Minnesota nonprofit HMOs to pay state $73 million [Pioneer Press, St. Paul, Minn.]

April 03--The state and federal government will split $73 million in expected repayments from Minnesota's HMOs as a result of a cap on health plan profits during 2011.

State officials expect to receive the funds by this summer and anticipate that about half the money will go to the federal government, according to an announcement Tuesday, April 3, from Gov. Mark Dayton.

For years, the state has hired nonprofit health maintenance organizations to manage the care for most people enrolled in the state's two largest public health insurance programs. Called Medicaid and MinnesotaCare, the programs are jointly funded by the federal government.

For more than a year, questions have roiled the Capitol about whether state contracts have provided too much profit for health plans. Last year, HMOs and the Dayton administration re-negotiated contract terms so that health plans' operating profits from the two programs during 2011 would be capped at 1 percent of revenue.

"Today does mark a real milestone in our administration's efforts to transform the way we pay for health care," said Lucinda Jesson, the commissioner of the Department of Human Services, during a Tuesday news conference at the Capitol. She added that the cap "gave us some much-needed dollars."

Bloomington-based HealthPartners is expected to pay $31 million because of the cap, while Minnetonka-based Medica will pay $25 million. Eagan-based Blue Cross and Blue Shield of Minnesota will pay $9 million while Minneapolis-based

UCare will pay $8 million.

The UCare repayment comes on top of a $30 million contribution the health plan made last spring to help the state government bridge a massive budget deficit.

Past contracts between the state and HMOs were "too generous with the taxpayers' money," said Dayton, a Democrat. The one-time cap on profits in 2011 was negotiated for the third year of a three-year contract that Dayton said was negotiated during the administration of Republican Gov. Tim Pawlenty.

Going forward, HMO contracts in the metro are being awarded through a competitive bidding process that will be extended elsewhere in the state, Jesson said.

But Sen. David Hann, a Republican from Eden Prairie, disputed the idea that HMO profits in excess of 1 percent in the public health insurance programs were necessarily indicative of a problem.

"I don't believe that the margins that are being generated by private entities are necessarily atypical," Hann said. "The real question is whether we want to have the marketplace play a role in what we do in health care policy....I think we do."

At the Legislature on Wednesday, Hann expects to offer an amendment to a health and human services bill in the Senate that would spend the state's share of the HMO repayments. Possible beneficiaries, Hann said, include an emergency medical assistance program as well as personal care assistants who saw their pay from the state cut last year.

At his news conference, Dayton also mentioned the personal care attendants as a potential beneficiary. Last year, the state reduced by 20 percent the pay of personal care assistants who provide care for their relatives.

Christopher Snowbeck can be reached at 651-228-5479. Follow him at twitter.com/chrissnowbeck

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