Molina Healthcare is acquiring a financially beleaguered Medicaid plan from a nonprofit insurer trying to preserve another managed care business.
The Long Beach, California-based for-profit Molina is buying the Medicaid and CHIP plans of HealthPlus of Michigan, one of the small insurers struggling in the new healthcare economy.
Founded in 1979 as a not-for-profit managed care plan, Flint-based HealthPlus serves about 200,000 Medicaid and Medicare members along the I-75 corridor north of Detroit. Recently it's been taking on water, despite a growing market with the state's new Healthy Michigan Medicaid expansion program.
In 2014, HealthPlus lost $17.7 million on $503 million in revenue; its Partners Medicaid subsidiary lost about $9 million on $296 million in revenue. Last fall, CEO Bruce Hill, a 20-year-veteran of the company, left after five years in the top spot, and was replaced by Nancy Jenkins, former VP of community programs and customer experience.
Earlier this year, the Michigan Department of Financial and Insurance Services cited HealthPlus for missing cash reserve requirements, with a $4.8 million "negative surplus" for 2014. The Centers for Medicare & Medicaid Services later suspended enrollment in HealthPlus Medicare Advantage plans.
"Medicaid has been a significant growth product for HealthPlus in recent years, especially with the Healthy Michigan expansion," said Jenkins, HealthPlus president and CEO. "However, this strategic move will provide us the needed capital to maintain the HealthPlus brand as well as to strengthen and grow our Medicare and commercial lines of business. A key factor in our decision to enter into a transaction for our Medicaid and MIChild business with Molina Healthcare was Molina's shared dedication to providing members with unparalleled customer service and high quality care through innovative care models."
Molina Healthcare of Michigan will assume HealthPlus Partners' Medicaid contract and HealthPlus of Michigan's MIChild contract, along with "certain provider agreements."
The deal, whose price was not disclosed, will add about 90,000 Medicaid members and 6,00 CHIP members to Molina's 256,000 Michigan members, most of them on Medicaid. Molina's total membership will be at 3 million Medicaid and exchange beneficiaries across 11 states.
"Molina Healthcare of Michigan is excited about this opportunity to expand our health plan in the State of Michigan," said Stephen Harris, president of Molina Healthcare of Michigan. "This agreement with HealthPlus further reinforces our commitment to the Medicaid and MIChild programs, the state and the local provider community."