Minnesota Legislature
Office of the Revisor of Statutes
Minnesota Session Laws - 2005, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 17-H.F.No. 925
An act relating to insurance; making federally
conforming changes in Medicare-related coverage;
providing financial solvency regulation for
stand-alone Medicare Part D prescription drug plans;
making related technical changes; amending Minnesota
Statutes 2004, sections 62A.31, subdivisions 1f, 1k,
1n, 1s, 1t, 1u, 3, 4, 7; 62A.315; 62A.316; 62A.318;
62A.36, subdivision 1; 62L.12, subdivision 2; 62Q.01,
subdivision 6; 256.9657, subdivision 3; proposing
coding for new law in Minnesota Statutes, chapter 62A.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
ARTICLE 1
FEDERALLY CONFORMING CHANGES IN MEDICARE-RELATED COVERAGES
Section 1. Minnesota Statutes 2004, section 62A.31,
subdivision 1f, is amended to read:
Subd. 1f. [SUSPENSION BASED ON ENTITLEMENT TO MEDICAL
ASSISTANCE.] (a) The policy or certificate must provide that
benefits and premiums under the policy or certificate shall be
suspended for any period that may be provided by federal
regulation at the request of the policyholder or certificate
holder for the period, not to exceed 24 months, in which the
policyholder or certificate holder has applied for and is
determined to be entitled to medical assistance under title XIX
of the Social Security Act, but only if the policyholder or
certificate holder notifies the issuer of the policy or
certificate within 90 days after the date the individual becomes
entitled to this assistance.
(b) If suspension occurs and if the policyholder or
certificate holder loses entitlement to this medical assistance,
the policy or certificate shall be automatically reinstated,
effective as of the date of termination of this entitlement, if
the policyholder or certificate holder provides notice of loss
of the entitlement within 90 days after the date of the loss and
pays the premium attributable to the period, effective as of the
date of termination of entitlement.
(c) The policy must provide that upon reinstatement (1)
there is no additional waiting period with respect to treatment
of preexisting conditions, (2) coverage is provided which is
substantially equivalent to coverage in effect before the date
of the suspension. If the suspended policy provided coverage
for outpatient prescription drugs, reinstitution of the policy
for Medicare Part D enrollees must be without coverage for
outpatient prescription drugs and must otherwise provide
coverage substantially equivalent to the coverage in effect
before the date of suspension, and (3) premiums are classified
on terms that are at least as favorable to the policyholder or
certificate holder as the premium classification terms that
would have applied to the policyholder or certificate holder had
coverage not been suspended.
Sec. 2. Minnesota Statutes 2004, section 62A.31,
subdivision 1k, is amended to read:
Subd. 1k. [GUARANTEED RENEWABILITY.] The policy must
guarantee renewability.
(a) Only the following standards for renewability provided
in this subdivision may be used in Medicare supplement insurance
policy forms.
(b) No issuer of Medicare supplement insurance policies may
cancel or nonrenew a Medicare supplement policy or certificate
for any reason other than nonpayment of premium or material
misrepresentation.
(c) If a group Medicare supplement insurance policy is
terminated by the group policyholder and is not replaced as
provided in this clause, the issuer shall offer certificate
holders an individual Medicare supplement policy which, at the
option of the certificate holder, provides for continuation of
the benefits contained in the group policy; or provides for such
benefits and benefit packages as otherwise meet the requirements
of this clause.
(d) If an individual is a certificate holder in a group
Medicare supplement insurance policy and the individual
terminates membership in the group, the issuer of the policy
shall offer the certificate holder the conversion opportunities
described in this clause; or offer the certificate holder
continuation of coverage under the group policy.
(e) If a Medicare supplement policy eliminates an
outpatient prescription drug benefit as a result of requirements
imposed by the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003, the policy as modified for that
purpose is deemed to satisfy the guaranteed renewal requirements
of this subdivision.
Sec. 3. Minnesota Statutes 2004, section 62A.31,
subdivision 1n, is amended to read:
Subd. 1n. [TERMINATION OF COVERAGE.] (a) Termination by an
issuer of a Medicare supplement policy or certificate shall be
without prejudice to any continuous loss that began while the
policy or certificate was in force, but the extension of
benefits beyond the period during which the policy or
certificate was in force may be conditioned on the continuous
total disability of the insured, limited to the duration of the
policy or certificate benefit period, if any, or payment of the
maximum benefits. The extension of benefits does not apply when
the termination is based on fraud, misrepresentation, or
nonpayment of premium. Receipt of Medicare Part D benefits is
not considered in determining a continuous loss.
(b) An issuer may discontinue the availability of a policy
form or certificate form if the issuer provides to the
commissioner in writing its decision at least 30 days before
discontinuing the availability of the form of the policy or
certificate. An issuer that discontinues the availability of a
policy form or certificate form shall not file for approval a
new policy form or certificate form of the same type for the
same Medicare supplement benefit plan as the discontinued form
for five years after the issuer provides notice to the
commissioner of the discontinuance. The This period of
discontinuance ineligibility to file a form for approval may be
reduced if the commissioner determines that a shorter period is
appropriate. The sale or other transfer of Medicare supplement
business to another issuer shall be considered a discontinuance
for the purposes of this section. A change in the rating
structure or methodology shall be considered a discontinuance
under this section unless the issuer complies with the following
requirements:
(1) the issuer provides an actuarial memorandum, in a form
and manner prescribed by the commissioner, describing the manner
in which the revised rating methodology and resulting rates
differ from the existing rating methodology and resulting rates;
and
(2) the issuer does not subsequently put into effect a
change of rates or rating factors that would cause the
percentage differential between the discontinued and subsequent
rates as described in the actuarial memorandum to change. The
commissioner may approve a change to the differential that is in
the public interest.
Sec. 4. Minnesota Statutes 2004, section 62A.31,
subdivision 1s, is amended to read:
Subd. 1s. [PRESCRIPTION DRUG COVERAGE.] Beginning January
1, 1993, a health maintenance organization that issues
Medicare-related coverage must offer, to each person to whom it
offers any contract described in this subdivision, at least one
contract that either:
(1) covers 80 percent of the reasonable and customary
charge for prescription drugs or the co-payment equivalency; or
(2) offers the coverage described in clause (1) as an
optional rider that may be purchased separately from other
optional coverages (a) Subject to subdivisions 1k, 1m, 1n, and
1p, a Medicare supplement policy with benefits for outpatient
prescription drugs, in existence prior to January 1, 2006, must
be renewed, at the option of the policyholder, for current
policyholders who do not enroll in Medicare Part D.
(b) A Medicare supplement policy with benefits for
outpatient prescription drugs must not be issued after December
31, 2005.
(c) After December 31, 2005, a Medicare supplement policy
with benefits for outpatient prescription drugs must not be
renewed after the policyholder enrolls in Medicare Part D unless:
(1) the policy is modified to eliminate outpatient
prescription drug coverage for expenses of outpatient
prescription drugs incurred on or after the effective date of
the individual's coverage under Medicare Part D; and
(2) premiums are adjusted to reflect the elimination of
outpatient prescription drug coverage at the time of Medicare
Part D enrollment, accounting for any claims paid, if applicable.
(d) An issuer of a Medicare supplement policy or
certificate must comply with the federal Medicare Prescription
Drug, Improvement, and Modernization Act of 2003, as amended,
including any federal regulations, as amended, adopted under
that act. This paragraph does not require compliance with any
provision of that act until the date upon which that act
requires compliance with that provision. The commissioner has
authority to enforce this paragraph.
Sec. 5. Minnesota Statutes 2004, section 62A.31,
subdivision 1t, is amended to read:
Subd. 1t. [NOTICE OF LACK OF DRUG COVERAGE.] Each policy
or contract issued without prescription drug coverage by any
insurer, health service plan corporation, health maintenance
organization, or fraternal benefit society must contain,
displayed prominently by type or other appropriate means, on the
first page of the contract, the following:
"Notice to buyer: This contract does not cover
prescription drugs. Prescription drugs can be a very high
percentage of your medical expenses. Coverage for prescription
drugs may be available to you by retaining existing coverage you
may have or by enrolling in Medicare Part D. Please ask for
further details."
From January 1, 1993 to February 28, 1993, compliance with
this paragraph is optional. If a health maintenance
organization does not comply with this paragraph during that
period, the health maintenance organization must extend any
person's six-month eligibility period provided under subdivision
1h that began prior to or during that period and ends during or
after that period. The length of the extension must be no less
than that portion of the person's six-month eligibility period
during which the health carrier did not comply with this
paragraph. The extended eligibility period applies only to
contracts that provide the prescription drug coverage required
by this paragraph.
Sec. 6. Minnesota Statutes 2004, section 62A.31,
subdivision 1u, is amended to read:
Subd. 1u. [GUARANTEED ISSUE FOR ELIGIBLE PERSONS.] (a)(1)
Eligible persons are those individuals described in paragraph
(b) who seek to enroll under the policy during the period
specified in paragraph (c) and who submit evidence of the date
of termination or disenrollment described in paragraph (b), or
of the date of Medicare Part D enrollment, with the application
for a Medicare supplement policy.
(2) With respect to eligible persons, an issuer shall not:
deny or condition the issuance or effectiveness of a Medicare
supplement policy described in paragraph (c) that is offered and
is available for issuance to new enrollees by the issuer;
discriminate in the pricing of such a Medicare supplement policy
because of health status, claims experience, receipt of health
care, medical condition, or age; or impose an exclusion of
benefits based upon a preexisting condition under such a
Medicare supplement policy.
