August 1, 2012
Documents obtained by PRM show that former Minnesota State Representative Matt Entenza raised questions about the relative efficacy and cost of Minnesota’s HMO-administered managed care programs. These initiatives provide health care to low-income and disabled Minnesotans, through programs jointly funded by the state of Minnesota and the federal government.
Managed care programs are currently administered by non-profit HMOs and county-based purchasers that receive blocks of money, and then disburse them out to hospitals, doctors, and others providing care to PMAP enrollees. Recent criticism of the managed care model has resulted in changes to the way such programs are administered in Minnesota’s biggest counties, as well as to managed care audit requirements. However, questions persist about whether managed care provides the cost savings that it claims to deliver, and whether it makes maximum use of public dollars.
The managed care model supplanted the former “fee-for-service” model of public health care, in which providers billed the state directly for services rendered. The 2004 Entenza letters raise the question of whether managed care actually resulted in a cost savings over the fee-for-service model. In response to Entenza’s questions, former DHS Commissioner Kevin Goodno noted that “there are a number of benefits to managed care that accrue both to enrolled recipient and the State,” but also noted that DHS did not have a methodology for comparing current managed care costs against fee-for-service costs.