SF 857

1st Engrossment - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to health care; establishing premium rate restrictions and expenditure
limits; amending Minnesota Statutes 2006, sections 62A.65, subdivision 3;
62J.04, subdivision 3, by adding a subdivision; 62J.041; 62J.301, subdivision 3;
62J.38; 62L.08, subdivision 8.

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

Section 1.

Minnesota Statutes 2006, section 62A.65, subdivision 3, is amended to read:

Subd. 3.

Premium rate restrictions.

No individual health plan may be offered,
sold, issued, or renewed to a Minnesota resident unless the premium rate charged is
determined in accordance with the following requirements:

(a) Premium rates must be no more than 25 percent above and no more than 25
percent below the index rate charged to individuals for the same or similar coverage,
adjusted pro rata for rating periods of less than one year. The premium variations
permitted by this paragraph must be based only upon health status, claims experience,
and occupation. For purposes of this paragraph, health status includes refraining from
tobacco use or other actuarially valid lifestyle factors associated with good health,
provided that the lifestyle factor and its effect upon premium rates have been determined
by the commissioner to be actuarially valid and have been approved by the commissioner.
Variations permitted under this paragraph must not be based upon age or applied
differently at different ages. This paragraph does not prohibit use of a constant percentage
adjustment for factors permitted to be used under this paragraph.

(b) Premium rates may vary based upon the ages of covered persons only as
provided in this paragraph. In addition to the variation permitted under paragraph (a),
each health carrier may use an additional premium variation based upon age of up to
plus or minus 50 percent of the index rate.

(c) A health carrier may request approval by the commissioner to establish separate
geographic regions determined by the health carrier and to establish separate index rates
for each such region. The commissioner shall grant approval if the following conditions
are met:

(1) the geographic regions must be applied uniformly by the health carrier;

(2) each geographic region must be composed of no fewer than seven counties that
create a contiguous region; and

(3) the health carrier provides actuarial justification acceptable to the commissioner
for the proposed geographic variations in index rates, establishing that the variations are
based upon differences in the cost to the health carrier of providing coverage.

(d) Health carriers may use rate cells and must file with the commissioner the rate
cells they use. Rate cells must be based upon the number of adults or children covered
under the policy and may reflect the availability of Medicare coverage. The rates for
different rate cells must not in any way reflect generalized differences in expected costs
between principal insureds and their spouses.

(e) In developing its index rates and premiums for a health plan, a health carrier shall
take into account only the following factors:

(1) actuarially valid differences in rating factors permitted under paragraphs (a)
and (b); and

(2) actuarially valid geographic variations if approved by the commissioner as
provided in paragraph (c).

(f) All premium variations must be justified in initial rate filings and upon request of
the commissioner in rate revision filings. All rate variations are subject to approval by
the commissioner.

(g) The loss ratio must comply with the section 62A.021 requirements for individual
health plans.

(h) new text begin Notwithstanding paragraphs (a) to (g), new text end the rates must not be approved, unless the
commissioner has determined that the rates are reasonable. In determining reasonableness,
the commissioner shall deleted text begin consider the growth rates applied under section 62J.04, subdivision
1, paragraph (b) deleted text end new text begin apply the premium growth limits established under section 62J.04,
subdivision 1b new text end , to the calendar year or years that the proposed premium rate would be in
effect, new text begin and shall consider new text end actuarially valid changes in risks associated with the enrollee
populations, and actuarially valid changes as a result of statutory changes in Laws 1992,
chapter 549.

(i) An insurer may, as part of a minimum lifetime loss ratio guarantee filing under
section 62A.02, subdivision 3a, include a rating practices guarantee as provided in this
paragraph. The rating practices guarantee must be in writing and must guarantee that
the policy form will be offered, sold, issued, and renewed only with premium rates and
premium rating practices that comply with subdivisions 2, 3, 4, and 5. The rating practices
guarantee must be accompanied by an actuarial memorandum that demonstrates that the
premium rates and premium rating system used in connection with the policy form will
satisfy the guarantee. The guarantee must guarantee refunds of any excess premiums to
policyholders charged premiums that exceed those permitted under subdivision 2, 3, 4,
or 5. An insurer that complies with this paragraph in connection with a policy form is
exempt from the requirement of prior approval by the commissioner under paragraphs
(c), (f), and (h).

Sec. 2.

