HF 3543

as introduced - 86th Legislature (2009 - 2010) Posted on 03/09/2010 10:20am

A bill for an act
relating to insurance; replacing the Minnesota Comprehensive Health Association
assessment with health care provider tax revenues; increasing the provider tax
accordingly; appropriating money; amending Minnesota Statutes 2008, sections
62A.02, by adding a subdivision; 62E.02, subdivision 23; 62E.091; 62E.10,
subdivisions 1, 2, 3, 6; 62E.11, subdivisions 9, 10; 62E.13, subdivisions 2, 3a,
by adding a subdivision; 62E.14, subdivisions 1, 6; 295.52; 295.581; repealing
Minnesota Statutes 2008, sections 62E.02, subdivision 23; 62E.11, subdivisions
5, 6, 13; 62E.13, subdivision 1.

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

Section 1.

Minnesota Statutes 2008, section 62A.02, is amended by adding a
subdivision to read:

new text begin Subd. 8. new text end

new text begin Effects on premium rates of certain law changes. new text end

new text begin In approving premium
rates under this section and sections 62A.021; 62A.65, subdivision 3; and 62L.08,
subdivision 8, the commissioners of commerce and health shall ensure that the provisions
of this act eliminating the Comprehensive Health Association assessment are reflected
in the premium rates charged by health plan companies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for coverage issued on or after
January 1, 2011.
new text end

Sec. 2.

Minnesota Statutes 2008, section 62E.02, subdivision 23, is amended to read:

Subd. 23.

deleted text begin Contributing member deleted text end new text begin Health plan company new text end .

" deleted text begin Contributing member deleted text end new text begin
Health plan company new text end " 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, effective July
1, 1993; and joint self-insurance plans regulated under chapter 62H. deleted text begin For the purposes
of determining liability of contributing members pursuant to section 62E.11 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. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 3.

Minnesota Statutes 2008, section 62E.091, is amended to read:

62E.091 APPROVAL OF STATE PLAN PREMIUMS.

The association shall submit to the commissioner any premiums it proposes to
become effective for coverage under the comprehensive health insurance plan, pursuant
to section 62E.08, subdivision 3. No later than 45 days before the effective date for
premiums specified in section 62E.08, subdivision 3, the commissioner shall approve,
modify, or reject the proposed premiums on the basis of the following criteria:

(a) whether the association has complied with the provisions of section 62E.11,
subdivision 11;

(b) whether the association has submitted the proposed premiums in a manner which
provides sufficient time for individuals covered under the comprehensive insurance plan
to receive notice of any premium increase no less than 30 days prior to the effective
date of the increase;

(c) the degree to which the association's computations and conclusions are consistent
with section 62E.08;

(d) the degree to which any sample used to compute a weighted average by the
association pursuant to section 62E.08 reasonably reflects circumstances existing in the
private marketplace for individual coverage;

(e) the degree to which a weighted average computed pursuant to section 62E.08
that uses information pertaining to individual coverage available only on a renewal basis
reflects the circumstances existing in the private marketplace for individual coverage;

(f) a comparison of the proposed increases with increases in the cost of medical care
and increases experienced in the private marketplace for individual coverage;

(g) the financial consequences to enrollees of the proposed increase;

(h) the actuarially projected effect of the proposed increase upon both total
enrollment in, and the nature of the risks assumed by, the comprehensive health insurance
plan; new text begin and
new text end

deleted text begin (i) the relative solvency of the contributing members; and
deleted text end

deleted text begin (j) deleted text end new text begin (i) new text end other factors deemed relevant by the commissioner.

In no case, however, may the commissioner approve premiums for those plans of
coverage described in section 62E.08, subdivision 1, paragraphs (a) to (d), that are lower
than 101 percent or greater than 125 percent of the weighted averages computed by the
association pursuant to section 62E.08. The commissioner shall support a decision to
approve, modify, or reject any premium proposed by the association with written findings
and conclusions addressing each criterion specified in this section. If the commissioner
does not approve, modify, or reject the premiums proposed by the association sooner than
45 days before the effective date for premiums specified in section 62E.08, subdivision 3,
the premiums proposed by the association under this section become effective.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 4.

Minnesota Statutes 2008, section 62E.10, subdivision 1, is amended to read:

Subdivision 1.

Creation; tax exemption.

There is established a Comprehensive
Health Association to promote the public health and welfare of the state of Minnesota deleted text begin with
membership consisting of all insurers; self-insurers; fraternals; joint self-insurance plans
regulated under chapter 62H; the Minnesota employees insurance program established
in section 43A.317, effective July 1, 1993; health maintenance organizations; and
community integrated service networks licensed or authorized to do business in this state deleted text end . new text begin
The association shall have no members. new text end The Comprehensive Health 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 begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 5.

