1.1                          A bill for an act 
  1.2             relating to health; creating a dental health 
  1.3             maintenance organization; amending Minnesota Statutes 
  1.4             1994, sections 60B.15; 60B.20; 62D.02, subdivision 4, 
  1.5             and by adding a subdivision; 62D.03, subdivisions 3 
  1.6             and 4; 62D.04, subdivisions 1 and 3; 62D.045, 
  1.7             subdivision 1; 62D.05, subdivision 3; 62D.07, 
  1.8             subdivision 3; 62D.09, subdivision 1; 62D.10, 
  1.9             subdivision 3; 62D.101, subdivision 2; 62D.103; 
  1.10            62D.104; 62D.105, subdivision 1; 62D.12, subdivisions 
  1.11            1a and 9; 62D.121, subdivision 3; 62D.15, subdivision 
  1.12            1; 62D.17, subdivision 4; 62D.20, subdivision 1; 
  1.13            62D.22, subdivision 3; and 62E.02, subdivision 3; 
  1.14            Minnesota Statutes 1995 Supplement, sections 62D.02, 
  1.15            subdivision 8; 62D.044; 62D.181, subdivision 2; and 
  1.16            256.9657, subdivision 3. 
  1.17  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.18     Section 1.  Minnesota Statutes 1994, section 60B.15, is 
  1.19  amended to read: 
  1.20     60B.15 [GROUNDS FOR REHABILITATION.] 
  1.21     The commissioner may apply by verified petition to the 
  1.22  district court for Ramsey county or for the county in which the 
  1.23  principal office of the insurer is located for an order 
  1.24  directing the commissioner to rehabilitate a domestic insurer or 
  1.25  an alien insurer domiciled in this state on any one or more of 
  1.26  the following grounds: 
  1.27     (1) Any ground on which the commissioner may apply for an 
  1.28  order of liquidation under section 60B.20, whenever the 
  1.29  commissioner believes that the insurer may be successfully 
  1.30  rehabilitated without substantial increase in the risk of loss 
  1.31  to creditors of the insurer, its policyholders or to the public; 
  2.1      (2) That the commissioner has reasonable cause to believe 
  2.2   that there has been theft from the insurer, wrongful 
  2.3   sequestration or diversion of the insurer's assets, forgery or 
  2.4   fraud affecting the insurer or other illegal conduct in, by or 
  2.5   with respect to the insurer, which endanger assets in an amount 
  2.6   threatening insolvency of the insurer; 
  2.7      (3) That substantial and unexplained discrepancies exist 
  2.8   between the insurer's records and the most recent annual report 
  2.9   or other official company reports; 
  2.10     (4) That the insurer, after written demand by the 
  2.11  commissioner, has failed to remove any person who in fact has 
  2.12  executive authority in the insurer, whether an officer, manager, 
  2.13  general agent, employee, or other person, if the person has been 
  2.14  found by the commissioner after notice and hearing to be 
  2.15  dishonest or untrustworthy in a way affecting the insurer's 
  2.16  business such as is the basis for action under section 60A.052; 
  2.17     (5) That control of the insurer, whether by stock ownership 
  2.18  or otherwise, and whether direct or indirect, is in one or more 
  2.19  persons found by the commissioner after notice and hearing to be 
  2.20  dishonest or untrustworthy such as is the basis for action under 
  2.21  section 60A.052; 
  2.22     (6) That the insurer, after written demand by the 
  2.23  commissioner, has failed within a reasonable period of time to 
  2.24  terminate the employment and status and all influences on 
  2.25  management of any person who in fact has executive authority in 
  2.26  the insurer, whether an officer, manager, general agent, 
  2.27  employee or other person if the person has refused to submit to 
  2.28  lawful examination under oath by the commissioner concerning the 
  2.29  affairs of the insurer, whether in this state or elsewhere; 
  2.30     (7) That after lawful written demand by the commissioner 
  2.31  the insurer has failed to submit promptly any of its own 
  2.32  property, books, accounts, documents, or other records, or those 
  2.33  of any subsidiary or related company within the control of the 
  2.34  insurer, or those of any person having executive authority in 
  2.35  the insurer so far as they pertain to the insurer, to reasonable 
  2.36  inspection or examination by the commissioner or an authorized 
  3.1   representative.  If the insurer is unable to submit the 
  3.2   property, books, accounts, documents, or other records of a 
  3.3   person having executive authority in the insurer, it shall be 
  3.4   excused from doing so if it promptly and effectively terminates 
  3.5   the relationship of the person to the insurer; 
  3.6      (8) That without first obtaining the written consent of the 
  3.7   commissioner, or if required by law, the written consent of the 
  3.8   attorney general, the insurer has transferred, or attempted to 
  3.9   transfer, substantially its entire property or business, or has 
  3.10  entered into any transaction the effect of which is to merge, 
  3.11  consolidate, or reinsure substantially its entire property or 
  3.12  business of any other person; 
  3.13     (9) That the insurer or its property has been or is the 
  3.14  subject of an application for the appointment of a receiver, 
  3.15  trustee, custodian, conservator or sequestrator or similar 
  3.16  fiduciary of the insurer or its property otherwise than as 
  3.17  authorized under sections 60B.01 to 60B.61, and that such 
  3.18  appointment has been made or is imminent, and that such 
  3.19  appointment might divest the courts of this state of 
  3.20  jurisdiction or prejudice orderly delinquency proceedings under 
  3.21  sections 60B.01 to 60B.61; 
  3.22     (10) That within the previous year the insurer has 
  3.23  willfully violated its charter or articles of incorporation or 
  3.24  its bylaws or any applicable insurance law or regulation of any 
  3.25  state, or of the federal government, or any valid order of the 
  3.26  commissioner under section 60B.11 in any manner or as to any 
  3.27  matter which threatens substantial injury to the insurer, its 
  3.28  creditors, it policyholders or the public, or having become 
  3.29  aware within the previous year of an unintentional or willful 
  3.30  violation has failed to take all reasonable steps to remedy the 
  3.31  situation resulting from the violation and to prevent the same 
  3.32  violations in the future; 
  3.33     (11) That the directors of the insurer are deadlocked in 
  3.34  the management of the insurer's affairs and that the members or 
  3.35  shareholders are unable to break the deadlock and that 
  3.36  irreparable injury to the insurer, its creditors, its 
  4.1   policyholders, or the public is threatened by reason thereof; 
  4.2      (12) That the insurer has failed to pay for 60 days after 
  4.3   due date any obligation to this state or any political 
  4.4   subdivision thereof or any judgment entered in this state, 
  4.5   except that such nonpayment shall not be a ground until 60 days 
  4.6   after any good faith effort by the insurer to contest the 
  4.7   obligation or judgment has been terminated, whether it is before 
  4.8   the commissioner or in the courts; 
  4.9      (13) That the insurer has failed to file its annual report 
  4.10  or other report within the time allowed by law, and after 
  4.11  written demand by the commissioner has failed to give an 
  4.12  adequate explanation immediately; 
  4.13     (14) That two-thirds of the board of directors, or the 
  4.14  holders of a majority of the shares entitled to vote, or a 
  4.15  majority of members or policyholders of an insurer subject to 
  4.16  control by its members or policyholders, consent to 
  4.17  rehabilitation under sections 60B.01 to 60B.61; 
  4.18     (15) That the insurer is engaging in a systematic practice 
  4.19  of reaching settlements with and obtaining releases from 
  4.20  policyholders or third party claimants and then unreasonably 
  4.21  delaying payment of or failing to pay the agreed upon 
  4.22  settlements; 
  4.23     (16) That the insurer is in such condition that the further 
  4.24  transaction of business would be hazardous, financially or 
  4.25  otherwise, to its policyholders, its creditors, or the public; 
  4.26     (17) That within the previous 12 months the insurer has 
  4.27  systematically attempted to compromise with its creditors on the 
  4.28  ground that it is financially unable to pay its claims in full; 
  4.29     (18) In the context of a health maintenance organization, 
  4.30  "insurer" when used in clauses (1) to (17) means "health 
  4.31  maintenance organization."  In addition to the grounds in 
  4.32  clauses (1) to (17), any one of the following constitutes 
  4.33  grounds for rehabilitation of a health maintenance organization: 
  4.34     (a) the health maintenance organization is unable or is 
  4.35  expected to be unable to meet its debts as they become due; 
  4.36     (b) grounds exist under section 62D.042, subdivision 7; 
  5.1      (c) the health maintenance organization's liabilities 
  5.2   exceed the current value of its assets, exclusive of intangibles 
  5.3   and, where the guaranteeing organization's financial condition 
  5.4   no longer meets the requirements of sections 62D.041 and 
  5.5   62D.042, exclusive of any deposits, letters of credit, or 
  5.6   guarantees provided by any guaranteeing organization under 
  5.7   chapter 62D; 
  5.8      (d) in addition to grounds under clause (16), within the 
  5.9   last year the health maintenance organization has failed, and 
  5.10  the commissioner of health expects such failure to continue in 
  5.11  the future, to make comprehensive medical care, or comprehensive 
  5.12  dental care if the health maintenance organization provides only 
  5.13  dental health maintenance services, adequately available and 
  5.14  accessible to its enrollees and the health maintenance 
  5.15  organization has not successfully implemented a plan of 
  5.16  corrective action pursuant to section 62D.121, subdivision 7; 
  5.17  and 
  5.18     (e) in addition to grounds under clause (16), within the 
  5.19  last year the directors or officers of the health maintenance 
  5.20  organization willfully violated the requirements of section 
  5.21  317A.251, or having become aware within the previous year of an 
  5.22  unintentional or willful violation of section 317A.251, have 
  5.23  failed to take all reasonable steps to remedy the situation 
  5.24  resulting from the violation and to prevent the same violation 
  5.25  in the future; 
  5.26     (19) An affiliate of the insurer has been placed in 
  5.27  conservatorship, rehabilitation, liquidation, or other court 
  5.28  supervision such that the insurer's financial condition may be 
  5.29  jeopardized.  
