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Providers urge large rate increases for substance‑use treatment; committee lays bill over
Summary
House File 19,94 would raise SUD rates using recommendations from an outpatient rate study and include an automatic inflation adjustment. Providers testified that underfunding has led to closures and workforce shortages, and urged passage to maintain rural and residential capacity.
House File 19,94 would adopt rate changes for substance use disorder services based on a 2024 outpatient rate study and create an automatic inflation adjustment for future years. The Human Services Finance and Policy Committee laid the bill over after extensive provider testimony.
MARCH and several provider executives told the committee that many SUD rates are “grossly underfunded.” Dr. Roy John Sutherland, vice president of addiction services at Nexus/Neisser (transcript spelling), said a Burns & Associates study recommended an average 68% increase to remain financially viable and noted 47 programs statewide have closed in the past three years. Dr. Lou Zeidner, CEO of Eosys (formerly Meridian Behavioral Health), said his organization serves 7,500 Medicaid and behavioral health fund patients annually and warned that without proposed rate increases some providers “will go out of business before the end of the year.”
Nut graf: Providers argued low reimbursement has not kept pace with labor and operating costs and that increased rates would avoid further closures, support workforce retention, and yield societal savings in reduced emergency care, criminal justice costs and other downstream expenses.
Rural perspective: Via Zoom, Sadie Brockmeier of the Minnesota Alliance of Rural Treatment Providers (Meritap) emphasized that many rural programs rely almost entirely on Medicaid/behavioral health fund rates and cannot offset low rates with private insurance; she said rural counties lack adolescent SUD counselors and that closures would leave multi‑county service gaps.
Action: Representative Frederick laid HF1994 over for possible inclusion in a future omnibus bill. Sponsors asked the committee to consider rate increases as a long‑term investment in public health and rural access.
Ending: Lawmakers acknowledged fiscal constraints in the session but said they will consider the provider evidence and budget choices; HF1994 was laid over for further consideration.
