SF 2755

Introduction - 94th Legislature (2025 - 2026)

Posted on 06/06/2025 12:25 p.m.

A bill for an act
relating to human services; implementing the Program of All-Inclusive Care for
the Elderly service delivery system; amending Minnesota Statutes 2024, sections
256B.69, subdivision 23; 256L.12, subdivision 9; 256S.02, subdivision 17;
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 2024, section 256B.69, subdivision 23, is amended to read:

Subd. 23.

Alternative services; elderly persons and persons with a disability.

(a) The
commissioner may implement demonstration projects to create alternative integrated delivery
systems for acute and long-term care services to elderly persons and persons with disabilities
as defined in section 256B.77, subdivision 7a, that provide increased coordination, improve
access to quality services, and mitigate future cost increases. The commissioner may seek
federal authority to combine Medicare and Medicaid capitation payments for the purpose
of such demonstrations and may contract with Medicare-approved special needs plans that
are offered by a demonstration provider or by an entity that is directly or indirectly wholly
owned or controlled by a demonstration provider to provide Medicaid services. Medicare
funds and services shall be administered according to the terms and conditions of the federal
contract and demonstration provisions. For the purpose of administering medical assistance
funds, demonstrations under this subdivision are subject to subdivisions 1 to 22. The
provisions of Minnesota Rules, parts 9500.1450 to 9500.1464, apply to these demonstrations,
with the exceptions of parts 9500.1452, subpart 2, item B; and 9500.1457, subpart 1, items
B and C, which do not apply to persons enrolling in demonstrations under this section. All
enforcement and rulemaking powers available under chapters 62D, 62M, and 62Q are hereby
granted to the commissioner of health with respect to Medicare-approved special needs
plans with which the commissioner contracts to provide Medicaid services under this section.
An initial open enrollment period may be provided. Persons who disenroll from
demonstrations under this subdivision remain subject to Minnesota Rules, parts 9500.1450
to 9500.1464. When a person is enrolled in a health plan under these demonstrations and
the health plan's participation is subsequently terminated for any reason, the person shall
be provided an opportunity to select a new health plan and shall have the right to change
health plans within the first 60 days of enrollment in the second health plan. Persons required
to participate in health plans under this section who fail to make a choice of health plan
shall not be randomly assigned to health plans under these demonstrations. Notwithstanding
section 256L.12, subdivision 5, and Minnesota Rules, part 9505.5220, subpart 1, item A,
if adopted, for the purpose of demonstrations under this subdivision, the commissioner may
contract with managed care organizations, including counties, to serve only elderly persons
eligible for medical assistance, elderly persons with a disability, or persons with a disability
only. For persons with a primary diagnosis of developmental disability, serious and persistent
mental illness, or serious emotional disturbance, the commissioner must ensure that the
county authority has approved the demonstration and contracting design. Enrollment in
these projects for persons with disabilities shall be voluntary. The commissioner shall not
implement any demonstration project under this subdivision for persons with a primary
diagnosis of developmental disabilities, serious and persistent mental illness, or serious
emotional disturbance, without approval of the county board of the county in which the
demonstration is being implemented.

deleted text begin (b) MS 2009 Supplement [Expired, 2003 c 47 s 4; 2007 c 147 art 7 s 60]
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end Before implementation of a demonstration project for persons with a disability,
the commissioner must provide information to appropriate committees of the house of
representatives and senate and must involve representatives of affected disability groups in
the design of the demonstration projects.

deleted text begin (d) deleted text end new text begin (c) new text end A nursing facility reimbursed under the alternative reimbursement methodology
in section 256B.434 may, in collaboration with a hospital, clinic, or other health care entity
provide services under paragraph (a). The commissioner shall amend the state plan and seek
any federal waivers necessary to implement this paragraph.

