1.1 A bill for an act
1.2 relating to health insurance; establishing medical assistance rate adjustments for
1.3 physician and professional services; increasing rates for certain residential services;
1.4 requiring a statewide reimbursement rate for behavioral health home services;
1.5 imposing an assessment on health plan companies to provide nonfederal funds for
1.6 medical assistance; authorizing the commissioner of human services to seek federal
1.7 waivers; amending Minnesota Statutes 2024, sections 256.969, subdivision 2b;
1.8 256B.0757, subdivision 5, by adding a subdivision; 256B.76, subdivisions 1, 6;
1.9 256B.761; proposing coding for new law in Minnesota Statutes, chapters 256B;
1.10 295; repealing Minnesota Statutes 2024, section 256B.0625, subdivision 38.
1.11BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.12 Section 1. Minnesota Statutes 2024, section 256.969, subdivision 2b, is amended to read:
1.13 Subd. 2b.Hospital payment rates.(a) For discharges occurring on or after November
1.141, 2014, hospital inpatient services for hospitals located in Minnesota shall be paid according
1.15to the following:
1.16 (1) critical access hospitals as defined by Medicare shall be paid using a cost-based
1.17methodology;
1.18 (2) long-term hospitals as defined by Medicare shall be paid on a per diem methodology
1.19under subdivision 25;
1.20 (3) rehabilitation hospitals or units of hospitals that are recognized as rehabilitation
1.21distinct parts as defined by Medicare shall be paid according to the methodology under
1.22subdivision 12; and
1.23 (4) all other hospitals shall be paid on a diagnosis-related group (DRG) methodology.
1Section 1.
S1402-1 1st EngrossmentSF1402 REVISOR AGW
SENATE
STATE OF MINNESOTA
S.F. No. 1402NINETY-FOURTH SESSION
(SENATE AUTHORS: WIKLUND, Mann, Abeler and Boldon)
OFFICIAL STATUSD-PGDATE
Introduction and first reading38802/13/2025
Referred to Health and Human Services
Authors added Abeler; Boldon57902/27/2025
Comm report: To pass as amended and re-refer to Taxes03/03/2025
Author stricken Lieske 2.1 (b) For the period beginning January 1, 2011, through October 31, 2014, rates shall not
2.2be rebased, except that a Minnesota long-term hospital shall be rebased effective January
2.31, 2011, based on its most recent Medicare cost report ending on or before September 1,
2.42008, with the provisions under subdivisions 9 and 23, based on the rates in effect on
2.5December 31, 2010. For rate setting periods after November 1, 2014, in which the base
2.6years are updated, a Minnesota long-term hospital's base year shall remain within the same
2.7period as other hospitals.
2.8 (c) Effective for discharges occurring on and after November 1, 2014, payment rates
2.9for hospital inpatient services provided by hospitals located in Minnesota or the local trade
2.10area, except for the hospitals paid under the methodologies described in paragraph (a),
2.11clauses (2) and (3), shall be rebased, incorporating cost and payment methodologies in a
2.12manner similar to Medicare. The base year or years for the rates effective November 1,
2.132014, shall be calendar year 2012. The rebasing under this paragraph shall be budget neutral,
2.14ensuring that the total aggregate payments under the rebased system are equal to the total
2.15aggregate payments that were made for the same number and types of services in the base
2.16year. Separate budget neutrality calculations shall be determined for payments made to
2.17critical access hospitals and payments made to hospitals paid under the DRG system. Only
2.18the rate increases or decreases under subdivision 3a or 3c that applied to the hospitals being
2.19rebased during the entire base period shall be incorporated into the budget neutrality
2.20calculation.
2.21 (d) For discharges occurring on or after November 1, 2014, through the next rebasing
2.22that occurs, the rebased rates under paragraph (c) that apply to hospitals under paragraph
2.23(a), clause (4), shall include adjustments to the projected rates that result in no greater than
2.24a five percent increase or decrease from the base year payments for any hospital. Any
2.25adjustments to the rates made by the commissioner under this paragraph and paragraph (e)
2.26shall maintain budget neutrality as described in paragraph (c).
2.27 (e) For discharges occurring on or after November 1, 2014, the commissioner may make
2.28additional adjustments to the rebased rates, and when evaluating whether additional
2.29adjustments should be made, the commissioner shall consider the impact of the rates on the
2.30following:
2.31 (1) pediatric services;
2.32 (2) behavioral health services;
2.33 (3) trauma services as defined by the National Uniform Billing Committee;
2.34 (4) transplant services;
2Section 1.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 3.1 (5) obstetric services, newborn services, and behavioral health services provided by
3.2hospitals outside the seven-county metropolitan area;
3.3 (6) outlier admissions;
3.4 (7) low-volume providers; and
3.5 (8) services provided by small rural hospitals that are not critical access hospitals.
3.6 (f) Hospital payment rates established under paragraph (c) must incorporate the following:
3.7 (1) for hospitals paid under the DRG methodology, the base year payment rate per
3.8admission is standardized by the applicable Medicare wage index and adjusted by the
3.9hospital's disproportionate population adjustment;
3.10 (2) for critical access hospitals, payment rates for discharges between November 1, 2014,
3.11and June 30, 2015, shall be set to the same rate of payment that applied for discharges on
3.12October 31, 2014;
3.13 (3) the cost and charge data used to establish hospital payment rates must only reflect
3.14inpatient services covered by medical assistance; and
3.15 (4) in determining hospital payment rates for discharges occurring on or after the rate
3.16year beginning January 1, 2011, through December 31, 2012, the hospital payment rate per
3.17discharge shall be based on the cost-finding methods and allowable costs of the Medicare
3.18program in effect during the base year or years. In determining hospital payment rates for
3.19discharges in subsequent base years, the per discharge rates shall be based on the cost-finding
3.20methods and allowable costs of the Medicare program in effect during the base year or
3.21years.
