Minnesota Legislature
SF 1208
5th Engrossment - 80th Legislature (1997 - 1998) Posted on 12/15/2009 12:00am
KEY: stricken = removed, old language.
underscored = added, new language.
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; regulating community 1.14 purchasing arrangements; requiring certain studies; 1.15 appropriating money; amending Minnesota Statutes 1996, 1.16 sections 60A.15, subdivision 1; 60A.951, subdivision 1.17 5; 62A.61; 62J.017; 62J.06; 62J.07, subdivisions 1 and 1.18 3; 62J.09, subdivision 1; 62J.15, subdivision 1; 1.19 62J.152, subdivisions 1, 2, 4, 5, and by adding a 1.20 subdivision; 62J.17, subdivision 6a; 62J.22; 62J.25; 1.21 62J.2914, subdivision 1; 62J.2915; 62J.2916, 1.22 subdivision 1; 62J.2917, subdivision 2; 62J.2921, 1.23 subdivision 2; 62J.451, subdivision 6b; 62M.02, 1.24 subdivision 21; 62N.01, subdivision 1; 62N.22; 62N.23; 1.25 62N.25, subdivision 5; 62N.26; 62N.40; 62Q.01, 1.26 subdivisions 3, 4, and 5; 62Q.03, subdivision 5a; 1.27 62Q.106; 62Q.19, subdivision 1; 62Q.33, subdivision 2; 1.28 62Q.45, subdivision 2; 136A.1355; 144.147, 1.29 subdivisions 1, 2, 3, and 4; 144.1484, subdivision 1; 1.30 256.01, subdivision 2; 256.045, subdivision 3a; 1.31 256.9352, subdivision 3; 256.9353, subdivisions 1, 3, 1.32 and 7; 256.9354, subdivisions 4, 5, 6, 7, and by 1.33 adding a subdivision; 256.9355, subdivisions 1, 4, and 1.34 by adding a subdivision; 256.9357, subdivision 3; 1.35 256.9358, subdivision 4; 256.9359, subdivision 2; 1.36 256.9363, subdivisions 1 and 5; 256.9657, subdivision 1.37 3; 256B.0625, subdivision 13; 256D.03, subdivision 3; 1.38 295.50, subdivisions 3, 4, 6, 7, 9b, 13, 14, and by 1.39 adding a subdivision; 295.51, subdivision 1; 295.52, 1.40 subdivisions 1, 1a, 2, 4, and by adding subdivisions; 1.41 295.53, subdivisions 1, 3, and 4; 295.54, subdivisions 1.42 1 and 2; 295.55, subdivision 2; and 295.582; proposing 1.43 coding for new law in Minnesota Statutes, chapters 1.44 16A; 144; and 256; proposing coding for new law as 1.45 Minnesota Statutes, chapter 62S; repealing Minnesota 1.46 Statutes 1996, sections 62E.11, subdivision 12; 2.1 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, 2.2 subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, 2.3 subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 2.4 62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 2.5 62N.072; 62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 2.6 62N.10; 62N.11; 62N.12; 62N.13; 62N.14; 62N.15; 2.7 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, subdivision 2.8 3; 62Q.25; 62Q.29; 62Q.41; 147.01, subdivision 6; 2.9 295.52, subdivision 1b; and 295.53, subdivision 5; 2.10 Laws 1993, chapter 247, article 4, section 8; Laws 2.11 1994, chapter 625, article 5, section 5, as amended; 2.12 Laws 1995, chapter 96, section 2; and Laws 1995, First 2.13 Special Session chapter 3, article 13, section 2. 2.14 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 2.15 ARTICLE 1 2.16 MINNESOTACARE PROGRAM/GAMC 2.17 Section 1. Minnesota Statutes 1996, section 256.9353, 2.18 subdivision 1, is amended to read: 2.19 Subdivision 1. [COVERED HEALTH SERVICES.] "Covered health 2.20 services" means the health services reimbursed under chapter 2.21 256B, with the exception of inpatient hospital services, special 2.22 education services, private duty nursing services, adult dental 2.23 care services other than preventive services, orthodontic 2.24 services, nonemergency medical transportation services, personal 2.25 care assistant and case management services, nursing home or 2.26 intermediate care facilities services, inpatient mental health 2.27 services, and chemical dependency services. Effective July 1, 2.28 1998, adult dental care for nonpreventive services with the 2.29 exception of orthodontic services is available to persons who 2.30 qualify under section 256.9354, subdivisions 1 to 5, or 2.31 256.9366, with family gross income equal to or less than 175 2.32 percent of the federal poverty guidelines. Outpatient mental 2.33 health services covered under the MinnesotaCare program are 2.34 limited to diagnostic assessments, psychological testing, 2.35 explanation of findings, medication management by a physician, 2.36 day treatment, partial hospitalization, and individual, family, 2.37 and group psychotherapy. 2.38 No public funds shall be used for coverage of abortion 2.39 under MinnesotaCare except where the life of the female would be 2.40 endangered or substantial and irreversible impairment of a major 2.41 bodily function would result if the fetus were carried to term; 2.42 or where the pregnancy is the result of rape or incest. 3.1 Covered health services shall be expanded as provided in 3.2 this section. 3.3 Sec. 2. Minnesota Statutes 1996, section 256.9353, 3.4 subdivision 3, is amended to read: 3.5 Subd. 3. [INPATIENT HOSPITAL SERVICES.] (a) Beginning July 3.6 1, 1993, covered health services shall include inpatient 3.7 hospital services, including inpatient hospital mental health 3.8 services and inpatient hospital and residential chemical 3.9 dependency treatment, subject to those limitations necessary to 3.10 coordinate the provision of these services with eligibility 3.11 under the medical assistance spenddown. Prior to July 1, 1997, 3.12 the inpatient hospital benefit for adult enrollees is subject to 3.13 an annual benefit limit of $10,000. Effective July 1, 1997, the 3.14 inpatient hospital benefit for adult enrollees who qualify under 3.15 section 256.9354, subdivision 5, is subject to an annual limit 3.16 of $10,000. 3.17 (b) Enrollees who qualify under section 256.9354, 3.18 subdivision 5, are determined by the commissioner to have a 3.19 basis of eligibility for medical assistance shall apply for and 3.20 cooperate with the requirements of medical assistance by the 3.21 last day of the third month following admission to an inpatient 3.22 hospital. If an enrollee fails to apply for medical assistance 3.23 within this time period, the enrollee and the enrollee's family 3.24 shall be disenrolled from the plan and they may not reenroll 3.25 until 12 calendar months have elapsed. Enrollees and enrollees' 3.26 families disenrolled for not applying for or not cooperating 3.27 with medical assistance may not reenroll. 3.28 (c) Admissions for inpatient hospital services paid for 3.29 under section 256.9362, subdivision 3, must be certified as 3.30 medically necessary in accordance with Minnesota Rules, parts 3.31 9505.0500 to 9505.0540, except as provided in clauses (1) and 3.32 (2): 3.33 (1) all admissions must be certified, except those 3.34 authorized under rules established under section 254A.03, 3.35 subdivision 3, or approved under Medicare; and 3.36 (2) payment under section 256.9362, subdivision 3, shall be 4.1 reduced by five percent for admissions for which certification 4.2 is requested more than 30 days after the day of admission. The 4.3 hospital may not seek payment from the enrollee for the amount 4.4 of the payment reduction under this clause. 4.5 (d) Any enrollee or family member of an enrollee who has 4.6 previously been permanently disenrolled from MinnesotaCare for 4.7 not applying for and cooperating with medical assistance shall 4.8 be eligible to reenroll if 12 calendar months have elapsed since 4.9 the date of disenrollment. 4.10 Sec. 3. Minnesota Statutes 1996, section 256.9353, 4.11 subdivision 7, is amended to read: 4.12 Subd. 7. [COPAYMENTS AND COINSURANCE.] The MinnesotaCare 4.13 benefit plan shall include the following copayments and 4.14 coinsurance requirements: 4.15 (1) ten percent of the charges submitted for inpatient 4.16 hospital services for adult enrollees not eligible for medical 4.17 assistance, subject to an annual inpatient out-of-pocket maximum 4.18 of $1,000 per individual and $3,000 per family; 4.19 (2) $3 per prescription for adult enrollees;and4.20 (3) $25 for eyeglasses for adult enrollees; and 4.21 (4) effective July 1, 1998, 50 percent of charges submitted 4.22 for adult dental care services other than preventive care 4.23 services for persons eligible under section 256.9354, 4.24 subdivisions 1 to 5, or 256.9366 with income equal to or less 4.25 than 175 percent of the federal poverty guidelines. The 4.26 copayment amount shall be calculated as 50 percent of the 4.27 payment amount calculated according to section 256B.76, 4.28 paragraph (b). 4.29 Prior to July 1, 1997, enrollees who are not eligible for 4.30 medical assistance with or without a spenddown shall be 4.31 financially responsible for the coinsurance amount and amounts 4.32 which exceed the $10,000 benefit limit.MinnesotaCare shall be4.33financially responsible for the spenddown amount up to the4.34$10,000 benefit limit for enrollees who are eligible for medical4.35assistance with a spenddown; enrollees who are eligible for4.36medical assistance with a spenddown are financially responsible5.1for amounts which exceed the $10,000 benefit limit.Effective 5.2 July 1, 1997, the inpatient hospital benefit for adult enrollees 5.3 who qualify under section 256.9354, subdivision 5, and who are 5.4 not eligible for medical assistance with or without a spenddown 5.5 shall be financially responsible for the coinsurance amount and 5.6 amounts, which exceed the $10,000 benefit limit. 5.7 When a MinnesotaCare enrollee becomes a member of a prepaid 5.8 health plan, or changes from one prepaid health plan to another 5.9 during a calendar year, any charges submitted towards the 5.10 $10,000 annual inpatient benefit limit, and any out-of-pocket 5.11 expenses incurred by the enrollee for inpatient services, that 5.12 were submitted or incurred prior to enrollment, or prior to the 5.13 change in health plans, shall be disregarded. 5.14 Sec. 4. Minnesota Statutes 1996, section 256.9354, 5.15 subdivision 4, is amended to read: 5.16 Subd. 4. [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON 5.17 PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning 5.18 January 1, 1993, "eligible persons" means children, parents, and 5.19 dependent siblings residing in the same householdwho are not5.20eligible for medical assistance without a spenddown under5.21chapter 256B. Children who meet the criteria in subdivision 1 5.22 or 4a shall continue to be enrolled pursuant to those 5.23 subdivisions. Persons who are eligible under this subdivision 5.24 or subdivision 2, 3, or 5 must pay a premium as determined under 5.25 sections 256.9357 and 256.9358, and children eligible under 5.26 subdivision 1 must pay the premium required under section 5.27 256.9356, subdivision 1. Individuals and families whose income 5.28 is greater than the limits established under section 256.9358 5.29 may not enroll in MinnesotaCare. 5.30 Sec. 5. Minnesota Statutes 1996, section 256.9354, 5.31 subdivision 5, is amended to read: 5.32 Subd. 5. [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 5.33 CHILDREN.] (a) Beginning October 1, 1994, the definition of 5.34 "eligible persons" is expanded to include all individuals and 5.35 households with no children who have gross family incomes that 5.36 are equal to or less than 125 percent of the federal poverty 6.1 guidelines and who are not eligible for medical assistance 6.2 without a spenddown under chapter 256B. 6.3(b) After October 1, 1995, the commissioner of human6.4services may expand the definition of "eligible persons" to6.5include all individuals and households with no children who have6.6gross family incomes that are equal to or less than 135 percent6.7of federal poverty guidelines and are not eligible for medical6.8assistance without a spenddown under chapter 256B. This6.9expansion may occur only if the financial management6.10requirements of section 256.9352, subdivision 3, can be met.6.11(c) The commissioners of health and human services, in6.12consultation with the legislative commission on health care6.13access, shall make preliminary recommendations to the6.14legislature by October 1, 1995, and final recommendations to the6.15legislature by February 1, 1996, on whether a further expansion6.16of the definition of "eligible persons" to include all6.17individuals and households with no children who have gross6.18family incomes that are equal to or less than 150 percent of6.19federal poverty guidelines and are not eligible for medical6.20assistance without a spenddown under chapter 256B would be6.21allowed under the financial management constraints outlined in6.22section 256.9352, subdivision 3.6.23(d)(b) Beginning July 1, 1997, the definition of eligible 6.24 persons is expanded to include all individuals and households 6.25 with no children who have gross family incomes that are equal to 6.26 or less than 175 percent of the federal poverty guidelines and 6.27 who are not eligible for medical assistance without a spenddown 6.28 under chapter 256B. 6.29 (c) All eligible persons under paragraphs (a) and (b) are 6.30 eligible for coverage through the MinnesotaCare program but must 6.31 pay a premium as determined under sections 256.9357 and 6.32 256.9358. Individuals and families whose income is greater than 6.33 the limits established under section 256.9358 may not enroll in 6.34 the MinnesotaCare program. 6.35 Sec. 6. Minnesota Statutes 1996, section 256.9354, 6.36 subdivision 6, is amended to read: 7.1 Subd. 6. [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 7.2 ASSISTANCE.] Individuals who apply for MinnesotaCare who qualify 7.3 under section 256.9354, subdivision 5, but who are potentially 7.4 eligible for medical assistance without a spenddown shall be 7.5 allowed to enroll in MinnesotaCare for a period of 60 days, so 7.6 long as the applicant meets all other conditions of 7.7 eligibility. The commissioner shall identify and refer such 7.8 individuals to their county social service agency. The enrollee 7.9 must cooperate with the county social service agency in 7.10 determining medical assistance eligibility within the 60-day 7.11 enrollment period. Enrollees who do not apply for and cooperate 7.12 with medical assistance within the 60-day enrollment period, and 7.13 their other family members, shall be disenrolled from the plan 7.14 within one calendar month. Persons disenrolled for 7.15 nonapplication for medical assistance may not reenroll until 7.16 they have obtained a medical assistance eligibility 7.17 determination for the family member or members who were referred 7.18 to the county agency. Persons disenrolled for noncooperation 7.19 with medical assistance may not reenroll until they have 7.20 cooperated with the county agency and have obtained a medical 7.21 assistance eligibility determination. The commissioner shall 7.22 redetermine provider payments made under MinnesotaCare to the 7.23 appropriate medical assistance payments for those enrollees who 7.24 subsequently become eligible for medical assistance. 7.25 Sec. 7. Minnesota Statutes 1996, section 256.9354, 7.26 subdivision 7, is amended to read: 7.27 Subd. 7. [GENERAL ASSISTANCE MEDICAL CARE.] A person 7.28 cannot have coverage under both MinnesotaCare and general 7.29 assistance medical care in the same month, except that a7.30MinnesotaCare enrollee may be eligible for retroactive general7.31assistance medical care according to section 256D.03,7.32subdivision 3, paragraph (b). 7.33 Sec. 8. Minnesota Statutes 1996, section 256.9354, is 7.34 amended by adding a subdivision to read: 7.35 Subd. 8. [MINNESOTACARE OUTREACH.] (a) The commissioner 7.36 shall award grants to public or private organizations to provide 8.1 information on the importance of maintaining insurance coverage 8.2 and on how to obtain coverage through the MinnesotaCare program 8.3 in areas of the state with high uninsured populations. 8.4 (b) In awarding the grants, the commissioner shall consider 8.5 the following: 8.6 (1) geographic areas and populations with high uninsured 8.7 rates; 8.8 (2) the ability to raise matching funds from private or 8.9 nonpublic sources; and 8.10 (3) the ability to contact or serve eligible populations. 8.11 The commissioner shall monitor the grants and may terminate 8.12 a grant if the outreach effort does not increase the 8.13 MinnesotaCare program enrollment. 8.14 (c) Information about MinnesotaCare coverage and enrollment 8.15 shall be made available to insurance agents. A fee may be paid 8.16 by the commissioner of human services to an insurance agent for 8.17 each MinnesotaCare enrollee who is enrolled into the 8.18 MinnesotaCare program as a result of a documented referral from 8.19 that agent. 8.20 Sec. 9. Minnesota Statutes 1996, section 256.9355, 8.21 subdivision 1, is amended to read: 8.22 Subdivision 1. [APPLICATION AND INFORMATION AVAILABILITY.] 8.23 Applications and other information must be made available to 8.24 provider offices, local human services agencies, school 8.25 districts, public and private elementary schools in which 25 8.26 percent or more of the students receive free or reduced price 8.27 lunches, community health offices, and Women, Infants and 8.28 Children (WIC) program sites. These sites may accept 8.29 applications, collect the enrollment fee or initial premium fee,8.30 and forward the formsand feesto the commissioner. Otherwise, 8.31 applicants may apply directly to the commissioner. Beginning 8.32 January 1, 2000, MinnesotaCare enrollment sites will be expanded 8.33 to include local county human services agencies which choose to 8.34 participate. 8.35 Sec. 10. Minnesota Statutes 1996, section 256.9355, 8.36 subdivision 4, is amended to read: 9.1 Subd. 4. [APPLICATION PROCESSING.] The commissioner of 9.2 human services shall determine an applicant's eligibility for 9.3 MinnesotaCare no more than 30 days from the date that the 9.4 application is received by the department of human services. 9.5This requirement shall be suspended for four months following9.6the dates in which single adults and families without children9.7become eligible for the program.Beginning July 1, 2000, this 9.8 requirement also applies to local county human services agencies 9.9 that determine eligibility for MinnesotaCare. 9.10 Sec. 11. Minnesota Statutes 1996, section 256.9355, is 9.11 amended by adding a subdivision to read: 9.12 Subd. 5. [AVAILABILITY OF PRIVATE INSURANCE.] The 9.13 commissioner, in consultation with the commissioners of health 9.14 and commerce, shall provide information regarding the 9.15 availability of private health insurance coverage to all 9.16 families and individuals enrolled in the MinnesotaCare program 9.17 whose gross family income is equal to or more than 200 percent 9.18 of the federal poverty guidelines. This information must be 9.19 provided upon initial enrollment and annually thereafter. 9.20 Sec. 12. Minnesota Statutes 1996, section 256.9357, 9.21 subdivision 3, is amended to read: 9.22 Subd. 3. [PERIOD UNINSURED.] To be eligible for subsidized 9.23 premium payments based on a sliding scale, families and 9.24 individuals initially enrolled in the MinnesotaCare program 9.25 under section 256.9354, subdivisions 4 and 5, must have had no 9.26 health coverage for at least four months prior to application. 9.27 The commissioner may change this eligibility criterion for 9.28 sliding scale premiums without complying with rulemaking 9.29 requirements in order to remain within the limits of available 9.30 appropriations. The requirement of at least four months of no 9.31 health coverage prior to application for the MinnesotaCare 9.32 program does not apply to: 9.33 (1) families, children, and individuals whowant toapply 9.34 for the MinnesotaCare program upon termination from or as 9.35 required by the medical assistance program, general assistance 9.36 medical care program, or coverage under a regional demonstration 10.1 project for the uninsured funded under section 256B.73, the 10.2 Hennepin county assured care program, or the Group Health, Inc., 10.3 community health plan; 10.4 (2) families and individuals initially enrolled under 10.5 section 256.9354, subdivisions 1, paragraph (a), and 2; 10.6 (3) children enrolled pursuant to Laws 1992, chapter 549, 10.7 article 4, section 17; or 10.8 (4) individuals currently serving or who have served in the 10.9 military reserves, and dependents of these individuals, if these 10.10 individuals: (i) reapply for MinnesotaCare coverage after a 10.11 period of active military service during which they had been 10.12 covered by the Civilian Health and Medical Program of the 10.13 Uniformed Services (CHAMPUS); (ii) were covered under 10.14 MinnesotaCare immediately prior to obtaining coverage under 10.15 CHAMPUS; and (iii) have maintained continuous coverage. 10.16 Sec. 13. Minnesota Statutes 1996, section 256.9358, 10.17 subdivision 4, is amended to read: 10.18 Subd. 4. [INELIGIBILITY.] Families with children whose 10.19 gross monthly income is above the amount specified in 10.20 subdivision 3 are not eligible for the plan.Beginning October10.211, 1994,An individual or households with no children whose 10.22 gross family income is greater than125 percent of the federal10.23poverty guidelinesthe amount specified in section 256.9354, 10.24 subdivision 5, are ineligible for the plan. 10.25 Sec. 14. Minnesota Statutes 1996, section 256.9359, 10.26 subdivision 2, is amended to read: 10.27 Subd. 2. [RESIDENCY REQUIREMENT.] (a) Prior to July 1, 10.28 1997, to be eligible for health coverage under the MinnesotaCare 10.29 program, families and individuals must be permanent residents of 10.30 Minnesota. 10.31 (b) Effective July 1, 1997, to be eligible for health 10.32 coverage under the MinnesotaCare program, adults without 10.33 children must be permanent residents of Minnesota. 10.34 (c) Effective July 1, 1997, to be eligible for health 10.35 coverage under the MinnesotaCare program, pregnant women, 10.36 families, and children must meet the residency requirements as 11.1 provided by Code of Federal Regulations, title 42, section 11.2 435.403, except that the provisions of section 256B.056, 11.3 subdivision 1, shall apply upon receipt of federal approval. 11.4 Sec. 15. Minnesota Statutes 1996, section 256.9363, 11.5 subdivision 5, is amended to read: 11.6 Subd. 5. [ELIGIBILITY FOR OTHER STATE PROGRAMS.] 11.7 MinnesotaCare enrollees who become eligible for medical 11.8 assistance or general assistance medical care will remain in the 11.9 same managed care plan if the managed care plan has a contract 11.10 for that population. Effective January 1, 1998, MinnesotaCare 11.11 enrollees who were formerly eligible for general assistance 11.12 medical care pursuant to section 256D.03, subdivision 3, within 11.13 six months of MinnesotaCare enrollment and were enrolled in a 11.14 prepaid health plan pursuant to section 256D.03, subdivision 4, 11.15 paragraph (d), must remain in the same managed care plan if the 11.16 managed care plan has a contract for that population. Contracts 11.17 between the department of human services and managed care plans 11.18 must include MinnesotaCare, and medical assistance and may, at 11.19 the option of the commissioner of human services, also include 11.20 general assistance medical care. 11.21 Sec. 16. [256.937] [ASSET REQUIREMENT FOR MINNESOTACARE.] 11.22 Subdivision 1. [DEFINITIONS.] For purposes of this 11.23 section, the following definitions apply. 11.24 (a) "Asset" means cash and other personal property, as well 11.25 as any real property, that a family or individual owns which has 11.26 monetary value. 11.27 (b) "Homestead" means the home that is owned by, and is the 11.28 usual residence of, the family or individual, together with the 11.29 surrounding property which is not separated from the home by 11.30 intervening property owned by others. Public rights-of-way, 11.31 such as roads that run through the surrounding property and 11.32 separate it from the home, will not affect the exemption of the 11.33 property. "Usual residence" includes the home from which the 11.34 family or individual is temporarily absent due to illness, 11.35 employment, or education, or because the home is temporarily not 11.36 habitable due to casualty or natural disaster. 12.1 (c) "Net asset" means the asset's fair market value minus 12.2 any encumbrances including, but not limited to, liens and 12.3 mortgages. 12.4 Subd. 2. [LIMIT ON TOTAL ASSETS.] (a) Effective April 1, 12.5 1997, or upon federal approval, whichever is later, in order to 12.6 be eligible for the MinnesotaCare program, a household of two or 12.7 more persons must not own more than $30,000 in total net assets, 12.8 and a household of one person must not own more than $15,000 in 12.9 total net assets. 12.10 (b) For purposes of this subdivision, total net assets 12.11 include all assets, with the following exceptions: 12.12 (1) a homestead is not considered; 12.13 (2) household goods and personal effects are not 12.14 considered; 12.15 (3) any assets owned by children; 12.16 (4) a household's vehicle used for employment; 12.17 (5) court ordered settlements; 12.18 (6) individual retirement accounts of up to $10,000 in 12.19 value; and 12.20 (7) capital and operating assets of a trade or business up 12.21 to $200,000 in net assets are not considered. 12.22 (c) If an asset excluded under paragraph (b) has a negative 12.23 value, the negative value shall be subtracted from the total net 12.24 assets under paragraph (a). 12.25 Subd. 3. [DOCUMENTATION.] (a) The commissioner of human 12.26 services shall require individuals and families, at the time of 12.27 application or renewal, to indicate on a checkoff form developed 12.28 by the commissioner whether they satisfy the MinnesotaCare asset 12.29 requirement. This form must include the following or similar 12.30 language: "To be eligible for MinnesotaCare, individuals and 12.31 families must not own net assets in excess of $30,000 for a 12.32 household of two or more persons or $15,000 for a household of 12.33 one person, not including a homestead, household goods and 12.34 personal effects, assets owned by children, a household's 12.35 vehicle used for employment, court ordered settlements, 12.36 individual retirement accounts of up to $10,000 in value, and 13.1 capital and operating assets of a trade or business up to 13.2 $200,000. Do you and your household own net assets in excess of 13.3 these limits?" 13.4 (b) The commissioner may require individuals and families 13.5 to provide any information the commissioner determines necessary 13.6 to verify compliance with the asset requirement, if the 13.7 commissioner determines that there is reason to believe that an 13.8 individual or family has assets that exceed the program limit. 13.9 Subd. 4. [PENALTIES.] Individuals or families who are 13.10 found to have knowingly misreported the amount of their assets 13.11 as described in this section shall be subject to the penalties 13.12 in section 256.98. The commissioner shall present 13.13 recommendations on additional penalties to the 1998 legislature. 13.14 Sec. 17. [256.9371] [PENALTIES.] 13.15 Whoever obtains or attempts to obtain, or aids or abets any 13.16 person to obtain by means of a willfully false statement or 13.17 representation, or by the intentional withholding or concealment 13.18 of a material fact, or by impersonation, or other fraudulent 13.19 device: 13.20 (1) benefits under the MinnesotaCare program to which the 13.21 person is not entitled; or 13.22 (2) benefits under the MinnesotaCare program greater than 13.23 that to which the person is reasonably entitled; 13.24 shall be considered to have violated section 256.98, and shall 13.25 be subject to both the criminal and civil penalties provided 13.26 under that section. 