SF 3178

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

A bill for an act
relating to health; changing the governance structure of the Minnesota
Comprehensive Health Association; providing a health insurance exemption
from the insurance premiums tax; repealing the assessment for the Minnesota
Comprehensive Health Association; appropriating money; amending Minnesota
Statutes 2004, sections 62A.02, by adding a subdivision; 62E.02, subdivision 23;
62E.091; 62E.10, subdivisions 1, 2, 3, 6, 7; 62E.11, subdivisions 9, 10; 62E.13,
subdivision 3a, by adding a subdivision; 62E.14, subdivisions 1, 6; Minnesota
Statutes 2005 Supplement, section 62E.13, subdivision 2; repealing Minnesota
Statutes 2004, sections 62E.11, subdivisions 5, 6, 13; 62E.13, subdivision 1.

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

Section 1.

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

new text begin Subd. 8. new text end

new text begin Effects on premium rates of certain law changes. new text end

new text begin In approving premium
rates under this section and sections 62A.021; 62A.65, subdivision 3; and 62L.08,
subdivision 8, the commissioners of commerce and health shall ensure that the provisions
of this act eliminating the Comprehensive Health Association assessment are reflected
in the premium rates charged by health plan companies.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective for coverage issued on or after
January 1, 2007.
new text end

Sec. 2.

Minnesota Statutes 2004, section 62E.02, subdivision 23, is amended to read:

Subd. 23.

deleted text begin Contributing member deleted text end new text begin Health plan company new text end .

" deleted text begin Contributing member
deleted text end new text begin Health plan company new text end " means those companies regulated under chapter 62A and offering,
selling, issuing, or renewing policies or contracts of accident and health insurance;
health maintenance organizations regulated under chapter 62D; nonprofit health service
plan corporations regulated under chapter 62C; community integrated service networks
regulated under chapter 62N; fraternal benefit societies regulated under chapter 64B; the
Minnesota employees insurance program established in section 43A.317, effective July
1, 1993; and joint self-insurance plans regulated under chapter 62H. deleted text begin For the purposes
of determining liability of contributing members pursuant to section 62E.11 payments
received from or on behalf of Minnesota residents for coverage by a health maintenance
organization or community integrated service network shall be considered to be accident
and health insurance premiums.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 3.

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

62E.091 APPROVAL OF STATE PLAN PREMIUMS.

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

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

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

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

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

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

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

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

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

(i) deleted text begin the relative solvency of the contributing members; and
deleted text end

deleted text begin (j) deleted text end other factors deemed relevant by the commissioner.

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

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 4.

Minnesota Statutes 2004, section 62E.10, subdivision 1, is amended to read:

Subdivision 1.

Creation; tax exemption.

There is established a Comprehensive
Health Association to promote the public health and welfare of the state of Minnesota deleted text begin with
membership consisting of all insurers; self-insurers; fraternals; joint self-insurance plans
regulated under chapter 62H; the Minnesota employees insurance program established
in section 43A.317, effective July 1, 1993; health maintenance organizations; and
community integrated service networks licensed or authorized to do business in this state deleted text end .
new text begin The association shall have no members. new text end The Comprehensive Health Association is
exempt from the taxes imposed under chapter 297I and any other laws of this state and all
property owned by the association is exempt from taxation.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 5.

Minnesota Statutes 2004, section 62E.10, subdivision 2, is amended to read:

Subd. 2.

Board of directors; organization.

The board of directors of the
association shall be made up of deleted text begin eleven members as follows: six directors selected by
contributing members, subject to approval by the commissioner, one of which must be a
health actuary; five public directors deleted text end new text begin 11 individuals new text end selected by the commissioner, at least
two of whom must be plan enrollees deleted text begin , two of whom must be representatives of employers
whose accident and health insurance premiums are part of the association's assessment
base, and one of whom must be a licensed insurance agent deleted text end . At least two of the deleted text begin public
deleted text end directors must reside outside of the seven county metropolitan area. deleted text begin In determining voting
rights at members' meetings, each member shall be entitled to vote in person or proxy. The
vote shall be a weighted vote based upon the member's cost of self-insurance, accident
and health insurance premium, subscriber contract charges, health maintenance contract
payment, or community integrated service network payment derived from or on behalf of
Minnesota residents in the previous calendar year, as determined by the commissioner. In
approving directors of the board, the commissioner shall consider, among other things,
whether all types of members are fairly represented. Directors selected by contributing
members may be reimbursed from the money of the association for expenses incurred by
them as directors, but shall not otherwise be compensated by the association for their
services. The costs of conducting meetings of the association and its board of directors
shall be borne by members of the association.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 6.

