1.1                          A bill for an act 
  1.2             relating to health; modifying provisions relating to 
  1.3             spending on health care services; providing for 
  1.4             monitoring the rate of growth of health care spending; 
  1.5             modifying the integrated service network act; 
  1.6             providing for the cancellation of recodification 
  1.7             efforts; amending Minnesota Statutes 1996, sections 
  1.8             60A.951, subdivision 5; 62J.04, subdivisions 1, 1a, 3, 
  1.9             7, and 9; 62J.041, subdivisions 2, 3, 4, 5, and 6; 
  1.10            62J.042; 62N.01, subdivision 1; 62N.22; 62N.23; 
  1.11            62N.26; 62N.40; 62Q.01, subdivisions 4 and 5; 62Q.106; 
  1.12            62Q.45, subdivision 2; 256.9363, subdivision 1; and 
  1.13            256.9657, subdivision 3; repealing Minnesota Statutes 
  1.14            1996, sections 62J.041, subdivision 7; 62J.37; 62N.01, 
  1.15            subdivision 2; 62N.02, subdivisions 4b, 4c, 6, 7, 8, 
  1.16            9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 
  1.17            62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 
  1.18            62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 
  1.19            62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.26; 
  1.20            62N.38, subdivisions 1, 2, 3, and 4; and 62Q.41; Laws 
  1.21            1994, chapter 625, article 5, section 5, as amended.  
  1.22  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.23     Section 1.  Minnesota Statutes 1996, section 60A.951, 
  1.24  subdivision 5, is amended to read: 
  1.25     Subd. 5.  [INSURER.] "Insurer" means insurance company, 
  1.26  risk retention group as defined in section 60E.02, service plan 
  1.27  corporation as defined in section 62C.02, health maintenance 
  1.28  organization as defined in section 62D.02, community integrated 
  1.29  service network as defined in section 62N.02, fraternal benefit 
  1.30  society regulated under chapter 64B, township mutual company 
  1.31  regulated under chapter 67A, joint self-insurance plan or 
  1.32  multiple employer trust regulated under chapter 60F, 62H, or 
  1.33  section 471.617, subdivision 2, persons administering a 
  2.1   self-insurance plan as defined in section 60A.23, subdivision 8, 
  2.2   clause (2), paragraphs (a) and (d), and the workers' 
  2.3   compensation reinsurance association established in section 
  2.4   79.34. 
  2.5      Sec. 2.  Minnesota Statutes 1996, section 62J.04, 
  2.6   subdivision 1, is amended to read: 
  2.7      Subdivision 1.  [LIMITS ON THE RATE OF GROWTH COST 
  2.8   CONTAINMENT GOALS.] (a) The commissioner of health shall set 
  2.9   annual limits on the rate of growth of cost containment goals 
  2.10  for public and private spending on health care services for 
  2.11  Minnesota residents, as provided in paragraph (b).  The limits 
  2.12  on growth cost containment goals must be set at levels the 
  2.13  commissioner determines to be realistic and achievable but that 
  2.14  will reduce the rate of growth in health care spending by at 
  2.15  least ten percent per year for the next five years.  The 
  2.16  commissioner shall set limits on growth cost containment goals 
  2.17  based on available data on spending and growth trends, including 
  2.18  data from group purchasers, national data on public and private 
  2.19  sector health care spending and cost trends, and trend 
  2.20  information from other states. 
  2.21     (b) The commissioner shall set the following annual limits 
  2.22  on the rate of growth of cost containment goals for public and 
  2.23  private spending on health care services for Minnesota residents:
  2.24     (1) for calendar year 1994, the rate of growth must not 
  2.25  exceed the change in the regional consumer price index for urban 
  2.26  consumers for calendar year 1993 plus 6.5 percentage points; 
  2.27     (2) for calendar year 1995, the rate of growth must not 
  2.28  exceed the change in the regional consumer price index for urban 
  2.29  consumers for calendar year 1994 plus 5.3 percentage points; 
  2.30     (3) (2) for calendar year 1996, the rate of growth must not 
  2.31  exceed the change in the regional consumer price index for urban 
  2.32  consumers for calendar year 1995 plus 4.3 percentage points; 
  2.33     (4) (3) for calendar year 1997, the rate of growth must 
  2.34  should not exceed the change in the regional consumer price 
  2.35  index for urban consumers for calendar year 1996 plus 3.4 
  2.36  percentage points; and 
  3.1      (5) (4) for calendar year 1998, the rate of growth must 
  3.2   should not exceed the change in the regional consumer price 
  3.3   index for urban consumers for calendar year 1997 plus 2.6 
  3.4   percentage points; and 
  3.5      (5) for calendar years after 1998, the commissioner shall 
  3.6   set cost containment goals using a method determined by the 
  3.7   commissioner to be most appropriate. 
  3.8      The commissioner shall adjust the growth limit set for 
  3.9   calendar year 1995 to recover savings in health care spending 
  3.10  required for the period July 1, 1993 to December 31, 1993.  
  3.11     (c) The commissioner shall publish: 
  3.12     (1) the projected limits cost containment goals in the 
  3.13  State Register by April 15 of the year immediately preceding the 
  3.14  year in which the limit cost containment goal will be 
  3.15  effective except for the year 1993, in which the limit shall be 
  3.16  published by July 1, 1993; 
  3.17     (2) the quarterly change in the regional consumer price 
  3.18  index for urban consumers; and 
  3.19     (3) the health care financing administration forecast for 
  3.20  total growth in the national health care expenditures.  
  3.21     (d) In setting an annual limit the cost containment goals, 
  3.22  the commissioner is exempt from the rulemaking requirements of 
  3.23  chapter 14.  The commissioner's decision on an annual limit the 
  3.24  cost containment goals is not appealable. 
