Minnesota Session Laws - 1988, Regular Session

  

                         Laws of Minnesota 1988 

                        CHAPTER 434-S.F.No. 1861 
           An act relating to health maintenance organizations; 
          insurance; requiring replacement coverage in the event 
          an HMO cancels coverage; increasing state 
          comprehensive health plan liabilities in the event a 
          member terminates coverage; allowing for mediation of 
          disputes about health maintenance organization 
          agreements; allowing interest on unpaid charges; 
          increasing health maintenance organization notice 
          requirements and annual reporting requirements; 
          amending Minnesota Statutes 1986, sections 62D.07; 
          62D.08, subdivision 5; 62D.09; 62D.101; 62D.11; 
          62D.12, subdivision 2, and by adding a subdivision; 
          62D.17, subdivision 1; 62D.20; 62E.11, by adding 
          subdivisions; 62E.14, subdivisions 1, 3, and by adding 
          a subdivision; 62E.16; Minnesota Statutes 1987 
          Supplement, sections 62A.17, subdivision 6; and 
          62D.08, subdivision 3; proposing coding for new law in 
          Minnesota Statutes, chapter 62D; repealing Laws 1984, 
          chapter 464, sections 29 and 40. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  [FINDINGS.] 
    The legislature finds that access to continuous and 
uninterrupted health care coverage is necessary for citizens of 
Minnesota enrolled in health care plans.  While Minnesota law 
requires conversion policies for members of group health plan 
contracts, no similar right is extended to holders of individual 
contracts. 
    The legislature finds it necessary for individual health 
care coverage policyholders to immediately be afforded the same 
protections as group contract holders.  The legislature further 
finds that a legal requirement is necessary to protect the 
access to health care coverage for the citizens of Minnesota who 
hold individual health care contracts.  In view of continuing 
uncertainty in the marketplace, the legislature finds it 
necessary to impose this legal requirement on all existing 
individual contracts the day after enactment, so that no other 
consumers face a threat to their health care coverage. 
    Sec. 2.  Minnesota Statutes 1987 Supplement, section 
62A.17, subdivision 6, is amended to read:  
    Subd. 6.  [CONVERSION TO INDIVIDUAL POLICY.] A group 
insurance policy that provides posttermination or layoff 
coverage as required by this section shall also include a 
provision allowing a covered employee, surviving spouse, or 
dependent at the expiration of the posttermination or layoff 
coverage provided by subdivision 2 to obtain from the insurer 
offering the group policy or group subscriber contract, at the 
employee's, spouse's, or dependent's option and expense, without 
further evidence of insurability and without interruption of 
coverage, an individual policy of insurance or an individual 
subscriber contract providing at least the minimum benefits of a 
qualified plan as prescribed by section 62E.06 and the option of 
a number three qualified plan, a number two qualified plan, and 
a number one qualified plan as provided by section 62E.06, 
subdivisions 1 to 3, provided application is made to the insurer 
within 30 days following notice of the expiration of the 
continued coverage and upon payment of the appropriate premium.  
The required conversion contract must treat pregnancy the same 
as any other covered illness under the conversion contract.  A 
health maintenance contract issued by a health maintenance 
organization that provides posttermination or layoff coverage as 
required by this section shall also include a provision allowing 
a former employee, surviving spouse, or dependent at the 
expiration of the posttermination or layoff coverage provided in 
subdivision 2 to obtain from the health maintenance 
organization, at the former employee's, spouse's, or dependent's 
option and expense, without further evidence of insurability and 
without interruption of coverage, an individual health 
maintenance contract.  Effective January 1, 1985, enrollees who 
have become nonresidents of the health maintenance 
organization's service area shall be given the option, to be 
arranged by the health maintenance organization, of a number 
three qualified plan, a number two qualified plan, or a number 
one qualified plan as provided by section 62E.06, subdivisions 1 
to 3 if an arrangement with an insurer can reasonably be made by 
the health maintenance organization.  This option shall be made 
available at the enrollee's expense, without further evidence of 
insurability and without interruption of coverage.  
    A policy providing reduced benefits at a reduced premium 
rate may be accepted by the employee, the spouse, or a dependent 
in lieu of the optional coverage otherwise required by this 
subdivision. 
    The individual policy or contract shall be renewable at the 
option of the individual as long as the individual is not 
covered under another qualified plan as defined in section 
62E.02, subdivision 4, up to age 65 or to the day before the 
date of eligibility for coverage under title XVIII of the Social 
Security Act, as amended.  Any revisions in the table of rate 
for the individual policy shall apply to the covered person's 
original age at entry and shall apply equally to all similar 
policies issued by the insurer. 
    Sec. 3.  Minnesota Statutes 1986, section 62D.07, is 
amended to read:  
    62D.07 [EVIDENCE OF COVERAGE.] 
    Subdivision 1.  Every health maintenance organization 
enrollee residing in this state is entitled to evidence of 
coverage under a health maintenance or contract.  The health 
maintenance organization or its designated representative shall 
issue the evidence of coverage or contract. 
    Subd. 2.  No evidence of coverage or contract, or amendment 
thereto shall be issued or delivered to any person in this state 
until a copy of the form of the evidence of coverage or contract 
or amendment thereto has been filed with the commissioner of 
health pursuant to section 62D.03 or 62D.08. 
