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Minnesota Legislature

Office of the Revisor of Statutes

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

  

                         Laws of Minnesota 1992 

                        CHAPTER 554-S.F.No. 2743 
           An act relating to insurance; regulating Medicare 
          supplement; making various changes in state law 
          required by the federal government; regulating 
          coverages and practices; regulating the Minnesota 
          comprehensive health association; increasing the 
          maximum lifetime benefit amounts of certain state plan 
          coverages; extending the effective date of the 
          authorization of use of experimental delivery methods; 
          amending Minnesota Statutes 1990, sections 62A.31, by 
          adding subdivisions; 62A.315; 62A.36, subdivision 1; 
          62A.38; 62A.39; 62A.42; 62A.436; 62A.44; and 62E.07; 
          Minnesota Statutes 1991 Supplement, sections 62A.31, 
          subdivision 1; 62A.316; 62E.10, subdivision 9; and 
          62E.12; proposing coding for new law in Minnesota 
          Statutes, chapter 62A. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1
    Section 1.  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 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; and section 62E.07. 
    (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) A Medicare supplement policy or certificate shall not 
indemnify against losses resulting from sickness on a different 
basis than losses resulting from accidents. 
    (m) A Medicare supplement policy or certificate shall 
provide that benefits designed to cover cost sharing amounts 
under Medicare will be changed automatically to coincide with 
any changes in the applicable Medicare deductible amount and 
copayment percentage factors.  Premiums may be modified to 
correspond with the changes. 
    As soon as practicable, but no later than 30 days prior to 
the annual effective date of any Medicare benefit changes, an 
issuer shall notify its policyholders and certificate holders of 
modifications it has made to Medicare supplement insurance 
policies or certificates in a format acceptable to the 
commissioner.  Such notice shall: 
    (1) include a description of revisions to the Medicare 
program and a description of each modification made to the 
coverage provided under the Medicare supplement policy or 
certificate; and 
    (2) inform each policyholder or certificate holder as to 
when any premium adjustment is to be made, due to changes in 
Medicare. 
    The notice of benefit modifications and any premium 
adjustments must be in outline form and in clear and simple 
terms so as to facilitate comprehension. 
    The notices must not contain or be accompanied by any 
solicitation. 
    (n) Termination by an issuer of a Medicare supplement 
policy or certificate shall be without prejudice to any 
continuous loss that began while the policy or certificate was 
in force, but the extension of benefits beyond the period during 
which the policy or certificate was in force may be conditioned 
on the continuous total disability of the insured, limited to 
the duration of the policy or certificate benefit period, if 
any, or payment of the maximum benefits.  The extension of 
benefits does not apply when the termination is based on fraud, 
misrepresentation, or nonpayment of premium.  An issuer may 
discontinue the availability of a policy form or certificate 
form if the issuer provides to the commissioner in writing its 
decision at least 30 days before discontinuing the availability 
of the form of the policy or certificate.  An issuer that 
discontinues the availability of a policy form or certificate 
shall not file for approval a new policy form or certificate 
form of the same type for the same Medicare supplement benefit 
plan as the discontinued form for five years after the issuer 
provides notice to the commissioner of the discontinuance.  The 
period of discontinuance may be reduced if the commissioner 
determines that a shorter period is appropriate.  The sale or 
other transfer of Medicare supplement business to another issuer 
shall be considered a discontinuance for the purposes of this 
section.  A change in the rating structure or methodology shall 
be considered a discontinuance under this section unless the 
issuer complies with the following requirements: 
    (1) the issuer provides an actuarial memorandum, in a form 
and manner prescribed by the commissioner, describing the manner 
in which the revised rating methodology and resulting rates 
differ from the existing rating methodology and resulting rates; 
and 
    (2) the issuer does not subsequently put into effect a 
change of rates or rating factors that would cause the 
percentage differential between the discontinued and subsequent 
rates as described in the actuarial memorandum to change.  The 
commissioner may approve a change to the differential that is in 
the public interest. 
    (o)(1) Except as provided in clause (2), the Minnesota 
experience of all policy forms or certificate forms of the same 
type in a standard Medicare supplement benefit plan shall be 
combined for purposes of the refund or credit calculation 
prescribed in section 62A.36; 
    (2) forms assumed under an assumption reinsurance agreement 
shall not be combined with the Minnesota experience of other 
forms for purposes of the refund or credit calculation. 
    (p) Medicare supplement policies and certificates shall 
include a renewal or continuation provision.  The language or 
specifications of the provision shall be consistent with the 
type of contract issued.  The provision shall be appropriately 
captioned and shall appear on the first page of the policy or 
certificate, and shall include any reservation by the issuer of 
the right to change premiums and any automatic renewal premium 
increases based on the policyholder's age.  Except for riders or 
endorsements by which the issuer effectuates a request made in 
writing by the insured, exercises a specifically reserved right 
under a Medicare supplement policy or certificate, or is 
required to reduce or eliminate benefits to avoid duplication of 
Medicare benefits, all riders or endorsements added to a 
Medicare supplement policy or certificate after the date of 
issue or at reinstatement or renewal that reduce or eliminate 
benefits or coverage in the policy or certificate shall require 
a signed acceptance by the insured.  After the date of policy or 
certificate issue, a rider or endorsement that increases 
benefits or coverage with a concomitant increase in premium 
during the policy or certificate term shall be agreed to in 
writing and signed by the insured, unless the benefits are 
required by the minimum standards for Medicare supplement 
policies or if the increased benefits or coverage is required by 
law.  Where a separate additional premium is charged for 
benefits provided in connection with riders or endorsements, the 
premium charge shall be set forth in the policy, declaration 
page, or certificate.  If a Medicare supplement policy or 
certificate contains limitations with respect to preexisting 
conditions, the limitations shall appear as a separate paragraph 
of the policy or certificate and be labeled as "preexisting 
condition limitations." 
    Issuers of accident and sickness policies or certificates 
that provide hospital or medical expense coverage on an expense 
incurred or indemnity basis, other than incidentally, to a 
person eligible for Medicare by reason of age shall provide to 
such applicants a Medicare Supplement Buyer's Guide in the form 
developed by the Health Care Financing Administration and in a 
type size no smaller than 12-point type.  Delivery of the 
Buyer's Guide must be made whether or not such policies or 
certificates are advertised, solicited, or issued as Medicare 
supplement policies or certificates as defined in this section.  
Except in the case of direct response issuers, delivery of the 
Buyer's Guide must be made to the applicant at the time of 
application, and acknowledgment of receipt of the Buyer's Guide 
must be obtained by the issuer.  Direct response issuers shall 
deliver the Buyer's Guide to the applicant upon request, but no 
later than the time at which the policy is delivered. 
