GMHCC Offers Comments on

 Outcome-Based Purchasing...

       MNA Also Weighs In (below)

                                                     Dec. 14, 2017

 Response to MN Dept. of Human Services Request for Comments on:   

Outcomes-Based Purchasing Redesign and Next Generation IHP


Introductory, general comments: 

Greater MN Health Care Coalition (GMHCC) represents low and middle income health care consumers in the East Central, Central, and Northeast parts of the state.  Its member groups have over 40 years of health care public policy involvement at the state level. 

GMHCC is glad to see the Dept. of Human Services (DHS) moving further away from HMO middlemen for Medical Assistance and MinnesotaCare, since we have been persistently and strongly advocating for that, for the past ten years.  However, we are dismayed to see that DHS wants to impose Managed Care Organization (MCO) mechanisms and complex payment systems onto the medical providers that might choose to participate.  This is unfortunate, since direct contracting with provider groups can be done much more simply and efficiently, with less administrative expense. DHS’ hybrid proposal would require DHS to administer Fee For Service claims while at the same time administering a complicated capitation – for those same medical procedures -- with various adjustments, including risk score measures.  It is strange that DHS sees a need to increase its own administrative workload in order to directly contract with medical providers.

A global budgeting process would be better, simpler, and less costly to administer, for both DHS and hospital/clinic groups. A global budget system can vary in how much financial risk is placed on providers.  Provisions for smaller risk would enable smaller providers to participate instead of just large integrated medical systems.  

While we are glad that the Next Generation Integrated Health Partnerships (IHPs) can result in removal of HMO middlemen for many Medical Assistance and MinnesotaCare enrollees, DHS’ proposal, by still incorporating MCOs, fails to seize the opportunity to completely remove the private corporate middlemen, which would involve ceasing to contract at all with private HMOs on a capitated basis.   We assert, at the same time, that the publicly-operated County Based Purchasing systems (CBPs) should still be allowed to contract with the state on a capitated basis, since they, having a very different status and motivation than the private Health Plan HMOs, actually perform the MCO  function in the proper, public purpose, economically efficient and financially transparent way that is supposed to happen for all MCOs.  The CBPs demonstrate how MCOs ought to operate in relationship to the state, while the private HMOs do not.  It is a large mistake to lump the two together.  And, depending on how the Next Generation IHP financial incentives work out for hospital/clinic systems, we might or might not end up with a majority of Medical Assistance and MinnesotaCare enrollees still enrolled in private HMOs.

To fully directly contract with hospitals and clinics, another alternative exists apart from global budgets with hospital/clinic systems.   It is the managed care method known as Primary Care Case Management (PCCM), which, according to the Kaiser Family Foundation, is used as the only managed care option in North Carolina, Oklahoma, South Dakota, Vermont, Maine, Alabama, Arkansas, Idaho and Montana.  It is also used partially -- along with MCOs -- in Connecticut, Colorado, North Dakota and a few other states.   The PCCM method pays fees to primary care medical homes to be care coordinators and gatekeepers, and pays all other medical services to all  providers on a Fee For Service basis.  Some PCCM systems add on enhanced features such as medication management and disease management programs.   A large advantage of PCCM compared to direct-contracting global budgeting (or capitated risk payments for that matter) is that providers are not economically pressured to have to combine into larger and larger groups to shoulder risk.  Most important, the PCCM model has proven to reduce cost, while maintaining or improving access and quality of care, compared to MCO contracts with insurance companies.  Very large reductions in overall administrative expense, compared to using private MCOs, have taken place.   Unfortunately, in some states there has been push-back and reduction in the use of PCCMs, due to pressure by insurance companies who want to get MCO contracts precisely for the purpose of making money off of the states.

Geographic considerations:  Direct contracting options including Next Generation IHPs, global budgets with provider groups, or PCCM should be available from the start for provider groups statewide, not just in the Twin Cities.  Some of the larger systems in Greater Minnesota would very likely be interested in contracting with the state with the Next Generation IHPs (depending on the risk exposure) or with global budgeting direct-contracting.  If a PCCM system is adopted statewide instead, then all sizes of medical providers could readily participate, and enrollees’ choice of provider would be maximized.  Minnesota has already put a lot of development into Primary Care Medical Homes, which would facilitate widespread PCCM use.  Greater Minnesota should not have to wait years for a Twin Cities pilot project to finish.

 Specific DHS Questions:  In addition to the above general comments, GMHCC offers responses to some of the specific questions posed by DHS.  We will respond to questions 5, 6, 7, 9, and 12.

  1. What criteria and evidence should DHS and counties use to evaluate any potential responder's ability to implement any proposed initiative, contract, intervention, etc.? How should DHS hold entities accountable for their proposal?


A critical component of accountability is to fully verify the medical claims data of the MCOs.  There is  significant evidence that the private HMOs have repeatedly given inaccurate, inflated numbers to the state, but this verification has never been imposed by DHS, the Dept. of Health, the Dept. of Commerce, or the Legislative Auditor, despite statutes and contract provisions requiring and/or allowing it to happen.  Those provisions in statute are rendered meaningless if they are never utilized – a cruel joke which makes a mockery of Minnesota’s “good government” reputation.  GMHCC has found it amazing, in the face of our repeated attempts to see external auditing and verification of paid claims encounter data happen, a steadfast resistance of the part of all state officials to do this.  If federal authorities are not interested in enforcing the legal requirements for this accountability, that does not mean the state should put itself off the hook.  Basic due diligence dictates that when Minnesota is spending over $5 billion a year, in the largest contracts by far to any private entities, it is imperative to verify if the money is being spent as intended.   Note that the Health Plans collectively invest – by their own admission to the Minnesota Campaign Finance and Public Disclosure Board – about $1 million per year to lobby the state legislature.  The true amount of financial influence, especially if behind-the-scenes political expenditures were identified, would be much larger.

