SF 1208

4th Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am

  1.1                          A bill for an act 
  1.2             relating to MinnesotaCare; eliminating the health care 
  1.3             commission; modifying the regional coordinating 
  1.4             boards; eliminating integrated service networks; 
  1.5             modifying the health technology advisory committee; 
  1.6             expanding the eligibility of the MinnesotaCare 
  1.7             program; modifying general assistance medical care; 
  1.8             modifying the enforcement mechanisms for the provider 
  1.9             tax pass-through; modifying mandatory Medicare 
  1.10            assignment; making technical, policy, and 
  1.11            administrative changes and connections to 
  1.12            MinnesotaCare taxes; providing grants for 
  1.13            MinnesotaCare outreach; appropriating money; amending 
  1.14            Minnesota Statutes 1996, sections 60A.15, subdivision 
  1.15            1; 60A.951, subdivision 5; 62A.61; 62J.017; 62J.06; 
  1.16            62J.07, subdivisions 1 and 3; 62J.09, subdivision 1; 
  1.17            62J.15, subdivision 1; 62J.152, subdivisions 1, 2, 4, 
  1.18            and 5; 62J.17, subdivision 6a; 62J.22; 62J.25; 
  1.19            62J.2914, subdivision 1; 62J.2915; 62J.2916, 
  1.20            subdivision 1; 62J.2917, subdivision 2; 62J.2921, 
  1.21            subdivision 2; 62J.451, subdivision 6b; 62M.02, 
  1.22            subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 
  1.23            62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, 
  1.24            subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 
  1.25            62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 
  1.26            62Q.45, subdivision 2; 136A.1355; 144.147, 
  1.27            subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1; 
  1.28            256.01, subdivision 2; 256.045, subdivision 3a; 
  1.29            256.9352, subdivision 3; 256.9353, subdivisions 1, 3, 
  1.30            and 7; 256.9354, subdivisions 4, 5, 6, 7, and by 
  1.31            adding a subdivision; 256.9355, subdivisions 1, 4, and 
  1.32            by adding a subdivision; 256.9357, subdivision 3; 
  1.33            256.9358, subdivision 4; 256.9359, subdivision 2; 
  1.34            256.9363, subdivisions 1 and 5; 256.9657, subdivision 
  1.35            3; 256B.0625, subdivision 13; 256D.03, subdivision 3; 
  1.36            295.50, subdivisions 3, 4, 6, 7, 9b, 13, 14, and by 
  1.37            adding a subdivision; 295.51, subdivision 1; 295.52, 
  1.38            subdivisions 1, 1a, 2, 4, and by adding subdivisions; 
  1.39            295.53, subdivisions 1, 3, and 4; 295.54, subdivisions 
  1.40            1 and 2; 295.55, subdivision 2; and 295.582; proposing 
  1.41            coding for new law in Minnesota Statutes, chapters 
  1.42            16A; 144; and 256; repealing Minnesota Statutes 1996, 
  1.43            sections 62J.04, subdivisions 4 and 7; 62J.05; 
  1.44            62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, 
  1.45            subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 
  1.46            7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 
  2.1             62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 
  2.2             62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 62N.13; 
  2.3             62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 
  2.4             62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41; 
  2.5             147.01, subdivision 6; 295.52, subdivision 1b; and 
  2.6             295.53, subdivision 5; Laws 1993, chapter 247, article 
  2.7             4, section 8; Laws 1994, chapter 625, article 5, 
  2.8             section 5, as amended; Laws 1995, chapter 96, section 
  2.9             2; and Laws 1995, First Special Session chapter 3, 
  2.10            article 13, section 2. 
  2.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  2.12                             ARTICLE 1 
  2.13                     MINNESOTACARE PROGRAM/GAMC 
  2.14     Section 1.  Minnesota Statutes 1996, section 256.9353, 
  2.15  subdivision 1, is amended to read: 
  2.16     Subdivision 1.  [COVERED HEALTH SERVICES.] "Covered health 
  2.17  services" means the health services reimbursed under chapter 
  2.18  256B, with the exception of inpatient hospital services, special 
  2.19  education services, private duty nursing services, adult dental 
  2.20  care services other than preventive services, orthodontic 
  2.21  services, nonemergency medical transportation services, personal 
  2.22  care assistant and case management services, nursing home or 
  2.23  intermediate care facilities services, inpatient mental health 
  2.24  services, and chemical dependency services.  Effective July 1, 
  2.25  1998, adult dental care for nonpreventive services with the 
  2.26  exception of orthodontic services is available to persons who 
  2.27  qualify under section 256.9354, subdivisions 1 to 5, or 
  2.28  256.9366, with family gross income equal to or less than 175 
  2.29  percent of the federal poverty guidelines.  Outpatient mental 
  2.30  health services covered under the MinnesotaCare program are 
  2.31  limited to diagnostic assessments, psychological testing, 
  2.32  explanation of findings, medication management by a physician, 
  2.33  day treatment, partial hospitalization, and individual, family, 
  2.34  and group psychotherapy. 
  2.35     No public funds shall be used for coverage of abortion 
  2.36  under MinnesotaCare except where the life of the female would be 
  2.37  endangered or substantial and irreversible impairment of a major 
  2.38  bodily function would result if the fetus were carried to term; 
  2.39  or where the pregnancy is the result of rape or incest. 
  2.40     Covered health services shall be expanded as provided in 
  3.1   this section. 
  3.2      Sec. 2.  Minnesota Statutes 1996, section 256.9353, 
  3.3   subdivision 3, is amended to read: 
  3.4      Subd. 3.  [INPATIENT HOSPITAL SERVICES.] (a) Beginning July 
  3.5   1, 1993, covered health services shall include inpatient 
  3.6   hospital services, including inpatient hospital mental health 
  3.7   services and inpatient hospital and residential chemical 
  3.8   dependency treatment, subject to those limitations necessary to 
  3.9   coordinate the provision of these services with eligibility 
  3.10  under the medical assistance spenddown.  Prior to July 1, 1997, 
  3.11  the inpatient hospital benefit for adult enrollees is subject to 
  3.12  an annual benefit limit of $10,000.  Effective July 1, 1997, the 
  3.13  inpatient hospital benefit for adult enrollees who qualify under 
  3.14  section 256.9354, subdivision 5, is subject to an annual limit 
  3.15  of $10,000.  
  3.16     (b) Enrollees who qualify under section 256.9354, 
  3.17  subdivision 5, are determined by the commissioner to have a 
  3.18  basis of eligibility for medical assistance shall apply for and 
  3.19  cooperate with the requirements of medical assistance by the 
  3.20  last day of the third month following admission to an inpatient 
  3.21  hospital.  If an enrollee fails to apply for medical assistance 
  3.22  within this time period, the enrollee and the enrollee's family 
  3.23  shall be disenrolled from the plan and they may not reenroll 
  3.24  until 12 calendar months have elapsed.  Enrollees and enrollees' 
  3.25  families disenrolled for not applying for or not cooperating 
  3.26  with medical assistance may not reenroll. 
  3.27     (c) Admissions for inpatient hospital services paid for 
  3.28  under section 256.9362, subdivision 3, must be certified as 
  3.29  medically necessary in accordance with Minnesota Rules, parts 
  3.30  9505.0500 to 9505.0540, except as provided in clauses (1) and 
  3.31  (2): 
  3.32     (1) all admissions must be certified, except those 
  3.33  authorized under rules established under section 254A.03, 
  3.34  subdivision 3, or approved under Medicare; and 
  3.35     (2) payment under section 256.9362, subdivision 3, shall be 
  3.36  reduced by five percent for admissions for which certification 
  4.1   is requested more than 30 days after the day of admission.  The 
  4.2   hospital may not seek payment from the enrollee for the amount 
  4.3   of the payment reduction under this clause. 
  4.4      (d) Any enrollee or family member of an enrollee who has 
  4.5   previously been permanently disenrolled from MinnesotaCare for 
  4.6   not applying for and cooperating with medical assistance shall 
  4.7   be eligible to reenroll if 12 calendar months have elapsed since 
  4.8   the date of disenrollment. 
  4.9      Sec. 3.  Minnesota Statutes 1996, section 256.9353, 
  4.10  subdivision 7, is amended to read: 
  4.11     Subd. 7.  [COPAYMENTS AND COINSURANCE.] The MinnesotaCare 
  4.12  benefit plan shall include the following copayments and 
  4.13  coinsurance requirements:  
  4.14     (1) ten percent of the charges submitted for inpatient 
  4.15  hospital services for adult enrollees not eligible for medical 
  4.16  assistance, subject to an annual inpatient out-of-pocket maximum 
  4.17  of $1,000 per individual and $3,000 per family; 
  4.18     (2) $3 per prescription for adult enrollees; and 
  4.19     (3) $25 for eyeglasses for adult enrollees; and 
  4.20     (4) effective July 1, 1998, 50 percent of charges submitted 
  4.21  for adult dental care services other than preventive care 
  4.22  services for persons eligible under section 256.9354, 
  4.23  subdivisions 1 to 5, or 256.9366 with income equal to or less 
  4.24  than 175 percent of the federal poverty guidelines.  The 
  4.25  copayment amount shall be calculated as 50 percent of the 
  4.26  payment amount calculated according to section 256B.76, 
  4.27  paragraph (b).  
  4.28     Prior to July 1, 1997, enrollees who are not eligible for 
  4.29  medical assistance with or without a spenddown shall be 
  4.30  financially responsible for the coinsurance amount and amounts 
  4.31  which exceed the $10,000 benefit limit.  MinnesotaCare shall be 
  4.32  financially responsible for the spenddown amount up to the 
  4.33  $10,000 benefit limit for enrollees who are eligible for medical 
  4.34  assistance with a spenddown; enrollees who are eligible for 
  4.35  medical assistance with a spenddown are financially responsible 
  4.36  for amounts which exceed the $10,000 benefit limit.  Effective 
  5.1   July 1, 1997, the inpatient hospital benefit for adult enrollees 
  5.2   who qualify under section 256.9354, subdivision 5, and who are 
  5.3   not eligible for medical assistance with or without a spenddown 
  5.4   shall be financially responsible for the coinsurance amount and 
  5.5   amounts, which exceed the $10,000 benefit limit. 
  5.6      When a MinnesotaCare enrollee becomes a member of a prepaid 
  5.7   health plan, or changes from one prepaid health plan to another 
  5.8   during a calendar year, any charges submitted towards the 
  5.9   $10,000 annual inpatient benefit limit, and any out-of-pocket 
  5.10  expenses incurred by the enrollee for inpatient services, that 
  5.11  were submitted or incurred prior to enrollment, or prior to the 
  5.12  change in health plans, shall be disregarded. 
  5.13     Sec. 4.  Minnesota Statutes 1996, section 256.9354, 
  5.14  subdivision 4, is amended to read: 
  5.15     Subd. 4.  [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON 
  5.16  PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning 
  5.17  January 1, 1993, "eligible persons" means children, parents, and 
  5.18  dependent siblings residing in the same household who are not 
  5.19  eligible for medical assistance without a spenddown under 
  5.20  chapter 256B.  Children who meet the criteria in subdivision 1 
  5.21  or 4a shall continue to be enrolled pursuant to those 
  5.22  subdivisions.  Persons who are eligible under this subdivision 
  5.23  or subdivision 2, 3, or 5 must pay a premium as determined under 
  5.24  sections 256.9357 and 256.9358, and children eligible under 
  5.25  subdivision 1 must pay the premium required under section 
  5.26  256.9356, subdivision 1.  Individuals and families whose income 
  5.27  is greater than the limits established under section 256.9358 
  5.28  may not enroll in MinnesotaCare.  
  5.29     Sec. 5.  Minnesota Statutes 1996, section 256.9354, 
  5.30  subdivision 5, is amended to read: 
  5.31     Subd. 5.  [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 
  5.32  CHILDREN.] (a) Beginning October 1, 1994, the definition of 
  5.33  "eligible persons" is expanded to include all individuals and 
  5.34  households with no children who have gross family incomes that 
  5.35  are equal to or less than 125 percent of the federal poverty 
  5.36  guidelines and who are not eligible for medical assistance 
  6.1   without a spenddown under chapter 256B.  
  6.2      (b) After October 1, 1995, the commissioner of human 
  6.3   services may expand the definition of "eligible persons" to 
  6.4   include all individuals and households with no children who have 
  6.5   gross family incomes that are equal to or less than 135 percent 
  6.6   of federal poverty guidelines and are not eligible for medical 
  6.7   assistance without a spenddown under chapter 256B.  This 
  6.8   expansion may occur only if the financial management 
  6.9   requirements of section 256.9352, subdivision 3, can be met. 
  6.10     (c) The commissioners of health and human services, in 
  6.11  consultation with the legislative commission on health care 
  6.12  access, shall make preliminary recommendations to the 
  6.13  legislature by October 1, 1995, and final recommendations to the 
  6.14  legislature by February 1, 1996, on whether a further expansion 
  6.15  of the definition of "eligible persons" to include all 
  6.16  individuals and households with no children who have gross 
  6.17  family incomes that are equal to or less than 150 percent of 
  6.18  federal poverty guidelines and are not eligible for medical 
  6.19  assistance without a spenddown under chapter 256B would be 
  6.20  allowed under the financial management constraints outlined in 
  6.21  section 256.9352, subdivision 3. 
  6.22     (d) (b) Beginning July 1, 1997, the definition of eligible 
  6.23  persons is expanded to include all individuals and households 
  6.24  with no children who have gross family incomes that are equal to 
  6.25  or less than 175 percent of the federal poverty guidelines and 
  6.26  who are not eligible for medical assistance without a spenddown 
  6.27  under chapter 256B. 
  6.28     (c) All eligible persons under paragraphs (a) and (b) are 
  6.29  eligible for coverage through the MinnesotaCare program but must 
  6.30  pay a premium as determined under sections 256.9357 and 
  6.31  256.9358.  Individuals and families whose income is greater than 
  6.32  the limits established under section 256.9358 may not enroll in 
  6.33  the MinnesotaCare program. 
  6.34     Sec. 6.  Minnesota Statutes 1996, section 256.9354, 
  6.35  subdivision 6, is amended to read: 
  6.36     Subd. 6.  [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 
  7.1   ASSISTANCE.] Individuals who apply for MinnesotaCare who qualify 
  7.2   under section 256.9354, subdivision 5, but who are potentially 
  7.3   eligible for medical assistance without a spenddown shall be 
  7.4   allowed to enroll in MinnesotaCare for a period of 60 days, so 
  7.5   long as the applicant meets all other conditions of 
  7.6   eligibility.  The commissioner shall identify and refer such 
  7.7   individuals to their county social service agency.  The enrollee 
  7.8   must cooperate with the county social service agency in 
  7.9   determining medical assistance eligibility within the 60-day 
  7.10  enrollment period.  Enrollees who do not apply for and cooperate 
  7.11  with medical assistance within the 60-day enrollment period, and 
  7.12  their other family members, shall be disenrolled from the plan 
  7.13  within one calendar month.  Persons disenrolled for 
  7.14  nonapplication for medical assistance may not reenroll until 
  7.15  they have obtained a medical assistance eligibility 
  7.16  determination for the family member or members who were referred 
  7.17  to the county agency.  Persons disenrolled for noncooperation 
  7.18  with medical assistance may not reenroll until they have 
  7.19  cooperated with the county agency and have obtained a medical 
  7.20  assistance eligibility determination.  The commissioner shall 
  7.21  redetermine provider payments made under MinnesotaCare to the 
  7.22  appropriate medical assistance payments for those enrollees who 
  7.23  subsequently become eligible for medical assistance. 
  7.24     Sec. 7.  Minnesota Statutes 1996, section 256.9354, 
  7.25  subdivision 7, is amended to read: 
  7.26     Subd. 7.  [GENERAL ASSISTANCE MEDICAL CARE.] A person 
  7.27  cannot have coverage under both MinnesotaCare and general 
  7.28  assistance medical care in the same month, except that a 
  7.29  MinnesotaCare enrollee may be eligible for retroactive general 
  7.30  assistance medical care according to section 256D.03, 
  7.31  subdivision 3, paragraph (b). 
  7.32     Sec. 8.  Minnesota Statutes 1996, section 256.9354, is 
  7.33  amended by adding a subdivision to read: 
  7.34     Subd. 8.  [MINNESOTACARE OUTREACH.] (a) The commissioner 
  7.35  shall award grants to public or private organizations to provide 
  7.36  information on the importance of maintaining insurance coverage 
  8.1   and on how to obtain coverage through the MinnesotaCare program 
  8.2   in areas of the state with high uninsured populations.  
  8.3      (b) In awarding the grants, the commissioner shall consider 
  8.4   the following: 
  8.5      (1) geographic areas and populations with high uninsured 
  8.6   rates; 
  8.7      (2) the ability to raise matching funds from private or 
  8.8   nonpublic sources; and 
  8.9      (3) the ability to contact or serve eligible populations. 
  8.10     The commissioner shall monitor the grants and may terminate 
  8.11  a grant if the outreach effort does not increase the 
  8.12  MinnesotaCare program enrollment. 
  8.13     (c) Information about MinnesotaCare coverage and enrollment 
  8.14  shall be made available to insurance agents.  A fee may be paid 
  8.15  by the commissioner of human services to an insurance agent for 
  8.16  each MinnesotaCare enrollee who is enrolled into the 
  8.17  MinnesotaCare program as a result of a documented referral from 
  8.18  that agent.  
  8.19     Sec. 9.  Minnesota Statutes 1996, section 256.9355, 
  8.20  subdivision 1, is amended to read: 
  8.21     Subdivision 1.  [APPLICATION AND INFORMATION AVAILABILITY.] 
  8.22  Applications and other information must be made available to 
  8.23  provider offices, local human services agencies, school 
  8.24  districts, public and private elementary schools in which 25 
  8.25  percent or more of the students receive free or reduced price 
  8.26  lunches, community health offices, and Women, Infants and 
  8.27  Children (WIC) program sites.  These sites may accept 
  8.28  applications, collect the enrollment fee or initial premium fee, 
  8.29  and forward the forms and fees to the commissioner.  Otherwise, 
  8.30  applicants may apply directly to the commissioner.  Beginning 
  8.31  January 1, 2000, MinnesotaCare enrollment sites will be expanded 
  8.32  to include local county human services agencies which choose to 
  8.33  participate.  
  8.34     Sec. 10.  Minnesota Statutes 1996, section 256.9355, 
  8.35  subdivision 4, is amended to read: 
  8.36     Subd. 4.  [APPLICATION PROCESSING.] The commissioner of 
  9.1   human services shall determine an applicant's eligibility for 
  9.2   MinnesotaCare no more than 30 days from the date that the 
  9.3   application is received by the department of human services.  
  9.4   This requirement shall be suspended for four months following 
  9.5   the dates in which single adults and families without children 
  9.6   become eligible for the program.  Beginning July 1, 2000, this 
  9.7   requirement also applies to local county human services agencies 
  9.8   that determine eligibility for MinnesotaCare.  
  9.9      Sec. 11.  Minnesota Statutes 1996, section 256.9355, is 
  9.10  amended by adding a subdivision to read: 
  9.11     Subd. 5.  [AVAILABILITY OF PRIVATE INSURANCE.] The 
  9.12  commissioner, in consultation with the commissioners of health 
  9.13  and commerce, shall provide information regarding the 
  9.14  availability of private health insurance coverage to all 
  9.15  families and individuals enrolled in the MinnesotaCare program 
  9.16  whose gross family income is equal to or more than 200 percent 
  9.17  of the federal poverty guidelines.  This information must be 
  9.18  provided upon initial enrollment and annually thereafter. 
  9.19     Sec. 12.  Minnesota Statutes 1996, section 256.9357, 
  9.20  subdivision 3, is amended to read: 
  9.21     Subd. 3.  [PERIOD UNINSURED.] To be eligible for subsidized 
  9.22  premium payments based on a sliding scale, families and 
  9.23  individuals initially enrolled in the MinnesotaCare program 
  9.24  under section 256.9354, subdivisions 4 and 5, must have had no 
  9.25  health coverage for at least four months prior to application.  
  9.26  The commissioner may change this eligibility criterion for 
  9.27  sliding scale premiums without complying with rulemaking 
  9.28  requirements in order to remain within the limits of available 
  9.29  appropriations.  The requirement of at least four months of no 
  9.30  health coverage prior to application for the MinnesotaCare 
  9.31  program does not apply to: 
  9.32     (1) families, children, and individuals who want to apply 
  9.33  for the MinnesotaCare program upon termination from or as 
  9.34  required by the medical assistance program, general assistance 
  9.35  medical care program, or coverage under a regional demonstration 
  9.36  project for the uninsured funded under section 256B.73, the 
 10.1   Hennepin county assured care program, or the Group Health, Inc., 
 10.2   community health plan; 
 10.3      (2) families and individuals initially enrolled under 
 10.4   section 256.9354, subdivisions 1, paragraph (a), and 2; 
 10.5      (3) children enrolled pursuant to Laws 1992, chapter 549, 
 10.6   article 4, section 17; or 
 10.7      (4) individuals currently serving or who have served in the 
 10.8   military reserves, and dependents of these individuals, if these 
 10.9   individuals:  (i) reapply for MinnesotaCare coverage after a 
 10.10  period of active military service during which they had been 
 10.11  covered by the Civilian Health and Medical Program of the 
 10.12  Uniformed Services (CHAMPUS); (ii) were covered under 
 10.13  MinnesotaCare immediately prior to obtaining coverage under 
 10.14  CHAMPUS; and (iii) have maintained continuous coverage. 
 10.15     Sec. 13.  Minnesota Statutes 1996, section 256.9358, 
 10.16  subdivision 4, is amended to read: 
 10.17     Subd. 4.  [INELIGIBILITY.] Families with children whose 
 10.18  gross monthly income is above the amount specified in 
 10.19  subdivision 3 are not eligible for the plan.  Beginning October 
 10.20  1, 1994, An individual or households with no children whose 
 10.21  gross family income is greater than 125 percent of the federal 
 10.22  poverty guidelines the amount specified in section 256.9354, 
 10.23  subdivision 5, are ineligible for the plan. 
 10.24     Sec. 14.  Minnesota Statutes 1996, section 256.9359, 
 10.25  subdivision 2, is amended to read: 
 10.26     Subd. 2.  [RESIDENCY REQUIREMENT.] (a) Prior to July 1, 
 10.27  1997, to be eligible for health coverage under the MinnesotaCare 
 10.28  program, families and individuals must be permanent residents of 
 10.29  Minnesota.  
 10.30     (b) Effective July 1, 1997, to be eligible for health 
 10.31  coverage under the MinnesotaCare program, adults without 
 10.32  children must be permanent residents of Minnesota. 
 10.33     (c) Effective July 1, 1997, to be eligible for health 
 10.34  coverage under the MinnesotaCare program, pregnant women, 
 10.35  families, and children must meet the residency requirements as 
 10.36  provided by Code of Federal Regulations, title 42, section 
 11.1   435.403, except that the provisions of section 256B.056, 
 11.2   subdivision 1, shall apply upon receipt of federal approval. 
 11.3      Sec. 15.  Minnesota Statutes 1996, section 256.9363, 
 11.4   subdivision 5, is amended to read: 
 11.5      Subd. 5.  [ELIGIBILITY FOR OTHER STATE PROGRAMS.] 
 11.6   MinnesotaCare enrollees who become eligible for medical 
 11.7   assistance or general assistance medical care will remain in the 
 11.8   same managed care plan if the managed care plan has a contract 
 11.9   for that population.  Effective January 1, 1998, MinnesotaCare 
 11.10  enrollees who were formerly eligible for general assistance 
 11.11  medical care pursuant to section 256D.03, subdivision 3, within 
 11.12  six months of MinnesotaCare enrollment and were enrolled in a 
 11.13  prepaid health plan pursuant to section 256D.03, subdivision 4, 
 11.14  paragraph (d), must remain in the same managed care plan if the 
 11.15  managed care plan has a contract for that population.  Contracts 
 11.16  between the department of human services and managed care plans 
 11.17  must include MinnesotaCare, and medical assistance and may, at 
 11.18  the option of the commissioner of human services, also include 
 11.19  general assistance medical care. 
