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Auditor: Minnesota followed the rules when awarding public health contracts

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It was a decision that will see 370,000 people switch insurance providers and led to the loss of almost 250 jobs at one company.

But an investigation into how Minnesota's Department of Human Services (DHS) awarded contracts for public health insurance programs, such as Medical Assistance and MinnesotaCare, has found it followed the rules.

The department says it will save $450 million after Blue Cross, HealthPartners and Medica won the bulk of the new contracts, but it was challenged by UCare, the biggest loser in the competitive bidding process.

The company was the biggest public health plan provider in Minnesota with 370,000 customers across the state, but was awarded zero contracts following the bidding process and as a result cut 245 jobs in October.

Now the preliminary results of a probe into the bidding process carried out by the Office of the Legislative Auditor has found the state followed the correct procedures when awarding the contracts.

"We concluded that DHS followed existing legal standards for scoring competitive bids and accurately calculated the total bid scores and top rankings of the proposals that were submitted," it wrote.

The DHS said UCare's bid didn't prove to offer the same value to the state as other companies when the quality of care and services they were offering was measured up against the cost.

Changes needed for county-based health providers

But the Office of the Legislative Auditor did concede the state had made a mistake in taking contracts away from South Country Health Alliance, which at the end of process was left with just a single county in which it could provide public health contracts.

South Country is a "county-based" healthcare provider, run by a group of 12 Minnesota counties including Goodhue, Todd, Wabasha and Waseca.

Following mediation, the Pioneer Press reports the DHS restored South Country as a provider in all of its original counties.

The auditor's report said changes are needed to laws regarding county-based health providers. The newspaper says the law currently requires the DHS to seek bids for every county in the state but also needs to offer contracts to county-based programs.

"In particular, the Legislature should clarify in law requirements regarding the participation of county-based purchasing organizations in competitive bidding and counties’ authority to purchase or provide public health care," the legislative auditor wrote in a letter to lawmakers.

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