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Minnesota Legislature

Office of the Revisor of Statutes

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

  
    Laws of Minnesota 1993 

                        CHAPTER 247-S.F.No. 419 
           An act relating to health care; modifying and making 
          corrections to the health right act; amending 
          Minnesota Statutes 1992, sections 43A.317, 
          subdivisions 2, 7, and 10; 62A.011, subdivision 3; 
          62A.02, subdivision 1; 62A.65, subdivision 5; 62J.04, 
          subdivisions 2, 3, 4, 5, 6, and 7; 62J.09, 
          subdivisions 1, 2, and 6; 62J.15, subdivision 2; 
          62J.17, subdivisions 2, 4, 5, and 6; 62J.19; 62J.23; 
          62J.29, subdivisions 1 and 4; 62J.30, subdivisions 4, 
          7, 8, and 10; 62J.31, subdivisions 2 and 3; 62J.32, 
          subdivisions 1 and 4; 62J.34, subdivisions 2 and 3; 
          62L.02, subdivisions 8, 11, 15, and 16, and by adding 
          a subdivision; 62L.03, subdivisions 2 and 5; 62L.05, 
          subdivision 10; 62L.09, subdivision 2; 62L.13, 
          subdivisions 1, 3, and 4; 62L.14, subdivisions 1, 2, 
          3, 4, 5, 6, 7, and 9; 62L.15, subdivision 2; 62L.16, 
          subdivision 5, and by adding a subdivision; 62L.17, 
          subdivisions 1 and 4; 62L.19; 62L.20, subdivisions 1 
          and 2; 144.147, subdivision 4; 144.1481, subdivision 
          1; 144.1486; 256.045, subdivision 10; 256.9353, 
          subdivisions 2, 6, and by adding a subdivision; 
          256.9354; 256.9355, subdivision 3; 256.9356, 
          subdivision 2; 256.9357; 256B.0644; Laws 1992, chapter 
          549, articles 1, section 15; 2, sections 24 and 25; 3, 
          section 24; and 4, section 18; proposing coding for 
          new law in Minnesota Statutes, chapter 62J; repealing 
          Minnesota Statutes 1992, sections 62J.05, subdivision 
          5; 62J.09, subdivision 3; and 62J.21. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                               ARTICLE 1

                            COST CONTAINMENT
    Section 1.  Minnesota Statutes 1992, section 62J.04, 
subdivision 2, is amended to read: 
    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 private or nonpublic, 
trade secret information under section 13.37 except to the 
extent that it is given a different classification elsewhere in 
this chapter.  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, or as permitted elsewhere in this 
chapter. 
    Sec. 2.  Minnesota Statutes 1992, section 62J.04, 
subdivision 3, is amended to read: 
     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 referral 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 Laws 
1992, chapter 549, 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. 
    Sec. 3.  Minnesota Statutes 1992, section 62J.04, 
subdivision 4, is amended to read: 
     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 on health care access of the commissioner's 
intent to depart from the recommendations of the Minnesota 
health care commission.  The notice to the legislative oversight 
commission on health care access 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 
on health care access at the earliest possible time. 
    Sec. 4.  Minnesota Statutes 1992, section 62J.04, 
subdivision 5, is amended to read: 
    Subd. 5.  [APPEALS.] A person or organization may appeal a 
decision of the commissioner made under this chapter through a 
contested case proceeding under chapter 14. 
    Sec. 5.  Minnesota Statutes 1992, section 62J.04, 
subdivision 6, is amended to read: 
    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. 
    Sec. 6.  Minnesota Statutes 1992, section 62J.04, 
subdivision 7, is amended to read: 
    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 commissioner, 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. 7.  [62J.06] [IMMUNITY FROM LIABILITY.] 
    No member of the Minnesota health care commission 
established under section 62J.05, regional coordinating boards 
established under section 62J.09, health planning advisory 
committee established under section 62J.15, data collection 
advisory committee established under section 62J.30, or practice 
parameter advisory committee established under section 62J.32 
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. 
    Sec. 8.  Minnesota Statutes 1992, section 62J.09, 
subdivision 1, is amended to read: 
     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 approve 
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. 
    Sec. 9.  Minnesota Statutes 1992, section 62J.09, 
subdivision 2, is amended to read: 
    Subd. 2.  [MEMBERSHIP.] (a) Each regional health care 
management coordinating board consists of 16 17 members as 
provided in this subdivision.  A member may designate a 
representative to act as a member of the commission board 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 four 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. 
