About Health Maintenance Organizations and County Based Purchasers

The Managed Care Systems Section has licensing and regulatory oversight on all Health Maintenance Organizations (HMO) and County Based Purchasers (CBP). Currently, there are 12 HMOs and 3 CBPs operating in Minnesota.

List of Health Maintenance Organizations and County-Based Purchasers

What is a Health Maintenance Organization (HMO)?

A Health Maintenance Organization (HMO) is a common type of health insurance plan that usually coordinates health services within a specific provider network. Some HMOs require that you choose a primary care provider, and don’t cover health services out-of-network (except in an emergency), while others are more flexible. HMOs often provide integrated care and focus on prevention and wellness. An HMO provides comprehensive health maintenance services, or arranges for the provision of these services, to enrollees based on a fixed prepaid sum without regard to the frequency or extent of services furnished to an individual enrollee, aside from copays or deductibles. 

Historically, Minnesota HMOs were required to be nonprofit corporations. The law changed in 2017 to allow for-profit HMOs to be licensed in Minnesota. When the law passed, a moratorium was placed on nonprofit HMOs converting to a for-profit. The moratorium is set to expire June 30, 2026.

What does the Minnesota Department of Health do to Regulate HMOs?

Financial Regulation: The Minnesota Department of Health (MDH) contracts with the Minnesota Department of Commerce to review all financial statements, annual reports, and select premium rates for all managed care entities that we regulate. These products include individual (non-group) plans, conversion plans, small employer plans and Medicare related plans. MDH reviews for compliance with applicable state laws governing loss ratios, index rates, claims, community rating and actuarial justification. An HMO cannot market a health plan or charge a premium without approval from the Minnesota Department of Health.

Quality Regulation: The Minnesota Department of Health ensures HMOs are providing quality care to enrollees through quality audits at least every three years. The audits ensure HMOs are following Minnesota statutes and rules by reviewing their policies and procedures, and ensuring the policies and procedures are being followed. MDH also reviews quality measures for HMOs annually.

What is the difference between HMOs and other health insurance companies?

HMOs use a defined network of providers such as physicians, hospitals, and other health care professionals with which they have negotiated coverage prices beforehand in exchange for inclusion in the network, or because they are owned by the HMO. 

In Minnesota, HMOs and insurance companies offer plans in the individual, small group, and large group markets. However, only HMOs and county-based purchasers can contract with DHS to provide coverage for public program recipients. Another distinction is that MDH conducts quality assurance examinations of HMOs every three years, and HMOs must file annual quality program descriptions with the Department.

HMOs are also required to file collaboration plans every 4 years. Click here to learn more about HMO Collaboration Plans.

What is a County Based Purchaser (CBP?)

County Based Purchasing (CBP) is a health plan operated by a county or group of counties. The CBP entity purchases health care services for certain residents enrolled in Medical Assistance, Prepaid Assistance Medical Program, and MinnesotaCare. The participating counties are primarily rural.

Generally, counties propose arrangements that add value to public programs by:

• Assuring improved access to providers and community resources
• Improving coordination of health and human services
• Stabilizing and supporting existing community provider networks

CBP is authorized by Minnesota Statutes, section 256B.692, permitting counties to elect this purchasing system. CBP entities must meet the same requirements as HMOs or Community Integrated Service Networks (CISNs), as provided for under Minnesota Statutes, chapters 62D and 62N. Requirements are also set out in portions of Minnesota Statutes, chapters 62A, 62J, 62M, 62Q, and 72A.; and in Minn. Rules Part 4685.These requirements include standards for access, quality and financial solvency.

For more information, email health.mcs@state.mn.us.