13.27 Sec. 18. Minnesota Statutes 1996, section 256D.03, 13.28 subdivision 3, is amended to read: 13.29 Subd. 3. [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 13.30 (a) General assistance medical care may be paid for any person 13.31 who is not eligible for medical assistance under chapter 256B, 13.32 including eligibility for medical assistance based on a 13.33 spenddown of excess income according to section 256B.056, 13.34 subdivision 5, or MinnesotaCare as defined in clause (4), except 13.35 as provided in paragraph (b); and: 13.36 (1) who is receiving assistance under section 14.1 256D.05, except for families with children who are eligible 14.2 under Minnesota family investment program-statewide (MFIP-S), or 14.3 who is having a payment made on the person's behalf under 14.4 sections 256I.01 to 256I.06; or 14.5 (2)(i) who is a resident of Minnesota; and whose equity in 14.6 assets is not in excess of $1,000 per assistance unit. No asset 14.7 test shall be applied to children and their parents living in 14.8 the same household. Exempt assets, the reduction of excess 14.9 assets, and the waiver of excess assets must conform to the 14.10 medical assistance program in chapter 256B, with the following 14.11 exception: the maximum amount of undistributed funds in a trust 14.12 that could be distributed to or on behalf of the beneficiary by 14.13 the trustee, assuming the full exercise of the trustee's 14.14 discretion under the terms of the trust, must be applied toward 14.15 the asset maximum; and 14.16 (ii) who has countable income not in excess of the 14.17 assistance standards established in section 256B.056, 14.18 subdivision 4, or whose excess income is spent down pursuant to 14.19 section 256B.056, subdivision 5, using a six-month budget 14.20 period, except that a one-month budget period must be used for14.21recipients residing in a long-term care facility. The method 14.22 for calculating earned income disregards and deductions for a 14.23 person who resides with a dependent child under age 21 shallbe14.24as specified in section 256.74, subdivision 1follow section 14.25 256B.056, subdivision 1a. However, if a disregard of $30 and 14.26 one-third of the remainderdescribed in section 256.74,14.27subdivision 1, clause (4),has been applied to the wage earner's 14.28 income, the disregard shall not be applied again until the wage 14.29 earner's income has not been considered in an eligibility 14.30 determination for general assistance, general assistance medical 14.31 care, medical assistance, oraid to families with dependent14.32childrenMFIP-S for 12 consecutive months. The earned income 14.33 and work expense deductions for a person who does not reside 14.34 with a dependent child under age 21 shall be the same as the 14.35 method used to determine eligibility for a person under section 14.36 256D.06, subdivision 1, except the disregard of the first $50 of 15.1 earned income is not allowed; or 15.2 (3) who would be eligible for medical assistance except 15.3 that the person resides in a facility that is determined by the 15.4 commissioner or the federal health care financing administration 15.5 to be an institution for mental diseases. 15.6 (4) Beginning July 1, 1998, applicants or recipients who 15.7 meet all eligibility requirements of MinnesotaCare as defined in 15.8 sections 256.9351 to 256.9363 and 256.9366 to 256.9369, and are: 15.9 (i) adults with dependent children under 21 whose gross 15.10 family income is equal to or less than 275 percent of the 15.11 federal poverty guidelines; or 15.12 (ii) adults without children with earned income and whose 15.13 family gross income is between 75 percent of the federal poverty 15.14 guidelines and the amount set by section 256.9354, subdivision 15.15 5, shall be terminated from general assistance medical care upon 15.16 enrollment in MinnesotaCare. 15.17 (b)Eligibility is available for the month of application,15.18and for three months prior to application if the person was15.19eligible in those prior months.(1) For services rendered on or 15.20 after July 1, 1997, eligibility is limited to one month prior to 15.21 application if the person is determined eligible in the prior 15.22 month. A redetermination of eligibility must occur every 12 15.23 months. Beginning July 1, 1998, Minnesota health care program 15.24 applications completed by recipients and applicants who are 15.25 persons described in paragraph (a), clause (4), may be returned 15.26 to the county agency to be forwarded to the department of human 15.27 services or sent directly to the department of human services 15.28 for enrollment in MinnesotaCare. If all other eligibility 15.29 requirements of this subdivision are met, eligibility for 15.30 general assistance medical care shall be available in any month 15.31 during which a MinnesotaCare eligibility determination and 15.32 enrollment are pending. Upon notification of eligibility for 15.33 MinnesotaCare, notice of termination for eligibility for general 15.34 assistance medical care shall be sent to an applicant or 15.35 recipient. If all other eligibility requirements of this 15.36 subdivision are met, eligibility for general assistance medical 16.1 care shall be available until enrollment in MinnesotaCare 16.2 subject to the provisions of paragraph (d). 16.3 (2) An initial Minnesota health care program application 16.4 shall be considered complete and determination of eligibility 16.5 underway if the recipient and applicant has provided their name, 16.6 address, social security number, and best estimate of prior 16.7 year's income. If the recipient or applicant is unable to 16.8 provide this information when health care is delivered due to a 16.9 medical condition or disability, a health care provider may act 16.10 on their behalf to complete the initial application. 16.11 (3) County agencies are authorized to use all automated 16.12 databases containing information regarding recipients' or 16.13 applicants' income in order to determine eligibility for general 16.14 assistance medical care or MinnesotaCare. Such use shall be 16.15 considered sufficient in order to determine eligibility and 16.16 premium payments by the county agency. 16.17 (c) General assistance medical care is not available for a 16.18 person in a correctional facility unless the person is detained 16.19 by law for less than one year in a county correctional or 16.20 detention facility as a person accused or convicted of a crime, 16.21 or admitted as an inpatient to a hospital on a criminal hold 16.22 order, and the person is a recipient of general assistance 16.23 medical care at the time the person is detained by law or 16.24 admitted on a criminal hold order and as long as the person 16.25 continues to meet other eligibility requirements of this 16.26 subdivision. 16.27 (d) General assistance medical care is not available for 16.28 applicants or recipients who do not cooperate with the county 16.29 agency to meet the requirements of medical assistance. General 16.30 assistance medical care is limited to payment of emergency 16.31 services only for applicants or recipients as described in 16.32 paragraph (a), clause (4), whose MinnesotaCare coverage is 16.33 denied or terminated for nonpayment of premiums as required by 16.34 sections 256.9356 to 256.9358. 16.35 (e) In determining the amount of assets of an individual, 16.36 there shall be included any asset or interest in an asset, 17.1 including an asset excluded under paragraph (a), that was given 17.2 away, sold, or disposed of for less than fair market value 17.3 within the 60 months preceding application for general 17.4 assistance medical care or during the period of eligibility. 17.5 Any transfer described in this paragraph shall be presumed to 17.6 have been for the purpose of establishing eligibility for 17.7 general assistance medical care, unless the individual furnishes 17.8 convincing evidence to establish that the transaction was 17.9 exclusively for another purpose. For purposes of this 17.10 paragraph, the value of the asset or interest shall be the fair 17.11 market value at the time it was given away, sold, or disposed 17.12 of, less the amount of compensation received. For any 17.13 uncompensated transfer, the number of months of ineligibility, 17.14 including partial months, shall be calculated by dividing the 17.15 uncompensated transfer amount by the average monthly per person 17.16 payment made by the medical assistance program to skilled 17.17 nursing facilities for the previous calendar year. The 17.18 individual shall remain ineligible until this fixed period has 17.19 expired. The period of ineligibility may exceed 30 months, and 17.20 a reapplication for benefits after 30 months from the date of 17.21 the transfer shall not result in eligibility unless and until 17.22 the period of ineligibility has expired. The period of 17.23 ineligibility begins in the month the transfer was reported to 17.24 the county agency, or if the transfer was not reported, the 17.25 month in which the county agency discovered the transfer, 17.26 whichever comes first. For applicants, the period of 17.27 ineligibility begins on the date of the first approved 17.28 application. 17.29 (f)(1) Beginning October 1, 1993, an undocumented alien or 17.30 a nonimmigrant is ineligible for general assistance medical care 17.31 other than emergency services. For purposes of this 17.32 subdivision, a nonimmigrant is an individual in one or more of 17.33 the classes listed in United States Code, title 8, section 17.34 1101(a)(15), and an undocumented alien is an individual who 17.35 resides in the United States without the approval or 17.36 acquiescence of the Immigration and Naturalization Service. 18.1 (2) This subdivision does not apply to a child under age 18.2 18, to a Cuban or Haitian entrant as defined in Public Law 18.3 Number 96-422, section 501(e)(1) or (2)(a), or to an alien who 18.4 is aged, blind, or disabled as defined in United States Code, 18.5 title 42, section 1382c(a)(1). 18.6 (3) For purposes ofparagraphparagraphs (d) and (f), 18.7 "emergency services" has the meaning given in Code of Federal 18.8 Regulations, title 42, section 440.255(b)(1), except that it 18.9 also means services rendered because of suspected or actual 18.10 pesticide poisoning. 18.11 Sec. 19. [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.] 18.12 (a) The commissioner of human services, in consultation 18.13 with the legislative commission on health care access and the 18.14 commissioners of employee relations, health, and commerce, shall 18.15 develop an implementation plan to transition higher-income 18.16 MinnesotaCare enrollees to private sector or other nonsubsidized 18.17 coverage. In developing the plan, the commissioner shall 18.18 examine the feasibility of using the health insurance program 18.19 for state employees administered by the commissioner of employee 18.20 relations as a source of coverage, and shall also examine 18.21 methods to increase the affordability of private sector coverage 18.22 for individuals and families transitioning off MinnesotaCare. 18.23 The commissioner shall submit the implementation plan to the 18.24 legislature by December 15, 1997. 18.25 (b) The commissioner of human services shall report to the 18.26 legislature by January 15, 1998, on the impact of the outreach 18.27 efforts for the MinnesotaCare program, and on the reasons why 18.28 enrollees are leaving the MinnesotaCare program, and make 18.29 recommendations on: 18.30 (1) the affordability of the MinnesotaCare premium 18.31 schedule; 18.32 (2) the eligibility income level for the MinnesotaCare 18.33 program that will result in the greatest number of individuals 18.34 having health coverage; 18.35 (3) what will encourage greater availability of health 18.36 coverage in the private market; 19.1 (4) steps to increase the availability of health coverage 19.2 in the small employer market; 19.3 (5) the need, if any, and the feasibility of increasing the 19.4 MinnesotaCare program income eligibility level for individuals 19.5 and households without children; and 19.6 (6) the possibility of alternative premium payments and of 19.7 waiving the premiums for the MinnesotaCare program for certain 19.8 low-income enrollees. 19.9 ARTICLE 2 19.10 MISCELLANEOUS CHANGES TO HEALTH CARE REFORM 19.11 Section 1. Minnesota Statutes 1996, section 60A.951, 19.12 subdivision 5, is amended to read: 19.13 Subd. 5. [INSURER.] "Insurer" means insurance company, 19.14 risk retention group as defined in section 60E.02, service plan 19.15 corporation as defined in section 62C.02, health maintenance 19.16 organization as defined in section 62D.02, community integrated 19.17 service network as defined in section 62N.02, fraternal benefit 19.18 society regulated under chapter 64B, township mutual company 19.19 regulated under chapter 67A, joint self-insurance plan or 19.20 multiple employer trust regulated under chapter 60F, 62H, or 19.21 section 471.617, subdivision 2, persons administering a 19.22 self-insurance plan as defined in section 60A.23, subdivision 8, 19.23 clause (2), paragraphs (a) and (d), and the workers' 19.24 compensation reinsurance association established in section 19.25 79.34. 19.26 Sec. 2. Minnesota Statutes 1996, section 62A.61, is 19.27 amended to read: 19.28 62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 19.29 DETERMINE USUAL AND CUSTOMARY FEES.] 19.30 (a) A health carrier that bases reimbursement to health 19.31 care providers upon a usual and customary fee must maintain in 19.32 its office a copy of a description of the methodology used to 19.33 calculate fees including at least the following: 19.34 (1) the frequency of the determination of usual and 19.35 customary fees; 19.36 (2) a general description of the methodology used to 20.1 determine usual and customary fees; and 20.2 (3) the percentile of usual and customary fees that 20.3 determines the maximum allowable reimbursement. 20.4 (b) A health carrier must provide a copy of the information 20.5 described in paragraph (a) tothe Minnesota health care20.6commission,the commissioner of health,or the commissioner of 20.7 commerce, upon request. 20.8 (c) The commissioner of health or the commissioner of 20.9 commerce, as appropriate, may use to enforce this section any 20.10 enforcement powers otherwise available to the commissioner with 20.11 respect to the health carrier.The appropriate commissioner20.12shall enforce compliance with a request made under this section20.13by the Minnesota health care commission, at the request of the20.14commissioner.The commissioner of health or commerce, as 20.15 appropriate, may require health carriers to provide the 20.16 information required under this section and may use any powers 20.17 granted under other laws relating to the regulation of health 20.18 carriers to enforce compliance. 20.19 (d) For purposes of this section, "health carrier" has the 20.20 meaning given in section 62A.011. 20.21 Sec. 3. Minnesota Statutes 1996, section 62J.017, is 20.22 amended to read: 20.23 62J.017 [IMPLEMENTATION TIMETABLE.] 20.24 The state seeks to complete the restructuring of the health 20.25 care delivery and financing system. Beginning July 1, 1994, 20.26 measures will be taken to increase the public accountability of 20.27 existing health plan companies, to promote the development of 20.28 small, community-based integrated service networks, and to 20.29 reduce administrative costs by standardizing third-party billing 20.30 forms and procedures and utilization review requirements. 20.31Voluntary formation of other integrated service networks will20.32begin after rules have been adopted, but not before July 1,20.331996. Statutes and rules for the restructured health care20.34financing and delivery system must be enacted or adopted by20.35January 1, 1996.20.36 Sec. 4. Minnesota Statutes 1996, section 62J.06, is 21.1 amended to read: 21.2 62J.06 [IMMUNITY FROM LIABILITY.] 21.3 No member of theMinnesota health care commission21.4established under section 62J.05,regional coordinating boards 21.5 established under section 62J.09, or the health technology 21.6 advisory committee established under section 62J.15, shall be 21.7 held civilly or criminally liable for an act or omission by that 21.8 person if the act or omission was in good faith and within the 21.9 scope of the member's responsibilities under this chapter. 21.10 Sec. 5. Minnesota Statutes 1996, section 62J.07, 21.11 subdivision 1, is amended to read: 21.12 Subdivision 1. [LEGISLATIVE OVERSIGHT.] The legislative 21.13 commission on health care access reviews the activities of the 21.14 commissioner of health, thestate health care21.15commissionregional coordinating boards, the health technology 21.16 advisory committee, and all other state agencies involved in the 21.17 implementation and administration of this chapter, including 21.18 efforts to obtain federal approval through waivers and other 21.19 means. 21.20 Sec. 6. Minnesota Statutes 1996, section 62J.07, 21.21 subdivision 3, is amended to read: 21.22 Subd. 3. [REPORTS TO THE COMMISSION.] The commissioner of 21.23 healthand the Minnesota health care commission, the regional 21.24 coordinating boards, and the health technology advisory 21.25 committee shall report on their activitiesand the activities of21.26the regional boardsannually and at other times at the request 21.27 of the legislative commission on health care access. The 21.28 commissioners of health, commerce, and human services shall 21.29 provide periodic reports to the legislative commission on the 21.30 progress of rulemaking that is authorized or required under this 21.31 act and shall notify members of the commission when a draft of a 21.32 proposed rule has been completed and scheduled for publication 21.33 in the State Register. At the request of a member of the 21.34 commission, a commissioner shall provide a description and a 21.35 copy of a proposed rule. 21.36 Sec. 7. Minnesota Statutes 1996, section 62J.09, 22.1 subdivision 1, is amended to read: 22.2 Subdivision 1. [GENERAL DUTIES.] (a) The commissioner 22.3 shall divide the state into five rural regions, which shall 22.4 include all areas of the state, except for the seven-county 22.5 metropolitan area. 22.6The(b) Each rural region shall establish a locally 22.7 controlled regional coordinatingboards are locally controlled22.8boardsboard consisting of providers, health plan companies, 22.9 employers, consumers, and elected officials. Regional 22.10 coordinating boards may: 22.11 (1) undertake voluntary activities to educate consumers, 22.12 providers, and purchasers about community plans and projects 22.13 promoting health care cost containment, consumer accountability, 22.14 access, and quality and efforts to achieve public health goals; 22.15 (2) make recommendations to the commissioner regarding ways 22.16 of improving affordability, accessibility, and quality of health 22.17 care in the region and throughout the state; 22.18 (3) provide technical assistance to parties interested in 22.19 establishing or operating a community integrated service network 22.20 or integrated service network within the region. This 22.21 assistance must complement assistance provided by the 22.22 commissioner under section 62N.23; 22.23 (4) advise the commissioner on public health goals, taking 22.24 into consideration the relevant portions of the community health 22.25 service plans, plans required by the Minnesota comprehensive 22.26 adult mental health act, the Minnesota comprehensive children's 22.27 mental health act, and the community social service act plans 22.28 developed by county boards or community health boards in the 22.29 region under chapters 145A, 245, and 256E; 22.30 (5) prepare an annual regional education plan that is 22.31 consistent with and supportive of public health goals identified 22.32 by community health boards in the region; and 22.33 (6) serve as advisory bodies to identify potential 22.34 applicants for federal Health Professional Shortage Area and 22.35 federal Medically Underserved Area designation as requested by 22.36 the commissioner. 23.1 Sec. 8. Minnesota Statutes 1996, section 62J.15, 23.2 subdivision 1, is amended to read: 23.3 Subdivision 1. [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The 23.4Minnesota health care commission shall convenelegislative 23.5 commission on health care access may convene or authorize the 23.6 commissioner of health to convene an advisory committee to 23.7 conduct evaluations of existing research and technology 23.8 assessments conducted by other entities of new and existing 23.9 health care technologies as designated by the legislative 23.10 commission on health care access, the commissioner, or the 23.11 advisory committee.The advisory committee may include members23.12of the state commission and other persons appointed by the23.13commission.The advisory committee must include at least one 23.14 person representing physicians, at least one person representing 23.15 hospitals, and at least one person representing the health care 23.16 technology industry. Health care technologies include high-cost 23.17 drugs, devices, procedures, or processes applied to human health 23.18 care, such as high-cost transplants and expensive scanners and 23.19 imagers. The advisory committee is governed by section 15.0575, 23.20 subdivision 3, except that members do not receive per diem 23.21 payments. 23.22 Sec. 9. Minnesota Statutes 1996, section 62J.152, 23.23 subdivision 1, is amended to read: 23.24 Subdivision 1. [GENERALLY.] The health technology advisory 23.25 committee established in section 62J.15 shall: 23.26 (1) develop criteria and processes for evaluating health 23.27 care technology assessments made by other entities; 23.28 (2) conduct evaluations of specific technologies and their 23.29 specific use and application; 23.30 (3) provide the legislature with scientific evaluations of 23.31 proposed benefit mandates that utilize health care technologies 23.32 for a specific use and application; 23.33 (4) report the results of the evaluations to the 23.34 commissioner and theMinnesota health care23.35commissionlegislative commission on health care access; and 23.36(4)(5) carry out other duties relating to health 24.1 technology assigned by thecommissionlegislature or the 24.2 legislative commission on health care access. 24.3 Sec. 10. Minnesota Statutes 1996, section 62J.152, is 24.4 amended by adding a subdivision to read: 24.5 Subd. 1a. [LEGISLATIVE ACTION.] Nothing in subdivision 1 24.6 shall be construed to: 24.7 (1) require the legislature to postpone hearings or 24.8 legislative action on a proposed benefit mandate; or 24.9 (2) require the legislature to act in accordance with any 24.10 recommendations of the health technology advisory committee. 24.11 Sec. 11. Minnesota Statutes 1996, section 62J.152, 24.12 subdivision 2, is amended to read: 24.13 Subd. 2. [PRIORITIES FOR DESIGNATING TECHNOLOGIESCRITERIA 24.14 FORASSESSMENTEVALUATION.] The health technology advisory 24.15 committee shall consider the following criteria indesignating24.16 assessing or evaluating technologiesfor evaluation: 24.17 (1) the level of controversy within the medical or 24.18 scientific community, including questionable or undetermined 24.19 efficacy; 24.20 (2) the cost implications; 24.21 (3) the potential for rapid diffusion; 24.22 (4) the impact on a substantial patient population; 24.23 (5) the existence of alternative technologies; 24.24 (6) the impact on patient safety and health outcome; 24.25 (7) the public health importance; 24.26 (8) the level of public and professional demand; 24.27 (9) the social, ethical, and legal concerns; and 24.28 (10) the prevalence of the disease or condition. 24.29 The committee may give different weights or attach different 24.30 importance to each of the criteria, depending on the technology 24.31 being considered. The committee shall consider any additional 24.32 criteria approved by the commissioner and theMinnesota health24.33care commissionlegislative commission on health care access. 24.34 Sec. 12. Minnesota Statutes 1996, section 62J.152, 24.35 subdivision 4, is amended to read: 24.36 Subd. 4. [TECHNOLOGY EVALUATION PROCESS.] (a) The health 25.1 technology advisory committee shall collect and evaluate studies 25.2 and research findings on the technologies selected for 25.3 evaluation from as wide of a range of sources as needed, 25.4 including, but not limited to: federal agencies or other units 25.5 of government, international organizations conducting health 25.6 care technology assessments, health carriers, insurers, 25.7 manufacturers, professional and trade associations, nonprofit 25.8 organizations, and academic institutions. The health technology 25.9 advisory committee may use consultants or experts and solicit 25.10 testimony or other input as needed to evaluate a specific 25.11 technology. 25.12 (b) When the evaluation process on a specific technology 25.13 has been completed, the health technology advisory committee 25.14 shall submit a preliminary report to thehealth care25.15commissioncommissioner and the legislative commission on health 25.16 care access and publish a summary of the preliminary report in 25.17 the State Register with a notice that written comments may be 25.18 submitted. The preliminary report must include the results of 25.19 the technology assessment evaluation, studies and research 25.20 findings considered in conducting the evaluation, and the health 25.21 technology advisory committee's summary statement about the 25.22 evaluation. Any interested persons or organizations may submit 25.23 to the health technology advisory committee written comments 25.24 regarding the technology evaluation within 30 days from the date 25.25 the preliminary report was published in the State Register. The 25.26 health technology advisory committee's final report on its 25.27 technology evaluation must be submitted to thehealth care25.28commissioncommissioner, to the legislature, and to the 25.29 information clearinghouse. A summary of written comments 25.30 received by the health technology advisory committee within the 25.31 30-day period must be included in the final report.The health25.32care commission shall review the final report and prepare its25.33comments and recommendations. Before completing its final25.34comments and recommendations, the health care commission shall25.35provide adequate public notice that testimony will be accepted25.36by the health care commission. The health care commission shall26.1then forward the final report, its comments and recommendations,26.2and a summary of the public's comments to the commissioner and26.3information clearinghouse.26.4 (c) The reports of the health technology advisory committee 26.5and the comments and recommendations of the health care26.6commissionshould not eliminate or bar new technology, and are 26.7 not rules as defined in the administrative procedure act. 26.8 Sec. 13. Minnesota Statutes 1996, section 62J.152, 26.9 subdivision 5, is amended to read: 26.10 Subd. 5. [USE OF TECHNOLOGY EVALUATION.] (a) The final 26.11 report on the technology evaluationand the commission's26.12comments and recommendationsmay be used: 26.13 (1) by the commissioner in retrospective and prospective 26.14 review of major expenditures; 26.15 (2) byintegrated service networks and othergroup 26.16 purchasers and by employers, in making coverage, contracting, 26.17 purchasing, and reimbursement decisions; 26.18 (3) by organizations in the development of practice 26.19 parameters; 26.20 (4) by health care providers in making decisions about 26.21 adding or replacing technology and the appropriate use of 26.22 technology; 26.23 (5) by consumers in making decisions about treatment; 26.24 (6) by medical device manufacturers in developing and 26.25 marketing new technologies; and 26.26 (7) as otherwise needed by health care providers, health 26.27 care plans, consumers, and purchasers. 