Federal Certification for Molina

Molina Medicaid Solutions, an operating subsidiary of Molina Healthcare, Inc. (MOH - Analyst Report), announced that the Centers for Medicare and Medicaid Services (“CMS”) has endowed complete federation certification to implement the Medicaid Management Information System (“MMIS”) in Idaho. The system underwent stringent monitoring for a week, followed by further evaluation by CMS to successfully receive the certification.

As the federal certification will increase the monthly cost of operation, three-fourth of the MMIS operation costs incurred by Molina Medicaid Solutions will be reimbursed by the regulatory bodies. This compensation will be effective retrospectively since the system began processing the claims.

The federal government was desirous of this upgrade as the system caters to over 230,000 participants and processes approximately 140,000 claims a week.

Rising expenditures have always been a cause of concern for health care companies. The certification and reimbursement of costs will aid the company’s revenues to a certain extent.

Molina Healthcare competes closely with Unitedhealth Group, Inc. (UNH - Analyst Report). In early July, the Government Accountability Office confirmed the U.S. Department of Defense’s TRICARE Managed Care Support contract award to UnitedHealth Group.TRICARE is a health insurance service program meant for working as well as retired military service members and their families.

Under this administrative services contract, UnitedHealth will support health care delivery to approximately 2.9 million eligible beneficiaries who are active duty service members, retirees and family members based in 21 states of TRICARE’s West region. The contract consists of five one-year option periods and is valued at $20.5 billion.

Molina Healthcare is scheduled to release its second quarter results after the closing bell on July 26. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at 7 cents per share, representing an estimated year-over-year decline of 81.6%.

Molina Healthcare currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We have long-term Neutral recommendation on its shares.