State to audit rate-setting for Medicaid managed plans

In an unusual move, Minnesota insurance officials are seeking an independent audit to determine whether private insurers were overpaid to manage the state's Medicaid program.

The outside auditors, which haven't yet been chosen by the Minnesota Department of Human Services (DHS), will examine the state's Medicaid rate-setting practices under former Gov. Tim Pawlenty, the Minneapolis Star Tribune reported.

"This independent analysis will allow an outside independent expert to address, once and for all, whether the state's payments to those contractors were higher than the amounts allowable under state and federal law," DHS Commissioner Lucinda Jesson wrote in a letter to legislative leaders. "The results of this analysis will also inform the Medicaid contracting reforms undertaken by our administration since 2011."

Minnesota's contracts with private payers to administer Medicaid have been the focus of several federal and state investigations that have attempted to determine whether state officials manipulated the rate certification process, the Pioneer Press reported.

Gov. Mark Dayton and Jesson both have stated that Minnesota's Medicaid contracts have been too generous for private insurers. Attempting to improve the state's contracts, Jesson reached an agreement with nonprofit health plans to institute a 1 percent cap on profits they earned through Medicaid, resulting in a total of $73 million paid to the state and federal governments, according to Minnesota Public Radio.

The Minnesota Council of Health Plans said insurers with Medicaid contracts already have and will continue to support transparency. "The state sets the rates paid to health plans, and [the federal government] approves them," Executive Director Julie Brunner said in a statement. "If DHS has any questions about the rates between 2003 to 2011, asking for a review by an independent party is a reasonable action on the part of the commissioner."

The audit report should be completed in November.

To learn more:
- read the Minneapolis Star Tribune article
- see the Pioneer Press article
- check out the Minnesota Public Radio article

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