HF 2760

Introduction - 94th Legislature (2025 - 2026)

Posted on 03/24/2025 03:04 p.m.

A bill for an act
relating to health; modifying reimbursement procedures for federally qualified
health centers; amending Minnesota Statutes 2024, section 256B.0625, subdivision
30.

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

Section 1.

Minnesota Statutes 2024, section 256B.0625, subdivision 30, is amended to
read:

Subd. 30.

Other clinic services.

(a) Medical assistance covers rural health clinic services,
federally qualified health center services, nonprofit community health clinic services, and
public health clinic services. Rural health clinic services and federally qualified health center
services mean services defined in United States Code, title 42, section 1396d(a)(2)(B) and
(C). Payment for rural health clinic and federally qualified health center services shall be
made according to applicable federal law and regulation.

(b) A federally qualified health center (FQHC) that is beginning initial operation shall
submit an estimate of budgeted costs and visits for the initial reporting period in the form
and detail required by the commissioner. An FQHC that is already in operation shall submit
an initial report using actual costs and visits for the initial reporting period. Within 90 days
of the end of its reporting period, an FQHC shall submit, in the form and detail required by
the commissioner, a report of its operations, including allowable costs actually incurred for
the period and the actual number of visits for services furnished during the period, and other
information required by the commissioner. FQHCs that file Medicare cost reports shall
provide the commissioner with a copy of the most recent Medicare cost report filed with
the Medicare program intermediary for the reporting year which support the costs claimed
on their cost report to the state.

(c) In order to continue cost-based payment under the medical assistance program
according to paragraphs (a) and (b), an FQHC or rural health clinic must apply for designation
as an essential community provider within six months of final adoption of rules by the
Department of Health according to section 62Q.19, subdivision 7. For those FQHCs and
rural health clinics that have applied for essential community provider status within the
six-month time prescribed, medical assistance payments will continue to be made according
to paragraphs (a) and (b) for the first three years after application. For FQHCs and rural
health clinics that either do not apply within the time specified above or who have had
essential community provider status for three years, medical assistance payments for health
services provided by these entities shall be according to the same rates and conditions
applicable to the same service provided by health care providers that are not FQHCs or rural
health clinics.

(d) Effective July 1, 1999, the provisions of paragraph (c) requiring an FQHC or a rural
health clinic to make application for an essential community provider designation in order
to have cost-based payments made according to paragraphs (a) and (b) no longer apply.

(e) Effective January 1, 2000, payments made according to paragraphs (a) and (b) shall
be limited to the cost phase-out schedule of the Balanced Budget Act of 1997.

(f) Effective January 1, 2001, through December 31, 2020, each FQHC and rural health
clinic may elect to be paid either under the prospective payment system established in United
States Code, title 42, section 1396a(aa), or under an alternative payment methodology
consistent with the requirements of United States Code, title 42, section 1396a(aa), and
approved by the Centers for Medicare and Medicaid Services. The alternative payment
methodology shall be 100 percent of cost as determined according to Medicare cost
principles.

(g) Effective for services provided on or after January 1, 2021, all claims for payment
of clinic services provided by FQHCs and rural health clinics shall be paid by the
commissioner, according to an annual election by the FQHC or rural health clinic, under
the current prospective payment system described in paragraph (f) or the alternative payment
methodology described in paragraph (l), or, upon federal approval, for FQHCs that are also
urban Indian organizations under Title V of the federal Indian Health Improvement Act, as
provided under paragraph (k).

(h) For purposes of this section, "nonprofit community clinic" is a clinic that:

(1) has nonprofit status as specified in chapter 317A;

(2) has tax exempt status as provided in Internal Revenue Code, section 501(c)(3);

(3) is established to provide health services to low-income population groups, uninsured,
high-risk and special needs populations, underserved and other special needs populations;

(4) employs professional staff at least one-half of which are familiar with the cultural
background of their clients;

(5) charges for services on a sliding fee scale designed to provide assistance to
low-income clients based on current poverty income guidelines and family size; and

(6) does not restrict access or services because of a client's financial limitations or public
assistance status and provides no-cost care as needed.

(i) Effective for services provided on or after January 1, 2015, all claims for payment
of clinic services provided by FQHCs and rural health clinics shall be paid by the
commissioner. The commissioner shall determine the most feasible method for paying
claims from the following options:

(1) FQHCs and rural health clinics submit claims directly to the commissioner for
payment, and the commissioner provides claims information for recipients enrolled in a
managed care or county-based purchasing plan to the plan, on a regular basis; or

(2) FQHCs and rural health clinics submit claims for recipients enrolled in a managed
care or county-based purchasing plan to the plan, and those claims are submitted by the
plan to the commissioner for payment to the clinic.

