Medica is poised to return to a large contract in the state's public health insurance programs more than two years after the Minnetonka-based HMO dropped the business.

The state Department of Human Services (DHS) says Medica is one of four HMOs that are finalists for a contract to manage care for adults and children in the state's Medicaid and MinnesotaCare programs.

Medica in 2017 dropped out of a statewide contract for those beneficiaries because of financial losses, and the move prompted about 300,000 people to switch health plans. The contract that's being negotiated involves about 80 counties in greater Minnesota but not the Twin Cities metro.

"It is important to remember that not all enrollees will have to change plans, but may choose to switch plans if they wish," DHS said in a statement to the Star Tribune. "The contracting process is ongoing. Final contract awards will be announced when contracts are executed and submitted to the [federal government] in October."

In a statement, Medica noted that the HMO currently serves as a managed care organization for older adults in two smaller state health care programs.

For decades, Minnesota has hired HMOs to serve as managed care organizations in the Prepaid Medical Assistance Program (PMAP), which is part of the state Medicaid program, as well as MinnesotaCare. Medicaid provides coverage for many groups including Minnesotans living in poverty; MinnesotaCare covers a slightly higher-income group of residents whose employers don't provide job-based health insurance.

In 2018, the HMOs at Eagan-based Blue Cross and Blue Shield of Minnesota, Bloomington-based HealthPartners and Minneapolis-based UCare were the largest managed care organizations in PMAP and MinnesotaCare. A Star Tribune analysis of state filings shows the HMOs for 2018 collectively reported about $69.2 million in net income on about $4 billion in revenue from the programs.

After announcing in late 2016 that it would drop the large state contract, Medica filed a lawsuit against DHS the following spring, alleging that competing health plans were offered better deals to serve as HMOs in the public programs. A judge later tossed the lawsuit.

DHS says the new contract will specify which HMOs will manage the care of about 364,000 people in the PMAP and MinnesotaCare programs. A county-based purchasing group called PrimeWest is also a finalist to manage care in the health insurance programs.

Christopher Snowbeck • 612-673-4744 Twitter: @chrissnowbeck