SF 635

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; eliminating certain hospital payment reductions;
appropriating money; amending Minnesota Statutes 2006, sections 256.969,
subdivisions 3a, 27; 256B.75.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 256.969, subdivision 3a, is amended to
read:

Subd. 3a.

Payments.

(a) Acute care hospital billings under the medical
assistance program must not be submitted until the recipient is discharged. However,
the commissioner shall establish monthly interim payments for inpatient hospitals that
have individual patient lengths of stay over 30 days regardless of diagnostic category.
Except as provided in section 256.9693, medical assistance reimbursement for treatment
of mental illness shall be reimbursed based on diagnostic classifications. Individual
hospital payments established under this section and sections 256.9685, 256.9686, and
256.9695, in addition to third party and recipient liability, for discharges occurring during
the rate year shall not exceed, in aggregate, the charges for the medical assistance covered
inpatient services paid for the same period of time to the hospital. This payment limitation
shall be calculated separately for medical assistance and general assistance medical
care services. The limitation on general assistance medical care shall be effective for
admissions occurring on or after July 1, 1991. Services that have rates established under
subdivision 11 or 12, must be limited separately from other services. After consulting with
the affected hospitals, the commissioner may consider related hospitals one entity and
may merge the payment rates while maintaining separate provider numbers. The operating
and property base rates per admission or per day shall be derived from the best Medicare
and claims data available when rates are established. The commissioner shall determine
the best Medicare and claims data, taking into consideration variables of recency of the
data, audit disposition, settlement status, and the ability to set rates in a timely manner.
The commissioner shall notify hospitals of payment rates by December 1 of the year
preceding the rate year. The rate setting data must reflect the admissions data used to
establish relative values. Base year changes from 1981 to the base year established for the
rate year beginning January 1, 1991, and for subsequent rate years, shall not be limited
to the limits ending June 30, 1987, on the maximum rate of increase under subdivision
1. The commissioner may adjust base year cost, relative value, and case mix index data
to exclude the costs of services that have been discontinued by the October 1 of the year
preceding the rate year or that are paid separately from inpatient services. Inpatient stays
that encompass portions of two or more rate years shall have payments established based
on payment rates in effect at the time of admission unless the date of admission preceded
the rate year in effect by six months or more. In this case, operating payment rates for
services rendered during the rate year in effect and established based on the date of
admission shall be adjusted to the rate year in effect by the hospital cost index.

(b) For fee-for-service admissions occurring deleted text begin on or after deleted text end new text begin from new text end July 1, 2002, new text begin to June
30, 2007, new text end the total payment, before third-party liability and spenddown, made to hospitals
for inpatient services is reduced by .5 percent from the current statutory rates.

(c) In addition to the reduction in paragraph (b), the total payment for fee-for-service
admissions occurring deleted text begin on or after deleted text end new text begin from new text end July 1, 2003, new text begin to June 30, 2007, new text end made to hospitals for
inpatient services before third-party liability and spenddown, is reduced five percent from
the current statutory rates. Mental health services within diagnosis related groups 424 to
432, and facilities defined under subdivision 16 are excluded from this paragraph.

(d) In addition to the reduction in paragraphs (b) and (c), the total payment for
fee-for-service admissions occurring deleted text begin on or after deleted text end new text begin from new text end July 1, 2005, new text begin to June 30, 2007, new text end made
to hospitals for inpatient services before third-party liability and spenddown, is reduced
6.0 percent from the current statutory rates. Mental health services within diagnosis
related groups 424 to 432 and facilities defined under subdivision 16 are excluded from
this paragraph. Notwithstanding section 256.9686, subdivision 7, for purposes of this
paragraph, medical assistance does not include general assistance medical care. Payments
made to managed care plans shall be reduced for services provided on or after January
1, 2006, to reflect this reduction.

Sec. 2.

Minnesota Statutes 2006, section 256.969, subdivision 27, is amended to read:

Subd. 27.

Quarterly payment adjustment.

(a) In addition to any other payment
under this section, the commissioner shall make the following payments effective July
1, 2007:

(1) for a hospital located in Minnesota and not eligible for payments under
subdivision 20, with a medical assistance inpatient utilization rate greater than 17.8
percent of total patient days as of the base year in effect on July 1, 2005, a payment equal
to 13 percent of the total of the operating and property payment rates;

(2) for a hospital located in Minnesota in a specified urban area outside of the
seven-county metropolitan area and not eligible for payments under subdivision 20, with
a medical assistance inpatient utilization rate less than or equal to 17.8 percent of total
patient days as of the base year in effect on July 1, 2005, a payment equal to ten percent
of the total of the operating and property payment rates. For purposes of this clause, the
following cities are specified urban areas: Detroit Lakes, Rochester, Willmar, Alexandria,
Austin, Cambridge, Brainerd, Hibbing, Mankato, Duluth, St. Cloud, Grand Rapids,
Wyoming, Fergus Falls, Albert Lea, Winona, Virginia, Thief River Falls, and Wadena; and

(3) for a hospital located in Minnesota but not located in a specified urban area under
clause (2), with a medical assistance inpatient utilization rate less than or equal to 17.8
percent of total patient days as of the base year in effect on July 1, 2005, a payment equal to
four percent of the total of the operating and property payment rates. A hospital located in
Woodbury and not in existence during the base year shall be reimbursed under this clause.

