Molina Healthcare is no longer buying Chicago-based Medicaid managed care plan NextLevel Health.
"The health insurance companies are no longer negotiating and have decided to call off steps towards a merger," according to a memo NextLevel sent this month to healthcare providers and which was obtained by Crain's. "Providers can continue to see NextLevel Health patients and submit their claims as normal."
The memo did not say why the deal fell through. Molina and the Illinois Department of Healthcare & Family Services, which oversees Medicaid, did not immediately respond to requests for comment.
"In the midst of the COVID-19 global pandemic, which is disproportionately affecting minority populations, we remain committed to providing community-informed health care to those who need it the most, and we will continue to seek a capital partner to help us positively impact our communities and save lives," NextLevel said in an emailed statement to Crain's.
Long Beach, Calif.-based Molina in January agreed to pay $50 million for NextLevel, run by longtime healthcare executive Dr. Cheryl Whitaker.
With about 58,000 enrollees, or 3% of the market, NextLevel is one of two plans that serve Medicaid managed care members only in Cook County. Molina has 10% of the market, with about 221,500 Medicaid managed care members statewide.
During a February earnings call, Molina CEO Joe Zubretsky provided an update on the insurance company's growth strategy, which included acquiring New York Medicaid plan YourCare and NextLevel.
"These acquisitions of financially underperforming health plans have stable membership and revenue, but provide opportunity for margin improvement, operating leverage and membership growth," he said. "In the NextLevel transaction, we will serve over 50,000 Medicaid and (long-term services and supports) members in Cook County, Illinois, with annual revenue of approximately $270 million."
The acquisition was expected to close in the first half of this year.
Molina and NextLevel are among six private health insurers contracted by the state to administer Medicaid benefits under a program intended to improve care and save money.
Had Molina bought NextLevel, the deal would have left the state's Medicaid managed care program with five insurance companies, down from seven in 2018 and 12 before that.
"Molina Healthcare's purchase of Medicaid managed care provider falls through" originally appeared in Crain's Chicago Business.