As an antitrust investigation of Anthem continues, Attorney General Richard Blumenthal said Monday that he is asking the company to abandon its use of a contractual clause known as “Most Favored Nation.”
The clause allows Anthem to pay the lowest reimbursement rate offered by any of the other insurance companies or HMO’s doing business with the state’s 32 hospitals. That means only 17 of the 32 state hospitals in the state have agreed to accept Republican Gov. M. Jodi Rell’s Charter Oak Health Plan for uninsured adults.
He said the lower reimbursement rates paid by the Charter Oak program “restrain and straightjacket” hospitals from enrolling in the public program. The clause ultimately threatens to cripple Charter Oak and prevents the 13,000 enrolled in the program from accessing quality care.
“There are hospitals that would participate in Charter Oak but for these restrictive clauses,” Blumenthal said at a press conference Monday. He said the clause would be so financially crippling to these hospitals that they can’t participate right now because of the clause.
“Our investigation is continuing, but we’re taking this step now because of the extraordinary impact on patients and consumers by limiting their choices,” Blumenthal said.
Prior to holding the press conference Monday Blumenthal sent a letter to Anthem President David Fusco asking him to exclude Charter Oak from the “Most Favored Nation” clause.
Blumenthal opined that if Anthem, the state’s largest insurance company, abandoned this clause that it would have little effect on its profits, but “significant positive impact on access to affordable health care in our state.”
An Anthem spokeswoman said Monday that “We are currently reviewing the press release and letter by the Attorney General Blumenthal from earlier today.”
The Charter Oak program itself has not been without controversy and its low reimbursement rates were a concern of legislators from the very beginning of the program in 2008.
Under Charter Oak, hospitals that agreed to participate were required to accept discounted rates for services and treatment of those enrolled in the program. The rates were much lower than rates generally accepted from commercial insurance companies.
There are no hospitals in Windham or Middlesex counties participating in the Charter Oak program, which means those enrolled on the plan that live in those areas have to travel much further for hospital care.
John Dempsey Hospital in Farmington, which is operated by the state, said back in 2008 that by agreeing to accept the Charter Oak program it would be contributing to the state budget deficit.
The decision to participate in the Charter Oak program wasn’t an easy one for the hospital.
Given the current deficit, “the decision to participate in the Charter Oak Health Plan was very stressful for us,” James Walter said back in 2008. However, the decision to participate “was quite simple,” he said. “We’re in the business of health care and as health care providers we see the need to improve access to care.”