Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 1984, Regular Session
Key: (1) language to be deleted (2) new language
Laws of Minnesota 1984
CHAPTER 464-H.F.No. 1561
An act relating to health; health maintenance
organizations; providing continued coverage upon
replacement of an insurance carrier; including health
maintenance organization contracts in certain
statutorily mandated coverages; providing for the
disclosure and reporting by the organization of
detailed financial, administrative and ownership
information; providing for reporting of changes in
provider agreements; granting the commissioner
authority to adopt rules regarding the content of
provider and other agreements; requiring certain
deposits against insolvency; authorizing organizations
to enter into certain health services contracts;
requiring certain consumer rights information in
evidences of coverage and annual information
statements; providing for reimbursement of, and direct
payments to, enrollees; providing for examination by
the commissioner of health; specifying the examination
powers of the commissioner; classifying certain data
used for review purposes; prescribing penalties;
amending Minnesota Statutes 1982, sections 60A.082;
62A.041; 62A.042; 62A.044; 62A.14; 62A.147; 62D.02,
subdivision 8, and by adding subdivisions; 62D.04;
62D.05, subdivision 3; 62D.07, subdivisions 1, 3, and
by adding subdivisions; 62D.08, subdivisions 1, 3, and
by adding subdivisions; 62D.09; 62D.10, subdivision 3,
and by adding a subdivision; 62D.101, subdivisions 2
and 2a; 62D.12, subdivisions 1, 2, 4, 9, 10, and by
adding subdivisions; 62D.14; 62D.15, subdivision 1;
62D.17, subdivisions 1 and 4; 62D.19; 62D.22,
subdivision 5, and by adding a subdivision; amending
Minnesota Statutes 1983 Supplement, sections 62A.17,
subdivision 6; 62D.03, subdivision 4; proposing new
law coded in Minnesota Statutes, chapter 62D;
repealing Minnesota Statutes 1982, sections 62D.10,
subdivision 2; 62D.12, subdivision 7; 62D.22,
subdivision 9; and 62D.27.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1982, section 60A.082, is
amended to read:
60A.082 [GROUP INSURANCE; BENEFITS CONTINUED IF INSURER
CHANGED.]
A person covered under group life, group accidental death
and dismemberment, group disability income or group medical
expense insurance, shall not be denied benefits to which he is
otherwise entitled solely because of a change in the insurance
company writing the coverage or in the group contract applicable
to the person. In the case of one or more carriers replacing or
remaining in place after one or more plans have been
discontinued, each carrier shall accept any person who was
covered under the discontinued plan or plans without denial of
benefits to which other persons in the group covered by that
carrier are entitled. "Insurance Company" shall include a
service plan corporation under chapter 62C or 62D.
The commissioner shall promulgate rules to carry out this
section. Nothing in this section shall preclude an employer,
union or association from reducing the level of benefits under
any group insurance policy or plan.
Sec. 2. Minnesota Statutes 1982, section 62A.041, is
amended to read:
62A.041 [MATERNITY BENEFITS; UNMARRIED WOMEN.]
Each group policy of accident and health insurance issued
or renewed after June 4, 1971, and each group health maintenance
contract issued or renewed after the effective date of this
section shall provide the same coverage for maternity benefits
to unmarried women and minor female dependents that it provides
to married women including the wives of employees choosing
dependent family coverage. If an unmarried insured or an
unmarried enrollee is a parent of a dependent child, each group
policy issued or renewed after July 1, 1976, and each group
contract issued or renewed after the effective date of this
section shall provide the same coverage for that child as that
provided for the child of a married employee choosing dependent
family coverage if the insured or the enrollee elects dependent
family coverage.
Each individual policy of accident and health insurance and
each individual health maintenance contract shall provide the
same coverage for maternity benefits to unmarried women and
minor female dependents as that provided for married women. If
an unmarried insured or an unmarried enrollee is a parent of a
dependent child, each individual policy issued or renewed after
July 1, 1976, and each individual contract issued or renewed
after the effective date of this section shall also provide the
same coverage for that child as that provided for the child of a
married insured or a married enrollee choosing dependent family
coverage if the insured or the enrollee elects dependent family
coverage.
For the purposes of this section, the term "maternity
benefits" shall not include elective, induced abortion whether
performed in a hospital, other abortion facility, or the office
of a physician.
Sec. 3. Minnesota Statutes 1982, section 62A.042, is
amended to read:
62A.042 [FAMILY COVERAGE; COVERAGE OF NEWBORN INFANTS.]
Subdivision 1. [INDIVIDUAL FAMILY POLICIES; RENEWALS.] No
policy of individual accident and sickness insurance which
provides for insurance for more than one person under section
62A.03, subdivision 1, clause (3), and no individual health
maintenance contract which provides for coverage for more than
one person under chapter 62D, shall be renewed to insure or
cover any person in this state or be delivered or issued for
delivery to any person in this state unless such policy or
contract includes as insured or covered members of the family
any newborn infants immediately from the moment of birth and
thereafter which insurance or contract shall provide coverage
for illness, injury, congenital malformation or premature birth.
Subd. 2. [GROUP POLICIES; RENEWALS.] No group accident and
sickness insurance policy and no group health maintenance
contract which provides provide for coverage of family members
or other dependents of an employee or other member of the
covered group shall be renewed to cover members of a group
located in this state or delivered or issued for delivery in
this state unless such policy or contract includes as insured or
covered family members or dependents any newborn infants
immediately from the moment of birth and thereafter which
insurance or contract shall provide coverage for illness,
injury, congenital malformation or premature birth.
Sec. 4. Minnesota Statutes 1982, section 62A.044, is
amended to read:
62A.044 [PAYMENTS TO GOVERNMENTAL INSTITUTIONS.]
No group or individual policy of accident and sickness
insurance issued or renewed after May 22, 1973 pursuant to this
chapter, and no group or individual service plan or subscriber
contract issued or renewed after May 22, 1973 pursuant to
chapter 62C, and no group or individual health maintenance
contract issued or renewed after the effective date of this
section pursuant to chapter 62D, shall contain any provision
denying or prohibiting payments for covered and authorized
services rendered by a hospital or medical institution owned or
operated by the federal, state, or local government or
practitioners therein in any instance wherein charges for such
services are imposed against the policy holder or, subscriber,
or enrollee. The unit of government operating the institution
may maintain an action for recovery of such charges.
Sec. 5. Minnesota Statutes 1982, section 62A.14, is
amended to read:
62A.14 [HANDICAPPED CHILDREN.]
Subdivision 1. [INDIVIDUAL FAMILY POLICIES.] An individual
hospital or medical expense insurance policy delivered or issued
for delivery in this state more than 120 days after May 16,
1969, or an individual health maintenance contract delivered or
issued for delivery in this state after the effective date of
this section, which provides that coverage of a dependent child
shall terminate upon attainment of the limiting age for
dependent children specified in the policy or contract shall
also provide in substance that attainment of such limiting age
shall not operate to terminate the coverage of such child while
the child is and continues to be both (a) incapable of
self-sustaining employment by reason of mental retardation or
physical handicap and (b) chiefly dependent upon the
policyholder for support and maintenance, provided proof of such
incapacity and dependency is furnished to the insurer or health
maintenance organization by the policyholder or enrollee within
31 days of the child's attainment of the limiting age and
subsequently as may be required by the insurer or organization
but not more frequently than annually after the two year period
following the child's attainment of the limiting age.