    (q)(1) An issuer, directly or through its producers, shall: 
    (i) establish marketing procedures to assure that a 
comparison of policies by its agents or other producers will be 
fair and accurate; 
    (ii) establish marketing procedures to ensure that 
excessive insurance is not sold or issued; 
    (iii) establish marketing procedures that set forth a 
mechanism or formula for determining whether a replacement 
policy or certificate contains benefits clearly and 
substantially greater than the benefits under the replaced 
policy or certificate; 
    (iv) display prominently by type or other appropriate 
means, on the first page of the policy or certificate, the 
following: 
 "Notice to buyer:  This policy or certificate may not cover 
all of your medical expenses"; 
    (v) inquire and otherwise make every reasonable effort to 
identify whether a prospective applicant or enrollee for 
Medicare supplement insurance already has accident and sickness 
insurance and the types and amounts of the insurance; 
    (vi) establish auditable procedures for verifying 
compliance with this paragraph; 
    (2) in addition to the practices prohibited in chapter 72A, 
the following acts and practices are prohibited: 
    (i) knowingly making any misleading representation or 
incomplete or fraudulent comparison of any insurance policies or 
issuers for the purpose of inducing, or tending to induce, any 
person to lapse, forfeit, surrender, terminate, retain, pledge, 
assign, borrow on, or convert any insurance policy or to take 
out a policy of insurance with another insurer; 
    (ii) employing any method of marketing having the effect of 
or tending to induce the purchase of insurance through force, 
fright, threat, whether explicit or implied, or undue pressure 
to purchase or recommend the purchase of insurance; 
    (iii) making use directly or indirectly of any method of 
marketing which fails to disclose in a conspicuous manner that a 
purpose of the method of marketing is solicitation of insurance 
and that contact will be made by an insurance agent or insurance 
company; 
    (3) the terms "Medicare supplement," "medigap," and words 
of similar import shall not be used unless the policy or 
certificate is issued in compliance with this subdivision. 
     (r) 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 of commerce. 
     (s) Beginning January 1, 1993, a health maintenance 
organization that issues coverage that supplements Medicare or 
that issues coverage governed by section 1833 or 1876 of the 
federal Social Security Act, United States Code, title 42, 
section 1395 et seq., must offer, to each person to whom it 
offers any contract described in this paragraph, at least one 
contract that either: 
    (1) covers 80 percent of the reasonable and customary 
charge for prescription drugs or the copayment equivalency; or 
    (2) offers the coverage described in clause (1) as an 
optional rider that may be purchased separately from other 
optional coverages.  Each contract issued without prescription 
drug coverage by any insurer, health service plan corporation, 
health maintenance organization, or fraternal benefit society 
must contain, displayed prominently by type or other appropriate 
means, on the first page of the contract, the following: 
    "Notice to buyer:  This contract does not cover 
prescription drugs.  Prescription drugs can be a very high 
percentage of your medical expenses.  Coverage for prescription 
drugs may be available to you.  Please ask for further details." 
    Sec. 2.  Minnesota Statutes 1990, section 62A.31, is 
amended by adding a subdivision to read: 
    Subd. 3.  [DEFINITIONS.] (a) "Accident," "accidental 
injury," or "accidental means" means to employ "result" language 
and does not include words that establish an accidental means 
test or use words such as "external," "violent," "visible 
wounds," or similar words of description or characterization. 
    (1) The definition shall not be more restrictive than the 
following:  "Injury or injuries for which benefits are provided 
means accidental bodily injury sustained by the insured person 
which is the direct result of an accident, independent of 
disease or bodily infirmity or any other cause, and occurs while 
insurance coverage is in force." 
    (2) The definition may provide that injuries shall not 
include injuries for which benefits are provided or available 
under a workers' compensation, employer's liability or similar 
law, or motor vehicle no-fault plan, unless prohibited by law. 
    (b) "Applicant" means: 
    (1) in the case of an individual Medicare supplement policy 
or certificate, the person who seeks to contract for insurance 
benefits; and 
    (2) in the case of a group Medicare supplement policy or 
certificate, the proposed certificate holder. 
    (c) "Benefit period" or "Medicare benefit period" shall not 
be defined more restrictively than as defined in the Medicare 
program. 
    (d) "Certificate" means a certificate delivered or issued 
for delivery in this state or offered to a resident of this 
state under a group Medicare supplement policy or certificate. 
    (e) "Certificate form" means the form on which the 
certificate is delivered or issued for delivery by the issuer. 
    (f) "Convalescent nursing home," "extended care facility," 
or "skilled nursing facility" shall not be defined more 
restrictively than as defined in the Medicare program. 
    (g) "Health care expenses" means expenses of health 
maintenance organizations associated with the delivery of health 
care services which are analogous to incurred losses of 
insurers.  The expenses shall not include: 
    (1) home office and overhead costs; 
    (2) advertising costs; 
    (3) commissions and other acquisition costs; 
    (4) taxes; 
    (5) capital costs; 
    (6) administrative costs; and 
    (7) claims processing costs. 
    (h) "Hospital" may be defined in relation to its status, 
facilities, and available services or to reflect its 
accreditation by the joint commission on accreditation of 
hospitals, but not more restrictively than as defined in the 
Medicare program. 
    (i) "Issuer" includes insurance companies, fraternal 
benefit societies, health care service plans, health maintenance 
organizations, and any other entity delivering or issuing for 
delivery Medicare supplement policies or certificates in this 
state or offering these policies or certificates to residents of 
this state. 
    (j) "Medicare" shall be defined in the policy and 
certificate.  Medicare may be defined as the Health Insurance 
for the Aged Act, title XVIII of the Social Security Amendments 
of 1965, as amended, or title I, part I, of Public Law Number 
89-97, as enacted by the 89th Congress of the United States of 
America and popularly known as the Health Insurance for the Aged 
Act, as amended. 
    (k) "Medicare eligible expenses" means health care expenses 
covered by Medicare, to the extent recognized as reasonable and 
medically necessary by Medicare. 
    (l) "Medicare supplement policy or certificate" means a 
group or individual policy of accident and sickness insurance or 
a subscriber contract of hospital and medical service 
associations or health maintenance organizations, other than a 
policy or certificate issued under a contract under section 1833 
or 1876 of the federal Social Security Act, United States Code, 
title 42, section 1395, et seq., or an issued policy under a 
demonstration project authorized under amendments to the federal 
Social Security Act, which is advertised, marketed, or designed 
primarily as a supplement to reimbursements under Medicare for 
the hospital, medical, or surgical expenses of persons eligible 
for Medicare. 
    (m) "Physician" shall not be defined more restrictively 
than as defined in the Medicare program or section 62A.04, 
subdivision 1, or 62A.15, subdivision 3a. 
    (n) "Policy form" means the form on which the policy is 
delivered or issued for delivery by the issuer. 
    (o) "Sickness" shall not be defined more restrictively than 
the following: 
"Sickness means illness or disease of an insured person 
which first manifests itself after the effective date of 
insurance and while the insurance is in force." 
    The definition may be further modified to exclude 
sicknesses or diseases for which benefits are provided under a 
workers' compensation, occupational disease, employer's 
liability, or similar law. 
    Sec. 3.  Minnesota Statutes 1990, section 62A.31, is 
amended by adding a subdivision to read: 
    Subd. 4.  [PROHIBITED POLICY PROVISIONS.] A Medicare 
supplement policy or certificate in force in the state shall not 
contain benefits that duplicate benefits provided by Medicare. 
    Sec. 4.  Minnesota Statutes 1990, section 62A.315, is 
amended to read: 
    62A.315 [EXTENDED BASIC MEDICARE SUPPLEMENT PLAN; 
COVERAGE.] 
