Fhp International Corp

The Chicago Board Options Exchange said Thursday that it is investigating unusually heavy trading of FHP International Inc. options in the days leading up to the announcement of its purchase by PacifiCare Health Systems Inc. Nearly 10 times the usual volume of trades was recorded just two trading days before the Orange County companies went public with the merger news Aug. 5. That flurry of activity has sparked concern among some market watchers about potential abuse of insider information.

Unusually heavy trading in FHP International Corp. securities two trading days before its sale to rival PacifiCare Health Systems Inc. was announced is sparking concern among market watchers about possible abuse of inside information. On Thursday, more than 2,000 FHP call options were traded, some that give investors the right to buy FHP shares at as low as $25 a share before Aug. 17.

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

PacifiCare Health Systems Inc.'s planned acquisition of FHP International Corp. for $2 billion in stock would give the Cypress-based health-care giant a larger foothold in the lucrative Medicare market. If approved by regulators, the deal would create the nation's fifth-largest managed-care company with about 4 million patients--almost 1 million of whom receive Medicare.

Several years ago, when PacifiCare Health Systems surpassed arch-rival FHP International as the nation's biggest HMO for Medicare recipients, it marked a milestone for the company--and positioned PacifiCare to exploit the nation's emerging plans for Medicare. FHP had pioneered the Medicare managed-care business in the early 1980s, only to stumble a decade later amid government allegations of widespread sales abuses in its senior program.

PacifiCare Health Systems Inc.'s pending acquisition of FHP International Corp. signals the end of a health-care experiment launched 35 years ago by an ambitious Long Beach doctor. Bored with treating patients and searching for a more rational health-care payment system, Dr. Robert Gumbiner started FHP in the early 1960s. Over the next 30 years, he built the company into an HMO giant.

In a move that creates a national giant in the highly competitive battle for federal Medicare dollars, PacifiCare Health Systems Inc. said Monday it plans to buy its longtime Orange County rival, FHP International Corp., in a $2.1-billion stock and cash deal. The merged company, with revenues of more than $8.6 billion, would become the nation's fifth-largest health maintenance organization, with 1.4 million members in Southern California among a total of nearly 4 million in 15 states and Guam.

With Monday's unveiling of a merger that will make PacifiCare Health Systems one of the premier players in the managed care industry, Alan Hoops can finally say he made it to the big leagues--just not the way he thought he would. The former UCLA baseball standout dreamed of a pitching career in the major leagues, and even played a couple of seasons with the West Palm Beach Expos before hanging up the glove to pursue a master's degree in health administration.

California workers likely have seen the end of recent annual cuts in premiums for managed health care plans, and experts predict costs will head upward in the next five years. As health maintenance organizations increase the cost of their services, they said, the burden will fall on workers, who depend on employers for health insurance options.