SF 376

as introduced - 84th Legislature (2005 - 2006) Posted on 12/15/2009 12:00am

A bill for an act
relating to health care cost containment; making
changes to encourage consumer-driven health plans;
encouraging efficiency in providing health care;
implementing health care cost containment, cost
shifting provisions, and reduction of government
mandates; implementing health plan competition and
reform provisions; changing health maintenance
organization regulatory authority; reforming medical
malpractice liability; amending Minnesota Statutes
2004, sections 16A.10, by adding a subdivision;
43A.23, by adding a subdivision; 62A.02, subdivision
2; 62D.02, subdivision 4, by adding a subdivision;
62D.03, subdivision 1; 62D.04, subdivision 1; 62D.05,
subdivision 1; 62E.08, subdivision 1; 62E.091; 62J.26,
by adding a subdivision; 256B.04, by adding a
subdivision; 290.01, subdivisions 19, 31; proposing
coding for new law in Minnesota Statutes, chapters
62L; 147; 604; repealing Minnesota Statutes 2004,
section 62J.17, subdivisions 1, 2, 3, 4a, 5a, 6a, 7, 8.

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

ARTICLE 1

HEALTH CARE COST CONTAINMENT; CONSUMER EMPOWERMENT

Section 1.

Minnesota Statutes 2004, section 43A.23, is
amended by adding a subdivision to read:

new text begin Subd. 4. new text end

new text begin Health savings accounts. new text end

new text begin During collective
bargaining negotiations with the exclusive representatives of
state employees, the commissioner must propose that state
employee health coverage include at least one plan of hospital
and medical benefits that combines a high-deductible health plan
with a health savings account, so as to qualify the health
savings account under section 223 of the Internal Revenue Code,
as amended.
new text end

Sec. 2.

Minnesota Statutes 2004, section 256B.04, is
amended by adding a subdivision to read:

new text begin Subd. 20. new text end

new text begin Information web site for interpreter services.
new text end

new text begin The commissioner shall establish an information Web site to
assist health care providers in obtaining oral language
interpreter services when these services are needed to enable a
patient to obtain a health care service from a provider. The
commissioner must collect and maintain contact and rate
information for providers of oral language interpreter services
and must make this information available to all health care
providers, whether or not the provider is enrolled in a state
health care program. The Web site list is not an endorsement by
the commissioner of any particular interpreter.
new text end

Sec. 3.

Minnesota Statutes 2004, section 290.01,
subdivision 19, is amended to read:

Subd. 19.

Net income.

The term "net income" means the
federal taxable income, as defined in section 63 of the Internal
Revenue Code of 1986, as amended through the date named in this
subdivision, incorporating any elections made by the taxpayer in
accordance with the Internal Revenue Code in determining federal
taxable income for federal income tax purposes, and with the
modifications provided in subdivisions 19a to 19f.

In the case of a regulated investment company or a fund
thereof, as defined in section 851(a) or 851(g) of the Internal
Revenue Code, federal taxable income means investment company
taxable income as defined in section 852(b)(2) of the Internal
Revenue Code, except that:

(1) the exclusion of net capital gain provided in section
852(b)(2)(A) of the Internal Revenue Code does not apply;

(2) the deduction for dividends paid under section
852(b)(2)(D) of the Internal Revenue Code must be applied by
allowing a deduction for capital gain dividends and
exempt-interest dividends as defined in sections 852(b)(3)(C)
and 852(b)(5) of the Internal Revenue Code; and

(3) the deduction for dividends paid must also be applied
in the amount of any undistributed capital gains which the
regulated investment company elects to have treated as provided
in section 852(b)(3)(D) of the Internal Revenue Code.

The net income of a real estate investment trust as defined
and limited by section 856(a), (b), and (c) of the Internal
Revenue Code means the real estate investment trust taxable
income as defined in section 857(b)(2) of the Internal Revenue
Code.

The net income of a designated settlement fund as defined
in section 468B(d) of the Internal Revenue Code means the gross
income as defined in section 468B(b) of the Internal Revenue
Code.

