Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

Key: (1) language to be deleted (2) new language

  

                         Laws of Minnesota 1992 

                        CHAPTER 549-H.F.No. 2800 
           An act relating to health care; providing health 
          coverage for low-income uninsured persons; 
          establishing statewide and regional cost containment 
          programs; reforming requirements for health insurance 
          companies; establishing rural health system 
          initiatives; creating quality of care and data 
          collection programs; revising malpractice laws; 
          creating a health care access fund; imposing taxes; 
          providing penalties; appropriating money; amending 
          Minnesota Statutes 1990, sections 16A.124, by adding a 
          subdivision; 43A.17, subdivision 9; 60A.15, 
          subdivision 1; 62A.02, subdivisions 1, 2, 3, and by 
          adding subdivisions; 62C.01, subdivision 3; 62E.02, 
          subdivision 23; 62E.10, subdivision 1; 62E.11, 
          subdivision 9, and by adding a subdivision; 62H.01; 
          136A.1355, subdivisions 2 and 3; 144.147, subdivisions 
          1, 3, and 4; 144.581, subdivision 1; 144.8093; 
          145.682, subdivision 4; 256.936, subdivisions 1, 2, 3, 
          4, and by adding subdivisions; 256B.057, by adding a 
          subdivision; 290.01, subdivision 19b; and 447.31, 
          subdivisions 1 and 3; Minnesota Statutes 1991 
          Supplement, sections 62A.31, subdivision 1; 145.61, 
          subdivision 5; 145.64, subdivision 2; 256.936, 
          subdivision 5; 297.02, subdivision 1; and 297.03, 
          subdivision 5; proposing coding for new law in 
          Minnesota Statutes, chapter 16A; 43A; 62A; 62E; 62J; 
          136A; 137; 144; 214; 256; 256B; 295; and 604; 
          proposing coding for new law as Minnesota Statutes, 
          chapter 62L; repealing Minnesota Statutes 1990, 
          section 62A.02, subdivisions 4 and 5. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                            COST CONTAINMENT
    Section 1.  [62J.015] [PURPOSE.] 
    The legislature finds that the staggering growth in health 
care costs is having a devastating effect on the health and cost 
of living of Minnesota residents.  The legislature further finds 
that the number of uninsured and underinsured residents is 
growing each year and that the cost of health care coverage for 
our insured residents is increasing annually at a rate that far 
exceeds the state's overall rate of inflation. 
    The legislature further finds that it must enact immediate 
and intensive cost containment measures to limit the growth of 
health care expenditures, reform insurance practices, and 
finance a plan that offers access to affordable health care for 
our permanent residents by capturing dollars now lost to 
inefficiencies in Minnesota's health care system. 
    The legislature further finds that controlling costs is 
essential to the maintenance of the many factors contributing to 
the quality of life in Minnesota:  our environment, education 
system, safe communities, affordable housing, provision of food, 
economic vitality, purchasing power, and stable population. 
    It is, therefore, the intent of the legislature to lay a 
new foundation for the delivery and financing of health care in 
Minnesota and to call this new foundation The Minnesota Health 
Right Act. 
    Sec. 2.  [62J.03] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE OF DEFINITIONS.] For purposes of 
this chapter, the terms defined in this section have the 
meanings given. 
    Subd. 2.  [CLINICALLY EFFECTIVE.] "Clinically effective" 
means that the use of a particular medical technology improves 
patient clinical status, as measured by medical condition, 
survival rates, and other variables, and that the use of the 
particular technology demonstrates a clinical advantage over 
alternative technologies. 
    Subd. 3.  [COMMISSION.] "Commission" or "state commission" 
means the Minnesota health care commission established in 
section 62J.05. 
    Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
commissioner of health. 
    Subd. 5.  [COST EFFECTIVE.] "Cost effective" means that the 
economic costs of using a particular technology to achieve 
improvement in a patient's health outcome are justified given a 
comparison to both the economic costs and the improvement in 
patient health outcome resulting from the use of alternative 
technologies. 
    Subd. 6.  [GROUP PURCHASER.] "Group purchaser" means a 
person or organization that purchases health care services on 
behalf of an identified group of persons, regardless of whether 
the cost of coverage or services is paid for by the purchaser or 
by the persons receiving coverage or services, as further 
defined in rules adopted by the commissioner.  "Group purchaser" 
includes, but is not limited to, health insurance companies, 
health maintenance organizations and other health plan 
companies; employee health plans offered by self-insured 
employers; group health coverage offered by fraternal 
organizations, professional associations, or other 
organizations; state and federal health care programs; state and 
local public employee health plans; workers' compensation plans; 
and the medical component of automobile insurance coverage. 
    Subd. 7.  [IMPROVEMENT IN HEALTH OUTCOME.] "Improvement in 
health outcome" means an improvement in patient clinical status, 
and an improvement in patient quality-of-life status, as 
measured by ability to function, ability to return to work, and 
other variables. 
    Subd. 8.  [PROVIDER.] "Provider" or "health care provider" 
means a person or organization other than a nursing home that 
provides health care or medical care services within Minnesota 
for a fee, as further defined in rules adopted by the 
commissioner. 
    Sec. 3.  [62J.04] [CONTROLLING THE RATE OF GROWTH OF HEALTH 
CARE SPENDING.] 
    Subdivision 1.  [COMPREHENSIVE BUDGET.] The commissioner of 
health shall set an annual limit on the rate of growth of public 
and private spending on health care services for Minnesota 
residents.  The limit on growth must be set at a level that will 
slow the current rate of growth by at least ten percent per year 
using the spending growth rate for 1991 as a base year.  This 
limit must be achievable through good faith, cooperative efforts 
of health care consumers, purchasers, and providers. 
    Subd. 2.  [DATA COLLECTION.] For purposes of setting limits 
under this section, the commissioner shall collect from all 
Minnesota health care providers data on patient revenues 
received during a time period specified by the commissioner.  
The commissioner shall also collect data on health care spending 
from all group purchasers of health care.  All health care 
providers and group purchasers doing business in the state shall 
provide the data requested by the commissioner at the times and 
in the form specified by the commissioner.  Professional 
licensing boards and state agencies responsible for licensing, 
registering, or regulating providers shall cooperate fully with 
the commissioner in achieving compliance with the reporting 
requirements.  Intentional failure to provide reports requested 
under this section is grounds for revocation of a license or 
other disciplinary or regulatory action against a regulated 
provider.  The commissioner may assess a fine against a provider 
who refuses to provide information required by the commissioner 
under this section.  If a provider refuses to provide a report 
or information required under this section, the commissioner may 
obtain a court order requiring the provider to produce documents 
and allowing the commissioner to inspect the records of the 
provider for purposes of obtaining the information required 
under this section.  All data received is nonpublic, trade 
secret information under section 13.37.  The commissioner shall 
establish procedures and safeguards to ensure that data provided 
to the Minnesota health care commission is in a form that does 
not identify individual patients, providers, employers, 
purchasers, or other individuals and organizations, except with 
the permission of the affected individual or organization. 
    Subd. 3.  [COST CONTAINMENT DUTIES.] After obtaining the 
advice and recommendations of the Minnesota health care 
commission, the commissioner shall: 
    (1) establish statewide and regional limits on growth in 
total health care spending under this section, monitor regional 
and statewide compliance with the spending limits, and take 
action to achieve compliance to the extent authorized by the 
legislature; 
    (2) divide the state into no fewer than four regions, with 
one of those regions being the Minneapolis/St. Paul metropolitan 
statistical area, for purposes of fostering the development of 
regional health planning and coordination of health care 
delivery among regional health care systems and working to 
achieve spending limits; 
    (3) provide technical assistance to regional coordinating 
boards; 
    (4) monitor the quality of health care throughout the 
state, conduct consumer satisfaction surveys, and take action as 
necessary to ensure an appropriate level of quality; 
    (5) develop uniform billing forms, uniform electronic 
billing procedures, and other uniform claims procedures for 
health care providers by January 1, 1993; 
    (6) undertake health planning responsibilities as provided 
in section 62J.15; 
    (7) monitor and promote the development and implementation 
of practice parameters; 
    (8) authorize, fund, or promote research and 
experimentation on new technologies and health care procedures; 
    (9) designate centers of excellence for specialized and 
high-cost procedures and treatment and establish minimum 
standards and requirements for particular procedures or 
treatment; 
    (10) administer or contract for statewide consumer 
education and wellness programs that will improve the health of 
Minnesotans and increase individual responsibility relating to 
personal health and the delivery of health care services; 
    (11) administer the health care analysis unit under article 
7; and 
    (12) undertake other activities to monitor and oversee the 
delivery of health care services in Minnesota with the goal of 
improving affordability, quality, and accessibility of health 
care for all Minnesotans. 
    Subd. 4.  [CONSULTATION WITH THE COMMISSION.] Before 
undertaking any of the duties required under this chapter, the 
commissioner of health shall consult with the Minnesota health 
care commission and obtain the commission's advice and 
recommendations.  If the commissioner intends to depart from the 
commission's recommendations, the commissioner shall inform the 
commission of the intended departure, provide a written 
explanation of the reasons for the departure, and give the 
commission an opportunity to comment on the intended departure.  
If, after receiving the commission's comment, the commissioner 
still intends to depart from the commission's recommendations, 
the commissioner shall notify each member of the legislative 
oversight commission of the commissioner's intent to depart from 
the recommendations of the Minnesota health care commission.  
The notice to the legislative oversight commission must be 
provided at least ten days before the commissioner takes final 
action.  If emergency action is necessary that does not allow 
the commissioner to obtain the advice and recommendations of the 
Minnesota health care commission or to provide advance notice 
and an opportunity for comment as required in this subdivision, 
the commissioner shall provide a written notice and explanation 
to the Minnesota health care commission and the legislative 
oversight commission at the earliest possible time. 
    Subd. 5.  [APPEALS.] A person or organization may appeal a 
decision of the commissioner through a contested case proceeding 
under chapter 14. 
    Subd. 6.  [RULEMAKING.] The commissioner shall adopt rules 
under chapter 14 to implement this chapter, including appeals of 
decisions by the Minnesota health care commission and the 
regional coordinating boards. 
    Subd. 7.  [PLAN FOR CONTROLLING GROWTH IN SPENDING.] (a) By 
January 15, 1993, the Minnesota health care commission shall 
submit to the legislature and the governor for approval a plan, 
with as much detail as possible, for slowing the growth in 
health care spending to the growth rate identified by the 
commission, beginning July 1, 1993.  The goal of the plan shall 
be to reduce the growth rate of health care spending, adjusted 
for population changes, so that it declines by at least ten 
percent per year for each of the next five years.  The 
commission shall use the rate of spending growth in 1991 as the 
base year for developing its plan.  The plan may include 
tentative targets for reducing the growth in spending for 
consideration by the legislature. 
    (b) In developing the plan, the commission shall consider 
the advisability and feasibility of the following options, but 
is not obligated to incorporate them into the plan: 
    (1) data and methods that could be used to calculate 
regional and statewide spending limits and the various options 
for expressing spending limits, such as maximum percentage 
growth rates or actuarially adjusted average per capita rates 
that reflect the demographics of the state or a region of the 
state; 
    (2) methods of adjusting spending limits to account for 
patients who are not Minnesota residents, to reflect care 
provided to a person outside the person's region, and to adjust 
for demographic changes over time; 
    (3) methods that could be used to monitor compliance with 
the limits; 
    (4) criteria for exempting spending on research and 
experimentation on new technologies and medical practices when 
setting or enforcing spending limits; 
    (5) methods that could be used to help providers, 
purchasers, consumers, and communities control spending growth; 
    (6) methods of identifying activities of consumers, 
providers, or purchasers that contribute to excessive growth in 
spending; 
    (7) methods of encouraging voluntary activities that will 
help keep spending within the limits; 
    (8) methods of consulting providers and obtaining their 
assistance and cooperation and safeguards that are necessary to 
protect providers from abrupt changes in revenues or practice 
requirements; 
    (9) methods of avoiding, preventing, or recovering spending 
in excess of the rate of growth identified by the commission; 
    (10) methods of depriving those who benefit financially 
from overspending of the benefit of overspending, including the 
option of recovering the amount of the excess spending from the 
greater provider community or from individual providers or 
groups of providers through targeted assessments; 
    (11) methods of reallocating health care resources among 
provider groups to correct existing inequities, reward desirable 
provider activities, discourage undesirable activities, or 
improve the quality, affordability, and accessibility of health 
care services; 
    (12) methods of imposing mandatory requirements relating to 
the delivery of health care, such as practice parameters, 
hospital admission protocols, 24-hour emergency care screening 
systems, or designated specialty providers; 
    (13) methods of preventing unfair health care practices 
that give a provider or group purchaser an unfair advantage or 
financial benefit or that significantly circumvent, subvert, or 
obstruct the goals of this chapter; 
    (14) methods of providing incentives through special 
spending allowances or other means to encourage and reward 
special projects to improve outcomes or quality of care; and 
    (15) the advisability or feasibility of a system of 
permanent, regional coordinating boards to ensure community 
involvement in activities to improve affordability, 
accessibility, and quality of health care in each region. 
    Sec. 4.  [62J.05] [MINNESOTA HEALTH CARE COMMISSION.] 
    Subdivision 1.  [PURPOSE OF THE COMMISSION.] The Minnesota 
health care commission consists of health care providers, 
purchasers, consumers, employers, and employees.  The two major 
functions of the commission are:  
    (1) to make recommendations to the commissioner of health 
and the legislature regarding statewide and regional limits on 
the rate of growth of health care spending and activities to 
prevent or address spending in excess of the limits; and 
    (2) to help Minnesota communities, providers, group 
purchasers, employers, employees, and consumers improve the 
affordability, quality, and accessibility of health care. 
    Subd. 2.  [MEMBERSHIP.] (a) [NUMBER.] The Minnesota health 
care commission consists of 25 members, as specified in this 
subdivision.  A member may designate a representative to act as 
a member of the commission in the member's absence.  The 
governor and legislature shall coordinate appointments under 
this subdivision to ensure gender balance and ensure that 
geographic areas of the state are represented in proportion to 
their population. 
    (b) [HEALTH PLAN COMPANIES.] The commission includes four 
members representing health plan companies, including one member 
appointed by the Minnesota Council of Health Maintenance 
Organizations, one member appointed by the Insurance Federation 
of Minnesota, one member appointed by Blue Cross and Blue Shield 
of Minnesota, and one member appointed by the governor. 
    (c) [HEALTH CARE PROVIDERS.] The commission includes six 
members representing health care providers, including one member 
appointed by the Minnesota Hospital Association, one member 
appointed by the Minnesota Medical Association, one member 
appointed by the Minnesota Nurses' Association, one rural 
physician appointed by the governor, and two members appointed 
by the governor to represent providers other than hospitals, 
physicians, and nurses. 
    (d) [EMPLOYERS.] The commission includes four members 
representing employers, including (1) two members appointed by 
the Minnesota Chamber of Commerce, including one self-insured 
employer and one small employer; and (2) two members appointed 
by the governor. 
    (e) [CONSUMERS.] The commission includes five consumer 
members, including three members appointed by the governor, one 
of whom must represent persons over age 65; one appointed under 
the rules of the senate; and one appointed under the rules of 
the house of representatives. 
     (f) [EMPLOYEE UNIONS.] The commission includes three 
representatives of labor unions, including two appointed by the 
AFL-CIO Minnesota and one appointed by the governor to represent 
other unions. 
    (g) [STATE AGENCIES.] The commission includes the 
commissioners of commerce, employee relations, and human 
services. 
    (h) [CHAIR.] The governor shall designate the chair of the 
commission from among the governor's appointees. 
    Subd. 3.  [FINANCIAL INTERESTS OF MEMBERS.] A member 
representing employers, consumers, or employee unions must not 
have any personal financial interest in the health care system 
except as an individual consumer of health care services.  An 
employee who participates in the management of a health benefit 
plan may serve as a member representing employers or unions. 
    Subd. 4.  [CONFLICTS OF INTEREST.] No member may 
participate or vote in commission proceedings involving an 
individual provider, purchaser, or patient, or a specific 
activity or transaction, if the member has a direct financial 
interest in the outcome of the commission's proceedings other 
than as an individual consumer of health care services. 
    Subd. 5.  [IMMUNITY FROM LIABILITY.] No member of the 
commission shall be held civilly or criminally liable for an act 
or omission by that person if the act or omission was in good 
faith and within the scope of the member's responsibilities 
under this chapter. 
    Subd. 6.  [TERMS; COMPENSATION; REMOVAL; AND 
VACANCIES.] The commission is governed by section 15.0575.  
    Subd. 7.  [ADMINISTRATION.] The commissioner of health 
shall provide office space, equipment and supplies, and 
technical support to the commission.  
    Subd. 8.  [STAFF.] The commission may hire an executive 
director who serves in the unclassified service.  The executive 
director may hire employees and consultants as authorized by the 
commission and may prescribe their duties.  The attorney general 
shall provide legal services to the commission. 
    Sec. 5.  [62J.07] [LEGISLATIVE OVERSIGHT COMMISSION.] 
    Subdivision 1.  [LEGISLATIVE OVERSIGHT.] The legislative 
commission on health care access reviews the activities of the 
commissioner of health, the state health care commission, and 
all other state agencies involved in the implementation and 
administration of this chapter, including efforts to obtain 
federal approval through waivers and other means.  
    Subd. 2.  [MEMBERSHIP.] The legislative commission on 
health care access consists of five members of the senate 
appointed under the rules of the senate and five members of the 
house of representatives appointed under the rules of the house 
of representatives.  The legislative commission on health care 
access must include three members of the majority party and two 
members of the minority party in each house.  
    Subd. 3.  [REPORTS TO THE COMMISSION.] The commissioner of 
health and the Minnesota health care commission shall report on 
their activities and the activities of the regional boards 
annually and at other times at the request of the legislative 
commission on health care access.  The commissioners of health, 
commerce, and human services shall provide periodic reports to 
the legislative commission on the progress of rulemaking that is 
authorized or required under this act and shall notify members 
of the commission when a draft of a proposed rule has been 
completed and scheduled for publication in the State Register.  
At the request of a member of the commission, a commissioner 
shall provide a description and a copy of a proposed rule. 
    Subd. 4.  [REPORT ON REVENUE SOURCES.] The legislative 
commission on health care access shall study the long-term 
integrity and stability of the revenue sources created in this 
act as the funding mechanism for the health right program and 
related health care initiatives.  The study must include: 
    (1) an analysis of the impact of the provider taxes on the 
health care system and the relationship between the taxes and 
other initiatives related to health care access, affordability, 
and quality; 
    (2) the adequacy of the revenues generated in relation to 
the costs of a fully implemented and appropriately designed 
health right program; 
    (3) the extent to which provider taxes are passed on to 
individual and group purchasers and the ability of individual 
providers and groups of provider to absorb all or part of the 
tax burden; 
    (4) alternative funding sources and financing methods; and 
    (5) other appropriate issues relating to the financing of 
the health right program and related initiatives. 
    The commission shall provide a preliminary report and 
recommendations to the legislature by January 15, 1993, and a 
final report and recommendations by January 15, 1994.  The 
commissioners of revenue, human services, and health shall 
provide assistance to the commission. 
    Sec. 6.  [62J.09] [REGIONAL COORDINATING BOARDS.] 
    Subdivision 1.  [GENERAL DUTIES.] The regional coordinating 
boards are locally controlled boards consisting of providers, 
health plan companies, employers, consumers, and elected 
officials.  Regional boards may: 
    (1) recommend that the commissioner sanction voluntary 
agreements between providers in the region that will improve 
quality, access, or affordability of health care but might 
constitute a violation of antitrust laws if undertaken without 
government direction; 
    (2) make recommendations to the commissioner regarding 
major capital expenditures or the introduction of expensive new 
technologies and medical practices that are being proposed or 
considered by providers; 
    (3) undertake voluntary activities to educate consumers, 
providers, and purchasers or to promote voluntary, cooperative 
community cost containment, access, or quality of care projects; 
    (4) make recommendations to the commissioner regarding ways 
of improving affordability, accessibility, and quality of health 
care in the region and throughout the state. 
    Subd. 2.  [MEMBERSHIP.] (a) Each regional health care 
management board consists of 16 members as provided in this 
subdivision.  A member may designate a representative to act as 
a member of the commission in the member's absence.  
    (b) [PROVIDER REPRESENTATIVES.] Each regional board must 
include four members representing health care providers who 
practice in the region.  One member is appointed by the 
Minnesota Medical Association.  One member is appointed by the 
Minnesota Hospital Association.  One member is appointed by the 
Minnesota Nurses' Association.  The remaining member is 
appointed by the governor to represent providers other than 
physicians, hospitals, and nurses. 
    (c) [HEALTH PLAN COMPANY REPRESENTATIVES.] Each regional 
board includes three members representing health plan companies 
who provide coverage for residents of the region, including one 
member representing health insurers who is elected by a vote of 
all health insurers providing coverage in the region, one member 
elected by a vote of all health maintenance organizations 
providing coverage in the region, and one member appointed by 
Blue Cross and Blue Shield of Minnesota.  The fourth member is 
appointed by the governor. 
    (d) [EMPLOYER REPRESENTATIVES.] Regional boards include 
three members representing employers in the region.  Employer 
representatives are elected by a vote of the employers who are 
members of chambers of commerce in the region.  At least one 
member must represent self-insured employers.  
     (e) [EMPLOYEE UNIONS.] Regional boards include one member 
appointed by the AFL-CIO Minnesota who is a union member 
residing or working in the region or who is a representative of 
a union that is active in the region. 
    (f) [PUBLIC MEMBERS.] Regional boards include three 
consumer members.  One consumer member is elected by the 
community health boards in the region, with each community 
health board having one vote.  One consumer member is elected by 
the state legislators with districts in the region.  One 
consumer member is appointed by the governor. 
    (g) [COUNTY COMMISSIONER.] Regional boards include one 
member who is a county board member.  The county board member is 
elected by a vote of all of the county board members in the 
region, with each county board having one vote.  
    (h) [STATE AGENCY.] Regional boards include one state 
agency commissioner appointed by the governor to represent state 
health coverage programs. 
    Subd. 3.  [ESTABLISHMENT OF REGIONAL COORDINATING 
ORGANIZATIONS AND STRUCTURE.] The providers of health services 
in each region should begin formulating the appropriate 
structure for organizing the delivery networks or systems to 
accomplish the objectives in subdivision 1.  Once a draft plan 
is outlined, or during the drafting process, other entities 
should be included as appropriate so as to ensure the 
comprehensiveness of the plan and the regional planning 
process.  The ultimate structure of the regional coordinating 
organization may vary by region and in composition.  Each region 
may consult with the commissioner of health and the Minnesota 
health care commission during the planning process. 
    Subd. 4.  [FINANCIAL INTERESTS OF MEMBERS.] A member 
representing employers, consumers, or employee unions must not 
have any personal financial interest in the health care system 
except as an individual consumer of health care services.  An 
employee who participates in the management of a health benefit 
plan may serve as a member representing employers or unions. 
    Subd. 5.  [CONFLICTS OF INTEREST.] No member may 
participate or vote in commission proceedings involving an 
individual provider, purchaser, or patient, or a specific 
activity or transaction, if the member has a direct financial 
interest in the outcome of the commission's proceedings other 
than as an individual consumer of health care services. 
    Subd. 6.  [TECHNICAL ASSISTANCE.] The state health care 
commission shall provide technical assistance to regional boards.
    Subd. 7.  [TERMS; COMPENSATION; REMOVAL; AND 
VACANCIES.] Regional coordinating boards are governed by section 
15.0575, except that members do not receive per diem payments. 
    Subd. 8.  [REPEALER.] This section is repealed effective 
July 1, 1993. 
    Sec. 7.  [62J.15] [HEALTH PLANNING.] 
    Subdivision 1.  [HEALTH PLANNING ADVISORY COMMITTEE.] The 
Minnesota health care commission shall convene an advisory 
committee to make recommendations regarding the use and 
distribution of new and existing health care technologies and 
procedures and major capital expenditures by providers.  The 
advisory committee may include members of the state commission 
and other persons appointed by the commission.  The advisory 
committee must include at least one person representing 
physicians, at least one person representing hospitals, and at 
least one person representing the health care technology 
industry.  Health care technologies and procedures include 
high-cost pharmaceuticals, organ and other high-cost 
transplants, high-cost health care procedures and devices 
excluding United States Food and Drug Administration approved 
implantable or wearable medical devices, and expensive, 
large-scale technologies such as scanners and imagers. 
    Subd. 2.  [HEALTH PLANNING.] In consultation with the 
health planning advisory committee, the Minnesota health care 
commission shall: 
    (1) make recommendations on the types of high-cost 
technologies, procedures, and capital expenditures for which a 
plan on statewide use and distribution should be made; 
    (2) develop criteria for evaluating new high-cost health 
care technology and procedures and major capital expenditures 
that take into consideration the clinical effectiveness, cost 
effectiveness, and health outcome; 
    (3) recommend to the commissioner of health and the 
regional coordinating organizations statewide and regional goals 
and targets for the distribution and use of new and existing 
high-cost health care technologies and procedures and major 
capital expenditures; 
    (4) make recommendations to the commissioner regarding the 
designation of centers of excellence for transplants and other 
specialized medical procedures; and 
    (5) make recommendations to the commissioner regarding 
minimum volume requirements for the performance of certain 
procedures by hospitals and other health care facilities or 
providers. 
    Sec. 8.  [62J.17] [EXPENDITURE REPORTING.] 
    Subdivision 1.  [PURPOSE.] To ensure access to affordable 
health care services for all Minnesotans it is necessary to 
restrain the rate of growth in health care costs.  An important 
factor believed to contribute to escalating costs may be the 
purchase of costly new medical equipment, major capital 
expenditures, and the addition of new specialized services.  
After spending limits are established under section 62J.04, 
providers, patients, and communities will have the opportunity 
to decide for themselves whether they can afford capital 
expenditures or new equipment or specialized services within the 
constraints of a spending limit.  In this environment, the 
state's role in reviewing these spending commitments can be more 
limited.  However, during the interim period until spending 
targets are established, it is important to prevent unrestrained 
major spending commitments that will contribute further to the 
escalation of health care costs and make future cost containment 
efforts more difficult.  In addition, it is essential to protect 
against the possibility that the legislature's expression of its 
attempt to control health care costs may lead a provider to make 
major spending commitments before targets or other cost 
containment constraints are fully implemented because the 
provider recognizes that the spending commitment may not be 
considered appropriate, needed, or affordable within the context 
of a fixed budget for health care spending.  Therefore, the 
legislature finds that a requirement for reporting health care 
expenditures is necessary. 
    Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
terms defined in this subdivision have the meanings given. 
    (a) [CAPITAL EXPENDITURE.] "Capital expenditure" means an 
expenditure which, under generally accepted accounting 
principles, is not properly chargeable as an expense of 
operation and maintenance. 
    (b) [HEALTH CARE SERVICE.] "Health care service" means: 
    (1) a service or item that would be covered by the medical 
assistance program under chapter 256B if provided in accordance 
with medical assistance requirements to an eligible medical 
assistance recipient; and 
    (2) a service or item that would be covered by medical 
assistance except that it is characterized as experimental, 
cosmetic, or voluntary. 
    "Health care service" does not include retail, 
over-the-counter sales of nonprescription drugs and other retail 
sales of health-related products that are not generally paid for 
by medical assistance and other third-party coverage. 
    (c) [MAJOR SPENDING COMMITMENT.] "Major spending 
commitment" means: 
    (1) acquisition of a unit of medical equipment; 
    (2) a capital expenditure for a single project for the 
purposes of providing health care services, other than for the 
acquisition of medical equipment; 
    (3) offering a new specialized service not offered before; 
    (4) planning for an activity that would qualify as a major 
spending commitment under this paragraph; or 
    (5) a project involving a combination of two or more of the 
activities in clauses (1) to (4). 
    The cost of acquisition of medical equipment, and the 
amount of a capital expenditure, is the total cost to the 
provider regardless of whether the cost is distributed over time 
through a lease arrangement or other financing or payment 
mechanism.  
    (d) [MEDICAL EQUIPMENT.] "Medical equipment" means fixed 
and movable equipment that is used by a provider in the 
provision of a health care service.  "Medical equipment" 
includes, but is not limited to, the following: 
    (1) an extracorporeal shock wave lithotripter; 
    (2) a computerized axial tomography (CAT) scanner; 
    (3) a magnetic resonance imaging (MRI) unit; 
    (4) a positron emission tomography (PET) scanner; and 
    (5) emergency and nonemergency medical transportation 
equipment and vehicles. 
    (e) [NEW SPECIALIZED SERVICE.] "New specialized service" 
means a specialized health care procedure or treatment regimen 
offered by a provider that was not previously offered by the 
provider, including, but not limited to:  
    (1) cardiac catheterization services involving high-risk 
patients as defined in the Guidelines for Coronary Angiography 
established by the American Heart Association and the American 
College of Cardiology; 
    (2) heart, heart-lung, liver, kidney, bowel, or pancreas 
transplantation service, or any other service for 
transplantation of any other organ; 
    (3) megavoltage radiation therapy; 
    (4) open heart surgery; 
    (5) neonatal intensive care services; and 
    (6) any new medical technology for which premarket approval 
has been granted by the United States Food and Drug 
Administration, excluding implantable and wearable devices. 
    (f) [PROVIDER.] "Provider" means an individual, 
corporation, association, firm, partnership, or other entity 
that is regularly engaged in providing health care services in 
Minnesota.  
    Subd. 3.  [HOSPITAL AND NURSING HOME MORATORIA PRESERVED; 
NURSING HOMES EXEMPT.] Nothing in this section supersedes or 
limits the applicability of section 144.551 or 144A.071.  This 
section does not apply to major spending commitments made by 
nursing homes or intermediate care facilities that are related 
to the provision of long-term care services to residents. 
    Subd. 4. [EXPENDITURE REPORTING.] Any provider making a 
capital expenditure establishing a health care service or new 
specialized service, or making a major spending commitment after 
April 1, 1992, that is in excess of $500,000, shall submit 
notification of this expenditure to the commissioner and provide 
the commissioner with any relevant background or other 
information.  The commissioner shall not have any approval or 
denial authority, but should use such information in the ongoing 
evaluation of statewide and regional progress toward cost 
containment and other objectives.  
    Subd. 5.  [RETROSPECTIVE REVIEW.] The commissioner of 
health, in consultation with the Minnesota health care 
commission, shall retrospectively review capital expenditures 
and major spending commitments that are required to be reported 
by providers under subdivision 4.  In the event that health care 
providers refuse to cooperate with attempts by the Minnesota 
health care commission and regional coordinating organizations 
to coordinate the use of health care technologies and 
procedures, and reduce the growth rate in health care 
expenditures; or in the event that health care providers use, 
purchase, or perform health care technologies and procedures 
that are not clinically effective and cost effective and do not 
improve health outcomes based on the results of medical 
research; or in the event providers have failed to pursue 
collaborative arrangements; the commissioner shall require those 
health care providers to follow the procedures for prospective 
review and approval established in subdivision 6. 
    Subd. 6.  [PROSPECTIVE REVIEW AND APPROVAL.] (a) 
[REQUIREMENT.] The commissioner shall prohibit those health care 
providers subject to retrospective review under subdivision 5 
from making future major spending commitments or capital 
expenditures that are required to be reported under subdivision 
4 for a period of up to five years, unless:  (1) the provider 
has filed an application to proceed with the major spending 
commitment or capital expenditure with the commissioner and 
provided supporting documentation and evidence requested by the 
commissioner; and (2) the commissioner determines, based upon 
this documentation and evidence, that the spending commitment or 
capital expenditure is appropriate.  The commissioner shall make 
a decision on a completed application within 60 days after an 
application is submitted.  The Minnesota health care commission 
shall convene an expert review panel made up of persons with 
knowledge and expertise regarding medical equipment, specialized 
services, and health care expenditures to review applications 
and make recommendations to the commissioner and the commission. 
    (b) [EXCEPTIONS.] This subdivision does not apply to: 
    (1) a major spending commitment to replace existing 
equipment with comparable equipment, if the old equipment will 
no longer be used in the state; 
    (2) a major spending commitment made by a research and 
teaching institution for purposes of conducting medical 
education, medical research supported or sponsored by a medical 
school, or by a federal or foundation grant, or clinical trials; 
    (3) a major spending commitment to repair, remodel, or 
replace existing buildings or fixtures if, in the judgment of 
the commissioner, the project does not involve a substantial 
expansion of service capacity or a substantial change in the 
nature of health care services provided; and 
    (4) mergers, acquisitions, and other changes in ownership 
or control that, in the judgment of the commissioner, do not 
involve a substantial expansion of service capacity or a 
substantial change in the nature of health care services 
provided. 
    (c) [APPEALS.] A provider may appeal a decision of the 
commissioner under this section through a contested case 
proceeding under chapter 14.  
    (d) [PENALTIES AND REMEDIES.] The commissioner of health 
shall have the authority to issue fines, seek injunctions, and 
pursue other remedies as provided by law. 
    Sec. 9.  [62J.19] [SUBMISSION OF REGIONAL PLAN TO 
COMMISSIONER.] 
    Each regional coordinating organization shall submit its 
plan to the commissioner on or before June 30, 1993.  In the 
event that any major provider, provider group or other entity 
within the region chooses to not participate in the regional 
planning process, the commissioner may require the participation 
of that entity in the planning process or adopt other rules or 
criteria for that entity.  In the event that a region fails to 
submit a plan to the commissioner that satisfactorily promotes 
the objectives in section 62J.09, subdivisions 1 and 2, or where 
competing plans and regional coordination organizations exist, 
the commissioner has the authority to establish a public 
regional coordinating organization for purposes of establishing 
a regional plan which will achieve the objectives.  The public 
regional coordinating organization shall be appointed by the 
commissioner and under the commissioner's direction.  
    Sec. 10.  [62J.21] [REPORTING TO THE LEGISLATURE.] 
    The commissioner shall report to the legislature by January 
1, 1993 regarding the process being made within each region with 
respect to the establishment of a regional coordinating 
organization and the development of a regional plan.  In the 
event that the commissioner determines that any region is not 
making reasonable progress or a good-faith commitment towards 
establishing a regional coordinating organization and regional 
plan, the commissioner may establish a public regional board for 
this purpose.  The commissioner's report should also include the 
issues, if any, raised during the planning process to date and 
request any appropriate legislate action that would facilitate 
the planning process. 
    Sec. 11.  [62J.22] [PARTICIPATION OF FEDERAL PROGRAMS.] 
    The commissioner of health shall seek the full 
participation of federal health care programs under this 
chapter, including Medicare, medical assistance, veterans 
administration programs, and other federal programs.  The 
commissioner of human services shall under the direction of the 
health care commission submit waiver requests and take other 
action necessary to obtain federal approval to allow 
participation of the medical assistance program.  Other state 
agencies shall provide assistance at the request of the 
commission.  If federal approval is not given for one or more 
federal programs, data on the amount of health care spending 
that is collected under section 62J.04 shall be adjusted so that 
state and regional spending limits take into account the failure 
of the federal program to participate. 
    Sec. 12.  [62J.23] [PROVIDER CONFLICTS OF INTEREST.] 
    Subdivision 1.  [RULES PROHIBITING CONFLICTS OF 
INTEREST.] The commissioner of health shall adopt rules 
restricting financial relationships or payment arrangements 
involving health care providers under which a provider benefits 
financially by referring a patient to another provider, 
recommending another provider, or furnishing or recommending an 
item or service.  The rules must be compatible with, and no less 
restrictive than, the federal Medicare antikickback statute, in 
section 1128B(b) of the Social Security Act, United States Code, 
title 42, section 1320a-7b(b), and regulations adopted under 
it.  However, the commissioner's rules may be more restrictive 
than the federal law and regulations and may apply to additional 
provider groups and business and professional arrangements.  
When the state rules restrict an arrangement or relationship 
that is permissible under federal laws and regulations, 
including an arrangement or relationship expressly permitted 
under the federal safe harbor regulations, the fact that the 
state requirement is more restrictive than federal requirements 
must be clearly stated in the rule.  
    Subd. 2.  [INTERIM RESTRICTIONS.] From July 1, 1992, until 
rules are adopted by the commissioner under this section, the 
restrictions in the federal Medicare antikickback statutes in 
section 1128B(b) of the Social Security Act, United States Code, 
title 42, section 1320a-7b(b), and rules adopted under the 
federal statutes, apply to all health care providers in the 
state, regardless of whether the provider participates in any 
state health care program.  The commissioner shall approve a 
transition plan submitted to the commissioner by January 1, 
1993, by a provider who is in violation of this section that 
provides a reasonable time for the provider to modify prohibited 
practices or divest financial interests in other providers in 
order to come into compliance with this section. 
    Subd. 3.  [PENALTY.] The commissioner may assess a fine 
against a provider who violates this section.  The amount of the 
fine is $1,000 or 110 percent of the estimated financial benefit 
that the provider realized as a result of the prohibited 
financial arrangement or payment relationship, whichever is 
greater.  A provider who is in compliance with a transition plan 
approved by the commissioner under subdivision 2, or who is 
making a good faith effort to obtain the commissioner's approval 
of a transition plan, is not in violation of this section. 
    Sec. 13.  [62J.25] [MANDATORY MEDICARE ASSIGNMENT.] 
    (a) Effective January 1, 1993, a health care provider 
authorized to participate in the Medicare program shall not 
charge to or collect from a Medicare beneficiary who is a 
Minnesota resident any amount in excess of 115 percent of the 
Medicare-approved amount for any Medicare-covered service 
provided. 
    (b) Effective January 1, 1994, a health care provider 
authorized to participate in the Medicare program shall not 
charge to or collect from a Medicare beneficiary who is a 
Minnesota resident any amount in excess of 110 percent of the 
Medicare-approved amount for any Medicare-covered service 
provided. 
    (c) Effective January 1, 1995, a health care provider 
authorized to participate in the Medicare program shall not 
charge to or collect from a Medicare beneficiary who is a 
Minnesota resident any amount in excess of 105 percent of the 
Medicare-approved amount for any Medicare-covered service 
provided. 
    (d) Effective January 1, 1996, a health care provider 
authorized to participate in the Medicare program shall not 
charge to or collect from a Medicare beneficiary who is a 
Minnesota resident any amount in excess of the Medicare-approved 
amount for any Medicare-covered service provided. 
    (e) This section does not apply to ambulance services as 
defined in section 144.801, subdivision 4. 
    Sec. 14.  [62J.29] [ANTITRUST EXCEPTIONS.] 
    Subdivision 1.  [PURPOSE.] The legislature finds that the 
goals of controlling health care costs and improving the quality 
of and access to health care services will be significantly 
enhanced by some cooperative arrangements involving providers or 
purchasers that would be prohibited by state and federal 
antitrust laws if undertaken without governmental involvement.  
The purpose of this section is to create an opportunity for the 
state to review proposed arrangements and to substitute 
regulation for competition when an arrangement is likely to 
result in lower costs, or greater access or quality, than would 
otherwise occur in the competitive marketplace.  The legislature 
intends that approval of relationships be accompanied by 
appropriate conditions, supervision, and regulation to protect 
against private abuses of economic power. 
    Subd. 2.  [REVIEW AND APPROVAL.] The commissioner shall 
establish criteria and procedures to review and authorize 
contracts, business or financial arrangements, or other 
activities, practices, or arrangements involving providers or 
purchasers that might be construed to be violations of state or 
federal antitrust laws but which are in the best interests of 
the state and further the policies and goals of this chapter.  
The commissioner shall not approve any application unless the 
commissioner finds that the proposed arrangement is likely to 
result in lower health care costs, or greater access to or 
quality of health care, than would occur in the competitive 
marketplace.  The commissioner may condition approval of a 
proposed arrangement on a modification of all or part of the 
arrangement to eliminate any restriction on competition that is 
not reasonably related to the goals of controlling costs or 
improving access or quality.  The commissioner may also 
establish conditions for approval that are reasonably necessary 
to protect against any abuses of private economic power and to 
ensure that the arrangement is appropriately supervised and 
regulated by the state.  The commissioner shall actively monitor 
and regulate arrangements approved under this section to ensure 
that the arrangements remain in compliance with the conditions 
of approval.  The commissioner may revoke an approval upon a 
finding that the arrangement is not in substantial compliance 
with the terms of the application or the conditions of approval. 
    Subd. 3.  [APPLICATIONS.] Applications for approval under 
this section must be filed with the commissioner.  An 
application for approval must describe the proposed arrangement 
in detail.  The application must include at least:  the 
identities of all parties, the intent of the arrangement, the 
expected effects of the arrangement, an explanation of how the 
arrangement will control costs or improve access or quality, and 
financial statements showing how the efficiencies of operation 
will be passed along to patients and purchasers of health care.  
The commissioner may ask the attorney general to comment on an 
application, but the application and any information obtained by 
the commissioner under this section is not admissible in any 
proceeding brought by the attorney general based on antitrust.  
    Subd. 4.  [STATE ANTITRUST LAW.] Notwithstanding the 
Minnesota antitrust law of 1971, as amended, in Minnesota 
Statutes, sections 325D.49 to 325D.66, contracts, business or 
financial arrangements, or other activities, practices, or 
arrangements involving providers or purchasers that are approved 
by the commissioner under this section do not constitute an 
unlawful contract, combination, or conspiracy in unreasonable 
restraint of trade or commerce under Minnesota Statutes, 
sections 325D.49 to 325D.66.  Approval by the state commission 
is an absolute defense against any action under state antitrust 
laws.  
    Subd. 5.  [RULEMAKING.] The commissioner shall by January 
1, 1994, adopt permanent rules to implement this section.  The 
commissioner is exempt from rulemaking until January 1, 1994. 
     Sec. 15.  [HOSPITAL PLANNING TASK FORCE.] 
    The legislative commission on health care access shall 
convene a hospital health planning task force to undertake 
preliminary planning relating to cost containment, accessibility 
of health care services, and quality of care, and to develop 
options and recommendations to be presented to the legislative 
commission and to the Minnesota health care commission.  The 
task force consists of interested representatives of Minnesota 
hospitals, the commissioner of health or the commissioner's 
representatives, and the members of the legislative commission 
or their representatives.  The task force shall submit reports 
to the Minnesota health care commission by August 1, 1992, and 
July 1, 1993.  The task force expires on August 1, 1993.  The 
expenses and compensation of members is the responsibility of 
the institutions, organizations, or agencies they represent. 
    Sec. 16.  [STUDY ON RECOVERY OF UNCOMPENSATED CARE COSTS.] 
    The commissioner of health shall study cost-shifting and 
uncompensated care costs in the health care industry.  The 
commissioner shall recommend to the legislature by January 15, 
1993, methods to recover from health care providers an amount 
equal to the share of uncompensated care costs shifted to other 
payers that are no longer incurred by the provider as 
uncompensated care costs, due to the availability of the health 
right plan. 
    Sec. 17.  [STUDY OF HEALTH CARE MANAGEMENT COMPANIES.] 
    The commissioner of commerce and the commissioner of health 
shall study and make recommendations to the legislature 
regarding the regulation of health care management companies.  
The recommendations shall include, but are not limited to: 
    (1) the definition of a for-profit, and nonprofit health 
care management company; 
    (2) the scope and appropriateness of regulation of 
for-profit health care management companies, and of nonprofit 
health care management companies; 
    (3) the extent to which cost containment and expenditure 
targets can be attained or realized through regulation of health 
care management companies; and 
    (4) the relationship between health care management 
companies and health care providers, health care plans, health 
care technology entities, and other components of the health 
care system. 
    The commissioners of commerce and health shall present a 
joint report to the legislature on or before January 15, 1993. 
    Sec. 18.  [STUDY OF HEALTH MAINTENANCE ORGANIZATION 
REGULATION.] 
    The commissioners of health and commerce shall jointly 
study the regulation of health maintenance organizations.  The 
commissioners shall examine the level and type of regulation 
that is appropriate for the department of health and for the 
department of commerce and shall report to the legislature by 
January 15, 1993.  The report must contain a consensus plan to 
transfer authority over the financial aspects of health 
maintenance organizations to the commissioner of commerce, while 
allowing the commissioner of health to retain authority over the 
health care quality aspects of health maintenance organizations. 
    Sec. 19.  [STUDY OF MEDICARE ASSIGNMENT FOR HOME MEDICAL 
EQUIPMENT.] 
    The commissioner of health, in consultation with 
representatives of the home medical equipment industry, shall 
study the financial impact of the phase-in of mandatory Medicare 
assignment on the home medical equipment suppliers.  The study 
must include an examination of charges for medical equipment, 
physician documentation of medical need for medical equipment, 
the appropriateness of federal guidelines regarding the 
treatment of assignment, and other factors related to Medicare 
assignment that may be unique to the home medical equipment 
industry.  The commissioner shall present recommendations to the 
legislature by January 15, 1993.  
    Sec. 20.  [EFFECTIVE DATE.] 
    Sections 1 to 11; 12, subdivisions 1 and 2; and 13 to 19 
are effective the day following final enactment.  Section 12, 
subdivision 3, is effective July 1, 1993. 