  3.25     Sec. 3.  Minnesota Statutes 1996, section 62J.04, 
  3.26  subdivision 1a, is amended to read: 
  3.27     Subd. 1a.  [ADJUSTED GROWTH LIMITS AND ENFORCEMENT COST 
  3.28  CONTAINMENT GOALS.] (a) The commissioner shall publish the final 
  3.29  adjusted growth limit cost containment goal in the State 
  3.30  Register by January 31 of the year that the expenditure limit 
  3.31  cost containment goal is to be in effect.  The adjusted limit 
  3.32  cost containment goal must reflect the actual regional consumer 
  3.33  price index for urban consumers for the previous calendar year, 
  3.34  and may deviate from the previously published projected growth 
  3.35  limits cost containment goals to reflect differences between the 
  3.36  actual regional consumer price index for urban consumers and the 
  4.1   projected Consumer Price Index for urban consumers.  The 
  4.2   commissioner shall report to the legislature by February 15 of 
  4.3   each year on the implementation of the growth limits cost 
  4.4   containment goals as part of the study required under section 
  4.5   144.70.  This annual The report shall describe the differences 
  4.6   between the projected increase in health care expenditures, the 
  4.7   actual expenditures based on data collected, and the impact and 
  4.8   validity of growth limits within the overall health care reform 
  4.9   strategy. 
  4.10     (b) The commissioner, in consultation with the Minnesota 
  4.11  health care commission, shall research and include in the annual 
  4.12  report required in paragraph (a) for 1996, recommendations 
  4.13  regarding the implementation of growth limits for health plan 
  4.14  companies and providers.  The commissioner shall: 
  4.15     (1) consider both spending and revenue approaches and 
  4.16  report on the implementation of the interim limits as defined in 
  4.17  sections 62J.041 and 62J.042; 
  4.18     (2) make recommendations regarding the enforcement 
  4.19  mechanism and consider mechanisms to adjust future growth limits 
  4.20  as well as mechanisms to establish financial penalties for 
  4.21  noncompliance; 
  4.22     (3) address the feasibility of systemwide limits imposed on 
  4.23  all integrated service networks; and 
  4.24     (4) make recommendations on the most effective way to 
  4.25  implement growth limits on the fee-for-service system in the 
  4.26  absence of a regulated all-payer system. 
  4.27     (c) The commissioner shall enforce limits on growth in 
  4.28  spending for health plan companies and revenues for providers.  
  4.29  If the commissioner determines that artificial inflation or 
  4.30  padding of costs or prices has occurred in anticipation of the 
  4.31  implementation of growth limits, the commissioner may adjust the 
  4.32  base year spending totals or growth limits or take other action 
  4.33  to reverse the effect of the artificial inflation or padding. 
  4.34     (d) The commissioner shall impose and enforce overall 
  4.35  limits on growth in spending for health plan companies, with 
  4.36  adjustments for changes in enrollment, benefits, severity, and 
  5.1   risks.  If a health plan company exceeds the growth limits, the 
  5.2   commissioner may impose financial penalties up to the amount 
  5.3   exceeding the applicable growth limit. 
  5.4      Sec. 4.  Minnesota Statutes 1996, section 62J.04, 
  5.5   subdivision 3, is amended to read: 
  5.6      Subd. 3.  [COST CONTAINMENT MONITORING DUTIES.] After 
  5.7   obtaining the advice and recommendations of the Minnesota health 
  5.8   care commission, the commissioner shall: 
  5.9      (1) establish statewide and regional limits on growth in 
  5.10  cost containment goals for total health care spending under this 
  5.11  section, monitor statewide compliance with the spending limits, 
  5.12  and take action to achieve compliance to the extent authorized 
  5.13  by the legislature and collect data as described in sections 
  5.14  62J.37 to 62J.41 to monitor statewide achievement of the cost 
  5.15  containment goals; 
  5.16     (2) divide the state into no fewer than four regions, with 
  5.17  one of those regions being the Minneapolis/St. Paul metropolitan 
  5.18  statistical area but excluding Chisago, Isanti, Wright, and 
  5.19  Sherburne counties, for purposes of fostering the development of 
  5.20  regional health planning and coordination of health care 
  5.21  delivery among regional health care systems and working to 
  5.22  achieve spending limits cost containment goals; 
  5.23     (3) provide technical assistance to regional coordinating 
  5.24  boards; 
  5.25     (4) monitor the quality of health care throughout the state 
  5.26  and take action as necessary to ensure an appropriate level of 
  5.27  quality; 
  5.28     (5) issue recommendations regarding uniform billing forms, 
  5.29  uniform electronic billing procedures and data interchanges, 
  5.30  patient identification cards, and other uniform claims and 
  5.31  administrative procedures for health care providers and private 
  5.32  and public sector payers.  In developing the recommendations, 
  5.33  the commissioner shall review the work of the work group on 
  5.34  electronic data interchange (WEDI) and the American National 
  5.35  Standards Institute (ANSI) at the national level, and the work 
  5.36  being done at the state and local level.  The commissioner may 
  6.1   adopt rules requiring the use of the Uniform Bill 82/92 form, 
  6.2   the National Council of Prescription Drug Providers (NCPDP) 3.2 
  6.3   electronic version, the Health Care Financing Administration 
  6.4   1500 form, or other standardized forms or procedures; 
  6.5      (6) undertake health planning responsibilities as provided 
  6.6   in section 62J.15; 
  6.7      (7) authorize, fund, or promote research and 
  6.8   experimentation on new technologies and health care procedures; 
  6.9      (8) within the limits of appropriations for these purposes, 
  6.10  administer or contract for statewide consumer education and 
  6.11  wellness programs that will improve the health of Minnesotans 
  6.12  and increase individual responsibility relating to personal 
  6.13  health and the delivery of health care services, undertake 
  6.14  prevention programs including initiatives to improve birth 
  6.15  outcomes, expand childhood immunization efforts, and provide 
  6.16  start-up grants for worksite wellness programs; and 
  6.17     (9) undertake other activities to monitor and oversee the 
  6.18  delivery of health care services in Minnesota with the goal of 
  6.19  improving affordability, quality, and accessibility of health 
  6.20  care for all Minnesotans; and 
  6.21     (10) make the cost containment goal data available to the 
  6.22  public in forms that meet the requirements of data privacy and 
  6.23  that are useful to consumers, providers, and purchasers of 
  6.24  health care services. 