    The extended basic Medicare supplement plan must have a 
level of coverage so that it will be certified as a qualified 
plan pursuant to chapter 62E section 62E.07, and will provide: 
    (1) coverage for all of the Medicare part A inpatient 
hospital deductible and coinsurance amounts, and 100 percent of 
all Medicare part A eligible expenses for hospitalization not 
covered by Medicare for the calendar year; 
    (2) coverage for the daily copayment amount of Medicare 
part A eligible expenses for the calendar year incurred for 
skilled nursing facility care; 
    (3) coverage for the 20 percent copayment amount of 
Medicare eligible expenses excluding outpatient prescription 
drugs under Medicare part B regardless of hospital confinement 
for Medicare part B and coverage of the Medicare deductible 
amount; 
    (4) 80 percent of usual and customary hospital and medical 
expenses, supplies, and prescription drug expenses, not covered 
by Medicare's eligible expenses; 
    (5) coverage for the reasonable cost of the first three 
pints of blood, or equivalent quantities of packed red blood 
cells as defined under federal regulations under Medicare parts 
A and B, unless replaced in accordance with federal regulations; 
and 
    (6) 100 percent of the cost of immunizations. and routine 
screening procedures for cancer, including mammograms and pap 
smears; 
    (7) preventive medical care benefit:  coverage for the 
following preventive health services: 
    (i) an annual clinical preventive medical history and 
physical examination that may include tests and services from 
clause (ii) and patient education to address preventive health 
care measures; 
    (ii) any one or a combination of the following preventive 
screening tests or preventive services, the frequency of which 
is considered medically appropriate: 
    (A) fecal occult blood test and/or digital rectal 
examination; 
    (B) dipstick urinalysis for hematuria, bacteriuria, and 
proteinauria; 
    (C) pure tone (air only) hearing screening test 
administered or ordered by a physician; 
    (D) serum cholesterol screening every five years; 
    (E) thyroid function test; 
    (F) diabetes screening; 
    (iii) any other tests or preventive measures determined 
appropriate by the attending physician.  
     Reimbursement shall be for the actual charges up to 100 
percent of the Medicare-approved amount for each service as if 
Medicare were to cover the service as identified in American 
Medical Association current procedural terminology (AMA CPT) 
codes to a maximum of $120 annually under this benefit.  This 
benefit shall not include payment for any procedure covered by 
Medicare; 
    (8) At-home recovery benefit:  coverage for services to 
provide short-term at-home assistance with activities of daily 
living for those recovering from an illness, injury, or surgery: 
    (i) For purposes of this benefit, the following definitions 
shall apply: 
    (A) "activities of daily living" include, but are not 
limited to, bathing, dressing, personal hygiene, transferring, 
eating, ambulating, assistance with drugs that are normally 
self-administered, and changing bandages or other dressings; 
    (B) "care provider" means a duly qualified or licensed home 
health aide/homemaker, personal care aide, or nurse provided 
through a licensed home health care agency or referred by a 
licensed referral agency or licensed nurses registry; 
    (C) "home" means a place used by the insured as a place of 
residence, provided that the place would qualify as a residence 
for home health care services covered by Medicare.  A hospital 
or skilled nursing facility shall not be considered the 
insured's place of residence; 
    (D) "at-home recovery visit" means the period of a visit 
required to provide at-home recovery care, without limit on the 
duration of the visit, except each consecutive four hours in a 
24-hour period of services provided by a care provider is one 
visit; 
    (ii) coverage requirements and limitations: 
    (A) at-home recovery services provided must be primarily 
services that assist in activities of daily living; 
    (B) the insured's attending physician must certify that the 
specific type and frequency of at-home recovery services are 
necessary because of a condition for which a home care plan of 
treatment was approved by Medicare; 
    (C) coverage is limited to: 
    (I) no more than the number and type of at-home recovery 
visits certified as medically necessary by the insured's 
attending physician.  The total number of at-home recovery 
visits shall not exceed the number of Medicare-approved home 
health care visits under a Medicare-approved home care plan of 
treatment; 
    (II) the actual charges for each visit up to a maximum 
reimbursement of $40 per visit; 
    (III) $1,600 per calendar year; 
    (IV) seven visits in any one week; 
     (V) care furnished on a visiting basis in the insured's 
home; 
     (VI) services provided by a care provider as defined in 
this section; 
    (VII) at-home recovery visits while the insured is covered 
under the policy or certificate and not otherwise excluded; 
    (VIII) at-home recovery visits received during the period 
the insured is receiving Medicare-approved home care services or 
no more than eight weeks after the service date of the last 
Medicare-approved home health care visit; 
    (iii) coverage is excluded for: 
    (A) home care visits paid for by Medicare or other 
government programs; and 
    (B) care provided by family members, unpaid volunteers, or 
providers who are not care providers. 
    Sec. 5.  Minnesota Statutes 1991 Supplement, section 
62A.316, is amended to read: 
    62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.] 
    (a) The basic Medicare supplement plan must have a level of 
coverage that will provide: 
    (1) coverage for all of the Medicare part A inpatient 
hospital coinsurance amounts, and 100 percent of all Medicare 
part A eligible expenses for hospitalization not covered by 
Medicare for the calendar year, after satisfying the Medicare 
part A deductible; 
    (2) coverage for the daily copayment amount of Medicare 
part A eligible expenses for the calendar year incurred for 
skilled nursing facility care; 
    (3) coverage for the 20 percent copayment amount of 
Medicare eligible expenses excluding outpatient prescription 
drugs under Medicare part B regardless of hospital confinement 
for Medicare part B after the Medicare deductible amount; 
    (4) 80 percent of the usual and customary hospital and 
medical expenses and supplies incurred during travel outside the 
United States as a result of a medical emergency; 
    (5) coverage for the reasonable cost of the first three 
pints of blood, or equivalent quantities of packed red blood 
cells as defined under federal regulations under Medicare parts 
A and B, unless replaced in accordance with federal regulations; 
and 
    (6) 100 percent of the cost of immunizations and routine 
screening procedures for cancer screening including mammograms 
and pap smears. 
    (b) Only the following optional benefit riders may be added 
to this plan: 
    (1) coverage for all of the Medicare part A inpatient 
hospital deductible amount; 
    (2) a minimum of 80 percent of usual and customary eligible 
medical expenses, not to exceed any charge limitation 
established by the Medicare program, and supplies not covered by 
Medicare part B.  This does not include outpatient prescription 
drugs; 
    (3) coverage for all of the Medicare part B annual 
deductible; and 
    (4) coverage for at least 50 percent, or the equivalent of 
50 percent, of usual and customary prescription drug expenses.; 
    Nothing in this section prohibits the plan from requiring 
that services be received from providers designated as preferred 
providers or participating providers in order to receive 
coverage under optional benefit riders. 
    (5) coverage for the following preventive health services: 
    (i) an annual clinical preventive medical history and 
physical examination that may include tests and services from 
clause (ii) and patient education to address preventive health 
care measures; 
    (ii) any one or a combination of the following preventive 
screening tests or preventive services, the frequency of which 
is considered medically appropriate: 
    (A) fecal occult blood test and/or digital rectal 
examination; 
    (B) dipstick urinalysis for hematuria, bacteriuria, and 
proteinauria; 
    (C) pure tone (air only) hearing screening test, 
administered or ordered by a physician; 
    (D) serum cholesterol screening every five years; 
    (E) thyroid function test; 
    (F) diabetes screening; 
    (iii) any other tests or preventive measures determined 
appropriate by the attending physician. 
