Centene's Neidorff: WellCare acquisition has cleared final state approvals

Centene
If Centene's $17 billion deal to buy WellCare is finalized, it would create one of the nation's largest government plan insurers for Medicare, Medicaid and the Affordable Care Act exchanges. (Centene)

NEW YORK CITY—St. Louis-based Centene Corporation's acquisition of WellCare Health Plans crossed a significant hurdle as the deal earned approval from all 27 states necessary, according to Centene CEO Michael Neidorff.

Illinois and New Jersey approved the pending merger of the two insurers, Neidorff said while speaking at the Forbes Healthcare Summit Thursday. The deal is expected to be completed by the first half of 2020.

"[The merger] is progressing well," Neidorff said. "We have told the team to be ready for full integration by January 1."

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RELATED: Centene's Neidorff says WellCare acquisition continues to pace ahead of schedule

If the $17 billion deal is finalized, it would create one of the nation's largest government plan insurers for Medicare, Medicaid and the Affordable Care Act (ACA) exchanges. However, the Department of Justice (DOJ) still needs to approve the deal, which is already gaining opposition from provider groups. Centene is working with the DOJ to "meet the department's needs," Neidorff said.

If the merger goes through, the new company would be the fourth-largest payer in the private Medicare space that includes Medicare Advantage and Part D plans. Overall, there would be 22 million members across all 50 states.

The American Hospital Association warned that the DOJ needs to fully investigate the merger because of concerns it will harm competition for Medicare Advantage plans.

Centene’s U.S. business has grown rapidly thanks to the ACA and its subsidized individual coverage and the expansion of Medicaid benefits. Centene serves nearly 2 million ACA exchange customers in 20 states. The company announced in August it would expand its footprint, increasing the number of plans it offers on the ACA exchanges in 10 states. 

Centene has been a large player in the exchanges since they went online in 2014. While many large insurers pulled out of the ACA exchanges because of losses and uncertainty about the marketplace, Centene continues to see strong growth, Neidorff said.

"We went in slowly, around 400,000 individuals to see how to be successful," Neidorff said. When the Trump administration changed enrollment—the administration halved the HealthCare.gov enrollment period to 45 days from 90 days in 2017 and also reduced federal funding for advertising and enrollment support—Centene put navigators in place to help people enroll, he said.

Asked by Forbes senior healthcare contributor Bruce Japsen whether he was concerned about Democratic presidential candidates' proposals around "Medicare for All" and single-payer systems, Neidorff responded, "We deal with the facts as they are today."

"I view Medicare for All as a sound bite," he said. "We need to continue to build on the existing products in the ACA. We're working with both sides of the aisles to do that."

Companies in the ACA marketplaces also face other lingering challenges, including a court challenge to the law filed by a group of Republican-led states. Those states won a sweeping ruling last December from a Texas federal judge who invalidated the entire health law, finding Congress rendered the ACA legally unsustainable when it eliminated a financial penalty for people who forgo health insurance.

The industry is awaiting a ruling by the Fifth Circuit Court in Louisiana on an appeal.

RELATED: Centene aims to expand presence in 10 ACA markets in 2020

Neidorff believes that decision will be overturned by the Supreme Court, or even reversed earlier by the Fifth Circuit.

"This case, there is no doubt in any attorneys’ minds, it will be overturned at the Supreme Court. [The decision] won’t be 5-4. It will be 7-2 or 6-3," he said. "We are counting on the Supreme Court to return from politics to policy."

Addressing social, preventive health needs

With the WellCare merger, Centene wants to test and scale new models of care that are more patient-driven. Centene is increasing its focus on supporting preventive health for its members as well as addressing social needs that impact health, Neidorff said. 

The insurer is ramping up its use of predictive analytics to identify members at risk of worsening health, such as a risk of a coronary event, and then alerting physicians so providers can intervene earlier to improve health outcomes.

Centene also offers a healthy rewards program that provides pregnant women with debit cards when they keep prenatal care visits. The insurer's Smart Start for Your Baby outreach program aims to prevent premature births through outreach and care coordination.

Neidorff cited an example of a member who was pregnant with triplets and at risk of preterm birth. The expectant mother had no electricity or heat. Through the program, care coordinators were able to restore electricity and heat to the woman's home, and she delivered three full-term babies. 

"Our mentality is, we delivered three full-term babies," Neidorff said. "The financials follow good high-quality care."

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