Centene-WellCare Merger Alters GA Medicaid Managed Care Landscape

The Centene-WellCare merger has changed Georgia’s Medicaid managed care landscape, giving Centene-WellCare the majority of the state’s Medicaid business.

The merger placed Centene-WellCare as the largest Medicaid insurer in the state. Around two-thirds of the state’s Medicaid HMO business will go to the combined company. That encompasses over 800,000 members of Medicaid and PeachCare, a program for children of low-income, uninsured families who are ineligible for Medicaid.

Centene-WellCare’s dominance in the public payer sector is not restricted to Georgia’s Medicaid program. The combined company has become one of the largest government program insurers in the nation as a result of the merger.

The company’s business in Georgia also includes the state health insurance marketplace through its Peach State Health Plan and Ambetter as well as its individual health insurance market plans.

In Illinois, Centene had to sell its Medicaid and Medicare Advantage plans in order for the merger to gain approval. CVS Health acquired the plans when the merger was finalized.

"We are pleased to achieve this milestone and look forward to closing our acquisition of WellCare and providing more members and communities access to high-quality healthcare," Michael F. Neidorff, Centene's chairman, president and chief executive officer, said in a press release when the merger achieved the approvals.

"We also look forward to building on our relationships with providers and government partners through the combined company's wide range of affordable health solutions,” Neidorff added. “We have been working diligently on the integration plans to bring our organizations together so that it is seamless for members, providers and employees of both companies.”

Missouri and Nebraska required WellCare to divest its Medicaid plans in order to receive their approval, according to the press release.

Major medical organizations that objected to the merger from the beginning grounded their arguments in the merger’s powerful effect on Medicaid programs across the states.

In its letter to the Attorney General in May 2019, the American Hospital Association alleged that Centene underrepresented the impacts of the merger. Illinois, Florida, Georgia, Kentucky, and other states were at risk of high Medicaid insurer concentration, with potential for 61 percent Medicaid consolidation under Centene-WellCare in Georgia.

The Medical Association of Georgia, Georgia Pharmacy Association, and Georgia Society of Clinical Oncology commented on the impact to Medicaid when the state was deciding whether to approve the health insurance merger.

Their comments pointed out that not only would Centene-WellCare run 61 percent of the Medicaid managed care market, but also confronted payers’ track records in the state. Over 27 percent of the Peach State performance measures were below the national Medicaid 25th percentile and over 61 percent were below the 50th percentile. Similarly, almost 20 percent of WellCare’s HEDIS performance measures fell beneath the 25th percentile in Medicaid and over half were below the 50th percentile.

“The undersigned oppose the merger on the grounds that it will substantially lessen competition, be hazardous to Georgia Medicaid managed care patients, and that Centene may lack the competence such that the acquisition would not be in the interest of WellCare patients or the public,” the letter concluded.

The state, however, chose to approve the health insurance merger.

Although the combined entity easily gained stockholder approval, received support from 26 states, and finalized the merger, it is not necessarily safe from future litigation. Past megamergers reinforce that fact.

For instance, CVS Health and Aetna had already divested Aetna’s Medicare prescription drug plan to WellCare, received approval from every relevant state, and finalized their merger when Judge Richard Leon halted the entities’ fusion with an investigation in December 2018. It was not until September 2019 that the merger cleared the courts, though CVS Health and Aetna were permitted to act as a combined company starting in late December 2018.

Time will tell if the Centene-Wellcare merger must face the same legal purgatory.