May 6, 2019
The Honorable Michelle Benson
The Honorable Jim Abeler
The Honorable Scott Jensen
The Honorable Paul Utke
The Honorable John Marty
The Honorable Tina Liebling
The Honorable Laurie Halverson
The Honorable Rena Moran
The Honorable Jennifer Schultz
The Honorable Rod Hamilton
Dear Health and Human Services Omnibus Bill Conferees,
On behalf of the Minnesota Hospital Association (MHA) and the 141 hospitals and health care systems we represent, thank you for the work you are undertaking. We recognize it is difficult to balance the needs of over one million Minnesotans dependent on our Medical Assistance and MinnesotaCare programs.
Below are MHA’s comments on some of the key provisions you will be considering for inclusion in the 2019 health and human services omnibus budget bill. Many of the provisions in SF 2452 and in HF 2414 would impact hospitals and health systems, our patients, and the communities we serve throughout Minnesota. Given the breadth of these issues, our comments focus on MHA’s priorities and those of greatest concern for our members.
Eliminating the sunset of the provider tax:
Repealing the sunset of the provider tax is a crucial legislative priority for MHA, as well as approximately 150 other stakeholder organizations. Collectively, we recognize that without the provider tax lawmakers will likely choose (or be forced) to eliminate coverage for low income Minnesotans, cut benefits, cut provider payment rates, or most likely, a combination of these bad options.
There is an urgency to repealing the sunset this legislative session. Allowing the health care provider tax to expire would create a $970 million loss in funding for the 2020-21 biennium and a $1.5 billion loss in funding for the next biennium. This could jeopardize health care access for thousands of low-income Minnesotans and destabilize Minnesota’s health care sector.
Any reduction in state funding for the Medical Assistance program will also trigger losses in federal matching funds. Today, each dollar of state Medical Assistance spending leverages matching funds ranging from one to nine dollars of federal support depending on enrollees’ eligibility status.
Once the provider tax is restored, MHA supports strengthening the current trigger mechanism or other policy approaches to reduce the tax rate if surpluses exceed expenditures, as well as stronger guardrails to prevent non-health care uses of the Health Care Access Fund (HCAF). These policy improvements are not as imperative as eliminating the sunset.
The OneCare proposal as included in HF 2414 is six legislative initiatives that could be adopted as a package or considered individually: a health insurance premium subsidy, a state-based health insurance tax credit, prescription drug purchasing reform, dental benefits purchasing reform, a statewide, government-sponsored platinum-level insurance option in the individual market, and regional, government-sponsored gold- and silver-level insurance options in areas with market failures.
The current legislative alternative to the Governor’s health insurance premium subsidy and tax credit proposals is reinsurance. MHA supports extension of the reinsurance program for an additional year, which would allow stakeholders and policymakers time to evaluate longer-term solutions. Reinsurance reduced individual market premiums by 20% and helped stabilize the individual market throughout the state. This program can be extended for another year with a fair amount of certainty that it will work again.
However, MHA is concerned about the sustainability of the reinsurance program and its negative impact on federal funding for Minnesota’s Basic Health Plan. Lawmakers should take the time necessary to thoughtfully analyze and evaluate premium subsidies, tax credits, and other ideas that might serve as potential alternatives to reinsurance.
The statewide platinum and the regional, government-sponsored gold-silver level insurance options have raised many questions and concerns from MHA members. Promoted as an “affordable” option with a 90% actuarial value, its affordability would be due to artificially setting payment rates to hospitals, physicians and other providers at levels far below those of commercial insurance. As proposed, these government-sponsored options would be available even to those at the highest income tiers, as well as to those whose employers offer affordable, comprehensive health benefits. Insurance products premised on artificially below-market payments to health care providers without any upper income eligibility threshold would disrupt the individual and small group markets. In many communities, especially those in rural areas, providers may already have only 30% or less of their patients covered by commercial insurance products. As currently designed, these plans would further shrink that proportion and could put already struggling providers over the tipping point.
Because the proposal for these government-sponsored insurance products would not go into effect for several years, policymakers have time to further evaluate the impact to providers and other stakeholders, as well as to explore other options for greater insurance affordability.
MHA supports the following provisions that are included in HF 2414:
- Reform fee-for-service outpatient drug reimbursements with financial help for negatively impacted safety net hospitals. Both the House and Senate bills include language to bring the state into compliance with federal regulations dealing with Medicaid fee-for-service reimbursement for pharmaceuticals in outpatient settings. Without this change in the law, Minnesota could lose up to $190 million in federal funding annually.
