1.1                          A bill for an act
  1.2             relating to health; MinnesotaCare; repealing the 
  1.3             regulated all-payer option; modifying tax payment 
  1.4             procedures; amending Minnesota Statutes 1994, sections 
  1.5             62J.017; 62J.04, subdivision 1a; 62J.09, subdivision 
  1.6             1a; 62J.152, subdivision 5; 62J.48; 62J.65; 62N.05, 
  1.7             subdivision 2; 62Q.01, subdivisions 3 and 4; 62Q.30; 
  1.8             62Q.41; and 295.582; repealing Minnesota Statutes 
  1.9             1994, sections 62J.152, subdivision 6; 62P.01; 62P.02; 
  1.10            62P.03; 62P.04; 62P.05; 62P.07; 62P.09; 62P.11; 
  1.11            62P.13; 62P.15; 62P.17; 62P.19; 62P.21; 62P.23; 
  1.12            62P.25; 62P.27; 62P.29; 62P.31; and 62P.33. 
  1.13  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.14     Section 1.  Minnesota Statutes 1994, section 62J.017, is 
  1.15  amended to read: 
  1.16     62J.017 [IMPLEMENTATION TIMETABLE.] 
  1.17     The state seeks to complete the restructuring of the health 
  1.18  care delivery and financing system by July 1, 1997.  The 
  1.19  restructured system will have two options:  (1) integrated 
  1.20  service networks, which will be accountable for meeting state 
  1.21  cost containment, quality, and access standards; or (2) a 
  1.22  uniform set of price and utilization controls for all health 
  1.23  care services for Minnesota residents not provided through an 
  1.24  integrated service network.  Both systems will operate under the 
  1.25  state's growth limits and will be structured to promote 
  1.26  competition in the health care marketplace. 
  1.27     Beginning July 1, 1994, measures will be taken to increase 
  1.28  the public accountability of existing health plan companies, to 
  1.29  promote the development of small, community-based integrated 
  2.1   service networks, and to reduce administrative costs by 
  2.2   standardizing third-party billing forms and procedures and 
  2.3   utilization review requirements.  Voluntary formation of other 
  2.4   integrated service networks will begin after rules have been 
  2.5   adopted, but not before July 1, 1996.  Statutes and rules for 
  2.6   the entire restructured health care financing and delivery 
  2.7   system must be enacted or adopted by January 1, 1996, and a 
  2.8   phase-in of the all-payer reimbursement system must begin on 
  2.9   that date.  By July 1, 1997, all health coverage must be 
  2.10  regulated under integrated service network or community 
  2.11  integrated service network law pursuant to chapter 62N or 
  2.12  all-payer law pursuant to chapter 62P. 
  2.13     Sec. 2.  Minnesota Statutes 1994, section 62J.04, 
  2.14  subdivision 1a, is amended to read: 
  2.15     Subd. 1a.  [ADJUSTED GROWTH LIMITS AND ENFORCEMENT.] (a) 
  2.16  The commissioner shall publish the final adjusted growth limit 
  2.17  in the State Register by January 31 of the year that the 
  2.18  expenditure limit is to be in effect.  The adjusted limit must 
  2.19  reflect the actual regional consumer price index for urban 
  2.20  consumers for the previous calendar year, and may deviate from 
  2.21  the previously published projected growth limits to reflect 
  2.22  differences between the actual regional consumer price index for 
  2.23  urban consumers and the projected Consumer Price Index for urban 
  2.24  consumers.  The commissioner shall report to the legislature by 
  2.25  February 15 of each year on differences between the projected 
  2.26  increase in health care expenditures, the actual expenditures 
  2.27  based on data collected, and the impact and validity of growth 
  2.28  limits within the overall health care reform strategy. 
