1.1 	A bill for an act
1.2 	relating to human services; establishing an alternative payment methodology for 
1.3 	federally qualified health centers and rural health clinics; modifying federally 
1.4 	qualified health centers and rural health clinics payments; requiring a report;
1.5 	amending Minnesota Statutes 2018, section 256B.0625, subdivision 30; repealing 
1.6 	Minnesota Statutes 2018, section 256B.0625, subdivision 63.
1.7 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.8 	Section 1. Minnesota Statutes 2018, section 256B.0625, subdivision 30, is amended to 
1.9 	read:
1.10 		Subd. 30.Other clinic services. (a) Medical assistance covers rural health clinic services, 
1.11 	federally qualified health center services, nonprofit community health clinic services, and 
1.12 	public health clinic services. Rural health clinic services and federally qualified health center 
1.13 	services mean services defined in United States Code, title 42, section 1396d(a)(2)(B) and 
1.14 	(C). Payment for rural health clinic and federally qualified health center services shall be 
1.15 	made according to applicable federal law and regulation.
1.16 	(b) A federally qualified health center (FQHC) that is beginning initial operation shall 
1.17 	submit an estimate of budgeted costs and visits for the initial reporting period in the form 
1.18 	and detail required by the commissioner. A federally qualified health center An FQHC that 
1.19 	is already in operation shall submit an initial report using actual costs and visits for the 
1.20 	initial reporting period. Within 90 days of the end of its reporting period, a federally qualified 
1.21 	health center an FQHC shall submit, in the form and detail required by the commissioner, 
1.22 	a report of its operations, including allowable costs actually incurred for the period and the 
1.23 	actual number of visits for services furnished during the period, and other information 
1.24 	required by the commissioner. Federally qualified health centers FQHCs that file Medicare 
2.1 	cost reports shall provide the commissioner with a copy of the most recent Medicare cost 
2.2 	report filed with the Medicare program intermediary for the reporting year which support 
2.3 	the costs claimed on their cost report to the state.
2.4 	(c) In order to continue cost-based payment under the medical assistance program 
2.5 	according to paragraphs (a) and (b), a federally qualified health center an FQHC or rural 
2.6 	health clinic must apply for designation as an essential community provider within six 
2.7 	months of final adoption of rules by the Department of Health according to section 62Q.19, 
2.8 	subdivision 7. For those federally qualified health centers FQHCs and rural health clinics 
2.9 	that have applied for essential community provider status within the six-month time 
2.10 	prescribed, medical assistance payments will continue to be made according to paragraphs 
2.11 	(a) and (b) for the first three years after application. For federally qualified health centers
2.12 	FQHCs and rural health clinics that either do not apply within the time specified above or 
2.13 	who have had essential community provider status for three years, medical assistance 
2.14 	payments for health services provided by these entities shall be according to the same rates 
2.15 	and conditions applicable to the same service provided by health care providers that are not 
2.16 	federally qualified health centers FQHCs or rural health clinics.
2.17 	(d) Effective July 1, 1999, the provisions of paragraph (c) requiring a federally qualified 
2.18 	health center an FQHC or a rural health clinic to make application for an essential community 
2.19 	provider designation in order to have cost-based payments made according to paragraphs 
2.20 	(a) and (b) no longer apply.
2.21 	(e) Effective January 1, 2000, payments made according to paragraphs (a) and (b) shall 
2.22 	be limited to the cost phase-out schedule of the Balanced Budget Act of 1997.
2.23 	(f) Effective January 1, 2001, through December 31, 2020, each federally qualified 
2.24 	health center FQHC and rural health clinic may elect to be paid either under the prospective 
2.25 	payment system established in United States Code, title 42, section 1396a(aa), or under an 
2.26 	alternative payment methodology consistent with the requirements of United States Code, 
2.27 	title 42, section 1396a(aa), and approved by the Centers for Medicare and Medicaid Services. 
2.28 	The alternative payment methodology shall be 100 percent of cost as determined according 
2.29 	to Medicare cost principles.
2.30 	(g) Effective for services provided on or after January 1, 2021, all claims for payment 
2.31 	of clinic services provided by FQHCs and rural health clinics shall be paid by the 
2.32 	commissioner, according to an annual election by the FQHC or rural health clinic, under 
2.33 	the current prospective payment system described in paragraph (f) or the alternative payment 
2.34 	methodology described in paragraph (l).
3.1 	(h) For purposes of this section, "nonprofit community clinic" is a clinic that:
3.2 	(1) has nonprofit status as specified in chapter 317A;
3.3 	(2) has tax exempt status as provided in Internal Revenue Code, section 501(c)(3);
3.4 	(3) is established to provide health services to low-income population groups, uninsured, 
3.5 	high-risk and special needs populations, underserved and other special needs populations;
