1.1 	A bill for an act
1.2 	relating to health care; establishing premium rate restrictions and expenditure 
1.3 	limits;amending Minnesota Statutes 2006, sections 62A.65, subdivision 3; 
1.4 	62J.04, subdivision 3, by adding a subdivision; 62J.041; 62J.301, subdivision 3; 
1.5 	62J.38; 62L.08, subdivision 8.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2006, section 62A.65, subdivision 3, is amended to read:
1.8 		Subd. 3.Premium rate restrictions. No individual health plan may be offered, 
1.9 	sold, issued, or renewed to a Minnesota resident unless the premium rate charged is 
1.10 	determined in accordance with the following requirements:
1.11 	(a) Premium rates must be no more than 25 percent above and no more than 25 
1.12 	percent below the index rate charged to individuals for the same or similar coverage, 
1.13 	adjusted pro rata for rating periods of less than one year. The premium variations 
1.14 	permitted by this paragraph must be based only upon health status, claims experience, 
1.15 	and occupation. For purposes of this paragraph, health status includes refraining from 
1.16 	tobacco use or other actuarially valid lifestyle factors associated with good health, 
1.17 	provided that the lifestyle factor and its effect upon premium rates have been determined 
1.18 	by the commissioner to be actuarially valid and have been approved by the commissioner. 
1.19 	Variations permitted under this paragraph must not be based upon age or applied 
1.20 	differently at different ages. This paragraph does not prohibit use of a constant percentage 
1.21 	adjustment for factors permitted to be used under this paragraph.
1.22 	(b) Premium rates may vary based upon the ages of covered persons only as 
1.23 	provided in this paragraph. In addition to the variation permitted under paragraph (a), 
1.24 	each health carrier may use an additional premium variation based upon age of up to 
1.25 	plus or minus 50 percent of the index rate.
2.1 	(c) A health carrier may request approval by the commissioner to establish separate 
2.2 	geographic regions determined by the health carrier and to establish separate index rates 
2.3 	for each such region. The commissioner shall grant approval if the following conditions 
2.4 	are met: 
2.5 	(1) the geographic regions must be applied uniformly by the health carrier;
2.6 	(2) each geographic region must be composed of no fewer than seven counties that 
2.7 	create a contiguous region; and
2.8 	(3) the health carrier provides actuarial justification acceptable to the commissioner 
2.9 	for the proposed geographic variations in index rates, establishing that the variations are 
2.10 	based upon differences in the cost to the health carrier of providing coverage.
2.11 	(d) Health carriers may use rate cells and must file with the commissioner the rate 
2.12 	cells they use. Rate cells must be based upon the number of adults or children covered 
2.13 	under the policy and may reflect the availability of Medicare coverage. The rates for 
2.14 	different rate cells must not in any way reflect generalized differences in expected costs 
2.15 	between principal insureds and their spouses.
2.16 	(e) In developing its index rates and premiums for a health plan, a health carrier shall 
2.17 	take into account only the following factors:
2.18 	(1) actuarially valid differences in rating factors permitted under paragraphs (a) 
2.19 	and (b); and
2.20 	(2) actuarially valid geographic variations if approved by the commissioner as 
2.21 	provided in paragraph (c).
2.22 	(f) All premium variations must be justified in initial rate filings and upon request of 
2.23 	the commissioner in rate revision filings. All rate variations are subject to approval by 
2.24 	the commissioner.
2.25 	(g) The loss ratio must comply with the section 62A.021 requirements for individual 
2.26 	health plans. 
2.27 	(h) Notwithstanding paragraphs (a) to (g), the rates must not be approved, unless the 
2.28 	commissioner has determined that the rates are reasonable. In determining reasonableness, 
2.29 	the commissioner shall consider the growth rates applied under section 62J.04, subdivision 
2.30 	1, paragraph (b) apply the premium growth limits established under section 62J.04, 
2.31 	subdivision 1b, to the calendar year or years that the proposed premium rate would be in 
2.32 	effect, and shall consider actuarially valid changes in risks associated with the enrollee 
2.33 	populations, and actuarially valid changes as a result of statutory changes in Laws 1992, 
2.34 	chapter 549. 
