UCare sues to halt ouster from state health programs, claims bid process tainted

In asking a Ramsey County court to slam the brakes on sweeping new health plan contracts, UCare is taking aim at a bidding process during which it says state officials violated laws and steamrolled recommendations of dozens of counties.

UCare is seeking a temporary injunction to stop the state Department of Human Services from dropping the HMO next year for most people in public health insurance programs.

With about half of its $3 billion in revenue at stake, UCare accuses state officials of giving UCare's confidential information to competitors in violation of data practices laws and ordering the destruction of documents, also in violation of state law.

In its lawsuit filed Thursday in Ramsey County District Court, UCare says DHS followed a politicized path lacking in transparency. "One is left with the strong impression that DHS must be worried about sunlight on its procedures," the lawsuit says.

The HMO wants the court to delay an open enrollment period for the Medicaid and MinnesotaCare programs that's scheduled to begin in September.

The insurer also argues that about 40,000 health plan enrollees who are non-English speakers will be among nearly 370,000 people who otherwise will be subjected to "the largest disruption in public health insurance plans in state history."

"We were surprised and disappointed by [the department's] decision to exclude UCare, a 30-year partner in this work," said Jim Eppel, the UCare chief executive, in a prepared statement. "This action is a last resort for us after we made every effort to seek reconsideration."

It said that the state has used competitive bidding since 2011 "to get the best value for taxpayers, and provide the best possible care for people served by public health care programs. By the end of 2016, we anticipate that competitive bidding and other cost-saving reforms will have saved taxpayers approximately $1.65 billion."

In July, Gov. Mark Dayton announced competitive bidding results that would save state and federal taxpayers $450 million next year, but eliminate UCare as an option for most in the health insurance programs.

Medicaid provides coverage for those near or below the poverty line, while MinnesotaCare covers a slightly higher-income group. Minnesota hires HMOs and county-based purchasing organizations to administer the programs, where UCare currently is the largest health plan with about 369,000 enrollees.

UCare argues that county boards were denied their statutory right to mutually select health plans in the public programs along with DHS. Counties that were involved with evaluating bids were told to destroy certain documents, the lawsuit alleges, arguing that all such data is part of a procurement process that ultimately will be considered public.

The HMO says the state gave UCare's actual county-specific health care costs to competitors by issuing a cost data book to be used by managed care organizations in developing bids.

More broadly, UCare argues enrollees will suffer in making the switch to new health plans. Noting the diversity in its workforce, including many employees who are bilingual, UCare argues the changes could disproportionately impact enrollees from racial and ethnic minority groups, immigrant populations and those with limited English skills.

"UCare's elimination from the marketplace undercuts the free choice encouraged by the Legislature and removes a demonstrated plan with a history of success serving diverse, immigrant and non-English language speaking population," the lawsuit states.

During a state Senate committee hearing Tuesday, Eppel warned that about half of the HMO's 900 workers could lose their jobs if the state pushes forward with preliminary contract awards that will be finalized this fall.

Counties that administer Medicaid in conjunction with the state have the right to appeal the state's decision, and 30 have either done so or indicated they will. Such appeals ultimately are ruled on the by the state's human services commissioner, who joined Dayton in July to announce the competitive bidding results.

Because final contracts haven't been signed, the state has not released details that show how UCare's bid for the business compares with those from other health plans. Winners include a division of Blue Cross and Blue Shield of Minnesota, HealthPartners, Medica and several county-based groups.

The contracts would start Jan. 1. Until then, UCare continues to serve enrollees in the public programs. It's also a large HMO for Medicare beneficiaries and an option for individuals buying non-group coverage on the state's MNsure health insurance exchange.

Due to concerns that HMOs were making too much money administering the public programs, the Dayton administration moved to competitive bidding in portions of the state with managed care contracts for 2012 and 2014. The contract for 2016 was the first statewide procurement, and it applies to the largest group of people in the programs — individuals and families.

By shaking up the list of managed care organizations in counties across the state, the results mean an estimated 475,000 enrollees will need to pick a new plan. At a hearing this week near the Capitol, DFL and Republicans warned there's too much disruption for enrollees and managed care organizations.

In addition to UCare, a county-based purchasing organization called South Country Health Alliance is threatened, officials say, because it's losing 10 of the 11 counties where it currently operates.

Christopher Snowbeck • 612-673-4744