In the new era of healthcare reform, some providers and insurers are finding it necessary to join forces. But as one acquisition in California illustrates, such unions come at a price.
OptumHealth plans to acquire the management arm of Monarch HealthCare, the largest physician group in Orange County. That throws a monkey wrench into Monarch's network relationship with Anthem Blue Cross of California.

A stark and ironic casualty is the unwinding of an accountable care organization; under reform, ACOs are supposed to be a key strategy for tackling the underlying costs of healthcare.

Although UnitedHealth Group has set up its Optum subsidiary separately from UnitedHealthcare, it is not surprising that other health plans have reservations about doing business with a physician group ultimately owned by one of their fiercest rivals.

Monarch is one of a handful of provider groups that have been working with Anthem Blue Cross on an ACO an endeavor that has catapulted Anthem to the forefront of private-sector ACO development. For more than a year, Monarch physicians and the health plan collaborated on a complex plan to bring a new era of care coordination to Anthem's PPO members.

But now Anthem members who were asked to be part of the ACO are being informed by the insurer that it no longer exists. Although Blue Cross has assured HMO and PPO members that it still has a contract with Monarch that provides in-network access, don't bet on that contract being renewed.

Meanwhile, the other Blue plan in the state, Blue Shield of California, has announced it will not contract with Monarch once it's part of Optum, according to a statement released by the insurer.

United's acquisition of provider groups creates a conflict of interest that will inevitably put other health plans that contract with those providers at a competitive disadvantage, said Juan Davila, senior vice president of network management.

OptumHealth recently began buying physician practices and IPAs in key markets across the country. Monarch officials seized the opportunity, saying the physician group needed to be part of a larger organization with more resources to keep up in the changing healthcare environment.

While the acquisition is still in the approval stage, OptumHealth has said that its multi-payer strategy has not changed. But at least two of those payers  Anthem and Blue Shield of California clearly disagree. As UnitedHealth Group and other MCOs begin to acquire provider groups, look for similar dust-ups across the country.

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