  5.30     Sec. 2.  Minnesota Statutes 1994, section 60B.20, is 
  5.31  amended to read: 
  5.32     60B.20 [GROUNDS FOR LIQUIDATION.] 
  5.33     The commissioner may apply by verified petition to the 
  5.34  district court for Ramsey county or for the county in which the 
  5.35  principal office of the insurer is located for an order to 
  5.36  liquidate a domestic insurer or an alien insurer domiciled in 
  6.1   this state on any one or more of the following grounds: 
  6.2      (1) Any ground on which the commissioner may apply for an 
  6.3   order of rehabilitation under section 60B.15, whenever the 
  6.4   commissioner believes that attempts to rehabilitate the insurer 
  6.5   would substantially increase the risk of loss to its creditors, 
  6.6   its policyholders, or the public, or would be futile, or that 
  6.7   rehabilitation would serve no useful purpose; 
  6.8      (2) That the insurer is or is about to become insolvent; 
  6.9      (3) That the insurer has not transacted the business for 
  6.10  which it was organized or incorporated during the previous 12 
  6.11  months or has transacted only a token such business during that 
  6.12  period, although authorized to do so throughout that period, or 
  6.13  that more than 12 months after incorporation it has failed to 
  6.14  become authorized to do the business for which it was organized 
  6.15  or incorporated; 
  6.16     (4) That the insurer has commenced, or within the previous 
  6.17  year has attempted to commence, voluntary dissolution or 
  6.18  liquidation otherwise than as provided in section 60B.04, 
  6.19  subdivision 3 in the case of a solvent insurer; 
  6.20     (5) That the insurer has concealed records or assets from 
  6.21  the commissioner or improperly removed them from the 
  6.22  jurisdiction, or the commissioner believes that the insurer is 
  6.23  about to do so; 
  6.24     (6) That the insurer does not satisfy the requirements that 
  6.25  would be applicable if it were seeking initial authorization in 
  6.26  this state to do the business for which it was organized or 
  6.27  incorporated, except for: 
  6.28     (i) Requirements that are intended to apply only at the 
  6.29  time the initial authorization to do business is obtained, and 
  6.30  not thereafter; and 
  6.31     (ii) Requirements that are expressly made inapplicable by 
  6.32  the laws establishing the requirements; 
  6.33     (7) That the holders of two-thirds of the shares entitled 
  6.34  to vote, or two-thirds of the members or policyholders entitled 
  6.35  to vote in an insurer controlled by its members or 
  6.36  policyholders, have consented to a petition; 
  7.1      (8) In the context of a health maintenance organization, 
  7.2   "insurer" when used in clauses (1) to (7) means "health 
  7.3   maintenance organization."  In addition to the grounds in 
  7.4   clauses (1) to (7), any one of the following constitutes grounds 
  7.5   for liquidation of a health maintenance organization: 
  7.6      (i) the health maintenance organization is unable or is 
  7.7   expected to be unable to meet its debts as they become due; 
  7.8      (ii) grounds exist under section 62D.042, subdivision 7; 
  7.9      (iii) the health maintenance organization's liabilities 
  7.10  exceed the current value of its assets, exclusive of intangibles 
  7.11  and, where the guaranteeing organization's financial condition 
  7.12  no longer meets the requirements of sections 62D.041 and 
  7.13  62D.042, exclusive of any deposits, letters of credit, or 
  7.14  guarantees provided by any guaranteeing organization under 
  7.15  chapter 62D; 
  7.16     (iv) within the last year the health maintenance 
  7.17  organization has failed, and the commissioner of health expects 
  7.18  failure to continue in the future, to make comprehensive medical 
  7.19  care, or comprehensive dental care if the health maintenance 
  7.20  organization provides only dental health maintenance services, 
  7.21  adequately available and accessible to its enrollees and the 
  7.22  health maintenance organization has not successfully implemented 
  7.23  a plan of corrective action pursuant to section 62D.121, 
  7.24  subdivision 7; and 
  7.25     (v) within the last year the directors or officers of the 
  7.26  health maintenance organization willfully violated the 
  7.27  requirements of section 317A.251, or having become aware within 
  7.28  the previous year of an unintentional or willful violation of 
  7.29  section 317A.251, have failed to take all reasonable steps to 
  7.30  remedy the situation resulting from the violation and to prevent 
  7.31  the same violation in the future. 
  7.32     Sec. 3.  Minnesota Statutes 1994, section 62D.02, 
  7.33  subdivision 4, is amended to read: 
  7.34     Subd. 4.  (a) "Health maintenance organization" means a 
  7.35  nonprofit corporation organized under chapter 317A, or a local 
  7.36  governmental unit as defined in subdivision 11, controlled and 
  8.1   operated as provided in sections 62D.01 to 62D.30, which 
  8.2   provides, either directly or through arrangements with providers 
  8.3   or other persons, comprehensive health maintenance services, 
  8.4   comprehensive dental health maintenance services, or arranges 
  8.5   for the provision of these services, to enrollees on the basis 
  8.6   of a fixed prepaid sum without regard to the frequency or extent 
  8.7   of services furnished to any particular enrollee.  
  8.8      (b) Notwithstanding paragraph (a), an organization licensed 
  8.9   as a health maintenance organization that accepts payments for 
  8.10  health care services on a capitated basis, or under another 
  8.11  similar risk sharing agreement, from a program of self-insurance 
  8.12  as described in section 60A.02, subdivision 3, paragraph (b), 
  8.13  shall not be regulated as a health maintenance organization with 
  8.14  respect to the receipt of the payments.  The payments are not 
  8.15  premium revenues for the purpose of calculating the health 
  8.16  maintenance organization's liability for otherwise applicable 
  8.17  state taxes, assessments, or surcharges, with the exception of: 
  8.18     (1) the MinnesotaCare provider tax; 
  8.19     (2) the one percent premium tax imposed in section 60A.15, 
  8.20  subdivision 1, paragraph (d); and 
  8.21     (3) effective July 1, 1995, assessments by the Minnesota 
  8.22  comprehensive health association. 
  8.23  This paragraph applies only where: 
  8.24     (1) the health maintenance organization does not bear risk 
  8.25  in excess of 110 percent of the self-insurance program's 
  8.26  expected costs; 
  8.27     (2) the employer does not carry stop loss, excess loss, or 
  8.28  similar coverage with an attachment point lower than 120 percent 
  8.29  of the self-insurance program's expected costs; 
  8.30     (3) the health maintenance organization and the employer 
  8.31  comply with the data submission and administrative 
  8.32  simplification provisions of chapter 62J; 
  8.33     (4) the health maintenance organization and the employer 
  8.34  comply with the provider tax pass-through provisions of section 
  8.35  295.582; 
  8.36     (5) the health maintenance organization's required minimum 
  9.1   reserves reflect the risk borne by the health maintenance 
  9.2   organization under this paragraph, with an appropriate 
  9.3   adjustment for the 110 percent limit on risk borne by the 
  9.4   community network; 
  9.5      (6) on or after July 1, 1994, but prior to January 1, 1995, 
  9.6   the employer has at least 1,500 current employees, as defined in 
  9.7   section 62L.02, or, on or after January 1, 1995, the employer 
  9.8   has at least 750 current employees, as defined in section 
  9.9   62L.02; 
  9.10     (7) the employer does not exclude any eligible employees or 
  9.11  their dependents, both as defined in section 62L.02, from 
  9.12  coverage offered by the employer, under this paragraph or any 
  9.13  other health coverage, insured or self-insured, offered by the 
  9.14  employer, on the basis of the health status or health history of 
  9.15  the person.  
  9.16     This paragraph expires December 31, 1997. 
  9.17     Sec. 4.  Minnesota Statutes 1995 Supplement, section 
  9.18  62D.02, subdivision 8, is amended to read: 
  9.19     Subd. 8.  "Health maintenance contract" means any contract 
  9.20  whereby a health maintenance organization agrees to provide 
  9.21  comprehensive health maintenance services or comprehensive 
  9.22  dental health maintenance services to enrollees, provided that 
  9.23  the contract may contain reasonable enrollee copayment 
  9.24  provisions.  An individual or group health maintenance contract 
  9.25  may contain the copayment and deductible provisions specified in 
  9.26  this subdivision.  Copayment and deductible provisions in group 
  9.27  contracts shall not discriminate on the basis of age, sex, race, 
  9.28  length of enrollment in the plan, or economic status; and during 
  9.29  every open enrollment period in which all offered health benefit 
  9.30  plans, including those subject to the jurisdiction of the 
  9.31  commissioners of commerce or health, fully participate without 
  9.32  any underwriting restrictions, copayment and deductible 
  9.33  provisions shall not discriminate on the basis of preexisting 
  9.34  health status.  In no event shall the sum of the annual 
  9.35  copayments and deductible for comprehensive health maintenance 
  9.36  services exceed the maximum out-of-pocket expenses allowable for 
 10.1   a number three qualified plan under section 62E.06, nor shall 
 10.2   that sum exceed $5,000 per family.  The annual deductible must 
 10.3   not exceed $1,000 per person.  The annual deductible must not 
 10.4   apply to preventive health services as described in Minnesota 
 10.5   Rules, part 4685.0801, subpart 8.  Where sections 62D.01 to 
 10.6   62D.30 permit a health maintenance organization to contain 
 10.7   reasonable copayment provisions for preexisting health status, 
 10.8   these provisions may vary with respect to length of enrollment 
 10.9   in the plan.  Any contract may provide for health care services 
 10.10  in addition to those set forth in subdivision 7. 