26.28 (b) At the request of the commissioner,the health care26.29commission, in consultation withthe health technology advisory 26.30 committee,shall submit specific recommendations relating to 26.31 technologies that have been evaluated under this section for 26.32 purposes of retrospective and prospective review of major 26.33 expenditures and coverage, contracting, purchasing, and 26.34 reimbursement decisions affecting state programs. 26.35 Sec. 14. Minnesota Statutes 1996, section 62J.17, 26.36 subdivision 6a, is amended to read: 27.1 Subd. 6a. [PROSPECTIVE REVIEW AND APPROVAL.] (a) 27.2 [REQUIREMENT.] No health care provider subject to prospective 27.3 review under this subdivision shall make a major spending 27.4 commitment unless: 27.5 (1) the provider has filed an application with the 27.6 commissioner to proceed with the major spending commitment and 27.7 has provided all supporting documentation and evidence requested 27.8 by the commissioner; and 27.9 (2) the commissioner determines, based upon this 27.10 documentation and evidence, that the major spending commitment 27.11 is appropriate under the criteria provided in subdivision 5a in 27.12 light of the alternatives available to the provider. 27.13 (b) [APPLICATION.] A provider subject to prospective 27.14 review and approval shall submit an application to the 27.15 commissioner before proceeding with any major spending 27.16 commitment. The application must address each item listed in 27.17 subdivision 4a, paragraph (a), and must also include 27.18 documentation to support the response to each item. The 27.19 provider may submit information, with supporting documentation, 27.20 regarding why the major spending commitment should be excepted 27.21 from prospective review under subdivision 7. The submission may 27.22 be made either in addition to or instead of the submission of 27.23 information relating to the items listed in subdivision 4a, 27.24 paragraph (a). 27.25 (c) [REVIEW.] The commissioner shall determine, based upon 27.26 the information submitted, whether the major spending commitment 27.27 is appropriate under the criteria provided in subdivision 5a, or 27.28 whether it should be excepted from prospective review under 27.29 subdivision 7. In making this determination, the commissioner 27.30 may also consider relevant information from other sources. At 27.31 the request of the commissioner, theMinnesota health care27.32commissionhealth technology advisory committee shall convene an 27.33 expert review panel made up of persons with knowledge and 27.34 expertise regarding medical equipment, specialized services, 27.35 health care expenditures, and capital expenditures to review 27.36 applications and make recommendations to the commissioner. The 28.1 commissioner shall make a decision on the application within 60 28.2 days after an application is received. 28.3 (d) [PENALTIES AND REMEDIES.] The commissioner of health 28.4 has the authority to issue fines, seek injunctions, and pursue 28.5 other remedies as provided by law. 28.6 Sec. 15. Minnesota Statutes 1996, section 62J.22, is 28.7 amended to read: 28.8 62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.] 28.9 The commissioner of health shall seek the full 28.10 participation of federal health care programs under this 28.11 chapter, including Medicare, medical assistance, veterans 28.12 administration programs, and other federal programs. The 28.13 commissioner of human services shallunder the direction of the28.14health care commissionsubmit waiver requests and take other 28.15 action necessary to obtain federal approval to allow 28.16 participation of the medical assistance program.Other state28.17agencies shall provide assistance at the request of the28.18commission.If federal approval is not given for one or more 28.19 federal programs, data on the amount of health care spending 28.20 that is collected under section 62J.04 shall be adjusted so that 28.21 state and regional spending limits take into account the failure 28.22 of the federal program to participate. 28.23 Sec. 16. Minnesota Statutes 1996, section 62J.25, is 28.24 amended to read: 28.25 62J.25 [MANDATORY MEDICARE ASSIGNMENT.] 28.26 (a) Effective January 1, 1993, a health care provider 28.27authorized to participate in the Medicare programshall not 28.28 charge to or collect from a Medicare beneficiary who is a 28.29 Minnesota resident any amount in excess of 115 percent of the 28.30 Medicare-approved amount for any Medicare-covered service 28.31 provided. 28.32 (b) Effective January 1, 1994, a health care provider 28.33authorized to participate in the Medicare programshall not 28.34 charge to or collect from a Medicare beneficiary who is a 28.35 Minnesota resident any amount in excess of 110 percent of the 28.36 Medicare-approved amount for any Medicare-covered service 29.1 provided. 29.2 (c) Effective January 1, 1995, a health care provider 29.3authorized to participate in the Medicare programshall not 29.4 charge to or collect from a Medicare beneficiary who is a 29.5 Minnesota resident any amount in excess of 105 percent of the 29.6 Medicare-approved amount for any Medicare-covered service 29.7 provided. 29.8 (d) Effective January 1, 1996, a health care provider 29.9authorized to participate in the Medicare programshall not 29.10 charge to or collect from a Medicare beneficiary who is a 29.11 Minnesota resident any amount in excess of the Medicare-approved 29.12 amount for any Medicare-covered service provided. 29.13 (e) This section does not apply to ambulance services as 29.14 defined in section 144.801, subdivision 4, or medical supplies 29.15 and equipment. 29.16 Sec. 17. Minnesota Statutes 1996, section 62J.2914, 29.17 subdivision 1, is amended to read: 29.18 Subdivision 1. [DISCLOSURE.] An application for approval 29.19 must include, to the extent applicable, disclosure of the 29.20 following: 29.21 (1) a descriptive title; 29.22 (2) a table of contents; 29.23 (3) exact names of each party to the application and the 29.24 address of the principal business office of each party; 29.25 (4) the name, address, and telephone number of the persons 29.26 authorized to receive notices and communications with respect to 29.27 the application; 29.28 (5) a verified statement by a responsible officer of each 29.29 party to the application attesting to the accuracy and 29.30 completeness of the enclosed information; 29.31 (6) background information relating to the proposed 29.32 arrangement, including: 29.33 (i) a description of the proposed arrangement, including a 29.34 list of any services or products that are the subject of the 29.35 proposed arrangement; 29.36 (ii) an identification of any tangential services or 30.1 products associated with the services or products that are the 30.2 subject of the proposed arrangement; 30.3 (iii) a description of the geographic territory involved in 30.4 the proposed arrangement; 30.5 (iv) if the geographic territory described in item (iii), 30.6 is different from the territory in which the applicants have 30.7 engaged in the type of business at issue over the last five 30.8 years, a description of how and why the geographic territory 30.9 differs; 30.10 (v) identification of all products or services that a 30.11 substantial share of consumers would consider substitutes for 30.12 any service or product that is the subject of the proposed 30.13 arrangement; 30.14 (vi) identification of whether any services or products of 30.15 the proposed arrangement are currently being offered, capable of 30.16 being offered, utilized, or capable of being utilized by other 30.17 providers or purchasers in the geographic territory described in 30.18 item (iii); 30.19 (vii) identification of the steps necessary, under current 30.20 market and regulatory conditions, for other parties to enter the 30.21 territory described in item (iii) and compete with the 30.22 applicant; 30.23 (viii) a description of the previous history of dealings 30.24 between the parties to the application; 30.25 (ix) a detailed explanation of the projected effects, 30.26 including expected volume, change in price, and increased 30.27 revenue, of the arrangement on each party's current businesses, 30.28 both generally as well as the aspects of the business directly 30.29 involved in the proposed arrangement; 30.30 (x) the present market share of the parties to the 30.31 application and of others affected by the proposed arrangement, 30.32 and projected market shares after implementation of the proposed 30.33 arrangement; 30.34 (xi) a statement of why the projected levels of cost, 30.35 access, or quality could not be achieved in the existing market 30.36 without the proposed arrangement; and 31.1 (xii) an explanation of how the arrangement relates to any 31.2Minnesota health care commission orapplicable regional 31.3 coordinating board plans for delivery of health care; and 31.4 (7) a detailed explanation of how the transaction will 31.5 affect cost, access, and quality. The explanation must address 31.6 the factors in section 62J.2917, subdivision 2, paragraphs (b) 31.7 to (d), to the extent applicable. 31.8 Sec. 18. Minnesota Statutes 1996, section 62J.2915, is 31.9 amended to read: 31.10 62J.2915 [NOTICE AND COMMENT.] 31.11 Subdivision 1. [NOTICE.] The commissioner shall cause the 31.12 notice described in section 62J.2914, subdivision 2, to be 31.13 published in the State Register and sent tothe Minnesota health31.14care commission,the regional coordinating boards for any 31.15 regions that include all or part of the territory covered by the 31.16 proposed arrangement, and any person who has requested to be 31.17 placed on a list to receive notice of applications. The 31.18 commissioner may maintain separate notice lists for different 31.19 regions of the state. The commissioner may also send a copy of 31.20 the notice to any person together with a request that the person 31.21 comment as provided under subdivision 2. Copies of the request 31.22 must be provided to the applicant. 31.23 Subd. 2. [COMMENTS.] Within 20 days after the notice is 31.24 published, any person may mail to the commissioner written 31.25 comments with respect to the application. Within 30 days after 31.26 the notice is published,the Minnesota health care commission or31.27 any regional coordinating board may mail to the commissioner 31.28 comments with respect to the application. Persons submitting 31.29 comments shall provide a copy of the comments to the applicant. 31.30 The applicant may mail to the commissioner written responses to 31.31 any comments within ten days after the deadline for mailing such 31.32 comments. The applicant shall send a copy of the response to 31.33 the person submitting the comment. 31.34 Sec. 19. Minnesota Statutes 1996, section 62J.2916, 31.35 subdivision 1, is amended to read: 31.36 Subdivision 1. [CHOICE OF PROCEDURES.] After the 32.1 conclusion of the period provided in section 62J.2915, 32.2 subdivision 2, for the applicant to respond to comments, the 32.3 commissioner shall select one of the three procedures provided 32.4 in subdivision 2. In determining which procedure to use, the 32.5 commissioner shall consider the following criteria: 32.6 (1) the size of the proposed arrangement, in terms of 32.7 number of parties and amount of money involved; 32.8 (2) the complexity of the proposed arrangement; 32.9 (3) the novelty of the proposed arrangement; 32.10 (4) the substance and quantity of the comments received; 32.11 (5) any comments received from theMinnesota health care32.12commission orregional coordinating boards; and 32.13 (6) the presence or absence of any significant gaps in the 32.14 factual record. 32.15 If the applicant demands a contested case hearing no later 32.16 than the conclusion of the period provided in section 62J.2915, 32.17 subdivision 2, for the applicant to respond to comments, the 32.18 commissioner shall not select a procedure. Instead, the 32.19 applicant shall be given a contested case proceeding as a matter 32.20 of right. 32.21 Sec. 20. Minnesota Statutes 1996, section 62J.2917, 32.22 subdivision 2, is amended to read: 32.23 Subd. 2. [FACTORS.] (a) [GENERALLY APPLICABLE FACTORS.] 32.24 In making a determination about cost, access, and quality, the 32.25 commissioner may consider the following factors, to the extent 32.26 relevant: 32.27 (1) whether the proposal is compatible with thecost32.28containment plan or other plan of the Minnesota health care32.29commission or theapplicable regional plans of the regional 32.30 coordinating boards; 32.31 (2) market structure: 32.32 (i) actual and potential sellers and buyers, or providers 32.33 and purchasers; 32.34 (ii) actual and potential consumers; 32.35 (iii) geographic market area; and 32.36 (iv) entry conditions; 33.1 (3) current market conditions; 33.2 (4) the historical behavior of the market; 33.3 (5) performance of other, similar arrangements; 33.4 (6) whether the proposal unnecessarily restrains 33.5 competition or restrains competition in ways not reasonably 33.6 related to the purposes of this chapter; and 33.7 (7) the financial condition of the applicant. 33.8 (b) [COST.] The commissioner's analysis of cost must focus 33.9 on the individual consumer of health care. Cost savings to be 33.10 realized by providers, health carriers, group purchasers, or 33.11 other participants in the health care system are relevant only 33.12 to the extent that the savings are likely to be passed on to the 33.13 consumer. However, where an application is submitted by 33.14 providers or purchasers who are paid primarily by third party 33.15 payers unaffiliated with the applicant, it is sufficient for the 33.16 applicant to show that cost savings are likely to be passed on 33.17 to the unaffiliated third party payers; the applicants do not 33.18 have the burden of proving that third party payers with whom the 33.19 applicants are not affiliated will pass on cost savings to 33.20 individuals receiving coverage through the third party payers. 33.21 In making determinations as to costs, the commissioner may 33.22 consider: 33.23 (1) the cost savings likely to result to the applicant; 33.24 (2) the extent to which the cost savings are likely to be 33.25 passed on to the consumer and in what form; 33.26 (3) the extent to which the proposed arrangement is likely 33.27 to result in cost shifting by the applicant onto other payers or 33.28 purchasers of other products or services; 33.29 (4) the extent to which the cost shifting by the applicant 33.30 is likely to be followed by other persons in the market; 33.31 (5) the current and anticipated supply and demand for any 33.32 products or services at issue; 33.33 (6) the representations and guarantees of the applicant and 33.34 their enforceability; 33.35 (7) likely effectiveness of regulation by the commissioner; 33.36 (8) inferences to be drawn from market structure; 34.1 (9) the cost of regulation, both for the state and for the 34.2 applicant; and 34.3 (10) any other factors tending to show that the proposed 34.4 arrangement is or is not likely to reduce cost. 34.5 (c) [ACCESS.] In making determinations as to access, the 34.6 commissioner may consider: 34.7 (1) the extent to which the utilization of needed health 34.8 care services or products by the intended targeted population is 34.9 likely to increase or decrease. When a proposed arrangement is 34.10 likely to increase access in one geographic area, by lowering 34.11 prices or otherwise expanding supply, but limits access in 34.12 another geographic area by removing service capabilities from 34.13 that second area, the commissioner shall articulate the criteria 34.14 employed to balance these effects; 34.15 (2) the extent to which the proposed arrangement is likely 34.16 to make available a new and needed service or product to a 34.17 certain geographic area; and 34.18 (3) the extent to which the proposed arrangement is likely 34.19 to otherwise make health care services or products more 34.20 financially or geographically available to persons who need them. 34.21 If the commissioner determines that the proposed 34.22 arrangement is likely to increase access and bases that 34.23 determination on a projected increase in utilization, the 34.24 commissioner shall also determine and make a specific finding 34.25 that the increased utilization does not reflect overutilization. 34.26 (d) [QUALITY.] In making determinations as to quality, the 34.27 commissioner may consider the extent to which the proposed 34.28 arrangement is likely to: 34.29 (1) decrease morbidity and mortality; 34.30 (2) result in faster convalescence; 34.31 (3) result in fewer hospital days; 34.32 (4) permit providers to attain needed experience or 34.33 frequency of treatment, likely to lead to better outcomes; 34.34 (5) increase patient satisfaction; and 34.35 (6) have any other features likely to improve or reduce the 34.36 quality of health care. 35.1 Sec. 21. Minnesota Statutes 1996, section 62J.2921, 35.2 subdivision 2, is amended to read: 35.3 Subd. 2. [NOTICE.] The commissioner shall begin a 35.4 proceeding to revoke approval by providing written notice to the 35.5 applicant describing in detail the basis for the proposed 35.6 revocation. Notice of the proceeding must be published in the 35.7 State Register and submitted tothe Minnesota health care35.8commission andthe applicable regional coordinating boards. The 35.9 notice must invite the submission of comments to the 35.10 commissioner. 35.11 Sec. 22. Minnesota Statutes 1996, section 62J.451, 35.12 subdivision 6b, is amended to read: 35.13 Subd. 6b. [CONSUMER SURVEYS.] (a) The health data 35.14 institute shall develop and implement a mechanism for collecting 35.15 comparative data on consumer perceptions of the health care 35.16 system, including consumer satisfaction, through adoption of a 35.17 standard consumer survey. This survey shall include enrollees 35.18 in community integrated service networks, integrated service 35.19 networks, health maintenance organizations, preferred provider 35.20 organizations, indemnity insurance plans, public programs, and 35.21 other health plan companies. The health data institute, in35.22consultation with the health care commission,shall determine a 35.23 mechanism for the inclusion of the uninsured. This consumer 35.24 survey may be conducted every two years. A focused survey may 35.25 be conducted on the off years. Health plan companies and group 35.26 purchasers shall provide to the health data institute roster 35.27 data as defined in subdivision 2, including the names, 35.28 addresses, and telephone numbers of enrollees and former 35.29 enrollees and other data necessary for the completion of this 35.30 survey. This roster data provided by the health plan companies 35.31 and group purchasers is classified as provided under section 35.32 62J.452. The health data institute may analyze and prepare 35.33 findings from the raw, unaggregated data, and the findings from 35.34 this survey may be included in the health plan company 35.35 performance reports specified in subdivision 6a, and in other 35.36 reports developed and disseminated by the health data institute 36.1 and the commissioner. The raw, unaggregated data is classified 36.2 as provided under section 62J.452, and may be made available by 36.3 the health data institute to the extent permitted under section 36.4 62J.452. The health data institute shall provide raw, 36.5 unaggregated data to the commissioner. The survey may include 36.6 information on the following subjects: 36.7 (1) enrollees' overall satisfaction with their health care 36.8 plan; 36.9 (2) consumers' perception of access to emergency, urgent, 36.10 routine, and preventive care, including locations, hours, 36.11 waiting times, and access to care when needed; 36.12 (3) premiums and costs; 36.13 (4) technical competence of providers; 36.14 (5) communication, courtesy, respect, reassurance, and 36.15 support; 36.16 (6) choice and continuity of providers; 36.17 (7) continuity of care; 36.18 (8) outcomes of care; 36.19 (9) services offered by the plan, including range of 36.20 services, coverage for preventive and routine services, and 36.21 coverage for illness and hospitalization; 36.22 (10) availability of information; and 36.23 (11) paperwork. 36.24 (b) The health data institute shall appoint a consumer 36.25 advisory group which shall consist of 13 individuals, 36.26 representing enrollees from public and private health plan 36.27 companies and programs and two uninsured consumers, to advise 36.28 the health data institute on issues of concern to consumers. 36.29 The advisory group must have at least one member from each 36.30 regional coordinating board region of the state. The advisory 36.31 group expires June 30, 1996. 36.32 Sec. 23. Minnesota Statutes 1996, section 62M.02, 36.33 subdivision 21, is amended to read: 36.34 Subd. 21. [UTILIZATION REVIEW ORGANIZATION.] "Utilization 36.35 review organization" means an entity including but not limited 36.36 to an insurance company licensed under chapter 60A to offer, 37.1 sell, or issue a policy of accident and sickness insurance as 37.2 defined in section 62A.01; a health service plan licensed under 37.3 chapter 62C; a health maintenance organization licensed under 37.4 chapter 62D; a community integrated service networkor an37.5integrated service networklicensed under chapter 62N; a 37.6 fraternal benefit society operating under chapter 64B; a joint 37.7 self-insurance employee health plan operating under chapter 62H; 37.8 a multiple employer welfare arrangement, as defined in section 3 37.9 of the Employee Retirement Income Security Act of 1974 (ERISA), 37.10 United States Code, title 29, section 1103, as amended; a third 37.11 party administrator licensed under section 60A.23, subdivision 37.12 8, which conducts utilization review and determines 37.13 certification of an admission, extension of stay, or other 37.14 health care services for a Minnesota resident; or any entity 37.15 performing utilization review that is affiliated with, under 37.16 contract with, or conducting utilization review on behalf of, a 37.17 business entity in this state. 37.18 Sec. 24. Minnesota Statutes 1996, section 62N.01, 37.19 subdivision 1, is amended to read: 37.20 Subdivision 1. [CITATION.] This chapter may be cited as 37.21 the "Minnesota community integrated service network act." 37.22 Sec. 25. Minnesota Statutes 1996, section 62N.22, is 37.23 amended to read: 37.24 62N.22 [DISCLOSURE OF COMMISSIONS.] 37.25 Before selling any coverage or enrollment in a community 37.26 integrated service networkor an integrated service network, a 37.27 person selling the coverage or enrollment shall disclose in 37.28 writing to the prospective purchaser the amount of any 37.29 commission or other compensation the person will receive as a 37.30 direct result of the sale. The disclosure may be expressed in 37.31 dollars or as a percentage of the premium. The amount disclosed 37.32 need not include any anticipated renewal commissions. 37.33 Sec. 26. Minnesota Statutes 1996, section 62N.23, is 37.34 amended to read: 37.35 62N.23 [TECHNICAL ASSISTANCE; LOANS.] 37.36 (a) The commissioner shall provide technical assistance to 38.1 parties interested in establishing or operating a community 38.2 integrated service networkor an integrated service network. 38.3 This shall be known as the community integrated service network 38.4 technical assistance program(ISNTAP)(CISNTAP). 38.5 The technical assistance program shall offer seminars on 38.6 the establishment and operation of community integrated service 38.7 networksor integrated service networksin all regions of 38.8 Minnesota. The commissioner shall advertise these seminars in 38.9 local and regional newspapers, and attendance at these seminars 38.10 shall be free. 38.11 The commissioner shall write a guide to establishing and 38.12 operating a community integrated service networkor an38.13integrated service network. The guide must provide basic 38.14 instructions for parties wishing to establish a community 38.15 integrated service networkor an integrated service network. 38.16 The guide must be provided free of charge to interested 38.17 parties. The commissioner shall update this guide when 38.18 appropriate. 38.19 The commissioner shall establish a toll-free telephone line 38.20 that interested parties may call to obtain assistance in 38.21 establishing or operating a community integrated service network 38.22or an integrated service network. 38.23 (b) The commissioner shall grant loans for organizational 38.24 and start-up expenses to entities forming community integrated 38.25 service networksor integrated service networks, or to networks 38.26 less than one year old, to the extent of any appropriation for 38.27 that purpose. The commissioner shall allocate the available 38.28 funds among applicants based upon the following criteria, as 38.29 evaluated by the commissioner within the commissioner's 38.30 discretion: 38.31 (1) the applicant's need for the loan; 38.32 (2) the likelihood that the loan will foster the formation 38.33 or growth of a network; and 38.34 (3) the likelihood of repayment. 38.35 The commissioner shall determine any necessary application 38.36 deadlines and forms and is exempt from rulemaking in doing so. 39.1 Sec. 27. Minnesota Statutes 1996, section 62N.25, 39.2 subdivision 5, is amended to read: 39.3 Subd. 5. [BENEFITS.] Community integrated service networks 39.4 must offer the health maintenance organization benefit set, as 39.5 defined in chapter 62D, and other laws applicable to entities 39.6 regulated under chapter 62D, except that the community39.7integrated service network may impose a deductible, not to39.8exceed $1,000 per person per year, provided that out-of-pocket39.9expenses on covered services do not exceed $3,000 per person or39.10$5,000 per family per year. The deductible must not apply to39.11preventive health services as described in Minnesota Rules, part39.124685.0801, subpart 8. Community networks and chemical 39.13 dependency facilities under contract with a community network 39.14 shall use the assessment criteria in Minnesota Rules, parts 39.15 9530.6600 to 9530.6660, when assessing enrollees for chemical 39.16 dependency treatment. 39.17 Sec. 28. Minnesota Statutes 1996, section 62N.26, is 39.18 amended to read: 39.19 62N.26 [SHARED SERVICES COOPERATIVE.] 