A national for-profit giant and Michigan's largest health insurer are coming to a resolution over the long-standing, fractious trade issues of excluding and favoring.
The Tuesday after Memorial Day a trial was set to start in Michigan to weigh Aetna's allegations that Blue Cross Blue Shield of Michigan protected its roughy 70 percent market share through provider contracts forcing up rates for other insurers.
When Aetna started to expand in Michigan in 2005, after a $390 million takeover of HMS Healthcare, "Blue Cross responded with an anticompetitive scheme aimed at thwarting competition by increasing the rates that Aetna and other competitors would pay for hospital services," lawyers for Aetna wrote in the original 2011 lawsuit.
Aetna accused BCBSMI of violating antitrust law by requiring providers to sign souped-up varieties of "most favored nation" provisions guaranteeing the insurer rates as low or lower than competitors and at times blocking competitors from contracting with those providers in the first place.
"Blue Cross perversely agreed to pay higher rates to those hospitals that entered into exclusionary contracts, and it explicitly threatened to pay lower rates if hospitals declined to enter into such agreements," the original complained argued. "Under some of Blue Cross' exclusionary contracts, hospitals have been required to charge Aetna and others substantially more than Blue Cross--as much as 39 percent more."
Aetna wanted the practices to be banned and an award of economic damages. Blue Cross Blue Shield of Michigan pushed for the case to be dismissed, writing off Aetna as a "disappointed competitor."
Less than week before a trial was going to weigh those arguments, with millions of dollars on the line, the two insurers agreed to resolve the dispute and settle out of court--in secret. The only detail made public is that they're each covering their own legal costs.
Aetna sued BCBSMI on the heels of a 2010 U.S. Department of Justice antitrust complaint against BCBSMI, which was dropped in 2013 after a new Michigan law banned the use of most favored national contracts.