    Sec. 10.  Minnesota Statutes 1992, section 62J.09, 
subdivision 6, is amended to read: 
    Subd. 6.  [TECHNICAL ASSISTANCE.] The state health care 
commission commissioner shall provide technical assistance to 
regional coordinating boards. 
    Sec. 11.  Minnesota Statutes 1992, section 62J.15, 
subdivision 2, is amended to read: 
    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 boards 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 referral 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. 12.  Minnesota Statutes 1992, section 62J.17, 
subdivision 2, is amended to read: 
     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, or that makes a major spending commitment to become 
regularly engaged in providing health care services in Minnesota.
    Sec. 13.  Minnesota Statutes 1992, section 62J.17, 
subdivision 4, is amended to read: 
    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 within 60 
days of making the major spending commitment 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.  
    Sec. 14.  Minnesota Statutes 1992, section 62J.17, 
subdivision 5, is amended to read: 
     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 
boards 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 lawful 
collaborative arrangements; the commissioner shall require those 
health care providers to follow the procedures for prospective 
review and approval established in subdivision 6. 
    Sec. 15.  Minnesota Statutes 1992, section 62J.17, 
subdivision 6, is amended to read: 
    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. 16.  Minnesota Statutes 1992, section 62J.19, is 
amended to read: 
    62J.19 [SUBMISSION OF REGIONAL PLAN TO COMMISSIONER.] 
    Each regional coordinating board 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 boards exist, the 
commissioner has the authority to establish a public regional 
coordinating board for purposes of establishing a regional plan 
which will achieve the objectives.  The public regional 
coordinating board shall be appointed by the commissioner and 
under the commissioner's direction.  
    Sec. 17.  Minnesota Statutes 1992, section 62J.23, is 
amended to read: 
    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 person benefits 
financially by referring a patient to another provider person, 
recommending another provider person, 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 persons in 
the state, regardless of whether the provider person 
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 person who is in violation of 
this section that provides a reasonable time for the provider 
person to modify prohibited practices or divest financial 
interests in other providers persons in order to come into 
compliance with this section.  Transition plans that identify 
individuals are private data.  Transition plans that do not 
identify individuals are nonpublic data. 
    Subd. 3.  [PENALTY.] The commissioner may assess a fine 
against a provider person who violates this section.  The amount 
of the fine is $1,000 or 110 percent of the estimated financial 
benefit that the provider person realized as a result of the 
prohibited financial arrangement or payment relationship, 
whichever is greater.  A provider person 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. 18.  Minnesota Statutes 1992, section 62J.29, 
subdivision 1, is amended to read: 
    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 may 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, and that this approval 
will make relationships immune from state and federal antitrust 
liability. 
    Sec. 19.  Minnesota Statutes 1992, section 62J.29, 
subdivision 4, is amended to read: 
     Subd. 4.  [STATE ANTITRUST LAW.] Notwithstanding the 
Minnesota antitrust law of 1971, as amended, in 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 
sections 325D.49 to 325D.66.  Approval by the state commission 
commissioner is an absolute defense against any action under 
state antitrust laws.  
    Sec. 20.  Laws 1992, chapter 549, article 1, section 15, is 
amended to read: 
    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. 21.  [REPEALER.] 
    Minnesota Statutes 1992, sections 62J.05, subdivision 5; 
62J.09, subdivision 3; and 62J.21, are repealed. 
     Sec. 22.  [EFFECTIVE DATE.] 
    Sections 1 to 21 are effective the day following final 
enactment. 

                               ARTICLE 2 

                    SMALL EMPLOYER INSURANCE REFORM 
    Section 1.  Minnesota Statutes 1992, section 62L.02, 
subdivision 8, is amended to read: 
    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.  For purposes of sections 62L.13 to 62L.22, 
"commissioner" means the commissioner of commerce. 
    Sec. 2.  Minnesota Statutes 1992, section 62L.02, 
subdivision 11, is amended to read: 
    Subd. 11.  [DEPENDENT.] "Dependent" means an eligible 
employee's spouse, unmarried child who is under the age of 19 
years, unmarried child under the age of 25 years 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. 
