The North Carolina General Assembly sent to Governor Pat McCrory May 1 a bill (HB 247/S 359) that would prohibit so-called “most favored nation” clauses in healthcare contracts.
Such clauses guarantee a customer that it will receive prices that are at least as favorable as those provided to other buyers of the same seller for the same products or services, and have come under fire from the Federal Trade Commission (FTC) as being anticompetitive.
“Although at times employed for benign purposes, MFNs can under certain circumstances present competitive concerns,” because they may “when used by a dominant buyer of intermediate goods, raise other buyers’ costs or foreclose would-be competitors from accessing the market,” FTC said last year. They also can be used to “facilitate collusion and stabilize coordinated pricing among sellers,” the agency noted.
The legislation specifies that no contract with a healthcare provider may “[p]rohibit, or grant a health insurance carrier an option to prohibit, the provider from contracting with another health insurance carrier to provide health care services at a rate that is equal to or lower than the payment specified in the contract.”
The bill also prohibits a health insurer from requiring a provider to disclose, directly or indirectly, the provider's contractual rates with another health insurance carrier.