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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 345-H.F.No. 1178 
           An act relating to health; implementing 
          recommendations of the Minnesota health care 
          commission; defining and regulating integrated service 
          networks; requiring regulation of health care services 
          not provided through integrated service networks; 
          establishing data reporting and collection 
          requirements; establishing other cost containment 
          measures; providing for classification of certain tax 
          data; requiring certain studies; appropriating money; 
          amending Minnesota Statutes 1992, sections 3.732, 
          subdivision 1; 43A.17, by adding a subdivision; 
          43A.317, subdivision 5; 60K.14, by adding a 
          subdivision; 62A.021, subdivision 1; 62A.65; 62C.16, 
          by adding a subdivision; 62D.042, subdivision 2; 
          62D.12, by adding a subdivision; 62E.11, subdivision 
          12; 62J.03, subdivisions 6, 8, and by adding a 
          subdivision; 62J.04, subdivisions 1, 2, 3, 4, 5, 7, 
          and by adding subdivisions; 62J.05, by adding a 
          subdivision; 62J.09, subdivisions 2, 5, 8, and by 
          adding subdivisions; 62J.15, subdivision 1, and by 
          adding a subdivision; 62J.17, subdivision 2, and by 
          adding subdivisions; 62J.23, by adding a subdivision; 
          62J.30, subdivisions 1, 6, 7, and 8; 62J.32, 
          subdivision 4; 62J.33; 62J.34, subdivision 2; 62L.02, 
          subdivisions 19, 26, and 27; 62L.03, subdivisions 3 
          and 4; 62L.04, subdivision 1; 62L.05, subdivisions 2, 
          3, 4, and 6; 62L.08, subdivisions 4 and 8; 62L.09, 
          subdivision 1; 62L.11, subdivision 1; 124C.62; 
          136A.1355, subdivisions 1, 3, 4, and by adding a 
          subdivision; 136A.1356, subdivisions 2 and 5; 
          136A.1357; 137.38, subdivisions 2, 3, and 4; 137.39, 
          subdivisions 2 and 3; 137.40, subdivision 3; 144.147, 
          subdivision 4; 144.1484, subdivisions 1 and 2; 
          144.335, by adding a subdivision; 151.21; 151.47, 
          subdivision 1; 214.16, subdivision 3; 256.9351, 
          subdivision 3; 256.9352, subdivision 3; 256.9353; 
          256.9354, subdivisions 1, 4, and by adding a 
          subdivision; 256.9356; 256.9357, subdivision 1; 
          256.9657, subdivision 3; 256B.057, subdivisions 1, 2a, 
          and by adding a subdivision; 256B.0625, subdivision 
          13; 256B.0644; 256D.03, subdivision 3; 270B.01, 
          subdivision 8; 295.50, subdivisions 3, 4, 7, 14, and 
          by adding subdivisions; 295.51, subdivision 1; 295.52, 
          by adding subdivisions; 295.53, subdivisions 1, 2, 3, 
          and by adding a subdivision; 295.54; 295.55, 
          subdivision 4; 295.57; 295.58; and 295.59; Laws 1992, 
          chapter 549, article 7, section 9, and article 9, 
          section 19; proposing coding for new law in Minnesota 
          Statutes, chapters 62A; 62J; 136A; 144; 151; 256; and 
          295; proposing coding for new law as Minnesota 
          Statutes, chapters 62N; and 62P; repealing Minnesota 
          Statutes 1992, sections 62J.15, subdivision 2; 62J.17, 
          subdivisions 4, 5, and 6; 62J.29; 62L.09, subdivision 
          2; 295.50, subdivisions 5 and 10; and 295.51, 
          subdivision 2. 
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 

                                ARTICLE 1

                       INTEGRATED SERVICE NETWORKS
    Section 1.  Minnesota Statutes 1992, section 62J.04, is 
amended by adding a subdivision to read: 
    Subd. 8.  [IMPLEMENTATION PLAN.] (a) The commissioner, in 
consultation with the commission, shall develop and submit to 
the legislature and the governor by January 15, 1994, a detailed 
implementation plan, including proposed rules and legislation, 
to implement the cost containment plan recommended by the 
commission as described in the summary report of the commission 
issued on January 25, 1993, as further modified by this act.  
The goal of the implementation plan must be to allow integrated 
service networks to form beginning July 1, 1994, and to begin a 
phased-in implementation of an all-payer system over a two-year 
period beginning July 1, 1994. 
    (b) To ensure a wide range of choices for purchasers, 
consumers, and providers, the rules and legislation must 
encourage and facilitate the formation of locally controlled 
integrated service networks, in addition to networks sponsored 
by statewide health plan companies. 
    (c) Financial solvency, net worth, and reserve requirements 
for integrated service networks must facilitate the formation of 
new networks, including networks sponsored by providers, 
employers, community organizations, local governments, and other 
locally based organizations, while protecting enrollees from 
undue risk of financial insolvency.  The rules and legislation 
shall authorize alternative financial solvency, net worth, and 
reserve requirements for networks sponsored by providers that 
are based on the operational capacity, facilities, personnel, 
and financial capability to provide the services that it has 
contracted to provide to enrollees during the term of the 
contract provided the requirements are based on sound actuarial, 
financial, and accounting principles.  The criteria for allowing 
integrated service networks and participating providers and 
health care providing entities to satisfy financial requirements 
through alternative means may authorize consideration of: 
    (1) the level of services to be provided by a provider 
relative to its existing service capacity; 
    (2) the provider's debt rating; 
    (3) certification by an independent consulting actuary; 
    (4) the availability of allocated or restricted funds; 
    (5) net worth; 
    (6) the availability of letters of credit; 
    (7) the taxing authority of the entity or governmental 
sponsor; 
    (8) net revenues; 
    (9) accounts receivable; 
    (10) the number of providers under contract; 
    (11) indebtedness; and 
    (12) other factors the commissioner may reasonably 
establish to measure the ability of the provider or health care 
providing entity to provide the level of services. 
    (d) The implementation plan may include a requirement that 
an integrated service network may not contract for management 
services with a separate entity unless: 
    (1) the contract complies with section 62D.19; and 
    (2) if the management contract exceeds five percent of 
gross revenues of the integrated service network, provisions 
requiring holdbacks or other risk related provisions must be no 
more favorable to the separate entity under the management 
contract than comparable terms contained in any contract between 
the integrated service network and any health care providing 
entity or provider. 
    (e) The implementation plan must include technical 
assistance and financial assistance to promote the creation of 
locally controlled networks to serve rural areas and special 
populations.  The commissioner and the commission shall consider 
including in the implementation plan the establishment of a 
management cooperative that will provide planning, organization, 
administration, billing, legal, and support services to 
integrated service networks that are members of the cooperative. 
    (f) The implementation plan must address problems of 
provider recruitment and retention in rural areas.  Rules and 
legislation must be designed to improve the ability of rural 
communities to maintain an effective local delivery system. 
    (g) The implementation plan must include a method to create 
an option for health care providers and health care plans who 
meet or fall below the limits set by the commissioner under 
section 62J.04 to obtain a waiver from the applicability of the 
all-payer rules. 
    (h) In developing the implementation plan, the commissioner 
and the commission shall consider medical malpractice liability 
in terms of an entity operating an integrated service network 
and possible medical malpractice committed by its employees and 
make recommendations on any statutory changes that may be 
necessary.  The commissioner may also consider whether a network 
and its participating entities should be allowed to reallocate 
between themselves the risk of malpractice liability. 
    (i) The implementation plan must identify the entities to 
whom an integrated service network may provide health care 
services, and persons or methods through whom or which an 
integrated service network may offer or sell its services. 
    (j) The implementation plan may consider the obligations 
that an integrated service network should have to the 
comprehensive health association established under section 
62E.10.  If obligations are to be required of an integrated 
service network, the implementation plan may provide for a 
phase-in of the assessments under section 62E.11.  The 
implementation plan should clearly specify the rights and duties 
of integrated service networks with respect to the comprehensive 
health association. 
    (k) In developing the implementation plan, the commissioner 
and the commission shall consider how enrollees should be 
protected in the event of the insolvency of a network, how 
prospective enrollees should be informed of the consequences to 
enrollees of an insolvency, and the form of the hold harmless 
clause that must be contained in every network enrollee contract.
    (l) In developing the implementation plan, the commissioner 
and the commission shall consider the liquidation, 
rehabilitation, and conservation procedures that would be 
appropriate for networks. 
    (m) The rules and legislation must include provisions 
authorizing integrated service networks to bear the risk of 
providing coverage either by retaining the risk or by 
transferring all or part of the risk by purchasing reinsurance 
or other appropriate methods. 
    (n) The implementation plan must recommend the solvency 
requirements appropriate for a network, including net worth and 
deposit requirements, any reduced or phased-in net worth or 
deposit requirements that might be appropriate for new networks, 
government-sponsored networks, networks that use accredited 
capitated providers, or that have other particular features that 
provide a rationale for adjusting the solvency requirements. 
    (o) The commissioner shall determine the possible 
relationships between providers and integrated service networks, 
including requirements for the contractual relationships that 
may be required in order to ensure flexible arrangements between 
integrated service networks and providers. 
    Sec. 2.  [62N.01] [CITATION AND PURPOSE.] 
    Subdivision 1.  [CITATION.] Sections 62N.01 to 62N.24 may 
be cited as the "Minnesota integrated service network act." 
    Subd. 2.  [PURPOSE.] Sections 62N.01 to 62N.24 allow the 
creation of integrated service networks that will be responsible 
for arranging for or delivering a full array of health care 
services, from routine primary and preventive care through acute 
inpatient hospital care, to a defined population for a fixed 
price from a purchaser.  
    Each integrated service network is accountable to keep its 
total revenues within the limit of growth set by the 
commissioner of health under section 62N.05, subdivision 2, 
clause (1).  Integrated service networks can be formed by health 
care providers, health maintenance organizations, insurance 
companies, employers, or other organizations.  Competition 
between integrated service networks on the quality and price of 
health care services is encouraged.  
    Sec. 3.  [62N.02] [DEFINITIONS.] 
    Subdivision 1.  [APPLICATION.] The definitions in this 
section apply to sections 62J.04, subdivision 8, and 62N.01 to 
62N.24. 
    Subd. 2.  [ACCREDITED CAPITATED PROVIDER.] "Accredited 
capitated provider" means a financially responsible health care 
providing entity paid by a network on a capitated basis.  
    Subd. 3.  [COMMISSION.] "Commission" means the health care 
commission established under section 62J.05. 
    Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
commissioner of health or the commissioner's designated 
representative. 
    Subd. 5.  [ENROLLEE.] "Enrollee" means an individual, 
including a member of a group, to whom a network is obligated to 
provide health services under this chapter. 
    Subd. 6.  [HEALTH CARE PROVIDING ENTITY.] "Health care 
providing entity" means a participating entity that provides 
health care to enrollees through an integrated service network. 
    Subd. 6a.  [HEALTH CARRIER.] "Health carrier" has the 
meaning given in section 62A.011. 
    Subd. 7.  [HEALTH PLAN.] "Health plan" means a health plan 
as defined in section 62A.011 or coverage by an integrated 
service network. 
