Bob Herman
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Justice Department lawsuit puts UnitedHealth in hot water

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A newly unsealed lawsuit alleges UnitedHealth Group "defrauded the United States of hundreds of millions — and likely billions — of dollars" by knowingly submitting false and inflated charges to Medicare, multiple media outlets have reported.

The stocks of UnitedHealth and other insurers that sell Medicare Advantage plans were hammered Friday on the news, and some financial analysts believe the lawsuit will likely "result in additional scrutiny on Medicare Advantage," the private alternative to traditional Medicare coverage. A UnitedHealth spokesman said the company will fight the lawsuit "vigorously," saying it's based on a misinterpretation of Medicare rules.

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How the FTC’s new competition chief could affect health care

President Trump's acting Federal Trade Commission chairwoman, Maureen Ohlhausen, is wasting no time shaking up the agency. She named Tad Lipsky the new acting director of the FTC's Bureau of Competition yesterday — the office charged with policing mergers and acquisitions for most of the health care industry.

What this means: Potentially less oversight, but not for all health care players. Lipsky replaces Deborah Feinstein, who went after some large hospital and health system mergers. However, her group has been lax on many transactions involving drug companies, pharmacy benefit managers and retail pharmacies.

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The divergent finances of two merging health systems

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Catholic Health Initiatives and Dignity Health, two massive not-for-profit hospital systems exploring a merger (they call it an "affiliation"), are sitting on very different financial foundations right now.

The numbers: Dignity Health reported Thursday a $165 million operating surplus in the first six months of its fiscal year, which ended Dec. 31, on $6.6 billion of revenue. CHI, meanwhile, lost $384 million on $8.1 billion of revenue in the same time period. CHI has struggled to manage its health insurance company, which it is selling, and the system has been weighed down by bloated expenses and fewer patients with commercial insurance.

Why this matters: This is one of the largest potential deals in the health care industry right now, and both sides are still evaluating the pros and cons. A combined CHI-Dignity system would have almost $30 billion in annual revenue, making it larger than companies like McDonald's or Macy's. But a glaring issue is whether CHI can stop the bleeding.

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Court to review Anthem-Cigna feud

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A Delaware corporate court has granted a temporary restraining order that prohibits Cigna from terminating its merger with Anthem. The court will schedule a hearing the week of April 10 to review both sides of what has become an incredibly messy divorce between the two health insurers.

Cigna sued Anthem this week after a federal judge blocked their transaction. Cigna demanded the $1.85 billion break-up fee as well as $13 billion in damages. Anthem countered with its own lawsuit, and took Cigna to task with pointed examples of how Cigna "sabotaged" the deal. One of Anthem's most interesting claims: Cigna did almost nothing on the back end to help combine the companies and refused mediation that was suggested by the court.

What to look for: Anthem's proposed $54 billion acquisition of Cigna has been tumultuous from the start, and now it's a bloodbath. Anthem is still pursuing an expedited appeal, believing the deal can be completed, although most antitrust experts believe otherwise. This court case may come down to how much Anthem will have to pay in the break-up fee. Analysts have said Cigna may have a difficult time getting the other $13 billion.

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Obamacare causes unexpected losses for Molina Healthcare

Andrew Harnik / AP

Molina Healthcare's stock tumbled after hours Wednesday after the health insurer posted a fourth-quarter loss that was attributed to parts of Obamacare — a big problem for one of the health insurers that has had success in the program.

However, the company didn't lose money because it had sicker-than-expected enrollees. In fact, medical costs for its Obamacare enrollees were $120 million lower than Molina thought. Instead, Molina got slammed because it had healthier members and had to pay $325 million into an Obamacare program called risk adjustment, which pools money from insurers in a given state and redistributes it to those who had higher-cost enrollees.

Molina's losses also were "exacerbated by the federal government's failure" to make payments under Obamacare's risk corridor program, another feature designed to reduce insurer losses in the early years. Axios reported last month that Molina, which has not yet committed to the exchanges in 2018, was suing the federal government for $52 million in risk corridor payments. Molina believes it is entitled to another $90 million for 2016.

