1.1                          A bill for an act
  1.2             relating to health; modifying provisions relating to 
  1.3             MinnesotaCare and general assistance medical care; 
  1.4             providing for health care reform; modifying 
  1.5             MinnesotaCare tax provisions; establishing a senior 
  1.6             citizen drug program; modifying provisions relating to 
  1.7             the Minnesota comprehensive health association; 
  1.8             providing for rural health care; providing civil and 
  1.9             criminal penalties; appropriating money; amending 
  1.10            Minnesota Statutes 1996, sections 60A.15, subdivision 
  1.11            1; 60A.951, subdivision 5; 62A.021, by adding a 
  1.12            subdivision; 62A.61; 62A.65, subdivision 3; 62D.02, 
  1.13            subdivision 5; 62D.09, subdivision 3; 62E.02, 
  1.14            subdivisions 13 and 18; 62E.11, by adding a 
  1.15            subdivision; 62E.13, subdivision 2; 62J.017; 62J.04, 
  1.16            subdivisions 1, 1a, and 9; 62J.041; 62J.06; 62J.07, 
  1.17            subdivisions 1 and 3; 62J.09, subdivision 1; 62J.15, 
  1.18            subdivision 1; 62J.152, subdivisions 1, 2, 4, 5, and 
  1.19            by adding a subdivision; 62J.17, subdivision 6a; 
  1.20            62J.22; 62J.25; 62J.2914, subdivision 1; 62J.2915; 
  1.21            62J.2916, subdivision 1; 62J.2917, subdivision 2; 
  1.22            62J.2921, subdivision 2; 62J.451, subdivision 6b; 
  1.23            62L.08, subdivision 8; 62M.02, subdivision 21; 62N.01, 
  1.24            subdivision 1; 62N.22; 62N.23; 62N.25, subdivision 5; 
  1.25            62N.26; 62N.40; 62Q.01, subdivisions 3, 4, and 5; 
  1.26            62Q.03, subdivision 5a; 62Q.106; 62Q.19, subdivision 
  1.27            1; 62Q.33, subdivision 2; 62Q.45, subdivision 2; 
  1.28            136A.1355, subdivisions 1, 2, 3, and 5; 144.1465; 
  1.29            144.147, subdivisions 1, 2, 3, and 4; 144.1484, 
  1.30            subdivision 1; 256.9352, subdivision 3; 256.9353, 
  1.31            subdivisions 1, 3, and 7; 256.9354, subdivisions 4, 5, 
  1.32            6, 7, and by adding a subdivision; 256.9355, 
  1.33            subdivisions 1, 2, 4, and by adding a subdivision; 
  1.34            256.9357, subdivisions 1 and 3; 256.9358, subdivision 
  1.35            4; 256.9359, subdivision 2; 256.9362, subdivision 6; 
  1.36            256.9363, subdivisions 1 and 5; 256.9657, subdivision 
  1.37            3; 256B.04, by adding a subdivision; 256B.056, 
  1.38            subdivision 8; 256B.0625, subdivision 15; 256D.03, 
  1.39            subdivisions 3 and 3b; 295.50, subdivisions 3, 4, 6, 
  1.40            7, 13, and 14; 295.51, subdivision 1; 295.52, 
  1.41            subdivisions 1, 1a, 2, 3, 4, and by adding a 
  1.42            subdivision; 295.53, subdivisions 1, 3, and 4; 295.54, 
  1.43            subdivisions 1 and 2; 295.55, subdivision 2; 295.58; 
  1.44            and 295.582; proposing coding for new law in Minnesota 
  1.45            Statutes, chapters 16A; 62Q; 144; and 256; repealing 
  1.46            Minnesota Statutes 1996, sections 62J.03, subdivision 
  2.1             3; 62J.04, subdivisions 4 and 7; 62J.041, subdivision 
  2.2             7; 62J.042; 62J.05; 62J.051; 62J.09, subdivision 3a; 
  2.3             62J.15; 62J.152; 62J.156; 62J.37; 62N.01, subdivision 
  2.4             2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, 
  2.5             and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 
  2.6             62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 
  2.7             62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 
  2.8             62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, 
  2.9             subdivision 3; 62Q.25; 62Q.29; 62Q.41; 147.01, 
  2.10            subdivision 6; 295.52, subdivision 1b; and 295.53, 
  2.11            subdivision 5; Laws 1993, chapter 247, article 4, 
  2.12            section 8; Laws 1994, chapter 625, article 5, section 
  2.13            5, as amended; Laws 1995, chapter 96, section 2; and 
  2.14            Laws 1995, First Special Session chapter 3, article 
  2.15            13, section 2. 
  2.16  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.17                             ARTICLE 1 
  2.18                     MINNESOTACARE PROGRAM/GAMC 
  2.19     Section 1.  Minnesota Statutes 1996, section 256.9353, 
  2.20  subdivision 1, is amended to read: 
  2.21     Subdivision 1.  [COVERED HEALTH SERVICES.] "Covered health 
  2.22  services" means the health services reimbursed under chapter 
  2.23  256B, with the exception of inpatient hospital services, special 
  2.24  education services, private duty nursing services, adult dental 
  2.25  care services other than preventive services, orthodontic 
  2.26  services, nonemergency medical transportation services, personal 
  2.27  care assistant and case management services, nursing home or 
  2.28  intermediate care facilities services, inpatient mental health 
  2.29  services, and chemical dependency services.  Effective July 1, 
  2.30  1998, adult dental care for nonpreventive services with the 
  2.31  exception of orthodontic services is available to persons who 
  2.32  qualify under section 256.9354, subdivisions 1 to 5, or 
  2.33  256.9366, with family gross income equal to or less than 175 
  2.34  percent of the federal poverty guidelines.  Outpatient mental 
  2.35  health services covered under the MinnesotaCare program are 
  2.36  limited to diagnostic assessments, psychological testing, 
  2.37  explanation of findings, medication management by a physician, 
  2.38  day treatment, partial hospitalization, and individual, family, 
  2.39  and group psychotherapy. 
  2.40     No public funds shall be used for coverage of abortion 
  2.41  under MinnesotaCare except where the life of the female would be 
  2.42  endangered or substantial and irreversible impairment of a major 
  2.43  bodily function would result if the fetus were carried to term; 
  3.1   or where the pregnancy is the result of rape or incest. 
  3.2      Covered health services shall be expanded as provided in 
  3.3   this section. 
  3.4      Sec. 2.  Minnesota Statutes 1996, section 256.9353, 
  3.5   subdivision 3, is amended to read: 
  3.6      Subd. 3.  [INPATIENT HOSPITAL SERVICES.] (a) Beginning July 
  3.7   1, 1993, covered health services shall include inpatient 
  3.8   hospital services, including inpatient hospital mental health 
  3.9   services and inpatient hospital and residential chemical 
  3.10  dependency treatment, subject to those limitations necessary to 
  3.11  coordinate the provision of these services with eligibility 
  3.12  under the medical assistance spenddown.  Prior to July 1, 1997, 
  3.13  the inpatient hospital benefit for adult enrollees is subject to 
  3.14  an annual benefit limit of $10,000.  Effective July 1, 1997, the 
  3.15  inpatient hospital benefit for adult enrollees who qualify under 
  3.16  section 256.9354, subdivision 5, is subject to an annual limit 
  3.17  of $10,000.  
  3.18     (b) Enrollees who qualify under section 256.9354, 
  3.19  subdivision 5, and are determined by the commissioner to have a 
  3.20  basis of eligibility for medical assistance shall apply for and 
  3.21  cooperate with the requirements of medical assistance by the 
  3.22  last day of the third month following admission to an inpatient 
  3.23  hospital.  If an enrollee fails to apply for medical assistance 
  3.24  within this time period, the enrollee and the enrollee's family 
  3.25  shall be disenrolled from the plan and they may not reenroll 
  3.26  until 12 calendar months have elapsed.  Enrollees and enrollees' 
  3.27  families disenrolled for not applying for or not cooperating 
  3.28  with medical assistance may not reenroll. 
  3.29     (c) Admissions for inpatient hospital services paid for 
  3.30  under section 256.9362, subdivision 3, must be certified as 
  3.31  medically necessary in accordance with Minnesota Rules, parts 
  3.32  9505.0500 to 9505.0540, except as provided in clauses (1) and 
  3.33  (2): 
  3.34     (1) all admissions must be certified, except those 
  3.35  authorized under rules established under section 254A.03, 
  3.36  subdivision 3, or approved under Medicare; and 
  4.1      (2) payment under section 256.9362, subdivision 3, shall be 
  4.2   reduced by five percent for admissions for which certification 
  4.3   is requested more than 30 days after the day of admission.  The 
  4.4   hospital may not seek payment from the enrollee for the amount 
  4.5   of the payment reduction under this clause. 
  4.6      (d) Any enrollee or family member of an enrollee who has 
  4.7   previously been permanently disenrolled from MinnesotaCare for 
  4.8   not applying for and cooperating with medical assistance shall 
  4.9   be eligible to reenroll if 12 calendar months have elapsed since 
  4.10  the date of disenrollment. 
  4.11     Sec. 3.  Minnesota Statutes 1996, section 256.9353, 
  4.12  subdivision 7, is amended to read: 
  4.13     Subd. 7.  [COPAYMENTS AND COINSURANCE.] The MinnesotaCare 
  4.14  benefit plan shall include the following copayments and 
  4.15  coinsurance requirements:  
  4.16     (1) ten percent of the paid charges submitted for inpatient 
  4.17  hospital services for adult enrollees not eligible for medical 
  4.18  assistance, subject to an annual inpatient out-of-pocket maximum 
  4.19  of $1,000 per individual and $3,000 per family; 
  4.20     (2) $3 per prescription for adult enrollees; and 
  4.21     (3) $25 for eyeglasses for adult enrollees; and 
  4.22     (4) effective July 1, 1998, 50 percent of paid charges for 
  4.23  adult dental care services other than preventive care services 
  4.24  for persons eligible under section 256.9354, subdivisions 1 to 
  4.25  5, or 256.9366 with income equal to or less than 175 percent of 
  4.26  the federal poverty guidelines.  
  4.27     Prior to July 1, 1997, enrollees who are not eligible for 
  4.28  medical assistance with or without a spenddown shall be 
  4.29  financially responsible for the coinsurance amount and amounts 
  4.30  which exceed the $10,000 benefit limit.  MinnesotaCare shall be 
  4.31  financially responsible for the spenddown amount up to the 
  4.32  $10,000 benefit limit for enrollees who are eligible for medical 
  4.33  assistance with a spenddown; enrollees who are eligible for 
  4.34  medical assistance with a spenddown are financially responsible 
  4.35  for amounts which exceed the $10,000 benefit limit.  Effective 
  4.36  July 1, 1997, adult enrollees who qualify under section 
  5.1   256.9354, subdivision 5, and who are not eligible for medical 
  5.2   assistance with or without a spenddown shall be financially 
  5.3   responsible for the coinsurance amount and amounts which exceed 
  5.4   the $10,000 inpatient hospital benefit limit. 
  5.5      Sec. 4.  Minnesota Statutes 1996, section 256.9354, 
  5.6   subdivision 4, is amended to read: 
  5.7      Subd. 4.  [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON 
  5.8   PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning 
  5.9   January 1, 1993, "eligible persons" means children, parents, and 
  5.10  dependent siblings residing in the same household who are not 
  5.11  eligible for medical assistance without a spenddown under 
  5.12  chapter 256B.  Children who meet the criteria in subdivision 1 
  5.13  or 4a shall continue to be enrolled pursuant to those 
  5.14  subdivisions.  Persons who are eligible under this subdivision 
  5.15  or subdivision 2, 3, or 5 must pay a premium as determined under 
  5.16  sections 256.9357 and 256.9358, and children eligible under 
  5.17  subdivision 1 must pay the premium required under section 
  5.18  256.9356, subdivision 1.  Individuals and families whose income 
  5.19  is greater than the limits established under section 256.9358 
  5.20  may not enroll in MinnesotaCare.  
  5.21     Sec. 5.  Minnesota Statutes 1996, section 256.9354, 
  5.22  subdivision 5, is amended to read: 
  5.23     Subd. 5.  [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 
  5.24  CHILDREN.] (a) Beginning October 1, 1994, the definition of 
  5.25  "eligible persons" is expanded to include all individuals and 
  5.26  households with no children who have gross family incomes that 
  5.27  are equal to or less than 125 percent of the federal poverty 
  5.28  guidelines and who are not eligible for medical assistance 
  5.29  without a spenddown under chapter 256B.  
  5.30     (b) After October 1, 1995, the commissioner of human 
  5.31  services may expand the definition of "eligible persons" to 
  5.32  include all individuals and households with no children who have 
  5.33  gross family incomes that are equal to or less than 135 percent 
  5.34  of federal poverty guidelines and are not eligible for medical 
  5.35  assistance without a spenddown under chapter 256B.  This 
  5.36  expansion may occur only if the financial management 
  6.1   requirements of section 256.9352, subdivision 3, can be met. 
  6.2      (c) The commissioners of health and human services, in 
  6.3   consultation with the legislative commission on health care 
  6.4   access, shall make preliminary recommendations to the 
  6.5   legislature by October 1, 1995, and final recommendations to the 
  6.6   legislature by February 1, 1996, on whether a further expansion 
  6.7   of the definition of "eligible persons" to include all 
  6.8   individuals and households with no children who have gross 
  6.9   family incomes that are equal to or less than 150 percent of 
  6.10  federal poverty guidelines and are not eligible for medical 
  6.11  assistance without a spenddown under chapter 256B would be 
  6.12  allowed under the financial management constraints outlined in 
  6.13  section 256.9352, subdivision 3. 
  6.14     (d) (b) Beginning July 1, 1997, the definition of eligible 
  6.15  persons is expanded to include all individuals and households 
  6.16  with no children who have gross family incomes that are equal to 
  6.17  or less than 175 percent of the federal poverty guidelines and 
  6.18  who are not eligible for medical assistance without a spenddown 
  6.19  under chapter 256B. 
  6.20     (c) All eligible persons under paragraphs (a) and (b) are 
  6.21  eligible for coverage through the MinnesotaCare program but must 
  6.22  pay a premium as determined under sections 256.9357 and 
  6.23  256.9358.  Individuals and families whose income is greater than 
  6.24  the limits established under section 256.9358 may not enroll in 
  6.25  the MinnesotaCare program. 
  6.26     Sec. 6.  Minnesota Statutes 1996, section 256.9354, 
  6.27  subdivision 6, is amended to read: 
  6.28     Subd. 6.  [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 
  6.29  ASSISTANCE.] Individuals who apply for MinnesotaCare who qualify 
  6.30  under section 256.9354, subdivision 5, but who are potentially 
  6.31  eligible for medical assistance without a spenddown shall be 
  6.32  allowed to enroll in MinnesotaCare for a period of 60 days, so 
  6.33  long as the applicant meets all other conditions of 
  6.34  eligibility.  The commissioner shall identify and refer such 
  6.35  individuals to their county social service agency.  The enrollee 
  6.36  must cooperate with the county social service agency in 
  7.1   determining medical assistance eligibility within the 60-day 
  7.2   enrollment period.  Enrollees who do not apply for and cooperate 
  7.3   with medical assistance within the 60-day enrollment period, and 
  7.4   their other family members, shall be disenrolled from the plan 
  7.5   within one calendar month.  Persons disenrolled for 
  7.6   nonapplication for medical assistance may not reenroll until 
  7.7   they have obtained a medical assistance eligibility 
  7.8   determination for the family member or members who were referred 
  7.9   to the county agency.  Persons disenrolled for noncooperation 
  7.10  with medical assistance may not reenroll until they have 
  7.11  cooperated with the county agency and have obtained a medical 
  7.12  assistance eligibility determination.  The commissioner shall 
  7.13  redetermine provider payments made under MinnesotaCare to the 
  7.14  appropriate medical assistance payments for those enrollees who 
  7.15  subsequently become eligible for medical assistance. 
  7.16     Sec. 7.  Minnesota Statutes 1996, section 256.9354, 
  7.17  subdivision 7, is amended to read: 
  7.18     Subd. 7.  [GENERAL ASSISTANCE MEDICAL CARE.] A person 
  7.19  cannot have coverage under both MinnesotaCare and general 
  7.20  assistance medical care in the same month, except that a 
  7.21  MinnesotaCare enrollee may be eligible for retroactive general 
  7.22  assistance medical care according to section 256D.03, 
  7.23  subdivision 3, paragraph (b). 
  7.24     Sec. 8.  Minnesota Statutes 1996, section 256.9354, is 
  7.25  amended by adding a subdivision to read: 
  7.26     Subd. 8.  [MINNESOTACARE OUTREACH.] The commissioner shall 
  7.27  award grants to public or private organizations to provide 
  7.28  information on the importance of maintaining insurance coverage 
  7.29  and on how to obtain coverage through the MinnesotaCare program 
  7.30  in areas of the state with high uninsured populations.  
  7.31     Sec. 9.  Minnesota Statutes 1996, section 256.9355, 
  7.32  subdivision 1, is amended to read: 
  7.33     Subdivision 1.  [APPLICATION AND INFORMATION AVAILABILITY.] 
  7.34  Applications and other information must be made available to 
  7.35  provider offices, local human services agencies, school 
  7.36  districts, public and private elementary schools in which 25 
  8.1   percent or more of the students receive free or reduced price 
  8.2   lunches, community health offices, and Women, Infants and 
  8.3   Children (WIC) program sites.  These sites may accept 
  8.4   applications, collect the enrollment fee or initial premium fee, 
  8.5   and forward the forms and fees to the commissioner.  Otherwise, 
  8.6   applicants may apply directly to the commissioner.  Beginning 
  8.7   January 1, 2000, MinnesotaCare enrollment sites will be expanded 
  8.8   to include local county human services agencies which choose to 
  8.9   participate.  
  8.10     Sec. 10.  Minnesota Statutes 1996, section 256.9355, 
  8.11  subdivision 2, is amended to read: 
  8.12     Subd. 2.  [COMMISSIONER'S DUTIES.] The commissioner shall 
  8.13  use individuals' social security numbers as identifiers for 
  8.14  purposes of administering the plan and conduct data matches to 
  8.15  verify income.  Applicants shall submit evidence of family 
  8.16  income, earned and unearned, including the most recent income 
  8.17  tax return and any form W-2 wage and tax statements, wage slips, 
  8.18  or other documentation that is necessary to verify income 
  8.19  eligibility.  The commissioner shall perform random audits to 
  8.20  verify reported income and eligibility.  The commissioner may 
  8.21  execute data sharing arrangements with the department of revenue 
  8.22  and any other governmental agency in order to perform income 
  8.23  verification related to eligibility and premium payment under 
  8.24  the MinnesotaCare program. 
  8.25     Sec. 11.  Minnesota Statutes 1996, section 256.9355, 
  8.26  subdivision 4, is amended to read: 
  8.27     Subd. 4.  [APPLICATION PROCESSING.] The commissioner of 
  8.28  human services shall determine an applicant's eligibility for 
  8.29  MinnesotaCare no more than 30 days from the date that the 
  8.30  application is received by the department of human services.  
  8.31  This requirement shall be suspended for four months following 
  8.32  the dates in which single adults and families without children 
  8.33  become eligible for the program.  Beginning July 1, 2000, this 
  8.34  requirement also applies to local county human services agencies 
  8.35  that determine eligibility for MinnesotaCare.  
  8.36     Sec. 12.  Minnesota Statutes 1996, section 256.9355, is 
  9.1   amended by adding a subdivision to read: 
  9.2      Subd. 5.  [AVAILABILITY OF PRIVATE INSURANCE.] The 
  9.3   commissioner, in consultation with the commissioners of health 
  9.4   and commerce, shall provide information regarding the 
  9.5   availability of private health insurance coverage to all 
  9.6   families and individuals enrolled in the MinnesotaCare program 
  9.7   whose gross family income is equal to or more than 200 percent 
  9.8   of the federal poverty guidelines.  This information must be 
  9.9   provided upon initial enrollment and annually thereafter. 
  9.10     Sec. 13.  Minnesota Statutes 1996, section 256.9357, 
  9.11  subdivision 1, is amended to read: 
  9.12     Subdivision 1.  [GENERAL REQUIREMENTS.] Families and 
  9.13  individuals who enroll on or after October 1, 1992, are eligible 
  9.14  for subsidized premium payments based on a sliding scale under 
  9.15  section 256.9358 only if the family or individual meets the 
  9.16  requirements in subdivisions 2 and 3.  Children already enrolled 
  9.17  in the children's health plan as of September 30, 1992, eligible 
  9.18  under section 256.9354, subdivision 1, paragraph (a), children 
  9.19  who enroll in the MinnesotaCare program after September 30, 
  9.20  1992, pursuant to Laws 1992, chapter 549, article 4, section 17, 
  9.21  and children who enroll under section 256.9354, subdivision 4a, 
  9.22  are eligible for subsidized premium payments without meeting 
  9.23  these requirements, as long as they maintain continuous coverage 
  9.24  in the MinnesotaCare plan or medical assistance.  
  9.25     Families and individuals who initially enrolled in 
  9.26  MinnesotaCare under section 256.9354 or 256.9366, and whose 
  9.27  income increases above the limits established in section 
  9.28  sections 256.9358 and 256.9366, may continue enrollment and pay 
  9.29  the full cost of coverage are no longer eligible for the program 
  9.30  and shall be disenrolled by the commissioner.  MinnesotaCare 
  9.31  coverage terminates the last day of the calendar month following 
  9.32  the month in which the department determines that the income of 
  9.33  a family or individual, determined as required by section 
  9.34  256.9358, exceeds program income limits. 
  9.35     Sec. 14.  Minnesota Statutes 1996, section 256.9357, 
  9.36  subdivision 3, is amended to read: 
 10.1      Subd. 3.  [PERIOD UNINSURED.] To be eligible for subsidized 
 10.2   premium payments based on a sliding scale, families and 
 10.3   individuals initially enrolled in the MinnesotaCare program 
 10.4   under section 256.9354, subdivisions 4 and 5, must have had no 
 10.5   health coverage for at least four months prior to application.  
 10.6   The commissioner may change this eligibility criterion for 
 10.7   sliding scale premiums without complying with rulemaking 
 10.8   requirements in order to remain within the limits of available 
 10.9   appropriations.  The requirement of at least four months of no 
 10.10  health coverage prior to application for the MinnesotaCare 
 10.11  program does not apply to: 
 10.12     (1) families, children, and individuals who want to apply 
 10.13  for the MinnesotaCare program upon termination from or as 
 10.14  required by the medical assistance program, general assistance 
 10.15  medical care program, or coverage under a regional demonstration 
 10.16  project for the uninsured funded under section 256B.73, the 
 10.17  Hennepin county assured care program, or the Group Health, Inc., 
 10.18  community health plan; 
 10.19     (2) families and individuals initially enrolled under 
 10.20  section 256.9354, subdivisions 1, paragraph (a), and 2; 
 10.21     (3) children enrolled pursuant to Laws 1992, chapter 549, 
 10.22  article 4, section 17; or 
 10.23     (4) individuals currently serving or who have served in the 
 10.24  military reserves, and dependents of these individuals, if these 
 10.25  individuals:  (i) reapply for MinnesotaCare coverage after a 
 10.26  period of active military service during which they had been 
 10.27  covered by the Civilian Health and Medical Program of the 
 10.28  Uniformed Services (CHAMPUS); (ii) were covered under 
 10.29  MinnesotaCare immediately prior to obtaining coverage under 
 10.30  CHAMPUS; and (iii) have maintained continuous coverage; or 
 10.31     (5) individuals and families whose only health coverage 
 10.32  during the four months prior to application was a qualified or 
 10.33  Medicare supplement plan issued by the Minnesota comprehensive 
 10.34  health association under chapter 62E. 
 10.35     Sec. 15.  Minnesota Statutes 1996, section 256.9358, 
 10.36  subdivision 4, is amended to read: 
 11.1      Subd. 4.  [INELIGIBILITY.] Families with children whose 
 11.2   gross monthly income is above the amount specified in 
 11.3   subdivision 3 are not eligible for the plan.  Beginning October 
 11.4   1, 1994, An individual or households with no children whose 
 11.5   gross income is greater than 125 percent of the federal poverty 
 11.6   guidelines the amount specified in section 256.9354, subdivision 
 11.7   5, are ineligible for the plan. 
 11.8      Sec. 16.  Minnesota Statutes 1996, section 256.9359, 
 11.9   subdivision 2, is amended to read: 
 11.10     Subd. 2.  [RESIDENCY REQUIREMENT.] (a) Prior to July 1, 
 11.11  1997, to be eligible for health coverage under the MinnesotaCare 
 11.12  program, families and individuals must be permanent residents of 
 11.13  Minnesota.  
 11.14     (b) Effective July 1, 1997, to be eligible for health 
 11.15  coverage under the MinnesotaCare program, adults without 
 11.16  children must be permanent residents of Minnesota. 
 11.17     (c) Effective July 1, 1997, to be eligible for health 
 11.18  coverage under the MinnesotaCare program, pregnant women, 
 11.19  families, and children must meet the residency requirements as 
 11.20  provided by Code of Federal Regulations, title 42, section 
 11.21  435.403, except that the provisions of section 256B.056, 
 11.22  subdivision 1, shall apply upon receipt of federal approval. 
 11.23     Sec. 17.  Minnesota Statutes 1996, section 256.9362, 
 11.24  subdivision 6, is amended to read: 
 11.25     Subd. 6.  [ENROLLEES 18 OR OLDER.] Payment by the 
 11.26  MinnesotaCare program for inpatient hospital services provided 
 11.27  to MinnesotaCare enrollees eligible under section 256.9354, 
 11.28  subdivision 5, who are 18 years old or older on the date of 
 11.29  admission to the inpatient hospital must be in accordance with 
 11.30  paragraphs (a) and (b).  For inpatient hospital services 
 11.31  provided to MinnesotaCare enrollees eligible under section 
 11.32  256.9366, who are 18 years old or older on the date of admission 
 11.33  to the inpatient hospital, and who are not pregnant, payment 
 11.34  must be in accordance with paragraph (c). 
 11.35     (a) If the medical assistance rate minus any copayment 
 11.36  required under section 256.9353, subdivision 6, is less than or 
 12.1   equal to the amount remaining in the enrollee's benefit limit 
 12.2   under section 256.9353, subdivision 3, payment must be the 
 12.3   medical assistance rate minus any copayment required under 
 12.4   section 256.9353, subdivision 6.  The hospital must not seek 
 12.5   payment from the enrollee in addition to the copayment.  The 
 12.6   MinnesotaCare payment plus the copayment must be treated as 
 12.7   payment in full. 
 12.8      (b) If the medical assistance rate minus any copayment 
 12.9   required under section 256.9353, subdivision 6, is greater than 
 12.10  the amount remaining in the enrollee's benefit limit under 
 12.11  section 256.9353, subdivision 3, payment must be the lesser of: 
 12.12     (1) the amount remaining in the enrollee's benefit limit; 
 12.13  or 
 12.14     (2) charges submitted for the inpatient hospital services 
 12.15  less any copayment established under section 256.9353, 
 12.16  subdivision 6. 
