Mankato Clinic gets cheaper rates for Preferred One

Feb. 27--MANKATO -- The Mankato Clinic estimates it lost roughly 2,000 state employee patients when an insurance carrier put them in a category of coverage that was more expensive than its competitor.

But now, after negotiating with the Preferred One insurance company, Mankato Clinic is back to the price tier it was in before it was recategorized. The change will take effect Saturday.

Mankato Clinic CEO Randy Farrow said the clinic's decision to make further cuts in prices was prompted in part by the number of patients they heard from who wanted to stay with the clinic but couldn't afford to pass up cheaper rates elsewhere.

"We were kind of frustrated this time around with the process," Farrow said. "We didn't think it was very transparent with the data and why we were being placed in a higher tier."

Farrow said the clinic served roughly 6,500 state employees before the tier changes. After the changes -- where the clinic got moved up to a costlier tier for state employees who chose Preferred One while its main competitor, Mayo Clinic Health System in Mankato, went down to a cheaper tier 2 -- about a third of the employees left, most going to Mayo.

"We learned a lot through the process, got some of our state representatives involved," Farrow said.

The hit has been significant, Farrow said. Making the necessary changes to secure the preferred tier designation is expected to cost the clinic about $2 million in revenue.

But Farrow said they're hoping to lure back some of those who left. When the initial changes were announced, the clinic sent letters to all state employees explaining their position and that they wanted current patients to stay. They'll do the same now, with this latest letter explaining the Preferred One plan cost is now in line with their competitors and they'd like to have them back.

"We had heard from a lot of people who said they wanted to stay, but they had to make a budget decision," Farrow said. "And now we welcome them back. We value the relationship we've had with those patients over the years. We felt bad. We knew it was putting people in a tough position."

The differences in prices were significant. For example, typical office visits for an individual on a tier 2 plan would cost about $23 versus $36 for a tier 3 plan. For deductibles, tier 2 was $180 for individuals and $400 for families. In tier 3 those numbers are $360 and $800 respectively. Maximum out-of-pocket costs for an individual in tier 2 are $1,100 and $1,500 for families. In tier 3, those numbers are $2,200 and $3,000, respectively.

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