UCare sues to keep access to Minnesota public health plans

Aug. 20--Health insurer UCare, which lost big in Minnesota's recent competitive bidding for its Medicaid and MinnesotaCare health customers, has filed a lawsuit to change that ruling.

"We believe that despite the state's best intentions it acted improperly and contrary to law in deciding to exclude UCare," UCare's general counsel Mark Traynor said in a statement.

UCare is seeking an emergency injunction in Ramsey County District Court asking the state to let public plan enrollees choose UCare in the upcoming open enrollment.

Before the competitive bidding, UCare had the lion's share of the public health plan market. It managed 360,000 enrollees, all of whom will have to switch to different providers unless UCare overturns the state's decision. But the bid results released last month saw UCare fail to win access to a single Minnesota county.

The loss was a huge blow to the Minneapolis-based company. About half its $3 billion in revenue last year came from public program enrollees.

"Because of the significant reduction in membership and revenue, UCare will be forced to eliminate hundreds of jobs" if it loses these plans, the company's lawsuit claims.

Open enrollment under the new bidding is scheduled to start Sept. 1.

State officials haven't released the exact figures showing why UCare fell short of other providers, chiefly Blue Plus, HealthPartners and Medica. They're keeping those scores secret until final contracts are signed.

Generally, cost made up 45 percent of the bid, while care quality made up the other 55 percent.

Before competitive bidding, all qualified health plans could contract with the state to manage public health plan enrollees. They would then compete for those enrollees.

UCare's lawsuit argues that the state's competitive bidding process was arbitrary, that its guidelines were more ambiguous and uncertain than state law allows for competitive bids, and that excluding UCare through the bidding process violated "statutory mandates for free choice."

It also claims that at least 47 different county boards passed resolutions recommending that DHS contract with UCare, and says the state released confidential UCare data to other plans as part of the bidding, which "potentially gave other plans a competitive advantage."

"UCare will suffer irreparable harm if DHS excludes UCare from the opportunity to provide health care services to eligible recipients of (public health plans)," the lawsuit concludes. "The public interest favors allowing UCare the opportunity to provide health care services to eligible (public plan) recipients... in the counties that recommended UCare."

On Tuesday, Gov. Mark Dayton said he'd listen to UCare but was unsympathetic to their complaints.

"In my experience, almost everyone who doesn't get a positive result for themselves or their organization blames the process," Dayton said. "The bottom line is, this is a competitive bid process and they didn't measure up to the competition according to the criteria that were established in terms of price and in terms of quality of service, as relayed by the county workers and other factors."

Dayton also criticized state procurement law that prevents the bid scoring from being divulged "to UCare itself, much less to the press or the public" as an "absurd process." He said he was legally forbidden from revealing some of the reasons why UCare didn't win any county bids.

By seeking statewide competitive bids for the first time, the state projects it will save taxpayers $450 million next year, though some experts believe the actual figure could be lower. A majority of those savings go to federal taxpayers, while a projected $173 million will flow to the state's bottom line.

David Montgomery can be reached at 651-224-5064. Follow him at twitter.com/dhmontgomery.

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