For-profit HMOs will, again, be blocked from Minnesota's Medicaid program [Star Tribune]

Minnesota lawmakers are once again blocking for-profit HMOs from winning managed care contracts in the state's Medicaid program.

The change begins next year and will be felt most immediately by Minnetonka-based UnitedHealthcare and its nearly 32,000 enrollees covered through the state health care programs.

For decades, Minnesota has hired HMOs to serve as managed care organizations in these government-run programs, which primarily serve lower-income residents. The market was reserved for nonprofit health plans up until the Legislature in 2017 voted to drop what had been a 40-year ban on for-profit HMOs.

Opponents have argued that for-profit insurers may be more likely to stint on coverage, although there's a lack of comprehensive research on the subject.

"To me, it's really a systemic problem that we have so much corporate interest in all sectors of our health care, from the provider side to the health plan side," said Rep. Liz Reyer, DFL-Eagan.

UnitedHealthcare, which is the nation's largest health insurer, did not immediately comment. The company currently is the only for-profit HMO in Minnesota Medicaid, which is also known as Medical Assistance, as well as a related program called MinnesotaCare.

At the end of March, the company was managing care for nearly 7.7 million Medicaid beneficiaries in states across the country.

The Health Plan Partnership for Minnesota — a trade group representing for-profit HMOs — called the change discriminatory. The group said the decision is based on unsubstantiated beliefs about differences between for-profit and nonprofit HMOs.

"Creating laws based on myth, rather than evidence, and disrupting health coverage for more than 30,000 vulnerable Minnesotans sets a dangerous precedent," Heidi Holste, executive director of the Health Plan Partnership of Minnesota, said in a statement.

UnitedHealthcare's current contract ends this year, Reyer said, so there was no guarantee UnitedHealthcare would remain an option for beneficiaries in 2025.

Sen. Melissa Wiklund, DFL-Bloomington, called it "prudent" to restore the old approach because lawmakers in 2017 didn't sufficiently study the initial change to make sure care wouldn't be compromised.

Sen. Paul Utke, R-Park Rapids, countered there wasn't time to study the change back then because lawmakers had to respond to a crisis in the health insurance market for individuals. By now, for-profit HMOs have a proven track-record that includes more competition, Utke argued. "There are zero regulatory differences between the two — they all operate under the same framework," he said. "Our own Department of Human Services, they put out requests for proposals and they picked a for-profit HMO."

Medicaid contracts in Minnesota have been a huge source of revenue over the years for health insurers. While there are years when some health plans lose money on the business, it generated record profits in 2022.

At that time, the state Department of Human Services (DHS) said its managed care contracts accounted for about $8.7 billion in annual spending, with coverage provided for about 1.3 million residents. Those figures were somewhat inflated, however, by continuous-coverage requirements during the COVID public health emergency.

As of May, total managed care enrollment in the programs stands at about 1.1 million people, as the state has resumed coverage redeterminations for beneficiaries.

The previous ban stopped for-profit health insurers from obtaining HMO licenses in Minnesota, while the new ban blocks DHS from awarding contracts to these insurers. For-profit HMOs still can be licensed in Minnesota and compete for other types of business, such as customers in the fully-insured markets for groups and individuals.

Reyer said she pushed for the change due to concerns the profit motive has too often pushed health insurers to wrongly deny or delay coverage for needed medical services. There are also concerns about nonprofits denying care, Reyer said, adding that she's "no apologist" for those health insurers.

"Let's face it, for-profit companies exist to legally maximize shareholder value," she said. "That's their requirement."

The new law also prevents for-profit HMOs from winning managed care contracts in the State Employee Group Insurance Program (SEGIP). Currently, the for-profit insurers Humana and Allina Health Aetna also have HMO licenses in Minnesota, although they don't have Medicaid contracts here.

Forty states plus the District of Columbia provide Medicaid coverage through managed care companies, but researchers say there's been a lack of transparency about how well this has worked for beneficiaries. This data void, in turn, has made it difficult to compare the relative quality of for-profit and nonprofit health plans in Medicaid, said Andy Schneider, a researcher with the Georgetown Center for Children and Families, during a University of Minnesota forum earlier this year.

DHS says enrollees that need to change health plans for 2025 will receive a notice as part of the annual health plan selection. They do not need to take any action right now, the agency says. Enrollees typically have a choice between two or more managed care options, depending on their county of residence.

This is a developing story. Check back for updates.

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