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Coauthors outline directed-payment plan to draw federal Medicaid dollars for hospitals
Summary
Coauthors presented House File 2057 proposing a hospital assessment to fund a Medicaid-directed payment program intended to draw federal match dollars and raise medical-assistance reimbursements to hospitals.
Note: During the hearing Representative Biermann and Representative Nadeau co-presented House File 2057, a proposal to establish a hospital assessment and a directed payment program to draw additional federal Medicaid funds in order to increase reimbursements to hospitals.
Coauthor Representative Biermann described the purpose and scale of the bill: hospitals would fund a state share through a broad-based assessment on inpatient and outpatient hospital revenue; DHS would claim federal matching dollars and return directed Medicaid payments to hospitals through managed-care plans. “On average, for every 40¢ the hospital community puts in, they will receive 60¢ in additional federal dollars up to the allowable federal cap,” Biermann said, and speakers estimated Minnesota could capture an additional $1 billion in federal Medicaid funding if the program is implemented and approved by CMS.
Representative Nadeau and hospital representatives described operational details and safeguards in the bill: quarterly assessments with timelines to minimize lag between assessment and payments; provisions for new/merged hospitals; dispute-resolution mechanics so hospitals can review managed-care claims used to calculate payments; annual consultation between DHS and the Minnesota Hospital Association; and an annual legislative review requirement. The Minnesota Council of Health Plans asked for timeline changes (requesting 30-day maximum payment windows rather than shorter windows in initial draft language) and cautioned against penalties for delays outside plan control.
Hospital CEOs from rural and urban systems testified about urgent financial stress: Community Memorial Hospital's CEO Rick Brewer described service-line closures and strong Medicaid exposure for labor and delivery, and North Memorial CEO Trevor Swalish said underpayments for Medicare/Medicaid totaled roughly $187 million annually for his system and warned that insufficient reimbursement threatens service continuity and the system’s ability to absorb losses.
Representatives and hospital association staff acknowledged the bill's technical complexity and said DHS, Minnesota Hospital Association, managed-care plans and consultants (Health Management Associates) will work together to refine methodology. The bill was laid over for possible inclusion in the omnibus bill; authors and DHS said further drafting and federal application work is needed before the program could be implemented and before federal match dollars could be claimed.
Why it matters: Supporters argued the directed-payment model can stabilize hospital finances without a state general-fund outlay by using a hospital-funded state share to attract federal Medicaid matching dollars; authors and stakeholders said similar programs operate in many states and CMS has approved comparable programs.
Next steps: The committee laid HF2057 over for further work; authors and DHS will continue to refine legal language, operational timelines, and federal-approval strategy.
