1.1 	A bill for an act
1.2 	relating to health care cost containment; making
1.3 	changes to encourage consumer-driven health plans;
1.4 	encouraging efficiency in providing health care;
1.5 	implementing health care cost containment, cost
1.6 	shifting provisions, and reduction of government
1.7 	mandates; implementing health plan competition and
1.8 	reform provisions; changing health maintenance
1.9 	organization regulatory authority; reforming medical
1.10 	malpractice liability; amending Minnesota Statutes
1.11 	2004, sections 16A.10, by adding a subdivision;
1.12 	43A.23, by adding a subdivision; 62A.02, subdivision
1.13 	2; 62D.02, subdivision 4, by adding a subdivision;
1.14 	62D.03, subdivision 1; 62D.04, subdivision 1; 62D.05,
1.15 	subdivision 1; 62E.08, subdivision 1; 62E.091; 62J.26,
1.16 	by adding a subdivision; 256B.04, by adding a
1.17 	subdivision; 290.01, subdivisions 19, 31; proposing
1.18 	coding for new law in Minnesota Statutes, chapters
1.19 	62L; 147; 604; repealing Minnesota Statutes 2004,
1.20 	section 62J.17, subdivisions 1, 2, 3, 4a, 5a, 6a, 7, 8.
1.21 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.22 	ARTICLE 1
1.23 	HEALTH CARE COST CONTAINMENT; CONSUMER EMPOWERMENT

1.24 	Section 1. Minnesota Statutes 2004, section 43A.23, is
1.25 	amended by adding a subdivision to read:
1.26 		Subd. 4.Health savings accounts. During collective
1.27 	bargaining negotiations with the exclusive representatives of
1.28 	state employees, the commissioner must propose that state
1.29 	employee health coverage include at least one plan of hospital
1.30 	and medical benefits that combines a high-deductible health plan
1.31 	with a health savings account, so as to qualify the health
1.32 	savings account under section 223 of the Internal Revenue Code,
1.33 	as amended.

2.1 	Sec. 2. Minnesota Statutes 2004, section 256B.04, is
2.2 	amended by adding a subdivision to read:
2.3 		Subd. 20.Information web site for interpreter services.
 2.4 	The commissioner shall establish an information Web site to
2.5 	assist health care providers in obtaining oral language
2.6 	interpreter services when these services are needed to enable a
2.7 	patient to obtain a health care service from a provider.  The
2.8 	commissioner must collect and maintain contact and rate
2.9 	information for providers of oral language interpreter services
2.10 	and must make this information available to all health care
2.11 	providers, whether or not the provider is enrolled in a state
2.12 	health care program.  The Web site list is not an endorsement by
2.13 	the commissioner of any particular interpreter.

