SCHA sees higher costs in medical plans

Staff Writer

South Country Health Alliance’s (SCHA) $10.2 million loss in 2016 isn’t the full story, company Chief Financial Officer Scott Schufman said.

SCHA is a non-profit health insurance company that handles clients on government insurance programs like Medicare or Medicaid.

At Tuesday’s Morrison County Board meeting, Schufman and SCHA CEO Leota Lind told the Board that about $5 million will be part of this year’s income.

The state requires companies like SCHA to have money set aside if the company can reasonably estimate what it will be paying out for claims is more than it is receiving from government programs like the Prepaid Medical Assistance Program (PMAP) or Minnesota Care (MNCARE).

“South Country only serves government funded clients. So we don’t set premiums based upon what we need to have like a private insurance company,” County Administrator Deb Gruber said.

In 2016, SCHA set aside $7 million for possible shortages in 2017.

Overall, for every $100 coming into SCHA, $92 will be paid out in claims. With MNCARE clients, for every $100 coming into SCHA for that program, $103 is paid out, and that’s before any administrative expenses, Schufman said.

The rates, which are set by the state’s Department of Human Services (DHS), were based on an abnormally low medical cost period in 2014-2015, Schufman said.

It was also set through a competitive bidding model, where Medica said it could cover people at a low rate, which was then given to every other company. Then Medica chose to leave the market last year, and coverage from Medica formally ended May 1.

Schufman and Lind said while they know they have things to work on, this process had a large impact on its finances.

While DHS will try to use closer years when setting the rates for 2018, the 2017 rates are based on the same formula, Schufman said.

“I still don’t quite understand how when you had such a bad year, they want to use that same formula to bring into the next year. All you do is fall behind,” Commissioner Mike Wilson said.

Gruber said the state does that, because it fits the budget they’re looking for.

Now, 5,874 people on PMAP from Medica became covered through SCHA May 1, including 1,056 from Morrison County. Another 744 on MNCARE from Medica came to SCHA as well, including 111 from Morrison County.

While SCHA lost $800,000 in the first quarter, Schufman said it has programs in place, such as negotiated lower rates with medical providers, which will begin taking place in the second quarter.

Board of Commissioners Briefs

In other business Tuesday, the Morrison County Board of Commissioners:

  • Approved submitting a grant proposal to the National Joint Powers Alliance (NJPA) for funding to educate social service workers on trauma;
  • Approved the transfer of a liquor license from Robert Boyd of Western Liquors to Patrick Kalmbacher;
  • Approved new owner establishment licenses for Bylinda Klaphake of Route 26 Bar & Grill in Foley and Patrick Kalmbacher of Western Liquors in Cushing. New owner tobacco licenses were also approved for both individuals;
  • Approved an off-sale liquor license for Rice Creek Hunting and Recreation; and
  • Approved a variance allowing Faye Diederich Revocable Living Trust to establish a demolition debris facility and exceed the limit of 500 cubic yard threshold.

The next meeting of the Morrison County Board of Commissioners is Tuesday, at 8:30 a.m. in the Morrison County Government Center’s Board Room.