HF3423

Purpose and intent

• Strengthen how providers enroll in Minnesota’s medical assistance program (MA) and improve oversight to reduce fraud, waste, and abuse.
• Expand who counts as a “controlling individual” and add several layers of background checks, site visits, financial safeguards, and mandatory compliance practices.

Key definitions introduced or clarified

• Controlling individual: broad definition of who controls a provider (owners, certain officers, authorized agents, compliance officers, managerial officials, and certain board roles). There are specific exclusions (e.g., banks, state/federal officials in some cases, small shareholders, certain tax-exempt entities, etc.).
• Managerial official: someone with decisionmaking authority over the program’s operation and its ongoing management or policies; a site director with no ownership is not automatically a managerial official.

Main provisions and what they accomplish

• Provider enrollment and background checks
  • Enroll providers and each provider-controlled location before offering direct services.
  • Require pre-enrollment and post-enrollment checks, including background studies and fingerprinting for anyone with ownership or control interest.
  • Revalidate enrollment every few years (typical providers every 5 years; CFSS, EIDBI, and some high-risk categories every 3 years).
  • Improve responsiveness requirements: if information is missing, providers have a set window to respond or enrollment can be denied.
• Risk-based provider designations
  • Categorize provider types as limited-risk, moderate-risk, or high-risk using CMS criteria; publish the list and criteria in the Minnesota Health Care Program Provider Manual.
  • Designations influence what checks, site visits, and oversight apply.
• Site visits and location enrollment
  • Require unannounced on-site inspections for enrolled locations.
  • Conduct site visits before paying the first claim, within 12 months of the provider beginning to bill, and before revalidating.
• Financial safeguards
  • Require surety bonds for certain provider types (e.g., DMEPOS and other high-risk providers) with specific bond amounts depending on enrollment type and prior Medicaid revenue.
  • Require cash reserves for providers as a condition of enrollment (minimum amount or a percentage of recent Medicaid payments).
• Compliance programs and officer responsibilities
  • Some providers must designate a compliance officer.
  • Compliance officers must develop policies and procedures to ensure MA laws are followed, train staff, respond to improper conduct, monitor compliance, report violations, and arrange for recovery of overpayments within 60 days of discovery.
  • Ensures core CMS elements for a provider’s compliance program are in place where required.
• Oversight, reporting, and enforcement
  • Annual reporting by the state agency (DHS) detailing MA operations, expenditures, and provider site visits by county.
  • Allows suspension or termination of enrollment for noncompliance, insufficient documentation, or certain criminal convictions; some suspension actions are not subject to administrative appeal.
  • Provides grounds to terminate enrollment if a provider or person with significant ownership is convicted of relevant offenses or has certain Medicare/Medicaid terminations.
  • Requires ongoing enforcement tools (unannounced inspections, revalidation, and posting of high-risk designations).

Significant changes to existing law

• Broad expansion of who is considered a controlling individual, pulling in more officers, agents, and managerial roles under enrollment rules.
• Introduction of a formal, risk-based framework for provider enrollment and ongoing oversight (limited-, moderate-, and high-risk categories).
• New or strengthened requirements for:
  • Background checks and fingerprinting
  • Unannounced site visits and revalidation scheduling
  • Surety bonds and cash reserves for various provider types
  • Mandatory compliance programs with defined duties and timelines
  • More frequent or focused oversight of high-risk providers
• Enhanced DHS reporting obligations and clearer enforcement pathways (including certain non-appealable suspension/termination actions).

Implementation and administration (who does what)

• Minnesota Department of Human Services (DHS) roles
  • Classify provider risk levels and publish criteria
  • Perform verifications, background checks, and background studies
  • Conduct pre-enrollment, post-enrollment, and unannounced site visits
  • Require and monitor bonds and cash reserves
  • Oversee the revalidation process and sanctions for noncompliance
  • Publish annual provider-related information in the MA Provider Manual
• Centers for Medicare and Medicaid Services (CMS) alignment
  • Use CMS core elements for compliance programs and reference CMS standards in designations and requirements

Potential impacts

• For providers: higher administrative burden and potential cost increases (bonding, cash reserves, background checks, and compliance program requirements).
• For beneficiaries: tighter controls against improper claims and potential improvements in program integrity and service quality.
• For DHS and CMS: clearer, standardized oversight and enforcement tools, with more frequent verification and monitoring.

Plain-language overview

• The bill tightens who must be checked and monitored when enrolling in MA, adds stronger financial safeguards, requires formal compliance programs, increases oversight (including unannounced site visits), and gives DHS tools to suspend or terminate enrollment when providers do not meet requirements or fail to keep proper documentation.

Relevant terms

• controlling individual
• managerial official
• authorized agent
• compliance officer
• provider enrollment
• medical assistance (MA)
• background study
• fingerprinting
• pre-enrollment/post-enrollment checks
• revalidation
• unannounced site visit
• DMEPOS (durable medical equipment, prosthetics, orthotics, and supplies)
• surety bond
• cash reserves
• compliance program
• high-risk provider
• Minnesota Health Care Program Provider Manual
• CMS core elements
• risk levels (limited, moderate, high)
• licensing and licensure verifications
• preenrollment and postenrollment databases checks
• termination/suspension of enrollment
• administrative appeal (not always applicable)