2.14 	Sec. 3. Minnesota Statutes 2004, section 290.01,
2.15 	subdivision 19, is amended to read:
2.16 		Subd. 19.Net income.  The term "net income" means the
2.17 	federal taxable income, as defined in section 63 of the Internal
2.18 	Revenue Code of 1986, as amended through the date named in this
2.19 	subdivision, incorporating any elections made by the taxpayer in
2.20 	accordance with the Internal Revenue Code in determining federal
2.21 	taxable income for federal income tax purposes, and with the
2.22 	modifications provided in subdivisions 19a to 19f.
2.23 	In the case of a regulated investment company or a fund
2.24 	thereof, as defined in section 851(a) or 851(g) of the Internal
2.25 	Revenue Code, federal taxable income means investment company
2.26 	taxable income as defined in section 852(b)(2) of the Internal
2.27 	Revenue Code, except that:
2.28 	(1) the exclusion of net capital gain provided in section
2.29 	852(b)(2)(A) of the Internal Revenue Code does not apply;
2.30 	(2) the deduction for dividends paid under section
2.31 	852(b)(2)(D) of the Internal Revenue Code must be applied by
2.32 	allowing a deduction for capital gain dividends and
2.33 	exempt-interest dividends as defined in sections 852(b)(3)(C)
2.34 	and 852(b)(5) of the Internal Revenue Code; and
2.35 	(3) the deduction for dividends paid must also be applied
2.36 	in the amount of any undistributed capital gains which the
3.1 	regulated investment company elects to have treated as provided
3.2 	in section 852(b)(3)(D) of the Internal Revenue Code.
3.3 	The net income of a real estate investment trust as defined
3.4 	and limited by section 856(a), (b), and (c) of the Internal
3.5 	Revenue Code means the real estate investment trust taxable
3.6 	income as defined in section 857(b)(2) of the Internal Revenue
3.7 	Code.
3.8 	The net income of a designated settlement fund as defined
3.9 	in section 468B(d) of the Internal Revenue Code means the gross
3.10 	income as defined in section 468B(b) of the Internal Revenue
3.11 	Code.
3.12 	The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
3.13 	1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
3.14 	1616, 1617, 1704(l), and 1704(m) of the Small Business Job
3.15 	Protection Act, Public Law 104-188, the provisions of Public Law
3.16 	104-117, the provisions of sections 313(a) and (b)(1), 602(a),
3.17 	913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
3.18 	1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
3.19 	and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
3.20 	1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
3.21 	105-34, the provisions of section 6010 of the Internal Revenue
3.22 	Service Restructuring and Reform Act of 1998, Public Law
3.23 	105-206, the provisions of section 4003 of the Omnibus
3.24 	Consolidated and Emergency Supplemental Appropriations Act,
3.25 	1999, Public Law 105-277, and the provisions of section 318 of
3.26 	the Consolidated Appropriation Act of 2001, Public Law 106-554,
3.27 	shall become effective at the time they become effective for
3.28 	federal purposes.
3.29 	The Internal Revenue Code of 1986, as amended through
3.30 	December 31, 1996, shall be in effect for taxable years
3.31 	beginning after December 31, 1996.
3.32 	The provisions of sections 202(a) and (b), 221(a), 225,
3.33 	312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
3.34 	(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
3.35 	1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
3.36 	1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
4.1 	of the Taxpayer Relief Act of 1997, Public Law 105-34, the
4.2 	provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
4.3 	and 7003 of the Internal Revenue Service Restructuring and
4.4 	Reform Act of 1998, Public Law 105-206, the provisions of
4.5 	section 3001 of the Omnibus Consolidated and Emergency
4.6 	Supplemental Appropriations Act, 1999, Public Law 105-277, the
4.7 	provisions of section 3001 of the Miscellaneous Trade and
4.8 	Technical Corrections Act of 1999, Public Law 106-36, and the
4.9 	provisions of section 316 of the Consolidated Appropriation Act
4.10 	of 2001, Public Law 106-554, shall become effective at the time
4.11 	they become effective for federal purposes.
4.12 	The Internal Revenue Code of 1986, as amended through
4.13 	December 31, 1997, shall be in effect for taxable years
4.14 	beginning after December 31, 1997.
4.15 	The provisions of sections 5002, 6009, 6011, and 7001 of
4.16 	the Internal Revenue Service Restructuring and Reform Act of
4.17 	1998, Public Law 105-206, the provisions of section 9010 of the
4.18 	Transportation Equity Act for the 21st Century, Public Law
4.19 	105-178, the provisions of sections 1004, 4002, and 5301 of the
4.20 	Omnibus Consolidation and Emergency Supplemental Appropriations
4.21 	Act, 1999, Public Law 105-277, the provision of section 303 of
4.22 	the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
4.23 	105-369, the provisions of sections 532, 534, 536, 537, and 538
4.24 	of the Ticket to Work and Work Incentives Improvement Act of
4.25 	1999, Public Law 106-170, the provisions of the Installment Tax
4.26 	Correction Act of 2000, Public Law 106-573, and the provisions
4.27 	of section 309 of the Consolidated Appropriation Act of 2001,
4.28 	Public Law 106-554, shall become effective at the time they
4.29 	become effective for federal purposes.
4.30 	The Internal Revenue Code of 1986, as amended through
4.31 	December 31, 1998, shall be in effect for taxable years
4.32 	beginning after December 31, 1998.
4.33 	The provisions of the FSC Repeal and Extraterritorial
4.34 	Income Exclusion Act of 2000, Public Law 106-519, and the
4.35 	provision of section 412 of the Job Creation and Worker
4.36 	Assistance Act of 2002, Public Law 107-147, shall become
5.1 	effective at the time it became effective for federal purposes.
5.2 	The Internal Revenue Code of 1986, as amended through
5.3 	December 31, 1999, shall be in effect for taxable years
5.4 	beginning after December 31, 1999.  The provisions of sections
5.5 	306 and 401 of the Consolidated Appropriation Act of 2001,
5.6 	Public Law 106-554, and the provision of section 632(b)(2)(A) of
5.7 	the Economic Growth and Tax Relief Reconciliation Act of 2001,
5.8 	Public Law 107-16, and provisions of sections 101 and 402 of the
5.9 	Job Creation and Worker Assistance Act of 2002, Public Law
5.10 	107-147, shall become effective at the same time it became
5.11 	effective for federal purposes.
5.12 	The Internal Revenue Code of 1986, as amended through
5.13 	December 31, 2000, shall be in effect for taxable years
5.14 	beginning after December 31, 2000.  The provisions of sections
5.15 	659a and 671 of the Economic Growth and Tax Relief
5.16 	Reconciliation Act of 2001, Public Law 107-16, the provisions of
5.17 	sections 104, 105, and 111 of the Victims of Terrorism Tax
5.18 	Relief Act of 2001, Public Law 107-134, and the provisions of
5.19 	sections 201, 403, 413, and 606 of the Job Creation and Worker
5.20 	Assistance Act of 2002, Public Law 107-147, shall become
5.21 	effective at the same time it became effective for federal
5.22 	purposes.
5.23 	The Internal Revenue Code of 1986, as amended through March
5.24 	15, 2002, shall be in effect for taxable years beginning after
5.25 	December 31, 2001.
5.26 	The provisions of sections 101 and 102 of the Victims of
5.27 	Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
5.28 	become effective at the same time it becomes effective for
5.29 	federal purposes.
5.30 	The Internal Revenue Code of 1986, as amended through June
5.31 	15, 2003, shall be in effect for taxable years beginning after
5.32 	December 31, 2002.  The provisions of section 201 of the Jobs
5.33 	and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
5.34 	it is enacted into law, are effective at the same time it became
5.35 	effective for federal purposes.
5.36 	Section 1201 of the Medicare Prescription Drug,
6.1 	Improvement, and Modernization Act of 2003, Public Law 108-73,
6.2 	is effective at the same time it became effective for federal
6.3 	purposes.
6.4 	Except as otherwise provided, references to the Internal
6.5 	Revenue Code in subdivisions 19a to 19g mean the code in effect
6.6 	for purposes of determining net income for the applicable year.
6.7 	
EFFECTIVE DATE. This section is effective the day
6.8 	following final enactment.

