Health Care Law Notes

Minnesota Chamber Discusses Provider Pricing

The Minnesota Chamber Health Policy Committee met recently to discuss a concept and potential legislative proposal referred to as provider pricing. According to the Chamber, provider pricing would allow for providers to set a standard price for each service they offer, and that price would be the same for all payers. This proposal would significantly reform the current system where health plans negotiate prices with health care providers.

The intent of such a change would be to better enable consumers in determining the cost of a specific health care service and potentially comparison shop. Supporters of the initiative claim that having providers set one price for each service they deliver would make the cost of health care more transparent to consumers.

Speaking in favor of “looking at the proposal,” Mark Skubic with Park Nicollet Health Services noted that there is a great deal of variance in the cost of doing business with various plans as well as a variance of cost in products and procedures. A simplified system would enable providers to operate more efficiently while theoretically promoting competition on medical service costs, patient satisfaction, quality, scope of services they deliver, integration with other providers and delivery innovation. Skubic also noted that providers are not paid for disease management, and cited a need for incentives to promote a health care model that rewards value.

Arguing against provider pricing, Geoff Bartsh with HealthPartners stated that while transparency makes it easier to disclose cost, allowing providers to set their price does nothing by itself to make those prices more transparent to consumers, and there are a number of additional issues that need to be addressed if the true objectives are turning the health care field into a market driven industry and empowering consumers.

Bartsh also said that administrative expenses related to contracting and negotiations only account for about 0.2% of total health care cost, and any potential savings by eliminating the need to negotiate prices would likely be wiped out if providers were able to set their own payment rates. Additionally, Bartsh recommended simplifying reimbursement codes as a way to improve transparency and reduce administrative expenses or allowing plans, rather than providers, to set a uniform payments for services to result in greater health savings.

Another concern was that such a proposal could give large clinics and care systems that already have an upper hand in negotiations an even greater advantage over the rest of the provider community. Large systems will be able to set their prices lower than smaller clinics. This could result in additional mergers in the provider market, which leads to even greater leverage with health plans and increased costs.

Opponents to provider pricing argued that provider pricing prevents providers from giving incentives to insurers who are efficient. For example, providers may give favored rates to insurers that have faster-than-average claims payment times, are responsive to provider inquiries and work in partnership with the providers.

By and large, many members of the committee agreed that significant changes to the health care business structure are on the horizon, and the time for talk has nearly expired. While some employers would prefer give their employees higher salaries and allow them to find their own health coverage, such an economical and sociological trend would all but pave the way toward a government run single payer health care system.

Bob Johnson with the Insurance Federation of Minnesota phrased the argument best, saying that Minnesota is currently at a crossroads. One path leads to the state and perhaps later the nation moving toward a single payer, government run health care system. Otherwise, the private industry can work proactively to make changes that make the health care industry more competitive. Johnson noted that while provider pricing may not be the only solution, it is the kind of radical change that proponents for a market driven health care system need to embrace.

The Committee will meet again on January 12th.

2006 Election Results

As prognosticators and polls alike have suggested for the past year, the 2006 elections saw a vast number of incumbents lose their seats, nearly all of which belonged to the Republican Party. As this article goes to print, the Democrats have gained more than twice the number of seats they needed to gain control of the House of Representatives, and currently hold a larger majority than Republicans ever enjoyed during their 12 years in control. Additionally, Democrats are poised to gain control of the United States Senate. Sen. Amy Klobuchar soundly defeated Rep. Mark Kennedy by nearly 20 percentage points making her the first female U.S. Senator elected in Minnesota, and Retired Army Sergeant Major and teacher Tim Walz upset Rep. Gil Gutcknect in Minnesota’s 1st District.

In Minnesota, Gov. Tim Pawlenty overcame the Democratic tide, narrowly beating Attorney General Mike Hatch, though he was the only Republican reelected in a statewide race. The Republican Party was also able to maintain control of the 6th Congressional District with Michele Bachmann defeating Patty Wetterling in an exceptionally nasty contest that set a state record for spending on a House race.