3.22 (g) The commissioner shall validate the rates effective November 1, 2014, by applying
3.23the rates established under paragraph (c), and any adjustments made to the rates under
3.24paragraph (d) or (e), to hospital claims paid in calendar year 2013 to determine whether the
3.25total aggregate payments for the same number and types of services under the rebased rates
3.26are equal to the total aggregate payments made during calendar year 2013.
3.27 (h) Effective for discharges occurring on or after July 1, 2017, and every two years
3.28thereafter, payment rates under this section shall be rebased to reflect only those changes
3.29in hospital costs between the existing base year or years and the next base year or years. In
3.30any year that inpatient claims volume falls below the threshold required to ensure a
3.31statistically valid sample of claims, the commissioner may combine claims data from two
3.32consecutive years to serve as the base year. Years in which inpatient claims volume is
3.33reduced or altered due to a pandemic or other public health emergency shall not be used as
3Section 1.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 4.1a base year or part of a base year if the base year includes more than one year. Changes in
4.2costs between base years shall be measured using the lower of the hospital cost index defined
4.3in subdivision 1, paragraph (a), or the percentage change in the case mix adjusted cost per
4.4claim. The commissioner shall establish the base year for each rebasing period considering
4.5the most recent year or years for which filed Medicare cost reports are available, except
4.6that the base years for the rebasing effective July 1, 2023, are calendar years 2018 and 2019.
4.7The estimated change in the average payment per hospital discharge resulting from a
4.8scheduled rebasing must be calculated and made available to the legislature by January 15
4.9of each year in which rebasing is scheduled to occur, and must include by hospital the
4.10differential in payment rates compared to the individual hospital's costs.
4.11 (i) Effective for discharges occurring on or after July 1, 2015, inpatient payment rates
4.12for critical access hospitals located in Minnesota or the local trade area shall be determined
4.13using a new cost-based methodology. The commissioner shall establish within the
4.14methodology tiers of payment designed to promote efficiency and cost-effectiveness.
4.15Payment rates for hospitals under this paragraph shall be set at a level that does not exceed
4.16the total cost for critical access hospitals as reflected in base year cost reports. Until the
4.17next rebasing that occurs, the new methodology shall result in no greater than a five percent
4.18decrease from the base year payments for any hospital, except a hospital that had payments
4.19that were greater than 100 percent of the hospital's costs in the base year shall have their
4.20rate set equal to 100 percent of costs in the base year. The rates paid for discharges on and
4.21after July 1, 2016, covered under this paragraph shall be increased by the inflation factor
4.22in subdivision 1, paragraph (a). The new cost-based rate shall be the final rate and shall not
4.23be settled to actual incurred costs. Hospitals shall be assigned a payment tier based on the
4.24following criteria:
4.25 (1) hospitals that had payments at or below 80 percent of their costs in the base year
4.26shall have a rate set that equals 85 percent of their base year costs;
4.27 (2) hospitals that had payments that were above 80 percent, up to and including 90
4.28percent of their costs in the base year shall have a rate set that equals 95 percent of their
4.29base year costs; and
4.30 (3) hospitals that had payments that were above 90 percent of their costs in the base year
4.31shall have a rate set that equals 100 percent of their base year costs.
4.32 (j) The commissioner may refine the payment tiers and criteria for critical access hospitals
4.33to coincide with the next rebasing under paragraph (h). The factors used to develop the new
4.34methodology may include, but are not limited to:
4Section 1.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 5.1 (1) the ratio between the hospital's costs for treating medical assistance patients and the
5.2hospital's charges to the medical assistance program;
5.3 (2) the ratio between the hospital's costs for treating medical assistance patients and the
5.4hospital's payments received from the medical assistance program for the care of medical
5.5assistance patients;
5.6 (3) the ratio between the hospital's charges to the medical assistance program and the
5.7hospital's payments received from the medical assistance program for the care of medical
5.8assistance patients;
5.9 (4) the statewide average increases in the ratios identified in clauses (1), (2), and (3);
5.10 (5) the proportion of that hospital's costs that are administrative and trends in
5.11administrative costs; and
5.12 (6) geographic location.
5.13 (k) Subject to subdivision 2g, effective for discharges occurring on or after January 1,
5.142024, the rates paid to hospitals described in paragraph (a), clauses (2) to (4), must include
5.15a rate factor specific to each hospital that qualifies for a medical education and research
5.16cost distribution under section 62J.692, subdivision 4, paragraph (a).
5.17 (l) Effective for discharges occurring on or after January 1, 2028, the commissioner
5.18must increase:
5.19 (1) payments for inpatient behavioral health services provided by hospitals paid under
5.20the DRG methodology by increasing the adjustment for behavioral health services under
5.21section 256.969, subdivision 2b, paragraph (e); and
5.22 (2) capitation payments made to managed care plans and county-based purchasing plans
5.23to reflect the rate increase provided under this paragraph. Managed care and county-based
5.24purchasing plans must use the capitation rate increase provided under this clause to increase
5.25payment rates for inpatient behavioral health services provided by hospitals paid under the
5.26DRG methodology. The commissioner must monitor the effect of this rate increase on
5.27enrollee access to behavioral health services. If for any contract year federal approval is not
5.28received for this clause, the commissioner must adjust the capitation rates paid to managed
5.29care plans and county-based purchasing plans for that contract year to reflect the removal
5.30of this clause. Contracts between managed care plans and county-based purchasing plans
5.31and providers to whom this paragraph applies must allow recovery of payments from those
5.32providers if capitation rates are adjusted in accordance with this clause. Payment recoveries
5.33must not exceed the amount equal to any increase in rates that results from this paragraph.
