On Oct. 18, 2010, the U.S. Department of Justice, acting with the Michigan Attorney General, filed an antitrust suit to enjoin Blue Cross Blue Shield of Michigan (Blue Cross) from including “most favored nation” (MFN) clauses in its contracts with hospitals in Michigan and to have those clauses removed from existing contracts.1 MFNs between insurers and health care providers typically require the health care provider to offer the insurer the lowest cost for services it makes available to any of its other insurers.
According to the complaint, Blue Cross is “by far the largest provider of commercial health insurance in Michigan,” covering more than 60 percent of the commercially insured population in the state. Blue Cross has entered into MFNs or similar agreements with 70 of Michigan’s 131 general acute care hospitals, representing more than 40 percent of the state’s acute care beds. The MFN provisions are either (i) “equal-to-MFNs” that ensure that hospitals’ costs for services offered to competing insurers are at least as much as they charge Blue Cross, or (ii) “MFN-plus” agreements requiring hospitals to charge competing insurers more than they charge Blue Cross, typically by a specified percentage differential of up to 40 percent.
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