    Subd. 3.  An evidence Contracts and evidences of coverage 
shall contain: 
    (a) No provisions or statements which are unjust, unfair, 
inequitable, misleading, deceptive, or which are untrue, 
misleading or deceptive as defined in section 62D.12, 
subdivision 1; and 
    (b) A clear, concise and complete statement of: 
    (1) The health care services and the insurance or other 
benefits, if any, to which the enrollee is entitled under the 
health maintenance contract; 
    (2) Any exclusions or limitations on the services, kind of 
services, benefits, or kind of benefits, to be provided, 
including any deductible or copayment feature, and requirements 
for referrals, prior authorizations, and second opinions; 
    (3) Where and in what manner information is available as to 
how services, including emergency and out of area services, may 
be obtained; 
    (4) The total amount of payment and copayment, if any, for 
health care services and the indemnity or service benefits, if 
any, which the enrollee is obligated to pay with respect to 
individual contracts, or an indication whether the plan is 
contributory or noncontributory with respect to group 
certificates; and 
    (5) A description of the health maintenance organization's 
method for resolving enrollee complaints and a statement 
identifying the commissioner as an external source with whom 
grievances may be registered.  
    (c) On the cover page of the evidence of coverage and 
contract, a clear and complete statement of enrollees' rights as 
consumers, including but not limited to a description of each of 
the following:.  The statement must be in bold print and 
captioned "Important Consumer Information and Enrollee Bill of 
Rights" and must include but not be limited to the following 
provisions in the following language or in substantially similar 
language approved in advance by the commissioner:  
 CONSUMER INFORMATION 
    (1) COVERED SERVICES:  Services provided by (name of health 
maintenance organization) will be covered only if services are 
provided by participating (name of health maintenance 
organization) providers or authorized by (name of health 
maintenance organization).  Your contract fully defines what 
services are covered and describes procedures you must follow to 
obtain coverage. 
    (2) PROVIDERS:  Enrolling in (name of health maintenance 
organization) does not guarantee services by a particular 
provider on the list of providers.  When a provider is no longer 
part of (name of health maintenance organization), you must 
choose among remaining (name of health maintenance organization) 
providers. 
    (3) REFERRALS:  Certain covered benefits are covered only 
upon referral.  See section (section number) of your contract 
for referral requirements.  All referrals to non-(name of health 
maintenance organization) providers and certain types of health 
care providers must be authorized by (name of health maintenance 
organization). 
    (4) EMERGENCY SERVICES:  Emergency services from providers 
who are not affiliated with (name of health maintenance 
organization) will be covered only if proper procedures are 
followed.  Your contract explains the procedures and benefits 
associated with emergency care from (name of health maintenance 
organization) and non-(name of health maintenance organization) 
providers. 
    (5) EXCLUSIONS:  Certain services or medical supplies are 
not covered.  You should read the contract for a detailed 
explanation of all exclusions. 
    (6) CONTINUATION:  You may convert to an individual health 
maintenance organization contract or continue coverage under 
certain circumstances.  These continuation and conversion rights 
are explained fully in your contract. 
    (7) CANCELLATION:  Your coverage may be canceled by you or 
(name of health maintenance organization) only under certain 
conditions.  Your contract describes all reasons for 
cancellation of coverage. 
 ENROLLEE BILL OF RIGHTS 
    (1) based upon the delivery system of each health 
maintenance organization, a statement which describes any type 
of health care professional as defined in section 145.61, whose 
services may be available only by referral of the health 
maintenance organization's participating staff;  
    (2) Enrollees have the right to available and accessible 
services which can be secured as promptly as appropriate for the 
symptoms presented, in a manner which assures continuity and, 
when medically necessary, the right to including emergency 
services available, as defined in your contract, 24 hours a day 
and seven days a week;  
    (3) (2) Enrollees have the consumer's right to be informed 
of health problems, and to receive information regarding 
treatment alternatives and risks which is sufficient to assure 
informed choice;  
    (4) (3) Enrollees have the right to refuse treatment;, and 
    (5)  the right to privacy of medical and financial records 
maintained by the health maintenance organization and its health 
care providers, in accordance with existing law;  
    (6) (4) Enrollees have the right to file a grievance with 
the health maintenance organization and the commissioner of 
health and the right to initiate a legal proceeding when 
experiencing a problem with the health maintenance organization 
or its health care providers; and 
    (7) the right to initiate a legal proceeding when 
dissatisfied with the health maintenance organization's final 
determination regarding a grievance;  
    (8) the right of the enrollee and dependents to continue 
group coverage in the event the enrollee is terminated or laid 
off from employment, provided that the cost of such coverage is 
paid by the enrollee and furthermore, the right of the enrollee 
to convert to an individual contract at the end of the 
continuation period;  
    (9) the right for notification of enrollees regarding the 
cancellation or termination of contracts with participating 
primary care professionals, and the right to choose from among 
remaining participating primary care professionals;  
    (10) the right to cancel an individual health maintenance 
contract within ten days of its receipt and to have premiums 
paid refunded if, after examination of the contract, the 
individual is not satisfied with it for any reason.  The 
individual is responsible for repaying the health maintenance 
organization for any services rendered or claims paid by the 
health maintenance organization during the ten days; and 
    (11) (5) Enrollees have the right to a grace period of 31 
days for the payment of each premium for an individual health 
maintenance contract falling due after the first premium during 
which period the contract shall continue in force.  
    Subd. 4.  Any subsequent approved change in an evidence of 
coverage shall be issued to each enrollee. 
    Subd. 5.  A grace period of 31 days shall be granted for 
payment of each premium for an individual health maintenance 
contract falling due after the first premium, during which 
period the contract shall continue in force.  Individual health 
maintenance organization contracts shall clearly state the 
existence of the grace period. 
