By – Centene announced that it will be selling IlliniCare Health Plan, Inc. and Centene’s Illinois Medicaid and Medicare Advantage plans to CVS Health in order to prepare for Centene’s merger with WellCare Health Plans.
“We are continuing to make progress towards completing our transaction with WellCare and the divestiture of our IlliniCare Health plan is the next step in that process,” explained Michael F. Neidorff, Centene’s chairman, president and chief executive officer.
“Our employees in Illinois have done an exceptional job serving our communities in the state. We are pleased to enter this agreement with CVS Health, under which these employees can continue helping members achieve better health outcomes while delivering benefits to providers. We will work closely with CVS Health to ensure a smooth transition of this business for members, employees and providers.”
If approved, Centene would relinquish most of its Medicaid and Medicare Advantage clout in the Illinois market. However, the health payer still has some foothold in the state.
For example, IlliniCare Health Plan’s Medicare-Medicaid Alignment Initiative would remain under Centene’s scope.
The Medicare-Medicaid Financial Alignment Initiative is a CMS program initiated in 2016 to improve care for dual eligibles. Using a capitated model and a managed fee-for-service model, the program seeks to deflate high healthcare spending and achieve better care coordination for dual eligibles.
Centene would also hold on to its YouthCare foster care contract, which goes into effect in February 2020. Centene has a long history of providing foster care as well as the health plan’s CHIP, long-term care, and other health plans for the underserved.
The deal depends on a couple of layers of legal approvals: federal antitrust clearance and state regulatory clearance for CVS Health to purchase IlliniCare Health Plan and the approval of the Centene-WellCare merger.
CVS Health does not anticipate significant changes to its earnings based on this transaction. The cost of the Centene-CVS Health deal will go undisclosed, unlike the Centene-WellCare merger’s $17.3 billion price tag which was announced in March.
Centene and WellCare are still collecting states’ approvals for the merger. Twenty-six states have sanctioned the deal so far. Through the merger, the combined company would serve over 12 million Medicaid members and approximately five million Medicare members, according to the merger website.
“The combined company would be the leader in government-sponsored healthcare with increased scale and diversification both geographically and in its managed care service offerings, and enhance access to high-quality services for members,” the site explains.
The companies expect to finalize the merger in the first half of 2020.
Centene and WellCare are not the only health plans seeking federal and state blessing for their future.
Tufts Health Plan and Harvard Pilgrim have been defending their potential merger this week. When the announcement was first released, local news outlets emphasized the extensive impact this merger could have on New England’s healthcare.
This week, the CEOs—Tom Croswell, the chief executive of Tufts, and Michael Carson, the chief executive officer at Harvard Pilgrim—explained to the Boston Globe why the merger would be a positive change for the region. Croswell indicated in the interview that the company sees the merger as an opportunity to rectify high healthcare costs.
The companies have said that their goal is to overcome the four obstacles that handicap members in the healthcare system: affordability, access to care, quality of care, and care coordination.
Responses to both the Tufts-Harvard Pilgrim and the Centene-WellCare mergers show that the public remains wary of healthcare industry consolidation.