A Philadelphia-based Medicaid managed-care plan has agreed to buy a troubled South Carolina Medicaid HMO to prop up the ailing plan's sagging bottom line and extract it from state control.
The state of South Carolina seized privately owned Charleston-based Select Health, with about 6,500 Medicaid enrollees in 15 counties, in April after the plan's surplus fell well below the $2.3 million required to maintain its state license (April 12, p. 20).
It is being purchased by AmeriHealth Mercy Health Plan, a joint venture between AmeriHealth HMO and Mercy Health System, both of Philadelphia.
AmeriHealth HMO is a subsidiary of Independence Blue Cross, the Philadelphia Blue Cross plan. Mercy Health is part of the Catholic Health East system based in Newtown Square, Pa. Mercy's flagship hospital is 504-bed Mercy Health System of Southeastern Pennsylvania in Bala Cynwyd, just west of Philadelphia.
The deal is expected to close by Oct. 1 and was recently approved by the South Carolina Department of Insurance and HCFA.
AmeriHealth Mercy has agreed to buy Select Health's stock for $1.3 million and to put $1.6 million more into the company to bring it into state compliance, according to documents provided by the South Carolina Department of Insurance. Specifically, AmeriHealth Mercy has agreed to bring the company's surplus to $2.3 million and keep it at least at that level.
This acquisition will be AmeriHealth Mercy's first launch into South Carolina. The joint venture and its affiliates have a total Medicaid membership of 660,000, said Matthew Cabrey, spokesman for AmeriHealth Mercy.
The company has the largest Medicaid managed-care plan in Pennsylvania, with nearly 250,000 Medicaid recipients in the southeastern part of the state. It also has plans in Kentucky, Missouri, New Jersey and Texas.
AmeriHealth HMO has managed-care products in Delaware, Florida, Kentucky, New Jersey, Pennsylvania, Texas and Vermont.