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Minnesota Legislature

Office of the Revisor of Statutes

SF 2986

as introduced - 86th Legislature (2009 - 2010) Posted on 03/03/2010 10:53am

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to health; specifying certain aspects of prepaid health plan contracts
entered into by the commissioner of human services or county-based purchasing
plans; requiring use of certain accounting procedures; providing health care
providers and others a right to audit under those contracts; providing for
resolution of disputes; amending Minnesota Statutes 2008, section 256B.69,
subdivisions 5i, 9, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2008, section 256B.69, subdivision 5i, is amended to
read:


Subd. 5i.

Administrative expenses.

(a) Managed care plan and county-based
purchasing plan administrative costs for a prepaid health plan provided under this section
or section 256B.692 must not exceed by more than five percent that prepaid health plan's
or county-based purchasing plan's actual calculated administrative spending for the
previous calendar year as a percentage of total revenue. The penalty for exceeding this
limit must be the amount of administrative spending in excess of 105 percent of the actual
calculated amount. The commissioner may waive this penalty if the excess administrative
spending is the result of unexpected shifts in enrollment or member needs or new program
requirements.

(b) Expenses listed under section 62D.12, subdivision 9a, clause (4), are not
allowable administrative expenses for rate-setting purposes under this section, unless
approved by the commissioner.

new text begin (c) A prepaid health plan must meet a loss ratio of no less than 90 percent, calculated
as specified in this paragraph. The loss ratio consists of a numerator consisting only of
direct expenses of providing patient care to persons covered under the program, excluding
administrative expenses. The denominator consists of the total amount paid by the
commissioner to the prepaid health plan, after subtraction of taxes and other mandatory
government assessments directly attributable to the prepaid health plan's participation as
a provider in the program being reported on. Payments by the prepaid health plan to
unaffiliated third parties or to providers or other entities that own, are owned by, or under
common control with the prepaid health plan must be divided into patient care expenses
and administrative expenses and included in the appropriate category for determination of
the loss ratio.
new text end

new text begin (d) A bid submitted by a prepaid health plan may include a provision obligating the
bidder to provide extra services specified in the bid if necessary to meet the required
loss ratio, to the extent that the loss ratio would otherwise exceed 90 percent as the year
progresses.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 2.

Minnesota Statutes 2008, section 256B.69, subdivision 9, is amended to read:


Subd. 9.

Reporting.

(a) Each demonstration provider shall submit information as
required by the commissioner, including data required for assessing client satisfaction,
quality of care, cost, and utilization of services for purposes of project evaluation. The
commissioner shall also develop methods of data reporting and collection in order to
provide aggregate enrollee information on encounters and outcomes to determine access
and quality assurance. Required information shall be specified before the commissioner
contracts with a demonstration provider.

(b) Aggregate nonpersonally identifiable health plan encounter data, aggregate
spending data for major categories of service as reported to the commissioners of
health and commerce under section 62D.08, subdivision 3, clause (a), and criteria for
service authorization and service use are public data that the commissioner shall make
available and use in public reports. The commissioner shall require each health plan and
county-based purchasing plan to provide:

(1) encounter data for each service provided, using standard codes and unit of
service definitions set by the commissioner, in a form that the commissioner can report by
age, eligibility groups, and health plan; and

(2) criteria, written policies, and procedures required to be disclosed under section
62M.10, subdivision 7, and Code of Federal Regulations, title 42, part 438.210(b)(1), used
for each type of service for which authorization is required.

new text begin (c) All financial reporting, including administrative expenses, under this section or
section 256B.92 must be reported in compliance with Generally Accepted Accounting
Principals.
new text end

new text begin EFFECTIVE DATE. new text end

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

Sec. 3.

Minnesota Statutes 2008, section 256B.69, is amended by adding a subdivision
to read:


new text begin Subd. 9c. new text end

new text begin Rights to audit related to the loss ratio. new text end

new text begin (a) Within 90 days after the end
of each calendar year during the term of provider participation, each prepaid health plan
used by the commissioner to provide services under this section or section 256B.692 shall
furnish to each provider a statement in reasonable detail setting forth the computation of
the total costs and expenses used in the calculation of the minimum loss ratio as well as
all administrative expenses incurred in the prior calendar year. At the request of any
provider, a prepaid health plan used by the commissioner to provide services under this
section or section 256B.692 shall furnish to the provider all records of payments from
the commissioner to the prepaid plan, all invoices, receipts, and all other data necessary
for the provider to verify the amount of any administrative costs and expenses and the
calculation of the minimum loss ratio.
new text end

new text begin (b) Any provider or group of providers has on its sole expense the right upon 14 days
written notice to audit and inspect all of the prepaid health plan's records relating to the
costs and expenses which are used in the calculation of the minimum loss ratio; provided,
however, that upon the expiration of 24 months following the end of any calendar year,
the health plan's records shall be deemed to be conclusive, and the providers have no
further rights to audit and inspect them with regard to that calendar year. Appropriate
adjustments shall be made for errors in the amount of the computations revealed by an
audit or inspection. If an audit or inspection by a provider or group of providers indicates
an excess in the amount of administrative costs and expenses by more than 2 percent, the
cost incurred by the providers for the audit or inspection shall be paid to the providers by
the health plan. If any excess of administrative expense by the plan is discovered by the
audit, the prepaid health plan shall pay the amount of the excess above 10 percent to the
health care access fund.
new text end

new text begin (c) Nothing in this subdivision requires the mandatory loss ratio in subdivision
5i to be applied to any prepaid plan's business other than that business awarded by
the commissioner unless the prepaid health plan fails to keep a separate and distinct
accounting for funds received from the commissioner.
new text end

new text begin (d) No prepaid health plan used by the commissioner may require any provider to
waive this right to audit as a condition of participation with the prepaid health plan. No
prepaid health plan may retaliate against any provider for exercising any rights related
to the audit described in this subdivision.
new text end

new text begin (e) If a prepaid health plan and a provider or group of providers do not agree as
to the result of an audit or inspection of records conducted under this subdivision, the
commissioner shall refer the dispute to the attorney general for resolution. Each party
shall pay its own expenses in connection with the process of resolving the dispute.
new text end

new text begin (f) An enrollee or group of enrollees has the right to conduct an audit and inspection
of a prepaid health plan's records in the same basis granted under this subdivision to
health care providers.
new text end

new text begin (g) The commissioner shall reference this subdivision in any request for proposal for
services to which this subdivision applies.
new text end

new text begin EFFECTIVE DATE. new text end

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