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Committee advances bill to create hospital-directed payment program to stabilize hospital finances
Summary
Senate File 2413, proposing a hospital assessment to finance a state Medicaid directed payment program (DPP) intended to stabilize hospital finances and draw federal Medicaid funds, was passed without recommendation and referred to Health and Human Services after testimony from the Minnesota Hospital Association and sponsor Senator Mann.
Senate File 2413, which would establish a Directed Payment Program (DPP) funded by an assessment on Minnesota hospitals to draw additional federal Medicaid dollars, was passed without recommendation by the Senate Taxes Committee on April 1 and referred to the Senate Committee on Health and Human Services.
Senator Mann said the assessment would be placed only on hospitals and not on other health-care providers, and that the DPP could attract roughly $1 billion in additional federal Medicaid funding to stabilize hospitals that have struggled financially since the pandemic. "This will be just like 40 other states are doing," Mann said, describing quarterly assessments and quarterly supplemental payments to return combined state and federal dollars to hospitals through Medicaid managed-care plans.
Joe Schindler, vice president of finance for the Minnesota Hospital Association, testified in support and described the assessment design: inpatient assessments based on total inpatient days and outpatient assessments based on net outpatient revenue minus Medicare revenue. He told the committee the approach reduces the assessment burden on rural hospitals that serve a high Medicare mix. On timing, Schindler said hospitals need a minimal lag between assessment collections and supplemental payments; he urged cooperation among DHS and Medicaid managed-care plans to operationalize the program.
Committee questions focused on who ultimately bears cost and whether patients or taxpayers would end up paying the assessment. Schindler testified that the proposal is structured so the assessment and reimbursement mechanism would not increase costs to consumers or health plans, because the federal funds returned to hospitals are intended to cover the assessment. Senator Dzaskowski and others sought clarity about whether the program effectively relies on federal taxpayers for the increased funding; witnesses confirmed the federal share is the critical source of the additional dollars if CMS approves the plan.
Senator Klein moved that SF 2413 be passed without recommendation and referred to Health and Human Services; the motion was recorded as carried by voice vote. The bill will proceed to Health and Human Services for further policy and operational review, particularly on CMS approval, assessment methodology, and timing to reduce cash-flow risk for hospitals.
