HF4045

Purpose

• To alter how medical assistance payments to managed care plans are paid and reviewed, by establishing a system of withholds (deductions) from capitation payments and linking them to performance targets and a new verification of coverage process. The goal is to improve program integrity, control spending, and ensure plans accurately verify beneficiaries’ coverage.

Main Provisions

• Contracts and timing

  • Managed care contracts under Minnesota Statutes 256B and related sections must be entered into or renewed on a calendar-year basis.
  • Separate contracts can be issued for services to medical assistance recipients age 65 and older.
  • Requirements for managed care programs take effect when the contract is next issued or renewed.

• Withholding of payments (general framework)

  • The commissioner may withhold a portion of capitation payments to prepaid managed care plans and county-based purchasing plans for the prepaid medical assistance program, pending completion of performance targets.
  • The initial framework includes a schedule of withholds that have changed over time (historically 4.5% in 2013; 3% in 2014; and a later 2% provision tied to verification of coverage for 2026), with the current version setting a 2% withhold for enrollees whose verification of coverage is completed.
  • Withheld funds are to be returned in the following year once performance targets are met, with deadlines tied to specific timeframes (e.g., by July of the year after targets are achieved).

• Performance targets

  • Each performance target must be quantifiable, measurable, and reasonably attainable, and outlined in writing before the contract becomes effective.
  • Targets must consider evidence-based research and, when available, reasonable interventions, and involve input from external clinical experts and stakeholders (including plans, county-based purchasing plans, and providers).
  • The commissioner can periodically update administrative measures used as performance targets to improve overall plan performance.
  • Targets include measures related to containing spending on health care services and administrative activities.
  • The commissioner may set plan-specific targets that account for factors affecting a single plan’s enrollee population.
  • Plans must demonstrate to the commissioner that they have accurate data for target attainment; withheld funds are returned if targets are achieved.

• Verification of coverage (new 2026 requirement)

  • Starting for services on or after January 1, 2026, the commissioner will withhold 2% of the capitation payment for each medical assistance enrollee who has a completed and signed verification of coverage form.
  • The verification form must be developed by the commissioner and made available to plans; it requires the enrollee’s name and street address, the plan selected or assigned, and a signature to attest accuracy.
  • Plans must obtain verification forms from all enrollees and submit them to the commissioner by February 28, 2026.
  • If a completed form for an enrollee is not received by the deadline, the withheld funds for that enrollee are not returned, and the commissioner must disenroll the enrollee from medical assistance effective the April 2026 coverage month, subject to any enrollee appeal rights.

• Additional operational requirements

  • Plans must use assessment and authorization processes, forms, timelines, standards, documentation, and data reporting requirements consistent with MA fee-for-service or other DHS contract requirements for related services (e.g., personal care assistance and community first services and supports) when applicable.
  • If there are rate increases for covered services, plans must inform the commissioner and the leadership of relevant legislative committees about how much of the rate increase is paid to each personal care assistance provider agency.
  • A six-month timely filing standard applies to claims, with exemptions for resubmission due to denials, requests for more information, or system issues.
  • Plans and county-based purchasing plans may include as admitted assets any amount withheld under this section that is reasonably expected to be returned.
  • Contracts with the commissioner and prepaid health plans are exempt from certain set-aside and preference requirements.
  • Plans must maintain current, fully executed subcontractor agreements for administrative services expensed to public health programs and provide access to subcontractor documentation when requested, while protecting nonpublic data.

• Subcontractor and data protections

  • Subcontractor agreements must include essential elements (offer, acceptance, payment terms, scope, duration, and relation to state public health programs) and be in writing or electronic form.
  • The commissioner may access subcontractor documentation upon request.
  • Release of nonpublic data must comply with data privacy laws.

Significant Changes from Existing Law

• Introduction of a targeted, recurring withholding mechanism from capitation payments tied to performance targets and ongoing verification of coverage (including a new 2% withhold starting in 2026 for enrollees with verified coverage).
• Establishment of a mandatory, plan-wide verification of coverage process for enrollees with a specific deadline (February 28, 2026) and automatic disenrollment if forms are not provided.
• Expansion of contract-year timing and input requirements (calendar-year renewals and input from external clinical experts and stakeholders).
• Expanded reporting and transparency requirements around rate increases and provider payments, plus expanded subcontractor documentation and data-access requirements.
• Retains historical withhold schedules (4.5% in 2013 and 3% in 2014) as background context, while implementing a modernized framework culminating in the 2026 verification-based withholding.

How It Affects Stakeholders

• Enrollees: New requirement to complete and sign a verification of coverage form if they are to stay enrolled and keep their benefits; failure to return the form could lead to disenrollment.
• Managed care plans and county-based purchasing plans: Subject to withholds from capitation payments, performance target requirements, data reporting, and new verification procedures; must maintain subcontractor agreements and provide documentation as requested.
• Providers and contractors: Must be prepared to demonstrate compliance and participate in performance targets; must have contract documentation accessible to the state.

Effective Dates and Timelines (Key Dates)

• Contract timing: Calendar-year contracts; renewals and terms adjusted accordingly.
• 2013 and 2014 withhold histories noted in the bill text (4.5% and 3%, respectively) as background context.
• 2026: New verification of coverage process becomes operative; 2% withhold applies to enrollees with verified coverage forms; deadline for form submission is February 28, 2026; disenrollment to take effect in April 2026 if forms are not submitted.

Relevant Terms - medical assistance capitation payment - withhold / withholdings - managed care contracts - prepaid health plan - county-based purchasing plan - verification of coverage form - enrollee (beneficiary) - performance targets - data reporting - external clinical experts - assessment and authorization processes - personal care assistance (PCA) services - community first services and supports (CFSS) - rate increases - subcontractor agreements - nonpublic data - Minnesota Statutes 256B.69, subdivision 5a - special demonstration projects - disenroll / disenrollment

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