Minnesota Session Laws - 1997, Regular Session

                            CHAPTER 150-H.F.No. 858 
                  An act relating to health; regulating health plans; 
                  providing for certain disclosures; amending Minnesota 
                  Statutes 1996, sections 62J.04, subdivisions 1, 1a, 
                  and 3; 62J.041; and 62J.301, subdivision 3; repealing 
                  Minnesota Statutes 1996, section 62J.042. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1996, section 62J.04, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LIMITS ON THE RATE OF GROWTH COST 
        CONTAINMENT GOALS.] (a) The commissioner of health shall set 
        annual limits on the rate of growth of cost containment goals 
        for public and private spending on health care services for 
        Minnesota residents, as provided in paragraph (b).  The limits 
        on growth cost containment goals must be set at levels the 
        commissioner determines to be realistic and achievable but that 
        will reduce the rate of growth in health care spending by at 
        least ten percent per year for the next five years.  The 
        commissioner shall set limits on growth cost containment goals 
        based on available data on spending and growth trends, including 
        data from group purchasers, national data on public and private 
        sector health care spending and cost trends, and trend 
        information from other states. 
           (b) The commissioner shall set the following annual limits 
        on the rate of growth of cost containment goals for public and 
        private spending on health care services for Minnesota residents:
           (1) for calendar year 1994, the rate of growth cost 
        containment goal must not exceed the change in the regional 
        consumer price index for urban consumers for calendar year 1993 
        plus 6.5 percentage points; 
           (2) for calendar year 1995, the rate of growth cost 
        containment goal must not exceed the change in the regional 
        consumer price index for urban consumers for calendar year 1994 
        plus 5.3 percentage points; 
           (3) for calendar year 1996, the rate of growth cost 
        containment goal must not exceed the change in the regional 
        consumer price index for urban consumers for calendar year 1995 
        plus 4.3 percentage points; 
           (4) for calendar year 1997, the rate of growth cost 
        containment goal must not exceed the change in the regional 
        consumer price index for urban consumers for calendar year 1996 
        plus 3.4 percentage points; and 
           (5) for calendar year 1998, the rate of growth cost 
        containment goal must not exceed the change in the regional 
        consumer price index for urban consumers for calendar year 1997 
        plus 2.6 percentage points. 
           The commissioner shall adjust the growth limit cost 
        containment goal set for calendar year 1995 to recover savings 
        in health care spending required for the period July 1, 1993, to 
        December 31, 1993. 
           (c) The commissioner shall publish: 
           (1) the projected limits cost containment goal in the State 
        Register by April 15 of the year immediately preceding the year 
        in which the limit cost containment goal will be effective 
        except for the year 1993, in which the limit cost containment 
        goal shall be published by July 1, 1993; 
           (2) the quarterly change in the regional consumer price 
        index for urban consumers; and 
           (3) the health care financing administration forecast for 
        total growth in the national health care expenditures.  In 
        setting an annual limit the cost containment goals, the 
        commissioner is exempt from the rulemaking requirements of 
        chapter 14.  The commissioner's decision on an annual limit the 
        cost containment goals is not appealable. 
           Sec. 2.  Minnesota Statutes 1996, section 62J.04, 
        subdivision 1a, is amended to read: 
           Subd. 1a.  [ADJUSTED GROWTH LIMITS AND ENFORCEMENT COST 
        CONTAINMENT GOALS.] (a) The commissioner shall publish the final 
        adjusted growth limit cost containment goal in the State 
        Register by January 31 of the year that the expenditure limit 
        cost containment goal is to be in effect.  The adjusted limit 
        cost containment goal must reflect the actual regional consumer 
        price index for urban consumers for the previous calendar year, 
        and may deviate from the previously published projected growth 
        limits cost containment goal to reflect differences between the 
        actual regional consumer price index for urban consumers and the 
        projected Consumer Price Index for urban consumers.  The 
        commissioner shall report to the legislature by February 15 of 
        each year on the implementation of the growth limits cost 
        containment goal.  This annual report shall describe the 
        differences between the projected increase in health care 
        expenditures, the actual expenditures based on data collected, 
        and the impact and validity of growth limits cost containment 
        goals within the overall health care reform strategy. 
