EIGHTY-THIRD SESSION 2004 EIGHTIETH DAY

Transcription

1 80TH DAY] FRIDAY, MARCH 26, STATE OF MINNESOTA EIGHTY-THIRD SESSION 2004 EIGHTIETH DAY SAINT PAUL, MINNESOTA, FRIDAY, MARCH 26, 2004 The House of Representatives convened at 12:00 noon and was called to order by Ron Abrams, Speaker pro tempore. Prayer was offered by the Reverend Kevin G. Schill, Christ United Methodist Church, Rochester, Minnesota. The members of the House gave the pledge of allegiance to the flag of the United States of America. The roll was called and the following members were present: Abeler Abrams Adolphson Anderson, B. Anderson, I. Atkins Beard Bernardy Biernat Blaine Borrell Boudreau Bradley Brod Buesgens Carlson Clark Cox Davids Davnie DeLaForest Demmer Dempsey Dill Dorn Eastlund Eken Entenza Erickson Fuller Gerlach Goodwin Greiling Gunther Haas Hackbarth Harder Hausman Heidgerken Hilstrom Hilty Holberg Hoppe Hornstein Howes Huntley Jacobson Johnson, J. Johnson, S. Juhnke Kahn Kelliher Klinzing Knoblach Koenen Kohls Krinkie Kuisle Lanning Latz Lenczewski Lesch Lieder Lindgren Lindner Lipman Magnus Mahoney Mariani Marquart McNamara Mullery Murphy Nelson, C. Nelson, M. Nelson, P. Newman Nornes Olsen, S. Olson, M. Opatz Osterman Otremba Otto Ozment Paulsen Paymar Pelowski Penas Powell Pugh Rhodes Samuelson Seagren Seifert Sertich Severson Sieben Simpson Slawik Smith Soderstrom Solberg Stang Swenson Sykora Thao Thissen Tingelstad Urdahl Vandeveer Wagenius Walker Walz Wardlow Wasiluk Westerberg Westrom Wilkin Zellers A quorum was present. Anderson, J.; Cornish; Ellison; Erhardt; Finstad; Jaros; Larson; Meslow; Peterson; Rukavina; Ruth; Strachan and Sviggum were excused. The Chief Clerk proceeded to read the Journal of the preceding day. Cox moved that further reading of the Journal be suspended and that the Journal be approved as corrected by the Chief Clerk. The motion prevailed.

2 5794 JOURNAL OF THE HOUSE [80TH DAY REPORTS OF CHIEF CLERK S. F. No and H. F. No. 2688, which had been referred to the Chief Clerk for comparison, were examined and found to be identical. McNamara moved that S. F. No be substituted for H. F. No and that the House File be indefinitely postponed. The motion prevailed. PETITIONS AND COMMUNICATIONS The following communications were received: The Honorable Steve Sviggum Speaker of the House of Representatives The State of Minnesota Dear Speaker Sviggum: STATE OF MINNESOTA OFFICE OF THE GOVERNOR SAINT PAUL March 19, 2004 It is my honor to inform you that I have received, approved, signed, and deposited in the Office of the Secretary of State the following House File: H. F. No. 480, relating to civil actions; providing protection for disclosure of job reference information; requiring disclosure of data between school districts and charter schools relating to acts of violence or inappropriate sexual contact with students; regulating the right of an employee to inspect personnel records concerning the employee. Sincerely, TIM PAWLENTY Governor STATE OF MINNESOTA OFFICE OF THE SECRETARY OF STATE ST. PAUL The Honorable Steve Sviggum Speaker of the House of Representatives The Honorable James P. Metzen President of the Senate I have the honor to inform you that the following enrolled Acts of the 2004 Session of the State Legislature have been received from the Office of the Governor and are deposited in the Office of the Secretary of State for preservation, pursuant to the State Constitution, Article IV, Section 23:

3 80TH DAY] FRIDAY, MARCH 26, S. F. No. H. F. No. Session Laws Chapter No. Time and Date Approved 2004 Date Filed :30 p.m. March 19 March :52 p.m. March 19 March :57 p.m. March 19 March :03 p.m. March 19 March 22 Sincerely, MARY KIFFMEYER Secretary of State REPORTS OF STANDING COMMITTEES Bradley from the Committee on Health and Human Services Finance to which was referred: H. F. No. 1681, A bill for an act relating to health; conforming to federal tax changes to encourage consumerdriven health plans; encouraging efficiency in providing health care; reforming medical malpractice liability; reducing and providing a moratorium on state-imposed private-sector health coverage mandates; providing a pilot project for health plans that do not cover all mandated benefits; eliminating capital expenditure reporting requirements; permitting nonprofit hospitals to garnish state tax refunds; permitting file-and-use for health insurance policy forms; permitting for-profit health maintenance organizations; transferring regulatory authority for health maintenance organizations; addressing the cost-shifting impacts of public sector health care programs; amending Minnesota Statutes 2002, sections 16A.10, by adding a subdivision; 43A.23, by adding a subdivision; 62A.02, subdivision 2; 62D.02, subdivision 4, by adding a subdivision; 62D.03, subdivision 1; 62D.04, subdivision 1; 62Q.65; 72A.20, by adding a subdivision; , subdivision 1; 256B.04, by adding a subdivision; Minnesota Statutes 2003 Supplement, sections 62J.26, by adding a subdivision; , subdivision 3; 270A.03, subdivision 2; , subdivisions 19, 31; proposing coding for new law in Minnesota Statutes, chapters 3; 62J; 62L; 62Q; 144; 147; 151; 604; repealing Minnesota Statutes 2002, sections 62A.309; 62J.17, as amended. Reported the same back with the following amendments: Delete everything after the enacting clause and insert: "ARTICLE 1 HEALTH CARE COST CONTAINMENT; CONSUMER EMPOWERMENT Section 1. Minnesota Statutes 2002, section 43A.23, is amended by adding a subdivision to read: Subd. 4. [HEALTH SAVINGS ACCOUNTS.] During collective bargaining negotiations with the exclusive representatives of state employees, the commissioner must propose that state employee health coverage include at least one plan of hospital and medical benefits that combines a high deductible health plan with a health savings account, so as to qualify the health savings account under section 223 of the Internal Revenue Code, as amended.