 12.17     The hospital may seek payment from the enrollee for the 
 12.18  amount by which usual and customary charges exceed the payment 
 12.19  under this paragraph.  If payment is reduced under section 
 12.20  256.9353, subdivision 3, paragraph (c), the hospital may not 
 12.21  seek payment from the enrollee for the amount of the reduction. 
 12.22     (c) For admissions occurring during the period of July 1, 
 12.23  1997, through June 30, 1998, for adults eligible under section 
 12.24  256.9366 who are not pregnant, the commissioner shall pay 
 12.25  hospitals directly, up to the medical assistance payment rate, 
 12.26  for inpatient hospital benefits in excess of the $10,000 annual 
 12.27  inpatient benefit limit. 
 12.28     Sec. 18.  Minnesota Statutes 1996, section 256.9363, 
 12.29  subdivision 5, is amended to read: 
 12.30     Subd. 5.  [ELIGIBILITY FOR OTHER STATE PROGRAMS.] 
 12.31  MinnesotaCare enrollees who become eligible for medical 
 12.32  assistance or general assistance medical care will remain in the 
 12.33  same managed care plan if the managed care plan has a contract 
 12.34  for that population.  Effective January 1, 1998, MinnesotaCare 
 12.35  enrollees who were formerly eligible for general assistance 
 12.36  medical care pursuant to section 256D.03, subdivision 3, within 
 13.1   six months of MinnesotaCare enrollment and were enrolled in a 
 13.2   prepaid health plan pursuant to section 256D.03, subdivision 4, 
 13.3   paragraph (d), must remain in the same managed care plan if the 
 13.4   managed care plan has a contract for that population.  Contracts 
 13.5   between the department of human services and managed care plans 
 13.6   must include MinnesotaCare, and medical assistance and may, at 
 13.7   the option of the commissioner of human services, also include 
 13.8   general assistance medical care. 
 13.9      Sec. 19.  [256.937] [ASSET REQUIREMENT FOR MINNESOTACARE.] 
 13.10     Subdivision 1.  [DEFINITIONS.] For purposes of this 
 13.11  section, the following definitions apply. 
 13.12     (a) "Asset" means cash and other personal property, as well 
 13.13  as any real property, that a family or individual owns which has 
 13.14  monetary value. 
 13.15     (b) "Homestead" means the home that is owned by, and is the 
 13.16  usual residence of, the family or individual, together with the 
 13.17  surrounding property which is not separated from the home by 
 13.18  intervening property owned by others.  Public rights-of-way, 
 13.19  such as roads that run through the surrounding property and 
 13.20  separate it from the home, will not affect the exemption of the 
 13.21  property.  "Usual residence" includes the home from which the 
 13.22  family or individual is temporarily absent due to illness, 
 13.23  employment, or education, or because the home is temporarily not 
 13.24  habitable due to casualty or natural disaster. 
 13.25     (c) "Net asset" means the asset's fair market value minus 
 13.26  any encumbrances including, but not limited to, liens and 
 13.27  mortgages. 
 13.28     Subd. 2.  [LIMIT ON TOTAL ASSETS.] (a) Effective April 1, 
 13.29  1997, or upon federal approval, whichever is later, in order to 
 13.30  be eligible for the MinnesotaCare program, a household of two or 
 13.31  more persons must not own more than $30,000 in total net assets, 
 13.32  and a household of one person must not own more than $15,000 in 
 13.33  total net assets. 
 13.34     (b) For purposes of this subdivision, total net assets 
 13.35  include all assets, with the following exceptions: 
 13.36     (1) a homestead is not considered; 
 14.1      (2) household goods and personal effects are not 
 14.2   considered; and 
 14.3      (3) capital and operating assets of a trade or business up 
 14.4   to $200,000 in net assets are not considered. 
 14.5      (c) If an asset excluded under paragraph (b) has a negative 
 14.6   value, the negative value shall be subtracted from the total net 
 14.7   assets under paragraph (a). 
 14.8      Subd. 3.  [DOCUMENTATION.] (a) The commissioner of human 
 14.9   services shall require individuals and families, at the time of 
 14.10  application or renewal, to indicate on a checkoff form developed 
 14.11  by the commissioner whether they satisfy the MinnesotaCare asset 
 14.12  requirement.  This form must include the following or similar 
 14.13  language:  "To be eligible for MinnesotaCare, individuals and 
 14.14  families must not own net assets in excess of $30,000 for a 
 14.15  household of two or more persons or $15,000 for a household of 
 14.16  one person, not including a homestead, household goods and 
 14.17  personal effects, and capital and operating assets of a trade or 
 14.18  business up to $200,000.  Do you and your household own net 
 14.19  assets in excess of these limits?" 
 14.20     (b) The commissioner may require individuals and families 
 14.21  to provide any information the commissioner determines necessary 
 14.22  to verify compliance with the asset requirement, if the 
 14.23  commissioner determines that there is reason to believe that an 
 14.24  individual or family has assets that exceed the program limit. 
 14.25     Subd. 4.  [PENALTIES.] Individuals or families who are 
 14.26  found to have knowingly misreported the amount of their assets 
 14.27  as described in this section shall be subject to the penalties 
 14.28  in section 256.98.  The commissioner shall present 
 14.29  recommendations on additional penalties to the 1998 legislature. 
 14.30     Sec. 20.  [256.9371] [PENALTIES.] 
 14.31     Whoever obtains or attempts to obtain, or aids or abets any 
 14.32  person to obtain by means of a willfully false statement or 
 14.33  representation, or by the intentional withholding or concealment 
 14.34  of a material fact, or by impersonation, or other fraudulent 
 14.35  device: 
 14.36     (1) benefits under the MinnesotaCare program to which the 
 15.1   person is not entitled; or 
 15.2      (2) benefits under the MinnesotaCare program greater than 
 15.3   that to which the person is reasonably entitled; 
 15.4   shall be considered to have violated section 256.98, and shall 
 15.5   be subject to both the criminal and civil penalties provided 
 15.6   under that section. 
 15.7      Sec. 21.  Minnesota Statutes 1996, section 256D.03, 
 15.8   subdivision 3, is amended to read: 
 15.9      Subd. 3.  [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 
 15.10  (a) General assistance medical care may be paid for any person 
 15.11  who is not eligible for medical assistance under chapter 256B, 
 15.12  including eligibility for medical assistance based on a 
 15.13  spenddown of excess income according to section 256B.056, 
 15.14  subdivision 5, or MinnesotaCare as defined in clause (4), except 
 15.15  as provided in paragraph (b); and: 
 15.16     (1) who is receiving assistance under section 256D.05, or 
 15.17  except for families with children who are eligible under 
 15.18  Minnesota family investment program-statewide (MFIP-S), who is 
 15.19  having a payment made on the person's behalf under sections 
 15.20  256I.01 to 256I.06, or who resides in group residential housing 
 15.21  as defined in chapter 256I and can meet a spenddown using the 
 15.22  cost of remedial services received through group residential 
 15.23  housing; or 
 15.24     (2)(i) who is a resident of Minnesota; and whose equity in 
 15.25  assets is not in excess of $1,000 per assistance unit.  No asset 
 15.26  test shall be applied to children and their parents living in 
 15.27  the same household.  Exempt assets, the reduction of excess 
 15.28  assets, and the waiver of excess assets must conform to the 
 15.29  medical assistance program in chapter 256B, with the following 
 15.30  exception:  the maximum amount of undistributed funds in a trust 
 15.31  that could be distributed to or on behalf of the beneficiary by 
 15.32  the trustee, assuming the full exercise of the trustee's 
 15.33  discretion under the terms of the trust, must be applied toward 
 15.34  the asset maximum; and 
 15.35     (ii) who has countable income not in excess of the 
 15.36  assistance standards established in section 256B.056, 
 16.1   subdivision 4, or whose excess income is spent down pursuant to 
 16.2   section 256B.056, subdivision 5, using a six-month budget 
 16.3   period, except that a one-month budget period must be used for 
 16.4   recipients residing in a long-term care facility.  The method 
 16.5   for calculating earned income disregards and deductions for a 
 16.6   person who resides with a dependent child under age 21 shall be 
 16.7   as specified in section 256.74, subdivision 1 follow section 
 16.8   256B.056, subdivision 1a.  However, if a disregard of $30 and 
 16.9   one-third of the remainder described in section 256.74, 
 16.10  subdivision 1, clause (4), has been applied to the wage earner's 
 16.11  income, the disregard shall not be applied again until the wage 
 16.12  earner's income has not been considered in an eligibility 
 16.13  determination for general assistance, general assistance medical 
 16.14  care, medical assistance, or aid to families with dependent 
 16.15  children MFIP-S for 12 consecutive months.  The earned income 
 16.16  and work expense deductions for a person who does not reside 
 16.17  with a dependent child under age 21 shall be the same as the 
 16.18  method used to determine eligibility for a person under section 
 16.19  256D.06, subdivision 1, except the disregard of the first $50 of 
 16.20  earned income is not allowed; or 
 16.21     (3) who would be eligible for medical assistance except 
 16.22  that the person resides in a facility that is determined by the 
 16.23  commissioner or the federal health care financing administration 
 16.24  to be an institution for mental diseases. 
 16.25     (4) Beginning July 1, 1998, applicants or recipients who 
 16.26  meet all eligibility requirements of MinnesotaCare as defined in 
 16.27  sections 256.9351 to 256.9363 and 256.9366 to 256.9369, and are: 
 16.28     (i) adults with dependent children under 21 whose gross 
 16.29  family income is equal to or less than 275 percent of the 
 16.30  federal poverty guidelines; or 
 16.31     (ii) adults without children with earned income and whose 
 16.32  family gross income is between 75 percent of the federal poverty 
 16.33  guidelines and the amount set by section 256.9354, subdivision 
 16.34  5, shall be terminated from general assistance medical care upon 
 16.35  enrollment in MinnesotaCare. 
 16.36     (b) Eligibility is available for the month of application, 
 17.1   and for three months prior to application if the person was 
 17.2   eligible in those prior months. For services rendered on or 
 17.3   after July 1, 1997, eligibility is limited to one month prior to 
 17.4   application if the person is determined eligible in the prior 
 17.5   month.  A redetermination of eligibility must occur every 12 
 17.6   months.  Beginning July 1, 1998, Minnesota health care program 
 17.7   applications completed by recipients and applicants who are 
 17.8   persons described in paragraph (a), clause (4), may be returned 
 17.9   to the county agency to be forwarded to the department of human 
 17.10  services or sent directly to the department of human services 
 17.11  for enrollment in MinnesotaCare.  If all other eligibility 
 17.12  requirements of this subdivision are met, eligibility for 
 17.13  general assistance medical care shall be available in any month 
 17.14  during which a MinnesotaCare eligibility determination and 
 17.15  enrollment are pending.  Upon notification of eligibility for 
 17.16  MinnesotaCare, notice of termination for eligibility for general 
 17.17  assistance medical care shall be sent to an applicant or 
 17.18  recipient.  If all other eligibility requirements of this 
 17.19  subdivision are met, eligibility for general assistance medical 
 17.20  care shall be available until enrollment in MinnesotaCare 
 17.21  subject to the provisions of paragraph (d). 
 17.22     (c) The date of an initial Minnesota health care program 
 17.23  application necessary to begin a determination of eligibility 
 17.24  shall be the date the applicant has provided a name, address, 
 17.25  and social security number, signed and dated, to the county 
 17.26  agency or the department of human services.  If the applicant is 
 17.27  unable to provide an initial application when health care is 
 17.28  delivered due to a medical condition or disability, a health 
 17.29  care provider may act on the person's behalf to complete the 
 17.30  initial application.  The applicant must complete the remainder 
 17.31  of the application and provide necessary verification before 
 17.32  eligibility can be determined.  The county agency must assist 
 17.33  the applicant in obtaining verification if necessary. 
 17.34     (d) County agencies are authorized to use all automated 
 17.35  databases containing information regarding recipients' or 
 17.36  applicants' income in order to determine eligibility for general 
 18.1   assistance medical care or MinnesotaCare.  Such use shall be 
 18.2   considered sufficient in order to determine eligibility and 
 18.3   premium payments by the county agency. 
 18.4      (c) (e) General assistance medical care is not available 
 18.5   for a person in a correctional facility unless the person is 
 18.6   detained by law for less than one year in a county correctional 
 18.7   or detention facility as a person accused or convicted of a 
 18.8   crime, or admitted as an inpatient to a hospital on a criminal 
 18.9   hold order, and the person is a recipient of general assistance 
 18.10  medical care at the time the person is detained by law or 
 18.11  admitted on a criminal hold order and as long as the person 
 18.12  continues to meet other eligibility requirements of this 
 18.13  subdivision.  
 18.14     (d) (f) General assistance medical care is not available 
 18.15  for applicants or recipients who do not cooperate with the 
 18.16  county agency to meet the requirements of medical 
 18.17  assistance.  General assistance medical care is limited to 
 18.18  payment of emergency services only for applicants or recipients 
 18.19  as described in paragraph (a), clause (4), whose MinnesotaCare 
 18.20  coverage is denied or terminated for nonpayment of premiums as 
 18.21  required by sections 256.9356 to 256.9358.  
 18.22     (e) (g) In determining the amount of assets of an 
 18.23  individual, there shall be included any asset or interest in an 
 18.24  asset, including an asset excluded under paragraph (a), that was 
 18.25  given away, sold, or disposed of for less than fair market value 
 18.26  within the 60 months preceding application for general 
 18.27  assistance medical care or during the period of eligibility.  
 18.28  Any transfer described in this paragraph shall be presumed to 
 18.29  have been for the purpose of establishing eligibility for 
 18.30  general assistance medical care, unless the individual furnishes 
 18.31  convincing evidence to establish that the transaction was 
 18.32  exclusively for another purpose.  For purposes of this 
 18.33  paragraph, the value of the asset or interest shall be the fair 
 18.34  market value at the time it was given away, sold, or disposed 
 18.35  of, less the amount of compensation received.  For any 
 18.36  uncompensated transfer, the number of months of ineligibility, 
 19.1   including partial months, shall be calculated by dividing the 
 19.2   uncompensated transfer amount by the average monthly per person 
 19.3   payment made by the medical assistance program to skilled 
 19.4   nursing facilities for the previous calendar year.  The 
 19.5   individual shall remain ineligible until this fixed period has 
 19.6   expired.  The period of ineligibility may exceed 30 months, and 
 19.7   a reapplication for benefits after 30 months from the date of 
 19.8   the transfer shall not result in eligibility unless and until 
 19.9   the period of ineligibility has expired.  The period of 
 19.10  ineligibility begins in the month the transfer was reported to 
 19.11  the county agency, or if the transfer was not reported, the 
 19.12  month in which the county agency discovered the transfer, 
 19.13  whichever comes first.  For applicants, the period of 
 19.14  ineligibility begins on the date of the first approved 
 19.15  application. 
 19.16     (f)(1) (h) Beginning October 1, 1993, an undocumented alien 
 19.17  or a nonimmigrant is ineligible for general assistance medical 
 19.18  care other than emergency services.  For purposes of this 
 19.19  subdivision, a nonimmigrant is an individual in one or more of 
 19.20  the classes listed in United States Code, title 8, section 
 19.21  1101(a)(15), and an undocumented alien is an individual who 
 19.22  resides in the United States without the approval or 
 19.23  acquiescence of the Immigration and Naturalization Service. 
 19.24     (2) (i) This subdivision does not apply to a child under 
 19.25  age 18, to a Cuban or Haitian entrant as defined in Public Law 
 19.26  Number 96-422, section 501(e)(1) or (2)(a), or to an alien who 
 19.27  is aged, blind, or disabled as defined in United States Code, 
 19.28  title 42, section 1382c(a)(1). 
 19.29     (3) (j) For purposes of paragraph paragraphs (f) and (h), 
 19.30  "emergency services" has the meaning given in Code of Federal 
 19.31  Regulations, title 42, section 440.255(b)(1), except that it 
 19.32  also means services rendered because of suspected or actual 
 19.33  pesticide poisoning. 
 19.34     Sec. 22.  [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.] 
 19.35     (a) The commissioner of human services, in consultation 
 19.36  with the legislative commission on health care access and the 
 20.1   commissioners of employee relations, health, and commerce, shall 
 20.2   develop an implementation plan to transition higher-income 
 20.3   MinnesotaCare enrollees to private sector or other nonsubsidized 
 20.4   coverage.  In developing the plan, the commissioner shall 
 20.5   examine the feasibility of using the health insurance program 
 20.6   for state employees administered by the commissioner of employee 
 20.7   relations as a source of coverage, and shall also examine 
 20.8   methods to increase the affordability of private sector coverage 
 20.9   for individuals and families transitioning off MinnesotaCare.  
 20.10  The commissioner shall submit the implementation plan to the 
 20.11  legislature by December 15, 1997. 
 20.12     (b) The commissioner of human services shall also report to 
 20.13  the legislature by January 15, 1998, on the impact of the 
 20.14  outreach efforts conducted by the department of human services 
 20.15  for the MinnesotaCare program, affordability of the 
 20.16  MinnesotaCare premium schedule, and the reasons why families and 
 20.17  individuals are leaving the MinnesotaCare program; regarding 
 20.18  recommendations on the eligibility income level that will result 
 20.19  in the greatest number of individuals having health insurance; 
 20.20  what will encourage greater availability of coverage in the 
 20.21  private market; steps to increase the availability of insurance 
 20.22  in the small employer market; the need, if any, for increasing 
 20.23  the MinnesotaCare program eligibility level for single adults 
 20.24  and households without children; and shall make recommendations 
 20.25  on the feasibility of increasing the eligibility income level 
 20.26  for single adults and households without children in the 
 20.27  MinnesotaCare program. 
 20.28     Sec. 23.  [EFFECTIVE DATE.] 
 20.29     Section 4 is effective July 1, 1998.  Section 14, 
 20.30  subdivision 3, clause (5), is effective the day following final 
 20.31  enactment.  
 20.32                             ARTICLE 2 
 20.33            MISCELLANEOUS CHANGES TO HEALTH CARE REFORM 
 20.34     Section 1.  Minnesota Statutes 1996, section 60A.951, 
 20.35  subdivision 5, is amended to read: 
 20.36     Subd. 5.  [INSURER.] "Insurer" means insurance company, 
 21.1   risk retention group as defined in section 60E.02, service plan 
 21.2   corporation as defined in section 62C.02, health maintenance 
 21.3   organization as defined in section 62D.02, community integrated 
 21.4   service network as defined in section 62N.02, fraternal benefit 
 21.5   society regulated under chapter 64B, township mutual company 
 21.6   regulated under chapter 67A, joint self-insurance plan or 
 21.7   multiple employer trust regulated under chapter 60F, 62H, or 
 21.8   section 471.617, subdivision 2, persons administering a 
 21.9   self-insurance plan as defined in section 60A.23, subdivision 8, 
 21.10  clause (2), paragraphs (a) and (d), and the workers' 
 21.11  compensation reinsurance association established in section 
 21.12  79.34. 
 21.13     Sec. 2.  Minnesota Statutes 1996, section 62A.021, is 
 21.14  amended by adding a subdivision to read: 
 21.15     Subd. 3.  [LOSS RATIO DISCLOSURE.] Each health care policy 
 21.16  form or health care certificate form for which subdivision 1 
 21.17  requires the commissioner's approval of premium rates shall 
 21.18  contain on its front page the following statement: 
 21.19     "Minnesota law requires that this policy or contract 
 21.20  include this paragraph disclosing the loss ratio.  The loss 
 21.21  ratio is the average percentage of premiums that is expected to 
 21.22  be paid for health care for the enrollee.  This policy or 
 21.23  contract is expected to have a loss ratio of (fill in estimated 
 21.24  loss ratio accepted by commissioner).  The lowest loss ratio 
 21.25  permitted by state law for this policy or contract is (fill in 
 21.26  applicable minimum loss ratio)." 
 21.27     Sec. 3.  Minnesota Statutes 1996, section 62A.61, is 
 21.28  amended to read: 
 21.29     62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
 21.30  DETERMINE USUAL AND CUSTOMARY FEES.] 
 21.31     (a) A health carrier that bases reimbursement to health 
 21.32  care providers upon a usual and customary fee must maintain in 
 21.33  its office a copy of a description of the methodology used to 
 21.34  calculate fees including at least the following: 
 21.35     (1) the frequency of the determination of usual and 
 21.36  customary fees; 
 22.1      (2) a general description of the methodology used to 
 22.2   determine usual and customary fees; and 
 22.3      (3) the percentile of usual and customary fees that 
 22.4   determines the maximum allowable reimbursement. 
 22.5      (b) A health carrier must provide a copy of the information 
 22.6   described in paragraph (a) to the Minnesota health care 
 22.7   commission, the commissioner of health, or the commissioner of 
 22.8   commerce, upon request. 
 22.9      (c) The commissioner of health or the commissioner of 
 22.10  commerce, as appropriate, may use to enforce this section any 
 22.11  enforcement powers otherwise available to the commissioner with 
 22.12  respect to the health carrier.  The appropriate commissioner 
 22.13  shall enforce compliance with a request made under this section 
 22.14  by the Minnesota health care commission, at the request of the 
 22.15  commissioner.  The commissioner of health or commerce, as 
 22.16  appropriate, may require health carriers to provide the 
 22.17  information required under this section and may use any powers 
 22.18  granted under other laws relating to the regulation of health 
 22.19  carriers to enforce compliance. 
 22.20     (d) For purposes of this section, "health carrier" has the 
 22.21  meaning given in section 62A.011. 
 22.22     Sec. 4.  Minnesota Statutes 1996, section 62A.65, 
 22.23  subdivision 3, is amended to read: 
 22.24     Subd. 3.  [PREMIUM RATE RESTRICTIONS.] No individual health 
 22.25  plan may be offered, sold, issued, or renewed to a Minnesota 
 22.26  resident unless the premium rate charged is determined in 
 22.27  accordance with the following requirements:  
 22.28     (a) Premium rates must be no more than 25 percent above and 
 22.29  no more than 25 percent below the index rate charged to 
 22.30  individuals for the same or similar coverage, adjusted pro rata 
 22.31  for rating periods of less than one year.  The premium 
 22.32  variations permitted by this paragraph must be based only upon 
 22.33  health status, claims experience, and occupation.  For purposes 
 22.34  of this paragraph, health status includes refraining from 
 22.35  tobacco use or other actuarially valid lifestyle factors 
 22.36  associated with good health, provided that the lifestyle factor 
 23.1   and its effect upon premium rates have been determined by the 
 23.2   commissioner to be actuarially valid and have been approved by 
 23.3   the commissioner.  Variations permitted under this paragraph 
 23.4   must not be based upon age or applied differently at different 
 23.5   ages.  This paragraph does not prohibit use of a constant 
 23.6   percentage adjustment for factors permitted to be used under 
 23.7   this paragraph. 
 23.8      (b) Premium rates may vary based upon the ages of covered 
 23.9   persons only as provided in this paragraph.  In addition to the 
 23.10  variation permitted under paragraph (a), each health carrier may 
 23.11  use an additional premium variation based upon age of up to plus 
 23.12  or minus 50 percent of the index rate. 
 23.13     (c) A health carrier may request approval by the 
 23.14  commissioner to establish no more than three geographic regions 
 23.15  and to establish separate index rates for each region, provided 
 23.16  that the index rates do not vary between any two regions by more 
 23.17  than 20 percent.  Health carriers that do not do business in the 
 23.18  Minneapolis/St. Paul metropolitan area may request approval for 
 23.19  no more than two geographic regions, and clauses (2) and (3) do 
 23.20  not apply to approval of requests made by those health 
 23.21  carriers.  The commissioner may grant approval if the following 
 23.22  conditions are met: 
 23.23     (1) the geographic regions must be applied uniformly by the 
 23.24  health carrier; 
 23.25     (2) one geographic region must be based on the 
 23.26  Minneapolis/St. Paul metropolitan area; 
 23.27     (3) for each geographic region that is rural, the index 
 23.28  rate for that region must not exceed the index rate for the 
 23.29  Minneapolis/St. Paul metropolitan area; and 
 23.30     (4) the health carrier provides actuarial justification 
 23.31  acceptable to the commissioner for the proposed geographic 
 23.32  variations in index rates, establishing that the variations are 
 23.33  based upon differences in the cost to the health carrier of 
 23.34  providing coverage. 
 23.35     (d) Health carriers may use rate cells and must file with 
 23.36  the commissioner the rate cells they use.  Rate cells must be 
 24.1   based upon the number of adults or children covered under the 
 24.2   policy and may reflect the availability of Medicare coverage.  
 24.3   The rates for different rate cells must not in any way reflect 
 24.4   generalized differences in expected costs between principal 
 24.5   insureds and their spouses. 
 24.6      (e) In developing its index rates and premiums for a health 
 24.7   plan, a health carrier shall take into account only the 
 24.8   following factors: 
 24.9      (1) actuarially valid differences in rating factors 
 24.10  permitted under paragraphs (a) and (b); and 
 24.11     (2) actuarially valid geographic variations if approved by 
 24.12  the commissioner as provided in paragraph (c). 
 24.13     (f) All premium variations must be justified in initial 
 24.14  rate filings and upon request of the commissioner in rate 
 24.15  revision filings.  All rate variations are subject to approval 
 24.16  by the commissioner. 
 24.17     (g) The loss ratio must comply with the section 62A.021 
 24.18  requirements for individual health plans. 
 24.19     (h) The rates must not be approved, unless the commissioner 
 24.20  has determined that the rates are reasonable.  In determining 
 24.21  reasonableness, the commissioner shall consider the growth rates 
 24.22  applied cost containment goals established under section 62J.04, 
 24.23  subdivision 1, paragraph (b), to the calendar year or years that 
 24.24  the proposed premium rate would be in effect, actuarially valid 
 24.25  changes in risks associated with the enrollee populations, and 
 24.26  actuarially valid changes as a result of statutory changes in 
 24.27  Laws 1992, chapter 549.  
 24.28     Sec. 5.  Minnesota Statutes 1996, section 62D.02, 
 24.29  subdivision 5, is amended to read: 
 24.30     Subd. 5.  "Evidence of coverage" means any certificate, 
 24.31  agreement or contract, and amendments thereto, issued to an 
 24.32  enrollee which sets out the coverage to which the enrollee is 
 24.33  entitled under the health maintenance contract which covers the 
 24.34  enrollee. 
 24.35     Sec. 6.  Minnesota Statutes 1996, section 62D.09, 
 24.36  subdivision 3, is amended to read: 
 25.1      Subd. 3.  Every health maintenance organization or its 
 25.2   representative shall annually, before June 1, provide to its 
 25.3   enrollees the following:  (1) a summary of its most recent 
 25.4   annual financial statement including a balance sheet and 
 25.5   statement of receipts and disbursements; (2) a description of 
 25.6   the health maintenance organization, its health care plan or 
 25.7   plans, its facilities and personnel, any material changes 
 25.8   therein since the last report; (3) the current evidence of 
 25.9   coverage, or contract amendments thereto; and (4) a statement of 
 25.10  consumer information and rights as described in section 62D.07, 
 25.11  subdivision 3, paragraph (c).  Under clause (3), a health 
 25.12  maintenance organization may annually alternate between 
 25.13  providing enrollees with amendments and providing current 
 25.14  evidence of coverage. 