The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
1616, 1617, 1704(l), and 1704(m) of the Small Business Job
Protection Act, Public Law 104-188, the provisions of Public Law
104-117, the provisions of sections 313(a) and (b)(1), 602(a),
913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
105-34, the provisions of section 6010 of the Internal Revenue
Service Restructuring and Reform Act of 1998, Public Law
105-206, the provisions of section 4003 of the Omnibus
Consolidated and Emergency Supplemental Appropriations Act,
1999, Public Law 105-277, and the provisions of section 318 of
the Consolidated Appropriation Act of 2001, Public Law 106-554,
shall become effective at the time they become effective for
federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1996, shall be in effect for taxable years
beginning after December 31, 1996.

The provisions of sections 202(a) and (b), 221(a), 225,
312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
(c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
of the Taxpayer Relief Act of 1997, Public Law 105-34, the
provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
and 7003 of the Internal Revenue Service Restructuring and
Reform Act of 1998, Public Law 105-206, the provisions of
section 3001 of the Omnibus Consolidated and Emergency
Supplemental Appropriations Act, 1999, Public Law 105-277, the
provisions of section 3001 of the Miscellaneous Trade and
Technical Corrections Act of 1999, Public Law 106-36, and the
provisions of section 316 of the Consolidated Appropriation Act
of 2001, Public Law 106-554, shall become effective at the time
they become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1997, shall be in effect for taxable years
beginning after December 31, 1997.

The provisions of sections 5002, 6009, 6011, and 7001 of
the Internal Revenue Service Restructuring and Reform Act of
1998, Public Law 105-206, the provisions of section 9010 of the
Transportation Equity Act for the 21st Century, Public Law
105-178, the provisions of sections 1004, 4002, and 5301 of the
Omnibus Consolidation and Emergency Supplemental Appropriations
Act, 1999, Public Law 105-277, the provision of section 303 of
the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
105-369, the provisions of sections 532, 534, 536, 537, and 538
of the Ticket to Work and Work Incentives Improvement Act of
1999, Public Law 106-170, the provisions of the Installment Tax
Correction Act of 2000, Public Law 106-573, and the provisions
of section 309 of the Consolidated Appropriation Act of 2001,
Public Law 106-554, shall become effective at the time they
become effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1998, shall be in effect for taxable years
beginning after December 31, 1998.

The provisions of the FSC Repeal and Extraterritorial
Income Exclusion Act of 2000, Public Law 106-519, and the
provision of section 412 of the Job Creation and Worker
Assistance Act of 2002, Public Law 107-147, shall become
effective at the time it became effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 1999, shall be in effect for taxable years
beginning after December 31, 1999. The provisions of sections
306 and 401 of the Consolidated Appropriation Act of 2001,
Public Law 106-554, and the provision of section 632(b)(2)(A) of
the Economic Growth and Tax Relief Reconciliation Act of 2001,
Public Law 107-16, and provisions of sections 101 and 402 of the
Job Creation and Worker Assistance Act of 2002, Public Law
107-147, shall become effective at the same time it became
effective for federal purposes.

The Internal Revenue Code of 1986, as amended through
December 31, 2000, shall be in effect for taxable years
beginning after December 31, 2000. The provisions of sections
659a and 671 of the Economic Growth and Tax Relief
Reconciliation Act of 2001, Public Law 107-16, the provisions of
sections 104, 105, and 111 of the Victims of Terrorism Tax
Relief Act of 2001, Public Law 107-134, and the provisions of
sections 201, 403, 413, and 606 of the Job Creation and Worker
Assistance Act of 2002, Public Law 107-147, shall become
effective at the same time it became effective for federal
purposes.

The Internal Revenue Code of 1986, as amended through March
15, 2002, shall be in effect for taxable years beginning after
December 31, 2001.

The provisions of sections 101 and 102 of the Victims of
Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
become effective at the same time it becomes effective for
federal purposes.

The Internal Revenue Code of 1986, as amended through June
15, 2003, shall be in effect for taxable years beginning after
December 31, 2002. The provisions of section 201 of the Jobs
and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
it is enacted into law, are effective at the same time it became
effective for federal purposes.

new text begin Section 1201 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, Public Law 108-73,
is effective at the same time it became effective for federal
purposes.
new text end

Except as otherwise provided, references to the Internal
Revenue Code in subdivisions 19a to 19g mean the code in effect
for purposes of determining net income for the applicable year.

new text begin EFFECTIVE DATE. new text end

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

Sec. 4.

