AMERIGROUP to Acquire Memphis H...(ht partner to help ussustain that work. ...),Health

TLC Family Care Health Plan is the largest of the four health plans currently participating in TennCare in West Tennessee, covering almost half of the region's 375,000 TennCare enrollees. TLC maintains an extensive healthcare network that includes more than 3,000 doctors, hospitals and other healthcare providers, and employs more than 200 people in the Memphis area. AMERIGROUP does not plan significant changes in that structure.

TLC Family Care Health Plan operates under an administrative services only agreement with the State of Tennessee, which means that it maintains and administers a network of physicians, hospitals and other healthcare providers. TLC Family Care Health Plan manages this network, pays appropriate claims and provides medical management and disease management services. The plan has a shared-risk contract with the State but is not at this time a full-risk contractor.

Under the terms of the purchase agreement, AMERIGROUP will acquire substantially all of the assets of Memphis Managed Care Corporation, which include TLC Family Care Health Plan and MidSouth Health Solutions, an affiliated firm that offers disease management and case management services. Memphis Managed Care was founded by the Regional Medical Center at Memphis, which operates the only Level I trauma center in the region, and UT Medical Group Inc., the private physician practice organization of the College of Medicine of the University of Tennessee Health Science Center, both of which have approved the transaction.

AMERIGROUP agreed to pay Memphis Managed Care Corporation $12 million at the close of the transaction and additional consideration should AMERIGROUP bid successfully to enter the TennCare program as a full-risk contractor in West Tennessee. AMERIGROUP will fund the transaction through available unregulated cash and does not expect the transaction to have a material impact on its 2007 earnings or to impact oper
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