The UnitedHealth-Change Healthcare antitrust trial begins Monday

The Justice Department’s case seeking to block UnitedHealth Group’s $13 billion acquisition of data broker Change Healthcare begins in federal court on Monday.

The government filed a lawsuit to block the deal in February, arguing it would violate federal antitrust restrictions by giving UnitedHealthcare access to private information about how competing health insurers structure their provider networks.

UnitedHealth Group says adding Change Healthcare’s clearinghouse technology to its health services subsidiary Optum will lower costs for health insurers and providers and, in turn, for patients. The companies initially planned to close the deal last year, and now aim to complete the deal by December 31.

The trial begins in the U.S. District Court for the District of Columbia on Monday and is scheduled to last two weeks. Judge Karl Nichols, a the former clerk for Supreme Court justice Clarence Thomas whom President Donald Trump nominated to on court in 2019, is presiding.

What UnitedHealth Group wants

UnitedHealth aims to add Change Healthcare’s claims processing service to its OptumInsight revenue cycle management operation. OptumInsight, Optum’s smallest division, was responsible for $3.2 billion of Optum’s $45 billion in revenue in the second quarter.

Acquiring Change Healthcare would allow OptumInsight to scale its payment processing, claims review and administrative services, according to UnitedHealth.

Optum plans to integrate Change Healthcare’s claims data and automated payment processing tool to speed payments to providers and bill insurers and patients more transparently, the company said in a news release announcing the deal in January 2021.

UnitedHealth will use Change Healthcare’s clinical data to offer providers analytic decision support for individual patients. That would advance Optum’s value-based care initiatives, the company said.

Optum will use Change Healthcare’s patient engagement tool, which reaches more than 200 million people annually with member insurance policies, to promote health incentive programs. The acquisition builds on UnitedHealth’s plan to bring Optum’s patients under the parent company’s brand.

In June, Optum reportedly paid an undisclosed amount to buy Irving-based Healthcare Associates of Texas from private equity firm Webster Equity Partners. Also this year, UnitedHealth announced plans to buy Lafayette, La.-based home health and hospice provider LHC Group, behavioral health and substance abuse chain Refresh Mental Health of Jacksonville Beach, Fla., and Houston medical group Kelsey-Seybold Clinic .

In addition to being the largest U.S. health insurer by membership with 51.2 million policyholders, UnitedHealth is the largest employer of physicians, with more than 60,000 physicians employed by Optum.

Why is the government suing?

If the deal is completed, UnitedHealth would hold a monopoly on the claims clearinghouse market, the Justice Department said. That would give him insight into what competitors pay providers and how they structure their networks, according to the suit.

Nine of the nation’s 10 largest insurers rely on Change Healthcare to review, review and reimburse claims, the Justice Department’s filing said. Those companies contracted with Change Healthcare to avoid doing business with competitor OptumInsight, according to the government.

The acquisition would give UnitedHealth control of more than 75 percent of the claims editing market and leave other insurers little choice but to work with a competitor, according to the Justice Department. Because Change Healthcare is the leading clearinghouse for electronic data exchange between providers, insurers won’t be able to bypass UnitedHealth even if they switch providers because their insurance data will continue to flow through Change Healthcare’s network, the lawsuit says of the Ministry of Justice.

Hospital, pharmacy and antitrust advocates echoed the Justice Department’s argument. They oppose the deal because of monopoly concerns and say the acquisition will raise costs. The American Hospital Association and the National Pharmacists Association support the Justice Department’s move to block the acquisition.

UnitedHealth’s plan for approval

If the acquisition moves forward, UnitedHealth will sell Change Healthcare’s claims editing business for $2.2 billion to private equity firm TPG Capital. If the transaction is not completed, Change Healthcare will retain ClaimsXten.

UnitedHealth will also pay a $650 million fee to Change Healthcare if the transaction is not completed due to a court order.

The company also agreed to buy another $60 million in Change Healthcare services when the deal was announced in January 2021, the Justice Department wrote in the lawsuit. That means even if the deal fell through, Change Healthcare would have gained a valuable customer, the government argued.

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