1.1                          A bill for an act 
  1.2             relating to Minnesota Comprehensive Health 
  1.3             Association; increasing the minimum premium rate; 
  1.4             authorizing enrollee incentives for participation in a 
  1.5             disease management program; phasing out 
  1.6             Medicare-extended basic supplement plans; modifying 
  1.7             eligibility requirements; amending Minnesota Statutes 
  1.8             2002, sections 62A.65, by adding a subdivision; 
  1.9             62E.10, subdivisions 2, 10; 62E.141; Minnesota 
  1.10            Statutes 2003 Supplement, sections 62E.08, subdivision 
  1.11            1; 62E.091; 62E.12; 62E.14, subdivision 5. 
  1.12  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.13     Section 1.  Minnesota Statutes 2002, section 62A.65, is 
  1.14  amended by adding a subdivision to read: 
  1.15     Subd. 5a.  [GUARANTEED ISSUE; MCHA ENROLLEES.] A health 
  1.16  carrier must offer an individual health plan to any individual 
  1.17  previously covered by the Minnesota Comprehensive Health 
  1.18  Association, so long as the individual maintained continuous 
  1.19  coverage as defined in section 62L.02, was covered by the 
  1.20  association after exhausting continuation coverage provided 
  1.21  under state or federal law, and had health claims for the prior 
  1.22  three-year period in an amount less than the average for an 
  1.23  individual of the same age in this state.  The underwriting and 
  1.24  premium for this coverage must comply with the limitations set 
  1.25  forth in subdivision 5, paragraph (b). 
  1.26     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  1.27  62E.08, subdivision 1, is amended to read: 
  1.28     Subdivision 1.  [ESTABLISHMENT.] The association shall 
  2.1   establish the following maximum premiums to be charged for 
  2.2   membership in the comprehensive health insurance plan: 
  2.3      (a) the premium for the number one qualified plan shall 
  2.4   range from a minimum of 101 115 percent to a maximum of 125 135 
  2.5   percent of the weighted average of rates charged by those 
  2.6   insurers and health maintenance organizations with individuals 
  2.7   enrolled in: 
  2.8      (1) $1,000 annual deductible individual plans of insurance 
  2.9   in force in Minnesota; 
  2.10     (2) individual health maintenance organization contracts of 
  2.11  coverage with a $1,000 annual deductible which are in force in 
  2.12  Minnesota; and 
  2.13     (3) other plans of coverage similar to plans offered by the 
  2.14  association based on generally accepted actuarial principles; 
  2.15     (b) the premium for the number two qualified plan shall 
  2.16  range from a minimum of 101 115 percent to a maximum of 125 135 
  2.17  percent of the weighted average of rates charged by those 
  2.18  insurers and health maintenance organizations with individuals 
  2.19  enrolled in: 
  2.20     (1) $500 annual deductible individual plans of insurance in 
  2.21  force in Minnesota; 
  2.22     (2) individual health maintenance organization contracts of 
  2.23  coverage with a $500 annual deductible which are in force in 
  2.24  Minnesota; and 
  2.25     (3) other plans of coverage similar to plans offered by the 
  2.26  association based on generally accepted actuarial principles; 
  2.27     (c) the premiums for the plans with a $2,000, $5,000, or 
  2.28  $10,000 annual deductible shall range from a minimum of 101 115 
  2.29  percent to a maximum of 125 135 percent of the weighted average 
  2.30  of rates charged by those insurers and health maintenance 
  2.31  organizations with individuals enrolled in: 
  2.32     (1) $2,000, $5,000, or $10,000 annual deductible individual 
  2.33  plans, respectively, in force in Minnesota; and 
  2.34     (2) individual health maintenance organization contracts of 
  2.35  coverage with a $2,000, $5,000, or $10,000 annual deductible, 
  2.36  respectively, which are in force in Minnesota; or 
  3.1      (3) other plans of coverage similar to plans offered by the 
  3.2   association based on generally accepted actuarial principles; 
  3.3      (d) the premium for each type of Medicare supplement plan 
  3.4   required to be offered by the association pursuant to section 
  3.5   62E.12 shall range from a minimum of 101 115 percent to a 
  3.6   maximum of 125 135 percent of the weighted average of rates 
  3.7   charged by those insurers and health maintenance organizations 
  3.8   with individuals enrolled in:  
  3.9      (1) Medicare supplement plans in force in Minnesota; 
  3.10     (2) health maintenance organization Medicare supplement 
  3.11  contracts of coverage which are in force in Minnesota; and 
  3.12     (3) other plans of coverage similar to plans offered by the 
  3.13  association based on generally accepted actuarial principles; 
  3.14  and 
  3.15     (e) the charge for health maintenance organization coverage 
  3.16  shall be based on generally accepted actuarial principles. 