deleted text begin (e) The commissioner, in consultation with the commissioners of commerce and health,
may approve and implement programs for all-inclusive care for the elderly (PACE) according
to federal laws and regulations governing that program and state laws or rules applicable
to participating providers. A PACE provider is not required to be licensed or certified as a
health plan company as defined in section 62Q.01, subdivision 4. Persons age 55 and older
who have been screened by the county and found to be eligible for services under the elderly
waiver or community access for disability inclusion or who are already eligible for Medicaid
but meet level of care criteria for receipt of waiver services may choose to enroll in the
PACE program. Medicare and Medicaid services will be provided according to this
subdivision and federal Medicare and Medicaid requirements governing PACE providers
and programs. PACE enrollees will receive Medicaid home and community-based services
through the PACE provider as an alternative to services for which they would otherwise be
eligible through home and community-based waiver programs and Medicaid State Plan
Services. The commissioner shall establish Medicaid rates for PACE providers that do not
exceed costs that would have been incurred under fee-for-service or other relevant managed
care programs operated by the state.
deleted text end

deleted text begin (f) deleted text end new text begin (d) new text end The commissioner shall seek federal approval to expand the Minnesota disability
health options (MnDHO) program established under this subdivision in stages, first to
regional population centers outside the seven-county metro area and then to all areas of the
state. Until July 1, 2009, expansion for MnDHO projects that include home and
community-based services is limited to the two projects and service areas in effect on March
1, 2006. Enrollment in integrated MnDHO programs that include home and community-based
services shall remain voluntary. Costs for home and community-based services included
under MnDHO must not exceed costs that would have been incurred under the fee-for-service
program. Notwithstanding whether expansion occurs under this paragraph, in determining
MnDHO payment rates and risk adjustment methods, the commissioner must consider the
methods used to determine county allocations for home and community-based program
participants. If necessary to reduce MnDHO rates to comply with the provision regarding
MnDHO costs for home and community-based services, the commissioner shall achieve
the reduction by maintaining the base rate for contract year 2010 for services provided under
the community access for disability inclusion waiver at the same level as for contract year
2009. The commissioner may apply other reductions to MnDHO rates to implement decreases
in provider payment rates required by state law. Effective January 1, 2011, enrollment and
operation of the MnDHO program in effect during 2010 shall cease. The commissioner may
reopen the program provided all applicable conditions of this section are met. In developing
program specifications for expansion of integrated programs, the commissioner shall involve
and consult the state-level stakeholder group established in subdivision 28, paragraph (d),
including consultation on whether and how to include home and community-based waiver
programs. Plans to reopen MnDHO projects shall be presented to the chairs of the house of
representatives and senate committees with jurisdiction over health and human services
policy and finance prior to implementation.

deleted text begin (g) deleted text end new text begin (e) new text end Notwithstanding section 256B.0621, health plans providing services under this
section are responsible for home care targeted case management and relocation targeted
case management. Services must be provided according to the terms of the waivers and
contracts approved by the federal government.

Sec. 2.

new text begin [256B.6902] PROGRAM OF ALL-INCLUSIVE CARE FOR THE ELDERLY
SERVICE DELIVERY SYSTEM.
new text end

new text begin Subdivision 1. new text end

new text begin Establishment. new text end

new text begin The Program of All-Inclusive Care for the Elderly (PACE)
is established as authorized under sections 1894, 1905(a), and 1934 of the Social Security
Act.
new text end

new text begin Subd. 2. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the terms defined in this
subdivision have the meanings given.
new text end

new text begin (b) "Commissioner" means the commissioner of human services.
new text end

new text begin (c) "Eligible person" means a person who meets the eligibility requirements to enroll in
PACE as defined in Code of Federal Regulations, title 42, section 460.150. Eligibility for
medical assistance of a person receiving PACE services is controlled by sections 256B.055,
256B.056, 256B.059, and 256B.06.
new text end

new text begin (d) "PACE organization" means an entity as defined in Code of Federal Regulations,
title 42, section 460.6, that is a not-for-profit entity organized for charitable purposes under
section 501(c)(3) of the Internal Revenue Code of 1986.
new text end

new text begin Subd. 3. new text end

new text begin Services for eligible persons. new text end

new text begin The commissioner may include any or all of the
services offered in medical assistance long-term services and supports in PACE coverage.
The commissioner must provide all services and programs through PACE in accordance
with Code of Federal Regulations, title 42, sections 460.90 to 460.106.
new text end

new text begin Subd. 4. new text end

new text begin Enrollment. new text end

new text begin (a) An eligible person may enroll in PACE.
new text end

new text begin (b) If an eligible person enrolls in PACE, the eligible person is not eligible for payment
through other Medicare, medical assistance, or MinnesotaCare programs.
new text end

new text begin Subd. 5. new text end

new text begin Disenrollment. new text end

new text begin An eligible person may disenroll from PACE at any time.
new text end

