BCBSM agreed to raise the prices it pays some hospitals to get the MFNs, thus buying protection from competitors by increasing its own costs, the complaint alleges.
"When a large healthcare plan with a substantial market share, like Blue Cross, imposes an anticompetitive MFN in the marketplace, it harms competition and consumers. It prevents others from entering the marketplace and discourages discounting. The end result: fewer options and higher prices," Varney said.
Nonprofit BCBSM is the largest commercial health insurer in Michigan, with revenues exceeding $10 billion in 2009. BCBSM insures more than nine times as many Michigan residents as its next largest commercial health insurance competitor, covering more than 60% of Michigan's 3 million commercially insured residents.
Hetzel said the hospital discounts BCBSM negotiates "are a vital part of our statutory mission to provide Michigan residents with statewide access to healthcare at a reasonable cost."
"It does not make good business sense for Blue Cross Blue Shield of Michigan to reimburse a provider at a higher rate than we can otherwise negotiate," Hetzel said. "These kinds of low cost guarantees are widely used in a variety of contracts in a number of industries. In fact, the federal government routinely requires its own vendors to abide by these same low cost requirements."
The state of Michigan joined DOJ in its lawsuit, which was filed in U.S. District Court in Detroit.