Bloomberg News

Humana to Drop Arcadian Plans in Five States in Settlement

March 27, 2012

Humana Inc. (HUM) won approval from the U.S. Justice Department to buy Arcadian Management Services Inc. on the condition that it sell the acquired company’s Medicare Advantage business in parts of five states.

The settlement with Humana, filed today in federal court in Washington, requires the Louisville, Kentucky-based health insurer to divest the business in 51 counties to buyers that win approval from antitrust officials, the department said in a statement. The agreement still requires approval of a federal judge.

“These divestitures preserve competition so that Medicare beneficiaries, primarily senior citizens, in Arizona, Arkansas, Louisiana, Oklahoma and Texas, benefit from lower prices, better quality services and more innovative products for their health care needs,” Sharis Pozen, the acting chief of the antitrust division, said in the statement.

The department said the transaction as originally proposed would have eliminated competition between Humana and closely held Arcadian, which were “two of the few significant sellers of Medicare Advantage plans” in counties where the business will be sold.

The lines of business to be divested cover about 12,700 individual Medicare Advantage beneficiaries, according to a competitive impact statement filed by the Justice Department.

Humana announced it agreed to buy Oakland, California-based Arcadian in August without disclosing financial terms. The transaction was valued at $150 million by the two companies, according to court papers filed by the department.

To contact the reporter on this story: Seth Stern in Washington at sstern14@bloomberg.net

To contact the editor responsible for this story: Fred Strasser at fstrasser@bloomberg.net


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