Wellcare Health Plans Inc 's Comment on Competitors and Industry Peers
We operate in a highly competitive environment to obtain government health
care program beneficiaries and manage the cost and quality of services that
are delivered to these beneficiaries. We currently compete in this environment
by offering Medicare and Medicaid health plans in which we accept all or nearly
all of the financial risk for management of beneficiary care under these programs.
We typically must be awarded a contract by the government agency with responsibility
for a program in order to offer our services in a particular location. Some
government programs choose to limit the number of plans that may offer services
to beneficiaries, while other agencies allow an unlimited number of plans to
serve a program, subject to each plan meeting certain contract requirements.
When the number of plans participating in a program is limited, an agency generally
employs a bidding process to select the participating plans.
As a result, the number of companies with which we compete varies significantly
depending on the geographic market, business segment and line of business. We
believe a number of our competitors have strengths that may match or exceed
our own with respect to one or more of the criteria on which we compete with
them. Further, some of our competitors may be better positioned than us to withstand
rate compression.
The health care industry is highly competitive, primarily due to a large number
of for-profit and not-for-profit competitors. New entrants into the marketplace,
including Accountable Care Organizations, as well as significant consolidation
within the industry, have contributed to the competitive environment. In addition,
the increased use of technology to interact with members, providers and customers,
increase the risks we currently face from new entrants and disruptive actions
by existing competitors compared to prior periods.
We believe that the significant factors that distinguish competing health plans
include the perceived overall quality (including accreditation status), quality
of service, comprehensiveness of coverage, cost (including premium rates, provider
arrangements and member out-of-pocket costs), financial stability and ratings,
breadth and quality of provider networks, and quality of member support and
care management programs. We believe that we are competitive on each of these
factors. Our ability to increase the number of persons covered by our plans
or to increase our revenues is affected by our ability to differentiate ourselves
from our competitors on these factors. Competition may also affect the availability
of services from health care providers, including primary care physicians, specialists
and hospitals.
Medicaid Competitors
In the Medicaid managed care market, our principal competitors for state contracts,
members and providers include the following types of organizations:
MCOs—Managed care organizations ("MCOs") that, like us, receive
state funding to provide Medicaid benefits to members. Many of these competitors
operate in a single or small number of geographic locations. There are a few
multi-state Medicaid-only organizations that are able to leverage their infrastructure
over a larger membership base. Competitors include private and public companies,
which can be either for-profit or non-profit organizations, with varying degrees
of focus on serving Medicaid populations.
Medicaid Fee-For-Service—Traditional Medicaid offered directly by the
states or a modified version whereby the state administers a primary care case
management model.
PSNs—A Provider Service Network ("PSN") is a network of providers
that is established and operated by a health care provider or group of affiliated
health care providers. A PSN operates as either a fee-for-service ("FFS")
health plan or as a prepaid health plan that, like us, receives a capitated
premium to provide Medicaid benefits to members. A PSN that operates as a FFS
health plan is not at risk for medical benefit costs. FFS PSNs are at risk for
50% of their administrative cost allocation if their total costs exceed the
estimated at-risk capitation amount.
Accountable Care Organizations - Accountable Care Organizations (“ACOs”)
are groups of doctors, hospitals, and other health care providers who come together
voluntarily to give coordinated high quality care to their patients. The goal
of coordinated care is to ensure that patients, especially the chronically ill,
get the right care at the right time, while avoiding unnecessary duplication
of services and preventing medical errors.
Medicare Competitors
In the Medicare market, which includes Medicare Advantage and Prescription
Drug Plans; our primary competitors for contracts, members and providers include
the following types of competitors:
Original Fee-For-Service Medicare—Original Medicare is available nationally
and is a fee-for-service plan managed by the federal government. Beneficiaries
enrolled in Original Medicare can go to any doctor, supplier, hospital or other
facility that accepts Medicare and is accepting new Medicare patients.
Medicare Advantage and Prescription Drug Plans—MA and stand-alone Part
D plans are offered by national, regional and local MCOs and insurance companies
that serve Medicare beneficiaries. In addition, prescription drug plans are
being offered by or co-branded with retail drug store chains or other retail
store chains, which may be able to offer lower priced plans and achieve benefits
from integration with their pharmacy benefit management operations.
Employer-Sponsored Coverage—Employers and unions may subsidize Medicare
benefits for their retirees in their commercial group. The group sponsor solicits
proposals from MA plans and may select an HMO, preferred provider organization
("PPO") and/or PDP to provide these benefits.