1.1 	A bill for an act
1.2 	relating to health; modifying requirements for provider peer grouping;
1.3 	amending Minnesota Statutes 2010, sections 62U.04, subdivisions 1, 2, 4, 5; 
1.4 	256B.0754, subdivision 2; Minnesota Statutes 2011 Supplement, section 62U.04, 
1.5 	subdivisions 3, 9.
1.6 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7 	Section 1. Minnesota Statutes 2010, section 62U.04, subdivision 1, is amended to read:
1.8 		Subdivision 1.Development of tools to improve costs and quality outcomes.
 1.9 	The commissioner of health shall develop a plan to create transparent prices, encourage 
1.10 	greater provider innovation and collaboration across points on the health continuum 
1.11 	in cost-effective, high-quality care delivery, reduce the administrative burden on 
1.12 	providers and health plans associated with submitting and processing claims, and provide 
1.13 	comparative information to consumers on variation in health care cost and quality across 
1.14 	providers. The development must be complete by January 1, 2010.

1.15 	Sec. 2. Minnesota Statutes 2010, section 62U.04, subdivision 2, is amended to read:
1.16 		Subd. 2.Calculation of health care costs and quality. The commissioner of health 
1.17 	shall develop a uniform method of calculating providers' relative cost of care, defined as a 
1.18 	measure of health care spending including resource use and unit prices, and relative quality 
1.19 	of care. In developing this method, the commissioner must address the following issues:
1.20 	(1) provider attribution of costs and quality;
1.21 	(2) appropriate adjustment for outlier or catastrophic cases;
1.22 	(3) appropriate risk adjustment to reflect differences in the demographics and health 
1.23 	status across provider patient populations, using generally accepted and transparent risk 
1.24 	adjustment methodologies and case mix adjustment;
2.1 	(4) specific types of providers that should be included in the calculation;
2.2 	(5) specific types of services that should be included in the calculation;
2.3 	(6) appropriate adjustment for variation in payment rates;
2.4 	(7) the appropriate provider level for analysis;
2.5 	(8) payer mix adjustments, including variation across providers in the percentage of 
2.6 	revenue received from government programs; and
2.7 	(9) other factors that the commissioner determines and the advisory committee, 
2.8 	established under subdivision 3, determine are needed to ensure validity and comparability 
2.9 	of the analysis.

