Justice Department sues BlueCross of Michigan over low prices

The Department of Justice's antitrust division on Monday sued BlueCross BlueShield of Michigan over the insurer's low hospital reimbursement rates.

The lawsuit alleges that the nonprofit health insurer is abusing its dominant 60 percent market share to demand better rates from hospitals than its competitors get. The federal government argues that contractual clauses guaranteeing that no other insurer can get a better rate than BlueCross "stifle competition, resulting in higher health insurance prices for consumers in Michigan."

"In some circumstances," Assistant Attorney General Christine Varney told reporters at a briefing, "BlueCross agreed to pay higher prices to hospitals in exchange for a promise from the hospitals to charge even higher prices to its competitors."

BlueCross responds that it's the only insurer in the state required to meet cost, quality and access goals set by statute.

"At a time when insurance premiums are increasing because of medical costs," corporate communications vice-president Andrew Hetzel said in a statement, "it hurts consumers to remove tools that insurers use to negotiate the lowest possible cost for medical care in the hospital."