By Jon Kamp
Medicaid health insurers Molina Healthcare Inc. (MOH) and
Centene Corp. (CNC) won back business in Ohio after protesting
their prior rejection for new contracts starting next year.
The state, which had initially named Aetna Inc. (AET) a winner,
dropped that insurer from its list of five Medicaid health plans
that will serve start starting Jan. 1. Meridian Health Plan, a
nonprofit, was also dropped after initially being named a
winner.
The protest wins are important for Molina and Centene, which
have seen their share prices come under pressure after they
surprisingly lost the Ohio businesses, where they are both
incumbents, two months ago. Shares of both companies also sold off
sharply on Thursday after Molina disclosed surprising problems with
high medical costs in Texas, where both companies have a
presence.
Molina traded up 18% to $21.00 in after hours trading late
Thursday, regaining some ground due to Ohio's announcement, after a
31% decline during regular trading hours. Centene rose 3.6% to
$34.03 after hours after closing down 12% when regular trading
ended.
Ohio didn't award new business to Amerigroup Corp. (AGP),
Coventry Health Care Inc. (CVH) or WellCare Health Plans Inc. (WCG)
despite their protests. But analysts have said Molina and Centene
had more at stake due to their large Ohio stakes, particularly
Molina.
The state sent letters to affected firms Thursday letting them
know how their applications were scored and reviewed, and what
changes were made.
"The process we used to select the managed care plans, including
the procedure that applicants utilized to protest the initial
scoring, was thoughtful and deliberate and based on a fair and open
application process," said John McCarthy, Ohio's Medicaid director,
in a statement. He also said the methodology was objective and used
to pick the best firms.
Medicaid is a joint federal and state health program for the
poor. Many states including Ohio have tapped managed care firms to
run the Medicaid program and save money. There are 1.6 million
Medicaid-eligible people in Ohio.
A spokesman for the Ohio Department of Job and Family Services
said there is no set time for how long the contacts will last,
though all contracts are renewed annually, and Ohio Medicaid
expects to have another bidding process in five years. There is no
further opportunity for protests, the spokesman said.
Ohio's list of five suppliers still includes UnitedHealth Group
Inc. (UNH); CareSource, a nonprofit firm working with Humana Inc.
(HUM) to try to win contracts to serve so-called dual-eligible
patients who also use Medicare; and nonprofit Paramount Care.
Write to Jon Kamp at jon.kamp@dowjones.com