Minnesota Hospital Association


May 01, 2008

Starting the health care reform journey

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  of care.

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.

Health-Care Homes

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  “Health-Care Homes.”    

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  implementation.

Increasing Access

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.

Quality Transparency

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  providers;   
  • 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.

Additional Studies:  

  • 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.