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Managing state health plans (new law)

Published (5/30/2008)
By Patty Ostberg
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State health plans will be subject to stricter financial management and reporting requirements, under a new law.

Sponsored by Rep. Thomas Huntley (DFL-Duluth) and Sen. Yvonne Prettner Solon (DFL-Duluth), the changes are a response to a February 2008 Office of the Legislative Auditor report, “Financial Management of Health Care Programs.”

The report raises concerns over: the state’s difficulty in accessing information on administrative costs; the minimal reporting on the quality outcomes for the system’s clients; and guaranteeing financial reserves of county-based purchasing plans.

Under the new law:

• managed care plans must demonstrate to the human services commissioner’s satisfaction that the data submitted on performance targets is accurate;

• the commissioner may periodically change the administrative measures used as performance targets in order to improve plan performance across a broad range of administrative services;

• performance targets must include efforts to contain spending on service and administrative costs;

• managed care plans and county-based purchasing plan administrative costs for a prepaid health plan cannot exceed by more than 5 percent the administrative spending for the previous calendar year as a percentage of total revenue;

• a report on the financial management of health care programs will be due to the Legislature by Jan. 15, 2009; and

• the health and human services commissioners are to work together to collect data on administrative spending for state health care programs.

The law also requires that county-based purchasing plans must have specific reserves, according to each plan. If a plan receives excess revenues, they are to be used for either reserves, to increase provider payments, to repay county investments or contributions, or for prevention and early intervention in programs.

The law has various effective dates.


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