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Mich. health insurer sued over price deals

Associated Press / October 19, 2010

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WASHINGTON — The Justice Department alleged yesterday in a lawsuit that Michigan Blue Cross Blue Shield is discouraging competition by engaging in practices that raise hospital prices, conduct that an assistant attorney general vowed to challenge anywhere else it is found in the United States.

The suit targets “most favored nation’’ clauses between Michigan Blue Cross Blue Shield and health care providers which, according to the government, essentially guarantee that no competing health care plan can obtain a better rate.

Michigan Blue Cross Blue Shield has such clauses in contracts with at least 70 of the 131 general acute care hospitals in the state, the government alleges.

The lawsuit said that Michigan Blue Cross Blue Shield intended to raise hospital costs for competing health care plans and reduce competition for the sale of health insurance.

Michigan Blue Cross Blue Shield said the lawsuit is seeking to restrict the nonprofit company’s ability to provide the most deeply discounted rates from Michigan hospitals. The company said that negotiated hospital discounts are a tool that Blue Cross uses to protect the affordability of health insurance for millions of state residents.

The state of Michigan joined the Justice Department in the case filed in federal court in Detroit.

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