 11.20     Sec. 16.  Minnesota Statutes 1996, section 256D.03, 
 11.21  subdivision 3, is amended to read: 
 11.22     Subd. 3.  [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 
 11.23  (a) General assistance medical care may be paid for any person 
 11.24  who is not eligible for medical assistance under chapter 256B, 
 11.25  including eligibility for medical assistance based on a 
 11.26  spenddown of excess income according to section 256B.056, 
 11.27  subdivision 5, or MinnesotaCare as defined in clause (4), except 
 11.28  as provided in paragraph (b); and: 
 11.29     (1) who is receiving assistance under section 
 11.30  256D.05, except for families with children who are eligible 
 11.31  under Minnesota family investment program-statewide (MFIP-S), or 
 11.32  who is having a payment made on the person's behalf under 
 11.33  sections 256I.01 to 256I.06; or 
 11.34     (2)(i) who is a resident of Minnesota; and whose equity in 
 11.35  assets is not in excess of $1,000 per assistance unit.  No asset 
 11.36  test shall be applied to children and their parents living in 
 12.1   the same household.  Exempt assets, the reduction of excess 
 12.2   assets, and the waiver of excess assets must conform to the 
 12.3   medical assistance program in chapter 256B, with the following 
 12.4   exception:  the maximum amount of undistributed funds in a trust 
 12.5   that could be distributed to or on behalf of the beneficiary by 
 12.6   the trustee, assuming the full exercise of the trustee's 
 12.7   discretion under the terms of the trust, must be applied toward 
 12.8   the asset maximum; and 
 12.9      (ii) who has countable income not in excess of the 
 12.10  assistance standards established in section 256B.056, 
 12.11  subdivision 4, or whose excess income is spent down pursuant to 
 12.12  section 256B.056, subdivision 5, using a six-month budget 
 12.13  period, except that a one-month budget period must be used for 
 12.14  recipients residing in a long-term care facility.  The method 
 12.15  for calculating earned income disregards and deductions for a 
 12.16  person who resides with a dependent child under age 21 shall be 
 12.17  as specified in section 256.74, subdivision 1 follow section 
 12.18  256B.056, subdivision 1a.  However, if a disregard of $30 and 
 12.19  one-third of the remainder described in section 256.74, 
 12.20  subdivision 1, clause (4), has been applied to the wage earner's 
 12.21  income, the disregard shall not be applied again until the wage 
 12.22  earner's income has not been considered in an eligibility 
 12.23  determination for general assistance, general assistance medical 
 12.24  care, medical assistance, or aid to families with dependent 
 12.25  children MFIP-S for 12 consecutive months.  The earned income 
 12.26  and work expense deductions for a person who does not reside 
 12.27  with a dependent child under age 21 shall be the same as the 
 12.28  method used to determine eligibility for a person under section 
 12.29  256D.06, subdivision 1, except the disregard of the first $50 of 
 12.30  earned income is not allowed; or 
 12.31     (3) who would be eligible for medical assistance except 
 12.32  that the person resides in a facility that is determined by the 
 12.33  commissioner or the federal health care financing administration 
 12.34  to be an institution for mental diseases. 
 12.35     (4) Beginning July 1, 1998, applicants or recipients who 
 12.36  meet all eligibility requirements of MinnesotaCare as defined in 
 13.1   sections 256.9351 to 256.9363 and 256.9366 to 256.9369, and are: 
 13.2      (i) adults with dependent children under 21 whose gross 
 13.3   family income is equal to or less than 275 percent of the 
 13.4   federal poverty guidelines; or 
 13.5      (ii) adults without children with earned income and whose 
 13.6   family gross income is between 75 percent of the federal poverty 
 13.7   guidelines and the amount set by section 256.9354, subdivision 
 13.8   5, shall be terminated from general assistance medical care upon 
 13.9   enrollment in MinnesotaCare. 
 13.10     (b) Eligibility is available for the month of application, 
 13.11  and for three months prior to application if the person was 
 13.12  eligible in those prior months. (1) For services rendered on or 
 13.13  after July 1, 1997, eligibility is limited to one month prior to 
 13.14  application if the person is determined eligible in the prior 
 13.15  month.  A redetermination of eligibility must occur every 12 
 13.16  months.  Beginning July 1, 1998, Minnesota health care program 
 13.17  applications completed by recipients and applicants who are 
 13.18  persons described in paragraph (a), clause (4), may be returned 
 13.19  to the county agency to be forwarded to the department of human 
 13.20  services or sent directly to the department of human services 
 13.21  for enrollment in MinnesotaCare.  If all other eligibility 
 13.22  requirements of this subdivision are met, eligibility for 
 13.23  general assistance medical care shall be available in any month 
 13.24  during which a MinnesotaCare eligibility determination and 
 13.25  enrollment are pending.  Upon notification of eligibility for 
 13.26  MinnesotaCare, notice of termination for eligibility for general 
 13.27  assistance medical care shall be sent to an applicant or 
 13.28  recipient.  If all other eligibility requirements of this 
 13.29  subdivision are met, eligibility for general assistance medical 
 13.30  care shall be available until enrollment in MinnesotaCare 
 13.31  subject to the provisions of paragraph (d). 
 13.32     (2) An initial Minnesota health care program application 
 13.33  shall be considered complete and determination of eligibility 
 13.34  underway if the recipient and applicant has provided their name, 
 13.35  address, social security number, and best estimate of prior 
 13.36  year's income.  If the recipient or applicant is unable to 
 14.1   provide this information when health care is delivered due to a 
 14.2   medical condition or disability, a health care provider may act 
 14.3   on their behalf to complete the initial application. 
 14.4      (3) County agencies are authorized to use all automated 
 14.5   databases containing information regarding recipients' or 
 14.6   applicants' income in order to determine eligibility for general 
 14.7   assistance medical care or MinnesotaCare.  Such use shall be 
 14.8   considered sufficient in order to determine eligibility and 
 14.9   premium payments by the county agency. 
 14.10     (c) General assistance medical care is not available for a 
 14.11  person in a correctional facility unless the person is detained 
 14.12  by law for less than one year in a county correctional or 
 14.13  detention facility as a person accused or convicted of a crime, 
 14.14  or admitted as an inpatient to a hospital on a criminal hold 
 14.15  order, and the person is a recipient of general assistance 
 14.16  medical care at the time the person is detained by law or 
 14.17  admitted on a criminal hold order and as long as the person 
 14.18  continues to meet other eligibility requirements of this 
 14.19  subdivision.  
 14.20     (d) General assistance medical care is not available for 
 14.21  applicants or recipients who do not cooperate with the county 
 14.22  agency to meet the requirements of medical assistance.  General 
 14.23  assistance medical care is limited to payment of emergency 
 14.24  services only for applicants or recipients as described in 
 14.25  paragraph (a), clause (4), whose MinnesotaCare coverage is 
 14.26  denied or terminated for nonpayment of premiums as required by 
 14.27  sections 256.9356 to 256.9358.  
 14.28     (e) In determining the amount of assets of an individual, 
 14.29  there shall be included any asset or interest in an asset, 
 14.30  including an asset excluded under paragraph (a), that was given 
 14.31  away, sold, or disposed of for less than fair market value 
 14.32  within the 60 months preceding application for general 
 14.33  assistance medical care or during the period of eligibility.  
 14.34  Any transfer described in this paragraph shall be presumed to 
 14.35  have been for the purpose of establishing eligibility for 
 14.36  general assistance medical care, unless the individual furnishes 
 15.1   convincing evidence to establish that the transaction was 
 15.2   exclusively for another purpose.  For purposes of this 
 15.3   paragraph, the value of the asset or interest shall be the fair 
 15.4   market value at the time it was given away, sold, or disposed 
 15.5   of, less the amount of compensation received.  For any 
 15.6   uncompensated transfer, the number of months of ineligibility, 
 15.7   including partial months, shall be calculated by dividing the 
 15.8   uncompensated transfer amount by the average monthly per person 
 15.9   payment made by the medical assistance program to skilled 
 15.10  nursing facilities for the previous calendar year.  The 
 15.11  individual shall remain ineligible until this fixed period has 
 15.12  expired.  The period of ineligibility may exceed 30 months, and 
 15.13  a reapplication for benefits after 30 months from the date of 
 15.14  the transfer shall not result in eligibility unless and until 
 15.15  the period of ineligibility has expired.  The period of 
 15.16  ineligibility begins in the month the transfer was reported to 
 15.17  the county agency, or if the transfer was not reported, the 
 15.18  month in which the county agency discovered the transfer, 
 15.19  whichever comes first.  For applicants, the period of 
 15.20  ineligibility begins on the date of the first approved 
 15.21  application. 
 15.22     (f)(1) Beginning October 1, 1993, an undocumented alien or 
 15.23  a nonimmigrant is ineligible for general assistance medical care 
 15.24  other than emergency services.  For purposes of this 
 15.25  subdivision, a nonimmigrant is an individual in one or more of 
 15.26  the classes listed in United States Code, title 8, section 
 15.27  1101(a)(15), and an undocumented alien is an individual who 
 15.28  resides in the United States without the approval or 
 15.29  acquiescence of the Immigration and Naturalization Service. 
 15.30     (2) This subdivision does not apply to a child under age 
 15.31  18, to a Cuban or Haitian entrant as defined in Public Law 
 15.32  Number 96-422, section 501(e)(1) or (2)(a), or to an alien who 
 15.33  is aged, blind, or disabled as defined in United States Code, 
 15.34  title 42, section 1382c(a)(1). 
 15.35     (3) For purposes of paragraph paragraphs (d) and (f), 
 15.36  "emergency services" has the meaning given in Code of Federal 
 16.1   Regulations, title 42, section 440.255(b)(1), except that it 
 16.2   also means services rendered because of suspected or actual 
 16.3   pesticide poisoning. 
 16.4      Sec. 17.  [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.] 
 16.5      (a) The commissioner of human services, in consultation 
 16.6   with the legislative commission on health care access and the 
 16.7   commissioners of employee relations, health, and commerce, shall 
 16.8   develop an implementation plan to transition higher-income 
 16.9   MinnesotaCare enrollees to private sector or other nonsubsidized 
 16.10  coverage.  In developing the plan, the commissioner shall 
 16.11  examine the feasibility of using the health insurance program 
 16.12  for state employees administered by the commissioner of employee 
 16.13  relations as a source of coverage, and shall also examine 
 16.14  methods to increase the affordability of private sector coverage 
 16.15  for individuals and families transitioning off MinnesotaCare.  
 16.16  The commissioner shall submit the implementation plan to the 
 16.17  legislature by December 15, 1997. 
 16.18     (b) The commissioner of human services shall report to the 
 16.19  legislature by January 15, 1998, on the impact of the outreach 
 16.20  efforts for the MinnesotaCare program, and on the reasons why 
 16.21  enrollees are leaving the MinnesotaCare program, and make 
 16.22  recommendations on:  
 16.23     (1) the affordability of the MinnesotaCare premium 
 16.24  schedule; 
 16.25     (2) the eligibility income level for the MinnesotaCare 
 16.26  program that will result in the greatest number of individuals 
 16.27  having health coverage; 
 16.28     (3) what will encourage greater availability of health 
 16.29  coverage in the private market; 
 16.30     (4) steps to increase the availability of health coverage 
 16.31  in the small employer market; 
 16.32     (5) the need, if any, and the feasibility of increasing the 
 16.33  MinnesotaCare program income eligibility level for individuals 
 16.34  and households without children; and 
 16.35     (6) the possibility of alternative payments and waiving the 
 16.36  premiums for the MinnesotaCare program for certain enrollees. 
 17.1                              ARTICLE 2 
 17.2             MISCELLANEOUS CHANGES TO HEALTH CARE REFORM 
 17.3      Section 1.  Minnesota Statutes 1996, section 60A.951, 
 17.4   subdivision 5, is amended to read: 
 17.5      Subd. 5.  [INSURER.] "Insurer" means insurance company, 
 17.6   risk retention group as defined in section 60E.02, service plan 
 17.7   corporation as defined in section 62C.02, health maintenance 
 17.8   organization as defined in section 62D.02, community integrated 
 17.9   service network as defined in section 62N.02, fraternal benefit 
 17.10  society regulated under chapter 64B, township mutual company 
 17.11  regulated under chapter 67A, joint self-insurance plan or 
 17.12  multiple employer trust regulated under chapter 60F, 62H, or 
 17.13  section 471.617, subdivision 2, persons administering a 
 17.14  self-insurance plan as defined in section 60A.23, subdivision 8, 
 17.15  clause (2), paragraphs (a) and (d), and the workers' 
 17.16  compensation reinsurance association established in section 
 17.17  79.34. 
 17.18     Sec. 2.  Minnesota Statutes 1996, section 62A.61, is 
 17.19  amended to read: 
 17.20     62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
 17.21  DETERMINE USUAL AND CUSTOMARY FEES.] 
 17.22     (a) A health carrier that bases reimbursement to health 
 17.23  care providers upon a usual and customary fee must maintain in 
 17.24  its office a copy of a description of the methodology used to 
 17.25  calculate fees including at least the following: 
 17.26     (1) the frequency of the determination of usual and 
 17.27  customary fees; 
 17.28     (2) a general description of the methodology used to 
 17.29  determine usual and customary fees; and 
 17.30     (3) the percentile of usual and customary fees that 
 17.31  determines the maximum allowable reimbursement. 
 17.32     (b) A health carrier must provide a copy of the information 
 17.33  described in paragraph (a) to the Minnesota health care 
 17.34  commission, the commissioner of health, or the commissioner of 
 17.35  commerce, upon request. 
 17.36     (c) The commissioner of health or the commissioner of 
 18.1   commerce, as appropriate, may use to enforce this section any 
 18.2   enforcement powers otherwise available to the commissioner with 
 18.3   respect to the health carrier.  The appropriate commissioner 
 18.4   shall enforce compliance with a request made under this section 
 18.5   by the Minnesota health care commission, at the request of the 
 18.6   commissioner.  The commissioner of health or commerce, as 
 18.7   appropriate, may require health carriers to provide the 
 18.8   information required under this section and may use any powers 
 18.9   granted under other laws relating to the regulation of health 
 18.10  carriers to enforce compliance. 
 18.11     (d) For purposes of this section, "health carrier" has the 
 18.12  meaning given in section 62A.011. 
 18.13     Sec. 3.  Minnesota Statutes 1996, section 62J.017, is 
 18.14  amended to read: 
 18.15     62J.017 [IMPLEMENTATION TIMETABLE.] 
 18.16     The state seeks to complete the restructuring of the health 
 18.17  care delivery and financing system.  Beginning July 1, 1994, 
 18.18  measures will be taken to increase the public accountability of 
 18.19  existing health plan companies, to promote the development of 
 18.20  small, community-based integrated service networks, and to 
 18.21  reduce administrative costs by standardizing third-party billing 
 18.22  forms and procedures and utilization review requirements.  
 18.23  Voluntary formation of other integrated service networks will 
 18.24  begin after rules have been adopted, but not before July 1, 
 18.25  1996.  Statutes and rules for the restructured health care 
 18.26  financing and delivery system must be enacted or adopted by 
 18.27  January 1, 1996. 
 18.28     Sec. 4.  Minnesota Statutes 1996, section 62J.06, is 
 18.29  amended to read: 
 18.30     62J.06 [IMMUNITY FROM LIABILITY.] 
 18.31     No member of the Minnesota health care commission 
 18.32  established under section 62J.05, regional coordinating boards 
 18.33  established under section 62J.09, or the health technology 
 18.34  advisory committee established under section 62J.15, shall be 
 18.35  held civilly or criminally liable for an act or omission by that 
 18.36  person if the act or omission was in good faith and within the 
 19.1   scope of the member's responsibilities under this chapter.  
 19.2      Sec. 5.  Minnesota Statutes 1996, section 62J.07, 
 19.3   subdivision 1, is amended to read: 
 19.4      Subdivision 1.  [LEGISLATIVE OVERSIGHT.] The legislative 
 19.5   commission on health care access reviews the activities of the 
 19.6   commissioner of health, the state health care 
 19.7   commission regional coordinating boards, the health technology 
 19.8   advisory committee, and all other state agencies involved in the 
 19.9   implementation and administration of this chapter, including 
 19.10  efforts to obtain federal approval through waivers and other 
 19.11  means.  
 19.12     Sec. 6.  Minnesota Statutes 1996, section 62J.07, 
 19.13  subdivision 3, is amended to read: 
 19.14     Subd. 3.  [REPORTS TO THE COMMISSION.] The commissioner of 
 19.15  health and the Minnesota health care commission, the regional 
 19.16  coordinating boards, and the health technology advisory 
 19.17  committee shall report on their activities and the activities of 
 19.18  the regional boards annually and at other times at the request 
 19.19  of the legislative commission on health care access.  The 
 19.20  commissioners of health, commerce, and human services shall 
 19.21  provide periodic reports to the legislative commission on the 
 19.22  progress of rulemaking that is authorized or required under this 
 19.23  act and shall notify members of the commission when a draft of a 
 19.24  proposed rule has been completed and scheduled for publication 
 19.25  in the State Register.  At the request of a member of the 
 19.26  commission, a commissioner shall provide a description and a 
 19.27  copy of a proposed rule. 
 19.28     Sec. 7.  Minnesota Statutes 1996, section 62J.09, 
 19.29  subdivision 1, is amended to read: 
 19.30     Subdivision 1.  [GENERAL DUTIES.] (a) The commissioner 
 19.31  shall divide the state into five rural regions, which shall 
 19.32  include all areas of the state, except for the seven-county 
 19.33  metropolitan area. 
 19.34     The (b) Each rural region shall establish a locally 
 19.35  controlled regional coordinating boards are locally controlled 
 19.36  boards board consisting of providers, health plan companies, 
 20.1   employers, consumers, and elected officials.  Regional 
 20.2   coordinating boards may: 
 20.3      (1) undertake voluntary activities to educate consumers, 
 20.4   providers, and purchasers about community plans and projects 
 20.5   promoting health care cost containment, consumer accountability, 
 20.6   access, and quality and efforts to achieve public health goals; 
 20.7      (2) make recommendations to the commissioner regarding ways 
 20.8   of improving affordability, accessibility, and quality of health 
 20.9   care in the region and throughout the state; 
 20.10     (3) provide technical assistance to parties interested in 
 20.11  establishing or operating a community integrated service network 
 20.12  or integrated service network within the region.  This 
 20.13  assistance must complement assistance provided by the 
 20.14  commissioner under section 62N.23; 
 20.15     (4) advise the commissioner on public health goals, taking 
 20.16  into consideration the relevant portions of the community health 
 20.17  service plans, plans required by the Minnesota comprehensive 
 20.18  adult mental health act, the Minnesota comprehensive children's 
 20.19  mental health act, and the community social service act plans 
 20.20  developed by county boards or community health boards in the 
 20.21  region under chapters 145A, 245, and 256E; 
 20.22     (5) prepare an annual regional education plan that is 
 20.23  consistent with and supportive of public health goals identified 
 20.24  by community health boards in the region; and 
 20.25     (6) serve as advisory bodies to identify potential 
 20.26  applicants for federal Health Professional Shortage Area and 
 20.27  federal Medically Underserved Area designation as requested by 
 20.28  the commissioner. 
 20.29     Sec. 8.  Minnesota Statutes 1996, section 62J.15, 
 20.30  subdivision 1, is amended to read: 
 20.31     Subdivision 1.  [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The 
 20.32  Minnesota health care commission shall convene legislative 
 20.33  commission on health care access may convene or authorize the 
 20.34  commissioner of health to convene an advisory committee to 
 20.35  conduct evaluations of existing research and technology 
 20.36  assessments conducted by other entities of new and existing 
 21.1   health care technologies as designated by the legislative 
 21.2   commission on health care access, the commissioner, or the 
 21.3   advisory committee.  The advisory committee may include members 
 21.4   of the state commission and other persons appointed by the 
 21.5   commission.  The advisory committee must include at least one 
 21.6   person representing physicians, at least one person representing 
 21.7   hospitals, and at least one person representing the health care 
 21.8   technology industry.  Health care technologies include high-cost 
 21.9   drugs, devices, procedures, or processes applied to human health 
 21.10  care, such as high-cost transplants and expensive scanners and 
 21.11  imagers.  The advisory committee is governed by section 15.0575, 
 21.12  subdivision 3, except that members do not receive per diem 
 21.13  payments. 
 21.14     Sec. 9.  Minnesota Statutes 1996, section 62J.152, 
 21.15  subdivision 1, is amended to read: 
 21.16     Subdivision 1.  [GENERALLY.] The health technology advisory 
 21.17  committee established in section 62J.15 shall: 
 21.18     (1) develop criteria and processes for evaluating health 
 21.19  care technology assessments made by other entities; 
 21.20     (2) conduct evaluations of specific technologies and their 
 21.21  specific use and application; 
 21.22     (3) provide the legislature with scientific evaluations of 
 21.23  proposed benefit mandates that utilize health care technologies 
 21.24  for a specific use and application; 
 21.25     (4) report the results of the evaluations to the 
 21.26  commissioner and the Minnesota health care 
 21.27  commission legislative commission on health care access; and 
 21.28     (4) (5) carry out other duties relating to health 
 21.29  technology assigned by the commission legislature or the 
 21.30  legislative commission on health care access. 
 21.31     Sec. 10.  Minnesota Statutes 1996, section 62J.152, 
 21.32  subdivision 2, is amended to read: 
 21.33     Subd. 2.  [PRIORITIES FOR DESIGNATING TECHNOLOGIES CRITERIA 
 21.34  FOR ASSESSMENT EVALUATION.] The health technology advisory 
 21.35  committee shall consider the following criteria in designating 
 21.36  assessing or evaluating technologies for evaluation: 
 22.1      (1) the level of controversy within the medical or 
 22.2   scientific community, including questionable or undetermined 
 22.3   efficacy; 
 22.4      (2) the cost implications; 
 22.5      (3) the potential for rapid diffusion; 
 22.6      (4) the impact on a substantial patient population; 
 22.7      (5) the existence of alternative technologies; 
 22.8      (6) the impact on patient safety and health outcome; 
 22.9      (7) the public health importance; 
 22.10     (8) the level of public and professional demand; 
 22.11     (9) the social, ethical, and legal concerns; and 
 22.12     (10) the prevalence of the disease or condition. 
 22.13  The committee may give different weights or attach different 
 22.14  importance to each of the criteria, depending on the technology 
 22.15  being considered.  The committee shall consider any additional 
 22.16  criteria approved by the commissioner and the Minnesota health 
 22.17  care commission legislative commission on health care access. 
 22.18     Sec. 11.  Minnesota Statutes 1996, section 62J.152, 
 22.19  subdivision 4, is amended to read: 
 22.20     Subd. 4.  [TECHNOLOGY EVALUATION PROCESS.] (a) The health 
 22.21  technology advisory committee shall collect and evaluate studies 
 22.22  and research findings on the technologies selected for 
 22.23  evaluation from as wide of a range of sources as needed, 
 22.24  including, but not limited to:  federal agencies or other units 
 22.25  of government, international organizations conducting health 
 22.26  care technology assessments, health carriers, insurers, 
 22.27  manufacturers, professional and trade associations, nonprofit 
 22.28  organizations, and academic institutions.  The health technology 
 22.29  advisory committee may use consultants or experts and solicit 
 22.30  testimony or other input as needed to evaluate a specific 
 22.31  technology. 
 22.32     (b) When the evaluation process on a specific technology 
 22.33  has been completed, the health technology advisory committee 
 22.34  shall submit a preliminary report to the health care 
 22.35  commission commissioner and the legislative commission on health 
 22.36  care access and publish a summary of the preliminary report in 
 23.1   the State Register with a notice that written comments may be 
 23.2   submitted.  The preliminary report must include the results of 
 23.3   the technology assessment evaluation, studies and research 
 23.4   findings considered in conducting the evaluation, and the health 
 23.5   technology advisory committee's summary statement about the 
 23.6   evaluation.  Any interested persons or organizations may submit 
 23.7   to the health technology advisory committee written comments 
 23.8   regarding the technology evaluation within 30 days from the date 
 23.9   the preliminary report was published in the State Register.  The 
 23.10  health technology advisory committee's final report on its 
 23.11  technology evaluation must be submitted to the health care 
 23.12  commission commissioner, to the legislature, and to the 
 23.13  information clearinghouse.  A summary of written comments 
 23.14  received by the health technology advisory committee within the 
 23.15  30-day period must be included in the final report.  The health 
 23.16  care commission shall review the final report and prepare its 
 23.17  comments and recommendations.  Before completing its final 
 23.18  comments and recommendations, the health care commission shall 
 23.19  provide adequate public notice that testimony will be accepted 
 23.20  by the health care commission.  The health care commission shall 
 23.21  then forward the final report, its comments and recommendations, 
 23.22  and a summary of the public's comments to the commissioner and 
 23.23  information clearinghouse. 
