1.1 	A bill for an act
1.2 	relating to health care; creating a prescription drug discount program; expanding 
1.3 	the benefit set for single adults; increasing the eligibility income limit for single 
1.4 	adults; increasing the cap for inpatient hospitalization benefits for adults; 
1.5 	modifying the definition of income for self-employed farmers; establishing a 
1.6 	small employer option; amending Minnesota Statutes 2004, sections 256L.03, 
1.7 	subdivision 3; 256L.04, subdivision 7; Minnesota Statutes 2005 Supplement, 
1.8 	sections 256L.01, subdivision 4; 256L.03, subdivisions 1, 5; 256L.07, 
1.9 	subdivision 1; proposing coding for new law in Minnesota Statutes, chapters 
1.10 	256; 256L; repealing Minnesota Statutes 2005 Supplement, section 256L.035.
1.11 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.12 	Section 1. [256.9545] PRESCRIPTION DRUG DISCOUNT PROGRAM.
1.13 		Subdivision 1.Establishment; administration.  The    commissioner shall establish 
1.14 	and administer the prescription drug discount program.
1.15 		Subd. 2.Commissioner's authority. The commissioner  shall administer a drug 
1.16 	rebate program for drugs purchased  according to the prescription drug discount program. 
1.17 	The  commissioner shall execute a rebate agreement from all  manufacturers that choose to 
1.18 	participate in the program for  those drugs covered under the medical assistance program. 
1.19 	For  each drug, the amount of the rebate shall be equal to the rebate  as defined for purposes 
1.20 	of the federal rebate program in United  States Code, title 42, section 1396r-8.  The 
1.21 	rebate program  shall utilize the terms and conditions used for the federal  rebate program 
1.22 	established according to section 1927 of title  XIX of the federal Social Security Act.
1.23 		Subd. 3.Definitions.  For purposes of this section,  the following terms have the 
1.24 	meanings given them.  
1.25 	(a) "Commissioner" means the commissioner of human services. 
1.26 	(b) "Covered prescription drug" means a prescription drug  as defined in section 
1.27 	151.44, paragraph (d), that is covered  under medical assistance as described in section 
2.1 	256B.0625,  subdivision 13, and that is provided by a participating  manufacturer that has a 
2.2 	fully executed rebate agreement with the  commissioner under this section and complies 
2.3 	with that agreement.
2.4 	(c) "Enrolled individual" means a person who is eligible  for the program under 
2.5 	subdivision 4 and has enrolled in the  program according to subdivision 5.
2.6 	(d) "Health carrier" means an insurance company licensed  under chapter 60A to 
2.7 	offer, sell, or issue an individual or  group policy of accident and sickness insurance as 
2.8 	defined in  section 62A.01; a nonprofit health service plan corporation  operating under 
2.9 	chapter 62C; a health maintenance organization  operating under chapter 62D; a joint 
2.10 	self-insurance employee  health plan operating under chapter 62H; a community integrated 
2.11 	service network licensed under chapter 62N; a fraternal benefit  society operating under 
2.12 	chapter 64B; a city, county, school  district, or other political subdivision providing 
2.13 	self-insured  health coverage under section 471.617 or sections 471.98 to  471.982; and a 
2.14 	self-funded health plan under the Employee  Retirement Income Security Act of 1974, as 
2.15 	amended. 
2.16 	(e) "Participating manufacturer" means a manufacturer as  defined in section 151.44, 
2.17 	paragraph (c), that agrees to  participate in the prescription drug discount program.   
2.18 	(f) "Participating pharmacy" means a pharmacy as defined in  section 151.01, 
2.19 	subdivision 2, that agrees to participate in the  prescription drug discount program.
2.20 		Subd. 4.Eligibility.  (a) To be eligible for the program, an  applicant must:
2.21 	(1) be a permanent resident of Minnesota as defined in  section 256L.09, subdivision 
2.22 	4;
2.23 	(2) not be enrolled in medical assistance,  general assistance medical care, or 
2.24 	MinnesotaCare;
2.25 	(3) not be enrolled in and have currently available  prescription drug coverage under 
2.26 	a health plan offered by a  health carrier or employer or under a pharmacy benefit program 
2.27 	offered by a pharmaceutical manufacturer; and 
2.28 	(4) not be enrolled in and have currently available  prescription drug coverage 
2.29 	under a Medicare supplement policy, as  defined in sections 62A.31 to 62A.44, or 
2.30 	policies, contracts, or  certificates that supplement Medicare issued by health  maintenance 
2.31 	organizations or those policies, contracts, or  certificates governed by section 1833 or 1876 
2.32 	of the federal  Social Security Act, United States Code, title 42, section 1395,  et seq., as 
2.33 	amended.
