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Humana, Wal-Mart sign Medicare drug plan deal

The deal highlights private plans' desire to tap into what is expected to be a lucrative business.

By Bob Cook — Posted Aug. 1, 2005

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In another sign of how aggressively health plans are moving to capture the upcoming Medicare drug plan market, Humana says it is joining with retail giant Wal-Mart to offer the new Part D prescription drug plan to seniors.

Humana and Wal-Mart say they plan to offer a co-branded prescription card to Medicare recipients. The card can be used at the pharmacies within stores operated by the Bentonville, Ark.-based retailer, which has 3,600 outlets, including Wal-Mart stores and Supercenters, the Sam's Club bulk-sales club outlet, and the Neighborhood Market grocery chain. They also can be used at other pharmacies as well, the companies said.

Enrollment for the new Medicare prescription plan, which is administered by private payers, begins Nov. 15, while the plan itself begins Jan. 1, 2006. The drug plan was passed by Congress as part of the Medicare Modernization Act of 2003.

Analysts considered access to a large senior population a catalyst for Minneapolis, Minn.-based UnitedHealth Group's recently announced $8.1 billion acquisition of Cypress, Calif.-based PacifiCare Health Systems, a plan whose Secure Horizons division is the largest private administrator of Medicare plans. The transaction needs approval from federal and state regulators.

United also recently signed a deal allying with AARP to administer a Medicare prescription program.

According to company filings, Medicare already makes up about 24% of Humana's annual premiums and administrative services fees.

But it wants more. Louisville, Ky.-based Humana said it had applied with the Centers for Medicare & Medicaid Services to expand its Medicare business next year to 46 states from its current 25. The company also says it planned to hire about 1,800 employees, on top its current base of 13,000, to handle the Medicare business.

Financial details of the agreement with Wal-Mart were not disclosed.

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