1.1                          A bill for an act 
  1.2             relating to MinnesotaCare; eliminating the health care 
  1.3             commission; modifying the regional coordinating 
  1.4             boards; eliminating integrated service networks; 
  1.5             modifying the health technology advisory committee; 
  1.6             expanding the eligibility of the MinnesotaCare 
  1.7             program; modifying general assistance medical care; 
  1.8             modifying the enforcement mechanisms for the provider 
  1.9             tax pass-through; modifying mandatory Medicare 
  1.10            assignment; making technical, policy, and 
  1.11            administrative changes and connections to 
  1.12            MinnesotaCare taxes; providing grants for 
  1.13            MinnesotaCare outreach; appropriating money; amending 
  1.14            Minnesota Statutes 1996, sections 60A.15, subdivision 
  1.15            1; 60A.951, subdivision 5; 62A.61; 62J.017; 62J.06; 
  1.16            62J.07, subdivisions 1 and 3; 62J.09, subdivision 1; 
  1.17            62J.15, subdivision 1; 62J.152, subdivisions 1, 2, 4, 
  1.18            and 5; 62J.17, subdivision 6a; 62J.22; 62J.25; 
  1.19            62J.2914, subdivision 1; 62J.2915; 62J.2916, 
  1.20            subdivision 1; 62J.2917, subdivision 2; 62J.2921, 
  1.21            subdivision 2; 62J.451, subdivision 6b; 62M.02, 
  1.22            subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 
  1.23            62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, 
  1.24            subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 
  1.25            62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 
  1.26            62Q.45, subdivision 2; 136A.1355; 144.147, 
  1.27            subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1; 
  1.28            256.9352, subdivision 3; 256.9353, subdivisions 1, 3, 
  1.29            and 7; 256.9354, subdivisions 4, 5, 6, 7, and by 
  1.30            adding a subdivision; 256.9355, subdivisions 1, 4, and 
  1.31            by adding a subdivision; 256.9357, subdivision 3; 
  1.32            256.9359, subdivision 2; 256.9363, subdivisions 1 and 
  1.33            5; 256.9657, subdivision 3; 256B.04, by adding a 
  1.34            subdivision; 256D.03, subdivision 3; 295.50, 
  1.35            subdivisions 3, 4, 6, 7, 9b, 13, and 14; 295.51, 
  1.36            subdivision 1; 295.52, subdivision 4, and by adding 
  1.37            subdivisions; 295.53, subdivisions 1, 3, and 4; 
  1.38            295.54, subdivisions 1 and 2; 295.55, subdivision 2; 
  1.39            and 295.582; proposing coding for new law in Minnesota 
  1.40            Statutes, chapters 16A; 144; and 256; repealing 
  1.41            Minnesota Statutes 1996, sections 62J.04, subdivisions 
  1.42            4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 
  1.43            62J.37; 62N.01, subdivision 2; 62N.02, subdivisions 2, 
  1.44            3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 
  1.45            62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 
  1.46            62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 
  2.1             62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 
  2.2             62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 
  2.3             62Q.29; 62Q.41; 147.01, subdivision 6; 295.52, 
  2.4             subdivision 1b; and 295.53, subdivision 5; Laws 1993, 
  2.5             chapter 247, article 4, section 8; Laws 1994, chapter 
  2.6             625, article 5, section 5, as amended; Laws 1995, 
  2.7             chapter 96, section 2; and Laws 1995, First Special 
  2.8             Session chapter 3, article 13, section 2. 
  2.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.10                             ARTICLE 1 
  2.11                     MINNESOTACARE PROGRAM/GAMC 
  2.12     Section 1.  Minnesota Statutes 1996, section 256.9353, 
  2.13  subdivision 1, is amended to read: 
  2.14     Subdivision 1.  [COVERED HEALTH SERVICES.] "Covered health 
  2.15  services" means the health services reimbursed under chapter 
  2.16  256B, with the exception of inpatient hospital services, special 
  2.17  education services, private duty nursing services, adult dental 
  2.18  care services other than preventive services, orthodontic 
  2.19  services, nonemergency medical transportation services, personal 
  2.20  care assistant and case management services, nursing home or 
  2.21  intermediate care facilities services, inpatient mental health 
  2.22  services, and chemical dependency services.  Effective July 1, 
  2.23  1998, adult dental care for nonpreventive services with the 
  2.24  exception of orthodontic services is available to persons who 
  2.25  qualify under section 256.9354, subdivisions 1 to 5, or 
  2.26  256.9366, with family gross income equal to or less than 175 
  2.27  percent of the federal poverty guidelines.  Outpatient mental 
  2.28  health services covered under the MinnesotaCare program are 
  2.29  limited to diagnostic assessments, psychological testing, 
  2.30  explanation of findings, medication management by a physician, 
  2.31  day treatment, partial hospitalization, and individual, family, 
  2.32  and group psychotherapy. 
  2.33     No public funds shall be used for coverage of abortion 
  2.34  under MinnesotaCare except where the life of the female would be 
  2.35  endangered or substantial and irreversible impairment of a major 
  2.36  bodily function would result if the fetus were carried to term; 
  2.37  or where the pregnancy is the result of rape or incest. 
  2.38     Covered health services shall be expanded as provided in 
  2.39  this section. 
  3.1      Sec. 2.  Minnesota Statutes 1996, section 256.9353, 
  3.2   subdivision 3, is amended to read: 
  3.3      Subd. 3.  [INPATIENT HOSPITAL SERVICES.] (a) Beginning July 
  3.4   1, 1993, covered health services shall include inpatient 
  3.5   hospital services, including inpatient hospital mental health 
  3.6   services and inpatient hospital and residential chemical 
  3.7   dependency treatment, subject to those limitations necessary to 
  3.8   coordinate the provision of these services with eligibility 
  3.9   under the medical assistance spenddown.  Prior to July 1, 1998, 
  3.10  the inpatient hospital benefit for adult enrollees is subject to 
  3.11  an annual benefit limit of $10,000.  Effective July 1, 1997, the 
  3.12  inpatient hospital benefit for adult enrollees who qualify under 
  3.13  section 256.9354, subdivision 5, is subject to an annual limit 
  3.14  of $10,000.  
  3.15     (b) Enrollees who qualify under section 256.9354, 
  3.16  subdivision 5, are determined by the commissioner to have a 
  3.17  basis of eligibility for medical assistance shall apply for and 
  3.18  cooperate with the requirements of medical assistance by the 
  3.19  last day of the third month following admission to an inpatient 
  3.20  hospital.  If an enrollee fails to apply for medical assistance 
  3.21  within this time period, the enrollee and the enrollee's family 
  3.22  shall be disenrolled from the plan and they may not reenroll 
  3.23  until 12 calendar months have elapsed.  Enrollees and enrollees' 
  3.24  families disenrolled for not applying for or not cooperating 
  3.25  with medical assistance may not reenroll. 
  3.26     (c) Admissions for inpatient hospital services paid for 
  3.27  under section 256.9362, subdivision 3, must be certified as 
  3.28  medically necessary in accordance with Minnesota Rules, parts 
  3.29  9505.0500 to 9505.0540, except as provided in clauses (1) and 
  3.30  (2): 
  3.31     (1) all admissions must be certified, except those 
  3.32  authorized under rules established under section 254A.03, 
  3.33  subdivision 3, or approved under Medicare; and 
  3.34     (2) payment under section 256.9362, subdivision 3, shall be 
  3.35  reduced by five percent for admissions for which certification 
  3.36  is requested more than 30 days after the day of admission.  The 
  4.1   hospital may not seek payment from the enrollee for the amount 
  4.2   of the payment reduction under this clause. 
  4.3      (d) Any enrollee or family member of an enrollee who has 
  4.4   previously been permanently disenrolled from MinnesotaCare for 
  4.5   not applying for and cooperating with medical assistance shall 
  4.6   be eligible to reenroll if 12 calendar months have elapsed since 
  4.7   the date of disenrollment. 
  4.8      Sec. 3.  Minnesota Statutes 1996, section 256.9353, 
  4.9   subdivision 7, is amended to read: 
  4.10     Subd. 7.  [COPAYMENTS AND COINSURANCE.] The MinnesotaCare 
  4.11  benefit plan shall include the following copayments and 
  4.12  coinsurance requirements:  
  4.13     (1) ten percent of the charges submitted for inpatient 
  4.14  hospital services for adult enrollees not eligible for medical 
  4.15  assistance, subject to an annual inpatient out-of-pocket maximum 
  4.16  of $1,000 per individual and $3,000 per family; 
  4.17     (2) $3 per prescription for adult enrollees; and 
  4.18     (3) $25 for eyeglasses for adult enrollees; and 
  4.19     (4) effective July 1, 1998, 50 percent of charges submitted 
  4.20  for adult dental care services other than preventive care 
  4.21  services for persons eligible under section 256.9354, 
  4.22  subdivisions 1 to 5, or 256.9366 with income equal to or less 
  4.23  than 175 percent of the federal poverty guidelines.  
  4.24     Prior to July 1, 1997, enrollees who are not eligible for 
  4.25  medical assistance with or without a spenddown shall be 
  4.26  financially responsible for the coinsurance amount and amounts 
  4.27  which exceed the $10,000 benefit limit.  MinnesotaCare shall be 
  4.28  financially responsible for the spenddown amount up to the 
  4.29  $10,000 benefit limit for enrollees who are eligible for medical 
  4.30  assistance with a spenddown; enrollees who are eligible for 
  4.31  medical assistance with a spenddown are financially responsible 
  4.32  for amounts which exceed the $10,000 benefit limit.  Effective 
  4.33  July 1, 1997, the inpatient hospital benefit for adult enrollees 
  4.34  who qualify under section 256.9354, subdivision 5, and who are 
  4.35  not eligible for medical assistance with or without a spenddown 
  4.36  shall be financially responsible for the coinsurance amount and 
  5.1   amounts, which exceed the $10,000 benefit limit. 
  5.2      Sec. 4.  Minnesota Statutes 1996, section 256.9354, 
  5.3   subdivision 4, is amended to read: 
  5.4      Subd. 4.  [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON 
  5.5   PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning 
  5.6   January 1, 1993, "eligible persons" means children, parents, and 
  5.7   dependent siblings residing in the same household who are not 
  5.8   eligible for medical assistance without a spenddown under 
  5.9   chapter 256B.  Children who meet the criteria in subdivision 1 
  5.10  or 4a shall continue to be enrolled pursuant to those 
  5.11  subdivisions.  Persons who are eligible under this subdivision 
  5.12  or subdivision 2, 3, or 5 must pay a premium as determined under 
  5.13  sections 256.9357 and 256.9358, and children eligible under 
  5.14  subdivision 1 must pay the premium required under section 
  5.15  256.9356, subdivision 1.  Individuals and families whose income 
  5.16  is greater than the limits established under section 256.9358 
  5.17  may not enroll in MinnesotaCare.  
  5.18     Sec. 5.  Minnesota Statutes 1996, section 256.9354, 
  5.19  subdivision 5, is amended to read: 
  5.20     Subd. 5.  [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 
  5.21  CHILDREN.] (a) Beginning October 1, 1994, the definition of 
  5.22  "eligible persons" is expanded to include all individuals and 
  5.23  households with no children who have gross family incomes that 
  5.24  are equal to or less than 125 percent of the federal poverty 
  5.25  guidelines and who are not eligible for medical assistance 
  5.26  without a spenddown under chapter 256B.  
  5.27     (b) After October 1, 1995, the commissioner of human 
  5.28  services may expand the definition of "eligible persons" to 
  5.29  include all individuals and households with no children who have 
  5.30  gross family incomes that are equal to or less than 135 percent 
  5.31  of federal poverty guidelines and are not eligible for medical 
  5.32  assistance without a spenddown under chapter 256B.  This 
  5.33  expansion may occur only if the financial management 
  5.34  requirements of section 256.9352, subdivision 3, can be met. 
  5.35     (c) The commissioners of health and human services, in 
  5.36  consultation with the legislative commission on health care 
  6.1   access, shall make preliminary recommendations to the 
  6.2   legislature by October 1, 1995, and final recommendations to the 
  6.3   legislature by February 1, 1996, on whether a further expansion 
  6.4   of the definition of "eligible persons" to include all 
  6.5   individuals and households with no children who have gross 
  6.6   family incomes that are equal to or less than 150 percent of 
  6.7   federal poverty guidelines and are not eligible for medical 
  6.8   assistance without a spenddown under chapter 256B would be 
  6.9   allowed under the financial management constraints outlined in 
  6.10  section 256.9352, subdivision 3. 
  6.11     (d) (b) Beginning July 1, 1997, the definition of eligible 
  6.12  persons is expanded to include all individuals and households 
  6.13  with no children who have gross family incomes that are equal to 
  6.14  or less than 175 percent of the federal poverty guidelines and 
  6.15  who are not eligible for medical assistance without a spenddown 
  6.16  under chapter 256B. 
  6.17     (c) All eligible persons under paragraphs (a) and (b) are 
  6.18  eligible for coverage through the MinnesotaCare program but must 
  6.19  pay a premium as determined under sections 256.9357 and 
  6.20  256.9358.  Individuals and families whose income is greater than 
  6.21  the limits established under section 256.9358 may not enroll in 
  6.22  the MinnesotaCare program. 
  6.23     Sec. 6.  Minnesota Statutes 1996, section 256.9354, 
  6.24  subdivision 6, is amended to read: 
  6.25     Subd. 6.  [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 
  6.26  ASSISTANCE.] Individuals who apply for MinnesotaCare who qualify 
  6.27  under section 256.9354, subdivision 5, but who are potentially 
  6.28  eligible for medical assistance without a spenddown shall be 
  6.29  allowed to enroll in MinnesotaCare for a period of 60 days, so 
  6.30  long as the applicant meets all other conditions of 
  6.31  eligibility.  The commissioner shall identify and refer such 
  6.32  individuals to their county social service agency.  The enrollee 
  6.33  must cooperate with the county social service agency in 
  6.34  determining medical assistance eligibility within the 60-day 
  6.35  enrollment period.  Enrollees who do not apply for and cooperate 
  6.36  with medical assistance within the 60-day enrollment period, and 
  7.1   their other family members, shall be disenrolled from the plan 
  7.2   within one calendar month.  Persons disenrolled for 
  7.3   nonapplication for medical assistance may not reenroll until 
  7.4   they have obtained a medical assistance eligibility 
  7.5   determination for the family member or members who were referred 
  7.6   to the county agency.  Persons disenrolled for noncooperation 
  7.7   with medical assistance may not reenroll until they have 
  7.8   cooperated with the county agency and have obtained a medical 
  7.9   assistance eligibility determination.  The commissioner shall 
  7.10  redetermine provider payments made under MinnesotaCare to the 
  7.11  appropriate medical assistance payments for those enrollees who 
  7.12  subsequently become eligible for medical assistance. 
  7.13     Sec. 7.  Minnesota Statutes 1996, section 256.9354, 
  7.14  subdivision 7, is amended to read: 
  7.15     Subd. 7.  [GENERAL ASSISTANCE MEDICAL CARE.] A person 
  7.16  cannot have coverage under both MinnesotaCare and general 
  7.17  assistance medical care in the same month, except that a 
  7.18  MinnesotaCare enrollee may be eligible for retroactive general 
  7.19  assistance medical care according to section 256D.03, 
  7.20  subdivision 3, paragraph (b). 
  7.21     Sec. 8.  Minnesota Statutes 1996, section 256.9354, is 
  7.22  amended by adding a subdivision to read: 
  7.23     Subd. 8.  [MINNESOTACARE OUTREACH.] The commissioner shall 
  7.24  award grants to public or private organizations to provide 
  7.25  information on the importance of maintaining insurance coverage 
  7.26  and on how to obtain coverage through the MinnesotaCare program 
  7.27  in areas of the state with high uninsured populations.  
  7.28     Information about MinnesotaCare coverage and enrollment 
  7.29  shall be made available to insurance agents.  A fee may be paid 
  7.30  by the commissioner of human services to an insurance agent for 
  7.31  each MinnesotaCare enrollee who is enrolled into the 
  7.32  MinnesotaCare program as a result of a documented referral from 
  7.33  that agent.  
  7.34     Sec. 9.  Minnesota Statutes 1996, section 256.9355, 
  7.35  subdivision 1, is amended to read: 
  7.36     Subdivision 1.  [APPLICATION AND INFORMATION AVAILABILITY.] 
  8.1   Applications and other information must be made available to 
  8.2   provider offices, local human services agencies, school 
  8.3   districts, public and private elementary schools in which 25 
  8.4   percent or more of the students receive free or reduced price 
  8.5   lunches, community health offices, and Women, Infants and 
  8.6   Children (WIC) program sites.  These sites may accept 
  8.7   applications, collect the enrollment fee or initial premium fee, 
  8.8   and forward the forms and fees to the commissioner.  Otherwise, 
  8.9   applicants may apply directly to the commissioner.  Beginning 
  8.10  January 1, 2000, MinnesotaCare enrollment sites will be expanded 
  8.11  to include local county human services agencies which choose to 
  8.12  participate.  
  8.13     Sec. 10.  Minnesota Statutes 1996, section 256.9355, 
  8.14  subdivision 4, is amended to read: 
  8.15     Subd. 4.  [APPLICATION PROCESSING.] The commissioner of 
  8.16  human services shall determine an applicant's eligibility for 
  8.17  MinnesotaCare no more than 30 days from the date that the 
  8.18  application is received by the department of human services.  
  8.19  This requirement shall be suspended for four months following 
  8.20  the dates in which single adults and families without children 
  8.21  become eligible for the program.  Beginning July 1, 2000, this 
  8.22  requirement also applies to local county human services agencies 
  8.23  that determine eligibility for MinnesotaCare.  
  8.24     Sec. 11.  Minnesota Statutes 1996, section 256.9355, is 
  8.25  amended by adding a subdivision to read: 
  8.26     Subd. 5.  [AVAILABILITY OF PRIVATE INSURANCE.] The 
  8.27  commissioner, in consultation with the commissioners of health 
  8.28  and commerce, shall provide information regarding the 
  8.29  availability of private health insurance coverage to all 
  8.30  families and individuals enrolled in the MinnesotaCare program 
  8.31  whose gross family income is equal to or more than 200 percent 
  8.32  of the federal poverty guidelines.  This information must be 
  8.33  provided upon initial enrollment and annually thereafter. 
  8.34     Sec. 12.  Minnesota Statutes 1996, section 256.9357, 
  8.35  subdivision 3, is amended to read: 
  8.36     Subd. 3.  [PERIOD UNINSURED.] To be eligible for subsidized 
  9.1   premium payments based on a sliding scale, families and 
  9.2   individuals initially enrolled in the MinnesotaCare program 
  9.3   under section 256.9354, subdivisions 4 and 5, must have had no 
  9.4   health coverage for at least four months prior to application.  