Minnesota’s Senate Democrats were able to add to their majority by tentatively picking up six seats in this election. The big news of the night was the loss of Senate Majority Leader Dean Johnson. Despite the loss of Johnson and another Democratic Senator the Senate Democrats were able to increase their majority by defeating seven incumbent Republican Senators and by picking up an open seat, leaving the Senate with approximately 44 Democrats and 23 Republicans. The incumbent State Senators who were defeated include:

Carrie Ruud (4- R)
Cal Larson (10-R)
Dallas Sams (11- DFL)
Dean Johnson (13- DFL)
Sean Nienow (17-R)
Mike McGinn (38-R)
Bill Belanger (40-R)
Mady Reiter (53-R)
Brian LeClair (56-R)

Democrats took control of the Minnesota House, picking up around 19 seats. Going into the election the House was comprised of 68 Republicans and 66 Democrats. It looks like the House Democrats were able to defeat twelve Republican incumbents and pick up six open seats giving them a stunning 85-49 seat majority. The incumbents who were defeated in the House were:

Judy Soderstrom (8B-R)
Paul Gazelka (12A-R)
Greg Blaine (12B-R)
Pete Nelson (17B-R)
Ray Cox (25B-R)
Greg Davids (31B-R)
Lloyd Cybart (37A-R)
Tim Wilkin (38A-R)
Duke Powell (40A-R)
Phil Krinkie (53A-R)
Mike Charron (56A-R)
Karen Klinzing (56B-R)

Access election results.

Many of the aforementioned changes have a significant impact on the makeup of the House and Senate committees overseeing health care policy and financial matters.

Minnesota Senate

Before a single vote was cast in the 2006 Election, the Minnesota Senate’s health care committees were already poised to bid farewell to three very experienced legislators with the retirements of Becky Lourey, Steve Kelley and Sheila Kiscaden. Minnesota voters also relieved Senators Sean Nienow and Brian LeClair of their duties as policymakers, creating two additional vacancies needing to be filled before January.

Sen. Yvonne Prettner Solon (DFL-7) is widely expected to chair the Health and Family Security Committee, and Sen. Linda Berglin (DFL-61) is expected to continue guiding the health care budget through the legislative process. With so many candidates vowing to make health care reform a priority on the campaign trail, there may be an extensive waiting list to fill the departing legislators’ shoes. Sen. Tarryl Clark (DFL-15) and newly elected Sen. Kathy Sheran (DFL-23) are among those who have expressed interest in serving on the Health and Family Security Committee in the past. Sen. Paul Koering (R-12), who served on the Senate Health and Human Services Budget Division last year, may also gain a seat on the committee.

Minnesota House of Representatives

When the House of Representatives convened in 2006, there were a few certainties most political observers could agree on: Fran Bradley, Char Samuelson and Barb Goodwin would not be returning and a Democrat-controlled legislature would result in Rep. Tom Huntley (DFL-7A) holding a gavel. One relevant question that will be answered in the next few weeks will be whether House Democrats break up the Health Policy and Finance Committee into two separate groups. If this is the direction Democrats choose to go, Huntley may assume responsibilities over the financial committee while Rep. Mary Ellen Otremba (DFL-11B) will most likely take over the Policy committee.

What most political observers didn’t anticipate was that Tim Wilkin’s tenure as a state legislator would come to an end. Health Policy and Finance Committee member Duke Powell was also defeated by Democratic challenger Will Morgan in District 40A. With Democrats enjoying an 85-seat majority, chances are Wilkin and Powell will not be the only Representatives leaving the committee. Rep. Patti Fritz, who worked as a nurse for 29 years at St. Lucas Care Center, has expressed much interest in serving on a health care committee, and will in all likelihood get her wish. Rep. Mindy Greiling (DFL-54A) and newly elected Reps Julie Bunn (DFL-56A), Marsha Swails (DFL-56B) and Erin Murphy (DFL-64A) have also expressed interest in serving on the committee.

We will continue to provide regular updates on the makeup of the House and Senate health care committees as new information surfaces.

