Aetna joins Mich. Blues fray

Modern Healthcare - - THE WEEK IN HEALTHCARE - Joe Carl­son

Blue Cross and Blue Shield of Michi­gan was hit with yet an­other an­titrust law­suit chal­leng­ing its “most fa­vored na­tion” pric­ing con­tracts with hos­pi­tals— but this time, the law­suit came from a com­peti­tor.

Aetna, Hart­ford, Conn., filed a law­suit in U.S. District Court in Detroit al­leg­ing that the Michi­gan Blues re­sponded to new com­pe­ti­tion in the state by con­vinc­ing hos­pi­tals to sign anti-com­pet­i­tive pric­ing con­tracts.

Specif­i­cally, Aetna said at least 62 of the state’s 131 acute-care hos­pi­tals signed con­tracts guar­an­tee­ing that Blue Cross would re­ceive the low­est pos­si­ble prices for hos­pi­tal ser­vices, some­times in­clud­ing a de­fined price dif­fer­en­tial. Aetna said Blue Cross also agreed to pay higher rates un­der many of those con­tracts, thus rais­ing the “price floor” for the en­tire mar­ket.

In the law­suit, Aetna said it has been fi­nan­cially harmed by Michi­gan Blue Cross’ “most fa­vored na­tion” pric­ing, which al­lows the dom­i­nant in­surer to use its mar­ket po­si­tion to pre­vent less­es­tab­lished en­ti­ties from com­pet­ing with it. The law­suit asks the fed­eral court to in­val­i­date the con­tracts and pay triple dam­ages to Aetna, with the amount to be de­ter­mined at trial.

Blue Cross of­fi­cials de­nied the al­le­ga­tions, say­ing their con­tracts only re­late to the prices that they pay, not their com­peti­tors.

“If we ne­go­ti­ate a con­tract that guar­an­tees the best price, a com­peti­tor could look at the same con­tract and claim that re­quires them to pay more. But we deny that,” said An­drew Het­zel, com­mu­ni­ca­tions vice pres­i­dent at Blue Cross Blue Shield of Michi­gan. “We have cer­tain pro­vi­sions in some of our con­tracts that guar­an­tee us the best pos­si­ble price.”

Het­zel said Blue Cross of­fi­cials ex­pect pric­ing that re­flects the vol­ume of pa­tients they brings to hos­pi­tals, and that their price ne­go­ti­a­tions have led to na­tion­ally rec­og­nized con­trols on hos­pi­tal prices across the state.

The Michi­gan Blues in­sures 4.3 mil­lion ben­e­fi­cia­ries in the state. Aetna said it in­sures be­tween 5% and 6% of the to­tal Michi­gan mar­ket, but de­clined to re­lease an ex­act fig­ure

The U.S. Jus­tice Depart­ment filed its own an­titrust law­suit against Blue Cross and Blue Shield of Michi­gan last year, lodg­ing sim­i­lar al­le­ga­tions of an­ti­com­pet­i­tive price con­trols through the use of vari­a­tions on “most fa­vored na­tion” pric­ing. (Oct. 25, 2010, p. 6) U.S. District Judge Denise Page Hood has re­jected the Blues’ re­quest to throw out the law­suit, and she set a bench trial for April 2013.

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