Antitrust regulators allow Humana to buy Arcadian Mgmt

WASHINGTON Tue Mar 27, 2012 12:29pm EDT

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WASHINGTON (Reuters) - Health insurer Humana Inc (HUM.N) has won antitrust approval to buy California-based Arcadian Management Services on condition that it sell Arcadian's Medicare Advantage business in parts of five states, the Justice Department said on Tuesday

Humana announced in August that it would buy Arcadian, a health maintenance organization with 64,000 members in 15 states, for an undisclosed sum to expand its Medicare Advantage business. Medicare Advantage is a privately provided alternative to Medicare.

In order to complete the deal, the Justice Department is requiring Humana to sell Arcadian's Medicare Advantage business in 51 counties or parishes in Arizona, Arkansas, Louisiana, Oklahoma and Texas. There are about 71,000 people in Medicare Advantage plans in those areas, the department said.

"These divestitures preserve competition so that Medicare beneficiaries, primarily senior citizens in Arizona, Arkansas, Louisiana, Oklahoma and Texas, benefit from lower prices, better quality services and more innovative products," said Acting Assistant Attorney General Sharis Pozen, who heads the Justice Department's Antitrust Division.

The Justice Department reviews some mergers to ensure that they comply with antitrust law.

In 2010, Humana reported revenue of $33.6 billion. Arcadian had revenue of $622 million in 2010.

(Reporting By Diane Bartz; editing by John Wallace)