1.1 	A bill for an act
1.2 	relating to insurance; making federally conforming
1.3 	changes in Medicare-related coverage; providing
1.4 	financial solvency regulation for stand-alone Medicare
1.5 	Part D prescription drug plans; making related
1.6 	technical changes; amending Minnesota Statutes 2004,
1.7 	sections 62A.31, subdivisions 1f, 1k, 1n, 1s, 1t, 1u,
1.8 	3, 4, 7; 62A.315; 62A.316; 62A.318; 62A.36,
1.9 	subdivision 1; 62L.12, subdivision 2; 62Q.01,
1.10 	subdivision 6; 256.9657, subdivision 3; proposing
1.11 	coding for new law in Minnesota Statutes, chapter 62A.
1.12 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.13 	ARTICLE 1
1.14 	FEDERALLY CONFORMING CHANGES IN MEDICARE-RELATED COVERAGES

1.15 	Section 1. Minnesota Statutes 2004, section 62A.31,
1.16 	subdivision 1f, is amended to read:
1.17 		Subd. 1f.Suspension based on entitlement to medical
1.18 	assistance.  (a) The policy or certificate must provide that
1.19 	benefits and premiums under the policy or certificate shall be
1.20 	suspended for any period that may be provided by federal
1.21 	regulation at the request of the policyholder or certificate
1.22 	holder for the period, not to exceed 24 months, in which the
1.23 	policyholder or certificate holder has applied for and is
1.24 	determined to be entitled to medical assistance under title XIX
1.25 	of the Social Security Act, but only if the policyholder or
1.26 	certificate holder notifies the issuer of the policy or
1.27 	certificate within 90 days after the date the individual becomes
1.28 	entitled to this assistance.
2.1 	(b) If suspension occurs and if the policyholder or
2.2 	certificate holder loses entitlement to this medical assistance,
2.3 	the policy or certificate shall be automatically reinstated,
2.4 	effective as of the date of termination of this entitlement, if
2.5 	the policyholder or certificate holder provides notice of loss
2.6 	of the entitlement within 90 days after the date of the loss and
2.7 	pays the premium attributable to the period, effective as of the
2.8 	date of termination of entitlement.
2.9 	(c) The policy must provide that upon reinstatement (1)
2.10 	there is no additional waiting period with respect to treatment
2.11 	of preexisting conditions, (2) coverage is provided which is
2.12 	substantially equivalent to coverage in effect before the date
2.13 	of the suspension. If the suspended policy provided coverage for
2.14 	outpatient prescription drugs, reinstitution of the policy for
2.15 	Medicare Part D enrollees must be without coverage for
2.16 	outpatient prescription drugs and must otherwise provide
2.17 	coverage substantially equivalent to the coverage in effect
2.18 	before the date of suspension, and (3) premiums are classified
2.19 	on terms that are at least as favorable to the policyholder or
2.20 	certificate holder as the premium classification terms that
2.21 	would have applied to the policyholder or certificate holder had
2.22 	coverage not been suspended.

2.23 	Sec. 2. Minnesota Statutes 2004, section 62A.31,
2.24 	subdivision 1k, is amended to read:
2.25 		Subd. 1k.Guaranteed renewability.  The policy must
2.26 	guarantee renewability.
2.27 	(a) Only the following standards for renewability provided
2.28 	in this subdivision may be used in Medicare supplement insurance
2.29 	policy forms.
2.30 	(b) No issuer of Medicare supplement insurance policies may
2.31 	cancel or nonrenew a Medicare supplement policy or certificate
2.32 	for any reason other than nonpayment of premium or material
2.33 	misrepresentation.
2.34 	(c) If a group Medicare supplement insurance policy is
2.35 	terminated by the group policyholder and is not replaced as
2.36 	provided in this clause, the issuer shall offer certificate
3.1 	holders an individual Medicare supplement policy which, at the
3.2 	option of the certificate holder, provides for continuation of
3.3 	the benefits contained in the group policy; or provides for such
3.4 	benefits and benefit packages as otherwise meet the requirements
3.5 	of this clause.
3.6 	(d) If an individual is a certificate holder in a group
3.7 	Medicare supplement insurance policy and the individual
3.8 	terminates membership in the group, the issuer of the policy
3.9 	shall offer the certificate holder the conversion opportunities
3.10 	described in this clause; or offer the certificate holder
3.11 	continuation of coverage under the group policy.
3.12 	(e) If a Medicare supplement policy eliminates an
3.13 	outpatient prescription drug benefit as a result of requirements
3.14 	imposed by the Medicare Prescription Drug, Improvement, and
3.15 	Modernization Act of 2003, the policy as modified for that
3.16 	purpose is deemed to satisfy the guaranteed renewal requirements
3.17 	of this subdivision.

3.18 	Sec. 3. Minnesota Statutes 2004, section 62A.31,
3.19 	subdivision 1n, is amended to read:
3.20 		Subd. 1n.Termination of coverage. (a) Termination by an
3.21 	issuer of a Medicare supplement policy or certificate shall be
3.22 	without prejudice to any continuous loss that began while the
3.23 	policy or certificate was in force, but the extension of
3.24 	benefits beyond the period during which the policy or
3.25 	certificate was in force may be conditioned on the continuous
3.26 	total disability of the insured, limited to the duration of the
3.27 	policy or certificate benefit period, if any, or payment of the
3.28 	maximum benefits.  The extension of benefits does not apply when
3.29 	the termination is based on fraud, misrepresentation, or
3.30 	nonpayment of premium. Receipt of Medicare Part D benefits is
3.31 	not considered in determining a continuous loss.
3.32 	(b) An issuer may discontinue the availability of a policy
3.33 	form or certificate form if the issuer provides to the
3.34 	commissioner in writing its decision at least 30 days before
3.35 	discontinuing the availability of the form of the policy or
3.36 	certificate.  An issuer that discontinues the availability of a
4.1 	policy form or certificate form shall not file for approval a
4.2 	new policy form or certificate form of the same type for the
4.3 	same Medicare supplement benefit plan as the discontinued form
4.4 	for five years after the issuer provides notice to the
4.5 	commissioner of the discontinuance. The This period of
4.6 	discontinuance ineligibility to file a form for approval may be
4.7 	reduced if the commissioner determines that a shorter period is
4.8 	appropriate.  The sale or other transfer of Medicare supplement
4.9 	business to another issuer shall be considered a discontinuance
4.10 	for the purposes of this section.  A change in the rating
4.11 	structure or methodology shall be considered a discontinuance
4.12 	under this section unless the issuer complies with the following
4.13 	requirements:
4.14 	(1) the issuer provides an actuarial memorandum, in a form
4.15 	and manner prescribed by the commissioner, describing the manner
4.16 	in which the revised rating methodology and resulting rates
4.17 	differ from the existing rating methodology and resulting rates;
4.18 	and
4.19 	(2) the issuer does not subsequently put into effect a
4.20 	change of rates or rating factors that would cause the
4.21 	percentage differential between the discontinued and subsequent
4.22 	rates as described in the actuarial memorandum to change.  The
4.23 	commissioner may approve a change to the differential that is in
4.24 	the public interest.

4.25 	Sec. 4. Minnesota Statutes 2004, section 62A.31,
4.26 	subdivision 1s, is amended to read:
4.27 		Subd. 1s.Prescription drug coverage. Beginning January
4.28 	1, 1993, a health maintenance organization that issues
4.29 	Medicare-related coverage must offer, to each person to whom it
4.30 	offers any contract described in this subdivision, at least one
4.31 	contract that either:
4.32 	(1) covers 80 percent of the reasonable and customary
4.33 	charge for prescription drugs or the co-payment equivalency; or 
4.34 	(2) offers the coverage described in clause (1) as an
4.35 	optional rider that may be purchased separately from other
4.36 	optional coverages (a) Subject to subdivisions 1k, 1m, 1n, and
5.1 	1p, a Medicare supplement policy with benefits for outpatient
5.2 	prescription drugs, in existence prior to January 1, 2006, must
5.3 	be renewed, at the option of the policyholder, for current
5.4 	policyholders who do not enroll in Medicare Part D.
5.5 	(b) A Medicare supplement policy with benefits for
5.6 	outpatient prescription drugs must not be issued after December
5.7 	31, 2005.
5.8 	(c) After December 31, 2005, a Medicare supplement policy
5.9 	with benefits for outpatient prescription drugs must not be
5.10 	renewed after the policyholder enrolls in Medicare Part D unless:
5.11 	(1) the policy is modified to eliminate outpatient
5.12 	prescription drug coverage for expenses of outpatient
5.13 	prescription drugs incurred on or after the effective date of
5.14 	the individual's coverage under Medicare Part D; and 
5.15 	(2) premiums are adjusted to reflect the elimination of
5.16 	outpatient prescription drug coverage at the time of Medicare
5.17 	Part D enrollment, accounting for any claims paid, if applicable.
5.18 	(d) An issuer of a Medicare supplement policy or
5.19 	certificate must comply with the federal Medicare Prescription
5.20 	Drug, Improvement, and Modernization Act of 2003, as amended,
5.21 	including any federal regulations, as amended, adopted under
5.22 	that act.  This paragraph does not require compliance with any
5.23 	provision of that act until the date upon which that act
5.24 	requires compliance with that provision.  The commissioner has
5.25 	authority to enforce this paragraph.

5.26 	Sec. 5. Minnesota Statutes 2004, section 62A.31,
5.27 	subdivision 1t, is amended to read:
5.28 		Subd. 1t.Notice of lack of drug coverage.  Each policy
5.29 	or contract issued without prescription drug coverage by any
5.30 	insurer, health service plan corporation, health maintenance
5.31 	organization, or fraternal benefit society must contain,
5.32 	displayed prominently by type or other appropriate means, on the
5.33 	first page of the contract, the following:
5.34 	"Notice to buyer:  This contract does not cover
5.35 	prescription drugs.  Prescription drugs can be a very high
5.36 	percentage of your medical expenses.  Coverage for prescription
6.1 	drugs may be available to you by retaining existing coverage you
6.2 	may have or by enrolling in Medicare Part D.  Please ask for
6.3 	further details."
6.4 	From January 1, 1993 to February 28, 1993, compliance with
6.5 	this paragraph is optional.  If a health maintenance
6.6 	organization does not comply with this paragraph during that
6.7 	period, the health maintenance organization must extend any
6.8 	person's six-month eligibility period provided under subdivision
6.9 	1h that began prior to or during that period and ends during or
6.10 	after that period.  The length of the extension must be no less
6.11 	than that portion of the person's six-month eligibility period
6.12 	during which the health carrier did not comply with this
6.13 	paragraph.  The extended eligibility period applies only to
6.14 	contracts that provide the prescription drug coverage required
6.15 	by this paragraph.