In its document requesting comments, DHS remarks that its normal MCO rate-setting process includes an allowance for “contribution to reserves,” which for practical purposes equates to a “net income” or “profit” from the managed care contracts.  However, DHS has never -- and is not proposing now -- to monitor the level of the reserves, and adjust the allowed contribution to reserves in relationship to how high that level is. DHS should do that.  But because it doesn’t, that means, as has been the case much more often than not over the years, that the DHS contracts have inappropriately added to financial reserves that are already excessive.  If you add up the net income from the state programs – including investment income – that Blue Plus, Medica, HealthPartners and UCare have reported to the state on their MN Supplement Reports, you reach an aggregate total (incorporating both gains and losses) over the last 20 years of over $1.2 billion dollars. That is an enormous contribution to reserves.  If external, forensic auditing were ever to be performed, the number would likely be much higher.

Another problem with accountability is the need for reliable verification for health risk adjustment scores for MCO enrollees, which is a critical aspect of managed care rate setting.  It has been shown and proven a number of times that health insurance companies will stoop to inflating their enrollee risk scores if it will bring extra, unjustified payment to them.  Hospital/clinic groups which contract with the state on a capitated basis would be subject to the same temptation.  In general, it is difficult to achieve meaningful risk adjustment anyway, and to do so accurately would greatly increase the expense of the analysis. The leeway to manipulate reported risk scores is huge.  Furthermore, MCO and provider payments based on risk scores leads to rampant “up-coding” at the provider level (either insisted on by insurance payors or self-motivated to get better reimbursements).  We have a national  Medicare Advantage scandal of some $15 billion per year stolen by insurance companies inflating their enrollee risk scores -- and never submitting reduced scores when they have the evidence for that – which speaks to a need for extensive, expensive regulatory monitoring if cheating is to be kept in check.  Accurate health risk scores, without cheating, is a very costly proposition.

  1. Would administering a single Preferred Drug List (PDL) across all the models be preferable to carving out the pharmacy benefit from the Managed Care or Next Generation IHP models? Would expanding the single PDL or pharmacy carve out beyond the seven county metro area be preferable to applying the changes to only the metro county contracts?


A carve-out of the pharmacy benefit, if administered properly, would be preferable to administering a single Preferred Drug List (PDL).   Whichever of the two methods is used, it would be best for it to apply statewide, instead of just in the metro counties. Greater Minnesota needs better formulary choices, and savings in pharmacy costs, as much or more as does the Twin Cities metro area.    

A carve-out is preferable because it would allow for efficient, consolidated, lower-cost administrative expense, and because it would eliminate secret rebates that go to HMOs that drive formulary decisions which are often not the most efficacious and cost-effective choices. To realize these benefits, however, the carve-out would have to be administered by, or under the direct and detailed supervision of, the state.  If the state were merely to pick and hire a Health Plan or a Pharmacy Benefit Manager to manage the carve-out, even with a competitive bidding process, the result would likely be unnecessary costs, excess profit to the contractor, hidden costs and profits, and a formulary designed to secretly financially benefit the contractor, rather than provide the most cost-effective drugs at the best prices.  

The alternative method of a single PDL used by all the MCOs and Next Generation IHPs would be much less efficient, but it raises both the question and opportunity for coordinated purchasing – by the provider groups as well as the MCOs -- from drug manufacturers of the chosen formulary medications and items.  This would work best if the state was negotiating with the drug manufacturers on behalf of these purchasers as one pool.  That might be the only feasible way for it to work.

Whether a carve-out or a PDL is used, the state has very good resources to deliberate and decide on the best evidence-based choices for a formulary, with DHS’ own Drug Formulary Committee, plus important experts such as Cody Wiberg at the MN Board of Pharmacy, and Prof. Steve Schondelmeyer at the University of Minnesota College of Pharmacy.

  1. How can this model appropriately balance the level of risk that providers can take on under this demonstration while ensuring incentives are adequate to drive changes in care delivery and overall costs?


The question of the appropriate level of risk is very critical, and the state must acknowledge these considerations:  (1) It would be a huge mistake to burden medical providers with more financial risk than they can readily handle; (2) The determination of this has to be very individualized to each provider system’s particulars; and (3) The determination, to be accurate, has to access detailed financial and operational data for each participating provider system. 

Adding too much financial risk can incentivize providers to start acting like an insurer, or even cause them to join forces with an insurer to help manage the risk.  It also encourages consolidation of providers into ever-larger groups which can diminish competition that could help hold down prices. Any risk that the state makes providers take on needs to be carefully calibrated with the providers’ strategies of holding down or reducing unnecessary costs while providing the full appropriate measures of medical treatments to patients. 

The question of financial risk also raises the question of how long a medical provider can count on a particular patient to be with them for the long term.  In general, they can’t, and this is especially true of patients enrolled in Medical Assistance or MinnesotaCare.  The risk models that depend on attributing patients to a particular provider group creates a huge disincentive, which is:  Providers would be naturally reluctant to spend increased resources on more prevention, primary care and disease management because the “return on investment” – savings down the road in reduced expensive specialized care – take decades to fully materialize.  A provider could spend the extra money for this on their patients, who years later switch to a different provider – who realizes the financial savings caused by the previous provider’s investment.   Very large integrated systems with tens of thousands of patients would maybe make the investments, but the only way to really solve the problem is to have a unified, universal payment system which shoulders the investment expense for all providers at the same time.   To date, the investments that have been generally made by Accountable Care Organization (ACO) models have been very limited to the “low hanging fruit” of certain types of disease management that can prevent, in a short period of time, reduced hospitalization expense.  It does not address our overriding problem of far too little preventive and primary care, which results in more specialized and expensive care than need happen otherwise, and an unnecessarily high medical expenditure overall.

The vastly problematic issue of provider risk heavily points to the desirability of the PCCM model discussed above.   PCCM addresses DHS’ goal of reducing spending that is not actual medical care, by very directly and clearing slashing administrative expense. Medical providers don’t have to deal with the issues in taking on insurance risk.  In PCCM models, utilization is kept in check with the primary care gatekeeper and coordination roles.  The old (and very questionable) fear of “blank check” runaway costs with Fee For Service payments has not materialized in the PCCM experience.  The huge administrative savings from PCCM could even enable better reimbursements to medical providers above the current DHS Fee For Service rates.

  1. How much of the entities’ payment should be subject to performance on quality and health outcome measures? Please explain your answer.