 25.15     Sec. 7.  Minnesota Statutes 1996, section 62J.017, is 
 25.16  amended to read: 
 25.17     62J.017 [IMPLEMENTATION TIMETABLE.] 
 25.18     The state seeks to complete the restructuring of the health 
 25.19  care delivery and financing system.  Beginning July 1, 1994, 
 25.20  measures will be taken to increase the public accountability of 
 25.21  existing health plan companies, to promote the development of 
 25.22  small, community-based integrated service networks, and to 
 25.23  reduce administrative costs by standardizing third-party billing 
 25.24  forms and procedures and utilization review requirements.  
 25.25  Voluntary formation of other integrated service networks will 
 25.26  begin after rules have been adopted, but not before July 1, 
 25.27  1996.  Statutes and rules for the restructured health care 
 25.28  financing and delivery system must be enacted or adopted by 
 25.29  January 1, 1996. 
 25.30     Sec. 8.  Minnesota Statutes 1996, section 62J.04, 
 25.31  subdivision 1, is amended to read: 
 25.32     Subdivision 1.  [LIMITS ON THE RATE OF GROWTH COST 
 25.33  CONTAINMENT GOALS.] (a) The commissioner of health shall set 
 25.34  annual limits on the rate of growth of cost containment goals 
 25.35  for public and private spending on health care services for 
 25.36  Minnesota residents, as provided in paragraph (b).  The limits 
 26.1   on growth cost containment goals must be set at levels the 
 26.2   commissioner determines to be realistic and achievable but that 
 26.3   will reduce the rate of growth in health care spending by at 
 26.4   least ten percent per year for the next five years.  The 
 26.5   commissioner shall set limits on growth cost containment goals 
 26.6   based on available data on spending and growth trends, including 
 26.7   data from group purchasers, national data on public and private 
 26.8   sector health care spending and cost trends, and trend 
 26.9   information from other states. 
 26.10     (b) The commissioner shall set the following annual limits 
 26.11  on the rate of growth of cost containment goals for public and 
 26.12  private spending on health care services for Minnesota residents:
 26.13     (1) for calendar year 1994, the rate of growth cost 
 26.14  containment goal must not exceed the change in the regional 
 26.15  consumer price index for urban consumers for calendar year 1993 
 26.16  plus 6.5 percentage points; 
 26.17     (2) for calendar year 1995, the rate of growth cost 
 26.18  containment goal must not exceed the change in the regional 
 26.19  consumer price index for urban consumers for calendar year 1994 
 26.20  plus 5.3 percentage points; 
 26.21     (3) for calendar year 1996, the rate of growth cost 
 26.22  containment goal must not exceed the change in the regional 
 26.23  consumer price index for urban consumers for calendar year 1995 
 26.24  plus 4.3 percentage points; 
 26.25     (4) for calendar year 1997, the rate of growth cost 
 26.26  containment goal must not exceed the change in the regional 
 26.27  consumer price index for urban consumers for calendar year 1996 
 26.28  plus 3.4 percentage points; and 
 26.29     (5) for calendar year 1998, the rate of growth cost 
 26.30  containment goal must not exceed the change in the regional 
 26.31  consumer price index for urban consumers for calendar year 1997 
 26.32  plus 2.6 percentage points; and 
 26.33     (6) for calendar years after 1998, the commissioner shall 
 26.34  set annual cost containment goals based on available data on 
 26.35  spending and growth trends, including data from group 
 26.36  purchasers, national data on public and private sector health 
 27.1   care spending and cost trends, and trend information from other 
 27.2   states. 
 27.3      The commissioner shall adjust the growth limit set for 
 27.4   calendar year 1995 to recover savings in health care spending 
 27.5   required for the period July 1, 1993 to December 31, 1993. 
 27.6      (c) The commissioner shall publish: 
 27.7      (1) the projected limits cost containment goal in the State 
 27.8   Register by April 15 of the year immediately preceding the year 
 27.9   in which the limit cost containment goal will be effective 
 27.10  except for the year 1993, in which the limit cost containment 
 27.11  goal shall be published by July 1, 1993; 
 27.12     (2) the quarterly change in the regional consumer price 
 27.13  index for urban consumers; and 
 27.14     (3) the health care financing administration forecast for 
 27.15  total growth in the national health care expenditures.  In 
 27.16  setting an annual limit the cost containment goals, the 
 27.17  commissioner is exempt from the rulemaking requirements of 
 27.18  chapter 14.  The commissioner's decision on an annual limit the 
 27.19  cost containment goals is not appealable. 
 27.20     Sec. 9.  Minnesota Statutes 1996, section 62J.04, 
 27.21  subdivision 1a, is amended to read: 
 27.22     Subd. 1a.  [ADJUSTED GROWTH LIMITS AND ENFORCEMENT COST 
 27.23  CONTAINMENT GOALS.] (a) The commissioner shall publish the final 
 27.24  adjusted growth limit cost containment goal in the State 
 27.25  Register by January 31 of the year that the expenditure limit 
 27.26  cost containment goal is to be in effect.  The adjusted limit 
 27.27  cost containment goal must reflect the actual regional consumer 
 27.28  price index for urban consumers for the previous calendar year, 
 27.29  and may deviate from the previously published projected growth 
 27.30  limits cost containment goal to reflect differences between the 
 27.31  actual regional consumer price index for urban consumers and the 
 27.32  projected Consumer Price Index for urban consumers.  The 
 27.33  commissioner shall report to the legislature by February 15 of 
 27.34  each year on the implementation of the growth limits cost 
 27.35  containment goal.  This annual report shall describe the 
 27.36  differences between the projected increase in health care 
 28.1   expenditures, the actual expenditures based on data collected, 
 28.2   and the impact and validity of growth limits cost containment 
 28.3   goals within the overall health care reform strategy. 
 28.4      (b) The commissioner, in consultation with the Minnesota 
 28.5   health care commission, shall research and include in the annual 
 28.6   report required in paragraph (a) for 1996, recommendations 
 28.7   regarding the implementation of growth limits for health plan 
 28.8   companies and providers.  The commissioner shall: 
 28.9      (1) consider both spending and revenue approaches and 
 28.10  report on the implementation of the interim limits as defined in 
 28.11  sections 62J.041 and 62J.042; 
 28.12     (2) make recommendations regarding the enforcement 
 28.13  mechanism and consider mechanisms to adjust future growth limits 
 28.14  as well as mechanisms to establish financial penalties for 
 28.15  noncompliance; 
 28.16     (3) address the feasibility of systemwide limits imposed on 
 28.17  all integrated service networks; and 
 28.18     (4) make recommendations on the most effective way to 
 28.19  implement growth limits on the fee-for-service system in the 
 28.20  absence of a regulated all-payer system. 
 28.21     (c) The commissioner shall enforce limits on growth in 
 28.22  spending for health plan companies and revenues for providers.  
 28.23  If the commissioner determines that artificial inflation or 
 28.24  padding of costs or prices has occurred in anticipation of the 
 28.25  implementation of growth limits, the commissioner may adjust the 
 28.26  base year spending totals or growth limits or take other action 
 28.27  to reverse the effect of the artificial inflation or padding. 
 28.28     (d) The commissioner shall impose and enforce overall 
 28.29  limits on growth in spending for health plan companies, with 
 28.30  adjustments for changes in enrollment, benefits, severity, and 
 28.31  risks.  If a health plan company exceeds the growth limits, the 
 28.32  commissioner may impose financial penalties up to the amount 
 28.33  exceeding the applicable growth limit. 
 28.34     Sec. 10.  Minnesota Statutes 1996, section 62J.04, 
 28.35  subdivision 9, is amended to read: 
 28.36     Subd. 9.  [GROWTH LIMITS COST CONTAINMENT GOALS; FEDERAL 
 29.1   PROGRAMS.] The commissioners of health and human services shall 
 29.2   establish a rate methodology for Medicare and Medicaid 
 29.3   risk-based contracting with health plan companies that is 
 29.4   consistent with statewide growth limits cost containment goals.  
 29.5   The methodology shall be presented for review by the Minnesota 
 29.6   health care commission and the legislative commission on health 
 29.7   care access prior to the submission of a waiver request to the 
 29.8   health care financing administration and subsequent 
 29.9   implementation of the methodology. 
 29.10     Sec. 11.  Minnesota Statutes 1996, section 62J.041, is 
 29.11  amended to read: 
 29.12     62J.041 [INTERIM HEALTH PLAN COMPANY EXPENDITURE LIMITS.] 
 29.13     Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 29.14  section, the following definitions apply. 
 29.15     (b) "Health plan company" has the definition provided in 
 29.16  section 62Q.01. 
 29.17     (c) "Total expenditures" means incurred claims or 
 29.18  expenditures on health care services, administrative expenses, 
 29.19  charitable contributions, and all other payments made by health 
 29.20  plan companies out of premium revenues. 
 29.21     (d) "Net expenditures" means total expenditures minus 
 29.22  exempted taxes and assessments and payments or allocations made 
 29.23  to establish or maintain reserves.  
 29.24     (e) "Exempted taxes and assessments" means direct payments 
 29.25  for taxes to government agencies, contributions to the Minnesota 
 29.26  comprehensive health association, the medical assistance 
 29.27  provider's surcharge under section 256.9657, the MinnesotaCare 
 29.28  provider tax under section 295.52, assessments by the health 
 29.29  coverage reinsurance association, assessments by the Minnesota 
 29.30  life and health insurance guaranty association, assessments by 
 29.31  the Minnesota risk adjustment association, and any new 
 29.32  assessments imposed by federal or state law. 
 29.33     (f) "Consumer cost-sharing or subscriber liability" means 
 29.34  enrollee coinsurance, copayment, deductible payments, and 
 29.35  amounts in excess of benefit plan maximums. 
 29.36     Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
 30.1   establish limits on cost containment goals for the increase in 
 30.2   net expenditures by each health carrier plan company for 
 30.3   calendar years 1994, 1995, 1996, and 1997.  The limits cost 
 30.4   containment goals must be the same as the annual rate of growth 
 30.5   in cost containment goals for health care spending established 
 30.6   under section 62J.04, subdivision 1, paragraph (b).  Health plan 
 30.7   companies that are affiliates may elect to meet one 
 30.8   combined expenditure limit cost containment goal. 
 30.9      Subd. 3.  [DETERMINATION OF EXPENDITURES.] Health plan 
 30.10  companies shall submit to the commissioner of health, by April 
 30.11  1, 1994, for calendar year 1993; April 1, 1995, for calendar 
 30.12  year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, 
 30.13  for calendar year 1996; and April 1, 1998, for calendar year 
 30.14  1997 all information the commissioner determines to be necessary 
 30.15  to implement and enforce this section.  The information must be 
 30.16  submitted in the form specified by the commissioner.  The 
 30.17  information must include, but is not limited to, expenditures 
 30.18  per member per month or cost per employee per month, and 
 30.19  detailed information on revenues and reserves.  The 
 30.20  commissioner, to the extent possible, shall coordinate the 
 30.21  submittal of the information required under this section with 
 30.22  the submittal of the financial data required under chapter 62J, 
 30.23  to minimize the administrative burden on health plan companies.  
 30.24  The commissioner may adjust final expenditure figures for 
 30.25  demographic changes, risk selection, changes in basic benefits, 
 30.26  and legislative initiatives that materially change health care 
 30.27  costs, as long as these adjustments are consistent with the 
 30.28  methodology submitted by the health plan company to the 
 30.29  commissioner, and approved by the commissioner as actuarially 
 30.30  justified.  The methodology to be used for adjustments and the 
 30.31  election to meet one expenditure limit cost containment goal for 
 30.32  affiliated health plan companies must be submitted to the 
 30.33  commissioner by September 1, 1994.  Community integrated service 
 30.34  networks may submit the information with their application for 
 30.35  licensure.  The commissioner shall also accept changes to 
 30.36  methodologies already submitted.  The adjustment methodology 
 31.1   submitted and approved by the commissioner must apply to the 
 31.2   data submitted for calendar years 1994 and 1995.  The 
 31.3   commissioner may allow changes to accepted adjustment 
 31.4   methodologies for data submitted for calendar years 1996 and 
 31.5   1997.  Changes to the adjustment methodology must be received by 
 31.6   September 1, 1996, and must be approved by the commissioner. 
 31.7      Subd. 4.  [MONITORING OF RESERVES.] (a) The commissioners 
 31.8   of health and commerce shall monitor health plan company 
 31.9   reserves and net worth as established under chapters 60A, 62C, 
 31.10  62D, 62H, and 64B, with respect to the health plan companies 
 31.11  that each commissioner respectively regulates to ensure 
 31.12  that assess the degree to which savings resulting from the 
 31.13  establishment of expenditure limits cost containment goals are 
 31.14  passed on to consumers in the form of lower premium rates.  
 31.15     (b) Health plan companies shall fully reflect in the 
 31.16  premium rates the savings generated by the expenditure limits.  
 31.17  No premium rate, currently reviewed by the departments of health 
 31.18  or commerce, may be approved for those health plan companies 
 31.19  unless the health plan company establishes to the satisfaction 
 31.20  of the commissioner of commerce or the commissioner of health, 
 31.21  as appropriate, that the proposed new rate would comply with 
 31.22  this paragraph. 
 31.23     (c) Health plan companies, except those licensed under 
 31.24  chapter 60A to sell accident and sickness insurance under 
 31.25  chapter 62A, shall annually before the end of the fourth fiscal 
 31.26  quarter provide to the commissioner of health or commerce, as 
 31.27  applicable, a projection of the level of reserves the company 
 31.28  expects to attain during each quarter of the following fiscal 
 31.29  year.  These health plan companies shall submit with required 
 31.30  quarterly financial statements a calculation of the actual 
 31.31  reserve level attained by the company at the end of each quarter 
 31.32  including identification of the sources of any significant 
 31.33  changes in the reserve level and an updated projection of the 
 31.34  level of reserves the health plan company expects to attain by 
 31.35  the end of the fiscal year.  In cases where the health plan 
 31.36  company has been given a certificate to operate a new health 
 32.1   maintenance organization under chapter 62D, or been licensed as 
 32.2   an integrated service network or community integrated service 
 32.3   network under chapter 62N, or formed an affiliation with one of 
 32.4   these organizations, the health plan company shall also submit 
 32.5   with its quarterly financial statement, total enrollment at the 
 32.6   beginning and end of the quarter and enrollment changes within 
 32.7   each service area of the new organization.  The reserve 
 32.8   calculations shall be maintained by the commissioners as trade 
 32.9   secret information, except to the extent that such information 
 32.10  is also required to be filed by another provision of state law 
 32.11  and is not treated as trade secret information under such other 
 32.12  provisions. 
 32.13     (d) Health plan companies in paragraph (c) whose reserves 
 32.14  are less than the required minimum or more than the required 
 32.15  maximum at the end of the fiscal year shall submit a plan of 
 32.16  corrective action to the commissioner of health or commerce 
 32.17  under subdivision 7. 
 32.18     (e) The commissioner of commerce, in consultation with the 
 32.19  commissioner of health, shall report to the legislature no later 
 32.20  than January 15, 1995, as to whether the concept of a reserve 
 32.21  corridor or other mechanism for purposes of monitoring reserves 
 32.22  is adaptable for use with indemnity health insurers that do 
 32.23  business in multiple states and that must comply with their 
 32.24  domiciliary state's reserves requirements. 
 32.25     Subd. 5.  [NOTICE.] The commissioner of health shall 
 32.26  publish in the State Register and make available to the public 
 32.27  by July 1, 1995, a list of all health plan companies that 
 32.28  exceeded their expenditure limit cost containment goal for the 
 32.29  1994 calendar year.  The commissioner shall publish in the State 
 32.30  Register and make available to the public by July 1, 1996, a 
 32.31  list of all health plan companies that exceeded their 
 32.32  combined expenditure limit cost containment goal for calendar 
 32.33  years 1994 and 1995.  The commissioner shall notify each health 
 32.34  plan company that the commissioner has determined that the 
 32.35  health plan company exceeded its expenditure limit cost 
 32.36  containment goal, at least 30 days before publishing the list, 
 33.1   and shall provide each health plan company with ten days to 
 33.2   provide an explanation for exceeding the expenditure limit cost 
 33.3   containment goal.  The commissioner shall review the explanation 
 33.4   and may change a determination if the commissioner determines 
 33.5   the explanation to be valid. 
 33.6      Subd. 6.  [ASSISTANCE BY THE COMMISSIONER OF COMMERCE.] The 
 33.7   commissioner of commerce shall provide assistance to the 
 33.8   commissioner of health in monitoring health plan companies 
 33.9   regulated by the commissioner of commerce.  The commissioner of 
 33.10  commerce, in consultation with the commissioner of health, shall 
 33.11  enforce compliance with expenditure limits the cost containment 
 33.12  goals for those health plan companies in which the commissioner 
 33.13  of commerce approves the premium rates. 
 33.14     Subd. 7.  [ENFORCEMENT.] (a) The commissioners of health 
 33.15  and commerce shall enforce the reserve limits referenced in 
 33.16  subdivision 4, with respect to the health plan companies that 
 33.17  each commissioner respectively regulates.  Each commissioner 
 33.18  shall require health plan companies under the commissioner's 
 33.19  jurisdiction to submit plans of corrective action when the 
 33.20  reserve requirement is not met.  The plan of correction must 
 33.21  address the following: 
 33.22     (1) actuarial assumptions used in forecasting future 
 33.23  financial results; 
 33.24     (2) trend assumptions used in setting future premiums; 
 33.25     (3) demographic, geographic, and private and public sector 
 33.26  mix of the population covered by the health plan company; 
 33.27     (4) proposed rate increases or decreases; 
 33.28     (5) growth limits applied under section 62J.04, subdivision 
 33.29  1, paragraph (b); and 
 33.30     (6) other factors deemed appropriate by the health plan 
 33.31  company or commissioner. 
 33.32  If the health plan company's reserves exceed the required 
 33.33  maximum, the plan of correction shall address how the health 
 33.34  plan company will come into compliance and set forth a timetable 
 33.35  within which compliance would be achieved.  The plan of 
 33.36  correction may propose premium refunds, credits for prior 
 34.1   premiums paid, policyholder dividends, or any combination of 
 34.2   these or other methods which will benefit enrollees and/or 
 34.3   Minnesota residents and are such that the reserve requirements 
 34.4   can reasonably be expected to be met.  The commissioner's 
 34.5   evaluation of the plan of correction must consider: 
 34.6      (1) whether implementation of the plan would provide the 
 34.7   company with an unfair advantage in the market; 
 34.8      (2) the extent to which the reserve excess was created by 
 34.9   any movement of enrolled persons to another organization formed 
 34.10  by the company; 
 34.11     (3) whether any proposed premium refund, credit, and/or 
 34.12  dividend represents an equitable allocation to policyholders 
 34.13  covered in prior periods as determined using sound actuarial 
 34.14  practice; and 
 34.15     (4) any other factors deemed appropriate by the applicable 
 34.16  commissioner. 
 34.17     (b) The plan of correction is subject to approval by the 
 34.18  commissioner of health or commerce, as applicable.  If such a 
 34.19  plan is not approved by the applicable commissioner, the 
 34.20  applicable commissioner shall enter an order stating the steps 
 34.21  that the health plan company must take to come into compliance.  
 34.22  Within 30 days of the date of such order, the health plan 
 34.23  company must file a notice of appeal with the applicable 
 34.24  commissioner or comply with the commissioner's order.  If an 
 34.25  appeal is filed, such appeal is governed by chapter 14. 
 34.26     (c) Health plan companies that exceed the expenditure 
 34.27  limits based on two-year average expenditure data (1994 and 
 34.28  1995, 1996 and 1997) shall be required by the appropriate 
 34.29  commissioner to pay back the amount exceeding the expenditure 
 34.30  limit through an assessment on the health plan company.  A 
 34.31  health plan company may appeal the commissioner's order to pay 
 34.32  back the amount exceeding the expenditure limit by mailing to 
 34.33  the commissioner a written notice of appeal within 30 days from 
 34.34  the date the commissioner's order was mailed.  The contested 
 34.35  case and judicial review provisions of chapter 14 apply to the 
 34.36  appeal.  The health plan company shall pay the amount specified 
 35.1   by the commissioner either to the commissioner or into an escrow 
 35.2   account until final resolution of the appeal.  Notwithstanding 
 35.3   sections 15.472 to 15.475, each party is responsible for its own 
 35.4   fees and expenses, including attorneys fees, for the appeal.  
 35.5   Any amount required to be paid back under this section shall be 
 35.6   deposited in the health care access fund.  The appropriate 
 35.7   commissioner may approve a different repayment method to take 
 35.8   into account the health plan company's financial condition.  
 35.9   Health plan companies shall comply with the limits but shall 
 35.10  also guarantee that their contractual obligations are met.  
 35.11  Health plan companies are prohibited from meeting spending 
 35.12  obligations by increasing subscriber liability, including 
 35.13  copayments and deductibles and amounts in excess of benefit plan 
 35.14  maximums. 
 35.15     Sec. 12.  Minnesota Statutes 1996, section 62J.06, is 
 35.16  amended to read: 
 35.17     62J.06 [IMMUNITY FROM LIABILITY.] 
 35.18     No member of the Minnesota health care commission 
 35.19  established under section 62J.05, regional coordinating boards 
 35.20  established under section 62J.09, or the health technology 
 35.21  advisory committee established under section 62J.15, shall be 
 35.22  held civilly or criminally liable for an act or omission by that 
 35.23  person if the act or omission was in good faith and within the 
 35.24  scope of the member's responsibilities under this chapter.  
 35.25     Sec. 13.  Minnesota Statutes 1996, section 62J.07, 
 35.26  subdivision 1, is amended to read: 
 35.27     Subdivision 1.  [LEGISLATIVE OVERSIGHT.] The legislative 
 35.28  commission on health care access reviews the activities of the 
 35.29  commissioner of health, the state health care 
 35.30  commission regional coordinating boards, the health technology 
 35.31  advisory committee, and all other state agencies involved in the 
 35.32  implementation and administration of this chapter, including 
 35.33  efforts to obtain federal approval through waivers and other 
 35.34  means.  
 35.35     Sec. 14.  Minnesota Statutes 1996, section 62J.07, 
 35.36  subdivision 3, is amended to read: 
 36.1      Subd. 3.  [REPORTS TO THE COMMISSION.] The commissioner of 
 36.2   health and the Minnesota health care commission, the regional 
 36.3   coordinating boards, and the health technology advisory 
 36.4   committee shall report on their activities and the activities of 
 36.5   the regional boards annually and at other times at the request 
 36.6   of the legislative commission on health care access.  The 
 36.7   commissioners of health, commerce, and human services shall 
 36.8   provide periodic reports to the legislative commission on the 
 36.9   progress of rulemaking that is authorized or required under this 
 36.10  act and shall notify members of the commission when a draft of a 
 36.11  proposed rule has been completed and scheduled for publication 
 36.12  in the State Register.  At the request of a member of the 
 36.13  commission, a commissioner shall provide a description and a 
 36.14  copy of a proposed rule. 
 36.15     Sec. 15.  Minnesota Statutes 1996, section 62J.09, 
 36.16  subdivision 1, is amended to read: 
 36.17     Subdivision 1.  [GENERAL DUTIES.] (a) The commissioner 
 36.18  shall divide the state into six regions, one of these regions 
 36.19  being the seven-county metropolitan area.  
 36.20     The (b) Each rural region shall establish a locally 
 36.21  controlled regional coordinating boards are locally controlled 
 36.22  boards board consisting of providers, health plan companies, 
 36.23  employers, consumers, and elected officials.  Regional 
 36.24  coordinating boards may: 
 36.25     (1) undertake voluntary activities to educate consumers, 
 36.26  providers, and purchasers about community plans and projects 
 36.27  promoting health care cost containment, consumer accountability, 
 36.28  access, and quality and efforts to achieve public health goals; 
 36.29     (2) make recommendations to the commissioner regarding ways 
 36.30  of improving affordability, accessibility, and quality of health 
 36.31  care in the region and throughout the state; 
 36.32     (3) provide technical assistance to parties interested in 
 36.33  establishing or operating a community integrated service network 
 36.34  or integrated service network within the region.  This 
 36.35  assistance must complement assistance provided by the 
 36.36  commissioner under section 62N.23; 
 37.1      (4) advise the commissioner on public health goals, taking 
 37.2   into consideration the relevant portions of the community health 
 37.3   service plans, plans required by the Minnesota comprehensive 
 37.4   adult mental health act, the Minnesota comprehensive children's 
 37.5   mental health act, and the community social service act plans 
 37.6   developed by county boards or community health boards in the 
 37.7   region under chapters 145A, 245, and 256E; 
 37.8      (5) prepare an annual regional education plan that is 
 37.9   consistent with and supportive of public health goals identified 
 37.10  by community health boards in the region; and 
 37.11     (6) serve as advisory bodies to identify potential 
 37.12  applicants for federal Health Professional Shortage Area and 
 37.13  federal Medically Underserved Area designation as requested by 
 37.14  the commissioner. 
 37.15     Sec. 16.  Minnesota Statutes 1996, section 62J.15, 
 37.16  subdivision 1, is amended to read: 
 37.17     Subdivision 1.  [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The 
 37.18  Minnesota health care commission shall convene commissioner of 
 37.19  health shall convene an advisory committee to conduct 
 37.20  evaluations of existing research and technology assessments 
 37.21  conducted by other entities of new and existing health care 
 37.22  technologies as designated by the legislative commission on 
 37.23  health care access, the commissioner, or the advisory 
 37.24  committee.  The advisory committee may include members of the 
 37.25  state commission and other persons appointed by the commission.  
 37.26  The advisory committee must include at least one person 
 37.27  representing physicians, at least one person representing 
 37.28  hospitals, and at least one person representing the health care 
 37.29  technology industry.  Health care technologies include high-cost 
 37.30  drugs, devices, procedures, or processes applied to human health 
 37.31  care, such as high-cost transplants and expensive scanners and 
 37.32  imagers.  The advisory committee is governed by section 15.0575, 
 37.33  subdivision 3, except that members do not receive per diem 
 37.34  payments. 
 37.35     Sec. 17.  Minnesota Statutes 1996, section 62J.152, 
 37.36  subdivision 1, is amended to read: 
 38.1      Subdivision 1.  [GENERALLY.] The health technology advisory 
 38.2   committee established in section 62J.15 shall: 
 38.3      (1) develop criteria and processes for evaluating health 
 38.4   care technology assessments made by other entities; 
 38.5      (2) conduct evaluations of specific technologies and their 
 38.6   specific use and application; 
 38.7      (3) provide the legislature with scientific evaluations of 
 38.8   proposed benefit mandates that utilize health care technologies 
 38.9   for a specific use and application; 
 38.10     (4) report the results of the evaluations to the 
 38.11  commissioner and the Minnesota health care 
 38.12  commission legislative commission on health care access; and 
 38.13     (4) (5) carry out other duties relating to health 
 38.14  technology assigned by the commission legislature or the 
 38.15  legislative commission on health care access. 
