Health insurers in Michigan are now banned from including “most-favored-nation” (MFN) clauses in contracts with hospitals.
Following up an order first issued in July, Michigan Office of Financial and Insurance Regulation Commissioner Kevin Clinton last week finalized a prohibition on the use of MFN clauses. While directed at all health insurers in the state, the order primarily affects Blue Cross Blue Shield of Michigan. Blue Cross is the defendant in a federal anti-trust case that claims the insurer uses its market power to impose and enforce the MFN clauses and receive more favorable pricing than its competitors.
The federal lawsuit claims that 22 large hospitals agreed to the clauses in their contracts that grant Blue Cross Blue Shield lower prices and require the hospitals, in some cases, to charge competitors 40 percent more.
Blue Cross Blue Shield of Michigan strongly denies the allegations in the lawsuit.
Clinton last summer said any use of the most-favored nation clauses required review and approval by his office.
“As of the date of this bulletin, no insurer has submitted any MFN clauses for the commissioner’s review. Accordingly, all MFNs currently in use by any insurer are void and unenforceable,” Clinton wrote in a Feb. 8 bulletin.