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Governor Snyder Proposes Total Overhaul to Blue Cross Blue Shield of Michigan

blue cross blue shieldGovernor Rick Snyder in a press conference this morning proposed a total overhaul of Blue Cross Blue Shield of Michigan ("BCBSM").  Governor Snyder's proposal would:

  1. covert BCBSM to a non-profit mutual company;
  2. end its tax exemption; and
  3. remove Attorney General review of requested rates. 

In essence, Michigan would treat BCBSM as it would any other health insurer as BCBSM would be regulated by the Insurance Code.  While this proposal may seem drastic, it is not surprising given recent regulation orders by the Office of Financial and Insurance Regulation ("OFIR") curtailing BCBSM's use of most favored nation clauses ("MFN Clauses") and rejecting the low rates that it charges to hospitals and other providers.

Specifically, in mid-July, OFIR issued an order prohibiting the use of most favored nation ("MFN") clauses in insurer provider contracts, including those used by BCBSM as of February 1, 2013, unless the MFN clause had been filed with and previously approved by the Insurance Commissioner.  Any attempt to enforce an MFN without the Commissioner's prior approval was prohibited and would result in appropriate administrative action.  Also in July of this year, OFIR rejected BCBSM's proposed hospital provider class plan (and the rates it pays to hospitals) because BCBSM failed to recognize government shortfalls related to Medicare and Medicaid in its reimbursement methodology.  This in effect resulted in BCBSM underpaying hospital providers and allowing other health care insurers or purchasers to bear portions of BCBSM's fair share of reasonable costs to hospitals.  These regulatory handcuffs would be augmented by an entirely new legislative scheme that would treat BCBSM as any other insurer in the State of Michigan.

Governor Snyder hopes to have this legislation passed before year end.  However, the Attorney General oversight of the Governor's proposal would end after a four year transition.

Categories: Hospitals, Insurance, Physicians, Regulatory

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Gary has nearly 40 years of experience and has earned a reputation for handling sophisticated transactions for hospitals, managed care organizations, HMOs, health insurers, physician groups and other provider entities and for helping his clients stay on top of complex regulatory issues, such as Anti-Kickback Statute, Stark II, Medicare, Medicaid, and BCBSM reimbursement appeals. 

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Best Lawyers® 2020

Congratulations to the attorneys of the Health Care practice group at Foster Swift Collins & Smith, PC for their inclusion in the Best Lawyers in America 2020 edition. Firm-wide, 42 lawyers were listed. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation and as lawyers are not required or allowed to pay a fee to be listed; inclusion in Best Lawyers is considered a singular honor. Health Care practice group members listed in Best Lawyers are as follows:

To see the full list of Foster Swift attorneys listed in Best Lawyers 2020, click here.