 10.11     Sec. 5.  Minnesota Statutes 1994, section 62D.02, is 
 10.12  amended by adding a subdivision to read: 
 10.13     Subd. 17.  "Comprehensive dental health services" means a 
 10.14  set of comprehensive dental health services which enrollees 
 10.15  might reasonably require to maintain good dental health, 
 10.16  including, but not limited to, preventive services, diagnostic 
 10.17  services, emergency dental care, and restorative services. 
 10.18     Sec. 6.  Minnesota Statutes 1994, section 62D.03, 
 10.19  subdivision 3, is amended to read: 
 10.20     Subd. 3.  The commissioner of health may require any person 
 10.21  providing physician, dental, and hospital services with payments 
 10.22  made in the manner set forth in section 62D.02, subdivision 4, 
 10.23  to apply for a certificate of authority under sections 62D.01 to 
 10.24  62D.30.  Any person directed to apply for a certificate of 
 10.25  authority shall be subject to the provisions of subdivision 2. 
 10.26     Sec. 7.  Minnesota Statutes 1994, section 62D.03, 
 10.27  subdivision 4, is amended to read: 
 10.28     Subd. 4.  Each application for a certificate of authority 
 10.29  shall be verified by an officer or authorized representative of 
 10.30  the applicant, and shall be in a form prescribed by the 
 10.31  commissioner of health.  Each application shall include the 
 10.32  following: 
 10.33     (a) a copy of the basic organizational document, if any, of 
 10.34  the applicant and of each major participating entity; such as 
 10.35  the articles of incorporation, or other applicable documents, 
 10.36  and all amendments thereto; 
 11.1      (b) a copy of the bylaws, rules and regulations, or similar 
 11.2   document, if any, and all amendments thereto which regulate the 
 11.3   conduct of the affairs of the applicant and of each major 
 11.4   participating entity; 
 11.5      (c) a list of the names, addresses, and official positions 
 11.6   of the following: 
 11.7      (1) all members of the board of directors, or governing 
 11.8   body of the local government unit, and the principal officers 
 11.9   and shareholders of the applicant organization; and 
 11.10     (2) all members of the board of directors, or governing 
 11.11  body of the local government unit, and the principal officers of 
 11.12  the major participating entity and each shareholder beneficially 
 11.13  owning more than ten percent of any voting stock of the major 
 11.14  participating entity; 
 11.15     The commissioner may by rule identify persons included in 
 11.16  the term "principal officers"; 
 11.17     (d) a full disclosure of the extent and nature of any 
 11.18  contract or financial arrangements between the following:  
 11.19     (1) the health maintenance organization and the persons 
 11.20  listed in clause (c)(1); 
 11.21     (2) the health maintenance organization and the persons 
 11.22  listed in clause (c)(2); 
 11.23     (3) each major participating entity and the persons listed 
 11.24  in clause (c)(1) concerning any financial relationship with the 
 11.25  health maintenance organization; and 
 11.26     (4) each major participating entity and the persons listed 
 11.27  in clause (c)(2) concerning any financial relationship with the 
 11.28  health maintenance organization; 
 11.29     (e) the name and address of each participating entity and 
 11.30  the agreed upon duration of each contract or agreement; 
 11.31     (f) a copy of the form of each contract binding the 
 11.32  participating entities and the health maintenance organization.  
 11.33  Contractual provisions shall be consistent with the purposes of 
 11.34  sections 62D.01 to 62D.30, in regard to the services to be 
 11.35  performed under the contract, the manner in which payment for 
 11.36  services is determined, the nature and extent of 
 12.1   responsibilities to be retained by the health maintenance 
 12.2   organization, the nature and extent of risk sharing permissible, 
 12.3   and contractual termination provisions; 
 12.4      (g) a copy of each contract binding major participating 
 12.5   entities and the health maintenance organization.  Contract 
 12.6   information filed with the commissioner shall be confidential 
 12.7   and subject to the provisions of section 13.37, subdivision 1, 
 12.8   clause (b), upon the request of the health maintenance 
 12.9   organization.  
 12.10     Upon initial filing of each contract, the health 
 12.11  maintenance organization shall file a separate document 
 12.12  detailing the projected annual expenses to the major 
 12.13  participating entity in performing the contract and the 
 12.14  projected annual revenues received by the entity from the health 
 12.15  maintenance organization for such performance.  The commissioner 
 12.16  shall disapprove any contract with a major participating entity 
 12.17  if the contract will result in an unreasonable expense under 
 12.18  section 62D.19.  The commissioner shall approve or disapprove a 
 12.19  contract within 30 days of filing.  
 12.20     Within 120 days of the anniversary of the implementation of 
 12.21  each contract, the health maintenance organization shall file a 
 12.22  document detailing the actual expenses incurred and reported by 
 12.23  the major participating entity in performing the contract in the 
 12.24  preceding year and the actual revenues received from the health 
 12.25  maintenance organization by the entity in payment for the 
 12.26  performance.  
 12.27     Contracts implemented prior to April 25, 1984, shall be 
 12.28  filed within 90 days of April 25, 1984.  These contracts are 
 12.29  subject to the provisions of section 62D.19, but are not subject 
 12.30  to the prospective review prescribed by this clause, unless or 
 12.31  until the terms of the contract are modified.  Commencing with 
 12.32  the next anniversary of the implementation of each of these 
 12.33  contracts immediately following filing, the health maintenance 
 12.34  organization shall, as otherwise required by this subdivision, 
 12.35  file annual actual expenses and revenues; 
 12.36     (h) a statement generally describing the health maintenance 
 13.1   organization, its health maintenance contracts and separate 
 13.2   health service contracts, facilities, and personnel, including a 
 13.3   statement describing the manner in which the applicant proposes 
 13.4   to provide enrollees with comprehensive health maintenance 
 13.5   services, comprehensive dental health maintenance services, and 
 13.6   separate health services; 
 13.7      (i) a copy of the form of each evidence of coverage to be 
 13.8   issued to the enrollees; 
 13.9      (j) a copy of the form of each individual or group health 
 13.10  maintenance contract and each separate health service contract 
 13.11  which is to be issued to enrollees or their representatives; 
 13.12     (k) financial statements showing the applicant's assets, 
 13.13  liabilities, and sources of financial support.  If the 
 13.14  applicant's financial affairs are audited by independent 
 13.15  certified public accountants, a copy of the applicant's most 
 13.16  recent certified financial statement may be deemed to satisfy 
 13.17  this requirement; 
 13.18     (l) a description of the proposed method of marketing the 
 13.19  plan, a schedule of proposed charges, and a financial plan which 
 13.20  includes a three-year projection of the expenses and income and 
 13.21  other sources of future capital; 
 13.22     (m) a statement reasonably describing the geographic area 
 13.23  or areas to be served and the type or types of enrollees to be 
 13.24  served; 
 13.25     (n) a description of the complaint procedures to be 
 13.26  utilized as required under section 62D.11; 
 13.27     (o) a description of the procedures and programs to be 
 13.28  implemented to meet the requirements of section 62D.04, 
 13.29  subdivision 1, clauses (b) and (c) and to monitor the quality of 
 13.30  health care provided to enrollees; 
 13.31     (p) a description of the mechanism by which enrollees will 
 13.32  be afforded an opportunity to participate in matters of policy 
 13.33  and operation under section 62D.06; 
 13.34     (q) a copy of any agreement between the health maintenance 
 13.35  organization and an insurer or nonprofit health service 
 13.36  corporation regarding reinsurance, stop-loss coverage, 
 14.1   insolvency coverage, or any other type of coverage for potential 
 14.2   costs of health services, as authorized in sections 62D.04, 
 14.3   subdivision 1, clause (f), 62D.05, subdivision 3, and 62D.13; 
 14.4      (r) a copy of the conflict of interest policy which applies 
 14.5   to all members of the board of directors and the principal 
 14.6   officers of the health maintenance organization, as described in 
 14.7   section 62D.04, subdivision 1, paragraph (g).  All currently 
 14.8   licensed health maintenance organizations shall also file a 
 14.9   conflict of interest policy with the commissioner within 60 days 
 14.10  after August 1, 1990, or at a later date if approved by the 
 14.11  commissioner; 
 14.12     (s) a copy of the statement that describes the health 
 14.13  maintenance organization's prior authorization administrative 
 14.14  procedures; 
 14.15     (t) a copy of the agreement between the guaranteeing 
 14.16  organization and the health maintenance organization, as 
 14.17  described in section 62D.043, subdivision 6; and 
 14.18     (u) other information as the commissioner of health may 
 14.19  reasonably require to be provided. 
