HF 694

as introduced - 87th Legislature (2011 - 2012) Posted on 02/24/2011 10:39am

A bill for an act
relating to human services; modifying requirements for managed care
and county-based purchasing plans; providing access to data on provider
payment rates; requiring managed care and county-based plans serving state
health care program enrollees to annually provide data necessary to conduct
cost-effectiveness audits; requiring the commissioner of human services to
enter into an interagency agreement with the commissioner of commerce to
conduct a cost-effectiveness audit; reducing payments to managed care plans;
establishing a loss ratio for managed care and county-based purchasing plans;
establishing an additional performance withhold; establishing a work group on
plan regulation and reporting; requiring a report; amending Minnesota Statutes
2010, sections 256B.69, subdivisions 5a, 5i, 6, 9, 9b, by adding subdivisions;
256L.12, subdivision 9, by adding a subdivision.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 256B.69, subdivision 5a, is amended to
read:

Subd. 5a.

Managed care contracts.

(a) Managed care contracts under this section
and section 256L.12 shall be entered into or renewed on a calendar year basis beginning
January 1, 1996. Managed care contracts which were in effect on June 30, 1995, and set to
renew on July 1, 1995, shall be renewed for the period July 1, 1995 through December
31, 1995 at the same terms that were in effect on June 30, 1995. The commissioner may
issue separate contracts with requirements specific to services to medical assistance
recipients age 65 and older.

(b) A prepaid health plan providing covered health services for eligible persons
pursuant to chapters 256B and 256L is responsible for complying with the terms of its
contract with the commissioner. Requirements applicable to managed care programs
under chapters 256B and 256L established after the effective date of a contract with the
commissioner take effect when the contract is next issued or renewed.

(c) Effective for services rendered on or after January 1, 2003, the commissioner
shall withhold five percent of managed care plan payments under this section and
county-based purchasing plan payments under section 256B.692 for the prepaid medical
assistance program pending completion of performance targets. Each performance target
must be quantifiable, objective, measurable, and reasonably attainable, except in the case
of a performance target based on a federal or state law or rule. Criteria for assessment
of each performance target must be outlined in writing prior to the contract effective
date. The managed care plan must demonstrate, to the commissioner's satisfaction,
that the data submitted regarding attainment of the performance target is accurate. The
commissioner shall periodically change the administrative measures used as performance
targets in order to improve plan performance across a broader range of administrative
services. The performance targets must include measurement of plan efforts to contain
spending on health care services and administrative activities. The commissioner may
adopt plan-specific performance targets that take into account factors affecting only one
plan, including characteristics of the plan's enrollee population. The withheld funds
must be returned no sooner than July of the following year if performance targets in the
contract are achieved. The commissioner may exclude special demonstration projects
under subdivision 23.

(d) Effective for services rendered on or after January 1, 2009, through December
31, 2009, the commissioner shall withhold three percent of managed care plan payments
under this section and county-based purchasing plan payments under section 256B.692
for the prepaid medical assistance program. The withheld funds must be returned no
sooner than July 1 and no later than July 31 of the following year. The commissioner may
exclude special demonstration projects under subdivision 23.

(e) Effective for services provided on or after January 1, 2010, the commissioner
shall require that managed care plans use the assessment and authorization processes,
forms, timelines, standards, documentation, and data reporting requirements, protocols,
billing processes, and policies consistent with medical assistance fee-for-service or the
Department of Human Services contract requirements consistent with medical assistance
fee-for-service or the Department of Human Services contract requirements for all
personal care assistance services under section 256B.0659.

(f) Effective for services rendered on or after January 1, 2010, through December
31, 2010, the commissioner shall withhold 4.5 percent of managed care plan payments
under this section and county-based purchasing plan payments under section 256B.692
for the prepaid medical assistance program. The withheld funds must be returned no
sooner than July 1 and no later than July 31 of the following year. The commissioner may
exclude special demonstration projects under subdivision 23.

