WellPoint Inc. Charged with Antitrust Violation in Virginia

Amerigroup Corp.’s sale of its subsidiary, Amerigroup Virginia Inc., has addressed the government’s concerns with WellPoint Inc.’s proposed acquisition of Amerigroup, a move that would have led to a merger to monopoly in Medicaid managed care in Northern Virginia.

The proposed acquisition, which was initially met with scrutiny by the government, would have given WellPoint a near-total control over the Medicaid managed care market in the region, resulting in a significant loss of competition. However, the sale of Amerigroup Virginia to the Inova Health System Foundation has alleviated these concerns, ensuring that Medicaid beneficiaries in Northern Virginia will continue to have a choice of at least two Medicaid managed care entities.

According to the government, WellPoint and Amerigroup compete in Northern Virginia on the breadth and quality of their provider networks of physicians, hospitals, and pharmacies; plan design; service; care management; and programs and services to improve the health status of Medicaid enrollees.

The Virginia Medicaid managed care program provides enrollees with access to preventive and coordinated care through managed care organizations, including WellPoint and Amerigroup. The program has been recognized for its importance in providing choice to Medicaid beneficiaries, with Congress generally requiring that states give beneficiaries a choice of at least two Medicaid managed care entities if the state requires beneficiaries to enroll in managed care plans.

WellPoint Inc. is headquartered in Indianapolis and is a licensee of the Blue Cross and Blue Shield Association. The company serves more than 65 million members and had 2011 revenues of $60.7 billion. Amerigroup Corporation, on the other hand, is headquartered in Virginia Beach, Va., and coordinates services for individuals in publicly funded healthcare programs. Amerigroup serves more than 2 million members and had 2011 revenue of more than $6 billion.

Despite the concerns raised by the government, the proposed acquisition of Amerigroup by WellPoint Inc. has not been formally charged with any crimes. However, the sale of Amerigroup Virginia to the Inova Health System Foundation has addressed the government’s concerns, allowing the parties to proceed with the transaction.

The government worked closely with the Virginia Attorney General’s office in reviewing the sale of Amerigroup Virginia to the Inova Health System Foundation. The divestiture of Amerigroup Virginia will ensure continued competition in the markets for Medicaid managed care plans in Northern Virginia, according to Acting Assistant Attorney General Renata B. Hesse in charge of the Antitrust Division.

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