Minnesota says rules are rules and insurance is insurance. That means a clinic's prepaid health plan, which served Minneapolis' poor for 25 years without a state HMO license, will fold shortly.
The clinic is Community University Health Care Center of the University of Minnesota. Under the plan, it provides a broad range of services to 1,500 people for a monthly fee based on income. As part of the program, University Hospital and its physicians write off their costs for enrollees' care.
The plan will fold Jan. 1 because the clinic can't afford to keep $500,000 in reserves, said clinic Director Amos Deinard, M.D. Treatment will continue to be offered on a fee-for-service basis.
Deinard said his decision also reflects the uncertain fate of a cornerstone of the plan-free inpatient services. University Hospital is being acquired by Fairview Health System.
The plan is a wonderful service, but its current operation is illegal, said Barbara Colombo, assistant commissioner of the Minnesota Health Department. "We don't make the laws, we simply enforce them," Colombo said.
Minnesota took an unprecedented step in offering the clinic two years to get a license or phase out the plan. Colombo said she was taken aback to learn the plan would close so quickly.
Since the clinic is at risk for enrollees' healthcare costs, it must have reserves under Minnesota law. It would need at least $500,000 in reserves and a $1 million net worth to be licensed as an HMO. The clinic could get away with half the net worth and a lighter state-reporting load if it were licensed as an alternative entity, known as a community integrated service network.
CISNs were created in 1994 to make it easier for small organizations to enter the managed-care market.
"(The clinic plan) is a microcosm of what's going on nationally," Colombo said. "We've got rules and laws in place that simply don't meet the needs of the healthcare landscape."