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Lockridge Grindal Nauen Our People Government Relations- State and Federal Practice Areas Events Endorsements Media Community Summer Associate Program Contact Us Map & Directions Health Care Law News and Analysis Notes Clients	Health Care Law Notes Minnesota Chamber Discusses Provider Pricing The Minnesota Chamber Health Policy Committee met recently to discuss a concept and potential legislative proposal referred to as provider pricing. According to the Chamber, provider pricing would allow for providers to set a standard price for each service they offer, and that price would be the same for all payers. This proposal would significantly reform the current system where health plans negotiate prices with health care providers. The intent of such a change would be to better enable consumers in determining the cost of a specific health care service and potentially comparison shop. Supporters of the initiative claim that having providers set one price for each service they deliver would make the cost of health care more transparent to consumers. Speaking in favor of “looking at the proposal,” Mark Skubic with Park Nicollet Health Services noted that there is a great deal of variance in the cost of doing business with various plans as well as a variance of cost in products and procedures. A simplified system would enable providers to operate more efficiently while theoretically promoting competition on medical service costs, patient satisfaction, quality, scope of services they deliver, integration with other providers and delivery innovation. Skubic also noted that providers are not paid for disease management, and cited a need for incentives to promote a health care model that rewards value. Arguing against provider pricing, Geoff Bartsh with HealthPartners stated that while transparency makes it easier to disclose cost, allowing providers to set their price does nothing by itself to make those prices more transparent to consumers, and there are a number of additional issues that need to be addressed if the true objectives are turning the health care field into a market driven industry and empowering consumers. Bartsh also said that administrative expenses related to contracting and negotiations only account for about 0.2% of total health care cost, and any potential savings by eliminating the need to negotiate prices would likely be wiped out if providers were able to set their own payment rates. Additionally, Bartsh recommended simplifying reimbursement codes as a way to improve transparency and reduce administrative expenses or allowing plans, rather than providers, to set a uniform payments for services to result in greater health savings. Another concern was that such a proposal could give large clinics and care systems that already have an upper hand in negotiations an even greater advantage over the rest of the provider community. Large systems will be able to set their prices lower than smaller clinics. This could result in additional mergers in the provider market, which leads to even greater leverage with health plans and increased costs. Opponents to provider pricing argued that provider pricing prevents providers from giving incentives to insurers who are efficient. For example, providers may give favored rates to insurers that have faster-than-average claims payment times, are responsive to provider inquiries and work in partnership with the providers. By and large, many members of the committee agreed that significant changes to the health care business structure are on the horizon, and the time for talk has nearly expired. While some employers would prefer give their employees higher salaries and allow them to find their own health coverage, such an economical and sociological trend would all but pave the way toward a government run single payer health care system. Bob Johnson with the Insurance Federation of Minnesota phrased the argument best, saying that Minnesota is currently at a crossroads. One path leads to the state and perhaps later the nation moving toward a single payer, government run health care system. Otherwise, the private industry can work proactively to make changes that make the health care industry more competitive. Johnson noted that while provider pricing may not be the only solution, it is the kind of radical change that proponents for a market driven health care system need to embrace. The Committee will meet again on January 12th. 2006 Election Results As prognosticators and polls alike have suggested for the past year, the 2006 elections saw a vast number of incumbents lose their seats, nearly all of which belonged to the Republican Party. As this article goes to print, the Democrats have gained more than twice the number of seats they needed to gain control of the House of Representatives, and currently hold a larger majority than Republicans ever enjoyed during their 12 years in control. Additionally, Democrats are