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UnitedHealth gets state OK for Rocky Mountain Health deal

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Colorado insurance regulators say they will let UnitedHealth Group Inc. acquire Rocky Mountain Health Plans, a nonprofit managed care company that serves western Colorado, in exchange for a $21.4 million capital infusion into the company and a $36.5 million contribution to a nonprofit foundation.

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UnitedHealth has also agreed to try to keep selling individual and group health coverage in western Colorado for at least five years, and to give $500,000 per year to charities in the region for the next three years.

“This transaction is likely to lead to the continuing viability of Rocky, which, in turn, will benefit the public more than if the transaction were not to occur,” Marguerite Salazar, Colorado’s insurance commissioner, says in a list of her findings on the deal.

Minnetonka, Minnesota-based UnitedHealth has 1.2 million enrollees in Colorado, with about 94 percent of the enrollees in eastern Colorado.

Rocky Mountain Health Plans, which is based in Gunniston, Colorado, has 280,000 enrollees in Colorado’s Western Slope region.

Representatives for Rocky Mountain Health told state regulators in September that Rocky Mountain Health Plans has suffered losses over the past three years, in the group market and the Medicaid market as well as the individual major medical market.

Rocky Mountain Health has too little capital to meet state requirements, and the company is unlikely to survive without a significant capital infusion, the reps said.

In the past, UnitedHealth’s acquisition of Rocky Mountain Health would have given the combined company a 20.1 percent share of the major medical market in western Colorado. Now the deal will have a much smaller impact, because Rocky Mountain Health is selling individual major medical coverage in just one county this year, Salazar says in her order approving the deal.

Rocky Mountain Health has been set up in such a way that a nonprofit foundation controlled a nonprofit health maintenance organization. In Colorado, a nonprofit organization controls its operations on behalf of the people of Colorado.

Regulators often require the sellers of a nonprofit company to convert the company to for-profit status and donate the value of the company to a foundation.

The Colorado attorney general required the nonprofit Rocky Mountain Health Foundation to convert the Rocky Mountain HMO to for-profit status, then use $36.5 million in cash from UnitedHealth to continue and expand its charitable activities.

One of the foundation’s efforts is a medical support fund that helps patients going through medical crises handle bills for food, housing and other daily living expenses.


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