5Section 1.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 6.1 Sec. 2. Minnesota Statutes 2024, section 256B.0757, subdivision 5, is amended to read:
6.2 Subd. 5.Payments.(a) The commissioner shall make payments to each designated
6.3provider for the provision of health home services described in subdivision 3 to each eligible
6.4individual under subdivision 2 that selects the health home as a provider. This paragraph
6.5expires on the date that paragraph (b) becomes effective.
6.6 (b) Effective January 1, 2028, or upon federal approval, whichever is later, the
6.7commissioner shall make payments to each designated provider for the provision of health
6.8home services described in subdivision 3, except for behavioral health services, to each
6.9eligible individual under subdivision 2 who selects the health home as a provider.
6.10 Sec. 3. Minnesota Statutes 2024, section 256B.0757, is amended by adding a subdivision
6.11to read:
6.12 Subd. 5a.Payments for behavioral health home services.(a) Notwithstanding
6.13subdivision 5, the commissioner must implement a single statewide reimbursement rate for
6.14behavioral health home services under this section. The rate must be no less than $425 per
6.15member per month. The commissioner must adjust the statewide reimbursement rate annually
6.16according to the change from the midpoint of the previous rate year to the midpoint of the
6.17rate year for which the rate is being determined using the Centers for Medicare and Medicaid
6.18Services Medicare Economic Index as forecasted in the fourth quarter of the calendar year
6.19before the rate year.
6.20 (b) The commissioner must review and update the behavioral health home services rate
6.21under paragraph (a) at least every four years. The updated rate must account for the average
6.22hours required for behavioral health home team members spent providing services and the
6.23Department of Labor prevailing wage for required behavioral health home team members.
6.24The updated rate must ensure that behavioral health home services rates are sufficient to
6.25allow providers to meet required certifications, training, and practice transformation
6.26standards; staff qualification requirements; and service delivery standards.
6.27 (c) This section is effective January 1, 2028, or upon federal approval, whichever is
6.28later.
6.29 Sec. 4. [256B.757] REIMBURSEMENT RATES FOR OBSTETRIC AND
6.30GYNECOLOGIC SERVICES.
6.31 Subdivision 1.Obstetric and gynecologic minimum rate.Effective for services rendered
6.32on or after January 1, 2026, or the date of federal approval, whichever is later, rates for
6Sec. 4.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 7.1obstetric and gynecologic services reimbursed under the resource-based relative value scale
7.2must be at least equal to 100 percent of the Medicare Physician Fee Schedule.
7.3 Subd. 2.Capitation payments.Effective for services rendered on or after January 1,
7.42026, or the date of federal approval, whichever is later, the commissioner shall increase
7.5capitation payments made to managed care plans and county-based purchasing plans to
7.6reflect the rate increases provided under this section. Managed care plans and county-based
7.7purchasing plans must use the capitation rate increase provided under this subdivision to
7.8increase payment rates to the providers corresponding to the rate increases. The commissioner
7.9must monitor the effect of this rate increase on enrollee access to services under this section.
7.10If for any contract year federal approval is not received for this subdivision, the commissioner
7.11must adjust the capitation rates paid to managed care plans and county-based purchasing
7.12plans for that contract year to reflect the removal of this subdivision. Contracts between
7.13managed care plans and county-based purchasing plans and providers to whom this
7.14subdivision applies must allow recovery of payments from those providers if capitation
7.15rates are adjusted in accordance with this subdivision. Payment recoveries must not exceed
7.16the amount equal to any increase in rates that results from this subdivision.
7.17 Subd. 3.Medicare physician fee schedule.For purposes of this section, the applicable
7.18Medicare Physician Fee Schedule is the most recent Medicare Physician Fee Schedule Final
7.19Rule issued by the Centers for Medicare and Medicaid Services in effect at the time the
7.20service was rendered.
7.21 EFFECTIVE DATE.Subdivision 3 is effective January 1, 2026, or upon federal
7.22approval, whichever is later. The commissioner shall notify the revisor of statutes when
7.23federal approval is obtained.
7.24 Sec. 5. Minnesota Statutes 2024, section 256B.76, subdivision 1, is amended to read:
7.25 Subdivision 1.Physician and professional services reimbursement.(a) Effective for
7.26services rendered on or after October 1, 1992, the commissioner shall make payments for
7.27physician services as follows:
7.28 (1) payment for level one Centers for Medicare and Medicaid Services' common
7.29procedural coding system codes titled "office and other outpatient services," "preventive
7.30medicine new and established patient," "delivery, antepartum, and postpartum care," "critical
7.31care," cesarean delivery and pharmacologic management provided to psychiatric patients,
7.32and level three codes for enhanced services for prenatal high risk, shall be paid at the lower
7.33of (i) submitted charges, or (ii) 25 percent above the rate in effect on June 30, 1992;
7Sec. 5.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 8.1 (2) payments for all other services shall be paid at the lower of (i) submitted charges,
8.2or (ii) 15.4 percent above the rate in effect on June 30, 1992; and
8.3 (3) all physician rates shall be converted from the 50th percentile of 1982 to the 50th
8.4percentile of 1989, less the percent in aggregate necessary to equal the above increases
8.5except that payment rates for home health agency services shall be the rates in effect on
8.6September 30, 1992.