Minnesota Statutes 2004, section 290.01,
subdivision 31, is amended to read:

Subd. 31.

Internal revenue code.

Unless specifically
defined otherwise, "Internal Revenue Code" means the Internal
Revenue Code of 1986, as amended through June 15, 2003 new text begin , and as
amended by section 1201 of the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, Public Law 108-73 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

ARTICLE 2

HEALTH CARE COST CONTAINMENT; COST SHIFTING

Section 1.

Minnesota Statutes 2004, section 16A.10, is
amended by adding a subdivision to read:

new text begin Subd. 4. new text end

new text begin Limit on state health care program
expansion. new text end

new text begin No budget proposal shall include any provision that
requests new or increased funding for an expansion of
eligibility or covered services for a state health care program,
unless state health care program reimbursement rates for major
service categories, at the time the expansion is to take effect,
will be sufficient to cover estimated provider costs for each
major service category. For purposes of this section, "state
health care program" means the medical assistance,
MinnesotaCare, and general assistance medical care programs.
new text end

Sec. 2. new text begin STUDY OF COST SHIFTING.
new text end

new text begin (a) The commissioner of health shall evaluate the extent to
which state health care program reimbursement rates result in
health care provider cost shifting to private sector payers and
individuals paying for services out-of-pocket. In conducting
the evaluation, the commissioner shall:
new text end

new text begin (1) examine the extent to which average state health care
program reimbursement rates for major categories of services
vary from average private sector reimbursement rates;
new text end

new text begin (2) examine the extent to which average state health care
program reimbursement rates for major categories of services
cover average provider costs;
new text end

new text begin (3) estimate the amount by which average state health care
program reimbursement rates for major categories of services
would need to be increased to match average private sector
reimbursement rates and to cover average provider costs; and
new text end

new text begin (4) present recommendations to the legislature on methods
of increasing average state health care program reimbursement
rates for major categories of services, over a six-year period,
to the average private sector reimbursement rate and to a level
that covers average provider costs.
new text end

new text begin (b) The commissioner shall present results and
recommendations to the legislature by December 15, 2005. The
commissioner may contract with an actuarial consulting firm to
implement this section. Payment and reimbursement data
collected by the commissioner in the course of implementing this
section shall be classified as not public data under Minnesota
Statutes, chapter 13, except that data shall be classified as
public data not on individuals if the information collected was
already accessible to the public under the policies of the
private sector entity providing the data. For purposes of this
section, "state health care program" means the medical
assistance, MinnesotaCare, and general assistance medical care
programs.
new text end

ARTICLE 3

HEALTH CARE COST CONTAINMENT; REDUCING GOVERNMENT MANDATES

Section 1.

Minnesota Statutes 2004, section 62J.26, is
amended by adding a subdivision to read:

new text begin Subd. 6. new text end

new text begin Mandated benefits moratorium. new text end

new text begin (a) No new
mandated health benefit proposal, as defined in subdivision 1,
shall be enacted.
new text end

new text begin (b) This subdivision expires January 1, 2008.
new text end

Sec. 2.

new text begin [62L.056] SMALL EMPLOYER ALTERNATIVE BENEFIT
PLANS.
new text end

new text begin (a) Notwithstanding any provision of this chapter, chapter
363A, or any other law to the contrary, the commissioner of
commerce shall, by January 1, 2006, permit health carriers to
offer alternative health benefit plans to small employers if the
following requirements are satisfied:
new text end

new text begin (1) the health carrier is assessed less than ten percent of
the total amount assessed by the Minnesota Comprehensive Health
Association;
new text end

new text begin (2) the health plans must be offered in compliance with
this chapter, except as otherwise permitted in this section;
new text end

new text begin (3) the health plans to be offered must be designed to
enable employers and covered persons to better manage costs and
coverage options through the use of co-pays, deductibles, and
other cost-sharing arrangements;
new text end

new text begin (4) the health plans must be issued and administered in
compliance with sections 62E.141; 62L.03, subdivision 6; and
62L.12, subdivisions 3 and 4, relating to prohibitions against
enrolling persons eligible for employer group coverage in the
Minnesota Comprehensive Health Association;
new text end

new text begin (5) loss-ratio requirements do not apply to health plans
issued under this section;
new text end

new text begin (6) the health plans may alter or eliminate coverages that
would otherwise be required by law, except for maternity
coverage as required under federal law;
new text end

