Montana Admonishes Blue Cross – Most Favored Nations Status in Jeopardy?

……. Blue Cross must notify the Justice Department and the state of Montana before it uses exclusive contracts with brokers, or exclusive or most-favored-nation provisions in its agreements with health care providers.
 
 
Best’s News Service – November 14, 2011 04:00 PM
BCBS of Montana Settles with US Justice Department, State AG in Antitrust Complaint
BILLINGS, Mont. – The Montana attorney general and the U.S. Department of Justice reached a settlement with two of Montana’s largest health insurers in a move intended to preserve competition in the state’s health insurance market.


The settlement, subject to approval by the U.S. District Court for the District of Montana, involves Blue Cross and Blue Shield of Montana and hospitals that own New West Health Services, the other health insurer, and resolves significant antitrust concerns, according to a statement from Montana Attorney General Steve Bullock.


Back in August, Blue Cross and five of the six hospitals that own New West entered into an agreement in which Blue Cross agreed to pay the hospitals for their promise to stop buying their own employees’ health insurance from New West, and instead buy it from Blue Cross for the next six years, Bullock’s office said.


Under the settlement, Blue Cross can proceed with the agreement with five of New West’s six hospital owners to buy health insurance from Blue Cross for six years, the U.S. Justice Department said. The five hospital owners are the Billings Clinic, Bozeman Deaconess Health Services, Community Medical Center in Missoula; Northern Montana Health Care and St. Peter’s Hospital in Helena.


“We’re focused on providing exceptional customer service to our customers, and deliver that same service to our new customers,” said Tim Warner, a spokesman for the nonprofit Blue Cross and Blue Shield Montana. The Montana Blues is the largest health insurer in the state, with reported revenues of about $530 million in 2010, according to the Justice Department.


The settlement, however, also requires New West to promptly divest its remaining commercial health-insurance business to an acquirer with the intent to be a competitor. New West, another nonprofit, is the third-largest health insurer in Montana, with reported revenues of about $120 million in 2010.


The feds tentatively approved PacificSource Health Plans, based in Springfield, Ore., as the acquirer, and the hospital owners must first attempt to sell the assets to PacificSource before selling to another buyer. PacificSource, another nonprofit health insurer, reported revenues of about $735 million in 2010.


The original transaction would have effectively eliminated competition between Blue Cross and New West, and allow Blue Cross to increase prices and reduce the quality of its commercial health-insurance plans, according to the civil antitrust complaint.


New West, created in 1998, provided a large and diverse network of doctors and hospitals for its customers, Bullock’s office said. “When we learned that Montana’s dominant health insurance company, Blue Cross Blue Shield, was planning to take over a substantial portion of New West’s business, we were very concerned that the reduced competition could lead to higher premiums for Montana consumers,” Bullock said in a statement.


“New West has been the most significant competitor for Blue Cross,” Bullock said. “By encouraging another company to take over a portion of New West’s business here, the settlement will help provide health care consumers a viable option when they are seeking coverage.”


The proposed settlement also contains provisions to prevent Blue Cross from interfering with the acquirer’s ability to compete effectively. Blue Cross must notify the Justice Department and the state of Montana before it uses exclusive contracts with brokers, or exclusive or most-favored-nation provisions in its agreements with health care providers.


Without the divestiture, competition would have been substantially reduced in commercial health-insurance markets in Montana, the Justice Department said. New West is one of two significant competitors to Blue Cross in commercial health insurance in the Billings, Bozeman, Helena and Missoula areas of Montana.


According to a report released by the American Medical Association on competition in the health insurance market, the vast majority of commercial health insurance markets in the United States are highly concentrated and are “ripe for the exercise of health insurer market power, which is detrimental to society.” The AMA relied on newly revised guidelines laid out by the U.S. Department of Justice and the U.S. Federal Trade Commission (Best’s News Service, Nov. 2, 2011).