6.9 	Sec. 4. Minnesota Statutes 2004, section 290.01,
6.10 	subdivision 31, is amended to read:
6.11 		Subd. 31.Internal revenue code.  Unless specifically
6.12 	defined otherwise, "Internal Revenue Code" means the Internal
6.13 	Revenue Code of 1986, as amended through June 15, 2003, and as
6.14 	amended by section 1201 of the Medicare Prescription Drug,
6.15 	Improvement, and Modernization Act of 2003, Public Law 108-73.
6.16 	
EFFECTIVE DATE. This section is effective the day
6.17 	following final enactment.

6.18 	ARTICLE 2
6.19 	HEALTH CARE COST CONTAINMENT; COST SHIFTING

6.20 	Section 1. Minnesota Statutes 2004, section 16A.10, is
6.21 	amended by adding a subdivision to read:
6.22 		Subd. 4.Limit on state health care program
6.23 	expansion. No budget proposal shall include any provision that
6.24 	requests new or increased funding for an expansion of
6.25 	eligibility or covered services for a state health care program,
6.26 	unless state health care program reimbursement rates for major
6.27 	service categories, at the time the expansion is to take effect,
6.28 	will be sufficient to cover estimated provider costs for each
6.29 	major service category.  For purposes of this section, "state
6.30 	health care program" means the medical assistance,
6.31 	MinnesotaCare, and general assistance medical care programs.

6.32 	Sec. 2. STUDY OF COST SHIFTING.
 6.33 	(a) The commissioner of health shall evaluate the extent to
6.34 	which state health care program reimbursement rates result in
6.35 	health care provider cost shifting to private sector payers and
6.36 	individuals paying for services out-of-pocket.  In conducting
7.1 	the evaluation, the commissioner shall:
7.2 	(1) examine the extent to which average state health care
7.3 	program reimbursement rates for major categories of services
7.4 	vary from average private sector reimbursement rates;
7.5 	(2) examine the extent to which average state health care
7.6 	program reimbursement rates for major categories of services
7.7 	cover average provider costs;
7.8 	(3) estimate the amount by which average state health care
7.9 	program reimbursement rates for major categories of services
7.10 	would need to be increased to match average private sector
7.11 	reimbursement rates and to cover average provider costs; and 
7.12 	(4) present recommendations to the legislature on methods
7.13 	of increasing average state health care program reimbursement
7.14 	rates for major categories of services, over a six-year period,
7.15 	to the average private sector reimbursement rate and to a level
7.16 	that covers average provider costs.
7.17 	(b) The commissioner shall present results and
7.18 	recommendations to the legislature by December 15, 2005.  The
7.19 	commissioner may contract with an actuarial consulting firm to
7.20 	implement this section.  Payment and reimbursement data
7.21 	collected by the commissioner in the course of implementing this
7.22 	section shall be classified as not public data under Minnesota
7.23 	Statutes, chapter 13, except that data shall be classified as
7.24 	public data not on individuals if the information collected was
7.25 	already accessible to the public under the policies of the
7.26 	private sector entity providing the data.  For purposes of this
7.27 	section, "state health care program" means the medical
7.28 	assistance, MinnesotaCare, and general assistance medical care
7.29 	programs.

7.30 	ARTICLE 3
7.31 	HEALTH CARE COST CONTAINMENT; REDUCING GOVERNMENT MANDATES

7.32 	Section 1. Minnesota Statutes 2004, section 62J.26, is
7.33 	amended by adding a subdivision to read:
7.34 		Subd. 6.Mandated benefits moratorium. (a) No new
7.35 	mandated health benefit proposal, as defined in subdivision 1,
7.36 	shall be enacted.
8.1 	(b) This subdivision expires January 1, 2008.

8.2 	Sec. 2. [62L.056] SMALL EMPLOYER ALTERNATIVE BENEFIT
8.3 	PLANS.
8.4 	(a) Notwithstanding any provision of this chapter, chapter
8.5 	363A, or any other law to the contrary, the commissioner of
8.6 	commerce shall, by January 1, 2006, permit health carriers to
8.7 	offer alternative health benefit plans to small employers if the
8.8 	following requirements are satisfied:
8.9 	(1) the health carrier is assessed less than ten percent of
8.10 	the total amount assessed by the Minnesota Comprehensive Health
8.11 	Association;
8.12 	(2) the health plans must be offered in compliance with
8.13 	this chapter, except as otherwise permitted in this section;
8.14 	(3) the health plans to be offered must be designed to
8.15 	enable employers and covered persons to better manage costs and
8.16 	coverage options through the use of co-pays, deductibles, and
8.17 	other cost-sharing arrangements;
8.18 	(4) the health plans must be issued and administered in
8.19 	compliance with sections 62E.141; 62L.03, subdivision 6; and
8.20 	62L.12, subdivisions 3 and 4, relating to prohibitions against
8.21 	enrolling persons eligible for employer group coverage in the
8.22 	Minnesota Comprehensive Health Association;
8.23 	(5) loss-ratio requirements do not apply to health plans
8.24 	issued under this section;
8.25 	(6) the health plans may alter or eliminate coverages that
8.26 	would otherwise be required by law, except for maternity
8.27 	coverage as required under federal law;
8.28 	(7) each health plan must be approved by the commissioner
8.29 	of commerce; and 
8.30 	(8) the commissioner may limit the types and numbers of
8.31 	health plan forms permitted under this section, but must permit,
8.32 	as one option, a health plan form in which a health carrier may
8.33 	exclude or alter coverage of any or all benefits otherwise
8.34 	mandated by state law, except for maternity coverage as required
8.35 	under federal law.
8.36 	(b) The definitions in section 62L.02 apply to this section
9.1 	as modified by this section.
9.2 	(c) An employer may provide health plans permitted under
9.3 	this section to its employees, the employees' dependents, and
9.4 	other persons eligible for coverage under the employer's plan,
9.5 	notwithstanding chapter 363A or any other law to the contrary.

