The passage of health care reform legislation was clearly one of the highest legislative priorities for the 2008 Legislature. After countless hours serving on both the Governor’s Transformation Task Force and the Legislature’s Health Care Access Commission, health care leaders seemed bound and determined to pass some form of health care reform legislation, even if it meant compromising much of the proposed MinnesotaCare
eligibility expansion in order to get Governor Pawlenty’s approval. Despite the scaled-back provisions, an additional 7,000 individuals will be eligible for MinnesotaCare under the new health care reform bill, S.F. 3780. The expansion comes primarily through raising the income limit to 250 percent of federal poverty guidelines for adults without children and through raising the family income limit to $57,500.
After Governor Pawlenty vetoed the first health-care reform bill, H.F. 3391, bill authors
Sen. Linda Berglin (DFL-Minneapolis) and Rep. Tom Huntley (DFL-Duluth) spent the
next couple of days negotiating with Administration officials. Huntley had an especially
challenging task of reaching out to a coalition of single-payer DFL legislators, who
wanted more eligibility expansion without getting locked into a specific payment
methodology. At the same time, Huntley had to try to convince House Republicans, who
had overwhelmingly voted against the original bill, that the new bill contained many
worthwhile reform measures at a significantly reduced price tag. In addition, House
Republicans wanted inclusion of tax credits and resources for Section 125 tax plans for
small businesses. The negotiations must have produced the right balance because the final bill passed with only five “no” votes in the Senate and seven in the House.
Throughout the legislative process the bill continued to be amended to address concerns
raised by the health care provider community. The final legislation, which puts into place
a process for more significant reform, is in the words of Senator Berglin a “mere shadow”
of its original content.
Minnesota Hospital Association 1 Starting the Health-Care Reform Journey
The Minnesota Hospital Association (MHA) was opposed to the proposed hospital tax to
pay for the new public-health initiative. In the end, the final bill had no new hospital tax
and called for the public health initiative to be paid for with money from the Health Care
Access Fund. The payment reform section is also significantly different. The bill now
authorizes uniform definitions to be created for a minimum of seven baskets of care that
providers can voluntarily submit bids for in 2010. Previous versions of the bill required
participation in this bidding approach. The single pricing language, which was also of
concern to many health-care providers, will apply exclusively to these voluntary baskets
In the end, the benefits of moving forward with even a scaled-back health-care reform
bill outweighed any remaining policy or political concerns. An estimated 12,000 individuals will have access to health care coverage, either through expanded eligibility
in MinnesotaCare or through tax credits provided through the Section 125 plans. The bill
seeks to empower consumers with greater transparency around both provider price and
quality, provide better coordination of care through the creation of medical homes and
establishes a framework for moving forward with payment reform ideas.
Highlights of the Health-Care Reform Bill, S.F. 3780
Statewide Health Improvement Program
This section of the bill includes a competitive grant program for which community health boards
can apply. Grants are to be aimed at reducing the percentage of Minnesotans who are obese and
reducing the use of tobacco. Local communities will be required to provide a minimum of 10
percent matching funds to qualify for grants. The grants will be paid for through the Health Care
Access Fund. Through MHA’s advocacy efforts, the original funding source of a new
hospital/health plan tax was not adopted.
One of the ideas discussed throughout the summer and fall by both the Health Care
Transformation Commission as well as the Health Care Access Commission was the creation of
A health-care home is to provide patients with a consistent, ongoing contact with a personal
clinician or team of clinical professionals to ensure continuous and appropriate care for the
patient’s condition. Legislators embraced the idea that health-care homes will provide better
outcomes for individuals, particularly those with chronic conditions. Some legislators also
believe the model will result in cost savings.
The State will establish a certification program for health-care providers seeking to be designated
as a health-care home. Certification is voluntary. Beginning July 1, 2009, state health plan
enrollees shall be encouraged to select a primary-care clinic that has been certified as a health- care home.
The legislation also calls for care coordination payments. Certified health-care homes are eligible
for per-person payments for providing care coordination services and directly managing onsite or
employing care coordinators. Payments are to be based on the complexity of the patient’s needs.
Development of the payment system must be completed by Jan. 1, 2010 with the goal of
implementation by July 1, 2010.
By Jan. 1, 2010, health-plan companies shall include health-care homes in their provider
networks and, by July 1, 2010, shall pay a care coordination fee for their members who enroll in
health-care homes. By July 1, 2010, the commissioner of finance shall implement this incentive
payment system for all participants in the state employee group insurance program.
The Commissioners of Health and Human Services shall provide to the Legislature
comprehensive evaluations of the health-care home model three and five years after
It is estimated that, through this legislation, an additional 12,000 Minnesotans will now have
health insurance. Approximately 7,000 individuals will now be eligible for MinnesotaCare, and
5,000 individuals will get coverage through enhanced affordability of private insurance.
MinnesotaCare expansion is done primarily through four provisions:
- Raise the eligibility restrictions for adults without children from 215 percent to 250
percent of federal poverty guidelines;
- Raise the current family income limit from $50,000 to $57,500;
- Establish a 30-day grace period for the processing of re-enrollment paperwork or
instances of a missed payment; and
- Increase the current $20 application assistance bonus to $25.
Private coverage is expanded primarily through tax incentives for small businesses to establish
Section 125 plans for their employees. By July 2009, all employers with 11 or more employees
will be required to establish Section 125 plans, which allow employees to purchase individual
market or employer-based insurance with pre-tax dollars. Employers may opt out of this
requirement by appealing to the Department of Commerce. (Detailed implementation language
regarding Section 125 plans is contained in both S.F. 3780 and in the Omnibus Tax Bill.)