  2.29     (b) The commissioner shall enforce limits on growth in 
  2.30  spending and revenues for integrated service networks and for 
  2.31  the regulated all-payer option.  If the commissioner determines 
  2.32  that artificial inflation or padding of costs or prices has 
  2.33  occurred in anticipation of the implementation of growth limits, 
  2.34  the commissioner may adjust the base year spending totals or 
  2.35  growth limits or take other action to reverse the effect of the 
  2.36  artificial inflation or padding. 
  3.1      (c) The commissioner shall impose and enforce overall 
  3.2   limits on growth in revenues and spending for integrated service 
  3.3   networks, with adjustments for changes in enrollment, benefits, 
  3.4   severity, and risks.  If an integrated service network exceeds 
  3.5   the growth limits, the commissioner may reduce future limits on 
  3.6   growth in aggregate premium revenues for that integrated service 
  3.7   network by up to the amount overspent.  If the integrated 
  3.8   service network system exceeds a systemwide spending limit, the 
  3.9   commissioner may reduce future limits on growth in premium 
  3.10  revenues for the integrated service network system by up to the 
  3.11  amount overspent. 
  3.12     (d) The commissioner shall set prices, utilization 
  3.13  controls, and other requirements for the regulated all-payer 
  3.14  option to ensure that the overall costs of this system, after 
  3.15  adjusting for changes in population, severity, and risk, do not 
  3.16  exceed the growth limits.  If growth limits for a calendar year 
  3.17  are exceeded, the commissioner may reduce reimbursement rates or 
  3.18  otherwise recoup amounts exceeding the limit for all or part of 
  3.19  the next calendar year.  To the extent possible, the 
  3.20  commissioner may reduce reimbursement rates or otherwise recoup 
  3.21  amounts over the limit from individual providers who exceed the 
  3.22  growth limits. 
  3.23     (e) The commissioner, in consultation with the Minnesota 
  3.24  health care commission, shall research and make recommendations 
  3.25  to the legislature regarding the implementation of growth limits 
  3.26  for integrated service networks and the regulated all-payer 
  3.27  option.  The commissioner must consider both spending and 
  3.28  revenue approaches and will report on the implementation of the 
  3.29  interim limits as defined in sections 62P.04 and 62P.05.  The 
  3.30  commissioner must examine and make recommendations on the use of 
  3.31  annual update factors based on volume performance standards as a 
  3.32  mechanism for achieving controls on spending in the all-payer 
  3.33  option.  The commissioner must make recommendations regarding 
  3.34  the enforcement mechanism and must consider mechanisms to adjust 
  3.35  future growth limits as well as mechanisms to establish 
  3.36  financial penalties for noncompliance.  The commissioner must 
  4.1   also address the feasibility of systemwide limits imposed on all 
  4.2   integrated service networks. 
  4.3      (f) (e) The commissioner shall report to the legislative 
  4.4   commission on health care access by December 1, 1994, on trends 
  4.5   in aggregate spending and premium revenue for health plan 
  4.6   companies.  The commissioner shall use data submitted under 
  4.7   section 62P.04 and other available data to complete this report. 
  4.8      Sec. 3.  Minnesota Statutes 1994, section 62J.09, 
  4.9   subdivision 1a, is amended to read: 
  4.10     Subd. 1a.  [DUTIES RELATED TO COST CONTAINMENT.] (a) 
  4.11  [ALLOCATION OF REGIONAL SPENDING LIMITS.] Regional coordinating 
  4.12  boards may advise the commissioner regarding allocation of 
  4.13  annual regional limits on the rate of growth for providers in 
  4.14  the regulated all-payer option in order to: 
  4.15     (1) achieve communitywide and regional public health goals 
  4.16  consistent with those established by the commissioner; and 
  4.17     (2) promote access to and equitable reimbursement of 
  4.18  preventive and primary care providers. 
  4.19     (b) [TECHNICAL ASSISTANCE.] Regional coordinating boards, 
  4.20  in cooperation with the commissioner, shall provide technical 
  4.21  assistance to parties interested in establishing or operating a 
  4.22  community integrated service network or integrated service 
  4.23  network within the region.  This assistance must complement 
  4.24  assistance provided by the commissioner under section 62N.23. 
