Requiring the commissioner of human services to assist children's mental health collaboratives implementing capitation payment systems to ensure the inclusion of federally reimbursable services in the expenditures base used to determine reimbursable expenditures; requiring the commissioner in consultation with the association of Minnesota counties to develop proposals to provide medical assistance (MA) reimbursement for mental health and other treatment services provided in children's residential treatment programs, specifying certain required proposal elements; providing for payment of funds generated from state and federal reimbursement for treatment services to counties, specifying certain required uses, authorizing certain commissioner waivers; providing for expansion of county expenditures for services; requiring incorporation of anticipated or generated revenue into the capitation rate; prohibiting the use of the state and federal reimbursement to determine the allocation of other funds to counties; requiring the commissioner to incorporate medical assistance reimbursements received in federal waiver discussions and to report proposal design and implementation recommendations to the legislature by a certain date; requiring the commissioner in consultation with the association of Minnesota counties to design proposals to add rehabilitation services to the state medical assistance plan for adults with mental illness or other debilitating conditions and to provide medical assistance reimbursement for targeted case management services for certain vulnerable adults, specifying certain proposal requirements and requiring submission of recommendations to the legislature by a certain date and incorporation of medical assistance reimbursements in federal waiver discussions(mk)