Molina Healthcare, Inc. provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the Marketplace).
The company serves low-income families in Southern California. The company served approximately 5.5 million members as of December 31, 2024, located across 21 states.
Segments
The company has four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other.
The Medicaid, Medicare, and Marketplace s...
Molina Healthcare, Inc. provides managed healthcare services under the Medicaid and Medicare programs, and through the state insurance marketplaces (the Marketplace).
The company serves low-income families in Southern California. The company served approximately 5.5 million members as of December 31, 2024, located across 21 states.
Segments
The company has four reportable segments consisting of: 1) Medicaid; 2) Medicare; 3) Marketplace; and 4) Other.
The Medicaid, Medicare, and Marketplace segments represent the government-funded or sponsored programs under which the company offers managed healthcare services.
The Other segment includes long-term services and supports consultative services in Wisconsin.
Strategy
The company’s long-term growth strategy remains unchanged, as it continues to be a pure-play government-sponsored healthcare business, which provides it with opportunities to compete in high-growth, synergistic market segments with attractive and sustainable margins.
The company’s strategic priorities include organic growth of its core businesses by growing with new state procurement opportunities, retaining existing contracts, increasing market share in current service areas and pursuing carve-in and/or adjacent opportunities; and inorganic growth through accretive mergers and acquisitions (M&A).
Key Developments
Connecticut Acquisition - Marketplace and Medicare: Effective February 1, 2025, the company closed on its acquisition of ConnectiCare Holding Company, Inc. (‘ConnectiCare’), a wholly owned subsidiary of EmblemHealth, Inc. ConnectiCare is a leading health plan in the state of Connecticut serving approximately 140,000 members across Marketplace, Medicare, and certain commercial products.
California Acquisition - Medicare: Effective January 1, 2024, the company closed on its acquisition of 100% of the issued and outstanding capital stock of Bright Health Medicare, which added approximately 109,000 members.
Business
Medicaid
Medicaid was established under the U.S. Social Security Act to provide healthcare and long-term services and support to low-income Americans. Although jointly funded by federal and state governments, Medicaid is a state-operated and state-implemented program.
The company participates in the following Medicaid programs:
Temporary Assistance for Needy Families (TANF): This is the most common Medicaid program. It primarily covers low-income families with children.
Medicaid Aged, Blind or Disabled (ABD): ABD programs cover low-income persons with chronic physical disabilities or behavioral health impairments. ABD beneficiaries typically use more services than those served by other Medicaid programs because of their critical health issues.
Children’s Health Insurance Program (CHIP): CHIP is a joint federal and state matching program that provides healthcare coverage to children whose families earn too much to qualify for Medicaid coverage. States have the option of administering CHIP through their Medicaid programs.
Medicaid Expansion: In states that have elected to participate, Medicaid Expansion provides eligibility to nearly all low-income individuals under age 65 with incomes at or below 138% of the federal poverty line.
Long Term Services and Supports (LTSS): LTSS programs cover a range of medical and personal care assistance that people may need – for several weeks, months, or years – when they experience difficulty completing self-care tasks as a result of aging, chronic illness, or disability. Such services include, but are not limited to, nursing facility care, adult daycare programs, home health aide services, personal care services, transportation, and supported employment as well as assistance provided by a family caregiver.
Contracts
The company’s state Medicaid contracts typically have terms of three to five years, contain renewal options exercisable by the state Medicaid agency, and allow either the state or the health plan to terminate the contract with or without cause.
In addition to contract renewal, the company’s state Medicaid contracts may be periodically amended to include or exclude certain health benefits (such as pharmacy services, behavioral health services, or long-term care services); populations, such as the ABD; and regions or service areas.
Status of Significant Contracts
The company’s Medicaid premium revenue constituted 79% of its consolidated premium revenue in the year ended December 31, 2024. The company’s Medicaid contracts with the states of California, New York, Texas, and Washington each accounted for approximately 10% or more of its consolidated Medicaid premium revenues in the year ended December 31, 2024.
California: The three DHCS Medi-Cal contracts and plan-to-plan subcontract for Los Angeles County commenced on January 1, 2024, which enabled the company to continue serving Medi-Cal members in Los Angeles, Riverside/San Bernardino, Sacramento, and San Diego counties and significantly expanded its footprint in Los Angeles County. The company’s California Medicaid contracts represented premium revenue of approximately or 13% of its consolidated Medicaid premium revenue in 2024.