poised to gain control of the United States Senate. Sen. Amy Klobuchar soundly defeated Rep. Mark Kennedy by nearly 20 percentage points making her the first female U.S. Senator elected in Minnesota, and Retired Army Sergeant Major and teacher Tim Walz upset Rep. Gil Gutcknect in Minnesota’s 1st District. In Minnesota, Gov. Tim Pawlenty overcame the Democratic tide, narrowly beating Attorney General Mike Hatch, though he was the only Republican reelected in a statewide race. The Republican Party was also able to maintain control of the 6th Congressional District with Michele Bachmann defeating Patty Wetterling in an exceptionally nasty contest that set a state record for spending on a House race. Minnesota’s Senate Democrats were able to add to their majority by tentatively picking up six seats in this election. The big news of the night was the loss of Senate Majority Leader Dean Johnson. Despite the loss of Johnson and another Democratic Senator the Senate Democrats were able to increase their majority by defeating seven incumbent Republican Senators and by picking up an open seat, leaving the Senate with approximately 44 Democrats and 23 Republicans. The incumbent State Senators who were defeated include: Carrie Ruud (4- R) Cal Larson (10-R) Dallas Sams (11- DFL) Dean Johnson (13- DFL) Sean Nienow (17-R) Mike McGinn (38-R) Bill Belanger (40-R) Mady Reiter (53-R) Brian LeClair (56-R) Democrats took control of the Minnesota House, picking up around 19 seats. Going into the election the House was comprised of 68 Republicans and 66 Democrats. It looks like the House Democrats were able to defeat twelve Republican incumbents and pick up six open seats giving them a stunning 85-49 seat majority. The incumbents who were defeated in the House were: Judy Soderstrom (8B-R) Paul Gazelka (12A-R) Greg Blaine (12B-R) Pete Nelson (17B-R) Ray Cox (25B-R) Greg Davids (31B-R) Lloyd Cybart (37A-R) Tim Wilkin (38A-R) Duke Powell (40A-R) Phil Krinkie (53A-R) Mike Charron (56A-R) Karen Klinzing (56B-R) Access election results. Many of the aforementioned changes have a significant impact on the makeup of the House and Senate committees overseeing health care policy and financial matters. Minnesota Senate Before a single vote was cast in the 2006 Election, the Minnesota Senate’s health care committees were already poised to bid farewell to three very experienced legislators with the retirements of Becky Lourey, Steve Kelley and Sheila Kiscaden. Minnesota voters also relieved Senators Sean Nienow and Brian LeClair of their duties as policymakers, creating two additional vacancies needing to be filled before January. Sen. Yvonne Prettner Solon (DFL-7) is widely expected to chair the Health and Family Security Committee, and Sen. Linda Berglin (DFL-61) is expected to continue guiding the health care budget through the legislative process. With so many candidates vowing to make health care reform a priority on the campaign trail, there may be an extensive waiting list to fill the departing legislators’ shoes. Sen. Tarryl Clark (DFL-15) and newly elected Sen. Kathy Sheran (DFL-23) are among those who have expressed interest in serving on the Health and Family Security Committee in the past. Sen. Paul Koering (R-12), who served on the Senate Health and Human Services Budget Division last year, may also gain a seat on the committee. Minnesota House of Representatives When the House of Representatives convened in 2006, there were a few certainties most political observers could agree on: Fran Bradley, Char Samuelson and Barb Goodwin would not be returning and a Democrat-controlled legislature would result in Rep. Tom Huntley (DFL-7A) holding a gavel. One relevant question that will be answered in the next few weeks will be whether House Democrats break up the Health Policy and Finance Committee into two separate groups. If this is the direction Democrats choose to go, Huntley may assume responsibilities over the financial committee while Rep. Mary Ellen Otremba (DFL-11B) will most likely take over the Policy committee. What most political observers didn’t anticipate was that Tim Wilkin’s tenure as a state legislator would come to an end. Health Policy and Finance Committee member Duke Powell was also defeated by Democratic challenger Will Morgan in District 40A. With Democrats enjoying an 85-seat majority, chances are Wilkin and Powell will not be the only Representatives leaving the committee. Rep. Patti Fritz, who worked as a nurse for 29 years at St. Lucas Care Center, has expressed much interest in serving on a health care committee, and will in all likelihood get her wish. Rep. Mindy Greiling (DFL-54A) and newly elected Reps Julie Bunn (DFL-56A), Marsha Swails (DFL-56B) and Erin Murphy (DFL-64A) have also expressed interest in serving on the committee. We will continue to provide regular updates on the makeup of the House and Senate health care committees as new information surfaces.
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