           (b) The commissioner, in consultation with the Minnesota 
        health care commission, shall research and include in the annual 
        report required in paragraph (a) for 1996, recommendations 
        regarding the implementation of growth limits for health plan 
        companies and providers.  The commissioner shall: 
           (1) consider both spending and revenue approaches and 
        report on the implementation of the interim limits as defined in 
        sections 62J.041 and 62J.042; 
           (2) make recommendations regarding the enforcement 
        mechanism and consider mechanisms to adjust future growth limits 
        as well as mechanisms to establish financial penalties for 
        noncompliance; 
           (3) address the feasibility of systemwide limits imposed on 
        all integrated service networks; and 
           (4) make recommendations on the most effective way to 
        implement growth limits on the fee-for-service system in the 
        absence of a regulated all-payer system. 
           (c) The commissioner shall enforce limits on growth in 
        spending for health plan companies and revenues for providers.  
        If the commissioner determines that artificial inflation or 
        padding of costs or prices has occurred in anticipation of the 
        implementation of growth limits, the commissioner may adjust the 
        base year spending totals or growth limits or take other action 
        to reverse the effect of the artificial inflation or padding. 
           (d) The commissioner shall impose and enforce overall 
        limits on growth in spending for health plan companies, with 
        adjustments for changes in enrollment, benefits, severity, and 
        risks.  If a health plan company exceeds the growth limits, the 
        commissioner may impose financial penalties up to the amount 
        exceeding the applicable growth limit. 
           Sec. 3.  Minnesota Statutes 1996, section 62J.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COST CONTAINMENT DUTIES.] After obtaining the 
        advice and recommendations of the Minnesota health care 
        commission, the commissioner shall: 
           (1) establish statewide and regional limits on growth in 
        cost containment goals for total health care spending under this 
        section, and collect data as described in sections 62J.37 to 
        62J.41 to monitor statewide compliance with the spending limits, 
        and take action to achieve compliance to the extent authorized 
        by the legislature achievement of the cost containment goals; 
           (2) divide the state into no fewer than four regions, with 
        one of those regions being the Minneapolis/St. Paul metropolitan 
        statistical area but excluding Chisago, Isanti, Wright, and 
        Sherburne counties, for purposes of fostering the development of 
        regional health planning and coordination of health care 
        delivery among regional health care systems and working to 
        achieve spending limits the cost containment goals; 
           (3) provide technical assistance to regional coordinating 
        boards; 
           (4) monitor the quality of health care throughout the state 
        and take action as necessary to ensure an appropriate level of 
        quality; 
           (5) issue recommendations regarding uniform billing forms, 
        uniform electronic billing procedures and data interchanges, 
        patient identification cards, and other uniform claims and 
        administrative procedures for health care providers and private 
        and public sector payers.  In developing the recommendations, 
        the commissioner shall review the work of the work group on 
        electronic data interchange (WEDI) and the American National 
        Standards Institute (ANSI) at the national level, and the work 
        being done at the state and local level.  The commissioner may 
        adopt rules requiring the use of the Uniform Bill 82/92 form, 
        the National Council of Prescription Drug Providers (NCPDP) 3.2 
        electronic version, the Health Care Financing Administration 
        1500 form, or other standardized forms or procedures; 
           (6) undertake health planning responsibilities as provided 
        in section 62J.15; 
           (7) authorize, fund, or promote research and 
        experimentation on new technologies and health care procedures; 
           (8) within the limits of appropriations for these purposes, 
        administer or contract for statewide consumer education and 
        wellness programs that will improve the health of Minnesotans 
        and increase individual responsibility relating to personal 
        health and the delivery of health care services, undertake 
        prevention programs including initiatives to improve birth 
        outcomes, expand childhood immunization efforts, and provide 
        start-up grants for worksite wellness programs; and 
           (9) undertake other activities to monitor and oversee the 
        delivery of health care services in Minnesota with the goal of 
        improving affordability, quality, and accessibility of health 
        care for all Minnesotans; and 
           (10) make the cost containment goal data available to the 
        public in a consumer-oriented manner. 