The concept of pay for performance (P4P) might sound plausible in theory, but it is not a good method to use, and should not be used at all, or at least not for the components that measure patient health outcomes.  The chief reason is because the P4P theory depends on accurate and fair measurements which are either extremely expensive and/or impossible to obtain, and because P4P can easily lead to negative consequences.  A very real danger is that physicians and clinics would become motivated to not want to see patients who “bring down” their performance scores, which can result in patients who need care the most having the most difficulty receiving it.  As mentioned previously, risk adjustment is such an inadequate science that it cannot do a good job of factoring into P4P determinations.

Trying to attribute patient health outcomes to the performance of the physician makes little sense  when so many factors including patient compliance with instructions; patient ability to afford out of pocket costs for medications and other expenses; and social determinants affecting the patient are all outside of the physician’s control.   It is useful that the DHS proposal, and other trends, are seeking medical providers’ involvement in addressing social determinants, but that does not alleviate or negate the issue of these factors affecting outcomes and physician “performance.”   P4P adjustments are very likely to lead to financial punishments for providers who treat low income and disadvantaged patients, and reduced care for those patients.  That contributes to worse health outcomes, not better ones, and worsens health disparities instead of improving them.  Social determinants of health such as housing, environmental factors, education, nutrition, and income are such basic societal realities – and fundamentally a result of our country’s vastly unequal distribution of income and wealth -- that it does not make any sense to make medical providers responsible for them.  As for personal behaviors, medical providers can influence some of those to some degree, but still have no real control over them.

  1. Other:

In its request for comments, DHS states that “More than $212 million of this savings has occurred in the last three years with the state’s successful IHP program.”    GMHCC has repeatedly asked DHS for a breakdown of the calculations to arrive at this number, with no response other than silence.  It is important for DHS to provide the detailed calculations to the legislature and the public, so we can properly evaluate the claim.  


An important question is: Just what shared savings has DHS actually realized from the IHPs (Medicaid ACOs) to date?  When savings occur by beating spending targets, two different processes take place in regard to Fee For Service enrollees, versus MCO enrollees in the Prepaid Medical Assistance Program PMAP):


1) For Fee For Service (FFS) enrollees, DHS calculates and pays the ACO provider its share of the savings.  DHS has already realized its share of the savings, by virtue of paying out less in FFS reimbursements than it would have otherwise.


2) For managed care (PMAP) enrollees, the process starts with DHS paying the MCO its normal monthly capitation for all of the MCO’s enrollees.  The MCO pays the ACO provider its normal reimbursement for specific services.  After the year is up, DHS calculates the total savings that the ACO accomplished.  DHS then orders the MCOs to pay, on behalf of each MCO’s enrollees who are patients of the ACO, the appropriate portion of the savings to the ACO.


The big question is then:  How does DHS receive its portion of the shared savings, out of the money that it already gave to the MCOs?   This is apparently accomplished through some sort of adjustments in the capitated rate setting for each MCO, for the next year or perhaps only starting with the year after that.  There are also negotiations between DHS and the MCOs.  The bottom line is that is unknown and unclear if DHS actually gets the full amount of its shared savings, or whether the MCOs keep some of that, which they should not be retaining.


From:   Minnesota Nurses Association 

In response to the Minnesota Department of Human Services (DHS) request for comments regarding the “next-generation” Integrated Health Partnerships (IHPs), the Minnesota Nurses Association submits the following comments.


Nurses believe that everyone must receive the care they need when they need it without regard to their ability to pay. Minnesota has a strong tradition of providing basic health coverage for our neighbors who are most in need, but nurses know that all too often, patients do not receive necessary care. This is why we work towards the policy solution of a publicly-financed healthcare system that covers all Minnesota residents from birth until death without interruption.

As we work towards a Single Payer healthcare system, we seek to build the pillars of that system in our publicly-managed programs, including Medical Assistance and MinnesotaCare. Those pillars include (1) direct contracting between the State and providers, (2) prioritization of preventive care, care coordination, and proactive management of chronic conditions, (3) full choice of providers, (4) the ability to negotiate prescription drug prices, and (5) global budgeting for hospitals.


The “next-generation” IHP program has some positive advancements, though we remain concerned with the overall direction of IHPs and Managed Care Organizations (MCOs) generally.


We applaud the upfront per-member per-month payments to providers for care coordination. This advancement will allow providers to invest in higher-quality, provider-initiated interactions with patients, as well as allow patients to contact providers with basic questions about their health. Right now, nurse hotlines and patient outreach are not reimbursable and are therefore underutilized.


We are concerned, however, with a number of elements within the IHP and MCO models.


First, all risk in healthcare should be held by the population as a whole, not a business. The opportunity and risk of shared savings should not be part of this public-provider relationship as it creates possible perverse incentives to provide less care or lower-quality care in order to maximize profits. Nurses seek to remove profit incentives from healthcare delivery.


Second, and relatedly, the regular rebasing for Total Cost of Care (TCOC) savings determinations leads to a healthcare system more similar to the Walmart style of business – regularly forcing providers to decrease supply costs and thus reduce quality over time – than to one that delivers a high-quality product or service. When we also consider the difficulty or even impossibility to accurately make risk adjustments, the TCOC determinations are largely arbitrary. This is particularly detrimental financially to small clinics that serve high-need patients.


Lastly, no public healthcare dollars should go to insurance companies or any healthcare system that assumes risk for a pool of patients. Insurance companies and hospital system billing agents do not provide any care to patients. Payments should only be made for direct patient care and care coordination.


Instead of expanding on the IHP model, given our aforementioned concerns, we recommend the following to DHS for management of its Medical Assistance and MinnesotaCare programs.


First, that DHS fully invest in preventive care and care coordination by paying clinics a small but reasonable capitated payment for care coordination. DHS should pay higher rates for patients with certain diagnoses and chronic conditions.


Second, that DHS pay set fees for any service or procedure provided beyond general appointments and care coordination. As those services would be included in the capitated payment, reimbursement for other services and procedures would allow providers to use capitated payments exclusively for maintaining regular contact with patients, ensuring they are taking prescribed medication and receiving the care they need when they need it.


Third, that no capitated payment go to a hospital system: only independent clinics and providers. This would remove possible perverse incentives that could include providers from hospital-owned clinics sending patients into hospital systems for unnecessary procedures simply to meet quotas, for example.


