insurance042208

On the homepage

Sunday's paper

Only in your Sunday Star Tribune

Out There

Music

New, and old, kids at the block party

Tour de France

'Really long, hard climb'

Home | Business

County HMO gets $6 million bailout

Hennepin County officials said an obsolete system caused billing errors. The problem raised questions about the program's future.

By DAVID PHELPS, Star Tribune

Last update: April 21, 2008 - 10:00 PM

Print this story

Minnesota business by the numbers

See Minnesota's top earning companies, CEOs and non-profits

More from Business

Metropolitan Health Plan, Hennepin County's insurance program for the needy, required a $6 million emergency bailout late last month to meet minimum reserves and stay in compliance with state law.

An antiquated billing system was blamed for much of the financial shortfall when the plan learned from auditors that it was overpaying some care providers and underbilling others. But members of the Hennepin County Board who approved the cash infusion expressed concern about the development, and one commissioner asked if the county should be in the HMO business.

"This raises questions from people about what is the long-term prognosis for the county," said Commissioner Penny Steele. "I've got to look at the long term and decide whether this is a viable enterprise for Hennepin County to be in."

Said Commissioner Gail Dorfman: "It was a surprise to everyone."

Metropolitan Health Plan (MHP) has about 25,000 enrollees who are part of government-backed programs such as Medicaid, MinnesotaCare and General Assistance Medical Care.

The HMO also provides Medicare coverage.

The $6 million transfer was the first request for county funds since Hennepin County spent $1 million to get Metropolitan Health Plan off the ground in 1983.

"We came to discover a payment problem late last year," said plan Chief Executive Officer David Johnson. "By February, we had a greater grasp of the problem. It's a slow, arduous process" sorting through billing records.

Compounding concern about the plan's condition is the departure of two of its top executives. Finance director David Edwards retired earlier this spring and Johnson is retiring at the end of May. Both retirements were expected, Dorfman said.

Steele said she was surprised by the March 25 request for $6 million. Asked if that seemed like a lot of money, Steele replied, "Yes, totally."

In a recommendation to the county board, Hennepin County Administrator Richard Johnson said that if the transfer isn't made, MHP could become subject to the direction of state regulators, who could force the county to fund the shortage or, ultimately, take over administration of the plan.

"We had no choice," Dorfman said. "We weren't entirely happy about it." She said any money recovered by MHP as it reviews its records will go into the county's general fund. But "I'd be really surprised if they identified $6 million."

David Johnson said the plan's billing and payment system is old and not up to speed with the new technology for processing complex medical cases. "We've kind of reached our technical life span," he said. "We're heading toward obsolescence."

The next step for MHP and the county is to find and implement a new billing system, which is likely to be expensive.

"I think we'll be bringing in consultants so this doesn't happen again," Dorfman said.

David Phelps • 612-673-7269

Comment on this story | Read all 12 comments | Hide reader comments

Blog: Patent Pending

U to host big conference

The University of Minnesota will host the annual conference of the Association of University Research Parks in 2010. The conference will focus on ways research parks and innovation can aid the world’s economic recovery. Pretty good timing for the U. Through state-approved bonds, the school is spending $292 million to build four biomedical buidlings on its [...]