By Taylor C. Brewer

On February 5th, 2020, during a public meeting of the Financial Solvency Standards Board, Director of the Department of Managed Health Care (DMHC) Shelley Rouillard announced her approval of Anthem, Inc.’s proposed acquisition of Beacon Health Options. The Department has new authority to review potential mergers involving health plans within DMHC’s jurisdiction, and the Director has the discretion to disapprove a transaction if she believes it would substantially lessen competition, pursuant to AB 595 (Wood) (Chapter 292, Statutes of 2018).  [see 24:1 CRLR 33–34] Anthem, Inc. announced its plan to acquire Beacon Health Options (Beacon), “the largest independently held behavioral health organization in the country,” on June 6, 2019, stating its intent to expand its focus on behavioral health solutions as part of whole-person care.

According to Ms. Rouillard’s oral report at the February meeting, a Department analysis concluded that the proposed merger did not constitute a “major transaction” pursuant to AB 595, and thus her approval was made without need for an open public meeting or impact statement in accordance with the Bagley-Keene Open Meeting Act. The term “major transaction” is defined in section 1399.65 (g)(1) of the Health and Safety Code, and includes the following criteria: “(A) Affects a significant number of enrollees; (B) Involves a material amount of assets; (C) Adversely affects either the subscribers or enrollees or the stability of the health care delivery system because of the entity’s market position, including, but not limited to, the entity’s market exit from a market segment or the entity’s dominance of a market segment.”

While Director Rouillard did mention at the July and November Financial Solvency Standards Board meetings that she was reviewing the merger, no public statement or order approving the merger has been issued at this writing, other than her announcement at the February meeting.  Pursuant to section 1399.65(b)(2) of the Health and Safety Code, if a member of the public requests it, the Director must make available to the public her determination that her approval did not require a public hearing.