Purpose

Create a new Family Medical Account (FMA) service delivery model within Minnesota’s medical assistance system (MA; Minnesota Statutes chapter 256B) to replace or modify how eligible enrollees receive benefits. The model introduces individual financial accounts, consumer-style choices, and negotiated provider payment arrangements aimed at managing costs and guiding enrollment and care.

What the bill establishes

• Establishes the FMA service delivery model and requires all new and reenrolling MA enrollees eligible under subdivision 4 (and not excluded) to participate starting January 1, 2027.
• Defines key terms for the program, including enrollees, FMA debit accounts, FMA debit cards, FMA investment accounts, yearly contribution amounts, service fees, and negotiated provider rates.
• Requires the Department of Human Services (commissioner) to create enrollment counseling, access to negotiated rates, and ongoing education about high medical costs and responsible use of care.
• Creates a framework for direct contracting with health care providers to deliver MA benefits under the FMA, with potential open competition for reinsurance and oversight by a third-party administrator (not a managed care company or MA plan).

How enrollees participate and what happens to benefits

• Enrollment is required for eligible individuals (income at or below 138% of the federal poverty guideline, MA-eligible, not excluded by the bill).
• Enrollment lasts 12 months and can be renewed for additional 12-month periods, contingent on eligibility.
• Enrollees are treated as “consumers” who receive MA benefits after spending their yearly contribution amount, with ongoing monthly contributions and access to a separate FMA investment account for unspent funds.
• Benefits include:
  • Medical expenses covered after the yearly contribution is spent, plus ongoing monthly contributions (one-twelfth of the yearly amount) and access to the FMA investment account.
  • An FMA debit card to pay for service fees and outpatient/ER-related costs, including monthly direct primary care fees.
  • Non-contribution-covered services and items that are excluded from the yearly contribution amount (e.g., certain preventive services, diabetes, hypertension, and other specified medications; certain equipment and hospital services still covered).
  • No deduction of ER fees if the enrollee is admitted to inpatient care.
• Eligibility exclusions include:
  • People who are disabled or age 65 or older at enrollment.
  • MA enrollees subject to federal waivers/demonstration projects that require a specific MA delivery model.

Financial mechanics and accounts

• Yearly contributions and accounts:
  • The commissioner contributes a yearly amount into each enrollee’s FMA debit account.
  • Monthly contributions are one-twelfth of the yearly amount and paid while the enrollee remains MA-eligible.
  • Initial annual contributions (for the first year) are: $1,500 (children), $2,500 (adults with children), and $2,500 (adults without children).
  • The annual contribution amount may be adjusted to meet 40% of CMS’s annual enrollee costs, based on available data.
  • Unspent money in the FMA debit account can be moved to the enrollee’s FMA investment account after a defined period; investment accounts have no stated dollar maximum and accrue interest as negotiated with the financial institution.
  • Unspent money in the FMA debit account remains available for use within the rules for up to one year after ineligibility, then transfers to the FMA investment account; after one year, remaining funds may be used for medical care under the investment account rules.
• Spending rules:
  • Money in the FMA debit account is generally limited to paying for medical care service fees for outpatient and ER-related services, plus monthly fees for direct primary care.
  • Some items/services are excluded or not subject to the yearly contribution amount (e.g., certain preventive services, specified medications, lifesaving devices, medical equipment, inpatient care, and surgery-related costs).
  • If service fees exceed the available debit account balance, enrollees may overdraw up to the full yearly contribution amount; subsequent monthly contributions can be withheld until the overdrawn amount is repaid.
  • If an enrollee leaves the FMA or becomes ineligible for MA, different rules apply for usage of remaining debit/investment funds, and in some cases funds must be transferred to the enrollee’s MA provider network or retained for other purposes.
• Administration:
  • A third-party administrator (not a health plan company or a financial institution acting as the administrator) will administer the FMA model and be audited annually by an independent auditor.
  • The commissioner contracts with a financial institution to establish FMA investment accounts for enrollees and negotiates the interest rate paid to enrollees.
  • The commissioner may contract for private banking services.
  • Funds in FMA accounts do not count as income or assets for MA eligibility purposes.
  • All payments to providers are made directly through the FMA debit card, with checks on fraud, abuse, and nonqualified withdrawals.

Care delivery, rates, and oversight

• Providers:
  • Enrollees can access a wide range of providers, including cash-only clinics or clinics that agree to payment rates not exceeding MA rates.
  • The commissioner must publish monthly provider listings with locations, hours, and prices paid by MA.
• Rates:
  • The commissioner may raise service fees to levels equivalent to Medicare rates.
  • Negotiated provider rates are a key feature, with emphasis on transparency and access.
• Data and transparency:
  • All data under the FMA model (except protected health information) is available to the commissioner and, in general, other parties under applicable laws.
  • A monthly transaction report is provided to enrollees, detailing FMA debit and investment account balances.
• Reporting and rulemaking:
  • The commissioner must publish rules and may adopt additional rules under Chapter 14 to govern the FMA model.
  • Progress reports on the FMA model are due to legislative health and human services committees by October 1, 2027 and October 1, 2028, with recommendations for changes.

Patient support, coordination, and privacy

• Enrollment counselors and ongoing education must assist enrollees in accessing providers and utilizing negotiated rates.
• The Office of the Ombudsperson for Managed Care is available to FMA enrollees for access, service, and billing issues related to MA benefits under the FMA model.
• A care coordination process is established for high-cost, chronically ill enrollees and those with complex needs (including mental health, dental care, and prolonged illness/injury).

Significant changes to existing law

• Introduces a new, consumer-directed MA delivery model (FMA) with dedicated debit and investment accounts, funded by annual contributions and monthly deposits.
• Shifts MA benefit delivery toward direct provider contracts, with negotiated rates and open competition for some provider arrangements, rather than traditional managed care or fully fee-for-service models.
• Establishes new restrictions and allowances on how MA funds can be used, including caps, overdraw provisions, and investment-account transfers.
• Establishes a new governance and administrative framework with a third-party administrator and a financial institution, rather than relying solely on existing MA plans or providers.
• Expands data access and reporting requirements to legislators, the commissioner, and other oversight bodies; implements electronic transaction requirements for all FMA account activity.
• Sets a staged implementation timeline (enrollment begins January 1, 2027) and requires progress reports with recommendations for changes to align with federal requirements.

Relevant Terms - Family Medical Account (FMA) service delivery model - FMA debit account - FMA debit card - FMA investment account - yearly contribution amount - service fee - negotiated provider service fee rates - medical assistance (MA) - Minnesota Statutes chapter 256B - chronic illness - disability - enrollees - third-party administrator - managed care ombudsperson - cash-only clinics - direct provider contracts - open reinsurance (not from MCOs) - data transparency and protected data constraints - electronic transactions and encounter-level data - Centers for Medicare and Medicaid Services (CMS) cost benchmarks - progression reports due Oct 1, 2027 and Oct 1, 2028