 Fourth, that DHS work with each hospital in Minnesota to create global budgets and begin making annual per-hospital payments based on the number of public patients each hospital serves. These budgets would include infrastructure improvements, maintenance, and investment in new technology, among other needs. It is important that these global budgets concern individual hospitals and that hospital systems not be allowed to transfer this money between hospitals within their system.


Fifth, that patients have a full choice of providers. Patients should be able to choose any primary care provider, as well as any hospital system for other procedures and services. DHS should rescind current network restrictions that prohibit this.


Sixth, that DHS seek necessary approval to begin negotiating prescription drug prices for patients on public programs.


Finally, that all payments be made directly from DHS to providers for all services. Again, we have no need for insurance companies, and this would also help reduce the rapidly-increasing number of billing agents providers are required to hire.


In summary, nurses work towards a system that guarantees every patient receive the healthcare they need when they need it without regard to their ability to pay. We look to DHS to help construct the pillars of a publicly-financed healthcare system that meets all Minnesotans’ healthcare needs within its current public programs. Direct contracting with providers, investments in preventive care and care coordination, full patient choice, negotiated drug prices, and global hospital budgeting are all among those pillars.


If we move in this direction through DHS public programs, Minnesotans can finally begin to take control of our broken healthcare system.




What’s happening

to health insurance in Minnesota? 

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1. Important points about Blue Cross Blue Shield MN:

1. Blue Cross Blue Shield Minnesota is dropping over 100,000 people from individual health insurance policies -- with the explanation of losing too much money.  You should know that:

2.  Despite $126 M overall reported loss for 2015, Blue Cross and its Blue Plus subsidiary had, over the last 5 years -- including 2015 -- $301 M in cumulative profits, especially from investment income. meanwhile, there are additional profits, which are not reported.  There are no public numbers on the profits Blue Cross gets from its other subsidiaries, especially its Comprehensive Care Services unit which provides Third Party Administrator work (hired by corporations to manage the health care funds for employee benefits), and its Prime Therapeutics pharmacy benefit manager unit (serving as a middleman to arrange prices between drug manufacturers and insurance companies).  In addition, there is no public reporting of the consolidated revenue, expenses and profits of the entire Blue Cross system in Minnesota.  The true profit or loss for 2015 is hidden from public view. 

(Note: the other three big Health Plans – HealthPartners, Medica and UCare – all claim overall profits for 2015, unlike Blue Cross Blue Shield MN.

3.  Blue Cross has huge financial reserves, far bigger than the other Plans.  Their 2015 loss reduced it by only 7.5%. They have over one billion dollars more in reserves than what they are required by regulations to have.  The reserves are in essence “money in the bank” to use if the insurance policies run at a loss.

4. Blue Cross stands to make much larger state program profits in 2016 compared to 2015, thanks to taking over most of the lucrative public program enrollments which had been with UCare.

 5. In the Allina-MN Nurses Assoc. dispute over health care benefits, Allina and Blue Cross are refusing to provide the actual employee medical claims data to prove their assertion of a $10 million/yr extra expense of the RNs’ health care coverage. Blue Cross is the Third Party Administrator for Allina, and it could easily be getting large, illegal, undisclosed profits through the operations of this division.

 2. Big picture:  Current system is not working:

(A) The insurance company business model is broken.  Their viability – including generating profits -- had heavily depended on cherry –picking healthy enrollees, and rejecting those who needed coverage the most.  The Affordable Care Act outlawed that cruel and unethical practice.  As a result, we now see that the insurance companies are not able to provide useful, affordable insurance to tens of thousands of people.

(B) You need everyone in, to spread the risk. The private market can’t do that.  Forcing people to buy private insurance is not working. The Affordable Care Act tried, with the flawed individual mandate penalty, but hasn’t achieved its goal.  It would be politically unfeasible to make the penalties large enough to economically force people to buy policies – that is, make the penalty as big or bigger than the insurance premiums.

(C) The only way you can get everyone in is with a universal public program where all residents are automatically included.      That has the additional huge benefit of spreading the risk across the population, as it should be.

D)  If the big Health Plans didn’t have huge profits off of the state programs to subsidize their losses in the private market, they would have had to close up shop long ago. This is another symptom that the private insurance market is broken and can’t be fixed.

 3. Also important to know:

 1. Overall health care cost is bloated with huge profits (insurance co profits, as well as drug, medical equip and other), insurance co fraud, huge unnecessary admin costs of insurance cos (including huge executive compensation), and the huge admin work they force hospitals and clinics to do.  A third or more of the total is spent on things other than actual medical care.

 2. Strong regulation could eliminate the insurance co profits, but would require expensive, intensive oversight.  Cutting out waste and unnecessary administrative cost due to multiple insurers, can only be done with single payer, universal coverage. Changing it away from a market-based system would remove the perverse dynamic of financial winners and losers.

 3.  The huge profits in the state programs are wasteful, unnecessary, and fraudulent. The state programs would cost much less in taxpayer dollars if there weren’t insurance company middlemen taking a huge slice.  (Ditto for Medicare Advantage.)

 4.  Blue Cross, HealthPartners, and Medica are probably also ripping off self insured companies with their Third Party Administrator work overseeing employee health plans.  The income and profits from these are not publicly reported, and very likely are large numbers.



Healthcare Estate Liens Addressed By Legislature

March 24, 2016

     The recent news that some families who are enrolled in Medical Assistance (through MNsure) have had substantial liens placed against their property was a shock to many Minnesotans.

    According to the little publicized provision in the MNsure enrollment in MA (Medical Assistance, Minnesota’s version of Medicaid), if you’re 55 or older and on MA, the state places an estate claim with which to recover its costs after you and your spouse have died.

      Statewide attention was focused on at least two (2) families living in Pine County within the Seven County region.  Both families recounted similar experiences in their enrollments into the MA program.  When asked about the issue, Sen. Tony Lourey of Kerrick, said the process “lacked transparency.”  “It is there in the fine print, but not anywhere near to the level that I think is acceptable,” Lourey said. The Senator has taken action to alleviate the current problem by introducing a bill that addresses select provisions of the law. 

       It’s worth knowing that the estate claim provision has always been in place for people enrolled in MA. However, with the 2014 expansion of MA under the ACA (Affordable Care Act), MNsure has brought younger people into the system (people in the 55-64 age range and with more assets).  It’s that group of individuals who are now are now most affected by the same MA lien provisions. If a proposed law from Sen. Lourey passes, nursing home and long-term care costs will still accrue liens against MA enrollees estates, but a number of the other expenses will be exempted from the lien process if the measure passes. 

