Minneapolis-based UCare seeks to continue growth, vying for Medicaid business in Kansas

UCare is looking to continue its recent growth spurt by competing for Medicaid business in the state of Kansas.

Like other states, Kansas hires private health insurers to manage care for beneficiaries in the state-federal Medicaid and CHIP programs, which generally cover lower-income residents.

Last year, the state requested proposals for new managed care contracts starting in 2025, with winners announced in April. Minneapolis-based UCare says it met a January deadline for bidding on the work and has been learning about the Kansas market through meetings with health care providers, community groups and state officials.

“Kansas isn’t the only state that we’re thinking about,” Chief Executive Hilary Marden-Resnik said in an interview with the Star Tribune.

“Obviously, there’s a business benefit when you get scale [but] that’s not the primary reason we’re looking at new geographies,” Marden-Resnik said. “It’s really to expand our impactful mission into communities that would benefit from a plan like UCare.”

UCare was founded about 40 years ago by family medicine doctors at the University of Minnesota to test whether a nonprofit health plan could effectively manage care for Medicaid beneficiaries.

Over the years, UCare also started selling Medicare Advantage coverage to seniors as well as health plans purchased by individuals on the MNsure insurance exchange.

With the COVID-19 pandemic, Medicaid programs across the country halted eligibility checks, which caused enrollment to surge. UCare has seen significant growth as a result, along with increased market share since 2018 in Minnesota’s Medicare market.

In Kansas, UCare did significant prep work for bidding on the Medicaid contract, including grants to certain health care groups in the state and hiring a market president for operations.

About a year ago, UCare announced that it was bidding on a Medicaid contract in Iowa, although the HMO was not successful. Even so, the experience helped sharpen the insurer’s application in Kansas, Marden-Resnik said.

As has been true in Minnesota, UCare hopes to start with Medicaid and then potentially expand into Kansas markets for seniors and individuals, she said, as the HMO builds a long-term presence in the state. As of August 2023, the total Medicaid/CHIP-covered population in Kansas was about 520,000 people.

“Some other health plans have gone into new markets and then exited them rapidly,” Marden-Resnik said. “As we are thinking about potential new markets, we want to think about the next 40-plus years in these markets.”

Last year, UCare announced it would pay $100 million to the University of Minnesota as part of a legal settlement where the U relinquished its majority on UCare’s board of directors.

The agreement came more than a year after the university sued to stop UCare from changing the composition of its board. To illustrate the importance of the U’s majority, the lawsuit suggested university officials had used their board positions to question UCare’s proposed expansion in Iowa.

Marden-Resnik said she could offer only limited comments about the dispute between the U and UCare.

“The UCare board has been consistently aligned on what it needs to do,” Marden-Resnik said. “Largely this was not about differences of opinion within the board.”

UCare was created by the U’s Department of Family Medicine in 1984. After UCare became an independent nonprofit in the late 1990s, the chair of family medicine at the university always served as UCare’s board chair, although that’s no longer the case under last year’s legal settlement.

Last fall, UCare announced four new board members, two of whom replaced the U’s representatives. Two other newcomers filled new positions on what’s now a 17-person board.

Among carriers selling on MNsure, UCare was the largest at the end of last year. In 2022, the health insurer was Minnesota’s fifth largest nonprofit group with about $6.12 billion in revenue.

UCare employs about 1,600 people.