    Sec. 3.  Minnesota Statutes 1992, section 62L.02, is 
amended by adding a subdivision to read: 
    Subd. 11a.  [DISCOUNTED ELIGIBLE CHARGES.] "Discounted 
eligible charges" means, as determined by the board of 
directors, eligible charges reduced by the average difference 
between eligible charges and the expected liability of the 
health carrier for services performed.  The board of directors, 
in its discretion, may determine additional different discounts, 
based upon geographic area and type of delivery system. 
    Sec. 4.  Minnesota Statutes 1992, section 62L.02, 
subdivision 15, is amended to read: 
    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 as defined in section 62B.02; 
    (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) a long-term care insurance policy 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.; or 
    (12) issued solely as a companion to a health maintenance 
contract as described in section 62D.12, subdivision 1a, so long 
as the health maintenance contract meets the definition of a 
health benefit plan. 
    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. 
    Sec. 5.  Minnesota Statutes 1992, section 62L.02, 
subdivision 16, is amended to read: 
    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 health 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 health carrier. 
    Sec. 6.  Minnesota Statutes 1992, section 62L.03, 
subdivision 2, is amended to read: 
    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 health carrier participating in the 
small employer market 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 health carrier 
participating in the small employer market in a financially 
impaired condition, provided, however, that a small 
employer health carrier participating in the small employer 
market 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 health carrier is not financially 
impaired and that offering coverage or accepting applications 
under subdivision 1 would not cause the health carrier to be 
become financially impaired. 
    Sec. 7.  Minnesota Statutes 1992, section 62L.03, 
subdivision 5, is amended to read: 
    Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) 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 persons covered or to 
be covered by the health benefit plan.  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 under section 62L.09; 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. 
    (b) A health carrier need not renew a health benefit plan, 
and shall not renew a small employer plan, if an employer ceases 
to qualify as a small employer as defined in section 62L.02.  If 
a health benefit plan, other than a small employer plan, 
provides terms of renewal that do not exclude an employer that 
is no longer a small employer, the health benefit plan may be 
renewed according to its own terms.  If a health carrier issues 
or renews a health plan to an employer that is no longer a small 
employer, without interruption of coverage, the health plan is 
subject to section 60A.082. 
    Sec. 8.  Minnesota Statutes 1992, section 62L.05, 
subdivision 10, is amended to read: 
    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 diagnosis-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. 
    Sec. 9.  Minnesota Statutes 1992, section 62L.09, 
subdivision 2, is amended to read: 
    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 
health carrier. 
    Sec. 10.  Minnesota Statutes 1992, section 62L.13, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION.] The health coverage reinsurance 
association is established as a nonprofit corporation may 
operate as a nonprofit unincorporated association, but is 
authorized to incorporate under chapter 317A.  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.  
    Sec. 11.  Minnesota Statutes 1992, section 62L.13, 
subdivision 3, is amended to read: 
    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.  Directors 
and 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 directors and members of the 
association. 
    Sec. 12.  Minnesota Statutes 1992, section 62L.13, 
subdivision 4, is amended to read: 
    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 may operate under the plan of operation approved by 
the board and shall be governed in accordance with this chapter 
and may operate in accordance with chapter 317A.  If the 
association incorporates as a nonprofit corporation under 
chapter 317A, the filing of the plan of operation meets the 
requirements of filing articles. 
    Sec. 13.  Minnesota Statutes 1992, section 62L.14, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COMPOSITION OF BOARD.] The association 
shall exercise its powers through a board of 13 directors.  Four 
members directors must be public members appointed by the 
commissioner.  The public members directors must not be 
employees of or otherwise affiliated with any member of the 
association.  The nonpublic members of the board directors 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.  Directors are 
automatically removed if they fail to satisfy this qualification.
    Sec. 14.  Minnesota Statutes 1992, section 62L.14, 
subdivision 2, is amended to read: 
    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 until the annual 
meeting in 1994.  Except for the public members directors, 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 plan of 
operation, subject to approval by the commissioner.  Members of 
the association may vote in person or by proxy.  The 
public members directors shall continue to be appointed by the 
commissioner to terms meeting the requirements of subdivision 3. 
    Sec. 15.  Minnesota Statutes 1992, section 62L.14, 
subdivision 3, is amended to read: 
    Subd 3.  [TERM OF OFFICE.] The first annual meeting must be 
held by December 1, 1992.  After the initial two-year period 
annual meeting in 1994, each director shall serve a three-year 
term, except that the board shall make appropriate arrangements 
to stagger the terms of the board members directors 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. 
