1.1                          A bill for an act 
  1.2             relating to health; changing health plan company 
  1.3             regulation provisions; establishing a prescription 
  1.4             drug discount program; changing provisions in the 
  1.5             Minnesota provider tax and tobacco tax; imposing a 
  1.6             limit on punitive damages for health care provider 
  1.7             malpractice; appropriating money; amending Minnesota 
  1.8             Statutes 2000, sections 62A.02, subdivisions 3, 4a, 
  1.9             5a, by adding a subdivision; 62A.021, subdivision 1; 
  1.10            62C.01; 62C.02, subdivision 6; 62D.02, subdivisions 4, 
  1.11            8; 62D.03, subdivision 1; 62D.04, subdivision 1; 
  1.12            295.52, subdivisions 1, 1a, 2, 3; 297F.05, 
  1.13            subdivisions 1, 3; 297F.08, subdivision 7; 297F.10; 
  1.14            549.20, by adding a subdivision; proposing coding for 
  1.15            new law in Minnesota Statutes, chapters 62Q; 256; 
  1.16            repealing Minnesota Statutes 2000, sections 62A.02, 
  1.17            subdivision 2; 62A.309; Minnesota Statutes 2001 
  1.18            Supplement, section 295.52, subdivision 7. 
  1.19  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.20                             ARTICLE 1 
  1.21                   HEALTH PLAN COMPANY REGULATION 
  1.22     Section 1.  Minnesota Statutes 2000, section 62A.02, is 
  1.23  amended by adding a subdivision to read: 
  1.24     Subd. 1a.  [DEFINITIONS.] For the purpose of this section, 
  1.25  the following definitions apply: 
  1.26     (a) "Excessive" means a rate that is likely to produce a 
  1.27  long-term profit that is unreasonably high for the insurance 
  1.28  provided. 
  1.29     (b) "Inadequate" means a rate that is unreasonably low for 
  1.30  the insurance provided and the continued use of which endangers 
  1.31  the solvency of the health plan using the rate or will have the 
  1.32  effect of substantially lessening competition or creating a 
  2.1   monopoly for any health plan. 
  2.2      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  2.3   following final enactment. 
  2.4      Sec. 2.  Minnesota Statutes 2000, section 62A.02, 
  2.5   subdivision 3, is amended to read: 
  2.6      Subd. 3.  [STANDARDS FOR APPROVAL AND DISAPPROVAL.] The 
  2.7   commissioner shall, within ~~60~~ 30 days after the filing of any 
  2.8   form or rate, approve or disapprove the form or rate.  A rate or 
  2.9   form filing under this section may be used on or after the date 
  2.10  of filing with the commissioner.  Forms or rates that are not 
  2.11  approved or disapproved within the 30-day time period are deemed 
  2.12  approved.  The commissioner may disapprove forms or rates for 
  2.13  the following reasons: 
  2.14     (1) if the benefits provided are not reasonable in relation 
  2.15  to the premium charged; 
  2.16     (2) if it contains a provision or provisions which are 
  2.17  unjust, unfair, inequitable, misleading, deceptive or encourage 
  2.18  misrepresentation of the health plan form, or otherwise does not 
  2.19  comply with this chapter, chapter 62L, or chapter 72A; 
  2.20     (3) if the proposed premium rate is excessive or ~~not~~ 
  2.21  ~~adequate~~ inadequate; or 
  2.22     (4) the actuarial reasons and data submitted do not justify 
  2.23  the rate.  
  2.24     The party proposing a rate has the burden of proving by a 
  2.25  preponderance of the evidence that it does not violate this 
  2.26  subdivision.  
  2.27     ~~In determining the reasonableness of a rate, the~~ 
  2.28  ~~commissioner shall also review all administrative contracts,~~ 
  2.29  ~~service contracts, and other agreements to determine the~~ 
  2.30  ~~reasonableness of the cost of the contracts or agreement and~~ 
  2.31  ~~effect of the contracts on the rate.  If the commissioner~~ 
  2.32  ~~determines that a contract or agreement is not reasonable, the~~ 
  2.33  ~~commissioner shall disapprove any rate that reflects any~~ 
  2.34  ~~unreasonable cost arising out of the contract or agreement.  The~~ 
  2.35  ~~commissioner may require any information that the commissioner~~ 
  2.36  ~~deems necessary to determine the reasonableness of the cost.~~ 
  3.1      ~~For the purposes of this subdivision, the commissioner~~ 
  3.2   ~~shall establish by rule a schedule of minimum anticipated loss~~ 
  3.3   ~~ratios which shall be based on (i) the type or types of coverage~~ 
  3.4   ~~provided, (ii) whether the policy is for group or individual~~ 
  3.5   ~~coverage, and (iii) the size of the group for group policies.~~  
  3.6   ~~Except for individual policies of disability or income~~ 
  3.7   ~~protection insurance, the minimum anticipated loss ratio shall~~ 
  3.8   ~~not be less than 50 percent after the first year that a policy~~ 
  3.9   ~~is in force.  All applicants for a policy shall be informed in~~ 
  3.10  ~~writing at the time of application of the anticipated loss ratio~~ 
  3.11  ~~of the policy.  "Anticipated loss ratio" means the ratio at the~~ 
  3.12  ~~time of filing, at the time of notice of withdrawal under~~ 
  3.13  ~~subdivision 4a, or at the time of subsequent rate revision of~~ 
  3.14  ~~the present value of all expected future benefits, excluding~~ 
  3.15  ~~dividends, to the present value of all expected future premiums.~~ 
  3.16     ~~If the commissioner notifies a health carrier that has~~ 
  3.17  ~~filed any form or rate that it does not comply with this~~ 
  3.18  ~~chapter, chapter 62L, or chapter 72A, it shall be unlawful for~~ 
  3.19  ~~the health carrier to issue or use the form or rate.  In the~~ 
  3.20  ~~notice the commissioner shall specify the reasons for~~ 
  3.21  ~~disapproval and state that a hearing will be granted within 20~~ 
  3.22  ~~days after request in writing by the health carrier.~~  
  3.23     The ~~60-day~~ 30-day period within which the commissioner is 
  3.24  to approve or disapprove the form or rate does not begin to run 
  3.25  until a complete filing of all data and materials required by 
  3.26  statute or initially requested by the commissioner has been 
  3.27  submitted.  
  3.28     However, if the supporting data is not filed within 30 days 
  3.29  after a request by the commissioner, the rate is not effective 
  3.30  and is presumed to be an excessive rate.  
  3.31     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  3.32  following final enactment. 
