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By Krishna Gandhi, Research Associate & Kshipra K, Analyst, Market Access

Well known for its acquisitions, Molina Healthcare expanded its existing Medicaid markets and entered a few new markets in 2020. Molina’s strategy to target small private plans and utilize its operational experience has been successful in boosting its growth.

California-based Molina Healthcare is one of the nation's largest managed Medicaid organizations with Washington, California, Michigan, Ohio, Illinois, Texas, and Puerto Rico as its top markets. The insurer also offers individual commercial plans and has small Medicare Advantage business geared towards dual eligible members. The insurer serves approximately 3 million individuals overall.

Various deals and its impact on markets:

New York:

The insurer announced to enter into a definitive agreement with a New York-based, Affinity Health Plan for $380 million on Sept. 29, 2020. The deal will focus on Molina’s support to Affinity towards primary care and community health. Affinity Health Plan is one of the largest provider networks in the Greater New York region. The insurer will nearly add 247,000* Medicaid beneficiaries to Molina’s portfolio post acquisition.

Additionally, another New York-based health plan, YourCare was acquired by the payor on July 1, 2020. With this purchase, Molina will have a larger footprint and 43,000 additional Medicaid members in seven counties in western New York and the Finger Lakes regions. Thus, both the deals provide Molina an expanded market in New York.

Acquisitions

In summer 2020, Molina was awarded one of Kentucky’s five Medicaid MCO contracts.  The contract is effective Jan. 1, 2021 to December 2024.

The insurer bought Kentucky-based Medicaid MCO  Passport Health Plan on Sept. 1, 2020. Under the agreement, Molina will continue the coverage and care for Passport members, will utilize the Passport name, and retain their employees.

On April 30, 2020, Molina also purchased Magellan Complete Care , which serves members in six states, $820 million. This gives Molina full-service Medicaid plans in Virginia and Arizona, both new states for the carrier, and expands the Medicaid market in New York, Florida, and Wisconsin. MCC provides plans for Medicaid and Medicare dual beneficiaries in Massachusetts. The acquisition of MCC will increase the number of beneficiaries by about 124,000 beneficiaries.

ACQUIRED HEALTH PLANS STATE PREDICTED ENROLLMENT*
PASSPORT HEALTH Kentucky (New Market) 319,289
AFFINITY HEALTH PLAN AND YOUR CARE New York 318,885
MAGELLAN COMPLETE CARE Virginia (New Market) 109,366
MAGELLAN COMPLETE CARE Florida (New Market) 86,602
MAGELLAN COMPLETE CARE Arizona 18,802

 

Competition in the Market:

Molina competes with various insurers that provide health benefits through contracts with state Medicaid programs and the federal government, including Centene, Humana and UnitedHealth Group.

In January 2020, Centene completed its acquisition of WellCare which expanded its Medicaid market across the nation with 1 in 15 residents covered by Centene. Following this acquisition, the Medicaid market is currently consolidated, which might result in plans offering higher premiums due to payer monopoly. Thus, having new players like Molina in the market can be beneficial as it gives people more options to choose from to get Medicaid coverage. Additionally, Molina can also expect good profit in its new markets following a merger with plans like Magellan and Affinity health which already has a reasonable market share in its respective states.

Key Takeaway

Acquiring underperforming plans is an integral – and effective - part of Molina’s growth strategy. Buying plans that lack the scale to execute innovative ideas and utilize their operational experience to expand Molina’s footprint as well as enhance the product offerings to underserved or underinsured individuals, makes the insurer an important player to watch.

*As per DRG lives data, January 2020.