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Recently, Molina Healthcare of New Mexico, a subsidiary of Molina Healthcare, Inc. (MOH - Analyst Report), inked a definitive agreement to assume Lovelace Community Health Plan’s contract for the New Mexico Medicaid Salud! Program. The transaction is expected to close by Aug 1, 2013, subject to customary closing conditions.

Upon the completion of the transaction, all Medicaid members of Lovelace Community Health Plan will become the members of Molina’s Medicaid program. Molina will provide the members with Medicaid services and benefits. However, members would still have access to Lovelace’s providers and medical staff as well as Lovelace Retail Pharmacies and Lovelace’s network of hospitals.  The non-Medicaid members of Lovelace will not be affected by the transaction.

The agreement will facilitate the transition of Lovelace’s Medicaid members to the Centennial Care program of New Mexico, as Molina is one of the four managed care organizations selected under the program. The Centennial Care program is the new name for New Mexico’s Medicaid program, in effect from Jan 1, 2013.

Only four managed care organizations were selected under the program to provide healthcare to about 700,000 New Mexicans. Molina Healthcare of New Mexico has the highest National Committee for Quality Assurance (NCQA) ranking among all the Medicaid plans in New Mexico.

Molina’s selection in the Centennial Care program is expected to significantly boost its Medicaid members. This contract with Lovelace is a result of the company’s selection for the program, as the Medicaid members of Lovelace will now be able to continue with Molina once the program is implemented, instead of having to choose a new Medicaid provider. Thus, the members will continue to receive high quality care without any disruption in service.

Lovelace currently provides Medicaid services to about 84,000 members in New Mexico under the New Mexico Medicaid Salud! State Coverage Insurance program. Thus, the agreement should significantly boost Molina’s Medicaid membership in the state, which currently stands at 91,000. Lovelace’s Medicaid members will be notified about their transition to Molina through a letter sent by both the companies.

Molina currently carries a Zacks Rank #1 (Strong Buy). Other health maintenance organizations worth considering are Aetna Inc. (AET - Analyst Report) – Zacks Rank #1 (Strong Buy), Select Medical Holdings Corporation (SEM - Snapshot Report) – Zacks Rank #2 (Buy) and UnitedHealth Group Inc. (UNH - Analyst Report) – Zacks Rank #2 (Buy).

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