2.35 	(i) An insurer may, as part of a minimum lifetime loss ratio guarantee filing under 
2.36 	section 62A.02, subdivision 3a, include a rating practices guarantee as provided in this 
3.1 	paragraph. The rating practices guarantee must be in writing and must guarantee that 
3.2 	the policy form will be offered, sold, issued, and renewed only with premium rates and 
3.3 	premium rating practices that comply with subdivisions 2, 3, 4, and 5. The rating practices 
3.4 	guarantee must be accompanied by an actuarial memorandum that demonstrates that the 
3.5 	premium rates and premium rating system used in connection with the policy form will 
3.6 	satisfy the guarantee. The guarantee must guarantee refunds of any excess premiums to 
3.7 	policyholders charged premiums that exceed those permitted under subdivision 2, 3, 4, 
3.8 	or 5. An insurer that complies with this paragraph in connection with a policy form is 
3.9 	exempt from the requirement of prior approval by the commissioner under paragraphs 
3.10 	(c), (f), and (h).

3.11 	Sec. 2. Minnesota Statutes 2006, section 62J.04, is amended by adding a subdivision to 
3.12 	read:
3.13 		Subd. 1b.Premium growth limits. (a) For calendar year 2008 and each year 
3.14 	thereafter, the commissioner shall set annual premium growth limits for health plan 
3.15 	companies. The premium limits set by the commissioner for calendar years 2008 to 2013 
3.16 	shall not exceed the regional Consumer Price Index for urban consumers for the preceding 
3.17 	calendar year plus two percentage points and an additional one percentage point to be used 
3.18 	to finance the implementation of the electronic medical record system described under 
3.19 	section 62J.495. The commissioner shall ensure that the additional percentage point is 
3.20 	being used to provide financial assistance to health care providers to implement electronic 
3.21 	medical record systems either directly or through an increase in reimbursement.
3.22 	(b) For the calendar years beyond 2013, the rate of premium growth shall be 
3.23 	limited to the change in the Consumer Price Index for urban consumers for the previous 
3.24 	calendar year plus two percentage points. The commissioners of health and commerce 
3.25 	shall make a recommendation to the legislature by January 15, 2012, regarding the 
3.26 	continuation of the additional percentage point to the growth limit described in paragraph 
3.27 	(a). The recommendation shall be based on the progress made by health care providers 
3.28 	in instituting an electronic medical record system and in creating a statewide interactive 
3.29 	electronic health record system.
3.30 	(c) The commissioner may add additional percentage points as needed to the 
3.31 	premium limit for a calendar year if a major disaster, bioterrorism, or a public health 
3.32 	emergency occurs that results in higher health care costs. Any additional percentage 
3.33 	points must reflect the additional cost to the health care system directly attributed to 
3.34 	the disaster or emergency. 
4.1 	(d) The commissioner shall publish the annual premium growth limits in the State 
4.2 	Register by January 31 of the year that the limits are to be in effect.
4.3 	(e) For the purposes of this subdivision, premium growth is measured as the 
4.4 	percentage change in per member, per month premium revenue from the current year to 
4.5 	the previous year. Premium growth rates shall be calculated for the following lines of 
4.6 	business: individual, small group, and large group. Data used for premium growth rate 
4.7 	calculations shall be submitted as part of the cost containment filing under section 62J.38.
4.8 	(f) For purposes of this subdivision, "health plan company" has the meaning given 
4.9 	in section 62J.041.

