AG James joins US Department of Justice for Sue UnitedHealth Group
A survey found that the merger would increase healthcare costs
NEW YORK – New York Attorney General Letitia James today filed an antitrust lawsuit with the U.S. Department of Justice and the State of Minnesota to block the proposed acquisition of Change Healthcare (Change) by UnitedHealth Group (United).
The lawsuit alleges the acquisition would give United, one of the nation’s largest health insurers, an unprecedented competitive advantage – allowing it to use Change’s massive claims data repository to drive up the costs of its competitors, hindering their ability to compete with United and denying their access to innovations. The acquisition would reduce competition among health insurers, likely leading to higher health care costs and lower quality of services for New Yorkers.
“It is concerning that in the midst of a devastating pandemic, United is pursuing actions that would increase health care costs and reduce the quality of services for New Yorkers and patients nationwide,” said Attorney General James. “New Yorkers need affordable health care, not health insurance companies primarily concerned with market dominance. We are suing United to end its attempted acquisition of Change to ensure New Yorkers benefit from competitive healthcare markets. I will continue to fight for New Yorkers to have access to affordable, quality health care.
According to the lawsuit, filed in the U.S. District Court for the District of Columbia, United’s proposed acquisition of Change would allow United to use its competitively sensitive data to co-opt rival insurers’ innovations and outpace their competitors. competitive strategies, thereby reducing their incentives to pursue those innovations and strategies in the first place. It would also allow United to use its control over Exchange technologies to disadvantage other health insurers by increasing their costs, degrading the quality of their services, and denying or delaying their access to innovations and quality improvements. . Ultimately, this substantial lessening of competition would result in more expensive, lower quality, and less innovative commercial health insurance for employers, employees, and their families.
The complaint alleges that United’s acquisition of electronic data interchange (EDI) clearinghouse Change would leave New York employers with a difficult and unwelcome choice when choosing an insurer. Essentially, employers who choose a United competitor would get lower quality EDI clearinghouse services and employers who choose United would likely pay higher prices with lower quality than they would have in a competitive market.
Additionally, the complaint alleges that United’s acquisition of the ClaimsXten product from Change would essentially be a merger with a monopoly. ClaimsXten is the leading ‘first pass’ claims publishing provider in the country, with United’s CES in second place. The acquisition of Change would create a claims publishing giant with a market share of over 80% – an acquisition that is allegedly anti-competitive.
UnitedHealth Group is the fifth-largest company by revenue in the Fortune 500. It includes United Healthcare (UHC, the health insurance subsidiary) and Optum (the information and technology services subsidiary). UHC is New York’s largest commercial health insurer. Optum is divided into three business segments: OptumRx, OptumHealth and OptumInsight. OptumInsight provides healthcare data, analytics, research, consulting, technology and managed services solutions. OptumHealth is one of the largest provider group owners in the country, with 53,000 physicians nationwide. OptumHealth has several large provider groups in New York, including ProHealth and CareMount.
Change Healthcare is a leading independent health technology company. Change provides data-driven insights and analytics to providers and insurers. It also operates the largest EDI clearinghouse in the country. Clearinghouses are an essential part of the infrastructure that underpins every doctor-patient interaction, facilitating the transmission of claims to insurers and the approval or rejection of claims to providers. Change has built an extensive database of claims data from these transactions, dating back to 2012. Change also owns ClaimsXten, the nation’s leading claims editing software. Claims editing is another critical part of the healthcare infrastructure, saving the system money by ensuring accuracy and avoiding overpayments.
The litigation is being handled on behalf of New York by Assistant Attorneys General Olga Kogan and Benjamin Cole of the Antitrust Bureau, under the supervision of Deputy Bureau Chief Amy E. McFarlane and Bureau Chief Elinor R. Hoffmann. The Antitrust Bureau is a unit of the Economic Justice Division, overseen by Chief Deputy Attorney General Christopher D’Angelo and Senior Deputy Attorney General Jennifer Levy.