HF 1609

as introduced - 92nd Legislature (2021 - 2022) Posted on 03/08/2021 04:31pm

A bill for an act
relating to human services; establishing directed payment arrangements for nonstate
government-owned teaching hospitals with high Medicaid utilization and level 1
trauma centers and their affiliated physicians; modifying inpatient hospital rates
for certain hospitals; exempting certain health plan revenue from the insurance
premium taxes and surcharges; exempting certain hospital revenue from the
provider tax; amending Minnesota Statutes 2020, sections 256.9657, subdivision
3; 256.969, by adding a subdivision; 256B.196, subdivision 2; 256B.6928,
subdivision 5; 295.53, subdivision 1; proposing coding for new law in Minnesota
Statutes, chapter 256B.

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

Section 1.

Minnesota Statutes 2020, section 256.9657, subdivision 3, is amended to read:

Subd. 3.

Surcharge on HMOs and community integrated service networks.

(a)
Effective October 1, 1992, each health maintenance organization with a certificate of
authority issued by the commissioner of health under chapter 62D and each community
integrated service network licensed by the commissioner under chapter 62N shall pay to
the commissioner of human services a surcharge equal to six-tenths of one percent of the
total premium revenues of the health maintenance organization or community integrated
service network as reported to the commissioner of health according to the schedule in
subdivision 4.

(b) For purposes of this subdivision, total premium revenue means:

(1) premium revenue recognized on a prepaid basis from individuals and groups for
provision of a specified range of health services over a defined period of time which is
normally one month, excluding premiums paid to a health maintenance organization or
community integrated service network from the Federal Employees Health Benefit Program;

(2) premiums from Medicare wraparound subscribers for health benefits which
supplement Medicare coverage;

(3) Medicare revenue, as a result of an arrangement between a health maintenance
organization or a community integrated service network and the Centers for Medicare and
Medicaid Services of the federal Department of Health and Human Services, for services
to a Medicare beneficiary, excluding Medicare revenue that states are prohibited from taxing
under sections 1854, 1860D-12, and 1876 of title XVIII of the federal Social Security Act,
codified as United States Code, title 42, sections 1395mm, 1395w-112, and 1395w-24,
respectively, as they may be amended from time to time; and

(4) medical assistance revenue, as a result of an arrangement between a health
maintenance organization or community integrated service network and a Medicaid state
agency, for services to a medical assistance beneficiary new text begin , minus the portion of medical
assistance revenue attributable to an approved directed payment arrangement under section
256B.1973 new text end .

If advance payments are made under clause (1) or (2) to the health maintenance
organization or community integrated service network for more than one reporting period,
the portion of the payment that has not yet been earned must be treated as a liability.

(c) When a health maintenance organization or community integrated service network
merges or consolidates with or is acquired by another health maintenance organization or
community integrated service network, the surviving corporation or the new corporation
shall be responsible for the annual surcharge originally imposed on each of the entities or
corporations subject to the merger, consolidation, or acquisition, regardless of whether one
of the entities or corporations does not retain a certificate of authority under chapter 62D
or a license under chapter 62N.

(d) Effective June 15 of each year, the surviving corporation's or the new corporation's
surcharge shall be based on the revenues earned in the previous calendar year by all of the
entities or corporations subject to the merger, consolidation, or acquisition regardless of
whether one of the entities or corporations does not retain a certificate of authority under
chapter 62D or a license under chapter 62N until the total premium revenues of the surviving
corporation include the total premium revenues of all the merged entities as reported to the
commissioner of health.

(e) When a health maintenance organization or community integrated service network,
which is subject to liability for the surcharge under this chapter, transfers, assigns, sells,
leases, or disposes of all or substantially all of its property or assets, liability for the surcharge
imposed by this chapter is imposed on the transferee, assignee, or buyer of the health
maintenance organization or community integrated service network.

(f) In the event a health maintenance organization or community integrated service
network converts its licensure to a different type of entity subject to liability for the surcharge
under this chapter, but survives in the same or substantially similar form, the surviving
entity remains liable for the surcharge regardless of whether one of the entities or corporations
does not retain a certificate of authority under chapter 62D or a license under chapter 62N.

(g) The surcharge assessed to a health maintenance organization or community integrated
service network ends when the entity ceases providing services for premiums and the
cessation is not connected with a merger, consolidation, acquisition, or conversion.

Sec. 2.

