Minnesota judge rejects UCare bid to halt sign-ups as insurer seeks new contract

A Ramsey County judge on Thursday declined to issue an injunction that could have kept UCare as an insurer for thousands of low-income Minnesotans receiving public health coverage in 2016.

UCare has charged that it lost out to other health insurers in an unfair bidding process conducted by the state Department of Human Services (DHS), but Judge Robert Awsumb said there hasn't been enough evidence presented to support that claim or disrupt the process of enrolling thousands of Minnesotans into the state's Medicaid and MinnesotaCare programs. Awsumb did schedule an expedited trial for Nov. 2 to consider arguments on both sides.

In the interim, DHS will start next week enrolling low-income Minnesotans into managed care plans provided by a variety of insurers that bid successfully — including a division of Blue Cross Blue Shield of Minnesota, Medica and HealthPartners.

Enrollment will be complicated by the fact that roughly 370,000 Minnesotans now covered by UCare plans will need to be switched to new insurers for 2016. But state Human Services Commissioner Lucinda Jesson said that would have been even tougher if the injunction had disrupted the process.

"That would have really harmed our ability to make this transition smooth and I think the judge recognized that," she said. "We need the time to do this right."

UCare has provided coverage for low-income Minnesotans for decades. Executives for the health plan argued that as many as half of its 900 employees could lose their jobs if they weren't allowed to continue serving this population.

The judge acknowledged that it could be "significant and quite possibly devastating" for UCare to lose its business in state public programs next year, but noted that others such as Blue Cross had lost public program bids in the past and survived. Few insurers are as dependent on public program business as UCare, though. Approximately half of its $3 billion in revenue in 2014 came from state public programs.

"Our intent at this time is to continue to pursue all available options to remain a choice for high-quality coverage and services for low-income individuals and families," he said.

A key missing piece of information for the judge was bidding process scores that reveal how UCare stacked up against the other health insurers. By law, that information cannot be released publicly until contracts with the winning insurers are signed. That process is taking place over the coming weeks but could be delayed in some counties if they choose to appeal the plans the state offers to their low-income populations.

Jesson said she welcomes the public release of that information as soon as legally possible: "I think people will see this was a fair process and UCare competed on a level playing field."

UCare argued in its lawsuit that competitors received key financial data that tainted the bidding.

The judge said the damage to UCare by not providing an injunction would be limited if it prevailed in the trial and was allowed back into the enrollment process before the start of 2016.

For now, the judge wrote that "Minnesota is blessed with a plethora of health insurers with a high level of competence and, importantly, [are] willing and able to take on the risk and efforts required to serve the state's low-income and vulnerable populations."

Critics have questioned whether the Human Services Department is capable of handling such a massive transition of low-income Minnesotans to new plans. Glitches emerged last year as the department switched to using a MNsure system to determine if people were eligible for publicly subsidized health benefits. The result was a backlog that peaked at 180,000 cases in July of people whose eligibility for renewal for Medical Assistance and MinnesotaCare plans hadn't been determined.

Jesson said the state now has the added time and staffing to help low-income Minnesotans choose their plans for 2016. If they don't make a choice, those who are eligible will have one selected for them.

"No one is going to lose their coverage through this process," she said. "We have the capacity to deal with this."