1.1 	A bill for an act
1.2 	relating to human services; establishing a contingent, alternate medical assistance 
1.3 	payment method for children's hospitals;amending Minnesota Statutes 2016, 
1.4 	section 256.969, subdivision 4b, by adding a subdivision.
1.5 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.6 	Section 1. Minnesota Statutes 2016, section 256.969, is amended by adding a subdivision 
1.7 	to read:
1.8 		Subd. 2e.Alternate inpatient payment rate. (a) If the days, costs, and revenues 
1.9 	associated with patients who are eligible for medical assistance and also have private health 
1.10 	insurance are required to be included in the calculation of the hospital-specific 
1.11 	disproportionate share hospital payment limit for a rate year, then the commissioner, effective 
1.12 	retroactively to rate years beginning on or after January 1, 2015, shall compute an alternate 
1.13 	inpatient payment rate for a Minnesota hospital that is designated as a children's hospital 
1.14 	and enumerated as such by Medicare. The commissioner shall reimburse the hospital for a 
1.15 	rate year at the higher of the amount calculated under the alternate payment rate or the 
1.16 	amount calculated under subdivision 9.
1.17 	(b) The alternate payment rate must meet the criteria in clauses (1) to (4):
1.18 	(1) the alternate payment rate shall be structured to target a total aggregate reimbursement 
1.19 	amount equal to two percent less than each children's hospital's cost coverage percentage 
1.20 	in the applicable base year for providing fee-for-service inpatient services under this section 
1.21 	to patients enrolled in medical assistance;
1.22 	(2) costs shall be determined using the most recently available medical assistance cost 
1.23 	report provided under subdivision 4b, paragraph (a), clause (3), for the applicable base year. 
2.1 	Costs shall be determined using standard Medicare cost finding and cost allocation methods 
2.2 	and applied in the same manner as the costs were in the rebasing for the applicable base 
2.3 	year. If the medical assistance cost report is not available, costs shall be determined in the 
2.4 	interim using the Medicare Cost Report;
2.5 	(3) in any rate year in which payment to a hospital is made using the alternate payment 
2.6 	rate, no payments shall be made to the hospital under subdivision 9; and
2.7 	(4) if the alternate payment amount increases payments at a rate that is higher than the 
2.8 	inflation factor applied over the rebasing period, the commissioner shall take this into 
2.9 	consideration when setting payment rates at the next rebasing.

2.10 	Sec. 2. Minnesota Statutes 2016, section 256.969, subdivision 4b, is amended to read:
2.11 		Subd. 4b.Medical assistance cost reports for services. (a) A hospital that meets one 
2.12 	of the following criteria must annually submit to the commissioner medical assistance cost 
2.13 	reports within six months of the end of the hospital's fiscal year:
2.14 	(1) a hospital designated as a critical access hospital that receives medical assistance 
2.15 	payments; or
2.16 	(2) a Minnesota hospital or out-of-state hospital located within a Minnesota local trade 
2.17 	area that receives a disproportionate population adjustment under subdivision 9; or
2.18 	(3) a Minnesota hospital that is designated as a children's hospital and enumerated as 
2.19 	such by Medicare.
2.20 	For purposes of this subdivision, local trade area has the meaning given in subdivision 
2.21 	17.
2.22 	(b) The commissioner shall suspend payments to any hospital that fails to submit a report 
2.23 	required under this subdivision. Payments must remain suspended until the report has been 
2.24 	filed with and accepted by the commissioner.

2.25 	EFFECTIVE DATE. This section is effective retroactively from January 1, 2015.