6.16 	Sec. 6. Minnesota Statutes 2004, section 62A.31,
6.17 	subdivision 1u, is amended to read:
6.18 		Subd. 1u.Guaranteed issue for eligible persons.  (a)(1)
6.19 	Eligible persons are those individuals described in paragraph
6.20 	(b) who seek to enroll under the policy during the period
6.21 	specified in paragraph (c) and who submit evidence of the date
6.22 	of termination or disenrollment described in paragraph (b), or
6.23 	of the date of Medicare Part D enrollment,with the application
6.24 	for a Medicare supplement policy.
6.25 	(2) With respect to eligible persons, an issuer shall not:
6.26 	deny or condition the issuance or effectiveness of a Medicare
6.27 	supplement policy described in paragraph (c) that is offered and
6.28 	is available for issuance to new enrollees by the issuer;
6.29 	discriminate in the pricing of such a Medicare supplement policy
6.30 	because of health status, claims experience, receipt of health
6.31 	care, medical condition, or age; or impose an exclusion of
6.32 	benefits based upon a preexisting condition under such a
6.33 	Medicare supplement policy.
6.34 	(b) An eligible person is an individual described in any of
6.35 	the following:
6.36 	(1) the individual is enrolled under an employee welfare
7.1 	benefit plan that provides health benefits that supplement the
7.2 	benefits under Medicare; and the plan terminates, or the plan
7.3 	ceases to provide all such supplemental health benefits to the
7.4 	individual;
7.5 	(2) the individual is enrolled with a Medicare+Choice 
7.6 	Medicare Advantage organization under a Medicare+Choice Medicare
7.7 	Advantage plan under Medicare Part C, and any of the following
7.8 	circumstances apply, or the individual is 65 years of age or
7.9 	older and is enrolled with a Program of All-Inclusive Care for
7.10 	the Elderly (PACE) provider under section 1894 of the federal
7.11 	Social Security Act, and there are circumstances similar to
7.12 	those described in this clause that would permit discontinuance
7.13 	of the individual's enrollment with the provider if the
7.14 	individual were enrolled in a Medicare+Choice Medicare Advantage 
7.15 	plan:
7.16 	(i) the organization's or plan's certification under
7.17 	Medicare Part C has been terminated or the organization has
7.18 	terminated or otherwise discontinued providing the plan in the
7.19 	area in which the individual resides;
7.20 	(ii) the individual is no longer eligible to elect the plan
7.21 	because of a change in the individual's place of residence or
7.22 	other change in circumstances specified by the secretary, but
7.23 	not including termination of the individual's enrollment on the
7.24 	basis described in section 1851(g)(3)(B) of the federal Social
7.25 	Security Act, United States Code, title 42, section
7.26 	1395w-21(g)(3)(b) (where the individual has not paid premiums on
7.27 	a timely basis or has engaged in disruptive behavior as
7.28 	specified in standards under section 1856 of the federal Social
7.29 	Security Act, United States Code, title 42, section 1395w-26),
7.30 	or the plan is terminated for all individuals within a residence
7.31 	area;
7.32 	(iii) the individual demonstrates, in accordance with
7.33 	guidelines established by the Secretary, that:
7.34 	(A) the organization offering the plan substantially
7.35 	violated a material provision of the organization's contract in
7.36 	relation to the individual, including the failure to provide an
8.1 	enrollee on a timely basis medically necessary care for which
8.2 	benefits are available under the plan or the failure to provide
8.3 	such covered care in accordance with applicable quality
8.4 	standards; or
8.5 	(B) the organization, or agent or other entity acting on
8.6 	the organization's behalf, materially misrepresented the plan's
8.7 	provisions in marketing the plan to the individual; or
8.8 	(iv) the individual meets such other exceptional conditions
8.9 	as the secretary may provide;
8.10 	(3)(i) the individual is enrolled with:
8.11 	(A) an eligible organization under a contract under section
8.12 	1876 of the federal Social Security Act, United States Code,
8.13 	title 42, section 1395mm (Medicare cost);
8.14 	(B) a similar organization operating under demonstration
8.15 	project authority, effective for periods before April 1, 1999;
8.16 	(C) an organization under an agreement under section
8.17 	1833(a)(1)(A) of the federal Social Security Act, United States
8.18 	Code, title 42, section 1395l(a)(1)(A) (health care prepayment
8.19 	plan); or
8.20 	(D) an organization under a Medicare Select policy under
8.21 	section 62A.318 or the similar law of another state; and
8.22 	(ii) the enrollment ceases under the same circumstances
8.23 	that would permit discontinuance of an individual's election of
8.24 	coverage under clause (2);
8.25 	(4) the individual is enrolled under a Medicare supplement
8.26 	policy, and the enrollment ceases because:
8.27 	(i)(A) of the insolvency of the issuer or bankruptcy of the
8.28 	nonissuer organization; or
8.29 	(B) of other involuntary termination of coverage or
8.30 	enrollment under the policy;
8.31 	(ii) the issuer of the policy substantially violated a
8.32 	material provision of the policy; or
8.33 	(iii) the issuer, or an agent or other entity acting on the
8.34 	issuer's behalf, materially misrepresented the policy's
8.35 	provisions in marketing the policy to the individual;
8.36 	(5)(i) the individual was enrolled under a Medicare
9.1 	supplement policy and terminates that enrollment and
9.2 	subsequently enrolls, for the first time, with any
9.3 	Medicare+Choice Medicare Advantage organization under a
9.4 	Medicare+Choice Medicare Advantage plan under Medicare Part C;
9.5 	any eligible organization under a contract under section 1876 of
9.6 	the federal Social Security Act, United States Code, title 42,
9.7 	section 1395mm (Medicare cost); any similar organization
9.8 	operating under demonstration project authority; any PACE
9.9 	provider under section 1894 of the federal Social Security Act,
9.10 	or a Medicare Select policy under section 62A.318 or the similar
9.11 	law of another state; and
9.12 	(ii) the subsequent enrollment under item (i) is terminated
9.13 	by the enrollee during any period within the first 12 months of
9.14 	the subsequent enrollment during which the enrollee is permitted
9.15 	to terminate the subsequent enrollment under section 1851(e) of
9.16 	the federal Social Security Act; or 
9.17 	(6) the individual, upon first enrolling for benefits under
9.18 	Medicare Part B, enrolls in a Medicare+Choice Medicare Advantage 
9.19 	plan under Medicare Part C, or with a PACE provider under
9.20 	section 1894 of the federal Social Security Act, and disenrolls
9.21 	from the plan by not later than 12 months after the effective
9.22 	date of enrollment; or 
9.23 	(7) the individual enrolls in a Medicare Part D plan during
9.24 	the initial Part D enrollment period, as defined under United
9.25 	States Code, title 42, section 1395ss(v)(6)(D), and, at the time
9.26 	of enrollment in Part D, was enrolled under a Medicare
9.27 	supplement policy that covers outpatient prescription drugs and
9.28 	the individual terminates enrollment in the Medicare supplement
9.29 	policy and submits evidence of enrollment in Medicare Part D
9.30 	along with the application for a policy described in paragraph
9.31 	(e), clause (4).
9.32 	(c)(1) In the case of an individual described in paragraph
9.33 	(b), clause (1), the guaranteed issue period begins on the later
9.34 	of:  (i) the date the individual receives a notice of
9.35 	termination or cessation of all supplemental health benefits or,
9.36 	if a notice is not received, notice that a claim has been denied
10.1 	because of a termination or cessation,; or (ii) the date that
10.2 	the applicable coverage terminates or ceases;and ends 63 days
10.3 	after the date of the applicable notice later of those two dates.
10.4 	(2) In the case of an individual described in paragraph
10.5 	(b), clause (2), (3), (5), or (6), whose enrollment is
10.6 	terminated involuntarily, the guaranteed issue period begins on
10.7 	the date that the individual receives a notice of termination
10.8 	and ends 63 days after the date the applicable coverage is
10.9 	terminated.
10.10 	(3) In the case of an individual described in paragraph
10.11 	(b), clause (4), item (i), the guaranteed issue period begins on
10.12 	the earlier of:  (i) the date that the individual receives a
10.13 	notice of termination, a notice of the issuer's bankruptcy or
10.14 	insolvency, or other such similar notice if any; and (ii) the
10.15 	date that the applicable coverage is terminated, and ends on the
10.16 	date that is 63 days after the date the coverage is terminated.
10.17 	(4) In the case of an individual described in paragraph
10.18 	(b), clause (2), (4), (5), or (6), who disenrolls voluntarily,
10.19 	the guaranteed issue period begins on the date that is 60 days
10.20 	before the effective date of the disenrollment and ends on the
10.21 	date that is 63 days after the effective date.
10.22 	(5) In the case of an individual described in paragraph
10.23 	(b), clause (7), the guaranteed issue period begins on the date
10.24 	the individual receives notice pursuant to section 1882(v)(2)(B)
10.25 	of the Social Security Act from the Medicare supplement issuer
10.26 	during the 60-day period immediately preceding the initial Part
10.27 	D enrollment period and ends on the date that is 63 days after
10.28 	the effective date of the individual's coverage under Medicare
10.29 	Part D.
10.30 	(6) In the case of an individual described in paragraph (b)
10.31 	but not described in this paragraph, the guaranteed issue period
10.32 	begins on the effective date of disenrollment and ends on the
10.33 	date that is 63 days after the effective date.
10.34 	(d)(1) In the case of an individual described in paragraph
10.35 	(b), clause (5), or deemed to be so described, pursuant to this
10.36 	paragraph, whose enrollment with an organization or provider
11.1 	described in paragraph (b), clause (5), item (i), is
11.2 	involuntarily terminated within the first 12 months of
11.3 	enrollment, and who, without an intervening enrollment, enrolls
11.4 	with another such organization or provider, the subsequent
11.5 	enrollment is deemed to be an initial enrollment described in
11.6 	paragraph (b), clause (5).
11.7 	(2) In the case of an individual described in paragraph
11.8 	(b), clause (6), or deemed to be so described, pursuant to this
11.9 	paragraph, whose enrollment with a plan or in a program
11.10 	described in paragraph (b), clause (6), is involuntarily
11.11 	terminated within the first 12 months of enrollment, and who,
11.12 	without an intervening enrollment, enrolls in another such plan
11.13 	or program, the subsequent enrollment is deemed to be an initial
11.14 	enrollment described in paragraph (b), clause (6).
11.15 	(3) For purposes of paragraph (b), clauses (5) and (6), no
11.16 	enrollment of an individual with an organization or provider
11.17 	described in paragraph (b), clause (5), item (i), or with a plan
11.18 	or in a program described in paragraph (b), clause (6), may be
11.19 	deemed to be an initial enrollment under this paragraph after
11.20 	the two-year period beginning on the date on which the
11.21 	individual first enrolled with the organization, provider, plan,
11.22 	or program.
11.23 	(e) The Medicare supplement policy to which eligible
11.24 	persons are entitled under:
11.25 	(1) paragraph (b), clauses (1) to (4), is any Medicare
11.26 	supplement policy that has a benefit package consisting of the
11.27 	basic Medicare supplement plan described in section 62A.316,
11.28 	paragraph (a), plus any combination of the three optional riders
11.29 	described in section 62A.316, paragraph (b), clauses (1) to (3),
11.30 	offered by any issuer;
11.31 	(2) paragraph (b), clause (5), is the same Medicare
11.32 	supplement policy in which the individual was most recently
11.33 	previously enrolled, if available from the same issuer, or, if
11.34 	not so available, any policy described in clause (1) offered by
11.35 	any issuer;, except that after December 31, 2005, if the
11.36 	individual was most recently enrolled in a Medicare supplement
12.1 	policy with an outpatient prescription drug benefit, a Medicare
12.2 	supplement policy to which the individual is entitled under
12.3 	paragraph (b), clause (5), is:
12.4 	(i) the policy available from the same issuer but modified
12.5 	to remove outpatient prescription drug coverage; or 
12.6 	(ii) at the election of the policyholder, a policy
12.7 	described in clause (4), except that the policy may be one that
12.8 	is offered and available for issuance to new enrollees that is
12.9 	offered by any issuer;
12.10 	(3) paragraph (b), clause (6), shall include is any
12.11 	Medicare supplement policy offered by any issuer;
12.12 	(4) paragraph (b), clause (7), is a Medicare supplement
12.13 	policy that has a benefit package classified as a basic plan
12.14 	under section 62A.316 if the enrollee's existing Medicare
12.15 	supplement policy is a basic plan or, if the enrollee's existing
12.16 	Medicare supplement policy is an extended basic plan under
12.17 	section 62A.315, a basic or extended basic plan at the option of
12.18 	the enrollee, provided that the policy is offered and is
12.19 	available for issuance to new enrollees by the same issuer that
12.20 	issued the individual's Medicare supplement policy with
12.21 	outpatient prescription drug coverage.  The issuer must permit
12.22 	the enrollee to retain all optional benefits contained in the
12.23 	enrollee's existing coverage, other than outpatient prescription
12.24 	drugs, subject to the provision that the coverage be offered and
12.25 	available for issuance to new enrollees by the same issuer.
12.26 	(f)(1) At the time of an event described in paragraph (b),
12.27 	because of which an individual loses coverage or benefits due to
12.28 	the termination of a contract or agreement, policy, or plan, the
12.29 	organization that terminates the contract or agreement, the
12.30 	issuer terminating the policy, or the administrator of the plan
12.31 	being terminated, respectively, shall notify the individual of
12.32 	the individual's rights under this subdivision, and of the
12.33 	obligations of issuers of Medicare supplement policies under
12.34 	paragraph (a).  The notice must be communicated
12.35 	contemporaneously with the notification of termination.
12.36 	(2) At the time of an event described in paragraph (b),
13.1 	because of which an individual ceases enrollment under a
13.2 	contract or agreement, policy, or plan, the organization that
13.3 	offers the contract or agreement, regardless of the basis for
13.4 	the cessation of enrollment, the issuer offering the policy, or
13.5 	the administrator of the plan, respectively, shall notify the
13.6 	individual of the individual's rights under this subdivision,
13.7 	and of the obligations of issuers of Medicare supplement
13.8 	policies under paragraph (a).  The notice must be communicated
13.9 	within ten working days of the issuer receiving notification of
13.10 	disenrollment.
13.11 	(g) Reference in this subdivision to a situation in which,
13.12 	or to a basis upon which, an individual's coverage has been
13.13 	terminated does not provide authority under the laws of this
13.14 	state for the termination in that situation or upon that basis.
13.15 	(h) An individual's rights under this subdivision are in
13.16 	addition to, and do not modify or limit, the individual's rights
13.17 	under subdivision 1h.

