United States v. UnitedHealth Group Opening Statement — page 1

UNITEDHEALTH

GRour

Revenue:

$285

billion

UnitedHealth

Group:

Full

Year

2021

tedHealth

Gro

up 1

ava

able

ttps

www

tedhealthgroup.com

conten

dam

UHG

PDF

nvestors

2021

2021-Form

10-K.pdf.

11111

United

Healthcare

Revenue:

$222

billion

Optum

Insight

Revenue:

$4.1

billion

United States v. UnitedHealth Group Opening Statement — page 3

Proposed

Merger

Harms

Competition

Three

Ways

Harms

competition

for

first

pass

claims

editing,

critical

input

for

health

insurers

Harms

competition

insurance

markets

giving

United

control

Change's

EDI

clearinghouse,

giving

United

the

ability

and

incentive

raise

rivals'

costs

denying

rivals

access

innovations

Harms

competition

insurance

markets

giving

United

access

Change's

customers'

competitively

sensitive

information

and

data,

disincentivizing

innovation

United States v. UnitedHealth Group Opening Statement — page 4

UHG:

"Enterprise

thinking"

Over

"financial

and

data

firewalls"

Feb.25,2021

UNITEDHEALTH

GROUP

PX6

74.

Where to

start

...

We have

much

opportunity

put

the

breadth

our

capabilities

full display

and

achieve

true

synergy

and

scale gains from

our

extensive

capabilities. We need

stop thinking

that

just

because we need

have

financial

and

data

firewalls between Optum

and

UHC

means we can't

show

together

and

harness

the

capabilities

both

organizations

together. We need

take a deep look

how

success is defined for each

operating

unit

and

how performance is rewarded

and

stop any

compensation / reward plans

that

unintentionally inhibit Enterprise

thinking

worse create moral hazards

incongruency with

our

strategic growth objectives. We need

improve our

CRM

systems

and

stop operating with

many

different instances

sales force

that

don't

talk

another

some level. We need

continue

the

Enterprise

Growth work aimed at building a total comprehensive view

our

top

existing

and

prospective accounts.

United States v. UnitedHealth Group Opening Statement — page 5

Clayton

Act

u.s.c.

Section

the

Clayton Act prohibits acquisitions

"where

any line of commerce

...

any

section

the

country,

the

effect of such acquisition

may be substantially to lessen competition,

tend

to create a monopoly."

United States v. UnitedHealth Group Opening Statement — page 6

Certainty

Not

Required

Brown

Shoe

Co.

United

States,

'fa

370

U.S.

294,323

(1962)

"Congress used

the

words 'may

substantially to

lessen competition' [], to indicate

that

its concern

was with

probabilities,

not

certainties

United

States

H&R

Block,

Inc.,

833

Supp.

36,

(D.D.C.

2011)

(citation

omitted)

"'To establish a Section

violation, [P]laintiff[s]

must

show

that

a pending acquisition is

reasonably

likely

to cause anticompetitive effects."'

United States v. UnitedHealth Group Opening Statement — page 7

Insurance

Claim

Process

United States v. UnitedHealth Group Opening Statement — page 8

Claim

Pathway

Claim

Remittance

Advice

United States v. UnitedHealth Group Opening Statement — page 9

"Innovation

the

Center

the

Healthcare

Ecosystem"

Billion

Healthcare

Transactions

Base

PX250

PX047

NGE

HEALTHCARE

All

States

90%

Counties

$1.5

Trillion

Healthcare

Claims

United States v. UnitedHealth Group Opening Statement — page 10

Both

Change

And

United

Agree:

Change

Unique

A NGE

HEALTHCARE

Optum

PX7

PX769

The

healthcare

system,

and

how

payers

and

providers

interact

and

transact,

would

not

work

without

Change

Healthcare.

Risk

Payer

Customer

Attrition

Change

Hea\thcarel

✓

Paitfrls

Lead

Eagle-

======::..

l\nterna\

Code

for

•

!Industry

inotjust

1:1

initermediairy between payers and providers, it is

many

relattonship

•

Even

Relay

others

aire

used, those companies use Eagle

for

connections

they

possess

United States v. UnitedHealth Group Opening Statement — page 11

Change's

EDI

Clearinghouse

Market

Leader

:__J

)

PX027

PX081

;

PX084

Project Cambridge

Key

Due

Diligence

Considerations

Cambridge (Change) maintains

the

highest volt1me

claims

and

penetration

across

EDI

companies for medical,

dental

and

pharmacy networks.

Change Healthcare Inc.

Company Profile

Change operates one

the

largest health care

networks

the

U.S.