  9.5   The commissioner may change this eligibility criterion for 
  9.6   sliding scale premiums without complying with rulemaking 
  9.7   requirements in order to remain within the limits of available 
  9.8   appropriations.  The requirement of at least four months of no 
  9.9   health coverage prior to application for the MinnesotaCare 
  9.10  program does not apply to: 
  9.11     (1) families, children, and individuals who want to apply 
  9.12  for the MinnesotaCare program upon termination from or as 
  9.13  required by the medical assistance program, general assistance 
  9.14  medical care program, or coverage under a regional demonstration 
  9.15  project for the uninsured funded under section 256B.73, the 
  9.16  Hennepin county assured care program, or the Group Health, Inc., 
  9.17  community health plan; 
  9.18     (2) families and individuals initially enrolled under 
  9.19  section 256.9354, subdivisions 1, paragraph (a), and 2; 
  9.20     (3) children enrolled pursuant to Laws 1992, chapter 549, 
  9.21  article 4, section 17; or 
  9.22     (4) individuals currently serving or who have served in the 
  9.23  military reserves, and dependents of these individuals, if these 
  9.24  individuals:  (i) reapply for MinnesotaCare coverage after a 
  9.25  period of active military service during which they had been 
  9.26  covered by the Civilian Health and Medical Program of the 
  9.27  Uniformed Services (CHAMPUS); (ii) were covered under 
  9.28  MinnesotaCare immediately prior to obtaining coverage under 
  9.29  CHAMPUS; and (iii) have maintained continuous coverage. 
  9.30     Sec. 13.  Minnesota Statutes 1996, section 256.9359, 
  9.31  subdivision 2, is amended to read: 
  9.32     Subd. 2.  [RESIDENCY REQUIREMENT.] (a) Prior to July 1, 
  9.33  1997, to be eligible for health coverage under the MinnesotaCare 
  9.34  program, families and individuals must be permanent residents of 
  9.35  Minnesota.  
  9.36     (b) Effective July 1, 1997, to be eligible for health 
 10.1   coverage under the MinnesotaCare program, adults without 
 10.2   children must be permanent residents of Minnesota. 
 10.3      (c) Effective July 1, 1997, to be eligible for health 
 10.4   coverage under the MinnesotaCare program, pregnant women, 
 10.5   families, and children must meet the residency requirements as 
 10.6   provided by Code of Federal Regulations, title 42, section 
 10.7   435.403, except that the provisions of section 256B.056, 
 10.8   subdivision 1, shall apply upon receipt of federal approval. 
 10.9      Sec. 14.  Minnesota Statutes 1996, section 256.9363, 
 10.10  subdivision 5, is amended to read: 
 10.11     Subd. 5.  [ELIGIBILITY FOR OTHER STATE PROGRAMS.] 
 10.12  MinnesotaCare enrollees who become eligible for medical 
 10.13  assistance or general assistance medical care will remain in the 
 10.14  same managed care plan if the managed care plan has a contract 
 10.15  for that population.  Effective January 1, 1998, MinnesotaCare 
 10.16  enrollees who were formerly eligible for general assistance 
 10.17  medical care pursuant to section 256D.03, subdivision 3, within 
 10.18  six months of MinnesotaCare enrollment and were enrolled in a 
 10.19  prepaid health plan pursuant to section 256D.03, subdivision 4, 
 10.20  paragraph (d), must remain in the same managed care plan if the 
 10.21  managed care plan has a contract for that population.  Contracts 
 10.22  between the department of human services and managed care plans 
 10.23  must include MinnesotaCare, and medical assistance and may, at 
 10.24  the option of the commissioner of human services, also include 
 10.25  general assistance medical care. 
 10.26     Sec. 15.  [256.955] [SENIOR CITIZEN DRUG PROGRAM.] 
 10.27     Subdivision 1.  [ESTABLISHMENT.] The commissioner, in 
 10.28  consultation with county social service agencies, shall 
 10.29  establish and administer a senior citizen drug program.  
 10.30  Qualified senior citizens shall be eligible for prescription 
 10.31  drug coverage under the program beginning January 1, 1998. 
 10.32     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 10.33  the following definitions apply. 
 10.34     (b) "Health plan" has the meaning provided in section 
 10.35  62Q.01, subdivision 3. 
 10.36     (c) "Health plan company" has the meaning provided in 
 11.1   section 62Q.01, subdivision 4. 
 11.2      (d) "Qualified senior citizen" means an individual age 65 
 11.3   or older who: 
 11.4      (1) has a household income that does not exceed 120 percent 
 11.5   of the federal poverty guidelines; 
 11.6      (2) owns assets whose value does not exceed twice the limit 
 11.7   used to determine eligibility under the supplemental security 
 11.8   income program; 
 11.9      (3) is enrolled in Medicare part A and part B; 
 11.10     (4) is not eligible for prescription drug coverage under a 
 11.11  health plan; 
 11.12     (5) is not eligible for prescription drug coverage under a 
 11.13  Medicare supplement plan, as defined in sections 62A.31 to 
 11.14  62A.44, or policies, contracts, or certificates that supplement 
 11.15  Medicare issued by health maintenance organizations or those 
 11.16  policies, contracts, or certificates governed by section 1833 or 
 11.17  1876 of the federal Social Security Act, United States Code, 
 11.18  title 42, section 1395, et seq., as amended; 
 11.19     (6) is not eligible for medical assistance without a 
 11.20  spenddown or general assistance medical care without a 
 11.21  spenddown; 
 11.22     (7) has not had coverage described in clauses (4) and (5) 
 11.23  for at least four months prior to application for the program; 
 11.24  and 
 11.25     (8) is a permanent resident of Minnesota as defined in 
 11.26  section 256.9359. 
 11.27     (b) Persons who initially enrolled in the senior citizen 
 11.28  drug program under this section and whose income increases above 
 11.29  the limits established in paragraph (a) may continue enrollment 
 11.30  but must pay the full cost of coverage. 
 11.31     Subd. 3.  [PRESCRIPTION DRUG COVERAGE.] (a) Coverage under 
 11.32  the program is limited to prescription drugs covered under the 
 11.33  medical assistance program, except as provided in paragraph (b). 
 11.34     (b) As of the date the commissioner determines that, in a 
 11.35  given county, at least two health plan companies offer policies, 
 11.36  contracts, or certificates governed by section 1833 or 1876 of 
 12.1   the federal Social Security Act that provide a prescription drug 
 12.2   benefit as part of their standard coverage for Medicare 
 12.3   enrollees, eligibility for prescription drug coverage under the 
 12.4   senior drug program for enrollees who are residents of the 
 12.5   county shall be limited to coverage of prescription drug costs 
 12.6   in excess of any annual expenditure limit for enrollees of the 
 12.7   health plan companies. 
 12.8      Subd. 4.  [APPLICATION PROCEDURES AND 
 12.9   ADMINISTRATION.] Applications and information on the program 
 12.10  must be made available at county social service agencies, health 
 12.11  care provider offices, and agencies and organizations serving 
 12.12  senior citizens.  Senior citizens shall submit applications and 
 12.13  any information specified by the commissioner as being necessary 
 12.14  to verify eligibility directly to the county social service 
 12.15  agencies.  County social service agencies shall determine an 
 12.16  applicant's eligibility for the program within 30 days from the 
 12.17  date the application is received. 
 12.18     Subd. 5.  [DRUG UTILIZATION REVIEW PROGRAM.] The 
 12.19  commissioner may implement a drug utilization review program for 
 12.20  program enrollees.  The commissioner shall establish a task 
 12.21  force in accordance with section 15.014 to assist the 
 12.22  commissioner in developing criteria for the utilization review 
 12.23  program.  The task force shall be comprised of an equal number 
 12.24  of physicians and pharmacists with expertise in treating elderly 
 12.25  persons, and shall use a consensus process to develop clinically 
 12.26  relevant standards for drug utilization review designed to 
 12.27  improve health care outcomes for senior citizens.  
 12.28     Subd. 6.  [PHARMACY ENROLLMENT AND 
 12.29  REIMBURSEMENT.] Pharmacies may apply to the commissioner to 
 12.30  participate in the senior citizen drug program.  The 
 12.31  commissioner shall reimburse participating pharmacies for drug 
 12.32  and dispensing costs at the MinnesotaCare reimbursement level, 
 12.33  minus the copayment required under subdivision 7. 
 12.34     Subd. 7.  [PREMIUM PAYMENTS AND COST SHARING.] (a) Program 
 12.35  enrollees shall pay a $10 per month premium. 
 12.36     (b) Program enrollees shall pay a copayment of $10 for each 
 13.1   prescription. 
 13.2      (c) Program enrollees must satisfy a $200 annual 
 13.3   deductible, based upon expenditures for prescription drugs.  The 
 13.4   commissioner may adjust the annual deductible amount to stay 
 13.5   within the program's appropriation. 
 13.6      (d) The commissioner shall include payments or expenditures 
 13.7   by an enrollee under this subdivision as expenses for medical 
 13.8   care when determining an enrollee's eligibility for medical 
 13.9   assistance or general assistance medical care based upon a 
 13.10  spenddown. 
 13.11     Subd. 8.  [REPORT.] The commissioner shall annually report 
 13.12  to the legislature on the senior citizen drug program.  The 
 13.13  report must include demographic information on enrollees, 
 13.14  per-prescription expenditures, total program expenditures, 
 13.15  hospital and nursing home costs avoided by enrollees, any 
 13.16  savings to medical assistance and Medicare resulting from the 
 13.17  provision of prescription drug coverage under Medicare by health 
 13.18  maintenance organizations, other public and private options for 
 13.19  drug assistance to the senior population, and any 
 13.20  recommendations for changes in the senior drug program. 
 13.21     Sec. 16.  Minnesota Statutes 1996, section 256B.04, is 
 13.22  amended by adding a subdivision to read: 
 13.23     Subd. 19.  [PRESCRIPTION DRUG CONTRACT REQUIREMENT.] The 
 13.24  commissioner shall include, as part of any medical assistance 
 13.25  prescription drug contract with a drug manufacturer or drug 
 13.26  wholesaler, a requirement that the drug manufacturer or drug 
 13.27  wholesaler agree to extend the medical assistance rebate to the 
 13.28  senior citizen drug program established under section 256.955. 
 13.29     Sec. 17.  Minnesota Statutes 1996, section 256D.03, 
 13.30  subdivision 3, is amended to read: 
 13.31     Subd. 3.  [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 
 13.32  (a) General assistance medical care may be paid for any person 
 13.33  who is not eligible for medical assistance under chapter 256B, 
 13.34  including eligibility for medical assistance based on a 
 13.35  spenddown of excess income according to section 256B.056, 
 13.36  subdivision 5, or MinnesotaCare as defined in clause (4), except 
 14.1   as provided in paragraph (b); and: 
 14.2      (1) who is receiving assistance under section 
 14.3   256D.05, except for families with children who are eligible 
 14.4   under Minnesota family investment program-statewide (MFIP-S), or 
 14.5   who is having a payment made on the person's behalf under 
 14.6   sections 256I.01 to 256I.06; or 
 14.7      (2)(i) who is a resident of Minnesota; and whose equity in 
 14.8   assets is not in excess of $1,000 per assistance unit.  No asset 
 14.9   test shall be applied to children and their parents living in 
 14.10  the same household.  Exempt assets, the reduction of excess 
 14.11  assets, and the waiver of excess assets must conform to the 
 14.12  medical assistance program in chapter 256B, with the following 
 14.13  exception:  the maximum amount of undistributed funds in a trust 
 14.14  that could be distributed to or on behalf of the beneficiary by 
 14.15  the trustee, assuming the full exercise of the trustee's 
 14.16  discretion under the terms of the trust, must be applied toward 
 14.17  the asset maximum; and 
 14.18     (ii) who has countable income not in excess of the 
 14.19  assistance standards established in section 256B.056, 
 14.20  subdivision 4, or whose excess income is spent down pursuant to 
 14.21  section 256B.056, subdivision 5, using a six-month budget 
 14.22  period, except that a one-month budget period must be used for 
 14.23  recipients residing in a long-term care facility.  The method 
 14.24  for calculating earned income disregards and deductions for a 
 14.25  person who resides with a dependent child under age 21 shall be 
 14.26  as specified in section 256.74, subdivision 1 follow section 
 14.27  256B.056, subdivision 1a.  However, if a disregard of $30 and 
 14.28  one-third of the remainder described in section 256.74, 
 14.29  subdivision 1, clause (4), has been applied to the wage earner's 
 14.30  income, the disregard shall not be applied again until the wage 
 14.31  earner's income has not been considered in an eligibility 
 14.32  determination for general assistance, general assistance medical 
 14.33  care, medical assistance, or aid to families with dependent 
 14.34  children MFIP-S for 12 consecutive months.  The earned income 
 14.35  and work expense deductions for a person who does not reside 
 14.36  with a dependent child under age 21 shall be the same as the 
 15.1   method used to determine eligibility for a person under section 
 15.2   256D.06, subdivision 1, except the disregard of the first $50 of 
 15.3   earned income is not allowed; or 
 15.4      (3) who would be eligible for medical assistance except 
 15.5   that the person resides in a facility that is determined by the 
 15.6   commissioner or the federal health care financing administration 
 15.7   to be an institution for mental diseases. 
 15.8      (4) Beginning July 1, 1998, applicants or recipients who 
 15.9   meet all eligibility requirements of MinnesotaCare as defined in 
 15.10  sections 256.9351 to 256.9363 and 256.9366 to 256.9369, and are: 
 15.11     (i) adults with dependent children under 21 whose gross 
 15.12  family income is equal to or less than 275 percent of the 
 15.13  federal poverty guidelines; or 
 15.14     (ii) adults without children with earned income and whose 
 15.15  family gross income is between 75 percent of the federal poverty 
 15.16  guidelines and the amount set by section 256.9354, subdivision 
 15.17  5, shall be terminated from general assistance medical care upon 
 15.18  enrollment in MinnesotaCare. 
 15.19     (b) Eligibility is available for the month of application, 
 15.20  and for three months prior to application if the person was 
 15.21  eligible in those prior months. (1) For services rendered on or 
 15.22  after July 1, 1997, eligibility is limited to one month prior to 
 15.23  application if the person is determined eligible in the prior 
 15.24  month.  A redetermination of eligibility must occur every 12 
 15.25  months.  Beginning July 1, 1998, Minnesota health care program 
 15.26  applications completed by recipients and applicants who are 
 15.27  persons described in paragraph (a), clause (4), may be returned 
 15.28  to the county agency to be forwarded to the department of human 
 15.29  services or sent directly to the department of human services 
 15.30  for enrollment in MinnesotaCare.  If all other eligibility 
 15.31  requirements of this subdivision are met, eligibility for 
 15.32  general assistance medical care shall be available in any month 
 15.33  during which a MinnesotaCare eligibility determination and 
 15.34  enrollment are pending.  Upon notification of eligibility for 
 15.35  MinnesotaCare, notice of termination for eligibility for general 
 15.36  assistance medical care shall be sent to an applicant or 
 16.1   recipient.  If all other eligibility requirements of this 
 16.2   subdivision are met, eligibility for general assistance medical 
 16.3   care shall be available until enrollment in MinnesotaCare 
 16.4   subject to the provisions of paragraph (d). 
 16.5      (2) An initial Minnesota health care program application 
 16.6   shall be considered complete and determination of eligibility 
 16.7   underway if the recipient and applicant has provided their name, 
 16.8   address, social security number, and best estimate of prior 
 16.9   year's income.  If the recipient or applicant is unable to 
 16.10  provide this information when health care is delivered due to a 
 16.11  medical condition or disability, a health care provider may act 
 16.12  on their behalf to complete the initial application. 
 16.13     (3) County agencies are authorized to use all automated 
 16.14  databases containing information regarding recipients' or 
 16.15  applicants' income in order to determine eligibility for general 
 16.16  assistance medical care or MinnesotaCare.  Such use shall be 
 16.17  considered sufficient in order to determine eligibility and 
 16.18  premium payments by the county agency. 
 16.19     (c) General assistance medical care is not available for a 
 16.20  person in a correctional facility unless the person is detained 
 16.21  by law for less than one year in a county correctional or 
 16.22  detention facility as a person accused or convicted of a crime, 
 16.23  or admitted as an inpatient to a hospital on a criminal hold 
 16.24  order, and the person is a recipient of general assistance 
 16.25  medical care at the time the person is detained by law or 
 16.26  admitted on a criminal hold order and as long as the person 
 16.27  continues to meet other eligibility requirements of this 
 16.28  subdivision.  
 16.29     (d) General assistance medical care is not available for 
 16.30  applicants or recipients who do not cooperate with the county 
 16.31  agency to meet the requirements of medical assistance.  General 
 16.32  assistance medical care is limited to payment of emergency 
 16.33  services only for applicants or recipients as described in 
 16.34  paragraph (a), clause (4), whose MinnesotaCare coverage is 
 16.35  denied or terminated for nonpayment of premiums as required by 
 16.36  sections 256.9356 to 256.9358.  
 17.1      (e) In determining the amount of assets of an individual, 
 17.2   there shall be included any asset or interest in an asset, 
 17.3   including an asset excluded under paragraph (a), that was given 
 17.4   away, sold, or disposed of for less than fair market value 
 17.5   within the 60 months preceding application for general 
 17.6   assistance medical care or during the period of eligibility.  
 17.7   Any transfer described in this paragraph shall be presumed to 
 17.8   have been for the purpose of establishing eligibility for 
 17.9   general assistance medical care, unless the individual furnishes 
 17.10  convincing evidence to establish that the transaction was 
 17.11  exclusively for another purpose.  For purposes of this 
 17.12  paragraph, the value of the asset or interest shall be the fair 
 17.13  market value at the time it was given away, sold, or disposed 
 17.14  of, less the amount of compensation received.  For any 
 17.15  uncompensated transfer, the number of months of ineligibility, 
 17.16  including partial months, shall be calculated by dividing the 
 17.17  uncompensated transfer amount by the average monthly per person 
 17.18  payment made by the medical assistance program to skilled 
 17.19  nursing facilities for the previous calendar year.  The 
 17.20  individual shall remain ineligible until this fixed period has 
 17.21  expired.  The period of ineligibility may exceed 30 months, and 
 17.22  a reapplication for benefits after 30 months from the date of 
 17.23  the transfer shall not result in eligibility unless and until 
 17.24  the period of ineligibility has expired.  The period of 
 17.25  ineligibility begins in the month the transfer was reported to 
 17.26  the county agency, or if the transfer was not reported, the 
 17.27  month in which the county agency discovered the transfer, 
 17.28  whichever comes first.  For applicants, the period of 
 17.29  ineligibility begins on the date of the first approved 
 17.30  application. 
 17.31     (f)(1) Beginning October 1, 1993, an undocumented alien or 
 17.32  a nonimmigrant is ineligible for general assistance medical care 
 17.33  other than emergency services.  For purposes of this 
 17.34  subdivision, a nonimmigrant is an individual in one or more of 
 17.35  the classes listed in United States Code, title 8, section 
 17.36  1101(a)(15), and an undocumented alien is an individual who 
 18.1   resides in the United States without the approval or 
 18.2   acquiescence of the Immigration and Naturalization Service. 
 18.3      (2) This subdivision does not apply to a child under age 
 18.4   18, to a Cuban or Haitian entrant as defined in Public Law 
 18.5   Number 96-422, section 501(e)(1) or (2)(a), or to an alien who 
 18.6   is aged, blind, or disabled as defined in United States Code, 
 18.7   title 42, section 1382c(a)(1). 
 18.8      (3) For purposes of paragraph paragraphs (d) and (f), 
 18.9   "emergency services" has the meaning given in Code of Federal 
 18.10  Regulations, title 42, section 440.255(b)(1), except that it 
 18.11  also means services rendered because of suspected or actual 
 18.12  pesticide poisoning. 
 18.13     Sec. 18.  [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.] 
 18.14     (a) The commissioner of human services, in consultation 
 18.15  with the legislative commission on health care access and the 
 18.16  commissioners of employee relations, health, and commerce, shall 
 18.17  develop an implementation plan to transition higher-income 
 18.18  MinnesotaCare enrollees to private sector or other nonsubsidized 
 18.19  coverage.  In developing the plan, the commissioner shall 
 18.20  examine the feasibility of using the health insurance program 
 18.21  for state employees administered by the commissioner of employee 
 18.22  relations as a source of coverage, and shall also examine 
 18.23  methods to increase the affordability of private sector coverage 
 18.24  for individuals and families transitioning off MinnesotaCare.  
