Provider Tax to Be Reduced to 1.6% in 2023

December 15, 2022

Based on a law passed in 2011, Minnesota’s provider tax, which is assessed on the gross revenues received by physicians and other healthcare providers for patient services, will be reduced by 11% for 2023—from 1.8% to 1.6%.  

The provider tax is deposited into the Health Care Access Fund (HCAF) and is used to fund the MinnesotaCare program and other programs designed to ensure affordable access to healthcare services. 

In 2011, the Legislature passed a law that requires the Commissioner of Management and Budget to determine the projected balance in the HCAF each year and, if the revenues are projected to exceed 125% of the needed expenditures, the Commissioner shall reduce the tax to reduce the structural balance in the fund. The reduced rate is just for that calendar year. For more information, refer to Minnesota Statute 295.52, subdivision 8. The rate change for 2023 is the first time this provision has been triggered. 

 The current surplus in the HCAF was partially caused by increased federal payments for Medical Assistance and MinnesotaCare that reduced the state expenditures that were needed for these programs. 

The provider tax was originally adopted by the Legislature in 1992 with the creation of the MinnesotaCare program.  It was originally set at a rate of 2%. The tax was permanently reduced to 1.8% in 2019. 

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