UnitedHealth Group

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UnitedHealth Group Incorporated NYSE: UNH is a diversified health and "well-being" company. Headquartered in Minnetonka, Minnesota, UnitedHealth Group offers a spectrum of products and services through two operating businesses: UnitedHealthcare and Optum. Through its family of subsidiaries and divisions, UnitedHealth Group serves approximately 70 million individuals nationwide. In 2010, the company posted a net income of $4.6 billion.[4]

UnitedHealth Group is the parent of UnitedHealthcare, a large health insurer in the United States. It was created in 1977, as UnitedHealthCare Corporation (it was renamed in 1998), but traces its origin to a firm it acquired in 1977, Charter Med Incorporated, which was founded in 1974. In 1979, it introduced the first network-based health plan for seniors. In 1984, it became a publicly traded company.

J.D. Power and Associates recently gave UnitedHealthcare the highest employer satisfaction rating for self-insured health plans [5]. UnitedHealthcare also received high marks from the American Medical Association (AMA) in its 2011 National Health Insurance Report Card. [6]. The fourth annual report card evaluated seven national health insurance companies on the timeliness and accuracy of their claims processing based on a variety of payment, approval and process metrics. UnitedHealthcare moved into the top spot among its industry peers on two metrics: Contracted Fee Schedule Match Rate, which indicates how often an insurer's claim payment matches the contracted fee schedule; and Electronic Remittance Advice (ERA) Accuracy, which measures the rate at which the insurer's allowed amount equals the physician practice's expected allowed amount. And in a recent insurance industry publication, Business Insurance, United was named "readers choice" winner 2010 for "Best health plan provider". [7].

To contrast, however, in a 2010 survey of hospital executives who have dealt with the company, United received a 65% unfavorable rating. While this marks a 33% improvement over the prior year's survey, UnitedHealthcare still ranked last among all listed.[8]

In 2010, UnitedHealth Group spent more than $1.8 million on lobbying activities to work to achieve favorable legislation, and hired seven different lobbying firms to work on its behalf. [9] In addition, its corporate political action committee or PAC, called "United for Health," spent an additional $1 million on lobbying activities in 2010. [10]

Contents [hide]

1 Acquisitions

2 Legal issues

2.1 Ingenix

2.2 Options backdating investigations and lawsuits

2.3 Resignation of McGuire

2.4 McGuire's settlement with SEC

3 Health Care Reform

4 Businesses

4.1 The Lewin Group

5 Foundations

6 References

7 External links

[edit]Acquisitions

Health care in the United States

Public health care

Federal Employees Health Benefits Program

Indian Health Service

Medicaid

Medicare

Military Health System / TRICARE

State Children's Health Insurance Program (SCHIP)

Veterans Health Administration

Private health coverage

Health insurance in the United States

Consumer-driven health care

Flexible spending account (FSA)

Health reimbursement account

Health savings account

High-deductible health plan (HDHP)

Medical savings account

Managed care

Health maintenance organization (HMO)

Preferred provider organization (PPO)

Medical underwriting

Health care law and reform

Emergency Medical Treatment and Active Labor Act (1986)

Health Insurance Portability and Accountability Act (1996)

Medicare Prescription Drug, Improvement, and Modernization Act (2003)

Patient Safety and Quality Improvement Act (2005)

Patient Protection and Affordable Care Act (2010)

State level reform

Massachusetts health care reform

Oregon Health Plan

Vermont health care reform

SustiNet (Connecticut)

Municipal health coverage

Fair Share Health Care Act (Maryland)

Healthy Howard (Howard Co., Maryland)

Healthy San Francisco

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In 1995, the company acquired The MetraHealth Companies Inc. for $1.75 billion. MetraHealth was a privately held company formed by combining the group health care operations of The Travelers Insurance Company and Metropolitan Life Insurance Company also known as MetLife.

In July 2004, UnitedHealth Group acquired Oxford Health Plans and all of United Healthcare's New York-based small group contracts are now Oxford Health Plans products. In December 2005, the company received final regulatory approval for its $9.2 billion purchase of PacifiCare Health Systems. It agreed to divest parts of PacifiCare's commercial health insurance business in Tucson, Arizona and Boulder, Colorado to satisfy antitrust regulator concerns, and also agreed to end its network access agreement with Blue Shield of California.

In March 2007, UnitedHealth Group signed a definitive agreement to acquire Sierra Health Services Inc. for $2.6 billion. Sierra provided health benefits and services to 310,000 members in Nevada and another 320,000 people in senior and government programs throughout the United States.

In June 2009, Ingenix, a UHG subsidiary, acquired AIM Healthcare. AIM is the leading data mining and insurance claim auditing service in the US.