    Subd. 6 5.  Individual health maintenance contracts shall 
state that any person entering into an individual health 
maintenance contract may cancel the contract within ten days of 
its receipt and to have the premium paid refunded if, after 
examination of the contract, the individual is not satisfied 
with it for any reason.  The individual is responsible for 
repaying the health maintenance organization for any services 
rendered or claims paid by the health maintenance organization 
during the ten days.  
    Subd. 6.  The contract and evidence of coverage shall 
clearly explain the conditions upon which a health maintenance 
organization may terminate coverage. 
    Subd. 7.  The contract and evidence of coverage shall 
clearly explain continuation and conversion rights afforded to 
enrollees. 
    Subd. 8.  Individual and group contract holders shall be 
given 30 days' advance, written notice of any change in 
subscriber fees or benefits. 
    Subd. 9.  Individual health maintenance organization 
contracts shall be delivered to enrollees no later than the date 
coverage is effective.  For enrollees with group contracts, an 
evidence of coverage shall be delivered or issued for delivery 
not more than 15 days from the date the health maintenance 
organization is notified of the enrollment or the effective date 
of coverage, whichever is later. 
    Subd. 10.  An individual health maintenance organization 
contract and an evidence of coverage must contain a department 
of health telephone number that the enrollee can call to 
register a complaint about a health maintenance organization. 
    Sec. 4.  Minnesota Statutes 1987 Supplement, section 
62D.08, subdivision 3, is amended to read:  
    Subd. 3.  Such report shall be on forms prescribed by the 
commissioner of health, and shall include: 
    (a) A financial statement of the organization, including 
its balance sheet and receipts and disbursements for the 
preceding year certified by an independent certified public 
accountant, reflecting at least (1) all prepayment and other 
payments received for health care services rendered, (2) 
expenditures to all providers, by classes or groups of 
providers, and insurance companies or nonprofit health service 
plan corporations engaged to fulfill obligations arising out of 
the health maintenance contract, (3) expenditures for capital 
improvements, or additions thereto, including but not limited to 
construction, renovation or purchase of facilities and capital 
equipment, and (4) a supplementary statement of assets, 
liabilities, premium revenue, and expenditures for risk sharing 
business under section 62D.04, subdivision 1, on forms 
prescribed by the commissioner; 
    (b) The number of new enrollees enrolled during the year, 
the number of group enrollees and the number of individual 
enrollees as of the end of the year and the number of enrollees 
terminated during the year; 
    (c) A summary of information compiled pursuant to section 
62D.04, subdivision 1, clause (c) in such form as may be 
required by the commissioner of health; 
    (d) A report of the names and addresses of all persons set 
forth in section 62D.03, subdivision 4, clause (c) who were 
associated with the health maintenance organization or the major 
participating entity during the preceding year, and the amount 
of wages, expense reimbursements, or other payments to such 
individuals for services to the health maintenance organization 
or the major participating entity, as those services relate to 
the health maintenance organization, including a full disclosure 
of all financial arrangements during the preceding year required 
to be disclosed pursuant to section 62D.03, subdivision 4, 
clause (d); and 
    (e) A separate report addressing health maintenance 
contracts sold to individuals covered by Medicare, Title XVIII 
of the Social Security Act, as amended, including the 
information required under section 62D.30, subdivision 6; and 
    (f) Such other information relating to the performance of 
the health maintenance organization as is reasonably necessary 
to enable the commissioner of health to carry out the duties 
under sections 62D.01 to 62D.29. 
    Sec. 5.  Minnesota Statutes 1986, section 62D.08, 
subdivision 5, is amended to read:  
    Subd. 5.  Every health maintenance organization shall 
inform the commissioner of any change in the information 
described in section 62D.03, subdivision 4, clause (e), 
including any change in address, any modification of the 
duration of any contract or agreement, and any addition to the 
list of participating entities, within ten working days of the 
notification of the change.  Any cancellation or discontinuance 
of any contract or agreement listed in section 62D.03, 
subdivision 4, clause (e), or listed subsequently in accordance 
with this subdivision, shall be reported to the commissioner 
within seven 120 days before the effective date.  When the 
health maintenance organization terminates a provider for cause, 
death, disability, or loss of license, the health maintenance 
organization must notify the commissioner within three working 
days of the date the health maintenance organization sends out 
or receives the notice of cancellation or, discontinuance, or 
termination.  Any health maintenance organization which fails to 
notify the commissioner within the time periods prescribed in 
this subdivision shall be subject to the levy of a fine up to 
$100 per contract for each day the notice is past due, accruing 
up to the date the organization notifies the commissioner of the 
cancellation or discontinuance.  Any fine levied under this 
subdivision is subject to the contested case and judicial review 
provisions of chapter 14.  The levy of a fine does not preclude 
the commissioner from using other penalties described in 
sections 62D.15 to 62D.17. 
    Sec. 6.  Minnesota Statutes 1986, section 62D.09, is 
amended to read:  
    62D.09 [INFORMATION TO ENROLLEES.] 
    Subdivision 1.  Any written marketing materials which may 
be directed toward potential enrollees and which include a 
detailed description of benefits provided by the health 
maintenance organization shall include a statement of consumer 
information and rights as described in section 62D.07, 
subdivision 3, paragraph (c).  
    Subd. 2.  The application for coverage by the health 
maintenance organization shall be accompanied by the statement 
of consumer information and rights as described in section 
62D.07, subdivision 3, paragraph (c).  
