AMA opposes UnitedHealth/Sierra merger

CHICAGO--The American Medical Assn. has asked the U.S. Department of Justice to block UnitedHealth Group Inc.'s proposed acquisition of Sierra Health Services Inc.

The Chicago-based provider organization wrote to U.S. Attorney General Alberto Gonzales to express its strong opposition to the acquisition, claiming that UnitedHealth's goal is to dominate the Nevada and Las Vegas health insurance markets.

Las Vegas-based Sierra is the second-largest insurer in Nevada, with a total market share of 29%, while Minnetonka, Minn.-based UnitedHealth has a 14% market share, according to the AMA. Sierra has a dominant position in the Las Vegas-Paradise metropolitan area health maintenance organization market, with an 81% market share, while UnitedHealth has a 13% share, the AMA said.

"These numbers, along with United's well-documented single-minded focus on profits, should raise major red flags about United's potential to exercise monopoly power over purchasers of health care by raising premiums above market rates, as well as its potential to exercise monopsony power over the purchase of physician services," the letter stated.

The AMA expressed concerns about UnitedHealth's business practices. For example, UnitedHealth recently suspended a policy that would have allowed the insurer to fine New Jersey physicians if their patients have laboratory tests in out-of-network facilities. The insurer temporarily suspended the policy at the request of the New Jersey Department of Banking and Insurance after officials expressed dissatisfaction with the legality of the policy, according to a department spokesman. The policy, though, went into effect nationwide earlier this month.

The AMA also noted that UnitedHealth has been cited and fined by a number of states for violations of state law, including violations of prompt-pay laws and failure to respond to regulatory orders and official inquiries.

A UnitedHealth spokesman called AMA's argument "misleading" and said the acquisition will provide Nevada residents with a full range of affordable services and access to a broader network of quality physicians and hospitals.

"We believe that this combination is in the best interests of consumers, purchasers, providers and the people of Nevada," the spokesman said in an e-mailed statement.