Keeping an eye on United

Nevada's formation of a physician advisory council in the wake of a health plan merger gives doctors a chance to scrutinize UnitedHealth Group's conduct.

Posted April 7, 2008.

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UnitedHealth Group's market-grabbing takeover of a Nevada health plan may be a done deal, but state officials there at least are trying to make sure that freedom from accountability wasn't part of the bargain.

In doing so, the Nevadans did a more complete job than the Justice Dept., which placed a single condition on United's acquisition of Sierra Health Services. Of the federal action -- or lack of it -- the assessment of William G. Plested, MD, American Medical Association immediate past president, was blunt: It "will do nothing to block UnitedHealth Group from gaining a stranglehold on the Las Vegas commercial insurance market." The AMA is considering its legal options in fighting the United-Sierra approval.

But the Nevada attorney general's insistence that physicians get a voice at United guarantees that physicians won't have to suffer in silence if and when the company's stranglehold gets too tight.

The only requirement the Justice Dept. put on United in its $2.6 billion acquisition is that United sell 25,000 of its Medicare Advantage customers to Humana for $185 million. That still left United with a large share of the commercial insurance market in Nevada, including 95% of the Las Vegas HMO business.

But the state attorney general's office demanded more as the deal closed Feb. 25, only four days before the approval of Nevada's insurance department would have expired.

Among the many requirements, the office required United to refrain, for two years, from a pair of practices long harshly criticized by physicians as health plan abuses. One is all-products clauses, which require physicians to sign up for all United plans if they signed up for one. The other is most-favored-nation treatment, requiring physicians to give United the lowest reimbursement rate of any plan. The office required United to fund audits by the state's Division of Insurance.

It also required United to sell off the Nevada operations of FiServ, a national third-party administrator it recently acquired.

The physician oversight will come from a physician advisory council that United is required to establish and fund. The panel must include representatives from the Nevada State Medical Assn., the Clark County Medical Society, United and the attorney general's office itself. The AMA is not a part of the council, but it was part of the effort to get concessions from United, and it has stated it will continue to work with state officials.

That means if a problem with United arises, it won't get buried. Instead, physicians will have an opportunity to speak out about it -- not only to the company, but also to an authority that already has demonstrated its willingness to take action.

This kind of committee in the wake of a merger is unusual but not untested. Colorado's Division of Insurance set up a physician advisory council in 2005 after United got Justice Dept. approval to acquire PacifiCare. (The Justice Dept. rightly required United to divest in markets in Colorado and Arizona to limit its stranglehold in those areas.) Colorado served as a model for the idea of a Nevada council.

As it turned out, the physicians, United executives and insurance regulators on Colorado's councils haven't discussed only merger-related issues. For example, doctor complaints about United's physician ratings system during council meetings turned into the genesis for a bill, as of this writing, awaiting the governor's signature, that sets legal standards in Colorado for how health plans can profile physicians for tiered networks.

Anticompetitive health plan consolidation shouldn't be allowed in the first place.

The United-Sierra deal is an egregious example and hardly the only one. At least Colorado, and now Nevada, show that closing the deal doesn't mean closing the door to physicians who may be harmed by the sale.

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