HF 1128

as introduced - 90th Legislature (2017 - 2018) Posted on 02/22/2017 02:41pm

A bill for an act
relating to insurance; health; modifying requirements for health insurance
underwriting, renewability, and benefits; creating an individual health plan
reinsurance program; appropriating money; amending Minnesota Statutes 2016,
sections 13.7191, by adding a subdivision; 62A.65, subdivisions 3, 5; 62L.02,
subdivision 26; 62L.03, by adding a subdivision; 62L.08, subdivision 7, by adding
a subdivision; 62Q.18, subdivision 10; 297I.05, subdivision 5; proposing coding
for new law in Minnesota Statutes, chapters 62A; 62K; 62Q; proposing coding for
new law as Minnesota Statutes, chapter 62W; repealing Minnesota Statutes 2016,
sections 62A.65, subdivision 2; 62L.08, subdivision 4.

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

ARTICLE 1

HEALTH INSURANCE REFORM

Section 1.

new text begin [62A.614] PREEXISTING CONDITIONS DISCLOSED AT TIME OF
APPLICATION.
new text end

new text begin No insurer may cancel or rescind a health insurance policy for a preexisting condition
of which the application or other information provided by the insured reasonably gave the
insurer notice. No insurer may restrict coverage for a preexisting condition of which the
application or other information provided by the insured reasonably gave the insurer notice
unless the coverage is restricted at the time the policy is issued and the restriction is disclosed
in writing to the insured at the time the policy is issued.
new text end

Sec. 2.

Minnesota Statutes 2016, section 62A.65, subdivision 3, is amended to read:

Subd. 3.

Premium rate restrictions.

No individual health plan may be offered, sold,
issued, or renewed to a Minnesota resident unless the premium rate charged is determined
in accordance with the following requirements:

(a) Premium rates may vary based upon the ages of covered persons in accordance with
the provisions of the Affordable Care Act.

(b) Premium rates deleted text begin may vary based upon geographic rating area. The commissioner shall
grant approval if the following conditions are met:
deleted text end

deleted text begin (1) the areas are established in accordance with the Affordable Care Act;
deleted text end

deleted text begin (2) each geographic region must be composed of no fewer than seven counties that create
a contiguous region; and
deleted text end

deleted text begin (3) the health carrier provides actuarial justification acceptable to the commissioner for
the proposed geographic variations in premium rates for each area, establishing that the
variations are based upon differences in the cost to the health carrier of providing coverage deleted text end new text begin
must be no more than ten percent above and no more than 50 percent below the standard
rate charged to individuals for the same or similar coverage, adjusted pro rata for rating
periods of less than one year. The premium variations permitted by this paragraph must be
based only upon health status and claims experience. For purposes of this paragraph, health
status includes refraining from tobacco use or other actuarially valid lifestyle factors
associated with good health, provided that the lifestyle factor and its effect upon premium
rates have been determined by the commissioner to be actuarially valid and have been
approved by the commissioner. This paragraph does not prohibit use of a constant percentage
adjustment for factors permitted to be used under this paragraph new text end .

(c) Premium rates may vary based upon tobacco use, in accordance with the provisions
of the Affordable Care Act.

(d) In developing its premiums for a health plan, a health carrier shall take into account
only deleted text begin the following factors:
deleted text end

deleted text begin (1) deleted text end actuarially valid differences in rating factors permitted under paragraphs (a) new text begin , (b), new text end
and (c) deleted text begin ; and
deleted text end

deleted text begin (2) actuarially valid geographic variations if approved by the commissioner as provided
in paragraph (b) deleted text end .

(e) new text begin The state of Minnesota shall constitute a single geographic rating area for purposes
of setting premium rates.
new text end

new text begin (f) new text end The premium charged with respect to any particular individual health plan shall not
be adjusted more frequently than annually or January 1 of the year following initial
enrollment, except that the premium rates may be changed to reflect:

(1) changes to the family composition of the policyholder;

deleted text begin (2) changes in geographic rating area of the policyholder, as provided in paragraph (b);
deleted text end

deleted text begin (3) deleted text end new text begin (2) new text end changes in age, as provided in paragraph (a);

deleted text begin (4) deleted text end new text begin (3) new text end changes in tobacco use, as provided in paragraph (c);

deleted text begin (5) deleted text end new text begin (4) new text end transfer to a new health plan new text begin , reunderwriting, or enhanced coverage as new text end requested
by the policyholder; or

deleted text begin (6) deleted text end new text begin (5) new text end other changes required by or otherwise expressly permitted by state or federal
law or regulations.

deleted text begin (f) deleted text end new text begin (g) new text end All premium variations must be justified in initial rate filings and upon request
of the commissioner in rate revision filings. All rate variations are subject to approval by
the commissioner.

deleted text begin (g) deleted text end new text begin (h) new text end The loss ratio must comply with the section 62A.021 requirements for individual
health plans.

deleted text begin (h) deleted text end new text begin (i) new text end The rates must not be approved, unless the commissioner has determined that the
rates are reasonable. In determining reasonableness, the commissioner shall consider the
growth rates applied under section 62J.04, subdivision 1, paragraph (b), to the calendar year
or years that the proposed premium rate would be in effect and actuarially valid changes in
risks associated with the enrollee populations.

deleted text begin (i) deleted text end new text begin (j) new text end A health carrier may, as part of a minimum lifetime loss ratio guarantee filing
under section 62A.02, subdivision 3a, include a rating practices guarantee as provided in
this paragraph. The rating practices guarantee must be in writing and must guarantee that
the policy form will be offered, sold, issued, and renewed only with premium rates and
premium rating practices that comply with subdivisions 2, 3, 4, and 5. The rating practices
guarantee must be accompanied by an actuarial memorandum that demonstrates that the
premium rates and premium rating system used in connection with the policy form will
satisfy the guarantee. The guarantee must guarantee refunds of any excess premiums to
policyholders charged premiums that exceed those permitted under subdivision 2, 3, 4, or
5. A health carrier that complies with this paragraph in connection with a policy form is
exempt from the requirement of prior approval by the commissioner under paragraphs deleted text begin (b),
(f), deleted text end new text begin (g) new text end and deleted text begin (h) deleted text end new text begin (i) new text end .

deleted text begin (j) deleted text end new text begin (k) new text end The commissioner may establish regulations to implement the provisions of this
subdivision.

