After vetoing more legislation than any Minnesota governor since before World War II, Gov. Tim Pawlenty closed the legislative session yesterday by signing what might be the most substantial health care reform (SF 3780) to come out of any state this year. 

The legislation emerged from almost a year’s worth of high-level health care policy discussions.  What did Minnesota come up with?  It’s a lengthy list of reforms and there’s a little something for each political persuasion.  Reforms include:

• Health promotion grants to community programs that target obesity and tobacco use
• Development of health care homes, a health care delivery model that relies on a primary care practice that partners with patients to manage all aspects of their care
• A requirement that all electronic health records be consistent with federal standards for interoperability
• A mandate that all prescriptions be electronically ordered by 2011
• Payment reform that utilizes a system of quality-based incentive payments to reward providers
• Payment reform that creates incentives for health plan enrollees to choose providers based on how providers compare to their peers on a combined measure of cost and quality.
• A one-time tax credit for uninsured Minnesotans equal to 20 percent of an annual employer-based insurance premium
• A “requirement” that employers must offer Sec. 125 cafeteria plans to employees if the employer does not offer health insurance that includes an opt out
• Medicaid expansion for single adults from 215 percent of federal poverty guidelines to 250 percent
• Medicaid outreach coordinated with other public programs
• Streamlined Medicaid application and renewal processes
• Reductions to Medicaid provider reimbursement rates

Price and quality transparency linked to payment reform will likely stand out as the signature piece of the legislation.  The legislation requires the state to collect information on provider quality, resource use, and pricing.  It then directs the state to combine this information into a system that indexes providers and compares them to an appropriate peer group.  Once the peer grouping system is complete, health plans must develop at least one plan that uses the information to “establish financial incentives for consumers to choose high-quality, low-cost providers through enrollee cost-sharing or selective provider networks.”

The legislation is also notable for what it does not contain.  Originally the legislation included a more comprehensive payment reform component that would have encouraged integrated health care systems to make annual risk-adjusted bids on populations of patients.  In addition, the original legislation would have created a subsidy program for employer-sponsored health coverage and required that providers charge a uniform price for their services.

In the coming weeks, I will take a more critical look at many of these Minnesota reforms, both those that passed and those that did not.