(b) An eligible person is an individual described in any of
the following:
(1) the individual is enrolled under an employee welfare
benefit plan that provides health benefits that supplement the
benefits under Medicare; and the plan terminates, or the plan
ceases to provide all such supplemental health benefits to the
individual;
(2) the individual is enrolled with a Medicare+Choice
Medicare Advantage organization under a Medicare+Choice Medicare
Advantage plan under Medicare Part C, and any of the following
circumstances apply, or the individual is 65 years of age or
older and is enrolled with a Program of All-Inclusive Care for
the Elderly (PACE) provider under section 1894 of the federal
Social Security Act, and there are circumstances similar to
those described in this clause that would permit discontinuance
of the individual's enrollment with the provider if the
individual were enrolled in a Medicare+Choice Medicare Advantage
plan:
(i) the organization's or plan's certification under
Medicare Part C has been terminated or the organization has
terminated or otherwise discontinued providing the plan in the
area in which the individual resides;
(ii) the individual is no longer eligible to elect the plan
because of a change in the individual's place of residence or
other change in circumstances specified by the secretary, but
not including termination of the individual's enrollment on the
basis described in section 1851(g)(3)(B) of the federal Social
Security Act, United States Code, title 42, section
1395w-21(g)(3)(b) (where the individual has not paid premiums on
a timely basis or has engaged in disruptive behavior as
specified in standards under section 1856 of the federal Social
Security Act, United States Code, title 42, section 1395w-26),
or the plan is terminated for all individuals within a residence
area;
(iii) the individual demonstrates, in accordance with
guidelines established by the Secretary, that:
(A) the organization offering the plan substantially
violated a material provision of the organization's contract in
relation to the individual, including the failure to provide an
enrollee on a timely basis medically necessary care for which
benefits are available under the plan or the failure to provide
such covered care in accordance with applicable quality
standards; or
(B) the organization, or agent or other entity acting on
the organization's behalf, materially misrepresented the plan's
provisions in marketing the plan to the individual; or
(iv) the individual meets such other exceptional conditions
as the secretary may provide;
(3)(i) the individual is enrolled with:
(A) an eligible organization under a contract under section
1876 of the federal Social Security Act, United States Code,
title 42, section 1395mm (Medicare cost);
(B) a similar organization operating under demonstration
project authority, effective for periods before April 1, 1999;
(C) an organization under an agreement under section
1833(a)(1)(A) of the federal Social Security Act, United States
Code, title 42, section 1395l(a)(1)(A) (health care prepayment
plan); or
(D) an organization under a Medicare Select policy under
section 62A.318 or the similar law of another state; and
(ii) the enrollment ceases under the same circumstances
that would permit discontinuance of an individual's election of
coverage under clause (2);
(4) the individual is enrolled under a Medicare supplement
policy, and the enrollment ceases because:
(i)(A) of the insolvency of the issuer or bankruptcy of the
nonissuer organization; or
(B) of other involuntary termination of coverage or
enrollment under the policy;
(ii) the issuer of the policy substantially violated a
material provision of the policy; or
(iii) the issuer, or an agent or other entity acting on the
issuer's behalf, materially misrepresented the policy's
provisions in marketing the policy to the individual;
(5)(i) the individual was enrolled under a Medicare
supplement policy and terminates that enrollment and
subsequently enrolls, for the first time, with any
Medicare+Choice Medicare Advantage organization under a
Medicare+Choice Medicare Advantage plan under Medicare Part C;
any eligible organization under a contract under section 1876 of
the federal Social Security Act, United States Code, title 42,
section 1395mm (Medicare cost); any similar organization
operating under demonstration project authority; any PACE
provider under section 1894 of the federal Social Security Act,
or a Medicare Select policy under section 62A.318 or the similar
law of another state; and
(ii) the subsequent enrollment under item (i) is terminated
by the enrollee during any period within the first 12 months of
the subsequent enrollment during which the enrollee is permitted
to terminate the subsequent enrollment under section 1851(e) of
the federal Social Security Act; or
(6) the individual, upon first enrolling for benefits under
Medicare Part B, enrolls in a Medicare+Choice Medicare Advantage
plan under Medicare Part C, or with a PACE provider under
section 1894 of the federal Social Security Act, and disenrolls
from the plan by not later than 12 months after the effective
date of enrollment; or
(7) the individual enrolls in a Medicare Part D plan during
the initial Part D enrollment period, as defined under United
States Code, title 42, section 1395ss(v)(6)(D), and, at the time
of enrollment in Part D, was enrolled under a Medicare
supplement policy that covers outpatient prescription drugs and
the individual terminates enrollment in the Medicare supplement
policy and submits evidence of enrollment in Medicare Part D
along with the application for a policy described in paragraph
(e), clause (4).
(c)(1) In the case of an individual described in paragraph
(b), clause (1), the guaranteed issue period begins on the later
of: (i) the date the individual receives a notice of
termination or cessation of all supplemental health benefits or,
if a notice is not received, notice that a claim has been denied
because of a termination or cessation,; or (ii) the date that
the applicable coverage terminates or ceases; and ends 63 days
after the date of the applicable notice later of those two dates.
(2) In the case of an individual described in paragraph
(b), clause (2), (3), (5), or (6), whose enrollment is
terminated involuntarily, the guaranteed issue period begins on
the date that the individual receives a notice of termination
and ends 63 days after the date the applicable coverage is
terminated.
(3) In the case of an individual described in paragraph
(b), clause (4), item (i), the guaranteed issue period begins on
the earlier of: (i) the date that the individual receives a
notice of termination, a notice of the issuer's bankruptcy or
insolvency, or other such similar notice if any; and (ii) the
date that the applicable coverage is terminated, and ends on the
date that is 63 days after the date the coverage is terminated.
(4) In the case of an individual described in paragraph
(b), clause (2), (4), (5), or (6), who disenrolls voluntarily,
the guaranteed issue period begins on the date that is 60 days
before the effective date of the disenrollment and ends on the
date that is 63 days after the effective date.
(5) In the case of an individual described in paragraph
(b), clause (7), the guaranteed issue period begins on the date
the individual receives notice pursuant to section 1882(v)(2)(B)
of the Social Security Act from the Medicare supplement issuer
during the 60-day period immediately preceding the initial Part
D enrollment period and ends on the date that is 63 days after
the effective date of the individual's coverage under Medicare
Part D.
(6) In the case of an individual described in paragraph (b)
but not described in this paragraph, the guaranteed issue period
begins on the effective date of disenrollment and ends on the
date that is 63 days after the effective date.
(d)(1) In the case of an individual described in paragraph
(b), clause (5), or deemed to be so described, pursuant to this
paragraph, whose enrollment with an organization or provider
described in paragraph (b), clause (5), item (i), is
involuntarily terminated within the first 12 months of
enrollment, and who, without an intervening enrollment, enrolls
with another such organization or provider, the subsequent
enrollment is deemed to be an initial enrollment described in
paragraph (b), clause (5).
(2) In the case of an individual described in paragraph
(b), clause (6), or deemed to be so described, pursuant to this
paragraph, whose enrollment with a plan or in a program
described in paragraph (b), clause (6), is involuntarily
terminated within the first 12 months of enrollment, and who,
without an intervening enrollment, enrolls in another such plan
or program, the subsequent enrollment is deemed to be an initial
enrollment described in paragraph (b), clause (6).
(3) For purposes of paragraph (b), clauses (5) and (6), no
enrollment of an individual with an organization or provider
described in paragraph (b), clause (5), item (i), or with a plan
or in a program described in paragraph (b), clause (6), may be
deemed to be an initial enrollment under this paragraph after
the two-year period beginning on the date on which the
individual first enrolled with the organization, provider, plan,
or program.
(e) The Medicare supplement policy to which eligible
persons are entitled under:
(1) paragraph (b), clauses (1) to (4), is any Medicare
supplement policy that has a benefit package consisting of the
basic Medicare supplement plan described in section 62A.316,
paragraph (a), plus any combination of the three optional riders
described in section 62A.316, paragraph (b), clauses (1) to (3),
offered by any issuer;
(2) paragraph (b), clause (5), is the same Medicare
supplement policy in which the individual was most recently
previously enrolled, if available from the same issuer, or, if
not so available, any policy described in clause (1) offered by
any issuer;, except that after December 31, 2005, if the
individual was most recently enrolled in a Medicare supplement
policy with an outpatient prescription drug benefit, a Medicare
supplement policy to which the individual is entitled under
paragraph (b), clause (5), is:
(i) the policy available from the same issuer but modified
to remove outpatient prescription drug coverage; or
(ii) at the election of the policyholder, a policy
described in clause (4), except that the policy may be one that
is offered and available for issuance to new enrollees that is
offered by any issuer;
(3) paragraph (b), clause (6), shall include is any
Medicare supplement policy offered by any issuer;
(4) paragraph (b), clause (7), is a Medicare supplement
policy that has a benefit package classified as a basic plan
under section 62A.316 if the enrollee's existing Medicare
supplement policy is a basic plan or, if the enrollee's existing
Medicare supplement policy is an extended basic plan under
section 62A.315, a basic or extended basic plan at the option of
the enrollee, provided that the policy is offered and is
available for issuance to new enrollees by the same issuer that
issued the individual's Medicare supplement policy with
outpatient prescription drug coverage. The issuer must permit
the enrollee to retain all optional benefits contained in the
enrollee's existing coverage, other than outpatient prescription
drugs, subject to the provision that the coverage be offered and
available for issuance to new enrollees by the same issuer.
(f)(1) At the time of an event described in paragraph (b),
because of which an individual loses coverage or benefits due to
the termination of a contract or agreement, policy, or plan, the
organization that terminates the contract or agreement, the
issuer terminating the policy, or the administrator of the plan
being terminated, respectively, shall notify the individual of
the individual's rights under this subdivision, and of the
obligations of issuers of Medicare supplement policies under
paragraph (a). The notice must be communicated
contemporaneously with the notification of termination.
(2) At the time of an event described in paragraph (b),
because of which an individual ceases enrollment under a
contract or agreement, policy, or plan, the organization that
offers the contract or agreement, regardless of the basis for
the cessation of enrollment, the issuer offering the policy, or
the administrator of the plan, respectively, shall notify the
individual of the individual's rights under this subdivision,
and of the obligations of issuers of Medicare supplement
policies under paragraph (a). The notice must be communicated
within ten working days of the issuer receiving notification of
disenrollment.
(g) Reference in this subdivision to a situation in which,
or to a basis upon which, an individual's coverage has been
terminated does not provide authority under the laws of this
state for the termination in that situation or upon that basis.
(h) An individual's rights under this subdivision are in
addition to, and do not modify or limit, the individual's rights
under subdivision 1h.
Sec. 7. Minnesota Statutes 2004, section 62A.31,
subdivision 3, is amended to read:
Subd. 3. [DEFINITIONS.] (a) The definitions provided in
this subdivision apply to sections 62A.31 to 62A.44.
(b) "Accident," "accidental injury," or "accidental means"
means to employ "result" language and does not include words
that establish an accidental means test or use words such as
"external," "violent," "visible wounds," or similar words of
description or characterization.
(1) The definition shall not be more restrictive than the
following: "Injury or injuries for which benefits are provided
means accidental bodily injury sustained by the insured person
which is the direct result of an accident, independent of
disease or bodily infirmity or any other cause, and occurs while
insurance coverage is in force."
