Senate File 2413, presented April 1 by Senator Mann, would create a state Medicaid directed‑payment program (DPP) that assesses hospitals and uses the assessments as the state share to draw additional federal Medicaid dollars and return combined state and federal payments to hospitals via quarterly supplemental payments.

Mann told the Taxes Committee the assessment would be applied only to hospitals and would not be structured to raise consumer or health‑plan prices. He said Minnesota could capture approximately $1 billion in federal Medicaid funding by implementing a DPP similar to programs in about 40 other states.

Joe Schindler, vice president of finance at the Minnesota Hospital Association, testified in favor and described the chronic underfunding of hospitals and the continuing financial strain since the pandemic. Schindler outlined the assessment’s structure: inpatient assessments based on patient days and outpatient assessments based on net outpatient revenue less Medicare, designed to reduce burden on rural hospitals with a high Medicare mix. He said assessments would be collected quarterly and returned through quarterly supplemental payments and stressed operational concerns about cash flow timing between assessment payments and supplemental disbursements.

Committee members raised questions about who ultimately bears costs. Schindler said the reimbursement structure is intended to cover the assessment and that the hospitals are not intending to pass the assessment on to patients or health plans. Some committee members expressed concern about increased dependence on federal funds.

Senator Klein moved that SF 2413 be passed without recommendation and referred to the Committee on Health and Human Services; the motion prevailed by voice vote.