Senate committee hears bill to speed rate updates for federally qualified health centers

Senator John Mann, sponsor of Senate File 1622, told the Minnesota Senate Health and Human Services Finance and Policy Committee on March 11 that the bill would change how Federally Qualified Health Centers are reimbursed under Medicaid. "This bill does 2 things," Mann said: it moves the cost-reporting window from three-to-four years prior to one-to-two years prior, and it allows rate review when there is a change in "time intensity, duration, or amount of services."

The change aims to reduce a multi-year lag between FQHCs' current costs and the encounter-rate reimbursement they receive, proponents said. Lee Homan, chief executive officer of Lake Superior Community Health Center in Duluth, testified for the Minnesota Association of Community Health Centers that older cost reports have failed to reflect higher wages, inflation and greater patient complexity. "Using cost reports from 1 to 2 years prior will align more closely with recent operational costs," Homan said.

Becky Howard, acting chief operations officer of Community Health Services Inc. in Rochester, said the bill would allow centers to expand services such as prenatal care without waiting multiple years to see the costs reflected in rates. Howard described additional clinical and facility needs that follow an expansion in prenatal and obstetric services, including certified nurse midwives, ultrasound capability and on-call obstetric support. Without a rate-review pathway, she said, centers could face years of carrying added expenses.

Testimony described the current statutory trigger for a rate review as a 2.5% change in total services, which speakers said is difficult to reach even when centers add labor-intensive services. Homan said that under current Minnesota statute, a health center's rate could not reflect increased costs "for up to 5 years," and that the bill borrows language used in Washington State and Wisconsin to permit earlier review when intensity of services rises.

Senator Jim Abeler and other committee members praised FQHCs' record serving Medicaid patients and encouraged further negotiation on bill language. Department of Human Services staff had raised questions about precision of the proposed statutory language; proponents said they were willing to work with DHS to refine wording.

No final vote on the bill was taken. Chair Wiklendt laid over Senate File 1622 "as amended" for possible inclusion—an administrative action that preserves further committee consideration. Earlier, Senator Mann moved a technical A1 amendment, and the committee adopted that amendment by voice vote (aye).