Amerigroup Corp’s Divestiture will Allow for Competition
On November 28, 2012, the Department of Justice ended its concerns over WellPoint Inc’s proposed acquisition of Amerigroup after Amerigroup Corp sold its subsidiary, Amerigroup Virginia Inc. The Justice Department initially ruled that the merger would significantly decrease competition of Medicaid managed care plans in Northern Virginia since Amerigroup and WellPoint are the only Medicaid managed care plan providers in Northern Virginia.
In order to settle concerns with the Justice Department, Amerigroup agreed to sell Amerigroup Virginia to Inova Health System Foundation. The Justice Department closed the investigation immediately after the transaction was completed and reviewed.
If there was no divestiture, the merger would have created a monopoly in Arlington, Culpeper, Fairfax, Fauquier, Frederick, Loudon, Prince William, Rappahannock, and Warren counties along with the cities of Alexandria, Falls Church, Fairfax and Manassas Park. Before the merger, WellPoint and Amerigroup competed as providers to physicians, hospitals, and pharmacies.
Congress usually requires states to provide Medicaid beneficiaries with at least two Medicaid managed companies if the state requires beneficiaries to have managed care plans.
Acting Assistant Attorney General Renata B. Hesse with the Antitrust Division stated: “The divestiture of Amerigroup Virginia will ensure continued competition in the markets for Medicaid managed care plans in Northern Virginia. Preserving competition in health care markets is vital to ensuring that consumers receive better and more innovative health care services.”
Wellpoint has its headquarters in Indianapolis and is currently a licensee of the Blue Cross and Blue Shield Association. Wellpoint and subsidiaries reported revenues of $60.7 billion 2011 and served over 65 million members.
Amerigroup is headquartered in Virginia Beach and organizes services for individuals receiving funds from public healthcare programs. Amerigroup reported revenues of over $6 billion in 2011 and served more than 2 million members.
Source: Department of Justice