4 5796 JOURNAL OF THE HOUSE [80TH DAY Sec. 2. [62J.81] [DISCLOSURE OF PAYMENTS FOR HEALTH CARE SERVICES.] Subdivision 1. [REQUIRED DISCLOSURE OF PAYMENT RANGE.] A health care provider, as defined in section 62J.03, subdivision 8, shall, at the request of a consumer, provide that consumer with the beginning and end of the range of payments received by the provider from health plan companies for a specific service or services that the consumer may reasonably expect to receive from the provider, based upon the consumer's medical condition. The beginning of the range of payments received by a provider is the lowest amount the provider is paid by a health plan company for a specific service and the end of the range is the highest amount the provider is paid by a health plan company for the service, based upon the provider agreements in force at the time of the request. A provider is not required to identify the names of health plan companies. Subd. 2. [APPLICABILITY.] For purposes of this section, "consumer" does not include a medical assistance, MinnesotaCare, or general assistance medical care enrollee, for services covered under those programs, and a health care provider shall not include in the range, payments from the medical assistance, MinnesotaCare, and general assistance medical care programs. Sec. 3. Minnesota Statutes 2002, section 62Q.65, is amended to read: 62Q.65 [ACCESS TO PROVIDER DISCOUNTS.] Subdivision 1. [REQUIREMENT.] A high deductible health plan must, when used in connection with a medical savings account an Archer MSA or with a health savings account, provide the enrollee access to any discounted provider fees for services covered by the high deductible health plan, regardless of whether the enrollee has satisfied the deductible for the high deductible health plan. Subd. 2. [DEFINITIONS.] For purposes of this section, the following terms have the meanings given: (1) "high deductible health plan" has the meaning given under the Internal Revenue Code of 1986, section 220(c)(2) or 223(c)(2); (2) "medical savings account Archer MSA" has the meaning given under the Internal Revenue Code of 1986, section 220(d)(1); and (3) "discounted provider fees" means fees contained in a provider agreement entered into by the issuer of the high deductible health plan, or by an affiliate of the issuer, for use in connection with the high deductible health plan; and (4) "health savings account" has the meaning given under the Internal Revenue Code of 1986, section 223(d). Sec. 4. [ ] [PAYMENT DISCLOSURE.] Subdivision 1. [EXPLANATION OF PHARMACY BENEFITS.] A pharmacist licensed under this chapter must provide to a patient, for each prescription dispensed where part or all of the cost of the prescription is being paid or reimbursed by an employer-sponsored plan or health plan company, or its contracted pharmacy benefit manager, the patient's co-payment amount and the usual and customary price of the prescription or the amount the pharmacy will be paid for the prescription drug by the patient's employer-sponsored plan or health plan company, or its contracted pharmacy benefit manager.

5 80TH DAY] FRIDAY, MARCH 26, Subd. 2. [NO PROHIBITION ON DISCLOSURE.] No contracting agreement between an employer-sponsored health plan or health plan company, or its contracted pharmacy benefit manager, and a resident or nonresident pharmacy registered under this chapter, may prohibit the pharmacy from disclosing to patients information a pharmacy is required or given the option to provide under subdivision 1. Sec. 5. Minnesota Statutes 2003 Supplement, section , subdivision 19, is amended to read: Subd. 19. [NET INCOME.] The term "net income" means the federal taxable income, as defined in section 63 of the Internal Revenue Code of 1986, as amended through the date named in this subdivision, incorporating any elections made by the taxpayer in accordance with the Internal Revenue Code in determining federal taxable income for federal income tax purposes, and with the modifications provided in subdivisions 19a to 19f. In the case of a regulated investment company or a fund thereof, as defined in section 851(a) or 851(g) of the Internal Revenue Code, federal taxable income means investment company taxable income as defined in section 852(b)(2) of the Internal Revenue Code, except that: (1) the exclusion of net capital gain provided in section 852(b)(2)(A) of the Internal Revenue Code does not apply; (2) the deduction for dividends paid under section 852(b)(2)(D) of the Internal Revenue Code must be applied by allowing a deduction for capital gain dividends and exempt-interest dividends as defined in sections 852(b)(3)(C) and 852(b)(5) of the Internal Revenue Code; and (3) the deduction for dividends paid must also be applied in the amount of any undistributed capital gains which the regulated investment company elects to have treated as provided in section 852(b)(3)(D) of the Internal Revenue Code. The net income of a real estate investment trust as defined and limited by section 856(a), (b), and (c) of the Internal Revenue Code means the real estate investment trust taxable income as defined in section 857(b)(2) of the Internal Revenue Code. The net income of a designated settlement fund as defined in section 468B(d) of the Internal Revenue Code means the gross income as defined in section 468B(b) of the Internal Revenue Code. The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 1616, 1617, 1704(l), and 1704(m) of the Small Business Job Protection Act, Public Law , the provisions of Public Law , the provisions of sections 313(a) and (b)(1), 602(a), 913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law , the provisions of section 6010 of the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law , the provisions of section 4003 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Public Law , and the provisions of section 318 of the Consolidated Appropriation Act of 2001, Public Law , shall become effective at the time they become effective for federal purposes. The Internal Revenue Code of 1986, as amended through December 31, 1996, shall be in effect for taxable years beginning after December 31, The provisions of sections 202(a) and (b), 221(a), 225, 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) of the Taxpayer Relief Act of 1997, Public Law , the provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, and 7003 of the

