Blue Cross Accused of Price Fixing – Favored Nation Clause

Blue Cross is accused of price fixing in a lawsuit filed last year. Could it be that Blue Cross agreed to hospital pricing demands, with the understanding that the hospitals would charge other PPO’s more?

Did the negotiating process look something like this “Ok, we will pay you those high whorehouse prices you demand, but you must agree to charge our competitiors more!”

Editor’s Note: We have held many a discussion with hospital administrators in negotiating payer contracts. One hospital administrator in East Texas told us “sure, we will give you a discount, but it cannot be more than 35% off billed charges due to our Favored Nations Contract with BCBS.”