    Subd. 3.  Every health maintenance organization or its 
representative shall annually, before June 1, provide to its 
enrollees the following:  (1) a summary of its most recent 
annual financial statement including a balance sheet and 
statement of receipts and disbursements; (2) a description of 
the health maintenance organization, its health care plan or 
plans, its facilities and personnel, any material changes 
therein since the last report,; (3) the current evidence of 
coverage or contract; and (4) a statement of 
consumer information and rights as described in section 62D.07, 
subdivision 3, paragraph (c). 
    Subd. 4.  Health maintenance organizations which issue 
contracts to persons who are covered by Title XVIII of the 
Social Security Act (Medicare) must give the applicant, at the 
time of application, an outline containing at least the 
following information: 
    (1) a description of the principal benefits and coverage 
provided in the contract, including a clear description of 
nursing home and home care benefits covered by the health 
maintenance organization; 
    (2) a statement of the exceptions, reductions, and 
limitations contained in the contract; 
    (3) the following language:  "This contract does not cover 
all skilled nursing home care or home care services and does not 
cover custodial or residential nursing care.  Read your contract 
carefully to determine which nursing home facilities and home 
care services are covered by your contract, and what procedures 
you must follow to receive these benefits."; 
    (4) a statement of the renewal provisions including any 
reservation by the health maintenance organization of the right 
to change fees; 
    (5) a statement that the outline of coverage is a summary 
of the contract issued or applied for and that the contract 
should be read to determine governing contractual provisions; 
and 
    (6) a statement explaining that the enrollee's Medicare 
coverage is altered by enrollment with the health maintenance 
organization, if applicable. 
    Subd. 5.  Health maintenance organizations shall provide 
enrollees with a list of the names and locations of 
participating providers to whom enrollees have direct access 
without referral no later than the effective date of enrollment 
or date the evidence of coverage is issued and upon request.  
Health maintenance organizations need not provide the names of 
their employed providers. 
    Subd. 6.  Any list of providers issued by the health 
maintenance organization shall include the date the list was 
published and contain a bold type notice in a prominent location 
on the list of providers with the following language, or 
substantially similar language approved in advance by the 
commissioner: 
    "Enrolling in (name of health maintenance organization) 
does not guarantee services by a particular provider on this 
list.  If you wish to be certain of receiving care from a 
specific provider listed, you should contact that provider to 
ask whether or not he or she is still a (name of health 
maintenance organization) provider and whether or not he or she 
is accepting additional patients." 
    Sec. 7.  Minnesota Statutes 1986, section 62D.101, is 
amended to read:  
    62D.101 [CONTINUATION AND CONVERSION PRIVILEGES FOR FORMER 
SPOUSES AND CHILDREN.] 
    Subdivision 1.  [TERMINATION OF COVERAGE.] No health 
maintenance contract which, in addition to covering an enrollee, 
also covers the enrollee's spouse shall contain a provision for 
termination of coverage for a spouse covered under the health 
maintenance contract solely as a result of a break in the 
marital relationship except by reason of an entry of a valid 
decree of dissolution of marriage between the parties. 
    Subd. 2.  [CONVERSION PRIVILEGE.] Every health maintenance 
contract, as described in subdivision 1 shall contain a 
provision allowing a former spouse and dependent children of an 
enrollee, without providing evidence of insurability, to obtain 
from the health maintenance organization at the expiration of 
any continuation of coverage required under subdivision 2a 
or section sections 62A.146 and 9, or upon termination of 
coverage by reason of an entry of a valid decree of dissolution 
which does not require the health maintenance organization to 
provide continued coverage for the former spouse, an individual 
health maintenance contract providing at least the minimum 
benefits of a qualified plan as prescribed by section 62E.06 and 
the option of a number three qualified plan, a number two 
qualified plan, a number one qualified plan as provided by 
section 62E.06, subdivisions 1 to 3, provided application is 
made to the health maintenance organization within 30 days 
following notice of the expiration of the continued coverage and 
upon payment of the appropriate fee.  A contract providing 
reduced benefits at a reduced fee may be accepted by the former 
spouse and dependent children in lieu of the optional coverage 
otherwise required by this subdivision.  The individual health 
maintenance contract shall be renewable at the option of the 
former spouse as long as the former spouse is not covered under 
another qualified plan as defined in section 62E.02, subdivision 
4, up to age 65 or to the day before the date of eligibility for 
coverage under title XVIII of the Social Security Act, as 
amended.  Any revisions in the table of rate for the individual 
contract shall apply to the former spouse's original age at 
entry, and shall apply equally to all similar contracts issued 
by the health maintenance organization. 
    Subd. 2a.  [CONTINUATION PRIVILEGE.] Every health 
maintenance contract as described in subdivision 1 shall contain 
a provision which permits continuation of coverage under the 
contract for the enrollee's former spouse and children upon 
entry of a valid decree of dissolution of marriage, if the 
decree requires the enrollee to provide continued coverage for 
those persons.  The coverage may shall be continued until the 
earlier of the following dates:  
    (a) The date of remarriage of either the enrollee or the 
enrollee's former spouse the enrollee's former spouse becomes 
covered under another group plan or Medicare; or 
    (b) The date coverage would otherwise terminate under the 
health maintenance contract.  
