News in brief - Sept. 24, 2007

United-Sierra merger moves closer; Nevada attorney general to review

United HealthGroup has received all the necessary state agency reviews and approvals needed to move forward with its planned merger with Las Vegas-based Sierra Health Services.

On Sept. 6 the California Dept. of Insurance was the final state to approve the deal, following Nevada and Arizona. Final approval will need to come from the U.S. Dept. of Justice. The American Medical Association has asked the Justice Dept. to block the $2.6 billion deal, saying it would allow United to dominate the Nevada market, especially the Las Vegas segment.

Meanwhile, the attorney general of Nevada is reviewing whether to sue to block the deal, which also is opposed by the Nevada State Medical Assn. and the state's governor. The governor had asked the attorney general to review the merger after the state's insurance commissioner approved it. A decision is expected by Sept. 30.

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Humana buys administrator

Louisville, Ky.-based Humana said it is paying $187.7 million -- including the assumption of $50 million in debt -- to acquire Minnetonka, Minn.-based insurance administrator KMG America.

KMG was formed in 2004 to buy a Southeastern regional insurer, Kanawha Insurance Co., and expand the business in third-party administrator and other products.

The company had hired an advisor to determine its options after insurer rater A.M. Best in March revised the company's outlook down from stable to negative, citing the company's financial losses.

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Pittsburgh health plan creates PHRs

The University of Pittsburgh Medical Center Health Plan has created personal health records for its nearly 500,000 members and will give them a jump-start in filling them.

The plan said it will automatically upload claims data into the records that will include prescriptions, office and emergency visits, hospitalizations, home health visits and diagnostic tests.

The plan also said members will be able to add to the reports and share them with doctors, family members or friends.

The plan's network includes 80 hospitals and more than 7,500 physicians in Western Pennsylvania.

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Indianapolis HMO closes shop

M-Plan, the largest HMO in the Indianapolis area, says it is shutting down its HMO operations.

Even though the 125,000-member HMO reportedly had been profitable, executives said competing against larger plans had become increasingly difficult. The plan also said declining market interest in HMOs overall was another deciding factor.

The company is recommending that members enroll with WellPoint-owned Anthem when their current HMO coverage comes up for renewal, though Anthem is not buying M-Plan.

M-Plan is owned by The Health Group, an Indianapolis-based consortium of local hospital systems formed to run the plan. After it gets out of the commercial HMO business, its only product will be a 7,000-member Medicare plan.

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Shareholders sue Pediatrix over backdated stock options

Pediatrix Medical Group, a Florida-based physician practice management company focusing on pregnancy and neonatal care, acknowledged in a Sept. 5 Securities and Exchange Commission filing that it is the defendant in a shareholder lawsuit.

The company said it was accused of misdeeds related to the backdating of stock options. A company audit earlier found that between 1996 and 2000, there were 56 stock-option grants backdated, meaning the exercise date was set on a past date when the company's stock hit a low price, rather than a predetermined date. The lawsuit also claims Pediatrix failed to properly record compensation expenses for its option grants, which led to inflated company earnings.

The lawsuit names the company and past executives as defendants. Pediatrix did not respond to the lawsuit specifically. However, in the SEC filing the company said its audit committee had determined there were no misdeeds by current executives.

The company also announced that it had purchased the 53-physician Fairfax (Va.) Anesthesiology Associates. Terms of the deal were not disclosed.

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