                               ARTICLE 2 

                    SMALL EMPLOYER INSURANCE REFORM 
    Section 1.  [62L.01] [CITATION.] 
    Subdivision 1.  [POPULAR NAME.] Sections 62L.01 to 62L.23 
may be cited as the Minnesota small employer health benefit act. 
    Subd. 2.  [JURISDICTION.] Sections 62L.01 to 62L.23 apply 
to any health carrier that offers, issues, delivers, or renews a 
health benefit plan to a small employer. 
    Subd. 3.  [LEGISLATIVE FINDINGS AND PURPOSE.] The 
legislature finds that underwriting and rating practices in the 
individual and small employer markets for health coverage create 
substantial hardship and unfairness, create unnecessary 
administrative costs, and adversely affect the health of 
residents of this state.  The legislature finds that the premium 
restrictions provided by this chapter reduce but do not 
eliminate these harmful effects.  Accordingly, the legislature 
declares its desire to phase out the remaining rating bands as 
quickly as possible, with the end result of eliminating all 
rating practices based on risk by July 1, 1997. 
    Sec. 2.  [62L.02] [DEFINITIONS.] 
    Subdivision 1.  [APPLICATION.] The definitions in this 
section apply to sections 62L.01 to 62L.23. 
    Subd. 2.  [ACTUARIAL OPINION.] "Actuarial opinion" means a 
written statement by a member of the American Academy of 
Actuaries that a health carrier is in compliance with this 
chapter, based on the person's examination, including a review 
of the appropriate records and of the actuarial assumptions and 
methods utilized by the health carrier in establishing premium 
rates for health benefit plans. 
    Subd. 3.  [ASSOCIATION.] "Association" means the health 
coverage reinsurance association. 
    Subd. 4.  [BASE PREMIUM RATE.] "Base premium rate" means as 
to a rating period, the lowest premium rate charged or which 
could have been charged under the rating system by the health 
carrier to small employers for health benefit plans with the 
same or similar coverage. 
    Subd. 5.  [BOARD OF DIRECTORS.] "Board of directors" means 
the board of directors of the health coverage reinsurance 
association. 
    Subd. 6.  [CASE CHARACTERISTICS.] "Case characteristics" 
means the relevant characteristics of a small employer, as 
determined by a health carrier in accordance with this chapter, 
which are considered by the carrier in the determination of 
premium rates for the small employer. 
    Subd. 7.  [COINSURANCE.] "Coinsurance" means an established 
dollar amount or percentage of health care expenses that an 
eligible employee or dependent is required to pay directly to a 
provider of medical services or supplies under the terms of a 
health benefit plan. 
    Subd. 8.  [COMMISSIONER.] "Commissioner" means the 
commissioner of commerce for health carriers subject to the 
jurisdiction of the department of commerce or the commissioner 
of health for health carriers subject to the jurisdiction of the 
department of health, or the relevant commissioner's designated 
representative. 
    Subd. 9.  [CONTINUOUS COVERAGE.] "Continuous coverage" 
means the maintenance of continuous and uninterrupted qualifying 
prior coverage by an eligible employee or dependent.  An 
eligible employee or dependent is considered to have maintained 
continuous coverage if the individual requests enrollment in a 
health benefit plan within 30 days of termination of the 
qualifying prior coverage. 
    Subd. 10.  [DEDUCTIBLE.] "Deductible" means the amount of 
health care expenses an eligible employee or dependent is 
required to incur before benefits are payable under a health 
benefit plan. 
    Subd. 11.  [DEPENDENT.] "Dependent" means an eligible 
employee's spouse, unmarried child who is under the age of 19 
years, unmarried child who is a full-time student under the age 
of 25 years as defined in section 62A.301 and financially 
dependent upon the eligible employee, or dependent child of any 
age who is handicapped and who meets the eligibility criteria in 
section 62A.14, subdivision 2.  For the purpose of this 
definition, a child may include a child for whom the employee or 
the employee's spouse has been appointed legal guardian. 
    Subd. 12.  [ELIGIBLE CHARGES.] "Eligible charges" means the 
actual charges submitted to a health carrier by or on behalf of 
a provider, eligible employee, or dependent for health services 
covered by the health carrier's health benefit plan.  Eligible 
charges do not include charges for health services excluded by 
the health benefit plan or charges for which an alternate health 
carrier is liable under the coordination of benefit provisions 
of the health benefit plan. 
    Subd. 13.  [ELIGIBLE EMPLOYEE.] "Eligible employee" means 
an individual employed by a small employer for at least 20 hours 
per week and who has satisfied all employer participation and 
eligibility requirements, including, but not limited to, the 
satisfactory completion of a probationary period of not less 
than 30 days but no more than 90 days.  The term includes a sole 
proprietor, a partner of a partnership, or an independent 
contractor, if the sole proprietor, partner, or independent 
contractor is included as an employee under a health benefit 
plan of a small employer, but does not include employees who 
work on a temporary, seasonal, or substitute basis. 
    Subd. 14.  [FINANCIALLY IMPAIRED CONDITION.] "Financially 
impaired condition" means a situation in which a health carrier 
is not insolvent, but (1) is considered by the commissioner to 
be potentially unable to fulfill its contractual obligations, or 
(2) is placed under an order of rehabilitation or conservation 
by a court of competent jurisdiction. 
    Subd. 15.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
means a policy, contract, or certificate issued by a health 
carrier to a small employer for the coverage of medical and 
hospital benefits.  Health benefit plan includes a small 
employer plan.  Health benefit plan does not include coverage 
that is: 
    (1) limited to disability or income protection coverage; 
    (2) automobile medical payment coverage; 
    (3) supplemental to liability insurance; 
    (4) designed solely to provide payments on a per diem, 
fixed indemnity, or nonexpense-incurred basis; 
    (5) credit accident and health insurance issued under 
chapter 62B; 
    (6) designed solely to provide dental or vision care; 
    (7) blanket accident and sickness insurance as defined in 
section 62A.11; 
    (8) accident-only coverage; 
    (9) long-term care insurance as defined in section 62A.46; 
    (10) issued as a supplement to Medicare, as defined in 
sections 62A.31 to 62A.44, or policies that supplement Medicare 
issued by health maintenance organizations or those policies 
governed by section 1833 or 1876 of the Federal Social Security 
Act, United States Code, title 42, section 1395, et seq., as 
amended through December 31, 1991; or 
    (11) workers' compensation insurance. 
    For the purpose of this chapter, a health benefit plan 
issued to employees of a small employer who meets the 
participation requirements of section 62L.03, subdivision 3, is 
considered to have been issued to a small employer.  A health 
benefit plan issued on behalf of a health carrier is considered 
to be issued by the health carrier. 
    Subd. 16.  [HEALTH CARRIER.] "Health carrier" means 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; a health service plan licensed under chapter 
62C; a health maintenance organization licensed under chapter 
62D; a fraternal benefit society operating under chapter 64B; a 
joint self-insurance employee health plan operating under 
chapter 62H; and a multiple employer welfare arrangement, as 
defined in United States Code, title 29, section 1002(40), as 
amended through December 31, 1991.  For the purpose of this 
chapter, companies that are affiliated companies or that are 
eligible to file a consolidated tax return must be treated as 
one carrier, except that any insurance company or health service 
plan corporation that is an affiliate of a health maintenance 
organization located in Minnesota, or any health maintenance 
organization located in Minnesota that is an affiliate of an 
insurance company or health service plan corporation, or any 
health maintenance organization that is an affiliate of another 
health maintenance organization in Minnesota, may treat the 
health maintenance organization as a separate carrier. 
    Subd. 17.  [HEALTH PLAN.] "Health plan" means a health 
benefit plan issued by a health carrier, except that it may be 
issued: 
    (1) to a small employer; 
    (2) to an employer who does not satisfy the definition of a 
small employer as defined under subdivision 26; or 
    (3) to an individual purchasing an individual or conversion 
policy of health care coverage issued by a health carrier. 
    Subd. 18.  [INDEX RATE.] "Index rate" means as to a rating 
period for small employers the arithmetic average of the 
applicable base premium rate and the corresponding highest 
premium rate. 
    Subd. 19.  [LATE ENTRANT.] "Late entrant" means an eligible 
employee or dependent who requests enrollment in a health 
benefit plan of a small employer following the initial 
enrollment period applicable to the employee or dependent under 
the terms of the health benefit plan, provided that the initial 
enrollment period must be a period of at least 30 days.  
However, an eligible employee or dependent must not be 
considered a late entrant if: 
    (1) the individual was covered under qualifying existing 
coverage at the time the individual was eligible to enroll in 
the health benefit plan, declined enrollment on that basis, and 
presents to the carrier a certificate of termination of the 
qualifying prior coverage, provided that the individual 
maintains continuous coverage; 
    (2) the individual has lost coverage under another group 
health plan due to the expiration of benefits available under 
the Consolidated Omnibus Budget Reconciliation Act of 1985, 
Public Law Number 99-272, as amended, and any state continuation 
laws applicable to the employer or carrier, provided that the 
individual maintains continuous coverage; 
    (3) the individual is a new spouse of an eligible employee, 
provided that enrollment is requested within 30 days of becoming 
legally married; 
    (4) the individual is a new dependent child of an eligible 
employee, provided that enrollment is requested within 30 days 
of becoming a dependent; 
    (5) the individual is employed by an employer that offers 
multiple health benefit plans and the individual elects a 
different plan during an open enrollment period; or 
    (6) a court has ordered that coverage be provided for a 
dependent child under a covered employee's health benefit plan 
and request for enrollment is made within 30 days after issuance 
of the court order. 
    Subd. 20.  [MCHA.] "MCHA" means the Minnesota comprehensive 
health association established under section 62E.10. 
    Subd. 21.  [MEDICAL NECESSITY.] "Medical necessity" means 
the appropriate and necessary medical and hospital services 
eligible for payment under a health benefit plan as determined 
by a health carrier. 
    Subd. 22.  [MEMBERS.] "Members" means the health carriers 
operating in the small employer market who may participate in 
the association. 
    Subd. 23.  [PREEXISTING CONDITION.] "Preexisting condition" 
means a condition manifesting in a manner that causes an 
ordinarily prudent person to seek medical advice, diagnosis, 
care, or treatment or for which medical advice, diagnosis, care, 
or treatment was recommended or received during the six months 
immediately preceding the effective date of coverage, or a 
pregnancy existing as of the effective date of coverage of a 
health benefit plan. 
    Subd. 24.  [QUALIFYING PRIOR COVERAGE OR QUALIFYING 
EXISTING COVERAGE.] "Qualifying prior coverage" or "qualifying 
existing coverage" means health benefits or health coverage 
provided under: 
    (1) a health plan, as defined in this section; 
    (2) Medicare; 
    (3) medical assistance under chapter 256B; 
    (4) general assistance medical care under chapter 256D; 
    (5) MCHA; 
    (6) a self-insured health plan; 
    (7) the health right plan established under section 
256.936, subdivision 2, when the plan includes inpatient 
hospital services as provided in section 256.936, subdivision 
2a, paragraph (c); 
    (8) a plan provided under section 43A.316; or 
    (9) a plan similar to any of the above plans provided in 
this state or in another state as determined by the commissioner.
    Subd. 25.  [RATING PERIOD.] "Rating period" means the 
12-month period for which premium rates established by a health 
carrier are assumed to be in effect, as determined by the health 
carrier.  During the rating period, a health carrier may adjust 
the rate based on the prorated change in the index rate. 
    Subd. 26.  [SMALL EMPLOYER.] "Small employer" means a 
person, firm, corporation, partnership, association, or other 
entity actively engaged in business who, on at least 50 percent 
of its working days during the preceding calendar year, employed 
no fewer than two nor more than 29 eligible employees, the 
majority of whom were employed in this state.  If a small 
employer has only two eligible employees, one employee must not 
be the spouse, child, sibling, parent, or grandparent of the 
other, except that a small employer plan may be offered through 
a domiciled association to self-employed individuals and small 
employers who are members of the association, even if the 
self-employed individual or small employer has fewer than two 
employees or the employees are family members.  Entities that 
are eligible to file a combined tax return for purposes of state 
tax laws are considered a single employer for purposes of 
determining the number of eligible employees.  Small employer 
status must be determined on an annual basis as of the renewal 
date of the health benefit plan.  The provisions of this chapter 
continue to apply to an employer who no longer meets the 
requirements of this definition until the annual renewal date of 
the employer's health benefit plan.  Where an association, 
described in section 62A.10, subdivision 1, comprised of 
employers contracts with a health carrier to provide coverage to 
its members who are small employers, the association may elect 
to be considered to be a small employer, even though the 
association provides coverage to more than 29 employees of its 
members, so long as each employer that is provided coverage 
through the association qualifies as a small employer.  An 
association's election to be considered a small employer under 
this section is not effective unless filed with the commissioner 
of commerce.  The association may revoke its election at any 
time by filing notice of revocation with the commissioner. 
    Subd. 27.  [SMALL EMPLOYER MARKET.] (a) "Small employer 
market" means the market for health benefit plans for small 
employers. 
    (b) A health carrier is considered to be participating in 
the small employer market if the carrier offers, sells, issues, 
or renews a health benefit plan to:  (1) any small employer; or 
(2) the eligible employees of a small employer offering a health 
benefit plan if, with the knowledge of the health carrier, both 
of the following conditions are met: 
    (i) any portion of the premium or benefits is paid for or 
reimbursed by a small employer; and 
    (ii) the health benefit plan is treated by the employer or 
any of the eligible employees or dependents as part of a plan or 
program for the purposes of the Internal Revenue Code, section 
106, 125, or 162. 
    Subd. 28.  [SMALL EMPLOYER PLAN.] "Small employer plan" 
means a health benefit plan issued by a health carrier to a 
small employer for coverage of the medical and hospital benefits 
described in section 62L.05. 
    Sec. 3.  [62L.03] [AVAILABILITY OF COVERAGE.] 
    Subdivision 1.  [GUARANTEED ISSUE AND REISSUE.] Every 
health carrier shall, as a condition of authority to transact 
business in this state in the small employer market, 
affirmatively market, offer, sell, issue, and renew any of its 
health benefit plans to any small employer as provided in this 
chapter.  Every health carrier participating in the small 
employer market shall make available both of the plans described 
in section 62L.05 to small employers and shall fully comply with 
the underwriting and the rate restrictions specified in this 
chapter for all health benefit plans issued to small employers.  
A health carrier may cease to transact business in the small 
employer market as provided under section 62L.09. 
    Subd. 2.  [EXCEPTIONS.] (a) No health maintenance 
organization is required to offer coverage or accept 
applications under subdivision 1 in the case of the following: 
    (1) with respect to a small employer, where the worksite of 
the employees of the small employer is not physically located in 
the health maintenance organization's approved service areas; or 
    (2) with respect to an employee, when the employee does not 
work or reside within the health maintenance organization's 
approved service areas.  
    (b) A small employer carrier shall not be required to offer 
coverage or accept applications pursuant to subdivision 1 where 
the commissioner finds that the acceptance of an application or 
applications would place the small employer carrier in a 
financially impaired condition, provided, however, that a small 
employer carrier that has not offered coverage or accepted 
applications pursuant to this paragraph shall not offer coverage 
or accept applications for any health benefit plan until 180 
days following a determination by the commissioner that the 
small employer carrier has ceased to be financially impaired. 
    Subd. 3.  [MINIMUM PARTICIPATION.] (a) A small employer 
that has at least 75 percent of its eligible employees who have 
not waived coverage participating in a health benefit plan must 
be guaranteed coverage from any health carrier participating in 
the small employer market.  The participation level of eligible 
employees must be determined at the initial offering of coverage 
and at the renewal date of coverage.  A health carrier may not 
increase the participation requirements applicable to a small 
employer at any time after the small employer has been accepted 
for coverage.  For the purposes of this subdivision, waiver of 
coverage includes only waivers due to coverage under another 
group health plan. 
    (b) A health carrier may require that small employers 
contribute a specified minimum percentage toward the cost of the 
coverage of eligible employees, so long as the requirement is 
uniformly applied for all small employers.  For the small 
employer plans, a health carrier must require that small 
employers contribute at least 50 percent of the cost of the 
coverage of eligible employees.  The health carrier must impose 
this requirement on a uniform basis for both small employer 
plans and for all small employers. 
    (c) Nothing in this section obligates a health carrier to 
issue coverage to a small employer that currently offers 
coverage through a health benefit plan from another health 
carrier, unless the new coverage will replace the existing 
coverage and not serve as one of two or more health benefit 
plans offered by the employer. 
    Subd. 4.  [UNDERWRITING RESTRICTIONS.] Health carriers may 
apply underwriting restrictions to coverage for health benefit 
plans for small employers, including any preexisting condition 
limitations, only as expressly permitted under this chapter.  
Health carriers may collect information relating to the case 
characteristics and demographic composition of small employers, 
as well as health status and health history information about 
employees of small employers.  Except as otherwise authorized 
for late entrants, preexisting conditions may be excluded by a 
health carrier for a period not to exceed 12 months from the 
effective date of coverage of an eligible employee or 
dependent.  When calculating a preexisting condition limitation, 
a health carrier shall credit the time period an eligible 
employee or dependent was previously covered by qualifying prior 
coverage, provided that the individual maintains continuous 
coverage.  Late entrants may be subject to a preexisting 
condition limitation not to exceed 18 months from the effective 
date of coverage of the late entrant.  Late entrants may also be 
excluded from coverage for a period not to exceed 18 months, 
provided that if a health carrier imposes an exclusion from 
coverage and a preexisting condition limitation, the combined 
time period for both the coverage exclusion and preexisting 
condition limitation must not exceed 18 months. 
    Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] No health 
carrier shall cancel, decline to issue, or fail to renew a 
health benefit plan as a result of the claim experience or 
health status of the small employer group.  A health carrier may 
cancel or fail to renew a health benefit plan: 
    (1) for nonpayment of the required premium; 
    (2) for fraud or misrepresentation by the small employer, 
or, with respect to coverage of an individual eligible employee 
or dependent, fraud or misrepresentation by the eligible 
employee or dependent, with respect to eligibility for coverage 
or any other material fact; 
    (3) if eligible employee participation during the preceding 
calendar year declines to less than 75 percent, subject to the 
waiver of coverage provision in subdivision 3; 
    (4) if the employer fails to comply with the minimum 
contribution percentage legally required by the health carrier; 
    (5) if the health carrier ceases to do business in the 
small employer market; or 
    (6) for any other reasons or grounds expressly permitted by 
the respective licensing laws and regulations governing a health 
carrier, including, but not limited to, service area 
restrictions imposed on health maintenance organizations under 
section 62D.03, subdivision 4, paragraph (m), to the extent that 
these grounds are not expressly inconsistent with this chapter. 
    Subd. 6.  [MCHA ENROLLEES.] Health carriers shall offer 
coverage to any eligible employee or dependent enrolled in MCHA 
at the time of the health carrier's issuance or renewal of a 
health benefit plan to a small employer.  The health benefit 
plan must require that the employer permit MCHA enrollees to 
enroll in the small employer's health benefit plan as of the 
first date of renewal of a health benefit plan occurring on or 
after July 1, 1993, or, in the case of a new group, as of the 
initial effective date of the health benefit plan.  Unless 
otherwise permitted by this chapter, health carriers must not 
impose any underwriting restrictions, including any preexisting 
condition limitations or exclusions, on any eligible employee or 
dependent previously enrolled in MCHA and transferred to a 
health benefit plan so long as continuous coverage is 
maintained, provided that the health carrier may impose any 
unexpired portion of a preexisting condition limitation under 
the person's MCHA coverage.  An MCHA enrollee is not a late 
entrant, so long as the enrollee has maintained continuous 
coverage.  
    Sec. 4.  [62L.04] [COMPLIANCE REQUIREMENTS.] 
    Subdivision 1.  [APPLICABILITY OF CHAPTER 
REQUIREMENTS.] Beginning July 1, 1993, health carriers 
participating in the small employer market must offer and make 
available any health benefit plan that they offer, including 
both of the small employer plans provided in section 62L.05, to 
all small employers who satisfy the small employer participation 
requirements specified in this chapter.  Compliance with these 
requirements is required as of the first renewal date of any 
small employer group occurring after July 1, 1993.  For new 
small employer business, compliance is required as of the first 
date of offering occurring after July 1, 1993. 
    Compliance with these requirements is required as of the 
first renewal date occurring after July 1, 1994, with respect to 
employees of a small employer who had been issued individual 
coverage prior to July 1, 1993, administered by the health 
carrier on a group basis.  Notwithstanding any other law to the 
contrary, the health carrier shall terminate any individual 
coverage for employees of small employers who satisfy the small 
employer participation requirements specified in section 62L.03 
and offer to replace it with a health benefit plan.  If the 
employer elects not to purchase a health benefit plan, the 
health carrier must offer all covered employees and dependents 
the option of maintaining their current coverage, administered 
on an individual basis, or replacement individual coverage.  
Small employer and replacement individual coverage provided 
under this subdivision must be without application of 
underwriting restrictions, provided continuous coverage is 
maintained. 
    Subd. 2.  [NEW CARRIERS.] A health carrier entering the 
small employer market after July 1, 1993, shall begin complying 
with the requirements of this chapter as of the first date of 
offering of a health benefit plan to a small employer.  A health 
carrier entering the small employer market after July 1, 1993, 
is considered to be a member of the health coverage reinsurance 
association as of the date of the health carrier's initial offer 
of a health benefit plan to a small employer. 
    Sec. 5.  [62L.05] [SMALL EMPLOYER PLAN BENEFITS.] 
    Subdivision 1.  [TWO SMALL EMPLOYER PLANS.] Each health 
carrier in the small employer market must make available to any 
small employer both of the small employer plans described in 
subdivisions 2 and 3.  Under subdivisions 2 and 3, coinsurance 
and deductibles do not apply to child health supervision 
services and prenatal services, as defined by section 62A.047.  
The maximum out-of-pocket costs for covered services must be 
$3,000 per individual and $6,000 per family per year.  The 
maximum lifetime benefit must be $500,000.  The out-of-pocket 
cost limits and the deductible amounts provided in subdivision 2 
must be adjusted on July 1 every two years, based upon changes 
in the consumer price index, as of the end of the previous 
calendar year, as determined by the commissioner of commerce.  
Adjustments must be in increments of $50 and must not be made 
unless at least that amount of adjustment is required. 
    Subd. 2.  [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The 
benefits of the deductible-type small employer plan offered by a 
health carrier must be equal to 80 percent of the eligible 
charges for health care services, supplies, or other articles 
covered under the small employer plan, in excess of an annual 
deductible which must be $500 per individual and $1,000 per 
family. 
    Subd. 3.  [COPAYMENT-TYPE SMALL EMPLOYER PLAN.] The 
benefits of the copayment-type small employer plan offered by a 
health carrier must be equal to 80 percent of the eligible 
charges for health care services, supplies, or other articles 
covered under the small employer plan, in excess of the 
following copayments: 
    (1) $15 per outpatient visit, other than to a hospital 
outpatient department or emergency room, urgent care center, or 
similar facility; 
    (2) $15 per day for the services of a home health agency or 
private duty registered nurse; 
    (3) $50 per outpatient visit to a hospital outpatient 
department or emergency room, urgent care center, or similar 
facility; and 
    (4) $300 per inpatient admission to a hospital. 
    Subd. 4.  [BENEFITS.] The medical services and supplies 
listed in this subdivision are the benefits that must be covered 
by the small employer plans described in subdivisions 2 and 3: 
    (1) inpatient and outpatient hospital services, excluding 
services provided for the diagnosis, care, or treatment of 
chemical dependency or a mental illness or condition, other than 
those conditions specified in clauses (10), (11), and (12); 
    (2) physician and nurse practitioner services for the 
diagnosis or treatment of illnesses, injuries, or conditions; 
    (3) diagnostic X-rays and laboratory tests; 
    (4) ground transportation provided by a licensed ambulance 
service to the nearest facility qualified to treat the 
condition, or as otherwise required by the health carrier; 
    (5) services of a home health agency if the services 
qualify as reimbursable services under Medicare and are directed 
by a physician or qualify as reimbursable under the health 
carrier's most commonly sold health plan for insured group 
coverage; 
    (6) services of a private duty registered nurse if 
medically necessary, as determined by the health carrier; 
    (7) the rental or purchase, as appropriate, of durable 
medical equipment, other than eyeglasses and hearing aids; 
    (8) child health supervision services up to age 18, as 
defined in section 62A.047; 
    (9) maternity and prenatal care services, as defined in 
sections 62A.041 and 62A.047; 
    (10) inpatient hospital and outpatient services for the 
diagnosis and treatment of certain mental illnesses or 
conditions, as defined by the International Classification of 
Diseases-Clinical Modification (ICD-9-CM), seventh edition 
(1990) and as classified as ICD-9 codes 295 to 299; 
    (11) ten hours per year of outpatient mental health 
diagnosis or treatment for illnesses or conditions not described 
in clause (10); 
    (12) 60 hours per year of outpatient treatment of chemical 
dependency; and 
    (13) 50 percent of eligible charges for prescription drugs, 
up to a separate annual maximum out-of-pocket expense of $1,000 
per individual for prescription drugs, and 100 percent of 
eligible charges thereafter. 
    Subd. 5.  [PLAN VARIATIONS.] (a) No health carrier shall 
offer to a small employer a health benefit plan that differs 
from the two small employer plans described in subdivisions 1 to 
4, unless the health benefit plan complies with all provisions 
of chapters 62A, 62C, 62D, 62E, 62H, and 64B that otherwise 
apply to the health carrier, except as expressly permitted by 
paragraph (b). 
    (b) As an exception to paragraph (a), a health benefit plan 
is deemed to be a small employer plan and to be in compliance 
with paragraph (a) if it differs from one of the two small 
employer plans described in subdivisions 1 to 4 only by 
providing benefits in addition to those described in subdivision 
4, provided that the health care benefit plan has an actuarial 
value that exceeds the actuarial value of the benefits described 
in subdivision 4 by no more than two percent.  "Benefits in 
addition" means additional units of a benefit listed in 
subdivision 4 or one or more benefits not listed in subdivision 
4. 
    Subd. 6.  [CHOICE PRODUCTS EXCEPTION.] Nothing in 
subdivision 1 prohibits a health carrier from offering a small 
employer plan which provides for different benefit coverages 
based on whether the benefit is provided through a primary 
network of providers or through a secondary network of providers 
so long as the benefits provided in the primary network equal 
the benefit requirements of the small employer plan as described 
in this section.  For purposes of products issued under this 
subdivision, out-of-pocket costs in the secondary network may 
exceed the out-of-pocket limits described in subdivision 1. 
    Subd. 7.  [BENEFIT EXCLUSIONS.] No medical, hospital, or 
other health care benefits, services, supplies, or articles not 
expressly specified in subdivision 4 are required to be included 
in a small employer plan.  Nothing in subdivision 4 restricts 
the right of a health carrier to restrict coverage to those 
services, supplies, or articles which are medically necessary.  
Health carriers may exclude a benefit, service, supply, or 
article not expressly specified in subdivision 4 from a small 
employer plan. 
    Subd. 8.  [CONTINUATION COVERAGE.] Small employer plans 
must include the continuation of coverage provisions required by 
the Consolidated Omnibus Budget Reconciliation Act of 1985 
(COBRA), Public Law Number 99-272, as amended through December 
31, 1991, and by state law. 
    Subd. 9.  [DEPENDENT COVERAGE.] Other state law and rules 
applicable to health plan coverage of newborn infants, dependent 
children who do not reside with the eligible employee, 
handicapped children and dependents, and adopted children apply 
to a small employer plan.  Health benefit plans that provide 
dependent coverage must define "dependent" no more restrictively 
than the definition provided in section 62L.02. 
    Subd. 10.  [MEDICAL EXPENSE REIMBURSEMENT.] Health carriers 
may reimburse or pay for medical services, supplies, or articles 
provided under a small employer plan in accordance with the 
health carrier's provider contract requirements including, but 
not limited to, salaried arrangements, capitation, the payment 
of usual and customary charges, fee schedules, discounts from 
fee-for-service, per diems, diagnostic-related groups (DRGs), 
and other payment arrangements.  Nothing in this chapter 
requires a health carrier to develop, implement, or change its 
provider contract requirements for a small employer plan.  
Coinsurance, deductibles, out-of-pocket maximums, and maximum 
lifetime benefits must be calculated and determined in 
accordance with each health carrier's standard business 
practices. 
    Subd. 11.  [PLAN DESIGN.] Notwithstanding any other law, 
regulation, or administrative interpretation to the contrary, 
health carriers may offer small employer plans through any 
provider arrangement, including, but not limited to, the use of 
open, closed, or limited provider networks.  A health carrier 
may only use product and network designs currently allowed under 
existing statutory requirements.  The provider networks offered 
by any health carrier may be specifically designed for the small 
employer market and may be modified at the carrier's election so 
long as all otherwise applicable regulatory requirements are 
met.  Health carriers may use professionally recognized provider 
standards of practice when they are available, and may use 
utilization management practices otherwise permitted by law, 
including, but not limited to, second surgical opinions, prior 
authorization, concurrent and retrospective review, referral 
authorizations, case management, and discharge planning.  A 
health carrier may contract with groups of providers with 
respect to health care services or benefits, and may negotiate 
with providers regarding the level or method of reimbursement 
provided for services rendered under a small employer plan. 
    Subd. 12.  [DEMONSTRATION PROJECTS.] Nothing in this 
chapter prohibits a health maintenance organization from 
offering a demonstration project authorized under section 62D.30.
The commissioner of health may approve a demonstration project 
which offers benefits that do not meet the requirements of a 
small employer plan if the commissioner finds that the 
requirements of section 62D.30 are otherwise met. 
    Sec. 6.  [62L.06] [DISCLOSURE OF UNDERWRITING RATING 
PRACTICES.] 
    When offering or renewing a health benefit plan, health 
carriers shall disclose in all solicitation and sales materials: 
    (1) the case characteristics and other rating factors used 
to determine initial and renewal rates; 
    (2) the extent to which premium rates for a small employer 
are established or adjusted based upon actual or expected 
variation in claim experience; 
    (3) provisions concerning the health carrier's right to 
change premium rates and the factors other than claim experience 
that affect changes in premium rates; 
    (4) provisions relating to renewability of coverage; 
    (5) the use and effect of any preexisting condition 
provisions, if permitted; and 
    (6) the application of any provider network limitations and 
their effect on eligibility for benefits. 
    Sec. 7.  [62L.07] [SMALL EMPLOYER REQUIREMENTS.] 
    Subdivision 1.  [VERIFICATION OF ELIGIBILITY.] Health 
benefit plans must require that small employers offering a 
health benefit plan maintain information verifying the 
continuing eligibility of the employer, its employees, and their 
dependents, and provide the information to health carriers on a 
quarterly basis or as reasonably requested by the health carrier.
    Subd. 2.  [WAIVERS.] Health benefit plans must require that 
small employers offering a health benefit plan maintain written 
documentation of a waiver of coverage by an eligible employee or 
dependent and provide the documentation to the health carrier 
upon reasonable request. 
    Sec. 8.  [62L.08] [RESTRICTIONS RELATING TO PREMIUM RATES.] 
    Subdivision 1.  [RATE RESTRICTIONS.] Premium rates for all 
health benefit plans sold or issued to small employers are 
subject to the restrictions specified in this section. 
    Subd. 2.  [GENERAL PREMIUM VARIATIONS.] Beginning July 1, 
1993, each health carrier must offer premium rates to small 
employers that are no more than 25 percent above and no more 
than 25 percent below the index rate charged to small employers 
for the same or similar coverage, adjusted pro rata for rating 
periods of less than one year.  The premium variations permitted 
by this subdivision must be based only on health status, claims 
experience, industry of the employer, and duration of coverage 
from the date of issue.  For purposes of this subdivision, 
health status includes refraining from tobacco use or other 
actuarially valid lifestyle factors associated with good health, 
provided that the lifestyle factor and its effect upon premium 
rates have been determined to be actuarially valid and approved 
by the commissioner. 
    Subd. 3.  [AGE-BASED PREMIUM VARIATIONS.] Beginning July 1, 
1993, each health carrier may offer premium rates to small 
employers that vary based upon the ages of the eligible 
employees and dependents of the small employer only as provided 
in this subdivision.  In addition to the variation permitted by 
subdivision 2, each health carrier may use an additional premium 
variation based upon age of up to plus or minus 50 percent of 
the index rate. 
     Subd. 4.  [GEOGRAPHIC PREMIUM VARIATIONS.] A health carrier 
may request approval by the commissioner to establish no more 
than three geographic regions and to establish separate index 
rates for each region, provided that the index rates do not vary 
between any two regions by more than twenty percent.  The 
commissioner may grant approval if the following conditions are 
met: 
    (1) the geographic regions must be applied uniformly by the 
health carrier; 
    (2) one geographic region must be based on the 
Minneapolis/St. Paul metropolitan area; 
    (3) if one geographic region is rural, the index rate for 
the rural region must not exceed the index rate for the 
Minneapolis/St. Paul metropolitan area; 
    (4) the health carrier provides actuarial justification 
acceptable to the commissioner for the proposed geographic 
variations in index rates, establishing that the variations are 
based upon differences in the cost to the health carrier of 
providing coverage. 
    Subd. 5.  [GENDER-BASED RATES PROHIBITED.] Beginning July 
1, 1993, no health carrier may determine premium rates through a 
method that is in any way based upon the gender of eligible 
employees or dependents. 
    Subd. 6.  [RATE CELLS PERMITTED.] Health carriers may use 
rate cells and must file with the commissioner the rate cells 
they use.  Rate cells must be based on the number of adults and 
children covered under the policy and may reflect the 
availability of Medicare coverage.  
    Subd. 7.  [INDEX AND PREMIUM RATE DEVELOPMENT.] In 
developing its index rates and premiums, a health carrier may 
take into account only the following factors: 
    (1) actuarially valid differences in benefit designs of 
health benefit plans; 
    (2) actuarially valid differences in the rating factors 
permitted in subdivisions 2 and 3; 
    (3) actuarially valid geographic variations if approved by 
the commissioner as provided in subdivision 4. 
    Subd. 8.  [FILING REQUIREMENT.] No later than July 1, 1993, 
and each year thereafter, a health carrier that offers, sells, 
issues, or renews a health benefit plan for small employers 
shall file with the commissioner the index rates and must 
demonstrate that all rates shall be within the rating 
restrictions defined in this chapter.  Such demonstration must 
include the allowable range of rates from the index rates and a 
description of how the health carrier intends to use demographic 
factors including case characteristics in calculating the 
premium rates. 
    Subd. 9.  [EFFECT OF ASSESSMENTS.] Premium rates must 
comply with the rating requirements of this section, 
notwithstanding the imposition of any assessments or premiums 
paid by health carriers as provided under sections 62L.13 to 
62L.22. 
    Subd. 10.  [RATING REPORT.] Beginning January 1, 1995, and 
annually thereafter, the commissioners of health and commerce 
shall provide a joint report to the legislature on the effect of 
the rating restrictions required by this section and the 
appropriateness of proceeding with additional rate reform.  Each 
report must include an analysis of the availability of health 
care coverage due to the rating reform, the equitable and 
appropriate distribution of risk and associated costs, the 
effect on the self-insurance market, and any resulting or 
anticipated change in health plan design and market share and 
availability of health carriers. 
    Sec. 9.  [62L.09] [CESSATION OF SMALL EMPLOYER BUSINESS.] 
    Subdivision 1.  [NOTICE TO COMMISSIONER.] A health carrier 
electing to cease doing business in the small employer market 
shall notify the commissioner 180 days prior to the effective 
date of the cessation.  The cessation of business does not 
include the failure of a health carrier to offer or issue new 
business in the small employer market or continue an existing 
product line, provided that a health carrier does not terminate, 
cancel, or fail to renew its current small employer business or 
other product lines.  
