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Matt Sepic

Medica sues Minn., alleging competitors got better rates

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Medica on Tuesday sued Minnesota's Department of Human Services, alleging the state gave preferential treatment to competitors in contracts for state-sponsored health care.

Medica and several other plans together serve the 1.2 million people enrolled in MinnesotaCare and Medical Assistance. Medica manages care for about 320,000 of those enrollees.

Among other things, Medica claims DHS secretly increased the rates it pays the other managed care organizations, and allowed them to re-negotiate contract terms with the state.

Medica Vice President Geoff Bartsh said that violates state laws that govern public contracts.

"The state negotiated with some MCOs but not all, specifically Medica, on rates and terms for the 2017 contract, and they not only did not include Medica in that process but offered terms they had previously not offered to Medica," Bartsh said.

In a statement, DHS said it negotiated in good faith, and is fully aware of its responsibilities to taxpayers and the law.

As of May 1, Medica will no longer manage care for people who use MinnesotaCare and Medical Assistance, but Bartsh said the company is working with the state to transition members to other plans.