SF 3322

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to human services; improving management of state health care programs;
modifying managed care contracting; limiting managed care administrative
expenses; modifying county-based purchasing; requiring mandated reports;
amending Minnesota Statutes 2006, sections 13.461, by adding a subdivision;
256B.69, subdivision 5a, by adding subdivisions; 256B.692, subdivision 2, by
adding a subdivision; 256L.12, subdivision 9; Laws 2005, First Special Session
chapter 4, article 8, section 84, as amended.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2006, section 13.461, is amended by adding a
subdivision to read:

Subd. 24a.

Managed care plans.

Data provided to the commissioner of human
services by managed care plans relating to contracts and provider payment rates are
classified under section 256B.69, subdivision 9b.

Sec. 2.

Minnesota Statutes 2006, section 256B.69, subdivision 5a, is amended to read:

Subd. 5a.

Managed care contracts.

(a) Managed care contracts under this section
and sections 256L.12 and 256D.03, shall be entered into or renewed on a calendar year
basis beginning January 1, 1996. Managed care contracts which were in effect on June
30, 1995, and set to renew on July 1, 1995, shall be renewed for the period July 1, 1995
through December 31, 1995 at the same terms that were in effect on June 30, 1995. The
commissioner may issue separate contracts with requirements specific to services to
medical assistance recipients age 65 and older.

(b) A prepaid health plan providing covered health services for eligible persons
pursuant to chapters 256B, 256D, and 256L, is responsible for complying with the terms
of its contract with the commissioner. Requirements applicable to managed care programs
under chapters 256B, 256D, and 256L, established after the effective date of a contract
with the commissioner take effect when the contract is next issued or renewed.

(c) Effective for services rendered on or after January 1, 2003, the commissioner
shall withhold five percent of managed care plan payments under this section for the
prepaid medical assistance and general assistance medical care programs pending
completion of performance targets. Each performance target must be quantifiable,
objective, measurable, and reasonably attainable, except in the case of a performance
target based on a federal or state law or rule. Criteria for assessment of each performance
target must be outlined in writing prior to the contract effective date. The managed
care plan must demonstrate, to the commissioner's satisfaction, that the data submitted
regarding attainment of the performance target is accurate. The commissioner shall
periodically change the administrative measures used as performance targets in order
to improve plan performance across a broader range of administrative services. The
performance targets must include measurement of plan efforts to contain spending
on health care services and administrative activities. The commissioner may adopt
plan-specific performance targets that take into account factors affecting only one plan,
including characteristics of the plan's enrollee population. The withheld funds must be
returned no sooner than July of the following year if performance targets in the contract
are achieved. The commissioner may exclude special demonstration projects under
subdivision 23. A managed care plan or a county-based purchasing plan under section
256B.692 may include as admitted assets under section 62D.044 any amount withheld
under this paragraph that is reasonably expected to be returned.

Sec. 3.

Minnesota Statutes 2006, section 256B.69, is amended by adding a subdivision
to read:

Subd. 5i.

Administrative expenses.

(a) Managed care plan and county-based
purchasing plan administrative costs for a prepaid health plan provided under this section
or section 256B.692 must not exceed by more than five percent that prepaid health plan's
or county-based purchasing plan's actual calculated administrative spending for the
previous calendar year as a percentage of total revenue. The penalty for exceeding this
limit must be the amount of administrative spending in excess of 105 percent of the actual
calculated amount. The commissioner may waive this penalty if the excess administrative
spending is the result of unexpected shifts in enrollment or member needs or new program
requirements.

(b) Capitated rate payments for administrative costs must be reduced to exclude
onetime or sporadic expenditures in the prior year unless the managed care plan certifies
that the expenditure will recur during the contract year. The commissioner shall verify
these certifications on an annual basis and recoup any payments made for onetime or
sporadic expenditures that did not occur in the prior year.

(c) Expenses listed under section 62D.12, subdivision 9a, clause (4), are not
allowable administrative expenses for rate-setting purposes under this section, unless
approved by the commissioner.

Sec. 4.

Minnesota Statutes 2006, section 256B.69, is amended by adding a subdivision
to read:

Subd. 5j.

Treatment of investment earnings.

Capitation rates shall treat investment
income and interest earnings as income to the same extent that investment-related
expenses are treated as administrative expenditures.

Sec. 5.