  3.17     The list of insurers and health maintenance organizations 
  3.18  whose rates are used to establish the premium for coverage 
  3.19  offered by the association pursuant to paragraphs (a) to (d) 
  3.20  shall be established by the commissioner on the basis of 
  3.21  information which shall be provided to the association by all 
  3.22  insurers and health maintenance organizations annually at the 
  3.23  commissioner's request.  This information shall include the 
  3.24  number of individuals covered by each type of plan or contract 
  3.25  specified in paragraphs (a) to (d) that is sold, issued, and 
  3.26  renewed by the insurers and health maintenance organizations, 
  3.27  including those plans or contracts available only on a renewal 
  3.28  basis.  The information shall also include the rates charged for 
  3.29  each type of plan or contract.  
  3.30     In establishing premiums pursuant to this section, the 
  3.31  association shall utilize generally accepted actuarial 
  3.32  principles, provided that the association shall not discriminate 
  3.33  in charging premiums based upon sex.  In order to compute a 
  3.34  weighted average for each type of plan or contract specified 
  3.35  under paragraphs (a) to (d), the association shall, using the 
  3.36  information collected pursuant to this subdivision, list 
  4.1   insurers and health maintenance organizations in rank order of 
  4.2   the total number of individuals covered by each insurer or 
  4.3   health maintenance organization.  The association shall then 
  4.4   compute a weighted average of the rates charged for coverage by 
  4.5   all the insurers and health maintenance organizations by: 
  4.6      (1) multiplying the numbers of individuals covered by each 
  4.7   insurer or health maintenance organization by the rates charged 
  4.8   for coverage; 
  4.9      (2) separately summing both the number of individuals 
  4.10  covered by all the insurers and health maintenance organizations 
  4.11  and all the products computed under clause (1); and 
  4.12     (3) dividing the total of the products computed under 
  4.13  clause (1) by the total number of individuals covered.  
  4.14     The association may elect to use a sample of information 
  4.15  from the insurers and health maintenance organizations for 
  4.16  purposes of computing a weighted average.  In no case, however, 
  4.17  may a sample used by the association to compute a weighted 
  4.18  average include information from fewer than the two insurers or 
  4.19  health maintenance organizations highest in rank order.  
  4.20     Sec. 3.  Minnesota Statutes 2003 Supplement, section 
  4.21  62E.091, is amended to read: 
  4.22     62E.091 [APPROVAL OF STATE PLAN PREMIUMS.] 