Minnesota Statutes 2020, section 256.969, is amended by adding a subdivision to
read:

new text begin Subd. 2f. new text end

new text begin Alternate inpatient payment rate. new text end

new text begin Effective July 1, 2021, for a hospital
eligible to receive disproportionate share hospital payments under subdivision 9, paragraph
(d), clause (6), the commissioner shall reduce the amount calculated under subdivision 9
by ... percent and compute an alternate inpatient payment rate. The alternate payment rate
shall be structured to target a total aggregate reimbursement amount equal to what the
hospital would have received for providing fee-for-service inpatient services under this
section to patients enrolled in medical assistance had the hospital received the entire amount
calculated under subdivision 9.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 3.

Minnesota Statutes 2020, section 256B.196, subdivision 2, is amended to read:

Subd. 2.

Commissioner's duties.

(a) For the purposes of this subdivision and subdivision
3, the commissioner shall determine the fee-for-service outpatient hospital services upper
payment limit for nonstate government hospitals. The commissioner shall then determine
the amount of a supplemental payment to Hennepin County Medical Center and Regions
Hospital for these services that would increase medical assistance spending in this category
to the aggregate upper payment limit for all nonstate government hospitals in Minnesota.
In making this determination, the commissioner shall allot the available increases between
Hennepin County Medical Center and Regions Hospital based on the ratio of medical
assistance fee-for-service outpatient hospital payments to the two facilities. The commissioner
shall adjust this allotment as necessary based on federal approvals, the amount of
intergovernmental transfers received from Hennepin and Ramsey Counties, and other factors,
in order to maximize the additional total payments. The commissioner shall inform Hennepin
County and Ramsey County of the periodic intergovernmental transfers necessary to match
federal Medicaid payments available under this subdivision in order to make supplementary
medical assistance payments to Hennepin County Medical Center and Regions Hospital
equal to an amount that when combined with existing medical assistance payments to
nonstate governmental hospitals would increase total payments to hospitals in this category
for outpatient services to the aggregate upper payment limit for all hospitals in this category
in Minnesota. Upon receipt of these periodic transfers, the commissioner shall make
supplementary payments to Hennepin County Medical Center and Regions Hospital.

(b) For the purposes of this subdivision and subdivision 3, the commissioner shall
determine an upper payment limit for physicians and other billing professionals affiliated
with Hennepin County Medical Center and with Regions Hospital. The upper payment limit
shall be based on the average commercial rate or be determined using another method
acceptable to the Centers for Medicare and Medicaid Services. The commissioner shall
inform Hennepin County and Ramsey County of the periodic intergovernmental transfers
necessary to match the federal Medicaid payments available under this subdivision in order
to make supplementary payments to physicians and other billing professionals affiliated
with Hennepin County Medical Center and to make supplementary payments to physicians
and other billing professionals affiliated with Regions Hospital through HealthPartners
Medical Group equal to the difference between the established medical assistance payment
for physician and other billing professional services and the upper payment limit. Upon
receipt of these periodic transfers, the commissioner shall make supplementary payments
to physicians and other billing professionals affiliated with Hennepin County Medical Center
and shall make supplementary payments to physicians and other billing professionals
affiliated with Regions Hospital through HealthPartners Medical Group.

(c) Beginning January 1, 2010, deleted text begin Hennepin County and deleted text end Ramsey County may make monthly
voluntary intergovernmental transfers to the commissioner in amounts not to exceed
deleted text begin $12,000,000 per year from Hennepin County and deleted text end $6,000,000 per year deleted text begin from Ramsey County deleted text end .
The commissioner shall increase the medical assistance capitation payments to any licensed
health plan under contract with the medical assistance program that agrees to make enhanced
payments to deleted text begin Hennepin County Medical Center or deleted text end Regions Hospital. The increase shall be
in an amount equal to the annual value of the monthly transfers plus federal financial
participation, with each health plan receiving its pro rata share of the increase based on the
pro rata share of medical assistance admissions to deleted text begin Hennepin County Medical Center and deleted text end
Regions Hospital by those plans. For the purposes of this paragraph, "the base amount"
means the total annual value of increased medical assistance capitation payments, including
the voluntary intergovernmental transfers, under this paragraph in calendar year 2017. For
managed care contracts beginning on or after January 1, 2018, the commissioner shall reduce
the total annual value of increased medical assistance capitation payments under this
paragraph by an amount equal to ten percent of the base amount, and by an additional ten
percent of the base amount for each subsequent contract year until December 31, 2025.
Upon the request of the commissioner, health plans shall submit individual-level cost data
for verification purposes. The commissioner may ratably reduce these payments on a pro
rata basis in order to satisfy federal requirements for actuarial soundness. If payments are
reduced, transfers shall be reduced accordingly. Any licensed health plan that receives
increased medical assistance capitation payments under the intergovernmental transfer
described in this paragraph shall increase its medical assistance payments to deleted text begin Hennepin
County Medical Center and deleted text end Regions Hospital by the same amount as the increased payments
received in the capitation payment described in this paragraph. This paragraph expires
January 1, 2026.

