Metropolitan Heath Networks (MDF)

[Bobwins]

Friday 7/22. Duplicate post from Yahoo. Bobwins

Talked with Mike Earley to ask about the Molina disaster where a Medicaid HMO stock got hit due to a projected profit for next qtr becoming a loss. Went from 46 to 25 in one day!!!

Asked him if they were seeing any problems with escalating usage of the network or problems similar to Molina.

He said that the industry was abuzz with this issue but that he didn't forsee any similar problems for MDF.

Molina is in the Medicaid market. That's single women and children on welfare, nursing home residents and others who are unable to pay for their medical care. Molina is in several states and specifically mentioned Washington state as a problem area.

Medicaid is paid for with state and Federal funds so state govts are responsible for rule making. Every state is different. By contrast, MDF is in one state with Federal rules that have recently been revised to benefit MDF's market.

Overall he said the Medicaid market is exploding as you can tell by checking Molina's growth in revs. MOH. Could be a one time increase in network usage that will pass thru or Molina may have some structural costs to get into line. He also said they may have increased staffing to accomodate the growth and may come out fine in the long run.

Getting back to MDF, he said he thinks MDF is in a great place. This fall there will be a big increase in advertising and education about the drug benefit for Medicare recipients. He said AARP is joining with industry players to educate the public on their choices. He predicted a big increase in awareness and enrollment in Medicare Advantage plans versus straight Medicare plus the Drug benefit on a standalone basis.

Next year, Medicare recipients will have a choice. To take advantage of the drug benefit, they can stay in straight Medicare and add the drug benefit for about $35/month plus their Medicare premium of $78?

OR they can enroll in a Medicare Advantage HMO program and get the drug benefit plus other benefits of belonging to the HMO like an annual physical for a total premium that is less than $78+35.

Earley likes being a startup HMO in this kind of environment where Medicare enrollees will have a choice. At the same time, he cautioned that Humana and MDF will have to do a good job of educating their existing customers so they don't lose market share during this time of change.

Overall he sounded very positive. I didn't ask about the number of enrollees to the plan because he can't tell me that but did find out that the HMO's in Florida report to the state on a qtrly basis. There is a 60 day delay in the reporting but later this year, we will have a way of checking MDF's growth. He said they will be commenting on their actuals before these numbers come out but they could be useful in the future. I will check out State of Florida websites to try to find that report.

Overall the industry may be getting hit as a result of Molina's problem but Earley doesn't see any direct connection to MDF performance. Could be the reason for the weakness the last two days. This too shall pass. Bobwins