NC Capitol

NC Capitol

House OKs bill limiting Blue Cross contracts with hospitals

Posted March 28, 2013 1:27 p.m. EDT

— The state House overwhelmingly approved legislation Thursday that would prevent Blue Cross Blue Shield of North Carolina from using contractual provisions to drive up competitors' rates.

House Bill 247 now heads to the Senate after a 102-10 vote.

The bill prohibits insurance companies from putting so-called "most favored nation" clauses in contracts that negotiate with hospitals and other health care providers. The clauses typically require that providers give a dominant insurance company, such as Blue Cross, rates as good as or better than rates negotiated by competing insurance companies. The provisions also often require hospitals to show contracts with other companies to Blue Cross.

A similar bill was passed in the Senate during the last session. The measure stalled in the House when Blue Cross officials pledged they had abandoned the practice.

Rep. Justin Burr, R-Stanly, said that he brought the bill back due to concerns he heard from hospitals and others in the health care business that Blue Cross hadn't followed through on that promise.

"We need to return North Carolina's health insurance market to a competitive state," Burr said, noting that only seven insurers write health policies in the state now, down from 30 in the late 1990s.

"The MFN clause is not used to keep down a particular insurance company's costs but really to drive up the costs of their competitors," he said.

Rep. Craig Horn, R-Union, expressed concern that the legislation could entangle North Carolina in litigation in other states over most favored nation clauses, but Burr said the bill had been amended to ensure that wouldn't happen.

Blue Cross, which has 3.7 million members and manages the health plan for state employees, is by far the largest insurer in North Carolina.

A Blue Cross lobbyist argued Wednesday in the House Judiciary Committee that prohibiting the sharing of information could interfere with providing payments when someone is insured by more than one company.

In other business, the House also gave final approval to bills that would eliminate public matching funds in political campaigns and would prohibit people who take others to hospital emergency rooms for treatment from being prosecuted if they are intoxicated or possess a small amount of drugs.