13.18 	Sec. 7. Minnesota Statutes 2004, section 62A.31,
13.19 	subdivision 3, is amended to read:
13.20 		Subd. 3.Definitions.  (a) The definitions provided in
13.21 	this subdivision apply to sections 62A.31 to 62A.44.
13.22 	(b) "Accident," "accidental injury," or "accidental means"
13.23 	means to employ "result" language and does not include words
13.24 	that establish an accidental means test or use words such as
13.25 	"external," "violent," "visible wounds," or similar words of
13.26 	description or characterization.
13.27 	(1) The definition shall not be more restrictive than the
13.28 	following:  "Injury or injuries for which benefits are provided
13.29 	means accidental bodily injury sustained by the insured person
13.30 	which is the direct result of an accident, independent of
13.31 	disease or bodily infirmity or any other cause, and occurs while
13.32 	insurance coverage is in force."
13.33 	(2) The definition may provide that injuries shall not
13.34 	include injuries for which benefits are provided or available
13.35 	under a workers' compensation, employer's liability or similar
13.36 	law, or motor vehicle no-fault plan, unless prohibited by law.
14.1 	(c) "Applicant" means:
14.2 	(1) in the case of an individual Medicare supplement policy
14.3 	or certificate, the person who seeks to contract for insurance
14.4 	benefits; and
14.5 	(2) in the case of a group Medicare supplement policy or
14.6 	certificate, the proposed certificate holder.
14.7 	(d) "Bankruptcy" means a situation in which a
14.8 	Medicare+Choice Medicare Advantage organization that is not an
14.9 	issuer has filed, or has had filed against it, a petition for
14.10 	declaration of bankruptcy and has ceased doing business in the
14.11 	state.
14.12 	(e) "Benefit period" or "Medicare benefit period" shall not
14.13 	be defined more restrictively than as defined in the Medicare
14.14 	program.
14.15 	(f) "Certificate" means a certificate delivered or issued
14.16 	for delivery in this state or offered to a resident of this
14.17 	state under a group Medicare supplement policy or certificate.
14.18 	(g) "Certificate form" means the form on which the
14.19 	certificate is delivered or issued for delivery by the issuer.
14.20 	(h) "Convalescent nursing home," "extended care facility,"
14.21 	or "skilled nursing facility" shall not be defined more
14.22 	restrictively than as defined in the Medicare program.
14.23 	(i) "Employee welfare benefit plan" means a plan, fund, or
14.24 	program of employee benefits as defined in United States Code,
14.25 	title 29, section 1002 (Employee Retirement Income Security Act).
14.26 	(j) "Health care expenses" means, for purposes of section
14.27 	62A.36,expenses of health maintenance organizations associated
14.28 	with the delivery of health care services which are analogous to
14.29 	incurred losses of insurers.  The expenses shall not include:
14.30 	(1) home office and overhead costs;
14.31 	(2) advertising costs;
14.32 	(3) commissions and other acquisition costs;
14.33 	(4) taxes;
14.34 	(5) capital costs;
14.35 	(6) administrative costs; and
14.36 	(7) claims processing costs.
15.1 	(k) "Hospital" may be defined in relation to its status,
15.2 	facilities, and available services or to reflect its
15.3 	accreditation by the Joint Commission on Accreditation of
15.4 	Hospitals, but not more restrictively than as defined in the
15.5 	Medicare program.
15.6 	(l) "Insolvency" means a situation in which an issuer,
15.7 	licensed to transact the business of insurance in this state,
15.8 	including the right to transact business as any type of issuer,
15.9 	has had a final order of liquidation entered against it with a
15.10 	finding of insolvency by a court of competent jurisdiction in
15.11 	the issuer's state of domicile.
15.12 	(m) "Issuer" includes insurance companies, fraternal
15.13 	benefit societies, health service plan corporations, health
15.14 	maintenance organizations, and any other entity delivering or
15.15 	issuing for delivery Medicare supplement policies or
15.16 	certificates in this state or offering these policies or
15.17 	certificates to residents of this state.
15.18 	(n) "Medicare" shall be defined in the policy and
15.19 	certificate.  Medicare may be defined as the Health Insurance
15.20 	for the Aged Act, title XVIII of the Social Security Amendments
15.21 	of 1965, as amended, or title I, part I, of Public Law 89-97, as
15.22 	enacted by the 89th Congress of the United States of America and
15.23 	popularly known as the Health Insurance for the Aged Act, as
15.24 	amended.
15.25 	(o) "Medicare eligible expenses" means health care expenses
15.26 	covered by Medicare Part A or B, to the extent recognized as
15.27 	reasonable and medically necessary by Medicare.
15.28 	(p) " Medicare+Choice Medicare Advantage plan" means a plan
15.29 	of coverage for health benefits under Medicare Part C as defined
15.30 	in section 1859 of the federal Social Security Act, United
15.31 	States Code, title 42, section 1395w-28, and includes:
15.32 	(1) coordinated care plans which provide health care
15.33 	services, including, but not limited to, health maintenance
15.34 	organization plans, with or without a point-of-service option,
15.35 	plans offered by provider-sponsored organizations, and preferred
15.36 	provider organization plans;
16.1 	(2) medical savings account plans coupled with a
16.2 	contribution into a Medicare+Choice Medicare Advantage medical
16.3 	savings account; and
16.4 	(3) Medicare+Choice Medicare Advantage private
16.5 	fee-for-service plans.
16.6 	(q) "Medicare-related coverage" means a policy, contract,
16.7 	or certificate issued as a supplement to Medicare, regulated
16.8 	under sections 62A.31 to 62A.44, including Medicare select
16.9 	coverage; policies, contracts, or certificates that supplement
16.10 	Medicare issued by health maintenance organizations; or
16.11 	policies, contracts, or certificates governed by section 1833
16.12 	(known as "cost" or "HCPP" contracts) or 1876 (known as "TEFRA"
16.13 	or "risk" contracts) of the federal Social Security Act, United
16.14 	States Code, title 42, section 1395, et seq., as amended; or
16.15 	Section 4001 of the Balanced Budget Act of 1997 (BBA)(Public Law
16.16 	105-33), Sections 1851 to 1859 of the Social Security Act
16.17 	establishing part C of the Medicare program, known as the
16.18 	" Medicare+Choice Medicare Advantage program."
16.19 	(r) "Medicare supplement policy or certificate" means a
16.20 	group or individual policy of accident and sickness insurance or
16.21 	a subscriber contract of hospital and medical service
16.22 	associations or health maintenance organizations, or other than 
16.23 	those policies or certificates covered by section 1833 of the
16.24 	federal Social Security Act, United States Code, title 42,
16.25 	section 1395, et seq., or an issued policy under a demonstration
16.26 	project specified under amendments to the federal Social
16.27 	Security Act, which is advertised, marketed, or designed
16.28 	primarily as a supplement to reimbursements under Medicare for
16.29 	the hospital, medical, or surgical expenses of persons eligible
16.30 	for Medicare. "Medicare supplement policy" does not include
16.31 	Medicare Advantage plans established under Medicare Part C,
16.32 	outpatient prescription drug plans established under Medicare
16.33 	Part D, or any health care prepayment plan that provides
16.34 	benefits under an agreement under section 1833(a)(1)(A) of the
16.35 	Social Security Act.
16.36 	(s) "Physician" shall not be defined more restrictively
17.1 	than as defined in the Medicare program or section 62A.04,
17.2 	subdivision 1, or 62A.15, subdivision 3a.
17.3 	(t) "Policy form" means the form on which the policy is
17.4 	delivered or issued for delivery by the issuer.
17.5 	(u) "Secretary" means the Secretary of the United States
17.6 	Department of Health and Human Services.
17.7 	(v) "Sickness" shall not be defined more restrictively than
17.8 	the following:
17.9 	"Sickness means illness or disease of an insured person
17.10 	which first manifests itself after the effective date of
17.11 	insurance and while the insurance is in force."
17.12 	The definition may be further modified to exclude
17.13 	sicknesses or diseases for which benefits are provided under a
17.14 	workers' compensation, occupational disease, employer's
17.15 	liability, or similar law.
17.16 	(w) "Outpatient prescription drug" means a prescription
17.17 	drug prescribed or administered under circumstances that qualify
17.18 	for coverage under Medicare Part D and not under Medicare Part A
17.19 	or Part B.

17.20 	Sec. 8. Minnesota Statutes 2004, section 62A.31,
17.21 	subdivision 4, is amended to read:
17.22 		Subd. 4.Prohibited policy provisions. (a) A Medicare
17.23 	supplement policy or certificate in force in the state shall not
17.24 	contain benefits that duplicate benefits provided by Medicare or
17.25 	contain exclusions on coverage that are more restrictive than
17.26 	those of Medicare. Duplication of benefits is permitted to the
17.27 	extent permitted under subdivision 1s, paragraph (a), for
17.28 	benefits provided by Medicare Part D.
17.29 	(b) No Medicare supplement policy or certificate may use
17.30 	waivers to exclude, limit, or reduce coverage or benefits for
17.31 	specifically named or described preexisting diseases or physical
17.32 	conditions, except as permitted under subdivision 1b.

17.33 	Sec. 9. Minnesota Statutes 2004, section 62A.31,
17.34 	subdivision 7, is amended to read:
17.35 		Subd. 7.Medicare prescription drug benefit.  If Congress
17.36 	enacts legislation creating a prescription drug benefit in the
18.1 	Medicare program, nothing in this section or any other section
18.2 	shall prohibit an issuer of a Medicare supplement policy from
18.3 	offering this prescription drug benefit consistent with the
18.4 	applicable federal law or regulations. If an issuer offers the
18.5 	federal benefit, such an offer shall be deemed to meet the
18.6 	issuer's mandatory offer obligations under this section and may,
18.7 	at the discretion of the issuer, constitute replacement coverage
18.8 	as defined in subdivision 1i for any existing policy containing
18.9 	a prescription drug benefit.

18.10 	Sec. 10. Minnesota Statutes 2004, section 62A.315, is
18.11 	amended to read:
18.12 	62A.315 EXTENDED BASIC MEDICARE SUPPLEMENT PLAN;
18.13 	COVERAGE.
18.14 	The extended basic Medicare supplement plan must have a
18.15 	level of coverage so that it will be certified as a qualified
18.16 	plan pursuant to section 62E.07, and will provide:
18.17 	(1) coverage for all of the Medicare Part A inpatient
18.18 	hospital deductible and coinsurance amounts, and 100 percent of
18.19 	all Medicare Part A eligible expenses for hospitalization not
18.20 	covered by Medicare;
18.21 	(2) coverage for the daily co-payment amount of Medicare
18.22 	Part A eligible expenses for the calendar year incurred for
18.23 	skilled nursing facility care;
18.24 	(3) coverage for the coinsurance amount or in the case of
18.25 	hospital outpatient department services paid under a prospective
18.26 	payment system, the co-payment amount, of Medicare eligible
18.27 	expenses under Medicare Part B regardless of hospital
18.28 	confinement, and the Medicare Part B deductible amount;
18.29 	(4) 80 percent of the usual and customary hospital and
18.30 	medical expenses and supplies described in section 62E.06,
18.31 	subdivision 1, not to exceed any charge limitation established
18.32 	by the Medicare program or state law,;the usual and customary
18.33 	hospital and medical expenses and supplies, described in section
18.34 	62E.06, subdivision 1, while in a foreign country,;and
18.35 	prescription drug expenses, not covered by Medicare.  An
18.36 	outpatient prescription drug benefit must not be included for
19.1 	sale or issuance in a Medicare supplement policy or certificate
19.2 	issued on or after January 1, 2006;
19.3 	(5) coverage for the reasonable cost of the first three
19.4 	pints of blood, or equivalent quantities of packed red blood
19.5 	cells as defined under federal regulations under Medicare parts
19.6 	A and B, unless replaced in accordance with federal regulations;
19.7 	(6) 100 percent of the cost of immunizations and routine
19.8 	screening procedures for cancer, including mammograms and pap
19.9 	smears;
19.10 	(7) preventive medical care benefit:  coverage for the
19.11 	following preventive health services:
19.12 	(i) an annual clinical preventive medical history and
19.13 	physical examination that may include tests and services from
19.14 	clause (ii) and patient education to address preventive health
19.15 	care measures;
19.16 	(ii) any one or a combination of the following preventive
19.17 	screening tests or preventive services, the frequency of which
19.18 	is considered medically appropriate:
19.19 	(A) fecal occult blood test and/or digital rectal
19.20 	examination;
19.21 	(B) dipstick urinalysis for hematuria, bacteriuria, and
19.22 	proteinuria;
19.23 	(C) pure tone (air only) hearing screening test
19.24 	administered or ordered by a physician;
19.25 	(D) serum cholesterol screening every five years;
19.26 	(E) thyroid function test;
19.27 	(F) diabetes screening;
19.28 	(iii) any other tests or preventive measures determined
19.29 	appropriate by the attending physician.
19.30 	Reimbursement shall be for the actual charges up to 100
19.31 	percent of the Medicare-approved amount for each service as if
19.32 	Medicare were to cover the service as identified in American
19.33 	Medical Association current procedural terminology (AMA CPT)
19.34 	codes to a maximum of $120 annually under this benefit.  This
19.35 	benefit shall not include payment for any procedure covered by
19.36 	Medicare;
20.1 	(8) at-home recovery benefit:  coverage for services to
20.2 	provide short-term at-home assistance with activities of daily
20.3 	living for those recovering from an illness, injury, or surgery:
20.4 	(i) for purposes of this benefit, the following definitions
20.5 	shall apply:
20.6 	(A) "activities of daily living" include, but are not
20.7 	limited to, bathing, dressing, personal hygiene, transferring,
20.8 	eating, ambulating, assistance with drugs that are normally
20.9 	self-administered, and changing bandages or other dressings;
20.10 	(B) "care provider" means a duly qualified or licensed home
20.11 	health aide/homemaker, personal care aide, or nurse provided
20.12 	through a licensed home health care agency or referred by a
20.13 	licensed referral agency or licensed nurses registry;
20.14 	(C) "home" means a place used by the insured as a place of
20.15 	residence, provided that the place would qualify as a residence
20.16 	for home health care services covered by Medicare.  A hospital
20.17 	or skilled nursing facility shall not be considered the
20.18 	insured's place of residence;
20.19 	(D) "at-home recovery visit" means the period of a visit
20.20 	required to provide at-home recovery care, without limit on the
20.21 	duration of the visit, except each consecutive four hours in a
20.22 	24-hour period of services provided by a care provider is one
20.23 	visit;
20.24 	(ii) coverage requirements and limitations:
20.25 	(A) at-home recovery services provided must be primarily
20.26 	services that assist in activities of daily living;
20.27 	(B) the insured's attending physician must certify that the
20.28 	specific type and frequency of at-home recovery services are
20.29 	necessary because of a condition for which a home care plan of
20.30 	treatment was approved by Medicare;
20.31 	(C) coverage is limited to:
20.32 	(I) no more than the number and type of at-home recovery
20.33 	visits certified as medically necessary by the insured's
20.34 	attending physician.  The total number of at-home recovery
20.35 	visits shall not exceed the number of Medicare-approved home
20.36 	health care visits under a Medicare-approved home care plan of
21.1 	treatment;
21.2 	(II) the actual charges for each visit up to a maximum
21.3 	reimbursement of $100 per visit;
21.4 	(III) $4,000 per calendar year;
21.5 	(IV) seven visits in any one week;
21.6 	(V) care furnished on a visiting basis in the insured's
21.7 	home;
21.8 	(VI) services provided by a care provider as defined in
21.9 	this section;
21.10 	(VII) at-home recovery visits while the insured is covered
21.11 	under the policy or certificate and not otherwise excluded;
21.12 	(VIII) at-home recovery visits received during the period
21.13 	the insured is receiving Medicare-approved home care services or
21.14 	no more than eight weeks after the service date of the last
21.15 	Medicare-approved home health care visit;
21.16 	(iii) coverage is excluded for:
21.17 	(A) home care visits paid for by Medicare or other
21.18 	government programs; and
21.19 	(B) care provided by unpaid volunteers or providers who are
21.20 	not care providers.

