Legislative Update

February 18, 2011

Governor Dayton Releases Budget Recommendations
On February 15, Governor Dayton released his budget recommendations to fill the projected $6.2 billion budget shortfall.  His recommendations included a combination of tax increases and spending cuts that result in a balanced budget.  His recommendations differ significantly from the Republican-lead Legislature that is planning on balancing the budget with spending cuts alone.  As expected the Republicans labeled Dayton’s budget “dead on arrival.”  Even so, this now becomes the starting point for budget negotiations.

Dayton’s budget includes $4.1 billion in new revenue, with the largest portion of that revenue coming from his proposed new income tax rate for couples with adjusted gross incomes over $150,000, and a temporary 3% tax surcharge for those earning over $500,000.  His budget proposes spending cuts, including cutting health and human services programs by a net $345 million.  Among those cuts is a delay in the hospital payment rebasing that saves $99 million in 2013, and a $31.4 million savings by cutting eligibility for MinnesotaCare for adults without children to 200% of the federal poverty level, down from 250%.  This cuts off approximately 7,200 MinnesotaCare recipients.

In addition to the cuts, Dayton recommends a significant increase in the surcharges to hospitals, nursing homes, and health plans used to draw-down federal Medicaid money.  The hospital surcharge is increased from 1.56% of total revenues to 4.45%.  This raises $498 million to the state, of which $123 million is paid back to hospitals in higher MA rates, saving the state $374 million.

On a positive note, Dayton funds the State Health Improvement Program (SHIP) at $20 million each year.  SHIP provides grants to local communities for public health activities focusing on tobacco prevention and obesity.

For a summary of the Governor’s actions for HHS, click here.

On February 16, the House Health and Human Services Finance Committee began its review of the Governor’s recommendations.  This review will take place over the next 3-4 weeks as the Legislature awaits the updated budget forecast, due out the first week of March.  Most are hoping that that forecast will show the deficit has reduced somewhat.  From that forecast the Legislature will develop its own budget, which will then be negotiated with the Governor before they adjourn for the year.
 

Community Paramedic Legislation Moves Forward
Legislation passed both the House and Senate health care committees on February 16 authorizing a new type of provider called a community paramedic.  Community paramedics (CP) would be paramedics with at least two years of experience who have completed an additional 120 hours of training in the area of health assessment, care coordination, patient education, and the performance of minor medical procedures.  There is an accredited training program for community paramedics that was developed by the Mayo Clinic and is offered at the community college system.  CPs would practice under protocols developed by the ambulance medical director.  The care must be in coordination with the patient’s primary physician.

This bill is being promoted as a way to address the workforce shortages, especially in the rural area.  Testifying in support of the bill was MAFP member Mike Wilcox, MD, the medical director at Queen of Peace Hospital in New Prague.  The Minnesota Nurses Association testified in opposition to the bill raising concerns that CPs are not well trained to provide care coordination and patient education.  They also raised concerns that this service would be duplicative to the services offered by local public health nurses. 

The MAFP has not yet taken a position on this bill.  We have heard from members who strongly support the program and from those raising concerns about coordination of the services provided by the CP and those provided by a health care home.  Very clearly, for this to help patients it must be coordinated with the health care home.  Language was added to the bill to ensure that the work of the CP is in collaboration with the patient’s primary physician.

The legislation has bipartisan support in the House and Senate.  It passed out of both committees with a commitment from the authors to continue to work on outstanding issues.
 

Dayton Issues First Veto: Budget Cutting Bill
Governor Dayton issued his first veto of his term when he vetoed the Republican-backed bill to cut $900 million from the state budget.  This bill was presented as a first step to address the $6.2 billion shortfall.  It made permanent most of the cuts that were adopted last year as one-time only cuts. 

To see the Governor’s veto letter to the Legislature, click here.

In his letter Dayton based his veto on three objections.  First the bill would have resulted in increases in local property taxes, second the bill make undocumented assumptions for savings in this fiscal year, and third he disagreed with balancing the budget in a piecemeal approach.
 

PMAP Funding Under Scrutiny
The role of HMOs in providing services to DHS enrollees was the topic of a House HHS Finance Committee hearing on February 8.  Karen Peed, Director of Managed Care and Purchasing Policy for the Department of Human Services (DHS), described how DHS contracts with managed care organizations (MCOs), sets rates, collects information from MCOs and meets actuarial soundness.  David Feinwachs, former general counsel to the Minnesota Hospital Association, described what he termed the “black box” used by HMOs.  Ghita Worcester from UCare described how plans manage PMAP programs.  Members of the committee had many questions for the witnesses and their tone was decidedly anti-HMO. 

Concerns have been raised by many policy-makers about the lack of transparency for the money that is appropriated to health plans to cover people in our public programs.  No action was taken.  The hearing topic prompted the largest audience for this committee this session, with hundreds of spectators filling the room to standing-room-only status. 
 

Health Insurance Exchange Bill Introduced
Rep. Steve Gottwalt (R – St. Cloud), chair of the House HHS Reform Committee introduced a bill to establish a health insurance exchange in Minnesota.  The bill, HF 497, would create a health insurance exchange as required under the 2010 federal health care reforms, the Patient Protection and Affordable Care Act (PPACA).  Health insurance exchanges are to serve as an electronic marketplace where individuals and employers can connect with health plan companies to purchase insurance.  

The bill is largely modeled on recommendations from the National Association of Insurance Commissioners (NAIC), the national organization of state insurance regulators, and is very technical in nature.  That said, key components of the bill are likely to be subject to much debate, notably the governance structure.  HF 497 establishes a Board of Directors that is initially appointed by the House of Representatives, State Senate, and Governor, and lists various areas of expertise that directors are to have, largely related to health plan finance and administration.  Absent in this proposal are directors from the provider community or consumer advocates.  Rep. Gottwalt’s bill was crafted with significant assistance from the Minnesota Association of Health Underwriters (MAHU). 

The bill was slated to receive its first hearing in Rep. Gottwalt’s House HHS Reform Committee on February 16, though it was postponed.  Some have speculated it was delayed because of the large presence of opponents to the bill or that the bill did not have the votes to pass out of the committee.  As of this writing, no Senate companion has been introduced.  It is expected that the Dayton Administration is likely to draft and introduce its own proposal to establish an exchange. 

In a related development, DHS Commissioner Lucinda Jesson testified at a Senate Finance hearing that the Dayton Administration has recently applied for a $1 million health insurance exchange planning grant, and it’s likely to be forthcoming in the next weeks.  Former Governor Tim Pawlenty had issued an executive order barring state officials from seeking federal dollars associated with PPACA. 
 

“Freedom of Choice in Health Care” Moves Forward in the House
A bill that would declare it is state public policy for every resident to have the freedom of choice in choosing whether or not to carry health care insurance took a step in the Minnesota House of Representatives when it was passed out of the House HHS Reform Committee.  The bill, HF 199, is carried by Rep. Steve Gottwalt (R – St. Cloud).  The bill makes a clear statement in opposition to the 2010 federal health care reforms, and instructs the state’s Attorney General to join other state’s efforts to challenge the federal law. 

Debate on the bill centered on the federal reforms, and proved to be contentious.  Rep. Sandy Peterson (DFL – New Hope) expressed her frustration that the bill was being referred to as “ObamaCare,” suggesting that a legislative body like the Minnesota House should refer to the law by its name, the Patient Protection and Affordable Care Act. 
 

- Dave Renner, MAFP Legislative Representative
(drenner@mnmed.org, 612-362-3750, 1-800-342-5662)