Colorado’s top insurance regulator has approved the proposed $9.2 billion takeover of PacifiCare by UnitedHealth after creating safeguards to ease physicians’ fears and getting a pledge from the company that it will not pass merger costs on to consumers.
Colorado Insurance Commissioner David Rivera approved the merger late Tuesday. Colorado was the last of 10 states where the companies operate to do so, and the companies said Wednesday that the union was complete.
“We’re obviously comfortable with (the conditions) and happy to have the commissioner’s support,” UnitedHealth spokesman Mark Lindsay said.
Under the agreement, UnitedHealth must provide better training to workers who take service calls from physicians, speed up work to resolve claims and complaints and comply with a 12 month limit on recovering overpayments.
In addition, the state Division of Insurance will require the creation of a Colorado Physician Advisory Council to address providers’ concerns regarding the merged company. An ombudsman will work with the Colorado Medical Society.
“It’s the first time I’m aware of us doing anything like this. Of course it’s a pretty unique merger,” Rivera said.
During a public hearing in November, the medical society and other physicians voiced concerns that the merger could threaten doctors’ ability to control patient care and could cut their payments. A call to the society Wednesday was not immediately returned.
“Arguably, Colorado has addressed the physicians concerns the most out of the states,” Rivera said.
UnitedHealth must complete quarterly progress reports for the state. If the conditions aren’t met, the state could take actions ranging from fines to court orders.
Rivera also announced Wednesday that UnitedHealth would contribute $7.5 million to fund a mobile clinic, which would provide immunizations, flu shots and other medical services to rural and underserved communities in Colorado. The contribution also would help pay for Gov. Bill Owens’ Rural Health Care Initiative.
Rivera said the takeover could help Coloradans by streamlining administration and improving access to doctors and medical technology nationwide.
UnitedHealth Group Inc.’s takeover of PacifiCare Health Systems Inc. is the second-biggest merger ever in the hospital managed-care industry. It would create one of the nation’s largest private health plan providers, with about 26 million subscribers.
UnitedHealth has about 574,000 health plan members in Colorado, while PacifiCare has about 278,000. The merger creates the largest insurance carrier in the state.
To satisfy antitrust concerns from the Justice Department, UnitedHealth agreed earlier this week to divest part of PacifiCare’s commercial health insurance business in Boulder — a contract with the University of Colorado that covers about 6,000 members.
The Justice Department was concerned that after the merger UnitedHealth, which would account for a large share of payments in Boulder, could use its increased bargaining power to lower physician payments, thus reducing the quality of care in the area, according to court documents.
Lindsey said customers under that contract in Boulder probably would not feel any changes while the company complies with the department’s orders.
“There’s going to be continuity of service,” Lindsey said. “I
don’t want people to think that tomorrow they are going to be moved
to someone else without their participation. That’s not going to
happen.”
Topics Mergers & Acquisitions Colorado
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