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.

*  *  *  *  *

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.