new text begin (7) each health plan must be approved by the commissioner
of commerce; and
new text end

new text begin (8) the commissioner may limit the types and numbers of
health plan forms permitted under this section, but must permit,
as one option, a health plan form in which a health carrier may
exclude or alter coverage of any or all benefits otherwise
mandated by state law, except for maternity coverage as required
under federal law.
new text end

new text begin (b) The definitions in section 62L.02 apply to this section
as modified by this section.
new text end

new text begin (c) An employer may provide health plans permitted under
this section to its employees, the employees' dependents, and
other persons eligible for coverage under the employer's plan,
notwithstanding chapter 363A or any other law to the contrary.
new text end

Sec. 3. new text begin REPEALER; EXPENDITURE REPORTING.
new text end

new text begin Minnesota Statutes 2004, section 62J.17, subdivisions 1, 2,
3, 4a, 5a, 6a, 7, and 8, are repealed effective the day
following final enactment.
new text end

ARTICLE 4

HEALTH CARE COST CONTAINMENT;
HEALTH PLAN COMPETITION AND REFORM

Section 1.

Minnesota Statutes 2004, section 62A.02,
subdivision 2, is amended to read:

Subd. 2.

Approval.

(a) The health plan form shall not be
issued, nor shall any application, rider, endorsement, or rate
be used in connection with it, until the expiration of 60 days
after it has been filed unless the commissioner approves it
before that time.

(b) Notwithstanding paragraph (a), a new text begin health plan form or a
new text end rate new text begin , new text end filed with respect to a policy of accident and sickness
insurance as defined in section 62A.01 by an insurer licensed
under chapter 60A, may be used on or after the date of filing
with the commissioner. new text begin Health plan forms and new text end rates that are not
approved or disapproved within the 60-day time period are deemed
approved. This paragraph does not apply to Medicare-related
coverage as defined in section 62A.31, subdivision 3, paragraph
(q).

Sec. 2.

Minnesota Statutes 2004, section 62D.02,
subdivision 4, is amended to read:

Subd. 4.

Health maintenance organization.

(a) "Health
maintenance organization" means a deleted text begin nonprofit corporation
organized under chapter 317A, or deleted text end new text begin person, including new text end 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.

(b) (Expired)

Sec. 3.

Minnesota Statutes 2004, section 62D.02, is
amended by adding a subdivision to read:

new text begin Subd. 17. new text end

new text begin Person. new text end

new text begin "Person" means a natural or artificial
person, including, but not limited to, individuals,
partnerships, limited liability companies, associations, trusts,
corporations, other business entities, or governmental entities.
new text end

Sec. 4.

Minnesota Statutes 2004, 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 begin nonprofit corporation organized to do so or a local governmental
unit deleted text end new text begin person new text end 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 An out-of-state corporation may qualify under
this chapter, subject to obtaining a certificate of authority to
do business in this state as an out-of-state corporation under
chapter 303 and compliance with this chapter and other
applicable state laws.
new text end

Sec. 5.

Minnesota Statutes 2004, section 62D.04,
subdivision 1, is amended to read:

Subdivision 1.

Application review.

Upon receipt of an
application for a certificate of authority, the commissioner of
health shall determine whether the applicant for a certificate
of authority has:

(a) demonstrated the willingness and potential ability to
assure that health care services will be provided in such a
manner as to enhance and assure both the availability and
accessibility of adequate personnel and facilities;

(b) arrangements for an ongoing evaluation of the quality
of health care;

(c) a procedure to develop, compile, evaluate, and report
statistics relating to the cost of its operations, the pattern
of utilization of its services, the quality, availability and
accessibility of its services, and such other matters as may be
reasonably required by regulation of the commissioner of health;

(d) reasonable provisions for emergency and out of area
health care services;

(e) demonstrated that it is financially responsible and may
reasonably be expected to meet its obligations to enrollees and
prospective enrollees. In making this determination, the
commissioner of health shall require the amount of initial net
worth required in section 62D.042, compliance with the
risk-based capital standards under sections 60A.50 to 60A.592,
the deposit required in section 62D.041, and in addition shall
consider:

(1) the financial soundness of its arrangements for health
care services and the proposed schedule of charges used in
connection therewith;

