RALEIGH, N.C. (AP) — Rivals of Blue Cross and Blue Shield of North Carolina are again backing legislation that would eliminate a practice they say North Carolina Blue uses to discourage competition and keep health care costs high.
The state House Judiciary Committee voted overwhelmingly in favor of a bill on Wednesday that bars insurance companies from writing contracts that include a “most favored nation” clause requiring medical providers to give them whatever discounts their rivals are getting.
An insurer’s contract also couldn’t bar providers from negotiating with other carriers at equal or lower rates to what that insurer is getting.
The bill would prevent providers from having to disclose their rates with another insurance carrier as part of any agreement.
A similar measure passed the Senate in 2011 but failed to get through the House.
Prohibiting the contract requirements would “return our state and our state’s health insurance market to a competitive landscape so that everybody gets equal footing and opportunity to offer health insurance,” said Rep. Justin Burr, R-Stanly, one of the bill’s primary sponsors.
The measure pits North Carolina Blue, which has 3.7 million members and holds more than 80 percent of the state’s individual and small business markets, against those insurers with smaller market share. But bill supporters also have clout. A regional executive for United Health (NYSE:UNH), which has 900,000 North Carolina members and 80 million nationwide, spoke for the bill.
Ken Lewis, president of the North Carolina Association of Health Plans, said North Carolina Blue uses the most favored nation clauses in contracts and its sheer size to get the terms it wants. Some contracts allow a health insurer to force hospital and doctors to pay back money if it’s determine they’ve given deeper discounts to other providers.
“It’s an 800-pound gorilla versus a very small provider, and we all know when an 800-pound gorilla sits on you, you tend to do what the 800-pound gorilla wants,” said Lewis, who is also head of FirstCarolinaCare Insurance Co.