Blue Cross Squawks at Georgia’s New Rule

ATLANTA (CN) – Blue Cross and Blue Shield sued Georgia’s insurance commissioner for outlawing a clause in the insurer’s contracts that requires hospitals to notify Blue Cross if the hospitals accept lower reimbursements from another insurer. Blue Cross wants Insurance Commissioner John Oxendine enjoined from enforcing Directive 10-EX-2.

     In its complaint in Fulton County Superior Court, Blue Cross challenges Georgia’s claim “that is a violation of the Georgia Insurance Code to have a provision in an agreement between an insurer and a hospital provider that requires the hospital to notify the insurer if the hospital provider enters into an agreement with another insurer to accept an amount for services which is less than the amount previously agreed to and to provide the insurer with an option to accept that lesser amount (known as a ‘most-favored-nation’ or ‘MFN’ clause or provision),” (parentheses in complaint.)
     The directive was issued on June 23.
     Blue Cross say the MFN clause, which has been included in its contracts with some Georgia hospitals for more than 20 years, guarantees that if hospitals offer lower prices for services to another insurer, the hospitals must offer the same price to Blue Cross.
     Commissioner Oxendine says the MFN clause is “anticompetitive or illegal,” but Blue Cross claims it provides “direct benefits to consumers.”
     Since the directive was issued, Blue Cross says, several hospitals have contacted it to discuss whether the clause should be excluded from renewed agreements.
     Blue Cross also claims that Oxendine “acted outside the scope of his authority under the Georgia Insurance Code.”
     It wants Oxendine “restrained and enjoined from taking any punitive action against plaintiffs based on the directive.”
     Blue Cross and Blue Shield of Georgia is represented by Mark Cohen, with Troutman Sanders.

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