- California Department of Managed Health Care director Shelley Rouillard approved the CVS-Aetna merger Thursday. The state's reluctant nod came after the entity promised not to increase premiums as a result of acquisition costs and keep premium rate increases to a minimum.
- CVS-Aetna also agreed to invest almost $240 million in California's healthcare delivery system in exchange for the state's blessing.
- Aetna filed notice of its proposed $69 billion acquisition by CVS Health with the DMHC in January, so the approval has been in the works for almost a year now. The deal now awaits regulatory approval from four more states and is expected to close before Thanksgiving.
CVS-Aetna has cleared yet another hurdle in the race to merger consummation. The largest obstacle — Department of Justice approval — is now in the merger's rearview mirror, as the feds signed off on the marriage in mid-October contingent on Aetna selling off its Medicare Part D prescription drug business.
CVS and Aetna are now waiting on four more states, including New York and New Jersey. California's green light was in no ways assured, either, as its insurance commissioner came out publicly against the merger earlier this year.
CVS-Aetna's investment in California's healthcare delivery chassis includes $166 million to support California's healthcare infrastructure and employment, such as facility construction and improvement in the state and job growth in Fresno and Walnut Creek. $22.8 million will be allocated to increase the number of providers in underrepresented communities through scholarship and loan repayment programs and $22.5 million to support coordinated care delivery platforms such as accountable care organizations.
The remainder of the funds will go towards initiatives such as expanding provider directories, fostering healthcare in underserved areas, providing free dental care and consumer assistance to seniors and the disabled, along with integrating emergency medical services into opioid prevention and treatment programs.
Until Aetna completes the divestiture of its Medicare Part D plans to a Wellcare subsidiary, the DMHC confirmed it would keep its prescription drug business as a viable option for Golden State citizens into 2019.
The vertical deal will create a massive healthcare entity with significant market share in both the pharmacy and healthcare insurance industries — along with an estimated annual revenue of $245 billion.