 14.20     Sec. 8.  Minnesota Statutes 1994, section 62D.04, 
 14.21  subdivision 1, is amended to read: 
 14.22     Subdivision 1.  Upon receipt of an application for a 
 14.23  certificate of authority, the commissioner of health shall 
 14.24  determine whether the applicant for a certificate of authority 
 14.25  has: 
 14.26     (a) demonstrated the willingness and potential ability to 
 14.27  assure that health care services will be provided in such a 
 14.28  manner as to enhance and assure both the availability and 
 14.29  accessibility of adequate personnel and facilities; 
 14.30     (b) arrangements for an ongoing evaluation of the quality 
 14.31  of health care; 
 14.32     (c) a procedure to develop, compile, evaluate, and report 
 14.33  statistics relating to the cost of its operations, the pattern 
 14.34  of utilization of its services, the quality, availability and 
 14.35  accessibility of its services, and such other matters as may be 
 14.36  reasonably required by regulation of the commissioner of health; 
 15.1      (d) reasonable provisions for emergency and out of area 
 15.2   health care services; 
 15.3      (e) demonstrated that it is financially responsible and may 
 15.4   reasonably be expected to meet its obligations to enrollees and 
 15.5   prospective enrollees.  In making this determination, the 
 15.6   commissioner of health shall require the amounts of net worth 
 15.7   and working capital required in section 62D.042, the deposit 
 15.8   required in section 62D.041, and in addition shall consider: 
 15.9      (1) the financial soundness of its arrangements for health 
 15.10  care services and the proposed schedule of charges used in 
 15.11  connection therewith; 
 15.12     (2) arrangements which will guarantee for a reasonable 
 15.13  period of time the continued availability or payment of the cost 
 15.14  of health care services in the event of discontinuance of the 
 15.15  health maintenance organization; and 
 15.16     (3) agreements with providers for the provision of health 
 15.17  care services; 
 15.18     (f) demonstrated that it will assume full financial risk on 
 15.19  a prospective basis for the provision of comprehensive health 
 15.20  maintenance services, including hospital care, or comprehensive 
 15.21  dental health maintenance services; provided, however, that the 
 15.22  requirement in this paragraph shall not prohibit the following: 
 15.23     (1) a health maintenance organization from obtaining 
 15.24  insurance or making other arrangements (i) for the cost of 
 15.25  providing to any enrollee comprehensive health maintenance 
 15.26  services or dental health maintenance services, the aggregate 
 15.27  value of which exceeds $5,000 in any year, (ii) for the cost of 
 15.28  providing comprehensive health care services or comprehensive 
 15.29  dental services to its members on a nonelective emergency basis, 
 15.30  or while they are outside the area served by the organization, 
 15.31  or (iii) for not more than 95 percent of the amount by which the 
 15.32  health maintenance organization's costs for any of its fiscal 
 15.33  years exceed 105 percent of its income for such fiscal years; 
 15.34  and 
 15.35     (2) a health maintenance organization from having a 
 15.36  provision in a group health maintenance contract allowing an 
 16.1   adjustment of premiums paid based upon the actual health 
 16.2   services utilization of the enrollees covered under the 
 16.3   contract, except that at no time during the life of the contract 
 16.4   shall the contract holder fully self-insure the financial risk 
 16.5   of health care services delivered under the contract.  Risk 
 16.6   sharing arrangements shall be subject to the requirements of 
 16.7   sections 62D.01 to 62D.30; 
 16.8      (g) demonstrated that it has made provisions for and 
 16.9   adopted a conflict of interest policy applicable to all members 
 16.10  of the board of directors and the principal officers of the 
 16.11  health maintenance organization.  The conflict of interest 
 16.12  policy shall include the procedures described in section 
 16.13  317A.255, subdivisions 1 and 2.  However, the commissioner is 
 16.14  not precluded from finding that a particular transaction is an 
 16.15  unreasonable expense as described in section 62D.19 even if the 
 16.16  directors follow the required procedures; and 
 16.17     (h) otherwise met the requirements of sections 62D.01 to 
 16.18  62D.30. 
 16.19     Sec. 9.  Minnesota Statutes 1994, section 62D.04, 
 16.20  subdivision 3, is amended to read: 
 16.21     Subd. 3.  Except as provided in section 62D.03, subdivision 
 16.22  2, no person who has not been issued a certificate of authority 
 16.23  shall use the words "health maintenance organization," "dental 
 16.24  health maintenance organization," or the initials "HMO" or "DHMO"
 16.25  in its name, contracts or literature.  Provided, however, that 
 16.26  persons who are operating under a contract with, operating in 
 16.27  association with, enrolling enrollees for, or otherwise 
 16.28  authorized by a health maintenance organization licensed under 
 16.29  sections 62D.01 to 62D.30 to act on its behalf may use the terms 
 16.30  "health maintenance organization" or "HMO" for the limited 
 16.31  purpose of denoting or explaining their association or 
 16.32  relationship with the authorized health maintenance 
 16.33  organization.  No health maintenance organization which has a 
 16.34  minority of consumers as members of its board of directors shall 
 16.35  use the words "consumer controlled" in its name or in any way 
 16.36  represent to the public that it is controlled by consumers. 
 17.1      Sec. 10.  Minnesota Statutes 1995 Supplement, section 
 17.2   62D.044, is amended to read: 
 17.3      62D.044 [ADMITTED ASSETS.] 
 17.4      "Admitted assets" includes the following: 
 17.5      (1) petty cash and other cash funds in the organization's 
 17.6   principal or official branch office that are under the 
 17.7   organization's control; 
 17.8      (2) immediately withdrawable funds on deposit in demand 
 17.9   accounts, in a bank or trust company organized and regularly 
 17.10  examined under the laws of the United States or any state, and 
 17.11  insured by an agency of the United States government, or like 
 17.12  funds actually in the principal or official branch office at 
 17.13  statement date, and, in transit to a bank or trust company with 
 17.14  authentic deposit credit given before the close of business on 
 17.15  the fifth bank working day following the statement date; 
 17.16     (3) the amount fairly estimated as recoverable on cash 
 17.17  deposited in a closed bank or trust company, if the assets 
 17.18  qualified under this section before the suspension of the bank 
 17.19  or trust company; 
 17.20     (4) bills and accounts receivable that are collateralized 
 17.21  by securities in which the organization is authorized to invest; 
 17.22     (5) premiums due from groups or individuals that are not 
 17.23  more than 90 days past due; 
 17.24     (6) amounts due under reinsurance arrangements from 
 17.25  insurance companies authorized to do business in this state; 
 17.26     (7) tax refunds due from the United States or this state; 
 17.27     (8) principal and interest accrued on mortgage loans not 
 17.28  exceeding in aggregate one year's total due and accrued 
 17.29  principal and interest on an individual loan; 
 17.30     (9) the rents due to the organization on real and personal 
 17.31  property, directly or beneficially owned, not exceeding the 
 17.32  amount of one year's total due and accrued rent on each 
 17.33  individual property; 
 17.34     (10) principal and interest or rents accrued on conditional 
 17.35  sales agreements, security interests, chattel mortgages, and 
 17.36  real or personal property under lease to other corporations that 
 18.1   do not exceed the amount of one year's total due and accrued 
 18.2   interest or rent on an individual investment; 
 18.3      (11) the fixed required principal and interest due and 
 18.4   accrued on bonds and other evidences of indebtedness that are 
 18.5   not in default; 
 18.6      (12) dividends receivable on shares of stock, provided that 
 18.7   the market price for valuation purposes does not include the 
 18.8   value of the dividend; 
 18.9      (13) the interest on dividends due and payable, but not 
 18.10  credited, on deposits in banks and trust companies or on 
 18.11  accounts with savings associations; 
 18.12     (14) principal and interest accrued on secured loans that 
 18.13  do not exceed the amount of one year's interest on any loan; 
 18.14     (15) interest accrued on tax anticipation warrants; 
 18.15     (16) the amortized value of electronic computer or data 
 18.16  processing machines or systems purchased for use in the business 
 18.17  of the organization, including software purchased and developed 
 18.18  specifically for the organization's use; 
 18.19     (17) the cost of furniture, equipment, and medical 
 18.20  equipment, less accumulated depreciation thereon, and medical, 
 18.21  dental, and pharmaceutical supplies that are used to deliver 
 18.22  health care and are under the organization's control, provided 
 18.23  such assets do not exceed 30 percent of admitted assets; 
 18.24     (18) amounts currently due from an affiliate that has 
 18.25  liquid assets with which to pay the balance and maintain its 
 18.26  accounts on a current basis.  Any amount outstanding more than 
 18.27  three months is not current; 
 18.28     (19) amounts on deposit under section 62D.041; 
 18.29     (20) accounts receivable from participating health care 
 18.30  providers that are not more than 60 days past due; and 
 18.31     (21) investments allowed by section 62D.045, except for 
 18.32  investments in securities and properties described under section 
 18.33  61A.284. 