    If coverage is provided under a group policy, any required 
premium contributions for the coverage shall be paid by the 
enrollee on a monthly basis to the group contract holder to be 
paid to the health maintenance organization.  In no event shall 
the fee charged exceed 102 percent of the cost to the plan for 
the period of coverage for other similarly situated spouses and 
dependent children when the marital relationship has not 
dissolved, regardless of whether the cost is paid by the 
employer or employee. 
    Subd. 3.  [APPLICATION.] Subdivision 1 applies to every 
health maintenance contract which is delivered, issued for 
delivery, renewed or amended on or after July 19, 1977. 
    Subdivisions 2 and 2a apply to every health maintenance 
contract which is delivered, issued for delivery, renewed, or 
amended on or after March 1, 1983.  
    Sec. 8.  [62D.104] [REQUIRED OUT-OF-AREA CONVERSION.] 
    Enrollees who have individual health maintenance 
organization contracts and who have become nonresidents of the 
health maintenance organization's service area but remain 
residents of the state of Minnesota shall be given the option, 
to be arranged by the health maintenance organization if an 
agreement with an insurer can reasonably be made, of a number 
three qualified plan, a number two qualified plan, or a number 
one qualified plan as provided by section 62E.06, subdivisions 1 
to 3, or, if such enrollees are covered by Title XVIII of the 
Social Security Act (Medicare), they shall be given the option 
of a Medicare supplement plan as provided by sections 62A.31 to 
62A.35. 
    This option shall be made available at the enrollee's 
expense, without further evidence of insurability and without 
interruption of coverage. 
    If a health maintenance organization cannot make 
arrangements for conversion coverage, the health maintenance 
organization shall notify enrollees of health plans available in 
other service areas. 
    Sec. 9.  [62D.105] [COVERAGE OF CURRENT SPOUSE AND 
CHILDREN.] 
    Subdivision 1.  [REQUIREMENT.] Every health maintenance 
contract, which in addition to covering the enrollee also 
provides coverage to the spouse and dependent children of the 
enrollee shall:  (1) permit the spouse and dependent children to 
elect to continue coverage when the enrollee becomes enrolled 
for benefits under Title XVIII of the Social Security Act 
(Medicare); and (2) permit the dependent children to continue 
coverage when they cease to be dependent children under the 
generally applicable requirement of the plan. 
    Subd. 2.  [CONTINUATION PRIVILEGE.] The coverage described 
in subdivision 1 may be continued until the earlier of the 
following dates: 
    (1) the date coverage would otherwise terminate under the 
contract; 
    (2) 36 months after continuation by the spouse or dependent 
was elected; or 
    (3) the date the spouse or dependent children become 
covered under another group health plan or Medicare. 
    If coverage is provided under a group policy, any required 
fees for the coverage shall be paid by the enrollee on a monthly 
basis to the group contract holder for remittance to the health 
maintenance organization.  In no event shall the fee charged 
exceed 102 percent of the cost to the plan for such coverage for 
other similarly situated spouse and dependent children to whom 
subdivision 1 is not applicable, without regard to whether such 
cost is paid by the employer or employee. 
    Sec. 10.  Minnesota Statutes 1986, section 62D.11, is 
amended to read:  
    62D.11 [COMPLAINT SYSTEM.] 
    Subdivision 1.  Every health maintenance organization shall 
establish and maintain a complaint system including an impartial 
arbitration provision, to provide reasonable procedures for the 
resolution of written complaints initiated by enrollees 
concerning the provision of health care services.  "Provision of 
health services" includes, but is not limited to, questions of 
the scope of coverage, quality of care, and administrative 
operations.  Arbitration shall be subject to chapter 572, except 
(a) in the event that an enrollee elects to litigate a complaint 
prior to submission to arbitration, and (b) no medical 
malpractice damage claim shall be subject to arbitration unless 
agreed to by both parties subsequent to the event giving rise to 
the claim. 
    Subd. 1a.  Where a complaint involves a dispute about a 
health maintenance organization's coverage of an immediately and 
urgently needed service, the commissioner may either (a) review 
the complaint and any information and testimony necessary in 
order to make a determination and order the appropriate remedy 
pursuant to sections 62D.15 to 62D.17, or (b) order the health 
maintenance organization to use an expedited system to process 
the complaint. 
    Subd. 2.  The health maintenance organization shall 
maintain a record of each written complaint filed with it for 
three five years and the commissioner of health shall have 
access to the records. 
    Sec. 11.  Minnesota Statutes 1986, section 62D.12, 
subdivision 2, is amended to read:  
    Subd. 2.  No health maintenance organization may cancel or 
fail to renew the coverage of an enrollee except for (a) failure 
to pay the charge for health care coverage; (b) termination of 
the health care plan; (c) termination of the group plan; (d) 
enrollee moving out of the area served, subject to section 
62A.17, subdivisions 1 and 6, and section 8; (e) enrollee moving 
out of an eligible group, subject to section 62A.17, 
subdivisions 1 and 6, and section 8; (f) failure to make 
copayments required by the health care plan; or (g) other 
reasons established in rules promulgated by the commissioner of 
health. 
    An enrollee Subd. 2a.  Enrollees shall be given 30 days 
notice of any cancellation or nonrenewal, except that enrollees 
who are eligible to receive replacement coverage under section 
13, subdivision 1, shall receive 90 days notice as provided 
under section 13, subdivision 5. 
