AHA Cites Antitrust Concerns Over UnitedHealth-Change Healthcare Deal

August 10, 2021 - In a letter to the Department of Justice’s (DOJ) Antitrust Division, AHA expressed concern over the implications of UnitedHealth Group’s $8 billion acquisition of Change Healthcare, which is expected to close later this year.

UnitedHealth Group announced in January that Change Healthcare will combine with Optum, UnitedHealth Group’s diversified health services company. The acquisition surfaced with the goal of reducing administrative burden, enabling healthcare data exchanges, and streamlining revenue cycle management.

But the combination of both organizations’ vast datasets could have negative impacts on patient care, claims processing, and denials. AHA contended that Optum will have the data and incentives to inform its reimbursement rates based on competing payers’ data, resulting in reduced competition.

AHA argued in its letter that “UHG and Change are well aware that their transaction is likely to violate the antitrust laws because, under the terms of their merger, they are required, in order to obtain DOJ approval, to divest assets that generate hundreds of millions of dollars in revenue.”

“We respectively maintain that the massive divestiture provision to which the parties have agreed does not provide the pathway needed to remedy the transaction’s likely substantial illegalities; rather, it strongly indicates that the deal cannot be ‘fixed.’”

The letter is a follow-up to a similar letter from AHA in March in which AHA urged that DOJ launch an investigation into the UnitedHealth-Change Healthcare deal.

The March letter stated that the transaction would substantially reduce competition for a variety of health IT services, including claims clearinghouse, clinical decision support, payment accuracy, and revenue cycle management services.

Partly prompted by the AHA letter, the DOJ questioned the acquisition and requested additional information in an official filing in March. UnitedHealth Group cooperated with the DOJ’s request for information.

New reports indicate that the DOJ is now considering a lawsuit to stop the purchase. If the DOJ moves forward with its lawsuit, it could signal a trend in President Biden’s administration regarding antitrust action.

President Biden’s recent executive order targeted healthcare consolidation specifically, citing the fact that unimpeded mergers and acquisitions have led to ten of the largest healthcare systems controlling a quarter of the market.

AHA’s most recent letter also called out language from Change Healthcare’s most recent 10-K and securities filings that indicate that the organization knows that its domination of the market gives it significant power.

“Change’s own securities filing state that the company’s success depends to a significant degree on ‘the advantages of scale’ which ‘makes us a preferred technology partner.’ The company represented that its ’size, scale, expertise, and presence throughout the healthcare ecosystem…’ are key factors in its success,” the letter explained.

AHA expressed concerns over the reduced market competition that the deal would facilitate, and the conflicts of interests that will result from UnitedHealth Group acquiring Change Healthcare’s proprietary dataset.

Specifically, AHA cited the following concerns:

• Greater ability for UHG to favor UnitedHealthcare’s health plans over those of competitors
• The potential that UHG will modify Change’s InterQual clinical support algorithms to favor payors over patients
• The increased risk that UHG will gain access to competitors’ pricing and other competitively sensitive information. Moreover, allowing UHG to acquire Change’s data sets, even if a divestiture buyer also acquires them, is precisely the type of incomplete remedy that the Antitrust Division has warned will ‘increase the risk [that] a remedy will not preserve competition.’

Overall, the deal could shake up the healthcare industry in more ways than one, resulting in less competition and setting a precedent for other healthcare mergers and acquisitions.