Highlight on Minnesota: Health plans’ red ink worst in a decade

Nonprofit insurers in Minnesota reported an operating loss of $687 million on nearly $25.9 billion in revenue for 2016, according to a trade group for insurers, the Minnesota Council of Health Plans. The financial results were the worst in a decade, with losses in both the state public health insurance programs and the marketplace where individuals purchase coverage for themselves.

Overall, revenue from premiums increased 4 percent over the prior year, while expenses increased 6 percent to $26.6 billion. State public programs accounted for more than half of the overall losses, followed by continued losses in the individual market. According to the report, on average, health insurers paid $763 per second for care. To pay those bills, insurers withdrew nearly $560 million from state-mandated medical reserves. The bulk of the financial losses reported did not result from the employer group and Medicare markets, which remained steady, and where most Minnesotans get health insurance.

In the individual market, Blue Cross and Blue Shield of Minnesota said it lost $142 million for 2016, compared to a $265 million deficit the previous year. The decline mirrored the drop in enrollment, the insurer noted, rather than an improvement in the business. Over the last 10 years, health insurers returned a profit in seven. The numbers reported by the trade group focused solely on revenue and income from the health insurance business, as investment returns made by insurers were not counted in the numbers. Some saw hope in the overall numbers, however, noting that the market was not in a “death spiral,” as some health law critics have argued, because many insurers in 2016 saw slight improvements from the previous year.

Highlight on Minnesota: Blue Cross, medical cannabis, and baby chickens

BCBS customers feeling blue about next year

Blue Cross and Blue Shield of Minnesota (BCBS) has given up the ghost and will not sell health plans to individuals and families next year. The company projected a loss of over $500 million in the individual market over three years, based on current trends, with a loss of $265 million reported in 2015. Premium revenue for individual plans did not come close to supporting claims. Individual market plans will still be available on a limited basis through Blue Plus HMO from the insurer’s parent company, which currently has about 13,000 members. Blue Plus covers a very small share of the market, considering that 103,000 state residents who have purchased BCBS coverage will have to go back to the drawing board during the next open enrollment period.

The company stated that it would be notifying each member, and committed to assisting all customers in transitioning to new coverage. The company also indicated its intent to continue working with state leadership to stabilize the market and find workable solutions. A spokesperson for MNsure, the state exchange, said about 20,000 of the soon to be displaced members purchased their BCBS plans on the exchange. The majority of these customers qualified for tax credits to make premiums more affordable, and they are encouraged to come back to MNsure to shop for coverage in order to maintain financial assistance.

New condition category for medical cannabis

Minnesota’s medical cannabis program will celebrate its first birthday by adding a new condition to its eligibility list: intractable pain. This type of chronic pain stems from a cause that cannot be removed and has resisted normal pain management methods, or those methods have caused intolerable side effects. Patients must be certified on the Minnesota Department of Health (MDH) website by a provider, then registered to receive medical cannabis at one of eight state treatment centers. Medical cannabis is provided either in a pill or a liquid form.

Hands off the cute baby chicks

Young poultry may be more dangerous than they first appear. The MDH reports that nine cases of salmonella infections occurring from late April through mid-June of this year have been linked to baby chickens and other poultry (ducks, turkeys, or pheasants, specifically). Eight of the nine people who fell ill purchased young poultry this spring at local feed stores. The cases struck a wide range of ages, from 2 months to 66 years.

Birds that appear clean and healthy may have enough bacteria on their feet or feathers to infect a human. The MDH warns that young children, who are likely to be attracted to the baby birds, are at an increased risk for contracting salmonella and are also more likely to experience complications. Recommended precautions include thoroughly washing hands after contact with poultry, not allowing children under 5 years old to handle poultry, supervising older children closely, keeping food and drinks away from poultry, and avoiding contact with the face.

Bipartisan Lawmakers Call for Closer Scrutiny of Minnesota Medicaid Program

During a recent committee hearing, the Minnesota legislature became aware that the state’s Medicaid program, called the Medical Assistance Program, is being investigated by the federal government on allegations that it inflated health care premiums to receive excess federal funds. Consequently, lawmakers from both sides of the aisle are recommending a review of the program’s accounting practices by an independent third party auditor.

At issue in the investigation is whether Minnesota funds have improperly boosted the financial reserves and profits of four HMOs that manage the program, including Blue Cross and Blue Shield of Minnesota, UCare, Health Partners and Medica. United States Representative Michelle Bachmann framed the inquiry as, “(a)re nonprofit HMOs certifying the level of risk that may or may not even exist in order to draw down massive amounts of matching federal funding?” The collective surplus of the HMOs, combined with those of related private market health insurance companies, totaled $2.5 billion at the close of 2010, according to the Minnesota Council of Health Plans (MCHP), an HMO trade group.

Eileen Smith, the spokesperson for MCHP, maintains that as health care costs are increasing, there is more of a necessity for insurers to place money in reserve. She also contends that the amount currently in reserve is only sufficient to cover less than three months of care under the program. At this time, the state has not imposed a maximum limit on financial reserves.

One of the program’s biggest challengers, Attorney David Feinwachs, inquired during the committee hearing why UCare exceeded anticipated profits from the program in 2011, resulting in its return of $30 million to the state. Officials defend the HMOs’ profits on the Medical Assistance Program because the HMOs used to run a second low-income health insurance program, the General Assistance Medical Care (GAMC), at a financial loss. Feinwachs questioned why the federal government did not receive its half of the returned money, despite its role as joint funder of the Medicaid program and why other HMOs did not refund excess profits as well.

Representative Glenn Gruenhagen inquired why HMOs have been receiving increasing amounts of funding although provider payment rates have not increased. The Commissioner of the Minnesota Department of Human Services, Lucinda Jesson, said that HMO enrollment has been growing, which has been a factor in the increased funding. Jesson also maintained that there was no provision in UCare’s contract that required them to make the $30 million payment to the state; therefore, it qualified as a donation, not a refund.

Bachmann made it clear that she will assist state legislators by introducing comparable federal legislation that requires independent auditing of the Medical Assistance Program.