Subd. 2. [GROUP POLICIES.] A group hospital or medical
expense insurance policy delivered or issued for delivery in
this state more than 120 days after May 16, 1969, or a group
health maintenance contract delivered or issued for delivery in
this state after the effective date of this section, which
provides that coverage of a dependent child of an employee or
other member of the covered group shall terminate upon
attainment of the limiting age for dependent children specified
in the policy or contract shall also provide in substance that
attainment of such limiting age shall not operate to terminate
the coverage of such child while the child is and continues to
be both (a) incapable of self-sustaining employment by reason of
mental retardation or physical handicap and (b) chiefly
dependent upon the employee or member for support and
maintenance, provided proof of such incapacity and dependency is
furnished to the insurer or organization by the employee or
member within 31 days of the child's attainment of the limiting
age and subsequently as may be required by the insurer or
organization but not more frequently than annually after the two
year period following the child's attainment of the limiting age.
Sec. 6. Minnesota Statutes 1982, section 62A.147, is
amended to read:
62A.147 [DISABLED EMPLOYEES' BENEFITS; DEFINITIONS.]
Subdivision 1. For the purposes of this section and
section 62A.148, the terms defined in this section shall have
the meanings here given them.
Subd. 2. "Covered employee" means any person who, at the
time he suffered an injury resulting in total disability or
became totally disabled by reason of illness, was employed by
and receiving a salary, commission, hourly wage, or other
remuneration for his services by any employer providing,
offering or contributing to group insurance coverage or group
coverage through a health maintenance contract, for that
employee who was so enrolled for the coverage.
Subd. 3. "Total disability" means (a) the inability of an
injured or ill employee to engage in or perform the duties of
his regular occupation or employment within the first two years
of such disability and (b) after the first two years of such
disability, the inability of the employee to engage in any paid
employment or work for which he may, by his education and
training, including rehabilitative training, be or reasonably
become qualified.
Subd. 4. "Group insurance" means any policy or contract of
accident and health protection, including health maintenance
contracts, regardless of by whom underwritten, which provides
benefits, including cash payments for reimbursement of expenses
or the provision of usual needed health care and medical
services as the result of any injury, sickness, disability or
disease suffered by a group of employees, or any one of them,
and which protection is paid for or otherwise provided in full
or in part by an employer.
Subd. 5. "Employer" means any natural person, company,
corporation, partnership, association, firm, or franchise which
employs any employee.
Subd. 6. "Insurer" means any person, company, corporation
including a nonprofit corporation and a health maintenance
organization, partnership, association, firm or franchise which
underwrites or is by contract or other agreement obligated to
provide accident and health protection benefits to any group of
employees of any employer.
Sec. 7. Minnesota Statutes 1983 Supplement, section
62A.17, subdivision 6, is amended to read:
Subd. 6. [CONVERSION TO INDIVIDUAL POLICY.] A group
insurance policy that provides post termination or lay off
coverage as required by this section shall also include a
provision allowing a covered employee, surviving spouse, or
dependent at the expiration of the post termination or lay off
coverage provided by subdivision 2 to obtain from the insurer
offering the group policy or group subscriber contract, at the
employee's, spouse's, or dependent's option and expense, without
further evidence of insurability and without interruption of
coverage, an individual policy of insurance or an individual
subscriber contract providing at least the minimum benefits of a
qualified plan as prescribed by section 62E.06 and the option of
a number three qualified plan, a number two qualified plan, and
a number one qualified plan as provided by section 62E.06,
subdivisions 1 to 3. A health maintenance contract issued by a
health maintenance organization that provides post-termination
or layoff coverage as required by this section shall also
include a provision allowing a former employee, surviving
spouse, or dependent at the expiration of the post-termination
or layoff coverage provided in subdivision 2 to obtain from the
health maintenance organization, at the former employee's,
spouse's, or dependent's option and expense, without further
evidence of insurability and without interruption of coverage,
an individual health maintenance contract. Effective January 1,
1985, enrollees who have become nonresidents of the health
maintenance organization's service area shall be given the
option, to be arranged by the health maintenance organization,
of a number three qualified plan, a number two qualified plan,
or a number one qualified plan as provided by section 62E.06,
subdivisions 1 to 3 if an arrangement with an insurer can
reasonably be made by the health maintenance organization. This
option shall be made available at the enrollee's expense,
without further evidence of insurability and without
interruption of coverage.
A policy providing reduced benefits at a reduced premium
rate may be accepted by the employee, the spouse, or a dependent
in lieu of the optional coverage otherwise required by this
subdivision.
The individual policy or contract shall be renewable at the
option of the individual as long as the individual is not
covered under another qualified plan as defined in section
62E.02, subdivision 4, up to age 65 or to the day before the
date of eligibility for coverage under title XVIII of the Social
Security Act, as amended. Any revisions in the table of rate
for the individual policy shall apply to the covered person's
original age at entry and shall apply equally to all similar
policies issued by the insurer.
Sec. 8. Minnesota Statutes 1982, section 62D.02,
subdivision 8, is amended to read:
Subd. 8. "Health maintenance contract" means any contract
whereby a health maintenance organization agrees to provide
comprehensive health maintenance services to enrollees, provided
that the contract may contain reasonable enrollee copayment
provisions. Copayment provisions in group contracts shall not
discriminate on the basis of age, sex, race, length of
enrollment in the plan, or economic status; and during every
open enrollment period in which all offered health benefit
plans, including those subject to the jurisdiction of the
commissioners of commerce or health, fully participate without
any underwriting restrictions, copayment provisions shall not
discriminate on the basis of preexisting health status. In no
event shall the annual copayment exceed the maximum
out-of-pocket expenses allowable for a number three qualified
insurance policy under section 62E.06. Where sections 62D.01 to
62D.30 permit a health maintenance organization to contain
reasonable copayment provisions for preexisting health status,
these provisions may vary with respect to length of enrollment
in the plan. Any contract may provide for health care services
in addition to those set forth in subdivision 7.
Sec. 9. Minnesota Statutes 1982, section 62D.02, is
amended by adding a subdivision to read:
Subd. 12. "Participating entity" means any of the
following persons, providers, companies, or other organizations
with which the health maintenance organization has contracts or
other agreements:
(1) a health care facility licensed under sections 144.50
to 144.56, a nursing home licensed under sections 144A.02 to
144A.11, and any other health care facility otherwise licensed
under the laws of this state or registered with the commissioner
of health;
(2) a health care professional licensed under
health-related licensing boards, as defined in section 214.01,
subdivision 2, and any other health care professional otherwise
licensed under the laws of this state or registered with the
commissioner of health;
(3) a group, professional corporation, or other
organization which provides the services of individuals or
entities identified in (2), including but not limited to a
medical clinic, a medical group, a home health care agency, an
urgent care center, and an emergent care center;
(4) any person or organization providing administrative,
financial, or management services to the health maintenance
organization if the total payment for all services exceeds three
percent of the gross revenues of the health maintenance
organization.
"Participating entity" does not include (a) another health
maintenance organization with which a health maintenance
organization has made contractual arrangements or (b) any entity
with which a health maintenance organization has contracted
primarily in order to purchase or lease equipment or space or
(c) employees of the health maintenance organization or (d)
employees of any participating entity identified in clause (3)
of this subdivision.