    Subd. 8.  [INTEGRATED SERVICE NETWORK.] "Integrated service 
network" means a formal arrangement permitted by this chapter 
and licensed by the commissioner for providing health services 
under this chapter to enrollees for a fixed payment per time 
period. 
    Subd. 9.  [NETWORK.] "Network" means an integrated service 
network as defined in this section. 
    Subd. 10.  [PARTICIPATING ENTITY.] "Participating entity" 
means a health care providing entity, a risk-bearing entity, or 
an entity providing other services through an integrated service 
network. 
    Subd. 11.  [PRICE.] "Price" means the actual amount of 
money paid, after discounts or other adjustments, by the person 
or organization paying money to buy health care coverage and 
health care services.  "Price" does not mean the cost or costs 
incurred by a network or other entity to provide health care 
services to individuals. 
    Subd. 12.  [RISK-BEARING ENTITY.] "Risk-bearing entity" 
means an entity that participates in an integrated service 
network so as to bear all or part of the risk of loss.  
"Risk-bearing entity" includes an entity that provides 
reinsurance, stop-loss, excess-of-loss, and similar coverage. 
    Sec. 4.  [62N.03] [APPLICABILITY OF OTHER LAW.] 
    Chapters 60A, 60B, 60G, 61A, 61B, 62A, 62C, 62D, 62E, 62H, 
62L, 62M, and 64B do not, except as expressly provided in this 
chapter or in those other chapters, apply to integrated service 
networks, or to entities otherwise subject to those chapters, 
with respect to participation by those entities in integrated 
service networks.  Chapters 72A and 72C apply to integrated 
service networks, except as otherwise expressly provided in this 
chapter. 
    Integrated service networks are in "the business of 
insurance" for purposes of the federal McCarren-Ferguson Act, 
United States Code, title 15, section 1012, are "domestic 
insurance companies" for purposes of the federal Bankruptcy 
Reform Act of 1978, United States Code, title 11, section 109, 
and are "insurance" for purposes of the federal Employee 
Retirement Income Security Act, United States Code, title 29, 
section 1144. 
    Sec. 5.  [62N.04] [REGULATION.] 
    Integrated service networks are under the supervision of 
the commissioner, who shall enforce this chapter.  The 
commissioner has, with respect to this chapter, all enforcement 
and rulemaking powers available to the commissioner under 
section 62D.17. 
    Sec. 6.  [62N.05] [RULES GOVERNING INTEGRATED SERVICE 
NETWORKS.] 
    Subdivision 1.  [RULES.] The commissioner, in consultation 
with the commission, may adopt emergency and permanent rules to 
establish more detailed requirements governing integrated 
service networks in accordance with this chapter. 
    Subd. 2.  [REQUIREMENTS.] The commissioner shall include in 
the rules requirements that will ensure that the annual rate of 
growth of an integrated service network's aggregate total 
revenues received from purchasers and enrollees, after 
adjustments for changes in population size and risk, does not 
exceed the growth limit established in section 62J.04.  A 
network's aggregate total revenues for purposes of these growth 
limits are net of the contributions, surcharges, taxes, and 
assessments listed in section 62P.04, subdivision 2, that the 
network pays.  The commissioner may include in the rules the 
following: 
    (1) requirements for licensure, including a fee for initial 
application and an annual fee for renewal; 
    (2) quality standards; 
    (3) requirements for availability and comprehensiveness of 
services; 
    (4) requirements regarding the defined population to be 
served by an integrated service network; 
    (5) requirements for open enrollment; 
    (6) provisions for incentives for networks to accept as 
enrollees individuals who have high risks for needing health 
care services and individuals and groups with special needs; 
    (7) prohibitions against disenrolling individuals or groups 
with high risks or special needs; 
    (8) requirements that an integrated service network provide 
to its enrollees information on coverage, including any 
limitations on coverage, deductibles and copayments, optional 
services available and the price or prices of those services, 
any restrictions on emergency services and services provided 
outside of the network's service area, any responsibilities 
enrollees have, and describing how an enrollee can use the 
network's enrollee complaint resolution system; 
    (9) requirements for financial solvency and stability; 
    (10) a deposit requirement; 
    (11) financial reporting and examination requirements; 
    (12) limits on copayments and deductibles; 
    (13) mechanisms to prevent and remedy unfair competition; 
    (14) provisions to reduce or eliminate undesirable barriers 
to the formation of new integrated service networks; 
    (15) requirements for maintenance and reporting of 
information on costs, prices, revenues, volume of services, and 
outcomes and quality of services; 
    (16) a provision allowing an integrated service network to 
set credentialing standards for practitioners employed by or 
under contract with the network; 
    (17) a requirement that an integrated service network 
employ or contract with practitioners and other health care 
providers, and minimum requirements for those contracts if the 
commissioner deems requirements to be necessary to ensure that 
each network will be able to control expenditures and revenues 
or to protect enrollees and potential enrollees; 
    (18) provisions regarding liability for medical 
malpractice; 
    (19) provisions regarding permissible and impermissible 
underwriting criteria applicable to the standard set of 
benefits; 
    (20) a method or methods to facilitate and encourage 
appropriate provision of services by midlevel practitioners and 
pharmacists; 
    (21) a method or methods to assure that all integrated 
service networks are subject to the same regulatory 
requirements.  All health carriers, including health maintenance 
organizations, insurers, and nonprofit health service plan 
corporations shall be regulated under the same rules, to the 
extent that the health carrier is operating an integrated 
service network or is a participating entity in an integrated 
service network; 
    (22) provisions for appropriate risk adjusters or other 
methods to prevent or compensate for adverse selection of 
enrollees into or out of an integrated service network; and 
    (23) rules prescribing standard measures and methods by 
which integrated service networks shall determine and disclose 
their prices, copayments, deductibles, out-of-pocket limits, 
enrollee satisfaction levels, and anticipated loss ratios.  
    Subd. 3.  [CRITERIA FOR RULEMAKING.] (a) 
[APPLICABILITY.] The commissioner shall adopt rules governing 
integrated service networks based on the criteria and objectives 
specified in this subdivision. 
    (b) [COMPETITION.] The rules must encourage and facilitate 
competition through the collection and distribution of reliable 
information on the cost, prices, and quality of each integrated 
service network in a manner that allows comparisons between 
networks. 
    (c) [FLEXIBILITY.] The rules must allow significant 
flexibility in the structure and organization of integrated 
service networks.  The rules must allow and facilitate the 
formation of networks by providers, employers, and other 
organizations, in addition to health carriers. 
    (d) [EXPANDING ACCESS AND COVERAGE.] The rules must be 
designed to expand access to health care services and coverage 
for all Minnesotans, including individuals and groups who have 
preexisting health conditions, who represent a higher risk of 
requiring treatment, who require translation or other special 
services to facilitate treatment, who face social or cultural 
barriers to obtaining health care, or who for other reasons face 
barriers to access to health care and coverage.  Enrollment 
standards must ensure that high risk and special needs 
populations will be included and growth limits and payment 
systems must be designed to provide incentives for networks to 
enroll even the most challenging and costly groups and 
populations.  The rules must be consistent with the principles 
of health insurance reform that are reflected in Laws 1992, 
chapter 549. 
    (e) [ABILITY TO BEAR FINANCIAL RISK.] The rules must allow 
a variety of options for integrated service networks to 
demonstrate their ability to bear the financial risk of serving 
their enrollees, to facilitate diversity and innovation and the 
entry into the market of new networks.  The rules must allow the 
phasing in of reserve requirements and other requirements 
relating to financial solvency. 
    (f) [PARTICIPATION OF PROVIDERS.] The rules must not 
require providers to participate in an integrated service 
network and must allow providers to participate in more than one 
network and to serve both patients who are covered by an 
integrated service network and patients who are not.  The rules 
must allow significant flexibility for an integrated service 
network and providers to define and negotiate the terms and 
conditions of provider participation.  The rules must encourage 
and facilitate the participation of midlevel practitioners, 
allied health care practitioners, and pharmacists, and eliminate 
inappropriate barriers to their participation.  The rules must 
encourage and facilitate the participation of disproportionate 
share providers in integrated service networks and eliminate 
inappropriate barriers to this participation. 
    (g) [RURAL COMMUNITIES.] The rules must permit a variety of 
forms of integrated service networks to be developed in rural 
areas in response to the needs, preferences, and conditions of 
rural communities, utilizing to the greatest extent possible 
current existing health care providers and hospitals. 
    (h) [LIMITS ON GROWTH.] The rules must include provisions 
to enable the commissioner to enforce the limits on growth in 
health care total revenues for each integrated service network 
and for the entire system of integrated service networks. 
    (i) [STANDARD BENEFIT SET.] The commission shall make 
recommendations to the commissioner regarding a standard benefit 
set. 
    (j) [CONFLICT OF INTEREST.] The rules shall include 
provisions the commissioner deems necessary and appropriate to 
address integrated service networks' and participating 
providers' relationship to section 62J.23 or other laws relating 
to provider conflicts of interest. 
    Sec. 7.  [62N.06] [AUTHORIZED ENTITIES.] 
    Subdivision 1.  [AUTHORIZED ENTITIES.] (a) An integrated 
service network may be organized as a separate nonprofit 
corporation under chapter 317A or as a cooperative under chapter 
308A.  
    (b) A nonprofit health carrier, as defined in section 
62A.011, may establish and operate one or more integrated 
service networks without forming a separate corporation or 
cooperative, but only if all of the following conditions are met:
    (i) a contract between the health carrier and a health care 
provider, for a term of less than seven years, that was executed 
before June 1, 1993, does not bind the health carrier or 
provider as applied to integrated service network services, 
except with the mutual consent of the health carrier and 
provider entered into on or after June 1, 1993.  This clause 
does not apply to contracts between a health carrier and its 
salaried employees; 
    (ii) the health carrier shall not apply toward the net 
worth, working capital, or deposit requirements of this chapter 
any assets used to satisfy net worth, working capital, deposit, 
or other financial requirements under any other chapter of 
Minnesota law; 
    (iii) the health carrier shall not include in its premiums 
for health coverage provided under any other chapter of 
Minnesota law, an assessment or surcharge relating to net worth, 
working capital, or deposit requirements imposed upon the 
integrated service network under this chapter; and 
    (iv) the health carrier shall not include in its premiums 
for integrated service network coverage under this chapter an 
assessment or surcharge relating to net worth working capital or 
deposit requirements imposed upon health coverage offered under 
any other chapter of Minnesota law. 
    Subd. 2.  [SEPARATE ACCOUNTING REQUIRED.] Any entity 
operating one or more integrated service networks shall maintain 
separate accounting and record keeping procedures, acceptable to 
the commissioner, for each integrated service network. 
    Subd. 3.  [GOVERNMENTAL SUBDIVISION.] A political 
subdivision may establish and operate an integrated service 
network directly, without forming a separate entity.  Unless 
otherwise specified, a network authorized under this subdivision 
must comply with all other provisions governing networks. 
    Sec. 8.  [62N.065] [ADMINISTRATIVE COST CONTAINMENT.] 
