Senate File 1402, presented April 1 to the Minnesota Senate Taxes Committee by Senator Ann Wicklund, would implement a 2024 Department of Human Services rate study to raise Medicaid reimbursement for outpatient mental‑health and clinic‑based care and fund the increases through an assessment on Medicaid managed‑care organizations (MCOs) that would draw additional federal matching funds.

Wicklund told the committee the bill aims to address a statewide shortage of outpatient providers and the related problem of children “boarding in emergency rooms, detention facilities and within counties.” She said the bill uses an MCO assessment to access federal supplemental (directed) payments and that the proposal is structured so “our health plan partners get back 99% of their assessment through higher capitation rates.”

The sponsor and several senators stressed the plan requires federal approval. Wicklund said the state must present the proposal to the Centers for Medicare & Medicaid Services (CMS) and obtain CMS authorization; she and other senators said the assessment would not go into effect if federal approval is not granted.

Committee members asked whether the assessment would reach claims handled by third‑party administrators or those governed by ERISA. Wicklund said the bill is focused on MCOs and that the state’s authority to affect ERISA plans is limited.

Dan Andreessen, testifying for the Minnesota Council of Health Plans, said the council supports raising Medicaid rates but opposed this bill’s funding approach. Andreessen said the bill “applies a tax on commercial insurance as well as MCOs” and warned that the fully insured commercial market — which he said covers most individual and small‑group policyholders — would bear the cost. “Any new tax on our member plans will be passed along in increased premiums,” Andreessen said, and he recommended exploring existing provider‑tax mechanisms instead of creating a new assessment.

Senator Steve Cline moved that SF 1402 be passed without recommendation and referred to the Committee on Health and Human Services; the committee approved the motion by voice vote.

The bill will advance to the Health and Human Services Committee; implementation of the assessment as described by the sponsor would still require CMS approval before it could be executed.