    Reimbursement shall be for the actual charges up to 100 
percent of the Medicare-approved amount for each service, as if 
Medicare were to cover the service as identified in American 
Medical Association current procedural terminology (AMA CPT) 
codes, to a maximum of $120 annually under this benefit.  This 
benefit shall not include payment for a procedure covered by 
Medicare; 
    (6) coverage for services to provide short-term at-home 
assistance with activities of daily living for those recovering 
from an illness, injury, or surgery: 
    (i) For purposes of this benefit, the following definitions 
apply: 
    (A) "activities of daily living" include, but are not 
limited to, bathing, dressing, personal hygiene, transferring, 
eating, ambulating, assistance with drugs that are normally 
self-administered, and changing bandages or other dressings; 
    (B) "care provider" means a duly qualified or licensed home 
health aide/homemaker, personal care aid, or nurse provided 
through a licensed home health care agency or referred by a 
licensed referral agency or licensed nurses registry; 
    (C) "home" means a place used by the insured as a place of 
residence, provided that the place would qualify as a residence 
for home health care services covered by Medicare.  A hospital 
or skilled nursing facility shall not be considered the 
insured's place of residence; 
    (D) "at-home recovery visit" means the period of a visit 
required to provide at-home recovery care, without limit on the 
duration of the visit, except each consecutive four hours in a 
24-hour period of services provided by a care provider is one 
visit; 
    (ii) Coverage requirements and limitations: 
    (A) at-home recovery services provided must be primarily 
services that assist in activities of daily living; 
    (B) the insured's attending physician must certify that the 
specific type and frequency of at-home recovery services are 
necessary because of a condition for which a home care plan of 
treatment was approved by Medicare; 
    (C) Coverage is limited to: 
    (I) no more than the number and type of at-home recovery 
visits certified as necessary by the insured's attending 
physician.  The total number of at-home recovery visits shall 
not exceed the number of Medicare-approved home care visits 
under a Medicare-approved home care plan of treatment; 
    (II) the actual charges for each visit up to a maximum 
reimbursement of $40 per visit; 
    (III) $1,600 per calendar year; 
    (IV) seven visits in any one week; 
    (V) care furnished on a visiting basis in the insured's 
home; 
    (VI) services provided by a care provider as defined in 
this section; 
    (VII) at-home recovery visits while the insured is covered 
under the policy or certificate and not otherwise excluded; 
    (VIII) at-home recovery visits received during the period 
the insured is receiving Medicare-approved home care services or 
no more than eight weeks after the service date of the last 
Medicare-approved home health care visit; 
    (iii) Coverage is excluded for: 
    (A) home care visits paid for by Medicare or other 
government programs; and 
    (B) care provided by family members, unpaid volunteers, or 
providers who are not care providers. 
    Sec. 6.  [62A.317] [STANDARDS FOR CLAIMS PAYMENT.] 
    (a) An issuer shall comply with section 1882(c)(3) of the 
federal Social Security Act, as enacted by section 4081(b)(2)(C) 
of the Omnibus Budget Reconciliation Act of 1987 (OBRA), Public 
Law Number 100-203, by: 
    (1) accepting a notice from a Medicare carrier on duly 
assigned claims submitted by Medicare participating physicians 
and suppliers as a claim for benefits in place of any other 
claim form otherwise required and making a payment determination 
on the basis of the information contained in that notice; 
    (2) notifying the Medicare participating physician or 
supplier and the beneficiary of the payment determination; 
    (3) paying the Medicare participating physician or supplier 
directly; 
    (4) furnishing, at the time of enrollment, each enrollee 
with a card listing the policy or certificate name, number, and 
a central mailing address to which notices from a Medicare 
carrier may be sent; 
    (5) paying user fees for claim notices that are transmitted 
electronically or otherwise; and 
    (6) providing to the secretary of health and human 
services, at least annually, a central mailing address to which 
all claims may be sent by Medicare carriers. 
    (b) Compliance with the requirements in paragraph (a) shall 
be certified on the Medicare supplement insurance experience 
reporting form. 
    Sec. 7.  [62A.319] [REPORTING OF MULTIPLE POLICIES.] 
    Subdivision 1.  [ANNUAL REPORT.] On or before March 1 of 
each year, an issuer shall report the following information for 
every individual resident of this state for which the issuer has 
in force more than one Medicare supplement policy or certificate:
    (1) the policy and certificate number; and 
    (2) the date of issuance. 
    Subd. 2.  [NAIC REPORT FORMS.] The items in subdivision 1 
must be grouped by individual policyholder and be on the 
National Association of Insurance Commissioners Reporting 
Medicare Supplement Policies form.  
    Sec. 8.  Minnesota Statutes 1990, section 62A.36, 
subdivision 1, is amended to read: 
    Subdivision 1.  [MINIMUM LOSS RATIOS RATIO 
STANDARDS.] Notwithstanding section 62A.02, subdivision 3, 
relating to loss ratios, (a) A Medicare supplement policies 
policy form or certificate form shall not be required delivered 
or issued for delivery 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 under the policy, for each year excluding the 
year of issuance and the first year thereafter, on the basis of 
incurred claims experience and earned premiums in Minnesota and 
in accordance with accepted actuarial principles and practices, 
not including anticipated refunds or credits, provided under the 
policy form or certificate form:  
    (a) (1) at least 75 percent of the aggregate amount of 
premiums collected earned in the case of group policies, and 
    (b) (2) at least 65 percent of the aggregate amount of 
premiums collected earned in the case of individual policies., 
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.  An 
insurer shall demonstrate that the third year loss ratio is 
greater than or equal to the applicable percentage.  
    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 or certificate shall equal or exceed the appropriate loss 
ratio standards.  
    (b) An issuer shall collect and file with the commissioner 
by May 31 of each year the data contained in the National 
Association of Insurance Commissioners Medicare Supplement 
Refund Calculating form, for each type of Medicare supplement 
benefit plan.  
    If, on the basis of the experience as reported, the 
benchmark ratio since inception (ratio 1) exceeds the adjusted 
experience ratio since inception (ratio 3), then a refund or 
credit calculation is required.  The refund calculation must be 
done on a statewide basis for each type in a standard Medicare 
supplement benefit plan.  For purposes of the refund or credit 
calculation, experience on policies issued within the reporting 
year shall be excluded.  
    A refund or credit shall be made only when the benchmark 
loss ratio exceeds the adjusted experience loss ratio and the 
amount to be refunded or credited exceeds a de minimis level.  
The refund shall include interest from the end of the calendar 
year to the date of the refund or credit at a rate specified by 
the secretary of health and human services, but in no event 
shall it be less than the average rate of interest for 13-week 
treasury bills.  A refund or credit against premiums due shall 
be made by September 30 following the experience year on which 
the refund or credit is based.  
    (c) An issuer of Medicare supplement policies and 
certificates in this state shall file annually its rates, rating 
schedule, and supporting documentation including ratios of 
incurred losses to earned premiums by policy or certificate 
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 policies or certificates in force less than 
three years. 
