How Deal Would Affect Members, Other Consumers

The proposed merger of PacifiCare Health Systems Inc. and FHP International Corp. would have numerous effects on their 2.3 million clients in Southern California. Here are some answers to questions that might be asked by their members or other HMO consumers:

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Q. What does the proposed merger mean for my coverage through PacifiCare and FHP?

A. Executives at both companies said there would be no immediate changes because PacifiCare and FHP would continue to operate as independent companies until the merger is completed.

Insured parties and health-care providers would be mailed letters or newsletters describing the proposed deal. The companies have also set up 800 numbers for subscribers who have questions. PacifiCare subscribers can call (800) 624-8822 for information. Subscribers to PacifiCare’s Secure Horizons should call (800) 228-2144. FHP subscribers should call (800) 532-4347.

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Q. Would I have to change doctors if I’m now an FHP subscriber?

A. PacifiCare and FHP executives said it’s “highly unlikely” that members would have to change doctors. But industry observers note that HMOs have dropped doctors or medical groups from their networks after other recent mergers.

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Q. What’s the procedure for this kind of a merger? Would regulators have the final say?

A. The acquisition is subject to various federal and state regulatory approvals. State Sen. Herschel Rosenthal (D-Los Angeles) on Monday said that the continuing string of mergers among large HMOs is a cause for concern. Rosenthal and others worry that a few large HMOs will gain such marketplace clout that competition will lessen, allowing these insurers to raise prices in the future.

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Q. Are there noticeable differences between the plans that the two companies have to offer?

A. Health-care analysts say PacifiCare and FHP are required by law to offer similar medical benefits and that they offer many of the same doctors.

For those enrolled in Medicare plans, the most notable difference might be in prescription drug benefits. The two plans offer various co-payments, deductibles and lists of approved drugs. Some of these differences are likely to disappear after the merger.

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Q. What does the deal mean to shareholders of the two companies?

A. Boards of the two Orange County companies have unanimously approved the proposed $2.1-billion deal, but it is still subject to a shareholder vote at both companies.

PacifiCare said it would pay $35 a share--including $17.50 in cash--for each of FHP’s 41 million common shares. Holders of FHP’s preferred shares would receive $14.11 in cash and one-half of a new PacifiCare preferred share. PacifiCare said it would issue 2.3 million Class A shares to pay for the transaction.

Times staff writer David R. Olmos contributed to this report.