39.20 The commissioner of health shall establish, or assist in 39.21 establishing, a shared services cooperative organized under 39.22 chapter 308A to make available administrative and legal 39.23 services, technical assistance, provider contracting and billing 39.24 services, and other services to those community integrated 39.25 service networksand integrated service networksthat choose to 39.26 participate in the cooperative. The commissioner shall provide, 39.27 to the extent funds are appropriated, start-up loans sufficient 39.28 to maintain the shared services cooperative until its operations 39.29 can be maintained by fees and contributions. The cooperative 39.30 must not be staffed, administered, or supervised by the 39.31 commissioner of health. The cooperative shall make use of 39.32 existing resources that are already available in the community, 39.33 to the extent possible. 39.34 Sec. 29. Minnesota Statutes 1996, section 62N.40, is 39.35 amended to read: 39.36 62N.40 [CHEMICAL DEPENDENCY SERVICES.] 40.1 Each community integrated service networkand integrated40.2service networkregulated under this chapter must ensure that 40.3 chemically dependent individuals have access to cost-effective 40.4 treatment options that address the specific needs of 40.5 individuals. These include, but are not limited to, the need 40.6 for: treatment that takes into account severity of illness and 40.7 comorbidities; provision of a continuum of care, including 40.8 treatment and rehabilitation programs licensed under Minnesota 40.9 Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; 40.10 the safety of the individual's domestic and community 40.11 environment; gender appropriate and culturally appropriate 40.12 programs; and access to appropriate social services. 40.13 Sec. 30. Minnesota Statutes 1996, section 62Q.01, 40.14 subdivision 3, is amended to read: 40.15 Subd. 3. [HEALTH PLAN.] "Health plan" means a health plan 40.16 as defined in section 62A.011; a policy, contract, or 40.17 certificate issued by a community integrated service network; or40.18an integrated service network. 40.19 Sec. 31. Minnesota Statutes 1996, section 62Q.01, 40.20 subdivision 4, is amended to read: 40.21 Subd. 4. [HEALTH PLAN COMPANY.] "Health plan company" 40.22 means: 40.23 (1) a health carrier as defined under section 62A.011, 40.24 subdivision 2; or 40.25 (2)an integrated service network as defined under section40.2662N.02, subdivision 8; or40.27(3)a community integrated service network as defined under 40.28 section 62N.02, subdivision 4a. 40.29 Sec. 32. Minnesota Statutes 1996, section 62Q.01, 40.30 subdivision 5, is amended to read: 40.31 Subd. 5. [MANAGED CARE ORGANIZATION.] "Managed care 40.32 organization" means: (1) a health maintenance organization 40.33 operating under chapter 62D; (2) a community integrated service 40.34 network as defined under section 62N.02, subdivision 40.35 4a; or (3)an integrated service network as defined under40.36section 62N.02, subdivision 8; or (4)an insurance company 41.1 licensed under chapter 60A, nonprofit health service plan 41.2 corporation operating under chapter 62C, fraternal benefit 41.3 society operating under chapter 64B, or any other health plan 41.4 company, to the extent that it covers health care services 41.5 delivered to Minnesota residents through a preferred provider 41.6 organization or a network of selected providers. 41.7 Sec. 33. Minnesota Statutes 1996, section 62Q.03, 41.8 subdivision 5a, is amended to read: 41.9 Subd. 5a. [PUBLIC PROGRAMS.] (a) A separate risk 41.10 adjustment system must be developed for state-run public 41.11 programs, including medical assistance, general assistance 41.12 medical care, and MinnesotaCare. The system must be developed 41.13 in accordance with the general risk adjustment methodologies 41.14 described in this section, must include factors in addition to 41.15 age and sex adjustment, and may include additional demographic 41.16 factors, different targeted conditions, and/or different payment 41.17 amounts for conditions. The risk adjustment system for public 41.18 programs must attempt to reflect the special needs related to 41.19 poverty, cultural, or language barriers and other needs of the 41.20 public program population. 41.21 (b) The commissioners of health and human services shall 41.22 jointly convene a public programs risk adjustment work group 41.23 responsible for advising the commissioners in the design of the 41.24 public programs risk adjustment system. The public programs 41.25 risk adjustment work group is governed by section 15.059 for 41.26 purposes of membership terms and removal of members and shall 41.27 terminate on June 30, 1999. The work group shall meet at the 41.28 discretion of the commissioners of health and human services. 41.29 The commissioner of health shall work with the risk adjustment 41.30 association to ensure coordination between the risk adjustment 41.31 systems for the public and private sectors. The commissioner of 41.32 human services shall seek any needed federal approvals necessary 41.33 for the inclusion of the medical assistance program in the 41.34 public programs risk adjustment system. 41.35 (c) The public programs risk adjustment work group must be 41.36 representative of the persons served by publicly paid health 42.1 programs and providers and health plans that meet their needs. 42.2 To the greatest extent possible, the appointing authorities 42.3 shall attempt to select representatives that have historically 42.4 served a significant number of persons in publicly paid health 42.5 programs or the uninsured. Membership of the work group shall 42.6 be as follows: 42.7 (1) one provider member appointed by the Minnesota Medical 42.8 Association; 42.9 (2) two provider members appointed by the Minnesota 42.10 Hospital Association, at least one of whom must represent a 42.11 major disproportionate share hospital; 42.12 (3) five members appointed by the Minnesota Council of 42.13 HMOs, one of whom must represent an HMO with fewer than 50,000 42.14 enrollees located outside the metropolitan area and one of whom 42.15 must represent an HMO with at least 50 percent of total 42.16 membership enrolled through a public program; 42.17 (4) two representatives of counties appointed by the 42.18 Association of Minnesota Counties; 42.19 (5) three representatives of organizations representing the 42.20 interests of families, children, childless adults, and elderly 42.21 persons served by the various publicly paid health programs 42.22 appointed by the governor; 42.23 (6) two representatives of persons with mental health, 42.24 developmental or physical disabilities, chemical dependency, or 42.25 chronic illness appointed by the governor; and 42.26 (7) three public members appointed by the governor, at 42.27 least one of whom must represent a community health board. The 42.28 risk adjustment association may appoint a representative, if a 42.29 representative is not otherwise appointed by an appointing 42.30 authority. 42.31 (d) The commissioners of health and human services, with 42.32 the advice of the public programs risk adjustment work group, 42.33 shall develop a work plan and time frame and shall coordinate 42.34 their efforts with the private sector risk adjustment 42.35 association's activities and other state initiatives related to 42.36 public program managed care reimbursement.The commissioners of43.1health and human services shall report to the health care43.2commission and to the appropriate legislative committees on43.3January 15, 1996, and on January 15, 1997, on any policy or43.4legislative changes necessary to implement the public program43.5risk adjustment system.43.6 Sec. 34. Minnesota Statutes 1996, section 62Q.106, is 43.7 amended to read: 43.8 62Q.106 [DISPUTE RESOLUTION BY COMMISSIONER.] 43.9 A complainant may at any time submit a complaint to the 43.10 appropriate commissioner to investigate. After investigating a 43.11 complaint, or reviewing a company's decision, the appropriate 43.12 commissioner may order a remedy as authorized under section 43.1362N.04,62Q.30,or chapter 45, 60A, or 62D. 43.14 Sec. 35. Minnesota Statutes 1996, section 62Q.19, 43.15 subdivision 1, is amended to read: 43.16 Subdivision 1. [DESIGNATION.] The commissioner shall 43.17 designate essential community providers. The criteria for 43.18 essential community provider designation shall be the following: 43.19 (1) a demonstrated ability to integrate applicable 43.20 supportive and stabilizing services with medical care for 43.21 uninsured persons and high-risk and special needs populations as 43.22 defined in section 62Q.07, subdivision 2, paragraph (e), 43.23 underserved, and other special needs populations; and 43.24 (2) a commitment to serve low-income and underserved 43.25 populations by meeting the following requirements: 43.26 (i) has nonprofit status in accordance with chapter 317A; 43.27 (ii) has tax exempt status in accordance with the Internal 43.28 Revenue Service Code, section 501(c)(3); 43.29 (iii) charges for services on a sliding fee schedule based 43.30 on current poverty income guidelines; and 43.31 (iv) does not restrict access or services because of a 43.32 client's financial limitation; 43.33 (3) status as a local government unit as defined in section 43.34 62D.02, subdivision 11, an Indian tribal government, an Indian 43.35 health service unit, or community health board as defined in 43.36 chapter 145A;or44.1 (4) a former state hospital that specializes in the 44.2 treatment of cerebral palsy, spina bifida, epilepsy, closed head 44.3 injuries, specialized orthopedic problems, and other disabling 44.4 conditions; or 44.5 (5) a rural hospital that has qualified for a sole 44.6 community hospital financial assistance grant in the past three 44.7 years under section 144.1484, subdivision 1. For these rural 44.8 hospitals, the essential community provider designation applies 44.9 to all health services provided, including both inpatient and 44.10 outpatient services. 44.11 Prior to designation, the commissioner shall publish the 44.12 names of all applicants in the State Register. The public shall 44.13 have 30 days from the date of publication to submit written 44.14 comments to the commissioner on the application. No designation 44.15 shall be made by the commissioner until the 30-day period has 44.16 expired. 44.17 The commissioner may designate an eligible provider as an 44.18 essential community provider for all the services offered by 44.19 that provider or for specific services designated by the 44.20 commissioner. 44.21 For the purpose of this subdivision, supportive and 44.22 stabilizing services include at a minimum, transportation, child 44.23 care, cultural, and linguistic services where appropriate. 44.24 Sec. 36. Minnesota Statutes 1996, section 62Q.33, 44.25 subdivision 2, is amended to read: 44.26 Subd. 2. [REPORT ON SYSTEM DEVELOPMENT.] The commissioner 44.27 of health, in consultation with the state community health 44.28 services advisory committee and the commissioner of human 44.29 services, and representatives of local health departments, 44.30 county government, a municipal government acting as a local 44.31 board of health,the Minnesota health care commission,area 44.32 Indian health services, health care providers, and citizens 44.33 concerned about public health, shall coordinate the process for 44.34 defining implementation and financing responsibilities of the 44.35 local government core public health functions. The commissioner 44.36 shall submit recommendations and an initial and final report on 45.1 local government core public health functions according to the 45.2 timeline established in subdivision 5. 45.3 Sec. 37. Minnesota Statutes 1996, section 62Q.45, 45.4 subdivision 2, is amended to read: 45.5 Subd. 2. [DEFINITION.] For purposes of this section, 45.6 "managed care organization" means: (1) a health maintenance 45.7 organization operating under chapter 62D; (2) a community 45.8 integrated service network as defined under section 62N.02, 45.9 subdivision 4a; or (3)an integrated service network as defined45.10under section 62N.02, subdivision 8; or (4)an insurance company 45.11 licensed under chapter 60A, nonprofit health service plan 45.12 corporation operating under chapter 62C, fraternal benefit 45.13 society operating under chapter 64B, or any other health plan 45.14 company, to the extent that it covers health care services 45.15 delivered to Minnesota residents through a preferred provider 45.16 organization or a network of selected providers. 45.17 Sec. 38. Minnesota Statutes 1996, section 136A.1355, is 45.18 amended to read: 45.19 136A.1355 [RURAL PHYSICIANS.] 45.20 Subdivision 1. [CREATION OF ACCOUNT.] A rural physician 45.21 education account is established in the health care access 45.22 fund. The higher education services office shall use money from 45.23 the account to establish a loan forgiveness program for 45.24 medicalstudentsresidents agreeing to practice in designated 45.25 rural areas, as defined by the commissioner. 45.26 Subd. 2. [ELIGIBILITY.] To be eligible to participate in 45.27 the program, a prospective physician must submit a letter of 45.28 interest to the higher education services office. Astudent or45.29 resident who is accepted must sign a contract to agree to serve 45.30 at least three of the first five years following residency in a 45.31 designated rural area. 45.32 Subd. 3. [LOAN FORGIVENESS.] For fiscal years beginning on 45.33 and after July 1, 1995, the higher education services office may 45.34 accept up tofour applicants who are fourth year medical45.35students, three12 applicants who are medical residents, four 45.36 applicants who are pediatric residents, andfoursix applicants 46.1 who are family practice residents, andone applicant who is46.2antwo applicants who are internal medicineresidentresidents, 46.3 per fiscal year for participation in the loan forgiveness 46.4 program. If the higher education services office does not 46.5 receive enough applicants per fiscal year to fill the number of 46.6 residents in the specific areas of practice, the resident 46.7 applicants may be from any area of practice. Theeight12 46.8 resident applicants may be in any year of training; however, 46.9 priority must be given to the following categories of residents 46.10 in descending order: third year residents, second year 46.11 residents, and first year residents. Applicants are responsible 46.12 for securing their own loans. Applicants chosen to participate 46.13 in the loan forgiveness program may designate for each year of 46.14 medical school, up to a maximum of four years, an agreed amount, 46.15 not to exceed $10,000, as a qualified loan. For each year that 46.16 a participant serves as a physician in a designated rural area, 46.17 up to a maximum of four years, the higher education services 46.18 office shall annually pay an amount equal to one year of 46.19 qualified loans. Participants who move their practice from one 46.20 designated rural area to another remain eligible for loan 46.21 repayment. In addition, if a resident participating in the loan 46.22 forgiveness program serves at least four weeks during a year of 46.23 residency substituting for a rural physician to temporarily 46.24 relieve the rural physician of rural practice commitments to 46.25 enable the rural physician to take a vacation, engage in 46.26 activities outside the practice area, or otherwise be relieved 46.27 of rural practice commitments, the participating resident may 46.28 designate up to an additional $2,000, above the $10,000 maximum, 46.29 for each year of residency during which the resident substitutes 46.30 for a rural physician for four or more weeks. 46.31 Subd. 4. [PENALTY FOR NONFULFILLMENT.] If a participant 46.32 does not fulfill the required three-year minimum commitment of 46.33 service in a designated rural area, the higher education 46.34 services office shall collect from the participant the amount 46.35 paid by the commissioner under the loan forgiveness program. 46.36 The higher education services office shall deposit the money 47.1 collected in the rural physician education account established 47.2 in subdivision 1. The commissioner shall allow waivers of all 47.3 or part of the money owed the commissioner if emergency 47.4 circumstances prevented fulfillment of the three-year service 47.5 commitment. 47.6 Subd. 5. [LOAN FORGIVENESS; UNDERSERVED URBAN 47.7 COMMUNITIES.] For fiscal years beginning on and after July 1, 47.8 1995, the higher education services office may accept up to four 47.9 applicants who areeither fourth year medical students, or47.10 residents in family practice, pediatrics, or internal medicine 47.11 per fiscal year for participation in the urban primary care 47.12 physician loan forgiveness program. The resident applicants may 47.13 be in any year of residency training; however, priority will be 47.14 given to the following categories of residents in descending 47.15 order: third year residents, second year residents, and first 47.16 year residents. If the higher education services office does 47.17 not receive enough qualified applicants per fiscal year to fill 47.18 the number of slots for urban underserved communities, the slots 47.19 may be allocated tostudents orresidents who have applied for 47.20 the rural physician loan forgiveness program in subdivision 1. 47.21 Applicants are responsible for securing their own loans. For 47.22 purposes of this provision, "qualifying educational loans" are 47.23 government and commercial loans for actual costs paid for 47.24 tuition, reasonable education expenses, and reasonable living 47.25 expenses related to the graduate or undergraduate education of a 47.26 health care professional. Applicants chosen to participate in 47.27 the loan forgiveness program may designate for each year of 47.28 medical school, up to a maximum of four years, an agreed amount, 47.29 not to exceed $10,000, as a qualified loan. For each year that 47.30 a participant serves as a physician in a designated underserved 47.31 urban area, up to a maximum of four years, the higher education 47.32 services office shall annually pay an amount equal to one year 47.33 of qualified loans. Participants who move their practice from 47.34 one designated underserved urban community to another remain 47.35 eligible for loan repayment. 47.36 Sec. 39. Minnesota Statutes 1996, section 144.147, 48.1 subdivision 1, is amended to read: 48.2 Subdivision 1. [DEFINITION.] "Eligible rural hospital" 48.3 means any nonfederal, general acute care hospital that: 48.4 (1) is either located in a rural area, as defined in the 48.5 federal Medicare regulations, Code of Federal Regulations, title 48.6 42, section 405.1041, or located in a community with a 48.7 population of less than 5,000, according to United States Census 48.8 Bureau statistics, outside the seven-county metropolitan area; 48.9 (2) has10050 or fewer beds; and 48.10 (3) is not for profit; and48.11(4) has not been awarded a grant under the federal rural48.12health transition grant program, which would be received48.13concurrently with any portion of the grant period for this48.14program. 48.15 Sec. 40. Minnesota Statutes 1996, section 144.147, 48.16 subdivision 2, is amended to read: 48.17 Subd. 2. [GRANTS AUTHORIZED.] The commissioner shall 48.18 establish a program of grants to assist eligible rural 48.19 hospitals. The commissioner shall award grants to hospitals and 48.20 communities for the purposes set forth in paragraphs (a) and (b). 48.21 (a) Grants may be used by hospitals and their communities 48.22 to develop strategic plans for preserving or enhancing access to 48.23 health services. At a minimum, a strategic plan must consist of: 48.24 (1) a needs assessment to determine what health services 48.25 are needed and desired by the community. The assessment must 48.26 include interviews with or surveys of area health professionals, 48.27 local community leaders, and public hearings; 48.28 (2) an assessment of the feasibility of providing needed 48.29 health services that identifies priorities and timeliness for 48.30 potential changes; and 48.31 (3) an implementation plan. 48.32 The strategic plan must be developed by a committee that 48.33 includes representatives from the hospital, local public health 48.34 agencies, other health providers, and consumers from the 48.35 community. 48.36 (b) The grants may also be used by eligible rural hospitals 49.1 that have developed strategic plans to implement transition 49.2 projects to modify the type and extent of services provided, in 49.3 order to reflect the needs of that plan. Grants may be used by 49.4 hospitals under this paragraph to develop hospital-based 49.5 physician practices that integrate hospital and existing medical 49.6 practice facilities that agree to transfer their practices, 49.7 equipment, staffing, and administration to the hospital. The 49.8 grants may also be used by the hospital to establish a health 49.9 provider cooperative, a telemedicine system, or a rural health 49.10 care system. Not more than one-third of any grant shall be used 49.11 to offset losses incurred by physicians agreeing to transfer 49.12 their practices to hospitals. 49.13 Sec. 41. Minnesota Statutes 1996, section 144.147, 49.14 subdivision 3, is amended to read: 49.15 Subd. 3. [CONSIDERATION OF GRANTS.] In determining which 49.16 hospitals will receive grants under this section, the 49.17 commissioner shall take into account: 49.18 (1) improving community access to hospital or health 49.19 services; 49.20 (2) changes in service populations; 49.21 (3) demand for ambulatory and emergency services; 49.22 (4) the extent that the health needs of the community are 49.23 not currently being met by other providers in the service area; 49.24 (5) the need to recruit and retain health professionals; 49.25 (6) theinvolvement andextent of community supportof the49.26community and local health care providers;and49.27 (7) the coordination with local community organizations, 49.28 such as community development and public health agencies; and 49.29 (8) the financial condition of the hospital. 49.30 Sec. 42. Minnesota Statutes 1996, section 144.147, 49.31 subdivision 4, is amended to read: 49.32 Subd. 4. [ALLOCATION OF GRANTS.] (a) Eligible hospitals 49.33 must apply to the commissioner no later than September 1 of each 49.34 fiscal year for grants awarded for that fiscal year. A grant 49.35 may be awarded upon signing of a grant contract. 49.36 (b) The commissioner must make a final decision on the 50.1 funding of each application within 60 days of the deadline for 50.2 receiving applications. 50.3 (c) Each relevant community health board has 30 days in 50.4 which to review and comment to the commissioner on grant 50.5 applications from hospitals in their community health service 50.6 area. 50.7 (d) In determining which hospitals will receive grants 50.8 under this section, the commissioner shall consider the 50.9 following factors: 50.10 (1) Description of the problem, description of the project, 50.11 and the likelihood of successful outcome of the project. The 50.12 applicant must explain clearly the nature of the health services 50.13 problems in their service area, how the grant funds will be 50.14 used, what will be accomplished, and the results expected. The 50.15 applicant should describe achievable objectives, a timetable, 50.16 and roles and capabilities of responsible individuals and 50.17 organizations. 50.18 (2) The extent of community support for the hospital and 50.19 this proposed project. The applicant should demonstrate support 50.20 for the hospital and for the proposed project from other local 50.21 health service providers and from local community and government 50.22 leaders. Evidence of such support may include past commitments 50.23 of financial support from local individuals, organizations, or 50.24 government entities; and commitment of financial support, 50.25 in-kind services or cash, for this project. 50.26 (3) The comments, if any, resulting from a review of the 50.27 application by the community health board in whose community 50.28 health service area the hospital is located. 50.29 (e) In evaluating applications, the commissioner shall 50.30 score each application on a 100 point scale, assigning the 50.31 maximum of 70 points for an applicant's understanding of the 50.32 problem, description of the project, and likelihood of 50.33 successful outcome of the project; and a maximum of 30 points 50.34 for the extent of community support for the hospital and this 50.35 project. The commissioner may also take into account other 50.36 relevant factors. 51.1 (f) A grant to a hospital, including hospitals that submit 51.2 applications as consortia, may not exceed$37,500$50,000 a year 51.3 and may not exceed a term of two years. Prior to the receipt of 51.4 any grant, the hospital must certify to the commissioner that at 51.5 least one-half of the amount, which may include in-kind 51.6 services, is available for the same purposes from nonstate 51.7 sources. A hospital receiving a grant under this section may 51.8 use the grant for any expenses incurred in the development of 51.9 strategic plans or the implementation of transition projects 51.10 with respect to which the grant is made. Project grants may not 51.11 be used to retire debt incurred with respect to any capital 51.12 expenditure made prior to the date on which the project is 51.13 initiated. 51.14 (g) The commissioner may adopt rules to implement this 51.15 section. 51.16 Sec. 43. [144.1475] [RURAL HOSPITAL DEMONSTRATION 51.17 PROJECT.] 51.18 Subdivision 1. [ESTABLISHMENT.] The commissioner of 51.19 health, for the biennium ending June 30, 1999, shall establish 51.20 at least three demonstration projects per fiscal year to assist 51.21 rural hospitals in the planning and implementation process to 51.22 either consolidate or cooperate with another existing hospital 51.23 in its service area to provide better quality health care to its 51.24 community. A demonstration project must include at least two 51.25 eligible hospitals. For purposes of this section, an "eligible 51.26 hospital" means a hospital that: 51.27 (1) is located outside the seven-county metropolitan area; 51.28 (2) has 50 or fewer licensed beds; and 51.29 (3) is located within a 25-mile radius of another hospital. 51.30 At least one of the eligible hospitals in a demonstration 51.31 project must have had a negative operating margin during one of 51.32 the two years prior to application. 51.33 Subd. 2. [APPLICATION.] (a) An eligible hospital seeking 51.34 to be a participant in a demonstration project must submit an 51.35 application to the commissioner of health detailing the 51.36 hospital's efforts to consolidate health care delivery in its 52.1 service area, cooperate with another hospital in the delivery of 52.2 health care, or both consolidate and cooperate. Applications 52.3 must be submitted by October 15 of each fiscal year for grants 52.4 awarded for that fiscal year. 52.5 (b) Applications must: 52.6 (1) describe the problem that the proposed consolidation or 52.7 cooperation will address, the consolidation or cooperation 52.8 project, how the grant funds will be used, what will be 52.9 accomplished, and the results expected; 52.10 (2) describe achievable objectives, a timetable, and the 52.11 roles and capabilities of responsible individuals and 52.12 organizations; 52.13 (3) include written commitments from the applicant hospital 52.14 and at least one other hospital that will participate in the 52.15 consolidation or cooperation demonstration project, that specify 52.16 the activities the organization will undertake during the 52.17 project, the resources the organization will contribute to the 52.18 demonstration project, and the expected role and nature of the 52.19 organization's involvement in proposed consolidation or 52.20 cooperation activities; and 52.21 (4) provide evidence of support for the proposed project 52.22 from other local health service providers and from local 52.23 community and government leaders. 