SF4092

Purpose

• This bill would repeal two existing Minnesota statutes that govern health care funding and rate setting. Specifically, it removes the rules that trigger automatic transfers of funds and that cap increases in certain health care rates.

Main Provisions

• Repeal of health care transfer savings and repayment rule (62U.10, subd.4):
  • Previously, when state health care savings reached 50,000,000, the health department would certify this and, in the next fiscal year, the general fund would transfer 50,000,000 to the Health Care Access Fund. The general fund required an appropriation to cover this transfer.
• Repeal of the trend limit for prepaid health plans (256B.69, subd.31a):
  • Previously, from 2020 to 2024, the commissioner of human services could limit the year-over-year rate increases for managed care plans and county-based purchasing plans by an amount equal to a 0.8 percent reduction in Medical Assistance (Medicaid) rates across all products, as long as rates remained actuarially sound.
  • It also included a forecasting process to measure potential reductions in expenditures and, if the total reduction was less than 145,150,000, a transfer of the difference from the Premium Security Account to the General Fund.
• By repealing these sections, the bill removes both the automatic transfer mechanism and the rate-trend limitation.

What Changes in Law (Impact)

• Automatic funding transfers:
  • Eliminates the requirement that savings trigger a 50,000,000 transfer from the General Fund to the Health Care Access Fund in the following year.
• Rate increase limits:
  • Removes the 0.8 percent trend limit on year-over-year increases for certain health care plans, along with the related forecast-based reductions and potential transfers to the General Fund from the Premium Security Account.
• Overall effect:
  • Health care funding decisions and rate-setting would no longer be governed by these two repealed provisions; other laws governing health care funding, rate setting, and actuarial standards would still apply where relevant.

Background and Context (key terms tied to the bill)

• Health Care Access Fund: a dedicated fund for health care access initiatives.
• Managed care plans and county-based purchasing plans: buyers of health care services under Minnesota’s Medicaid program.
• Medical Assistance (Medicaid): Minnesota’s Medicaid program.
• Premium Security Account: a separate funding account referenced for transfers if reductions are not enough.
• General Fund: the state’s main operating fund.
• Actuarial soundness: a standard ensuring rates are financially appropriate.
• CFR 42 Part 438 Subpart A: federal regulatory standard referenced for rate development.
• Forecast expenditure growth: planning estimates used to project future costs.

Relevant Terms - Health care transfer savings and repayment - Health Care Access Fund - Prepaid health plans - Managed care plans - County-based purchasing plans - Medical Assistance (Medicaid) - Premium Security Account - General Fund - Actuarial soundness - CFR 42 CFR Part 438 Subpart A - Trend limit calculation - Year-over-year rate increases - Forecast expenditure growth - 0.8 percent reduction - Automatic transfer - Savings threshold (50,000,000) - Transfer to General Fund threshold (145,150,000)