8.7 (b) Effective for services rendered on or after January 1, 2000, payment rates for physician
8.8and professional services shall be increased by three percent over the rates in effect on
8.9December 31, 1999, except for home health agency and family planning agency services.
8.10The increases in this paragraph shall be implemented January 1, 2000, for managed care.
8.11 (c) Effective for services rendered on or after July 1, 2009, payment rates for physician
8.12and professional services shall be reduced by five percent, except that for the period July
8.131, 2009, through June 30, 2010, payment rates shall be reduced by 6.5 percent for the medical
8.14assistance and general assistance medical care programs, over the rates in effect on June
8.1530, 2009. This reduction and the reductions in paragraph (d) do not apply to office or other
8.16outpatient visits, preventive medicine visits and family planning visits billed by physicians,
8.17advanced practice registered nurses, or physician assistants in a family planning agency or
8.18in one of the following primary care practices: general practice, general internal medicine,
8.19general pediatrics, general geriatrics, and family medicine. This reduction and the reductions
8.20in paragraph (d) do not apply to federally qualified health centers, rural health centers, and
8.21Indian health services. Effective October 1, 2009, payments made to managed care plans
8.22and county-based purchasing plans under sections 256B.69, 256B.692, and 256L.12 shall
8.23reflect the payment reduction described in this paragraph.
8.24 (d) Effective for services rendered on or after July 1, 2010, payment rates for physician
8.25and professional services shall be reduced an additional seven percent over the five percent
8.26reduction in rates described in paragraph (c). This additional reduction does not apply to
8.27physical therapy services, occupational therapy services, and speech pathology and related
8.28services provided on or after July 1, 2010. This additional reduction does not apply to
8.29physician services billed by a psychiatrist or an advanced practice registered nurse with a
8.30specialty in mental health. Effective October 1, 2010, payments made to managed care plans
8.31and county-based purchasing plans under sections 256B.69, 256B.692, and 256L.12 shall
8.32reflect the payment reduction described in this paragraph.
8.33 (e) Effective for services rendered on or after September 1, 2011, through June 30, 2013,
8.34payment rates for physician and professional services shall be reduced three percent from
8Sec. 5.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 9.1the rates in effect on August 31, 2011. This reduction does not apply to physical therapy
9.2services, occupational therapy services, and speech pathology and related services.
9.3 (f) Effective for services rendered on or after September 1, 2014, payment rates for
9.4physician and professional services, including physical therapy, occupational therapy, speech
9.5pathology, and mental health services shall be increased by five percent from the rates in
9.6effect on August 31, 2014. In calculating this rate increase, the commissioner shall not
9.7include in the base rate for August 31, 2014, the rate increase provided under section
9.8256B.76, subdivision 7. This increase does not apply to federally qualified health centers,
9.9rural health centers, and Indian health services. Payments made to managed care plans and
9.10county-based purchasing plans shall not be adjusted to reflect payments under this paragraph.
9.11 (g) (a) Effective for services rendered on or after July 1, 2015, payment rates for physical
9.12therapy, occupational therapy, and speech pathology and related services provided by a
9.13hospital meeting the criteria specified in section 62Q.19, subdivision 1, paragraph (a), clause
9.14(4), shall be increased by 90 percent from the rates in effect on June 30, 2015. Payments
9.15made to managed care plans and county-based purchasing plans shall not be adjusted to
9.16reflect payments under this paragraph.
9.17 (h) (b) Any ratables effective before July 1, 2015, do not apply to early intensive
9.18developmental and behavioral intervention (EIDBI) benefits described in section 256B.0949.
9.19 (i) (c) The commissioner may reimburse physicians and other licensed professionals for
9.20costs incurred to pay the fee for testing newborns who are medical assistance enrollees for
9.21heritable and congenital disorders under section 144.125, subdivision 1, paragraph (c), when
9.22the sample is collected outside of an inpatient hospital or freestanding birth center and the
9.23cost is not recognized by another payment source.
9.24 EFFECTIVE DATE.This section is effective January 1, 2026, or upon federal approval
9.25of the amendments in this act to section 256B.76, subdivision 6, whichever is later. The
9.26commissioner of human services shall notify the revisor of statutes when federal approval
9.27is obtained.
9.28 Sec. 6. Minnesota Statutes 2024, section 256B.76, subdivision 6, is amended to read:
9.29 Subd. 6.Medicare relative value units.(a) Effective for services rendered on or after
9.30January 1, 2007, the commissioner shall make payments for physician and professional
9.31services based on the Medicare relative value units (RVUs). This change shall be budget
9.32neutral and the cost of implementing RVUs will be incorporated in the established conversion
9.33factor. This paragraph expires on the date that paragraph (b) becomes effective.
9Sec. 6.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 10.1 (b) Effective January 1, 2026, or upon federal approval, whichever is later, and effective
10.2for services rendered on or after January 1, 2007, the commissioner shall make payments
10.3for physician and professional services based on the Medicare relative value units (RVUs).
10.4 (b) (c) Effective for services rendered on or after January 1, 2025, rates for mental health
10.5services reimbursed under the resource-based relative value scale (RBRVS) must be equal
10.6to 83 percent of the Medicare Physician Fee Schedule. This paragraph expires on the date
10.7that paragraph (d) becomes effective.
