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| Blue Cross Blue Shield |
Federal and state investigators sent civil subpoenas to Blue Cross Blue Shield units in Kansas, Missouri, Ohio, West Virginia, North Carolina, South Carolina and the District of Columbia, a person familiar with the matter said.
Gina Talamona, a department spokeswoman, confirmed the investigation has widened to include “various parts” of the country. She declined to comment on which states investigators are focusing on.
The Justice Department has been looking for ways to cut medical costs as the government sets up the health-care system established by legislation signed a year ago this week by President Barack Obama.
In October, the department sued Blue Cross Blue Shield of Michigan for allegedly entering agreements that raised hospital prices. Last month, the department pressured United Regional Health Care System in Wichita Falls, Texas, to agree to stop entering into contracts with insurers that make it harder for them to work with rivals.
‘Exclusionary Practices’
The expansion of the Blue Cross Blue Shield investigation is important because “they’re using exclusionary practices to hold competitors at bay,” said David Balto, an antitrust attorney and senior fellow at the Center for American Progress, a Washington-based policy group that generally favors Democratic initiatives.
The department’s Michigan complaint said Blue Cross negotiated contracts with 70 of the state’s 131 general acute- care hospitals that led to higher prices for the insurer’s competitors. In some cases, the hospitals charged rivals 30 percent to 40 percent more than Blue Cross, the department said at the time.
Brett Lieberman, a spokesman for the Blue Cross Blue Shield Association, a Washington-based trade group that licenses the insurer’s name, said the agreements have saved consumers money.
“It’s our goal to secure the best health care at the best rates for our members while also ensuring fair compensation to providers,” he said. Last year, Blue Cross efforts led to “hundreds of billions of dollars in cost savings for members.”
‘Received an Inquiry’
Fred Earley, president of Highmark Blue Cross Blue Shield West Virginia, said in an interview that his company received “documents in the last day or so” from the West Virginia attorney general’s office and the federal government. He and his general counsel were reviewing the materials, he said.
Elizabeth Hammond, a spokeswoman for Blue Cross Blue Shield of South Carolina, said, “We received an inquiry from the U.S. Department of Justice and are working with our counsel to respond.”
Mary Beth Chambers, a spokeswoman for Blue Cross and Blue Shield of Kansas, declined to comment.
Spokespeople for Blue Cross insurers in North Carolina, Ohio, Missouri and Washington didn’t return phone calls and e-mails seeking comment.
The Blue Cross companies in Ohio are run by Indianapolis- based WellPoint Inc.
The probe and suit are concerned with so-called most- favored-nation clauses in contracts with hospitals that guarantee no other insurer can get a better rate from the provider. The clauses are legal unless abused and are used in other industries, said Christine Varney, head of the department’s Antitrust Division, in October.
The Wall Street Journal reported earlier yesterday on the broadened investigation.
Sources: http://www.businessweek.com