McKinsey

&Company

OPTUM~

Market

Assessntent

Steerco 3 - Discussion Document

Change:

[

argest,

onl

pla

across

segments

EDI:

Cambridge

enjoys

broadest

and

deepest

datasets

several

categories;

has

unrestricted

access

under

HIP

guidelines

Cambridge manages

the

highest

volume

claims

compared

any

other

EDI

competitor as well as a large percentage

longitudinal

data

sets

that

are

valued

United States v. UnitedHealth Group Opening Statement — page 12

Providers

Connect

Change's

EDI

Clearinghouse

Many

Ways

NGE

HEALTHCARE

United States v. UnitedHealth Group Opening Statement — page 13

UnitedHealthcare

Leads

National

Accounts

Market

Standalone

Companies

25.6%

_____

......,;:.__

Horizon

16.8%

10.2%

5.9%

0.5%

Humana

PX853

United States v. UnitedHealth Group Opening Statement — page 14

United States v. UnitedHealth Group Opening Statement — page 15

Speed

Claim

Library

L-J.-J

Vendor

~[j]

First

Pass

Claims

Editing

Distinct

First

Pass

Second

Pass

•

Individual

Review

•

Real

Time

E!1

•

Batch

Revi_ew

i~J

•~

•

Not

Real

Time

•

Full

Set

Edits

•

Limited

Set

Edits

•

Per

Transaction

•

Perpetual

License

•

Contingency

•

Single

•

Multiple

United States v. UnitedHealth Group Opening Statement — page 16

Change

and

Optum

Compete

Head

UNITEDHEALTH

GROUP

Optum

PX103;

PX107

PX106

PX208

37;

PX033

PX224

PX223

PX238

A NGE

HEALTHCARE

United States v. UnitedHealth Group Opening Statement — page 17

Horizontal

Competition:

Market

tum

NGE

- -

HEALTHCARE

United States v. UnitedHealth Group Opening Statement — page 18

Market

Concentration

Here

Exceeds

Precedent

Cases

this District

United States v. UnitedHealth Group Opening Statement — page 19

Divestitures

Must

Promote

Competitive

Markets

United States v. UnitedHealth Group Opening Statement — page 20

Defendants

Bear

Burden

Rebutting

Prima

Facie

Case

United

States

Aetna

Inc.,

240

Supp.

(0.0.C.

2017);

id.

(alteration

original)

(citation

and

internal

quotation

omitted)

"Defendants

merger

challenge

bear

the

burden

producing evidence

tending

rebut

the

government's

prim

a f acie case."

Defendants have

the

burden

show

"that

proposed

divestiture would

'restore

[the] competition' lost

the

merger."

United States v. UnitedHealth Group Opening Statement — page 21

Defendants'

Proposed

Divestiture

Not

Sufficient

•

Proposed

purchaser

has

experience

market

Proposed

purchaser's

incentives

and

commitments

not

support

robust,

long-term

competition

Proposed

divestiture

narrow,

lacking

necessary

products

promote

strong

competition

United States v. UnitedHealth Group Opening Statement — page 22

Feb.

2022

Mar.

2021

CHA NGE

HEALTHCARE

PX544

PX543

Real-Time

Settlement

mentioned, we are exploring Real-Time Settlement for

healthcare claims/billing/payment.

not sure if there is

anything your technology can

add

our

plans there,

but

given you asked

there were any truly disruRtive areas we

are working in, this is one.

This is core to the company's future so we need to have a

strategic vs. solely tactical discussion about this.

United States v. UnitedHealth Group Opening Statement — page 23

United States v. UnitedHealth Group Opening Statement — page 24

Merger

Harm

the

Relevant

Commercial

Insurance

Markets

With

Control

Change's

Clearinghouse

and

ClaimsXten

Products,

United

Can

Harm

Rivals

and

Competition

Degrade

quality

Raisecost

(8)

Deny

delay

innovation

With

Change's

Competitively

Sensitive

Information,

United

Can

Harm

Competition

Surveil

its

insurance

rivals'

sensitive

information,

lessening

innovation

Single

out

and

avoid

insuring

high-risk

groups

United States v. UnitedHealth Group Opening Statement — page 25

Merger

Harm

the

Relevant

Commercial

Insurance

Markets

With

Control

Change's

Clearinghouse

and

ClaimsXten

Products,

United

Can

Harm

Rivals

and

Competition

Degrade

quality

Raisecost

(8)

Deny

delay

innovation

United States v. UnitedHealth Group Opening Statement — page 26

Vertical

Harm

NGE

HEALTHCARE

United States v. UnitedHealth Group Opening Statement — page 27

Vertical

Harm

Reduced

incentive

for

upstream

sales

rivals

due

ability

recapture

downstream

health

insurance

sales

Higher

costs

for

rivals

reduces

competition

EMP

ERS

downstream

markets

8888

United States v. UnitedHealth Group Opening Statement — page 28

Only

Tiny

Shift

Makes

Foreclosure

Profitable

PX863.

