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HF 3663

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 03/22/2010 10:17am

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

Current Version - 1st Engrossment

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A bill for an act
relating to human services; requiring prepaid health plans to meet a certain loss
ratio; amending Minnesota Statutes 2008, section 256B.69, subdivision 5i.

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

Section 1.

Minnesota Statutes 2008, 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) A prepaid health plan must meet a loss ratio of not less than 91 percent,
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 the program,
excluding administrative expenses. The denominator consists of the total amount paid by
the commissioner to the prepaid health plan.
new text end

new text begin (d) A bid submitted by a prepaid health plan may include a provision obligating the
bidder to provide free services to uninsured, low-income persons as specified in the bid
if necessary to meet the required loss ratio, to the extent that the loss ratio for that year
would otherwise not reach 91 percent.
new text end

new text begin (e) Nothing in this subdivision requires the minimum loss ratio to be applied to any
plan's business other than that business awarded by the commissioner, unless the plan fails
to keep a separate and distinct accounting of funds received from the commissioner.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2011.
new text end