    Subdivision 1.  [UNREASONABLE EXPENSES.] No integrated 
service network shall incur or pay for any expense of any nature 
which is unreasonably high in relation to the value of the 
service or goods provided.  The commissioner shall implement and 
enforce this section by rules adopted under this section. 
     In an effort to achieve the stated purposes of sections 
62N.01 to 62N.22; in order to safeguard the underlying nonprofit 
status of integrated service networks; and to ensure that 
payment of integrated service network money to any person or 
organization results in a corresponding benefit to the 
integrated service network and its enrollees; when determining 
whether an integrated service network has incurred an 
unreasonable expense in relation to payments made to a person or 
organization, due consideration shall be given to, in addition 
to any other appropriate factors, whether the officers and 
trustees of the integrated service network have acted with good 
faith and in the best interests of the integrated service 
network in entering into, and performing under, a contract under 
which the integrated service network has incurred an expense.  
In addition to the compliance powers under subdivision 3, the 
commissioner has standing to sue, on behalf of an integrated 
service network, officers or trustees of the integrated service 
network who have breached their fiduciary duty in entering into 
and performing such contracts. 
    Subd. 2.  [DATA ON CONTRACTS.] Integrated service networks 
shall keep on file in the offices of the integrated service 
network copies of all contracts regulated under subdivision 1, 
and data on the payments, salaries, and other remuneration paid 
to for-profit firms, affiliates, or to persons for 
administrative expenses, service contracts, and management of 
the integrated service network, and shall make these records 
available to the commissioner upon request. 
     Subd. 3.  [COMPLIANCE AUTHORITY.] The commissioner may 
review any contract, arrangement, or agreement to determine 
whether it complies with the provisions contained in subdivision 
1.  The commissioner may suspend any provision that does not 
comply with subdivision 1 and may require the integrated service 
network to replace those provisions with provisions that do 
comply. 
    Sec. 9.  [62N.07] [PURPOSE.] 
    The legislature finds that previous cost containment 
efforts have focused on reducing benefits and services, 
eliminating access to certain provider groups, and otherwise 
reducing the level of care available.  Under a system of overall 
spending controls, these cost containment approaches will, in 
the absence of controls on cost shifting, shift costs from the 
payer to the consumer, to government programs, and to providers 
in the form of uncompensated care.  The legislature further 
finds that the integrated service network benefit package should 
be designed to promote coordinated, cost-effective delivery of 
all health services an enrollee needs without cost shifting.  
The legislature further finds that affordability of health 
coverage is a high priority and that lower cost coverage options 
should be made available through the use of copayments, 
coinsurance, and deductibles to reduce premium costs rather than 
through the exclusion of services or providers. 
    Sec. 10.  [62N.075] [COVERED SERVICES.] 
    (a) An integrated service network must provide to each 
person enrolled a set of appropriate and necessary health 
services.  For purposes of this chapter, "appropriate and 
necessary" means services needed to maintain the enrollee in 
good health including as a minimum, but not limited to, 
emergency care, inpatient hospital and physician care, 
outpatient health services, preventive health services.  The 
commissioner may modify this definition to reflect changes in 
community standards, development of practice parameters, new 
technology assessments, and other medical innovations.  These 
services must be delivered by authorized practitioners acting 
within their scope of practice.  An integrated service network 
is not responsible for health services that are not appropriate 
and necessary. 
    (b) A network may define benefit levels through the use of 
consumer cost sharing but remains financially accountable for 
the cost of the set of required health services. 
    (c) A network may offer any Medicare supplement, Medicare 
select, or other Medicare-related product otherwise permitted 
for any type of health carrier in this state.  Each 
Medicare-related product may be offered only in full compliance 
with the requirements in chapters 62A, 62D, and 62E that apply 
to that category of product. 
    (d) Networks must comply with all continuation and 
conversion of coverage requirements applicable to health 
maintenance organizations under state or federal law. 
    (e) Networks must comply with sections 62A.047, 62A.27, and 
any other coverage of newborn infants, dependent children who do 
not reside with a covered person, handicapped children and 
dependents, and adopted children.  A network providing dependent 
coverage must comply with section 62A.302. 
      (f) Networks must comply with the equal access requirements 
of section 62A.15, subdivision 2. 
    Sec. 11.  [62N.08] [AVAILABILITY OF SERVICES.] 
    (a) An integrated service network is financially 
responsible to provide to each person enrolled all appropriate 
and necessary health services required by statute, by the 
contract of coverage, or otherwise required under sections 
62N.075 to 62N.085. 
    (b) The commissioner shall require that networks provide 
all appropriate and necessary health services within a 
reasonable geographic distance for enrollees.  The commissioner 
may adopt rules providing a more detailed requirement, 
consistent with this paragraph. 
     Sec. 12.  [62N.085] [ESTABLISHMENT OF STANDARDIZED BENEFIT 
PLANS.] 
    (a) The commissioner of health shall adopt permanent rules 
and may adopt emergency rules to establish not more than five 
standardized benefit plans which must be offered by integrated 
service networks.  The plans must comply with the requirements 
of sections 62N.07 to 62N.08 and the other requirements of this 
chapter.  The plans must vary only on the basis of enrollee cost 
sharing and encompass a range of cost sharing options from (1) 
lower premium costs combined with higher enrollee cost sharing, 
to (2) higher premium costs combined with lower enrollee cost 
sharing.  
    (b) The purposes of this section, "consumer cost sharing" 
or "cost sharing" means copayments, deductibles, coinsurance, 
and other out-of-pocket expenses paid by the individual consumer 
of health care services. 
    (c) The commissioner shall consider whether the following 
principles should apply to cost sharing in an integrated service 
network: 
    (1) consumers must have a wide choice of cost sharing 
arrangement; 
    (2) consumer cost sharing must be administratively feasible 
and consistent with efforts to reduce the overall administrative 
burden of the health care system; 
    (3) cost sharing must be based on income and an enrollee's 
ability to pay for services and should not create a barrier to 
access to appropriate and effective services; 
    (4) cost sharing must be capped at a predetermined annual 
limit to protect individuals and families from financial 
catastrophe and to protect individuals with substantial health 
care needs; 
    (5) child health supervision services, immunizations, 
prenatal care, and other prevention services must not be 
subjected to cost sharing; 
    (6) additional requirements for networks should be 
established to assist enrollees for whom an inducement in 
addition to the elimination of cost sharing is necessary in 
order to encourage them to use cost-effective preventive 
services.  These requirements may include the provision of 
educational information, assistance or guidance, and 
opportunities for responsible decision making by enrollees that 
minimize potential out-of-pocket costs; 
    (7) cost-sharing requirements and benefit or service 
limitations for outpatient mental health and outpatient chemical 
dependency services, except for persons placed in chemical 
dependency services under Minnesota Rules, parts 9530.6600 to 
9530.6660, must not place a greater financial burden on the 
insured or enrollee, or be more restrictive than those 
requirements and limitations for outpatient medical services; 
and 
    (8) cost-sharing requirements and benefit or service 
limitations for inpatient hospital mental health and inpatient 
hospital and residential chemical dependency services, except 
for persons placed in chemical dependency services under 
Minnesota Rules, parts 9530.6600 to 9530.6660, must not place a 
greater financial burden on the insured or enrollee, or be more 
restrictive than those requirements and limitations for 
inpatient hospital medical services. 
    Sec. 13.  [62N.10] [LICENSING.] 
    Subdivision 1.  [REQUIREMENTS.] All integrated service 
networks must be licensed by the commissioner.  Licensure 
requirements are: 
    (1) the ability to be responsible for the full continuum of 
required health care and related costs for the defined 
population that the integrated service network will serve; 
    (2) the ability to satisfy standards for quality of care; 
    (3) financial solvency; and 
    (4) the ability to fully comply with this chapter and all 
other applicable law.  
    The commissioner may adopt rules to specify licensure 
requirements for integrated service networks in greater detail, 
consistent with this subdivision. 
    Subd. 2.  [FEES.] Licensees shall pay an initial fee and a 
renewal fee each following year to be established by the 
commissioner of health. 
    Subd. 3.  [LOSS OF LICENSE.] The commissioner may fine a 
licensee or suspend or revoke a license for violations of rules 
or statutes pertaining to integrated service networks. 
    Subd. 4.  [PARTICIPATION; GOVERNMENT PROGRAMS.] Integrated 
service networks shall, as a condition of licensure, participate 
in the medical assistance, general assistance medical care, and 
MinnesotaCare programs.  The commissioner shall adopt rules 
specifying the participation required of the networks.  The 
rules must be consistent with Minnesota Rules, parts 9505.5200 
to 9505.5260, governing participation by health maintenance 
organizations in public health care programs. 
    Subd. 5.  [APPLICATION.] Each application for an integrated 
service network license must be in a form prescribed by the 
commissioner. 
    Subd. 6.  [DOCUMENTS ON FILE.] A network shall agree to 
retain in its files any documents specified by the 
commissioner.  A network shall permit the commissioner to 
examine those documents at any time and shall promptly provide 
copies of any of them to the commissioner upon request. 
    Sec. 14.  [62N.11] [EVIDENCE OF COVERAGE.] 
    Subdivision 1.  [APPLICABILITY.] Every integrated service 
network enrollee residing in this state is entitled to evidence 
of coverage or contract.  The integrated service network or its 
designated representative shall issue the evidence of coverage 
or contract.  The commissioner shall adopt rules specifying the 
requirements for contracts and evidence of coverage.  "Evidence 
of coverage" means evidence that an enrollee is covered by a 
group contract issued to the group.  
    Subd. 2.  [FILING.] No evidence of coverage or contract or 
amendment of coverage or contract shall be issued or delivered 
to any individual in this state until a copy of the form of the 
evidence of coverage or contract or amendment of coverage or 
contract has been filed with and approved by the commissioner. 
    Sec. 15.  [62N.12] [ENROLLEE RIGHTS.] 
    The cover page of the evidence of coverage and contract 
must contain a clear and complete statement of an enrollee's 
rights as a consumer.  The commissioner shall adopt rules 
specifying enrollee rights and required disclosures to enrollees.
    Sec. 16.  [62N.13] [ENROLLEE COMPLAINT SYSTEM.] 
    Every integrated service network must establish and 
maintain an enrollee complaint system, including an impartial 
arbitration provision, to provide reasonable procedures for the 
resolution of written complaints initiated by enrollees 
concerning the provision of health care services.  The 
commissioner shall adopt rules specifying requirements relating 
to enrollee complaints. 
    Sec. 17.  [62N.16] [UNDERWRITING AND RATING.] 
    Subdivision 1.  [APPLICABILITY.] Except as provided in 
subdivision 3, this section applies to the standard benefit 
plans under section 62N.085 and does not apply to additional 
benefits.  This section does not require coverage by an 
integrated service network of any group or individual residing 
outside of the network's service area.  A network's service area 
is a geographic service region agreed to by the commissioner and 
the network at the time of licensure.  This section does not 
apply to any group that the commissioner determines is organized 
or functions primarily to provide coverage to one or more high 
risk individuals.  The commissioner may adopt rules specifying 
other types of groups to which this section does not apply. 
