News Release

PO 360 Trenton, NJ 08625-0360	Christine Grant Commissioner
For Release: August 6, 1999	For Further Information Contact: Dennis McGowan, DHSS, 609-984-7160 Bill Heine, DOBI, 609-292-5064

Commissioners Approve Aetna's Purchase of Prudential Health Care Plan, Inc.

TRENTON - Health and Senior Commissioner Christine Grant and Banking and Insurance Commissioner Jaynee LaVecchia today approved Aetna, Inc.'s purchase of Prudential Health Care Plan, Inc., subject to certain conditions placed on the ownership transfer to protect HMO consumers and health care providers.

In their decision, the commissioners found the acquisition met all applicable statutory and regulatory requirements. The commissioners noted that both the U.S. Justice Department and state Department of Law and Public Safety's Division of Criminal Justice concluded that there was insufficient basis to challenge this merger under antitrust laws.

"Through this decision and consent order we have balanced the business interests of Aetna and Prudential Health Care with the concerns expressed by consumers and providers throughout the application process," said Commissioner Grant.

"Throughout this process we were attentive to concerns regarding the effect this sale might have on HMO consumers and the health insurance market in this state," said Commissioner LaVecchia. "For that reason, we will be monitoring the transition to make sure there is no adverse impact on the future delivery of health care in New Jersey."

The conditions include consumer protection provisions, provider protections, restrictions on the use of certain contract provisions previously employed by Aetna, rate review and enhanced reporting and examinations requirements during the period of integration of the health plan.

Aetna will continue to operate its Aetna/U.S. Healthcare and PruCare health maintenance organizations separately, each maintaining its own benefits, networks and payment rates, until the departments review and approve a transition plan and until current PruCare contracts expire. Aetna's transition plan must be submitted within 90 days.

Among the conditions imposed on the ownership transfer, Aetna will continue coverage after PruCare contacts expire for an additional 120 days for members with life-threatening or disabling conditions with the patients' current provider even if the provider chooses not to join Aetna. Coverage with current providers for pregnant members will continue through six weeks after delivery.

Aetna also agrees to continue its current commitment to programs such as Medicare, Medicaid, KidCare and the Vaccines for Children.

Other conditions include:

Aetna will maintain at least 90 percent of the current PruCare physicians in its network for three years.
Decisions on appeals made by independent utilization review organizations will be binding on the HMO.
Aetna must give the departments four months advance notice of any intent to impose more stringent utilization review or reimbursement policies on providers.
Aetna will submit reimbursement and market share analyses to monitor any effect on physicians' ability to contract. At Aetna's expense, the departments will be able to hire medical and health economic consultants to review competition and quality of care issues.
The departments retain the authority to require Aetna to divest some of its business in the future to maintain ease of market entry for competitors.

Reviews of acquisition applications are limited to an assessment of five factors: 1) whether, after the change of ownership, the HMO would be able to satisfy its certificate of authority requirements; 2) whether the change of ownership would substantially lessen competition among HMOs or tend to create a monopoly; 3) whether the financial condition of the acquiring party might jeopardize the financial stability of the HMO, or adversely affect the provision of health care services to members; 4) whether the proposed change of ownership is determined to be unfair and unreasonable to members and/or the public interest; and 5) whether the competence, experience and integrity of the people who would control the HMO are such that it would not be in the interest of the members and/or public interest to approve the acquisition.

After a public hearing and careful review, no sufficient basis was found to determine that this transaction should be disapproved for any of the five factors.

A consent order was signed by Aetna and Prudential with the department, under which the companies have agreed to abide by the conditions. A copy of the decision and consent order can be found at http://www.naic.org/nj/aetnarp2.htm.

# # #