Minnesota Statutes 2006, section 256B.69, is amended by adding a subdivision
to read:

Subd. 9a.

Administrative expense reporting.

Each managed care plan and
county-based purchasing plan must provide to the commissioner detailed information on
administrative spending, including:

(1) itemized lists of costs for claims processing and provider network management;

(2) detailed reports of costs for contracts with providers and third-party
administrators;

(3) a detailed analysis of administrative spending for each Minnesota health care
program;

(4) a detailed analysis of the provider's allocation of administrative expenses among
its public and commercial lines of business;

(5) a detailed analysis of administrative costs by service category; and

(6) a detailed analysis of onetime and sporadic expenditures included in the
administrative spending category.

Sec. 6.

Minnesota Statutes 2006, section 256B.69, is amended by adding a subdivision
to read:

Subd. 9b.

Reporting of subcontracts and provider payment rates.

(a) Each
managed care plan and county-based purchasing plan must provide to the commissioner:

(1) detailed information on contracts with health care providers; and

(2) detailed information on reimbursement rates paid by the managed care plan
to providers under contract with the plan.

(b) Data provided to the commissioner under this subdivision are nonpublic data as
defined in section 13.02.

Sec. 7.

Minnesota Statutes 2006, section 256B.692, subdivision 2, is amended to read:

Subd. 2.

Duties of commissioner of health.

(a) Notwithstanding chapters 62D
and 62N, a county that elects to purchase medical assistance and general assistance
medical care in return for a fixed sum without regard to the frequency or extent of services
furnished to any particular enrollee is not required to obtain a certificate of authority
under chapter 62D or 62N. The county board of commissioners is the governing body of
a county-based purchasing program. In a multicounty arrangement, the governing body
is a joint powers board established under section 471.59.

(b) A county that elects to purchase medical assistance and general assistance
medical care services under this section must satisfy the commissioner of health that the
requirements for assurance of consumer protection, provider protection, and, effective
January 1, 2010, fiscal solvency of chapter 62D, applicable to health maintenance
organizations, or chapter 62N, applicable to community integrated service networks, will
be met. according to the following schedule:

(1) for a county-based purchasing plan approved on or before June 30, 2008, the
plan must have in reserve:

(i) at least 50 percent of the minimum amount required under chapter 62D as
of January 1, 2010;

(ii) at least 75 percent of the minimum amount required under chapter 62D as of
January 1, 2011;

(iii) at least 87.5 percent of the minimum amount required under chapter 62D as
of January 1, 2012; and

(iv) at least 100 percent of the minimum amount required under chapter 62D as
of January 1, 2013; and

(2) for a county-based purchasing plan first approved after June 30, 2008, the plan
must have in reserve:

(i) at least 50 percent of the minimum amount required under chapter 62D at the
time the plan begins enrolling enrollees;

(ii) at least 75 percent of the minimum amount required under chapter 62D after
the first full calendar year;

(iii) at least 87.5 percent of the minimum amount required under chapter 62D after
the second full calendar year; and

(iv) at least 100 percent of the minimum amount required under chapter 62D after
the third full calendar year.

(c) Until a plan is required to have reserves equaling at least 100 percent of the
minimum amount required under chapter 62D, the plan may demonstrate its ability to
cover any losses by satisfying the requirements of chapter 62N. A county county-based
purchasing plan must also assure the commissioner of health that the requirements of
sections 62J.041; 62J.48; 62J.71 to 62J.73; 62M.01 to 62M.16; all applicable provisions
of chapter 62Q, including sections 62Q.075; 62Q.1055; 62Q.106; 62Q.12; 62Q.135;
62Q.14; 62Q.145; 62Q.19; 62Q.23, paragraph (c); 62Q.43; 62Q.47; 62Q.50; 62Q.52 to
62Q.56; 62Q.58; 62Q.68 to 62Q.72; and 72A.201 will be met.

(d) All enforcement and rulemaking powers available under chapters 62D, 62J,
62M, 62N, and 62Q are hereby granted to the commissioner of health with respect to
counties that purchase medical assistance and general assistance medical care services
under this section.

(e) The commissioner, in consultation with county government, shall develop
administrative and financial reporting requirements for county-based purchasing programs
relating to sections 62D.041, 62D.042, 62D.045, 62D.08, 62N.28, 62N.29, and 62N.31,
and other sections as necessary, that are specific to county administrative, accounting, and
reporting systems and consistent with other statutory requirements of counties.

