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Hospitals and insurers oppose pharmacy carve‑out and higher HMO surcharge in governor’s DHS budget
Summary
Representatives of Minnesota’s nonprofit insurers and hospitals told the Human Services Committee they oppose several health care financing proposals in the governor’s DHS budget, saying the changes could raise costs for enrollees and harm safety‑net providers.
Representatives of Minnesota’s nonprofit insurers and hospitals told the Human Services Committee they oppose several health care financing proposals in the governor’s DHS budget, saying the changes could raise costs for enrollees and harm safety‑net providers.
Dan Endresen of the Minnesota Council of Health Plans described two concerns: a proposed increase in the HMO surcharge from 0.6% to 1.25% and proposals to carve out pharmacy and non‑emergency medical transportation (NEMT) from the state’s managed care model. Endresen said adding taxes to insurance “increases the cost paid by enrollees and small businesses” and noted the fully insured market already bears several premium‑based assessments.
Endresen also argued that carving out pharmacy and NEMT would fragment care coordination. “Prescription drugs and NEMT services are important components of a health care, and carving these benefits out will remove the vital opportunities to coordinate that care,” he said, warning members would face multiple points of contact rather than a single managed care organization.
Danny Acker of the Minnesota Hospital Association said the Department of Human Services’ pharmacy carve‑out proposal would jeopardize roughly $86,000,000 in annual outpatient savings generated through the federal 340B drug pricing program. “If the state were to take all of that in Medicaid rebates, the federal share is actually withheld, so about 70% of that $86,000,000 would just stay in Washington, DC and not come to Minnesota,” he said. Acker urged lawmakers to consider alternate models used in Kentucky and Ohio that keep pharmacy benefits inside managed care while addressing PBM practices.
Both witnesses urged legislators to prioritize enrollee experience and warned that previous single‑administrator carve outs (for other products) produced unintended consequences. No formal votes were taken in the hearing; witnesses said they will review bill language as it is released and return as needed.