6 5798 JOURNAL OF THE HOUSE [80TH DAY Internal Revenue Service Restructuring and Reform Act of 1998, Public Law , the provisions of section 3001 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Public Law , the provisions of section 3001 of the Miscellaneous Trade and Technical Corrections Act of 1999, Public Law , and the provisions of section 316 of the Consolidated Appropriation Act of 2001, Public Law , shall become effective at the time they become effective for federal purposes. The Internal Revenue Code of 1986, as amended through December 31, 1997, shall be in effect for taxable years beginning after December 31, The provisions of sections 5002, 6009, 6011, and 7001 of the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law , the provisions of section 9010 of the Transportation Equity Act for the 21st Century, Public Law , the provisions of sections 1004, 4002, and 5301 of the Omnibus Consolidation and Emergency Supplemental Appropriations Act, 1999, Public Law , the provision of section 303 of the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law , the provisions of sections 532, 534, 536, 537, and 538 of the Ticket to Work and Work Incentives Improvement Act of 1999, Public Law , the provisions of the Installment Tax Correction Act of 2000, Public Law , and the provisions of section 309 of the Consolidated Appropriation Act of 2001, Public Law , shall become effective at the time they become effective for federal purposes. The Internal Revenue Code of 1986, as amended through December 31, 1998, shall be in effect for taxable years beginning after December 31, The provisions of the FSC Repeal and Extraterritorial Income Exclusion Act of 2000, Public Law , and the provision of section 412 of the Job Creation and Worker Assistance Act of 2002, Public Law , shall become effective at the time it became effective for federal purposes. The Internal Revenue Code of 1986, as amended through December 31, 1999, shall be in effect for taxable years beginning after December 31, The provisions of sections 306 and 401 of the Consolidated Appropriation Act of 2001, Public Law , and the provision of section 632(b)(2)(A) of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law , and provisions of sections 101 and 402 of the Job Creation and Worker Assistance Act of 2002, Public Law , shall become effective at the same time it became effective for federal purposes. The Internal Revenue Code of 1986, as amended through December 31, 2000, shall be in effect for taxable years beginning after December 31, The provisions of sections 659a and 671 of the Economic Growth and Tax Relief Reconciliation Act of 2001, Public Law , the provisions of sections 104, 105, and 111 of the Victims of Terrorism Tax Relief Act of 2001, Public Law , and the provisions of sections 201, 403, 413, and 606 of the Job Creation and Worker Assistance Act of 2002, Public Law , shall become effective at the same time it became effective for federal purposes. The Internal Revenue Code of 1986, as amended through March 15, 2002, shall be in effect for taxable years beginning after December 31, The provisions of sections 101 and 102 of the Victims of Terrorism Tax Relief Act of 2001, Public Law , shall become effective at the same time it becomes effective for federal purposes. The Internal Revenue Code of 1986, as amended through June 15, 2003, shall be in effect for taxable years beginning after December 31, The provisions of section 201 of the Jobs and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if it is enacted into law, are effective at the same time it became effective for federal purposes.

7 80TH DAY] FRIDAY, MARCH 26, Section 1201 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, codified as section 223 of the Internal Revenue Code, as amended, relating to health savings accounts, is effective at the same time it became effective for federal purposes. Except as otherwise provided, references to the Internal Revenue Code in subdivisions 19a to 19g mean the code in effect for purposes of determining net income for the applicable year. Sec. 6. Minnesota Statutes 2003 Supplement, section , subdivision 31, is amended to read: Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically defined otherwise, "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended through June 15, 2003, and as amended by section 1201 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, codified as section 223 of the Internal Revenue Code, as amended, relating to health savings accounts. ARTICLE 2 HEALTH CARE COST CONTAINMENT; BEST PRACTICES Section 1. [62J.43] [BEST PRACTICES AND QUALITY IMPROVEMENT.] (a) To improve quality and reduce health care costs, state agencies shall encourage the adoption of best practice guidelines and participation in best practices measurement activities by physicians, other health care providers, universities and colleges, health care purchasers, and health plan companies. The commissioner of health shall facilitate access to best practice guidelines and quality of care measurement information for providers, purchasers, and consumers by: (1) identifying and promoting local, community-based, physician-designed best practices care across the Minnesota health care system; (2) disseminating information on adherence to best practices care by physicians and other health care providers in Minnesota; and (3) educating consumers and purchasers on how to effectively use this information in choosing their health care providers and making purchasing decisions. (b) The commissioner of health shall collaborate with a nonprofit Minnesota quality improvement organization specializing in best practices and quality of care measurements to provide best practices criteria. (c) The initial best practices and quality of care measurement criteria developed shall address diabetes and congestive heart failure. (d) The commissioners of human services and employee relations may use the best practices guidelines to assist them in developing contracting strategies that are appropriate for the populations they serve. The commissioners shall report to the legislature by January 1, 2006, on agency use of best practices guidelines. (e) This section does not apply if the best practices guidelines authorizes or recommends denial of treatment, food, or fluids necessary to sustain life on the basis of the patient's age or expected length of life or the patient's present or predicted disability, degree of medical dependency, or quality of life.

