SF 720

3rd Engrossment - 90th Legislature (2017 - 2018) Posted on 05/11/2018 04:21pm

A bill for an act
relating to commerce; authorizing the Minnesota premium security plan as a
state-based reinsurance program administered by the Minnesota Comprehensive
Health Association; modifying certain provider taxes; imposing a reinsurance tax;
appropriating money; amending Minnesota Statutes 2016, section 62E.10,
subdivision 2; proposing coding for new law in Minnesota Statutes, chapter 62E.

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

Section 1.

Minnesota Statutes 2016, 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 deleted text end new text begin 13 new text end members as follows: six directors selected by contributing
members, subject to approval by the commissioner, one of which must be a health actuary;
new text begin two directors selected by the commissioner of human services, one of whom must represent
hospitals and one of whom must represent health care providers; new text end five public directors selected
by the commissioner, at least two of whom must be deleted text begin plan enrollees, two of whom are covered
under an individual plan subject to assessment under section 62E.11 or group plan offered
by an employer subject to assessment under section 62E.11, deleted text end new text begin enrollees in the individual
market new text end and one of whom must be a licensed insurance agent. At least two of the public
directors must reside outside of the seven-county metropolitan area. In determining voting
rights at members' meetings, each member shall be entitled to vote in person or proxy. deleted text begin 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. deleted text end 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. deleted text begin The costs of
conducting meetings of the association and its board of directors shall be borne by members
of the association.
deleted text end

Sec. 2.

new text begin [62E.21] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For the purposes of sections 62E.21 to 62E.25, the terms
and phrases defined in this section have the meanings given them.
new text end

new text begin Subd. 2. new text end

new text begin Affordable Care Act. new text end

new text begin "Affordable Care Act" means the Affordable Care Act
as defined in section 62A.011, subdivision 1a.
new text end

new text begin Subd. 3. new text end

new text begin Attachment point. new text end

new text begin "Attachment point" means the threshold dollar amount for
claims costs incurred by an eligible health carrier for an enrolled individual's covered benefits
in a plan year, after which threshold the claims costs for such benefits are eligible for
Minnesota premium security plan payments.
new text end

new text begin Subd. 4. new text end

new text begin Board. new text end

new text begin "Board" means the board of directors of the Minnesota Comprehensive
Health Association established under section 62E.10.
new text end

new text begin Subd. 5. new text end

new text begin Coinsurance rate. new text end

new text begin "Coinsurance rate" means the rate, established by the board
of the Minnesota Comprehensive Health Association, at which the association will reimburse
the eligible health carrier for claims costs incurred for an enrolled individual's covered
benefits in a plan year after the attachment point and before the reinsurance cap.
new text end

new text begin Subd. 6. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of commerce.
new text end

new text begin Subd. 7. new text end

new text begin Eligible health carrier. new text end

new text begin "Eligible health carrier" means:
new text end

new text begin (1) an insurance company licensed under chapter 60A to offer, sell, or issue a policy of
accident and sickness insurance as defined in section 62A.01;
new text end

new text begin (2) a nonprofit health service plan corporation operating under chapter 62C; or
new text end

new text begin (3) a health maintenance organization operating under chapter 62D
new text end

new text begin offering health plans in the individual market and incurring claims costs for an individual
enrollee's covered benefits in the applicable plan year that exceed the attachment point under
the Minnesota premium security plan.
new text end

new text begin Subd. 8. new text end

new text begin Individual market. new text end

new text begin "Individual market" has the meaning given in section
62A.011, subdivision 5.
new text end

new text begin Subd. 9. new text end

new text begin Minnesota Comprehensive Health Association or association. new text end

new text begin "Minnesota
Comprehensive Health Association" or "association" has the meaning given in section
62E.02, subdivision 14.
new text end

new text begin Subd. 10. new text end

new text begin Minnesota premium security plan. new text end

new text begin The "Minnesota premium security plan"
means the state-based reinsurance program authorized under section 62E.23.
new text end

new text begin Subd. 11. new text end

new text begin Plan year. new text end

new text begin "Plan year" means a calendar year for which an eligible health
carrier provides coverage under a health plan in the individual market.
new text end

new text begin Subd. 12. new text end

new text begin Reinsurance cap. new text end

new text begin "Reinsurance cap" means the threshold dollar amount for
claims costs incurred by an eligible health carrier for an enrolled individual's covered
benefits, after which threshold the claims costs for such benefits are no longer eligible for
Minnesota premium security plan payments, established by the board of the Minnesota
Comprehensive Health Association.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 3.

