Photo: Courtesy of UnitedHealthcare
not sealed short In the Justice Department’s case against the merger of UnitedHealth Group and Change Healthcare, it strengthened arguments on both sides in the antitrust case.
Federal Judge Karl Nichols questioned the Department of Justice Thursday over its claim that UnitedHealth Group’s $13 billion acquisition of Change would suppress competition, according to the The Wall Street Journal.
Nichols is expected to make a decision early this month but before the end of October.
Basis Ministry of Justice case On competitively sensitive data, UnitedHealth will take advantage of its competitors with the acquisition that brings together UHG’s OptumInsight and Change, a healthcare technology company.
UnitedHealth argued that it would not have access to this information due to firewalls within the company. UnitedHealth said it has incentives to protect other payers’ data because Optum is a multi-payer company. While $92 billion of Optum’s revenue came from internal revenue in 2021, $63 billion was from external revenue.
These two organizations [at] strictly [an] David Wichman, former CEO of UnitedHealth Group, said of UnitedHealthcare and Optum during a trial last month, according to court documents. Optum works with UHC as a client, he said, “very similar to the way” Optum works with its other commercial clients.
Andrew Witty, the current CEO of UnitedHealth Group testified, “So again, first of all, it would be against the tone, the culture, the rules, everything we stand for in the organization… And so, I would never expect that to happen. And again Others, I would say if that happened, it would be very devastating, not just to our reputation but to our economic interest, because clients would not go back to an organization abusing their data in this way.”
But the Department of Justice argued that could happen. Once the merger, there will be nothing to stop the sharing of that data, which, according to the Justice Department’s argument, represents an illegal merger.
The Justice Department said in court documents that a lack of “firewall,” “policy,” “commitment,” or “culture” would prevent United from using data rights it might get from Change for its own benefit, to the detriment of competition.
The Justice Department said the merger would bring together UnitedHealth Group, one of the largest US companies and owner of the country’s largest health insurer, and Change Healthcare, the country’s largest electronic data exchange (EDI) center. Today, change is independent and has no economic incentives in favor of any insurance company.
“By acquiring Change, United will gain control of this critical infrastructure, giving it a long-term ownership advantage that will distort competition among health insurers for years to come,” the Department of Justice said.
“In an experiment in which many facts have been disputed, there should be no dispute that United is a profit maximizing organization that will use Change data assets as much as possible to maximize profits and try to justify the $13 billion Change purchase price,” the Department of State said. Justice in court documents. “This offer is sufficient to demonstrate that the merger is likely to harm competition.”
UnitedHealth has argued that “things may change” is not a discernible theory of antitrust damage.
UnitedHealth on September 7 requested that the judgment be entered against UHG and requested that the ownership of the Xten claims be withdrawn to TPG.
The Department of Justice concluded that because the effect of the transaction “may substantially reduce competition” and “tend to create a monopoly,” it requested a court order for an injunction against the proposed transaction.
Why is this important
In order to allay anti-competitive fears, UnitedHealth announced in April that it would do so sold Change in claims editor, ClaimsXten, for TPG Capital.
The Ministry of Justice said the divestment did not solve the problem of the illegality of the merger. As a buyer, TPG is unable to “replace[ing] The intensity of the competition “that exists today between United and the change, as stated in court documents.
Founded in 1996, Change merged with the Technology Solutions division of McKesson Corp. In 2017. Change currently sells four claims release solutions: ClaimCheck, ClaimsXten, ClaimsXten Select and ClaimsXten Cloud. All four products are included in the stripping package.
Once the merger is completed, Carolyn Wukic, Senior Vice President and General Manager Network and Financial Management, will continue to run ClaimsXten as the company’s CEO. Court records said more than 50% of Wukitch’s compensation will depend on ClaimsXten’s performance.
TPG was first approached about the acquisition of ClaimsXten in January 2022 and has spent more than $10 million on outside advisors (as reported in court documents as “on the upside”) to determine the market’s financial viability, growth, and whether the company can be decoupled. about its commercial activity. Parent without problems.
TPG will put $1.2 billion in equity into the acquisition, and the remaining $1 billion will be funded by debt.
Data and vision
“United wants to buy Change due to its position at the heart of the healthcare ecosystem,” the Justice Department said in court documents. “Data is the future of healthcare.”
“Following the merger, United will have the ability and strong incentive to use data about its competitors to obtain competitively sensitive insights that it can disseminate to its advantage and at the expense of its competitors,” the Department of Justice said.
United argued that the Department of Justice did not provide evidence of a single case in which OptumInsight — or OptumRx or OptumHealth — misused external payer data in favor of UHC.
The Department of Justice also failed to identify a single instance in which OptumInsight used its data to derive “specific competitor negotiated prices,” “designed a specific competitor product network,” or “specific competitor claims adjustments,” and provided that information to UHC based on claims data. Multiple drivers are already in their possession.
UnitedHealth said in court documents that Optum is already receiving extensive claims data from third-party payer clients. This includes potential claims data and retrospective claims data.
Other companies have firewalls. For example, CVS Health — which owns Aetna and CVS Caremark, PBM — has an enterprise firewall policy that prohibits sharing sensitive information from one line of business with another, UnitedHealth has argued.
“The data, however, was not what motivated the deal,” UnitedHealth said.
The UHG said the primary purpose of the change transaction is to reduce the amount of friction between payers and providers. The deal aims to address more than $100 billion in administrative waste in the US healthcare system due to inaccuracies in the claims payment system.
UnitedHealth said its Change suite of pre- and post-payment payment integrity offerings, and the broad portfolio of risk, quality and comprehensive collection solutions for revenue cycle technology and services complement Optum’s existing offerings and enable the transformation the company envisions.
UnitedHealth said that fee payers will see lower administrative costs from fewer false claims, greater payment accuracy and providers will perceive fewer denials.
The court documents said the combination of Change and Optum’s payment wallets would also allow for “the ability to enable the patient at the point of service to know what their correct commitment is in the doctor’s office, and to do so relatively quickly.” .
UHG said it sees the integration of Change and Optum capabilities helping develop its transparent network – the emerging “next generation platform” to align interests and accuracy between payers and clinicians.
On January 6, 2021, UHG announced its agreement to acquire Change for $25.75 per share.
American Hospital Association raised Antitrust concerns With the Department of Justice, which filed a lawsuit in February to block the deal.
UnitedHealthcare accounts for between 15.9% and 21.4% of the commercial health insurance market; Anthem represents between 10.8% and 13.8%; Aetna accounts for between 10.3% and 16.8%; Cigna accounts for between 8.4% and 10.2%; and Health Care Service Corp. accounts for between 7.7% and 10.5%, according to court documents.
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