SF5270

Purpose

• Establish financial stabilization mechanisms to support Minnesota hospitals and safety-net providers facing financial distress and high levels of uncompensated care.
• Provide a targeted grant to stabilize Hennepin Healthcare System Inc. (HCSI) and prevent the closure of Hennepin County Medical Center (HCMC) while preserving access to essential health services.
• Require ongoing reporting on hospital finances and overall health system stability, and appropriate onetime funding to support these goals.

Main Provisions

• Hospital Stabilization Program (144.5911)

  • Establishment and purpose: Provides financial relief to hospitals experiencing distress and a disproportionate amount of uncompensated care.
  • Definitions:
  • Qualifying hospital: A Minnesota-licensed hospital that has filed a Medicare cost report and meets criteria such as several years of negative operating margins or high public payer mix; Mayo Clinic Hospital Rochester is excluded.
  • Qualifying uncompensated episode of care: Services paid under medical assistance where the patient is uninsured or not eligible, with total reimbursement between $5,000 and $50,000 per episode.
  • Applications and reporting: Hospitals must document qualifying uncompensated episodes for specific reporting periods (Jan 1–June 30 and Jul 1–Dec 31), with defined submission deadlines.
  • Payments: Distributions are proportional to each hospital’s share of total qualifying uncompensated episodes, capped at 10% of funds per period; any remaining funds are redistributed to other eligible hospitals. Provisions exist for late submissions and corrections.
  • Usage and accountability: Funds must be used to preserve access to emergency, inpatient, maternal, behavioral health, primary care, and clinic services. Hospitals must report back on how funds were used, including a financial analysis and strategic plan for long-term stability.
  • Oversight: Notices of actions and funding amounts must be shared with legislative chairs/ranking minority members and leaders.
  • Restrictions: Funds cannot be used to supplant other funding or raise executive compensation.

• Community-Based Safety Net Provider Stabilization Program (144.5912)

  • Establishment and purpose: Provides financial relief to community-based safety-net providers with disproportionate uncompensated care.
  • Definitions:
  • Qualifying providers include federally qualified health centers, certified community behavioral health clinics, and community mental health centers.
  • Qualifying uncompensated episode of care: Similar to hospitals, with a lower monetary range ($200 to $2,000 per episode).
  • Applications and reporting: Providers must document qualifying episodes within same reporting periods as hospitals, with similar submission rules.
  • Payments: Distributions follow the same proportional, cap-based approach as the hospital program, with redistributions if funds remain after caps.
  • Usage and accountability: Funds must support continued access to essential community health services; reporting requirements mirror those for hospitals.

• Hennepin Healthcare System Inc. Stabilization Grant (HCMC)

  • Establishment and purpose: A onetime grant to stabilize HCMC operations, avoid closure, and preserve access to essential services.
  • Definitions: HCMC is related to Hennepin Healthcare System Inc. (public corporation).
  • Accountability and plan: Requires a comprehensive plan and quarterly financial reporting, including details of revenues by payer, expenses, capital expenditures, and long-term sustainability strategies. Includes governance transition provisions to move control away from the Hennepin County Board of Commissioners to ensure stability.
  • Reporting: The commissioner must share planned actions with legislators and leadership and require ongoing information from HCMC and HCSI to monitor progress and compliance.
  • Eligibility: HCMC is ineligible for payment under the general hospital programs in fiscal year 2027.

• Reporting on Financial Stability of Hospitals (new addition to statute)

  • The commissioner must prepare a report each November forecast year-segment and provide ongoing reports on hospital financial stability, along with related data and recommendations.

• General Provisions

  • Onetime appropriations: The bill authorizes onetime general fund appropriations in 2026–2027 for the hospital stabilization program, the community-based safety net provider stabilization program, the HCMC stabilization grant, and related reporting requirements.
  • Related programs: The bill references and aligns with funding for a Rural EMS uncompensated care pool as a separate onetime appropriation.

Definitions and Key Terms (as used in the bill)

• Qualifying hospital
• Qualifying uncompensated episode of care
• Qualifying community-based safety net provider
• Qualifying uncompensated episode of care (for safety nets)
• Public payer mix
• Medical assistance (MA)
• MinnesotaCare
• Medicare
• Hennepin Healthcare System Inc. (HCSI)
• Hennepin County Board of Commissioners (governance transition)
• Mayo Clinic Hospital Rochester (excluded from eligibility)

Significant Changes to Existing Law

• Adds a new reporting subdivision to Minnesota Statutes 16A.103 (Subd.1k) to require a hospital financial stability report with detailed metrics beyond current reporting.
• Creates new statutory sections for Hospital Stabilization Program (144.5911) and Community-Based Safety Net Provider Stabilization Program (144.5912), establishing distinct funding mechanisms, eligibility criteria, and payment methodologies.
• Establishes a Hennepin Healthcare System Inc. stabilization grant with governance and long-term sustainability planning requirements.
• Requires regular reporting to legislative bodies and the Legislative Auditor regarding the stability and use of funds, plus explicit transparency obligations.

Effective Dates and Timing

• Initial reporting requirements and period definitions begin in 2026 (first reporting period January 1–June 30, 2026).
• Onetime appropriations are specified for fiscal year 2026 and 2027, with ongoing reporting through 2030 for the HCMC/HCSI provisions.
• Notice and reporting to legislative leadership and committees occur as actions are taken.

Funding Snapshot

• Hospital Stabilization Program: onetime general fund appropriation in 2027.
• Community-Based Safety Net Provider Stabilization Program: onetime general fund appropriation in 2027.
• Hennepin Healthcare System Inc. Stabilization Grant: onetime appropriation in 2026 and 2027.
• Other related reporting and stabilization funding: onetime appropriations for 2027, including Rural EMS uncompensated care pool funding.
• Administration: Onetime appropriations are allocated for administering these programs in 2027 per the statute.

Relevant Terms - hospital stabilization program - hospital financial distress - qualifying hospital - qualifying uncompensated episode of care - medical assistance - MinnesotaCare - Medicare - public payer mix - Mayo Clinic Hospital Rochester - community-based safety net provider stabilization program - qualifying community-based safety net provider - qualifying uncompensated episode of care (safety net) - Hennepin Healthcare System Inc. stabilization grant - HCMC (Hennepin County Medical Center) - Minnesota Statutes 144.5911 and 144.5912 - 16A.103 Subd.1k (reporting on hospital financial stability) - reporting requirements and notices to legislative bodies - general fund onetime appropriations - rural EMS uncompensated care pool (related onetime funding)