- The state of Kentucky awarded lucrative Medicaid managed care contracts to five insurers, including two new players who beat out previous incumbents. The awards were announced Friday after Gov. Andy Beshear canceled the previous contracts awarded by the outgoing administration in early December.
- Aetna, Centene (WellCare), Humana, Molina and UnitedHealthcare were the winners of the contracts that cover 1.4 million people with an annual spend of $8 billion for coverage.
- Molina and UnitedHealthcare edged out Anthem and Passport Health Plan, which currently cover 10% and 20% of the state's Medicaid members, respectively.
It's a big win for Molina, particularly after its failed acquisition of NextLevel Health in Illinois.
The award is most accretive to Molina's earnings, according to a recent note from analysts at Jefferies. It gives Molina a foothold in Kentucky, which may lead the firm to expand its Affordable Care Act marketplace business there — a common tactic among Medicaid managed care organizations.
Molina covers about 3.4 million people nationwide through its Medicaid, Medicare and marketplace products. However, its Medicaid book of business is by far its largest, with 2.9 million members as of March 31.
The contract awards begin January 2021 and go through the end of 2024.
It was an important contract win for Centene, too. Of the three companies to successfully defend their current business in the state, the contract "was most important to [Centene] from an earnings exposure standpoint as the contract contributed 1.5% to [earnings per share]," Jefferies analysts said.
Centene also controlled the most market share with more than 446,000 covered members.
|Medicaid enrollment in Kentucky|
Even though the contracts were rebid once Beshear took office, his administration awarded the contracts to the exact same companies that won under the last administration.
Anthem and Louisville-based Passport Health Plan did not fare any better this time around. Passport said it plans to protest the decision. Anthem did not immediately respond to a request for comment.
On Friday, the governor said in a statement that the previous awards "raised concerns about the review process and bias regarding certain companies," though he did not elaborate any further.
However, he may have been alluding to Passport and its complicated relationship with previous Gov. Matt Bevin. Passport previously said earlier rate cuts violated its contract with the state and also threatened the solvency of the company, according to previous reports from the Louisville Courier-Journal. Then, Bevin called the company "poorly run," according to the newspaper, sparking outrage from previous Passport CEO Mark Carter.