 18.34     Sec. 11.  Minnesota Statutes 1994, section 62D.045, 
 18.35  subdivision 1, is amended to read: 
 18.36     Subdivision 1.  [RESTRICTIONS.] Funds of a health 
 19.1   maintenance organization shall be invested only in securities 
 19.2   and property designated by law for investment by domestic life 
 19.3   insurance companies, except that money may be used to purchase 
 19.4   real estate, including leasehold estates and leasehold 
 19.5   improvements, for the convenient accommodation of the 
 19.6   organization's business operations, including the home office, 
 19.7   branch offices, medical facilities, and field office operations, 
 19.8   on the following conditions: 
 19.9      (1) a parcel of real estate acquired under this subdivision 
 19.10  may include excess space for rent to others if it is reasonably 
 19.11  anticipated that the excess will be required by the organization 
 19.12  for expansion or if the excess is reasonably required in order 
 19.13  to have one or more buildings that will function as an economic 
 19.14  unit; 
 19.15     (2) the real estate may be subject to a mortgage; and 
 19.16     (3) the purchase price of the asset, including capitalized 
 19.17  permanent improvements, less depreciation spread evenly over the 
 19.18  life of the property or less depreciation computed on any basis 
 19.19  permitted under the Internal Revenue Code and its regulations, 
 19.20  or the organization's equity, plus all encumbrances on the real 
 19.21  estate owned by a company under this subdivision, whichever is 
 19.22  greater, does not exceed 20 percent of its admitted assets, 
 19.23  except if, when calculated in combination with the assets 
 19.24  described in section 62D.044, clause (17), the total of said 
 19.25  assets and the real estate assets described hereunder do not 
 19.26  exceed the total combined percent limitations allowable under 
 19.27  this section and section 62D.044, clause (17), or, if permitted 
 19.28  by the commissioner upon a finding that the percentage of the 
 19.29  health maintenance organization's admitted assets is 
 19.30  insufficient to provide convenient accommodation for the 
 19.31  organization's business.  However, a health maintenance 
 19.32  organization that owns property used in the delivery of 
 19.33  medical or dental services for its enrollees may invest an 
 19.34  additional 20 percent of its admitted assets in real estate, not 
 19.35  requiring the permission of the commissioner. 
 19.36     Sec. 12.  Minnesota Statutes 1994, section 62D.05, 
 20.1   subdivision 3, is amended to read: 
 20.2      Subd. 3.  A health maintenance organization may employ or 
 20.3   contract with providers of health care services to render the 
 20.4   services the health maintenance organization has promised to 
 20.5   provide under the terms of its health maintenance contracts, 
 20.6   may, subject to section 62D.12, subdivision 11, enter into 
 20.7   separate prepaid dental contracts, or other separate health 
 20.8   service contracts, may, subject to the limitations of section 
 20.9   62D.04, subdivision 1, clause (f), contract with insurance 
 20.10  companies and nonprofit health service plan corporations for 
 20.11  insurance, indemnity or reimbursement of its cost of providing 
 20.12  health care services for enrollees or against the risks incurred 
 20.13  by the health maintenance organization, may contract with 
 20.14  insurance companies and nonprofit health service plan 
 20.15  corporations for insolvency insurance coverage, and may contract 
 20.16  with insurance companies and nonprofit health service plan 
 20.17  corporations to insure or cover the enrollees' costs and 
 20.18  expenses in the health maintenance organization, including the 
 20.19  customary prepayment amount and any copayment obligations.  
 20.20     Sec. 13.  Minnesota Statutes 1994, section 62D.07, 
 20.21  subdivision 3, is amended to read: 
 20.22     Subd. 3.  Contracts and evidences of coverage shall contain:
 20.23     (a) No provisions or statements which are unjust, unfair, 
 20.24  inequitable, misleading, deceptive, or which are untrue, 
 20.25  misleading, or deceptive as defined in section 62D.12, 
 20.26  subdivision 1; and 
 20.27     (b) A clear, concise and complete statement of: 
 20.28     (1) the health care services and the insurance or other 
 20.29  benefits, if any, to which the enrollee is entitled under the 
 20.30  health maintenance contract; 
 20.31     (2) any exclusions or limitations on the services, kind of 
 20.32  services, benefits, or kind of benefits, to be provided, 
 20.33  including any deductible or copayment feature and requirements 
 20.34  for referrals, prior authorizations, and second opinions; 
 20.35     (3) where and in what manner information is available as to 
 20.36  how services, including emergency and out of area services, may 
 21.1   be obtained; 
 21.2      (4) the total amount of payment and copayment, if any, for 
 21.3   health care services and the indemnity or service benefits, if 
 21.4   any, which the enrollee is obligated to pay with respect to 
 21.5   individual contracts, or an indication whether the plan is 
 21.6   contributory or noncontributory with respect to group 
 21.7   certificates; and 
 21.8      (5) a description of the health maintenance organization's 
 21.9   method for resolving enrollee complaints and a statement 
 21.10  identifying the commissioner as an external source with whom 
 21.11  grievances may be registered.  
 21.12     (c) On the cover page of the evidence of coverage and 
 21.13  contract, a clear and complete statement of enrollees' rights as 
 21.14  consumers.  The statement must be in bold print and captioned 
 21.15  "Important Consumer Information and Enrollee Bill of Rights" and 
 21.16  must include but not be limited to the following provisions in 
 21.17  the following language or in substantially similar language 
 21.18  approved in advance by the commissioner:  
 21.19                        CONSUMER INFORMATION 
 21.20     (1) COVERED SERVICES:  Services provided by (name of health 
 21.21  maintenance organization) will be covered only if services are 
 21.22  provided by participating (name of health maintenance 
 21.23  organization) providers or authorized by (name of health 
 21.24  maintenance organization).  Your contract fully defines what 
 21.25  services are covered and describes procedures you must follow to 
 21.26  obtain coverage. 
 21.27     (2) PROVIDERS:  Enrolling in (name of health maintenance 
 21.28  organization) does not guarantee services by a particular 
 21.29  provider on the list of providers.  When a provider is no longer 
 21.30  part of (name of health maintenance organization), you must 
 21.31  choose among remaining (name of the health maintenance 
 21.32  organization) providers. 
 21.33     (3) REFERRALS:  Certain services are covered only upon 
 21.34  referral.  See section (section number) of your contract for 
 21.35  referral requirements.  All referrals to non-(name of health 
 21.36  maintenance organization) providers and certain types of health 
 22.1   care providers must be authorized by (name of health maintenance 
 22.2   organization). 
 22.3      (4) EMERGENCY SERVICES:  Emergency services from providers 
 22.4   who are not affiliated with (name of health maintenance 
 22.5   organization) will be covered only if proper procedures are 
 22.6   followed.  Your contract explains the procedures and benefits 
 22.7   associated with emergency care from (name of health maintenance 
 22.8   organization) and non-(name of health maintenance organization) 
 22.9   providers. 
 22.10     (5) EXCLUSIONS:  Certain services or medical supplies are 
 22.11  not covered.  You should read the contract for a detailed 
 22.12  explanation of all exclusions. 
 22.13     (6) CONTINUATION:  You may convert to an individual health 
 22.14  maintenance organization contract or continue coverage under 
 22.15  certain circumstances.  These continuation and conversion rights 
 22.16  are explained fully in your contract. 
 22.17     (7) CANCELLATION:  Your coverage may be canceled by you or 
 22.18  (name of health maintenance organization) only under certain 
 22.19  conditions.  Your contract describes all reasons for 
 22.20  cancellation of coverage. 
 22.21                      ENROLLEE BILL OF RIGHTS 
 22.22     (1) Enrollees have the right to available and accessible 
 22.23  services including emergency services, as defined in your 
 22.24  contract, 24 hours a day and seven days a week; 
 22.25     (2) Enrollees have the right to be informed of health 
 22.26  problems, and to receive information regarding treatment 
 22.27  alternatives and risks which is sufficient to assure informed 
 22.28  choice; 
 22.29     (3) Enrollees have the right to refuse treatment, and the 
 22.30  right to privacy of medical, dental, and financial records 
 22.31  maintained by the health maintenance organization and its health 
 22.32  care providers, in accordance with existing law; 
 22.33     (4) Enrollees have the right to file a grievance with the 
 22.34  health maintenance organization and the commissioner of health 
 22.35  and the right to initiate a legal proceeding when experiencing a 
 22.36  problem with the health maintenance organization or its health 
 23.1   care providers; 
 23.2      (5) Enrollees have the right to a grace period of 31 days 
 23.3   for the payment of each premium for an individual health 
 23.4   maintenance contract falling due after the first premium during 
 23.5   which period the contract shall continue in force; 
 23.6      (6) Medicare enrollees have the right to voluntarily 
 23.7   disenroll from the health maintenance organization and the right 
 23.8   not to be requested or encouraged to disenroll except in 
 23.9   circumstances specified in federal law; and 
 23.10     (7) Medicare enrollees have the right to a clear 
 23.11  description of nursing home and home care benefits covered by 
 23.12  the health maintenance organization. 
 23.13     Sec. 14.  Minnesota Statutes 1994, section 62D.09, 
 23.14  subdivision 1, is amended to read: 
 23.15     Subdivision 1.  (a) Any written marketing materials which 
 23.16  may be directed toward potential enrollees and which include a 
 23.17  detailed description of benefits provided by the health 
 23.18  maintenance organization shall include a statement of consumer 
 23.19  information and rights as described in section 62D.07, 
 23.20  subdivision 3, paragraphs (b) and (c).  Prior to any oral 
 23.21  marketing presentation, the agent marketing the plan must inform 
 23.22  the potential enrollees that any complaints concerning the 
 23.23  material presented should be directed to the health maintenance 
 23.24  organization, the commissioner of health, or, if applicable, the 
 23.25  employer. 
