Medicaid managed-care plans absorb smaller players

Medicaid managed-care plans continue to consolidate. In the latest deal, AmeriChoice Corp., Vienna, Va., bought 96,000-member Great Lakes Health Plan, Michigan's second-largest Medicaid HMO, for $27 million. Southfield, Mich.-based Great Lakes earned $7.1 million on revenue of $132.2 million during the nine months ended Sept. 30, 2003; but it has been operating under state supervision since failing to meet regulatory capital and reserve requirements last year. AmeriChoice, a subsidiary of UnitedHealth Group, specializes in covering beneficiaries of Medicaid and other government-funded programs. With the addition of Great Lakes, it has nearly 1.3 million members in 11 states. Meanwhile, fellow Medicaid managed-care plan WellCare Health Plans, Tampa, Fla., said it would pay an undisclosed price to acquire Illinois' largest Medicaid HMO, 85,000-member Harmony Health Plan, based in Chicago. WellCare, which plans to make an initial public offering this year, will have about 665,000 members in six states after the acquisition. Last month Molina Healthcare, Long Beach, Calif., announced its acquisition of a Medicaid managed-care company in New Mexico. -- by Laura B. Benko and Mark Taylor