Sen. Lourey’s curative bill is SF#2501 - the first part of the legislative language summarizes the bill’s intent:

SF 2501 retroactively limits medical assistance estate recoveries for those individuals who receive medical assistance while not institutionalized.

Section 1 (256B.15, subdivision 1, paragraph e – Circumstances under which a claim must be filed) retroactively modifies the circumstances under which the Commissioner of Human Services is permitted to file a claim against the estate of an individual who received medical assistance while not residing in an institution.  

For services rendered prior to January 1, 2014, a claim against an estate must be filed if a person received any medical assistance and the person was 55 years old or older at the time the service was rendered.

For services rendered after January 1, 2014, a claim against an estate must be filed, but only if the person was 55 years old or older at the time the service was rendered and the services provided were nursing home services, home and community-based services, or related hospital and prescription drug benefits.

- - - - -

      It should be noted that the language to create liens for this expanded group (55-64 years of age) was left as an option in 2014 for states that were operating insurance exchanges under the ACA.  Minnesota’s Dept. of Human Services decided to include that option, but did not do an adequate job of communicating that change to the MNsure Board which, in turn, created  much of the confusion that exists.

    As of this printing, there is now a MN House companion bill similar to the Senate bill (HF#3467); it’s authored by Rep. Matt Dean of White Bear Lake.    



Decision On Bidding Process

Leaves Counties With Questions

 October 30, 2015

       An appeals process, undertaken by twenty-eight (28) counties in Minnesota, sought to undo or at least forestall a ruling by the MN Department of Human Services (DHS) regarding healthcare contracts.  Their appeal had some success, but still left many questions unanswered as to the future and the budgeting process that will be needed to keep health programs functioning at a high level. 

       Prior to the DHS awarding of new contacts for 2016, counties who were part of a County-Based system of Purchasing (CBP) for healthcare were the sole contractor with healthcare providers in their region for Minnesota’s low-income programs (Medical Assistance and MinnesotaCare).  DHS went through a new bidding process this past summer and they decided to award healthcare contracts to three private HMOs (Health Maintenance Organizations) and, at the same time, mostly eliminate contracts with CBP systems serving rural Minnesota. 

       A majority of the affected counties filed an appeal to DHS and their grievance was heard by a 3-person panel.  After hearing and reading testimony from dozens of CBP supporters from throughout the state, fourteen (14) of the counties won modifications to the bidding results, with Olmsted County receiving permission to add UCare as a potential third insurer. St. Louis and Wright counties were permitted to negotiate with Medica as a potential third provider as well.  The panel ruled that all of the CBP counties would be able to continue to receive and administrate their state healthcare contracts, but would not be the sole source as before.  The counties will now share administration with another provider in their area.  In Kanabec County, for instance, the secondary choice will be Medica for low-income healthcare administration.

       This decision is likely to create some new challenges at the county level for CBPs that had been doing all of the administration and budgeting for the system.  It is not clear, and may not be for some time, how much of the business will flow through the county and how much will flow through private HMOs like Medica.  The state’s PMAP (Prepaid Medical Assistance Program) enrollees could end up in the county’s private HMO choice with the local CBP ending up with half of their previous business or less. 

        UCare, which was one of four (4) HMOs serving the vast majority of low-income enrollees in the state, now has a uncertain fate, as they have been excluded from most all of the programs. Its business providing federal Medicare plans and smaller state programs for senior citizens will be unaffected. In early November, a judge is scheduled to consider the insurer’s arguments that the state bidding process was unfair and tipped competitors to financial information that allowed them to make superior bids.


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30 Counties Appealing DHS Bid Results

October 2, 2015 

   One of South Country Health Alliance (a county based healthcare organization in outstate Minnesota) and UCare’s last hopes for salvaging enrollment began September 16th, as a three person panel started to hear their case.  Their appeal was based on a recent Dept. of Human Services (DHS) decision to drop UCare  and South Country from administering  the state’s public health insurance programs. The appeals come from counties that jointly administer the state’s Medical Assistance and MinnesotaCare programs.

    The panel was scheduled to hear appeals from 30 counties, some of which question the decision to drop UCare, while others want to retain South Country Health Alliance.

    According to an analysis of DHS enrollment data, there are about 135,000 UCare enrollees in the counties who have sought mediation,. Overall, the UCare HMO (Health Maintenance Organization) has about 363,000 enrollees in the families and children portion of the public programs, according to DHS.  When you factor in the enrollees in South Country’s base there are over 450,000 people who will be impacted.

   State officials announced preliminary results from competitive bidding in July, and the three-person panel will be asked to recommend whether Human Services Commissioner Lucinda Jesson should finalize changes.

     “I really think they should take a fresh look at the scoring,” Jesson said. “If there are recommendations about how to do things differently, they’ll make those recommendations to me.” St. Louis County has appealed the decision, too, with officials saying UCare has provided good service.  Patrick Boyle, a St. Louis County commissioner commented “I think we need to have some answers about why we’re doing this change… my hopes aren’t up, but I’m glad we’re having a little more transparency on the issue.”

    However, the final decision rests with Jesson, who has said she will decide by October 1, making many county officials skeptical that the mediation process will result in any changes.

    Minnesota hires HMOs like UCare, and county-based groups like South Country, to manage care for people enrolled in Medical Assistance and MinnesotaCare in the state.  Medical Assistance is the state’s version of Medicaid, which covers people at or below the poverty line, and  MinnesotaCare covering a slightly higher income group.

    In July of this year, DHS announced the results of competitive bidding that purportedly would save state and federal taxpayers $450 million next year, but would drop UCare as an option. South Country was also dropped as an option in 10 of the 11 counties where it currently operates.

    The state says bids from managed care organizations were scored with a greater emphasis on quality than cost. South Country sued to get access to DHS scoring documents, so the counties that created the managed care organization can better make their case during the mediation process. DHS and South Country reached an agreement in the dispute according to Tom Lehman, a lobbyist for South Country.

    Earlier this month, a Ramsey County judge declined to issue a temporary injunction that UCare had requested in order to block the new contracts. A trial in that case is slated for November.