  6.25     Sec. 5.  Minnesota Statutes 1996, section 62J.04, 
  6.26  subdivision 7, is amended to read: 
  6.27     Subd. 7.  [PLAN FOR CONTROLLING GROWTH IN SPENDING.] (a) By 
  6.28  January 15, 1993, the Minnesota health care commission shall 
  6.29  submit to the legislature and the governor for approval a plan, 
  6.30  with as much detail as possible, for slowing the growth in 
  6.31  health care spending to the growth rate identified by the 
  6.32  commissioner, beginning July 1, 1993.  The goal of the plan 
  6.33  shall be to reduce the growth rate of health care spending, 
  6.34  adjusted for population changes, so that it declines by at least 
  6.35  ten percent per year for each of the next five years.  The plan 
  6.36  may include tentative targets for reducing the growth in 
  7.1   spending for consideration by the legislature. 
  7.2      (b) In developing the plan, the commission shall consider 
  7.3   the advisability and feasibility of the following options, but 
  7.4   is not obligated to incorporate them into the plan: 
  7.5      (1) data and methods that could be used to calculate 
  7.6   regional and statewide spending limits cost containment goals 
  7.7   and the various options for expressing spending limits cost 
  7.8   containment goals, such as maximum percentage growth rates or 
  7.9   actuarially adjusted average per capita rates that reflect the 
  7.10  demographics of the state or a region of the state; 
  7.11     (2) methods of adjusting spending limits cost containment 
  7.12  goals to account for patients who are not Minnesota residents, 
  7.13  to reflect care provided to a person outside the person's 
  7.14  region, and to adjust for demographic changes over time; 
  7.15     (3) methods that could be used to monitor compliance with 
  7.16  the limits cost containment goals; 
  7.17     (4) criteria for exempting spending on research and 
  7.18  experimentation on new technologies and medical practices when 
  7.19  setting or enforcing spending limits cost containment goals; 
  7.20     (5) methods that could be used to help providers, 
  7.21  purchasers, consumers, and communities control spending growth; 
  7.22     (6) methods of identifying activities of consumers, 
  7.23  providers, or purchasers that contribute to excessive growth in 
  7.24  spending; 
  7.25     (7) methods of encouraging voluntary activities that will 
  7.26  help keep spending within the limits cost containment goals; 
  7.27     (8) methods of consulting providers and obtaining their 
  7.28  assistance and cooperation and safeguards that are necessary to 
  7.29  protect providers from abrupt changes in revenues or practice 
  7.30  requirements; 
  7.31     (9) methods of avoiding, preventing, or recovering spending 
  7.32  in excess of the rate of growth identified by the commission; 
  7.33     (10) methods of depriving those who benefit financially 
  7.34  from overspending of the benefit of overspending, including the 
  7.35  option of recovering the amount of the excess spending from the 
  7.36  greater provider community or from individual providers or 
  8.1   groups of providers through targeted assessments; 
  8.2      (11) methods of reallocating health care resources among 
  8.3   provider groups to correct existing inequities, reward desirable 
  8.4   provider activities, discourage undesirable activities, or 
  8.5   improve the quality, affordability, and accessibility of health 
  8.6   care services; 
  8.7      (12) methods of imposing mandatory requirements relating to 
  8.8   the delivery of health care, such as practice parameters, 
  8.9   hospital admission protocols, 24-hour emergency care screening 
  8.10  systems, or designated specialty providers; 
  8.11     (13) methods of preventing unfair health care practices 
  8.12  that give a provider or group purchaser an unfair advantage or 
  8.13  financial benefit or that significantly circumvent, subvert, or 
  8.14  obstruct the goals of this chapter; 
  8.15     (14) methods of providing incentives through special 
  8.16  spending allowances or other means to encourage and reward 
  8.17  special projects to improve outcomes or quality of care; and 
  8.18     (15) the advisability or feasibility of a system of 
  8.19  permanent, regional coordinating boards to ensure community 
  8.20  involvement in activities to improve affordability, 
  8.21  accessibility, and quality of health care in each region. 
  8.22     Sec. 6.  Minnesota Statutes 1996, section 62J.04, 
  8.23  subdivision 9, is amended to read: 
  8.24     Subd. 9.  [GROWTH LIMITS COST CONTAINMENT GOALS; FEDERAL 
  8.25  PROGRAMS.] The commissioners of health and human services shall 
  8.26  establish a rate methodology for Medicare and Medicaid 
  8.27  risk-based contracting with health plan companies that is 
  8.28  consistent with statewide growth limits cost containment goals.  
  8.29  The methodology shall be presented for review by the Minnesota 
  8.30  health care commission and the legislative commission on health 
  8.31  care access prior to the submission of a waiver request to the 
  8.32  health care financing administration and subsequent 
  8.33  implementation of the methodology. 
  8.34     Sec. 7.  Minnesota Statutes 1996, section 62J.041, 
  8.35  subdivision 2, is amended to read: 
  8.36     Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
  9.1   establish limits on the increase in net expenditures by each 
  9.2   health carrier plan company for calendar years 1994, 1995, 1996, 
  9.3   and 1997 cost containment goals for the annual increase in net 
  9.4   expenditures by each health carrier plan company.  The limits 
  9.5   cost containment goals must be the same as the annual rate of 
  9.6   growth in health care spending established under section 62J.04, 
  9.7   subdivision 1, paragraph (b).  Health plan companies that are 
  9.8   affiliates may elect to meet one combined expenditure limit cost 
  9.9   containment goal. 