21.21 	Sec. 11. Minnesota Statutes 2004, section 62A.316, is
21.22 	amended to read:
21.23 	62A.316 BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.
21.24 	(a) The basic Medicare supplement plan must have a level of
21.25 	coverage that will provide:
21.26 	(1) coverage for all of the Medicare part A inpatient
21.27 	hospital coinsurance amounts, and 100 percent of all Medicare
21.28 	part A eligible expenses for hospitalization not covered by
21.29 	Medicare, after satisfying the Medicare part A deductible;
21.30 	(2) coverage for the daily co-payment amount of Medicare
21.31 	part A eligible expenses for the calendar year incurred for
21.32 	skilled nursing facility care;
21.33 	(3) coverage for the coinsurance amount, or in the case of
21.34 	outpatient department services paid under a prospective payment
21.35 	system, the co-payment amount, of Medicare eligible expenses
21.36 	under Medicare part B regardless of hospital confinement,
22.1 	subject to the Medicare part B deductible amount;
22.2 	(4) 80 percent of the hospital and medical expenses and
22.3 	supplies incurred during travel outside the United States as a
22.4 	result of a medical emergency;
22.5 	(5) coverage for the reasonable cost of the first three
22.6 	pints of blood, or equivalent quantities of packed red blood
22.7 	cells as defined under federal regulations under Medicare parts
22.8 	A and B, unless replaced in accordance with federal regulations;
22.9 	(6) 100 percent of the cost of immunizations and routine
22.10 	screening procedures for cancer screening including mammograms
22.11 	and pap smears; and
22.12 	(7) 80 percent of coverage for all physician prescribed
22.13 	medically appropriate and necessary equipment and supplies used
22.14 	in the management and treatment of diabetes.  Coverage must
22.15 	include persons with gestational, type I, or type II diabetes.
22.16 	(b) Only the following optional benefit riders may be added
22.17 	to this plan:
22.18 	(1) coverage for all of the Medicare part A inpatient
22.19 	hospital deductible amount;
22.20 	(2) a minimum of 80 percent of eligible medical expenses
22.21 	and supplies not covered by Medicare part B, not to exceed any
22.22 	charge limitation established by the Medicare program or state
22.23 	law;
22.24 	(3) coverage for all of the Medicare part B annual
22.25 	deductible;
22.26 	(4) coverage for at least 50 percent, or the equivalent of
22.27 	50 percent, of usual and customary prescription drug expenses.
22.28 	An outpatient prescription drug benefit must not be included for
22.29 	sale or issuance in a Medicare policy or certificate issued on
22.30 	or after January 1, 2006;
22.31 	(5) coverage for the following preventive health services:
22.32 	(i) an annual clinical preventive medical history and
22.33 	physical examination that may include tests and services from
22.34 	clause (ii) and patient education to address preventive health
22.35 	care measures;
22.36 	(ii) any one or a combination of the following preventive
23.1 	screening tests or preventive services, the frequency of which
23.2 	is considered medically appropriate:
23.3 	(A) fecal occult blood test and/or digital rectal
23.4 	examination;
23.5 	(B) dipstick urinalysis for hematuria, bacteriuria, and
23.6 	proteinuria;
23.7 	(C) pure tone (air only) hearing screening test,
23.8 	administered or ordered by a physician;
23.9 	(D) serum cholesterol screening every five years;
23.10 	(E) thyroid function test;
23.11 	(F) diabetes screening;
23.12 	(iii) any other tests or preventive measures determined
23.13 	appropriate by the attending physician.
23.14 	Reimbursement shall be for the actual charges up to 100
23.15 	percent of the Medicare-approved amount for each service, as if
23.16 	Medicare were to cover the service as identified in American
23.17 	Medical Association current procedural terminology (AMA CPT)
23.18 	codes, to a maximum of $120 annually under this benefit.  This
23.19 	benefit shall not include payment for a procedure covered by
23.20 	Medicare;
23.21 	(6) coverage for services to provide short-term at-home
23.22 	assistance with activities of daily living for those recovering
23.23 	from an illness, injury, or surgery:
23.24 	(i) For purposes of this benefit, the following definitions
23.25 	apply:
23.26 	(A) "activities of daily living" include, but are not
23.27 	limited to, bathing, dressing, personal hygiene, transferring,
23.28 	eating, ambulating, assistance with drugs that are normally
23.29 	self-administered, and changing bandages or other dressings;
23.30 	(B) "care provider" means a duly qualified or licensed home
23.31 	health aide/homemaker, personal care aid, or nurse provided
23.32 	through a licensed home health care agency or referred by a
23.33 	licensed referral agency or licensed nurses registry;
23.34 	(C) "home" means a place used by the insured as a place of
23.35 	residence, provided that the place would qualify as a residence
23.36 	for home health care services covered by Medicare.  A hospital
24.1 	or skilled nursing facility shall not be considered the
24.2 	insured's place of residence;
24.3 	(D) "at-home recovery visit" means the period of a visit
24.4 	required to provide at-home recovery care, without limit on the
24.5 	duration of the visit, except each consecutive four hours in a
24.6 	24-hour period of services provided by a care provider is one
24.7 	visit;
24.8 	(ii) Coverage requirements and limitations:
24.9 	(A) at-home recovery services provided must be primarily
24.10 	services that assist in activities of daily living;
24.11 	(B) the insured's attending physician must certify that the
24.12 	specific type and frequency of at-home recovery services are
24.13 	necessary because of a condition for which a home care plan of
24.14 	treatment was approved by Medicare;
24.15 	(C) coverage is limited to:
24.16 	(I) no more than the number and type of at-home recovery
24.17 	visits certified as necessary by the insured's attending
24.18 	physician.  The total number of at-home recovery visits shall
24.19 	not exceed the number of Medicare-approved home care visits
24.20 	under a Medicare-approved home care plan of treatment;
24.21 	(II) the actual charges for each visit up to a maximum
24.22 	reimbursement of $40 per visit;
24.23 	(III) $1,600 per calendar year;
24.24 	(IV) seven visits in any one week;
24.25 	(V) care furnished on a visiting basis in the insured's
24.26 	home;
24.27 	(VI) services provided by a care provider as defined in
24.28 	this section;
24.29 	(VII) at-home recovery visits while the insured is covered
24.30 	under the policy or certificate and not otherwise excluded;
24.31 	(VIII) at-home recovery visits received during the period
24.32 	the insured is receiving Medicare-approved home care services or
24.33 	no more than eight weeks after the service date of the last
24.34 	Medicare-approved home health care visit;
24.35 	(iii) Coverage is excluded for:
24.36 	(A) home care visits paid for by Medicare or other
25.1 	government programs; and
25.2 	(B) care provided by family members, unpaid volunteers, or
25.3 	providers who are not care providers;
25.4 	(7) coverage for at least 50 percent, or the equivalent of
25.5 	50 percent, of usual and customary prescription drug expenses to
25.6 	a maximum of $1,200 paid by the issuer annually under this
25.7 	benefit.  An issuer of Medicare supplement insurance policies
25.8 	that elects to offer this benefit rider shall also make
25.9 	available coverage that contains the rider specified in clause
25.10 	(4). An outpatient prescription drug benefit must not be
25.11 	included for sale or issuance in a Medicare policy or
25.12 	certificate issued on or after January 1, 2006.