9.6 	Sec. 3. REPEALER; EXPENDITURE REPORTING.
 9.7 	Minnesota Statutes 2004, section 62J.17, subdivisions 1, 2,
9.8 	3, 4a, 5a, 6a, 7, and 8, are repealed effective the day
9.9 	following final enactment.

9.10 	ARTICLE 4
9.11 	HEALTH CARE COST CONTAINMENT;
9.12 	HEALTH PLAN COMPETITION AND REFORM

9.13 	Section 1. Minnesota Statutes 2004, section 62A.02,
9.14 	subdivision 2, is amended to read:
9.15 		Subd. 2.Approval.  (a) The health plan form shall not be
9.16 	issued, nor shall any application, rider, endorsement, or rate
9.17 	be used in connection with it, until the expiration of 60 days
9.18 	after it has been filed unless the commissioner approves it
9.19 	before that time.
9.20 	(b) Notwithstanding paragraph (a), a health plan form or a 
9.21 	rate,filed with respect to a policy of accident and sickness
9.22 	insurance as defined in section 62A.01 by an insurer licensed
9.23 	under chapter 60A, may be used on or after the date of filing
9.24 	with the commissioner. Health plan forms and rates that are not
9.25 	approved or disapproved within the 60-day time period are deemed
9.26 	approved.  This paragraph does not apply to Medicare-related
9.27 	coverage as defined in section 62A.31, subdivision 3, paragraph
9.28 	(q).

9.29 	Sec. 2. Minnesota Statutes 2004, section 62D.02,
9.30 	subdivision 4, is amended to read:
9.31 		Subd. 4.Health maintenance organization.  (a) "Health
9.32 	maintenance organization" means a nonprofit corporation
9.33 	organized under chapter 317A, or person, including a local
9.34 	governmental unit as defined in subdivision 11, controlled and
9.35 	operated as provided in sections 62D.01 to 62D.30, which
9.36 	provides, either directly or through arrangements with providers
10.1 	or other persons, comprehensive health maintenance services, or
10.2 	arranges for the provision of these services, to enrollees on
10.3 	the basis of a fixed prepaid sum without regard to the frequency
10.4 	or extent of services furnished to any particular enrollee.
10.5 	(b)  (Expired)

10.6 	Sec. 3. Minnesota Statutes 2004, section 62D.02, is
10.7 	amended by adding a subdivision to read:
10.8 		Subd. 17.Person. "Person" means a natural or artificial
10.9 	person, including, but not limited to, individuals,
10.10 	partnerships, limited liability companies, associations, trusts,
10.11 	corporations, other business entities, or governmental entities.

10.12 	Sec. 4. Minnesota Statutes 2004, section 62D.03,
10.13 	subdivision 1, is amended to read:
10.14 		Subdivision 1.Certificate of authority required.
 10.15 	Notwithstanding any law of this state to the contrary, any
10.16 	nonprofit corporation organized to do so or a local governmental
10.17 	unit person may apply to the commissioner of health for a
10.18 	certificate of authority to establish and operate a health
10.19 	maintenance organization in compliance with sections 62D.01 to
10.20 	62D.30.  No person shall establish or operate a health
10.21 	maintenance organization in this state, nor sell or offer to
10.22 	sell, or solicit offers to purchase or receive advance or
10.23 	periodic consideration in conjunction with a health maintenance
10.24 	organization or health maintenance contract unless the
10.25 	organization has a certificate of authority under sections
10.26 	62D.01 to 62D.30. An out-of-state corporation may qualify under
10.27 	this chapter, subject to obtaining a certificate of authority to
10.28 	do business in this state as an out-of-state corporation under
10.29 	chapter 303 and compliance with this chapter and other
10.30 	applicable state laws.