MHA strongly prefers the approach taken by the House because it also includes an additional $1.5 million in Disproportionate Share Hospital (DSH) payments to help certain hospitals who provide expensive and specialized outpatient drug therapies to Medical Assistance enrollees suffering from conditions such as pediatric oncology, HIV and hemophilia. Under the new payment formula necessary to comply with federal regulations, these hospitals’ reimbursements3will drop by far more than $1.5 million, but this additional DSH funding will help mitigate the impact. This funding was included in the 2018 omnibus budget bill that was vetoed.
- Funding for mental health services. There are two key mental health initiatives funded in the House bill that MHA strongly supports.
- Sustain and expand Certified Community Behavioral Health Clinics (CCBHCs). This one stop point of service allows individuals to receive both behavioral and substance abuse services, as well as care coordination in one location. Minnesota was selected as one of only 8 states to participate in this national mental health pilot. There have been great results from the six current locations. This funding would sustain those six as well as allow for expanding the program to five additional locations to reach other communities and serve more Minnesotans.
- Increase the number of Psychiatric Residential Treatment Facility (PRTF) beds and help make up for lost federal funding of children's residential mental health treatment. MHA members are seeing a rise in both the acuity and volume of adolescents seeking mental health care through emergency departments and inpatient units. This is leading to increased instances of lengthy emergency department boarding, transfers of children out of their communities for inpatient treatment, and longer length of stays in the hospitals as more appropriate community solutions are sought for discharge options.
MHA opposes the following provisions in SF 2452:
- Cutting the benefit set for adults on Medical Assistance and MinnesotaCare. Eliminating coverage for evidence-based services, such as dental and vision, does not eliminate enrollees’ need for those services. If dental care is not a covered service, enrollees will have even less access to preventative dental care, their care will get delayed, emergency department dental care services will increase, and overall costs will go up. While the numbers are still high, Medicaid enrollees seeking dental care services in the ER has been dropping. In 2016 there were 25,700 ER visits for dental services by Medicaid enrollees, and by 2018 that number had dropped by 13% to 22,274 cases. Without a dental benefit in Medicaid, more individuals will have poorer health, they will seek dental services in emergency rooms, and costs will go up.
- Reducing forecast growth assumption in PMAP to 1.6%. Limiting growth increases in PMAP below the forecast would result in health plans simply passing on these losses to providers who are already struggling under below-cost payment rates from PMAP plans. In addition, Minnesota would lose federal matching funds making the impact of such cuts even more significant. Minnesota’s innovative Integrated Health Partnerships (IHP) program and implementation of competitive contracting with PMAPs have saved the state hundreds of millions of dollars. It is important to know the degree to which forecasted spending increases are due to enrollment, the severity of illness and care needs, health plans’ administrative costs and margins, and/or provider reimbursement rates.
- Eliminating summer health care intern program. Unfortunately, when government grant programs run seamlessly, they don’t receive publicity. This is a small grant program that allows young people to explore their interest in health care careers. In 2017, the SHCIP provided 173 students with 45,006 hours of internship experience in 62 hospitals, clinics and long-term care organizations across the state. With continued popularity by both the employers and employees, in 2018, SHCIP provided 181 students with 46,724 hours of internship experience in 80 hospitals, clinics and long-term care organizations across the state. This program is a small investment that helps build and grow the pipeline for tomorrow’s health care workforce. We hope legislators will not cut this effective and popular workforce development tool.
- Hospital Billing Mandates. MHA strongly opposes an amendment added on the floor to the Senate’s HHS bill changing previously agreed to language, that was already of concern to many MHA members. The original Senate bill included a new mandate to require hospitals to provide an itemized bill statement of hospital charges to be sent to all private pay and fully insured patients within 30 days of discharge. (This information has been available to any discharged patient who requests it. It also does not improve the ability to shop for health care services.)
The amendment would require a hospital to disclose to patients the charge information for which any drug was increased by five percent or more over the hospital's acquisition cost and the total percent of the increase. Drug acquisition costs change on a nearly daily basis for hospitals. Also, tying a dose of a drug given to a patient back to the price the hospital paid for the supply of medication from which that dose originated would require integrated and real-time supply chain, logistics and tracking systems that do not exist. Finally, there is concern about the implications this proposal might have on proprietary price information. Therefore, this new requirement would be nearly impossible for hospitals to administer, potentially subject to litigation, labor intensive, and very expensive. And it would not change or improve care patients receive. MHA respectfully requests that conferees drop this provision.
Thank you for your consideration of our concerns. Please do not hesitate to contact us if you have any questions or need additional information. In addition, thank you for your service on the HHS committees and on behalf of our state!
Vice President, Government Relations
Director, State Government Relations