New York: The company’s presence in New York increased substantially after completion of the Magellan Complete Care acquisition in December 2020, the Affinity Health Plan acquisition in October 2021 and the AgeWell New York acquisition in 2022. Affinity Health Plan is a Medicaid managed care organization serving members in New York City, Westchester, Orange, Nassau, Suffolk, and Rockland counties in New York. AgeWell is a specialty managed care organization that provides long-term care services at home or in the community for those who are chronically ill or disabled in The Bronx, New York City, Queens, Brooklyn, Nassau, Westchester, and Suffolk counties. The company’s New York Medicaid contracts represented premium revenue of approximately 11% of its consolidated Medicaid premium revenue in 2024.
Texas: The company’s new contract for the Texas STAR+PLUS program commenced on September 1, 2024, retaining its entire existing footprint in each of Bexar, Dallas, El Paso, Harris, Hidalgo, Jefferson, Northeast Texas, and Tarrant service areas; and grew the company’s market share. In the first quarter of 2024, the company was notified of the Texas Health and Human Services Commission’s intent to award the company a contract for TANF and CHIP (known in Texas as the STAR & CHIP programs, and both existing contracts for Molina), expanding its footprint, and expecting to grow its market share. The company’s Texas Medicaid contracts represented approximately 14% of consolidated Medicaid premium revenue in 2024.
Washington: The company’s managed care contract with the Washington State Health Care Authority (‘HCA’) covers all ten regions of the state’s Apple Health Integrated Managed Care program and was effective through December 31, 2024. HCA has renewed the contract through December 31, 2025, with a further renewal expected for 2026. HCA is expected to re-procure for Medicaid with an anticipated release of an RFP no earlier than sometime in 2026, with an expected contract effective date of January 1, 2027. The company’s Washington Medicaid contract represented approximately 13% of consolidated Medicaid premium revenue in 2024.
Basis for Premium Rates
Under its Medicaid contracts, state government agencies pay the company’s health plans per-member per-month (PMPM) rates that vary by state, line of business, demographics, and in most instances, health risk factors. CMS requires these rates to be actuarially sound. In exchange for the payment received, Molina arranges, pays for, and manages healthcare services provided to Medicaid beneficiaries.
Member Enrollment and Marketing
Most states allow eligible Medicaid members to select the Medicaid plan of their choice. In some of the states in which the company operates, a substantial majority of new Medicaid members voluntarily select a plan with the remainder subject to the auto-assignment process, while in other states less than half of new members voluntarily choose a plan.
The company’s Medicaid health plans may benefit from auto-assignment of individuals who do not choose a plan, but for whom participation in managed care programs is mandatory. The company’s Medicaid marketing efforts are regulated by the states in which it operates, each of which imposes different requirements for, or restrictions on, Medicaid sales and marketing. These requirements and restrictions are revised from time to time.
Medicare
Medicare is a federal program that provides eligible persons aged 65 and over, and some disabled persons, with a variety of hospital, medical insurance, and prescription drug benefits. Medicare is funded by Congress and administered by CMS. Medicare beneficiaries may enroll in a Medicare Advantage plan, under which managed care plans contract with CMS to provide benefits that are comparable to original Medicare. Since 2006, Medicare beneficiaries have had the option of selecting a prescription drug benefit from an existing Medicare Advantage plan.
Over 12 million low-income elderly and disabled people qualify for both the Medicare and Medicaid programs (‘dual eligible’ individuals). These beneficiaries are more likely than other Medicare beneficiaries to be frail, live with multiple chronic conditions, and have functional and cognitive impairments. Medicare is their primary source of health insurance coverage. Medicaid supplements Medicare by paying for services not covered by Medicare, such as dental care and long-term care services and supports, and by helping to cover Medicare’s premiums and cost-sharing requirements.
In 2025, the company is participating in Medicare in all its markets except Florida and Iowa.
The company participates in the following Medicare programs:
Medicare Advantage-Part D (MAPD): The company contracts with CMS under the Medicare Advantage program to provide benefits in excess of original Medicare, including cost-sharing and enhanced prescription drug benefits under Part D, that are targeted towards low-income beneficiaries.
Dual Eligible Special Needs Plan (D-SNP): The company contracts with CMS to provide benefits in excess of original Medicare, including care coordination complex case management and care management.
Highly-Integrated Dual Special Needs Plans (HIDE) – The company contracts with CMS and state Medicaid agencies to integrate care at a higher level than a typical D-SNP for dually eligible beneficiaries.