(2) The definition may provide that injuries shall not
include injuries for which benefits are provided or available
under a workers' compensation, employer's liability or similar
law, or motor vehicle no-fault plan, unless prohibited by law.
(c) "Applicant" means:
(1) in the case of an individual Medicare supplement policy
or certificate, the person who seeks to contract for insurance
benefits; and
(2) in the case of a group Medicare supplement policy or
certificate, the proposed certificate holder.
(d) "Bankruptcy" means a situation in which a
Medicare+Choice Medicare Advantage organization that is not an
issuer has filed, or has had filed against it, a petition for
declaration of bankruptcy and has ceased doing business in the
state.
(e) "Benefit period" or "Medicare benefit period" shall not
be defined more restrictively than as defined in the Medicare
program.
(f) "Certificate" means a certificate delivered or issued
for delivery in this state or offered to a resident of this
state under a group Medicare supplement policy or certificate.
(g) "Certificate form" means the form on which the
certificate is delivered or issued for delivery by the issuer.
(h) "Convalescent nursing home," "extended care facility,"
or "skilled nursing facility" shall not be defined more
restrictively than as defined in the Medicare program.
(i) "Employee welfare benefit plan" means a plan, fund, or
program of employee benefits as defined in United States Code,
title 29, section 1002 (Employee Retirement Income Security Act).
(j) "Health care expenses" means, for purposes of section
62A.36, expenses of health maintenance organizations associated
with the delivery of health care services which are analogous to
incurred losses of insurers. The expenses shall not include:
(1) home office and overhead costs;
(2) advertising costs;
(3) commissions and other acquisition costs;
(4) taxes;
(5) capital costs;
(6) administrative costs; and
(7) claims processing costs.
(k) "Hospital" may be defined in relation to its status,
facilities, and available services or to reflect its
accreditation by the Joint Commission on Accreditation of
Hospitals, but not more restrictively than as defined in the
Medicare program.
(l) "Insolvency" means a situation in which an issuer,
licensed to transact the business of insurance in this state,
including the right to transact business as any type of issuer,
has had a final order of liquidation entered against it with a
finding of insolvency by a court of competent jurisdiction in
the issuer's state of domicile.
(m) "Issuer" includes insurance companies, fraternal
benefit societies, health service plan corporations, health
maintenance organizations, and any other entity delivering or
issuing for delivery Medicare supplement policies or
certificates in this state or offering these policies or
certificates to residents of this state.
(n) "Medicare" shall be defined in the policy and
certificate. Medicare may be defined as the Health Insurance
for the Aged Act, title XVIII of the Social Security Amendments
of 1965, as amended, or title I, part I, of Public Law 89-97, as
enacted by the 89th Congress of the United States of America and
popularly known as the Health Insurance for the Aged Act, as
amended.
(o) "Medicare eligible expenses" means health care expenses
covered by Medicare Part A or B, to the extent recognized as
reasonable and medically necessary by Medicare.
(p) "Medicare+Choice Medicare Advantage plan" means a plan
of coverage for health benefits under Medicare Part C as defined
in section 1859 of the federal Social Security Act, United
States Code, title 42, section 1395w-28, and includes:
(1) coordinated care plans which provide health care
services, including, but not limited to, health maintenance
organization plans, with or without a point-of-service option,
plans offered by provider-sponsored organizations, and preferred
provider organization plans;
(2) medical savings account plans coupled with a
contribution into a Medicare+Choice Medicare Advantage medical
savings account; and
(3) Medicare+Choice Medicare Advantage private
fee-for-service plans.
(q) "Medicare-related coverage" means a policy, contract,
or certificate issued as a supplement to Medicare, regulated
under sections 62A.31 to 62A.44, including Medicare select
coverage; policies, contracts, or certificates that supplement
Medicare issued by health maintenance organizations; or
policies, contracts, or certificates governed by section 1833
(known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA"
or "risk" contracts) of the federal Social Security Act, United
States Code, title 42, section 1395, et seq., as amended; or
Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law
105-33), Sections 1851 to 1859 of the Social Security Act
establishing part C of the Medicare program, known as the
"Medicare+Choice Medicare Advantage program."
(r) "Medicare supplement policy or certificate" means a
group or individual policy of accident and sickness insurance or
a subscriber contract of hospital and medical service
associations or health maintenance organizations, or other than
those policies or certificates covered by section 1833 of the
federal Social Security Act, United States Code, title 42,
section 1395, et seq., or an issued policy under a demonstration
project specified under amendments to the federal Social
Security Act, which is advertised, marketed, or designed
primarily as a supplement to reimbursements under Medicare for
the hospital, medical, or surgical expenses of persons eligible
for Medicare. "Medicare supplement policy" does not include
Medicare Advantage plans established under Medicare Part C,
outpatient prescription drug plans established under Medicare
Part D, or any health care prepayment plan that provides
benefits under an agreement under section 1833(a)(1)(A) of the
Social Security Act.
(s) "Physician" shall not be defined more restrictively
than as defined in the Medicare program or section 62A.04,
subdivision 1, or 62A.15, subdivision 3a.
(t) "Policy form" means the form on which the policy is
delivered or issued for delivery by the issuer.
(u) "Secretary" means the Secretary of the United States
Department of Health and Human Services.
(v) "Sickness" shall not be defined more restrictively than
the following:
"Sickness means illness or disease of an insured person
which first manifests itself after the effective date of
insurance and while the insurance is in force."
The definition may be further modified to exclude
sicknesses or diseases for which benefits are provided under a
workers' compensation, occupational disease, employer's
liability, or similar law.
(w) "Outpatient prescription drug" means a prescription
drug prescribed or administered under circumstances that qualify
for coverage under Medicare Part D and not under Medicare Part A
or Part B.
Sec. 8. Minnesota Statutes 2004, section 62A.31,
subdivision 4, is amended to read:
Subd. 4. [PROHIBITED POLICY PROVISIONS.] (a) A Medicare
supplement policy or certificate in force in the state shall not
contain benefits that duplicate benefits provided by Medicare or
contain exclusions on coverage that are more restrictive than
those of Medicare. Duplication of benefits is permitted to the
extent permitted under subdivision 1s, paragraph (a), for
benefits provided by Medicare Part D.
(b) No Medicare supplement policy or certificate may use
waivers to exclude, limit, or reduce coverage or benefits for
specifically named or described preexisting diseases or physical
conditions, except as permitted under subdivision 1b.
Sec. 9. Minnesota Statutes 2004, section 62A.31,
subdivision 7, is amended to read:
Subd. 7. [MEDICARE PRESCRIPTION DRUG BENEFIT.] If Congress
enacts legislation creating a prescription drug benefit in the
Medicare program, nothing in this section or any other section
shall prohibit an issuer of a Medicare supplement policy from
offering this prescription drug benefit consistent with the
applicable federal law or regulations. If an issuer offers the
federal benefit, such an offer shall be deemed to meet the
issuer's mandatory offer obligations under this section and may,
at the discretion of the issuer, constitute replacement coverage
as defined in subdivision 1i for any existing policy containing
a prescription drug benefit.
Sec. 10. Minnesota Statutes 2004, section 62A.315, is
amended to read:
62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN;
COVERAGE.]
The extended basic Medicare supplement plan must have a
level of coverage so that it will be certified as a qualified
plan pursuant to section 62E.07, and will provide:
(1) coverage for all of the Medicare Part A inpatient
hospital deductible and coinsurance amounts, and 100 percent of
all Medicare Part A eligible expenses for hospitalization not
covered by Medicare;
(2) coverage for the daily co-payment amount of Medicare
Part A eligible expenses for the calendar year incurred for
skilled nursing facility care;
(3) coverage for the coinsurance amount or in the case of
hospital outpatient department services paid under a prospective
payment system, the co-payment amount, of Medicare eligible
expenses under Medicare Part B regardless of hospital
confinement, and the Medicare Part B deductible amount;
(4) 80 percent of the usual and customary hospital and
medical expenses and supplies described in section 62E.06,
subdivision 1, not to exceed any charge limitation established
by the Medicare program or state law,; the usual and customary
hospital and medical expenses and supplies, described in section
62E.06, subdivision 1, while in a foreign country,; and
prescription drug expenses, not covered by Medicare. An
outpatient prescription drug benefit must not be included for
sale or issuance in a Medicare supplement policy or certificate
issued on or after January 1, 2006;
(5) coverage for the reasonable cost of the first three
pints of blood, or equivalent quantities of packed red blood
cells as defined under federal regulations under Medicare parts
A and B, unless replaced in accordance with federal regulations;
(6) 100 percent of the cost of immunizations and routine
screening procedures for cancer, including mammograms and pap
smears;
(7) preventive medical care benefit: coverage for the
following preventive health services:
(i) an annual clinical preventive medical history and
physical examination that may include tests and services from
clause (ii) and patient education to address preventive health
care measures;
(ii) any one or a combination of the following preventive
screening tests or preventive services, the frequency of which
is considered medically appropriate:
(A) fecal occult blood test and/or digital rectal
examination;
(B) dipstick urinalysis for hematuria, bacteriuria, and
proteinuria;
(C) pure tone (air only) hearing screening test
administered or ordered by a physician;
(D) serum cholesterol screening every five years;
(E) thyroid function test;
(F) diabetes screening;
(iii) any other tests or preventive measures determined
appropriate by the attending physician.
