UCare asks Minnesota judge to halt impending public health program signups as it fights state

Markets Associated Press

The health insurance company UCare has asked a Minnesota judge to halt the state's upcoming sign-up period for public health insurance programs as the coverage provider fights a decision eliminating it from the menu of options.

Continue Reading Below

In a Ramsey County lawsuit filed Wednesday, UCare seeks an injunction delaying 2016 enrollments due to start in early September and asks for the right to negotiate new contracts with the state. The company alleges that the state arbitrarily cut it out during a bidding process for those contracts and failed to follow the wishes of dozens of counties which recommended contracting with UCare.

The Department of Human Service announced in late July that UCare fell short of continued inclusion following a competitive bid process, a decision the company has attempted to appeal with the agency and Gov. Mark Dayton. In its complaint, the Minneapolis company notes both the immense burden of shifting its 370,000 low-income enrollees to new plans and the "irreparable harm" to its business the state's decision would trigger — nearly three-quarters of its customers are on the public programs MinnesotaCare or Medical Assistance.

"The public interest at stake here is significant — as counties and community representatives have expressed their displeasure and disagreement with DHS's announcement excluding UCare from the marketplace," attorneys for the company argued in a lawsuit that also criticizes the state for an "extreme decision to completely and abruptly exclude UCare."

The state contracts with health plans to cover hundreds of thousands of residents on its public health programs. For the first time this year, state officials put those contracts out to bid statewide — a move that Department of Human Services Commissioner Lucinda Jesson said last month would save $450 million over the next two-year contract starting in 2016.

In response to UCare's lawsuit, the Department of Human Services stressed those savings and said it was reviewing the complaint. The state has 20 days to respond.

Continue Reading Below

UCare Chief Executive Jim Eppel said this week the company has received little explanation as to why it was ultimately excluded after bidding for the contracts. State officials say they can't release much information about their decision until after the process is finalized.

Besides forcing the coverage switch for people in the subsidized Prepaid Medical Assistance Program — Minnesota's version of Medicaid — and the premium-based MinnesotaCare program, Eppel told lawmakers that the company may need to slash its workforce of 900 in half. The nonprofit UCare, founded in 1984 in connection with the University of Minnesota Medical School, also has clients on Medicare and commercial plans.

UCare provides at least some level of public insurance program coverage in 71 Minnesota counties. If the decision stands, UCare's public program subscribers would have select new plans before Jan. 1 to avoid gaps in coverage.

In addition to alleging that the state erred by arbitrarily cut out the company, UCare said the state should have heeded the wishes of individual counties. As many as 55 counties recommended continuing their contracts with UCare through 2016 and beyond, the filing notes. An exhibit attached to the court filing includes email correspondence in which county officials ask Jesson for reconsideration.

"I am surprised we lost UCare," Paul Fleissner, director of Olmsted County Community Services, wrote in one. He added, "I know there are other factors when you are making these decisions, but this is going to be impactful."

Several Minnesota lawmakers tiptoed around commenting on whether UCare's lawsuit could succeed, but said they were concerned about the prospect of one of the state's largest providers of public health care programs being removed.

"We have learned a very hard lesson. I hope we haven't done permanent damage to our health care market," said Sen. Michelle Benson, R-Ham Lake.

___

Associated Press writer Kyle Potter contributed to this report.