    As soon as practicable, but before the effective date of 
enhancements in Medicare benefits, every issuer of Medicare 
supplement policies or certificates in this state shall file 
with the commissioner, in accordance with the applicable filing 
procedures of this state:  
    (1) a premium adjustment that is necessary to produce an 
expected loss ratio under the policy or certificate that will 
conform with minimum loss ratio standards for Medicare 
supplement policies or certificates.  No premium adjustment that 
would modify the loss ratio experience under the policy or 
certificate other than the adjustments described herein shall be 
made with respect to a policy or certificate at any time other 
than on its renewal date or anniversary date; 
    (2) if an issuer fails to make premium adjustments 
acceptable to the commissioner, the commissioner may order 
premium adjustments, refunds, or premium credits considered 
necessary to achieve the loss ratio required by this section; 
    (3) any appropriate riders, endorsements, or policy or 
certificate forms needed to accomplish the Medicare supplement 
insurance policy or certificate modifications necessary to 
eliminate benefit duplications with Medicare.  The riders, 
endorsements, or policy or certificate forms shall provide a 
clear description of the Medicare supplement benefits provided 
by the policy or certificate. 
    (d) The commissioner may conduct a public hearing to gather 
information concerning a request by an issuer for an increase in 
a rate for a policy form or certificate form if the experience 
of the form for the previous reporting period is not in 
compliance with the applicable loss ratio standard.  The 
determination of compliance is made without consideration of a 
refund or credit for the reporting period.  Public notice of the 
hearing shall be furnished in a manner considered appropriate by 
the commissioner. 
    Sec. 9.  Minnesota Statutes 1990, section 62A.38, is 
amended to read: 
    62A.38 [NOTICE OF FREE EXAMINATION.] 
    Medicare supplement policies or certificates, other than 
those issued pursuant to direct response solicitation, shall 
have a notice prominently printed on the first page of the 
policy or attached thereto stating in substance that the 
policyholder or certificate holder shall have the right to 
return the policy or certificate within 30 days of its delivery 
and to have the premium refunded in full if, after examination 
of the policy or certificate, the insured person is not 
satisfied for any reason.  Medicare supplement policies or 
certificates, issued pursuant to a direct response solicitation 
to persons eligible for medicare by reason of age, shall have a 
notice prominently printed on the first page or attached thereto 
stating in substance that the policyholder or certificate holder 
shall have the right to return the policy or certificate within 
30 days of its delivery and to have the premium refunded within 
ten days after receipt of the returned policy or certificate to 
the insurer if, after examination, the insured person is not 
satisfied for any reason.  
    Sec. 10.  Minnesota Statutes 1990, section 62A.39, is 
amended to read: 
    62A.39 [DISCLOSURE.] 
    No individual Medicare supplement plan shall be delivered 
or issued in this state and no certificate shall be delivered 
pursuant to under a group Medicare supplement plan delivered or 
issued in this state unless an outline containing at least the 
following information in no less than 12-point type is delivered 
to the applicant at the time the application is made:  
    (a) A description of the principal benefits and coverage 
provided in the policy; 
    (b) A statement of the exceptions, reductions, and 
limitations contained in the policy including the following 
language, as applicable, in bold print:  "THIS POLICY DOES NOT 
COVER ALL MEDICAL EXPENSES BEYOND THOSE COVERED BY MEDICARE.  
THIS POLICY DOES NOT COVER ALL SKILLED NURSING HOME CARE 
EXPENSES AND DOES NOT COVER CUSTODIAL OR RESIDENTIAL NURSING 
CARE.  READ YOUR POLICY CAREFULLY TO DETERMINE WHICH NURSING 
HOME FACILITIES AND EXPENSES ARE COVERED BY YOUR POLICY."; 
    (c) A statement of the renewal provisions including any 
reservations by the insurer of a right to change premiums.  The 
premium and manner of payment shall be stated for all plans that 
are offered to the prospective applicant.  All possible premiums 
for the prospective applicant shall be illustrated.  If the 
premium is based on the increasing age of the insured, 
information specifying when premiums will change must be 
included; 
    (d) [Read your policy or certificate very carefully.] A 
statement that the outline of coverage is a summary of the 
policy issued or applied for and that the policy should be 
consulted to determine governing contractual provisions.  
Additionally, it does not give all the details of Medicare 
coverage.  Contact your local Social Security office or consult 
the Medicare handbook for more details; and 
    (e) A statement of the policy's loss ratio as follows:  
"This policy provides an anticipated loss ratio of (..%).  This 
means that, on the average, policyholders may expect that 
($....) of every $100.00 in premium will be returned as benefits 
to policyholders over the life of the contract."; 
    (f) When the outline of coverage is provided at the time of 
application and the Medicare supplement policy or certificate is 
issued on a basis that would require revision of the outline, a 
substitute outline of coverage properly describing the policy or 
certificate shall accompany the policy or certificate when it is 
delivered and contain the following statement, in no less than 
12-point type, immediately above the company name: 
"NOTICE:  Read this outline of coverage carefully.  It is not 
identical to the outline of coverage provided upon application, 
and the coverage originally applied for has not been issued."; 
    (g) [Right to return policy or certificate.] "If you find 
that you are not satisfied with your policy or certificate for 
any reason, you may return it to (insert issuer's address).  If 
you send the policy or certificate back to us within 30 days 
after you receive it, we will treat the policy or certificate as 
if it had never been issued and return all of your payments 
within ten days."; 
    (h) [Policy or certificate replacement.] "If you are 
replacing another health insurance policy or certificate, do NOT 
cancel it until you have actually received your new policy or 
certificate and are sure you want to keep it."; 
    (i) [Notice.] "This policy or certificate may not fully 
cover all of your medical costs."  
    A.  (for agents:) 
    "Neither (insert company's name) nor its agents are 
connected with Medicare." 
    B.  (for direct response:) 
    "(insert company's name) is not connected with Medicare." 
    (j) Notice regarding policies or certificates which are not 
Medicare supplement policies.  
    Any accident and sickness insurance policy or certificate, 
other than a Medicare supplement policy, or a policy or 
certificate issued pursuant to a contract under the federal 
Social Security Act, section 1833 or 1876 (United States Code, 
title 42, section 1395, et seq.), disability income policy; 
basic, catastrophic, or major medical expense policy; single 
premium nonrenewable policy; or other policy, issued for 
delivery in this state to persons eligible for Medicare shall 
notify insureds under the policy that the policy is not a 
Medicare supplement policy or certificate.  The notice shall 
either be printed or attached to the first page of the outline 
of coverage delivered to insureds under the policy, or if no 
outline of coverage is delivered, to the first page of the 
policy or certificate delivered to insureds.  The notice shall 
be in no less than 12-point type and shall contain the following 
language: 
 "THIS (POLICY OR CERTIFICATE) IS NOT A MEDICARE SUPPLEMENT 
(POLICY OR CONTRACT).  If you are eligible for Medicare, 
review the Medicare supplement buyer's guide available from 
the company." 
    (k) [Complete answers are very important.] "When you fill 
out the application for the new policy or certificate, be sure 
to answer truthfully and completely all questions about your 
medical and health history.  The company may cancel your policy 
or certificate and refuse to pay any claims if you leave out or 
falsify important medical information."  If the policy or 
certificate is guaranteed issue, this paragraph need not appear. 
    "Review the application carefully before you sign it.  Be 
certain that all information has been properly recorded."  
    Include for each plan, prominently identified in the cover 
page, a chart showing the services, Medicare payments, plan 
payments, and insured payments for each plan, using the same 
language, in the same order, using uniform layout and format. 