    Subd. 2.  [GROUP MEMBERS.] Integrated service networks 
shall charge the same rate for each individual in a group, 
except as appropriate to provide dependent or family coverage.  
Rates for managed care plans as described in section 256.9363 
shall be determined through contract between the department of 
human services and the integrated service network. 
    Subd. 3.  [SMALL EMPLOYERS.] To provide services to 
employees of a small employer as defined in section 62L.02, 
integrated service networks shall comply with chapter 62L. 
    Sec. 18.  [62N.22] [DISCLOSURE OF COMMISSIONS.] 
    Before selling, or offering to sell, any coverage or 
enrollment in an integrated service network, a person selling 
the coverage or enrollment shall disclose to the prospective 
purchaser the amount of any commission or other compensation the 
person will receive as a direct result of the sale.  The 
disclosure may be expressed in dollars or as a percentage of the 
premium.  The amount disclosed need not include any anticipated 
renewal commissions. 
    Sec. 19.  [62N.23] [TECHNICAL ASSISTANCE; LOANS.] 
    (a) The commissioner shall provide technical assistance to 
parties interested in establishing or operating an integrated 
service network.  This shall be known as the integrated service 
network technical assistance program (ISNTAP). 
    The technical assistance program shall offer seminars on 
the establishment and operation of integrated service networks 
in all regions of Minnesota.  The commissioner shall advertise 
these seminars in local and regional newspapers, and attendance 
at these seminars shall be free. 
    The commissioner shall write a guide to establishing and 
operating an integrated service network.  The guide must provide 
basic instructions for parties wishing to establish an 
integrated service network.  The guide must be provided free of 
charge to interested parties.  The commissioner shall update 
this guide when appropriate. 
    The commissioner shall establish a toll-free telephone line 
that interested parties may call to obtain assistance in 
establishing or operating an integrated service network. 
    (b) The commissioner, in consultation with the commission, 
shall provide recommendations for the creation of a loan program 
that would provide loans or grants to entities forming 
integrated service networks or to networks less than one year 
old.  The commissioner shall propose criteria for the loan 
program. 
    Sec. 20.  [62N.24] [REVIEW OF RULES.] 
    The commissioner of health shall mail copies of all 
proposed emergency and permanent rules that are being 
promulgated under this chapter to each member of the legislative 
commission on health care access prior to final adoption by the 
commissioner. 
    Sec. 21.  Minnesota Statutes 1992, section 256.9657, 
subdivision 3, is amended to read: 
    Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; INTEGRATED 
SERVICE NETWORK SURCHARGE.] Effective October 1, 1992, each 
health maintenance organization with a certificate of authority 
issued by the commissioner of health under chapter 62D and each 
integrated service network licensed by the commissioner under 
sections 62N.01 to 62N.22 shall pay to the commissioner of human 
services a surcharge equal to six-tenths of one percent of the 
total premium revenues of the health maintenance organization or 
integrated service network as reported to the commissioner of 
health according to the schedule in subdivision 4.  
    Sec. 22.  [BORDER COMMUNITIES.] 
    The commissioner of health shall monitor the effects of 
integrated service networks and the regulated all-payer system 
in communities in which a substantial proportion of health care 
services provided to Minnesota residents are provided in states 
bordering Minnesota and may amend the rules adopted under this 
article or article 2 to minimize effects that inhibit Minnesota 
residents' ability to obtain access to quality health care.  The 
commissioner shall report to the Minnesota health care 
commission and the legislature any effects that the commissioner 
intends to address by amendments to the rules adopted under this 
article or article 2. 
    Sec. 23.  [STUDY OF REQUIREMENTS FOR HEALTH CARRIERS 
FORMING INTEGRATED SERVICE NETWORKS.] 
    The Minnesota health care commission shall study the 
desirability and appropriateness of the provisions in Minnesota 
Statutes, section 62N.06, subdivision 1, which prohibit health 
carriers from establishing and operating integrated service 
networks other than through a separate entity except under 
specified conditions.  The commission shall report its findings, 
conclusions, and recommendations to the commissioner and the 
legislative commission on health care access by November 1, 
1993.  If, in the development of rules and proposed legislation, 
the commissioner intends to depart from the commission's 
recommendations on this issue, the notification procedures in 
Minnesota Statutes, section 62J.04, subdivision 4, apply. 
    Sec. 24.  [EFFECTIVE DATE.] 
    Sections 1 to 23 are effective the day following final 
enactment, but no integrated service network may provide health 
care services prior to July 1, 1994. 

                               ARTICLE 2 

                       REGULATED ALL-PAYER SYSTEM 
    Section 1.  Minnesota Statutes 1992, section 62D.042, 
subdivision 2, is amended to read: 
    Subd. 2.  [BEGINNING ORGANIZATIONS.] (a) Beginning 
organizations shall maintain net worth of at least 8-1/3 percent 
of the sum of all expenses expected to be incurred in the 12 
months following the date the certificate of authority is 
granted, or $1,500,000, whichever is greater. 
    (b) After the first full calendar year of operation, 
organizations shall maintain net worth of at least 8-1/3 percent 
and at most 16-2/3 percent of the sum of all expenses incurred 
during the most recent calendar year, or $1,000,000, whichever 
is greater but in no case shall net worth fall below $1,000,000. 
    Sec. 2.  [62P.01] [REGULATED ALL-PAYER SYSTEM.] 
    The regulated all-payer system established under this 
chapter governs all health care services that are provided 
outside of an integrated service network.  The regulated 
all-payer system is designed to control costs, prices, and 
utilization of all health care services not provided through an 
integrated service network while maintaining or improving the 
quality of services.  The commissioner of health shall adopt 
rules establishing controls within the system to ensure that the 
rate of growth in spending in the system, after adjustments for 
population size and risk, remains within the limits set by the 
commissioner under section 62J.04.  All providers that serve 
Minnesota residents and all health carriers that cover Minnesota 
residents shall comply with the requirements and rules 
established under this chapter for all health care services or 
coverage provided to Minnesota residents.  
    Sec. 3.  [62P.03] [IMPLEMENTATION.] 
    (a) By January 1, 1994, the commissioner of health, in 
consultation with the Minnesota health care commission, shall 
report to the legislature recommendations for the design and 
implementation of the all-payer system.  The commissioner may 
use a consultant or other technical assistance to develop a 
design for the all-payer system.  The commissioner's 
recommendations shall include the following: 
    (1) methods for controlling payments to providers such as 
uniform fee schedules or rate limits to be applied to all health 
plans and health care providers with independent billing rights; 
    (2) methods for controlling utilization of services such as 
the application of standardized utilization review criteria, 
incentives based on setting and achieving volume targets, 
recovery of excess spending due to overutilization, or required 
use of practice parameters; 
    (3) methods for monitoring quality of care and mechanisms 
to enforce the quality of care standards; 
    (4) requirements for maintaining and reporting data on 
costs, prices, revenues, expenditures, utilization, quality of 
services, and outcomes; 
    (5) measures to prevent or discourage adverse risk 
selection between the regulated all-payer system and integrated 
service networks; 
    (6) measures to coordinate the regulated all-payer system 
with integrated service networks to minimize or eliminate 
barriers to access to health care services that might otherwise 
result; 
    (7) an appeals process; 
    (8) measures to encourage and facilitate appropriate use of 
midlevel practitioners and eliminate undesirable barriers to 
their participation in providing services; 
    (9) measures to assure appropriate use of technology and to 
manage introduction of new technology; 
    (10) consequences to be imposed on providers whose 
expenditures have exceeded the limits established by the 
commissioner; and 
    (11) restrictions on provider conflicts of interest. 
    (b) On July 1, 1994, the regulated all-payer system shall 
begin to be phased in with full implementation by July 1, 1996.  
During the transition period, expenditure limits for health 
carriers shall be established in accordance with section 4 and 
health care provider revenue limits shall be established in 
accordance with section 5. 
    Sec. 4.  [62P.04] [EXPENDITURE LIMITS FOR HEALTH CARRIERS.] 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
section, the following definitions apply. 
    (b) "Health carrier" has the definition provided in section 
62A.011. 
    (c) "Total expenditures" mean incurred claims or 
expenditures on health care services, administrative expenses, 
charitable contributions, and all other payments made by health 
carriers out of premium revenues, except taxes and assessments, 
and payments or allocations made to establish or maintain 
reserves. Total expenditures are equivalent to the amount of 
total revenues minus taxes and assessments.  Taxes and 
assessments means payments for taxes, contributions to the 
Minnesota comprehensive health association, the provider's 
surcharge under section 256.9657, the MinnesotaCare provider tax 
under section 295.52, assessments by the health coverage 
reinsurance association, assessments by the Minnesota life and 
health insurance guaranty association, and any new assessments 
imposed by federal or state law. 
    Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
establish limits on the increase in total expenditures by each 
health carrier for calendar years 1994 and 1995.  The limits 
must be the same as the annual rate of growth in health care 
spending established under section 62J.04, subdivision 1, 
paragraph (b).  Health carriers that are affiliates may elect to 
meet one combined expenditure limit. 
    Subd. 3.  [DETERMINATION OF EXPENDITURES.] Health carriers 
shall submit to the commissioner of health, by April 1, 1994, 
for calendar year 1993, and by April 1, 1995, for calendar year 
1994, all information the commissioner determines to be 
necessary to implement and enforce this section.  The 
information must be submitted in the form specified by the 
commissioner.  The information must include, but is not limited 
to, expenditures per member per month or cost per employee per 
month, and detailed information on revenues and reserves.  The 
commissioner, to the extent possible, shall coordinate the 
submittal of the information required under this section with 
the submittal of the financial data required under chapter 62J, 
to minimize the administrative burden on health carriers.  The 
commissioner may adjust final expenditure figures for 
demographic changes, risk selection, changes in basic benefits, 
and legislative initiatives that materially change health care 
costs, as long as these adjustments are consistent with the 
methodology submitted by the health carrier to the commissioner, 
and approved by the commissioner as actuarially justified.  The 
methodology to be used for adjustments and the election to meet 
one expenditure limit for affiliated health carriers must be 
submitted to the commissioner by September 1, 1993. 
    Subd. 4.  [MONITORING OF RESERVES.] (a) The commissioner of 
health shall monitor health carrier reserves and net worth as 
established under chapters 60A, 62C, 62D, 62H, and 64B, to 
ensure that savings resulting from the establishment of 
expenditure limits are passed on to consumers in the form of 
lower premium rates.  
    (b) Health carriers shall fully reflect in the premium 
rates the savings generated by the expenditure limits and the 
health care provider revenue limits.  No premium rate increase 
may be approved for those health carriers unless the health 
carrier establishes to the satisfaction of the commissioner of 
commerce or the commissioner of health, as appropriate, that the 
proposed new rate would comply with this paragraph. 
    Subd. 5.  [NOTICE.] The commissioner of health shall 
publish in the State Register and make available to the public 
by July 1, 1995, a list of all health carriers that exceeded 
their expenditure target for the 1994 calendar year.  The 
commissioner shall publish in the State Register and make 
available to the public by July 1, 1996, a list of all health 
carriers that exceeded their combined expenditure limit for 
calendar years 1994 and 1995.  The commissioner shall notify 
each health carrier that the commissioner has determined that 
the carrier exceeded its expenditure limit, at least 30 days 
before publishing the list, and shall provide each carrier with 
ten days to provide an explanation for exceeding the expenditure 
target.  The commissioner shall review the explanation and may 
change a determination if the commissioner determines the 
explanation to be valid. 
