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January 03, 2017 11:00 PM

WellCare completes purchase of Care1st Plan of Arizona

Modern Healthcare
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    WellCare Health Plans has completed its acquisition of Care1st Health Plan of Arizona.

    The $157.5 million deal marks WellCare's entrance into the Arizona Medicaid managed-care market.

    Care1st Arizona is a subsidiary of Care1st Health Plan, a California-based insurer that Blue Shield of California bought for $1.25 billion last October. Care1st Arizona provides Medicaid coverage to 112,000 people in the state's two largest counties and also has a small Medicare Advantage special needs plan that covers 2,000 people. WellCare serves approximately 3.8 million members nationwide as of September 2016.

    "This acquisition marks our entrance into our eleventh Medicaid state, further geographically diversifying our business in an attractive market," said Ken Burdick, WellCare's CEO.

    Scott Cummings, who was previously chief administrative officer for Care1st Arizona, has been named WellCare's state president for Arizona.

    Care1st Arizona is expected to add about $400 million of premium revenue to WellCare, according to Wall Street projections. WellCare, which also sells Medicare Advantage and Medicare Part D prescription drug plans, had $3.6 billion of revenue in the first half of this year.

    WellCare recently signed new Medicaid contracts with Georgia and Nebraska, but the company has encountered problems in other states. Iowa kicked out WellCare from its new Medicaid privatization program, citing disclosure and ethics lapses.

    WellCare also lost out on Pennsylvania's managed long-term services and supports. The plan is joining Aetna Better Health, Molina Healthcare of Pennsylvania, Gateway Health Plan of Highmark and Mercy Health System of Southeastern Pennsylvania in appealing the Pennsylvania decision.

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