Lucinda Jesson, Commissioner, Minnesota Dept. of Human Services
Civic CaucusFocus on CompetitivenessInterview February 1, 2013
Paul Gilje (coordinator), Lucinda Jesson, Randy Johnson, Sallie
Kemper, Dan Loritz (chair), Dana Schroeder. By phone: Dave Broden, Audrey
Clay, Janis Clay, Walt McClure, Tim McDonald, Clarence Shallbetter.
Department of Human Services (DHS) Commissioner Lucinda Jesson believes
that without reform, the demographic changes resulting in the aging of the
state's population will make her agency's programs, as structured today,
unsustainable in the long run. Reform and redesign offer the best path to
sustainability, she says. The department's reform efforts started two
years ago with the overhauling of its managed care contracts, the area
where the biggest dollars are involved. Other redesign efforts include:
(1) being the first state to contract with Medicaid providers to change
the financial incentive from quantity (doing more tests and procedures) to
quality (efficiently keeping a population healthy); (2) working to
streamline the department's multiple public health care programs into one
unified public program that changes incentives for enrollees and
providers; (3) intervening earlier to help keep people in their homes; (4)
giving people more control in choosing the services and providers they
wish to have.
Lucinda E. Jesson
is commissioner of
the Minnesota Department of Human Services (DHS). The department is the
state's largest agency, serving well over one million people, with an
annual budget of $11 billion and more than 6,000 employees throughout the
state. DHS administers a broad range of services, including health care,
economic assistance, mental health and substance abuse prevention and
treatment, child welfare services, and services for the elderly and people
As commissioner, Jesson's priorities include
making the state a smarter purchaser of health care; redesigning the care
delivery systems through integration of primary care, behavioral health,
social services and long-term care; keeping people fed and healthy;
narrowing disparities; and reducing fraud, waste and abuse.
Prior to joining DHS in January of 2011, Jesson was an associate professor
of law at the Hamline University School of Law in St. Paul. She also
founded and served as director of the Health Law Institute there. Before
that, Jesson served in local and state government, both as chief deputy
Hennepin County attorney and as Minnesota deputy attorney general. In
addition, Jesson has extensive private sector experience, both as a
partner in the law firm of Oppenheimer Wolff & Donnelly LLP and in her own
Jesson has a J.D. degree from the University of Pennsylvania Law School in
Philadelphia and a B.A. degree from the University of Arkansas in
Minnesota Department of Human Services (DHS)
programs touch one million, or nearly one in five, Minnesotans each year.
Commissioner Jesson noted
Roughly 862,000 people, or nearly one in six Minnesotans, are in
DHS-administered health care programs. Significantly over 100,000 more
children and families turned to Medicaid during the recession. Jesson
said that figure doesn't count single adults or the Medicaid expansion.
About 526,000 people are on food support. Many more people have
turned to food-support programs since the beginning of the recession.
During the recession, human service agencies
have been serving many more people with fewer employees.
Minnesota since 2008, Jesson said, DHS has been serving 25 percent more
people with 1,000 fewer state employees, about a 15 percent reduction in
staff. She noted that figure doesn't count the reductions in staff in
counties around the state.
Without change, human services programs become
unsustainable in the long term.
"Our programs are the safety
net," she said. "We can't just walk away from them. But we have to do
things differently." That is particularly true because of the aging of the
state's population, which will hit especially hard starting in 2020. "We
must make changes now to prepare for that," Jesson said. "The state has
made a commitment to seniors and people with disabilities and we serve
them better than almost any other state. If we're going to continue with
that, we're going to have to make changes."
Jesson outlined three broad areas of reform DHS
is both instituting and planning:
health reform, the Reform 2020
initiative and human service areas outside of health care.
I. Health Reform: Being a smarter purchaser of
health care, incentivizing quality and making programs easier to use.
The department's reform efforts started two
years ago with the overhauling of its managed care contracts, the area
where the biggest dollars were spent.