    Subd. 2.  [NOTICE TO EMPLOYERS.] A health carrier electing 
to cease doing business in the small employer market shall 
provide 120 days' written notice to each small employer covered 
by a health benefit plan issued by the health carrier.  A health 
carrier that ceases to write new business in the small employer 
market shall continue to be governed by this chapter with 
respect to continuing small employer business conducted by the 
carrier. 
    Subd. 3.  [REENTRY PROHIBITION.] A health carrier that 
ceases to do business in the small employer market after July 1, 
1993, is prohibited from writing new business in the small 
employer market in this state for a period of five years from 
the date of notice to the commissioner.  This subdivision 
applies to any health maintenance organization that ceases to do 
business in the small employer market in one service area with 
respect to that service area only.  Nothing in this subdivision 
prohibits an affiliated health maintenance organization from 
continuing to do business in the small employer market in that 
same service area. 
    Subd. 4.  [CONTINUING ASSESSMENT LIABILITY.] A health 
carrier that ceases to do business in the small employer market 
remains liable for assessments levied by the association as 
provided in section 62L.22. 
    Sec. 10.  [62L.10] [SUPERVISION BY COMMISSIONER.] 
    Subdivision 1.  [REPORTS.] A health carrier doing business 
in the small employer market shall file by April 1 of each year 
an annual actuarial opinion with the commissioner certifying 
that the health carrier complied with the underwriting and 
rating requirements of this chapter during the preceding year 
and that the rating methods used by the health carrier were 
actuarially sound.  A health carrier shall retain a copy of the 
opinion at its principal place of business. 
    Subd. 2.  [RECORDS.] A health carrier doing business in the 
small employer market shall maintain at its principal place of 
business a complete and detailed description of its rating 
practices and renewal underwriting practices, including 
information and documentation that demonstrate that its rating 
methods and practices are based upon commonly accepted actuarial 
assumptions and are in accordance with sound actuarial 
principles. 
    Subd. 3.  [SUBMISSIONS TO COMMISSIONER.] Subsequent to the 
annual filing, the commissioner may request information and 
documentation from a health carrier describing its rating 
practices and renewal underwriting practices, including 
information and documentation that demonstrates that a health 
carrier's rating methods and practices are in accordance with 
sound actuarial principles and the requirements of this 
chapter.  Except in cases of violations of this chapter or of 
another chapter, information received by the commissioner as 
provided under this subdivision is nonpublic.  
    Subd. 4.  [REVIEW OF PREMIUM RATES.] The commissioner shall 
regulate premium rates charged or proposed to be charged by all 
health carriers in the small employer market under section 
62A.02.  The commissioner of health has, with respect to 
carriers under that commissioner's jurisdiction, all of the 
powers of the commissioner of commerce under that section. 
    Subd. 5.  [TRANSITIONAL PRACTICES.] The commissioner shall 
disapprove index rates, premium variations, or other practices 
of a health carrier if they violate the spirit of this chapter 
and are the result of practices engaged in by the health carrier 
between the date of final enactment of this act and July 1, 
1993, where the practices engaged in were carried out for the 
purpose of evading the spirit of this chapter.  Each health 
carrier shall report to the commissioner, within 30 days and on 
a form prescribed by the commissioner, each cancellation, 
nonrenewal, or other termination of coverage of a small employer 
between the date of final enactment of this act and June 30, 
1993.  The health carrier shall provide any related information 
requested by the commissioner within the time specified in the 
request.  Any health carrier that engages in a practice of 
terminating or inducing termination of coverage of small 
employers in order to evade the effects of this act, is guilty 
of an unfair method of competition and an unfair or deceptive 
act or practice in the business of insurance and is subject to 
the remedies provided in sections 72A.17 to 72A.32. 
    Sec. 11.  [62L.11] [PENALTIES AND ENFORCEMENT.] 
    Subdivision 1.  [DISCIPLINARY PROCEEDINGS.] The 
commissioner may, by order, suspend or revoke a health carrier's 
license or certificate of authority and impose a monetary 
penalty not to exceed $25,000 for each violation of this 
chapter, including the failure to pay an assessment required by 
section 62L.22.  The notice, hearing, and appeal procedures 
specified in section 60A.051 or 62D.16, as appropriate, apply to 
the order.  The order is subject to judicial review as provided 
under chapter 14. 
    Subd. 2.  [ENFORCEMENT POWERS.] The commissioners of health 
and commerce each has for purposes of this chapter all of each 
commissioner's respective powers under other chapters that are 
applicable to their respective duties under this chapter.  
    Sec. 12.  [62L.12] [PROHIBITED PRACTICES.] 
    Subdivision 1.  [PROHIBITION ON ISSUANCE OF INDIVIDUAL 
POLICIES.] A health carrier operating in the small employer 
market shall not knowingly offer, issue, or renew an individual 
policy, subscriber contract, or certificate to an eligible 
employee or dependent of a small employer that meets the minimum 
participation requirements defined in section 62L.03, 
subdivision 3, except as authorized under subdivision 2. 
    Subd. 2.  [EXCEPTIONS.] (a) A health carrier may sell, 
issue, or renew individual conversion policies to eligible 
employees and dependents otherwise eligible for conversion 
coverage under section 62D.104 as a result of leaving a health 
maintenance organization's service area. 
    (b) A health carrier may sell, issue, or renew individual 
conversion policies to eligible employees and dependents 
otherwise eligible for conversion coverage as a result of the 
expiration of any continuation of group coverage required under 
sections 62A.146, 62A.17, 62A.21, 62C.142, 62D.101, and 62D.105. 
    (c) A health carrier may sell, issue, or renew conversion 
policies under section 62E.16 to eligible employees and 
dependents. 
    (d) A health carrier may sell, issue, or renew individual 
continuation policies to eligible employees and dependents as 
required. 
     (e) A health carrier may sell, issue, or renew individual 
coverage if the coverage is appropriate due to an unexpired 
preexisting condition limitation or exclusion applicable to the 
person under the employer's group coverage or due to the 
person's need for health care services not covered under the 
employer's group policy. 
    (f) A health carrier may sell, issue, or renew an 
individual policy, with the prior consent of the commissioner, 
if the individual has elected to buy the individual coverage not 
as part of a general plan to substitute individual coverage for 
group coverage nor as a result of any violation of subdivision 3 
or 4. 
    (g) Nothing in this subdivision relieves a health carrier 
of any obligation to provide continuation or conversion coverage 
otherwise required under federal or state law. 
    Subd. 3.  [AGENT'S LICENSURE.] An agent licensed under 
chapter 60A or section 62C.17 who knowingly and willfully breaks 
apart a small group for the purpose of selling individual 
policies to eligible employees and dependents of a small 
employer that meets the participation requirements of section 
62L.03, subdivision 3, is guilty of an unfair trade practice and 
subject to the revocation or suspension of license under section 
60A.17, subdivision 6c, or 62C.17.  The action must be by order 
and subject to the notice, hearing, and appeal procedures 
specified in section 60A.17, subdivision 6d.  The action of the 
commissioner is subject to judicial review as provided under 
chapter 14. 
    Subd. 4.  [EMPLOYER PROHIBITION.] A small employer shall 
not encourage or direct an employee or applicant to: 
    (1) refrain from filing an application for health coverage 
when other similarly situated employees may file an application 
for health coverage; 
    (2) file an application for health coverage during initial 
eligibility for coverage, the acceptance of which is contingent 
on health status, when other similarly situated employees may 
apply for health coverage, the acceptance of which is not 
contingent on health status; 
    (3) seek coverage from another carrier, including, but not 
limited to, MCHA; or 
    (4) cause coverage to be issued on different terms because 
of the health status or claims experience of that person or the 
person's dependents. 
    Subd. 5.  [SALE OF OTHER PRODUCTS.] A health carrier shall 
not condition the offer, sale, issuance, or renewal of a health 
benefit plan on the purchase by a small employer of other 
insurance products offered by the health carrier or a subsidiary 
or affiliate of the health carrier, including, but not limited 
to, life, disability, property, and general liability insurance. 
This prohibition does not apply to insurance products offered as 
a supplement to a health maintenance organization plan, 
including, but not limited to, supplemental benefit plans under 
section 62D.05, subdivision 6. 
    Sec. 13.  [62L.13] [REINSURANCE ASSOCIATION.] 
    Subdivision 1.  [CREATION.] The health coverage reinsurance 
association is established as a nonprofit corporation.  All 
health carriers in the small employer market shall be and remain 
members of the association as a condition of their authority to 
transact business.  
    Subd. 2.  [PURPOSE.] The association is established to 
provide for the fair and equitable transfer of risk associated 
with participation by a health carrier in the small employer 
market to a private reinsurance pool established and maintained 
by the association. 
    Subd. 3.  [EXEMPTIONS.] The association, its transactions, 
and all property owned by it are exempt from taxation under the 
laws of this state or any of its subdivisions, including, but 
not limited to, income tax, sales tax, use tax, and property tax.
The association may seek exemption from payment of all fees and 
taxes levied by the federal government.  Except as otherwise 
provided in this chapter, the association is not subject to the 
provisions of chapters 13, 14, 60A, 62A to 62H, and section 
471.705.  The association is not a public employer and is not 
subject to the provisions of chapters 179A and 353.  Health 
carriers who are members of the association are exempt from the 
provisions of sections 325D.49 to 325D.66 in the performance of 
their duties as members of the association. 
    Subd. 4.  [POWERS OF ASSOCIATION.] The association may 
exercise all of the powers of a corporation formed under chapter 
317A, including, but not limited to, the authority to: 
    (1) establish operating rules, conditions, and procedures 
relating to the reinsurance of members' risks; 
    (2) assess members in accordance with the provisions of 
this section and to make advance interim assessments as may be 
reasonable and necessary for organizational and interim 
operating expenses; 
    (3) sue and be sued, including taking any legal action 
necessary to recover any assessments; 
    (4) enter into contracts necessary to carry out the 
provisions of this chapter; 
    (5) establish operating, administrative, and accounting 
procedures for the operation of the association; and 
    (6) borrow money against the future receipt of premiums and 
assessments up to the amount of the previous year's assessment, 
with the prior approval of the commissioner. 
    The provisions of this chapter govern if the provisions of 
chapter 317A conflict with this chapter.  The association shall 
adopt bylaws and shall be governed in accordance with this 
chapter and chapter 317A. 
    Subd. 5.  [SUPERVISION BY COMMISSIONER.] The commissioner 
of commerce shall supervise the association in accordance with 
this chapter.  The commissioner of commerce may examine the 
association.  The association's reinsurance policy forms, its 
contracts, its premium rates, and its assessments are subject to 
the approval of the commissioner of commerce.  The association's 
policy forms, contracts, and premium rates are deemed approved 
if not disapproved by the commissioner of commerce within 60 
days after the date of filing them with the commissioner of 
commerce.  The association's assessments are deemed approved if 
not disapproved by the commissioner of commerce within 15 
business days after filing them with the commissioner of 
commerce.  The association shall notify the commissioner of all 
association or board meetings, and the commissioner or the 
commissioner's designee may attend all association or board 
meetings.  The association shall file an annual report with the 
commissioner on or before July 1 of each year, beginning July 1, 
1994, describing its activities during the preceding calendar 
year.  The report must include a financial report and a summary 
of claims paid by the association.  The annual report must be 
available for public inspection. 
    Sec. 14.  [62L.14] [BOARD OF DIRECTORS.] 
    Subdivision 1.  [COMPOSITION OF BOARD.] The association 
shall exercise its powers through a board of 13 directors.  Four 
members must be public members appointed by the commissioner.  
The public members must not be employees of or otherwise 
affiliated with any member of the association.  The nonpublic 
members of the board must be representative of the membership of 
the association and must be officers, employees, or directors of 
the members during their term of office.  No member of the 
association may have more than three members of the board.  
Directors are automatically removed if they fail to satisfy this 
qualification. 
    Subd. 2.  [ELECTION OF BOARD.] On or before July 1, 1992, 
the commissioner shall appoint an interim board of directors of 
the association who shall serve through the first annual meeting 
of the members and for the next two years.  Except for the 
public members, the commissioner's initial appointments must be 
equally apportioned among the following three categories:  
accident and health insurance companies, nonprofit health 
service plan corporations, and health maintenance organizations. 
Thereafter, members of the association shall elect the board of 
directors in accordance with this chapter and the bylaws of the 
association, subject to approval by the commissioner.  Members 
of the association may vote in person or by proxy.  The public 
members shall continue to be appointed by the commissioner.  
    Subd 3.  [TERM OF OFFICE.] The first annual meeting must be 
held by December 1, 1992.  After the initial two-year period, 
each director shall serve a three-year term, except that the 
board shall make appropriate arrangements to stagger the terms 
of the board members so that approximately one-third of the 
terms expire each year.  Each director shall hold office until 
expiration of the director's term or until the director's 
successor is duly elected or appointed and qualified, or until 
the director's death, resignation, or removal. 
    Subd. 4.  [RESIGNATION AND REMOVAL.] A director may resign 
at any time by giving written notice to the commissioner.  The 
resignation takes effect at the time the resignation is received 
unless the resignation specifies a later date.  A nonpublic 
director may be removed at any time, with cause, by the members. 
    Subd. 5.  [QUORUM.] A majority of the members of the board 
of directors constitutes a quorum for the transaction of 
business.  If a vacancy exists by reason of death, resignation, 
or otherwise, a majority of the remaining directors constitutes 
a quorum. 
    Subd. 6.  [DUTIES OF DIRECTORS.] The board of directors 
shall adopt or amend the association's bylaws.  The bylaws may 
contain any provision for the purpose of administering the 
association that is not inconsistent with this chapter.  The 
board shall manage the association in furtherance of its 
purposes and as provided in its bylaws.  On or before January 1, 
1993, the board or the interim board shall develop a plan of 
operation and reasonable operating rules to assure the fair, 
reasonable, and equitable administration of the association.  
The plan of operation must include the development of procedures 
for selecting an administering carrier, establishment of the 
powers and duties of the administering carrier, and 
establishment of procedures for collecting assessments from 
members, including the imposition of interest penalties for late 
payments of assessments.  The plan of operation must be 
submitted to the commissioner for review and approval and must 
be submitted to the members for approval at the first meeting of 
the members.  The board of directors may subsequently amend, 
change, or revise the plan of operation without approval by the 
members. 
    Subd. 7.  [COMPENSATION.] Members of the board may be 
reimbursed by the association for reasonable and necessary 
expenses incurred by them in performing their duties as 
directors, but shall not otherwise be compensated by the 
association for their services. 
    Subd. 8.  [OFFICERS.] The board may elect officers and 
establish committees as provided in the bylaws of the 
association.  Officers have the authority and duties in the 
management of the association as prescribed by the bylaws and 
determined by the board of directors. 
    Subd. 9.  [MAJORITY VOTE.] Approval by a majority of the 
board members present is required for any action of the board.  
The majority vote must include one vote from a board member 
representing an accident and health insurance company, one vote 
from a board member representing a health service plan 
corporation, one vote from a board member representing a health 
maintenance organization, and one vote from a public member. 
    Sec. 15.  [62L.15] [MEMBERS.] 
    Subdivision 1.  [ANNUAL MEETING.] The association shall 
conduct an annual meeting of the members of the association for 
the purpose of electing directors and transacting any other 
appropriate business of the membership of the association.  The 
board shall determine the date, time, and place of the annual 
meeting.  The association shall conduct its first annual member 
meeting on or before December 1, 1992. 
    Subd. 2.  [SPECIAL MEETINGS.] Special meetings of the 
members must be held whenever called by any three of the 
directors.  At least two categories must be represented among 
the directors calling a special meeting of the members.  The 
categories are accident and health insurance companies, 
nonprofit health service plan corporations, and health 
maintenance organizations.  Special meetings of the members must 
be held at a time and place designated in the notice of the 
meeting. 
    Subd. 3.  [MEMBER VOTING.] Each member's vote is a weighted 
vote and is based on each member's total insurance premiums, 
subscriber contract charges, health maintenance contract 
payments, or other health benefit plan revenue derived from, or 
on behalf of, small employers during the preceding calendar 
year, as determined by the board and approved by the 
commissioner, based on annual statements and other reports 
considered necessary by the board of directors.  
    Subd. 4.  [INITIAL MEMBER MEETING.] At least 60 days before 
the first annual meeting of the members, the commissioner shall 
give written notice to all members of the time and place of the 
member meeting.  The members shall elect directors representing 
the members, approve the initial plan of operation of the 
association, and transact any other appropriate business of the 
membership of the association. 
    Subd. 5.  [MEMBER COMPLIANCE.] All members shall comply 
with the provisions of this chapter, the association's bylaws, 
the plan of operation developed by the board of directors, and 
any other operating, administrative, or other procedures 
established by the board of directors for the operation of the 
association.  The board may request the commissioner to secure 
compliance with this chapter through the use of any enforcement 
action otherwise available to the commissioner.  
    Sec. 16.  [62L.16] [ADMINISTRATION OF ASSOCIATION.] 
    Subdivision 1.  [ADMINISTRATOR.] The association shall 
contract with a qualified entity to operate and administer the 
association.  If there is no available qualified entity, or in 
the event of a termination under subdivision 2, the association 
may directly operate and administer the reinsurance program.  
The administrator shall perform all administrative functions 
required by this chapter.  The board of directors shall develop 
administrative functions required by this chapter and written 
criteria for the selection of an administrator.  The 
administrator must be selected by the board of directors, 
subject to approval by the commissioner. 
    Subd. 2.  [TERM.] The administrator shall serve for a 
period of three years, unless the administrator requests the 
termination of its contract and the termination is approved by 
the board of directors.  The board of directors shall approve or 
deny a request to terminate within 90 days of its receipt after 
consultation with the commissioner.  A failure to make a final 
decision on a request to terminate within 90 days is considered 
an approval. 
    Subd. 3.  [DUTIES OF ADMINISTRATOR.] The association shall 
enter into a written contract with the administrator to carry 
out its duties and responsibilities.  The administrator shall 
perform all administrative functions required by this chapter 
including the: 
    (1) preparation and submission of an annual report to the 
commissioner; 
    (2) preparation and submission of monthly reports to the 
board of directors; 
    (3) calculation of all assessments and the notification 
thereof of members; 
    (4) payment of claims to health carriers following the 
submission by health carriers of acceptable claim documentation; 
and 
    (5) provision of claim reports to health carriers as 
determined by the board of directors. 
    Subd. 4.  [BID PROCESS.] The association shall issue a 
request for proposal for administration of the reinsurance 
association and shall solicit responses from health carriers 
participating in the small employer market and from other 
qualified entities.  Methods of compensation of the 
administrator must be a part of the bid process.  The 
administrator shall substantiate its cost reports consistent 
with generally accepted accounting principles. 
    Subd. 5.  [AUDITS.] The board of directors may conduct 
periodic audits to verify the accuracy of financial data and 
reports submitted by the administrator. 
    Subd. 6.  [RECORDS OF ASSOCIATION.] The association shall 
maintain appropriate records and documentation relating to the 
activities of the association.  All individual 
patient-identifying claims data and information are confidential 
and not subject to disclosure of any kind, except that a health 
carrier shall have access upon request to individual claims data 
relating to eligible employees and dependents covered by a 
health benefit plan issued by the health carrier.  All records, 
documents, and work product prepared by the association or by 
the administrator for the association are the property of the 
association.  The commissioner shall have access to the data for 
the purposes of carrying out the supervisory functions provided 
for in this chapter. 
    Sec. 17.  [62L.17] [PARTICIPATION IN THE REINSURANCE 
ASSOCIATION.] 
    Subdivision 1.  [MINIMUM STANDARDS.] The board of directors 
or the interim board shall establish minimum claim processing 
and managed care standards which must be met by a health carrier 
in order to reinsure business. 
    Subd. 2.  [PARTICIPATION.] A health carrier may elect to 
not participate in the reinsurance association through 
transferring risk only after filing an application with the 
commissioner of commerce.  The commissioner may approve the 
application after consultation with the board of directors.  In 
determining whether to approve an application, the commissioner 
shall consider whether the health carrier meets the following 
standards: 
    (1) demonstration by the health carrier of a substantial 
and established market presence; 
    (2) demonstrated experience in the small group market and 
history of rating and underwriting small employer groups; 
    (3) commitment to comply with the requirements of this 
chapter for small employers in the state or its service area; 
and 
    (4) financial ability to assume and manage the risk of 
enrolling small employer groups without the protection of the 
reinsurance. 
    Initial application for nonparticipation must be filed with 
the commissioner no later than February 1993.  The commissioner 
shall make the determination and notify the carrier no later 
than April 15, 1993. 
    Subd. 3.  [LENGTH OF PARTICIPATION.] A health carrier's 
initial election is for a period of two years.  Subsequent 
elections of participation are for five-year periods. 
    Subd. 4.  [APPEAL.] A health carrier whose application for 
nonparticipation has been rejected by the commissioner may 
appeal the decision.  The association may also appeal a decision 
of the commissioner, if approved by a two-thirds majority of the 
board.  Chapter 14 applies to all appeals. 
    Subd. 5.  [ANNUAL CERTIFICATION.] A health carrier that has 
received approval to not participate in the reinsurance 
association shall annually certify to the commissioner on or 
before December 1 that it continues to meet the standards 
described in subdivision 2. 
    Subd. 6.  [SUBSEQUENT ELECTION.] Election to participate in 
the reinsurance association must occur on or before December 31 
of each year.  If after a period of nonparticipation, the 
nonparticipating health carrier subsequently elects to 
participate in the reinsurance association, the health carrier 
retains the risk it assumed when not participating in the 
association. 
    If a participating health carrier subsequently elects to 
not participate in the reinsurance association, the health 
carrier shall cease reinsuring through the association all of 
its small employer business and is liable for any assessment 
described in section 62L.22 which has been prorated based on the 
business covered by the reinsurance mechanism during the year of 
the assessment. 
    Subd. 7.  [ELECTION MODIFICATION.] The commissioner, after 
consultation with the board, may authorize a health carrier to 
modify its election to not participate in the association at any 
time, if the risk from the carrier's existing small employer 
business jeopardizes the financial condition of the health 
carrier.  If the commissioner authorizes a health carrier to 
participate in the association, the health carrier shall retain 
the risk it assumed while not participating in the association.  
This election option may not be exercised if the health carrier 
is in rehabilitation. 
    Sec. 18.  [62L.18] [CEDING OF RISK.] 
    Subdivision 1.  [PROSPECTIVE CEDING.] For health benefit 
plans issued on or after July 1, 1993, all health carriers 
participating in the association may prospectively reinsure an 
employee or dependent within a small employer group and entire 
employer groups of seven or fewer eligible employees.  A health 
carrier must determine whether to reinsure an employee or 
dependent or entire group within 60 days of the commencement of 
the coverage of the small employer and must notify the 
association during that time period. 
    Subd. 2.  [ELIGIBILITY FOR REINSURANCE.] A health carrier 
may not reinsure existing small employer business through the 
association.  A health carrier may reinsure an employee or 
dependent who previously had coverage from MCHA who is now 
eligible for coverage through the small employer group at the 
time of enrollment as defined in section 62L.03, subdivision 6.  
A health carrier may not reinsure individuals who have existing 
individual health care coverage with that health carrier upon 
replacement of the individual coverage with group coverage as 
provided in section 62L.04, subdivision 1. 
    Subd. 3.  [REINSURANCE TERMINATION.] A health carrier may 
terminate reinsurance through the association for an employee or 
dependent or entire group on the anniversary date of coverage 
for the small employer.  If the health carrier terminates the 
reinsurance, the health carrier may not subsequently reinsure 
the individual or entire group. 
    Subd. 4.  [CONTINUING CARRIER RESPONSIBILITY.] A health 
carrier transferring risk to the association is completely 
responsible for administering its health benefit plans.  A 
health carrier shall apply its case management and claim 
processing techniques consistently between reinsured and 
nonreinsured business.  Small employers, eligible employees, and 
dependents shall not be notified that the health carrier has 
reinsured their coverage through the association. 
    Sec. 19.  [62L.19] [ALLOWED REINSURANCE BENEFITS.] 
    A health carrier may reinsure through the association only 
those benefits described in section 62L.05. 
    Sec. 20.  [62L.20] [TRANSFER OF RISK.] 
    Subdivision 1.  [REINSURANCE THRESHOLD.] A health carrier 
participating in the association may transfer up to 90 percent 
of the risk above a reinsurance threshold of $5,000 of eligible 
charges resulting from issuance of a health benefit plan to an 
eligible employee or dependent of a small employer group whose 
risk has been prospectively ceded to the association.  If the 
eligible charges exceed $50,000, a health carrier participating 
in the association may transfer 100 percent of the risk each 
policy year not to exceed 12 months. 
    Satisfaction of the reinsurance threshold must be 
determined by the board of directors based on eligible charges.  
The board may establish an audit process to assure consistency 
in the submission of charge calculations by health carriers to 
the association. 
    Subd. 2.  [CONVERSION FACTORS.] The board shall establish a 
standardized conversion table for determining equivalent charges 
for health carriers that use alternative provider reimbursement 
methods.  If a health carrier establishes to the board that the 
carrier's conversion factor is equivalent to the association's 
standardized conversion table, the association shall accept the 
health carrier's conversion factor. 
    Subd. 3.  [BOARD AUTHORITY.] The board shall establish 
criteria for changing the threshold amount or retention 
percentage.  The board shall review the criteria on an annual 
basis.  The board shall provide the members with an opportunity 
to comment on the criteria at the time of the annual review. 
    Subd. 4.  [NOTIFICATION OF TRANSFER OF RISK.] A 
participating health carrier must notify the association, within 
90 days of receipt of proof of loss, of satisfaction of a 
reinsurance threshold.  After satisfaction of the reinsurance 
threshold, a health carrier continues to be liable to its 
providers, eligible employees, and dependents for payment of 
claims in accordance with the health carrier's health benefit 
plan.  Health carriers shall not pend or delay payment of 
otherwise valid claims due to the transfer of risk to the 
association. 
    Subd. 5.  [PERIODIC STUDIES.] The board shall, on a 
biennial basis, prepare and submit a report to the commissioner 
of commerce on the effect of the reinsurance association on the 
small employer market.  The first study must be presented to the 
commissioner no later than January 1, 1995, and must 
specifically address whether there has been disruption in the 
small employer market due to unnecessary churning of groups for 
the purpose of obtaining reinsurance and whether it is 
appropriate for health carriers to transfer the risk of their 
existing small group business to the reinsurance association.  
After two years of operation, the board shall study both the 
effect of ceding both individuals and entire small groups of 
seven or fewer eligible employees to the reinsurance association 
and the composition of the board and determine whether the 
initial appointments reflect the types of health carriers 
participating in the reinsurance association and whether the 
voting power of members of the association should be weighted 
and recommend any necessary changes. 
    Sec. 21.  [62L.21] [REINSURANCE PREMIUMS.] 
    Subdivision 1.  [MONTHLY PREMIUM.] A health carrier ceding 
an individual to the reinsurance association shall be assessed a 
monthly reinsurance coverage premium that is 5.0 times the 
adjusted average market price.  A health carrier ceding an 
entire group to the reinsurance association shall be assessed a 
monthly reinsurance coverage premium that is 1.5 times the 
adjusted average market price.  The adjusted average market 
premium price must be established by the board of directors in 
accordance with its plan of operation.  The board may consider 
benefit levels in establishing the reinsurance coverage premium. 
    Subd. 2.  [ADJUSTMENT OF PREMIUM RATES.] The board of 
directors shall establish operating rules to allocate 
adjustments to the reinsurance premium charge of no more than 
minus 25 percent of the monthly reinsurance premium for health 
carriers that can demonstrate administrative efficiencies and 
cost-effective handling of equivalent risks.  The adjustment 
must be made annually on a retrospective basis.  The operating 
rules must establish objective and measurable criteria which 
must be met by a health carrier in order to be eligible for an 
adjustment.  These criteria must include consideration of 
efficiency attributable to case management, but not 
consideration of such factors as provider discounts. 
    Subd. 3.  [LIABILITY FOR PREMIUM.] A health carrier is 
liable for the cost of the reinsurance premium and may not 
directly charge the small employer for the costs.  The 
reinsurance premium may be reflected only in the rating factors 
permitted in section 62L.08, as provided in section 62L.08, 
subdivision 10. 
    Sec. 22.  [62L.22] [ASSESSMENTS.] 
    Subdivision 1.  [ASSESSMENT BY BOARD.] For the purpose of 
providing the funds necessary to carry out the purposes of the 
association, the board of directors shall assess members as 
provided in subdivisions 2, 3, and 4 at the times and for the 
amounts the board of directors finds necessary.  Assessments are 
due and payable on the date specified by the board of directors, 
but not less than 30 days after written notice to the member.  
Assessments accrue interest at the rate of six percent per year 
on or after the due date. 
    Subd. 2.  [INITIAL CAPITALIZATION.] The interim board of 
directors shall determine the initial capital operating 
requirements for the association.  The board shall assess each 
licensed health carrier $100 for the initial capital 
requirements of the association.  The assessment is due and 
payable no later than January 1, 1993. 
    Subd. 3.  [RETROSPECTIVE ASSESSMENT.] On or before July 1 
of each year, the administering carrier shall determine the 
association's net loss, if any, for the previous calendar year, 
the program expenses of administration, and other appropriate 
gains and losses.  If reinsurance premium charges are not 
sufficient to satisfy the operating and administrative expenses 
incurred or estimated to be incurred by the association, the 
board of directors shall assess each member participating in the 
association in proportion to each member's respective share of 
the total insurance premiums, subscriber contract payments, 
health maintenance organization payments, and other health 
benefit plan revenue derived from or on behalf of small 
employers during the preceding calendar year.  The assessments 
must be calculated by the board of directors based on annual 
statements and other reports considered necessary by the board 
of directors and filed by members with the association.  The 
amount of the assessment shall not exceed four percent of the 
member's small group market premium.  In establishing this 
assessment, the board shall consider a formula based on total 
small employer premiums earned and premiums earned from newly 
issued small employer plans.  A member's assessment may not be 
reduced or increased by more than 50 percent as a result of 
using that formula, which includes a reasonable cap on 
assessments on any premium category or premium classification.  
The board of directors may provide for interim assessments as it 
considers necessary to appropriately carry out the association's 
responsibilities.  The board of directors may establish 
operating rules to provide for changes in the assessment 
calculation. 
    Subd. 4.  [ADDITIONAL ASSESSMENTS.] If the board of 
directors determines that the retrospective assessment formula 
described in subdivision 3 is insufficient to meet the 
obligations of the association, the board of directors shall 
assess each member not participating in the reinsurance 
association, but which is providing health plan coverage in the 
small employer market, in proportion to each member's respective 
share of the total insurance premiums, subscriber contract 
payments, health maintenance organization payments, and other 
health benefit plan revenue derived from or on behalf of small 
employers during the preceding calendar year.  The assessment 
must be calculated by the board of directors based on annual 
statements and other reports considered necessary by the board 
of directors and filed by members with the association.  The 
amount of the assessment may not exceed one percent of the 
member's small group market premium.  Members who paid the 
retrospective assessment described in subdivision 3 are not 
subject to the additional assessment. 
    If the additional assessment is insufficient to meet the 
obligations of the association, the board of directors may 
assess members participating in the association who paid the 
retrospective assessment described in subdivision 3 up to an 
additional one percent of the member's small group market 
premium. 
    Subd. 5.  [ABATEMENT OR DEFERMENT.] The association may 
abate or defer, in whole or in part, the retrospective 
assessment of a member if, in the opinion of the commissioner, 
payment of the assessment would endanger the ability of the 
member to fulfill its contractual obligations or the member is 
placed under an order of rehabilitation, liquidation, 
receivership, or conservation by a court of competent 
jurisdiction.  In the event that a retrospective assessment 
against a member is abated or deferred, in whole or in part, the 
amount by which the assessment is abated or deferred may be 
assessed against other members in accordance with the 
methodology specified in subdivisions 3 and 4. 
    Subd. 6.  [REFUND.] The board of directors may refund to 
members, in proportion to their contributions, the amount by 
which the assets of the association exceed the amount the board 
of directors finds necessary to carry out its responsibilities 
during the next calendar year.  A reasonable amount may be 
retained to provide funds for the continuing expenses of the 
association and for future losses. 
    Subd. 7.  [APPEALS.] A health carrier may appeal to the 
commissioner of commerce within 30 days of notice of an 
assessment by the board of directors.  A final action or order 
of the commissioner is subject to judicial review in the manner 
provided in chapter 14. 
    Subd. 8.  [LIABILITY FOR ASSESSMENT.] Employer liability 
for other costs of a health carrier resulting from assessments 
made by the association under this section are limited by the 
rate spread restrictions specified in section 62L.08. 
    Sec. 23.  [62L.23] [LOSS RATIO STANDARDS.] 
    Notwithstanding section 62A.02, subdivision 3, relating to 
loss ratios, each policy or contract form used with respect to a 
health benefit plan offered, or issued in the small employer 
market, is subject, beginning July 1, 1993, to section 62A.021.  
The commissioner of health has, with respect to carriers under 
that commissioner's jurisdiction, all of the powers of the 
commissioner of commerce under that section. 
    Sec. 24.  [COMMISSIONER OF COMMERCE STUDY.] 
    The commissioner of commerce shall study and provide a 
written report and recommendations to the legislature that 
analyze the effects of this article and future measures that the 
legislature could enact to achieve the purpose set forth in 
section 62L.01, subdivision 3.  The commissioner shall study, 
report, and make recommendations on the following: 
    (1) the effects of this article on availability of 
coverage, average premium rates, variations in premium rates, 
the number of uninsured and underinsured residents of this 
state, the types of health benefit plans chosen by employers, 
and other effects on the market for health benefit plans for 
small employers; 
    (2) the desirability and feasibility of achieving the goal 
stated in section 62L.01, subdivision 3, in the small employer 
market by means of the following timetable: 
    (i) as of July 1, 1995, a reduction of the age rating bands 
to 30 percent on each side of the index rate, accompanied by a 
proportional reduction of the general premium rating bands to 15 
percent on each side of the index rate; 
    (ii) as of July 1, 1996, a reduction in the bands 
referenced in the preceding clause to 15 percent and 7.5 percent 
respectively; and 
    (iii) as of July 1, 1997, a ban on all rating bands; and 
    (3) Any other aspects of the small employer market 
considered relevant by the commissioner. 
The commissioner shall file the written report and 
recommendations with the legislature no later than December 1, 
1994. 
    Sec. 25.  [EFFECTIVE DATES.] 
    Sections 1 to 12 and 23 are effective July 1, 1993, except 
that section 10, subdivision 5, is effective the day following 
final enactment.  Sections 13 to 22 are effective the day 
following final enactment. 