(d) For the purposes of this subdivision and subdivision 3, the commissioner shall
determine an upper payment limit for ambulance services affiliated with Hennepin County
Medical Center and the city of St. Paul, and ambulance services owned and operated by
another governmental entity that chooses to participate by requesting the commissioner to
determine an upper payment limit. The upper payment limit shall be based on the average
commercial rate or be determined using another method acceptable to the Centers for
Medicare and Medicaid Services. The commissioner shall inform Hennepin County, the
city of St. Paul, and other participating governmental entities of the periodic
intergovernmental transfers necessary to match the federal Medicaid payments available
under this subdivision in order to make supplementary payments to Hennepin County
Medical Center, the city of St. Paul, and other participating governmental entities equal to
the difference between the established medical assistance payment for ambulance services
and the upper payment limit. Upon receipt of these periodic transfers, the commissioner
shall make supplementary payments to Hennepin County Medical Center, the city of St.
Paul, and other participating governmental entities. A tribal government that owns and
operates an ambulance service is not eligible to participate under this subdivision.

(e) For the purposes of this subdivision and subdivision 3, the commissioner shall
determine an upper payment limit for physicians, dentists, and other billing professionals
affiliated with the University of Minnesota and University of Minnesota Physicians. The
upper payment limit shall be based on the average commercial rate or be determined using
another method acceptable to the Centers for Medicare and Medicaid Services. The
commissioner shall inform the University of Minnesota Medical School and University of
Minnesota School of Dentistry of the periodic intergovernmental transfers necessary to
match the federal Medicaid payments available under this subdivision in order to make
supplementary payments to physicians, dentists, and other billing professionals affiliated
with the University of Minnesota and the University of Minnesota Physicians equal to the
difference between the established medical assistance payment for physician, dentist, and
other billing professional services and the upper payment limit. Upon receipt of these periodic
transfers, the commissioner shall make supplementary payments to physicians, dentists,
and other billing professionals affiliated with the University of Minnesota and the University
of Minnesota Physicians.

(f) The commissioner shall inform the transferring governmental entities on an ongoing
basis of the need for any changes needed in the intergovernmental transfers in order to
continue the payments under paragraphs (a) to (e), at their maximum level, including
increases in upper payment limits, changes in the federal Medicaid match, and other factors.

(g) The payments in paragraphs (a) to (e) shall be implemented independently of each
other, subject to federal approval and to the receipt of transfers under subdivision 3.

(h) All of the data and funding transactions related to the payments in paragraphs (a) to
(e) shall be between the commissioner and the governmental entities.

(i) For purposes of this subdivision, billing professionals are limited to physicians, nurse
practitioners, nurse midwives, clinical nurse specialists, physician assistants,
anesthesiologists, certified registered nurse anesthetists, dentists, dental hygienists, and
dental therapists.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021.
new text end

Sec. 4.

new text begin [256B.1973] DIRECTED PAYMENT ARRANGEMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Billing professionals" means physicians, nurse practitioners, nurse midwives, clinical
nurse specialists, physician assistants, anesthesiologists, and certified registered anesthetists,
and may include dentists, dental hygienists, and dental therapists.
new text end

new text begin (c) "Health plan" means a licensed health plan under contract with the medical assistance
program.
new text end

new text begin (d) "High medical assistance utilization" means a medical assistance utilization rate
equal to the standard established in section 256.969, subdivision 9, paragraph (d), clause
(6).
new text end

new text begin Subd. 2. new text end

new text begin Federal approval required. new text end

new text begin Each directed payment arrangement under this
section is contingent on federal approval and must conform with the requirements for
permissible directed managed care organization expenditures under section 256B.6928,
subdivision 5.
new text end

new text begin Subd. 3. new text end

new text begin Eligible providers. new text end

new text begin Eligible providers under this section are nonstate government
teaching hospitals with high medical assistance utilization and a level 1 trauma center and
the hospital's affiliated billing professionals, ambulance services, hospitals, and
non-hospital-based clinics.
new text end