Sec. 10. Minnesota Statutes 1982, section 62D.02, is
amended by adding a subdivision to read:
Subd. 13. "Major participating entity" shall include the
following:
(1) a participating entity that receives from the health
maintenance organization as compensation for services a sum
greater than 30 percent of the health maintenance organization's
gross annual revenues;
(2) a participating entity providing administrative,
financial, or management services to the health maintenance
organization, if the total payment for all services provided by
the participating entity exceeds three percent of the gross
revenue of the health maintenance organization;
(3) a participating entity that nominates or appoints 30
percent or more of the board of directors of the health
maintenance organization.
Sec. 11. Minnesota Statutes 1982, section 62D.02, is
amended by adding a subdivision to read:
Subd. 14. "Separate health services contracts" means
prepaid dental services contracts and other similar types of
prepaid health services agreements in which services are
provided by participating entities or employees of the health
maintenance organization, but does not include contracts subject
to chapter 62A or 62C.
Sec. 12. Minnesota Statutes 1983 Supplement, section
62D.03, subdivision 4, is amended to read:
Subd. 4. Each application for a certificate of authority
shall be verified by an officer or authorized representative of
the applicant, and shall be in a form prescribed by the
commissioner of health. Each application shall include the
following:
(a) a copy of the basic organizational document, if any, of
the applicant and of each major participating entity; such as
the articles of incorporation, or other applicable documents,
and all amendments thereto;
(b) a copy of the bylaws, rules and regulations, or similar
document, if any, and all amendments thereto which regulate the
conduct of the affairs of the applicant and of each major
participating entity;
(c) a list of the names, addresses, and official positions
of the following persons:
All members of the board of directors or governing body of
the local governmental unit, and the principal officers of the
organization; which shall contain a full disclosure in the
application of the extent and nature of any contract or
financial arrangements between them and the health maintenance
organization, including a full disclosure of any financial
arrangements between them and any provider or other person
concerning any financial relationship with the health
maintenance organization;
(1) all members of the board of directors, or governing
body of the local government unit, and the principal officers
and shareholders of the applicant organization; and
(2) all members of the board of directors, or governing
body of the local government unit, and the principal officers of
the major participating entity and each shareholder beneficially
owning more than ten percent of any voting stock of the major
participating entity;
The commissioner may by rule identify persons included in
the term "principal officers";
(d) a full disclosure of the extent and nature of any
contract or financial arrangements between the following:
(1) the health maintenance organization and the persons
listed in clause (c)(1);
(2) the health maintenance organization and the persons
listed in clause (c)(2);
(3) each major participating entity and the persons listed
in clause (c)(1) concerning any financial relationship with the
health maintenance organization; and
(4) each major participating entity and the persons listed
in clause (c)(2) concerning any financial relationship with the
health maintenance organization;
(e) the name and address of each participating entity and
the agreed upon duration of each contract or agreement;
(f) a copy of the form of each contract binding the
participating entities and the health maintenance organization.
Contractual provisions shall be consistent with the purposes of
sections 62D.01 to 62D.29 in regard to the services to be
performed under the contract, the manner in which payment for
services is determined, the nature and extent of
responsibilities to be retained by the health maintenance
organization, the nature and extent of risk sharing permissible,
and contractual termination provisions;
(g) a copy of each contract binding major participating
entities and the health maintenance organization. Upon the
request of the health maintenance organization, contract
information filed with the commissioner may be nonpublic and
subject to the provisions of section 13.37, subdivision 1(b).
Upon initial filing of each contract, the health
maintenance organization shall file a separate document
detailing the projected annual expenses to the major
participating entity in performing the contract and the
projected annual revenues received by the entity from the health
maintenance organization for such performance. The commissioner
shall disapprove any contract with a major participating entity
if the contract will result in an unreasonable expense under
section 62D.19. The commissioner shall notify a major
participating entity within 30 days if a contract may be
disapproved.
Within 120 days of the anniversary of the implementation of
each contract, the health maintenance organization shall file a
document detailing the actual expenses incurred by the major
participating entity in performing the contract in the preceding
year and the actual revenues received from the health
maintenance organization by the entity in payment for the
performance.
Contracts implemented prior to the effective date of this
subdivision shall be filed within 90 days of such effective date.
Commencing with the next anniversary of the implementation of
each of these contracts immediately following filing, the health
maintenance organization shall, as otherwise required by this
subdivision, file annual actual expenses and revenues. These
contracts are subject to the provisions of section 62D.19, but
are not subject to the prospective review prescribed by this
clause, unless or until the terms of the contract are modified.
(d) (h) a statement generally describing the health
maintenance organization, its health care plan or plans
maintenance contracts and separate health service contracts,
facilities, and personnel, including a statement describing the
manner in which the applicant proposes to provide enrollees with
comprehensive health maintenance services and separate health
services;
(e) (i) a copy of the form of each evidence of coverage to
be issued to the enrollees;
(f) (j) a copy of the form of each individual or group
health maintenance contract and each separate health service
contract which is to be issued to enrollees or their
representatives;
(g) (k) financial statements showing the applicant's
assets, liabilities, and sources of financial support. If the
applicant's financial affairs are audited by independent
certified public accountants, a copy of the applicant's most
recent certified financial statement may be deemed to satisfy
this requirement;
(h) (1) (l) a description of the proposed method of
marketing the plan, (2) a schedule of proposed charges, and (3)
a financial plan which includes a three year projection of the
expenses and income and other sources of future capital;
(i) (m) a statement reasonably describing the geographic
area or areas to be served and the type or types of enrollees to
be served;
(j) (n) a description of the complaint procedures to be
utilized as required under section 62D.11;
(k) (o) a description of the procedures and programs to be
implemented to meet the requirements of section 62D.04,
subdivision 1, clauses (b) and (c) and to monitor the quality of
health care provided to enrollees;
(l) (p) a description of the mechanism by which enrollees
will be afforded an opportunity to participate in matters of
policy and operation under section 62D.06;
(q) a copy of any agreement between the health maintenance
organization and an insurer or nonprofit health service
corporation regarding reinsurance, stop-loss coverage, or any
other type of coverage for potential costs of health services,
as authorized in section 62D.04, subdivision 1(f) and section
62D.13; and
(m) (r) other information as the commissioner of health may
reasonably require to be provided.
Sec. 13. Minnesota Statutes 1982, section 62D.04, is
amended to read:
62D.04 [ISSUANCE OF CERTIFICATE AUTHORITY.]
Subdivision 1. 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 may consider either the standards of
clauses (1) and (2), or the standards of clauses (3) and (4),
whichever the applicant shall elect:
(1) the financial soundness of its arrangements for health
care services and the proposed schedule of charges used in
connection therewith;
(2) the adequacy of its working capital;
(3) 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
(4) agreements with providers for the provision of health
care services; and
(5) any deposit of cash or securities submitted in
accordance with section 19.
(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 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 non-elective 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
(g) Otherwise met the requirements of sections 62D.01 to
62D.29.
Subd. 2. Within 90 days after the receipt of the
application for a certificate of authority, the commissioner of
health shall determine whether or not the applicant meets the
requirements of this section. If the commissioner of health
determines that the applicant meets the requirements of sections
62D.01 to 62D.29, he shall issue a certificate of authority to
the applicant. If the commissioner of health determines that
the applicant is not qualified, he shall so notify the applicant
and shall specify the reason or reasons for such
disqualification.