2.34 	(b) Notwithstanding paragraph (a), clause (3), an individual who is enrolled in a 
2.35 	Medicare Part D prescription drug plan or Medicare Advantage plan is eligible for the 
2.36 	program but only for drugs that are not covered under the Medicare Part D plan or for 
3.1 	drugs that are covered under the plan, but according to the conditions of the plan, the 
3.2 	individual is responsible for 100 percent of the cost of the prescription drug. 
3.3 		Subd. 5.Application procedure.  (a) Applications and  information on the program 
3.4 	must be made available at county  social services agencies, health care provider offices, and 
3.5 	agencies and organizations serving senior citizens.  Individuals  shall submit applications 
3.6 	and any information specified by the  commissioner as being necessary to verify eligibility 
3.7 	directly  to the commissioner.  The commissioner shall determine an  applicant's eligibility 
3.8 	for the program within 30 days from the  date the application is received.  Upon notice of 
3.9 	approval, the  applicant must submit to the commissioner the enrollment fee  specified in 
3.10 	subdivision 10.  Eligibility begins the month after  the enrollment fee is received by the 
3.11 	commissioner.
3.12 	(b) An enrollee's eligibility must be renewed every 12  months with the 12-month 
3.13 	period beginning in the month after the  application is approved.
3.14 	(c) The commissioner shall develop an application form that  does not exceed one 
3.15 	page in length and requires information  necessary to determine eligibility for the program.
3.16 		Subd. 6.Participating pharmacy.  (a) Upon implementation  of the prescription 
3.17 	drug discount program, and until January 1,  2008, a participating pharmacy, with a 
3.18 	valid  prescription, must sell a covered prescription drug to an  enrolled individual at the 
3.19 	medical assistance rate.
3.20 	(b) After January 1, 2008, a participating pharmacy, with a valid prescription, must 
3.21 	sell a covered  prescription drug to an enrolled individual at the medical  assistance rate, 
3.22 	minus an amount that is equal to the rebate  amount described in subdivision 8, plus 
3.23 	the amount of any switch  fee established by the commissioner under subdivision 10, 
3.24 	paragraph (b).
3.25 	(c) Each participating pharmacy shall provide the  commissioner with all information 
3.26 	necessary to administer the  program, including, but not limited to, information on 
3.27 	prescription drug sales to enrolled individuals and usual and  customary retail prices.
3.28 		Subd. 7.Notification of rebate amount.  The commissioner  shall notify each 
3.29 	participating manufacturer, each calendar  quarter or according to a schedule established 
3.30 	by the  commissioner, of the amount of the rebate owed on the  prescription drugs sold by 
3.31 	participating pharmacies to enrolled  individuals.
3.32 		Subd. 8.Provision of rebate.  To the extent that a  participating manufacturer's 
3.33 	prescription drugs are prescribed  to a resident of this state, the manufacturer must provide 
3.34 	a  rebate equal to the rebate provided under the medical assistance  program for any 
3.35 	prescription drug distributed by the  manufacturer that is purchased at a  participating 
3.36 	pharmacy by an enrolled individual.  The participating manufacturer must  provide full 
4.1 	payment within 38 days of receipt of the state  invoice for the rebate, or according to 
4.2 	a schedule to be  established by the commissioner.  The commissioner shall deposit  all 
4.3 	rebates received into the Minnesota prescription drug  dedicated fund established under 
4.4 	subdivision 11.  The  manufacturer must provide the commissioner with any information 
4.5 	necessary to verify the rebate determined per drug.
4.6 		Subd. 9.Payment to pharmacies.  Beginning January 1,  2008, the commissioner 
4.7 	shall distribute on a biweekly basis an  amount that is equal to an amount collected under 
4.8 	subdivision 8  to each participating pharmacy based on the prescription drugs  sold by that 
4.9 	pharmacy to enrolled individuals on or after  January 1, 2008.