(2) arrangements which will guarantee for a reasonable
period of time the continued availability or payment of the cost
of health care services in the event of discontinuance of the
health maintenance organization; and

(3) agreements with providers for the provision of health
care services;

(f) demonstrated that it will assume full financial risk on
a prospective basis for the provision of comprehensive health
maintenance services, including hospital care; provided,
however, that the requirement in this paragraph shall not
prohibit the following:

(1) a health maintenance organization from obtaining
insurance or making other arrangements (i) for the cost of
providing to any enrollee comprehensive health maintenance
services, the aggregate value of which exceeds $5,000 in any
year, (ii) for the cost of providing comprehensive health care
services to its members on a nonelective emergency basis, or
while they are outside the area served by the organization, or
(iii) for not more than 95 percent of the amount by which the
health maintenance organization's costs for any of its fiscal
years exceed 105 percent of its income for such fiscal years;
and

(2) a health maintenance organization from having a
provision in a group health maintenance contract allowing an
adjustment of premiums paid based upon the actual health
services utilization of the enrollees covered under the
contract, except that at no time during the life of the contract
shall the contract holder fully self-insure the financial risk
of health care services delivered under the contract. Risk
sharing arrangements shall be subject to the requirements of
sections 62D.01 to 62D.30;

(g) demonstrated that it has made provisions for and
adopted a conflict of interest policy applicable to all members
of the board of directors and the principal officers of the
health maintenance organization. The conflict of interest
policy shall include the procedures described in section
317A.255, subdivisions 1 and 2 new text begin , or a substantially similar
provision contained in the laws under which the health
maintenance organization is incorporated or otherwise
organized new text end . However, the commissioner is not precluded from
finding that a particular transaction is an unreasonable expense
as described in section 62D.19 even if the directors follow the
required procedures; and

(h) otherwise met the requirements of sections 62D.01 to
62D.30.

Sec. 6.

Minnesota Statutes 2004, section 62D.05,
subdivision 1, is amended to read:

Subdivision 1.

Authority granted.

Any deleted text begin nonprofit
corporation or local governmental unit deleted text end new text begin person new text end may, upon
obtaining a certificate of authority as required in sections
62D.01 to 62D.30, operate as a health maintenance organization.

Sec. 7.

Minnesota Statutes 2004, section 62E.08,
subdivision 1, is amended to read:

Subdivision 1.

Establishment.

The association shall
establish the following maximum premiums to be charged for
membership in the comprehensive health insurance plan:

(a) the premium for the number one qualified plan shall
range from a minimum of deleted text begin 101 deleted text end new text begin 115 new text end percent to a maximum of deleted text begin 125 deleted text end new text begin 135
new text end percent of the weighted average of rates charged by those
insurers and health maintenance organizations with individuals
enrolled in:

(1) $1,000 annual deductible individual plans of insurance
in force in Minnesota;

(2) individual health maintenance organization contracts of
coverage with a $1,000 annual deductible which are in force in
Minnesota; and

(3) other plans of coverage similar to plans offered by the
association based on generally accepted actuarial principles;

(b) the premium for the number two qualified plan shall
range from a minimum of deleted text begin 101 deleted text end new text begin 115 new text end percent to a maximum of deleted text begin 125 deleted text end new text begin 135
new text end percent of the weighted average of rates charged by those
insurers and health maintenance organizations with individuals
enrolled in:

(1) $500 annual deductible individual plans of insurance in
force in Minnesota;

(2) individual health maintenance organization contracts of
coverage with a $500 annual deductible which are in force in
Minnesota; and

(3) other plans of coverage similar to plans offered by the
association based on generally accepted actuarial principles;

(c) the premiums for the plans with a $2,000, $5,000, or
$10,000 annual deductible shall range from a minimum of deleted text begin 101 deleted text end new text begin 115
new text end percent to a maximum of deleted text begin 125 deleted text end new text begin 135 new text end percent of the weighted average
of rates charged by those insurers and health maintenance
organizations with individuals enrolled in:

(1) $2,000, $5,000, or $10,000 annual deductible individual
plans, respectively, in force in Minnesota; and

(2) individual health maintenance organization contracts of
coverage with a $2,000, $5,000, or $10,000 annual deductible,
respectively, which are in force in Minnesota; or