Reimbursement shall be for the actual charges up to 100
percent of the Medicare-approved amount for each service as if
Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT)
codes to a maximum of $120 annually under this benefit. This
benefit shall not include payment for any procedure covered by
Medicare;
(8) at-home recovery benefit: coverage for services to
provide short-term at-home assistance with activities of daily
living for those recovering from an illness, injury, or surgery:
(i) for purposes of this benefit, the following definitions
shall apply:
(A) "activities of daily living" include, but are not
limited to, bathing, dressing, personal hygiene, transferring,
eating, ambulating, assistance with drugs that are normally
self-administered, and changing bandages or other dressings;
(B) "care provider" means a duly qualified or licensed home
health aide/homemaker, personal care aide, or nurse provided
through a licensed home health care agency or referred by a
licensed referral agency or licensed nurses registry;
(C) "home" means a place used by the insured as a place of
residence, provided that the place would qualify as a residence
for home health care services covered by Medicare. A hospital
or skilled nursing facility shall not be considered the
insured's place of residence;
(D) "at-home recovery visit" means the period of a visit
required to provide at-home recovery care, without limit on the
duration of the visit, except each consecutive four hours in a
24-hour period of services provided by a care provider is one
visit;
(ii) coverage requirements and limitations:
(A) at-home recovery services provided must be primarily
services that assist in activities of daily living;
(B) the insured's attending physician must certify that the
specific type and frequency of at-home recovery services are
necessary because of a condition for which a home care plan of
treatment was approved by Medicare;
(C) coverage is limited to:
(I) no more than the number and type of at-home recovery
visits certified as medically necessary by the insured's
attending physician. The total number of at-home recovery
visits shall not exceed the number of Medicare-approved home
health care visits under a Medicare-approved home care plan of
treatment;
(II) the actual charges for each visit up to a maximum
reimbursement of $100 per visit;
(III) $4,000 per calendar year;
(IV) seven visits in any one week;
(V) care furnished on a visiting basis in the insured's
home;
(VI) services provided by a care provider as defined in
this section;
(VII) at-home recovery visits while the insured is covered
under the policy or certificate and not otherwise excluded;
(VIII) at-home recovery visits received during the period
the insured is receiving Medicare-approved home care services or
no more than eight weeks after the service date of the last
Medicare-approved home health care visit;
(iii) coverage is excluded for:
(A) home care visits paid for by Medicare or other
government programs; and
(B) care provided by unpaid volunteers or providers who are
not care providers.
Sec. 11. Minnesota Statutes 2004, section 62A.316, is
amended to read:
62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.]
(a) The basic Medicare supplement plan must have a level of
coverage that will provide:
(1) coverage for all of the Medicare part A inpatient
hospital coinsurance amounts, and 100 percent of all Medicare
part A eligible expenses for hospitalization not covered by
Medicare, after satisfying the Medicare part A deductible;
(2) coverage for the daily co-payment amount of Medicare
part A eligible expenses for the calendar year incurred for
skilled nursing facility care;
(3) coverage for the coinsurance amount, or in the case of
outpatient department services paid under a prospective payment
system, the co-payment amount, of Medicare eligible expenses
under Medicare part B regardless of hospital confinement,
subject to the Medicare part B deductible amount;
(4) 80 percent of the hospital and medical expenses and
supplies incurred during travel outside the United States as a
result of a medical emergency;
(5) coverage for the reasonable cost of the first three
pints of blood, or equivalent quantities of packed red blood
cells as defined under federal regulations under Medicare parts
A and B, unless replaced in accordance with federal regulations;
(6) 100 percent of the cost of immunizations and routine
screening procedures for cancer screening including mammograms
and pap smears; and
(7) 80 percent of coverage for all physician prescribed
medically appropriate and necessary equipment and supplies used
in the management and treatment of diabetes. Coverage must
include persons with gestational, type I, or type II diabetes.
(b) Only the following optional benefit riders may be added
to this plan:
(1) coverage for all of the Medicare part A inpatient
hospital deductible amount;
(2) a minimum of 80 percent of eligible medical expenses
and supplies not covered by Medicare part B, not to exceed any
charge limitation established by the Medicare program or state
law;
(3) coverage for all of the Medicare part B annual
deductible;
(4) coverage for at least 50 percent, or the equivalent of
50 percent, of usual and customary prescription drug expenses.
An outpatient prescription drug benefit must not be included for
sale or issuance in a Medicare policy or certificate issued on
or after January 1, 2006;
(5) coverage for the following preventive health services:
(i) an annual clinical preventive medical history and
physical examination that may include tests and services from
clause (ii) and patient education to address preventive health
care measures;
(ii) any one or a combination of the following preventive
screening tests or preventive services, the frequency of which
is considered medically appropriate:
(A) fecal occult blood test and/or digital rectal
examination;
(B) dipstick urinalysis for hematuria, bacteriuria, and
proteinuria;
(C) pure tone (air only) hearing screening test,
administered or ordered by a physician;
(D) serum cholesterol screening every five years;
(E) thyroid function test;
(F) diabetes screening;
(iii) any other tests or preventive measures determined
appropriate by the attending physician.
Reimbursement shall be for the actual charges up to 100
percent of the Medicare-approved amount for each service, as if
Medicare were to cover the service as identified in American
Medical Association current procedural terminology (AMA CPT)
codes, to a maximum of $120 annually under this benefit. This
benefit shall not include payment for a procedure covered by
Medicare;
(6) coverage for services to provide short-term at-home
assistance with activities of daily living for those recovering
from an illness, injury, or surgery:
(i) For purposes of this benefit, the following definitions
apply:
(A) "activities of daily living" include, but are not
limited to, bathing, dressing, personal hygiene, transferring,
eating, ambulating, assistance with drugs that are normally
self-administered, and changing bandages or other dressings;
(B) "care provider" means a duly qualified or licensed home
health aide/homemaker, personal care aid, or nurse provided
through a licensed home health care agency or referred by a
licensed referral agency or licensed nurses registry;
(C) "home" means a place used by the insured as a place of
residence, provided that the place would qualify as a residence
for home health care services covered by Medicare. A hospital
or skilled nursing facility shall not be considered the
insured's place of residence;
(D) "at-home recovery visit" means the period of a visit
required to provide at-home recovery care, without limit on the
duration of the visit, except each consecutive four hours in a
24-hour period of services provided by a care provider is one
visit;
(ii) Coverage requirements and limitations:
(A) at-home recovery services provided must be primarily
services that assist in activities of daily living;
(B) the insured's attending physician must certify that the
specific type and frequency of at-home recovery services are
necessary because of a condition for which a home care plan of
treatment was approved by Medicare;
(C) coverage is limited to:
(I) no more than the number and type of at-home recovery
visits certified as necessary by the insured's attending
physician. The total number of at-home recovery visits shall
not exceed the number of Medicare-approved home care visits
under a Medicare-approved home care plan of treatment;
(II) the actual charges for each visit up to a maximum
reimbursement of $40 per visit;
(III) $1,600 per calendar year;
(IV) seven visits in any one week;
(V) care furnished on a visiting basis in the insured's
home;
(VI) services provided by a care provider as defined in
this section;
(VII) at-home recovery visits while the insured is covered
under the policy or certificate and not otherwise excluded;
(VIII) at-home recovery visits received during the period
the insured is receiving Medicare-approved home care services or
no more than eight weeks after the service date of the last
Medicare-approved home health care visit;
(iii) Coverage is excluded for:
(A) home care visits paid for by Medicare or other
government programs; and
(B) care provided by family members, unpaid volunteers, or
providers who are not care providers;
(7) coverage for at least 50 percent, or the equivalent of
50 percent, of usual and customary prescription drug expenses to
a maximum of $1,200 paid by the issuer annually under this
benefit. An issuer of Medicare supplement insurance policies
that elects to offer this benefit rider shall also make
available coverage that contains the rider specified in clause
(4). An outpatient prescription drug benefit must not be
included for sale or issuance in a Medicare policy or
certificate issued on or after January 1, 2006.
Sec. 12. Minnesota Statutes 2004, section 62A.318, is
amended to read:
62A.318 [MEDICARE SELECT POLICIES AND CERTIFICATES.]
Subdivision 1. [APPLICABILITY AND ADVERTISING LIMITATION.]
(a) This section applies to Medicare select policies and
certificates, as defined in this section, including those issued
by health maintenance organizations.
(b) No policy or certificate may be advertised as a
Medicare select policy or certificate unless it meets the
requirements of this section.
(b) Subd. 2. [DEFINITIONS.] For the purposes of this
section:
(1) "complaint" means any dissatisfaction expressed by an
individual concerning a Medicare select issuer or its network
providers;
(2) "grievance" means dissatisfaction expressed in writing
by an individual insured under a Medicare select policy or
certificate with the administration, claims practices, or
provision of services concerning a Medicare select issuer or its
network providers;
(3) "Medicare select issuer" means an issuer offering, or
seeking to offer, a Medicare select policy or certificate;
(4) "Medicare select policy" or "Medicare select
certificate" means a Medicare supplement policy or certificate
that contains restricted network provisions;
(5) "network provider" means a provider of health care, or
a group of providers of health care, that has entered into a
written agreement with the issuer to provide benefits insured
under a Medicare select policy or certificate;
(6) "restricted network provision" means a provision that
conditions the payment of benefits, in whole or in part, on the
use of network providers; and
(7) "service area" means the geographic area approved by
the commissioner within which an issuer is authorized to offer a
Medicare select policy or certificate.
(c) Subd. 3. [REVIEW BY COMMISSIONER.] The commissioner
may authorize an issuer to offer a Medicare select policy or
certificate pursuant to this section and section 4358 of the
Omnibus Budget Reconciliation Act (OBRA) of 1990, Public Law
101-508, if the commissioner finds that the issuer has satisfied
all of the requirements of Minnesota Statutes.
(d) Subd. 4. [APPROVAL; PLAN OF OPERATION.] A Medicare
select issuer shall not issue a Medicare select policy or
certificate in this state until its plan of operation has been
approved by the commissioner.
(e) Subd. 5. [CONTENTS OF PLAN OF OPERATION.] A Medicare
select issuer shall file a proposed plan of operation with the
commissioner, in a format prescribed by the commissioner. The
plan of operation shall contain at least the following
information:
(1) evidence that all covered services that are subject to
restricted network provisions are available and accessible
through network providers, including a demonstration that:
(i) the services can be provided by network providers with
reasonable promptness with respect to geographic location, hours
of operation, and after-hour care. The hours of operation and
availability of after-hour care shall reflect usual practice in
the local area. Geographic availability shall reflect the usual
travel times within the community;
(ii) the number of network providers in the service area is
sufficient, with respect to current and expected policyholders,
either:
(A) to deliver adequately all services that are subject to
a restricted network provision; or
(B) to make appropriate referrals;
(iii) there are written agreements with network providers
describing specific responsibilities;
(iv) emergency care is available 24 hours per day and seven
days per week; and
(v) in the case of covered services that are subject to a
restricted network provision and are provided on a prepaid
basis, there are written agreements with network providers
prohibiting the providers from billing or otherwise seeking
reimbursement from or recourse against an individual insured
under a Medicare select policy or certificate. This section
does not apply to supplemental charges or coinsurance amounts as
stated in the Medicare select policy or certificate;
(2) a statement or map providing a clear description of the
service area;
(3) a description of the grievance procedure to be used;
(4) a description of the quality assurance program,
including:
(i) the formal organizational structure;
(ii) the written criteria for selection, retention, and
removal of network providers; and
(iii) the procedures for evaluating quality of care
provided by network providers, and the process to initiate
corrective action when warranted;
(5) a list and description, by specialty, of the network
providers;
(6) copies of the written information proposed to be used
by the issuer to comply with paragraph (i); and
(7) any other information requested by the commissioner.
