The race is on for Minnesota to net as much as $1 billion in federal Medicaid support and help some of the state’s vulnerable hospitals stay open.
Soon, that opportunity could close. For good.
Minnesota lawmakers greenlit the effort last week when they finalized the state budget. That gave the Department of Human Services (DHS) permission to pursue a directed-payment program that would boost federal payments to hospitals without raising costs on patients or the state.
Trouble is, they left hospital and DHS leaders with only three weeks to apply for the program before Congress’ self-imposed July 4 deadline to approve a federal budget. The House version of that budget prohibits new directed-payment programs; the Senate and Trump administration are considering cuts that could make these programs less valuable.
“We do have to get it in on time,” said Joe Schindler, vice president of finance policy for the Minnesota Hospital Association. It’s “last-best option” for a struggling industry, he added.
“Hospitals are desperate, at this point,” he said.
Late to the game
Minnesota is late in its pursuit of directed payments. More than 40 states have added them in the past decade to help hospitals gain more money from Medicaid. A combination of federal and state tax dollars finance that health plan for 71 million disabled and low-income Americans.
Minnesota created a directed-payment program three years ago for Hennepin Healthcare, shoring up revenues for the urban trauma center that treats a high volume of uninsured and impoverished patients. Schindler said hospitals didn’t lobby for a statewide version until now because they hoped Minnesota would simply boost Medicaid payment rates and prevent the need for this complex financing mechanism.