new text begin Subd. 6. new text end

new text begin Requirements. new text end

new text begin (a) The commissioner must coordinate an extensive array of
medical and nonmedical services to meet the needs of a PACE enrollee primarily in outpatient
environments, including but not limited to an adult day center, the enrollee's home, or an
institutional setting.
new text end

new text begin (b) The commissioner must administer PACE to:
new text end

new text begin (1) enhance the quality of life for enrollees;
new text end

new text begin (2) offer the potential to reduce the costs of the medical needs of enrollees, including
costs of hospital and nursing home admissions;
new text end

new text begin (3) maintain enrollees in the community as an alternative to long-term institutionalization;
new text end

new text begin (4) provide optimum accessibility to various social and health resources to assist enrollees
in maintaining independent living;
new text end

new text begin (5) coordinate, integrate, and link social and health services by removing obstacles that
impede or limit improvements in delivery of those services;
new text end

new text begin (6) provide the most efficient and effective use of capitated money for the delivery of
social and health services; and
new text end

new text begin (7) ensure that capitation payments comply with Code of Federal Regulations title 42,
section 460.182.
new text end

new text begin Subd. 7. new text end

new text begin Contracts with PACE organizations. new text end

new text begin (a) The commissioner must only enter
into PACE contracts with approved PACE organizations. A state readiness review must be
performed before the commissioner enters into a contract with a PACE organization. The
commissioner must only contract with PACE organizations that the commissioner determines
have the ability and resources to effectively operate a PACE organization in accordance
with Code of Federal Regulations, title 42, section 460.12.
new text end

new text begin (b) A PACE organization must have an agreement with the Centers for Medicare and
Medicaid Services (CMS) and with the commissioner to operate. PACE contracts must
include but are not limited to:
new text end

new text begin (1) a designation of the PACE organization's service area;
new text end

new text begin (2) a statement of commitment by the PACE organization to meet all applicable federal,
state, and local requirements;
new text end

new text begin (3) the effective date and terms of the agreement;
new text end

new text begin (4) a description of the PACE organization's organizational structure;
new text end

new text begin (5) a copy of the participant bill of rights;
new text end

new text begin (6) a description of grievance and appeal processes;
new text end

new text begin (7) the policies on eligibility, enrollment, and disenrollment;
new text end

new text begin (8) a description of the services offered;
new text end

new text begin (9) a description of the PACE organization's quality improvement program;
new text end

new text begin (10) a statement of levels of performance required on standard quality measures;
new text end

new text begin (11) CMS and department data requirements;
new text end

new text begin (12) the Medicaid capitation rate or Medicaid payment rate methodology and the
methodology used to calculate the medical assistance capitation rate;
new text end

new text begin (13) the procedures for program termination; and
new text end

new text begin (14) a statement by the PACE organization to hold CMS, the state, and PACE enrollees
harmless if the PACE organization fails to pay for services performed by a provider in
accordance with the contract.
new text end

new text begin (c) The commissioner must establish a competitive bidding process to solicit proposals
from PACE organizations by December 31, 2025, or upon federal approval, whichever is
later.
new text end

new text begin (d) PACE organizations awarded contracts by the commissioner must establish operations
by June 30, 2026, and begin providing services on January 1, 2027.
new text end

new text begin (e) Contracted PACE organizations must use a risk-based financing model, assume
responsibility for all costs generated by PACE enrollees, and create and maintain solvency
according to federal regulations to cover any cost overages for any enrollee.
new text end

new text begin (f) Contracted PACE organizations must assume responsibility for all services listed
under subdivision 3 as determined necessary for an enrollee by an interdisciplinary team,
including but not limited to hospital and nursing home care.
new text end

new text begin Subd. 8. new text end

new text begin Implementation. new text end

new text begin By October 1, 2025, the commissioner must prepare and
submit a state plan amendment to CMS to establish PACE and provide community-based,
risk-based, and capitated long-term care services as optional services under the state plan;
under contracts entered into between CMS, the commissioner, and PACE organizations
meeting the requirements of Code of Federal Regulations title 42, sections 460.30 to 460.34;
and under any other applicable law or regulation.
new text end

new text begin Subd. 9. new text end

new text begin Payment rates. new text end

new text begin (a) The commissioner must develop and implement a
methodology for establishing payment rates for costs of benefits provided by PACE
organizations to medical assistance-eligible PACE enrollees beginning July 1, 2025. The
commissioner must implement the methodology by January 1, 2027.
new text end