Subd. 3. Except as provided in section 62D.03, subdivision
2, no person who has not been issued a certificate of authority
shall use the words "health maintenance organization" or the
initials "HMO" in its name, contracts or literature. Provided,
however, that persons who are operating under a contract with,
operating in association with, enrolling enrollees for, or
otherwise authorized by a health maintenance organization
licensed under sections 62D.01 to 62D.29 to act on its behalf
may use the terms "health maintenance organization" or "HMO" for
the limited purpose of denoting or explaining their association
or relationship with the authorized health maintenance
organization. No health maintenance organization which has a
minority of consumers as members of its board of directors shall
use the words "consumer controlled" in its name or in any way
represent to the public that it is controlled by consumers.
Subd. 4. Upon being granted a certificate of authority to
operate as a health maintenance organization, the organization
must continue to operate in compliance with the standards set
forth in subdivision 1. Noncompliance may result in the
imposition of a fine or the suspension or revocation of the
certificate of authority, in accordance with sections 62D.15 to
62D.17.
Sec. 14. [62D.041] [PROTECTION AGAINST INSOLVENCY.]
Subdivision 1. [DEFINITION.] For the purposes of this
section, the term "uncovered expenditures" means the costs of
health care services that are covered by a health maintenance
organization for which an enrollee would also be liable in the
event of the organization's insolvency, including out-of-area
services, referral services, and any other expenditures for
health care services for which the health maintenance
organization is at risk.
Subd. 2. [REQUIRED DEPOSIT.] Unless otherwise provided in
this section, each health maintenance organization shall deposit
with any organization or trustee acceptable to the commissioner
through which a custodial or controlled account is utilized,
cash, freely alienable securities, or any combination of these
or other measures that is acceptable to the commissioner in the
amount set forth in this section. If a health maintenance
organization does not have the required reserves or its reserves
are not properly computed, operations shall be adjusted to
correct the condition, according to a written plan proposed by
the health maintenance organization and approved by the
commissioner. If a health maintenance organization does not
propose measures to correct its reserves or surplus within a
reasonable time, if a corporation violates the plan which has
been approved, or if there is evidence that an improper reserve
or surplus status cannot be corrected within a reasonable time,
the commissioner of commerce may take action against the
corporation under chapter 60B.
Subd. 3. [AMOUNT FOR BEGINNING ORGANIZATIONS.] The amount
for an organization that is beginning operation shall be the
greater of: (a) five percent of its estimated expenditures for
health care services for its first year of operation; (b) twice
its estimated average monthly uncovered expenditures for its
first year of operation; or (c) $100,000.
At the beginning of each succeeding year, unless not
applicable, the organization shall deposit with the organization
or trustee, cash, freely alienable securities, or any
combination of these or other measures acceptable to the
commissioner in an amount equal to four percent of its estimated
annual uncovered expenditures for that year.
Subd. 4. [AMOUNT FOR EXISTING ORGANIZATIONS.] Unless not
applicable, an organization that is in operation on the
effective date of this section shall make a deposit equal to the
larger of:
(a) one percent of the preceding 12 months' uncovered
expenditures; or
(b) $100,000 on the first day of the fiscal year beginning
six months or more after the effective date of this section.
In the second fiscal year, if applicable, the amount of the
additional deposit shall be equal to two percent of its
estimated annual uncovered expenditures. In the third year, if
applicable, the additional deposit shall be equal to three
percent of its estimated annual uncovered expenditures for that
year. In the fourth fiscal year and subsequent years, if
applicable, the additional deposit shall be equal to four
percent of its estimated annual uncovered expenditures for each
year. Each year's estimate, after the first year of operation,
shall reasonably reflect the prior year's operating experience
and delivery arrangements.
Subd. 5. [WAIVER.] The commissioner may waive any of the
deposit requirements set forth in subdivisions 2 and 3 whenever
satisfied that the organization has sufficient net worth and an
adequate history of generating net income to assure its
financial viability for the next year, or its performance and
obligations are guaranteed by an organization with sufficient
net worth and an adequate history of generating net income, or
the assets of the organization or its contracts with insurers,
hospital, or medical service corporations, governments, or other
organizations are reasonably sufficient to assure the
performance of its obligations.
Subd. 6. [FINANCIAL EXEMPTIONS.] When an organization has
achieved a net worth not including land, buildings, and
equipment of at least $1,000,000 or has achieved a net worth
including organization-related land, buildings, and equipment of
at least $5,000,000, the annual deposit requirement does not
apply.
The annual deposit requirement does not apply to an
organization if the total amount of the accumulated deposit is
equal to 25 percent of its estimated annual uncovered
expenditures for the next calendar year, or the capital and
surplus requirements for the formation for admittance of an
accident and health insurer in this state, whichever is less.
If the organization has a guaranteeing organization which
has been in operation for at least five years and has a net
worth not including land, buildings, and equipment of at least
$1,000,000 or which has been in operation for at least ten years
and has a net worth including organization-related land,
buildings, and equipment of at least $5,000,000, the annual
deposit requirement does not apply. If the guaranteeing
organization is sponsoring more than one organization, the net
worth requirement shall be increased by $400,000 not including
organization-related land, buildings, and equipment, for each
additional organization, for guaranteeing organizations that
have been in operation for at least five years, and by
$2,000,000 including organization-related land, buildings, and
equipment, for each additional organization, for guaranteeing
organizations that have been in operation for at least ten
years. This requirement to maintain a deposit in excess of the
deposit required of an accident and health insurer does not
apply during any time that the guaranteeing organization
maintains for each organization it sponsors a net worth at least
equal to the capital and surplus requirements for an accident
and health insurer.
Subd. 7. [CONTROL OF OVER DEPOSITS.] All income from
deposits shall belong to the depositing organizations and shall
be paid to it as it becomes available. A health maintenance
organization that has made a securities deposit may withdraw
that deposit or any part thereof after making a substitute
deposit of cash, freely alienable securities, or any combination
of these or other measures of equal amount and value. Any
securities shall be approved by the commissioner before being
substituted.
Subd. 8. [REDUCTION BY COMMISSIONER.] In any year in which
an annual deposit is not required of an organization's request
the commissioner shall reduce the required, previously
accumulated deposit by $100,000 for each $250,000 of net worth
in excess of the amount that allows the organization not to make
the annual deposit. If the amount of net worth no longer
supports a reduction of its required deposit, the organization
shall immediately redeposit $100,000 for each $250,000 of
reduction in net worth, provided that its total deposit shall
not exceed the maximum required under this section.
Sec. 15. Minnesota Statutes 1982, section 62D.05,
subdivision 3, is amended to read:
Subd. 3. A health maintenance organization may contract
with providers of health care services to render the services
the health maintenance organization has promised to provide
under the terms of its health maintenance contracts, may,
subject to section 62D.12, subdivision 11, enter into separate
prepaid dental contracts, or other separate health service
contracts, may, subject to the limitations of section 62D.04,
subdivision 1, clause (f), contract with insurance companies and
nonprofit health service plan corporations for insurance,
indemnity or reimbursement of its cost of providing health care
services for enrollees or against the risks incurred by the
health maintenance organization, and may contract with insurance
companies and nonprofit health service plan corporations to
insure or cover the enrollees' costs and expenses in the health
maintenance organization, including the customary prepayment
amount and any co-payment obligations.
Sec. 16. Minnesota Statutes 1982, section 62D.07,
subdivision 1, is amended to read:
Subdivision 1. Every enrollee residing in this state is
entitled to evidence of coverage under a health care plan
maintenance contract. The health maintenance organization or
its designated representative shall issue the evidence of
coverage.