8 5800 JOURNAL OF THE HOUSE [80TH DAY Sec. 2. Minnesota Statutes 2003 Supplement, section , subdivision 3, is amended to read: Subd. 3. [FACILITY.] "Facility" means a hospital licensed under sections to or an outpatient surgical center licensed under Minnesota Rules, chapter Sec. 3. [256B.075] [DISEASE MANAGEMENT PROGRAMS.] Subdivision 1. [GENERAL.] The commissioner shall implement disease management initiatives that seek to improve patient care and health outcomes and reduce health care costs by managing the care provided to recipients with chronic conditions. Subd. 2. [FEE-FOR-SERVICE.] (a) The commissioner shall develop and implement a disease management program for medical assistance and general assistance medical care recipients who are not enrolled in the prepaid medical assistance or prepaid general assistance medical care programs and who are receiving services on a fee-forservice basis. The commissioner may contract with an outside organization to provide these services. (b) The commissioner shall seek any federal approval necessary to implement this section and to obtain federal matching funds. Subd. 3. [PREPAID MANAGED CARE PROGRAMS.] For the prepaid medical assistance, prepaid general assistance medical care, and MinnesotaCare programs, the commissioner shall ensure that contracting health plans implement disease management programs that are appropriate for Minnesota health care program recipients and have been designed by the health plan to improve patient care and health outcomes and reduce health care costs by managing the care provided to recipients with chronic conditions. Subd. 4. [HEMOPHILIA.] The commissioner shall develop a disease management initiative for Minnesota health care program recipients who have been diagnosed with hemophilia. In developing the program, the commissioner shall explore the feasibility of contracting with a section 340B provider to provide disease management services or coordination of care in order to maximize the discounted prescription drug prices of the federal 340B program offered through section 340B of the federal Public Health Services Act, United States Code, title 42, section 256b (1999). ARTICLE 3 HEALTH CARE COST CONTAINMENT; COST-SHIFTING Section 1. Minnesota Statutes 2002, section 16A.10, is amended by adding a subdivision to read: Subd. 4. [LIMIT ON STATE HEALTH CARE PROGRAM EXPANSION.] No budget proposal shall include any provision that requests new or increased funding for an expansion of eligibility or covered services for a state health care program, unless state health care program reimbursement rates for major service categories, at the time the expansion is to take effect, will be sufficient to cover estimated provider costs for each major service category. For purposes of this section, "state health care program" means the medical assistance, MinnesotaCare, and general assistance medical care programs. Sec. 2. [STUDY OF COST-SHIFTING.] (a) The commissioner of health shall evaluate the extent to which state health care program reimbursement rates result in health care provider cost-shifting to private sector payers and individuals paying for services out-of-pocket. In conducting the evaluation, the commissioner shall:

9 80TH DAY] FRIDAY, MARCH 26, (1) examine the extent to which average state health care program reimbursement rates for major categories of services vary from average private sector reimbursement rates; (2) examine the extent to which average state health care program reimbursement rates for major categories of services cover average provider costs; (3) estimate the amount by which average state health care program reimbursement rates for major categories of services would need to be increased to match average private sector reimbursement rates and to cover average provider costs; and (4) present recommendations to the legislature on methods of increasing average state health care program reimbursement rates for major categories of services, over a six-year period, to the average private sector reimbursement rate and to a level that covers average provider costs. (b) The commissioner shall present results and recommendations to the legislature by December 15, The commissioner may contract with an actuarial consulting firm to implement this section. Payment and reimbursement data collected by the commissioner in the course of implementing this section shall be classified as not public data under Minnesota Statutes, chapter 13, except that data shall be classified as public data not on individuals if the information collected was already accessible to the public under the policies of the private sector entity providing the data. For purposes of this section, "state health care program" means the medical assistance, MinnesotaCare, and general assistance medical care programs. ARTICLE 4 HEALTH CARE COST CONTAINMENT; REDUCING GOVERNMENT MANDATES Section 1. Minnesota Statutes 2003 Supplement, section 62J.26, is amended by adding a subdivision to read: Subd. 6. [MANDATED BENEFITS MORATORIUM.] (a) No new mandated health benefit proposal, as defined in subdivision 1, shall be enacted. (b) This subdivision expires January 1, Sec. 2. [62L.056] [SMALL EMPLOYER ALTERNATIVE BENEFIT PLANS.] (a) Notwithstanding any provision of this chapter, chapter 363A, or any other law to the contrary, the commissioner of commerce shall by January 1, 2005, permit health carriers to offer alternative health benefit plans to small employers if the following requirements are satisfied: (1) the health carrier is assessed less than ten percent of the total amount assessed by the Minnesota Comprehensive Health Association; (2) the health plans must be offered in compliance with this chapter, except as otherwise permitted in this section; (3) the health plans to be offered must be designed to enable employers and covered persons to better manage costs and coverage options through the use of co-pays, deductibles, and other cost-sharing arrangements; (4) the health plans must be issued and administered in compliance with sections 62E.141; 62L.03, subdivision 6; and 62L.12, subdivisions 3 and 4, relating to prohibitions against enrolling in the Minnesota Comprehensive Health Association persons eligible for employer group coverage;