                                ARTICLE 3

                      INSURANCE REFORM:  INDIVIDUAL

                        MARKET AND MISCELLANEOUS
    Section 1.  [43A.317] [PRIVATE EMPLOYERS INSURANCE 
PROGRAM.] 
    Subdivision 1.  [INTENT.] The legislature finds that the 
creation of a statewide program to provide employers with the 
advantages of a large pool for insurance purchasing would 
advance the welfare of the citizens of the state. 
    Subd. 2.  [DEFINITIONS.] (a) [SCOPE.] For the purposes of 
this section, the terms defined have the meaning given them. 
    (b) [COMMISSIONER.] "Commissioner" means the commissioner 
of employee relations. 
    (c) [ELIGIBLE EMPLOYEE.] "Eligible employee" means an 
employee eligible to participate in the program under the terms 
described in subdivision 6. 
    (d) [ELIGIBLE EMPLOYER.] "Eligible employer" means an 
employer eligible to participate in the program under the terms 
described in subdivision 5. 
    (e) [ELIGIBLE INDIVIDUAL.] "Eligible individual" means a 
person eligible to participate in the program under the terms 
described in subdivision 6. 
    (f) [EMPLOYEE.] "Employee" means a common law employee of 
an eligible employer. 
    (g) [EMPLOYER.] "Employer" means a private person, firm, 
corporation, partnership, association, unit of local government, 
or other entity actively engaged in business or public 
services.  "Employer" includes both for-profit and nonprofit 
entities.  
    (h) [PROGRAM.] "Program" means the private employers 
insurance program created by this section. 
    Subd. 3.  [ADMINISTRATION.] The commissioner shall, 
consistent with the provisions of this section, administer the 
program and determine its coverage options, funding and premium 
arrangements, contractual arrangements, and all other matters 
necessary to administer the program.  The commissioner's 
contracting authority for the program, including authority for 
competitive bidding and negotiations, is governed by section 
43A.23. 
    Subd. 4.  [ADVISORY COMMITTEE.] The commissioner shall 
establish a ten-member advisory committee that includes five 
members who represent eligible employers and five members who 
represent eligible individuals.  The committee shall advise the 
commissioner on issues related to administration of the 
program.  The committee is governed by sections 15.014 and 
15.059, and continues to exist while the program remains in 
operation. 
    Subd. 5.  [EMPLOYER ELIGIBILITY.] (a) [PROCEDURES.] All 
employers are eligible for coverage through the program subject 
to the terms of this subdivision.  The commissioner shall 
establish procedures for an employer to apply for coverage 
through the program. 
    (b) [TERM.] The initial term of an employer's coverage will 
be two years from the effective date of the employer's 
application.  After that, coverage will be automatically renewed 
for additional two-year terms unless the employer gives notice 
of withdrawal from the program according to procedures 
established by the commissioner or the commissioner gives notice 
to the employer of the discontinuance of the program.  The 
commissioner may establish conditions under which an employer 
may withdraw from the program prior to the expiration of a 
two-year term, including by reason of a midyear increase in 
health coverage premiums of 50 percent or more.  An employer 
that withdraws from the program may not reapply for coverage for 
a period of two years from its date of withdrawal. 
    (c) [MINNESOTA WORK FORCE.] An employer is not eligible for 
coverage through the program if five percent or more of its 
eligible employees work primarily outside Minnesota, except that 
an employer may apply to the program on behalf of only those 
employees who work primarily in Minnesota.  
    (d) [EMPLOYEE PARTICIPATION; AGGREGATION OF GROUPS.] An 
employer is not eligible for coverage through the program unless 
its application includes all eligible employees who work 
primarily in Minnesota, except employees who waive coverage as 
permitted by subdivision 6.  Private entities that are eligible 
to file a combined tax return for purposes of state tax laws are 
considered a single employer, except as otherwise approved by 
the commissioner. 
    (e) [PRIVATE EMPLOYER.] A private employer is not eligible 
for coverage unless it has two or more eligible employees in the 
state of Minnesota.  If an employer has only two eligible 
employees, one employee must not be the spouse, child, sibling, 
parent, or grandparent of the other.  
    (f) [MINIMUM PARTICIPATION.] The commissioner must require 
as a condition of employer eligibility that at least 75 percent 
of its eligible employees who have not waived coverage 
participate in the program.  The participation level of eligible 
employees must be determined at the initial offering of coverage 
and at the renewal date of coverage.  For purposes of this 
section, waiver of coverage includes only waivers due to 
coverage under another group health benefit plan.  
    (g) [EMPLOYER CONTRIBUTION.] The commissioner must require 
as a condition of employer eligibility that the employer 
contribute at least 50 percent toward the cost of the premium of 
the employee and may require that the contribution toward the 
cost of coverage is structured in a way that promotes price 
competition among the coverage options available through the 
program. 
    (h) [ENROLLMENT CAP.] The commissioner may limit employer 
enrollment in the program if necessary to avoid exceeding the 
program's reserve capacity. 
    Subd. 6.  [INDIVIDUAL ELIGIBILITY.] (a) [PROCEDURES.] The 
commissioner shall establish procedures for eligible employees 
and other eligible individuals to apply for coverage through the 
program. 
    (b) [EMPLOYEES.] An employer shall determine when it 
applies to the program the criteria its employees must meet to 
be eligible for coverage under its plan.  An employer may 
subsequently change the criteria annually or at other times with 
approval of the commissioner.  The criteria must provide that 
new employees become eligible for coverage after a probationary 
period of at least 30 days, but no more than 90 days. 
    (c) [OTHER INDIVIDUALS.] An employer may elect to cover 
under its plan: 
    (1) the spouse, dependent children, and dependent 
grandchildren of a covered employee; 
    (2) a retiree who is eligible to receive a pension or 
annuity from the employer and a covered retiree's spouse, 
dependent children, and dependent grandchildren; 
    (3) the surviving spouse, dependent children, and dependent 
grandchildren of a deceased employee or retiree, if the spouse, 
children, or grandchildren were covered at the time of the 
death; 
    (4) a covered employee who becomes disabled, as provided in 
sections 62A.147 and 62A.148; or 
    (5) any other categories of individuals for whom group 
coverage is required by state or federal law. 
    An employer shall determine when it applies to the program 
the criteria individuals in these categories must meet to be 
eligible for coverage.  An employer may subsequently change the 
criteria annually, or at other times with approval of the 
commissioner.  The criteria for dependent children and dependent 
grandchildren may be no more inclusive than the criteria under 
section 43A.18, subdivision 2.  This paragraph shall not be 
interpreted as relieving the program from compliance with any 
federal and state continuation of coverage requirements. 
    (d) [WAIVER AND LATE ENTRANCE.] An eligible individual may 
waive coverage at the time the employer joins the program or 
when coverage first becomes available.  The commissioner may 
establish a preexisting condition exclusion of not more than 18 
months for late entrants as defined in section 62L.02, 
subdivision 19. 
    (e) [CONTINUATION COVERAGE.] The program shall provide all 
continuation coverage required by state and federal law. 
    Subd. 7.  [COVERAGE.] Coverage is available through the 
program beginning on July 1, 1993.  At least annually, the 
commissioner shall solicit bids from carriers regulated under 
chapters 62A, 62C, and 62D, to provide coverage of eligible 
individuals.  The commissioner shall provide coverage through 
contracts with carriers, unless the commissioner receives no 
reasonable bids from carriers. 
    (a) [HEALTH COVERAGE.] Health coverage is available to all 
employers in the program.  The commissioner shall attempt to 
establish health coverage options that have strong care 
management features to control costs and promote quality and 
shall attempt to make a choice of health coverage options 
available.  Health coverage for a retiree who is eligible for 
the federal Medicare program must be administered as though the 
retiree is enrolled in Medicare parts A and B.  To the extent 
feasible as determined by the commissioner and in the best 
interests of the program, the commissioner shall model coverage 
after the plan established in section 43A.18, subdivision 2.  
Health coverage must include at least the benefits required of a 
carrier regulated under chapter 62A, 62C, or 62D for comparable 
coverage.  Coverage under this paragraph must not be provided as 
part of the health plans available to state employees. 
    (b) [OPTIONAL COVERAGES.] In addition to offering health 
coverage, the commissioner may arrange to offer dental coverage 
through the program.  Employers with health coverage may choose 
to offer dental coverage according to the terms established by 
the commissioner.  
    (c) [OPEN ENROLLMENT.] The program must meet all 
underwriting requirements of chapter 62L and must provide 
periodic open enrollments for eligible individuals for those 
coverages where a choice exists. 
    (d) [TECHNICAL ASSISTANCE.] The commissioner may arrange 
for technical assistance and referrals for eligible employers in 
areas such as health promotion and wellness, employee benefits 
structure, tax planning, and health care analysis services as 
described in section 62J.33. 
    Subd. 8.  [PREMIUMS.] (a) [PAYMENTS.] Employers enrolled in 
the program shall pay premiums according to terms established by 
the commissioner.  If an employer fails to make the required 
payments, the commissioner may cancel coverage and pursue other 
civil remedies. 
    (b) [RATING METHOD.] The commissioner shall determine the 
premium rates and rating method for the program.  The rating 
method for eligible small employers must meet or exceed the 
requirements of chapter 62L.  The rating methods must recover in 
premiums all of the ongoing costs for state administration and 
for maintenance of a premium stability and claim fluctuation 
reserve.  Premiums must be established so as to recover and 
repay within five years after July 1, 1993, any direct 
appropriations received to provide start-up administrative 
costs.  Premiums must be established so as to recover and repay 
within five years after July 1, 1993, any direct appropriations 
received to establish initial reserves. 
     (c) [TAXES AND ASSESSMENTS.] To the extent that the program 
operates as a self-insured group, the premiums paid to the 
program are not subject to the premium taxes imposed by sections 
60A.15 and 60A.198, but the program is subject to a Minnesota 
comprehensive health association assessment under section 62E.11.
    Subd. 9.  [PRIVATE EMPLOYERS INSURANCE TRUST FUND.] (a) 
[CONTENTS.] The private employer insurance trust fund in the 
state treasury consists of deposits received from eligible 
employers and individuals, contractual settlements or rebates 
relating to the program, investment income or losses, and direct 
appropriations. 
    (b) [APPROPRIATION.] All money in the fund is appropriated 
to the commissioner to pay insurance premiums, approved claims, 
refunds, administrative costs, and other costs necessary to 
administer the program. 
    (c) [RESERVES.] For any coverages for which the program 
does not contract to transfer full financial responsibility, the 
commissioner shall establish and maintain reserves:  
    (1) for claims in process, incomplete and unreported 
claims, premiums received but not yet earned, and all other 
accrued liabilities; and 
    (2) to ensure premium stability and the timely payment of 
claims in the event of adverse claims experience.  The reserve 
for premium stability and claim fluctuations must be established 
according to the standards of section 62C.09, subdivision 3, 
except that the reserve may exceed the upper limit under this 
standard until July 1, 1997.  
    (d) [INVESTMENTS.] The state board of investment shall 
invest the fund's assets according to section 11A.24.  
Investment income and losses attributable to the fund must be 
credited to the fund. 
    Subd. 10.  [PROGRAM STATUS.] The private employers 
insurance program is a state program to provide the advantages 
of a large pool to small employers for purchasing health 
coverage, other coverages, and related services from insurance 
companies, health maintenance organizations, and other 
organizations.  The program is not an insurance company.  
Coverage under this program shall be considered a certificate of 
insurance or similar evidence of coverage and is subject to all 
applicable requirements of chapters 60A, 62A, 62C, 62E, 62H, 
62L, and 72A, and is subject to regulation by the commissioner 
of commerce to the extent applicable.  Coverage is subject to 
section 471.617, subdivisions 2 and 3, and the bidding 
requirements of section 471.6161. 
    Subd. 11.  [EVALUATION.] The commissioner shall report to 
the legislature on December 15, 1995.  The report must provide a 
detailed summary of all direct and indirect administrative costs 
associated with the program, and must include an analysis of 
whether the program (1) is providing coverage to persons who 
would otherwise be unable to purchase coverage in the private 
sector; (2) will provide coverage at lower premium costs without 
ongoing state subsidy; (3) will provide coverage to persons in 
geographic areas of the state where coverage options would 
otherwise be limited; and (4) will fulfill the intent of the 
legislature. 
    Sec. 2.  [62A.011] [DEFINITIONS.] 
    Subdivision 1.  [APPLICABILITY.] For purposes of this 
chapter, the terms defined in this section have the meanings 
given. 
    Subd. 2.  [HEALTH CARRIER.] "Health carrier" means 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; a nonprofit health service plan corporation 
operating under chapter 62C; a health maintenance organization 
operating under chapter 62D; a fraternal benefit society 
operating under chapter 64B; or a joint self-insurance employee 
health plan operating under chapter 62H. 
    Subd. 3.  [HEALTH PLAN.] "Health plan" means a policy or 
certificate of accident and sickness insurance as defined in 
section 62A.01 offered by an insurance company licensed under 
chapter 60A; a subscriber contract or certificate offered by a 
nonprofit health service plan corporation operating under 
chapter 62C; a health maintenance contract or certificate 
offered by a health maintenance organization operating under 
chapter 62D; a health benefit certificate offered by a fraternal 
benefit society operating under chapter 64B; or health coverage 
offered by a joint self-insurance employee health plan operating 
under chapter 62H.  Health plan means individual and group 
coverage, unless otherwise specified. 
    Sec. 3.  Minnesota Statutes 1990, section 62A.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [FILING.] No policy of accident and 
sickness insurance health plan as defined in section 62A.011 
shall be issued or delivered to any person in this state, nor 
shall any application, rider, or endorsement be used in 
connection therewith with the health plan, until a copy of the 
its form thereof and of the classification of risks and the 
premium rates pertaining thereto to the form have been filed 
with the commissioner.  The filing for nongroup policies health 
plan forms shall include a statement of actuarial reasons and 
data to support the need for any premium rate increase.  For 
health benefit plans as defined in section 62L.02, and for 
health plans to be issued to individuals, the health carrier 
shall file with the commissioner the information required in 
section 62L.08, subdivision 8.  For group health plans for which 
approval is sought for sales only outside of the small employer 
market as defined in section 62L.02, this section applies only 
to policies or contracts of accident and sickness insurance.  
All forms intended for issuance in the individual or small 
employer market must be accompanied by a statement as to the 
expected loss ratio for the form.  Premium rates and forms 
relating to specific insureds or proposed insureds, whether 
individuals or groups, need not be filed, unless requested by 
the commissioner. 
    Sec. 4.  Minnesota Statutes 1990, section 62A.02, 
subdivision 2, is amended to read: 
    Subd. 2.  [APPROVAL.] No such policy The health plan form 
shall not be issued, nor shall any application, rider, or 
endorsement, or rate be used in connection therewith with it, 
until the expiration of 60 days after it has been so filed 
unless the commissioner shall sooner give written approval 
thereto approves it before that time.  
    Sec. 5.  Minnesota Statutes 1990, section 62A.02, 
subdivision 3, is amended to read: 
    Subd. 3.  [STANDARDS FOR DISAPPROVAL.] The commissioner 
shall, within 60 days after the filing of any form or rate, 
disapprove the form or rate: 
    (1) if the benefits provided therein are unreasonable not 
reasonable in relation to the premium charged; 
    (2) if it contains a provision or provisions which are 
unjust, unfair, inequitable, misleading, deceptive or encourage 
misrepresentation of the policy health plan form, or otherwise 
does not comply with this chapter, chapter 62L, or chapter 
72A; or 
    (3) if the proposed premium rate is excessive because the 
insurer has failed to exercise reasonable cost control or not 
adequate; or 
    (4) the actuarial reasons and data submitted do not justify 
the rate.  
    The party proposing a rate has the burden of proving by a 
preponderance of the evidence that it does not violate this 
subdivision.  
    In determining the reasonableness of a rate, the 
commissioner shall also review all administrative contracts, 
service contracts, and other agreements to determine the 
reasonableness of the cost of the contracts or agreement and 
effect of the contracts on the rate.  If the commissioner 
determines that a contract or agreement is not reasonable, the 
commissioner shall disapprove any rate that reflects any 
unreasonable cost arising out of the contract or agreement.  The 
commissioner may require any information that the commissioner 
deems necessary to determine the reasonableness of the cost. 
    For the purposes of clause (1) this subdivision, the 
commissioner shall establish by rule a schedule of minimum 
anticipated loss ratios which shall be based on (i) the type or 
types of coverage provided, (ii) whether the policy is for group 
or individual coverage, and (iii) the size of the group for 
group policies.  Except for individual policies of disability or 
income protection insurance, the minimum anticipated loss ratio 
shall not be less than 50 percent after the first year that a 
policy is in force.  All applicants for a policy shall be 
informed in writing at the time of application of the 
anticipated loss ratio of the policy.  For the purposes of this 
subdivision, "Anticipated loss ratio" means the ratio at the 
time of form filing, at the time of notice of withdrawal under 
subdivision 4a, or at the time of subsequent rate revision of 
the present value of all expected future benefits, excluding 
dividends, to the present value of all expected future 
premiums.  Nothing in this paragraph shall prohibit the 
commissioner from disapproving a form which meets the 
requirements of this paragraph but which the commissioner 
determines still provides benefits which are unreasonable in 
relation to the premium charged.  
    If the commissioner notifies an insurer which a health 
carrier that has filed any form or rate that the form it does 
not comply with the provisions of this section or sections 
62A.03 to 62A.05 and 72A.20 chapter, chapter 62L, or chapter 
72A, it shall be unlawful thereafter for the insurer health 
carrier to issue or use the form or use it in connection with 
any policy rate.  In the notice the commissioner shall specify 
the reasons for disapproval and state that a hearing will be 
granted within 20 days after request in writing by the insurer 
health carrier.  
    The 60-day period within which the commissioner is to 
approve or disapprove the form or rate does not begin to run 
until a complete filing of all data and materials required by 
statute or requested by the commissioner has been submitted.  
    However, if the supporting data is not filed within 30 days 
after a request by the commissioner, the rate is not effective 
and is presumed to be an excessive rate.  
    Sec. 6.  Minnesota Statutes 1990, section 62A.02, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [WITHDRAWAL OF APPROVAL.] The commissioner may, 
at any time after a 20-day written notice has been given to the 
insurer, withdraw approval of any form or rate that has 
previously been approved on any of the grounds stated in this 
section.  It is unlawful for the health carrier to issue a form 
or rate or use it in connection with any health plan after the 
effective date of the withdrawal of approval.  The notice of 
withdrawal of approval must advise the health carrier of the 
right to a hearing under the contested case procedures of 
chapter 14, and must specify the matters to be considered at the 
hearing.  
    The commissioner may request an health carrier to provide 
actuarial reasons and data, as well as other information, needed 
to determine if a previously approved rate continues to satisfy 
the requirements of this section.  If the requested information 
is not provided within 30 days after request by the 
commissioner, the rate is presumed to be an excessive rate.  
    Sec. 7.  Minnesota Statutes 1990, section 62A.02, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [HEARING.] The health carrier must request a 
hearing before the 20-day notice period has ended, or the 
commissioner's order is final.  A request for hearing stays the 
commissioner's order until the commissioner notifies the health 
carrier of the result of the hearing.  The commissioner's order 
may require the modification of any rate or form and may require 
continued coverage to persons covered under a health plan to 
which the disapproved form or rate applies.  
    Sec. 8.  [62A.021] [HEALTH CARE POLICY RATES.] 
    Subdivision 1.  [LOSS RATIO STANDARDS.] Notwithstanding 
section 62A.02, subdivision 3, relating to loss ratios, a health 
care policy form or certificate form shall not be delivered or 
issued for delivery to an individual or to a small employer as 
defined in section 62L.02, unless the policy form or certificate 
form can be expected, as estimated for the entire period for 
which rates are computed to provide coverage, to return to 
Minnesota policyholders and certificate holders in the form of 
aggregate benefits not including anticipated refunds or credits, 
provided under the policy form or certificate form, (1) at least 
75 percent of the aggregate amount of premiums earned in the 
case of policies issued in the small employer market, as defined 
in section 62L.02, subdivision 27; and (2) at least 65 percent 
of the aggregate amount of premiums earned in the case of 
policies issued in the individual market, calculated on the 
basis of incurred claims experience or incurred health care 
expenses where coverage is provided by a health maintenance 
organization on a service rather than reimbursement basis and 
earned premiums for the period and according to accepted 
actuarial principles and practices.  A health carrier shall 
demonstrate that the third year loss ratio is greater than or 
equal to the applicable percentage.  Assessments by the 
reinsurance association created in chapter 62L and any types of 
taxes, surcharges, or assessments created by this act or created 
on or after the date of final enactment of this act are included 
in the calculation of incurred claims experience or incurred 
health care expenses.  The applicable percentage for policy 
forms and certificate forms issued in the small employer market, 
as defined in section 62L.02, increases by one percentage point 
on July 1 of each year, until an 80 percent loss ratio is 
reached on July 1, 1998.  The applicable percentage for policy 
forms and certificate forms issued in the individual market 
increases by one percentage point on July 1 of each year, until 
a 70 percent loss ratio is reached on July 1, 1998.  Premiums 
earned and claims incurred in markets other than the small 
employer and individual markets are not relevant for purposes of 
this section.  
    Notwithstanding section 645.26, any act enacted at this 
session that amends or repeals section 62A.135 or that otherwise 
changes the loss ratios provided in that section is void. 
    All filings of rates and rating schedules shall demonstrate 
that actual expected claims in relation to premiums comply with 
the requirements of this section when combined with actual 
experience to date.  Filings of rate revisions shall also 
demonstrate that the anticipated loss ratio over the entire 
future period for which the revised rates are computed to 
provide coverage can be expected to meet the appropriate loss 
ratio standards, and aggregate loss ratio from inception of the 
policy form or certificate form shall equal or exceed the 
appropriate loss ratio standards. 
    A health carrier that issues health care policies and 
certificates to individuals or to small employers, as defined in 
section 62L.02, in this state shall file annually its rates, 
rating schedule, and supporting documentation including ratios 
of incurred losses to earned premiums by policy form or 
certificate form duration for approval by the commissioner 
according to the filing requirements and procedures prescribed 
by the commissioner.  The supporting documentation shall also 
demonstrate in accordance with actuarial standards of practice 
using reasonable assumptions that the appropriate loss ratio 
standards can be expected to be met over the entire period for 
which rates are computed.  The demonstration shall exclude 
active life reserves.  An expected third-year loss ratio which 
is greater than or equal to the applicable percentage shall be 
demonstrated for policy forms or certificate forms in force less 
than three years.  If the data submitted does not confirm that 
the health carrier has satisfied the loss ratio requirements of 
this section, the commissioner shall notify the health carrier 
in writing of the deficiency.  The health carrier shall have 30 
days from the date of the commissioner's notice to file amended 
rates that comply with this section.  If the health carrier 
fails to file amended rates within the prescribed time, the 
commissioner shall order that the health carrier's filed rates 
for the nonconforming policy form or certificate form be reduced 
to an amount that would have resulted in a loss ratio that 
complied with this section had it been in effect for the 
reporting period of the supplement.  The health carrier's 
failure to file amended rates within the specified time or the 
issuance of the commissioner's order amending the rates does not 
preclude the health carrier from filing an amendment of its 
rates at a later time.  The commissioner shall annually make the 
submitted data available to the public at a cost not to exceed 
the cost of copying.  The data must be compiled in a form useful 
for consumers who wish to compare premium charges and loss 
ratios. 
    Each sale of a policy or certificate that does not comply 
with the loss ratio requirements of this section is an unfair or 
deceptive act or practice in the business of insurance and is 
subject to the penalties in sections 72A.17 to 72A.32. 
    For purposes of this section, health care policies issued 
as a result of solicitations of individuals through the mail or 
mass media advertising, including both print and broadcast 
advertising, shall be treated as individual policies.  
    For purposes of this section, (1) "health care policy" or 
"health care certificate" is a health plan as defined in section 
62A.011; and (2) "health carrier" has the meaning given in 
section 62A.011 and includes all health carriers delivering or 
issuing for delivery health care policies or certificates in 
this state or offering these policies or certificates to 
residents of this state.  
    Subd. 2.  [COMPLIANCE AUDIT.] The commissioner has the 
authority to audit any health carrier to assure compliance with 
this section.  Health carriers shall retain at their principal 
place of business information necessary for the commissioner to 
perform compliance audits. 
    Sec. 9.  [62A.302] [COVERAGE OF DEPENDENTS.] 
    Subdivision 1.  [SCOPE OF COVERAGE.] This section applies 
to all health plans as defined in section 62A.011. 
    Subd. 2.  [REQUIRED COVERAGE.] Every health plan included 
in subdivision 1 that provides dependent coverage must define 
"dependent" no more restrictively than the definition provided 
in section 62L.02. 
    Sec. 10.  [62A.303] [PROHIBITION; SEVERING OF GROUPS.] 
    Section 62L.12, subdivisions 1, 2, 3, and 4, apply to all 
employer group health plans, as defined in section 62A.011, 
regardless of the size of the group. 
    Sec. 11.  Minnesota Statutes 1991 Supplement, section 
62A.31, subdivision 1, is amended to read: 
    Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
group policy, certificate, subscriber contract issued by a 
health service plan corporation regulated under chapter 62C, or 
other evidence of accident and health insurance the effect or 
purpose of which is to supplement Medicare coverage issued or 
delivered in this state or offered to a resident of this state 
shall be sold or issued to an individual covered by Medicare 
unless the following requirements are met:  
    (a) The policy must provide a minimum of the coverage set 
out in subdivision 2; 
    (b) The policy must cover preexisting conditions during the 
first six months of coverage if the insured was not diagnosed or 
treated for the particular condition during the 90 days 
immediately preceding the effective date of coverage; 
    (c) The policy must contain a provision that the plan will 
not be canceled or nonrenewed on the grounds of the 
deterioration of health of the insured; 
    (d) Before the policy is sold or issued, an offer of both 
categories of Medicare supplement insurance has been made to the 
individual, together with an explanation of both coverages; 
    (e) An outline of coverage as provided in section 62A.39 
must be delivered at the time of application and prior to 
payment of any premium; 
    (f)(1) The policy must provide that benefits and premiums 
under the policy shall be suspended at the request of the 
policyholder for the period, not to exceed 24 months, in which 
the policyholder has applied for and is determined to be 
entitled to medical assistance under title XIX of the Social 
Security Act, but only if the policyholder notifies the issuer 
of the policy within 90 days after the date the individual 
becomes entitled to this assistance; 
     (2) If suspension occurs and if the policyholder or 
certificate holder loses entitlement to this medical assistance, 
the policy shall be automatically reinstated, effective as of 
the date of termination of this entitlement, if the policyholder 
provides notice of loss of the entitlement within 90 days after 
the date of the loss; 
     (3) The policy must provide that upon reinstatement (i) 
there is no additional waiting period with respect to treatment 
of preexisting conditions, (ii) coverage is provided which is 
substantially equivalent to coverage in effect before the date 
of the suspension, and (iii) premiums are classified on terms 
that are at least as favorable to the policyholder or 
certificate holder as the premium classification terms that 
would have applied to the policyholder or certificate holder had 
coverage not been suspended; 
     (g) The written statement required by an application for 
Medicare supplement insurance pursuant to section 62A.43, 
subdivision 1, shall be made on a form, approved by the 
commissioner, that states that counseling services may be 
available in the state to provide advice concerning the purchase 
of Medicare supplement policies and enrollment under the 
Medicaid program; 
    (h) No issuer of Medicare supplement policies, including 
policies that supplement Medicare issued by health maintenance 
organizations or those policies governed by section 1833 or 1876 
of the federal Social Security Act, United States Code, title 
42, section 1395, et seq., in this state may impose preexisting 
condition limitations or otherwise deny or condition the 
issuance or effectiveness of any Medicare supplement insurance 
policy form available for sale in this state, nor may it 
discriminate in the pricing of such a policy, because of the 
health status, claims experience, receipt of health care, or 
medical condition of an applicant where an application for such 
insurance is submitted during the six-month period beginning 
with the first month in which an individual first enrolled for 
benefits under Medicare Part B; 
    (i) If a Medicare supplement policy replaces another 
Medicare supplement policy, the issuer of the replacing policy 
shall waive any time periods applicable to preexisting 
conditions, waiting periods, elimination periods, and 
probationary periods in the new Medicare supplement policy for 
similar benefits to the extent the time was spent under the 
original policy; 
    (j) The policy has been filed with and approved by the 
department as meeting all the requirements of sections 62A.31 to 
62A.44; and 
    (k) The policy guarantees renewability.  
     Only the following standards for renewability may be used 
in Medicare supplement insurance policy forms. 
     No issuer of Medicare supplement insurance policies may 
cancel or nonrenew a Medicare supplement policy or certificate 
for any reason other than nonpayment of premium or material 
misrepresentation.  
     If a group Medicare supplement insurance policy is 
terminated by the group policyholder and is not replaced as 
provided in this clause, the issuer shall offer certificate 
holders an individual Medicare supplement policy which, at the 
option of the certificate holder, provides for continuation of 
the benefits contained in the group policy; or provides for such 
benefits and benefit packages as otherwise meet the requirements 
of this clause.  
     If an individual is a certificate holder in a group 
Medicare supplement insurance policy and the individual 
terminates membership in the group, the issuer of the policy 
shall offer the certificate holder the conversion opportunities 
described in this clause; or offer the certificate holder 
continuation of coverage under the group policy. 
     (l) Each health maintenance organization, health service 
plan corporation, insurer, or fraternal benefit society that 
sells coverage that supplements Medicare coverage shall 
establish a separate community rate for that coverage.  
Beginning January 1, 1993, no coverage that supplements Medicare 
or that is governed by section 1833 or 1876 of the federal 
Social Security Act, United States Code, title 42, section 1395, 
et seq., may be offered, issued, sold, or renewed to a Minnesota 
resident, except at the community rate required by this 
paragraph. 
    For coverage that supplements Medicare and for the Part A 
rate calculation for plans governed by section 1833 of the 
federal Social Security Act, United States Code, title 42, 
section 1395, et seq., the community rate may take into account 
only the following factors: 
    (1) actuarially valid differences in benefit designs or 
provider networks; 
    (2) geographic variations in rates if preapproved by the 
commissioner of commerce; and 
    (3) premium reductions in recognition of healthy lifestyle 
behaviors, including but not limited to, refraining from the use 
of tobacco.  Premium reductions must be actuarially valid and 
must relate only to those healthy lifestyle behaviors that have 
a proven positive impact on health.  Factors used by the health 
carrier making this premium reduction must be filed with and 
approved by the commissioner. 
    Sec. 12.  [62A.65] [INDIVIDUAL MARKET REGULATION.] 
    Subdivision 1.  [APPLICABILITY.] No health carrier, as 
defined in chapter 62L, shall offer, sell, issue, or renew any 
individual policy of accident and sickness coverage, as defined 
in section 62A.01, subdivision 1, any individual subscriber 
contract regulated under chapter 62C, any individual health 
maintenance contract regulated under chapter 62D, any individual 
health benefit certificate regulated under chapter 64B, or any 
individual health coverage provided by a multiple employer 
welfare arrangement, to a Minnesota resident except in 
compliance with this section.  For purposes of this section, 
"health benefit plan" has the meaning given in chapter 62L, 
except that the term means individual coverage, including family 
coverage, rather than employer group coverage.  This section 
does not apply to the comprehensive health association 
established in section 62E.10 or to coverage described in 
section 62A.31, subdivision 1, paragraph (h), or to long-term 
care policies as defined in section 62A.46, subdivision 2. 
    Subd. 2.  [GUARANTEED RENEWAL.] No health benefit plan may 
be offered, sold, issued, or renewed to a Minnesota resident 
unless the health benefit plan provides that the plan is 
guaranteed renewable at a premium rate that does not take into 
account the claims experience or any change in the health status 
of any covered person that occurred after the initial issuance 
of the health benefit plan to the person.  The premium rate upon 
renewal must also otherwise comply with this section.  A health 
benefit plan may be subject to refusal to renew only under the 
conditions provided in chapter 62L. 
    Subd. 3.  [PREMIUM RATE RESTRICTIONS.] No health benefit 
plan may be offered, sold, issued, or renewed to a Minnesota 
resident unless the premium rate charged is determined in 
accordance with the rating and premium restrictions provided 
under chapter 62L, except the minimum loss ratio applicable to 
individual coverage is as provided in section 62A.021.  All 
provisions of chapter 62L apply to rating and premium 
restrictions in the individual market, unless clearly 
inapplicable to the individual market. 
    Subd. 4.  [GENDER RATING PROHIBITED.] No health benefit 
plan offered, sold, issued, or renewed to a Minnesota resident 
may determine the premium rate or any other underwriting 
decision, including initial issuance, on the gender of any 
person covered or to be covered under the health benefit plan. 
    Subd. 5.  [PORTABILITY OF COVERAGE.] (a) No health benefit 
plan may be offered, sold, issued, or renewed to a Minnesota 
resident that contains a preexisting condition limitation or 
exclusion, unless the limitation or exclusion would be permitted 
under chapter 62L.  The individual may be treated as a late 
entrant, as defined in chapter 62L, unless the individual has 
maintained continuous coverage as defined in chapter 62L.  An 
individual who has maintained continuous coverage may be 
subjected to a one-time preexisting condition limitation as 
permitted under chapter 62L for persons who are not late 
entrants, at the time that the individual first is covered by 
individual coverage.  Thereafter, the person must not be subject 
to any preexisting condition limitation, except an unexpired 
portion of a limitation under prior coverage, so long as the 
individual maintains continuous coverage. 
    (b) A health carrier must offer individual coverage to any 
individual previously covered under a group health benefit plan 
issued by that health carrier, so long as the individual 
maintained continuous coverage as defined in chapter 62L.  
Coverage issued under this paragraph must not contain any 
preexisting condition limitation or exclusion, except for any 
unexpired limitation or exclusion under the previous coverage.  
The initial premium rate for the individual coverage must comply 
with subdivision 3.  The premium rate upon renewal must comply 
with subdivision 2. 
    Subd. 6.  [GUARANTEED ISSUE NOT REQUIRED.] Nothing in this 
section requires a health carrier to initially issue a health 
benefit plan to a Minnesota resident, except as otherwise 
expressly provided in subdivision 4 or 5. 
    Sec. 13.  Minnesota Statutes 1990, section 62E.02, 
subdivision 23, is amended to read: 
    Subd. 23.  "Contributing member" means those companies 
operating pursuant to regulated under chapter 62A and offering, 
selling, issuing, or renewing policies or contracts of accident 
and health insurance or; health maintenance organizations and 
regulated under chapter 62D; nonprofit health service plan 
corporations incorporated regulated under chapter 62C or; 
fraternal benefit society operating societies regulated under 
chapter 64B; the private employers insurance program established 
in section 43A.317, effective July 1, 1993; and joint 
self-insurance plans regulated under chapter 62H.  For the 
purposes of determining liability of contributing members 
pursuant to section 62E.11 payments received from or on behalf 
of Minnesota residents for coverage by a health maintenance 
organization shall be considered to be accident and health 
insurance premiums. 
    Sec. 14.  Minnesota Statutes 1990, section 62E.10, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION; TAX EXEMPTION.] There is 
established a comprehensive health association to promote the 
public health and welfare of the state of Minnesota with 
membership consisting of all insurers,; self-insurers,; 
fraternals; joint self-insurance plans regulated under chapter 
62H; the private employers insurance program established in 
section 43A.317, effective July 1, 1993; and health maintenance 
organizations licensed or authorized to do business in this 
state.  The comprehensive health association shall be exempt 
from taxation under the laws of this state and all property 
owned by the association shall be exempt from taxation. 
    Sec. 15.  Minnesota Statutes 1990, section 62E.11, 
subdivision 9, is amended 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 62D.121; shall pay a special assessment 
to the state plan based upon the number of terminated 
individuals who join the comprehensive health insurance plan as 
authorized under section 62E.14, subdivisions 1, paragraph (d), 
and 6.  Such a 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. 16.  Minnesota Statutes 1990, section 62E.11, is 
amended by adding a subdivision to read: 
    Subd. 12.  [FUNDING.] Notwithstanding subdivision 5, the 
claims expenses and operating and administrative expenses of the 
association incurred on or after January 1, 1994 shall be paid 
from the health care access account established in section 
16A.724, to the extent appropriated for that purpose by the 
legislature.  Any such expenses not paid from that account shall 
be paid as otherwise provided in this section.  All contributing 
members shall adjust their premium rates to fully reflect 
funding provided under this subdivision.  The commissioner of 
commerce or the commissioner of health, as appropriate, shall 
require contributing members to prove compliance with this rate 
adjustment requirement. 
    Sec. 17.  [62E.141] [INCLUSION IN EMPLOYER-SPONSORED PLAN.] 
    No employee, or dependent of an employee, of an employer 
who offers a health benefit plan, under which the employee or 
dependent is eligible to enroll under chapter 62L, is eligible 
to enroll, or continue to be enrolled, in the comprehensive 
health association, except for enrollment or continued 
enrollment necessary to cover conditions that are subject to an 
unexpired preexisting condition limitation or exclusion under 
the employer's health benefit plan.  This section does not apply 
to persons enrolled in the comprehensive health association as 
of June 30, 1993. 
    Sec. 18.  Minnesota Statutes 1990, section 62H.01, is 
amended to read: 
    62H.01 [JOINT SELF-INSURANCE EMPLOYEE HEALTH PLAN.] 
    Any three two or more employers, excluding the state and 
its political subdivisions as described in section 471.617, 
subdivision 1, who are authorized to transact business in 
Minnesota may jointly self-insure employee health, dental, or 
short-term disability benefits.  Joint plans must have a minimum 
of 250 covered employees and meet all conditions and terms of 
sections 62H.01 to 62H.08.  Joint plans covering employers not 
resident in Minnesota must meet the requirements of sections 
62H.01 to 62H.08 as if the portion of the plan covering 
Minnesota resident employees was treated as a separate plan.  A 
plan may cover employees resident in other states only if the 
plan complies with the applicable laws of that state. 
    A multiple employer welfare arrangement as defined in 
United States Code, title 29, section 1002(40)(a), is subject to 
this chapter to the extent authorized by the Employee Retirement 
Income Security Act of 1974, United States Code, title 29, 
sections 1001 et seq.  
    Sec. 19.  [REQUEST FOR ERISA EXEMPTION.] 
    The commissioner of commerce shall request and diligently 
pursue an exemption from the federal preemption of state laws 
relating to health coverage provided under employee welfare 
benefit plans under the Employee Retirement Income Security Act 
of 1974 (ERISA), United States Code, title 29, section 1144.  
The scope of the exemption should permit the state to: 
    (1) require that employers participate in a state payroll 
withholding system designed to pay for health coverage for 
employees and dependents; 
    (2) regulate self-insured health plans to the same extent 
as insurance companies; and 
    (3) enact or adopt other state laws relating to health 
coverage that would, in the judgment of the commissioner of 
commerce, further the public policies of this state. 
    In determining the scope of the exemption request and in 
requesting and pursuing the exemption, the commissioner of 
commerce shall seek the advice and assistance of the legislative 
commission on health care access.  The commissioner shall report 
in writing to that commission at least quarterly regarding the 
status of the exemption request. 
    Sec. 20.  [COMMISSIONER OF COMMERCE STUDY.] 
    The commissioner of commerce shall study the operation of 
the individual market and shall file a report and 
recommendations with the legislature, no later than December 15, 
1992.  The study, report, and recommendations must: 
    (1) evaluate the extent to which the individual market and 
the state's regulation of it can achieve the goals provided in 
Minnesota Statutes, section 62L.01, subdivision 3; 
    (2) evaluate the need for and feasibility of a guaranteed 
issue requirement in the individual market; 
    (3) make recommendations regarding the future of the 
comprehensive health association.  
    Sec. 21.  [REVIEW OF STANDARDIZED POLICY FORMS.] 
    The commissioner of commerce shall review the health care 
policies currently in use in the state, other than specialized 
and limited scope products such as dental insurance and hospital 
indemnity products, and make recommendations to the legislature 
by February 1, 1993, relating to standardized health care policy 
forms to be used by all insurers, health service plans, or other 
entities regulated under Minnesota Statutes, chapter 62A, 62C, 
62E, or 62H. 
    Sec. 22.  [STUDY OF HEALTHY LIFESTYLE PREMIUM REDUCTIONS.] 
    The commissioner of commerce shall study and make 
recommendations to the legislature regarding whether health 
benefits plans, as defined in Minnesota Statutes, section 
62L.02, but including both individual and group plans, should be 
permitted or required to offer premium discounts in recognition 
of and to encourage healthy lifestyle behaviors.  The 
commissioner shall file the recommendations with the legislature 
on or before December 15, 1992.  The commissioner shall make 
recommendations regarding: 
    (1) the types of lifestyle behaviors, including but not 
limited to, nonuse of tobacco, nonuse of alcohol, and regular 
exercise appropriate to the person's age and health status, that 
should be eligible for premium discounts; 
    (2) the level or amounts of premium discounts that should 
be permitted or required, including appropriateness of premium 
discounts of up to 25 percent of the premium; 
    (3) the actuarial justification that the commissioner 
should require for premium reductions; 
    (4) the extent to which health carriers can monitor 
compliance with promised lifestyle behaviors and whether new 
legislation could increase the monitoring ability or reduce its 
cost; and 
    (5) any favorable or adverse impacts on the individual or 
small group market.  Any data on individuals collected under 
this section and received by the commissioner, which has not 
previously been public data, is private data on individuals. 
    This section shall not be interpreted as prohibiting any 
premium discounts approved under current law by the commissioner 
of commerce or by the commissioner of health or permitted under 
this act.  
    Sec. 23.  [REPEALER.] 
    Minnesota Statutes 1990, sections 62A.02, subdivisions 4 
and 5, are repealed.  
    Sec. 24.  [EFFECTIVE DATE.] 
    Section 11 is effective July 30, 1992.  Sections 1 to 10, 
12, 15, 16, 17, 18, and 23 are effective July 1, 1993, except 
that section 1, subdivision 9, is effective the day following 
final enactment.  Sections 19, 20, 21, and 22 are effective the 
day following final enactment. 