  9.10     Sec. 8.  Minnesota Statutes 1996, section 62J.041, 
  9.11  subdivision 3, is amended to read: 
  9.12     Subd. 3.  [DETERMINATION OF EXPENDITURES.] Health plan 
  9.13  companies shall submit to the commissioner of health, by April 
  9.14  1, 1994, for calendar year 1993; April 1, 1995, for calendar 
  9.15  year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, 
  9.16  for calendar year 1996; and April 1, 1998, for calendar year 
  9.17  1997 all information the commissioner determines to be necessary 
  9.18  to implement and enforce this section.  The information must be 
  9.19  submitted in the form specified by the commissioner.  The 
  9.20  information must include, but is not limited to, expenditures 
  9.21  per member per month or cost per employee per month, and 
  9.22  detailed information on revenues and reserves.  The 
  9.23  commissioner, to the extent possible, shall coordinate the 
  9.24  submittal of the information required under this section with 
  9.25  the submittal of the financial data required under chapter 62J, 
  9.26  to minimize the administrative burden on health plan companies.  
  9.27  The commissioner may adjust final expenditure figures for 
  9.28  demographic changes, risk selection, changes in basic benefits, 
  9.29  and legislative initiatives that materially change health care 
  9.30  costs, as long as these adjustments are consistent with the 
  9.31  methodology submitted by the health plan company to the 
  9.32  commissioner, and approved by the commissioner as actuarially 
  9.33  justified.  The methodology to be used for adjustments and the 
  9.34  election to meet one expenditure limit cost containment goal for 
  9.35  affiliated health plan companies must be submitted to the 
  9.36  commissioner by September 1, 1994.  Community integrated service 
 10.1   networks may submit the information with their application for 
 10.2   licensure.  The commissioner shall also accept changes to 
 10.3   methodologies already submitted.  The adjustment methodology 
 10.4   submitted and approved by the commissioner must apply to the 
 10.5   data submitted for calendar years 1994 and 1995.  The 
 10.6   commissioner may allow changes to accepted adjustment 
 10.7   methodologies for data submitted for calendar years 1996 and 
 10.8   1997.  Changes to the adjustment methodology must be received by 
 10.9   September 1, 1996, of each year and must be approved by the 
 10.10  commissioner. 
 10.11     Sec. 9.  Minnesota Statutes 1996, section 62J.041, 
 10.12  subdivision 4, is amended to read: 
 10.13     Subd. 4.  [MONITORING OF RESERVES.] (a) The commissioners 
 10.14  of health and commerce shall monitor health plan company 
 10.15  reserves and net worth as established under chapters 60A, 62C, 
 10.16  62D, 62H, and 64B, with respect to the health plan companies 
 10.17  that each commissioner respectively regulates to ensure 
 10.18  that assess the degree to which savings resulting from the 
 10.19  establishment of expenditure limits cost containment goals are 
 10.20  passed on to consumers in the form of lower premium rates.  
 10.21     (b) Health plan companies shall fully reflect in the 
 10.22  premium rates the savings generated by the expenditure limits 
 10.23  resulting from cost containment goals.  No premium rate, 
 10.24  currently reviewed by the departments of health or commerce, may 
 10.25  be approved for those health plan companies unless the health 
 10.26  plan company establishes to the satisfaction of the commissioner 
 10.27  of commerce or the commissioner of health, as appropriate, that 
 10.28  the proposed new rate would comply with this paragraph. 
 10.29     (c) Health plan companies, except those licensed under 
 10.30  chapter 60A to sell accident and sickness insurance under 
 10.31  chapter 62A, shall annually before the end of the fourth fiscal 
 10.32  quarter provide to the commissioner of health or commerce, as 
 10.33  applicable, a projection of the level of reserves the company 
 10.34  expects to attain during each quarter of the following fiscal 
 10.35  year.  These health plan companies shall submit with required 
 10.36  quarterly financial statements a calculation of the actual 
 11.1   reserve level attained by the company at the end of each quarter 
 11.2   including identification of the sources of any significant 
 11.3   changes in the reserve level and an updated projection of the 
 11.4   level of reserves the health plan company expects to attain by 
 11.5   the end of the fiscal year.  In cases where the health plan 
 11.6   company has been given a certificate to operate a new health 
 11.7   maintenance organization under chapter 62D, or been licensed as 
 11.8   an integrated service network or community integrated service 
 11.9   network under chapter 62N, or formed an affiliation with one of 
 11.10  these organizations, the health plan company shall also submit 
 11.11  with its quarterly financial statement, total enrollment at the 
 11.12  beginning and end of the quarter and enrollment changes within 
 11.13  each service area of the new organization.  The reserve 
 11.14  calculations shall be maintained by the commissioners as trade 
 11.15  secret information, except to the extent that such information 
 11.16  is also required to be filed by another provision of state law 
 11.17  and is not treated as trade secret information under such other 
 11.18  provisions. 
 11.19     (d) Health plan companies in paragraph (c) whose reserves 
 11.20  are less than the required minimum or more than the required 
 11.21  maximum at the end of the fiscal year shall submit a plan of 
 11.22  corrective action to the commissioner of health or commerce 
 11.23  under subdivision 7. 
 11.24     (e) The commissioner of commerce, in consultation with the 
 11.25  commissioner of health, shall report to the legislature no later 
 11.26  than January 15, 1995, as to whether the concept of a reserve 
 11.27  corridor or other mechanism for purposes of monitoring reserves 
 11.28  is adaptable for use with indemnity health insurers that do 
 11.29  business in multiple states and that must comply with their 
 11.30  domiciliary state's reserves requirements. 