    Sec. 11.  Minnesota Statutes 1990, section 62A.42, is 
amended to read: 
    62A.42 [RULEMAKING AUTHORITY.] 
    To carry out the purposes of sections 62A.31 to 62A.44, the 
commissioner may promulgate rules pursuant to chapter 14.  These 
rules may:  
    (a) prescribe additional disclosure requirements for 
medicare supplement plans, designed to adequately inform the 
prospective insured of the need and extent of coverage offered; 
    (b) prescribe uniform policy forms in order to give the 
insurance purchaser a reasonable opportunity to compare the cost 
of insuring with various insurers and may prescribe reasonable 
measures as necessary to conform Medicare supplement policies 
and certificates to the requirements of federal law and 
regulations; and 
    (c) establish other reasonable standards to further the 
purpose of sections 62A.31 to 62A.44. 
     Sec. 12.  Minnesota Statutes 1990, section 62A.436, is 
amended to read: 
    62A.436 [COMMISSIONS.] 
    The commission, sales allowance, service fee, or 
compensation to an agent for the sale of a Medicare supplement 
plan must be the same for each of the first four years of the 
policy.  The commissioner may grant a waiver of this restriction 
on commissions when the commissioner believes that the insurer's 
fee structure does not encourage deceptive practices. 
    In no event may the rate of commission, sales allowance, 
service fee, or compensation for the sale of a basic Medicare 
supplement plan exceed that which applies to the sale of an 
extended basic Medicare supplement plan. 
     For purposes of this section, "compensation" includes 
pecuniary or nonpecuniary remuneration of any kind relating to 
the sale or renewal of the policy or certificate, including but 
not limited to bonuses, gifts, prizes, awards, and finder's fees.
    This section also applies to sales of replacement policies. 
    Sec. 13.  Minnesota Statutes 1990, section 62A.44, is 
amended to read: 
    62A.44 [APPLICATIONS.] 
    Subdivision 1.  [APPLICANT COPY.] No individual medicare 
supplement plan shall be issued or delivered in this state 
unless a signed and completed copy of the application for 
insurance is left with the applicant at the time application is 
made. 
    Subd. 2.  [QUESTIONS.] (a) Application forms shall include 
the following questions designed to elicit information as to 
whether, as of the date of the application, the applicant has 
another Medicare supplement or other health insurance policy or 
certificate in force or whether a Medicare supplement policy or 
certificate is intended to replace any other accident and 
sickness policy or certificate presently in force.  A 
supplementary application or other form to be signed by the 
applicant and agent containing the questions and statements may 
be used. 
 "(1) You do not need more than one Medicare supplement 
policy or certificate. 
 (2) If you are 65 or older, you may be eligible for 
benefits under Medicaid and may not need a Medicare 
supplement policy or certificate.  
 (3) The benefits and premiums under your Medicare 
supplement policy or certificate will be suspended during 
your entitlement to benefits under Medicaid for 24 months.  
You must request this suspension within 90 days of becoming 
eligible for Medicaid.  If you are no longer entitled to 
Medicaid, your policy or certificate will be reinstated if 
requested within 90 days of losing Medicaid eligibility. 
 To the best of your knowledge: 
 (1) Do you have another Medicare supplement policy or 
certificate in force, including health care service 
contract or health maintenance organization contract?  If 
so, with which company? 
 (2) Do you have any other health insurance policies that 
provide benefits that this Medicare supplement policy or 
certificate would duplicate?  (a) If so, with which company?
 (3) If the answer to question 1 or 2 is yes, do you intend 
to replace these medical or health policies with this 
policy or certificate? 
 (4) Are you covered by Medicaid?" 
    (b) Agents shall list any other health insurance policies 
they have sold to the applicant.  
    (1) List policies sold that are still in force.  
    (2) List policies sold in the past five years that are no 
longer in force.  
    (c) In the case of a direct response issuer, a copy of the 
application or supplemental form, signed by the applicant, and 
acknowledged by the insurer, shall be returned to the applicant 
by the insurer on delivery of the policy or certificate.  
    (d) Upon determining that a sale will involve replacement 
of Medicare supplement coverage, any issuer, other than a direct 
response issuer, or its agent, shall furnish the applicant, 
before issuance or delivery of the Medicare supplement policy or 
certificate, a notice regarding replacement of Medicare 
supplement coverage.  One copy of the notice signed by the 
applicant and the agent, except where the coverage is sold 
without an agent, shall be provided to the applicant and an 
additional signed copy shall be retained by the issuer.  A 
direct response issuer shall deliver to the applicant at the 
time of the issuance of the policy or certificate the notice 
regarding replacement of Medicare supplement coverage. 
    (e) The notice required by paragraph (d) for an issuer 
shall be provided in substantially the following form in no less 
than 12-point type: 
 "NOTICE TO APPLICANT REGARDING REPLACEMENT 
 OF MEDICARE SUPPLEMENT INSURANCE
 [Insurance company's name and address]
 SAVE THIS NOTICE!  IT MAY BE IMPORTANT TO YOU IN THE FUTURE.
    According to (your application) (information you have 
furnished), you intend to terminate existing Medicare supplement 
insurance and replace it with a policy or certificate to be 
issued by (Company Name) Insurance Company.  Your new policy or 
certificate will provide 30 days within which you may decide 
without cost whether you desire to keep the policy or 
certificate. 
    You should review this new coverage carefully.  Compare it 
with all accident and sickness coverage you now have.  Terminate 
your present policy only if, after due consideration, you find 
that purchase of this Medicare supplement coverage is a wise 
decision. 
 STATEMENT TO APPLICANT BY ISSUER, AGENT, (BROKER OR OTHER 
REPRESENTATIVE):  I have reviewed your current medical or 
health insurance coverage.  The replacement of insurance 
involved in this transaction does not duplicate coverage, 
to the best of my knowledge.  The replacement policy or 
certificate is being purchased for the following reason(s) 
(check one): 
______  Additional benefits 
______  No change in benefits, but lower premiums 
______  Fewer benefits and lower premiums 
______  Other (please specify)  
____________________________________________________________
___________ ________________________________________________
____________________________________________________________
 (1) Health conditions which you may presently have 
(preexisting conditions) may not be immediately or fully 
covered under the new policy or certificate.  This could 
result in denial or delay of a claim for benefits under the 
new policy or certificate, whereas a similar claim might 
have been payable under your present policy or certificate. 
 (2) State law provides that your replacement policy or 
certificate may not contain new preexisting conditions, 
waiting periods, elimination periods, or probationary 
periods.  The insurer will waive any time periods 
applicable to preexisting conditions, waiting periods, 
elimination periods, or probationary periods in the new 
policy (or coverage) for similar benefits to the extent the 
time was spent (depleted) under the original policy or 
certificate. 
 (3) If you still wish to terminate your present policy or 
certificate and replace it with new coverage, be certain to 
truthfully and completely answer all questions on the 
application concerning your medical and health history.  
Failure to include all material medical information on an 
application may provide a basis for the company to deny any 
future claims and to refund your premium as though your 
policy or certificate had never been in force.  After the 
application has been completed and before you sign it, 
review it carefully to be certain that all information has 
been properly recorded.  (If the policy or certificate is 
guaranteed issue, this paragraph need not appear.) 