(f) Subd. 6. [FILING OF PROPOSED CHANGES; DEEMED
APPROVAL.] A Medicare select issuer shall file proposed changes
to the plan of operation, except for changes to the list of
network providers, with the commissioner before implementing the
changes. The changes shall be considered approved by the
commissioner after 30 days unless specifically disapproved.
An updated list of network providers shall be filed with
the commissioner at least quarterly.
(g) Subd. 7. [NONNETWORK PROVIDERS; LIMITS ON COVERAGE
RESTRICTIONS.] A Medicare select policy or certificate shall not
restrict payment for covered services provided by nonnetwork
providers if:
(1) the services are for symptoms requiring emergency care
or are immediately required for an unforeseen illness, injury,
or condition; and
(2) it is not reasonable to obtain the services through a
network provider.
(h) Subd. 8. [FULL PAYMENT; SERVICES NOT AVAILABLE IN
NETWORK.] A Medicare select policy or certificate shall provide
payment for full coverage under the policy or certificate for
covered services that are not available through network
providers.
(i) Subd. 9. [REQUIRED DISCLOSURES.] A Medicare select
issuer shall make full and fair disclosure in writing of the
provisions, restrictions, and limitations of the Medicare select
policy or certificate to each applicant. This disclosure must
include at least the following:
(1) an outline of coverage sufficient to permit the
applicant to compare the coverage and premiums of the Medicare
select policy or certificate with:
(i) other Medicare supplement policies or certificates
offered by the issuer; and
(ii) other Medicare select policies or certificates;
(2) a description, including address, phone number, and
hours of operation, of the network providers, including primary
care physicians, specialty physicians, hospitals, and other
providers;
(3) a description of the restricted network provisions,
including payments for coinsurance and deductibles when
providers other than network providers are used;
(4) a description of coverage for emergency and urgently
needed care and other out-of-service area coverage;
(5) a description of limitations on referrals to restricted
network providers and to other providers;
(6) a description of the policyholder's rights to purchase
any other Medicare supplement policy or certificate otherwise
offered by the issuer; and
(7) a description of the Medicare select issuer's quality
assurance program and grievance procedure.
(j) Subd. 10. [PROOF OF DISCLOSURE.] Before the sale of a
Medicare select policy or certificate, a Medicare select issuer
shall obtain from the applicant a signed and dated form stating
that the applicant has received the information provided
pursuant to paragraph (i) and that the applicant understands the
restrictions of the Medicare select policy or certificate.
(k) Subd. 11. [GRIEVANCE PROCEDURES.] A Medicare select
issuer shall have and use procedures for hearing complaints and
resolving written grievances from the subscribers. The
procedures shall be aimed at mutual agreement for settlement and
may include arbitration procedures.
(1) The grievance procedure must be described in the policy
and certificates and in the outline of coverage.
(2) At the time the policy or certificate is issued, the
issuer shall provide detailed information to the policyholder
describing how a grievance may be registered with the issuer.
(3) Grievances must be considered in a timely manner and
must be transmitted to appropriate decision makers who have
authority to fully investigate the issue and take corrective
action.
(4) If a grievance is found to be valid, corrective action
must be taken promptly.
(5) All concerned parties must be notified about the
results of a grievance.
(6) The issuer shall report no later than March 31 of each
year to the commissioner regarding the grievance procedure. The
report shall be in a format prescribed by the commissioner and
shall contain the number of grievances filed in the past year
and a summary of the subject, nature, and resolution of the
grievances.
(l) Subd. 12. [OFFER OF ALTERNATIVE PRODUCT REQUIRED.] At
the time of initial purchase, a Medicare select issuer shall
make available to each applicant for a Medicare select policy or
certificate the opportunity to purchase a Medicare supplement
policy or certificate otherwise offered by the issuer.
(m)(1) Subd. 13. [RIGHT TO REPLACE WITH NONNETWORK
COVERAGE.] (a) At the request of an individual insured under a
Medicare select policy or certificate, a Medicare select issuer
shall make available to the individual insured the opportunity
to purchase a Medicare supplement policy or certificate offered
by the issuer that has comparable or lesser benefits and that
does not contain a restricted network provision. The issuer
shall make the policies or certificates available without
requiring evidence of insurability after the Medicare supplement
select policy or certificate has been in force for six months.
If the issuer does not have available for sale a policy or
certificate without restrictive network provisions, the issuer
shall provide enrollment information for the Minnesota
comprehensive health association Medicare supplement plans.
(2) (b) For the purposes of this paragraph subdivision, a
Medicare supplement policy or certificate will be considered to
have comparable or lesser benefits unless it contains one or
more significant benefits not included in the Medicare select
policy or certificate being replaced. For the purposes of this
paragraph, a significant benefit means coverage for the Medicare
Part A deductible, coverage for prescription drugs, coverage for
at-home recovery services, or coverage for part B excess
charges. Coverage for outpatient prescription drugs is not
permitted in Medicare supplement policies or certificates issued
on or after January 1, 2006.
(n) Subd. 14. [CONTINUATION OF COVERAGE UNDER CERTAIN
CIRCUMSTANCES.] (a) Medicare select policies and certificates
shall provide for continuation of coverage if the secretary of
health and human services determines that Medicare select
policies and certificates issued pursuant to this section should
be discontinued due to either the failure of the Medicare select
program to be reauthorized under law or its substantial
amendment.
(1) (b) In the event of a determination under paragraph
(a), each Medicare select issuer shall make available to each
individual insured under a Medicare select policy or certificate
the opportunity to purchase a Medicare supplement policy or
certificate offered by the issuer that has comparable or lesser
benefits and that does not contain a restricted network
provision. The issuer shall make the policies and certificates
available without requiring evidence of insurability.
(2) (c) For the purposes of this paragraph subdivision, a
Medicare supplement policy or certificate will be considered to
have comparable or lesser benefits unless it contains one or
more significant benefits not included in the Medicare select
policy or certificate being replaced. For the purposes of this
paragraph subdivision, a significant benefit means coverage for
the Medicare Part A deductible, coverage for prescription drugs,
coverage for at-home recovery services, or coverage for part B
excess charges. Coverage for outpatient prescription drugs must
not be included for sale or issuance of a Medicare supplement
policy or certificate issued on or after January 1, 2006.
(o) Subd. 15. [PROVISION OF DATA REQUIRED.] A Medicare
select issuer shall comply with reasonable requests for data
made by state or federal agencies, including the United States
Department of Health and Human Services, for the purpose of
evaluating the Medicare select program.
(p) Subd. 16. [REGULATION BY COMMERCE DEPARTMENT.]
Medicare select policies and certificates under this section
shall be regulated and approved by the Department of Commerce.
(q) Subd. 17. [TYPES OF PLANS.] Medicare select policies
and certificates must be either a basic plan or an extended
basic plan. Before a Medicare select policy or certificate is
sold or issued in this state, the applicant must be provided
with an explanation of coverage for both a Medicare select basic
and a Medicare select extended basic policy or certificate and
must be provided with the opportunity of purchasing either a
Medicare select basic or a Medicare select extended basic
policy. The basic plan may also include any of the optional
benefit riders authorized by section 62A.316. Preventive care
provided by Medicare select policies or certificates must be
provided as set forth in section 62A.315 or 62A.316, except that
the benefits are as defined in chapter 62D.
(r) (Expired)
Sec. 13. Minnesota Statutes 2004, section 62A.36,
subdivision 1, is amended to read:
Subdivision 1. [LOSS RATIO STANDARDS AND REFUND
PROVISIONS.] (a) For purposes of this section, "Medicare
supplement policy or certificate" has the meaning given in
section 62A.31, subdivision 3, but also includes a policy,
contract, or certificate issued under a contract under section
1833 or 1876 of the federal Social Security Act, United States
Code, title 42, section 1395 et seq. A Medicare supplement
policy form or certificate form shall not be delivered or issued
for delivery unless the policy form or certificate form can be
expected, as estimated for the entire period for which rates are
computed to provide coverage, to return to policyholders and
certificate holders in the form of aggregate benefits, not
including anticipated refunds or credits, provided under the
policy form or certificate form:
(1) at least 75 percent of the aggregate amount of premiums
earned in the case of group policies; and
(2) at least 65 percent of the aggregate amount of premiums
earned in the case of individual policies, calculated on the
basis of.
These ratios must be calculated based upon incurred claims
experience, or incurred health care expenses where coverage is
provided by a health maintenance organization on a service
rather than reimbursement basis, and earned premiums for the
period and according to accepted actuarial principles and
practices. For purposes of this calculation, "health care
expenses" has the meaning given in section 62A.31, subdivision
3, paragraph (j). An insurer shall demonstrate that the third
year loss ratio is greater than or equal to the applicable
percentage.
All filings of rates and rating schedules shall demonstrate
that expected claims in relation to premiums comply with the
requirements of this section when combined with actual
experience to date. Filings of rate revisions shall also
demonstrate that the anticipated loss ratio over the entire
future period for which the revised rates are computed to
provide coverage can be expected to meet the appropriate loss
ratio standards, and aggregate loss ratio from inception of the
policy or certificate shall equal or exceed the appropriate loss
ratio standards.
An application form for a Medicare supplement policy or
certificate, as defined in this section, must prominently
disclose the anticipated loss ratio and explain what it means.
(b) An issuer shall collect and file with the commissioner
by May 31 of each year the data contained in the National
Association of Insurance Commissioners Medicare Supplement
Refund Calculating form, for each type of Medicare supplement
benefit plan.
If, on the basis of the experience as reported, the
benchmark ratio since inception (ratio 1) exceeds the adjusted
experience ratio since inception (ratio 3), then a refund or
credit calculation is required. The refund calculation must be
done on a statewide basis for each type in a standard Medicare
supplement benefit plan. For purposes of the refund or credit
calculation, experience on policies issued within the reporting
year shall be excluded.
A refund or credit shall be made only when the benchmark
loss ratio exceeds the adjusted experience loss ratio and the
amount to be refunded or credited exceeds a de minimis level.
