Medica and Mayo partner on new health plans

Sept. 14--Minnetonka-based Medica plans to start courting business from health systems across the country that want to develop insurance policies for their regional markets, and will offer access to the Mayo Clinic for complex care as part of the deal.

The initiative announced Thursday would let Medica partner with health care systems that increasingly are looking to create "accountable care organizations" where insurers and care providers share the financial risks and rewards of financing care for large groups of people.

For Medica, it's another example of how the health insurer is trying to grow outside Minnesota at a time when insurance giant UnitedHealthcare, which also is based in Minnetonka, is trying to expand within the state's health plan market.

"We will go to basically new markets, and we will work with local delivery systems and bring a solution to that market," said John Naylor, the Medica chief executive, in an interview. "Members in that market would be able to access Mayo for serious and complex care."

Medica and Rochester-based Mayo Clinic did not release financial terms.

Mayo Clinic is not participating on the insurance side of the arrangements that Medica would negotiate with regional health care systems, said Dennis Dahlen, the chief financial officer at Mayo Clinic, in an interview.

Whereas Minneapolis-based Allina Health System and national insurer Aetna have jointly invested in a new company that will sell coverage in the Twin Cities, Mayo Clinic is not an equity holder in any of the collaborations that Medica would negotiate with regional health care systems.

"Having Mayo as a provider as part of the network for specialty and complex care opens the playing field a bit to the kind of provider networks and organizations that Medica can work with in the local markets," Dahlen said. "They don't have to have an academic medical center presence, for example, to do the complex oncology and orthopedics or whatever else. We can provide that."

Dahlen added: "This is a joint effort, but not a joint venture. ... We're interested in making Mayo available to as many patients as possible."

The announcement comes about a year after Medica acquired a division of the Mayo Clinic that served as the third-party administrator for more than two dozen employer health plans, including the plan for Mayo employees. On Thursday, Mayo and Medica said administration for those health plans including Mayo Clinic staff will transition to Medica beginning Jan. 1.

In recent years, Medica has expanded beyond its operating base in Minnesota, North Dakota and Wisconsin via the federal Affordable Care Act. Medica has expanded to the individual markets in Iowa, Kansas and Nebraska, and expects to start selling next year in Missouri and Oklahoma.

In Minnesota, Medica is losing revenue as its long-standing relationship ends with UnitedHealthcare, whereby the national insurer paid fees so enrollees in the state could use Medica's network of doctors and hospitals. United is building its own network of health care providers as it tries to sell more coverage in the state to employer groups and Medicare beneficiaries. A Medica spokesman said the annual fees amounted to less than $5 million in revenue.

For 2017, Mayo Clinic reported net income of $707 million, up 49 percent over the previous year, on $11.99 billion in revenue. Medica last year posted net income of $146.9 million on $3.72 billion in revenue.

Twitter: @chrissnowbeck

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