UnitedHealth is selling its S.C. Medicaid business

Coverage for 65,000 low-income people will shift to a Florida-based insurer.

UnitedHealth Group Inc., usually in the buyer's seat, is selling off its Medicaid business in South Carolina.

The Minnetonka-based health care company said Wednesday that it has signed an agreement with Tampa-based WellCare Health Plans Inc., which will take over insurance coverage for about 65,000 low-income people in 39 of South Carolina's 46 counties.

The move divests all of UnitedHealthcare's Medicaid managed-care operations in the state, though it still covers 255,000 people through workplace insurance plans and another 75,000 seniors enrolled in Medicare.

Subject to regulatory approval, the deal is expected to close in the fourth quarter. Terms were not disclosed.

UnitedHealth is the nation's largest insurer by revenue and enrollment. Recently, its business in the government-sponsored health care programs of Medicare and Medicaid has outperformed its commercial market, which has been hurt by weak employment, a dearth of newly created businesses and cutbacks from companies that have dropped or reduced benefits for their workers. The company added 70,000 low-income people to its Medicaid rolls in the third quarter alone.

Steven Meeker, regional vice president of UnitedHealthcare Community Plan, said that after discussions with South Carolina officials and WellCare it determined that "it was best to transition all 65,000 Medicaid members to WellCare when our contract expired at the end of this year."

In South Carolina, almost one in four of the state's citizens received Medicaid in 2011, according to state officials. The state has one of the highest rates of Medicaid physician participations in the country, likely because it has high Medicaid reimbursement rates, according to a blog post by South Carolina's health and services director, Anthony Keck, citing a HealthAffairs study.

WellCare Health Plans provide managed-care services targeted to government-sponsored health care programs, focusing on Medicare and Medicaid. The company serves approximately 2.6 million members nationwide.

UnitedHealth has typically been on the acquiring end of deals. On Oct. 10 it announced it would spend $4.9 billion to enter the health care market in Brazil.

On Feb. 28, UnitedHealth announced it was acquiring Preferred Care Partners and Medica HealthCare Plans, two senior-focused health plans in Florida that serve more than 97,000 Medicare and Medicaid beneficiaries. Earlier in February, the company acquired Baltimore-based XLHealth Corp., which serves 113,000 Medicare Advantage members.

pkennedy@startribune.com • 612-673-7926 jcrosby@startribune.com • 612-673-7335

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