Molina, Centene Win Back Ohio Medicaid Business After Protests
06/07/2012| 06:34pm US/Eastern
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By Jon Kamp
Medicaid health insurers Molina Healthcare Inc. (>> Molina Healthcare, Inc.) and Centene Corp. (>> Centene Corp) won back business in Ohio after protesting their prior rejection for new contracts starting next year.
The state, which had initially named Aetna Inc. (>> Aetna Inc.) 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. (>> AMERIGROUP Corporation), Coventry Health Care Inc. (>> Coventry Health Care, Inc.) 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. (>> UnitedHealth Group Inc.); CareSource, a nonprofit firm working with Humana Inc. (>> Humana Inc.) 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
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