Eight Philadelphia nonprofit health systems — including the University of Pennsylvania Health System — filed an antitrust lawsuit against Blue Cross Blue Shield Association at the beginning of the month.
The March lawsuit — which was filed in the District Court for the Eastern District of Pennsylvania — claimed that Blue Cross Blue Shield and affiliated insurance companies violated antitrust law, forcing hospitals and doctors to accept lower rates. Health systems across Pennsylvania alleged in the suit that insurers’ drove down reimbursements and increased the cost of insurance.
The plaintiffs argued that Blue Cross has historically divided up markets in a way that limited competition in Southeastern Pennsylvania, giving Independence Blue Cross — a leading health insurance company in the region — more power. Because of this, the suit claimed that IBX has been able to use its size to push for lower payments to healthcare providers.
Similar lawsuits have been filed across the country by health systems nationwide, with hospitals claiming that they’ve been underpaid by billions of dollars since 2008. The lawsuit UPHS has entered claimed that Blue Cross Blue Shield companies being allowed to work together gives them too much power, which could lead to price-fixing.
Lawsuits filed in California, Illinois, and Pennsylvania were filed in response to medical providers declining to participate in a $2.8 billion class action settlement in federal court in Alabama. Instead, UPHS and the other plaintiffs chose to pursue greater compensation than what the settlement would have provided.
Through a national agreement known as the Blue Card program, all Blue Cross Blue Shield companies across the country pay Philadelphia doctors and hospitals the same rates that IBX has negotiated for its local members.
For example, if a Philadelphia resident works for a company in Texas, their insurance might be through Blue Cross Blue Shield of Texas. But, under the Blue Card program, this Texas-based insurer would pay Philadelphia hospitals the same price that IBX has agreed to locally. This policy creates uniform pricing across regions, even if those prices were negotiated in a specific area.
Healthcare providers often feel forced to accept these prices, because if they don’t, they risk losing patients who are covered by the insurance, which could hurt their ability to stay in business. Several major health systems in the Greater Philadelphia area, including Main Line Health and Tower Health, are part of the lawsuit against this practice.
Blue Cross Blue Shield has been a key player in health insurance for over 80 years. The two companies merged in 1982 and now own 15 of the 25 largest health insurers in the U.S.. Originally, Blue Cross covered hospital care, while Blue Shield focused on doctor visits.
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