Sec. 3.

Minnesota Statutes 2016, section 62A.65, subdivision 5, is amended to read:

Subd. 5.

Portability and conversion of coverage.

(a) For plan years beginning on or
after January 1, deleted text begin 2014 deleted text end new text begin 2018 new text end , no individual health plan may be offered, sold, issued, or
renewed, to a Minnesota resident that contains a preexisting condition limitation, preexisting
condition exclusion, or exclusionary rider new text begin , unless the limitation or exclusion is permitted
under this subdivision or chapter 62L new text end . An individual deleted text begin age 19 or older may be subjected to
an 18-month preexisting condition limitation during plan years beginning prior to January
1, 2014 deleted text end new text begin who obtains coverage pursuant to this section may be subject to a preexisting
condition limitation during the first 12 months of coverage if the individual was diagnosed
or treated for that condition during the six months immediately preceding the date of
application for coverage was received new text end , unless the individual has maintained continuous
coverage as defined in section 62L.02. The individual must not be subjected to an
exclusionary rider. deleted text begin During plan years beginning prior to January 1, 2014, deleted text end An individual
deleted text begin who is age 19 or older and deleted text end who has maintained continuous coverage may be subjected to
a onetime preexisting condition limitation of up to 12 months, with credit for time covered
under qualifying coverage as defined in section 62L.02, at the time that the individual first
is covered under an individual health plan by any health carrier. Credit must be given for
all qualifying coverage with respect to all preexisting conditions, regardless of whether the
conditions were preexisting with respect to any previous qualifying coverage. The individual
must not be subjected to an exclusionary rider. Thereafter, the individual deleted text begin who is age 19 or
older deleted text end must not be subject to any preexisting condition limitation, preexisting condition
exclusion, or exclusionary rider under an individual health plan by any health carrier, except
an unexpired portion of a limitation under prior coverage, so long as the individual maintains
continuous coverage as defined in section 62L.02. deleted text begin The prohibition on preexisting condition
limitations for children age 18 or under does not apply to individual health plans that are
grandfathered plans. The prohibition on preexisting condition limitations for adults age 19
and over beginning for plan years on or after January 1, 2014, does not apply to individual
health plans that are grandfathered plans. deleted text end new text begin An individual who has not maintained continuous
coverage may be subject to a new 12-month preexisting condition limitation after each break
in continuous coverage.
new text end

(b) A health carrier must offer an individual health plan to any individual previously
covered under a group health plan issued by that health carrier, regardless of the size of the
group, so long as the individual maintained continuous coverage as defined in section
62L.02. deleted text begin If the individual has available any continuation coverage provided under sections
62A.146; 62A.148; 62A.17, subdivisions 1 and 2; 62A.20; 62A.21; 62C.142; 62D.101; or
62D.105, or continuation coverage provided under federal law, the health carrier need not
offer coverage under this paragraph until the individual has exhausted the continuation
coverage. deleted text end The offer must not be subject to underwriting, except as permitted under this
paragraph. A health plan issued under this paragraph must be a qualified plan as defined in
section 62E.02 and must not contain any preexisting condition limitation, preexisting
condition exclusion, or exclusionary rider, except for any unexpired limitation or exclusion
under the previous coverage. The individual health plan must cover pregnancy on the same
basis as any other covered illness under the individual health plan. The offer of coverage
by the health carrier must inform the individual that the coverage, including what is covered
and the health care providers from whom covered care may be obtained, may not be the
same as the individual's coverage under the group health plan. The offer of coverage by the
health carrier must also inform the individual that the individual, if a Minnesota resident,
may be eligible to obtain coverage from (i) other private sources of health coverage, or (ii)
the Minnesota Comprehensive Health Association, without a preexisting condition limitation,
and must provide the telephone number used by that association for enrollment purposes.
The initial premium rate for the individual health plan must comply with subdivision 3. The
premium rate upon renewal must comply with subdivision 2. In no event shall the premium
rate exceed 100 percent of the premium charged for comparable individual coverage by the
Minnesota Comprehensive Health Association, and the premium rate must be less than that
amount if necessary to otherwise comply with this section. Coverage issued under this
paragraph must provide that it cannot be canceled or nonrenewed as a result of the health
carrier's subsequent decision to leave the individual, small employer, or other group market.
Section 72A.20, subdivision 28, applies to this paragraph.

Sec. 4.

new text begin [62K.16] TERMINATION OF COVERAGE DUE TO NONPAYMENT.
new text end

new text begin (a) Notwithstanding section 62V.05, subdivision 5, a health carrier may terminate
coverage of enrollees due to the nonpayment of premiums regardless of whether the enrollee
is receiving advance premium tax credits under the Affordable Care Act if the enrollee has
previously paid at least one full month's premium during the benefit year. Prior to termination,
the health carrier must notify the enrollee of the premium payment delinquency, including
the amount of premium owed.
new text end

new text begin (b) Termination of coverage for nonpayment of premiums under this section is effective
30 days following the date the premium was due.
new text end

new text begin (c) The health carrier is not responsible for claims for services rendered to the enrollee
during the grace period described in paragraph (b).
new text end

Sec. 5.

Minnesota Statutes 2016, section 62L.02, subdivision 26, is amended to read:

Subd. 26.

Small employer.