new text begin (b) The methodology and rates must comply with applicable federal requirements and
CMS rate setting rules and guidance. If required by federal law, the rate methodology for
PACE organizations must result in a payment amount no greater than the amount that would
have been paid for comparable services provided by other programs under the state plan if
the enrollee was not enrolled in PACE.
new text end

new text begin Subd. 10. new text end

new text begin Commissioner's duties. new text end

new text begin The commissioner must:
new text end

new text begin (1) establish a reimbursement system for services under PACE;
new text end

new text begin (2) develop and implement contracts with and set contractual obligations for PACE
organizations, including but not limited to reporting and monitoring utilization costs of
PACE organizations; and
new text end

new text begin (3) collect data from PACE organizations, including but not limited to encounter data
for oversight, quality management, rate setting, and other similar purposes.
new text end

Sec. 3.

Minnesota Statutes 2024, section 256L.12, subdivision 9, is amended to read:

Subd. 9.

Rate setting; performance withholds.

(a) Rates will be prospective, per capita,
where possible. The commissioner may allow health plans to arrange for inpatient hospital
services on a risk or nonrisk basis. The commissioner shall consult with an independent
actuary to determine appropriate rates.

(b) For services rendered on or after January 1, 2004, the commissioner shall withhold
five percent of managed care plan payments and county-based purchasing plan payments
under this section pending completion of performance targets. Each performance target
must be quantifiable, objective, measurable, and reasonably attainable, except in the case
of a performance target based on a federal or state law or rule. Criteria for assessment of
each performance target must be outlined in writing prior to the contract effective date.
Clinical or utilization performance targets and their related criteria must consider
evidence-based research and reasonable interventions, when available or applicable to the
populations served, and must be developed with input from external clinical experts and
stakeholders, including managed care plans, county-based purchasing plans, and providers.
The managed care plan must demonstrate, to the commissioner's satisfaction, that the data
submitted regarding attainment of the performance target is accurate. The commissioner
shall periodically change the administrative measures used as performance targets in order
to improve plan performance across a broader range of administrative services. The
performance targets must include measurement of plan efforts to contain spending on health
care services and administrative activities. The commissioner may adopt plan-specific
performance targets that take into account factors affecting only one plan, such as
characteristics of the plan's enrollee population. The withheld funds must be returned no
sooner than July 1 and no later than July 31 of the following calendar year if performance
targets in the contract are achieved.

(c) For services rendered on or after January 1, 2011, the commissioner shall withhold
an additional three percent of managed care plan or county-based purchasing plan payments
under this section. The withheld funds must be returned no sooner than July 1 and no later
than July 31 of the following calendar year. The return of the withhold under this paragraph
is not subject to the requirements of paragraph (b).

(d) Effective for services rendered on or after January 1, 2011, through December 31,
2011, the commissioner shall include as part of the performance targets described in
paragraph (b) a reduction in the plan's emergency room utilization rate for state health care
program enrollees by a measurable rate of five percent from the plan's utilization rate for
the previous calendar year. Effective for services rendered on or after January 1, 2012, the
commissioner shall include as part of the performance targets described in paragraph (b) a
reduction in the health plan's emergency department utilization rate for medical assistance
and MinnesotaCare enrollees, as determined by the commissioner. For 2012, the reductions
shall be based on the health plan's utilization in 2009. To earn the return of the withhold
each subsequent year, the managed care plan or county-based purchasing plan must achieve
a qualifying reduction of no less than ten percent of the plan's utilization rate for medical
assistance and MinnesotaCare enrollees, excluding enrollees in programs described in
deleted text begin section deleted text end new text begin sections new text end 256B.69, subdivisions 23 and 28, new text begin and 256B.6902, new text end compared to the previous
measurement year, until the final performance target is reached. When measuring
performance, the commissioner must consider the difference in health risk in a managed
care or county-based purchasing plan's membership in the baseline year compared to the
measurement year, and work with the managed care or county-based purchasing plan to
account for differences that they agree are significant.

The withheld funds must be returned no sooner than July 1 and no later than July 31 of
the following calendar year if the managed care plan or county-based purchasing plan
demonstrates to the satisfaction of the commissioner that a reduction in the utilization rate
was achieved. The commissioner shall structure the withhold so that the commissioner
returns a portion of the withheld funds in amounts commensurate with achieved reductions
in utilization less than the targeted amount.