 23.26     (b) Detailed marketing materials must affirmatively 
 23.27  disclose all exclusions and limitations in the organization's 
 23.28  services or kinds of services offered to the contracting party, 
 23.29  including but not limited to the following types of exclusions 
 23.30  and limitations: 
 23.31     (1) health care services not provided; 
 23.32     (2) health care services requiring copayments or 
 23.33  deductibles paid by enrollees; 
 23.34     (3) the fact that access to health care services does not 
 23.35  guarantee access to a particular provider type; and 
 23.36     (4) health care services that are or may be provided only 
 24.1   by referral of a physician or dentist. 
 24.2      (c) No marketing materials may lead consumers to believe 
 24.3   that all health care needs will be covered.  All marketing 
 24.4   materials must alert consumers to possible uncovered expenses 
 24.5   with the following language in bold print:  "THIS HEALTH CARE 
 24.6   PLAN MAY NOT COVER ALL YOUR HEALTH CARE EXPENSES; READ YOUR 
 24.7   CONTRACT CAREFULLY TO DETERMINE WHICH EXPENSES ARE COVERED."  
 24.8   Immediately following the disclosure required under paragraph 
 24.9   (b), clause (3), consumers must be given a telephone number to 
 24.10  use to contact the health maintenance organization for specific 
 24.11  information about access to provider types. 
 24.12     (d) The disclosures required in paragraphs (b) and (c) are 
 24.13  not required on billboards or image, and name identification 
 24.14  advertisement. 
 24.15     Sec. 15.  Minnesota Statutes 1994, section 62D.10, 
 24.16  subdivision 3, is amended to read: 
 24.17     Subd. 3.  A health plan providing health maintenance 
 24.18  services or reimbursement for health care costs to a specified 
 24.19  group or groups may limit the open enrollment in each group plan 
 24.20  to members of such group or groups, but after it has been in 
 24.21  operation 24 months shall have an annual open enrollment period 
 24.22  of at least 14 days during which it shall accept all otherwise 
 24.23  eligible individuals in the order in which they apply for 
 24.24  enrollment in a manner which does not discriminate on the basis 
 24.25  of age, sex, race, health, or economic status.  The health 
 24.26  maintenance organization shall notify potential enrollees of any 
 24.27  limitations on the number of new enrollees to be accepted.  
 24.28  "Specified groups" may include, but shall not be limited to: 
 24.29     (a) Employees of one or more specified employers; 
 24.30     (b) Members of one or more specified labor unions; 
 24.31     (c) Members of one or more specified associations; 
 24.32     (d) Patients of physicians or dentists providing services 
 24.33  through a health care plan who had previously provided services 
 24.34  outside the health care plan; and 
 24.35     (e) Members of an existing group insurance policy. 
 24.36     Sec. 16.  Minnesota Statutes 1994, section 62D.101, 
 25.1   subdivision 2, is amended to read: 
 25.2      Subd. 2.  [CONVERSION PRIVILEGE.] Every health maintenance 
 25.3   contract for comprehensive health care services, as described in 
 25.4   subdivision 1 shall contain a provision allowing a former spouse 
 25.5   and dependent children of an enrollee, without providing 
 25.6   evidence of insurability, to obtain from the health maintenance 
 25.7   organization at the expiration of any continuation of coverage 
 25.8   required under subdivision 2a or sections 62A.146 and 62D.105, 
 25.9   an individual health maintenance contract providing at least the 
 25.10  minimum benefits of a qualified plan as prescribed by section 
 25.11  62E.06 and the option of a number three qualified plan, a number 
 25.12  two qualified plan, a number one qualified plan as provided by 
 25.13  section 62E.06, subdivisions 1 to 3, provided application is 
 25.14  made to the health maintenance organization within 30 days 
 25.15  following notice of the expiration of the continued coverage and 
 25.16  upon payment of the appropriate fee.  Every health maintenance 
 25.17  contract for comprehensive dental health maintenance services, 
 25.18  as described in subdivision 1, shall contain a provision 
 25.19  allowing a former spouse and dependent children of an enrollee, 
 25.20  without providing evidence of insurability, to obtain from the 
 25.21  health maintenance organization at the expiration of any 
 25.22  continuation of coverage required under subdivision 2a or 
 25.23  sections 62A.146 and 62D.105, an individual health maintenance 
 25.24  contract providing at least comparable benefits of the prior 
 25.25  coverage, provided application is made to the health maintenance 
 25.26  organization within 30 days following notice of the expiration 
 25.27  of the continued coverage and upon payment of the appropriate 
 25.28  fee.  A contract providing reduced benefits at a reduced fee may 
 25.29  be accepted by the former spouse and dependent children in lieu 
 25.30  of the optional coverage otherwise required by this 
 25.31  subdivision.  The individual health maintenance contract shall 
 25.32  be renewable at the option of the former spouse as long as the 
 25.33  former spouse is not covered under another qualified plan as 
 25.34  defined in section 62E.02, subdivision 4.  Any revisions in the 
 25.35  table of rate for the individual contract shall apply to the 
 25.36  former spouse's original age at entry and shall apply equally to 
 26.1   all similar contracts issued by the health maintenance 
 26.2   organization.  
 26.3      Sec. 17.  Minnesota Statutes 1994, section 62D.103, is 
 26.4   amended to read: 
 26.5      62D.103 [SECOND OPINION RELATED TO CHEMICAL DEPENDENCY AND 
 26.6   MENTAL HEALTH.] 
 26.7      A health maintenance organization providing comprehensive 
 26.8   health maintenance services shall promptly evaluate the 
 26.9   treatment needs of any enrollee who is seeking treatment for a 
 26.10  problem related to chemical dependency or mental health 
 26.11  conditions.  In the event that the health maintenance 
 26.12  organization or a participating provider determines that no type 
 26.13  of structured treatment is necessary, the enrollee shall be 
 26.14  immediately entitled to a second opinion paid for by the health 
 26.15  maintenance organization, by a health care professional 
 26.16  qualified in diagnosis and treatment of the problem and not 
 26.17  affiliated with the health maintenance organization.  The health 
 26.18  maintenance organization or participating provider shall 
 26.19  consider the second opinion but is not obligated to accept the 
 26.20  conclusion of the second opinion.  The health maintenance 
 26.21  organization or participating provider shall document its 
 26.22  consideration of the second opinion.  
 26.23     Sec. 18.  Minnesota Statutes 1994, section 62D.104, is 
 26.24  amended to read: 
 26.25     62D.104 [REQUIRED OUT-OF-AREA CONVERSION.] 
 26.26     Enrollees who have individual health maintenance 
 26.27  organization contracts providing comprehensive health 
 26.28  maintenance services and who have become nonresidents of the 
 26.29  health maintenance organization's service area but remain 
 26.30  residents of the state of Minnesota shall be given the option, 
 26.31  to be arranged by the health maintenance organization if an 
 26.32  agreement with an insurer can reasonably be made, of a number 
 26.33  three qualified plan, a number two qualified plan, or a number 
 26.34  one qualified plan as provided by section 62E.06, subdivisions 1 
 26.35  to 3, or, if such enrollees are covered by title XVIII of the 
 26.36  Social Security Act (Medicare), they shall be given the option 
 27.1   of a Medicare supplement plan as provided by chapter 
 27.2   62A.  Enrollees who have individual health maintenance 
 27.3   organization contracts providing only comprehensive dental 
 27.4   health maintenance services and who have become nonresidents of 
 27.5   the health maintenance organization's service area but remain 
 27.6   residents of the state of Minnesota shall be given the option, 
 27.7   to be arranged by the health maintenance organization if an 
 27.8   agreement with an insurer or nonprofit health service plan 
 27.9   company can reasonably be made, of a dental health plan 
 27.10  providing comparable benefits to the previous coverage. 
 27.11     This option shall be made available at the enrollee's 
 27.12  expense, without further evidence of insurability and without 
 27.13  interruption of coverage. 
 27.14     If a health maintenance organization cannot make 
 27.15  arrangements for conversion coverage, the health maintenance 
 27.16  organization shall notify enrollees of health plans available in 
 27.17  other service areas. 
 27.18     Sec. 19.  Minnesota Statutes 1994, section 62D.105, 
 27.19  subdivision 1, is amended to read: 
 27.20     Subdivision 1.  [REQUIREMENT.] Every health maintenance 
 27.21  contract providing comprehensive health maintenance services, 
 27.22  which in addition to covering the enrollee also provides 
 27.23  coverage to the spouse and dependent children of the enrollee 
 27.24  shall:  (1) permit the spouse and dependent children to elect to 
 27.25  continue coverage when the enrollee becomes enrolled for 
 27.26  benefits under title XVIII of the Social Security Act 
 27.27  (Medicare); and (2) permit the dependent children to continue 
 27.28  coverage when they cease to be dependent children under the 
 27.29  generally applicable requirement of the plan.  Every health 
 27.30  maintenance contract providing only comprehensive dental health 
 27.31  maintenance services, which in addition to covering the enrollee 
 27.32  also provides coverage to the dependent children of the 
 27.33  enrollee, shall permit the dependent children to continue 
 27.34  coverage when they cease to be dependent children under the 
 27.35  generally applicable requirement of the plan. 
