WellCare Health Plans Inc. plans to invest a portion of its savings from the recent cut in the federal corporate tax rate into quality initiatives and workforce development, according to CEO Kenneth Burdick.
The company will increase spending on programs that help incentives for its high-performing doctors in its Medicare and Medicaid businesses, Burdick said during a conference call to discuss earnings. It also plans to expand internal training programs, enhance tuition reimbursement, and accelerate hiring in areas directly related to growth and quality improvements, Burdick said.
WellCare managed to bring 39% of its Medicare membership to 4-star plans, a measure the CEO called a "meaningful revenue tailwind," and one the company hopes to eventually double.
The company revised its guidance to reflect the benefits of federal tax reform. Executives indicated that WellCare planned to split the tax savings between reinvestment and shareholder benefits. The reduction in the federal corporate tax rate to 21% from 35% moves WellCare's effective tax rate from as high as 53% to a projected range of 34.5% to 36%. The tax rate reflects the nondeductible fee WellCare pays for the Affordable Care Act.
Several regulatory factors combine to reduce the amount of savings WellCare will see from tax reform, CFO Andrew Asher said.
The company is monitoring New York Gov. Andrew Cuomo's proposal to impose a surcharge on private health insurers in that state to capture some of the savings from corporate tax reform, Burdick said.
"We like to think that, through a good, healthy dialogue, the state of New York will understand that creating sustainable programs for their Medicare beneficiaries really is the ultimate objective," he said.
