On March, 4, 2016, the Department of Managed Health Care (DMHC) held a public meeting on the proposed takeover of Cigna by Anthem Blue Cross. The public meeting was requested by consumer groups including Health Access, Consumers Union, and others to raise questions about the structure of the deal, its potential impact on California’s patients and health care systems, and ensure proper oversight as insurance companies merge and become larger.
The proposed Anthem Blue Cross-Cigna merger is one of three pending insurer mergers being reviewed by DMHC. Late last year, DMHC approved a merger between Blue Shield and Care1st, following Health Access’ and other consumer groups’ requests for strong conditions to address potential negative impacts. Health Access is also monitoring the proposed Centene-Health Net and Aetna-Humana mergers and will continue to fully engage state regulators, including the DMHC and CDI (California Department of Insurance), to ensure strong consumer protections and a commitment to improving the health care delivery system. Please visit our Merger Watch page for information about Health Access’ work on these mergers.
Anthem Blue Cross is one of the largest health insurance companies in California and operates in both the commercial and public market. Health Access and other consumer advocates argue that Anthem’s troubling record of not meeting its obligations to its customers raises questions about whether those problems will only grow as the company gets bigger.
Tam Ma, Health Access California’s Policy Counsel, provided comment on behalf of California consumers, raising questions about Anthem’s track record in California. Specifically, she made the case that to ensure that this merger—and others— is in the public interest, insurers should not be allowed to get bigger unless they commit to getting better, sharing skepticism about whether bigger is actually better for consumers.
Anthem’s Troubling Track Record
In her testimony, Tam Ma focused on Anthem’s track record in California and its lack of respect for California law as well as basic consumer protections.
- Grievance Systems: In Anthem’s most recent Routine Medical Survey, 5 out of the 7 major deficiencies found are rooted in its poor handling of grievances. DMHC found that consumer complaints were not adequately investigated or resolved because Anthem misclassified them as inquires instead of grievances. In addition, Anthem does not always do its due diligence when reviewing complaints. As a result, critical facts or solutions were overlooked, leaving consumers without needed medications or stuck with bills they should not have to pay.
- Utilization Management: Anthem’s utilization management practices are also deficient. Anthem routinely failed to adequately explain why it denied, delayed, or modified treatment requested by providers, especially when it comes to behavioral health care. As a result, consumers have no way of knowing if decisions about medical necessity are made using sound clinical judgment.
- Language Assistance: Anthem has also failed to assess the language needs of its current enrollees. As a result, some patients are unable to communicate with their providers. These issues are particularly important because 40% of Medi-Cal and subsidy-eligible Covered California consumers speak a language other than English. The fact that Anthem is not complying with language access requirements is a critical indicator that may not be providing quality care to all its enrollees.
- Provider Directories: Anthem has also had notoriously inaccurate provider directories, making it difficult for consumers to know which in-network doctors are accepting new patients. Last year, the State Auditor found 23% of the information in Anthem’s Medi-Cal directory for Fresno County to be inaccurate. Anthem also received a $250,000 fine from DMHC for inaccuracies in its directory for the individual market. It is unclear whether Anthem actually has adequate networks. Health Access requests DMHC scrutinize their timely access reports, which we note are not yet publicly available. DMHC should require Anthem to correct all outstanding deficiencies and before it is allowed to complete its acquisition of Cigna.
- Unreasonable Rate Increases: Anthem has proceeded with three rate increases that the Department of Insurance found to be unreasonable. If this merger is approved, it must be conditioned on the promise to not proceed with unreasonable rate increases.
- Market concentration: This merger could result in less competition and fewer options for consumers. An analysis by Cattaneo and Stroud found that the combination of Anthem and Cigna would increase concentration in California’s commercial market and reduce competitiveness in 31 counties.
Several other organizations provided public comment regarding the proposed merger—all expressing their opposition to it. Physician groups, organizations representing communities of color as well as consumer groups, such as Consumers Union and the Western Center for Law and Poverty, raised similar concerns about unreasonable rate increases, inaccurate provider directories, network inadequacies and low consumer satisfaction scores.
Given Anthem and Cigna’s track records, Health Access and other consumer advocates are urging state regulators and policymakers to scrutinize this merger and other pending deals. If this merger is supposed to lead to better care and lower cost, then clear commitments should be made that guarantee consumers will benefit in the form of lower premiums, lower out-of-pocket costs, higher quality care, and/or reduced health disparities.
If you or your organization would like to submit comments about this merger or the larger questions at stake concerning mergers in general, you have until Monday, March 11, 5:00 pm to submit your comments to firstname.lastname@example.org.
You can also sign our petition to demonstrate your support for accountability as these mergers are considered.VIEW THE FILE Insurers