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June 17, 2021                                                                                                             Contact:      Allan Baumgarten, 952/212-8589

 

Minnesota Health Market Review 2021 finds:

COVID-19 pandemic drives higher profits for health plans,

increases in Medicaid managed care enrollment

 

            (Minneapolis-St. Paul) Minnesota health plans increased their enrollment and more than lower claims for surgeries and other primary and acute care. Six health plans enjoyed an unexpected windfall when they received payments of more than $380 million under the Affordable Care Act Risk Corridor program.

 

            These and other findings are reported in Part One of Minnesota Health Market Review 2021, released today by Allan Baumgarten. This is the 32nd edition of the report, which analyzes key trends and competitive strategies for payer and provider organization in Minnesota’s health care markets. Part Two of the Minnesota report, to be released later this year, will present his analysis of the state’s provider systems and their strategies, financial performance and measures of inpatient utilization. The new report finds that:

 

  • Minnesota HMOs and County-Based Purchasing plans improved their net income from a net loss of $70.4 million in 2019 to positive net income of $272.3 million in 2020. Medica Health Plans was the most profitable HMO, with net income of $77.5 million and a margin of 6.8%, while Medica Insurance Company had net income of $257.3 million, based on its operations in nine states.
  • Medicaid and public programs were once again the most profitable line of business here. HMOs and County-Based Purchasing plans reported underwriting income (before investment revenues and income taxes) of $178.4 million on their state public programs in 2020. That was up from an underwriting loss of $129 million in 2019. The seven plans participating in the Minnesota Senior Health Options program (for persons receiving both Medicaid and Medicare) had underwriting income of $115 million from the program in 2020, up from $82.3 million in 2019.
  • Blue Cross Blue Shield received $249.7 million from the ACA risk corridor to compensate for losses on its individual plans between 2014 and 2016. Five other Minnesota companies split about $130 million in risk corridor payments, although two, Blue Cross Blue Shield and UCare, gave up part of their payment in exchange for an advance payment from investment funds.
  • Enrollment in HMOs and County-Based Purchasing plans increased by 11.6% in 2020, with Medicaid and other public programs adding nearly 170,000 net new members. UCare alone added more than 81,000 new enrollees in Medicaid, Medicare Advantage and individual plans. Minnesota is going through several procurement processes for Medicaid and other public program in 2021 and 2022, and these contracts represent billions in potential revenues for health plans.
  • Medicare health plans added about 52,000 members between January 2020 and 2021. UCare added about 12,000 to its HMOs and Blue Cross Blue Shield added about 16,000, mostly in PPO plans. Humana lost about 10,000 Medicare enrollees, partly because some major providers chose not to participate in its networks.
  • Enrollment continued to grow in individual and Medicaid plans in the first quarter of 2021. Individual plans added about 12,000 enrollees in the most recent open enrollment, while Medicaid added 27,000 new members in managed care plans.

            Excerpts from the report, including the “Minnesota Health Plans at a Glance” page can be viewed at AllanBaumgarten.com. Subscriptions to Minnesota Health Market Review 2021 in interactive PDF format, including both Parts One and Two, can be ordered and downloaded for $160.00 at www.AllanBaumgarten.com. Phone: 952/212-8589. E-mail address: Baumg010@umn.edu

 

Allan Baumgarten currently publishes reports analyzing health care payer and provider markets in Minnesota and five other states: Colorado, Florida, Michigan, Ohio and Texas. He conducts project research for a number of clients and has completed three studies of health plan and provider system strategies for the Robert Wood Johnson Foundation. More information about those projects is available at his website.

January 6, 2021

Minnesota Health Market Review 2020, Part Two finds:

Health Insurers Report 16.5% More Medicaid Enrollees, Reduced Claims and Stronger Profits in 2020; Minnesota Hospitals Posted Continued Strong Net Income in 2019

            Enrollment in Minnesota Medicaid HMOs increased by 16.5% in 2020, and health insurers saw lower claims and higher profits. Twin Cities hospital systems reported strong net income in 2019, 15.2% higher than in 2018.