Sec. 8.

Minnesota Statutes 2006, section 256B.692, is amended by adding a
subdivision to read:

Subd. 4a.

Expenditure of revenues.

(a) A county that has elected to participate
in a county-based purchasing plan under this section shall use any excess revenues over
expenses that are received by the county and are not needed for capital reserves under
subdivision 2, or to repay county investments or contributions to the county-based
purchasing plan, for prevention, early intervention, and health care programs, services, or
activities.

(b) A county-based purchasing plan under this section is subject to the unreasonable
expense provisions of section 62D.19.

Sec. 9.

Minnesota Statutes 2006, section 256L.12, subdivision 9, is amended to read:

Subd. 9.

Rate setting; performance withholds.

(a) Rates will be prospective,
per capita, where possible. The commissioner may allow health plans to arrange for
inpatient hospital services on a risk or nonrisk basis. The commissioner shall consult with
an independent actuary to determine appropriate rates.

(b) For services rendered on or after January 1, 2003, to December 31, 2003, the
commissioner shall withhold .5 percent of managed care plan payments under this section
pending completion of performance targets. The withheld funds must be returned no
sooner than July 1 and no later than July 31 of the following year if performance targets
in the contract are achieved. A managed care plan may include as admitted assets under
section 62D.044 any amount withheld under this paragraph that is reasonably expected
to be returned.

(c) For services rendered on or after January 1, 2004, the commissioner shall
withhold five percent of managed care plan payments under this section pending
completion of performance targets. Each performance target must be quantifiable,
objective, measurable, and reasonably attainable, except in the case of a performance target
based on a federal or state law or rule. Criteria for assessment of each performance target
must be outlined in writing prior to the contract effective date. The managed care plan
must demonstrate, to the commissioner's satisfaction, that the data submitted regarding
attainment of the performance target is accurate. The commissioner shall periodically
change the administrative measures used as performance targets in order to improve plan
performance across a broader range of administrative services. The performance targets
must include measurement of plan efforts to contain spending on health care services and
administrative activities. The commissioner may adopt plan-specific performance targets
that take into account factors affecting only one plan, such as characteristics of the plan's
enrollee population. The withheld funds must be returned no sooner than July 1 and no
later than July 31 of the following calendar year if performance targets in the contract are
achieved. A managed care plan or a county-based purchasing plan under section 256B.692
may include as admitted assets under section 62D.044 any amount withheld under this
paragraph that is reasonably expected to be returned.

Sec. 10.

Laws 2005, First Special Session chapter 4, article 8, section 84, as amended
by Laws 2006, chapter 264, section 15, is amended to read:

Sec. 84. SOLE-SOURCE OR SINGLE-PLAN MANAGED CARE
CONTRACT.

(a) Notwithstanding Minnesota Statutes, section 256B.692, subdivision 6, clause
(1), paragraph (c), the commissioner of human services shall approve a county-based
purchasing health plan proposal, submitted on behalf of Cass, Crow Wing, Morrison,
Todd, and Wadena Counties, that requires county-based purchasing on a single-plan basis
contract if the implementation of the single-plan purchasing proposal does not limit an
enrollee's provider choice or access to services and all other requirements applicable to
health plan purchasing are satisfied. The commissioner shall continue until January 1,
2010, single health plan purchasing arrangements with county-based purchasing entities
in the service areas in existence on May 1, 2006, including arrangements for which a
proposal was submitted by May 1, 2006, on behalf of Cass, Crow Wing, Morrison, Todd,
and Wadena Counties, in response to a request for proposals issued by the commissioner.
The commissioner shall reopen all counties for competitive reprocurement every five
years, beginning in 2011.

(b) The commissioner shall consider, and may approve, contracting on a
single-health plan basis with county-based purchasing plans, or with other qualified health
plans that have coordination arrangements with counties, to serve persons with a disability
who voluntarily enroll, in order to promote better coordination or integration of health
care services, social services and other community-based services, provided that all
requirements applicable to health plan purchasing, including those in Minnesota Statutes,
section 256B.69, subdivision 23, are satisfied. By January 15, 2007, the commissioner
shall report to the chairs of the appropriate legislative committees in the house and senate
an analysis of the advantages and disadvantages of using single-health plan purchasing
to serve persons with a disability who are eligible for health care programs. The report
shall include consideration of the impact of federal health care programs and policies for
persons who are eligible for both federal and state health care programs and shall consider
strategies to improve coordination between federal and state health care programs for
those persons.