10.31 	Sec. 5. Minnesota Statutes 2004, section 62D.04,
10.32 	subdivision 1, is amended to read:
10.33 		Subdivision 1.Application review.  Upon receipt of an
10.34 	application for a certificate of authority, the commissioner of
10.35 	health shall determine whether the applicant for a certificate
10.36 	of authority has:
11.1 	(a) demonstrated the willingness and potential ability to
11.2 	assure that health care services will be provided in such a
11.3 	manner as to enhance and assure both the availability and
11.4 	accessibility of adequate personnel and facilities;
11.5 	(b) arrangements for an ongoing evaluation of the quality
11.6 	of health care;
11.7 	(c) a procedure to develop, compile, evaluate, and report
11.8 	statistics relating to the cost of its operations, the pattern
11.9 	of utilization of its services, the quality, availability and
11.10 	accessibility of its services, and such other matters as may be
11.11 	reasonably required by regulation of the commissioner of health;
11.12 	(d) reasonable provisions for emergency and out of area
11.13 	health care services;
11.14 	(e) demonstrated that it is financially responsible and may
11.15 	reasonably be expected to meet its obligations to enrollees and
11.16 	prospective enrollees.  In making this determination, the
11.17 	commissioner of health shall require the amount of initial net
11.18 	worth required in section 62D.042, compliance with the
11.19 	risk-based capital standards under sections 60A.50 to 60A.592,
11.20 	the deposit required in section 62D.041, and in addition shall
11.21 	consider:
11.22 	(1) the financial soundness of its arrangements for health
11.23 	care services and the proposed schedule of charges used in
11.24 	connection therewith;
11.25 	(2) arrangements which will guarantee for a reasonable
11.26 	period of time the continued availability or payment of the cost
11.27 	of health care services in the event of discontinuance of the
11.28 	health maintenance organization; and
11.29 	(3) agreements with providers for the provision of health
11.30 	care services;
11.31 	(f) demonstrated that it will assume full financial risk on
11.32 	a prospective basis for the provision of comprehensive health
11.33 	maintenance services, including hospital care; provided,
11.34 	however, that the requirement in this paragraph shall not
11.35 	prohibit the following:
11.36 	(1) a health maintenance organization from obtaining
12.1 	insurance or making other arrangements (i) for the cost of
12.2 	providing to any enrollee comprehensive health maintenance
12.3 	services, the aggregate value of which exceeds $5,000 in any
12.4 	year, (ii) for the cost of providing comprehensive health care
12.5 	services to its members on a nonelective emergency basis, or
12.6 	while they are outside the area served by the organization, or
12.7 	(iii) for not more than 95 percent of the amount by which the
12.8 	health maintenance organization's costs for any of its fiscal
12.9 	years exceed 105 percent of its income for such fiscal years;
12.10 	and
12.11 	(2) a health maintenance organization from having a
12.12 	provision in a group health maintenance contract allowing an
12.13 	adjustment of premiums paid based upon the actual health
12.14 	services utilization of the enrollees covered under the
12.15 	contract, except that at no time during the life of the contract
12.16 	shall the contract holder fully self-insure the financial risk
12.17 	of health care services delivered under the contract.  Risk
12.18 	sharing arrangements shall be subject to the requirements of
12.19 	sections 62D.01 to 62D.30;
12.20 	(g) demonstrated that it has made provisions for and
12.21 	adopted a conflict of interest policy applicable to all members
12.22 	of the board of directors and the principal officers of the
12.23 	health maintenance organization.  The conflict of interest
12.24 	policy shall include the procedures described in section
12.25 	317A.255, subdivisions 1 and 2, or a substantially similar
12.26 	provision contained in the laws under which the health
12.27 	maintenance organization is incorporated or otherwise
12.28 	organized.  However, the commissioner is not precluded from
12.29 	finding that a particular transaction is an unreasonable expense
12.30 	as described in section 62D.19 even if the directors follow the
12.31 	required procedures; and
12.32 	(h) otherwise met the requirements of sections 62D.01 to
12.33 	62D.30.

12.34 	Sec. 6. Minnesota Statutes 2004, section 62D.05,
12.35 	subdivision 1, is amended to read:
12.36 		Subdivision 1.Authority granted.  Any nonprofit
13.1 	corporation or local governmental unit person may, upon
13.2 	obtaining a certificate of authority as required in sections
13.3 	62D.01 to 62D.30, operate as a health maintenance organization.

