MINNEAPOLIS (FOX 9) - Hennepin Healthcare’s budget crisis will likely accelerate because of a $115 million debt that UCare stopped making payments on when it started winding down operations late last year, according to court transcripts.
UCare owes Hennepin Healthcare $115 million
What we know:
Hennepin Healthcare argues its budget crisis will continue to worsen unless UCare starts paying back its debts.
The managed care organization, which is currently being dissolved by the Minnesota Department of Health (MDH) due to its own financial woes, owes Hennepin Healthcare $115 million.
"And that number increases by the day," Patti Jurkovich, Assistant Hennepin County Attorney said in a recent court hearing.
But UCare has not made a payment since Dec. 22.
"In the meantime, Hennepin Healthcare continues to provide care for all the patients under those UCare contracts that we have and is not getting paid," Jurkovich said.
Hennepin Healthcare, Allina, Farview and Mayo owed $500 million
Big picture view:
Hennepin Healthcare joined Allina, Fairview and Mayo Clinic in an effort to intervene in UCare’s ongoing dissolution because they are owed nearly $500 million combined.
UCare stopped making payments in December after MDH took control of the nonprofit to stabilize healthcare services for its members as they transitioned to Medica.
The healthcare providers want to ensure they are made whole for medical services that have already been provided.
Allina’s attorney argued their debts must be prioritized to "ensure that the failure of UCare does not turn into a domino effect of failures of healthcare providers."
Hennepin Healthcare may need a financial backstop so the Level 1 Trauma Center can "continue operations," according to Jurkovich.
MDH wants to set aside $200 million to cover UCare medical debt
The other side:
MDH is objecting to the companies' efforts to intervene in the dissolution of UCare.
The agency wants to set aside an initial $200 million of UCare’s remaining assets to pay back healthcare providers, according to the state’s rehabilitation plan that was filed in court this week.
"We don't dispute that UCare’s financial condition has caused considerable disruption and concern," Jennifer Moreau, Assistant Attorney General, told the court.
"We understand there's a concern that there could be insufficient funds to pay everybody in full, and that's why we're in this delinquency proceeding."
If the plan is approved by the court, UCare would only make further distributions to pay down medical care debts as "cash becomes available."
It would first cover its own necessary expenses as the nonprofit winds down operations.
That would include future administrative costs, attorney’s fees and any federal tax obligations, such as employment taxes.
Allina’s attorney, Stephen Schwab, argued the healthcare companies should not have to wait in line and should be able to intervene in the case to speed up the repayment process.
"Time…in this case is everybody’s enemy," Schwab said.