           Sec. 4.  Minnesota Statutes 1996, section 62J.041, is 
        amended to read: 
           62J.041 [INTERIM HEALTH PLAN COMPANY EXPENDITURE LIMITS 
        COST CONTAINMENT GOALS.] 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the following definitions apply. 
           (b) "Health plan company" has the definition provided in 
        section 62Q.01. 
           (c) "Total expenditures" means incurred claims or 
        expenditures on health care services, administrative expenses, 
        charitable contributions, and all other payments made by health 
        plan companies out of premium revenues. 
           (d) "Net expenditures" means total expenditures minus 
        exempted taxes and assessments and payments or allocations made 
        to establish or maintain reserves.  
           (e) "Exempted taxes and assessments" means direct payments 
        for taxes to government agencies, contributions to the Minnesota 
        comprehensive health association, the medical assistance 
        provider's surcharge under section 256.9657, the MinnesotaCare 
        provider tax under section 295.52, assessments by the health 
        coverage reinsurance association, assessments by the Minnesota 
        life and health insurance guaranty association, assessments by 
        the Minnesota risk adjustment association, and any new 
        assessments imposed by federal or state law. 
           (f) "Consumer cost-sharing or subscriber liability" means 
        enrollee coinsurance, copayment, deductible payments, and 
        amounts in excess of benefit plan maximums. 
           Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
        establish limits on cost containment goals for the increase in 
        net expenditures by each health carrier plan company for 
        calendar years 1994, 1995, 1996, and 1997.  The limits cost 
        containment goals must be the same as the annual rate of growth 
        in cost containment goals for health care spending established 
        under section 62J.04, subdivision 1, paragraph (b).  Health plan 
        companies that are affiliates may elect to meet one 
        combined expenditure limit cost containment goal. 
           Subd. 3.  [DETERMINATION OF EXPENDITURES.] Health plan 
        companies shall submit to the commissioner of health, by April 
        1, 1994, for calendar year 1993; April 1, 1995, for calendar 
        year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, 
        for calendar year 1996; and April 1, 1998, for calendar year 
        1997 all information the commissioner determines to be necessary 
        to implement and enforce this section.  The information must be 
        submitted in the form specified by the commissioner.  The 
        information must include, but is not limited to, expenditures 
        per member per month or cost per employee per month, and 
        detailed information on revenues and reserves.  The 
        commissioner, to the extent possible, shall coordinate the 
        submittal of the information required under this section with 
        the submittal of the financial data required under chapter 62J, 
        to minimize the administrative burden on health plan companies.  
        The commissioner may adjust final expenditure figures for 
        demographic changes, risk selection, changes in basic benefits, 
        and legislative initiatives that materially change health care 
        costs, as long as these adjustments are consistent with the 
        methodology submitted by the health plan company to the 
        commissioner, and approved by the commissioner as actuarially 
        justified.  The methodology to be used for adjustments and the 
        election to meet one expenditure limit cost containment goal for 
        affiliated health plan companies must be submitted to the 
        commissioner by September 1, 1994.  Community integrated service 
        networks may submit the information with their application for 
        licensure.  The commissioner shall also accept changes to 
        methodologies already submitted.  The adjustment methodology 
        submitted and approved by the commissioner must apply to the 
        data submitted for calendar years 1994 and 1995.  The 
        commissioner may allow changes to accepted adjustment 
        methodologies for data submitted for calendar years 1996 and 
        1997.  Changes to the adjustment methodology must be received by 
        September 1, 1996, and must be approved by the commissioner. 
           Subd. 4.  [MONITORING OF RESERVES.] (a) The commissioners 
        of health and commerce shall monitor health plan company 
        reserves and net worth as established under chapters 60A, 62C, 
        62D, 62H, and 64B, with respect to the health plan companies 
        that each commissioner respectively regulates to ensure 
        that assess the degree to which savings resulting from the 
        establishment of expenditure limits cost containment goals are 
        passed on to consumers in the form of lower premium rates.  
