Medica Sues Minnesota Over Medicaid Contract

Medica claims Minnesota’s Department of Human Services gave preferential treatment to competitors

ST. PAUL, Minn. – Medica is suing Minnesota’s Department of Human Services (DHS) over the state’s handling of Medicaid and MinnesotaCare contracts.

Last year, Minnetonka-based Medica announced that low payment rates were driving them out of the public health insurance programs, saying they would stop serving their 300,000 enrollees on May 1st, 2017.

Just last month, DHS announced they had found a replacement HMO for those who would be without benefits in May following Medica’s withdrawal.

Now Medica has filed a lawsuit claiming DHS gave preferential treatment to competitors seeking to replace Medica. Medica Vice President Geoff Bartsh contends DHS blocked them out of the competitive bidding process, negotiating with some Managed Care Organizations (MCOs) and not others.

“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,” said Bartsh.

One of the terms not previously offered to Medica was a “transition factor” which boosts the payment rates for new insurers picking up Medica’s old cases.

DHS stands by the negotiation process, citing an obligation to bring affordable healthcare to Minnesotans that rely on public programs.

“We have an obligation to ensure continued coverage for the more than 300,000 people affected by Medica’s decision last fall to terminate its contract with the state,” DHS said in a statement, “The Minnesota Department of Human Services is dually responsible for good stewardship of taxpayer dollars and providing access to quality health care for the 1.2 million Minnesotans who rely on our public healthcare programs.”

The 2017 contracts are unlikely to be affected by the lawsuit. Instead, Medica has set their sights on the 2018 contracts, arguing that DHS should re-bid all the public programs.

Christine Bauman