Fairview to ac­quire strug­gling in­surer UCare

Modern Healthcare - - REGIONAL NEWS - —Bob Her­man

Fairview Health Ser­vices in Min­neapo­lis is jump­ing into the health in­sur­ance busi­ness with both feet with plans to ac­quire UCare.

The deal an­nounced last week, and ex­pected to re­ceive fi­nal ap­proval by this sum­mer, would shake up Min­nesota’s health­care busi­ness and po­lit­i­cal land­scape. Ac­quir­ing UCare would al­low Fairview to build a much larger in­sur­ance di­vi­sion. Fairview re­cently be­came the full owner of health in­surer Pre­ferredOne and dropped out of the Min­nesota Hos­pi­tal As­so­ci­a­tion.

For UCare, the merger may be a door-die sit­u­a­tion be­cause the health in­surer lost nearly all its state Med­i­caid busi­ness. UCare elim­i­nated more than a quar­ter of its work­force last year af­ter Min­nesota de­cided to end most Med­i­caid man­aged-care con­tracts with UCare, ac­cord­ing to the Star Tri­bune.

Al­most all of UCare’s in­sur­ance busi­ness comes from tax­payer-funded pro­grams. About 76% of its 2015 rev­enue came from Med­i­caid pro­grams alone, ac­cord­ing to UCare fi­nan­cial doc­u­ments an­a­lyzed by Mod­ern Health­care. UCare ended last year with al­most 500,000 mem­bers, but a vast ma­jor­ity of those are Med­i­caid mem­bers who are mov­ing to other plans, leav­ing UCare with about 150,000 cov­ered lives. The plan still has al­most 93,000 Medi­care Ad­van­tage mem­bers and also sells health plans on Min­nesota’s Af­ford­able Care Act ex­change.

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