 23.24     (c) The reports of the health technology advisory committee 
 23.25  and the comments and recommendations of the health care 
 23.26  commission should not eliminate or bar new technology, and are 
 23.27  not rules as defined in the administrative procedure act. 
 23.28     Sec. 12.  Minnesota Statutes 1996, section 62J.152, 
 23.29  subdivision 5, is amended to read: 
 23.30     Subd. 5.  [USE OF TECHNOLOGY EVALUATION.] (a) The final 
 23.31  report on the technology evaluation and the commission's 
 23.32  comments and recommendations may be used: 
 23.33     (1) by the commissioner in retrospective and prospective 
 23.34  review of major expenditures; 
 23.35     (2) by integrated service networks and other group 
 23.36  purchasers and by employers, in making coverage, contracting, 
 24.1   purchasing, and reimbursement decisions; 
 24.2      (3) by organizations in the development of practice 
 24.3   parameters; 
 24.4      (4) by health care providers in making decisions about 
 24.5   adding or replacing technology and the appropriate use of 
 24.6   technology; 
 24.7      (5) by consumers in making decisions about treatment; 
 24.8      (6) by medical device manufacturers in developing and 
 24.9   marketing new technologies; and 
 24.10     (7) as otherwise needed by health care providers, health 
 24.11  care plans, consumers, and purchasers. 
 24.12     (b) At the request of the commissioner, the health care 
 24.13  commission, in consultation with the health technology advisory 
 24.14  committee, shall submit specific recommendations relating to 
 24.15  technologies that have been evaluated under this section for 
 24.16  purposes of retrospective and prospective review of major 
 24.17  expenditures and coverage, contracting, purchasing, and 
 24.18  reimbursement decisions affecting state programs. 
 24.19     Sec. 13.  Minnesota Statutes 1996, section 62J.17, 
 24.20  subdivision 6a, is amended to read: 
 24.21     Subd. 6a.  [PROSPECTIVE REVIEW AND APPROVAL.] (a) 
 24.22  [REQUIREMENT.] No health care provider subject to prospective 
 24.23  review under this subdivision shall make a major spending 
 24.24  commitment unless:  
 24.25     (1) the provider has filed an application with the 
 24.26  commissioner to proceed with the major spending commitment and 
 24.27  has provided all supporting documentation and evidence requested 
 24.28  by the commissioner; and 
 24.29     (2) the commissioner determines, based upon this 
 24.30  documentation and evidence, that the major spending commitment 
 24.31  is appropriate under the criteria provided in subdivision 5a in 
 24.32  light of the alternatives available to the provider.  
 24.33     (b)  [APPLICATION.] A provider subject to prospective 
 24.34  review and approval shall submit an application to the 
 24.35  commissioner before proceeding with any major spending 
 24.36  commitment.  The application must address each item listed in 
 25.1   subdivision 4a, paragraph (a), and must also include 
 25.2   documentation to support the response to each item.  The 
 25.3   provider may submit information, with supporting documentation, 
 25.4   regarding why the major spending commitment should be excepted 
 25.5   from prospective review under subdivision 7.  The submission may 
 25.6   be made either in addition to or instead of the submission of 
 25.7   information relating to the items listed in subdivision 4a, 
 25.8   paragraph (a).  
 25.9      (c)  [REVIEW.] The commissioner shall determine, based upon 
 25.10  the information submitted, whether the major spending commitment 
 25.11  is appropriate under the criteria provided in subdivision 5a, or 
 25.12  whether it should be excepted from prospective review under 
 25.13  subdivision 7.  In making this determination, the commissioner 
 25.14  may also consider relevant information from other sources.  At 
 25.15  the request of the commissioner, the Minnesota health care 
 25.16  commission health technology advisory committee shall convene an 
 25.17  expert review panel made up of persons with knowledge and 
 25.18  expertise regarding medical equipment, specialized services, 
 25.19  health care expenditures, and capital expenditures to review 
 25.20  applications and make recommendations to the commissioner.  The 
 25.21  commissioner shall make a decision on the application within 60 
 25.22  days after an application is received. 
 25.23     (d)  [PENALTIES AND REMEDIES.] The commissioner of health 
 25.24  has the authority to issue fines, seek injunctions, and pursue 
 25.25  other remedies as provided by law. 
 25.26     Sec. 14.  Minnesota Statutes 1996, section 62J.22, is 
 25.27  amended to read: 
 25.28     62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.] 
 25.29     The commissioner of health shall seek the full 
 25.30  participation of federal health care programs under this 
 25.31  chapter, including Medicare, medical assistance, veterans 
 25.32  administration programs, and other federal programs.  The 
 25.33  commissioner of human services shall under the direction of the 
 25.34  health care commission submit waiver requests and take other 
 25.35  action necessary to obtain federal approval to allow 
 25.36  participation of the medical assistance program.  Other state 
 26.1   agencies shall provide assistance at the request of the 
 26.2   commission.  If federal approval is not given for one or more 
 26.3   federal programs, data on the amount of health care spending 
 26.4   that is collected under section 62J.04 shall be adjusted so that 
 26.5   state and regional spending limits take into account the failure 
 26.6   of the federal program to participate. 
 26.7      Sec. 15.  Minnesota Statutes 1996, section 62J.25, is 
 26.8   amended to read: 
 26.9      62J.25 [MANDATORY MEDICARE ASSIGNMENT.] 
 26.10     (a) Effective January 1, 1993, a health care provider 
 26.11  authorized to participate in the Medicare program shall not 
 26.12  charge to or collect from a Medicare beneficiary who is a 
 26.13  Minnesota resident any amount in excess of 115 percent of the 
 26.14  Medicare-approved amount for any Medicare-covered service 
 26.15  provided. 
 26.16     (b) Effective January 1, 1994, a health care provider 
 26.17  authorized to participate in the Medicare program shall not 
 26.18  charge to or collect from a Medicare beneficiary who is a 
 26.19  Minnesota resident any amount in excess of 110 percent of the 
 26.20  Medicare-approved amount for any Medicare-covered service 
 26.21  provided. 
 26.22     (c) Effective January 1, 1995, a health care provider 
 26.23  authorized to participate in the Medicare program shall not 
 26.24  charge to or collect from a Medicare beneficiary who is a 
 26.25  Minnesota resident any amount in excess of 105 percent of the 
 26.26  Medicare-approved amount for any Medicare-covered service 
 26.27  provided. 
 26.28     (d) Effective January 1, 1996, a health care provider 
 26.29  authorized to participate in the Medicare program shall not 
 26.30  charge to or collect from a Medicare beneficiary who is a 
 26.31  Minnesota resident any amount in excess of the Medicare-approved 
 26.32  amount for any Medicare-covered service provided. 
 26.33     (e) This section does not apply to ambulance services as 
 26.34  defined in section 144.801, subdivision 4, or medical supplies 
 26.35  and equipment. 
 26.36     Sec. 16.  Minnesota Statutes 1996, section 62J.2914, 
 27.1   subdivision 1, is amended to read: 
 27.2      Subdivision 1.  [DISCLOSURE.] An application for approval 
 27.3   must include, to the extent applicable, disclosure of the 
 27.4   following: 
 27.5      (1) a descriptive title; 
 27.6      (2) a table of contents; 
 27.7      (3) exact names of each party to the application and the 
 27.8   address of the principal business office of each party; 
 27.9      (4) the name, address, and telephone number of the persons 
 27.10  authorized to receive notices and communications with respect to 
 27.11  the application; 
 27.12     (5) a verified statement by a responsible officer of each 
 27.13  party to the application attesting to the accuracy and 
 27.14  completeness of the enclosed information; 
 27.15     (6) background information relating to the proposed 
 27.16  arrangement, including: 
 27.17     (i) a description of the proposed arrangement, including a 
 27.18  list of any services or products that are the subject of the 
 27.19  proposed arrangement; 
 27.20     (ii) an identification of any tangential services or 
 27.21  products associated with the services or products that are the 
 27.22  subject of the proposed arrangement; 
 27.23     (iii) a description of the geographic territory involved in 
 27.24  the proposed arrangement; 
 27.25     (iv) if the geographic territory described in item (iii), 
 27.26  is different from the territory in which the applicants have 
 27.27  engaged in the type of business at issue over the last five 
 27.28  years, a description of how and why the geographic territory 
 27.29  differs; 
 27.30     (v) identification of all products or services that a 
 27.31  substantial share of consumers would consider substitutes for 
 27.32  any service or product that is the subject of the proposed 
 27.33  arrangement; 
 27.34     (vi) identification of whether any services or products of 
 27.35  the proposed arrangement are currently being offered, capable of 
 27.36  being offered, utilized, or capable of being utilized by other 
 28.1   providers or purchasers in the geographic territory described in 
 28.2   item (iii); 
 28.3      (vii) identification of the steps necessary, under current 
 28.4   market and regulatory conditions, for other parties to enter the 
 28.5   territory described in item (iii) and compete with the 
 28.6   applicant; 
 28.7      (viii) a description of the previous history of dealings 
 28.8   between the parties to the application; 
 28.9      (ix) a detailed explanation of the projected effects, 
 28.10  including expected volume, change in price, and increased 
 28.11  revenue, of the arrangement on each party's current businesses, 
 28.12  both generally as well as the aspects of the business directly 
 28.13  involved in the proposed arrangement; 
 28.14     (x) the present market share of the parties to the 
 28.15  application and of others affected by the proposed arrangement, 
 28.16  and projected market shares after implementation of the proposed 
 28.17  arrangement; 
 28.18     (xi) a statement of why the projected levels of cost, 
 28.19  access, or quality could not be achieved in the existing market 
 28.20  without the proposed arrangement; and 
 28.21     (xii) an explanation of how the arrangement relates to any 
 28.22  Minnesota health care commission or applicable regional 
 28.23  coordinating board plans for delivery of health care; and 
 28.24     (7) a detailed explanation of how the transaction will 
 28.25  affect cost, access, and quality.  The explanation must address 
 28.26  the factors in section 62J.2917, subdivision 2, paragraphs (b) 
 28.27  to (d), to the extent applicable. 
 28.28     Sec. 17.  Minnesota Statutes 1996, section 62J.2915, is 
 28.29  amended to read: 
 28.30     62J.2915 [NOTICE AND COMMENT.] 
 28.31     Subdivision 1.  [NOTICE.] The commissioner shall cause the 
 28.32  notice described in section 62J.2914, subdivision 2, to be 
 28.33  published in the State Register and sent to the Minnesota health 
 28.34  care commission, the regional coordinating boards for any 
 28.35  regions that include all or part of the territory covered by the 
 28.36  proposed arrangement, and any person who has requested to be 
 29.1   placed on a list to receive notice of applications.  The 
 29.2   commissioner may maintain separate notice lists for different 
 29.3   regions of the state.  The commissioner may also send a copy of 
 29.4   the notice to any person together with a request that the person 
 29.5   comment as provided under subdivision 2.  Copies of the request 
 29.6   must be provided to the applicant. 
 29.7      Subd. 2.  [COMMENTS.] Within 20 days after the notice is 
 29.8   published, any person may mail to the commissioner written 
 29.9   comments with respect to the application.  Within 30 days after 
 29.10  the notice is published, the Minnesota health care commission or 
 29.11  any regional coordinating board may mail to the commissioner 
 29.12  comments with respect to the application.  Persons submitting 
 29.13  comments shall provide a copy of the comments to the applicant.  
 29.14  The applicant may mail to the commissioner written responses to 
 29.15  any comments within ten days after the deadline for mailing such 
 29.16  comments.  The applicant shall send a copy of the response to 
 29.17  the person submitting the comment. 
 29.18     Sec. 18.  Minnesota Statutes 1996, section 62J.2916, 
 29.19  subdivision 1, is amended to read: 
 29.20     Subdivision 1.  [CHOICE OF PROCEDURES.] After the 
 29.21  conclusion of the period provided in section 62J.2915, 
 29.22  subdivision 2, for the applicant to respond to comments, the 
 29.23  commissioner shall select one of the three procedures provided 
 29.24  in subdivision 2.  In determining which procedure to use, the 
 29.25  commissioner shall consider the following criteria: 
 29.26     (1) the size of the proposed arrangement, in terms of 
 29.27  number of parties and amount of money involved; 
 29.28     (2) the complexity of the proposed arrangement; 
 29.29     (3) the novelty of the proposed arrangement; 
 29.30     (4) the substance and quantity of the comments received; 
 29.31     (5) any comments received from the Minnesota health care 
 29.32  commission or regional coordinating boards; and 
 29.33     (6) the presence or absence of any significant gaps in the 
 29.34  factual record. 
 29.35     If the applicant demands a contested case hearing no later 
 29.36  than the conclusion of the period provided in section 62J.2915, 
 30.1   subdivision 2, for the applicant to respond to comments, the 
 30.2   commissioner shall not select a procedure.  Instead, the 
 30.3   applicant shall be given a contested case proceeding as a matter 
 30.4   of right. 
 30.5      Sec. 19.  Minnesota Statutes 1996, section 62J.2917, 
 30.6   subdivision 2, is amended to read: 
 30.7      Subd. 2.  [FACTORS.] (a)  [GENERALLY APPLICABLE FACTORS.] 
 30.8   In making a determination about cost, access, and quality, the 
 30.9   commissioner may consider the following factors, to the extent 
 30.10  relevant: 
 30.11     (1) whether the proposal is compatible with the cost 
 30.12  containment plan or other plan of the Minnesota health care 
 30.13  commission or the applicable regional plans of the regional 
 30.14  coordinating boards; 
 30.15     (2) market structure: 
 30.16     (i) actual and potential sellers and buyers, or providers 
 30.17  and purchasers; 
 30.18     (ii) actual and potential consumers; 
 30.19     (iii) geographic market area; and 
 30.20     (iv) entry conditions; 
 30.21     (3) current market conditions; 
 30.22     (4) the historical behavior of the market; 
 30.23     (5) performance of other, similar arrangements; 
 30.24     (6) whether the proposal unnecessarily restrains 
 30.25  competition or restrains competition in ways not reasonably 
 30.26  related to the purposes of this chapter; and 
 30.27     (7) the financial condition of the applicant. 
 30.28     (b)  [COST.] The commissioner's analysis of cost must focus 
 30.29  on the individual consumer of health care.  Cost savings to be 
 30.30  realized by providers, health carriers, group purchasers, or 
 30.31  other participants in the health care system are relevant only 
 30.32  to the extent that the savings are likely to be passed on to the 
 30.33  consumer.  However, where an application is submitted by 
 30.34  providers or purchasers who are paid primarily by third party 
 30.35  payers unaffiliated with the applicant, it is sufficient for the 
 30.36  applicant to show that cost savings are likely to be passed on 
 31.1   to the unaffiliated third party payers; the applicants do not 
 31.2   have the burden of proving that third party payers with whom the 
 31.3   applicants are not affiliated will pass on cost savings to 
 31.4   individuals receiving coverage through the third party payers.  
 31.5   In making determinations as to costs, the commissioner may 
 31.6   consider: 
 31.7      (1) the cost savings likely to result to the applicant; 
 31.8      (2) the extent to which the cost savings are likely to be 
 31.9   passed on to the consumer and in what form; 
 31.10     (3) the extent to which the proposed arrangement is likely 
 31.11  to result in cost shifting by the applicant onto other payers or 
 31.12  purchasers of other products or services; 
 31.13     (4) the extent to which the cost shifting by the applicant 
 31.14  is likely to be followed by other persons in the market; 
 31.15     (5) the current and anticipated supply and demand for any 
 31.16  products or services at issue; 
 31.17     (6) the representations and guarantees of the applicant and 
 31.18  their enforceability; 
 31.19     (7) likely effectiveness of regulation by the commissioner; 
 31.20     (8) inferences to be drawn from market structure; 
 31.21     (9) the cost of regulation, both for the state and for the 
 31.22  applicant; and 
 31.23     (10) any other factors tending to show that the proposed 
 31.24  arrangement is or is not likely to reduce cost. 
 31.25     (c)  [ACCESS.] In making determinations as to access, the 
 31.26  commissioner may consider: 
 31.27     (1) the extent to which the utilization of needed health 
 31.28  care services or products by the intended targeted population is 
 31.29  likely to increase or decrease.  When a proposed arrangement is 
 31.30  likely to increase access in one geographic area, by lowering 
 31.31  prices or otherwise expanding supply, but limits access in 
 31.32  another geographic area by removing service capabilities from 
 31.33  that second area, the commissioner shall articulate the criteria 
 31.34  employed to balance these effects; 
 31.35     (2) the extent to which the proposed arrangement is likely 
 31.36  to make available a new and needed service or product to a 
 32.1   certain geographic area; and 
 32.2      (3) the extent to which the proposed arrangement is likely 
 32.3   to otherwise make health care services or products more 
 32.4   financially or geographically available to persons who need them.
 32.5      If the commissioner determines that the proposed 
 32.6   arrangement is likely to increase access and bases that 
 32.7   determination on a projected increase in utilization, the 
 32.8   commissioner shall also determine and make a specific finding 
 32.9   that the increased utilization does not reflect overutilization. 
 32.10     (d)  [QUALITY.] In making determinations as to quality, the 
 32.11  commissioner may consider the extent to which the proposed 
 32.12  arrangement is likely to: 
 32.13     (1) decrease morbidity and mortality; 
 32.14     (2) result in faster convalescence; 
 32.15     (3) result in fewer hospital days; 
 32.16     (4) permit providers to attain needed experience or 
 32.17  frequency of treatment, likely to lead to better outcomes; 
 32.18     (5) increase patient satisfaction; and 
 32.19     (6) have any other features likely to improve or reduce the 
 32.20  quality of health care. 
 32.21     Sec. 20.  Minnesota Statutes 1996, section 62J.2921, 
 32.22  subdivision 2, is amended to read: 
 32.23     Subd. 2.  [NOTICE.] The commissioner shall begin a 
 32.24  proceeding to revoke approval by providing written notice to the 
 32.25  applicant describing in detail the basis for the proposed 
 32.26  revocation.  Notice of the proceeding must be published in the 
 32.27  State Register and submitted to the Minnesota health care 
 32.28  commission and the applicable regional coordinating boards.  The 
 32.29  notice must invite the submission of comments to the 
 32.30  commissioner. 
 32.31     Sec. 21.  Minnesota Statutes 1996, section 62J.451, 
 32.32  subdivision 6b, is amended to read: 
 32.33     Subd. 6b.  [CONSUMER SURVEYS.] (a) The health data 
 32.34  institute shall develop and implement a mechanism for collecting 
 32.35  comparative data on consumer perceptions of the health care 
 32.36  system, including consumer satisfaction, through adoption of a 
 33.1   standard consumer survey.  This survey shall include enrollees 
 33.2   in community integrated service networks, integrated service 
 33.3   networks, health maintenance organizations, preferred provider 
 33.4   organizations, indemnity insurance plans, public programs, and 
 33.5   other health plan companies.  The health data institute, in 
 33.6   consultation with the health care commission, shall determine a 
 33.7   mechanism for the inclusion of the uninsured.  This consumer 
 33.8   survey may be conducted every two years.  A focused survey may 
 33.9   be conducted on the off years.  Health plan companies and group 
 33.10  purchasers shall provide to the health data institute roster 
 33.11  data as defined in subdivision 2, including the names, 
 33.12  addresses, and telephone numbers of enrollees and former 
 33.13  enrollees and other data necessary for the completion of this 
 33.14  survey.  This roster data provided by the health plan companies 
 33.15  and group purchasers is classified as provided under section 
 33.16  62J.452.  The health data institute may analyze and prepare 
 33.17  findings from the raw, unaggregated data, and the findings from 
 33.18  this survey may be included in the health plan company 
 33.19  performance reports specified in subdivision 6a, and in other 
 33.20  reports developed and disseminated by the health data institute 
 33.21  and the commissioner.  The raw, unaggregated data is classified 
 33.22  as provided under section 62J.452, and may be made available by 
 33.23  the health data institute to the extent permitted under section 
 33.24  62J.452.  The health data institute shall provide raw, 
 33.25  unaggregated data to the commissioner.  The survey may include 
 33.26  information on the following subjects: 
 33.27     (1) enrollees' overall satisfaction with their health care 
 33.28  plan; 
 33.29     (2) consumers' perception of access to emergency, urgent, 
 33.30  routine, and preventive care, including locations, hours, 
 33.31  waiting times, and access to care when needed; 
 33.32     (3) premiums and costs; 
 33.33     (4) technical competence of providers; 
 33.34     (5) communication, courtesy, respect, reassurance, and 
 33.35  support; 
 33.36     (6) choice and continuity of providers; 
 34.1      (7) continuity of care; 
 34.2      (8) outcomes of care; 
 34.3      (9) services offered by the plan, including range of 
 34.4   services, coverage for preventive and routine services, and 
 34.5   coverage for illness and hospitalization; 
 34.6      (10) availability of information; and 
 34.7      (11) paperwork. 
 34.8      (b) The health data institute shall appoint a consumer 
 34.9   advisory group which shall consist of 13 individuals, 
 34.10  representing enrollees from public and private health plan 
 34.11  companies and programs and two uninsured consumers, to advise 
 34.12  the health data institute on issues of concern to consumers.  
 34.13  The advisory group must have at least one member from each 
 34.14  regional coordinating board region of the state.  The advisory 
 34.15  group expires June 30, 1996. 
 34.16     Sec. 22.  Minnesota Statutes 1996, section 62M.02, 
 34.17  subdivision 21, is amended to read: 
 34.18     Subd. 21.  [UTILIZATION REVIEW ORGANIZATION.] "Utilization 
 34.19  review organization" means an entity including but not limited 
 34.20  to an insurance company licensed under chapter 60A to offer, 
 34.21  sell, or issue a policy of accident and sickness insurance as 
 34.22  defined in section 62A.01; a health service plan licensed under 
 34.23  chapter 62C; a health maintenance organization licensed under 
 34.24  chapter 62D; a community integrated service network or an 
 34.25  integrated service network licensed under chapter 62N; a 
 34.26  fraternal benefit society operating under chapter 64B; a joint 
 34.27  self-insurance employee health plan operating under chapter 62H; 
 34.28  a multiple employer welfare arrangement, as defined in section 3 
 34.29  of the Employee Retirement Income Security Act of 1974 (ERISA), 
 34.30  United States Code, title 29, section 1103, as amended; a third 
 34.31  party administrator licensed under section 60A.23, subdivision 
 34.32  8, which conducts utilization review and determines 
 34.33  certification of an admission, extension of stay, or other 
 34.34  health care services for a Minnesota resident; or any entity 
 34.35  performing utilization review that is affiliated with, under 
 34.36  contract with, or conducting utilization review on behalf of, a 
 35.1   business entity in this state. 
 35.2      Sec. 23.  Minnesota Statutes 1996, section 62N.01, 
 35.3   subdivision 1, is amended to read: 
 35.4      Subdivision 1.  [CITATION.] This chapter may be cited as 
 35.5   the "Minnesota community integrated service network act." 
 35.6      Sec. 24.  Minnesota Statutes 1996, section 62N.22, is 
 35.7   amended to read: 
 35.8      62N.22 [DISCLOSURE OF COMMISSIONS.] 
 35.9      Before selling any coverage or enrollment in a community 
 35.10  integrated service network or an integrated service network, a 
 35.11  person selling the coverage or enrollment shall disclose in 
 35.12  writing to the prospective purchaser the amount of any 
 35.13  commission or other compensation the person will receive as a 
 35.14  direct result of the sale.  The disclosure may be expressed in 
 35.15  dollars or as a percentage of the premium.  The amount disclosed 
 35.16  need not include any anticipated renewal commissions. 
 35.17     Sec. 25.  Minnesota Statutes 1996, section 62N.23, is 
 35.18  amended to read: 
 35.19     62N.23 [TECHNICAL ASSISTANCE; LOANS.] 
 35.20     (a) The commissioner shall provide technical assistance to 
 35.21  parties interested in establishing or operating a community 
 35.22  integrated service network or an integrated service network.  
 35.23  This shall be known as the community integrated service network 
 35.24  technical assistance program (ISNTAP) (CISNTAP). 
 35.25     The technical assistance program shall offer seminars on 
 35.26  the establishment and operation of community integrated service 
 35.27  networks or integrated service networks in all regions of 
 35.28  Minnesota.  The commissioner shall advertise these seminars in 
 35.29  local and regional newspapers, and attendance at these seminars 
 35.30  shall be free. 