In 24 of the 48 states that the report analyzed, the two largest insurers had a combined commercial market share of 70% or more. The 10 states with the least competitive commercial health insurance markets were, in order: Alabama; Alaska; Delaware; Michigan; Hawaii; Washington, D.C.; Nebraska; North Carolina; Indiana and Maine.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)BN-NJ-11-14-2011 1600 ET #


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BILLINGS, Mont. – The Montana attorney general and the U.S. Department of Justice reached a settlement with two of Montana’s largest health insurers in a move intended to preserve competition in the state’s health insurance market.

The settlement, subject to approval by the U.S. District Court for the District of Montana, involves Blue Cross and Blue Shield of Montana and hospitals that own New West Health Services, the other health insurer, and resolves significant antitrust concerns, according to a statement from Montana Attorney General Steve Bullock.


Back in August, Blue Cross and five of the six hospitals that own New West entered into an agreement in which Blue Cross agreed to pay the hospitals for their promise to stop buying their own employees’ health insurance from New West, and instead buy it from Blue Cross for the next six years, Bullock’s office said.


Under the settlement, Blue Cross can proceed with the agreement with five of New West’s six hospital owners to buy health insurance from Blue Cross for six years, the U.S. Justice Department said. The five hospital owners are the Billings Clinic, Bozeman Deaconess Health Services, Community Medical Center in Missoula; Northern Montana Health Care and St. Peter’s Hospital in Helena.


“We’re focused on providing exceptional customer service to our customers, and deliver that same service to our new customers,” said Tim Warner, a spokesman for the nonprofit Blue Cross and Blue Shield Montana. The Montana Blues is the largest health insurer in the state, with reported revenues of about $530 million in 2010, according to the Justice Department.


The settlement, however, also requires New West to promptly divest its remaining commercial health-insurance business to an acquirer with the intent to be a competitor. New West, another nonprofit, is the third-largest health insurer in Montana, with reported revenues of about $120 million in 2010.


The feds tentatively approved PacificSource Health Plans, based in Springfield, Ore., as the acquirer, and the hospital owners must first attempt to sell the assets to PacificSource before selling to another buyer. PacificSource, another nonprofit health insurer, reported revenues of about $735 million in 2010.


The original transaction would have effectively eliminated competition between Blue Cross and New West, and allow Blue Cross to increase prices and reduce the quality of its commercial health-insurance plans, according to the civil antitrust complaint.


New West, created in 1998, provided a large and diverse network of doctors and hospitals for its customers, Bullock’s office said. “When we learned that Montana’s dominant health insurance company, Blue Cross Blue Shield, was planning to take over a substantial portion of New West’s business, we were very concerned that the reduced competition could lead to higher premiums for Montana consumers,” Bullock said in a statement.


“New West has been the most significant competitor for Blue Cross,” Bullock said. “By encouraging another company to take over a portion of New West’s business here, the settlement will help provide health care consumers a viable option when they are seeking coverage.”


The proposed settlement also contains provisions to prevent Blue Cross from interfering with the acquirer’s ability to compete effectively. Blue Cross must notify the Justice Department and the state of Montana before it uses exclusive contracts with brokers, or exclusive or most-favored-nation provisions in its agreements with health care providers.


Without the divestiture, competition would have been substantially reduced in commercial health-insurance markets in Montana, the Justice Department said. New West is one of two significant competitors to Blue Cross in commercial health insurance in the Billings, Bozeman, Helena and Missoula areas of Montana.


According to a report released by the American Medical Association on competition in the health insurance market, the vast majority of commercial health insurance markets in the United States are highly concentrated and are “ripe for the exercise of health insurer market power, which is detrimental to society.” The AMA relied on newly revised guidelines laid out by the U.S. Department of Justice and the U.S. Federal Trade Commission (Best’s News Service, Nov. 2, 2011).


In 24 of the 48 states that the report analyzed, the two largest insurers had a combined commercial market share of 70% or more. The 10 states with the least competitive commercial health insurance markets were, in order: Alabama; Alaska; Delaware; Michigan; Hawaii; Washington, D.C.; Nebraska; North Carolina; Indiana and Maine.
 


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