            Part Two of Minnesota Managed Care Review 2020, released today, presents a new analysis of hospital and health plan finances based on data from 2019 and the first nine months of 2020. The author, Allan Baumgarten, is a Minneapolis-based analyst who published his first Minnesota market analysis in 1990. He analyzes data from Medicare cost reports, health insurer quarterly and annual statements and other sources and shows some of the early impacts of the COVID-19 pandemic.

            The report analyzes data for 31 hospitals in the Twin Cities area, including four in western Wisconsin that are part of Minnesota systems, and 51 hospitals serving communities in outstate Minnesota. It includes detailed data on financial results and inpatient utilization for the state’s major integrated delivery systems, including Fairview, Allina and HealthPartners in the Twin Cities and Mayo Clinic, Essentia, CentraCare and Sanford Health in outstate Minnesota. The health plan analysis uses quarterly statement data for the first nine months of 2020 to show the impact of the COVID-19 pandemic on insurers, including Blue Cross Blue Shield, UCare and HealthPartners.

            In the new report, Baumgarten found:

  • Even with a high number of COVID-19 hospitalizations, Minnesota health insurers reported lower medical expenses and higher profits in 2020. In the first nine months of 2020, the average medical loss ratio for Minnesota HMOs dropped from 91.8% to 88.5% and their average profit margin increased from 0.3% to 3.7%, compared to the same period in 2019. Other insurers, including Blue Cross Blue Shield and Medica Insurance Company, reported that their average medical loss ratio dropped from 80.7% to 77% and their average margin grew from 6.4% to 10.3%. Medicaid HMOs, including UCare and Blue Plus, added more than 138,000 members, an increase of 16.5%.
  • Twin Cities area hospitals reported net income of $603.2 million in 2019, or 5.3% of net patient revenues. That was 15.2% higher than their 2018 net income of $523.5 million (4.7% of net patient revenues). The HealthPartners hospitals, including Regions and Methodist, had the best results: $182 million in net income, or 10.7% of net patient revenues. The M Health Fairview hospitals saw their net income decline by half from $133.5 million in 2018 to $63.2 million. The system has since closed Bethesda and downsized St. Joseph, which had combined losses in 2019 of almost $50 million. Net income for the Allina Health hospitals in the Twin Cities dropped from $220.8 million 2018 to $148.8 million in 2019.
  • Led by the Mayo Clinic and Sanford Health systems, hospitals serving communities in Greater Minnesota reported combined net income of $1.502 billion, or 11.2% of net patient revenues. The Mayo Clinic hospitals in Minnesota reported net income of $943.9 million in 2019, up from $848.6 million in 2018. The Mayo hospitals in Rochester alone had net income of $949.1 million, or 33.4% of net patient revenues. The Sanford Health hospitals reported net income of $272 million, up from $222 million, while CentraCare, with eight hospitals across central Minnesota, had net income of $102.7 million, half of its 2018 net income. The Essentia hospitals reported combined net income of $89.5 million, about the same as in 2018. While some hospitals, including Altru in Grand Forks and the University of Michigan, have delayed major capital projects, Essentia is moving ahead with its $900 million Vision Northland project.
  • Inpatient hospital days increased for the second year at Twin Cities hospitals, though not at the hospitals outstate. Twin Cities hospitals provided 1.551 million inpatient days in 2019, up 2.5% from 2018. On an average day in 2019, 72.1% of inpatient beds at metro area hospitals were occupied in, up from 71.6% in 2018. Hospitals serving the Twin Cities provided about 8,600 more days to Medicaid recipients in 2019 compared to 2018.