  4.25     Sec. 4.  Minnesota Statutes 1994, section 62J.152, 
  4.26  subdivision 5, is amended to read: 
  4.27     Subd. 5.  [USE OF TECHNOLOGY EVALUATION.] (a) The final 
  4.28  report on the technology evaluation and the commission's 
  4.29  comments and recommendations may be used: 
  4.30     (1) by the commissioner in retrospective and prospective 
  4.31  review of major expenditures; 
  4.32     (2) by integrated service networks and other group 
  4.33  purchasers and by employers, in making coverage, contracting, 
  4.34  purchasing, and reimbursement decisions; 
  4.35     (3) by government programs and regulators of the regulated 
  4.36  all-payer option, in making coverage, contracting, purchasing, 
  5.1   and reimbursement decisions; 
  5.2      (4) by the commissioner and other organizations in the 
  5.3   development of practice parameters; 
  5.4      (5) by health care providers in making decisions about 
  5.5   adding or replacing technology and the appropriate use of 
  5.6   technology; 
  5.7      (6) by consumers in making decisions about treatment; 
  5.8      (7) by medical device manufacturers in developing and 
  5.9   marketing new technologies; and 
  5.10     (8) as otherwise needed by health care providers, health 
  5.11  care plans, consumers, and purchasers. 
  5.12     (b) At the request of the commissioner, the health care 
  5.13  commission, in consultation with the health technology advisory 
  5.14  committee, shall submit specific recommendations relating to 
  5.15  technologies that have been evaluated under this section for 
  5.16  purposes of retrospective and prospective review of major 
  5.17  expenditures and coverage, contracting, purchasing, and 
  5.18  reimbursement decisions affecting state programs and the 
  5.19  all-payer option. 
  5.20     Sec. 5.  Minnesota Statutes 1994, section 62J.48, is 
  5.21  amended to read: 
  5.22     62J.48 [CRITERIA FOR REIMBURSEMENT.] 
  5.23     All ambulance services licensed under section 144.802 are 
  5.24  eligible for reimbursement under the integrated service network 
  5.25  system and the regulated all-payer option.  The commissioner 
  5.26  shall require community integrated service networks, and 
  5.27  integrated service networks, and all-payer insurers to adopt the 
  5.28  following reimbursement policies. 
  5.29     (1) All scheduled or prearranged air and ground ambulance 
  5.30  transports must be reimbursed if requested by an attending 
  5.31  physician or nurse, and, if the person is an enrollee in an 
  5.32  integrated service network or community integrated service 
  5.33  network, if approved by a designated representative of an 
  5.34  integrated service network or a community service network who is 
  5.35  immediately available on a 24-hour basis.  The designated 
  5.36  representative must be a registered nurse or a physician 
  6.1   assistant with at least three years of critical care or trauma 
  6.2   experience, or a licensed physician. 
  6.3      (2) Reimbursement must be provided for all emergency 
  6.4   ambulance calls in which a patient is transported or medical 
  6.5   treatment rendered. 
  6.6      (3) Special transportation services must not be billed or 
  6.7   reimbursed if the patient needs medical attention immediately 
  6.8   before transportation. 
  6.9      Sec. 6.  Minnesota Statutes 1994, section 62J.65, is 
  6.10  amended to read: 
  6.11     62J.65 [EXEMPTION.] 
  6.12     Patient revenues derived from non-Minnesota patients are 
  6.13  exempt from the regulated all-payer system and Medicare balance 
  6.14  billing prohibition under section 62J.25. 