Fully-Integrated Dual Special Needs Plans (FIDE): The company contracts with CMS and state Medicaid agencies to fully integrate care for dually eligible beneficiaries under a single managed care plan.
Medicare-Medicaid Plans (MMP): To coordinate care and deliver services in a more financially efficient manner, some states have undertaken demonstration programs to integrate Medicare and Medicaid services for dual-eligible individuals.
Contracts
The company enters into MAPD contracts with CMS annually, and for D-SNP, FIDE and MMP (collectively, dual-eligible programs), it enters into contracts with CMS, in partnership with each state’s department of health and human services. Such contracts typically have terms of one to three years.
Status of MMP Contracts
In May 2022, CMS published a Final Rule that addressed the termination of the Financial Alignment Initiative Demonstration. Under a provision within the Final Rule, states can maintain their existing MMP through a two-year extension until December 31, 2025, so long as the applicable state provided CMS with a transition plan by October 1, 2022. In the proposed rule for contract year 2025, CMS has further provided states with a process for identifying a pathway to a FIDE or HIDE D-SNP plan.
The company’s California MMP members were transitioned to Molina’s California EAE-SNP products early in 2023.
In November 2024, the company’s Ohio health plan was awarded a contract to provide benefits to the state’s Next Generation MyCare program. The new contract is expected to commence on January 1, 2026 in the 29 counties where MyCare Ohio is currently available, with statewide expansion of the program following as quickly as possible.
In December 2024, the company’s Michigan health plan was awarded a contract to provide benefits for the state’s HIDE D-SNP in eleven service regions. The new contract, which is expected to commence on January 1, 2026 in select regions, will be implemented statewide in 2027.
In South Carolina, the company expects MMP members to be cross-walked to a HIDE product without an RFP process. In Texas, the company expects MMP members to be cross-walked to a FIDE product without an RFP process. Illinois has issued an RFP to transition MMP members to a FIDE D-SNP effective January 1, 2026.
Basis for Premium Rates
Under Medicare Advantage, managed care plans contract with CMS, and for the dual-eligible programs with CMS and state governments, to provide benefits in exchange for a PMPM premium payment that varies based on health plan Star rating and member demographics, including county of residence and health risk factors. The premium payment considers inflation, non-benefit expense requirements, other Medicare Advantage bids submitted to CMS, changes in utilization patterns and average per capita fee-for-service Medicare costs in the calculation of the PMPM premium payment. Amounts payable to it under the dual-eligible programs and Medicare Advantage contracts are subject to annual revision by CMS, including any federal budget cuts or tax changes applicable to Medicare. The company elects to participate in each Medicare service area or region on an annual basis.
Medicare Advantage premiums are subject to retroactive increase or decrease based on the health status of the company’s Medicare members, as measured by member risk scores determined pursuant to the CMS risk adjustment model. The data the company provides to CMS to determine risk scores is subject to audit by CMS at the contract level, by plan year on an on-going basis. Such risk adjustment data validation (RADV) audits can result in retroactive and prospective premium adjustments. The company records the estimated impact of audit settlements as a reduction to premium revenues, based upon available information, in the year that CMS determines repayment is required.
On January 30, 2023, CMS finalized its approach to RADV audits, including its decision to extrapolate the results of audit samples when calculating payment errors, which will also not include the Fee-For-Service Adjuster. CMS will apply extrapolation to audits for the 2018 payment year. On November 14, 2024, CMS initiated the payment year 2018 MA RADV audits, and CMS expects to begin issuing payment year 2018 audit findings in mid-calendar year 2026. CMS also announced the removal of the Fee-For-Service Adjuster from the risk adjustment data validation audit methodology beginning for payment year 2018. On March 31, 2023, CMS issued its final 2024 Medicare Advantage Rate Announcement, which implements a three-year phase-in of certain changes to the methodology CMS will use to perform risk adjustment for plan years 2024 through 2026. Under the new risk adjustment model that was implemented in 2024, CMS has changed the manner by which over 2,000 diagnosis codes, across a range of disease and condition categories, are considered for purposes of patient risk scoring, with certain of these codes no longer impacting risk scoring.
Member Enrollment and Marketing
The company’s Medicare members may be enrolled through auto-assignment or by enrolling in its plans with the assistance of insurance agents employed by Molina, outside brokers, or via the Internet. Generally, the enrollment period occurs between mid-October and early December for coverage that begins on the following January 1.
