The side deal, which antitrust regulators required for the CVS-Aetna deal to proceed, nearly triples membership in WellCare's standalone Medicare Part D plans.
WellCare Health Plans completed its purchase of Aetna's standalone Medicare Part D plans late last week, resolving a key sticking point for antitrust regulators reviewing the megamerger between CVS Health and Aetna.
WellCare announced the acquisition's closure Tuesday, even as a federal judge questioned the U.S. Department of Justice's approval of the CVS-Aetna deal. The judge's words have added a layer of doubt atop the near-certain merger, which the companies said officially closed last Wednesday.
The DOJ and five state attorneys general said in October that they would allow the nearly $70 billion transaction to proceed if certain conditions are met, including the divestiture to WellCare.
D.C. District Court Judge Richard Leon, however, who complained last week that the parties were treating him as a "rubber stamp" on their arrangement, signaled in a highly unusual move that he may order the companies to remain separate while he mulls the terms of their settlement.
"I am concerned that your complaint raises anticompetitive concerns about one-tenth of 1% of this $69 billion deal," Leon said in a hearing Monday, as The Wall Street Journal's Brent Kendall reported.
Kendall drew a comparison between Leon's skepticism of the DOJ's stance on CVS-Aetna and Leon's opinion last June rejecting the DOJ's challenge to a merger between AT&T and Time Warner, for which there's an appellate hearing later this week.
As far as WellCare is concerned, the deal is done, though Aetna will continue providing administrative services and holding the risk for its Part D plans through the end of the 2019 plan year. Although this will delay any increase in revenue for WellCare as a result of the deal, the arrangement nearly triples WellCare's standalone Part D membership, from about 1.1 million members to more than 3.1 million members.
"We're pleased that we could be a solution to our federal partners, as well as CVS Health," WellCare CEO Ken Burdick said in a statement. "This acquisition allows us the opportunity to serve over 2 million additional Medicare Part D members nationwide and complements our long-term growth strategy within government-sponsored health plans."
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.