10.8 (d) Effective January 1, 2026, or upon federal approval, whichever is later, and effective
10.9for services rendered on or after January 1, 2026, or the date of federal approval, whichever
10.10is later, rates for all physician and professional services must be at least equal to 100 percent
10.11of the Medicare Physician Fee Schedule.
10.12 (c) (e) Effective for services rendered on or after January 1, 2025, the commissioner
10.13shall increase capitation payments made to managed care plans and county-based purchasing
10.14plans to reflect the rate increases provided under this subdivision. Managed care plans and
10.15county-based purchasing plans must use the capitation rate increase provided under this
10.16paragraph to increase payment rates to the providers corresponding to the rate increases.
10.17The commissioner must monitor the effect of this rate increase on enrollee access to services
10.18under this subdivision. If for any contract year federal approval is not received for this
10.19paragraph, the commissioner must adjust the capitation rates paid to managed care plans
10.20and county-based purchasing plans for that contract year to reflect the removal of this
10.21paragraph. Contracts between managed care plans and county-based purchasing plans and
10.22providers to whom this paragraph applies must allow recovery of payments from those
10.23providers if capitation rates are adjusted in accordance with this paragraph. Payment
10.24recoveries must not exceed the amount equal to any increase in rates that results from this
10.25paragraph.
10.26 (f) For purposes of this subdivision, the applicable Medicare Physician Fee Schedule is
10.27the most recent Medicare Physician Fee Schedule Final Rule issued by the Centers for
10.28Medicare and Medicaid Services in effect at the time the service was rendered.
10.29 EFFECTIVE DATE.Paragraph (f) is effective January 1, 2026, or upon federal
10.30approval, whichever is later. The commissioner of human services shall notify the revisor
10.31of statutes when federal approval is obtained.
10Sec. 6.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 11.1 Sec. 7. Minnesota Statutes 2024, section 256B.761, is amended to read:
11.2 256B.761 REIMBURSEMENT FOR MENTAL HEALTH SERVICES.
11.3 (a) Effective for services rendered on or after July 1, 2001, payment for medication
11.4management provided to psychiatric patients, outpatient mental health services, day treatment
11.5services, home-based mental health services, and family community support services shall
11.6be paid at the lower of (1) submitted charges, or (2) 75.6 percent of the 50th percentile of
11.71999 charges.
11.8 (b) Effective July 1, 2001, the medical assistance rates for outpatient mental health
11.9services provided by an entity that operates: (1) a Medicare-certified comprehensive
11.10outpatient rehabilitation facility; and (2) a facility that was certified prior to January 1, 1993,
11.11with at least 33 percent of the clients receiving rehabilitation services in the most recent
11.12calendar year who are medical assistance recipients, will be increased by 38 percent, when
11.13those services are provided within the comprehensive outpatient rehabilitation facility and
11.14provided to residents of nursing facilities owned by the entity.
11.15 (c) In addition to rate increases otherwise provided, the commissioner may restructure
11.16coverage policy and rates to improve access to adult rehabilitative mental health services
11.17under section 256B.0623 and related mental health support services under section 256B.021,
11.18subdivision 4, paragraph (f), clause (2). For state fiscal years 2015 and 2016, the projected
11.19state share of increased costs due to this paragraph is transferred from adult mental health
11.20grants under sections 245.4661 and 256K.10. The transfer for fiscal year 2016 is a permanent
11.21base adjustment for subsequent fiscal years. Payments made to managed care plans and
11.22county-based purchasing plans under sections 256B.69, 256B.692, and 256L.12 shall reflect
11.23the rate changes described in this paragraph.
11.24 (d) Any ratables effective before July 1, 2015, do not apply to early intensive
11.25developmental and behavioral intervention (EIDBI) benefits described in section 256B.0949.
11.26 (e) Effective for services rendered on or after January 1, 2024, payment rates for
11.27behavioral health services included in the rate analysis required by Laws 2021, First Special
11.28Session chapter 7, article 17, section 18, except for adult day treatment services under section
11.29256B.0671, subdivision 3; early intensive developmental and behavioral intervention services
11.30under section 256B.0949; and substance use disorder services under chapter 254B, must be
11.31increased by three percent from the rates in effect on December 31, 2023. Effective for
11.32services rendered on or after January 1, 2025, payment rates for behavioral health services
11.33included in the rate analysis required by Laws 2021, First Special Session chapter 7, article
11.3417, section 18; early intensive developmental behavioral intervention services under section
11Sec. 7.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 12.1256B.0949; and substance use disorder services under chapter 254B, must be annually
12.2adjusted according to the change from the midpoint of the previous rate year to the midpoint
12.3of the rate year for which the rate is being determined using the Centers for Medicare and
12.4Medicaid Services Medicare Economic Index as forecasted in the fourth quarter of the
12.5calendar year before the rate year. For payments made in accordance with this paragraph,
12.6if and to the extent that the commissioner identifies that the state has received federal
12.7financial participation for behavioral health services in excess of the amount allowed under
12.8United States Code, title 42, section 447.321, the state shall repay the excess amount to the
12.9Centers for Medicare and Medicaid Services with state money and maintain the full payment
12.10rate under this paragraph. This paragraph does not apply to federally qualified health centers,
12.11rural health centers, Indian health services, certified community behavioral health clinics,
12.12cost-based rates, and rates that are negotiated with the county. This paragraph expires upon
12.13legislative implementation of the new rate methodology resulting from the rate analysis
12.14required by Laws 2021, First Special Session chapter 7, article 17, section 18.