 11.31     Sec. 10.  Minnesota Statutes 1996, section 62J.041, 
 11.32  subdivision 5, is amended to read: 
 11.33     Subd. 5.  [NOTICE.] The commissioner of health shall 
 11.34  publish in the State Register and make available to the public 
 11.35  by July 1, 1995, a list of all health plan companies that 
 11.36  exceeded their expenditure limit cost containment goal for the 
 12.1   1994 calendar year.  The commissioner shall publish in the State 
 12.2   Register and make available to the public by July 1, 1996, of 
 12.3   each year a list of all health plan companies that exceeded 
 12.4   their combined expenditure limit cost containment goal for the 
 12.5   preceding calendar years 1994 and 1995 year.  The commissioner 
 12.6   shall notify each health plan company that the commissioner has 
 12.7   determined that the health plan company exceeded its expenditure 
 12.8   limit cost containment goal, at least 30 days before publishing 
 12.9   the list, and shall provide each health plan company with ten 
 12.10  days to provide an explanation for exceeding the expenditure 
 12.11  limit cost containment goal.  The commissioner shall review the 
 12.12  explanation and may change a determination if the commissioner 
 12.13  determines the explanation to be valid. 
 12.14     Sec. 11.  Minnesota Statutes 1996, section 62J.041, 
 12.15  subdivision 6, is amended to read: 
 12.16     Subd. 6.  [ASSISTANCE BY THE COMMISSIONER OF COMMERCE.] The 
 12.17  commissioner of commerce shall provide assistance to the 
 12.18  commissioner of health in monitoring health plan companies 
 12.19  regulated by the commissioner of commerce.  The commissioner of 
 12.20  commerce, in consultation with the commissioner of health, shall 
 12.21  enforce compliance with expenditure limits for those health plan 
 12.22  companies. 
 12.23     Sec. 12.  Minnesota Statutes 1996, section 62J.042, is 
 12.24  amended to read: 
 12.25     62J.042 [HEALTH CARE PROVIDER REVENUE LIMITS COST 
 12.26  CONTAINMENT GOALS.] 
 12.27     Subdivision 1.  [DEFINITION.] For purposes of this section, 
 12.28  "health care provider" has the definition given in section 
 12.29  62J.03, subdivision 8. 
 12.30     Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
 12.31  establish limits on cost containment goals for the annual 
 12.32  increase in revenue for each health care provider, for calendar 
 12.33  years 1994, 1995, 1996, and 1997.  The limits cost containment 
 12.34  goals must be the same as the annual rate of goals for growth in 
 12.35  health care spending established under section 62J.04, 
 12.36  subdivision 1, paragraph (b).  The commissioner may adjust final 
 13.1   revenue figures for case mix complexity, payer mix, 
 13.2   out-of-period settlements, certain taxes and assessments 
 13.3   including the MinnesotaCare provider tax and provider surcharge, 
 13.4   any new assessments imposed by federal or state law, research 
 13.5   and education costs, donations, grants, and legislative 
 13.6   initiatives that materially change health care revenues, as long 
 13.7   as these adjustments are consistent with the methodology 
 13.8   submitted by the health care provider to the commissioner, and 
 13.9   approved by the commissioner as actuarially justified.  The 
 13.10  methodology to be used for adjustments must be submitted to the 
 13.11  commissioner by September 1, 1994.  The commissioner shall also 
 13.12  accept changes to methodologies already submitted.  The 
 13.13  adjustment methodology submitted and approved by the 
 13.14  commissioner must apply to the data submitted for calendar years 
 13.15  1994 and 1995.  The commissioner may allow changes to accepted 
 13.16  adjustment methodologies for data submitted for calendar years 
 13.17  1996 and 1997.  The commissioner may allow changes to accepted 
 13.18  adjustment methodologies.  Changes to the adjustment methodology 
 13.19  must be received by September 1, 1996, of each year and must be 
 13.20  approved by the commissioner.  
 13.21     Subd. 3.  [MONITORING OF REVENUE.] The commissioner of 
 13.22  health shall monitor health care provider revenue, to ensure 
 13.23  that assess the degree to which savings resulting from the 
 13.24  establishment of revenue limits cost containment goals are 
 13.25  passed on to consumers in the form of lower charges.  The 
 13.26  commissioner shall monitor hospital revenue by examining net 
 13.27  inpatient revenue per adjusted admission and net outpatient 
 13.28  revenue per outpatient visit.  The commissioner shall monitor 
 13.29  the revenue of physicians and other health care providers by 
 13.30  examining revenue per patient per year or revenue per 
 13.31  encounter.  For purposes of this section, definitions related to 
 13.32  the implementation of limits cost containment goals for 
 13.33  providers other than hospitals are included in Minnesota Rules, 
 13.34  chapter 4650, and definitions related to the implementation 
 13.35  of limits cost containment goals for hospitals are included in 
 13.36  Minnesota Rules, chapter 4651.  If this information is not 
 14.1   available, the commissioner may enforce an annual limit on the 
 14.2   rate of growth of the provider's current fees. 
 14.3      Subd. 4.  [MONITORING AND ENFORCEMENT.] (a) Health care 
 14.4   providers shall submit to the commissioner of health, in the 
 14.5   form and at the times required by the commissioner, all 
 14.6   information the commissioner determines to be necessary to 
 14.7   implement and enforce this section.  The commissioner shall 
 14.8   regularly audit all health clinics employing or contracting with 
 14.9   over 100 physicians.  The commissioner shall also audit, at 
 14.10  times and in a manner that does not interfere with delivery of 
 14.11  patient care, a sample of smaller clinics and other health care 
 14.12  providers.  Providers that exceed revenue limits based on 
 14.13  two-year average revenue data shall be required by the 
 14.14  commissioner to pay back the amount exceeding the revenue limits 
 14.15  during the following calendar year.  
 14.16     (b) Pharmacists may adjust their revenue figures for 
 14.17  increases in drug product costs that are set by the 
 14.18  manufacturer.  The commissioner shall may consult with pharmacy 
 14.19  groups, including pharmacies, wholesalers, drug manufacturers, 
 14.20  health plans, and other interested parties, to determine the 
 14.21  methodology for measuring and implementing the interim growth 
 14.22  limits cost containment goals while taking into account the 
 14.23  adjustments for drug product costs. 
