Medical Assistance Finance and Reform Legislation Introduced in Minnesota Senate

February 13, 2025

A bill that would increase Medical Assistance (MA) and MinnesotaCare reimbursement rates for outpatient physician services – a top legislative priority for the MMA – was introduced in the Senate on February 13. This bill will raise outpatient payments to at least the Medicare level. 

A 2024 Department of Human Services (DHS) study concluded that outpatient MA payments in Minnesota are too low and must be increased to ensure access to services. The study recommended increasing rates to 100% of Medicare. MA currently reimburses 60-70% of Medicare, and only about 30% of what commercial insurers pay.  

Proponents of the bill (SF 1402 - Wiklund, DFL – Bloomington) argue that payment rates have not received an across-the-board increase for 10 years and these payments have failed to keep up with the cost of delivering care, causing clinics to make difficult business decisions about services to cut or limit.  

MA is a rising source of healthcare for Minnesotans. One in four Minnesotans rely on MA for their healthcare and more than four in 10 babies born in Minnesota are covered by MA. Data shows that many rural communities have the largest proportion of their population covered by MA.  

Increasing the rates will help ensure that patients in every corner of the state have access to needed health coverage and raising the rates to at least the Medicare level is a major health equity issue across Minnesota. 

The bill, as introduced, uses general fund money to phase the needed increases in over three years. The MMA is also working on a funding mechanism that maximizes federal matching funds from the Centers for Medicare and Medicaid Services (CMS) to increase the rates more quickly. MA is financed by a combination of state and federal funds. Additional revenue to increase outpatient payment rates can be generated through an enrollment-based assessment on managed care organizations (MCOs) that do not use the state’s General Fund. Most of this assessment is reimbursed through increased federal matching money, thereby reducing the negative impact on health plans. This approach has been successfully adopted by other states, including West Virginia and California.  

The legislation is expected to be introduced in the Minnesota House on February 17. A committee hearing in the Minnesota Senate could be held as early as two weeks.