    Sec. 16.  Minnesota Statutes 1992, section 62L.14, 
subdivision 4, is amended to read: 
    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.  If a vacancy occurs for a public director, the 
commissioner shall appoint a new public director for the 
duration of the unexpired term. 
    Sec. 17.  Minnesota Statutes 1992, section 62L.14, 
subdivision 5, is amended to read: 
    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. 
    Sec. 18.  Minnesota Statutes 1992, section 62L.14, 
subdivision 6, is amended to read: 
    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. 
    Sec. 19.  Minnesota Statutes 1992, section 62L.14, 
subdivision 7, is amended to read: 
    Subd. 7.  [COMPENSATION.] Members of the board Public 
directors 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. 
    Sec. 20.  Minnesota Statutes 1992, section 62L.14, 
subdivision 9, is amended to read: 
    Subd. 9.  [MAJORITY VOTE.] Approval by a majority of the 
board members directors present is required for any action of 
the board.  The majority vote must include one vote from a board 
member director representing an accident and health insurance 
company, one vote from a board member director representing a 
health service plan corporation, one vote from a board member 
director representing a health maintenance organization, and one 
vote from a public member director. 
    Sec. 21.  Minnesota Statutes 1992, section 62L.15, 
subdivision 2, is amended to read: 
    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 public directors, 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. 
    Sec. 22.  Minnesota Statutes 1992, section 62L.16, 
subdivision 5, is amended to read: 
    Subd. 5.  [AUDITS.] The board of directors may conduct 
periodic audits to verify the accuracy of financial data and 
reports submitted by the administrator.  The board may establish 
in the plan of operation a uniform audit program.  All costs of 
the uniform audit program and any additional audits conducted by 
the board to verify the accuracy of claims submissions are the 
responsibility of the health carrier.  Failure of a health 
carrier to comply with the requirements of the audit program, 
including the failure to pay the costs of an audit, may subject 
the health carrier to the penalties described in section 62L.11. 
    Sec. 23.  Minnesota Statutes 1992, section 62L.16, is 
amended by adding a subdivision to read: 
    Subd. 7.  [INDEMNIFICATION.] The association shall 
indemnify members, directors, officers, employees, and agents to 
the same extent that persons may be indemnified by corporations 
under section 317A.521. 
    Sec. 24.  Minnesota Statutes 1992, section 62L.17, 
subdivision 1, is amended to read: 
    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 have its business reinsured by the 
association. 
    Sec. 25.  Minnesota Statutes 1992, section 62L.17, 
subdivision 4, is amended to read: 
    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 under this subdivision.
    Sec. 26.  Minnesota Statutes 1992, section 62L.19, is 
amended to read: 
    62L.19 [ALLOWED REINSURANCE BENEFITS.] 
    A health carrier may reinsure through the association only 
those benefits described in section 62L.05.  The board may 
establish guidelines to clarify what coverage is included within 
the benefits described in this chapter.  If a health plan 
conforms to those benefits as clarified by the board, the 
benefits are considered to be in accordance with this chapter 
for purposes of the association's obligations. 
    Sec. 27.  Minnesota Statutes 1992, section 62L.20, 
subdivision 1, is amended to read: 
    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 $55,000, 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 discounted 
eligible charges.  The board may establish an audit process to 
assure consistency in the submission of charge calculations by 
health carriers to the association.  The association shall 
determine the amount to be paid to the health carrier for claims 
submitted based on discounted eligible charges.  The board may 
establish upper limits on the amount paid by the association 
based on a usual and customary determination.  The board shall 
establish in the plan of operation a procedure for determining 
the discounted eligible charge. 
    Sec. 28.  Minnesota Statutes 1992, section 62L.20, 
subdivision 2, is amended to read: 
    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 
health carrier's conversion factor is equivalent to the 
association's standardized conversion table, the association 
shall accept the health carrier's conversion factor. 
    Sec. 29.  Laws 1992, chapter 549, article 2, section 24, is 
amended to read: 
    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 April 1, 
1995.  The commissioner shall file with the legislature a 
written preliminary progress report no later than December 1, 
1994. 
