PacifiCare Gets OK for FHP Acquisition

After a prolonged examination, the state gave PacifiCare Health Systems Inc. the OK to absorb the California operations of former competitor FHP International Corp. The combined health plan, which will operate as one system, will serve about 2.3 million Californians, Cypress-based PacifiCare said. But the Department of Corporations is requiring the company to revise some of its contracts with doctors and hospitals to ensure that providers remain in business and consumers will have access to care. “Our concern is that, in certain circumstances, the [prior] provisions could limit accessibility,” Corporations Commissioner Keith Bishop said. The previous contracts prevented providers from doing business with other plans or serving other plans at lower rates, according to the agency, which regulates HMOs. Nancy Monk, the PacifiCare official involved in months of negotiations with the state, said the company had no problem revising its contracts. The state had approved PacifiCare’s acquisition of FHP earlier this year but would not allow PacifiCare to combine the California operations until the department could evaluate the impact on plan members.