Minnesota Statutes 2004, section 62E.10, subdivision 3, is amended to read:

Subd. 3.

deleted text begin Mandatory membership deleted text end new text begin Organizational documents new text end .

deleted text begin All members shall
maintain their membership in the association as a condition of doing accident and health
insurance, self-insurance, health maintenance organization, or community integrated
service network business in this state. deleted text end The association shall submit its articles, bylaws new text begin ,
new text end and operating rules to the commissioner for approval; provided that the adoption and
amendment of articles, bylaws new text begin , new text end and operating rules by the association and deleted text begin the deleted text end new text begin their
new text end approval by the commissioner deleted text begin thereof shall be deleted text end new text begin is new text end exempt from deleted text begin the provisions of deleted text end sections
14.001 to 14.69.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 7.

Minnesota Statutes 2004, section 62E.10, subdivision 6, is amended to read:

Subd. 6.

Antitrust exemption.

In the performance of their duties as deleted text begin members
deleted text end new text begin directors new text end of the association, the deleted text begin members deleted text end new text begin directors and their employers new text end shall be exempt
from the provisions of sections 325D.49 to 325D.66.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 8.

Minnesota Statutes 2004, section 62E.10, subdivision 7, is amended to read:

Subd. 7.

General powers.

The association may:

(a) Exercise the powers granted to insurers under the laws of this state;

(b) Sue or be sued;

(c) Enter into contracts with insurers, similar associations in other states new text begin , new text end or with
other persons for the performance of administrative functions deleted text begin including the functions
provided for in clauses (e) and (f) deleted text end ; new text begin and
new text end

(d) Establish administrative and accounting procedures for the operation of the
association deleted text begin ; deleted text end new text begin .
new text end

deleted text begin (e) Provide for the reinsuring of risks incurred as a result of issuing the coverages
required by sections 62E.04 and 62E.16 by members of the association. Each member
which elects to reinsure its required risks shall determine the categories of coverage it
elects to reinsure in the association. The categories of coverage are:
deleted text end

deleted text begin (1) individual qualified plans, excluding group conversions;
deleted text end

deleted text begin (2) group conversions;
deleted text end

deleted text begin (3) group qualified plans with fewer than 50 employees or members; and
deleted text end

deleted text begin (4) major medical coverage.
deleted text end

deleted text begin A separate election may be made for each category of coverage. If a member elects
to reinsure the risks of a category of coverage, it must reinsure the risk of the coverage
of every life covered under every policy issued in that category. A member electing to
reinsure risks of a category of coverage shall enter into a contract with the association
establishing a reinsurance plan for the risks. This contract may include provision for
the pooling of members' risks reinsured through the association and it may provide for
assessment of each member reinsuring risks for losses and operating and administrative
expenses incurred, or estimated to be incurred in the operation of the reinsurance plan.
This reinsurance plan shall be approved by the commissioner before it is effective.
Members electing to administer the risks which are reinsured in the association shall
comply with the benefit determination guidelines and accounting procedures established
by the association. The fee charged by the association for the reinsurance of risks shall
not be less than 110 percent of the total anticipated expenses incurred by the association
for the reinsurance; and
deleted text end

deleted text begin (f) Provide for the administration by the association of policies which are reinsured
pursuant to clause (e). Each member electing to reinsure one or more categories of
coverage in the association may elect to have the association administer the categories of
coverage on the member's behalf. If a member elects to have the association administer
the categories of coverage, it must do so for every life covered under every policy issued
in that category. The fee for the administration shall not be less than 110 percent of the
total anticipated expenses incurred by the association for the administration.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 9.

Minnesota Statutes 2004, section 62E.11, subdivision 9, is amended to read:

Subd. 9.

Special assessment upon termination of individual health coverage.

