Anthem Waives Contract Clause That Hindered State Health Insurance Plan
A state-run health insurance program may have an easier time contracting with hospitals after the state’s largest insurer agreed to waive a clause in its own contracts.
Anthem Blue Cross and Blue Shield in Connecticut has a “most favored nation” clause in its contracts with medical providers that requires hospitals to offer Anthem the same or better discounts offered to other insurers. Anthem’s arrangement has made it difficult for the state-subsidized Charter Oak health plan program to secure contracts with hospitals.
Last month, Attorney General Richard Blumenthal asked Anthem to exempt Charter Oak, a program for uninsured adults that serves about 13,000. Anthem waived the clause on Wednesday, said Anthem spokeswoman Sarah Yeager.
“This agreement enables hospitals to freely accept Charter Oak without fear of financial repercussions from Anthem for breach of contract,” Blumenthal said Thursday.
Yeager said Anthem never intended to have hospitals pay Anthem at Charter Oak’s reimbursement rates.
“Anthem supports efforts and initiatives that expand health coverage to Connecticut’s uninsured and underinsured populations,” Yeager said.
In 2008, the state started offering the Charter Oak health plan to provide coverage to uninsured adults between 19 and 64. The state contracted with three private insurance plans — Aetna Better Health, AmeriChoice by United HealthCare and Community Health Network — to manage networks of doctors and hospitals for the Charter Oak plan. In December, 17 of 32 hospitals in Connecticut had agreements with Charter Oak insurers — none in Windham or Middlesex counties.
Blumenthal has an ongoing investigation into Anthem’s most-favored-nation clauses, which he said in December undermined competition and deterred hospital enrollment in Charter Oak.
“I am pleased that Anthem has recognized the need to carve out Charter Oak from this clause, but have continued concerns about the potential anti-competitive impact on the health insurance market,” Blumenthal said. “I commend the company for its continued cooperation in this important ongoing antitrust investigation.”
In the summer of 2008, the state started offering Charter Oak as a state-subsidized health plan to provide coverage to uninsured adults between 19 and 64. The state contracted with three private insurance plans — Aetna Better Health, AmeriChoice by United HealthCare and Community Health Network — to manage networks of doctors and hospitals for the Charter Oak plan.
Charter Oak, as any government-subsidized program such as Medicaid and Medicare, typically pays less to hospitals than commercial insurers. The most-favored-nation clause would require a hospital to offer Anthem rates as low as those offered to Charter Oak. Hospitals can’t afford to lose revenue from treating customers who have Anthem, which insures 1.5 million in Connecticut, by dropping the insurer to accept Charter Oak patients.
As of last month, hospitals that don’t participate in the Charter Oak plan included Bristol, Danbury, Day Kimball in Putnam, Griffin in Derby, Johnson Memorial in Stafford Springs, Lawrence & Memorial in New London, Middlesex, Midstate in Meriden, Milford, Norwalk, St. Francis, St. Vincent’s, Stamford, Waterbury and Windham.
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