United States v. UnitedHealth Group Opening Statement — page 29

Merger

Harm

the

Relevant

Commercial

Insurance

Markets

UNITEDHEALTH

GROUP

Data

Data Rights

With

Change's

Competitively

Sensitive

Information,

United

Can

Harm

Competition

Surveil

its

insurance

rivals'

sensitive

information,

lessening

innovation

Single

out

and

avoid

insuring

high-risk

groups

United States v. UnitedHealth Group Opening Statement — page 30

Claims

Data

and

Insights

Flow

Absent

Merger

Optum

Claims

Data

Rights

NGE

Claims

Data

Rights

Claims

Data

Rights

Claims

Data

Rights

Claims

Data

Rights

United States v. UnitedHealth Group Opening Statement — page 31

Claims

Data

and

Insights

Flow

United

With

Merger

United States v. UnitedHealth Group Opening Statement — page 32

Optum

PX353

PX357

United's

Incentive:

"enterprise

math"

ke a

cro

view

and

compromise

(includes sharing

data

quantifying

value

enterprise

king

cornpromises, etc)

r changing the answer on the termination .. .importantly,

sought #2 macro view and

did the enterprise math and it

was

clear that

UHC

needed to

get

to a different place with that

health system

UnitedHealth

Group

Enterprise

Data

Governance

Policy

2019

Policy

rpose

The purpose

this Policy is to

create

Ent.erprise-

\.vide

approach

ta Transactions that is

cons

istent with

the

Enterpr

ise

mission

and

otherwise in the

best

interests

the Enterprise and

the constituents

serves.

United States v. UnitedHealth Group Opening Statement — page 33

CHA NGE

HEALTHCARE

OPTUM

PX360

, 1

PX615

21, 1

66.

Data

Important

UHG

Data is viewed as

both

a challenge

and

critical success factor

to meeting business

objectives

Unrealized

Market

Opportunity

• Fragmented

data

can't

used as competitive

advantage to

grow

existing biz models,

and

identify

and

capture new biz

models

Challenges continue to exist

enacting programs

that

cross silos

-either those within Optum

those between Optum

and

UHC.

what should UHG

doing:

- Data security

and

policy for

sharing

The potential Change acquisition

provides significant

data

assets,

data

use rights

...

Claims

•

2,300

payer connections

United States v. UnitedHealth Group Opening Statement — page 34

From

Schumacher

Witty

March

2021

PX352

Data

Important

UHG

explicit about what information we

are going

share between companies

...

not

just

grant permission,

but

require it

United States v. UnitedHealth Group Opening Statement — page 35

January

2020

Emai

l f

rom

Muss

Maa

: Wic

hmann

from

Musslewhite

Maack

January

2020

Data

Rights

[Wichmann] says

we have

data

rights, he's excited.

We will

need

to come back to

him

with a good answer

data

and

why we get a proprietary advantage

from doing this deal

...

which

think

we can do.

PX082

at1.

DEC

2019

JAN

2020

FEB

2020

MAR

2020

APR

2020

MAY

2020

JUN

2020

JUL

2020

AUG

2020

SEP

2020

OCT

2020

NOV

2020

DEC

2020

JAN

2021

FEB

2021

MAR

2021

United States v. UnitedHealth Group Opening Statement — page 36

February

from

Narayanan

Re:

(Change)

Walka

from

Maack

Narayanan

Re:

Cambridge

(Change)

Walkaround

Deck

February

2020

Data

Rights

Data :Rage(s)

➔

This is Wichmann's

obsession so might suggest we

push

to have a page

two from [Change]

data

volume,

data

rights, etc.

PX098

DEC

2019

JAN

2020

FEB

2020

MAR

2020

APR

2020

MAY

2020

JUN

2020

JUL

2020

AUG

2020

SEP

2020

OCT

2020

NOV

2020

DEC

2020

JAN

2021

FEB

2021

MAR

2021

UnitedHealth

Group's

Follow-Up

Materials

Change

(Project

Cambridge)

May

2020

Data

Rights

[Change]

manages

the

highest

volume

claims

among

EDI

players

and

has

penetration

across medical, dental,

and

pharmacy

networks. [Change] is

2articularly

broad

and

deep

the

areas

commercial claims,

dental

claims, eligibility

and

patient

statements.