(j) For clinic services provided prior to January 1, 2015, the commissioner shall calculate
and pay monthly the proposed managed care supplemental payments to clinics, and clinics
shall conduct a timely review of the payment calculation data in order to finalize all
supplemental payments in accordance with federal law. Any issues arising from a clinic's
review must be reported to the commissioner by January 1, 2017. Upon final agreement
between the commissioner and a clinic on issues identified under this subdivision, and in
accordance with United States Code, title 42, section 1396a(bb), no supplemental payments
for managed care plan or county-based purchasing plan claims for services provided prior
to January 1, 2015, shall be made after June 30, 2017. If the commissioner and clinics are
unable to resolve issues under this subdivision, the parties shall submit the dispute to the
arbitration process under section 14.57.

(k) The commissioner shall establish an encounter payment rate that is equivalent to the
all inclusive rate (AIR) payment established by the Indian Health Service and published in
the Federal Register. The encounter rate must be updated annually and must reflect the
changes in the AIR established by the Indian Health Service each calendar year. FQHCs
that are also urban Indian organizations under Title V of the federal Indian Health
Improvement Act may elect to be paid: (1) at the encounter rate established under this
paragraph; (2) under the alternative payment methodology described in paragraph (l); or
(3) under the federally required prospective payment system described in paragraph (f).
FQHCs that elect to be paid at the encounter rate established under this paragraph must
continue to meet all state and federal requirements related to FQHCs and urban Indian
organizations, and must maintain their statuses as FQHCs and urban Indian organizations.

(l) All claims for payment of clinic services provided by FQHCs and rural health clinics,
that have elected to be paid under this paragraph, shall be paid by the commissioner according
to the following requirements:

(1) the commissioner shall establish a single medical and single dental organization
encounter rate for each FQHC and rural health clinic when applicable;

(2) each FQHC and rural health clinic is eligible for same day reimbursement of one
medical and one dental organization encounter rate if eligible medical and dental visits are
provided on the same day;

(3) the commissioner shall reimburse FQHCs and rural health clinics, in accordance
with current applicable Medicare cost principles, their allowable costs, including direct
patient care costs and patient-related support services. Nonallowable costs include, but are
not limited to:

(i) general social services and administrative costs;

(ii) retail pharmacy;

(iii) patient incentives, food, housing assistance, and utility assistance;

(iv) external lab and x-ray;

(v) navigation services;

(vi) health care taxes;

(vii) advertising, public relations, and marketing;

(viii) office entertainment costs, food, alcohol, and gifts;

(ix) contributions and donations;

(x) bad debts or losses on awards or contracts;

(xi) fines, penalties, damages, or other settlements;

(xii) fundraising, investment management, and associated administrative costs;

(xiii) research and associated administrative costs;

(xiv) nonpaid workers;

(xv) lobbying;

(xvi) scholarships and student aid; and

(xvii) nonmedical assistance covered services;

(4) the commissioner shall review the list of nonallowable costs in the years between
the rebasing process established in clause (5), in consultation with the Minnesota Association
of Community Health Centers, FQHCs, and rural health clinics. The commissioner shall
publish the list and any updates in the Minnesota health care programs provider manual;

(5) the initial applicable base year organization encounter rates for FQHCs and rural
health clinics shall be computed for services delivered on or after January 1, 2021, and:

(i) must be determined using each FQHC's and rural health clinic's Medicare cost reports
from 2017 and 2018;

(ii) must be according to current applicable Medicare cost principles as applicable to
FQHCs and rural health clinics without the application of productivity screens and upper
payment limits or the Medicare prospective payment system FQHC aggregate mean upper
payment limit;

(iii) must be subsequently rebased every two years thereafter using the Medicare cost
reports that are deleted text begin three deleted text end new text begin one new text end and deleted text begin four deleted text end new text begin two new text end years prior to the rebasing year. Years in which
organizational cost or claims volume is reduced or altered due to a pandemic, disease, or
other public health emergency shall not be used as part of a base year when the base year
includes more than one year. The commissioner may use the Medicare cost reports of a year
unaffected by a pandemic, disease, or other public health emergency, or previous two
consecutive years, inflated to the base year as established under item (iv);

(iv) must be inflated to the base year using the inflation factor described in clause (6);
and

(v) the commissioner must provide for a 60-day appeals process under section 14.57;