2.10 	Sec. 3. Minnesota Statutes 2011 Supplement, section 62U.04, subdivision 3, is 
2.11 	amended to read:
2.12 		Subd. 3.Provider peer grouping; system development; advisory committee.
 2.13 	(a) The commissioner shall develop a peer grouping system for providers based on a 
2.14 	combined measure that incorporates both provider risk-adjusted cost of care and quality of 
2.15 	care, and for specific conditions as determined by the commissioner. In developing this 
2.16 	system, the commissioner shall consult and coordinate with health care providers, health 
2.17 	plan companies, state agencies, and organizations that work to improve health care quality 
2.18 	in Minnesota. For purposes of the final establishment of the peer grouping system, the 
2.19 	commissioner shall not contract with any private entity, organization, or consortium of 
2.20 	entities that has or will have a direct financial interest in the outcome of the system.
2.21 	(b) The commissioner shall establish an advisory committee comprised of 
2.22 	representatives of health care providers, health plan companies, consumers, state agencies, 
2.23 	employers, academic researchers, and organizations that work to improve health care 
2.24 	quality in Minnesota. The advisory committee shall meet no fewer than three times 
2.25 	per year. The commissioner shall consult with the advisory committee in developing 
2.26 	and administering the peer grouping system, including but not limited to the following 
2.27 	activities:
2.28 	(1) establishing peer groups;
2.29 	(2) selecting quality measures;
2.30 	(3) recommending thresholds for completeness of data and statistical significance 
2.31 	for the purposes of public release of provider peer grouping results;
2.32 	(4) considering whether adjustments are necessary for facilities that provide medical 
2.33 	education, level 1 trauma services, neonatal intensive care, or inpatient psychiatric care;
2.34 	(5) recommending inclusion or exclusion of other costs; and
2.35 	(6) adopting patient attribution and quality and cost-scoring methodologies.
3.1 		Subd. 3a.Provider peer grouping; dissemination of data to providers. (b) By 
3.2 	no later than October 15, 2010, (a) The commissioner shall disseminate information 
3.3 	to providers on their total cost of care, total resource use, total quality of care, and the 
3.4 	total care results of the grouping developed under this subdivision 3 in comparison to an 
3.5 	appropriate peer group. Data used for this analysis must be the most recent data available. 
3.6 	Any analyses or reports that identify providers may only be published after the provider 
3.7 	has been provided the opportunity by the commissioner to review the underlying data in 
3.8 	order to verify, consistent with the recommendations developed pursuant to subdivision 
3.9 	3c, paragraph (d), and adopted by the commissioner, the accuracy and representativeness 
3.10 	of any analyses or reports and submit comments to the commissioner or initiate an appeal 
3.11 	under subdivision 3b. Providers may Upon request, providers shall be given any data for 
3.12 	which they are the subject of the data. The provider shall have 30 60 days to review the 
3.13 	data for accuracy and initiate an appeal as specified in paragraph (d) subdivision 3b.
3.14 	(c) By no later than January 1, 2011, (b) The commissioner shall disseminate 
3.15 	information to providers on their condition-specific cost of care, condition-specific 
3.16 	resource use, condition-specific quality of care, and the condition-specific results of the 
3.17 	grouping developed under this subdivision 3 in comparison to an appropriate peer group.
3.18 	Data used for this analysis must be the most recent data available. Any analyses or 
3.19 	reports that identify providers may only be published after the provider has been provided 
3.20 	the opportunity by the commissioner to review the underlying data in order to verify, 
3.21 	consistent with the recommendations developed pursuant to subdivision 3c, paragraph (d), 
3.22 	and adopted by the commissioner, the accuracy and representativeness of any analyses or 
3.23 	reports and submit comments to the commissioner or initiate an appeal under subdivision 
3.24 	3b. Providers may Upon request, providers shall be given any data for which they are the 
3.25 	subject of the data. The provider shall have 30 60 days to review the data for accuracy and 
3.26 	initiate an appeal as specified in paragraph (d) subdivision 3b.
3.27 		Subd. 3b.Provider peer grouping; appeals process. (d) The commissioner shall 
3.28 	establish an appeals a process to resolve disputes from providers regarding the accuracy 
3.29 	of the data used to develop analyses or reports or errors in the application of standards 
3.30 	or methodology established by the commissioner in consultation with the advisory 
3.31 	committee. When a provider appeals the accuracy of the data used to calculate the peer 
3.32 	grouping system results submits an appeal, the provider shall:
3.33 	(1) clearly indicate the reason they believe the data used to calculate the peer group 
3.34 	system results are not accurate or reasons for the appeal;
3.35 	(2) provide any evidence and, calculations, or documentation to support the reason 
3.36 	that data was not accurate for the appeal; and
4.1 	(3) cooperate with the commissioner, including allowing the commissioner access to 
4.2 	data necessary and relevant to resolving the dispute.
4.3 	The commissioner shall cooperate with the provider during the data review period 
4.4 	specified in subdivisions 3a and 3c by giving the provider information necessary for the 
4.5 	preparation of an appeal.
4.6 	If a provider does not meet the requirements of this paragraph subdivision, a provider's 
4.7 	appeal shall be considered withdrawn. The commissioner shall not publish peer grouping
4.8 	results for a specific provider under paragraph (e) or (f) while that provider has an 
4.9 	unresolved appeal until the appeal has been resolved.
4.10 		Subd. 3c.Provider peer grouping; publication of information for the public.
 4.11 	(e) Beginning January 1, 2011, the commissioner shall, no less than annually, publish 
4.12 	information on providers' total cost, total resource use, total quality, and the results of 
4.13 	the total care portion of the peer grouping process. The results that are published must 
4.14 	be on a risk-adjusted basis. (a) The commissioner may publicly release summary data 
4.15 	related to the peer grouping system as long as the data do not contain information or 
4.16 	descriptions from which the identity of individual hospitals, clinics, or other providers 
4.17 	may be discerned.
4.18 	(f) Beginning March 30, 2011, the commissioner shall no less than annually publish 
4.19 	information on providers' condition-specific cost, condition-specific resource use, and 
4.20 	condition-specific quality, and the results of the condition-specific portion of the peer 
4.21 	grouping process. The results that are published must be on a risk-adjusted basis. (b) The 
4.22 	commissioner may publicly release analyses or results related to the peer grouping system 
4.23 	that identify hospitals, clinics, or other providers only if the following criteria are met:
4.24 	(1) the results, data, and summaries, including any graphical depictions of provider 
4.25 	performance, have been distributed to providers at least 120 days prior to publication; 
4.26 	(2) the commissioner has provided an opportunity for providers to verify and review 
4.27 	data for which the provider is the subject consistent with the recommendations developed 
4.28 	pursuant to paragraph (d) and adopted by the commissioner; 
4.29 	(3) the results meet thresholds of validity, reliability, statistical significance, 
4.30 	representativeness, and other standards that reflect the recommendations of the advisory 
4.31 	committee, established under subdivision 3; and
4.32 	(4) any public report or other usage of the analyses, report, or data used by the 
4.33 	state clearly notifies consumers about how to use and interpret the results, including 
4.34 	any limitations of the data and analysis.
4.35 	(g) (c) After publishing the first public report, the commissioner shall, no less 
4.36 	frequently than annually, publish information on providers' total cost, total resource use, 
5.1 	total quality, and the results of the total care portion of the peer grouping process, as well 
5.2 	as information on providers' condition-specific cost, condition-specific resource use, 
5.3 	and condition-specific quality, and the results of the condition-specific portion of the 
5.4 	peer grouping process. The results that are published must be on a risk-adjusted basis, 
5.5 	including case mix adjustments.
5.6 	(d) The commissioner shall convene a work group comprised of representatives 
5.7 	of physician clinics, hospitals, their respective statewide associations, and other 
5.8 	relevant stakeholder organizations to make recommendations on data to be made 
5.9 	available to hospitals and physician clinics to allow for verification of the accuracy and 
5.10 	representativeness of the provider peer grouping results.
5.11 		Subd. 3d.Provider peer grouping; standards for dissemination and publication.
 5.12 	(a) Prior to disseminating data to providers under paragraph (b) or (c) subdivision 3a or 
5.13 	publishing information under paragraph (e) or (f) subdivision 3c, the commissioner, in 
5.14 	consultation with the advisory committee, shall ensure the scientific and statistical validity 
5.15 	and reliability of the results according to the standards described in paragraph (h) (b). 
5.16 	If additional time is needed to establish the scientific validity, statistical significance,
5.17 	and reliability of the results, the commissioner may delay the dissemination of data to 
5.18 	providers under paragraph (b) or (c) subdivision 3a, or the publication of information under 
5.19 	paragraph (e) or (f) subdivision 3c. If the delay is more than 60 days, the commissioner 
5.20 	shall report in writing to the chairs and ranking minority members of the legislative 
5.21 	committees with jurisdiction over health care policy and finance the following information:
5.22 	(1) the reason for the delay;
5.23 	(2) the actions being taken to resolve the delay and establish the scientific validity 
5.24 	and reliability of the results; and
5.25 	(3) the new dates by which the results shall be disseminated.
5.26 	If there is a delay under this paragraph, The commissioner must disseminate the 
5.27 	information to providers under paragraph (b) or (c) subdivision 3a at least 90 120 days 
5.28 	before publishing results under paragraph (e) or (f) subdivision 3c.
5.29 	(h) (b) The commissioner's assurance of valid, timely, and reliable clinic and hospital 
5.30 	peer grouping performance results shall include, at a minimum, the following:
5.31 	(1) use of the best available evidence, research, and methodologies; and
5.32 	(2) establishment of an explicit minimum reliability threshold thresholds for both 
5.33 	quality and costs developed in collaboration with the subjects of the data and the users of 
5.34 	the data, at a level not below nationally accepted standards where such standards exist.
5.35 	In achieving these thresholds, the commissioner shall not aggregate clinics that are not 
5.36 	part of the same system or practice group. The commissioner shall consult with and 
6.1 	solicit feedback from the advisory committee and representatives of physician clinics 
6.2 	and hospitals during the peer grouping data analysis process to obtain input on the 
6.3 	methodological options prior to final analysis and on the design, development, and testing 
6.4 	of provider reports.

