Cigna, Humana Considering Merger. How Does This Affect Your Practice?

Nov 29 (Reuters) - U.S. health insurer Cigna (CI.N) is in talks to merge with peer Humana (HUM.N), a source familiar with the matter said on Wednesday, a deal that could exceed $60 billion in value and would be certain to attract fierce antitrust scrutiny.

The discussions come six years after regulators blocked mega-deals that would have consolidated the U.S. health insurance sector.

After U.S. courts upheld antitrust challenges in 2017, Cigna gave up on a $48 billion deal to acquire Anthem -- now known as Elevance Health. Losing the legal battle also caused Aetna -- now owned by pharmacy chain operator CVS Health (CVS.N) -- to abandon a $37 billion deal to acquire Humana.

Cigna and Humana are discussing a stock-and-cash deal that could be finalized by the end of the year, according to the Wall Street Journal, which first reported on the potential deal earlier on Wednesday. Humana declined to comment, while Cigna did not respond to requests for comment.

A merger would give the combined company more scale to rival bigger U.S. health insurance players UnitedHealth Group (UNH.N) and CVS Health.

The Effects of Health Insurer Mergers to Physicians and Medical Practice’s

Theoretically, insurer mergers could have two very different results. First, they could raise premiums, if the merger reduces competition, allowing health insurers to set higher prices. Second, if a merger strengthens insurers’ bargaining power with physicians and their medical practice, it could in fact lower CPT? code reimbursements. Similarly, a merger also has the potential to result in efficiency gains, including from economies of scale and savings that insurers could pass along to consumers in the form of lower premiums.

When one payer merges with or acquires another payer, the clear lines of contractual obligations with the physician become blurred. Which corporate structure prevails? The #physician needs to analyze both #payers’ #contracts and renegotiate the most favorable points, resolve any prior claims and specify how the parties will exchange notifications.

Example. United Healthcare purchased Humana. Most physicians contract with United Healthcare. Which contract applies? Clearly, the physician should contact United Healthcare regarding changes in contract terms and reimbursement.

Many physicians fear what consolidation among the biggest national payers will mean for their practices. Their worries are many:

• Will insurers drop them from increasingly narrow networks?
• Will their practices face new in-network competition?
• What leverage will they have in contract negotiations when so few insurance companies could end up controlling the marketplace?
• Will there be logistical hassles in getting integrated into the new networks?

The mergers have prompted vigorous protests from the medical community, arguing that they would let just a few companies control most of the healthcare insurance market. Many experts say the concerns are well-founded. The proposed mergers, they say, would add to the pressures that already make it difficult for independent medical practices to stay afloat.

Physicians Have Some Measures Available To Protect Themselves In The New Environment

One is tracking quality metrics. Physicians who can meet the top criteria will be able to withstand any downward ratcheting of rates by insurance companies. Physicians who want to strengthen their competitive position can start using their electronic health records system to gather performance data now.

One of the powerful things they have is their own quality of the services they provide to their patient. That quality really needs to be quantified. If your patients love you and you have great outcomes, you need to be collecting the data so you can show you are in the high quantile of physicians who provide services. The physician who is aware, who is doing good service and is able to quantify that is in a better position.

Even solo physicians who are not part of a clinically integrated network can take steps to negotiate better arrangements with payers. Physicians should review their current contracts, because after a merger the resulting company often adopts the contract that reimburses physicians the least.

Physicians should be looking at any amendments they see in their contracts immediately after these consolidations. Quite often, they might find there is an amendment they have a very short time to object to. They need to really be on the lookout for changes that are going to come down if they get approved.

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