UPDATE: Washington State Picks 5 Insurers For Medicaid Contracts
January 18 2012 - 8:55PM
Dow Jones News
The state of Washington has named five health insurers,
including Amerigroup Corp. (AGP), Centene Corp. (CNC), UnitedHealth
Group Inc. (UNH) and Molina Healthcare Inc. (MOH), as preliminary
winners in a Medicaid bidding process that could be worth around
$2.5 billion in industry revenue.
The 18-month contracts, which are subject to finalization,
represent new-market entries for three of those firms but fresh
competition for Molina, which already has a big presence in
Washington. The state also picked a nonprofit group, Community
Health Plan of Washington, in the bidding process to serve an
expanding program for low-income health-care recipients.
The contracts in question are expected to cover about 840,000
people and go into effect July 1. The Washington process is the
latest in a string of contests around the U.S. that are creating
new revenue sources for Medicaid-focused insurers.
Market-share breakdowns for Washington aren't available before
the state finalizes contracts--anticipated by the end of
February--according to the state's Health Care Authority. But with
three sizable competitors entering the market, while replacing two
private local firms which didn't win new contracts, Molina could
see its market share slip from current levels, analysts said.
Molina currently serves nearly half the Washington market, which
represents, in turn, around 18% of the Long Beach, Calif.,
company's revenue. Community Health Plan is also an incumbent
Medicaid provider in Washington.
Glen Bogner, president of Molina Healthcare of Washington, said
in a statement that the Medicaid-focused insurer is proud to have
been selected to continue its long-standing relationship with the
state. The company will disclose more details when it knows more
about which counties it was awarded and how membership will be
allocated, Bogner said.
Molina shares declined 1.3% to $27.93 on Wednesday, following
the state's late-Tuesday announcement. Shares among the other
winners in the bidding process were mixed Wednesday amid more
modest percentage changes.
The Washington announcement "is clearly positive" for the three
publicly traded firms winning new business, but with market-share
breakdowns still unclear, the news isn't yet a catalyst for stocks,
Susquehanna analyst Chris Rigg said.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
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