KHI News Service

Blue Cross of Kansas part of federal anti-trust investigation

By Phil Cauthon | April 21, 2011

Blue Cross Blue Shield of Kansas is one of several health insurers nationwide being investigated by the U.S. Department of Justice for possible anti-competitive practices.

The Wall Street Journal reported that federal investigators and some state attorneys general have sent civil subpoenas to BCBS companies in Kansas, Missouri, Ohio, West Virginia, North Carolina, South Carolina and the District of Columbia.

The Kansas Attorney General's Office is not involved in the probe, according to an agency spokesperson.

The practices being investigated involve "most-favored nation," clauses in contracts between the insurers and hospitals, a spokesperson for the U.S. Department of Justice told KHI News Service, declining to comment further.

The provisions, sometimes referred to as "most favored customer" clauses would require hospitals to give Blue Cross the best terms or prices they make available to anyone. They could help hold down prices for services, but also could violate anti-trust laws if used to stifle competition.

Blue Cross Blue Shield of Kansas spokesperson Mary Beth Chambers confirmed the company had received a request for information from the justice department.

"We did receive a civil investigative demand," she said. "We are taking all the steps necessary to comply with their request and send them the information they are seeking." She declined to comment further, saying it was an ongoing legal investigation.

The justice department filed an anti-trust lawsuit against Blue Cross Blue Shield of Michigan in October. Michigan Blue Cross is defending itself in court saying that the administration has failed to demonstrate that its most-favored clauses are leading to economic harm.

That lawsuit in some quarters is viewed as a partial test of the federal health reform law, which promises to lower health care costs. Supporters of health reform have said that the planned health insurance exchanges — which are intended to foster competition — could be undermined in states with one dominant insurer, such as Michigan.

Blue Cross Blue Shield of Kansas is the largest private provider of health insurance in Kansas.