4.10 		Subd. 10.Enrollment fee; switch fee.  (a) The  commissioner shall establish an 
4.11 	annual enrollment fee that  covers the commissioner's expenses for enrollment, processing 
4.12 	claims, and distributing rebates under this program.
4.13 	(b) The commissioner shall establish a reasonable switch  fee that covers expenses 
4.14 	incurred by participating pharmacies in  formatting for electronic submission claims for 
4.15 	prescription  drugs sold to enrolled individuals.
4.16 		Subd. 11.Dedicated fund; creation; use of fund.  (a) The  Minnesota prescription 
4.17 	drug dedicated fund is established as an  account in the state treasury.  The commissioner 
4.18 	of finance  shall credit to the dedicated fund all rebates paid under  subdivision 8, any 
4.19 	federal funds received for the program, all  enrollment fees paid by the enrollees, and 
4.20 	any appropriations or  allocations designated for the fund.  The commissioner of  finance 
4.21 	shall ensure that fund money is invested under section  11A.25.  All money earned by the 
4.22 	fund must be credited to the  fund.  The fund shall earn a proportionate share of the total 
4.23 	state annual investment income.
4.24 	(b) Money in the fund is appropriated to the commissioner  to reimburse participating 
4.25 	pharmacies for prescription drugs provided to enrolled individuals under  subdivision 6, 
4.26 	paragraph (b); to reimburse the commissioner for  costs related to enrollment, processing 
4.27 	claims, and distributing  rebates and for other reasonable administrative costs related to 
4.28 	administration of the prescription drug discount program; and to  repay the appropriation 
4.29 	provided by law for this section.  The  commissioner must administer the program so that 
4.30 	the costs total  no more than funds appropriated plus the drug rebate proceeds.

4.31 	Sec. 2. Minnesota Statutes 2005 Supplement, section 256L.01, subdivision 4, is 
4.32 	amended to read:
4.33 		Subd. 4.Gross individual or gross family income. (a) "Gross individual or gross 
4.34 	family income" for nonfarm self-employed means income calculated for the six-month 
4.35 	period of eligibility using the net profit or loss reported on the applicant's federal income 
5.1 	tax form for the previous year and using the medical assistance families with children 
5.2 	methodology for determining allowable and nonallowable self-employment expenses and 
5.3 	countable income.
5.4 	(b) "Gross individual or gross family income" for farm self-employed means income 
5.5 	calculated for the six-month period of eligibility using as the baseline the adjusted gross 
5.6 	income reported on the applicant's federal income tax form for the previous year and 
5.7 	adding back in reported depreciation amounts that apply to the business in which the 
5.8 	family is currently engaged.
5.9 	(c) "Gross individual or gross family income" means the total income for all family 
5.10 	members, calculated for the six-month period of eligibility.

5.11 	Sec. 3. Minnesota Statutes 2005 Supplement, section 256L.03, subdivision 1, is 
5.12 	amended to read:
5.13 		Subdivision 1.Covered health services. For individuals under section 256L.04, 
5.14 	subdivision 7, with income no greater than 75 percent of the federal poverty guidelines 
5.15 	or for families with children under section 256L.04, subdivision 1, all subdivisions of 
5.16 	this section apply. "Covered health services" means the health services reimbursed 
5.17 	under chapter 256B, with the exception of inpatient hospital services, special education 
5.18 	services, private duty nursing services, adult dental care services other than services 
5.19 	covered under section 256B.0625, subdivision 9, orthodontic services, nonemergency 
5.20 	medical transportation services, personal care assistant and case management services, 
5.21 	nursing home or intermediate care facilities services, inpatient mental health services, 
5.22 	and chemical dependency services. Outpatient mental health services covered under the 
5.23 	MinnesotaCare program are limited to diagnostic assessments, psychological testing, 
5.24 	explanation of findings, mental health telemedicine, psychiatric consultation, medication 
5.25 	management by a physician, day treatment, partial hospitalization, and individual, family, 
5.26 	and group psychotherapy.
5.27 	No public funds shall be used for coverage of abortion under MinnesotaCare 
5.28 	except where the life of the female would be endangered or substantial and irreversible 
5.29 	impairment of a major bodily function would result if the fetus were carried to term; or 
5.30 	where the pregnancy is the result of rape or incest.