12.15 (f) Effective January 1, 2024, the commissioner shall increase capitation payments made
12.16to managed care plans and county-based purchasing plans to reflect the behavioral health
12.17service rate increase provided in paragraph (e). Managed care and county-based purchasing
12.18plans must use the capitation rate increase provided under this paragraph to increase payment
12.19rates to behavioral health services providers. The commissioner must monitor the effect of
12.20this rate increase on enrollee access to behavioral health services. If for any contract year
12.21federal approval is not received for this paragraph, the commissioner must adjust the
12.22capitation rates paid to managed care plans and county-based purchasing plans for that
12.23contract year to reflect the removal of this provision. Contracts between managed care plans
12.24and county-based purchasing plans and providers to whom this paragraph applies must
12.25allow recovery of payments from those providers if capitation rates are adjusted in accordance
12.26with this paragraph. Payment recoveries must not exceed the amount equal to any increase
12.27in rates that results from this provision.
12.28 (g) Effective for services rendered on or after January 1, 2026, or the date of federal
12.29approval, whichever is later:
12.30 (1) rates for mental health services reimbursed under the resource-based relative value
12.31scale must be at least equal to 100 percent of the Medicare Physician Fee Schedule; and
12.32 (2) the commissioner must increase capitation payments made to managed care plans
12.33and county-based purchasing plans to reflect the rate increases provided under this paragraph.
12.34Managed care plans and county-based purchasing plans must use the capitation rate increase
12.35provided under this clause to increase payment rates to the providers corresponding to the
12Sec. 7.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 13.1rate increases. The commissioner must monitor the effect of this rate increase on enrollee
13.2access to services under this paragraph. If for any contract year federal approval is not
13.3received for this clause, the commissioner must adjust the capitation rates paid to managed
13.4care plans and county-based purchasing plans for that contract year to reflect the removal
13.5of this clause. Contracts between managed care plans and county-based purchasing plans
13.6and providers to whom this clause applies must allow recovery of payments from those
13.7providers if capitation rates are adjusted in accordance with this clause. Payment recoveries
13.8must not exceed the amount equal to any increase in rates that results from this clause.
13.9 (h) Effective for services under this section billed and coded under Healthcare Common
13.10Procedure Coding System H, T, and S, and rendered on or after January 1, 2027, or the date
13.11of federal approval, whichever is later, the commissioner must increase reimbursement rates
13.12as necessary to align with the Medicare Physician Fee Schedule.
13.13 (i) Effective for children's therapeutic supports and services under section 256B.0943,
13.14subdivision 2, and services under section 245.488, rendered on or after January 1, 2026, or
13.15the date of federal approval, whichever is later, the commissioner must increase:
13.16 (1) reimbursement rates as necessary to align with the Medicare Physician Fee Schedule;
13.17and
13.18 (2) capitation payments made to managed care plans and county-based purchasing plans
13.19to reflect the rate increases provided under this paragraph. Managed care plans and
13.20county-based purchasing plans must use the capitation rate increase provided under this
13.21clause to increase payment rates to the providers corresponding to the rate increases. The
13.22commissioner must monitor the effect of this rate increase on enrollee access to services
13.23under this paragraph. If for any contract year federal approval is not received for this clause,
13.24the commissioner must adjust the capitation rates paid to managed care plans and
13.25county-based purchasing plans for that contract year to reflect the removal of this clause.
13.26Contracts between managed care plans and county-based purchasing plans and providers
13.27to whom this clause applies must allow recovery of payments from those providers if
13.28capitation rates are adjusted in accordance with this clause. Payment recoveries must not
13.29exceed the amount equal to any increase in rates that results from this clause.
13.30 (j) Paragraph (i) does not apply to federally qualified health centers, rural health centers,
13.31Indian health services, certified community behavioral health clinics, cost-based rates,
13.32psychiatric residential treatment facilities, and children's residential services and rates that
13.33are negotiated with the county.
13Sec. 7.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 14.1 (k) For behavioral health services included in the rate analysis required by Laws 2021,
14.2First Special Session chapter 7, article 17, section 18, except for adult day treatment services
14.3under section 256B.0671, subdivision 3; early intensive developmental and behavioral
14.4intervention services under section 256B.0949; and substance use disorder services under
14.5chapter 254B, managed care plans and county-based purchasing plans must reimburse the
14.6providers at a rate that is at least equal to the fee-for-service payment rate. The commissioner
14.7must monitor the effect of this requirement on the rate of access to the services delivered
14.8by providers of behavioral health services.
14.9 (l) For purposes of this section, the applicable Medicare Physician Fee Schedule is the
14.10most recent Medicare Physician Fee Schedule Final Rule issued by the Centers for Medicare
14.11and Medicaid Services in effect at the time the service was rendered.
14.12 EFFECTIVE DATE.Paragraphs (j) to (l) are effective January 1, 2026, or upon federal
14.13approval, whichever is later. The commissioner shall notify the revisor of statutes when
14.14federal approval is obtained.
14.15Sec. 8. [256B.7662] REIMBURSEMENT RATES FOR PRIMARY CARE SERVICES.
14.16 Subdivision 1.Primary care minimum rate.Effective for services rendered on or after
14.17January 1, 2026, or the date of federal approval, whichever is later, rates for primary care
14.18services reimbursed under the resource-based relative value scale must be at least equal to
14.19100 percent of the Medicare Physician Fee Schedule.