    The stakes are high for both managed care organizations. During a legislative hearing in August, a South Country official said his group, with nearly 100 employees, might not be able to continue without the state contract. Likewise, the public programs accounted for roughly half of UCare’s $3 billion in revenue last year, so the HMO might need to eliminate about half of its 900-person workforce.

    If the matter isn’t resolved in South Country Health Alliance’s favor, managed-care contracts will be awarded on a county-by-county basis, with at least two plan options in every county, and three plans in each county within the seven-county metro. That’s according to a statement released by Commissioner Jesson in July.


Healthcare Bid Process Will Affect 400,000

September 2, 2015

After announcing the results of the statewide competitive bidding for public health programs, it appears that South Country Health Alliance (SCHA) and UCare will be dramatically impacted.  South Country Health Alliance is a county-based healthcare purchasing collaboration which has Kanabec County as one of its eleven (11) member counties.  UCare is a twin cities based health insurer which has state health plan clients across the state.


Minneapolis-based UCare would be removed from the biggest portion of the programs, forcing over 350,000 enrollees to find a new health plan by January of 2016.  UCare generated about half of its $3 billion in revenue last year from the MinnesotaCare and Medical Assistance programs it administers, and UCare officials predict hundreds of jobs could be lost.  It’s worth noting that UCare for Seniors customers will not be affected by this change.


Gov. Mark Dayton and Department of Human Services Commissioner Lucinda Jesson recently announced Minnesota’s first competitive-bidding process for MinnesotaCare and Medical Assistance (Minnesota’s version of Medicaid).  The bidding resulted in $450 million in savings for state taxpayers and $200 million in refunds for the state.  On the face of it, that’s good news.  However, at UCare and at South Country Health Alliance system, there likely will be a dramatic change in how those programs are administered.


Sen. Tony Lourey (of Kerrick) who is Chair of the Senate Health & Human Services Committee, said he wasn’t ready to give up on competitive bidding, but suggested that the state might want to give more weight to the potential for disruption when scoring and evaluating future bids.  Lourey went on to say that the Legislature did instruct the administration to do this, and added “… but I’m not particularly pleased with the result.” 


Commissioner Jesson said in a press release that “…the competitive-bidding process is about getting the best value for taxpayers and our enrollees, and that is exactly what this procurement accomplished. In addition to hundreds of millions in taxpayer savings, our enrollees will have more choice as well as high-performing plans from which to choose.”


However, for enrollees in 10 of the 11 counties where South Country Health Alliance currently provides MinnesotaCare and Medical Assistance for those 65 and younger, including Kanabec County, that option will no longer be available come Jan. 1, 2016.  In addition, UCare has the aforementioned 350,000 plus enrollees who are in the same boat and will also need to find new plans.   In total, this will directly affect over 400,000 people come next year.


“We know that this will have a significantly negative impact on our members, providers, counties and the organization itself”, said Leota Lind, CEO of the South Country Health Alliance.


Through the competitive-bidding process, South Country Health Alliance was only awarded the contract for Dodge County in southern Minnesota, so more than 30,000 enrollees in the remaining 10 counties, including nearly 1,000  in Kanabec County, will have to change their plans.  Even though their members aren’t eligible for enrollment in SCHA, Pine County will no doubt be affected by the potential service changes in Kanabec County.  Kanabec and Pine counties have shared some social service functions for almost 2 years in order to maintain better service while managing costs, so a significant change in state contract dollars in Kanabec will impact both entities. 






GMHCC Meets With DHS Commissioner



      Greater Minnesota Health Care Coalition members (GMHCC) traveled to St. Paul in August to meet with Lucinda Jesson, Dept. of Human Services Commissioner for the state of Minnesota. 


The meeting was designed to continue a dialogue that started over 2 years ago when Jesson was named to the post and GMHCC was one of the first groups to secure an audience with her.  Subject matters discussed were very similar to those that started 2 years ago, but with updated information and experience added by GMHCC and Commissioner Jesson.   It’s safe to say that there has been lots of healthcare activity since the last time a meeting took place, both nationally and locally in Minnesota.


The Affordable Care Act launched nationally last Fall, and MNSure debuted at the same time in Minnesota. Both programs had shaky rollouts but seem to have stabilized in the interim.  Both topics were discussed briefly but were not the centerpiece of discussions.


As most of you know, GMHCC and its allies have been working for over 6 years to finally bring transparency and accountability to the subject of healthcare costs in Minnesota related to state sponsored programs run by HMOs (over $3 billion tax dollars per year).  An independent report by the Segal Corporation following an internal examination of the facts confirmed that there are significant deficiencies in the accounting practices being used by DHS and the HMOs they work with.


The legislature passed a law in 2010 that mandated that DHS collect encounter data from the HMOs.  DHS was then supposed to use that data in their annual rate setting process to adjust payments to the HMOs.  According to all external indications, this has not taken place in any meaningful way… yet.


~ Commissioner Jesson stated that changes are being made in this regard (encounter data used for rate setting).  She went on to defend the actions taken by DHS under her leadership, including the issue of rehiring the Milliman (of Milwakee) accounting firm in the fall of 2013.  The change was made following Jesson's statement in early 2013 that DHS had fired Milliman (of Minneapolis) as the state's accounting/auditing firm.  The commissioner reiterated that a number of changes will likely be evident within the next 12 months as the tracking systems catchup with the changes.



DHS Commissioner Lucinda Jesson






PUBLIC POLICY - Position and Information

Greater Minnesota Health Care Coalition   

                                             Public Policy Briefing Memo on:

Health Insurance industry Transparency and Accountability

      The issue of health insurance transparency and accountability, especially for programs funded by taxpayer dollars, is very important.  It relates to large sums of money paid to HMOs but improperly withheld from medical providers, resulting in unwarranted excess profits, huge financial waste, and in some cases, inadequate care to the low income enrollees of public health care programs.  Another aspect is falsified claims of enrollees’ health, resulting in excess payments and profits.  Reducing and returning this wasted money to government budgets can help alleviate the underfunding of other needed programs, and/or help moderate the need to increase taxes. 

