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Wellcare gets boost from new Medicare coverage

The drug benefit doesn't take effect until 2006, but it already has led to a hiring spree for Tampa's WellCare Health Plans Inc.

By KRIS HUNDLEY
Published September 23, 2005

The big winners under next year's Medicare drug benefit may be the dozens of private companies that have lined up to sponsor the federally funded plans.

And few have more to celebrate than WellCare Health Plans Inc. which expects its involvement in the program to nearly double its membership next year and fuel a hiring spree at its Tampa headquarters.

WellCare is one of only 10 companies nationwide that will sponsor stand-alone drug coverage for people who want to continue receiving medical care through traditional Medicare.

The company will also expand its existing Medicare Advantage plans in six states, including Florida, to include drug coverage. WellCare's enhanced HMOs will be available in Hillsborough, Pinellas, Pasco, Hernando, Sarasota and Manatee counties.

Finally, WellCare stands to have hundreds of thousands of low-income enrollees dropped into its lap by the federal government. WellCare is among a select group of six companies nationwide that will be automatically assigned people who are currently on both Medicare and Medicaid.

WellCare expects the government's auto-assignment process will result in about 500,000 new members by mid-2006. The company expects an additional 100,000 people to independently enroll in its other plans.

Currently, WellCare has about 800,000 members; only about 60,000 of them are in Medicare HMOs, while the rest are in Medicaid managed care plans.

Heath Schiesser, president of WellCare's prescription drug plan business, said his company has added about 100 employees in Tampa over the past several months to gear up for the anticipated bump in membership. Another 100 will be added by mid-2006. WellCare currently has 1,154 employees in Tampa.

"We're using a lot of outsourced vendors to provide things like customer service and printing," Schiesser said. "We're going to be primarily hiring people like pharmacy techs, marketing, regulatory and financial executives."

Medicare will reimburse WellCare and the other private drug plans about $60 per member per month for the coverage. WellCare estimates it will spend up to $35-million by the end of the year to prepare for the launch of its new drug plans. It said it expects these plans to generate up to $600-million in revenues next year from the drug plans, yielding pre-tax income of between $20-to $24-million.

After an initial run-up in WellCare's stock price on Friday, its shares closed down 65 cents at $39.45. Schiesser said he is aware that some observers think the company, which went public in July 2004 at $17 a share, may be too aggressive in bidding on the new drug program.

"But we are very comfortable with our bids," he said. "We have very relevant experience with this and we're comfortable we can make a modest but fair profit."

-- Kris Hundley can be reached at hundley@sptimes.com or 727 892-2996.

[Last modified September 23, 2005, 19:22:39]