Justice Department Seeks More Information On Centene-WellCare Deal

By | May 24, 2019

 the U.S. Justice Department to take a close look at Centene’s acquisition of WellCare, saying it “threatens to reduce competition in delivery of Medicaid managed care and Medicare Advantage services to tens of millions of consumers across broad swaths of the country.”

The American Hospital Association, which represents some 5,000 hospitals and health systems, has urged the government to closely scrutinize health insurance mergers in the past with mixed success. Some health plan deals like Aetna’s attempt to buy Humana and Anthem’s effort to buy Cigna a few years ago were aborted in the face of antitrust concerns by the U.S. Justice Department.

Centene has said its proposed acquisition of WellCare will give the combined company 22 million members in all 50 states and combined revenue approaching $ 100 billion.

Centene executives have been confident the merger will win approval but haven’t ruled out the potential for divesting certain operations in order to win regulatory approval.

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Centene and WellCare Health Plans Thursday confirmed that each company has received a request for additional information from the U.S. Department of Justice about the merger of the two health insurers.

In a regulatory filing with the Securities & Exchange Commission, Centene and WellCare confirmed “each received a Request for Additional Information and Documentary Material from the Antitrust Division in connection with the Antitrust Division’s review of the transactions contemplated by the merger agreement.” The DOJ request for information was received on Wednesday, May 22.

It’s unclear what additional information the Justice Department wants from either company in their effort to create a national health insurer, but such requests are common and don’t always mean an effort to stop the merger is coming.

Centene announced plans on March 27 to buy WellCare for more than $ 15 billion in a deal that would expand the business of administering Medicaid benefits for poor Americans as well as private Medicare Advantage coverage.

Centene’s WellCare transaction would put the combined company in all 50 states, creating a larger player in the business of administering Medicare Advantage. Centene already sells Medicaid benefits in contracts with many states and is the largest provider of individual coverage under the Affordable Care Act, offering subsidized Obamacare in 20 states.

Medical care providers are worried about the potential clout of the combined health insurers. The powerful U.S. hospital lobby has already urged the U.S. Justice Department to take a close look at Centene’s acquisition of WellCare, saying it “threatens to reduce competition in delivery of Medicaid managed care and Medicare Advantage services to tens of millions of consumers across broad swaths of the country.”

The American Hospital Association, which represents some 5,000 hospitals and health systems, has urged the government to closely scrutinize health insurance mergers in the past with mixed success. Some health plan deals like Aetna’s attempt to buy Humana and Anthem’s effort to buy Cigna a few years ago were aborted in the face of antitrust concerns by the U.S. Justice Department.

Centene has said its proposed acquisition of WellCare will give the combined company 22 million members in all 50 states and combined revenue approaching $ 100 billion.

Centene executives have been confident the merger will win approval but haven’t ruled out the potential for divesting certain operations in order to win regulatory approval.

Forbes – Healthcare