25.13 	Sec. 12. Minnesota Statutes 2004, section 62A.318, is
25.14 	amended to read:
25.15 	62A.318 MEDICARE SELECT POLICIES AND CERTIFICATES.
25.16 		Subdivision 1.Applicability and advertising limitation.
 25.17 	(a) This section applies to Medicare select policies and
25.18 	certificates, as defined in this section, including those issued
25.19 	by health maintenance organizations.
25.20 	(b) No policy or certificate may be advertised as a
25.21 	Medicare select policy or certificate unless it meets the
25.22 	requirements of this section.
25.23 	(b) Subd. 2.[DEFINITIONS.] For the purposes of this
25.24 	section:
25.25 	(1) "complaint" means any dissatisfaction expressed by an
25.26 	individual concerning a Medicare select issuer or its network
25.27 	providers;
25.28 	(2) "grievance" means dissatisfaction expressed in writing
25.29 	by an individual insured under a Medicare select policy or
25.30 	certificate with the administration, claims practices, or
25.31 	provision of services concerning a Medicare select issuer or its
25.32 	network providers;
25.33 	(3) "Medicare select issuer" means an issuer offering, or
25.34 	seeking to offer, a Medicare select policy or certificate;
25.35 	(4) "Medicare select policy" or "Medicare select
25.36 	certificate" means a Medicare supplement policy or certificate
26.1 	that contains restricted network provisions;
26.2 	(5) "network provider" means a provider of health care, or
26.3 	a group of providers of health care, that has entered into a
26.4 	written agreement with the issuer to provide benefits insured
26.5 	under a Medicare select policy or certificate;
26.6 	(6) "restricted network provision" means a provision that
26.7 	conditions the payment of benefits, in whole or in part, on the
26.8 	use of network providers; and
26.9 	(7) "service area" means the geographic area approved by
26.10 	the commissioner within which an issuer is authorized to offer a
26.11 	Medicare select policy or certificate.
26.12 	(c) Subd. 3.[REVIEW BY COMMISSIONER.] The commissioner
26.13 	may authorize an issuer to offer a Medicare select policy or
26.14 	certificate pursuant to this section and section 4358 of the
26.15 	Omnibus Budget Reconciliation Act (OBRA) of 1990, Public Law
26.16 	101-508, if the commissioner finds that the issuer has satisfied
26.17 	all of the requirements of Minnesota Statutes.
26.18 	(d) Subd. 4.[APPROVAL; PLAN OF OPERATION.] A Medicare
26.19 	select issuer shall not issue a Medicare select policy or
26.20 	certificate in this state until its plan of operation has been
26.21 	approved by the commissioner.
26.22 	(e) Subd. 5.[CONTENTS OF PLAN OF OPERATION.] A Medicare
26.23 	select issuer shall file a proposed plan of operation with the
26.24 	commissioner, in a format prescribed by the commissioner.  The
26.25 	plan of operation shall contain at least the following
26.26 	information:
26.27 	(1) evidence that all covered services that are subject to
26.28 	restricted network provisions are available and accessible
26.29 	through network providers, including a demonstration that:
26.30 	(i) the services can be provided by network providers with
26.31 	reasonable promptness with respect to geographic location, hours
26.32 	of operation, and after-hour care.  The hours of operation and
26.33 	availability of after-hour care shall reflect usual practice in
26.34 	the local area.  Geographic availability shall reflect the usual
26.35 	travel times within the community;
26.36 	(ii) the number of network providers in the service area is
27.1 	sufficient, with respect to current and expected policyholders,
27.2 	either:
27.3 	(A) to deliver adequately all services that are subject to
27.4 	a restricted network provision; or
27.5 	(B) to make appropriate referrals;
27.6 	(iii) there are written agreements with network providers
27.7 	describing specific responsibilities;
27.8 	(iv) emergency care is available 24 hours per day and seven
27.9 	days per week; and
27.10 	(v) in the case of covered services that are subject to a
27.11 	restricted network provision and are provided on a prepaid
27.12 	basis, there are written agreements with network providers
27.13 	prohibiting the providers from billing or otherwise seeking
27.14 	reimbursement from or recourse against an individual insured
27.15 	under a Medicare select policy or certificate.  This section
27.16 	does not apply to supplemental charges or coinsurance amounts as
27.17 	stated in the Medicare select policy or certificate;
27.18 	(2) a statement or map providing a clear description of the
27.19 	service area;
27.20 	(3) a description of the grievance procedure to be used;
27.21 	(4) a description of the quality assurance program,
27.22 	including:
27.23 	(i) the formal organizational structure;
27.24 	(ii) the written criteria for selection, retention, and
27.25 	removal of network providers; and
27.26 	(iii) the procedures for evaluating quality of care
27.27 	provided by network providers, and the process to initiate
27.28 	corrective action when warranted;
27.29 	(5) a list and description, by specialty, of the network
27.30 	providers;
27.31 	(6) copies of the written information proposed to be used
27.32 	by the issuer to comply with paragraph (i); and
27.33 	(7) any other information requested by the commissioner.
27.34 	(f) Subd. 6.[FILING OF PROPOSED CHANGES; DEEMED
27.35 	APPROVAL.] A Medicare select issuer shall file proposed changes
27.36 	to the plan of operation, except for changes to the list of
28.1 	network providers, with the commissioner before implementing the
28.2 	changes.  The changes shall be considered approved by the
28.3 	commissioner after 30 days unless specifically disapproved.
28.4 	An updated list of network providers shall be filed with
28.5 	the commissioner at least quarterly.
28.6 	(g) Subd. 7.[NONNETWORK PROVIDERS; LIMITS ON COVERAGE
28.7 	RESTRICTIONS.] A Medicare select policy or certificate shall not
28.8 	restrict payment for covered services provided by nonnetwork
28.9 	providers if:
28.10 	(1) the services are for symptoms requiring emergency care
28.11 	or are immediately required for an unforeseen illness, injury,
28.12 	or condition; and
28.13 	(2) it is not reasonable to obtain the services through a
28.14 	network provider.
28.15 	(h) Subd. 8.[FULL PAYMENT; SERVICES NOT AVAILABLE IN
28.16 	NETWORK.] A Medicare select policy or certificate shall provide
28.17 	payment for full coverage under the policy or certificate for
28.18 	covered services that are not available through network
28.19 	providers.
28.20 	(i) Subd. 9.[REQUIRED DISCLOSURES.] A Medicare select
28.21 	issuer shall make full and fair disclosure in writing of the
28.22 	provisions, restrictions, and limitations of the Medicare select
28.23 	policy or certificate to each applicant.  This disclosure must
28.24 	include at least the following:
28.25 	(1) an outline of coverage sufficient to permit the
28.26 	applicant to compare the coverage and premiums of the Medicare
28.27 	select policy or certificate with:
28.28 	(i) other Medicare supplement policies or certificates
28.29 	offered by the issuer; and
28.30 	(ii) other Medicare select policies or certificates;
28.31 	(2) a description, including address, phone number, and
28.32 	hours of operation, of the network providers, including primary
28.33 	care physicians, specialty physicians, hospitals, and other
28.34 	providers;
28.35 	(3) a description of the restricted network provisions,
28.36 	including payments for coinsurance and deductibles when
29.1 	providers other than network providers are used;
29.2 	(4) a description of coverage for emergency and urgently
29.3 	needed care and other out-of-service area coverage;
29.4 	(5) a description of limitations on referrals to restricted
29.5 	network providers and to other providers;
29.6 	(6) a description of the policyholder's rights to purchase
29.7 	any other Medicare supplement policy or certificate otherwise
29.8 	offered by the issuer; and
29.9 	(7) a description of the Medicare select issuer's quality
29.10 	assurance program and grievance procedure.
29.11 	(j) Subd. 10.[PROOF OF DISCLOSURE.] Before the sale of a
29.12 	Medicare select policy or certificate, a Medicare select issuer
29.13 	shall obtain from the applicant a signed and dated form stating
29.14 	that the applicant has received the information provided
29.15 	pursuant to paragraph (i) and that the applicant understands the
29.16 	restrictions of the Medicare select policy or certificate.
29.17 	(k) Subd. 11.[GRIEVANCE PROCEDURES.] A Medicare select
29.18 	issuer shall have and use procedures for hearing complaints and
29.19 	resolving written grievances from the subscribers.  The
29.20 	procedures shall be aimed at mutual agreement for settlement and
29.21 	may include arbitration procedures.
29.22 	(1) The grievance procedure must be described in the policy
29.23 	and certificates and in the outline of coverage.
29.24 	(2) At the time the policy or certificate is issued, the
29.25 	issuer shall provide detailed information to the policyholder
29.26 	describing how a grievance may be registered with the issuer.
29.27 	(3) Grievances must be considered in a timely manner and
29.28 	must be transmitted to appropriate decision makers who have
29.29 	authority to fully investigate the issue and take corrective
29.30 	action.
29.31 	(4) If a grievance is found to be valid, corrective action
29.32 	must be taken promptly.
29.33 	(5) All concerned parties must be notified about the
29.34 	results of a grievance.
29.35 	(6) The issuer shall report no later than March 31 of each
29.36 	year to the commissioner regarding the grievance procedure.  The
30.1 	report shall be in a format prescribed by the commissioner and
30.2 	shall contain the number of grievances filed in the past year
30.3 	and a summary of the subject, nature, and resolution of the
30.4 	grievances.
30.5 	(l) Subd. 12.[OFFER OF ALTERNATIVE PRODUCT REQUIRED.] At
30.6 	the time of initial purchase, a Medicare select issuer shall
30.7 	make available to each applicant for a Medicare select policy or
30.8 	certificate the opportunity to purchase a Medicare supplement
30.9 	policy or certificate otherwise offered by the issuer.
30.10 	(m)(1) Subd. 13.[RIGHT TO REPLACE WITH NONNETWORK
30.11 	COVERAGE.] (a) At the request of an individual insured under a
30.12 	Medicare select policy or certificate, a Medicare select issuer
30.13 	shall make available to the individual insured the opportunity
30.14 	to purchase a Medicare supplement policy or certificate offered
30.15 	by the issuer that has comparable or lesser benefits and that
30.16 	does not contain a restricted network provision.  The issuer
30.17 	shall make the policies or certificates available without
30.18 	requiring evidence of insurability after the Medicare supplement 
30.19 	select policy or certificate has been in force for six months.
30.20 	If the issuer does not have available for sale a policy or
30.21 	certificate without restrictive network provisions, the issuer
30.22 	shall provide enrollment information for the Minnesota
30.23 	comprehensive health association Medicare supplement plans.
30.24 	(2) (b) For the purposes of this paragraph subdivision, a
30.25 	Medicare supplement policy or certificate will be considered to
30.26 	have comparable or lesser benefits unless it contains one or
30.27 	more significant benefits not included in the Medicare select
30.28 	policy or certificate being replaced.  For the purposes of this
30.29 	paragraph, a significant benefit means coverage for the Medicare
30.30 	Part A deductible, coverage for prescription drugs, coverage for
30.31 	at-home recovery services, or coverage for part B excess
30.32 	charges. Coverage for outpatient prescription drugs is not
30.33 	permitted in Medicare supplement policies or certificates issued
30.34 	on or after January 1, 2006.
30.35 	(n) Subd. 14.[CONTINUATION OF COVERAGE UNDER CERTAIN
30.36 	CIRCUMSTANCES.] (a) Medicare select policies and certificates
31.1 	shall provide for continuation of coverage if the secretary of
31.2 	health and human services determines that Medicare select
31.3 	policies and certificates issued pursuant to this section should
31.4 	be discontinued due to either the failure of the Medicare select
31.5 	program to be reauthorized under law or its substantial
31.6 	amendment.
31.7 	(1) (b) In the event of a determination under paragraph
31.8 	(a),each Medicare select issuer shall make available to each
31.9 	individual insured under a Medicare select policy or certificate
31.10 	the opportunity to purchase a Medicare supplement policy or
31.11 	certificate offered by the issuer that has comparable or lesser
31.12 	benefits and that does not contain a restricted network
31.13 	provision.  The issuer shall make the policies and certificates
31.14 	available without requiring evidence of insurability.
31.15 	(2) (c) For the purposes of this paragraph subdivision, a
31.16 	Medicare supplement policy or certificate will be considered to
31.17 	have comparable or lesser benefits unless it contains one or
31.18 	more significant benefits not included in the Medicare select
31.19 	policy or certificate being replaced.  For the purposes of this
31.20 	paragraph subdivision, a significant benefit means coverage for
31.21 	the Medicare Part A deductible, coverage for prescription drugs,
31.22 	coverage for at-home recovery services, or coverage for part B
31.23 	excess charges. Coverage for outpatient prescription drugs must
31.24 	not be included for sale or issuance of a Medicare supplement
31.25 	policy or certificate issued on or after January 1, 2006.
31.26 	(o) Subd. 15.[PROVISION OF DATA REQUIRED.] A Medicare
31.27 	select issuer shall comply with reasonable requests for data
31.28 	made by state or federal agencies, including the United States
31.29 	Department of Health and Human Services, for the purpose of
31.30 	evaluating the Medicare select program.
31.31 	(p) Subd. 16.[REGULATION BY COMMERCE DEPARTMENT.]
31.32 	Medicare select policies and certificates under this section
31.33 	shall be regulated and approved by the Department of Commerce.
31.34 	(q) Subd. 17.[TYPES OF PLANS.] Medicare select policies
31.35 	and certificates must be either a basic plan or an extended
31.36 	basic plan.  Before a Medicare select policy or certificate is
32.1 	sold or issued in this state, the applicant must be provided
32.2 	with an explanation of coverage for both a Medicare select basic
32.3 	and a Medicare select extended basic policy or certificate and
32.4 	must be provided with the opportunity of purchasing either a
32.5 	Medicare select basic or a Medicare select extended basic
32.6 	policy.  The basic plan may also include any of the optional
32.7 	benefit riders authorized by section 62A.316.  Preventive care
32.8 	provided by Medicare select policies or certificates must be
32.9 	provided as set forth in section 62A.315 or 62A.316, except that
32.10 	the benefits are as defined in chapter 62D.
32.11 	(r)  (Expired) 

