Consolidation of Payors Harms ASCs: UnitedHealth Group Acquires Sierra Health Services

UnitedHealth Group has completed its acquisition of Sierra Health Services, according to published reports .

The continued consolidation of payors, as evidenced by this type of acquisition, has a very negative impact on surgery centers. Such consolidations provide payors with much greater leverage in negotiating reimbursement paid to ASCs. This increased leverage in certain communities is leading to unilateral and significant reductions in pay to ASCs.

The acquisition also would have resulted in a 94 percent controlling stake of the Medicare Advantage health insurance market in the Las Vegas area had the U.S. Department of Justice not required United to divest assets of its Medicare Advantage business as a stipulation for approval of the acquisition.

United and Sierra were the first and second largest sellers of Medicare Advantage plans in the Las Vegas area, which include approximately 82,000 people enrolled in the plans. United is the largest health insurer in the U.S., reporting revenues of approximately $75 billion. Sierra is the largest health insurer in the Las Vegas area, reporting revenues of $1.9 billion.

Under the settlement between United and the DOJ to allow the acquisition to proceed, United must attempt to sell the assets related to its Medicare Advantage business to Humana Inc. If the two payors cannot come to an agreement, United will be required to find another purchaser.

"This divestiture ensures that senior citizens and others will continue to benefit from competition between sellers of Medicare Advantage products," says Thomas O. Barnett, assistant attorney general in charge of the DOJ's Antitrust Division, in a DOJ statement. "We are committed to preserving competition in the health insurance industry because this competition spurs insurers to lower prices, enhance services, and offer innovative new products."

© Copyright ASC COMMUNICATIONS 2012. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.