Medica sues state over public insurance contract - Insurance News | InsuranceNewsNet

InsuranceNewsNet — Your Industry. One Source.™

Sign in
  • Subscribe
  • About
  • Advertise
  • Contact
Home Now reading Newswires
Topics
    • Advisor News
    • Annuity Index
    • Annuity News
    • Companies
    • Earnings
    • Fiduciary
    • From the Field: Expert Insights
    • Health/Employee Benefits
    • Insurance & Financial Fraud
    • INN Magazine
    • Insiders Only
    • Life Insurance News
    • Newswires
    • Property and Casualty
    • Regulation News
    • Sponsored Articles
    • Washington Wire
    • Videos
    • ———
    • About
    • Meet our Editorial Staff
    • Advertise
    • Contact
    • Newsletters
  • Exclusives
  • NewsWires
  • Magazine
  • Newsletters
Sign in or register to be an INNsider.
  • AdvisorNews
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Exclusives
  • INN Magazine
  • Insurtech
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Video
  • Washington Wire
  • Life Insurance
  • Annuities
  • Advisor
  • Health/Benefits
  • Property & Casualty
  • Insurtech
  • About
  • Advertise
  • Contact
  • Editorial Staff

Get Social

  • Facebook
  • X
  • LinkedIn
Newswires
Newswires RSS Get our newsletter
Order Prints
March 14, 2017 Newswires
Share
Share
Post
Email

Medica sues state over public insurance contract

Star Tribune (Minneapolis, MN)

March 15--Minnetonka-based Medica said it has filed a lawsuit against the state Department of Human Services that alleges competing health plans were offered better deals by the state to serve as HMOs in public health insurance programs.

Late last year, Medica said it could not continue as a managed care organization for most in the public programs due to low payment rates, and it gave notice that it would stop doing so for about 300,000 enrollees on May 1.

In February, the Department of Human Services (DHS) announced it had found substitute HMOs for those with benefits currently managed by Medica who must switch to a new plan this spring.

In the lawsuit, Medica argues that DHS did not comply with state procurement laws when hiring these other vendors, according to a filing provided by Medica to the Star Tribune.

Among other things, the state boosted payment rates to competing managed care organizations (MCOs) through a "transition factor" that was never offered to Medica, according to the lawsuit.

"We believe the state violated state procurement law by refusing to include Medica in negotiations that resulted in higher 2017 payments and other favorable terms to other health plans for this business," said Geoff Bartsh, vice president and general manager at Medica for state public programs, in a statement posted Tuesday for company employees.

In a statement, DHS said it negotiated with Medica in good faith and is aware of its responsibilities to taxpayers under current law.

"We have an obligation to ensure continued coverage for the more than 300,000 people affected by Medica's decision last fall to terminate its contract with the state," DHS said. "The Minnesota Department of Human Services is dually responsible for good stewardship of taxpayer dollars and providing access to quality health care for the 1.2 million Minnesotans who rely on our public health care programs."

Medica said it filed the lawsuit Monday in Ramsey County District Court. It marks the second time since 2015 that an HMO has taken the state to court over managed care contracts that collectively are worth billions of dollars in revenue each year for health plans.

DHS started awarding the contracts via competitive bidding in 2012 following concerns at the State Capitol that HMOs were generating too much profit from the agreements. For decades, Minnesota has hired HMOs to manage care for people in the Medicaid and MinnesotaCare programs, which provide coverage for low- and moderate-income Minnesotans.

For 2016, DHS conducted its first statewide bid for the "families and children" contract in the public programs, which is where most people in the programs get coverage.

Minneapolis-based UCare was dramatically downsized as a vendor in that portion of the programs as a result of the bid, with Medica picking up many of UCare's enrollees.

In November, both Medica and the HMO at Blue Cross and Blue Shield of Minnesota reported significant financial losses through the first three quarters of 2016 under the new contracts. Medica cited the financial performance when explaining its decision to not renew the contract.

DHS said in February the state would spend an extra $34 million to fill health plan gaps due to the Medica pullback. UCare is just one of the plans adding enrollees as a result.

Back in 2015, UCare sued DHS over the results of the competitive bid for 2016.

In the new lawsuit, Medica says it does not want to interrupt the upcoming transition of enrollees in May to other health plans. But the HMO is seeking a preliminary injunction because the 2017 agreements with other health plans give those HMOs an "inside track on performance of future years of the contract," the lawsuit states.

"DHS refused to honor its commitment to negotiate new actuarially sound 2017 rates," the lawsuit states. "DHS then began to clandestinely and informally re-procure the managed-care services by soliciting offers from competing MCOs."

