UnitedHealth Group is vigorously defending its proposed $13 billion acquisition of Change Healthcare by arguing a Justice Department lawsuit to block the deal presents theories with "no basis in fact and law" about how competition could be harmed.
UnitedHealth Group blasts DOJ arguments in lawsuit over Change Healthcare deal
The Minnetonka-based health care giant says the government has "no basis in fact or law" for blocking the $13 billion acquisition.
The Minnetonka-based health care giant on Thursday called the lawsuit "flawed" in a statement issued shortly after a federal judge scheduled a 12-day trial of the case for August.
It was UnitedHealth Group's fullest public response to the litigation thus far, echoing themes from a recent court filing where the company called the Justice Department's theories "vague and speculative."
The department declined to comment Thursday.
UnitedHealth Group runs UnitedHealthcare, which is the nation's largest health insurer. Tennessee-based Change Healthcare would add to UnitedHealth Group's already influential unit for health care data and technology within Optum, a division that provides a variety of health care services.
"The government's case rests entirely on speculation and theories unsupported by any past conduct, i.e. that Optum will somehow exploit Change Healthcare's products and services to secure an unfair advantage for UnitedHealthcare's health insurance business," the company said.
In February, the Justice Department filed a civil lawsuit in the U.S. District Court for the District of Columbia to stop the acquisition, which it said was anticompetitive. Putting Change Healthcare's technology into the hands of UnitedHealth Group could lower the quality of health insurance, the government alleged, and make coverage more costly for millions of people.
The department said UnitedHealth Group is a "behemoth" that would gain too much power through the acquisition in the world of electronic data transactions between insurance companies and health care providers.
UnitedHealth announced its plan to acquire Change Healthcare in January 2021. Attorneys general in Minnesota and New York joined the Justice Department in launching the litigation this past February.
On Thursday, UnitedHealth Group asserted the lawsuit omits several key facts. Optum already has access to competitively sensitive information of UnitedHealthcare's competitors, the company said. Contract terms, existing firewalls and data-security protect it from improper use.
"Optum's business model and financial success is dependent on providing products and services to external customers, not just UnitedHealthcare," the company said. "Put simply, any misuse of customer [competitively sensitive information] would be economic suicide for Optum because its sophisticated external customer base would simply cease using Optum's services and turn to any number of Optum competitors."
In its complaint, the Justice Department said Change Healthcare operates the nation's largest electronic data interchange (EDI) clearinghouse, which health care providers use to submit claims for payment and insurers use to provide remittances. This claims data "provides a window into the inner workings of the health insurers and their plans," the lawsuit asserted.
While the government says UnitedHealth Group could unfairly use this information for competitive advantage, the company pledged Thursday to extend existing firewalls to data from Change Healthcare once the acquisition is complete.
The government's argument that Optum would raise prices for EDI services "has no basis in rational economic or financial logic," UnitedHealth Group said, because those services constitute less than 1% of an insurer's cost structure and sometimes are provided at no charge.
"Instead, Optum has every incentive to do just the opposite — continuing to offer high-quality products and services, including EDI," the company said.
The Justice Department argued the acquisition would give United too much power in selling "claims-editing" technology that insurers use to make sure in real time, that millions of claims for payment submitted by health care providers are eligible for reimbursement. But the company said it already has agreed to divest this business, with a purchase agreement expected in a matter of weeks.
UnitedHealth Group said that, upon closing the Change Healthcare deal, Optum would continue processing EDI transactions "in the most efficient, contractually available manner."
The company also pledged not to alter Change Healthcare's practice of making certain aggregated, de-identified data available to the market. And Optum would make any new products or services it develops using EDI data available to the market, the company said.
The recent court filing, which responded last week to allegations in the government's complaint, said the acquisition would help improve a U.S. health care system riddled with inefficiency. That includes an administrative process for paying claims that "takes up a massive amount of time, money and effort for providers and insurers alike," the response states.
Technology for EDI systems and claims-editing programs are helping, but UnitedHealth Group says the remaining "friction" in the system wastes an estimated $267 billion annually. Meanwhile, the nation's health system is plagued, the company says, by unnecessary tests and missed opportunities to provide care that's just as effective but less costly.
Buying Change Healthcare will simply continue the work, the company says, of building a "frictionless" platform to reduce administrative waste.
"The government's complaint tries to spin this new innovation as a bad thing, alleging that [UnitedHealth Group] would keep new innovations to itself and not share them with the marketplace...," the company said in the court filing.
"The entire business rationale for the transaction is for [UnitedHealth Group] to develop innovations that it can sell externally to other health insurers and health care providers."
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