Legislative Update: 4/23/09


Sara Noznesky, MN-AAP Lobbyist

The Legislature shifted gears again this week as Finance committees held their final meetings and quickly passed omnibus spending bills. They have engaged in lengthy floor sessions in order to consider amendments and pass bills. Once budget bills pass both the House and Senate, conference committees will begin. House and Senate Leadership will meet to establish new global targets for each area of spending. At that point, members of the House and Senate will meet to reconcile differences in their bills before reaching a final agreement. Conference Committees are required to complete their work by May 7.  Whether the Governor participates in the discussions (and when he joins) may be an indicator for how long the legislature will be in session. Most insiders expect that the Governor will veto the budget bills as soon as he receives them because the bills are dependent on revenue from tax increases which the Governor opposes.

House Health and Human Services Budget Proposals Released

The House released its proposed Health and Human Services Budget earlier this week. Overall patients and providers did significantly better under the House proposal than under the Governor’s proposal. This is primarily due to the fact that the House proposes to raise $1.5 billion in revenue to help close the budget gap, leaving just over $400 million in cuts necessary in the HHS area. In comparison, the Governor cut $2.2 billion from the HHS budget over the same two-year period.

Following is a brief overview of the finance provisions in Rep. Tom Huntley’s bill, H.F.1362.
The House did not accept the most egregious of the Governor’s recommendations, namely dramatic cuts to eligibility and benefits (including dental, PT, OT and speech language pathology). The House also rejected the Governor’s proposal to eliminate the Health Care Access Fund and merge the revenue into the General Fund. Finally, the House rejected the Governor’s proposal to virtually eliminate the Statewide Health Improvement Plan (public health funding). The House and Senate are expected to try to capture as much federal funding as possible both from the stimulus package and S-CHIP reauthorization package.

The House bill includes the following items:

  • 3% reduction for providers, except primary care providers (family physicians, pediatricians, internists, pediatric, family, adult and geriatric nurse practitioners)  Excludes radiology, lab, rx, medical supplies and primary care – (procedure codes 99201 to 99215) and preventive medicine services (procedure codes 99381 to 99412)
  • 3% ratable reduction for hospitals
  • 5.2% ratable for Mental Health DRG’s 2009, made to hospitals for mental health services within diagnosis-related groups 424 to 432 liability
  • Modified adult dental program rather than elimination of the benefit
  • Managed care withhold to reduce ER admissions ($1.3 million FY10/11)
  • Eliminate patient incentive grants.
  • E-Health Initiative and E-Records loan program–$4 million to get $20 million federal—some funding is retroactive (consistent with federal stimulus)
  • Pharmacy reimbursement cut 1%
  • Funding to create uniform formulary exception and prior auth forms
  • Patient-Centered Decision Making as a study
  • Express lane eligibility for children via free and reduced school lunch applications
  • Presumptive eligibility for children
  • Study on aligning income methodology for eligibility for families and children for MA and MNCare
  • Autism Task Force
  • Reform for Personal Care Assistance eligibility and benefits

Senator Berglin’s Health and Human Services Budget proposal is expected either over the weekend or early next week. Many of the provisions the MN-AAP has expressed concern about are expected to be included in Senator Berglin’s bill including prior authorization for ADHD and mandatory primary caries prevention. Her budget bill is required to cut an additional $200 million (for a total of nearly $600 million) and is expected to be more painful than Rep. Huntley’s bill.

As a result of delays receiving fiscal notes, neither the House nor Senate HHS Budget bills met the legislative deadline and will make an additional procedural committee stop before advancing next week.

Provider Tax Increase

The legislature continues to dance around a potential increase in the provider tax. A sick tax increase had been hinted at as a possible part of the final solution since the beginning of session. Both Representative Huntley and Senator Berglin introduced bills last week to raise the tax.

The House Tax Committee held a hearing on H.F.2315 (Huntley) to raise the tax 1% in order to hear the pros and cons of the provider tax.  After hearing from many provider groups in opposition, including physicians, the bill was laid over without any action.  The House did not include an increase in the provider tax as part of their initial proposal.

When the Senate Tax Committee chair introduced his version of the tax bill on Tuesday without a provider tax increase it looked like the issue was dead for now.  But then on Wednesday, the Senate Tax Committee amended the Senate tax bill to include a placeholder for increasing the provider tax on hospitals and surgical centers only.  The language leaves the amount of the increase blank. The amendment excludes physician services.

Chair of the Senate Tax Committee, Thomas Bakk, DFL-Virginia, has said he does not want to increase the sick tax. However, he wanted to amend the bill as a procedural matter, so that if the negotiations with the Governor do in fact result in an increase the provider tax, the change will be codified in the tax bill instead of the budget bill.

A number of committee members made statements during the committee that they do not want to increase the sick tax, but the fact that they have this “placeholder” language is disconcerting – the Senate has now created an opportunity for that very thing to happen.

Early Childhood Bills Also Move

Early Childhood is an important topic at the capitol this session as well. H.F.2088 (Slawik), the House Early Childhood Omnibus bill passed earlier today. The Senate E-12 Education bill, S.F.1328 (Stumpf), passed before the recess. Differences in the bills will now be worked out in conference committee.

Annual Sponsors

Children's Minnesota
Gillette Children's
Hennepin Healthcare
University of Minnesota Health
Essentia Health
Mayo Clinic
Shriners Healthcare for Children-Twin Cities