1.1 A bill for an act
1.2 relating to human services; imposing an assessment on hospitals; requiring directed
1.3 payments to hospitals in the medical assistance program; requiring reports;
1.4 amending Minnesota Statutes 2024, sections 256.9657, by adding a subdivision;
1.5 256B.1973, by adding a subdivision; proposing coding for new law in Minnesota
1.6 Statutes, chapter 256B.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2024, section 256.9657, is amended by adding a subdivision
1.9to read:
1.10 Subd. 2b.Hospital assessment.(a) For purposes of this subdivision, the following terms
1.11have the meanings given:
1.12 (1) "eligible hospital" means a hospital that participates in Minnesota's medical assistance
1.13program;
1.14 (2) "net inpatient revenue" means the value stated on line ... on worksheet ..., part ..., of
1.15the hospital's most recent Medicare cost report filed and showing in the Healthcare Cost
1.16Report Information System (HCRIS) as of October 1 of each year; and
1.17 (3) "net outpatient revenue" means the value stated on line ... on worksheet ..., part ...,
1.18of the hospital's most recent Medicare cost report filed and showing in HCRIS as of October
1.191 of each year.
1.20 (b) Subject to paragraph (k), each eligible hospital must pay to the hospital directed
1.21payment program account established under section 256B.1975 an assessment equal to the
1.22sum of the following:
1.23 (1) ... percent of the hospital's net inpatient revenue; and
1Section 1.
REVISOR AGW/BM 25-0429203/06/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 2057
NINETY-FOURTH SESSION
Authored by Nadeau03/10/2025
The bill was read for the first time and referred to the Committee on Health Finance and Policy 2.1 (2) ... percent of the hospital's net outpatient revenue.
2.2 (c) Assessments are due on January 1, April 1, July 1, and October 1 each year.
2.3Assessments must be paid quarterly in the form and manner specified by the commissioner.
2.4 (d) Invoices for the assessments are due December 1, March 1, June 1, and September
2.51 each year.
2.6 (e) If any of the dates for assessments or invoices in paragraphs (c) and (d) falls on a
2.7holiday, the applicable date is the next business day.
2.8 (f) The commissioner must notify each eligible hospital of its estimated assessment
2.9amount for the subsequent year by October 15 each year.
2.10 (g) A hospital is not required to pay the assessment until the start of the first full fiscal
2.11year the hospital is an eligible hospital. A hospital that has merged with another hospital
2.12must have the hospital's assessment revised at the start of the first full fiscal year after the
2.13merger is complete. A closed hospital is retroactively responsible for assessments owed for
2.14services provided through the final date of operations.
2.15 (h) If the commissioner determines that a hospital has underpaid or overpaid assessments,
2.16the commissioner must notify the hospital of the unpaid assessments or of any refund due.
2.17A hospital that disputes the amount of an assessment by the commissioner may dispute the
2.18assessment utilizing any remedy available in law related to provider payments in medical
2.19assistance.
2.20 (i) Revenue from the assessment must only be used by the commissioner to pay the
2.21nonfederal share of the directed payment program under section 256B.1974.
2.22 (j) The commissioner is prohibited from collecting any assessment under this subdivision
2.23during any period of time when:
2.24 (1) federal financial participation is unavailable or disallowed; or
2.25 (2) a directed payment under section 256B.1974 is not approved by the Centers for
2.26Medicare and Medicaid Services.
2.27 (k) The commissioner must make the following discounts or exemptions from the
2.28assessment under this subdivision, or as necessary, to achieve federal approval of the
2.29assessment in this section:
2.30 (1) a long-term care hospital, as defined in Code of Federal Regulations, title 42, section
2.31412.23, paragraph (e);
2Section 1.
REVISOR AGW/BM 25-0429203/06/25 3.1 (2) each critical access hospital or independent hospital in rural Minnesota paid under
3.2the Medicare prospective payment system to the maximum extent necessary to meet the
3.3federal law requirements for this assessment;
3.4 (3) any hospital in Minnesota designated as a children's hospital under Code of Federal
3.5Regulation, title 42, section 412.23, paragraph (d), to the maximum extent necessary to
3.6meet the federal law requirements for this assessment;
3.7 (4) federal Indian Health Service facilities;
3.8 (5) state-owned or state-operated regional treatment centers and all state-operated services;
3.9 (6) a discount assessment for a hospital that is a nonstate government teaching hospital
3.10with high medical assistance utilization and a level 1 trauma center to the maximum extent
3.11necessary to meet the federal law requirements for this assessment; and
3.12 (7) a discount assessment at the level necessary to ensure that no single hospital system
3.13is responsible for greater than ... percent of the total assessments collected statewide on an
3.14annual basis.
