Minnesota has awarded contracts worth about $5 billion next year for health plans that will pay for and manage the medical needs of about 600,000 people.

The award of contracts, announced this week by the state Department of Human Services, covers primary health insurance programs for low-income state residents outside the metro area.

Mintonka-based UnitedHealthcare, which last year became the first for-profit HMO to win a contract in public programs, was among the winners, doing business in two counties.

Under the contracts, Blue Cross and Blue Shield of Minnesota, both based in Medica City, will see larger expansions. Meanwhile, Bloomington-based HealthPartners will not be an option in 22 counties across central and northern Minnesota.

For decades, Minnesota has hired HMOs and county purchasing organizations to manage enrollee sponsorship in public programs, which are funded jointly by the state and federal government. While health plans can make money from contracts, the money is primarily paid for health care services.

Prior to 2017, state law prohibited HMOs from bidding on contracts.

The recent purchase covered 80 counties in Greater Minnesota for families and children from MinnesotaCare Plus Medicaid Prepaid Assistance (PMAP), Minnesota’s largest program for Medicaid recipients. Insurance programs provide coverage to low-income Minnesotas.

“These contracts have been expanded to improve just and timely access to care,” Commissioner for Human Services Jodi Harpsted said in a news release.

The state also awarded contracts to administer care in all counties for eligible seniors and adults with disabilities for three smaller public programs.

Contracts are awarded on a county-by-county basis, which means residents choose from different combinations of health plan options depending on the county they live in. With new contracts, nearly 31,000 people in public programs will need to choose a new health plan or be assigned one.

Other contract winners include Hennepin Health, Itasca Medical Care, PrimeWest Health, South Country Health Alliance, and UCare. All health plans that currently have managed care contracts in public programs will return for 2023 in at least one county.

In a statement to the Star Tribune, the insurer said HealthPartners remains an option in 12 counties, but has decided to withdraw its service area due to “the uncertainties that the pandemic and federal public health emergencies have brought to the market.”

The Department of Human Services and county officials jointly registered bids, prioritizing how health plans address “equity, eliminate disparities in health outcomes and respond to the needs of rural Minnesota residents,” DHS said in a news release.

“For Minnesota seniors and adults with disabilities, DHS has prioritized the stability and continuity of care by ensuring that those enrolled can maintain their existing health plans,” the department said.

Last year, UnitedHealthcare was among the winning bidders on contracts to manage care for nearly 700,000 people in seven metro Twin Cities.

Altogether, managed care contracts in state public programs represent approximately $8.7 billion in annual spending, while providing coverage for approximately 1.3 million residents.

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