new text begin Subd. 4. new text end

new text begin Voluntary intergovernmental transfers. new text end

new text begin A nonstate governmental entity that
is eligible to perform intergovernmental transfers may make voluntary intergovernmental
transfers to the commissioner. The commissioner shall inform the nonstate governmental
entity of the intergovernmental transfers necessary to maximize the allowable directed
payments.
new text end

new text begin Subd. 5. new text end

new text begin Commissioner's duties; state-directed fee schedule requirement. new text end

new text begin (a) For
each federally approved directed payment arrangement that is a state-directed fee schedule
requirement, the commissioner shall determine a uniform adjustment factor to be applied
to each claim submitted by an eligible provider to a health plan. The commissioner shall
ensure that the application of the uniform adjustment factor maximizes the allowable directed
payments and does not result in payments exceeding federal limits. The commissioner shall
apply the uniform adjustment to each submitted claim.
new text end

new text begin (b) For each federally approved directed payment arrangement that is a state-directed
fee schedule requirement, the commissioner must ensure that the total annual amount of
payments equals at least the sum of the annual value of the voluntary intergovernmental
transfers to the commissioner under subdivision 4 and federal financial participation.
new text end

new text begin (c) For each federally approved directed payment arrangement that is a state-directed
fee schedule requirement, the commissioner shall develop a plan for the initial
implementation of the state-directed fee schedule requirement to ensure that the eligible
provider receives the entire permissible value of the federally approved directed payment
arrangement. If federal approval of a directed payment arrangement under this subdivision
is retroactive, the commissioner shall make a onetime pro rata increase to the uniform
adjustment factor and the initial payments in order to include claims submitted between the
retroactive federal approval date and the period captured by the initial payments.
new text end

new text begin Subd. 6. new text end

new text begin Health plan duties; submission of claims. new text end

new text begin In accordance with its contract,
each health plan shall submit to the commissioner payment information for each claim paid
to an eligible provider for services provided to a medical assistance enrollee.
new text end

new text begin Subd. 7. new text end

new text begin Health plan duties; directed payments. new text end

new text begin In accordance with its contract, each
health plan shall make directed payments to the eligible provider in an amount equal to the
payment amounts the plan received from the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2021, or upon federal approval,
whichever is later, unless the federal approval provides for an effective date after July 1,
2021, but before the date of federal approval, in which case the federally approved effective
date applies.
new text end

Sec. 5.

Minnesota Statutes 2020, section 256B.6928, subdivision 5, is amended to read:

Subd. 5.

Direction of managed care organization expenditures.

(a) The commissioner
shall not direct managed care organizations expenditures under the managed care contract,
except deleted text begin in deleted text end new text begin as permitted under Code of Federal Regulations, part 42, section 438.6(c). The
exception under this paragraph includes new text end the following situations:

(1) implementation of a value-based purchasing model for provider reimbursement,
including pay-for-performance arrangements, bundled payments, or other service payments
intended to recognize value or outcomes over volume of services;

(2) participation in a multipayer or medical assistance-specific delivery system reform
or performance improvement initiative; or

(3) implementation of a minimum or maximum fee schedule, or a uniform dollar or
percentage increase for network providers that provide a particular service. The maximum
fee schedule must allow the managed care organization the ability to reasonably manage
risk and provide discretion in accomplishing the goals of the contract.

(b) Any managed care contract that directs managed care organization expenditures as
permitted under paragraph (a), clauses (1) to (3), must be developed in accordance with
Code of Federal Regulations, part 42, sections 438.4 and 438.5; comply with actuarial
soundness and generally accepted actuarial principles and practices; and have written
approval from the Centers for Medicare and Medicaid Services before implementation. To
obtain approval, the commissioner shall demonstrate in writing that the contract arrangement:

(1) is based on the utilization and delivery of services;

(2) directs expenditures equally, using the same terms of performance for a class of
providers providing service under the contract;

(3) is intended to advance at least one of the goals and objectives in the commissioner's
quality strategy;

(4) has an evaluation plan that measures the degree to which the arrangement advances
at least one of the goals in the commissioner's quality strategy;

(5) does not condition network provider participation on the network provider entering
into or adhering to an intergovernmental transfer agreement; and

(6) is not renewed automatically.

(c) For contract arrangements identified in paragraph (a), clauses (1) and (2), the
commissioner shall:

(1) make participation in the value-based purchasing model, special delivery system
reform, or performance improvement initiative available, using the same terms of
performance, to a class of providers providing services under the contract related to the
model, reform, or initiative; and

(2) use a common set of performance measures across all payers and providers.