                                ARTICLE 4

                    CHILDREN'S HEALTH PLAN EXPANSION
    Section 1.  [256.362] [REPORTS AND IMPLEMENTATION.] 
    Subdivision 1.  [WELLNESS COMPONENT.] The commissioners of 
human services and health shall recommend to the legislature, by 
January 1, 1993, methods to incorporate discounts for wellness 
factors of up to 25 percent into the health right plan premium 
sliding scale.  Beginning October 1, 1992, the commissioner of 
human services shall inform health right plan enrollees of the 
future availability of the wellness discount, and shall 
encourage enrollees to incorporate wellness factors into their 
lifestyles. 
    Subd. 2.  [FEDERAL HEALTH INSURANCE CREDIT.] By October 1, 
1992, the commissioners of human services and revenue shall 
apply for any federal waivers or approvals necessary to allow 
enrollees in state health care programs to assign the federal 
health insurance credit component of the earned income tax 
credit to the state. 
    Subd. 3.  [COORDINATION OF MEDICAL ASSISTANCE AND THE 
HEALTH RIGHT PLAN.] The commissioner shall develop and implement 
a plan to combine medical assistance and health right plan 
application and eligibility procedures.  The plan may include 
the following changes:  (1) use of a single mail-in application; 
(2) elimination of the requirement for personal interviews; (3) 
postponing notification of paternity disclosure requirements; 
(4) modifying verification requirements for pregnant women and 
children; (5) using shorter forms for recertifying eligibility; 
(6) expedited and more efficient eligibility determinations for 
applicants; (7) expanded outreach efforts, including combined 
marketing of the two plans; and (8) other changes that improve 
access to services provided by the two programs.  The plan may 
include seeking the following changes in federal law:  (1) 
extension and expansion of exemptions for different eligibility 
groups from Medicaid quality control sanctions; (2) changing 
requirements for the redetermination of eligibility; (3) 
eliminating asset tests for all children; and (4) other changes 
that improve access to services provided by the two programs.  
The commissioner shall seek any necessary federal approvals, and 
any necessary changes in federal law.  The commissioner shall 
implement each element of the plan as federal approval is 
received, and shall report to the legislature by January 1, 
1993, on progress in implementing this plan. 
    Subd. 4.  [PLAN FOR MANAGED CARE.] By January 1, 1993, the 
commissioner of human services shall present a plan to the 
legislature for providing all medical assistance and health 
right plan services through managed care arrangements.  The 
commissioner shall apply to the secretary of health and human 
services for any necessary federal waivers or approvals, and 
shall begin to implement the plan for managed care upon receipt 
of the federal waivers or approvals. 
    Subd. 5.  [REPORT ON PURCHASES AT FULL COST.] By January 1, 
1994, the commissioner shall report to the legislature on the 
effect on average overall premium cost for the health right plan 
of allowing families who are not eligible for a subsidy to 
enroll in the health right plan at 100 percent of premium cost.  
By January 1, 1995, the commissioner shall report to the 
legislature on the effect on average overall premium cost for 
the health right plan of allowing individuals who are not 
eligible for a subsidy to enroll in the health right plan at 100 
percent of premium cost.  The commissioner shall recommend 
whether enrollment for this group should begin. 
    Sec. 2.  Minnesota Statutes 1990, section 256.936, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] For purposes of this section 
the following terms shall have the meanings given them: 
    (a) "Eligible persons" means children who are one year of 
age or older but less than 18 years of age who have gross family 
incomes that are equal to or less than 185 percent of the 
federal poverty guidelines and who are not eligible for medical 
assistance under chapter 256B or general assistance medical care 
under chapter 256D and who are not otherwise insured for the 
covered services.  The period of eligibility extends from the 
first day of the month in which the child's first birthday 
occurs to the last day of the month in which the child becomes 
18 years old. 
    (b) "Covered services" means children's health services. 
    (c) "Children's health services" means the health services 
reimbursed under chapter 256B, with the exception of inpatient 
hospital services, special education services, private duty 
nursing services, orthodontic services, medical transportation 
services, personal care assistant and case management services, 
hospice care services, nursing home or intermediate care 
facilities services, inpatient mental health services, 
outpatient mental health services in excess of $1,000 per 
enrolled child per 12-month eligibility period, and chemical 
dependency services.  Outpatient mental health services covered 
under the children's health plan are limited to diagnostic 
assessments, psychological testing, explanation of findings, and 
individual, family, and group psychotherapy. 
    (d) "Eligible providers" means those health care providers 
who provide children's covered health services to medical 
assistance recipients under rules established by the 
commissioner for that program.  Reimbursement under this section 
shall be at the same rates and conditions established for 
medical assistance. 
    (e) (b) "Commissioner" means the commissioner of human 
services. 
    (f) (c) "Gross family income" for farm and nonfarm 
self-employed means income calculated using as the baseline the 
adjusted gross income reported on the applicant's federal income 
tax form for the previous year and adding back in reported 
depreciation, carryover loss, and net operating loss amounts 
that apply to the business in which the family is currently 
engaged.  Applicants shall report the most recent financial 
situation of the family if it has changed from the period of 
time covered by the federal income tax form.  The report may be 
in the form of percentage increase or decrease. 
    Sec. 3.  Minnesota Statutes 1990, section 256.936, 
subdivision 2, is amended to read: 
    Subd. 2.  [PLAN ADMINISTRATION.] The children's health 
right plan is established to promote access to 
appropriate primary health care services to assure healthy 
children and adults.  The commissioner shall establish an office 
for the state administration of this plan.  The plan shall be 
used to provide children's covered health services for eligible 
persons.  Payment for these services shall be made to all 
eligible providers.  The commissioner may shall adopt rules to 
administer this section the health right plan.  The commissioner 
shall establish marketing efforts to encourage potentially 
eligible persons to receive information about the program and 
about other medical care programs administered or supervised by 
the department of human services.  A toll-free telephone number 
must be used to provide information about medical programs and 
to promote access to the covered services.  The commissioner 
shall manage spending for the health right plan in a manner that 
maintains a minimum reserve equal to five percent of the 
expected cost of state premium subsidies.  The commissioner must 
make a quarterly assessment of the expected expenditures for the 
covered services and the appropriation for the remainder of the 
current fiscal year and for the following two fiscal 
years.  Based on this assessment the commissioner may limit 
enrollments and target former aid to families with dependent 
children recipients.  If sufficient money is not available to 
cover all costs incurred in one quarter, the commissioner may 
seek an additional authorization for funding from the 
legislative advisory committee.  The estimated expenditure shall 
be compared to an estimate of the revenues that will be 
deposited in the health care access fund.  Based on this 
comparison, and after consulting with the chairs of the house 
appropriations committee and the senate finance committee, and 
the legislative commission on health care access, the 
commissioner shall make adjustments as necessary to ensure that 
expenditures remain within the limits of available revenues.  
The adjustments the commissioner may use must be implemented in 
this order:  first, stop enrollment of single adults and 
households without children; second, upon 45 days' notice, stop 
coverage of single adults and households without children 
already enrolled in the health right plan; third, upon 90 days' 
notice, decrease the premium subsidy amounts by ten percent for 
families with gross annual income above 200 percent of the 
federal poverty guidelines; fourth, upon 90 days' notice, 
decrease the premium subsidy amounts by ten percent for families 
with gross annual income at or below 200 percent; and fifth, 
require applicants to be uninsured for at least six months prior 
to eligibility in the health right plan.  If these measures are 
insufficient to limit the expenditures to the estimated amount 
of revenue, the commissioner may further limit enrollment or 
decrease premium subsidies. 
    If the commissioner determines that, despite adjustments 
made as authorized under this subdivision, estimated costs will 
exceed the forecasted amount of available revenues other than 
the reserve, the commissioner may, with the approval of the 
commissioner of finance, use all or part of the reserve to cover 
the costs of the program. 
    The commissioner may adopt emergency rules to govern 
implementation of this section.  Notwithstanding section 14.35, 
the emergency rules adopted under this section shall remain in 
effect for 720 days. 
    Sec. 4.  Minnesota Statutes 1990, section 256.936, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [COVERED HEALTH SERVICES.] (a) [COVERED 
SERVICES.] "Covered health services" means the health services 
reimbursed under chapter 256B, with the exception of inpatient 
hospital services, special education services, private duty 
nursing services, orthodontic services, medical transportation 
services, personal care assistant and case management services, 
hospice care services, nursing home or intermediate care 
facilities services, inpatient mental health services, 
outpatient mental health services in excess of $1,000 per adult 
enrollee and $2,500 per child enrollee per 12-month eligibility 
period, and chemical dependency services.  Outpatient mental 
health services covered under the health right plan are limited 
to diagnostic assessments, psychological testing, explanation of 
findings, and individual, family, and group psychotherapy.  
Medication management by a physician is not subject to the 
$1,000 and $2,500 limitations on outpatient mental health 
services.  Covered health services shall be expanded as provided 
in this subdivision. 
    (b) [ALCOHOL AND DRUG DEPENDENCY.] Beginning October 1, 
1992, covered health services shall include up to ten hours per 
year of individual outpatient treatment of alcohol or drug 
dependency by a qualified health professional or outpatient 
program.  Two hours of group treatment count as one hour of 
individual treatment. 
    Persons who may need chemical dependency services under the 
provisions of this chapter shall be assessed by a local agency 
as defined under section 254B.01, and under the assessment 
provisions of section 254A.03, subdivision 3.  Persons who are 
recipients of medical benefits under the provisions of this 
chapter and who are financially eligible for consolidated 
chemical dependency treatment fund services provided under the 
provisions of chapter 254B shall receive chemical dependency 
treatment services under the provisions of chapter 254B only if: 
    (1) they have exhausted the chemical dependency benefits 
offered under this chapter; or 
    (2) an assessment indicates that they need a level of care 
not provided under the provisions of this chapter. 
    (c) [INPATIENT HOSPITAL SERVICES.] Beginning July 1, 1993, 
covered health services shall include inpatient hospital 
services, subject to those limitations necessary to coordinate 
the provision of these services with eligibility under the 
medical assistance spenddown.  The inpatient hospital benefit 
for adult enrollees not eligible for medical assistance is 
subject to an annual benefit limit of $10,000.  The commissioner 
shall provide enrollees with at least 60 days' notice of 
coverage for inpatient hospital services and any premium 
increase associated with the inclusion of this benefit. 
    (d) [EMERGENCY MEDICAL TRANSPORTATION SERVICES.] Beginning 
July 1, 1993, covered health services shall include emergency 
medical transportation services. 
    (e) [FEDERAL WAIVERS AND APPROVALS.] The commissioner shall 
coordinate the provision of hospital inpatient services under 
the health right plan with enrollee eligibility under the 
medical assistance spend-down, and shall apply to the secretary 
of health and human services for any necessary federal waivers 
or approvals. 
    (f) [COPAYMENTS AND COINSURANCE.] The health right benefit 
plan shall include the following copayments and coinsurance 
requirements:  
    (1) ten percent for inpatient hospital services for adult 
enrollees not eligible for medical assistance, subject to an 
annual out-of-pocket maximum of $2,000 per individual and $3,000 
per family; 
    (2) 50 percent for adult dental services, except for 
preventive services; 
    (3) $3 per prescription for adult enrollees; and 
    (4) $25 for eyeglasses for adult enrollees.  
    Enrollees who would be eligible for medical assistance with 
a spenddown must pay the coinsurance amount up to the spenddown 
limit or the coinsurance amount, whichever is less, in order to 
become eligible for the medical assistance program.  
    Sec. 5.  Minnesota Statutes 1990, section 256.936, is 
amended by adding a subdivision to read: 
    Subd. 2b.  [ELIGIBLE PERSONS.] (a) [CHILDREN.] "Eligible 
persons" means children who are one year of age or older but 
less than 18 years of age who have gross family incomes that are 
equal to or less than 185 percent of the federal poverty 
guidelines and who are not eligible for medical assistance under 
chapter 256B and who are not otherwise insured for the covered 
services.  The period of eligibility extends from the first day 
of the month in which the child's first birthday occurs to the 
last day of the month in which the child becomes 18 years old.  
Eligibility for the health right plan shall be expanded as 
provided in paragraphs (b) to (e).  Under paragraphs (b) to (e), 
parents who enroll in the health right plan must also enroll 
their children and dependent siblings, if the children and their 
dependent siblings are eligible.  Children and dependent 
siblings may be enrolled separately without enrollment by 
parents.  However, if one parent in the household enrolls, both 
parents must enroll, unless other insurance is available.  If 
one child from a family is enrolled, all children must be 
enrolled, unless other insurance is available.  Families cannot 
choose to enroll only certain uninsured members.  For purposes 
of this subdivision, a "dependent sibling" means an unmarried 
child who is a full-time student under the age of 25 years who 
is financially dependent upon his or her parents.  Proof of 
school enrollment will be required.  
    (b) [FAMILIES WITH CHILDREN.] Beginning October 1, 1992, 
"eligible persons" means children eligible under paragraph (a), 
and parents and dependent siblings residing in the same 
household as a child eligible under paragraph (a).  Individuals 
who initially enroll in the health right plan under the 
eligibility criteria in this paragraph shall remain eligible for 
the health right plan, regardless of age, place of residence 
within Minnesota, or the presence or absence of children in the 
same household, as long as all other eligibility requirements 
are met and continuous enrollment in the health right plan or 
medical assistance is maintained. 
    (c) [CONTINUATION OF ELIGIBILITY.] Beginning October 1, 
1992, individuals who initially enrolled in the health right 
plan under the eligibility criteria in paragraph (a) or (b) 
remain eligible even if their gross income after enrollment 
exceeds 185 percent of the federal poverty guidelines, subject 
to any premium required under subdivision 4a, as long as all 
other eligibility requirements are met and continuous enrollment 
in the health right plan or medical assistance is maintained. 
    (d) [FAMILIES WITH CHILDREN; ELIGIBILITY BASED ON 
PERCENTAGE OF INCOME PAID FOR HEALTH COVERAGE.] Beginning 
January 1, 1993, "eligible persons" means children, parents, and 
dependent siblings residing in the same household who are not 
eligible for medical assistance under chapter 256B.  These 
persons are eligible for coverage through the health right plan 
but must pay a premium as determined under subdivisions 4a and 
4b.  Individuals and families whose income is greater than the 
limits established under subdivision 4b may not enroll in the 
health right plan.  Individuals who initially enroll in the 
health right plan under the eligibility criteria in this 
paragraph remain eligible for the health right plan, regardless 
of age, place of residence within Minnesota, or the presence or 
absence of children in the same household, as long as all other 
eligibility requirements are met and continuous enrollment in 
the health right plan or medical assistance is maintained. 
    (e) [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 
CHILDREN.] Beginning July 1, 1994, "eligible persons" means all 
families and individuals who are not eligible for medical 
assistance under chapter 256B.  These persons are eligible for 
coverage through the health right plan but must pay a premium as 
determined under subdivisions 4a and 4b.  Individuals and 
families whose income is greater than the limits established 
under subdivision 4b may not enroll in the health right plan.  
    Sec. 6.  Minnesota Statutes 1990, section 256.936, 
subdivision 3, is amended to read: 
    Subd. 3.  [APPLICATION PROCEDURES.] Applications and other 
information must be made available to provider offices, local 
human services agencies, school districts, public and private 
elementary schools in which 25 percent or more of the students 
receive free or reduced price lunches, community health offices, 
and Women, Infants and Children (WIC) program sites.  These 
sites may accept applications, collect the enrollment fee or 
initial premium fee, and forward the forms and fees to the 
commissioner.  Otherwise, applicants may apply directly to the 
commissioner.  The commissioner may shall use individuals' 
social security numbers as identifiers for purposes of 
administering the plan and conduct data matches to verify 
income.  Applicants shall submit evidence of family income, 
earned and unearned, that will be used is necessary to verify 
income eligibility.  The commissioner shall perform random 
audits to verify reported income and eligibility.  The 
commissioner may execute data sharing arrangements with the 
department of revenue and any other governmental agency in order 
to perform income verification related to eligibility and 
premium payment under the health right plan.  The effective date 
of coverage is the first day of the month following the month in 
which a complete application is entered to the eligibility file 
and the first premium payment has been received.  Benefits are 
not available until the day following discharge if an enrollee 
is hospitalized on the first day of coverage.  Notwithstanding 
any other law to the contrary, benefits under this section are 
secondary to a plan of insurance or benefit program under which 
an eligible person may have coverage and the commissioner shall 
use cost avoidance techniques to ensure coordination of any 
other health coverage for eligible persons.  The commissioner 
shall identify eligible persons who may have coverage or 
benefits under other plans of insurance or who become eligible 
for medical assistance. 
    Sec. 7.  Minnesota Statutes 1990, section 256.936, 
subdivision 4, is amended to read: 
    Subd. 4.  [ENROLLMENT AND PREMIUM FEE.] (a) [ENROLLMENT 
FEE.] Until October 1, 1992, an annual enrollment fee of $25, 
not to exceed $150 per family, is required from eligible persons 
for children's covered health services. 
    (b) [PREMIUM PAYMENTS.] Beginning October 1, 1992, the 
commissioner shall require health right plan enrollees to pay a 
premium based on a sliding scale, as established under 
subdivision 4a. Applicants who are eligible under subdivision 
2b, paragraph (a), are exempt from this requirement until July 
1, 1993, if the application is received by the health right plan 
staff on or before September 30, 1992.  Before July 1, 1993, 
these individuals shall continue to pay the annual enrollment 
fee required by paragraph (a). 
    (c) [ADMINISTRATION.] Enrollment and premium fees are 
dedicated to the commissioner for the children's health right 
plan program.  The commissioner shall make an annual 
redetermination of continued eligibility and identify people who 
may become eligible for medical assistance.  The commissioner 
shall develop and implement procedures to:  (1) require 
enrollees to report changes in income; (2) adjust sliding scale 
premium payments, based upon changes in enrollee income; and (3) 
disenroll enrollees from the health right plan for failure to 
pay required premiums.  Premiums are calculated on a calendar 
month basis and may be paid on a monthly or quarterly basis, 
with the first payment due upon notice from the commissioner of 
the premium amount required.  Premium payment is required before 
enrollment is complete and to maintain eligibility in the health 
right plan. Nonpayment of the premium will result in 
disenrollment from the plan within one calendar month after the 
due date.  Persons disenrolled for nonpayment may not reenroll 
until four calendar months have elapsed. 
    Sec. 8.  Minnesota Statutes 1990, section 256.936, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [ELIGIBILITY FOR SUBSIDIZED PREMIUMS BASED ON 
SLIDING SCALE.] (a) [GENERAL REQUIREMENTS.] Families and 
individuals who enroll on or after October 1, 1992, are eligible 
for subsidized premium payments based on a sliding scale under 
subdivision 4b only if the family or individual meets the 
requirements in paragraphs (b) to (d).  Children already 
enrolled in the health right plan as of September 30, 1992, are 
eligible for subsidized premium payments without meeting these 
requirements, as long as they maintain continuous coverage in 
the health right plan or medical assistance. 
    Families and individuals who initially enrolled in the 
health right plan under subdivision 2b, and whose income 
increases above the limits established in subdivision 4b, may 
continue enrollment and pay the full cost of coverage.  
    (b) [MUST NOT HAVE ACCESS TO EMPLOYER-SUBSIDIZED COVERAGE.] 
To be eligible for subsidized premium payments based on a 
sliding scale, a family or individual must not have access to 
subsidized health coverage through an employer, and must not 
have had access to subsidized health coverage through an 
employer for the 18 months prior to application for subsidized 
coverage under the health right plan.  The requirement that the 
family or individual must not have had access to 
employer-subsidized coverage during the previous 18 months does 
not apply if employer-subsidized coverage was lost for reasons 
that would not disqualify the individual for unemployment 
benefits under section 268.09 and the family or individual has 
not had access to employer-subsidized coverage since the 
layoff.  For purposes of this requirement, subsidized health 
coverage means health coverage for which the employer pays at 
least 50 percent of the cost of coverage for the employee, 
excluding dependent coverage, or a higher percentage as 
specified by the commissioner.  Children are eligible for 
employer-subsidized coverage through either parent, including 
the noncustodial parent.  The commissioner must treat employer 
contributions to Internal Revenue Code Section 125 plans as 
qualified employer subsidies toward the cost of health coverage 
for employees for purposes of this paragraph. 
    (c) [PERIOD UNINSURED.] To be eligible for subsidized 
premium payments based on a sliding scale, families and 
individuals initially enrolled in the health right plan under 
subdivision 2b, paragraphs (d) and (e), must have had no health 
coverage for at least four months prior to application.  The 
commissioner may change this eligibility criterion for sliding 
scale premiums without complying with rulemaking requirements in 
order to remain within the limits of available appropriations.  
The requirement of at least four months of no health coverage 
prior to application for the health right plan does not apply to 
families, children, and individuals who want to apply for the 
health right plan upon termination from the medical assistance 
program, general assistance medical care program, or coverage 
under a regional demonstration project for the uninsured funded 
under section 256B.73, the Hennepin county assured care program, 
or the Group Health, Inc., community health plan.  This 
paragraph does not apply to families and individuals initially 
enrolled under subdivision 2b, paragraphs (a) and (b). 
    Sec. 9.  Minnesota Statutes 1990, section 256.936, is 
amended by adding a subdivision to read: 
    Subd. 4b.  [PREMIUMS.] (a) Each individual or family 
enrolled in the health right plan shall pay a premium determined 
according to a sliding fee based on the cost of coverage as a 
percentage of the individual's or family's gross family income. 
    (b) The commissioner shall establish sliding scales to 
determine the percentage of gross family income that households 
at different income levels must pay to obtain coverage through 
the health right plan.  The sliding scale must be based on the 
enrollee's gross family income, as defined in subdivision 1, 
paragraph (c), during the previous four months.  The sliding 
scale must provide separate sliding scales for individuals, 
two-person households, and households of three or more. 
    (c) Beginning July 1, 1993, the sliding scales begin with a 
premium of 1.5 percent of gross family income for individuals 
with incomes below the limits for the medical assistance program 
set at 133-1/3 percent of the AFDC payment standard and proceed 
through the following evenly spaced steps:  1.8, 2.3, 3.1, 3.8, 
4.8, 5.9, 7.4, and 8.8.  These percentages are matched to evenly 
spaced income steps ranging from the medical assistance income 
limit to a gross monthly income of $1,600 for an individual, 
$2,160 for a household of two, $2,720 for a household of three, 
$3,280 for a household of four, $3,840 for a household of five, 
and $4,400 for households of six or more persons.  For the 
period October 1, 1992 through June 30, 1993, the commissioner 
shall employ a sliding scale that sets required premiums at 
percentages of gross family income equal to two-thirds of the 
percentages specified in this paragraph.  
    (d) An individual or family whose gross monthly income is 
above the amount specified in paragraph (c) is not eligible for 
the plan.  
    (e) The premium for coverage under the health right plan 
may be collected through wage withholding with the consent of 
the employer and the employee. 
    (f) The sliding fee scale and percentages are not subject 
to the provisions of chapter 14. 
    Sec. 10.  Minnesota Statutes 1990, section 256.936, is 
amended by adding a subdivision to read: 
    Subd. 4c.  [RESIDENCY.] (a) The legislature finds that the 
enactment of a comprehensive health plan for uninsured 
Minnesotans creates a risk that persons needing medical care 
will migrate to the state for the primary purpose of obtaining 
medical care subsidized by the state.  The risk of migration 
undermines the state's ability to provide to legitimate state 
residents a valuable and necessary health care program which is 
an important component of the state's comprehensive cost 
containment and health care system reform plan.  Intent-based 
residency requirements, which are expressly authorized under 
decisions of the United States Supreme Court, are an 
unenforceable and ineffective method of denying benefits to 
those persons the Supreme Court has stated may legitimately be 
denied eligibility for state programs.  If the state is unable 
to limit eligibility to legitimate permanent residents of the 
state, the state faces a significant risk that it will be forced 
to reduce the eligibility and benefits it would otherwise 
provide to Minnesotans.  The legislature finds that a durational 
residence requirement is a legitimate, objective, enforceable 
standard for determining whether a person is a permanent 
resident of the state.  The legislature also finds low-income 
persons who have not lived in the state for the required time 
period will have access to necessary health care services 
through the general assistance medical care program, the medical 
assistance program, and public and private charity care programs.
    (b) To be eligible for health coverage under the health 
right program, families and individuals must be permanent 
residents of Minnesota.  
    (c) For purposes of this subdivision, a permanent Minnesota 
resident is a person who has demonstrated, through persuasive 
and objective evidence, that the person is domiciled in the 
state and intends to live in the state permanently.  
    (d) To be eligible, all applicants must demonstrate the 
requisite intent to live in the state permanently by: 
    (1) showing that the applicant maintains a residence at a 
verified address other than a place of public accommodation, 
through the use of evidence of residence described in section 
256D.02, subdivision 12a, clause (1); 
    (2) demonstrating that the applicant has been continuously 
domiciled in the state for no less than 180 days immediately 
before the application; and 
    (3) signing an affidavit declaring that (A) the applicant 
currently resides in the state and intends to reside in the 
state permanently; and (B) the applicant did not come to the 
state for the primary purpose of obtaining medical coverage or 
treatment. 
    (e) An individual or family that moved to Minnesota 
primarily to obtain medical treatment or health coverage for a 
pre-existing condition is not a permanent resident.  
    (f) If the 180-day requirement in paragraph (d), clause 
(2), is determined by a court to be unconstitutional, the 
commissioner of human services shall impose a 12-month 
pre-existing condition exclusion on coverage for persons who 
have been domiciled in the state for less than 180 days.  
    (g) If any paragraph, sentence, clause, or phrase of this 
subdivision is for any reason determined by a court to be 
unconstitutional, the decision shall not affect the validity of 
the remaining portions of the subdivision.  The legislature 
declares that it would have passed each paragraph, sentence, 
clause, and phrase in this subdivision, irrespective of the fact 
that any one or more paragraphs, sentences, clauses, or phrases 
is declared unconstitutional. 
    Sec. 11.  Minnesota Statutes 1991 Supplement, section 
256.936, subdivision 5, is amended to read: 
    Subd. 5.  [APPEALS.] If the commissioner suspends, reduces, 
or terminates eligibility for the children's health right plan, 
or services provided under the children's health right plan, the 
commissioner must provide notification according to the laws and 
rules governing the medical assistance program.  A children's 
health right plan applicant or enrollee aggrieved by a 
determination of the commissioner has the right to appeal the 
determination according to section 256.045. 
    Sec. 12.  Minnesota Statutes 1990, section 256B.057, is 
amended by adding a subdivision to read: 
    Subd. 2a.  [NO ASSET TEST FOR CHILDREN.] Eligibility for 
medical assistance for a person under age 21 must be determined 
without regard to asset standards established in section 
256B.056. 
    Sec. 13.  [256B.0644] [PARTICIPATION REQUIRED FOR 
REIMBURSEMENT UNDER OTHER STATE HEALTH CARE PROGRAMS.] 
    A vendor of medical care, as defined in section 256B.02, 
subdivision 7, and a health maintenance organization, as defined 
in chapter 62D, must participate as a provider or contractor in 
the medical assistance program, general assistance medical care 
program, and the health right plan as a condition of 
participating as a provider in health insurance plans or 
contractor for state employees established under section 43A.18, 
the public employees insurance plan under section 43A.316, the 
workers' compensation system under section 176.135, and 
insurance plans provided through the Minnesota comprehensive 
health association under sections 62E.01 to 62E.17.  For 
providers other than health maintenance organizations, 
participation in the medical assistance program means that (1) 
the provider accepts new medical assistance patients or (2) at 
least 20 percent of the provider's patients are covered by 
medical assistance, general assistance medical care, or the 
health right plan as their primary source of coverage.  The 
commissioner shall establish participation requirements for 
health maintenance organizations.  The commissioner shall 
provide lists of participating medical assistance providers on a 
quarterly basis to the commissioner of employee relations, the 
commissioner of labor and industry, and the commissioner of 
commerce.  Each of the commissioners shall develop and implement 
procedures to exclude as participating providers in the program 
or programs under their jurisdiction those providers who do not 
participate in the medical assistance program. 
    Sec. 14.  [PROVIDER PAYMENT INCREASES.] 
    Subdivision 1.  [HOSPITAL OUTPATIENT REIMBURSEMENT.] For 
outpatient hospital facility fee payments for services rendered 
on or after October 1, 1992, the commissioner of human services 
shall pay the lower of (1) submitted charge, or (2) 32 percent 
above the rate in effect on June 30, 1992, except for those 
services for which there is a federal maximum allowable 
payment.  Services for which there is a federal maximum 
allowable payment shall be paid at the lower of (1) submitted 
charge, or (2) the federal maximum allowable payment.  Total 
aggregate payment for outpatient hospital facility fee services 
shall not exceed the Medicare upper limit.  If it is determined 
that a provision of this section conflicts with existing or 
future requirements of the United States government with respect 
to federal financial participation in medical assistance, the 
federal requirements prevail.  The commissioner may, in the 
aggregate, prospectively reduce payment rates to avoid reduced 
federal financial participation resulting from rates that are in 
excess of the Medicare upper limitations. 
    Subd. 2.  [PHYSICIAN AND DENTAL REIMBURSEMENT.] (a) The 
physician reimbursement increase provided in Minnesota Statutes, 
section 256B.74, subdivision 2, shall not be implemented.  
Effective for services rendered on or after October 1, 1992, the 
commissioner shall make payments for physician services as 
follows: 
    (1) payment for level one Health Care Finance 
Administration's common procedural coding system (HCPCS) codes 
titled "office and other outpatient services," "preventive 
medicine new and established patient," "delivery, antepartum, 
and postpartum care," "critical care," caesarean delivery and 
pharmacologic management provided to psychiatric patients, and 
HCPCS level three codes for enhanced services for prenatal high 
risk, shall be paid at the lower of (i) submitted charges, or 
(ii) 25 percent above the rate in effect on June 30, 1992.  If 
the rate on any procedure code within these categories is 
different than the rate that would have been paid under the 
methodology in Minnesota Statutes, section 256B.74, subdivision 
2, then the larger rate shall be paid; 
    (2) payments for all other services shall be paid at the 
lower of (i) submitted charges, or (ii) 15.4 percent above the 
rate in effect on June 30, 1992; and 
    (3) all physician rates shall be converted from the 50th 
percentile of 1982 to the 50th percentile of 1989, less the 
percent in aggregate necessary to equal the above increases. 
    (b) The dental reimbursement increase provided in Minnesota 
Statutes, section 256B.74, subdivision 5, shall not be 
implemented.  Effective for services rendered on or after 
October 1, 1992, the commissioner shall make payments for dental 
services as follows: 
    (1) dental services shall be paid at the lower of (i) 
submitted charges, or (ii) 25 percent above the rate in effect 
on June 30, 1992; and 
    (2) dental rates shall be converted from the 50th 
percentile of 1982 to the 50th percentile of 1989, less the 
percent in aggregate necessary to equal the above increases. 
    Subd. 3.  [CONTINGENT ON ENACTMENT OF 
APPROPRIATIONS.] Subdivisions 1 and 2 are effective only if 
money is appropriated to the commissioner of human services to 
cover the entire state cost of the increases. 
    Sec. 15.  [COORDINATION OF STATE HEALTH CARE PURCHASING.] 
    The commissioner of administration shall convene an 
interagency task force to develop a plan for coordinating the 
health care programs administered by state agencies and local 
governments in order to improve the efficiency and quality of 
health care delivery and make the most effective use of the 
state's market leverage and expertise in contracting and working 
with health plans and health care providers.  The commissioner 
shall present to the legislature, by January 1, 1994, 
recommendations to:  (1) improve the effectiveness of public 
health care purchasing; and (2) streamline and consolidate 
health care delivery, through merger, transfer, or 
reconfiguration of existing health care and health coverage 
programs.  At the request of the commissioner of administration, 
the commissioners of other state agencies and units of local 
government shall provide assistance in evaluating and 
coordinating existing state and local health care programs. 
    Sec. 16.  [STUDY ON PREMIUMS AND BENEFITS.] 
    The commissioner of human services shall study the cost of 
health right premiums and the level of premium subsidies in 
relationship to the benefits provided.  This study must include 
a comparison of the additional enrollee premium costs associated 
with the provision of an inpatient hospital benefit beginning 
July 1, 1993.  Based on this analysis, the commissioner shall 
report to the legislative commission on health care access by 
January 15, 1993, on whether the premiums and subsidy level for 
the health right plan should be adjusted. 
    Sec. 17.  [PHASE-OUT OF THE CHILDREN'S HEALTH PLAN.] 
    Notwithstanding contrary provisions of Minnesota Statutes, 
section 256.936, the commissioner shall continue to accept 
enrollments in the children's health plan until July 1, 1993, 
using the eligibility and coverage requirements in effect prior 
to October 1, 1992, until the commissioner projects that the 
total enrollment in the children's health plan will exhaust the 
fiscal year 1993 appropriation for the children's health plan.  
These enrollees pay the annual fee established in Minnesota 
Statutes, section 256.936, subdivision 4, until July 1, 1993. 
    Sec. 18.  [IMPACT OF HEALTH RIGHT ON CHILDREN'S HEALTH PLAN 
ENROLLEE.] 
    The commissioner of human services shall examine the impact 
of health right plan premium costs on access to health care for 
children's health plan enrollees.  The commissioner shall 
examine whether health right plan premiums are affordable for 
children's health plan enrollees, and shall examine the degree 
to which children's health plan enrollees fail to continue 
coverage through the health right plan for financial reasons.  
The commissioner shall present recommendations to the 
legislature by February 15, 1993, on methods to ensure continued 
access to health care coverage for children's health plan 
enrollees. 
    Sec. 19.  [INSTRUCTION TO REVISOR.] 
    (a) The revisor of statutes is directed to change the words 
"children's health plan" to "health right plan" wherever they 
appear in the next edition of Minnesota Statutes. 
    (b) The revisor of statutes is directed to recodify the 
subdivisions of Minnesota Statutes, section 256.936 as separate 
sections in chapter 256, and to recodify paragraphs as 
subdivisions within these sections. 
    Sec. 20.  [EFFECTIVE DATE.] 
    Section 13, relating to participation in state health care 
programs, is effective October 1, 1992. 