Sec. 17. Minnesota Statutes 1982, section 62D.07,
subdivision 3, is amended to read:
Subd. 3. An evidence of coverage shall contain:
(a) No provisions or statements which are unjust, unfair,
inequitable, misleading, deceptive, or which are untrue,
misleading or deceptive as defined in section 62D.12,
subdivision 1; and
(b) A clear, concise and complete statement of:
(1) The health care services and the insurance or other
benefits, if any, to which the enrollee is entitled under the
health care plan maintenance contract;
(2) Any exclusions or limitations on the services, kind of
services, benefits, or kind of benefits, to be provided,
including any deductible or copayment feature;
(3) Where and in what manner information is available as to
how services, including emergency and out of area services, may
be obtained;
(4) The total amount of payment and copayment, if any, for
health care services and the indemnity or service benefits, if
any, which the enrollee is obligated to pay with respect to
individual contracts, or an indication whether the plan is
contributory or noncontributory with respect to group
certificates; and
(5) A description of the health maintenance organization's
method for resolving enrollee complaints and a statement
identifying the commissioner as an external source with whom
grievances may be registered.
(c) On the cover page of the evidence of coverage, a clear
and complete statement of enrollees' rights as consumers,
including but not limited to a description of each of the
following:
(1) based upon the delivery system of each health
maintenance organization, a statement which describes any type
of health care professional as defined in section 145.61, whose
services may be available only by referral of the health
maintenance organization's participating staff;
(2) the right to available and accessible services which
can be secured as promptly as appropriate for the symptoms
presented, in a manner which assures continuity and, when
medically necessary, the right to emergency services available
24 hours a day and 7 days a week;
(3) the consumer's right to be informed of his or her
health problems, and to receive information regarding treatment
alternatives and risks which is sufficient to assure informed
choice;
(4) the right to refuse treatment;
(5) the right to privacy of medical and financial records
maintained by the health maintenance organization and its health
care providers, in accordance with existing law;
(6) the right to file a grievance with the health
maintenance organization and the commissioner when experiencing
a problem with the health maintenance organization or its health
care providers;
(7) the right to initiate a legal proceeding when
dissatisfied with the health maintenance organization's final
determination regarding a grievance;
(8) the right of the enrollee and his or her dependents to
continue group coverage in the event the enrollee is terminated
or laid off from employment, provided that the cost of such
coverage is paid by the enrollee and furthermore, the right of
the enrollee to convert to an individual contract at the end of
the continuation period;
(9) the right for notification of enrollees regarding the
cancellation or termination of contracts with participating
primary care professionals, and the right to choose from among
remaining participating primary care professionals;
(10) the right to cancel an individual health maintenance
contract within ten days of its receipt and to have premiums
paid refunded if, after examination of the contract, the
individual is not satisfied with it for any reason. The
individual is responsible for repaying the health maintenance
organization for any services rendered or claims paid by the
health maintenance organization during the ten days; and
(11) the right to a grace period of 31 days for the payment
of each premium for an individual health maintenance contract
falling due after the first premium during which period the
contract shall continue in force.
Sec. 18. Minnesota Statutes 1982, section 62D.07, is
amended by adding a subdivision to read:
Subd. 5. A grace period of 31 days shall be granted for
payment of each premium for an individual health maintenance
contract falling due after the first premium, during which
period the contract shall continue in force.
Sec. 19. Minnesota Statutes 1982, section 62D.07, is
amended by adding a subdivision to read:
Subd. 6. Any person entering into an individual health
maintenance contract may cancel the contract within ten days of
its receipt and to have premium paid refunded if, after
examination of the contract, the individual is not satisfied
with it for any reason. The individual is responsible for
repaying the health maintenance organization for any services
rendered or claims paid by the health maintenance organization
during the ten days.
Sec. 20. Minnesota Statutes 1982, section 62D.08,
subdivision 1, is amended to read:
Subdivision 1. A health maintenance organization shall,
unless otherwise provided for by regulations adopted by the
commissioner of health, file notice with the commissioner of
health prior to any modification of the operations or documents
described in the information submitted under clauses (a), (b),
(e), (f), (g), (i), (j), (k), (l), and (m), (n), (o), (p), (q)
and (r) of section 62D.03, subdivision 4. If the commissioner
of health does not disapprove of the filing within 30 days, it
shall be deemed approved and may be implemented by the health
maintenance organization.
Sec. 21. Minnesota Statutes 1982, section 62D.08,
subdivision 3, is amended to read:
Subd. 3. Such report shall be on forms prescribed by the
commissioner of health, and shall include:
(a) A financial statement of the organization, including
its balance sheet and receipts and disbursements for the
preceding year certified by an independent certified public
accountant, reflecting at least (1) all prepayment and other
payments received for health care services rendered, (2)
expenditures to all providers, by classes or groups of
providers, and insurance companies or nonprofit health service
plan corporations engaged to fulfill obligations arising out of
the health maintenance contract, and (3) expenditures for
capital improvements, or additions thereto, including but not
limited to construction, renovation or purchase of facilities
and capital equipment;
(b) The number of new enrollees enrolled during the year,
the number of enrollees as of the end of the year and the number
of enrollees terminated during the year;
(c) A summary of information compiled pursuant to section
62D.04, subdivision 1, clause (c) in such form as may be
required by the commissioner of health;
(d) A report of the names and residence addresses of all
persons set forth in section 62D.03, subdivision 4, clause (c)
who were associated with the health maintenance organization or
the major participating entity during the preceding year, and
the amount of wages, expense reimbursements, or other payments
to such individuals for services to the health maintenance
organization or the major participating entity, as those
services relate to the health maintenance organization,
including a full disclosure of all financial arrangements during
the preceding year required to be disclosed pursuant to section
62D.03, subdivision 4, clause (c) (d); and
(e) Such other information relating to the performance of
the health maintenance organization as is reasonably necessary
to enable the commissioner of health to carry out his duties
under sections 62D.01 to 62D.29.
Sec. 22. Minnesota Statutes 1982, section 62D.08, is
amended by adding a subdivision to read:
Subd. 4. Any health maintenance organization which fails
to file a verified report with the commissioner on or before
April 1 of the year due shall be subject to the levy of a fine
up to $500 for each day the report is past due. This failure
will serve as a basis for other disciplinary action against the
organization, including suspension or revocation, in accordance
with sections 62D.15 to 62D.17. The commissioner may grant an
extension of the reporting deadline upon good cause shown by the
health maintenance organization. Any fine levied or
disciplinary action taken against the organization under this
subdivision is subject to the contested case and judicial review
provisions of sections 14.57 to 14.69.
Sec. 23. Minnesota Statutes 1982, section 62D.08, is
amended by adding a subdivision to read:
Subd. 5. Every health maintenance organization shall
inform the commissioner of any change in the information
described in section 62D.03, subdivision 4, clause (e),
including any change in address, any modification of the
duration of any contract or agreement, and any addition to the
list of participating entities, within ten working days of the
notification of the change. Any cancellation or discontinuance
of any contract or agreement listed in section 62D.03,
subdivision 4, clause (e), or listed subsequently in accordance
with this subdivision, shall be reported to the commissioner
within seven working days of the date the health maintenance
organization sends out or receives the notice of cancellation or
discontinuance. Any health maintenance organization which fails
to notify the commissioner within the time periods prescribed in
this subdivision shall be subject to the levy of a fine up to
$100 per contract for each day the notice is past due, accruing
up to the date the organization notifies the commissioner of the
cancellation or discontinuance. Any fine levied under this
subdivision is subject to the contested case and judicial review
provisions of chapter 14.