13.4 	Sec. 7. Minnesota Statutes 2004, section 62E.08,
13.5 	subdivision 1, is amended to read:
13.6 		Subdivision 1.Establishment.  The association shall
13.7 	establish the following maximum premiums to be charged for
13.8 	membership in the comprehensive health insurance plan:
13.9 	(a) the premium for the number one qualified plan shall
13.10 	range from a minimum of 101 115 percent to a maximum of 125 135 
13.11 	percent of the weighted average of rates charged by those
13.12 	insurers and health maintenance organizations with individuals
13.13 	enrolled in:
13.14 	(1) $1,000 annual deductible individual plans of insurance
13.15 	in force in Minnesota;
13.16 	(2) individual health maintenance organization contracts of
13.17 	coverage with a $1,000 annual deductible which are in force in
13.18 	Minnesota; and
13.19 	(3) other plans of coverage similar to plans offered by the
13.20 	association based on generally accepted actuarial principles;
13.21 	(b) the premium for the number two qualified plan shall
13.22 	range from a minimum of 101 115 percent to a maximum of 125 135 
13.23 	percent of the weighted average of rates charged by those
13.24 	insurers and health maintenance organizations with individuals
13.25 	enrolled in:
13.26 	(1) $500 annual deductible individual plans of insurance in
13.27 	force in Minnesota;
13.28 	(2) individual health maintenance organization contracts of
13.29 	coverage with a $500 annual deductible which are in force in
13.30 	Minnesota; and
13.31 	(3) other plans of coverage similar to plans offered by the
13.32 	association based on generally accepted actuarial principles;
13.33 	(c) the premiums for the plans with a $2,000, $5,000, or
13.34 	$10,000 annual deductible shall range from a minimum of 101 115 
13.35 	percent to a maximum of 125 135 percent of the weighted average
13.36 	of rates charged by those insurers and health maintenance
14.1 	organizations with individuals enrolled in:
14.2 	(1) $2,000, $5,000, or $10,000 annual deductible individual
14.3 	plans, respectively, in force in Minnesota; and
14.4 	(2) individual health maintenance organization contracts of
14.5 	coverage with a $2,000, $5,000, or $10,000 annual deductible,
14.6 	respectively, which are in force in Minnesota; or
14.7 	(3) other plans of coverage similar to plans offered by the
14.8 	association based on generally accepted actuarial principles;
14.9 	(d) the premium for each type of Medicare supplement plan
14.10 	required to be offered by the association pursuant to section
14.11 	62E.12 shall range from a minimum of 101 115 percent to a
14.12 	maximum of 125 135 percent of the weighted average of rates
14.13 	charged by those insurers and health maintenance organizations
14.14 	with individuals enrolled in:
14.15 	(1) Medicare supplement plans in force in Minnesota;
14.16 	(2) health maintenance organization Medicare supplement
14.17 	contracts of coverage which are in force in Minnesota; and
14.18 	(3) other plans of coverage similar to plans offered by the
14.19 	association based on generally accepted actuarial principles;
14.20 	and
14.21 	(e) the charge for health maintenance organization coverage
14.22 	shall be based on generally accepted actuarial principles.
14.23 	The list of insurers and health maintenance organizations
14.24 	whose rates are used to establish the premium for coverage
14.25 	offered by the association pursuant to paragraphs (a) to (d)
14.26 	shall be established by the commissioner on the basis of
14.27 	information which shall be provided to the association by all
14.28 	insurers and health maintenance organizations annually at the
14.29 	commissioner's request.  This information shall include the
14.30 	number of individuals covered by each type of plan or contract
14.31 	specified in paragraphs (a) to (d) that is sold, issued, and
14.32 	renewed by the insurers and health maintenance organizations,
14.33 	including those plans or contracts available only on a renewal
14.34 	basis.  The information shall also include the rates charged for
14.35 	each type of plan or contract.
14.36 	In establishing premiums pursuant to this section, the
15.1 	association shall utilize generally accepted actuarial
15.2 	principles, provided that the association shall not discriminate
15.3 	in charging premiums based upon sex.  In order to compute a
15.4 	weighted average for each type of plan or contract specified
15.5 	under paragraphs (a) to (d), the association shall, using the
15.6 	information collected pursuant to this subdivision, list
15.7 	insurers and health maintenance organizations in rank order of
15.8 	the total number of individuals covered by each insurer or
15.9 	health maintenance organization.  The association shall then
15.10 	compute a weighted average of the rates charged for coverage by
15.11 	all the insurers and health maintenance organizations by:
15.12 	(1) multiplying the numbers of individuals covered by each
15.13 	insurer or health maintenance organization by the rates charged
15.14 	for coverage;
15.15 	(2) separately summing both the number of individuals
15.16 	covered by all the insurers and health maintenance organizations
15.17 	and all the products computed under clause (1); and
15.18 	(3) dividing the total of the products computed under
15.19 	clause (1) by the total number of individuals covered.
15.20 	The association may elect to use a sample of information
15.21 	from the insurers and health maintenance organizations for
15.22 	purposes of computing a weighted average.  In no case, however,
15.23 	may a sample used by the association to compute a weighted
15.24 	average include information from fewer than the two insurers or
15.25 	health maintenance organizations highest in rank order.

15.26 	Sec. 8. Minnesota Statutes 2004, section 62E.091, is
15.27 	amended to read:
15.28 	62E.091 APPROVAL OF STATE PLAN PREMIUMS.
15.29 	The association shall submit to the commissioner any
15.30 	premiums it proposes to become effective for coverage under the
15.31 	comprehensive health insurance plan, pursuant to section 62E.08,
15.32 	subdivision 3.  No later than 45 days before the effective date
15.33 	for premiums specified in section 62E.08, subdivision 3, the
15.34 	commissioner shall approve, modify, or reject the proposed
15.35 	premiums on the basis of the following criteria:
15.36 	(a) whether the association has complied with the
16.1 	provisions of section 62E.11, subdivision 11;
16.2 	(b) whether the association has submitted the proposed
16.3 	premiums in a manner which provides sufficient time for
16.4 	individuals covered under the comprehensive insurance plan to
16.5 	receive notice of any premium increase no less than 30 days
16.6 	prior to the effective date of the increase;
16.7 	(c) the degree to which the association's computations and
16.8 	conclusions are consistent with section 62E.08;
16.9 	(d) the degree to which any sample used to compute a
16.10 	weighted average by the association pursuant to section 62E.08
16.11 	reasonably reflects circumstances existing in the private
16.12 	marketplace for individual coverage;
16.13 	(e) the degree to which a weighted average computed
16.14 	pursuant to section 62E.08 that uses information pertaining to
16.15 	individual coverage available only on a renewal basis reflects
16.16 	the circumstances existing in the private marketplace for
16.17 	individual coverage;
16.18 	(f) a comparison of the proposed increases with increases
16.19 	in the cost of medical care and increases experienced in the
16.20 	private marketplace for individual coverage;
16.21 	(g) the financial consequences to enrollees of the proposed
16.22 	increase;
16.23 	(h) the actuarially projected effect of the proposed
16.24 	increase upon both total enrollment in, and the nature of the
16.25 	risks assumed by, the comprehensive health insurance plan;
16.26 	(i) the relative solvency of the contributing members; and
16.27 	(j) other factors deemed relevant by the commissioner.
16.28 	In no case, however, may the commissioner approve premiums
16.29 	for those plans of coverage described in section 62E.08,
16.30 	subdivision 1, paragraphs (a) to (d), that are lower than 101 
16.31 	115 percent or greater than 125 135 percent of the weighted
16.32 	averages computed by the association pursuant to section
16.33 	62E.08.  The commissioner shall support a decision to approve,
16.34 	modify, or reject any premium proposed by the association with
16.35 	written findings and conclusions addressing each criterion
16.36 	specified in this section.  If the commissioner does not
17.1 	approve, modify, or reject the premiums proposed by the
17.2 	association sooner than 45 days before the effective date for
17.3 	premiums specified in section 62E.08, subdivision 3, the
17.4 	premiums proposed by the association under this section become
17.5 	effective.