52.24 Subd. 3. [GRANTS.] The commissioner of health shall 52.25 allocate a grant of up to $100,000 to the highest scoring 52.26 applicants each year until available funding is expended. 52.27 Grants may be used by eligible hospitals to: 52.28 (1) conduct consolidation or cooperation negotiations; 52.29 (2) develop consolidation or cooperation plans, including 52.30 financial plans and architectural designs; 52.31 (3) seek community input and conduct community education on 52.32 proposed or planned consolidations or cooperative activities; 52.33 and 52.34 (4) implement consolidation or cooperation plans. 52.35 Subd. 4. [CONSIDERATION OF GRANTS.] In evaluating 52.36 applications, the commissioner shall score each application on a 53.1 100 point scale, assigning: a maximum of 40 points for an 53.2 applicant's understanding of the problem, description of the 53.3 project, and likelihood of successful outcome of the project; a 53.4 maximum of 30 points for explicit and unequivocal written 53.5 commitments from organizations participating in the project; a 53.6 maximum of 20 points for matching funds or in-kind services 53.7 committed by the applicant or others to the project; and a 53.8 maximum of ten points for the extent of community support for 53.9 the project. The commissioner shall consider the comments, if 53.10 any, resulting from a review of the application by the community 53.11 health board in whose community health service area the 53.12 applicant is located. The commissioner may also take into 53.13 account other relevant factors. 53.14 Subd. 5. [EVALUATION.] The commissioner of health shall 53.15 evaluate the overall effectiveness of the demonstration projects 53.16 and report to the legislature by September 1, 2000. The 53.17 commissioner may collect, from the hospitals receiving grants, 53.18 any information necessary to evaluate the demonstration project. 53.19 Sec. 44. [144.148] [RURAL HOSPITAL CAPITAL IMPROVEMENT 53.20 GRANT AND LOAN PROGRAM.] 53.21 Subdivision 1. [DEFINITION.] (a) For purposes of this 53.22 section, the following definitions apply. 53.23 (b) "Eligible rural hospital" means a hospital that: 53.24 (1) is located outside the seven-county metropolitan area; 53.25 (2) has 50 or fewer licensed hospital beds with a net 53.26 hospital operating margin not greater than two percent in the 53.27 two fiscal years prior to application; and 53.28 (3) is 25 miles or more from another hospital. 53.29 (c) "Eligible project" means a modernization project to 53.30 update, remodel, or replace aging hospital facilities and 53.31 equipment necessary to maintain the operations of a hospital. 53.32 Subd. 2. [PROGRAM.] The commissioner of health shall award 53.33 rural hospital capital improvement grants or loans to eligible 53.34 rural hospitals. A grant or loan shall not exceed $1,500,000 53.35 per hospital. Grants or loans shall be interest free. An 53.36 eligible rural hospital may apply the funds retroactively to 54.1 capital improvements made during the two fiscal years preceding 54.2 the fiscal year in which the grant or loan was received, 54.3 provided the hospital met the eligibility criteria during that 54.4 time period. 54.5 Subd. 3. [APPLICATIONS.] Eligible hospitals seeking a 54.6 grant or loan shall apply to the commissioner. Applications 54.7 must include a description of the problem that the proposed 54.8 project will address, a description of the project including 54.9 construction and remodeling drawings or specifications, sources 54.10 of funds for the project, uses of funds for the project, the 54.11 results expected, and a plan to maintain or operate any facility 54.12 or equipment included in the project. The applicant must 54.13 describe achievable objectives, a timetable, and roles and 54.14 capabilities of responsible individuals and organization. 54.15 Applicants must submit to the commissioner evidence that 54.16 competitive bidding was used to select contractors for the 54.17 project. 54.18 Subd. 4. [CONSIDERATION OF APPLICATIONS.] The commissioner 54.19 shall review each application to determine whether or not the 54.20 hospital's application is complete and whether the hospital and 54.21 the project are eligible for a grant or loan. In evaluating 54.22 applications, the commissioner shall score each application on a 54.23 100 point scale, assigning: a maximum of 40 points for an 54.24 applicant's clarity and thoroughness in describing the problem 54.25 and the project; a maximum of 40 points for the extent to which 54.26 the applicant has demonstrated that it has made adequate 54.27 provisions to assure proper and efficient operation of the 54.28 facility once the project is completed; and a maximum of 20 54.29 points for the extent to which the proposed project is 54.30 consistent with the hospital's capital improvement plan or 54.31 strategic plan. The commissioner may also take into account 54.32 other relevant factors. During application review, the 54.33 commissioner may request additional information about a proposed 54.34 project, including information on project cost. Failure to 54.35 provide the information requested disqualifies a loan applicant. 54.36 Subd. 5. [PROGRAM OVERSIGHT.] The commissioner of health 55.1 shall review audited financial information of the hospital to 55.2 assess eligibility. The commissioner shall determine the amount 55.3 of a grant or loan to be given to an eligible rural hospital 55.4 based on the relative score of each eligible hospital's 55.5 application and the funds available to the commissioner. The 55.6 grant or loan shall be used to update, remodel, or replace aging 55.7 facilities and equipment necessary to maintain the operations of 55.8 the hospital. 55.9 Subd. 6. [LOAN PAYMENT.] Loans shall be repaid as provided 55.10 in this subdivision over a period of 15 years. In those years 55.11 when an eligible rural hospital experiences a positive net 55.12 operating margin in excess of two percent, the eligible rural 55.13 hospital shall pay to the state one-half of the excess above two 55.14 percent, up to the yearly payment amount based upon a loan 55.15 period of 15 years. If the amount paid back in any year is less 55.16 than the yearly payment amount, or if no payment is required 55.17 because the eligible rural hospital does not experience a 55.18 positive net operating margin in excess of two percent, the 55.19 amount unpaid for that year shall be forgiven by the state 55.20 without any financial penalty. As a condition of receiving an 55.21 award through this program, eligible hospitals must agree to any 55.22 and all collection activities the commissioner finds necessary 55.23 to collect loan payments in those years a payment is due. 55.24 Subd. 7. [ACCOUNTING TREATMENT.] The commissioner of 55.25 finance shall record as grants in the state accounting system 55.26 funds obligated by this section. Loan payments received under 55.27 this section shall be deposited in the health care access fund. 55.28 Subd. 8. [EXPIRATION.] This section expires June 30, 1999. 55.29 Sec. 45. Minnesota Statutes 1996, section 144.1484, 55.30 subdivision 1, is amended to read: 55.31 Subdivision 1. [SOLE COMMUNITY HOSPITAL FINANCIAL 55.32 ASSISTANCE GRANTS.] The commissioner of health shall award 55.33 financial assistance grants to rural hospitals in isolated areas 55.34 of the state. To qualify for a grant, a hospital must: (1) be 55.35 eligible to be classified as a sole community hospital according 55.36 to the criteria in Code of Federal Regulations, title 42, 56.1 section 412.92 or be located in a community with a population of 56.2 less than 5,000 and located more than 25 miles from a like 56.3 hospital currently providing acute short-term services; (2) have 56.4 experienced net operating income losses inthetwo of the 56.5 previous three most recent consecutive hospital fiscal years for 56.6 which audited financial information is available; (3) consist of 56.7 40 or fewer licensed beds; and (4) demonstrate to the 56.8 commissioner that it has obtained local support for the hospital 56.9 and that any state support awarded under this program will not 56.10 be used to supplant local support for the hospital. The 56.11 commissioner shall review audited financial statements of the 56.12 hospital to assess the extent of local support. Evidence of 56.13 local support may include bonds issued by a local government 56.14 entity such as a city, county, or hospital district for the 56.15 purpose of financing hospital projects; and loans, grants, or 56.16 donations to the hospital from local government entities, 56.17 private organizations, or individuals. The commissioner shall 56.18 determine the amount of the award to be given to each eligible 56.19 hospital based on the hospital's operating loss margin (total 56.20 operating losses as a percentage of total operating revenue) for 56.21thetwo of the previous three most recent consecutive fiscal 56.22 years for which audited financial information is available and 56.23 the total amount of funding available. For purposes of 56.24 calculating a hospital's operating loss margin, total operating 56.25 revenue does not include grant funding provided under this 56.26 subdivision. One hundred percent of the available funds will be 56.27 disbursed proportionately based on the operating loss margins of 56.28 the eligible hospitals. 56.29 Sec. 46. Minnesota Statutes 1996, section 256.045, 56.30 subdivision 3a, is amended to read: 56.31 Subd. 3a. [PREPAID HEALTH PLAN APPEALS.] (a) All prepaid 56.32 health plans under contract to the commissioner under chapter 56.33 256B or 256D must provide for a complaint system according to 56.34 section 62D.11. When a prepaid health plan denies, reduces, or 56.35 terminates a health service or denies a request to authorize a 56.36 previously authorized health service, the prepaid health plan 57.1 must notify the recipient of the right to file a complaint or an 57.2 appeal. The notice must include the name and telephone number 57.3 of the ombudsman and notice of the recipient's right to request 57.4 a hearing under paragraph (b). When a complaint is filed, the 57.5 prepaid health plan must notify the ombudsman within three 57.6 working days. Recipients may request the assistance of the 57.7 ombudsman in the complaint system process. The prepaid health 57.8 plan must issue a written resolution of the complaint to the 57.9 recipient within 30 days after the complaint is filed with the 57.10 prepaid health plan. A recipient is not required to exhaust the 57.11 complaint system procedures in order to request a hearing under 57.12 paragraph (b). 57.13 (b) Recipients enrolled in a prepaid health plan under 57.14 chapter 256B or 256D may contest a prepaid health plan's denial, 57.15 reduction, or termination of health services, a prepaid health 57.16 plan's denial of a request to authorize a previously authorized 57.17 health service, or the prepaid health plan's written resolution 57.18 of a complaint by submitting a written request for a hearing 57.19 according to subdivision 3. A state human services referee 57.20 shall conduct a hearing on the matter and shall recommend an 57.21 order to the commissioner of human services. The commissioner 57.22 need not grant a hearing if the sole issue raised by a recipient 57.23 is the commissioner's authority to require mandatory enrollment 57.24 in a prepaid health plan in a county where prepaid health plans 57.25 are under contract with the commissioner. The state human 57.26 services referee may order a second medical opinion from the 57.27 prepaid health plan or may order a second medical opinion from a 57.28 nonprepaid health plan provider at the expense of the prepaid 57.29 health plan. Recipients may request the assistance of the 57.30 ombudsman in the appeal process. 57.31 (c) In the written request for a hearing to appeal from a 57.32 prepaid health plan's denial, reduction, or termination of a 57.33 health service, a prepaid health plan's denial of a request to 57.34 authorize a previously authorized service, or the prepaid health 57.35 plan's written resolution to a complaint, a recipient may 57.36 request an expedited hearing. If an expedited appeal is 58.1 warranted, the state human services referee shall hear the 58.2 appeal and render a decision within a time commensurate with the 58.3 level of urgency involved, based on the individual circumstances 58.4 of the case. 58.5 Sec. 47. Minnesota Statutes 1996, section 256.9363, 58.6 subdivision 1, is amended to read: 58.7 Subdivision 1. [SELECTION OF VENDORS.] In order to contain 58.8 costs, the commissioner of human services shall select vendors 58.9 of medical care who can provide the most economical care 58.10 consistent with high medical standards and shall, where 58.11 possible, contract with organizations on a prepaid capitation 58.12 basis to provide these services. The commissioner shall 58.13 consider proposals by counties and vendors for managed care 58.14 plans which may include: prepaid capitation programs, 58.15 competitive bidding programs, or other vendor payment mechanisms 58.16 designed to provide services in an economical manner or to 58.17 control utilization, with safeguards to ensure that necessary 58.18 services are provided.Managed care plans may include58.19integrated service networks as defined in section 62N.02.58.20 Sec. 48. Minnesota Statutes 1996, section 256.9657, 58.21 subdivision 3, is amended to read: 58.22 Subd. 3. [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY 58.23 INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 58.24 1992, each health maintenance organization with a certificate of 58.25 authority issued by the commissioner of health under chapter 62D 58.26 and eachintegrated service network andcommunity integrated 58.27 service network licensed by the commissioner under chapter 62N 58.28 shall pay to the commissioner of human services a surcharge 58.29 equal to six-tenths of one percent of the total premium revenues 58.30 of the health maintenance organization, integrated service58.31network,or community integrated service network as reported to 58.32 the commissioner of health according to the schedule in 58.33 subdivision 4. 58.34 (b) For purposes of this subdivision, total premium revenue 58.35 means: 58.36 (1) premium revenue recognized on a prepaid basis from 59.1 individuals and groups for provision of a specified range of 59.2 health services over a defined period of time which is normally 59.3 one month, excluding premiums paid to a health maintenance 59.4 organization, integrated service network,or community 59.5 integrated service network from the Federal Employees Health 59.6 Benefit Program; 59.7 (2) premiums from Medicare wrap-around subscribers for 59.8 health benefits which supplement Medicare coverage; 59.9 (3) Medicare revenue, as a result of an arrangement between 59.10 a health maintenance organization, an integrated service59.11network,or a community integrated service network and the 59.12 health care financing administration of the federal Department 59.13 of Health and Human Services, for services to a Medicare 59.14 beneficiary; and 59.15 (4) medical assistance revenue, as a result of an 59.16 arrangement between a health maintenance organization,59.17integrated service network,or community integrated service 59.18 network and a Medicaid state agency, for services to a medical 59.19 assistance beneficiary. 59.20 If advance payments are made under clause (1) or (2) to the 59.21 health maintenance organization, integrated service network,or 59.22 community integrated service network for more than one reporting 59.23 period, the portion of the payment that has not yet been earned 59.24 must be treated as a liability. 59.25 (c) When a health maintenance organization oran integrated59.26service network orcommunity integrated service network merges 59.27 or consolidates with or is acquired by another health 59.28 maintenance organization, integrated service network,or 59.29 community integrated service network, the surviving corporation 59.30 or the new corporation shall be responsible for the annual 59.31 surcharge originally imposed on each of the entities or 59.32 corporations subject to the merger, consolidation, or 59.33 acquisition, regardless of whether one of the entities or 59.34 corporations does not retain a certificate of authority under 59.35 chapter 62D or a license under chapter 62N. 59.36 (d) Effective July 1 of each year, the surviving 60.1 corporation's or the new corporation's surcharge shall be based 60.2 on the revenues earned in the second previous calendar year by 60.3 all of the entities or corporations subject to the merger, 60.4 consolidation, or acquisition regardless of whether one of the 60.5 entities or corporations does not retain a certificate of 60.6 authority under chapter 62D or a license under chapter 62N until 60.7 the total premium revenues of the surviving corporation include 60.8 the total premium revenues of all the merged entities as 60.9 reported to the commissioner of health. 60.10 (e) When a health maintenance organization, integrated60.11service network,or community integrated service network, which 60.12 is subject to liability for the surcharge under this chapter, 60.13 transfers, assigns, sells, leases, or disposes of all or 60.14 substantially all of its property or assets, liability for the 60.15 surcharge imposed by this chapter is imposed on the transferee, 60.16 assignee, or buyer of the health maintenance organization,60.17integrated service network,or community integrated service 60.18 network. 60.19 (f) In the event a health maintenance organization,60.20integrated service network,or community integrated service 60.21 network converts its licensure to a different type of entity 60.22 subject to liability for the surcharge under this chapter, but 60.23 survives in the same or substantially similar form, the 60.24 surviving entity remains liable for the surcharge regardless of 60.25 whether one of the entities or corporations does not retain a 60.26 certificate of authority under chapter 62D or a license under 60.27 chapter 62N. 60.28 (g) The surcharge assessed to a health maintenance 60.29 organization, integrated service network,or community 60.30 integrated service network ends when the entity ceases providing 60.31 services for premiums and the cessation is not connected with a 60.32 merger, consolidation, acquisition, or conversion. 60.33 Sec. 49. [MEIP STUDY.] 60.34 The commissioner of employee relations shall study the 60.35 current Minnesota employees insurance program (MEIP) and report 60.36 to the legislature by January 15, 1998, on recommendations on 61.1 whether this program provides greater accessibility to small 61.2 employers for purchasing health insurance and, if not, whether 61.3 the program could be modified in terms of underwriting, 61.4 marketing, and advertising to create a program that would 61.5 provide a cost incentive for small employers to purchase health 61.6 coverage through this program. 61.7 Sec. 50. [MCHA STANDARDS STUDY.] 61.8 The commissioner of commerce, in consultation with the 61.9 commissioner of health, shall study and make recommendations 61.10 regarding the feasibility of establishing a comprehensive set of 61.11 eligibility standards for coverage under the Minnesota 61.12 comprehensive health association and on guaranteed issuance in 61.13 the individual market for individuals who do not meet the 61.14 eligibility standards for coverage under the Minnesota 61.15 comprehensive health association. The recommendations shall be 61.16 reported to the legislature by January 15, 1998. 61.17 Sec. 51. [REVISOR INSTRUCTIONS.] 61.18 The revisor of statutes shall delete references to 61.19 "integrated service network," but not "community integrated 61.20 service network," wherever it appears in Minnesota Statutes and 61.21 make conforming changes as necessary. 61.22 Sec. 52. [REPEALER.] 61.23 (a) Minnesota Statutes 1996, sections 62E.11, subdivision 61.24 12; 62J.04, subdivisions 4 and 7; 62J.05; 62J.051; 62J.09, 61.25 subdivision 3a; 62J.37; 62N.01, subdivision 2; 62N.02, 61.26 subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 62N.03; 61.27 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 61.28 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 61.29 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 62Q.165, 61.30 subdivision 3; 62Q.25; 62Q.29; 62Q.41 and 147.01, subdivision 6, 61.31 are repealed. 61.32 (b) Laws 1993, chapter 247, article 4, section 8; Laws 61.33 1995, chapter 96, section 2; and Laws 1995, First Special 61.34 Session chapter 3, article 13, section 2, are repealed. 61.35 (c) Laws 1994, chapter 625, article 5, section 5, as 61.36 amended by Laws 1995, chapter 234, article 3, section 8, is 62.1 repealed. 62.2 Sec. 53. [EFFECTIVE DATE.] 62.3 Section 16 [62J.25] is effective the day following final 62.4 enactment. 62.5 ARTICLE 3 62.6 MINNESOTACARE TAXES 62.7 Section 1. [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS 62.8 FUND.] 62.9 Subdivision 1. [ESTABLISH RESERVE.] The federal 62.10 contingency reserve is established within the health care access 62.11 fund for uses necessary to preserve access to basic health care 62.12 services when federal funding is significantly reduced. 62.13 Subd. 2. [RESERVE FINANCING.] The funds in reserve shall 62.14 be equal to the amount of federal financial participation 62.15 received since July 1, 1995, for services and administrative 62.16 activities funded by the health care access fund up to a reserve 62.17 limit of $150,000,000. Investment income attributed to the 62.18 federal contingency reserve balances shall also be included in 62.19 the total reserve amount. 62.20 Subd. 3. [PERMITTED USE.] The federal contingency reserve 62.21 is established to protect access to basic health care services 62.22 that are publicly funded. Funds held in the federal contingency 62.23 reserve are available for appropriation in the event that 62.24 federal funds for basic health care services are significantly 62.25 reduced such as under federal reform or other significant 62.26 changes to federal law. 62.27 Subd. 4. [LIMITS ON USE.] The federal contingency reserve 62.28 is not available for supplementing reductions in federal funding 62.29 resulting from application of current federal law funding 62.30 formulas, for funding long-term care services, or for replacing 62.31 existing general fund commitments. 62.32 Sec. 2. Minnesota Statutes 1996, section 60A.15, 62.33 subdivision 1, is amended to read: 62.34 Subdivision 1. [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 62.35 before April 1, June 1, and December 1 of each year, every 62.36 domestic and foreign company, including town and farmers' mutual 63.1 insurance companies, domestic mutual insurance companies, marine 63.2 insurance companies, health maintenance organizations, 63.3integrated service networks,community integrated service 63.4 networks, and nonprofit health service plan corporations, shall 63.5 pay to the commissioner of revenue installments equal to 63.6 one-third of the insurer's total estimated tax for the current 63.7 year. Except as provided in paragraphs (d) and (e), 63.8 installments must be based on a sum equal to two percent of the 63.9 premiums described in paragraph (b). 63.10 (b) Installments under paragraph (a), (d), or (e) are 63.11 percentages of gross premiums less return premiums on all direct 63.12 business received by the insurer in this state, or by its agents 63.13 for it, in cash or otherwise, during such year. 63.14 (c) Failure of a company to make payments of at least 63.15 one-third of either (1) the total tax paid during the previous 63.16 calendar year or (2) 80 percent of the actual tax for the 63.17 current calendar year shall subject the company to the penalty 63.18 and interest provided in this section, unless the total tax for 63.19 the current tax year is $500 or less. 63.20 (d) For health maintenance organizations, nonprofit health 63.21servicesservice plan corporations,integrated service networks,63.22 and community integrated service networks, the installments must 63.23 be based on an amountequal to one percent of premiums described63.24in paragraph (b) that are paid after December 31,63.251995determined by the commissioner of finance as described 63.26 under paragraph (g). 63.27 (e) For purposes of computing installments for town and 63.28 farmers' mutual insurance companies and for mutual property 63.29 casualty companies with total assets on December 31, 1989, of 63.30 $1,600,000,000 or less, the following rates apply: 63.31 (1) for all life insurance, two percent; 63.32 (2) for town and farmers' mutual insurance companies and 63.33 for mutual property and casualty companies with total assets of 63.34 $5,000,000 or less, on all other coverages, one percent; and 63.35 (3) for mutual property and casualty companies with total 63.36 assets on December 31, 1989, of $1,600,000,000 or less, on all 64.1 other coverages, 1.26 percent. 64.2 (f) Premiums under medical assistance, general assistance 64.3 medical care, the MinnesotaCare program, and the Minnesota 64.4 comprehensive health insurance plan and all payments, revenues, 64.5 and reimbursements received from the federal government for 64.6 Medicare-related coverage as defined in section 62A.31, 64.7 subdivision 3, paragraph (e), are not subject to tax under this 64.8 section. 