Legislative Update: 4/30/10


House Moves Omnibus HHS Bill and Senate To Act on Monday

The House HHS bill that passed out of the Finance committee this week reduces spending for HHS programs by $18.4 million in FY10 and $147.9 million in FY11. Although the bill is not available, the Senate released its spreadsheet, which reduces spending by $6.69 million in FY10 and $113.4 million in FY11.  Both bills provide significant relief, compared to a $346 million reduction proposed by the Governor and the GAMC bill that passed earlier.  The House and Senate cover the GAMC population (under 75% of FPG) under Medical Assistance (MA) through the early opt-in allowed under the federal reform and also maintain coverage for single adults in MNCare.

The bills differ in how they generate revenue to fund this expansion.  The House has an HMO surcharge, 7.5% ratable reduction for hospitals and makes other reductions for providers. Originally, the surcharge was 7%, but was increased to generate revenue to exempt Children’s Hospitals and Gillette from the ratable, as well increase Gillette’s outpatient rates. The House also makes other cuts to providers.  The Senate increases the hospital surcharge to 2.63% July 1, 2010 and 2.3% January 1, 2011.  The HMO and nursing home surcharge is also increased to generate revenue along with other reductions to HMO’s and providers.  There is a 3% rate reduction for PMAP and the 10% rate reduction for MNCare adults over 75% of income that generate $42 million and $14.7 million respectively that cannot be passed on to providers.  In addition, the Senate delays hospital rebasing until 2013.  Neither bill cuts the MERC funding as proposed by the Governor.  The House bill made deep cuts in mental health services for both adults and children, while leaving the state-operated services untouched.  Minnesota NAMI lead the charge against the deep cuts, especially for children’s mental health, and it appears that there will be an amendment in Ways and Means to restore some of the funding.

The House bill will be in Way’s and Means on Monday and could be on the floor Monday or Tuesday.

House HHS HF 2614

Article 2

  • Increases surcharge on HMO’s to 2.5% effective July 1, 2011 for fee for service and January 1, 2012 for PMAP.
  • Ratably reduces payments for inpatient admissions 7.5% beginning June 1, 2010. Exempts Children’s Hospitals and Gillette from ratable.
  • Increases pharmacy dispensing fee for sole-community pharmacies from $3.65 to $4.25.
  • Sets the acquisition price of drugs of Average wholesale price (AWP) minus 12.5% or wholesale acquisition costs (WAC) plus 5.0%, whichever is lower. Current law is AWP minus 15%.  Also sets the antihemophilic factor drugs at AWP minus 28.12 or WAC minus 13.76%.  Current law is AWP minus 30%.
  • Oral interpreters services are covered only if the interpreter is on the registry or roster established by the commissioner, effective July 1, 2010.
  • Allows commissioner to purchase medical supplies with competitive bidding and negotiating.
  • Sets income level for single adults to 75% of FPG retroactively to April 1, 2010 for MA.  Funds with HCAF.
  • Requires authorization for PT (80 unites of any approved CPT code: 20 modality sessions; and 3 evaluations/reevaluations) OT (120 units and 1 evaluation) and Speech Language (50 treatment and 1 evaluation) that exceeds certain units of treatment, modalities, and evaluations and re-evaluations.  Eliminates special maintenance therapy.  The Governor recommended elimination.
  • Amends current dental service coverage and partially restores funding for critical access.  The Governor recommended elimination.
  • Pays traditional licensed midwives up to 100% of the physician rate for the same services.
  • Reduces non-emergency co-payments for ER’s from $6 to $3.50 and increases the monthly maximum from  $7 to $12.
  • Establishes a payment reform demonstration project for providers serving an identified group of patients who are enrolled in a state health care program and are high utilizers or have characteristics that put them at risk of being high utilizers. The goal is to reduce hospitalizations, ER visits, high cost medications, specialty services, or nursing home or long term care. Projects serving patients with chronic medical conditions or complex medical needs that are complicated by a physical disability, serious mental illness, or serious socio-economic factors, are given priority.  Requires that project reduces total cost of care.
  • Intensive Management Care Program is established for enrollees over 18 in the top 5% of costs.  Requires the program to reduce costs by 20%.
  • Increases rates to HMOS after August 1, 2010 by 1.4%.
  • Reduces payments made to HMO’s by 1% on January 1, 2011.
  • Exempts rehab therapy services from the 5% ratable reduction in current law effective July 1, 2010.  Section 32, reduces payment by 3% and classifies them as basic care services.
  • Physicians and professional services
    • Reduces by 3% effective July 1, 2010.  Does not apply to preventive medicine visits provided by primary care providers that includes pediatricians.  Makes the payment reduction effective for HMO’s October 1, 2010.
    • Increases payments to HealthPartners clinics by15%.
    • Payments for services can’t exceed Medicare.
    • Increases fee for service payments by 7% effective January 1, 2011
  • Prohibits the Commissioner from modifiying state programs before July 1, 2014 under financial management statute.
  • Requires MnCare to offer supplemental hospital coverage to pay for costs over $10,000 and must state that adults without children in MnCare are responsible for the amount over $10,000.
  • Makes changes to critical access dental providers that limit the number of eligible providers.
  • Includes Medication therapy management as a covered service under GAMC between April 1 and May 31.
  • CCD’s clarifies that enrollees should choose a provider when there is more than one, what is within 25 miles of their home.  Changes the schedule of quarterly payments. Non CCD hospitals that transfer patients to receive a higher level of care are not reimbursed by the CCD and are only eligible for the charity care pool.  Add ambulance service to charity care pool; if transfer is more than 25 miles form the health care facility receiving the patient.  Extends charity care pool to December 31, 2010.