The company’s Medicare marketing and sales activities are regulated by CMS and the states in which it operates. CMS has oversight over all marketing materials used by Medicare Advantage plans, and in some cases has imposed advance approval requirements. CMS generally limits sales activities to those conveying information regarding benefits, describing the operations of its managed care plans, and providing information about eligibility requirements.
The company employs its own insurance agents and contract with independent, licensed insurance agents to market its Medicare Advantage products. The company has continued to expand its use of independent agents because the cost of these agents is largely variable, and the use of independent, licensed agents is more conducive to the shortened Medicare selling season and the open enrollment period. The activities of the company’s independent, licensed insurance agents are also regulated by CMS. The company also uses direct mail, mass media and the Internet to market its Medicare Advantage products.
Marketplace
The ACA authorized the creation of Marketplace insurance exchanges, allowing individuals and small groups to purchase federally subsidized health insurance effective January 1, 2014. Marketplace plans must be ACA-compliant, meeting standards established by the federal government, including a requirement to cover certain essential health benefits. Certain beneficiaries qualify for premium tax credits and cost-sharing reductions based on annual household income. Plans are categorized by metal tiers (Platinum, Gold, Silver or Bronze), which determine how beneficiaries and the plan share costs (e.g., premiums, out-of-pocket costs and deductibles). The company offers Marketplace plans in many of the states where it offers Medicaid health plans. The company’s plans allow its Medicaid members to stay with their providers as they transition between Medicaid and the Marketplace. Additionally, the company’s plans remove financial barriers to quality care and seek to minimize members' out-of-pocket expenses. In 2025, the company is participating in the Marketplace in all its markets except Arizona, Iowa, Massachusetts, Nebraska, New York, and Virginia.
The company expects its Marketplace enrollment to increase by almost 50% in 2025, to a total of 580,000 members by the end of the year, including the 66,000 members it added as a result of the ConnectiCare acquisition, effective February 1, 2025.
Contracts
The company enters into contracts with CMS annually for the state Marketplace programs. These contracts have a one-year term ending on December 31 and must be renewed annually.
Basis for Premium Rates
For Marketplace, the company develops each state’s premium rates during the spring of each year for policies effective in the following calendar year. The premium rates are filed for approval with the various state and federal authorities in accordance with the rules and regulations applicable to the ACA individual market, including but not limited to, minimum loss ratio thresholds and adjustments for permissible rate variations by age, geographic area, and variations in plan design.
Member Enrollment and Marketing
The company’s Marketplace members enroll in its plans with the assistance of insurance agents employed by Molina, outside brokers, vendors, direct to consumer marketing, and via the Internet.
While its Marketplace sales activities are regulated by CMS (such as eligibility determinations), the company’s marketing activities are regulated by the individual states in which it operates. Some states require it to obtain prior approval of the company’s marketing materials, others simply require it to provide them with copies of its marketing materials, and some states do not request its marketing materials. The company is able to freely contact its members and provide them with marketing materials as long as those materials are fair and do not discriminate.
The company’s Marketplace sales and marketing strategy is to provide high quality, affordable, compliant and consumer-centric Marketplace products through a variety of distribution channels. The company’s Marketplace products are displayed on the Federally Facilitated Marketplace (FFM) and the State Based Marketplace (SBM) in the states in which it participates in the Marketplace. The company also autos with independent, licensed insurance agents to market its Marketplace products. The activities of its independently licensed insurance agents are also regulated by both CMS and the departments of insurance in the states in which it participates. The company’s sales cycle typically peaks during the annual Open Enrollment Period (OEP) as defined and regulated by CMS and the applicable FFM and SBM.
Providers
The company arranges healthcare services for its members through contracts with a vast network of providers, including independent physicians and physician groups, hospitals, ancillary providers, and pharmacies. The company strives to ensure that its providers have the appropriate expertise and cultural and linguistic experience.
Providers
The company arranges healthcare services for its members through contracts with a vast network of providers, including independent physicians and physician groups, hospitals, ancillary providers, and pharmacies. The company strives to ensure that its providers have the appropriate expertise and cultural and linguistic experience.