Each deleted text begin contributing member deleted text end new text begin health plan company new text end that terminates individual health coverage
for reasons other than (a) nonpayment of premium; (b) failure to make co-payments;
(c) enrollee moving out of the area served; or (d) a materially false statement or
misrepresentation by the enrollee in the application for membership; and does not provide
or arrange for replacement coverage that meets the requirements of section 62D.121; shall
pay a special assessment to the state plan based upon the number of terminated individuals
who join the comprehensive health insurance plan as authorized under section 62E.14,
subdivisions 1, paragraph (d), and 6. Such a deleted text begin contributing member deleted text end new text begin health plan company
new text end shall pay the association an amount equal to the average cost of an enrollee in the state
plan in the year in which the deleted text begin member deleted text end new text begin health plan company new text end terminated enrollees multiplied
by the total number of terminated enrollees who enroll in the state plan.

The average cost of an enrollee in the state comprehensive health insurance plan
shall be determined by dividing the state plan's total annual losses by the total number of
enrollees from that year. deleted text begin This cost will be assessed to the contributing member who has
terminated health coverage before the association makes the annual determination of each
contributing member's liability as required under this section.
deleted text end

In the event that the deleted text begin contributing member deleted text end new text begin health plan company new text end is terminating health
coverage because of a loss of health care providers, the commissioner may review whether
or not the special assessment established under this subdivision will have an adverse
impact on the deleted text begin contributing member deleted text end new text begin health plan company new text end or its enrollees or insureds,
including but not limited to causing the deleted text begin contributing member deleted text end new text begin health plan company new text end to
fall below statutory net worth requirements. If the commissioner determines that the
special assessment would have an adverse impact on the deleted text begin contributing member deleted text end new text begin health
plan company new text end or its enrollees or insureds, the commissioner may adjust the amount of
the special assessment, or establish alternative payment arrangements to the state plan.
For health maintenance organizations regulated under chapter 62D, the commissioner of
health shall make the determination regarding any adjustment in the special assessment
and shall transmit that determination to the commissioner of commerce.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 10.

Minnesota Statutes 2004, section 62E.11, subdivision 10, is amended to read:

Subd. 10.

Termination of individual plan without replacement coverage.

Any
deleted text begin contributing members deleted text end new text begin health plan companies new text end who have terminated individual health plans
and do not provide or arrange for replacement coverage that meets the requirements of
section 62D.121, and whose former insureds or enrollees enroll in the state comprehensive
health insurance plan with a waiver of the preexisting conditions pursuant to section
62E.14, subdivisions 1, paragraph (d), and 6, will be liable for the costs of any preexisting
conditions of their former enrollees or insureds treated during the first six months of
coverage under the state plan. deleted text begin The liability for preexisting conditions will be assessed
before the association makes the annual determination of each contributing member's
liability as required under this section.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 11.

Minnesota Statutes 2005 Supplement, section 62E.13, subdivision 2, is
amended to read:

Subd. 2.

Selection of writing carrier.

The association may deleted text begin select policies and
contracts, or parts thereof, submitted by a member or members of the association, or by
the association or others, to deleted text end develop specifications for bids from any entity which wishes
to be selected as a writing carrier to administer the state plan. The selection of the writing
carrier shall be based upon criteria established by the board of directors of the association
and approved by the commissioner. The criteria shall outline specific qualifications
that an entity must satisfy in order to be selected and, at a minimum, shall include the
entity's proven ability to handle large group accident and health insurance cases, efficient
claim paying capacity, and the estimate of total charges for administering the plan. The
association may select separate writing carriers for the two types of qualified plans and the
$2,000, $5,000, and $10,000 deductible plans, the Medicare supplement plans, and the
health maintenance organization contract.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 12.

Minnesota Statutes 2004, section 62E.13, subdivision 3a, is amended to read:

Subd. 3a.

Extension of writing carrier contract.

Subject to the approval of the
commissioner, and subject to the consent of the writing carrier, the association may
extend the effective writing carrier contract for a period not to exceed three years, if the
association and the commissioner determine that it would be in the best interest of the
association's enrollees and deleted text begin contributing members deleted text end new text begin of the state new text end . This subdivision applies
notwithstanding anything to the contrary in subdivisions 2 and 3.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 13.