Why this matters: Insurers like Humana are exiting Obamacare because they said they didn't have enough young and healthy members to offset the higher costs of older and sicker people. But Molina's problems show there are other components of Obamacare that insurers want fixed in any kind of replacement package. The risk corridor problem, however, lays entirely at the feet of the congressional Republicans who stymied those payments.

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National health spending slowed down in 2016

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Americans spent $3.36 trillion on health care in 2016, a 4.8% increase from 2015, according to the latest spending projections from the Centers for Medicare and Medicaid Services.

Although last year's growth rate in health care expenses was lower than the 5.8% increase in 2015, it was still more than double the broader U.S. inflation rate of 2.1%, according to the report from the agency's Office of the Actuary. That indicates health care costs have moderated broadly during the Obamacare years, but health care continues to eat up more of the U.S. economy. Read on for some of the other important stats from the report.

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Obamacare rule is mostly tinkering, but suggests bigger plans

Andrew Harnik/AP

The Obamacare "market stabilization" rule released this morning dodges a lot of the biggest issues health insurers are worried about. It's mostly meant to send signals about where the Trump administration is headed — and analysts say the signals suggest a more insurer-friendly environment, with tighter rules for consumers and separate treatment for sick people.

Insurers are mostly happy with the changes in the proposed rule, though they're noncommittal about whether it will bring them back to the Obamacare marketplaces next year. But liberals and consumer groups are up in arms about it, saying it will shift costs to patients. Health and Human Services Secretary Tom Price said in a statement that it's the first stage of an effort to "reverse the harmful effects of Obamacare."

Read on for highlights of the early reactions.

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Aetna CEO: Obamacare is in "death spiral"

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Aetna CEO Mark Bertolini told the Wall Street Journal's Dennis Berman in a livestreamed interview Wednesday that Obamacare "is in a death spiral." Aetna has already scaled back its Obamacare plans for 2017, citing $450 million in losses, and Bertolini wouldn't make any commitments for next year.

However, his "death spiral" claim — a situation in which healthy people leave an insurance marketplace and drive up costs for the sick — was quickly questioned by health policy analysts who said the evidence argues against it.

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Humana to exit Obamacare exchanges in 2018

Ed Reinke / AP

Humana is ready to jump ship completely on Obamacare. Executives said Tuesday that Humana "cannot continue to offer" Obamacare coverage for 2018, saying that the recent enrollment period showed the exchanges still have too many sick people and not enough healthy enrollees.

Humana spokesman Tom Noland confirmed that Humana, which had already scaled back its Obamacare participation, would stop selling coverage both on and off the individual exchanges in 2018. It has 152,000 customers in those plans. Federal law bars insurers from re-entering the marketplaces for five years, assuming they discontinue all types of individual policies.

Why this matters: Humana is now the first health insurance company to publicly come out and say it will completely end all Obamacare plans after this year. Other insurers are debating their participation internally and are waiting for President Trump and Republicans in Congress to put out an Obamacare replacement plan before they commit to the individual market. But the inability of Republicans to coalesce around a new plan is starting to have a real effect.

What to watch for: This could be the beginning of a domino effect in the individual market. If the Trump administration doesn't adequately stabilize the exchanges, more insurers could follow Humana, leaving many consumers out of health insurance options for 2018.

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Cigna sues Anthem to stop merger

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Cigna is suing Anthem to halt its merger, and it's demanding Anthem pay the $1.85 billion termination fee as well as $13 billion in damages that include "the amount of premium that Cigna shareholders did not realize as a result of the failed merger process."

A federal judge ruled last week that the Anthem-Cigna transaction was anticompetitive, particularly for people who get their health insurance through big national employers, and Anthem had intended to file an appeal. Now, Anthem will have to fight its own merger partner in court. Anthem said Cigna does "not have a right" to kill the deal.

This break-up is a lot less amicable than the deal between Aetna and Humana. Those two insurers mutually terminated their merger earlier today.

Why this matters: Anthem and Cigna have disliked each other from the start, when Cigna CEO David Cordani demanded he become the top executive of the combined company but got no such assurances. The legal teams on both sides also had multiple quibbles. It's only going to get messier and add more legal costs to the growing tab associated with the health insurance mega-mergers. And it's all coming at a time when Congress is trying to dismantle Obamacare, which would disrupt both companies.