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SF 2986

1st Engrossment - 86th Legislature (2009 - 2010) Posted on 03/17/2010 02:38pm

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.


Section 1.

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

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

(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.

(c) A prepaid health plan must meet a loss ratio of not less than 93.5 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 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 are under common
control with the plan must be divided into patient care expenses and administrative
expenses and included in the appropriate category for determination of the loss ratio.

(d) A bid submitted by a prepaid health plan may include a provision obligating the
bidder to provide free services to uninsured, low-income persons as specified in the bid
if necessary to meet the required loss ratio, to the extent that the loss ratio for that year
would otherwise not reach 93.5 percent.

(e) Nothing in this subdivision requires the minimum loss ratio to be applied to any
plan's business other than that business awarded by the commissioner, unless the plan fails
to keep a separate and distinct accounting of funds received from the commissioner.


This section is effective January 1, 2011.

Sec. 2.

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

Subd. 9.


(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.

(c) All financial reporting, including reporting of administrative expenses, under this
section must be reported in compliance with generally accepted accounting principles.
If the commissioner believes this paragraph would violate federal regulations, the
commissioner shall promptly seek a federal waiver to permit the state to comply with
this paragraph. The commissioner may accept donations to cover the cost of the waiver


This section is effective January 1, 2011.

Sec. 3.

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

Subd. 9c.

Rights to audit related to the loss ratio.

(a) Within 90 days after the
end of each calendar year, each managed care plan used by the commissioner to provide
services under this section shall furnish to each provider that furnished services during
the calendar year under a contract with the plan a Web-based 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 the amount of administrative expenses incurred in
the prior calendar year.

(b) Any provider or group of providers may, at its expense and after 14 days' written
notice, audit and inspect all records of the managed care plan relating to the costs and
expenses which are used in the calculation of the minimum loss ratio, provided that at
the end of 24 months following the end of any calendar year the 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.

(c) In the event that an audit or inspection determines that a plan failed to satisfy the
93.5 percent loss ratio requirement, the following shall apply:

(1) the plan shall make a payment to the commissioner equal to the amount by which
the plan failed to satisfy the minimum loss ratio, to be deposited in the fund from which the
payments to the plan were made, as determined by the commissioner. If the commissioner
cannot specify the fund, the payment shall be deposited in the health care access fund; and

(2) if the plan falls two percentage points or more short of satisfying the 93.5
percent minimum loss ratio, the plan shall reimburse the provider or group of providers
for reasonable costs incurred for the audit or inspection.

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

(e) If a plan and a provider or group of providers disagree regarding 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.

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

(g) The commissioner shall describe the requirements of this subdivision in any
request for proposal for services to which this subdivision applies.


This section is effective January 1, 2011.

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