 27.36     Sec. 20.  Minnesota Statutes 1994, section 62D.12, 
 28.1   subdivision 1a, is amended to read: 
 28.2      Subd. 1a.  [SWING-OUT PRODUCTS.] Notwithstanding 
 28.3   subdivision 1, nothing in sections 62A.049, 62A.60, and 72A.201, 
 28.4   subdivision 4a, applies to a commercial health or dental policy 
 28.5   issued under this chapter as a companion to a health maintenance 
 28.6   contract. 
 28.7      Sec. 21.  Minnesota Statutes 1994, section 62D.12, 
 28.8   subdivision 9, is amended to read: 
 28.9      Subd. 9.  All net earnings of the health maintenance 
 28.10  organization shall be devoted to the nonprofit purposes of the 
 28.11  health maintenance organization in providing comprehensive 
 28.12  health care or comprehensive dental care.  No health maintenance 
 28.13  organization shall provide for the payment, whether directly or 
 28.14  indirectly, of any part of its net earnings, to any person as a 
 28.15  dividend or rebate; provided, however, that health maintenance 
 28.16  organizations may make payments to providers or other persons 
 28.17  based upon the efficient provision of services or as incentives 
 28.18  to provide quality care.  The commissioner of health shall, 
 28.19  pursuant to sections 62D.01 to 62D.30, revoke the certificate of 
 28.20  authority of any health maintenance organization in violation of 
 28.21  this subdivision. 
 28.22     Sec. 22.  Minnesota Statutes 1994, section 62D.121, 
 28.23  subdivision 3, is amended to read: 
 28.24     Subd. 3.  If health maintenance organization replacement 
 28.25  coverage for comprehensive health maintenance services is not 
 28.26  offered by the health maintenance organization, as explained 
 28.27  under subdivisions 2 and 2a, the replacement coverage shall 
 28.28  provide, for enrollees covered by title XVIII of the Social 
 28.29  Security Act, coverage at least equivalent to a basic Medicare 
 28.30  supplement plan as defined in section 62A.316, except that the 
 28.31  replacement coverage shall also cover the liability for any 
 28.32  Medicare part A and part B deductible as defined under title 
 28.33  XVIII of the Social Security Act.  After satisfaction of the 
 28.34  Medicare part B deductible, the replacement coverage shall be at 
 28.35  least 80 percent of usual and customary eligible medical 
 28.36  expenses and supplies not covered by Medicare part B eligible 
 29.1   expenses.  This does not include outpatient prescription drugs.  
 29.2   The fee or premium of the replacement coverage shall not exceed 
 29.3   the premium charged by the state comprehensive health plan as 
 29.4   established under section 62E.08, for a qualified Medicare 
 29.5   supplement plan.  All enrollees receiving comprehensive health 
 29.6   maintenance services not covered by Medicare shall be given the 
 29.7   option of a number three qualified plan or a number two 
 29.8   qualified plan as defined in section 62E.06, subdivisions 1 and 
 29.9   2, for replacement coverage.  The fee or premium for a number 
 29.10  three qualified plan shall not exceed 125 percent of the average 
 29.11  of rates charged by the five insurers with the largest number of 
 29.12  individuals in a number three qualified plan of insurance in 
 29.13  force in Minnesota.  The fee or premium for a number two 
 29.14  qualified plan shall not exceed 125 percent of the average of 
 29.15  rates charged by the five insurers with the largest number of 
 29.16  individuals in a number two qualified plan of insurance in force 
 29.17  in Minnesota.  
 29.18     If health maintenance organization replacement coverage for 
 29.19  comprehensive dental health maintenance services is not offered 
 29.20  by the health maintenance organization, as explained under 
 29.21  subdivisions 2 and 2a, the replacement coverage shall be 
 29.22  indemnity dental coverage providing comparable benefits as the 
 29.23  previous coverage, the fee or premium for which shall not exceed 
 29.24  125 percent of the average of rates charged for similar coverage 
 29.25  by the five insurers with the largest number of individuals in 
 29.26  comparable indemnity dental plans in force in Minnesota. 
 29.27     Sec. 23.  Minnesota Statutes 1994, section 62D.15, 
 29.28  subdivision 1, is amended to read: 
 29.29     Subdivision 1.  The commissioner of health may suspend or 
 29.30  revoke any certificate of authority issued to a health 
 29.31  maintenance organization under sections 62D.01 to 62D.30 if the 
 29.32  commissioner finds that: 
 29.33     (a) The health maintenance organization is operating 
 29.34  significantly in contravention of its basic organizational 
 29.35  document, its health maintenance contract, or in a manner 
 29.36  contrary to that described in and reasonably inferred from any 
 30.1   other information submitted under section 62D.03, unless 
 30.2   amendments to such submissions have been filed with and approved 
 30.3   by the commissioner of health; 
 30.4      (b) The health maintenance organization issues evidences of 
 30.5   coverage which do not comply with the requirements of section 
 30.6   62D.07; 
 30.7      (c) The health maintenance organization is unable to 
 30.8   fulfill its obligations to furnish comprehensive health 
 30.9   maintenance services or comprehensive dental health maintenance 
 30.10  services as required under its health maintenance contract; 
 30.11     (d) The health maintenance organization is no longer 
 30.12  financially responsible and may reasonably be expected to be 
 30.13  unable to meet its obligations to enrollees or prospective 
 30.14  enrollees; 
 30.15     (e) The health maintenance organization has failed to 
 30.16  implement a mechanism affording the enrollees an opportunity to 
 30.17  participate in matters of policy and operation under section 
 30.18  62D.06; 
 30.19     (f) The health maintenance organization has failed to 
 30.20  implement the complaint system required by section 62D.11 in a 
 30.21  manner designed to reasonably resolve valid complaints; 
 30.22     (g) The health maintenance organization, or any person 
 30.23  acting with its sanction, has advertised or merchandised its 
 30.24  services in an untrue, misrepresentative, misleading, deceptive, 
 30.25  or unfair manner; 
 30.26     (h) The continued operation of the health maintenance 
 30.27  organization would be hazardous to its enrollees; or 
 30.28     (i) The health maintenance organization has otherwise 
 30.29  failed to substantially comply with sections 62D.01 to 62D.30 or 
 30.30  with any other statute or administrative rule applicable to 
 30.31  health maintenance organizations, or has submitted false 
 30.32  information in any report required hereunder. 
 30.33     Sec. 24.  Minnesota Statutes 1994, section 62D.17, 
 30.34  subdivision 4, is amended to read: 
 30.35     Subd. 4.  (a) The commissioner of health may issue an order 
 30.36  directing a health maintenance organization or a representative 
 31.1   of a health maintenance organization to cease and desist from 
 31.2   engaging in any act or practice in violation of the provisions 
 31.3   of sections 62D.01 to 62D.30. 
 31.4      (1) The cease and desist order may direct a health 
 31.5   maintenance organization to pay for or provide a service when 
 31.6   that service is required by statute or rule to be provided. 
 31.7      (2) The commissioner may issue a cease and desist order 
 31.8   directing a health maintenance organization to pay for a service 
 31.9   that is required by statute or rule to be provided, only if 
 31.10  there is a demonstrable and irreparable harm to the public or an 
 31.11  enrollee.  
 31.12     (3) If the cease and desist order involves a dispute over 
 31.13  the medical or dental necessity of a procedure based on its 
 31.14  experimental nature, the commissioner may issue a cease and 
 31.15  desist order only if the following conditions are met:  
 31.16     (i) the commissioner has consulted with appropriate and 
 31.17  identified experts; 
 31.18     (ii) the commissioner has reviewed relevant scientific and 
 31.19  medical literature; and 
 31.20     (iii) the commissioner has considered all other relevant 
 31.21  factors including whether final approval of the technology or 
 31.22  procedure has been granted by the appropriate government agency; 
 31.23  the availability of scientific evidence concerning the effect of 
 31.24  the technology or procedure on health outcomes; the availability 
 31.25  of scientific evidence that the technology or procedure is as 
 31.26  beneficial as established alternatives; and the availability of 
 31.27  evidence of benefit or improvement without the technology or 
 31.28  procedure. 
 31.29     (b) Within 20 days after service of the order to cease and 
 31.30  desist, the respondent may request a hearing on the question of 
 31.31  whether acts or practices in violation of sections 62D.01 to 
 31.32  62D.30 have occurred.  Such hearings shall be subject to 
 31.33  judicial review as provided by chapter 14. 
 31.34     If the acts or practices involve violation of the reporting 
 31.35  requirements of section 62D.08, or if the commissioner has 
 31.36  ordered the rehabilitation, liquidation, or conservation of the 
 32.1   health maintenance organization in accordance with section 
 32.2   62D.18, the health maintenance organization may request an 
 32.3   expedited hearing on the matter.  The hearing shall be held 
 32.4   within 15 days of the request.  Within ten days thereafter, an 
 32.5   administrative law judge shall issue a recommendation on the 
 32.6   matter.  The commissioner shall make a final determination on 
 32.7   the matter within ten days of receipt of the administrative law 
 32.8   judge's recommendation.  