Minnesota Statutes 2006, section 62J.04, is amended by adding a subdivision to
read:

new text begin Subd. 1b. new text end

new text begin Premium growth limits. new text end

new text begin (a) For calendar year 2008 and each year
thereafter, the commissioner shall set annual premium growth limits for health plan
companies. The premium limits set by the commissioner for calendar years 2008 to 2013
shall not exceed the regional Consumer Price Index for urban consumers for the preceding
calendar year plus two percentage points and an additional one percentage point to be used
to finance the implementation of the electronic medical record system described under
section 62J.495. The commissioner shall ensure that the additional percentage point is
being used to provide financial assistance to health care providers to implement electronic
medical record systems either directly or through an increase in reimbursement.
new text end

new text begin (b) For the calendar years beyond 2013, the rate of premium growth shall be
limited to the change in the Consumer Price Index for urban consumers for the previous
calendar year plus two percentage points. The commissioners of health and commerce
shall make a recommendation to the legislature by January 15, 2012, regarding the
continuation of the additional percentage point to the growth limit described in paragraph
(a). The recommendation shall be based on the progress made by health care providers
in instituting an electronic medical record system and in creating a statewide interactive
electronic health record system.
new text end

new text begin (c) The commissioner may add additional percentage points as needed to the
premium limit for a calendar year if a major disaster, bioterrorism, or a public health
emergency occurs that results in higher health care costs. Any additional percentage
points must reflect the additional cost to the health care system directly attributed to
the disaster or emergency.
new text end

new text begin (d) The commissioner shall publish the annual premium growth limits in the State
Register by January 31 of the year that the limits are to be in effect.
new text end

new text begin (e) For the purposes of this subdivision, premium growth is measured as the
percentage change in per member, per month premium revenue from the current year to
the previous year. Premium growth rates shall be calculated for the following lines of
business: individual, small group, and large group. Data used for premium growth rate
calculations shall be submitted as part of the cost containment filing under section 62J.38.
new text end

new text begin (f) For purposes of this subdivision, "health plan company" has the meaning given
in section 62J.041.
new text end

Sec. 3.

Minnesota Statutes 2006, section 62J.04, subdivision 3, is amended to read:

Subd. 3.

Cost containment duties.

The commissioner shall:

(1) establish statewide and regional cost containment goals for total health care
spending under this section and collect data as described in sections 62J.38 to 62J.41 to
monitor statewide achievement of the cost containment goals new text begin and premium growth limits new text end ;

(2) divide the state into no fewer than four regions, with one of those regions being
the Minneapolis/St. Paul metropolitan statistical area but excluding Chisago, Isanti,
Wright, and Sherburne Counties, for purposes of fostering the development of regional
health planning and coordination of health care delivery among regional health care
systems and working to achieve the cost containment goals;

(3) monitor the quality of health care throughout the state and take action as
necessary to ensure an appropriate level of quality;

(4) issue recommendations regarding uniform billing forms, uniform electronic
billing procedures and data interchanges, patient identification cards, and other uniform
claims and administrative procedures for health care providers and private and public
sector payers. In developing the recommendations, the commissioner shall review the
work of the work group on electronic data interchange (WEDI) and the American National
Standards Institute (ANSI) at the national level, and the work being done at the state and
local level. The commissioner may adopt rules requiring the use of the Uniform Bill
82/92 form, the National Council of Prescription Drug Providers (NCPDP) 3.2 electronic
version, the Centers for Medicare and Medicaid Services 1500 form, or other standardized
forms or procedures;

(5) undertake health planning responsibilities;

(6) authorize, fund, or promote research and experimentation on new technologies
and health care procedures;

(7) within the limits of appropriations for these purposes, administer or contract for
statewide consumer education and wellness programs that will improve the health of
Minnesotans and increase individual responsibility relating to personal health and the
delivery of health care services, undertake prevention programs including initiatives to
improve birth outcomes, expand childhood immunization efforts, and provide start-up
grants for worksite wellness programs;

(8) undertake other activities to monitor and oversee the delivery of health care
services in Minnesota with the goal of improving affordability, quality, and accessibility of
health care for all Minnesotans; and

(9) make the cost containment goal new text begin and premium growth limit new text end data available to
the public in a consumer-oriented manner.

Sec. 4.

Minnesota Statutes 2006, section 62J.041, is amended to read:

62J.041 deleted text begin INTERIM deleted text end HEALTH PLAN COMPANY deleted text begin COST CONTAINMENT
GOALS deleted text end new text begin HEALTH CARE EXPENDITURE LIMITS new text end .