 38.16     Sec. 18.  Minnesota Statutes 1996, section 62J.152, 
 38.17  subdivision 2, is amended to read: 
 38.18     Subd. 2.  [PRIORITIES FOR DESIGNATING TECHNOLOGIES CRITERIA 
 38.19  FOR ASSESSMENT EVALUATION.] The health technology advisory 
 38.20  committee shall consider the following criteria in designating 
 38.21  assessing or evaluating technologies for evaluation: 
 38.22     (1) the level of controversy within the medical or 
 38.23  scientific community, including questionable or undetermined 
 38.24  efficacy; 
 38.25     (2) the cost implications; 
 38.26     (3) the potential for rapid diffusion; 
 38.27     (4) the impact on a substantial patient population; 
 38.28     (5) the existence of alternative technologies; 
 38.29     (6) the impact on patient safety and health outcome; 
 38.30     (7) the public health importance; 
 38.31     (8) the level of public and professional demand; 
 38.32     (9) the social, ethical, and legal concerns; and 
 38.33     (10) the prevalence of the disease or condition. 
 38.34  The committee may give different weights or attach different 
 38.35  importance to each of the criteria, depending on the technology 
 38.36  being considered.  The committee shall consider any additional 
 39.1   criteria approved by the commissioner and the Minnesota health 
 39.2   care commission legislative commission on health care access.  
 39.3   The committee shall present its list of technologies for 
 39.4   evaluation to the legislative commission on health care access 
 39.5   for review. 
 39.6      Sec. 19.  Minnesota Statutes 1996, section 62J.152, 
 39.7   subdivision 4, is amended to read: 
 39.8      Subd. 4.  [TECHNOLOGY EVALUATION PROCESS.] (a) The health 
 39.9   technology advisory committee shall collect and evaluate studies 
 39.10  and research findings on the technologies selected for 
 39.11  evaluation from as wide of a range of sources as needed, 
 39.12  including, but not limited to:  federal agencies or other units 
 39.13  of government, international organizations conducting health 
 39.14  care technology assessments, health carriers, insurers, 
 39.15  manufacturers, professional and trade associations, nonprofit 
 39.16  organizations, and academic institutions.  The health technology 
 39.17  advisory committee may use consultants or experts and solicit 
 39.18  testimony or other input as needed to evaluate a specific 
 39.19  technology. 
 39.20     (b) When the evaluation process on a specific technology 
 39.21  has been completed, the health technology advisory committee 
 39.22  shall submit a preliminary report to the health care 
 39.23  commission commissioner and the legislative commission on health 
 39.24  care access and publish a summary of the preliminary report in 
 39.25  the State Register with a notice that written comments may be 
 39.26  submitted.  The preliminary report must include the results of 
 39.27  the technology assessment evaluation, studies and research 
 39.28  findings considered in conducting the evaluation, and the health 
 39.29  technology advisory committee's summary statement about the 
 39.30  evaluation.  Any interested persons or organizations may submit 
 39.31  to the health technology advisory committee written comments 
 39.32  regarding the technology evaluation within 30 days from the date 
 39.33  the preliminary report was published in the State Register.  The 
 39.34  health technology advisory committee's final report on its 
 39.35  technology evaluation must be submitted to the health care 
 39.36  commission commissioner, to the legislature, and to the 
 40.1   information clearinghouse.  A summary of written comments 
 40.2   received by the health technology advisory committee within the 
 40.3   30-day period must be included in the final report.  The health 
 40.4   care commission shall review the final report and prepare its 
 40.5   comments and recommendations.  Before completing its final 
 40.6   comments and recommendations, the health care commission shall 
 40.7   provide adequate public notice that testimony will be accepted 
 40.8   by the health care commission.  The health care commission shall 
 40.9   then forward the final report, its comments and recommendations, 
 40.10  and a summary of the public's comments to the commissioner and 
 40.11  information clearinghouse. 
 40.12     (c) The reports of the health technology advisory committee 
 40.13  and the comments and recommendations of the health care 
 40.14  commission should not eliminate or bar new technology, and are 
 40.15  not rules as defined in the administrative procedure act. 
 40.16     Sec. 20.  Minnesota Statutes 1996, section 62J.152, 
 40.17  subdivision 5, is amended to read: 
 40.18     Subd. 5.  [USE OF TECHNOLOGY EVALUATION.] (a) The final 
 40.19  report on the technology evaluation and the commission's 
 40.20  comments and recommendations may be used: 
 40.21     (1) by the commissioner in retrospective and prospective 
 40.22  review of major expenditures; 
 40.23     (2) by integrated service networks and other group 
 40.24  purchasers and by employers, in making coverage, contracting, 
 40.25  purchasing, and reimbursement decisions; 
 40.26     (3) by organizations in the development of practice 
 40.27  parameters; 
 40.28     (4) by health care providers in making decisions about 
 40.29  adding or replacing technology and the appropriate use of 
 40.30  technology; 
 40.31     (5) by consumers in making decisions about treatment; 
 40.32     (6) by medical device manufacturers in developing and 
 40.33  marketing new technologies; and 
 40.34     (7) as otherwise needed by health care providers, health 
 40.35  care plans, consumers, and purchasers. 
 40.36     (b) At the request of the commissioner, the health care 
 41.1   commission, in consultation with the health technology advisory 
 41.2   committee, shall submit specific recommendations relating to 
 41.3   technologies that have been evaluated under this section for 
 41.4   purposes of retrospective and prospective review of major 
 41.5   expenditures and coverage, contracting, purchasing, and 
 41.6   reimbursement decisions affecting state programs. 
 41.7      Sec. 21.  Minnesota Statutes 1996, section 62J.152, is 
 41.8   amended by adding a subdivision to read: 
 41.9      Subd. 8.  [REPEALER.] This section and sections 62J.15 and 
 41.10  62J.156 are repealed effective July 1, 2001. 
 41.11     Sec. 22.  Minnesota Statutes 1996, section 62J.17, 
 41.12  subdivision 6a, is amended to read: 
 41.13     Subd. 6a.  [PROSPECTIVE REVIEW AND APPROVAL.] (a) 
 41.14  [REQUIREMENT.] No health care provider subject to prospective 
 41.15  review under this subdivision shall make a major spending 
 41.16  commitment unless:  
 41.17     (1) the provider has filed an application with the 
 41.18  commissioner to proceed with the major spending commitment and 
 41.19  has provided all supporting documentation and evidence requested 
 41.20  by the commissioner; and 
 41.21     (2) the commissioner determines, based upon this 
 41.22  documentation and evidence, that the major spending commitment 
 41.23  is appropriate under the criteria provided in subdivision 5a in 
 41.24  light of the alternatives available to the provider.  
 41.25     (b)  [APPLICATION.] A provider subject to prospective 
 41.26  review and approval shall submit an application to the 
 41.27  commissioner before proceeding with any major spending 
 41.28  commitment.  The application must address each item listed in 
 41.29  subdivision 4a, paragraph (a), and must also include 
 41.30  documentation to support the response to each item.  The 
 41.31  provider may submit information, with supporting documentation, 
 41.32  regarding why the major spending commitment should be excepted 
 41.33  from prospective review under subdivision 7.  The submission may 
 41.34  be made either in addition to or instead of the submission of 
 41.35  information relating to the items listed in subdivision 4a, 
 41.36  paragraph (a).  
 42.1      (c)  [REVIEW.] The commissioner shall determine, based upon 
 42.2   the information submitted, whether the major spending commitment 
 42.3   is appropriate under the criteria provided in subdivision 5a, or 
 42.4   whether it should be excepted from prospective review under 
 42.5   subdivision 7.  In making this determination, the commissioner 
 42.6   may also consider relevant information from other sources.  At 
 42.7   the request of the commissioner, the Minnesota health care 
 42.8   commission health technology advisory committee shall convene an 
 42.9   expert review panel made up of persons with knowledge and 
 42.10  expertise regarding medical equipment, specialized services, 
 42.11  health care expenditures, and capital expenditures to review 
 42.12  applications and make recommendations to the commissioner.  The 
 42.13  commissioner shall make a decision on the application within 60 
 42.14  days after an application is received. 
 42.15     (d)  [PENALTIES AND REMEDIES.] The commissioner of health 
 42.16  has the authority to issue fines, seek injunctions, and pursue 
 42.17  other remedies as provided by law. 
 42.18     Sec. 23.  Minnesota Statutes 1996, section 62J.22, is 
 42.19  amended to read: 
 42.20     62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.] 
 42.21     The commissioner of health shall seek the full 
 42.22  participation of federal health care programs under this 
 42.23  chapter, including Medicare, medical assistance, veterans 
 42.24  administration programs, and other federal programs.  The 
 42.25  commissioner of human services shall under the direction of the 
 42.26  health care commission submit waiver requests and take other 
 42.27  action necessary to obtain federal approval to allow 
 42.28  participation of the medical assistance program.  Other state 
 42.29  agencies shall provide assistance at the request of the 
 42.30  commission.  If federal approval is not given for one or more 
 42.31  federal programs, data on the amount of health care spending 
 42.32  that is collected under section 62J.04 shall be adjusted so that 
 42.33  state and regional spending limits take into account the failure 
 42.34  of the federal program to participate. 
 42.35     Sec. 24.  Minnesota Statutes 1996, section 62J.25, is 
 42.36  amended to read: 
 43.1      62J.25 [MANDATORY MEDICARE ASSIGNMENT.] 
 43.2      (a) Effective January 1, 1993, a health care provider 
 43.3   authorized to participate in the Medicare program shall not 
 43.4   charge to or collect from a Medicare beneficiary who is a 
 43.5   Minnesota resident any amount in excess of 115 percent of the 
 43.6   Medicare-approved amount for any Medicare-covered service 
 43.7   provided. 
 43.8      (b) Effective January 1, 1994, a health care provider 
 43.9   authorized to participate in the Medicare program shall not 
 43.10  charge to or collect from a Medicare beneficiary who is a 
 43.11  Minnesota resident any amount in excess of 110 percent of the 
 43.12  Medicare-approved amount for any Medicare-covered service 
 43.13  provided. 
 43.14     (c) Effective January 1, 1995, a health care provider 
 43.15  authorized to participate in the Medicare program shall not 
 43.16  charge to or collect from a Medicare beneficiary who is a 
 43.17  Minnesota resident any amount in excess of 105 percent of the 
 43.18  Medicare-approved amount for any Medicare-covered service 
 43.19  provided. 
 43.20     (d) Effective January 1, 1996, a health care provider 
 43.21  authorized to participate in the Medicare program shall not 
 43.22  charge to or collect from a Medicare beneficiary who is a 
 43.23  Minnesota resident any amount in excess of the Medicare-approved 
 43.24  amount for any Medicare-covered service provided. 
 43.25     (e) This section does not apply to ambulance services as 
 43.26  defined in section 144.801, subdivision 4, or medical supplies 
 43.27  and equipment. 
 43.28     Sec. 25.  Minnesota Statutes 1996, section 62J.2914, 
 43.29  subdivision 1, is amended to read: 
 43.30     Subdivision 1.  [DISCLOSURE.] An application for approval 
 43.31  must include, to the extent applicable, disclosure of the 
 43.32  following: 
 43.33     (1) a descriptive title; 
 43.34     (2) a table of contents; 
 43.35     (3) exact names of each party to the application and the 
 43.36  address of the principal business office of each party; 
 44.1      (4) the name, address, and telephone number of the persons 
 44.2   authorized to receive notices and communications with respect to 
 44.3   the application; 
 44.4      (5) a verified statement by a responsible officer of each 
 44.5   party to the application attesting to the accuracy and 
 44.6   completeness of the enclosed information; 
 44.7      (6) background information relating to the proposed 
 44.8   arrangement, including: 
 44.9      (i) a description of the proposed arrangement, including a 
 44.10  list of any services or products that are the subject of the 
 44.11  proposed arrangement; 
 44.12     (ii) an identification of any tangential services or 
 44.13  products associated with the services or products that are the 
 44.14  subject of the proposed arrangement; 
 44.15     (iii) a description of the geographic territory involved in 
 44.16  the proposed arrangement; 
 44.17     (iv) if the geographic territory described in item (iii), 
 44.18  is different from the territory in which the applicants have 
 44.19  engaged in the type of business at issue over the last five 
 44.20  years, a description of how and why the geographic territory 
 44.21  differs; 
 44.22     (v) identification of all products or services that a 
 44.23  substantial share of consumers would consider substitutes for 
 44.24  any service or product that is the subject of the proposed 
 44.25  arrangement; 
 44.26     (vi) identification of whether any services or products of 
 44.27  the proposed arrangement are currently being offered, capable of 
 44.28  being offered, utilized, or capable of being utilized by other 
 44.29  providers or purchasers in the geographic territory described in 
 44.30  item (iii); 
 44.31     (vii) identification of the steps necessary, under current 
 44.32  market and regulatory conditions, for other parties to enter the 
 44.33  territory described in item (iii) and compete with the 
 44.34  applicant; 
 44.35     (viii) a description of the previous history of dealings 
 44.36  between the parties to the application; 
 45.1      (ix) a detailed explanation of the projected effects, 
 45.2   including expected volume, change in price, and increased 
 45.3   revenue, of the arrangement on each party's current businesses, 
 45.4   both generally as well as the aspects of the business directly 
 45.5   involved in the proposed arrangement; 
 45.6      (x) the present market share of the parties to the 
 45.7   application and of others affected by the proposed arrangement, 
 45.8   and projected market shares after implementation of the proposed 
 45.9   arrangement; 
 45.10     (xi) a statement of why the projected levels of cost, 
 45.11  access, or quality could not be achieved in the existing market 
 45.12  without the proposed arrangement; and 
 45.13     (xii) an explanation of how the arrangement relates to any 
 45.14  Minnesota health care commission or applicable regional 
 45.15  coordinating board plans for delivery of health care; and 
 45.16     (7) a detailed explanation of how the transaction will 
 45.17  affect cost, access, and quality.  The explanation must address 
 45.18  the factors in section 62J.2917, subdivision 2, paragraphs (b) 
 45.19  to (d), to the extent applicable. 
 45.20     Sec. 26.  Minnesota Statutes 1996, section 62J.2915, is 
 45.21  amended to read: 
 45.22     62J.2915 [NOTICE AND COMMENT.] 
 45.23     Subdivision 1.  [NOTICE.] The commissioner shall cause the 
 45.24  notice described in section 62J.2914, subdivision 2, to be 
 45.25  published in the State Register and sent to the Minnesota health 
 45.26  care commission, the regional coordinating boards for any 
 45.27  regions that include all or part of the territory covered by the 
 45.28  proposed arrangement, and any person who has requested to be 
 45.29  placed on a list to receive notice of applications.  The 
 45.30  commissioner may maintain separate notice lists for different 
 45.31  regions of the state.  The commissioner may also send a copy of 
 45.32  the notice to any person together with a request that the person 
 45.33  comment as provided under subdivision 2.  Copies of the request 
 45.34  must be provided to the applicant. 
 45.35     Subd. 2.  [COMMENTS.] Within 20 days after the notice is 
 45.36  published, any person may mail to the commissioner written 
 46.1   comments with respect to the application.  Within 30 days after 
 46.2   the notice is published, the Minnesota health care commission or 
 46.3   any regional coordinating board may mail to the commissioner 
 46.4   comments with respect to the application.  Persons submitting 
 46.5   comments shall provide a copy of the comments to the applicant.  
 46.6   The applicant may mail to the commissioner written responses to 
 46.7   any comments within ten days after the deadline for mailing such 
 46.8   comments.  The applicant shall send a copy of the response to 
 46.9   the person submitting the comment. 
 46.10     Sec. 27.  Minnesota Statutes 1996, section 62J.2916, 
 46.11  subdivision 1, is amended to read: 
 46.12     Subdivision 1.  [CHOICE OF PROCEDURES.] After the 
 46.13  conclusion of the period provided in section 62J.2915, 
 46.14  subdivision 2, for the applicant to respond to comments, the 
 46.15  commissioner shall select one of the three procedures provided 
 46.16  in subdivision 2.  In determining which procedure to use, the 
 46.17  commissioner shall consider the following criteria: 
 46.18     (1) the size of the proposed arrangement, in terms of 
 46.19  number of parties and amount of money involved; 
 46.20     (2) the complexity of the proposed arrangement; 
 46.21     (3) the novelty of the proposed arrangement; 
 46.22     (4) the substance and quantity of the comments received; 
 46.23     (5) any comments received from the Minnesota health care 
 46.24  commission or regional coordinating boards; and 
 46.25     (6) the presence or absence of any significant gaps in the 
 46.26  factual record. 
 46.27     If the applicant demands a contested case hearing no later 
 46.28  than the conclusion of the period provided in section 62J.2915, 
 46.29  subdivision 2, for the applicant to respond to comments, the 
 46.30  commissioner shall not select a procedure.  Instead, the 
 46.31  applicant shall be given a contested case proceeding as a matter 
 46.32  of right. 
 46.33     Sec. 28.  Minnesota Statutes 1996, section 62J.2917, 
 46.34  subdivision 2, is amended to read: 
 46.35     Subd. 2.  [FACTORS.] (a)  [GENERALLY APPLICABLE FACTORS.] 
 46.36  In making a determination about cost, access, and quality, the 
 47.1   commissioner may consider the following factors, to the extent 
 47.2   relevant: 
 47.3      (1) whether the proposal is compatible with the cost 
 47.4   containment plan or other plan of the Minnesota health care 
 47.5   commission or the applicable regional plans of the regional 
 47.6   coordinating boards; 
 47.7      (2) market structure: 
 47.8      (i) actual and potential sellers and buyers, or providers 
 47.9   and purchasers; 
 47.10     (ii) actual and potential consumers; 
 47.11     (iii) geographic market area; and 
 47.12     (iv) entry conditions; 
 47.13     (3) current market conditions; 
 47.14     (4) the historical behavior of the market; 
 47.15     (5) performance of other, similar arrangements; 
 47.16     (6) whether the proposal unnecessarily restrains 
 47.17  competition or restrains competition in ways not reasonably 
 47.18  related to the purposes of this chapter; and 
 47.19     (7) the financial condition of the applicant. 
 47.20     (b)  [COST.] The commissioner's analysis of cost must focus 
 47.21  on the individual consumer of health care.  Cost savings to be 
 47.22  realized by providers, health carriers, group purchasers, or 
 47.23  other participants in the health care system are relevant only 
 47.24  to the extent that the savings are likely to be passed on to the 
 47.25  consumer.  However, where an application is submitted by 
 47.26  providers or purchasers who are paid primarily by third party 
 47.27  payers unaffiliated with the applicant, it is sufficient for the 
 47.28  applicant to show that cost savings are likely to be passed on 
 47.29  to the unaffiliated third party payers; the applicants do not 
 47.30  have the burden of proving that third party payers with whom the 
 47.31  applicants are not affiliated will pass on cost savings to 
 47.32  individuals receiving coverage through the third party payers.  
 47.33  In making determinations as to costs, the commissioner may 
 47.34  consider: 
 47.35     (1) the cost savings likely to result to the applicant; 
 47.36     (2) the extent to which the cost savings are likely to be 
 48.1   passed on to the consumer and in what form; 
 48.2      (3) the extent to which the proposed arrangement is likely 
 48.3   to result in cost shifting by the applicant onto other payers or 
 48.4   purchasers of other products or services; 
 48.5      (4) the extent to which the cost shifting by the applicant 
 48.6   is likely to be followed by other persons in the market; 
 48.7      (5) the current and anticipated supply and demand for any 
 48.8   products or services at issue; 
 48.9      (6) the representations and guarantees of the applicant and 
 48.10  their enforceability; 
 48.11     (7) likely effectiveness of regulation by the commissioner; 
 48.12     (8) inferences to be drawn from market structure; 
 48.13     (9) the cost of regulation, both for the state and for the 
 48.14  applicant; and 
 48.15     (10) any other factors tending to show that the proposed 
 48.16  arrangement is or is not likely to reduce cost. 
 48.17     (c)  [ACCESS.] In making determinations as to access, the 
 48.18  commissioner may consider: 
 48.19     (1) the extent to which the utilization of needed health 
 48.20  care services or products by the intended targeted population is 
 48.21  likely to increase or decrease.  When a proposed arrangement is 
 48.22  likely to increase access in one geographic area, by lowering 
 48.23  prices or otherwise expanding supply, but limits access in 
 48.24  another geographic area by removing service capabilities from 
 48.25  that second area, the commissioner shall articulate the criteria 
 48.26  employed to balance these effects; 
 48.27     (2) the extent to which the proposed arrangement is likely 
 48.28  to make available a new and needed service or product to a 
 48.29  certain geographic area; and 
 48.30     (3) the extent to which the proposed arrangement is likely 
 48.31  to otherwise make health care services or products more 
 48.32  financially or geographically available to persons who need them.
 48.33     If the commissioner determines that the proposed 
 48.34  arrangement is likely to increase access and bases that 
 48.35  determination on a projected increase in utilization, the 
 48.36  commissioner shall also determine and make a specific finding 
 49.1   that the increased utilization does not reflect overutilization. 
 49.2      (d)  [QUALITY.] In making determinations as to quality, the 
 49.3   commissioner may consider the extent to which the proposed 
 49.4   arrangement is likely to: 
 49.5      (1) decrease morbidity and mortality; 
 49.6      (2) result in faster convalescence; 
 49.7      (3) result in fewer hospital days; 
 49.8      (4) permit providers to attain needed experience or 
 49.9   frequency of treatment, likely to lead to better outcomes; 
 49.10     (5) increase patient satisfaction; and 
 49.11     (6) have any other features likely to improve or reduce the 
 49.12  quality of health care. 
 49.13     Sec. 29.  Minnesota Statutes 1996, section 62J.2921, 
 49.14  subdivision 2, is amended to read: 
 49.15     Subd. 2.  [NOTICE.] The commissioner shall begin a 
 49.16  proceeding to revoke approval by providing written notice to the 
 49.17  applicant describing in detail the basis for the proposed 
 49.18  revocation.  Notice of the proceeding must be published in the 
 49.19  State Register and submitted to the Minnesota health care 
 49.20  commission and the applicable regional coordinating boards.  The 
 49.21  notice must invite the submission of comments to the 
 49.22  commissioner. 
 49.23     Sec. 30.  Minnesota Statutes 1996, section 62J.451, 
 49.24  subdivision 6b, is amended to read: 
 49.25     Subd. 6b.  [CONSUMER SURVEYS.] (a) The health data 
 49.26  institute shall develop and implement a mechanism for collecting 
 49.27  comparative data on consumer perceptions of the health care 
 49.28  system, including consumer satisfaction, through adoption of a 
 49.29  standard consumer survey.  This survey shall include enrollees 
 49.30  in community integrated service networks, integrated service 
 49.31  networks, health maintenance organizations, preferred provider 
 49.32  organizations, indemnity insurance plans, public programs, and 
 49.33  other health plan companies.  The health data institute, in 
 49.34  consultation with the health care commission, shall determine a 
 49.35  mechanism for the inclusion of the uninsured.  This consumer 
 49.36  survey may be conducted every two years.  A focused survey may 
 50.1   be conducted on the off years.  Health plan companies and group 
 50.2   purchasers shall provide to the health data institute roster 
 50.3   data as defined in subdivision 2, including the names, 
 50.4   addresses, and telephone numbers of enrollees and former 
 50.5   enrollees and other data necessary for the completion of this 
 50.6   survey.  This roster data provided by the health plan companies 
 50.7   and group purchasers is classified as provided under section 
 50.8   62J.452.  The health data institute may analyze and prepare 
 50.9   findings from the raw, unaggregated data, and the findings from 
 50.10  this survey may be included in the health plan company 
 50.11  performance reports specified in subdivision 6a, and in other 
 50.12  reports developed and disseminated by the health data institute 
 50.13  and the commissioner.  The raw, unaggregated data is classified 
 50.14  as provided under section 62J.452, and may be made available by 
 50.15  the health data institute to the extent permitted under section 
 50.16  62J.452.  The health data institute shall provide raw, 
 50.17  unaggregated data to the commissioner.  The survey may include 
 50.18  information on the following subjects: 
 50.19     (1) enrollees' overall satisfaction with their health care 
 50.20  plan; 
 50.21     (2) consumers' perception of access to emergency, urgent, 
 50.22  routine, and preventive care, including locations, hours, 
 50.23  waiting times, and access to care when needed; 
 50.24     (3) premiums and costs; 
 50.25     (4) technical competence of providers; 
 50.26     (5) communication, courtesy, respect, reassurance, and 
 50.27  support; 
 50.28     (6) choice and continuity of providers; 
 50.29     (7) continuity of care; 
 50.30     (8) outcomes of care; 
 50.31     (9) services offered by the plan, including range of 
 50.32  services, coverage for preventive and routine services, and 
 50.33  coverage for illness and hospitalization; 
 50.34     (10) availability of information; and 
 50.35     (11) paperwork. 
 50.36     (b) The health data institute shall appoint a consumer 
 51.1   advisory group which shall consist of 13 individuals, 
 51.2   representing enrollees from public and private health plan 
 51.3   companies and programs and two uninsured consumers, to advise 
 51.4   the health data institute on issues of concern to consumers.  
 51.5   The advisory group must have at least one member from each 
 51.6   regional coordinating board region of the state.  The advisory 
 51.7   group expires June 30, 1996. 
 51.8      Sec. 31.  Minnesota Statutes 1996, section 62L.08, 
 51.9   subdivision 8, is amended to read: 
 51.10     Subd. 8.  [FILING REQUIREMENT.] No later than July 1, 1993, 
 51.11  and each year thereafter, a health carrier that offers, sells, 
 51.12  issues, or renews a health benefit plan for small employers 
 51.13  shall file with the commissioner the index rates and must 
 51.14  demonstrate that all rates shall be within the rating 
 51.15  restrictions defined in this chapter.  Such demonstration must 
 51.16  include the allowable range of rates from the index rates and a 
 51.17  description of how the health carrier intends to use demographic 
 51.18  factors including case characteristics in calculating the 
 51.19  premium rates.  The rates shall not be approved, unless the 
 51.20  commissioner has determined that the rates are reasonable.  In 
 51.21  determining reasonableness, the commissioner shall consider the 
 51.22  growth rates applied cost containment goals established under 
 51.23  section 62J.04, subdivision 1, paragraph (b), to the calendar 
 51.24  year or years that the proposed premium rate would be in effect, 
 51.25  actuarially valid changes in risk associated with the enrollee 
 51.26  population, and actuarially valid changes as a result of 
 51.27  statutory changes in Laws 1992, chapter 549.  For premium rates 
 51.28  proposed to go into effect between July 1, 1993 and December 31, 
 51.29  1993, the pertinent growth rate is the growth rate applied under 
 51.30  section 62J.04, subdivision 1, paragraph (b), to calendar year 
 51.31  1994.  