  3.33     Sec. 3.  Minnesota Statutes 2000, section 62A.02, 
  3.34  subdivision 4a, is amended to read: 
  3.35     Subd. 4a.  [DISAPPROVAL OR WITHDRAWAL OF APPROVAL.] ~~The~~ 
  3.36  ~~commissioner may, at any time after a 20-day written notice has~~ 
  4.1   ~~been given to the insurer, withdraw approval of any form or rate~~ 
  4.2   ~~that has previously been approved on any of the grounds stated~~ 
  4.3   ~~in this section.~~  (a) [FORMS.] Upon written notice to the health 
  4.4   plan, the commissioner may disapprove or withdraw approval of a 
  4.5   form if the form violates this section.  The notice shall 
  4.6   specify the objectionable provisions, state the reasons for the 
  4.7   commissioner's decision, and state that a hearing will be 
  4.8   granted in 20 days after the request in writing by the health 
  4.9   plan.  If the form is already legally in use by the health plan 
  4.10  in this state, the notice shall give the effective date of the 
  4.11  commissioner's disapproval which shall not be less than 30 days 
  4.12  subsequent to the delivery of the notice.  If the form is not 
  4.13  legally in use, the disapproval shall be effective immediately. 
  4.14     (b) [RATES.] Upon written notice to the health plan, the 
  4.15  commissioner may disapprove a rate that has not been approved or 
  4.16  deemed approved if the rate violates this section.  The notice 
  4.17  shall state the reasons for the commissioner's decision, and 
  4.18  state that a hearing will be granted in 20 days after a written 
  4.19  request by the health plan for a hearing.  At any time, the 
  4.20  commissioner, after a hearing for which at least 30 days' notice 
  4.21  has been given, may withdraw approval of rates deemed approved 
  4.22  under this section and may order an appropriate refund or a 
  4.23  future premium credit to policyholders.  The notice of a hearing 
  4.24  to consider the withdrawal of approval must specify the matters 
  4.25  to be considered at the hearing.  The health plan may waive the 
  4.26  right to a hearing under this paragraph. 
  4.27     (c) [GENERAL REQUIREMENTS.] It is unlawful for the health 
  4.28  carrier to issue a form or rate or use it in connection with any 
  4.29  health plan after the effective date of the withdrawal of 
  4.30  approval.  ~~The notice of withdrawal of approval must advise the~~ 
  4.31  ~~health carrier of the right to a hearing under the contested~~ 
  4.32  ~~case procedures of chapter 14, and must specify the matters to~~ 
  4.33  ~~be considered at the hearing.~~  
  4.34     The commissioner may request a health carrier to provide 
  4.35  actuarial reasons and data, as well as other information, needed 
  4.36  to determine if a previously approved rate continues to satisfy 
  5.1   the requirements of this section.  If the requested information 
  5.2   is not provided within 30 days after request by the 
  5.3   commissioner, the rate is presumed to be an excessive rate.  
  5.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  5.5   following final enactment.  
  5.6      Sec. 4.  Minnesota Statutes 2000, section 62A.02, 
  5.7   subdivision 5a, is amended to read: 
  5.8      Subd. 5a.  [HEARING.] ~~The~~ In the case of disapproval of a 
  5.9   form or rate or withdrawal of approval of a form, if the health 
  5.10  carrier ~~must request a hearing before the 20-day notice period~~ 
  5.11  ~~has ended, or~~ does not request a hearing before the 20-day 
  5.12  notice period has ended, the commissioner's order is final.  A 
  5.13  request for hearing stays the commissioner's order until the 
  5.14  commissioner notifies the health carrier of the result of the 
  5.15  hearing.  The commissioner's order may require the modification 
  5.16  of any rate or form and may require continued coverage to 
  5.17  persons covered under a health plan to which the disapproved 
  5.18  form or rate applies.  
  5.19     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  5.20  following final enactment.  
  5.21     Sec. 5.  Minnesota Statutes 2000, section 62A.021, 
  5.22  subdivision 1, is amended to read: 
  5.23     Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
  5.24  section 62A.02, subdivision 3, relating to loss ratios, health 
  5.25  care policies or certificates shall not be delivered or issued 
  5.26  for delivery to an individual or to a small employer as defined 
  5.27  in section 62L.02, unless the policies or certificates can be 
  5.28  expected, as estimated for the entire period for which rates are 
  5.29  computed to provide coverage, to return to Minnesota 
  5.30  policyholders and certificate holders in the form of aggregate 
  5.31  benefits not including anticipated refunds or credits, provided 
  5.32  under the policies or certificates, (1) at least ~~75~~ 60 percent 
  5.33  of the aggregate amount of premiums earned in the case of 
  5.34  policies issued in the small employer market, as defined in 
  5.35  section 62L.02, subdivision 27, calculated on an aggregate 
  5.36  basis; and (2) at least ~~65~~ 60 percent of the aggregate amount of 
  6.1   premiums earned in the case of each policy form or certificate 
  6.2   form issued in the individual market; calculated on the basis of 
  6.3   incurred claims experience or incurred health care expenses 
  6.4   where coverage is provided by a health maintenance organization 
  6.5   on a service rather than reimbursement basis and earned premiums 
  6.6   for the period and according to accepted actuarial principles 
  6.7   and practices.  Assessments by the reinsurance association 
  6.8   created in chapter 62L and all types of taxes, surcharges, or 
  6.9   assessments created by Laws 1992, chapter 549, or created on or 
  6.10  after April 23, 1992, are included in the calculation of 
  6.11  incurred claims experience or incurred health care expenses.  
  6.12  ~~The applicable percentage for policies and certificates issued~~ 
  6.13  ~~in the small employer market, as defined in section 62L.02,~~ 
  6.14  ~~increases by one percentage point on July 1 of each year,~~ 
  6.15  ~~beginning on July 1, 1994, until an 82 percent loss ratio is~~ 
  6.16  ~~reached on July 1, 2000.  The applicable percentage for policy~~ 
  6.17  ~~forms and certificate forms issued in the individual market~~ 
  6.18  ~~increases by one percentage point on July 1 of each year,~~ 
  6.19  ~~beginning on July 1, 1994, until a 72 percent loss ratio is~~ 
  6.20  ~~reached on July 1, 2000.  A health carrier that enters a market~~ 
  6.21  ~~after July 1, 1993, does not start at the beginning of the~~ 
  6.22  ~~phase-in schedule and must instead comply with the loss ratio~~ 
  6.23  ~~requirements applicable to other health carriers in that market~~ 
  6.24  ~~for each time period.~~  Premiums earned and claims incurred in 
  6.25  markets other than the small employer and individual markets are 
  6.26  not relevant for purposes of this section. 