     This set of issues has policy aspects at the federal, state, and county levels:


A. Federal policy

Medicare Advantage overpayments: 

     The Center for Public Integrity reports that tens of billions of dollars have been wasted, with about $2 billion a year at present, according to the GAO (Government Accountability Office).  Many of the insurance companies which control this huge program of privatized Medicare file false reports claiming that their enrollees are sicker than they are, and thereby automatically get larger payments from the government than warranted.    

     Oversight is minimal, and the federal agencies appear to have neither the will nor the resources to deal with this massive problem.  The insurance companies have enough clout in Congress to push back attempts to rein in windfall payments, fraud, waste and abuse. The federal government is unwilling to release the insurance companies’ actual payment and financial data.


B. State policy

1. Disclosure of secret HMO payment rates to doctors and hospitals: 

     The legislature began debating in 2014, and will have to finish in 2015, whether the prices that HMOs pay doctors and hospitals for the state’s public programs should be made public or not.  In 2014, a one-year delay was granted for the HMOs to comply with a new requirement that this data must be public.  The state has never required the HMOs to reveal their data in its contracts.  The HMOs claim that doing so would result in their having to pay the medical providers more, and in return require bigger infusions of tax dollars. The state Dept. of Human Services (DHS) will examine this theory and issue a report by year’s end. Disclosure, once it is required, may reveal that the HMOs have paid medical providers much less than the HMOs attested to state agencies. If so, this would expose a large source of wasted taxpayer dollars.  It could lead to reductions in per-person public expenditures, and reduced premiums for individual and small business insurance policies.


2. State audit of HMO expenses for public health care programs: 

    The state never conducted any outside audits to determine what the HMOs actually spend for medical care, out of the billions of taxpayer dollars given to them each year.  The legislature decided in 2012 that its first-ever audit would be conducted, to examine calendar 2014 expenses. This year, however, the Office of Legislative Auditor asked the legislature to change the statutory mandate, so that the audit would be performed in-house instead of hiring an outside auditing firm; and to remove the requirement to determine whether or not any laws had been broken.  This proposal was not debated and did not pass in 2014, but another attempt might be made in 2015.

3. State use of actual payment data to set payment rates to HMOs: 

 In addition to not having the HMOs’ payment data be public, and never conducting an outside audit to verify those expenses, DHS has never used actual payment data in its own calculations to set its per-person payments to the HMOs. Instead, it used summary numbers supplied by the HMOs. This has been shown, by the Segal report and others, to have resulted in hundreds of millions of dollars in overpayments.  The overpayments end up as excess profits and excess financial reserves.         

     In 2011, DHS started receiving this data, known as “paid claims encounter data” from the HMOs for the first time.  However, as of 2014, DHS is only using actual data of medication expenses in the HMO rate setting -- and still not the data for doctor and hospital expenses.                    

     The legislature could intervene to demand answers and make public why this is so, and to require DHS to start using that data in specific ways to set the rates.  The HMOs’ self-reported profits from the state programs are three times what they are supposed to be, which can be an indication that overpayments are still occurring.  


4. Unused auditing powers; recovery of past overpayments:

      The state has auditing powers that it could have used already, and still can use, to determine the extent of past and present overpayments.  Such auditing of the “integrity” of the financial data of medical payments could reveal that the HMOs had intentionally inflated the amounts that it said it paid doctors and hospitals.  If so, then they could be forced to return these amounts obtained under illegal, false pretenses.  Potentially, a half billion to a billion dollars could be recovered, with half of the money being returned each to the Minnesota and federal governments.  The U.S. Dept .of Justice is currently conducting its own investigation to look into this precise matter.

     The state has three potential ways to do its own audits and investigations:

(1) The Governor’s administration has statutory power, for the Dept. of Health, of conducting an

      audit of the HMOs’ finances whenever the public interest merits it, and charge the cost of the

      auditing to the HMOs themselves.  This power has never been used, but the current situation

      warrants that it should be used, given that such an audit could discover fraud and recover

      hundreds of millions of dollars for the state’s general fund.

(2) The State Attorney General has powers to conduct its own investigation into possible Medicaid

      fraud by the HMOs; and also has additional oversight powers over two of the HMOs which are

      501 c 3s:  Group Health, and UCare.

(3) The Financial Crimes Task Force, housed in the MN. Dept. of Public Safety, has investigative

      powers.  The state legislature has some oversight authority over this Task Force.


C. County policy

1. County-run managed care public health coverage programs: 

     Counties have an option under state law to directly operate the state’s low income health care programs, instead of the state contracting with the HMOs.  This provides local control, better administrative efficiency, better services to enrollees (especially dental), positive partnerships with local health care providers, financial transparency, and public accountability.  26 rural counties are already doing this.  It can potentially be expanded to provide low cost coverage to local businesses and individuals who are not in the public programs.  County boards can consider creating their own system; collaborating with other counties; or joining one of the existing systems.

 2. Ramsey County:  Unnecessary payments to Regions Hospital: 

     Ramsey County makes large, voluntary payments to Regions Hospital, on the theory that it is needed to help cover the cost of treatments for indigent county residents.  Those expenses have never been audited.  The County relies on the self-reported figures from HealthPartners, which owns the Regions Hospital business.   If the expenses were audited, it might show that Regions/Health Partners has been over-billing the County.  This could result in a halt to the payments of county funds, and maybe to the recovery of past payments.  The County could obtain an audit by requesting the MN State Auditor to do this.  However, the Ramsey County Board has not requested this, and continues to make payments.

- - - - -

 For more detailed information and further explanation on these policy ideas, contact:


Greater MN  Health Care Coalition (GMHCC), 47 Park St. N., Mora, MN 55051   1-888-694-5055

Or email Buddy Robinson, GMHCC Co-Coordinator:




"Community Voices - Letter to Minn Post (link)"

from:  Buddy Robinson 6.4.14

BREAKING:  A battle is looming over Health Plans' secret price data!

---   <*>     <->    <*>     <->    <*>    <->   ---


"The Medicare Advantage Money Grab" (link)

Who's getting rich on the backs of seniors? 

read the report from the Center for Public Integrity




Popular Stories... Informative Links

Our method of healthcare delivery in the United States is fragmented, confusing and unsustainable.