Article 5, Miscellaneous

Oral Cancer Chemotherapy Parity—requires HMO’s and insurance policies to have parity for the purpose of out of pocket costs for intravenous and oral chemo therapy agents. Effective August 1, 2010.

Autism Spectrum Disorder Coverage (page 76)
Creates a new mandate for specific services for autism spectrum disorder.  Specifies coverage, treatment providers, and services.  Exempts the State Employee Plan (SEGIP) and state health plans due to the fiscal note, however the new language requires that plans maintain their current level of coverage.  Some of the plans cover some of these services and some don’t.  Several families of autistic children testified in favor of the bill. The Somali community expressed concern that they were being discriminated as they won’t have coverage under MA or MnCare, or SEGIP as they are exempt—except for the plans that currently provide the coverage.  Appropriates $50,000 to monitor the gaps in level of service provided in state health programs, SEGIP, and private health plans.

HMO Reporting
Adds amounts paid to contractors, subcontractors, and other entities for the purpose of managing provider utilization or distributing provider payments to the current reporting requirement.

Coverage for Private Duty Nursing Services
Requires a health plan to pay for private duty nursing services at the same level as Medical Assistance.  Allows for cost sharing at inpatient hospital stay.  Effective July 1, 2010.

Advisory Group on State Operated Services
Establishes an advisory group to make recommendations on the transformation of state services for individuals with mental illness and developmental disabilities to access quality care across the state.  The bill does not make the SOS reductions proposed by the Governor.

Cambridge State Operated Services (SOS)
Allows Cambridge to reorganized into two 16 bed facilities, one for DD and one for MH, with the remaining beds converted to transitional intensive foster homes.

Pilot Projects for Chemical Dependency
Allows the DHS to approve and implement pilot projects that were authorized last session to provide alternatives to and enhance coordination of delivery of chemical health services. Projects must be revenue neutral.

Office of Inspector General
Creates an office to enhance anti-fraud activities.

Article 6, Department of Health

HMO Administrative and Investment Income Reporting
Establishes reporting requirements for HMO’s and establishes an advisory group to develop cost reporting recommendations.

E Health Records and Health Information Exchange (page 95)

  • Ensure all information follows the patient across the full continuum of care.
  • Prevent fragmentation of health information that can occur when there is lack of interoperability or cooperation between health information exchange providers.
  • Ensures that organizations are adhering to nationally recognized standards.
  • Ensure patient privacy and security.
  • Ensure that that MN infrastructure is in place by 2010 to allow Minnesota providers and hospitals to achieve meaningful use.
  • Establishes criteria, oversight and fees.

Birth Center Licensing (page 109)
Adds birth centers as an essential community provider. Establishes licensure for birth centers using the Commission for the Accreditation of Birth Centers (CABC) standards.  Includes other professionals in reviewing birth center outcomes including representative of the College of OB/GYM, American Academy of Pediatrics, the Minnesota Hospital Association, and the Minnesota Ambulance Association to the list of those evaluating the quality of care and outcomes for service providing in birth centers.