 Do not cancel your present policy or certificate until you 
have received your new policy or certificate and are you 
sure that you want to keep it. 
  
 _____________________________________________________ 
 (Signature of Agent, Broker, or Other Representative)* 
  
 _____________________________________________________ 
 (Typed Name and Address of Issuer, Agent, or Broker) 
  
 _____________________ 
 (Date) 
                                             
 __________________________________ 
 (Applicant's Signature) 
                     
 _____________________ 
 (Date) 
                     
 *Signature not required for direct response sales." 
    (f) Paragraph (e), clauses (1) and (2), of the replacement 
notice (applicable to preexisting conditions) may be deleted by 
an issuer if the replacement does not involve application of a 
new preexisting condition limitation. 
    Sec. 14.  Minnesota Statutes 1990, section 62E.07, is 
amended to read: 
    62E.07 [QUALIFIED MEDICARE SUPPLEMENT PLAN.] 
    Any plan which provides benefits to persons over the age of 
65 years may be certified as a qualified Medicare supplement 
plan if the plan is designed to supplement Medicare and provides 
coverage of 100 percent of the deductibles required under 
Medicare and 80 percent of the charges for covered services 
described in section 62E.06, subdivision 1, which charges are 
not paid by Medicare.  The coverage shall include a limitation 
of $1,000 per person on total annual out-of-pocket expenses for 
the covered services.  The coverage may be subject to a maximum 
lifetime benefit of not less than $500,000.  
    Sec. 15.  Minnesota Statutes 1991 Supplement, section 
62E.10, subdivision 9, is amended to read: 
    Subd. 9.  [EXPERIMENTAL DELIVERY METHOD.] The association 
may petition the commissioner of commerce for a waiver to allow 
the experimental use of alternative means of health care 
delivery.  The commissioner may approve the use of the 
alternative means the commissioner considers appropriate.  The 
commissioner may waive any of the requirements of this chapter 
and chapters 60A, 62A, and 62D in granting the waiver.  The 
commissioner may also grant to the association any additional 
powers as are necessary to facilitate the specific waiver, 
including the power to implement a provider payment schedule.  
    This subdivision is effective until August 1, 1992 1993. 
    Sec. 16.  Minnesota Statutes 1991 Supplement, section 
62E.12, is amended to read: 
    62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE 
PLAN.] 
    The association through its comprehensive health insurance 
plan shall offer policies which provide the benefits of a number 
one qualified plan, and a number two qualified plan, except that 
the maximum lifetime benefit on these plans shall be $1,000,000, 
and basic and an extended basic plan and a basic Medicare 
supplement plans plan as described in sections 62A.31 to 62A.44 
and 62E.07.  The requirement that a policy issued by the 
association must be a qualified plan is satisfied if the 
association contracts with a preferred provider network and the 
level of benefits for services provided within the network 
satisfies the requirements of a qualified plan.  If the 
association uses a preferred provider network, payments to 
nonparticipating providers must meet the minimum requirements of 
section 72A.20, subdivision 15.  They shall offer health 
maintenance organization contracts in those areas of the state 
where a health maintenance organization has agreed to make the 
coverage available and has been selected as a writing carrier.  
Notwithstanding the provisions of section 62E.06 the state plan 
shall exclude coverage of services of a private duty nurse other 
than on an inpatient basis and any charges for treatment in a 
hospital located outside of the state of Minnesota in which the 
covered person is receiving treatment for a mental or nervous 
disorder, unless similar treatment for the mental or nervous 
disorder is medically necessary, unavailable in Minnesota and 
provided upon referral by a licensed Minnesota medical 
practitioner.  
    Sec. 17.  [FEDERAL CHANGES.] 
    If the federal government requires additions or changes for 
compliance with any provisions of this act that are required by 
the federal Omnibus Budget Reconciliation Act of 1990, Public 
Law Number 101-508, the commissioner may by order make those 
additions or changes.  Before issuing an order, the commissioner 
shall notify the appropriate policy committees of the 
legislature of the additions or changes. 
    Sec. 18.  [EFFECTIVE DATE.] 
    Sections 1 to 14 and 17 are effective the day following 
final enactment and apply to policies or certificates issued 
before and after that date.  Sections 15 and 16 are effective 
the day following final enactment. 

                                ARTICLE 2 
    Section 1.  [62A.318] [MEDICARE SELECT POLICIES AND 
CERTIFICATES.] 
    (a) This section applies to Medicare select policies and 
certificates, as defined in this section, including those issued 
by health maintenance organizations.  No policy or certificate 
may be advertised as a Medicare select policy or certificate 
unless it meets the requirements of this section. 
    (b) For the purposes of this section: 
    (1) "complaint" means any dissatisfaction expressed by an 
individual concerning a Medicare select issuer or its network 
providers; 
    (2) "grievance" means dissatisfaction expressed in writing 
by an individual insured under a Medicare select policy or 
certificate with the administration, claims practices, or 
provision of services concerning a Medicare select issuer or its 
network providers; 
    (3) "Medicare select issuer" means an issuer offering, or 
seeking to offer, a Medicare select policy or certificate; 
    (4) "Medicare select policy" or "Medicare select 
certificate" means a Medicare supplement policy or certificate 
that contains restricted network provisions; 
    (5) "network provider" means a provider of health care, or 
a group of providers of health care, that has entered into a 
written agreement with the issuer to provide benefits insured 
under a Medicare select policy or certificate; 
    (6) "restricted network provision" means a provision that 
conditions the payment of benefits, in whole or in part, on the 
use of network providers; and 
    (7) "service area" means the geographic area approved by 
the commissioner within which an issuer is authorized to offer a 
Medicare select policy or certificate. 
    (c) The commissioner may authorize an issuer to offer a 
Medicare select policy or certificate pursuant to this section 
and section 4358 of the Omnibus Budget Reconciliation Act (OBRA) 
of 1990, Public Law Number 101-508, if the commissioner finds 
that the issuer has satisfied all of the requirements of this 
section. 
    (d) A Medicare select issuer shall not issue a Medicare 
select policy or certificate in this state until its plan of 
operation has been approved by the commissioner. 
    (e) A Medicare select issuer shall file a proposed plan of 
operation with the commissioner, in a format prescribed by the 
commissioner.  The plan of operation shall contain at least the 
following information: 
    (1) evidence that all covered services that are subject to 
restricted network provisions are available and accessible 
through network providers, including a demonstration that: 
    (i) the services can be provided by network providers with 
reasonable promptness with respect to geographic location, hours 
of operation, and after-hour care.  The hours of operation and 
availability of after-hour care shall reflect usual practice in 
the local area.  Geographic availability shall reflect the usual 
travel times within the community; 
    (ii) the number of network providers in the service area is 
sufficient, with respect to current and expected policyholders, 
either: 
    (A) to deliver adequately all services that are subject to 
a restricted network provision; or 
    (B) to make appropriate referrals; 
    (iii) there are written agreements with network providers 
describing specific responsibilities; 
    (iv) emergency care is available 24 hours per day and seven 
days per week; and 
    (v) in the case of covered services that are subject to a 
restricted network provision and are provided on a prepaid 
basis, there are written agreements with network providers 
prohibiting the providers from billing or otherwise seeking 
reimbursement from or recourse against an individual insured 
under a Medicare select policy or certificate.  This section 
does not apply to supplemental charges or coinsurance amounts as 
stated in the Medicare select policy or certificate; 
    (2) a statement or map providing a clear description of the 
service area; 
    (3) a description of the grievance procedure to be used; 
    (4) a description of the quality assurance program, 
including: 
    (i) the formal organizational structure; 
    (ii) the written criteria for selection, retention, and 
removal of network providers; and 
    (iii) the procedures for evaluating quality of care 
provided by network providers, and the process to initiate 
corrective action when warranted; 
    (5) a list and description, by specialty, of the network 
providers; 
    (6) copies of the written information proposed to be used 
by the issuer to comply with paragraph (i); and 
    (7) any other information requested by the commissioner. 