(3) other plans of coverage similar to plans offered by the
association based on generally accepted actuarial principles;

(d) the premium for each type of Medicare supplement plan
required to be offered by the association pursuant to section
62E.12 shall range from a minimum of deleted text begin 101 deleted text end new text begin 115 new text end percent to a
maximum of deleted text begin 125 deleted text end new text begin 135 new text end percent of the weighted average of rates
charged by those insurers and health maintenance organizations
with individuals enrolled in:

(1) Medicare supplement plans in force in Minnesota;

(2) health maintenance organization Medicare supplement
contracts of coverage which are in force in Minnesota; and

(3) other plans of coverage similar to plans offered by the
association based on generally accepted actuarial principles;
and

(e) the charge for health maintenance organization coverage
shall be based on generally accepted actuarial principles.

The list of insurers and health maintenance organizations
whose rates are used to establish the premium for coverage
offered by the association pursuant to paragraphs (a) to (d)
shall be established by the commissioner on the basis of
information which shall be provided to the association by all
insurers and health maintenance organizations annually at the
commissioner's request. This information shall include the
number of individuals covered by each type of plan or contract
specified in paragraphs (a) to (d) that is sold, issued, and
renewed by the insurers and health maintenance organizations,
including those plans or contracts available only on a renewal
basis. The information shall also include the rates charged for
each type of plan or contract.

In establishing premiums pursuant to this section, the
association shall utilize generally accepted actuarial
principles, provided that the association shall not discriminate
in charging premiums based upon sex. In order to compute a
weighted average for each type of plan or contract specified
under paragraphs (a) to (d), the association shall, using the
information collected pursuant to this subdivision, list
insurers and health maintenance organizations in rank order of
the total number of individuals covered by each insurer or
health maintenance organization. The association shall then
compute a weighted average of the rates charged for coverage by
all the insurers and health maintenance organizations by:

(1) multiplying the numbers of individuals covered by each
insurer or health maintenance organization by the rates charged
for coverage;

(2) separately summing both the number of individuals
covered by all the insurers and health maintenance organizations
and all the products computed under clause (1); and

(3) dividing the total of the products computed under
clause (1) by the total number of individuals covered.

The association may elect to use a sample of information
from the insurers and health maintenance organizations for
purposes of computing a weighted average. In no case, however,
may a sample used by the association to compute a weighted
average include information from fewer than the two insurers or
health maintenance organizations highest in rank order.

Sec. 8.

Minnesota Statutes 2004, section 62E.091, is
amended to read:

62E.091 APPROVAL OF STATE PLAN PREMIUMS.

The association shall submit to the commissioner any
premiums it proposes to become effective for coverage under the
comprehensive health insurance plan, pursuant to section 62E.08,
subdivision 3. No later than 45 days before the effective date
for premiums specified in section 62E.08, subdivision 3, the
commissioner shall approve, modify, or reject the proposed
premiums on the basis of the following criteria:

(a) whether the association has complied with the
provisions of section 62E.11, subdivision 11;

(b) whether the association has submitted the proposed
premiums in a manner which provides sufficient time for
individuals covered under the comprehensive insurance plan to
receive notice of any premium increase no less than 30 days
prior to the effective date of the increase;

(c) the degree to which the association's computations and
conclusions are consistent with section 62E.08;

(d) the degree to which any sample used to compute a
weighted average by the association pursuant to section 62E.08
reasonably reflects circumstances existing in the private
marketplace for individual coverage;

(e) the degree to which a weighted average computed
pursuant to section 62E.08 that uses information pertaining to
individual coverage available only on a renewal basis reflects
the circumstances existing in the private marketplace for
individual coverage;

(f) a comparison of the proposed increases with increases
in the cost of medical care and increases experienced in the
private marketplace for individual coverage;

(g) the financial consequences to enrollees of the proposed
increase;

(h) the actuarially projected effect of the proposed
increase upon both total enrollment in, and the nature of the
risks assumed by, the comprehensive health insurance plan;

(i) the relative solvency of the contributing members; and

(j) other factors deemed relevant by the commissioner.

