Centene Wins Big in Latest Round of Medicaid Contract Awards

For Medicaid-focused insurers facing the headwinds of the post-pandemic disenrollment backlog, a contract win can cause a major sigh of relief. That’s particularly true for Centene Corp., the largest managed Medicaid insurer in the U.S., which held onto three state contracts in Michigan, New Hampshire and Florida in recent months. Shares of Centene were up 3.5% following its April 12 win in Florida, where it currently serves 1.46 million members, according to AIS’s Directory of Health Plans (DHP).

Awards from Kansas and Georgia — where Centene is an incumbent — are expected to be announced in the coming weeks. Texas, meanwhile, is in the middle of a procurement process that could mean a plan switch for about 1.8 million beneficiaries. And it could spell the end of Centene’s winning streak. CEO Sarah London at the Barclays Global Healthcare Conference, held in March, said the company was “disappointed” in the scoring of its most recent Texas proposal, and planned to protest any contract loss. “I would say the biggest concern for the program overall is the idea that the results are going to force 1.8 million Medicaid members in Texas, which is a state that has a very high choice rate, to choose a different place,” London continued.

Centene currently serves about 937,000 Texas Medicaid members, per DHP. Rumors are also swirling that the state intends to drop three nonprofit children’s health plans from the program. Texas will not comment until awards from the request for proposals (RFP) are unveiled in July. During Centene’s April 26 conference call to discuss recent earnings, London noted that the Texas protest “remains ongoing.”

Nevertheless, analysts with Oppenheimer remain encouraged by the Centene wins. “Given that we are approaching the end of redeterminations, it is not surprising to see a slowdown in the monthly membership changes,” wrote analysts on April 17, before Centene reported first-quarter 2024 earnings. “We continue to believe that with this overhang now past, and the RFP calendar set to slow down, the Medicaid managed care market should become increasingly attractive for the investment community. We continue to favor Centene at current prices.”

by Carina Belles

Adapted from the 5/2/24 issue of AIS’s Radar on Medicare Advantage