Most Favored Nation Clause Under Attack, Again

mooresevilleThe lawsuit, filed by businesses and residents of  Mooresville, was the first of more than 20 class actions making similar  allegations against Blue Cross plans nationwide.  Those cases have recently  been consolidated before a federal judge in Alabama, which means that the  litigation’s outcome likely would affect companies and policyholders  nationwide.

On May 1st, the North Carolina General Assembly sent House Bill 247 (Senate  Bill 359) to Governor McCrory for signature.  The bill,  titled An Act to Allow Health Providers and Health Insurers  to Freely Negotiate Reimbursement Rates by Prohibiting Contract Provisions that  Restrict Rate Negotiations, would prohibit “most favored nation” clauses in healthcare contracts, a regular clause found in Blue Cross and Blue  Shield of North Carolina (BCBSNC) contracts.  The Raleigh News &  Observer reported that BCBSNC opposed the bill even thought it says  it has not been enforcing the provisions.

A “most favored nation” clause guarantees prices that are at least as  favorable as those provided to others (not party to the contract) for the  same products and services.  These clauses have come under fire  from the Federal Trade Commission (FTC) as being anti-competitive.  The  U.S. Justice Department has been investigating whether these Blue Cross clauses  in North Carolina and other states violate antitrust laws.  In  addition, a NC lawsuit filed in early 2012 against BCBSNC  alleges collusion to carve up the nations insurance market, increasing the  cost of insurance.  The lawsuit, filed by businesses and residents of  Mooresville, was the first of more than 20 class actions making similar  allegations against Blue Cross plans nationwide.  Those cases have recently  been consolidated before a federal judge in Alabama, which means that the  litigation’s outcome likely would affect companies and policyholders  nationwide.  Read more about the lawsuit in our earlier post here.

The General Assembly legislation cuts to the chase by specifying that no  contract with a healthcare provider may “[p]rohibit, or grant a health insurance  carrier an option to prohibit, the provider from contracting with another health  insurance carrier to provide  health care services at a rate that is equal  to or lower than the payment specified in the contract.”  The bill also  prohibits a health insurer from requiring a provider to disclose, directly or  indirectly, the provider’s contractual rates with another health insurance  carrier.  The bill is set to become effective October 1, 2013.  Read  the full text of the bill here.

Read More http://www.healthcarereformdigest.com/the-general-assembly-passes-a-bill-challenging-bcbs-of-ncs-dominance

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