 18.25  The commissioner shall submit the implementation plan to the 
 18.26  legislature by December 15, 1997. 
 18.27     (b) The commissioner of human services shall also report to 
 18.28  the legislature by January 15, 1998, on the impact of the 
 18.29  outreach efforts conducted by the department of human services 
 18.30  for the MinnesotaCare program, affordability of the 
 18.31  MinnesotaCare premium schedule, and the reasons why families and 
 18.32  individuals are leaving the MinnesotaCare program; regarding 
 18.33  recommendations on the eligibility income level that will result 
 18.34  in the greatest number of individuals having health insurance; 
 18.35  what will encourage greater availability of coverage in the 
 18.36  private market; steps to increase the availability of insurance 
 19.1   in the small employer market; the need, if any, for increasing 
 19.2   the MinnesotaCare program eligibility level for single adults 
 19.3   and households without children; and shall make recommendations 
 19.4   on the feasibility of increasing the eligibility income level 
 19.5   for single adults and households without children in the 
 19.6   MinnesotaCare program. 
 19.7      Sec. 19.  [REIMBURSEMENT RATE INCREASE.] 
 19.8      Notwithstanding statutory provisions to the contrary, the 
 19.9   commissioner of human services shall increase reimbursement 
 19.10  rates under the MinnesotaCare program by 15 percent for dental 
 19.11  services rendered on or after July 1, 1997. 
 19.12     Sec. 20.  [EFFECTIVE DATE.] 
 19.13     Section 4 is effective July 1, 1998. 
 19.14                             ARTICLE 2 
 19.15            MISCELLANEOUS CHANGES TO HEALTH CARE REFORM 
 19.16     Section 1.  Minnesota Statutes 1996, section 60A.951, 
 19.17  subdivision 5, is amended to read: 
 19.18     Subd. 5.  [INSURER.] "Insurer" means insurance company, 
 19.19  risk retention group as defined in section 60E.02, service plan 
 19.20  corporation as defined in section 62C.02, health maintenance 
 19.21  organization as defined in section 62D.02, community integrated 
 19.22  service network as defined in section 62N.02, fraternal benefit 
 19.23  society regulated under chapter 64B, township mutual company 
 19.24  regulated under chapter 67A, joint self-insurance plan or 
 19.25  multiple employer trust regulated under chapter 60F, 62H, or 
 19.26  section 471.617, subdivision 2, persons administering a 
 19.27  self-insurance plan as defined in section 60A.23, subdivision 8, 
 19.28  clause (2), paragraphs (a) and (d), and the workers' 
 19.29  compensation reinsurance association established in section 
 19.30  79.34. 
 19.31     Sec. 2.  Minnesota Statutes 1996, section 62A.61, is 
 19.32  amended to read: 
 19.33     62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
 19.34  DETERMINE USUAL AND CUSTOMARY FEES.] 
 19.35     (a) A health carrier that bases reimbursement to health 
 19.36  care providers upon a usual and customary fee must maintain in 
 20.1   its office a copy of a description of the methodology used to 
 20.2   calculate fees including at least the following: 
 20.3      (1) the frequency of the determination of usual and 
 20.4   customary fees; 
 20.5      (2) a general description of the methodology used to 
 20.6   determine usual and customary fees; and 
 20.7      (3) the percentile of usual and customary fees that 
 20.8   determines the maximum allowable reimbursement. 
 20.9      (b) A health carrier must provide a copy of the information 
 20.10  described in paragraph (a) to the Minnesota health care 
 20.11  commission, the commissioner of health, or the commissioner of 
 20.12  commerce, upon request. 
 20.13     (c) The commissioner of health or the commissioner of 
 20.14  commerce, as appropriate, may use to enforce this section any 
 20.15  enforcement powers otherwise available to the commissioner with 
 20.16  respect to the health carrier.  The appropriate commissioner 
 20.17  shall enforce compliance with a request made under this section 
 20.18  by the Minnesota health care commission, at the request of the 
 20.19  commissioner.  The commissioner of health or commerce, as 
 20.20  appropriate, may require health carriers to provide the 
 20.21  information required under this section and may use any powers 
 20.22  granted under other laws relating to the regulation of health 
 20.23  carriers to enforce compliance. 
 20.24     (d) For purposes of this section, "health carrier" has the 
 20.25  meaning given in section 62A.011. 
 20.26     Sec. 3.  Minnesota Statutes 1996, section 62J.017, is 
 20.27  amended to read: 
 20.28     62J.017 [IMPLEMENTATION TIMETABLE.] 
 20.29     The state seeks to complete the restructuring of the health 
 20.30  care delivery and financing system.  Beginning July 1, 1994, 
 20.31  measures will be taken to increase the public accountability of 
 20.32  existing health plan companies, to promote the development of 
 20.33  small, community-based integrated service networks, and to 
 20.34  reduce administrative costs by standardizing third-party billing 
 20.35  forms and procedures and utilization review requirements.  
 20.36  Voluntary formation of other integrated service networks will 
 21.1   begin after rules have been adopted, but not before July 1, 
 21.2   1996.  Statutes and rules for the restructured health care 
 21.3   financing and delivery system must be enacted or adopted by 
 21.4   January 1, 1996. 
 21.5      Sec. 4.  Minnesota Statutes 1996, section 62J.06, is 
 21.6   amended to read: 
 21.7      62J.06 [IMMUNITY FROM LIABILITY.] 
 21.8      No member of the Minnesota health care commission 
 21.9   established under section 62J.05, regional coordinating boards 
 21.10  established under section 62J.09, or the health technology 
 21.11  advisory committee established under section 62J.15, shall be 
 21.12  held civilly or criminally liable for an act or omission by that 
 21.13  person if the act or omission was in good faith and within the 
 21.14  scope of the member's responsibilities under this chapter.  
 21.15     Sec. 5.  Minnesota Statutes 1996, section 62J.07, 
 21.16  subdivision 1, is amended to read: 
 21.17     Subdivision 1.  [LEGISLATIVE OVERSIGHT.] The legislative 
 21.18  commission on health care access reviews the activities of the 
 21.19  commissioner of health, the state health care 
 21.20  commission regional coordinating boards, the health technology 
 21.21  advisory committee, and all other state agencies involved in the 
 21.22  implementation and administration of this chapter, including 
 21.23  efforts to obtain federal approval through waivers and other 
 21.24  means.  
 21.25     Sec. 6.  Minnesota Statutes 1996, section 62J.07, 
 21.26  subdivision 3, is amended to read: 
 21.27     Subd. 3.  [REPORTS TO THE COMMISSION.] The commissioner of 
 21.28  health and the Minnesota health care commission, the regional 
 21.29  coordinating boards, and the health technology advisory 
 21.30  committee shall report on their activities and the activities of 
 21.31  the regional boards annually and at other times at the request 
 21.32  of the legislative commission on health care access.  The 
 21.33  commissioners of health, commerce, and human services shall 
 21.34  provide periodic reports to the legislative commission on the 
 21.35  progress of rulemaking that is authorized or required under this 
 21.36  act and shall notify members of the commission when a draft of a 
 22.1   proposed rule has been completed and scheduled for publication 
 22.2   in the State Register.  At the request of a member of the 
 22.3   commission, a commissioner shall provide a description and a 
 22.4   copy of a proposed rule. 
 22.5      Sec. 7.  Minnesota Statutes 1996, section 62J.09, 
 22.6   subdivision 1, is amended to read: 
 22.7      Subdivision 1.  [GENERAL DUTIES.] (a) The commissioner 
 22.8   shall divide the state into five rural regions, which shall 
 22.9   include all areas of the state, except for the seven-county 
 22.10  metropolitan area. 
 22.11     The (b) Each rural region shall establish a locally 
 22.12  controlled regional coordinating boards are locally controlled 
 22.13  boards board consisting of providers, health plan companies, 
 22.14  employers, consumers, and elected officials.  Regional 
 22.15  coordinating boards may: 
 22.16     (1) undertake voluntary activities to educate consumers, 
 22.17  providers, and purchasers about community plans and projects 
 22.18  promoting health care cost containment, consumer accountability, 
 22.19  access, and quality and efforts to achieve public health goals; 
 22.20     (2) make recommendations to the commissioner regarding ways 
 22.21  of improving affordability, accessibility, and quality of health 
 22.22  care in the region and throughout the state; 
 22.23     (3) provide technical assistance to parties interested in 
 22.24  establishing or operating a community integrated service network 
 22.25  or integrated service network within the region.  This 
 22.26  assistance must complement assistance provided by the 
 22.27  commissioner under section 62N.23; 
 22.28     (4) advise the commissioner on public health goals, taking 
 22.29  into consideration the relevant portions of the community health 
 22.30  service plans, plans required by the Minnesota comprehensive 
 22.31  adult mental health act, the Minnesota comprehensive children's 
 22.32  mental health act, and the community social service act plans 
 22.33  developed by county boards or community health boards in the 
 22.34  region under chapters 145A, 245, and 256E; 
 22.35     (5) prepare an annual regional education plan that is 
 22.36  consistent with and supportive of public health goals identified 
 23.1   by community health boards in the region; and 
 23.2      (6) serve as advisory bodies to identify potential 
 23.3   applicants for federal Health Professional Shortage Area and 
 23.4   federal Medically Underserved Area designation as requested by 
 23.5   the commissioner. 
 23.6      Sec. 8.  Minnesota Statutes 1996, section 62J.15, 
 23.7   subdivision 1, is amended to read: 
 23.8      Subdivision 1.  [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The 
 23.9   Minnesota health care commission shall convene legislative 
 23.10  commission on health care access may convene or authorize the 
 23.11  commissioner of health to convene an advisory committee to 
 23.12  conduct evaluations of existing research and technology 
 23.13  assessments conducted by other entities of new and existing 
 23.14  health care technologies as designated by the legislative 
 23.15  commission on health care access, the commissioner, or the 
 23.16  advisory committee.  The advisory committee may include members 
 23.17  of the state commission and other persons appointed by the 
 23.18  commission.  The advisory committee must include at least one 
 23.19  person representing physicians, at least one person representing 
 23.20  hospitals, and at least one person representing the health care 
 23.21  technology industry.  Health care technologies include high-cost 
 23.22  drugs, devices, procedures, or processes applied to human health 
 23.23  care, such as high-cost transplants and expensive scanners and 
 23.24  imagers.  The advisory committee is governed by section 15.0575, 
 23.25  subdivision 3, except that members do not receive per diem 
 23.26  payments. 
 23.27     Sec. 9.  Minnesota Statutes 1996, section 62J.152, 
 23.28  subdivision 1, is amended to read: 
 23.29     Subdivision 1.  [GENERALLY.] The health technology advisory 
 23.30  committee established in section 62J.15 shall: 
 23.31     (1) develop criteria and processes for evaluating health 
 23.32  care technology assessments made by other entities; 
 23.33     (2) conduct evaluations of specific technologies and their 
 23.34  specific use and application; 
 23.35     (3) provide the legislature with scientific evaluations of 
 23.36  proposed benefit mandates that utilize health care technologies 
 24.1   for a specific use and application; 
 24.2      (4) report the results of the evaluations to the 
 24.3   commissioner and the Minnesota health care 
 24.4   commission legislative commission on health care access; and 
 24.5      (4) (5) carry out other duties relating to health 
 24.6   technology assigned by the commission legislature or the 
 24.7   legislative commission on health care access. 
 24.8      Sec. 10.  Minnesota Statutes 1996, section 62J.152, 
 24.9   subdivision 2, is amended to read: 
 24.10     Subd. 2.  [PRIORITIES FOR DESIGNATING TECHNOLOGIES CRITERIA 
 24.11  FOR ASSESSMENT EVALUATION.] The health technology advisory 
 24.12  committee shall consider the following criteria in designating 
 24.13  assessing or evaluating technologies for evaluation: 
 24.14     (1) the level of controversy within the medical or 
 24.15  scientific community, including questionable or undetermined 
 24.16  efficacy; 
 24.17     (2) the cost implications; 
 24.18     (3) the potential for rapid diffusion; 
 24.19     (4) the impact on a substantial patient population; 
 24.20     (5) the existence of alternative technologies; 
 24.21     (6) the impact on patient safety and health outcome; 
 24.22     (7) the public health importance; 
 24.23     (8) the level of public and professional demand; 
 24.24     (9) the social, ethical, and legal concerns; and 
 24.25     (10) the prevalence of the disease or condition. 
 24.26  The committee may give different weights or attach different 
 24.27  importance to each of the criteria, depending on the technology 
 24.28  being considered.  The committee shall consider any additional 
 24.29  criteria approved by the commissioner and the Minnesota health 
 24.30  care commission legislative commission on health care access. 
 24.31     Sec. 11.  Minnesota Statutes 1996, section 62J.152, 
 24.32  subdivision 4, is amended to read: 
 24.33     Subd. 4.  [TECHNOLOGY EVALUATION PROCESS.] (a) The health 
 24.34  technology advisory committee shall collect and evaluate studies 
 24.35  and research findings on the technologies selected for 
 24.36  evaluation from as wide of a range of sources as needed, 
 25.1   including, but not limited to:  federal agencies or other units 
 25.2   of government, international organizations conducting health 
 25.3   care technology assessments, health carriers, insurers, 
 25.4   manufacturers, professional and trade associations, nonprofit 
 25.5   organizations, and academic institutions.  The health technology 
 25.6   advisory committee may use consultants or experts and solicit 
 25.7   testimony or other input as needed to evaluate a specific 
 25.8   technology. 
 25.9      (b) When the evaluation process on a specific technology 
 25.10  has been completed, the health technology advisory committee 
 25.11  shall submit a preliminary report to the health care 
 25.12  commission legislative commission on health care access and 
 25.13  publish a summary of the preliminary report in the State 
 25.14  Register with a notice that written comments may be submitted.  
 25.15  The preliminary report must include the results of the 
 25.16  technology assessment evaluation, studies and research findings 
 25.17  considered in conducting the evaluation, and the health 
 25.18  technology advisory committee's summary statement about the 
 25.19  evaluation.  Any interested persons or organizations may submit 
 25.20  to the health technology advisory committee written comments 
 25.21  regarding the technology evaluation within 30 days from the date 
 25.22  the preliminary report was published in the State Register.  The 
 25.23  health technology advisory committee's final report on its 
 25.24  technology evaluation must be submitted to the health care 
 25.25  commission commissioner, to the legislature, and to the 
 25.26  information clearinghouse.  A summary of written comments 
 25.27  received by the health technology advisory committee within the 
 25.28  30-day period must be included in the final report.  The health 
 25.29  care commission shall review the final report and prepare its 
 25.30  comments and recommendations.  Before completing its final 
 25.31  comments and recommendations, the health care commission shall 
 25.32  provide adequate public notice that testimony will be accepted 
 25.33  by the health care commission.  The health care commission shall 
 25.34  then forward the final report, its comments and recommendations, 
 25.35  and a summary of the public's comments to the commissioner and 
 25.36  information clearinghouse. 
 26.1      (c) The reports of the health technology advisory committee 
 26.2   and the comments and recommendations of the health care 
 26.3   commission should not eliminate or bar new technology, and are 
 26.4   not rules as defined in the administrative procedure act. 
 26.5      Sec. 12.  Minnesota Statutes 1996, section 62J.152, 
 26.6   subdivision 5, is amended to read: 
 26.7      Subd. 5.  [USE OF TECHNOLOGY EVALUATION.] (a) The final 
 26.8   report on the technology evaluation and the commission's 
 26.9   comments and recommendations may be used: 
 26.10     (1) by the commissioner in retrospective and prospective 
 26.11  review of major expenditures; 
 26.12     (2) by integrated service networks and other group 
 26.13  purchasers and by employers, in making coverage, contracting, 
 26.14  purchasing, and reimbursement decisions; 
 26.15     (3) by organizations in the development of practice 
 26.16  parameters; 
 26.17     (4) by health care providers in making decisions about 
 26.18  adding or replacing technology and the appropriate use of 
 26.19  technology; 
 26.20     (5) by consumers in making decisions about treatment; 
 26.21     (6) by medical device manufacturers in developing and 
 26.22  marketing new technologies; and 
 26.23     (7) as otherwise needed by health care providers, health 
 26.24  care plans, consumers, and purchasers. 
 26.25     (b) At the request of the commissioner, the health care 
 26.26  commission, in consultation with the health technology advisory 
 26.27  committee, shall submit specific recommendations relating to 
 26.28  technologies that have been evaluated under this section for 
 26.29  purposes of retrospective and prospective review of major 
 26.30  expenditures and coverage, contracting, purchasing, and 
 26.31  reimbursement decisions affecting state programs. 
 26.32     Sec. 13.  Minnesota Statutes 1996, section 62J.17, 
 26.33  subdivision 6a, is amended to read: 
 26.34     Subd. 6a.  [PROSPECTIVE REVIEW AND APPROVAL.] (a) 
 26.35  [REQUIREMENT.] No health care provider subject to prospective 
 26.36  review under this subdivision shall make a major spending 
 27.1   commitment unless:  
 27.2      (1) the provider has filed an application with the 
 27.3   commissioner to proceed with the major spending commitment and 
 27.4   has provided all supporting documentation and evidence requested 
 27.5   by the commissioner; and 
 27.6      (2) the commissioner determines, based upon this 
 27.7   documentation and evidence, that the major spending commitment 
 27.8   is appropriate under the criteria provided in subdivision 5a in 
 27.9   light of the alternatives available to the provider.  
 27.10     (b)  [APPLICATION.] A provider subject to prospective 
 27.11  review and approval shall submit an application to the 
 27.12  commissioner before proceeding with any major spending 
 27.13  commitment.  The application must address each item listed in 
 27.14  subdivision 4a, paragraph (a), and must also include 
 27.15  documentation to support the response to each item.  The 
 27.16  provider may submit information, with supporting documentation, 
 27.17  regarding why the major spending commitment should be excepted 
 27.18  from prospective review under subdivision 7.  The submission may 
 27.19  be made either in addition to or instead of the submission of 
 27.20  information relating to the items listed in subdivision 4a, 
 27.21  paragraph (a).  
 27.22     (c)  [REVIEW.] The commissioner shall determine, based upon 
 27.23  the information submitted, whether the major spending commitment 
 27.24  is appropriate under the criteria provided in subdivision 5a, or 
 27.25  whether it should be excepted from prospective review under 
 27.26  subdivision 7.  In making this determination, the commissioner 
 27.27  may also consider relevant information from other sources.  At 
 27.28  the request of the commissioner, the Minnesota health care 
 27.29  commission health technology advisory committee shall convene an 
 27.30  expert review panel made up of persons with knowledge and 
 27.31  expertise regarding medical equipment, specialized services, 
 27.32  health care expenditures, and capital expenditures to review 
 27.33  applications and make recommendations to the commissioner.  The 
 27.34  commissioner shall make a decision on the application within 60 
 27.35  days after an application is received. 
 27.36     (d)  [PENALTIES AND REMEDIES.] The commissioner of health 
 28.1   has the authority to issue fines, seek injunctions, and pursue 
 28.2   other remedies as provided by law. 
 28.3      Sec. 14.  Minnesota Statutes 1996, section 62J.22, is 
 28.4   amended to read: 
 28.5      62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.] 