6.5 	Sec. 4. Minnesota Statutes 2010, section 62U.04, subdivision 4, is amended to read:
6.6 		Subd. 4.Encounter data. (a) Beginning July 1, 2009, and every six months 
6.7 	thereafter, all health plan companies and third-party administrators shall submit encounter 
6.8 	data to a private entity designated by the commissioner of health. The data shall be 
6.9 	submitted in a form and manner specified by the commissioner subject to the following 
6.10 	requirements:
6.11 	(1) the data must be de-identified data as described under the Code of Federal 
6.12 	Regulations, title 45, section 164.514;
6.13 	(2) the data for each encounter must include an identifier for the patient's health care 
6.14 	home if the patient has selected a health care home; and
6.15 	(3) except for the identifier described in clause (2), the data must not include 
6.16 	information that is not included in a health care claim or equivalent encounter information 
6.17 	transaction that is required under section 62J.536.
6.18 	(b) The commissioner or the commissioner's designee shall only use the data 
6.19 	submitted under paragraph (a) for the purpose of carrying out its responsibilities in this 
6.20 	section, and must maintain the data that it receives according to the provisions of this 
6.21 	section. to carry out its responsibilities in this section, including supplying the data to 
6.22 	providers so they can verify their results of the peer grouping process consistent with the 
6.23 	recommendations developed pursuant to subdivision 3c, paragraph (d), and adopted by 
6.24 	the commissioner and, if necessary, submit comments to the commissioner or initiate 
6.25 	an appeal.
6.26 	(c) Data on providers collected under this subdivision are private data on individuals 
6.27 	or nonpublic data, as defined in section 13.02. Notwithstanding the definition of summary 
6.28 	data in section 13.02, subdivision 19, summary data prepared under this subdivision 
6.29 	may be derived from nonpublic data. The commissioner or the commissioner's designee 
6.30 	shall establish procedures and safeguards to protect the integrity and confidentiality of 
6.31 	any data that it maintains.
6.32 	(d) The commissioner or the commissioner's designee shall not publish analyses or 
6.33 	reports that identify, or could potentially identify, individual patients.