 51.32     Sec. 32.  Minnesota Statutes 1996, section 62M.02, 
 51.33  subdivision 21, is amended to read: 
 51.34     Subd. 21.  [UTILIZATION REVIEW ORGANIZATION.] "Utilization 
 51.35  review organization" means an entity including but not limited 
 51.36  to an insurance company licensed under chapter 60A to offer, 
 52.1   sell, or issue a policy of accident and sickness insurance as 
 52.2   defined in section 62A.01; a health service plan licensed under 
 52.3   chapter 62C; a health maintenance organization licensed under 
 52.4   chapter 62D; a community integrated service network or an 
 52.5   integrated service network licensed under chapter 62N; a 
 52.6   fraternal benefit society operating under chapter 64B; a joint 
 52.7   self-insurance employee health plan operating under chapter 62H; 
 52.8   a multiple employer welfare arrangement, as defined in section 3 
 52.9   of the Employee Retirement Income Security Act of 1974 (ERISA), 
 52.10  United States Code, title 29, section 1103, as amended; a third 
 52.11  party administrator licensed under section 60A.23, subdivision 
 52.12  8, which conducts utilization review and determines 
 52.13  certification of an admission, extension of stay, or other 
 52.14  health care services for a Minnesota resident; or any entity 
 52.15  performing utilization review that is affiliated with, under 
 52.16  contract with, or conducting utilization review on behalf of, a 
 52.17  business entity in this state. 
 52.18     Sec. 33.  Minnesota Statutes 1996, section 62N.01, 
 52.19  subdivision 1, is amended to read: 
 52.20     Subdivision 1.  [CITATION.] This chapter may be cited as 
 52.21  the "Minnesota community integrated service network act." 
 52.22     Sec. 34.  Minnesota Statutes 1996, section 62N.22, is 
 52.23  amended to read: 
 52.24     62N.22 [DISCLOSURE OF COMMISSIONS.] 
 52.25     Before selling any coverage or enrollment in a community 
 52.26  integrated service network or an integrated service network, a 
 52.27  person selling the coverage or enrollment shall disclose in 
 52.28  writing to the prospective purchaser the amount of any 
 52.29  commission or other compensation the person will receive as a 
 52.30  direct result of the sale.  The disclosure may be expressed in 
 52.31  dollars or as a percentage of the premium.  The amount disclosed 
 52.32  need not include any anticipated renewal commissions. 
 52.33     Sec. 35.  Minnesota Statutes 1996, section 62N.23, is 
 52.34  amended to read: 
 52.35     62N.23 [TECHNICAL ASSISTANCE; LOANS.] 
 52.36     (a) The commissioner shall provide technical assistance to 
 53.1   parties interested in establishing or operating a community 
 53.2   integrated service network or an integrated service network.  
 53.3   This shall be known as the community integrated service network 
 53.4   technical assistance program (ISNTAP) (CISNTAP). 
 53.5      The technical assistance program shall offer seminars on 
 53.6   the establishment and operation of community integrated service 
 53.7   networks or integrated service networks in all regions of 
 53.8   Minnesota.  The commissioner shall advertise these seminars in 
 53.9   local and regional newspapers, and attendance at these seminars 
 53.10  shall be free. 
 53.11     The commissioner shall write a guide to establishing and 
 53.12  operating a community integrated service network or an 
 53.13  integrated service network.  The guide must provide basic 
 53.14  instructions for parties wishing to establish a community 
 53.15  integrated service network or an integrated service network.  
 53.16  The guide must be provided free of charge to interested 
 53.17  parties.  The commissioner shall update this guide when 
 53.18  appropriate. 
 53.19     The commissioner shall establish a toll-free telephone line 
 53.20  that interested parties may call to obtain assistance in 
 53.21  establishing or operating a community integrated service network 
 53.22  or an integrated service network. 
 53.23     (b) The commissioner shall grant loans for organizational 
 53.24  and start-up expenses to entities forming community integrated 
 53.25  service networks or integrated service networks, or to networks 
 53.26  less than one year old, to the extent of any appropriation for 
 53.27  that purpose.  The commissioner shall allocate the available 
 53.28  funds among applicants based upon the following criteria, as 
 53.29  evaluated by the commissioner within the commissioner's 
 53.30  discretion: 
 53.31     (1) the applicant's need for the loan; 
 53.32     (2) the likelihood that the loan will foster the formation 
 53.33  or growth of a network; and 
 53.34     (3) the likelihood of repayment. 
 53.35     The commissioner shall determine any necessary application 
 53.36  deadlines and forms and is exempt from rulemaking in doing so.  
 54.1      Sec. 36.  Minnesota Statutes 1996, section 62N.25, 
 54.2   subdivision 5, is amended to read: 
 54.3      Subd. 5.  [BENEFITS.] Community integrated service networks 
 54.4   must offer the health maintenance organization benefit set, as 
 54.5   defined in chapter 62D, and other laws applicable to entities 
 54.6   regulated under chapter 62D, except that the community 
 54.7   integrated service network may impose a deductible, not to 
 54.8   exceed $1,000 per person per year, provided that out-of-pocket 
 54.9   expenses on covered services do not exceed $3,000 per person or 
 54.10  $5,000 per family per year.  The deductible must not apply to 
 54.11  preventive health services as described in Minnesota Rules, part 
 54.12  4685.0801, subpart 8.  Community networks and chemical 
 54.13  dependency facilities under contract with a community network 
 54.14  shall use the assessment criteria in Minnesota Rules, parts 
 54.15  9530.6600 to 9530.6660, when assessing enrollees for chemical 
 54.16  dependency treatment. 
 54.17     Sec. 37.  Minnesota Statutes 1996, section 62N.26, is 
 54.18  amended to read: 
 54.19     62N.26 [SHARED SERVICES COOPERATIVE.] 
 54.20     The commissioner of health shall establish, or assist in 
 54.21  establishing, a shared services cooperative organized under 
 54.22  chapter 308A to make available administrative and legal 
 54.23  services, technical assistance, provider contracting and billing 
 54.24  services, and other services to those community integrated 
 54.25  service networks and integrated service networks that choose to 
 54.26  participate in the cooperative.  The commissioner shall provide, 
 54.27  to the extent funds are appropriated, start-up loans sufficient 
 54.28  to maintain the shared services cooperative until its operations 
 54.29  can be maintained by fees and contributions.  The cooperative 
 54.30  must not be staffed, administered, or supervised by the 
 54.31  commissioner of health.  The cooperative shall make use of 
 54.32  existing resources that are already available in the community, 
 54.33  to the extent possible. 
 54.34     Sec. 38.  Minnesota Statutes 1996, section 62N.40, is 
 54.35  amended to read: 
 54.36     62N.40 [CHEMICAL DEPENDENCY SERVICES.] 
 55.1      Each community integrated service network and integrated 
 55.2   service network regulated under this chapter must ensure that 
 55.3   chemically dependent individuals have access to cost-effective 
 55.4   treatment options that address the specific needs of 
 55.5   individuals.  These include, but are not limited to, the need 
 55.6   for:  treatment that takes into account severity of illness and 
 55.7   comorbidities; provision of a continuum of care, including 
 55.8   treatment and rehabilitation programs licensed under Minnesota 
 55.9   Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; 
 55.10  the safety of the individual's domestic and community 
 55.11  environment; gender appropriate and culturally appropriate 
 55.12  programs; and access to appropriate social services. 
 55.13     Sec. 39.  Minnesota Statutes 1996, section 62Q.01, 
 55.14  subdivision 3, is amended to read: 
 55.15     Subd. 3.  [HEALTH PLAN.] "Health plan" means a health plan 
 55.16  as defined in section 62A.011; a policy, contract, or 
 55.17  certificate issued by a community integrated service network; or 
 55.18  an integrated service network. 
 55.19     Sec. 40.  Minnesota Statutes 1996, section 62Q.01, 
 55.20  subdivision 4, is amended to read: 
 55.21     Subd. 4.  [HEALTH PLAN COMPANY.] "Health plan company" 
 55.22  means: 
 55.23     (1) a health carrier as defined under section 62A.011, 
 55.24  subdivision 2; or 
 55.25     (2) an integrated service network as defined under section 
 55.26  62N.02, subdivision 8; or 
 55.27     (3) a community integrated service network as defined under 
 55.28  section 62N.02, subdivision 4a. 
 55.29     Sec. 41.  Minnesota Statutes 1996, section 62Q.01, 
 55.30  subdivision 5, is amended to read: 
 55.31     Subd. 5.  [MANAGED CARE ORGANIZATION.] "Managed care 
 55.32  organization" means:  (1) a health maintenance organization 
 55.33  operating under chapter 62D; (2) a community integrated service 
 55.34  network as defined under section 62N.02, subdivision 
 55.35  4a; or (3) an integrated service network as defined under 
 55.36  section 62N.02, subdivision 8; or (4) an insurance company 
 56.1   licensed under chapter 60A, nonprofit health service plan 
 56.2   corporation operating under chapter 62C, fraternal benefit 
 56.3   society operating under chapter 64B, or any other health plan 
 56.4   company, to the extent that it covers health care services 
 56.5   delivered to Minnesota residents through a preferred provider 
 56.6   organization or a network of selected providers.  
 56.7      Sec. 42.  Minnesota Statutes 1996, section 62Q.03, 
 56.8   subdivision 5a, is amended to read: 
 56.9      Subd. 5a.  [PUBLIC PROGRAMS.] (a) A separate risk 
 56.10  adjustment system must be developed for state-run public 
 56.11  programs, including medical assistance, general assistance 
 56.12  medical care, and MinnesotaCare.  The system must be developed 
 56.13  in accordance with the general risk adjustment methodologies 
 56.14  described in this section, must include factors in addition to 
 56.15  age and sex adjustment, and may include additional demographic 
 56.16  factors, different targeted conditions, and/or different payment 
 56.17  amounts for conditions.  The risk adjustment system for public 
 56.18  programs must attempt to reflect the special needs related to 
 56.19  poverty, cultural, or language barriers and other needs of the 
 56.20  public program population. 
 56.21     (b) The commissioners of health and human services shall 
 56.22  jointly convene a public programs risk adjustment work group 
 56.23  responsible for advising the commissioners in the design of the 
 56.24  public programs risk adjustment system.  The public programs 
 56.25  risk adjustment work group is governed by section 15.059 for 
 56.26  purposes of membership terms and removal of members and shall 
 56.27  terminate on June 30, 1999.  The work group shall meet at the 
 56.28  discretion of the commissioners of health and human services. 
 56.29  The commissioner of health shall work with the risk adjustment 
 56.30  association to ensure coordination between the risk adjustment 
 56.31  systems for the public and private sectors.  The commissioner of 
 56.32  human services shall seek any needed federal approvals necessary 
 56.33  for the inclusion of the medical assistance program in the 
 56.34  public programs risk adjustment system.  
 56.35     (c) The public programs risk adjustment work group must be 
 56.36  representative of the persons served by publicly paid health 
 57.1   programs and providers and health plans that meet their needs.  
 57.2   To the greatest extent possible, the appointing authorities 
 57.3   shall attempt to select representatives that have historically 
 57.4   served a significant number of persons in publicly paid health 
 57.5   programs or the uninsured.  Membership of the work group shall 
 57.6   be as follows: 
 57.7      (1) one provider member appointed by the Minnesota Medical 
 57.8   Association; 
 57.9      (2) two provider members appointed by the Minnesota 
 57.10  Hospital Association, at least one of whom must represent a 
 57.11  major disproportionate share hospital; 
 57.12     (3) five members appointed by the Minnesota Council of 
 57.13  HMOs, one of whom must represent an HMO with fewer than 50,000 
 57.14  enrollees located outside the metropolitan area and one of whom 
 57.15  must represent an HMO with at least 50 percent of total 
 57.16  membership enrolled through a public program; 
 57.17     (4) two representatives of counties appointed by the 
 57.18  Association of Minnesota Counties; 
 57.19     (5) three representatives of organizations representing the 
 57.20  interests of families, children, childless adults, and elderly 
 57.21  persons served by the various publicly paid health programs 
 57.22  appointed by the governor; 
 57.23     (6) two representatives of persons with mental health, 
 57.24  developmental or physical disabilities, chemical dependency, or 
 57.25  chronic illness appointed by the governor; and 
 57.26     (7) three public members appointed by the governor, at 
 57.27  least one of whom must represent a community health board.  The 
 57.28  risk adjustment association may appoint a representative, if a 
 57.29  representative is not otherwise appointed by an appointing 
 57.30  authority. 
 57.31     (d) The commissioners of health and human services, with 
 57.32  the advice of the public programs risk adjustment work group, 
 57.33  shall develop a work plan and time frame and shall coordinate 
 57.34  their efforts with the private sector risk adjustment 
 57.35  association's activities and other state initiatives related to 
 57.36  public program managed care reimbursement.  The commissioners of 
 58.1   health and human services shall report to the health care 
 58.2   commission and to the appropriate legislative committees on 
 58.3   January 15, 1996, and on January 15, 1997, on any policy or 
 58.4   legislative changes necessary to implement the public program 
 58.5   risk adjustment system. 
 58.6      Sec. 43.  Minnesota Statutes 1996, section 62Q.106, is 
 58.7   amended to read: 
 58.8      62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.] 
 58.9      A complainant may at any time submit a complaint to the 
 58.10  appropriate commissioner to investigate.  After investigating a 
 58.11  complaint, or reviewing a company's decision, the appropriate 
 58.12  commissioner may order a remedy as authorized under section 
 58.13  62N.04, 62Q.30, or chapter 45, 60A, or 62D.  
 58.14     Sec. 44.  Minnesota Statutes 1996, section 62Q.33, 
 58.15  subdivision 2, is amended to read: 
 58.16     Subd. 2.  [REPORT ON SYSTEM DEVELOPMENT.] The commissioner 
 58.17  of health, in consultation with the state community health 
 58.18  services advisory committee and the commissioner of human 
 58.19  services, and representatives of local health departments, 
 58.20  county government, a municipal government acting as a local 
 58.21  board of health, the Minnesota health care commission, area 
 58.22  Indian health services, health care providers, and citizens 
 58.23  concerned about public health, shall coordinate the process for 
 58.24  defining implementation and financing responsibilities of the 
 58.25  local government core public health functions.  The commissioner 
 58.26  shall submit recommendations and an initial and final report on 
 58.27  local government core public health functions according to the 
 58.28  timeline established in subdivision 5. 
 58.29     Sec. 45.  Minnesota Statutes 1996, section 62Q.45, 
 58.30  subdivision 2, is amended to read: 
 58.31     Subd. 2.  [DEFINITION.] For purposes of this section, 
 58.32  "managed care organization" means:  (1) a health maintenance 
 58.33  organization operating under chapter 62D; (2) a community 
 58.34  integrated service network as defined under section 62N.02, 
 58.35  subdivision 4a; or (3) an integrated service network as defined 
 58.36  under section 62N.02, subdivision 8; or (4) an insurance company 
 59.1   licensed under chapter 60A, nonprofit health service plan 
 59.2   corporation operating under chapter 62C, fraternal benefit 
 59.3   society operating under chapter 64B, or any other health plan 
 59.4   company, to the extent that it covers health care services 
 59.5   delivered to Minnesota residents through a preferred provider 
 59.6   organization or a network of selected providers.  
 59.7      Sec. 46.  [62Q.52] [REFERRALS FOR RESIDENTS OF HEALTH CARE 
 59.8   FACILITIES.] 
 59.9      If an enrollee is a resident of a health care facility 
 59.10  licensed under chapter 144A or a housing with services 
 59.11  establishment registered under chapter 144D, the enrollee's 
 59.12  primary care physician must refer the enrollee to that 
 59.13  facility's skilled nursing unit or that facility's appropriate 
 59.14  care setting, provided that the health plan company and the 
 59.15  provider can best meet the patient's needs in that setting, if 
 59.16  the following conditions are met: 
 59.17     (1) the facility agrees to be reimbursed at that health 
 59.18  plan company's contract rate negotiated with similar providers 
 59.19  for the same services and supplies; and 
 59.20     (2) the facility meets all guidelines established by the 
 59.21  health plan company related to quality of care, utilization, 
 59.22  referral authorization, risk assumption, use of health plan 
 59.23  company network, and other criteria applicable to providers 
 59.24  under contract for the same services and supplies. 
 59.25     Sec. 47.  [62Q.65] [ACCESS TO PROVIDER DISCOUNTS.] 
 59.26     Subdivision 1.  [REQUIREMENT.] A high deductible health 
 59.27  plan must, when used in connection with a medical savings 
 59.28  account, provide the enrollee access to any discounted provider 
 59.29  fees for services covered by the high deductible health plan, 
 59.30  regardless of whether the enrollee has satisfied the deductible 
 59.31  for the high deductible health plan. 
 59.32     Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
 59.33  following terms have the meanings given: 
 59.34     (1) "high deductible health plan" has the meaning given 
 59.35  under the Internal Revenue Code of 1986, section 220(c)(2); 
 59.36     (2) "medical savings account" has the meaning given under 
 60.1   the Internal Revenue Code of 1986, section 220(d)(1); and 
 60.2      (3) "discounted provider fees" means fees contained in a 
 60.3   provider agreement entered into by the issuer of the high 
 60.4   deductible health plan, or an affiliate of the issuer, for use 
 60.5   in connection with the high deductible health plan. 
 60.6      Sec. 48.  Minnesota Statutes 1996, section 256.9363, 
 60.7   subdivision 1, is amended to read: 
 60.8      Subdivision 1.  [SELECTION OF VENDORS.] In order to contain 
 60.9   costs, the commissioner of human services shall select vendors 
 60.10  of medical care who can provide the most economical care 
 60.11  consistent with high medical standards and shall, where 
 60.12  possible, contract with organizations on a prepaid capitation 
 60.13  basis to provide these services.  The commissioner shall 
 60.14  consider proposals by counties and vendors for managed care 
 60.15  plans which may include:  prepaid capitation programs, 
 60.16  competitive bidding programs, or other vendor payment mechanisms 
 60.17  designed to provide services in an economical manner or to 
 60.18  control utilization, with safeguards to ensure that necessary 
 60.19  services are provided.  Managed care plans may include 
 60.20  integrated service networks as defined in section 62N.02. 
 60.21     Sec. 49.  Minnesota Statutes 1996, section 256.9657, 
 60.22  subdivision 3, is amended to read: 
 60.23     Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY 
 60.24  INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 
 60.25  1992, each health maintenance organization with a certificate of 
 60.26  authority issued by the commissioner of health under chapter 62D 
 60.27  and each integrated service network and community integrated 
 60.28  service network licensed by the commissioner under chapter 62N 
 60.29  shall pay to the commissioner of human services a surcharge 
 60.30  equal to six-tenths of one percent of the total premium revenues 
 60.31  of the health maintenance organization, integrated service 
 60.32  network, or community integrated service network as reported to 
 60.33  the commissioner of health according to the schedule in 
 60.34  subdivision 4.  
 60.35     (b) For purposes of this subdivision, total premium revenue 
 60.36  means: 
 61.1      (1) premium revenue recognized on a prepaid basis from 
 61.2   individuals and groups for provision of a specified range of 
 61.3   health services over a defined period of time which is normally 
 61.4   one month, excluding premiums paid to a health maintenance 
 61.5   organization, integrated service network, or community 
 61.6   integrated service network from the Federal Employees Health 
 61.7   Benefit Program; 
 61.8      (2) premiums from Medicare wrap-around subscribers for 
 61.9   health benefits which supplement Medicare coverage; 
 61.10     (3) Medicare revenue, as a result of an arrangement between 
 61.11  a health maintenance organization, an integrated service 
 61.12  network, or a community integrated service network and the 
 61.13  health care financing administration of the federal Department 
 61.14  of Health and Human Services, for services to a Medicare 
 61.15  beneficiary; and 
 61.16     (4) medical assistance revenue, as a result of an 
 61.17  arrangement between a health maintenance organization, 
 61.18  integrated service network, or community integrated service 
 61.19  network and a Medicaid state agency, for services to a medical 
 61.20  assistance beneficiary. 
 61.21     If advance payments are made under clause (1) or (2) to the 
 61.22  health maintenance organization, integrated service network, or 
 61.23  community integrated service network for more than one reporting 
 61.24  period, the portion of the payment that has not yet been earned 
 61.25  must be treated as a liability. 
 61.26     (c) When a health maintenance organization or an integrated 
 61.27  service network or community integrated service network merges 
 61.28  or consolidates with or is acquired by another health 
 61.29  maintenance organization, integrated service network, or 
 61.30  community integrated service network, the surviving corporation 
 61.31  or the new corporation shall be responsible for the annual 
 61.32  surcharge originally imposed on each of the entities or 
 61.33  corporations subject to the merger, consolidation, or 
 61.34  acquisition, regardless of whether one of the entities or 
 61.35  corporations does not retain a certificate of authority under 
 61.36  chapter 62D or a license under chapter 62N. 
 62.1      (d) Effective July 1 of each year, the surviving 
 62.2   corporation's or the new corporation's surcharge shall be based 
 62.3   on the revenues earned in the second previous calendar year by 
 62.4   all of the entities or corporations subject to the merger, 
 62.5   consolidation, or acquisition regardless of whether one of the 
 62.6   entities or corporations does not retain a certificate of 
 62.7   authority under chapter 62D or a license under chapter 62N until 
 62.8   the total premium revenues of the surviving corporation include 
 62.9   the total premium revenues of all the merged entities as 
 62.10  reported to the commissioner of health. 
 62.11     (e) When a health maintenance organization, integrated 
 62.12  service network, or community integrated service network, which 
 62.13  is subject to liability for the surcharge under this chapter, 
 62.14  transfers, assigns, sells, leases, or disposes of all or 
 62.15  substantially all of its property or assets, liability for the 
 62.16  surcharge imposed by this chapter is imposed on the transferee, 
 62.17  assignee, or buyer of the health maintenance organization, 
 62.18  integrated service network, or community integrated service 
 62.19  network. 
 62.20     (f) In the event a health maintenance organization, 
 62.21  integrated service network, or community integrated service 
 62.22  network converts its licensure to a different type of entity 
 62.23  subject to liability for the surcharge under this chapter, but 
 62.24  survives in the same or substantially similar form, the 
 62.25  surviving entity remains liable for the surcharge regardless of 
 62.26  whether one of the entities or corporations does not retain a 
 62.27  certificate of authority under chapter 62D or a license under 
 62.28  chapter 62N. 
 62.29     (g) The surcharge assessed to a health maintenance 
 62.30  organization, integrated service network, or community 
 62.31  integrated service network ends when the entity ceases providing 
 62.32  services for premiums and the cessation is not connected with a 
 62.33  merger, consolidation, acquisition, or conversion. 
 62.34     Sec. 50.  [MEIP STUDY.] 
 62.35     The commissioner of employee relations shall study the 
 62.36  current Minnesota employees insurance program (MEIP) and report 
 63.1   to the legislature by January 15, 1998, on recommendations on 
 63.2   whether this program provides greater accessibility to small 
 63.3   employers for purchasing health insurance and on the continued 
 63.4   viability of the program. 
 63.5      Sec. 51.  [REVISOR INSTRUCTIONS.] 
 63.6      The revisor of statutes shall delete references to 
 63.7   "integrated service network," but not "community integrated 
 63.8   service network," wherever it appears in Minnesota Statutes and 
 63.9   make conforming changes as necessary. 
 63.10     Sec. 52.  [REPEALER.] 
 63.11     (a) Minnesota Statutes 1996, sections 62J.03, subdivision 
 63.12  3; 62J.04, subdivisions 4 and 7; 62J.041, subdivision 7; 
 63.13  62J.042; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 
 63.14  62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 
 63.15  8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 
 63.16  62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 
 63.17  62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 
 63.18  62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; 
 63.19  and 147.01, subdivision 6, are repealed. 
 63.20     (b) Laws 1993, chapter 247, article 4, section 8; Laws 
 63.21  1995, chapter 96, section 2; and Laws 1995, First Special 
 63.22  Session chapter 3, article 13, section 2, are repealed. 
 63.23     (c) Laws 1994, chapter 625, article 5, section 5, as 
 63.24  amended by Laws 1995, chapter 234, article 3, section 8, is 
 63.25  repealed. 
 63.26     Sec. 53.  [EFFECTIVE DATE.] 
 63.27     Section 24 [62J.25] is effective the day following final 
 63.28  enactment.  Section 47 [62Q.65] is effective January 1, 1998, 
 63.29  and applies to high deductible health plans issued or renewed on 
 63.30  or after that date. 
 63.31                             ARTICLE 3 
 63.32                        MINNESOTACARE TAXES 
 63.33     Section 1.  [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS 
 63.34  FUND.] 
 63.35     Subdivision 1.  [ESTABLISH RESERVE.] The federal 
 63.36  contingency reserve is established within the health care access 
 64.1   fund for uses necessary to preserve access to basic health care 
 64.2   services when federal funding is significantly reduced. 
 64.3      Subd. 2.  [RESERVE FINANCING.] The funds in reserve shall 
 64.4   be equal to the amount of federal financial participation 
 64.5   received since July 1, 1995, for services and administrative 
 64.6   activities funded by the health care access fund up to a reserve 
 64.7   limit of $150,000,000.  Investment income attributed to the 
 64.8   federal contingency reserve balances shall also be included in 
 64.9   the total reserve amount. 
 64.10     Subd. 3.  [PERMITTED USE.] The federal contingency reserve 
 64.11  is established to protect access to basic health care services 
 64.12  that are publicly funded.  Funds held in the federal contingency 
 64.13  reserve are available for appropriation in the event that 
 64.14  federal funds for basic health care services are significantly 
 64.15  reduced such as under federal reform or other significant 
 64.16  changes to federal law. 
 64.17     Subd. 4.  [LIMITS ON USE.] The federal contingency reserve 
 64.18  is not available for supplementing reductions in federal funding 
 64.19  resulting from application of current federal law funding 
 64.20  formulas, for funding long-term care services, or for replacing 
 64.21  existing general fund commitments. 
 64.22     Sec. 2.  Minnesota Statutes 1996, section 60A.15, 
 64.23  subdivision 1, is amended to read: 
 64.24     Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
 64.25  before April 1, June 1, and December 1 of each year, every 
 64.26  domestic and foreign company, including town and farmers' mutual 
 64.27  insurance companies, domestic mutual insurance companies, marine 
 64.28  insurance companies, health maintenance organizations, 
 64.29  integrated service networks, community integrated service 
 64.30  networks, and nonprofit health service plan corporations, shall 
 64.31  pay to the commissioner of revenue installments equal to 
 64.32  one-third of the insurer's total estimated tax for the current 
 64.33  year.  Except as provided in paragraphs (d) and (e), 
 64.34  installments must be based on a sum equal to two percent of the 
 64.35  premiums described in paragraph (b). 
 64.36     (b) Installments under paragraph (a), (d), or (e) are 
 65.1   percentages of gross premiums less return premiums on all direct 
 65.2   business received by the insurer in this state, or by its agents 
 65.3   for it, in cash or otherwise, during such year. 
 65.4      (c) Failure of a company to make payments of at least 
 65.5   one-third of either (1) the total tax paid during the previous 
 65.6   calendar year or (2) 80 percent of the actual tax for the 
 65.7   current calendar year shall subject the company to the penalty 
 65.8   and interest provided in this section, unless the total tax for 
 65.9   the current tax year is $500 or less. 
