UCare pushes back as state pulls Medicaid, MinnesotaCare business

UCare is pushing back after the state decided to take away 70 percent of the health plan's business.

UCare officials met with senior Dayton administration staff Monday but still want to make their case directly to the governor. Without the intervention, UCare will lose 360,000 clients who will have to find another plan, and competition in the marketplace will suffer, said UCare CEO Jim Eppel. But the state Department of Human Services, he said, isn't budging.

"We have talked extensively with the team at the Department of Human Services and we felt like we needed to elevate the conversation to the governor's office," Eppel said.

UCare is proposing to keep serving clients in dozens of counties that have previously expressed a preference for UCare. DHS says 55 of Minnesota's 87 counties recommended UCare.

"I think it's a fairly logical position," Eppel said. "We've had a ground swell of support and communication from the provider community, from the advocacy groups from the various constituency groups from the state."

Before leaving for a trade mission to Mexico today, Gov. Mark Dayton told reporters he plans to meet with UCare when he returns, but that he hasn't decided anything.

DHS Assistant Commissioner Nathan Moracco says there's no mystery behind why UCare lost the 2016 contracts. The company's products didn't score as high as the competition on cost and quality measures. Moracco says UCare simply lost out.

"It's clear that what we're looking for is high value and low cost, and in this round the competition had just done a better job than UCare," he said.

Moracco is promising smooth transitions for UCare clients who have to find a different health plan. He also says he hopes UCare will be back to bid in the next contract round which could be as soon as two years from now.

At the moment, however, Eppel says it's unlikely UCare will bid for the state's business in the next contract round because it will be difficult to scale up again. Right now, he says the business has to shrink, and he's trying to figure out how many of the company's 900 employees will be let go.

There's plenty of angst at UCare following the loss of so many public contracts, said Dan Thole, a claims processor who's worked at UCare for more than four years.

"For sure there's a sense of shock and disappointment," he said at a coffee shop across from UCare's headquarters. "I think everybody walks by in the hallway wondering, 'Well, I wonder how I'm doing, I wonder how many of us we're really going to need come Jan. 1?'"

Thole says management has been up-front with workers about the uncertainty and likely job losses and that he and many other UCare employees are busy tapping their networks in search of options.

UCare dates back to the mid-1980s. The University of Minnesota Department of Family Practice and Community Health started the plan as a safety-net for people who had poor access to health care. Three decades later, UCare is independent from the U of M. The business has expanded and now offers individual coverage and supplemental Medicare plans.

Minnesota Association of Health Underwriters President Heidi Michaels is a fan of UCare and worries about its future.

Her immediate concern is that UCare won't charge enough for individual and family coverage. Low prices could bring in more business but also could leave UCare without enough money to pay all claims. That's what happened with PreferedOne. It happened again with BlueCross Blue Shield of Minnesota this past year. Both companies experienced substantial financial losses after people who enrolled in a plan through MNsure used more health care than the insurers expected.

"The concern now is that UCare doesn't have that bigger block of business to support a huge amount of claims," Michaels said.

Eppel, however, said the loss of the public program business will not lead to higher prices for UCare's individual health plans. Although UCare is losing the vast majority of its Medicaid business, it will retain about 25,000 disabled and senior citizen Medicaid customers. UCare plans to expand its Medicare business and will be looking for ways to offer more products on the individual market which it entered last year, he said.

Regardless of whether he can get the governor to change DHS' plan, Eppel insists UCare will survive.

"There's no question about that. We've been here a long time. We're going to be here a long time. This is a retooling. It's a refocusing."