Minnesota Statutes 2008, section 62E.10, subdivision 2, is amended to read:

Subd. 2.

Board of directors; organization.

The board of directors of the
association shall be made up of deleted text begin eleven members as follows: six directors selected by
contributing members, subject to approval by the commissioner, one of which must be a
health actuary; five public directors deleted text end new text begin 11 individuals new text end selected by the commissioner, at least
two of whom must be plan enrollees deleted text begin , two of whom are covered under an individual plan
subject to assessment under section 62E.11 or group plan offered by an employer subject
to assessment under section 62E.11, and one of whom must be a licensed insurance agent deleted text end .
At least two of the deleted text begin public deleted text end directors must reside outside of the seven county metropolitan
area. deleted text begin In determining voting rights at members' meetings, 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
self-insurance, accident and health insurance premium, subscriber contract charges, health
maintenance contract payment, or community integrated service network payment derived
from or on behalf of Minnesota residents in the previous calendar year, as determined by
the commissioner. In approving directors of the board, the commissioner shall consider,
among other things, whether all types of members are fairly represented. Directors
selected by contributing 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. The costs of conducting meetings of the association and its
board of directors shall be borne by members of the association.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 6.

Minnesota Statutes 2008, section 62E.10, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Mandatory membership deleted text end new text begin Organizational documents new text end .

deleted text begin All members
shall maintain their membership in the association as a condition of doing accident
and health insurance, self-insurance, health maintenance organization, or community
integrated service network business in this state. deleted text end The association shall submit its articles,
bylaws new text begin , new text end and operating rules to the commissioner for approval; provided that the adoption
and amendment of articles, bylaws and operating rules by the association and deleted text begin the deleted text end new text begin their new text end
approval by the commissioner deleted text begin thereof shall be deleted text end new text begin is new text end exempt from deleted text begin the provisions of deleted text end sections
14.001 to 14.69.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 7.

Minnesota Statutes 2008, section 62E.10, subdivision 6, is amended to read:

Subd. 6.

Antitrust exemption.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 8.

Minnesota Statutes 2008, section 62E.11, subdivision 9, is amended to read:

Subd. 9.

Special assessment upon termination of individual health coverage.

Each deleted text begin contributing member deleted text end new text begin health plan company new text end that terminates individual health coverage
for reasons other than (a) nonpayment of premium; (b) failure to make co-payments;
(c) enrollee moving out of the area served; or (d) a materially false statement or
misrepresentation by the enrollee in the application for membership; and does not provide
or arrange for replacement coverage that meets the requirements of section 62D.121; shall
pay a special assessment to the state plan based upon the number of terminated individuals
who join the comprehensive health insurance plan as authorized under section 62E.14,
subdivisions 1, paragraph (d), and 6. Such a deleted text begin contributing member deleted text end new text begin health plan company new text end
shall pay the association an amount equal to the average cost of an enrollee in the state
plan in the year in which the deleted text begin member deleted text end new text begin health plan company new text end terminated enrollees multiplied
by the total number of terminated enrollees who enroll in the state plan.

The average cost of an enrollee in the state comprehensive health insurance plan
shall be determined by dividing the state plan's total annual losses by the total number of
enrollees from that year. deleted text begin This cost will be assessed to the contributing member who has
terminated health coverage before the association makes the annual determination of each
contributing member's liability as required under this section.
deleted text end

In the event that the deleted text begin contributing member deleted text end new text begin health plan company new text end is terminating health
coverage because of a loss of health care providers, the commissioner may review whether
or not the special assessment established under this subdivision will have an adverse
impact on the deleted text begin contributing member deleted text end new text begin health plan company new text end or its enrollees or insureds,
including but not limited to causing the deleted text begin contributing member deleted text end new text begin health plan company new text end to
fall below statutory net worth requirements. If the commissioner determines that the
special assessment would have an adverse impact on the deleted text begin contributing member deleted text end new text begin health
plan company new text end or its enrollees or insureds, the commissioner may adjust the amount of
the special assessment, or establish alternative payment arrangements to the state plan.
For health maintenance organizations regulated under chapter 62D, the commissioner of
health shall make the determination regarding any adjustment in the special assessment
and shall transmit that determination to the commissioner of commerce.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 9.

Minnesota Statutes 2008, section 62E.11, subdivision 10, is amended to read:

Subd. 10.

Termination of individual plan without replacement coverage.

Any
deleted text begin contributing members deleted text end new text begin health plan company new text end who have terminated individual health plans
and do not provide or arrange for replacement coverage that meets the requirements of
section 62D.121, and whose former insureds or enrollees enroll in the state comprehensive
health insurance plan with a waiver of the preexisting conditions pursuant to section
62E.14, subdivisions 1, paragraph (d), and 6, will be liable for the costs of any preexisting
conditions of their former enrollees or insureds treated during the first six months of
coverage under the state plan. deleted text begin The liability for preexisting conditions will be assessed
before the association makes the annual determination of each contributing member's
liability as required under this section. deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 10.