Sec. 24. Minnesota Statutes 1982, section 62D.09, is
amended to read:
62D.09 [INFORMATION TO ENROLLEES.]
Subdivision 1. Any written marketing materials which may
be directed toward potential enrollees and which includes a
detailed description of benefits provided by the health
maintenance organization shall include a statement of consumer
rights as described in section 62D.07, subdivision 3(c).
Subd. 2. The application for coverage by the health
maintenance organization shall be accompanied by the statement
of consumer rights as described in section 62D.07, subdivision
3(c).
Subd. 3. Every health maintenance organization or its
representative shall annually, before April June 1, provide to
its enrollees the following: (1) a summary of: its most recent
annual financial statement including a balance sheet and
statement of receipts and disbursements; (2) a description of
the health maintenance organization, its health care plan or
plans, its facilities and personnel, any material changes
therein since the last report, and (3) the current evidence of
coverage; and (4) a statement of consumer rights as described in
section 62D.07, subdivision 3, paragraph (c).
Sec. 25. Minnesota Statutes 1982, section 62D.10,
subdivision 3, is amended to read:
Subd. 3. A health plan providing health maintenance
services or reimbursement for health care costs to a specified
group or groups may limit the open enrollment in each group plan
to members of such group or groups, but after it has been in
operation 24 months shall have an annual open enrollment period
of at least one month 14 days during which it accepts enrollees
from the members of each group up to a minimum of five percent
of its current enrollment in each group plan shall accept all
otherwise eligible individuals in the order in which they apply
for enrollment in a manner which does not discriminate on the
basis of age, sex, race, health, or economic status. The health
maintenance organization shall notify potential enrollees of any
limitations on the number of new enrollees to be accepted.
"Specified groups" may include, but shall not be limited to:
(a) Employees of one or more specified employers;
(b) Members of one or more specified labor unions;
(c) Members of one or more specified associations;
(d) Patients of physicians providing services through a
health care plan who had previously provided services outside
the health care plan; and
(e) Members of an existing group insurance policy.
Sec. 26. Minnesota Statutes 1982, section 62D.10, is
amended by adding a subdivision to read:
Subd. 5. Any fee charged by a health maintenance
organization for the process of determining an applicant's
eligibility, and any other application fee charged, shall be
refunded with interest to the applicant if the applicant is not
accepted for enrollment in the health maintenance organization,
or credited with interest to the applicant's premiums due if the
applicant is accepted for enrollment in the organization.
Sec. 27. Minnesota Statutes 1982, section 62D.101,
subdivision 2, is amended to read:
Subd. 2. [CONVERSION PRIVILEGE.] Every health maintenance
contract, other than a contract whose continuance is contingent
upon continued employment or membership, which contains a
provision for termination of coverage of the spouse upon
dissolution of marriage as described in subdivision 1 shall
contain a provision allowing a former spouse and dependent
children of an enrollee, without providing evidence of
insurability, to obtain from the health maintenance organization
at the expiration of any continuation of coverage required under
subdivision 2a or section 62A.146, or upon termination of
coverage by reason of an entry of a valid decree of dissolution
which does not require the health maintenance organization to
provide continued coverage for the former spouse, an individual
health maintenance contract providing at least the minimum
benefits of a qualified plan as prescribed by section 62E.06 and
the option of a number three qualified plan, a number two
qualified plan, a number one qualified plan as provided by
section 62E.06, subdivisions 1 to 3, provided application is
made to the health maintenance organization within 30 days
following notice of the expiration of the continued coverage and
upon payment of the appropriate fee. A contract providing
reduced benefits at a reduced fee may be accepted by the former
spouse and dependent children in lieu of the optional coverage
otherwise required by this subdivision. The individual health
maintenance contract shall be renewable at the option of the
former spouse as long as the former spouse is not covered under
another qualified plan as defined in section 62E.02, subdivision
4, up to age 65 or to the day before the date of eligibility for
coverage under Title XVIII of the Social Security Act, as
amended. Any revisions in the table of rate for the individual
contract shall apply to the former spouse's original age at
entry, and shall apply equally to all similar contracts issued
by the health maintenance organization.
Sec. 28. Minnesota Statutes 1982, section 62D.101,
subdivision 2a, is amended to read:
Subd. 2a. [CONTINUATION PRIVILEGE.] Every health
maintenance contract, other than a contract whose continuance is
contingent upon continued employment or membership, as described
in subdivision 1 shall contain a provision which permits
continuation of coverage under the contract for the enrollee's
former spouse and children upon entry of a valid decree of
dissolution of marriage, if the decree requires the enrollee to
provide continued coverage for those persons. The coverage may
be continued until the earlier of the following dates:
(a) The date of remarriage of either the enrollee or the
enrollee's former spouse; or
(b) The date coverage would otherwise terminate under the
health maintenance contract.
Sec. 29. [62D.103] [SECOND OPINION RELATED TO CHEMICAL
DEPENDENCY AND MENTAL HEALTH.]
A health maintenance organization shall promptly evaluate
the treatment needs of any enrollee who is seeking treatment for
a problem related to chemical dependency or mental health
conditions. In the event that the health maintenance
organization or a participating provider determines that no type
of treatment, either inpatient or outpatient, is necessary, the
enrollee shall immediately be entitled to a second opinion by a
health care professional qualified in diagnosis and treatment of
the problem. An enrollee who seeks a second opinion from a
health care professional not affiliated with the health
maintenance organization must do so at his or her own expense.
The health maintenance organization or participating provider
shall consider the second opinion but is not obligated to accept
the conclusion of the second opinion. The health maintenance
organization or participating provider shall document its
consideration of the second opinion.
Sec. 30. Minnesota Statutes 1982, section 62D.12,
subdivision 1, is amended to read:
Subdivision 1. No health maintenance organization or
representative thereof may cause or knowingly permit the use of
advertising or solicitation which is untrue or misleading, or
any form of evidence of coverage which is deceptive. Any
written advertising is misleading if it fails to disclose that
there are limitations on the services of some health care
professionals. This general disclosure is not required on
billboards. Each health maintenance organization shall be
subject to sections 72A.17 to 72A.321, relating to the
regulation of trade practices, except (a) to the extent that the
nature of a health maintenance organization renders such
sections clearly inappropriate and (b) that enforcement shall be
by the commissioner of health and not by the commissioner of
insurance. Every health maintenance organization shall be
subject to sections 325.79 325F.69 and 325.907 8.31.
Sec. 31. Minnesota Statutes 1982, section 62D.12,
subdivision 2, is amended to read:
Subd. 2. No health maintenance organization may cancel or
fail to renew the coverage of an enrollee except for (a) failure
to pay the charge for health care coverage; (b) termination of
the health care plan; (c) termination of the group plan; (d)
enrollee moving out of the area served, subject to section
62A.17, subdivisions 1 and 6; (e) enrollee moving out of an
eligible group, subject to section 62A.17, subdivisions 1 and 6;
(f) failure to make copayments required by the health care plan;
or (g) other reasons established in regulations promulgated by
the commissioner of health. An enrollee shall be given 30 days
notice of any cancellation or nonrenewal.
