Anthem’s Amerigroup Unit, N.C. Blues Team Up To Compete for State’s Managed Care Reboot

Reprinted from HEALTH PLAN WEEK, the most reliable source of objective business, financial and regulatory news of the health insurance industry. 

By Lauren Kelly and Judy Packer-Tursman

June 5, 2017 Volume 27 Issue 19

By partnering with local Blue Cross and Blue Shield carriers on Medicaid managed care business in states including North Carolina and Louisiana, Anthem Inc.’s Amerigroup unit gains robust local provider networks and brings operational know-how to the table in return, industry experts say.

Amerigroup, with its national footprint in Medicaid, “brings operational competencies, while a local partner can bring the provider relations. That may work for a more potent combination,” says Bob Atlas, president of the EBG Advisors consulting unit of health care law firm Epstein, Becker & Green. He has advised the state of North Carolina on its ongoing Medicaid transformation.

As companies seek growth opportunities that didn’t materialize with Affordable Care Act (ACA) exchanges, Medicaid managed care “is an important market for many companies — and a desirable place to be,” Atlas says. “A Blues plan has a strong local presence, a good relationship with local providers, and influential positioning with the state, but they may not have the capabilities needed to succeed in Medicaid versus the employer-group market.” By contrast, Amerigroup “was created as a Medicaid managed care company,” he says. “That’s always been its specialty.”

Adds Stifel analyst Mark Kelly: “All procurements run by states are very political with a lot of things to navigate. So an outside entity partnering with a locally known entity like the Blues makes sense. People would be more wary without the local connection.” He says he doesn’t know of other states where future partnering might occur since North Carolina is one of the last states turning to Medicaid managed care.

As North Carolina anticipates transitioning its 1.9 million Medicaid enrollees from a fee-for-service delivery model to managed care, Amerigroup and Blue Cross and Blue Shield of North Carolina have embarked on a collaborative effort the insurers say has the potential to improve health outcomes for Medicaid enrollees in the state. The Medicaid-focused partnership is the second between Amerigroup and a local Blues insurer unveiled in the last year.

The North Carolina General Assembly in September 2015 passed a law calling for the state to enter into capitated Prepaid Health Plan (PHP) contracts to cover all Medicaid and NC Health Choice services, including physical health services, prescription drugs, long-term services and supports and behavioral health services for NC Health Choice recipients (unless they are already provided by the established local management entities/managed care organizations that will be excluded from the capitated contracts until four years after PHP implementation). That law calls for the Dept. of Health and Human Services (DHHS) to award three statewide contracts to “commercial” MCOs; the state would also form capitated contracts with regional “provider-led” entities that meet certain criteria. DHHS in June 2016 submitted a Section 1115 demonstration waiver application to CMS. Following federal approvals and the procurement of PHP contracts, MCOs are anticipated to begin serving enrollees on July 1, 2019. In the meantime, new DHHS Sec. Mandy Cohen, M.D., has been hosting public input sessions on the proposed changes during a month-long comment period that ended May 25.

But in advance of the waiver being approved or the issuance of an RFP, the North Carolina Blues plan and Amerigroup Partnership Plan, LLC have already begun collaborating on the reform effort with the intention of bidding together to serve the PHP program. While both companies will retain their existing brands and ownership, how the partnership may evolve over time — including how risk and revenue will be shared if they win a contract — and health plan naming in the North Carolina Medicaid market are yet to be determined, according to Brad Wilson, president and CEO of Blue Cross and Blue Shield of North Carolina. At this point, the partners are “collaborating by sharing expertise to design and build solutions that would best serve the North Carolina Medicaid program and its participants,” Wilson tells AIS Health.

Amerigroup Louisiana in December 2016 formed a similar partnership with Blue Cross and Blue Shield of Louisiana to serve Louisiana’s Medicaid, Medicaid expansion and LaCHIP programs. That venture “is independent of and separate from” the latest pact, “but they share the same fundamental goals,” adds Brian Shipp, Amerigroup South Region Medicaid President.

“Every opportunity is unique and in this case, we chose to align ourselves with Blue Cross and Blue Shield of North Carolina because their offerings and expertise perfectly complement our offerings and expertise,” says Shipp, referring to the combination of the Blues plan’s “strong local presence, community-based expertise and established local relationships” with “Amerigroup’s national Medicaid expertise and unique insight on addressing diverse and evolving needs of Medicaid beneficiaries.” Moreover, the agreement will have “no immediate impact” on North Carolinians currently served by the Blues plan or the insurer’s contracted providers, according to the companies.

As the largest health insurer in the state, the North Carolina Blues plan serves more than 3.74 million individuals, including approximately 1 million served on behalf of other Blues plans, and has more provider partnerships than any other MCO in the state. Amerigroup, meanwhile, serves 6.5 million Medicaid members across 20 states. By working together, both companies can connect stakeholders to social services agencies, community advocates and local experts to “create solutions and offer tools that help close care gaps and make measurable impacts” on members’ health, asserts Shipp.

Atlas calls the combination a “logical partnership,” given that “Amerigroup has a big track record in Medicaid and they both have Blues connections.” But he notes that this is just the latest in a string of partnerships “happening on the ground in the state to position well to win this small number of contracts.” Centene Corp., for example, has partnered with the North Carolina Community Health Center Association and the North Carolina Medical Society to form a joint venture that would establish, organize and operate a physician-led health plan to provide Medicaid managed care services in the state.

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