Minnesota Payers Report 2012 Spending Increase
Payers in spent just under $19 billion last year to provide care to their enrollees in Minnesota, according to a new report.
The data from the Minnesota Council of Health Plans, which represents not-for-profit payers, concluded that spending was up $1.3 billion in 2012 compared to 2011, an uptick of 7% overall. Per person spending rose an average of 5%.
The leading cost drivers was outpatient care provided by hospitals and emergency care, both up 10%. Chiropractic and mental health services were up by 15%, but represented a far smaller portion of the overall spending.
The health plans barely eked out margins in the black during 2012, netting $120.1 million on $20.9 billion of premium revenue – a profit margin of 0.57%.
Blue Cross Blue Shield of Minnesota, the state's largest not-for-profit insurer hit this number almost precisely: It reported net income of $54.8 million on revenue of $9.5 billion, for a margin just over 0.57%. However, it only reported a profit due to investment income and other forms of income. Otherwise, it posted an operating loss of $54.8 million.
“During the recent recession, our members did not seek levels ofcare consistent with historical patterns, and utilization was lower than expected,” said Jamison Rice, chief financial officer of the Minnesota Blues. “As the overall economystrengthened, the volume and cost of our medical claims rose, contributing to the operating lossexperienced last year.”
Minnesota's health plans reported somewhat better returns on its Medicaid managed care plans, with an operating margin of 1.4%. The average margin on Medicaid managed care over the past decade has been 10.8%.
However, a recent audit report undertaken by the Segal Group on behalf of the Minnesota Department of Human Services concluded that health plans that service the poor received $207 million more between 2002 and 2011 than they had contracted for with the state. Officials with the MCHP have blamed state regulators for the overpayments, citing their power to set rates.
