KCUR News
5:21 pm
Fri April 22, 2011

Feds Question Blue Cross of KC About Plans

KANSAS CITY, Mo. – Blue Cross and Blue Shield of Kansas City is among a handful of Blue Cross plans that federal authorities are looking to determine whether agreements with hospitals stifle health care competition.

Spokeswoman Sue Johnson said the local Blue Cross plan received a "civil investigation demand" from the Justice Department last month, asking for information about its use of so-called "most-favored-nation" provisions in contracts with hospitals and other care providers.

Johnson said the insurer - the largest in the Kansas City market - provided the information and is confident that authorities will find its practices are pro-competitive.

The clauses in question are agreements that set a floor for how much the insurer will reimburse the hospital for care. The idea is to ensure that competitors will pay the same or higher costs.

The Obama administration is interested in how competitive the health care market is an important factor in cost containment.

The Wall Street Journal recently reported the federal investigation - originating in Michigan - has expanded to include plans offered in several other states, including Kansas and Missouri.