business
Insurance commissioner to review most-favored-nation clauses
NEWS IN BRIEF — Posted Aug. 6, 2012
Michigan’s insurance commissioner has notified the state’s health insurers that most-favored-nation contract clauses may violate state law. He ordered them to submit any contracts containing that type of language after Feb. 1, 2013, to the Office of Financial and Insurance Regulation for review.
A most-favored-nation clause typically requires that a hospital or physician group give a particular insurer the lowest rate, meaning that competing insurers can’t negotiate lower prices for care for their members. Under the July 18 order, any insurer who attempts to enforce such contract language after the February deadline without the department’s approval would be subject to censure by the state.
The U.S. Dept. of Justice and Aetna have sued Blue Cross Blue Shield of Michigan over the alleged improper use of most-favored-nation clauses, which the Justice Dept. and Aetna say have given the Blues an unfair market advantage.
A company statement from Blue Cross Blue Shield of Michigan said the company welcomed the insurance commissioner’s decision, in part because it believes the legality of most-favored-nation clauses is a state issue.
“We will continue to negotiate reimbursement with hospitals that is fair, recognizes hospitals for their efforts to improve quality and provides our customers with the most affordable pricing possible,” said Jeffrey Rumley, vice president and general counsel of the company.
Note: This item originally appeared at http://www.ama-assn.org/amednews/2012/08/06/bibf0806.htm.
