Amerigroup Wins Medicaid Expansion in Texas

Company Retains Existing Business and Will Enter New Service Areas

VIRGINIA BEACH, Va. (Aug. 1, 2011) – Amerigroup Corporation (NYSE:AGP) today announced that it has won its bid to retain and expand its presence in Texas, the Company’s largest market. The award was announced by the Texas Health and Human Services Commission (HHSC) today as part of a statewide competitive‐bidding process that will significantly increase the role of Amerigroup in the STAR, STAR+PLUS, and CHIP programs.

As of June 30, 2011, Amerigroup served approximately 593,000 members. Under the new award, the Company will retain all existing products in the following markets: Austin, Dallas/Fort Worth, Houston (including the planned September 1st expansion into the Jefferson service area), and San Antonio. The Company will no longer participate in the Corpus Christi area, for which it currently serves approximately 10,000 members.

In addition, the Company will begin providing prescription drug benefits for all products and, pending final approval of the State’s CMS waiver, in‐patient hospital services for the STAR+PLUS program.

HHSC also awarded Amerigroup the following new business:

  • STAR and STAR+PLUS products in the Lubbock service area;
  • STAR+PLUS product in the El Paso service area;
  • CHIP product in Austin; and,
  • STAR product in all three rural service areas, which includes 164 counties previously served by a primary care case management program.

With this procurement, Amerigroup is expected to remain the largest Medicaid health plan in the State of Texas.

“Texas has been a national leader in using innovative private sector solutions to improve health outcomes for its citizens, while simultaneously saving taxpayer funds. We are grateful for the Health and Human Services Commission’s confidence and are committed to meeting their fiscal and healthcare goals,” said James G. Carlson, Amerigroup Chairman and Chief Executive Officer. “While we have not received rates, our preliminary estimate for this award represents over $1 billion in incremental annualized revenue.”

"We are excited about retaining our existing markets and expanding into new areas of Texas,” said Aileen McCormick, West Regional CEO for Amerigroup. "We are especially pleased to help more Texans
access care and improve their health outcomes. This award recognizes our positive experience
throughout other parts of the State, and we are happy to expand our partnership with HHSC.”

Pending final contract negotiations, the Company anticipates beginning operations for new markets and products in early 2012.