South Country Health Alliance reports $6.1 million 2025 net income, warns county about state pharmacy and transport changes

Scott Shuffman, chief financial officer for South Country Health Alliance, told the Waseca County Board on April 7 that the health plan finished 2025 with a reported net income of $6.1 million, driven largely by one‑time accounting moves and state rate adjustments.

Shuffman said a released premium‑deficiency reserve of $11.44 million and roughly $17.1 million in rate adjustments from the Department of Human Services were central to the result. “We turned out having a decent bottom line after an unusual year — finishing with a net income positive $6.1 million,” Shuffman said.

The CFO told commissioners that the plan’s 2025 loss ratio was 93.5 percent — meaning, he said, “93.5% of every dollar we take in went out in claims expense.” He noted that without the reserve release and rate corrections, the plan would have posted a sizable operating loss; membership declines plus higher medical and pharmacy utilization had driven much of the underlying pressure.

Shuffman outlined 2026 budget assumptions that include a 36 percent membership increase in certain products and a lower projected loss ratio of 91.4 percent. He also described operational investments and IT work — including fraud‑detection software and a new contract‑tracking system — intended to improve efficiency and claims management.

Leota, who introduced Shuffman and led the Alliance briefing, told the board that two recent state actions were significant for counties. She said the state has delayed implementing a single‑state pharmacy benefit manager until Jan. 1, 2028 and has withdrawn or paused a proposed centralized nonemergency medical‑transportation procurement. “We were extremely concerned about that,” Leota said of the single‑state PBM plan, adding that removing pharmacy management from county‑based managed care could fragment care coordination. She said the procurement pause on nonemergency transportation was welcomed because of rural access concerns.

The presenters said counties will continue legislative and administrative engagement to preserve county‑administered integration where possible. Leota outlined pending legislative work, including a carveout‑prevention bill that did not receive a hearing this session but could return next year, and said Alliance staff were working through a settlement agreement with DHS and other plans related to litigation over plan status.

Board members pressed Shuffman on administrative‑expense assumptions. When a commissioner asked whether a 9 percent administrative‑expense‑to‑revenue ratio for 2026 was conservative, Shuffman said the plan has historically come in under budget on administration and expects to leverage fixed costs as membership grows; he said “I would expect that it wouldn't take much to come in under that 9.0” level.

The Alliance briefing also covered audit results: Shuffman reported a clean (unmodified) opinion from independent auditors and a risk‑based capital ratio well above regulatory minimums.

Next steps: Alliance staff will continue to brief counties on implementation details for any DHS changes and to monitor the litigation and legislative processes that affect county‑administered plans.