ST. PAUL, Minn. (AP) — Gov. Mark Dayton toughened his stance toward health plans that manage care for subsidized health programs on Wednesday, ordering competitive bidding for state contracts and a new level of financial disclosure.
The Democratic governor directed state agencies to audit the plans and produce a yearly report detailing their finances. His administration will launch a website to showcase financial information about the plans, due to go live next week. Dayton is seeking to save on $3 billion worth of state contracts with health plans that manage care for more than 500,000 poor patients.
Human Services Commissioner Lucinda Jesson wouldn’t quantify how much savings competitive bids could yield, but said it would be significant. She said past contracts were renewed based on past business, but that will change for next year’s contracts in the Twin Cities market with a new bidding process that kicks off this month.
Dayton and Jesson also are seeking to recover excess reserves from health plans that do business with the state, an effort the commissioner said would be strengthened by the administration’s latest moves.
“They have to adjust to a new reality,” Jesson said in an interview.
A spokeswoman for the Minnesota Council of Health Plans had no immediate comment.
A release from Dayton’s office said health plan contracts went “largely unchecked” under Republican former Gov. Tim Pawlenty, now exploring a presidential campaign.
Minnesota’s budget is running $5 billion short over the coming two years, with health and social services programs among the fastest-growing spending items.
Both Dayton and lawmakers have targeted the area for spending reductions, but Republicans who run the Legislature would cut more deeply. Dayton instead is focusing on the nonprofit health plans. His latest executive order comes a week after UCare, a health plan that covers subsidized patients, voluntarily returned $30 million to the state treasury. The donation highlighted concerns about the level of reserves among health plans that do business with the state.
Jesson said she is negotiating with the other plans, whose contracts run through the end of the year. Health plans are due to file annual reports with the state Health Department on April 1, giving a fresh look at their reserves.
The Department of Human Services will collect bids for managed care contracts in June to start negotiations for 2012 contracts in the Twin Cities, the state’s most competitive health care market. Health plans don’t have an inside track — Jesson said her agency is ready to consider proposals from hospitals, clinics, counties or some combination thereof.
“How much we can lower costs, I think the market will tell us,” Jesson said. “But we haven’t had the market in there before, so this really is a fundamental shift.”
Meanwhile, the Department of Commerce will audit the health plans, probing more deeply into their finances than past state reviews of financial documents supplied by the organizations. The website on health plans will collect information the state has about the plans, making it accessible to policymakers and the public.
Dayton’s office also announced that the Human Services Department will bids for pilot health care projects focused on quality and efficiency. Last year’s Democratic-controlled Legislature authorized the demonstration projects.
Now in the minority, Democratic lawmakers cheered the administration’s moves.
“This is what real reform looks like,” said Rep. Larry Hosch, DFL-St. Joseph.
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