Indianapolis-based WellPoint Inc. sees a $100 billion market in the states it serves to provide managed care for poor, elderly patients in the Medicare and Medicaid programs.
WellPoint’s purchase last year of CareMore Health Group and its 29 neighborhood health clinics gives the insurer an edge in winning the business for so-called dual eligibles, Chief Financial Officer Wayne DeVeydt said Wednesday. WellPoint has 29 CareMore centers in California, Nevada and Arizona and plans to add 12 more and expand to other states this year, he said.
“Because this is a group that needs highly coordinated care, you really need a model that specializes in that, and that’s what CareMore does for us,” DeVeydt said. “It’s kind of our missing link in being prepared for the duals, and we think we’re uniquely positioned versus some of the other companies out there.”
About 9 million people in the U.S. are covered by both Medicare, the federal program for the elderly and disabled, and Medicaid, the state-federal plan for the poor. This group accounts for $320 billion in annual spending in the two health programs, said Carl McDonald, a Citigroup analyst, in an April 24 report to clients.
Seeking to cut costs, at least 15 states, led by California, Texas and Florida, may issue contracts in the next two years to let managed-care companies coordinate their medical coverage, McDonald said.
The group “represents an enormous market for the industry,” he wrote.
DeVeydt, in an interview after WellPoint announced its quarterly earnings, said the company would seek dual-eligible contracts first in the 14 states where it operates Blue Cross plans before trying to expand elsewhere. The company will participate in a pilot project in California to cover dual enrollees starting next year.
“We want to prove to our state partners and to the federal government that we can manage this population well, and that we can show better value for them and save the states money,” DeVeydt said.
WellPoint earlier said earnings excluding one-time items were $2.34 a share in the first quarter, beating the $2.30 estimate of 17 analysts compiled by Bloomberg. The company raised its full year forecast for profit excluding certain items to $7.65 a share.
The insurer's stock declined less than 1 percent, to close at $70.40 per share. The shares are down 2.5 percent in the past 12 months