    Sec. 30.  Laws 1992, chapter 549, article 2, section 25, is 
amended to read: 
    Sec. 25.  [EFFECTIVE DATES.] 
    Sections 1 3 to 12 and 23 are effective July 1, 1993, 
except that section 10, subdivision 5, is effective the day 
following final enactment.  Sections 1, 2, and 13 to 22 are 
effective the day following final enactment. 
    Sec. 31.  [EFFECTIVE DATES.] 
    Sections 1 to 30 are effective the day following final 
enactment. 

                                ARTICLE 3

         INSURANCE REFORM:  INDIVIDUAL MARKET AND MISCELLANEOUS
    Section 1.  Minnesota Statutes 1992, section 43A.317, 
subdivision 2, is amended to read: 
    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 an employee 
of an eligible employer.  "Employee" includes a sole proprietor, 
partner of a partnership, member of a limited liability company, 
or independent contractor. 
    (g) [EMPLOYER.] "Employer" means a private person, firm, 
corporation, partnership, limited liability company, 
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. 
    Sec. 2.  Minnesota Statutes 1992, section 43A.317, 
subdivision 7, is amended to read: 
    Subd. 7.  [COVERAGE.] Coverage is available through the 
program beginning on July 1, 1993.  At least annually, Until an 
arrangement is in place to provide coverage through a transfer 
of risk to one or more carriers regulated under chapter 62A, 
62C, or 62D, the commissioner shall solicit bids under section 
43A.23, 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. 
    Sec. 3.  Minnesota Statutes 1992, section 43A.317, 
subdivision 10, is amended to read: 
    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. 
    Sec. 4.  Minnesota Statutes 1992, section 62A.011, 
subdivision 3, is amended to read: 
    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.  Health 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 as defined in 
section 62B.02; 
    (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) a long-term care policy 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; 
    (11) workers' compensation insurance; or 
    (12) issued solely as a companion to a health maintenance 
contract as described in section 62D.12, subdivision 1a, so long 
as the health maintenance contract meets the definition of a 
health plan. 
    Sec. 5.  Minnesota Statutes 1992, section 62A.02, 
subdivision 1, is amended to read: 
    Subdivision 1.  [FILING.] For purposes of this section, 
"health plan" means a health plan as defined in section 62A.011 
or a policy of accident and sickness insurance as defined in 
section 62A.01.  No 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 with the health plan, until a copy of its form and of 
the classification of risks and the premium rates pertaining to 
the form have been filed with the commissioner.  The filing for 
nongroup health plan forms shall include a statement of 
actuarial reasons and data to support the rate.  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. 6.  Minnesota Statutes 1992, section 62A.65, 
subdivision 5, is amended to read: 
    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 individual 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. 
    Sec. 7.  Laws 1992, chapter 549, article 3, section 24, is 
amended to read: 
    Sec. 24.  [EFFECTIVE DATE.] 
    Section 11 is effective July 30, 1992.  Sections 1, 3 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 2, 19, 20, 21, and 22 are 
effective the day following final enactment. 
    Sec. 8.  [EFFECTIVE DATES.] 
    Sections 1 to 7 are effective the day following final 
enactment. 

                               ARTICLE 4

                    CHILDREN'S HEALTH PLAN EXPANSION
    Section 1.  Minnesota Statutes 1992, section 256.045, 
subdivision 10, is amended to read: 
    Subd. 10.  [PAYMENTS PENDING APPEAL.] If the commissioner 
of human services or district court orders monthly assistance or 
aid or services paid or provided in any proceeding under this 
section, it shall be paid or provided pending appeal to the 
commissioner of human services, district court, court of 
appeals, or supreme court.  The human services referee may order 
the local human services agency to reduce or terminate medical 
assistance or general assistance medical care to a recipient 
before a final order is issued under this section if:  (1) the 
human services referee determines at the hearing that the sole 
issue on appeal is one of a change in state or federal law; and 
(2) the commissioner or the local agency notifies the recipient 
before the action.  The state or county agency has a claim for 
food stamps, cash payments, medical assistance, and general 
assistance medical care, and MinnesotaCare plan payments made to 
or on behalf of a recipient or former recipient while an appeal 
is pending if the recipient or former recipient is determined 
ineligible for the food stamps, cash payments, medical 
assistance, or general assistance medical care, or MinnesotaCare 
as a result of the appeal, except for medical assistance and 
general assistance medical care made on behalf of a recipient 
pursuant to a court order.  In enforcing a claim on 
MinnesotaCare plan payments, the state or county agency shall 
reduce the claim amount by the value of any premium payments 
made by a recipient or former recipient during the period for 
which the recipient or former recipient has been determined to 
be ineligible. 
