UnitedHealth Group withdraws Appeal; For-Profit HMOs Cannot Operate in Minnesota’s Publicly Funded Market

October 24, 2024

On October 15, UnitedHealth Group (UHG) ended its fight to keep for-profit Health Maintenance Organizations (HMOs) operating in the state of Minnesota.  

Up until 2017, Minnesota only allowed nonprofit HMOs to operate in the state. This has been in part based on an argument that “allowing for-profit HMOs would harm patients by diverting money to shareholders,” as stated in a 2017 Pioneer Press article.  

This all changed in 2017 when the Minnesota Legislature passed a bill that ended the prohibition and allowed for-profit corporations to also operate HMOs in Minnesota. With the bill's passage, UHG, a for-profit corporation, entered into contracts with the Minnesota Department of Human Services (DHS) to provide services to Minnesota’s publicly funded programs.  

In 2024, Minnesota’s 93rd Legislature passed a bill that reinstituted the prohibition on for-profit HMOs from participating as providers in publicly funded plans, but still allows them to participate in the state-regulated commercial market, as they have been allowed to do prior to 2017.  

Following the bill’s passage, DHS terminated and refused to renew multiple UHG contracts, prompting UHG to file a lawsuit against the state to force DHS to renew the contracts. UHG raised several arguments, including claiming that the prohibition on for-profit HMOs did not apply to contract renewals, only to new contracts.  

The Minnesota Council of Health Plans (MCHP) participated as amicus curiae in the case before the Court of Appeals, arguing in favor of the state of Minnesota and DHS.  

A District Court in Minnesota found for the state and refused to require DHS to renew their contracts. UHG filed an appeal with the Minnesota Court of Appeals, but withdrew its appeal on October 15.