Feds: Blue Cross Blue Shield of Mi. Violated Anti-Trust Law

By: Alex Goldsmith Email
By: Alex Goldsmith Email

John Sellek of the Michigan Attorney General's Office described what Blue Cross Blue Shield's actions in negotiating with hospitals as "atrocious".

"Blue Cross is using every advantage it has in the marketplace provided to them by the taxpayer to force out any compettion at any hospital," said Sellek. "What that's going to mean is market dominance for them and higher prices for everyone else."

The lawsuit filed against Blue Cross Monday follows a joint investigation with the Dept. of Justice and the Michigan Attorney General's Office.

Blue Cross is accused of using it's position as Michigan's largest health insurance provider to force hospitals to raise rates on the competition. In smaller hospitals, Blue Cross is accused of threatening to lower reimbursement rates 16% if they didn't comply. Sellek says larger hospitals received a sweeter deal.

"The shocking thing to us was Blue Cross was actually increasing the amount of money they gave to hospitals almost like a payoff to say 'Hey, you have to charge other insurers 10, 20 or 40 percent more' for things like x-rays." said Sellek.

"They're filing suit over us providing low costs through our healthcare agreements," said Andrew Hetzel, VP of Corporate Communications for Blue Cross Blue Shield of Michigan.

Blue Cross says the allegations against them are unfounded and that they save their subscribers billions of dollars.

"The argument that we're providing higher costs for other people really doesn't make sense," said Hetzel. "We represent more than 4 million of our customers and subscribers when we negotiate, we don't negotiate on behalf of other health plans and their members."

According to the lawsuit, Sparrow Hospital was one of 68 hospitals who had this type of arrangement with Blue Cross. However Sparrow is not accused of doing anything wrong and is not a party in this lawsuit.

"Sparrow has not seen nor can we comment on the particulars of this lawsuit," said Rose Tantraphol in a statement e-mailed to WILX. "What we can say is that Sparrow has a similar contractual arrangement with Blue Cross Blue Shield of Michigan as most other larger Michigan hospitals. As is common practice throughout the nation, contracted rates are determined, in part, based on volume."

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Comments are posted from viewers like you and do not always reflect the views of this station.
  • by non anonymous on Oct 19, 2010 at 05:27 PM
    Most health insurance companies will be out of business by 2014 and all you will have is the govt. plan to choose from.
  • by Ricardo Location: Lansing on Oct 19, 2010 at 06:55 AM
    Does this surprize anyone? BCBS has been doing these tactics for years. Get exclusive agreements with the local hospitals, then raise premiums to pay off the regulators that are supposed to oversee them. Not a pretty picture for sure. But, unfortunately, this kind of activity will keep going on as long as "The Price is Right". Even if they are found guilty from doing improper/illegal stuff, the cost of the litigation and fines will just be passed onto the people that pay for insurance coverage, and it will still stay "business as usual". Until someone gets the "intestinal fortitude" to hold the executives feet to the fire, instead of looking the other way if enough money flows in, it will stay the same. Thank you Ricardo
  • by Anonymous on Oct 19, 2010 at 06:12 AM
    They wanted to be a monopoly. We will have more insurance companies competing with obama care and it will be even worse for smaller hospitals.
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