The state pays for health
care for most enrollees through managed care companies, Jesson said. The
department put contracts out for bid and got significant savings. Those
savings and a negotiated one percent cap on profits for the 2011 contracts
inherited from the previous administration resulted in $1 billion in
savings compared to the November 2010 forecast. "Without those savings we
would have had to cut eligibility," she said. "We're continuing to look
very closely at how we spend our dollars in managed care."
As part of the 2011 budget agreement, the agency
capped how much the state would pay managed care companies in the future
to cover the DHS population. It capped the increase per capita for
FY2012-2013 at two percent and at three percent in FY2014-2015. "Caps of
two and three percent for health care are significant," Jesson remarked.
"We need to set the expectations differently. We have to set the caps and
work to drive down the medical cost trend. We can't do it alone; we have
to do it with the health plans."
She said the state negotiated contract rates for
2013 that came in far below the two percent growth caps, saving taxpayers
about $60 million. "That's pretty significant," she said. "Most employers
would be overjoyed to do that. We did it without cutting benefits or
"We started out looking at our biggest cost
drivers," Jesson continued. "But managed care contracts were just a
beginning. We're trying to use our power as a purchaser not only to drive
down costs, but to have better outcomes for people. You don't just do that
in a department this size overnight, but it's critical to our reform
An interviewer commented, "It's a fight between
you and the providers," he said. "You're not harnessing the most effective
forces out there, which could eventually drive down costs at least 20
percent. If consumers can get quality measures and true cost information,
you can use your whole population to choose better for less. They'll do it
for you like they do in every other market where they know what's better
"We needed to save money and needed to be a
smarter purchaser," Jesson replied. "We'll never get to real reform just
by paying less; we must redesign the health care system."
The department is also working in other ways to
redesign public health care programs in the state.
two ways in which this is happening:
1. Minnesota is the first state to use
Medicaid Accountable Care Organizations (ACOs). These are direct
contracts with health care providers to care for people. DHS has
arranged for 100,000 of its Medicaid enrollees to be covered by these
new contracts with providers. The contracts change the financial
incentives of providers. "Instead of paying providers by test or
procedure," she said, "we're actually contracting with providers to
provide care for a population, to keep people healthy and to be more
efficient." The providers must meet quality targets. If DHS and the
providers agree upon what the medical cost trend for that population is
and the providers come in under that amount, the state will share the
savings with them. She said DHS will add provider groups each year to
the new contracting system.
2. In the long term, Jesson said, DHS wants to
move from multiple public health care programs to one streamlined public
program that changes incentives for enrollees and providers. "What we
need is the ability to build incentives in our Medicaid system to
encourage our enrollees to make healthier decisions.
A streamlined program with sliding-scale
premiums for low-income families would be simpler, she said. It would
drive down duplicative administrative costs. It would replace the
current patchwork of programs where people churn between Medical
Assistance and MinnesotaCare and where family members end up in
different plans. It would change arbitrary coverage limits.
A streamlined public plan should also permit
more innovation, Jesson continued. Freedom from some federal mandates
would allow the state to give providers, plans and enrollees more
powerful incentives to promote health and reduce health costs and health
"Let's move to a system that's streamlined,"
she remarked, "where people aren't churning between our public programs
and one that's easier for providers. They wouldn't have to have
different contracts with MinnesotaCare and Medicaid; that could drive
down their administrative costs. And we'll save administrative costs
because now we're administering two or three programs. That's ludicrous.
Let's just administer one. Let's redesign that program so we change
incentives for providers and enrollees."
New money in the future must be tied to better
"I think what we have to do is to take that approach of
driving a harder bargain," she said, "not just in terms of dollars, but in
what we're paying for and being much more focused on paying for outcomes
and quality. We're really trying to make that change across the
department. We're not just talking about health care. You'll see a shift
in that direction in the governor's budget. If you want to get new money
in the future, you need to improve outcomes for the people we all serve."