(g) Effective for services rendered on or after January 1, 2011, the commissioner
shall include as part of the performance targets described in paragraph (c) a reduction in
the health plan's emergency room utilization rate for state health care program enrollees
by a measurable rate of five percent from the plan's utilization rate for state health care
program enrollees for the previous calendar year.

The withheld funds must be returned no sooner than July 1 and no later than July 31
of the following calendar year if the managed care plan demonstrates to the satisfaction of
the commissioner that a reduction in the utilization rate was achieved.

The withhold described in this paragraph shall continue for each consecutive
contract period until the plan's emergency room utilization rate for state health care
program enrollees is reduced by 25 percent of the plan's emergency room utilization
rate for state health care program enrollees for calendar year 2009. Hospitals shall
cooperate with the health plans in meeting this performance target and shall accept
payment withholds that may be returned to the hospitals if the performance target is
achieved. The commissioner shall structure the withhold so that the commissioner returns
a portion of the withheld funds in amounts commensurate with achieved reductions in
utilization less than the targeted amount. The withhold in this paragraph does not apply to
county-based purchasing plans.

(h) Effective for services rendered on or after January 1, 2011, through December
31, 2011, the commissioner shall withhold 4.5 percent of managed care plan payments
under this section and county-based purchasing plan payments under section 256B.692
for the prepaid medical assistance program. The withheld funds must be returned no
sooner than July 1 and no later than July 31 of the following year. The commissioner may
exclude special demonstration projects under subdivision 23.

(i) Effective for services rendered on or after January 1, 2012, through December 31,
2012, the commissioner shall withhold 4.5 percent of managed care plan payments under
this section and county-based purchasing plan payments under section 256B.692 for the
prepaid medical assistance program. The withheld funds must be returned no sooner than
July 1 and no later than July 31 of the following year. The commissioner may exclude
special demonstration projects under subdivision 23.

(j) Effective for services rendered on or after January 1, 2013, through December 31,
2013, the commissioner shall withhold 4.5 percent of managed care plan payments under
this section and county-based purchasing plan payments under section 256B.692 for the
prepaid medical assistance program. The withheld funds must be returned no sooner than
July 1 and no later than July 31 of the following year. The commissioner may exclude
special demonstration projects under subdivision 23.

(k) Effective for services rendered on or after January 1, 2014, the commissioner
shall withhold three percent of managed care plan payments under this section and
county-based purchasing plan payments under section 256B.692 for the prepaid medical
assistance program. The withheld funds must be returned no sooner than July 1 and
no later than July 31 of the following year. The commissioner may exclude special
demonstration projects under subdivision 23.

(l) A managed care plan or a county-based purchasing plan under section 256B.692
may include as admitted assets under section 62D.044 any amount withheld under this
section that is reasonably expected to be returned.

(m) Contracts between the commissioner and a prepaid health plan are exempt from
the set-aside and preference provisions of section 16C.16, subdivisions 6, paragraph
(a), and 7.

(n) The return of the withhold under paragraphs (d), (f), and (h) to (k) is not subject
to the requirements of paragraph (c).

new text begin (o) Effective for services provided on or after January 1, 2012, the commissioner
shall withhold ... percent of managed care plan payments under this section and
county-based purchasing plan payments under section 256B.692 for the prepaid
medical assistance program pending completion of outcome-based performance targets
for enrollees with complex or chronic conditions. Criteria for assessment of each
performance target must be outlined in writing by the commissioner prior to the contract
effective date. The managed care or county-based purchasing plan must demonstrate,
to the commissioner's satisfaction, that the data submitted regarding attainment of the
performance target is accurate. The withheld funds must be returned no sooner than July
of the following year if the performance targets in the contract are achieved.
new text end

Sec. 2.

Minnesota Statutes 2010, section 256B.69, subdivision 5i, is amended to read:

Subd. 5i.

Administrative expenses.