Sec. 32. Minnesota Statutes 1982, section 62D.12,
subdivision 4, is amended to read:
Subd. 4. No health maintenance contract or evidence of
coverage shall provide for the reimbursement of an enrollee
other than through a policy of insurance, except to refund
payments made by or on behalf of an enrollee; or, with the prior
approval of the commissioner of health, payments to enrollees
for obligations incurred for non-elective emergency or
out-of-area services received; or with prior approval, direct
payments to providers for out-of-area, non-elective emergency or
referral medical, hospital, or other health services rendered to
enrollees as stated in this subdivision:
(a) the health maintenance organization may refund payments
made by or on behalf of an enrollee;
(b) the health maintenance organization may make direct
payments to enrollees or providers for obligations incurred for
nonelective emergency or out-of-area services received.
Sec. 33. Minnesota Statutes 1982, section 62D.12,
subdivision 9, is amended to read:
Subd. 9. All net earnings of the health maintenance
organization shall be devoted to the nonprofit purposes of the
health maintenance organization in providing comprehensive
health care. No health maintenance organization shall provide
for the payment, whether directly or indirectly, of any part of
its net earnings, to any person as a dividend or rebate;
provided, however, that authorized expenses of a health
maintenance organization shall include:
(a) cash rebates to enrollees, or to persons who have made
payments on behalf of enrollees; or, when approved by the
commissioner of health as provided in subdivision 4, direct
payments to enrollees for obligations incurred for non-elective
emergency or out-of-area services received; or, with prior
approval, direct payments to providers for out-of-area,
non-elective emergency or referral medical, hospital, or other
health services rendered to enrollees;
(b) free or reduced cost health service to enrollees; or
(c) payments to providers or other persons based upon the
efficient provision of services or as incentives to provide
quality care. All net earnings shall be devoted to the
nonprofit purposes of the health maintenance organization in
providing comprehensive health care. health maintenance
organizations may make payments to providers or other persons
based upon the efficient provision of services or as incentives
to provide quality care. The commissioner of health shall,
pursuant to sections 62D.01 to 62D.29, revoke the certificate of
authority of any health maintenance organization in violation of
this subdivision.
Sec. 34. Minnesota Statutes 1982, section 62D.12, is
amended by adding a subdivision to read:
Subd. 9a. Authorized expenses of a health maintenance
organization shall include:
(1) cash rebates to enrollees, or to persons who have made
payments on behalf of enrollees;
(2) direct payments to enrollees or providers as provided
in subdivision 4, clause (b);
(3) free or reduced cost health service to enrollees;
(4) payments to any organization or organizations selected
by the health maintenance organization which are operated for
charitable, educational, or religious or scientific purposes.
Sec. 35. Minnesota Statutes 1982, section 62D.12,
subdivision 10, is amended to read:
Subd. 10. No health maintenance contract or evidence of
coverage entered into, issued, amended, renewed or delivered on
or after January 1, 1976 shall contain any provision offsetting,
or in any other manner reducing, any benefit to an enrollee or
other beneficiary by the amount of, or in any proportion to, any
increase in disability benefits received or receivable under the
federal Social Security Act, as amended subsequent to the date
of commencement of such benefit, the Railroad Retirement Act,
any Veteran's Disability Compensation and Survivor Benefits Act,
workers' compensation, or any similar federal or state law, as
amended subsequent to the date of commencement of that benefit.
Sec. 36. Minnesota Statutes 1982, section 62D.12, is
amended by adding a subdivision to read:
Subd. 13. No health maintenance organization offering an
individual or group health maintenance contract shall refuse to
provide or renew the coverage because the applicant or enrollee
has an option to elect workers' compensation coverage pursuant
to section 176.012.
Sec. 37. Minnesota Statutes 1982, section 62D.14, is
amended to read:
62D.14 [EXAMINATIONS.]
Subdivision 1. The commissioner of health may make an
examination of the financial affairs of any health maintenance
organization and its contracts, agreements, or other
arrangements with providers any participating entity as often as
the commissioner of health deems necessary for the protection of
the interests of the people of this state, but not less
frequently than once every three years, provided that
examinations of participating entities pursuant to this
subdivision shall be limited to their dealings with the health
maintenance organization and its enrollees.
Subd. 2. The commissioner of health may make an
examination concerning the quality of health care services
provided to enrollees by any health maintenance organization and
providers with whom such organization has contracts, agreements,
or other arrangements pursuant to its health care plan as often
as the commissioner of health deems necessary for the protection
of the interests of the people of this state, but not less
frequently than once every three years. Provided, that
examinations of providers pursuant to this subdivision shall be
limited to their dealings with the health maintenance
organization and its enrollees will notify the organization and
any involved participating entity in writing when an examination
has been initiated. The commissioner will include in this
notice a full statement of the pertinent facts and of the
matters being examined, and may include a statement that the
organization or participating entity must submit to the
commissioner within 30 days from the date of the notice a
complete written report concerning those matters.
Subd. 3. In order to accomplish his duties under this
section with respect to the dealings of the participating
entities with the health maintenance organization, the
commissioner of health shall have the right to:
(a) inspect or otherwise evaluate the quality,
appropriateness, and timeliness of services performed under such
contract; and
(b) audit and inspect any books and records of a health
maintenance organization and a participating entity which
pertain to services performed and determinations of amounts
payable under such contract;
(c) require persons or organizations under examination to
be deposed and to answer interrogatories, regardless of whether
an administrative hearing or other civil proceeding has been or
will be initiated; and
(d) employ site visits, public hearings, or any other
procedures considered appropriate to obtain the information
necessary to determine the issues.
Subd. 4. Any data or information pertaining to the
diagnosis, treatment, or health of any enrollee, or any
application obtained from any person, shall be confidential
private as defined in chapter 13 and shall not be disclosed to
any person except (a) to the extent that it may be necessary to
carry out the purposes of sections 62D.01 to 62D.29, the
commissioner and his or her designee shall have access to the
above data or information but the data removed from the health
maintenance organization or participating entity shall not
identify any particular patient or client by name or contain any
other unique personal identifier; (b) upon the express consent
of the enrollee or applicant; (c) pursuant to statute or court
order for the production of evidence or the discovery thereof;
or (d) in the event of claim or litigation between such person
and the provider or health maintenance organization wherein such
data or information is pertinent. In any case involving a
suspected violation of a law applicable to health maintenance
organizations in which access to health data maintained by the
health maintenance organization or participating entity is
necessary, the commissioner and his or her agents, while
maintaining the privacy rights of individuals and families,
shall be permitted to obtain data that identifies any particular
patient or client by name. A health maintenance organization
shall be entitled to claim any statutory privileges against such
disclosure which the provider who furnished such information to
the health maintenance organization is entitled to claim.
Subd. 5. The commissioner of health shall have the power
to administer oaths to and examine witnesses, and to issue
subpoenas.
Subd. 6. Reasonable expenses of examinations under this
section shall be assessed by the commissioner of health against
the organization being examined, and shall be remitted to the
commissioner of health for deposit in the general fund of the
state treasury.
Subd. 7. Failure to provide relevant information necessary
for conducting examinations pursuant to this section shall be
subject to the levy of a fine up to $200 for each day the
information is not provided. A fine levied under this
subdivision shall be subject to the contested case and judicial
review provisions of chapter 14. In the event a timely request
for review is made, accrual of a fine levied shall be stayed
pending completion of the contested case and judicial review
proceeding.
