United spins off members to Cigna

UnitedHealth Group's move in Arizona is being done to allow its merger with PacifiCare Health Systems.

By Jonathan G. Bethely — Posted July 10, 2006

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About 54,000 people with PacifiCare Health Services and UnitedHealthcare insurance plans are being placed under the management of Cigna as a result of the U.S. Justice Dept.'s divesture order handed down when UnitedHealth Group acquired PacifiCare.

The Dept. of Justice filed suit following the $9 billion acquisition last year, saying the deal would give United too dominant a market share in Tucson, Ariz., and Boulder, Colo., thus requiring United to spin off those operations. The lawsuit will be dropped as soon as those operations are disposed.

Financial terms of the deal were not released.

Cigna spokeswoman Gwyn Dilday said the transition from United and PacifiCare to Cigna will be seamless for patients and physicians, as the companies share 98% of the same physician network.

A spokeswoman for the Arizona Medical Assn. said physicians are unsure what the impact of the deal will be.

"There's not a lot of information at this point," said Andrea Smiley.

In the transition, Cigna will act as a third-party administrator of the contracts of United and PacifiCare members in Tucson until the contracts are up for renewal. Once those contracts expire, Cigna and just about any other plan will be allowed to bid for the contracts. Under rules of the divestiture, PacifiCare and United won't be allowed to bid on any contract until one year after its expiration as one of the company's agreements.

United's acquisition of PacifiCare was generally opposed by physicians. In Colorado, the Colorado Medical Society and the AMA spoke out against it during public meetings with the Colorado Insurance Commission. No word has yet been given on how and when United and PacifiCare will spin off its Boulder operations.

When the deal was finally approved in January, federal and various state regulators required the company to sell certain operations, contribute money to state-level health initiatives, and meet requirements for addressing physician contracting concerns. It was the first time the Justice Dept. placed conditions on a health plan merger since requiring Aetna to sell certain Texas operations upon its 1999 purchase of Prudential's health insurance business.

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