Blue Cross Blue Shield of Michigan welcomes continued state review of health insurers' "most favored nation" hospital contract language

Order by Michigan Insurance Commissioner puts all insurers' MFNs up for review

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Jul 19, 2012, 04:09 ET

DETROIT, July 19, 2012 /PRNewswire/ -- In connection with its ongoing review and regulation of Blue Cross Blue Shield of Michigan's Provider Class Plan and the provision of health care insurance under state law, the Michigan Insurance Commissioner issued a report regarding Blue Cross's Class Plan for hospitals. The Commissioner also issued a separate Order requiring all insurance carriers to submit their Michigan hospital provider contracts containing so-called "Most Favored Nation" (MFN) language for review and approval of those provisions.

MFN language is commonly included in certain types of commercial contracts. Blue Cross is defending the inclusion of MFN provisions in some of its hospital contracts in a U.S. Department of Justice case in Federal District Court in Detroit.

The Insurance Commissioner's Order institutes a six-month window during which any health insurance carrier that currently includes MFN clauses in its hospital contracts or seeks to include such provisions in the future must receive approval from the Commissioner in order to continue them. If the health insurance carrier does not receive approval, its MFNs will not be enforceable after Feb. 1, 2013.

"This action by the state of Michigan is a fair, formal regulatory review of both existing and new contracts to ensure any MFN provisions are proper," said Jeffrey Rumley, BCBSM vice president and general counsel. "We welcome the Commissioner's ongoing oversight as Blue Cross continues in its mission to ensure access to affordable health care in Michigan. We are looking further at what we believe is the significant positive effect of the Commissioner's Order on the pending litigation about MFNs brought by the Department of Justice. We will continue to negotiate reimbursement with hospitals that is fair, recognizes hospitals for their efforts to improve quality, and provides our customers with the most affordable pricing possible."

Rumley also said that the Commissioner's oversight re-enforces BCBSM's position that these issues are matters of state, and not federal, regulation.

Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association. Company news is available at http://news.bcbsm.com

SOURCE Blue Cross Blue Shield of Michigan