The Justice Department lawsuit seeking to block UnitedHealth Group's $13 billion acquisition of data broker Change Healthcare in federal court began Monday.
The government sued to block the deal in February, alleging it would violate federal antitrust restrictions by giving UnitedHealthcare access to proprietary information on how rival health insurers structure their provider networks.
UnitedHealth Group has argued that adding Change Healthcare's claims clearinghouse technology to its Optum healthcare services subsidiary would lower costs for health insurance companies and providers and, in turn, for patients. The companies initially planned to close the deal last year, and now aim to complete the transaction by Dec. 31.
The trial began in the U.S. District Court for the District of Columbia on Monday and is slated to last two weeks. Judge Carl Nichols, a former clerk for Supreme Court Justice Clarence Thomas whom President Donald Trump nominated to the 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, the Optum subsidiary's smallest division, was responsible for $3.2 billion of Optum's $45 billion in revenue during the second-quarter.
Acquiring Change Healthcare would enable 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 accelerate payments to providers and to more transparently bill insurers and patients, the company said in a news release announcing the deal in January 2021.
UnitedHealth would leverage Change Healthcare's clinical data to offer providers analytical decision support for individual patients. That would advance Optum's value-based care initiatives, the company said.
Optum would utilize Change Healthcare's patient engagement tool—which reaches more than 200 million people a year—with members' insurance policies to promote health incentive programs. The acquisition builds on UnitedHealth's plan to make Optum patients' entry point into the parent company's brand.
In June, Optum reportedly paid an undisclosed sum to buy Irving-based Healthcare Associates of Texas from private equity firm Webster Equity Partners. Also this year, UnitedHealth announced plans to buy Lafayette, Louisiana-based home health and hospice provider LHC Group, behavioral health and substance abuse chain Refresh Mental Health of Jacksonville Beach, Florida, and the Kelsey-Seybold Clinic medical group in Houston.
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 doctors working at Optum.
Why the government is suing
If the deal is completed, UnitedHealth would hold a monopoly on the claims clearinghouse market, the Justice Department alleges. That would give it insight into what rivals pay providers and how they structure their networks, according to the lawsuit.
Nine of the nation's 10 largest insurers rely on Change Healthcare to review, revise and reimburse claims, the Justice Department lawsuit says. These companies contract with Change Healthcare to avoid conducting business with a competitor, OptumInsight, according to the government.
The acquisition would give UnitedHealth control of more than 75% of the claims editing market and leave other insurers with little choice but to work with a competitor, according to the Justice Department. Because Change Healthcare is the leading electronic data interchange clearinghouse among providers, insurers would be unable to bypass UnitedHealth even if they switched service providers, as their insurance data would still pass through Change Healthcare's network, the Justice Department lawsuit says.
Hospital, pharmacy and antitrust advocates have echoed the Justice Department's argument. They oppose the deal over monopoly concerns and maintain the acquisition would raise costs. The American Hospital Association and National Community Pharmacists Association support Justice Department's move to block the acquisition.
UnitedHealth's plan for approval
If the acquisition advances, UnitedHealth would 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 would retain ClaimsXten.
UnitedHealth would also pay a $650 million fee to Change Healthcare if the transaction is not completed because of a court decision.
The company also agreed to purchase another $60 million of Change Healthcare's services when the deal was announced in January 2021, the Justice Department wrote in the lawsuit. That means that even if the deal falls through, Change Healthcare would have gained a valuable customer, the government alleges.