    Subd. 6.  [ASSISTANCE BY THE COMMISSIONER OF COMMERCE.] The 
commissioner of commerce shall provide assistance to the 
commissioner of health in monitoring health carriers regulated 
by the commissioner of commerce.  The commissioner of commerce, 
in consultation with the commissioner of health, shall enforce 
compliance by those health carriers. 
    Subd. 7.  [ENFORCEMENT.] The commissioners of health and 
commerce shall enforce the reserve limits referenced in 
subdivision 4, with respect to the health carriers that each 
commissioner respectively regulates.  Each commissioner shall 
require health carriers under the commissioner's jurisdiction to 
submit plans of corrective action when the reserve requirement 
is not met.  Each commissioner may adopt rules necessary to 
enforce this section.  Carriers that exceed the expenditure 
limits based on two-year average expenditure data or whose 
reserves exceed the limits referenced in subdivision 4 shall be 
required by the appropriate commissioner to pay back the amount 
overspent through an assessment on the carrier.  The appropriate 
commissioner may approve a different repayment method to take 
into account the carrier's financial condition. 
    Sec. 5.  [62P.05] [HEALTH CARE PROVIDER REVENUE LIMITS.] 
    Subdivision 1.  [DEFINITION.] For purposes of this section, 
"health care provider" has the definition given in section 
62J.03, subdivision 8. 
    Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
establish limits on the increase in revenue for each health care 
provider, for calendar years 1994 and 1995.  The limits must be 
the same as the annual rate of growth in health care spending 
established under section 62J.04, subdivision 1, paragraph (b).  
The commissioner may adjust final revenue figures for case mix 
complexity, inpatient to outpatient conversion, payer mix, 
out-of-period settlements, taxes, donations, grants, and 
legislative initiatives that materially change health care 
costs, as long as these adjustments are consistent with the 
methodology submitted by the health care provider to the 
commissioner, and approved by the commissioner as actuarially 
justified.  The methodology to be used for adjustments must be 
submitted to the commissioner by September 1, 1993.  A health 
care provider's revenues for purposes of these growth limits are 
net of the contributions, surcharges, taxes, and assessments 
listed in section 62P.04, subdivision 2, that the health care 
provider pays. 
    Subd. 3.  [MONITORING OF REVENUE.] The commissioner of 
health shall monitor health care provider revenue, to ensure 
that savings resulting from the establishment of revenue limits 
are passed on to consumers in the form of lower charges.  The 
commissioner shall monitor hospital revenue by examining net 
patient revenue per adjusted admission.  The commissioner shall 
monitor the revenue of physicians and other health care 
providers by examining revenue per patient per year or revenue 
per encounter.  If this information is not available, the 
commissioner may enforce an annual limit on the rate of growth 
of the provider's current fees based on the limits on the rate 
of growth established for calendar years 1994 and 1995. 
    Subd. 4.  [MONITORING AND ENFORCEMENT.] Health care 
providers shall submit to the commissioner of health, in the 
form and at the times required by the commissioner, all 
information the commissioner determines to be necessary to 
implement and enforce this section.  Health care providers shall 
submit to audits conducted by the commissioner.  The 
commissioner shall regularly audit all health clinics employing 
or contracting with over 100 physicians.  The commissioner shall 
also audit, at times and in a manner that does not interfere 
with delivery of patient care, a sample of smaller clinics, 
hospitals, and other health care providers.  Providers that 
exceed revenue limits based on two-year average revenue data 
shall be required by the commissioner to pay back the amount 
overspent during the following calendar year.  The commissioner 
may approve a different repayment schedule for a health care 
provider that takes into account the provider's financial 
condition.  For those providers subject to fee limits 
established by the commissioner, the commissioner may adjust the 
percentage increase in the fee schedule to account for changes 
in utilization.  The commissioner may adopt rules in order to 
enforce this section. 
    Sec. 6.  [APPLICABILITY OF OTHER LAWS.] 
    Except as expressly provided in rules adopted under this 
chapter, to the extent that a provider provides services in the 
regulated all-payer system, the provider is subject to all other 
statutes and rules that apply to providers of that type on the 
effective date of this section, including, as applicable, 
Minnesota Statutes, sections 62J.17 and 62J.23. 
    Sec. 7.  [STUDY OF THE TRANSITION TO AN ALL-PAYER SYSTEM.] 
    The Minnesota health care commission shall study issues 
related to the transition to an all-payer system and shall 
report to the legislature and the governor by February 1, 1994.  
The report must include, but is not limited to, recommendations 
to minimize any financial and administrative burden of an 
all-payer system on providers in areas of the state without 
integrated service networks, increase the availability of 
integrated service networks in rural areas of the state, 
encourage the development of provider-managed integrated service 
networks, and ensure continued access to necessary health care 
services in all areas of the state. 
    Sec. 8.  [EFFECTIVE DATE.] 
    Sections 1 to 7 are effective the day following final 
enactment. 

                               ARTICLE 3 

              DATA COLLECTION AND COST CONTROL INITIATIVES 
    Section 1.  Minnesota Statutes 1992, section 62J.03, 
subdivision 6, is amended to read: 
    Subd. 6.  [GROUP PURCHASER.] "Group purchaser" means a 
person or organization that purchases health care services on 
behalf of an identified group of persons, regardless of whether 
the cost of coverage or services is paid for by the purchaser or 
by the persons receiving coverage or services, as further 
defined in rules adopted by the commissioner.  "Group purchaser" 
includes, but is not limited to, integrated service networks; 
health insurance companies, health maintenance organizations, 
nonprofit health service plan corporations, and other health 
plan companies; employee health plans offered by self-insured 
employers; trusts established in a collective bargaining 
agreement under the federal Labor-Management Relations Act of 
1947, United States Code, title 29, section 141, et seq.; the 
Minnesota comprehensive health association; group health 
coverage offered by fraternal organizations, professional 
associations, or other organizations; state and federal health 
care programs; state and local public employee health plans; 
workers' compensation plans; and the medical component of 
automobile insurance coverage. 
    Sec. 2.  Minnesota Statutes 1992, section 62J.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  [COMPREHENSIVE BUDGET LIMITS ON THE RATE OF 
GROWTH.] (a) The commissioner of health shall set an annual 
limit limits on the rate of growth of public and private 
spending on health care services for Minnesota residents, as 
provided in paragraph (b).  The limit limits on growth must be 
set at a level levels the commissioner determines to be 
realistic and achievable but that will slow reduce the current 
rate of growth in health care spending by at least ten percent 
per year using the spending growth rate for 1991 as a base 
year.  This limit must be achievable through good faith, 
cooperative efforts of health care consumers, purchasers, and 
providers for the next five years.  The commissioner shall set 
limits on growth based on available data on spending and growth 
trends, including data from group purchasers, national data on 
public and private sector health care spending and cost trends, 
and trend information from other states. 
    (b) The commissioner shall set the following annual limits 
on the rate of growth of public and private spending on health 
care services for Minnesota residents: 
    (1) for calendar year 1994, the rate of growth must not 
exceed the change in the regional consumer price index for urban 
consumers for calendar year 1993 plus 6.5 percentage points; 
    (2) for calendar year 1995, the rate of growth must not 
exceed the change in the regional consumer price index for urban 
consumers for calendar year 1994 plus 5.3 percentage points; 
    (3) for calendar year 1996, the rate of growth must not 
exceed the change in the regional consumer price index for urban 
consumers for calendar year 1995 plus 4.3 percentage points; 
    (4) for calendar year 1997, the rate of growth must not 
exceed the change in the regional consumer price index for urban 
consumers for calendar year 1996 plus 3.4 percentage points; and 
    (5) for calendar year 1998, the rate of growth must not 
exceed the change in the regional consumer price index for urban 
consumers for calendar year 1997 plus 2.6 percentage points. 
    If the health care financing administration forecast for 
the total growth in national health expenditures for a calendar 
year is lower than the rate of growth for the calendar year as 
specified in clauses (1) to (5), the commissioner shall adopt 
this forecast as the growth limit for that calendar year.  The 
commissioner shall adjust the growth limit set for calendar year 
1995 to recover savings in health care spending required for the 
period July 1, 1993 to December 31, 1993.  The commissioner 
shall publish: 
    (1) the projected limits in the State Register by April 15 
of the year immediately preceding the year in which the limit 
will be effective except for the year 1993, in which the limit 
shall be published by July 1, 1993; 
    (2) the quarterly change in the regional consumer price 
index for urban consumers; and 
    (3) the health care financing administration forecast for 
total growth in the national health care expenditures.  In 
setting an annual limit, the commissioner is exempt from the 
rulemaking requirements of chapter 14.  The commissioner's 
decision on an annual limit is not appealable. 
    Sec. 3.  Minnesota Statutes 1992, section 62J.04, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [ADJUSTED GROWTH LIMITS AND ENFORCEMENT.] (a) 
The commissioner shall publish the final adjusted growth limit 
in the State Register by January 15 of the year that the 
expenditure limit is to be in effect.  The adjusted limit must 
reflect the actual regional Consumer Price Index for urban 
consumers for the previous calendar year, and may deviate from 
the previously published projected growth limits to reflect 
differences between the actual regional Consumer Price Index for 
urban consumers and the projected Consumer Price Index for urban 
consumers.  The commissioner shall report to the legislature by 
January 15 of each year on the projected increase in health care 
expenditures, the implementation of growth limits, and the 
reduction in the trend in the growth based on the limits imposed.
    (b) The commissioner shall enforce limits on growth in 
spending and revenues for integrated service networks and for 
the regulated all-payer system.  If the commissioner determines 
that artificial inflation or padding of costs or prices has 
occurred in anticipation of the implementation of growth limits, 
the commissioner may adjust the base year spending totals or 
growth limits or take other action to reverse the effect of the 
artificial inflation or padding. 
    (c) The commissioner shall impose and enforce overall 
limits on growth in revenues and spending for integrated service 
networks, with adjustments for changes in enrollment, benefits, 
severity, and risks.  If an integrated service network exceeds a 
spending limit, the commissioner may reduce future limits on 
growth in aggregate premium revenues for that integrated service 
network by up to the amount overspent.  If the integrated 
service network system exceeds a systemwide spending limit, the 
commissioner may reduce future limits on growth in premium 
revenues for the integrated service network system by up to the 
amount overspent. 
    (d) The commissioner shall set prices, utilization 
controls, and other requirements for the regulated all-payer 
system to ensure that the overall costs of this system, after 
adjusting for changes in population, severity, and risk, do not 
exceed the growth limits.  If spending growth limits for a 
calendar year are exceeded, the commissioner may reduce 
reimbursement rates or otherwise recoup overspending for all or 
part of the next calendar year, to recover in savings up to the 
amount of money overspent.  To the extent possible, the 
commissioner may reduce reimbursement rates or otherwise recoup 
overspending from individual providers who exceed the spending 
growth limits. 
