Kansas denies UCare's bid for Medicaid contract

UCare has suffered a second setback in its plans for health plan growth outside Minnesota.

In results announced this month, Kansas officials gave low marks to the Minneapolis-based HMO's bid on a contract to manage care for beneficiaries within the state's Medicaid program. They recommended contract awards for Minnetonka-based UnitedHealthcare, a division of Missouri-based Centene Corp., and a partnership between two Blue Cross and Blue Shield health insurers.

UCare's bid for growth in Iowa suffered a similar fate in August 2022, when state Medicaid officials opted to hire two for-profit health insurance companies, rather than the nonprofit UCare.

"We are disappointed by the KanCare results, but knew that competing against established plans in Kansas would be extremely challenging," UCare said in a statement to the Star Tribune. "In our view, every [request for proposals] opportunity is a valuable learning experience and building block for eventual success."

With nearly 1,200 employees, UCare is Minnesota's fifth largest nonprofit group. The insurer was founded in the 1980s by University of Minnesota family medicine doctors as part of a demonstration project to see if nonprofit health plans could effectively manage care for people in the Medicaid program, which primarily covers lower-income residents.

Over the years, as UCare added Medicare Advantage coverage for seniors and health plans for individuals to its lineup of services, its geographic reach has largely been limited to Minnesota and parts of Wisconsin.

In Kansas, the HMO made grants to certain health care groups and hired a market president for operations as prep work for the bidding process.

Last year, UCare announced it would pay $100 million to the University of Minnesota as part of a settlement in which the U relinquished its majority on UCare's board of directors. In 2022, the university sued UCare, to stop the HMO from changing the composition of its board. The U's lawsuit suggested university officials had used their board positions to question UCare's proposed expansion in Iowa.

In its statement Wednesday, UCare said: "We believe our 40 years as a leading government programs health plan, our deep commitment to serving Medicaid members and our community-based model are assets here in Minnesota — as well as in new states that seek a high-performing partner."