Minnesota awarding contracts worth $5 billion to Medicaid health plans

Minnesota has awarded contracts worth about $5 billion next year to health plans that will pay for and manage the medical needs of about 600,000 people.

The contract awards, which were announced this week by the state Department of Human Services, cover the primary health insurance programs for lower-income state residents outside the metro area.

Minnetonka-based UnitedHealthcare, which last year became the first for-profit HMO to win a contract in the public programs, was among the winners, picking up business in two counties.

Under the contracts, Eagan-based Blue Cross and Blue Shield of Minnesota and Minnetonka-based Medica will see even larger expansions. Bloomington-based HealthPartners, meanwhile, will no longer be an option in 22 counties across central and northern Minnesota.

For decades, Minnesota has hired HMOs and county-based purchasing organizations to manage care for enrollees in the public programs, which are jointly funded by the state and federal governments. While health plans can make money on the contracts, the funds mainly pay for health care services.

Before 2017, state law blocked for-profit HMOs from bidding on the contracts.

The latest procurement covered 80 counties in greater Minnesota for the families and children portion of MinnesotaCare as well as prepaid Medical Assistance (PMAP), which is Minnesota's largest program for Medicaid beneficiaries. The insurance programs provide coverage for lower-income Minnesotans.

"These contracts are expanded to improve timely, equitable access to care," Human Services Commissioner Jodi Harpstead said in a news release.

The state also awarded contracts to manage care across all counties for older adults and adults with disabilities who qualify for three smaller public programs.

Contracts are awarded on a county-by-county basis, which means residents choose from different sets of health plan options depending on what county they live in. With the new contracts, nearly 31,000 people in public programs will need to pick a new health plan or have one assigned to them.

Other contract winners include: Hennepin Health, Itasca Medical Care, PrimeWest Health, South Country Health Alliance and UCare. All health plans that currently have managed care contracts in the public programs will return for 2023 in at least one county.

HealthPartners remains an option in 12 counties, but decided to pull back its service area due to "the uncertainties the pandemic and federal public health emergency have created for the market," the insurer said in a statement to the Star Tribune.

The Department of Human Services in conjunction with county officials scored bids, with priority placed on how the health plans will address "equity, eliminating disparities in health outcomes and responding to the needs of rural Minnesotans," DHS said in a news release.

"For older Minnesotans and adults with disabilities, DHS prioritized stability and continuity of care by ensuring that these enrollees could keep their current health plans," the department said.

Last year, UnitedHealthcare was among the winning bidders on contracts to manage care for about 700,000 people in the seven-county Twin Cities metro.

Altogether, managed care contracts in the state public programs account for about $8.7 billion in annual spending, with coverage provided for about 1.3 million residents.