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HF 1378

2nd Engrossment - 91st Legislature (2019 - 2020) Posted on 03/20/2019 12:07pm

KEY: stricken = removed, old language.
underscored = added, new language.

Bill Text Versions

Engrossments
Introduction Posted on 02/18/2019
1st Engrossment Posted on 03/11/2019
2nd Engrossment Posted on 03/20/2019

Current Version - 2nd Engrossment

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A bill for an act
relating to health care; requiring health maintenance organizations to be nonprofit
corporations; amending Minnesota Statutes 2018, sections 62D.02, subdivision 4;
62D.03, subdivision 1; 62D.05, subdivision 1; 62D.06, subdivision 1; 62D.12, by
adding a subdivision; 62D.19; 62E.02, subdivision 3.

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

Section 1.

Minnesota Statutes 2018, section 62D.02, subdivision 4, is amended to read:


Subd. 4.

Health maintenance organization.

"Health maintenance organization" means
a deleted text beginforeign or domesticdeleted text endnew text begin nonprofitnew text end corporationnew text begin organized under chapter 317Anew text end, or a local
governmental unit as defined in subdivision 11, controlled and operated as provided in
sections 62D.01 to 62D.30, which provides, either directly or through arrangements with
providers or other persons, comprehensive health maintenance services, or arranges for the
provision of these services, to enrollees on the basis of a fixed prepaid sum without regard
to the frequency or extent of services furnished to any particular enrollee.

Sec. 2.

Minnesota Statutes 2018, section 62D.03, subdivision 1, is amended to read:


Subdivision 1.

Certificate of authority required.

Notwithstanding any law of this state
to the contrary, any deleted text beginforeign or domesticdeleted text endnew text begin nonprofitnew text end corporation organized to do so or a local
governmental unit may apply to the commissioner of health for a certificate of authority to
establish and operate a health maintenance organization in compliance with sections 62D.01
to 62D.30. No person shall establish or operate a health maintenance organization in this
state, nor sell or offer to sell, or solicit offers to purchase or receive advance or periodic
consideration in conjunction with a health maintenance organization or health maintenance
contract unless the organization has a certificate of authority under sections 62D.01 to
62D.30.

Sec. 3.

Minnesota Statutes 2018, section 62D.05, subdivision 1, is amended to read:


Subdivision 1.

Authority granted.

Any new text beginnonprofit new text endcorporation or local governmental
unit may, upon obtaining a certificate of authority as required in sections 62D.01 to 62D.30,
operate as a health maintenance organization.

Sec. 4.

Minnesota Statutes 2018, section 62D.06, subdivision 1, is amended to read:


Subdivision 1.

Governing body composition; enrollee advisory body.

The governing
body of any health maintenance organization which is a new text beginnonprofit new text endcorporation may include
enrollees, providers, or other individuals; provided, however, that after a health maintenance
organization which is a new text beginnonprofit new text endcorporation has been authorized under sections 62D.01
to 62D.30 for one year, at least 40 percent of the governing body shall be composed of
enrollees and members elected by the enrollees and members from among the enrollees and
members. For purposes of this section, "member" means a consumer who receives health
care services through a self-insured contract that is administered by the health maintenance
organization or its related third-party administrator. The number of members elected to the
governing body shall not exceed the number of enrollees elected to the governing body. An
enrollee or member elected to the governing board may not be a person:

(1) whose occupation involves, or before retirement involved, the administration of
health activities or the provision of health services;

(2) who is or was employed by a health care facility as a licensed health professional;
or

(3) who has or had a direct substantial financial or managerial interest in the rendering
of a health service, other than the payment of a reasonable expense reimbursement or
compensation as a member of the board of a health maintenance organization.

After a health maintenance organization which is a local governmental unit has been
authorized under sections 62D.01 to 62D.30 for one year, an enrollee advisory body shall
be established. The enrollees who make up this advisory body shall be elected by the enrollees
from among the enrollees.

Sec. 5.

Minnesota Statutes 2018, section 62D.12, is amended by adding a subdivision to
read:


new text begin Subd. 8a. new text end

new text begin Net earnings. new text end

new text begin All net earnings of the nonprofit health maintenance organization
shall be devoted to the nonprofit purposes of the health maintenance organization in providing
comprehensive health care. No nonprofit health maintenance organization shall provide for
the payment, whether directly or indirectly, of any part of its net earnings to any person as
a dividend or rebate, provided, however, that nonprofit health maintenance organizations
may make payments to providers or other persons based upon the efficient provision of
services or as incentives to provide quality care. The commissioner of health shall, pursuant
to sections 62D.01 to 62D.30, revoke the certificate of authority of any nonprofit health
maintenance organization in violation of this subdivision.
new text end

Sec. 6.

Minnesota Statutes 2018, section 62D.19, is amended to read:


62D.19 UNREASONABLE EXPENSES.

No health maintenance organization shall incur or pay for any expense of any nature
which is unreasonably high in relation to the value of the service or goods provided. The
commissioner of health shall implement and enforce this section by rules adopted under
this section.

In an effort to achieve the stated purposes of sections 62D.01 to 62D.30new text begin, in order to
safeguard the underlying nonprofit status of nonprofit health maintenance organizations,
new text end
and to ensure that the payment of health maintenance organization money to major
participating entities results in a corresponding benefit to the health maintenance organization
and its enrollees, when determining whether an organization has incurred an unreasonable
expense in relation to a major participating entity, due consideration shall be given to, in
addition to any other appropriate factors, whether the officers and trustees of the health
maintenance organization have acted with good faith and in the best interests of the health
maintenance organization in entering into, and performing under, a contract under which
the health maintenance organization has incurred an expense. The commissioner has standing
to sue, on behalf of a health maintenance organization, officers or trustees of the health
maintenance organization who have breached their fiduciary duty in entering into and
performing such contracts.

Sec. 7.

Minnesota Statutes 2018, section 62E.02, subdivision 3, is amended to read:


Subd. 3.

Health maintenance organization.

"Health maintenance organization" means
a new text beginnonprofit new text endcorporation licensed and operated as provided in chapter 62D.

Sec. 8. new text beginEFFECTIVE DATE.
new text end

new text begin Sections 1 to 4 and 7 are effective upon the commissioner of commerce making a
determination that those sections will not result in: (1) decreased health maintenance contract
options for small businesses, seniors, or those purchasing individual health insurance; (2)
decreased health care provider options for small businesses, seniors, or those purchasing
individual health insurance; or (3) increased premiums for small businesses, seniors, or
those purchasing individual health insurance. The commissioner of commerce shall inform
the revisor of statutes when this determination is made.
new text end