Minnesota Statutes 2008, section 62E.13, subdivision 2, is amended to read:

Subd. 2.

Selection of writing carrier.

The association may deleted text begin select policies and
contracts, or parts thereof, submitted by a member or members of the association, or by
the association or others, to deleted text end develop specifications for bids from any entity which wishes
to be selected as a writing carrier to administer the state plan. The selection of the writing
carrier shall be based upon criteria established by the board of directors of the association
and approved by the commissioner. The criteria shall outline specific qualifications
that an entity must satisfy in order to be selected and, at a minimum, shall include the
entity's proven ability to handle large group accident and health insurance cases, efficient
claim paying capacity, and the estimate of total charges for administering the plan. The
association may select separate writing carriers for the two types of qualified plans and the
$2,000, $5,000, and $10,000 deductible plans, the Medicare supplement plans, and the
health maintenance organization contract.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 11.

Minnesota Statutes 2008, section 62E.13, subdivision 3a, is amended to read:

Subd. 3a.

Extension of writing carrier contract.

Subject to the approval of the
commissioner, and subject to the consent of the writing carrier, the association may
extend the effective writing carrier contract for a period not to exceed three years, if the
association and the commissioner determine that it would be in the best interest of the
association's enrollees and deleted text begin contributing members deleted text end new text begin of the state new text end . This subdivision applies
notwithstanding anything to the contrary in subdivisions 2 and 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 12.

Minnesota Statutes 2008, section 62E.13, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Appropriation. new text end

new text begin An amount sufficient to offset any deficit of the
association for the fiscal year is appropriated from the health care access fund to the
commissioner of commerce for payment to the association for that purpose.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 13.

Minnesota Statutes 2008, section 62E.14, subdivision 1, is amended to read:

Subdivision 1.

Application, contents.

The comprehensive health insurance plan
shall be open for enrollment by eligible persons. An eligible person shall enroll by
submission of an application to the writing carrier. The application must provide the
following:

deleted text begin (a) deleted text end new text begin (1) new text end name, address, age, list of residences for the immediately preceding six
months and length of time at current residence of the applicant;

deleted text begin (b) deleted text end new text begin (2) new text end name, address, and age of spouse and children if any, if they are to be insured;

deleted text begin (c) deleted text end new text begin (3) new text end evidence of rejection, a requirement of restrictive riders, a rate up, or a
preexisting conditions limitation on a qualified plan, the effect of which is to substantially
reduce coverage from that received by a person considered a standard risk, by at least
one deleted text begin association member deleted text end new text begin health plan company new text end within six months of the date of the
application, or other eligibility requirements adopted by rule by the commissioner which
are not inconsistent with this chapter and which evidence that a person is unable to
obtain coverage substantially similar to that which may be obtained by a person who is
considered a standard risk;

deleted text begin (d) deleted text end new text begin (4) new text end if the applicant has been terminated from individual health coverage which
does not provide replacement coverage, evidence that no replacement coverage that
meets the requirements of section 62D.121 was offered, and evidence of termination of
individual health coverage by an insurer, nonprofit health service plan corporation, or
health maintenance organization, provided that the contract or policy has been terminated
for reasons other than (1) failure to pay the charge for health care coverage; (2) failure to
make co-payments required by the health care plan; (3) enrollee moving out of the area
served; or (4) a materially false statement or misrepresentation by the enrollee in the
application for the terminated contract or policy; and

deleted text begin (e) deleted text end new text begin (5) new text end a designation of the coverage desired.

An eligible person may not purchase more than one policy from the state plan. Upon
ceasing to be a resident of Minnesota a person is no longer eligible to purchase or renew
coverage under the state plan, except as required by state or federal law with respect to
renewal of Medicare supplement coverage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 14.

Minnesota Statutes 2008, section 62E.14, subdivision 6, is amended to read:

Subd. 6.

Termination of individual policy or contract.

A Minnesota resident
who holds an individual health maintenance contract, individual nonprofit health service
corporation contract, or an individual insurance policy previously approved by the
commissioners of health or commerce, may enroll in the comprehensive health insurance
plan with a waiver of the preexisting condition as described in subdivision 3, without
interruption in coverage, provided (1) no replacement coverage that meets the requirements
of section 62D.121 was offered by the deleted text begin contributing member deleted text end new text begin health plan company new text end , and
(2) the policy or contract has been terminated for reasons other than (a) nonpayment of
premium; (b) failure to make co-payments required by the health care plan; (c) moving out
of the area served; or (d) a materially false statement or misrepresentation by the enrollee
in the application for the terminated policy or contract; and, provided further, that the
option to enroll in the plan is exercised by submitting an application that is received by the
writing carrier no later than 90 days after termination of the existing policy or contract.

