Two announcements Monday underscored the rapid currents of change in Georgia health care.
First came news of a $4.5 billion deal by health insurance giant WellPoint to acquire Amerigroup.
Both companies have large operations in Georgia.
WellPoint is the parent company of Blue Cross and Blue Shield of Georgia, the state’s largest health insurer. Amerigroup runs one of the three ‘‘care management organizations’’ (CMOs) that serve the Medicaid and PeachCare populations in the state.
According to the second announcement, Cobb-based WellStar Health Network has been selected to participate as an ‘‘accountable care organization’’ (ACO) for Medicare patients in Georgia.
ACOs are networks of hospitals and doctors aimed at improving patient care and containing costs. Under the Shared Savings Program, the organizations get paid more for keeping their patients healthy and out of the hospital.
The WellPoint deal is focused on Amerigroup’s Medicaid business nationally. States increasingly are looking to managed care companies to control their spending on Medicaid, which covers the poor and disabled and is jointly financed with the federal government.
Georgia’s Medicaid program is undergoing a restructuring process, with a new round of managed care contracts looming.
Also, states have an opportunity to expand their Medicaid programs under the federal health reform law. Some states, though, have indicated they won’t pursue such an expansion, citing the costs involved. Whether Georgia will go through with an expansion is unclear.
WellPoint CEO Angela Braly, in a conference call with analysts, said the company expects ‘‘organic growth in the Medicaid segment.’’
“We did this deal no matter what and decided to do it no matter what the Supreme Court decided,” she said, according to a Los Angeles Times article. Late last month, the high court upheld most of the health reform law as constitutional.
Thomas Carroll, a Stifel Nicolaus & Co. analyst in Baltimore, told the L.A. Times, “We’re somewhat surprised by Amerigroup’s willingness to sell. There’s just so much growth in the Medicaid space, why not do it yourself? But I guess the price was just too good to pass up.”
The acquisition of Amerigroup may also help WellPoint grab a larger share of the market serving “dual eligibles,” enrollees who receive both Medicare and Medicaid, and who are typically among the sickest and most costly to insure. There are 9 million such people in the U.S., accounting for $300 billion in annual spending, Braly said in the conference call, the L.A. Times reported.
Amerigroup CEO Jim Carlson, also on the conference call, predicted that states are going to decide to expand their Medicaid programs.
“There are going to be billions of dollars of federal money flowing into the states, and we think the states are going to have to take it,” Carlson said in the Times article. “We think once everybody settles down and really understands this from a budgetary standpoint, and really from a human standpoint,” expansion will go forward.
Meanwhile, WellStar, a heavyweight presence in suburban Atlanta, joins two other ACOs picked by the Centers for Medicare and Medicaid Services that will have operations in Georgia:
Meridian Holdings, Inc. based in Hawthorne, Calif., will serve Medicare beneficiaries in California, the District of Columbia, Florida, Georgia, Maryland, North Carolina, South Carolina and Texas; and Accountable Care Partners, LLC in Jacksonville, Fla., which will serve Medicare members in Florida and Georgia.
A total of 89 ACOs were announced by CMS.
WellStar CEO Reynold Jennings said in a statement: “We are joining an elite group of health systems as innovators in how health care will be delivered across the country for years to come. Initially, more than 36,000 Medicare beneficiaries will be a part of the WellStar Health Network.’’
ACOs are a central feature of the federal health reform law of 2010, also known as the Affordable Care Act.
Advocates say ACOs can improve care for Medicare beneficiaries and slow rising costs by changing the incentives that influence how doctors and hospitals operate. Participation is voluntary for both providers and patients.
In April, two other Medicare ACOs with Georgia connections were announced: the Accountable Care Coalition of Coastal Georgia, formed in partnership between South Coast Medical Group and a local health system; and the Accountable Care Coalition of Greater Athens, established between the Coalition of Athens Area Physicians and a health system there.
In addition, Piedmont Healthcare in Atlanta has also formed an ACO with Cigna, the giant health insurer.