(a) "Small employer" means, with respect to a calendar year
and a plan year, a person, new text begin sole proprietorship, new text end firm, corporation, partnership, association,
or other entity actively engaged in business in Minnesota, including a political subdivision
of the state, that employed an average of at least one, deleted text begin not including a sole proprietor, deleted text end but
not more than 50 current employees on business days during the preceding calendar year
and that employs at least one current employee deleted text begin , not including a sole proprietor, deleted text end on the first
day of the plan year. A small employer plan may be offered through a domiciled association
to self-employed individuals and small employers who are members of the association, even
if the self-employed individual or small employer has fewer than deleted text begin two deleted text end new text begin one new text end current deleted text begin employees deleted text end new text begin
employee new text end . Entities that are treated as a single employer under subsection (b), (c), (m), or
(o) of section 414 of the federal Internal Revenue Code are considered a single employer
for purposes of determining the number of current employees. Small employer status must
be determined on an annual basis as of the renewal date of the health benefit plan. The
provisions of this chapter continue to apply to an employer who no longer meets the
requirements of this definition until the annual renewal date of the employer's health benefit
plan. If an employer was not in existence throughout the preceding calendar year, the
determination of whether the employer is a small employer is based upon the average number
of current employees that it is reasonably expected that the employer will employ on business
days in the current calendar year. For purposes of this definition, the term employer includes
any predecessor of the employer. An employer that has more than 50 current employees
but has 50 or fewer employees, as "employee" is defined under United States Code, title
29, section 1002(6), is a small employer under this subdivision.

(b) Where an association, as defined in section 62L.045, comprised of employers contracts
with a health carrier to provide coverage to its members who are small employers, the
association and health benefit plans it provides to small employers, are subject to section
62L.045, with respect to small employers in the association, even though the association
also provides coverage to its members that do not qualify as small employers.

(c) If an employer has employees covered under a trust specified in a collective bargaining
agreement under the federal Labor-Management Relations Act of 1947, United States Code,
title 29, section 141, et seq., as amended, or employees whose health coverage is determined
by a collective bargaining agreement and, as a result of the collective bargaining agreement,
is purchased separately from the health plan provided to other employees, those employees
are excluded in determining whether the employer qualifies as a small employer. Those
employees are considered to be a separate small employer if they constitute a group that
would qualify as a small employer in the absence of the employees who are not subject to
the collective bargaining agreement.

(d) Small group health plans offered through MNsure under chapter 62V to employees
of a small employer are not considered individual health plans, regardless of whether the
health plan is purchased using a defined contribution from the small employer.

Sec. 6.

Minnesota Statutes 2016, section 62L.03, is amended by adding a subdivision to
read:

new text begin Subd. 4a. new text end

new text begin Preexisting conditions. new text end

new text begin Preexisting conditions may be excluded by a health
carrier for the first 12 months of coverage if the eligible employee was diagnosed or treated
for that condition during the six months immediately preceding the enrollment date, but
exclusionary riders must not be used. When calculating any length of preexisting condition
limitation, a health carrier shall credit the time period an eligible employee or dependent
was previously covered by qualifying coverage, provided that the individual maintains
continuous coverage. The credit must be given for all qualifying coverage with respect to
all preexisting conditions, regardless of whether the conditions were preexisting with respect
to any previous qualifying coverage. Section 60A.082, relating to replacement of group
coverage, and the rules adopted under that section apply to this chapter, and this chapter's
requirements are in addition to the requirements of that section and the rules adopted under
it.
new text end

Sec. 7.

Minnesota Statutes 2016, section 62L.08, is amended by adding a subdivision to
read:

new text begin Subd. 1a. new text end

new text begin General premium variations. new text end

new text begin Each health carrier must offer premium rates
to small employers that are no more than 25 percent above and no more than 25 percent
below the standard rate charged to small employers for the same or similar coverage, adjusted
pro rata for rating periods of less than one year. The premium variations permitted by this
subdivision must be based only on health status, claims experience, industry of the employer,
and duration of coverage from the date of issue. For purposes of this subdivision, health
status includes refraining from tobacco use or other actuarially valid lifestyle factors
associated with good health, provided that the lifestyle factor and its effect upon premium
rates have been determined to be actuarially valid and approved by the commissioner. This
subdivision does not prohibit use of a constant percentage adjustment for factors permitted
to be used under this subdivision.
new text end

Sec. 8.

Minnesota Statutes 2016, section 62L.08, subdivision 7, is amended to read:

Subd. 7.

Premium rate development.

(a) In developing its new text begin standard rates, new text end rates new text begin , new text end and
premiums, a health carrier may take into account only the following factors:

(1) actuarially valid differences in benefit designs of health benefit plans; and

(2) actuarially valid deleted text begin geographic variations if approved by the commissioner as provided
in subdivision 4 deleted text end new text begin differences in the rating factors permitted in subdivisions 1a and 3 new text end .

(b) All premium variations permitted under this section must be based upon actuarially
valid differences in expected cost to the health carrier of providing coverage. The variation
must be justified in initial rate filings and upon request of the commissioner in rate revision
filings. All premium variations are subject to approval by the commissioner.

Sec. 9.

Minnesota Statutes 2016, section 62Q.18, subdivision 10, is amended to read:

Subd. 10.

Guaranteed issue.

new text begin (a) new text end No health plan company shall offer, sell, or issue any
health plan that does not make coverage available on a guaranteed issue basis deleted text begin in accordance
with the Affordable Care Act deleted text end .

new text begin (b) Notwithstanding paragraph (a), a health plan company may offer, sell, or issue an
individual health plan that contains a preexisting condition limitation or exclusion as
permitted under section 62A.65, subdivision 5.
new text end

Sec. 10.

new text begin [62Q.461] CHOICE IN CONTRACEPTIVE COVERAGE.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin This section applies to individual health plans and small
group health plans, as defined in section 62K.03, subdivision 12, offered, issued, or renewed
by a health plan company.
new text end

new text begin Subd. 2. new text end

new text begin Requirement to provide enrollee choice. new text end

new text begin A health plan company must offer
a health plan option to enrollees that does not include coverage for contraceptive methods
that are abortifacients. For purposes of this requirement, "contraceptive methods that are
abortifacients" include hormonal and copper intrauterine devices, Plan B and Ella emergency
contraception (morning after pills), and other methods of contraception that prevent
implantation of the fertilized egg or affect the implanted embryo.
new text end

Sec. 11.

new text begin [62Q.678] HEALTH PLAN OPEN ENROLLMENT.
new text end

new text begin (a) All health plans must be made available in the manner required by Code of Federal
Regulations, title 45, section 147.104.
new text end

new text begin (b) In addition to the requirements of paragraph (a), any individual health plan:
new text end

new text begin (1) must be made available for purchase at any time during the calendar year; and
new text end

new text begin (2) is not retroactive from the date on which the application for coverage was received.
new text end