  6.27     (b) All filings of rates and rating schedules shall 
  6.28  demonstrate that actual expected claims in relation to premiums 
  6.29  comply with the requirements of this section when combined with 
  6.30  actual experience to date.  Filings of rate revisions shall also 
  6.31  demonstrate that the anticipated loss ratio over the entire 
  6.32  future period for which the revised rates are computed to 
  6.33  provide coverage can be expected to meet the appropriate loss 
  6.34  ratio standards, and aggregate loss ratio from inception of the 
  6.35  policy form or certificate form shall equal or exceed the 
  6.36  appropriate loss ratio standards. 
  7.1      (c) A health carrier that issues health care policies and 
  7.2   certificates to individuals or to small employers, as defined in 
  7.3   section 62L.02, in this state shall file annually its rates, 
  7.4   rating schedule, and supporting documentation including ratios 
  7.5   of incurred losses to earned premiums by policy form or 
  7.6   certificate form duration for approval by the commissioner 
  7.7   according to the filing requirements and procedures prescribed 
  7.8   by the commissioner.  The supporting documentation shall also 
  7.9   demonstrate in accordance with actuarial standards of practice 
  7.10  using reasonable assumptions that the appropriate loss ratio 
  7.11  standards can be expected to be met over the entire period for 
  7.12  which rates are computed.  The demonstration shall exclude 
  7.13  active life reserves.  If the data submitted does not confirm 
  7.14  that the health carrier has satisfied the loss ratio 
  7.15  requirements of this section, the commissioner shall notify the 
  7.16  health carrier in writing of the deficiency.  The health carrier 
  7.17  shall have 30 days from the date of the commissioner's notice to 
  7.18  file amended rates that comply with this section.  If the health 
  7.19  carrier fails to file amended rates within the prescribed time, 
  7.20  the commissioner shall order that the health carrier's filed 
  7.21  rates for the nonconforming policy form or certificate form be 
  7.22  reduced to an amount that would have resulted in a loss ratio 
  7.23  that complied with this section had it been in effect for the 
  7.24  reporting period of the supplement.  The health carrier's 
  7.25  failure to file amended rates within the specified time or the 
  7.26  issuance of the commissioner's order amending the rates does not 
  7.27  preclude the health carrier from filing an amendment of its 
  7.28  rates at a later time.  The commissioner shall annually make the 
  7.29  submitted data available to the public at a cost not to exceed 
  7.30  the cost of copying.  The data must be compiled in a form useful 
  7.31  for consumers who wish to compare premium charges and loss 
  7.32  ratios. 
  7.33     (d) Each sale of a policy or certificate that does not 
  7.34  comply with the loss ratio requirements of this section is an 
  7.35  unfair or deceptive act or practice in the business of insurance 
  7.36  and is subject to the penalties in sections 72A.17 to 72A.32. 
  8.1      (e)(1) For purposes of this section, health care policies 
  8.2   issued as a result of solicitations of individuals through the 
  8.3   mail or mass media advertising, including both print and 
  8.4   broadcast advertising, shall be treated as individual policies. 
  8.5      (2) For purposes of this section, (i) "health care policy" 
  8.6   or "health care certificate" is a health plan as defined in 
  8.7   section 62A.011; and (ii) "health carrier" has the meaning given 
  8.8   in section 62A.011 and includes all health carriers delivering 
  8.9   or issuing for delivery health care policies or certificates in 
  8.10  this state or offering these policies or certificates to 
  8.11  residents of this state.  
  8.12     (f) ~~The loss ratio phase-in as described in paragraph (a)~~ 
  8.13  ~~does not apply to individual policies and small employer~~ 
  8.14  ~~policies issued by a health plan company that is assessed less~~ 
  8.15  ~~than three percent of the total annual amount assessed by the~~ 
  8.16  ~~Minnesota comprehensive health association.  These policies must~~ 
  8.17  ~~meet a 68 percent loss ratio for individual policies, a 71~~ 
  8.18  ~~percent loss ratio for small employer policies with fewer than~~ 
  8.19  ~~ten employees, and a 75 percent loss ratio for all other small~~ 
  8.20  ~~employer policies.~~ 
  8.21     ~~(g)~~ The commissioners of commerce and health shall each 
  8.22  annually issue a public report listing, by health plan company, 
  8.23  the actual loss ratios experienced in the individual and small 
  8.24  employer markets in this state by the health plan companies that 
  8.25  the commissioners respectively regulate.  The commissioners 
  8.26  shall coordinate release of these reports so as to release them 
  8.27  as a joint report or as separate reports issued the same day.  
  8.28  The report or reports shall be released no later than June 1 for 
  8.29  loss ratios experienced for the preceding calendar year.  Health 
  8.30  plan companies shall provide to the commissioners any 
  8.31  information requested by the commissioners for purposes of this 
  8.32  paragraph. 
  8.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  8.34  following final enactment.  
  8.35     Sec. 6.  Minnesota Statutes 2000, section 62C.01, is 
  8.36  amended to read: 
  9.1      62C.01 [~~NONPROFIT~~ HEALTH SERVICE PLAN CORPORATIONS ACT.] 
  9.2      Subdivision 1.  [CITATION.] Sections 62C.01 to 62C.23 may 
  9.3   be cited as the "~~Nonprofit~~ Health Service Plan Corporations Act."
  9.4      Subd. 2.  [PURPOSE.] It is the purpose and intent of Laws 
  9.5   1971, chapter 568 to promote a wider, more economical and timely 
  9.6   availability of hospital, medical-surgical, dental, and other 
  9.7   health services for the people of Minnesota, through ~~nonprofit,~~ 
  9.8   prepaid health service plans, and thereby advance public health 
  9.9   and the art and science of medical and health care within the 
  9.10  state, while reasonably regulating the formation, continuation, 
  9.11  operation, and termination of such service plans by 
  9.12  establishment and enforcement of reasonable and practical 
  9.13  standards of administration, investments, surplus and reserves.  
