Attorney General James Sues to Block UnitedHealth Group’s Proposed Acquisition of Change Healthcare

AG James Joins U.S. Department of Justice to Sue UnitedHealth Group
After Investigation Found Merger Would Increase Healthcare Costs

NEW YORK – New York Attorney General Letitia James today filed an antitrust lawsuit with the U.S. Department of Justice and the State of Minnesota to stop the proposed acquisition of Change Healthcare (Change) by UnitedHealth Group (United).

The lawsuit alleges that the acquisition would give United, one of the nation’s largest health insurers, an unparalleled competitive advantage — allowing it to use Change’s enormous repository of claims data to raise costs for its competitors, hobble their ability to compete with United, and deny them access to innovations. The acquisition would reduce competition among health insurers, likely leading to increased healthcare costs and decreased quality of services for New Yorkers. 

“It’s concerning that amidst a devastating pandemic United is pursuing actions that would drive up healthcare costs and reduce the quality of services for New Yorkers and patients nationwide,” said Attorney General James. “New Yorkers need affordable healthcare, not health insurance companies primarily concerned with market dominance. We are suing United to stop its attempted acquisition of Change to ensure that New Yorkers benefit from competitive healthcare markets. I will continue to fight to ensure New Yorkers have access to affordable, quality healthcare.”

According to the lawsuit, filed in the U.S. District Court for the District of Columbia, United’s proposed acquisition of Change would allow United to use its competitively sensitive data to co-opt rival insurers’ innovations and preempt their competitive strategies, reducing their incentives to pursue those innovations and strategies in the first place. It would also allow United to use its control over Change’s technologies to disadvantage other health insurers by raising their costs, degrading the quality of their services, and denying or delaying their access to innovations and quality improvements. Ultimately, this substantial lessening of competition would result in higher cost, lower quality, and less innovative commercial health insurance for employers, employees, and their families. 

The complaint alleges that United’s acquisition of Change’s Electronic Data Interchange (EDI) clearinghouse would leave employers in New York with a difficult and unwelcome choice when choosing an insurer. Essentially, employers that choose a United rival would get lower quality EDI clearinghouse services and employers that choose United would likely pay higher prices with poorer quality than would have been in a competitive market.

Additionally, the complaint alleges that United’s acquisition of Change’s ClaimsXten product would essentially be a merger to monopoly. ClaimsXten is the leading provider of “first pass” claims editing in the country, with United’s CES in second place. The acquisition of Change would create a claims editing behemoth with a market share of over 80% — an acquisition that is presumptively anticompetitive.

UnitedHealth Group is the fifth largest company by revenue in the Fortune 500. It includes United Healthcare (UHC, the health insurance subsidiary), and Optum (the information and technology-enabled services subsidiary). UHC is the largest commercial health insurer in New York. Optum is divided into three business lines: OptumRx, OptumHealth, and OptumInsight. OptumInsight provides healthcare data, analytics, research, consulting, technology, and managed services solutions. OptumHealth is one of the largest owners of provider groups in the country, with 53,000 physicians nationally. OptumHealth owns several large provider groups in New York, including ProHealth and CareMount.

Change Healthcare is a leading independent healthcare technology company. Change provides data and analytics-driven insights to both providers and insurers. It also runs the nation’s largest EDI Clearinghouse. Clearinghouses are a vital part of the infrastructure underpinning every interaction between a doctor and patient — facilitating the transmission of claims to insurers and claim approvals or rejections back to providers. Change has built up a large database of claims data from these transactions, dating back to 2012. Change also owns ClaimsXten, the nation’s leading claims editing software. Claims editing is another vital part of the healthcare infrastructure, driving savings to the system by ensuring accuracy and avoiding overpayments.

The litigation is being handled on behalf of New York by Assistant Attorneys General Olga Kogan and Benjamin Cole of the Antitrust Bureau, under the supervision of Deputy Bureau Chief Amy E. McFarlane and Bureau Chief Elinor R. Hoffmann. The Antitrust Bureau is a unit of the Division of Economic Justice, overseen by Chief Deputy Attorney General Christopher D’Angelo and First Deputy Attorney General Jennifer Levy.

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