  4.23     The association shall submit to the commissioner any 
  4.24  premiums it proposes to become effective for coverage under the 
  4.25  comprehensive health insurance plan, pursuant to section 62E.08, 
  4.26  subdivision 3.  No later than 45 days before the effective date 
  4.27  for premiums specified in section 62E.08, subdivision 3, the 
  4.28  commissioner shall approve, modify, or reject the proposed 
  4.29  premiums on the basis of the following criteria:  
  4.30     (a) whether the association has complied with the 
  4.31  provisions of section 62E.11, subdivision 11; 
  4.32     (b) whether the association has submitted the proposed 
  4.33  premiums in a manner which provides sufficient time for 
  4.34  individuals covered under the comprehensive insurance plan to 
  4.35  receive notice of any premium increase no less than 30 days 
  4.36  prior to the effective date of the increase; 
  5.1      (c) the degree to which the association's computations and 
  5.2   conclusions are consistent with section 62E.08; 
  5.3      (d) the degree to which any sample used to compute a 
  5.4   weighted average by the association pursuant to section 62E.08 
  5.5   reasonably reflects circumstances existing in the private 
  5.6   marketplace for individual coverage; 
  5.7      (e) the degree to which a weighted average computed 
  5.8   pursuant to section 62E.08 that uses information pertaining to 
  5.9   individual coverage available only on a renewal basis reflects 
  5.10  the circumstances existing in the private marketplace for 
  5.11  individual coverage; 
  5.12     (f) a comparison of the proposed increases with increases 
  5.13  in the cost of medical care and increases experienced in the 
  5.14  private marketplace for individual coverage; 
  5.15     (g) the financial consequences to enrollees of the proposed 
  5.16  increase; 
  5.17     (h) the actuarially projected effect of the proposed 
  5.18  increase upon both total enrollment in, and the nature of the 
  5.19  risks assumed by, the comprehensive health insurance plan; 
  5.20     (i) the relative solvency of the contributing members; and 
  5.21     (j) other factors deemed relevant by the commissioner. 
  5.22     In no case, however, may the commissioner approve premiums 
  5.23  for those plans of coverage described in section 62E.08, 
  5.24  subdivision 1, paragraphs (a) to (d), that are lower than 101 
  5.25  115 percent or greater than 125 135 percent of the weighted 
  5.26  averages computed by the association pursuant to section 
  5.27  62E.08.  The commissioner shall support a decision to approve, 
  5.28  modify, or reject any premium proposed by the association with 
  5.29  written findings and conclusions addressing each criterion 
  5.30  specified in this section.  If the commissioner does not 
  5.31  approve, modify, or reject the premiums proposed by the 
  5.32  association sooner than 45 days before the effective date for 
  5.33  premiums specified in section 62E.08, subdivision 3, the 
  5.34  premiums proposed by the association under this section become 
  5.35  effective.  
  5.36     Sec. 4.  Minnesota Statutes 2002, section 62E.10, 
  6.1   subdivision 2, is amended to read: 
  6.2      Subd. 2.  [BOARD OF DIRECTORS; ORGANIZATION.] The board of 
  6.3   directors of the association shall be made up of nine members as 
  6.4   follows:  five directors selected by contributing members, 
  6.5   subject to approval by the commissioner, one of whom must be a 
  6.6   health actuary; four public directors selected by the 
  6.7   commissioner, at least two of whom must be plan enrollees and 
  6.8   two of whom must be representatives of employers whose accident 
  6.9   and health insurance premiums are part of the association's 
  6.10  assessment base.  At least two of the public directors shall 
  6.11  reside outside of the seven-county metropolitan area.  Public 
  6.12  members may include licensed insurance agents.  In determining 
  6.13  voting rights at members' meetings, each member shall be 
  6.14  entitled to vote in person or proxy.  The vote shall be a 
  6.15  weighted vote based upon the member's cost of self-insurance, 
  6.16  accident and health insurance premium, subscriber contract 
  6.17  charges, health maintenance contract payment, or community 
  6.18  integrated service network payment derived from or on behalf of 
  6.19  Minnesota residents in the previous calendar year, as determined 
  6.20  by the commissioner.  In approving directors of the board, the 
  6.21  commissioner shall consider, among other things, whether all 
  6.22  types of members are fairly represented.  Directors selected by 
  6.23  contributing members may be reimbursed from the money of the 
  6.24  association for expenses incurred by them as directors, but 
  6.25  shall not otherwise be compensated by the association for their 
  6.26  services.  The costs of conducting meetings of the association 
  6.27  and its board of directors shall be borne by members of the 
  6.28  association. 