new text begin [62E.22] DUTIES OF COMMISSIONER.
new text end

new text begin In the implementation and operation of the Minnesota premium security plan, established
under section 62E.23, the commissioner shall require eligible health carriers to calculate
the premium amount the eligible health carrier would have charged for the applicable plan
year had the Minnesota premium security plan not been established and to submit this
information as part of the rate filing.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 4.

new text begin [62E.23] MINNESOTA PREMIUM SECURITY PLAN.
new text end

new text begin Subdivision 1. new text end

new text begin The Minnesota premium security plan as state-based reinsurance.
new text end

new text begin The association is Minnesota's reinsurance entity to administer the state-based reinsurance
program referred to as the Minnesota premium security plan. The Minnesota premium
security plan shall be designed to protect consumers by mitigating the impact of high-risk
individuals on rates in the individual market.
new text end

new text begin Subd. 2. new text end

new text begin Minnesota premium security plan parameters. new text end

new text begin (a) The board shall propose
to the commissioner the Minnesota premium security plan payment parameters for the next
plan year by January 15 of the calendar year prior to the applicable plan year. In developing
the proposed payment parameters, the board shall consider the anticipated impact on
premiums. The commissioner shall approve or reject the payment parameters no later than
14 calendar days following the board proposal. In developing the proposed payment
parameters for plan year 2019 and after, the board may develop methods to account for
variations in costs within the Minnesota premium security plan.
new text end

new text begin (b) For plan year 2018, the Minnesota premium security plan parameters, including the
attachment point, reinsurance cap, and coinsurance rate, shall be established within the
parameters of the appropriated funds as follows:
new text end

new text begin (1) the attachment point is set at $45,000;
new text end

new text begin (2) the reinsurance cap is set at $250,000; and
new text end

new text begin (3) the coinsurance rate is set at 80 percent.
new text end

new text begin (c) The board must apply the Minnesota premium security plan's parameters established
under paragraph (a) or (b), as applicable, when calculating reinsurance payments.
new text end

new text begin Subd. 3. new text end

new text begin Payments under Minnesota premium security plan. new text end

new text begin (a) Each Minnesota
premium security plan payment must be calculated with respect to an eligible health carrier's
incurred claims costs for an individual enrollee's covered benefits in the applicable plan
year. If such claims costs do not exceed the attachment point, payment will be zero dollars.
If such claims costs exceed the attachment point, payment will be calculated as the product
of the coinsurance rate multiplied by the lesser of:
new text end

new text begin (1) such claims costs minus the attachment point; or
new text end

new text begin (2) the reinsurance cap minus the attachment point.
new text end

new text begin (b) The board must ensure that the payments made to eligible health carriers must not
exceed the eligible health carrier's total paid amount for any eligible claim. For purposes
of this paragraph, "total paid amount of an eligible claim" means the amount paid by the
eligible health carrier based upon the allowed amount less any deductible, coinsurance, or
co-payment, as of the time the data is submitted or made accessible under subdivision 4,
paragraph (b), clause (1).
new text end

new text begin Subd. 4. new text end

new text begin Requests for Minnesota premium security plan payments. new text end

new text begin (a) An eligible
health carrier may make a request for payment when the eligible health carrier's claims costs
for an enrollee meet the criteria for payment under subdivision 3 and the requirements of
this subdivision.
new text end

new text begin (b)(1) To be eligible for Minnesota premium security plan payments, an eligible health
carrier must provide to the association access to the data within the dedicated data
environment established by the eligible health carrier under the federal Risk Adjustment
Program. Eligible health carriers must submit an attestation to the board asserting compliance
with the dedicated data environments, data requirements, establishment and usage of masked
enrollee identification numbers, and data submission deadlines; and
new text end

new text begin (2) an eligible health carrier must provide the required access under clause (1) for the
applicable plan year by April 30 of the year following the end of the applicable plan year.
new text end

new text begin (c) An eligible health carrier must make requests for payment according to the
requirements established by the board.
new text end

new text begin (d) An eligible health carrier must maintain documents and records, whether paper,
electronic, or in other media, sufficient to substantiate the requests for Minnesota premium
security plan payments made pursuant to this section for a period of at least ten years and
must make those documents and records available upon request from the state or its designee
for purposes of verification, investigation, audit, or other review of Minnesota premium
security plan payment requests.
new text end