    Sec. 12.  Minnesota Statutes 1986, section 62D.12, is 
amended by adding a subdivision to read:  
    Subd. 14.  Each health maintenance organization shall 
establish a telephone number, which need not be toll free, that 
providers may call with questions about coverage, prior 
authorization, and approval of medical services.  The telephone 
number must be staffed by an employee of the health maintenance 
organization during normal working hours during the normal work 
week.  After normal working hours, the telephone number must be 
equipped with an answering machine and recorded message to allow 
the caller an opportunity to leave a message.  The health 
maintenance organization must respond to questions within 24 
hours after they are received, excluding weekends and holidays.  
At the request of a provider, the health maintenance 
organization shall provide a copy of the health maintenance 
contract for enrollees in the provider's service area. 
    Sec. 13.  [62D.121] [REQUIRED REPLACEMENT COVERAGE.] 
    Subdivision 1.  When membership of an enrollee who has 
individual health coverage is terminated by the health 
maintenance organization for a reason other than (a) failure to 
pay the charge for health care coverage; (b) failure to make 
copayments required by the health care plan; (c) enrollee moving 
out of the area served; or (d) a materially false statement or 
misrepresentation by the enrollee in the application for 
membership, the health maintenance organization must offer or 
arrange to offer replacement coverage, without evidence of 
insurability, without preexisting condition exclusions, and 
without interruption of coverage. 
    Subd. 2.  If the health maintenance organization has 
terminated individuals from coverage in a service area, the 
replacement coverage shall be health maintenance organization 
coverage issued by the health maintenance organization 
terminating coverage unless the health maintenance organization 
can demonstrate to the commissioner that offering health 
maintenance organization replacement coverage would not be 
feasible.  In making the determination, the commissioner shall 
consider (1) loss ratios and forecasts, (2) lack of agreements 
between health care providers and the health maintenance 
organization to offer that product, (3) evidence of anticipated 
premium needs compared with established rates, (4) the financial 
impact of the replacement coverage on the overall financial 
solvency of the plan, and (5) the cost to the enrollee of health 
maintenance organization replacement coverage as compared to 
cost to the enrollee of the replacement coverage required under 
subdivision 3 of this section. 
    Subd. 3.  If replacement coverage is not provided by the 
health maintenance organization, as explained under subdivision 
2, the replacement coverage shall provide, for enrollees covered 
by Title XVIII of the Social Security Act, coverage at least 
equivalent to a Medicare supplement two plan as defined in 
section 62A.34, except that the replacement coverage shall also 
cover the liability for any Medicare Part A and Part B 
deductible as defined under Title XVIII of the Social Security 
Act.  After satisfaction of the Medicare Part B deductible, the 
replacement coverage shall be based on 120 percent of the 
Medicare Part B eligible expenses less the Medicare Part B 
payment amount.  The fee or premium of the replacement coverage 
shall not exceed the premium charged by the state comprehensive 
health plan as established under section 62E.08, for a qualified 
Medicare supplement plan.  All enrollees not covered by Medicare 
shall be given the option of a number three qualified plan or a 
number two qualified plan as defined in section 62E.06, 
subdivisions 1 and 2, for replacement coverage.  The fee or 
premium for a number three qualified plan shall not exceed 125 
percent of the average of rates charged by the five insurers 
with the largest number of individuals in a number three 
qualified plan of insurance in force in Minnesota.  The fee or 
premium for a number two qualified plan shall not exceed 125 
percent of the average of rates charged by the five insurers 
with the largest number of individuals in a number two qualified 
plan of insurance in force in Minnesota.  
    If the replacement coverage is health maintenance 
organization coverage, the fee shall not exceed 125 percent of 
the cost of the average fee charged by health maintenance 
organizations for a similar health plan.  The commissioner of 
health will determine the average cost of the plan on the basis 
of information provided annually by the health maintenance 
organizations concerning the rates charged by the health 
maintenance organizations for the plans offered.  Fees or 
premiums charged under this section must be actuarially 
justified. 
    Subd. 4.  The commissioner will approve or disapprove the 
replacement coverage within 30 days.  A health maintenance 
organization shall not give enrollees a notice of cancellation 
of coverage until a replacement policy has been filed with the 
commissioner and approved or disapproved. 
    Subd. 5.  The health maintenance organization must provide 
the terminated enrollees with a notice of cancellation 90 days 
before the date the cancellation takes effect.  If the 
replacement coverage is approved by the commissioner under 
subdivision 4, the notice shall clearly and completely describe 
the replacement coverage that the enrollees are eligible to 
receive and explain the procedure for enrolling.  If the 
replacement coverage is not approved by the commissioner, the 
health maintenance organization shall provide a cancellation 
notice with information that the enrollee is entitled to enroll 
in the state comprehensive health insurance plan with a waiver 
of the waiting period for preexisting conditions under section 
62E.14, subdivisions 1, paragraph (d), and 6. 
    Subd. 6.  The commissioner may waive the notice required in 
this section if the commissioner determines that the health 
maintenance organization has not received information regarding 
Medicare reimbursement rates from the Health Care Financing 
Administration before September 1 for contracts renewing on 
January 1 of the next year.  In no event shall enrollees covered 
by Title XVIII of the Social Security Act receive less than 60 
days' notice of contract termination. 
    Subd. 7.  [GEOGRAPHIC ACCESSIBILITY.] If the commissioner 
determines that there are not enough providers to assure that 
enrollees have accessible health services available in a 
geographic service area, the commissioner shall institute a plan 
of corrective action that shall be followed by the health 
maintenance organization.  Such a plan may include but not be 
limited to requiring the health maintenance organization to make 
payments to nonparticipating providers for health services for 
enrollees, requiring the health maintenance organization to 
discontinue accepting new enrollees in that service area, and 
requiring the health maintenance organization to reduce its 
geographic service area.  If a nonparticipating provider has 
been a participating provider with the health maintenance 
organization within the last year, any payments made under this 
section must not exceed the payment level of the previous 
contract unless the commissioner determines that without 
adjusting payments the health maintenance organization will be 
unable to meet the health care needs of enrollees in the area. 
