House panel advances Human Services finance bill after amendment adopting program and integrity changes

The House Ways and Means Committee on a voice vote recommended House File 2,434, the Human Services Finance Bill, to the general register after adopting an A5 amendment that chairs described as largely technical and to align the bill with committee targets.

The bill matters because it funds a wide range of human services programs across the state while meeting the committee target that committee staff described as a multi-hundred-million-dollar reduction from the February forecast. Sponsors said the bill adjusts payment models for nursing facilities, adds program-integrity tools for home- and community-based services, and includes a $1.2 million appropriation for demolition of the Miller Building at the Anoka Medical Regional Treatment Center site.

Committee staff member Ms. Adrienne told the panel, “The Human Services Finance Committee received a target that was $300,000,000 below the base that was established in the February forecast for fiscal years 26 and '27.” Chair Schumacher moved the bill to the general register and offered the A5 amendment; the panel adopted that amendment by voice vote.

Co-chair Representative Schumacher and co-chair Chair Noor outlined the bill’s major provisions. The bill replaces the nursing-home payment model currently described as RUG with the PDPM structure requested by federal authorities and funds a nursing home workforce standards board. "There is no disagreement that the team members at the nursing home should be getting paid more," Chair Schumacher said, adding the bill front-loads state funding to cover those costs when they are first recognized.

To draw more federal matching dollars, the bill modifies a bed surcharge mechanism for nursing facilities; Chair Schumacher said the state may charge up to $6,000 per bed and that the surcharge functions as a pass-through to increase federal drawdown. The bill also includes a $1.2 million appropriation “for the demolition of the Miller Building to prepare for the site for future construction of the Anoka Medical Regional Treatment Center,” co-chairs said when describing the A5 amendment.

On disability services, the bill changes the waiver rate system’s inflation cap from a 2% cap in the governor’s proposal to a 4% annual cap based on the CPI-U, co-chairs said. The bill introduces a county cost-share requirement for rate exceptions; Chair Noor said counties would be asked to provide roughly 16.67 percent of the cost of rate exceptions and that the chairs planned to work with counties to develop guidelines and monitoring to ensure rate-exception funds reach front-line providers rather than executives.

The bill contains several program-integrity measures. Chair Noor said the proposal would require additional background studies for owners, operators, employees and volunteers who have direct contact in home- and community-based services; create a program-integrity surcharge to fund inspector-general work and training; allow the commissioner authority to withhold payments or impose temporary suspense licenses where fraud is suspected; and expand the commissioner’s authority to review licenses after a change of ownership.

Behavioral health and housing provisions described by Chair Noor include a state-run certification process and centralized registry for recovery residences (sometimes called sober homes), expanded housing-support funding and changes to eligibility and payment for substance-use services. The bill also delays a scheduled waiver reimagining implementation until January 1, 2028, according to the co-chairs’ description.

Committee members pressed for county-level fiscal impact detail. Representative Scott asked what counties should expect net-net; Chair Schumacher replied that county-level runs were still outstanding and the committee had asked counties and the Department of Human Services for data to break down impacts by county. Representative Novotny asked for the total state cost related to nursing-home wage adjustments; Chair Schumacher said the deeper fiscal details were in other files (House File 1419 referenced) and that the four-year impact discussed for certain components was $95 million.

Several members expressed support for expanded substance-use disorder and mental-health funding within the bill. Representative Baker praised rate increases for substance-use disorder treatment as a workforce and capacity strategy, and Representative Biermann and Representative Gomez highlighted investments in school-linked mental-health and homelessness services that they said fit into a broader continuum of care.

The committee adopted the A5 amendment and recommended House File 2,434, as amended, to be placed on the general register. The record shows the motions and amendment adoption by voice vote; no roll-call tally was recorded in the transcript for the final recommendation.

What happens next: House File 2,434 as amended moves toward the House floor and any conference or committee steps that follow.