4.10 	Sec. 3. Minnesota Statutes 2006, section 62J.04, subdivision 3, is amended to read:
4.11 		Subd. 3.Cost containment duties. The commissioner shall:
4.12 	(1) establish statewide and regional cost containment goals for total health care 
4.13 	spending under this section and collect data as described in sections 62J.38 to 62J.41 to 
4.14 	monitor statewide achievement of the cost containment goals and premium growth limits; 
4.15 	(2) divide the state into no fewer than four regions, with one of those regions being 
4.16 	the Minneapolis/St. Paul metropolitan statistical area but excluding Chisago, Isanti, 
4.17 	Wright, and Sherburne Counties, for purposes of fostering the development of regional 
4.18 	health planning and coordination of health care delivery among regional health care 
4.19 	systems and working to achieve the cost containment goals;
4.20 	(3) monitor the quality of health care throughout the state and take action as 
4.21 	necessary to ensure an appropriate level of quality;
4.22 	(4) issue recommendations regarding uniform billing forms, uniform electronic 
4.23 	billing procedures and data interchanges, patient identification cards, and other uniform 
4.24 	claims and administrative procedures for health care providers and private and public 
4.25 	sector payers. In developing the recommendations, the commissioner shall review the 
4.26 	work of the work group on electronic data interchange (WEDI) and the American National 
4.27 	Standards Institute (ANSI) at the national level, and the work being done at the state and 
4.28 	local level. The commissioner may adopt rules requiring the use of the Uniform Bill 
4.29 	82/92 form, the National Council of Prescription Drug Providers (NCPDP) 3.2 electronic 
4.30 	version, the Centers for Medicare and Medicaid Services 1500 form, or other standardized 
4.31 	forms or procedures;
4.32 	(5) undertake health planning responsibilities;
4.33 	(6) authorize, fund, or promote research and experimentation on new technologies 
4.34 	and health care procedures;
5.1 	(7) within the limits of appropriations for these purposes, administer or contract for 
5.2 	statewide consumer education and wellness programs that will improve the health of 
5.3 	Minnesotans and increase individual responsibility relating to personal health and the 
5.4 	delivery of health care services, undertake prevention programs including initiatives to 
5.5 	improve birth outcomes, expand childhood immunization efforts, and provide start-up 
5.6 	grants for worksite wellness programs;
5.7 	(8) undertake other activities to monitor and oversee the delivery of health care 
5.8 	services in Minnesota with the goal of improving affordability, quality, and accessibility of 
5.9 	health care for all Minnesotans; and
5.10 	(9) make the cost containment goal and premium growth limit data available to 
5.11 	the public in a consumer-oriented manner.

5.12 	Sec. 4. Minnesota Statutes 2006, section 62J.041, is amended to read:
5.13 	62J.041 INTERIM HEALTH PLAN COMPANY COST CONTAINMENT 
5.14 	GOALS HEALTH CARE EXPENDITURE LIMITS.
5.15 		Subdivision 1.Definitions. (a) For purposes of this section, the following definitions 
5.16 	apply.
5.17 	(b) "Health plan company" has the definition provided in section 62Q.01. This 
5.18 	definition does not include the state employee health plan offered under chapter 43A or 
5.19 	the public employees insurance program offered under section 43A.316.
5.20 	(c) "Total Health care expenditures" means incurred claims or expenditures on health 
5.21 	care services, administrative expenses, charitable contributions, and all other payments
5.22 	made by health plan companies out of premium revenues.
5.23 	(d) "Net expenditures" means total expenditures minus exempted taxes and 
5.24 	assessments and payments or allocations made to establish or maintain reserves.
5.25 	(e) "Exempted taxes and assessments" means direct payments for taxes to 
5.26 	government agencies, contributions to the Minnesota Comprehensive Health Association, 
5.27 	the medical assistance provider's surcharge under section 256.9657, the MinnesotaCare 
5.28 	provider tax under section 295.52, assessments by the Health Coverage Reinsurance 
5.29 	Association, assessments by the Minnesota Life and Health Insurance Guaranty 
5.30 	Association, assessments by the Minnesota Risk Adjustment Association, and any new 
5.31 	assessments imposed by federal or state law. 
5.32 	(f) (d) "Consumer cost-sharing or subscriber liability" means enrollee coinsurance, 
5.33 	co-payment, deductible payments, and amounts in excess of benefit plan maximums.
5.34 		Subd. 2.Establishment. The commissioner of health shall establish cost 
5.35 	containment goals health care expenditure limits for the increase in net calendar year 
6.1 	2008, and each year thereafter, for health care expenditures by each health plan company 
6.2 	for calendar years 1994, 1995, 1996, and 1997. The cost containment goals must be the 
6.3 	same as the annual cost containment goals for health care spending established under 
6.4 	section 62J.04, subdivision 1, paragraph (b). Health plan companies that are affiliates may 
6.5 	elect to meet one combined cost containment goal health care expenditure limit. The 
6.6 	limits set by the commissioner shall not exceed the premium limits established in section 
6.7 	62J.04, subdivision 1b. 
