UCare, its partner businesses and about 370,000 of its clients face uncertain times as a result of a competitive bidding process for state health care contracts. The clients are among an estimated 475,000 Minnesotans who must switch public health plan providers in January 2016. This is the greatest number of Minnesotans who have ever had to switch plans in a given year.

UCare officials have described the change as a disruption, noting that about 40,000 of its clients affected speak languages other than English. Clients are low-income, many with disabilities.

UCare’s fight to retain its contracts, and allow counties to indicate a preference for its health care plans, is part of a larger statewide shakeup for Minnesota managed care organizations that provide Medicaid and MinnesotaCare services. With an estimated value of $4.9 billion for the new enrollment cycle, Medicaid and MinnesotaCare contracts are a huge windfall for companies that land them. Enactment of the federal Affordable Care Act, which expanded availability of Medicaid for people at or below the poverty level, has changed the landscape of this contract process.

State officials have said they will award managed care contracts county-by-county, with at least two plan options in most counties. Counties in the seven-county metropolitan area will each have three plans available. Minnesota hires county-based purchasing organizations and health maintenance organizations to manage care for most clients in public health insurance programs.

Losing contracts would mean cuts to as much as half of UCare’s staff, the end of services including immigrant health programs and a mobile dental clinic and cuts to organizations UCare
has supported. UCare is very dependent on public programs as about half of its $3 billion in revenue in 2014 came from state programs. The situation is much bleaker for Owatonna-based South Country Health Alliance (SCHA).

The county-owned managed care organization will lose all but one of its 11 member counties as a result of competitive bidding. That could mean shutting down, putting more than 30 people out of work and forcing changes for about 37,000 clients. Some counties involved in SCHA are considering their legal options.

Founded in 2001, the county-owned SCHA serves counties in east and south central Minnesota. Leota Lind, CEO of the alliance, told Minnesota Public Radio that her organization will lose 85 percent of its membership.

Officials from UCare and SCHA took their case to a Senate committee hearing August 19. Senators seemed sympathetic to the plight of the two organizations, with Sen. John Marty, DFL-Roseville, asking “Why can’t we put this off a year?” Other legislators wondered if the changes could cause too great a disruption for companies and for clients. UCare was singled out by some legislators for its service to diverse communities.

UCare sued the state last month to block the September 4 start of new enrollments, alleging that the Minneapolis-based company was arbitrarily cut out of the recent contract bidding process. “We were surprised and disappointed by [the state’s] decision to exclude UCare, a 30-year partner in this work,” Jim Eppel, the UCare chief executive, said in a prepared statement. “This action is a last resort for us after we made every effort to seek reconsideration.”

UCare also has contended that competitors received key financial data that tainted the bidding. Yet another point is that many Minnesota county officials want to continue to work with UCare. UCare’s request for an injunction was heard August 29.

Ramsey County District Court Judge Robert Awsumb September 4 declined to grant UCare’s request for an injunction against changes in insurance for its clients. While admitting that it could be “significant and quite possibly devastating” for UCare to lose its clients through state public programs, Awsumb stated that other providers lost public programs in the past but survived.

UCare spokesman Dan Ness said an appeal is being considered. The judge has scheduled an expedited trial for November 2, so both sides can continue to make their cases. But that will not stop the enrollment process through the Minnesota Department of Human Services (DHS).

Other health care companies objected to UCare’s claims. They asked Awsumb to deny the injunction request. Blue Plus, Medica and HealthPartners all filed papers with the court saying that the injunction if granted would threaten the orderly transition for those who need to enroll in new plans. All of the companies stated in court documents that they have begun making plans for the transition and that granting the injunction would only cause confusion.

In its filing, HealthPartners stated that “Stopping the transition envisioned and established by the DHS at this late stage will affect the ability of plan members to obtain health care services in the coming year.” Blue Plus, which is a division of Blue Cross Blue Shield, stated it would be “fundamentally unfair” to change the rules of the process now and force DHS to work with UCare.

