The Minnesota Department of Human Services (DHS) followed the law and used reasonable standards when evaluating competitive bids for public health insurance programs this year, according to a report released Tuesday by the state’s Office of the Legislative Auditor.

The report concludes that DHS used a “reasonable and inclusive process” to generate a request for proposals from HMOs and county-based groups hired by the state to manage care for public insurance enrollees.

The auditor also concluded that DHS correctly calculated the total technical and price bid scores, and properly ranked managed care organizations.

Legislators called for the audit report because the bid results are prompting changes in the lineup of health plans that operate in Medical Assistance and MinnesotaCare next year. The biggest shift involves more than 350,000 people who are moving from Minneapolis-based UCare to other managed care organizations.

“We were unable to commence a full review of DHS’s competitive bidding process,” the report states. “However, we did agree to conduct a limited review.”

DHS says the competitive bid results will save state and federal taxpayers $450 million next year. While UCare has cut about 250 jobs in the wake of the state’s decision, Blue Cross and Blue Shield on Monday announced expansion plans based on its winning bids.

Blue Cross and Minnetonka-based Medica expect to gain more than 100,000 enrollees each next year in the public health insurance programs.

In the report, Legislative Auditor James Nobles wrote that “the Legislature needs to address certain other procurement policies and do so before the next round of competitive bidding for public health care programs.”

In particular, the Legislature should clarify how county-based purchasing organizations compete in bids, as well as counties’ authority to purchase or provide public health care, Nobles wrote.

Preliminary results from competitive bidding would have dropped a county-based purchasing group called South Country Health Alliance in 10 of 11 counties where it currently operates. But after an appeal process this fall, South Country was restored as an option in those 10 counties.

“Absent such clarifications in law, we think modifying the department’s bid scoring methods will not sufficiently address potential dissatisfaction with DHS’s overall award process and selection of managed care organizations,” Nobles wrote.


Twitter: @chrissnowbeck