32.12 	Sec. 13. Minnesota Statutes 2004, section 62A.36,
32.13 	subdivision 1, is amended to read:
32.14 		Subdivision 1.Loss ratio standards and refund
32.15 	provisions.  (a) For purposes of this section, "Medicare
32.16 	supplement policy or certificate" has the meaning given in
32.17 	section 62A.31, subdivision 3, but also includes a policy,
32.18 	contract, or certificate issued under a contract under section
32.19 	1833 or 1876 of the federal Social Security Act, United States
32.20 	Code, title 42, section 1395 et seq.  A Medicare supplement
32.21 	policy form or certificate form shall not be delivered or issued
32.22 	for delivery unless the policy form or certificate form can be
32.23 	expected, as estimated for the entire period for which rates are
32.24 	computed to provide coverage, to return to policyholders and
32.25 	certificate holders in the form of aggregate benefits, not
32.26 	including anticipated refunds or credits, provided under the
32.27 	policy form or certificate form:
32.28 	(1) at least 75 percent of the aggregate amount of premiums
32.29 	earned in the case of group policies; and
32.30 	(2) at least 65 percent of the aggregate amount of premiums
32.31 	earned in the case of individual policies, calculated on the
32.32 	basis of .
32.33 	These ratios must be calculated based upon incurred claims
32.34 	experience,or incurred health care expenses where coverage is
32.35 	provided by a health maintenance organization on a service
32.36 	rather than reimbursement basis,and earned premiums for the
33.1 	period and according to accepted actuarial principles and
33.2 	practices. For purposes of this calculation, "health care
33.3 	expenses" has the meaning given in section 62A.31, subdivision
33.4 	3, paragraph (j).An insurer shall demonstrate that the third
33.5 	year loss ratio is greater than or equal to the applicable
33.6 	percentage.
33.7 	All filings of rates and rating schedules shall demonstrate
33.8 	that expected claims in relation to premiums comply with the
33.9 	requirements of this section when combined with actual
33.10 	experience to date.  Filings of rate revisions shall also
33.11 	demonstrate that the anticipated loss ratio over the entire
33.12 	future period for which the revised rates are computed to
33.13 	provide coverage can be expected to meet the appropriate loss
33.14 	ratio standards, and aggregate loss ratio from inception of the
33.15 	policy or certificate shall equal or exceed the appropriate loss
33.16 	ratio standards.
33.17 	An application form for a Medicare supplement policy or
33.18 	certificate, as defined in this section, must prominently
33.19 	disclose the anticipated loss ratio and explain what it means.
33.20 	(b) An issuer shall collect and file with the commissioner
33.21 	by May 31 of each year the data contained in the National
33.22 	Association of Insurance Commissioners Medicare Supplement
33.23 	Refund Calculating form, for each type of Medicare supplement
33.24 	benefit plan.
33.25 	If, on the basis of the experience as reported, the
33.26 	benchmark ratio since inception (ratio 1) exceeds the adjusted
33.27 	experience ratio since inception (ratio 3), then a refund or
33.28 	credit calculation is required.  The refund calculation must be
33.29 	done on a statewide basis for each type in a standard Medicare
33.30 	supplement benefit plan.  For purposes of the refund or credit
33.31 	calculation, experience on policies issued within the reporting
33.32 	year shall be excluded.
33.33 	A refund or credit shall be made only when the benchmark
33.34 	loss ratio exceeds the adjusted experience loss ratio and the
33.35 	amount to be refunded or credited exceeds a de minimis level.
33.36 	The refund shall include interest from the end of the calendar
34.1 	year to the date of the refund or credit at a rate specified by
34.2 	the secretary of health and human services, but in no event
34.3 	shall it be less than the average rate of interest for 13-week
34.4 	treasury bills.  A refund or credit against premiums due shall
34.5 	be made by September 30 following the experience year on which
34.6 	the refund or credit is based.
34.7 	(c) An issuer of Medicare supplement policies and
34.8 	certificates in this state shall file annually its rates, rating
34.9 	schedule, and supporting documentation including ratios of
34.10 	incurred losses to earned premiums by policy or certificate
34.11 	duration for approval by the commissioner according to the
34.12 	filing requirements and procedures prescribed by the
34.13 	commissioner.  The supporting documentation shall also
34.14 	demonstrate in accordance with actuarial standards of practice
34.15 	using reasonable assumptions that the appropriate loss ratio
34.16 	standards can be expected to be met over the entire period for
34.17 	which rates are computed.  The demonstration shall exclude
34.18 	active life reserves.  An expected third-year loss ratio which
34.19 	is greater than or equal to the applicable percentage shall be
34.20 	demonstrated for policies or certificates in force less than
34.21 	three years.
34.22 	As soon as practicable, but before the effective date of
34.23 	enhancements in Medicare benefits, every issuer of Medicare
34.24 	supplement policies or certificates in this state shall file
34.25 	with the commissioner, in accordance with the applicable filing
34.26 	procedures of this state:
34.27 	(1) a premium adjustment that is necessary to produce an
34.28 	expected loss ratio under the policy or certificate that will
34.29 	conform with minimum loss ratio standards for Medicare
34.30 	supplement policies or certificates.  No premium adjustment that
34.31 	would modify the loss ratio experience under the policy or
34.32 	certificate other than the adjustments described herein shall be
34.33 	made with respect to a policy or certificate at any time other
34.34 	than on its renewal date or anniversary date;
34.35 	(2) if an issuer fails to make premium adjustments
34.36 	acceptable to the commissioner, the commissioner may order
35.1 	premium adjustments, refunds, or premium credits considered
35.2 	necessary to achieve the loss ratio required by this section;
35.3 	(3) any appropriate riders, endorsements, or policy or
35.4 	certificate forms needed to accomplish the Medicare supplement
35.5 	insurance policy or certificate modifications necessary to
35.6 	eliminate benefit duplications with Medicare.  The riders,
35.7 	endorsements, or policy or certificate forms shall provide a
35.8 	clear description of the Medicare supplement benefits provided
35.9 	by the policy or certificate.
35.10 	(d) The commissioner may conduct a public hearing to gather
35.11 	information concerning a request by an issuer for an increase in
35.12 	a rate for a policy form or certificate form if the experience
35.13 	of the form for the previous reporting period is not in
35.14 	compliance with the applicable loss ratio standard.  The
35.15 	determination of compliance is made without consideration of a
35.16 	refund or credit for the reporting period.  Public notice of the
35.17 	hearing shall be furnished in a manner considered appropriate by
35.18 	the commissioner.
35.19 	(e) An issuer shall not use or change premium rates for a
35.20 	Medicare supplement policy or certificate unless the rates,
35.21 	rating schedule, and supporting documentation have been filed
35.22 	with, and approved by, the commissioner according to the filing
35.23 	requirements and procedures prescribed by the commissioner.
35.24 	(f) An issuer must file any riders or amendments to policy
35.25 	or certificate forms to delete outpatient prescription drug
35.26 	benefits as required by the Medicare Prescription Drug,
35.27 	Improvement, and Modernization Act of 2003 only with the
35.28 	commissioner in the state in which the policy or certificate was
35.29 	issued.
35.30 	(g) Issuers are permitted to continue to issue currently
35.31 	approved policy and certificate forms as appropriate through
35.32 	December 31, 2005.
35.33 	(h) Issuers must comply with any requirements to notify
35.34 	enrollees under the Medicare Prescription Drug, Improvement, and
35.35 	Modernization Act of 2003.

35.36 	Sec. 14. REVISOR INSTRUCTION.
 36.1 	The revisor of statutes shall, in producing Minnesota
36.2 	Statutes 2006, place in alphabetical order the terms defined in
36.3 	Minnesota Statutes, section 62A.31, subdivision 3, and make any
36.4 	necessary resulting changes in cross-references.

36.5 	Sec. 15. EFFECTIVE DATE.
 36.6 	Sections 1 to 13 are effective January 1, 2006, except that
36.7 	section 13, paragraphs (f), (g), and (h), are effective the day
36.8 	following final enactment.

36.9 	ARTICLE 2
36.10 	REGULATION OF STAND-ALONE MEDICARE
36.11 	PART D PRESCRIPTION DRUG PLANS

36.12 	Section 1. [62A.451] DEFINITIONS.
36.13 		Subdivision 1.Applicability. For purposes of sections
36.14 	62A.451 to 62A.4528, the terms defined in this section have the
36.15 	meanings given.
36.16 		Subd. 2.Commissioner. "Commissioner" means the
36.17 	commissioner of commerce.
36.18 		Subd. 3.Enrollee. "Enrollee" means an individual who is
36.19 	entitled to limited health services under a contract with an
36.20 	entity authorized to provide or arrange for such services under
36.21 	sections 62A.451 to 62A.4528.
36.22 		Subd. 4.Evidence of coverage. "Evidence of coverage"
36.23 	means the certificate, agreement, or contract issued under
36.24 	section 62A.4516 setting forth the coverage to which an enrollee
36.25 	is entitled.
36.26 		Subd. 5.Limited health service. "Limited health service"
36.27 	means pharmaceutical services covered under Medicare Part D.
36.28 	Limited health service does not include hospital, medical,
36.29 	surgical, or emergency services.
36.30 		Subd. 6.Prepaid limited health service
36.31 	organization. "Prepaid limited health service organization"
36.32 	means any corporation, partnership, or other entity that, in
36.33 	return for a prepayment, undertakes to provide or arrange for
36.34 	the provision of limited health services to enrollees.  Prepaid
36.35 	limited health service organization does not include:
36.36 	(1) an entity otherwise authorized under the laws of this
37.1 	state either to provide any limited health service on a
37.2 	prepayment or other basis or to indemnify for any limited health
37.3 	service;
37.4 	(2) an entity that meets the requirements of section
37.5 	62A.4514; or 
37.6 	(3) a provider or entity when providing or arranging for
37.7 	the provision of limited health services under a contract with a
37.8 	prepaid limited health service organization or with an entity
37.9 	described in clause (1) or (2).
37.10 		Subd. 7.Provider. "Provider" means a physician,
37.11 	pharmacist, health facility, or other person or institution that
37.12 	is licensed or otherwise authorized to deliver or furnish
37.13 	limited health services under sections 62A.451 to 62A.4528.
37.14 		Subd. 8.Subscriber. "Subscriber" means the person whose
37.15 	employment or other status, except for family dependency, is the
37.16 	basis for entitlement to limited health services under a
37.17 	contract with an entity authorized to provide or arrange for
37.18 	such services under sections 62A.451 to 62A.4528.

37.19 	Sec. 2. [62A.4511] CERTIFICATE OF AUTHORITY REQUIRED.
37.20 	No person, corporation, partnership, or other entity may
37.21 	operate a prepaid limited health service organization in this
37.22 	state without obtaining and maintaining a certificate of
37.23 	authority from the commissioner under sections 62A.451 to
37.24 	62A.4528.

37.25 	Sec. 3. [62A.4512] APPLICATION FOR CERTIFICATE OF
37.26 	AUTHORITY.
37.27 	An application for a certificate of authority to operate a
37.28 	prepaid limited health service organization must be filed with
37.29 	the commissioner on a form prescribed by the commissioner.  The
37.30 	application must be verified by an officer or authorized
37.31 	representative of the applicant and must set forth, or be
37.32 	accompanied by, the following:
37.33 	(1) a copy of the applicant's basic organizational
37.34 	document, such as the articles of incorporation, articles of
37.35 	association, partnership agreement, trust agreement, or other
37.36 	applicable documents and all amendments to these documents;
38.1 	(2) a copy of all bylaws, rules and regulations, or similar
38.2 	documents, if any, regulating the conduct of the applicant's
38.3 	internal affairs;
38.4 	(3) a list of the names, addresses, official positions, and
38.5 	biographical information of the individuals who are responsible
38.6 	for conducting the applicant's affairs, including but not
38.7 	limited to, all members of the board of directors, board of
38.8 	trustees, executive committee, or other governing board or
38.9 	committee, the principal officers, and any person or entity
38.10 	owning or having the right to acquire ten percent or more of the
38.11 	voting securities of the applicant, and the partners or members
38.12 	in the case of a partnership or association;
38.13 	(4) a statement generally describing the applicant, its
38.14 	facilities, personnel, and the limited health services to be
38.15 	offered;
38.16 	(5) a copy of the form of any contract made or to be made
38.17 	between the applicant and any providers regarding the provision
38.18 	of limited health services to enrollees;
38.19 	(6) a copy of the form of any contract made, or to be made
38.20 	between the applicant and any person listed in clause (3);
38.21 	(7) a copy of the form of any contract made or to be made
38.22 	between the applicant and any person, corporation, partnership,
38.23 	or other entity for the performance on the applicant's behalf of
38.24 	any functions including, but not limited to, marketing,
38.25 	administration, enrollment, investment management, and
38.26 	subcontracting for the provision of limited health services to
38.27 	enrollees;
38.28 	(8) a copy of the form of any group contract that is to be
38.29 	issued to employers, unions, trustees, or other organizations
38.30 	and a copy of any form of evidence of coverage to be issued to
38.31 	subscribers;
38.32 	(9) a copy of the applicant's most recent financial
38.33 	statements audited by independent certified public accountants.
38.34 	If the financial affairs of the applicant's parent company are
38.35 	audited by independent certified public accountants but those of
38.36 	the applicant are not, then a copy of the most recent audited
39.1 	financial statement of the applicant's parent company, certified
39.2 	by an independent certified public accountant, attached to which
39.3 	shall be consolidating financial statements of the applicant,
39.4 	satisfies this requirement unless the commissioner determines
39.5 	that additional or more recent financial information is required
39.6 	for the proper administration of sections 62A.451 to 62A.4528;
39.7 	(10) a copy of the applicant's financial plan, including a
39.8 	three-year projection of anticipated operating results, a
39.9 	statement of the sources of working capital, and any other
39.10 	sources of funding and provisions for contingencies;
39.11 	(11) a statement acknowledging that all lawful process in
39.12 	any legal action or proceeding against the applicant on a cause
39.13 	of action arising in this state is valid if served in accordance
39.14 	with section 45.028;
39.15 	(12) a description of how the applicant will comply with
39.16 	section 62A.4523; and 
39.17 	(13) such other information as the commissioner may
39.18 	reasonably require to make the determinations required by
39.19 	sections 62A.451 to 62A.4528.

39.20 	Sec. 4. [62A.4513] ISSUANCE OF CERTIFICATE OF AUTHORITY;
39.21 	DENIAL.
39.22 		Subdivision 1.Issuance. Following receipt of an
39.23 	application filed under section 62A.4512, the commissioner shall
39.24 	review the application and notify the applicant of any
39.25 	deficiencies.  The commissioner must approve or deny an
39.26 	application within 90 days after receipt of a substantially
39.27 	complete application, or the application is deemed approved.
39.28 	The commissioner shall issue a certificate of authority to an
39.29 	applicant provided that the following conditions are met:
39.30 	(1) the requirements of section 62A.4512 have been
39.31 	fulfilled;
39.32 	(2) the individuals responsible for conducting the
39.33 	applicant's affairs are competent, trustworthy, and possess good
39.34 	reputations, and have had appropriate experience, training, or
39.35 	education;
39.36 	(3) the applicant is financially responsible and may
40.1 	reasonably be expected to meet its obligations to enrollees and
40.2 	to prospective enrollees.  In making this determination, the
40.3 	commissioner may consider:
40.4 	(i) the financial soundness of the applicant's arrangements
40.5 	for limited health services;
40.6 	(ii) the adequacy of working capital, other sources of
40.7 	funding, and provisions for contingencies;
40.8 	(iii) any agreement for paying the cost of the limited
40.9 	health services or for alternative coverage in the event of
40.10 	insolvency of the prepaid limited health service organization;
40.11 	and 
40.12 	(iv) the manner in which the requirements of section
40.13 	62A.4523 have been fulfilled; and 
40.14 	(4) any deficiencies identified by the commissioner have
40.15 	been corrected.
40.16 		Subd. 2.Denials. If the certificate of authority is
40.17 	denied, the commissioner shall notify the applicant and shall
40.18 	specify the reasons for denial in the notice.  The prepaid
40.19 	limited health service organization has 30 days from the date of
40.20 	receipt of the notice to request a hearing before the
40.21 	commissioner under chapter 14.

