Michigan introduced a bill titled the Michigan Health Care Transparency Act, which would create an APCD in the state. Michigan has also enacted a ban on MFN clauses in healthcare contracts between providers and health care corporations. The ban resulted from a dispute between the Department of Justice and Blue Cross Blue Shield of Michigan, which prior to the passage of the ACA was the responsible for insuring Michigan residents with pre-existing conditions. Michigan is also engaged with the federal Centers for Medicare and Medicaid Services to test innovative service delivery and payment reform models.
Michigan’s current regular legislative session runs from 1/10/2018 – 12/31/2018.
Recent Legislative Developments
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We compile state statutes relate to healthcare price and competition, including healthcare transparency, markets, and costs. For a complete listing of all health related statutes visit the State Health Practice Database for Research.
Transparency in Healthcare
- MI ST 333.17757 mandates that upon request of the consumer, a pharmacist must provide the price of a prescription drug and comparative current selling price of generic and brand name drugs dispended by that pharmacy. The pharmacy must also display a conspicuous notice that informs consumers that they are not under an obligation to buy from this pharmacy and may shop around based on price.
- MI ST 400.105f establishes a health care cost and quality advisory committee within the Department of Community Health, which issued a report with recommendations on the creation of a health care cost and quality database in 2014.
- MI ST 550.1901 to 1929 gives patients the right to an internal grievance and external review process at the time a health carrier sends written notice of an adverse determination.
- MI ST 550.1400/MI ST 500.3405a prohibits most-favored nations (MFN) clauses in a contract between a health insurance carrier and a health care provider. A most-favored nation clause is a type of contractual provision that requires that the provider give the health carrier a rate equal to or lower than the most favorable between the provider and any other health insurance carrier. A most-favored nation clause in a healthcare contract can prevent smaller insurance carriers with less market power from competing on price.
- MI ST 333.22209 et seq. prohibits health care providers from acquiring, replacing, or adding to their facilities and equipment, except in specified circumstances, without the prior approval of the Department of Community Health through the state’s Certificate of Need process. A Certificate of Need regime aims to reduce healthcare overheard by reducing unnecessary or duplicative services, but can be anticompetitive by increasing regulatory barriers for new entrants.
- MI ST 550.1504 directs that reimbursement arrangements between health care corporations and providers must maintain a rate of change in the total corporation payment per member to each provider class that is not higher than the compound rate of inflation and real economic growth.
- MI ST 550.51 through 63 enables an organization to enter into a prudent purchaser agreement with health care providers of a specific service “to control health care costs, assure appropriate utilization of health care services, and maintain quality of health care.” The organization must give all providers in the geographic area that perform the applicable service an opportunity to apply for membership. The organization must disclose to purchasers of coverage the financial arrangement between the organization and providers, such as whether payments are fee-for-service, capitated, or under other criteria like outcome quality or patient satisfaction. Agreements between health care providers and purchasers of health care services are not per se antitrust violations under the law.
- MI ST 550.1504 directs health care corporations to contract with providers to assure subscribers have reasonable access to health care services throughout the state of a reasonable cost and quality.
FY 2018 BUDGET
Michigan’s fiscal year begins on October 1st and ends on September 30th of the following calendar year. While there is no specific legal time requirement for passage of the budget bills, this task is accomplished prior to the beginning of the new fiscal year. Appropriations bills are usually considered and passed in April by the first house, in early June by the second house, and usually final action is completed in July. To view Michigan’s FY 2018 Budget, click here.
- On June 25, 2015, , the Antitrust Division of the Justice Department and the Michigan Attorney General’s Office filed a civil complaint against four Michigan hospitals, alleging the providers had agreed not to compete with one another in violation of Sherman Act §1 and Michigan state law. DOJ and the Michigan AGO filed a proposed settlement (in the form of a proposed final judgment) simultaneously with that complaint, which means that the parties had reached a settlement before either document was filed. Read our blog post on the case.
- Aetna’s antitrust suit against Blue Shield of Michigan that began with this 2011 complaint had been set to go to trail on May 26, 2015, but the court dismissed the suit in light of a settlement on May 22. The suit followed DOJ’s investigation into Blue Shield’s use of most-favored nations clauses in insurer-provider contracts, alleging that Blue Shield violated Sherman Act Section 1 and Michigan law by entering into exclusionary contracts with providers that drove up health care costs and inhibited competition.
- In October 2010, the U.S. Department of Justice and the Michigan Attorney General filed suit against Blue Cross Blue Shield of Michigan alleging the insurer violated antitrust laws by forcing hospitals to charge higher prices to rival insurers though the use of most-favored nations clauses in its contracts. In March 2013, DOJ and the Michigan AG dropped the suit when Michigan passed legislation banning MFNs in healthcare provider-insurer contracts. The DOJ case summary and documents are available here, and Michigan AG Office press release about filing the case here.