(a) Managed care plan and county-based
purchasing plan administrative costs for a prepaid health plan provided under this section
or section 256B.692 must not exceed by more than five percent that prepaid health plan's
or county-based purchasing plan's actual calculated administrative spending for the
previous calendar year as a percentage of total revenue. The penalty for exceeding this
limit must be the amount of administrative spending in excess of 105 percent of the actual
calculated amount. The commissioner may waive this penalty if the excess administrative
spending is the result of unexpected shifts in enrollment or member needs or new program
requirements.

(b) Expenses listed under section 62D.12, subdivision 9a, clause (4), are not
allowable administrative expenses for rate-setting purposes under this section, unless
approved by the commissioner.

new text begin (c) Managed care and county-based purchasing plans seeking to include an increase
in administrative costs in their base payment rate must submit information on the
allocation of administrative costs by category and subcategory and reasons for the increase
in administrative costs, in the form and manner specified by the commissioner.
new text end

new text begin (d) A managed care or county-based purchasing plan must meet a loss ratio of no
less than 92.5 percent for each program it participates in under this section, calculated
as specified in this paragraph. The loss ratio consists of a numerator consisting only
of direct expenses of providing patient care to persons covered under each program,
excluding administrative expenses. The denominator consists of the total amount paid by
the commissioner to the plan, after subtraction of taxes and other mandatory government
assessments directly attributable to the plan's participation as a provider in the program
being reported on. Payments by the plan to unaffiliated third parties or to providers or
other entities that own, are owned by, or under common control with the plan must
be divided into patient care expenses and administrative expenses and included in the
appropriate category for determination of the loss ratio.
new text end

Sec. 3.

Minnesota Statutes 2010, section 256B.69, is amended by adding a subdivision
to read:

new text begin Subd. 5l. new text end

new text begin Payment rate reduction. new text end

new text begin In addition to the reductions in subdivisions 5g
and 5h, the total payment to managed care plans under the medical assistance program is
reduced by 15 percent for services provided on or after January 1, 2012. This provision
excludes payments for nursing home services, home and community-based waivers, and
mental health services added as covered benefits after December 31, 2007. Managed care
plans are prohibited from reducing provider payment rates to reflect this reduction, and the
commissioner shall ensure that the provider payment rates in effect for the contract year
beginning January 1, 2012, are not lower than the provider payment rates in effect for the
contract year beginning January 1, 2011.
new text end

Sec. 4.

Minnesota Statutes 2010, section 256B.69, subdivision 6, is amended to read:

Subd. 6.

Service delivery.

(a) Each demonstration provider shall be responsible for
the health care coordination for eligible individuals. Demonstration providers:

(1) shall authorize and arrange for the provision of all needed health services
including but not limited to the full range of services listed in sections 256B.02,
subdivision 8, and 256B.0625 in order to ensure appropriate health care is delivered to
enrollees. Notwithstanding section 256B.0621, demonstration providers that provide
nursing home and community-based services under this section shall provide relocation
service coordination to enrolled persons age 65 and over;

(2) shall accept the prospective, per capita payment from the commissioner in return
for the provision of comprehensive and coordinated health care services for eligible
individuals enrolled in the program;

(3) deleted text begin may deleted text end new text begin shall seek to new text end contract with new text begin federally qualified health centers and new text end other health
care and social service practitioners to provide new text begin coordinated health care and social new text end services
to enrollees new text begin from high-risk or medically underserved populations new text end ; and

(4) shall institute recipient grievance procedures according to the method established
by the project, utilizing applicable requirements of chapter 62D. Disputes not resolved
through this process shall be appealable to the commissioner as provided in subdivision 11.

(b) Demonstration providers must comply with the standards for claims settlement
under section 72A.201, subdivisions 4, 5, 7, and 8, when contracting with other health
care and social service practitioners to provide services to enrollees. A demonstration
provider must pay a clean claim, as defined in Code of Federal Regulations, title 42,
section 447.45(b), within 30 business days of the date of acceptance of the claim.

Sec. 5.

