Blue Cross Blue Shield of Michigan and Independence Blue Cross are making a deal that could help Blue Cross and Blue Shield companies get a bigger share of the Medicaid plan market.
Michigan Blue, Detroit, and Independence Blue, Philadelphia, have agreed to pay $170 million to buy a 50% stake in the AmeriHealth Mercy Family of Companies, Philadelphia, now owned by Mercy Health System, Philadelphia.
Independence Blue — a Blue Cross plan that provides or administers health coverage for 3.1 million Pennsylvania residents — has split ownership of AmeriHealth with Mercy Health System since 1996.
Michigan Blue, a carrier that provides or manages health coverage for 4.3 million people in Michigan, will get a minority stake in AmeriHealth, the companies say.
AmeriHealth manages coverage for 800,000 Medicaid managed care enrollees in Indiana, Pennsylvania and South Carolina, and it provides pharmacy benefits management and behavioral health management services in 11 states. The company provides Medicaid administrative services in Kentucky and New Jersey.
The companies hope to complete the deal within 120 days.
Michigan Blue and Independence Blue have both agreed to invest in the growth of AmeriHealth — and they say they would like to see more Blues carriers join them in a Medicaid plan alliance.
Blue Cross and Blue Shield carriers cover about 33% of Americans, but only one-third of the Blues carriers are active in the Medicaid market, Independence Blue and Michigan Blue say.
The Michigan Blue-Independence Blue alliance should create a vehicle that other Blues can use to expand into the Medicaid market, the carriers say.
The carriers note that Medicaid enrollment is supposed to increase dramatically in 2014, when coverage expansion provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) are supposed to take effect.