6.8 		Subd. 3.Determination of expenditures. Health plan companies shall submit to 
6.9 	the commissioner of health, by April 1, 1994, for calendar year 1993; April 1, 1995, for 
6.10 	calendar year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, for calendar 
6.11 	year 1996; and April 1, 1998, for calendar year 1997 of each year, beginning 2008, all 
6.12 	information the commissioner determines to be necessary to implement this section. 
6.13 	The information must be submitted in the form specified by the commissioner. The 
6.14 	information must include, but is not limited to, health care expenditures per member per 
6.15 	month or cost per employee per month, and detailed information on revenues and reserves. 
6.16 	The commissioner, to the extent possible, shall coordinate the submittal of the information 
6.17 	required under this section with the submittal of the financial data required under chapter 
6.18 	62J, to minimize the administrative burden on health plan companies. The commissioner 
6.19 	may adjust final expenditure figures for demographic changes, risk selection, changes in 
6.20 	basic benefits, and legislative initiatives that materially change health care costs, as long 
6.21 	as these adjustments are consistent with the methodology submitted by the health plan 
6.22 	company to the commissioner, and approved by the commissioner as actuarially justified. 
6.23 	The methodology to be used for adjustments and the election to meet one cost containment 
6.24 	goal for affiliated health plan companies must be submitted to the commissioner by 
6.25 	September 1, 1994. Community integrated service networks may submit the information 
6.26 	with their application for licensure. The commissioner shall also accept changes to 
6.27 	methodologies already submitted. The adjustment methodology submitted and approved 
6.28 	by the commissioner must apply to the data submitted for calendar years 1994 and 1995. 
6.29 	The commissioner may allow changes to accepted adjustment methodologies for data 
6.30 	submitted for calendar years 1996 and 1997. Changes to the adjustment methodology 
6.31 	must be received by September 1, 1996, and must be approved by the commissioner.
6.32 		Subd. 4.Monitoring of reserves. (a) The commissioners of health and commerce 
6.33 	shall monitor health plan company reserves and net worth as established under chapters 
6.34 	60A, 62C, 62D, 62H, and 64B, with respect to the health plan companies that each 
6.35 	commissioner respectively regulates to assess the degree to which savings resulting from 
7.1 	the establishment of cost containment goals are passed on to consumers in the form of 
7.2 	lower premium rates.
7.3 	(b) Health plan companies shall fully reflect in the premium rates the savings 
7.4 	generated by the cost containment goals. No premium rate, currently reviewed by the 
7.5 	Department of Health or Commerce, may be approved for those health plan companies 
7.6 	unless the health plan company establishes to the satisfaction of the commissioner of 
7.7 	commerce or the commissioner of health, as appropriate, that the proposed new rate 
7.8 	would comply with this paragraph.
7.9 	(c) Health plan companies, except those licensed under chapter 60A to sell accident 
7.10 	and sickness insurance under chapter 62A, shall annually before the end of the fourth fiscal 
7.11 	quarter provide to the commissioner of health or commerce, as applicable, a projection of 
7.12 	the level of reserves the company expects to attain during each quarter of the following 
7.13 	fiscal year. These health plan companies shall submit with required quarterly financial 
7.14 	statements a calculation of the actual reserve level attained by the company at the end 
7.15 	of each quarter including identification of the sources of any significant changes in the 
7.16 	reserve level and an updated projection of the level of reserves the health plan company 
7.17 	expects to attain by the end of the fiscal year. In cases where the health plan company has 
7.18 	been given a certificate to operate a new health maintenance organization under chapter 
7.19 	62D, or been licensed as a community integrated service network under chapter 62N, or 
7.20 	formed an affiliation with one of these organizations, the health plan company shall also 
7.21 	submit with its quarterly financial statement, total enrollment at the beginning and end of 
7.22 	the quarter and enrollment changes within each service area of the new organization. The 
7.23 	reserve calculations shall be maintained by the commissioners as trade secret information, 
7.24 	except to the extent that such information is also required to be filed by another provision 
7.25 	of state law and is not treated as trade secret information under such other provisions.
7.26 	(d) Health plan companies in paragraph (c) whose reserves are less than the required 
7.27 	minimum or more than the required maximum at the end of the fiscal year shall submit a 
7.28 	plan of corrective action to the commissioner of health or commerce under subdivision 7.
