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Dayton and Major Health Plans Agree to Cap 2011 Profits

April 05, 2011

Governor continues to lead on managed care reforms, focus on taxpayer value

St. Paul, MN -- Today Governor Mark Dayton and Human Services Commissioner Lucinda Jesson announced additional health care cost-savings, by reaching an agreement with the four major health plans – BlueCross BlueShield, HealthPartners, Medica, and UCare -- to place a 1% cap on profits for 2011 managed care contracts.  The four health plans have voluntarily agreed to a one-time cap on 2011 earnings at 1% of revenue, and to return any amount over 1% to the state’s General and Health Care Access Funds in April, 2012.  
 
“I applaud UCare, HealthPartners, Medica, and BlueCross BlueShield for their civic responsibility in recognizing the State’s dire financial condition, and helping to reduce our rising health care costs,” said Governor Dayton.  “I thank them and Human Services Commissioner Lucinda Jesson for their outstanding leadership in working together to reach this agreement.”
 
Beginning in 2012, as a result of reforms announced recently by Dayton and Jesson, managed care contracts will be subject to a competitive bidding process and new contracts with providers statewide will be negotiated.
 
“Our managed care reforms will result in purchasing better care at better prices in the future,” said Commissioner Jesson, who negotiated the agreement.  “In the short term, we have a budget challenge and I appreciate our state health plans helping to address that shortfall. ”
 
This announcement comes following health plans, on Friday, reporting collective profits of 3.8% made on its 2010 contracts for taxpayer-funded public health programs.  Profits had increased substantially from 2.6% in 2009 to the 3.8% profit reported for 2010.  While previously announced managed care reforms will ensure the state is a ‘smarter purchaser’ in the future, this one-time cap on profits in the current contracts – negotiated by the previous administration-- provides more immediate relief. In addition to today’s cap, UCare has already announced it will provide a one-time, $30 million contribution to the state in 2011.