3.15 (l) The commissioner must reduce the assessment on a uniform percentage basis across
3.16eligible hospitals on which the assessment is imposed, such that the aggregate amount
3.17collected from hospitals under this subdivision does not exceed the total amount needed for
3.18the annual nonfederal share of the directed payments authorized by section 256B.1974.
3.19 (m) Hospitals subject to the assessment under this subdivision must submit to the
3.20commissioner, in the form and manner specified by the commissioner and annually agreed
3.21to in writing by the Minnesota Hospital Association, all documentation necessary to
3.22determine the assessment amounts under this subdivision.
3.23 EFFECTIVE DATE.(a) This section is effective the later of January 1, 2026, or federal
3.24approval of all of the following:
3.25 (1) this section; and
3.26 (2) the amendments in this act to Minnesota Statutes, sections 256B.1973 and 256B.1974.
3.27 (b) The commissioner of human services shall notify the revisor of statutes when federal
3.28approval is obtained.
3Section 1.
REVISOR AGW/BM 25-0429203/06/25 4.1 Sec. 2. Minnesota Statutes 2024, section 256B.1973, is amended by adding a subdivision
4.2to read:
4.3 Subd. 9.Interaction with other directed payments.Nothing in this section precludes
4.4an eligible provider under subdivision 3 from participating in the hospital directed payment
4.5program under section 256B.1974. A provider participating in the hospital directed payment
4.6program must not receive a directed payment under this section for any provider classes
4.7paid via the hospital directed payment program. A hospital subject to this section must
4.8notify the commissioner in writing no later than 30 days after enactment of this subdivision
4.9of their intention to participate in the hospital directed payment program under section
4.10256B.1974.
4.11 EFFECTIVE DATE.(a) This section is effective on the later of January 1, 2026, or
4.12federal approval of all of the following:
4.13 (1) the amendments in this act to add Minnesota Statutes, section 256.9657, subdivision
4.142b; and
4.15 (2) the amendments in this act to Minnesota Statutes, section 256B.1974.
4.16 (b) The commissioner of human services shall notify the revisor of statutes when federal
4.17approval is obtained.
4.18 Sec. 3. [256B.1974] HOSPITAL DIRECTED PAYMENT PROGRAM.
4.19 Subdivision 1.Definitions.(a) For the purposes of this section, the following terms have
4.20the meanings given.
4.21 (b) "Health plan" means a managed care or county-based purchasing plan that is under
4.22contract with the commissioner to deliver services to medical assistance enrollees under
4.23section 256B.69.
4.24 (c) "Hospital" means a hospital licensed under section 144.50.
4.25 Subd. 2.Federal approval required.The hospital directed payment program is
4.26contingent on federal approval and must conform with the requirements for permissible
4.27directed managed care organization expenditures under section 256B.6928, subdivision 5.
4.28 Subd. 3.Commissioner's duties; state-directed fee schedule requirement.(a) For
4.29each federally approved directed payment program that is a state-directed fee schedule
4.30requirement the commissioner must determine a quarterly payment amount to be submitted
4.31by an eligible provider to a health plan. The commissioner must determine the quarterly
4.32payment amount using the average commercial payer rate, or using another method
4Sec. 3.
REVISOR AGW/BM 25-0429203/06/25 5.1acceptable to the Centers for Medicare and Medicaid Services if the average commercial
5.2payer rate is not approved, minus the amount necessary for the plan to satisfy assessment
5.3liabilities under sections 256.9657 and 297I.05 attributable to the directed payment program.
5.4The commissioner must ensure that the application of the quarterly payment amounts
5.5maximizes the allowable directed payments and does not result in payments exceeding
5.6federal limits. The commissioner may use an annual settle-up process. The directed payment
5.7program must be specific to each health plan and prospectively incorporated into capitation
5.8payments for that plan.
5.9 (b) For each federally approved directed payment program that is a state-directed fee
5.10schedule requirement, the commissioner must develop a plan for the initial implementation
5.11of the state-directed fee schedule requirement to ensure that the eligible provider receives
5.12the entire permissible value of the federally approved directed payment. If federal approval
5.13of a directed payment under this subdivision is retroactive, the commissioner must make a
5.14onetime pro rata increase to the quarterly payment amount and the initial payments to include
5.15claims submitted between the retroactive federal approval date and the period captured by
5.16the initial payments.
5.17 (c) Directed payments under this section must only be used to supplement, and not
5.18supplant, medical assistance reimbursement to hospitals. The directed payment program
5.19must not modify, reduce, or offset the medical assistance payment rates determined for each
5.20hospital as required by section 256.969.