(b) The state share of payments under paragraph (a) shall be equal to federal
reimbursements to the commissioner to reimburse nonstate expenditures reported under
section 256B.199. The commissioner shall ratably reduce or increase payments under this
subdivision in order to ensure that these payments equal the amount of reimbursement
received by the commissioner under section 256B.199 deleted text begin , except that payments shall be
ratably reduced by an amount equivalent to the state share of a four percent reduction in
MinnesotaCare and medical assistance payments for inpatient hospital services deleted text end .

(c) The payments under paragraph (a) shall be paid quarterly beginning on July
15, 2007, or upon federal approval of federal reimbursements under section 256B.199,
whichever occurs later.

(d) The commissioner shall not adjust rates paid to a prepaid health plan under
contract with the commissioner to reflect payments provided in paragraph (a).

(e) The commissioner shall maximize the use of available federal money for
disproportionate share hospital payments and shall maximize payments to qualifying
hospitals. In order to accomplish these purposes, the commissioner may, in consultation
with the nonstate entities identified in section 256B.199, adjust, on a pro rata basis
if feasible, the amounts reported by nonstate entities under section 256B.199 when
application for reimbursement is made to the federal government, and otherwise adjust
the provisions of this subdivision.

(f) By January 15 of each year, beginning January 15, 2006, the commissioner
shall report to the chairs of the house and senate finance committees and divisions with
jurisdiction over funding for the Department of Human Services the following estimates
for the current and upcoming federal and state fiscal years:

(1) the difference between the Medicare upper payment limit and actual or
anticipated medical assistance payments for hospital services;

(2) the amount of federal disproportionate share hospital funding available to
Minnesota and the amount expected to be claimed by the state; and

(3) the methodology used to calculate the results reported for clauses (1) and (2).

(g) For purposes of this subdivision, medical assistance does not include general
assistance medical care.

(h) This section sunsets on June 30, 2009. The commissioner shall report to
the legislature by December 15, 2008, with recommendations for maximizing federal
disproportionate share hospital payments after June 30, 2009.

Sec. 3.

Minnesota Statutes 2006, section 256B.75, is amended to read:

256B.75 HOSPITAL OUTPATIENT REIMBURSEMENT.

(a) For outpatient hospital facility fee payments for services rendered on or after
October 1, 1992, the commissioner of human services shall pay the lower of (1) submitted
charge, or (2) 32 percent above the rate in effect on June 30, 1992, except for those
services for which there is a federal maximum allowable payment. Effective for services
rendered on or after January 1, 2000, payment rates for nonsurgical outpatient hospital
facility fees and emergency room facility fees shall be increased by eight percent over the
rates in effect on December 31, 1999, except for those services for which there is a federal
maximum allowable payment. Services for which there is a federal maximum allowable
payment shall be paid at the lower of (1) submitted charge, or (2) the federal maximum
allowable payment. Total aggregate payment for outpatient hospital facility fee services
shall not exceed the Medicare upper limit. If it is determined that a provision of this
section conflicts with existing or future requirements of the United States government with
respect to federal financial participation in medical assistance, the federal requirements
prevail. The commissioner may, in the aggregate, prospectively reduce payment rates to
avoid reduced federal financial participation resulting from rates that are in excess of
the Medicare upper limitations.

(b) Notwithstanding paragraph (a), payment for outpatient, emergency, and
ambulatory surgery hospital facility fee services for critical access hospitals designated
under section 144.1483, clause (10), shall be paid on a cost-based payment system that is
based on the cost-finding methods and allowable costs of the Medicare program.

(c) Effective for services provided on or after July 1, 2003, rates that are based
on the Medicare outpatient prospective payment system shall be replaced by a budget
neutral prospective payment system that is derived using medical assistance data. The
commissioner shall provide a proposal to the 2003 legislature to define and implement
this provision.

(d) For fee-for-service services provided deleted text begin on or after deleted text end new text begin from new text end July 1, 2002, new text begin to June 30,
2007, new text end the total payment, before third-party liability and spenddown, made to hospitals for
outpatient hospital facility services is reduced by .5 percent from the current statutory rate.

(e) In addition to the reduction in paragraph (d), the total payment for fee-for-service
services provided deleted text begin on or after deleted text end new text begin from new text end July 1, 2003, new text begin to June 30, 2007, new text end made to hospitals for
outpatient hospital facility services before third-party liability and spenddown, is reduced
five percent from the current statutory rates. Facilities defined under section 256.969,
subdivision 16, are excluded from this paragraph.

Sec. 4. new text begin APPROPRIATION.
new text end

new text begin $....... is appropriated from the general fund to the commissioner of human services
for the biennium beginning July 1, 2007, for the purposes of sections 1 to 3.
new text end