  9.14     Subd. 3.  [SCOPE.] Every foreign or domestic ~~nonprofit~~ 
  9.15  corporation organized for the purpose of establishing or 
  9.16  operating a health service plan in Minnesota whereby health 
  9.17  services are provided to subscribers to the plan under a 
  9.18  contract with the corporation shall be subject to and governed 
  9.19  by Laws 1971, chapter 568, and shall not be subject to the laws 
  9.20  of this state relating to insurance, except the gross premiums 
  9.21  tax provisions contained in chapter 297I and as otherwise 
  9.22  specifically provided.  Laws 1971, chapter 568 shall apply to 
  9.23  all health service plan corporations incorporated after August 
  9.24  1, 1971, and to all existing health service plan corporations, 
  9.25  except as otherwise provided.  Nothing in sections 62C.01 to 
  9.26  62C.23 shall apply to prepaid group practice plans.  A prepaid 
  9.27  group practice plan is any plan or arrangement other than a 
  9.28  service plan, whereby health services are rendered to certain 
  9.29  patients by providers who devote their professional effort 
  9.30  primarily to members or patients of the plan, and whereby the 
  9.31  recipients of health services pay for the services on a regular, 
  9.32  periodic basis, not on a fee for service basis.  
  9.33     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
  9.34  following final enactment.  
  9.35     Sec. 7.  Minnesota Statutes 2000, section 62C.02, 
  9.36  subdivision 6, is amended to read: 
 10.1      Subd. 6.  [SERVICE PLAN CORPORATION.] "Service plan 
 10.2   corporation" means a foreign or domestic ~~nonprofit~~ corporation 
 10.3   which contracts for health service or payment therefor for 
 10.4   subscribers pursuant to a service plan, in exchange for periodic 
 10.5   prepayments by or on behalf of subscribers.  An "existing 
 10.6   corporation" means a service plan association or corporation 
 10.7   legally in existence on August 1, 1971, and authorized to do 
 10.8   business in this state on that date.  
 10.9      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 10.10  following final enactment.  
 10.11     Sec. 8.  Minnesota Statutes 2000, section 62D.02, 
 10.12  subdivision 4, is amended to read: 
 10.13     Subd. 4.  [HEALTH MAINTENANCE ORGANIZATION.] (a) "Health 
 10.14  maintenance organization" means a ~~nonprofit~~ domestic or foreign 
 10.15  corporation ~~organized under chapter 317A~~, or a local 
 10.16  governmental unit as defined in subdivision 11, controlled and 
 10.17  operated as provided in sections 62D.01 to 62D.30, which 
 10.18  provides, either directly or through arrangements with providers 
 10.19  or other persons, comprehensive health maintenance services, or 
 10.20  arranges for the provision of these services, to enrollees on 
 10.21  the basis of a fixed prepaid sum without regard to the frequency 
 10.22  or extent of services furnished to any particular enrollee.  
 10.23     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 10.24  following final enactment.  
 10.25     Sec. 9.  Minnesota Statutes 2000, section 62D.02, 
 10.26  subdivision 8, is amended to read: 
 10.27     Subd. 8.  [HEALTH MAINTENANCE CONTRACT.] "Health 
 10.28  maintenance contract" means any contract whereby a health 
 10.29  maintenance organization agrees to provide comprehensive health 
 10.30  maintenance services to enrollees, provided that the contract 
 10.31  may contain reasonable enrollee ~~copayment~~ cost-sharing 
 10.32  provisions.  An individual or group health maintenance contract 
 10.33  may contain the copayment and deductible provisions specified in 
 10.34  this subdivision.  Copayment and deductible provisions in group 
 10.35  contracts shall not discriminate on the basis of age, sex, race, 
 10.36  length of enrollment in the plan, or economic status; and during 
 11.1   every open enrollment period in which all offered health benefit 
 11.2   plans, including those subject to the jurisdiction of the 
 11.3   commissioners of commerce or health, fully participate without 
 11.4   any underwriting restrictions, copayment and deductible 
 11.5   provisions shall not discriminate on the basis of preexisting 
 11.6   health status.  ~~In no event shall the sum of the annual~~ 
 11.7   ~~copayments and deductible exceed the maximum out-of-pocket~~ 
 11.8   ~~expenses allowable for a number three qualified plan under~~ 
 11.9   ~~section 62E.06, nor shall that sum exceed $5,000 per family.~~  
 11.10  The annual deductible must not exceed ~~$1,000~~ $5,000 per person 
 11.11  or $10,000 per family.  The annual deductible must not apply to 
 11.12  preventive health services as described in Minnesota Rules, part 
 11.13  4685.0801, subpart 8.  Where sections 62D.01 to 62D.30 permit a 
 11.14  health maintenance organization to contain reasonable copayment 
 11.15  provisions for preexisting health status, these provisions may 
 11.16  vary with respect to length of enrollment in the plan.  A health 
 11.17  maintenance organization may impose coinsurance expressed as 
 11.18  percentages, or flat fee copayments up to a maximum of 50 
 11.19  percent on the provider amount paid at the time the claim is 
 11.20  processed.  Any contract may provide for health care services in 
 11.21  addition to those set forth in subdivision 7. 
 11.22     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 11.23  following final enactment, and applies to health plan contracts 
 11.24  and policies issued or renewed on or after that date.  
 11.25     Sec. 10.  Minnesota Statutes 2000, section 62D.03, 
 11.26  subdivision 1, is amended to read: 
 11.27     Subdivision 1.  [CERTIFICATE OF AUTHORITY REQUIRED.] 
 11.28  Notwithstanding any law of this state to the contrary, any 
 11.29  ~~nonprofit~~ domestic or foreign corporation organized to do so or 
 11.30  a local governmental unit may apply to the commissioner of 
 11.31  health for a certificate of authority to establish and operate a 
 11.32  health maintenance organization in compliance with sections 
 11.33  62D.01 to 62D.30.  No person shall establish or operate a health 
 11.34  maintenance organization in this state, nor sell or offer to 
 11.35  sell, or solicit offers to purchase or receive advance or 
 11.36  periodic consideration in conjunction with a health maintenance 
 12.1   organization or health maintenance contract unless the 
 12.2   organization has a certificate of authority under sections 
 12.3   62D.01 to 62D.30. 
 12.4      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 12.5   following final enactment.  
