HF 1746

as introduced - 88th Legislature (2013 - 2014) Posted on 04/10/2013 11:04am

A bill for an act
relating to health; limiting a health maintenance organization's net worth;
proposing coding for new law in Minnesota Statutes, chapter 62D.

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

Section 1.

new text begin [62D.0425] NET WORTH LIMIT.
new text end

new text begin (a) Between July 1, 2013, and June 30, 2018, no health maintenance organization
shall have a net worth of more than 25 percent of the sum of all expenses incurred during
the most recent calendar year, except as provided in paragraph (b).
new text end

new text begin (b) A health maintenance organization may have a net worth of more than 25 percent
of the sum of all expenses incurred during the most recent calendar year if necessary to
maintain capital reserves at the level of the product of 2.0 and its authorized control
level risk-based capital, as required pursuant to sections 60A.50 to 60A.592 and 62D.04.
Paragraphs (c) and (d) do not apply to health maintenance organizations permitted, under
this paragraph, to have a net worth greater than 25 percent of the sum of all expenses
incurred during the most recent calendar year.
new text end

new text begin (c) By June 15, 2013, and annually thereafter until June 15, 2017, for a health
maintenance organization that has a net worth of more than 25 percent of the sum of all
expenses incurred during the most recent calendar year, the commissioner of health, in
consultation with the commissioners of commerce and human services, shall determine:
new text end

new text begin (1) capital reserves using the National Association of Insurance Commissioners
definitions of admitted assets, which shall be used in clauses (2) to (5);
new text end

new text begin (2) the proportion of capital reserves that are reasonably attributable to net
underwriting gains in Minnesota public health care programs based on annual financial
filings for calendar years 2003 to 2012;
new text end

new text begin (3) the proportion of capital reserves that are reasonably attributable to investment
gains associated with net underwriting gains in Minnesota public health care programs
based on annual financial filings for calendar years 2003 to 2012;
new text end

new text begin (4) any adjustments needed to clauses (1) or (2) based on corporate reorganizations,
since 2003; and
new text end

new text begin (5) any adjustments needed to account for the impact of annual financial filings
for calendar years 2013 to 2016.
new text end

new text begin (d) A health maintenance organization that has a net worth of more than 25 percent
of the sum of all expenses incurred during the most recent calendar year shall reduce its
capital reserves as follows:
new text end

new text begin (1) as determined by paragraph (c), the proportion of capital reserves that are greater
than 25 percent of the sum of all expenses incurred during the most recent calendar
year and that are reasonably attributable to net underwriting gains and investment gains
associated with net underwriting gains in Minnesota public health care programs shall be
spent down. The health maintenance organization shall place excess capital reserves in a
special restricted account under the control of the health maintenance organization. The
special restricted account may only be used to pay for a portion of the health maintenance
organization's current public program enrollee premiums. The health maintenance
organization shall spend no less than 50 percent of this special restricted account in any
state fiscal year beginning on or after July 1, 2013; and
new text end

new text begin (2) the proportion of capital reserves that are greater than 25 percent of the
sum of all expenses incurred during the most recent calendar year and that are not
reasonably attributable to net underwriting gains and investment gains associated with net
underwriting gains in Minnesota public health care programs shall be spent down. The
health maintenance organization shall place these excess capital reserves in a second
special restricted account under the control of the health maintenance organization. The
health maintenance organization may use this special restricted account to benefit current
enrollees by moderating variation in premium increases, assisting enrollees in accessing
new benefits, reducing health disparities, promoting health, wellness and preventive
services, and improving care coordination. Prior to spending down excess reserves from
this special revenue account, the health maintenance organization's spenddown plan must
be approved by the commissioner of health. The health maintenance organization shall
spend no less than 33 percent of this special restricted account in any state fiscal year
beginning July 1, 2013.
new text end

new text begin (e) The health maintenance organization must spend down all of the reserves placed
in its special restricted accounts by July 1, 2018. All reserves placed in a special restricted
account must be spent according to paragraph (d), unless the reserves are necessary for the
health maintenance organization to maintain capital reserves at the level of the product
of 2.0 and its authorized control level risk-based capital, as required pursuant to sections
60A.50 to 60A.592 and 62D.04, in which case the health maintenance organization
may transfer funds out of its special restricted accounts in a manner approved by the
commissioner of health.
new text end

new text begin (f) The commissioner of health must approve all health maintenance organization
expenditures for the acquisition of any asset, which is a not an admitted asset under
National Association of Insurance Commissioners definitions. The commissioner shall
disapprove any acquisition unless the health maintenance organization demonstrates that
the acquisition is: (1) consistent with its long-standing business practices; or (2) more
beneficial to enrollees than benefits to enrollees under paragraph (d).
new text end