Electronic Prescription Drug Program
Any organization (providers, insurers, etc.) that uses e-prescribing must, by 2011, establish an
electronic prescription drug program that uses either HL7 messages or the NCPDP SCRIPT
Standard for transmitting, directly or through an intermediary, prescriptions and prescription- related information using electronic media.
Interoperable Electronic Health Record Requirements
Electronic medical records must be certified by the Certification Commission for Healthcare
Information Technology, or its successor. This criterion shall be considered met if a hospital or
health-care provider is using an electronic health records system that has been certified within
the last three years, even if a more current version of the system has been certified within the
three-year period. As included in last year’s legislation, this requirement goes into effect in 2015.
Health-care providers who are prescribers or dispensers of controlled substances must have a
certified electronic health record system.
Payment Restructuring, Incentive Payments Based on Quality of Care
Minnesota Hospital Association 3 Starting the Health-Care Reform Journey The Commissioner of Health shall develop a standardized set of measures by which to assess the
quality of health-care services offered by health-care providers. Quality measures must be based
on medical evidence and be developed through a process in which providers participate. The
measures will be developed by July 1, 2009 and used for the quality incentive payment system
for state health-care programs. Payments are to be based upon a comparison of provider
performance against specific targets, and improvement over time.
The Commissioner of Health shall establish standards for measuring health outcomes; establish a
system for risk adjusting quality measures and issue annual reports on provider quality beginning
July 1, 2010. By Jan. 1, 2010, physician clinics and hospitals shall submit to the commissioner
standardized electronic information on the outcomes and processes associated with patient care. (The measures must be initially based on existing quality indicators for physicians and hospital
services, which are measured and reported publicly by quality measurement organizations.) The
commissioner may contract with a private entity or consortium of private entities to complete
these tasks. By Jan. 1, 2010, health-plan companies shall use the standardized quality measures
established and shall not require providers to report any other specific quality and outcome measures.
Payment Reform to Reduce Health-Care Costs and Improve Quality
The Commissioner of Health is instructed to develop a plan to create transparent prices,
encourage provider innovation, reduce the administrative burden associated with processing
claims and provide comparative information to consumers on variations in health-care cost and
quality across providers. (This plan is to be complete by Jan. 1, 2010.) Specifically, the
commissioner is to develop a uniform method of calculating providers’ relative costs of care,
defined as a measure of health-care spending including resource use and unit prices, and relative
quality of care. In developing this method, the commissioner will be required to address a
number of issues including provider attribution of cost and quality, appropriate adjustment for
catastrophic cases, patient demographics and health status, specific types of providers and
services and a variety of other factors in calculating the relative cost of care.
Beginning January 2009 and every six months thereafter, health plans and third-party
administrators will be required to submit encounter data to a private entity designated by the
Commissioner of Health. This data will be used to help the Commissioner of Health develop a
peer grouping system for providers based on a combined measure that incorporates risk-adjusted
cost of care and quality of care. Also beginning Jan. 1, 2009 and annually thereafter, all health
plan companies and third-party administrators shall submit data on their contracted prices with
health-care providers to the selected private entity for the purposes of performing the analysis
necessary to develop a peer-grouping system. The law calls for the commissioner to consult and
coordinate with health-care providers on establishing the peer-group system.
Beginning July 1, 2010, the commissioner shall disseminate information to providers on their
cost of care, quality of care and the results of the grouping based on the health-plan and provider
data collected. Providers will have 21 days to appeal if they do not agree with the findings.
This information will be used to do the following by Jan. 1, 2011:
- The Commissioner of Finance shall use this information to strengthen incentives for
members of the state employee group insurance program to use high-quality, low-cost
- All units of government (city, county and school district) must offer plans that
differentiate providers on cost and quality;
- All health-plan companies shall develop products that encourage consumers to use high- quality, low-cost providers and must offer at least one plan that uses the information to
establish incentives for consumers to choose high-quality, low-cost providers.
Provider Pricing for Baskets of Care
The Commissioner of Health must establish a workgroup with members appointed by statewide
health-care associations. The group will advise the commissioner in order to meet a July 1, 2009
deadline of establishing uniform definitions of services within each basket of care. The law calls
for a minimum of seven baskets of care with a focus on chronic conditions.
Beginning Jan. 1, 2010, health-care providers may establish package prices for the baskets of
care. Providers must accept their single price as payment in full when voluntarily submitting bids
for these baskets. This single pricing will not apply to services paid for by Medicare, state public
health-care programs, workers’ compensation or no-fault automobile insurance.
Health-Care Reform Review Council
The bill authorizes a Health-Care Reform Review Council be established to review the progress
of implementation of this legislation. Specifically, two members of the council are to be
appointed by the Minnesota Hospital Association, with at least one being a rural hospital
administrator. Other stakeholder groups include Minnesota Medical Association, Minnesota
Medical Group Managers Association, as well as business and labor organizations.
- A workforce shortage study;
- A study of the uniform claims review process;
- A work group will also be created to make recommendations for the design of a health
benefit set that provides coverage for a broad range of services and technologies;
- A study will look at ways to provide health coverage to employees at long-term care- facilities; and
- Recommendations to the Legislature on community benefit standards for nonprofit health
plans doing business in the state.
Where Do We Go From Here?
This year’s legislation has been characterized as an incremental step toward a larger objective.
For the foreseeable future, it appears the Legislature will be divided between those who want to
expand access to coverage and those who are more concerned with cutting health-care
expenditures. Regardless of how this debate unfolds, there will unquestionably be increasing
calls for more transparency around provider pricing and quality measures. The legislation passed
this year has ample opportunity for the hospital community and other health-care providers to be
involved in the reform process going forward.