64.9 (g) The commissioner of finance shall determine the balance 64.10 of the health care access fund on September 1 of each year 64.11 beginning September 1, 1999. If the commissioner determines 64.12 that there is no structural deficit for the next fiscal year, no 64.13 tax shall be imposed under paragraph (d). If the commissioner 64.14 determines that there will be a structural deficit in the fund 64.15 for the following fiscal year, then the commissioner, in 64.16 consultation with the commissioner of revenue, shall determine 64.17 the amount needed to eliminate the structural deficit and a tax 64.18 shall be imposed under paragraph (d). The commissioner shall 64.19 determine the rate of the tax as either one-quarter of one 64.20 percent, one-half of one percent, three-quarters of one percent, 64.21 or one percent of premiums described in paragraph (b), whichever 64.22 is the lowest of those rates that the commissioner determines 64.23 will produce sufficient revenue to eliminate the projected 64.24 structural deficit. The commissioner of finance shall publish 64.25 in the State Register by October 1 of each year the amount of 64.26 tax to be imposed for the following calendar year. 64.27 (h) In approving the premium rates as required in sections 64.28 62L.08, subdivision 8, and 62A.65, subdivision 3, the 64.29 commissioners of health and commerce shall ensure that any 64.30 exemption from the tax as described in paragraph (g) is 64.31 reflected in the premium rate. 64.32 Sec. 3. Minnesota Statutes 1996, section 256.9352, 64.33 subdivision 3, is amended to read: 64.34 Subd. 3. [FINANCIAL MANAGEMENT.] (a) The commissioner 64.35 shall manage spending for the MinnesotaCare program in a manner 64.36 that maintains a minimum reserveequal to five percent of the65.1expected cost of state premium subsidiesin accordance with 65.2 section 16A.76. The commissioner must make a quarterly 65.3 assessment of the expected expenditures for the covered services 65.4 for the remainder of the current biennium and for the following 65.5 biennium. The estimated expenditure, includingminimumthe 65.6 reserve requirements described in section 16A.76, shall be 65.7 compared to an estimate of the revenues that will be deposited 65.8 in the health care access fund. Based on this comparison, and 65.9 after consulting with the chairs of the house ways and means 65.10 committee and the senate finance committee, and the legislative 65.11 commission on health care access, the commissioner shall, as 65.12 necessary, make the adjustments specified in paragraph (b) to 65.13 ensure that expenditures remain within the limits of available 65.14 revenues for the remainder of the current biennium and for the 65.15 following biennium. The commissioner shall not hire additional 65.16 staff using appropriations from the health care access fund 65.17 until the commissioner of finance makes a determination that the 65.18 adjustments implemented under paragraph (b) are sufficient to 65.19 allow MinnesotaCare expenditures to remain within the limits of 65.20 available revenues for the remainder of the current biennium and 65.21 for the following biennium. 65.22 (b) The adjustments the commissioner shall use must be 65.23 implemented in this order: first, stop enrollment of single 65.24 adults and households without children; second, upon 45 days' 65.25 notice, stop coverage of single adults and households without 65.26 children already enrolled in the MinnesotaCare program; third, 65.27 upon 90 days' notice, decrease the premium subsidy amounts by 65.28 ten percent for families with gross annual income above 200 65.29 percent of the federal poverty guidelines; fourth, upon 90 days' 65.30 notice, decrease the premium subsidy amounts by ten percent for 65.31 families with gross annual income at or below 200 percent; and 65.32 fifth, require applicants to be uninsured for at least six 65.33 months prior to eligibility in the MinnesotaCare program. If 65.34 these measures are insufficient to limit the expenditures to the 65.35 estimated amount of revenue, the commissioner shall further 65.36 limit enrollment or decrease premium subsidies. 66.1The reserve referred to in this subdivision is appropriated66.2to the commissioner but may only be used upon approval of the66.3commissioner of finance, if estimated costs will exceed the66.4forecasted amount of available revenues after all adjustments66.5authorized under this subdivision have been made.66.6By February 1, 1995, the department of human services and66.7the department of health shall develop a plan to adjust benefit66.8levels, eligibility guidelines, or other steps necessary to66.9ensure that expenditures for the MinnesotaCare program are66.10contained within the two percent taxes imposed under section66.11295.52 and the gross premiums tax imposed under section 60A.15,66.12subdivision 1, paragraph (e), for fiscal year 1997.66.13(c) Notwithstanding paragraphs (a) and (b), the66.14commissioner shall proceed with the enrollment of single adults66.15and households without children in accordance with section66.16256.9354, subdivision 5, paragraph (a), even if the expenditures66.17do not remain within the limits of available revenues through66.18fiscal year 1997 to allow the departments of human services and66.19health to develop the plan required under paragraph (b).66.20 Sec. 4. Minnesota Statutes 1996, section 295.50, 66.21 subdivision 3, is amended to read: 66.22 Subd. 3. [GROSS REVENUES.] "Gross revenues" are total 66.23 amounts received in money or otherwise by: 66.24 (1) a hospital for resident and nonresident patient 66.25 services; 66.26 (2) a surgical center for resident and nonresident patient 66.27 services; 66.28 (3) a health care provider, other than a staff model health 66.29 carrier, for resident and nonresident patient services; 66.30 (4) a wholesale drug distributor for sale or distribution 66.31 of legend drugs that are delivered: (i) to a Minnesota resident66.32by a wholesale drug distributor who is a nonresident pharmacy66.33directly, by common carrier, or by mail; or (ii)in Minnesota by 66.34 the wholesale drug distributor, by common carrier, or by mail, 66.35 unless the legend drugs are delivered to another wholesale drug 66.36 distributor who sells legend drugs exclusively at wholesale. 67.1 Legend drugs do not include nutritional products as defined in 67.2 Minnesota Rules, part 9505.0325; and 67.3 (5) a staff model health plan company as gross premiums for 67.4 enrollees, copayments, deductibles, coinsurance, and fees for 67.5 resident and nonresident patient services covered under its 67.6 contracts with groups and enrollees; and67.7(6) a pharmacy for medical supplies, appliances, and67.8equipment. 67.9 Sec. 5. Minnesota Statutes 1996, section 295.50, 67.10 subdivision 4, is amended to read: 67.11 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care 67.12 provider" means: 67.13 (1) a person whose health care occupation is regulated or 67.14 required to be regulated by the state of Minnesota furnishing 67.15 any or all of the following goods or services directly to a 67.16 patient or consumer: medical, surgical, optical, visual, 67.17 dental, hearing, nursing services, drugs,medical supplies,67.18medical appliances,laboratory, diagnostic or therapeutic 67.19 services, or any; (2) a person who provides goods and services 67.20 not listedabovein clause (1) that qualify for reimbursement 67.21 under the medical assistance program provided under chapter 67.22 256B. For purposes of this clause, "directly to a patient or67.23consumer" includes goods and services provided in connection67.24with independent medical examinations under section 65B.56 or67.25other examinations for purposes of litigation or insurance67.26claims; 67.27(2)(3) a staff model health plan company;or67.28(3)(4) an ambulance service required to be licensed; or 67.29 (5) a person who sells or repairs hearing aids and related 67.30 equipment or prescription eyewear. 67.31 (b) Health care provider does not include hospitals,; 67.32 medical supplies distributors, except as specified under 67.33 paragraph (a), clause (5); nursing homes licensed under chapter 67.34 144A or licensed in any other jurisdiction,; pharmacies,; 67.35 surgical centers,; bus and taxicab transportation, or any other 67.36 providers of transportation services other than ambulance 68.1 services required to be licensed,; supervised living facilities 68.2 for persons with mental retardation or related conditions, 68.3 licensed under Minnesota Rules, parts 4665.0100 to 4665.9900,; 68.4 residential care homes licensed under chapter 144B,; board and 68.5 lodging establishments providing only custodial services that 68.6 are licensed under chapter 157 and registered under section 68.7 157.17 to provide supportive services or health supervision 68.8 services,; adult foster homes as defined in Minnesota Rules, 68.9 part 9555.5105,; day training and habilitation services for 68.10 adults with mental retardation and related conditions as defined 68.11 in section 252.41, subdivision 3,; and boarding care homes, as 68.12 defined in Minnesota Rules, part 4655.0100. 68.13 (c) For purposes of this subdivision, "directly to a 68.14 patient or consumer" includes goods and services provided in 68.15 connection with independent medical examinations under section 68.16 65B.56 or other examinations for purposes of litigation or 68.17 insurance claims. 68.18 Sec. 6. Minnesota Statutes 1996, section 295.50, 68.19 subdivision 6, is amended to read: 68.20 Subd. 6. [HOME HEALTH CARE SERVICES.] "Home health care 68.21 services" are services: 68.22 (1) defined under the state medical assistance program as 68.23 home health agency services provided by a home health agency, 68.24 personal care services and supervision of personal care 68.25 services, private duty nursing services, and waivered 68.26 services or services by home care providers required to be 68.27 licensed under chapter 144A; and 68.28 (2) provided at a recipient's residence, if the recipient 68.29 does not live in a hospital, nursing facility, as defined in 68.30 section 62A.46, subdivision 3, or intermediate care facility for 68.31 persons with mental retardation as defined in section 256B.055, 68.32 subdivision 12, paragraph (d). 68.33 Sec. 7. Minnesota Statutes 1996, section 295.50, 68.34 subdivision 7, is amended to read: 68.35 Subd. 7. [HOSPITAL.] "Hospital" means a hospital licensed 68.36 under chapter 144, or a hospital licensed by any otherstate or69.1province or territory of Canadajurisdiction. 69.2 Sec. 8. Minnesota Statutes 1996, section 295.50, is 69.3 amended by adding a subdivision to read: 69.4 Subd. 7a. [NONRESIDENT PATIENT SERVICES.] "Nonresident 69.5 patient services" means inpatient and outpatient services and 69.6 other goods and services provided by hospitals, surgical 69.7 centers, or health care providers to a patient or consumer who 69.8 is not a Minnesota resident. They include the following health 69.9 care goods and services: 69.10 (1) bed and board; 69.11 (2) nursing services and other related services; 69.12 (3) use of hospitals, surgical centers, or health care 69.13 provider facilities; 69.14 (4) medical social services; 69.15 (5) drugs, biologicals, supplies, appliances, and 69.16 equipment; 69.17 (6) other diagnostic or therapeutic items or services; 69.18 (7) medical or surgical services; 69.19 (8) items and services furnished to ambulatory patients not 69.20 requiring emergency care; 69.21 (9) emergency services; and 69.22 (10) covered services listed in section 256B.0625 and in 69.23 Minnesota Rules, parts 9505.0170 to 9505.0475. 69.24 Sec. 9. Minnesota Statutes 1996, section 295.50, 69.25 subdivision 9b, is amended to read: 69.26 Subd. 9b. [RESIDENT PATIENT SERVICES.] "Resident patient 69.27 services" means inpatient and outpatient services and other 69.28 goods and services provided by hospitals, surgical centers, or 69.29 health care providers to a patient or consumer who is a 69.30 Minnesota resident. They include the following health care 69.31 goods and servicesprovided to a patient or consumer: 69.32 (1) bed and board; 69.33 (2) nursing services and other related services; 69.34 (3) use of hospitals, surgical centers, or health care 69.35 provider facilities; 69.36 (4) medical social services; 70.1 (5) drugs, biologicals, supplies, appliances, and 70.2 equipment; 70.3 (6) other diagnostic or therapeutic items or services; 70.4 (7) medical or surgical services; 70.5 (8) items and services furnished to ambulatory patients not 70.6 requiring emergency care; 70.7 (9) emergency services; and 70.8 (10) covered services listed in section 256B.0625 and in 70.9 Minnesota Rules, parts 9505.0170 to 9505.0475. 70.10 Sec. 10. Minnesota Statutes 1996, section 295.50, 70.11 subdivision 13, is amended to read: 70.12 Subd. 13. [SURGICAL CENTER.] "Surgical center" is an 70.13 outpatient surgical center as defined in Minnesota Rules, 70.14 chapter 4675 or a similar facility located in any otherstate or70.15province or territory of Canadajurisdiction. 70.16 Sec. 11. Minnesota Statutes 1996, section 295.50, 70.17 subdivision 14, is amended to read: 70.18 Subd. 14. [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 70.19 distributor" means a wholesale drug distributor required to be 70.20 licensed under sections 151.42 to 151.51or a nonresident70.21pharmacy required to be registered under section 151.19. 70.22 Sec. 12. Minnesota Statutes 1996, section 295.51, 70.23 subdivision 1, is amended to read: 70.24 Subdivision 1. [BUSINESS TRANSACTIONS IN MINNESOTA.] A 70.25 hospital, surgical center,pharmacy,or health care provider is 70.26 subject to tax under sections 295.50 to 295.59 if it is 70.27 "transacting business in Minnesota." A hospital, surgical 70.28 center,pharmacy,or health care provider is transacting 70.29 business in Minnesota if it maintains contacts with or presence 70.30 in the state of Minnesota sufficient to permit taxation of gross 70.31 revenues received for patient services under the United States 70.32 Constitution. 70.33 Sec. 13. Minnesota Statutes 1996, section 295.52, 70.34 subdivision 1, is amended to read: 70.35 Subdivision 1. [HOSPITAL TAX.] A tax is imposed on each 70.36 hospital equal to two percent of its gross revenues from 71.1 resident patient services and one percent of its gross revenues 71.2 from nonresident patient services. 71.3 Sec. 14. Minnesota Statutes 1996, section 295.52, 71.4 subdivision 1a, is amended to read: 71.5 Subd. 1a. [SURGICAL CENTER TAX.] A tax is imposed on each 71.6 surgical center equal to two percent of its gross revenues from 71.7 resident patient services and one percent of its gross revenues 71.8 from nonresident patient services. 71.9 Sec. 15. Minnesota Statutes 1996, section 295.52, 71.10 subdivision 2, is amended to read: 71.11 Subd. 2. [PROVIDER TAX.] A tax is imposed on each health 71.12 care provider equal to two percent of its gross revenues from 71.13 resident patient services and one percent of its gross revenues 71.14 for nonresident patient services. 71.15 Sec. 16. Minnesota Statutes 1996, section 295.52, 71.16 subdivision 4, is amended to read: 71.17 Subd. 4. [USE TAX; PRESCRIPTION DRUGS.] A person that 71.18 receives prescription drugs for resale or use in Minnesota, 71.19 other than from a wholesale drug distributor that paid the tax 71.20 under subdivision 3, is subject to a tax equal to two percent of 71.21 the price paid. Liability for the tax is incurred when 71.22 prescription drugs are received or delivered in Minnesota by the 71.23 person. 71.24 Sec. 17. Minnesota Statutes 1996, section 295.52, is 71.25 amended by adding a subdivision to read: 71.26 Subd. 6. [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax 71.27 liability of a person who meets the definition of a health care 71.28 provider solely because the person sells or repairs hearing aids 71.29 and related equipment or prescription eyewear is limited to the 71.30 gross revenues received from the sale or repair of these items. 71.31 Sec. 18. Minnesota Statutes 1996, section 295.52, is 71.32 amended by adding a subdivision to read: 71.33 Subd. 7. [TAX REDUCTION.] Notwithstanding subdivisions 1, 71.34 1a, 2, 3, and 4, the tax imposed under this section for calendar 71.35 years 1998 and 1999 shall be equal to 1.75 percent of the gross 71.36 revenues received on or after January 1, 1998, and before 72.1 January 1, 2000. 72.2 Sec. 19. Minnesota Statutes 1996, section 295.53, 72.3 subdivision 1, is amended to read: 72.4 Subdivision 1. [EXEMPTIONS.] (a) The following payments 72.5 are excluded from the gross revenues subject to the hospital, 72.6 surgical center, or health care provider taxes under sections 72.7 295.50 to 295.57: 72.8 (1) payments received for services provided under the 72.9 Medicare program, including payments received from the 72.10 government, and organizations governed by sections 1833 and 1876 72.11 of title XVIII of the federal Social Security Act, United States 72.12 Code, title 42, section 1395, and enrollee deductibles, 72.13 coinsurance, and copayments, whether paid by the Medicare 72.14 enrollee or by a Medicare supplemental coverage as defined in 72.15 section 62A.011, subdivision 3, clause (10). Payments for 72.16 services not covered by Medicare are taxable; 72.17 (2) medical assistance payments including payments received 72.18 directly from the government or from a prepaid plan; 72.19 (3) payments received for home health care services; 72.20 (4) payments received from hospitals or surgical centers 72.21 for goods and services on which liability for tax is imposed 72.22 under section 295.52 or the source of funds for the payment is 72.23 exempt under clause (1), (2), (7), (8), or (10); 72.24 (5) payments received from health care providers for goods 72.25 and services on which liability for tax is imposed under this 72.26 chapter or the source of funds for the payment is exempt under 72.27 clause (1), (2), (7), (8), or (10); 72.28 (6) amounts paid for legend drugs, other than nutritional 72.29 products, to a wholesale drug distributor who is subject to tax 72.30 under section 295.52, subdivision 3, reduced by reimbursements 72.31 received for legend drugs under clauses (1), (2), (7), and (8); 72.32 (7) payments received under the general assistance medical 72.33 care program including payments received directly from the 72.34 government or from a prepaid plan; 72.35 (8) payments received for providing services under the 72.36 MinnesotaCare program including payments received directly from 73.1 the government or from a prepaid plan and enrollee deductibles, 73.2 coinsurance, and copayments. For purposes of this clause, 73.3 coinsurance means the portion of payment that the enrollee is 73.4 required to pay for the covered service; 73.5 (9) payments received by a health care provider or the 73.6 wholly owned subsidiary of a health care provider for care 73.7 provided outside Minnesota to a patient who is not domiciled in 73.8 Minnesota; 73.9 (10) payments received from the chemical dependency fund 73.10 under chapter 254B; 73.11 (11) payments received in the nature of charitable 73.12 donations that are not designated for providing patient services 73.13 to a specific individual or group; 73.14 (12) payments received for providing patient services 73.15 incurred through a formal program of health care research 73.16 conducted in conformity with federal regulations governing 73.17 research on human subjects. Payments received from patients or 73.18 from other persons paying on behalf of the patients are subject 73.19 to tax; 73.20 (13) payments received from any governmental agency for 73.21 services benefiting the public, not including payments made by 73.22 the government in its capacity as an employer or insurer; 73.23 (14) payments received for services provided by community 73.24 residential mental health facilities licensed under Minnesota 73.25 Rules, parts 9520.0500 to 9520.0690, community support programs 73.26 and family community support programs approved under Minnesota 73.27 Rules, parts 9535.1700 to 9535.1760, and community mental health 73.28 centers as defined in section 245.62, subdivision 2; 73.29 (15) government payments received by a regional treatment 73.30 center; 73.31 (16) payments received for hospice care services; 73.32 (17) payments received by a health care provider for 73.33medical supplies, appliances, and equipmenthearing aids and 73.34 related equipment or prescription eyewear delivered outside of 73.35 Minnesota; 73.36 (18) payments received by a post-secondary educational 74.1 institution from student tuition, student activity fees, health 74.2 care service fees, government appropriations, donations, or 74.3 grants. Fee for service payments and payments for extended 74.4 coverage are taxable; and 74.5 (19) payments received for services provided by: assisted 74.6 living programs and congregate housing programs. 74.7 (b) Payments received by wholesale drug distributors for 74.8prescriptionlegend drugs sold directly to veterinarians or 74.9 veterinary bulk purchasing organizations are excluded from the 74.10 gross revenues subject to the wholesale drug distributor tax 74.11 under sections 295.50 to 295.59. 74.12 Sec. 20. Minnesota Statutes 1996, section 295.53, 74.13 subdivision 3, is amended to read: 74.14 Subd. 3. [SEPARATE STATEMENT OF TAX.] A hospital, surgical 74.15 center,pharmacy,or health care provider must not state the tax 74.16 obligation under section 295.52 in a deceptive or misleading 74.17 manner. It must not separately state tax obligations on bills 74.18 provided to patients, consumers, or other payers when the amount 74.19 received for the services or goods is not subject to tax. 74.20 Pharmacies that separately state the tax obligations on 74.21 bills provided to consumers or to other payers who purchase 74.22 legend drugs may state the tax obligation as two percent of the 74.23 wholesale price of the legend drugs. Pharmacies must not state 74.24 the tax obligation as two percent of the retail price. 74.25 Whenever the commissioner determines that a person has 74.26 engaged in any act or practice constituting a violation of this 74.27 subdivision, the commissioner may bring an action in the name of 74.28 the state in the district court of the appropriate county to 74.29 enjoin the act or practice and to enforce compliance with this 74.30 subdivision, or the commissioner may refer the matter to the 74.31 attorney general or the county attorney of the appropriate 74.32 county. Upon a proper showing, a permanent or temporary 74.33 injunction, restraining order, or other appropriate relief must 74.34 be granted. 74.35 Sec. 21. Minnesota Statutes 1996, section 295.53, 74.36 subdivision 4, is amended to read: 75.1 Subd. 4. [DEDUCTION FOR RESEARCH.] (a) In addition to the 75.2 exemptions allowed under subdivision 1, a hospital or health 75.3 care providerwhich is exempt under section 501(c)(3) of the75.4Internal Revenue Code of 1986 or is owned and operated under75.5authority of a governmental unit,may deduct from its gross 75.6 revenues subject to the hospital or health care provider taxes 75.7 under sections 295.50 to 295.57 revenues equal to expenditures 75.8 for qualifying research conducted by an allowable research 75.9programsprogram. 75.10 (b) For purposes of this subdivision, the following 75.11 requirements apply: 75.12 (1) expendituresfor allowable research programs are the75.13direct and generalmust be for program costsfor activities75.14which are partof qualifying research conducted by an allowable 75.15 research program; 75.16 (2) an allowable research program must be a formal program 75.17 of medical and health care researchapproved by the governing75.18body of the hospital or health care provider which also includes75.19active solicitation of research funds from government and75.20private sources. Allowableconducted by an entity which is 75.21 exempt under section 501(c)(3) of the Internal Revenue Code of 75.22 1986 or is owned and operated under authority of a governmental 75.23 unit; 75.24 (3) qualifying research must: 75.25 (A) be approved in writing by the governing body of the 75.26 hospital or health care provider which is taking the deduction 75.27 under this subdivision; 75.28(1)(B) have as its purpose the development of new 75.29 knowledge in basic or applied science relating to the diagnosis 75.30 and treatment of conditions affecting the human body; 75.31(2)(C) be subject to review by individuals with expertise 75.32 in the subject matter of the proposed study but who have no 75.33 financial interest in the proposed study and are not involved in 75.34 the conduct of the proposed study; and 75.35(3)(D) be subject to review and supervision by an 75.36 institutional review board operating in conformity with federal 76.1 regulations if the research involves human subjects or an 76.2 institutional animal care and use committee operating in 76.3 conformity with federal regulations if the research involves 76.4 animal subjects. Research expenses are not exempt if the study 76.5 is a routine evaluation of health care methods or products used 76.6 in a particular setting conducted for the purpose of making a 76.7 management decision. Costs of clinical research activities paid 76.8 directly for the benefit of an individual patient are excluded 76.9 from this exemption. Basic research in fields including 76.10 biochemistry, molecular biology, and physiology are also 76.11 included if such programs are subject to a peer review process. 76.12 (c) No deduction shall be allowed under this subdivision 76.13 for any revenue received by the hospital or health care provider 76.14 in the form of a grant, gift, or otherwise, whether from a 76.15 government or nongovernment source, on which the tax liability 76.16 under section 295.52 is not imposedor for which the tax76.17liability under section 295.52 has been received from a third76.18party as provided for in section 295.582. 76.19 (d) Effective beginning with calendar year 1995, the 76.20 taxpayer shall not take the deduction under this section into 76.21 account in determining estimated tax payments or the payment 76.22 made with the annual return under section 295.55. The total 76.23 deduction allowable to all taxpayers under this section for 76.24 calendar years beginning after December 31, 1994, may not exceed 76.25 $65,000,000. To implement this limit, each qualifying hospital 76.26 and qualifying health care provider shall submit to the 76.27 commissioner by March 15 its total expenditures qualifying for 76.28 the deduction under this section for the previous calendar 76.29 year. The commissioner shall sum the total expenditures of all 76.30 taxpayers qualifying under this section for the calendar year. 76.31 If the resulting amount exceeds $65,000,000, the commissioner 76.32 shall allocate a part of the $65,000,000 deduction limit to each 76.33 qualifying hospital and health care provider in proportion to 76.34 its share of the total deductions. The commissioner shall pay a 76.35 refund to each qualifying hospital or provider equal to its 76.36 share of the deduction limit multiplied by two percent. The 77.1 commissioner shall pay the refund no later than May 15 of the 77.2 calendar year. 77.3 Sec. 22. Minnesota Statutes 1996, section 295.54, 77.4 subdivision 1, is amended to read: 77.5 Subdivision 1. [TAXES PAID TO ANOTHER STATE.] A hospital, 77.6 surgical center,pharmacy,or health care provider that has paid 77.7 taxes to anotherstate or province or territory of77.8Canadajurisdiction measured by gross revenues and is subject to 77.9 tax under sections 295.52 to 295.59 on the same gross revenues 77.10 is entitled to a credit for the tax legally due and paid to 77.11 anotherstate or province or territory of Canadajurisdiction to 77.12 the extent of the lesser of (1) the tax actually paid to the 77.13 otherstate or province or territory of Canadajurisdiction, or 77.14 (2) the amount of tax imposed by Minnesota on the gross revenues 77.15 subject to tax in the other taxing jurisdictions. 