EIGHTY-THIRD SESSION 2004 SIXTY-FIFTH DAY

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1 65TH DAY] THURSDAY, FEBRUARY 19, STATE OF MINNESOTA EIGHTY-THIRD SESSION 2004 SIXTY-FIFTH DAY SAINT PAUL, MINNESOTA, THURSDAY, FEBRUARY 19, 2004 The House of Representatives convened at 3:00 p.m. and was called to order by Steve Sviggum, Speaker of the House. Prayer was offered by the Reverend Scott Prouty, First Presbyterian Church, Redwood Falls, 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. Anderson, J. Atkins Beard Bernardy Biernat Blaine Boudreau Bradley Brod Buesgens Carlson Cornish Cox Davids Davnie DeLaForest Demmer Dempsey Dill Dorman Dorn Eastlund Eken Ellison Entenza Erickson Finstad Fuller Gerlach Goodwin Greiling Gunther Haas Hackbarth Harder Hausman Heidgerken Hilstrom Hilty Holberg Hoppe Hornstein Howes Huntley Jacobson Jaros Johnson, J. Johnson, S. Juhnke Kahn Kelliher Klinzing Knoblach Koenen Kohls Krinkie Kuisle Lanning Larson Lenczewski Lesch Lieder Lindgren Lindner Lipman Magnus Mahoney Mariani Marquart McNamara Meslow Mullery Murphy Nelson, C. Nelson, M. Nelson, P. Newman Nornes Olson, M. Opatz Osterman Otremba Otto Ozment Paulsen Paymar Pelowski Penas Peterson Pugh Rhodes Rukavina Ruth Samuelson Seagren Seifert Sertich Severson Sieben Simpson Slawik Smith Soderstrom Stang Strachan Swenson Sykora Thao Thissen Tingelstad Urdahl Vandeveer Wagenius Walz Wardlow Wasiluk Westerberg Westrom Wilkin Zellers Spk. Sviggum A quorum was present. Borrell; Clark; Erhardt; Latz; Olsen, S.; Powell; Solberg and Walker were excused. The Chief Clerk proceeded to read the Journal of the preceding day. Severson 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 4586 JOURNAL OF THE HOUSE [65TH DAY REPORTS OF CHIEF CLERK S. F. No and H. F. No. 1805, which had been referred to the Chief Clerk for comparison, were examined and found to be identical with certain exceptions. SUSPENSION OF RULES Pugh moved that the rules be so far suspended 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 communication was received: 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 Act of the 2004 Session of the State Legislature has been received from the Office of the Governor and is deposited in the Office of the Secretary of State for preservation, pursuant to the State Constitution, Article IV, Section 23: S. F. No. H. F. No. Session Laws Chapter No. Time and Date Approved 2004 Date Filed :05 p.m. February 17 February 17 Sincerely, MARY KIFFMEYER Secretary of State REPORTS OF STANDING COMMITTEES Holberg from the Committee on Civil Law to which was referred: H. F. No. 250, A bill for an act proposing an amendment to the Minnesota Constitution; adding a section to article IV to provide for initiative and referendum; providing procedures for initiative and referendum; providing penalties; amending Minnesota Statutes 2002, sections 204C.33, subdivisions 1, 3; 204D.11, by adding a subdivision; proposing coding for new law in Minnesota Statutes, chapter 3B. Reported the same back with the following amendments:

3 65TH DAY] THURSDAY, FEBRUARY 19, Page 13, line 34, delete "3B.49" and insert "3B.47" With the recommendation that when so amended the bill pass and be re-referred to the Committee on Ways and Means. The report was adopted. Erhardt from the Committee on Transportation Policy to which was referred: H. F. No. 722, A bill for an act relating to traffic regulations; exempting garbage trucks and recycling vehicles from certain weight restrictions; amending Minnesota Statutes 2002, section , subdivision 6. Reported the same back with the following amendments: Delete everything after the enacting clause and insert: "Section 1. Minnesota Statutes 2002, section , subdivision 6, is amended to read: Subd. 6. [RECYCLING VEHICLES.] Weight restrictions imposed under subdivisions 1 and 2 do not apply to (1) a two-axle vehicle that does not exceed 20,000 pounds per single axle and is designed and used exclusively for recycling, while engaged in recycling in a political subdivision that mandates curbside recycling pickup, or (2) a vehicle that does not exceed 20,000 pounds per single axle and is designed and used exclusively for collecting mixed municipal solid waste, as defined in section 115A.03, subdivision 21, while engaged in such collection. [EFFECTIVE DATE.] This section is effective the day following final enactment." With the recommendation that when so amended the bill be re-referred to the Committee on Transportation Finance without further recommendation. The report was adopted. Boudreau from the Committee on Health and Human Services Policy 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; 62A.02, subdivision 2; 62D.02, subdivision 4, by adding a subdivision; 62D.03, subdivision 1; 62D.04, subdivision 1; , 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; 62L; 147; 604; repealing Minnesota Statutes 2002, sections 62A.309; 62J.17, as amended; 62Q.65. Reported the same back with the following amendments:

4 4588 JOURNAL OF THE HOUSE [65TH DAY Delete everything after the enacting clause and insert: "ARTICLE 1 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 the state make available to state employees 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. 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, 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).

5 65TH DAY] THURSDAY, FEBRUARY 19, Sec. 4. [ ] [PAYMENT DISCLOSURE.] Subdivision 1. [EXPLANATION OF PHARMACY BENEFITS.] Each health plan company, as defined in section 62Q.01, subdivision 4, or its contracted pharmacy benefit manager, shall provide on a quarterly basis an explanation of pharmacy benefits to patients receiving prescription drugs covered under their health plan. The explanation of benefits must include the payment to the pharmacy by the health plan company or its contracted pharmacy benefit manager, the patient's co-payment, and the amount billed to the patient's employer or health plan sponsor. Subd. 2. [NO PROHIBITION ON DISCLOSURE.] No contracting agreement between a 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 the total reimbursement to the pharmacy, including the amount of the patient's co-payment and the amount paid to the pharmacy by the health plan company or its contracted pharmacy benefit manager. 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

6 4590 JOURNAL OF THE HOUSE [65TH DAY , 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 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.

7 65TH DAY] THURSDAY, FEBRUARY 19, 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. 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 BEST PRACTICES Section 1. [ ] [IDENTIFICATION AND TRACKING OF USE OF PRACTICE GUIDELINES.] The commissioner of health, in consultation with medical researchers, consumers, and representatives of health care providers and health plan companies, shall review health care best practice guidelines and identify five best practice guidelines for which, in the determination of the commissioner, greater adherence to by Minnesota health care providers would lead to a significant improvement in patient health outcomes. The commissioner shall encourage Minnesota health care providers to follow the guidelines identified and shall monitor and track the extent to which Minnesota health care providers follow the guidelines. 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. [147.38] [BEST PRACTICES GUIDELINE.] Subdivision 1. [HEALTH-RELATED BOARD.] For purposes of this section, "health-related board" means the Board of Medical Practice established under section , the Board of Nursing established under section , the Board of Chiropractic Examiners established under section , the Board of Optometry established under section , the Board of Physical Therapy established under section , the Board of Dentistry established under section 150A.02, the Board of Pharmacy established under section , and the Board of Podiatry established under section

8 4592 JOURNAL OF THE HOUSE [65TH DAY Subd. 2. [BOARD APPROVAL.] A health-related board, in consultation with a relevant professional association or specialty organization and the commissioner of health, may evaluate and approve best practice guidelines and shall make any approved guidelines available to interested practitioners through the board's Web site. Sec. 4. Minnesota Statutes 2002, section 256B.04, is amended by adding a subdivision to read: Subd. 20. [INFORMATION AND REFERRAL CENTER FOR INTERPRETER SERVICES.] The commissioner shall establish an information and referral center to assist health care providers in obtaining oral language interpreter services, when these services are needed to enable a patient to obtain a health care service from a provider. The information and referral center must collect and maintain contact and rate information for providers of oral language interpreter services and must make this information available to all health care providers, whether or not the provider is enrolled in a state health care program. The commissioner may contract with a private sector, nonprofit organization to implement this subdivision. Sec. 5. [BEST PRACTICES PILOT PROJECT.] The commissioners of human services and employee relations shall develop and implement a one-year best practices pilot project to encourage greater use of at least three of the best practice guidelines identified by the commissioner of health under Minnesota Statutes, section The pilot project must provide health care providers and health plan companies serving state employees and enrollees of state health care programs administered by the commissioner of human services with financial and other incentives to increase the use of the best practice guidelines selected. The commissioners shall implement the pilot project beginning January 1, 2005, and shall report the results of the pilot project to the legislature by June 1, ARTICLE 3 MEDICAL MALPRACTICE REFORM Section 1. [147.37] [BEST PRACTICE GUIDELINES; USE IN MEDICAL MALPRACTICE CASES.] (a) In an action against a provider for malpractice, error, mistake, or failure to cure, whether based in contract or tort, adherence to a best practice guideline approved by either a recognized specialty organization or an organization established for the purpose of developing community-based clinical practice guidelines is an absolute defense against an allegation that the provider did not comply with accepted standards of practice in the community. This paragraph does not apply if the best practice guideline 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. (b) Evidence of a departure from a best practice guideline is admissible only on the issue of whether the provider is entitled to an absolute defense under paragraph (a). (c) Paragraphs (a) and (b) apply to claims arising on or after August 1, (d) Nothing in this section changes the standard or burden of proof in an action alleging a delay in diagnosis, a misdiagnosis, inappropriate application of a best practice guideline, failure to obtain informed consent, battery or other intentional tort, or product liability.

