Colorado Regulators Approve PacifiCare Health Systems Acquisition by UnitedHealth Group
Colorado insurance regulators on Wednesday approved the proposed acquisition of PacifiCare Health Systems by UnitedHealth Group, with the addition of conditions "to protect consumers and bolster rural care," the Denver Post reports (Austin, Denver Post, 12/22).
Under an agreement announced on July 6, UnitedHealth would acquire PacifiCare for $9.2 billion in cash, stock and assumed debt. The agreement also would include $230 million in accelerated stock options and payments to PacifiCare's executives and an additional $85 million in signing bonuses to executives who remain employed with the company after the acquisition.
PacifiCare shareholders approved the agreement in November. Department of Justice officials on Tuesday said that the department would approve the agreement, provided that the companies divest some PacifiCare businesses and revise a California network access agreement. On Monday, California insurance regulators approved the agreement. State insurance regulators in Arizona, Nevada, Oklahoma, Wisconsin and Oregon also have approved the agreement, which still requires approval by regulators in Texas and Washington state (California Healthline, 12/21).
As a condition of the Colorado approval, UnitedHealth cannot raise premiums to cover the cost of the acquisition. The approval also requires performance standards, such as accelerated resolution of complaints and claims processing.
In addition, UnitedHealth must contribute $7.5 million to improve rural health care, in part to cover the cost of a mobile clinic to provide basic medical services to rural populations. Colorado Insurance Commissioner David Rivera said that the approval also requires the formation of a physician advisory council monitored by the state Division of Insurance to address concerns related to UnitedHealth.
Rivera said, "The whole issue of rural health care access is one we've been hearing about for years. I appreciate United stepping up to the plate to help address this issue," adding that the combined company will control 27% of the state health insurance market and "has the potential to benefit Colorado's consumers through administrative streamlining."
The Colorado Medical Society said in a statement, "We have only just received the 17-page final order and are analyzing against current law whether the conditions imposed on the merger will adequately protect patients and physicians" (Denver Post, 12/22).