7.29 	(e) The commissioner of commerce, in consultation with the commissioner of health, 
7.30 	shall report to the legislature no later than January 15, 1995, as to whether the concept of 
7.31 	a reserve corridor or other mechanism for purposes of monitoring reserves is adaptable 
7.32 	for use with indemnity health insurers that do business in multiple states and that must 
7.33 	comply with their domiciliary state's reserves requirements.
7.34 		Subd. 5.Notice. The commissioner of health shall publish in the State Register 
7.35 	and make available to the public by July 1, 1995 2009, and each year thereafter, a list 
7.36 	of all health plan companies that exceeded their cost containment goalhealth care 
8.1 	expenditure limit for the 1994 previous calendar year. The commissioner shall publish 
8.2 	in the State Register and make available to the public by July 1, 1996, a list of all health 
8.3 	plan companies that exceeded their combined cost containment goal for calendar years 
8.4 	1994 and 1995. The commissioner shall notify each health plan company that the 
8.5 	commissioner has determined that the health plan company exceeded its cost containment 
8.6 	goal,health care expenditure limit at least 30 days before publishing the list, and shall 
8.7 	provide each health plan company with ten days to provide an explanation for exceeding 
8.8 	the cost containment goal health care expenditure limit. The commissioner shall review 
8.9 	the explanation and may change a determination if the commissioner determines the 
8.10 	explanation to be valid.
8.11 		Subd. 6.Assistance by the commissioner of commerce. The commissioner of 
8.12 	commerce shall provide assistance to the commissioner of health in monitoring health 
8.13 	plan companies regulated by the commissioner of commerce.

8.14 	Sec. 5. Minnesota Statutes 2006, section 62J.301, subdivision 3, is amended to read:
8.15 		Subd. 3.General duties. The commissioner shall:
8.16 	(1) collect and maintain data which enable population-based monitoring and trending 
8.17 	of the access, utilization, quality, and cost of health care services within Minnesota;
8.18 	(2) collect and maintain data for the purpose of estimating total Minnesota health 
8.19 	care expenditures and trends;
8.20 	(3) collect and maintain data for the purposes of setting cost containment goals and 
8.21 	premium growth limits under section 62J.04, and measuring cost containment goal and 
8.22 	premium growth limit compliance; 
8.23 	(4) conduct applied research using existing and new data and promote applications 
8.24 	based on existing research;
8.25 	(5) develop and implement data collection procedures to ensure a high level of 
8.26 	cooperation from health care providers and health plan companies, as defined in section 
8.27 	62Q.01, subdivision 4; 
8.28 	(6) work closely with health plan companies and health care providers to promote 
8.29 	improvements in health care efficiency and effectiveness; and
8.30 	(7) participate as a partner or sponsor of private sector initiatives that promote 
8.31 	publicly disseminated applied research on health care delivery, outcomes, costs, quality, 
8.32 	and management.

8.33 	Sec. 6. Minnesota Statutes 2006, section 62J.38, is amended to read:
8.34 	62J.38 COST CONTAINMENT DATA FROM GROUP PURCHASERS.
9.1 	(a) The commissioner shall require group purchasers to submit detailed data on total 
9.2 	health care spending for each calendar year. Group purchasers shall submit data for the 
9.3 	1993 calendar year by April 1, 1994, and each April 1 thereafter shall submit data for the 
9.4 	preceding calendar year.
9.5 	(b) The commissioner shall require each group purchaser to submit data on revenue, 
9.6 	expenses, and member months, as applicable. Revenue data must distinguish between 
9.7 	premium revenue and revenue from other sources and must also include information 
9.8 	on the amount of revenue in reserves and changes in reserves. Premium revenue data, 
9.9 	information on aggregate enrollment, and data on member months must be broken down 
9.10 	to distinguish between individual market, small group market, and large group market. 
9.11 	Filings under this section for calendar year 2008 must also include information broken 
9.12 	down by individual market, small group market, and large group market for calendar year 
9.13 	2007. Expenditure data must distinguish between costs incurred for patient care and 
9.14 	administrative costs. Patient care and administrative costs must include only expenses 
9.15 	incurred on behalf of health plan members and must not include the cost of providing 
9.16 	health care services for nonmembers at facilities owned by the group purchaser or affiliate. 