The refund shall include interest from the end of the calendar
year to the date of the refund or credit at a rate specified by
the secretary of health and human services, but in no event
shall it be less than the average rate of interest for 13-week
treasury bills. A refund or credit against premiums due shall
be made by September 30 following the experience year on which
the refund or credit is based.
(c) An issuer of Medicare supplement policies and
certificates in this state shall file annually its rates, rating
schedule, and supporting documentation including ratios of
incurred losses to earned premiums by policy or certificate
duration for approval by the commissioner according to the
filing requirements and procedures prescribed by the
commissioner. The supporting documentation shall also
demonstrate in accordance with actuarial standards of practice
using reasonable assumptions that the appropriate loss ratio
standards can be expected to be met over the entire period for
which rates are computed. The demonstration shall exclude
active life reserves. An expected third-year loss ratio which
is greater than or equal to the applicable percentage shall be
demonstrated for policies or certificates in force less than
three years.
As soon as practicable, but before the effective date of
enhancements in Medicare benefits, every issuer of Medicare
supplement policies or certificates in this state shall file
with the commissioner, in accordance with the applicable filing
procedures of this state:
(1) a premium adjustment that is necessary to produce an
expected loss ratio under the policy or certificate that will
conform with minimum loss ratio standards for Medicare
supplement policies or certificates. No premium adjustment that
would modify the loss ratio experience under the policy or
certificate other than the adjustments described herein shall be
made with respect to a policy or certificate at any time other
than on its renewal date or anniversary date;
(2) if an issuer fails to make premium adjustments
acceptable to the commissioner, the commissioner may order
premium adjustments, refunds, or premium credits considered
necessary to achieve the loss ratio required by this section;
(3) any appropriate riders, endorsements, or policy or
certificate forms needed to accomplish the Medicare supplement
insurance policy or certificate modifications necessary to
eliminate benefit duplications with Medicare. The riders,
endorsements, or policy or certificate forms shall provide a
clear description of the Medicare supplement benefits provided
by the policy or certificate.
(d) The commissioner may conduct a public hearing to gather
information concerning a request by an issuer for an increase in
a rate for a policy form or certificate form if the experience
of the form for the previous reporting period is not in
compliance with the applicable loss ratio standard. The
determination of compliance is made without consideration of a
refund or credit for the reporting period. Public notice of the
hearing shall be furnished in a manner considered appropriate by
the commissioner.
(e) An issuer shall not use or change premium rates for a
Medicare supplement policy or certificate unless the rates,
rating schedule, and supporting documentation have been filed
with, and approved by, the commissioner according to the filing
requirements and procedures prescribed by the commissioner.
(f) An issuer must file any riders or amendments to policy
or certificate forms to delete outpatient prescription drug
benefits as required by the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003 only with the
commissioner in the state in which the policy or certificate was
issued.
(g) Issuers are permitted to continue to issue currently
approved policy and certificate forms as appropriate through
December 31, 2005.
(h) Issuers must comply with any requirements to notify
enrollees under the Medicare Prescription Drug, Improvement, and
Modernization Act of 2003.
Sec. 14. [REVISOR INSTRUCTION.]
The revisor of statutes shall, in producing Minnesota
Statutes 2006, place in alphabetical order the terms defined in
Minnesota Statutes, section 62A.31, subdivision 3, and make any
necessary resulting changes in cross-references.
Sec. 15. [EFFECTIVE DATE.]
Sections 1 to 13 are effective January 1, 2006, except that
section 13, paragraphs (f), (g), and (h), are effective the day
following final enactment.
ARTICLE 2
REGULATION OF STAND-ALONE MEDICARE
PART D PRESCRIPTION DRUG PLANS
Section 1. [62A.451] [DEFINITIONS.]
Subdivision 1. [APPLICABILITY.] For purposes of sections
62A.451 to 62A.4528, the terms defined in this section have the
meanings given.
Subd. 2. [COMMISSIONER.] "Commissioner" means the
commissioner of commerce.
Subd. 3. [ENROLLEE.] "Enrollee" means an individual who is
entitled to limited health services under a contract with an
entity authorized to provide or arrange for such services under
sections 62A.451 to 62A.4528.
Subd. 4. [EVIDENCE OF COVERAGE.] "Evidence of coverage"
means the certificate, agreement, or contract issued under
section 62A.4516 setting forth the coverage to which an enrollee
is entitled.
Subd. 5. [LIMITED HEALTH SERVICE.] "Limited health service"
means pharmaceutical services covered under Medicare Part D.
Limited health service does not include hospital, medical,
surgical, or emergency services.
Subd. 6. [PREPAID LIMITED HEALTH SERVICE
ORGANIZATION.] "Prepaid limited health service organization"
means any corporation, partnership, or other entity that, in
return for a prepayment, undertakes to provide or arrange for
the provision of limited health services to enrollees. Prepaid
limited health service organization does not include:
(1) an entity otherwise authorized under the laws of this
state either to provide any limited health service on a
prepayment or other basis or to indemnify for any limited health
service;
(2) an entity that meets the requirements of section
62A.4514; or
(3) a provider or entity when providing or arranging for
the provision of limited health services under a contract with a
prepaid limited health service organization or with an entity
described in clause (1) or (2).
Subd. 7. [PROVIDER.] "Provider" means a physician,
pharmacist, health facility, or other person or institution that
is licensed or otherwise authorized to deliver or furnish
limited health services under sections 62A.451 to 62A.4528.
Subd. 8. [SUBSCRIBER.] "Subscriber" means the person whose
employment or other status, except for family dependency, is the
basis for entitlement to limited health services under a
contract with an entity authorized to provide or arrange for
such services under sections 62A.451 to 62A.4528.
Sec. 2. [62A.4511] [CERTIFICATE OF AUTHORITY REQUIRED.]
No person, corporation, partnership, or other entity may
operate a prepaid limited health service organization in this
state without obtaining and maintaining a certificate of
authority from the commissioner under sections 62A.451 to
62A.4528.
Sec. 3. [62A.4512] [APPLICATION FOR CERTIFICATE OF
AUTHORITY.]
An application for a certificate of authority to operate a
prepaid limited health service organization must be filed with
the commissioner on a form prescribed by the commissioner. The
application must be verified by an officer or authorized
representative of the applicant and must set forth, or be
accompanied by, the following:
(1) a copy of the applicant's basic organizational
document, such as the articles of incorporation, articles of
association, partnership agreement, trust agreement, or other
applicable documents and all amendments to these documents;
(2) a copy of all bylaws, rules and regulations, or similar
documents, if any, regulating the conduct of the applicant's
internal affairs;
(3) a list of the names, addresses, official positions, and
biographical information of the individuals who are responsible
for conducting the applicant's affairs, including but not
limited to, all members of the board of directors, board of
trustees, executive committee, or other governing board or
committee, the principal officers, and any person or entity
owning or having the right to acquire ten percent or more of the
voting securities of the applicant, and the partners or members
in the case of a partnership or association;
(4) a statement generally describing the applicant, its
facilities, personnel, and the limited health services to be
offered;
(5) a copy of the form of any contract made or to be made
between the applicant and any providers regarding the provision
of limited health services to enrollees;
(6) a copy of the form of any contract made, or to be made
between the applicant and any person listed in clause (3);
(7) a copy of the form of any contract made or to be made
between the applicant and any person, corporation, partnership,
or other entity for the performance on the applicant's behalf of
any functions including, but not limited to, marketing,
administration, enrollment, investment management, and
subcontracting for the provision of limited health services to
enrollees;
(8) a copy of the form of any group contract that is to be
issued to employers, unions, trustees, or other organizations
and a copy of any form of evidence of coverage to be issued to
subscribers;
(9) a copy of the applicant's most recent financial
statements audited by independent certified public accountants.
If the financial affairs of the applicant's parent company are
audited by independent certified public accountants but those of
the applicant are not, then a copy of the most recent audited
financial statement of the applicant's parent company, certified
by an independent certified public accountant, attached to which
shall be consolidating financial statements of the applicant,
satisfies this requirement unless the commissioner determines
that additional or more recent financial information is required
for the proper administration of sections 62A.451 to 62A.4528;
(10) a copy of the applicant's financial plan, including a
three-year projection of anticipated operating results, a
statement of the sources of working capital, and any other
sources of funding and provisions for contingencies;
(11) a statement acknowledging that all lawful process in
any legal action or proceeding against the applicant on a cause
of action arising in this state is valid if served in accordance
with section 45.028;
(12) a description of how the applicant will comply with
section 62A.4523; and
(13) such other information as the commissioner may
reasonably require to make the determinations required by
sections 62A.451 to 62A.4528.
Sec. 4. [62A.4513] [ISSUANCE OF CERTIFICATE OF AUTHORITY;
DENIAL.]
Subdivision 1. [ISSUANCE.] Following receipt of an
application filed under section 62A.4512, the commissioner shall
review the application and notify the applicant of any
deficiencies. The commissioner must approve or deny an
application within 90 days after receipt of a substantially
complete application, or the application is deemed approved.
The commissioner shall issue a certificate of authority to an
applicant provided that the following conditions are met:
(1) the requirements of section 62A.4512 have been
fulfilled;
(2) the individuals responsible for conducting the
applicant's affairs are competent, trustworthy, and possess good
reputations, and have had appropriate experience, training, or
education;
(3) the applicant is financially responsible and may
reasonably be expected to meet its obligations to enrollees and
to prospective enrollees. In making this determination, the
commissioner may consider:
(i) the financial soundness of the applicant's arrangements
for limited health services;
(ii) the adequacy of working capital, other sources of
funding, and provisions for contingencies;
(iii) any agreement for paying the cost of the limited
health services or for alternative coverage in the event of
insolvency of the prepaid limited health service organization;
and
(iv) the manner in which the requirements of section
62A.4523 have been fulfilled; and
(4) any deficiencies identified by the commissioner have
been corrected.
Subd. 2. [DENIALS.] If the certificate of authority is
denied, the commissioner shall notify the applicant and shall
specify the reasons for denial in the notice. The prepaid
limited health service organization has 30 days from the date of
receipt of the notice to request a hearing before the
commissioner under chapter 14.
Sec. 5. [62A.4514] [FILING REQUIREMENTS FOR AUTHORIZED
ENTITIES.]
(a) An entity authorized under the laws of this state to
operate a health maintenance organization, an accident and
health insurance company, a nonprofit health service plan
corporation, a fraternal benefit society, or a multiple employer
welfare arrangement, and that is not otherwise authorized under
the laws of this state to offer limited health services on a per
capita or fixed prepayment basis, may do so by filing for
approval with the commissioner the information requested by
section 62A.4512, clauses (4), (5), (7), (8), and (10), and any
subsequent material modification or addition to those provisions.