3.6 	(4) employs professional staff at least one-half of which are familiar with the cultural 
3.7 	background of their clients;
3.8 	(5) charges for services on a sliding fee scale designed to provide assistance to 
3.9 	low-income clients based on current poverty income guidelines and family size; and
3.10 	(6) does not restrict access or services because of a client's financial limitations or public 
3.11 	assistance status and provides no-cost care as needed.
3.12 	(h) (i) Effective for services provided on or after January 1, 2015, all claims for payment 
3.13 	of clinic services provided by federally qualified health centers FQHCs and rural health 
3.14 	clinics shall be paid by the commissioner. the commissioner shall determine the most feasible 
3.15 	method for paying claims from the following options:
3.16 	(1) federally qualified health centers FQHCs and rural health clinics submit claims 
3.17 	directly to the commissioner for payment, and the commissioner provides claims information 
3.18 	for recipients enrolled in a managed care or county-based purchasing plan to the plan, on 
3.19 	a regular basis; or
3.20 	(2) federally qualified health centers FQHCs and rural health clinics submit claims for 
3.21 	recipients enrolled in a managed care or county-based purchasing plan to the plan, and those 
3.22 	claims are submitted by the plan to the commissioner for payment to the clinic.
3.23 	(i) (j) For clinic services provided prior to January 1, 2015, the commissioner shall 
3.24 	calculate and pay monthly the proposed managed care supplemental payments to clinics, 
3.25 	and clinics shall conduct a timely review of the payment calculation data in order to finalize 
3.26 	all supplemental payments in accordance with federal law. Any issues arising from a clinic's 
3.27 	review must be reported to the commissioner by January 1, 2017. Upon final agreement 
3.28 	between the commissioner and a clinic on issues identified under this subdivision, and in 
3.29 	accordance with United States Code, title 42, section 1396a(bb), no supplemental payments 
3.30 	for managed care plan or county-based purchasing plan claims for services provided prior 
3.31 	to January 1, 2015, shall be made after June 30, 2017. If the commissioner and clinics are 
3.32 	unable to resolve issues under this subdivision, the parties shall submit the dispute to the 
3.33 	arbitration process under section 14.57.
4.1 	(j) (k) The commissioner shall seek a federal waiver, authorized under section 1115 of 
4.2 	the Social Security Act, to obtain federal financial participation at the 100 percent federal 
4.3 	matching percentage available to facilities of the Indian Health Service or tribal organization 
4.4 	in accordance with section 1905(b) of the Social Security Act for expenditures made to 
4.5 	organizations dually certified under Title V of the Indian Health Care Improvement Act, 
4.6 	Public Law 94-437, and as a federally qualified health center under paragraph (a) that 
4.7 	provides services to American Indian and Alaskan Native individuals eligible for services 
4.8 	under this subdivision.
4.9 	(l) All claims for payment of clinic services provided by FQHCs and rural health clinics, 
4.10 	that have elected to be paid under this paragraph, shall be paid by the commissioner according 
4.11 	to the following requirements:
4.12 	(1)  the commissioner shall establish a single medical and single dental organization rate 
4.13 	for each FQHC and rural health clinic when applicable;
4.14 	(2) each FQHC and rural health clinic is eligible for same day reimbursement of one 
4.15 	medical and one dental organization rate if eligible medical and dental visits are provided 
4.16 	on the same day;
4.17 	(3) the commissioner shall reimburse FQHCs and rural health clinics, in accordance 
4.18 	with Medicare cost principles, their allowable costs, including direct patient care costs and 
4.19 	patient-related support services. Nonallowable costs include, but are not limited to:
4.20 	(i) general social service and administrative costs;
4.21 	(ii) retail pharmacy;
4.22 	(iii) patient incentives, food, housing assistance, and utility assistance;
4.23 	(iv) external lab and x-ray;
4.24 	(v) navigation services;
4.25 	(vi) health care taxes;
4.26 	(vii) advertising, public relations, and marketing;
4.27 	(viii) office entertainment costs, food, alcohol, and gifts;
4.28 	(ix) contributions and donations;
4.29 	(x) bad debts or losses on awards or contracts;
4.30 	(xi) fines, penalties, damages, or other settlements;
4.31 	(xii) fund-raising, investment management, and associated administrative costs;
5.1 	(xiii) research and associated administrative costs;
5.2 	(xiv) nonpaid workers;
5.3 	(xv) lobbying;
5.4 	(xvi) scholarships and student aid; and
5.5 	(xvii) nonmedical assistance covered services.
5.6 	(4) the base year payment rates for FQHCs and rural health clinics:
5.7 	(i) must be determined using each FQHC's and rural health clinic's Medicare cost reports 
5.8 	from 2017 and 2018;
5.9 	(ii) must be according to current Medicare cost principles as applicable to FQHCs and 
5.10 	rural health clinics without the application of productivity screens and upper payment limits 
5.11 	or the Medicare prospective payment system FQHC aggregate mean upper payment limit; 
5.12 	and
5.13 	(iii) must provide for a 60-day appeals process under section 14.57;