 28.6      The commissioner of health shall seek the full 
 28.7   participation of federal health care programs under this 
 28.8   chapter, including Medicare, medical assistance, veterans 
 28.9   administration programs, and other federal programs.  The 
 28.10  commissioner of human services shall under the direction of the 
 28.11  health care commission submit waiver requests and take other 
 28.12  action necessary to obtain federal approval to allow 
 28.13  participation of the medical assistance program.  Other state 
 28.14  agencies shall provide assistance at the request of the 
 28.15  commission.  If federal approval is not given for one or more 
 28.16  federal programs, data on the amount of health care spending 
 28.17  that is collected under section 62J.04 shall be adjusted so that 
 28.18  state and regional spending limits take into account the failure 
 28.19  of the federal program to participate. 
 28.20     Sec. 15.  Minnesota Statutes 1996, section 62J.25, is 
 28.21  amended to read: 
 28.22     62J.25 [MANDATORY MEDICARE ASSIGNMENT.] 
 28.23     (a) Effective January 1, 1993, a health care provider 
 28.24  authorized to participate in the Medicare program shall not 
 28.25  charge to or collect from a Medicare beneficiary who is a 
 28.26  Minnesota resident any amount in excess of 115 percent of the 
 28.27  Medicare-approved amount for any Medicare-covered service 
 28.28  provided. 
 28.29     (b) Effective January 1, 1994, a health care provider 
 28.30  authorized to participate in the Medicare program shall not 
 28.31  charge to or collect from a Medicare beneficiary who is a 
 28.32  Minnesota resident any amount in excess of 110 percent of the 
 28.33  Medicare-approved amount for any Medicare-covered service 
 28.34  provided. 
 28.35     (c) Effective January 1, 1995, a health care provider 
 28.36  authorized to participate in the Medicare program shall not 
 29.1   charge to or collect from a Medicare beneficiary who is a 
 29.2   Minnesota resident any amount in excess of 105 percent of the 
 29.3   Medicare-approved amount for any Medicare-covered service 
 29.4   provided. 
 29.5      (d) Effective January 1, 1996, a health care provider 
 29.6   authorized to participate in the Medicare program shall not 
 29.7   charge to or collect from a Medicare beneficiary who is a 
 29.8   Minnesota resident any amount in excess of the Medicare-approved 
 29.9   amount for any Medicare-covered service provided. 
 29.10     (e) This section does not apply to ambulance services as 
 29.11  defined in section 144.801, subdivision 4, or medical supplies 
 29.12  and equipment. 
 29.13     Sec. 16.  Minnesota Statutes 1996, section 62J.2914, 
 29.14  subdivision 1, is amended to read: 
 29.15     Subdivision 1.  [DISCLOSURE.] An application for approval 
 29.16  must include, to the extent applicable, disclosure of the 
 29.17  following: 
 29.18     (1) a descriptive title; 
 29.19     (2) a table of contents; 
 29.20     (3) exact names of each party to the application and the 
 29.21  address of the principal business office of each party; 
 29.22     (4) the name, address, and telephone number of the persons 
 29.23  authorized to receive notices and communications with respect to 
 29.24  the application; 
 29.25     (5) a verified statement by a responsible officer of each 
 29.26  party to the application attesting to the accuracy and 
 29.27  completeness of the enclosed information; 
 29.28     (6) background information relating to the proposed 
 29.29  arrangement, including: 
 29.30     (i) a description of the proposed arrangement, including a 
 29.31  list of any services or products that are the subject of the 
 29.32  proposed arrangement; 
 29.33     (ii) an identification of any tangential services or 
 29.34  products associated with the services or products that are the 
 29.35  subject of the proposed arrangement; 
 29.36     (iii) a description of the geographic territory involved in 
 30.1   the proposed arrangement; 
 30.2      (iv) if the geographic territory described in item (iii), 
 30.3   is different from the territory in which the applicants have 
 30.4   engaged in the type of business at issue over the last five 
 30.5   years, a description of how and why the geographic territory 
 30.6   differs; 
 30.7      (v) identification of all products or services that a 
 30.8   substantial share of consumers would consider substitutes for 
 30.9   any service or product that is the subject of the proposed 
 30.10  arrangement; 
 30.11     (vi) identification of whether any services or products of 
 30.12  the proposed arrangement are currently being offered, capable of 
 30.13  being offered, utilized, or capable of being utilized by other 
 30.14  providers or purchasers in the geographic territory described in 
 30.15  item (iii); 
 30.16     (vii) identification of the steps necessary, under current 
 30.17  market and regulatory conditions, for other parties to enter the 
 30.18  territory described in item (iii) and compete with the 
 30.19  applicant; 
 30.20     (viii) a description of the previous history of dealings 
 30.21  between the parties to the application; 
 30.22     (ix) a detailed explanation of the projected effects, 
 30.23  including expected volume, change in price, and increased 
 30.24  revenue, of the arrangement on each party's current businesses, 
 30.25  both generally as well as the aspects of the business directly 
 30.26  involved in the proposed arrangement; 
 30.27     (x) the present market share of the parties to the 
 30.28  application and of others affected by the proposed arrangement, 
 30.29  and projected market shares after implementation of the proposed 
 30.30  arrangement; 
 30.31     (xi) a statement of why the projected levels of cost, 
 30.32  access, or quality could not be achieved in the existing market 
 30.33  without the proposed arrangement; and 
 30.34     (xii) an explanation of how the arrangement relates to any 
 30.35  Minnesota health care commission or applicable regional 
 30.36  coordinating board plans for delivery of health care; and 
 31.1      (7) a detailed explanation of how the transaction will 
 31.2   affect cost, access, and quality.  The explanation must address 
 31.3   the factors in section 62J.2917, subdivision 2, paragraphs (b) 
 31.4   to (d), to the extent applicable. 
 31.5      Sec. 17.  Minnesota Statutes 1996, section 62J.2915, is 
 31.6   amended to read: 
 31.7      62J.2915 [NOTICE AND COMMENT.] 
 31.8      Subdivision 1.  [NOTICE.] The commissioner shall cause the 
 31.9   notice described in section 62J.2914, subdivision 2, to be 
 31.10  published in the State Register and sent to the Minnesota health 
 31.11  care commission, the regional coordinating boards for any 
 31.12  regions that include all or part of the territory covered by the 
 31.13  proposed arrangement, and any person who has requested to be 
 31.14  placed on a list to receive notice of applications.  The 
 31.15  commissioner may maintain separate notice lists for different 
 31.16  regions of the state.  The commissioner may also send a copy of 
 31.17  the notice to any person together with a request that the person 
 31.18  comment as provided under subdivision 2.  Copies of the request 
 31.19  must be provided to the applicant. 
 31.20     Subd. 2.  [COMMENTS.] Within 20 days after the notice is 
 31.21  published, any person may mail to the commissioner written 
 31.22  comments with respect to the application.  Within 30 days after 
 31.23  the notice is published, the Minnesota health care commission or 
 31.24  any regional coordinating board may mail to the commissioner 
 31.25  comments with respect to the application.  Persons submitting 
 31.26  comments shall provide a copy of the comments to the applicant.  
 31.27  The applicant may mail to the commissioner written responses to 
 31.28  any comments within ten days after the deadline for mailing such 
 31.29  comments.  The applicant shall send a copy of the response to 
 31.30  the person submitting the comment. 
 31.31     Sec. 18.  Minnesota Statutes 1996, section 62J.2916, 
 31.32  subdivision 1, is amended to read: 
 31.33     Subdivision 1.  [CHOICE OF PROCEDURES.] After the 
 31.34  conclusion of the period provided in section 62J.2915, 
 31.35  subdivision 2, for the applicant to respond to comments, the 
 31.36  commissioner shall select one of the three procedures provided 
 32.1   in subdivision 2.  In determining which procedure to use, the 
 32.2   commissioner shall consider the following criteria: 
 32.3      (1) the size of the proposed arrangement, in terms of 
 32.4   number of parties and amount of money involved; 
 32.5      (2) the complexity of the proposed arrangement; 
 32.6      (3) the novelty of the proposed arrangement; 
 32.7      (4) the substance and quantity of the comments received; 
 32.8      (5) any comments received from the Minnesota health care 
 32.9   commission or regional coordinating boards; and 
 32.10     (6) the presence or absence of any significant gaps in the 
 32.11  factual record. 
 32.12     If the applicant demands a contested case hearing no later 
 32.13  than the conclusion of the period provided in section 62J.2915, 
 32.14  subdivision 2, for the applicant to respond to comments, the 
 32.15  commissioner shall not select a procedure.  Instead, the 
 32.16  applicant shall be given a contested case proceeding as a matter 
 32.17  of right. 
 32.18     Sec. 19.  Minnesota Statutes 1996, section 62J.2917, 
 32.19  subdivision 2, is amended to read: 
 32.20     Subd. 2.  [FACTORS.] (a)  [GENERALLY APPLICABLE FACTORS.] 
 32.21  In making a determination about cost, access, and quality, the 
 32.22  commissioner may consider the following factors, to the extent 
 32.23  relevant: 
 32.24     (1) whether the proposal is compatible with the cost 
 32.25  containment plan or other plan of the Minnesota health care 
 32.26  commission or the applicable regional plans of the regional 
 32.27  coordinating boards; 
 32.28     (2) market structure: 
 32.29     (i) actual and potential sellers and buyers, or providers 
 32.30  and purchasers; 
 32.31     (ii) actual and potential consumers; 
 32.32     (iii) geographic market area; and 
 32.33     (iv) entry conditions; 
 32.34     (3) current market conditions; 
 32.35     (4) the historical behavior of the market; 
 32.36     (5) performance of other, similar arrangements; 
 33.1      (6) whether the proposal unnecessarily restrains 
 33.2   competition or restrains competition in ways not reasonably 
 33.3   related to the purposes of this chapter; and 
 33.4      (7) the financial condition of the applicant. 
 33.5      (b)  [COST.] The commissioner's analysis of cost must focus 
 33.6   on the individual consumer of health care.  Cost savings to be 
 33.7   realized by providers, health carriers, group purchasers, or 
 33.8   other participants in the health care system are relevant only 
 33.9   to the extent that the savings are likely to be passed on to the 
 33.10  consumer.  However, where an application is submitted by 
 33.11  providers or purchasers who are paid primarily by third party 
 33.12  payers unaffiliated with the applicant, it is sufficient for the 
 33.13  applicant to show that cost savings are likely to be passed on 
 33.14  to the unaffiliated third party payers; the applicants do not 
 33.15  have the burden of proving that third party payers with whom the 
 33.16  applicants are not affiliated will pass on cost savings to 
 33.17  individuals receiving coverage through the third party payers.  
 33.18  In making determinations as to costs, the commissioner may 
 33.19  consider: 
 33.20     (1) the cost savings likely to result to the applicant; 
 33.21     (2) the extent to which the cost savings are likely to be 
 33.22  passed on to the consumer and in what form; 
 33.23     (3) the extent to which the proposed arrangement is likely 
 33.24  to result in cost shifting by the applicant onto other payers or 
 33.25  purchasers of other products or services; 
 33.26     (4) the extent to which the cost shifting by the applicant 
 33.27  is likely to be followed by other persons in the market; 
 33.28     (5) the current and anticipated supply and demand for any 
 33.29  products or services at issue; 
 33.30     (6) the representations and guarantees of the applicant and 
 33.31  their enforceability; 
 33.32     (7) likely effectiveness of regulation by the commissioner; 
 33.33     (8) inferences to be drawn from market structure; 
 33.34     (9) the cost of regulation, both for the state and for the 
 33.35  applicant; and 
 33.36     (10) any other factors tending to show that the proposed 
 34.1   arrangement is or is not likely to reduce cost. 
 34.2      (c)  [ACCESS.] In making determinations as to access, the 
 34.3   commissioner may consider: 
 34.4      (1) the extent to which the utilization of needed health 
 34.5   care services or products by the intended targeted population is 
 34.6   likely to increase or decrease.  When a proposed arrangement is 
 34.7   likely to increase access in one geographic area, by lowering 
 34.8   prices or otherwise expanding supply, but limits access in 
 34.9   another geographic area by removing service capabilities from 
 34.10  that second area, the commissioner shall articulate the criteria 
 34.11  employed to balance these effects; 
 34.12     (2) the extent to which the proposed arrangement is likely 
 34.13  to make available a new and needed service or product to a 
 34.14  certain geographic area; and 
 34.15     (3) the extent to which the proposed arrangement is likely 
 34.16  to otherwise make health care services or products more 
 34.17  financially or geographically available to persons who need them.
 34.18     If the commissioner determines that the proposed 
 34.19  arrangement is likely to increase access and bases that 
 34.20  determination on a projected increase in utilization, the 
 34.21  commissioner shall also determine and make a specific finding 
 34.22  that the increased utilization does not reflect overutilization. 
 34.23     (d)  [QUALITY.] In making determinations as to quality, the 
 34.24  commissioner may consider the extent to which the proposed 
 34.25  arrangement is likely to: 
 34.26     (1) decrease morbidity and mortality; 
 34.27     (2) result in faster convalescence; 
 34.28     (3) result in fewer hospital days; 
 34.29     (4) permit providers to attain needed experience or 
 34.30  frequency of treatment, likely to lead to better outcomes; 
 34.31     (5) increase patient satisfaction; and 
 34.32     (6) have any other features likely to improve or reduce the 
 34.33  quality of health care. 
 34.34     Sec. 20.  Minnesota Statutes 1996, section 62J.2921, 
 34.35  subdivision 2, is amended to read: 
 34.36     Subd. 2.  [NOTICE.] The commissioner shall begin a 
 35.1   proceeding to revoke approval by providing written notice to the 
 35.2   applicant describing in detail the basis for the proposed 
 35.3   revocation.  Notice of the proceeding must be published in the 
 35.4   State Register and submitted to the Minnesota health care 
 35.5   commission and the applicable regional coordinating boards.  The 
 35.6   notice must invite the submission of comments to the 
 35.7   commissioner. 
 35.8      Sec. 21.  Minnesota Statutes 1996, section 62J.451, 
 35.9   subdivision 6b, is amended to read: 
 35.10     Subd. 6b.  [CONSUMER SURVEYS.] (a) The health data 
 35.11  institute shall develop and implement a mechanism for collecting 
 35.12  comparative data on consumer perceptions of the health care 
 35.13  system, including consumer satisfaction, through adoption of a 
 35.14  standard consumer survey.  This survey shall include enrollees 
 35.15  in community integrated service networks, integrated service 
 35.16  networks, health maintenance organizations, preferred provider 
 35.17  organizations, indemnity insurance plans, public programs, and 
 35.18  other health plan companies.  The health data institute, in 
 35.19  consultation with the health care commission, shall determine a 
 35.20  mechanism for the inclusion of the uninsured.  This consumer 
 35.21  survey may be conducted every two years.  A focused survey may 
 35.22  be conducted on the off years.  Health plan companies and group 
 35.23  purchasers shall provide to the health data institute roster 
 35.24  data as defined in subdivision 2, including the names, 
 35.25  addresses, and telephone numbers of enrollees and former 
 35.26  enrollees and other data necessary for the completion of this 
 35.27  survey.  This roster data provided by the health plan companies 
 35.28  and group purchasers is classified as provided under section 
 35.29  62J.452.  The health data institute may analyze and prepare 
 35.30  findings from the raw, unaggregated data, and the findings from 
 35.31  this survey may be included in the health plan company 
 35.32  performance reports specified in subdivision 6a, and in other 
 35.33  reports developed and disseminated by the health data institute 
 35.34  and the commissioner.  The raw, unaggregated data is classified 
 35.35  as provided under section 62J.452, and may be made available by 
 35.36  the health data institute to the extent permitted under section 
 36.1   62J.452.  The health data institute shall provide raw, 
 36.2   unaggregated data to the commissioner.  The survey may include 
 36.3   information on the following subjects: 
 36.4      (1) enrollees' overall satisfaction with their health care 
 36.5   plan; 
 36.6      (2) consumers' perception of access to emergency, urgent, 
 36.7   routine, and preventive care, including locations, hours, 
 36.8   waiting times, and access to care when needed; 
 36.9      (3) premiums and costs; 
 36.10     (4) technical competence of providers; 
 36.11     (5) communication, courtesy, respect, reassurance, and 
 36.12  support; 
 36.13     (6) choice and continuity of providers; 
 36.14     (7) continuity of care; 
 36.15     (8) outcomes of care; 
 36.16     (9) services offered by the plan, including range of 
 36.17  services, coverage for preventive and routine services, and 
 36.18  coverage for illness and hospitalization; 
 36.19     (10) availability of information; and 
 36.20     (11) paperwork. 
 36.21     (b) The health data institute shall appoint a consumer 
 36.22  advisory group which shall consist of 13 individuals, 
 36.23  representing enrollees from public and private health plan 
 36.24  companies and programs and two uninsured consumers, to advise 
 36.25  the health data institute on issues of concern to consumers.  
 36.26  The advisory group must have at least one member from each 
 36.27  regional coordinating board region of the state.  The advisory 
 36.28  group expires June 30, 1996. 
 36.29     Sec. 22.  Minnesota Statutes 1996, section 62M.02, 
 36.30  subdivision 21, is amended to read: 
 36.31     Subd. 21.  [UTILIZATION REVIEW ORGANIZATION.] "Utilization 
 36.32  review organization" means an entity including but not limited 
 36.33  to an insurance company licensed under chapter 60A to offer, 
 36.34  sell, or issue a policy of accident and sickness insurance as 
 36.35  defined in section 62A.01; a health service plan licensed under 
 36.36  chapter 62C; a health maintenance organization licensed under 
 37.1   chapter 62D; a community integrated service network or an 
 37.2   integrated service network licensed under chapter 62N; a 
 37.3   fraternal benefit society operating under chapter 64B; a joint 
 37.4   self-insurance employee health plan operating under chapter 62H; 
 37.5   a multiple employer welfare arrangement, as defined in section 3 
 37.6   of the Employee Retirement Income Security Act of 1974 (ERISA), 
 37.7   United States Code, title 29, section 1103, as amended; a third 
 37.8   party administrator licensed under section 60A.23, subdivision 
 37.9   8, which conducts utilization review and determines 
 37.10  certification of an admission, extension of stay, or other 
 37.11  health care services for a Minnesota resident; or any entity 
 37.12  performing utilization review that is affiliated with, under 
 37.13  contract with, or conducting utilization review on behalf of, a 
 37.14  business entity in this state. 
 37.15     Sec. 23.  Minnesota Statutes 1996, section 62N.01, 
 37.16  subdivision 1, is amended to read: 
 37.17     Subdivision 1.  [CITATION.] This chapter may be cited as 
 37.18  the "Minnesota community integrated service network act." 
 37.19     Sec. 24.  Minnesota Statutes 1996, section 62N.22, is 
 37.20  amended to read: 
 37.21     62N.22 [DISCLOSURE OF COMMISSIONS.] 
 37.22     Before selling any coverage or enrollment in a community 
 37.23  integrated service network or an integrated service network, a 
 37.24  person selling the coverage or enrollment shall disclose in 
 37.25  writing to the prospective purchaser the amount of any 
 37.26  commission or other compensation the person will receive as a 
 37.27  direct result of the sale.  The disclosure may be expressed in 
 37.28  dollars or as a percentage of the premium.  The amount disclosed 
 37.29  need not include any anticipated renewal commissions. 
 37.30     Sec. 25.  Minnesota Statutes 1996, section 62N.23, is 
 37.31  amended to read: 
 37.32     62N.23 [TECHNICAL ASSISTANCE; LOANS.] 
 37.33     (a) The commissioner shall provide technical assistance to 
 37.34  parties interested in establishing or operating a community 
 37.35  integrated service network or an integrated service network.  
 37.36  This shall be known as the community integrated service network 
 38.1   technical assistance program (ISNTAP) (CISNTAP). 
 38.2      The technical assistance program shall offer seminars on 
 38.3   the establishment and operation of community integrated service 
 38.4   networks or integrated service networks in all regions of 
 38.5   Minnesota.  The commissioner shall advertise these seminars in 
 38.6   local and regional newspapers, and attendance at these seminars 
 38.7   shall be free. 
