NU Online News Service, March 10, 2004, 2:06 p.m. EST – Universal American Financial Corp., Rye Brook, N.Y., is bullish on the Medicare managed care market.[@@]
The senior services company says it has agreed to pay $98 million in cash for Heritage Health Systems Inc., Houston, a privately held company that runs Medicare managed care plans in Houston and Beaumont.
Universal American says it will pay for the deal by using $34 million in cash on hand and drawing $64 million from a credit facility provided by a unit of Bank of America Corp., Charlotte, N.C.
Universal American hopes to complete the deal by June 30.
Heritage was founded in 1995 and now generates about $130 million in annual revenue by administering health coverage for 15,700 Medicare members.
Health insurers were fleeing from the Medicare managed care market, but Congress increased the appeal of the market in late 2003, by including an increase in Medicare managed care program reimbursement levels and other program changes in the Medicare Prescription Drug, Improvement and Modernization Act.
Universal American, a company that sells insurance to older Americans and support services to long term care insurers, says it also has filed applications to set up Medicare managed care plans of its own in New York and Pennsylvania.