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Diving brief:
- Minnesota will no longer allow for-profit health insurers to participate in its Medicaid program starting in 2025, under a provision of an omnibus bill promulgated last week.
- The ban will only immediately affect UnitedHealthcare, which is the only for-profit managed care organization with a Medicaid contract in the state.
- Minnesota Medicaid covers approximately 1.1 million people, with UnitedHealthcare covering more than 31,000 of that population.
Dive overview:
The legislation restricts Medicaid contracts to nonprofit entities, reinstating Minnesota's four-decade ban that was briefly overturned in 2017 by the then-Republican state Legislature. Before the 2017 repeal, Minnesota was the only U.S. state which prohibited for-profit companies from selling health insurance.
Now, again, “the commissioner shall not enter into a contract with any health maintenance organization” unless it is a non-profit corporation or a governmental unit. read the billwhich was passed by the Democratic-controlled Minnesota legislature on May 19. It was signed into law Friday by Governor Tim Walz, also a Democrat.
Medicaid managed care, in which states pay private health insurers a flat rate per enrollee, has become the dominant Medicaid delivery system in the United States. The programs can be a major source of revenue for insurers – Minnesota managed care contracts represent $8.7 billion in annual spendingaccording to the state Department of Human Services (DHS).
However, insurers face growing criticism for restricting care to keep more Medicaid revenue as profits. Because companies are paid on a capitation basis, they may have an incentive to deny or limit medical services to pocket a larger share of the health care budget.
This incentive has underpinned recent concerns about the adequacy of Medicaid managed care plans. Leading Democrats in Congress launched an investigation into the quality of MCOs last year, following research findings high coverage denial rates.
Concerns are heightened when insurers are motivated by profit, according to supporters of the Minnesota ban.
Minnesota audience members included in a DHS study of the state's insurance markets said they place a high value on insurance coverage and care provided by nonprofit organizations. They also believe that nonprofits are more engaged with the community and more responsive to local needs.
Yet data is scarce on the differences between for-profit and nonprofit businesses. HMOincluding regarding operations, quality of care and member satisfaction, according to the DHS report released in February.
A UnitedHealthcare spokesperson said in a statement that the company was “deeply disappointed” by the legislation, which “was added in a closed-door process, without public input, and appears to specifically target a local company which employs more than 19,000 people. in the state.”
“This legislation is unnecessary and will disrupt health care coverage for more than 31,000 Minnesotans while taking away choice from many others by creating a less competitive market,” the spokesperson continued.
Minnesota isn't the only state shaking up its Medicaid providers. Several others have recently replicated contracts.
Earlier this month, Kansas awarded contracts to incumbents UnitedHealth and Centene, while replace CVS with an Elevance plan.
Florida issued Medicaid awards in Aprilrenewing contracts with Centene, Elevance and Humana but removing UnitedHealth, CVS and Molina from the state. Molina has already announced his intention to contest against the decision, while UnitedHealth indicated it would also protest. Molina is also challenging a recent Medicaid contract loss in Virginia.
New Hampshire and Michigan as well reproduced offers earlier this year, with Centene renew your contract in New Hampshire. Michigan Awards Essentially Preserved the status quo in the State, with CenteneCVS, Molina and UnitedHealth reproduction contracts with minor membership changes.