Multi~

yer

claims

data

would

additive to

the

datasets

p_!_

which

are

primarily

comprised

UHC claims.

PX368

DEC

2019

JAN

2020

FEB

2020

MAR

2020

APR

2020

MAY

2020

JUN

2020

JUL

2020

AUG

2020

SEP

2020

OCT

2020

NOV

2020

DEC

2020

JAN

2021

FEB

2021

MAR

2021

UnitedHealth

Change

(Project

Cambridge)

Due

Diligence

Materials

December

20,

2020

Data

Rights

[W]e believe about

60%

---==~

all

data

has

de-identification

rights.

December

20,

2020

UnitedHealth/

Change

(Project

Cambridge)

Due

Diligence

Materials

United States v. UnitedHealth Group Opening Statement — page 39

David

Wichmann

Retired

CEO,

UnitedHealth

Group

11111

United

Healthcare

Data

Rights

Let's

just

break

the

record

really

clear.

There

the

clinical

side

things

which

you

were

just

touching

on.

There's

the

administrative

services

side.

the

administrative

services

side,

correct

that

from

your

working

with

the

team,

was

your

understanding

that

UnitedHealth

Group

would

have

access

the

data

rights

relates

the

administrative

services

side

the

business

for

Change

Healthcare;

that

correct?

Yeah.

wouldn't

hastily

generalize,

but

that's

the

foundation

which

the

business

case

was

made.

Wichmann.

(CID)Dep.

2?4:~1-25;

275:2~

12.

December

29,

2020

FINAL

BOARD

DECISION

DEC

2019

JAN

2020

FEB

2020

MAR

2020

APR

2020

MAY

2020

JUN

2020

JUL

2020

AUG

2020

SEP

2020

OCT

2020

NOV

2020

DEC

2020

JAN

2021

FEB

2021

MAR

2021

United States v. UnitedHealth Group Opening Statement — page 40

Mega

Payer

Sales

Strategy

December

2019

"U-Factor"

Casts

Shadow

Over

Optum

• Optum is perceived as a respectable and

competent vendor, however large payers

have concerns contracting with Optum

given its ownership by United

• Optum is perceived by all executives as

facing "Chinese wall" problems with other

large payers, mainly Nationals. Not

perceived as such a constraint for Blues

and mid sized payers.

PX108

United States v. UnitedHealth Group Opening Statement — page 41

Neil

Crescenzo

President

CEO

CHA NGE

HEALTHCARE

PX52

PX522

PX523

The

U-Factor

2021

Well,

meetings

with

[REDACTED]

this

morning

here in Nashville should be

interesting

after

yesterday's NYT article

UnitedHealthcare -

Anesthesia

Partners.

You

folks make life interesting!

The old LI-factor

we call it. Interesting

one way

put

good

Rick

Hardy

CEO

Optum

llnsight

United's

Access

Data

and

Data

Rights

Harms

Competition

United

monitors

rivals,

thwarting

incentives

rivals

innovate

and

affecting

costs

United

understands

about

employer

groups,

bidding

only

profitable

accounts

United

retains

access

Change's

clearinghouse,

exposing

rivals'

claims

data

United States v. UnitedHealth Group Opening Statement — page 43

Competitively

Sensitive

Information

Not

Shielded

from

Change

NGE

HEALTHCARE

United States v. UnitedHealth Group Opening Statement — page 44

vi':

Defendants'

Arguments

Are

Not

Persuasive

Efficiencies

are

not

verifiable,

merger-specific,

and

not

flow

through

consumers

Customer

commitments

are

vague

and

illusory

Behavioral

firewalls

and

policies

procedures

are

fundamentally

flawed

United States v. UnitedHealth Group Opening Statement — page 45

Proposed

Merger

Harms

Competition

Three

Ways

Harms

competition

for

first

pass

claims

editing,

critical

input

for

health

insurers

Harms

competition

insurance

markets

giving

United

control

Change's

EDI

clearinghouse,

giving

United

the

ability

and

incentive

raise

rivals'

costs

denying

rivals

access

innovations

Harms

competition

insurance

markets

giving

United

access

Change's

customers'

competitively

sensitive

information

and

data,

disincentivizing

innovation

United States v. UnitedHealth Group Opening Statement — page 46

, ~

Brown

Shoe

Co.

United

States,

'(8

370

294

337

(1962)

(internal

quotation

omitted)

"[I]f anticompetitive effects of a merger are

probable in 'any' significant market, the

merger-

least to

that

extent-is

proscribed."

United States v. UnitedHealth Group Opening Statement

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