 32.9      When a request for a stay accompanies the hearing request, 
 32.10  the matter shall be referred to the office of administrative 
 32.11  hearings within three working days of receipt of the request. 
 32.12  Within ten days thereafter, an administrative law judge shall 
 32.13  issue a recommendation to grant or deny the stay.  The 
 32.14  commissioner shall grant or deny the stay within five days of 
 32.15  receipt of the administrative law judge's recommendation. 
 32.16     To the extent the acts or practices alleged do not involve 
 32.17  (1) violations of section 62D.08; (2) violations which may 
 32.18  result in the financial insolvency of the health maintenance 
 32.19  organization; (3) violations which threaten the life and health 
 32.20  of enrollees; (4) violations which affect whole classes of 
 32.21  enrollees; or (5) violations of benefits or service requirements 
 32.22  mandated by law; if a timely request for a hearing is made, the 
 32.23  cease and desist order shall be stayed for a period of 90 days 
 32.24  from the date the hearing is requested or until a final 
 32.25  determination is made on the order, whichever is earlier.  
 32.26  During this stay, the respondent may show cause why the order 
 32.27  should not become effective upon the expiration of the stay.  
 32.28  Arguments on this issue shall be made through briefs filed with 
 32.29  the administrative law judge no later than ten days prior to the 
 32.30  expiration of the stay.  
 32.31     Sec. 25.  Minnesota Statutes 1995 Supplement, section 
 32.32  62D.181, subdivision 2, is amended to read: 
 32.33     Subd. 2.  [ELIGIBLE INDIVIDUALS.] An individual is eligible 
 32.34  for alternative coverage under this section if: 
 32.35     (1) the individual had individual health coverage for 
 32.36  comprehensive health maintenance services through a health 
 33.1   maintenance organization, integrated service network, or 
 33.2   community integrated service network, the coverage is no longer 
 33.3   available due to the insolvency of the health maintenance 
 33.4   organization, integrated service network, or community 
 33.5   integrated service network, and the individual has not obtained 
 33.6   alternative coverage; or 
 33.7      (2) the individual had group health coverage for 
 33.8   comprehensive health maintenance services through a health 
 33.9   maintenance organization, integrated service network, or 
 33.10  community integrated service network, the coverage is no longer 
 33.11  available due to the insolvency of the health maintenance 
 33.12  organization, integrated service network, or community 
 33.13  integrated service network, and the individual has not obtained 
 33.14  alternative coverage. 
 33.15     Sec. 26.  Minnesota Statutes 1994, section 62D.20, 
 33.16  subdivision 1, is amended to read: 
 33.17     Subdivision 1.  [RULEMAKING.] The commissioner of health 
 33.18  may, pursuant to chapter 14, promulgate such reasonable rules as 
 33.19  are necessary or proper to carry out the provisions of sections 
 33.20  62D.01 to 62D.30.  Included among such rules shall be those 
 33.21  which provide minimum requirements for the provision of 
 33.22  comprehensive health maintenance services, as defined in section 
 33.23  62D.02, subdivision 7, comprehensive dental health maintenance 
 33.24  services as defined in section 62D.02, subdivision 17, and 
 33.25  reasonable exclusions therefrom.  Nothing in such rules shall 
 33.26  force or require a health maintenance organization to provide 
 33.27  elective, induced abortions, except as medically necessary to 
 33.28  prevent the death of the mother, whether performed in a 
 33.29  hospital, other abortion facility, or the office of a physician; 
 33.30  the rules shall provide every health maintenance organization 
 33.31  the option of excluding or including elective, induced 
 33.32  abortions, except as medically necessary to prevent the death of 
 33.33  the mother, as part of its comprehensive health maintenance 
 33.34  services.  
 33.35     Sec. 27.  Minnesota Statutes 1994, section 62D.22, 
 33.36  subdivision 3, is amended to read: 
 34.1      Subd. 3.  Any health maintenance organization authorized 
 34.2   under sections 62D.01 to 62D.30 shall not be deemed to be 
 34.3   practicing a healing art and may employ directly any provider of 
 34.4   health care services notwithstanding any other law or statute to 
 34.5   the contrary. 
 34.6      Sec. 28.  Minnesota Statutes 1994, section 62E.02, 
 34.7   subdivision 3, is amended to read: 
 34.8      Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION.] "Health 
 34.9   maintenance organization" means a nonprofit corporation licensed 
 34.10  and operated as provided in chapter 62D, except health 
 34.11  maintenance organization does not mean a nonprofit corporation 
 34.12  licensed and operated as provided in chapter 62D, which provides 
 34.13  only dental or vision care.  
 34.14     Sec. 29.  Minnesota Statutes 1995 Supplement, section 
 34.15  256.9657, subdivision 3, is amended to read: 
 34.16     Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; INTEGRATED 
 34.17  SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 1992, each 
 34.18  health maintenance organization with a certificate of authority 
 34.19  issued by the commissioner of health under chapter 62D, except a 
 34.20  health maintenance organization that provides only dental or 
 34.21  vision care, and each integrated service network and community 
 34.22  integrated service network licensed by the commissioner under 
 34.23  chapter 62N shall pay to the commissioner of human services a 
 34.24  surcharge equal to six-tenths of one percent of the total 
 34.25  premium revenues of the health maintenance organization, 
 34.26  integrated service network, or community integrated service 
 34.27  network as reported to the commissioner of health according to 
 34.28  the schedule in subdivision 4.  
 34.29     (b) For purposes of this subdivision, total premium revenue 
 34.30  means: 
 34.31     (1) premium revenue recognized on a prepaid basis from 
 34.32  individuals and groups for provision of a specified range of 
 34.33  health services over a defined period of time which is normally 
 34.34  one month, excluding premiums paid to a health maintenance 
 34.35  organization, integrated service network, or community 
 34.36  integrated service network from the Federal Employees Health 
 35.1   Benefit Program; 
 35.2      (2) premiums from Medicare wrap-around subscribers for 
 35.3   health benefits which supplement Medicare coverage; 
 35.4      (3) Medicare revenue, as a result of an arrangement between 
 35.5   a health maintenance organization, an integrated service 
 35.6   network, or a community integrated service network and the 
 35.7   health care financing administration of the federal Department 
 35.8   of Health and Human Services, for services to a Medicare 
 35.9   beneficiary; and 
 35.10     (4) medical assistance revenue, as a result of an 
 35.11  arrangement between a health maintenance organization, 
 35.12  integrated service network, or community integrated service 
 35.13  network and a Medicaid state agency, for services to a medical 
 35.14  assistance beneficiary. 
 35.15     If advance payments are made under clause (1) or (2) to the 
 35.16  health maintenance organization, integrated service network, or 
 35.17  community integrated service network for more than one reporting 
 35.18  period, the portion of the payment that has not yet been earned 
 35.19  must be treated as a liability. 
 35.20     (c) When a health maintenance organization or an integrated 
 35.21  service network or community integrated service network merges 
 35.22  or consolidates with or is acquired by another health 
 35.23  maintenance organization, integrated service network, or 
 35.24  community integrated service network, the surviving corporation 
 35.25  or the new corporation shall be responsible for the annual 
 35.26  surcharge originally imposed on each of the entities or 
 35.27  corporations subject to the merger, consolidation, or 
 35.28  acquisition, regardless of whether one of the entities or 
 35.29  corporations does not retain a certificate of authority under 
 35.30  chapter 62D or a license under chapter 62N. 
 35.31     (d) Effective July 1 of each year, the surviving 
 35.32  corporation's or the new corporation's surcharge shall be based 
 35.33  on the revenues earned in the second previous calendar year by 
 35.34  all of the entities or corporations subject to the merger, 
 35.35  consolidation, or acquisition regardless of whether one of the 
 35.36  entities or corporations does not retain a certificate of 
 36.1   authority under chapter 62D or a license under chapter 62N until 
 36.2   the total premium revenues of the surviving corporation include 
 36.3   the total premium revenues of all the merged entities as 
 36.4   reported to the commissioner of health. 
 36.5      (e) When a health maintenance organization, integrated 
 36.6   service network, or community integrated service network, which 
 36.7   is subject to liability for the surcharge under this chapter, 
 36.8   transfers, assigns, sells, leases, or disposes of all or 
 36.9   substantially all of its property or assets, liability for the 
 36.10  surcharge imposed by this chapter is imposed on the transferee, 
 36.11  assignee, or buyer of the health maintenance organization, 
 36.12  integrated service network, or community integrated service 
 36.13  network. 
 36.14     (f) In the event a health maintenance organization, 
 36.15  integrated service network, or community integrated service 
 36.16  network converts its licensure to a different type of entity 
 36.17  subject to liability for the surcharge under this chapter, but 
 36.18  survives in the same or substantially similar form, the 
 36.19  surviving entity remains liable for the surcharge regardless of 
 36.20  whether one of the entities or corporations does not retain a 
 36.21  certificate of authority under chapter 62D or a license under 
 36.22  chapter 62N. 
 36.23     (g) The surcharge assessed to a health maintenance 
 36.24  organization, integrated service network, or community 
 36.25  integrated service network ends when the entity ceases providing 
 36.26  services for premiums and the cessation is not connected with a 
 36.27  merger, consolidation, acquisition, or conversion. 
 36.28     Sec. 30.  [EFFECTIVE DATE.] 
 36.29     Sections 1 to 29 are effective the day following final 
 36.30  enactment.