There's an increase in the governor's budget in payments to
child-care providers. The department tied part of that increase to the
quality of care provided, as measured by the Parent Aware Ratings
The governor's budget also proposes an increase to nursing homes,
part of which is tied to quality improvement.
The budget proposes funding to establish a set of measures that will
form the basis of a quality add-on payment for home and community care
providers. This way future payments will be tied more closely to
quality, not just cost-of-living adjustments. Providing those services
to seniors and people with disabilities is one of the fastest-growing
parts of the DHS budget.
II. Reform 2020: comprehensive redesign of the
state's home and community-based services system.
Reform 2020 is a bipartisan initiative to reform
Medical Assistance (MA), Minnesota's Medicaid program, to better meet the
challenges of rising health care costs and a growing senior population,
while still providing Minnesotans the services they need to lead
Jesson explained that Reform 2020 seeks to
achieve these goals by modifying existing services, providing new services
to targeted groups, and asking the federal government for a waiver to try
new ways to deliver and pay for health care services that ensure people
receive the right services, at the right time, in the right way. Reform
2020 efforts will result in more effective and efficient service delivery
and will modify the service delivery system to focus on person-centered
She pointed out that 16 percent of the people
enrolled in DHS programs have disabilities, but they account for 44
percent of the cost of the programs. Seniors, too, account for a larger
percentage of the cost than they represent as a proportion of total
The program is being rolled out in the 2013
legislative system. "Without redesign, it will be unsustainable 10 years
from now when we're really hit by the age wave," Jesson said. "We've got
to start now. You don't just change a system overnight, because too many
people depend on it. We don't do something by taking things away from
The redesign is aimed at providing more services
early, sometimes even before people are enrolled in Medicaid or other DHS
programs. "We want to reach out to help keep them in their homes by
intervening earlier," Jesson explained. "What we're trying to do is reach
people before they qualify for our really deep end of expensive services,"
she continued. "Let's try to intervene earlier and provide more options
through our regular programs, outside of Medicaid, to keep people in their
homes and communities."
Key principles of Reform 2020 are providing a
broader array of services earlier and making the services more
The new Community First Supports and Services
program is aimed at achieving these goals. The program hopes to reduce the
number of people on federal waiver programs. "We want this to be consumer
driven," Jesson commented. "We don't want it to be one size fits all. "
For example, on Medicaid, people can get
personal care assistants (PCAs) to help keep them in their homes. "That's
mostly where people want to stay and it saves the state money," she said.
"But maybe what you need to stay in your home is a home modification.
Regular Medicaid won't pay for that now. It should. If that's going to
help people stay in their homes, we ought to be paying for it."
People may not need a PCA to come into the home
to help them do things, but someone to come into home to teach them new
skills or to relearn old skills, so they can do things for themselves.
Jesson said this is especially true for kids on DHS programs. "Sometimes
they don't need help doing, they need help in learning."
Assessing people individually and tying a dollar
value to the community services they need will allow them to direct the
money themselves. If a person wants to stay in the home, he or she might
need some PCA services, but may also need to have the home modified.
Jesson commented that people would have much more ability to direct the
dollars, make choices for themselves and choose their own service
providers. "This will put much more power in the hands of our enrollees."
"We need to reach out to more people before they
qualify for Medicaid," she continued. "We need a consumer-driven system
with early interventions, a lot more help during transitions, help keeping
people connected to employment and a lot more information. It's a broad
array of things. It really will fundamentally redesign our system. It
doesn't happen overnight. It'll take three or four years to get it done.
And we need flexibility from the federal government to do it."
DHS is negotiating with the federal government
and has a reform package before the legislature this session. Jesson said
the proposal is budget neutral in the short term. "The whole idea is not
budget savings in this biennium. It's redesigning a system so we have
something that's sustainable in five years."
III. Other DHS Initiatives.
DHS has the flexibility to allow counties to do
more pilot programs.