14.20 Subd. 2.Capitation payments.Effective for services rendered on or after January 1,
14.212026, or the date of federal approval, whichever is later, the commissioner shall increase
14.22capitation payments made to managed care plans and county-based purchasing plans to
14.23reflect the rate increases provided under this section. Managed care plans and county-based
14.24purchasing plans must use the capitation rate increase provided under this subdivision to
14.25increase payment rates to the providers corresponding to the rate increases. The commissioner
14.26must monitor the effect of this rate increase on enrollee access to services under this section.
14.27If for any contract year federal approval is not received for this subdivision, the commissioner
14.28must adjust the capitation rates paid to managed care plans and county-based purchasing
14.29plans for that contract year to reflect the removal of this subdivision. Contracts between
14.30managed care plans and county-based purchasing plans and providers to whom this
14.31subdivision applies must allow recovery of payments from those providers if capitation
14.32rates are adjusted in accordance with this subdivision. Payment recoveries must not exceed
14.33the amount equal to any increase in rates that results from this subdivision.
14Sec. 8.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 15.1 Subd. 3.Medicare physician fee schedule.For purposes of this section, the applicable
15.2Medicare Physician Fee Schedule is the most recent Medicare Physician Fee Schedule Final
15.3Rule issued by the Centers for Medicare and Medicaid Services in effect at the time the
15.4service was rendered.
15.5 EFFECTIVE DATE.Subdivision 3 is effective January 1, 2026, or upon federal
15.6approval, whichever is later. The commissioner shall notify the revisor of statutes when
15.7federal approval is obtained.
15.8 Sec. 9. [295.525] MCO ASSESSMENT ON HEALTH PLAN COMPANIES.
15.9 Subdivision 1.Definitions.(a) For purposes of this section, the definitions have the
15.10meanings given.
15.11 (b) "Base year" means January 1, 2025, to December 31, 2025.
15.12 (c) "Commissioner" means the commissioner of human services.
15.13 (d) "Enrollee" has the meaning given in section 62Q.01, except that enrollee does not
15.14include:
15.15 (1) an individual enrolled in a Medicare plan;
15.16 (2) a plan-to-plan enrollee; or
15.17 (3) an individual enrolled in a health plan pursuant to the Federal Employees Health
15.18Benefits Act of 1959, Public Law 86-382, as amended, to the extent the imposition of the
15.19assessment under this section is preempted pursuant to United States Code, title 5, section
15.208909, subsection (f).
15.21 (e) "Health plan" has the meaning given in section 62Q.01.
15.22 (f) "Health plan company" has the meaning given in section 62Q.01.
15.23 (g) "Medical assistance" means the medical assistance program established under chapter
15.24256B.
15.25 (h) "Medical assistance enrollee" means an enrollee in medical assistance for whom the
15.26department of human services directly pays the health plan company a capitated payment.
15.27 (i) "Plan-to-plan enrollee" means an individual who receives coverage for health care
15.28services through a health plan pursuant to a subcontract from another health plan.
15.29 Subd. 2.MCO assessment.(a) An annual assessment is imposed on health plan
15.30companies for calendar years 2026 to 2029. The total annual assessment amount is equal
15Sec. 9.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 16.1to the sum of the amounts assessed for medical assistance enrollees under paragraph (b)
16.2and for nonmedical assistance enrollees under paragraph (c).
16.3 (b) The amount assessed for medical assistance enrollees is equal to the sum of the
16.4following:
16.5 (1) for medical assistance enrollees 0 to 60,000, $0 per enrollee;
16.6 (2) for medical assistance enrollees 60,001 to 100,000, $340 per enrollee;
16.7 (3) for medical assistance enrollees 100,001 to 200,000, $365 per enrollee; and
16.8 (4) for medical assistance enrollees 200,001 to 350,000, $380 per enrollee.
16.9 (c) The amount assessed for nonmedical assistance enrollees is equal to the sum of the
16.10following:
16.11 (1) for nonmedical assistance enrollees 0 to 60,000, $0 per enrollee;
16.12 (2) for nonmedical assistance enrollees 60,001 to 100,000, 50 cents per enrollee;
16.13 (3) for nonmedical assistance enrollees 100,001 to 200,000, 75 cents per enrollee; and
16.14 (4) for nonmedical assistance enrollees 200,001 to 350,000, $1 per enrollee.
16.15 (d) The commissioner may, after consultation with health plan companies likely to be
16.16affected, modify the rate of assessment, as set forth in paragraphs (a) to (c), as necessary to
16.17comply with federal law, obtain or maintain a waiver under Code of Federal Regulations,
16.18title 42, section 433.72, or to otherwise maximize under this section federal financial
16.19participation for medical assistance.
16.20 (e) Unpaid assessment amounts accrue interest at a rate of ten percent per annum,
16.21beginning the day following the assessment payment's due date. A penalty, equal to the
16.22total accrued interest charge, is imposed monthly on payments 60 days or more overdue
16.23until the payment, penalty, and interest are paid in full.
16.24 Subd. 3.Assessment computation; collection.(a) The commissioner must determine
16.25the following for each health plan company:
16.26 (1) total cumulative enrollment for the base year;
16.27 (2) total Medicare cumulative enrollment for the base year;
16.28 (3) total medical assistance cumulative enrollment for the base year;
16.29 (4) total plan-to-plan cumulative enrollment for the base year;
16Sec. 9.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 17.1 (5) total cumulative enrollment through the Federal Employees Health Benefits Act of
17.21959, Public Law 86-382, as amended, for the base year; and
17.3 (6) total other cumulative enrollment for the base year that is not otherwise counted in
17.4clauses (2) to (5).