 38.8      The commissioner shall write a guide to establishing and 
 38.9   operating a community integrated service network or an 
 38.10  integrated service network.  The guide must provide basic 
 38.11  instructions for parties wishing to establish a community 
 38.12  integrated service network or an integrated service network.  
 38.13  The guide must be provided free of charge to interested 
 38.14  parties.  The commissioner shall update this guide when 
 38.15  appropriate. 
 38.16     The commissioner shall establish a toll-free telephone line 
 38.17  that interested parties may call to obtain assistance in 
 38.18  establishing or operating a community integrated service network 
 38.19  or an integrated service network. 
 38.20     (b) The commissioner shall grant loans for organizational 
 38.21  and start-up expenses to entities forming community integrated 
 38.22  service networks or integrated service networks, or to networks 
 38.23  less than one year old, to the extent of any appropriation for 
 38.24  that purpose.  The commissioner shall allocate the available 
 38.25  funds among applicants based upon the following criteria, as 
 38.26  evaluated by the commissioner within the commissioner's 
 38.27  discretion: 
 38.28     (1) the applicant's need for the loan; 
 38.29     (2) the likelihood that the loan will foster the formation 
 38.30  or growth of a network; and 
 38.31     (3) the likelihood of repayment. 
 38.32     The commissioner shall determine any necessary application 
 38.33  deadlines and forms and is exempt from rulemaking in doing so.  
 38.34     Sec. 26.  Minnesota Statutes 1996, section 62N.25, 
 38.35  subdivision 5, is amended to read: 
 38.36     Subd. 5.  [BENEFITS.] Community integrated service networks 
 39.1   must offer the health maintenance organization benefit set, as 
 39.2   defined in chapter 62D, and other laws applicable to entities 
 39.3   regulated under chapter 62D, except that the community 
 39.4   integrated service network may impose a deductible, not to 
 39.5   exceed $1,000 per person per year, provided that out-of-pocket 
 39.6   expenses on covered services do not exceed $3,000 per person or 
 39.7   $5,000 per family per year.  The deductible must not apply to 
 39.8   preventive health services as described in Minnesota Rules, part 
 39.9   4685.0801, subpart 8.  Community networks and chemical 
 39.10  dependency facilities under contract with a community network 
 39.11  shall use the assessment criteria in Minnesota Rules, parts 
 39.12  9530.6600 to 9530.6660, when assessing enrollees for chemical 
 39.13  dependency treatment. 
 39.14     Sec. 27.  Minnesota Statutes 1996, section 62N.26, is 
 39.15  amended to read: 
 39.16     62N.26 [SHARED SERVICES COOPERATIVE.] 
 39.17     The commissioner of health shall establish, or assist in 
 39.18  establishing, a shared services cooperative organized under 
 39.19  chapter 308A to make available administrative and legal 
 39.20  services, technical assistance, provider contracting and billing 
 39.21  services, and other services to those community integrated 
 39.22  service networks and integrated service networks that choose to 
 39.23  participate in the cooperative.  The commissioner shall provide, 
 39.24  to the extent funds are appropriated, start-up loans sufficient 
 39.25  to maintain the shared services cooperative until its operations 
 39.26  can be maintained by fees and contributions.  The cooperative 
 39.27  must not be staffed, administered, or supervised by the 
 39.28  commissioner of health.  The cooperative shall make use of 
 39.29  existing resources that are already available in the community, 
 39.30  to the extent possible. 
 39.31     Sec. 28.  Minnesota Statutes 1996, section 62N.40, is 
 39.32  amended to read: 
 39.33     62N.40 [CHEMICAL DEPENDENCY SERVICES.] 
 39.34     Each community integrated service network and integrated 
 39.35  service network regulated under this chapter must ensure that 
 39.36  chemically dependent individuals have access to cost-effective 
 40.1   treatment options that address the specific needs of 
 40.2   individuals.  These include, but are not limited to, the need 
 40.3   for:  treatment that takes into account severity of illness and 
 40.4   comorbidities; provision of a continuum of care, including 
 40.5   treatment and rehabilitation programs licensed under Minnesota 
 40.6   Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; 
 40.7   the safety of the individual's domestic and community 
 40.8   environment; gender appropriate and culturally appropriate 
 40.9   programs; and access to appropriate social services. 
 40.10     Sec. 29.  Minnesota Statutes 1996, section 62Q.01, 
 40.11  subdivision 3, is amended to read: 
 40.12     Subd. 3.  [HEALTH PLAN.] "Health plan" means a health plan 
 40.13  as defined in section 62A.011; a policy, contract, or 
 40.14  certificate issued by a community integrated service network; or 
 40.15  an integrated service network. 
 40.16     Sec. 30.  Minnesota Statutes 1996, section 62Q.01, 
 40.17  subdivision 4, is amended to read: 
 40.18     Subd. 4.  [HEALTH PLAN COMPANY.] "Health plan company" 
 40.19  means: 
 40.20     (1) a health carrier as defined under section 62A.011, 
 40.21  subdivision 2; or 
 40.22     (2) an integrated service network as defined under section 
 40.23  62N.02, subdivision 8; or 
 40.24     (3) a community integrated service network as defined under 
 40.25  section 62N.02, subdivision 4a. 
 40.26     Sec. 31.  Minnesota Statutes 1996, section 62Q.01, 
 40.27  subdivision 5, is amended to read: 
 40.28     Subd. 5.  [MANAGED CARE ORGANIZATION.] "Managed care 
 40.29  organization" means:  (1) a health maintenance organization 
 40.30  operating under chapter 62D; (2) a community integrated service 
 40.31  network as defined under section 62N.02, subdivision 
 40.32  4a; or (3) an integrated service network as defined under 
 40.33  section 62N.02, subdivision 8; or (4) an insurance company 
 40.34  licensed under chapter 60A, nonprofit health service plan 
 40.35  corporation operating under chapter 62C, fraternal benefit 
 40.36  society operating under chapter 64B, or any other health plan 
 41.1   company, to the extent that it covers health care services 
 41.2   delivered to Minnesota residents through a preferred provider 
 41.3   organization or a network of selected providers.  
 41.4      Sec. 32.  Minnesota Statutes 1996, section 62Q.03, 
 41.5   subdivision 5a, is amended to read: 
 41.6      Subd. 5a.  [PUBLIC PROGRAMS.] (a) A separate risk 
 41.7   adjustment system must be developed for state-run public 
 41.8   programs, including medical assistance, general assistance 
 41.9   medical care, and MinnesotaCare.  The system must be developed 
 41.10  in accordance with the general risk adjustment methodologies 
 41.11  described in this section, must include factors in addition to 
 41.12  age and sex adjustment, and may include additional demographic 
 41.13  factors, different targeted conditions, and/or different payment 
 41.14  amounts for conditions.  The risk adjustment system for public 
 41.15  programs must attempt to reflect the special needs related to 
 41.16  poverty, cultural, or language barriers and other needs of the 
 41.17  public program population. 
 41.18     (b) The commissioners of health and human services shall 
 41.19  jointly convene a public programs risk adjustment work group 
 41.20  responsible for advising the commissioners in the design of the 
 41.21  public programs risk adjustment system.  The public programs 
 41.22  risk adjustment work group is governed by section 15.059 for 
 41.23  purposes of membership terms and removal of members and shall 
 41.24  terminate on June 30, 1999.  The work group shall meet at the 
 41.25  discretion of the commissioners of health and human services. 
 41.26  The commissioner of health shall work with the risk adjustment 
 41.27  association to ensure coordination between the risk adjustment 
 41.28  systems for the public and private sectors.  The commissioner of 
 41.29  human services shall seek any needed federal approvals necessary 
 41.30  for the inclusion of the medical assistance program in the 
 41.31  public programs risk adjustment system.  
 41.32     (c) The public programs risk adjustment work group must be 
 41.33  representative of the persons served by publicly paid health 
 41.34  programs and providers and health plans that meet their needs.  
 41.35  To the greatest extent possible, the appointing authorities 
 41.36  shall attempt to select representatives that have historically 
 42.1   served a significant number of persons in publicly paid health 
 42.2   programs or the uninsured.  Membership of the work group shall 
 42.3   be as follows: 
 42.4      (1) one provider member appointed by the Minnesota Medical 
 42.5   Association; 
 42.6      (2) two provider members appointed by the Minnesota 
 42.7   Hospital Association, at least one of whom must represent a 
 42.8   major disproportionate share hospital; 
 42.9      (3) five members appointed by the Minnesota Council of 
 42.10  HMOs, one of whom must represent an HMO with fewer than 50,000 
 42.11  enrollees located outside the metropolitan area and one of whom 
 42.12  must represent an HMO with at least 50 percent of total 
 42.13  membership enrolled through a public program; 
 42.14     (4) two representatives of counties appointed by the 
 42.15  Association of Minnesota Counties; 
 42.16     (5) three representatives of organizations representing the 
 42.17  interests of families, children, childless adults, and elderly 
 42.18  persons served by the various publicly paid health programs 
 42.19  appointed by the governor; 
 42.20     (6) two representatives of persons with mental health, 
 42.21  developmental or physical disabilities, chemical dependency, or 
 42.22  chronic illness appointed by the governor; and 
 42.23     (7) three public members appointed by the governor, at 
 42.24  least one of whom must represent a community health board.  The 
 42.25  risk adjustment association may appoint a representative, if a 
 42.26  representative is not otherwise appointed by an appointing 
 42.27  authority. 
 42.28     (d) The commissioners of health and human services, with 
 42.29  the advice of the public programs risk adjustment work group, 
 42.30  shall develop a work plan and time frame and shall coordinate 
 42.31  their efforts with the private sector risk adjustment 
 42.32  association's activities and other state initiatives related to 
 42.33  public program managed care reimbursement.  The commissioners of 
 42.34  health and human services shall report to the health care 
 42.35  commission and to the appropriate legislative committees on 
 42.36  January 15, 1996, and on January 15, 1997, on any policy or 
 43.1   legislative changes necessary to implement the public program 
 43.2   risk adjustment system. 
 43.3      Sec. 33.  Minnesota Statutes 1996, section 62Q.106, is 
 43.4   amended to read: 
 43.5      62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.] 
 43.6      A complainant may at any time submit a complaint to the 
 43.7   appropriate commissioner to investigate.  After investigating a 
 43.8   complaint, or reviewing a company's decision, the appropriate 
 43.9   commissioner may order a remedy as authorized under section 
 43.10  62N.04, 62Q.30, or chapter 45, 60A, or 62D.  
 43.11     Sec. 34.  Minnesota Statutes 1996, section 62Q.19, 
 43.12  subdivision 1, is amended to read: 
 43.13     Subdivision 1.  [DESIGNATION.] The commissioner shall 
 43.14  designate essential community providers.  The criteria for 
 43.15  essential community provider designation shall be the following: 
 43.16     (1) a demonstrated ability to integrate applicable 
 43.17  supportive and stabilizing services with medical care for 
 43.18  uninsured persons and high-risk and special needs populations as 
 43.19  defined in section 62Q.07, subdivision 2, paragraph (e), 
 43.20  underserved, and other special needs populations; and 
 43.21     (2) a commitment to serve low-income and underserved 
 43.22  populations by meeting the following requirements: 
 43.23     (i) has nonprofit status in accordance with chapter 317A; 
 43.24     (ii) has tax exempt status in accordance with the Internal 
 43.25  Revenue Service Code, section 501(c)(3); 
 43.26     (iii) charges for services on a sliding fee schedule based 
 43.27  on current poverty income guidelines; and 
 43.28     (iv) does not restrict access or services because of a 
 43.29  client's financial limitation; 
 43.30     (3) status as a local government unit as defined in section 
 43.31  62D.02, subdivision 11, an Indian tribal government, an Indian 
 43.32  health service unit, or community health board as defined in 
 43.33  chapter 145A; or 
 43.34     (4) a former state hospital that specializes in the 
 43.35  treatment of cerebral palsy, spina bifida, epilepsy, closed head 
 43.36  injuries, specialized orthopedic problems, and other disabling 
 44.1   conditions; or 
 44.2      (5) a rural hospital that has qualified for a sole 
 44.3   community hospital financial assistance grant in the past three 
 44.4   years under section 144.1484, subdivision 1.  For these rural 
 44.5   hospitals, the essential community provider designation applies 
 44.6   to all health services provided, including both inpatient and 
 44.7   outpatient services. 
 44.8      Prior to designation, the commissioner shall publish the 
 44.9   names of all applicants in the State Register.  The public shall 
 44.10  have 30 days from the date of publication to submit written 
 44.11  comments to the commissioner on the application.  No designation 
 44.12  shall be made by the commissioner until the 30-day period has 
 44.13  expired. 
 44.14     The commissioner may designate an eligible provider as an 
 44.15  essential community provider for all the services offered by 
 44.16  that provider or for specific services designated by the 
 44.17  commissioner. 
 44.18     For the purpose of this subdivision, supportive and 
 44.19  stabilizing services include at a minimum, transportation, child 
 44.20  care, cultural, and linguistic services where appropriate. 
 44.21     Sec. 35.  Minnesota Statutes 1996, section 62Q.33, 
 44.22  subdivision 2, is amended to read: 
 44.23     Subd. 2.  [REPORT ON SYSTEM DEVELOPMENT.] The commissioner 
 44.24  of health, in consultation with the state community health 
 44.25  services advisory committee and the commissioner of human 
 44.26  services, and representatives of local health departments, 
 44.27  county government, a municipal government acting as a local 
 44.28  board of health, the Minnesota health care commission, area 
 44.29  Indian health services, health care providers, and citizens 
 44.30  concerned about public health, shall coordinate the process for 
 44.31  defining implementation and financing responsibilities of the 
 44.32  local government core public health functions.  The commissioner 
 44.33  shall submit recommendations and an initial and final report on 
 44.34  local government core public health functions according to the 
 44.35  timeline established in subdivision 5. 
 44.36     Sec. 36.  Minnesota Statutes 1996, section 62Q.45, 
 45.1   subdivision 2, is amended to read: 
 45.2      Subd. 2.  [DEFINITION.] For purposes of this section, 
 45.3   "managed care organization" means:  (1) a health maintenance 
 45.4   organization operating under chapter 62D; (2) a community 
 45.5   integrated service network as defined under section 62N.02, 
 45.6   subdivision 4a; or (3) an integrated service network as defined 
 45.7   under section 62N.02, subdivision 8; or (4) an insurance company 
 45.8   licensed under chapter 60A, nonprofit health service plan 
 45.9   corporation operating under chapter 62C, fraternal benefit 
 45.10  society operating under chapter 64B, or any other health plan 
 45.11  company, to the extent that it covers health care services 
 45.12  delivered to Minnesota residents through a preferred provider 
 45.13  organization or a network of selected providers.  
 45.14     Sec. 37.  Minnesota Statutes 1996, section 136A.1355, is 
 45.15  amended to read: 
 45.16     136A.1355 [RURAL PHYSICIANS.] 
 45.17     Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
 45.18  education account is established in the health care access 
 45.19  fund.  The higher education services office shall use money from 
 45.20  the account to establish a loan forgiveness program for 
 45.21  medical students residents agreeing to practice in designated 
 45.22  rural areas, as defined by the commissioner.  
 45.23     Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
 45.24  the program, a prospective physician must submit a letter of 
 45.25  interest to the higher education services office.  A student or 
 45.26  resident who is accepted must sign a contract to agree to serve 
 45.27  at least three of the first five years following residency in a 
 45.28  designated rural area. 
 45.29     Subd. 3.  [LOAN FORGIVENESS.] For fiscal years beginning on 
 45.30  and after July 1, 1995, the higher education services office may 
 45.31  accept up to four applicants who are fourth year medical 
 45.32  students, three 12 applicants who are medical residents, four 
 45.33  applicants who are pediatric residents, and four six applicants 
 45.34  who are family practice residents, and one applicant who is 
 45.35  an two applicants who are internal medicine resident residents, 
 45.36  per fiscal year for participation in the loan forgiveness 
 46.1   program.  If the higher education services office does not 
 46.2   receive enough applicants per fiscal year to fill the number of 
 46.3   residents in the specific areas of practice, the resident 
 46.4   applicants may be from any area of practice.  The eight 12 
 46.5   resident applicants may be in any year of training; however, 
 46.6   priority must be given to the following categories of residents 
 46.7   in descending order:  third year residents, second year 
 46.8   residents, and first year residents.  Applicants are responsible 
 46.9   for securing their own loans.  Applicants chosen to participate 
 46.10  in the loan forgiveness program may designate for each year of 
 46.11  medical school, up to a maximum of four years, an agreed amount, 
 46.12  not to exceed $10,000, as a qualified loan.  For each year that 
 46.13  a participant serves as a physician in a designated rural area, 
 46.14  up to a maximum of four years, the higher education services 
 46.15  office shall annually pay an amount equal to one year of 
 46.16  qualified loans.  Participants who move their practice from one 
 46.17  designated rural area to another remain eligible for loan 
 46.18  repayment.  In addition, if a resident participating in the loan 
 46.19  forgiveness program serves at least four weeks during a year of 
 46.20  residency substituting for a rural physician to temporarily 
 46.21  relieve the rural physician of rural practice commitments to 
 46.22  enable the rural physician to take a vacation, engage in 
 46.23  activities outside the practice area, or otherwise be relieved 
 46.24  of rural practice commitments, the participating resident may 
 46.25  designate up to an additional $2,000, above the $10,000 maximum, 
 46.26  for each year of residency during which the resident substitutes 
 46.27  for a rural physician for four or more weeks. 
 46.28     Subd. 4.  [PENALTY FOR NONFULFILLMENT.] If a participant 
 46.29  does not fulfill the required three-year minimum commitment of 
 46.30  service in a designated rural area, the higher education 
 46.31  services office shall collect from the participant the amount 
 46.32  paid by the commissioner under the loan forgiveness program.  
 46.33  The higher education services office shall deposit the money 
 46.34  collected in the rural physician education account established 
 46.35  in subdivision 1.  The commissioner shall allow waivers of all 
 46.36  or part of the money owed the commissioner if emergency 
 47.1   circumstances prevented fulfillment of the three-year service 
 47.2   commitment.  
 47.3      Subd. 5.  [LOAN FORGIVENESS; UNDERSERVED URBAN 
 47.4   COMMUNITIES.] For fiscal years beginning on and after July 1, 
 47.5   1995, the higher education services office may accept up to four 
 47.6   applicants who are either fourth year medical students, or 
 47.7   residents in family practice, pediatrics, or internal medicine 
 47.8   per fiscal year for participation in the urban primary care 
 47.9   physician loan forgiveness program.  The resident applicants may 
 47.10  be in any year of residency training; however, priority will be 
 47.11  given to the following categories of residents in descending 
 47.12  order:  third year residents, second year residents, and first 
 47.13  year residents.  If the higher education services office does 
 47.14  not receive enough qualified applicants per fiscal year to fill 
 47.15  the number of slots for urban underserved communities, the slots 
 47.16  may be allocated to students or residents who have applied for 
 47.17  the rural physician loan forgiveness program in subdivision 1.  
 47.18  Applicants are responsible for securing their own loans.  For 
 47.19  purposes of this provision, "qualifying educational loans" are 
 47.20  government and commercial loans for actual costs paid for 
 47.21  tuition, reasonable education expenses, and reasonable living 
 47.22  expenses related to the graduate or undergraduate education of a 
 47.23  health care professional.  Applicants chosen to participate in 
 47.24  the loan forgiveness program may designate for each year of 
 47.25  medical school, up to a maximum of four years, an agreed amount, 
 47.26  not to exceed $10,000, as a qualified loan.  For each year that 
 47.27  a participant serves as a physician in a designated underserved 
 47.28  urban area, up to a maximum of four years, the higher education 
 47.29  services office shall annually pay an amount equal to one year 
 47.30  of qualified loans.  Participants who move their practice from 
 47.31  one designated underserved urban community to another remain 
 47.32  eligible for loan repayment. 