 35.31     The commissioner shall write a guide to establishing and 
 35.32  operating a community integrated service network or an 
 35.33  integrated service network.  The guide must provide basic 
 35.34  instructions for parties wishing to establish a community 
 35.35  integrated service network or an integrated service network.  
 35.36  The guide must be provided free of charge to interested 
 36.1   parties.  The commissioner shall update this guide when 
 36.2   appropriate. 
 36.3      The commissioner shall establish a toll-free telephone line 
 36.4   that interested parties may call to obtain assistance in 
 36.5   establishing or operating a community integrated service network 
 36.6   or an integrated service network. 
 36.7      (b) The commissioner shall grant loans for organizational 
 36.8   and start-up expenses to entities forming community integrated 
 36.9   service networks or integrated service networks, or to networks 
 36.10  less than one year old, to the extent of any appropriation for 
 36.11  that purpose.  The commissioner shall allocate the available 
 36.12  funds among applicants based upon the following criteria, as 
 36.13  evaluated by the commissioner within the commissioner's 
 36.14  discretion: 
 36.15     (1) the applicant's need for the loan; 
 36.16     (2) the likelihood that the loan will foster the formation 
 36.17  or growth of a network; and 
 36.18     (3) the likelihood of repayment. 
 36.19     The commissioner shall determine any necessary application 
 36.20  deadlines and forms and is exempt from rulemaking in doing so.  
 36.21     Sec. 26.  Minnesota Statutes 1996, section 62N.25, 
 36.22  subdivision 5, is amended to read: 
 36.23     Subd. 5.  [BENEFITS.] Community integrated service networks 
 36.24  must offer the health maintenance organization benefit set, as 
 36.25  defined in chapter 62D, and other laws applicable to entities 
 36.26  regulated under chapter 62D, except that the community 
 36.27  integrated service network may impose a deductible, not to 
 36.28  exceed $1,000 per person per year, provided that out-of-pocket 
 36.29  expenses on covered services do not exceed $3,000 per person or 
 36.30  $5,000 per family per year.  The deductible must not apply to 
 36.31  preventive health services as described in Minnesota Rules, part 
 36.32  4685.0801, subpart 8.  Community networks and chemical 
 36.33  dependency facilities under contract with a community network 
 36.34  shall use the assessment criteria in Minnesota Rules, parts 
 36.35  9530.6600 to 9530.6660, when assessing enrollees for chemical 
 36.36  dependency treatment. 
 37.1      Sec. 27.  Minnesota Statutes 1996, section 62N.26, is 
 37.2   amended to read: 
 37.3      62N.26 [SHARED SERVICES COOPERATIVE.] 
 37.4      The commissioner of health shall establish, or assist in 
 37.5   establishing, a shared services cooperative organized under 
 37.6   chapter 308A to make available administrative and legal 
 37.7   services, technical assistance, provider contracting and billing 
 37.8   services, and other services to those community integrated 
 37.9   service networks and integrated service networks that choose to 
 37.10  participate in the cooperative.  The commissioner shall provide, 
 37.11  to the extent funds are appropriated, start-up loans sufficient 
 37.12  to maintain the shared services cooperative until its operations 
 37.13  can be maintained by fees and contributions.  The cooperative 
 37.14  must not be staffed, administered, or supervised by the 
 37.15  commissioner of health.  The cooperative shall make use of 
 37.16  existing resources that are already available in the community, 
 37.17  to the extent possible. 
 37.18     Sec. 28.  Minnesota Statutes 1996, section 62N.40, is 
 37.19  amended to read: 
 37.20     62N.40 [CHEMICAL DEPENDENCY SERVICES.] 
 37.21     Each community integrated service network and integrated 
 37.22  service network regulated under this chapter must ensure that 
 37.23  chemically dependent individuals have access to cost-effective 
 37.24  treatment options that address the specific needs of 
 37.25  individuals.  These include, but are not limited to, the need 
 37.26  for:  treatment that takes into account severity of illness and 
 37.27  comorbidities; provision of a continuum of care, including 
 37.28  treatment and rehabilitation programs licensed under Minnesota 
 37.29  Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; 
 37.30  the safety of the individual's domestic and community 
 37.31  environment; gender appropriate and culturally appropriate 
 37.32  programs; and access to appropriate social services. 
 37.33     Sec. 29.  Minnesota Statutes 1996, section 62Q.01, 
 37.34  subdivision 3, is amended to read: 
 37.35     Subd. 3.  [HEALTH PLAN.] "Health plan" means a health plan 
 37.36  as defined in section 62A.011; a policy, contract, or 
 38.1   certificate issued by a community integrated service network; or 
 38.2   an integrated service network. 
 38.3      Sec. 30.  Minnesota Statutes 1996, section 62Q.01, 
 38.4   subdivision 4, is amended to read: 
 38.5      Subd. 4.  [HEALTH PLAN COMPANY.] "Health plan company" 
 38.6   means: 
 38.7      (1) a health carrier as defined under section 62A.011, 
 38.8   subdivision 2; or 
 38.9      (2) an integrated service network as defined under section 
 38.10  62N.02, subdivision 8; or 
 38.11     (3) a community integrated service network as defined under 
 38.12  section 62N.02, subdivision 4a. 
 38.13     Sec. 31.  Minnesota Statutes 1996, section 62Q.01, 
 38.14  subdivision 5, is amended to read: 
 38.15     Subd. 5.  [MANAGED CARE ORGANIZATION.] "Managed care 
 38.16  organization" means:  (1) a health maintenance organization 
 38.17  operating under chapter 62D; (2) a community integrated service 
 38.18  network as defined under section 62N.02, subdivision 
 38.19  4a; or (3) an integrated service network as defined under 
 38.20  section 62N.02, subdivision 8; or (4) an insurance company 
 38.21  licensed under chapter 60A, nonprofit health service plan 
 38.22  corporation operating under chapter 62C, fraternal benefit 
 38.23  society operating under chapter 64B, or any other health plan 
 38.24  company, to the extent that it covers health care services 
 38.25  delivered to Minnesota residents through a preferred provider 
 38.26  organization or a network of selected providers.  
 38.27     Sec. 32.  Minnesota Statutes 1996, section 62Q.03, 
 38.28  subdivision 5a, is amended to read: 
 38.29     Subd. 5a.  [PUBLIC PROGRAMS.] (a) A separate risk 
 38.30  adjustment system must be developed for state-run public 
 38.31  programs, including medical assistance, general assistance 
 38.32  medical care, and MinnesotaCare.  The system must be developed 
 38.33  in accordance with the general risk adjustment methodologies 
 38.34  described in this section, must include factors in addition to 
 38.35  age and sex adjustment, and may include additional demographic 
 38.36  factors, different targeted conditions, and/or different payment 
 39.1   amounts for conditions.  The risk adjustment system for public 
 39.2   programs must attempt to reflect the special needs related to 
 39.3   poverty, cultural, or language barriers and other needs of the 
 39.4   public program population. 
 39.5      (b) The commissioners of health and human services shall 
 39.6   jointly convene a public programs risk adjustment work group 
 39.7   responsible for advising the commissioners in the design of the 
 39.8   public programs risk adjustment system.  The public programs 
 39.9   risk adjustment work group is governed by section 15.059 for 
 39.10  purposes of membership terms and removal of members and shall 
 39.11  terminate on June 30, 1999.  The work group shall meet at the 
 39.12  discretion of the commissioners of health and human services. 
 39.13  The commissioner of health shall work with the risk adjustment 
 39.14  association to ensure coordination between the risk adjustment 
 39.15  systems for the public and private sectors.  The commissioner of 
 39.16  human services shall seek any needed federal approvals necessary 
 39.17  for the inclusion of the medical assistance program in the 
 39.18  public programs risk adjustment system.  
 39.19     (c) The public programs risk adjustment work group must be 
 39.20  representative of the persons served by publicly paid health 
 39.21  programs and providers and health plans that meet their needs.  
 39.22  To the greatest extent possible, the appointing authorities 
 39.23  shall attempt to select representatives that have historically 
 39.24  served a significant number of persons in publicly paid health 
 39.25  programs or the uninsured.  Membership of the work group shall 
 39.26  be as follows: 
 39.27     (1) one provider member appointed by the Minnesota Medical 
 39.28  Association; 
 39.29     (2) two provider members appointed by the Minnesota 
 39.30  Hospital Association, at least one of whom must represent a 
 39.31  major disproportionate share hospital; 
 39.32     (3) five members appointed by the Minnesota Council of 
 39.33  HMOs, one of whom must represent an HMO with fewer than 50,000 
 39.34  enrollees located outside the metropolitan area and one of whom 
 39.35  must represent an HMO with at least 50 percent of total 
 39.36  membership enrolled through a public program; 
 40.1      (4) two representatives of counties appointed by the 
 40.2   Association of Minnesota Counties; 
 40.3      (5) three representatives of organizations representing the 
 40.4   interests of families, children, childless adults, and elderly 
 40.5   persons served by the various publicly paid health programs 
 40.6   appointed by the governor; 
 40.7      (6) two representatives of persons with mental health, 
 40.8   developmental or physical disabilities, chemical dependency, or 
 40.9   chronic illness appointed by the governor; and 
 40.10     (7) three public members appointed by the governor, at 
 40.11  least one of whom must represent a community health board.  The 
 40.12  risk adjustment association may appoint a representative, if a 
 40.13  representative is not otherwise appointed by an appointing 
 40.14  authority. 
 40.15     (d) The commissioners of health and human services, with 
 40.16  the advice of the public programs risk adjustment work group, 
 40.17  shall develop a work plan and time frame and shall coordinate 
 40.18  their efforts with the private sector risk adjustment 
 40.19  association's activities and other state initiatives related to 
 40.20  public program managed care reimbursement.  The commissioners of 
 40.21  health and human services shall report to the health care 
 40.22  commission and to the appropriate legislative committees on 
 40.23  January 15, 1996, and on January 15, 1997, on any policy or 
 40.24  legislative changes necessary to implement the public program 
 40.25  risk adjustment system. 
 40.26     Sec. 33.  Minnesota Statutes 1996, section 62Q.106, is 
 40.27  amended to read: 
 40.28     62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.] 
 40.29     A complainant may at any time submit a complaint to the 
 40.30  appropriate commissioner to investigate.  After investigating a 
 40.31  complaint, or reviewing a company's decision, the appropriate 
 40.32  commissioner may order a remedy as authorized under section 
 40.33  62N.04, 62Q.30, or chapter 45, 60A, or 62D.  
 40.34     Sec. 34.  Minnesota Statutes 1996, section 62Q.19, 
 40.35  subdivision 1, is amended to read: 
 40.36     Subdivision 1.  [DESIGNATION.] The commissioner shall 
 41.1   designate essential community providers.  The criteria for 
 41.2   essential community provider designation shall be the following: 
 41.3      (1) a demonstrated ability to integrate applicable 
 41.4   supportive and stabilizing services with medical care for 
 41.5   uninsured persons and high-risk and special needs populations as 
 41.6   defined in section 62Q.07, subdivision 2, paragraph (e), 
 41.7   underserved, and other special needs populations; and 
 41.8      (2) a commitment to serve low-income and underserved 
 41.9   populations by meeting the following requirements: 
 41.10     (i) has nonprofit status in accordance with chapter 317A; 
 41.11     (ii) has tax exempt status in accordance with the Internal 
 41.12  Revenue Service Code, section 501(c)(3); 
 41.13     (iii) charges for services on a sliding fee schedule based 
 41.14  on current poverty income guidelines; and 
 41.15     (iv) does not restrict access or services because of a 
 41.16  client's financial limitation; 
 41.17     (3) status as a local government unit as defined in section 
 41.18  62D.02, subdivision 11, an Indian tribal government, an Indian 
 41.19  health service unit, or community health board as defined in 
 41.20  chapter 145A; or 
 41.21     (4) a former state hospital that specializes in the 
 41.22  treatment of cerebral palsy, spina bifida, epilepsy, closed head 
 41.23  injuries, specialized orthopedic problems, and other disabling 
 41.24  conditions; or 
 41.25     (5) a rural hospital that has qualified for a sole 
 41.26  community hospital financial assistance grant in the past three 
 41.27  years under section 144.1484, subdivision 1.  For these rural 
 41.28  hospitals, the essential community provider designation applies 
 41.29  to all health services provided, including both inpatient and 
 41.30  outpatient services. 
 41.31     Prior to designation, the commissioner shall publish the 
 41.32  names of all applicants in the State Register.  The public shall 
 41.33  have 30 days from the date of publication to submit written 
 41.34  comments to the commissioner on the application.  No designation 
 41.35  shall be made by the commissioner until the 30-day period has 
 41.36  expired. 
 42.1      The commissioner may designate an eligible provider as an 
 42.2   essential community provider for all the services offered by 
 42.3   that provider or for specific services designated by the 
 42.4   commissioner. 
 42.5      For the purpose of this subdivision, supportive and 
 42.6   stabilizing services include at a minimum, transportation, child 
 42.7   care, cultural, and linguistic services where appropriate. 
 42.8      Sec. 35.  Minnesota Statutes 1996, section 62Q.33, 
 42.9   subdivision 2, is amended to read: 
 42.10     Subd. 2.  [REPORT ON SYSTEM DEVELOPMENT.] The commissioner 
 42.11  of health, in consultation with the state community health 
 42.12  services advisory committee and the commissioner of human 
 42.13  services, and representatives of local health departments, 
 42.14  county government, a municipal government acting as a local 
 42.15  board of health, the Minnesota health care commission, area 
 42.16  Indian health services, health care providers, and citizens 
 42.17  concerned about public health, shall coordinate the process for 
 42.18  defining implementation and financing responsibilities of the 
 42.19  local government core public health functions.  The commissioner 
 42.20  shall submit recommendations and an initial and final report on 
 42.21  local government core public health functions according to the 
 42.22  timeline established in subdivision 5. 
 42.23     Sec. 36.  Minnesota Statutes 1996, section 62Q.45, 
 42.24  subdivision 2, is amended to read: 
 42.25     Subd. 2.  [DEFINITION.] For purposes of this section, 
 42.26  "managed care organization" means:  (1) a health maintenance 
 42.27  organization operating under chapter 62D; (2) a community 
 42.28  integrated service network as defined under section 62N.02, 
 42.29  subdivision 4a; or (3) an integrated service network as defined 
 42.30  under section 62N.02, subdivision 8; or (4) an insurance company 
 42.31  licensed under chapter 60A, nonprofit health service plan 
 42.32  corporation operating under chapter 62C, fraternal benefit 
 42.33  society operating under chapter 64B, or any other health plan 
 42.34  company, to the extent that it covers health care services 
 42.35  delivered to Minnesota residents through a preferred provider 
 42.36  organization or a network of selected providers.  
 43.1      Sec. 37.  Minnesota Statutes 1996, section 136A.1355, is 
 43.2   amended to read: 
 43.3      136A.1355 [RURAL PHYSICIANS.] 
 43.4      Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
 43.5   education account is established in the health care access 
 43.6   fund.  The higher education services office shall use money from 
 43.7   the account to establish a loan forgiveness program for 
 43.8   medical students residents agreeing to practice in designated 
 43.9   rural areas, as defined by the commissioner.  
 43.10     Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
 43.11  the program, a prospective physician must submit a letter of 
 43.12  interest to the higher education services office.  A student or 
 43.13  resident who is accepted must sign a contract to agree to serve 
 43.14  at least three of the first five years following residency in a 
 43.15  designated rural area. 
 43.16     Subd. 3.  [LOAN FORGIVENESS.] For fiscal years beginning on 
 43.17  and after July 1, 1995, the higher education services office may 
 43.18  accept up to four applicants who are fourth year medical 
 43.19  students, three 12 applicants who are medical residents, four 
 43.20  applicants who are pediatric residents, and four six applicants 
 43.21  who are family practice residents, and one applicant who is 
 43.22  an two applicants who are internal medicine resident residents, 
 43.23  per fiscal year for participation in the loan forgiveness 
 43.24  program.  If the higher education services office does not 
 43.25  receive enough applicants per fiscal year to fill the number of 
 43.26  residents in the specific areas of practice, the resident 
 43.27  applicants may be from any area of practice.  The eight 12 
 43.28  resident applicants may be in any year of training; however, 
 43.29  priority must be given to the following categories of residents 
 43.30  in descending order:  third year residents, second year 
 43.31  residents, and first year residents.  Applicants are responsible 
 43.32  for securing their own loans.  Applicants chosen to participate 
 43.33  in the loan forgiveness program may designate for each year of 
 43.34  medical school, up to a maximum of four years, an agreed amount, 
 43.35  not to exceed $10,000, as a qualified loan.  For each year that 
 43.36  a participant serves as a physician in a designated rural area, 
 44.1   up to a maximum of four years, the higher education services 
 44.2   office shall annually pay an amount equal to one year of 
 44.3   qualified loans.  Participants who move their practice from one 
 44.4   designated rural area to another remain eligible for loan 
 44.5   repayment.  In addition, if a resident participating in the loan 
 44.6   forgiveness program serves at least four weeks during a year of 
 44.7   residency substituting for a rural physician to temporarily 
 44.8   relieve the rural physician of rural practice commitments to 
 44.9   enable the rural physician to take a vacation, engage in 
 44.10  activities outside the practice area, or otherwise be relieved 
 44.11  of rural practice commitments, the participating resident may 
 44.12  designate up to an additional $2,000, above the $10,000 maximum, 
 44.13  for each year of residency during which the resident substitutes 
 44.14  for a rural physician for four or more weeks. 
 44.15     Subd. 4.  [PENALTY FOR NONFULFILLMENT.] If a participant 
 44.16  does not fulfill the required three-year minimum commitment of 
 44.17  service in a designated rural area, the higher education 
 44.18  services office shall collect from the participant the amount 
 44.19  paid by the commissioner under the loan forgiveness program.  
 44.20  The higher education services office shall deposit the money 
 44.21  collected in the rural physician education account established 
 44.22  in subdivision 1.  The commissioner shall allow waivers of all 
 44.23  or part of the money owed the commissioner if emergency 
 44.24  circumstances prevented fulfillment of the three-year service 
 44.25  commitment.  
 44.26     Subd. 5.  [LOAN FORGIVENESS; UNDERSERVED URBAN 
 44.27  COMMUNITIES.] For fiscal years beginning on and after July 1, 
 44.28  1995, the higher education services office may accept up to four 
 44.29  applicants who are either fourth year medical students, or 
 44.30  residents in family practice, pediatrics, or internal medicine 
 44.31  per fiscal year for participation in the urban primary care 
 44.32  physician loan forgiveness program.  The resident applicants may 
 44.33  be in any year of residency training; however, priority will be 
 44.34  given to the following categories of residents in descending 
 44.35  order:  third year residents, second year residents, and first 
 44.36  year residents.  If the higher education services office does 
 45.1   not receive enough qualified applicants per fiscal year to fill 
 45.2   the number of slots for urban underserved communities, the slots 
 45.3   may be allocated to students or residents who have applied for 
 45.4   the rural physician loan forgiveness program in subdivision 1.  
 45.5   Applicants are responsible for securing their own loans.  For 
 45.6   purposes of this provision, "qualifying educational loans" are 
 45.7   government and commercial loans for actual costs paid for 
 45.8   tuition, reasonable education expenses, and reasonable living 
 45.9   expenses related to the graduate or undergraduate education of a 
 45.10  health care professional.  Applicants chosen to participate in 
 45.11  the loan forgiveness program may designate for each year of 
 45.12  medical school, up to a maximum of four years, an agreed amount, 
 45.13  not to exceed $10,000, as a qualified loan.  For each year that 
 45.14  a participant serves as a physician in a designated underserved 
 45.15  urban area, up to a maximum of four years, the higher education 
 45.16  services office shall annually pay an amount equal to one year 
 45.17  of qualified loans.  Participants who move their practice from 
 45.18  one designated underserved urban community to another remain 
 45.19  eligible for loan repayment. 
 45.20     Sec. 38.  Minnesota Statutes 1996, section 144.147, 
 45.21  subdivision 1, is amended to read: 
 45.22     Subdivision 1.  [DEFINITION.] "Eligible rural hospital" 
 45.23  means any nonfederal, general acute care hospital that: 
 45.24     (1) is either located in a rural area, as defined in the 
 45.25  federal Medicare regulations, Code of Federal Regulations, title 
 45.26  42, section 405.1041, or located in a community with a 
 45.27  population of less than 5,000, according to United States Census 
 45.28  Bureau statistics, outside the seven-county metropolitan area; 
 45.29     (2) has 100 50 or fewer beds; and 
 45.30     (3) is not for profit; and 
 45.31     (4) has not been awarded a grant under the federal rural 
 45.32  health transition grant program, which would be received 
 45.33  concurrently with any portion of the grant period for this 
 45.34  program. 
 45.35     Sec. 39.  Minnesota Statutes 1996, section 144.147, 
 45.36  subdivision 2, is amended to read: 
 46.1      Subd. 2.  [GRANTS AUTHORIZED.] The commissioner shall 
 46.2   establish a program of grants to assist eligible rural 
 46.3   hospitals.  The commissioner shall award grants to hospitals and 
 46.4   communities for the purposes set forth in paragraphs (a) and (b).
 46.5      (a) Grants may be used by hospitals and their communities 
 46.6   to develop strategic plans for preserving or enhancing access to 
 46.7   health services.  At a minimum, a strategic plan must consist of:
 46.8      (1) a needs assessment to determine what health services 
 46.9   are needed and desired by the community.  The assessment must 
 46.10  include interviews with or surveys of area health professionals, 
 46.11  local community leaders, and public hearings; 
 46.12     (2) an assessment of the feasibility of providing needed 
 46.13  health services that identifies priorities and timeliness for 
 46.14  potential changes; and 
 46.15     (3) an implementation plan.  
 46.16     The strategic plan must be developed by a committee that 
 46.17  includes representatives from the hospital, local public health 
 46.18  agencies, other health providers, and consumers from the 
 46.19  community.  
 46.20     (b) The grants may also be used by eligible rural hospitals 
 46.21  that have developed strategic plans to implement transition 
 46.22  projects to modify the type and extent of services provided, in 
 46.23  order to reflect the needs of that plan.  Grants may be used by 
 46.24  hospitals under this paragraph to develop hospital-based 
 46.25  physician practices that integrate hospital and existing medical 
 46.26  practice facilities that agree to transfer their practices, 
 46.27  equipment, staffing, and administration to the hospital.  The 
 46.28  grants may also be used by the hospital to establish a health 
 46.29  provider cooperative, a telemedicine system, or a rural health 
 46.30  care system.  Not more than one-third of any grant shall be used 
 46.31  to offset losses incurred by physicians agreeing to transfer 
 46.32  their practices to hospitals.  
 46.33     Sec. 40.  Minnesota Statutes 1996, section 144.147, 
 46.34  subdivision 3, is amended to read: 
 46.35     Subd. 3.  [CONSIDERATION OF GRANTS.] In determining which 
 46.36  hospitals will receive grants under this section, the 
 47.1   commissioner shall take into account:  
 47.2      (1) improving community access to hospital or health 
 47.3   services; 
 47.4      (2) changes in service populations; 
 47.5      (3) demand for ambulatory and emergency services; 
 47.6      (4) the extent that the health needs of the community are 
 47.7   not currently being met by other providers in the service area; 
 47.8      (5) the need to recruit and retain health professionals; 
 47.9      (6) the involvement and extent of community support of the 
 47.10  community and local health care providers; and 
 47.11     (7) the coordination with local community organizations, 
 47.12  such as community development and public health agencies; and 
 47.13     (8) the financial condition of the hospital. 
 47.14     Sec. 41.  Minnesota Statutes 1996, section 144.147, 
 47.15  subdivision 4, is amended to read: 
 47.16     Subd. 4.  [ALLOCATION OF GRANTS.] (a) Eligible hospitals 
 47.17  must apply to the commissioner no later than September 1 of each 
 47.18  fiscal year for grants awarded for that fiscal year.  A grant 
 47.19  may be awarded upon signing of a grant contract. 
 47.20     (b) The commissioner must make a final decision on the 
 47.21  funding of each application within 60 days of the deadline for 
 47.22  receiving applications. 
 47.23     (c) Each relevant community health board has 30 days in 
 47.24  which to review and comment to the commissioner on grant 
 47.25  applications from hospitals in their community health service 
 47.26  area. 