 65.10     (d) For health maintenance organizations, nonprofit health 
 65.11  services plan corporations, integrated service networks, and 
 65.12  community integrated service networks, the installments must be 
 65.13  based on an amount equal to one percent of premiums described in 
 65.14  paragraph (b) that are paid after December 31, 1995. 
 65.15     (e) For purposes of computing installments for town and 
 65.16  farmers' mutual insurance companies and for mutual property 
 65.17  casualty companies with total assets on December 31, 1989, of 
 65.18  $1,600,000,000 or less, the following rates apply: 
 65.19     (1) for all life insurance, two percent; 
 65.20     (2) for town and farmers' mutual insurance companies and 
 65.21  for mutual property and casualty companies with total assets of 
 65.22  $5,000,000 or less, on all other coverages, one percent; and 
 65.23     (3) for mutual property and casualty companies with total 
 65.24  assets on December 31, 1989, of $1,600,000,000 or less, on all 
 65.25  other coverages, 1.26 percent. 
 65.26     (f) Premiums under medical assistance, general assistance 
 65.27  medical care, the MinnesotaCare program, and the Minnesota 
 65.28  comprehensive health insurance plan and all payments, revenues, 
 65.29  and reimbursements received from the federal government for 
 65.30  Medicare-related coverage as defined in section 62A.31, 
 65.31  subdivision 3, paragraph (e), are not subject to tax under this 
 65.32  section. 
 65.33     Sec. 3.  Minnesota Statutes 1996, section 256.9352, 
 65.34  subdivision 3, is amended to read: 
 65.35     Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
 65.36  shall manage spending for the MinnesotaCare program in a manner 
 66.1   that maintains a minimum reserve equal to five percent of the 
 66.2   expected cost of state premium subsidies in accordance with 
 66.3   section 16A.76.  The commissioner must make a quarterly 
 66.4   assessment of the expected expenditures for the covered services 
 66.5   for the remainder of the current biennium and for the following 
 66.6   biennium.  The estimated expenditure, including minimum the 
 66.7   reserve requirements described in section 16A.76, shall be 
 66.8   compared to an estimate of the revenues that will be deposited 
 66.9   in the health care access fund.  Based on this comparison, and 
 66.10  after consulting with the chairs of the house ways and means 
 66.11  committee and the senate finance committee, and the legislative 
 66.12  commission on health care access, the commissioner shall, as 
 66.13  necessary, make the adjustments specified in paragraph (b) to 
 66.14  ensure that expenditures remain within the limits of available 
 66.15  revenues for the remainder of the current biennium and for the 
 66.16  following biennium.  The commissioner shall not hire additional 
 66.17  staff using appropriations from the health care access fund 
 66.18  until the commissioner of finance makes a determination that the 
 66.19  adjustments implemented under paragraph (b) are sufficient to 
 66.20  allow MinnesotaCare expenditures to remain within the limits of 
 66.21  available revenues for the remainder of the current biennium and 
 66.22  for the following biennium. 
 66.23     (b) The adjustments the commissioner shall use must be 
 66.24  implemented in this order:  first, stop enrollment of single 
 66.25  adults and households without children; second, upon 45 days' 
 66.26  notice, stop coverage of single adults and households without 
 66.27  children already enrolled in the MinnesotaCare program; third, 
 66.28  upon 90 days' notice, decrease the premium subsidy amounts by 
 66.29  ten percent for families with gross annual income above 200 
 66.30  percent of the federal poverty guidelines; fourth, upon 90 days' 
 66.31  notice, decrease the premium subsidy amounts by ten percent for 
 66.32  families with gross annual income at or below 200 percent; and 
 66.33  fifth, require applicants to be uninsured for at least six 
 66.34  months prior to eligibility in the MinnesotaCare program.  If 
 66.35  these measures are insufficient to limit the expenditures to the 
 66.36  estimated amount of revenue, the commissioner shall further 
 67.1   limit enrollment or decrease premium subsidies. 
 67.2      The reserve referred to in this subdivision is appropriated 
 67.3   to the commissioner but may only be used upon approval of the 
 67.4   commissioner of finance, if estimated costs will exceed the 
 67.5   forecasted amount of available revenues after all adjustments 
 67.6   authorized under this subdivision have been made. 
 67.7      By February 1, 1995, the department of human services and 
 67.8   the department of health shall develop a plan to adjust benefit 
 67.9   levels, eligibility guidelines, or other steps necessary to 
 67.10  ensure that expenditures for the MinnesotaCare program are 
 67.11  contained within the two percent taxes imposed under section 
 67.12  295.52 and the gross premiums tax imposed under section 60A.15, 
 67.13  subdivision 1, paragraph (e), for fiscal year 1997.  
 67.14     (c) Notwithstanding paragraphs (a) and (b), the 
 67.15  commissioner shall proceed with the enrollment of single adults 
 67.16  and households without children in accordance with section 
 67.17  256.9354, subdivision 5, paragraph (a), even if the expenditures 
 67.18  do not remain within the limits of available revenues through 
 67.19  fiscal year 1997 to allow the departments of human services and 
 67.20  health to develop the plan required under paragraph (b). 
 67.21     Sec. 4.  Minnesota Statutes 1996, section 295.50, 
 67.22  subdivision 3, is amended to read: 
 67.23     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
 67.24  amounts received in money or otherwise by: 
 67.25     (1) a hospital for patient services; 
 67.26     (2) a surgical center for patient services; 
 67.27     (3) a health care provider, other than a staff model health 
 67.28  carrier, for patient services; 
 67.29     (4) a wholesale drug distributor for sale or distribution 
 67.30  of legend drugs that are delivered:  (i) to a Minnesota resident 
 67.31  by a wholesale drug distributor who is a nonresident pharmacy 
 67.32  directly, by common carrier, or by mail; or (ii) in Minnesota by 
 67.33  the wholesale drug distributor, by common carrier, or by mail, 
 67.34  unless the legend drugs are delivered to another wholesale drug 
 67.35  distributor who sells legend drugs exclusively at wholesale.  
 67.36  Legend drugs do not include nutritional products as defined in 
 68.1   Minnesota Rules, part 9505.0325; and 
 68.2      (5) a staff model health plan company as gross premiums for 
 68.3   enrollees, copayments, deductibles, coinsurance, and fees for 
 68.4   patient services covered under its contracts with groups and 
 68.5   enrollees; and 
 68.6      (6) a pharmacy for medical supplies, appliances, and 
 68.7   equipment. 
 68.8      Sec. 5.  Minnesota Statutes 1996, section 295.50, 
 68.9   subdivision 4, is amended to read: 
 68.10     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
 68.11  provider" means: 
 68.12     (1) a person whose health care occupation is regulated or 
 68.13  required to be regulated by the state of Minnesota furnishing 
 68.14  any or all of the following goods or services directly to a 
 68.15  patient or consumer:  medical, surgical, optical, visual, 
 68.16  dental, hearing, nursing services, drugs, medical supplies, 
 68.17  medical appliances, or laboratory, diagnostic, or therapeutic 
 68.18  services, or any; 
 68.19     (2) a person who provides goods and services not 
 68.20  listed above in clause (1) that qualify for reimbursement under 
 68.21  the medical assistance program provided under chapter 256B.  For 
 68.22  purposes of this clause, "directly to a patient or consumer" 
 68.23  includes goods and services provided in connection with 
 68.24  independent medical examinations under section 65B.56 or other 
 68.25  examinations for purposes of litigation or insurance claims; 
 68.26     (2) (3) a staff model health plan company; or 
 68.27     (3) (4) an ambulance service required to be licensed; or 
 68.28     (5) a person who sells or repairs hearing aids and related 
 68.29  equipment or prescription eyewear. 
 68.30     (b) Health care provider does not include hospitals,; 
 68.31  medical supplies distributors, except as specified under 
 68.32  paragraph (a), clause (5); nursing homes licensed under chapter 
 68.33  144A or licensed in any other jurisdiction,; pharmacies,; 
 68.34  surgical centers,; bus and taxicab transportation, or any other 
 68.35  providers of transportation services other than ambulance 
 68.36  services required to be licensed,; supervised living facilities 
 69.1   for persons with mental retardation or related conditions, 
 69.2   licensed under Minnesota Rules, parts 4665.0100 to 4665.9900,; 
 69.3   residential care homes licensed under chapter 144B,; board and 
 69.4   lodging establishments providing only custodial services that 
 69.5   are licensed under chapter 157 and registered under section 
 69.6   157.17 to provide supportive services or health supervision 
 69.7   services,; adult foster homes as defined in Minnesota Rules, 
 69.8   part 9555.5105,; day training and habilitation services for 
 69.9   adults with mental retardation and related conditions as defined 
 69.10  in section 252.41, subdivision 3,; and boarding care homes, as 
 69.11  defined in Minnesota Rules, part 4655.0100. 
 69.12     (c) For purposes of this subdivision, "directly to a 
 69.13  patient or consumer" includes goods and services provided in 
 69.14  connection with independent medical examinations under section 
 69.15  65B.56 or other examinations for purposes of litigation or 
 69.16  insurance claims. 
 69.17     Sec. 6.  Minnesota Statutes 1996, section 295.50, 
 69.18  subdivision 6, is amended to read: 
 69.19     Subd. 6.  [HOME HEALTH CARE SERVICES.] "Home health care 
 69.20  services" are services: 
 69.21     (1) defined under the state medical assistance program as 
 69.22  home health agency services provided by a home health agency, 
 69.23  personal care services and supervision of personal care 
 69.24  services, private duty nursing services, and waivered 
 69.25  services or services by home care providers required to be 
 69.26  licensed under chapter 144A; and 
 69.27     (2) provided at a recipient's residence, if the recipient 
 69.28  does not live in a hospital, nursing facility, as defined in 
 69.29  section 62A.46, subdivision 3, or intermediate care facility for 
 69.30  persons with mental retardation as defined in section 256B.055, 
 69.31  subdivision 12, paragraph (d). 
 69.32     Sec. 7.  Minnesota Statutes 1996, section 295.50, 
 69.33  subdivision 7, is amended to read: 
 69.34     Subd. 7.  [HOSPITAL.] "Hospital" means a hospital licensed 
 69.35  under chapter 144, or a hospital licensed by any other state or 
 69.36  province or territory of Canada jurisdiction. 
 70.1      Sec. 8.  Minnesota Statutes 1996, section 295.50, 
 70.2   subdivision 13, is amended to read: 
 70.3      Subd. 13.  [SURGICAL CENTER.] "Surgical center" is an 
 70.4   outpatient surgical center as defined in Minnesota Rules, 
 70.5   chapter 4675 or a similar facility located in any other state or 
 70.6   province or territory of Canada jurisdiction. 
 70.7      Sec. 9.  Minnesota Statutes 1996, section 295.50, 
 70.8   subdivision 14, is amended to read: 
 70.9      Subd. 14.  [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 
 70.10  distributor" means a wholesale drug distributor required to be 
 70.11  licensed under sections 151.42 to 151.51 or a nonresident 
 70.12  pharmacy required to be registered under section 151.19. 
 70.13     Sec. 10.  Minnesota Statutes 1996, section 295.51, 
 70.14  subdivision 1, is amended to read: 
 70.15     Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
 70.16  hospital, surgical center, pharmacy, or health care provider is 
 70.17  subject to tax under sections 295.50 to 295.59 if it is 
 70.18  "transacting business in Minnesota."  A hospital, surgical 
 70.19  center, pharmacy, or health care provider is transacting 
 70.20  business in Minnesota if it maintains contacts with or presence 
 70.21  in the state of Minnesota sufficient to permit taxation of gross 
 70.22  revenues received for patient services under the United States 
 70.23  Constitution. 
 70.24     Sec. 11.  Minnesota Statutes 1996, section 295.52, 
 70.25  subdivision 1, is amended to read: 
 70.26     Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
 70.27  hospital equal to two 1.50 percent of its gross revenues. 
 70.28     Sec. 12.  Minnesota Statutes 1996, section 295.52, 
 70.29  subdivision 1a, is amended to read: 
 70.30     Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
 70.31  surgical center equal to two 1.50 percent of its gross revenues. 
 70.32     Sec. 13.  Minnesota Statutes 1996, section 295.52, 
 70.33  subdivision 2, is amended to read: 
 70.34     Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
 70.35  care provider equal to two 1.50 percent of its gross revenues. 
 70.36     Sec. 14.  Minnesota Statutes 1996, section 295.52, 
 71.1   subdivision 3, is amended to read: 
 71.2      Subd. 3.  [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is 
 71.3   imposed on each wholesale drug distributor equal to two 1.50 
 71.4   percent of its gross revenues. 
 71.5      Sec. 15.  Minnesota Statutes 1996, section 295.52, 
 71.6   subdivision 4, is amended to read: 
 71.7      Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] A person that 
 71.8   receives prescription drugs for resale or use in Minnesota, 
 71.9   other than from a wholesale drug distributor that paid the tax 
 71.10  under subdivision 3, is subject to a tax equal to two 1.50 
 71.11  percent of the price paid.  Liability for the tax is incurred 
 71.12  when prescription drugs are received or delivered in Minnesota 
 71.13  by the person. 
 71.14     Sec. 16.  Minnesota Statutes 1996, section 295.52, is 
 71.15  amended by adding a subdivision to read: 
 71.16     Subd. 6.  [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax 
 71.17  liability of a person who meets the definition of a health care 
 71.18  provider solely because the person sells or repairs hearing aids 
 71.19  and related equipment or prescription eyewear is limited to the 
 71.20  gross revenues received from the sale or repair of these items. 
 71.21     Sec. 17.  Minnesota Statutes 1996, section 295.53, 
 71.22  subdivision 1, is amended to read: 
 71.23     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 71.24  are excluded from the gross revenues subject to the hospital, 
 71.25  surgical center, or health care provider taxes under sections 
 71.26  295.50 to 295.57: 
 71.27     (1) payments received for services provided under the 
 71.28  Medicare program, including payments received from the 
 71.29  government, and organizations governed by sections 1833 and 1876 
 71.30  of title XVIII of the federal Social Security Act, United States 
 71.31  Code, title 42, section 1395, and enrollee deductibles, 
 71.32  coinsurance, and copayments, whether paid by the Medicare 
 71.33  enrollee or by a Medicare supplemental coverage as defined in 
 71.34  section 62A.011, subdivision 3, clause (10).  Payments for 
 71.35  services not covered by Medicare are taxable; 
 71.36     (2) medical assistance payments including payments received 
 72.1   directly from the government or from a prepaid plan; 
 72.2      (3) payments received for home health care services; 
 72.3      (4) payments received from hospitals or surgical centers 
 72.4   for goods and services on which liability for tax is imposed 
 72.5   under section 295.52 or the source of funds for the payment is 
 72.6   exempt under clause (1), (2), (7), (8), or (10); 
 72.7      (5) payments received from health care providers for goods 
 72.8   and services on which liability for tax is imposed under this 
 72.9   chapter or the source of funds for the payment is exempt under 
 72.10  clause (1), (2), (7), (8), or (10); 
 72.11     (6) amounts paid for legend drugs, other than nutritional 
 72.12  products, to a wholesale drug distributor who is subject to tax 
 72.13  under section 295.52, subdivision 3, reduced by reimbursements 
 72.14  received for legend drugs under clauses (1), (2), (7), and (8); 
 72.15     (7) payments received under the general assistance medical 
 72.16  care program including payments received directly from the 
 72.17  government or from a prepaid plan; 
 72.18     (8) payments received for providing services under the 
 72.19  MinnesotaCare program including payments received directly from 
 72.20  the government or from a prepaid plan and enrollee deductibles, 
 72.21  coinsurance, and copayments.  For purposes of this clause, 
 72.22  coinsurance means the portion of payment that the enrollee is 
 72.23  required to pay for the covered service; 
 72.24     (9) payments received by a health care provider or the 
 72.25  wholly owned subsidiary of a health care provider for care 
 72.26  provided outside Minnesota to a patient who is not domiciled in 
 72.27  Minnesota; 
 72.28     (10) payments received from the chemical dependency fund 
 72.29  under chapter 254B; 
 72.30     (11) payments received in the nature of charitable 
 72.31  donations that are not designated for providing patient services 
 72.32  to a specific individual or group; 
 72.33     (12) payments received for providing patient services 
 72.34  incurred through a formal program of health care research 
 72.35  conducted in conformity with federal regulations governing 
 72.36  research on human subjects.  Payments received from patients or 
 73.1   from other persons paying on behalf of the patients are subject 
 73.2   to tax; 
 73.3      (13) payments received from any governmental agency for 
 73.4   services benefiting the public, not including payments made by 
 73.5   the government in its capacity as an employer or insurer; 
 73.6      (14) payments received for services provided by community 
 73.7   residential mental health facilities licensed under Minnesota 
 73.8   Rules, parts 9520.0500 to 9520.0690, community support programs 
 73.9   and family community support programs approved under Minnesota 
 73.10  Rules, parts 9535.1700 to 9535.1760, and community mental health 
 73.11  centers as defined in section 245.62, subdivision 2; 
 73.12     (15) government payments received by a regional treatment 
 73.13  center; 
 73.14     (16) payments received for hospice care services; 
 73.15     (17) payments received by a health care provider for 
 73.16  medical supplies, appliances, and equipment hearing aids and 
 73.17  related equipment or prescription eyewear delivered outside of 
 73.18  Minnesota; 
 73.19     (18) payments received by a post-secondary educational 
 73.20  institution from student tuition, student activity fees, health 
 73.21  care service fees, government appropriations, donations, or 
 73.22  grants.  Fee for service payments and payments for extended 
 73.23  coverage are taxable; and 
 73.24     (19) payments received for services provided by:  assisted 
 73.25  living programs and congregate housing programs. 
 73.26     (b) Payments received by wholesale drug distributors for 
 73.27  prescription legend drugs sold directly to veterinarians or 
 73.28  veterinary bulk purchasing organizations are excluded from the 
 73.29  gross revenues subject to the wholesale drug distributor tax 
 73.30  under sections 295.50 to 295.59. 
 73.31     Sec. 18.  Minnesota Statutes 1996, section 295.53, 
 73.32  subdivision 3, is amended to read: 
 73.33     Subd. 3.  [SEPARATE STATEMENT OF TAX.] A hospital, surgical 
 73.34  center, pharmacy, or health care provider must not state the tax 
 73.35  obligation under section 295.52 in a deceptive or misleading 
 73.36  manner.  It must not separately state tax obligations on bills 
 74.1   provided to patients, consumers, or other payers when the amount 
 74.2   received for the services or goods is not subject to tax.  
 74.3      Pharmacies that separately state the tax obligations on 
 74.4   bills provided to consumers or to other payers who purchase 
 74.5   legend drugs may state the tax obligation as two 1.50 percent of 
 74.6   the wholesale price of the legend drugs.  Pharmacies must not 
 74.7   state the tax obligation as two 1.50 percent of the retail price.
 74.8      Whenever the commissioner determines that a person has 
 74.9   engaged in any act or practice constituting a violation of this 
 74.10  subdivision, the commissioner may bring an action in the name of 
 74.11  the state in the district court of the appropriate county to 
 74.12  enjoin the act or practice and to enforce compliance with this 
 74.13  subdivision, or the commissioner may refer the matter to the 
 74.14  attorney general or the county attorney of the appropriate 
 74.15  county.  Upon a proper showing, a permanent or temporary 
 74.16  injunction, restraining order, or other appropriate relief must 
 74.17  be granted.  
 74.18     Sec. 19.  Minnesota Statutes 1996, section 295.53, 
 74.19  subdivision 4, is amended to read: 
 74.20     Subd. 4.  [DEDUCTION FOR RESEARCH.] (a) In addition to the 
 74.21  exemptions allowed under subdivision 1, a hospital or health 
 74.22  care provider which is exempt under section 501(c)(3) of the 
 74.23  Internal Revenue Code of 1986 or is owned and operated under 
 74.24  authority of a governmental unit, may deduct from its gross 
 74.25  revenues subject to the hospital or health care provider taxes 
 74.26  under sections 295.50 to 295.57 revenues equal to expenditures 
 74.27  for qualifying research conducted by an allowable research 
 74.28  programs program.  
 74.29     (b) For purposes of this subdivision, the following 
 74.30  requirements apply: 
 74.31     (1) expenditures for allowable research programs are the 
 74.32  direct and general must be for program costs for activities 
 74.33  which are part of qualifying research conducted by an allowable 
 74.34  research program; 
 74.35     (2) an allowable research program must be a formal program 
 74.36  of medical and health care research approved by the governing 
 75.1   body of the hospital or health care provider which also includes 
 75.2   active solicitation of research funds from government and 
 75.3   private sources.  Allowable conducted by an entity which is 
 75.4   exempt under section 501(c)(3) of the Internal Revenue Code of 
 75.5   1986 or is owned and operated under authority of a governmental 
 75.6   unit; and 
 75.7      (3) qualifying research must:  
 75.8      (i) be approved in writing by the governing body of the 
 75.9   hospital or health care provider which is taking the deduction 
 75.10  under this subdivision; 
 75.11     (1) (ii) have as its purpose the development of new 
 75.12  knowledge in basic or applied science relating to the diagnosis 
 75.13  and treatment of conditions affecting the human body; 
 75.14     (2) (iii) be subject to review by individuals with 
 75.15  expertise in the subject matter of the proposed study but who 
 75.16  have no financial interest in the proposed study and are not 
 75.17  involved in the conduct of the proposed study; and 
 75.18     (3) (iv) be subject to review and supervision by an 
 75.19  institutional review board operating in conformity with federal 
 75.20  regulations if the research involves human subjects or an 
 75.21  institutional animal care and use committee operating in 
 75.22  conformity with federal regulations if the research involves 
 75.23  animal subjects.  Research expenses are not exempt if the study 
 75.24  is a routine evaluation of health care methods or products used 
 75.25  in a particular setting conducted for the purpose of making a 
 75.26  management decision.  Costs of clinical research activities paid 
 75.27  directly for the benefit of an individual patient are excluded 
 75.28  from this exemption.  Basic research in fields including 
 75.29  biochemistry, molecular biology, and physiology are also 
 75.30  included if such programs are subject to a peer review process. 
 75.31     (c) No deduction shall be allowed under this subdivision 
 75.32  for any revenue received by the hospital or health care provider 
 75.33  in the form of a grant, gift, or otherwise, whether from a 
 75.34  government or nongovernment source, on which the tax liability 
 75.35  under section 295.52 is not imposed or for which the tax 
 75.36  liability under section 295.52 has been received from a third 
 76.1   party as provided for in section 295.582. 
 76.2      (d) Effective beginning with calendar year 1995, the 
 76.3   taxpayer shall not take the deduction under this section into 
 76.4   account in determining estimated tax payments or the payment 
 76.5   made with the annual return under section 295.55.  The total 
 76.6   deduction allowable to all taxpayers under this section for 
 76.7   calendar years beginning after December 31, 1994, may not exceed 
 76.8   $65,000,000.  To implement this limit, each qualifying hospital 
 76.9   and qualifying health care provider shall submit to the 
 76.10  commissioner by March 15 its total expenditures qualifying for 
 76.11  the deduction under this section for the previous calendar 
 76.12  year.  The commissioner shall sum the total expenditures of all 
 76.13  taxpayers qualifying under this section for the calendar year.  
 76.14  If the resulting amount exceeds $65,000,000, the commissioner 
 76.15  shall allocate a part of the $65,000,000 deduction limit to each 
 76.16  qualifying hospital and health care provider in proportion to 
 76.17  its share of the total deductions.  The commissioner shall pay a 
 76.18  refund to each qualifying hospital or provider equal to its 
 76.19  share of the deduction limit multiplied by two 1.50 percent.  
 76.20  The commissioner shall pay the refund no later than May 15 of 
 76.21  the calendar year. 
 76.22     Sec. 20.  Minnesota Statutes 1996, section 295.54, 
 76.23  subdivision 1, is amended to read: 
 76.24     Subdivision 1.  [TAXES PAID TO ANOTHER STATE.] A hospital, 
 76.25  surgical center, pharmacy, or health care provider that has paid 
 76.26  taxes to another state or province or territory of 
 76.27  Canada jurisdiction measured by gross revenues and is subject to 
 76.28  tax under sections 295.52 to 295.59 on the same gross revenues 
 76.29  is entitled to a credit for the tax legally due and paid to 
 76.30  another state or province or territory of Canada jurisdiction to 
 76.31  the extent of the lesser of (1) the tax actually paid to the 
 76.32  other state or province or territory of Canada jurisdiction, or 
 76.33  (2) the amount of tax imposed by Minnesota on the gross revenues 
 76.34  subject to tax in the other taxing jurisdictions. 
 76.35     Sec. 21.  Minnesota Statutes 1996, section 295.54, 
 76.36  subdivision 2, is amended to read: 
 77.1      Subd. 2.  [PHARMACY CREDIT REFUND.] A pharmacy may claim a 
 77.2   quarterly credit an annual refund against the total amount of 
 77.3   tax, if any, the pharmacy owes during that quarter calendar year 
 77.4   under section 295.52, subdivision 1b, as provided in this 
 77.5   subdivision 2.  The credit refund shall equal two 1.50 
 77.6   percent of the amount paid by the pharmacy to a wholesale drug 
 77.7   distributor subject to tax under section 295.52, subdivision 3, 
 77.8   for legend drugs delivered by the pharmacy outside of Minnesota. 
 77.9   If the amount of the credit exceeds the tax liability of the 
 77.10  pharmacy under section 295.52, subdivision 1b, the commissioner 
 77.11  shall provide the pharmacy with a refund equal to the excess 
 77.12  amount.  Each qualifying pharmacy must apply for the refund on 
 77.13  the annual return as provided under section 295.55, subdivision 
 77.14  5.  The refund must be claimed within one year of the due date 
 77.15  of the return.  Interest on refunds paid under this subdivision 
 77.16  will begin to accrue 60 days after the date a claim for refund 
 77.17  is filed.  For purposes of this subdivision, the date a claim is 
 77.18  filed is the due date of the return or the date of the actual 
 77.19  claim for refund, whichever is later.  
 77.20     Sec. 22.  Minnesota Statutes 1996, section 295.55, 
 77.21  subdivision 2, is amended to read: 
 77.22     Subd. 2.  [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 
 77.23  Each hospital or surgical center must make estimated payments of 
 77.24  the taxes for the calendar year in monthly installments to the 
 77.25  commissioner within ten 15 days after the end of the month. 
 77.26     (b) Estimated tax payments are not required of hospitals or 
 77.27  surgical centers if the tax for the calendar year is less than 
 77.28  $500 or if a hospital has been allowed a grant under section 
 77.29  144.1484, subdivision 2, for the year. 
 77.30     (c) Underpayment of estimated installments bear interest at 
 77.31  the rate specified in section 270.75, from the due date of the 
 77.32  payment until paid or until the due date of the annual return at 
 77.33  the rate specified in section 270.75.  An underpayment of an 
 77.34  estimated installment is the difference between the amount paid 
 77.35  and the lesser of (1) 90 percent of one-twelfth of the tax for 
 77.36  the calendar year or (2) the tax for the actual gross revenues 
 78.1   received during the month. 