In July 2009, UnitedHealth Group Inc. agreed to acquire Health Net Inc.'s (HNT) Northeast licensed subsidiaries for up to $570 million in payments spread out over a two year period.[11]

In July 2010, Ingenix acquired Picis Inc. Picis is a leading provider of health information solutions for the high-acuity areas of hospitals. [12]

[edit]Legal issues

In 2006, the Securities and Exchange Commission (SEC) began investigating the conduct of UnitedHealth Group's management and directors, for backdating of stock options. Investigations were also begun by the Internal Revenue Service and prosecutors in the U.S. attorney's office for the Southern District of New York, who subpoenaed documents from the company. The investigations came to light after a series of probing stories in the Wall Street Journal in May 2006, discussing apparent backdating of hundreds of millions of dollars' worth of stock options by UHC management. The backdating apparently occurred with the knowledge and approval of the directors, according to the Journal. Major shareholders have filed lawsuits accusing former New Jersey governor Thomas Kean and UHC's other directors of failing in their fiduciary duty.[13][14] On October 15, 2006, CEO William W. McGuire was forced to resign, and relinquish hundreds of millions of dollars in stock options. On December 6, 2007, the SEC announced a settlement under which McGuire will repay $468 million, as a partial settlement of the backdating prosecution. Legal actions filed by the SEC against UnitedHealth Group itself are still pending.[15]

In June 2006, the American Chiropractic Association filed a national class action lawsuit against the American Chiropractic Network (ACN), which is owned by UnitedHealth Group and administers chiropractic benefits, and against UnitedHealth Group itself, for alleged practices in violation of the federal Racketeer Influenced and Corrupt Organizations Act (RICO).[16]

[edit]Ingenix

In February 2008, New York State Attorney General Andrew M. Cuomo announced an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reasonable and customary rates. The announcement included a statement that Cuomo intended "to file suit against Ingenix, Inc., its parent UnitedHealth Group, and three additional subsidiaries." Cuomo asserted that his investigation found that rates found in a database of health care charges maintained by Ingenix were lower than what he determined was the actual cost of certain medical expenses. Cuomo said this inappropriately allowed health insurance companies to deny a portion of provider claims, thereby pushing costs down to members. [17]

On January 13, 2009, UnitedHealth Group and Ingenix announced an agreement with the New York State attorney settling the probe into the independence of the health pricing database. Under the settlement, UnitedHealth Group and Ingenix would pay $50 million to finance a new, non-profit entity that would develop a new health care pricing database. Ingenix would discontinue its medical pricing databases when the new entity makes its product available. The company acknowledged the appearance of a conflict of interest, but admitted no wrongdoing.[18]

On January 15, 2009, UnitedHealth Group announced a $350 million settlement of three class action lawsuits filed in Federal court by the American Medical Association, UnitedHealth Group members, healthcare providers, and state medical societies for not paying out-of-network benefits. This settlement came two days after a similar settlement with Cuomo.[19]

On October 27, 2009, Cuomo announced the creation FAIR Health, the independent, non-profit organization that will develop a nationwide database for consumer reimbursement, as well as a website where consumers will be able to compare prices before they choose doctors. To fund FAIR Health, the Attorney General's office secured nearly $100 million from insurers such as Aetna, UnitedHealth Group, and WellPoint.[20]

[edit]Options backdating investigations and lawsuits

In 2006, the SEC began investigating the conduct of UnitedHealth Group's management and directors, including Dr. McGuire, as did the Internal Revenue Service and prosecutors in the U.S. attorney's office for the Southern District of New York, who have subpoenaed documents from the company.

The investigations came to light after a series of probing stories in the Wall Street Journal in May 2006, discussing the apparent backdating of hundreds of millions of dollars' worth of stock options—in a process called options backdating—by UnitedHealth Group management. The backdating apparently occurred with the knowledge and approval of the directors, according to the Journal. Major shareholders have filed lawsuits accusing former New Jersey governor Thomas Kean and UnitedHealth Group's other directors of failing in their fiduciary duty.[13][21]

[edit]Resignation of McGuire

On October 15, 2006, it was announced that Dr. McGuire would step down immediately as chairman and director of UnitedHealth Group, and step down as CEO on December 1, 2006, due to his involvement in the employee stock options scandal. Simultaneously, it was announced that he would be replaced as CEO by Stephen Hemsley, who has served as President and COO and is a member of the board of directors.[22] McGuire's exit compensation from UnitedHealth, expected to be around $1.1 billion, would be the largest golden parachute in the history of corporate America.[23]

McGuire's compensation became controversial again on May 21, 2009, when Elizabeth Edwards, speaking on The Daily Show, used it to support her argument for a public alternative to commercial insurance[24]. Edwards stressed the importance of restoring competition in health insurance markets noting that at one point, "the President of UnitedHealth made so much money, that one of every $700 that was spent in this country on health care went to pay him."

Estimates of McGuire's 2005 compensation range from $59,625,444 [25] to $124.8 million[26], and the revenue of UnitedHealth Group was then $71 billion. It has therefore been suggested that Mrs. Edwards may have meant to say that one of every $700 that was spent on UnitedHealth Group premiums went to pay McGuire.

[edit]McGuire's settlement with SEC

On December 6, 2007, the SEC announced a settlement under which McGuire was to repay $468 million, including a $7 million civil penalty, as a partial settlement of the backdating prosecution. He was also barred from serving as an officer or director of a public company for ten years.[27][28][29] This was the first time in which the little-used "clawback" provision under the Sarbanes-Oxley Act was used against a