Conn. AG urges insurance company to overhaul practices

By Nick Rees | Dec 21, 2009

Richard Blumenthal (D)

HARTFORD, Conn. (Legal Newsline) - The president of Anthem Blue Cross and Blue Shield has been called on by Connecticut Attorney General Richard Blumenthal to drop contractual clauses that restrain and straitjacket Connecticut hospitals and doctors and constraining the state's Charter Oak plan for the uninsured.

An ongoing antitrust investigation is being conducted by Blumenthal into the "Most Favored Nation" clauses used by Anthem in contracts with hospitals and other health care providers. The clauses require hospitals to provide Anthem with discounts at least as favorable as any provided to competitors, which undermines competition and threatens widespread hospital enrollment in the Charter Oak Health Plan for the uninsured. This road block to enrollment would deprive thousands of Connecticut uninsured citizens of ready access to health care.

"Anthem is straitjacketing and restraining Connecticut hospitals - potentially constraining competition and hindering Charter Oak in enrolling hospitals statewide," Blumenthal said. "By insisting on every favorable term given to Charter Oak, Anthem is effectively pressuring hospitals to reject Charter Oak. My investigation continues, but I call on Anthem to break its death grip on hospitals and encourage them to join in this critical health insurance program. It should disavow the contract clause - known as Most Favored Nation - that may cause hospitals to delay or refuse to participate in Charter Oak."

Blumenthal, in a letter to Anthem President David R. Fusco, called for Charter Oak to be immediately excluded from the Most Favored Nation clauses and for hospitals in Anthem's provider network to be permitted to participate in Charter Oak without having to extend Anthem the same terms applied to Charter Oak.

"This step will have little effect on Anthem's profits, but a significant positive impact on access to affordable health care in our state," Blumenthal said.

The state subsidized Charter Oak was created in Summer 2008 to provide health insurance to uninsured adult Connecticut residents aged 19 through 64. The Department of Social Services administers Charter Oak. The state contracted with private health insurers Aetna Better Health, AmeriChoice by Unitedhealthcare, and Community Health Network of Connecticut to coordinate benefits in a managed care program and establish provider networks for health professionals and hospitals.

Hospitals that agreed to participate in Charter Oak are required to accept discounted rates for services and treatment for Charter Oak members. These rates are lower than the rates hospitals generally accept for their commercial business but are considered normal in publicly-subsidized health coverage programs.

Only 17 of the 32 hospitals in Connecticut have executed these agreements to participate with Charter Oak insurers to date. Blumenthal attributes this lack of participation to concern that Anthem could seek to enforce its Most Favored Nation rights on any hospital participating in Charter Oak. Charter Oak's rate of reimbursement is far less than the rates charged to Anthem. Hospitals that had the clause applied by Anthem to Charter Oak would be exposed to considerable financial penalty.

Nearly 13,000 Connecticut residents are currently enrolled in Charter Oak health coverage.

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