 47.33     Sec. 38.  Minnesota Statutes 1996, section 144.147, 
 47.34  subdivision 1, is amended to read: 
 47.35     Subdivision 1.  [DEFINITION.] "Eligible rural hospital" 
 47.36  means any nonfederal, general acute care hospital that: 
 48.1      (1) is either located in a rural area, as defined in the 
 48.2   federal Medicare regulations, Code of Federal Regulations, title 
 48.3   42, section 405.1041, or located in a community with a 
 48.4   population of less than 5,000, according to United States Census 
 48.5   Bureau statistics, outside the seven-county metropolitan area; 
 48.6      (2) has 100 50 or fewer beds; and 
 48.7      (3) is not for profit; and 
 48.8      (4) has not been awarded a grant under the federal rural 
 48.9   health transition grant program, which would be received 
 48.10  concurrently with any portion of the grant period for this 
 48.11  program. 
 48.12     Sec. 39.  Minnesota Statutes 1996, section 144.147, 
 48.13  subdivision 2, is amended to read: 
 48.14     Subd. 2.  [GRANTS AUTHORIZED.] The commissioner shall 
 48.15  establish a program of grants to assist eligible rural 
 48.16  hospitals.  The commissioner shall award grants to hospitals and 
 48.17  communities for the purposes set forth in paragraphs (a) and (b).
 48.18     (a) Grants may be used by hospitals and their communities 
 48.19  to develop strategic plans for preserving or enhancing access to 
 48.20  health services.  At a minimum, a strategic plan must consist of:
 48.21     (1) a needs assessment to determine what health services 
 48.22  are needed and desired by the community.  The assessment must 
 48.23  include interviews with or surveys of area health professionals, 
 48.24  local community leaders, and public hearings; 
 48.25     (2) an assessment of the feasibility of providing needed 
 48.26  health services that identifies priorities and timeliness for 
 48.27  potential changes; and 
 48.28     (3) an implementation plan.  
 48.29     The strategic plan must be developed by a committee that 
 48.30  includes representatives from the hospital, local public health 
 48.31  agencies, other health providers, and consumers from the 
 48.32  community.  
 48.33     (b) The grants may also be used by eligible rural hospitals 
 48.34  that have developed strategic plans to implement transition 
 48.35  projects to modify the type and extent of services provided, in 
 48.36  order to reflect the needs of that plan.  Grants may be used by 
 49.1   hospitals under this paragraph to develop hospital-based 
 49.2   physician practices that integrate hospital and existing medical 
 49.3   practice facilities that agree to transfer their practices, 
 49.4   equipment, staffing, and administration to the hospital.  The 
 49.5   grants may also be used by the hospital to establish a health 
 49.6   provider cooperative, a telemedicine system, or a rural health 
 49.7   care system.  Not more than one-third of any grant shall be used 
 49.8   to offset losses incurred by physicians agreeing to transfer 
 49.9   their practices to hospitals.  
 49.10     Sec. 40.  Minnesota Statutes 1996, section 144.147, 
 49.11  subdivision 3, is amended to read: 
 49.12     Subd. 3.  [CONSIDERATION OF GRANTS.] In determining which 
 49.13  hospitals will receive grants under this section, the 
 49.14  commissioner shall take into account:  
 49.15     (1) improving community access to hospital or health 
 49.16  services; 
 49.17     (2) changes in service populations; 
 49.18     (3) demand for ambulatory and emergency services; 
 49.19     (4) the extent that the health needs of the community are 
 49.20  not currently being met by other providers in the service area; 
 49.21     (5) the need to recruit and retain health professionals; 
 49.22     (6) the involvement and extent of community support of the 
 49.23  community and local health care providers; and 
 49.24     (7) the coordination with local community organizations, 
 49.25  such as community development and public health agencies; and 
 49.26     (8) the financial condition of the hospital. 
 49.27     Sec. 41.  Minnesota Statutes 1996, section 144.147, 
 49.28  subdivision 4, is amended to read: 
 49.29     Subd. 4.  [ALLOCATION OF GRANTS.] (a) Eligible hospitals 
 49.30  must apply to the commissioner no later than September 1 of each 
 49.31  fiscal year for grants awarded for that fiscal year.  A grant 
 49.32  may be awarded upon signing of a grant contract. 
 49.33     (b) The commissioner must make a final decision on the 
 49.34  funding of each application within 60 days of the deadline for 
 49.35  receiving applications. 
 49.36     (c) Each relevant community health board has 30 days in 
 50.1   which to review and comment to the commissioner on grant 
 50.2   applications from hospitals in their community health service 
 50.3   area. 
 50.4      (d) In determining which hospitals will receive grants 
 50.5   under this section, the commissioner shall consider the 
 50.6   following factors: 
 50.7      (1) Description of the problem, description of the project, 
 50.8   and the likelihood of successful outcome of the project.  The 
 50.9   applicant must explain clearly the nature of the health services 
 50.10  problems in their service area, how the grant funds will be 
 50.11  used, what will be accomplished, and the results expected.  The 
 50.12  applicant should describe achievable objectives, a timetable, 
 50.13  and roles and capabilities of responsible individuals and 
 50.14  organizations. 
 50.15     (2) The extent of community support for the hospital and 
 50.16  this proposed project.  The applicant should demonstrate support 
 50.17  for the hospital and for the proposed project from other local 
 50.18  health service providers and from local community and government 
 50.19  leaders.  Evidence of such support may include past commitments 
 50.20  of financial support from local individuals, organizations, or 
 50.21  government entities; and commitment of financial support, 
 50.22  in-kind services or cash, for this project. 
 50.23     (3) The comments, if any, resulting from a review of the 
 50.24  application by the community health board in whose community 
 50.25  health service area the hospital is located. 
 50.26     (e) In evaluating applications, the commissioner shall 
 50.27  score each application on a 100 point scale, assigning the 
 50.28  maximum of 70 points for an applicant's understanding of the 
 50.29  problem, description of the project, and likelihood of 
 50.30  successful outcome of the project; and a maximum of 30 points 
 50.31  for the extent of community support for the hospital and this 
 50.32  project.  The commissioner may also take into account other 
 50.33  relevant factors. 
 50.34     (f) A grant to a hospital, including hospitals that submit 
 50.35  applications as consortia, may not exceed $37,500 $50,000 a year 
 50.36  and may not exceed a term of two years.  Prior to the receipt of 
 51.1   any grant, the hospital must certify to the commissioner that at 
 51.2   least one-half of the amount, which may include in-kind 
 51.3   services, is available for the same purposes from nonstate 
 51.4   sources.  A hospital receiving a grant under this section may 
 51.5   use the grant for any expenses incurred in the development of 
 51.6   strategic plans or the implementation of transition projects 
 51.7   with respect to which the grant is made.  Project grants may not 
 51.8   be used to retire debt incurred with respect to any capital 
 51.9   expenditure made prior to the date on which the project is 
 51.10  initiated. 
 51.11     (g) The commissioner may adopt rules to implement this 
 51.12  section. 
 51.13     Sec. 42.  [144.148] [RURAL HOSPITAL CAPITAL IMPROVEMENT 
 51.14  GRANT AND LOAN PROGRAM.] 
 51.15     Subdivision 1.  [DEFINITION.] (a) For purposes of this 
 51.16  section, the following definitions apply. 
 51.17     (b) "Eligible rural hospital" means a hospital that: 
 51.18     (1) is located outside the seven-county metropolitan area; 
 51.19     (2) has 50 or fewer licensed hospital beds with a net 
 51.20  hospital operating margin not greater than two percent in the 
 51.21  two fiscal years prior to application; and 
 51.22     (3) is 25 miles or more from another hospital. 
 51.23     (c) "Eligible project" means a modernization project to 
 51.24  update, remodel, or replace aging hospital facilities and 
 51.25  equipment necessary to maintain the operations of a hospital. 
 51.26     Subd. 2.  [PROGRAM.] The commissioner of health shall award 
 51.27  rural hospital capital improvement grants or loans to eligible 
 51.28  rural hospitals.  A grant or loan shall not exceed $1,500,000 
 51.29  per hospital.  Grants or loans shall be interest free.  An 
 51.30  eligible rural hospital may apply the funds retroactively to 
 51.31  capital improvements made during the two fiscal years preceding 
 51.32  the fiscal year in which the grant or loan was received, 
 51.33  provided the hospital met the eligibility criteria during that 
 51.34  time period.  
 51.35     Subd. 3.  [APPLICATIONS.] Eligible hospitals seeking a 
 51.36  grant or loan shall apply to the commissioner.  Applications 
 52.1   must include a description of the problem that the proposed 
 52.2   project will address, a description of the project including 
 52.3   construction and remodeling drawings or specifications, sources 
 52.4   of funds for the project, uses of funds for the project, the 
 52.5   results expected, and a plan to maintain or operate any facility 
 52.6   or equipment included in the project.  The applicant must 
 52.7   describe achievable objectives, a timetable, and roles and 
 52.8   capabilities of responsible individuals and organization.  
 52.9   Applicants must submit to the commissioner evidence that 
 52.10  competitive bidding was used to select contractors for the 
 52.11  project.  
 52.12     Subd. 4.  [CONSIDERATION OF APPLICATIONS.] The commissioner 
 52.13  shall review each application to determine whether or not the 
 52.14  hospital's application is complete and whether the hospital and 
 52.15  the project are eligible for a grant or loan.  In evaluating 
 52.16  applications, the commissioner shall score each application on a 
 52.17  100 point scale, assigning:  a maximum of 40 points for an 
 52.18  applicant's clarity and thoroughness in describing the problem 
 52.19  and the project; a maximum of 40 points for the extent to which 
 52.20  the applicant has demonstrated that it has made adequate 
 52.21  provisions to assure proper and efficient operation of the 
 52.22  facility once the project is completed; and a maximum of 20 
 52.23  points for the extent to which the proposed project is 
 52.24  consistent with the hospital's capital improvement plan or 
 52.25  strategic plan.  The commissioner may also take into account 
 52.26  other relevant factors.  During application review, the 
 52.27  commissioner may request additional information about a proposed 
 52.28  project, including information on project cost.  Failure to 
 52.29  provide the information requested disqualifies a loan applicant. 
 52.30     Subd. 5.  [PROGRAM OVERSIGHT.] The commissioner of health 
 52.31  shall review audited financial information of the hospital to 
 52.32  assess eligibility.  The commissioner shall determine the amount 
 52.33  of a grant or loan to be given to an eligible rural hospital 
 52.34  based on the relative score of each eligible hospital's 
 52.35  application and the funds available to the commissioner.  The 
 52.36  grant or loan shall be used to update, remodel, or replace aging 
 53.1   facilities and equipment necessary to maintain the operations of 
 53.2   the hospital.  
 53.3      Subd. 6.  [LOAN PAYMENT.] Loans shall be repaid as provided 
 53.4   in this subdivision over a period of 15 years.  In those years 
 53.5   when an eligible rural hospital experiences a positive net 
 53.6   operating margin in excess of two percent, the eligible rural 
 53.7   hospital shall pay to the state one-half of the excess above two 
 53.8   percent, up to the yearly payment amount based upon a loan 
 53.9   period of 15 years.  If the amount paid back in any year is less 
 53.10  than the yearly payment amount, or if no payment is required 
 53.11  because the eligible rural hospital does not experience a 
 53.12  positive net operating margin in excess of two percent, the 
 53.13  amount unpaid for that year shall be forgiven by the state 
 53.14  without any financial penalty.  As a condition of receiving an 
 53.15  award through this program, eligible hospitals must agree to any 
 53.16  and all collection activities the commissioner finds necessary 
 53.17  to collect loan payments in those years a payment is due. 
 53.18     Subd. 7.  [ACCOUNTING TREATMENT.] The commissioner of 
 53.19  finance shall record as grants in the state accounting system 
 53.20  funds obligated by this section.  Loan payments received under 
 53.21  this section shall be deposited in the health care access fund. 
 53.22     Subd. 8.  [EXPIRATION.] This section expires June 30, 1999. 
 53.23     Sec. 43.  Minnesota Statutes 1996, section 144.1484, 
 53.24  subdivision 1, is amended to read: 
 53.25     Subdivision 1.  [SOLE COMMUNITY HOSPITAL FINANCIAL 
 53.26  ASSISTANCE GRANTS.] The commissioner of health shall award 
 53.27  financial assistance grants to rural hospitals in isolated areas 
 53.28  of the state.  To qualify for a grant, a hospital must:  (1) be 
 53.29  eligible to be classified as a sole community hospital according 
 53.30  to the criteria in Code of Federal Regulations, title 42, 
 53.31  section 412.92 or be located in a community with a population of 
 53.32  less than 5,000 and located more than 25 miles from a like 
 53.33  hospital currently providing acute short-term services; (2) have 
 53.34  experienced net operating income losses in the two of the 
 53.35  previous three most recent consecutive hospital fiscal years for 
 53.36  which audited financial information is available; (3) consist of 
 54.1   40 or fewer licensed beds; and (4) demonstrate to the 
 54.2   commissioner that it has obtained local support for the hospital 
 54.3   and that any state support awarded under this program will not 
 54.4   be used to supplant local support for the hospital.  The 
 54.5   commissioner shall review audited financial statements of the 
 54.6   hospital to assess the extent of local support.  Evidence of 
 54.7   local support may include bonds issued by a local government 
 54.8   entity such as a city, county, or hospital district for the 
 54.9   purpose of financing hospital projects; and loans, grants, or 
 54.10  donations to the hospital from local government entities, 
 54.11  private organizations, or individuals.  The commissioner shall 
 54.12  determine the amount of the award to be given to each eligible 
 54.13  hospital based on the hospital's operating loss margin (total 
 54.14  operating losses as a percentage of total operating revenue) for 
 54.15  the two of the previous three most recent consecutive fiscal 
 54.16  years for which audited financial information is available and 
 54.17  the total amount of funding available.  For purposes of 
 54.18  calculating a hospital's operating loss margin, total operating 
 54.19  revenue does not include grant funding provided under this 
 54.20  subdivision.  One hundred percent of the available funds will be 
 54.21  disbursed proportionately based on the operating loss margins of 
 54.22  the eligible hospitals. 
 54.23     Sec. 44.  Minnesota Statutes 1996, section 256.9363, 
 54.24  subdivision 1, is amended to read: 
 54.25     Subdivision 1.  [SELECTION OF VENDORS.] In order to contain 
 54.26  costs, the commissioner of human services shall select vendors 
 54.27  of medical care who can provide the most economical care 
 54.28  consistent with high medical standards and shall, where 
 54.29  possible, contract with organizations on a prepaid capitation 
 54.30  basis to provide these services.  The commissioner shall 
 54.31  consider proposals by counties and vendors for managed care 
 54.32  plans which may include:  prepaid capitation programs, 
 54.33  competitive bidding programs, or other vendor payment mechanisms 
 54.34  designed to provide services in an economical manner or to 
 54.35  control utilization, with safeguards to ensure that necessary 
 54.36  services are provided.  Managed care plans may include 
 55.1   integrated service networks as defined in section 62N.02. 
 55.2      Sec. 45.  Minnesota Statutes 1996, section 256.9657, 
 55.3   subdivision 3, is amended to read: 
 55.4      Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY 
 55.5   INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 
 55.6   1992, each health maintenance organization with a certificate of 
 55.7   authority issued by the commissioner of health under chapter 62D 
 55.8   and each integrated service network and community integrated 
 55.9   service network licensed by the commissioner under chapter 62N 
 55.10  shall pay to the commissioner of human services a surcharge 
 55.11  equal to six-tenths of one percent of the total premium revenues 
 55.12  of the health maintenance organization, integrated service 
 55.13  network, or community integrated service network as reported to 
 55.14  the commissioner of health according to the schedule in 
 55.15  subdivision 4.  
 55.16     (b) For purposes of this subdivision, total premium revenue 
 55.17  means: 
 55.18     (1) premium revenue recognized on a prepaid basis from 
 55.19  individuals and groups for provision of a specified range of 
 55.20  health services over a defined period of time which is normally 
 55.21  one month, excluding premiums paid to a health maintenance 
 55.22  organization, integrated service network, or community 
 55.23  integrated service network from the Federal Employees Health 
 55.24  Benefit Program; 
 55.25     (2) premiums from Medicare wrap-around subscribers for 
 55.26  health benefits which supplement Medicare coverage; 
 55.27     (3) Medicare revenue, as a result of an arrangement between 
 55.28  a health maintenance organization, an integrated service 
 55.29  network, or a community integrated service network and the 
 55.30  health care financing administration of the federal Department 
 55.31  of Health and Human Services, for services to a Medicare 
 55.32  beneficiary; and 
 55.33     (4) medical assistance revenue, as a result of an 
 55.34  arrangement between a health maintenance organization, 
 55.35  integrated service network, or community integrated service 
 55.36  network and a Medicaid state agency, for services to a medical 
 56.1   assistance beneficiary. 
 56.2      If advance payments are made under clause (1) or (2) to the 
 56.3   health maintenance organization, integrated service network, or 
 56.4   community integrated service network for more than one reporting 
 56.5   period, the portion of the payment that has not yet been earned 
 56.6   must be treated as a liability. 
 56.7      (c) When a health maintenance organization or an integrated 
 56.8   service network or community integrated service network merges 
 56.9   or consolidates with or is acquired by another health 
 56.10  maintenance organization, integrated service network, or 
 56.11  community integrated service network, the surviving corporation 
 56.12  or the new corporation shall be responsible for the annual 
 56.13  surcharge originally imposed on each of the entities or 
 56.14  corporations subject to the merger, consolidation, or 
 56.15  acquisition, regardless of whether one of the entities or 
 56.16  corporations does not retain a certificate of authority under 
 56.17  chapter 62D or a license under chapter 62N. 
 56.18     (d) Effective July 1 of each year, the surviving 
 56.19  corporation's or the new corporation's surcharge shall be based 
 56.20  on the revenues earned in the second previous calendar year by 
 56.21  all of the entities or corporations subject to the merger, 
 56.22  consolidation, or acquisition regardless of whether one of the 
 56.23  entities or corporations does not retain a certificate of 
 56.24  authority under chapter 62D or a license under chapter 62N until 
 56.25  the total premium revenues of the surviving corporation include 
 56.26  the total premium revenues of all the merged entities as 
 56.27  reported to the commissioner of health. 
 56.28     (e) When a health maintenance organization, integrated 
 56.29  service network, or community integrated service network, which 
 56.30  is subject to liability for the surcharge under this chapter, 
 56.31  transfers, assigns, sells, leases, or disposes of all or 
 56.32  substantially all of its property or assets, liability for the 
 56.33  surcharge imposed by this chapter is imposed on the transferee, 
 56.34  assignee, or buyer of the health maintenance organization, 
 56.35  integrated service network, or community integrated service 
 56.36  network. 
 57.1      (f) In the event a health maintenance organization, 
 57.2   integrated service network, or community integrated service 
 57.3   network converts its licensure to a different type of entity 
 57.4   subject to liability for the surcharge under this chapter, but 
 57.5   survives in the same or substantially similar form, the 
 57.6   surviving entity remains liable for the surcharge regardless of 
 57.7   whether one of the entities or corporations does not retain a 
 57.8   certificate of authority under chapter 62D or a license under 
 57.9   chapter 62N. 