Subdivision 1.

Definitions.

(a) For purposes of this section, the following definitions
apply.

(b) "Health plan company" has the definition provided in section 62Q.01. new text begin This
definition does not include the state employee health plan offered under chapter 43A or
the public employees insurance program offered under section 43A.316.
new text end

(c) " deleted text begin Total deleted text end new text begin Health care new text end expenditures" means incurred claims or expenditures on health
care services deleted text begin , administrative expenses, charitable contributions, and all other payments deleted text end
made by health plan companies deleted text begin out of premium revenues deleted text end .

deleted text begin (d) "Net expenditures" means total expenditures minus exempted taxes and
assessments and payments or allocations made to establish or maintain reserves.
deleted text end

deleted text begin (e) "Exempted taxes and assessments" means direct payments for taxes to
government agencies, contributions to the Minnesota Comprehensive Health Association,
the medical assistance provider's surcharge under section , the MinnesotaCare
provider tax under section , assessments by the Health Coverage Reinsurance
Association, assessments by the Minnesota Life and Health Insurance Guaranty
Association, assessments by the Minnesota Risk Adjustment Association, and any new
assessments imposed by federal or state law.
deleted text end

deleted text begin (f) deleted text end new text begin (d) new text end "Consumer cost-sharing or subscriber liability" means enrollee coinsurance,
co-payment, deductible payments, and amounts in excess of benefit plan maximums.

Subd. 2.

Establishment.

The commissioner of health shall establish deleted text begin cost
containment goals deleted text end new text begin health care expenditure limits new text end for deleted text begin the increase in net deleted text end new text begin calendar year
2008, and each year thereafter, for health care new text end expenditures by each health plan company
deleted text begin for calendar years 1994, 1995, 1996, and 1997. The cost containment goals must be the
same as the annual cost containment goals for health care spending established under
section 62J.04, subdivision 1, paragraph (b) deleted text end . Health plan companies that are affiliates may
elect to meet one combined deleted text begin cost containment goal deleted text end new text begin health care expenditure limit. The
limits set by the commissioner shall not exceed the premium limits established in section
62J.04, subdivision 1b new text end .

Subd. 3.

Determination of expenditures.

Health plan companies shall submit to
the commissioner of health, by April 1 deleted text begin , 1994, for calendar year 1993; April 1, 1995, for
calendar year 1994; April 1, 1996, for calendar year 1995; April 1, 1997, for calendar
year 1996; and April 1, 1998, for calendar year 1997 deleted text end new text begin of each year, beginning 2008, new text end all
information the commissioner determines to be necessary to implement this section.
The information must be submitted in the form specified by the commissioner. The
information must include, but is not limited to, new text begin health care new text end expenditures per member per
month or cost per employee per month, and detailed information on revenues and reserves.
The commissioner, to the extent possible, shall coordinate the submittal of the information
required under this section with the submittal of the financial data required under chapter
62J, to minimize the administrative burden on health plan companies. The commissioner
may adjust final expenditure figures for demographic changes, risk selection, changes in
basic benefits, and legislative initiatives that materially change health care costs, as long
as these adjustments are consistent with the methodology submitted by the health plan
company to the commissioner, and approved by the commissioner as actuarially justified.
deleted text begin The methodology to be used for adjustments and the election to meet one cost containment
goal for affiliated health plan companies must be submitted to the commissioner by
September 1, 1994. Community integrated service networks may submit the information
with their application for licensure. The commissioner shall also accept changes to
methodologies already submitted. The adjustment methodology submitted and approved
by the commissioner must apply to the data submitted for calendar years 1994 and 1995.
The commissioner may allow changes to accepted adjustment methodologies for data
submitted for calendar years 1996 and 1997. Changes to the adjustment methodology
must be received by September 1, 1996, and must be approved by the commissioner.
deleted text end

Subd. 4.

Monitoring of reserves.

(a) The commissioners of health and commerce
shall monitor health plan company reserves and net worth as established under chapters
60A, 62C, 62D, 62H, and 64B, with respect to the health plan companies that each
commissioner respectively regulates to assess the degree to which savings resulting from
the establishment of cost containment goals are passed on to consumers in the form of
lower premium rates.

