WellCare adds Hawaii to its Medicaid business

By Carol Gentry
2/6/2008 © Florida Health News
WellCare Health Plans has added a new state Medicaid program to its client list by becoming one of two companies that will share in a $1.24 billion contract with Hawaii, according to a Web site operated by that state. UnitedHealth Group subsidiary EverCare, which specializes in managing health of the elderly and disabled, was the other winner. The contract, awarded through competitive bidding, runs through June 2011.
WellCare, based in Tampa, will form a new subsidiary, Ohana Health Plans Inc., to handle the Hawaii operations, according to a filing with the Securities and Exchange Commission early Wednesday. The plan is expected to begin operations Nov. 1, the filing said. Ohana is a native Hawaiian word that refers to the bonds among extended family and close friends, according to Wikipedia.
Sales of WellCare's shares were up 3 percent at 11 a.m. as Wall Street embraced the good news, but were still trading at less than half the value they held before Oct. 24, when about 200 federal and state agents raided the Tampa headquarters and carried off computer disks and boxes of documents. The investigation into alleged Medicaid fraud in WellCare's Florida business continues; no charges have been filed.
Given the back story, said Oppenheimer analyst Carl McDonald, the Hawaii contract is a big win for WellCare. "The fact that a state is willing to select them even after all that's happened will be viewed as a sign that WellCare isn't going to go out of business," he said.
Since the Hawaii bids were submitted in early October before the raid, credit for the expansion lies with the former president, chairman and chief executive officer, Todd Farha. He and two other high-ranking WellCare executives, Chief Financial Officer Paul Behrens and Thaddeus Bereday, the general counsel, resigned 10 days ago following negotiations with a committee of independent board members. The company is now headed by Charles Berg, executive chairman, and CEO Heath Scheisser.
With Hawaii. WellCare currently has contracts with Medicaid in seven states. WellCare is also a nationwide player in the Medicare market.