Centene Corporation has agreed to buy QualChoice Health Insurance.
Terri Parker West, QualChoice Health Insurance communications & design manager, confirmed Friday (Jan. 4) that QualChoice’s parent company, Catholic Health Initiatives, had signed a definitive agreement with St. Louis-based Centene.
Centene offers Ambetter Marketplace and Allwell Medicare Advantage plans. QualChoice offers QCA Health Plan and QualChoice Life and Health plans.
“There will be no changes to QualChoice operations in the near future as a result of the sale. QualChoice members will still be covered by their current benefits and network of providers and pharmacies,” West said in an email.
The sale must be reviewed and approved by the Arkansas Insurance Department.
Ryan James, an AID spokesperson, said the department is aware of the reported sale but does not have any information on which it can comment. The companies would have to file the appropriate forms with the department.
The purchase would leave Arkansas with two insurance companies offering plans on the individual marketplace and for beneficiaries of the Arkansas Works program serving lower-income individuals through the Affordable Care Act. The state purchases private health insurance for those beneficiaries.
As of Aug. 23, 2018, Ambetter covered 85,373 affected lives on the individual marketplace not including Arkansas Works, while QualChoice covered 31,009 affected lives through its two plans. Arkansas Blue Cross & Blue Shield, the state’s largest individual marketplace insurer, covered 186,510.
James said that at the end of 2017, Celtic Insurance Company, a subsidiary of Centene that offers the Ambetter plan, was the state’s third largest insurer in the life and health segment, with $380.8 million in premiums, or 4.24% of the market. QualChoice that year had $199.4 million in premiums and was the state’s seventh largest life and heath insurer with 2.22% of the market. Arkansas Blue Cross and Blue Shield had $2.44 billion in premiums for a 27.2% share.
Catholic Health Initiatives bought QualChoice in 2014 and has been trying to sell all or part of it since May 2016. On June 29, 2016, CHI made public in a quarterly report to bondholders that it was exploring options to sell all or part of the insurer. CHI’s latest quarterly report for the third quarter dated Nov. 29, 2018, reported that it had entered into a non-binding letter of intent to sell QualChoice Health commercial operations in Arkansas. It said negotiations were ongoing and were expected to lead to a purchase agreement this fiscal year.
The report said CHI had improved operations since it had announced plans to sell QualChoice. The insurer had an operating EBIDA (earnings before interest, depreciation and amortization) loss of $85.4 million in fiscal year 2016 before restructuring, impairment, and other losses. In fiscal year 2018, it generated a positive operating EBIDA of $8.6 million before restructuring, impairment and other losses. In the third quarter of 2018, the insurer had operating revenues of $143.6 million, compared to $132.6 million the year before.
That report said CHI’s consolidated balance sheets included $181.3 million in total QualChoice assets held for sale, and total liabilities of $150.4 million.