Sec. 12. new text begin STATE INNOVATION WAIVER.
new text end

new text begin Subdivision 1. new text end

new text begin Submission of waiver application. new text end

new text begin The commissioner of commerce
must apply to the secretary of the Department of Health and Human Services under United
States Code, title 42, section 18052, for a state innovation waiver to implement the
requirements of article 1, sections 2 to 11 and 13, of this act for plan years beginning on or
after January 1, 2018.
new text end

new text begin Subd. 2. new text end

new text begin Consultation. new text end

new text begin In developing the waiver application, the commissioner shall
consult with the commissioner of human services and the commissioner of health.
new text end

new text begin Subd. 3. new text end

new text begin Application timelines; notification. new text end

new text begin The commissioner shall submit the waiver
application to the Secretary of Health and Human Services on or before July 5, 2017. The
commissioner shall make a draft application available for public review and comment by
June 1, 2017. The commissioner shall notify the chairs and ranking minority members of
the legislative committees with jurisdiction over health insurance and health care of any
federal actions regarding the waiver request.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 13. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2016, sections 62A.65, subdivision 2; and 62L.08, subdivision 4, new text end new text begin
are repealed.
new text end

Sec. 14. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 11 and 13 are effective January 1, 2018, or upon the effective date of any
necessary federal waivers or law changes, whichever is later, and apply to health plans
offered, issued, or renewed on or after that date.
new text end

ARTICLE 2

REINSURANCE PROGRAM

Section 1.

Minnesota Statutes 2016, section 13.7191, is amended by adding a subdivision
to read:

new text begin Subd. 23. new text end

new text begin Minnesota Health Reinsurance Association. new text end

new text begin Certain data maintained by the
Minnesota Health Reinsurance Association is classified under section 62W.05, subdivision
6.
new text end

Sec. 2.

new text begin [62W.01] CITATION.
new text end

new text begin This chapter may be cited as the "Minnesota Health Reinsurance Association Act."
new text end

Sec. 3.

new text begin [62W.02] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For the purposes of this chapter, the terms defined in this
section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Board. new text end

new text begin "Board" means the board of directors of the Minnesota Health
Reinsurance Association, as established under section 62W.05, subdivision 2.
new text end

new text begin Subd. 3. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 4. new text end

new text begin Eligible individual. new text end

new text begin "Eligible individual" means a natural person who has
received a diagnosis of one of the conditions in section 62W.06, subdivision 1, paragraph
(a), that qualifies claims for the person to be submitted by a member for reinsurance payments
under the program.
new text end

new text begin Subd. 5. new text end

new text begin Health carrier. new text end

new text begin "Health carrier" means a health carrier as defined in section
62A.011, subdivision 2.
new text end

new text begin Subd. 6. new text end

new text begin Health reinsurance program or program. new text end

new text begin "Health reinsurance program" or
"program" means the system of reinsurance created by this chapter.
new text end

new text begin Subd. 7. new text end

new text begin Individual health plan. new text end

new text begin "Individual health plan" means a health plan as defined
in section 62A.011, subdivision 4.
new text end

new text begin Subd. 8. new text end

new text begin Individual market. new text end

new text begin "Individual market" means the market for individual health
plans, as defined in section 62A.011, subdivision 5.
new text end

new text begin Subd. 9. new text end

new text begin Member. new text end

new text begin "Member" means a health carrier offering, issuing, or renewing
individual health plans to a Minnesota resident.
new text end

new text begin Subd. 10. new text end

new text begin Minnesota Health Reinsurance Association or association. new text end

new text begin "Minnesota
Health Reinsurance Association" or "association" means the association created under
section 62W.05, subdivision 1.
new text end

new text begin Subd. 11. new text end

new text begin Reinsurance payments. new text end

new text begin "Reinsurance payments" means a payment made by
the association to a member according to the requirements of the program and this chapter.
new text end

Sec. 4.

new text begin [62W.03] DUTIES OF COMMISSIONER.
new text end

new text begin The commissioner may:
new text end

new text begin (1) formulate general policies to advance the purposes of this chapter;
new text end

new text begin (2) supervise the creation of the Minnesota Health Reinsurance Association within the
limits described in section 62W.05;
new text end

new text begin (3) appoint advisory committees;
new text end

new text begin (4) conduct periodic audits to ensure the accuracy of the data submitted by members
and the association, and compliance of the association and members with requirements of
the plan of operation and this chapter;
new text end

new text begin (5) contract with the federal government or any other unit of government to ensure
coordination of the program with other individual health plan reinsurance or subsidy
programs;
new text end

new text begin (6) contract with health carriers and others for administrative services; and
new text end

new text begin (7) adopt, amend, suspend, and repeal rules as reasonably necessary to carry out and
make effective the provisions and purposes of this chapter.
new text end

Sec. 5.

new text begin [62W.04] APPROVAL OF REINSURANCE PAYMENTS.
new text end

new text begin Subdivision 1. new text end

new text begin Information submitted to commissioner. new text end

new text begin The association must submit
to the commissioner information regarding the reinsurance payments the association
anticipates making for the calendar year following the year in which the information is
submitted. The information must include historical reinsurance payment data, underlying
principles of the model used to calculate anticipated reinsurance payments, and any other
relevant information or data the association used to determine anticipated reinsurance
payments for the following calendar year. This information must be submitted to the
commissioner by August 30 of each year, for reinsurance payments anticipated to be made
in the calendar year following the year in which the information is submitted. By October
15 of each year the commissioner must approve or modify the anticipated reinsurance
payment schedule.
new text end

new text begin Subd. 2. new text end

new text begin Modification by commissioner. new text end

new text begin The commissioner may modify the association's
anticipated reinsurance payment schedule, as described in subdivision 1, on the basis of the
following criteria:
new text end

new text begin (1) whether the association is in compliance with the requirements of the plan of operation
and this chapter;
new text end

new text begin (2) the degree to which the computations and conclusions take into consideration the
current and future individual market regulations;
new text end

new text begin (3) the degree to which any sample used to compute the effect on premiums reasonably
reflects circumstances projected to exist in the individual market through the use of accepted
actuarial principles;
new text end

new text begin (4) the degree to which the computations and conclusions take into consideration the
current and future health care needs and health condition demographics of Minnesota
residents purchasing individual health plans;
new text end

new text begin (5) the actuarially projected effect of the reinsurance payments upon both total enrollment
in the individual market, and the nature of the risks assumed by the association;
new text end

new text begin (6) the financial cost to the individual market, and entire health insurance market in this
state;
new text end

new text begin (7) the projected cost of all reinsurance payments in relation to funding available for the
program; and
new text end

new text begin (8) other relevant factors, as determined by the commissioner.
new text end