 14.24     The commissioner shall monitor providers meeting the growth 
 14.25  limits based on their current fees on an annual basis.  The fee 
 14.26  charged for each service must be based on a weighted average 
 14.27  across 12 months and compared to the weighted average for the 
 14.28  previous 12-month period.  The percentage increase in the 
 14.29  average fee from 1993 to 1994, and from 1994 to 1995 is subject 
 14.30  to the growth limits established under section 62J.04, 
 14.31  subdivision 1, paragraph (b).  The percentage increase in the 
 14.32  average fee from 1995 to 1996, and from 1996 to 1997 is subject 
 14.33  to the change in the regional consumer price index for urban 
 14.34  consumers for the previous year published in the State Register 
 14.35  in January of the year that the growth limit is in effect.  The 
 14.36  audit process may include a review of the provider's monthly fee 
 15.1   schedule, and a random claims analysis for the provider during 
 15.2   different parts of the year to monitor variations in fees.  The 
 15.3   commissioner shall require providers that exceed growth limits, 
 15.4   based on annual fees, to pay back during the following calendar 
 15.5   year the amount of fees received exceeding the limit. 
 15.6      The commissioner shall notify each provider that has 
 15.7   exceeded its revenue or fee limit, at least 30 days before 
 15.8   taking action, and shall provide each provider with ten days to 
 15.9   provide an explanation for exceeding the revenue or fee limit.  
 15.10  The commissioner shall review the explanation and may change a 
 15.11  determination if the commissioner determines the explanation to 
 15.12  be valid. 
 15.13     The commissioner may approve a different repayment schedule 
 15.14  for a health care provider that takes into account the 
 15.15  provider's financial condition.  
 15.16     A provider may appeal the commissioner's order to pay back 
 15.17  the amount exceeding the revenue or fee limit by mailing a 
 15.18  written notice of appeal to the commissioner within 30 days 
 15.19  after the commissioner's order was mailed.  The contested case 
 15.20  and judicial review provisions of chapter 14 apply to the 
 15.21  appeal.  The provider shall pay the amount specified by the 
 15.22  commissioner either to the commissioner or into an escrow 
 15.23  account until final resolution of the appeal.  Notwithstanding 
 15.24  sections 15.472 to 15.475, each party is responsible for its own 
 15.25  fees and expenses, including attorneys fees, for the appeal.  
 15.26  Any amount required to be paid back under this section shall be 
 15.27  deposited in the health care access fund. 
 15.28     Subd. 5.  [SMALL RURAL HOSPITALS.] Each small rural 
 15.29  hospital shall file information with the commissioner of health 
 15.30  and calculate its growth in revenues pursuant to the 
 15.31  requirements of this chapter.  Small rural hospitals that do not 
 15.32  file as part of a hospital system are exempt from the repayment 
 15.33  provisions of subdivision 4.  However, the commissioner retains 
 15.34  the authority to initiate an investigation and order repayment 
 15.35  pursuant to this section, if the commissioner believes that 
 15.36  there is an unreasonable rate of growth in revenues and if the 
 16.1   hospital fails to demonstrate good cause for exceeding the 
 16.2   statutory growth limits.  For purposes of this subdivision, 
 16.3   small rural hospital is defined as a hospital with less than 50 
 16.4   licensed beds. 
 16.5      Sec. 13.  Minnesota Statutes 1996, section 62N.01, 
 16.6   subdivision 1, is amended to read: 
 16.7      Subdivision 1.  [CITATION.] This chapter may be cited as 
 16.8   the "Minnesota community integrated service network act." 
 16.9      Sec. 14.  Minnesota Statutes 1996, section 62N.22, is 
 16.10  amended to read: 
 16.11     62N.22 [DISCLOSURE OF COMMISSIONS.] 
 16.12     Before selling any coverage or enrollment in a community 
 16.13  integrated service network or an integrated service network, a 
 16.14  person selling the coverage or enrollment shall disclose in 
 16.15  writing to the prospective purchaser the amount of any 
 16.16  commission or other compensation the person will receive as a 
 16.17  direct result of the sale.  The disclosure may be expressed in 
 16.18  dollars or as a percentage of the premium.  The amount disclosed 
 16.19  need not include any anticipated renewal commissions. 
 16.20     Sec. 15.  Minnesota Statutes 1996, section 62N.23, is 
 16.21  amended to read: 
 16.22     62N.23 [TECHNICAL ASSISTANCE; LOANS.] 
 16.23     (a) The commissioner shall provide technical assistance to 
 16.24  parties interested in establishing or operating a community 
 16.25  integrated service network or an integrated service network.  
 16.26  This shall be known as the community integrated service network 
 16.27  technical assistance program (ISNTAP) (CISNTAP). 
 16.28     The technical assistance program shall offer seminars on 
 16.29  the establishment and operation of community integrated service 
 16.30  networks or integrated service networks in all regions of 
 16.31  Minnesota.  The commissioner shall advertise these seminars in 
 16.32  local and regional newspapers, and attendance at these seminars 
 16.33  shall be free. 
 16.34     The commissioner shall write a guide to establishing and 
 16.35  operating a community integrated service network or an 
 16.36  integrated service network.  The guide must provide basic 
 17.1   instructions for parties wishing to establish a community 
 17.2   integrated service network or an integrated service network.  
 17.3   The guide must be provided free of charge to interested 
 17.4   parties.  The commissioner shall update this guide when 
 17.5   appropriate. 
 17.6      The commissioner shall establish a toll-free telephone line 
 17.7   that interested parties may call to obtain assistance in 
 17.8   establishing or operating a community integrated service network 
 17.9   or an integrated service network. 
