Docs denied intervention in Health Net merger

The state insurance department has denied a request by the Connecticut State Medical Society and other consumer advocacy groups that were seeking intervenor status at a public hearing scheduled for Monday, on UnitedHealth Group's proposed acquisition of Health Net.

The state medical society, American Medical Association and several other consumer advocacy groups are raising concerns about the proposed deal, including that it will lead to further consolidation in the Connecticut market, creating an "anticompetitive effect."

The groups were seeking intervenor status for Monday's hearing because it would allow them to "be heard beyond just a member of the general public," said Matthew Katz, executive vice president of the state medical society.

But the state insurance department turned down the request Thursday, citing "timeliness and merit" issues.

"We are extremely disappointed that physicians and patients have not been given a formal participatory role in this hearing process involving two of the largest insurers in Connecticut, given the obvious and apparent impact on physicians and their patients," Katz said. "Those individuals that seem to be most affected appear to have been disenfranchised by this decision."

UnitedHealth Group agreed in July to pay about $510 million to buy Health Net's northeastern licensed subsidiaries, which have 578,000 members in Connecticut, New York and New Jersey.

Under the deal, UnitedHealth agreed to purchase the rights from Health Net to assume its commercial members as they renew coverage.

Katz said physicians and patients have the potential to be harmed by the acquisition because it will create fewer choices for patients and less ability for physicians to negotiate their rates. It would also mean a small number of insurers will have the ability to set market rates in the state.

"Bigger getting bigger is generally not good for the public," Katz said.

The CSMS is also concerned that the deal will allow UnitedHealth to "cherry pick," Health Net customers that they offer coverage to, since they are only proposing to buy renewal rights from Health Net. As a result some Health Net customers may not be offered coverage when their current plan runs out, or may need to change physicians.

"UnitedHealth is not purchasing lives, only renewal rights so they could offer coverage to anyone they want," Katz said. "They can cherry pick the most profitable patients, and drop coverage for the rest."

The CSMS is also concerned about UnitedHealth seeking access to certain "protected health information," on Health Net's customers, as well the impact the deal could have on a past court settlement involving Health Net.

In its ruling, the insurance department said the intervenor request was filed four days prior to the hearing, when state law requires it to be filed "no more than five days before the date of a hearing."

The insurance department also said the medical society's claims were largely focused on "speculative effects that could be felt by physicians," which don't warrant an intervenor status.

Katz said his organization still anticipates being at the hearing and providing their voices of concern, given the now limited role.

In a written statement UnitedHealth said it believes "this transaction is the best option for Health Net's Northeast customers," because "it broadens choice and access to quality care."

"We have nearly 4,000 employees in Connecticut, giving us deep experience in this market and an understanding of the local needs of members," the company said. "Health Net members, of course, have the option to stay with UnitedHealthcare or choose another insurer in this competitive market."

The public hearing is scheduled for 9 a.m. Monday at the Connecticut Insurance Department.