5.21 (d) The commissioner must require managed care organizations to make quarterly
5.22supplemental directed payments according to this section. Each calendar year, the
5.23commissioner must require managed care organizations to pay the maximum amount out
5.24of these funds as directed payments. The commissioner must require managed care
5.25organizations to make quarterly supplemental directed payments using electronic funds
5.26transfers, if the hospital provides the information necessary to process such transfers, and
5.27in accordance with directions provided by the commissioner, within five business days of
5.28the date the funds are paid to the managed care organizations, as calculated by the date that
5.29the commissioner issued sufficient payments to the managed care organization to make the
5.30directed payments according to this section. If funds are not paid to the managed care
5.31organizations by the commissioner by electronic funds transfer, any directed payment must
5.32be made within seven business days of the date the money was actually received by the
5.33managed care organization. The managed care organization must be considered to have
5.34paid the directed payments when the payment remittance number is generated, or on the
5.35date the managed care organization sends the check to the hospital if electronic money
5Sec. 3.
REVISOR AGW/BM 25-0429203/06/25 6.1transfer information is not supplied. If a managed care organization is late in paying a
6.2directed payment as required under this section, including any extensions granted by the
6.3commissioner, the managed care organization must pay a penalty, unless waived by the
6.4commissioner for reasonable cause, to the commissioner equal to five percent of the amount
6.5of the directed payment not paid on or before the due date plus five percent of the portion
6.6remaining unpaid on the last day of each thirty day period thereafter. Payments to managed
6.7care organizations that would be paid consistent with actuarial certification and enrollment
6.8in the absence of the increased capitation payments under this section must not be reduced
6.9as a consequence of payments made under this section. The commissioner must publish
6.10and maintain on its website for a period of no less than eight calendar quarters the total
6.11quarterly calculation of directed payments owed to each hospital from each managed care
6.12organization. All calculations and reports must be posted no later than the first day of the
6.13quarter for which the payments are to be issued.
6.14 (e) By December 1 each year, the commissioner must notify each hospital of any changes
6.15to the payment methodologies in this section, including but not limited to changes in the
6.16fixed rate directed payment rates, the aggregate directed payment amount for all hospitals,
6.17and the hospital's directed payment amount for the upcoming calendar year.
6.18 (f) The commissioner must distribute payments required under this section within 30
6.19days of the assessment being received and must pay the directed payments to managed care
6.20organizations under contract no later than January 1, April 1, July 1, and October 1 each
6.21year.
6.22 (g) A hospital is not entitled to payments under this section until the start of the first full
6.23fiscal year it is an eligible hospital. A hospital that has merged with another hospital must
6.24have its payments under this section revised at the start of the first full fiscal year after the
6.25merger is complete. A closed hospital is entitled to the payments under this section for
6.26services provided through the final date of operations.
6.27 Subd. 4.Health plan duties; submission of claims.Each health plan must submit to
6.28the commissioner, in accordance with its contract with the commissioner to serve as a
6.29managed care organization in medical assistance, payment information for each claim paid
6.30to an eligible provider for services provided to a medical assistance enrollee. Health plans
6.31must allow each hospital to review the health plan's own paid claims detail to enable proper
6.32validation that the medical assistance managed care claims volume and content is consistent
6.33with the hospital's internal records. To support the validation process for the directed payment
6.34program, managed care organizations must permit the commissioner to share inpatient and
6.35outpatient claims-level details with hospitals identifying only those claims where the prepaid
6Sec. 3.
REVISOR AGW/BM 25-0429203/06/25 7.1medical assistance program under section 256B.69 is the payer source. Hospitals must
7.2provide notice of discrepancies in claims paid to the commissioner in a form determined
7.3by the commissioner. The commissioner is authorized to determine the final disposition of
7.4the validation process for disputed claims.
7.5 Subd. 5.Health plan duties; directed payment add-on.(a) Each health plan must
7.6make, in accordance with its contract with the commissioner to serve as a managed care
7.7organization in medical assistance, a directed payment to the eligible provider in an amount
7.8equal to the payment amounts the plan received from the commissioner as a quarterly
7.9payment amount and on the same basis and calendar year timing for all health plans.
7.10 (b) Managed care organizations are prohibited from:
7.11 (1) setting, establishing, or negotiating reimbursement rates with a hospital in a manner
7.12that directly or indirectly takes into account a directed payment that a hospital receives
7.13under this section;
7.14 (2) unnecessarily delaying a directed payment to a hospital; or
7.15 (3) recouping or offsetting a directed payment for any reason, except as expressly
7.16authorized by the commissioner.
7.17 Subd. 6.Hospital duties; quarterly supplemental directed payment add-on.(a) A
7.18hospital receiving a directed payment under this section is prohibited from:
7.19 (1) setting, establishing, or negotiating reimbursement rates with a managed care
7.20organization in a manner that directly or indirectly takes into account a directed payment
7.21that a hospital receives under this section; or
7.22 (2) directly passing on the cost of an assessment to patients or nonmedical assistance
7.23payers, including as a fee or rate increase.