 17.10     (b) The commissioner shall grant loans for organizational 
 17.11  and start-up expenses to entities forming community integrated 
 17.12  service networks or integrated service networks, or to networks 
 17.13  less than one year old, to the extent of any appropriation for 
 17.14  that purpose.  The commissioner shall allocate the available 
 17.15  funds among applicants based upon the following criteria, as 
 17.16  evaluated by the commissioner within the commissioner's 
 17.17  discretion: 
 17.18     (1) the applicant's need for the loan; 
 17.19     (2) the likelihood that the loan will foster the formation 
 17.20  or growth of a network; and 
 17.21     (3) the likelihood of repayment. 
 17.22     The commissioner shall determine any necessary application 
 17.23  deadlines and forms and is exempt from rulemaking in doing so. 
 17.24     Sec. 16.  Minnesota Statutes 1996, section 62N.26, is 
 17.25  amended to read: 
 17.26     62N.26 [SHARED SERVICES COOPERATIVE.] 
 17.27     The commissioner of health shall establish, or assist in 
 17.28  establishing, a shared services cooperative organized under 
 17.29  chapter 308A to make available administrative and legal 
 17.30  services, technical assistance, provider contracting and billing 
 17.31  services, and other services to those community integrated 
 17.32  service networks and integrated service networks that choose to 
 17.33  participate in the cooperative.  The commissioner shall provide, 
 17.34  to the extent funds are appropriated, start-up loans sufficient 
 17.35  to maintain the shared services cooperative until its operations 
 17.36  can be maintained by fees and contributions.  The cooperative 
 18.1   must not be staffed, administered, or supervised by the 
 18.2   commissioner of health.  The cooperative shall make use of 
 18.3   existing resources that are already available in the community, 
 18.4   to the extent possible. 
 18.5      Sec. 17.  Minnesota Statutes 1996, section 62N.40, is 
 18.6   amended to read: 
 18.7      62N.40 [CHEMICAL DEPENDENCY SERVICES.] 
 18.8      Each community integrated service network and integrated 
 18.9   service network regulated under this chapter must ensure that 
 18.10  chemically dependent individuals have access to cost-effective 
 18.11  treatment options that address the specific needs of 
 18.12  individuals.  These include, but are not limited to, the need 
 18.13  for:  treatment that takes into account severity of illness and 
 18.14  comorbidities; provision of a continuum of care, including 
 18.15  treatment and rehabilitation programs licensed under Minnesota 
 18.16  Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; 
 18.17  the safety of the individual's domestic and community 
 18.18  environment; gender appropriate and culturally appropriate 
 18.19  programs; and access to appropriate social services. 
 18.20     Sec. 18.  Minnesota Statutes 1996, section 62Q.01, 
 18.21  subdivision 4, is amended to read: 
 18.22     Subd. 4.  [HEALTH PLAN COMPANY.] "Health plan company" 
 18.23  means: 
 18.24     (1) a health carrier as defined under section 62A.011, 
 18.25  subdivision 2; or 
 18.26     (2) an integrated service network as defined under section 
 18.27  62N.02, subdivision 8; or 
 18.28     (3) a community integrated service network as defined under 
 18.29  section 62N.02, subdivision 4a. 
 18.30     Sec. 19.  Minnesota Statutes 1996, section 62Q.01, 
 18.31  subdivision 5, is amended to read: 
 18.32     Subd. 5.  [MANAGED CARE ORGANIZATION.] "Managed care 
 18.33  organization" means:  (1) a health maintenance organization 
 18.34  operating under chapter 62D; (2) a community integrated service 
 18.35  network as defined under section 62N.02, subdivision 
 18.36  4a; or (3) an integrated service network as defined under 
 19.1   section 62N.02, subdivision 8; or (4) an insurance company 
 19.2   licensed under chapter 60A, nonprofit health service plan 
 19.3   corporation operating under chapter 62C, fraternal benefit 
 19.4   society operating under chapter 64B, or any other health plan 
 19.5   company, to the extent that it covers health care services 
 19.6   delivered to Minnesota residents through a preferred provider 
 19.7   organization or a network of selected providers. 
 19.8      Sec. 20.  Minnesota Statutes 1996, section 62Q.106, is 
 19.9   amended to read: 
 19.10     62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.] 
 19.11     A complainant may at any time submit a complaint to the 
 19.12  appropriate commissioner to investigate.  After investigating a 
 19.13  complaint, or reviewing a company's decision, the appropriate 
 19.14  commissioner may order a remedy as authorized under section 
 19.15  62N.04, 62Q.30, or chapter 45, 60A, or 62D. 
 19.16     Sec. 21.  Minnesota Statutes 1996, section 62Q.45, 
 19.17  subdivision 2, is amended to read: 
 19.18     Subd. 2.  [DEFINITION.] For purposes of this section, 
 19.19  "managed care organization" means:  (1) a health maintenance 
 19.20  organization operating under chapter 62D; (2) a community 
 19.21  integrated service network as defined under section 62N.02, 
 19.22  subdivision 4a; or (3) an integrated service network as defined 
 19.23  under section 62N.02, subdivision 8; or (4) an insurance company 
 19.24  licensed under chapter 60A, nonprofit health service plan 
 19.25  corporation operating under chapter 62C, fraternal benefit 
 19.26  society operating under chapter 64B, or any other health plan 
 19.27  company, to the extent that it covers health care services 
 19.28  delivered to Minnesota residents through a preferred provider 
 19.29  organization or a network of selected providers. 
 19.30     Sec. 22.  Minnesota Statutes 1996, section 256.9363, 
 19.31  subdivision 1, is amended to read: 
 19.32     Subdivision 1.  [SELECTION OF VENDORS.] In order to contain 
 19.33  costs, the commissioner of human services shall select vendors 
 19.34  of medical care who can provide the most economical care 
 19.35  consistent with high medical standards and shall, where 
 19.36  possible, contract with organizations on a prepaid capitation 
 20.1   basis to provide these services.  The commissioner shall 
 20.2   consider proposals by counties and vendors for managed care 
 20.3   plans which may include:  prepaid capitation programs, 
 20.4   competitive bidding programs, or other vendor payment mechanisms 
 20.5   designed to provide services in an economical manner or to 
 20.6   control utilization, with safeguards to ensure that necessary 
 20.7   services are provided.  Managed care plans may include 
 20.8   integrated service networks as defined in section 62N.02. 
