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WellCare to buy Medicare HMO in Calif.

Tampa-based WellCare Health Plans announced today that it will buy a small but fast-growing Medicare HMO in southern California.

Easy Choice Health Plan, based in Long Beach, has about 34,000 total members in four counties: Los Angeles, Orange, Riverside, and San Bernardino.

But it recently won federal permission to expand to 11 counties next year, including the San Diego market, according to the company's press release.

That will give WellCare access to 60 percent of the Medicare beneficiaries in the nation's largest state, or 3 million potential members, according to Goldman Sachs analysts Matthew Borsch and Sam Wass.

WellCare's press release said the Easy Choice acquisition would increase its Medicare Advantage (HMO) business by 22 percent, to 192,000 members. No information on the purchase price was mentioned.

This is the second Medicare plan in the western U.S. that WellCare has announced it will buy. The other is Desert Canyon Health Plan in Arizona.

Easy Choice has 12,000 Medicare-Medicaid "dual eligibles" enrolled in its Special Needs Plan, or SNP. Such plans cover low-income frail seniors and the disabled, including those who are still living at home or in the community as well as those in nursing homes.

SNPs are attractive to private managed-care companies because they offer higher premiums from the federal government than plans receive for the average Medicare enrollee. Thus, there is more profit potential if the plan manages the care of SNP patients in the community and keeps them out of institutions.

Since California's Medicaid program (Medi-Cal) is moving in the same direction as Florida, hoping to move virtually all its Medicaid patients into managed-care plans, there will be a significant revenue opportunity for WellCare on the horizon, Borsch and Wass wrote.

Florida Medicaid received applications from 14 health plans that want to vie for contracts to take care of the dual-eligible population in some region of the state, according to News Service of Florida. WellCare was one of six companies seeking contracts in all 11 regions.

Assuming the state receives permission from the Centers for Medicare and Medicaid Services, it plans to begin moving the long-term-care population, mostly seniors, into health plans the first quarter of 2013, according to the Agency for Health Care Administration website. All would ideally be enrolled by Oct. 1, the site says.

WellCare says it had 158,000 Medicare Advantage members in 11 states as of the end of June, an increase of 27 percent over the prior year. For 2013, the company expects to market its Medicare plans in 200 counties in 14 states.

The company also contracts with state Medicaid programs. It is the largest provider of Medicaid managed-care services in Florida.

Altogether, WellCare says it has about 2.6 million members nationwide.

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


Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.