7.24 (b) A hospital that violates this subdivision is prohibited from receiving a directed
7.25payment under this section for the remainder of the rate year. This subdivision does not
7.26prohibit a hospital from negotiating with a payer for a rate increase.
7.27 (c) Any hospital receiving a directed payment under this section must meet the
7.28commissioner's standards for directed payments as described in subdivision 7.
7.29 Subd. 7.State minimum policy goals established.(a) The effect of the directed
7.30payments under this section must align with the state's policy goals for medical assistance
7.31enrollees. The directed payments must be used to maintain quality and access to a full range
7.32of health care delivery mechanisms for medical assistance enrollees.
7Sec. 3.
REVISOR AGW/BM 25-0429203/06/25 8.1 (b) The commissioner, in consultation with the Minnesota Hospital Association, must
8.2submit to the Centers for Medicare and Medicaid Services a methodology to regularly
8.3measure access to care and the achievement of state policy goals described in this subdivision.
8.4 Subd. 8.Administrative review.Before making the payments required under this
8.5section, and on at least an annual basis, the commissioner must consult with and provide
8.6for review of the payment amounts by a permanent select committee established by the
8.7Minnesota Hospital Association. Any data or information reviewed by members of the
8.8committee are data not on individuals, as defined in section 13.02. The committee's members
8.9may not include any current employee or paid consultant of any hospital.
8.10 EFFECTIVE DATE.This section is effective the later of January 1, 2026, or federal
8.11approval for all of the following:
8.12 (1) the amendments in this act to add Minnesota Statutes, section 256.9657, subdivision
8.132b; and
8.14 (2) the amendments in this act to this section.
8.15 (b) The commissioner of human services shall notify the revisor of statutes when federal
8.16approval is obtained.
8.17 Sec. 4. [256B.1975] HOSPITAL DIRECTED PAYMENT PROGRAM ACCOUNT.
8.18 Subdivision 1.Account established; appropriation.(a) The hospital directed payment
8.19program account is created in the special revenue fund in the state treasury.
8.20 (b) Money in the account, including interest earned, is annually appropriated to the
8.21commissioner for the purposes specified in section 256B.1974.
8.22 (c) Transfers from this account to the general fund are prohibited.
8.23 Subd. 2.Reports to the legislature.By January 15, 2027, and each January 15 thereafter,
8.24the commissioner must submit a report to the chairs and ranking minority members of the
8.25legislative committees with jurisdiction over health and human services policy and finance
8.26that details the activities and uses of money in the hospital directed payment program
8.27account, including the metrics and outcomes of the policy goals established by section
8.28256B.1974, subdivision 7.
8.29 EFFECTIVE DATE.(a) This section is effective on the later of January 1, 2026, or
8.30federal approval of the amendments in this act to add section 256.9657, subdivision 2b.
8.31 (b) The commissioner of human services shall notify the revisor of statutes when federal
8.32approval is obtained.
8Sec. 4.
REVISOR AGW/BM 25-0429203/06/25 9.1 Sec. 5. IMPLEMENTATION OF HOSPITAL ASSESSMENT AND DIRECTED
9.2PAYMENT PROGRAM.
9.3 (a) By October 1, 2025, the commissioner of human services must begin all necessary
9.4claims analysis to calculate the assessment and payments required under Minnesota Statutes,
9.5section 256.9657, subdivision 2b, and the hospital directed payment program described in
9.6Minnesota Statutes, section 256B.1974.
9.7 (b) The commissioner of human services, in consultation with the Minnesota Hospital
9.8Association, must submit to the Centers for Medicare and Medicaid Services a request for
9.9federal approval to implement the hospital assessment described in Minnesota Statutes,
9.10section 256.9657, subdivision 2b, and the hospital directed payment program under
9.11Minnesota Statutes, section 256B.1974. At least 60 days before submitting the request for
9.12approval, the commissioner must make available to the public the draft assessment
9.13requirements, draft directed payment details, and an estimate of each nonexempt hospital's
9.14assessment amount.
9.15 (c) During the design and prior to submission of the request for approval under paragraph
9.16(b), the commissioner of human services must consult with the Minnesota Hospital
9.17Association and any nonexempt hospitals that are not members of the Minnesota Hospital
9.18Association.
9.19 (d) If federal approval is received for the request under paragraph (b), the commissioner
9.20of human services must provide no less than 30 days for public posting and review of the
9.21federally approved terms and conditions for the assessment and the directed payment
9.22program.
9.23 EFFECTIVE DATE.This section is effective the day following final enactment.
9Sec. 5.
REVISOR AGW/BM 25-0429203/06/25