  6.29     <b>[EFFECTIVE DATE.]</b> This section is effective July 1, 2004. 
  6.30     Sec. 5.  Minnesota Statutes 2002, section 62E.10, 
  6.31  subdivision 10, is amended to read: 
  6.32     Subd. 10.  [COST CONTAINMENT GOALS.] (a) By July 1, 2001, 
  6.33  the association shall investigate managed care delivery systems, 
  6.34  and if cost effective, enter into contracts with third-party 
  6.35  entities as provided in section 62E.101. 
  6.36     (b) By July 1, 2001, the association shall establish a 
  7.1   system to annually identify individuals insured by the Minnesota 
  7.2   Comprehensive Health Association who may be eligible for private 
  7.3   health care coverage, medical assistance, state drug programs, 
  7.4   or other state or federal programs and notify them about their 
  7.5   eligibility for these programs. 
  7.6      (c) The association shall endeavor to reduce health care 
  7.7   costs using additional methods consistent with effective patient 
  7.8   care.  At a minimum, by July 1, 2001, the association shall: 
  7.9      (1) develop a focused chronic disease management and case 
  7.10  management program; 
  7.11     (2) develop a comprehensive program of preventive care; and 
  7.12     (3) implement a total drug formulary program. 
  7.13     The association may provide an incentive for enrollee 
  7.14  participation in the chronic disease management and case 
  7.15  management program developed under this section.  
  7.16     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
  7.17  62E.12, is amended to read: 
  7.18     62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE 
  7.19  PLAN.] 
  7.20     (a) The association through its comprehensive health 
  7.21  insurance plan shall offer policies which provide the benefits 
  7.22  of a number one qualified plan and a number two qualified plan, 
  7.23  except that the maximum lifetime benefit on these plans shall be 
  7.24  $2,800,000; and an extended basic Medicare supplement plan and a 
  7.25  basic Medicare supplement plan as described in sections 62A.31 
  7.26  to 62A.44.  The association may also offer a plan that is 
  7.27  identical to a number one and number two qualified plan except 
  7.28  that it has a $2,000 annual deductible and a $2,800,000 maximum 
  7.29  lifetime benefit.  The association, subject to the approval of 
  7.30  the commissioner, may also offer plans that are identical to the 
  7.31  number one or number two qualified plan, except that they have 
  7.32  annual deductibles of $5,000 and $10,000, respectively; have 
  7.33  limitations on total annual out-of-pocket expenses equal to 
  7.34  those annual deductibles and therefore cover 100 percent of the 
  7.35  allowable cost of covered services in excess of those annual 
  7.36  deductibles; and have a $2,800,000 maximum lifetime benefit.  As 
  8.1   of January 1, 2006, the association shall no longer be required 
  8.2   to offer an extended basic Medicare supplement plan.  
  8.3      (b) The requirement that a policy issued by the association 
  8.4   must be a qualified plan is satisfied if the association 
  8.5   contracts with a preferred provider network and the level of 
  8.6   benefits for services provided within the network satisfies the 
  8.7   requirements of a qualified plan.  If the association uses a 
  8.8   preferred provider network, payments to nonparticipating 
  8.9   providers must meet the minimum requirements of section 72A.20, 
  8.10  subdivision 15.  
  8.11     (c) The association shall offer health maintenance 
  8.12  organization contracts in those areas of the state where a 
  8.13  health maintenance organization has agreed to make the coverage 
  8.14  available and has been selected as a writing carrier.  
  8.15     (d) Notwithstanding the provisions of section 62E.06 and 
  8.16  unless those charges are billed by a provider that is part of 
  8.17  the association's preferred provider network, the state plan 
  8.18  shall exclude coverage of services of a private duty nurse other 
  8.19  than on an inpatient basis and any charges for treatment in a 
  8.20  hospital located outside of the state of Minnesota in which the 
  8.21  covered person is receiving treatment for a mental or nervous 
  8.22  disorder, unless similar treatment for the mental or nervous 
  8.23  disorder is medically necessary, unavailable in Minnesota and 
  8.24  provided upon referral by a licensed Minnesota medical 
  8.25  practitioner. 
