Health insurer Aetna has entered into an agreement to acquire New York-based Prodigy Health Group, an independent third party administrator (TPA) of self-funded health care plans, from Prodigy Health Holdings, for $600m.

Prodigy Health Group operates under three business names: Meritain Health for its TPA benefits business; American Health for its medical management business; and Scrip World for its pharmacy benefits management business.

Prodigy Health Group has nearly 600,000 medical members, approximately 450,000 pharmacy members, and operates in 15 states.

Upon closure of the transaction, Prodigy Health Group will be a subsidiary of Aetna and will operate as a separate business.

Prodigy will retain the same brand name, current management and operating structure.

Aetna chairman, CEO and president Mark Bertolini said the acquisition of Prodigy Health Group is in keeping with Aetna’s strategy of diversifying its product offerings and adding new revenue streams.

"Prodigy extends Aetna’s reach into the third-party administrator business while providing a separate option under the Prodigy brands that addresses affordability and quality for middle-sized and small businesses and customers who are primarily price-focused.

The transaction is subject to customary closing conditions, including Hart-Scott-Rodino antitrust regulatory approval. The transaction is projected to be neutral to Aetna’s financial results in 2011.