Managed-care insurer WellCare Health Plans stayed profitable in the first quarter of 2015. But the success of the Tampa, Fla.-based company this year relies heavily on keeping its Medicaid contracts in Georgia and Kentucky.
Georgia and Kentucky released requests for proposals this year to contract with private health insurers to manage the health benefits of their Medicaid populations. Both states already outsource their Medicaid care to insurers, but each decided to put out new bids instead of automatically renewing terms with the incumbents. Bids for each state are due this month.
WellCare operates as a Medicaid insurer in both states, and they represent a large portion of its business. Georgia and Kentucky account for almost half of WellCare's Medicaid revenue and roughly 30% of all premium revenue. WellCare covers 593,000 low-income Georgians and 441,000 low-income Kentuckians.
Losing those contracts could severely hamper WellCare, which is why CEO Kenneth Burdick said on an earnings call Wednesday that “both of these re-procurements are a top priority for 2015.” But WellCare expressed a level of cautious optimism that its Medicaid experience in both states would help in the bidding process.
“We know that at any point in time, there's going to be challenges and some pressures, but feel confident that, in both states, we're going to get to the right answer,” said Burdick, who took over WellCare in January.
WellCare's net income in the first quarter dropped 60% to $17.5 million. Total revenue increased more than 16% to roughly $3.5 billion.
Most of WellCare's membership is Medicaid-based. As of March 31, the company had 2.35 million Medicaid members, up 26% from the same period last year. For every dollar of Medicaid premium WellCare receives, it spends 90 cents on medical care.
Medicare Advantage membership stayed flat year over year at 342,000. The number of people with a WellCare Medicare Part D prescription drug plan fell 14.3% to about 1.1 million. WellCare made almost no profit on Part D drug plans in the first quarter, as 99.5% of premiums went to pay for prescription drugs.