5.31 	Covered health services shall be expanded as provided in this section.

5.32 	Sec. 4. Minnesota Statutes 2004, section 256L.03, subdivision 3, is amended to read:
5.33 		Subd. 3.Inpatient hospital services. (a) Covered health services shall include 
5.34 	inpatient hospital services, including inpatient hospital mental health services and inpatient 
6.1 	hospital and residential chemical dependency treatment, subject to those limitations 
6.2 	necessary to coordinate the provision of these services with eligibility under the medical 
6.3 	assistance spenddown. Prior to July 1, 1997, the inpatient hospital benefit for adult 
6.4 	enrollees is subject to an annual benefit limit of $10,000. The inpatient hospital benefit for 
6.5 	adult enrollees who qualify under section  256L.04, subdivision 7, or who qualify under 
6.6 	section  256L.04, subdivisions 1 and 2, with family gross income that exceeds 175 190
6.7 	percent of the federal poverty guidelines and who are not pregnant, is subject to an annual 
6.8 	limit of $10,000 $20,000. 
6.9 	(b) Admissions for inpatient hospital services paid for under section  256L.11, 
6.10 	subdivision 3, must be certified as medically necessary in accordance with Minnesota 
6.11 	Rules, parts 9505.0500 to 9505.0540, except as provided in clauses (1) and (2): 
6.12 	(1) all admissions must be certified, except those authorized under rules established 
6.13 	under section  254A.03, subdivision 3, or approved under Medicare; and 
6.14 	(2) payment under section  256L.11, subdivision 3, shall be reduced by five percent 
6.15 	for admissions for which certification is requested more than 30 days after the day of 
6.16 	admission. The hospital may not seek payment from the enrollee for the amount of the 
6.17 	payment reduction under this clause. 

6.18 	Sec. 5. Minnesota Statutes 2005 Supplement, section 256L.03, subdivision 5, is 
6.19 	amended to read:
6.20 		Subd. 5.Co-payments and coinsurance. (a) Except as provided in paragraphs (b) 
6.21 	and (c), the MinnesotaCare benefit plan shall include the following co-payments and 
6.22 	coinsurance requirements for all enrollees:
6.23 	(1) ten percent of the paid charges for inpatient hospital services for adult enrollees, 
6.24 	subject to an annual inpatient out-of-pocket maximum of $1,000 per individual and 
6.25 	$3,000 per family;
6.26 	(2) $3 per prescription for adult enrollees;
6.27 	(3) $25 for eyeglasses for adult enrollees;
6.28 	(4) $3 per nonpreventive visit. For purposes of this subdivision, a "visit" means an 
6.29 	episode of service which is required because of a recipient's symptoms, diagnosis, or 
6.30 	established illness, and which is delivered in an ambulatory setting by a physician or 
6.31 	physician ancillary, chiropractor, podiatrist, nurse midwife, advanced practice nurse, 
6.32 	audiologist, optician, or optometrist;
6.33 	(5) $6 for nonemergency visits to a hospital-based emergency room; and
7.1 	(6) 50 percent of the fee-for-service rate for adult dental care services other than 
7.2 	preventive care services for persons eligible under section 256L.04, subdivisions 1 to 7, 
7.3 	with income equal to or less greater than 175 190 percent of the federal poverty guidelines.
7.4 	(b) Paragraph (a), clause (1), does not apply to parents and relative caretakers of 
7.5 	children under the age of 21 in households with family income equal to or less than 175 
7.6 	percent of the federal poverty guidelines. Paragraph (a), clause (1), does not apply to 
7.7 	parents and relative caretakers of children under the age of 21 in households with family 
7.8 	income greater than 175 percent of the federal poverty guidelines for inpatient hospital 
7.9 	admissions occurring on or after January 1, 2001.
7.10 	(c) Paragraph (a), clauses (1) to (4), do not apply to pregnant women and children 
7.11 	under the age of 21.
7.12 	(d) Adult enrollees with family gross income that exceeds 175 190 percent of the 
7.13 	federal poverty guidelines and who are not pregnant shall be financially responsible for 
7.14 	the coinsurance amount, if applicable, and amounts which exceed the $10,000 $20,000
7.15 	inpatient hospital benefit limit.