10 5802 JOURNAL OF THE HOUSE [80TH DAY (5) loss-ratio requirements do not apply to health plans issued under this section; (6) the health plans may alter or eliminate coverages that would otherwise be required by law, except for maternity coverage as required under federal law; (7) each health plan must be approved by the commissioner of commerce; and (8) the commissioner may limit the types and numbers of health plan forms permitted under this section, but must permit, as one option, a health plan form in which a health carrier may exclude or alter coverage of any or all benefits otherwise mandated by state law, except for maternity coverage as required under federal law. (b) The definitions in section 62L.02 apply to this section as modified by this section. (c) An employer may provide health plans permitted under this section to its employees, the employees' dependents, and other persons eligible for coverage under the employer's plan, notwithstanding chapter 363A or any other law to the contrary. Sec. 3. [REPEALER; BONE MARROW TRANSPLANT MANDATE.] Minnesota Statutes 2002, section 62A.309, is repealed. ARTICLE 5 HEALTH CARE COST CONTAINMENT; HEALTH PLAN COMPETITION AND REFORM Section 1. Minnesota Statutes 2002, section 62A.02, subdivision 2, is amended to read: Subd. 2. [APPROVAL.] (a) The health plan form shall not be issued, nor shall any application, rider, endorsement, or rate be used in connection with it, until the expiration of 60 days after it has been filed unless the commissioner approves it before that time. (b) Notwithstanding paragraph (a), a health plan form or a rate, filed with respect to a policy of accident and sickness insurance as defined in section 62A.01 by an insurer licensed under chapter 60A, may be used on or after the date of filing with the commissioner. Health plan forms and rates that are not approved or disapproved within the 60-day time period are deemed approved. This paragraph does not apply to Medicare-related coverage as defined in section 62A.31, subdivision 3, paragraph (q). Sec. 2. Minnesota Statutes 2002, section 62D.02, subdivision 4, is amended to read: Subd. 4. [HEALTH MAINTENANCE ORGANIZATION.] (a) "Health maintenance organization" means a nonprofit corporation organized under chapter 317A, or person, including a local governmental unit as defined in subdivision 11, controlled and operated as provided in sections 62D.01 to 62D.30, which provides, either directly or through arrangements with providers or other persons, comprehensive health maintenance services, or arranges for the provision of these services, to enrollees on the basis of a fixed prepaid sum without regard to the frequency or extent of services furnished to any particular enrollee.

11 80TH DAY] FRIDAY, MARCH 26, Sec. 3. Minnesota Statutes 2002, section 62D.02, is amended by adding a subdivision to read: Subd. 17. [PERSON.] "Person" means a natural or artificial person, including, but not limited to, individuals, partnerships, limited liability companies, associations, trusts, corporations, other business entities, or governmental entities. Sec. 4. Minnesota Statutes 2002, section 62D.03, subdivision 1, is amended to read: Subdivision 1. [CERTIFICATE OF AUTHORITY REQUIRED.] Notwithstanding any law of this state to the contrary, any nonprofit corporation organized to do so or a local governmental unit person may apply to the commissioner of health for a certificate of authority to establish and operate a health maintenance organization in compliance with sections 62D.01 to 62D.30. No person shall establish or operate a health maintenance organization in this state, nor sell or offer to sell, or solicit offers to purchase or receive advance or periodic consideration in conjunction with a health maintenance organization or health maintenance contract unless the organization has a certificate of authority under sections 62D.01 to 62D.30. An out-of-state corporation may qualify under this chapter, subject to obtaining a certificate of authority to do business in this state, as an out-of-state corporation under chapter 303 and compliance with this chapter and other applicable state laws. Sec. 5. Minnesota Statutes 2002, section 62D.04, subdivision 1, is amended to read: Subdivision 1. [APPLICATION REVIEW.] Upon receipt of an application for a certificate of authority, the commissioner of health shall determine whether the applicant for a certificate of authority has: (a) demonstrated the willingness and potential ability to assure that health care services will be provided in such a manner as to enhance and assure both the availability and accessibility of adequate personnel and facilities; (b) arrangements for an ongoing evaluation of the quality of health care; (c) a procedure to develop, compile, evaluate, and report statistics relating to the cost of its operations, the pattern of utilization of its services, the quality, availability and accessibility of its services, and such other matters as may be reasonably required by regulation of the commissioner of health; (d) reasonable provisions for emergency and out of area health care services; (e) demonstrated that it is financially responsible and may reasonably be expected to meet its obligations to enrollees and prospective enrollees. In making this determination, the commissioner of health shall require the amounts of net worth and working capital required in section 62D.042, the deposit required in section 62D.041, and in addition shall consider: (1) the financial soundness of its arrangements for health care services and the proposed schedule of charges used in connection therewith; (2) arrangements which will guarantee for a reasonable period of time the continued availability or payment of the cost of health care services in the event of discontinuance of the health maintenance organization; and (3) agreements with providers for the provision of health care services; (f) demonstrated that it will assume full financial risk on a prospective basis for the provision of comprehensive health maintenance services, including hospital care; provided, however, that the requirement in this paragraph shall not prohibit the following:

12 5804 JOURNAL OF THE HOUSE [80TH DAY (1) a health maintenance organization from obtaining insurance or making other arrangements (i) for the cost of providing to any enrollee comprehensive health maintenance services, the aggregate value of which exceeds $5,000 in any year, (ii) for the cost of providing comprehensive health care services to its members on a nonelective emergency basis, or while they are outside the area served by the organization, or (iii) for not more than 95 percent of the amount by which the health maintenance organization's costs for any of its fiscal years exceed 105 percent of its income for such fiscal years; and (2) a health maintenance organization from having a provision in a group health maintenance contract allowing an adjustment of premiums paid based upon the actual health services utilization of the enrollees covered under the contract, except that at no time during the life of the contract shall the contract holder fully self-insure the financial risk of health care services delivered under the contract. Risk sharing arrangements shall be subject to the requirements of sections 62D.01 to 62D.30; (g) demonstrated that it has made provisions for and adopted a conflict of interest policy applicable to all members of the board of directors and the principal officers of the health maintenance organization. The conflict of interest policy shall include the procedures described in section 317A.255, subdivisions 1 and 2, or a substantially similar provision contained in the laws under which the health maintenance organization is incorporated or otherwise organized. However, the commissioner is not precluded from finding that a particular transaction is an unreasonable expense as described in section 62D.19 even if the directors follow the required procedures; and (h) otherwise met the requirements of sections 62D.01 to 62D.30. Sec. 6. Minnesota Statutes 2002, section 62D.05, subdivision 1, is amended to read: Subdivision 1. [AUTHORITY GRANTED.] Any nonprofit corporation or local governmental unit person may, upon obtaining a certificate of authority as required in sections 62D.01 to 62D.30, operate as a health maintenance organization. Sec. 7. Minnesota Statutes 2003 Supplement, section 62E.08, subdivision 1, is amended to read: Subdivision 1. [ESTABLISHMENT.] The association shall establish the following maximum premiums to be charged for membership in the comprehensive health insurance plan: (a) the premium for the number one qualified plan shall range from a minimum of percent to a maximum of percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) $1,000 annual deductible individual plans of insurance in force in Minnesota; (2) individual health maintenance organization contracts of coverage with a $1,000 annual deductible which are in force in Minnesota; and (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; (b) the premium for the number two qualified plan shall range from a minimum of percent to a maximum of percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) $500 annual deductible individual plans of insurance in force in Minnesota;

13 80TH DAY] FRIDAY, MARCH 26, (2) individual health maintenance organization contracts of coverage with a $500 annual deductible which are in force in Minnesota; and (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; (c) the premiums for the plans with a $2,000, $5,000, or $10,000 annual deductible shall range from a minimum of percent to a maximum of percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) $2,000, $5,000, or $10,000 annual deductible individual plans, respectively, in force in Minnesota; and (2) individual health maintenance organization contracts of coverage with a $2,000, $5,000, or $10,000 annual deductible, respectively, which are in force in Minnesota; or (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; (d) the premium for each type of Medicare supplement plan required to be offered by the association pursuant to section 62E.12 shall range from a minimum of percent to a maximum of percent of the weighted average of rates charged by those insurers and health maintenance organizations with individuals enrolled in: (1) Medicare supplement plans in force in Minnesota; (2) health maintenance organization Medicare supplement contracts of coverage which are in force in Minnesota; and (3) other plans of coverage similar to plans offered by the association based on generally accepted actuarial principles; and (e) the charge for health maintenance organization coverage shall be based on generally accepted actuarial principles. The list of insurers and health maintenance organizations whose rates are used to establish the premium for coverage offered by the association pursuant to paragraphs (a) to (d) shall be established by the commissioner on the basis of information which shall be provided to the association by all insurers and health maintenance organizations annually at the commissioner's request. This information shall include the number of individuals covered by each type of plan or contract specified in paragraphs (a) to (d) that is sold, issued, and renewed by the insurers and health maintenance organizations, including those plans or contracts available only on a renewal basis. The information shall also include the rates charged for each type of plan or contract. In establishing premiums pursuant to this section, the association shall utilize generally accepted actuarial principles, provided that the association shall not discriminate in charging premiums based upon sex. In order to compute a weighted average for each type of plan or contract specified under paragraphs (a) to (d), the association shall, using the information collected pursuant to this subdivision, list insurers and health maintenance organizations in rank order of the total number of individuals covered by each insurer or health maintenance organization. The association shall then compute a weighted average of the rates charged for coverage by all the insurers and health maintenance organizations by: (1) multiplying the numbers of individuals covered by each insurer or health maintenance organization by the rates charged for coverage;