 12.6      Sec. 11.  Minnesota Statutes 2000, section 62D.04, 
 12.7   subdivision 1, is amended to read: 
 12.8      Subdivision 1.  [APPLICATION REVIEW.] Upon receipt of an 
 12.9   application for a certificate of authority, the commissioner of 
 12.10  health shall determine whether the applicant for a certificate 
 12.11  of authority has: 
 12.12     (a) demonstrated the willingness and potential ability to 
 12.13  assure that health care services will be provided in such a 
 12.14  manner as to enhance and assure both the availability and 
 12.15  accessibility of adequate personnel and facilities; 
 12.16     (b) arrangements for an ongoing evaluation of the quality 
 12.17  of health care; 
 12.18     (c) a procedure to develop, compile, evaluate, and report 
 12.19  statistics relating to the cost of its operations, the pattern 
 12.20  of utilization of its services, the quality, availability and 
 12.21  accessibility of its services, and such other matters as may be 
 12.22  reasonably required by regulation of the commissioner of health; 
 12.23     (d) reasonable provisions for emergency and out of area 
 12.24  health care services; 
 12.25     (e) demonstrated that it is financially responsible and may 
 12.26  reasonably be expected to meet its obligations to enrollees and 
 12.27  prospective enrollees.  In making this determination, the 
 12.28  commissioner of health shall require the amounts of net worth 
 12.29  and working capital required in section 62D.042, the deposit 
 12.30  required in section 62D.041, and in addition shall consider: 
 12.31     (1) the financial soundness of its arrangements for health 
 12.32  care services and the proposed schedule of charges used in 
 12.33  connection therewith; 
 12.34     (2) arrangements which will guarantee for a reasonable 
 12.35  period of time the continued availability or payment of the cost 
 12.36  of health care services in the event of discontinuance of the 
 13.1   health maintenance organization; and 
 13.2      (3) agreements with providers for the provision of health 
 13.3   care services; 
 13.4      (f) demonstrated that it will assume full financial risk on 
 13.5   a prospective basis for the provision of comprehensive health 
 13.6   maintenance services, including hospital care; provided, 
 13.7   however, that the requirement in this paragraph shall not 
 13.8   prohibit the following: 
 13.9      (1) a health maintenance organization from obtaining 
 13.10  insurance or making other arrangements (i) for the cost of 
 13.11  providing to any enrollee comprehensive health maintenance 
 13.12  services, the aggregate value of which exceeds $5,000 in any 
 13.13  year, (ii) for the cost of providing comprehensive health care 
 13.14  services to its members on a nonelective emergency basis, or 
 13.15  while they are outside the area served by the organization, or 
 13.16  (iii) for not more than 95 percent of the amount by which the 
 13.17  health maintenance organization's costs for any of its fiscal 
 13.18  years exceed 105 percent of its income for such fiscal years; 
 13.19  and 
 13.20     (2) a health maintenance organization from having a 
 13.21  provision in a group health maintenance contract allowing an 
 13.22  adjustment of premiums paid based upon the actual health 
 13.23  services utilization of the enrollees covered under the 
 13.24  contract, except that at no time during the life of the contract 
 13.25  shall the contract holder fully self-insure the financial risk 
 13.26  of health care services delivered under the contract.  Risk 
 13.27  sharing arrangements shall be subject to the requirements of 
 13.28  sections 62D.01 to 62D.30; 
 13.29     (g) demonstrated that it has made provisions for and 
 13.30  adopted a conflict of interest policy applicable to all members 
 13.31  of the board of directors and the principal officers of the 
 13.32  health maintenance organization.  The conflict of interest 
 13.33  policy shall include the procedures described in section 
 13.34  302A.255, subdivisions 1 and 2, or 317A.255, subdivisions 1 and 
 13.35  2.  However, the commissioner is not precluded from finding that 
 13.36  a particular transaction is an unreasonable expense as described 
 14.1   in section 62D.19 even if the directors follow the required 
 14.2   procedures; and 
 14.3      (h) otherwise met the requirements of sections 62D.01 to 
 14.4   62D.30. 
 14.5      <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.6   following final enactment.  
 14.7      Sec. 12.  [62Q.735] [PAYMENT DISCLOSURE.] 
 14.8      A health plan company shall make available, through an 
 14.9   electronic data base that can be publicly accessed through the 
 14.10  Internet, provider-specific allowable payment rates for each 
 14.11  health care service covered under any health plan offered by the 
 14.12  health plan company.  A health plan company shall also provide 
 14.13  this information to individuals upon written request.  For 
 14.14  purposes of this section, "allowable payment" means the total 
 14.15  financial compensation, including details of any withhold or 
 14.16  settle-up payments, to be paid to a health care provider for 
 14.17  providing a health care service, as determined by the contract 
 14.18  between the health plan company and the provider. 
 14.19     Sec. 13.  [CONSUMER COST AWARENESS.] 
 14.20     The commissioner of health, in consultation with 
 14.21  representatives of consumers, health plan companies, and 
 14.22  employers, shall develop and promote policies to increase 
 14.23  consumer awareness of health care costs.  These policies shall 
 14.24  include, but are not limited to, nonsmoking and other healthy 
 14.25  lifestyle premium discounts or financial incentives, provision 
 14.26  of employer health care premium contribution information on 
 14.27  employee pay stubs, and financial incentives for enrollees to 
 14.28  report health care provider billing errors. 
 14.29     <b>[EFFECTIVE DATE.]</b> This section is effective the day 
 14.30  following final enactment.  
 14.31     Sec. 14.  [INSTRUCTION TO REVISOR.] 
 14.32     The revisor of statutes shall change the term "nonprofit 
 14.33  health service plan corporation" or similar terms to "health 
 14.34  service plan corporation" or similar terms wherever they appear 
 14.35  in Minnesota Statutes and Minnesota Rules in connection with 
 14.36  those entities regulated under Minnesota Statutes, chapter 62C. 
 15.1      Sec. 15.  [REPEALER.] 
 15.2      Subdivision 1.  [AUTOLOGOUS BONE MARROW 
 15.3   TRANSPLANTATION.] Minnesota Statutes 2000, section 62A.309, is 
 15.4   repealed effective the day following final enactment, and 
 15.5   applies to health plan contracts and policies issued or renewed 
 15.6   on or after that date. 
 15.7      Subd. 2.  [APPROVAL OF HEALTH PLAN FORMS.] Minnesota 
 15.8   Statutes 2000, section 62A.02, subdivision 2, is repealed 
 15.9   effective the day following final enactment. 
 15.10                             ARTICLE 2 
 15.11                PRESCRIPTION DRUG DISCOUNT PROGRAM. 
 15.12     Section 1.  [256.954] [PRESCRIPTION DRUG DISCOUNT PROGRAM.] 
 15.13     Subdivision 1.  [ESTABLISHMENT; ADMINISTRATION.] The 
 15.14  commissioner of human services shall establish and administer 
 15.15  the prescription drug discount program.  
