Big news today out of Michigan! Aetna is suing Blue Cross Blue Shield of Michigan for implementing a hare brained business scheme. And it to me, typifies the attitudes of many of the Blue Cross franchises where they believe that they can do whatever they want. We are currently battling the good old boy network in Florida , specifically Blue Cross of Florida who is determined to fight the growth of the internet.
Aetna’s law suit alleges that Blue Cross was involved in raising their own rates to consumers and sharing the extra money with the hospital networks in Michigan that in return would charge the competitors of Blue Cross higher contract prices leaving the competitors of Blue Cross with no choice but to raise their premiums.
Check out what one of the guys from BCBS in Michigan named Andy Hetzel (VP of Corporate Communications) responded with;
“It’s a little sour grapes from a major national insurance company that is looking to take advantage of the presence of the federal national antitrust case to do something that they’ve been unwilling to do by making their own investments here,”
The Justice Department lawsuit of which Aetna is piggy backing on, alleges that the Blues forced 70 Michigan hospitals to give it the best prices in the state, while charging others much higher rates. The Michigan Attorney General’s Office supports the challenge.And maybe Blue Cross of Michigan doesn’t care, but to me it is important to realize that Michigan’s economy is in the toilet, lest you forgot. Unemployment in Michigan sets records!
Whats next for Aetna in Michigan?
Part of Aetna’s lawsuit claims that BC of Michigan is causing it to leave the market in early 2012 which kind of is bad news for East Coast Health Insurance. We sell a lot of Aetna in Michigan as it usually more affordable. And Aetna is not leaving without a fight. They spent nearly $390 million in 2005 to acquire a Michigan-based health care network, HMS Healthcare, in hopes to building a statewide plan of services for employers and individuals buying Aetna insurance. HMS operates in Michigan under the name PPOM and is based in Southfield. It is the second largest hospital and doctor network in Michigan.
Apparently Blue Cross feels this was not enough and that they can manipulate them out of the market.
Aetna in 2005 had better hospital rates than the Blues, the lawsuit charges. But after the Blues stepped up its strategy, several Michigan hospitals told Aetna they had to charge it much more because they “had no choice due to pressure from Blue Cross.”
One hospital executive even told Aetna, “I hope you understand but we don’t have any choice in the matter. Blue Cross is 30% of our business; we can’t (sic) put that in jeopardy’,” the lawsuit says.
The Aetna case is significant because other insurers and Michigan hospitals have stayed out of the fight with Michigan’s largest insurer, which covers about 60% of Michigan’s residents with health insurance. Only the city of Pontiac, an outstate business and a lone consumer have filed so-called piggyback lawsuits against the Blues alleging improper pricing practices.
And for the record, when BC of Michigan tried to get the suit dismissed the judge assigned to the case declined.
Asked why Aetna had stayed out of the legal fight before, Berenson the President of Michigan Aetna said: “As we look at the implementation of health reform, we felt that to insure a competitive marketplace… it is critical to file now in the state of Michigan.’’
