Health Plan Weekly

✦ Molina Healthcare, Inc. said on April 30 that it plans to buy Magellan Health, Inc.’s managed care organization, Magellan Complete Care (MCC), for about $820 million. MCC served approximately 155,000 members across six states as of Dec. 31, 2019, and it reported full-year 2019 revenues greater than $2.7 billion. “Acquiring MCC expands our geographic footprint in our core businesses of managed Medicaid, dual eligibles, and long-term services and supports,” said Joe Zubretsky, president and CEO of Molina. “We believe it will allow us to scale our enterprise-wide platforms and benefit from both operating and fixed cost leverage.” By adding MCC to its portfolio, Molina expects to serve more than 3.6 million members in government-sponsored health care programs in 18 states and will have 2020 pro-forma projected revenues of over $20 billion. The deal, which has not yet been approved by regulators, is expected to close in the first quarter of 2021. Read more at https://bwnews.pr/2xsW71q.

✦ UnitedHealth Group’s Optum division is in advanced talks to acquire the tele-behavioral health provider AbleTo, CNBC reported, citing people familiar with the potential deal. Optum’s venture arm previously made a “significant” strategic investment in AbleTo — a 12-year-old company based in New York — and the company has also raised money from investors including Bain Capital Ventures and Aetna (now owned by CVS Health Corp.). In addition, AbleTo CEO Trip Hofer was a senior executive at Optum from 2006 to 2012. Read the CNBC article at https://cnb.cx/2z0oWCU.

In a notable reversal, U.S. Chamber of Commerce joined America’s Health Insurance Plans (AHIP) and the American Hospital Association (AHA) in supporting broad — but temporary — federal involvement in health insurance markets during the COVID-19 pandemic.

In an April 28 letter to congressional leadership, the groups endorsed several policies designed to help preserve health insurance coverage, saying Congress should consider them in “the next round of legislation to overcome COVID-19.” The five specific policies the letter called for are:

Humana Inc. and Centene Corp. are both maintaining their 2020 earnings outlook despite the emergence of the COVID-19 pandemic and economic contraction at the end of the first quarter. Centene’s earnings fell short of the Wall Street consensus projection for the first quarter, while Humana’s earnings exceeded forecasts.

Humana’s revenues increased to $18.9 billion, compared with $16.1 billion in the first quarter of 2019, and it reported $5.40 in adjusted earnings per share (EPS), beating the Wall Street consensus of $4.66 adjusted EPS. Centene’s first quarter revenues increased 41% year-over-year to $26 billion, up from $18.4 billion, and it reported an adjusted EPS of $0.86. Centene fell short of the consensus with $0.99 adjusted EPS. Both insurers affirmed their projections for the end of the year, with Humana forecasting adjusted EPS of $18.25 to $18.75 and Centene $4.56 to $4.76.

Anthem, Inc., and Cigna Corp. both reported slightly better-than-expected medical loss ratios (MLRs) as part of their first-quarter 2020 earnings, in part due to delays in elective procedures resulting from the COVID-19 pandemic. Both insurers also reaffirmed their overall earnings-per-share (EPS) guidance for 2020.

But like UnitedHealth Group, which reported its own first quarter earnings on April 15 (HPW 4/20/20, p. 3), the insurers warned that MLRs may tick up later this year. In addition, they predicted that the impact of COVID-19 may lead to significant shifts in enrollment, as workers who are laid off shift to Medicaid or to the Affordable Care Act exchanges.