- Associated Press - Tuesday, April 5, 2016

MINNEAPOLIS (AP) - Fairview Health Services said Tuesday it will acquire the UCare health plan, which had been struggling since losing contracts with the state to cover low-income people enrolled in the MinnesotaCare and Medical Assistance programs.

Under the agreement, UCare will become a subsidiary of Fairview, and Jim Eppel will remain as UCare’s president and CEO. The two organizations said they hope to finalize the details and secure regulatory approvals by mid-summer.

UCare, along with insurer PreferredOne, which became a Fairview subsidiary in January, will form Fairview’s health plan division. UCare and PreferredOne are Minnesota’s fourth- and fifth-largest health plans, respectively.

Most of PreferredOne’s business involves third-party administration and health insurance products for employers, while UCare’s offerings are aimed at individuals eligible for Medicare, Medical Assistance and plans offered via the MNsure health exchange.

The combination “mirrors a growing national trend of payer/provider partnerships” and “will enable us to pilot innovative ways to improve patient outcomes, simplify the health care experience and reduce the cost of care,” Fairview interim CEO David Murphy said in a statement.

Fairview operates hospitals, clinics and care facilities across much of Minnesota.

UCare lost out in a bidding process against other insurers last summer, forcing 350,000-plus customers to pick new plans. However, UCare still provides insurance to 150,000 current members through Medicare, as well as individual market and public programs.

PreferredOne grabbed a huge share of the MNsure market by offering low premiums in the exchange’s inaugural year in 2014, but suffered big losses and exited MNsure a year later.

Fairview said overall job reductions are not expected as a result of the merger.

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