What is a “most favored nation” clause in a contract? What does the settlement prohibit here?
United and Sierra can not enter into a new or revised contract they have with a Nevada health care provider which contains a “most favored nation” clause. In this context, a “most favored nation” clause would require the provider to charge United or Sierra the same or a lower rate that the provider charges to one of United’s or Sierra’s competitors. United’s or Sierra’s competitors include another health insurer or a large self-insured employer. The prohibition was for two years ending October 7, 2010. This prohibition does not mean that no one can enter into a “most favored nation clause” with a Nevada health care provider, as only United and Sierra are prohibited from doing so. In fact, any settlement term applies to United and Sierra only. A “most favored nation” clause can be written in different ways. Examples of a prohibited “most favored nation” clause might be written as follows: • “Provider agrees that the rates reflected in this agreement’s Rate Schedule are equal to or lower
