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Feds clear WellPoint acquisition of Amerigroup

WASHINGTON (AP) -- The government has dropped its antitrust concerns about health insurer WellPoint Inc.'s proposed acquisition of Amerigroup Corp., the Justice Department said Wednesday, clearing WellPoint to proceed with the $4.46 billion deal.

Justice officials had objected to the proposed merger because WellPoint and Amerigroup are the only two providers of Medicaid managed care plans in northern Virginia. The merger "would have substantially lessened competition" by creating a monopoly in Medicaid managed care in nine counties and four cities in the region, the Justice Department said.

To address that concern, Amerigroup agreed to sell its Virginia business, Amerigroup Virginia Inc., to the Inova Health System Foundation. It did not disclose financial terms of that deal, which was announced in September and is conditioned on the closing of the WellPoint-Amerigroup merger.

The sale to Inova ensures that Medicaid users will have at least two options for managed care, the Justice Department said.

Amerigroup's sale of the unit "will ensure continued competition," said Acting Assistant Attorney General Renata Hesse, who heads the department's Antitrust Division, in a statement. "Preserving competition in health care markets is vital to ensuring that consumers receive better and more innovative health care services."

Amerigroup, based in Virginia Beach, has more than 2.7 million members in 13 states. The Virginia subsidiary has 55,000 members, including those in government assistance programs such as the Children's Health Insurance Program.

WellPoint, based in Indianapolis, is the nation's second-biggest health insurer. It said in July that it would pay $92 per share for Amerigroup and grab a bigger piece of the growing market of patients covered by Medicaid, the federal-state health program for low-income people.

WellPoint fell 16 cents to $54.81 in afternoon trading. Amerigroup rose 9 cents to $91.77.