9 65TH DAY] THURSDAY, FEBRUARY 19, Sec. 2. [ ] [HEALTH CARE PROVIDER ACTIONS; LIMITS ON DAMAGES AND ATTORNEY FEES.] Subdivision 1. [DEFINITIONS.] (a) For the purposes of this section, the terms in paragraphs (b) to (d) have the meanings given them. (b) "Economic loss" means all harm for which damages are recoverable, other than noneconomic losses. (c) "Health care provider" has the meaning given in section , paragraph (a), except that health care provider also includes a physician assistant registered under chapter 147A and ambulance services, medical directors, and personnel regulated under chapter 144E. (d) "Noneconomic loss" means all nonpecuniary harm for which damages are recoverable, including, but not limited to, pain, disability, disfigurement, embarrassment, emotional distress, and loss of consortium. Subd. 2. [LIMITATIONS.] (a) In an action for injury or death against a health care provider alleging malpractice, error, mistake, or failure to cure, whether based in contract or tort, the amount of damages awarded for noneconomic losses must not exceed $250,000, regardless of the number of parties against whom the action is brought or the number of separate claims or actions brought with respect to the same occurrence. (b) The limitation imposed by this subdivision must not be disclosed to the trier of fact by any person at trial. Subd. 3. [FINDINGS.] (a) A court in an action tried without a jury shall make a finding as to noneconomic loss without regard to the limit under subdivision 2. If noneconomic loss in excess of the limit is found, the court shall make any reduction required under this section and shall award as damages for noneconomic loss the lesser of the reduced amount or the limit. (b) If an action is before a jury, the jury shall make a finding as to noneconomic loss without regard to the limit under subdivision 2. If the jury finds that noneconomic loss exceeds the limit, the court shall make any reduction required under this section and shall award as damages for noneconomic loss the lesser of the reduced amount or the limit. Subd. 4. [PUNITIVE DAMAGES LIMITED.] (a) Punitive, exemplary, and similar damages recoverable against a health care provider in a cause of action described in subdivision 2 must not exceed $250,000. The jury must not be informed of this limitation. (b) All damages described in paragraph (a) must be paid directly to the Minnesota Comprehensive Health Association created under section 62E.10, subdivision 1, to be used for the purpose of reducing its assessments on its members. (c) Notwithstanding paragraph (a), a private nonprofit hospital licensed under sections to is not liable for punitive, exemplary, or similar damages, in an action described in subdivision 2. Subd. 5. [EXCESSIVE ATTORNEY FEES PROHIBITED.] (a) Attorney fees payable by a plaintiff in any cause of action referred to in subdivision 2 must not exceed the following percentage of damages: (1) 40 percent of the first $50,000; (2) 33-1/3 percent of the next $50,000; (3) 25 percent of the next $500,000; plus