 15.16     Subd. 2.  [COMMISSIONER'S AUTHORITY.] The commissioner 
 15.17  shall administer a drug rebate program for drugs purchased 
 15.18  according to the prescription drug discount program.  The 
 15.19  commissioner shall require a rebate agreement from all 
 15.20  manufacturers of covered drugs as defined in section 256B.0625, 
 15.21  subdivision 13.  For each drug, the amount of the rebate shall 
 15.22  be equal to the rebate as defined for purposes of the federal 
 15.23  rebate program in United States Code, title 42, section 
 15.24  1396r-8.  The rebate program shall utilize the terms and 
 15.25  conditions used for the federal rebate program established 
 15.26  according to section 1927 of title XIX of the federal Social 
 15.27  Security Act. 
 15.28     Subd. 3.  [DEFINITIONS.] For the purpose of this section, 
 15.29  the following terms have the meanings given them: 
 15.30     (a) "Commissioner" means the commissioner of human services.
 15.31     (b) "Manufacturer" means a manufacturer as defined in 
 15.32  section 151.44, paragraph (c). 
 15.33     (c) "Covered prescription drug" means a prescription drug 
 15.34  as defined in section 151.44, paragraph (d), that is covered 
 15.35  under medical assistance as described in section 256B.0625, 
 15.36  subdivision 13, and that is provided by a manufacturer that has 
 16.1   a fully executed rebate agreement with the commissioner under 
 16.2   this section and complies with that agreement. 
 16.3      (d) "Health carrier" means an insurance company licensed 
 16.4   under chapter 60A to offer, sell, or issue an individual or 
 16.5   group policy of accident and sickness insurance as defined in 
 16.6   section 62A.01; a nonprofit health service plan corporation 
 16.7   operating under chapter 62C; a health maintenance organization 
 16.8   operating under chapter 62D; a joint self-insurance employee 
 16.9   health plan operating under chapter 62H; a community integrated 
 16.10  systems network licensed under chapter 62N; a fraternal benefit 
 16.11  society operating under chapter 64B; and a self-funded health 
 16.12  plan under the Employee Retirement Income Security Act of 1974, 
 16.13  as amended. 
 16.14     (e) "Participating pharmacy" means a pharmacy as defined in 
 16.15  section 151.01, subdivision 2, that agrees to participate in the 
 16.16  prescription drug discount program. 
 16.17     (f) "Enrolled individual" means a person who is eligible 
 16.18  for the program under subdivision 4 and has enrolled in the 
 16.19  program according to subdivision 5. 
 16.20     Subd. 4.  [ELIGIBLE PERSONS.] To be eligible for the 
 16.21  program, an applicant must: 
 16.22     (1) be a permanent resident of Minnesota as defined in 
 16.23  section 256L.09, subdivision 4; 
 16.24     (2) not be enrolled in medical assistance, general 
 16.25  assistance medical care, MinnesotaCare, or the prescription drug 
 16.26  program under section 256.955; 
 16.27     (3) not be enrolled in and have currently available 
 16.28  prescription drug coverage under a health plan offered by a 
 16.29  health carrier; 
 16.30     (4) not be enrolled in and have currently available 
 16.31  prescription drug coverage under a Medicare supplement plan, as 
 16.32  defined in sections 62A.31 to 62A.44, or policies, contracts, or 
 16.33  certificates that supplement Medicare issued by health 
 16.34  maintenance organizations or those policies, contracts, or 
 16.35  certificates governed by section 1833 or 1876 of the federal 
 16.36  Social Security Act, United States Code, title 42, section 1395, 
 17.1   et. seq., as amended; and 
 17.2      (5) have a gross household income that does not exceed 250 
 17.3   percent of the federal poverty guidelines. 
 17.4      Subd. 5.  [APPLICATION PROCEDURE.] (a) Applications and 
 17.5   information on the program must be made available at county 
 17.6   social services agencies, health care provider offices, and 
 17.7   agencies and organizations serving senior citizens.  Individuals 
 17.8   shall submit applications and any information specified by the 
 17.9   commissioner as being necessary to verify eligibility directly 
 17.10  to the county social services agencies.  County social services 
 17.11  agencies shall determine an applicant's eligibility for the 
 17.12  program within 30 days from the date the application is 
 17.13  received.  Eligibility begins the month after approval. 
 17.14     (b) The commissioner shall develop an application form that 
 17.15  does not exceed one page in length and requires information 
 17.16  necessary to determine eligibility for the program. 
 17.17     Subd. 6.  [PARTICIPATING PHARMACY.] According to a valid 
 17.18  prescription, a participating pharmacy must sell a covered 
 17.19  prescription drug to an enrolled individual at the pharmacy's 
 17.20  usual and customary retail price, minus an amount that is equal 
 17.21  to the rebate amount described in subdivision 8, plus any 
 17.22  administrative fee and switch fee established by the 
 17.23  commissioner.  Each participating pharmacy shall provide the 
 17.24  commissioner with all information necessary to administer the 
 17.25  program, including, but not limited to, information on 
 17.26  prescription drug sales to enrolled individuals and usual and 
 17.27  customary retail prices. 
 17.28     Subd. 7.  [NOTIFICATION OF REBATE AMOUNT.] The commissioner 
 17.29  shall notify each drug manufacturer, each calendar quarter or 
 17.30  according to a schedule to be established by the commissioner, 
 17.31  of the amount of the rebate owed on the prescription drugs sold 
 17.32  by participating pharmacies to enrolled individuals. 
 17.33     Subd. 8.  [PROVISION OF REBATE.] To the extent that a 
 17.34  manufacturer's prescription drugs are prescribed to a citizen of 
 17.35  this state, the manufacturer must provide a rebate equal to the 
 17.36  rebate provided under the medical assistance program for any 
 18.1   prescription drug distributed by the manufacturer that is 
 18.2   purchased by an enrolled individual at a participating 
 18.3   pharmacy.  The manufacturer must provide full payment within 30 
 18.4   days of receipt of the state invoice for the rebate, or 
 18.5   according to a schedule to be established by the commissioner.  
 18.6   The commissioner shall deposit all rebates received into the 
 18.7   Minnesota prescription drug dedicated fund established under 
 18.8   this section.  The manufacturer must provide the commissioner 
 18.9   with any information necessary to verify the rebate determined 
 18.10  per drug. 
 18.11     Subd. 9.  [PAYMENT TO PHARMACIES.] The commissioner shall 
 18.12  distribute on a biweekly basis the amount collected under 
 18.13  subdivision 8 to each participating pharmacy based on the 
 18.14  prescription drugs sold by that pharmacy to enrolled 
 18.15  individuals, minus the amount of the administrative fee 
 18.16  established by the commissioner under subdivision 10. 