new text begin (e) The association or its designee may audit an eligible health carrier to assess the health
carrier's compliance with the requirements of this section. The eligible health carrier must
ensure that its contractors, subcontractors, or agents cooperate with any audit under this
section. If an audit results in a proposed finding of material weakness or significant deficiency
with respect to compliance with any requirement under this section, the eligible health
carrier may provide a response to the draft audit report within 30 calendar days. Within 30
calendar days of the issuance of the final audit report, the eligible health carrier must complete
the following:
new text end

new text begin (1) provide a written corrective action plan to the association for approval if the final
audit results in a finding of material weakness or significant deficiency with respect to
compliance with any requirement under this section;
new text end

new text begin (2) implement the approved plan; and
new text end

new text begin (3) provide to the association written documentation of the corrective actions once taken.
new text end

new text begin Subd. 5. new text end

new text begin Notification of Minnesota premium security plan payments. new text end

new text begin (a) For each
applicable plan year, the association must notify eligible health carriers annually of Minnesota
premium security plan payments, if applicable, to be made for the applicable plan year no
later than June 30 of the year following the applicable plan year.
new text end

new text begin (b) An eligible health carrier may follow the appeals procedure under section 62E.10,
subdivision 2a.
new text end

new text begin (c) For each applicable plan year, the board must provide to each eligible health carrier
the calculation of total Minnesota premium security plan payment requests on a quarterly
basis during the applicable plan year.
new text end

new text begin Subd. 6. new text end

new text begin Disbursement of Minnesota premium security plan payments. new text end

new text begin (a) The
association must:
new text end

new text begin (1) collect or access data required to determine Minnesota premium security plan
payments from an eligible health carrier according to the data requirements under subdivision
5; and
new text end

new text begin (2) make Minnesota premium security plan payments to the eligible health carrier after
receiving a valid claim for payment from that eligible health carrier by August 15 of the
year following the applicable plan year.
new text end

new text begin (b) If funding under section 62E.25 is not sufficient to pay all valid claims submitted
by eligible carriers for the premium security plan at the payment parameters, the board must,
in consultation with the commissioner and the commissioner of management and budget,
adopt revised payment parameters within the available funding.
new text end

new text begin Subd. 7. new text end

new text begin Data. new text end

new text begin Government data of the association under this section are private data
on individuals or nonpublic data as defined in section 13.02, subdivision 9 or 12.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 5.

new text begin [62E.24] ACCOUNTING, REPORTING, AND AUDITING.
new text end

new text begin Subdivision 1. new text end

new text begin Accounting requirements. new text end

new text begin For each plan year, the board must ensure
that it keeps an accounting of:
new text end

new text begin (1) all claims for Minnesota premium security plan payments received from eligible
health carriers;
new text end

new text begin (2) all Minnesota premium security plan payments made to eligible health carriers; and
new text end

new text begin (3) all administrative expenses incurred for the Minnesota premium security plan.
new text end

new text begin Subd. 2. new text end

new text begin Summary report. new text end

new text begin The board must submit to the commissioner and make public
a report on the Minnesota premium security plan operations for each plan year by November
1 following the applicable year or 60 calendar days following the last disbursement of
Minnesota premium security plan payments for the applicable plan year.
new text end

new text begin Subd. 3. new text end

new text begin Audits. new text end

new text begin The Minnesota premium security plan is subject to audit by the
legislative auditor. The board must ensure that its contractors, subcontractors, or agents
cooperate with the audit.
new text end

new text begin Subd. 4. new text end

new text begin External audit. new text end

new text begin The board must engage an independent certified public
accountant firm licensed under chapter 326A to perform a financial audit and a programmatic
audit analyzing performance to determine whether the program is effectively accomplishing
its goals for each plan year of the Minnesota premium security plan in accordance with
generally accepted auditing standards. The board must:
new text end

new text begin (1) provide to the commissioner the results of the audit, in the manner and time frame
to be specified by the commissioner;
new text end

new text begin (2) identify to the commissioner any material weakness or significant deficiency identified
in the audit, and address in writing to the commissioner how the board intends to correct
any identified material weakness or significant deficiency; and
new text end

new text begin (3) make public the results of the audit, including any material weakness or significant
deficiency and how the board intends to correct the material weakness or significant
deficiency.
new text end

new text begin Subd. 5. new text end

new text begin Action on audit findings. new text end

new text begin If an audit results in a finding of material weakness
or significant deficiency with respect to compliance with any requirement under this section,
the commissioner of commerce must ensure the board:
new text end

new text begin (1) within 60 calendar days of the issuance of the final audit report, provides a written
corrective action plan to the commissioner for approval;
new text end

new text begin (2) implements the approved plan; and
new text end

new text begin (3) provides to the commissioner written documentation of the corrective actions once
taken.
new text end