  6.15     Sec. 7.  Minnesota Statutes 1994, section 62N.05, 
  6.16  subdivision 2, is amended to read: 
  6.17     Subd. 2.  [REQUIREMENTS.] The commissioner shall include in 
  6.18  the rules requirements that will ensure that the annual rate of 
  6.19  growth of an integrated service network's aggregate total 
  6.20  revenues received from purchasers and enrollees, after 
  6.21  adjustments for changes in population size and risk, does not 
  6.22  exceed the growth limit established in section 62J.04.  A 
  6.23  network's aggregate total revenues for purposes of these growth 
  6.24  limits are net of the contributions, surcharges, taxes, and 
  6.25  assessments listed in Minnesota Statutes 1994, section 62P.04, 
  6.26  subdivision 2, that the network pays.  The commissioner may 
  6.27  include in the rules the following: 
  6.28     (1) requirements for licensure, including a fee for initial 
  6.29  application and an annual fee for renewal; 
  6.30     (2) quality standards; 
  6.31     (3) requirements for availability and comprehensiveness of 
  6.32  services; 
  6.33     (4) requirements regarding the defined population to be 
  6.34  served by an integrated service network; 
  6.35     (5) requirements for open enrollment; 
  6.36     (6) provisions for incentives for networks to accept as 
  7.1   enrollees individuals who have high risks for needing health 
  7.2   care services and individuals and groups with special needs; 
  7.3      (7) prohibitions against disenrolling individuals or groups 
  7.4   with high risks or special needs; 
  7.5      (8) requirements that an integrated service network provide 
  7.6   to its enrollees information on coverage, including any 
  7.7   limitations on coverage, deductibles and copayments, optional 
  7.8   services available and the price or prices of those services, 
  7.9   any restrictions on emergency services and services provided 
  7.10  outside of the network's service area, any responsibilities 
  7.11  enrollees have, and describing how an enrollee can use the 
  7.12  network's enrollee complaint resolution system; 
  7.13     (9) requirements for financial solvency and stability; 
  7.14     (10) a deposit requirement; 
  7.15     (11) financial reporting and examination requirements; 
  7.16     (12) limits on copayments and deductibles; 
  7.17     (13) mechanisms to prevent and remedy unfair competition; 
  7.18     (14) provisions to reduce or eliminate undesirable barriers 
  7.19  to the formation of new integrated service networks; 
  7.20     (15) requirements for maintenance and reporting of 
  7.21  information on costs, prices, revenues, volume of services, and 
  7.22  outcomes and quality of services; 
  7.23     (16) a provision allowing an integrated service network to 
  7.24  set credentialing standards for practitioners employed by or 
  7.25  under contract with the network; 
  7.26     (17) a requirement that an integrated service network 
  7.27  employ or contract with practitioners and other health care 
  7.28  providers, and minimum requirements for those contracts if the 
  7.29  commissioner deems requirements to be necessary to ensure that 
  7.30  each network will be able to control expenditures and revenues 
  7.31  or to protect enrollees and potential enrollees; 
  7.32     (18) provisions regarding liability for medical 
  7.33  malpractice; 
  7.34     (19) provisions regarding permissible and impermissible 
  7.35  underwriting criteria applicable to the standard set of 
  7.36  benefits; 
  8.1      (20) a method or methods to facilitate and encourage 
  8.2   appropriate provision of services by midlevel practitioners and 
  8.3   pharmacists; 
  8.4      (21) a method or methods to assure that all integrated 
  8.5   service networks are subject to the same regulatory 
  8.6   requirements.  All health carriers, including health maintenance 
  8.7   organizations, insurers, and nonprofit health service plan 
  8.8   corporations shall be regulated under the same rules, to the 
  8.9   extent that the health carrier is operating an integrated 
  8.10  service network or is a participating entity in an integrated 
  8.11  service network; 
  8.12     (22) provisions for appropriate risk adjusters or other 
  8.13  methods to prevent or compensate for adverse selection of 
  8.14  enrollees into or out of an integrated service network; and 
  8.15     (23) rules prescribing standard measures and methods by 
  8.16  which integrated service networks shall determine and disclose 
  8.17  their prices, copayments, deductibles, out-of-pocket limits, 
  8.18  enrollee satisfaction levels, and anticipated loss ratios.  