 18.17     Subd. 10.  [ADMINISTRATIVE FEE; SWITCH FEE.] The 
 18.18  commissioner may establish a reasonable administrative fee that 
 18.19  covers the commissioner's expenses for enrollment, processing 
 18.20  claims, and distributing rebates under this program to be paid 
 18.21  by enrolled individuals.  The commissioner shall establish a 
 18.22  reasonable switch fee that covers expenses incurred by 
 18.23  pharmacies in formatting for electronic submission claims for 
 18.24  prescription drugs sold to enrolled individuals. 
 18.25     Subd. 11.  [DEDICATED FUND.] (a) [CREATION.] The Minnesota 
 18.26  prescription drug dedicated fund is established as an account in 
 18.27  the state treasury.  The commissioner of finance shall credit to 
 18.28  the dedicated fund all rebates paid under subdivision 8, and any 
 18.29  appropriations or allocations designated for the fund.  The 
 18.30  commissioner of finance shall ensure that fund money is invested 
 18.31  under section 11A.25.  All money earned by the fund must be 
 18.32  credited to the fund.  The fund shall earn a proportionate share 
 18.33  of the total state annual investment income. 
 18.34     (b) [USE OF FUND.] Money in the fund is appropriated to the 
 18.35  commissioner of human services to reimburse participating 
 18.36  pharmacies for prescription drug discounts provided to enrolled 
 19.1   individuals under this section, to reimburse the commissioner of 
 19.2   human services for costs related to enrollment, processing 
 19.3   claims, distributing rebates, and for other reasonable 
 19.4   administrative costs related to administration of the 
 19.5   prescription drug discount program, and to repay the general 
 19.6   fund appropriation provided in section 2.  The commissioner must 
 19.7   administer the program so that the costs total no more than 
 19.8   funds appropriated plus the drug rebate proceeds.  
 19.9      Subd. 12.  [ENFORCEMENT.] (a) A violation of this section 
 19.10  shall be enforceable according to section 8.31. 
 19.11     (b) The remedies provided by this section are cumulative 
 19.12  and shall not be construed as restricting remedies otherwise 
 19.13  available against the same conduct under the common law or other 
 19.14  statutes of this state. 
 19.15     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 19.16     Sec. 2.  [APPROPRIATION.] 
 19.17     $....... is appropriated for the fiscal year ending June 
 19.18  30, 2003, from the general fund to the Minnesota prescription 
 19.19  drug dedicated fund established under the prescription drug 
 19.20  discount program. 
 19.21                             ARTICLE 3 
 19.22              MINNESOTACARE PROVIDER TAX; TOBACCO TAX 
 19.23     Section 1.  Minnesota Statutes 2000, section 295.52, 
 19.24  subdivision 1, is amended to read: 
 19.25     Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
 19.26  hospital equal to ~~two~~ one percent of its gross revenues. 
 19.27     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 19.28  2003, and applies to tax periods beginning on or after that date.
 19.29     Sec. 2.  Minnesota Statutes 2000, section 295.52, 
 19.30  subdivision 1a, is amended to read: 
 19.31     Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
 19.32  surgical center equal to ~~two~~ one percent of its gross revenues. 
 19.33     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 19.34  2003, and applies to tax periods beginning on or after that date.
 19.35     Sec. 3.  Minnesota Statutes 2000, section 295.52, 
 19.36  subdivision 2, is amended to read: 
 20.1      Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
 20.2   care provider equal to ~~two~~ one percent of its gross revenues. 
 20.3      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 20.4   2003, and applies to tax periods beginning on or after that date.
 20.5      Sec. 4.  Minnesota Statutes 2000, section 295.52, 
 20.6   subdivision 3, is amended to read: 
 20.7      Subd. 3.  [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is 
 20.8   imposed on each wholesale drug distributor equal to ~~two~~ one 
 20.9   percent of its gross revenues.  
 20.10     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 
 20.11  2003, and applies to tax periods beginning on or after that date.
 20.12     Sec. 5.  Minnesota Statutes 2000, section 297F.05, 
 20.13  subdivision 1, is amended to read: 
 20.14     Subdivision 1.  [RATES; CIGARETTES.] A tax is imposed upon 
 20.15  the sale of cigarettes in this state, upon having cigarettes in 
 20.16  possession in this state with intent to sell, upon any person 
 20.17  engaged in business as a distributor, and upon the use or 
 20.18  storage by consumers, at the following rates, subject to the 
 20.19  discount provided in this chapter: 
 20.20     (1) on cigarettes weighing not more than three pounds per 
 20.21  thousand, ~~24~~ 43 mills on each such cigarette; and 
 20.22     (2) on cigarettes weighing more than three pounds per 
 20.23  thousand, ~~48~~ 86 mills on each such cigarette. 
 20.24     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 20.25     Sec. 6.  Minnesota Statutes 2000, section 297F.05, 
 20.26  subdivision 3, is amended to read: 
 20.27     Subd. 3.  [RATES; TOBACCO PRODUCTS.] A tax is imposed upon 
 20.28  all tobacco products in this state and upon any person engaged 
 20.29  in business as a distributor, at the rate of ~~35~~ 63 percent of 
 20.30  the wholesale sales price of the tobacco products.  The tax is 
 20.31  imposed at the time the distributor: 
 20.32     (1) brings, or causes to be brought, into this state from 
 20.33  outside the state tobacco products for sale; 
 20.34     (2) makes, manufactures, or fabricates tobacco products in 
 20.35  this state for sale in this state; or 
 20.36     (3) ships or transports tobacco products to retailers in 
 21.1   this state, to be sold by those retailers. 
 21.2      <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 21.3      Sec. 7.  Minnesota Statutes 2000, section 297F.08, 
 21.4   subdivision 7, is amended to read: 
 21.5      Subd. 7.  [PRICE OF STAMPS.] The commissioner shall sell 
 21.6   stamps to any person licensed as a distributor at a discount of 
 21.7   ~~1.0~~ 0.8 percent from the face amount of the stamps for the first 
 21.8   ~~$1,500,000~~ $1,800,000 of such stamps purchased in any fiscal 
 21.9   year; and at a discount of ~~0.6~~ 0.33 percent on the remainder of 
 21.10  such stamps purchased in any fiscal year.  The commissioner 
 21.11  shall not sell stamps to any other person.  The commissioner may 
 21.12  prescribe the method of shipment of the stamps to the 
 21.13  distributor as well as the quantities of stamps purchased. 
 21.14     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 21.15     Sec. 8.  Minnesota Statutes 2000, section 297F.10, is 
 21.16  amended to read: 
 21.17     297F.10 [DEPOSIT OF PROCEEDS.] 