    Sec. 4.  Minnesota Statutes 1992, section 62J.04, 
subdivision 2, is amended to read: 
    Subd. 2.  [DATA COLLECTION BY COMMISSIONER.] For purposes 
of setting forecasting rates of growth in health care spending 
and setting limits under this section subdivisions 1 and 1a, the 
commissioner shall may collect from all Minnesota health care 
providers data on patient revenues and health care spending 
received during a time period specified by the commissioner.  
The commissioner shall may also collect data on health 
care revenues and 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.  
    Subd. 2a.  [FAILURE TO PROVIDE DATA.] The intentional 
failure to provide reports the data requested under this section 
chapter 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 data required by the commissioner 
under this section.  If a provider refuses to provide a report 
or information the data 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 data required under this section.  
    Subd. 2b.  [DATA PRIVACY.] All data received under this 
section or under section 62J.37, 62J.38, 62J.41, or 62J.42 is 
private or nonpublic, trade secret information under section 
13.37 as applicable.  The commissioner shall establish 
procedures and safeguards to ensure that data provided to the 
Minnesota health care commission released by the commissioner is 
in a form that does not identify individual specific patients, 
providers, employers, purchasers, or other specific individuals 
and organizations, except with the permission of the affected 
individual or organization, or as permitted elsewhere in this 
chapter. 
    Sec. 5.  [62J.045] [MEDICAL EDUCATION AND RESEARCH COSTS.] 
    Subdivision 1.  [PURPOSE.] The legislature finds that all 
health care stakeholders, as well as society at large, benefit 
from medical education and health care research.  The 
legislature further finds that the cost of medical education and 
research should not be borne by a few hospitals or medical 
centers but should be fairly allocated across the health care 
system. 
    Subd. 2.  [DEFINITION.] For purposes of this section, 
"health care research" means research that is not subsidized 
from private grants, donations, or other outside research 
sources but is funded by patient out-of-pocket expenses or a 
third party payer and has been approved by an institutional 
review board certified by the United States Department of Health 
and Human Services. 
    Subd. 3.  [COST ALLOCATION FOR EDUCATION AND RESEARCH.] By 
January 1, 1994, the commissioner of health, in consultation 
with the health care commission and the health technology 
advisory committee, shall: 
    (1) develop mechanisms to gather data and to identify the 
annual cost of medical education and research conducted by 
hospitals, medical centers, or health maintenance organizations; 
    (2) determine a percentage of the annual rate of growth 
established under section 62J.04 to be allocated for the cost of 
education and research and develop a method to assess the 
percentage from each group purchaser; 
    (3) develop mechanisms to collect the assessment from group 
purchasers to be deposited in a separate education and research 
fund; and 
    (4) develop a method to allocate the education and research 
fund to specific health care providers. 
    Sec. 6.  Minnesota Statutes 1992, section 62J.09, is 
amended by adding a subdivision to read: 
    Subdivision 1a.  [DUTIES RELATED TO COST CONTAINMENT.] (a) 
[ALLOCATION OF REGIONAL SPENDING LIMITS.] Regional coordinating 
boards may advise the commissioner regarding allocation of 
annual regional limits on the rate of growth for providers in 
the regulated all-payer system in order to: 
    (1) achieve communitywide and regional public health goals 
consistent with those established by the commissioner; and 
    (2) promote access to and equitable reimbursement of 
preventive and primary care providers. 
    (b) [TECHNICAL ASSISTANCE.] Regional coordinating boards, 
in cooperation with the commissioner, shall provide technical 
assistance to parties interested in establishing or operating an 
integrated service network within the region.  This assistance 
must complement assistance provided by the commissioner under 
section 62N.23. 
    Sec. 7.  Minnesota Statutes 1992, section 62J.33, is 
amended to read: 
    62J.33 [TECHNICAL ASSISTANCE INFORMATION ON COST AND 
QUALITY FOR PURCHASERS.] 
    Subdivision 1.  [HEALTH CARE ANALYSIS UNIT.] The health 
care analysis unit shall provide technical assistance 
information to health plan and health care assist group 
purchasers and consumers in making informed decisions regarding 
purchasing of health care services.  The unit shall provide 
information allowing comparisons between integrated service 
networks and between health care services and systems.  The unit 
shall collect information about: 
    (1) premiums, benefit levels, patient or enrollee 
satisfaction, managed care procedures, health care outcomes, and 
other features of popular integrated service networks, health 
plans, and health carriers; and 
    (2) prices, outcomes, provider experience, and other 
information for services less commonly covered by insurance or 
for which patients commonly face significant out-of-pocket 
expenses; and 
     (3) information on health care services not provided 
through integrated service networks, including information on 
prices, costs, expenditures, utilization, quality of care, and 
outcomes. 
    The commissioner shall publicize this information in an 
easily understandable format. 
    Subd. 2.  [INFORMATION CLEARINGHOUSE.] The commissioner of 
health shall establish an information clearinghouse within the 
department of health to facilitate the ability of consumers, 
employers, providers, health carriers, and others to obtain 
information on health care costs and quality in Minnesota.  The 
commissioner shall make available through the clearinghouse 
information developed or collected by the department of health 
on practice parameters, outcomes data and research, the costs 
and quality of integrated service networks, reports or 
recommendations of the health technology advisory committee and 
other entities on technology assessments, worksite wellness and 
prevention programs, other wellness programs, consumer 
education, and other initiatives.  The clearinghouse shall, upon 
request, make available information submitted voluntarily by 
health plans, providers, employers, and others if the 
information clearly states that an entity other than the state 
submitted the information, identifies the entity, and states 
that distribution by the clearinghouse does not imply 
endorsement of the entity or the information by the commissioner 
of health or the state of Minnesota.  The clearinghouse shall 
also refer requesters to sources of further information or 
assistance.  The clearinghouse is subject to chapter 13. 
    Sec. 8.  [62J.35] [DATA COLLECTION.] 
    Subdivision 1.  [CONTRACTING.] The commissioner may 
contract with private organizations to carry out the data 
collection initiatives required by this chapter.  The 
commissioner shall require in the contract that organizations 
under contract adhere to the data privacy requirements 
established under this chapter and chapter 13. 
    Subd. 2.  [EMERGENCY RULES.] The commissioner shall adopt 
permanent rules and may adopt emergency rules to implement the 
data collection and reporting requirements in this chapter.  The 
commissioner may combine all data reporting and collection 
requirements into a unified process so as to minimize 
duplication and administrative costs. 
    Sec. 9.  [62J.37] [DATA FROM INTEGRATED SERVICE NETWORKS.] 
    The commissioner shall require integrated service networks 
operating under section 62N.06, subdivision 1, to submit data on 
health care spending and revenue for calendar year 1994 by 
February 15, 1995.  Each February 15 thereafter, integrated 
service networks shall submit to the commissioner data on health 
care spending and revenue for the preceding calendar year.  The 
data must be provided in the form specified by the 
commissioner.  To the extent that an integrated service network 
is operated by a group purchaser under section 62N.06, 
subdivision 2, the integrated service network is exempt from 
this section and the group purchaser must provide data on the 
integrated service network under section 62J.38. 
    Sec. 10.  [62J.38] [DATA FROM GROUP PURCHASERS.] 
    (a) The commissioner shall require group purchasers to 
submit detailed data on total health care spending for calendar 
years 1990, 1991, and 1992, and for calendar year 1993 and 
successive calendar years.  Group purchasers shall submit data 
for the 1993 calendar year by February 15, 1994, and each April 
1 thereafter shall submit data for the preceding calendar year. 
    (b) The commissioner shall require each group purchaser to 
submit data on revenue, expenses, and member months, as 
applicable.  Revenue data must distinguish between premium 
revenue and revenue from other sources and must also include 
information on the amount of revenue in reserves and changes in 
reserves.  Expenditure data, including raw data from claims, 
must be provided separately for the following categories:  
physician services, dental services, other professional 
services, inpatient hospital services, outpatient hospital 
services, emergency and out-of-area care, pharmacy services and 
prescription drugs, mental health services, chemical dependency 
services, other expenditures, and administrative costs. 
    (c) State agencies and all other group purchasers shall 
provide the required data using a uniform format and uniform 
definitions, as prescribed by the commissioner. 
    Sec. 11.  [62J.40] [DATA FROM STATE AGENCIES.] 
    In addition to providing the data required under section 
62J.38, the commissioners of human services, commerce, labor and 
industry, and employee relations and all other state departments 
or agencies that administer one or more health care programs 
shall provide to the commissioner of health any additional data 
on the health care programs they administer that is requested by 
the commissioner of health, including data in unaggregated form, 
for purposes of developing estimates of spending, setting 
spending limits, and monitoring actual spending.  The data must 
be provided at the times and in the form specified by the 
commissioner of health. 
    Sec. 12.  [62J.41] [DATA FROM PROVIDERS.] 
    Subdivision 1.  [DATA TO BE COLLECTED FROM PROVIDERS.] The 
commissioner shall require health care providers to collect and 
provide both patient specific information and descriptive and 
financial aggregate data on: 
    (1) the total number of patients served; 
    (2) the total number of patients served by state of 
residence and Minnesota county; 
    (3) the site or sites where the health care provider 
provides services; 
    (4) the number of individuals employed, by type of 
employee, by the health care provider; 
    (5) the services and their costs for which no payment was 
received; 
    (6) total revenue by type of payer, including but not 
limited to, revenue from Medicare, medical assistance, 
MinnesotaCare, nonprofit health service plan corporations, 
commercial insurers, integrated service networks, health 
maintenance organizations, and individual patients; 
    (7) revenue from research activities; 
    (8) revenue from educational activities; 
    (9) revenue from out-of-pocket payments by patients; 
    (10) revenue from donations; and 
    (11) any other data required by the commissioner, including 
data in unaggregated form, for the purposes of developing 
spending estimates, setting spending limits, monitoring actual 
spending, and monitoring costs and quality. 
    Subd. 2.  [ANNUAL MONITORING AND ESTIMATES.] The 
commissioner shall require health care providers to submit the 
required data for the period July 1, 1993 to December 31, 1993, 
by February 15, 1994.  Health care providers shall submit data 
for the 1994 calendar year by February 15, 1995, and each 
February 15 thereafter shall submit data for the preceding 
calendar year.  The commissioner of revenue may collect health 
care service revenue data from health care providers, if the 
commissioner of revenue and the commissioner agree that this is 
the most efficient method of collecting the data.  The 
commissioner of revenue shall provide any data collected to the 
commissioner of health. 
    Subd. 3.  [PUBLIC HEALTH GOALS.] The commissioner shall 
establish specific public health goals including, but not 
limited to, increased delivery of prenatal care, improved birth 
outcomes, and expanded childhood immunizations.  The 
commissioner shall consider the community public health goals 
and the input of the statewide advisory committee on community 
health in establishing the statewide goals.  The commissioner 
shall require health care providers and integrated service 
networks to maintain and periodically report information on 
changes in health outcomes related to specific public health 
goals.  The information must be provided at the times and in the 
form specified by the commissioner. 