Minnesota Statutes 2010, section 256B.69, subdivision 9, is amended to read:

Subd. 9.

Reporting.

(a) Each demonstration provider shall submit information as
required by the commissioner, including data required for assessing client satisfaction,
quality of care, cost, and utilization of services for purposes of project evaluation. The
commissioner shall also develop methods of data reporting and collection in order to
provide aggregate enrollee information on encounters and outcomes to determine access
and quality assurance. Required information shall be specified before the commissioner
contracts with a demonstration provider.

(b) Aggregate nonpersonally identifiable health plan encounter data, aggregate
spending data for major categories of service as reported to the commissioners of
health and commerce under section 62D.08, subdivision 3, clause (a), and criteria for
service authorization and service use are public data that the commissioner shall make
available and use in public reports. The commissioner shall require each health plan and
county-based purchasing plan to provide:

(1) encounter data for each service provided, using standard codes and unit of
service definitions set by the commissioner, in a form that the commissioner can report by
age, eligibility groups, and health plan; and

(2) criteria, written policies, and procedures required to be disclosed under section
62M.10, subdivision 7, and Code of Federal Regulations, title 42, part 438.210(b)(1), used
for each type of service for which authorization is required.

new text begin (c) The commissioner shall require managed care and county-based purchasing
plans to report financial data separately by public and private lines of business.
new text end

new text begin (d) The commissioner shall contract with an actuary to collect the financial,
utilization, quality, and other data that managed care and county-based purchasing plans
are required to submit under this section. The commissioner, in consultation with the
actuary under contract, shall set uniform criteria, definitions, and standards for the data
to be submitted, and shall require managed care and county-based purchasing plans to
comply with these criteria, definitions, and standards when submitting data to the actuary
under contract.
new text end

Sec. 6.

Minnesota Statutes 2010, section 256B.69, subdivision 9b, is amended to read:

Subd. 9b.

Reporting provider payment rates.

(a) According to guidelines
developed by the commissioner, in consultation with health care providers, managed care
plans, and county-based purchasing plans, each managed care plan and county-based
purchasing plan must annually provide to the commissioner information on reimbursement
rates paid by the managed care plan under this section or the county-based purchasing
plan under section 256B.692 to providers and vendors for administrative services under
contract with the plan.

(b) Each managed care plan and county-based purchasing plan must annually
provide to the commissioner, in the form and manner specified by the commissioner:

(1) the amount of the payment made to the plan under this section that is paid to
health care providers for patient care;

(2) aggregate provider payment data, categorized by inpatient payments and
outpatient payments, with the outpatient payments categorized by payments to primary
care providers and nonprimary care providers;

(3) the process by which increases or decreases in payments made to the plan
under this section, that are based on actuarial analysis related to provider cost increases
or decreases, or that are required by legislative action, are passed through to health care
providers, categorized by payments to primary care providers and nonprimary care
providers; and

(4) specific information on the methodology used to establish provider
reimbursement rates paid by the managed health care plan and county-based purchasing
plan.

Data provided to the commissioner under this subdivision must allow the
commissioner to conduct the analyses required under paragraph (d).

(c) Data provided to the commissioner under this subdivision are deleted text begin nonpublic deleted text end new text begin public new text end
data as defined in section 13.02.

(d) The commissioner shall analyze data provided under this subdivision to assist the
legislature in providing oversight and accountability related to expenditures under this
section. The analysis must include information on payments to physicians, physician
extenders, and hospitals, and may include other provider types as determined by the
commissioner. The commissioner shall also array aggregate provider reimbursement rates
by health plan, by primary care, and by nonprimary care categories. The commissioner
shall report the analysis to the legislature annually, beginning December 15, 2010,
and each December 15 thereafter. The commissioner shall also make this information
available on the agency's Web site to managed care and county-based purchasing plans,
health care providers, and the public.

Sec. 7.