 57.10     (g) The surcharge assessed to a health maintenance 
 57.11  organization, integrated service network, or community 
 57.12  integrated service network ends when the entity ceases providing 
 57.13  services for premiums and the cessation is not connected with a 
 57.14  merger, consolidation, acquisition, or conversion. 
 57.15     Sec. 46.  [MEIP STUDY.] 
 57.16     The commissioner of employee relations shall study the 
 57.17  current Minnesota employees insurance program (MEIP) and report 
 57.18  to the legislature by January 15, 1998, on recommendations on 
 57.19  whether this program provides greater accessibility to small 
 57.20  employers for purchasing health insurance and, if not, whether 
 57.21  the program could be modified in terms of underwriting, 
 57.22  marketing, and advertising to create a program that would 
 57.23  provide a cost incentive for small employers to purchase health 
 57.24  coverage through this program. 
 57.25     Sec. 47.  [REVISOR INSTRUCTIONS.] 
 57.26     The revisor of statutes shall delete references to 
 57.27  "integrated service network," but not "community integrated 
 57.28  service network," wherever it appears in Minnesota Statutes and 
 57.29  make conforming changes as necessary. 
 57.30     Sec. 48.  [REPEALER.] 
 57.31     (a) Minnesota Statutes 1996, sections 62J.04, subdivisions 
 57.32  4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 
 57.33  62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 
 57.34  8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 
 57.35  62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 
 57.36  62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 
 58.1   62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41 
 58.2   and 147.01, subdivision 6, are repealed. 
 58.3      (b) Laws 1993, chapter 247, article 4, section 8; Laws 
 58.4   1995, chapter 96, section 2; and Laws 1995, First Special 
 58.5   Session chapter 3, article 13, section 2, are repealed. 
 58.6      (c) Laws 1994, chapter 625, article 5, section 5, as 
 58.7   amended by Laws 1995, chapter 234, article 3, section 8, is 
 58.8   repealed. 
 58.9      Sec. 49.  [EFFECTIVE DATE.] 
 58.10     Section 15 [62J.25] is effective the day following final 
 58.11  enactment. 
 58.12                             ARTICLE 3 
 58.13                        MINNESOTACARE TAXES 
 58.14     Section 1.  [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS 
 58.15  FUND.] 
 58.16     Subdivision 1.  [ESTABLISH RESERVE.] The federal 
 58.17  contingency reserve is established within the health care access 
 58.18  fund for uses necessary to preserve access to basic health care 
 58.19  services when federal funding is significantly reduced. 
 58.20     Subd. 2.  [RESERVE FINANCING.] The funds in reserve shall 
 58.21  be equal to the amount of federal financial participation 
 58.22  received since July 1, 1995, for services and administrative 
 58.23  activities funded by the health care access fund up to a reserve 
 58.24  limit of $150,000,000.  Investment income attributed to the 
 58.25  federal contingency reserve balances shall also be included in 
 58.26  the total reserve amount. 
 58.27     Subd. 3.  [PERMITTED USE.] The federal contingency reserve 
 58.28  is established to protect access to basic health care services 
 58.29  that are publicly funded.  Funds held in the federal contingency 
 58.30  reserve are available for appropriation in the event that 
 58.31  federal funds for basic health care services are significantly 
 58.32  reduced such as under federal reform or other significant 
 58.33  changes to federal law. 
 58.34     Subd. 4.  [LIMITS ON USE.] The federal contingency reserve 
 58.35  is not available for supplementing reductions in federal funding 
 58.36  resulting from application of current federal law funding 
 59.1   formulas, for funding long-term care services, or for replacing 
 59.2   existing general fund commitments. 
 59.3      Sec. 2.  Minnesota Statutes 1996, section 60A.15, 
 59.4   subdivision 1, is amended to read: 
 59.5      Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
 59.6   before April 1, June 1, and December 1 of each year, every 
 59.7   domestic and foreign company, including town and farmers' mutual 
 59.8   insurance companies, domestic mutual insurance companies, marine 
 59.9   insurance companies, health maintenance organizations, 
 59.10  integrated service networks, community integrated service 
 59.11  networks, and nonprofit health service plan corporations, shall 
 59.12  pay to the commissioner of revenue installments equal to 
 59.13  one-third of the insurer's total estimated tax for the current 
 59.14  year.  Except as provided in paragraphs (d) and (e), 
 59.15  installments must be based on a sum equal to two percent of the 
 59.16  premiums described in paragraph (b). 
 59.17     (b) Installments under paragraph (a), (d), or (e) are 
 59.18  percentages of gross premiums less return premiums on all direct 
 59.19  business received by the insurer in this state, or by its agents 
 59.20  for it, in cash or otherwise, during such year. 
 59.21     (c) Failure of a company to make payments of at least 
 59.22  one-third of either (1) the total tax paid during the previous 
 59.23  calendar year or (2) 80 percent of the actual tax for the 
 59.24  current calendar year shall subject the company to the penalty 
 59.25  and interest provided in this section, unless the total tax for 
 59.26  the current tax year is $500 or less. 
 59.27     (d) For health maintenance organizations, nonprofit health 
 59.28  services plan corporations, integrated service networks, and 
 59.29  community integrated service networks, the installments must be 
 59.30  based on an amount equal to one percent of premiums described in 
 59.31  paragraph (b) that are paid after December 31, 1995. 
 59.32     (e) For purposes of computing installments for town and 
 59.33  farmers' mutual insurance companies and for mutual property 
 59.34  casualty companies with total assets on December 31, 1989, of 
 59.35  $1,600,000,000 or less, the following rates apply: 
 59.36     (1) for all life insurance, two percent; 
 60.1      (2) for town and farmers' mutual insurance companies and 
 60.2   for mutual property and casualty companies with total assets of 
 60.3   $5,000,000 or less, on all other coverages, one percent; and 
 60.4      (3) for mutual property and casualty companies with total 
 60.5   assets on December 31, 1989, of $1,600,000,000 or less, on all 
 60.6   other coverages, 1.26 percent. 
 60.7      (f) Premiums under medical assistance, general assistance 
 60.8   medical care, the MinnesotaCare program, and the Minnesota 
 60.9   comprehensive health insurance plan and all payments, revenues, 
 60.10  and reimbursements received from the federal government for 
 60.11  Medicare-related coverage as defined in section 62A.31, 
 60.12  subdivision 3, paragraph (e), are not subject to tax under this 
 60.13  section. 
 60.14     (g) Notwithstanding paragraph (a), health maintenance 
 60.15  organizations, community integrated service networks, and 
 60.16  nonprofit health services plan corporations that have met the 
 60.17  cost containment goals established under section 62J.04 in the 
 60.18  individual and small employer market for calendar year 1996 are 
 60.19  not required to pay the installments as required under paragraph 
 60.20  (d) for premiums paid after April 1, 1997, and before March 31, 
 60.21  1998. 
 60.22     (h) Notwithstanding paragraph (a), health maintenance 
 60.23  organizations, community integrated service networks, and 
 60.24  nonprofit health services plan corporations that have met the 
 60.25  cost containment goals established under section 62J.04 in the 
 60.26  individual and small employer market for calendar year 1997 are 
 60.27  not required to pay installments as required under paragraph (d) 
 60.28  for premiums paid after April 1, 1998, and before March 31, 1999.
 60.29     (i) In approving the premium rates as required in sections 
 60.30  62L.08, subdivision 8, and 62A.65, subdivision 3, the 
 60.31  commissioners of health and commerce shall consider any 
 60.32  nonpayment of installments as described in paragraphs (g) and 
 60.33  (h) and shall ensure that this nonpayment is reflected in the 
 60.34  premium rate. 
 60.35     Sec. 3.  Minnesota Statutes 1996, section 256.9352, 
 60.36  subdivision 3, is amended to read: 
 61.1      Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
 61.2   shall manage spending for the MinnesotaCare program in a manner 
 61.3   that maintains a minimum reserve equal to five percent of the 
 61.4   expected cost of state premium subsidies in accordance with 
 61.5   section 16A.76.  The commissioner must make a quarterly 
 61.6   assessment of the expected expenditures for the covered services 
 61.7   for the remainder of the current biennium and for the following 
 61.8   biennium.  The estimated expenditure, including minimum the 
 61.9   reserve requirements described in section 16A.76, shall be 
 61.10  compared to an estimate of the revenues that will be deposited 
 61.11  in the health care access fund.  Based on this comparison, and 
 61.12  after consulting with the chairs of the house ways and means 
 61.13  committee and the senate finance committee, and the legislative 
 61.14  commission on health care access, the commissioner shall, as 
 61.15  necessary, make the adjustments specified in paragraph (b) to 
 61.16  ensure that expenditures remain within the limits of available 
 61.17  revenues for the remainder of the current biennium and for the 
 61.18  following biennium.  The commissioner shall not hire additional 
 61.19  staff using appropriations from the health care access fund 
 61.20  until the commissioner of finance makes a determination that the 
 61.21  adjustments implemented under paragraph (b) are sufficient to 
 61.22  allow MinnesotaCare expenditures to remain within the limits of 
 61.23  available revenues for the remainder of the current biennium and 
 61.24  for the following biennium. 
 61.25     (b) The adjustments the commissioner shall use must be 
 61.26  implemented in this order:  first, stop enrollment of single 
 61.27  adults and households without children; second, upon 45 days' 
 61.28  notice, stop coverage of single adults and households without 
 61.29  children already enrolled in the MinnesotaCare program; third, 
 61.30  upon 90 days' notice, decrease the premium subsidy amounts by 
 61.31  ten percent for families with gross annual income above 200 
 61.32  percent of the federal poverty guidelines; fourth, upon 90 days' 
 61.33  notice, decrease the premium subsidy amounts by ten percent for 
 61.34  families with gross annual income at or below 200 percent; and 
 61.35  fifth, require applicants to be uninsured for at least six 
 61.36  months prior to eligibility in the MinnesotaCare program.  If 
 62.1   these measures are insufficient to limit the expenditures to the 
 62.2   estimated amount of revenue, the commissioner shall further 
 62.3   limit enrollment or decrease premium subsidies. 
 62.4      The reserve referred to in this subdivision is appropriated 
 62.5   to the commissioner but may only be used upon approval of the 
 62.6   commissioner of finance, if estimated costs will exceed the 
 62.7   forecasted amount of available revenues after all adjustments 
 62.8   authorized under this subdivision have been made. 
 62.9      By February 1, 1995, the department of human services and 
 62.10  the department of health shall develop a plan to adjust benefit 
 62.11  levels, eligibility guidelines, or other steps necessary to 
 62.12  ensure that expenditures for the MinnesotaCare program are 
 62.13  contained within the two percent taxes imposed under section 
 62.14  295.52 and the gross premiums tax imposed under section 60A.15, 
 62.15  subdivision 1, paragraph (e), for fiscal year 1997.  
 62.16     (c) Notwithstanding paragraphs (a) and (b), the 
 62.17  commissioner shall proceed with the enrollment of single adults 
 62.18  and households without children in accordance with section 
 62.19  256.9354, subdivision 5, paragraph (a), even if the expenditures 
 62.20  do not remain within the limits of available revenues through 
 62.21  fiscal year 1997 to allow the departments of human services and 
 62.22  health to develop the plan required under paragraph (b). 
 62.23     Sec. 4.  Minnesota Statutes 1996, section 295.50, 
 62.24  subdivision 3, is amended to read: 
 62.25     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
 62.26  amounts received in money or otherwise by: 
 62.27     (1) a hospital for patient services; 
 62.28     (2) a surgical center for patient services; 
 62.29     (3) a health care provider, other than a staff model health 
 62.30  carrier, for patient services; 
 62.31     (4) a wholesale drug distributor for sale or distribution 
 62.32  of legend drugs that are delivered:  (i) to a Minnesota resident 
 62.33  by a wholesale drug distributor who is a nonresident pharmacy 
 62.34  directly, by common carrier, or by mail; or (ii) in Minnesota by 
 62.35  the wholesale drug distributor, by common carrier, or by mail, 
 62.36  unless the legend drugs are delivered to another wholesale drug 
 63.1   distributor who sells legend drugs exclusively at wholesale.  
 63.2   Legend drugs do not include nutritional products as defined in 
 63.3   Minnesota Rules, part 9505.0325; and 
 63.4      (5) a staff model health plan company as gross premiums for 
 63.5   enrollees, copayments, deductibles, coinsurance, and fees for 
 63.6   patient services covered under its contracts with groups and 
 63.7   enrollees; and 
 63.8      (6) a pharmacy for medical supplies, appliances, and 
 63.9   equipment. 
 63.10     Sec. 5.  Minnesota Statutes 1996, section 295.50, 
 63.11  subdivision 4, is amended to read: 
 63.12     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
 63.13  provider" means: 
 63.14     (1) a person whose health care occupation is regulated or 
 63.15  required to be regulated by the state of Minnesota furnishing 
 63.16  any or all of the following goods or services directly to a 
 63.17  patient or consumer:  medical, surgical, optical, visual, 
 63.18  dental, hearing, nursing services, drugs, medical supplies, 
 63.19  medical appliances, laboratory, diagnostic or therapeutic 
 63.20  services, or any; (2) a person who provides goods and services 
 63.21  not listed above in clause (1) that qualify for reimbursement 
 63.22  under the medical assistance program provided under chapter 
 63.23  256B.  For purposes of this clause, "directly to a patient or 
 63.24  consumer" includes goods and services provided in connection 
 63.25  with independent medical examinations under section 65B.56 or 
 63.26  other examinations for purposes of litigation or insurance 
 63.27  claims; 
 63.28     (2) (3) a staff model health plan company; or 
 63.29     (3) (4) an ambulance service required to be licensed; or 
 63.30     (5) a person who sells or repairs hearing aids and related 
 63.31  equipment or prescription eyewear. 
 63.32     (b) Health care provider does not include hospitals,; 
 63.33  medical supplies distributors, except as specified under 
 63.34  paragraph (a), clause (5); nursing homes licensed under chapter 
 63.35  144A or licensed in any other jurisdiction,; pharmacies,; 
 63.36  surgical centers,; bus and taxicab transportation, or any other 
 64.1   providers of transportation services other than ambulance 
 64.2   services required to be licensed,; supervised living facilities 
 64.3   for persons with mental retardation or related conditions, 
 64.4   licensed under Minnesota Rules, parts 4665.0100 to 4665.9900,; 
 64.5   residential care homes licensed under chapter 144B,; board and 
 64.6   lodging establishments providing only custodial services that 
 64.7   are licensed under chapter 157 and registered under section 
 64.8   157.17 to provide supportive services or health supervision 
 64.9   services,; adult foster homes as defined in Minnesota Rules, 
 64.10  part 9555.5105,; day training and habilitation services for 
 64.11  adults with mental retardation and related conditions as defined 
 64.12  in section 252.41, subdivision 3,; and boarding care homes, as 
 64.13  defined in Minnesota Rules, part 4655.0100. 
 64.14     (c) For purposes of this subdivision, "directly to a 
 64.15  patient or consumer" includes goods and services provided in 
 64.16  connection with independent medical examinations under section 
 64.17  65B.56 or other examinations for purposes of litigation or 
 64.18  insurance claims. 
 64.19     Sec. 6.  Minnesota Statutes 1996, section 295.50, 
 64.20  subdivision 6, is amended to read: 
 64.21     Subd. 6.  [HOME HEALTH CARE SERVICES.] "Home health care 
 64.22  services" are services: 
 64.23     (1) defined under the state medical assistance program as 
 64.24  home health agency services provided by a home health agency, 
 64.25  personal care services and supervision of personal care 
 64.26  services, private duty nursing services, and waivered 
 64.27  services or services by home care providers required to be 
 64.28  licensed under chapter 144A; and 
 64.29     (2) provided at a recipient's residence, if the recipient 
 64.30  does not live in a hospital, nursing facility, as defined in 
 64.31  section 62A.46, subdivision 3, or intermediate care facility for 
 64.32  persons with mental retardation as defined in section 256B.055, 
 64.33  subdivision 12, paragraph (d). 
 64.34     Sec. 7.  Minnesota Statutes 1996, section 295.50, 
 64.35  subdivision 7, is amended to read: 
 64.36     Subd. 7.  [HOSPITAL.] "Hospital" means a hospital licensed 
 65.1   under chapter 144, or a hospital licensed by any other state or 
 65.2   province or territory of Canada jurisdiction. 
 65.3      Sec. 8.  Minnesota Statutes 1996, section 295.50, 
 65.4   subdivision 9b, is amended to read: 
 65.5      Subd. 9b.  [PATIENT SERVICES.] "Patient services" means 
 65.6   inpatient and outpatient services and other goods and services 
 65.7   provided by hospitals, surgical centers, or health care 
 65.8   providers.  They include the following health care goods and 
 65.9   services provided to a patient or consumer who is a Minnesota 
 65.10  resident: 
 65.11     (1) bed and board; 
 65.12     (2) nursing services and other related services; 
 65.13     (3) use of hospitals, surgical centers, or health care 
 65.14  provider facilities; 
 65.15     (4) medical social services; 
 65.16     (5) drugs, biologicals, supplies, appliances, and 
 65.17  equipment; 
 65.18     (6) other diagnostic or therapeutic items or services; 
 65.19     (7) medical or surgical services; 
 65.20     (8) items and services furnished to ambulatory patients not 
 65.21  requiring emergency care; 
 65.22     (9) emergency services; and 
 65.23     (10) covered services listed in section 256B.0625 and in 
 65.24  Minnesota Rules, parts 9505.0170 to 9505.0475. 
 65.25     Sec. 9.  Minnesota Statutes 1996, section 295.50, 
 65.26  subdivision 13, is amended to read: 
 65.27     Subd. 13.  [SURGICAL CENTER.] "Surgical center" is an 
 65.28  outpatient surgical center as defined in Minnesota Rules, 
 65.29  chapter 4675 or a similar facility located in any other state or 
 65.30  province or territory of Canada jurisdiction. 
 65.31     Sec. 10.  Minnesota Statutes 1996, section 295.50, 
 65.32  subdivision 14, is amended to read: 
 65.33     Subd. 14.  [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 
 65.34  distributor" means a wholesale drug distributor required to be 
 65.35  licensed under sections 151.42 to 151.51 or a nonresident 
 65.36  pharmacy required to be registered under section 151.19. 
 66.1      Sec. 11.  Minnesota Statutes 1996, section 295.51, 
 66.2   subdivision 1, is amended to read: 
 66.3      Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
 66.4   hospital, surgical center, pharmacy, or health care provider is 
 66.5   subject to tax under sections 295.50 to 295.59 if it is 
 66.6   "transacting business in Minnesota."  A hospital, surgical 
 66.7   center, pharmacy, or health care provider is transacting 
 66.8   business in Minnesota if it maintains contacts with or presence 
 66.9   in the state of Minnesota sufficient to permit taxation of gross 
 66.10  revenues received for patient services under the United States 
 66.11  Constitution. 
 66.12     Sec. 12.  Minnesota Statutes 1996, section 295.52, 
 66.13  subdivision 4, is amended to read: 
 66.14     Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] A person that 
 66.15  receives prescription drugs for resale or use in Minnesota, 
 66.16  other than from a wholesale drug distributor that paid the tax 
 66.17  under subdivision 3, is subject to a tax equal to two percent of 
 66.18  the price paid.  Liability for the tax is incurred when 
 66.19  prescription drugs are received or delivered in Minnesota by the 
 66.20  person. 