An interviewer asked why the MAGIC Act,
which would allow counties to try different ways of delivering services in
pilot programs, failed to pass during the 2012 legislative session. "I'm
not sure it's dead," Jesson responded. "A lot of what the MAGIC Act
proposed in human services, we already have the ability to do. We have the
flexibility. But I'm a proponent of the MAGIC Act. We need to do more
pilots; we need to try more things."
to a Nov. 26, 2012, Civic Caucus interview with legislators Paul Marquart
and Carol McFarlane provides more background on the MAGIC Act.)
The governor's budget set several million
dollars aside to move toward budgeting for outcomes with counties.
"If we are clear with counties on outcomes we're looking for,
that's what they ought to be held accountable for," Jesson said. "If we
agree on outcomes, then we should let go of a lot of the process stuff. It
frustrates counties and us that we are holding counties accountable by
DHS has prioritized children's and mental health
issues through shifts in spending in the governor's budget.
budget proposes a doubling of school-based mental health grants, which
Jesson called a very effective way of doing early intervention and
reaching out to kids in the schools.
Also, the department wants to expand crisis
mobile-health teams, which are in place in 59 counties now, to the whole
state. The budget also includes a lot more money to help people move out
of Anoka State Hospital and the state Security Hospital in St. Peter, if
they don't need to be there any more. "We need to really beef up our
community mental health services to do that," she said.
"We were putting this budget together before the
Newtown shooting tragedy," Jesson pointed out. "We recognized that we
needed to strengthen our mental health system here in Minnesota. We have a
really good one. But even with the budget flat for the whole department,
we've reprioritized to make investments in mental health."
The state is looking for options in treating sex
In response to a question about the sex offender
treatment programs, Jesson said a task force she appointed now has some
preliminary recommendations. "One thing the task force is saying, and we
agree with them, is that there should be more options when judges are
making commitment decisions. Today, when a judge is making a decision
whether or not to civilly commit someone as a sex offender, either that
person is not committed at all or committed to this highly secure and
expensive facility and treatment program."
DHS has asked for information from service
providers, including its own state-operated service providers, about what
they have or could build that would provide options to the Minnesota Sex
Offender Treatment Program. The providers are to provide information on
the costs, the security and treatment by the end of February.
"What would the less expensive alternatives look
like?" Jesson asked. "We think the responses will give the Legislature
concrete options as they face decisions about the current sex offender
Intergenerational poverty and assuring that
traditional health care services reach seriously mentally ill people are
major challenges for Minnesota.
Responding to a question about
cost drivers in the budget, Jesson pointed out two troubling numbers:
1. Of the teenage mothers on the Minnesota
Family Investment Program (MFIP), the state's welfare reform program, 75
percent of their mothers were on assistance, as well. "That's the core
of our intergenerational poverty problem in this state and we have to
address that," she said.
2. People with serious and persistent mental
illness live 25 years less on average than other people. "They aren't
dying earlier because of suicide or something directly related to their
mental illness," she said. "They're dying of diabetes and congestive
heart failure and they're dying much earlier than other populations. We
need to make the connection between mental health services and the
traditional medical system, so we're getting people the health care they
Unsustainability offers opportunity for reform and redesign.
Jesson said she is passionate about
the reform of human services. "The status quo isn't sustainable, given the
demographics. That's exciting, because we can design things that work
better for people." She reiterated that the Reform 2020 initiative is not
about taking things away, it's about reaching people earlier, serving them
better and giving them more options. "We'll end up with a better system
and it will be better for taxpayers. Reform 2020 has bipartisan support.
It's not sexy, but it's really the hard stuff of redesign and reform that
we have to be doing."
The Civic Caucus
is a non-partisan,
tax-exempt educational organization. The Core participants
include persons of varying political persuasions, reflecting years of leadership in politics and
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David Broden, Janis Clay, Bill Frenzel, Paul Gilje,
Jan Hively, Dan Loritz (Chair), Marina Lyon, Joe Mansky,
Tim McDonald, John Mooty, Jim Olson, Wayne Popham and