Sec. 6.

new text begin [62W.05] MINNESOTA HEALTH REINSURANCE ASSOCIATION.
new text end

new text begin Subdivision 1. new text end

new text begin Creation; tax exemption. new text end

new text begin The Minnesota Health Reinsurance Association
is established to promote the stabilization and cost control of individual health plans in the
state. Membership in the association consists of all health carriers offering, issuing, or
renewing individual health plans in the state. The association is exempt from the taxes
imposed under chapter 297I and any other laws of this state and all property owned by the
association is exempt from taxation.
new text end

new text begin Subd. 2. new text end

new text begin Board of directors; organization. new text end

new text begin (a) The board of directors of the association
shall be made up of 11 members as follows: six directors selected by members, subject to
approval by the commissioner, one of which must be a health actuary; five public directors
selected by the commissioner, four of whom must be individual health plan enrollees, and
one of whom must be a licensed insurance agent. At least two of the public directors must
reside outside of the seven-county metropolitan area.
new text end

new text begin (b) In determining voting rights to elect directors at the member's meeting, each member
shall be entitled to vote in person or proxy. The vote shall be a weighted vote based upon
the member's cost of accident and health insurance premium, subscriber contract charges,
or health maintenance contract payment, derived from or on behalf of Minnesota residents
in the previous calendar year, in the individual market, as determined by the commissioner.
new text end

new text begin (c) In approving directors of the board, the commissioner shall consider, among other
things, whether all types of members are fairly represented. Directors selected by members
may be reimbursed from the money of the association for expenses incurred by them as
directors, but shall not otherwise be compensated by the association for their services.
new text end

new text begin Subd. 3. new text end

new text begin Membership. new text end

new text begin All members shall maintain their membership in the association
as a condition of participating in the individual market in this state.
new text end

new text begin Subd. 4. new text end

new text begin Operation. new text end

new text begin The association shall submit its articles, bylaws, and operating
rules to the commissioner for approval; provided that the adoption and amendment of
articles, bylaws, and operating rules by the association and the approval by the commissioner
thereof shall be exempt from sections 14.001 to 14.69.
new text end

new text begin Subd. 5. new text end

new text begin Open meetings. new text end

new text begin All meetings of the board and any committees shall comply
with the provisions of chapter 13D.
new text end

new text begin Subd. 6. new text end

new text begin Data. new text end

new text begin The association and board are subject to chapter 13. Data received by
the association and board from a member that is data on individuals is private data on
individuals, as defined in section 13.02, subdivision 12.
new text end

new text begin Subd. 7. new text end

new text begin Appeals. new text end

new text begin An appeal may be filed with the commissioner within 30 days after
notice of an action, ruling, or decision by the board. A final action or order of the
commissioner under this subdivision is subject to judicial review in the manner provided
by chapter 14. In lieu of the appeal to the commissioner, a person may seek judicial review
of the board's action.
new text end

new text begin Subd. 8. new text end

new text begin Antitrust exemption. new text end

new text begin In the performance of their duties as members of the
association, the members shall be exempt from the provisions of sections 325D.49 to
325D.66.
new text end

new text begin Subd. 9. new text end

new text begin General powers. new text end

new text begin The association may:
new text end

new text begin (1) exercise the powers granted to insurers under the laws of this state;
new text end

new text begin (2) sue or be sued;
new text end

new text begin (3) establish administrative and accounting procedures for the operation of the association;
and
new text end

new text begin (4) enter into contracts with insurers, similar associations in other states, or with other
persons for the performance of administrative functions including the functions provided
for section 62W.06.
new text end

new text begin Subd. 10. new text end

new text begin Rulemaking. new text end

new text begin The association is exempt from the Administrative Procedure
Act. However, to the extent the association wishes to adopt rules, they may use the provisions
of section 14.386, paragraph (a), clauses (1) and (3). Section 14.386, paragraph (b), does
not apply to rules adopted under this subdivision.
new text end

Sec. 7.

new text begin [62W.06] ASSOCIATION; ADMINISTRATION OF PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Acceptance of risk. new text end

new text begin (a) The association must accept a transfer to the
program from a member of the risk and cost associated with providing health coverage to
an eligible individual when the eligible individual discloses to the member in their application
for an individual health plan that they have received a diagnosis of at least one of the
conditions in paragraph (b).
new text end

new text begin (b) The diagnosis necessary to qualify as an eligible individual are:
new text end