Sec. 6.

new text begin [62E.25] FUNDING OF MINNESOTA PREMIUM SECURITY PLAN.
new text end

new text begin (a) The reinsurance fund account is created in the special revenue fund of the state
treasury. Funds in the account are appropriated to the commissioner of commerce for grants
to the Minnesota Comprehensive Health Association for the Minnesota premium security
plan.
new text end

new text begin (b) The association shall pay claims for the Minnesota premium security plan using the
following sources, in the following order:
new text end

new text begin (1) any federal funds available;
new text end

new text begin (2) excess funds of the association;
new text end

new text begin (3) any state funds from the health care access fund; and
new text end

new text begin (4) any state funds from the general fund.
new text end

new text begin (c) The association shall return to the commissioner of commerce any general fund
amount not used to pay claims submitted by eligible health carriers under the Minnesota
premium security plan by June 30, 2021. Any amount returned to the commissioner of
commerce shall be transferred to the budget reserve account under section 16A.152,
subdivision 1a.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 7. new text begin STATE INNOVATION WAIVER.
new text end

new text begin Subdivision 1. new text end

new text begin Authority to submit a waiver application. new text end

new text begin (a) The commissioner of
commerce shall apply to the United States Secretary of Health and Human Services under
United States Code, title 42, section 18052, for a waiver of applicable provisions of the
Affordable Care Act with respect to health insurance coverage in the state for a plan year
beginning on or after January 1, 2018, for the sole purpose of implementing the Minnesota
premium security plan in a manner that maximizes federal funding for Minnesota.
new text end

new text begin (b) The waiver application submitted under paragraph (a) must request that:
new text end

new text begin (1) the state receive federal funding in an amount equal to the amount the federal
government will not have to pay in advance premium tax credits under United States Code,
title 29, section 36B, to Minnesota residents due to reinsurance payments made by the
Minnesota Comprehensive Health Association;
new text end

new text begin (2) the state receive federal funding in an amount equal to the amount the federal
government has not paid and continues not to pay in advance premium tax credits under
United States Code, title 29, section 36B, to Minnesota residents who are eligible for advance
premium tax credits under United States Code, title 29, section 36B, but have chosen not
to receive the credits; and
new text end

new text begin (3) federal funding for MinnesotaCare, as Minnesota's basic health program, continues
to be based on the market premium and cost-sharing levels before the impact of reinsurance
under the Minnesota premium security plan established under Minnesota Statutes, section
62E.23.
new text end

new text begin (c) The commissioner shall implement a state plan for meeting the waiver requirements
in a manner consistent with state and federal law, and as approved by the United States
Secretary of Health and Human Services. Any federal funds received by the state due to
the waiver application shall be deposited in the reinsurance fund account created under
Minnesota Statutes, section 62E.25.
new text end

new text begin Subd. 2. new text end

new text begin Consultation. new text end

new text begin In developing the waiver application, the commissioner shall
consult with the Department of Human Services and MNsure.
new text end

new text begin Subd. 3. new text end

new text begin Application deadline. new text end

new text begin The commissioner shall submit the waiver application
to the appropriate federal agency on or before July 5, 2017. The commissioner shall follow
all application instructions. The commissioner shall complete the draft waiver application
for public review and comment by June 1, 2017.
new text end

new text begin Subd. 4. new text end

new text begin Appropriation. new text end

new text begin $155,000 in fiscal year 2018 is appropriated from the general
fund to the commissioner of commerce to prepare and submit a state innovation waiver.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 8. new text begin TRANSFERS.
new text end

new text begin (a) The commissioner of management and budget shall transfer $180,000,000 in fiscal
year 2018 and $180,000,000 in fiscal year 2019 from the health care access fund to the
reinsurance fund account in the special revenue fund. This is a onetime transfer.
new text end

new text begin (b) The commissioner of management and budget shall transfer $120,000,000 in fiscal
year 2018 and $120,000,000 in fiscal year 2019 from the budget reserve account in Minnesota
Statutes, section 16A.152, subdivision 1a, to the general fund. This is a onetime transfer.
new text end

new text begin (c) The commissioner of management and budget shall transfer $120,000,000 in fiscal
year 2018 and $120,000,000 in fiscal year 2019 from the general fund to the reinsurance
fund account in the special revenue fund. This is a onetime transfer.
new text end