    Sec. 14.  [62D.122] [MEDIATION.] 
    When current parties to a health maintenance organization 
contract between providers of health care services and the 
health maintenance organization believe they will be unable to 
reach agreement on the terms of renewal or maintenance of the 
agreement, either party may request the commissioner of health 
to order that the dispute be submitted to mediation.  The 
parties to the dispute shall enter mediation upon the order of 
the commissioner of health.  Whether or not a request for 
mediation from one of the parties has been received, the 
commissioner shall order mediation if failure to reach agreement 
would significantly impair access to health care services on the 
part of current enrollees of that health maintenance 
organization.  In determining whether access to health care 
services for current enrollees will be significantly impaired, 
the commissioner shall consider: 
    (1) the number of enrollees affected, 
    (2) the ability of the plan to make alternate arrangements 
with other participating providers for the provision of health 
care services to the affected enrollees, 
    (3) the availability of nonparticipating providers who may 
become participating providers for those with whom the health 
maintenance organization is in dispute, 
    (4) the time remaining until termination of the provider 
contract, and 
    (5) whether failure to resolve the dispute may establish a 
precedent for similar disputes in other parts of the state or 
might impede competition among health plans. 
    During the period in which the dispute is in mediation, no 
action to terminate provider or enrollee contracts may be taken 
by either party.  Participation in mediation shall be required 
of all parties for a period of not more than 30 days.  Notice of 
termination of provider agreements, as required under section 5, 
shall take effect no earlier than 31 days after the first day of 
mediation under this section. 
    When mediation is ordered by the commissioner, arrangements 
for mediation shall be made through either the office of dispute 
resolution in the state planning agency, or the office of 
administrative hearings. 
    Costs of the mediation shall be borne equally by the health 
maintenance organization and the health care providers unless 
otherwise agreed to by the parties.  The office of 
administrative hearings shall establish rates for mediation 
services comparable to those charged by mediators listed with 
the office of dispute resolution. 
    The mediator shall not have authority to impose a 
settlement or otherwise bind a participant to a nonvoluntary 
resolution of the dispute; however, any agreement reached as a 
result of the mediation shall be enforceable. 
    Except as otherwise provided under chapter 13 and sections 
62D.03 and 62D.14, the commissioner shall make public the 
results of any mediation agreement. 
    Sec. 15.  Minnesota Statutes 1986, section 62D.17, 
subdivision 1, is amended to read:  
    Subdivision 1.  The commissioner of health may, for any 
violation of statute or rule applicable to a health maintenance 
organization, or in lieu of suspension or revocation of a 
certificate of authority under section 62D.15, levy an 
administrative penalty in an amount up to $10,000 for each 
violation.  In the case of contracts or agreements made pursuant 
to section 62D.05, subdivisions 2 to 4, each contract or 
agreement entered into or implemented in a manner which violates 
sections 62D.01 to 62D.29 shall be considered a separate 
violation.  Reasonable notice in writing to the health 
maintenance organization shall be given of the intent to levy 
the penalty and the reasons therefor, and the health maintenance 
organization may have a reasonable time 15 days within which to 
remedy the defect in its operations which gave rise to the 
penalty citation, or have file a written request for an 
administrative hearing and review of the commissioner of 
health's determination.  Such administrative hearing shall be 
subject to judicial review pursuant to chapter 14. 
    Sec. 16.  Minnesota Statutes 1986, section 62D.20, is 
amended to read: 
    62D.20 [RULES.] 
    Subdivision 1.  The commissioner of health may, pursuant to 
chapter 14, promulgate such reasonable rules as are necessary or 
proper to carry out the provisions of sections 62D.01 to 
62D.29.  Included among such rules shall be those which provide 
minimum requirements for the provision of comprehensive health 
maintenance services, as defined in section 62D.02, subdivision 
7, and reasonable exclusions therefrom.  Nothing in such rules 
shall force or require a health maintenance organization to 
provide elective, induced abortions, except as medically 
necessary to prevent the death of the mother, whether performed 
in a hospital, other abortion facility, or the office of a 
physician; the rules shall provide every health maintenance 
organization the option of excluding or including elective, 
induced abortions, except as medically necessary to prevent the 
death of the mother, as part of its comprehensive health 
maintenance services.  
    Subd. 2.  The commissioner shall adopt rules that address 
the issue of appropriate prior authorization requirements, 
considering consumer needs, administrative concerns, and the 
nature of the benefit. 
    Sec. 17.  Minnesota Statutes 1986, section 62E.11, is 
amended by adding a subdivision to read: 
    Subd. 9.  Each contributing member that terminates 
individual health coverage regulated under chapter 62A, 62C, 
62D, or 64B for reasons other than (a) nonpayment of premium; (b)
failure to make copayments; (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 13; 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, subdivision 1, paragraph (d), and section 
21.  Such a contributing member shall pay the association an 
amount equal to the average cost of an enrollee in the state 
plan in the year in which the member 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.  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. 
    In the event that the contributing member 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 contributing member or its enrollees or insureds, 
including but not limited to causing the contributing member to 
fall below statutory net worth requirements.  If the 
commissioner determines that the special assessment would have 
an adverse impact on the contributing member 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. 
