On May 1st, the North Carolina General Assembly sent House Bill 247 (Senate Bill 359) to Governor McCrory for signature. The bill, titled An Act to Allow Health Providers and Health Insurers to Freely Negotiate Reimbursement Rates by Prohibiting Contract Provisions that Restrict Rate Negotiations, would prohibit “most favored nation” clauses in healthcare contracts, a regular clause found in Blue Cross and Blue Shield of North Carolina (BCBSNC) contracts. The Raleigh News & Observer reported that BCBSNC opposed the bill even thought it says it has not been enforcing the provisions.
A “most favored nation” clause guarantees prices that are at least as favorable as those provided to others (not party to the contract) for the same products and services. These clauses have come under fire from the Federal Trade Commission (FTC) as being anti-competitive. The U.S. Justice Department has been investigating whether these Blue Cross clauses in North Carolina and other states violate antitrust laws. In addition, a NC lawsuit filed in early 2012 against BCBSNC alleges collusion to carve up the nations insurance market, increasing the cost of insurance. The lawsuit, filed by businesses and residents of Mooresville, was the first of more than 20 class actions making similar allegations against Blue Cross plans nationwide. Those cases have recently been consolidated before a federal judge in Alabama, which means that the litigation’s outcome likely would affect companies and policyholders nationwide. Read more about the lawsuit in our earlier post here.
The General Assembly legislation cuts to the chase by specifying that no contract with a healthcare provider may “[p]rohibit, or grant a health insurance carrier an option to prohibit, the provider from contracting with another health insurance carrier to provide health care services at a rate that is equal to or lower than the payment specified in the contract.” The bill also prohibits a health insurer from requiring a provider to disclose, directly or indirectly, the provider’s contractual rates with another health insurance carrier. The bill is set to become effective October 1, 2013. Read the full text of the bill here.