                                ARTICLE 5

                        RURAL HEALTH INITIATIVES
    Section 1.  Minnesota Statutes 1990, section 16A.124, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [INVOICE ERRORS; DEPARTMENT OF HUMAN SERVICES.] 
For purposes of department of human services payments to 
hospitals receiving reimbursement under the medical assistance 
and general assistance medical care programs, if an invoice is 
incorrect, defective, or otherwise improper, the department of 
human services must notify the hospital of all errors, within 30 
days of discovery of the errors. 
    Sec. 2.  Minnesota Statutes 1990, section 43A.17, 
subdivision 9, is amended to read: 
    Subd. 9.  [POLITICAL SUBDIVISION SALARY LIMIT.] The salary 
of a person employed by a statutory or home rule charter city, 
county, town, school district, metropolitan or regional agency, 
or other political subdivision of this state, or employed under 
section 422A.03, may not exceed 95 percent of the salary of the 
governor as set under section 15A.082, except as provided in 
this subdivision.  Deferred compensation and payroll allocations 
to purchase an individual annuity contract for an employee are 
included in determining the employee's salary.  The salary of a 
medical doctor or doctor of osteopathy occupying a position that 
the governing body of the political subdivision has determined 
requires an M.D. or D.O. degree is excluded from the limitation 
in this subdivision.  The commissioner may increase the 
limitation in this subdivision for a position that the 
commissioner has determined requires special expertise 
necessitating a higher salary to attract or retain a qualified 
person.  The commissioner shall review each proposed increase 
giving due consideration to salary rates paid to other persons 
with similar responsibilities in the state.  The commissioner 
may not increase the limitation until the commissioner has 
presented the proposed increase to the legislative commission on 
employee relations and received the commission's recommendation 
on it.  The recommendation is advisory only.  If the commission 
does not give its recommendation on a proposed increase within 
30 days from its receipt of the proposal, the commission is 
deemed to have recommended approval. 
    Sec. 3.  [62A.66] [PARTICIPATING PROVIDERS.] 
    Subdivision 1.  [HEALTH PLAN COMPANY.] For purposes of this 
section, "health plan company" means any entity governed by 
chapter 62A, 62C, 62D, 62E, 62H, or 64B, or section 471.617, 
subdivision 2, that offers, sells, issues, or renews health 
coverage in this state.  Health plan company does not include an 
entity that sells only policies designed primarily to provide 
coverage on a per diem, fixed indemnity, or nonexpense-incurred 
basis, or policies that provide only accident coverage. 
    Subd. 2.  [ACCEPTANCE AS PARTICIPATING PROVIDER.] A health 
plan company shall not exclude, as a participating provider, a 
physician who is licensed under chapter 147 and meets the 
requirements of section 147.02, subdivision 1, paragraph (b), 
solely because the physician has not completed a full residency 
or is not board certified, if: 
    (1) the physician meets all other requirements for serving 
as a participating provider; 
    (2) the physician has completed a minimum of two years 
residency in any specialty; 
    (3) the physician has not been disciplined by the board of 
medical practice under section 147.091; 
    (4) the physician is credentialed by and has staff 
privileges at a hospital, or is employed by a medical clinic, 
located in an area designated by the federal government as 
either a health personnel shortage area or a medically 
underserved area; 
    (5) the medical clinic at which the physician practices was 
part of the provider network of a health plan company, and that 
health plan company provides health care services to a 
significant number of persons residing in the community in which 
the medical clinic is located, many of whom had formerly 
received services at the medical clinic; and 
    (6) the medical clinic and the hospital at which the 
physician has staff privileges are the only providers of 24-hour 
emergency services in the county. 
    Sec. 4.  Minnesota Statutes 1990, section 144.147, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITION.] "Eligible rural hospital" 
means any nonfederal, general acute care hospital that: 
    (1) is either located in a rural area, as defined in the 
federal Medicare regulations, Code of Federal Regulations, title 
42, section 405.1041, or located in a community with a 
population of less than 5,000, according to United States Census 
Bureau statistics, outside the seven-county metropolitan area; 
    (2) has 100 or fewer beds; 
    (3) has experienced net income losses in at least two of 
the three most recent consecutive hospital fiscal years for 
which audited financial information is available; 
    (4) is not for profit; and 
    (5) (4) has not been awarded a grant under the federal 
rural health transition grant program.  
    Sec. 5.  Minnesota Statutes 1990, section 144.147, 
subdivision 3, is amended to read: 
    Subd. 3.  [CONSIDERATION OF GRANTS.] In determining which 
hospitals will receive grants under this section, the 
commissioner shall take into account:  
    (1) improving community access to hospital or health 
services; 
    (2) changes in service populations; 
    (3) demand for ambulatory and emergency services; 
    (4) the extent that the health needs of the community are 
not currently being met by other providers in the service area; 
    (5) the need to recruit and retain health professionals; 
and 
    (6) the involvement and extent of support of the community 
and local health care providers; and 
     (7) the financial condition of the hospital. 
    Sec. 6.  Minnesota Statutes 1990, section 144.147, 
subdivision 4, is amended to read: 
    Subd. 4.  [ALLOCATION OF GRANTS.] (a) Eligible hospitals 
must apply to the commissioner no later than September 1, 
1990, of each year for grants awarded in the 1991 state fiscal 
year; and no later than September 1, 1990, for grants awarded in 
the 1992 state for the fiscal year beginning the following July 
1. 
    (b) The commissioner may award at least two grants for each 
fiscal year.  The commissioner must make a final decision on the 
funding of each application within 60 days of the deadline for 
receiving applications. 
    (c) Each relevant community health board has 30 days in 
which to review and comment to the commissioner on grant 
applications from hospitals in their community health service 
area. 
    (d) In determining which hospitals will receive grants 
under this section, the commissioner shall consider the 
following factors: 
    (1) Description of the problem, description of the project, 
and the likelihood of successful outcome of the project.  The 
applicant must explain clearly the nature of the health services 
problems in their service area, how the grant funds will be 
used, what will be accomplished, and the results expected.  The 
applicant should describe achievable objectives, a timetable, 
and roles and capabilities of responsible individuals and 
organizations. 
    (2) The extent of community support for the hospital and 
this proposed project.  The applicant should demonstrate support 
for the hospital and for the proposed project from other local 
health service providers and from local community and government 
leaders.  Evidence of such support may include past commitments 
of financial support from local individuals, organizations, or 
government entities; and commitment of financial support, 
in-kind services or cash, for this project. 
     (3) The comments, if any, resulting from a review of the 
application by the community health board in whose community 
health service area the hospital is located. 
     (e) In evaluating applications, the commissioner shall 
score each application on a 100 point scale, assigning the 
maximum of 70 points for an applicant's understanding of the 
problem, description of the project, and likelihood of 
successful outcome of the project; and a maximum of 30 points 
for the extent of community support for the hospital and this 
project.  The commissioner may also take into account other 
relevant factors. 
     (f) A grant to a hospital, including hospitals that submit 
applications as consortia, may not exceed $50,000 a year and may 
not exceed a term of two years.  Prior to the receipt of any 
grant, the hospital must certify to the commissioner that at 
least one-half of the amount, which may include in-kind 
services, is available for the same purposes from nonstate 
sources.  A hospital receiving a grant under this section may 
use the grant for any expenses incurred in the development of 
strategic plans or the implementation of transition projects 
with respect to which the grant is made.  Project grants may not 
be used to retire debt incurred with respect to any capital 
expenditure made prior to the date on which the project is 
initiated. 
    Sec. 7.  [144.1481] [RURAL HEALTH ADVISORY COMMITTEE.] 
    Subdivision 1.  [ESTABLISHMENT; MEMBERSHIP.] The 
commissioner of health shall establish a 15-member rural health 
advisory committee.  The committee shall consist of the 
following members, all of whom must reside outside the 
seven-county metropolitan area, as defined in section 473.121, 
subdivision 2: 
    (1) two members from the house of representatives of the 
state of Minnesota, one from the majority party and one from the 
minority party; 
    (2) two members from the senate of the state of Minnesota, 
one from the majority party and one from the minority party; 
    (3) a volunteer member of an ambulance service based 
outside the seven-county metropolitan area; 
    (4) a representative of a hospital located outside the 
seven-county metropolitan area; 
    (5) a representative of a nursing home located outside the 
seven-county metropolitan area; 
    (6) a medical doctor or doctor of osteopathy licensed under 
chapter 147; 
    (7) a midlevel practitioner; 
    (8) a registered nurse or licensed practical nurse; 
    (9) a licensed health care professional from an occupation 
not otherwise represented on the committee; 
    (10) a representative of an institution of higher education 
located outside the seven-county metropolitan area that provides 
training for rural health care providers; and 
    (11) three consumers, at least one of whom must be an 
advocate for persons who are mentally ill or developmentally 
disabled. 
     The commissioner will make recommendations for committee 
membership.  Committee members will be appointed by the 
governor.  In making appointments, the governor shall ensure 
that appointments provide geographic balance among those areas 
of the state outside the seven-county metropolitan area.  The 
chair of the committee shall be elected by the members.  The 
terms, compensation, and removal of members are governed by 
section 15.059. 
    Subd. 2.  [DUTIES.] The advisory committee shall: 
    (1) advise the commissioner and other state agencies on 
rural health issues; 
    (2) provide a systematic and cohesive approach toward rural 
health issues and rural health care planning, at both a local 
and statewide level; 
    (3) develop and evaluate mechanisms to encourage greater 
cooperation among rural communities and among providers; 
    (4) recommend and evaluate approaches to rural health 
issues that are sensitive to the needs of local communities; and 
    (5) develop methods for identifying individuals who are 
underserved by the rural health care system. 
    Subd. 3.  [STAFFING; OFFICE SPACE; EQUIPMENT.] The 
commissioner shall provide the advisory committee with staff 
support, office space, and access to office equipment and 
services. 
    Sec. 8.  [144.1482] [OFFICE OF RURAL HEALTH.] 
    Subdivision 1.  [DUTIES.] The office of rural health in 
conjunction with the University of Minnesota medical schools and 
other organizations in the state which are addressing rural 
health care problems shall: 
    (1) establish and maintain a clearinghouse for collecting 
and disseminating information on rural health care issues, 
research findings, and innovative approaches to the delivery of 
rural health care; 
    (2) coordinate the activities relating to rural health care 
that are carried out by the state to avoid duplication of 
effort; 
    (3) identify federal and state rural health programs and 
provide technical assistance to public and nonprofit entities, 
including community and migrant health centers, to assist them 
in participating in these programs; 
    (4) assist rural communities in improving the delivery and 
quality of health care in rural areas and in recruiting and 
retaining health professionals; and 
    (5) carry out the duties assigned in section 144.1483. 
    Subd. 2.  [CONTRACTS.] To carry out these duties, the 
office may contract with or provide grants to public and 
private, nonprofit entities. 
    Sec. 9.  [144.1483] [RURAL HEALTH INITIATIVES.] 
    The commissioner of health, through the office of rural 
health, and consulting as necessary with the commissioner of 
human services, the commissioner of commerce, the higher 
education coordinating board, and other state agencies, shall: 
    (1) develop a detailed plan regarding the feasibility of 
coordinating rural health care services by organizing individual 
medical providers and smaller hospitals and clinics into 
referral networks with larger rural hospitals and clinics that 
provide a broader array of services; 
    (2) develop and implement a program to assist rural 
communities in establishing community health centers, as 
required by section 144.1486; 
    (3) administer the program of financial assistance 
established under section 144.1484 for rural hospitals in 
isolated areas of the state that are in danger of closing 
without financial assistance, and that have exhausted local 
sources of support; 
    (4) develop recommendations regarding health education and 
training programs in rural areas, including but not limited to a 
physician assistants' training program, continuing education 
programs for rural health care providers, and rural outreach 
programs for nurse practitioners within existing training 
programs; 
    (5) develop a statewide, coordinated recruitment strategy 
for health care personnel and maintain a data base on health 
care personnel as required under section 144.1485; 
    (6) develop and administer technical assistance programs to 
assist rural communities in:  (i) planning and coordinating the 
delivery of local health care services; and (ii) hiring 
physicians, nurse practitioners, public health nurses, physician 
assistants, and other health personnel; 
    (7) study and recommend changes in the regulation of health 
care personnel, such as nurse practitioners and physician 
assistants, related to scope of practice, the amount of on-site 
physician supervision, and dispensing of medication, to address 
rural health personnel shortages; 
    (8) support efforts to ensure continued funding for medical 
and nursing education programs that will increase the number of 
health professionals serving in rural areas; 
    (9) support efforts to secure higher reimbursement for 
rural health care providers from the Medicare and medical 
assistance programs; 
     (10) coordinate the development of a statewide plan for 
emergency medical services, in cooperation with the emergency 
medical services advisory council; and 
    (11) carry out other activities necessary to address rural 
health problems. 
    Sec. 10.  [144.1484] [RURAL HOSPITAL FINANCIAL ASSISTANCE 
GRANTS.] 
    Subdivision 1.  [SOLE COMMUNITY HOSPITAL FINANCIAL 
ASSISTANCE GRANTS.] The commissioner of health shall award 
financial assistance grants to rural hospitals in isolated areas 
of the state.  To qualify for a grant, a hospital must:  (1) be 
eligible to be classified as a sole community hospital according 
to the criteria in Code of Federal Regulations, title 42, 
section 412.92 or be located in a community with a population of 
less than 5,000; (2) have experienced net income losses in the 
two most recent consecutive hospital fiscal years for which 
audited financial information is available; (3) consist of 30 or 
fewer licensed beds; and (4) have exhausted local sources of 
support.  Before applying for a grant, the hospital must have 
developed a strategic plan.  The commissioner shall award grants 
in equal amounts. 
     Subd. 2.  [GRANTS TO AT-RISK RURAL HOSPITALS TO OFFSET THE 
IMPACT OF THE HOSPITAL TAX.] The commissioner of health shall 
award financial assistance grants to rural hospitals that would 
otherwise close as a direct result of the hospital tax in 
article 9, section 7.  To be eligible for a grant, a hospital 
must have 50 or fewer beds and must not be located in a city of 
the first class.  To receive a grant, the hospital must 
demonstrate to the satisfaction of the commissioner of health 
that the hospital will close in the absence of state assistance 
under this subdivision and that the hospital tax is the 
principal reason for the closure.  The amount of the grant must 
not exceed the amount of the tax the hospital would pay under 
article 9, section 7, based on the previous year's hospital 
revenues. 
    Sec. 11.  [144.1485] [DATA BASE ON HEALTH PERSONNEL.] 
    The commissioner of health shall develop and maintain a 
data base on health services personnel.  The commissioner shall 
use this information to assist local communities and units of 
state government to develop plans for the recruitment and 
retention of health personnel.  Information collected in the 
data base must include, but is not limited to, data on levels of 
educational preparation, specialty, and place of employment.  
The commissioner may collect information through the 
registration and licensure systems of the state health licensing 
boards. 
    Sec. 12.  [144.1486] [RURAL COMMUNITY HEALTH CENTERS.] 
    The commissioner of health shall develop and implement a 
program to establish community health centers in rural areas of 
Minnesota that are underserved by health care providers.  The 
program shall provide rural communities and community 
organizations with technical assistance, capital grants for 
start-up costs, and short-term assistance with operating costs.  
The technical assistance component of the program must provide 
assistance in review of practice management, market analysis, 
practice feasibility analysis, medical records system analysis, 
and scheduling and patient flow analysis.  The program must:  
(1) include a local match requirement for state dollars 
received; (2) require local communities, through nonprofit 
boards comprised of local residents, to operate and own their 
community's health care program; (3) encourage the use of 
midlevel practitioners; and (4) incorporate a quality assurance 
strategy that provides regular evaluation of clinical 
performance and allows peer review comparisons for rural 
practices.  The commissioner shall report to the legislature on 
implementation of the program by February 15, 1994. 
    Sec. 13.  Minnesota Statutes 1990, section 144.581, 
subdivision 1, is amended to read: 
    Subdivision 1.  [NONPROFIT CORPORATION POWERS.] A 
municipality, political subdivision, state agency, or other 
governmental entity that owns or operates a hospital authorized, 
organized, or operated under chapters 158, 250, 376, and 397, or 
under sections 246A.01 to 246A.27, 412.221, 447.05 to 447.13, 
447.31, or 471.59, or under any special law authorizing or 
establishing a hospital or hospital district shall, relative to 
the delivery of health care services, have, in addition to any 
authority vested by law, the authority and legal capacity of a 
nonprofit corporation under chapter 317A, including authority to 
    (a) enter shared service and other cooperative ventures, 
    (b) join or sponsor membership in organizations intended to 
benefit the hospital or hospitals in general, 
    (c) enter partnerships, 
    (d) incorporate other corporations, 
    (e) have members of its governing authority or its officers 
or administrators serve as directors, officers, or employees of 
the ventures, associations, or corporations, 
    (f) own shares of stock in business corporations, 
    (g) offer, directly or indirectly, products and services of 
the hospital, organization, association, partnership, or 
corporation to the general public, and 
    (h) provide funds for payment of educational expenses of up 
to $20,000 per individual, if the hospital or hospital district 
has at least $1,000,000 in reserve and depreciation funds at the 
time of payment, and these reserve and depreciation funds were 
obtained solely from the operating revenues of the hospital or 
hospital district, and 
    (i) provide funds of up to $50,000 per year per individual 
for a maximum of two years to supplement the incomes of family 
practice physicians, up to a maximum of $100,000 in annual 
income, if the hospital or hospital district has at least 
$250,000 in reserve and depreciation funds at the time of 
payment, and these reserve and depreciation funds were obtained 
solely from the operating revenues of the hospital or hospital 
district expend funds, including public funds in any form, or 
devote the resources of the hospital or hospital district to 
recruit or retain physicians whose services are necessary or 
desirable for meeting the health care needs of the population, 
and for successful performance of the hospital or hospital 
district's public purpose of the promotion of health.  Allowable 
uses of funds and resources include the retirement of medical 
education debt, payment of one-time amounts in consideration of 
services rendered or to be rendered, payment of recruitment 
expenses, payment of moving expenses, and the provision of other 
financial assistance necessary for the recruitment and retention 
of physicians, provided that the expenditures in whatever form 
are reasonable under the facts and circumstances of the 
situation. 
    Sec. 14.  Minnesota Statutes 1990, section 144.8093, is 
amended to read: 
    144.8093 [EMERGENCY MEDICAL SERVICES FUND.] 
    Subdivision 1.  [CITATION.] This section is the "Minnesota 
emergency medical services system support act."  
    Subd. 2.  [ESTABLISHMENT AND PURPOSE.] In order to develop, 
maintain, and improve regional emergency medical services 
systems, the department of health shall establish an emergency 
medical services system fund.  The fund shall be used for the 
general purposes of promoting systematic, cost-effective 
delivery of emergency medical care throughout the state; 
identifying common local, regional, and state emergency medical 
system needs and providing assistance in addressing those needs; 
undertaking special providing discretionary grants for emergency 
medical service projects of statewide significance that will 
enhance the provision of emergency medical care in 
Minnesota with potential regionwide significance; providing for 
public education about emergency medical care; promoting the 
exchange of emergency medical care information; ensuring the 
ongoing coordination of regional emergency medical services 
systems; and establishing and maintaining training standards to 
ensure consistent quality of emergency medical services 
throughout the state.  
    Subd. 3.  [USE AND RESTRICTIONS.] Designated regional 
emergency medical services systems may use emergency medical 
services system funds to support local and regional emergency 
medical services as determined within the region, with 
particular emphasis given to supporting and improving emergency 
trauma and cardiac care and training.  No part of a region's 
share of the fund may be used to directly subsidize any 
ambulance service operations or rescue service operations or to 
purchase any vehicles or parts of vehicles for an ambulance 
service or a rescue service. 
    Subd. 4.  [DISTRIBUTION.] Money from the fund shall be 
distributed according to this subdivision.  Eighty Ninety-three 
and one-third percent of the fund shall be distributed annually 
on a contract for services basis with each of the eight regional 
emergency medical services systems designated by the 
commissioner of health.  The systems shall be governed by a body 
consisting of appointed representatives from each of the 
counties in that region and shall also include representatives 
from emergency medical services organizations.  The commissioner 
shall contract with a regional entity only if the contract 
proposal satisfactorily addresses proposed emergency medical 
services activities in the following areas:  personnel training, 
transportation coordination, public safety agency cooperation, 
communications systems maintenance and development, public 
involvement, health care facilities involvement, and system 
management.  If each of the regional emergency medical services 
systems submits a satisfactory contract proposal, then this part 
of the fund shall be distributed evenly among the regions.  If 
one or more of the regions does not contract for the full amount 
of its even share or if its proposal is unsatisfactory, then the 
commissioner may reallocate the unused funds to the remaining 
regions on a pro rata basis.  Six and two-thirds percent of the 
fund shall be used by the commissioner to support regionwide 
reporting systems and to provide other regional administration 
and technical assistance.  Thirteen and one-third percent shall 
be distributed by the commissioner as discretionary grants for 
special emergency medical services projects with potential 
statewide significance.  
    Sec. 15.  Minnesota Statutes 1990, section 447.31, 
subdivision 1, is amended to read: 
    Subdivision 1.  [RESOLUTIONS.] Any four two or more cities 
and towns, however organized, except cities of the first class, 
may create a hospital district.  They must do so by resolutions 
adopted by their respective governing bodies or electors.  A 
hospital district may be reorganized according to sections 
447.31 to 447.37.  Reorganization must be by resolutions adopted 
by the district's hospital board and the governing body or 
voters of each city and town in the district. 
    Sec. 16.  Minnesota Statutes 1990, section 447.31, 
subdivision 3, is amended to read: 
    Subd. 3.  [CONTENTS OF RESOLUTION.] A resolution under 
subdivision 1 must state that a hospital district is authorized 
to be created under sections 447.31 to 447.37, or that an 
existing hospital district is authorized to be reorganized under 
sections 447.31 to 447.37, in order to acquire, improve, and run 
hospital and nursing home facilities that the hospital board 
decides are necessary and expedient in accordance with sections 
447.31 to 447.37.  The resolution must name the four two or more 
cities or towns included in the district.  The resolution must 
be adopted by a two-thirds majority of the members-elect of the 
governing body or board acting on it, or by the voters of the 
city or town as provided in this section. 
    Each resolution adopted by the governing body of a city or 
town must be published in its official newspaper and takes 
effect 40 days after publication, unless a petition for 
referendum on the resolution is filed with the governing body 
within 40 days.  A petition for referendum must be signed by at 
least five percent of the number of voters voting at the last 
election of officers.  If a petition is filed, the resolution 
does not take effect until approved by a majority of voters 
voting on it at a regular municipal election or a special 
election which the governing body may call for that purpose.  
    The resolution may also be initiated by petition filed with 
the governing body of the city or town, signed by at least ten 
percent of the number of voters voting at the last general 
election.  A petition must present the text of the proposed 
resolution and request an election on it.  If the petition is 
filed, the governing body shall call a special election for the 
purpose, to be held within 30 days after the filing of the 
petition, or may submit the resolution to a vote at a regular 
municipal election that is to be held within the 30-day period.  
The resolution takes effect if approved by a majority of voters 
voting on it at the election.  Only one election shall be held 
within any given 12-month period upon resolutions initiated by 
petition.  The notice of the election and the ballot used must 
contain the text of the resolution, followed by the question:  
"Shall the above resolution be approved?"  
    Sec. 17.  [SPECIAL STUDIES.] 
    (a) The commissioner of health, through the office of rural 
health, shall: 
    (1) investigate the adequacy of access to perinatal 
services in rural Minnesota and report findings and 
recommendations to the legislature by January 15, 1994; and 
    (2) study the impact of current reimbursement provisions 
for midlevel practitioners on the use of midlevel practitioners 
in rural practice settings, examining reimbursement provisions 
in state programs, federal programs, and private sector health 
plans, and report findings and recommendations to the 
legislature by January 1, 1993. 
    (b) The commissioner of administration, through the 
statewide telecommunications access routing program and its 
advisory council, and in cooperation with the commissioner of 
health and the rural health advisory committee, shall 
investigate and develop recommendations regarding the use of 
advanced telecommunications technologies to improve rural health 
education and health care delivery.  The commissioner of 
administration shall report findings and recommendations to the 
legislature by January 15, 1994. 
    Sec. 18.  [REPORT ON RURAL HOSPITAL FINANCIAL ASSISTANCE 
GRANTS.] 
    The commissioner of health shall examine the eligibility 
criteria for rural hospital financial assistance grants under 
Minnesota Statutes, section 144.1484, and report to the 
legislature by February 1, 1993, on any needed modifications. 
    Sec. 19.  [STUDY OF BASIC AND ADVANCED LIFE SUPPORT 
REIMBURSEMENT.] 
    The commissioner of human services, in consultation with 
the commissioner of health, shall study the mechanisms and rates 
of reimbursement for advanced and basic life support ambulance 
and special transportation service calls under medical 
assistance and general assistance medical care.  The study shall 
examine methods of simplifying the claims process, 
interpretation of the "medically necessary" criteria and prior 
approval in light of the statutory mandate that ambulance 
service may not be denied, and other issues that create 
impediments to reasonable and fair reimbursement.  The 
commissioner shall report findings and offer recommendations to 
the legislature by January 1, 1993, on means of maximizing 
potential reimbursement levels. 
    Sec. 20.  [STUDY OF AMBULANCE SUBSCRIPTION PLANS.] 
    The commissioner of commerce and the commissioner of health 
shall study prepaid ambulance service plans that allow a person 
to prepay for ambulance services on a yearly basis.  The 
commissioners shall study plans offered in other states and 
shall study the cost effectiveness and feasibility of offering 
these plans in Minnesota.  The commissioners shall study methods 
of funding the plans.  The commissioners shall also address the 
issue of whether these plans should be regulated as insurance, 
health maintenance organizations, or as another type of entity.  
The commissioners shall conduct the study in conjunction with 
the attorney general.  The commissioners shall report the 
findings of the study to the legislature by January 1, 1993. 
    Sec. 21.  [REPEALER.] 
    Section 3 expires July 1, 1994, or one year after the date 
upon which a Minnesota program, established to conduct quality 
assurance and certification activities related to the 
participation of rural family practice physicians in health plan 
company provider networks, becomes operational, whichever occurs 
first. 
    Sec. 22.  [EFFECTIVE DATE.] 
    Section 1 relating to invoice errors is effective for the 
department of human services July 1, 1993, or on the 
implementation date of the upgrade to the Medicaid management 
information system, whichever is later. 
    Section 7 creating the rural health advisory committee is 
effective January 1, 1993. 

                                ARTICLE 6

                      HEALTH PROFESSIONAL EDUCATION
    Section 1.  Minnesota Statutes 1990, section 136A.1355, 
subdivision 2, is amended to read: 
    Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
the program, a prospective physician must submit a letter of 
interest to the higher education coordinating board while 
attending medical school.  Before completing the first year of 
residency,.  A student or resident who is accepted must sign a 
contract to agree to serve at least three of the first five 
years following residency in a designated rural area. 
    Sec. 2.  Minnesota Statutes 1990, section 136A.1355, 
subdivision 3, is amended to read: 
    Subd. 3.  [LOAN FORGIVENESS.] Prior to June 30, 1992, the 
higher education coordinating board may accept up to eight 
applicants who are fourth year medical students, up to eight 
applicants who are first year residents, and up to eight 
applicants who are second year residents for participation in 
the loan forgiveness program.  For the period July 1, 1992 
through June 30, 1995, the higher education coordinating board 
may accept up to eight applicants who are fourth year medical 
students per fiscal year for participation in the loan 
forgiveness program.  Applicants are responsible for securing 
their own loans.  Applicants chosen to participate in the loan 
forgiveness program may designate for each year of medical 
school, up to a maximum of four years, an agreed amount, not to 
exceed $10,000, as a qualified loan.  For each year that a 
participant serves as a physician in a designated rural area, up 
to a maximum of four years, the higher education coordinating 
board shall annually pay an amount equal to one year of 
qualified loans and the interest accrued on these loans.  
Participants who move their practice from one designated rural 
area to another remain eligible for loan repayment.  In 
addition, if a resident participating in the loan forgiveness 
program serves at least four weeks during a year of residency 
substituting for a rural physician to temporarily relieve the 
rural physician of rural practice commitments to enable the 
rural physician to take a vacation, engage in activities outside 
the practice area, or otherwise be relieved of rural practice 
commitments, the participating resident may designate up to an 
additional $2,000, above the $10,000 maximum, for each year of 
residency during which the resident substitutes for a rural 
physician for four or more weeks. 
    Sec. 3.  [136A.1356] [MIDLEVEL PRACTITIONER EDUCATION 
ACCOUNT.] 
    Subdivision 1.  [DEFINITIONS.] For purposes of this 
section, the following definitions apply: 
    (a) "Designated rural area" has the definition developed in 
rule by the higher education coordinating board. 
    (b) "Midlevel practitioner" means a nurse practitioner, 
nurse-midwife, nurse anesthetist, advanced clinical nurse 
specialist, or physician assistant. 
    (c) "Nurse-midwife" means a registered nurse who has 
graduated from a program of study designed to prepare registered 
nurses for advance practice as nurse-midwives. 
    (d) "Nurse practitioner" means a registered nurse who has 
graduated from a program of study designed to prepare registered 
nurses for advance practice as nurse practitioners. 
     (e) "Physician assistant" means a person meeting the 
definition in Minnesota Rules, part 5600.2600, subpart 11. 
    Subd. 2.  [CREATION OF ACCOUNT.] A midlevel practitioner 
education account is established.  The higher education 
coordinating board shall use money from the account to establish 
a loan forgiveness program for midlevel practitioners agreeing 
to practice in designated rural areas.  
    Subd. 3.  [ELIGIBILITY.] To be eligible to participate in 
the program, a prospective midlevel practitioner must submit a 
letter of interest to the higher education coordinating board 
prior to or while attending a program of study designed to 
prepare the individual for service as a midlevel practitioner.  
Before completing the first year of this program, a midlevel 
practitioner must sign a contract to agree to serve at least two 
of the first four years following graduation from the program in 
a designated rural area. 
    Subd. 4.  [LOAN FORGIVENESS.] The higher education 
coordinating board may accept up to eight applicants per year 
for participation in the loan forgiveness program.  Applicants 
are responsible for securing their own loans.  Applicants chosen 
to participate in the loan forgiveness program may designate for 
each year of midlevel practitioner study, up to a maximum of two 
years, an agreed amount, not to exceed $7,000, as a qualified 
loan.  For each year that a participant serves as a midlevel 
practitioner in a designated rural area, up to a maximum of four 
years, the higher education coordinating board shall annually 
repay an amount equal to one-half a qualified loan.  
Participants who move their practice from one designated rural 
area to another remain eligible for loan repayment.  
    Subd. 5.  [PENALTY FOR NONFULFILLMENT.] If a participant 
does not fulfill the service commitment required under 
subdivision 4 for full repayment of all qualified loans, the 
higher education coordinating board shall collect from the 
participant 100 percent of any payments made for qualified loans 
and interest at a rate established according to section 270.75.  
The higher education coordinating board shall deposit the money 
collected in the midlevel practitioner education account.  The 
board shall allow waivers of all or part of the money owed the 
board if emergency circumstances prevented fulfillment of the 
required service commitment.  
    Sec. 4.  [137.38] [EDUCATION AND TRAINING OF PRIMARY CARE 
PHYSICIANS.] 
    Subdivision 1.  [CONDITION.] If the board of regents 
accepts the funding appropriated for sections 137.38 to 137.40, 
it shall comply with the duties for which the appropriations are 
made. 
    Subd. 2.  [PRIMARY CARE.] For purposes of sections 137.38 
to 137.40, "primary care" means a type of medical care delivery 
that assumes ongoing responsibility for the patient in both 
health maintenance and illness treatment.  It is personal care 
involving a unique interaction and communication between the 
patient and the physician.  It is comprehensive in scope, and 
includes all the overall coordination of the care of the 
patient's health care problems including biological, behavioral, 
and social problems.  The appropriate use of consultants and 
community resources is an important aspect of effective primary 
care. 
    Subd. 3.  [GOALS.] The board of regents of the University 
of Minnesota, through the University of Minnesota medical 
school, is requested to implement the initiatives required by 
sections 137.38 to 137.40 in order to increase the number of 
graduates of residency programs of the medical school who 
practice primary care by 20 percent over an eight-year period.  
The initiatives must be designed to encourage newly graduated 
primary care physicians to establish practices in areas of rural 
Minnesota that are medically underserved. 
    Subd. 4.  [GRANTS.] The board of regents is requested to 
seek grants from private foundations and other nonstate sources 
for the medical school initiatives outlined in sections 137.38 
to 137.40. 
    Subd. 5.  [REPORTS.] The board of regents is requested to 
report annually to the legislature on progress made in 
implementing sections 137.38 to 137.40, beginning January 15, 
1993, and each succeeding January 15. 
    Sec. 5.  [137.39] [MEDICAL SCHOOL INITIATIVES.] 
    Subdivision 1.  [MODIFIED SCHOOL INITIATIVES.] The 
University of Minnesota medical school is requested to study the 
demographic characteristics of students that are associated with 
a primary care career choice.  The medical school is requested 
to modify the selection process for medical students based on 
the results of this study, in order to increase the number of 
medical school graduates choosing careers in primary care. 
    Subd. 2.  [DESIGN OF CURRICULUM.] The medical school is 
requested to ensure that its curriculum provides students with 
early exposure to primary care physicians and primary care 
practice.  The medical school is requested to also support 
premedical school educational initiatives that provide students 
with greater exposure to primary care physicians and practices. 
    Subd. 3.  [CLINICAL EXPERIENCES IN PRIMARY CARE.] The 
medical school, in consultation with medical school faculty at 
the University of Minnesota, Duluth, is requested to develop a 
program to provide students with clinical experiences in primary 
care settings in internal medicine and pediatrics.  The program 
must provide training experiences in medical clinics in rural 
Minnesota communities, as well as in community clinics and 
health maintenance organizations in the Twin Cities metropolitan 
area. 
    Sec. 6.  [137.40] [RESIDENCY AND OTHER INITIATIVES.] 
    Subdivision 1.  [PRIMARY CARE AND RURAL ROTATIONS.] The 
University of Minnesota medical school is requested to increase 
the opportunities for general medicine, pediatrics, and family 
practice residents to serve rotations in primary care settings.  
These settings must include community clinics, health 
maintenance organizations, and practices in rural communities. 
    Subd. 2.  [RURAL RESIDENCY TRAINING PROGRAM IN FAMILY 
PRACTICE.] The medical school is requested to establish a rural 
residency training program in family practice.  The program 
shall provide an initial year of training in a 
metropolitan-based hospital and family practice clinic.  The 
second and third years of the residency program shall be based 
in rural communities, utilizing local clinics and community 
hospitals, with specialty rotations in nearby regional medical 
centers. 
    Subd. 3.  [CONTINUING MEDICAL EDUCATION.] The medical 
school is requested to develop continuing medical education 
programs for primary care physicians that are comprehensive, 
community-based, and accessible to primary care physicians in 
all areas of the state. 
    Sec. 7.  [136A.1357] [EDUCATION ACCOUNT FOR NURSES WHO 
AGREE TO PRACTICE IN A NURSING HOME.] 
    Subdivision 1.  [CREATION OF THE ACCOUNT.] An education 
account in the general fund is established for a loan 
forgiveness program for nurses who agree to practice nursing in 
a nursing home.  The account consists of money appropriated by 
the legislature and repayments and penalties collected under 
subdivision 4.  Money from the account must be used for a loan 
forgiveness program. 
    Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
the loan forgiveness program, a person planning to enroll or 
enrolled in a program of study designed to prepare the person to 
become a registered nurse or licensed practical nurse must 
submit a letter of interest to the board before completing the 
first year of study of a nursing education program.  Before 
completing the first year of study, the applicant must sign a 
contract in which the applicant agrees to practice nursing for 
at least one of the first two years following completion of the 
nursing education program providing nursing services in a 
licensed nursing home.  
    Subd. 3.  [LOAN FORGIVENESS.] The board may accept up to 
ten applicants a year.  Applicants are responsible for securing 
their own loans.  For each year of nursing education, for up to 
two years, applicants accepted into the loan forgiveness program 
may designate an agreed amount, not to exceed $3,000, as a 
qualified loan.  For each year that a participant practices 
nursing in a nursing home, up to a maximum of two years, the 
board shall annually repay an amount equal to one year of 
qualified loans.  Participants who move from one nursing home to 
another remain eligible for loan repayment.  
    Subd. 4.  [PENALTY FOR NONFULFILLMENT.] If a participant 
does not fulfill the service commitment required under 
subdivision 3 for full repayment of all qualified loans, the 
commissioner shall collect from the participant 100 percent of 
any payments made for qualified loans and interest at a rate 
established according to section 270.75.  The board shall 
deposit the collections in the general fund to be credited to 
the account established in subdivision 1.  The board may grant a 
waiver of all or part of the money owed as a result of a 
nonfulfillment penalty if emergency circumstances prevented 
fulfillment of the required service commitment. 
    Subd. 5.  [RULES.] The board shall adopt rules to implement 
this section. 
    Sec. 8.  [STUDY OF OBSTETRICAL ACCESS.] 
    The commissioner of health shall study access to 
obstetrical services in Minnesota and report to the legislature 
by January 1, 1993.  The study must examine the number of 
physicians discontinuing obstetrical care in recent years and 
the effects of high malpractice costs and low government program 
reimbursement for obstetrical services, and must identify areas 
of the state where access to obstetrical services is most 
greatly affected.  The commissioner shall recommend ways to 
reduce liability costs and to encourage physicians to continue 
to provide obstetrical services. 
    Sec. 9.  [GRANT PROGRAM FOR MIDLEVEL PRACTITIONER 
TRAINING.] 
    The higher education coordinating board may award grants to 
Minnesota schools or colleges that educate, or plan to educate 
midlevel practitioners, in order to establish and administer 
midlevel practitioner training programs in areas of rural 
Minnesota with the greatest need for midlevel practitioners.  
The program must address rural health care needs, and 
incorporate innovative methods of bringing together faculty and 
students, such as the use of telecommunications, and must 
provide both clinical and lecture components. 
    Sec. 10.  [GRANTS FOR CONTINUING EDUCATION.] 
    The higher education coordinating board shall establish a 
competitive grant program for schools of nursing and other 
providers of continuing nurse education, in order to develop 
continuing education programs for nurses working in rural areas 
of the state.  The programs must complement, and not duplicate, 
existing continuing education activities, and must specifically 
address the needs of nurses working in rural practice settings.  
The board shall award two grants for the fiscal year ending June 
30, 1993. 

