United-Sierra merger in Nevada approved -- with conditions

Even though United has to give a little, doctors are not happy about another merger.

By Emily Berry, AMNews staff. March 17, 2008.

Days before approval from the Nevada Division of Insurance was set to expire, federal and state regulators approved the merger of the country's largest health insurer, UnitedHealth Group and Nevada's largest health insurer, Sierra Health Services.

The Feb. 25 approvals from the Dept. of Justice and the Nevada Attorney General's Office came with some conditions. For example, the Dept. of Justice said United must sell its Medicare Advantage business in Las Vegas, though it may keep Sierra's.

For physicians, the attorney general's office said that for the next two years, United must not put all-products or most-favored-nation clauses in its contracts, nor can it use its Ingenix database to set out-of-network rates. The New York Attorney General's Office filed a lawsuit against United in February for allegedly using Ingenix to intentionally propagate low fees, a charge the company denied.

Despite the conditions, the deal "is still going to be harmful," said Larry Matheis, executive director of the Nevada State Medical Assn.

Both the U.S. Dept. of Justice and Nevada Attorney General Catherine Cortez Masto filed federal lawsuits blocking the deal but simultaneously filed the proposed consent agreements, effectively issuing conditional approvals. Both agreements are subject to approval by federal judges.

A tentative agreement calls for United to sell the policies of 25,000 Medicare Advantage HMO members to Humana for $185 million. United and Sierra's combined share of the individual Medicare Advantage HMO in Clark and Nye counties would have been around 94%. Instead, United will now hold 60% of that market, with Humana holding 34%, according to estimates in the Justice Dept. lawsuit.