As part of the Centene-WellCare merger, WellCare plans to divest two Medicaid programs to Anthem, raising questions about the impact on Medicaid MCOs.
WellCare Health Plans will divest its Medicaid programs in Missouri and Nebraska to Anthem, Inc. as part of its merger with Centene Corporation, Centene announced.
“This agreement represents an important milestone toward completing the combination of Centene and WellCare,” said Michael F. Neidorff, the chairman, president, and chief executive officer of Centene.
“This transaction demonstrates the strength and quality of WellCare’s Medicaid healthcare plans, and we are pleased to have reached an agreement where the WellCare employees who operate and manage these plans will become part of Anthem and continue providing members and communities with solutions to help them achieve better health outcomes.”
This would be Anthem’s first payer acquisition of 2019, but not its first acquisition in general this year. In June, the payer acquired Beacon Health Options, creating one of the largest behavioral health networks in the US.
Through this acquisition, Anthem would gain 300,000 Medicaid members, according to the St. Louis Business Journal.
Medicaid beneficiaries currently make up 16 percent of the major payer’s consumer base, per a fact sheet from Anthem. With this acquisition, Anthem will further diversify its consumer base and expand its Medicaid footprint from 21 to 23 states, plus Washington, DC.
“We look forward to working with our state partners to serve Medicaid members in Missouri and Nebraska with our innovative care management programs designed to improve health outcomes among the most specialized populations,” said Gail K. Boudreaux, president and chief executive officer of Anthem, Inc.
The divestiture is not completely settled with every party involved, however. Missouri and Nebraska’s health departments still need to review the transaction.
“Centene and WellCare are valued partners, and Anthem is a well-known payor in the marketplace,” said Matthew Van Patton, MD, director of the division of Medicaid and long-term care at the Nebraska Department of Health and Human Services. “We will review the WellCare-Anthem transaction to ensure that our members will continue to receive excellent levels of care and service.”
Giving up WellCare’s MCOs in Nebraska and Missouri does not weaken Centene’s status with Medicaid MCOs. In fact, the company states that government-sponsored healthcare programs, Medicaid, and Medicare are three of the primary focuses of the merger. It was Centene’s Medicaid program that fueled rumors of a Humana buyout, which Humana finally silenced in June.
Due to the merging companies’ prominent status in the Medicaid MCO arena, the merger has generated conversation about the transparency of Medicaid managed care organization (MCO) quality. Some speculate about the impact this merger will have on Medicaid.
Centene runs Medicaid MCOs in 20 states covering 6.1 million individuals and WellCare has Medicaid MCOs in 12 states covering 3.1 million people.
The merger would bring Centene’s Medicaid MCOs to 25, level with UnitedHealth Group which leads the Medicaid MCO industry, noted Andy Schneider, a research professor of the practice at the Georgetown University McCourt School of Public Policy. Schneider wrote about the Centene-WellCare merger’s potential effect on Medicaid MCOs.
Schneider anticipated that the Centene-WellCare merger would decrease MCO competition in ten states, raise the population of Centene’s Medicaid MCO beneficiaries in seven states, and expand Centene’s Medicaid MCO footprint by five states. These would be major changes for the Medicaid program, particularly for children, as over two-thirds of children on Medicaid are under an MCO.
However, Schneider said that neither he nor anyone else could predict whether these changes would be negative or positive for the Medicaid program due to a lack of transparency in the Medicaid MCO industry.
“Centene’s acquisition of WellCare calls into question of how well individual MCOs—whether or not owned by Centene or WellCare—are managing the health care of millions of Medicaid beneficiaries, and how, given the lack of transparency, anyone would know,” Schneider wrote.
There are few places to obtain quality information about individual MCOs, he pointed out. The KFF Medicaid Market Tracker is the sole publicly available MCO quality database.
As of September 2019, the KFF Medicaid Market Tracker published the National Committee for Quality Assurance’s (NCQA’s) star ratings for four Anthem MCOs and five WellCare MCOs. Both companies received either 3 or 3.5 stars out of 4 stars, with the exception of WellCare’s New York MCO, which scored at 4.
Schneider argued that the quality data’s ambiguity leaves Medicaid beneficiaries and regulators in the dark about specific companies’ quality of care. He questioned the utility of the performance data that over half of US states publish. The NCQA reports, CMS scorecards, and other data on MCOs are not detailed enough about how the individuals MCOs serve specific populations, such as children, he said.
If all goes as planned, the impacts of the merger will be clear after its closure in the first half of 2020. Centene and WellCare have their stockholders’ approval and 19 states affirmations secured. Anti-trust action by the Department of Justice would be the merger’s primary obstacle.
Date: October 01, 2019