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WellCare-Centene deal alarms American Hospital Association

TAMPA — A big player in health care wants federal officials to scrutinize the proposed $17.3 billion acquisition of Tampa-based WellCare Health Plans by Centene Corp. of St. Louis.

In a letter this week, the American Hospital Association urged the anti-trust division of the U.S. Department of Justice to investigate the proposed merger "because it threatens to reduce competition in delivery of Medicaid managed care and Medicare Advantage services to tens of millions of consumers across broad swaths of the country."

'A UNIQUE OPPORTUNITY': Centene to buy Tampa-based WellCare in $17.3 billion deal, creating powerhouse in Medicaid, Medicare and Obamacare

Centene proposed in March to buy WellCare for $15.3 billion in cash and stock. Once WellCare's debt is included, the transaction has a total value fo $17.3 billion. If approved by regulators, the merger would create a bigger and more far-reaching provider in the Medicare, Medicaid and the Affordable Care Act's health insurance marketplaces, with an estimated 22 million members in all 50 states.

The new company, headquartered in St. Louis but still with a sizable presence in Tampa, would have more than 12 million Medicaid members and about 5 million members in Medicare or Medicare prescription drug plans. It expects to generate revenues of $97 billion a year, with 65 percent coming from Medicaid and 15 percent each from Medicare and Obamacare.

The companies say the result would be a more diversified company that could better serve customers and compete more effectively.

"Together, Centene and WellCare will create a mission-driven organization offering best-in-class capabilities and access to high-quality, affordable healthcare to members in their local communities," WellCare director of corporate communications Alissa Lawver said in an email Friday to the Tampa Bay Times. "In the near-term, WellCare remains focused on our commitments to our members, providers and government partners."

But the American Hospital Association, which has 43,000 individual members and represents 5,000 member hospitals, health systems and other health care organizations, contended that Medicaid patients in Florida, where the new company would be expected to control about half the Medicaid market, and other states would suffer as a result of a "dramatically increased concentration" of providers.

"The WellCare-Centene transaction is likely to significantly reduce competition and will therefore harm the most vulnerable Americans," the association's general counsel, Melinda Reid Hatton, wrote. So she said justice officials "should vigorously review this transaction's effects on current and future competition and take all
appropriate measures to protect U.S. consumers."

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Contact Richard Danielson at rdanielson@tampabay.com or (813) 226-3403. Follow @Danielson_Times

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