Mergers & Acquisitions

FTC Will Take a Closer Look at UnitedHealth-LHC Deal

The Federal Trade Commission (FTC) on June 10 made a formal request for information to UnitedHealth Group regarding the integrated health care giant’s announced purchase of LHC Group, Inc., a home health care provider, which could be an indication that the antitrust watchdog will move to block the deal. Experts tell AIS Health, a division of MMIT, that it’s not a certainty that the FTC will take such an action, given the fragmented nature of the home health care industry, but add that UnitedHealth’s singular size and diversification exposes the firm to higher antitrust scrutiny than other national health insurance or provider firms.

UnitedHealth announced its plans to acquire LHC in April, saying it would spend about $6 billion to purchase the provider and amortize some of its debt. The health care giant revealed the FTC’s request for information in a filing with the Securities and Exchange Commission. UnitedHealth has acquired dozens of smaller companies in recent years — and antitrust regulators have begun to pay closer attention as its spending spree has gone on. Notably, in February, the Dept. of Justice sued to block UnitedHealth’s bid to acquire Change Healthcare, Inc., a data and analytics company, joining the state attorneys general of New York and Minnesota in the antitrust enforcement action.

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Insurers’ Venture Capital Firms Pay With Influence Over Vendors

Launching a venture-capital (VC) fund has become commonplace for many health insurers, even smaller ones, industry insiders tell AIS Health. They typically do not disclose returns — and many of these funds are so new that there haven’t been enough exits to judge performance. But the investments pay dividends for insurers in the ability to influence the strategic direction of their vendors, get preferred contracting terms — and hopefully still make some money.

There are a lot of reasons that insurers launch VC funds, says Ari Gottlieb, a principal at consulting firm A2 Strategy Group. “They don’t have the pure profit motive that a traditional venture fund has, which is just making sound investments,” he says. “They’re not designed, though, to lose money.”

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FTC Files Lawsuits to Block Hospital Deals in N.J. and Utah

The Federal Trade Commission (FTC) on June 2 said it had filed lawsuits to block hospital mergers in New Jersey and Utah. Health policy experts tell AIS Health that health insurers and other payers likely will welcome the FTC’s actions as mergers limit competition and lead to higher prices.

The FTC is looking to block HCA Healthcare, Inc.’s acquisition of five hospitals that Steward Health Care owns in Utah. The agency is also aiming to deny RWJBarnabas Health’s purchase of Saint Peter’s Healthcare System, a non-profit that operates a hospital in New Brunswick, N.J. The Utah trial is scheduled to begin on Dec. 13 and the New Jersey trial is scheduled to start on Nov. 29.

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News Briefs: Inflation Hasn’t Yet Affected Health Care Prices

Inflation has not yet impacted health care prices, according to new research from the Kaiser Family Foundation (KFF). The KFF study reports that in the 12 months ending in April 2022, “overall prices grew by 8.3% from the previous year, while prices for medical care increased by only 3.2%.” The authors added, “This is unusual, as health prices historically outpace prices in the rest of the economy. However, the relatively high rate of inflation seen in the rest of the economy may eventually translate to higher prices for medical care. This may lead to steeper premium increases in the coming years.” Generally speaking, according to the report, prices have grown faster for commercial insurance than public payers, a trend that held up in 2022. Though inflation is greater than it has been for a generation, its impact is likely delayed in health care because of contracting cycles. “Health prices are generally set in advance, administratively or via private insurance contracting, so there may be a delay in observable price increases,” the authors observe.

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News Briefs: Consulting Firm Sold

Health care consulting firm Avalere Health has been sold to Fishawack Health, by previous owner Inovalon Health. In a letter to clients disclosing the deal, Avalere President Elizabeth Carpenter said that Avalere would “retain our logo and brand,” and “your client teams will remain the same and there will be no change to your current business relationship with Avalere. Everyone you know and love from Avalere is joining Fishawack, including all of our practice leadership.”

A new report by the Government Accountability Office (GAO) found that little information is available about the role that short-term health plans played during the COVID-19 pandemic — and that state regulators are not watching the industry closely. Short-term health plans are not required to meet all the standard benefits mandated by the Affordable Care Act. Per the report, “GAO found that limited and inconsistent data hinder understanding of the role short-term plans played during the COVID-19 pandemic for those who lost [employer-sponsored insurance], such as whether they were used by consumers as temporary coverage or as a longer-term alternative to ACA-compliant plans….State officials in the five states with plan sales were not able to report on the role of short-term plans for consumers, as none of them collected data on the duration of short-term plan coverage.”

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News Briefs: Aetna Wins Group Medicare Advantage Contract to Connecticut State Retirees

CVS Health Corp.’s Aetna won a new group Medicare Advantage contract to serve retirees covered by Connecticut’s state health plan. Connecticut Comptroller Natalie Braswell on June 1 said the state selected Aetna after a competitive bidding process and that the new contract will save an estimated $400 million over the next three years. Beginning Jan. 1, 2023, Aetna will serve some 57,000 Medicare-eligible retirees and dependents enrolled in the state’s MA plan. Connecticut first adopted an MA plan for retirees in 2018.

