Michigan Enforcing Ban on Most-Favored-Nation Contracts

Michigan's ban on most-favored-nation contracts between health insurers and hospitals has gone into effect, according to a Crain's Detroit Business report.

The ban stems from a 2010 lawsuit filed by the Michigan attorney general and the U.S. Department of Justice against Blue Cross Blue Shield of Michigan. The plaintiffs claimed BCBS, the largest insurer in the state, charged 22 of Michigan's 131 hospitals to sign "most favored nation-plus" contracts.

Those contracts allegedly required those hospitals to charge higher prices to competing health insurers — more than 20 percent more.

Michigan Insurance Commissioner R. Kevin Clinton issued an order in July that any insurers using MFN clauses in contracts with hospitals must gain his pre-approval. Any insurer that does not will undergo "administrative action."

The commissioner's order was confirmed and went into effect Feb. 8, and as of that date, no insurer had submitted any MFN clauses for the commissioner's review.

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