(6) the commissioner shall annually inflate the applicable organization encounter rates
for FQHCs and rural health clinics from the base year payment rate to the effective date by
using the CMS FQHC Market Basket inflator established under United States Code, title
42, section 1395m(o), less productivity;

(7) FQHCs and rural health clinics that have elected the alternative payment methodology
under this paragraph shall submit all necessary documentation required by the commissioner
to compute the rebased organization encounter rates no later than six months following the
date the applicable Medicare cost reports are due to the Centers for Medicare and Medicaid
Services;

(8) the commissioner shall reimburse FQHCs and rural health clinics an additional
amount relative to their medical and dental organization encounter rates that is attributable
to the tax required to be paid according to section 295.52, if applicable;

(9) FQHCs and rural health clinics may submit change of scope requests to the
commissioner new text begin to take into account any increase or decrease in the scope of services furnished
by the center or clinic during that fiscal year, including but not limited to:
new text end

new text begin (i) new text end if the change of scope would result in an increase or decrease of 2.5 percent or higher
in the medical or dental organization encounter rate currently received by the FQHC or
rural health clinic; new text begin and
new text end

new text begin (ii) if the cost to the FQHC of providing covered health care services to eligible clients
has increased or decreased due to one or more of the following events:
new text end

new text begin (A) a change in the type of health care services the FQHC provides;
new text end

new text begin (B) a change in the intensity, meaning the total quantity of labor and materials consumed
by an individual client during an average encounter, of health care services the FQHC
provides;
new text end

new text begin (C) a change in the duration, meaning the length of an average encounter, of health care
services the FQHC provides; or
new text end

new text begin (D) a change in the amount of health care services the FQHC provides in an average
encounter;
new text end

(10) for FQHCs and rural health clinics seeking a change in scope with the commissioner
under clause (9) that requires the approval of the scope change by the federal Health
Resources Services Administration:

(i) FQHCs and rural health clinics shall submit the change of scope request, including
the start date of services, to the commissioner within seven business days of submission of
the scope change to the federal Health Resources Services Administration;

(ii) the commissioner shall establish the effective date of the payment change as the
federal Health Resources Services Administration date of approval of the FQHC's or rural
health clinic's scope change request, or the effective start date of services, whichever is
later; and

(iii) within 45 days of one year after the effective date established in item (ii), the
commissioner shall conduct a retroactive review to determine if the actual costs established
under clause (3) or encounters result in an increase or decrease of 2.5 percent or higher in
the medical or dental organization encounter rate, and if this is the case, the commissioner
shall revise the rate accordingly and shall adjust payments retrospectively to the effective
date established in item (ii);

(11) for change of scope requests that do not require federal Health Resources Services
Administration approval, the FQHC and rural health clinic shall submit the request to the
commissioner before implementing the change, and the effective date of the change is the
date the commissioner received the FQHC's or rural health clinic's request, or the effective
start date of the service, whichever is later. The commissioner shall provide a response to
the FQHC's or rural health clinic's request within 45 days of submission and provide a final
approval within 120 days of submission. This timeline may be waived at the mutual
agreement of the commissioner and the FQHC or rural health clinic if more information is
needed to evaluate the request;

(12) the commissioner, when establishing organization encounter rates for new FQHCs
and rural health clinics, shall consider the patient caseload of existing FQHCs and rural
health clinics in a 60-mile radius for organizations established outside of the seven-county
metropolitan area, and in a 30-mile radius for organizations in the seven-county metropolitan
area. If this information is not available, the commissioner may use Medicare cost reports
or audited financial statements to establish base rates;

(13) the commissioner shall establish a quality measures workgroup that includes
representatives from the Minnesota Association of Community Health Centers, FQHCs,
and rural health clinics, to evaluate clinical and nonclinical measures; and

(14) the commissioner shall not disallow or reduce costs that are related to an FQHC's
or rural health clinic's participation in health care educational programs to the extent that
the costs are not accounted for in the alternative payment methodology encounter rate
established in this paragraph.

(m) Effective July 1, 2023, an enrolled Indian health service facility or a Tribal health
center operating under a 638 contract or compact may elect to also enroll as a Tribal FQHC.
Requirements that otherwise apply to an FQHC covered in this subdivision do not apply to
a Tribal FQHC enrolled under this paragraph, except that any requirements necessary to
comply with federal regulations do apply to a Tribal FQHC. The commissioner shall establish
an alternative payment method for a Tribal FQHC enrolled under this paragraph that uses
the same method and rates applicable to a Tribal facility or health center that does not enroll
as a Tribal FQHC.