10 4594 JOURNAL OF THE HOUSE [65TH DAY (4) 15 percent of that portion of damages that exceeds $600,000. (b) This subdivision applies to the net damages actually recovered by that plaintiff under the cause of action, whether through settlement, alternative dispute resolution, court judgment, or otherwise. "Net damages actually recovered" means the net sum recovered after deducting any disbursements or costs incurred in connection with prosecution or settlement of the claim, including all costs paid or advanced by any person. Costs of health care incurred by the plaintiff and the attorney's office overhead costs or charges for legal services are not deductible disbursements of costs for such purpose. (c) A fee agreement that violates this subdivision is void and unenforceable, to the extent of the violation. Sec. 3. [EFFECTIVE DATE; APPLICATION.] Section 2 is effective August 1, 2004, and applies to causes of actions arising from incidents occurring on or after that date. ARTICLE 4 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; (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; (7) each health plan must be approved by the commissioner of commerce; and

11 65TH DAY] THURSDAY, FEBRUARY 19, (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. (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 ADMINISTRATIVE REFORM 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). (b) The applicant shall satisfy all the requirements established in section , subdivision 1, paragraphs (a), (b), (d), (e), and (f). (c) The applicant shall: (1) have passed an examination prepared and graded by the Federation of State Medical Boards, the National Board of Medical Examiners, or the United States Medical Licensing Examination program in accordance with section , subdivision 1, paragraph (c), clause (2); the National Board of Osteopathic Examiners; or the Medical Council of Canada; and (2) have a current license from the equivalent licensing agency in another state or Canada and, if the examination in clause (1) was passed more than ten years ago, either: (i) pass the Special Purpose Examination of the Federation of State Medical Boards with a score of 75 or better within three attempts; or (ii) have a current certification by a specialty board of the American Board of Medical Specialties, of the American Osteopathic Association Bureau of Professional Education, or of the Royal College of Physicians and Surgeons of Canada. (d) The applicant shall pay a fee established by the board by rule. The fee may not be refunded. (e) The applicant must not be under license suspension or revocation by the licensing board of the state or jurisdiction in which the conduct that caused the suspension or revocation occurred.

12 4596 JOURNAL OF THE HOUSE [65TH DAY (f) The applicant must not have engaged in conduct warranting disciplinary action against a licensee, or have been subject to disciplinary action other than as specified in paragraph (e). If an applicant does not satisfy the requirements stated in this paragraph, the board may issue a license only on the applicant's showing that the public will be protected through issuance of a license with conditions or limitations the board considers appropriate. (g) Upon the request of an applicant, the board may conduct the final interview of the applicant by teleconference. Sec. 2. Minnesota Statutes 2003 Supplement, section 270A.03, subdivision 2, is amended to read: Subd. 2. [CLAIMANT AGENCY.] "Claimant agency" means any state agency, as defined by section 14.02, subdivision 2, the regents of the University of Minnesota, any district court of the state, any county, any statutory or home rule charter city presenting a claim for a municipal hospital or a public library or a municipal ambulance service, a hospital district, a private nonprofit hospital that leases its building from the county in which it is located, any public agency responsible for child support enforcement, any public agency responsible for the collection of court-ordered restitution, and any public agency established by general or special law that is responsible for the administration of a low-income housing program, and the Minnesota collection enterprise as defined in section 16D.02, subdivision 8, for the purpose of collecting the costs imposed under section 16D.11. A county may act as a claimant agency on behalf of an ambulance service licensed under chapter 144E if the ambulance service's primary service area is located at least in part within the county, but more than one county may not act as a claimant agency for a licensed ambulance service with respect to the same debt. Sec. 3. [COST OF HEALTH CARE REPORTING.] The commissioners of human services, health, and commerce shall meet with representatives of health plan companies as defined in section 62Q.01, subdivision 4, and hospitals to evaluate reporting requirements for these regulated entities and develop recommendations for reducing required reports. The commissioner must meet with the specified representatives prior to August 30, 2004, and must submit a consolidated report to the legislature by January 15, The report must: (1) identify the name and scope of each required report; (2) evaluate the need for and use of each report, including the value of the report to consumers; (3) evaluate the extent to which the report is used to reduce costs and increase quality of care; (4) identify reports that are no longer required; and (5) specify any statutory changes necessary to eliminate required reports. Sec. 4. [REPEALER.] Minnesota Statutes 2002, section 62J.17, as amended by Laws 2003, First Special Session chapter 14, article 7, section 11, is repealed effective the day following final enactment. ARTICLE 6 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.