17.6 	Sec. 9. CHANGE OF HEALTH MAINTENANCE ORGANIZATION
17.7 	REGULATORY AUTHORITY.
 17.8 	(a) Effective July 1, 2006, regulatory authority for health
17.9 	maintenance organizations under Minnesota Statutes, chapter 62D;
17.10 	community health clinics with respect to health care services
17.11 	prepaid option plans offered under Minnesota Statutes, section
17.12 	62Q.22; community integrated service networks, as defined in
17.13 	Minnesota Statutes, section 62N.02, subdivision 4a; health care
17.14 	cooperatives operating under Minnesota Statutes, chapter 62R;
17.15 	health care purchasing alliances and accountable provider
17.16 	networks operating under Minnesota Statutes, chapter 62T; and
17.17 	county-based purchasing programs operating under Minnesota
17.18 	Statutes, section 256B.692, subdivision 2, is transferred from
17.19 	the commissioner of health to the commissioner of commerce.
17.20 	(b) Minnesota Statutes, section 15.039, applies to this
17.21 	transfer of authority.
17.22 	(c) The revisor of statutes shall make changes to conform
17.23 	to paragraph (a) by changing references to the commissioner of
17.24 	health, Department of Health, and similar references, to the
17.25 	commissioner of commerce, Department of Commerce, or similar
17.26 	references, and by changing references to both commissioners or
17.27 	both departments or "the appropriate commissioner" or similar
17.28 	term to the commissioner or Department of Commerce, as
17.29 	appropriate in Minnesota Statutes, sections 62A.021, subdivision
17.30 	1, paragraph (h); 62D.02, subdivision 3; 62D.12, subdivision 1;
17.31 	62D.15, subdivision 1; 62D.24, by also changing the existing
17.32 	reference to "commissioner of commerce" to read "commissioner of
17.33 	health"; 62E.05, subdivision 2; 62E.11, subdivision 13; 62J.041,
17.34 	subdivision 4; 62J.701; 62J.74; 62L.02, subdivision 8; 62L.05,
17.35 	subdivision 12; 62L.08, subdivisions 10 and 11; 62L.09,
17.36 	subdivision 3; 62L.10, subdivision 4; 62L.11, subdivision 2;
18.1 	62M.11; 62M.16; 62N.02, subdivision 4; 62N.26; 62Q.01,
18.2 	subdivision 2; 62Q.106; 62Q.22, subdivisions 2, 6, and 7;
18.3 	62Q.33, subdivision 2, by specifying that the commissioner
18.4 	referenced in the last sentence is the commissioner of health;
18.5 	62Q.49, subdivision 2; 62Q.51, subdivision 3; 62Q.525,
18.6 	subdivision 3; 62Q.69, subdivisions 2 and 3; 62Q.71; 62Q.72;
18.7 	62Q.73, subdivisions 3, 4, 5, and 6; 62R.04, subdivision 5;
18.8 	62R.06, subdivision 1; 62T.01; and 256B.692, subdivisions 2 and
18.9 	7.  The revisor of statutes shall, in preparing Minnesota
18.10 	Statutes 2006, make all conforming changes in Minnesota
18.11 	Statutes, chapter 62D, and other chapters.

