Colorado Medical Society

http://www.cms.org/articles/executive-office-update-a-marriage-of-convenience-from-the-beginning/

Executive office update: A “marriage of convenience” from the beginning

Monday, March 20, 2017 12:11 PM

Alfred Gilchrist - headshot

Notwithstanding a withering, sharply worded opinion by federal Judge Amy Berman Jackson on Feb. 8 blocking Anthem’s proposed merger with Cigna (see “In their words,” here), Anthem attorneys in a Delaware Court of Chancery on Feb. 15 asserted that the company expects to close its transaction with Cigna through “resolution with a new DOJ” and that its prospects for a timely closing are enhanced by a “supportive” Vice President Mike Pence. Never mind that Cigna sued Anthem on Feb. 14, according to Bloomberg News, to terminate the merger for trying to undermine its business by stealing confidential information and harassing its customers. “Anthem’s destructive conduct must come to an end,” Cigna said in the lawsuit, which seeks to recover a $1.85 billion break-up fee and $13 billion in damages. Anthem responded with its own suit to compel Cigna to remain at the altar.

The Anthem-Cigna deal has been a “marriage of convenience” from the beginning. Marked by accusations between the lawyers and the company’s top executives throughout, they should have asked for a jury instead of a judge. Not that in hindsight it would have provided a different result. Instead, they have decided to pursue a flanking maneuver to undermine the judicial process with a transparently political ask, not unlike Aetna threatening the previous administration with dropping out of the exchanges in 17 markets if the DOJ moved to block their merger with Humana.

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The AMA appropriately raised the alarm with then-acting Attorney General Brent Snyder on Feb. 28, stating, “We find it implausible that the U.S. Department of Justice (DOJ), eleven states, and the District of Columbia – that have diligently and successfully prosecuted this antitrust case – could now be swayed to allow this merger to close pursuant to politically-driven settlement negotiations as Anthem has suggested.” We immediately joined the AMA by asking Colorado Attorney General Cynthia Coffman, a co-plaintiff with U.S. DOJ, to reject any offers to settle the litigation.

These types of “marriages” are not inexpensive nor are their consequences inconsequential. The Associated Press (AP) reports that the four companies involved in the mega-mergers have “cumulatively spent about $1.5 billion on legal and financial services since their proposed mergers were announced in summer of 2015,” according to documents filed with the Securities and Exchange Commission. Aetna is reported to have spent $775 million, and Anthem $421 million. For that cost, 378,000 Coloradans could have received a year’s worth of silver-plan-level health insurance on the Connect for Health Colorado marketplace. Instead, according to the AP, consumers will pick up the $1.5 billion mega-merger tab in the form of higher premiums.

CMS members continue to express extremely high levels of dissatisfaction with critical aspects of the current multi-payer system. They want the hoops and hassles that are interfering with everyday care of patients to be eliminated. The payers have legitimate issues that also need attention. The multi-payer system is going to be around for a while, and our preferred path forward is respectful, mutually beneficial dialogue and problem-solving with the companies.

Once again we say, “Let’s get back to work.” Until then, we’ll continue to take our case to the General Assembly, regulators and the court of public opinion.