Profile: Universal American Corp. (UAM.N)

Universal American Corp. (Universal American), incorporated on August 31, 1981, offers a range of health insurance and managed care products and services, primarily to the senior population. The Company's principal health insurance products for the senior market are Medicare Advantage, insured stand-alone prescription drug benefit plans pursuant to Medicare Part D, and Medicare supplement. Universal American also provides administrative services for senior market insurance and non-insurance programs to both affiliated and unaffiliated insurance companies and prescription benefit management (PBM) services to 17 state pharmacy assistance programs (SPAPs), and offers PBM services and drug discount card programs through a number of group contracts. Collectively, the Company's insurance subsidiaries are licensed or otherwise authorized to sell health insurance, life insurance and annuities in all 50 states, the District of Columbia, and Puerto Rico, as well as some United States territories. Universal American's managed care subsidiary operates Medicare Advantage coordinated care plans, known as health plans in Texas, Wisconsin and Oklahoma and private fee-for-service (PFFS) plans in 47 states.

Senior Managed Care-Medicare Advantage

During the year ended December 31, 2008, the Company operated Medicare Advantage HMO plans in 16 counties in Texas, primarily in Southeastern Texas and the surrounding Dallas area, 16 counties in Oklahoma and four counties in Wisconsin. In addition, it offers Medicare Advantage PFFS plans in 47 states. In January 2009, it began offering PPO products in 50 counties in nine states.

The Company’s HMO plans are offered under contracts with the Center for Medicare and Medicaid Services (CMS), and provide Medicare covered benefits with reduced member cost-sharing, as well as additional supplemental benefits, including a defined prescription drug benefit. In addition to a monthly payment per member from CMS, the plan may collect a monthly premium from its members for specified products.

The Company operates plans offering the product TexanPlus in 12 counties in Houston and southeastern Texas through SelectCare of Texas, which had approximately 42,100 members enrolled at December 31, 2008. The Company has expanded its Medicare Advantage HMO operations to locations outside of Southeastern Texas, including four counties in North Texas offering TexanFirst Health Plans through SelectCare Health Plans; nine counties in Oklahoma City and six counties in Tulsa offering Generations Healthcare through GlobalHealth, and its counties in the Milwaukee, Wisconsin area offering Today's Health. Effective January 1, 2008, the Company terminated its HMO plans operating in Florida.

The PFFS plans are known as Today's Options. They are offered under contracts with the Centers for Medicare & Medicaid Services, known as CMS and provide enhanced health care benefits compared to traditional Medicare, subject to cost sharing and other limitations. Some of these products include a defined prescription drug benefit. In addition to a fixed monthly payment per member from CMS, individuals in these plans may be required to pay a monthly premium in selected counties or for selected enhanced products. The Company will offer PFFS plans in a total of 47 states in 2009 as well.

The Company’s PPO plans are known as Today's OptionsPPO. They are offered under contracts with CMS and provide all basic Medicare covered benefits with reduced member cost-sharing, as well as additional supplemental benefits, including a defined prescription drug benefit. This coordinated care product is built around contracted networks of providers who, in connection with the health plan, coordinate an active medical management program. In addition to a monthly payment per member from CMS, the plan may collect a monthly premium from its members for specified products. Beginning October 1, 2008, the Company began offering PPO plans with a 2009, effective date in 15 markets in nine states.

Medicare Part D

Universal American began to offer a stand-alone prescription drug benefit pursuant to Part D known as Prescription Pathway through a strategic relationship with CVS Caremark Corp. (CVS). As of January 1, 2009, the Company ended the strategic relationship with CVS and renamed its plan PrescribaRx. On September 21, 2007, the Company completed the acquisition of MemberHealth, Inc., a PBM and sponsor of Community CCRx, a national Medicare Part D plan with 1.2 million members as of the date of acquisition. Prior to and after the acquisition, MemberHealth has been a Medicare Part D sponsor, offering Medicare prescription drug plans in 50 states, the District of Columbia, Puerto Rico and the United States Virgin Islands. MemberHealth has more than 60,000 pharmacies in its pharmacy network and covers 98 of the top 100 medications taken by Medicare beneficiaries.

For 2008, the Company offered, through its insurance subsidiaries, its Community CCRx and Prescription Pathway prescription drug plans in all 34 regions designated by CMS, in which the Company bids. These plans offer basic coverage with benefits mandated by the MMA, as well as plans providing enhanced coverage with varying degrees of out-of-pocket costs for premiums, deductibles and co-insurance. As of December 31, 2008, it had approximately 1.3 million members enrolled in its Community CCRx PDPs. The Company had a multi-year strategic alliance with the National Community Pharmacists Association (NCPA), which provides an exclusive outreach and communications for its Community CCRx PDPs to NCPA's independent pharmacy membership. Its alliance with NCPA, and its more than 25,000 independent pharmacy members, provides the Company with direct access to the community pharmacy network in the United States.

Traditional Insurance

Universal American's traditional Insurance segment combines the previously separately reported Medicare supplement and other senior health products, which the Company reports in its Senior Market Health segment, Specialty Health and Life & Annuity segments. The products in this segment are designed primarily for the senior market and marketed through the Company's Senior Solutions career agency force and through its network of independent general agencies. During 2008, the Company agreed to reinsure substantially all of the net in force life and annuity business with Commonwealth Annuity and Life Insurance Company, a Goldman Sachs Group, Inc. subsidiary.

The Company offers a line of low-face amount, simplified issue whole life products that it sells through its senior market independent agency and its career agency systems. The Company also market a line of interest sensitive whole life products that are designed for efficient asset transfer to beneficiaries. These products also offer acceleration of death benefit features that cover specified long term care expenses.

Senior Administrative Services

The Company performs a range of administrative services for senior market insurance and managed care products, primarily Medicare supplement, Medicare Advantage, Part D, senior life and long term care, for both affiliated and unaffiliated companies. Its network of registered nurses and social workers provides personalized support and care for its senior programs nationwide. In addition, its network of discount providers is an integral part of its geriatric care management services.

Corporate

Universal American's corporate segment reflects the debt service. The debt service is a portion of senior executive compensation and compliance with regulatory requirements resulting from its status as a public company.