 20.9      Sec. 23.  Minnesota Statutes 1996, section 256.9657, 
 20.10  subdivision 3, is amended to read: 
 20.11     Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY 
 20.12  INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 
 20.13  1992, each health maintenance organization with a certificate of 
 20.14  authority issued by the commissioner of health under chapter 62D 
 20.15  and each integrated service network and community integrated 
 20.16  service network licensed by the commissioner under chapter 62N 
 20.17  shall pay to the commissioner of human services a surcharge 
 20.18  equal to six-tenths of one percent of the total premium revenues 
 20.19  of the health maintenance organization, integrated service 
 20.20  network, or community integrated service network as reported to 
 20.21  the commissioner of health according to the schedule in 
 20.22  subdivision 4.  
 20.23     (b) For purposes of this subdivision, total premium revenue 
 20.24  means: 
 20.25     (1) premium revenue recognized on a prepaid basis from 
 20.26  individuals and groups for provision of a specified range of 
 20.27  health services over a defined period of time which is normally 
 20.28  one month, excluding premiums paid to a health maintenance 
 20.29  organization, integrated service network, or community 
 20.30  integrated service network from the Federal Employees Health 
 20.31  Benefit Program; 
 20.32     (2) premiums from Medicare wrap-around subscribers for 
 20.33  health benefits which supplement Medicare coverage; 
 20.34     (3) Medicare revenue, as a result of an arrangement between 
 20.35  a health maintenance organization, an integrated service 
 20.36  network, or a community integrated service network and the 
 21.1   health care financing administration of the federal Department 
 21.2   of Health and Human Services, for services to a Medicare 
 21.3   beneficiary; and 
 21.4      (4) medical assistance revenue, as a result of an 
 21.5   arrangement between a health maintenance organization, 
 21.6   integrated service network, or community integrated service 
 21.7   network and a Medicaid state agency, for services to a medical 
 21.8   assistance beneficiary. 
 21.9      If advance payments are made under clause (1) or (2) to the 
 21.10  health maintenance organization, integrated service network, or 
 21.11  community integrated service network for more than one reporting 
 21.12  period, the portion of the payment that has not yet been earned 
 21.13  must be treated as a liability. 
 21.14     (c) When a health maintenance organization or an integrated 
 21.15  service network or community integrated service network merges 
 21.16  or consolidates with or is acquired by another health 
 21.17  maintenance organization, integrated service network, or 
 21.18  community integrated service network, the surviving corporation 
 21.19  or the new corporation shall be responsible for the annual 
 21.20  surcharge originally imposed on each of the entities or 
 21.21  corporations subject to the merger, consolidation, or 
 21.22  acquisition, regardless of whether one of the entities or 
 21.23  corporations does not retain a certificate of authority under 
 21.24  chapter 62D or a license under chapter 62N. 
 21.25     (d) Effective July 1 of each year, the surviving 
 21.26  corporation's or the new corporation's surcharge shall be based 
 21.27  on the revenues earned in the second previous calendar year by 
 21.28  all of the entities or corporations subject to the merger, 
 21.29  consolidation, or acquisition regardless of whether one of the 
 21.30  entities or corporations does not retain a certificate of 
 21.31  authority under chapter 62D or a license under chapter 62N until 
 21.32  the total premium revenues of the surviving corporation include 
 21.33  the total premium revenues of all the merged entities as 
 21.34  reported to the commissioner of health. 
 21.35     (e) When a health maintenance organization, integrated 
 21.36  service network, or community integrated service network, which 
 22.1   is subject to liability for the surcharge under this chapter, 
 22.2   transfers, assigns, sells, leases, or disposes of all or 
 22.3   substantially all of its property or assets, liability for the 
 22.4   surcharge imposed by this chapter is imposed on the transferee, 
 22.5   assignee, or buyer of the health maintenance organization, 
 22.6   integrated service network, or community integrated service 
 22.7   network. 
 22.8      (f) In the event a health maintenance organization, 
 22.9   integrated service network, or community integrated service 
 22.10  network converts its licensure to a different type of entity 
 22.11  subject to liability for the surcharge under this chapter, but 
 22.12  survives in the same or substantially similar form, the 
 22.13  surviving entity remains liable for the surcharge regardless of 
 22.14  whether one of the entities or corporations does not retain a 
 22.15  certificate of authority under chapter 62D or a license under 
 22.16  chapter 62N. 
 22.17     (g) The surcharge assessed to a health maintenance 
 22.18  organization, integrated service network, or community 
 22.19  integrated service network ends when the entity ceases providing 
 22.20  services for premiums and the cessation is not connected with a 
 22.21  merger, consolidation, acquisition, or conversion. 
 22.22     Sec. 24.  [INSTRUCTION TO REVISOR.] 
 22.23     The revisor of statutes shall delete references to 
 22.24  "integrated service network," but not "community integrated 
 22.25  service network," wherever it appears in Minnesota Statutes and 
 22.26  make conforming changes as necessary. 
 22.27     Sec. 25.  [REPEALER.] 
 22.28     (a) Minnesota Statutes 1996, sections 62J.041, subdivision 
 22.29  7; 62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 4b, 4c, 
 22.30  6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 
 22.31  62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 
 22.32  62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 
 22.33  62N.24; 62N.26; 62N.38, subdivisions 1, 2, 3, and 4; and 62Q.41, 
 22.34  are repealed. 
 22.35     (b) Laws 1994, chapter 625, article 5, section 5, as 
 22.36  amended by Laws 1995, chapter 234, article 3, section 8, is 
 23.1   repealed. 
 23.2      Sec. 26.  [EFFECTIVE DATE.] 
 23.3      Section 25, paragraph (b), is effective the day following 
 23.4   final enactment.