Clinical laboratory information would be part of a “massive” transfer of data that may affect medical decision-making ‘to the detriment of consumers and healthcare providers’ the AHA stated in a letter to the DOJ

In yet another example of healthcare market concentration and consolidation where the big get bigger—sometimes at the expense of patients, physicians, and clinical laboratories—UnitedHealth Group (NYSE:UNH) announced in January the agreement that would enable it to acquire and merge Change Healthcare (NASDAQ:CHNG) with UnitedHealth Group’s (UHG’s) subsidiary OptumInsight. Many medical laboratories and anatomic pathology groups are clients of Change Healthcare.

Healthcare Finance reported that Nashville-based Change Healthcare “will join with OptumInsight to provide software and data analytics, technology-enabled services and research, advisory and revenue cycle management offerings, according to Optum parent company UnitedHealth Group.”

Change Healthcare says its Pathology Practice Revenue Cycle Management (RCM) services are used by more than 600 pathology and laboratory clients representing about 3,800 doctors. Perhaps this is why the American Hospital Association (AHA) has registered opposition to the proposed acquisition with the federal Department of Justice (DOJ).

In a letter to Richard Powers, JD, Acting Assistant Attorney General of the Antitrust Division at the DOJ, the AHA asked the DOJ to “conduct a thorough investigation of the proposed transaction because it threatens to reduce competition for the sale of healthcare information technology (HIT) services to hospitals and other healthcare providers, which could negatively impact consumers and healthcare providers.”

‘Substantial Antitrust Concerns’ Notes the AHA about the Merger

Optum, based in Eden Prairie, Minn., has approximately 5,000 hospitals and 300 health plans in its portfolio, according to Healthcare Finance. The health information technology and services firm offers data analytics, pharmacy care services, population health management, and more and is UHG’s fastest growing subsidiary, Modern Healthcare reported. UHG also owns UnitedHealthcare, the largest US health insurer.

When the AHA became troubled by UHG’s Optum/Change Healthcare plans, the national healthcare industry trade group asked the Antitrust Division of the DOJ to investigate the merger, noting in its letter to Powers that the merger “presents substantial antitrust concerns because the transaction agreement provides that the Parties will divest assets that generate hundreds of millions of dollars in revenue in order to obtain DOJ approval.”

In a US Securities and Exchange Commission report filed March 24, the DOJ announced it would extend its time to review the proposed acquisition, Becker’s Hospital Review reported.

Merger Could Affect Provider Reimbursement and Create Opportunity for Misuse of Patient Data

In its March 17 letter to DOJ’s Richard Powers, the AHA urged review of the proposed merger for these overarching reasons:

  • Possible loss of competition for services such as RCM and health IT services.
  • Likely repercussions from combining “massive” Optum and Change Healthcare data sets, which could be misused.

The marriage of Optum’s and Change Healthcare’s private patient data, the AHA portends, could possibly lead to altered decisions on patient care and claims processing and denials, Healthcare Finance reported.

Analysts told Healthcare Dive the merger would “consolidate Optum’s dominance in the data analytics space.”

In the AHA letter to the DOJ, Melinda Reid Hatton, JD, AHA Vice President and General Counsel, wrote, “The proposed acquisition would produce a massive consolidation of competitively sensitive healthcare data and shift such data from Change Healthcare, a neutral third party, to Optum.”

She continued, “Post-merger, Optum will have strong financial incentives to use competitive payers’ data to inform its reimbursement rates and set its competitive clinical strategy, which will reduce competition among payers and harm hospitals and other providers. 

“Optum’s proposed acquisition of Change Healthcare will reduce the competition between two similarly scaled competitors,” Hatton concluded.

Melinda Reid Hatton, JD headshot
In the letter the AHA sent to Richard Powers, JD, Acting Assistant Attorney General of the Antitrust Division at the DOJ, Melinda Reid Hatton, JD (above), AHA Vice President and General Counsel, wrote, “Because Optum’s parent, UHG, also owns the largest health insurance company—UnitedHealthcare—the combination of the Parties’ data sets would impact and likely distort decisions about patient care and claims processing and denials to the detriment of consumers and healthcare providers.” Much of this data would come from the clinical laboratories and pathology groups in those two company’s databases. (Photo copyright: American Hospital Association.)

Optum, Change Healthcare Say Their Goal is Better Outcomes

For their part, according to a UHG news release announcing the merger in January, Optum and Change Healthcare are intent on combining their technology and service companies for the purpose of improving “core clinical, administrative, and payment processes.”

“Optum and Change Healthcare share a vision for better health outcomes and experiences for everyone at lower cost,” an Optum spokesperson told Becker’s Hospital Review.

A UHG spokesperson told Healthcare Dive a separation of UnitedHealthcare and Optum businesses is in place.

The AHA’s letter acknowledged Optum’s inclusion of an “informational firewall,” but noted that it is not enough. “UHG has never demonstrated that firewalls are sufficiently robust to prevent sensitive and strategic information-sharing,” Hatton wrote.

The deal, which was originally expected to close in the second quarter of 2021, has a $13 billion valuation, Healthcare Dive reported. 

How Might This Affect Clinical Laboratories?

For clinical laboratories and pathology groups, the proposed merger could introduce questions about UnitedHealthcare’s access to information about how labs bill different payers other than UnitedHealthcare. 

Change Healthcare each year processes more than 87 million pathology and clinical laboratory procedures, for which it charges $4.4 billion, according to the company’s website. The services it provides are aimed at increasing clinical laboratory cash flow, patient revenue and billing, coding efficiency, and compliance, according to Change Healthcare.

Therefore, Change Healthcare—in serving labs and pathology groups—already has data about agreements on charges for tests and other prices labs have with different insurers, noted Robert Michel, Editor-in-Chief of Dark Daily and its sister publication The Dark Report.

“It’s only reasonable for lab leaders to be concerned—if this deal is made—about lab pricing and other information,” Michel said. “Could it be reviewed and possibly used by UnitedHealthcare to establish its own terms in its network contracts with clinical labs and pathology groups?”

Clinical laboratory leaders will want to monitor these events as DOJ receives more information and further examines the UHG Optum/Change Healthcare proposed merger. It will be interesting to see if opposition to the merger arises from other healthcare associations and professional groups.

—Donna Marie Pocius

Related Information:

OptumInsight and Change Healthcare Combine to Advance a More Modern, Information and Technology-Enabled Healthcare Platform

Hospitals Ask DOJ to Probe UnitedHealth’s Change Healthcare Acquisition

AHA Urges DOJ to Investigate UnitedHealth Group’s Acquisition of Change Healthcare

Statement

AHA Letter to DOJ

Justice Department to Further Review $13B UnitedHealth, Change Healthcare Deal

AHA Signals Opposition to Optum, UnitedHealthcare Group’s Acquisition of Change Healthcare

DOJ to Investigate UnitedHealth’s $13B Change Healthcare Buy