 47.27     (d) In determining which hospitals will receive grants 
 47.28  under this section, the commissioner shall consider the 
 47.29  following factors: 
 47.30     (1) Description of the problem, description of the project, 
 47.31  and the likelihood of successful outcome of the project.  The 
 47.32  applicant must explain clearly the nature of the health services 
 47.33  problems in their service area, how the grant funds will be 
 47.34  used, what will be accomplished, and the results expected.  The 
 47.35  applicant should describe achievable objectives, a timetable, 
 47.36  and roles and capabilities of responsible individuals and 
 48.1   organizations. 
 48.2      (2) The extent of community support for the hospital and 
 48.3   this proposed project.  The applicant should demonstrate support 
 48.4   for the hospital and for the proposed project from other local 
 48.5   health service providers and from local community and government 
 48.6   leaders.  Evidence of such support may include past commitments 
 48.7   of financial support from local individuals, organizations, or 
 48.8   government entities; and commitment of financial support, 
 48.9   in-kind services or cash, for this project. 
 48.10     (3) The comments, if any, resulting from a review of the 
 48.11  application by the community health board in whose community 
 48.12  health service area the hospital is located. 
 48.13     (e) In evaluating applications, the commissioner shall 
 48.14  score each application on a 100 point scale, assigning the 
 48.15  maximum of 70 points for an applicant's understanding of the 
 48.16  problem, description of the project, and likelihood of 
 48.17  successful outcome of the project; and a maximum of 30 points 
 48.18  for the extent of community support for the hospital and this 
 48.19  project.  The commissioner may also take into account other 
 48.20  relevant factors. 
 48.21     (f) A grant to a hospital, including hospitals that submit 
 48.22  applications as consortia, may not exceed $37,500 $50,000 a year 
 48.23  and may not exceed a term of two years.  Prior to the receipt of 
 48.24  any grant, the hospital must certify to the commissioner that at 
 48.25  least one-half of the amount, which may include in-kind 
 48.26  services, is available for the same purposes from nonstate 
 48.27  sources.  A hospital receiving a grant under this section may 
 48.28  use the grant for any expenses incurred in the development of 
 48.29  strategic plans or the implementation of transition projects 
 48.30  with respect to which the grant is made.  Project grants may not 
 48.31  be used to retire debt incurred with respect to any capital 
 48.32  expenditure made prior to the date on which the project is 
 48.33  initiated. 
 48.34     (g) The commissioner may adopt rules to implement this 
 48.35  section. 
 48.36     Sec. 42.  [144.1475] [RURAL HOSPITAL DEMONSTRATION 
 49.1   PROJECT.] 
 49.2      Subdivision 1.  [ESTABLISHMENT.] The commissioner of 
 49.3   health, for the biennium ending June 30, 1999, shall establish 
 49.4   at least three demonstration projects per fiscal year to assist 
 49.5   rural hospitals in the planning and implementation process to 
 49.6   either consolidate or cooperate with another existing hospital 
 49.7   in its service area to provide better quality health care to its 
 49.8   community.  A demonstration project must include at least two 
 49.9   eligible hospitals.  For purposes of this section, an "eligible 
 49.10  hospital" means a hospital that:  
 49.11     (1) is located outside the seven-county metropolitan area; 
 49.12     (2) has 50 or fewer licensed beds; and 
 49.13     (3) is located within a 25-mile radius of another hospital. 
 49.14     At least one of the eligible hospitals in a demonstration 
 49.15  project must have had a negative operating margin during one of 
 49.16  the two years prior to application.  
 49.17     Subd. 2.  [APPLICATION.] (a) An eligible hospital seeking 
 49.18  to be a participant in a demonstration project must submit an 
 49.19  application to the commissioner of health detailing the 
 49.20  hospital's efforts to consolidate health care delivery in its 
 49.21  service area, cooperate with another hospital in the delivery of 
 49.22  health care, or both consolidate and cooperate.  Applications 
 49.23  must be submitted by October 15 of each fiscal year for grants 
 49.24  awarded for that fiscal year. 
 49.25     (b) Applications must:  
 49.26     (1) describe the problem that the proposed consolidation or 
 49.27  cooperation will address, the consolidation or cooperation 
 49.28  project, how the grant funds will be used, what will be 
 49.29  accomplished, and the results expected; 
 49.30     (2) describe achievable objectives, a timetable, and the 
 49.31  roles and capabilities of responsible individuals and 
 49.32  organizations; 
 49.33     (3) include written commitments from the applicant hospital 
 49.34  and at least one other hospital that will participate in the 
 49.35  consolidation or cooperation demonstration project, that specify 
 49.36  the activities the organization will undertake during the 
 50.1   project, the resources the organization will contribute to the 
 50.2   demonstration project, and the expected role and nature of the 
 50.3   organization's involvement in proposed consolidation or 
 50.4   cooperation activities; and 
 50.5      (4) provide evidence of support for the proposed project 
 50.6   from other local health service providers and from local 
 50.7   community and government leaders. 
 50.8      Subd. 3.  [GRANTS.] The commissioner of health shall 
 50.9   allocate a grant of up to $100,000 to the highest scoring 
 50.10  applicants each year until available funding is expended.  
 50.11  Grants may be used by eligible hospitals to: 
 50.12     (1) conduct consolidation or cooperation negotiations; 
 50.13     (2) develop consolidation or cooperation plans, including 
 50.14  financial plans and architectural designs; 
 50.15     (3) seek community input and conduct community education on 
 50.16  proposed or planned consolidations or cooperative activities; 
 50.17  and 
 50.18     (4) implement consolidation or cooperation plans. 
 50.19     Subd. 4.  [CONSIDERATION OF GRANTS.] In evaluating 
 50.20  applications, the commissioner shall score each application on a 
 50.21  100 point scale, assigning:  a maximum of 40 points for an 
 50.22  applicant's understanding of the problem, description of the 
 50.23  project, and likelihood of successful outcome of the project; a 
 50.24  maximum of 30 points for explicit and unequivocal written 
 50.25  commitments from organizations participating in the project; a 
 50.26  maximum of 20 points for matching funds or in-kind services 
 50.27  committed by the applicant or others to the project; and a 
 50.28  maximum of ten points for the extent of community support for 
 50.29  the project.  The commissioner shall consider the comments, if 
 50.30  any, resulting from a review of the application by the community 
 50.31  health board in whose community health service area the 
 50.32  applicant is located.  The commissioner may also take into 
 50.33  account other relevant factors. 
 50.34     Subd. 5.  [EVALUATION.] The commissioner of health shall 
 50.35  evaluate the overall effectiveness of the demonstration projects 
 50.36  and report to the legislature by September 1, 2000.  The 
 51.1   commissioner may collect, from the hospitals receiving grants, 
 51.2   any information necessary to evaluate the demonstration project. 
 51.3      Sec. 43.  [144.148] [RURAL HOSPITAL CAPITAL IMPROVEMENT 
 51.4   GRANT AND LOAN PROGRAM.] 
 51.5      Subdivision 1.  [DEFINITION.] (a) For purposes of this 
 51.6   section, the following definitions apply. 
 51.7      (b) "Eligible rural hospital" means a hospital that: 
 51.8      (1) is located outside the seven-county metropolitan area; 
 51.9      (2) has 50 or fewer licensed hospital beds with a net 
 51.10  hospital operating margin not greater than two percent in the 
 51.11  two fiscal years prior to application; and 
 51.12     (3) is 25 miles or more from another hospital. 
 51.13     (c) "Eligible project" means a modernization project to 
 51.14  update, remodel, or replace aging hospital facilities and 
 51.15  equipment necessary to maintain the operations of a hospital. 
 51.16     Subd. 2.  [PROGRAM.] The commissioner of health shall award 
 51.17  rural hospital capital improvement grants or loans to eligible 
 51.18  rural hospitals.  A grant or loan shall not exceed $1,500,000 
 51.19  per hospital.  Grants or loans shall be interest free.  An 
 51.20  eligible rural hospital may apply the funds retroactively to 
 51.21  capital improvements made during the two fiscal years preceding 
 51.22  the fiscal year in which the grant or loan was received, 
 51.23  provided the hospital met the eligibility criteria during that 
 51.24  time period.  
 51.25     Subd. 3.  [APPLICATIONS.] Eligible hospitals seeking a 
 51.26  grant or loan shall apply to the commissioner.  Applications 
 51.27  must include a description of the problem that the proposed 
 51.28  project will address, a description of the project including 
 51.29  construction and remodeling drawings or specifications, sources 
 51.30  of funds for the project, uses of funds for the project, the 
 51.31  results expected, and a plan to maintain or operate any facility 
 51.32  or equipment included in the project.  The applicant must 
 51.33  describe achievable objectives, a timetable, and roles and 
 51.34  capabilities of responsible individuals and organization.  
 51.35  Applicants must submit to the commissioner evidence that 
 51.36  competitive bidding was used to select contractors for the 
 52.1   project.  
 52.2      Subd. 4.  [CONSIDERATION OF APPLICATIONS.] The commissioner 
 52.3   shall review each application to determine whether or not the 
 52.4   hospital's application is complete and whether the hospital and 
 52.5   the project are eligible for a grant or loan.  In evaluating 
 52.6   applications, the commissioner shall score each application on a 
 52.7   100 point scale, assigning:  a maximum of 40 points for an 
 52.8   applicant's clarity and thoroughness in describing the problem 
 52.9   and the project; a maximum of 40 points for the extent to which 
 52.10  the applicant has demonstrated that it has made adequate 
 52.11  provisions to assure proper and efficient operation of the 
 52.12  facility once the project is completed; and a maximum of 20 
 52.13  points for the extent to which the proposed project is 
 52.14  consistent with the hospital's capital improvement plan or 
 52.15  strategic plan.  The commissioner may also take into account 
 52.16  other relevant factors.  During application review, the 
 52.17  commissioner may request additional information about a proposed 
 52.18  project, including information on project cost.  Failure to 
 52.19  provide the information requested disqualifies a loan applicant. 
 52.20     Subd. 5.  [PROGRAM OVERSIGHT.] The commissioner of health 
 52.21  shall review audited financial information of the hospital to 
 52.22  assess eligibility.  The commissioner shall determine the amount 
 52.23  of a grant or loan to be given to an eligible rural hospital 
 52.24  based on the relative score of each eligible hospital's 
 52.25  application and the funds available to the commissioner.  The 
 52.26  grant or loan shall be used to update, remodel, or replace aging 
 52.27  facilities and equipment necessary to maintain the operations of 
 52.28  the hospital.  
 52.29     Subd. 6.  [LOAN PAYMENT.] Loans shall be repaid as provided 
 52.30  in this subdivision over a period of 15 years.  In those years 
 52.31  when an eligible rural hospital experiences a positive net 
 52.32  operating margin in excess of two percent, the eligible rural 
 52.33  hospital shall pay to the state one-half of the excess above two 
 52.34  percent, up to the yearly payment amount based upon a loan 
 52.35  period of 15 years.  If the amount paid back in any year is less 
 52.36  than the yearly payment amount, or if no payment is required 
 53.1   because the eligible rural hospital does not experience a 
 53.2   positive net operating margin in excess of two percent, the 
 53.3   amount unpaid for that year shall be forgiven by the state 
 53.4   without any financial penalty.  As a condition of receiving an 
 53.5   award through this program, eligible hospitals must agree to any 
 53.6   and all collection activities the commissioner finds necessary 
 53.7   to collect loan payments in those years a payment is due. 
 53.8      Subd. 7.  [ACCOUNTING TREATMENT.] The commissioner of 
 53.9   finance shall record as grants in the state accounting system 
 53.10  funds obligated by this section.  Loan payments received under 
 53.11  this section shall be deposited in the health care access fund. 
 53.12     Subd. 8.  [EXPIRATION.] This section expires June 30, 1999. 
 53.13     Sec. 44.  Minnesota Statutes 1996, section 144.1484, 
 53.14  subdivision 1, is amended to read: 
 53.15     Subdivision 1.  [SOLE COMMUNITY HOSPITAL FINANCIAL 
 53.16  ASSISTANCE GRANTS.] The commissioner of health shall award 
 53.17  financial assistance grants to rural hospitals in isolated areas 
 53.18  of the state.  To qualify for a grant, a hospital must:  (1) be 
 53.19  eligible to be classified as a sole community hospital according 
 53.20  to the criteria in Code of Federal Regulations, title 42, 
 53.21  section 412.92 or be located in a community with a population of 
 53.22  less than 5,000 and located more than 25 miles from a like 
 53.23  hospital currently providing acute short-term services; (2) have 
 53.24  experienced net operating income losses in the two of the 
 53.25  previous three most recent consecutive hospital fiscal years for 
 53.26  which audited financial information is available; (3) consist of 
 53.27  40 or fewer licensed beds; and (4) demonstrate to the 
 53.28  commissioner that it has obtained local support for the hospital 
 53.29  and that any state support awarded under this program will not 
 53.30  be used to supplant local support for the hospital.  The 
 53.31  commissioner shall review audited financial statements of the 
 53.32  hospital to assess the extent of local support.  Evidence of 
 53.33  local support may include bonds issued by a local government 
 53.34  entity such as a city, county, or hospital district for the 
 53.35  purpose of financing hospital projects; and loans, grants, or 
 53.36  donations to the hospital from local government entities, 
 54.1   private organizations, or individuals.  The commissioner shall 
 54.2   determine the amount of the award to be given to each eligible 
 54.3   hospital based on the hospital's operating loss margin (total 
 54.4   operating losses as a percentage of total operating revenue) for 
 54.5   the two of the previous three most recent consecutive fiscal 
 54.6   years for which audited financial information is available and 
 54.7   the total amount of funding available.  For purposes of 
 54.8   calculating a hospital's operating loss margin, total operating 
 54.9   revenue does not include grant funding provided under this 
 54.10  subdivision.  One hundred percent of the available funds will be 
 54.11  disbursed proportionately based on the operating loss margins of 
 54.12  the eligible hospitals. 
 54.13     Sec. 45.  Minnesota Statutes 1996, section 256.045, 
 54.14  subdivision 3a, is amended to read: 
 54.15     Subd. 3a.  [PREPAID HEALTH PLAN APPEALS.] (a) All prepaid 
 54.16  health plans under contract to the commissioner under chapter 
 54.17  256B or 256D must provide for a complaint system according to 
 54.18  section 62D.11.  When a prepaid health plan denies, reduces, or 
 54.19  terminates a health service or denies a request to authorize a 
 54.20  previously authorized health service, the prepaid health plan 
 54.21  must notify the recipient of the right to file a complaint or an 
 54.22  appeal.  The notice must include the name and telephone number 
 54.23  of the ombudsman and notice of the recipient's right to request 
 54.24  a hearing under paragraph (b).  When a complaint is filed, the 
 54.25  prepaid health plan must notify the ombudsman within three 
 54.26  working days.  Recipients may request the assistance of the 
 54.27  ombudsman in the complaint system process.  The prepaid health 
 54.28  plan must issue a written resolution of the complaint to the 
 54.29  recipient within 30 days after the complaint is filed with the 
 54.30  prepaid health plan.  A recipient is not required to exhaust the 
 54.31  complaint system procedures in order to request a hearing under 
 54.32  paragraph (b). 
 54.33     (b) Recipients enrolled in a prepaid health plan under 
 54.34  chapter 256B or 256D may contest a prepaid health plan's denial, 
 54.35  reduction, or termination of health services, a prepaid health 
 54.36  plan's denial of a request to authorize a previously authorized 
 55.1   health service, or the prepaid health plan's written resolution 
 55.2   of a complaint by submitting a written request for a hearing 
 55.3   according to subdivision 3.  A state human services referee 
 55.4   shall conduct a hearing on the matter and shall recommend an 
 55.5   order to the commissioner of human services.  The commissioner 
 55.6   need not grant a hearing if the sole issue raised by a recipient 
 55.7   is the commissioner's authority to require mandatory enrollment 
 55.8   in a prepaid health plan in a county where prepaid health plans 
 55.9   are under contract with the commissioner.  The state human 
 55.10  services referee may order a second medical opinion from the 
 55.11  prepaid health plan or may order a second medical opinion from a 
 55.12  nonprepaid health plan provider at the expense of the prepaid 
 55.13  health plan.  Recipients may request the assistance of the 
 55.14  ombudsman in the appeal process. 
 55.15     (c) In the written request for a hearing to appeal from a 
 55.16  prepaid health plan's denial, reduction, or termination of a 
 55.17  health service, a prepaid health plan's denial of a request to 
 55.18  authorize a previously authorized service, or the prepaid health 
 55.19  plan's written resolution to a complaint, a recipient may 
 55.20  request an expedited hearing.  If an expedited appeal is 
 55.21  warranted, the state human services referee shall hear the 
 55.22  appeal and render a decision within a time commensurate with the 
 55.23  level of urgency involved, based on the individual circumstances 
 55.24  of the case. 
 55.25     Sec. 46.  Minnesota Statutes 1996, section 256.9363, 
 55.26  subdivision 1, is amended to read: 
 55.27     Subdivision 1.  [SELECTION OF VENDORS.] In order to contain 
 55.28  costs, the commissioner of human services shall select vendors 
 55.29  of medical care who can provide the most economical care 
 55.30  consistent with high medical standards and shall, where 
 55.31  possible, contract with organizations on a prepaid capitation 
 55.32  basis to provide these services.  The commissioner shall 
 55.33  consider proposals by counties and vendors for managed care 
 55.34  plans which may include:  prepaid capitation programs, 
 55.35  competitive bidding programs, or other vendor payment mechanisms 
 55.36  designed to provide services in an economical manner or to 
 56.1   control utilization, with safeguards to ensure that necessary 
 56.2   services are provided.  Managed care plans may include 
 56.3   integrated service networks as defined in section 62N.02. 
 56.4      Sec. 47.  Minnesota Statutes 1996, section 256.9657, 
 56.5   subdivision 3, is amended to read: 
 56.6      Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY 
 56.7   INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 
 56.8   1992, each health maintenance organization with a certificate of 
 56.9   authority issued by the commissioner of health under chapter 62D 
 56.10  and each integrated service network and community integrated 
 56.11  service network licensed by the commissioner under chapter 62N 
 56.12  shall pay to the commissioner of human services a surcharge 
 56.13  equal to six-tenths of one percent of the total premium revenues 
 56.14  of the health maintenance organization, integrated service 
 56.15  network, or community integrated service network as reported to 
 56.16  the commissioner of health according to the schedule in 
 56.17  subdivision 4.  
 56.18     (b) For purposes of this subdivision, total premium revenue 
 56.19  means: 
 56.20     (1) premium revenue recognized on a prepaid basis from 
 56.21  individuals and groups for provision of a specified range of 
 56.22  health services over a defined period of time which is normally 
 56.23  one month, excluding premiums paid to a health maintenance 
 56.24  organization, integrated service network, or community 
 56.25  integrated service network from the Federal Employees Health 
 56.26  Benefit Program; 
 56.27     (2) premiums from Medicare wrap-around subscribers for 
 56.28  health benefits which supplement Medicare coverage; 
 56.29     (3) Medicare revenue, as a result of an arrangement between 
 56.30  a health maintenance organization, an integrated service 
 56.31  network, or a community integrated service network and the 
 56.32  health care financing administration of the federal Department 
 56.33  of Health and Human Services, for services to a Medicare 
 56.34  beneficiary; and 
 56.35     (4) medical assistance revenue, as a result of an 
 56.36  arrangement between a health maintenance organization, 
 57.1   integrated service network, or community integrated service 
 57.2   network and a Medicaid state agency, for services to a medical 
 57.3   assistance beneficiary. 
 57.4      If advance payments are made under clause (1) or (2) to the 
 57.5   health maintenance organization, integrated service network, or 
 57.6   community integrated service network for more than one reporting 
 57.7   period, the portion of the payment that has not yet been earned 
 57.8   must be treated as a liability. 
 57.9      (c) When a health maintenance organization or an integrated 
 57.10  service network or community integrated service network merges 
 57.11  or consolidates with or is acquired by another health 
 57.12  maintenance organization, integrated service network, or 
 57.13  community integrated service network, the surviving corporation 
 57.14  or the new corporation shall be responsible for the annual 
 57.15  surcharge originally imposed on each of the entities or 
 57.16  corporations subject to the merger, consolidation, or 
 57.17  acquisition, regardless of whether one of the entities or 
 57.18  corporations does not retain a certificate of authority under 
 57.19  chapter 62D or a license under chapter 62N. 
 57.20     (d) Effective July 1 of each year, the surviving 
 57.21  corporation's or the new corporation's surcharge shall be based 
 57.22  on the revenues earned in the second previous calendar year by 
 57.23  all of the entities or corporations subject to the merger, 
 57.24  consolidation, or acquisition regardless of whether one of the 
 57.25  entities or corporations does not retain a certificate of 
 57.26  authority under chapter 62D or a license under chapter 62N until 
 57.27  the total premium revenues of the surviving corporation include 
 57.28  the total premium revenues of all the merged entities as 
 57.29  reported to the commissioner of health. 
 57.30     (e) When a health maintenance organization, integrated 
 57.31  service network, or community integrated service network, which 
 57.32  is subject to liability for the surcharge under this chapter, 
 57.33  transfers, assigns, sells, leases, or disposes of all or 
 57.34  substantially all of its property or assets, liability for the 
 57.35  surcharge imposed by this chapter is imposed on the transferee, 
 57.36  assignee, or buyer of the health maintenance organization, 
 58.1   integrated service network, or community integrated service 
 58.2   network. 
 58.3      (f) In the event a health maintenance organization, 
 58.4   integrated service network, or community integrated service 
 58.5   network converts its licensure to a different type of entity 
 58.6   subject to liability for the surcharge under this chapter, but 
 58.7   survives in the same or substantially similar form, the 
 58.8   surviving entity remains liable for the surcharge regardless of 
 58.9   whether one of the entities or corporations does not retain a 
 58.10  certificate of authority under chapter 62D or a license under 
 58.11  chapter 62N. 
 58.12     (g) The surcharge assessed to a health maintenance 
 58.13  organization, integrated service network, or community 
 58.14  integrated service network ends when the entity ceases providing 
 58.15  services for premiums and the cessation is not connected with a 
 58.16  merger, consolidation, acquisition, or conversion. 
 58.17     Sec. 48.  [MEIP STUDY.] 
 58.18     The commissioner of employee relations shall study the 
 58.19  current Minnesota employees insurance program (MEIP) and report 
 58.20  to the legislature by January 15, 1998, on recommendations on 
 58.21  whether this program provides greater accessibility to small 
 58.22  employers for purchasing health insurance and, if not, whether 
 58.23  the program could be modified in terms of underwriting, 
 58.24  marketing, and advertising to create a program that would 
 58.25  provide a cost incentive for small employers to purchase health 
 58.26  coverage through this program. 
 58.27     Sec. 49.  [REVISOR INSTRUCTIONS.] 
 58.28     The revisor of statutes shall delete references to 
 58.29  "integrated service network," but not "community integrated 
 58.30  service network," wherever it appears in Minnesota Statutes and 
 58.31  make conforming changes as necessary. 
 58.32     Sec. 50.  [REPEALER.] 
 58.33     (a) Minnesota Statutes 1996, sections 62J.04, subdivisions 
 58.34  4 and 7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 
 58.35  62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 
 58.36  8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 
 59.1   62N.071; 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 
 59.2   62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 
 59.3   62N.24; 62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41 
 59.4   and 147.01, subdivision 6, are repealed. 
 59.5      (b) Laws 1993, chapter 247, article 4, section 8; Laws 
 59.6   1995, chapter 96, section 2; and Laws 1995, First Special 
 59.7   Session chapter 3, article 13, section 2, are repealed. 
 59.8      (c) Laws 1994, chapter 625, article 5, section 5, as 
 59.9   amended by Laws 1995, chapter 234, article 3, section 8, is 
 59.10  repealed. 
 59.11     Sec. 51.  [EFFECTIVE DATE.] 
 59.12     Section 15 [62J.25] is effective the day following final 
 59.13  enactment. 
 59.14                             ARTICLE 3 
 59.15                        MINNESOTACARE TAXES 
 59.16     Section 1.  [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS 
 59.17  FUND.] 
 59.18     Subdivision 1.  [ESTABLISH RESERVE.] The federal 
 59.19  contingency reserve is established within the health care access 
 59.20  fund for uses necessary to preserve access to basic health care 
 59.21  services when federal funding is significantly reduced. 
