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HF 5142

Hospital charity care payment program administered by the commissioner of health established, money collected from the hospital surcharge deposited in a charity care account in the special revenue fund, and money appropriated.

2025-2026 Regular Session Introduced by Kristin Bahner and 3 co-sponsors

Minnesota will divert hospital surcharges to a dedicated charity care account and create a program to pay eligible nonprofit Minnesota hospitals for charity care adjustments.

Author added Bahner
#appropriations #healthandhealthdepartment #hospitalsandhealthfacilities
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Bill Summary · HF 5142

Summary of HF 5142 (2025-2026) – Minnesota

HF 5142 proposes establishing a Hospital Charity Care Payment Program administered by the Minnesota Commissioner of Health, funded by a hospital surcharge redirected to a dedicated charity care account in the special revenue fund. The bill defines eligible hospitals, sets payment calculations, and outlines reporting and administrative processes. It also revises how hospital surcharge revenue is deposited and used.

Purpose and intent

  • Create a formal program to provide payments to eligible Minnesota hospitals to subsidize charity care adjustments.
  • Ensure surcharges originally collected for hospital-related funding are directed toward a charity care account in the special revenue fund for program payments and administration.
  • Enhance support for charitable care by distributing funds to hospitals based on eligible charity care adjustments.

Key provisions and changes

New Hospital Charity Care Payment Program (new statutory section [144.601])

  • Definitions
    • Establishes terms: Commissioner of health, charity care adjustments (as defined by existing rules), cost-to-charge ratio, and eligible hospital.
    • Eligible hospital criteria: licensed in Minnesota, located in Minnesota, filed a Medicare cost report with HCRIS, nonprofit, and not excluded by the bill’s provisions.
  • Charity care account and appropriations (Subd. 2)
    • Creates a charity care account in the special revenue fund.
    • Annual appropriations to the commissioner to:
    • Pay eligible hospitals for their charity care adjustments.
    • Cover program administration (amounts to be specified in a future appropriation).
  • Program establishment (Subd. 3)
    • The commissioner must establish and administer the hospital charity care payment program to pay eligible hospitals for their charity care adjustments.
  • Ineligible hospitals (Subd. 4)
    • Excludes: state-owned/regional treatment centers and state-operated services; federal Veterans Administration Medical Centers; long-term acute care hospitals.
  • Applications (Subd. 5)
    • Eligible hospitals must apply to receive payments in a fiscal year.
  • Calculations (Subd. 6)
    • Payments are calculated by adjusting charity care adjustments to cost basis using each hospital’s cost-to-charge ratio.
    • If the total charity care adjustments exceed the account’s available funds, payments are proportionally allocated based on each hospital’s share of total adjustments.
    • If funds suffice, each hospital receives the full amount of its reported charity care adjustments.
  • Payments (Subd. 7)
    • Payments must be made at least annually; may be disbursed more frequently per a schedule determined by the commissioner.

  • Reporting (Subd. 8)

    • Hospitals receiving payments must report data to evaluate the program.

  • Effective date

    • Effective July 1, 2026.

Revenues and deposits (Sec. 2 and Sec. 3)

  • Sec. 2 (amends 256.9656)
    • All money collected under specified surcharges and adjustments is deposited into the general fund for eventual expenditure (note: HF 5142 redirects these funds to a charity care account via subsequent changes described below).
    • Effective July 1, 2026; applies to surcharges and civil penalties collected on or after that date.
  • Sec. 3 (amends 256.9657, subdivision 2)
    • Reconfigures the hospital surcharge:
    • Maintains a hospital surcharge of 1.4% of net patient revenues (excluding net Medicare revenues) reported to HCIIS, with historic adjustments to 1.56% as of 1994.
    • Surcharge is designated as an amount to the charity care account in the special revenue fund.
    • Surcharge is not an allowable cost for state rate-setting purposes under certain sections (does not affect Medicare cost finding per se).
    • Effective July 1, 2026; applies to surcharges collected on or after that date.

Who is affected

  • Eligible hospitals in Minnesota (nonprofit, Minnesota-based, licensed, with Medicare cost reports) may receive payments for charity care adjustments.
  • Excluded facilities include state-operated services and regional treatment centers, federal VA medical centers, and long-term acute care hospitals.
  • The Minnesota Department of Health (as administrator) and the state’s budgetary apparatus (special revenue fund) will administer and fund the program.
  • Hospitals must file applications and provide required reporting to participate and receive payments.

Procedural and timeline aspects

  • Effective date: July 1, 2026.
  • Funding relies on hospital surcharges redirected to the charity care account, with annual appropriations to administer and pay eligible hospitals.
  • Payments occur at least annually, with potential more frequent disbursements per the commissioner's schedule.
  • Annual reporting required from recipient hospitals to evaluate the program.
  • The program uses cost-to-charge ratio-based adjustments to translate reported charity care adjustments into payment amounts.

Potential impact and considerations

  • Improves transparency and predictability of funding for hospital charity care by tying payments to reported charity care adjustments and hospital cost structures.
  • Could increase support for nonprofit Minnesota hospitals’ charity care activities, particularly if surcharges generate sufficient funds.
  • The design includes safeguards (e.g., proportional payments if funds are insufficient; defined eligibility; reporting requirements) to manage limited resources.
  • The reallocation of surcharges to a dedicated charity care account may affect general fund budgeting and hospital surcharge revenue planning.

If you’d like, I can provide a side-by-side comparison with current law, or a quick Q&A highlighting common questions about eligibility, calculation, and reporting.

Compiled from official sources — confirm details with the bill’s official record.

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