August 7, 2024  –  UnitedHealthcare has initiated a lawsuit against the state of Minnesota following a new legislative measure that prohibits for-profit Health Maintenance Organizations (HMOs) from administering Medicaid health plans. This law, set to be implemented next year, is currently under scrutiny for potentially breaching the “single subject clause” of the Minnesota Constitution.

The controversy stems from a substantial omnibus bill passed in the final hours of the legislative session in May, which included diverse topics such as higher education and traffic regulations alongside the HMO provision. UnitedHealthcare argues that this bundling of unrelated issues is unconstitutional and that there was insufficient legislative discussion on the specifics of the HMO ban.

The lawsuit, lodged in Hennepin County District Court, targets several state officials including the Attorney General and the Human Services Commissioner. UnitedHealthcare is seeking a judicial decree to strike down the Medicaid-related provisions of the omnibus bill, contending that the restrictions on HMO participation unfairly limit consumer choice and access to innovative and high-quality healthcare services.

“UnitedHealthcare is challenging legislation that limits choice for individuals, families and children in Minnesota,” said UnitedHealthcare in a statement. “Minnesotans deserve the right to choose among health plans that offer the broadest access to care, the most innovative services and the highest quality benefits to meet their health care needs.”

State officials have yet to respond publicly to the lawsuit. Historically, Minnesota has utilized both non-profit and for-profit managed care organizations to facilitate Medicaid benefits, with UnitedHealthcare becoming the state’s sole for-profit HMO following legislative changes in 2017. The company currently manages the healthcare of approximately 32,000 Minnesota Medicaid recipients, which could mean a big shift for beneficiaries if the ban is upheld.

The legal challenge also addresses payment structures, noting that for-profit HMOs do not receive higher reimbursement rates than their non-profit counterparts and are subject to the same regulatory requirements to maintain a spend of at least 85% of the capitation it receives from the state under the Medicaid program.

Amidst these developments, the Minnesota Department of Human Services has already indicated that it will not renew its contract with UnitedHealthcare for the coming year due to the new law. This lawsuit marks a critical point in ongoing national debates over the role of for-profit entities in public health programs, with outcomes that could resonate well beyond Minnesota’s borders.