           (b) Health plan companies shall fully reflect in the 
        premium rates the savings generated by the expenditure limits 
        cost containment goals.  No premium rate, currently reviewed by 
        the departments of health or commerce, may be approved for those 
        health plan companies unless the health plan company establishes 
        to the satisfaction of the commissioner of commerce or the 
        commissioner of health, as appropriate, that the proposed new 
        rate would comply with this paragraph. 
           (c) Health plan companies, except those licensed under 
        chapter 60A to sell accident and sickness insurance under 
        chapter 62A, shall annually before the end of the fourth fiscal 
        quarter provide to the commissioner of health or commerce, as 
        applicable, a projection of the level of reserves the company 
        expects to attain during each quarter of the following fiscal 
        year.  These health plan companies shall submit with required 
        quarterly financial statements a calculation of the actual 
        reserve level attained by the company at the end of each quarter 
        including identification of the sources of any significant 
        changes in the reserve level and an updated projection of the 
        level of reserves the health plan company expects to attain by 
        the end of the fiscal year.  In cases where the health plan 
        company has been given a certificate to operate a new health 
        maintenance organization under chapter 62D, or been licensed as 
        an integrated service network or community integrated service 
        network under chapter 62N, or formed an affiliation with one of 
        these organizations, the health plan company shall also submit 
        with its quarterly financial statement, total enrollment at the 
        beginning and end of the quarter and enrollment changes within 
        each service area of the new organization.  The reserve 
        calculations shall be maintained by the commissioners as trade 
        secret information, except to the extent that such information 
        is also required to be filed by another provision of state law 
        and is not treated as trade secret information under such other 
        provisions. 
           (d) Health plan companies in paragraph (c) whose reserves 
        are less than the required minimum or more than the required 
        maximum at the end of the fiscal year shall submit a plan of 
        corrective action to the commissioner of health or commerce 
        under subdivision 7. 
           (e) The commissioner of commerce, in consultation with the 
        commissioner of health, shall report to the legislature no later 
        than January 15, 1995, as to whether the concept of a reserve 
        corridor or other mechanism for purposes of monitoring reserves 
        is adaptable for use with indemnity health insurers that do 
        business in multiple states and that must comply with their 
        domiciliary state's reserves requirements. 
           Subd. 5.  [NOTICE.] The commissioner of health shall 
        publish in the State Register and make available to the public 
        by July 1, 1995, a list of all health plan companies that 
        exceeded their expenditure limit cost containment goal for the 
        1994 calendar year.  The commissioner shall publish in the State 
        Register and make available to the public by July 1, 1996, a 
        list of all health plan companies that exceeded their 
        combined expenditure limit cost containment goal for calendar 
        years 1994 and 1995.  The commissioner shall notify each health 
        plan company that the commissioner has determined that the 
        health plan company exceeded its expenditure limit cost 
        containment goal, at least 30 days before publishing the list, 
        and shall provide each health plan company with ten days to 
        provide an explanation for exceeding the expenditure limit cost 
        containment goal.  The commissioner shall review the explanation 
        and may change a determination if the commissioner determines 
        the explanation to be valid. 
           Subd. 6.  [ASSISTANCE BY THE COMMISSIONER OF COMMERCE.] The 
        commissioner of commerce shall provide assistance to the 
        commissioner of health in monitoring health plan companies 
        regulated by the commissioner of commerce.  The commissioner of 
        commerce, in consultation with the commissioner of health, shall 
        enforce compliance with expenditure limits for those health plan 
        companies. 
           Subd. 7.  [ENFORCEMENT.] (a) The commissioners of health 
        and commerce shall enforce the reserve limits referenced in 
        subdivision 4, with respect to the health plan companies that 
        each commissioner respectively regulates.  Each commissioner 
        shall require health plan companies under the commissioner's 
        jurisdiction to submit plans of corrective action when the 
        reserve requirement is not met.  The plan of correction must 
        address the following: 
           (1) actuarial assumptions used in forecasting future 
        financial results; 
           (2) trend assumptions used in setting future premiums; 
           (3) demographic, geographic, and private and public sector 
        mix of the population covered by the health plan company; 
           (4) proposed rate increases or decreases; 
           (5) growth limits applied under section 62J.04, subdivision 
        1, paragraph (b); and 
           (6) other factors deemed appropriate by the health plan 
        company or commissioner. 