 59.22     Subd. 2.  [RESERVE FINANCING.] The funds in reserve shall 
 59.23  be equal to the amount of federal financial participation 
 59.24  received since July 1, 1995, for services and administrative 
 59.25  activities funded by the health care access fund up to a reserve 
 59.26  limit of $150,000,000.  Investment income attributed to the 
 59.27  federal contingency reserve balances shall also be included in 
 59.28  the total reserve amount. 
 59.29     Subd. 3.  [PERMITTED USE.] The federal contingency reserve 
 59.30  is established to protect access to basic health care services 
 59.31  that are publicly funded.  Funds held in the federal contingency 
 59.32  reserve are available for appropriation in the event that 
 59.33  federal funds for basic health care services are significantly 
 59.34  reduced such as under federal reform or other significant 
 59.35  changes to federal law. 
 59.36     Subd. 4.  [LIMITS ON USE.] The federal contingency reserve 
 60.1   is not available for supplementing reductions in federal funding 
 60.2   resulting from application of current federal law funding 
 60.3   formulas, for funding long-term care services, or for replacing 
 60.4   existing general fund commitments. 
 60.5      Sec. 2.  Minnesota Statutes 1996, section 60A.15, 
 60.6   subdivision 1, is amended to read: 
 60.7      Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
 60.8   before April 1, June 1, and December 1 of each year, every 
 60.9   domestic and foreign company, including town and farmers' mutual 
 60.10  insurance companies, domestic mutual insurance companies, marine 
 60.11  insurance companies, health maintenance organizations, 
 60.12  integrated service networks, community integrated service 
 60.13  networks, and nonprofit health service plan corporations, shall 
 60.14  pay to the commissioner of revenue installments equal to 
 60.15  one-third of the insurer's total estimated tax for the current 
 60.16  year.  Except as provided in paragraphs (d) and (e), 
 60.17  installments must be based on a sum equal to two percent of the 
 60.18  premiums described in paragraph (b). 
 60.19     (b) Installments under paragraph (a), (d), or (e) are 
 60.20  percentages of gross premiums less return premiums on all direct 
 60.21  business received by the insurer in this state, or by its agents 
 60.22  for it, in cash or otherwise, during such year. 
 60.23     (c) Failure of a company to make payments of at least 
 60.24  one-third of either (1) the total tax paid during the previous 
 60.25  calendar year or (2) 80 percent of the actual tax for the 
 60.26  current calendar year shall subject the company to the penalty 
 60.27  and interest provided in this section, unless the total tax for 
 60.28  the current tax year is $500 or less. 
 60.29     (d) For health maintenance organizations, nonprofit health 
 60.30  services service plan corporations, integrated service networks, 
 60.31  and community integrated service networks, the installments must 
 60.32  be based on an amount equal to one percent of premiums described 
 60.33  in paragraph (b) that are paid after December 31, 
 60.34  1995 determined by the commissioner of finance as described 
 60.35  under paragraph (g). 
 60.36     (e) For purposes of computing installments for town and 
 61.1   farmers' mutual insurance companies and for mutual property 
 61.2   casualty companies with total assets on December 31, 1989, of 
 61.3   $1,600,000,000 or less, the following rates apply: 
 61.4      (1) for all life insurance, two percent; 
 61.5      (2) for town and farmers' mutual insurance companies and 
 61.6   for mutual property and casualty companies with total assets of 
 61.7   $5,000,000 or less, on all other coverages, one percent; and 
 61.8      (3) for mutual property and casualty companies with total 
 61.9   assets on December 31, 1989, of $1,600,000,000 or less, on all 
 61.10  other coverages, 1.26 percent. 
 61.11     (f) Premiums under medical assistance, general assistance 
 61.12  medical care, the MinnesotaCare program, and the Minnesota 
 61.13  comprehensive health insurance plan and all payments, revenues, 
 61.14  and reimbursements received from the federal government for 
 61.15  Medicare-related coverage as defined in section 62A.31, 
 61.16  subdivision 3, paragraph (e), are not subject to tax under this 
 61.17  section. 
 61.18     (g) The commissioner of finance shall determine the balance 
 61.19  of the health care access fund on September 1 of each year 
 61.20  beginning September 1, 1999.  If the commissioner determines 
 61.21  that there is no structural deficit for the next fiscal year, no 
 61.22  tax shall be imposed under paragraph (d).  If the commissioner 
 61.23  determines that there will be a structural deficit in the fund 
 61.24  for the following fiscal year, then the commissioner, in 
 61.25  consultation with the commissioner of revenue, shall determine 
 61.26  the amount needed to eliminate the structural deficit and a tax 
 61.27  shall be imposed under paragraph (d).  The commissioner shall 
 61.28  determine the rate of the tax as either one-quarter of one 
 61.29  percent, one-half of one percent, three-quarters of one percent, 
 61.30  or one percent of premiums described in paragraph (b), whichever 
 61.31  is the lowest of those rates that the commissioner determines 
 61.32  will produce sufficient revenue to eliminate the projected 
 61.33  structural deficit.  The commissioner of finance shall publish 
 61.34  in the State Register by October 1 of each year the amount of 
 61.35  tax to be imposed for the following calendar year. 
 61.36     (h) In approving the premium rates as required in sections 
 62.1   62L.08, subdivision 8, and 62A.65, subdivision 3, the 
 62.2   commissioners of health and commerce shall ensure that any 
 62.3   exemption from the tax as described in paragraph (g) is 
 62.4   reflected in the premium rate. 
 62.5      Sec. 3.  Minnesota Statutes 1996, section 256.9352, 
 62.6   subdivision 3, is amended to read: 
 62.7      Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
 62.8   shall manage spending for the MinnesotaCare program in a manner 
 62.9   that maintains a minimum reserve equal to five percent of the 
 62.10  expected cost of state premium subsidies in accordance with 
 62.11  section 16A.76.  The commissioner must make a quarterly 
 62.12  assessment of the expected expenditures for the covered services 
 62.13  for the remainder of the current biennium and for the following 
 62.14  biennium.  The estimated expenditure, including minimum the 
 62.15  reserve requirements described in section 16A.76, shall be 
 62.16  compared to an estimate of the revenues that will be deposited 
 62.17  in the health care access fund.  Based on this comparison, and 
 62.18  after consulting with the chairs of the house ways and means 
 62.19  committee and the senate finance committee, and the legislative 
 62.20  commission on health care access, the commissioner shall, as 
 62.21  necessary, make the adjustments specified in paragraph (b) to 
 62.22  ensure that expenditures remain within the limits of available 
 62.23  revenues for the remainder of the current biennium and for the 
 62.24  following biennium.  The commissioner shall not hire additional 
 62.25  staff using appropriations from the health care access fund 
 62.26  until the commissioner of finance makes a determination that the 
 62.27  adjustments implemented under paragraph (b) are sufficient to 
 62.28  allow MinnesotaCare expenditures to remain within the limits of 
 62.29  available revenues for the remainder of the current biennium and 
 62.30  for the following biennium. 
 62.31     (b) The adjustments the commissioner shall use must be 
 62.32  implemented in this order:  first, stop enrollment of single 
 62.33  adults and households without children; second, upon 45 days' 
 62.34  notice, stop coverage of single adults and households without 
 62.35  children already enrolled in the MinnesotaCare program; third, 
 62.36  upon 90 days' notice, decrease the premium subsidy amounts by 
 63.1   ten percent for families with gross annual income above 200 
 63.2   percent of the federal poverty guidelines; fourth, upon 90 days' 
 63.3   notice, decrease the premium subsidy amounts by ten percent for 
 63.4   families with gross annual income at or below 200 percent; and 
 63.5   fifth, require applicants to be uninsured for at least six 
 63.6   months prior to eligibility in the MinnesotaCare program.  If 
 63.7   these measures are insufficient to limit the expenditures to the 
 63.8   estimated amount of revenue, the commissioner shall further 
 63.9   limit enrollment or decrease premium subsidies. 
 63.10     The reserve referred to in this subdivision is appropriated 
 63.11  to the commissioner but may only be used upon approval of the 
 63.12  commissioner of finance, if estimated costs will exceed the 
 63.13  forecasted amount of available revenues after all adjustments 
 63.14  authorized under this subdivision have been made. 
 63.15     By February 1, 1995, the department of human services and 
 63.16  the department of health shall develop a plan to adjust benefit 
 63.17  levels, eligibility guidelines, or other steps necessary to 
 63.18  ensure that expenditures for the MinnesotaCare program are 
 63.19  contained within the two percent taxes imposed under section 
 63.20  295.52 and the gross premiums tax imposed under section 60A.15, 
 63.21  subdivision 1, paragraph (e), for fiscal year 1997.  
 63.22     (c) Notwithstanding paragraphs (a) and (b), the 
 63.23  commissioner shall proceed with the enrollment of single adults 
 63.24  and households without children in accordance with section 
 63.25  256.9354, subdivision 5, paragraph (a), even if the expenditures 
 63.26  do not remain within the limits of available revenues through 
 63.27  fiscal year 1997 to allow the departments of human services and 
 63.28  health to develop the plan required under paragraph (b). 
 63.29     Sec. 4.  Minnesota Statutes 1996, section 295.50, 
 63.30  subdivision 3, is amended to read: 
 63.31     Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
 63.32  amounts received in money or otherwise by: 
 63.33     (1) a hospital for resident and nonresident patient 
 63.34  services; 
 63.35     (2) a surgical center for resident and nonresident patient 
 63.36  services; 
 64.1      (3) a health care provider, other than a staff model health 
 64.2   carrier, for resident and nonresident patient services; 
 64.3      (4) a wholesale drug distributor for sale or distribution 
 64.4   of legend drugs that are delivered:  (i) to a Minnesota resident 
 64.5   by a wholesale drug distributor who is a nonresident pharmacy 
 64.6   directly, by common carrier, or by mail; or (ii) in Minnesota by 
 64.7   the wholesale drug distributor, by common carrier, or by mail, 
 64.8   unless the legend drugs are delivered to another wholesale drug 
 64.9   distributor who sells legend drugs exclusively at wholesale.  
 64.10  Legend drugs do not include nutritional products as defined in 
 64.11  Minnesota Rules, part 9505.0325; and 
 64.12     (5) a staff model health plan company as gross premiums for 
 64.13  enrollees, copayments, deductibles, coinsurance, and fees for 
 64.14  resident and nonresident patient services covered under its 
 64.15  contracts with groups and enrollees; and 
 64.16     (6) a pharmacy for medical supplies, appliances, and 
 64.17  equipment. 
 64.18     Sec. 5.  Minnesota Statutes 1996, section 295.50, 
 64.19  subdivision 4, is amended to read: 
 64.20     Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
 64.21  provider" means: 
 64.22     (1) a person whose health care occupation is regulated or 
 64.23  required to be regulated by the state of Minnesota furnishing 
 64.24  any or all of the following goods or services directly to a 
 64.25  patient or consumer:  medical, surgical, optical, visual, 
 64.26  dental, hearing, nursing services, drugs, medical supplies, 
 64.27  medical appliances, laboratory, diagnostic or therapeutic 
 64.28  services, or any; (2) a person who provides goods and services 
 64.29  not listed above in clause (1) that qualify for reimbursement 
 64.30  under the medical assistance program provided under chapter 
 64.31  256B.  For purposes of this clause, "directly to a patient or 
 64.32  consumer" includes goods and services provided in connection 
 64.33  with independent medical examinations under section 65B.56 or 
 64.34  other examinations for purposes of litigation or insurance 
 64.35  claims; 
 64.36     (2) (3) a staff model health plan company; or 
 65.1      (3) (4) an ambulance service required to be licensed; or 
 65.2      (5) a person who sells or repairs hearing aids and related 
 65.3   equipment or prescription eyewear. 
 65.4      (b) Health care provider does not include hospitals,; 
 65.5   medical supplies distributors, except as specified under 
 65.6   paragraph (a), clause (5); nursing homes licensed under chapter 
 65.7   144A or licensed in any other jurisdiction,; pharmacies,; 
 65.8   surgical centers,; bus and taxicab transportation, or any other 
 65.9   providers of transportation services other than ambulance 
 65.10  services required to be licensed,; supervised living facilities 
 65.11  for persons with mental retardation or related conditions, 
 65.12  licensed under Minnesota Rules, parts 4665.0100 to 4665.9900,; 
 65.13  residential care homes licensed under chapter 144B,; board and 
 65.14  lodging establishments providing only custodial services that 
 65.15  are licensed under chapter 157 and registered under section 
 65.16  157.17 to provide supportive services or health supervision 
 65.17  services,; adult foster homes as defined in Minnesota Rules, 
 65.18  part 9555.5105,; day training and habilitation services for 
 65.19  adults with mental retardation and related conditions as defined 
 65.20  in section 252.41, subdivision 3,; and boarding care homes, as 
 65.21  defined in Minnesota Rules, part 4655.0100. 
 65.22     (c) For purposes of this subdivision, "directly to a 
 65.23  patient or consumer" includes goods and services provided in 
 65.24  connection with independent medical examinations under section 
 65.25  65B.56 or other examinations for purposes of litigation or 
 65.26  insurance claims. 
 65.27     Sec. 6.  Minnesota Statutes 1996, section 295.50, 
 65.28  subdivision 6, is amended to read: 
 65.29     Subd. 6.  [HOME HEALTH CARE SERVICES.] "Home health care 
 65.30  services" are services: 
 65.31     (1) defined under the state medical assistance program as 
 65.32  home health agency services provided by a home health agency, 
 65.33  personal care services and supervision of personal care 
 65.34  services, private duty nursing services, and waivered 
 65.35  services or services by home care providers required to be 
 65.36  licensed under chapter 144A; and 
 66.1      (2) provided at a recipient's residence, if the recipient 
 66.2   does not live in a hospital, nursing facility, as defined in 
 66.3   section 62A.46, subdivision 3, or intermediate care facility for 
 66.4   persons with mental retardation as defined in section 256B.055, 
 66.5   subdivision 12, paragraph (d). 
 66.6      Sec. 7.  Minnesota Statutes 1996, section 295.50, 
 66.7   subdivision 7, is amended to read: 
 66.8      Subd. 7.  [HOSPITAL.] "Hospital" means a hospital licensed 
 66.9   under chapter 144, or a hospital licensed by any other state or 
 66.10  province or territory of Canada jurisdiction. 
 66.11     Sec. 8.  Minnesota Statutes 1996, section 295.50, is 
 66.12  amended by adding a subdivision to read: 
 66.13     Subd. 7a.  [NONRESIDENT PATIENT SERVICES.] "Nonresident 
 66.14  patient services" means inpatient and outpatient services and 
 66.15  other goods and services provided by hospitals, surgical 
 66.16  centers, or health care providers.  They include the following 
 66.17  health care goods and services provided to a patient or consumer 
 66.18  who is not a Minnesota resident:  
 66.19     (1) bed and board; 
 66.20     (2) nursing services and other related services; 
 66.21     (3) use of hospitals, surgical centers, or health care 
 66.22  provider facilities; 
 66.23     (4) medical social services; 
 66.24     (5) drugs, biologicals, supplies, appliances, and 
 66.25  equipment; 
 66.26     (6) other diagnostic or therapeutic items or services; 
 66.27     (7) medical or surgical services; 
 66.28     (8) items and services furnished to ambulatory patients not 
 66.29  requiring emergency care; 
 66.30     (9) emergency services; and 
 66.31     (10) covered services listed in section 256B.0625 and in 
 66.32  Minnesota Rules, parts 9505.0170 to 9505.0475. 
 66.33     Sec. 9.  Minnesota Statutes 1996, section 295.50, 
 66.34  subdivision 9b, is amended to read: 
 66.35     Subd. 9b.  [RESIDENT PATIENT SERVICES.] "Resident patient 
 66.36  services" means inpatient and outpatient services and other 
 67.1   goods and services provided by hospitals, surgical centers, or 
 67.2   health care providers.  They include the following health care 
 67.3   goods and services provided to a patient or consumer who is a 
 67.4   Minnesota resident: 
 67.5      (1) bed and board; 
 67.6      (2) nursing services and other related services; 
 67.7      (3) use of hospitals, surgical centers, or health care 
 67.8   provider facilities; 
 67.9      (4) medical social services; 
 67.10     (5) drugs, biologicals, supplies, appliances, and 
 67.11  equipment; 
 67.12     (6) other diagnostic or therapeutic items or services; 
 67.13     (7) medical or surgical services; 
 67.14     (8) items and services furnished to ambulatory patients not 
 67.15  requiring emergency care; 
 67.16     (9) emergency services; and 
 67.17     (10) covered services listed in section 256B.0625 and in 
 67.18  Minnesota Rules, parts 9505.0170 to 9505.0475. 
 67.19     Sec. 10.  Minnesota Statutes 1996, section 295.50, 
 67.20  subdivision 13, is amended to read: 
 67.21     Subd. 13.  [SURGICAL CENTER.] "Surgical center" is an 
 67.22  outpatient surgical center as defined in Minnesota Rules, 
 67.23  chapter 4675 or a similar facility located in any other state or 
 67.24  province or territory of Canada jurisdiction. 
 67.25     Sec. 11.  Minnesota Statutes 1996, section 295.50, 
 67.26  subdivision 14, is amended to read: 
 67.27     Subd. 14.  [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 
 67.28  distributor" means a wholesale drug distributor required to be 
 67.29  licensed under sections 151.42 to 151.51 or a nonresident 
 67.30  pharmacy required to be registered under section 151.19. 
 67.31     Sec. 12.  Minnesota Statutes 1996, section 295.51, 
 67.32  subdivision 1, is amended to read: 
 67.33     Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
 67.34  hospital, surgical center, pharmacy, or health care provider is 
 67.35  subject to tax under sections 295.50 to 295.59 if it is 
 67.36  "transacting business in Minnesota."  A hospital, surgical 
 68.1   center, pharmacy, or health care provider is transacting 
 68.2   business in Minnesota if it maintains contacts with or presence 
 68.3   in the state of Minnesota sufficient to permit taxation of gross 
 68.4   revenues received for patient services under the United States 
 68.5   Constitution. 
 68.6      Sec. 13.  Minnesota Statutes 1996, section 295.52, 
 68.7   subdivision 1, is amended to read: 
 68.8      Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
 68.9   hospital equal to two percent of its gross revenues from 
 68.10  resident patient services and equal to one percent of its gross 
 68.11  revenues from nonresident patient services. 
 68.12     Sec. 14.  Minnesota Statutes 1996, section 295.52, 
 68.13  subdivision 1a, is amended to read: 
 68.14     Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
 68.15  surgical center equal to two percent of its gross revenues from 
 68.16  resident patient services and equal to one percent of its gross 
 68.17  revenues from nonresident patient services. 
 68.18     Sec. 15.  Minnesota Statutes 1996, section 295.52, 
 68.19  subdivision 2, is amended to read: 
 68.20     Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
 68.21  care provider equal to two percent of its gross revenues from 
 68.22  resident patient services and equal to one percent of its gross 
 68.23  revenues for nonresident patient services. 
 68.24     Sec. 16.  Minnesota Statutes 1996, section 295.52, 
 68.25  subdivision 4, is amended to read: 
 68.26     Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] A person that 
 68.27  receives prescription drugs for resale or use in Minnesota, 
 68.28  other than from a wholesale drug distributor that paid the tax 
 68.29  under subdivision 3, is subject to a tax equal to two percent of 
 68.30  the price paid.  Liability for the tax is incurred when 
 68.31  prescription drugs are received or delivered in Minnesota by the 
 68.32  person. 
 68.33     Sec. 17.  Minnesota Statutes 1996, section 295.52, is 
 68.34  amended by adding a subdivision to read: 
 68.35     Subd. 6.  [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax 
 68.36  liability of a person who meets the definition of a health care 
 69.1   provider solely because the person sells or repairs hearing aids 
 69.2   and related equipment or prescription eyewear is limited to the 
 69.3   gross revenues received from the sale or repair of these items. 
 69.4      Sec. 18.  Minnesota Statutes 1996, section 295.52, is 
 69.5   amended by adding a subdivision to read: 
 69.6      Subd. 7.  [TAX REDUCTION.] Notwithstanding subdivisions 1, 
 69.7   1a, 2, 3, and 4, the tax imposed under this section for calendar 
 69.8   years 1998 and 1999 shall be equal to 1.75 percent of the gross 
 69.9   revenues received on or after January 1, 1998, and before 
 69.10  January 1, 2000. 
 69.11     Sec. 19.  Minnesota Statutes 1996, section 295.53, 
 69.12  subdivision 1, is amended to read: 
 69.13     Subdivision 1.  [EXEMPTIONS.] (a) The following payments 
 69.14  are excluded from the gross revenues subject to the hospital, 
 69.15  surgical center, or health care provider taxes under sections 
 69.16  295.50 to 295.57: 
 69.17     (1) payments received for services provided under the 
 69.18  Medicare program, including payments received from the 
 69.19  government, and organizations governed by sections 1833 and 1876 
 69.20  of title XVIII of the federal Social Security Act, United States 
 69.21  Code, title 42, section 1395, and enrollee deductibles, 
 69.22  coinsurance, and copayments, whether paid by the Medicare 
 69.23  enrollee or by a Medicare supplemental coverage as defined in 
 69.24  section 62A.011, subdivision 3, clause (10).  Payments for 
 69.25  services not covered by Medicare are taxable; 
 69.26     (2) medical assistance payments including payments received 
 69.27  directly from the government or from a prepaid plan; 
 69.28     (3) payments received for home health care services; 
 69.29     (4) payments received from hospitals or surgical centers 
 69.30  for goods and services on which liability for tax is imposed 
 69.31  under section 295.52 or the source of funds for the payment is 
 69.32  exempt under clause (1), (2), (7), (8), or (10); 
 69.33     (5) payments received from health care providers for goods 
 69.34  and services on which liability for tax is imposed under this 
 69.35  chapter or the source of funds for the payment is exempt under 
 69.36  clause (1), (2), (7), (8), or (10); 
 70.1      (6) amounts paid for legend drugs, other than nutritional 
 70.2   products, to a wholesale drug distributor who is subject to tax 
 70.3   under section 295.52, subdivision 3, reduced by reimbursements 
 70.4   received for legend drugs under clauses (1), (2), (7), and (8); 
 70.5      (7) payments received under the general assistance medical 
 70.6   care program including payments received directly from the 
 70.7   government or from a prepaid plan; 
 70.8      (8) payments received for providing services under the 
 70.9   MinnesotaCare program including payments received directly from 
 70.10  the government or from a prepaid plan and enrollee deductibles, 
 70.11  coinsurance, and copayments.  For purposes of this clause, 
 70.12  coinsurance means the portion of payment that the enrollee is 
 70.13  required to pay for the covered service; 
 70.14     (9) payments received by a health care provider or the 
 70.15  wholly owned subsidiary of a health care provider for care 
 70.16  provided outside Minnesota to a patient who is not domiciled in 
 70.17  Minnesota; 
 70.18     (10) payments received from the chemical dependency fund 
 70.19  under chapter 254B; 
 70.20     (11) payments received in the nature of charitable 
 70.21  donations that are not designated for providing patient services 
 70.22  to a specific individual or group; 
 70.23     (12) payments received for providing patient services 
 70.24  incurred through a formal program of health care research 
 70.25  conducted in conformity with federal regulations governing 
 70.26  research on human subjects.  Payments received from patients or 
 70.27  from other persons paying on behalf of the patients are subject 
 70.28  to tax; 
 70.29     (13) payments received from any governmental agency for 
 70.30  services benefiting the public, not including payments made by 
 70.31  the government in its capacity as an employer or insurer; 
 70.32     (14) payments received for services provided by community 
 70.33  residential mental health facilities licensed under Minnesota 
 70.34  Rules, parts 9520.0500 to 9520.0690, community support programs 
 70.35  and family community support programs approved under Minnesota 
 70.36  Rules, parts 9535.1700 to 9535.1760, and community mental health 
 71.1   centers as defined in section 245.62, subdivision 2; 
 71.2      (15) government payments received by a regional treatment 
 71.3   center; 
 71.4      (16) payments received for hospice care services; 
 71.5      (17) payments received by a health care provider for 
 71.6   medical supplies, appliances, and equipment hearing aids and 
 71.7   related equipment or prescription eyewear delivered outside of 
 71.8   Minnesota; 
 71.9      (18) payments received by a post-secondary educational 
 71.10  institution from student tuition, student activity fees, health 
 71.11  care service fees, government appropriations, donations, or 
 71.12  grants.  Fee for service payments and payments for extended 
 71.13  coverage are taxable; and 
 71.14     (19) payments received for services provided by:  assisted 
 71.15  living programs and congregate housing programs. 
