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Molina Healthcare buying CUP’s Medicaid assets

Acquisition beginning of end for Vancouver-based managed-care provider

By Marissa Harshman, Columbian Health Reporter
Published: November 12, 2015, 6:32pm

Molina Healthcare of Washington announced Thursday it’s acquiring Vancouver-based Columbia United Providers’ Medicaid assets. That means CUP’s 56,000 Medicaid clients will soon become Molina members.

The deal also means CUP, which has been the predominant Medicaid managed care provider in Clark County since 1994, will ultimately cease operations.

“Business as we’ve known it will not continue,” said CUP’s interim CEO Cynthia Finter, who stepped into the position in May.

The acquisition, which is pending regulatory approval, is expected to be finalized during the first quarter of 2016. Molina officials are not disclosing the acquisition cost but say they will pay for the transaction using available cash.

While the deal may take several months to finalize, Molina officials hope to transition CUP members to the Molina plan on Jan. 1. The state and the plans will notify all members before the transfer occurs.

“The goal and the intent and the plan is to carry on the commitment CUP has made to the Clark County community for 20-plus years — and Molina for 10 years — to serve the Medicaid population,” said Peter Adler, president of Molina Healthcare of Washington.

CUP and Molina are currently the two largest Medicaid managed care plan providers in Clark County. CUP has 56,223 local Medicaid members; Molina has 24,378. A third plan, Community Health Plan of Washington, has 15,400 members.

The CUP acquisition means Molina will serve 84 percent of the county’s Medicaid managed care population, which consists of more than 96,000 children and adults. (The county’s total Medicaid population is 118,225, which includes fee-for-service Medicaid clients.)

Currently, all new Medicaid clients are automatically enrolled to Molina, but members can choose CUP or Community Health Plan. Molina will continue to be the only auto-enroll plan in Clark County, said Preston Cody, an assistant director with the Health Care Authority, which oversees the state’s Medicaid program.

“Really, in the big picture, not much changes,” Cody said.

Molina will take over CUP’s clients and its provider contracts, allowing Molina’s provider network to grow and CUP members to keep their current physicians, Cody said.

Adler said he also expects the transition will be seamless.

The two organizations have overlapping provider networks, with most providers contracting with both CUP and Molina, Adler said. Molina will be reaching out to the small number of providers who currently contract with CUP but not with Molina, with hopes of adding them to the Molina network, he said.

“Our focus on the transition of the membership is going to be on ensuring the continuity of care,” Adler said. “This is really two local plans working together to transition CUP’s members to Molina and do it in a way that doesn’t disrupt care.”

Roots of acquisition

The deal between CUP and Molina has been in the works for several months.

CUP issued a request for proposals to gauge interest in collaborations with other health plan providers after evaluating the potential future impact of the Medicaid program. Washington is in the process of fully integrating its behavioral and mental health services with physical health services. The objective is to have all services managed by one care plan, rather than separate state and private entities, as they are now.

CUP, which is owned by PeaceHealth Southwest Medical Center and other local providers, has been working to expand its provider network and increase its services to meet those demands, but “in doing that, we faced tough financial pressures under the Medicaid contract,” Finter said.

Given that reality, CUP officials sought collaborations with other health plan providers. Molina, a Fortune 500 company based in Long Beach, Calif., responded to the request for proposals. Discussions with Molina led to the acquisition deal, Finter said.

“Any decision like this is difficult, that’s without question,” Finter said.

The deal comes after several rocky years for CUP.

In January 2012, the Health Care Authority announced it would not renew its contracts with the county’s two Medicaid managed care providers at the time: CUP and Community Health Plan. But several months later, the state announced the two plans it selected couldn’t establish the robust provider network required under the terms of the contracts. In response, Community Health Plan and CUP joined forces and submitted a new proposal to jointly manage Medicaid members that was approved in June 2012.

In November 2014, CUP announced it had regained its direct contract with the state. In addition, CUP was approved to sell three health plans on the commercial health plan marketplace in 2015. This year, CUP was approved to sell five commercial plans on the exchange in 2016.

But, in light of the new deal with Molina, CUP is working with insurance regulators to determine its next steps for commercial health plan members, Finter said. CUP serves fewer than 100 people in the commercial marketplace, she said.

CUP officials and employees will continue to serve Medicaid members until the transition is complete. Molina intends to open a service center in Vancouver — the details of which are still being worked out — and Finter is hopeful that will provide opportunities for its 95 employees.

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Columbian Health Reporter