In no case, however, may the commissioner approve premiums
for those plans of coverage described in section 62E.08,
subdivision 1, paragraphs (a) to (d), that are lower than deleted text begin 101
deleted text end new text begin 115 new text end percent or greater than deleted text begin 125 deleted text end new text begin 135 new text end percent of the weighted
averages computed by the association pursuant to section
62E.08. The commissioner shall support a decision to approve,
modify, or reject any premium proposed by the association with
written findings and conclusions addressing each criterion
specified in this section. If the commissioner does not
approve, modify, or reject the premiums proposed by the
association sooner than 45 days before the effective date for
premiums specified in section 62E.08, subdivision 3, the
premiums proposed by the association under this section become
effective.

Sec. 9. new text begin CHANGE OF HEALTH MAINTENANCE ORGANIZATION
REGULATORY AUTHORITY.
new text end

new text begin (a) Effective July 1, 2006, regulatory authority for health
maintenance organizations under Minnesota Statutes, chapter 62D;
community health clinics with respect to health care services
prepaid option plans offered under Minnesota Statutes, section
62Q.22; community integrated service networks, as defined in
Minnesota Statutes, section 62N.02, subdivision 4a; health care
cooperatives operating under Minnesota Statutes, chapter 62R;
health care purchasing alliances and accountable provider
networks operating under Minnesota Statutes, chapter 62T; and
county-based purchasing programs operating under Minnesota
Statutes, section 256B.692, subdivision 2, is transferred from
the commissioner of health to the commissioner of commerce.
new text end

new text begin (b) Minnesota Statutes, section 15.039, applies to this
transfer of authority.
new text end

new text begin (c) The revisor of statutes shall make changes to conform
to paragraph (a) by changing references to the commissioner of
health, Department of Health, and similar references, to the
commissioner of commerce, Department of Commerce, or similar
references, and by changing references to both commissioners or
both departments or "the appropriate commissioner" or similar
term to the commissioner or Department of Commerce, as
appropriate in Minnesota Statutes, sections 62A.021, subdivision
1, paragraph (h); 62D.02, subdivision 3; 62D.12, subdivision 1;
62D.15, subdivision 1; 62D.24, by also changing the existing
reference to "commissioner of commerce" to read "commissioner of
health"; 62E.05, subdivision 2; 62E.11, subdivision 13; 62J.041,
subdivision 4; 62J.701; 62J.74; 62L.02, subdivision 8; 62L.05,
subdivision 12; 62L.08, subdivisions 10 and 11; 62L.09,
subdivision 3; 62L.10, subdivision 4; 62L.11, subdivision 2;
62M.11; 62M.16; 62N.02, subdivision 4; 62N.26; 62Q.01,
subdivision 2; 62Q.106; 62Q.22, subdivisions 2, 6, and 7;
62Q.33, subdivision 2, by specifying that the commissioner
referenced in the last sentence is the commissioner of health;
62Q.49, subdivision 2; 62Q.51, subdivision 3; 62Q.525,
subdivision 3; 62Q.69, subdivisions 2 and 3; 62Q.71; 62Q.72;
62Q.73, subdivisions 3, 4, 5, and 6; 62R.04, subdivision 5;
62R.06, subdivision 1; 62T.01; and 256B.692, subdivisions 2 and
7. The revisor of statutes shall, in preparing Minnesota
Statutes 2006, make all conforming changes in Minnesota
Statutes, chapter 62D, and other chapters.
new text end

ARTICLE 5

HEALTH CARE COST CONTAINMENT;
MEDICAL MALPRACTICE REFORM

Section 1.

new text begin [147.37] BEST PRACTICE GUIDELINES; USE IN
MEDICAL MALPRACTICE CASES.
new text end

new text begin (a) In an action against a provider for malpractice, error,
mistake, or failure to cure, whether based in contract or tort,
adherence to a best practice guideline approved by either a
recognized specialty organization or an organization established
for the purpose of developing community-based clinical practice
guidelines is an absolute defense against an allegation that the
provider did not comply with accepted standards of practice in
the community. This paragraph does not apply if the best
practice guideline authorizes or recommends denial of treatment,
food, or fluids necessary to sustain life on the basis of the
patient's age or expected length of life or the patient's
present or predicted disability, degree of medical dependency,
or quality of life.
new text end

new text begin (b) Evidence of a departure from a best practice guideline
is admissible only on the issue of whether the provider is
entitled to an absolute defense under paragraph (a).
new text end

new text begin (c) Paragraphs (a) and (b) apply to claims arising on or
after August 1, 2005.
new text end

new text begin (d) Nothing in this section changes the standard or burden
of proof in an action alleging a delay in diagnosis, a
misdiagnosis, inappropriate application of a best practice
guideline, failure to obtain informed consent, battery or other
intentional tort, or product liability.
new text end

