Most-favored nation clauses could be illegal in North Carolina

A bill that would prevent insurers from using most-favored nation clauses is quickly making its way through the North Carolina state legislature.

The bill (H.B. 247), which passed the House Thursday and now moves on to the Senate, would prohibit insurers from including the clauses within their provider contracts that ensure certain rates.

State legislators are taking particular aim at Blue Cross Blue Shield of North Carolina, which controls more than 80 percent of the insurance market and has allegedly been using most-favored nation agreements for years.

Rep. Justin Burr, who sponsored the bill, said it's necessary to "return our state and our state's health insurance market to a competitive landscape so that everybody gets equal footing and opportunity to offer health insurance," according to the Associated Press.

The North Carolina Association of Health Plans supports the bill, claiming BCBSNC uses the most-favored nation clauses to even force providers to refund money if the insurer determines they offered more discounts to other insurers.

"It's an 800-pound gorilla versus a very small provider, and we all know when an 800-pound gorilla sits on you, you tend to do what the 800-pound gorilla wants," NCAHP President Ken Lewis said.

But BCBSNC Spokesperson Lew Borman told FierceHealthPayer that even though the insurer does not currently use most-favored nations clauses, "in this time of unprecedented change and uncertainty in the health insurance market, the General Assembly should refrain from piling on even more laws and regulations."

The insurer also said the bill could block its ability to successfully moderate rising healthcare prices, reported WRAL. "When has it ever made sense to tell (businesses) that if they know their consumers are paying more and their customers are paying more that I'm not allowed to go out and renegotiate a contract to try to remain competitive?" BCBSNC lobbyist Chris Evans asked. "It just absolutely makes no sense to us."

To learn more:
- here's the bill
- read the Associated Press article
- check out the WRAL article