Florida amends WellCare's Medicaid contract

Florida's Medicaid program has altered some rates within its managed-care contract with WellCare Health Plans, which WellCare said will likely decrease its Florida program revenue by about 4%. However, the publicly traded insurer said the rate adjustments will have little effect on its Florida Medicaid profit margins.

WellCare disclosed the amended contract Thursday to the Securities and Exchange Commission. WellCare, headquartered in Tampa, Fla., has a five-year managed-care contract to cover 962,000 beneficiaries in Florida's expanded Medicaid Managed Medical Assistance Program. The agreement, which expires at the end of 2018, pays WellCare a maximum of $11.8 billion.

Gregg MacDonald, WellCare's president of Florida operations, said in an interview that most of the changes were ultimately revenue-neutral. For example, although Florida adjusted some of the monthly capitated rates down, WellCare will be able to bill Florida for separate supplemental payments to help cover the high costs of hepatitis C drug Sovaldi.

In the second quarter of this year, WellCare posted a $7.5 million loss that was largely attributable to its increased presence in Florida's Medicaid program. Medical expenses shot up, totaling about 95% of premiums.

WellCare, which has been rumored as an acquisition target for not-for-profit health system Ascension Health, will report third-quarter earnings Nov. 5.

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