After CMS imposed a historic increase to Medicare Part B premiums partly due to cost considerations around Alzheimer’s disease treatment Aduhelm, the agency on May 27 said it will not make a midyear change but will likely lower the Part B premium in 2023. Upon raising the standard monthly premium by $21.60 to $170.10 for 2022, the agency in November said it considered “[a]dditional contingency reserves due to the uncertainty regarding the potential use” of Aduhelm, which was approved in July 2021 and priced at $56,000 per year. After Aduhelm makers Biogen and Eisai, Co., Ltd., cut that price in half starting Jan. 1, HHS Secretary Xavier Becerra instructed CMS to reassess the Part B premium. Meanwhile, the FDA issued a National Coverage Determination stating that Medicare will cover Aduhelm only for patients enrolled in randomized, controlled clinical trials conducted either through the FDA or the National Institutes of Health. CMS recommended incorporating the savings realized from this year’s lower-than-anticipated spending into the 2023 Part B premium determination.

Startups Oscar Health, Bright Health Exit Markets & Tighten Belts

Startup insurers Oscar Health, Inc. and Bright Health Group, Inc. have decided they will no longer sell individual and/or family plans in certain states after this year. Ari Gottlieb, a principal at consulting firm A2 Strategy Group, tells AIS Health that those are signs the companies are looking to stem large losses and shore up their businesses as their stock prices fall and raising additional capital becomes harder.

Gottlieb says he anticipates Cigna Corp, which invested in Oscar earlier this year, could buy the company as soon as the end of the year. The fate of Bright remains unknown, although Gottlieb does not see Oscar, Bright or the two other publicly traded startup insurers (Alignment Healthcare and Clover Health Investments Corp.) becoming profitable anytime soon. Gottleib says Cigna may buy Bright also.

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Humana Doubles Down on Primary Care Clinic Investments

Humana Inc. has become the latest insurer to increase its investment in building de novo primary care clinics, perhaps finding that while building is more effective than buying, opening clinics on a broad scale is a costlier proposition than first thought.

The insurer on May 16 said it had established a second joint venture with Welsh, Carson, Anderson & Stowe (WCAS) to further expand its value-based, senior-focused primary care clinics. (Hg Capital Partners and WCAS share control of MMIT, the parent of AIS Health.) The deal will provide up to $1.2 billion of additional capital for the development of approximately 100 new payer-agnostic clinics operated by Humana subsidiary CenterWell between 2023 and 2025. The expansion follows an earlier agreement that is currently deploying up to $800 million of capital to open 67 clinics by early 2023 and support ongoing operations, Humana added. WCAS will have majority ownership of the joint venture, while Humana will have a minority stake.

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News Briefs: Oscar Leaves Arkansas, Colorado

Oscar Health, Inc. will cease operations in Arkansas and Colorado at the end of this plan year. Chief Financial Officer Scott Blackley defended the decision by saying “they’re really small” markets for the firm in response to a question from Goldman Sachs analyst Nathan Rich during the startup insurer’s latest earnings call, according to the Motley Fool. He added that “they don’t have a significant or even close to material effect [on profits.] There is a benefit though from just reducing…compliance work.” The firm has yet to post a profit, prompting criticism from managed care insiders.

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News Briefs: TG Therapeutics Withdraws Pending Applications for Ublituximab/Ukoniq Combo

TG Therapeutics, Inc. said April 15 that it voluntarily withdrew its pending Biologics License Application (BLA)/supplemental New Drug Application (sNDA) for the combination of ublituximab and Ukoniq (umbralisib) for the treatment of adults with chronic lymphocytic leukemia (CLL) and small lymphocytic lymphoma. The company said it made the decision based on updated overall survival data from the UNITY-CLL Phase III trial. The company also said that it voluntarily withdrew Ukoniq from sale for two indications: (1) for adults with marginal zone lymphoma who have received at least one anti-CD20-based regimen, and (2) for adults with follicular lymphoma who have received at least three prior systemic therapies. The FDA gave the drug accelerated approval for those indications on Feb. 5, 2021. On Feb. 3, 2022, the company disclosed that the FDA was investigating a possible increased risk of death with Ukoniq based on initial findings from the UNITY clinical trial. The FDA had scheduled an April 22 meeting to discuss the sNDA for the combination therapy, as well as Ukoniq’s accelerated approvals. Following TG Therapeutics’ withdrawal of the BLA/sNDA and Ukoniq’s existing indications, the agency cancelled the meeting. The FDA is expected to make a decision on the BLA for ublituximab in relapsing forms of multiple sclerosis by Sept. 28, 2022.