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HF 884

as introduced - 87th Legislature (2011 - 2012) Posted on 03/07/2011 09:09am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to accountability in health care program contracts; requiring competitive
bids and audits; proposing coding for new law in Minnesota Statutes, chapter
256B.

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

Section 1.

new text begin [256B.695] MANAGED CARE OVERSIGHT.
new text end

new text begin Subdivision 1. new text end

new text begin Purpose; intent. new text end

new text begin (a) To provide coverage under the state's health care
programs, Minnesota has large contracts totaling over $3,000,000,000 per year in state
funds awarded without competitive bidding. The state began contracting these programs
out in 1983 as a pilot project with the hope of saving money. However, the pilot project
was never truly evaluated. The legislative auditor has twice called for greater scrutiny
over these programs, but no state agency has conducted an audit of these contracts for
quality and cost. Because there have been no audits, the state has no way of evaluating
whether health care dollars are being wisely spent. Under current practice, the state covers
all expenses that the health plans incur whether justified or not.
new text end

new text begin (b) In 2011, as the state enrolls 95,000 more residents into medical assistance it
would be irresponsible to add these new enrollees into these unaccountable contracts that
may cost significantly more than the state administering their coverage.
new text end

new text begin Subd. 2. new text end

new text begin Enrollment. new text end

new text begin Beginning March 1, 2011, all new medical assistance
enrollees must be covered through the Department of Human Services directly and may
not be placed into a prepaid health plan under section 256B.69.
new text end

new text begin Subd. 3. new text end

new text begin Competitive bidding. new text end

new text begin When the current state health plan contracts expire,
the commissioner of human services must initiate a competitive bidding process in the
13-county metropolitan area for prepaid health plans, with the contract for the 13-county
metropolitan area awarded to the two managed care organizations that best meet the state's
need to provide quality and cost-effective medical care to enrollees. The managed care
organizations must not use market division or allocation methodologies or subcontract
with other managed care organizations or any other scheme to undermine the competitive
bidding process. A managed care organization or entity listed in section 256B.69 that
violates any of the prohibitions in this subdivision shall be barred from contracting with
the state for ten years.
new text end

new text begin Subd. 4. new text end

new text begin Accounting process and definitions. new text end

new text begin (a) Any health maintenance
organization, community-integrated service network, or accountable provider network
authorized and operating under chapter 62D, 62N, or 62T, that participates in the
demonstration project under section 256B.69 or any managed health care program must
use GAAP accounting principles for all contracts with the state. For purposes of this
section, the terms in paragraphs (b) and (c) have the meanings given.
new text end

new text begin (b) "Administrative costs" means expenditures on loss-adjustment activities, prior
authorizations, utilization reviews, underwriting activities, negotiating networks and
contracts with providers, approvals and denials of claims, research activities, reserves,
capital expenses, and all other expenses not included under paragraph (c).
new text end

new text begin (c) "Medical costs" means the payments to licensed health care professionals and
health care entities for delivering to specific patients drugs, devices, supplies, and services,
including educational services, or assisting them in accessing medical care. Assisting
patients in accessing medical care includes, but is not limited to, such ancillary services
as interpreter services and transportation.
new text end

new text begin Subd. 5. new text end

new text begin Oversight. new text end

new text begin The legislative auditor shall regularly audit all health program
contracts using the definitions of administrative costs and medical costs under subdivision
4.
new text end

new text begin Subd. 6. new text end

new text begin State health care program contracts. new text end

new text begin For all state managed care
contracts, in assessing actuarial soundness as referenced in federal law, the Department of
Human Services shall cover only reasonable and appropriate costs incurred by the health
plan contractors, not all costs as in past practice.
new text end

new text begin Subd. 7. new text end

new text begin Data practices. new text end

new text begin Notwithstanding chapter 13, data practices exemptions
related to trade secrets and proprietary information do not apply to a contracting health
plan providing health care coverage for a state health care program.
new text end