Amerigroup Corporation is an American health insurance company owned by Anthem Inc. On August 16, 2021, the US Department of Justice announced that Amerigroup must divest its Medicare Advantage assets, paving the way for increased competition in the healthcare insurance sector. In this article, we will explore the Amerigroup divestiture and its implications for competition in the healthcare industry.
Background of the Divestiture
In 2012, Anthem acquired Amerigroup, a managed healthcare organization that provides health insurance services to low-income individuals. As part of the approval process, the Department of Justice mandated that the combined company must divest some of its assets to ensure that competition in the healthcare sector was not hindered.
In August 2021, the Department of Justice ordered Amerigroup to sell one of its Medicare Advantage plans in Virginia to Inova Health System Foundation to comply with the terms laid out earlier.
Implications for Competition
The divestiture of Amerigroup’s Medicare Advantage assets is expected to increase competition in the healthcare insurance market. It will allow other insurance companies to enter the market and offer more competitive healthcare plans to consumers.
The divestiture also aims to promote competition in the Medicare Advantage space, which provides managed healthcare services to seniors. By divesting its Medicare Advantage plan in Virginia, Anthem will be more competitive, benefiting consumers by offering them greater choice and lower costs.
Benefits for Consumers
The divestiture of Amerigroup’s Medicare Advantage assets is expected to have several benefits for consumers. First, it will increase competition in the market by paving the way for new insurance companies to enter the sector, offering consumers a wider range of options. Second, it will provide consumers with more affordable healthcare through enhanced cost-sharing and alternative coverage models. Lastly, the divestiture will increase the bargaining power of consumers in negotiations with their insurance companies.
The divestiture of Amerigroup’s Medicare Advantage assets is a significant step towards promoting competition and consumer choice in the healthcare sector. The decision will allow insurers to enter the market, which will provide a wider range of options for consumers, leading to lower costs and better healthcare coverage. As such, the Amerigroup divestiture is expected to create a competitive and vibrant market in the healthcare industry.
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