17.5 (b) Health plan companies must provide any information requested by the commissioner
17.6for the purpose of this subdivision, provided that the commissioner determines such
17.7information is necessary to accurately determine the information in paragraph (a).
17.8 (c) The commissioner may correct errors in data provided to the commissioner by a
17.9health plan company to the extent necessary to accurately determine the information in
17.10paragraph (a).
17.11 (d) For purposes of calculating the information in paragraph (a) for a health plan company,
17.12the commissioner must count any individual that was an enrollee of a health plan at any
17.13point of the base year, regardless of the enrollee's duration as an enrollee of the health plan.
17.14 (e) The commissioner must use the information in paragraph (a) to compute the
17.15assessment for each health plan company.
17.16 (f) The commissioner must collect the annual assessment for each health plan company
17.17in four equal installments, in the manner and on the schedule determined by the
17.18commissioner. The commissioner is prohibited from collecting any amount under this section
17.19until 20 days after the commissioner has notified the health plan company of:
17.20 (1) the effective date of this section;
17.21 (2) the assessment due dates for the applicable calendar year; and
17.22 (3) the annual assessment amount.
17.23 (g) The commissioner may waive all or part of the interest or penalty imposed on a
17.24health plan company under subdivision 2, paragraph (e), if the commissioner determines
17.25the interest or penalty is likely to create an undue financial hardship on the health plan
17.26company or a significant financial difficulty in providing necessary services to medical
17.27assistance enrollees. A waiver under this paragraph must be contingent on the health plan
17.28company's agreement to make assessment payments on an alternative schedule, determined
17.29by the commissioner, that accounts for the health plan company's finances and the potential
17.30impact on the delivery of services to medical assistance enrollees.
17.31 (h) In the event of a merger, acquisition, or other transaction that results in the transfer
17.32of health plan responsibility to another health plan company or similar entity during calendar
17Sec. 9.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 18.1years 2026 to 2029, the surviving, acquiring, or controlling health plan company or similar
18.2entity shall be responsible for paying the full assessment amount as provided in this section
18.3that would have been the responsibility of the health plan company to which that full
18.4assessment amount was assessed upon the effective date of the transaction. If a transaction
18.5results in the transfer of health plan responsibility for only some of a health plan's enrollees
18.6under this section but not all enrollees, the full assessment amount as provided in this section
18.7remains the responsibility of that health plan company to which that full assessment amount
18.8was assessed.
18.9 Subd. 4.MCO assessment expenditures.(a) All amounts collected by the commissioner
18.10under this section must be deposited in the health care access fund.
18.11 (b) All amounts collected by the commissioner under this section are annually
18.12appropriated to the commissioner to provide nonfederal funds for medical assistance. The
18.13assessment funds must be used to supplement funds for medical assistance from the general
18.14fund.
18.15 (c) The commissioner must provide an annual report to all health plan companies, in a
18.16time and manner determined by the commissioner. The report must identify the assessments
18.17imposed on each health plan company pursuant to this section, account for all funds raised
18.18by the MCO assessment, and provide an itemized accounting of expenditures from the fund.
18.19 Subd. 5.Expiration.This section expires June 30, 2030.
18.20 EFFECTIVE DATE.This section is effective January 1, 2026, or upon federal approval
18.21for the assessment established in this section to be considered a permissible health
18.22care-related tax under Code of Federal Regulations, title 42, section 433.68, eligible for
18.23federal financial participation, including but not limited to federal approval of a waiver
18.24under Code of Federal Regulations, title 42, section 433.72, if such waiver is necessary to
18.25receive health care-related taxes without a reduction in federal financial participation,
18.26whichever is later. The commissioner of human services shall notify the revisor of statutes
18.27when federal approval is obtained.
18.28Sec. 10. FEDERAL APPROVAL; WAIVERS.
18.29 (a) The commissioner must request, as the commissioner determines necessary, federal
18.30approval for the MCO assessment on health plan companies established in this act to be
18.31considered a permissible health care-related tax under Code of Federal Regulations, title
18.3242, section 433.68, eligible for federal financial participation.
18Sec. 10.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 19.1 (b) To obtain the federal approval under paragraph (a), the commissioner may apply for
19.2a waiver of the federal broad-based requirement for health care-related taxes, uniform
19.3requirement for health care-related taxes, and any other provision of federal law necessary
19.4to implement Minnesota Statutes, section 295.525.
19.5 EFFECTIVE DATE.This section is effective the day following final enactment.
19.6 Sec. 11. REPEALER.
19.7 Minnesota Statutes 2024, section 256B.0625, subdivision 38, is repealed.
19.8 EFFECTIVE DATE.This section is effective January 1, 2027, or upon federal approval,
19.9whichever is later. The commissioner of human services shall notify the revisor of statutes
19.10when federal approval is obtained.
19Sec. 11.
S1402-1 1st EngrossmentSF1402 REVISOR AGW 256B.0625 COVERED SERVICES.
Subd. 38. Payments for mental health services.Payments for mental health services covered
under the medical assistance program that are provided by masters-prepared mental health
professionals shall be 80 percent of the rate paid to doctoral-prepared professionals. Payments for
mental health services covered under the medical assistance program that are provided by
masters-prepared mental health professionals employed by community mental health centers shall
be 100 percent of the rate paid to doctoral-prepared professionals. Payments for mental health
services covered under the medical assistance program that are provided by physician assistants
shall be 80.4 percent of the base rate paid to psychiatrists.
1R
APPENDIX
Repealed Minnesota Statutes: S1402-1