7.16 	(e) When a MinnesotaCare enrollee becomes a member of a prepaid health 
7.17 	plan, or changes from one prepaid health plan to another during a calendar year, any 
7.18 	charges submitted towards the $10,000 $20,000 annual inpatient benefit limit, and any 
7.19 	out-of-pocket expenses incurred by the enrollee for inpatient services, that were submitted 
7.20 	or incurred prior to enrollment, or prior to the change in health plans, shall be disregarded.

7.21 	Sec. 6. Minnesota Statutes 2004, section 256L.04, subdivision 7, is amended to read:
7.22 		Subd. 7.Single adults and households with no children. The definition of eligible 
7.23 	persons includes all individuals and households with no children who have gross family 
7.24 	incomes that are equal to or less than 175 190 percent of the federal poverty guidelines.

7.25 	Sec. 7. Minnesota Statutes 2005 Supplement, section 256L.07, subdivision 1, is 
7.26 	amended to read:
7.27 		Subdivision 1.General requirements. (a) Children enrolled in the original 
7.28 	children's health plan as of September 30, 1992, children who enrolled in the 
7.29 	MinnesotaCare program after September 30, 1992, pursuant to Laws 1992, chapter 549, 
7.30 	article 4, section 17, and children who have family gross incomes that are equal to or 
7.31 	less than 150 percent of the federal poverty guidelines are eligible without meeting 
7.32 	the requirements of subdivision 2 and the four-month requirement in subdivision 3, as 
7.33 	long as they maintain continuous coverage in the MinnesotaCare program or medical 
7.34 	assistance. Children who apply for MinnesotaCare on or after the implementation date 
8.1 	of the employer-subsidized health coverage program as described in Laws 1998, chapter 
8.2 	407, article 5, section 45, who have family gross incomes that are equal to or less than 150 
8.3 	percent of the federal poverty guidelines, must meet the requirements of subdivision 2 to 
8.4 	be eligible for MinnesotaCare.
8.5 	(b) Families enrolled in MinnesotaCare under section 256L.04, subdivision 1, 
8.6 	whose income increases above 275 percent of the federal poverty guidelines, are no 
8.7 	longer eligible for the program and shall be disenrolled by the commissioner. Individuals 
8.8 	enrolled in MinnesotaCare under section 256L.04, subdivision 7, whose income increases 
8.9 	above 175 190 percent of the federal poverty guidelines are no longer eligible for the 
8.10 	program and shall be disenrolled by the commissioner. For persons disenrolled under 
8.11 	this subdivision, MinnesotaCare coverage terminates the last day of the calendar month 
8.12 	following the month in which the commissioner determines that the income of a family or 
8.13 	individual exceeds program income limits.
8.14 	(c) Notwithstanding paragraph (b), children may remain enrolled in MinnesotaCare 
8.15 	if ten percent of their gross individual or gross family income as defined in section 
8.16 	256L.01, subdivision 4, is less than the premium for a six-month policy with a $500 
8.17 	deductible available through the Minnesota Comprehensive Health Association. Children 
8.18 	who are no longer eligible for MinnesotaCare under this clause shall be given a 12-month 
8.19 	notice period from the date that ineligibility is determined before disenrollment. The 
8.20 	premium for children remaining eligible under this clause shall be the maximum premium 
8.21 	determined under section 256L.15, subdivision 2, paragraph (b).
8.22 	(d) Notwithstanding paragraphs (b) and (c), parents are not eligible for 
8.23 	MinnesotaCare if gross household income exceeds $25,000 for the six-month period 
8.24 	of eligibility.

8.25 	Sec. 8. [256L.20] MINNESOTACARE OPTION FOR SMALL EMPLOYERS.
8.26 		Subdivision 1.Definitions. (a) For the purposes of this section, the terms used 
8.27 	have the meanings given them. 
8.28 	(b) "Dependent" means an unmarried child under the age of 21. 
8.29 	(c) "Eligible employee" means an employee who works at least 20 hours per week 
8.30 	for an eligible employer. Eligible employee does not include an employee who works 
8.31 	on a temporary or substitute basis or who does not work more than 26 weeks annually. 
8.32 	Coverage of an eligible employee includes the employee's spouse. 
8.33 	(d) "Eligible employer" means a business that employs at least two, but not more 
8.34 	than 50, eligible employees, the majority of whom are employed in the state, and includes 
8.35 	a municipality that has 50 or fewer employees. 
