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WellPoint may be anti-competitive, Connecticut AG says

March 8, 2010

WellPoint Inc.’s Anthem Blue Cross & Blue Shield of Connecticut may constrain competition through contracts that require that the insurer receives hospital discounts at least as favorable as any provided to a competitor, according to state Attorney General Richard Blumenthal.

Blumenthal said in a statement Monday that he sent a letter to U.S. Secretary of Health and Human Services Kathleen Sebelius that his ongoing investigation into Anthem’s use of “Most Favored Nation” clauses in its contracts was a potentially anticompetitive practice that may raise rates.

Even though it has these favorable reimbursement deals, Anthem received approval for premium increases of between 13 percent and 20 percent less than a year ago on individual Connecticut health insurance policies, Blumenthal said.

“As a result of Anthem’s practices, competitors are forced to pay more, hospitals are forced to accept less from Anthem—and consumers are the ones paying,” Blumenthal said in the statement. “Our investigation remains ongoing, but federal officials deserve immediate warning about these practices—potentially having national implications and warranting federal investigation.”

Cheryl Leamon, a spokeswoman for Indianapolis-based WellPoint, the largest insurance provider by membership, did not immediately return a call for comment.

Most-favored nation clauses were banned in Indiana by the General Assembly in 2007.

Wellpoint shares were down 42 cents, or 0.7 percent, to $61.83 each in mid-afternoon trading..

President Barack Obama today pressed his case for an overhaul of the U.S. health-care system, saying insurers keep raising rates because of a lack of competition. Sebelius also sent letters to five health insurance companies, including WellPoint, calling on their chief executives to publicly justify proposed health insurance premium increases, according to a statement from the Department of Health and Human Services.

In January, Blumenthal announced that Anthem had agreed to waive the clauses in contracts with hospitals that threatened to deter them from participating in the Connecticut’s Charter Oak Health Plan for the uninsured.

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