14 5806 JOURNAL OF THE HOUSE [80TH DAY (2) separately summing both the number of individuals covered by all the insurers and health maintenance organizations and all the products computed under clause (1); and (3) dividing the total of the products computed under clause (1) by the total number of individuals covered. The association may elect to use a sample of information from the insurers and health maintenance organizations for purposes of computing a weighted average. In no case, however, may a sample used by the association to compute a weighted average include information from fewer than the two insurers or health maintenance organizations highest in rank order. Sec. 8. Minnesota Statutes 2003 Supplement, section 62E.091, is amended to read: 62E.091 [APPROVAL OF STATE PLAN PREMIUMS.] The association shall submit to the commissioner any premiums it proposes to become effective for coverage under the comprehensive health insurance plan, pursuant to section 62E.08, subdivision 3. No later than 45 days before the effective date for premiums specified in section 62E.08, subdivision 3, the commissioner shall approve, modify, or reject the proposed premiums on the basis of the following criteria: (a) whether the association has complied with the provisions of section 62E.11, subdivision 11; (b) whether the association has submitted the proposed premiums in a manner which provides sufficient time for individuals covered under the comprehensive insurance plan to receive notice of any premium increase no less than 30 days prior to the effective date of the increase; (c) the degree to which the association's computations and conclusions are consistent with section 62E.08; (d) the degree to which any sample used to compute a weighted average by the association pursuant to section 62E.08 reasonably reflects circumstances existing in the private marketplace for individual coverage; (e) the degree to which a weighted average computed pursuant to section 62E.08 that uses information pertaining to individual coverage available only on a renewal basis reflects the circumstances existing in the private marketplace for individual coverage; (f) a comparison of the proposed increases with increases in the cost of medical care and increases experienced in the private marketplace for individual coverage; (g) the financial consequences to enrollees of the proposed increase; (h) the actuarially projected effect of the proposed increase upon both total enrollment in, and the nature of the risks assumed by, the comprehensive health insurance plan; (i) the relative solvency of the contributing members; and (j) other factors deemed relevant by the commissioner. In no case, however, may the commissioner approve premiums for those plans of coverage described in section 62E.08, subdivision 1, paragraphs (a) to (d), that are lower than percent or greater than percent of the weighted averages computed by the association pursuant to section 62E.08. The commissioner shall support a decision to approve, modify, or reject any premium proposed by the association with written findings and

15 80TH DAY] FRIDAY, MARCH 26, conclusions addressing each criterion specified in this section. If the commissioner does not approve, modify, or reject the premiums proposed by the association sooner than 45 days before the effective date for premiums specified in section 62E.08, subdivision 3, the premiums proposed by the association under this section become effective. Sec. 9. [62Q.37] [AUDITS CONDUCTED BY NATIONALLY RECOGNIZED INDEPENDENT ORGANIZATION.] Subdivision 1. [APPLICABILITY.] This section applies only to (i) a nonprofit health service plan corporation operating under chapter 62C; (ii) a health maintenance organization operating under chapter 62D; (iii) a community integrated service network operating under chapter 62N; and (iv) managed care organizations operating under chapter 256B, 256D, or 256L. Subd. 2. [DEFINITIONS.] For purposes of this section, the following terms have the meanings given them. (a) "Commissioner" means the commissioner of health for purposes of regulating health maintenance organizations and community integrated service networks, the commissioner of commerce for purposes of regulating nonprofit health service plan corporations, or the commissioner of human services for the purpose of contracting with managed care organizations serving persons enrolled in programs under chapter 256B, 256D, or 256L. (b) "Health plan company" means (i) a nonprofit health service plan corporation operating under chapter 62C; (ii) a health maintenance organization operating under chapter 62D; (iii) a community integrated service network operating under chapter 62N; or (iv) a managed care organization operating under chapter 256B, 256D, or 256L. (c) "Nationally recognized independent organization" means (i) an organization that sets specific national standards governing health care quality assurance processes, utilization review, provider credentialing, marketing, and other topics covered by this chapter and other chapters and audits and provides accreditation to those health plan companies that meet those standards. The American Accreditation Health Care Commission (URAC), the National Committee for Quality Assurance (NCQA), and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) are, at a minimum, defined as nationally recognized independent organizations; and (ii) the Centers for Medicare and Medicaid Services for purposes of reviews or audits conducted of health plan companies under Part C of Title XVIII of the Social Security Act or under section 1876 of the Social Security Act. (d) "Performance standard" means those standards relating to quality management and improvement, access and availability of service, utilization review, provider selection, provider credentialing, marketing, member rights and responsibilities, complaints, appeals, grievance systems, enrollee information and materials, enrollment and disenrollment, subcontractual relationships and delegation, confidentiality, continuity and coordination of care, assurance of adequate capacity and services, coverage and authorization of services, practice guidelines, health information systems, and financial solvency. Subd. 3. [AUDITS.] (a) The commissioner may conduct routine audits and investigations as prescribed under the commissioner's respective state authorizing statutes. If a nationally recognized independent organization has conducted an audit of the health plan company using audit procedures that are comparable to or more stringent than the commissioner's audit procedures: (1) the commissioner may accept the independent audit and require no further audit if the results of the independent audit show that the performance standard being audited meets or exceeds state standards; (2) the commissioner may accept the independent audit and limit further auditing if the results of the independent audit show that the performance standard being audited partially meets state standards;