Lead Levels
Allows the Commissioner of Health to revise clinical and case management guidelines by January 1, 2011, to reflect new recommendations for protective action and follow-up services for child blood lead levels that exceed 5 micrograms of lead per deciliter of blood.  Requires the commissioner to consult with a statewide organization representing physicians, the public health department of Minneapolis and other public health departments, and nonprofits with expertise in lead abatement. The revised new guidelines must be implemented to the extent possible with available resources.  Appropriates $79,000 to revise the guidelines.

Article 7, Health Care Reform

Baskets of Care/Accountable Care Organizations (ACO)
Requires DHS to establish uniform definitions for the total cost of provide all necessary services to a patient through and ACO as specified in the federal reform bill.  Permits an ACO to establish package pricing for the baskets of care currently in statute (coronary artery disease and heart disease, diabetes, asthma and depression).  Beginning July 1, 2012 prohibits and ACO from varying the payment amount that the provider or organization accepts for full payment for services.  Requires quality measurements for ACO’s by June 30, 2012, and published comparative price and quality information on the total cost of care by January 1, 2013.

Coordinated Medical Homes (page 119)
Requires DHS to provide MA coverage of medical homes for eligible individuals with chronic conditions who select a designated provider, a team of health care professionals, or a health teams as the individual’s home in compliance with the federal reform bill.  To be eligible, the individual must have two chronic conditions, one chronic condition and be at risk of developing a second, or one serious and persistent mental illness.  Defines what services must be included and to the extent possible that they are consistent with the requirements and payments for health care homes under MA.  Allows the commissioner to modify the requirements to be consistent with the federal law.

Federal Health Care Reform Demonstration Project
Requires the DHS to apply for grants in the federal reform including:

  • Evaluation of integrated care around hospitalization. (section 2704)
  • MA global payment system (Section 2705)
  • Pediatric ACO (2706)
  • MA emergency psychiatrist (Section 3707) and
  • Grants to provide incentives for prevention of chronic diseases (section 4108).

Health Care Reform Task Force
Requires the Governor to establish a task force to advise and assist in the implementation of the federal health care reform bill.  Requires a report on recommendations by December 15, 2010.

Federal Health Care Exchange
Requires state to apply for one or more planning grants relating to establishing the exchange. Also requires the state to consider whether the exchange should be established before the federal deadline of January 1, 2014.


  • Reduces adult and children’s mental health grants by $15 million. Also reduces payments to counties for these services.  Some are done on one time basis and as mentioned earlier may be restored in Ways and Means.
  • Provides $8.5 million in FY12 and 13 for SHIP grants. These are one time additions.
  • $2.5 million for community clinics and $2.5 million for FQHC’s with priority to medical underserved areas of the state not served by a CCD.
  • Reduces CD fund payments, moves the CD Fund cash balance to the general fund and makes changes to CD fund payments based on new payment methodology, for providers with above average rates. Caps payments at 160% of average.

Senate HHS Bill Ready Monday

The Senate committee released its spread sheet this week, but no bill.  Based on the spread sheet, the Senate cuts $113 million for the FY10/11 biennium.

The following are included:

  • Expands MA to single adults under 75% of poverty ($115 million) Uses HACF
  • Hospital Surcharge of 2.63% July 1, 2010 and 2.3% January 1, 2011, by $43 million. Hospitals receive roughly $35 million back in various adjustments to their MA rates.
  • Delays hospital rebasing through January 1, 2013.  Cuts $9.2 million in FY11 and $94 million in FY12/13.
  •  Does not cut critical access to the extent proposed by the Governor.
  • Funds asthma demonstration project expansion.
  • Does not eliminate adult rehab services (PT, OT, Speech language)
  • Increases managed care withhold
  • Enacts HMO Surcharge
  • Reduces payments to HMO’s by 10% for MnCare single adults above 75% of poverty and non administration MA reduction of 3% effective 7/1/2010 that can not be passed on to providers.
  • Partially funds State Operated Service Increase
  • Increases pharmacy board budget—to fund NASPER.
  • Does not cut MERC
  • Does not eliminate coverage for single adults in MnCare
  • Does not eliminate rural DRG Add on.
  • Does not cut state operated services.

Annual Sponsors

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