Budget deal to cost Mayo millions

The final budget deal that brought an end to the 2010 legislative session spells bad financial news for Mayo Clinic.

Clinic lobbyist Frank Iossi said Mayo Clinic and Mayo Health Systems stand to lose $20 million to $25 million a year because lawmakers chose not to enroll in an expanded Medicaid program available at the federal level. On top of that, he said hospitals had agreed to a 2-percent rate cut and to delay rebasing, which reassesses Medicaid rates, in order to get the Medicaid expansion. But while those additional cuts went through, the Medicaid expansion got bogged down in political wrangling.

"Hospitals paid for the state's share of early enrollment in Medicaid but didn't get it," Iossi said.

In total, Iossi said the 2-percent cut will cost hospitals statewide $44 million — and roughly a $6.6 million cut for Mayo Clinic and Mayo Health Systems. The rebasing delay also amounts to an estimated $100 million loss for hospitals statewide.

On Monday, Republican and DFL legislative leaders stopped in Rochester as part of a statewide tour to offer their takes on the final budget deal. Republicans touted their efforts to block the Medicaid expansion, calling it part of "Obamacare."


"Yesterday was effectively a referendum on Obamacare," GOP gubernatorial candidate Tom Emmer said.

Democrats called on Republican Gov. Tim Pawlenty to take advantage of a provision in the final budget deal, which gives him and the next governor the authority to enroll in the early Medicaid expansion.

By spending $188 million, the state can tap into $1.4 billion in federal money. Sen. Ann Lynch, DFL-Rochester, pointed to a chart showing that for every $1 invested, Minnesota would get $7.45  back from the federal government under the deal.

"I think that this chart points out very clearly the opportunity and addresses the magnitude of what is really at stake here," Lynch said.

But Republicans say they are not willing to commit to the federal program in order to get the money because they are concerned it will place restrictions on the state that will hamper health-care reform.

"For many of us, it was a little too early in the game to say just absolutely this is the program we want," Senjem said. "Is that really the kind of program over the long term that is going to be sustainable?"

Democrats touted changes to a deal negotiated early this session to preserve a scaled-back version of a health-care program called General Assistance Medical Care for the poor, saying it would help rural hospitals. That included adding $10 million to an uncompensated care pool for hospitals.

But Mayo Clinic said it will not benefit from those dollars because the requirements to get the money are too onerous, Iossi said. As a result, he said, the clinic will continue to treat these patients and take the financial hit. Iossi said in the final hours of the session, he lobbied House and Senate Republicans hard to get them on board with the early expansion but those efforts failed — including with Senjem.


He added, "It's significant money and given what the Republicans want to do, which is to never enroll in early Medicaid, this is going to continue to be a cost to Mayo annually of $25 million if not more."

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