Sec. 2.

new text begin [604.111] HEALTH CARE PROVIDER ACTIONS; LIMITS ON
DAMAGES AND ATTORNEY FEES.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For the purposes of this
section, the terms in paragraphs (b) to (d) have the meanings
given them.
new text end

new text begin (b) "Economic loss" means all harm for which damages are
recoverable, other than noneconomic losses.
new text end

new text begin (c) "Health care provider" has the meaning given in section
541.076, paragraph (a), except that health care provider also
includes a physician assistant registered under chapter 147A and
ambulance services, medical directors, and personnel regulated
under chapter 144E.
new text end

new text begin (d) "Noneconomic loss" means all nonpecuniary harm for
which damages are recoverable, including, but not limited to,
pain, disability, disfigurement, embarrassment, emotional
distress, and loss of consortium.
new text end

new text begin Subd. 2. new text end

new text begin Limitation. new text end

new text begin (a) In an action for injury or
death against a health care provider alleging malpractice,
error, mistake, or failure to cure, whether based in contract or
tort, the amount of damages awarded for noneconomic losses must
not exceed $250,000, regardless of the number of parties against
whom the action is brought or the number of separate claims or
actions brought with respect to the same occurrence.
new text end

new text begin (b) The limitation imposed by this subdivision must not be
disclosed to the trier of fact by any person at trial.
new text end

new text begin Subd. 3. new text end

new text begin Findings. new text end

new text begin (a) A court in an action tried
without a jury shall make a finding as to noneconomic loss
without regard to the limit under subdivision 2. If noneconomic
loss in excess of the limit is found, the court shall make any
reduction required under this section and shall award as damages
for noneconomic loss the lesser of the reduced amount or the
limit.
new text end

new text begin (b) If an action is before a jury, the jury shall make a
finding as to noneconomic loss without regard to the limit under
subdivision 2. If the jury finds that noneconomic loss exceeds
the limit, the court shall make any reduction required under
this section and shall award as damages for noneconomic loss the
lesser of the reduced amount or the limit.
new text end

new text begin Subd. 4. new text end

new text begin Punitive damages limited. new text end

new text begin (a) Punitive,
exemplary, and similar damages recoverable against a health care
provider in a cause of action described in subdivision 2 must
not exceed $250,000. The jury must not be informed of this
limitation.
new text end

new text begin (b) All damages described in paragraph (a) must be paid
directly to the Minnesota Comprehensive Health Association
created under section 62E.10, subdivision 1, to be used for the
purpose of reducing its assessments on its members.
new text end

new text begin (c) Notwithstanding paragraph (a), a private nonprofit
hospital licensed under sections 144.50 to 144.56 is not liable
for punitive, exemplary, or similar damages, in an action
described in subdivision 2.
new text end

new text begin Subd. 5. new text end

new text begin Excessive attorney fees prohibited. new text end

new text begin (a)
Attorney fees payable by a plaintiff in any cause of action
referred to in subdivision 2 must not exceed the following
percentage of damages:
new text end

new text begin (1) 40 percent of the first $50,000;
new text end

new text begin (2) 33-1/3 percent of the next $50,000;
new text end

new text begin (3) 25 percent of the next $500,000; plus
new text end

new text begin (4) 15 percent of that portion of damages that exceeds
$600,000.
new text end

new text begin (b) This subdivision applies to the net damages actually
recovered by that plaintiff under the cause of action, whether
through settlement, alternative dispute resolution, court
judgment, or otherwise. "Net damages actually recovered" means
the net sum recovered after deducting any disbursements or costs
incurred in connection with prosecution or settlement of the
claim, including all costs paid or advanced by any person.
Costs of health care incurred by the plaintiff and the
attorney's office overhead costs or charges for legal services
are not deductible disbursements of costs for such purpose.
new text end

new text begin (c) A fee agreement that violates this subdivision is void
and unenforceable, to the extent of the violation.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective August 1, 2005,
and applies to causes of actions arising from incidents
occurring on or after that date.
new text end