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March 30, 2007
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MHMR March 30, 2007; Volume 15, Number 6
Highmark, IBC to merge...AMA opposes United-Sierra deal...United shares fall on downgrade...Sierra trading below United offer...Coventry raises ’07 EPS outlook...Amerigroup hit with more fines...Medicare PPO lives up 13%...BCBS plans tops in satisfaction...Humana names chief actuary...Medicare HMO lives up 1.3%...Medicare PPO lives up 1.6%...CVS buys Caremark...HMO stocks rise 0.8%...Services stocks rise 0.4%...and more...
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HIGHMARK, INDEPENDENCE TO MERGE
Highmark Inc. (Pittsburgh) and Independence Blue Cross (Philadelphia) have agreed to merge, a deal that will create the nation’s second largest Blue Cross Blue Shield company in revenues (third in enrollment) and a dominant force in the Pennsylvania market.
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AMA SEEKS TO BLOCK UNITED-SIERRA DEAL
The American Medical Assn. (Washington) has asked the U.S. Justice Dept. to block UnitedHealth Group (Minnetonka, MN) from acquiring Sierra Health Services (Las Vegas, NV), arguing that the merger would provide United with a “near-monopoly in the HMO insurance market” in Nevada.
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UNITED SHARES FALL 6% ON DOWNGRADE
Shares in UnitedHealth Group (Minnetonka, MN) fell 6% for the week ended March 30, after analyst Justin Lake of UBS downgraded the company from a buy to a hold.
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SIERRA SHARES TRADING AT 5% BELOW UNITED OFFER
Shares in Sierra Health Services (Las Vegas, NV) closed at $41.17 on March 30, more than two points or 5% below the buyout offer of $43.50 per share made by UnitedHealth Group (Minnetonka, MN) three weeks ago—suggesting that investors are concerned over whether the deal will receive regulatory approval. The American Medical Assn. (Washington) has asked the Dept. of Justice to block the transaction (see story, this issue), and the DOJ confirmed that an investigation is under way.
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COVENTRY RAISES ’07 EARNINGS OUTLOOK
Coventry Health Care (Bethesda, MD) said it has increased its 2007 earnings projection to between $3.92 and $3.98 per share ($619.4 million to $628.9 million based on 158 million diluted shares).
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AMERIGROUP ORDERED TO PAY $334 MM IN ILLINOIS LAWSUIT
A U.S. District Court Judge in Illinois levied an additional $190 million in fines on Amerigroup (Virginia Beach, VA), bringing to $334 million total fines and damages related to a lawsuit claiming that the company improperly avoided enrolling third-trimester pregnant women in its Medicaid plans between the years 2000 and 2003 (MHMR, Oct. 31, 2006).
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1Q07 MEDICARE PPO LIVES CLIMB 12.8%
Medicare Advantage PPO lives increased 12.8% to 497,266 as of March 30, 2007, compared to 440,803 as of year-end 2006, according to an MHMR tally of figures from the Centers for Medicare & Medicaid Services.
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BCBS PLANS SCORE HIGH IN SATISFACTION, STUDY SAYS
Blue Cross Blue Shield and privately owned health plans tended to score higher in customer satisfaction ratings than non-Blues or health plans owned by publicly traded corporations, according to a survey by J.D. Power & Associates (Westlake Village, CA) of 10,552 members of commercial HMO, PPO and POS plans.
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1Q07 MEDICARE HMO LIVES UP 1.3%
Medicare Advantage HMO lives increased 1.3% to 5.645 million as of March 31, 2007, compared to 5.572 million as of year-end 2006, according to an MHMR tally of figures from the Centers for Medicare & Medicaid Services.
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1Q07 MEDICARE PART D PDP LIVES INCREASE 1.6%
Enrollment in stand-alone prescription drug plans (PDP) under Medicare Part D increased 1.6% to 16.832 million as of March 30, 2007, compared to 16.575 million as of year-end 2006, according to an MHMR tally of figures from the Centers for Medicare & Medicaid Services.
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