If you want to know how our healthcare "system" doesn't work, you need to watch this:


*  Healthcare Accountability Press Conference  *

GMHCC held a press conference on Wednesday March 27th at 11 a.m. in Room 125 of the State Capitol building.  The purpose of the press conference was to update the media about progess and updates in our investigative efforts on HMO and DHS accountability in healthcare.  It's a follow-up to the release of our 20 page Healthcare Accountability/Transparency report. It covers and documents over 15 years of HMO mismanagement of a $4 billion dollar per year income which is funded by your tax dollars.

The press conference summary report can also be viewed on the KSTP-TV site here: 


AND you can...

CLICK HERE to view, print or download our exclusive investigative report-

"Who Was Minding The Store?"          >>>>>>>>>>>>>>>>>>>>>>>>>
A report on Minnesota’s problem with contracting out the state public health care programs to HMOs


ALSO, you can...

CLICK HERE to read the GMHCC summary of recent private and

state audits of the HMOs and DHS -





HHS Accountability Legislation Lacking…

 June 15, 2012

After many hours of debate and legislative wrangling over the provisions of what has become generically known as the Health & Human Services (HHS) Accountability Bill, the final version’s elements can now be revealed.

This information comes courtesy of a private researcher and ally of GMHCC and Seven County.

Audit language contained in HHS omnibus legislation
First introduced in various stand-alone bills, managed care audit requirements were folded into the 2012 Health and Human Services Omnibus bill, which emerged from conference committee on April 23rd.

The audit provisions alter Minnesota Statutes section 256B.69, by adding another subdivision, labeled (9d.). This subdivision allows that:

• The legislative auditor will contract with an outside audit firm to conduct a bi-annual, “independent, third-party financial audit” of managed care financial data.

• Audits will focus on data that HMOs and county-based purchasers already submit to DHS – including information on administrative expenses, revenues, reserves, reinsurance, and more.

• Audits will be conducted “in accordance with generally accepted government auditing standards issued by the United States Government Accountability Office.”

• The audits will determine if managed care programs are compliant with state and federal laws, as well as with the federal Medicaid rate certification process.

• Firms retained for the audit cannot have provided services to managed care or county-based purchasers during the time period for which the audit is being conducted.

• Future managed care contracts must include provisions that allow auditors access to relevant information, and stipulate cooperation with such auditors. Contracted firms will have the same powers as those of the legislative auditor, for the purposes of completing managed care audits.

• Managed care organizations must provide DHS with bi-weekly “encounter” and “claims” data on public health care programs.

• Audit results will be circulated to the Commissioner of DHS, the state auditor, the attorney general, and various members of the legislative leadership.

In summary…

The end result of these changes is one long-sought by transparency advocates. The bill adds an additional layer of oversight to the state’s managed care programs, by inserting an external auditor who is empowered by (and answerable) to Minnesota’s legislative auditor.

Previously, the oversight of managed care programs fell to DHS, and to a lesser extent, to MDH and the Department of Commerce. The underlying premise of the audit legislation clearly appears to be that an outside observer can find new perspectives on the efficacy of public health care plans, even though they will be using the same underlying data set as state agencies.

The legislation omits a key provision sought by Senator John Marty, in that audits will only extend to contracts beginning in 2014, and will not be retroactive to prior years. GMHCC has long contended that understanding what occurred in the past will be critical to managing public programs going forward – as well as discovering the scope and scale of any past improprieties.  There is some hope that language can be added or amended next session to move the audit window back at least to 2011 or before.    ~30~ 



Whistleblower Fired....

December 2010

In a move that caught many people by surprise, the attorney for almost 30 years for the MHA (Minnesota Hospital Association) was abruptly terminated in response to a video that he helped produce. 

The video was authored and produced by Dr. David Feinwachs who has been the corporate attorney for  the MHA since 1980.  Feinwachs was “released” from responsibilities in late November in apparent response to vehement objections to its content by various HMOs in Minnesota.  Minnesota’s HMOs were the subject of the video along with the state healthcare programs that they have been allowed to run since 1983.

At issue in the video is the double-standard and lack of accountability that is now the rule for the non-profit HMOs in Minnesota (by law, all Minnesota HMOs are required to be organized as non-profit entities).  Feinwachs describes the accountability problem as a “black box.”  State “tax dollars go into the black box” of HMO accounting in the form of $3 billion dollars in tax money every biennium, and they are “never accounted for” in any meaningful way, according to Feinwachs.

Feinwachs considers the current system of handing over healthcare tax dollars to the HMOs fiscally irresponsible and something that needs fixing.

The video illustrates the lack of oversight in a simple and understandable fashion and asks viewers to consider  the question of why no accounting of funds has been demanded for these tax dollars, and why this *demonstration project has been allowed to continue unmonitored. 

The response to the video’s content from the HMOs through the MN Council of Health Plans (MCHP), the organization which is made up of HMOs in the state, has been that they are monitored and are accountable to the state.

Feinwachs addresses that by saying they (the HMOs) are allowed to self report their expenditures and they don’t follow the same standard as any other group receiving state tax dollars.  He goes on to say that they are also not subject to any competitive bidding process, which is also unique to organizations receive state money.

As a well known and highly respected member of the healthcare industry as part of the MHA, Feinwach’s firing has generated a huge amount of interest.  Related to that, KSTP-TV reporter Jay Kolls has done an investigative piece on the story and plans to follow legislative activity related to the issue of HMO accountability.

Seven County and the Greater Minnesota Health Care Coalition (GMHCC) has contended for years that turning over state run programs without regulations or accountable standards has always been a huge waste of state resources.  Efforts to urge accountability hearings have been an ongoing priority with GMHCC and its coalition partners for years. 


State “tax dollars go into the black box” of HMO accounting in the form of $3 billion dollars in tax money every biennium, and they are “never accounted for...”

David Feinwachs


Echoes Senior News Now Online




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Welcome to the Greater Minnesota Health Care Coalition.

GMHCC is a non-profit organization, grassroots organization. We seek to unite Greater Minnesota citizens and their organizations to create positive social change on healthcare and other issues. In particular, we advocate for affordable prescription drugs, a sustainable Medicare system, and healthcare for all citizens. We also offer related information and resources, including a prescription drug program.

Follow our links to learn more about our positions on issues such as Medicare, healthcare, and prescription drugs; our legislative outreach, and our prescription partnership program. If you want more information or would like to talk with someone at GMHCC, call us toll-free at 1-888-694-5055.









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