How were managed care contracts determined prior to competitive bidding?
Prior to competitive bidding, managed care contracts were developed by taking historical costinformation for enrollees and then adjusting these costs for changes in benefits, programeligibility and cost/utilization trends. These factors were used to set the rates the plans receivedfor covering enrollees. All health plans received the same rate per enrollee, even if theirprojected costs were less than the specified rate. As a result, plans did not have incentives toaccept lower rates.
When did DHS begin competitive bidding for managed care contracts with health plans?
In February 2011, Governor Dayton released his budget proposal, which included a competitivebidding process for awarding state health care contracts beginning in 2012.
How are managed care contracts determined under the current competitive bidding process?
Prior to competitive bidding, all health plans were paid a standard monthly rate for all enrollees(see #5 above). Under competitive bidding, instead of a standard rate, plans providing coveragein the seven-country Twin Cities Metropolitan area were required to submit a bid for a monthlypayment amount per enrollee. The health plans provided bids by county and the state assessedthe bids based on the quality and cost. The state then selected two plans which to contract ineach county. For Hennepin, Ramsey and Dakota counties, the state included a third health plan,due to higher volume of enrollees in these areas.
How did UCare come to donate $30 million to Minnesota?
On March 14, 2011, UCare informed the state that it intended to donate $30 million from its
reserves to the state, citing the state’s severe budget deficit as the reason for the donation.
Thedonation was made voluntarily. The state did not ask UCare for the donation, nor was thedonation made in return for other payments.
What was the one percent cap on health plan profits that was negotiated in 2011?
When the Dayton Administration came into office in 2011, the managed care PMAP contractsfor 2011 were already in place. In light of recent past earnings by the health plans, health planreserves and the historic budget deficit, in late March 2011 the state asked the plans to agree tovoluntarily cap their profits at 1 percent of revenue for the state health care program. Thehealth plans agree to the cap and the contracts were amended to reflect the agreement.Revenue exceeding one percent in 2011 would be returned to the state in 2012.
How did the one percent cap affect the status of UCare’s $30 million donation?
In November 2011, the state received the $30 million donation from UCare. DHS believes thesefunds were a bona fide donation. The state did not believe the donation was a return of Medicaid dollars to the state, for which half would have to be returned to the federal
government under the state’s Medicaid