Sec. 11. REPORT ON FINANCIAL MANAGEMENT OF HEALTH CARE
PROGRAMS.

The commissioner of human services shall report to the legislature under Minnesota
Statutes, section 3.195, by January 15, 2009, with the following information regarding
financial management of health care programs:

(1) a status report on implementation of the cost containment strategies identified in
the 2005 "Strategies for Savings" report. The report must include:

(i) information on progress made towards implementation of cost-saving strategies;

(ii) an explanation of why certain strategies were not implemented; and

(iii) where appropriate, alternative strategies to those recommended in 2005 for
containing public health care program costs;

(2) a description of and, to the extent possible, an explanation of recent differences
between the health plan net revenue targets established by the commissioner for health
plans participating in public health care programs and the actual net revenue realized by
the plans from public programs;

(3) the adequacy of public health care program for fee-for-service rates, including
an identification of service areas or geographical regions where enrollees have difficulty
accessing providers as the result of inadequate provider payments. This report must
include recommendations to increase rates as needed to eliminate identified access
problems; and

(4) a progress report on implementation of Minnesota Statutes, section 256B.76,
paragraph (e), requiring payments for physician and professional services to be based
on Medicare relative value units, and an estimated completion date for implementation
of this payment system.

Sec. 12. HEALTH PLAN AND COUNTY-BASED PURCHASING PLAN
REQUIREMENTS.

(a) The commissioner of health shall develop and report to the legislature under
Minnesota Statutes, section 3.195, by January 15, 2009, guidelines to ensure that health
plans, and county-based purchasing plans where applicable, have consistent procedures
for allocating administrative expenses and investment income across their commercial and
public lines of business and across individual public programs. The guidelines shall be
consistent with generally accepted accounting principles and principles from the National
Association of Insurance Commissioners. The guidelines shall not have the effect of
changing allocation for Medicare-related programs as permitted by federal law and the
Centers for Medicare and Medicaid Services.

(b) The commissioner of health, in cooperation with the commissioners of commerce
and human services, shall develop and report to the legislature under Minnesota Statutes,
section 3.195, by January 15, 2009, detailed standards and procedures for examining
the reasonableness of health plan and county-based purchasing plan administrative
expenditures for publicly funded programs. These standards and procedures must include
a process for detailed examinations of individual programs and functional areas.

(c) The commissioner of health shall develop and report to the legislature under
Minnesota Statutes, section 3.195, by January 15, 2009, a more efficient method for a
health plan, and a county-based purchasing plan where appropriate, to demonstrate to the
commissioner that providers in the plan's network have appropriate credentials. The
commissioner shall review issues regarding:

(1) the duplicate review of credentials at a health care provider by multiple health
plans;

(2) the review of the credentials of all staff of a health care provider when only
limited staff will be in the plan network; and

(3) other duplicative credentialing issues.

Sec. 13. OMBUDSMAN FOR MANAGED CARE STUDY.

The commissioner of human services, in cooperation with the ombudsman for
managed care, shall study and report to the legislature under Minnesota Statutes,
section 3.195, by January 15, 2009, with recommendations on whether the duties of the
ombudsman should be expanded to include advocating on behalf of public health care
program fee-for-service enrollees. The report must include:

(1) a comparison of the recourse available to managed care clients versus
fee-for-service clients when service problems occur; and

(2) an estimate of any net cost increase from this change in the ombudsman's duties,
taking into account any reduction in the commissioner's duties.

Sec. 14. REPORTING MANAGED CARE PERFORMANCE DATA.

The commissioner of human services, in cooperation with the commissioner of
health, shall report to the legislature under Minnesota Statutes, section 3.195, by January
15, 2009, with recommendations on the adoption of a single method to compute and
publicly report managed health care performance measures in order to avoid confusion
about the plans' performance levels. The study must include recommendations regarding
coordinated use by the two agencies of the following data sources:

(1) Healthcare Effectiveness Data and Information Set (HEDIS) from managed
care organizations;

(2) data that health plans submit to claim reimbursement for health care procedures;
and

(3) data collected from medical record reviews of randomly selected individuals.