9.17 	Expenditure data must be provided separately for the following categories and for other 
9.18 	categories required by the commissioner: physician services, dental services, other 
9.19 	professional services, inpatient hospital services, outpatient hospital services, emergency, 
9.20 	pharmacy services and other nondurable medical goods, mental health, and chemical 
9.21 	dependency services, other expenditures, subscriber liability, and administrative costs. 
9.22 	Administrative costs must include costs for marketing; advertising; overhead; salaries 
9.23 	and benefits of central office staff who do not provide direct patient care; underwriting; 
9.24 	lobbying; claims processing; provider contracting and credentialing; detection and 
9.25 	prevention of payment for fraudulent or unjustified requests for reimbursement or 
9.26 	services; clinical quality assurance and other types of medical care quality improvement 
9.27 	efforts; concurrent or prospective utilization review as defined in section 62M.02; costs 
9.28 	incurred to acquire a hospital, clinic, or health care facility, or the assets thereof; capital 
9.29 	costs incurred on behalf of a hospital or clinic; lease payments; or any other costs incurred 
9.30 	pursuant to a partnership, joint venture, integration, or affiliation agreement with a 
9.31 	hospital, clinic, or other health care provider. Capital costs and costs incurred must be 
9.32 	recorded according to standard accounting principles. The reports of this data must also 
9.33 	separately identify expenses for local, state, and federal taxes, fees, and assessments. The 
9.34 	commissioner may require each group purchaser to submit any other data, including data 
9.35 	in unaggregated form, for the purposes of developing spending estimates, setting spending 
9.36 	limits, and monitoring actual spending and costs. In addition to reporting administrative 
10.1 	costs incurred to acquire a hospital, clinic, or health care facility, or the assets thereof; or 
10.2 	any other costs incurred pursuant to a partnership, joint venture, integration, or affiliation 
10.3 	agreement with a hospital, clinic, or other health care provider; reports submitted under 
10.4 	this section also must include the payments made during the calendar year for these 
10.5 	purposes. The commissioner shall make public, by group purchaser data collected under 
10.6 	this paragraph in accordance with section 62J.321, subdivision 5. Workers' compensation 
10.7 	insurance plans and automobile insurance plans are exempt from complying with this 
10.8 	paragraph as it relates to the submission of administrative costs. 
10.9 	(c) The commissioner may collect information on:
10.10 	(1) premiums, benefit levels, managed care procedures, and other features of health 
10.11 	plan companies;
10.12 	(2) prices, provider experience, and other information for services less commonly 
10.13 	covered by insurance or for which patients commonly face significant out-of-pocket 
10.14 	expenses; and
10.15 	(3) information on health care services not provided through health plan companies, 
10.16 	including information on prices, costs, expenditures, and utilization.
10.17 	(d) All group purchasers shall provide the required data using a uniform format and 
10.18 	uniform definitions, as prescribed by the commissioner.

10.19 	Sec. 7. Minnesota Statutes 2006, section 62L.08, subdivision 8, is amended to read:
10.20 		Subd. 8.Filing requirement. (a) A health carrier that offers, sells, issues, or renews 
10.21 	a health benefit plan for small employers shall file with the commissioner the index rates 
10.22 	and must demonstrate that all rates shall be within the rating restrictions defined in this 
10.23 	chapter. Such demonstration must include the allowable range of rates from the index rates 
10.24 	and a description of how the health carrier intends to use demographic factors including 
10.25 	case characteristics in calculating the premium rates. 
10.26 	(b) Notwithstanding paragraph (a), the rates shall not be approved, unless the 
10.27 	commissioner has determined that the rates are reasonable. In determining reasonableness, 
10.28 	the commissioner shall consider the growth rates applied under section 62J.04, subdivision 
10.29 	1, paragraph (b) apply the premium growth limits established under section 62J.04, 
10.30 	subdivision 1b, to the calendar year or years that the proposed premium rate would be 
10.31 	in effect, and shall consider actuarially valid changes in risk associated with the enrollee 
10.32 	population, and actuarially valid changes as a result of statutory changes in Laws 1992, 
10.33 	chapter 549.