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DOJ files lawsuit



July 21, 2016
Area(s) of Interest: Commercial Payors Payor Issues and Reimbursement Practice Management 

The U.S. Department of Justice (DOJ) today filed two lawsuits to block health insurance mega-mergers that would compromise patients’ access to care, and negatively impact the quality and affordability of health care across the country.


“If allowed to proceed, these mergers would fundamentally reshape the health insurance industry,” U.S. Attorney General Loretta Lynch said at a press conference. “They would leave much of the multi-trillion dollar health insurance industry in the hands of three mammoth insurance companies, restricting competition in key markets.”


The California Medical Association (CMA) has long-held concerns over reduced competition and increased health plan market power.


“Without competition, the health insurance companies will run unchecked. For the sake of those who desperately need medical care, we must not let this happen," said CMA President Steven E. Larson, M.D., MPH.


For the past six months, there had been speculation over whether federal antitrust officials would intervene to stop a $54 billion merger between Anthem and Cigna and a $37 billion deal between Aetna and Humana. The companies argued the mergers would benefit consumers and shareholders, but many legislators, state regulators and medical associations, including CMA and the American Medical Association, remained concerned that the deals would reduce competition and drive up costs for patients.


Earlier this year, CMA conducted a survey to determine California physicians’ perspective on the Anthem-Cigna and Aetna-Humana mergers. The results showed that 85 percent of California’s physicians opposed the mergers.


The CMA survey – which gathered data from 989 practices in 47 California counties, representing physicians from a range of specialties and practice sizes – sought not only to gauge California physicians’ temperature on the proposed mergers, but also to gather insight into the tactics undertaken by insurance companies in their negotiations with physicians.


The vast majority of surveyed physicians were concerned that market consolidation would narrow physician networks, making it more difficult for patients to find care from in-network physicians; reduce physicians’ ability to advocate on behalf of their patients; and reduce the quantity or quality of services that physicians can offer their patients.


Physicians strongly believe that health insurer consolidation compromises the ability of physicians to advocate for their patients. Physicians’ experience with past mergers demonstrates that increased market power allows insurers to exert control over clinical decisions, which has undermined the patient-physician relationship and eliminates crucial patient care safeguards. Competition among health insurers, on the other hand, can lower premiums, enhance customer service and spur innovative ways to improve quality while lowering costs.

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