40.22 	Sec. 5. [62A.4514] FILING REQUIREMENTS FOR AUTHORIZED
40.23 	ENTITIES.
40.24 	(a) An entity authorized under the laws of this state to
40.25 	operate a health maintenance organization, an accident and
40.26 	health insurance company, a nonprofit health service plan
40.27 	corporation, a fraternal benefit society, or a multiple employer
40.28 	welfare arrangement, and that is not otherwise authorized under
40.29 	the laws of this state to offer limited health services on a per
40.30 	capita or fixed prepayment basis, may do so by filing for
40.31 	approval with the commissioner the information requested by
40.32 	section 62A.4512, clauses (4), (5), (7), (8), and (10), and any
40.33 	subsequent material modification or addition to those provisions.
40.34 	(b) If the commissioner disapproves the filing, the
40.35 	procedures provided in section 62A.4513, subdivision 2, must be
40.36 	followed.

41.1 	Sec. 6. [62A.4515] MATERIAL MODIFICATIONS.
41.2 		Subdivision 1.Material modifications. A prepaid limited
41.3 	health service organization shall file with the commissioner
41.4 	prior to use, a notice of any material modification of any
41.5 	matter or document furnished under section 62A.4512, together
41.6 	with supporting documents necessary to fully explain the
41.7 	modification.  If the commissioner does not disapprove the
41.8 	filing within 60 days of its filing, the filing is deemed
41.9 	approved.
41.10 		Subd. 2.Procedure for disapproval. If a filing under
41.11 	this section is disapproved, the commissioner shall notify the
41.12 	prepaid limited health service organization and specify the
41.13 	reasons for disapproval in the notice.  The prepaid limited
41.14 	health service organization has 30 days from the date of receipt
41.15 	of notice to request a hearing before the commissioner under
41.16 	chapter 14.

41.17 	Sec. 7. [62A.4516] EVIDENCE OF COVERAGE.
41.18 	Every subscriber must be issued an evidence of coverage
41.19 	consistent with the requirements of Medicare Part D.

41.20 	Sec. 8. [62A.4517] CONSTRUCTION WITH OTHER LAWS.
41.21 		Subdivision 1.Application of other insurance laws. (a)
41.22 	A prepaid limited health service organization organized under
41.23 	the laws of this state is deemed to be a domestic insurer for
41.24 	purposes of chapter 60D unless specifically exempted in writing
41.25 	from one or more of the provisions of that chapter by the
41.26 	commissioner, based upon a determination that the provision is
41.27 	not applicable to the organization or to providing coverage
41.28 	under Medicare Part D.
41.29 	(b) No other provision of chapters 60 to 72C applies to a
41.30 	prepaid limited health service organization unless such an
41.31 	organization is specifically mentioned in the provision.
41.32 		Subd. 2.Not a healing art. The provision of limited
41.33 	health services by a prepaid limited health service organization
41.34 	or other entity under sections 62A.451 to 62A.4528 must not be
41.35 	deemed to be the practice of medicine or other healing arts.
41.36 		Subd. 3.Solicitation and advertising. Solicitation to
42.1 	arrange for or provide limited health services in accordance
42.2 	with sections 62A.451 to 62A.4528 shall not be construed to
42.3 	violate any provision of law relating to solicitation or
42.4 	advertising by health professionals.

42.5 	Sec. 9. [62A.4518] NONDUPLICATION OF COVERAGE.
42.6 	Notwithstanding any other law of this state, a prepaid
42.7 	limited health service organization, health maintenance
42.8 	organization, accident and health insurance company, nonprofit
42.9 	health service plan corporation, or fraternal benefit society
42.10 	may exclude, in any contract or policy issued to a group, any
42.11 	coverage that would duplicate the coverage for limited health
42.12 	services, whether in the form of services, supplies, or
42.13 	reimbursement, insofar as the coverage or service is provided in
42.14 	accordance with sections 62A.451 to 62A.4528 under a contract or
42.15 	policy issued to the same group or to a part of that group by a
42.16 	prepaid limited health service organization, a health
42.17 	maintenance organization, an accident and health insurance
42.18 	company, a nonprofit health service corporation, or a fraternal
42.19 	benefit society.

42.20 	Sec. 10. [62A.4519] COMPLAINT SYSTEM.
42.21 	Every prepaid limited health service organization shall
42.22 	establish and maintain a complaint system providing reasonable
42.23 	procedures for resolving written complaints initiated by
42.24 	enrollees and providers, consistent with the requirements of
42.25 	Medicare Part D.

42.26 	Sec. 11. [62A.4520] EXAMINATION OF ORGANIZATION.
42.27 	(a) The commissioner may examine the affairs of any prepaid
42.28 	limited health service organization as often as is reasonably
42.29 	necessary to protect the interests of the people of this state,
42.30 	but not less frequently than once every three years.
42.31 	(b) Every prepaid limited health service organization shall
42.32 	make its relevant books and records available for an examination
42.33 	and in every way cooperate with the commissioner to facilitate
42.34 	an examination.
42.35 	(c) In lieu of an examination, the commissioner may accept
42.36 	the report of an examination made by the commissioner of another
43.1 	state.

43.2 	Sec. 12. [62A.4521] INVESTMENTS.
43.3 	The funds of a prepaid limited health service organization
43.4 	shall be invested only in accordance with the guidelines under
43.5 	chapter 62D for investments by health maintenance organizations.

43.6 	Sec. 13. [62A.4522] AGENTS.
43.7 	No individual may apply, procure, negotiate, or place for
43.8 	others any policy or contract of a prepaid limited health
43.9 	service organization unless that individual holds a license or
43.10 	is otherwise authorized to sell accident and health insurance
43.11 	policies, nonprofit health service plan contracts, or health
43.12 	maintenance organization contracts.

43.13 	Sec. 14. [62A.4523] PROTECTION AGAINST INSOLVENCY;
43.14 	DEPOSIT.
43.15 		Subdivision 1.Net equity. (a) Except as approved in
43.16 	accordance with subdivision 4, each prepaid limited health
43.17 	service organization shall at all times have and maintain
43.18 	tangible net equity equal to the greater of:
43.19 	(1) $100,000; or 
43.20 	(2) two percent of the organization's annual gross premium
43.21 	income, up to a maximum of the required capital and surplus of
43.22 	an accident and health insurer.
43.23 	(b) A prepaid limited health service organization that has
43.24 	uncovered expenses in excess of $100,000, as reported on the
43.25 	most recent annual financial statement filed with the
43.26 	commissioner, shall maintain tangible net equity equal to 25
43.27 	percent of the uncovered expense in excess of $100,000 in
43.28 	addition to the tangible net equity required by paragraph (a).
43.29 		Subd. 2.Definitions. For the purpose of this section:
43.30 	(1) "net equity" means the excess of total assets over
43.31 	total liabilities, excluding liabilities which have been
43.32 	subordinated in a manner acceptable to the commissioner; and 
43.33 	(2) "tangible net equity" means net equity reduced by the
43.34 	value assigned to intangible assets including, but not limited
43.35 	to, goodwill; going concern value; organizational expense;
43.36 	start-up costs; long-term prepayments of deferred charges;
44.1 	nonreturnable deposits; and obligations of officers, directors,
44.2 	owners, or affiliates, except short-term obligations of
44.3 	affiliates for goods or services arising in the normal course of
44.4 	business that are payable on the same terms as equivalent
44.5 	transactions with nonaffiliates and that are not past due.
44.6 		Subd. 3.Deposit. (a) Each prepaid limited health
44.7 	service organization shall deposit with the commissioner or with
44.8 	any organization or trustee acceptable to the commissioner
44.9 	through which a custodial or controlled account is utilized,
44.10 	cash, securities, or any combination of these or other measures
44.11 	that is acceptable to the commissioner, in an amount equal to
44.12 	$50,000 plus 25 percent of the tangible net equity required in
44.13 	subdivision 1; provided, however, that the deposit must not be
44.14 	required to exceed $200,000.
44.15 	(b) The deposit is an admitted asset of the prepaid limited
44.16 	health service organization in the determination of tangible net
44.17 	equity.
44.18 	(c) All income from deposits is an asset of the prepaid
44.19 	limited health service organization.  A prepaid limited health
44.20 	service organization may withdraw a deposit or any part of it
44.21 	after making a substitute deposit of equal amount and value.
44.22 	Any securities must be approved by the commissioner before being
44.23 	substituted.
44.24 	(d) The deposit must be used to protect the interests of
44.25 	the prepaid limited health service organization's enrollees and
44.26 	to ensure continuation of limited health care services to
44.27 	enrollees of a prepaid limited health service organization that
44.28 	is in rehabilitation or conservation.  If a prepaid limited
44.29 	health service organization is placed in receivership or
44.30 	liquidation, the deposit is an asset subject to provisions of
44.31 	chapter 60B.
44.32 	(e) The commissioner may reduce or eliminate the deposit
44.33 	requirement if the prepaid limited health service organization
44.34 	has made an acceptable deposit with the state or jurisdiction of
44.35 	domicile for the protection of all enrollees, wherever located,
44.36 	and delivers to the commissioner a certificate to that effect,
45.1 	duly authenticated by the appropriate state official holding the
45.2 	deposit.
45.3 		Subd. 4.Waiver of net equity requirement. Upon
45.4 	application by a prepaid limited health service organization,
45.5 	the commissioner may waive some or all of the requirements of
45.6 	subdivision 1 for any period of time the commissioner deems
45.7 	proper upon a finding that either:
45.8 	(1) the prepaid limited health service organization has a
45.9 	net equity of at least $10,000,000; or 
45.10 	(2) an entity having a net equity of at least $10,000,000
45.11 	furnishes to the commissioner a written commitment, acceptable
45.12 	to the commissioner, to provide for the uncovered expenses of
45.13 	the prepaid limited health service organization.
45.14 		Subd. 5.Definition; uncovered expenses. For the
45.15 	purposes of this section, "uncovered expense" means the cost of
45.16 	health care services that are the obligation of a prepaid
45.17 	limited health organization (1) for which an enrollee may be
45.18 	liable in the event of the insolvency of the organization and
45.19 	(2) for which alternative arrangements acceptable to the
45.20 	commissioner have not been made to cover the costs.  Costs
45.21 	incurred by a provider who has agreed in writing not to bill
45.22 	enrollees, except for permissible supplemental charges, must be
45.23 	considered a covered expense.

45.24 	Sec. 15. [62A.4524] OFFICERS AND EMPLOYEES FIDELITY
45.25 	BOND.
45.26 	(a) A prepaid limited health service organization shall
45.27 	maintain in force a fidelity bond in its own name on its
45.28 	officers and employees in an amount not less than $20,000,000 or
45.29 	in any other amount prescribed by the commissioner.  Except as
45.30 	otherwise provided by this paragraph, the bond must be issued by
45.31 	an insurance company that is licensed to do business in this
45.32 	state or, if the fidelity bond required by this paragraph is not
45.33 	available from an insurance company that holds a certificate of
45.34 	authority in this state, a fidelity bond procured by a licensed
45.35 	surplus lines agent resident in this state in compliance with
45.36 	sections 60A.195 to 60A.2095 satisfies the requirements of this
46.1 	paragraph.
46.2 	(b) In lieu of the bond specified in paragraph (a), a
46.3 	prepaid limited health service organization may deposit with the
46.4 	commissioner cash or securities or other investments of the
46.5 	types set forth in section 62A.4521.  Such a deposit must be
46.6 	maintained by the commissioner in the amount and subject to the
46.7 	same conditions required for a bond under this paragraph.

46.8 	Sec. 16. [62A.4525] REPORTS.
46.9 	(a) Every prepaid limited health service organization shall
46.10 	file with the commissioner annually, on or before April 1, a
46.11 	report verified by at least two principal officers covering the
46.12 	preceding calendar year.
46.13 	(b) The report must be on forms prescribed by the
46.14 	commissioner and must include:
46.15 	(1) a financial statement of the organization, including
46.16 	its balance sheet, income statement, and statement of changes in
46.17 	financial position for the preceding year, certified by an
46.18 	independent public accountant, or a consolidated audited
46.19 	financial statement of its parent company certified by an
46.20 	independent public accountant, attached to which must be
46.21 	consolidating financial statements of the prepaid limited health
46.22 	service organization;
46.23 	(2) the number of subscribers at the beginning of the year,
46.24 	the number of subscribers at the end of the year, and the number
46.25 	of enrollments terminated during the year; and 
46.26 	(3) such other information relating to the performance of
46.27 	the organization as is necessary to enable the commissioner to
46.28 	carry out the commissioner's duties under sections 62A.451 to
46.29 	62A.4528.
46.30 	(c) The commissioner may require more frequent reports
46.31 	containing information necessary to enable the commissioner to
46.32 	carry out the commissioner's duties under sections 62A.451 to
46.33 	62A.4528.
46.34 	(d) The commissioner may suspend the organization's
46.35 	certificate of authority pending the proper filing of the
46.36 	required report by the organization.

