Proposed BCBS settlement reveals hospitals that raised rates

Blue Cross Blue Shield of Michigan in Grand Rapids
The exterior of the Blue Cross Blue Shield of Michigan building in Grand Rapids.

GRAND RAPIDS, Mich. (WOOD) — Court documents reveal which West Michigan hospitals raised their rates as part of a now defunct contract with Blue Cross Blue Shield of Michigan that sparked a class-action lawsuit.

Under a typical contract, insurance companies negotiate the lowest reimbursement rate to hospitals for a patient’s bill.

However, Blue Cross Blue Shield of Michigan offered to pay hospitals more money towards bills if the hospital agreed to charge all other insurance companies as much or more than Blue Cross Blue Shield of Michigan.

“This type of most favored pricing guarantee is much more valuable than the type of reduction we can realistically expect to achieve through negotiations,” Blue Cross Blue Shield of Michigan stated in one transcript obtained by Target 8.

“So the hospitals get paid more money, Blue Cross gets a better deal, and everyone else has to pay even more money. And so Blue Cross makes more money and healthcare expenses go up,” Varnum Law Attorney Perrin Rynders explained to Target 8.

Attorneys for those suing Blue Cross Blue Shield of Michigan say there were about 70 Michigan hospitals with these “Most Favored Nation” agreements, but an expert could only find higher rates at 13 of them during the contract period of 2008 and 2012.

A $30 million settlement agreement attorneys resubmitted this week identifies those 13 hospitals, which included the following West Michigan locations:

  • Bronson Lakeview (Paw Paw)
  • Three Rivers Health
  • Allegan General Hospital
  • Sparrow Ionia Hospital
  • Mercy Health Lakeshore

Other West Michigan hospitals also had controversial MFN agreements, but the expert was unable to prove those hospitals used the contracts to increase costs for competitors. Those other hospitals include:

  • Borgess Lee Memorial Hospital (Dowagiac)
  • Borgess Medical Center (Kalamazoo)
  • Borgess Pipp Hospital (Plainwell)
  • Bronson Vicksburg Hospital
  • Community Health Center of Branch County
  • Memorial Medical Center of West Michigan (Ludington)
  • Metro Health Hospital
  • Pennock Hospital (Hastings)
  • Sheridan Community Hospital
  • South Haven Community Hospital

Blue Cross Blue Shield of Michigan denies its contracts caused prices to increase.

Lawyers for the plaintiffs will deduct their fees and costs from the nearly $30 million settlement. Approximately 78 percent of the remaining settlement money will go to claims by patients, insurance companies and businesses who paid more at the 13 hospitals where costs allegedly increased.

Claims from all other hospitals that did not have this specific Blue Cross agreement may also be paid out if certain conditions are met. If there is money left over from this last group it will be donated to charity.