HF400

Purpose

This bill would change how Minnesota funds evaluation and implementation costs related to mandated health benefits. It aims to reduce financial pressure on health plan companies by providing payments for certain costs tied to evaluating and adopting mandated health benefits, if those benefits would raise costs for privately insured people.

Main Provisions

• Funding for evaluations and independent costs

  • The commissioner of commerce can seek and accept funds from sources other than the state to pay for evaluations of mandated health benefit proposals.
  • Any non-state funds must be deposited into a separate account in the state’s special revenue fund and used only for these evaluations.
  • The state can also use funds already appropriated for this purpose, as long as they comply with any restrictions from the fund source.
  • The funding source must not influence the evaluation process or its outcomes.
  • The commissioner may use funds appropriated for this section or funds from external sources for evaluation, as allowed by those sources’ restrictions.

• Defraying costs to health plan companies (new provision)

  • If an evaluation projects that a mandated health benefit proposal would cause a net increase in per-member-per-month costs (PMPM) for the total nonpublic insured population and the proposal becomes law, the commissioner must pay health plan companies to defray those costs on products offered in the individual, small group, and large group markets.
  • Payments must be made within 60 days after the health plan company submits a statement.
  • The process for defraying costs will follow the existing federal rule at 45 C.F.R. 155.170, including requirements to ensure a quantifiable cost calculation.

Funding and Financial Mechanics

• The state can use both state appropriations and externally sourced funds to cover evaluation costs, but only if those funds are deposited to a separate special revenue account and used for the specified purposes.
• The funding arrangements must ensure the source has no influence over the evaluation’s process or results.

Changes to Existing Law

• Adds a new defrayal provision (Subd. 6) to require the commissioner to pay health plan companies when a mandated health benefit proposal is enacted and shown to add net PMPM costs.
• Recasts and clarifies how funding for evaluations can be sourced and managed, including the use of a separate account in the special revenue fund and alignment with federal cost-defrayal standards.

Practical Implications

• Health plan companies could receive prompt payments (within 60 days) to offset costs associated with evaluating or implementing new mandated benefits, provided the proposal increases PMPM costs.
• The change creates a formal pathway for outside funding to support state evaluations, while preserving independence from donor influence.
• The bill ties state payments to measurable cost outcomes (net PMPM increases) and to compliance with federal defrayal rules for cost calculation.

Significance

• This represents a shift in how cost risk is shared between the state and private health plans during the evaluation and adoption of new mandated health benefits.
• It introduces a structured funding mechanism and a clear trigger (net PMPM cost increase and enacted proposal) for state payments to health plans.

Relevant Terms - commissioner of commerce - mandated health benefit proposal - net increase in per-member-per-month costs (PMPM) - total nonpublic insured population - health plan company - individual market - small group market - large group market - sources of funding - separate account - special revenue fund - state treasury - 45 C.F.R. 155.170 - evaluation - appropriations - independence of evaluation - cost defrayment - funding restrictions