DHS seeks savings through pharmacy carve‑out, extends audio‑only telehealth and raises HMO surcharge

Interim Department of Human Services Commissioner Shereen Gandhi and DHS budget staff presented the agency’s fiscal proposals to the House Health Finance and Policy Committee on Feb. 10, framing a package designed to strengthen program integrity and limit forecasted spending growth.

“DHS directly impacts more than a quarter of all Minnesotans,” budget director Alyce Bailey told the committee while summarizing program scale and fiscal assumptions.

What DHS proposed

- Pharmacy carve‑out: DHS recommended carving outpatient prescription drugs out of managed‑care plans and covering them in fee‑for‑service so the state can access federal Medicaid prescription‑drug rebate revenues for drugs currently provided to patients through safety‑net providers and the 340B program. DHS estimated the carve‑out would yield roughly a 30% reduction in net drug spending on affected drugs by enabling access to rebate revenue that is otherwise unavailable when drugs flow through certain provider arrangements.

- Extend audio‑only telehealth: The governor’s budget would extend audio‑only telehealth access in Medicaid for two years (through 07/01/2027). Assistant Commissioner Conley told the committee that the department’s 2024 study and remote‑care…