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Santa Monica, CA — Consumer Watchdog today urged the Department of Managed Health Care (DMHC) to use its full authority over the proposed Centene/Health Net merger to enact safeguards to ensure plans are not cancelled, benefits are not reduced and consumers do not bear the cost of the merger.

In a letter to DMHC, Consumer Watchdog wrote that Centene and Health Net claim that the merger will increase competition, improve care and benefit consumers. Unfortunately, healthcare mergers generally lead to the opposite: fewer choices, inadequate physician networks and higher premiums, the letter said.

"DMHC has the authority to deny or require changes to the 'Change in Control' request and should use it in order to assure continued access to quality health care and provide the full protection of state laws governing health plans," Consumer Watchdog wrote. "These types of mergers pose risks that include the further narrowing of physician networks, higher premiums, higher out-of-pocket costs (deductibles, co-pays and coinsurance) and fewer health insurance choices."

Read the letter here: http://www.consumerwatchdog.org/resources/centene_health_net_merger_.pdf

Among the concessions Blue Shield agreed to in DMHC's approval of its acquisition of Care1st was a $140 million charitable pledge. Blue Shield has since reneged on the deal, claiming it never made the promise. DMHC has declined to enforce it. Consumer Watchdog called for air-tight metrics in any Centene/Health Net approval to ensure commitments can be measured and enforced.

"... millions of Californians are newly insured," the letter continued. "Yet many low- and middle-income families continue to struggle to pay the costs of a policy, let alone use their new health coverage, as deductibles soar and doctor and hospital networks shrink. Mergers exacerbate these issues."  

The letter said conditions on the Centene/Health Net merger should include:

- Enhanced Rate Review: To assure the public that savings from the merger are passed on but costs are not, DMHC must require the merged company to agree to five years of enhanced rate review.
- Strengthen Health Care Delivery System: DMHC should mandate that Centene participate and invest in statewide efforts to centralize a provider directory database that allows easy and timely access for consumers.
- No Plan Cancellations: As part of its conditions, Centene should be required to maintain Health Net’s individual and small group products on the same basis as prior to the merger for the next five years.
- Bar “Upstreaming” of California Premiums to Centene: DMHC should prohibit Centene from removing reserves from California to pay for severance and retention packages for executives in connection with the merger and require it to explain any “upstream” amounts sent out of state post merger.
- Improve Quality of Care: Centene should be required to resolve complaints and litigation related to Health Net’s networks and quality of care for the benefit of consumers.

Consumer Watchdog is currently involved in litigation on behalf of Health Net consumers because the insurer failed to provide customers accurate information about which providers were participating in their networks. Read more about that case here.

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