18.12 	ARTICLE 5
18.13 	HEALTH CARE COST CONTAINMENT;
18.14 	 MEDICAL MALPRACTICE REFORM

18.15 	Section 1. [147.37] BEST PRACTICE GUIDELINES; USE IN
18.16 	MEDICAL MALPRACTICE CASES.
18.17 	(a) In an action against a provider for malpractice, error,
18.18 	mistake, or failure to cure, whether based in contract or tort,
18.19 	adherence to a best practice guideline approved by either a
18.20 	recognized specialty organization or an organization established
18.21 	for the purpose of developing community-based clinical practice
18.22 	guidelines is an absolute defense against an allegation that the
18.23 	provider did not comply with accepted standards of practice in
18.24 	the community.  This paragraph does not apply if the best
18.25 	practice guideline authorizes or recommends denial of treatment,
18.26 	food, or fluids necessary to sustain life on the basis of the
18.27 	patient's age or expected length of life or the patient's
18.28 	present or predicted disability, degree of medical dependency,
18.29 	or quality of life.
18.30 	(b) Evidence of a departure from a best practice guideline
18.31 	is admissible only on the issue of whether the provider is
18.32 	entitled to an absolute defense under paragraph (a).
18.33 	(c) Paragraphs (a) and (b) apply to claims arising on or
18.34 	after August 1, 2005.
18.35 	(d) Nothing in this section changes the standard or burden
18.36 	of proof in an action alleging a delay in diagnosis, a
19.1 	misdiagnosis, inappropriate application of a best practice
19.2 	guideline, failure to obtain informed consent, battery or other
19.3 	intentional tort, or product liability.

19.4 	Sec. 2. [604.111] HEALTH CARE PROVIDER ACTIONS; LIMITS ON
19.5 	DAMAGES AND ATTORNEY FEES.
19.6 		Subdivision 1.Definitions. (a) For the purposes of this
19.7 	section, the terms in paragraphs (b) to (d) have the meanings
19.8 	given them.
19.9 	(b) "Economic loss" means all harm for which damages are
19.10 	recoverable, other than noneconomic losses.
19.11 	(c) "Health care provider" has the meaning given in section
19.12 	541.076, paragraph (a), except that health care provider also
19.13 	includes a physician assistant registered under chapter 147A and
19.14 	ambulance services, medical directors, and personnel regulated
19.15 	under chapter 144E.
19.16 	(d) "Noneconomic loss" means all nonpecuniary harm for
19.17 	which damages are recoverable, including, but not limited to,
19.18 	pain, disability, disfigurement, embarrassment, emotional
19.19 	distress, and loss of consortium.
19.20 		Subd. 2.Limitation. (a) In an action for injury or
19.21 	death against a health care provider alleging malpractice,
19.22 	error, mistake, or failure to cure, whether based in contract or
19.23 	tort, the amount of damages awarded for noneconomic losses must
19.24 	not exceed $250,000, regardless of the number of parties against
19.25 	whom the action is brought or the number of separate claims or
19.26 	actions brought with respect to the same occurrence.
19.27 	(b) The limitation imposed by this subdivision must not be
19.28 	disclosed to the trier of fact by any person at trial.
19.29 		Subd. 3.Findings. (a) A court in an action tried
19.30 	without a jury shall make a finding as to noneconomic loss
19.31 	without regard to the limit under subdivision 2.  If noneconomic
19.32 	loss in excess of the limit is found, the court shall make any
19.33 	reduction required under this section and shall award as damages
19.34 	for noneconomic loss the lesser of the reduced amount or the
19.35 	limit.
19.36 	(b) If an action is before a jury, the jury shall make a
20.1 	finding as to noneconomic loss without regard to the limit under
20.2 	subdivision 2.  If the jury finds that noneconomic loss exceeds
20.3 	the limit, the court shall make any reduction required under
20.4 	this section and shall award as damages for noneconomic loss the
20.5 	lesser of the reduced amount or the limit.
20.6 		Subd. 4.Punitive damages limited. (a) Punitive,
20.7 	exemplary, and similar damages recoverable against a health care
20.8 	provider in a cause of action described in subdivision 2 must
20.9 	not exceed $250,000.  The jury must not be informed of this
20.10 	limitation.
20.11 	(b) All damages described in paragraph (a) must be paid
20.12 	directly to the Minnesota Comprehensive Health Association
20.13 	created under section 62E.10, subdivision 1, to be used for the
20.14 	purpose of reducing its assessments on its members.
20.15 	(c) Notwithstanding paragraph (a), a private nonprofit
20.16 	hospital licensed under sections 144.50 to 144.56 is not liable
20.17 	for punitive, exemplary, or similar damages, in an action
20.18 	described in subdivision 2.
20.19 		Subd. 5.Excessive attorney fees prohibited. (a)
20.20 	Attorney fees payable by a plaintiff in any cause of action
20.21 	referred to in subdivision 2 must not exceed the following
20.22 	percentage of damages:
20.23 	(1) 40 percent of the first $50,000;
20.24 	(2) 33-1/3 percent of the next $50,000;
20.25 	(3) 25 percent of the next $500,000; plus 
20.26 	(4) 15 percent of that portion of damages that exceeds
20.27 	$600,000.
20.28 	(b) This subdivision applies to the net damages actually
20.29 	recovered by that plaintiff under the cause of action, whether
20.30 	through settlement, alternative dispute resolution, court
20.31 	judgment, or otherwise.  "Net damages actually recovered" means
20.32 	the net sum recovered after deducting any disbursements or costs
20.33 	incurred in connection with prosecution or settlement of the
20.34 	claim, including all costs paid or advanced by any person.
20.35 	Costs of health care incurred by the plaintiff and the
20.36 	attorney's office overhead costs or charges for legal services
21.1 	are not deductible disbursements of costs for such purpose.
21.2 	(c) A fee agreement that violates this subdivision is void
21.3 	and unenforceable, to the extent of the violation.
21.4 	
EFFECTIVE DATE. This section is effective August 1, 2005,
21.5 	and applies to causes of actions arising from incidents
21.6 	occurring on or after that date.