Molina to pay $60 million for Cigna’s Texas Medicaid plans

Molina Healthcare will pay $60 million in cash for Cigna Corp.’s Medicaid and managed-care plans in Texas, with the acquisition expected to bring the number of low-income adults and children on the Long Beach, Calif.-based insurer’s rolls to nearly 4 million.

Through the acquisition, Molina will add approximately 50,000 Medicaid enrollees, including those from Cigna’s STAR+PLUS program in the Hidalgo, Tarrant and Northeast service areas. It will also bump up the payer’s revenue: In 2020, Cigna’s Texas Medicaid contracts generated $1 billion in premium revenue. Molina currently operates six managed-care plans in the state and, at the end of the year, counted 357,000 members in Texas. Last year, it successfully protested its initial omission from the state’s $10 billion Medicaid program and was able to keep its Medicaid contracts in Texas.

The acquisition is expected to close in the second half of 2021, subject to regulatory approvals. It follows a long line of Medicaid plan acquisitions by Molina over the years.

In 2020, Molina said it closed its purchases of the Passport Health Plan in Kentucky and YourCare Health Plan in New York. Meanwhile, its proposed acquisition of Affinity Health Plan in New York is still pending. These new businesses—and Molina’s existing Medicaid suite—bumped the company’s revenue to $19.4 billion in calendar 2020, up 15% from $16.8 billion the year before.

The public health crisis can both be credited for causing a rise in revenue and the number of lower-income adults and children on the company’s rolls, Molina CEO Joe Zubretsky said during the company’s most recent fourth-quarter earnings call. For every month the emergency extends beyond April, the company could add up to $150 million in revenue, he said. There is currently no end in sight for the public health emergency and states do not currently have a plan to start checking eligibility requirements for Medicaid.

“Acquiring Cigna’s Texas Medicaid business provides us with a stable base of membership and revenue that will deepen Molina’s service offerings in Texas, allowing us to meet the needs of thousands of additional Medicaid and [Medicaid managed-care] members,” Molina said in a statement.

Cigna, meanwhile, said it will continue to offer its Medicare Advantage, individual and commercial plans in Texas.


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