June 15, 2013

Highlights of the Health and Human Services Bill

The 2013 Minnesota Legislative Session concluded their work on May 20th.  Provided here are the highlights from the Health and Human Services Bill (HF 1233).

No increase in the hospital surcharge

Hospital successfully defeated an attempt to increase the hospital surcharge. Instead, to generate additional dollars for the HHS budget, hospitals will be required to “accelerate” hospital surcharge payments. Starting in October 2014, hospitals will pay their annual surcharge payments in nine months instead of 12 months. That is, hospitals will pay an increased surcharge amount October through June, and no surcharge payments July, August and September. Hospitals were successful in pushing the implementation date back to 2014 instead of the proposed 2013 start date, allowing hospitals additional time to prepare for this change.

Medical Education and Research Costs (MERC) funding restored.

Restoring MERC funds was the highest budget restoration item for Hospitals.  The final Omnibus Health and Human Services bill added $12.8 million to the MERC program, thereby restoring it to its pre-2011 cut funding level. An additional $2 million was also allocated for targeted MERC grants aimed at increasing the supply of primary care providers.

Emergency Medical Assistance (EMA) funding.

$3.1 million was allocated for cancer and dialysis services for EMA patients. Up to $2.2 million was also authorized to help place EMA patients in continuing care settings, to assist with more timely hospital discharges.

Various Medical Assistance rate increases.

Effective September 1, 2014, physicians will receive a 5% increase and outpatient hospital services will receive a 3% increase (like other basic care services) when caring for Medical Assistance patients in the fee for service program.

Funding for the State Health Improvement Program (SHIP).

The SHIP program received $17.5 million in each year of the biennium, for a total of $35 million.

In-patient mental health and 340B drug program cuts.

Two payment cuts of concern to hospitals were made:  the conference committee adopted the governor’s recommendation to cut $5.3 million in mental health grants that went to nine rural hospitals that provide inpatient mental health services. Second, the state saves $4.8 million attributable to changes in the 340B drug program. This cut will have the most impact on Hennepin County Medical Center, Regions Hospital and University of Minnesota Medical Center, Fairview.


  Expanding Medicaid to 138% of the Federal Poverty Guidelines.

Early in the session, lawmakers moved forward with implementing one of the most important provisions of the Affordable Care Act, the expansion of the Medicaid program to include adults who earn less than 138% of the Federal Poverty Guidelines (approximately $15,000/year). Minnesota was uniquely positioned to opt into this expansion because many in this population were already covered in our MinnesotaCare program. This Medicaid expansion will be paid for entirely with federal dollars for the first three years and then move to 90% federal financial participation.

We worked closely with leadership to ensure that the current abortion language was transferred to the new program and ensuring that there were no expansions.

The expansion of Medicaid for these low income individuals will be good for the State’s budget, good for reducing provider uncompensated care and, most important, good for the individuals who will now have insurance coverage and access to a broader benefit set without MinnesotaCare premiums, enrollment waiting times, or a $10,000 annual inpatient hospital cap.

Implementing a Minnesota-based Health Insurance Exchange.

State policymakers had to decide whether Minnesota should operate its own health insurance exchange or opt into a federally managed exchange. In typical Minnesota “can do” attitude, Minnesota created a state-run exchange, now called MNsure.  This approach will best serve Minnesotans and will keep the state’s authority for regulating insurance plans sold in Minnesota. The funding for MNsure will not come from the provider tax, but rather a premium withhold from all products sold through MNsure, starting out at 1.5% and then going up to 3.5% in 2015 and 2016.

Also, worked closely on a market rules bill and amendment clarifying that the new state program does not require insurance companies to offer coverage of abortion.

Finally, the legislature approved an increase in the tobacco tax of $1.60 per pack.

Nursing Facilities:

  • Effective September 1, 2013: an across the board      increase of 3.75% with 75% encumbered to go to staff wages and benefits,      and an additional average of 1.25% provided in the form of a quality      add-on with a range of 0% – 3.2% (which will be built into the base).      Average increase will be 5%.
  • Effective October 1, 2014: no additional increases      allocated.
  • Effective October 1, 2015: 2.4% across the board      increase with 75% encumbered to go to staff wages and benefits, with an      additional average 0.8% increase to all operating payments for quality but      is not built into the base. Total average increase is 3.2%.
  • October 1, 2016: no additional increases allocated.

Four year total is $83 million or $10 million more than what the Governor proposed in his budget.

Elderly Waiver/All Waivers

  • Effective July 1, 2013: a buy-back of the contingent      rate cut of 1.67%.
  • Effective April 1, 2014: 1% increase
  • July 1, 2015: quality enhancement program to be      developed with funding allocated for increases in the second biennium.

Four year investment total is $116.6 million for all waivers.

Home Care:

The Conference Committee report also includes much needed reforms to Home Care Licensing and the Survey Process. We have been working with the Minnesota Department of Health for the past five years on this effort and the reform will be a benefit to long-term care providers and the consumers they serve