6.34 	Sec. 5. Minnesota Statutes 2010, section 62U.04, subdivision 5, is amended to read:
7.1 		Subd. 5.Pricing data. (a) Beginning July 1, 2009, and annually on January 1 
7.2 	thereafter, all health plan companies and third-party administrators shall submit data 
7.3 	on their contracted prices with health care providers to a private entity designated by 
7.4 	the commissioner of health for the purposes of performing the analyses required under 
7.5 	this subdivision. The data shall be submitted in the form and manner specified by the 
7.6 	commissioner of health.
7.7 	(b) The commissioner or the commissioner's designee shall only use the data 
7.8 	submitted under this subdivision for the purpose of carrying out its responsibilities under 
7.9 	this section to carry out its responsibilities under this section, including supplying the 
7.10 	data to providers so they can verify their results of the peer grouping process consistent 
7.11 	with the recommendations developed pursuant to subdivision 3c, paragraph (d), and 
7.12 	adopted by the commissioner and, if necessary, submit comments to the commissioner or 
7.13 	initiate an appeal.
7.14 	(c) Data collected under this subdivision are nonpublic data as defined in section 
7.15 	13.02. Notwithstanding the definition of summary data in section 13.02, subdivision 19, 
7.16 	summary data prepared under this section may be derived from nonpublic data. The 
7.17 	commissioner shall establish procedures and safeguards to protect the integrity and 
7.18 	confidentiality of any data that it maintains.

7.19 	Sec. 6. Minnesota Statutes 2011 Supplement, section 62U.04, subdivision 9, is 
7.20 	amended to read:
7.21 		Subd. 9.Uses of information. (a) For product renewals or for new products that 
7.22 	are offered, after 12 months have elapsed from publication by the commissioner of the 
7.23 	information in subdivision 3, paragraph (e):
7.24 	(1) the commissioner of management and budget shall may use the information and 
7.25 	methods developed under subdivision 3 subdivisions 3 to 3d to strengthen incentives for 
7.26 	members of the state employee group insurance program to use high-quality, low-cost 
7.27 	providers;
7.28 	(2) all political subdivisions, as defined in section 13.02, subdivision 11, that offer 
7.29 	health benefits to their employees must may offer plans that differentiate providers on their 
7.30 	cost and quality performance and create incentives for members to use better-performing 
7.31 	providers;
7.32 	(3) all health plan companies shall may use the information and methods developed 
7.33 	under subdivision 3 subdivisions 3 to 3d to develop products that encourage consumers to 
7.34 	use high-quality, low-cost providers; and
8.1 	(4) health plan companies that issue health plans in the individual market or the 
8.2 	small employer market must may offer at least one health plan that uses the information 
8.3 	developed under subdivision 3 subdivisions 3 to 3d to establish financial incentives for 
8.4 	consumers to choose higher-quality, lower-cost providers through enrollee cost-sharing 
8.5 	or selective provider networks.
8.6 	(b) By January 1, 2011, the commissioner of health shall report to the governor 
8.7 	and the legislature on recommendations to encourage health plan companies to promote 
8.8 	widespread adoption of products that encourage the use of high-quality, low-cost providers. 
8.9 	The commissioner's recommendations may include tax incentives, public reporting of 
8.10 	health plan performance, regulatory incentives or changes, and other strategies.

8.11 	Sec. 7. Minnesota Statutes 2010, section 256B.0754, subdivision 2, is amended to read:
8.12 		Subd. 2.Payment reform. By no later than 12 months after the commissioner of 
8.13 	health publishes the information in section 62U.04, subdivision 3, paragraph (e) 62U.04, 
8.14 	subdivision 3c, paragraph (b), the commissioner of human services shall may use the 
8.15 	information and methods developed under section 62U.04 to establish a payment system 
8.16 	that:
8.17 	(1) rewards high-quality, low-cost providers;
8.18 	(2) creates enrollee incentives to receive care from high-quality, low-cost providers; 
8.19 	and
8.20 	(3) fosters collaboration among providers to reduce cost shifting from one part of 
8.21 	the health continuum to another.

8.22 	Sec. 8. EFFECTIVE DATE.
 8.23 	Sections 1 to 7 are effective July 1, 2012, and apply to all information provided or 
8.24 	released to the public or to health care providers, pursuant to Minnesota Statutes, section 
8.25 	62U.04, on or after that date. Section 3 shall be implemented by the commissioner of 
8.26 	health within available resources.