Physicians
The company contracts with both primary care physicians and specialists, many of whom are organized into medical groups or independent practice associations. Primary care physicians provide office-based primary care services. Primary care physicians may be paid under capitation or fee-for-service contracts and may receive additional compensation by providing certain preventive care services. Under capitation payment arrangements, healthcare providers receive fixed, pre-arranged monthly payments per enrolled member, whereas under fee-for-service payment arrangements, healthcare providers are paid a fee for each particular service rendered. The company’s specialists care for patients for a specific episode or condition, usually upon referral from a primary care physician, and are usually compensated on a fee-for-service basis. When the company contracts with groups of physicians on a capitated basis, it monitors their solvency.
Hospitals
The company generally contracts with hospitals that have significant experience dealing with the medical needs of the Medicaid population. The company reimburses hospitals under a variety of payment methods, including fee-for-service, per diems, diagnostic-related groups, capitation, and case rates.
Ancillary Providers
The company’s ancillary agreements provide coverage of medically-necessary care, including laboratory services, home health, physical, speech and occupational therapy, durable medical equipment, radiology, ambulance and transportation services, and is reimbursed on a capitation and fee-for-service basis.
Pharmacy
The company outsources pharmacy benefit management services, including claims processing, pharmacy network contracting, rebate processing and mail and specialty pharmacy fulfillment services. Via a Market Check provision in the agreement with its long-standing pharmacy benefit management (PBM) company, CVS Caremark (Caremark), it re-negotiated networks and administrative costs (for calendar years 2024 through 2026) to Molina’s benefit.
Medical Management
The company emphasizes primary care physicians as the central point of delivery for routine and preventive care, coordination of referrals to specialists, and appropriate assessment of the need for hospital care. This model has proved to be an effective method of coordinating medical care for its members.
Utilization Management
The company’s utilization management process serves as a bridge to identify at-risk members for referral into internally developed case management programs, such as Transitions of Care, which facilitates post-discharge safety and appropriate outcomes.
Population Management
Individuals are identified for interventions, and programs are customized, based on predictive analytics and the company’s member assessment process. These tools ensure that the appropriate level of services and support are provided to address physical health, behavioral health, and social determinants of health. This comprehensive and customized approach is designed to help members achieve their goals and improve their overall quality of life.
Pharmacy Management
The company’s pharmacy programs are designed to make it a trusted partner in improving member health and healthcare affordability. The company strategically partners with physicians and other healthcare providers who treat its members. This collaboration results in drug formularies and clinical initiatives that promote improved patient care. The company employs full-time pharmacists and pharmacy technicians who work closely with providers to educate them about its formulary products, clinical programs, and the importance of cost-effective care.
Medical Cost Management
The company uses various strategies to mitigate the negative effects of healthcare cost inflation. Specifically, the company’s health plans try to control medical care costs through contracts with independent providers of healthcare services. Through these contracted providers, the company’s health plans emphasize preventive healthcare and appropriate use of specialty and hospital services. There can be no assurance, however, that the company’s strategies to mitigate medical care cost inflation will be successful. Competitive pressures, new healthcare and pharmaceutical product introductions, demands from healthcare providers and customers, applicable regulations, or other factors may affect the company’s ability to control medical care costs.
Centralized Services
The company provides certain centralized medical and administrative services to its subsidiaries pursuant to administrative services agreements that include, but are not limited to, information technology, product development and administration, underwriting, claims processing, customer service, certain care management services, human resources, marketing, purchasing, risk management, actuarial, finance, accounting, compliance, legal and public relations.
Competition
Medicaid: The company’s primary competitors in the Medicaid managed care industry include Centene Corporation, CVS Health Corporation, Elevance Health, Inc., UnitedHealth Group Inc., and large not-for-profit healthcare organizations.
Marketplace: The company’s primary competitor for low-income Marketplace membership is Centene Corporation.
Regulation
All health plans are subject to the Health Insurance Portability and Accountability Act, including the company.
Because the company receives payments from federal and state governmental agencies, it is subject to various laws commonly referred to as ‘fraud and abuse’ laws, including federal and state anti-kickback statutes, prohibited referrals, and the federal False Claims Act, which permit agencies and enforcement authorities to institute a suit against it for violations, and in various cases, to seek treble damages, criminal and civil fines, penalties, and assessments.
The company’s health plans are licensed by the insurance departments in the states in which they operate, except its California health plan is licensed by the California Department of Managed Health Care; one of its New York health plans is licensed as a prepaid health services plan by the New York State Department of Health; and its Massachusetts health plan is regulated as a risk-bearing entity by the Massachusetts Executive Office of Health and Human Services.
History
Molina Healthcare, Inc. was founded in 1980. The company was incorporated in 1999. The company was reincorporated in Delaware in 2002.