Minnesota Statutes 2004, section 62E.13, is amended by adding a subdivision
to read:

new text begin Subd. 12. new text end

new text begin Appropriation. new text end

new text begin (a) An amount sufficient to offset any deficit of the
association for the fiscal year is appropriated from the health care access account to the
commissioner of commerce for payment to the association.
new text end

new text begin (b) Beginning for the 2008-2009 fiscal biennium, the commissioner of commerce
shall include estimates of the cost of the Minnesota Comprehensive Health Association
deficits in its submissions under section 16A.10, and the governor shall include
recommendations on it in the governor's budget submission to the legislature under
section 16A.11.
new text end

Sec. 14.

Minnesota Statutes 2004, section 62E.14, subdivision 1, is amended to read:

Subdivision 1.

Application, contents.

The comprehensive health insurance plan
shall be open for enrollment by eligible persons. An eligible person shall enroll by
submission of an application to the writing carrier. The application must provide the
following:

(a) name, address, age, list of residences for the immediately preceding six months
and length of time at current residence of the applicant;

(b) name, address, and age of spouse and children if any, if they are to be insured;

(c) evidence of rejection, a requirement of restrictive riders, a rate up, or a
preexisting conditions limitation on a qualified plan, the effect of which is to substantially
reduce coverage from that received by a person considered a standard risk, by at least
one deleted text begin association member deleted text end new text begin health plan company new text end within six months of the date of the
application, or other eligibility requirements adopted by rule by the commissioner which
are not inconsistent with this chapter and which evidence that a person is unable to
obtain coverage substantially similar to that which may be obtained by a person who is
considered a standard risk;

(d) if the applicant has been terminated from individual health coverage which
does not provide replacement coverage, evidence that no replacement coverage that
meets the requirements of section 62D.121 was offered, and evidence of termination of
individual health coverage by an insurer, nonprofit health service plan corporation, or
health maintenance organization, provided that the contract or policy has been terminated
for reasons other than (1) failure to pay the charge for health care coverage; (2) failure to
make co-payments required by the health care plan; (3) enrollee moving out of the area
served; or (4) a materially false statement or misrepresentation by the enrollee in the
application for the terminated contract or policy; and

(e) a designation of the coverage desired.

An eligible person may not purchase more than one policy from the state plan. Upon
ceasing to be a resident of Minnesota a person is no longer eligible to purchase or renew
coverage under the state plan, except as required by state or federal law with respect to
renewal of Medicare supplement coverage.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 15.

Minnesota Statutes 2004, section 62E.14, subdivision 6, is amended to read:

Subd. 6.

Termination of individual policy or contract.

A Minnesota resident
who holds an individual health maintenance contract, individual nonprofit health service
corporation contract, or an individual insurance policy previously approved by the
commissioners of health or commerce, may enroll in the comprehensive health insurance
plan with a waiver of the preexisting condition as described in subdivision 3, without
interruption in coverage, provided (1) no replacement coverage that meets the requirements
of section 62D.121 was offered by the deleted text begin contributing member deleted text end new text begin health plan company new text end , and
(2) the policy or contract has been terminated for reasons other than (a) nonpayment of
premium; (b) failure to make co-payments required by the health care plan; (c) moving out
of the area served; or (d) a materially false statement or misrepresentation by the enrollee
in the application for the terminated policy or contract; and, provided further, that the
option to enroll in the plan is exercised by submitting an application that is received by the
writing carrier no later than 90 days after termination of the existing policy or contract.

Coverage allowed under this section is effective when the contract or policy is
terminated and the enrollee has submitted the proper application that is received within the
time period stated in this subdivision and paid the required premium or fee.

Expenses incurred from the preexisting conditions of individuals enrolled in the state
plan under this subdivision must be paid by the deleted text begin contributing member deleted text end new text begin health plan company
new text end canceling coverage as set forth in section 62E.11, subdivision 10.

The application must include evidence of termination of the existing policy or
certificate as required in subdivision 1.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end

Sec. 16. new text begin APPROPRIATION.
new text end

new text begin $....... is appropriated from the health care access fund to the commissioner of
commerce to offset the deficit in the Minnesota Comprehensive Health Association
program for fiscal year 2007.
new text end

Sec. 17. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2004, sections 62E.11, subdivisions 5, 6, and 13; and 62E.13,
subdivision 1, new text end new text begin are repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2007.
new text end