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WellPoint to vie for FL Medicaid patients

WellPoint Inc., the nation's second-largest health insurer, will soon have a major presence in Florida with its purchase of Amerigroup Corp., one of the significant Medicaid contractors in the state.

The Associated Press reported today that Indianapolis-based WellPoint will spend $4.46 billion to acquire AmeriGroup, which has Medicaid contracts with 13 states, including Florida, Texas and New York. Amerigroup is based in Virginia Beach, VA.

Health-industry experts think WellPoint, which has essentially ignored Florida until now, has become interested because of all the low-income government-paid Medicare/Medicaid patients who will be moving into managed care.

"It's a sign of some of the changes we're going to see in the market as we transition to Medicaid managed care," said Michael Garner, president of the Florida Association of Health Plans. "It's going to attract companies that have not traditionally operated in Florida."

Medicaid, a joint state and federal program for the poor and disabled, moved into managed-care contracts in Florida years ago. But most of those who signed up are the beneficiaries who cost relatively little: children and pregnant women.

The high-cost Medicaid patients are the frail elderly who qualify for nursing homes and the physically or mentally disabled who have little income. These "dual eligibles," so called because they qualify for both Medicare and Medicaid, offer companies high monthly premiums and thus tantalizing profits if they can keep them relatively healthy and out of institutions.

Florida's Legislature voted in 2011 to move the dual eligibles into managed care beginning next year; the state has applied for a waiver of federal Medicaid rules to make the move possible. Florida's Medicaid program is managed by the Agency for Health Care Administration.

On June 29, AHCA announced it had begun issuing invitations to negotiate for the Long-term Care Managed Care component of the Statewide Medicaid Managed Care program.  Companies have until Aug. 28 to respond; more information is available at this website

AHCA official Beth Kidder told an audience of health consultants late last month that her agency has been so busy getting the invitation to negotiate ready they've had no time to issue updates on the likelihood of obtaining the federal go-ahead to expand Medicaid managed-care statewide. She said Florida officials have been given assurance they will receive the waiver.

Shortly after the announcement, investment advisors applauded the deal. "The transaction will make (WellPoint) the leader in Medicaid managed care with more than 4.5 million enrollees when the deal closes, eclipsing (United Healthcare's)  current leading membership position of about 3.6 million lives," wrote Scott Fidel of Deutsche Bank Equity Research.

Carl McDonald of Citi Research wrote: "With this deal, WellPoint becomes a key player in the dual opportunities across the country."

Other major insurers, including United, Aetna and Cigna, also need to beef up their Medicaid business, he said, but he doesn't expect other them to bid up WellPoint's $92/share offer. United has overlap with Amerigroup in another state, which would have raised anti-trust issues, McDonald wrote, and Cigna is still busy digesting HealthSpring.

Besides, other medium-size Medicaid plans are still available, McDonald said, including Centene, Molina and Tampa-based WellCare Health Plans Inc. (Despite the similarity in names, WellPoint and WellCare are not related).

WellPoint is an independent licensee of the Blue Cross and Blue Shield Association, has members in California, Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri, Nevada, New Hampshire, New York, Ohio, Virginia and Wisconsin. In most areas, WellPoint’s plans do business under the name of "Anthem."

WellPoint is not the only Blue Cross and Blue Shield affiliate competing for Medicaid business in Florida. In January, Florida Blue -- formerly Blue Cross and Blue Shield of Florida -- announced it was forming a Medicaid joint venture with AmeriHealth Mercy Family of Companies, based in Philadelphia. The joint venture is called Florida True Health Inc.

--Health News Florida is an independent online publication dedicated to journalism in the public interest. Contact Editor Carol Gentry at 727-410-3266 or by e-mail.