IBC invests to expand into Medicaid marketplace

    Philadelphia’s Independence Blue Cross is partnering with a Michigan insurer to buy some ready-made expertise. The acquisition could put the Blue companies on the fast-track to win more of the Medicaid patients expected to enroll in 2014.

    Independence and Detroit-based Blue Cross Blue Shield of Michigan have pooled dollars to buy AmeriHealth Mercy.

    Lots of low-income people in the Philadelphia region know the AmeriHealth name because the company handles insurance plans for about 400,000 Medicaid-eligible Pennsylvanians.

    Independence CEO Daniel Hilferty says the new ownership deal buys the Blues companies experience in the Medicaid marketplace.

    “In 2014, the Patient Protection and Affordable Care Act expands eligibility for Medicaid across the United States. Health-care experts predict that by 2019, this expansion will increase the number of people covered by Medicaid by 16 million,” Hilferty said.

    Right now, two-thirds of the Blue health insurers do not offer Medicaid coverage, he said.

    Under the deal, Independence and the Michigan company will pay $170 million to buy out Mercy Health System’s share of AmeriHealth. Mercy and Independence have a 50-50 stake in AmeriHealth today.

    AmeriHealth CEO Michael Rashid says his company will continue its focus on low-income Medicaid patients. He says that mission could help AmeriHealth win contracts from cash-strapped states governments well beyond Pennsylvania.

    “States more and more are having Medicaid Managed Care programs operate their Medicaid business instead of straight fee for service,” Rashid said.

    Temple University health economist Tom Getzen says AmeriHealth has maintained good relationships in Harrisburg through several administrations. He says the combined market reach of AmeriHealth and Independence Blue Cross makes the company a formidable negotiator when it comes to setting the fees paid to local doctors and hospitals.

    The planned acquisition needs some regulatory approvals, but company officials said they expect to finalize the deal in coming months.

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