    Sec. 2.  Minnesota Statutes 1992, section 256.9353, 
subdivision 2, is amended to read: 
    Subd. 2.  [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. 
    Recipients of covered health services under the children's 
health plan, as provided in Minnesota Statutes 1990, section 
256.936, and as amended by Laws 1991, chapter 292, article 4, 
section 17, and recipients of covered health services enrolled 
in the children's health plan or the MinnesotaCare plan after 
October 1, 1992, pursuant to Laws 1992, chapter 549, article 4, 
sections 5 and 17, are eligible to receive alcohol and drug 
dependency benefits under this subdivision. 
    Sec. 3.  Minnesota Statutes 1992, section 256.9353, 
subdivision 6, is amended to read: 
    Subd. 6.  [COPAYMENTS AND COINSURANCE.] The health right 
MinnesotaCare 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 inpatient out-of-pocket maximum of $2,000 $1,000 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 spend-down shall be financially responsible for the 
coinsurance amount up to the spend-down limit or the coinsurance 
amount, whichever is less, in order to become eligible for the 
medical assistance program. 
    Sec. 4.  Minnesota Statutes 1992, section 256.9353, is 
amended by adding a subdivision to read: 
    Subd. 7.  [LIEN.] When the state agency provides, pays for, 
or becomes liable for covered health services, the agency shall 
have a lien for the cost of the covered health services upon any 
and all causes of action accruing to the enrollee, or to the 
enrollee's legal representatives, as a result of the occurrence 
that necessitated the payment for the covered health services.  
All liens under this section shall be subject to the provisions 
of section 256.015. 
    Sec. 5.  Minnesota Statutes 1992, section 256.9354, is 
amended to read: 
    256.9354 [ELIGIBLE PERSONS.] 
    Subdivision 1.  [CHILDREN; EXPANSION AND CONTINUATION OF 
ELIGIBILITY.] (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. 
    (b) [EXPANSION OF ELIGIBILITY.] Eligibility for the health 
right MinnesotaCare plan shall be expanded as provided in 
subdivisions 2 to 5.  The enrollment requirements in this 
paragraph apply to enrollment under subdivisions 2 to 5,.  
Parents who enroll in the health right MinnesotaCare 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.  If one 
spouse in a household enrolls, the other spouse in the household 
must also enroll, unless other insurance is available.  Families 
cannot choose to enroll only certain uninsured members.  For 
purposes of this section, a "dependent sibling" means an 
unmarried child who is a full-time student under the age of 25 
years who is financially dependent upon a parent.  Proof of 
school enrollment will be required.  
    (c) [CONTINUATION OF ELIGIBILITY.] Individuals who 
initially enroll in the MinnesotaCare plan under the eligibility 
criteria in subdivisions 2 to 5 remain eligible for the 
MinnesotaCare plan, regardless of age, place of residence, or 
the presence or absence of children in the same household, as 
long as all other eligibility criteria are met and residence in 
Minnesota and continuous enrollment in the MinnesotaCare plan or 
medical assistance are maintained.  In order for either parent 
or either spouse in a household to remain enrolled, both must 
remain enrolled, unless other insurance is available. 
     Subd. 1a.  [COOPERATION.] To be eligible for MinnesotaCare, 
individuals must cooperate with the state agency to identify 
potentially liable third party payers and assist the state in 
obtaining third party payments.  "Cooperation" includes, but is 
not limited to, identifying any third party who may be liable 
for care and services provided under MinnesotaCare to the 
enrollee, providing relevant information to assist the state in 
pursuing a potentially liable third party, and completing forms 
necessary to recover third party payments. 
    Subd. 2.  [FAMILIES WITH CHILDREN.] Beginning October 1, 
1992, "eligible persons" means children eligible under 
subdivision 1, and parents and dependent siblings residing in 
the same household as a child eligible under subdivision 1.  
Individuals who initially enroll in the health right plan under 
the eligibility criteria in this subdivision 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. 
