California approves CVS, Aetna merger contingent upon premium promise and $240 million investment
New York State still needs to clear the $69 billion deal that CVS said it expects to close by Thanksgiving.
A California regulator has cleared the way for CVS Health to acquire Aetna.
Thursday, the California Department of Managed Health Care Director Shelley Rouillard approved the acquisition on the promise that CVS and Aetna agree not to increase premiums as a result of acquisition costs. The agreement states premium rate increases overall would be kept to a minimum.
The plans also agree to invest close to $240 million in California's healthcare delivery system, according to the press release from the Department of Managed Healthcare.
The money includes $166 million for state healthcare infrastructure and employment, such as building and improving facilities and supporting jobs in Fresno and Walnut Creek.
Another $22.8 million would go to increase the number of healthcare providers in underrepresented communities by funding scholarships and loan repayment programs.
An estimated $22.5 million would support joint ventures and accountable care organizations in the delivery of coordinated and value-based care.
WHY THIS MATTERS
California represents one of the last hurdles for the $69 billion merger that CVS has said it expects to see closed by Thanksgiving.
The New York State Department of Financial Services has yet to issue a decision after holding an October 18 hearing on the application.
THE TREND
The Department of Justice has already said that there are no barriers to the companies completing the merger, once CVS and Aetna sell Aetna's Medicare Part D plans. Aetna is divesting the prescription drug plans to WellCare.
California held a public meeting on the merger on May 2.
ON THE RECORD
"Our primary focus in reviewing a health plan merger is to ensure compliance with the strong consumer protections and financial solvency requirements in state law," Rouillard said. "The department thoroughly examined this merger and determined enrollees will have continued access to appropriate healthcare services and also imposed conditions that will help increase access and quality of care, remove barriers to care and improve health outcomes."
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
