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CT AG Charges Antitrust Practices in Health Insurance Industry

John Commins, for HealthLeaders Media, March 11, 2010

Connecticut Attorney General Richard Blumenthal said this week that his office has uncovered a potentially anticompetitive practice by health insurance companies that could raise healthcare costs and lower competition.

In a letter to HHS Secretary Kathleen Sebelius, Blumenthal called for an investigation of these practices at the national level.

Blumenthal said his office has been conducting an antitrust investigation of Anthem Blue Cross and Blue Shield of Connecticut, which is owned by WellPoint, Inc., and has found contractual Anthem clauses—commonly referred to as Most Favored Nation clauses—requiring hospitals and other providers to allow Anthem to pay the lowest reimbursement rates in the industry.

Despite apparently having the best reimbursement deals, Blumenthal said Anthem won't pass on its savings to policyholders. Instead, he said the company has sought and received premium increases on Connecticut health insurance consumers, and possibly elsewhere in the country, of at least 13% to 20%.

"Our investigation remains ongoing, but federal officials deserve immediate warning about these practices—potentially having national implications and warranting federal investigation," Blumenthal said in a media release. "Small businesses, individuals—and our entire economy—have a direct and immediate stake in practices that straitjacket hospitals and raise healthcare costs."

"WellPoint and Anthem—among the most powerful players in the health insurance industry—may be exploiting its strength to force hospitals into giving them the best deal in the market. As a result of Anthem's practices, competitors are forced to pay more, hospitals are forced to accept less from Anthem—and consumers are the ones paying," Blumenthal said.

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