    Subd. 3.  [CONTINUATION OF ELIGIBILITY.] Beginning October 
1, 1992, individuals who initially enrolled in the health right 
MinnesotaCare plan under the eligibility criteria in subdivision 
1 or 2 remain eligible even if their gross income after 
enrollment exceeds 185 percent of the federal poverty 
guidelines, subject to any premium required under section 
256.9357, as long as all other eligibility requirements are met 
and continuous enrollment in the health right MinnesotaCare plan 
or medical assistance is maintained. 
    Subd. 4.  [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 
MinnesotaCare plan but must pay a premium as determined under 
sections 256.9357 and 256.9358.  Individuals and families whose 
income is greater than the limits established under section 
256.9358 may not enroll in the health right MinnesotaCare plan.  
Individuals who initially enroll in the health right plan under 
the eligibility criteria in this subdivision 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. 
    Subd. 5.  [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 MinnesotaCare plan but must 
pay a premium as determined under sections 256.9357 and 
256.9358.  Individuals and families whose income is greater than 
the limits established under section 256.9358 may not enroll in 
the health right MinnesotaCare plan.  
    Sec. 6.  Minnesota Statutes 1992, section 256.9355, 
subdivision 3, is amended to read: 
    Subd. 3.  [EFFECTIVE DATE OF COVERAGE.] 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 
is approved and the first premium payment has been 
received.  The effective date of coverage for eligible newborns 
or eligible newly adoptive children added to a family receiving 
covered health services is the date of entry into the family.  
The effective date of coverage for other new recipients added to 
the family receiving covered health services is the first day of 
the month following the month in which eligibility is approved 
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 sections 256.9351 
to 256.9361 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 1992, section 256.9356, 
subdivision 2, is amended to read: 
    Subd. 2.  [PREMIUM PAYMENTS.] Beginning October 1, 1992, 
the commissioner shall require health right MinnesotaCare plan 
enrollees to pay a premium based on a sliding scale, as 
established under section 256.9357.  Applicants who are eligible 
under section 256.9354, subdivision 1, 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.  
The following applicants are exempt from this requirement until 
July 1, 1993: 
     (1) applicants who are eligible under section 256.9354, 
subdivision 1, if the application is received by MinnesotaCare 
staff on or before September 30, 1992; and 
     (2) children who enroll in the children's health plan after 
September 30, 1992, pursuant to Laws 1992, chapter 549, article 
4, section 17.  Before July 1, 1993, these individuals shall 
continue to pay the annual enrollment fee required by 
subdivision 1. 
    Sec. 8.  Minnesota Statutes 1992, section 256.9357, is 
amended to read: 
    256.9357 [ELIGIBILITY FOR SUBSIDIZED PREMIUMS BASED ON 
SLIDING SCALE.] 
    Subdivision 1.  [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 
section 256.9358 only if the family or individual meets the 
requirements in subdivisions 2 and 3.  Children already enrolled 
in the health right MinnesotaCare plan as of September 30, 1992, 
and children who enroll in the children's health plan after 
September 30, 1992, pursuant to Laws 1992, chapter 549, article 
4, section 17, are eligible for subsidized premium payments 
without meeting these requirements, as long as they maintain 
continuous coverage in the health right MinnesotaCare plan or 
medical assistance. 
    Families and individuals who initially enrolled in the 
health right MinnesotaCare plan under section 256.9354, and 
whose income increases above the limits established in section 
256.9358, may continue enrollment and pay the full cost of 
coverage.  
    Subd. 2.  [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 MinnesotaCare 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 subdivision. 
    Subd. 3.  [PERIOD UNINSURED.] To be eligible for subsidized 
premium payments based on a sliding scale, families and 
individuals initially enrolled in the health right MinnesotaCare 
plan under section 256.9354, subdivisions 4 and 5, 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 MinnesotaCare plan does not apply to families, children, 
and individuals who want to apply for the health 
right MinnesotaCare 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 subdivision does not apply to families and 
individuals initially enrolled under sections 256.9354, 
subdivisions 1 and 2, or to children enrolled pursuant to Laws 
1992, chapter 549, article 4, section 17. 
    Sec. 9.  Minnesota Statutes 1992, section 256B.0644, is 
amended to read: 
    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 MinnesotaCare 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 MinnesotaCare 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.  The commissioner of employee relations shall implement 
this section through contracts with participating health and 
dental carriers. 