    Sec. 18.  Minnesota Statutes 1986, section 62E.11, is 
amended by adding a subdivision to read: 
    Subd. 10.  Any contributing members who have terminated 
individual health plans and do not provide or arrange for 
replacement coverage that meets the requirements of section 13, 
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, subdivision 
1, paragraph (d), and section 21, 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.  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. 
    Sec. 19.  Minnesota Statutes 1986, section 62E.14, 
subdivision 1, is amended to read:  
    Subdivision 1.  [CERTIFICATE, CONTENTS.] The comprehensive 
health insurance plan shall be open for enrollment by eligible 
persons.  An eligible person shall enroll by submission of a 
certificate of eligibility to the writing carrier.  The 
certificate shall provide the following: 
    (a) Name, address, age, and length of time at 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 association members within six months of 
the date of the certificate, 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) Evidence that the applicant meets the eligibility 
requirements of section 62E.081, subdivision 1; and 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 13 
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 copayments 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 membership; 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. 
    Sec. 20.  Minnesota Statutes 1986, section 62E.14, 
subdivision 3, is amended to read:  
    Subd. 3.  [PREEXISTING CONDITIONS.] No person who obtains 
coverage pursuant to this section shall be covered for any 
preexisting condition during the first six months of coverage 
under the state plan if the person was diagnosed or treated for 
that condition during the 90 days immediately preceding the 
filing of an application except as provided under subdivisions 4 
and 5, and section 21. 
    Sec. 21.  Minnesota Statutes 1986, section 62E.14, is 
amended by adding a subdivision to read: 
    Subd. 6.  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 13 was offered 
by the contributing member, and (2) the policy or contract has 
been terminated for reasons other than (a) nonpayment of 
premium; (b) failure to make copayments 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 membership; and, provided further, that 
the option to enroll in the plan is exercised within 30 days of 
termination of the existing policy or contract. 
    Coverage allowed under this section is effective on the 
date of termination, when the contract or policy is terminated 
and the enrollee has completed the proper application 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 contributing member canceling coverage as 
set forth in section 18. 
    The application must include evidence of termination of the 
existing policy or certificate as required in subdivision 1. 
    Sec. 22.  Minnesota Statutes 1986, section 62E.16, is 
amended to read:  
    62E.16 [CONVERSION PRIVILEGES.] 
    Every program of self-insurance, policy of group accident 
and health insurance or contract of coverage by a health 
maintenance organization written or renewed in this state, shall 
include, in addition to the provisions required by section 
62A.17, the right to convert to an individual coverage qualified 
plan without the addition of underwriting restrictions if the 
individual insured leaves the group regardless of the reason for 
leaving the group, or upon cancellation or termination of the 
coverage for the group except where uninterrupted and continuous 
group coverage is otherwise provided to the group.  If the 
health maintenance organization has canceled coverage for the 
group because of a loss of providers in a service area, the 
health maintenance organization shall arrange for other health 
maintenance or indemnity conversion options that shall be 
offered to enrollees without the addition of underwriting 
restrictions.  The required conversion contract must treat 
pregnancy the same as any other covered illness under the 
conversion contract.  The person may exercise this right to 
conversion within 30 days of leaving the group or within 30 days 
following receipt of due notice of cancellation or termination 
of coverage of the group and upon payment of premiums from the 
date of termination or cancellation.  Due notice of cancellation 
or termination of coverage for a group shall be provided to each 
employee having coverage in the group by the insurer, 
self-insurer or health maintenance organization canceling or 
terminating the coverage except where reasonable evidence 
indicates that uninterrupted and continuous group coverage is 
otherwise provided to the group.  Every employer having a policy 
of group accident and health insurance, group subscriber or 
contract of coverage by a health maintenance organization shall, 
upon request, provide the insurer or health maintenance 
organization a list of the names and addresses of covered 
employees.  Plans of health coverage shall also include a 
provision which, upon the death of the individual in whose name 
the contract was issued, permits every other individual then 
covered under the contract to elect, within the period specified 
in the contract, to continue coverage under the same or a 
different contract without the addition of underwriting 
restrictions until the individual would have ceased to have been 
entitled to coverage had the individual in whose name the 
contract was issued lived.  An individual conversion contract 
issued by a health maintenance organization shall not be deemed 
to be an individual enrollment contract for the purposes of 
section 62D.10. 
    Sec. 23.  [REQUIRED STUDIES.] 
    Subdivision 1.  The commission on health plan regulatory 
reform created in Laws 1987, chapter 370, article 1, section 11, 
shall make recommendations for expedited review mechanisms for 
complaints concerning health maintenance organization coverage 
of an immediately and urgently needed service.  
    Subd. 2.  The board of the Minnesota comprehensive health 
association shall conduct a study examining the plan options 
currently offered by the association, in order to determine 
whether provision of additional plan options would better meet 
the needs of current and future enrollees.  The board shall 
report its findings to the legislature and the commissioner of 
health and the commissioner of commerce by February 15, 1989. 
    Sec. 24.  [REPEALER.] 
    Laws 1984, chapter 464, sections 29 and 40, are repealed.  
Section 14 is repealed June 30, 1990. 
    Sec. 25.  [EFFECTIVE DATE.] 
    Sections 11, 13, 14, 17, 18, 19, 20, 21, and 22 are 
effective the day following final enactment.  Section 3, 
subdivision 3, paragraph (c), is effective January 1, 1989. 
    Approved March 30, 1988