Coverage allowed under this section is effective when the contract or policy is
terminated and the enrollee has submitted the proper application that is received within the
time period stated in this subdivision and paid the required premium or fee.

Expenses incurred from the preexisting conditions of individuals enrolled in the state
plan under this subdivision must be paid by the deleted text begin contributing member deleted text end new text begin health plan company new text end
canceling coverage as set forth in section 62E.11, subdivision 10.

The application must include evidence of termination of the existing policy or
certificate as required in subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 15.

Minnesota Statutes 2008, section 295.52, is amended to read:

295.52 TAXES IMPOSED.

Subdivision 1.

Hospital tax.

A tax is imposed on each hospital equal to deleted text begin two deleted text end new text begin ....... new text end
percent of its gross revenues.

Subd. 1a.

Surgical center tax.

A tax is imposed on each surgical center equal
to deleted text begin two deleted text end new text begin ....... new text end percent of its gross revenues.

Subd. 2.

Provider tax.

A tax is imposed on each health care provider equal to deleted text begin two deleted text end new text begin
....... new text end percent of its gross revenues.

Subd. 3.

Wholesale drug distributor tax.

A tax is imposed on each wholesale drug
distributor equal to deleted text begin two deleted text end new text begin ....... new text end percent of its gross revenues.

Subd. 4.

Use tax; legend drugs.

(a) A person that receives legend drugs for
resale or use in Minnesota, other than from a wholesale drug distributor that is subject to
tax under subdivision 3, is subject to a tax equal to the price paid for the legend drugs
multiplied by the tax percentage specified in this section. Liability for the tax is incurred
when legend drugs are received or delivered in Minnesota by the person.

(b) A tax imposed under this subdivision does not apply to purchases by an
individual for personal consumption.

Subd. 4a.

Tax collection.

A wholesale drug distributor with nexus in Minnesota,
who is not subject to tax under subdivision 3, on all or a particular transaction is required
to collect the tax imposed under subdivision 4, from the purchaser of the drugs and
give the purchaser a receipt for the tax paid. The tax collected shall be remitted to the
commissioner in the manner prescribed by section 295.55, subdivision 3.

Subd. 5.

Volunteer ambulance services.

Volunteer ambulance services are
not subject to the tax under this section. For purposes of this requirement, "volunteer
ambulance service" means an ambulance service in which all of the individuals whose
primary responsibility is direct patient care meet the definition of volunteer under section
144E.001, subdivision 15. The ambulance service may employ administrative and support
staff, and remain eligible for this exemption, if the primary responsibility of these staff
is not direct patient care.

Subd. 6.

Hearing aids and prescription eyewear.

The tax liability of a person who
meets the definition of a health care provider solely because the person sells or repairs
hearing aids and related equipment or prescription eyewear is limited to the gross revenues
received from the sale or repair of these items.

Subd. 7.

Tax reduction.

Notwithstanding subdivisions 1, 1a, 2, 3, and 4, the tax
imposed under this section equals for calendar years 1998 to 2003, 1.5 percent of the gross
revenues received on or after January 1, 1998, and before January 1, 2004.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 16.

Minnesota Statutes 2008, section 295.581, is amended to read:

295.581 PROHIBITION ON NON-MINNESOTACARE TRANSFERS FROM
FUND.

Notwithstanding any law to the contrary, and notwithstanding section 645.33, money
in the health care access fund shall be appropriated only for purposes that are consistent
with past and current MinnesotaCare appropriations in Laws 1992, chapter 549; Laws
1993, chapter 345; Laws 1994, chapter 625; and Laws 1995, chapter 234, deleted text begin or deleted text end for initiatives
that are part of the section 1115 of the Social Security Act health care reform waiver
submitted to the federal Centers for Medicare and Medicaid Services by the commissioner
of human services as appropriated in Laws 1995, chapter 234 new text begin ; or for use under section
62E.13, subdivision 12 new text end .

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 17. new text begin APPROPRIATION.
new text end

new text begin $....... is appropriated from the health care access fund to the commissioner of
commerce to offset the deficit in the Minnesota Comprehensive Health Association
program for the second half of fiscal year 2011. Any amount not expended in fiscal year
2011 may be carried over to fiscal year 2012 and is available until spent. Beginning for the
2012-2013 fiscal biennium, the commissioner of commerce shall include estimates of the
cost of the Minnesota Comprehensive Health Association deficits in the commissioner's
submissions under Minnesota Statutes, section 16A.10, and the governor shall include
recommendations on it in the governor's budget submission to the legislature under
Minnesota Statutes, section 16A.11.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end

Sec. 18. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2008, sections 62E.02, subdivision 23; 62E.11, subdivisions 5, 6,
and 13; and 62E.13, subdivision 1, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end