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Minnesota: Payment Reform and Price Transparency

In May 2008, Minnesota legislators and Governor Tim Pawlenty reached agreement on a comprehensive package of health care payment reforms designed to promote medical homes, quality measurement, and cost and quality transparency. Many of the details related to quality measurement need to be worked out, but the legislature expects these issues to be resolved within two years and incorporated into new health care payment strategies:

  • Quality-based incentive payments. The Minnesota Health Commissioner will develop a standardized set of measures to assess health care quality, including measures related to medical homes, uniform definitions for quality indicators, and forms for submitting data. These measures will be used to develop incentive payments for health care providers that achieve target levels of performance or improve performance over time. The state will begin using the incentive payment system for state employees and Medicaid enrollees beginning July 2010, and publish annual reports on provider quality.
  • Payments for care coordination. Minnesota health care providers that are certified as "health care homes," as defined by the state, will be eligible for care coordination payments from public and private health care purchasers. Private health plans, the state employee health plan, and state public programs must implement care coordination payments to health care homes by July 2010.
  • Provider peer grouping. The Health Commissioner is required to develop a method to compare health care providers on a combination of risk-adjusted cost and quality indicators, based on encounter data and pricing data from health plans and third-party administrators. Information about relative cost and quality will be reported publicly beginning in September 2010.
  • Baskets of care. The Health Commissioner is also required to develop definitions for at least seven bundled payments, or "baskets of care," including coronary artery and heart disease, diabetes, asthma, and depression, with the remaining three to be determined. Health care providers that offer these baskets of care will be able to set their own prices for each basket. The objective is to allow consumers to more easily compare cost and quality of care across providers. Quality information on the baskets will be publicly available beginning July 2010.

In addition to payment reform and price transparency, the Minnesota reform mandates e-prescribing for physicians by 2011, invests $47 million in programs aimed at reducing obesity and tobacco use, provides tax incentives expected to allow an estimated 5,000 people to buy health insurance, and expands state-subsidized health care coverage (MinnesotaCare) to 8,700 low-income parents and childless adults who are not eligible for Medicaid and do not have access to affordable health care coverage.

For More Information on Minnesota's Health Reform
See: Minnesota Health Reform Initiative

2008 Health Care Reform Summary

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