DMHC Okays Health Net’s Acquisition

The Department of Managed Care has approved Midwest health insurance giant Centene’s acquisition of Woodland Hills-based Health Net, attaching a set of conditions to the deal that would ensure both plans would continues to have a significant presence in California.

The conditions include:

• Health Net's California headquarters are to be maintained

• A service center is to be created in an economically distressed community in California that employs at least 300

• Improve enrollee quality of care

• Contribute $75 million toward the state's healthcare infrastructure for underserved groups

• Contribute $65 million toward improving enrollee healthcare outcomes

“The DMHC's conditions will improve both plan performance and care for California's members,” said DMHC Director Shelley Rouillard. “In addition to the plans agreeing to invest in our healthcare system to better serve consumers, I am pleased to announce Health Net's headquarters and key operations will remain in California. I also applaud Centene's commitment to our state by building a new service center in California.”

The two insurers did not make any agreements to limit or reduce future premium increases. Centene came to terms to acquire Health Net for $6.8 billion in cash and stock last fall. It had limited operations in California prior to the deal. Health Net has about 3 million covered lives in California and 300,000 in Arizona, Oregon and Washington.

Regulators in several other states and the federal government have also given their approval.

Regulators in California and elsewhere have yet to approve mergers between Aetna and Humana and Anthem and Cigna.