Insurance-industry-proposed mergers: Colorado regulators okay Aetna-Humana merger without notice

Friday, January 01, 2016 12:16 PM
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CMS vigorously objects; considering all options

by Alfred Gilchrist, CMS CEO

The Colorado Division of Insurance (DOI) has green-lighted Aetna’s acquisition of Humana despite a steady stream of Colorado Medical Society requests for a hearing or other opportunities to provide analyses, commentary and raise anticompetitive concerns. 

“We are very disappointed that the Division of Insurance appears to have done little more than a paper review of Aetna’s request, summarily rejecting our repeated requests, and has forfeited the state’s considerable authority and leverage over these two health plan giants,” said CMS President Mike Volz, MD. “Given the national controversy the mergers have provoked and the potential risks they pose to physicians and their patients, we expected a more methodical approach that at a minimum allowed for public hearings in those communities where the two combined companies could dominate a market.” 

The state insurance commissioner has wide discretion to approve or reject an application, notwithstanding the importance of federal antitrust authorities, explained David Balto, a Washington, D.C.-based attorney and former policy director of the Federal Trade Commission, during a presentation to the National Association of Insurance Commissioners (NAIC) late last year. He noted that along with the Department of Justice Antitrust Division and the states’ attorneys general, the states’ insurance commissioners serve a critical role in investigating and reviewing mergers between health insurers.

Balto stressed that unlike the other regulators, the insurance commissioners’ powers allow them to analyze the health insurance market within their state fully, both broadening the scope of the investigation into potential competition issues and considering additional factors outside of typical antitrust jurisprudence. Most important he argued that a commissioner’s review is independent of those done by other regulators and therefore not beholden to the competitive analysis done by others. He further noted that insurance commissioners derive their health insurance merger review powers from state statutes modeled on the NAIC Model Insurance Holding Company System Regulatory Act; and while there are variations among states, all states have adopted some version of the model act. 

Upon hearing about the proposed Aetna-Humana and Anthem-CIGNA mergers, CMS has taken a number of steps on behalf of physicians including:

  • Joining the American Medical Association and the American Hospital Association in urging the U.S. Department of Justice to investigate the proposed mergers thoroughly.
  • Notifying the Colorado Congressional delegation and state legislative branch leadership about CMS concerns and the CMS recommendation for the Colorado Attorney General and the DOI to investigate the merger.
  • Sharing these concerns in writing and in person on several occasions with the DOI commissioner and her staff.
  • Highlighting for the DOI, prior to their Aetna-Humana decision, the AMA’s 2015 report on competition in U.S. health insurance markets that concluded that an Aetna-Humana merger would be presumed likely to enhance market power in certain Colorado metropolitan statistical areas (MSAs) including Boulder, Colorado Springs, Greeley, Pueblo, Grand Junction and Fort Collins-Loveland. (The agency has told CMS that they did not consider MSA-level data in making their decision about the merger.)
  • Repeatedly asking to be involved and to be notified of any of the company’s filings given that they trigger timelines for the DOI review and investigation should the commissioner decide to use her statutory authority.

CMS was satisfied from these meetings with the DOI that the society would be timely notified and given an opportunity to provide information at a minimum, even though a full investigation of the merger was requested. 

As if to emphasize the irrelevance of public comment, CMS learned that DOI had permitted the Aetna-Humana merger to proceed through an article in a Florida newspaper. DOI classified the merger as involving “non-domestic” insurers and therefore concluded (apparently with input from Aetna alone) not to conduct an independent investigation, public hearings or to otherwise request stakeholder input. CMS attorneys strongly dispute this merger classification as a legal technicality.

CMS subsequently filed a Colorado Open Records Act request to obtain paperwork filed by Aetna with DOI to determine the basis of the agency’s decision. The agency will ask a Colorado state district court to determine whether the information should be produced. The AMA Litigation Center was notified of the situation in late December and subsequently voted to financially support CMS legal advocacy at the district court now that the attorney general’s office filed a petition for review. CMS attorneys interpret the statute as permitting release of Aetna’s market analysis. Aetna has taken a vigorous position opposing CMS’ request, stating that the information is proprietary. CMS attorneys contend that market analysis information is based on publicly available data and argue that such data used by insurance companies to justify a merger should be transparent, open to public debate and subject to rebuttal.

CMS is also considering other actions to overturn the DOI decision permitting the merger to proceed so that a transparent and participatory process review process can be conducted.

DOI creates public notification system for merger info in response to CMS action

The Division of Insurance established an electronic notification system through which the public can sign up to receive information about filings, notices, documents, etc. associated with acquisitions or mergers of insurance companies in Colorado. To sign up to receive these notifications, go to and click on the blue “Get DOI Alerts” button. On that page, find the “Division of Insurance – Merger Information Notification,” enter your email address and click “submit.” This will register you to automatically receive a notification when items are posted to the division’s website pertaining to insurance company mergers or acquisitions.

This announcement was made on Jan. 4, in response to a meeting between CMS and DOI leaders on Dec. 31. An email from DOI thanked CMS for initiating the meeting and stated DOI’s commitment to using the notification mechanism, as well as their website, to post the public information about mergers and other acquisitions, including the fact and date of the filing of documents and information.

Update on the proposed Anthem-CIGNA merger

Anthem-CIGNA made their initial filing, Notice of Acquisition of Control or Merger under CRS 10-3-803(1)(a), on Nov. 24, 2015. The Division of Insurance made this document available on their website on Dec. 2, 2015. The application is not complete. DOI has stated its intention to notify the public through the new electronic notification system when the insurance commissioner determines it is complete. DOI will also conduct an independent investigation of the Anthem-CIGNA merger application and hold a public hearing. The commissioner will make the investigation report public as well as all data and reports used in the investigation, with the exception of what she deems is proprietary information, again using the electronic notification system to notify the public of its availability. The precedent of the discoverability of Form E as determined in the Aetna-Humana merger will apply in the Anthem-CIGNA merger. Finally, DOI will provide notice regarding the public’s ability to participate in the review of the application.

CMS is actively engaged in advocacy and research efforts on the Anthem-CIGNA merger, similar to the Aetna-Humana merger. Watch for future communications and outreach on this merger and be sure to complete the online CMS membership survey on health plan mergers that you should have received via email.

Posted in: Initiatives | Advocacy | AMA


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