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Minnesota Legislature

Office of the Revisor of Statutes

HF 2839

as introduced - 90th Legislature (2017 - 2018) Posted on 03/08/2018 05:41pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to health; requiring health maintenance organizations that are corporations
to be organized as nonprofit corporations in order to operate in the state; establishing
requirements for the use of net earnings of nonprofit health maintenance
organizations; amending Minnesota Statutes 2016, section 62D.12, by adding a
subdivision; Minnesota Statutes 2017 Supplement, sections 62D.02, subdivision
4; 62D.03, subdivision 1; 62D.05, subdivision 1; 62D.06, subdivision 1; 62D.19;
62E.02, subdivision 3.

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

Section 1.

Minnesota Statutes 2017 Supplement, section 62D.02, subdivision 4, is amended
to read:


Subd. 4.

Health maintenance organization.

"Health maintenance organization" means
a deleted text beginforeign or domesticdeleted text endnew text begin nonprofitnew text end corporationnew text begin organized under chapter 317Anew text end, or a local
governmental unit as defined in subdivision 11, controlled and operated as provided in
sections 62D.01 to 62D.30, which provides, either directly or through arrangements with
providers or other persons, comprehensive health maintenance services, or arranges for the
provision of these services, to enrollees on the basis of a fixed prepaid sum without regard
to the frequency or extent of services furnished to any particular enrollee.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 2.

Minnesota Statutes 2017 Supplement, section 62D.03, subdivision 1, is amended
to read:


Subdivision 1.

Certificate of authority required.

Notwithstanding any law of this state
to the contrary, any deleted text beginforeign or domesticdeleted text endnew text begin nonprofitnew text end corporation organized to do so or a local
governmental unit may apply to the commissioner of health for a certificate of authority to
establish and operate a health maintenance organization in compliance with sections 62D.01
to 62D.30. No person shall establish or operate a health maintenance organization in this
state, nor sell or offer to sell, or solicit offers to purchase or receive advance or periodic
consideration in conjunction with a health maintenance organization or health maintenance
contract unless the organization has a certificate of authority under sections 62D.01 to
62D.30.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 3.

Minnesota Statutes 2017 Supplement, section 62D.05, subdivision 1, is amended
to read:


Subdivision 1.

Authority granted.

Any new text beginnonprofit new text endcorporation or local governmental
unit may, upon obtaining a certificate of authority as required in sections 62D.01 to 62D.30,
operate as a health maintenance organization.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 4.

Minnesota Statutes 2017 Supplement, section 62D.06, subdivision 1, is amended
to read:


Subdivision 1.

Governing body composition; enrollee advisory body.

The governing
body of any health maintenance organization which is a new text beginnonprofit new text endcorporation may include
enrollees, providers, or other individuals; provided, however, that after a health maintenance
organization which is a new text beginnonprofit new text endcorporation has been authorized under sections 62D.01
to 62D.30 for one year, at least 40 percent of the governing body shall be composed of
enrollees and members elected by the enrollees and members from among the enrollees and
members. For purposes of this section, "member" means a consumer who receives health
care services through a self-insured contract that is administered by the health maintenance
organization or its related third-party administrator. The number of members elected to the
governing body shall not exceed the number of enrollees elected to the governing body. An
enrollee or member elected to the governing board may not be a person:

(1) whose occupation involves, or before retirement involved, the administration of
health activities or the provision of health services;

(2) who is or was employed by a health care facility as a licensed health professional;
or

(3) who has or had a direct substantial financial or managerial interest in the rendering
of a health service, other than the payment of a reasonable expense reimbursement or
compensation as a member of the board of a health maintenance organization.

After a health maintenance organization which is a local governmental unit has been
authorized under sections 62D.01 to 62D.30 for one year, an enrollee advisory body shall
be established. The enrollees who make up this advisory body shall be elected by the enrollees
from among the enrollees.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 5.

Minnesota Statutes 2016, section 62D.12, is amended by adding a subdivision to
read:


new text begin Subd. 8a. new text end

new text begin Net earnings. new text end

new text begin All net earnings of the nonprofit health maintenance organization
shall be devoted to the nonprofit purposes of the health maintenance organization in providing
comprehensive health care. No health maintenance organization shall provide for the
payment, whether directly or indirectly, of any part of its net earnings, to any person as a
dividend or rebate; provided, however, that the health maintenance organizations may make
payments to providers or other persons based upon the efficient provision of services or as
incentives to provide quality care. The commissioner of health shall, pursuant to sections
62D.01 to 62D.30, revoke the certificate of authority of any health maintenance organization
in violation of this subdivision.
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. 6.

Minnesota Statutes 2017 Supplement, section 62D.19, is amended to read:


62D.19 UNREASONABLE EXPENSES.

No health maintenance organization shall incur or pay for any expense of any nature
which is unreasonably high in relation to the value of the service or goods provided. The
commissioner of health shall implement and enforce this section by rules adopted under
this section.

In an effort to achieve the stated purposes of sections 62D.01 to 62D.30new text begin; in order to
safeguard the underlying nonprofit status of health maintenance organizations;
new text end and to ensure
that the payment of health maintenance organization money to major participating entities
results in a corresponding benefit to the health maintenance organization and its enrollees,
when determining whether an organization has incurred an unreasonable expense in relation
to a major participating entity, due consideration shall be given to, in addition to any other
appropriate factors, whether the officers and trustees of the health maintenance organization
have acted with good faith and in the best interests of the health maintenance organization
in entering into, and performing under, a contract under which the health maintenance
organization has incurred an expense. The commissioner has standing to sue, on behalf of
a health maintenance organization, officers or trustees of the health maintenance organization
who have breached their fiduciary duty in entering into and performing such contracts.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 7.

Minnesota Statutes 2017 Supplement, section 62E.02, subdivision 3, is amended
to read:


Subd. 3.

Health maintenance organization.

"Health maintenance organization" means
a new text beginnonprofit new text endcorporation licensed and operated as provided in chapter 62D.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2019.
new text end

Sec. 8. new text beginTRANSITION.
new text end

new text begin (a) Beginning January 1, 2019, the commissioner of health shall only issue new
certificates of authority for health maintenance organizations that are nonprofit corporations
organized under Minnesota Statutes, chapter 317A, or local governmental units. A certificate
of authority for a health maintenance organization that: (1) is not a nonprofit corporation
organized under Minnesota Statutes, chapter 317A, or a local governmental unit; and (2) is
issued before January 1, 2019, shall expire 30 days after the last date on which health
maintenance contracts issued by that health maintenance organization expire.
new text end

new text begin (b) A health maintenance organization that is not a nonprofit corporation organized
under Minnesota Statutes, chapter 317A, or a local governmental unit shall not offer, sell,
issue, or renew health maintenance contracts after September 30, 2018.
new text end