Claims Expenditure Assessment (provider tax replacement)

At its November 17, 2018, meeting, the MMA Board of Trustees voted to support an alternative funding source to replace the 2 percent provider tax that sunsets at the end of 2019. The new funding mechanism, a claims expenditure assessment (CEA), is applied to adjudicated claims processed by health plans and third-party administrators (TPAs).   

The provider tax is a tax on the gross revenues from health care services provided by various types of providers. In addition to physician services, care provided by dentists, chiropractors, physical therapists, optometrists, psychologists, and most other health care providers is subject to the tax, as are health care services provided at hospitals and ambulatory surgery centers.

Passed in 1992 as the mechanism to fund MinnesotaCare and other programs to address access to health care, the provider tax raises significant amounts of revenue. In 2019, the tax will generate more than $690 million in revenue.  

As part of a budget agreement in 2011, the GOP-controlled Legislature and Gov. Mark Dayton set the tax’s repeal for Dec. 31, 2019. Various efforts in recent years to repeal the sunset have not been successful and similar proposals are expected in 2019. The MMA supports Minnesota’s safety net programs, but has urged lawmakers to find another stable, ongoing funding source.

In a Jan. 8 editorial, the Minneapolis Star Tribune editorial board acknowledged the MMA’s claims expenditure assessment proposal, noting that the MMA “merits praise for putting forth a serious proposal and acknowledging the important reality that the provider tax revenue must be replaced.” 

Bipartisan CEA legislation was introduced in the Senate (SF 2616) on March 21, 2019, and in the House (HF 2789) on April 1, 2019. Senate authors include: Sen. Jim Abeler, Sen. Melisa Franzen, Sen. Scott Jensen, MD, and Sen. Matt Klein, MD. House authors include: Rep. Kelly Morrison, MD, Rep. Rod Hamilton, and Rep. Laurie Pryor. 


Claims Expenditure Assessment Overview Fact Sheet

Minnesota Legislature Faces a Health Care Funding Dilemma (Jan. 8 editorial in Minneapolis Star Tribune)

Board Supports Provider Tax Replacement to Preserve Safety Net Coverage (MMA News Now, Nov. 29, 2018)