UCare collapse: Medica takeover, $170M in unpaid claims to Fairview and Allina raise receivership questions
UCare is winding down and Minnetonka-based Medica will take over roughly 300,000 UCare members — the bulk of its business — absorbing all 2026 Medicaid and individual/family plans in Minnesota and western Wisconsin with the transfer expected in Q1 2026 pending regulatory approval; officials say coverage will continue without interruption and MNsure expects no change in 2026 plan coverage or costs. Meanwhile, Fairview and Allina say UCare owes about $170 million in unpaid claims and have filed to intervene in the state receivership, criticizing regulators for providing “scant details” about how UCare’s roughly $400 million in reserves will be used and when providers will be paid, while the Department of Commerce says payments are subject to statutory review and court approval.
📌 Key Facts
- Medica (Minnetonka‑based) will absorb roughly 300,000 UCare members — the bulk of UCare’s business — including UCare’s 2026 Medicaid and individual/family plans.
- The transaction is expected to close in Q1 2026 pending regulatory approvals; financial terms were not disclosed.
- UCare currently covers about 300,000 members in Minnesota and western Wisconsin; Medica covers about 1.4 million members across nine states.
- Both insurers’ CEOs said services will continue without interruption, and MNsure says UCare exchange plan coverage and costs will not change for plan year 2026 while it coordinates a transition.
- Health systems Fairview and Allina say UCare owes them about $100 million and $70 million respectively — roughly $170 million in alleged unpaid claims — and have filed to intervene in the state receivership case, warning that dissolution could delay payments, disrupt continuity of care and destabilize the regional system.
- Providers and hospital systems say they have been seeking answers since summer 2025 and met again with UCare, the Minnesota Department of Health and the Department of Commerce in December, but say critical questions remain about the timeline and mechanics of dissolution and liquidation.
- The Minnesota Department of Commerce and MDH have been criticized in filings for providing 'scant details' about the Medica transaction, including how UCare’s approximately $400 million in reserves will be used and when or whether providers will be paid in full.
- The Department of Commerce says payments to providers are subject to a statutory review process and court approval, and therefore it cannot yet specify how much and when providers will be paid.
📊 Relevant Data
UCare's financial losses totaled $102 million in 2023, $504 million in 2024, and $115 million in the first half of 2025, primarily driven by rising costs in its Medicare Advantage and Medicaid businesses amid lower government reimbursements.
Amid financial losses, UCare scales back Medicaid service area — Becker's Payer Review
In 2023, the racial and ethnic breakdown of Minnesota Medicaid enrollees was 43% White, 27% Black, 12% Hispanic, 4% Asian, 1% American Indian or Alaska Native, 0% Native Hawaiian or Pacific Islander, 2% Other, and 12% Unknown.
Medicaid Enrollees by Race/Ethnicity — KFF State Health Facts
In 2023, the poverty rate in Minnesota was 24.4% for Black residents, 23.0% for American Indian residents, 15.4% for Hispanic residents, 10.5% for Asian residents, and 6.6% for White residents, compared to the overall state poverty rate of 9.3%.
Poverty Rates in Minnesota — Minnesota Department of Employment and Economic Development
Federal prosecutors estimate that fraud in Minnesota-run Medicaid services likely exceeds $9 billion since 2018, with many schemes targeting autism and other benefits, potentially contributing to increased costs for managed care organizations like UCare.
U.S. Attorney: Fraud likely exceeds $9 billion in Minnesota-run Medicaid services — Minnesota Reformer
Many of the defendants charged in Minnesota's Medicaid fraud schemes are from the Somali community, which is overrepresented in such cases relative to their population share, linked to factors like poverty and resettlement programs.
98 charged so far in alleged Somali fraud scheme in Minnesota — The Center Square
📰 Source Timeline (4)
Follow how coverage of this story developed over time
- Fairview says in court filings it is owed about $100 million by UCare for services already provided; Allina says it is owed about $70 million, for a combined $170 million in alleged unpaid claims.
- Allina and Fairview have filed petitions to intervene in the state’s receivership case for UCare, arguing the dissolution could delay millions in pending claims, disrupt continuity of care, and destabilize an already fragile health‑care environment.
- The Minnesota Department of Commerce and MDH are criticized in filings for providing 'scant details' about the Medica transaction, including how UCare’s approximately $400 million in reserves will be used and when or whether providers will be paid in full.
- Commerce says payments to providers are subject to a statutory review process and court approval and therefore it cannot yet specify how much and when providers will be paid.
- Providers say they have been seeking answers since summer 2025 about UCare’s 'hazardous financial condition' and met again with UCare, MDH and Commerce in December, but 'critical questions remain unanswered' about the timeline and mechanics of dissolution and liquidation.
- Medica announced it will acquire all of UCare’s 2026 Medicaid and individual/family plans.
- UCare currently covers about 300,000 members in Minnesota and western Wisconsin; Medica covers 1.4 million across nine states.
- Transaction expected to close in Q1 2026 pending regulatory approvals; financial terms not disclosed.
- Both CEOs (Lisa Erickson, Hilary Marden-Resnik) say services will continue without interruption.
- MNsure says UCare exchange plan coverage and costs will not change for plan year 2026 and it is coordinating a smooth transition.
- Sen. Matt Klein (DFL–Mendota Heights), Senate Commerce Chair, will monitor for impacts on consumer choice and access.
- Context: UCare previously terminated its Medicare Advantage contracts as its board explored acquisition options.
- Medica will absorb roughly 300,000 UCare members.
- The transfer represents the bulk of UCare’s business.
- Confirms Minnetonka-based Medica as the acquiring insurer.