 71.16     (b) Payments received by wholesale drug distributors for 
 71.17  prescription legend drugs sold directly to veterinarians or 
 71.18  veterinary bulk purchasing organizations are excluded from the 
 71.19  gross revenues subject to the wholesale drug distributor tax 
 71.20  under sections 295.50 to 295.59. 
 71.21     Sec. 20.  Minnesota Statutes 1996, section 295.53, 
 71.22  subdivision 3, is amended to read: 
 71.23     Subd. 3.  [SEPARATE STATEMENT OF TAX.] A hospital, surgical 
 71.24  center, pharmacy, or health care provider must not state the tax 
 71.25  obligation under section 295.52 in a deceptive or misleading 
 71.26  manner.  It must not separately state tax obligations on bills 
 71.27  provided to patients, consumers, or other payers when the amount 
 71.28  received for the services or goods is not subject to tax.  
 71.29     Pharmacies that separately state the tax obligations on 
 71.30  bills provided to consumers or to other payers who purchase 
 71.31  legend drugs may state the tax obligation as two percent of the 
 71.32  wholesale price of the legend drugs.  Pharmacies must not state 
 71.33  the tax obligation as two percent of the retail price.  
 71.34     Whenever the commissioner determines that a person has 
 71.35  engaged in any act or practice constituting a violation of this 
 71.36  subdivision, the commissioner may bring an action in the name of 
 72.1   the state in the district court of the appropriate county to 
 72.2   enjoin the act or practice and to enforce compliance with this 
 72.3   subdivision, or the commissioner may refer the matter to the 
 72.4   attorney general or the county attorney of the appropriate 
 72.5   county.  Upon a proper showing, a permanent or temporary 
 72.6   injunction, restraining order, or other appropriate relief must 
 72.7   be granted.  
 72.8      Sec. 21.  Minnesota Statutes 1996, section 295.53, 
 72.9   subdivision 4, is amended to read: 
 72.10     Subd. 4.  [DEDUCTION FOR RESEARCH.] (a) In addition to the 
 72.11  exemptions allowed under subdivision 1, a hospital or health 
 72.12  care provider which is exempt under section 501(c)(3) of the 
 72.13  Internal Revenue Code of 1986 or is owned and operated under 
 72.14  authority of a governmental unit, may deduct from its gross 
 72.15  revenues subject to the hospital or health care provider taxes 
 72.16  under sections 295.50 to 295.57 revenues equal to expenditures 
 72.17  for qualifying research conducted by an allowable research 
 72.18  programs program.  
 72.19     (b) For purposes of this subdivision, the following 
 72.20  requirements apply: 
 72.21     (1) expenditures for allowable research programs are the 
 72.22  direct and general must be for program costs for activities 
 72.23  which are part of qualifying research conducted by an allowable 
 72.24  research program; 
 72.25     (2) an allowable research program must be a formal program 
 72.26  of medical and health care research approved by the governing 
 72.27  body of the hospital or health care provider which also includes 
 72.28  active solicitation of research funds from government and 
 72.29  private sources.  Allowable conducted by an entity which is 
 72.30  exempt under section 501(c)(3) of the Internal Revenue Code of 
 72.31  1986 or is owned and operated under authority of a governmental 
 72.32  unit; 
 72.33     (3) qualifying research must:  
 72.34     (A) be approved in writing by the governing body of the 
 72.35  hospital or health care provider which is taking the deduction 
 72.36  under this subdivision; 
 73.1      (1) (B) have as its purpose the development of new 
 73.2   knowledge in basic or applied science relating to the diagnosis 
 73.3   and treatment of conditions affecting the human body; 
 73.4      (2) (C) be subject to review by individuals with expertise 
 73.5   in the subject matter of the proposed study but who have no 
 73.6   financial interest in the proposed study and are not involved in 
 73.7   the conduct of the proposed study; and 
 73.8      (3) (D) be subject to review and supervision by an 
 73.9   institutional review board operating in conformity with federal 
 73.10  regulations if the research involves human subjects or an 
 73.11  institutional animal care and use committee operating in 
 73.12  conformity with federal regulations if the research involves 
 73.13  animal subjects.  Research expenses are not exempt if the study 
 73.14  is a routine evaluation of health care methods or products used 
 73.15  in a particular setting conducted for the purpose of making a 
 73.16  management decision.  Costs of clinical research activities paid 
 73.17  directly for the benefit of an individual patient are excluded 
 73.18  from this exemption.  Basic research in fields including 
 73.19  biochemistry, molecular biology, and physiology are also 
 73.20  included if such programs are subject to a peer review process. 
 73.21     (c) No deduction shall be allowed under this subdivision 
 73.22  for any revenue received by the hospital or health care provider 
 73.23  in the form of a grant, gift, or otherwise, whether from a 
 73.24  government or nongovernment source, on which the tax liability 
 73.25  under section 295.52 is not imposed or for which the tax 
 73.26  liability under section 295.52 has been received from a third 
 73.27  party as provided for in section 295.582. 
 73.28     (d) Effective beginning with calendar year 1995, the 
 73.29  taxpayer shall not take the deduction under this section into 
 73.30  account in determining estimated tax payments or the payment 
 73.31  made with the annual return under section 295.55.  The total 
 73.32  deduction allowable to all taxpayers under this section for 
 73.33  calendar years beginning after December 31, 1994, may not exceed 
 73.34  $65,000,000.  To implement this limit, each qualifying hospital 
 73.35  and qualifying health care provider shall submit to the 
 73.36  commissioner by March 15 its total expenditures qualifying for 
 74.1   the deduction under this section for the previous calendar 
 74.2   year.  The commissioner shall sum the total expenditures of all 
 74.3   taxpayers qualifying under this section for the calendar year.  
 74.4   If the resulting amount exceeds $65,000,000, the commissioner 
 74.5   shall allocate a part of the $65,000,000 deduction limit to each 
 74.6   qualifying hospital and health care provider in proportion to 
 74.7   its share of the total deductions.  The commissioner shall pay a 
 74.8   refund to each qualifying hospital or provider equal to its 
 74.9   share of the deduction limit multiplied by two percent.  The 
 74.10  commissioner shall pay the refund no later than May 15 of the 
 74.11  calendar year. 
 74.12     Sec. 22.  Minnesota Statutes 1996, section 295.54, 
 74.13  subdivision 1, is amended to read: 
 74.14     Subdivision 1.  [TAXES PAID TO ANOTHER STATE.] A hospital, 
 74.15  surgical center, pharmacy, or health care provider that has paid 
 74.16  taxes to another state or province or territory of 
 74.17  Canada jurisdiction measured by gross revenues and is subject to 
 74.18  tax under sections 295.52 to 295.59 on the same gross revenues 
 74.19  is entitled to a credit for the tax legally due and paid to 
 74.20  another state or province or territory of Canada jurisdiction to 
 74.21  the extent of the lesser of (1) the tax actually paid to the 
 74.22  other state or province or territory of Canada jurisdiction, or 
 74.23  (2) the amount of tax imposed by Minnesota on the gross revenues 
 74.24  subject to tax in the other taxing jurisdictions. 
 74.25     Sec. 23.  Minnesota Statutes 1996, section 295.54, 
 74.26  subdivision 2, is amended to read: 
 74.27     Subd. 2.  [PHARMACY CREDIT REFUND.] A pharmacy may claim a 
 74.28  quarterly credit an annual refund against the total amount of 
 74.29  tax, if any, the pharmacy owes during that quarter calendar year 
 74.30  under section 295.52, subdivision 1b, as provided in this 
 74.31  subdivision 2.  The credit refund shall equal two percent of the 
 74.32  amount paid by the pharmacy to a wholesale drug distributor 
 74.33  subject to tax under section 295.52, subdivision 3, for legend 
 74.34  drugs delivered by the pharmacy outside of Minnesota.  If the 
 74.35  amount of the credit refund exceeds the tax liability of the 
 74.36  pharmacy under section 295.52, subdivision 1b, the commissioner 
 75.1   shall provide the pharmacy with a refund equal to the excess 
 75.2   amount.  Each qualifying pharmacy must apply for the refund on 
 75.3   the annual return as provided under section 295.55, subdivision 
 75.4   5.  The refund must be claimed within one year of the due date 
 75.5   of the return.  Interest on refunds paid under this subdivision 
 75.6   will begin to accrue 60 days after the date a claim for refund 
 75.7   is filed.  For purposes of this subdivision, the date a claim is 
 75.8   filed is the due date of the return or the date of the actual 
 75.9   claim for refund, whichever is later.  
 75.10     Sec. 24.  Minnesota Statutes 1996, section 295.55, 
 75.11  subdivision 2, is amended to read: 
 75.12     Subd. 2.  [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 
 75.13  Each hospital or surgical center must make estimated payments of 
 75.14  the taxes for the calendar year in monthly installments to the 
 75.15  commissioner within ten 15 days after the end of the month. 
 75.16     (b) Estimated tax payments are not required of hospitals or 
 75.17  surgical centers if the tax for the calendar year is less than 
 75.18  $500 or if a hospital has been allowed a grant under section 
 75.19  144.1484, subdivision 2, for the year. 
 75.20     (c) Underpayment of estimated installments bear interest at 
 75.21  the rate specified in section 270.75, from the due date of the 
 75.22  payment until paid or until the due date of the annual return at 
 75.23  the rate specified in section 270.75.  An underpayment of an 
 75.24  estimated installment is the difference between the amount paid 
 75.25  and the lesser of (1) 90 percent of one-twelfth of the tax for 
 75.26  the calendar year or (2) the tax for the actual gross revenues 
 75.27  received during the month. 
 75.28     Sec. 25.  Minnesota Statutes 1996, section 295.582, is 
 75.29  amended to read: 
 75.30     295.582 [AUTHORITY.] 
 75.31     (a) A hospital, surgical center, pharmacy, or health care 
 75.32  provider that is subject to a tax under section 295.52, or a 
 75.33  pharmacy that has paid additional expense transferred under this 
 75.34  section by a wholesale drug distributor, may transfer additional 
 75.35  expense generated by section 295.52 obligations on to all 
 75.36  third-party contracts for the purchase of health care services 
 76.1   on behalf of a patient or consumer.  The additional expense 
 76.2   transferred to the third-party purchaser must not exceed two 
 76.3   percent of the gross revenues received under the third-party 
 76.4   contract, and two percent of copayments and deductibles paid by 
 76.5   the individual patient or consumer.  The expense must not be 
 76.6   generated on revenues derived from payments that are excluded 
 76.7   from the tax under section 295.53.  All third-party purchasers 
 76.8   of health care services including, but not limited to, 
 76.9   third-party purchasers regulated under chapter 60A, 62A, 62C, 
 76.10  62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or under section 
 76.11  471.61 or 471.617, must pay the transferred expense in addition 
 76.12  to any payments due under existing contracts with the hospital, 
 76.13  surgical center, pharmacy, or health care provider, to the 
 76.14  extent allowed under federal law.  A third-party purchaser of 
 76.15  health care services includes, but is not limited to, a health 
 76.16  carrier, integrated service network, or community integrated 
 76.17  service network that pays for health care services on behalf of 
 76.18  patients or that reimburses, indemnifies, compensates, or 
 76.19  otherwise insures patients for health care services.  A 
 76.20  third-party purchaser shall comply with this section regardless 
 76.21  of whether the third-party purchaser is a for-profit, 
 76.22  not-for-profit, or nonprofit entity.  A wholesale drug 
 76.23  distributor may transfer additional expense generated by section 
 76.24  295.52 obligations to entities that purchase from the 
 76.25  wholesaler, and the entities must pay the additional expense.  
 76.26  Nothing in this section limits the ability of a hospital, 
 76.27  surgical center, pharmacy, wholesale drug distributor, or health 
 76.28  care provider to recover all or part of the section 295.52 
 76.29  obligation by other methods, including increasing fees or 
 76.30  charges. 
 76.31     (b) Each third-party purchaser regulated under any chapter 
 76.32  cited in paragraph (a) shall include with its annual renewal for 
 76.33  certification of authority or licensure documentation indicating 
 76.34  compliance with paragraph (a).  
 76.35     (c) Any hospital, surgical center, or health care provider 
 76.36  subject to a tax under section 295.52 or a pharmacy that has 
 77.1   paid additional expense transferred under this section by a 
 77.2   wholesale drug distributor may file a complaint with the 
 77.3   commissioner responsible for regulating the third-party 
 77.4   purchaser if at any time the third-party purchaser fails to 
 77.5   comply with paragraph (a).  
 77.6      (d) If the commissioner responsible for regulating the 
 77.7   third-party purchaser finds at any time that the third-party 
 77.8   purchaser has not complied with paragraph (a), the commissioner 
 77.9   may take enforcement action against a third-party purchaser 
 77.10  which is subject to the commissioner's regulatory jurisdiction 
 77.11  and which does not allow a hospital, surgical center, pharmacy, 
 77.12  or provider to pass-through the tax.  The commissioner may by 
 77.13  order fine or censure the third-party purchaser or revoke or 
 77.14  suspend the certificate of authority or license of the 
 77.15  third-party purchaser to do business in this state if the 
 77.16  commissioner finds that the third-party purchaser has not 
 77.17  complied with this section.  The third-party purchaser may 
 77.18  appeal the commissioner's order through a contested case hearing 
 77.19  in accordance with chapter 14. 
 77.20     Sec. 26.  [MCHA ASSESSMENT OFFSET.] 
 77.21     In approving the premium rates as required in Minnesota 
 77.22  Statutes, sections 62A.65, subdivision 3, and 62L.08, 
 77.23  subdivision 8, the commissioners of health and commerce shall 
 77.24  ensure that any offset to the annual assessment made by the 
 77.25  contributing members to cover the costs of the Minnesota 
 77.26  comprehensive health insurance plan as required under Minnesota 
 77.27  Statutes, section 62E.11, is reflected in the premium rate of 
 77.28  each contributing member.  
 77.29     Sec. 27.  [REPEALER.] 
 77.30     Minnesota Statutes 1996, sections 295.52, subdivision 1b; 
 77.31  and 295.53, subdivision 5, are repealed.  
 77.32     Sec. 28.  [EFFECTIVE DATES.] 
 77.33     Section 2, subdivision 1, paragraphs (a) and (f), are 
 77.34  effective for payments, revenues, and reimbursements received 
 77.35  from the federal government on or after December 31, 1996. 
 77.36     Sections 1 and 3 are effective July 1, 1997. 
 78.1      Sections 4, 5, 6, 8, 9, 11 to 18, 20, and 23 are effective 
 78.2   for gross revenues received after December 31, 1997. 
 78.3      Section 19, subdivision 1, paragraph (a), clause (6), and 
 78.4   paragraph (b) are effective the day following final enactment.  
 78.5   Section 19, paragraph (a), clause (17), is effective for gross 
 78.6   revenues received for hearing aids and related equipment or 
 78.7   prescription eyewear after December 31, 1997. 
 78.8      Section 22 is effective January 1, 1998. 
 78.9      Section 24 is effective for estimated payments due after 
 78.10  July 1, 1997. 
 78.11     Sections 7, 10, and 25, paragraph (c), are effective the 
 78.12  day following final enactment. 
 78.13     Section 21 is effective for research expenditures incurred 
 78.14  after December 31, 1995. 
 78.15     Section 27 is effective January 1, 1998. 
 78.16                             ARTICLE 4 
 78.17                    SENIOR CITIZEN DRUG PROGRAM 
 78.18     Section 1.  Minnesota Statutes 1996, section 256.01, 
 78.19  subdivision 2, is amended to read: 
 78.20     Subd. 2.  [SPECIFIC POWERS.] Subject to the provisions of 
 78.21  section 241.021, subdivision 2, the commissioner of human 
 78.22  services shall: 
 78.23     (1) Administer and supervise all forms of public assistance 
 78.24  provided for by state law and other welfare activities or 
 78.25  services as are vested in the commissioner.  Administration and 
 78.26  supervision of human services activities or services includes, 
 78.27  but is not limited to, assuring timely and accurate distribution 
 78.28  of benefits, completeness of service, and quality program 
 78.29  management.  In addition to administering and supervising human 
 78.30  services activities vested by law in the department, the 
 78.31  commissioner shall have the authority to: 
 78.32     (a) require county agency participation in training and 
 78.33  technical assistance programs to promote compliance with 
 78.34  statutes, rules, federal laws, regulations, and policies 
 78.35  governing human services; 
 78.36     (b) monitor, on an ongoing basis, the performance of county 
 79.1   agencies in the operation and administration of human services, 
 79.2   enforce compliance with statutes, rules, federal laws, 
 79.3   regulations, and policies governing welfare services and promote 
 79.4   excellence of administration and program operation; 
 79.5      (c) develop a quality control program or other monitoring 
 79.6   program to review county performance and accuracy of benefit 
 79.7   determinations; 
 79.8      (d) require county agencies to make an adjustment to the 
 79.9   public assistance benefits issued to any individual consistent 
 79.10  with federal law and regulation and state law and rule and to 
 79.11  issue or recover benefits as appropriate; 
 79.12     (e) delay or deny payment of all or part of the state and 
 79.13  federal share of benefits and administrative reimbursement 
 79.14  according to the procedures set forth in section 256.017; and 
 79.15     (f) make contracts with and grants to public and private 
 79.16  agencies and organizations, both profit and nonprofit, and 
 79.17  individuals, using appropriated funds. 
 79.18     (2) Inform county agencies, on a timely basis, of changes 
 79.19  in statute, rule, federal law, regulation, and policy necessary 
 79.20  to county agency administration of the programs. 
 79.21     (3) Administer and supervise all child welfare activities; 
 79.22  promote the enforcement of laws protecting handicapped, 
 79.23  dependent, neglected and delinquent children, and children born 
 79.24  to mothers who were not married to the children's fathers at the 
 79.25  times of the conception nor at the births of the children; 
 79.26  license and supervise child-caring and child-placing agencies 
 79.27  and institutions; supervise the care of children in boarding and 
 79.28  foster homes or in private institutions; and generally perform 
 79.29  all functions relating to the field of child welfare now vested 
 79.30  in the state board of control. 
 79.31     (4) Administer and supervise all noninstitutional service 
 79.32  to handicapped persons, including those who are visually 
 79.33  impaired, hearing impaired, or physically impaired or otherwise 
 79.34  handicapped.  The commissioner may provide and contract for the 
 79.35  care and treatment of qualified indigent children in facilities 
 79.36  other than those located and available at state hospitals when 
 80.1   it is not feasible to provide the service in state hospitals. 
 80.2      (5) Assist and actively cooperate with other departments, 
 80.3   agencies and institutions, local, state, and federal, by 
 80.4   performing services in conformity with the purposes of Laws 
 80.5   1939, chapter 431. 
 80.6      (6) Act as the agent of and cooperate with the federal 
 80.7   government in matters of mutual concern relative to and in 
 80.8   conformity with the provisions of Laws 1939, chapter 431, 
 80.9   including the administration of any federal funds granted to the 
 80.10  state to aid in the performance of any functions of the 
 80.11  commissioner as specified in Laws 1939, chapter 431, and 
 80.12  including the promulgation of rules making uniformly available 
 80.13  medical care benefits to all recipients of public assistance, at 
 80.14  such times as the federal government increases its participation 
 80.15  in assistance expenditures for medical care to recipients of 
 80.16  public assistance, the cost thereof to be borne in the same 
 80.17  proportion as are grants of aid to said recipients. 
 80.18     (7) Establish and maintain any administrative units 
 80.19  reasonably necessary for the performance of administrative 
 80.20  functions common to all divisions of the department. 
 80.21     (8) Act as designated guardian of both the estate and the 
 80.22  person of all the wards of the state of Minnesota, whether by 
 80.23  operation of law or by an order of court, without any further 
 80.24  act or proceeding whatever, except as to persons committed as 
 80.25  mentally retarded.  
 80.26     (9) Act as coordinating referral and informational center 
 80.27  on requests for service for newly arrived immigrants coming to 
 80.28  Minnesota. 
 80.29     (10) The specific enumeration of powers and duties as 
 80.30  hereinabove set forth shall in no way be construed to be a 
 80.31  limitation upon the general transfer of powers herein contained. 
 80.32     (11) Establish county, regional, or statewide schedules of 
 80.33  maximum fees and charges which may be paid by county agencies 
 80.34  for medical, dental, surgical, hospital, nursing and nursing 
 80.35  home care and medicine and medical supplies under all programs 
 80.36  of medical care provided by the state and for congregate living 
 81.1   care under the income maintenance programs. 
 81.2      (12) Have the authority to conduct and administer 
 81.3   experimental projects to test methods and procedures of 
 81.4   administering assistance and services to recipients or potential 
 81.5   recipients of public welfare.  To carry out such experimental 
 81.6   projects, it is further provided that the commissioner of human 
 81.7   services is authorized to waive the enforcement of existing 
 81.8   specific statutory program requirements, rules, and standards in 
 81.9   one or more counties.  The order establishing the waiver shall 
 81.10  provide alternative methods and procedures of administration, 
 81.11  shall not be in conflict with the basic purposes, coverage, or 
 81.12  benefits provided by law, and in no event shall the duration of 
 81.13  a project exceed four years.  It is further provided that no 
 81.14  order establishing an experimental project as authorized by the 
 81.15  provisions of this section shall become effective until the 
 81.16  following conditions have been met: 
 81.17     (a) The proposed comprehensive plan, including estimated 
 81.18  project costs and the proposed order establishing the waiver, 
 81.19  shall be filed with the secretary of the senate and chief clerk 
 81.20  of the house of representatives at least 60 days prior to its 
 81.21  effective date. 
 81.22     (b) The secretary of health, education, and welfare of the 
 81.23  United States has agreed, for the same project, to waive state 
 81.24  plan requirements relative to statewide uniformity. 
 81.25     (c) A comprehensive plan, including estimated project 
 81.26  costs, shall be approved by the legislative advisory commission 
 81.27  and filed with the commissioner of administration.  
 81.28     (13) In accordance with federal requirements, establish 
 81.29  procedures to be followed by local welfare boards in creating 
 81.30  citizen advisory committees, including procedures for selection 
 81.31  of committee members. 
 81.32     (14) Allocate federal fiscal disallowances or sanctions 
 81.33  which are based on quality control error rates for the aid to 
 81.34  families with dependent children, medical assistance, or food 
 81.35  stamp program in the following manner:  
 81.36     (a) One-half of the total amount of the disallowance shall 
 82.1   be borne by the county boards responsible for administering the 
 82.2   programs.  For the medical assistance and AFDC programs, 
 82.3   disallowances shall be shared by each county board in the same 
 82.4   proportion as that county's expenditures for the sanctioned 
 82.5   program are to the total of all counties' expenditures for the 
 82.6   AFDC and medical assistance programs.  For the food stamp 
 82.7   program, sanctions shall be shared by each county board, with 50 
 82.8   percent of the sanction being distributed to each county in the 
 82.9   same proportion as that county's administrative costs for food 
 82.10  stamps are to the total of all food stamp administrative costs 
 82.11  for all counties, and 50 percent of the sanctions being 
 82.12  distributed to each county in the same proportion as that 
 82.13  county's value of food stamp benefits issued are to the total of 
 82.14  all benefits issued for all counties.  Each county shall pay its 
 82.15  share of the disallowance to the state of Minnesota.  When a 
 82.16  county fails to pay the amount due hereunder, the commissioner 
 82.17  may deduct the amount from reimbursement otherwise due the 
 82.18  county, or the attorney general, upon the request of the 
 82.19  commissioner, may institute civil action to recover the amount 
 82.20  due. 
 82.21     (b) Notwithstanding the provisions of paragraph (a), if the 
 82.22  disallowance results from knowing noncompliance by one or more 
 82.23  counties with a specific program instruction, and that knowing 
 82.24  noncompliance is a matter of official county board record, the 
 82.25  commissioner may require payment or recover from the county or 
 82.26  counties, in the manner prescribed in paragraph (a), an amount 
 82.27  equal to the portion of the total disallowance which resulted 
 82.28  from the noncompliance, and may distribute the balance of the 
 82.29  disallowance according to paragraph (a).  
