Centene, a Medicaid managed care and increasingly Affordable Care Act (ACA) plan payer, announced that it’s investing in RxAdvance, a cloud-based pharmacy benefit manager (PBM).
The St. Louis-based payer said the partnership is both a “customer relationship and strategic investment in RxAdvance.”
Centene said it may expand its equity investment in the company down the road.
Centene said the partnership will leverage Centene’s own PBM, Envolve, and its clinical competencies with RxAdvance’s Collaborative PBM cloud platform.
Centene said “key differentiators” of RxAdvance’s business model include an operating model with administrative cost savings and a reduction in avoidable drug-impacted medical costs.
RxAdvance founder and CEO Ravi Ika, who will continue in that role, said the PBM industry is changing. Employers and payers seek “technology innovation and new business models.”
Centene’s move comes as payers increasingly look to make major moves in the PBM space. Cigna announced last week its plan to purchase Express Scripts for $67 billion. Aetna and CVS Health are in the middle of a $69 billion merger that includes CVS’ Caremark PBM.
Centene, which has been known for Medicaid managed care, expanded ACA plan offerings this year and inched further into Medicare Advantage. The payer recently announced its total revenues grew 8% to $12.8 billion in the fourth quarter. Centene’s revenues increased 19% last year. The company said the revenue increase was connected mostly to expanding ACA plans, including moving into new states.
Centene’s ACA plan membership increased from 537,200 at the end of 2016 to 959,600 to finish 2017. That number increased to more than 1.6 million members in January as Centene expanded to three more states. That’s still a small number compared to Centene’s Medicaid managed care population (7.1 million members at the end of 2017).