Minnesota Statutes 2010, section 256B.69, is amended by adding a subdivision
to read:

new text begin Subd. 9c. new text end

new text begin Cost-effectiveness audit. new text end

new text begin (a) The commissioner shall require each
managed care and county-based purchasing plan, as a condition of contract, to annually
provide to the commissioner, in the form and manner specified by the commissioner, data
necessary for the commissioner or another entity to conduct an audit to determine if the
managed care or county-based purchasing plan provides covered services to medical
assistance and MinnesotaCare program enrollees in a cost-effective and efficient manner,
relative to the capitation payments received and the performance of health plan companies
serving private sector enrollees. Plans shall submit to the commissioner, by July 1 of each
year, data for the preceding contract year.
new text end

new text begin (b) The data collected must include, but is not limited to:
new text end

new text begin (1) expenditures by category, including claims and administrative costs by
subcategory;
new text end

new text begin (2) revenues by category, including capitation payments by enrollee category, return
on investment, and revenues from cost-sharing;
new text end

new text begin (3) provider payments by provider type;
new text end

new text begin (4) per-enrollee expenditures and utilization by age, gender, region, and eligibility
basis of the enrollee;
new text end

new text begin (5) net returns for public and private sector products and contributions to reserves;
new text end

new text begin (6) quality of care measures, including information on the achievement of
performance targets; and
new text end

new text begin (7) other data the commissioner determines is necessary to complete a
cost-effectiveness audit.
new text end

new text begin (c) Data provided to the commissioner under this subdivision are public data as
defined under section 13.02.
new text end

new text begin (d) The commissioner shall enter into an interagency agreement with the
commissioner of commerce to conduct a cost-effectiveness audit of each managed care and
county-based purchasing plan, using the data submitted by each plan under paragraph (b).
The audit must evaluate the extent to which managed care and county-based purchasing
plans provide covered services to medical assistance and MinnesotaCare program
enrollees in a cost-effective and efficient manner, relative to capitation payments received
and the performance of health plan companies providing coverage to private sector
enrollees. In conducting the audit, the commissioner shall consider differences between
public and private sector coverage, including but not limited to differences in benefit sets,
enrollee characteristics, and the use of underwriting. The commissioner of commerce
shall present audit findings to the commissioner of human services and the legislature by
November 1, 2011, and shall include with these findings recommendations for any changes
in capitation rates or other legislative or administrative changes necessary to improve
cost-effectiveness and efficiency of individual managed care and county-based purchasing
plans, and the prepaid medical assistance and prepaid MinnesotaCare programs.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8.

Minnesota Statutes 2010, section 256L.12, subdivision 9, is amended to read:

Subd. 9.

Rate setting; performance withholds.

(a) Rates will be prospective,
per capita, where possible. The commissioner may allow health plans to arrange for
inpatient hospital services on a risk or nonrisk basis. The commissioner shall consult with
an independent actuary to determine appropriate rates.

(b) For services rendered on or after January 1, 2004, the commissioner shall
withhold five percent of managed care plan payments and county-based purchasing
plan payments under this section pending completion of performance targets. Each
performance target must be quantifiable, objective, measurable, and reasonably attainable,
except in the case of a performance target based on a federal or state law or rule. Criteria
for assessment of each performance target must be outlined in writing prior to the
contract effective date. The managed care plan must demonstrate, to the commissioner's
satisfaction, that the data submitted regarding attainment of the performance target is
accurate. The commissioner shall periodically change the administrative measures used
as performance targets in order to improve plan performance across a broader range of
administrative services. The performance targets must include measurement of plan
efforts to contain spending on health care services and administrative activities. The
commissioner may adopt plan-specific performance targets that take into account factors
affecting only one plan, such as characteristics of the plan's enrollee population. The
withheld funds must be returned no sooner than July 1 and no later than July 31 of the
following calendar year if performance targets in the contract are achieved.