The lawsuit adds: "DHS's end-run around the rules has frozen Medica out of the competitive-bid process not just for 2017, but for years to come."

Twitter: @chrissnowbeck

___

(c)2017 the Star Tribune (Minneapolis)

Visit the Star Tribune (Minneapolis) at www.startribune.com

Distributed by Tribune Content Agency, LLC.

Older

EDITORIAL: Brutal CBO score suggests GOP’s Obamacare replacement needs a replacement

Newer

What the budget analysts say about GOP health care bill

Advisor News

  • Succession planning: Building the future of your practice
  • From loss to security: Supporting widowed clients with life insurance
  • Plan now for lower Social Security benefits later
  • The conversation almost no advisor is having yet
  • Why advisors should offer retirement-longevity planning
More Advisor News

Annuity News

  • Empower Annuity Insurance Company of America Trademark Application for “EMPOWER WHAT’S NEXT” Filed: Empower Annuity Insurance Company of America
  • Industry pushes back on linking ‘financial strength’ to annuity illustrations
  • Sammons Enterprises & Sammons Financial Group Respond to Reports
  • The Manhattan Life Insurance Company Acquires Union Security Life Insurance Company of New York
  • Cayman Islands premier to meet with U.S. reinsurance regulators
More Annuity News

Health/Employee Benefits News

  • What Luigi Mangione’s celebrity says about Gen Z (Opinion)
  • New Medicaid rules could hit 600,000 Oregonians. Many may not know it
  • Luigi Mangione’s double jeopardy gambit could see him freed from prison before he turns 60
  • QANDA: FRAUD DRIVES UP HEALTHCARE COSTS
  • New Mexico to continue funding gender-affirming care for minors as Medicaid ends coverage
Sponsor
More Health/Employee Benefits News

Life Insurance News

  • Record IUL sales don’t diminish the need for continued customer engagement
  • Benchmark International Successfully Facilitated the Transaction Between National Group Marketing Trust and New Era Life Insurance Companies
  • Why the bond market is flexing its muscles, and why everyone needs to care
  • An Application for the Trademark “LIVE TODAY, SECURE TOMORROW.” Has Been Filed by Security Mutual Life Insurance Company of New York: Security Mutual Life Insurance Company of New York
  • Modern Woodmen board selects Shea Doyle as next president and CEO
More Life Insurance News

NEWS INSIDE

  • Companies
  • Earnings
  • Economic News
  • INN Magazine
  • Insurtech News
  • Newswires Feed
  • Regulation News
  • Washington Wire
  • Videos

FEATURED OFFERS

Press Releases

  • Classic Car Insurer OpenRoad Insurance Expands to 40 U.S. States in Two Years
  • How Aspire General Turned an Early Technology Bet Into Claims Automation at Scale with Kyber
  • Adjusto launches AI-Native contents claims services powered by its technology platform
  • URL Insurance Group Celebrates 40 Years of Service, Growth, and Industry Leadership
  • MassMutual Ascend Surpasses $2 Billion in Lifetime Advisory Annuity Sales, Reflecting Continued Momentum in RIA Channel
More Press Releases > Add Your Press Release >

How to Write For InsuranceNewsNet

Find out how you can submit content for publishing on our website.
View Guidelines

Topics

  • Advisor News
  • Annuity Index
  • Annuity News
  • Companies
  • Earnings
  • Fiduciary
  • From the Field: Expert Insights
  • Health/Employee Benefits
  • Insurance & Financial Fraud
  • INN Magazine
  • Insiders Only
  • Life Insurance News
  • Newswires
  • Property and Casualty
  • Regulation News
  • Sponsored Articles
  • Washington Wire
  • Videos
  • ———
  • About
  • Meet our Editorial Staff
  • Advertise
  • Contact
  • Newsletters

Top Sections

  • AdvisorNews
  • Annuity News
  • Health/Employee Benefits News
  • InsuranceNewsNet Magazine
  • Life Insurance News
  • Property and Casualty News
  • Washington Wire

Our Company

  • About
  • Advertise
  • Contact
  • Meet our Editorial Staff
  • Magazine Subscription
  • Write for INN

Sign up for our FREE e-Newsletter!

Get breaking news, exclusive stories, and money- making insights straight into your inbox.

select Newsletter Options
Facebook Linkedin Twitter
© 2026 InsuranceNewsNet.com, Inc. All rights reserved.
  • Terms & Conditions
  • Privacy Policy
  • InsuranceNewsNet Magazine

Sign in with your Insider Pro Account

Not registered? Become an Insider Pro.
Insurance News | InsuranceNewsNet