Health insurer HealthPlus of Michigan will sell its Medicaid business to Molina Healthcare in an attempt to salvage the entire company, HealthPlus officials said Friday.
The Michigan Department of Financial and Insurance Services sanctioned HealthPlus in March because the insurer was hemorrhaging millions of dollars and did not have enough cash in reserves to meet state requirements. The company's medical claims were consistently exceeding the premium revenue as it attracted sicker-than-average members. That same month, the CMS also suspended HealthPlus from enrolling new Medicare Advantage members as a result of not meeting state regulations.
HealthPlus hopes divesting its Medicaid assets will allow it to keep the doors open. “This strategic move will provide us the needed capital to maintain the HealthPlus brand as well as to strengthen and grow our Medicare and commercial lines of business,” HealthPlus CEO Nancy Jenkins said in a news release.
A Michigan-based subsidiary of Molina Healthcare, a managed-care insurer headquartered in Long Beach, Calif., will acquire HealthPlus Partners as well as HealthPlus' Medicaid contract for children. Molina has 256,000 members in Michigan, most being Medicaid-only enrollees, and the deal will add 96,000 new low-income adults and children to its insurance rolls.
Molina almost exclusively contracts with states for Medicaid managed-care deals, although it also dabbles with individual policies on Affordable Care Act exchanges. Molina's profit so far this year has increased heavily.
Terms of the deal were not disclosed. Molina said it will pay cash and expects the transaction to close during the third quarter this year.