     Sec. 10.  Laws 1992, chapter 549, article 4, section 18, is 
amended to read: 
    Sec. 18.  [IMPACT OF HEALTH RIGHT MINNESOTACARE ON 
CHILDREN'S HEALTH PLAN ENROLLEES.] 
    The commissioner of human services shall examine the impact 
of health right MinnesotaCare plan premium costs on access to 
health care for children's health plan enrollees.  The 
commissioner shall examine whether health right MinnesotaCare 
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 MinnesotaCare plan for financial reasons.  The 
commissioner shall present recommendations to the legislature by 
February 15, 1993 April 1, 1994, on methods to ensure continued 
access to health care coverage for children's health plan 
enrollees. 
    Sec. 11.  [REVISOR INSTRUCTIONS.] 
    In the next edition of Minnesota Statutes, the revisor of 
statutes shall change the words "health right" to 
"MinnesotaCare," as appropriate, wherever they appear in 
Minnesota Statutes. 
     Sec. 12.  [EFFECTIVE DATE.] 
    Sections 2 to 10 are effective the day following final 
enactment.  Section 1 is effective for appeals filed on or after 
the day following final enactment. 

                               ARTICLE 5

                     DATA INITIATIVES; RURAL HEALTH
    Section 1.  Minnesota Statutes 1992, section 62J.30, 
subdivision 4, is amended to read: 
    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, to the extent feasible, 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. 
    Sec. 2.  Minnesota Statutes 1992, section 62J.30, 
subdivision 7, is amended to read: 
     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 individual patients or providers 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 health care 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, or nonpublic data under this chapter 
shall be made without releasing data that could reveal the 
identity of individuals identifies patients 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. 
    Sec. 3.  Minnesota Statutes 1992, section 62J.30, 
subdivision 8, is amended to read: 
     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, except that 
its existence does not terminate and members do not receive per 
diem compensation. 
    Sec. 4.  Minnesota Statutes 1992, section 62J.30, 
subdivision 10, is amended to read: 
    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. 
    Sec. 5.  Minnesota Statutes 1992, section 62J.31, 
subdivision 2, is amended to read: 
    Subd. 2.  [SPECIFIC HEALTH CONDITIONS.] (a) The Data 
collected under this section 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.  
    Sec. 6.  Minnesota Statutes 1992, section 62J.31, 
subdivision 3, is amended to read: 
     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, as provided in section 62J.30, subdivisions 6 
and 7.  The data must be collected in a manner that allows 
comparisons to be made between providers, health carriers, 
public programs, and other entities. 
    Sec. 7.  Minnesota Statutes 1992, section 62J.32, 
subdivision 1, is amended to read: 
     Subdivision 1.  [DATA ANALYSIS.] The health care analysis 
unit shall analyze the data collected on specific health 
conditions through the large-scale data base 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. 
    Sec. 8.  Minnesota Statutes 1992, section 62J.32, 
subdivision 4, is amended to read: 
    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 except that its existence does not 
terminate and members do not receive per diem compensation. 
    Sec. 9.  Minnesota Statutes 1992, section 62J.34, 
subdivision 2, is amended to read: 
     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.  Notice of adoption of practice parameters 
adopted without rulemaking must be published in the State 
Register and must include a statement that the complete practice 
parameter is available free of charge from the commissioner. 
    Sec. 10.  Minnesota Statutes 1992, section 62J.34, 
subdivision 3, is amended to read: 
     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. 11.  Minnesota Statutes 1992, 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 of each 
fiscal year for grants awarded for the that fiscal 
year beginning the following July 1.  A grant may be awarded 
upon signing of a grant contract. 
     (b) 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. 
    (g) The commissioner may adopt rules to implement this 
section. 
    Sec. 12.  Minnesota Statutes 1992, section 144.1481, 
subdivision 1, is amended to read: 
     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, except that the existence of the committee does 
not terminate and members do not receive per diem compensation. 
     Sec. 13.  Minnesota Statutes 1992, section 144.1486, is 
amended to read: 
    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 instrumentalities of the state of Minnesota or 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. 14.  [EFFECTIVE DATE.] 
    Sections 1 to 13 are effective the day following final 
enactment. 
    Presented to the governor May 14, 1993 
    Signed by the governor May 17, 1993, 4:42 p.m.