This is the 31st year that we have published Minnesota Health Market Review. Part One of the 2021 edition is scheduled for release in May. The Part One report will examine 2020 data on the enrollment trends and financial results of Minnesota health plans, including a fuller analysis of the impacts of the COVID-19 pandemic. Excerpts from the report and subscription information can be found at AllanBaumgarten.com

 

Data Set Summary
Report Contents

Part One
Introduction    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
 . .
 . . 3
Market Structure      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

Health Plan Companies     .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . . . . . . . .4
Network Arrangements and Provider Systems     .  .                                    .  .  .  .  .  .  . . . . . . 7
Trend Review       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 
Health Plan Enrollment   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . .  . . . . . . . 8
Individual Markets and MNsure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
State Healthcare Programs .  .  .  .  .  .  .  ..  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   .  . . . . . . . . . . 11
Medicare Health Plans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .   .  .  ..  . 13
Health Plan Net Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . 14
Financial Results by Line of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
Administrative Expenses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .       21
Health Plan Capital. . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   23
A Look Ahead             . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25



Part Two
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 

Hospitals and Provider Systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 

Twin Cities Area Hospitals and Systems............................................................9
Revenues and Net Income .  .  .  .  .  ..  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . . 10
Occupancy and Payer Mix .  .  .  ..  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . . . .12
Performance Bonuses and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Outstate Systems and Hospitals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .  14
Revenues and Net Income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Occupancy and Payer Mix .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . .    .  .  .  . . . . ..17
Performance Bonuses and Penalties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Health Plan Trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . 21
 Enrollment by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  21
Utilization and Effectiveness of Care and Enrollee Satisfaction .  .  .  .  .  .  .  .  . . . . . .23
A Look Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . . . .  . . 27

Media Coverage/Presentations
Minnesota Health Market Review 2018, Part One, released June 8: "Minnesota Health Plans Regain Profitability, Add Enrollees; New Competition Stirs for Medicare Health Plans"
  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Health Insurers Return to Profitability in Minnesota" Click here to view
  • Paul Demko wrote in Politico: "Massive financial improvement for Minnesota health plans last year." Click here to view.
  • Chistopher Snowbeck wrote in the Minneapolis StarTribune: "Health plans lost less on Medicaid last year." Click here to view
Minnesota Health Market Review 2017, Part Two, released March 27: "Net Income for Twin Cities Hospitals Drops by 19%; Health Systems Continue Growth, Consolidation and Partnership Strategies; Minnesota HMOs Regain Profits and Increase Enrollment by 8% in 2017"
  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Study: Big hospitals outside Twin Cities grow profits." 
  • David Montgomery wrote about the 2015 report in the St. Paul Pioneer Press: "Metro hospital profits fell in 2014, while outstate earnings rose"
  • Dan Diamond wrote about the 2015 report in Poiltico Pulse: "The Mayo Clinic had a nearly 18 percent profit margin"
Minnesota Health Market Review 2017, Part One, released June 9: "Minnesota Health Plans Go From Record Profits to Large Losses; Health Systems Push Ahead With Health Plan Strategies"
  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Operating Losses Swamp Investment Gains at Health Plans in Minnesota" Click here to view​​
Minnesota Health Market Review 2016, Part Two, released April 10: "Outstate Health Systems Increase Profits by 15%; Medicaid Covers More Hospital Days"
  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Study: Big hospitals outside Twin Cities grow profits." 
  • David Montgomery wrote about the 2015 report in the St. Paul Pioneer Press: "Metro hospital profits fell in 2014, while outstate earnings rose"
  • Dan Diamond wrote about the 2015 report in Poiltico Pulse: "The Mayo Clinic had a nearly 18 percent profit margin"

Minnesota Health Market Review 2016, Part One, released May 25: "HMO Profits for Public Programs Surpass $230 Million; Medicaid Enrollment Grows But Individual Market Remains Volatile; Hospitals Double Down on Health Plan Strategy"

  • Christopher Snowbeck wrote in the Minneapolis StarTribune: "Record HMO profits from state programs." Click here to view