 78.2      Sec. 23.  Minnesota Statutes 1996, section 295.582, is 
 78.3   amended to read: 
 78.4      295.582 [AUTHORITY.] 
 78.5      (a) A hospital, surgical center, pharmacy, or health care 
 78.6   provider that is subject to a tax under section 295.52, or a 
 78.7   pharmacy that has paid additional expense transferred under this 
 78.8   section by a wholesale drug distributor, may transfer additional 
 78.9   expense generated by section 295.52 obligations on to all 
 78.10  third-party contracts for the purchase of health care services 
 78.11  on behalf of a patient or consumer.  The additional expense 
 78.12  transferred to the third-party purchaser must not exceed two 
 78.13  1.50 percent of the gross revenues received under the 
 78.14  third-party contract, and two 1.50 percent of copayments and 
 78.15  deductibles paid by the individual patient or consumer.  The 
 78.16  expense must not be generated on revenues derived from payments 
 78.17  that are excluded from the tax under section 295.53.  All 
 78.18  third-party purchasers of health care services including, but 
 78.19  not limited to, third-party purchasers regulated under chapter 
 78.20  60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or 
 78.21  under section 471.61 or 471.617, must pay the transferred 
 78.22  expense in addition to any payments due under existing contracts 
 78.23  with the hospital, surgical center, pharmacy, or health care 
 78.24  provider, to the extent allowed under federal law.  A 
 78.25  third-party purchaser of health care services includes, but is 
 78.26  not limited to, a health carrier, integrated service network, or 
 78.27  community integrated service network that pays for health care 
 78.28  services on behalf of patients or that reimburses, indemnifies, 
 78.29  compensates, or otherwise insures patients for health care 
 78.30  services.  A third-party purchaser shall comply with this 
 78.31  section regardless of whether the third-party purchaser is a 
 78.32  for-profit, not-for-profit, or nonprofit entity.  A wholesale 
 78.33  drug distributor may transfer additional expense generated by 
 78.34  section 295.52 obligations to entities that purchase from the 
 78.35  wholesaler, and the entities must pay the additional expense.  
 78.36  Nothing in this section limits the ability of a hospital, 
 79.1   surgical center, pharmacy, wholesale drug distributor, or health 
 79.2   care provider to recover all or part of the section 295.52 
 79.3   obligation by other methods, including increasing fees or 
 79.4   charges. 
 79.5      (b) Each third-party purchaser regulated under any chapter 
 79.6   cited in paragraph (a) shall include with its annual renewal for 
 79.7   certification of authority or licensure documentation indicating 
 79.8   compliance with paragraph (a).  
 79.9      (c) Any hospital, surgical center, or health care provider 
 79.10  subject to a tax under section 295.52 or a pharmacy that has 
 79.11  paid additional expense transferred under this section by a 
 79.12  wholesale drug distributor may file a complaint with the 
 79.13  commissioner responsible for regulating the third-party 
 79.14  purchaser if at any time the third-party purchaser fails to 
 79.15  comply with paragraph (a).  
 79.16     (d) If the commissioner responsible for regulating the 
 79.17  third-party purchaser finds at any time that the third-party 
 79.18  purchaser has not complied with paragraph (a), the commissioner 
 79.19  may take enforcement action against a third-party purchaser 
 79.20  which is subject to the commissioner's regulatory jurisdiction 
 79.21  and which does not allow a hospital, surgical center, pharmacy, 
 79.22  or provider to pass-through the tax.  The commissioner may by 
 79.23  order fine or censure the third-party purchaser or revoke or 
 79.24  suspend the certificate of authority or license of the 
 79.25  third-party purchaser to do business in this state if the 
 79.26  commissioner finds that the third-party purchaser has not 
 79.27  complied with this section.  The third-party purchaser may 
 79.28  appeal the commissioner's order through a contested case hearing 
 79.29  in accordance with chapter 14. 
 79.30     Sec. 24.  [REPEALER.] 
 79.31     Minnesota Statutes 1996, sections 295.52, subdivision 1b; 
 79.32  and 295.53, subdivision 5, are repealed.  
 79.33     Sec. 25.  [EFFECTIVE DATES.] 
 79.34     Sections 7 [295.50, s.7], 8 [295.50, s.13], 9 [295.50, 
 79.35  s.14], 15 [295.52, s.4], and 20 [295.54, s.1] are effective the 
 79.36  day following final enactment. 
 80.1      Section 19 [295.53, s.4] is effective for research 
 80.2   expenditures incurred after December 31, 1996.  Section 2 
 80.3   [60A.15, s.1] is effective for payments, revenues, and 
 80.4   reimbursements received from the federal government after 
 80.5   December 31, 1996. 
 80.6      Section 22 [295.55, s.2] is effective for estimated 
 80.7   payments due after July 1, 1997. 
 80.8      Section 16 [295.52, s.6] is effective for services rendered 
 80.9   and revenue received after December 31, 1997.  Sections 5 
 80.10  [295.50, s.4], 11 [295.52, s.1], 12 [295.52, s.1a], 13 [295.52, 
 80.11  s.2], 14 [295.52, s.3], 15 [295.52, s.4], and 21 [295.54, s.2] 
 80.12  are effective for gross revenues received after December 31, 
 80.13  1997. 
 80.14     Sections 4 [295.50, s.3], 6 [295.50, s.6], 10 [295.51, 
 80.15  s.1], 17 [295.53, s.1], and 18 [295.53, s.3] are effective 
 80.16  January 1, 1998. 
 80.17                             ARTICLE 4 
 80.18                    SENIOR CITIZEN DRUG PROGRAM 
 80.19     Section 1.  [256.955] [SENIOR CITIZEN DRUG PROGRAM.] 
 80.20     Subdivision 1.  [ESTABLISHMENT; ELIGIBILITY.] The 
 80.21  commissioner, in consultation with county social service 
 80.22  agencies, shall establish and administer a senior citizen drug 
 80.23  program.  Qualified senior citizens shall be eligible for 
 80.24  prescription drug coverage under the program beginning January 
 80.25  1, 1998.  Persons who initially enroll as qualified senior 
 80.26  citizens and whose income increases above the limits specified 
 80.27  in subdivision 2, paragraph (d), may continue enrollment but 
 80.28  must pay the full cost of coverage. 
 80.29     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 80.30  the following definitions apply. 
 80.31     (b) "Health plan" has the meaning provided in section 
 80.32  62Q.01, subdivision 3. 
 80.33     (c) "Health plan company" has the meaning provided in 
 80.34  section 62Q.01, subdivision 4. 
 80.35     (d) "Qualified senior citizen" means an individual age 65 
 80.36  or older who: 
 81.1      (1) has a household income that does not exceed 120 percent 
 81.2   of the federal poverty guidelines; 
 81.3      (2) owns assets whose value does not exceed twice the limit 
 81.4   used to determine eligibility under the supplemental security 
 81.5   income program; 
 81.6      (3) is enrolled in Medicare Part A and Part B; 
 81.7      (4) is not eligible for prescription drug coverage under a 
 81.8   health plan; 
 81.9      (5) does not have coverage for prescription drugs under a 
 81.10  Medicare supplement plan, as defined in sections 62A.31 to 
 81.11  62A.44, or policies, contracts, or certificates that supplement 
 81.12  Medicare issued by health maintenance organizations or those 
 81.13  policies, contracts, or certificates governed by section 1833 or 
 81.14  1876 of the federal Social Security Act, United States Code, 
 81.15  title 42, section 1395, et seq., as amended; 
 81.16     (6) is not eligible for medical assistance without a 
 81.17  spenddown, general assistance medical care without a spenddown, 
 81.18  or MinnesotaCare; 
 81.19     (7) has not had coverage described in clauses (4) and (5) 
 81.20  for at least four months prior to application for the program; 
 81.21  and 
 81.22     (8) is a permanent resident of Minnesota as defined in 
 81.23  section 256.9359. 
 81.24     Subd. 3.  [PRESCRIPTION DRUG COVERAGE.] (a) Coverage under 
 81.25  the program is limited to prescription drugs covered under the 
 81.26  medical assistance program, except as provided in paragraph (b). 
 81.27     (b) As of the date the commissioner determines that, in a 
 81.28  given county, at least two health plan companies offer policies, 
 81.29  contracts, or certificates governed by section 1833 or 1876 of 
 81.30  the federal Social Security Act that provide a prescription drug 
 81.31  benefit as part of their standard coverage for Medicare 
 81.32  enrollees, eligibility for prescription drug coverage under the 
 81.33  senior drug program for enrollees who are residents of the 
 81.34  county shall be limited to coverage of prescription drug costs 
 81.35  in excess of any annual expenditure limit for enrollees of the 
 81.36  health plan companies. 
 82.1      Subd. 4.  [APPLICATION PROCEDURES AND 
 82.2   ADMINISTRATION.] Applications and information on the program 
 82.3   must be made available at county social service agencies, health 
 82.4   care provider offices, and agencies and organizations serving 
 82.5   senior citizens.  Senior citizens shall submit applications and 
 82.6   any information specified by the commissioner as being necessary 
 82.7   to verify eligibility directly to the county social service 
 82.8   agencies.  County social service agencies shall determine an 
 82.9   applicant's eligibility for the program within 30 days from the 
 82.10  date the application is received. 
 82.11     Subd. 5.  [DRUG UTILIZATION REVIEW PROGRAM.] The 
 82.12  commissioner shall implement a drug utilization review program 
 82.13  for program enrollees.  The commissioner shall establish an 
 82.14  advisory committee to assist the commissioner in developing 
 82.15  criteria for the utilization review program.  The committee 
 82.16  shall be comprised of an equal number of physicians and 
 82.17  pharmacists with expertise in treating elderly persons, and 
 82.18  shall use a consensus process to develop clinically relevant 
 82.19  standards for drug utilization review designed to improve health 
 82.20  care outcomes for senior citizens.  The advisory committee is 
 82.21  governed by section 15.059. 
 82.22     Subd. 6.  [PHARMACY ENROLLMENT AND 
 82.23  REIMBURSEMENT.] Pharmacies may apply to the commissioner to 
 82.24  participate in the senior citizen drug program.  The 
 82.25  commissioner shall reimburse participating pharmacies for drug 
 82.26  and dispensing costs at the MinnesotaCare reimbursement level, 
 82.27  minus the copayment required under subdivision 7. 
 82.28     Subd. 7.  [PREMIUM PAYMENTS AND COST SHARING.] (a) Program 
 82.29  enrollees shall pay premiums according to the sliding scale 
 82.30  established under section 256.9358. 
 82.31     (b) Program enrollees shall pay a copayment of $10 for each 
 82.32  prescription. 
 82.33     (c) Program enrollees must satisfy $200 annual deductible, 
 82.34  based upon expenditures for prescription drugs. 
 82.35     (d) The commissioner shall include payments or expenditures 
 82.36  by an enrollee under this subdivision as expenses for medical 
 83.1   care when determining an enrollee's eligibility for medical 
 83.2   assistance or general assistance medical care based upon a 
 83.3   spenddown. 
 83.4      Subd. 8.  [REPORT.] The commissioner shall submit to the 
 83.5   legislature by December 1, 1998, a report on the senior citizen 
 83.6   drug program.  The report must include demographic information 
 83.7   on enrollees, per-prescription expenditures, total program 
 83.8   expenditures, hospital and nursing home costs avoided by 
 83.9   enrollees, any savings to medical assistance and Medicare 
 83.10  resulting from the provision of prescription drug coverage under 
 83.11  Medicare by health maintenance organizations, other public and 
 83.12  private options for drug assistance to the senior population, 
 83.13  and any recommendations for changes in the senior drug program. 
 83.14     Subd. 9.  [SUNSET.] The commissioner shall have no 
 83.15  authority under this section and section 256B.04, subdivision 
 83.16  19, to pay claims for prescription drugs, accept premiums from 
 83.17  qualified senior citizens, or impose rebates on manufacturers 
 83.18  for drugs dispensed to qualified senior citizens, on or after 
 83.19  the effective date of any waiver approved by the federal Health 
 83.20  Care Financing Administration that would allow the commissioner 
 83.21  to provide prescription drug coverage to Medicare beneficiaries 
 83.22  whose income is less than 150 percent of the federal poverty 
 83.23  guidelines. 
 83.24     Sec. 2.  Minnesota Statutes 1996, section 256B.04, is 
 83.25  amended by adding a subdivision to read: 
 83.26     Subd. 19.  [PRESCRIPTION DRUG CONTRACT REQUIREMENT.] The 
 83.27  commissioner shall include, as part of any medical assistance 
 83.28  prescription drug contract with a drug manufacturer, a 
 83.29  requirement that the drug manufacturer provide for payment of a 
 83.30  15.1 percent rebate on each unit of drug paid for by the senior 
 83.31  citizen drug program under section 256.955 on behalf of a 
 83.32  qualified senior citizen enrolled in the program, after 
 83.33  satisfaction of any deductible and copayment requirements. 
 83.34                             ARTICLE 5 
 83.35             MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION 
 83.36     Section 1.  Minnesota Statutes 1996, section 62E.02, 
 84.1   subdivision 13, is amended to read: 
 84.2      Subd. 13.  [ELIGIBLE PERSON.] (a) "Eligible person" means 
 84.3   an individual who: 
 84.4      (1) is currently and has been a resident of Minnesota for 
 84.5   the six months immediately preceding the date of receipt by the 
 84.6   association or its writing carrier of a completed certificate of 
 84.7   eligibility and who; 
 84.8      (2) meets the enrollment requirements of section 62E.14; 
 84.9   and 
 84.10     (3) is not otherwise ineligible under this subdivision. 
 84.11     (b) No individual is eligible for coverage under a 
 84.12  qualified or a Medicare supplement plan issued by the 
 84.13  association for whom a premium is paid or reimbursed by a 
 84.14  federal, state, or local agency as of the first day of any term 
 84.15  for which a premium amount is paid or reimbursed. 
 84.16     Sec. 2.  Minnesota Statutes 1996, section 62E.02, 
 84.17  subdivision 18, is amended to read: 
 84.18     Subd. 18.  [WRITING CARRIER.] "Writing carrier" means the 
 84.19  insurer or insurers, health maintenance organization or 
 84.20  organizations, integrated service network or networks, and 
 84.21  community integrated service network or networks, or other 
 84.22  entity selected by the association and approved by the 
 84.23  commissioner to administer the comprehensive health insurance 
 84.24  plan. 
 84.25     Sec. 3.  Minnesota Statutes 1996, section 62E.11, is 
 84.26  amended by adding a subdivision to read: 
 84.27     Subd. 13.  [REPORT TO LEGISLATURE.] The commissioner shall 
 84.28  report to the legislature annually on the costs incurred by the 
 84.29  association in providing coverage to individuals enrolled in 
 84.30  medical assistance under chapter 256B or general assistance 
 84.31  medical care under chapter 256D.  The report shall be provided 
 84.32  to the chairs of the house committee on health and human 
 84.33  services and the senate committee on health and family security 
 84.34  no later than January 15 of each year.  The report's contents 
 84.35  shall be determined by the commissioner, in consultation with 
 84.36  the department of human services and the association.  At a 
 85.1   minimum, the report shall provide a breakdown, for the 
 85.2   association in aggregate and for each category of individuals 
 85.3   enrolled in medical assistance under chapter 256B or general 
 85.4   assistance medical care under chapter 256D, of: 
 85.5      (1) administrative costs; 
 85.6      (2) claims costs; 
 85.7      (3) premiums paid; 
 85.8      (4) deductibles, coinsurance, and copayments paid; 
 85.9      (5) state payments to providers satisfying deductibles, 
 85.10  coinsurance, or copayments required to be paid under a qualified 
 85.11  or Medicare supplement plan issued by the association; 
 85.12     (6) the number of individuals; 
 85.13     (7) losses; and 
 85.14     (8) appropriated state funds. 
 85.15     The commissioner of human services, the association, and 
 85.16  the writing carrier shall cooperate with the commissioner and 
 85.17  provide all information that the commissioner determines is 
 85.18  necessary to prepare this report. 
 85.19     Sec. 4.  Minnesota Statutes 1996, section 62E.13, 
 85.20  subdivision 2, is amended to read: 
 85.21     Subd. 2.  The association may select policies and 
 85.22  contracts, or parts thereof, submitted by a member or members of 
 85.23  the association, or by the association or others, to develop 
 85.24  specifications for bids from any members entity which wish 
 85.25  wishes to be selected as a writing carrier to administer the 
 85.26  state plan.  The selection of the writing carrier shall be based 
 85.27  upon criteria including established by the board of directors of 
 85.28  the association and approved by the commissioner.  The criteria 
 85.29  shall outline specific qualifications that an entity must 
 85.30  satisfy in order to be selected and, at a minimum, shall include 
 85.31  the member's entity's proven ability to handle large group 
 85.32  accident and health insurance cases, efficient claim paying 
 85.33  capacity, and the estimate of total charges for administering 
 85.34  the plan.  The association may select separate writing carriers 
 85.35  for the two types of qualified plans, the qualified medicare 
 85.36  supplement plan, and the health maintenance organization 
 86.1   contract. 
 86.2      Sec. 5.  Minnesota Statutes 1996, section 256B.056, 
 86.3   subdivision 8, is amended to read: 
 86.4      Subd. 8.  [COOPERATION.] To be eligible for medical 
 86.5   assistance, applicants and recipients must cooperate with the 
 86.6   state and local agency to identify potentially liable 
 86.7   third-party payers and assist the state in obtaining third party 
 86.8   payments, unless good cause for noncooperation is determined 
 86.9   according to Code of Federal Regulations, title 42, part 
 86.10  433.147.  "Cooperation" includes identifying any third party who 
 86.11  may be liable for care and services provided under this chapter 
 86.12  to the applicant, recipient, or any other family member for whom 
 86.13  application is made and providing relevant information to assist 
 86.14  the state in pursuing a potentially liable third party.  
 86.15  Cooperation also includes providing information about a group 
 86.16  health plan for which the person may be eligible and if the plan 
 86.17  is determined cost-effective by the state agency and premiums 
 86.18  are paid by the local agency or there is no cost to the 
 86.19  recipient, they must enroll or remain enrolled with the group.  
 86.20  For purposes of this subdivision, coverage provided by the 
 86.21  Minnesota comprehensive health association under chapter 62E 
 86.22  shall not be considered group health plan coverage or 
 86.23  cost-effective by the state and local agency.  Cost-effective 
 86.24  insurance premiums approved for payment by the state agency and 
 86.25  paid by the local agency are eligible for reimbursement 
 86.26  according to section 256B.19. 
 86.27     Sec. 6.  Minnesota Statutes 1996, section 256B.0625, 
 86.28  subdivision 15, is amended to read: 
 86.29     Subd. 15.  [HEALTH PLAN PREMIUMS AND COPAYMENTS.] (a) 
 86.30  Medical assistance covers health care prepayment plan premiums, 
 86.31  insurance premiums, and copayments if determined to be 
 86.32  cost-effective by the commissioner.  For purposes of obtaining 
 86.33  Medicare part A and part B, and copayments, expenditures may be 
 86.34  made even if federal funding is not available. 
 86.35     (b) Effective for all premiums due on or after June 30, 
 86.36  1997, medical assistance does not cover premiums that a 
 87.1   recipient is required to pay under a qualified or Medicare 
 87.2   supplement plan issued by the Minnesota comprehensive health 
 87.3   association. 
 87.4      Sec. 7.  Minnesota Statutes 1996, section 256D.03, 
 87.5   subdivision 3b, is amended to read: 
 87.6      Subd. 3b.  [COOPERATION.] (a) General assistance or general 
 87.7   assistance medical care applicants and recipients must cooperate 
 87.8   with the state and local agency to identify potentially liable 
 87.9   third-party payors and assist the state in obtaining third-party 
 87.10  payments.  Cooperation includes identifying any third party who 
 87.11  may be liable for care and services provided under this chapter 
 87.12  to the applicant, recipient, or any other family member for whom 
 87.13  application is made and providing relevant information to assist 
 87.14  the state in pursuing a potentially liable third party.  General 
 87.15  assistance medical care applicants and recipients must cooperate 
 87.16  by providing information about any group health plan in which 
 87.17  they may be eligible to enroll.  They must cooperate with the 
 87.18  state and local agency in determining if the plan is 
 87.19  cost-effective.  For purposes of this subdivision, coverage 
 87.20  provided by the Minnesota comprehensive health association under 
 87.21  chapter 62E shall not be considered group health plan coverage 
 87.22  or cost-effective by the state and local agency.  If the plan is 
 87.23  determined cost-effective and the premium will be paid by the 
 87.24  state or local agency or is available at no cost to the person, 
 87.25  they must enroll or remain enrolled in the group health plan.  
 87.26  Cost-effective insurance premiums approved for payment by the 
 87.27  state agency and paid by the local agency are eligible for 
 87.28  reimbursement according to subdivision 6. 
 87.29     (b) Effective for all premiums due on or after June 30, 
 87.30  1997, general assistance medical care does not cover premiums 
 87.31  that a recipient is required to pay under a qualified or 
 87.32  Medicare supplement plan issued by the Minnesota comprehensive 
 87.33  health association. 
 87.34     Sec. 8.  Minnesota Statutes 1996, section 295.58, is 
 87.35  amended to read: 
 87.36     295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
 88.1      (a) The commissioner shall deposit all revenues, including 
 88.2   penalties and interest, derived from the taxes imposed by 
 88.3   sections 295.50 to 295.57 and from the insurance premiums tax on 
 88.4   health maintenance organizations, community integrated service 
 88.5   networks, integrated service networks, and nonprofit health 
 88.6   service plan corporations in the health care access fund in the 
 88.7   state treasury.  Refunds of overpayments must be paid from the 
 88.8   health care access fund in the state treasury.  There is 
 88.9   annually appropriated from the health care access fund to the 
 88.10  commissioner of revenue the amount necessary to make any refunds 
 88.11  required under section 295.54. 
 88.12     (b) The revenues, including penalties and interest, derived 
 88.13  from the tax on insurance premiums imposed by section 60A.15 on 
 88.14  health maintenance organizations, community integrated service 
 88.15  networks, and nonprofit health service plan corporations must be 
 88.16  deposited in the general fund and are annually appropriated to 
 88.17  the Minnesota comprehensive health association to offset 
 88.18  assessments made to subsidize the costs of the Minnesota 
 88.19  comprehensive insurance plan established under chapter 62E. 
 88.20     Sec. 9.  [EFFECTIVE DATE.] 
 88.21     Sections 1 to 7 are effective the day following final 
 88.22  enactment.  Section 8 is effective for revenues attributable to 
 88.23  taxes due after June 30, 1997. 
 88.24                             ARTICLE 6 
 88.25                         RURAL HEALTH CARE 
 88.26     Section 1.  Minnesota Statutes 1996, section 62Q.19, 
 88.27  subdivision 1, is amended to read: 
 88.28     Subdivision 1.  [DESIGNATION.] The commissioner shall 
 88.29  designate essential community providers.  The criteria for 
 88.30  essential community provider designation shall be the following: 
 88.31     (1) a demonstrated ability to integrate applicable 
 88.32  supportive and stabilizing services with medical care for 
 88.33  uninsured persons and high-risk and special needs populations as 
 88.34  defined in section 62Q.07, subdivision 2, paragraph (e), 
 88.35  underserved, and other special needs populations; and 
 88.36     (2) a commitment to serve low-income and underserved 
 89.1   populations by meeting the following requirements: 
 89.2      (i) has nonprofit status in accordance with chapter 317A; 
 89.3      (ii) has tax exempt status in accordance with the Internal 
 89.4   Revenue Service Code, section 501(c)(3); 
 89.5      (iii) charges for services on a sliding fee schedule based 
 89.6   on current poverty income guidelines; and 
 89.7      (iv) does not restrict access or services because of a 
 89.8   client's financial limitation; 
 89.9      (3) status as a local government unit as defined in section 
 89.10  62D.02, subdivision 11, a hospital district created or 
 89.11  reorganized under sections 447.31 to 447.37, an Indian tribal 
 89.12  government, an Indian health service unit, or a community health 
 89.13  board as defined in chapter 145A; or 
 89.14     (4) status as a former state hospital that specializes in 
 89.15  the treatment of cerebral palsy, spina bifida, epilepsy, closed 
 89.16  head injuries, specialized orthopedic problems, and other 
 89.17  disabling conditions; or 
 89.18     (5) status as a rural hospital that qualifies for a sole 
 89.19  community hospital financial assistance grant under section 
 89.20  144.1484, subdivision 1.  
 89.21     Prior to designation, the commissioner shall publish the 
 89.22  names of all applicants in the State Register.  The public shall 
 89.23  have 30 days from the date of publication to submit written 
 89.24  comments to the commissioner on the application.  No designation 
 89.25  shall be made by the commissioner until the 30-day period has 
 89.26  expired. 
 89.27     The commissioner may designate an eligible provider as an 
 89.28  essential community provider for all the services offered by 
 89.29  that provider or for specific services designated by the 
 89.30  commissioner. 
 89.31     For the purpose of this subdivision, supportive and 
 89.32  stabilizing services include at a minimum, transportation, child 
 89.33  care, cultural, and linguistic services where appropriate. 
 89.34     Sec. 2.  Minnesota Statutes 1996, section 136A.1355, 
 89.35  subdivision 1, is amended to read: 
 89.36     Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
 90.1   education account is established in the health care access 
 90.2   fund.  The higher education services office shall use money from 
 90.3   the account to establish a loan forgiveness program for 
 90.4   medical students residents agreeing to practice in designated 
 90.5   rural areas, as defined by the commissioner. 
 90.6      Sec. 3.  Minnesota Statutes 1996, section 136A.1355, 
 90.7   subdivision 2, is amended to read: 
 90.8      Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
 90.9   the program, a prospective physician must submit a letter of 
 90.10  interest to the higher education services office.  A student or 
 90.11  resident who is accepted must sign a contract to agree to serve 
 90.12  at least three of the first five years following residency in a 
 90.13  designated rural area. 
 90.14     Sec. 4.  Minnesota Statutes 1996, section 136A.1355, 
 90.15  subdivision 3, is amended to read: 
 90.16     Subd. 3.  [LOAN FORGIVENESS.] For fiscal years beginning on 
 90.17  and after July 1, 1995, the higher education services office may 
 90.18  accept up to four applicants who are fourth year medical 
 90.19  students, three 12 applicants who are medical residents, four 
 90.20  applicants who are pediatric residents, and four six applicants 
 90.21  who are family practice residents, and one applicant who is an 
 90.22  two applicants who are internal medicine resident residents, per 
 90.23  fiscal year for participation in the loan forgiveness program.  
