Minnesota Gov. orders changes to state health care, institutes competitive bidding

Minnesota Governor Mark Dayton has instituted competitive bidding for providers of state health care according to a a new Executive Order issued yesterday. The Order further requires that providers fully disclose their profits, reserves and administrative expenses. According to the Governor, Minnesota’s history of uncompetitive contracts has resulted in high-cost managed care plans that aren’t focused on patient outcomes. In order to correct this, the Governor has called upon providers to donate excess earnings and reserves back to the state as U-Care did last week.

Under the terms of the Order, on April 1st providers will be required to audit their services and make their annual reports public. The Administration intends to ask any plan that discloses excess reserves to return that amount back to the state. The reserve is an amount insurers set aside each year to pay for expected claims. Minnesota has no cap on how much money a provider can hold in reserves.

Currently, Minnesota spends more than $3 billion annually covering more than 500,000 residents and using up eleven percent of the state budget – amounts that are only expected to increase. Dayton aims to recover at least part of that cost through competitive bidding focused on cost savings and patient outcomes rather than procedures. Under the reforms outlined in the Order, the Administration will be instituting a statewide Request For Proposal (RFP) process that specifically asks provides to develop new ways to cover individuals instead of relying on managed care plans. The RFPs will reward providers that work directly with people to improve their health.

In order to accelerate the process, the Department of Human Services has issued a Request for Information (RFI) today that seeks to connect patients directly with hospitals, clinics, and community health providers and holding providers accountable for quality of care. The Administration will also be outlining budget measures designed to lower plan costs.

“For far too long, health care plans have simply been paid based on what’s been done before. Through full, public disclosure of plan expenses and premiums, competitive bidding, and with a focus on outcomes instead of procedures, we can modernize our approach to health care,” said Human Services Commissioner Lucinda Jesson, of the Order.

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