5.14 	(5) the commissioner shall annually inflate the payment rates for FQHCs and rural health 
5.15 	clinics from the base year payment rate to the effective date by using the CMS FQHC Market 
5.16 	Basket inflator established under United States Code, title 42, section 1395m(o), less 
5.17 	productivity;
5.18 	(6) FQHCs' and rural health clinics' payment rates shall be rebased by the commissioner 
5.19 	every two years and adjusted biannually by the CMS FQHC Market Basket inflator 
5.20 	established under United States Code, title 42, section 1395m(o), less productivity;
5.21 	(7) the commissioner shall reimburse FQHCs and rural health clinics an additional 
5.22 	amount relative to their medical and dental organization rates that is attributable to the tax 
5.23 	required to be paid according to section 295.52, if applicable;
5.24 	(8) FQHCs and rural health clinics may submit change of scope requests to the 
5.25 	commissioner if the change of scope would result in an increase or decrease of 2.5 percent 
5.26 	or higher in the medical or dental organization rate currently received by the FQHC or rural 
5.27 	health clinic;
5.28 	(9) For FQHCs and rural health clinics seeking a change in scope with the commissioner 
5.29 	under clause (8) that requires the approval of the scope change by the federal Health 
5.30 	Resources Services Administration:
6.1 	(i) FQHCs and rural health clinics shall submit the change of scope request, including 
6.2 	the start date of services, to the commissioner within seven business days of submission of 
6.3 	the scope change to the federal Health Resources Services Administration;
6.4 	(ii) the commissioner shall establish the effective date of the payment change as the 
6.5 	federal Health Resources Services Administration date of approval of the FQHC's or rural 
6.6 	health clinic's scope change request, or the effective start date of services, whichever is 
6.7 	later; and
6.8 	(iii) within 45 days of one year after the effective date established in item (ii), the 
6.9 	commissioner shall conduct a retroactive review to determine if the actual costs or encounters 
6.10 	result in an increase or decrease of 2.5 percent or higher in the medical or dental organization 
6.11 	rate, and if this is the case, the commissioner shall revise the rate accordingly and shall 
6.12 	adjust payments retrospectively to the effective date established in item (ii);
6.13 	(10) for change of scope requests that do not require federal Health Resources Services 
6.14 	Administration approval, the FQHC and rural health clinic shall submit the request to the 
6.15 	commissioner before implementing the change, and the effective date of the change is the 
6.16 	date the commissioner received the FQHC's or rural health clinic's request, or the effective 
6.17 	start date of the service, whichever is later. The commissioner shall provide a response to 
6.18 	the FQHC's or rural health clinic's request within 45 days of submission and provide a final 
6.19 	approval within 120 days of submission. This timeline may be waived at the mutual 
6.20 	agreement of the commissioner and the FQHC or rural health clinic if more information is 
6.21 	needed to evaluate the request;
6.22 	(11) the commissioner, when establishing organization rates for new FQHCs and rural 
6.23 	health clinics, shall consider the patient caseload of existing FQHCs and rural health clinics 
6.24 	in a 60-mile radius for organizations established outside of the seven-county metropolitan 
6.25 	area, and in a 30-mile radius for organizations in the seven-county metropolitan area. If this 
6.26 	information is not available, the commissioner may use Medicare cost reports or audited 
6.27 	financial statements to establish base rate;
6.28 	(12) the commissioner shall establish a quality measures workgroup that includes 
6.29 	representatives from the Minnesota Association of Community Health Centers, FQHCs, 
6.30 	and rural health clinics, to evaluate clinical and nonclinical measures; and
6.31 	(13) the commissioner shall not disallow or reduce costs that are related to an FQHC's 
6.32 	or rural health clinic's participation in health care educational programs to the extent that 
6.33 	the costs are not accounted for in the alternative payment methodology encounter rate 
6.34 	established in this paragraph.

7.1 	Sec. 2. STUDY OF CLINIC COSTS.
 7.2 	The commissioner of human services shall conduct a five-year comparative analysis of 
7.3 	the actual change in FQHC and rural health clinic costs versus the CMS FQHC Market 
7.4 	Basket inflator using 2017 through 2022 finalized Medicare Cost Reports, CMS 2224-14, 
7.5 	and report the findings to the chairs and ranking minority members of the legislative 
7.6 	committees with jurisdiction over health and human services policy and finance, by July 1, 
7.7 	2025.

7.8 	Sec. 3. REPEALER.
 7.9 	Minnesota Statutes 2018, section 256B.0625, subdivision 63, is repealed.

APPENDIX 

Repealed Minnesota Statutes: H0725-1 

256B.0625 COVERED SERVICES.Subd. 63.Payment for multiple services provided on the same day. 
The commissioner shall not prohibit payment, including supplemental payments, for mental health services or dental services provided to a patient by a clinic or health care professional solely because the mental health or dental services were provided on the same day as other covered health services furnished by the same provider.