new text begin (i) AIDS/HIV;
new text end

new text begin (ii) Alzheimer's disease;
new text end

new text begin (iii) amyotrophic lateral sclerosis (ALS);
new text end

new text begin (iv) angina pectoris;
new text end

new text begin (v) anorexia nervosa or bulimia;
new text end

new text begin (vi) aortic aneurysm;
new text end

new text begin (vii) ascites;
new text end

new text begin (viii) chemical dependency;
new text end

new text begin (ix) chronic pancreatitis;
new text end

new text begin (x) chronic renal failure;
new text end

new text begin (xi) cirrhosis of the liver;
new text end

new text begin (xii) coronary insufficiency;
new text end

new text begin (xiii) coronary occlusion;
new text end

new text begin (xiv) Crohn's Disease (regional enteritis);
new text end

new text begin (xv) cystic fibrosis;
new text end

new text begin (xvi) dermatomyositis;
new text end

new text begin (xvii) Friedreich's ataxia;
new text end

new text begin (xviii) hemophilia;
new text end

new text begin (xix) hepatitis C;
new text end

new text begin (xx) history of major organ transplant;
new text end

new text begin (xxi) Huntington Chorea;
new text end

new text begin (xxii) hydrocephalus;
new text end

new text begin (xxiii) insulin dependent diabetes;
new text end

new text begin (xxiv) leukemia;
new text end

new text begin (xxv) malignant lymphoma;
new text end

new text begin (xxvi) malignant tumors;
new text end

new text begin (xxvii) metastatic cancer;
new text end

new text begin (xxviii) motor/sensory aphasia:
new text end

new text begin (xxix) multiple sclerosis;
new text end

new text begin (xxx) muscular dystrophy;
new text end

new text begin (xxxi) myasthenia gravis;
new text end

new text begin (xxxii) myocardial infarction;
new text end

new text begin (xxxiii) myotonia;
new text end

new text begin (xxxiv) open heart surgery;
new text end

new text begin (xxxv) paraplegia;
new text end

new text begin (xxxvi) Parkinson's Disease;
new text end

new text begin (xxxvii) polyarteritis nodosa;
new text end

new text begin (xxxviii) polycystic kidney;
new text end

new text begin (xxxix) primary cardiomyopathy;
new text end

new text begin (xl) progressive systemic sclerosis (Scleroderma);
new text end

new text begin (xli) quadriplegia;
new text end

new text begin (xlii) stroke;
new text end

new text begin (xliii) syringomylia;
new text end

new text begin (xliv) systemic lupus erythematosis (SLE); and
new text end

new text begin (xlv) Wilson's disease.
new text end

new text begin Subd. 2. new text end

new text begin Payment to members. new text end

new text begin (a) The association must reimburse members on a
quarterly basis for claims paid on behalf of an eligible individual whose risk and cost has
been transferred to the program.
new text end

new text begin (b) Reinsurance payments related to any one eligible individual is limited to $5,000,000
over the lifetime of the individual, without consideration of whether the reinsurance payments
are made to one or more members.
new text end

new text begin Subd. 3. new text end

new text begin Plan of operation. new text end

new text begin (a) The association, in consultation with the commissioners
of health and commerce, must create a plan of operation to administer the program. The
plan of operation must be updated as necessary by the board, in consultation with the
commissioners.
new text end

new text begin (b) The plan of operation must include:
new text end

new text begin (1) guidance to members regarding the use of diagnosis codes for the purposes of
identifying eligible individuals;
new text end

new text begin (2) a description of the data a member submitting a reinsurance payment request must
provide to the association for the association to implement and administer the program.
This includes data necessary for the association to determine a member's eligibility for
reinsurance payments;
new text end

new text begin (3) the manner and time period in which a member must provide the data described in
clause (3);
new text end

new text begin (4) requirements for reports to be submitted by a member to the association;
new text end

new text begin (5) requirements for the processing of reports received under section 62W.07, subdivision
2, clause (5), by the association;
new text end

new text begin (6) requirements for conducting audits in compliance with section 62W.08; and
new text end

new text begin (7) requirements for an annual actuarial study of this state's individual market to be
ordered by the association that:
new text end

new text begin (i) measures the impact of the program;
new text end

new text begin (ii) recommends funding levels for the program; and
new text end

new text begin (iii) analyzes possible changes in the individual market and the impact of the changes.
new text end

new text begin Subd. 4. new text end

new text begin Use of premium payments. new text end

new text begin The association must retain all premiums it receives
in excess of administrative and operational expenses and claims paid for eligible individuals
whose associated risk and cost has been transferred to the program, in that order. The
association must apply any excess premiums toward payment of future administrative and
operational expenses and claims incurred for eligible individuals whose associated risk and
cost has been transferred to the program.
new text end

Sec. 8.

new text begin [62W.07] MEMBERS; COMPLIANCE WITH PROGRAM.
new text end

new text begin Subdivision 1. new text end

new text begin Transfer of risk. new text end

new text begin A member must transfer the risk and cost associated
with providing health coverage to an eligible individual to the program in compliance with
this section. A member must transfer the risk and cost of the eligible individual within ten
days of receiving a completed application for an individual health plan from the individual,
which application discloses that the individual, or a member of the individual's family if a
family policy is being requested, has been diagnosed with one of the conditions listed in
section 62W.06, subdivision 1, paragraph (b). Reinsurance by the program is effective as
the effective date of the individual health plan and continues until the eligible individual
ceases coverage with the member.
new text end

new text begin Subd. 2. new text end

new text begin Reinsurance payments. new text end

new text begin (a) A member is eligible for reinsurance payments to
reimburse the member for the claims of an eligible individual if the member:
new text end

new text begin (1) provides evidence to the association that the individual is an eligible individual;
new text end

new text begin (2) is currently paying the claims of the eligible individual;
new text end

new text begin (3) pays to the association, pursuant to paragraph (c), the premium the member receives
under an individual health plan for the eligible individual;
new text end

new text begin (4) pays to the association, pursuant to paragraph (d), any pharmacy rebates the member
receives for health care services provided to the eligible individual; and
new text end

new text begin (5) reports to the association payments applicable to the eligible individual that the
member collects relating to:
new text end

new text begin (i) third-party liabilities;
new text end

new text begin (ii) payments the member recovers for overpayment;
new text end

new text begin (iii) payments for commercial reinsurance recoveries;
new text end

new text begin (iv) estimated federal cost-sharing reduction payments made under United States Code,
title 42, section 18071; and
new text end

new text begin (v) estimated advanced premium tax credits paid to the member on behalf of an eligible
individual made under United States Code, title 26, section 36B.
new text end

new text begin (b) A member that has transferred the associated risk and cost of an eligible individual
to the program must submit to the program all data and information required by the
association, in a manner determined by the association.
new text end