        If the health plan company's reserves exceed the required 
        maximum, the plan of correction shall address how the health 
        plan company will come into compliance and set forth a timetable 
        within which compliance would be achieved.  The plan of 
        correction may propose premium refunds, credits for prior 
        premiums paid, policyholder dividends, or any combination of 
        these or other methods which will benefit enrollees and/or 
        Minnesota residents and are such that the reserve requirements 
        can reasonably be expected to be met.  The commissioner's 
        evaluation of the plan of correction must consider: 
           (1) whether implementation of the plan would provide the 
        company with an unfair advantage in the market; 
           (2) the extent to which the reserve excess was created by 
        any movement of enrolled persons to another organization formed 
        by the company; 
           (3) whether any proposed premium refund, credit, and/or 
        dividend represents an equitable allocation to policyholders 
        covered in prior periods as determined using sound actuarial 
        practice; and 
           (4) any other factors deemed appropriate by the applicable 
        commissioner. 
           (b) The plan of correction is subject to approval by the 
        commissioner of health or commerce, as applicable.  If such a 
        plan is not approved by the applicable commissioner, the 
        applicable commissioner shall enter an order stating the steps 
        that the health plan company must take to come into compliance.  
        Within 30 days of the date of such order, the health plan 
        company must file a notice of appeal with the applicable 
        commissioner or comply with the commissioner's order.  If an 
        appeal is filed, such appeal is governed by chapter 14. 
           (c) Health plan companies that exceed the expenditure 
        limits based on two-year average expenditure data (1994 and 
        1995, 1996 and 1997) shall be required by the appropriate 
        commissioner to pay back the amount exceeding the expenditure 
        limit through an assessment on the health plan company.  A 
        health plan company may appeal the commissioner's order to pay 
        back the amount exceeding the expenditure limit by mailing to 
        the commissioner a written notice of appeal within 30 days from 
        the date the commissioner's order was mailed.  The contested 
        case and judicial review provisions of chapter 14 apply to the 
        appeal.  The health plan company shall pay the amount specified 
        by the commissioner either to the commissioner or into an escrow 
        account until final resolution of the appeal.  Notwithstanding 
        sections 15.472 to 15.475, each party is responsible for its own 
        fees and expenses, including attorneys fees, for the appeal.  
        Any amount required to be paid back under this section shall be 
        deposited in the health care access fund.  The appropriate 
        commissioner may approve a different repayment method to take 
        into account the health plan company's financial condition.  
        Health plan companies shall comply with the limits but shall 
        also guarantee that their contractual obligations are met.  
        Health plan companies are prohibited from meeting spending 
        obligations by increasing subscriber liability, including 
        copayments and deductibles and amounts in excess of benefit plan 
        maximums. 
           Sec. 5.  Minnesota Statutes 1996, section 62J.301, 
        subdivision 3, is amended to read: 
           Subd. 3.  [GENERAL DUTIES.] The commissioner shall: 
           (1) collect and maintain data which enable population-based 
        monitoring and trending of the access, utilization, quality, and 
        cost of health care services within Minnesota; 
           (2) collect and maintain data for the purpose of estimating 
        total Minnesota health care expenditures and trends; 
           (3) collect and maintain data for the purposes of setting 
        limits cost containment goals under section 62J.04, and 
        measuring growth limit cost containment goal compliance; 
           (4) conduct applied research using existing and new data 
        and promote applications based on existing research; 
           (5) develop and implement data collection procedures to 
        ensure a high level of cooperation from health care providers 
        and health plan companies, as defined in section 62Q.01, 
        subdivision 4; 
           (6) work closely with health plan companies and health care 
        providers to promote improvements in health care efficiency and 
        effectiveness; and 
           (7) participate as a partner or sponsor of private sector 
        initiatives that promote publicly disseminated applied research 
        on health care delivery, outcomes, costs, quality, and 
        management. 
           Sec. 6.  [REPEALER.] 
           Minnesota Statutes 1996, section 62J.042, is repealed. 
           Presented to the governor May 14, 1997 
           Signed by the governor May 15, 1997, 3:25 p.m.