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DOJ Files Antitrust Suit Against BCBS Michigan

John Commins, for HealthLeaders Media, October 19, 2010

BCBSM agreed to raise the prices it pays some hospitals to get the MFNs, thus buying protection from competitors by increasing its own costs, the complaint alleges.

"When a large healthcare plan with a substantial market share, like Blue Cross, imposes an anticompetitive MFN in the marketplace, it harms competition and consumers. It prevents others from entering the marketplace and discourages discounting. The end result: fewer options and higher prices," Varney said.

Nonprofit BCBSM is the largest commercial health insurer in Michigan, with revenues exceeding $10 billion in 2009. BCBSM insures more than nine times as many Michigan residents as its next largest commercial health insurance competitor, covering more than 60% of Michigan's 3 million commercially insured residents.

Hetzel said the hospital discounts BCBSM negotiates "are a vital part of our statutory mission to provide Michigan residents with statewide access to healthcare at a reasonable cost."

"It does not make good business sense for Blue Cross Blue Shield of Michigan to reimburse a provider at a higher rate than we can otherwise negotiate," Hetzel said. "These kinds of low cost guarantees are widely used in a variety of contracts in a number of industries. In fact, the federal government routinely requires its own vendors to abide by these same low cost requirements."

The state of Michigan joined DOJ in its lawsuit, which was filed in U.S. District Court in Detroit.


John Commins is a senior editor with HealthLeaders Media.

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2 comments on "DOJ Files Antitrust Suit Against BCBS Michigan"


Todd (10/21/2010 at 12:20 PM)
I find it absolutely absurd that the Federal Government can justify a lawsuit like this when Medicare and Medicaid reimburse hospitals significantly below even the COST OF CARE! Talk about an MFN! Talk about the pot calling the kettle black!

mjh (10/19/2010 at 9:30 AM)
As a Michigander who has been round and round with BCBSM, the Michigan Office of Insurance and Regulation as well as my small business employer and some of our state reps, I say it's about time and thank you! However, what bothers me even more, and what is not addressed, is that if I am employed and my work offers insurance (any plan, no matter how expensive it is), I have to get insurance through my employer – even though I could save a lot of money buying it individually. Due to certain arrangements between the State of MI and BCBSM, buying insurance on your own is not possible – they also prevent other providers such as Priority Health from allowing individual policies. So, I cannot get an HSA no matter how hard I try without changing jobs. I also pay many thousands of dollars more per year for insurance that I don't use, and I have to pick my doctor from a list. I hate this system. You want competitive pricing? Make people shop for their own insurance and allow the insurance companies to actually compete.