new text begin (c) A member must provide the program all premiums received for coverage under an
individual health plan from an eligible individual whose risk and associated cost has been
transferred to the program. A member must pay the association the separately identifiable
premium amount the member received under the individual health plan covering the eligible
individual within 30 days of the association accepting the risk and cost transferred to it with
respect to an eligible individual. If the eligible individual is covered under a family policy
providing health coverage and the eligible individual that has a separately identifiable
premium equal to $0, the member shall pay the association the highest separately identifiable
premium under the family policy. For each additional eligible individual covered under a
family policy who has a separately identifiable premium equal to $0, the member shall pay
the association the next highest separately identifiable premium under the family policy.
new text end

new text begin (d) A member must pay the association a pharmacy rebate required to be paid pursuant
to paragraph (a), clause (4), within 30 days of receiving the pharmacy rebate.
new text end

new text begin (e) Reinsurance payments for any one eligible individual are limited to $5,000,000 over
the lifetime of the individual, without consideration of whether the reinsurance payments
are made to one or more members.
new text end

new text begin Subd. 3. new text end

new text begin Duties; members. new text end

new text begin (a) A member must comply with the plan of operation created
under section 62W.06, subdivision 3, in order to receive reinsurance payments under the
program.
new text end

new text begin (b) A member must continue to administer and manage an eligible individual's individual
health plan in accordance with the terms of the individual health plan after the risk and cost
associated with the eligible individual has been transferred to the program.
new text end

new text begin (c) A member may not vary premium rates based on whether the risk and cost associated
with an eligible individual has been transferred to the program.
new text end

new text begin (d) After the risk and cost of an eligible individual has been transferred to the program,
the risk and cost will remain with the program for the benefit plan year.
new text end

new text begin (e) For a claim to qualify for reinsurance payments from the program, a member must
submit claims incurred by an eligible individual whose risk and associated cost has been
transferred to the program within 12 months of the claim being incurred.
new text end

Sec. 9.

new text begin [62W.08] ACCOUNTS AND AUDITS.
new text end

new text begin Subdivision 1. new text end

new text begin Reports and audits. new text end

new text begin (a) The association shall maintain its books, records,
accounts, and operations on a calendar-year basis.
new text end

new text begin (b) The association shall conduct a final accounting with respect to each calendar year
after April 15 of the following calendar year.
new text end

new text begin (c) Claims for eligible individuals whose associated risk and cost have been transferred
to the program that are incurred during a calendar year and are submitted for reimbursement
before April 15 of the following calendar year must be allocated to the calendar year in
which they are incurred. Claims submitted after April 15 following the calendar year in
which they are incurred must be allocated to a later calendar year in accordance with the
plan of operation.
new text end

new text begin (d) If the total receipts of the reinsurance association fund with respect to a calendar
year are expected to be insufficient to pay all program expenses, claims for reimbursement,
and other disbursements allocable to that calendar year, all claims for reimbursement
allocable to that calendar year shall be reduced proportionately to the extent necessary to
prevent a deficit in the fund for that calendar year. Any reduction in claims for reimbursement
with respect to a calendar year must apply to all claims allocable to that calendar year without
regard to when those claims are submitted for reimbursement, and any reduction will be
applied to each claim in the same proportion.
new text end

new text begin (e) The association must establish a process for auditing every member that transfers
the cost and associated risk of an eligible individual to the program. Audits may include
both an audit conducted in connection with commencement of a member's first transfer to
the program and periodic audits up to four times a year throughout a member's participation
in the program.
new text end

new text begin (f) The association must engage an independent third-party auditor to perform a financial
and programmatic audit for each calendar year in accordance with generally accepted
auditing standards. The association shall provide a copy of the audit to the commissioner
at the time the association receives the audit, and publish a copy of the audit on the
association's Web site within 14 days of receiving the audit.
new text end

new text begin Subd. 2. new text end

new text begin Annual settle-up. new text end

new text begin (a) The association shall establish a settle-up process with
respect to a calendar year to reflect adjustments made in establishing the final accounting
for that calendar year. The adjustments include, but are not limited to: (1) the crediting of
premiums received with respect to the cost and associated risks of an eligible person being
transferred after the end of the calendar year; (2) retroactive reductions or other adjustments
in reimbursements necessary to prevent a deficit in the reinsurance association fund for that
calendar year; and (3) retroactive reductions to prevent a windfall to a member as a result
of third party recoveries, recovery of overpayments, commercial reinsurance recoveries,
federal cost-sharing reductions made under United States Code, title 42, section 18071,
advanced premium tax credits paid under United States Code, title 26, section 36B, or risk
adjustments made under United States Code, title 42, section 18063, for that calendar year.
The settle-up must occur after April 15 following the calendar year to which it relates.
new text end

new text begin (b) With respect to the risk adjustment transfers as determined by the United States
Department of Health and Human Services, Centers for Medicare and Medicaid Services,
and Center for Consumer Information and Insurance Oversight:
new text end

new text begin (1) the commissioner must review the risk adjustment transfers to determine the impact
the transfer of risk and associated cost of an eligible individual to the program has had, if
any;
new text end

new text begin (2) the review must occur not later than 60 days after publication of the notice of final
risk adjustment transfers by the Center for Consumer Information and Insurance Oversight;
new text end

new text begin (3) if the commissioner notifies a member of the amount of any risk adjustment transfer
it received that does not accurately reflect benefits provided under the program;
new text end

new text begin (i) the member must pay that amount to the association within 30 days of receiving the
notice from the commissioner; and
new text end

new text begin (ii) as appropriate, the commissioner must refund that amount to the member that made
the federal risk adjustment payment; and
new text end

new text begin (4) a member must submit to the commissioner, in a form acceptable to the commissioner,
all data requested by the commissioner by March of the year following the year to which
the risk adjustment applies.
new text end

Sec. 10.