16 5808 JOURNAL OF THE HOUSE [80TH DAY (3) the health plan company must demonstrate to the commissioner that the nationally recognized independent organization that conducted the audit is qualified and that the results of the audit demonstrate that the particular performance standard partially or fully meets state standards; and (4) if the commissioner has partially or fully accepted an independent audit of the performance standard, the commissioner may use the finding of a deficiency with regard to statutes or rules by an independent audit as the basis for a targeted audit or enforcement action. (b) If a health plan company has formally delegated activities that are required under either state law or contract to another organization that has undergone an audit by a nationally recognized independent organization, that health plan company may use the nationally recognized accrediting body's determination on its own behalf under this section. Subd. 4. [DISCLOSURE OF NATIONAL STANDARDS AND REPORTS.] The health plan company shall: (1) request that the nationally recognized independent organization provide to the commissioner a copy of the current nationally recognized independent organization's standards upon which the acceptable accreditation status has been granted; and (2) provide the commissioner a copy of the most current final audit report issued by the nationally recognized independent organization. Subd. 5. [ACCREDITATION NOT REQUIRED.] Nothing in this section requires a health plan company to seek an acceptable accreditation status from a nationally recognized independent organization. Subd. 6. [CONTINUED AUTHORITY.] Nothing in this section precludes the commissioner from conducting audits and investigations or requesting data as granted under the commissioner's respective state authorizing statutes. Subd. 7. [HUMAN SERVICES.] The commissioner of human services shall implement this section in a manner that is consistent with applicable federal laws and regulations. Subd. 8. [CONFIDENTIALITY.] Any documents provided to the commissioner related to the audit report that may be accepted under this section are private data on individuals pursuant to chapter 13 and may only be released as permitted under section 60A.03, subdivision 9. Sec. 10. Minnesota Statutes 2002, section 72A.20, is amended by adding a subdivision to read: Subd. 37. [ELECTRONIC TRANSMISSION OF REQUIRED INFORMATION.] A health carrier, as defined in section 62A.011, subdivision 2, is not in violation of this chapter for electronically transmitting or electronically making available information otherwise required to be delivered in writing under chapters 62A to 62Q and 72A to an enrollee as defined in section 62Q.01, subdivision 2a, and with the requirements of those chapters if the following conditions are met: (1) the health carrier informs the enrollee that electronic transmission or access is available and, at the discretion of the health carrier, the enrollee is given one of the following options: (i) electronic transmission or access will occur only if the enrollee affirmatively requests to the health carrier that the required information be electronically transmitted or available and a record of that request is retained by the health carrier; or

17 80TH DAY] FRIDAY, MARCH 26, (ii) electronic transmission or access will automatically occur if the enrollee has not opted out of that manner of transmission by request to the health carrier and requested that the information be provided in writing. If the enrollee opts out of electronic transmission, a record of that request must be retained by the health carrier; (2) the enrollee is allowed to withdraw the request at any time; (3) if the information transmitted electronically contains individually identifiable data, it must be transmitted to a secured mailbox. If the information made available electronically contains individually identifiable data, it must be made available at a password-protected secured Web site; (4) the enrollee is provided a customer service number on the enrollee's member card that may be called to request a written copy of the document; and (5) the electronic transmission or electronic availability meets all other requirements of this chapter including, but not limited to, size of the typeface and any required time frames for distribution. Sec. 11. [CHANGE OF HEALTH MAINTENANCE ORGANIZATION REGULATORY AUTHORITY.] (a) Effective July 1, 2005, regulatory authority for health maintenance organizations under Minnesota Statutes, chapter 62D; community health clinics with respect to health care services prepaid option plans offered under Minnesota Statutes, section 62Q.22; community integrated service networks, as defined in Minnesota Statutes, section 62N.02, subdivision 4a; health care cooperatives operating under Minnesota Statutes, chapter 62R; health care purchasing alliances and accountable provider networks operating under Minnesota Statutes, chapter 62T; and county-based purchasing programs operating under Minnesota Statutes, section 256B.692, subdivision 2, is transferred from the commissioner of health to the commissioner of commerce. (b) Minnesota Statutes, section , applies to this transfer of authority. (c) The revisor of statutes shall make changes to conform to paragraph (a) by changing references to the commissioner of health, Department of Health, and similar references, to the commissioner of commerce, Department of Commerce, or similar references, and by changing references to both commissioners or both departments or "the appropriate commissioner" or similar term to the commissioner or Department of Commerce, as appropriate in Minnesota Statutes, sections 62A.021, subdivision 1, paragraph (h); 62D.02, subdivision 3; 62D.12, subdivision 1; 62D.15, subdivision 1; 62D.24, by also changing the existing reference to "commissioner of commerce" to read "commissioner of health"; 62E.05, subdivision 2; 62E.11, subdivision 13; 62J.041, subdivision 4; 62J.701; 62J.74, subdivisions 1 and 2; 62L.02, subdivision 8; 62L.05, subdivision 12; 62L.08, subdivisions 10 and 11; 62L.09, subdivision 3; 62L.10, subdivision 4; 62L.11, subdivision 2; 62M.11; 62M.16; 62N.02, subdivision 4; 62N.26; 62Q.01, subdivision 2; 62Q.106; 62Q.22, subdivisions 2, 6, and 7; 62Q.33, subdivision 2, by specifying that the commissioner referenced in the last sentence is the commissioner of health; 62Q.49, subdivision 2; 62Q.51, subdivision 3; 62Q.525, subdivision 3; 62Q.69, subdivisions 2 and 3; 62Q.71; 62Q.72; 62Q.73, subdivisions 3, 4, 5, and 6; 62R.04, subdivision 5; 62R.06, subdivision 1; 62T.01; 256B.692, subdivisions 2 and 7. The revisor of statutes shall, in preparing Minnesota Statutes 2004, make all conforming changes in Minnesota Statutes, chapter 62D, and other chapters. ARTICLE 6 HEALTH CARE COST CONTAINMENT; ADMINISTRATIVE SIMPLIFICATION Section 1. Minnesota Statutes 2002, section , subdivision 1, is amended to read: Subdivision 1. [ENDORSEMENT; RECIPROCITY.] (a) The board may issue a license to practice medicine to any person who satisfies the requirements in paragraphs (b) to (f).