 90.24  If the higher education services office does not receive enough 
 90.25  applicants per fiscal year to fill the number of residents in 
 90.26  the specific areas of practice, the resident applicants may be 
 90.27  from any area of practice.  The eight 12 resident applicants may 
 90.28  be in any year of training; however, priority must be given to 
 90.29  the following categories of residents in descending order:  
 90.30  third year residents, second year residents, and first year 
 90.31  residents.  Applicants are responsible for securing their own 
 90.32  loans.  Applicants chosen to participate in the loan forgiveness 
 90.33  program may designate for each year of medical school, up to a 
 90.34  maximum of four years, an agreed amount, not to exceed $10,000, 
 90.35  as a qualified loan.  For each year that a participant serves as 
 90.36  a physician in a designated rural area, up to a maximum of four 
 91.1   years, the higher education services office shall annually pay 
 91.2   an amount equal to one year of qualified loans.  Participants 
 91.3   who move their practice from one designated rural area to 
 91.4   another remain eligible for loan repayment.  In addition, if a 
 91.5   resident participating in the loan forgiveness program serves at 
 91.6   least four weeks during a year of residency substituting for a 
 91.7   rural physician to temporarily relieve the rural physician of 
 91.8   rural practice commitments to enable the rural physician to take 
 91.9   a vacation, engage in activities outside the practice area, or 
 91.10  otherwise be relieved of rural practice commitments, the 
 91.11  participating resident may designate up to an additional $2,000, 
 91.12  above the $10,000 maximum, for each year of residency during 
 91.13  which the resident substitutes for a rural physician for four or 
 91.14  more weeks. 
 91.15     Sec. 5.  Minnesota Statutes 1996, section 136A.1355, 
 91.16  subdivision 5, is amended to read: 
 91.17     Subd. 5.  [LOAN FORGIVENESS; UNDERSERVED URBAN 
 91.18  COMMUNITIES.] For fiscal years beginning on and after July 1, 
 91.19  1995, the higher education services office may accept up to four 
 91.20  applicants who are either fourth year medical students, or 
 91.21  residents in family practice, pediatrics, or internal medicine 
 91.22  per fiscal year for participation in the urban primary care 
 91.23  physician loan forgiveness program.  The resident applicants may 
 91.24  be in any year of residency training; however, priority will be 
 91.25  given to the following categories of residents in descending 
 91.26  order:  third year residents, second year residents, and first 
 91.27  year residents.  If the higher education services office does 
 91.28  not receive enough qualified applicants per fiscal year to fill 
 91.29  the number of slots for urban underserved communities, the slots 
 91.30  may be allocated to students or residents who have applied for 
 91.31  the rural physician loan forgiveness program in subdivision 1.  
 91.32  Applicants are responsible for securing their own loans.  For 
 91.33  purposes of this provision, "qualifying educational loans" are 
 91.34  government and commercial loans for actual costs paid for 
 91.35  tuition, reasonable education expenses, and reasonable living 
 91.36  expenses related to the graduate or undergraduate education of a 
 92.1   health care professional.  Applicants chosen to participate in 
 92.2   the loan forgiveness program may designate for each year of 
 92.3   medical school, up to a maximum of four years, an agreed amount, 
 92.4   not to exceed $10,000, as a qualified loan.  For each year that 
 92.5   a participant serves as a physician in a designated underserved 
 92.6   urban area, up to a maximum of four years, the higher education 
 92.7   services office shall annually pay an amount equal to one year 
 92.8   of qualified loans.  Participants who move their practice from 
 92.9   one designated underserved urban community to another remain 
 92.10  eligible for loan repayment. 
 92.11     Sec. 6.  Minnesota Statutes 1996, section 144.1465, is 
 92.12  amended to read: 
 92.13     144.1465 [FINDING AND PURPOSE.] 
 92.14     The legislature finds that rural hospitals are an integral 
 92.15  part of the health care delivery system and are fundamental to 
 92.16  the development of a sound rural economy.  The legislature 
 92.17  further finds that access to rural health care must be assured 
 92.18  to all Minnesota residents.  The rural health care system is 
 92.19  undergoing a restructuring that threatens to jeopardize access 
 92.20  in rural areas to quality health services.  To assure continued 
 92.21  rural health care access the legislature proposes to establish a 
 92.22  grant program to assist rural hospitals and their communities 
 92.23  with the development of strategic plans and transition projects, 
 92.24  provide subsidies for geographically isolated hospitals facing 
 92.25  closure, that encourage and maintain the development of rural 
 92.26  health networks, support cooperative efforts among hospitals to 
 92.27  restructure the delivery of health care services towards 
 92.28  outpatient care, develop telemedicine relationships, encourage 
 92.29  the appropriate consolidation of rural hospital emergency 
 92.30  services, and examine the problem of support efforts at 
 92.31  recruitment and retention of rural physicians, nurses, and other 
 92.32  allied health care professionals.  The legislature also proposes 
 92.33  to establish a grant program to provide subsidies for 
 92.34  geographically isolated rural hospitals facing closure.  
 92.35     Sec. 7.  Minnesota Statutes 1996, section 144.147, 
 92.36  subdivision 1, is amended to read: 
 93.1      Subdivision 1.  [DEFINITION.] "Eligible rural hospital" 
 93.2   means any nonfederal, general acute care hospital that: 
 93.3      (1) is either located in a rural area, as defined in the 
 93.4   federal Medicare regulations, Code of Federal Regulations, title 
 93.5   42, section 405.1041, or located in a community with a 
 93.6   population of less than 5,000, according to United States Census 
 93.7   Bureau statistics, outside the seven-county metropolitan area; 
 93.8      (2) has 100 50 or fewer beds; and 
 93.9      (3) is not for profit; and 
 93.10     (4) has not been awarded a grant under the federal rural 
 93.11  health transition grant program, which would be received 
 93.12  concurrently with any portion of the grant period for this 
 93.13  program. 
 93.14     Sec. 8.  Minnesota Statutes 1996, section 144.147, 
 93.15  subdivision 2, is amended to read: 
 93.16     Subd. 2.  [GRANTS AUTHORIZED.] The commissioner shall 
 93.17  establish a program of grants to assist eligible rural 
 93.18  hospitals.  The commissioner shall award grants to hospitals and 
 93.19  communities for the purposes set forth in paragraphs (a) and (b).
 93.20     (a) Grants may be used by hospitals and their communities 
 93.21  to develop strategic plans for preserving or enhancing access to 
 93.22  health services.  At a minimum, a strategic plan must consist of:
 93.23     (1) a needs assessment to determine what health services 
 93.24  are needed and desired by the community.  The assessment must 
 93.25  include interviews with or surveys of area health professionals, 
 93.26  local community leaders, and public hearings; 
 93.27     (2) an assessment of the feasibility of providing needed 
 93.28  health services that identifies priorities and timeliness for 
 93.29  potential changes; and 
 93.30     (3) an implementation plan.  
 93.31     The strategic plan must be developed by a committee that 
 93.32  includes representatives from the hospital, local public health 
 93.33  agencies, other health providers, and consumers from the 
 93.34  community.  
 93.35     (b) The grants may also be used by eligible rural hospitals 
 93.36  that have developed strategic plans to implement transition 
 94.1   projects to modify the type and extent of services provided, in 
 94.2   order to reflect the needs of that plan.  Grants may be used by 
 94.3   hospitals under this paragraph to develop hospital-based 
 94.4   physician practices that integrate hospital and existing medical 
 94.5   practice facilities that agree to transfer their practices, 
 94.6   equipment, staffing, and administration to the hospital.  The 
 94.7   grants may also be used by the hospital to establish a health 
 94.8   provider cooperative, a telemedicine system, or a rural health 
 94.9   care system.  Not more than one-third of any grant shall be used 
 94.10  to offset losses incurred by physicians agreeing to transfer 
 94.11  their practices to hospitals.  
 94.12     Sec. 9.  Minnesota Statutes 1996, section 144.147, 
 94.13  subdivision 3, is amended to read: 
 94.14     Subd. 3.  [CONSIDERATION OF GRANTS.] In determining which 
 94.15  hospitals will receive grants under this section, the 
 94.16  commissioner shall take into account:  
 94.17     (1) improving community access to hospital or health 
 94.18  services; 
 94.19     (2) changes in service populations; 
 94.20     (3) demand for ambulatory and emergency services; 
 94.21     (4) the extent that the health needs of the community are 
 94.22  not currently being met by other providers in the service area; 
 94.23     (5) the need to recruit and retain health professionals; 
 94.24     (6) the involvement and extent of community support of the 
 94.25  community and local health care providers; and 
 94.26     (7) the coordination with local community organizations, 
 94.27  such as community development and public health agencies; and 
 94.28     (8) the financial condition of the hospital. 
 94.29     Sec. 10.  Minnesota Statutes 1996, section 144.147, 
 94.30  subdivision 4, is amended to read: 
 94.31     Subd. 4.  [ALLOCATION OF GRANTS.] (a) Eligible hospitals 
 94.32  must apply to the commissioner no later than September 1 of each 
 94.33  fiscal year for grants awarded for that fiscal year.  A grant 
 94.34  may be awarded upon signing of a grant contract. 
 94.35     (b) The commissioner must make a final decision on the 
 94.36  funding of each application within 60 days of the deadline for 
 95.1   receiving applications. 
 95.2      (c) Each relevant community health board has 30 days in 
 95.3   which to review and comment to the commissioner on grant 
 95.4   applications from hospitals in their community health service 
 95.5   area. 
 95.6      (d) In determining which hospitals will receive grants 
 95.7   under this section, the commissioner shall consider the 
 95.8   following factors: 
 95.9      (1) Description of the problem, description of the project, 
 95.10  and the likelihood of successful outcome of the project.  The 
 95.11  applicant must explain clearly the nature of the health services 
 95.12  problems in their service area, how the grant funds will be 
 95.13  used, what will be accomplished, and the results expected.  The 
 95.14  applicant should describe achievable objectives, a timetable, 
 95.15  and roles and capabilities of responsible individuals and 
 95.16  organizations. 
 95.17     (2) The extent of community support for the hospital and 
 95.18  this proposed project.  The applicant should demonstrate support 
 95.19  for the hospital and for the proposed project from other local 
 95.20  health service providers and from local community and government 
 95.21  leaders.  Evidence of such support may include past commitments 
 95.22  of financial support from local individuals, organizations, or 
 95.23  government entities; and commitment of financial support, 
 95.24  in-kind services or cash, for this project. 
 95.25     (3) The comments, if any, resulting from a review of the 
 95.26  application by the community health board in whose community 
 95.27  health service area the hospital is located. 
 95.28     (e) In evaluating applications, the commissioner shall 
 95.29  score each application on a 100 point scale, assigning the 
 95.30  maximum of 70 points for an applicant's understanding of the 
 95.31  problem, description of the project, and likelihood of 
 95.32  successful outcome of the project; and a maximum of 30 points 
 95.33  for the extent of community support for the hospital and this 
 95.34  project.  The commissioner may also take into account other 
 95.35  relevant factors. 
 95.36     (f) A grant to a hospital, including hospitals that submit 
 96.1   applications as consortia, may not exceed $37,500 $50,000 a year 
 96.2   and may not exceed a term of two years.  Prior to the receipt of 
 96.3   any grant, the hospital must certify to the commissioner that at 
 96.4   least one-half of the amount, which may include in-kind 
 96.5   services, is available for the same purposes from nonstate 
 96.6   sources.  A hospital receiving a grant under this section may 
 96.7   use the grant for any expenses incurred in the development of 
 96.8   strategic plans or the implementation of transition projects 
 96.9   with respect to which the grant is made.  Project grants may not 
 96.10  be used to retire debt incurred with respect to any capital 
 96.11  expenditure made prior to the date on which the project is 
 96.12  initiated. 
 96.13     (g) The commissioner may adopt rules to implement this 
 96.14  section. 
 96.15     Sec. 11.  [144.1475] [RURAL HOSPITAL DEMONSTRATION 
 96.16  PROJECT.] 
 96.17     Subdivision 1.  [LEGISLATIVE PURPOSE.] The legislature 
 96.18  finds that some rural hospitals in close proximity to other like 
 96.19  hospitals are at risk of either closing or reducing operations.  
 96.20  The legislature further finds that it is in the interest of all 
 96.21  Minnesotans to move toward an efficient and cooperative rural 
 96.22  health care delivery system.  Therefore, the legislature 
 96.23  believes it is important to implement a demonstration project to 
 96.24  assist rural hospitals in consolidating or cooperating with one 
 96.25  another. 
 96.26     Subd. 2.  [ESTABLISHMENT.] The commissioner of health, for 
 96.27  the biennium ending June 30, 1999, shall establish at least 
 96.28  three demonstration projects per fiscal year to assist rural 
 96.29  hospitals in the planning and implementation process to either 
 96.30  consolidate or cooperate with another existing hospital in its 
 96.31  service area to provide better quality health care to its 
 96.32  community.  A demonstration project must include at least two 
 96.33  eligible hospitals.  For purposes of this section, an "eligible 
 96.34  hospital" means a hospital that:  
 96.35     (1) is located outside the seven-county metropolitan area; 
 96.36     (2) has 50 or fewer licensed beds; and 
 97.1      (3) is located within a 25-mile radius of another hospital. 
 97.2      At least one of the eligible hospitals in a demonstration 
 97.3   project must have had a negative operating margin during one of 
 97.4   the two years prior to application.  
 97.5      Subd. 3.  [APPLICATION.] (a) An eligible hospital seeking 
 97.6   to be a participant in a demonstration project must submit an 
 97.7   application to the commissioner of health detailing the 
 97.8   hospital's efforts to consolidate health care delivery in its 
 97.9   service area, cooperate with another hospital in the delivery of 
 97.10  health care, or both consolidate and cooperate.  Applications 
 97.11  must be submitted by October 15 of each fiscal year for grants 
 97.12  awarded for that fiscal year. 
 97.13     (b) Applications must:  
 97.14     (1) describe the problem that the proposed consolidation or 
 97.15  cooperation will address, the consolidation or cooperation 
 97.16  project, how the grant funds will be used, what will be 
 97.17  accomplished, and the results expected; 
 97.18     (2) describe achievable objectives, a time table, and the 
 97.19  roles and capabilities of responsible individuals and 
 97.20  organizations; 
 97.21     (3) include written commitments from the applicant hospital 
 97.22  and at least one other hospital that will participate in the 
 97.23  consolidation or cooperation demonstration project, that specify 
 97.24  the activities the organization will undertake during the 
 97.25  project, the resources the organization will contribute to the 
 97.26  demonstration project, and the expected role and nature of the 
 97.27  organization's involvement in proposed consolidation or 
 97.28  cooperation activities; and 
 97.29     (4) provide evidence of support for the proposed project 
 97.30  from other local health service providers and from local 
 97.31  community and government leaders. 
 97.32     Subd. 4.  [GRANTS.] The commissioner of health shall 
 97.33  allocate a grant of up to $100,000 to the highest scoring 
 97.34  applicants each year until available funding is expended.  
 97.35  Grants may be used by eligible hospitals to: 
 97.36     (1) conduct consolidation or cooperation negotiations; 
 98.1      (2) develop consolidation or cooperation plans, including 
 98.2   financial plans and architectural designs; 
 98.3      (3) seek community input and conduct community education on 
 98.4   proposed or planned consolidations or cooperative activities; 
 98.5   and 
 98.6      (4) implement consolidation or cooperation plans. 
 98.7      Subd. 5.  [CONSIDERATION OF GRANTS.] In evaluating 
 98.8   applications, the commissioner shall score each application on a 
 98.9   100-point scale, assigning:  a maximum of 40 points for an 
 98.10  applicant's understanding of the problem, description of the 
 98.11  project, and likelihood of successful outcome of the project; a 
 98.12  maximum of 30 points for explicit and unequivocal written 
 98.13  commitments from organizations participating in the project; a 
 98.14  maximum of 20 points for matching funds or in-kind services 
 98.15  committed by the applicant or others to the project; and a 
 98.16  maximum of 10 points for the extent of community support for the 
 98.17  project.  The commissioner shall consider the comments, if any, 
 98.18  resulting from a review of the application by the community 
 98.19  health board in whose community health service area the 
 98.20  applicant is located.  The commissioner may also take into 
 98.21  account other relevant factors. 
 98.22     Subd. 6.  [EVALUATION.] The commissioner of health shall 
 98.23  evaluate the overall effectiveness of the demonstration projects 
 98.24  and report to the legislature by September 1, 2000.  The 
 98.25  commissioner may collect, from the hospitals receiving grants, 
 98.26  any information necessary to evaluate the demonstration project. 
 98.27     Sec. 12.  [144.148] [RURAL HOSPITAL CAPITAL IMPROVEMENT 
 98.28  GRANT AND LOAN PROGRAM.] 
 98.29     Subdivision 1.  [PURPOSE.] The legislature finds that 
 98.30  Minnesota's rural hospital community is in need of modernization 
 98.31  to continue providing quality health care to Minnesota 
 98.32  residents.  Furthermore, funds needed for modernization projects 
 98.33  to update, remodel, and replace aging facilities and equipment 
 98.34  are scarce due to reductions in reimbursements from both public 
 98.35  and private payers.  Therefore, the legislature finds that it is 
 98.36  imperative to establish a rural hospital capital improvement 
 99.1   grant and loan program to ensure all health care delivered in 
 99.2   Minnesota is of the highest quality.  
 99.3      Subd. 2.  [DEFINITION.] (a) For purposes of this section, 
 99.4   the following definitions apply. 
 99.5      (b) "Eligible rural hospital" means a hospital that: 
 99.6      (1) is located outside the seven-county metropolitan area; 
 99.7      (2) has 50 or fewer licensed hospital beds with a net 
 99.8   hospital operating margin not greater than two percent in the 
 99.9   two fiscal years prior to application; and 
 99.10     (3) is 25 miles or more from another hospital. 
 99.11     (c) "Eligible project" means a modernization project to 
 99.12  update, remodel, or replace aging hospital facilities and 
 99.13  equipment necessary to maintain the operations of a hospital. 
 99.14     Subd. 3.  [PROGRAM.] The commissioner of health shall award 
 99.15  rural hospital capital improvement grants or loans to eligible 
 99.16  rural hospitals.  A grant or loan shall not exceed $1,500,000 
 99.17  per hospital.  Grants or loans shall be interest free.  An 
 99.18  eligible rural hospital may apply the funds retroactively to 
 99.19  capital improvements made during the two fiscal years preceding 
 99.20  the fiscal year in which the grant or loan was received, 
 99.21  provided the hospital met the eligibility criteria during that 
 99.22  time period.  
 99.23     Subd. 4.  [APPLICATIONS.] Eligible hospitals seeking a 
 99.24  grant or loan shall apply to the commissioner.  Applications 
 99.25  must include a description of the problem that the proposed 
 99.26  project will address, a description of the project including 
 99.27  construction and remodeling drawings or specifications, sources 
 99.28  of funds for the project, uses of funds for the project, the 
 99.29  results expected, and a plan to maintain or operate any facility 
 99.30  or equipment included in the project.  The applicant must 
 99.31  describe achievable objectives, a timetable, and roles and 
 99.32  capabilities of responsible individuals and organizations.  
 99.33  Applicants must submit to the commissioner evidence that 
 99.34  competitive bidding was used to select contractors for the 
 99.35  project.  
 99.36     Subd. 5.  [CONSIDERATION OF APPLICATIONS.] The commissioner 
100.1   shall review each application to determine whether or not the 
100.2   hospital's application is complete and whether the hospital and 
100.3   the project are eligible for a grant or loan.  In evaluating 
100.4   applications, the commissioner shall score each application on a 
100.5   100-point scale, assigning:  a maximum of 40 points for an 
100.6   applicant's clarity and thoroughness in describing the problem 
100.7   and the project; a maximum of 40 points for the extent to which 
100.8   the applicant has demonstrated that the applicant has made 
100.9   adequate provisions to assure proper and efficient operation of 
100.10  the facility once the project is completed; and a maximum of 20 
100.11  points for the extent to which the proposed project is 
100.12  consistent with the hospital's capital improvement plan or 
100.13  strategic plan.  The commissioner may also take into account 
100.14  other relevant factors.  During application review, the 
100.15  commissioner may request additional information about a proposed 
100.16  project, including information on project cost.  Failure to 
100.17  provide the information requested disqualifies a loan applicant. 
100.18     Subd. 6.  [PROGRAM OVERSIGHT.] The commissioner of health 
100.19  shall review audited financial information of the hospital to 
100.20  assess eligibility.  The commissioner shall determine the amount 
100.21  of a grant or loan to be given to an eligible rural hospital 
100.22  based on the relative score of each eligible hospital's 
100.23  application and the funds available to the commissioner.  The 
100.24  grant or loan shall be used to update, remodel, or replace aging 
100.25  facilities and equipment necessary to maintain the operations of 
100.26  the hospital.  
100.27     Subd. 7.  [LOAN PAYMENT.] Loans shall be repaid as provided 
100.28  in this subdivision over a period of 15 years.  In those years 
100.29  when an eligible rural hospital experiences a positive net 
100.30  operating margin in excess of two percent, the eligible rural 
100.31  hospital shall pay to the state one-half of the excess above two 
100.32  percent, up to the yearly payment amount based upon a loan 
100.33  period of 15 years.  If the amount paid back in any year is less 
100.34  than the yearly payment amount, or if no payment is required 
100.35  because the eligible rural hospital does not experience a 
100.36  positive net operating margin in excess of two percent, the 
101.1   amount unpaid for that year shall be forgiven by the state 
101.2   without any financial penalty.  As a condition of receiving an 
101.3   award through this program, eligible hospitals must agree to any 
101.4   and all collection activities the commissioner finds necessary 
101.5   to collect loan payments in those years a payment is due. 
101.6      Subd. 8.  [ACCOUNTING TREATMENT.] The commissioner of 
101.7   finance shall record as grants in the state accounting system 
101.8   funds obligated by this section.  Loan payments received under 
101.9   this section shall be deposited in the health care access fund. 
101.10     Subd. 9.  [EXPIRATION.] This section expires June 30, 1998. 
101.11     Sec. 13.  Minnesota Statutes 1996, section 144.1484, 
101.12  subdivision 1, is amended to read: 
101.13     Subdivision 1.  [SOLE COMMUNITY HOSPITAL FINANCIAL 
101.14  ASSISTANCE GRANTS.] The commissioner of health shall award 
101.15  financial assistance grants to rural hospitals in isolated areas 
101.16  of the state.  To qualify for a grant, a hospital must:  (1) be 
101.17  eligible to be classified as a sole community hospital according 
101.18  to the criteria in Code of Federal Regulations, title 42, 
101.19  section 412.92 or be located in a community with a population of 
101.20  less than 5,000 and located more than 25 miles from a like 
101.21  hospital currently providing acute short-term services; (2) have 
101.22  experienced net operating income losses in the two of the 
101.23  previous three most recent consecutive hospital fiscal years for 
101.24  which audited financial information is available; (3) consist of 
101.25  40 or fewer licensed beds; and (4) demonstrate to the 
101.26  commissioner that it has obtained local support for the hospital 
101.27  and that any state support awarded under this program will not 
101.28  be used to supplant local support for the hospital.  The 
101.29  commissioner shall review audited financial statements of the 
101.30  hospital to assess the extent of local support.  Evidence of 
101.31  local support may include bonds issued by a local government 
101.32  entity such as a city, county, or hospital district for the 
101.33  purpose of financing hospital projects; and loans, grants, or 
101.34  donations to the hospital from local government entities, 
101.35  private organizations, or individuals.  The commissioner shall 
101.36  determine the amount of the award to be given to each eligible 
102.1   hospital based on the hospital's operating loss margin (total 
102.2   operating losses as a percentage of total operating revenue) for 
102.3   the two of the previous three most recent consecutive fiscal 
102.4   years for which audited financial information is available and 
102.5   the total amount of funding available.  For purposes of 
102.6   calculating a hospital's operating loss margin, total operating 
102.7   revenue does not include grant funding provided under this 
102.8   subdivision.  One hundred percent of the available funds will be 
102.9   disbursed proportionately based on the operating loss margins of 
102.10  the eligible hospitals. 
102.11     Sec. 14.  [EFFECTIVE DATE.] 
102.12     Sections 11 and 12 are effective July 1, 1997. 
102.13                             ARTICLE 7 
102.14                           APPROPRIATIONS 
102.15  Section 1.  [APPROPRIATIONS.] 
102.16     Except as otherwise provided in this act, the sums set 
102.17  forth in the columns designated "fiscal year 1998" and "fiscal 
102.18  year 1999" are appropriated from the general fund, or other 
102.19  named fund, to the agencies for the purposes specified in this 
102.20  act for the fiscal years ending June 30, 1998, and June 30, 1999.
102.21                          SUMMARY BY FUND
102.22                            1998          1999           TOTAL
102.23  Health Care 
102.24  Access Fund          $109,415,000   $139,192,000   $248,606,000
102.25  Subdivision 1.  Department of Human 
102.26  Services 
102.27  Health Care
102.28  Access Fund            $ 92,409,000  $126,542,000  $218,950,000
102.29  Of this appropriation, $1,248,000 in 
102.30  fiscal year 1998 is to be transferred 
102.31  to the medical assistance program for 
102.32  the cost of increased enrollment in the 
102.33  Qualified Medicare Beneficiary and 
102.34  Services Limited Medicare Beneficiary 
102.35  programs resulting from implementation 
102.36  of the senior drug program. 
102.37  Subd. 2.  Department of Health 
102.38  Health Care 
102.39  Access Fund          $ 12,668,000   $  8,265,000   $ 20,933,000
102.40  Health care access fund appropriations 
102.41  for student loan forgiveness programs 
102.42  for health care providers are available 
102.43  for either year of the biennium. 
103.1   Subd. 3.  University of Minnesota 
103.2   Health Care 
103.3   Access Fund               2,592,000     2,592,000     5,184,000
103.4   $470,000 is appropriated to the board 
103.5   of regents of the University of 
103.6   Minnesota for the biennium ending June 
103.7   30, 1999, for primary care physician 
103.8   education and training under Minnesota 
103.9   Statutes, sections 137.38 to 137.40.  
103.10  This appropriation is in addition to 
103.11  the current base appropriation for 
103.12  these activities and shall become part 
103.13  of the base appropriation for the 
103.14  fiscal year 2000-2001 biennium. 
103.15  Subd. 4.  Department of Revenue 
103.16  Health Care 
103.17  Access Fund               1,621,000     1,668,000     3,289,000
103.18  Subd. 5.  Legislative Coordinating 
103.19  Commission 
103.20  Health Care 
103.21  Access Fund                 125,000       125,000       250,000
103.22  Sec. 2.  TRANSFERS 
103.23  $4,112,000 in fiscal year 1998 and 
103.24  $4,104,000 in fiscal year 1999 are 
103.25  transferred from the health care access 
103.26  fund to the general fund to replace the 
103.27  revenue lost due to the repeal of the 
103.28  $400 physician surcharge. 
103.29  Sec. 3.  CARRYOVER 
103.30  None of the appropriations in this act 
103.31  which are allowed to be carried forward 
103.32  from fiscal year 1998 to fiscal year 
103.33  1999 shall become part of the base 
103.34  level funding for the 2000-2001 
103.35  biennial budget, unless specifically 
103.36  directed by the legislature. 
103.37  Sec. 4.  SUNSET 
103.38  All uncodified language contained in 
103.39  this article expires on June 30, 1999, 
103.40  unless a different expiration is 
103.41  explicit.