 21.18     Subdivision 1.  [TAX AND USE TAX ON CIGARETTES.] Revenue 
 21.19  received from cigarette taxes, as well as related penalties, 
 21.20  interest, license fees, and miscellaneous sources of revenue 
 21.21  shall be deposited by the commissioner in the state treasury and 
 21.22  credited as follows: 
 21.23     (a) first to the general obligation special tax bond debt 
 21.24  service account in each fiscal year the amount required to 
 21.25  increase the balance on hand in the account on each December 1 
 21.26  to an amount equal to the full amount of principal and interest 
 21.27  to come due on all outstanding bonds whose debt service is 
 21.28  payable primarily from the proceeds of the tax to and including 
 21.29  the second following July 1; and 
 21.30     (b) after the requirements of paragraph (a) have been met: 
 21.31     (1) the revenue produced by one mill of the tax on 
 21.32  cigarettes weighing not more than three pounds a thousand and 
 21.33  two mills of the tax on cigarettes weighing more than three 
 21.34  pounds a thousand must be credited to the Minnesota future 
 21.35  resources fund; and 
 21.36     (2) the balance of the revenues derived from taxes, 
 22.1   penalties, and interest (under this chapter) and from license 
 22.2   fees and miscellaneous sources of revenue shall be credited to 
 22.3   the general fund, except that the portion of tax revenue 
 22.4   resulting from the increase in the tax on cigarettes weighing 
 22.5   not more than three pounds per thousand from 24 to 43 mills and 
 22.6   the increase in the tax on cigarettes weighing more than three 
 22.7   pounds per thousand from 48 to 86 mills shall be deposited in 
 22.8   the health care access fund. 
 22.9      Subd. 2.  [TAX AND USE TAX ON TOBACCO PRODUCTS.] Revenue 
 22.10  received from taxes on tobacco products, as well as related 
 22.11  penalties, interest, and license fees shall be deposited by the 
 22.12  commissioner in the state treasury and credited to the general 
 22.13  fund, except that the portion of tax revenue resulting from the 
 22.14  increase in the tax on the wholesale sales price of tobacco 
 22.15  products from 35 to 63 percent shall be deposited in the health 
 22.16  care access fund. 
 22.17     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 22.18     Sec. 9.  [FLOOR STOCKS TAX.] 
 22.19     Subdivision 1.  [CIGARETTES.] (a) A floor stocks tax is 
 22.20  imposed on every person engaged in business in this state as a 
 22.21  distributor, retailer, subjobber, vendor, manufacturer, or 
 22.22  manufacturer's representative of cigarettes, on the stamped 
 22.23  cigarettes and unaffixed stamps in the person's possession or 
 22.24  under the person's control at 12:01 a.m. on January 1, 2003.  
 22.25  The tax is imposed at the following rates, subject to the 
 22.26  discounts in Minnesota Statutes, section 297F.08, subdivision 7: 
 22.27     (1) on cigarettes weighing not more than three pounds per 
 22.28  thousand, 19 mills on each cigarette; and 
 22.29     (2) on cigarettes weighing more than three pounds per 
 22.30  thousand, 38 mills on each cigarette. 
 22.31     (b) Each distributor, by January 1, 2003, shall file a 
 22.32  report with the commissioner of revenue, in the form the 
 22.33  commissioner prescribes, showing the stamped cigarettes and 
 22.34  unaffixed stamps on hand at 12:01 a.m. on January 1, 2003, and 
 22.35  the amount of tax due on the cigarettes and unaffixed stamps.  
 22.36  The tax imposed by this section is due and payable by February 
 23.1   1, 2003, and after that date bears interest as provided in 
 23.2   Minnesota Statutes, section 270.75.  Each retailer, subjobber, 
 23.3   vendor, manufacturer, or manufacturer's representative shall 
 23.4   file a return with the commissioner, in the form the 
 23.5   commissioner prescribes, showing the cigarettes on hand at 12:01 
 23.6   a.m. on January 1, 2003, and pay the tax due on them by February 
 23.7   1, 2003.  Tax not paid by the due date bears interest as 
 23.8   provided in Minnesota Statutes, section 270.75. 
 23.9      Subd. 2.  [TOBACCO PRODUCTS.] A floor stocks tax is imposed 
 23.10  on every person engaged in business in this state as a 
 23.11  distributor of tobacco products, at the rate of 28 percent of 
 23.12  the wholesale sales price of each tobacco product in the 
 23.13  person's possession or under the person's control at 12:01 a.m. 
 23.14  on January 1, 2003, and the amount of tax due on them.  The tax 
 23.15  imposed by this section, less the discount provided in Minnesota 
 23.16  Statutes, section 297F.09, subdivision 2, is due and payable by 
 23.17  February 1, 2003, and thereafter bears interest as provided in 
 23.18  Minnesota Statutes, section 270.75. 
 23.19     Subd. 3.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
 23.20  section is subject to the audit, assessment, and collection 
 23.21  provisions applicable to the taxes imposed under Minnesota 
 23.22  Statutes, chapter 297F.  The commissioner of revenue shall 
 23.23  deposit the revenue from the tax imposed under this section in 
 23.24  the health care access fund in the state treasury. 
 23.25     <b>[EFFECTIVE DATE.]</b> This section is effective January 1, 2003.
 23.26     Sec. 10.  [REPEALER; TEMPORARY RATE FOR PROVIDER TAX.] 
 23.27     Minnesota Statutes 2001 Supplement, section 295.52, 
 23.28  subdivision 7, is repealed effective January 1, 2003. 
 23.29                             ARTICLE 4 
 23.30                       PUNITIVE DAMAGE LIMIT 
 23.31     Section 1.  Minnesota Statutes 2000, section 549.20, is 
 23.32  amended by adding a subdivision to read: 
 23.33     Subd. 4a.  [PUNITIVE DAMAGE LIMIT; HEALTH CARE PROVIDER 
 23.34  MALPRACTICE.] (a) For purposes of this subdivision, "health care 
 23.35  provider" means a physician, surgeon, dentist, occupational 
 23.36  therapist, and other health care professionals as defined in 
 24.1   section 145.61, hospital, or treatment facility. 
 24.2      (b) In an action by a patient or former patient against a 
 24.3   health care provider alleging malpractice, error, mistake, or 
 24.4   failure to cure, whether based on a contract or tort, the amount 
 24.5   of punitive damages that may be awarded must not exceed five 
 24.6   times the amount of compensatory damages awarded in the action. 
 24.7      <b>[EFFECTIVE DATE.]</b> This section is effective August 1, 2002, 
 24.8   and applies to actions commenced on or after that date.