                                ARTICLE 7

                DATA COLLECTION AND RESEARCH INITIATIVES
    Section 1.  [62J.30] [HEALTH CARE ANALYSIS UNIT.] 
     Subdivision 1.  [DEFINITIONS.] For purposes of sections 
62J.30 to 62J.34, the following definitions apply: 
    (a) "Practice parameter" means a statement intended to 
guide the clinical decision making of health care providers and 
patients that is supported by the results of appropriately 
designed outcomes research studies, including those studies 
sponsored by the federal agency for health care policy and 
research, or has been adopted for use by a national medical 
society. 
    (b) "Outcomes research" means research designed to identify 
and analyze the outcomes and costs of alternative interventions 
for a given clinical condition, in order to determine the most 
appropriate and cost-effective means to prevent, diagnose, 
treat, or manage the condition, or in order to develop and test 
methods for reducing inappropriate or unnecessary variations in 
the type and frequency of interventions. 
    Subd. 2.  [ESTABLISHMENT.] The commissioner of health, in 
consultation with the Minnesota health care commission, shall 
establish a health care analysis unit to conduct data and 
research initiatives in order to improve the efficiency and 
effectiveness of health care in Minnesota. 
    Subd. 3.  [GENERAL DUTIES; IMPLEMENTATION DATE.] The 
commissioner, through the health care analysis unit, shall: 
    (1) conduct applied research using existing and newly 
established health care data bases, and promote applications 
based on existing research; 
    (2) establish the condition-specific data base required 
under section 62J.31; 
    (3) develop and implement data collection procedures to 
ensure a high level of cooperation from health care providers 
and health carriers, as defined in section 62L.02, subdivision 
16; 
    (4) work closely with health carriers and health care 
providers to promote improvements in health care efficiency and 
effectiveness; 
    (5) participate as a partner or sponsor of private sector 
initiatives that promote publicly disseminated applied research 
on health care delivery, outcomes, costs, quality, and 
management; 
    (6) provide technical assistance to health plan and health 
care purchasers, as required by section 62J.33; 
    (7) develop outcome-based practice parameters as required 
under section 62J.34; and 
    (8) provide technical assistance as needed to the health 
planning advisory committee and the regional coordinating boards.
    Subd. 4.  [CRITERIA FOR UNIT INITIATIVES.] Data and 
research initiatives by the health care analysis unit must: 
    (1) serve the needs of the general public, public sector 
health care programs, employers and other purchasers of health 
care, health care providers, including providers serving large 
numbers of low-income people, and health carriers; 
    (2) promote a significantly accelerated pace of publicly 
disseminated, applied research on health care delivery, 
outcomes, costs, quality, and management; 
    (3) conduct research and promote health care applications 
based on scientifically sound and statistically valid methods; 
    (4) be statewide in scope, in order to benefit health care 
purchasers and providers in all parts of Minnesota and to ensure 
a broad and representative data base for research, comparisons, 
and applications; 
    (5) emphasize data that is useful, relevant, and 
nonredundant of existing data.  The initiatives may duplicate 
existing private activities, if this is necessary to ensure that 
the data collected will be in the public domain; 
    (6) be structured to minimize the administrative burden on 
health carriers, health care providers, and the health care 
delivery system, and minimize any privacy impact on individuals; 
and 
    (7) promote continuous improvement in the efficiency and 
effectiveness of health care delivery. 
    Subd. 5.  [CRITERIA FOR PUBLIC SECTOR HEALTH CARE 
PROGRAMS.] Data and research initiatives related to public 
sector health care programs must: 
    (1) assist the state's current health care financing and 
delivery programs to deliver and purchase health care in a 
manner that promotes improvements in health care efficiency and 
effectiveness; 
    (2) assist the state in its public health activities, 
including the analysis of disease prevalence and trends and the 
development of public health responses; 
    (3) assist the state in developing and refining its overall 
health policy, including policy related to health care costs, 
quality, and access; and 
    (4) provide a data source that allows the evaluation of 
state health care financing and delivery programs. 
    Subd. 6.  [DATA COLLECTION PROCEDURES.] The health care 
analysis unit shall collect data from health care providers, 
health carriers, and individuals in the most cost-effective 
manner, which does not unduly burden providers.  The unit may 
require health care providers and health carriers to collect and 
provide patient health records, provide mailing lists of 
patients who have consented to release of data, and cooperate in 
other ways with the data collection process.  For purposes of 
this chapter, the health care analysis unit shall assign, or 
require health care providers and health carriers to assign, a 
unique identification number to each patient to safeguard 
patient identity. 
    Subd. 7.  [DATA CLASSIFICATION.] (a) Data collected through 
the large-scale data base initiatives of the health care 
analysis unit required by section 62J.31 that identify 
individuals are private data on individuals.  Data not on 
individuals are nonpublic data.  The commissioner may release 
private data on individuals and nonpublic data to researchers 
affiliated with university research centers or departments who 
are conducting research on health outcomes, practice parameters, 
and medical practice style; researchers working under contract 
with the commissioner; and individuals purchasing health care 
services for health carriers and groups.  Prior to releasing any 
nonpublic or private data under this paragraph that identify or 
relate to a specific health carrier, medical provider, or health 
care facility, the commissioner shall provide at least 30 days' 
notice to the subject of the data, including a copy of the 
relevant data, and allow the subject of the data to provide a 
brief explanation or comment on the data which must be released 
with the data.  To the extent reasonably possible, release of 
private or confidential data under this chapter shall be made 
without releasing data that could reveal the identity of 
individuals and should instead be released using the 
identification numbers required by subdivision 6. 
    (b) Summary data derived from data collected through the 
large-scale data base initiatives of the health care analysis 
unit may be provided under section 13.05, subdivision 7, and may 
be released in studies produced by the commissioner. 
    (c) The commissioner shall adopt rules to establish 
criteria and procedures to govern access to and the use of data 
collected through the initiatives of the health care analysis 
unit. 
    Subd. 8.  [DATA COLLECTION ADVISORY COMMITTEE.] The 
commissioner shall convene a 15-member data collection advisory 
committee consisting of health service researchers, health care 
providers, health carrier representatives, representatives of 
businesses that purchase health coverage, and consumers.  Six 
members of this committee must be health care providers.  The 
advisory committee shall evaluate methods of data collection and 
shall recommend to the commissioner methods of data collection 
that minimize administrative burdens, address data privacy 
concerns, and meet the needs of health service researchers.  The 
advisory committee is governed by section 15.059. 
    Subd. 9.  [FEDERAL AND OTHER GRANTS.] The commissioner 
shall seek federal funding, and funding from private and other 
nonstate sources, for the initiatives of the health care 
analysis unit. 
    Subd. 10.  [CONTRACTS AND GRANTS.] To carry out the duties 
assigned in sections 62J.30 to 62J.34, the commissioner may 
contract with or provide grants to private sector entities.  Any 
contract or grant must require the private sector entity to 
maintain the data on individuals which it receives according to 
the statutory provisions applicable to the data. 
    Subd. 11.  [RULEMAKING.] The commissioner may adopt 
permanent and emergency rules to implement sections 62J.30 to 
62J.34.  
    Sec. 2.  [62J.31] [LARGE-SCALE DATA BASE.] 
    Subdivision 1.  [ESTABLISHMENT.] The health care analysis 
unit shall establish a large-scale data base for a limited 
number of health conditions.  This initiative must meet the 
requirements of this section. 
    Subd. 2.  [SPECIFIC HEALTH CONDITIONS.] (a) The data must 
be collected for specific health conditions, rather than 
specific procedures, types of health care providers, or 
services.  The health care analysis unit shall designate a 
limited number of specific health conditions for which data 
shall be collected during the first year of operation.  For 
subsequent years, data may be collected for additional specific 
health conditions.  The number of specific conditions for which 
data is collected is subject to the availability of 
appropriations. 
    (b) The initiative must emphasize conditions that account 
for significant total costs, when considering both the frequency 
of a condition and the unit cost of treatment.  The initial 
emphasis must be on the study of conditions commonly treated in 
hospitals on an inpatient or outpatient basis, or in 
freestanding outpatient surgical centers.  This initial emphasis 
may be expanded to include entire episodes of care for a given 
condition, whether or not treatment includes use of a hospital 
or a freestanding outpatient surgical center, if adequate data 
collection and evaluation techniques are available for that 
condition.  
    Subd. 3.  [INFORMATION TO BE COLLECTED.] The data collected 
must include information on health outcomes, including 
information on mortality, morbidity, patient functional status 
and quality of life, symptoms, and patient satisfaction.  The 
data collected must include information necessary to measure and 
make adjustments for differences in the severity of patient 
condition across different health care providers, and may 
include data obtained directly from the patient or from patient 
medical records.  The data must be collected in a manner that 
allows comparisons to be made between providers, health 
carriers, public programs, and other entities. 
    Subd. 4.  [DATA COLLECTION AND REVIEW.] Data collection for 
any one condition must continue for a sufficient time to 
permit:  adequate analysis by researchers and appropriate 
providers, including providers who will be impacted by the data; 
feedback to providers; and monitoring for changes in practice 
patterns.  The health care analysis unit shall annually review 
all specific health conditions for which data is being 
collected, in order to determine if data collection for that 
condition should be continued. 
    Subd. 5.  [USE OF EXISTING DATA BASES.] (a) The health care 
analysis unit shall negotiate with private sector organizations 
currently collecting data on specific health conditions of 
interest to the unit, in order to obtain required data in a 
cost-effective manner and minimize administrative costs.  The 
unit shall attempt to establish linkages between the large scale 
data base established by the unit and existing private sector 
data bases and shall consider and implement methods to 
streamline data collection in order to reduce public and private 
sector administrative costs. 
    (b) The health care analysis unit shall use existing public 
sector data bases, such as those existing for medical assistance 
and Medicare, to the greatest extent possible.  The unit shall 
establish linkages between existing public sector data bases and 
consider and implement methods to streamline public sector data 
collection in order to reduce public and private sector 
administrative costs. 
    Sec. 3.  [62J.32] [ANALYSIS AND USE OF DATA COLLECTED 
THROUGH THE LARGE-SCALE DATA BASE.] 
    Subdivision 1.  [DATA ANALYSIS.] The health care analysis 
unit shall analyze the data collected on specific health 
conditions using existing practice parameters and newly 
researched practice parameters, including those established 
through the outcomes research studies of the federal 
government.  The unit may use the data collected to develop new 
practice parameters, if development and refinement is based on 
input from and analysis by practitioners, particularly those 
practitioners knowledgeable about and impacted by practice 
parameters.  The unit may also refine existing practice 
parameters, and may encourage or coordinate private sector 
research efforts designed to develop or refine practice 
parameters. 
    Subd. 2.  [EDUCATIONAL EFFORTS.] The health care analysis 
unit shall maintain and improve the quality of health care in 
Minnesota by providing practitioners in the state with 
information about practice parameters.  The unit shall promote, 
support, and disseminate parameters for specific, appropriate 
conditions, and the research findings on which these parameters 
are based, to all practitioners in the state who diagnose or 
treat the medical condition. 
    Subd. 3.  [PEER REVIEW.] The unit may require peer review 
by the Minnesota Medical Association, Minnesota Chiropractic 
Association or appropriate health licensing board for specific 
health care conditions for which practice in all or part of the 
state deviates from practice parameters.  The commissioner may 
also require peer review by the Minnesota Medical Association, 
Minnesota Chiropractic Association or appropriate health 
licensing board for specific conditions for which there are 
large variations in treatment method or frequency of treatment 
in all or part of the state.  Peer review may be required for 
all practitioners statewide, or limited to practitioners in 
specific areas of the state.  The peer review must determine 
whether the procedures conducted by practitioners are necessary 
and appropriate, and within acceptable and prevailing practice 
parameters that have been disseminated by the health care 
analysis unit in conjunction with the appropriate professional 
organizations.  If a practitioner continues to perform 
procedures that are inappropriate, even after educational 
efforts by the review panel, the practitioner may be reported to 
the appropriate professional licensing board. 
    Subd. 4.  [PRACTICE PARAMETER ADVISORY COMMITTEE.] The 
commissioner shall convene a 15-member practice parameter 
advisory committee comprised of eight health care professionals, 
and representatives of the research community and the medical 
technology industry.  The committee shall present 
recommendations on the adoption of practice parameters to the 
commissioner and the Minnesota health care commission and 
provide technical assistance as needed to the commissioner and 
the commission.  The advisory committee is governed by section 
15.059, but does not expire. 
    Sec. 4.  [62J.33] [TECHNICAL ASSISTANCE FOR PURCHASERS.] 
    The health care analysis unit shall provide technical 
assistance to health plan and health care purchasers.  The unit 
shall collect information about: 
    (1) premiums, benefit levels, managed care procedures, 
health care outcomes, and other features of popular health plans 
and health carriers; and 
    (2) prices, outcomes, provider experience, and other 
information for services less commonly covered by insurance or 
for which patients commonly face significant out-of-pocket 
expenses. 
    The commissioner shall publicize this information in an 
easily understandable format. 
    Sec. 5.  [62J.34] [OUTCOME-BASED PRACTICE PARAMETERS.] 
    Subdivision 1.  [PRACTICE PARAMETERS.] The health care 
analysis unit may develop, adopt, revise, and disseminate 
practice parameters, and disseminate research findings, that are 
supported by medical literature and appropriately controlled 
studies to minimize unnecessary, unproven, or ineffective care.  
Among other appropriate activities relating to the development 
of practice parameters, the health care analysis unit shall: 
    (1) determine uniform specifications for the collection, 
transmission, and maintenance of health outcomes data; and 
    (2) conduct studies and research on the following subjects: 
    (i) new and revised practice parameters to be used in 
connection with state health care programs and other settings; 
    (ii) the comparative effectiveness of alternative modes of 
treatment, medical equipment, and drugs; 
    (iii) the relative satisfaction of participants with their 
care, determined with reference to both provider and mode of 
treatment; 
    (iv) the cost versus the effectiveness of health care 
treatments; and 
    (v) the impact on cost and effectiveness of health care of 
the management techniques and administrative interventions used 
in the state health care programs and other settings. 
    Subd. 2.  [APPROVAL.] The commissioner of health, after 
receiving the advice and recommendations of the Minnesota health 
care commission, may approve practice parameters that are 
endorsed, developed, or revised by the health care analysis 
unit.  The commissioner is exempt from the rulemaking 
requirements of chapter 14 when approving practice parameters 
approved by the federal agency for health care policy and 
research, practice parameters adopted for use by a national 
medical society, or national medical specialty society.  The 
commissioner shall use rulemaking to approve practice parameters 
that are newly developed or substantially revised by the health 
care analysis unit.  Practice parameters adopted without 
rulemaking must be published in the State Register. 
    Subd. 3.  [MEDICAL MALPRACTICE CASES.] (a) In an action 
against a provider for malpractice, error, mistake, or failure 
to cure, whether based in contract or tort, adherence to a 
practice parameter approved by the commissioner of health under 
subdivision 2 is an absolute defense against an allegation that 
the provider did not comply with accepted standards of practice 
in the community. 
    (b) Evidence of a departure from a practice parameter is 
admissible only on the issue of whether the provider is entitled 
to an absolute defense under paragraph (a). 
    (c) Paragraphs (a) and (b) apply to claims arising on or 
after August 1, 1993, or 90 days after the date the commissioner 
approves the applicable practice parameter, whichever is later. 
    (d) Nothing in this section changes the standard or burden 
of proof in an action alleging a delay in diagnosis, a 
misdiagnosis, inappropriate application of a practice parameter, 
failure to obtain informed consent, battery or other intentional 
tort, breach of contract, or product liability. 
    Sec. 6.  Minnesota Statutes 1991 Supplement, section 
145.61, subdivision 5, is amended to read: 
    Subd. 5.  "Review organization" means a nonprofit 
organization acting according to clause (k) or a committee whose 
membership is limited to professionals, administrative staff, 
and consumer directors, except where otherwise provided for by 
state or federal law, and which is established by a hospital, by 
a clinic, by one or more state or local associations of 
professionals, by an organization of professionals from a 
particular area or medical institution, by a health maintenance 
organization as defined in chapter 62D, by a nonprofit health 
service plan corporation as defined in chapter 62C, by a 
professional standards review organization established pursuant 
to United States Code, title 42, section 1320c-1 et seq., or by 
a medical review agent established to meet the requirements of 
section 256B.04, subdivision 15, or 256D.03, subdivision 7, 
paragraph (b), or by the department of human services, to gather 
and review information relating to the care and treatment of 
patients for the purposes of: 
    (a) evaluating and improving the quality of health care 
rendered in the area or medical institution; 
    (b) reducing morbidity or mortality; 
    (c) obtaining and disseminating statistics and information 
relative to the treatment and prevention of diseases, illness 
and injuries; 
    (d) developing and publishing guidelines showing the norms 
of health care in the area or medical institution; 
    (e) developing and publishing guidelines designed to keep 
within reasonable bounds the cost of health care; 
    (f) reviewing the quality or cost of health care services 
provided to enrollees of health maintenance organizations, 
health service plans, and insurance companies; 
    (g) acting as a professional standards review organization 
pursuant to United States Code, title 42, section 1320c-1 et 
seq.; 
    (h) determining whether a professional shall be granted 
staff privileges in a medical institution, membership in a state 
or local association of professionals, or participating status 
in a nonprofit health service plan corporation, health 
maintenance organization, or insurance company, or whether a 
professional's staff privileges, membership, or participation 
status should be limited, suspended or revoked; 
    (i) reviewing, ruling on, or advising on controversies, 
disputes or questions between: 
    (1) health insurance carriers, nonprofit health service 
plan corporations, or health maintenance organizations and their 
insureds, subscribers, or enrollees; 
    (2) professional licensing boards acting under their powers 
including disciplinary, license revocation or suspension 
procedures and health providers licensed by them when the matter 
is referred to a review committee by the professional licensing 
board; 
    (3) professionals and their patients concerning diagnosis, 
treatment or care, or the charges or fees therefor; 
    (4) professionals and health insurance carriers, nonprofit 
health service plan corporations, or health maintenance 
organizations concerning a charge or fee for health care 
services provided to an insured, subscriber, or enrollee; 
    (5) professionals or their patients and the federal, state, 
or local government, or agencies thereof; 
    (j) providing underwriting assistance in connection with 
professional liability insurance coverage applied for or 
obtained by dentists, or providing assistance to underwriters in 
evaluating claims against dentists; 
    (k) acting as a medical review agent under section 256B.04, 
subdivision 15, or 256D.03, subdivision 7, paragraph (b); or 
    (l) providing recommendations on the medical necessity of a 
health service, or the relevant prevailing community standard 
for a health service; or 
    (m) reviewing a provider's professional practice as 
requested by the health care analysis unit under section 62J.32. 
    Sec. 7.  Minnesota Statutes 1991 Supplement, section 
145.64, subdivision 2, is amended to read: 
    Subd. 2.  [PROVIDER DATA.] The restrictions in subdivision 
1 shall not apply to professionals requesting or seeking through 
discovery, data, information, or records relating to their 
medical staff privileges, membership, or participation status.  
However, any data so disclosed in such proceedings shall not be 
admissible in any other judicial proceeding than those brought 
by the professional to challenge an action relating to the 
professional's medical staff privileges or participation status. 
     Sec. 8.  [214.16] [DATA COLLECTION; HEALTH CARE PROVIDER 
TAX.] 
    Subdivision 1.  [DEFINITIONS.] For purposes of this 
section, the following terms have the meanings given them. 
    (a) "Board" means the boards of medical practice, 
chiropractic examiners, nursing, optometry, dentistry, pharmacy, 
and podiatry. 
    (b) "Regulated person" means a licensed physician, 
chiropractor, nurse, optometrist, dentist, pharmacist, or 
podiatrist. 
    Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
assist the commissioner of health and the data analysis unit in 
data collection activities required under this article and shall 
assist the commissioner of revenue in activities related to 
collection of the health care provider tax required under 
article 9.  Upon the request of the commissioner, the data 
analysis unit, or the commissioner of revenue, the board shall 
make available names and addresses of current licensees and 
provide other information or assistance as needed. 
    Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
shall take disciplinary action against a regulated person for: 
    (1) failure to provide the commissioner of health with data 
on gross patient revenue as required under section 62J.04; 
    (2) failure to provide the health care analysis unit with 
data as required under this article; 
    (3) failure to provide the commissioner of revenue with 
data on gross revenue and other information required for the 
commissioner to implement sections 295.50 to 295.58; and 
    (4) failure to pay the health care provider tax required 
under section 295.52. 
    Sec. 9.  [STUDY OF ADMINISTRATIVE COSTS.] 
    The health care analysis unit shall study costs and 
requirements incurred by health carriers, group purchasers, and 
health care providers that are related to the collection and 
submission of information to the state and federal government, 
insurers, and other third parties.  The unit shall recommend to 
the commissioner of health and the Minnesota health care 
commission by January 1, 1994, any reforms that may reduce these 
costs without compromising the purposes for which the 
information is collected. 

                                ARTICLE 8

                           MEDICAL MALPRACTICE
    Section 1.  Minnesota Statutes 1990, section 145.682, 
subdivision 4, is amended to read: 
    Subd. 4.  [IDENTIFICATION OF EXPERTS TO BE CALLED.] (a) The 
affidavit required by subdivision 2, clause (2), must be signed 
by each expert listed in the affidavit and by the plaintiff's 
attorney and state the identity of each person whom plaintiff 
expects to call as an expert witness at trial to testify with 
respect to the issues of malpractice or causation, the substance 
of the facts and opinions to which the expert is expected to 
testify, and a summary of the grounds for each opinion.  Answers 
to interrogatories that state the information required by this 
subdivision satisfy the requirements of this subdivision if they 
are signed by the plaintiff's attorney and by each expert listed 
in the answers to interrogatories and served upon the defendant 
within 180 days after commencement of the suit against the 
defendant. 
    (b) The parties or the court for good cause shown, may by 
agreement, provide for extensions of the time limits specified 
in subdivision 2, 3, or this subdivision.  Nothing in this 
subdivision may be construed to prevent either party from 
calling additional expert witnesses or substituting other expert 
witnesses. 
    (c) In any action alleging medical malpractice, all expert 
interrogatory answers must be signed by the attorney for the 
party responding to the interrogatory and by each expert listed 
in the answers.  The court shall include in a scheduling order a 
deadline prior to the close of discovery for all parties to 
answer expert interrogatories for all experts to be called at 
trial.  No additional experts may be called by any party without 
agreement of the parties or by leave of the court for good cause 
shown. 
    Sec. 2.  [604.11] [MEDICAL MALPRACTICE CASES.] 
    Subdivision 1.  [DISCOVERY.] Pursuant to the time 
limitations set forth in the Minnesota rules of civil procedure, 
the parties to any medical malpractice action may exchange the 
uniform interrogatories in subdivision 3 and ten additional 
nonuniform interrogatories.  Any subparagraph of a nonuniform 
interrogatory will be treated as one nonuniform interrogatory.  
By stipulation of the parties, or by leave of the court upon a 
showing of good cause, more than ten additional nonuniform 
interrogatories may be propounded by a party.  In addition, the 
parties may submit a request for production of documents 
pursuant to rule 34 of the Minnesota rules of civil procedure. 
    Subd. 2.  [ALTERNATIVE DISPUTE RESOLUTION.] At the time a 
trial judge orders a case for trial, the court shall require the 
parties to discuss and determine whether a form of alternative 
dispute resolution would be appropriate or likely to resolve 
some or all of the issues in the case.  Alternative dispute 
resolution may include arbitration, mediation, summary jury 
trial, or other alternatives suggested by the court or parties, 
and may be either binding or nonbinding.  All parties must agree 
unanimously before alternative dispute resolution proceeds. 
    Subd. 3.  [UNIFORM INTERROGATORIES.] (a) Uniform 
plaintiff's interrogatories to the defendant are as follows: 
 PLAINTIFF'S INTERROGATORIES TO DEFENDANT 
INTERROGATORY NO. 1: 
    Please attach a complete curriculum vitae for Dr. 
(..........), M.D., which should include, but is not limited to, 
the following information: 
    a.  Name; 
    b.  Office address; 
    c.  Name of practice; 
    d.  Identities of partners or associates, including their 
names, specialties, and how long they have been associated with 
Dr. (..........); 
    e.  Specialty of Dr. (.........); 
    f.  Age; 
    g.  The names and dates of attendance at any medical 
schools; 
    h.  Full information as to internship or residency, 
including the place and dates of the internship or residency as 
well as any specialized fields of practice engaged in during 
such internship or residency; 
    i.  The complete history of the practice of Dr. 
(..........) from and after medical school, setting forth the 
places where Dr. (..........) practiced medicine, the persons 
with whom Dr. (..........) was associated, the dates of the 
practice, and the reasons for leaving the practice; 
    j.  Full information as to any board certifications Dr. 
(..........) may hold, including the field of specialty and the 
dates of the certifications and any recertifications; 
    k.  Identifying the medical societies and organizations to 
which Dr. (..........) belongs, giving full information as to 
any offices held in the organizations; 
    l.  Identifying all professional journal articles, 
treatises, textbooks, abstracts, speeches, or presentations 
which Dr. (..........) has authored or contributed to; and 
    m.  Any other information which describes or explains the 
training and experience of Dr. (..........) for the practice of 
medicine.  
INTERROGATORY NO. 2:  
    Has Dr. (..........) been the subject of any professional 
disciplinary actions of any kind and, if so:  
    State whether Dr. (..........'s) license to practice 
medicine has ever been revoked or publicly limited in any way 
and, if so, give the date and the reasons for such revocation or 
restriction. 
INTERROGATORY NO. 3:  
    Please set forth a listing by author, title, publisher, and 
date of publication of all the medical texts referred to by Dr. 
(..........) with respect to the practice of medicine during the 
past five years.  
INTERROGATORY NO. 4:  
    Please set forth a complete listing of the medical and 
professional journals to which Dr. (..........) subscribes or 
has subscribed within the past five years.  
INTERROGATORY NO. 5:  
    As to each expert whom you expect to call as a witness at 
trial, please state:  
    a.  The expert's name, address, occupation, and title; 
    b.  The expert's field of expertise, including 
subspecialties, if any; 
    c.  The expert's education background; 
    d.  The expert's work experience in the field of expertise; 
    e.  All professional societies and associations of which 
the expert is a member; 
    f.  All hospitals at which the expert has staff privileges 
of any kind; 
    g.  All written publications of which the expert is the 
author, giving the title of the publication and when and where 
it was published.  
INTERROGATORY NO. 6:  
    With respect to each person identified in answer to the 
foregoing interrogatory, state:  
    a.  The subject matter on which the person is expected to 
testify; 
    b.  The substance of the facts and opinions to which the 
person is expected to testify; and 
    c.  A summary of the grounds for each opinion, including 
the specific factual data upon which the opinion will be based.  
INTERROGATORY NO. 7:  
    Please state whether there is any policy of insurance that 
will provide coverage to the defendant should liability attach 
on the basis of the allegations contained in the plaintiff's 
Complaint.  If so, state with regard to each policy applicable:  
    a.  The name and address of the insurer; 
    b.  The exact limits of coverage applicable; 
    c.  Whether any reservation of rights or controversy or 
coverage dispute exists between you and the insurance company. 
    Please attach copies of each policy to your Answers.  
INTERROGATORY NO. 8:  
    State the full name, present address, occupation, age, 
present employer, and the present employer's address of each 
physician, nurse, or other medical personnel in the employ of 
the defendant or defendant's professional association who 
treated, cared for, examined, or otherwise attended (name) from 
(date 1), through (date 2).  With regard to every individual, 
please state:  
    a.  Each date upon which the individual attended (name); 
    b.  The nature of the treatment or care rendered (name) on 
each date; 
    c.  The qualifications and area of specialty of each 
individual; and 
    d.  The present address of each individual.  
    In responding to this interrogatory, referring plaintiff's 
counsel to medical records will not be deemed to be a sufficient 
answer as plaintiff's counsel has reviewed the medical records 
and is not able to determine the identity of the individuals.  
INTERROGATORY NO. 9:  (Hospital defendant only) 
    Please state the name, address, telephone number, and last 
known employer of the nursing supervisor for the shifts set 
forth in the preceding interrogatory.  
INTERROGATORY NO. 10:  
    Please identify by name and current or last known address 
and telephone number each and every person who has or claims to 
have knowledge of any facts relevant to the issues in this 
lawsuit, stating in detail all facts each person has or claims 
to have knowledge of.  
INTERROGATORY NO. 11:  
    a.  Have any statements been taken from nonparties or the 
plaintiff(s) pertaining to this claim?  For purposes of this 
request, a statement previously made is (1) a written statement 
signed or otherwise adopted or approved by the person making it, 
or (2) a stenographic, mechanical, electrical, or other 
recording, or a transcription thereof, which is a substantial 
verbatim recital or an oral statement by the person making it 
and contemporaneously recorded.  With regard to each statement, 
state:  
    1.  The name and address of each person making a statement; 
    2.  The date on which the statement was made; 
    3.  The name and address of the person or persons taking 
each statement; and 
    4.  The subject matter of each statement.  
    b.  Attach a copy of each statement to the answers to these 
interrogatories.  
    c.  If you claim that any information, document, or thing 
sought or requested is privileged, protected by the work product 
doctrine, or otherwise not discoverable, please:  
    1.  Identify each document or thing by date, author, 
subject matter, and recipient; 
    2.  State in detail the legal and factual basis for 
asserting said privilege, work product protection, or objection, 
or refusing to provide discovery as requested.  
INTERROGATORY NO. 12:  
    Do you or anyone acting on your behalf know of any 
photographs, films, or videotapes depicting [..........]?  If 
so, state:  
    a.  The number of photographs or feet of film or videotape; 
    b.  The places, objects, or persons photographed, filmed, 
or videotaped; 
    c.  The date the photographs, film, or videotapes were 
taken; 
    d.  The name, address, and telephone number of each person 
who has the original or copy. 
    Please attach copies of any photographs or videotapes.  
INTERROGATORY NO. 13:  
    If you claim that injuries to plaintiff complained of in 
plaintiff's Complaint were contributed to or caused by plaintiff 
or any other person, including any other physician, hospital, 
nurse, or other health care provider, please state:  
    a.  The facts upon which you base the claim; 
    b.  The name, current address, and current employer of each 
person whom you allege was or may have been negligent.  
INTERROGATORY No. 14:  
    Please state the name or names of the individuals supplying 
the information contained in your Answers to these 
Interrogatories.  In addition, please state these individuals' 
current addresses, places of employment, and their current 
position at their place of employment.  
INTERROGATORY NO. 15:  
    Does defendant have knowledge of any conversations or 
statements made by the plaintiff(s) concerning any subject 
matter relative to this action?  If so, please state:  
    a.  The name and last known address of each person who 
claims to have heard such conversations or statements; 
    b.  The date of such conversations or statements; 
    c.  The summary or the substance of each conversation or 
statement.  
INTERROGATORY NO. 16:  
    Did the defendant, the defendant's agents, or employees 
conduct a surveillance of the plaintiff(s)?  If so, state:  
    a.  Name, address, and occupation of the person who 
conducted each surveillance; 
    b.  Name and address of the person who requested each 
surveillance to be made; 
    c.  Date or dates on which each surveillance was conducted; 
    d.  Place or places where each surveillance was performed; 
    e.  Information or facts discovered in the surveillance; 
    f.  Name and address of the person now having custody of 
each written report, photographs, videotapes, or other documents 
concerning each surveillance.  
INTERROGATORY NO. 17:  
    Are you aware of any person you may call as a witness at 
the trial of this action who may have or claims you have any 
information concerning the medical, mental, or physical 
condition of the plaintiff(s) prior to the incident in 
question?  ..........  If so, state:  
    a.  The name and last know address of each person and your 
means of ascertaining the present whereabouts of each person; 
    b.  The occupation and employer of each person; 
    c.  The subject and substance of the information each 
person claims to have.  
INTERROGATORY NO. 18:  
    As to any affirmative defenses you allege, state the 
factual basis of and describe each affirmative defense, the 
evidence which will be offered at trial concerning any alleged 
affirmative defense, including the names of any witnesses who 
will testify in support thereof, and the descriptions of any 
exhibits which will be offered to establish each affirmative 
defense.  
INTERROGATORY NO. 19:  
    Do you contend that any entries in the answering 
defendant's medical/hospital records are incorrect or 
inaccurate?  If so, state:  
    a.  The precise entry(ies) that you think are incorrect or 
inaccurate; 
    b.  What you contend the correct or accurate entry(ies) 
should have been; 
    c.  The name, address, and employer of each and every 
person who has knowledge pertaining to a. and b.; 
    d.  A description, including the author and title of each 
and every document that you claim supports your answer to a. and 
b.; 
    e.  The name, address, and telephone number of each and 
every person you intend to call as a witness in support of your 
contention. 
    (b) Uniform defendant's interrogatories to the plaintiff 
for personal injury cases are as follows: 
 DEFENDANT'S INTERROGATORIES TO PLAINTIFF (PERSONAL INJURY)
   1.  State your full name, address, date of birth, marital 
status, and social security number. 
    2.  If you have been employed at any time in the past ten 
years, with respect to this period state the names and addresses 
of each of your employers, describe the nature of your work, and 
state the approximate dates of each employment. 
    3.  If you have ever been a party to a lawsuit where you 
claimed damages for injury to your person, state the title of 
the suit, the court file number, the date of filing, the name 
and address of any involved insurance carrier, the kind of 
claim, and the ultimate disposition of the same.  (This is meant 
to include workers' compensation and social security disability 
claims.) 
    4.  Identify by name and address each and every physician, 
surgeon, medical practitioner, or other health care practitioner 
whom you consulted or who provided advice, treatment, or care 
for you at any time within the last ten years and, with respect 
to each contract, consultation, treatment, or advice, describe 
the same with particularity and indicate the reasons for the 
same. 
    5.  State the name and address of each and every hospital, 
treatment facility, or institution in which plaintiff has been 
confined for any reason at any time, and set forth with 
particularity the reasons for each confinement and/or treatment 
and the dates of each. 
    6.  Itemize all special damages which you claim in this 
case and specify, where appropriate, the basis and reason for 
your calculation as to each item of special damages. 
    7.  List all payments related to the injury or disability 
in question that have been made to you, or on your behalf, from 
"collateral sources" as that term is defined in Minnesota 
Statutes, section 548.36. 
    8.  List all amounts that have been paid, contributed, or 
forfeited by, or on behalf of, you or members of your immediate 
family for the two-year period immediately before the accrual of 
this action to secure the right to collateral source benefits 
that have been made to you or on your behalf. 
    9.  Do you contend any of the following: 
    a.  That defendant did not possess that degree of skill and 
learning which is normally possessed and used by medical 
professionals in good standing in a similar practice and under 
like circumstances; 
    b.  That defendant did not exercise that degree of skill 
and learning which is normally used by medical professionals in 
good standing in a similar practice and under like circumstances.
    10.  If your answer to any part of the foregoing 
interrogatory is yes, with respect to each answer: 
    a.  Specify in detail each contention; 
    b.  Specify in detail each act or omission of defendant 
which you contend was a departure from the degree of skill and 
learning normally used by medical professionals in a similar 
practice and under like circumstances; 
    c.  Specify in detail the conduct of defendant as you claim 
it should have been; 
    d.  Specify in detail each fact known to you and your 
attorneys upon which you base your answers to interrogatories 9 
and 10. 
    11.  If you claim defendant failed to disclose to you any 
risk concerning the involved medical care and treatment which, 
if disclosed, would have resulted in your refusing to consent to 
the medical care or treatment, then: 
    a.  State in detail each and every thing defendant did tell 
you concerning the risks of the involved medical care and 
treatment, giving the approximate dates thereof and identifying 
all persons in attendance; 
    b.  Describe each and every risk which you claim defendant 
should have, but failed to, disclose to you; 
    c.  Describe in detail precisely what you claim defendant 
should have said to you, but failed to say, concerning the risks 
of the involved medical care and treatment; 
    d.  Explain in detail all facts and reasons upon which you 
base the claim that, if the foregoing risks were explained to 
you, you would not have consented to the involved medical care 
and treatment. 
    12.  Please identify by name and current or last known 
address and telephone number each and every person who has or 
claims to have any knowledge of any facts relevant to the issues 
in this lawsuit, stating in detail all facts each person has or 
claims to have knowledge of. 
    13.  As to each expert whom you expect to call as a witness 
at trial, please state: 
    a.  The expert's name, address, occupation, and title; 
    b.  The expert's field of expertise, including 
subspecialties, if any; 
    c.  The expert's education background; 
    d.  The expert's work experience in the field of expertise; 
    e.  All professional societies and associations of which 
the expert is a member; 
    f.  All hospitals at which the expert has staff privileges 
of any kind; 
    g.  All written publications of which the expert is the 
author, giving the title of the publication and when and where 
it was published. 
    14.  With respect to each person identified in answer to 
the foregoing interrogatory, state: 
    a.  The subject matter on which the expert is expected to 
testify; 
    b.  The substance of the facts and opinions to which the 
expert is expected to testify; and 
    c.  A summary of the grounds for each opinion, including 
the specific factual data upon which the opinion will be based. 
    15.  Have any statements been taken from any defendant or 
nonparty pertaining to this claim?  For purposes of this 
request, a statement previously made is:  (1) a written 
statement signed or otherwise adopted or approved by the person 
making it, or (2) a stenographic, mechanical, electrical, or 
other recording, or a transcription thereof, which is a 
substantial verbatim recital or an oral statement by the person 
making it and contemporaneously recorded.  With regard to each 
statement, state: 
    a.  The name and address of each person making a statement; 
    b.  The date on which the statement was made; 
    c.  The name and address of the person or persons taking 
each statement; and 
    d.  The subject matter of the statement; 
    e.  Attach a copy of each statement to the answers to these 
interrogatories. 
    f.  If you claim that any information, document, or thing 
sought or requested is privileged, protected by the work product 
doctrine, or otherwise not discoverable, please: 
    1.  Identify each document or thing by date, author, 
subject matter, and recipient; 
    2.  State in detail the legal and factual basis for 
asserting said privilege, work product protection, or objection, 
or refusing to provide discovery as requested. 
    (c) Uniform defendant's interrogatories to the plaintiff 
for wrongful death cases are as follows: 
 DEFENDANT'S INTERROGATORIES TO PLAINTIFF (WRONGFUL DEATH)
    1.  State the full name, age, present occupation, business 
address, present residence address, and address for a period of 
ten years prior to the present date for each heir or next of kin 
(including the Trustee) on whose behalf this action has been 
commenced. 
    2.  Set forth the date of birth and place of birth of the 
decedent. 
    3.  Set forth the date of birth and place of birth of the 
decedent's surviving spouse. 
    4.  Set forth the names, date of birth, and places of birth 
of any children of decedent. 
    5.  Set forth the names, addresses, and dates of birth of 
all heirs and next of kin of decedent and set forth the 
relationship of each individual to decedent. 
    6.  Set forth the date of marriage between decedent and 
decedent's surviving spouse and the place of the marriage. 
    7.  Set forth whether or not there were any proceedings for 
a legal separation or divorce instituted between decedent and 
decedent's surviving spouse and, if so, set forth the dates that 
the proceedings were instituted, the result of the proceedings, 
and the court in which the proceedings were instituted. 
    8.  Set forth whether or not decedent was ever married to 
anyone other than decedent's surviving spouse and if so, set 
forth the names of any other spouse or spouses and the inclusive 
dates of any other marriages. 
    9.  Set forth whether or not decedent's surviving spouse 
has ever been married to anyone other than decedent and, if so, 
set forth the names of any other spouses and the inclusive dates 
of any other marriages. 
    10.  If you claim defendant failed to disclose to you any 
risk concerning the involved medical care and treatment which, 
if disclosed, would have resulted in the decedent's refusing to 
consent to the medical care or treatment, then: 
    a.  State in detail each and every thing defendant did tell 
you concerning the risks of the involved medical care and 
treatment, giving the approximate dates thereof and identify all 
persons in attendance; 
    b.  Describe each and every risk which you claim defendants 
should have, but failed to, disclose to you; 
    c.  Describe in detail precisely what you claim defendant 
should have said to you, but failed to say, concerning the risks 
of the involved medical care and treatment; 
    d.  Explain in detail all facts and reasons upon which you 
base the claim that, if the foregoing risks were explained to 
you, you would not have consented to the involved medical care 
and treatment. 
    11.  Was the deceased employed at the time of death? 
    12.  If the answer to Interrogatory No. 10 is yes, indicate 
the following: 
    a.  The name and address of the deceased's employer and the 
nature of the employment; 
    b.  The amount of earnings from the employment; 
    c.  Defendant requests copies of the decedent's federal and 
state income tax return for the past five years. 
    13.  If decedent was self-employed for any period of time 
during the ten-year period of time immediately preceding 
decedent's death, set forth the following: 
    a.  The inclusive dates of the self-employment; 
    b.  A specific and detailed description of the nature of 
the self-employment; 
    c.  The business name and address under which decedent 
operated; and 
    d.  A specific and detailed description of decedent's 
earnings from the self-employment. 
    14.  Set forth in detail a chronological education history 
of decedent including the name and address of each school 
attended, the inclusive dates of attendance, the date of 
graduation, a description of any degrees awarded, a description 
of the major area of study and the grade point average upon 
graduation. 
    15.  Did the decedent make any contribution of money, 
property, or other items having a money worth toward the 
support, maintenance, or well-being of any next of kin and, if 
so, please itemize the following: 
    a.  The amount and nature of the contribution; 
    b.  The date(s) upon which each contribution was made; 
    c.  The persons(s) receiving each contribution; 
    d.  The period of time over which the contributions were 
made; 
    e.  The regularity or irregularity of the contributions; 
    f.  Identify by date, author, type, recipient, and present 
custodian each and every document referring to or otherwise 
evidencing each contribution. 
    16.  Identify by name and address each and every physician, 
surgeon, medical practitioner, or other health care practitioner 
whom the decedent consulted or who provided advice, treatment, 
or care for the decedent at any time within ten years prior to 
death and, with respect to the contact, consultation, treatment, 
or advice, describe the same with particularity and indicate the 
reasons for the same. 
    17.  State the name and address of each and every hospital, 
treatment facility, or institution in which the decedent has 
been confined for any reason at any time, and set forth with 
particularity the reasons for each confinement and/or treatment 
and the dates of each. 
    18.  Itemize all special damages which you claim in this 
case and specify, where appropriate, the basis and reason for 
your calculation as to each item of special damages. 
    19.  List any payment related to the injury or disability 
in question made to you, or on your behalf, from "collateral 
sources" as that term is defined in Minnesota Statutes, section 
548.36. 
    20.  List all amounts that have been paid, contributed or 
forfeited by, or on behalf of, you or members of your immediate 
family for the two-year period immediately before the accrual of 
this action to secure the right to collateral source benefits 
that have been made to you or on your behalf. 
    21.  Do you contend any of the following: 
    a.  That any of the defendants did not possess that degree 
of skill and learning which is normally possessed and used by 
medical professionals in good standing in a similar practice and 
under like circumstances?  If so, identify the defendants; 
    b.  That any of the defendants did not exercise that degree 
of skill and learning which is normally used by medical 
professionals in good standing in a similar practice and under 
like circumstances?  If so, identify the defendants. 
    22.  If your answer to any part of the foregoing 
interrogatory is yes, with respect to each answer: 
    a.  Specify in detail your contention; 
    b.  Specify in detail each act or omission of each 
defendant which you contend was a departure from that degree of 
skill and learning normally used by medical professionals in a 
similar practice and under like circumstances. 
    23.  Please identify by name and current or last known 
address and telephone number of each and every person who has or 
claims to have any knowledge of any facts relevant to the issues 
in this lawsuit, stating in detail all facts each person has or 
claims to have knowledge of. 
    24.  As to each expert whom you expect to call as a witness 
at trial, please state: 
    a.  The expert's name, address, occupation, and title; 
    b.  The expert's field of expertise, including 
subspecialties, if any; 
    c.  The expert's education background; 
    d.  The expert's work experience in the field of expertise; 
    e.  All professional societies and associations of which 
the expert is a member; 
    f.  All hospitals at which the expert has staff privileges 
of any kind; 
    g.  All written publications of which the expert is the 
author, giving the title of the publication and when and where 
it was published. 
    25.  With respect to each person identified in the 
foregoing interrogatory, state: 
    a.  The subject matter on which the expert is expected to 
testify; 
    b.  The substance of the facts and opinions to which the 
expert is expected to testify; and 
    c.  A summary of the grounds for each opinion, including 
the specific factual data upon which the opinion will be based. 
    26.  Set forth in detail anything said or written by which 
plaintiff claims to be relevant to any of the issues in this 
lawsuit, identifying the time and place of each statement, who 
was present, and what was said by each person who was present. 
    27.  Have any statements been taken from any defendant or 
nonparty pertaining to this claim?  For purposes of this 
request, a statement previously made is:  (1) a written 
statement signed or otherwise adopted or approved by the person 
making it, or (2) a stenographic, mechanical, electrical, or 
other recording, or a transcription thereof, which is a 
substantial verbatim recital or an oral statement by the person 
making it and contemporaneously recorded.  With regard to each 
statement, state: 
    a.  The name and address of each person making a statement; 
    b.  The date on which the statement was made; 
    c.  The name and address of the person or persons taking 
each statement; and 
    d.  The subject matter of each statement; 
    e.  Attach a copy of each statement to the answers to these 
interrogatories; 
    f.  If you claim that any information, document or thing 
sought or requested is privileged, protected by the work product 
doctrine, or otherwise not discoverable, please: 
    1.  Identify each document or thing by date, author, 
subject matter, and recipient; 
    2.  State in detail the legal and factual basis for 
asserting said privilege, work product protection, or objection, 
or refusing to provide discovery as requested. 