The withhold described in this paragraph shall continue for each consecutive contract
period until the plan's emergency room utilization rate for state health care program enrollees
is reduced by 25 percent of the plan's emergency room utilization rate for medical assistance
and MinnesotaCare enrollees for calendar year 2009. Hospitals shall cooperate with the
health plans in meeting this performance target and shall accept payment withholds that
may be returned to the hospitals if the performance target is achieved.

(e) Effective for services rendered on or after January 1, 2012, the commissioner shall
include as part of the performance targets described in paragraph (b) a reduction in the plan's
hospitalization admission rate for medical assistance and MinnesotaCare enrollees, as
determined by the commissioner. To earn the return of the withhold each year, the managed
care plan or county-based purchasing plan must achieve a qualifying reduction of no less
than five percent of the plan's hospital admission rate for medical assistance and
MinnesotaCare enrollees, excluding enrollees in programs described in deleted text begin section deleted text end new text begin sections new text end
256B.69, subdivisions 23 and 28, new text begin and 256B.6902, new text end compared to the previous calendar year,
until the final performance target is reached. When measuring performance, the commissioner
must consider the difference in health risk in a managed care or county-based purchasing
plan's membership in the baseline year compared to the measurement year, and work with
the managed care or county-based purchasing plan to account for differences that they agree
are significant.

The withheld funds must be returned no sooner than July 1 and no later than July 31 of
the following calendar year if the managed care plan or county-based purchasing plan
demonstrates to the satisfaction of the commissioner that this reduction in the hospitalization
rate was achieved. The commissioner shall structure the withhold so that the commissioner
returns a portion of the withheld funds in amounts commensurate with achieved reductions
in utilization less than the targeted amount.

The withhold described in this paragraph shall continue until there is a 25 percent
reduction in the hospitals admission rate compared to the hospital admission rate for calendar
year 2011 as determined by the commissioner. Hospitals shall cooperate with the plans in
meeting this performance target and shall accept payment withholds that may be returned
to the hospitals if the performance target is achieved. The hospital admissions in this
performance target do not include the admissions applicable to the subsequent hospital
admission performance target under paragraph (f).

(f) Effective for services provided on or after January 1, 2012, the commissioner shall
include as part of the performance targets described in paragraph (b) a reduction in the plan's
hospitalization rate for a subsequent hospitalization within 30 days of a previous
hospitalization of a patient regardless of the reason, for medical assistance and MinnesotaCare
enrollees, as determined by the commissioner. To earn the return of the withhold each year,
the managed care plan or county-based purchasing plan must achieve a qualifying reduction
of the subsequent hospital admissions rate for medical assistance and MinnesotaCare
enrollees, excluding enrollees in programs described in deleted text begin section deleted text end new text begin sections new text end 256B.69, subdivisions
23 and 28, new text begin and 256B.6902, new text end of no less than five percent compared to the previous calendar
year until the final performance target is reached.

The withheld funds must be returned no sooner than July 1 and no later than July 31 of
the following calendar year if the managed care plan or county-based purchasing plan
demonstrates to the satisfaction of the commissioner that a reduction in the subsequent
hospitalization rate was achieved. The commissioner shall structure the withhold so that
the commissioner returns a portion of the withheld funds in amounts commensurate with
achieved reductions in utilization less than the targeted amount.

The withhold described in this paragraph must continue for each consecutive contract
period until the plan's subsequent hospitalization rate for medical assistance and
MinnesotaCare enrollees is reduced by 25 percent of the plan's subsequent hospitalization
rate for calendar year 2011. Hospitals shall cooperate with the plans in meeting this
performance target and shall accept payment withholds that must be returned to the hospitals
if the performance target is achieved.

(g) A managed care plan or a county-based purchasing plan under section 256B.692
may include as admitted assets under section 62D.044 any amount withheld under this
section that is reasonably expected to be returned.

Sec. 4.

Minnesota Statutes 2024, section 256S.02, subdivision 17, is amended to read:

Subd. 17.

Managed care organization.

"Managed care organization" means a prepaid
health plan or county-based purchasing plan with liability for elderly waiver services under
sections 256B.69, subdivisions 6b and 23, new text begin 256B.6902, new text end and 256B.692.