  8.19     Sec. 8.  Minnesota Statutes 1994, section 62Q.01, 
  8.20  subdivision 3, is amended to read: 
  8.21     Subd. 3.  [HEALTH PLAN.] "Health plan" means a health plan 
  8.22  as defined in section 62A.011 or a policy, contract, or 
  8.23  certificate issued by a community integrated service network; or 
  8.24  an integrated service network; or an all-payer insurer as 
  8.25  defined in section 62P.02. 
  8.26     Sec. 9.  Minnesota Statutes 1994, section 62Q.01, 
  8.27  subdivision 4, is amended to read: 
  8.28     Subd. 4.  [HEALTH PLAN COMPANY.] "Health plan company" 
  8.29  means: 
  8.30     (1) a health carrier as defined under section 62A.011, 
  8.31  subdivision 2; 
  8.32     (2) an integrated service network as defined under section 
  8.33  62N.02, subdivision 8; or 
  8.34     (3) an all-payer insurer as defined under section 62P.02; 
  8.35  or 
  8.36     (4) a community integrated service network as defined under 
  9.1   section 62N.02, subdivision 4a. 
  9.2      Sec. 10.  Minnesota Statutes 1994, section 62Q.30, is 
  9.3   amended to read: 
  9.4      62Q.30 [EXPEDITED FACT FINDING AND DISPUTE RESOLUTION 
  9.5   PROCESS.] 
  9.6      The commissioner shall establish an expedited fact finding 
  9.7   and dispute resolution process to assist enrollees of integrated 
  9.8   service networks and all-payer insurers with contested 
  9.9   treatment, coverage, and service issues to be in effect July 1, 
  9.10  1997.  The commissioner may order an integrated service network 
  9.11  or an all-payer insurer to provide or pay for a service that is 
  9.12  within the universal standard benefits set.  If the disputed 
  9.13  issue relates to whether a service is appropriate and necessary, 
  9.14  the commissioner shall issue an order only after consulting with 
  9.15  appropriate experts knowledgeable, trained, and practicing in 
  9.16  the area in dispute, reviewing pertinent literature, and 
  9.17  considering the availability of satisfactory alternatives.  The 
  9.18  commissioner shall take steps including but not limited to 
  9.19  fining, suspending, or revoking the license of an integrated 
  9.20  service network or an all-payer insurer that is the subject of 
  9.21  repeated orders by the commissioner that suggests a pattern of 
  9.22  inappropriate underutilization. 
  9.23     Sec. 11.  Minnesota Statutes 1994, section 62Q.41, is 
  9.24  amended to read: 
  9.25     62Q.41 [ANNUAL IMPLEMENTATION REPORT.] 
  9.26     The commissioner of health, in consultation with the 
  9.27  Minnesota health care commission, shall develop an annual 
  9.28  implementation report to be submitted to the legislature each 
  9.29  year beginning January 1, 1995, describing the progress and 
  9.30  status of rule development and implementation of the integrated 
  9.31  service network system and the regulated all-payer option, and 
  9.32  providing recommendations for legislative changes that the 
  9.33  commissioner determines may be needed.  
  9.34     Sec. 12.  Minnesota Statutes 1994, section 295.582, is 
  9.35  amended to read: 
  9.36     295.582 [AUTHORITY.] 
