HF3546

Purpose

Strengthen program integrity for medical assistance by adding stricter rules for high-risk providers. The bill creates new definitions, enrollment checks, oversight requirements, and enforcement tools to reduce fraud, waste, and abuse in Minnesota’s Medicaid program.

Main provisions and intent

• Define who is a controlling individual

  • Expands who counts as a controlling individual to include owners, officers (CEO/CFO), authorized agents, compliance officers, and other managerial officials.
  • Includes criteria to exclude certain entities and individuals (e.g., banks, many government officials, some small shareowners, or exempt organizations) from the definition.
  • Establishes that “managerial official” is someone with decision-making authority and ongoing management responsibilities; clarifies that a site director with no ownership is not automatically a managerial official.

• Strengthen program management for licensed providers

  • Requires license holders to designate a managerial staff person or team to oversee program management.
  • The designated manager is responsible for understanding licensing requirements, ensuring duties are fulfilled, implementing corrective actions after incident reviews, evaluating service quality and rights protections, ensuring staff competency and training, and driving ongoing program improvements.
  • The designated manager must be competent and have at least three years of supervisory experience in relevant care or education settings.

• Provider enrollment, background checks, and revalidation

  • Revisions to provider enrollment include background studies (fingerprint-based or equivalent), with review of state/federal databases.
  • High-risk providers or those with material ownership interests must consent to criminal background checks when required by law or CMS.
  • Introduces or strengthens revalidation schedules (e.g., every five years for most providers, every three years for CFSS-related providers and certain agencies, with CMS-designated high-risk categories potentially revalidated more frequently).
  • Requires provider locations to enroll where direct services are provided; enhances handling of incomplete enrollment applications; imposes timeframes for submitting information and for responding to deficiencies.

• Surety bonds for certain providers

  • Durable Medical Equipment (DME) providers and suppliers must purchase surety bonds, with amounts tied to revenue or a fixed minimum, and with DHS as the obligee.
  • Exceptions apply for certain types of providers (e.g., Indian Health Service, FQHCs, pharmacies, rural health clinics, etc.).
  • The bond is intended to cover costs and fees related to claims and enforcement actions; recovery periods are defined; bonding requirements can be waived if an existing bond meets other state requirements.

• Compliance programs and on-site inspections

  • DHS may require providers to implement CMS-core-compliance programs, including:
  • Designating a compliance officer (or equivalent) to develop policies, train staff, respond to improper conduct, monitor compliance, and report overpayments within a set timeframe.
  • Using evaluation techniques to monitor adherence to medical assistance laws.
  • Prompt reporting of violations to DHS and repayment of identified overpayments.
  • DHS or CMS-designated agents may conduct unannounced on-site inspections of provider locations (with requirements to publish designated high-risk provider lists for reference).

• Enrollment moratorium, prepayment review, and payment controls for high-risk providers

  • When CMS or DHS designates a provider type as high-risk, DHS must issue an enrollment moratorium within 15 days, lasting up to 24 months.
  • Prepayment review of fee-for-service claims for high-risk providers must be established within 15 days and last up to 24 months; must comply with federal timely claims processing rules.
  • CMS-designated high-risk status may allow DHS or CMS to withhold payments during the enrollment process or as allowed by law.
  • High-risk providers may be subject to ongoing enrollment conditions, with potential denial or suspension for noncompliance, and possible termination for pattern of missing documentation or failure to meet requirements.

• Revalidation and suspension/termination procedures

  • Revalidation schedules and procedures are specified, including notice requirements, deficiency timelines, and suspension with no right to an appeal for certain enrollment actions.
  • DHS may suspend or terminate enrollment for lack of documentation or noncompliance, with defined patterns (e.g., multiple occasions of missing documentation).

• Alignment with federal rules and provider manuals

  • The bill requires alignment with CMS core elements and places certain designations and procedures outside some typical state appeal processes.
  • It references the Minnesota Health Care Program Provider Manual for provider type designations and criteria.

Significant changes to existing law

• Expanded definition of controlling individuals and managerial officials, increasing accountability for more people involved in provider operations.
• New and enhanced requirements for program management oversight, including a qualified designated manager with defined duties and experience.
• Stronger enrollment and oversight for providers through:
  • Mandatory background studies and fingerprint checks for high-risk providers.
  • Structured revalidation timelines.
  • Required compliance officers and formal compliance programs.
  • Unannounced on-site inspections and annual or periodic prepayment reviews for high-risk providers.
• Introduction of risk-based enrollment actions:
  • Provider enrollment moratorium for high-risk categories (up to 24 months).
  • Ability to withhold or suspend payments during enrollment actions.
  • Mandatory surety bonds for certain DMEPOS providers, with specific bond amounts and exemptions.
• New enforcement tools for high-risk providers:
  • Clear suspension/termination authorities for documentation gaps or noncompliance.
  • Prepayment review and moratorium provisions intended to curb fraudulent, wasteful, or abusive practices.
• Increased use of CMS guidelines and federal rules in state enforcement and provider oversight.

Relevant terms

• highrisk providers
• moderate-risk providers
• limited-risk providers
• provider enrollment
• background studies / fingerprinting
• revalidation
• controlling individual
• managerial official
• compliance officer
• compliance program (CMS core elements)
• on-site inspections (unannounced)
• prepayment review
• enrollment moratorium
• withhold payments
• durable medical equipment and supplies (DMEPOS)
• surety bond
• Centers for Medicare and Medicaid Services (CMS)
• Minnesota Department of Human Services (DHS)
• Minnesota Health Care Program Provider Manual
• pattern of lack of documentation
• authorization / disclosures for compliance

Relevant Terms highrisk, enrollment moratorium, prepayment review, background studies,Fingerprinting, surety bond, DMEPOS, compliance officer, CMS core elements, on-site inspections, provider enrollment, revalidation, managerial official, controlling individual, DHS, Minnesota Health Care Program Provider Manual.