(b) If the commissioner disapproves the filing, the
procedures provided in section 62A.4513, subdivision 2, must be
followed.
Sec. 6. [62A.4515] [MATERIAL MODIFICATIONS.]
Subdivision 1. [MATERIAL MODIFICATIONS.] A prepaid limited
health service organization shall file with the commissioner
prior to use, a notice of any material modification of any
matter or document furnished under section 62A.4512, together
with supporting documents necessary to fully explain the
modification. If the commissioner does not disapprove the
filing within 60 days of its filing, the filing is deemed
approved.
Subd. 2. [PROCEDURE FOR DISAPPROVAL.] If a filing under
this section is disapproved, the commissioner shall notify the
prepaid limited health service organization and specify the
reasons for disapproval in the notice. The prepaid limited
health service organization has 30 days from the date of receipt
of notice to request a hearing before the commissioner under
chapter 14.
Sec. 7. [62A.4516] [EVIDENCE OF COVERAGE.]
Every subscriber must be issued an evidence of coverage
consistent with the requirements of Medicare Part D.
Sec. 8. [62A.4517] [CONSTRUCTION WITH OTHER LAWS.]
Subdivision 1. [APPLICATION OF OTHER INSURANCE LAWS.] (a)
A prepaid limited health service organization organized under
the laws of this state is deemed to be a domestic insurer for
purposes of chapter 60D unless specifically exempted in writing
from one or more of the provisions of that chapter by the
commissioner, based upon a determination that the provision is
not applicable to the organization or to providing coverage
under Medicare Part D.
(b) No other provision of chapters 60 to 72C applies to a
prepaid limited health service organization unless such an
organization is specifically mentioned in the provision.
Subd. 2. [NOT A HEALING ART.] The provision of limited
health services by a prepaid limited health service organization
or other entity under sections 62A.451 to 62A.4528 must not be
deemed to be the practice of medicine or other healing arts.
Subd. 3. [SOLICITATION AND ADVERTISING.] Solicitation to
arrange for or provide limited health services in accordance
with sections 62A.451 to 62A.4528 shall not be construed to
violate any provision of law relating to solicitation or
advertising by health professionals.
Sec. 9. [62A.4518] [NONDUPLICATION OF COVERAGE.]
Notwithstanding any other law of this state, a prepaid
limited health service organization, health maintenance
organization, accident and health insurance company, nonprofit
health service plan corporation, or fraternal benefit society
may exclude, in any contract or policy issued to a group, any
coverage that would duplicate the coverage for limited health
services, whether in the form of services, supplies, or
reimbursement, insofar as the coverage or service is provided in
accordance with sections 62A.451 to 62A.4528 under a contract or
policy issued to the same group or to a part of that group by a
prepaid limited health service organization, a health
maintenance organization, an accident and health insurance
company, a nonprofit health service corporation, or a fraternal
benefit society.
Sec. 10. [62A.4519] [COMPLAINT SYSTEM.]
Every prepaid limited health service organization shall
establish and maintain a complaint system providing reasonable
procedures for resolving written complaints initiated by
enrollees and providers, consistent with the requirements of
Medicare Part D.
Sec. 11. [62A.4520] [EXAMINATION OF ORGANIZATION.]
(a) The commissioner may examine the affairs of any prepaid
limited health service organization as often as is reasonably
necessary to protect the interests of the people of this state,
but not less frequently than once every three years.
(b) Every prepaid limited health service organization shall
make its relevant books and records available for an examination
and in every way cooperate with the commissioner to facilitate
an examination.
(c) In lieu of an examination, the commissioner may accept
the report of an examination made by the commissioner of another
state.
Sec. 12. [62A.4521] [INVESTMENTS.]
The funds of a prepaid limited health service organization
shall be invested only in accordance with the guidelines under
chapter 62D for investments by health maintenance organizations.
Sec. 13. [62A.4522] [AGENTS.]
No individual may apply, procure, negotiate, or place for
others any policy or contract of a prepaid limited health
service organization unless that individual holds a license or
is otherwise authorized to sell accident and health insurance
policies, nonprofit health service plan contracts, or health
maintenance organization contracts.
Sec. 14. [62A.4523] [PROTECTION AGAINST INSOLVENCY;
DEPOSIT.]
Subdivision 1. [NET EQUITY.] (a) Except as approved in
accordance with subdivision 4, each prepaid limited health
service organization shall at all times have and maintain
tangible net equity equal to the greater of:
(1) $100,000; or
(2) two percent of the organization's annual gross premium
income, up to a maximum of the required capital and surplus of
an accident and health insurer.
(b) A prepaid limited health service organization that has
uncovered expenses in excess of $100,000, as reported on the
most recent annual financial statement filed with the
commissioner, shall maintain tangible net equity equal to 25
percent of the uncovered expense in excess of $100,000 in
addition to the tangible net equity required by paragraph (a).
Subd. 2. [DEFINITIONS.] For the purpose of this section:
(1) "net equity" means the excess of total assets over
total liabilities, excluding liabilities which have been
subordinated in a manner acceptable to the commissioner; and
(2) "tangible net equity" means net equity reduced by the
value assigned to intangible assets including, but not limited
to, goodwill; going concern value; organizational expense;
start-up costs; long-term prepayments of deferred charges;
nonreturnable deposits; and obligations of officers, directors,
owners, or affiliates, except short-term obligations of
affiliates for goods or services arising in the normal course of
business that are payable on the same terms as equivalent
transactions with nonaffiliates and that are not past due.
Subd. 3. [DEPOSIT.] (a) Each prepaid limited health
service organization shall deposit with the commissioner or with
any organization or trustee acceptable to the commissioner
through which a custodial or controlled account is utilized,
cash, securities, or any combination of these or other measures
that is acceptable to the commissioner, in an amount equal to
$50,000 plus 25 percent of the tangible net equity required in
subdivision 1; provided, however, that the deposit must not be
required to exceed $200,000.
(b) The deposit is an admitted asset of the prepaid limited
health service organization in the determination of tangible net
equity.
(c) All income from deposits is an asset of the prepaid
limited health service organization. A prepaid limited health
service organization may withdraw a deposit or any part of it
after making a substitute deposit of equal amount and value.
Any securities must be approved by the commissioner before being
substituted.
(d) The deposit must be used to protect the interests of
the prepaid limited health service organization's enrollees and
to ensure continuation of limited health care services to
enrollees of a prepaid limited health service organization that
is in rehabilitation or conservation. If a prepaid limited
health service organization is placed in receivership or
liquidation, the deposit is an asset subject to provisions of
chapter 60B.
(e) The commissioner may reduce or eliminate the deposit
requirement if the prepaid limited health service organization
has made an acceptable deposit with the state or jurisdiction of
domicile for the protection of all enrollees, wherever located,
and delivers to the commissioner a certificate to that effect,
duly authenticated by the appropriate state official holding the
deposit.
Subd. 4. [WAIVER OF NET EQUITY REQUIREMENT.] Upon
application by a prepaid limited health service organization,
the commissioner may waive some or all of the requirements of
subdivision 1 for any period of time the commissioner deems
proper upon a finding that either:
(1) the prepaid limited health service organization has a
net equity of at least $10,000,000; or
(2) an entity having a net equity of at least $10,000,000
furnishes to the commissioner a written commitment, acceptable
to the commissioner, to provide for the uncovered expenses of
the prepaid limited health service organization.
Subd. 5. [DEFINITION; UNCOVERED EXPENSES.] For the
purposes of this section, "uncovered expense" means the cost of
health care services that are the obligation of a prepaid
limited health organization (1) for which an enrollee may be
liable in the event of the insolvency of the organization and
(2) for which alternative arrangements acceptable to the
commissioner have not been made to cover the costs. Costs
incurred by a provider who has agreed in writing not to bill
enrollees, except for permissible supplemental charges, must be
considered a covered expense.
Sec. 15. [62A.4524] [OFFICERS AND EMPLOYEES FIDELITY
BOND.]
(a) A prepaid limited health service organization shall
maintain in force a fidelity bond in its own name on its
officers and employees in an amount not less than $20,000,000 or
in any other amount prescribed by the commissioner. Except as
otherwise provided by this paragraph, the bond must be issued by
an insurance company that is licensed to do business in this
state or, if the fidelity bond required by this paragraph is not
available from an insurance company that holds a certificate of
authority in this state, a fidelity bond procured by a licensed
surplus lines agent resident in this state in compliance with
sections 60A.195 to 60A.2095 satisfies the requirements of this
paragraph.
(b) In lieu of the bond specified in paragraph (a), a
prepaid limited health service organization may deposit with the
commissioner cash or securities or other investments of the
types set forth in section 62A.4521. Such a deposit must be
maintained by the commissioner in the amount and subject to the
same conditions required for a bond under this paragraph.
Sec. 16. [62A.4525] [REPORTS.]
(a) Every prepaid limited health service organization shall
file with the commissioner annually, on or before April 1, a
report verified by at least two principal officers covering the
preceding calendar year.
(b) The report must be on forms prescribed by the
commissioner and must include:
(1) a financial statement of the organization, including
its balance sheet, income statement, and statement of changes in
financial position for the preceding year, certified by an
independent public accountant, or a consolidated audited
financial statement of its parent company certified by an
independent public accountant, attached to which must be
consolidating financial statements of the prepaid limited health
service organization;
(2) the number of subscribers at the beginning of the year,
the number of subscribers at the end of the year, and the number
of enrollments terminated during the year; and
(3) such other information relating to the performance of
the organization as is necessary to enable the commissioner to
carry out the commissioner's duties under sections 62A.451 to
62A.4528.
(c) The commissioner may require more frequent reports
containing information necessary to enable the commissioner to
carry out the commissioner's duties under sections 62A.451 to
62A.4528.
(d) The commissioner may suspend the organization's
certificate of authority pending the proper filing of the
required report by the organization.
Sec. 17. [62A.4526] [SUSPENSION OR REVOCATION OF
CERTIFICATE OF AUTHORITY.]
