As the newest member of the InComm Inc. family, Medagate Corp. hopes to reach more retailers and expand its restricted-spend prepaid card platform beyond health care and into everyday products.
Announced Feb. 13, InComm’s acquisition of Medagate enables InComm to gain a foothold in the growing health care payments sector. InComm bought all of the outstanding stock of Megadate, which is now a wholly owned subsidiary of InComm. All Medagate employees remain, and Medagate management continues to run the daily operations.
InComm and Medagate had partnered in 2010 to provide Medicare users and participating health-plan members a way to pay for a limited catalog of over-the counter items with a reloadable prepaid card instead paying out of pocket and going through a reimbursement process.
Medagate developed the card-issuing platform that allowed catalog options, and InComm provided the retailer network for integration. Three of those retailers–Walgreen Co., Rite-Aid Corp. and CVS–provide nearly 20,000 outlets alone.
Since the companies formed their partnership, Medagate has added 10,000 other retailer outlets, Medagate CEO Devin Wade tells PaymentsSource.
Health plans that sponsor and market Medagate’s prepaid card to members load the card accounts with an amount members may spend only on selected over-the counter items to guard against them using health-plan funds to buy for beer or cigarettes, for example. Medagate charges health plans a monthly per-member fee.
Wade says he hopes to use InComm’s resources to expand into Medicaid, add more private insurers and retailers, and boost efforts in cards that pay for vaccinations. He also hopes health plans use Medagate’s platform for health care rewards for members who follow health and wellness plans or reach certain health goals. Also, Medagate wants to use its catalog platform beyond health care by allowing retailers to customize card-connected catalogs into any category of product.
Medagate welcomes the nation’s changing health care landscape, Wade says.
“Medicaid roles will expand, and as they expand states are really forced to micromanage dollars,” he says. “Our ability to restrict spend is highly desirable. We’ve been talking with many states about our Medicaid programs, but we also have private plans that manage Medicaid that use our card as effective incentive tools.”
Two such incentives include gift cards or prepaid cards whose accounts are loaded with rewards funds spendable only on health care items.
Kunal Pandya, a senior analyst covering health insurance and payments for Boston-based Aite Group, says InComm’s purchase of Medagate is a smart one.
“With more companies trying to incorporate prepaid into health care, I think the market will grow, but it’s still a very small market,” he says. “If you look at it strictly from a health care perspective, there’s definitely growth, but it’s how they approach the model. Right now, it’s limited to cash incentives based on health-and-wellness programs, and mainly from the transaction. How they extend the program into other areas will be interesting.”
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