HF1975

Purpose

The purpose of this bill is to modify the hospital payment rates in Minnesota to ensure that reimbursements for hospital services are fair and reflect current costs.

Main Provisions

• Hospital Payment Methodologies: The bill outlines different payment methodologies for various types of hospitals:

  • Critical access hospitals are to be paid using a cost-based methodology.
  • Long-term hospitals are paid on a per diem basis.
  • Rehabilitation hospitals are paid based on a specific Medicare methodology.
  • All other hospitals are paid based on a diagnosis-related group (DRG) methodology.

• Rebasing and Budget Neutrality: The bill mandates the rebasing of hospital payment rates to be in line with Medicare practices, ensuring that payment updates are budget neutral. This means the total payments should mirror those from a prior equivalent period.

• Rate Adjustments: Adjustments may be made to address specific service areas like pediatric, behavioral health, trauma, transplant, obstetric services, and small or rural hospitals.

• Regular Updates: Inpatient payment rates should be rebased every two years, beginning July 2017, to reflect changes in hospital costs. Hospitals' costs during changes like pandemics are not to be considered in base year calculations.

• Cost-based Rate for Critical Access Hospitals: Effective from July 1, 2025, critical access hospitals' payment rates must be adjusted to reflect 100% of their base year costs, with inflation adjustments applied.

Significant Changes

• Introduction of New Methodologies: The bill sets new rules for how hospitals are paid, aligning these payments more closely with Medicare standards.
• Long-term Schedule for Rebasing: It schedules regular rebasing of payment rates, thereby ensuring that they keep pace with cost changes.

Relevant Terms

hospital payment rates, Medicare, critical access hospitals, cost-based methodology, rebasing, budget neutrality, diagnosis-related group (DRG), inpatient services, inflation adjustment, base year costs.