Colorado Medical Society

http://dev.cms.org/articles/mega-merger-slam-dunk-double-whammy/

Mega-merger slam-dunk double whammy

Thursday, February 09, 2017 04:16 AM

Federal trial court judges, in tough-worded opinions, have blocked in back-to-back sequence the mega-mergers proposed by Anthem-Cigna and Aetna-Humana. On Jan. 23, U.S. District Judge John Bates ruled against Aetna, and yesterday U.S. District Judge Amy Berman Jackson, citing similar anticompetitive concerns as Judge Bates, ruled against Anthem. Anthem has indicated they will appeal the ruling. Both plans, if these rulings are sustained, would be required to pay to their respective partners substantial sums, totaling between them over $2 billion.

Judge Jackson wrote: “Anthem is asking the court to go beyond what any court has done before: to bless this merger because customers may end up paying less to health care providers for the services that the providers deliver even though the same customers are also likely to end up paying more for what the defendants sell,” an important acknowledgment by the court of the monopsonistic consequences of mega-mergers.

Judge Bates additionally observed, after Aetna pulled their exchange business out of 11 of 17 states, including markets where they competed head-to-head with their betrothed, Humana, “Aetna tried to leverage its participation in the exchanges for favorable treatment from DOJ regarding the proposed merger.” The court’s ruling sets an important precedent by acknowledging, as the AMA, Colorado Medical Society and other state medical associations argued, that Medicare Advantage is a separate and distinct market that does not compete with traditional Medicare, a legal fiction Aetna was promoting in order to justify substantial consolidations of those programs with Medicare Advantage competitor, Humana.

AMA attorneys worked closely with CMS and the other high-concentration states, providing valuable physician survey data and experts to buttress the case for the Department of Justice. “This collaboration between the AMA and state medical societies made for a powerful case by the DOJ against some of the largest health plans in the country,” said CMS President Katie Lozano, MD.

She warned, “This was an important pushback against what will likely be a determined, sustained effort by the health plans.”