DOW JONES NEWSWIRES
The state of Louisiana's Department of Health and Hospitals on
Monday recommended the award of Medicaid contracts to five
companies to provide networks that the state has said will change
how two-thirds of Medicaid recipients receive health care.
The state said Medicaid--a government program that provides
health care to the poor--will offer two types of coordinated care
networks, prepaid and shared savings. The department recommended
that Amerigroup Corp. (AGP), Centene Corp. (CNC) and privately held
Amerihealth Mercy of Louisiana be awarded the prepaid contracts. It
also recommended that UnitedHealth Group Inc. (UNH) and Community
Health Solutions of America Inc., another private company, be
selected to manage the state's shared services.
Investment firm SIG Susquehanna estimated the new coordinated
care networks, or CCNs, would enroll about 900,000, with annual
revenue for the industry expected to range from $1.8 billion to $2
billion.
Meanwhile, in the first full year of implementation of the CCNs,
Louisiana said it expects to save $135 million. The state
originally sought bids in April, and received a number of bids
before the June 30 deadline. Bidding companies that weren't
selected included Aetna Inc. (AET) and WellCare Health Plans Inc.
(WCG).
Shares of all three publicly traded companies that were
recommended by Louisiana--Amerigroup, Centene and
UnitedHealth--were slightly down in recent trading.
-By John Kell, Dow Jones Newswires; 212-416-2480;
john.kell@dowjones.com