47.1 	Sec. 17. [62A.4526] SUSPENSION OR REVOCATION OF
47.2 	CERTIFICATE OF AUTHORITY.
47.3 		Subdivision 1.Grounds for suspension or revocation. The
47.4 	commissioner may suspend or revoke the certificate of authority
47.5 	issued to a prepaid limited health service organization under
47.6 	sections 62A.451 to 62A.4528 upon determining that any of the
47.7 	following conditions exist:
47.8 	(1) the prepaid limited health service organization is
47.9 	operating significantly in contravention of its basic
47.10 	organizational document or in a manner contrary to that
47.11 	described in and reasonably inferred from any other information
47.12 	submitted under section 62A.4512, unless amendments to the
47.13 	submissions have been filed with and approved by the
47.14 	commissioner;
47.15 	(2) the prepaid limited health service organization issues
47.16 	an evidence of coverage that does not comply with the
47.17 	requirements of section 62A.4516;
47.18 	(3) the prepaid limited health service organization is
47.19 	unable to fulfill its obligations to furnish limited health
47.20 	services;
47.21 	(4) the prepaid limited health service organization is not
47.22 	financially responsible and may reasonably be expected to be
47.23 	unable to meet its obligations to enrollees or prospective
47.24 	enrollees;
47.25 	(5) the tangible net equity of the prepaid limited health
47.26 	service organization is less than that required by section
47.27 	62A.4523 or the prepaid limited health service organization has
47.28 	failed to correct any deficiency in its tangible net equity as
47.29 	required by the commissioner;
47.30 	(6) the prepaid limited health service organization has
47.31 	failed to implement in a reasonable manner the complaint system
47.32 	required by section 62A.4519;
47.33 	(7) the continued operation of the prepaid limited health
47.34 	service organization would be hazardous to its enrollees; or 
47.35 	(8) the prepaid limited health service organization has
47.36 	otherwise failed to comply with sections 62A.451 to 62A.4528.
48.1 		Subd. 2.Procedure for suspension or revocation. If the
48.2 	commissioner has cause to believe that grounds for the
48.3 	suspension or revocation of a certificate of authority exist,
48.4 	the commissioner shall notify the prepaid limited health service
48.5 	organization in writing specifically stating the grounds for
48.6 	suspension or revocation and fixing a time not more than 60 days
48.7 	after the date of notification for a hearing on the matter in
48.8 	accordance with chapter 14.
48.9 		Subd. 3.Winding up after revocation. When the
48.10 	certificate of authority of a prepaid limited health service
48.11 	organization is revoked, the organization shall proceed,
48.12 	immediately following the effective date of the order of
48.13 	revocation, to wind up its affairs, and shall conduct no further
48.14 	business except as may be essential to the orderly conclusion of
48.15 	the affairs of the organization.  It shall engage in no further
48.16 	advertising or solicitation whatsoever.  The commissioner may,
48.17 	by written order, permit such further operation of the
48.18 	organization as the commissioner may find to be in the best
48.19 	interest of enrollees, to the end that enrollees will be
48.20 	afforded the greatest practical opportunity to obtain continuing
48.21 	limited health services.

48.22 	Sec. 18. [62A.4527] PENALTIES.
48.23 	In lieu of any penalty specified elsewhere in sections
48.24 	62A.451 to 62A.4528, or when no penalty is specifically
48.25 	provided, whenever a prepaid limited health service organization
48.26 	or other person, corporation, partnership, or entity subject to
48.27 	those sections has been found, pursuant to chapter 14, to have
48.28 	violated any provision of sections 62A.451 to 62A.4528, the
48.29 	commissioner may:
48.30 	(1) issue and cause to be served upon the organization,
48.31 	person, or entity charged with the violation a copy of the
48.32 	findings and an order requiring the organization, person, or
48.33 	entity to cease and desist from engaging in the act or practice
48.34 	that constitutes the violation; and 
48.35 	(2) impose a monetary penalty of not more than $1,000 for
48.36 	each violation, but not to exceed an aggregate penalty of
49.1 	$10,000.

49.2 	Sec. 19. [62A.4528] REHABILITATION, CONSERVATION, OR
49.3 	LIQUIDATION.
49.4 	(a) Any rehabilitation, conservation, or liquidation of a
49.5 	prepaid limited health service organization must be deemed to be
49.6 	the rehabilitation, conservation, or liquidation of an insurance
49.7 	company and must be conducted under chapter 60B.
49.8 	(b) A prepaid limited health service organization is not
49.9 	subject to the laws and rules governing insurance insolvency
49.10 	guaranty funds, nor shall any insurance insolvency guaranty fund
49.11 	provide protection to individuals entitled to receive limited
49.12 	health services from a prepaid limited health service
49.13 	organization.

49.14 	Sec. 20. EFFECTIVE DATE.
 49.15 	Sections 1 to 19 are effective March 15, 2005, but no
49.16 	coverage may become effective prior to January 1, 2006.

49.17 	ARTICLE 3
49.18 	TECHNICAL AND CONFORMING CHANGES

49.19 	Section 1. Minnesota Statutes 2004, section 62L.12,
49.20 	subdivision 2, is amended to read:
49.21 		Subd. 2.Exceptions.  (a) A health carrier may sell,
49.22 	issue, or renew individual conversion policies to eligible
49.23 	employees otherwise eligible for conversion coverage under
49.24 	section 62D.104 as a result of leaving a health maintenance
49.25 	organization's service area.
49.26 	(b) A health carrier may sell, issue, or renew individual
49.27 	conversion policies to eligible employees otherwise eligible for
49.28 	conversion coverage as a result of the expiration of any
49.29 	continuation of group coverage required under sections 62A.146,
49.30 	62A.17, 62A.21, 62C.142, 62D.101, and 62D.105.
49.31 	(c) A health carrier may sell, issue, or renew conversion
49.32 	policies under section 62E.16 to eligible employees.
49.33 	(d) A health carrier may sell, issue, or renew individual
49.34 	continuation policies to eligible employees as required.
49.35 	(e) A health carrier may sell, issue, or renew individual
49.36 	health plans if the coverage is appropriate due to an unexpired
50.1 	preexisting condition limitation or exclusion applicable to the
50.2 	person under the employer's group health plan or due to the
50.3 	person's need for health care services not covered under the
50.4 	employer's group health plan.
50.5 	(f) A health carrier may sell, issue, or renew an
50.6 	individual health plan, if the individual has elected to buy the
50.7 	individual health plan not as part of a general plan to
50.8 	substitute individual health plans for a group health plan nor
50.9 	as a result of any violation of subdivision 3 or 4.
50.10 	(g) Nothing in this subdivision relieves a health carrier
50.11 	of any obligation to provide continuation or conversion coverage
50.12 	otherwise required under federal or state law.
50.13 	(h) Nothing in this chapter restricts the offer, sale,
50.14 	issuance, or renewal of coverage issued as a supplement to
50.15 	Medicare under sections 62A.31 to 62A.44, or policies or
50.16 	contracts that supplement Medicare issued by health maintenance
50.17 	organizations, or those contracts governed by section 1833, 1851
50.18 	to 1859, 1860D,or 1876 of the federal Social Security Act,
50.19 	United States Code, title 42, section 1395 et seq., as amended.
50.20 	(i) Nothing in this chapter restricts the offer, sale,
50.21 	issuance, or renewal of individual health plans necessary to
50.22 	comply with a court order.
50.23 	(j) A health carrier may offer, issue, sell, or renew an
50.24 	individual health plan to persons eligible for an employer group
50.25 	health plan, if the individual health plan is a high deductible
50.26 	health plan for use in connection with an existing health
50.27 	savings account, in compliance with the Internal Revenue Code,
50.28 	section 223.  In that situation, the same or a different health
50.29 	carrier may offer, issue, sell, or renew a group health plan to
50.30 	cover the other eligible employees in the group.

50.31 	Sec. 2. Minnesota Statutes 2004, section 62Q.01,
50.32 	subdivision 6, is amended to read:
50.33 		Subd. 6.Medicare-related coverage.  "Medicare-related
50.34 	coverage" means a policy, contract, or certificate issued as a
50.35 	supplement to Medicare, regulated under sections 62A.31 to
50.36 	62A.44, including Medicare select coverage; policies, contracts,
51.1 	or certificates that supplement Medicare issued by health
51.2 	maintenance organizations; or policies, contracts, or
51.3 	certificates governed by section 1833 (known as "cost" or "HCPP"
51.4 	contracts), 1851 to 1859 (Medicare Advantage), 1860D (Medicare
51.5 	Part D),or 1876 (known as "TEFRA" or "risk" contracts) of the
51.6 	federal Social Security Act, United States Code, title 42,
51.7 	section 1395, et seq., as amended; or Section 4001 of the
51.8 	Balanced Budget Act of 1997 (BBA)(Public Law 105-33), Sections
51.9 	1851 to 1859 of the Social Security Act establishing part C of
51.10 	the Medicare program, known as the " Medicare+Choice Medicare
51.11 	Advantage program."

51.12 	Sec. 3. Minnesota Statutes 2004, section 256.9657,
51.13 	subdivision 3, is amended to read:
51.14 		Subd. 3.Health maintenance organization; community
51.15 	integrated service network surcharge.  (a) Effective October 1,
51.16 	1992, each health maintenance organization with a certificate of
51.17 	authority issued by the commissioner of health under chapter 62D
51.18 	and each community integrated service network licensed by the
51.19 	commissioner under chapter 62N shall pay to the commissioner of
51.20 	human services a surcharge equal to six-tenths of one percent of
51.21 	the total premium revenues of the health maintenance
51.22 	organization or community integrated service network as reported
51.23 	to the commissioner of health according to the schedule in
51.24 	subdivision 4.
51.25 	(b) For purposes of this subdivision, total premium revenue
51.26 	means:
51.27 	(1) premium revenue recognized on a prepaid basis from
51.28 	individuals and groups for provision of a specified range of
51.29 	health services over a defined period of time which is normally
51.30 	one month, excluding premiums paid to a health maintenance
51.31 	organization or community integrated service network from the
51.32 	Federal Employees Health Benefit Program;
51.33 	(2) premiums from Medicare wrap-around subscribers for
51.34 	health benefits which supplement Medicare coverage;
51.35 	(3) Medicare revenue, as a result of an arrangement between
51.36 	a health maintenance organization or a community integrated
52.1 	service network and the Centers for Medicare and Medicaid
52.2 	Services of the federal Department of Health and Human Services,
52.3 	for services to a Medicare beneficiary, excluding Medicare
52.4 	revenue that states are prohibited from taxing under sections
52.5 	4001 and 4002 of Public Law 105-33 received by a health
52.6 	maintenance organization or community integrated service network
52.7 	through risk sharing or Medicare Choice Plus contracts 1854,
52.8 	1860D-12, and 1876 of title XVIII of the federal Social Security
52.9 	Act, codified as United States Code, title 42, sections 1395mm,
52.10 	1395w-112, and 1395w-24, respectively, as they may be amended
52.11 	from time to time; and
52.12 	(4) medical assistance revenue, as a result of an
52.13 	arrangement between a health maintenance organization or
52.14 	community integrated service network and a Medicaid state
52.15 	agency, for services to a medical assistance beneficiary.
52.16 	If advance payments are made under clause (1) or (2) to the
52.17 	health maintenance organization or community integrated service
52.18 	network for more than one reporting period, the portion of the
52.19 	payment that has not yet been earned must be treated as a
52.20 	liability.
52.21 	(c) When a health maintenance organization or community
52.22 	integrated service network merges or consolidates with or is
52.23 	acquired by another health maintenance organization or community
52.24 	integrated service network, the surviving corporation or the new
52.25 	corporation shall be responsible for the annual surcharge
52.26 	originally imposed on each of the entities or corporations
52.27 	subject to the merger, consolidation, or acquisition, regardless
52.28 	of whether one of the entities or corporations does not retain a
52.29 	certificate of authority under chapter 62D or a license under
52.30 	chapter 62N.
52.31 	(d) Effective July 1 of each year, the surviving
52.32 	corporation's or the new corporation's surcharge shall be based
52.33 	on the revenues earned in the second previous calendar year by
52.34 	all of the entities or corporations subject to the merger,
52.35 	consolidation, or acquisition regardless of whether one of the
52.36 	entities or corporations does not retain a certificate of
53.1 	authority under chapter 62D or a license under chapter 62N until
53.2 	the total premium revenues of the surviving corporation include
53.3 	the total premium revenues of all the merged entities as
53.4 	reported to the commissioner of health.
53.5 	(e) When a health maintenance organization or community
53.6 	integrated service network, which is subject to liability for
53.7 	the surcharge under this chapter, transfers, assigns, sells,
53.8 	leases, or disposes of all or substantially all of its property
53.9 	or assets, liability for the surcharge imposed by this chapter
53.10 	is imposed on the transferee, assignee, or buyer of the health
53.11 	maintenance organization or community integrated service network.
53.12 	(f) In the event a health maintenance organization or
53.13 	community integrated service network converts its licensure to a
53.14 	different type of entity subject to liability for the surcharge
53.15 	under this chapter, but survives in the same or substantially
53.16 	similar form, the surviving entity remains liable for the
53.17 	surcharge regardless of whether one of the entities or
53.18 	corporations does not retain a certificate of authority under
53.19 	chapter 62D or a license under chapter 62N.
53.20 	(g) The surcharge assessed to a health maintenance
53.21 	organization or community integrated service network ends when
53.22 	the entity ceases providing services for premiums and the
53.23 	cessation is not connected with a merger, consolidation,
53.24 	acquisition, or conversion.