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House approves HHS budget that saves $50 million through reforms

Bill includes first increase for nursing home funding in four years

ST. PAUL – The Minnesota House of Representatives approved on Friday night the Omnibus Health and Human Services bill by a 73-61 vote.

The bill reduces the HHS budget by $50 million over two years through targeted cuts, reforms, and re-prioritization within the budget yet still remains true to the mission of HHS – to protect our most vulnerable and ensure the highest quality of life for Minnesota.

A provision that would have cost rural hospitals tens of thousands of dollars a year has been removed, and the pay increase for human services workers has been increases since the bill originally passed the House. The bill provides for 5 percent rate increase for nursing home providers. Of this total percent, 3.75 percent will go to employee compensation, and 1.25 percent will be tied to a quality assessment. They will receive an additional 3.2 percent increase in 2015.

Many of these improvements are due to a strong push from rural legislators.

“Nursing homes play a big role in our local communities,” said Rep. Roger Erickson (DFL – Baudette). “This budget will provide a well deserved raise for those workers who do such crucial work in nursing homes across Minnesota. They have been waiting for a raise for far too long and I’m happy to vote in favor of it.”

Long-term care and home and community-based providers will receive a 1 percent rate increase effective April 1, 2014. They are eligible to receive an additional rate increase based on service quality. And the bill provides for repealing the 1.67 percent rate reduction for long-term care providers that was to go into effect on on July 1, 2013.

It provides a rate increase for nursing homes and long-term care providers, funds mental health initiatives for children and adults, improves Minnesota’s health care and public health programs and helps thousands of low-income families and children. In addition to the original House bill, the bill makes further investments in child-focused programs, provides Medical Assistance (MA) rate increases for a range of health care providers and lowers MinnesotaCare premiums, among others.

“Two years ago, the Republicans cut $1 billion from the health and human services bill,” said Rep. John Persell (DFL – Bemidji). “This bill finds government efficiencies that will allow for some cost of living raises for nursing home workers in our communities.”

The combination of some wise cuts and reforms and increased spending is achieved through additional Affordable Care Act (ACA) savings, reducing HMO allowable administrative expenses, and reforming the payment methods for the HMO and hospital surcharges.

The reforms include reducing allowable HMO administrative expenses, capturing savings from ACA primary care rate increase, reforming the HMO and hospital surcharge process, suspending inflation payments for nursing facilities, capturing rebates for diabetic test strips, fixing MA drug pricing gaps, reducing drug reimbursement rates and maximizing rebates for HIV drugs, increasing DHS audit and recovery capability, increasing county share of cost of care for Anoka Regional Treatment Center and Minnesota Security Hospital patients, eliminating the Alternative to Moose Lake Grant, and recognizing CCAP savings from all-day kindergarten expansion.

In addition, the bill continues implementation of federal health reform, including a modernizing of MinnesotaCare through the Basic Health Plan, a major opportunity to assert more state-based control over federal health care dollars.

The bill also:

Provides new and expanded opportunities for treating the mentally ill The bill funds cost-preventive mental health initiatives for adults and children, such as fully-funding the Governor’s request for expanding school-based mental health services and mental health crisis response services.

Continues to implement the Affordable Care Act The House bill removes bureaucratic and wasteful barriers to coverage for Medical Assistance for children and adults. It protects and improves MinnesotaCare for middle class families as part of the ongoing process to implement federal health care reform. Hospitals and health care providers should see a decrease in uncompensated care due to MA expansion and a substantial influx of dollars over the next four years. Recognizing that Minnesota hospitals are expected to see a nearly $1 billion increase in funding over the next four years, the bill includes about $100 million in hospital surcharges. The surcharge allows for a strategic modification of hospital funding in Minnesota, including new incentive payments for every hospital that makes it a priority to serve more “safety net” clients. Even after the surcharge is implemented, Minnesota hospitals statewide are expected to see a four-year, $800 million increase in state and federal funds due to the implementation of federal health care reform.


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