Review raises questions about payment rates to HMOs

A review of how the Pawlenty administration set payment rates for HMOs managing care for public health programs raises questions about high profit margins for the private health plans.

The audit is one of several underway and comes in response to questions from the federal government about whether the state's managed care contracts for public programs have been too generous.

The report by Segal Company, an actuarial consulting firm, said the Pawlenty administration, the state's actuary and the federal government all missed opportunities to hold down payment rates.

Human Services Commissioner Lucinda Jesson said the Dayton administration commissioned the outside audit after the federal government questioned the state's rate-setting process in previous years. Jesson calls the findings troubling.

"It does find that for the years steady between fiscal years 2003 and 2011, the rates were as required by law actuarially sound every single year," Jesson said. "But I think very clearly makes the point that across time in totality, the rates were just too high."

Pawlenty has said he had no indication or reason to believe anything was done incorrectly or that the state overpaid.

A trade organization for health plans says there are no data in the report to support the contention that the profit margins were too high. The full report will be released at the end of the month.

"The Segal report argues that the Minnesota health plans' profit margins were high but we don't see any data in this report to support that," said Julie Brunner of the Minnesota Council of Health Plans.