In July Gov. Mark Dayton and DHS Commissioner Lucinda Jesson announced results of a competitive bidding process for state health care contracts for Medicaid and MinnesotaCare. They announced that the new contracts could save the state $450 million starting in 2016. They also announced that health care companies would refund the state $200 million. That’s a savings because fewer people than anticipated needed services.

The state would keep about one-third of the $650 million, with the rest going back to the federal government. The July bid process is a continuation of a process Dayton began in 2011. In 2013 bids were accepted for contracts in the Twin Cities metropolitan area. Twenty-seven counties were the focus of a bid process in 2014. All 87 Minnesota counties’ programs were competitively bid this year.

The bidding has had the results state officials desired. Costs for contracts in the current bid process are down 15 percent from last year, resulting in cost savings. The three biggest HMOs that did well as a result of the bids are Blue Plus, HealthPartners and Medica.

But UCare filed suit after state officials announced that the three other managed care providers won the bidding process. The bidding scores haven’t been released as the new providers need to sign their state contracts before the data can be made public. State officials have objected to claims that the bids were unfair and have stated that the other bids were better.

“Perhaps when the bidding results and scoring data is available for review, UCare will make a stronger showing,” Awsumb wrote.

In his ruling Awsumb stated that UCare didn’t provide enough evidence to support its claims. Awsumb also said the process of new enrollments should proceed. But how enrollment proceed may still be a question mark as counties may choose to appeal the plans the state offers to their residents.

The changes are prompting objections from some of UCare’s partners. Not only do UCare, SCHA and other managed care organizations work with clients, they also work with durable goods providers, home health care providers and others.

St. Paul-based Handi Medical Supply has worked with UCare for many years to provide home medical equipment and supplies, but doesn’t have contracts with the other companies chosen by the state. Customers could be forced to work with a new home medical equipment and supply provider.

Laurie Tomaszewski of Handi noted that the change has a direct impact on clients. ‘People assume they can stay in their home, get the supplies and equipment that is needed to be safe and healthy, provided by a company of their choice,” she said. “Handi Medical Supply has thousands of UCare customers who have received complex rehab; we maintain and repair their equipment. They count on us to keep them safe and independent.”

“Not being able to provide, like we have for the last 27 years, to our customers is a disservice to this community,” she said. “Handi Medical Supply has 100 employees, we provide supplies and equipment for people who need wound care, urological supplies, have respiratory needs, or complex mobility and rehab needs and more. Our customers and their families, along with the medical community have become part of our team, we are like family. It is important that our customers are being properly cared for and that their needs are met.”

United Home Health Care Inc., a St. Paul-based company that works with diverse populations, said UCare has always worked well in providing services for its clients. That company’s leadership argues that it and other minority-owned companies have had trouble getting service contracts with other health care providers, but that UCare has always been willing to work with diverse communities and their care providers.

“When a UCare member calls UCare for initial core services, a UCare staff member who is either from the culture or has good understanding of the culture of the patient can return a phone calls within five to 10 minutes and be of assistance right away,” United officials said in a statement. In contrast, clients have had to wait several days to get help from county officials.

One argument Handi, United and other UCare partners raise is that there are many negative impacts for those who must switch plans. Benefits must be coordinated and HIPAA rules followed. Paperwork and transfer of records can be complex. United argued that the costs of training people to work with diverse communities will be much more than state officials imagined.

Another issue critics raise is whether DHS can facilities such as larger number of plan changes, despite moving the transition period from October to September to accommodate those who need to make changes. Last year’s switch to use of a MnSure system to determine public benefits eligibility resulted in a backlog that peaked at 180,000 cases. Many were frustrated when eligibility for renewal for Medical Assistance and MinnesotaCare plans wasn’t determined as quickly as desired. DHS officials argue that the transition will go smoothly and that the state and new providers are prepared to handle the changes.

UCare began in the 190s, started by the University of Minnesota Department of Family Practice and Community Health as a safety-net for people who had little or no access to health care. UCare is now independent from the U of M.