 66.21     Sec. 13.  Minnesota Statutes 1996, section 295.52, is 
 66.22  amended by adding a subdivision to read: 
 66.23     Subd. 6.  [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax 
 66.24  liability of a person who meets the definition of a health care 
 66.25  provider solely because the person sells or repairs hearing aids 
 66.26  and related equipment or prescription eyewear is limited to the 
 66.27  gross revenues received from the sale or repair of these items. 
 66.28     Sec. 14.  Minnesota Statutes 1996, section 295.52, is 
 66.29  amended by adding a subdivision to read: 
 66.30     Subd. 7.  [TAX REDUCTION.] Notwithstanding subdivisions 1, 
 66.31  1a, 2, 3, and 4, the tax imposed under this section for calendar 
 66.32  years 1998 and 1999 shall be equal to 1.75 percent of the gross 
 66.33  revenues received on or after January 1, 1998, and before 
 66.34  January 1, 2000. 
 66.35     Sec. 15.  Minnesota Statutes 1996, section 295.53, 
 66.36  subdivision 1, is amended to read: 
 67.1      Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 67.2   are excluded from the gross revenues subject to the hospital, 
 67.3   surgical center, or health care provider taxes under sections 
 67.4   295.50 to 295.57: 
 67.5      (1) payments received for services provided under the 
 67.6   Medicare program, including payments received from the 
 67.7   government, and organizations governed by sections 1833 and 1876 
 67.8   of title XVIII of the federal Social Security Act, United States 
 67.9   Code, title 42, section 1395, and enrollee deductibles, 
 67.10  coinsurance, and copayments, whether paid by the Medicare 
 67.11  enrollee or by a Medicare supplemental coverage as defined in 
 67.12  section 62A.011, subdivision 3, clause (10).  Payments for 
 67.13  services not covered by Medicare are taxable; 
 67.14     (2) medical assistance payments including payments received 
 67.15  directly from the government or from a prepaid plan; 
 67.16     (3) payments received for home health care services; 
 67.17     (4) payments received from hospitals or surgical centers 
 67.18  for goods and services on which liability for tax is imposed 
 67.19  under section 295.52 or the source of funds for the payment is 
 67.20  exempt under clause (1), (2), (7), (8), or (10); 
 67.21     (5) payments received from health care providers for goods 
 67.22  and services on which liability for tax is imposed under this 
 67.23  chapter or the source of funds for the payment is exempt under 
 67.24  clause (1), (2), (7), (8), or (10); 
 67.25     (6) amounts paid for legend drugs, other than nutritional 
 67.26  products, to a wholesale drug distributor who is subject to tax 
 67.27  under section 295.52, subdivision 3, reduced by reimbursements 
 67.28  received for legend drugs under clauses (1), (2), (7), and (8); 
 67.29     (7) payments received under the general assistance medical 
 67.30  care program including payments received directly from the 
 67.31  government or from a prepaid plan; 
 67.32     (8) payments received for providing services under the 
 67.33  MinnesotaCare program including payments received directly from 
 67.34  the government or from a prepaid plan and enrollee deductibles, 
 67.35  coinsurance, and copayments.  For purposes of this clause, 
 67.36  coinsurance means the portion of payment that the enrollee is 
 68.1   required to pay for the covered service; 
 68.2      (9) payments received by a health care provider or the 
 68.3   wholly owned subsidiary of a health care provider for care 
 68.4   provided outside Minnesota to a patient who is not domiciled in 
 68.5   Minnesota; 
 68.6      (10) payments received from the chemical dependency fund 
 68.7   under chapter 254B; 
 68.8      (11) payments received in the nature of charitable 
 68.9   donations that are not designated for providing patient services 
 68.10  to a specific individual or group; 
 68.11     (12) payments received for providing patient services 
 68.12  incurred through a formal program of health care research 
 68.13  conducted in conformity with federal regulations governing 
 68.14  research on human subjects.  Payments received from patients or 
 68.15  from other persons paying on behalf of the patients are subject 
 68.16  to tax; 
 68.17     (13) payments received from any governmental agency for 
 68.18  services benefiting the public, not including payments made by 
 68.19  the government in its capacity as an employer or insurer; 
 68.20     (14) payments received for services provided by community 
 68.21  residential mental health facilities licensed under Minnesota 
 68.22  Rules, parts 9520.0500 to 9520.0690, community support programs 
 68.23  and family community support programs approved under Minnesota 
 68.24  Rules, parts 9535.1700 to 9535.1760, and community mental health 
 68.25  centers as defined in section 245.62, subdivision 2; 
 68.26     (15) government payments received by a regional treatment 
 68.27  center; 
 68.28     (16) payments received for hospice care services; 
 68.29     (17) payments received by a health care provider for 
 68.30  medical supplies, appliances, and equipment hearing aids and 
 68.31  related equipment or prescription eyewear delivered outside of 
 68.32  Minnesota; 
 68.33     (18) payments received by a post-secondary educational 
 68.34  institution from student tuition, student activity fees, health 
 68.35  care service fees, government appropriations, donations, or 
 68.36  grants.  Fee for service payments and payments for extended 
 69.1   coverage are taxable; and 
 69.2      (19) payments received for services provided by:  assisted 
 69.3   living programs and congregate housing programs. 
 69.4      (b) Payments received by wholesale drug distributors for 
 69.5   prescription legend drugs sold directly to veterinarians or 
 69.6   veterinary bulk purchasing organizations are excluded from the 
 69.7   gross revenues subject to the wholesale drug distributor tax 
 69.8   under sections 295.50 to 295.59. 
 69.9      Sec. 16.  Minnesota Statutes 1996, section 295.53, 
 69.10  subdivision 3, is amended to read: 
 69.11     Subd. 3.  [SEPARATE STATEMENT OF TAX.] A hospital, surgical 
 69.12  center, pharmacy, or health care provider must not state the tax 
 69.13  obligation under section 295.52 in a deceptive or misleading 
 69.14  manner.  It must not separately state tax obligations on bills 
 69.15  provided to patients, consumers, or other payers when the amount 
 69.16  received for the services or goods is not subject to tax.  
 69.17     Pharmacies that separately state the tax obligations on 
 69.18  bills provided to consumers or to other payers who purchase 
 69.19  legend drugs may state the tax obligation as two percent of the 
 69.20  wholesale price of the legend drugs.  Pharmacies must not state 
 69.21  the tax obligation as two percent of the retail price.  
 69.22     Whenever the commissioner determines that a person has 
 69.23  engaged in any act or practice constituting a violation of this 
 69.24  subdivision, the commissioner may bring an action in the name of 
 69.25  the state in the district court of the appropriate county to 
 69.26  enjoin the act or practice and to enforce compliance with this 
 69.27  subdivision, or the commissioner may refer the matter to the 
 69.28  attorney general or the county attorney of the appropriate 
 69.29  county.  Upon a proper showing, a permanent or temporary 
 69.30  injunction, restraining order, or other appropriate relief must 
 69.31  be granted.  
 69.32     Sec. 17.  Minnesota Statutes 1996, section 295.53, 
 69.33  subdivision 4, is amended to read: 
 69.34     Subd. 4.  [DEDUCTION FOR RESEARCH.] (a) In addition to the 
 69.35  exemptions allowed under subdivision 1, a hospital or health 
 69.36  care provider which is exempt under section 501(c)(3) of the 
 70.1   Internal Revenue Code of 1986 or is owned and operated under 
 70.2   authority of a governmental unit, may deduct from its gross 
 70.3   revenues subject to the hospital or health care provider taxes 
 70.4   under sections 295.50 to 295.57 revenues equal to expenditures 
 70.5   for qualifying research conducted by an allowable research 
 70.6   programs program.  
 70.7      (b) For purposes of this subdivision, the following 
 70.8   requirements apply: 
 70.9      (1) expenditures for allowable research programs are the 
 70.10  direct and general must be for program costs for activities 
 70.11  which are part of qualifying research conducted by an allowable 
 70.12  research program; 
 70.13     (2) an allowable research program must be a formal program 
 70.14  of medical and health care research approved by the governing 
 70.15  body of the hospital or health care provider which also includes 
 70.16  active solicitation of research funds from government and 
 70.17  private sources.  Allowable conducted by an entity which is 
 70.18  exempt under section 501(c)(3) of the Internal Revenue Code of 
 70.19  1986 or is owned and operated under authority of a governmental 
 70.20  unit; 
 70.21     (3) qualifying research must:  
 70.22     (A) be approved in writing by the governing body of the 
 70.23  hospital or health care provider which is taking the deduction 
 70.24  under this subdivision; 
 70.25     (1) (B) have as its purpose the development of new 
 70.26  knowledge in basic or applied science relating to the diagnosis 
 70.27  and treatment of conditions affecting the human body; 
 70.28     (2) (C) be subject to review by individuals with expertise 
 70.29  in the subject matter of the proposed study but who have no 
 70.30  financial interest in the proposed study and are not involved in 
 70.31  the conduct of the proposed study; and 
 70.32     (3) (D) be subject to review and supervision by an 
 70.33  institutional review board operating in conformity with federal 
 70.34  regulations if the research involves human subjects or an 
 70.35  institutional animal care and use committee operating in 
 70.36  conformity with federal regulations if the research involves 
 71.1   animal subjects.  Research expenses are not exempt if the study 
 71.2   is a routine evaluation of health care methods or products used 
 71.3   in a particular setting conducted for the purpose of making a 
 71.4   management decision.  Costs of clinical research activities paid 
 71.5   directly for the benefit of an individual patient are excluded 
 71.6   from this exemption.  Basic research in fields including 
 71.7   biochemistry, molecular biology, and physiology are also 
 71.8   included if such programs are subject to a peer review process. 
 71.9      (c) No deduction shall be allowed under this subdivision 
 71.10  for any revenue received by the hospital or health care provider 
 71.11  in the form of a grant, gift, or otherwise, whether from a 
 71.12  government or nongovernment source, on which the tax liability 
 71.13  under section 295.52 is not imposed or for which the tax 
 71.14  liability under section 295.52 has been received from a third 
 71.15  party as provided for in section 295.582. 
 71.16     (d) Effective beginning with calendar year 1995, the 
 71.17  taxpayer shall not take the deduction under this section into 
 71.18  account in determining estimated tax payments or the payment 
 71.19  made with the annual return under section 295.55.  The total 
 71.20  deduction allowable to all taxpayers under this section for 
 71.21  calendar years beginning after December 31, 1994, may not exceed 
 71.22  $65,000,000.  To implement this limit, each qualifying hospital 
 71.23  and qualifying health care provider shall submit to the 
 71.24  commissioner by March 15 its total expenditures qualifying for 
 71.25  the deduction under this section for the previous calendar 
 71.26  year.  The commissioner shall sum the total expenditures of all 
 71.27  taxpayers qualifying under this section for the calendar year.  
 71.28  If the resulting amount exceeds $65,000,000, the commissioner 
 71.29  shall allocate a part of the $65,000,000 deduction limit to each 
 71.30  qualifying hospital and health care provider in proportion to 
 71.31  its share of the total deductions.  The commissioner shall pay a 
 71.32  refund to each qualifying hospital or provider equal to its 
 71.33  share of the deduction limit multiplied by two percent.  The 
 71.34  commissioner shall pay the refund no later than May 15 of the 
 71.35  calendar year. 
 71.36     Sec. 18.  Minnesota Statutes 1996, section 295.54, 
 72.1   subdivision 1, is amended to read: 
 72.2      Subdivision 1.  [TAXES PAID TO ANOTHER STATE.] A hospital, 
 72.3   surgical center, pharmacy, or health care provider that has paid 
 72.4   taxes to another state or province or territory of 
 72.5   Canada jurisdiction measured by gross revenues and is subject to 
 72.6   tax under sections 295.52 to 295.59 on the same gross revenues 
 72.7   is entitled to a credit for the tax legally due and paid to 
 72.8   another state or province or territory of Canada jurisdiction to 
 72.9   the extent of the lesser of (1) the tax actually paid to the 
 72.10  other state or province or territory of Canada jurisdiction, or 
 72.11  (2) the amount of tax imposed by Minnesota on the gross revenues 
 72.12  subject to tax in the other taxing jurisdictions. 
 72.13     Sec. 19.  Minnesota Statutes 1996, section 295.54, 
 72.14  subdivision 2, is amended to read: 
 72.15     Subd. 2.  [PHARMACY CREDIT REFUND.] A pharmacy may claim a 
 72.16  quarterly credit an annual refund against the total amount of 
 72.17  tax, if any, the pharmacy owes during that quarter calendar year 
 72.18  under section 295.52, subdivision 1b, as provided in this 
 72.19  subdivision 2.  The credit refund shall equal two percent of the 
 72.20  amount paid by the pharmacy to a wholesale drug distributor 
 72.21  subject to tax under section 295.52, subdivision 3, for legend 
 72.22  drugs delivered by the pharmacy outside of Minnesota, except for 
 72.23  the period of time described in section 295.52, subdivision 7, 
 72.24  during which the refund shall equal 1.75 percent of the amount 
 72.25  paid. If the amount of the credit refund exceeds the tax 
 72.26  liability of the pharmacy under section 295.52, subdivision 1b, 
 72.27  the commissioner shall provide the pharmacy with a refund equal 
 72.28  to the excess amount.  Each qualifying pharmacy must apply for 
 72.29  the refund on the annual return as provided under section 
 72.30  295.55, subdivision 5.  The refund must be claimed within one 
 72.31  year of the due date of the return.  Interest on refunds paid 
 72.32  under this subdivision will begin to accrue 60 days after the 
 72.33  date a claim for refund is filed.  For purposes of this 
 72.34  subdivision, the date a claim is filed is the due date of the 
 72.35  return or the date of the actual claim for refund, whichever is 
 72.36  later.  
 73.1      Sec. 20.  Minnesota Statutes 1996, section 295.55, 
 73.2   subdivision 2, is amended to read: 
 73.3      Subd. 2.  [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 
 73.4   Each hospital or surgical center must make estimated payments of 
 73.5   the taxes for the calendar year in monthly installments to the 
 73.6   commissioner within ten 15 days after the end of the month. 
 73.7      (b) Estimated tax payments are not required of hospitals or 
 73.8   surgical centers if the tax for the calendar year is less than 
 73.9   $500 or if a hospital has been allowed a grant under section 
 73.10  144.1484, subdivision 2, for the year. 
 73.11     (c) Underpayment of estimated installments bear interest at 
 73.12  the rate specified in section 270.75, from the due date of the 
 73.13  payment until paid or until the due date of the annual return at 
 73.14  the rate specified in section 270.75.  An underpayment of an 
 73.15  estimated installment is the difference between the amount paid 
 73.16  and the lesser of (1) 90 percent of one-twelfth of the tax for 
 73.17  the calendar year or (2) the tax for the actual gross revenues 
 73.18  received during the month. 
 73.19     Sec. 21.  Minnesota Statutes 1996, section 295.582, is 
 73.20  amended to read: 
 73.21     295.582 [AUTHORITY.] 
 73.22     (a) A hospital, surgical center, pharmacy, or health care 
 73.23  provider that is subject to a tax under section 295.52, or a 
 73.24  pharmacy that has paid additional expense transferred under this 
 73.25  section by a wholesale drug distributor, may transfer additional 
 73.26  expense generated by section 295.52 obligations on to all 
 73.27  third-party contracts for the purchase of health care services 
 73.28  on behalf of a patient or consumer.  The additional expense 
 73.29  transferred to the third-party purchaser must not exceed two 
 73.30  percent of the gross revenues received under the third-party 
 73.31  contract, and two percent of copayments and deductibles paid by 
 73.32  the individual patient or consumer, except for the period of 
 73.33  time described in section 295.52, subdivision 7, during which 
 73.34  the amount transferred must not exceed 1.75 percent of the gross 
 73.35  revenues received and 1.75 percent of copayments and deductibles 
 73.36  paid.  The expense must not be generated on revenues derived 
 74.1   from payments that are excluded from the tax under section 
 74.2   295.53.  All third-party purchasers of health care services 
 74.3   including, but not limited to, third-party purchasers regulated 
 74.4   under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, 
 74.5   or 79A, or under section 471.61 or 471.617, must pay the 
 74.6   transferred expense in addition to any payments due under 
 74.7   existing contracts with the hospital, surgical center, pharmacy, 
 74.8   or health care provider, to the extent allowed under federal 
 74.9   law.  A third-party purchaser of health care services includes, 
 74.10  but is not limited to, a health carrier, integrated service 
 74.11  network, or community integrated service network that pays for 
 74.12  health care services on behalf of patients or that reimburses, 
 74.13  indemnifies, compensates, or otherwise insures patients for 
 74.14  health care services.  A third-party purchaser shall comply with 
 74.15  this section regardless of whether the third-party purchaser is 
 74.16  a for-profit, not-for-profit, or nonprofit entity.  A wholesale 
 74.17  drug distributor may transfer additional expense generated by 
 74.18  section 295.52 obligations to entities that purchase from the 
 74.19  wholesaler, and the entities must pay the additional expense.  
 74.20  Nothing in this section limits the ability of a hospital, 
 74.21  surgical center, pharmacy, wholesale drug distributor, or health 
 74.22  care provider to recover all or part of the section 295.52 
 74.23  obligation by other methods, including increasing fees or 
 74.24  charges. 
 74.25     (b) Each third-party purchaser regulated under any chapter 
 74.26  cited in paragraph (a) shall include with its annual renewal for 
 74.27  certification of authority or licensure documentation indicating 
 74.28  compliance with paragraph (a).  
 74.29     (c) Any hospital, surgical center, or health care provider 
 74.30  subject to a tax under section 295.52 or a pharmacy that has 
 74.31  paid additional expense transferred under this section by a 
 74.32  wholesale drug distributor may file a complaint with the 
 74.33  commissioner responsible for regulating the third-party 
 74.34  purchaser if at any time the third-party purchaser fails to 
 74.35  comply with paragraph (a).  
 74.36     (d) If the commissioner responsible for regulating the 
 75.1   third-party purchaser finds at any time that the third-party 
 75.2   purchaser has not complied with paragraph (a), the commissioner 
 75.3   may take enforcement action against a third-party purchaser 
 75.4   which is subject to the commissioner's regulatory jurisdiction 
 75.5   and which does not allow a hospital, surgical center, pharmacy, 
 75.6   or provider to pass-through the tax.  The commissioner may by 
 75.7   order fine or censure the third-party purchaser or revoke or 
 75.8   suspend the certificate of authority or license of the 
 75.9   third-party purchaser to do business in this state if the 
 75.10  commissioner finds that the third-party purchaser has not 
 75.11  complied with this section.  The third-party purchaser may 
 75.12  appeal the commissioner's order through a contested case hearing 
 75.13  in accordance with chapter 14. 
 75.14     Sec. 22.  [REPEALER.] 
 75.15     Minnesota Statutes 1996, sections 295.52, subdivision 1b; 
 75.16  and 295.53, subdivision 5, are repealed.  
 75.17     Sec. 23.  [EFFECTIVE DATES.] 
 75.18     Sections 7 [295.50, s.7], 9 [295.50, s.13], 10 [295.50, 
 75.19  s.14], 12 [295.52, s.4], and 18 [295.54, s.1] are effective the 
 75.20  day following final enactment. 
 75.21     Section 17 [295.53, s.4] is effective for research 
 75.22  expenditures incurred after December 31, 1996. 
 75.23     Section 20 [295.55, s.2] is effective for estimated 
 75.24  payments due after July 1, 1997. 
 75.25     Section 13 [295.52, s.6] is effective for services rendered 
 75.26  and revenue received after December 3, 1997. 
 75.27     Sections 4 [295.50, s.3], 5 [295.50, s.4], 6 [295.50, s.6], 
 75.28  11 [295.51, s.1], 15 [295.53, s.1], and 16 [295.53, s.3] are 
 75.29  effective January 1, 1998.