 82.30     (15) Develop and implement special projects that maximize 
 82.31  reimbursements and result in the recovery of money to the 
 82.32  state.  For the purpose of recovering state money, the 
 82.33  commissioner may enter into contracts with third parties.  Any 
 82.34  recoveries that result from projects or contracts entered into 
 82.35  under this paragraph shall be deposited in the state treasury 
 82.36  and credited to a special account until the balance in the 
 83.1   account reaches $1,000,000.  When the balance in the account 
 83.2   exceeds $1,000,000, the excess shall be transferred and credited 
 83.3   to the general fund.  All money in the account is appropriated 
 83.4   to the commissioner for the purposes of this paragraph. 
 83.5      (16) Have the authority to make direct payments to 
 83.6   facilities providing shelter to women and their children 
 83.7   pursuant to section 256D.05, subdivision 3.  Upon the written 
 83.8   request of a shelter facility that has been denied payments 
 83.9   under section 256D.05, subdivision 3, the commissioner shall 
 83.10  review all relevant evidence and make a determination within 30 
 83.11  days of the request for review regarding issuance of direct 
 83.12  payments to the shelter facility.  Failure to act within 30 days 
 83.13  shall be considered a determination not to issue direct payments.
 83.14     (17) Have the authority to establish and enforce the 
 83.15  following county reporting requirements:  
 83.16     (a) The commissioner shall establish fiscal and statistical 
 83.17  reporting requirements necessary to account for the expenditure 
 83.18  of funds allocated to counties for human services programs.  
 83.19  When establishing financial and statistical reporting 
 83.20  requirements, the commissioner shall evaluate all reports, in 
 83.21  consultation with the counties, to determine if the reports can 
 83.22  be simplified or the number of reports can be reduced. 
 83.23     (b) The county board shall submit monthly or quarterly 
 83.24  reports to the department as required by the commissioner.  
 83.25  Monthly reports are due no later than 15 working days after the 
 83.26  end of the month.  Quarterly reports are due no later than 30 
 83.27  calendar days after the end of the quarter, unless the 
 83.28  commissioner determines that the deadline must be shortened to 
 83.29  20 calendar days to avoid jeopardizing compliance with federal 
 83.30  deadlines or risking a loss of federal funding.  Only reports 
 83.31  that are complete, legible, and in the required format shall be 
 83.32  accepted by the commissioner.  
 83.33     (c) If the required reports are not received by the 
 83.34  deadlines established in clause (b), the commissioner may delay 
 83.35  payments and withhold funds from the county board until the next 
 83.36  reporting period.  When the report is needed to account for the 
 84.1   use of federal funds and the late report results in a reduction 
 84.2   in federal funding, the commissioner shall withhold from the 
 84.3   county boards with late reports an amount equal to the reduction 
 84.4   in federal funding until full federal funding is received.  
 84.5      (d) A county board that submits reports that are late, 
 84.6   illegible, incomplete, or not in the required format for two out 
 84.7   of three consecutive reporting periods is considered 
 84.8   noncompliant.  When a county board is found to be noncompliant, 
 84.9   the commissioner shall notify the county board of the reason the 
 84.10  county board is considered noncompliant and request that the 
 84.11  county board develop a corrective action plan stating how the 
 84.12  county board plans to correct the problem.  The corrective 
 84.13  action plan must be submitted to the commissioner within 45 days 
 84.14  after the date the county board received notice of noncompliance.
 84.15     (e) The final deadline for fiscal reports or amendments to 
 84.16  fiscal reports is one year after the date the report was 
 84.17  originally due.  If the commissioner does not receive a report 
 84.18  by the final deadline, the county board forfeits the funding 
 84.19  associated with the report for that reporting period and the 
 84.20  county board must repay any funds associated with the report 
 84.21  received for that reporting period. 
 84.22     (f) The commissioner may not delay payments, withhold 
 84.23  funds, or require repayment under paragraph (c) or (e) if the 
 84.24  county demonstrates that the commissioner failed to provide 
 84.25  appropriate forms, guidelines, and technical assistance to 
 84.26  enable the county to comply with the requirements.  If the 
 84.27  county board disagrees with an action taken by the commissioner 
 84.28  under paragraph (c) or (e), the county board may appeal the 
 84.29  action according to sections 14.57 to 14.69. 
 84.30     (g) Counties subject to withholding of funds under 
 84.31  paragraph (c) or forfeiture or repayment of funds under 
 84.32  paragraph (e) shall not reduce or withhold benefits or services 
 84.33  to clients to cover costs incurred due to actions taken by the 
 84.34  commissioner under paragraph (c) or (e). 
 84.35     (18) Allocate federal fiscal disallowances or sanctions for 
 84.36  audit exceptions when federal fiscal disallowances or sanctions 
 85.1   are based on a statewide random sample for the foster care 
 85.2   program under title IV-E of the Social Security Act, United 
 85.3   States Code, title 42, in direct proportion to each county's 
 85.4   title IV-E foster care maintenance claim for that period. 
 85.5      (19) Have the authority to administer a drug rebate program 
 85.6   for drugs purchased pursuant to the senior citizen drug program 
 85.7   established under section 256.955 after the beneficiary's 
 85.8   satisfaction of any deductible established in the program.  The 
 85.9   commissioner shall require a rebate agreement from all 
 85.10  manufacturers of covered drugs as defined in section 256B.0625, 
 85.11  subdivision 13.  The rebate program shall utilize the identical 
 85.12  terms, conditions, and formulas used for the federal rebate 
 85.13  program established pursuant to section 1927 of title XIX of the 
 85.14  Social Security Act. 
 85.15     Sec. 2.  [256.955] [SENIOR CITIZEN DRUG PROGRAM.] 
 85.16     Subdivision 1.  [ESTABLISHMENT.] The commissioner of human 
 85.17  services shall establish and administer a senior citizen drug 
 85.18  program.  Qualified senior citizens shall be eligible for 
 85.19  prescription drug coverage under the program beginning no later 
 85.20  than January 1, 1999. 
 85.21     Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
 85.22  the following definitions apply. 
 85.23     (b) "Health plan" has the meaning provided in section 
 85.24  62Q.01, subdivision 3. 
 85.25     (c) "Health plan company" has the meaning provided in 
 85.26  section 62Q.01, subdivision 4. 
 85.27     (d) "Qualified senior citizen" means an individual age 65 
 85.28  or older who: 
 85.29     (1) is eligible as a qualified Medicare beneficiary 
 85.30  according to section 256B.057, subdivision 3 or 3a, or is 
 85.31  eligible under section 256B.057, subdivision 3 or 3a, and 
 85.32  medical assistance or general assistance medical care with a 
 85.33  spenddown as defined in section 256B.056, subdivision 5.  
 85.34  Persons who are determined eligible for medical assistance 
 85.35  according to section 256B.0575 and persons who are eligible for 
 85.36  medical assistance without a spenddown according to section 
 86.1   256B.056, subdivision 4, are not eligible for this program; 
 86.2      (2) is not enrolled in prescription drug coverage under a 
 86.3   health plan; 
 86.4      (3) is not enrolled in prescription drug coverage under a 
 86.5   Medicare supplement plan, as defined in sections 62A.31 to 
 86.6   62A.44, or policies, contracts, or certificates that supplement 
 86.7   Medicare issued by health maintenance organizations or those 
 86.8   policies, contracts, or certificates governed by section 1833 or 
 86.9   1876 of the federal Social Security Act, United States Code, 
 86.10  title 42, section 1395, et seq., as amended; 
 86.11     (4) has not had coverage described in clauses (2) and (3) 
 86.12  for at least four months prior to application for the program; 
 86.13  and 
 86.14     (5) is a permanent resident of Minnesota as defined in 
 86.15  section 256.9359. 
 86.16     Subd. 3.  [PRESCRIPTION DRUG COVERAGE.] Coverage under the 
 86.17  program is limited to prescription drugs covered under the 
 86.18  medical assistance program as described in section 256B.0625, 
 86.19  subdivision 13, subject to a maximum deductible of $300 annually.
 86.20     Subd. 4.  [APPLICATION PROCEDURES AND COORDINATION WITH 
 86.21  MEDICAL ASSISTANCE.] Applications and information on the program 
 86.22  must be made available at county social service agencies, health 
 86.23  care provider offices, and agencies and organizations serving 
 86.24  senior citizens.  Senior citizens shall submit applications and 
 86.25  any information specified by the commissioner as being necessary 
 86.26  to verify eligibility directly to the county social service 
 86.27  agencies:  
 86.28     (1) beginning January 1, 1999, the county social service 
 86.29  agency shall determine medical assistance spenddown eligibility 
 86.30  of individuals who qualify for the senior citizen drug program 
 86.31  of individuals; and 
 86.32     (2) program payments will be used to reduce the spenddown 
 86.33  obligations of individuals who are determined to be eligible for 
 86.34  medical assistance with a spenddown as defined in section 
 86.35  256B.056, subdivision 5. 
 86.36  Seniors who are eligible for medical assistance with a spenddown 
 87.1   shall be financially responsible for the deductible amount up to 
 87.2   the satisfaction of the spenddown.  No deductible applies once 
 87.3   the spenddown has been met.  Payments to providers for 
 87.4   prescription drugs for persons eligible under this subdivision 
 87.5   shall be reduced by the deductible.  
 87.6      County social service agencies shall determine an 
 87.7   applicant's eligibility for the program within 45 days from the 
 87.8   date the application is received. 
 87.9      Subd. 5.  [DRUG UTILIZATION REVIEW PROGRAM.] The 
 87.10  commissioner shall utilize the drug utilization review program 
 87.11  as described in section 256B.0625, subdivision 13a.  
 87.12     Subd. 6.  [PHARMACY REIMBURSEMENT.] The commissioner shall 
 87.13  reimburse participating pharmacies for drug and dispensing costs 
 87.14  at the medical assistance reimbursement level, minus the 
 87.15  deductible required under subdivision 7. 
 87.16     Subd. 7.  [COST SHARING.] (a) Enrollees shall pay an annual 
 87.17  premium of $120.  
 87.18     (b) Program enrollees must satisfy a $300 annual 
 87.19  deductible, based upon expenditures for prescription drugs, as 
 87.20  follows: 
 87.21     (1) $25 monthly deductible for persons with a monthly 
 87.22  spenddown; and 
 87.23     (2) $150 biannual deductible for persons with a six-month 
 87.24  spenddown.  
 87.25  The commissioner may adjust the annual deductible amount to stay 
 87.26  within the program's appropriation. 
 87.27     Subd. 8.  [REPORT.] The commissioner shall annually report 
 87.28  to the legislature on the senior citizen drug program.  The 
 87.29  report must include demographic information on enrollees, 
 87.30  per-prescription expenditures, total program expenditures, 
 87.31  hospital and nursing home costs avoided by enrollees, any 
 87.32  savings to medical assistance and Medicare resulting from the 
 87.33  provision of prescription drug coverage under Medicare by health 
 87.34  maintenance organizations, other public and private options for 
 87.35  drug assistance to the senior population, and any 
 87.36  recommendations for changes in the senior drug program. 
 88.1      Subd. 9.  [PROGRAM LIMITATION.] This section shall be 
 88.2   repealed upon federal approval of the waiver to allow the 
 88.3   commissioner to provide prescription drug coverage for qualified 
 88.4   Medicare beneficiaries whose income is less than 150 percent of 
 88.5   the federal poverty guidelines. 
 88.6      Sec. 3.  Minnesota Statutes 1996, section 256B.0625, 
 88.7   subdivision 13, is amended to read: 
 88.8      Subd. 13.  [DRUGS.] (a) Medical assistance covers drugs, 
 88.9   except for fertility drugs when specifically used to enhance 
 88.10  fertility, if prescribed by a licensed practitioner and 
 88.11  dispensed by a licensed pharmacist, by a physician enrolled in 
 88.12  the medical assistance program as a dispensing physician, or by 
 88.13  a physician or a nurse practitioner employed by or under 
 88.14  contract with a community health board as defined in section 
 88.15  145A.02, subdivision 5, for the purposes of communicable disease 
 88.16  control.  The commissioner, after receiving recommendations from 
 88.17  professional medical associations and professional pharmacist 
 88.18  associations, shall designate a formulary committee to advise 
 88.19  the commissioner on the names of drugs for which payment is 
 88.20  made, recommend a system for reimbursing providers on a set fee 
 88.21  or charge basis rather than the present system, and develop 
 88.22  methods encouraging use of generic drugs when they are less 
 88.23  expensive and equally effective as trademark drugs.  The 
 88.24  formulary committee shall consist of nine members, four of whom 
 88.25  shall be physicians who are not employed by the department of 
 88.26  human services, and a majority of whose practice is for persons 
 88.27  paying privately or through health insurance, three of whom 
 88.28  shall be pharmacists who are not employed by the department of 
 88.29  human services, and a majority of whose practice is for persons 
 88.30  paying privately or through health insurance, a consumer 
 88.31  representative, and a nursing home representative.  Committee 
 88.32  members shall serve three-year terms and shall serve without 
 88.33  compensation.  Members may be reappointed once.  
 88.34     (b) The commissioner shall establish a drug formulary.  Its 
 88.35  establishment and publication shall not be subject to the 
 88.36  requirements of the administrative procedure act, but the 
 89.1   formulary committee shall review and comment on the formulary 
 89.2   contents.  The formulary committee shall review and recommend 
 89.3   drugs which require prior authorization.  The formulary 
 89.4   committee may recommend drugs for prior authorization directly 
 89.5   to the commissioner, as long as opportunity for public input is 
 89.6   provided.  Prior authorization may be requested by the 
 89.7   commissioner based on medical and clinical criteria before 
 89.8   certain drugs are eligible for payment.  Before a drug may be 
 89.9   considered for prior authorization at the request of the 
 89.10  commissioner:  
 89.11     (1) the drug formulary committee must develop criteria to 
 89.12  be used for identifying drugs; the development of these criteria 
 89.13  is not subject to the requirements of chapter 14, but the 
 89.14  formulary committee shall provide opportunity for public input 
 89.15  in developing criteria; 
 89.16     (2) the drug formulary committee must hold a public forum 
 89.17  and receive public comment for an additional 15 days; and 
 89.18     (3) the commissioner must provide information to the 
 89.19  formulary committee on the impact that placing the drug on prior 
 89.20  authorization will have on the quality of patient care and 
 89.21  information regarding whether the drug is subject to clinical 
 89.22  abuse or misuse.  Prior authorization may be required by the 
 89.23  commissioner before certain formulary drugs are eligible for 
 89.24  payment.  The formulary shall not include:  
 89.25     (i) drugs or products for which there is no federal 
 89.26  funding; 
 89.27     (ii) over-the-counter drugs, except for antacids, 
 89.28  acetaminophen, family planning products, aspirin, insulin, 
 89.29  products for the treatment of lice, vitamins for adults with 
 89.30  documented vitamin deficiencies, and vitamins for children under 
 89.31  the age of seven and pregnant or nursing women; 
 89.32     (iii) any other over-the-counter drug identified by the 
 89.33  commissioner, in consultation with the drug formulary committee, 
 89.34  as necessary, appropriate, and cost-effective for the treatment 
 89.35  of certain specified chronic diseases, conditions or disorders, 
 89.36  and this determination shall not be subject to the requirements 
 90.1   of chapter 14; 
 90.2      (iv) anorectics; and 
 90.3      (v) drugs for which medical value has not been established; 
 90.4   and 
 90.5      (vi) drugs from manufacturers who have not signed a rebate 
 90.6   agreement with the Department of Health and Human Services 
 90.7   pursuant to section 1927 of title XIX of the Social Security Act 
 90.8   and who have not signed an agreement with the state for drugs 
 90.9   purchased pursuant to the senior citizen drug program 
 90.10  established under section 256.955. 
 90.11     The commissioner shall publish conditions for prohibiting 
 90.12  payment for specific drugs after considering the formulary 
 90.13  committee's recommendations.  
 90.14     (c) The basis for determining the amount of payment shall 
 90.15  be the lower of the actual acquisition costs of the drugs plus a 
 90.16  fixed dispensing fee; the maximum allowable cost set by the 
 90.17  federal government or by the commissioner plus the fixed 
 90.18  dispensing fee; or the usual and customary price charged to the 
 90.19  public.  The pharmacy dispensing fee shall be $3.85.  Actual 
 90.20  acquisition cost includes quantity and other special discounts 
 90.21  except time and cash discounts.  The actual acquisition cost of 
 90.22  a drug shall be estimated by the commissioner, at average 
 90.23  wholesale price minus nine percent.  The maximum allowable cost 
 90.24  of a multisource drug may be set by the commissioner and it 
 90.25  shall be comparable to, but no higher than, the maximum amount 
 90.26  paid by other third-party payors in this state who have maximum 
 90.27  allowable cost programs.  Establishment of the amount of payment 
 90.28  for drugs shall not be subject to the requirements of the 
 90.29  administrative procedure act.  An additional dispensing fee of 
 90.30  $.30 may be added to the dispensing fee paid to pharmacists for 
 90.31  legend drug prescriptions dispensed to residents of long-term 
 90.32  care facilities when a unit dose blister card system, approved 
 90.33  by the department, is used.  Under this type of dispensing 
 90.34  system, the pharmacist must dispense a 30-day supply of drug.  
 90.35  The National Drug Code (NDC) from the drug container used to 
 90.36  fill the blister card must be identified on the claim to the 
 91.1   department.  The unit dose blister card containing the drug must 
 91.2   meet the packaging standards set forth in Minnesota Rules, part 
 91.3   6800.2700, that govern the return of unused drugs to the 
 91.4   pharmacy for reuse.  The pharmacy provider will be required to 
 91.5   credit the department for the actual acquisition cost of all 
 91.6   unused drugs that are eligible for reuse.  Over-the-counter 
 91.7   medications must be dispensed in the manufacturer's unopened 
 91.8   package.  The commissioner may permit the drug clozapine to be 
 91.9   dispensed in a quantity that is less than a 30-day supply.  
 91.10  Whenever a generically equivalent product is available, payment 
 91.11  shall be on the basis of the actual acquisition cost of the 
 91.12  generic drug, unless the prescriber specifically indicates 
 91.13  "dispense as written - brand necessary" on the prescription as 
 91.14  required by section 151.21, subdivision 2. 
 91.15     Sec. 4.  [STUDY ON DUAL PRESCRIPTION DRUG COVERAGE.] 
 91.16     The commissioner of human services shall study the 
 91.17  implications to the senior citizen drug program if a health plan 
 91.18  company offers within the state a product that provides a 
 91.19  prescription drug benefit as part of the standard coverage for 
 91.20  Medicare enrollees and shall make recommendations on how to 
 91.21  address this issue to the legislature by January 15, 1998. 
 91.22                             ARTICLE 5
 91.23                           APPROPRIATIONS
 91.24  Section 1.  [APPROPRIATIONS; SUMMARY.] 
 91.25     Except as otherwise provided in this act, the sums set 
 91.26  forth in the columns designated "fiscal year 1998" and "fiscal 
 91.27  year 1999" are appropriated from the general fund, or other 
 91.28  named fund, to the agencies for the purposes specified in this 
 91.29  act for the fiscal years ending June 30, 1998, and June 30, 1999.
 91.30  Sec. 2.  APPROPRIATIONS 
 91.31                          SUMMARY BY FUND
 91.32                            1998          1999           TOTAL
 91.33  Health Care 
 91.34  Access Fund            $125,029,000  $154,017,000  $279,046,000
 91.35  General Fund                689,000     5,096,000     5,785,000
 91.36  Subdivision 1.  Department of Human 
 91.37  Services 
 92.1   Health Care
 92.2   Access Fund              91,999,000   122,341,000   214,340,000
 92.3   General Fund                689,000     5,096,000     5,785,000
 92.4   [DENTAL SERVICES REIMBURSEMENT 
 92.5   INCREASE.] Notwithstanding statutory 
 92.6   provisions to the contrary, the 
 92.7   commissioner shall increase 
 92.8   reimbursement rates by 15 percent for 
 92.9   dental services covered under the 
 92.10  MinnesotaCare program and rendered on 
 92.11  or after July 1, 1997.  The 
 92.12  commissioner shall increase the prepaid 
 92.13  capitation rates as appropriate to 
 92.14  reflect this rate increase. 
 92.15  [FEDERAL RECEIPTS FOR ADMINISTRATION.] 
 92.16  Receipts received as a result of 
 92.17  federal participation pertaining to 
 92.18  administrative costs of the Minnesota 
 92.19  Health Care Reform Waiver shall be 
 92.20  deposited as a nondedicated revenue to 
 92.21  the Health Care Access Fund, while 
 92.22  receipts received as a result of 
 92.23  federal participation pertaining to 
 92.24  grants shall be deposited to the 
 92.25  federal fund and shall offset health 
 92.26  care access funds for payments to 
 92.27  providers. 
 92.28  [MINNESOTA OUTREACH.] Of the health 
 92.29  care access fund appropriation, 
 92.30  $750,000 each year shall be disbursed 
 92.31  for grants to public and private 
 92.32  organizations to provide outreach for 
 92.33  the MinnesotaCare program in areas of 
 92.34  the state with high uninsured 
 92.35  populations. 
 92.36  The general fund appropriation is for 
 92.37  administrative and service costs 
 92.38  associated with the senior drug 
 92.39  program.  If program expenditures in 
 92.40  any year after the 1998-1999 biennium 
 92.41  exceed $11,000,000, the commissioner 
 92.42  shall adjust the annual deductible and 
 92.43  premium to keep the general fund 
 92.44  expenditures under $11,000,000. 
 92.45  Subd. 2.  Department of Health 
 92.46  Health Care 
 92.47  Access Fund            11,427,000     11,526,000     22,953,000
 92.48  [RURAL HOSPITAL CAPITAL GRANTS.] Of 
 92.49  this appropriation, $4,200,000 in each 
 92.50  fiscal year shall be disbursed for 
 92.51  rural hospital capital improvement 
 92.52  grants or loans.  This appropriation 
 92.53  shall not become part of the base for 
 92.54  the fiscal year 2000-2001 biennium. 
 92.55  [RURAL HOSPITAL DEMONSTRATION 
 92.56  PROJECTS.] Of this appropriation, 
 92.57  $300,000 in each fiscal year shall be 
 92.58  disbursed for rural hospital 
 92.59  demonstration projects.  This 
 92.60  appropriation shall not become part of 
 92.61  the base for the fiscal year 2000-2001 
 92.62  biennium. 
 93.1   Subd. 3.  University of Minnesota 
 93.2    Health Care 
 93.3   Access Fund             2,357,000      2,357,000      4,714,000
 93.4   Subd. 4.  Department of Revenue 
 93.5   Health Care 
 93.6   Access Fund             3,121,000      1,668,000      4,789,000
 93.7   [RESEARCH DEDUCTION.] Of this 
 93.8   appropriation, $1,500,000 shall be 
 93.9   disbursed in fiscal year 1998 to be 
 93.10  used for research deduction claims 
 93.11  filed by hospitals and health care 
 93.12  providers under Minnesota Statutes, 
 93.13  section 295.53, subdivision 4, for 
 93.14  research expenditures incurred in 
 93.15  calendar year 1996.  These claims must 
 93.16  be filed by August 1, 1997, and the 
 93.17  commissioner must pay the refund no 
 93.18  later than October 1, 1997. 
 93.19  Subd. 5.  Department of Commerce 
 93.20  Health Care 
 93.21  Access Fund            16,000,000     16,000,000     32,000,000
 93.22  [MINNESOTA COMPREHENSIVE HEALTH 
 93.23  ASSOCIATION ASSESSMENT OFFSET.] This 
 93.24  appropriation is for a grant to the 
 93.25  Minnesota Comprehensive Health 
 93.26  Association and shall be made available 
 93.27  on January 1 of each fiscal year to be 
 93.28  used to offset the annual assessments 
 93.29  for calendar years 1998 and 1999 that 
 93.30  are required to be paid by each 
 93.31  contributing member in accordance with 
 93.32  Minnesota Statutes, section 62E.11.  
 93.33  This appropriation shall not become 
 93.34  part of the base for the fiscal year 
 93.35  2000-2001 biennium. 
 93.36  Subd. 6.  Legislative Coordinating 
 93.37  Commission 
 93.38  Health Care 
 93.39  Access Fund               125,000        125,000        250,000
 93.40  Sec. 3.  TRANSFERS 
 93.41  $4,112,000 in fiscal year 1998 and 
 93.42  $4,104,000 in fiscal year 1999 are 
 93.43  transferred from the health care access 
 93.44  fund to the general fund to replace the 
 93.45  revenue lost due to the repeal of the 
 93.46  $400 physician surcharge.