(b) Health plan companies shall fully reflect in the premium rates the savings
generated by the cost containment goals. No premium rate, currently reviewed by the
Department of Health or Commerce, may be approved for those health plan companies
unless the health plan company establishes to the satisfaction of the commissioner of
commerce or the commissioner of health, as appropriate, that the proposed new rate
would comply with this paragraph.

(c) Health plan companies, except those licensed under chapter 60A to sell accident
and sickness insurance under chapter 62A, shall annually before the end of the fourth fiscal
quarter provide to the commissioner of health or commerce, as applicable, a projection of
the level of reserves the company expects to attain during each quarter of the following
fiscal year. These health plan companies shall submit with required quarterly financial
statements a calculation of the actual reserve level attained by the company at the end
of each quarter including identification of the sources of any significant changes in the
reserve level and an updated projection of the level of reserves the health plan company
expects to attain by the end of the fiscal year. In cases where the health plan company has
been given a certificate to operate a new health maintenance organization under chapter
62D, or been licensed as a community integrated service network under chapter 62N, or
formed an affiliation with one of these organizations, the health plan company shall also
submit with its quarterly financial statement, total enrollment at the beginning and end of
the quarter and enrollment changes within each service area of the new organization. The
reserve calculations shall be maintained by the commissioners as trade secret information,
except to the extent that such information is also required to be filed by another provision
of state law and is not treated as trade secret information under such other provisions.

(d) Health plan companies in paragraph (c) whose reserves are less than the required
minimum or more than the required maximum at the end of the fiscal year shall submit a
plan of corrective action to the commissioner of health or commerce under subdivision 7.

(e) The commissioner of commerce, in consultation with the commissioner of health,
shall report to the legislature no later than January 15, 1995, as to whether the concept of
a reserve corridor or other mechanism for purposes of monitoring reserves is adaptable
for use with indemnity health insurers that do business in multiple states and that must
comply with their domiciliary state's reserves requirements.

Subd. 5.

Notice.

The commissioner of health shall publish in the State Register
and make available to the public by July 1, deleted text begin 1995 deleted text end new text begin 2009 new text end , new text begin and each year thereafter, new text end a list
of all health plan companies that exceeded their deleted text begin cost containment goal deleted text end new text begin health care
expenditure limit new text end for the deleted text begin 1994 deleted text end new text begin previous new text end calendar year. deleted text begin The commissioner shall publish
in the State Register and make available to the public by July 1, 1996, a list of all health
plan companies that exceeded their combined cost containment goal for calendar years
1994 and 1995. deleted text end The commissioner shall notify each health plan company that the
commissioner has determined that the health plan company exceeded its deleted text begin cost containment
goal, deleted text end new text begin health care expenditure limit new text end at least 30 days before publishing the list, and shall
provide each health plan company deleted text begin with deleted text end ten days to provide an explanation for exceeding
the deleted text begin cost containment goal deleted text end new text begin health care expenditure limit new text end . The commissioner shall review
the explanation and may change a determination if the commissioner determines the
explanation to be valid.

Subd. 6.

Assistance by the commissioner of commerce.

The commissioner of
commerce shall provide assistance to the commissioner of health in monitoring health
plan companies regulated by the commissioner of commerce.

Sec. 5.

Minnesota Statutes 2006, section 62J.301, subdivision 3, is amended to read:

Subd. 3.

General duties.

The commissioner shall:

(1) collect and maintain data which enable population-based monitoring and trending
of the access, utilization, quality, and cost of health care services within Minnesota;

(2) collect and maintain data for the purpose of estimating total Minnesota health
care expenditures and trends;

(3) collect and maintain data for the purposes of setting cost containment goals new text begin and
premium growth limits new text end under section 62J.04, and measuring cost containment goal new text begin and
premium growth limit new text end compliance;

(4) conduct applied research using existing and new data and promote applications
based on existing research;

(5) develop and implement data collection procedures to ensure a high level of
cooperation from health care providers and health plan companies, as defined in section
62Q.01, subdivision 4;

(6) work closely with health plan companies and health care providers to promote
improvements in health care efficiency and effectiveness; and

(7) participate as a partner or sponsor of private sector initiatives that promote
publicly disseminated applied research on health care delivery, outcomes, costs, quality,
and management.

Sec. 6.

Minnesota Statutes 2006, section 62J.38, is amended to read:

62J.38 COST CONTAINMENT DATA FROM GROUP PURCHASERS.