(d) The commissioner shall not set the amount or frequency of the expenditures or recoup
from the managed care organization any unspent funds allocated for these arrangements.

Sec. 6.

Minnesota Statutes 2020, section 295.53, subdivision 1, is amended to read:

Subdivision 1.

Exclusions and exemptions.

(a) The following payments are excluded
from the gross revenues subject to the hospital, surgical center, or health care provider taxes
under sections 295.50 to 295.59:

(1) payments received by a health care provider or the wholly owned subsidiary of a
health care provider for care provided outside Minnesota;

(2) government payments received by the commissioner of human services for
state-operated services;

(3) payments received by a health care provider for hearing aids and related equipment
or prescription eyewear delivered outside of Minnesota; and

(4) payments received by an educational institution from student tuition, student activity
fees, health care service fees, government appropriations, donations, or grants, and for
services identified in and provided under an individualized education program as defined
in section 256B.0625 or Code of Federal Regulations, chapter 34, section 300.340(a). Fee
for service payments and payments for extended coverage are taxable.

(b) The following payments are exempted from the gross revenues subject to hospital,
surgical center, or health care provider taxes under sections 295.50 to 295.59:

(1) payments received for services provided under the Medicare program, including
payments received from the government and organizations governed by sections 1833,
1853, and 1876 of title XVIII of the federal Social Security Act, United States Code, title
42, section 1395; and enrollee deductibles, co-insurance, and co-payments, whether paid
by the Medicare enrollee, by Medicare supplemental coverage as described in section
62A.011, subdivision 3, clause (10), or by Medicaid payments under title XIX of the federal
Social Security Act. Payments for services not covered by Medicare are taxable;

(2) payments received for home health care services;

(3) payments received from hospitals or surgical centers for goods and services on which
liability for tax is imposed under section 295.52 or the source of funds for the payment is
exempt under clause (1), (6), (9), (10), or (11);

(4) payments received from the health care providers for goods and services on which
liability for tax is imposed under this chapter or the source of funds for the payment is
exempt under clause (1), (6), (9), (10), or (11);

(5) amounts paid for legend drugs to a wholesale drug distributor who is subject to tax
under section 295.52, subdivision 3, reduced by reimbursement received for legend drugs
otherwise exempt under this chapter;

(6) payments received from the chemical dependency fund under chapter 254B;

(7) payments received in the nature of charitable donations that are not designated for
providing patient services to a specific individual or group;

(8) payments received for providing patient services incurred through a formal program
of health care research conducted in conformity with federal regulations governing research
on human subjects. Payments received from patients or from other persons paying on behalf
of the patients are subject to tax;

(9) payments received from any governmental agency for services benefiting the public,
not including payments made by the government in its capacity as an employer or insurer
or payments made by the government for services provided under the MinnesotaCare
program or the medical assistance program governed by title XIX of the federal Social
Security Act, United States Code, title 42, sections 1396 to 1396v;

(10) payments received under the federal Employees Health Benefits Act, United States
Code, title 5, section 8909(f), as amended by the Omnibus Reconciliation Act of 1990.
Enrollee deductibles, co-insurance, and co-payments are subject to tax;

(11) payments received under the federal Tricare program, Code of Federal Regulations,
title 32, section 199.17(a)(7). Enrollee deductibles, co-insurance, and co-payments are
subject to tax; and

(12) supplemental deleted text begin or deleted text end new text begin , new text end enhanced new text begin , or directed new text end payments authorized under section 256B.196
deleted text begin or deleted text end new text begin , new text end 256B.197 new text begin , or 256B.1973 new text end .

(c) Payments received by wholesale drug distributors for legend drugs sold directly to
veterinarians or veterinary bulk purchasing organizations are excluded from the gross
revenues subject to the wholesale drug distributor tax under sections 295.50 to 295.59.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for taxable years beginning after December
31, 2020.
new text end

Sec. 7. new text begin DIRECTION TO COMMISSIONER; DIRECTED PAYMENT
ARRANGEMENTS.
new text end

new text begin The commissioner of human services, in consultation with Hennepin Healthcare System,
shall submit Section 438.6(c) Preprint to Centers for Medicare and Medicaid Services as
soon as practicable, but no later than ... calendar days following the effective date of this
section. The commissioner shall request from the Centers for Medicare and Medicaid
Services an effective date of July 1, 2021.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end