    Subd. 4.  [REGIONAL PUBLIC HEALTH GOALS.] The regional 
coordinating boards shall adopt regional public health goals, 
taking into consideration the relevant portions of the community 
health service plans, plans required by the Minnesota 
comprehensive adult mental health act and the Minnesota 
comprehensive children's mental health act, and community social 
service act plans developed by county boards or community health 
boards in the region under chapters 145A, 245, and 256E. 
    Sec. 13.  [62J.42] [QUALITY, UTILIZATION, AND OUTCOME 
DATA.] 
    The commissioner shall also require group purchasers and 
health care providers to maintain and periodically report 
information on quality of care, utilization, and outcomes.  The 
information must be provided at the times and in the form 
specified by the commissioner. 
    Sec. 14.  [62J.44] [PUBLICATION OF DATA.] 
    (a) Notwithstanding section 62J.04, subdivision 2b, the 
commissioner may publish data on health care costs and spending, 
quality and outcomes, and utilization for health care 
institutions, individual health care professionals and groups of 
health care professionals, group purchasers, and integrated 
service networks, with a description of the methodology used for 
analysis, in order to provide information to purchasers and 
consumers of health care.  The commissioner shall not reveal the 
name of an institution, group of professionals, individual 
health care professional, group purchaser, or integrated service 
network until after the institution, group of professionals, 
individual health care professional, group purchaser, or 
integrated service network has had 15 days to review the data 
and comment.  The commissioner shall include any comments 
received in the release of the data.  
    (b) Summary data derived from data collected under this 
chapter may be provided under section 13.05, subdivision 7, and 
may be released in studies produced by the commissioner or 
otherwise in accordance with chapter 13. 
    Sec. 15.  [62J.45] [DATA INSTITUTE.] 
    Subdivision 1.  [STATEMENT OF PURPOSE.] It is the intention 
of the legislature to create a public-private mechanism for the 
collection of health care costs, quality, and outcome data, to 
the extent administratively efficient and effective.  This 
integrated data system will provide clear, usable information on 
the cost, quality, and structure of health care services in 
Minnesota. 
    The health reform initiatives being implemented rely 
heavily on the availability of valid, objective data that 
currently are collected in many forms within the health care 
industry.  Data collection needs cannot be efficiently met by 
undertaking separate data collection efforts. 
    The data institute created in this section will be a 
partnership between the commissioner of health and a board of 
directors representing health carriers and other group 
purchasers, health care providers, and consumers.  These 
entities will work together to establish a centralized cost and 
quality data system that will be used by the public and private 
sectors.  The data collection advisory committee and the 
practice parameter advisory committee shall provide assistance 
to the institute through the commissioner of health. 
    Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
following definitions apply.  
    (a) "Board" means the board of directors of the data 
institute. 
    (b) "Encounter level data" means data related to the 
utilization of health care services by, and the provision of 
health care services to individual patients, enrollees, or 
insureds, including claims data, abstracts of medical records, 
and data from patient interviews and patient surveys. 
    (c) "Health carrier" has the definition provided in section 
62A.011, subdivision 2. 
    Subd. 3.  [OBJECTIVES OF THE DATA INSTITUTE.] The data 
institute shall: 
    (1) provide direction and coordination for public and 
private sector data collection efforts; 
    (2) establish a data system that electronically transmits, 
collects, archives, and provides users of data with the data 
necessary for their specific interests, in order to promote a 
high quality, cost-effective, consumer-responsive health care 
system; 
    (3) use and build upon existing data sources and quality 
measurement efforts, and improve upon these existing data 
sources and measurement efforts through the integration of data 
systems and the standardization of concepts, to the greatest 
extent possible; 
    (4) ensure that each segment of the health care industry 
can obtain data for appropriate purposes in a useful format and 
timely fashion; 
    (5) protect the privacy of individuals and minimize 
administrative costs; and 
    (6) develop a public/private information system to: 
    (i) make health care claims processing and financial 
settlement transactions more efficient; 
    (ii) provide an efficient, unobtrusive method for meeting 
the shared data needs of the state, consumers, employers, 
providers, and group purchasers; 
    (iii) provide the state, consumers, employers, providers, 
and group purchasers with information on the cost, 
appropriateness and effectiveness of health care, and wellness 
and cost containment strategies; 
    (iv) provide employers with the capacity to analyze benefit 
plans and work place health; and 
    (v) provide researchers and providers with the capacity to 
analyze clinical effectiveness. 
    The institute shall carry out these activities in 
accordance with the recommendations of the data collection plan 
developed by the data collection advisory committee, the 
Minnesota health care commission, and the commissioner of 
health, under subdivision 4. 
    Subd. 4.  [DATA COLLECTION PLAN.] The commissioner, in 
consultation with the board of the institute and the data 
collection advisory committee, shall develop and implement a 
plan that:  
    (1) provides data collection objectives, strategies, 
priorities, cost estimates, administrative and operational 
guidelines, and implementation timelines for the data institute; 
and 
    (2) identifies the encounter level data needed for the 
commissioner to carry out the duties assigned in this chapter.  
The plan must take into consideration existing data sources and 
data sources that can easily be made uniform for linkages to 
other data sets. 
    This plan shall be prepared by October 31, 1993. 
    Subd. 5.  [COMMISSIONER'S DUTIES.] (a) The commissioner 
shall establish a public/private data institute in conjunction 
with health care providers, health carriers and other group 
purchasers, and consumers, to collect and process encounter 
level data that are required to be submitted to the commissioner 
under this chapter.  The commissioner shall not collect 
encounter level data from individual health care providers until 
standardized forms and procedures are available.  The 
commissioner shall establish a board of directors comprised of 
members of the public and private sector to provide oversight 
for the administration and operation of the institute. 
    (b) Until the data institute is operational, the 
commissioner may collect encounter level data required to be 
submitted under this chapter. 
    (c) The commissioner, with the advice of the board, shall 
establish policies for the disclosure of data to consumers, 
purchasers, providers, integrated service networks, and plans 
for their use in analysis to meet the goals of this chapter, as 
well as for the public disclosure of data to other interested 
parties.  The disclosure policies shall ensure that consumers, 
purchasers, providers, integrated service networks, and plans 
have access to institute data for use in analysis to meet the 
goals of this chapter at the same time that data is provided to 
the data analysis unit in the department of health. 
    (d) The commissioner, with the advice of the board, may 
require those requesting data from the institute to contribute 
toward the cost of data collection through the payments of 
fees.  Entities supplying data to the institute shall not be 
charged more than the actual transaction cost of providing the 
data requested. 
    (e) The commissioner may intervene in the direct operation 
of the institute, if this is necessary in the judgment of the 
commissioner to accomplish the institute's duties.  If the 
commissioner intends to depart from the advice and 
recommendations of the board, the commissioner shall inform the 
board of the intended departure, provide the board with a 
written explanation of the reasons for the departure, and give 
the board the opportunity to comment on the departure. 
    Subd. 6.  [BOARD OF DIRECTORS.] The institute is governed 
by a 20-member board of directors consisting of the following 
members: 
    (1) two representatives of hospitals, one appointed by the 
Minnesota Hospital Association and one appointed by the 
Metropolitan HealthCare Council, to reflect a mix of urban and 
rural institutions; 
    (2) four representatives of health carriers, two appointed 
by the Minnesota Council of Health Maintenance Organizations, 
one appointed by Blue Cross Blue Shield, and one appointed by 
the Insurance Federation of Minnesota; 
    (3) two consumer members, one appointed by the 
commissioner, and one appointed by the AFL-CIO as a labor union 
representative; 
    (4) five group purchaser representatives appointed by the 
Minnesota Consortium of Healthcare Purchasers to reflect a mix 
of urban and rural, large and small, and self-insured 
purchasers; 
    (5) two physicians appointed by the Minnesota Medical 
Association, to reflect a mix of urban and rural practitioners; 
    (6) one representative of teaching and research 
institutions, appointed jointly by the Mayo Foundation and the 
Minnesota Association of Public Teaching Hospitals; 
    (7) one nursing representative appointed by the Minnesota 
Nurses Association; and 
    (8) three representatives of state agencies, one member 
representing the department of employee relations, one member 
representing the department of human services, and one member 
representing the department of health.  
    Subd. 7.  [TERMS; COMPENSATION; REMOVAL; AND 
VACANCIES.] The board is governed by section 15.0575. 
    Subd. 8.  [STAFF.] The board may hire an executive director.
The executive director is not a state employee but is covered by 
section 3.736.  The executive director may participate in the 
following plans for employees in the unclassified service:  the 
state retirement plan, the state deferred compensation plan, and 
the health insurance and life insurance plans.  The attorney 
general shall provide legal services to the board. 
    Subd. 9.  [DUTIES.] The board shall provide assistance to 
the commissioner in developing and implementing a plan for the 
public/private information system.  In addition, the board shall 
make recommendations to the commissioner on: 
    (1) the purpose of initiating a data collection 
initiatives; 
    (2) the expected benefit to the state from the initiatives; 
    (3) the methodology needed to ensure the validity of the 
initiative without creating an undue burden to providers and 
payors; 
    (4) the most appropriate method of collecting the necessary 
data; and 
    (5) the projected cost to the state, health care providers, 
health carriers, and other group purchasers to complete the 
initiative. 
    Subd. 10.  [DATA COLLECTION.] The commissioner, in 
consultation with the data institute board, may select a vendor 
to: 
    (1) collect the encounter level data required to be 
submitted by group purchasers under sections 62J.38 and 62J.42, 
state agencies under section 62J.40, and health care providers 
under sections 62J.41 and 62J.42, using, to the greatest extent 
possible, standardized forms and procedures; 
    (2) collect the encounter level data required for the 
initiatives of the health care analysis unit, under sections 
62J.30 to 62J.34, using, to the greatest extent possible, 
standardized forms and procedures; 
    (3) process the data collected to ensure validity, 
consistency, accuracy, and completeness, and as appropriate, 
merge data collected from different sources; 
    (4) provide unaggregated, encounter level data to the 
health care analysis unit within the department of health; and 
    (5) carry out other duties assigned in this section. 
    Subd. 11.  [USE OF DATA.] (a) The board of the data 
institute, with the advice of the data collection advisory 
committee and the practice parameter advisory committee through 
the commissioner, is responsible for establishing the 
methodology for the collection of the data and is responsible 
for providing direction on what data would be useful to the 
plans, providers, consumers, and purchasers. 
    (b) The health care analysis unit is responsible for the 
analysis of the data and the development and dissemination of 
reports. 
    (c) The commissioner, in consultation with the board, shall 
determine when and under what conditions data disclosure to 
group purchasers, health care providers, consumers, researchers, 
and other appropriate parties may occur to meet the state's 
goals.  The commissioner may require users of data to contribute 
toward the cost of data collection through the payment of fees.  
The commissioner shall require users of data to maintain the 
data according to the data privacy provisions applicable to the 
data. 
    Subd. 12.  [CONTRACTING.] The commissioner, in consultation 
with the board, may contract with private sector entities to 
carry out the duties assigned in this section.  The commissioner 
shall diligently seek to enter into contracts with private 
sector entities.  Any contract must list the specific data to be 
collected and the methods to be used to collect and validate the 
data.  Any contract must require the private sector entity to 
maintain the data collected according to the data privacy 
provisions applicable to the data. 