13 65TH DAY] THURSDAY, FEBRUARY 19, (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. 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:

14 4598 JOURNAL OF THE HOUSE [65TH DAY (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: (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. [62Q.732] [RECOGNITION OF ACCREDITATION BY NATIONALLY RECOGNIZED ACCREDITING BODY.] Subdivision 1. [DEFINITIONS.] (a) For purposes of this section, the terms defined in this subdivision have the meanings given. (b) "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 all other health plan companies; or the commissioner of human services for the purpose of contracting with health plan companies serving persons enrolled in programs under chapter 256B, 256D, or 256L. (c) "Nationally recognized accrediting body" means an organization that sets specific national standards governing health care quality assurance processes, utilization review, provider credentialing, market conduct, and other topics covered by this chapter and other chapters and, based upon those standards, provides accreditation to health plan companies. The American Accreditation Health Care Commission (URAC), the National Committee for Quality Assurance (NCQA), and the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), at a minimum, are nationally recognized accrediting bodies for purposes of this section.

15 65TH DAY] THURSDAY, FEBRUARY 19, (d) "Acceptable accreditation status" means that a health plan company has achieved an accredited, commendable, or excellent determination, or comparable status, from a nationally recognized accrediting body. Subd. 2. [APPLICATION OF ACCREDITATION STANDARDS TO STATE REQUIREMENTS.] (a) Health plan companies that have achieved an acceptable accreditation status or that have been determined to be in substantial compliance with Medicare+Choice, cost contract, or Medicare Advantage requirements by the federal Centers for Medicare and Medicaid Services, and have forwarded the determination to the commissioner, are deemed to have met the comparable requirements of state law or contract. Nationally recognized accrediting body and Medicare+Choice, cost contract, or Medicare Advantage standards must be considered to be comparable to similar state requirements if they are at least as protective of the rights of the enrollee or at least as stringent as the state requirements. Provisions of state law or contract that are covered under this subdivision include requirements relating to health care quality assurance, utilization review, provider credentialing, and market conduct. Nothing in this section prohibits the commissioner from performing an on-site review of complaint, utilization management, and appeal files. (b) If a health plan company has formally delegated certain activities that are required under either state law or contract to another organization that has achieved an acceptable accreditation status, that health plan company may use the nationally recognized accrediting body's determination on its own behalf and must be deemed to have met the comparable requirements of the applicable state law or contract. Subd. 3. [DISCLOSURE OF NATIONAL STANDARDS.] The commissioner may request a copy of the national standards upon which the acceptable accreditation status has been granted. This request may be made to the nationally recognized accrediting body. Subd. 4. [ACCREDITATION NOT REQUIRED.] Nothing in this section requires a health plan company to seek an acceptable accreditation status from a nationally recognized accrediting body. Sec. 7. 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 (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;

16 4600 JOURNAL OF THE HOUSE [65TH DAY (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 the chapter including, but not limited to, size of the typeface and any required time frames for distribution. Sec. 8. [CHANGE OF HEALTH MAINTENANCE ORGANIZATION REGULATORY AUTHORITY.] (a) Effective July 1, 2005, regulatory authority for health maintenance organizations under Minnesota Statutes, chapter 62D, community integrated service networks, as defined in Minnesota Statutes, section 62N.02, subdivision 4a; health care cooperatives operating under Minnesota Statutes, chapter 62R; and health care purchasing alliances and accountable provider networks operating under Minnesota Statutes, chapter 62T, 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, in preparing Minnesota Statutes 2004, make all conforming changes in Minnesota Statutes, chapter 62D, and other chapters. Section 1. [3.990] [IMPACT OF COST-SHIFTING.] ARTICLE 7 TAXPAYER SUBSIDIZED HEALTH PROGRAM COST-SHIFTING The commissioner of human services and the commissioner of finance, in preparing a fiscal note for any legislative proposal that requires new or increased funding for an expansion of eligibility or covered services for a state health care program, shall include in the fiscal note an estimate of the financial impact of cost-shifting on private sector payers and individuals paying for health care services out-of-pocket. The commissioners shall measure the financial impact of cost-shifting by calculating the extent to which estimated state health care program reimbursement for the additional health care services expected to be provided as a result of the expansion is lower than the estimated cost to providers of providing the services. For purposes of this section, "state health care program" means the medical assistance, MinnesotaCare, and general assistance medical care programs. Sec. 2. 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. 3. [STUDY OF COST-SHIFTING.] (a) The commissioner of human services 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: