Amerigroup wants to leave S.C., expand in N.J.

VIRGINIA BEACH

Amerigroup Corp. said Thursday that it plans to expand its presence in New Jersey and withdraw from South Carolina by way of transactions with a competing managed-care provider.

Virginia Beach-based Amerigroup will buy Centene Corp.'s Medicaid health plan in New Jersey and sell its Medicaid plan in South Carolina to Centene, the two companies said.

Neither company disclosed the terms of their agreements, which must be approved by state regulators. The transactions, they said, are expected to close during next year's first quarter.

Amerigroup said it expected the net effect of the transactions to add slightly to its 2009 earnings.

Its share price fell $3.17, or 14 percent, in heavy trading to close at $18.73. Centene's shares dropped 71 cents, or 4 percent, to $16.23.

By buying Centene's Medicaid business in New Jersey, Amerigroup will be able to improve services and become more efficient in the state, said James Carlson, Amerigroup's chairman and chief executive officer, in a statement. Amerigroup, which has done business in New Jersey since 1996, has 103,000 individuals enrolled in its health plan there.

Centene, which provides a mix of health care services for beneficiaries of Medicaid and participants in other government-funded programs, said its New Jersey plan hadn't achieved the efficiency it had sought.

In South Carolina, Centene will pick up 9,000 individuals now enrolled in Amerigroup's Medicaid plan there. At the end of September, Centene had 1.2 million members in its health plans, including 26,600 in South Carolina.

Amerigroup entered South Carolina in December 2007 after the state revamped its Medicaid program. Budgetary pressures in South Carolina recently prompted the state to scale back its funding for Medicaid and reduce the eligibility. These changes were not a factor in Amerigroup's decision to sell its South Carolina health plan, said Kent Jenkins Jr., an Amerigroup spokesman.

The state of South Carolina is committed to a viable managed-care system for its Medicaid recipients, Carlson said, but the environment doesn't offer Amerigroup an opportunity to reach the scale it was seeking.

Amerigroup's health plans serve 1.7 million beneficiaries in 11 states, including Virginia.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com