 10.1      (a) A hospital, surgical center, pharmacy, or health care 
 10.2   provider that is subject to a tax under section 295.52, or a 
 10.3   pharmacy that has paid additional expense transferred under this 
 10.4   section by a wholesale drug distributor, may transfer additional 
 10.5   expense generated by section 295.52 obligations on to all 
 10.6   third-party contracts for the purchase of health care services 
 10.7   on behalf of a patient or consumer.  The expense must not exceed 
 10.8   two percent of the gross revenues received under the third-party 
 10.9   contract, plus two percent of copayments and deductibles paid by 
 10.10  the individual patient or consumer.  The expense must not be 
 10.11  generated on revenues derived from payments that are excluded 
 10.12  from the tax under section 295.53.  All third-party purchasers 
 10.13  of health care services including, but not limited to, 
 10.14  third-party purchasers regulated under chapter 60A, 62A, 62C, 
 10.15  62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or under section 
 10.16  471.61 or 471.617, must pay the transferred expense in addition 
 10.17  to any payments due under existing contracts with the hospital, 
 10.18  surgical center, pharmacy, or health care provider, to the 
 10.19  extent allowed under federal law.  A third-party purchaser of 
 10.20  health care services includes, but is not limited to, a health 
 10.21  carrier, integrated service network, or community integrated 
 10.22  service network that pays for health care services on behalf of 
 10.23  patients or that reimburses, indemnifies, compensates, or 
 10.24  otherwise insures patients for health care services.  A 
 10.25  third-party purchaser shall comply with this section regardless 
 10.26  of whether the third-party purchaser is a for-profit, 
 10.27  not-for-profit, or nonprofit entity.  A third-party purchaser is 
 10.28  not responsible for any transferred expenses which exceed its 
 10.29  contractual liability under any coinsurance provision of the 
 10.30  policy other than deductibles and copayments.  A wholesale drug 
 10.31  distributor may transfer additional expense generated by section 
 10.32  295.52 obligations to entities that purchase from the 
 10.33  wholesaler, and the entities must pay the additional expense.  
 10.34  Nothing in this section limits the ability of a hospital, 
 10.35  surgical center, pharmacy, wholesale drug distributor, or health 
 10.36  care provider to recover all or part of the section 295.52 
 11.1   obligation by other methods, including increasing fees or 
 11.2   charges. 
 11.3      (b) Each third-party purchaser regulated under any chapter 
 11.4   cited in paragraph (a) shall include with its annual renewal for 
 11.5   certification of authority or licensure documentation indicating 
 11.6   compliance with paragraph (a).  If the commissioner responsible 
 11.7   for regulating the third-party purchaser finds at any time that 
 11.8   the third-party purchaser has not complied with paragraph (a), 
 11.9   the commissioner may by order fine or censure the third-party 
 11.10  purchaser or revoke or suspend the certificate of authority or 
 11.11  license of the third-party purchaser to do business in this 
 11.12  state.  The third-party purchaser may appeal the commissioner's 
 11.13  order through a contested case hearing in accordance with 
 11.14  chapter 14. 
 11.15     (c) A hospital, surgical center, pharmacy, or health care 
 11.16  provider that chooses to transfer the additional expense of 
 11.17  section 295.52 obligations to third-party purchasers under 
 11.18  paragraph (a), shall itemize the obligation on invoices, 
 11.19  billings, or other documentation which are submitted to 
 11.20  third-party purchasers for payment of health care services.  
 11.21  Effective July 1, 1995, all third-party purchasers required to 
 11.22  pay the transferred expense under paragraph (a) must pay 
 11.23  itemized obligations. 
 11.24     Sec. 13.  [REPEALER; REGULATED ALL-PAYER OPTION.] 
 11.25     Subdivision 1.  [REGULATED ALL-PAYER OPTION.] Minnesota 
 11.26  Statutes 1994, sections 62P.01; 62P.02; 62P.03; 62P.04; 62P.05; 
 11.27  62P.07; 62P.09; 62P.11; 62P.13; 62P.15; 62P.17; 62P.19; 62P.21; 
 11.28  62P.23; 62P.25; 62P.27; 62P.29; 62P.31; and 62P.33, are repealed.
 11.29     Subd. 2.  [TECHNOLOGY EVALUATION AND REGULATED ALL-PAYER 
 11.30  OPTION.] Minnesota Statutes 1994, section 62J.152, subdivision 
 11.31  6, is repealed.