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Health Insurers Aiming For Costly Patients On Government Plans

--Health insurers aim to cover so-called "dual eligible" patients on Medicare and Medicaid --Federal government and states are looking to better coordinate care, lower costs --Emerging market could mean significant new business, but carries risks By Jon Kamp Of DOW JONES NEWSWIRES U.S. health insurers are gearing up to tap a potential $300 billion market as the government seeks to improve care and lower costs for some of its most expensive patients. The prospect for covering so-called "dual eligible" people who qualify for Medicaid and Medicare--due to factors like age, disability and poverty--has driven recent managed-care acquisitions while stoking smaller insurers' stock prices. A handful of states including California, working with the federal government, could have new programs covering dual patients running next year. The emerging market poses risks because of high up-front costs and patients' often significant health challenges. But companies ranging from industry heavyweight UnitedHealth Group Inc. (UNH) to Medicaid specialist Molina Healthcare Inc. (MOH) are broadly targeting the market nonetheless amid a significant chance to add business. "We do see it as a major opportunity," said Gail Boudreaux, chief executive of UnitedHealth's insurance unit, on a recent conference call. At issue are more than nine million Americans who qualify for both government health programs, yet frequently "receive their care in uncoordinated systems" that can weaken care and boost costs, according to a document from the Centers for Medicare & Medicaid Services. These patients' health issues trigger substantial costs; dual patients represent just 15% of Medicaid enrollment, for example, but 39% of program spending, CMS said. A typical dual patient might be on Medicare due to age and on Medicaid because chronic health problems drained their savings, although younger patients with disabilities are also in the system. These are "among the sickest and the poorest" people covered by the government, according to the Kaiser Family Foundation. The U.S. health-care overhaul law created an office within CMS that aims to improve coverage by streamlining an often confusing system. The agency has given grants to 15 states including California and New York to foster more coordinated efforts, and many other states are moving in that direction. There are open questions regarding how these efforts will work, when exactly they will come on line and the role managed-care companies could ultimately play in various states. Under one proposed model, health plans would sign contracts giving them a set amount of money for duals with an expectation they will restrain costs while meeting certain patient-care standards. Citigroup analyst Carl McDonald expects the first batch of states to create at least $25 billion in new revenue for health plans next year, with potential for revenue to double in 2014. Over the long term, there could be at least $300 billion in revenue up for grabs. Medicaid-focused insurers such as Molina and Amerigroup Corp. (AGP) could be well-positioned to win dual-eligible business, given experience and connections they have built through state Medicaid plans. Molina shares are up about 49% this year, while Amerigroup shares have climbed 12% amid rising investor enthusiasm for the duals market. Shares of Health Net Inc. (HNT), which like Molina could benefit from its foothold in the California market, are up 25% on the year. The added business won't mean as much to the industry's biggest names because of their heft. But UnitedHealth and WellPoint Inc. (WLP), which already have big Medicare and Medicaid businesses, could also expand significantly into the duals market. Among other firms, Humana Inc. (HUM) has talked about striking Medicaid-related partnerships to augment its own Medicare business and pursue dual-eligible patients. It is also possible big insurers could snap up Medicaid-focused companies, though Citigroup suggested big companies may prefer to build from within rather than paying deal premiums. Also, "we don't need to be part of another team to be successful here," said James Carlson, Amerigroup's chief executive, in an interview. The potential for broadly pushing duals onto managed-care plans has raised concern among patient advocates, such as the National Senior Citizens Law Center. They worry insurance companies lack experience with such health-challenged patients and are ill-equipped to offer more proactive care. Company executives said they understand this market will require significant investment, especially because performing poorly can mean more hospital trips and budget-busting costs. UnitedHealth and WellPoint have each recently acquired businesses specializing in seniors with special needs--XLHealth at UnitedHealth and CareMore at WellPoint--with this issue in mind. "If you don't get it right on day one, you could really not do well in these programs," said Wayne DeVeydt, WellPoint's chief financial officer, in an interview. He believes the market could offer long-term profit margins that are a bit better than margins typically seen in Medicaid-specific plans. But he also cautioned it could take two years for some health plans to break even because of high costs to invest in new markets. -By Jon Kamp, Dow Jones Newswires; 617-654-6728;

Stock News for Molina Healthcare (MOH)
03/13/201716:47:08Additional Proxy Soliciting Materials (definitive) (defa14a)
03/13/201716:41:01Proxy Statement (definitive) (def 14a)
03/10/201717:44:49Statement of Changes in Beneficial Ownership (4)
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03/01/201716:24:38Annual Report (10-k)
03/01/201716:16:13Amended Current Report Filing (8-k/a)

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