Sec. 38. Minnesota Statutes 1982, section 62D.15,
subdivision 1, is amended to read:
Subdivision 1. The commissioner of health may suspend or
revoke any certificate of authority issued to a health
maintenance organization under sections 62D.01 to 62D.29 if he
finds that:
(a) The health maintenance organization is operating
significantly in contravention of its basic organizational
document, its health care plan maintenance contract, or in a
manner contrary to that described in and reasonably inferred
from any other information submitted under section 62D.03,
unless amendments to such submissions have been filed with and
approved by the commissioner of health;
(b) The health maintenance organization issues evidences of
coverage which do not comply with the requirements of section
62D.07;
(c) The health maintenance organization is unable to
fulfill its obligations to furnish comprehensive health
maintenance services as required under its health care plan
maintenance contract;
(d) The health maintenance organization is no longer
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees;
(e) The health maintenance organization has failed to
implement a mechanism affording the enrollees an opportunity to
participate in matters of policy and operation under section
62D.06;
(f) The health maintenance organization has failed to
implement the complaint system required by section 62D.11 in a
manner designed to reasonably resolve valid complaints;
(g) The health maintenance organization, or any person
acting with its sanction, has advertised or merchandised its
services in an untrue, misrepresentative, misleading, deceptive,
or unfair manner;
(h) The continued operation of the health maintenance
organization would be hazardous to its enrollees; or
(i) The health maintenance organization has otherwise
failed to substantially comply with sections 62D.01 to 62D.29 or
with any other statute or administrative rule applicable to
health maintenance organizations, or has submitted false
information in any report required hereunder.
Sec. 39. Minnesota Statutes 1982, section 62D.17,
subdivision 1, is amended to read:
Subdivision 1. The commissioner of health may, for any
violation of statute or rule applicable to a health maintenance
organization, or in lieu of suspension or revocation of a
certificate of authority under section 62D.15, levy an
administrative penalty in an amount not less than $100 nor more
than up to $10,000 for each violation. In the case of contracts
or agreements made pursuant to section 62D.05, subdivisions 2 to
4, each contract or agreement entered into or implemented in a
manner which violates sections 62D.01 to 62D.29 shall be
considered a separate violation. Reasonable notice in writing
to the health maintenance organization shall be given of the
intent to levy the penalty and the reasons therefor, and the
health maintenance organization shall may have a reasonable time
within which to remedy the defect in its operations which gave
rise to the penalty citation, or have an administrative hearing
and review of the commissioner of health's determination. Such
administrative hearing shall be subject to judicial review
pursuant to chapter 14.
Sec. 40. Minnesota Statutes 1982, section 62D.17,
subdivision 4, is amended to read:
Subd. 4. (a) The commissioner of health may issue an order
directing a health maintenance organization or a representative
of a health maintenance organization to cease and desist from
engaging in any act or practice in violation of the provisions
of sections 62D.01 to 62D.29.
(b) Within 20 days after service of the order to cease and
desist, the respondent may request a hearing on the question of
whether acts or practices in violation of sections 62D.01 to
62D.29 have occurred. Such hearings shall be subject to
judicial review as provided by chapter 14.
If the acts or practices alleged involve violation of the
reporting requirements under section 62D.08, or if the
commissioner of commerce has ordered the rehabilitation,
liquidation, or conservation of the health maintenance
organization in accordance with section 62D.18, there shall be
no automatic stay of the cease and desist order. If a timely
request for a hearing is made, the respondent may show cause why
the order should be stayed pending completion of the
administrative contested case process. Written arguments on
this issue shall be filed with the commissioner no later than 15
days from the date the hearing is requested. The commissioner
has 15 days from the date the written arguments are filed to
render a decision regarding the requested stay.
To the extent the acts or practices alleged do not involve
violations of section 62D.08, if a timely request for a hearing
is made, the cease and desist order shall be stayed for a period
of 30 days from the date the hearing is requested. During this
stay, the respondent may show cause why the order should not
become effective upon the expiration of the stay. Arguments on
this issue shall be made through briefs filed with the
commissioner no later than ten days prior to the expiration of
the stay.
Sec. 41. Minnesota Statutes 1982, section 62D.19, is
amended to read:
62D.19 [UNREASONABLE EXPENSES.]
No health maintenance organization shall incur or pay for
any expense of any nature which is unreasonably high in relation
to the value of the service or goods provided. The commissioner
of insurance shall, pursuant to the administrative procedures
act, promulgate rules to implement and enforce this section.
In an effort to achieve the stated purposes of 62D.01 to
62D.29; in order to safeguard the underlying nonprofit status of
health maintenance organizations; and to ensure that the payment
of health maintenance organization moneys to major participating
entities results in a corresponding benefit to the health
maintenance organization and its enrollees, when determining
whether an organization has incurred an unreasonable expense in
relation to a major participating entity, due consideration
shall be given to, in addition to any other appropriate factors,
whether the officers and trustees of the health maintenance
organization have acted with good faith and in the best
interests of the health maintenance organization in entering
into, and performing under, a contract under which the health
maintenance organization has incurred an expense.
Sec. 42. Minnesota Statutes 1982, section 62D.22,
subdivision 5, is amended to read:
Subd. 5. Except as otherwise provided in sections 62A.01
to 62A.42 and 62D.01 to 62D.29, and except as they eliminate
elective, induced abortions, wherever performed, from health or
maternity benefits, provisions of the insurance laws and
provisions of nonprofit health service plan corporation laws
shall not be applicable to any health maintenance organization
granted a certificate of authority under sections 62D.01 to
62D.29.
Sec. 43. Minnesota Statutes 1982, section 62D.22, is
amended by adding a subdivision to read:
Subd. 10. Any person or committee conducting a review of a
health maintenance organization or a participating entity,
pursuant to sections 62D.01 to 62D.29, shall have access to any
data or information necessary to conduct the review. All data
or information is subject to admission into evidence in any
civil action initiated by the commissioner of health against the
health maintenance organization. The data and information are
subject to chapter 13.
Sec. 44. [INTERAGENCY AGREEMENT.]
In order to implement the provisions of 62D.01 to 62D.30,
the commissioner of health and commissioner of commerce shall
enter into an agreement for coordinated enforcement of laws
pertaining to health maintenance organizations. The agreement
shall contain procedures whereby each commissioner, to the
extent resources are available, shall provide technical
assistance to the other in those policy matters which each
commissioner has unique, specialized expertise.
Sec. 45. [STUDY OF COPAYMENT RESTRICTION.]
The commissioner shall solicit information from consumers,
health maintenance organizations, insurers, employers, and other
interested parties concerning the impact of restrictions on
copayment discrimination based upon preexisting health status.
The commissioner shall report a summary of the information along
with an analysis and recommendation concerning the need to
continue the restrictions on copayment discrimination upon
preexisting health status by March 1, 1986.
Sec. 46. [REPEALER.]
Minnesota Statutes 1982, sections 62D.10, subdivision 2;
62D.12, subdivision 7; 62D.22, subdivision 9; and 62D.27, are
repealed.
Sec. 47. [EFFECTIVE DATE.]
Section 12 is effective the day following final enactment.
Sections 17 and 24 are effective January 1, 1985. The
prohibition against discrimination on the basis of preexisting
health status contained in section 8, is effective for contracts
effective on or after January 1, 1985.
Approved April 24, 1984
Official Publication of the State of Minnesota
Revisor of Statutes