77.16 Sec. 23. Minnesota Statutes 1996, section 295.54, 77.17 subdivision 2, is amended to read: 77.18 Subd. 2. [PHARMACYCREDITREFUND.] A pharmacy may claima77.19quarterly creditan annual refund against the total amount of 77.20 tax, if any, the pharmacy owes during thatquartercalendar year 77.21 under section 295.52, subdivision1b, as provided in this77.22subdivision2. Thecreditrefund shall equal two percent of the 77.23 amount paid by the pharmacy to a wholesale drug distributor 77.24 subject to tax under section 295.52, subdivision 3, for legend 77.25 drugs delivered by the pharmacy outside of Minnesota. If the 77.26 amount of thecreditrefund exceeds the tax liability of the 77.27 pharmacy under section 295.52, subdivision 1b, the commissioner 77.28 shall provide the pharmacy with a refund equal to the excess 77.29 amount. Each qualifying pharmacy must apply for the refund on 77.30 the annual return as provided under section 295.55, subdivision 77.31 5. The refund must be claimed within one year of the due date 77.32 of the return. Interest on refunds paid under this subdivision 77.33 will begin to accrue 60 days after the date a claim for refund 77.34 is filed. For purposes of this subdivision, the date a claim is 77.35 filed is the due date of the return or the date of the actual 77.36 claim for refund, whichever is later. 78.1 Sec. 24. Minnesota Statutes 1996, section 295.55, 78.2 subdivision 2, is amended to read: 78.3 Subd. 2. [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 78.4 Each hospital or surgical center must make estimated payments of 78.5 the taxes for the calendar year in monthly installments to the 78.6 commissioner withinten15 days after the end of the month. 78.7 (b) Estimated tax payments are not required of hospitals or 78.8 surgical centers if the tax for the calendar year is less than 78.9 $500 or if a hospital has been allowed a grant under section 78.10 144.1484, subdivision 2, for the year. 78.11 (c) Underpayment of estimated installments bear interest at 78.12 the rate specified in section 270.75, from the due date of the 78.13 payment until paid or until the due date of the annual return at 78.14 the rate specified in section 270.75. An underpayment of an 78.15 estimated installment is the difference between the amount paid 78.16 and the lesser of (1) 90 percent of one-twelfth of the tax for 78.17 the calendar year or (2) the tax for the actual gross revenues 78.18 received during the month. 78.19 Sec. 25. Minnesota Statutes 1996, section 295.582, is 78.20 amended to read: 78.21 295.582 [AUTHORITY.] 78.22 (a) A hospital, surgical center,pharmacy,or health care 78.23 provider that is subject to a tax under section 295.52, or a 78.24 pharmacy that has paid additional expense transferred under this 78.25 section by a wholesale drug distributor, may transfer additional 78.26 expense generated by section 295.52 obligations on to all 78.27 third-party contracts for the purchase of health care services 78.28 on behalf of a patient or consumer. The additional expense 78.29 transferred to the third-party purchaser must not exceed two 78.30 percent of the gross revenues received under the third-party 78.31 contract, and two percent of copayments and deductibles paid by 78.32 the individual patient or consumer. The expense must not be 78.33 generated on revenues derived from payments that are excluded 78.34 from the tax under section 295.53. All third-party purchasers 78.35 of health care services including, but not limited to, 78.36 third-party purchasers regulated under chapter 60A, 62A, 62C, 79.1 62D, 62H, 62N, 64B, 65A, 65B, 79, or 79A, or under section 79.2 471.61 or 471.617, must pay the transferred expense in addition 79.3 to any payments due under existing contracts with the hospital, 79.4 surgical center, pharmacy, or health care provider, to the 79.5 extent allowed under federal law. A third-party purchaser of 79.6 health care services includes, but is not limited to, a health 79.7 carrier, integrated service network,or community integrated 79.8 service network that pays for health care services on behalf of 79.9 patients or that reimburses, indemnifies, compensates, or 79.10 otherwise insures patients for health care services. A 79.11 third-party purchaser shall comply with this section regardless 79.12 of whether the third-party purchaser is a for-profit, 79.13 not-for-profit, or nonprofit entity. A wholesale drug 79.14 distributor may transfer additional expense generated by section 79.15 295.52 obligations to entities that purchase from the 79.16 wholesaler, and the entities must pay the additional expense. 79.17 Nothing in this section limits the ability of a hospital, 79.18 surgical center, pharmacy, wholesale drug distributor, or health 79.19 care provider to recover all or part of the section 295.52 79.20 obligation by other methods, including increasing fees or 79.21 charges. 79.22 (b) Each third-party purchaser regulated under any chapter 79.23 cited in paragraph (a) shall include with its annual renewal for 79.24 certification of authority or licensure documentation indicating 79.25 compliance with paragraph (a). 79.26 (c) Any hospital, surgical center, or health care provider 79.27 subject to a tax under section 295.52 or a pharmacy that has 79.28 paid additional expense transferred under this section by a 79.29 wholesale drug distributor may file a complaint with the 79.30 commissioner responsible for regulating the third-party 79.31 purchaser if at any time the third-party purchaser fails to 79.32 comply with paragraph (a). 79.33 (d) If the commissioner responsible for regulating the 79.34 third-party purchaser finds at any time that the third-party 79.35 purchaser has not complied with paragraph (a), the commissioner 79.36 may take enforcement action against a third-party purchaser 80.1 which is subject to the commissioner's regulatory jurisdiction 80.2 and which does not allow a hospital, surgical center, pharmacy, 80.3 or provider to pass-through the tax. The commissioner may by 80.4 order fine or censure the third-party purchaser or revoke or 80.5 suspend the certificate of authority or license of the 80.6 third-party purchaser to do business in this state if the 80.7 commissioner finds that the third-party purchaser has not 80.8 complied with this section. The third-party purchaser may 80.9 appeal the commissioner's order through a contested case hearing 80.10 in accordance with chapter 14. 80.11 Sec. 26. [MCHA ASSESSMENT OFFSET.] 80.12 In approving the premium rates as required in Minnesota 80.13 Statutes, sections 62A.65, subdivision 3, and 62L.08, 80.14 subdivision 8, the commissioners of health and commerce shall 80.15 ensure that any offset to the annual assessment made by the 80.16 contributing members to cover the costs of the Minnesota 80.17 comprehensive health insurance plan as required under Minnesota 80.18 Statutes, section 62E.11, is reflected in the premium rate of 80.19 each contributing member. 80.20 Sec. 27. [REPEALER.] 80.21 Minnesota Statutes 1996, sections 295.52, subdivision 1b; 80.22 and 295.53, subdivision 5, are repealed. 80.23 Sec. 28. [EFFECTIVE DATES.] 80.24 Section 2, subdivision 1, paragraph (f), is effective for 80.25 payments, revenues, and reimbursements received from the federal 80.26 government on or after December 31, 1996. 80.27 Sections 1 and 3 are effective July 1, 1997. 80.28 Sections 4, 5, 6, 8, 9, 11 to 18, 20, and 23 are effective 80.29 for gross revenues received after December 31, 1997. 80.30 Section 19, subdivision 1, paragraph (a), clause (6), and 80.31 paragraph (b) are effective the day following final enactment. 80.32 Section 19, paragraph (a), clause (17), is effective for gross 80.33 revenues received for hearing aids and related equipment or 80.34 prescription eyewear after December 31, 1997. 80.35 Section 22 is effective January 1, 1998. 80.36 Section 24 is effective for estimated payments due after 81.1 July 1, 1997. 81.2 Sections 7, 10, and 25, paragraph (c), are effective the 81.3 day following final enactment. 81.4 Section 21 is effective for research expenditures incurred 81.5 after December 31, 1995. 81.6 Section 27 is effective January 1, 1998. 81.7 ARTICLE 4 81.8 SENIOR CITIZEN DRUG PROGRAM 81.9 Section 1. Minnesota Statutes 1996, section 256.01, 81.10 subdivision 2, is amended to read: 81.11 Subd. 2. [SPECIFIC POWERS.] Subject to the provisions of 81.12 section 241.021, subdivision 2, the commissioner of human 81.13 services shall: 81.14 (1) Administer and supervise all forms of public assistance 81.15 provided for by state law and other welfare activities or 81.16 services as are vested in the commissioner. Administration and 81.17 supervision of human services activities or services includes, 81.18 but is not limited to, assuring timely and accurate distribution 81.19 of benefits, completeness of service, and quality program 81.20 management. In addition to administering and supervising human 81.21 services activities vested by law in the department, the 81.22 commissioner shall have the authority to: 81.23 (a) require county agency participation in training and 81.24 technical assistance programs to promote compliance with 81.25 statutes, rules, federal laws, regulations, and policies 81.26 governing human services; 81.27 (b) monitor, on an ongoing basis, the performance of county 81.28 agencies in the operation and administration of human services, 81.29 enforce compliance with statutes, rules, federal laws, 81.30 regulations, and policies governing welfare services and promote 81.31 excellence of administration and program operation; 81.32 (c) develop a quality control program or other monitoring 81.33 program to review county performance and accuracy of benefit 81.34 determinations; 81.35 (d) require county agencies to make an adjustment to the 81.36 public assistance benefits issued to any individual consistent 82.1 with federal law and regulation and state law and rule and to 82.2 issue or recover benefits as appropriate; 82.3 (e) delay or deny payment of all or part of the state and 82.4 federal share of benefits and administrative reimbursement 82.5 according to the procedures set forth in section 256.017; and 82.6 (f) make contracts with and grants to public and private 82.7 agencies and organizations, both profit and nonprofit, and 82.8 individuals, using appropriated funds. 82.9 (2) Inform county agencies, on a timely basis, of changes 82.10 in statute, rule, federal law, regulation, and policy necessary 82.11 to county agency administration of the programs. 82.12 (3) Administer and supervise all child welfare activities; 82.13 promote the enforcement of laws protecting handicapped, 82.14 dependent, neglected and delinquent children, and children born 82.15 to mothers who were not married to the children's fathers at the 82.16 times of the conception nor at the births of the children; 82.17 license and supervise child-caring and child-placing agencies 82.18 and institutions; supervise the care of children in boarding and 82.19 foster homes or in private institutions; and generally perform 82.20 all functions relating to the field of child welfare now vested 82.21 in the state board of control. 82.22 (4) Administer and supervise all noninstitutional service 82.23 to handicapped persons, including those who are visually 82.24 impaired, hearing impaired, or physically impaired or otherwise 82.25 handicapped. The commissioner may provide and contract for the 82.26 care and treatment of qualified indigent children in facilities 82.27 other than those located and available at state hospitals when 82.28 it is not feasible to provide the service in state hospitals. 82.29 (5) Assist and actively cooperate with other departments, 82.30 agencies and institutions, local, state, and federal, by 82.31 performing services in conformity with the purposes of Laws 82.32 1939, chapter 431. 82.33 (6) Act as the agent of and cooperate with the federal 82.34 government in matters of mutual concern relative to and in 82.35 conformity with the provisions of Laws 1939, chapter 431, 82.36 including the administration of any federal funds granted to the 83.1 state to aid in the performance of any functions of the 83.2 commissioner as specified in Laws 1939, chapter 431, and 83.3 including the promulgation of rules making uniformly available 83.4 medical care benefits to all recipients of public assistance, at 83.5 such times as the federal government increases its participation 83.6 in assistance expenditures for medical care to recipients of 83.7 public assistance, the cost thereof to be borne in the same 83.8 proportion as are grants of aid to said recipients. 83.9 (7) Establish and maintain any administrative units 83.10 reasonably necessary for the performance of administrative 83.11 functions common to all divisions of the department. 83.12 (8) Act as designated guardian of both the estate and the 83.13 person of all the wards of the state of Minnesota, whether by 83.14 operation of law or by an order of court, without any further 83.15 act or proceeding whatever, except as to persons committed as 83.16 mentally retarded. 83.17 (9) Act as coordinating referral and informational center 83.18 on requests for service for newly arrived immigrants coming to 83.19 Minnesota. 83.20 (10) The specific enumeration of powers and duties as 83.21 hereinabove set forth shall in no way be construed to be a 83.22 limitation upon the general transfer of powers herein contained. 83.23 (11) Establish county, regional, or statewide schedules of 83.24 maximum fees and charges which may be paid by county agencies 83.25 for medical, dental, surgical, hospital, nursing and nursing 83.26 home care and medicine and medical supplies under all programs 83.27 of medical care provided by the state and for congregate living 83.28 care under the income maintenance programs. 83.29 (12) Have the authority to conduct and administer 83.30 experimental projects to test methods and procedures of 83.31 administering assistance and services to recipients or potential 83.32 recipients of public welfare. To carry out such experimental 83.33 projects, it is further provided that the commissioner of human 83.34 services is authorized to waive the enforcement of existing 83.35 specific statutory program requirements, rules, and standards in 83.36 one or more counties. The order establishing the waiver shall 84.1 provide alternative methods and procedures of administration, 84.2 shall not be in conflict with the basic purposes, coverage, or 84.3 benefits provided by law, and in no event shall the duration of 84.4 a project exceed four years. It is further provided that no 84.5 order establishing an experimental project as authorized by the 84.6 provisions of this section shall become effective until the 84.7 following conditions have been met: 84.8 (a) The proposed comprehensive plan, including estimated 84.9 project costs and the proposed order establishing the waiver, 84.10 shall be filed with the secretary of the senate and chief clerk 84.11 of the house of representatives at least 60 days prior to its 84.12 effective date. 84.13 (b) The secretary of health, education, and welfare of the 84.14 United States has agreed, for the same project, to waive state 84.15 plan requirements relative to statewide uniformity. 84.16 (c) A comprehensive plan, including estimated project 84.17 costs, shall be approved by the legislative advisory commission 84.18 and filed with the commissioner of administration. 84.19 (13) In accordance with federal requirements, establish 84.20 procedures to be followed by local welfare boards in creating 84.21 citizen advisory committees, including procedures for selection 84.22 of committee members. 84.23 (14) Allocate federal fiscal disallowances or sanctions 84.24 which are based on quality control error rates for the aid to 84.25 families with dependent children, medical assistance, or food 84.26 stamp program in the following manner: 84.27 (a) One-half of the total amount of the disallowance shall 84.28 be borne by the county boards responsible for administering the 84.29 programs. For the medical assistance and AFDC programs, 84.30 disallowances shall be shared by each county board in the same 84.31 proportion as that county's expenditures for the sanctioned 84.32 program are to the total of all counties' expenditures for the 84.33 AFDC and medical assistance programs. For the food stamp 84.34 program, sanctions shall be shared by each county board, with 50 84.35 percent of the sanction being distributed to each county in the 84.36 same proportion as that county's administrative costs for food 85.1 stamps are to the total of all food stamp administrative costs 85.2 for all counties, and 50 percent of the sanctions being 85.3 distributed to each county in the same proportion as that 85.4 county's value of food stamp benefits issued are to the total of 85.5 all benefits issued for all counties. Each county shall pay its 85.6 share of the disallowance to the state of Minnesota. When a 85.7 county fails to pay the amount due hereunder, the commissioner 85.8 may deduct the amount from reimbursement otherwise due the 85.9 county, or the attorney general, upon the request of the 85.10 commissioner, may institute civil action to recover the amount 85.11 due. 85.12 (b) Notwithstanding the provisions of paragraph (a), if the 85.13 disallowance results from knowing noncompliance by one or more 85.14 counties with a specific program instruction, and that knowing 85.15 noncompliance is a matter of official county board record, the 85.16 commissioner may require payment or recover from the county or 85.17 counties, in the manner prescribed in paragraph (a), an amount 85.18 equal to the portion of the total disallowance which resulted 85.19 from the noncompliance, and may distribute the balance of the 85.20 disallowance according to paragraph (a). 85.21 (15) Develop and implement special projects that maximize 85.22 reimbursements and result in the recovery of money to the 85.23 state. For the purpose of recovering state money, the 85.24 commissioner may enter into contracts with third parties. Any 85.25 recoveries that result from projects or contracts entered into 85.26 under this paragraph shall be deposited in the state treasury 85.27 and credited to a special account until the balance in the 85.28 account reaches $1,000,000. When the balance in the account 85.29 exceeds $1,000,000, the excess shall be transferred and credited 85.30 to the general fund. All money in the account is appropriated 85.31 to the commissioner for the purposes of this paragraph. 85.32 (16) Have the authority to make direct payments to 85.33 facilities providing shelter to women and their children 85.34 pursuant to section 256D.05, subdivision 3. Upon the written 85.35 request of a shelter facility that has been denied payments 85.36 under section 256D.05, subdivision 3, the commissioner shall 86.1 review all relevant evidence and make a determination within 30 86.2 days of the request for review regarding issuance of direct 86.3 payments to the shelter facility. Failure to act within 30 days 86.4 shall be considered a determination not to issue direct payments. 86.5 (17) Have the authority to establish and enforce the 86.6 following county reporting requirements: 86.7 (a) The commissioner shall establish fiscal and statistical 86.8 reporting requirements necessary to account for the expenditure 86.9 of funds allocated to counties for human services programs. 86.10 When establishing financial and statistical reporting 86.11 requirements, the commissioner shall evaluate all reports, in 86.12 consultation with the counties, to determine if the reports can 86.13 be simplified or the number of reports can be reduced. 86.14 (b) The county board shall submit monthly or quarterly 86.15 reports to the department as required by the commissioner. 86.16 Monthly reports are due no later than 15 working days after the 86.17 end of the month. Quarterly reports are due no later than 30 86.18 calendar days after the end of the quarter, unless the 86.19 commissioner determines that the deadline must be shortened to 86.20 20 calendar days to avoid jeopardizing compliance with federal 86.21 deadlines or risking a loss of federal funding. Only reports 86.22 that are complete, legible, and in the required format shall be 86.23 accepted by the commissioner. 86.24 (c) If the required reports are not received by the 86.25 deadlines established in clause (b), the commissioner may delay 86.26 payments and withhold funds from the county board until the next 86.27 reporting period. When the report is needed to account for the 86.28 use of federal funds and the late report results in a reduction 86.29 in federal funding, the commissioner shall withhold from the 86.30 county boards with late reports an amount equal to the reduction 86.31 in federal funding until full federal funding is received. 86.32 (d) A county board that submits reports that are late, 86.33 illegible, incomplete, or not in the required format for two out 86.34 of three consecutive reporting periods is considered 86.35 noncompliant. When a county board is found to be noncompliant, 86.36 the commissioner shall notify the county board of the reason the 87.1 county board is considered noncompliant and request that the 87.2 county board develop a corrective action plan stating how the 87.3 county board plans to correct the problem. The corrective 87.4 action plan must be submitted to the commissioner within 45 days 87.5 after the date the county board received notice of noncompliance. 87.6 (e) The final deadline for fiscal reports or amendments to 87.7 fiscal reports is one year after the date the report was 87.8 originally due. If the commissioner does not receive a report 87.9 by the final deadline, the county board forfeits the funding 87.10 associated with the report for that reporting period and the 87.11 county board must repay any funds associated with the report 87.12 received for that reporting period. 87.13 (f) The commissioner may not delay payments, withhold 87.14 funds, or require repayment under paragraph (c) or (e) if the 87.15 county demonstrates that the commissioner failed to provide 87.16 appropriate forms, guidelines, and technical assistance to 87.17 enable the county to comply with the requirements. If the 87.18 county board disagrees with an action taken by the commissioner 87.19 under paragraph (c) or (e), the county board may appeal the 87.20 action according to sections 14.57 to 14.69. 87.21 (g) Counties subject to withholding of funds under 87.22 paragraph (c) or forfeiture or repayment of funds under 87.23 paragraph (e) shall not reduce or withhold benefits or services 87.24 to clients to cover costs incurred due to actions taken by the 87.25 commissioner under paragraph (c) or (e). 87.26 (18) Allocate federal fiscal disallowances or sanctions for 87.27 audit exceptions when federal fiscal disallowances or sanctions 87.28 are based on a statewide random sample for the foster care 87.29 program under title IV-E of the Social Security Act, United 87.30 States Code, title 42, in direct proportion to each county's 87.31 title IV-E foster care maintenance claim for that period. 87.32 (19) Have the authority to administer a drug rebate program 87.33 for drugs purchased pursuant to the senior citizen drug program 87.34 established under section 256.955 after the beneficiary's 87.35 satisfaction of any deductible established in the program. The 87.36 commissioner shall require a rebate agreement from all 88.1 manufacturers of covered drugs as defined in section 256B.0625, 88.2 subdivision 13. The rebate program shall utilize the identical 88.3 terms, conditions, and formulas used for the federal rebate 88.4 program established pursuant to section 1927 of title XIX of the 88.5 Social Security Act. 88.6 Sec. 2. [256.955] [SENIOR CITIZEN DRUG PROGRAM.] 88.7 Subdivision 1. [ESTABLISHMENT.] The commissioner of human 88.8 services shall establish and administer a senior citizen drug 88.9 program. Qualified senior citizens shall be eligible for 88.10 prescription drug coverage under the program beginning no later 88.11 than January 1, 1999. 88.12 Subd. 2. [DEFINITIONS.] (a) For purposes of this section, 88.13 the following definitions apply. 88.14 (b) "Health plan" has the meaning provided in section 88.15 62Q.01, subdivision 3. 88.16 (c) "Health plan company" has the meaning provided in 88.17 section 62Q.01, subdivision 4. 88.18 (d) "Qualified senior citizen" means an individual age 65 88.19 or older who: 88.20 (1) is eligible as a qualified Medicare beneficiary 88.21 according to section 256B.057, subdivision 3 or 3a, or is 88.22 eligible under section 256B.057, subdivision 3 or 3a, and 88.23 medical assistance or general assistance medical care with a 88.24 spenddown as defined in section 256B.056, subdivision 5. 88.25 Persons who are determined eligible for medical assistance 88.26 according to section 256B.0575 and persons who are eligible for 88.27 medical assistance without a spenddown according to section 88.28 256B.056, subdivision 4, are not eligible for this program; 88.29 (2) is not enrolled in prescription drug coverage under a 88.30 health plan; 88.31 (3) is not enrolled in prescription drug coverage under a 88.32 Medicare supplement plan, as defined in sections 62A.31 to 88.33 62A.44, or policies, contracts, or certificates that supplement 88.34 Medicare issued by health maintenance organizations or those 88.35 policies, contracts, or certificates governed by section 1833 or 88.36 1876 of the federal Social Security Act, United States Code, 89.1 title 42, section 1395, et seq., as amended; 89.2 (4) has not had coverage described in clauses (2) and (3) 89.3 for at least four months prior to application for the program; 89.4 and 89.5 (5) is a permanent resident of Minnesota as defined in 89.6 section 256.9359. 89.7 Subd. 3. [PRESCRIPTION DRUG COVERAGE.] Coverage under the 89.8 program is limited to prescription drugs covered under the 89.9 medical assistance program as described in section 256B.0625, 89.10 subdivision 13, subject to a maximum deductible of $300 annually. 89.11 Subd. 4. [APPLICATION PROCEDURES AND COORDINATION WITH 89.12 MEDICAL ASSISTANCE.] Applications and information on the program 89.13 must be made available at county social service agencies, health 89.14 care provider offices, and agencies and organizations serving 89.15 senior citizens. Senior citizens shall submit applications and 89.16 any information specified by the commissioner as being necessary 89.17 to verify eligibility directly to the county social service 89.18 agencies: 89.19 (1) beginning January 1, 1999, the county social service 89.20 agency shall determine medical assistance spenddown eligibility 89.21 of individuals who qualify for the senior citizen drug program 89.22 of individuals; and 89.23 (2) program payments will be used to reduce the spenddown 89.24 obligations of individuals who are determined to be eligible for 89.25 medical assistance with a spenddown as defined in section 89.26 256B.056, subdivision 5. 89.27 Seniors who are eligible for medical assistance with a spenddown 89.28 shall be financially responsible for the deductible amount up to 89.29 the satisfaction of the spenddown. No deductible applies once 89.30 the spenddown has been met. Payments to providers for 89.31 prescription drugs for persons eligible under this subdivision 89.32 shall be reduced by the deductible. 89.33 County social service agencies shall determine an 89.34 applicant's eligibility for the program within 45 days from the 89.35 date the application is received. 