new text begin [62W.10] ASSESSMENT ON ISSUERS OF ACCIDENT AND HEALTH
INSURANCE POLICIES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this section, the following terms have
the meanings given them.
new text end

new text begin (b) "Accident and health insurance policy" or "policy" means insurance or nonprofit
health service plan contracts providing benefits for hospital, surgical and medical care.
Policy does not include coverage which is:
new text end

new text begin (1) limited to disability or income protection coverage;
new text end

new text begin (2) automobile medical payment coverage;
new text end

new text begin (3) supplemental to liability insurance;
new text end

new text begin (4) designed solely to provide payments on a per diem, fixed indemnity, or nonexpense
incurred basis;
new text end

new text begin (5) credit accident and health insurance issued pursuant to chapter 62B;
new text end

new text begin (6) designed solely to provide dental or vision care;
new text end

new text begin (7) blanket accident and sickness insurance as defined in section 62A.11; or
new text end

new text begin (8) accident only coverage issued by licensed and tested insurance agents or solicitors
which provides reasonable benefits in relation to the cost of covered services.
new text end

new text begin The provisions of clause (4) shall not apply to hospital indemnity coverage which is sold
by an insurer to an applicant who is not then currently covered by a qualified plan.
new text end

new text begin (c) "Market member" means those companies regulated under chapter 62A and offering,
selling, issuing, or renewing policies or contracts of accident and health insurance; health
maintenance organizations regulated under chapter 62D; nonprofit health service plan
corporations regulated under chapter 62C; community integrated service networks regulated
under chapter 62N; fraternal benefit societies regulated under chapter 64B; the Minnesota
employees insurance program established in section 43A.317; and joint self-insurance plans
regulated under chapter 62H. For the purposes of determining liability of market members
pursuant to subdivision 2, payments received from or on behalf of Minnesota residents for
coverage by a health maintenance organization or community integrated service network
shall be considered to be accident and health insurance premiums.
new text end

new text begin Subd. 2. new text end

new text begin Assessment. new text end

new text begin The association shall make an annual determination of each market
member's financial liability for the support of the program, in accordance with the
requirements of section 62W.11, if any, and may make an annual fiscal year-end assessment
if necessary. The association may also, subject to the approval of the commissioner, provide
for interim assessments against the market members whose aggregate assessments comprised
a minimum of 90 percent of the most recent prior annual assessment, in the event that the
association deems that methodology to be the most administratively efficient and
cost-effective means of assessment, and as may be necessary to ensure the financial capability
of the association in meeting the incurred or estimated claims expenses, and administrative
and operational costs of the program until the association's next annual fiscal year-end
assessment. Payment of an assessment shall be due within 30 days of receipt by a market
member of a written notice of a fiscal year-end or interim assessment. Failure by a market
member to tender to the association the assessment within 30 days shall be grounds for
termination of the market member's ability to issue accident and health insurance policies
in Minnesota. A market member which ceases to do accident and health insurance business
within the state shall remain liable for assessments through the calendar year during which
accident and health insurance business ceased. The association may decline to levy an
assessment against a market member if the assessment, as determined herein, would not
exceed $10.
new text end

Sec. 11.

new text begin [62W.11] FUNDING OF PROGRAM.
new text end

new text begin (a) The reinsurance association fund account is created in the special revenue fund of
the state treasury. Funds in the account are appropriated to the association for the operation
of the program. Notwithstanding section 11A.20, all investment income and all investment
losses attributable to the investment of the reinsurance association account not currently
needed, shall be credited to the reinsurance association fund account.
new text end

new text begin (b) The association shall fund the program using the following sources, in the following
order:
new text end

new text begin (1) any federal funds available, whether through grants or otherwise;
new text end

new text begin (2) the appropriation in section 13, which should be used by the association to cover the
claims, administrative, and operational costs of the program in an equal amount each year
until December 31, 2022;
new text end

new text begin (3) the tax imposed on health maintenance organizations, community integrated service
networks, and nonprofit health care service plan corporations under section 297I.05,
subdivision 5; and
new text end

new text begin (4) the assessment, if any, authorized by section 62W.10.
new text end

new text begin (c) The program shall not exceed $....... in claims, administrative, and operational costs
per calendar year.
new text end

Sec. 12.

Minnesota Statutes 2016, section 297I.05, subdivision 5, is amended to read:

Subd. 5.

Health maintenance organizations, nonprofit health service plan
corporations, and community integrated service networks.

(a) A tax is imposed on health
maintenance organizations, community integrated service networks, and nonprofit health
care service plan corporations. The rate of tax is equal to one percent of gross premiums
less return premiums on all direct business received by the organization, network, or
corporation or its agents in Minnesota, in cash or otherwise, in the calendar year.

(b) The commissioner shall deposit all revenues, including penalties and interest, collected
under this chapter from health maintenance organizations, community integrated service
networks, and nonprofit health service plan corporations in the deleted text begin health care access deleted text end new text begin reinsurance
association new text end fund. Refunds of overpayments of tax imposed by this subdivision must be paid
from the deleted text begin health care access deleted text end new text begin reinsurance association new text end fund. There is annually appropriated
from the deleted text begin health care access deleted text end new text begin reinsurance association new text end fund to the commissioner the amount
necessary to make any refunds of the tax imposed under this subdivision.

Sec. 13. new text begin APPROPRIATION.
new text end

new text begin $....... in fiscal year 2018 is appropriated from the health care access fund to the
commissioner of commerce for transfer to the reinsurance association fund account in the
special revenue fund for the purposes described in Minnesota Statutes, section 62W.10.
new text end

Sec. 14. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 13 are effective the day following final enactment and apply to individual
health plans providing coverage on or after January 1, 2018.
new text end

APPENDIX

Repealed Minnesota Statutes: 17-2884

62A.65 INDIVIDUAL MARKET REGULATION.

Subd. 2.

Guaranteed renewal.

No individual health plan may be offered, sold, issued, or renewed to a Minnesota resident unless the health plan provides that the plan is guaranteed renewable at a premium rate that does not take into account the claims experience or any change in the health status of any covered person that occurred after the initial issuance of the health plan to the person. The premium rate upon renewal must also otherwise comply with this section. A health carrier must not refuse to renew an individual health plan, except for nonpayment of premiums, fraud, or misrepresentation.

62L.08 RESTRICTIONS RELATING TO PREMIUM RATES.

Subd. 4.

Geographic premium variations.

Premium rates may vary based on geographic rating areas set by the commissioner. The commissioner shall grant approval if the health carrier provides actuarial justification acceptable to the commissioner for the proposed geographic variations in rates.