  8.26     Sec. 7.  Minnesota Statutes 2003 Supplement, section 
  8.27  62E.14, subdivision 5, is amended to read: 
  8.28     Subd. 5.  [TERMINATED EMPLOYEES.] An employee who is 
  8.29  voluntarily or involuntarily terminated or laid off from 
  8.30  employment and unable to exercise the option to continue, had an 
  8.31  income of less than 275 percent of the poverty level prior to 
  8.32  being terminated, and is unable to exercise the option to 
  8.33  continue coverage under section 62A.17 may enroll, by submitting 
  8.34  an application that is received by the writing carrier no later 
  8.35  than 90 days after termination or layoff, with a waiver of the 
  8.36  preexisting condition limitation set forth in subdivision 3 and 
  9.1   a waiver of the evidence of rejection set forth in subdivision 
  9.2   1, paragraph (c).  
  9.3      Sec. 8.  Minnesota Statutes 2002, section 62E.141, is 
  9.4   amended to read: 
  9.5      62E.141 [INCLUSION IN EMPLOYER-SPONSORED PLAN.] 
  9.6      (a) No employee of an employer that offers a health plan, 
  9.7   under which the employee is eligible for coverage, is eligible 
  9.8   to enroll, or continue to be enrolled, in the comprehensive 
  9.9   health association, except for enrollment or continued 
  9.10  enrollment necessary to cover conditions that are subject to an 
  9.11  unexpired preexisting condition limitation, preexisting 
  9.12  condition exclusion, or exclusionary rider under the employer's 
  9.13  health plan.  This section paragraph does not apply to persons 
  9.14  enrolled in the Comprehensive Health Association as of June 30, 
  9.15  1993 2004.  With respect to persons eligible to enroll in the 
  9.16  health plan of an employer that has more than 29 current 
  9.17  employees, as defined in section 62L.02, this section paragraph 
  9.18  does not apply to persons enrolled in the Comprehensive Health 
  9.19  Association as of December 31, 1994. 
  9.20     (b) Paragraph (a) applies to an employee's dependents if 
  9.21  the employer offers dependent coverage and the dependent is 
  9.22  eligible for coverage but does not apply to persons enrolled in 
  9.23  the Comprehensive Health Association as of June 30, 2004. 
  9.24     Sec. 9.  [PRESUMPTIVE CONDITIONS STUDY.] 
  9.25     The Minnesota Comprehensive Health Association, in 
  9.26  consultation with the commissioner of commerce, shall contract 
  9.27  with an independent entity to conduct an analysis of the 
  9.28  eligibility standards used for enrollment for coverage under the 
  9.29  Minnesota Comprehensive Health Association in terms of the use 
  9.30  of presumptive conditions for automatic eligibility and the 
  9.31  underwriting practices for the individual market regarding the 
  9.32  denial or limitations of coverage due to preexisting 
  9.33  conditions.  The analysis must compare the Minnesota 
  9.34  Comprehensive Health Association's practices with that of other 
  9.35  states' high-risk pools and examine the basis for denials within 
  9.36  the individual market.  The analysis must also determine whether 
 10.1   there should be additional guidelines or standards in place 
 10.2   before the existence of a specific condition or diagnosis is 
 10.3   deemed automatically eligible for coverage under the Minnesota 
 10.4   Comprehensive Health Association.  
 10.5      The commissioner of commerce shall submit the results of 
 10.6   the study and any recommendations to the legislature by January 
 10.7   15, 2005. 
 10.8      The Minnesota Comprehensive Health Association must also 
 10.9   contract for claims analysis and evaluation of its current 
 10.10  disease management and quality measurement function.