TOPEKA, Kan. (AP)—Kansas will review plans announced Monday by the nation’s second-largest health insurance company to buy another firm recently awarded a contract to help manage the state’s Medicaid program.
WellPoint Inc., based in Indianapolis, said it will acquire Amerigroup Corp., headquartered in Virginia Beach, Va., for about $4.46 billion. WellPoint expects to close the transaction by the end of March 2013 if Amerigroup stockholders approve.
The purchase comes as Gov. Sam Brownback’s administration is overhauling the state’s $2.9 billion-a-year Medicaid program, which provides health coverage to the poor, disabled and elderly. The state expects to turn the program’s management over to three private companies in January.
The state awarded one of its contracts two weeks ago to an Amerigroup subsidiary, Amerigroup Kansas Inc. Because the subsidiary is a Kansas company, the WellPoint acquisition must be reviewed by Insurance Commissioner Sandy Praeger’s office, spokesman Bob Hanson said.
Hanson said that once WellPoint files an application with Praeger’s office, a review should take about two months. He said Kansas is among 15 states that must review the transaction.
Meanwhile, the state’s three-year Medicaid contract with Amerigroup’s subsidiary remains in place, said Miranda Steele, spokeswoman for the state Department of Health and Environment. Brownback’s administration contends the overhauled Medicaid program, renamed KanCare, will coordinate services better for participants while reining in the state’s growing costs.
“Our expectations for KanCare are still that Kansans will benefit from better outcomes and reduced cost growth,” Steele said in a statement. “Amerigroup has met with us to reiterate their commitment to our vision.”
Maureen McDonnell, an Amerigroup vice president and spokeswoman, said the acquisition won’t alter her company’s Medicaid work in Kansas. She said after the acquisition, WellPoint’s Medicaid-related operations will be under the Amerigroup name, and they’ll be led by Amerigroup’s chairman and CEO.
“Amerigroup is excited to bring our mission to improve health outcomes for financially vulnerable individuals and promote independent living for seniors and people with disabilities to Kansas,” she said in a statement. “That remains the priority of Amerigroup, and we now have the additional resources that WellPoint brings to the table.”
WellPoint reported nearly $61 billion in revenues in 2011 in its latest annual report, while Amerigroup Corp. reported revenues of $6.3 billion last year.
The Medicaid overhaul would move all Kansas participants into managed care, and Brownback’s administration projects that the state will save more than $1 billion over the next five years because Medicaid costs won’t grow as quickly as they have previously. But some legislators and advocates for the needy and disabled are skeptical such savings will occur and worry that the administration is moving too quickly.