9.1 	(e) "Maximum premium" has the meaning given under section 256L.15, subdivision 
9.2 	2, paragraph (b), clause (3). 
9.3 	(f) "Participating employer" means an eligible employer who meets the requirements 
9.4 	in subdivision 3 and applies to the commissioner to enroll its eligible employees and their 
9.5 	dependents in the MinnesotaCare program.
9.6 	(g) "Program" means the MinnesotaCare program. 
9.7 		Subd. 2.Option. Eligible employees and their dependents may enroll in 
9.8 	MinnesotaCare if the eligible employer meets the requirements of subdivision 3. The 
9.9 	effective date of coverage is as defined in section 256L.05, subdivision 3. 
9.10 		Subd. 3.Employer requirements.  The commissioner shall establish procedures for 
9.11 	an eligible employer to apply for coverage through the program. In order to participate, an 
9.12 	eligible employer must meet the following requirements:
9.13 	(1) agree to contribute toward the cost of the premium for the employee, the 
9.14 	employee's spouse, and the employee's dependents according to subdivision 4; 
9.15 	(2) certify that at least 75 percent of its eligible employees who do not have other 
9.16 	creditable health coverage are enrolled in the program; 
9.17 	(3) offer coverage to all eligible employees, spouses, and dependents of eligible 
9.18 	employees; and 
9.19 	(4) have not provided employer-subsidized health coverage as an employee benefit 
9.20 	during the previous 12 months, as defined in section 256L.07, subdivision 2, paragraph (c). 
9.21 		Subd. 4.Premiums. (a) The premium for coverage provided under this section is 
9.22 	equal to the average monthly payment for families with children, excluding pregnant 
9.23 	women and children under the age of two. 
9.24 	(b) For eligible employees without dependents with income equal to or less than 175 
9.25 	percent of the federal poverty guidelines and for eligible employees with dependents with 
9.26 	income equal to or less than 275 percent of the federal poverty guidelines, the participating 
9.27 	employer shall pay 50 percent of the premium established under paragraph (a) for the 
9.28 	eligible employee, the employee's spouse, and any dependents, if applicable. 
9.29 	(c) For eligible employees without dependents with income over 175 percent of the 
9.30 	federal poverty guidelines and for eligible employees with dependents with income over 
9.31 	275 percent of the federal poverty guidelines, the participating employer shall pay the 
9.32 	full cost of the premium established under paragraph (a) for the eligible employee, the 
9.33 	employee's spouse, and any dependents, if applicable. The participating employer may 
9.34 	require the employee to pay a portion of the cost of the premium so long as the employer 
9.35 	pays 50 percent. If the employer requires the employee to pay a portion of the premium, 
9.36 	the employee shall pay the portion of the cost to the employer. 
10.1 	(d) The commissioner shall collect premium payments from participating employers 
10.2 	for eligible employees, spouses, and dependents who are covered by the program as 
10.3 	provided under this section. All premiums collected shall be deposited in the health care 
10.4 	access fund. 
10.5 		Subd. 5.Coverage. The coverage offered to those enrolled in the program under 
10.6 	this section must include all health services described under section 256L.03 and all 
10.7 	co-payments and coinsurance requirements under section 256L.03, subdivision 5, apply. 
10.8 		Subd. 6.Enrollment. Upon payment of the premium, according to this section 
10.9 	and section 256L.06, eligible employees, spouses, and dependents shall be enrolled in 
10.10 	MinnesotaCare. For purposes of enrollment under this section, income eligibility limits 
10.11 	established under sections 256L.04 and 256L.07, subdivision 1, and asset limits established 
10.12 	under section 256L.17 do not apply. The barriers established under section 256L.07, 
10.13 	subdivision 2 or 3, do not apply to enrollees eligible under this section. The commissioner 
10.14 	may require eligible employees to provide income verification to determine premiums. 

10.15 	Sec. 9.  REPEALER.
 10.16 	Minnesota Statutes 2005 Supplement, section 256L.035, is repealed.

10.17 	Sec. 10. EFFECTIVE DATE.
 10.18 	Sections 1 to 9 are effective August 1, 2006, or upon the implementation of 
10.19 	HealthMatch, whichever is later.