Subdivision 1. [GROUNDS FOR SUSPENSION OR REVOCATION.] The
commissioner may suspend or revoke the certificate of authority
issued to a prepaid limited health service organization under
sections 62A.451 to 62A.4528 upon determining that any of the
following conditions exist:
(1) the prepaid limited health service organization is
operating significantly in contravention of its basic
organizational document or in a manner contrary to that
described in and reasonably inferred from any other information
submitted under section 62A.4512, unless amendments to the
submissions have been filed with and approved by the
commissioner;
(2) the prepaid limited health service organization issues
an evidence of coverage that does not comply with the
requirements of section 62A.4516;
(3) the prepaid limited health service organization is
unable to fulfill its obligations to furnish limited health
services;
(4) the prepaid limited health service organization is not
financially responsible and may reasonably be expected to be
unable to meet its obligations to enrollees or prospective
enrollees;
(5) the tangible net equity of the prepaid limited health
service organization is less than that required by section
62A.4523 or the prepaid limited health service organization has
failed to correct any deficiency in its tangible net equity as
required by the commissioner;
(6) the prepaid limited health service organization has
failed to implement in a reasonable manner the complaint system
required by section 62A.4519;
(7) the continued operation of the prepaid limited health
service organization would be hazardous to its enrollees; or
(8) the prepaid limited health service organization has
otherwise failed to comply with sections 62A.451 to 62A.4528.
Subd. 2. [PROCEDURE FOR SUSPENSION OR REVOCATION.] If the
commissioner has cause to believe that grounds for the
suspension or revocation of a certificate of authority exist,
the commissioner shall notify the prepaid limited health service
organization in writing specifically stating the grounds for
suspension or revocation and fixing a time not more than 60 days
after the date of notification for a hearing on the matter in
accordance with chapter 14.
Subd. 3. [WINDING UP AFTER REVOCATION.] When the
certificate of authority of a prepaid limited health service
organization is revoked, the organization shall proceed,
immediately following the effective date of the order of
revocation, to wind up its affairs, and shall conduct no further
business except as may be essential to the orderly conclusion of
the affairs of the organization. It shall engage in no further
advertising or solicitation whatsoever. The commissioner may,
by written order, permit such further operation of the
organization as the commissioner may find to be in the best
interest of enrollees, to the end that enrollees will be
afforded the greatest practical opportunity to obtain continuing
limited health services.
Sec. 18. [62A.4527] [PENALTIES.]
In lieu of any penalty specified elsewhere in sections
62A.451 to 62A.4528, or when no penalty is specifically
provided, whenever a prepaid limited health service organization
or other person, corporation, partnership, or entity subject to
those sections has been found, pursuant to chapter 14, to have
violated any provision of sections 62A.451 to 62A.4528, the
commissioner may:
(1) issue and cause to be served upon the organization,
person, or entity charged with the violation a copy of the
findings and an order requiring the organization, person, or
entity to cease and desist from engaging in the act or practice
that constitutes the violation; and
(2) impose a monetary penalty of not more than $1,000 for
each violation, but not to exceed an aggregate penalty of
$10,000.
Sec. 19. [62A.4528] [REHABILITATION, CONSERVATION, OR
LIQUIDATION.]
(a) Any rehabilitation, conservation, or liquidation of a
prepaid limited health service organization must be deemed to be
the rehabilitation, conservation, or liquidation of an insurance
company and must be conducted under chapter 60B.
(b) A prepaid limited health service organization is not
subject to the laws and rules governing insurance insolvency
guaranty funds, nor shall any insurance insolvency guaranty fund
provide protection to individuals entitled to receive limited
health services from a prepaid limited health service
organization.
Sec. 20. [EFFECTIVE DATE.]
Sections 1 to 19 are effective March 15, 2005, but no
coverage may become effective prior to January 1, 2006.
ARTICLE 3
TECHNICAL AND CONFORMING CHANGES
Section 1. Minnesota Statutes 2004, section 62L.12,
subdivision 2, is amended to read:
Subd. 2. [EXCEPTIONS.] (a) A health carrier may sell,
issue, or renew individual conversion policies to eligible
employees otherwise eligible for conversion coverage under
section 62D.104 as a result of leaving a health maintenance
organization's service area.
(b) A health carrier may sell, issue, or renew individual
conversion policies to eligible employees otherwise eligible for
conversion coverage as a result of the expiration of any
continuation of group coverage required under sections 62A.146,
62A.17, 62A.21, 62C.142, 62D.101, and 62D.105.
(c) A health carrier may sell, issue, or renew conversion
policies under section 62E.16 to eligible employees.
(d) A health carrier may sell, issue, or renew individual
continuation policies to eligible employees as required.
(e) A health carrier may sell, issue, or renew individual
health plans if the coverage is appropriate due to an unexpired
preexisting condition limitation or exclusion applicable to the
person under the employer's group health plan or due to the
person's need for health care services not covered under the
employer's group health plan.
(f) A health carrier may sell, issue, or renew an
individual health plan, if the individual has elected to buy the
individual health plan not as part of a general plan to
substitute individual health plans for a group health plan nor
as a result of any violation of subdivision 3 or 4.
(g) Nothing in this subdivision relieves a health carrier
of any obligation to provide continuation or conversion coverage
otherwise required under federal or state law.
(h) Nothing in this chapter restricts the offer, sale,
issuance, or renewal of coverage issued as a supplement to
Medicare under sections 62A.31 to 62A.44, or policies or
contracts that supplement Medicare issued by health maintenance
organizations, or those contracts governed by section 1833, 1851
to 1859, 1860D, or 1876 of the federal Social Security Act,
United States Code, title 42, section 1395 et seq., as amended.
(i) Nothing in this chapter restricts the offer, sale,
issuance, or renewal of individual health plans necessary to
comply with a court order.
(j) A health carrier may offer, issue, sell, or renew an
individual health plan to persons eligible for an employer group
health plan, if the individual health plan is a high deductible
health plan for use in connection with an existing health
savings account, in compliance with the Internal Revenue Code,
section 223. In that situation, the same or a different health
carrier may offer, issue, sell, or renew a group health plan to
cover the other eligible employees in the group.
Sec. 2. Minnesota Statutes 2004, section 62Q.01,
subdivision 6, is amended to read:
Subd. 6. [MEDICARE-RELATED COVERAGE.] "Medicare-related
coverage" means a policy, contract, or certificate issued as a
supplement to Medicare, regulated under sections 62A.31 to
62A.44, including Medicare select coverage; policies, contracts,
or certificates that supplement Medicare issued by health
maintenance organizations; or policies, contracts, or
certificates governed by section 1833 (known as "cost" or "HCPP"
contracts), 1851 to 1859 (Medicare Advantage), 1860D (Medicare
Part D), or 1876 (known as "TEFRA" or "risk" contracts) of the
federal Social Security Act, United States Code, title 42,
section 1395, et seq., as amended; or Section 4001 of the
Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections
1851 to 1859 of the Social Security Act establishing part C of
the Medicare program, known as the "Medicare+Choice Medicare
Advantage program."
Sec. 3. Minnesota Statutes 2004, section 256.9657,
subdivision 3, is amended to read:
Subd. 3. [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY
INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1,
1992, each health maintenance organization with a certificate of
authority issued by the commissioner of health under chapter 62D
and each community integrated service network licensed by the
commissioner under chapter 62N shall pay to the commissioner of
human services a surcharge equal to six-tenths of one percent of
the total premium revenues of the health maintenance
organization or community integrated service network as reported
to the commissioner of health according to the schedule in
subdivision 4.
(b) For purposes of this subdivision, total premium revenue
means:
(1) premium revenue recognized on a prepaid basis from
individuals and groups for provision of a specified range of
health services over a defined period of time which is normally
one month, excluding premiums paid to a health maintenance
organization or community integrated service network from the
Federal Employees Health Benefit Program;
(2) premiums from Medicare wrap-around subscribers for
health benefits which supplement Medicare coverage;
(3) Medicare revenue, as a result of an arrangement between
a health maintenance organization or a community integrated
service network and the Centers for Medicare and Medicaid
Services of the federal Department of Health and Human Services,
for services to a Medicare beneficiary, excluding Medicare
revenue that states are prohibited from taxing under sections
4001 and 4002 of Public Law 105-33 received by a health
maintenance organization or community integrated service network
through risk sharing or Medicare Choice Plus contracts 1854,
1860D-12, and 1876 of title XVIII of the federal Social Security
Act, codified as United States Code, title 42, sections 1395mm,
1395w-112, and 1395w-24, respectively, as they may be amended
from time to time; and
(4) medical assistance revenue, as a result of an
arrangement between a health maintenance organization or
community integrated service network and a Medicaid state
agency, for services to a medical assistance beneficiary.
If advance payments are made under clause (1) or (2) to the
health maintenance organization or community integrated service
network for more than one reporting period, the portion of the
payment that has not yet been earned must be treated as a
liability.
(c) When a health maintenance organization or community
integrated service network merges or consolidates with or is
acquired by another health maintenance organization or community
integrated service network, the surviving corporation or the new
corporation shall be responsible for the annual surcharge
originally imposed on each of the entities or corporations
subject to the merger, consolidation, or acquisition, regardless
of whether one of the entities or corporations does not retain a
certificate of authority under chapter 62D or a license under
chapter 62N.
(d) Effective July 1 of each year, the surviving
corporation's or the new corporation's surcharge shall be based
on the revenues earned in the second previous calendar year by
all of the entities or corporations subject to the merger,
consolidation, or acquisition regardless of whether one of the
entities or corporations does not retain a certificate of
authority under chapter 62D or a license under chapter 62N until
the total premium revenues of the surviving corporation include
the total premium revenues of all the merged entities as
reported to the commissioner of health.
(e) When a health maintenance organization or community
integrated service network, which is subject to liability for
the surcharge under this chapter, transfers, assigns, sells,
leases, or disposes of all or substantially all of its property
or assets, liability for the surcharge imposed by this chapter
is imposed on the transferee, assignee, or buyer of the health
maintenance organization or community integrated service network.
(f) In the event a health maintenance organization or
community integrated service network converts its licensure to a
different type of entity subject to liability for the surcharge
under this chapter, but survives in the same or substantially
similar form, the surviving entity remains liable for the
surcharge regardless of whether one of the entities or
corporations does not retain a certificate of authority under
chapter 62D or a license under chapter 62N.
(g) The surcharge assessed to a health maintenance
organization or community integrated service network ends when
the entity ceases providing services for premiums and the
cessation is not connected with a merger, consolidation,
acquisition, or conversion.
Presented to the governor March 28, 2005
Signed by the governor March 31, 2005, 3:45 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes