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Anthem's "most-favored-nation" contracting under scrutiny

Connecticut says it's unfair for the company to ask for same reimbursement rates as a state-subsidized health plan.

By Emily Berry — Posted Jan. 13, 2010

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Anthem, WellPoint's subsidiary in Connecticut, has come under fire for demanding lower reimbursement rates to match what a health plan set up by the state pays hospitals and physicians.

The company has hospitals contracted under a "most-favored-nation" arrangement that the state's attorney general says should not apply to public insurance and state-administered plans.

Most-favored-nation contract clauses bar a hospital or physician from giving any other insurer a lower rate, but typically exclude Medicaid and Medicare.

Charter Oak Health Plan is a state-subsidized health plan for adults that uses commercial health plan contractors, including Aetna and UnitedHealth Group. It was launched in 2008.

Anthem is not a participant.

In a Dec. 21, 2009, letter to Anthem, Connecticut Attorney General Richard Blumenthal asked that the company exempt the Charter Oak plan from the most-favored-nation clause.

"By insisting on every favorable term given to Charter Oak, Anthem is effectively pressuring hospitals to reject Charter Oak," Blumenthal said in a news release.

According to Blumenthal's letter, only 17 of the state's 32 hospitals accept Charter Oak. About 13,000 people are enrolled in the plan.

The Connecticut State Medical Society supports Blumenthal's request, said Matthew Katz, the group's executive vice president. He said physicians have been concerned over whether Anthem would demand Charter Oak's rates.

"Those rates are significantly lower than commercial rates because physicians have gotten into Charter Oak to help patients who otherwise would not have access to health insurance," he said.

An e-mailed statement from Anthem said only: "We are currently reviewing the press release and letter issued by Attorney General Blumenthal on Dec. 21."

Blumenthal's letter said his office continues to investigate the anticompetitive effect that most-favored-nation clauses have on the health insurance market in Connecticut.

The U.S. Dept. of Justice in 2004 launched an investigation into Anthem's use of most-favored-nation clauses, but the outcome of that inquiry was never announced.

At least 12 states have adopted laws prohibiting or restricting the use of most-favored-nation clauses: Alaska, California, Colorado, Idaho, Indiana, Kentucky, Maryland, Minnesota, New Hampshire, Rhode Island, Vermont and Washington.

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