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Primary Care Physician-Led ACOs, in Partnership with Universal American Subsidiary, Generated $57 Million in Savings for Medicare Shared Savings Program

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Universal American Corp. (NYSE:UAM) announced today that the Accountable Care Organizations (ACOs) it formed in partnership with primary care physicians generated $57 million in total program savings for the Centers for Medicare & Medicaid Services (CMS) as part of the Medicare Shared Savings Program for program years 2012 and 2013.

In partnership with primary care physicians, Universal American’s subsidiary, Collaborative Health Systems formed 30 ACOs to participate in the Shared Savings Program for program years 2012 and 2013. These ACOs represent over 2,800 participating physicians serving more than 350,000 Medicare Fee-for-Service beneficiaries. In the aggregate, these ACO’s will receive payments of $20 million, part to be paid to physicians and part to defray a portion of the costs that Collaborative Health Systems has incurred.

Of Collaborative Health Systems’ 30 ACOs with start dates in 2012 and 2013, the results showed that:

  • 3 ACOs, serving more than 56,000 Medicare beneficiaries and including our flagship ACO in Houston, qualified for savings;
  • 7 ACOs, serving more than 80,000 Medicare beneficiaries, generated savings but fell below their Minimum Savings Rate (MSR) required to share savings with CMS;
  • 8 ACOs were within 2 percent of their benchmark;
  • 8 ACOs were 2 percent or more above their benchmark;
  • 4 ACOs will have results released in October; and
  • All ACOs met CMS’s quality reporting standards

Richard A. Barasch, CEO of Universal American, underscored the key role primary care physicians play in the success of ACOs. “We have built our business model around the concept that primary care physicians are in the best position to drive significant improvements in the cost and quality of healthcare, especially for Medicare beneficiaries. Our job is to enable them by providing a structure that offers appropriate incentives for such improvements and actionable information that help them achieve these goals. This concept underlies our long term success in the Medicare Advantage program, which we now are importing to the Medicare Shared Savings Program. We remain firmly committed to the ACO business and are optimistic about the outlook for 2014 and beyond, especially since many of the ACOs are close to the performance line and are showing positive trends in areas such as reduced hospitalizations and readmissions. Going forward, we will focus our resources on those ACOs where the shared savings program can work and where we can truly help impact the cost and quality of medical care.”

Jeffery Spight, senior vice president of market operations at Collaborative Health Systems, noted that the company’s ACOs operate across many different settings, serving Medicare beneficiaries in urban, rural and suburban areas. “Collaborative Health Systems has some of the most successful physician-led ACOs, which shows in the positive results for ACOs included in this reporting,” he said. “We are especially pleased that the physicians we have had a long-standing relationship with experienced positive results in 2013, and were able to deliver quality care to their Medicare beneficiaries while reducing costs.”

About Collaborative Health Systems

Collaborative Health Systems (CHS) is a member of the Universal American Corp. (NYSE:UAM) family of healthcare companies. CHS partners with providers throughout the country in the development of Accountable Care Organizations (ACOs). CHS provides a range of care coordination, analytics and reporting, technology and other administrative services to enable physicians and other healthcare professionals to deliver improved care, improved health and lower healthcare costs to their patients. For more information, visit http://www.CollaborativeHealthSystems.com.

About Universal American Corp.

Universal American (NYSE:UAM) , through our family of healthcare companies, provides health benefits to people covered by Medicare and/or Medicaid. We are dedicated to working collaboratively with healthcare professionals in order to improve the health and well-being of those we serve and reduce healthcare costs. For more information on Universal American, please visit our website at www.UniversalAmerican.com.

Forward Looking Statements

This news release and oral statements made from time to time by our executive officers may contain “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the PSLRA. Such statements that are not historical facts are hereby identified as forward-looking statements and intended to be covered by the safe harbor provisions of the PSLRA and can be identified by the use of the words “believe,” “expect,” “predict,” “project,” “potential,” “estimate,” “anticipate,” “should,” “intend,” “may,” “will,” and similar expressions or variations of such words, or by discussion of future financial results and events, strategy or risks and uncertainties, trends and conditions in our business and competitive strengths, all of which involve risks and uncertainties.

Where, in any forward-looking statement, we or our management expresses an expectation or belief as to future results or actions, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Our actual results may differ materially from our expectations, plans or projections. We warn you that forward-looking statements are only predictions and estimates, which are inherently subject to risks, trends and uncertainties, many of which are beyond our ability to control or predict with accuracy and some of which we might not even anticipate. We give no assurance that we will achieve our expectations and we do not assume responsibility for the accuracy and completeness of the forward-looking statements. Future events and actual results, financial and otherwise, may differ materially from the results discussed in the forward-looking statements as a result of many factors, including the risk factors described in the risk factor section of our SEC reports.

A summary of the information set forth in the “Risk Factors” section of our SEC reports and other risks includes, but is not limited to the following: we may invest significant capital and management attention in new business opportunities, including our ACOs and Medicaid opportunities, that may not be successful; the impact of CMS’s final Medicare Advantage reimbursement rates which will reduce Medicare Advantage payment rates for calendar year 2015 and may make it more difficult to maintain or grow our business; we are subject to extensive government regulation and the potential that CMS and/or other regulators could impose significant fines, penalties or operating restrictions on the Company, including with respect to False Claims Act matters or RADV audits; the Affordable Care Act and subsequent rules promulgated by CMS could have a material adverse effect on our opportunities for growth and our financial results; we may experience membership losses in our Medicare Advantage business; if we fail to design and price our products properly and competitively or if the premiums and fees we charge are insufficient to cover the cost of health care services delivered to our members, our profitability may be materially adversely affected; changes in governmental regulation or legislative reform could increase our costs of doing business and adversely affect our profitability; reductions in funding for Medicare programs could materially reduce our profitability; failure to reduce our operating costs could have a material adverse effect on our financial position, results of operations and cash flows; we may not be able to maintain or improve our CMS Star ratings which may cause certain of our plans to be terminated or to receive less bonuses or rebates than our competitors; we may experience higher than expected medical loss ratios which could materially adversely affect our results of operations; changes in governmental regulation or legislative reform, including the impact of Sequestration, could reduce our revenues, increase our costs of doing business and adversely affect our profitability; a substantial portion of our revenues are tied to our Medicare businesses and regulated by CMS and if our government contracts are not renewed or are terminated, our business could be substantially impaired; we no longer sell long-term care insurance and the premiums that we charge for the long-term care policies that remain in force may not be adequate to cover the claims expenses that we incur; any failure by us to manage our operations or to successfully complete or integrate acquisitions, dispositions and other significant transactions could harm our financial results, business and prospects; failure of the APS Healthcare business to retain existing contracts, including its contract with the Puerto Rico Medicaid agency that is expected to terminate on April 30, 2015, or enter into new contracts could further erode the value of the APS business; problems may arise in integrating the APS Healthcare business, which may result in Universal American not operating as effectively and efficiently as expected or failing to achieve the expected benefits of the transaction; Universal American may be unable to achieve cost-cutting synergies arising out of the transaction or it may take longer than expected to achieve those synergies; the APS Healthcare transaction may involve unexpected costs or unexpected liabilities, including litigation stemming from the acquisition; a substantial portion of APS Healthcare’s revenues are tied to short-term customer contracts which generally can be terminated without cause. Other unknown or unpredictable factors could also have material adverse effects on future results, performance or achievements of Universal American.

All forward-looking statements included in this release are based upon information available to Universal American as of the date of the release, and we assume no obligation to update or revise any such forward-looking statements.

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