(a) The commissioner shall require group purchasers to submit detailed data on total
health care spending for each calendar year. Group purchasers shall submit data for the
1993 calendar year by April 1, 1994, and each April 1 thereafter shall submit data for the
preceding calendar year.

(b) The commissioner shall require each group purchaser to submit data on revenue,
expenses, and member months, as applicable. Revenue data must distinguish between
premium revenue and revenue from other sources and must also include information
on the amount of revenue in reserves and changes in reserves. new text begin Premium revenue data,
information on aggregate enrollment, and data on member months must be broken down
to distinguish between individual market, small group market, and large group market.
Filings under this section for calendar year 2008 must also include information broken
down by individual market, small group market, and large group market for calendar year
2007. new text end Expenditure data must distinguish between costs incurred for patient care and
administrative costs. Patient care and administrative costs must include only expenses
incurred on behalf of health plan members and must not include the cost of providing
health care services for nonmembers at facilities owned by the group purchaser or affiliate.
Expenditure data must be provided separately for the following categories and for other
categories required by the commissioner: physician services, dental services, other
professional services, inpatient hospital services, outpatient hospital services, emergency,
pharmacy services and other nondurable medical goods, mental health, and chemical
dependency services, other expenditures, subscriber liability, and administrative costs.
Administrative costs must include costs for marketing; advertising; overhead; salaries
and benefits of central office staff who do not provide direct patient care; underwriting;
lobbying; claims processing; provider contracting and credentialing; detection and
prevention of payment for fraudulent or unjustified requests for reimbursement or
services; clinical quality assurance and other types of medical care quality improvement
efforts; concurrent or prospective utilization review as defined in section 62M.02; costs
incurred to acquire a hospital, clinic, or health care facility, or the assets thereof; capital
costs incurred on behalf of a hospital or clinic; lease payments; or any other costs incurred
pursuant to a partnership, joint venture, integration, or affiliation agreement with a
hospital, clinic, or other health care provider. Capital costs and costs incurred must be
recorded according to standard accounting principles. The reports of this data must also
separately identify expenses for local, state, and federal taxes, fees, and assessments. The
commissioner may require each group purchaser to submit any other data, including data
in unaggregated form, for the purposes of developing spending estimates, setting spending
limits, and monitoring actual spending and costs. In addition to reporting administrative
costs incurred to acquire a hospital, clinic, or health care facility, or the assets thereof; or
any other costs incurred pursuant to a partnership, joint venture, integration, or affiliation
agreement with a hospital, clinic, or other health care provider; reports submitted under
this section also must include the payments made during the calendar year for these
purposes. The commissioner shall make public, by group purchaser data collected under
this paragraph in accordance with section 62J.321, subdivision 5. Workers' compensation
insurance plans and automobile insurance plans are exempt from complying with this
paragraph as it relates to the submission of administrative costs.

(c) The commissioner may collect information on:

(1) premiums, benefit levels, managed care procedures, and other features of health
plan companies;

(2) prices, provider experience, and other information for services less commonly
covered by insurance or for which patients commonly face significant out-of-pocket
expenses; and

(3) information on health care services not provided through health plan companies,
including information on prices, costs, expenditures, and utilization.

(d) All group purchasers shall provide the required data using a uniform format and
uniform definitions, as prescribed by the commissioner.

Sec. 7.

Minnesota Statutes 2006, section 62L.08, subdivision 8, is amended to read:

Subd. 8.

Filing requirement.

new text begin (a) new text end A health carrier that offers, sells, issues, or renews
a health benefit plan for small employers shall file with the commissioner the index rates
and must demonstrate that all rates shall be within the rating restrictions defined in this
chapter. Such demonstration must include the allowable range of rates from the index rates
and a description of how the health carrier intends to use demographic factors including
case characteristics in calculating the premium rates.

new text begin (b) Notwithstanding paragraph (a), new text end the rates shall not be approved deleted text begin , deleted text end unless the
commissioner has determined that the rates are reasonable. In determining reasonableness,
the commissioner shall deleted text begin consider the growth rates applied under section 62J.04, subdivision
1, paragraph (b) deleted text end new text begin apply the premium growth limits established under section 62J.04,
subdivision 1b new text end , to the calendar year or years that the proposed premium rate would be
in effect, new text begin and shall consider new text end actuarially valid changes in risk associated with the enrollee
population, and actuarially valid changes as a result of statutory changes in Laws 1992,
chapter 549.