Dive Brief:
- Molina is slated to lose a Medicaid contract in Virginia that it’s held for the past eight years, in a step back for the insurer’s membership growth plans in the safety-net insurance program.
- Molina’s subsidiary in the state, Molina Healthcare of Virginia, was not awarded the contract to provide care in Virginia’s Cardinal Care Managed Care program, the payer disclosed on Thursday.
- Virginia intends to award contracts to CVS Health, Elevance, UnitedHealthcare, Sentara and Humana. The state’s Medicaid department expects current contracts to expire this summer.
Dive Insight:
Virginia plans to award new statewide contracts to all current insurers in its Medicaid program, save one: Molina.
The other four insurers that already manage care for Virginia’s Medicaid beneficiaries — CVS-owned Aetna Better Health, Elevance-owned Anthem HealthKeepers Plus, UnitedHealthcare Community Plan and Sentara Community Plan — will have their contracts renewed, the state announced on Thursday.
Virginia also intends to award a contract to a Humana subsidiary called Healthy Horizons of Virginia. It’s Humana’s first Medicaid award in the state of Virginia and expands the payer’s Medicaid presence to eight states.
Molina and Virginia’s Medicaid department did not respond to a request for comment on why Molina will not be awarded the contract.
Virginia Medicaid covers 2 million beneficiaries. Molina joined in 2017 and has grown its membership to 140,000 individuals in the state.
Losing access to Virginia Medicaid will be a setback for the insurer’s membership growth projections. Molina currently covers 4.5 million Medicaid lives, and said in February it expects to end 2024 with 5.1 million.
Molina will “evaluate next steps as further information becomes available,” the payer said in its release.
Molina currently contracts with 17 states (including Virginia) to offer Medicaid plans. The safety-net insurance accounts for 80% of Molina’s annual revenue.
The insurer brought in $34.1 billion in 2023, with $26.3 billion of that from Medicaid premiums.
As such, Medicaid contracts are key to Molina’s financial health. The insurer notched a number of new business additions last year, including recent Medicaid contract wins and plan launches in Texas, Iowa, California, New Mexico and Nebraska, along with the acquisition of a Wisconsin Medicaid plan.
Roughly $20 billion of Molina’s current revenue is up for state reprocurement in 2024 through 2026, according to a 10-K Molina filed with the Securities and Exchange Commission last month.
CEO Joe Zubretsky told investors in February that the insurer had submitted responses to requests for proposals for contract renewals in Florida and Michigan, along with Virginia.
Molina has also submitted bids in several new states, including Kansas and Georgia, for contracts in the next few years, Zubretsky said on the call.
Molina executives have expressed confidence about the insurers’ ability to hold onto existing contracts and win new awards. However, the payer has experienced recent losses.
In October, Molina was not awarded a contract in Indiana — one that the payer had expected to renew — after failing to stand up products in time.
Shares in Molina fell more than 2% following the announcement of the Virginia contract loss late Thursday.