89.36 Subd. 5. [DRUG UTILIZATION REVIEW PROGRAM.] The 90.1 commissioner shall utilize the drug utilization review program 90.2 as described in section 256B.0625, subdivision 13a. 90.3 Subd. 6. [PHARMACY REIMBURSEMENT.] The commissioner shall 90.4 reimburse participating pharmacies for drug and dispensing costs 90.5 at the medical assistance reimbursement level, minus the 90.6 deductible required under subdivision 7. 90.7 Subd. 7. [COST SHARING.] (a) Enrollees shall pay an annual 90.8 premium of $120. 90.9 (b) Program enrollees must satisfy a $300 annual 90.10 deductible, based upon expenditures for prescription drugs, as 90.11 follows: 90.12 (1) $25 monthly deductible for persons with a monthly 90.13 spenddown; and 90.14 (2) $150 biannual deductible for persons with a six-month 90.15 spenddown. 90.16 The commissioner may adjust the annual deductible amount to stay 90.17 within the program's appropriation. 90.18 Subd. 8. [REPORT.] The commissioner shall annually report 90.19 to the legislature on the senior citizen drug program. The 90.20 report must include demographic information on enrollees, 90.21 per-prescription expenditures, total program expenditures, 90.22 hospital and nursing home costs avoided by enrollees, any 90.23 savings to medical assistance and Medicare resulting from the 90.24 provision of prescription drug coverage under Medicare by health 90.25 maintenance organizations, other public and private options for 90.26 drug assistance to the senior population, and any 90.27 recommendations for changes in the senior drug program. 90.28 Subd. 9. [PROGRAM LIMITATION.] This section shall be 90.29 repealed upon federal approval of the waiver to allow the 90.30 commissioner to provide prescription drug coverage for qualified 90.31 Medicare beneficiaries whose income is less than 150 percent of 90.32 the federal poverty guidelines. 90.33 Sec. 3. Minnesota Statutes 1996, section 256B.0625, 90.34 subdivision 13, is amended to read: 90.35 Subd. 13. [DRUGS.] (a) Medical assistance covers drugs, 90.36 except for fertility drugs when specifically used to enhance 91.1 fertility, if prescribed by a licensed practitioner and 91.2 dispensed by a licensed pharmacist, by a physician enrolled in 91.3 the medical assistance program as a dispensing physician, or by 91.4 a physician or a nurse practitioner employed by or under 91.5 contract with a community health board as defined in section 91.6 145A.02, subdivision 5, for the purposes of communicable disease 91.7 control. The commissioner, after receiving recommendations from 91.8 professional medical associations and professional pharmacist 91.9 associations, shall designate a formulary committee to advise 91.10 the commissioner on the names of drugs for which payment is 91.11 made, recommend a system for reimbursing providers on a set fee 91.12 or charge basis rather than the present system, and develop 91.13 methods encouraging use of generic drugs when they are less 91.14 expensive and equally effective as trademark drugs. The 91.15 formulary committee shall consist of nine members, four of whom 91.16 shall be physicians who are not employed by the department of 91.17 human services, and a majority of whose practice is for persons 91.18 paying privately or through health insurance, three of whom 91.19 shall be pharmacists who are not employed by the department of 91.20 human services, and a majority of whose practice is for persons 91.21 paying privately or through health insurance, a consumer 91.22 representative, and a nursing home representative. Committee 91.23 members shall serve three-year terms and shall serve without 91.24 compensation. Members may be reappointed once. 91.25 (b) The commissioner shall establish a drug formulary. Its 91.26 establishment and publication shall not be subject to the 91.27 requirements of the administrative procedure act, but the 91.28 formulary committee shall review and comment on the formulary 91.29 contents. The formulary committee shall review and recommend 91.30 drugs which require prior authorization. The formulary 91.31 committee may recommend drugs for prior authorization directly 91.32 to the commissioner, as long as opportunity for public input is 91.33 provided. Prior authorization may be requested by the 91.34 commissioner based on medical and clinical criteria before 91.35 certain drugs are eligible for payment. Before a drug may be 91.36 considered for prior authorization at the request of the 92.1 commissioner: 92.2 (1) the drug formulary committee must develop criteria to 92.3 be used for identifying drugs; the development of these criteria 92.4 is not subject to the requirements of chapter 14, but the 92.5 formulary committee shall provide opportunity for public input 92.6 in developing criteria; 92.7 (2) the drug formulary committee must hold a public forum 92.8 and receive public comment for an additional 15 days; and 92.9 (3) the commissioner must provide information to the 92.10 formulary committee on the impact that placing the drug on prior 92.11 authorization will have on the quality of patient care and 92.12 information regarding whether the drug is subject to clinical 92.13 abuse or misuse. Prior authorization may be required by the 92.14 commissioner before certain formulary drugs are eligible for 92.15 payment. The formulary shall not include: 92.16 (i) drugs or products for which there is no federal 92.17 funding; 92.18 (ii) over-the-counter drugs, except for antacids, 92.19 acetaminophen, family planning products, aspirin, insulin, 92.20 products for the treatment of lice, vitamins for adults with 92.21 documented vitamin deficiencies, and vitamins for children under 92.22 the age of seven and pregnant or nursing women; 92.23 (iii) any other over-the-counter drug identified by the 92.24 commissioner, in consultation with the drug formulary committee, 92.25 as necessary, appropriate, and cost-effective for the treatment 92.26 of certain specified chronic diseases, conditions or disorders, 92.27 and this determination shall not be subject to the requirements 92.28 of chapter 14; 92.29 (iv) anorectics;and92.30 (v) drugs for which medical value has not been established; 92.31 and 92.32 (vi) drugs from manufacturers who have not signed a rebate 92.33 agreement with the Department of Health and Human Services 92.34 pursuant to section 1927 of title XIX of the Social Security Act 92.35 and who have not signed an agreement with the state for drugs 92.36 purchased pursuant to the senior citizen drug program 93.1 established under section 256.955. 93.2 The commissioner shall publish conditions for prohibiting 93.3 payment for specific drugs after considering the formulary 93.4 committee's recommendations. 93.5 (c) The basis for determining the amount of payment shall 93.6 be the lower of the actual acquisition costs of the drugs plus a 93.7 fixed dispensing fee; the maximum allowable cost set by the 93.8 federal government or by the commissioner plus the fixed 93.9 dispensing fee; or the usual and customary price charged to the 93.10 public. The pharmacy dispensing fee shall be $3.85. Actual 93.11 acquisition cost includes quantity and other special discounts 93.12 except time and cash discounts. The actual acquisition cost of 93.13 a drug shall be estimated by the commissioner, at average 93.14 wholesale price minus nine percent. The maximum allowable cost 93.15 of a multisource drug may be set by the commissioner and it 93.16 shall be comparable to, but no higher than, the maximum amount 93.17 paid by other third-party payors in this state who have maximum 93.18 allowable cost programs. Establishment of the amount of payment 93.19 for drugs shall not be subject to the requirements of the 93.20 administrative procedure act. An additional dispensing fee of 93.21 $.30 may be added to the dispensing fee paid to pharmacists for 93.22 legend drug prescriptions dispensed to residents of long-term 93.23 care facilities when a unit dose blister card system, approved 93.24 by the department, is used. Under this type of dispensing 93.25 system, the pharmacist must dispense a 30-day supply of drug. 93.26 The National Drug Code (NDC) from the drug container used to 93.27 fill the blister card must be identified on the claim to the 93.28 department. The unit dose blister card containing the drug must 93.29 meet the packaging standards set forth in Minnesota Rules, part 93.30 6800.2700, that govern the return of unused drugs to the 93.31 pharmacy for reuse. The pharmacy provider will be required to 93.32 credit the department for the actual acquisition cost of all 93.33 unused drugs that are eligible for reuse. Over-the-counter 93.34 medications must be dispensed in the manufacturer's unopened 93.35 package. The commissioner may permit the drug clozapine to be 93.36 dispensed in a quantity that is less than a 30-day supply. 94.1 Whenever a generically equivalent product is available, payment 94.2 shall be on the basis of the actual acquisition cost of the 94.3 generic drug, unless the prescriber specifically indicates 94.4 "dispense as written - brand necessary" on the prescription as 94.5 required by section 151.21, subdivision 2. 94.6 Sec. 4. [STUDY ON DUAL PRESCRIPTION DRUG COVERAGE.] 94.7 The commissioner of human services shall study the 94.8 implications to the senior citizen drug program if a health plan 94.9 company offers within the state a product that provides a 94.10 prescription drug benefit as part of the standard coverage for 94.11 Medicare enrollees and shall make recommendations on how to 94.12 address this issue to the legislature by January 15, 1998. 94.13 ARTICLE 5 94.14 COMMUNITY PURCHASING ARRANGEMENTS 94.15 Section 1. [62S.01] [DEFINITIONS.] 94.16 Subdivision 1. [SCOPE.] For purposes of this chapter, the 94.17 terms in this section have the meanings given. 94.18 Subd. 2. [HEALTH CARE PURCHASING ALLIANCE.] "Health care 94.19 purchasing alliance" means a business organization created under 94.20 this chapter to negotiate the purchase of health care services 94.21 for employees of its members and their dependents. Nothing in 94.22 this chapter shall be deemed to regulate or impose any 94.23 requirements on a self-insured employer or labor union. A 94.24 health care purchasing alliance may include a grouping of: 94.25 (1) businesses, including small businesses with one 94.26 employee. The businesses may or may not be organized under 94.27 section 62Q.17, as a purchasing pool; 94.28 (2) trade association members or church organizations under 94.29 section 60A.02, or union members who are not in a self-insured 94.30 benefit plan; 94.31 (3) multiple employer welfare associations under chapter 94.32 62H; 94.33 (4) municipalities or counties; 94.34 (5) other government entities; or 94.35 (6) any combination of clauses (1) to (5). 94.36 The alliance may determine the definition of a business of 95.1 one employee, but must adhere to its definition and show no bias 95.2 in selection of members, based on that definition. 95.3 Subd. 3. [ACCOUNTABLE PROVIDER NETWORK.] "Accountable 95.4 provider network" means a group of health care providers 95.5 organized to market health care services on a risk-sharing or 95.6 nonrisk-sharing basis with a health care purchasing alliance. 95.7 Accountable provider networks shall operate as not-for-profit 95.8 entities or as health care cooperatives, as allowed under 95.9 chapter 62R. 95.10 Subd. 4. [APPLICABILITY.] This chapter only applies when 95.11 an accountable provider network is marketing and selling 95.12 services and benefits to the employees of businesses as 95.13 authorized in section 4. 95.14 Subd. 5. [COMMISSIONER.] "Commissioner" means the 95.15 commissioner of health. 95.16 Sec. 2. [62S.02] [APPLICATION OF OTHER LAWS.] 95.17 An accountable provider network is subject to all 95.18 requirements applicable to a health plan company licensed in the 95.19 state, except as otherwise noted in this chapter. An 95.20 accountable provider network must comply with all requirements 95.21 of chapter 62L. A contracting arrangement between a health care 95.22 purchasing alliance and an accountable provider network for 95.23 provision of health care benefits must provide consumer 95.24 protection functions comparable to those currently required of a 95.25 health plan company licensed under section 62N.25, and other 95.26 statutes referenced in that section, except for modifications 95.27 and waivers permitted under this chapter. 95.28 Sec. 3. [62S.03] [COMPLAINT SYSTEM.] 95.29 Every accountable provider network shall establish a 95.30 complaint system and may contract with the health care 95.31 purchasing alliance or a vendor for operation of this system. 95.32 The system must be composed of at least an internal review and 95.33 discussion within 14 days of submission of a complaint and, if 95.34 not resolved, a formal appeal to a neutral party using an 95.35 approach that is confidential, customized to the problem being 95.36 considered, and completed within 30 days of appeal of the 96.1 internal review. 96.2 Sec. 4. [62S.04] [BENEFITS.] 96.3 An accountable provider network may offer and sell any 96.4 benefits permitted to be offered and sold by health plan 96.5 companies under Minnesota law. 96.6 Sec. 5. [62S.05] [WAIVERS.] 96.7 Subdivision 1. [AUTHORIZATION.] The commissioner may grant 96.8 waivers from the requirements of law for the contracting 96.9 arrangement between a health care purchasing alliance and an 96.10 accountable provider network in the areas listed in subdivisions 96.11 2 to 4. The commissioner may not waive the following state 96.12 consumer protection and quality assurance laws: 96.13 (1) laws requiring that enrollees be informed of any 96.14 restrictions, requirements, or limitations on coverage, 96.15 services, or access to specialists and other providers; 96.16 (2) laws allowing consumers to complain to or appeal to a 96.17 state regulatory agency if denied benefits or services; 96.18 (3) laws prohibiting gag clauses and other restrictions on 96.19 communication between a patient and their physician or provider; 96.20 (4) laws allowing consumers to obtain information on 96.21 provider financial incentives, which may affect treatment; 96.22 (5) laws requiring the submission of information needed to 96.23 monitor quality of care and enrollee rights; 96.24 (6) laws protecting enrollee privacy and confidentiality of 96.25 records; 96.26 (7) minimum standards for adequate provider network 96.27 capacity and geographic access to services; 96.28 (8) laws assuring continuity of care when a patient must 96.29 change providers; 96.30 (9) laws governing coverage of emergency services; 96.31 (10) laws prohibiting excessive or unreasonable 96.32 administrative fees or expenses; and 96.33 (11) other laws or rules that are directly related to 96.34 quality of care, consumer protection, and due process rights. 96.35 Subd. 2. [SOLVENCY PROTECTION.] (a) The commissioner may 96.36 waive the requirements of sections 62N.27 to 62N.32, and may 97.1 substitute capital and surplus requirements that are reduced 97.2 from the levels required of other risk-bearing entities in order 97.3 to reflect its reduced risk exposure. If risk is being 97.4 underwritten, the underwriter cannot have more than 25 percent 97.5 of the representation on the governing board of the accountable 97.6 provider network. The reduced requirements must include at 97.7 least the following levels of capital and surplus: (i) a 97.8 deposit of $500,000 plus (ii) the greater of an estimated 15 97.9 percent of gross premium revenues or twice the net retained 97.10 annual risk up to $750,000 on a single enrollee. Net retained 97.11 annual risk may be, for example, the lowest annual deductible 97.12 under a provider stop-loss insurance policy that covers all 97.13 costs above the deductible. Assets supporting the deposit must 97.14 meet the standards for deposits referenced in section 62N.32. 97.15 Assets supporting the capital must meet the investment 97.16 guidelines referenced in section 62N.27. 97.17 (b) An accountable provider network may propose a method of 97.18 reporting income, expenses, claims payments, and other financial 97.19 information in a manner which adequately demonstrates ongoing 97.20 compliance with the standards for capital, surplus, and claims 97.21 reserves agreed to under this waiver. 97.22 (c) An accountable provider network may demonstrate ability 97.23 to continue to deliver the contracted health care services to 97.24 the purchasing alliance through arrangements which ensure that, 97.25 subject to 60 days' notice of intent to discontinue the 97.26 contracting arrangement, provider participants will continue to 97.27 meet their obligation to provide health care services to 97.28 enrollees for a period of 60 days. 97.29 Subd. 3. [MARKETING AND DISCLOSURE.] The accountable 97.30 provider network, in conjunction with the health care purchasing 97.31 alliance, may propose alternative methods to present marketing 97.32 and disclosure information which assure the accountability to 97.33 consumers who are offered and who receive their services. 97.34 Subd. 4. [QUALITY ASSURANCE.] The accountable provider 97.35 network may propose an alternative quality assurance program 97.36 which incorporates effective methods for reviewing and 98.1 evaluating data related to quality of care and ways to identify 98.2 and correct quality problems. 98.3 Sec. 6. [62S.06] [CRITERIA FOR GRANTING WAIVERS.] 98.4 The commissioner may approve a request for waiver under 98.5 section 62S.05 if the applicant demonstrates that the 98.6 contracting arrangement between a health care purchasing 98.7 alliance and an accountable provider network will meet both of 98.8 the following criteria: 98.9 (a) The arrangement would be likely to result in: 98.10 (1) more choice in benefits and prices; 98.11 (2) lower costs; 98.12 (3) increased access to health care coverage by small 98.13 businesses; 98.14 (4) increased access to providers who have demonstrated a 98.15 long-term commitment to the community being serviced; or 98.16 (5) increased quality of health care than would otherwise 98.17 occur under the existing market conditions. In the event that a 98.18 proposed arrangement appears likely to improve one or two of the 98.19 criteria at the expense of another one or two of the criteria, 98.20 the commissioner shall not approve the waiver. 98.21 (b) The proposed alternative methods would provide equal or 98.22 improved results in consumer protection than would result under 98.23 the existing consumer protections requirements. 98.24 Sec. 7. [62S.07] [SUPERVISION AND REVOCATION OF WAIVERS.] 98.25 (a) The commissioner shall appropriately supervise and 98.26 monitor approved waivers. 98.27 (b) The commissioner may revoke approval of a waiver if the 98.28 contracting arrangement no longer satisfies the criteria in 98.29 section 62S.06, paragraphs (a) and (b). 98.30 Sec. 8. [62S.08] [MINNESOTA COMPREHENSIVE HEALTH 98.31 ASSOCIATION.] 98.32 A health care purchasing alliance must pay the assessment 98.33 required of contributing members pursuant to section 62E.11. 98.34 Sec. 9. [62S.09] [MINNESOTACARE TAX.] 98.35 An accountable provider network is subject to the one 98.36 percent premium tax established in section 60A.15 and must pay 99.1 installments as described in section 60A.15, subdivision 1, 99.2 paragraph (d). 99.3 Sec. 10. [62S.10] [DUTIES OF COMMISSIONER.] 99.4 (a) By July 1, 1997, the commissioner shall make available 99.5 application forms for licensure as an accountable provider 99.6 network. The accountable provider network may begin doing 99.7 business after application has been approved. 99.8 (b) Upon receipt of an application for a certificate of 99.9 authority, the commissioner shall grant or deny licensure and 99.10 waivers requested within 90 days of receipt of a complete 99.11 application if all requirements are substantially met. If no 99.12 written response has been received within 90 days, the 99.13 application is approved. When the commissioner denies an 99.14 application or waiver request, the commissioner shall notify the 99.15 applicant in writing specifically stating the grounds for the 99.16 denial and specific suggestions for how to remedy the denial. 99.17 The commissioner will entertain reconsiderations. Within 90 99.18 days after the denial, the applicant may file a written request 99.19 for an administrative hearing and review of the commissioner's 99.20 determination. The hearing is subject to judicial review as 99.21 provided by chapter 14. 99.22 (c) All monitoring, enforcement, and rulemaking powers 99.23 available under chapter 62N are granted to the commissioner to 99.24 assure continued compliance with provisions of this chapter. 99.25 (d) The commissioner may contract with other entities as 99.26 necessary to carry out the responsibilities in this chapter. 99.27 Sec. 11. [62S.11] [FEES.] 99.28 Every accountable provider network subject to this chapter 99.29 shall pay to the commissioner fees as prescribed by the 99.30 commissioner pursuant to section 144.122. The initial fees are: 99.31 (1) filing an application for licensure, $500; 99.32 (2) filing an amendment to a license, $90; 99.33 (3) filing an annual report, $200; 99.34 (4) filing of renewal of licensure based on a fee of $1,000 99.35 per 1,000 enrollees, with renewal every three years; and 99.36 (5) other filing fees as specified by rule. 100.1 Sec. 12. [62S.12] [ENROLLMENT.] 100.2 An accountable provider network created under this chapter 100.3 is limited to a maximum enrollment of 30,000 persons. 100.4 ARTICLE 6 100.5 APPROPRIATIONS 100.6 Section 1. [APPROPRIATIONS; SUMMARY.] 100.7 Except as otherwise provided in this act, the sums set 100.8 forth in the columns designated "fiscal year 1998" and "fiscal 100.9 year 1999" are appropriated from the general fund, or other 100.10 named fund, to the agencies for the purposes specified in this 100.11 act for the fiscal years ending June 30, 1998, and June 30, 1999. 100.12 Sec. 2. APPROPRIATIONS 100.13 SUMMARY BY FUND 100.14 1998 1999 TOTAL 100.15 Health Care 100.16 Access Fund $125,029,000 $154,017,000 $279,046,000 100.17 General Fund 689,000 5,096,000 5,785,000 100.18 Subdivision 1. Department of Human 100.19 Services 100.20 Health Care 100.21 Access Fund 91,999,000 122,341,000 214,340,000 100.22 General Fund 689,000 5,096,000 5,785,000 100.23 [DENTAL SERVICES REIMBURSEMENT 100.24 INCREASE.] Notwithstanding statutory 100.25 provisions to the contrary, the 100.26 commissioner shall increase 100.27 reimbursement rates by 15 percent for 100.28 dental services covered under the 100.29 MinnesotaCare program and rendered on 100.30 or after July 1, 1997. The 100.31 commissioner shall increase the prepaid 100.32 capitation rates as appropriate to 100.33 reflect this rate increase. 100.34 [FEDERAL RECEIPTS FOR ADMINISTRATION.] 100.35 Receipts received as a result of 100.36 federal participation pertaining to 100.37 administrative costs of the Minnesota 100.38 Health Care Reform Waiver shall be 100.39 deposited as a nondedicated revenue to 100.40 the Health Care Access Fund, while 100.41 receipts received as a result of 100.42 federal participation pertaining to 100.43 grants shall be deposited to the 100.44 federal fund and shall offset health 100.45 care access funds for payments to 100.46 providers. 100.47 [MINNESOTA OUTREACH.] Of the health 100.48 care access fund appropriation, 100.49 $750,000 each year shall be disbursed 100.50 for grants to public and private 101.1 organizations to provide outreach for 101.2 the MinnesotaCare program in areas of 101.3 the state with high uninsured 101.4 populations. 101.5 [SENIOR CITIZEN DRUG PROGRAM.] The 101.6 general fund appropriation is for 101.7 administrative and service costs 101.8 associated with the senior drug 101.9 program. If program expenditures in 101.10 any year after the 1998-1999 biennium 101.11 exceed $11,000,000, the commissioner 101.12 shall adjust the annual deductible and 101.13 premium to keep the general fund 101.14 expenditures under $11,000,000. The 101.15 premiums from the program shall be 101.16 deposited in the general fund and 101.17 appropriated to the commissioner for 101.18 the administration and operation of the 101.19 senior citizen drug program. 101.20 Subd. 2. Department of Health 101.21 Health Care 101.22 Access Fund 11,302,000 11,401,000 22,703,000 101.23 [RURAL HOSPITAL CAPITAL GRANTS.] Of 101.24 this appropriation, $4,075,000 in each 101.25 fiscal year shall be disbursed for 101.26 rural hospital capital improvement 101.27 grants or loans. This appropriation 101.28 shall not become part of the base for 101.29 the fiscal year 2000-2001 biennium. 101.30 [RURAL HOSPITAL DEMONSTRATION 101.31 PROJECTS.] Of this appropriation, 101.32 $300,000 in each fiscal year shall be 101.33 disbursed for rural hospital 101.34 demonstration projects. This 101.35 appropriation shall not become part of 101.36 the base for the fiscal year 2000-2001 101.37 biennium. 101.38 Subd. 3. University of Minnesota 101.39 Health Care 101.40 Access Fund 2,482,000 2,482,000 4,964,000 101.41 [PRIMARY CARE EDUCATION INITIATIVES.] 101.42 Of this appropriation, $125,000 in each 101.43 fiscal year shall be disbursed to the 101.44 board of regents for primary care 101.45 physician education and training under 101.46 Minnesota Statutes, sections 137.38 to 101.47 137.40. This appropriation is 101.48 available only if matched by $1 of 101.49 nonstate money for each $1 of the 101.50 appropriation. This appropriation is 101.51 in addition to the current base 101.52 appropriation for these activities and 101.53 shall become part of the base 101.54 appropriation for the fiscal year 101.55 2000-2001 biennium. 101.56 Subd. 4. Department of Revenue 101.57 Health Care 101.58 Access Fund 3,121,000 1,668,000 4,789,000 101.59 [RESEARCH DEDUCTION.] Of this 101.60 appropriation, $1,500,000 shall be 102.1 disbursed in fiscal year 1998 to be 102.2 used for research deduction claims 102.3 filed by hospitals and health care 102.4 providers under Minnesota Statutes, 102.5 section 295.53, subdivision 4, for 102.6 research expenditures incurred in 102.7 calendar year 1996. These claims must 102.8 be filed by August 1, 1997, and the 102.9 commissioner must pay the refund no 102.10 later than October 1, 1997. 102.11 Subd. 5. Department of Commerce 102.12 Health Care 102.13 Access Fund 16,000,000 16,000,000 32,000,000 102.14 [MINNESOTA COMPREHENSIVE HEALTH 102.15 ASSOCIATION ASSESSMENT OFFSET.] This 102.16 appropriation is for a grant to the 102.17 Minnesota Comprehensive Health 102.18 Association and shall be made available 102.19 on January 1 of each fiscal year to be 102.20 used to offset the annual assessments 102.21 for calendar years 1998 and 1999 that 102.22 are required to be paid by each 102.23 contributing member in accordance with 102.24 Minnesota Statutes, section 62E.11. 102.25 This appropriation shall not become 102.26 part of the base for the fiscal year 102.27 2000-2001 biennium. 102.28 Subd. 6. Legislative Coordinating 102.29 Commission 102.30 Health Care 102.31 Access Fund 125,000 125,000 250,000 102.32 Sec. 3. TRANSFERS 102.33 $4,112,000 in fiscal year 1998 and 102.34 $4,104,000 in fiscal year 1999 are 102.35 transferred from the health care access 102.36 fund to the general fund to replace the 102.37 revenue lost due to the repeal of the 102.38 $400 physician surcharge.