                                ARTICLE 9

                                FINANCING
    Section 1.  [16A.724] [HEALTH CARE ACCESS FUND.] 
    A health care access fund is created in the state 
treasury.  The fund is a direct appropriated special revenue 
fund.  The commissioner shall deposit to the credit of the fund 
money made available to the fund. 
    Sec. 2.  Minnesota Statutes 1990, section 60A.15, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
before April 15, June 15, and December 15 of each year, every 
domestic and foreign company, including town and farmers' mutual 
insurance companies and, domestic mutual insurance 
companies, health maintenance organizations, and nonprofit 
health service corporations, shall pay to the commissioner of 
revenue installments equal to one-third of the insurer's total 
estimated tax for the current year.  Except as provided 
in paragraph paragraphs (b) and (e), installments must be based 
on a sum equal to two percent of the premiums described in 
paragraph (c).  
    (b) For town and farmers' mutual insurance companies and 
mutual property and casualty insurance companies other than 
those (i) writing life insurance, or (ii) whose total assets on 
December 31, 1989, exceeded $1,600,000,000, the installments 
must be based on an amount equal to the following percentages of 
the premiums described in paragraph (c): 
    (1) for premiums paid after December 31, 1988, and before 
January 1, 1992, one percent; and 
    (2) for premiums paid after December 31, 1991, one-half of 
one percent. 
    (c) Installments under paragraph (a) or, (b), or (e) are 
percentages of gross premiums less return premiums on all direct 
business received by the insurer in this state, or by its agents 
for it, in cash or otherwise, during such year, excepting 
premiums written for marine insurance as specified in 
subdivision 6.  
    (d) Failure of a company to make payments of at least 
one-third of either (1) the total tax paid during the previous 
calendar year or (2) 80 percent of the actual tax for the 
current calendar year shall subject the company to the penalty 
and interest provided in this section, unless the total tax for 
the current tax year is $500 or less. 
     (e) For health maintenance organizations and nonprofit 
health services corporations, the installments must be based on 
an amount equal to one percent of premiums described in 
paragraph (c) that are paid after December 31, 1995. 
    (f) Premiums under the children's health plan, the health 
right plan, and Minnesota comprehensive health insurance plan 
are not subject to tax under this section. 
    Sec. 3.  Minnesota Statutes 1990, section 62C.01, 
subdivision 3, is amended to read: 
    Subd. 3.  [SCOPE.] Every foreign or domestic nonprofit 
corporation organized for the purpose of establishing or 
operating a health service plan in Minnesota whereby health 
services are provided to subscribers to the plan under a 
contract with the corporation shall be subject to and governed 
by Laws 1971, chapter 568, and shall not be subject to the laws 
of this state relating to insurance, except section 60A.15 and 
as otherwise specifically provided.  Laws 1971, chapter 568 
shall apply to all health service plan corporations incorporated 
after August 1, 1971, and to all existing health service plan 
corporations, except as otherwise provided.  Nothing in sections 
62C.01 to 62C.23 shall apply to prepaid group practice plans.  A 
prepaid group practice plan is any plan or arrangement other 
than a service plan, whereby health services are rendered to 
certain patients by providers who devote their professional 
effort primarily to members or patients of the plan, and whereby 
the recipients of health services pay for the services on a 
regular, periodic basis, not on a fee for service basis.  
    Sec. 4.  Minnesota Statutes 1990, section 290.01, 
subdivision 19b, is amended to read: 
    Subd. 19b.  [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For 
individuals, estates, and trusts, there shall be subtracted from 
federal taxable income: 
    (1) interest income on obligations of any authority, 
commission, or instrumentality of the United States to the 
extent includable in taxable income for federal income tax 
purposes but exempt from state income tax under the laws of the 
United States; 
    (2) if included in federal taxable income, the amount of 
any overpayment of income tax to Minnesota or to any other 
state, for any previous taxable year, whether the amount is 
received as a refund or as a credit to another taxable year's 
income tax liability; 
    (3) the amount paid to others not to exceed $650 for each 
dependent in grades kindergarten to 6 and $1,000 for each 
dependent in grades 7 to 12, for tuition, textbooks, and 
transportation of each dependent in attending an elementary or 
secondary school situated in Minnesota, North Dakota, South 
Dakota, Iowa, or Wisconsin, wherein a resident of this state may 
legally fulfill the state's compulsory attendance laws, which is 
not operated for profit, and which adheres to the provisions of 
the Civil Rights Act of 1964 and chapter 363.  As used in this 
clause, "textbooks" includes books and other instructional 
materials and equipment used in elementary and secondary schools 
in teaching only those subjects legally and commonly taught in 
public elementary and secondary schools in this state.  
"Textbooks" does not include instructional books and materials 
used in the teaching of religious tenets, doctrines, or worship, 
the purpose of which is to instill such tenets, doctrines, or 
worship, nor does it include books or materials for, or 
transportation to, extracurricular activities including sporting 
events, musical or dramatic events, speech activities, driver's 
education, or similar programs.  In order to qualify for the 
subtraction under this clause the taxpayer must elect to itemize 
deductions under section 63(e) of the Internal Revenue Code; 
    (4) to the extent included in federal taxable income, 
distributions from a qualified governmental pension plan, an 
individual retirement account, simplified employee pension, or 
qualified plan covering a self-employed person that represent a 
return of contributions that were included in Minnesota gross 
income in the taxable year for which the contributions were made 
but were deducted or were not included in the computation of 
federal adjusted gross income.  The distribution shall be 
allocated first to return of contributions until the 
contributions included in Minnesota gross income have been 
exhausted.  This subtraction applies only to contributions made 
in a taxable year prior to 1985; 
    (5) income as provided under section 290.0802; 
    (6) the amount of unrecovered accelerated cost recovery 
system deductions allowed under subdivision 19g; and 
    (7) to the extent included in federal adjusted gross 
income, income realized on disposition of property exempt from 
tax under section 290.491.; and 
    (8) to the extent not deducted in determining federal 
taxable income, the amount paid for health insurance of 
self-employed individuals as determined under section 162(l) of 
the Internal Revenue Code, except that the 25 percent limit does 
not apply.  If the taxpayer deducted insurance payments under 
section 213 of the Internal Revenue Code of 1986, the 
subtraction under this clause must be reduced by the lesser of: 
    (i) the total itemized deductions allowed under section 
63(d) of the Internal Revenue Code, less state, local, and 
foreign income taxes deductible under section 164 of the 
Internal Revenue Code and the standard deduction under section 
63(c) of the Internal Revenue Code; or 
    (ii) the lesser of (A) the amount of insurance qualifying 
as "medical care" under section 213(d) of the Internal Revenue 
Code to the extent not deducted under section 162(1) of the 
Internal Revenue Code or excluded from income or (B) the total 
amount deductible for medical care under section 213(a). 
 HOSPITALS AND HEALTH CARE PROVIDERS
    Sec. 5.  [295.50] [DEFINITIONS.] 
    Subdivision 1.  [DEFINITIONS.] For purposes of sections 
295.50 to 295.58, the following terms have the meanings given. 
    Subd. 2.  [COMMISSIONER.] "Commissioner" is the 
commissioner of revenue. 
    Subd. 3.  [GROSS REVENUES.] (a) "Gross revenues" are total 
amounts received in money or otherwise by: 
    (1) a resident hospital for inpatient or outpatient 
services as defined in Minnesota Rules, part 4650.0102, subparts 
21 and 29; 
    (2) a nonresident hospital for inpatient or outpatient 
services as defined in Minnesota Rules, part 4650.0102, subparts 
21 and 29, provided to patients domiciled in Minnesota; 
    (3) a resident health care provider, other than a health 
maintenance organization, for covered services listed in section 
256B.0625; 
    (4) a nonresident health care provider for covered services 
listed in section 256B.0625 provided to an individual domiciled 
in Minnesota; 
    (5) a wholesale drug distributor for sale or distribution 
of prescription drugs that are delivered in Minnesota by the 
distributor or a common carrier, unless the prescription drugs 
are delivered to another wholesale drug distributor; and 
    (6) a health maintenance organization as gross premiums for 
enrollees, carrier copayments, and fees for covered services 
listed in section 256B.0625. 
     (b) Gross revenues do not include governmental, foundation, 
or other grants or donations to a hospital or health care 
provider for operating or other costs. 
    Subd. 4.  [HEALTH CARE PROVIDER.] "Health care provider" is 
a vendor of medical care qualifying for reimbursement under the 
medical assistance program provided under chapter 256B, and 
includes health maintenance organizations but excludes hospitals 
and pharmacies. 
    Subd. 5.  [HMO.] "Health maintenance organization" is a 
nonprofit corporation licensed and operated as provided in 
chapter 62D. 
    Subd. 6.  [HOME HEALTH CARE SERVICES.] "Home health care 
services" are services: 
    (1) defined under the state medical assistance program as 
home health agency services, personal care services and 
supervision of personal care services, private duty nursing 
services, and waivered services; and 
    (2) provided at a recipient's residence, if the recipient 
does not live in a hospital, nursing facility, as defined in 
section 62A.46, subdivision 3, or intermediate care facility for 
persons with mental retardation as defined in section 256B.055, 
subdivision 12, paragraph (d). 
    Subd. 7.  [HOSPITAL.] "Hospital" is a hospital licensed 
under chapter 144, a hospital providing inpatient or outpatient 
services licensed by any other state or province or territory of 
Canada or a surgical center. 
    Subd. 8.  [NONRESIDENT HEALTH CARE PROVIDER.] "Nonresident 
health care provider" means a health care provider that is not a 
resident health care provider. 
    Subd. 9.  [NONRESIDENT HOSPITAL.] "Nonresident hospital" 
means a hospital physically located outside Minnesota. 
    Subd. 10.  [PHARMACY.] "Pharmacy" means a pharmacy, as 
defined in section 151.01, if the only goods or services the 
pharmacy sells that qualify for reimbursement under the medical 
assistance program under chapter 256B are drugs and prosthetics. 
    Subd. 11.  [RESIDENT HEALTH CARE PROVIDER.] "Resident 
health care provider" means a health care provider whose 
principal place of dispensing health care is in Minnesota. 
    Subd. 12.  [RESIDENT HOSPITAL.] "Resident hospital" means a 
hospital physically located inside Minnesota. 
    Subd. 13.  [SURGICAL CENTER.] "Surgical center" is an 
outpatient surgical center as defined in Minnesota Rules, 
chapter 4675 or a similar facility located in any other state or 
province or territory of Canada. 
    Subd. 14.  [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 
distributor" means a wholesale drug distributor required to be 
licensed under sections 151.42 to 151.51. 
    Sec. 6.  [295.51] [MINIMUM CONTACTS REQUIRED FOR 
JURISDICTION TO TAX GROSS REVENUE.] 
    Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
hospital or health care provider is subject to tax under 
sections 295.50 to 295.58 if it is "transacting business in 
Minnesota."  A hospital or health care provider is transacting 
business in Minnesota only if it: 
    (1) maintains an office in Minnesota; 
    (2) has employees, representatives, or independent 
contractors conducting business in Minnesota; 
    (3) regularly sells covered services to customers that 
receive the covered services in Minnesota; 
    (4) regularly solicits business from potential customers in 
Minnesota; 
    (5) regularly performs services outside Minnesota the 
benefits of which are consumed in Minnesota; 
    (6) owns or leases tangible personal or real property 
physically located in Minnesota; or 
    (7) receives medical assistance payments from the state of 
Minnesota. 
    Subd. 2.  [PRESUMPTION.] A hospital or health care provider 
is presumed to regularly solicit business within Minnesota if it 
receives gross receipts for covered services from 20 or more 
patients domiciled in Minnesota in a calendar year. 
    Sec. 7.  [295.52] [TAXES IMPOSED.] 
    Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
hospital equal to two percent of its gross revenues. 
    Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
care provider equal to two percent of its gross revenues. 
    Subd. 3.  [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is 
imposed on each wholesale drug distributor equal to two percent 
of its gross revenues.  
    Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] A person that 
receives prescription drugs for resale or use in Minnesota, 
other than from a wholesale drug distributor that paid the tax 
under subdivision 3, is subject to a tax equal to two percent of 
the price paid.  Liability for the tax is incurred when 
prescription drugs are received in Minnesota by the person. 
    Sec. 8.  [295.53] [EXEMPTIONS; SPECIAL RULES.] 
    Subdivision 1.  [EXEMPTIONS.] The following payments are 
excluded from the gross revenues subject to the hospital or 
health care provider taxes under sections 295.50 to 295.57: 
    (1) payments received from the federal government for 
services provided under the Medicare program, excluding enrollee 
deductible and coinsurance payments; 
    (2) medical assistance payments; 
    (3) payments received for services performed by nursing 
homes licensed under chapter 144A, services provided in 
supervised living facilities and home health care services; 
    (4) payments received from hospitals for goods and services 
that are subject to tax under section 295.52; 
    (5) payments received from health care providers for goods 
and services that are subject to tax under section 295.52; 
    (6) amounts paid for prescription drugs to a wholesale drug 
distributor reduced by reimbursements received for prescription 
drugs under clauses (1), (2), (7), and (8); 
    (7) payments received under the general assistance medical 
care program; 
    (8) payments received for providing services under the 
health right program under article 4; and 
     (9) payments received by a resident health care provider or 
the wholly owned subsidiary of a resident health care provider 
for care provided outside Minnesota to a patient who is not 
domiciled in Minnesota. 
    Subd. 2.  [DEDUCTIONS FOR HMOS.] (a) In addition to the 
exemptions allowed under subdivision 1, a health maintenance 
organization may deduct from its gross revenues for the year: 
    (1) amounts added to reserves, if total reserves do not 
exceed 25 percent of gross revenues for the prior year; 
    (2) assessments for the comprehensive health insurance plan 
under section 62E.11 paid during the year; and 
    (3) an allowance for administration and underwriting. 
    (b) The commissioner of health, in consultation with the 
commissioners of commerce and revenue, shall establish by rule 
under chapter 14 the percentage of health maintenance revenue 
that will be allowed as a deduction for administrative and 
underwriting expenses.  The commissioner of health shall 
determine the percentage allowance based on the average expenses 
of health maintenance organizations that are equivalent to the 
claims administration and other underwriting services of third 
party payors.  These expenses do not include the portion of 
health maintenance organization costs that are similar to the 
administrative costs of direct health care providers, rather 
than third party payors, and do not include costs deductible 
under paragraph (a), clauses (1) and (2).  The commissioner of 
health may adopt emergency rules. 
    Subd. 3.  [RESTRICTION ON ITEMIZATION.] A hospital or 
health care provider must not separately state the tax 
obligation under section 295.52 on bills provided to individual 
patients. 
    Sec. 9.  [295.54] [CREDIT FOR TAXES PAID TO ANOTHER STATE.] 
    A resident hospital or resident health care provider who is 
liable for taxes payable to another state or province or 
territory of Canada measured by gross receipts and is subject to 
tax under section 295.52 is entitled to a credit for the tax 
paid to another state or province or territory of Canada to the 
extent of the lesser of (1) the tax actually paid to the other 
state or province or territory of Canada, or (2) the amount of 
tax imposed by Minnesota on the gross receipts subject to tax in 
the other taxing jurisdictions. 
    Sec. 10.  [295.55] [PAYMENT OF TAX.] 
    Subdivision 1.  [SCOPE.] The provisions of this section 
apply to the taxes imposed under sections 295.50 to 295.58. 
    Subd. 2.  [ESTIMATED TAX; HOSPITALS.] (a) Each hospital 
must make estimated payments of the taxes for the calendar year 
in monthly installments to the commissioner within ten days 
after the end of the month. 
    (b) Estimated tax payments are not required if the tax for 
the calendar year is less than $500 or if the hospital has been 
allowed a grant under section 144.1484, subdivision 2 for the 
year. 
    (c) Underpayment of estimated installments bear interest at 
the rate specified in section 270.75, from the due date of the 
payment until paid or until the due date of the annual return at 
the rate specified in section 270.75.  An underpayment of an 
estimated installment is the difference between the amount paid 
and the lesser of (1) 90 percent of one-twelfth of the tax for 
the calendar year or (2) the tax for the actual gross revenues 
received during the month. 
    Subd. 3.  [ESTIMATED TAX; OTHER TAXPAYERS.] (a) Each 
taxpayer, other than a hospital, must make estimated payments of 
the taxes for the calendar year in quarterly installments to the 
commissioner by April 15, July 15, October 15, and January 15 of 
the following calendar year. 
    (b) Estimated tax payments are not required if the tax for 
the calendar year is less than $500. 
    (c) Underpayment of estimated installments bear interest at 
the rate specified in section 270.75, from the due date of the 
payment until paid or until the due date of the annual return at 
the rate specified in section 270.75.  An underpayment of an 
estimated installment is the difference between the amount paid 
and the lesser of (1) 90 percent of one-quarter of the tax for 
the calendar year or (2) the tax for the actual gross revenues 
received during the quarter. 
    Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
with an aggregate tax liability of $60,000 or more during a 
calendar quarter ending the last day of March, June, September, 
or December must thereafter remit all liabilities by means of a 
funds transfer as defined in section 336.4A-104, paragraph (a).  
The funds transfer payment date, as defined in section 
336.4A-401, is on or before the date the tax is due.  If the 
date the tax is due is not a funds-transfer business day, as 
defined in section 336.4A-105, paragraph (a), clause (4), the 
payment date is on or before the first funds-transfer business 
day after the date the tax is due. 
    Subd. 5.  [ANNUAL RETURN.] The taxpayer must file an annual 
return reconciling the estimated payments by March 15 of the 
following calendar year. 
    Subd. 6.  [FORM OF RETURNS.] The estimated payments and 
annual return must contain the information and be in the form 
prescribed by the commissioner. 
    Sec. 11.  [295.57] [COLLECTION AND ENFORCEMENT; RULEMAKING; 
APPLICATION OF OTHER CHAPTERS.] 
    Unless specifically provided otherwise by sections 295.50 
to 295.58, the enforcement, interest, and penalty provisions 
under chapter 294, appeal and criminal penalty provisions under 
chapter 289A, and collection and rulemaking provisions under 
chapter 270, apply to a liability for the taxes imposed under 
sections 295.50 to 295.58. 
    Sec. 12.  [295.58] [DEPOSIT OF REVENUES.] 
    The commissioner shall deposit all revenues, including 
penalties and interest, derived from the taxes imposed by 
sections 295.50 to 295.57 and from the insurance premiums tax on 
health maintenance organizations and nonprofit health service 
corporations in the health care access fund in the state 
treasury. 
    Sec. 13.  [295.59] [SEVERABILITY.] 
    If any section, subdivision, clause, or phrase of sections 
295.50 to 295.58 is for any reason held to be unconstitutional 
or in violation of federal law, the decision shall not affect 
the validity of the remaining portions of sections 295.50 to 
295.58.  The legislature declares that it would have passed 
sections 295.50 to 295.58 and each section, subdivision, 
sentence, clause, and phrase thereof, irrespective of the fact 
that any one or more sections, subdivisions, sentences, clauses, 
or phrases is declared unconstitutional. 
    Sec. 14.  Minnesota Statutes 1991 Supplement, section 
297.02, subdivision 1, is amended to read: 
    Subdivision 1.  [RATES.] A tax is hereby imposed upon the 
sale of cigarettes in this state or having cigarettes in 
possession in this state with intent to sell and upon any person 
engaged in business as a distributor thereof, at the following 
rates, subject to the discount provided in section 297.03: 
    (1) On cigarettes weighing not more than three pounds per 
thousand, 21.5 24 mills on each such cigarette; 
    (2) On cigarettes weighing more than three pounds per 
thousand, 43 48 mills on each such cigarette. 
    Sec. 15.  Minnesota Statutes 1991 Supplement, section 
297.03, subdivision 5, is amended to read: 
    Subd. 5.  [SALE OF STAMPS.] The commissioner shall sell 
stamps to any person licensed as a distributor at a discount of 
1.1 1.0 percent from the face amount of the stamps for the first 
$1,500,000 of such stamps purchased in any fiscal year; and at a 
discount of .65 .60 percent on the remainder of such stamps 
purchased in any fiscal year.  The commissioner shall not sell 
stamps to any other person.  The commissioner may prescribe the 
method of shipment of the stamps to the distributor as well as 
the quantities of stamps purchased.  
    Sec. 16.  [FLOOR STOCKS TAX.] 
    Subdivision 1.  [CIGARETTES.] A floor stocks tax is imposed 
on every person engaged in business in this state as a 
distributor, retailer, subjobber, vendor, manufacturer, or 
manufacturer's representative of cigarettes, on the stamped 
cigarettes in the person's possession or under the person's 
control at 12:01 a.m. on July 1, 1992.  The tax is imposed at 
the following rates, subject to the discounts in section 297.03: 
    (1) on cigarettes weighing not more than three pounds a 
thousand, 2.5 mills on each cigarette; and 
    (2) on cigarettes weighing more than three pounds a 
thousand, five mills on each cigarette. 
    Each distributor, by July 8, 1992, shall file a report with 
the commissioner, in the form the commissioner prescribes, 
showing the cigarettes on hand at 12:01 a.m. on July 1, 1992, 
and the amount of tax due on the cigarettes.  The tax imposed by 
this section is due and payable by August 1, 1992, and after 
that date bears interest at the rate of one percent a month. 
    Each retailer, subjobber, vendor, manufacturer, or 
manufacturer's representative shall file a return with the 
commissioner, in the form the commissioner prescribes, showing 
the cigarettes on hand at 12:01 a.m. on July 1, 1992, and pay 
the tax due thereon by August 1, 1992.  Tax not paid by the due 
date bears interest at the rate of one percent a month. 
    Subd. 2.  [AUDIT AND ENFORCEMENT.] The tax imposed by this 
section is subject to the audit, assessment, and collection 
provisions applicable to the taxes imposed under chapter 297C.  
The commissioner may require a distributor to receive and 
maintain copies of floor stock tax returns filed by all persons 
requesting a credit for returned cigarettes.  
    Subd. 3.  [DEPOSIT OF PROCEEDS.] The revenue from the tax 
imposed under this section shall be deposited by the 
commissioner in the state treasury and credited to the health 
care access fund. 
    Sec. 17.  [TEMPORARY DEPOSIT OF CIGARETTE TAX REVENUES.] 
    Notwithstanding the provisions of Minnesota Statutes, 
section 297.13, the revenue provided by 2.5 mills of the tax on 
cigarettes weighing not more than three pounds a thousand and 
five mills of the tax on cigarettes weighing more than three 
pounds a thousand must be credited to the health care access 
fund in the state treasury.  This section applies only to 
revenue collected for sales after June 30, 1992, and before 
January 1, 1994.  Revenue includes revenue from the tax, 
interest, and penalties collected under the provisions of 
Minnesota Statutes, sections 297.01 to 297.13. 
    This section expires June 30, 1994. 
    Sec. 18.  [TRANSITION PROVISION; HOSPITAL TAX.] 
    For gross revenues taxable under section 7, subdivision 1, 
for calendar year 1993, the exclusions under section 8, 
subdivision 1, clauses (5) and (6) do not apply. 
    Sec. 19.  [PASSTHROUGH.] 
    Subdivision 1.  [AUTHORITY.] A hospital that is subject to 
a tax under section 7 may transfer additional expense generated 
by section 7 obligations on to all third-party contracts for the 
purchase of health care services on behalf of a patient or 
consumer.  The expense must not exceed two percent of the gross 
revenues received under the third-party contract, including 
copayments and deductibles paid by the individual patient or 
consumer.  The expense must not be generated on revenues derived 
from payments that are excluded from the tax under section 8.  
All third-party purchasers of health care services including, 
but not limited to, third-party purchasers regulated under 
chapters 60A, 62A, 62C, 62D, 64B, or 62H, must pay the 
transferred expense in addition to any payments due under 
existing or future contracts with the hospital or health care 
provider, to the extent allowed under federal law.  Nothing in 
this subdivision limits the ability of a hospital to recover all 
or part of the section 7 obligation by other methods, including 
increasing fees or charges. 
    Subd. 2.  [EXPIRATION.] This section expires January 1, 
1994. 
    Sec. 20.  [STUDY.] 
    The commissioner of revenue, in consultation with the 
commissioner of health and the board of pharmacy, shall report 
to the legislature by November 1, 1992, on the expected impact 
of the wholesale drug distributor tax and the health care 
provider tax on pharmacies and pharmacists.  If the commissioner 
determines that these taxes are not effective or equitable as 
applied to pharmacies and pharmacists, the commissioner shall 
recommend alternative methods of taxing prescription drugs. 
     Sec. 21.  [FEDERAL WAIVER; HEALTH CARE RELATED TAX.] 
     The legislature finds that taxes imposed by this article 
are not subject to or in violation of the restrictions contained 
in the Social Security Act or other federal law.  The tax is 
imposed solely to fund a state program and is not used to pay 
the state share of medical assistance.  Nevertheless to avoid 
any ambiguity, the commissioner of human services shall apply to 
the secretary of the United States Department of Health and 
Human Services for a waiver to treat the tax imposed under 
section 7 as a broad-based health care related tax under section 
1903 of the Social Security Act, 42 United States Code section 
1396b. 
    Sec. 22.  [EFFECTIVE DATE.] 
    Sections 1 and 16 to 21 are effective the day following 
final enactment.  Section 4 is effective for taxable years 
beginning after December 31, 1992.  Section 7, subdivision 1, is 
effective for gross revenues generated by services performed and 
goods sold after December 31, 1992.  Section 7, subdivisions 2 
to 4, are effective for gross revenues generated by services 
performed and goods sold after December 31, 1993.  Sections 14 
and 15 are effective July 1, 1992. 

                               ARTICLE 10 

                             APPROPRIATIONS 
Section 1.  APPROPRIATIONS  
Subdivision 1.  The amounts specified 
in this section are appropriated from 
the health care access fund to the 
agencies and for the purposes 
indicated, to be available until June 
30, 1993. 
Subd. 2.  Commissioner of Commerce                      809,000
Subd. 3.  Commissioner of Health                      3,005,000
Subd. 4.  Commissioner of Human 
Services                                             13,371,000
 $20,000 of this appropriation is for a 
grant to the coalition responsible for 
establishing the demonstration project 
for low-income uninsured persons under 
Minnesota Statutes, section 256B.73, to 
provide consulting and marketing 
services related to the implementation 
of the health right program. 
Subd. 5.  Higher Education                                    
Coordinating Board                                      189,000
 This appropriation may be used as the 
required state match for any grants 
received by the University of Minnesota 
medical school. 
Subd. 6.  Commissioner of Employee  
Relations                                             1,679,000
Subd. 7.  Board of Regents of the  
University of Minnesota                               2,200,000
Subd. 8.  Commissioner of Revenue                       917,000
Subd. 9.  Legislature                                   125,000
 This appropriation is for the 
legislative coordinating commission, to 
be divided between the senate and the 
house based on the recommendations of 
the legislative commission on health 
care access, for the purpose of adding 
staff in existing departments who will 
be assigned to the legislative 
commission. 
Subd. 10. Commissioner of Administration                 27,000
    Sec. 2.  [TRANSFER.] 
    The commissioner of finance shall transfer $4,368,000 from 
the health care access fund to the general fund for fiscal year 
1993.  For purposes of preparing the biennial budget 
recommendations, the commissioner shall assume a transfer of 
$4,605,000 for fiscal year 1994 and $5,467,000 for fiscal year 
1995. 
    Sec. 3.  [EFFECTIVE DATE.] 
    The appropriations in section 1 are effective July 1, 1992, 
except that $616,000 of the appropriation in section 1, 
subdivision 4, is available for fiscal year 1992. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 23, 1992, 9:40 a.m.