(c) For services rendered on or after January 1, 2011, the commissioner shall
withhold an additional three percent of managed care plan or county-based purchasing
plan payments under this section. The withheld funds must be returned no sooner than
July 1 and no later than July 31 of the following calendar year. The return of the withhold
under this paragraph is not subject to the requirements of paragraph (b).

(d) Effective for services rendered on or after January 1, 2011, the commissioner
shall include as part of the performance targets described in paragraph (b) a reduction in
the plan's emergency room utilization rate for state health care program enrollees by a
measurable rate of five percent from the plan's utilization rate for the previous calendar
year.

The withheld funds must be returned no sooner than July 1 and no later than July 31
of the following calendar year if the managed care plan demonstrates to the satisfaction of
the commissioner that a reduction in the utilization rate was achieved.

The withhold described in this paragraph shall continue for each consecutive
contract period until the plan's emergency room utilization rate for state health care
program enrollees is reduced by 25 percent of the plan's emergency room utilization rate
for state health care program enrollees for calendar year 2009. Hospitals shall cooperate
with the health plans in meeting this performance target and shall accept payment
withholds that may be returned to the hospitals if the performance target is achieved. The
commissioner shall structure the withhold so that the commissioner returns a portion of
the withheld funds in amounts commensurate with achieved reductions in utilization less
than the targeted amount. The withhold described in this paragraph does not apply to
county-based purchasing plans.

(e) A managed care plan or a county-based purchasing plan under section 256B.692
may include as admitted assets under section 62D.044 any amount withheld under this
section that is reasonably expected to be returned.

new text begin (f) Effective for services provided on or after January 1, 2012, the commissioner
shall withhold ... percent of managed care plan and county-based purchasing plan
payments for the prepaid MinnesotaCare program pending completion of outcome-based
performance targets for enrollees with complex or chronic conditions. Criteria for
assessment of each performance target must be outlined in writing prior to the contract
effective date. The managed care or county-based purchasing plan must demonstrate,
to the commissioner's satisfaction, that the data submitted regarding attainment of the
performance target is accurate. The withheld funds must be returned no sooner than July
of the following year if the performance targets in the contract are achieved.
new text end

Sec. 9.

Minnesota Statutes 2010, section 256L.12, is amended by adding a subdivision
to read:

new text begin Subd. 9c. new text end

new text begin Rate reduction. new text end

new text begin In addition to the reductions in subdivisions 9a and 9b,
the total payment to managed care plans under the MinnesotaCare program is reduced
by 15 percent for services provided on or after January 1, 2012. This provision excludes
payments for mental health services added as covered benefits after December 31, 2007.
Managed care plans are prohibited from reducing provider payment rates to reflect this
reduction, and the commissioner shall ensure that the provider payment rates in effect for
the contract year beginning January 1, 2012, are not lower than the provider payment rates
in effect for the contract year beginning January 1, 2011.
new text end

Sec. 10. new text begin WORK GROUP ON PLAN REGULATION AND REPORTING.
new text end

new text begin The commissioner of human services shall convene a work group to study and make
recommendations on managed care plan and county-based purchasing plan regulatory and
reporting requirements under Minnesota Statutes, section 256B.69. The work group
shall consist of representatives of managed care and county-based purchasing plans,
consumers, and health care providers. The work group shall also include two members
of the Minnesota house of representatives appointed by the speaker of the house and
two members of the Minnesota senate appointed by the Subcommittee on Committees
of the senate Committee on Rules and Administration, with no more than one member
of each body being from the majority party. The work group shall recommend to the
legislature and the commissioner of human services, by January 15, 2012, any changes in
plan regulatory and reporting requirements necessary to:
new text end

new text begin (1) provide state agencies and the legislature with the information necessary to
monitor plan performance and efficiency;
new text end

new text begin (2) allow state agencies and the legislature to ensure that capitation rates and plan
administrative costs are reasonable and consistent with efficient management by the plan;
new text end

new text begin (3) avoid unnecessary duplication in reporting; and
new text end

new text begin (4) reduce plan administrative expenses.
new text end