This bill proposes amendments to Minnesota Statutes 2024, Section 256.969, subdivision 2b, regarding hospital payment rates under medical assistance. The key changes and provisions include:

1. Hospital Payment Methodology Updates:

   • Critical access hospitals will continue to be paid based on a cost-based methodology.
   • Long-term hospitals will be reimbursed using a per diem model.
   • Rehabilitation hospitals or units will follow Medicare's designated rehabilitation payment methods.
   • All other hospitals will be paid under a Diagnosis-Related Group (DRG) system.

2. Rebasing Payment Rates:

   • Hospital payment rates will be rebased (updated to reflect changes in hospital costs) every two years (instead of annually).
   • Any significant changes in claims volume due to a pandemic or public health emergency will be excluded from base year calculations.
   • The hospital cost index or case-mix adjusted cost per claim (whichever is lower) will be used to measure cost changes.

3. Budget Neutrality Requirement:

   • When hospital rates are rebased, adjustments must be made to ensure total aggregate payments remain unchanged from previous levels.
   • Specific adjustments may be considered for pediatric, behavioral health, trauma, transplant, obstetric, and rural hospital services.

4. New Cost-Based Payment System for Critical Access Hospitals:

   • Payment rates will be adjusted to promote cost-efficiency.
   • For hospitals where payments exceeded 100% of costs in the base year, future rates will be adjusted to match 100% of costs.
   • Hospitals will be placed into tiers based on their previous cost/payment ratios:
     • Hospitals receiving ≤80% of costs → Increased payment to 85% of costs.
     • Hospitals receiving between 80% and 90% → Increased payment to 95% of costs.
     • Hospitals receiving >90% of costs → Payment set at 100% of costs.

5. Potential Refinement of Payment Criteria for Critical Access Hospitals:

   • Future modifications may consider statewide cost trends, administrative cost proportions, and hospital geography.

6. Medical Education and Research Payment Factor:

   • Beginning January 1, 2024, hospitals qualifying for medical education and research payments will receive a specific rate adjustment.

7. Implementation Timeline:

   • July 1, 2025: Revised rebasing schedule and new critical access hospital payment methodology take effect.

Summary:

This bill updates hospital payment rates for Medicaid/medical assistance in Minnesota. It ensures hospitals are reimbursed fairly based on cost and efficiency while maintaining budget neutrality. Key provisions include a biennial rebasing schedule, updated cost-based payments for critical access hospitals, and preserving funding for essential medical services.