UCare tells lawmakers hundreds of jobs at stake in state contract shakeup

UCare warned Tuesday that about half of its 900 workers could lose their jobs if the state presses forward with contracts that drop the Minneapolis-based HMO for most in public health insurance programs.

Jim Eppel, UCare chief executive, included the job risk during remarks to a state Senate committee hearing about proposed contract changes for managed care organizations in the state's Medicaid and MinnesotaCare programs.

UCare is the largest health plan in the programs, which generated last year about half of the HMO's $3 billion in revenue.

"A very large percentage — for purposes of illustration, one could say half of those 900 employees — will likely lose their jobs as a result of this process," Eppel told the Senate committee.

The impact could be more devastating at South Country Health Alliance, a county-based purchasing group currently managing care for enrollees in 11 counties. The governmental organization, and its nearly 100 employees, might not survive being cut to one county, said Dan Rechtzigel, a South Country Health Alliance board member.

"For an organization like ours, we cannot weather the storm," Rechtzigel said. "It is a process that will take out a county-based purchasing unit."

Minnesota hires HMOs and county-based purchasing organizations to manage care for most in the public health insurance programs. In July, Gov. Mark Dayton announced competitive bidding results that would shake up the list of managed care organizations in many counties, with the most dramatic changes for UCare and South Country.

Counties have a say because they administer Medicaid in conjunction with the state Department of Human Services (DHS). Counties have until the end of August to ask DHS to reconsider preliminary decisions. Final contracts won't be signed until the fall, the state is working with counties to expedite any such appeals, said Lucinda Jesson, the state's human services commissioner.

Jesson defended the competitive bidding process, saying it would save state and federal taxpayers $450 million next year. In addition, she said the process was designed to give more weight to the quality of services provided by managed care organizations than cost. So, the good deal on economics should be a good deal for enrollees, too.

Legislators, however, seemed sympathetic to UCare and South Country Health Alliance.

Sen. John Marty, DFL-Roseville, at one point asked state officials: "Why can't we put this off a year?"

Raising concerns about small insurers unable to compete, Sen. Michelle Benson, R-Ham Lake, said: "I'm concerned where we're driving this market. … This is going to accelerate [the shift to] large single organizations, and limited choice for consumers."

Until contracts are signed in the fall, the DHS says it can't release final bidding documents that show exactly how competing proposals from HMOs and county-based groups were scored. That's part of what makes the issue such a thorny one for lawmakers as they hear from supporters of both UCare and South Country.

"We can't get a lot of our questions addressed because [the documents are] not public," said Sen. Kari Dziedzic, a DFLer whose district includes the northeast Minneapolis headquarters for UCare.

Sen. Jeff Hayden, DFL-Minneapolis, said that UCare has a good track record with the public programs, and stands out as an employer with a diverse workforce. He challenged Jesson on whether the state's workforce will be as diverse as it ramps up to assist some 475,000 enrollees in the public health insurance programs pick a new plan by Jan. 1.

Jesson said the state is making strides toward diversity. She said her top priority is to make sure the transition works well for enrollees.

People aren't at risk of losing coverage, Jesson said, but different health plans can have different networks of doctors and hospitals. Sometimes, there are differences in the lists of medications covered by different managed care groups.

"There has been real value in moving to competitive bidding. We have driven down costs substantially," Jesson said. "The price of that is, you're in a system where there are winners and losers."

Jesson argued that if the state doesn't follow through on final contracts generated by the current competitive bidding process, health plans won't aggressively bid on contracts in the future because they know they won't be excluded.

Christopher Snowbeck • 612-673-4744