Independence Blue Cross, BCBS of Michigan to push national Medicaid program
PHILADELPHIA – Independence Blue Cross and Blue Cross Blue Shield of Michigan announced a partnership intended to expand Medicaid insurance and services nationally through a combined acquisition of AmeriHealth Mercy, which serves nearly 800,000 Medicaid members in three states.
The partnership of the two Blues in AmeriHealth Mercy is a nod to coming changes in the insurance landscape expected as a result of the Affordable Care Act – changes that are expected to add more than 16 million people to Medicaid rolls by 2019, according to a report from the Kaiser Family Foundation.
The two companies will pay a combined $170 million for the 50 percent share of the company held by hospital operator Mercy Health System. Independence Blue Cross has held a 50 percent ownership stake in the country for the past 15 years and when the deal closes – expected within 90 days pending regulatory approval – it will hold a majority stake with BCBSM holding a minority position.
"With the additional resources this transaction will bring, (AmeriHealth Mercy) is now better positioned to grow in the Medicaid market by offering turnkey, cost-effective, comprehensive Medicaid managed care coverage and services to Medicaid consumers nationwide," said Independence Blue Cross president and CEO Daniel J. Hilferty in a press conference announcing the deal. "This agreement will also provide an opportunity for Blue health insurers nationwide to expand into the Medicaid market today and to take advantage of the enormous growth expected in Medicaid over the next few years."
Most Blues have eschewed the Medicaid market in favor of the more lucrative private group and individual insurance markets. According to the two companies, of the 39 Blues across the country, two-thirds of them do not provide Medicaid plans in the states they serve.
For BCBS of Michigan, which earlier this year had declared its intention to offer the Medicaid market, its stake in AmeriHealth Mercy jump starts that plan.
"With its 25 years of experience in Medicaid, AmeriHealth Mercy has Medicaid expertise, systems and processes that will reduce our learning curve in entering the Medicaid market," said Daniel J. Loepp, president and CEO of BCBSM. "AmeriHealth Mercy can provide us with experience in areas such as care management, behavioral health management, pharmacy benefits and other areas."
"This not only helps us in the Medicaid market but also can give us insight into serving non-Medicaid consumers who will receive subsidies in the future to purchase healthcare coverage under national healthcare reform," continued Loepp.
In addition to its 800,000 members, AmeriHealth Mercy also offers services including pharmacy benefits management and behavioral healthcare for an additional 3.2 million Medicaid, Medicare and SCHIP beneficiaries in 11 states. The infusion of cash when the deal closes will allow it to step up its expansion efforts.
"I have met the leaders at Blue Cross Blue Shield of Michigan -- and knowing how strongly Independence Blue Cross has supported our commitment in the past -- we know that we are like-minded organizations," said Michael A. Rashid, AmeriHealth Mercy's president and CEO. "We have similar values and missions. The difference, or better yet, the opportunity, is that this change lets us serve the poor and underserved in even more communities nationally."