    (f) A Medicare select issuer shall file proposed changes to 
the plan of operation, except for changes to the list of network 
providers, with the commissioner before implementing the 
changes.  The changes shall be considered approved by the 
commissioner after 30 days unless specifically disapproved. 
    An updated list of network providers shall be filed with 
the commissioner at least quarterly. 
    (g) A Medicare select policy or certificate shall not 
restrict payment for covered services provided by nonnetwork 
providers if: 
    (1) the services are for symptoms requiring emergency care 
or are immediately required for an unforeseen illness, injury, 
or condition; and 
    (2) it is not reasonable to obtain the services through a 
network provider. 
    (h) A Medicare select policy or certificate shall provide 
payment for full coverage under the policy or certificate for 
covered services that are not available through network 
providers. 
    (i) A Medicare select issuer shall make full and fair 
disclosure in writing of the provisions, restrictions, and 
limitations of the Medicare select policy or certificate to each 
applicant.  This disclosure must include at least the following: 
    (1) an outline of coverage sufficient to permit the 
applicant to compare the coverage and premiums of the Medicare 
select policy or certificate with: 
    (i) other Medicare supplement policies or certificates 
offered by the issuer; and 
    (ii) other Medicare select policies or certificates; 
    (2) a description, including address, phone number, and 
hours of operation, of the network providers, including primary 
care physicians, specialty physicians, hospitals, and other 
providers; 
    (3) a description of the restricted network provisions, 
including payments for coinsurance and deductibles when 
providers other than network providers are used; 
    (4) a description of coverage for emergency and urgently 
needed care and other out-of-service area coverage; 
    (5) a description of limitations on referrals to restricted 
network providers and to other providers; 
    (6) a description of the policyholder's rights to purchase 
any other Medicare supplement policy or certificate otherwise 
offered by the issuer; and 
    (7) a description of the Medicare select issuer's quality 
assurance program and grievance procedure. 
    (j) Before the sale of a Medicare select policy or 
certificate, a Medicare select issuer shall obtain from the 
applicant a signed and dated form stating that the applicant has 
received the information provided pursuant to paragraph (i) and 
that the applicant understands the restrictions of the Medicare 
select policy or certificate. 
    (k) A Medicare select issuer shall have and use procedures 
for hearing complaints and resolving written grievances from the 
subscribers.  The procedures shall be aimed at mutual agreement 
for settlement and may include arbitration procedures.  
    (1) The grievance procedure must be described in the policy 
and certificates and in the outline of coverage. 
    (2) At the time the policy or certificate is issued, the 
issuer shall provide detailed information to the policyholder 
describing how a grievance may be registered with the issuer. 
    (3) Grievances must be considered in a timely manner and 
must be transmitted to appropriate decision makers who have 
authority to fully investigate the issue and take corrective 
action. 
    (4) If a grievance is found to be valid, corrective action 
must be taken promptly. 
    (5) All concerned parties must be notified about the 
results of a grievance. 
    (6) The issuer shall report no later than March 31 of each 
year to the commissioner regarding the grievance procedure.  The 
report shall be in a format prescribed by the commissioner and 
shall contain the number of grievances filed in the past year 
and a summary of the subject, nature, and resolution of the 
grievances. 
    (l) At the time of initial purchase, a Medicare select 
issuer shall make available to each applicant for a Medicare 
select policy or certificate the opportunity to purchase a 
Medicare supplement policy or certificate otherwise offered by 
the issuer. 
    (m)(1) At the request of an individual insured under a 
Medicare select policy or certificate, a Medicare select issuer 
shall make available to the individual insured the opportunity 
to purchase a Medicare supplement policy or certificate offered 
by the issuer that has comparable or lesser benefits and that 
does not contain a restricted network provision.  The issuer 
shall make the policies or certificates available without 
requiring evidence of insurability after the Medicare supplement 
policy or certificate has been in force for six months.  If the 
issuer does not have available for sale a policy or certificate 
without restrictive network provisions, the issuer shall provide 
enrollment information for the Minnesota comprehensive health 
association Medicare supplement plans. 
    (2) For the purposes of this paragraph, a Medicare 
supplement policy or certificate will be considered to have 
comparable or lesser benefits unless it contains one or more 
significant benefits not included in the Medicare select policy 
or certificate being replaced.  For the purposes of this 
paragraph, a significant benefit means coverage for the Medicare 
part A deductible, coverage for prescription drugs, coverage for 
at-home recovery services, or coverage for part B excess charges.
    (n) Medicare select policies and certificates shall provide 
for continuation of coverage if the secretary of health and 
human services determines that Medicare select policies and 
certificates issued pursuant to this section should be 
discontinued due to either the failure of the Medicare select 
program to be reauthorized under law or its substantial 
amendment. 
    (1) Each Medicare select issuer shall make available to 
each individual insured under a Medicare select policy or 
certificate the opportunity to purchase a Medicare supplement 
policy or certificate offered by the issuer that has comparable 
or lesser benefits and that does not contain a restricted 
network provision.  The issuer shall make the policies and 
certificates available without requiring evidence of 
insurability. 
    (2) For the purposes of this paragraph, a Medicare 
supplement policy or certificate will be considered to have 
comparable or lesser benefits unless it contains one or more 
significant benefits not included in the Medicare select policy 
or certificate being replaced.  For the purposes of this 
paragraph, a significant benefit means coverage for the Medicare 
part A deductible, coverage for prescription drugs, coverage for 
at-home recovery services, or coverage for part B excess charges.
    (o) A Medicare select issuer shall comply with reasonable 
requests for data made by state or federal agencies, including 
the United States Department of Health and Human Services, for 
the purpose of evaluating the Medicare select program. 
    (p) Medicare select policies and certificates under this 
section shall be regulated and approved by the department of 
commerce. 
    (q) Medicare select policies and certificates must be 
either a basic plan or an extended basic plan.  The basic plan 
may also include any of the optional benefit riders authorized 
by section 62A.316.  Preventive care provided by Medicare select 
policies or certificates must be provided as set forth in 
section 62A.315 or 62A.316, except that the benefits are as 
defined in chapter 62D. 
    (r) Medicare select policies and certificates are exempt 
from the requirements of section 62A.31, subdivision 1, 
paragraph (d).  This paragraph expires January 1, 1994. 
    Sec. 2.  [EFFECTIVE DATE.] 
    Section 1 is effective July 30, 1992, and applies to 
policies or certificates issued on or after that date. 
    Presented to the governor April 17, 1992 
    Signed by the governor April 29, 1992, 8:08 a.m.