    Subd. 13.  [DATA PRIVACY.] The board and the institute are 
subject to chapter 13. 
    Subd. 14.  [STANDARDS FOR DATA RELEASE.] The data institute 
shall adopt standards for the collection, by the institute, of 
data on costs, spending, quality, outcomes, and utilization.  
The data institute shall also adopt standards for the analysis 
and dissemination, by private sector entities, of data on costs, 
spending, quality, outcomes, and utilization provided to the 
private sector entities by the data institute.  Both sets of 
standards must be consistent with data privacy requirements. 
    Subd. 15.  [INFORMATION CLEARINGHOUSE.] The commissioner 
shall coordinate the activities of the data institute with the 
activities of the information clearinghouse established in 
section 62J.33, subdivision 2. 
    Subd. 16.  [FEDERAL AND OTHER GRANTS.] The commissioner, in 
collaboration with the board, shall seek federal funding and 
funding from private and other nonstate sources for the 
initiatives required by the board. 
    Sec. 16.  [62J.46] [MONITORING AND REPORTS.] 
    Subdivision 1.  [LONG-TERM CARE COSTS.] The commissioner, 
with the advice of the interagency long-term care planning 
committee established under section 144A.31, shall use existing 
state data resources to monitor trends in public and private 
spending on long-term care costs and spending in Minnesota.  The 
commissioner shall recommend to the legislature any additional 
data collection activities needed to monitor these trends.  
State agencies collecting information on long-term care spending 
and costs shall coordinate with the interagency long-term care 
planning committee and the commissioner to facilitate the 
monitoring of long-term care expenditures in the state. 
    Subd. 2.  [COST SHIFTING.] The commissioner shall monitor 
the extent to which reimbursement rates for government health 
care programs lead to the shifting of costs to private payers.  
By January 1, 1995, the commissioner shall report any evidence 
of cost shifting to the legislature and make recommendations on 
adjustments to the cost containment plan that should be made due 
to cost shifting. 
    Sec. 17.  Laws 1992, chapter 549, article 7, section 9, is 
amended to read: 
    Sec. 9.  [STUDY OF ADMINISTRATIVE COSTS.] 
    The health care data analysis unit shall study costs and 
requirements incurred by health carriers, group purchasers, and 
health care providers that are related to the collection and 
submission of information to the state and federal government, 
insurers, and other third parties.  The data analysis unit shall 
also evaluate and make recommendations related to cost-savings 
and efficiencies that may be achieved through streamlining and 
consolidating health care administrative, payment, and data 
collection systems.  The unit shall recommend to the 
commissioner of health and the Minnesota health care commission 
by January 1, 1994, any reforms that may reduce these 
costs produce cost-savings and efficiencies without compromising 
the purposes for which the information is collected. 
    Sec. 18.  [INSTRUCTION TO REVISOR.] 
    (a) The revisor of statutes shall insert section 62J.04, 
subdivisions 2, 2a, and 2b, as subdivisions 1, 2, and 3 in 
section 62J.35, and renumber the other subdivisions of section 
62J.35 as subdivisions 4 and 5 of that section in the next and 
subsequent editions of Minnesota Statutes.  
    (b) The revisor of statutes is directed to change the words 
"health care analysis unit" to "data analysis unit" whenever 
they appear in the next edition of Minnesota Statutes. 
    Sec. 19.  [EFFECTIVE DATE.] 
    Sections 1 to 17 are effective the day following final 
enactment. 

                                ARTICLE 4
TECHNOLOGY ADVISORY COMMITTEE 
    Section 1.  Minnesota Statutes 1992, section 62J.03, is 
amended by adding a subdivision to read: 
    Subd. 9.  [SAFETY.] "Safety" means a judgment of the 
acceptability of risk of using a technology in a specified 
situation. 
    Sec. 2.  Minnesota Statutes 1992, section 62J.15, 
subdivision 1, is amended to read: 
    Subdivision 1.  [HEALTH PLANNING TECHNOLOGY ADVISORY 
COMMITTEE.] The Minnesota health care commission shall convene 
an advisory committee to make recommendations regarding the use 
and distribution conduct evaluations of existing research and 
technology assessments conducted by other entities of new and 
existing health care technologies and procedures and major 
capital expenditures by providers.  The advisory committee may 
include members of the state commission and other persons 
appointed by the commission.  The advisory committee must 
include at least one person representing physicians, at least 
one person representing hospitals, and at least one person 
representing the health care technology industry.  Health care 
technologies and procedures include high-cost pharmaceuticals, 
organ and other high-cost transplants, high-cost drugs, devices, 
procedures, or processes applied to human health care procedures 
and devices excluding United States Food and Drug Administration 
approved implantable or wearable medical devices, such as 
high-cost transplants and expensive, large-scale technologies 
such as scanners and imagers.  The advisory committee is 
governed by section 15.0575, subdivision 3, except that members 
do not receive per diem payments. 
    Sec. 3.  Minnesota Statutes 1992, section 62J.15, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [DEFINITION.] For purposes of sections 62J.15 to 
62J.156, the terms "evaluate," "evaluation," and "evaluating" 
mean the review or reviewing of research and technology 
assessments conducted by other entities relating to specific 
technologies and their specific use and application. 
    Sec. 4.  [62J.152] [DUTIES OF HEALTH TECHNOLOGY ADVISORY 
COMMITTEE.] 
    Subdivision 1.  [GENERALLY.] The health technology advisory 
committee established in section 62J.15 shall: 
    (1) develop criteria and processes for evaluating health 
care technology assessments made by other entities; 
    (2) conduct evaluations of specific technologies and their 
specific use and application; 
    (3) report the results of the evaluations to the 
commissioner and the Minnesota health care commission; and 
    (4) carry out other duties relating to health technology 
assigned by the commission. 
    Subd. 2.  [PRIORITIES FOR DESIGNATING TECHNOLOGIES FOR 
ASSESSMENT.] The health technology advisory committee shall 
consider the following criteria in designating technologies for 
evaluation: 
    (1) the level of controversy within the medical or 
scientific community, including questionable or undetermined 
efficacy; 
    (2) the cost implications; 
    (3) the potential for rapid diffusion; 
    (4) the impact on a substantial patient population; 
    (5) the existence of alternative technologies; 
    (6) the impact on patient safety and health outcome; 
    (7) the public health importance; 
    (8) the level of public and professional demand; 
    (9) the social, ethical, and legal concerns; and 
    (10) the prevalence of the disease or condition. 
The committee may give different weights or attach different 
importance to each of the criteria, depending on the technology 
being considered.  The committee shall consider any additional 
criteria approved by the commissioner and the Minnesota health 
care commission. 
    Subd. 3.  [CRITERIA FOR EVALUATING TECHNOLOGY.] In 
developing the criteria for evaluating specific technologies, 
the health technology advisory committee shall consider safety, 
improvement in health outcomes, and the degree to which a 
technology is clinically effective and cost-effective, and other 
factors. 
    Subd. 4.  [TECHNOLOGY EVALUATION PROCESS.] (a) The health 
technology advisory committee shall collect and evaluate studies 
and research findings on the technologies selected for 
evaluation from as wide of a range of sources as needed, 
including, but not limited to:  federal agencies or other units 
of government, international organizations conducting health 
care technology assessments, health carriers, insurers, 
manufacturers, professional and trade associations, nonprofit 
organizations, and academic institutions.  The health technology 
advisory committee may use consultants or experts and solicit 
testimony or other input as needed to evaluate a specific 
technology. 
    (b) When the evaluation process on a specific technology 
has been completed, the health technology advisory committee 
shall submit a preliminary report to the health care commission 
and publish a summary of the preliminary report in the State 
Register with a notice that written comments may be submitted.  
The preliminary report must include the results of the 
technology assessment evaluation, studies and research findings 
considered in conducting the evaluation, and the health 
technology advisory committee's summary statement about the 
evaluation.  Any interested persons or organizations may submit 
to the health technology advisory committee written comments 
regarding the technology evaluation within 30 days from the date 
the preliminary report was published in the State Register.  The 
health technology advisory committee's final report on its 
technology evaluation must be submitted to the health care 
commission.  A summary of written comments received by the 
health technology advisory committee within the 30-day period 
must be included in the final report.  The health care 
commission shall review the final report and prepare its 
comments and recommendations.  Before completing its final 
comments and recommendations, the health care commission shall 
provide adequate public notice that testimony will be accepted 
by the health care commission.  The health care commission shall 
then forward the final report, its comments and recommendations, 
and a summary of the public's comments to the commissioner and 
information clearinghouse. 
    (c) The reports of the health technology advisory committee 
and the comments and recommendations of the health care 
commission should not eliminate or bar new technology, and are 
not rules as defined in the administrative procedure act. 
    Subd. 5.  [USE OF TECHNOLOGY EVALUATION.] (a) The final 
report on the technology evaluation and the commission's 
comments and recommendations may be used: 
    (1) by the commissioner in retrospective and prospective 
review of major expenditures; 
    (2) by integrated service networks and other group 
purchasers and by employers, in making coverage, contracting, 
purchasing, and reimbursement decisions; 
    (3) by government programs and regulators of the regulated 
all-payer system, in making coverage, contracting, purchasing, 
and reimbursement decisions; 
    (4) by the commissioner and other organizations in the 
development of practice parameters; 
    (5) by health care providers in making decisions about 
adding or replacing technology and the appropriate use of 
technology; 
    (6) by consumers in making decisions about treatment; 
    (7) by medical device manufacturers in developing and 
marketing new technologies; and 
    (8) as otherwise needed by health care providers, health 
care plans, consumers, and purchasers. 
    (b) At the request of the commissioner, the health care 
commission, in consultation with the health technology advisory 
committee, shall submit specific recommendations relating to 
technologies that have been evaluated under this section for 
purposes of retrospective and prospective review of major 
expenditures and coverage, contracting, purchasing, and 
reimbursement decisions affecting state programs and the 
all-payer system. 
    Subd. 6.  [APPLICATION TO THE REGULATED ALL-PAYER 
SYSTEM.] The health technology advisory committee shall 
recommend to the Minnesota health care commission and the 
commissioner methods to control the diffusion and use of 
technology within the regulated all-payer system for services 
provided outside of an integrated service network. 
    Subd. 7.  [DATA GATHERING.] In evaluating a specific 
technology, the health technology advisory committee may seek 
the use of data collected by manufacturers, health plans, 
professional and trade associations, nonprofit organizations, 
academic institutions, or any other organization or association 
that may have data relevant to the committee's technology 
evaluation.  All information obtained under this subdivision 
shall be considered nonpublic data under section 13.02, 
subdivision 9, unless the data is already available to the 
public generally or upon request. 
    Sec. 5.  [62J.156] [CLOSED COMMITTEE HEARINGS.] 
    Notwithstanding section 471.705, the health technology 
advisory committee may meet in closed session to discuss a 
specific technology or procedure that involves data received 
under section 62J.152, subdivision 7, that have been classified 
as nonpublic data, where disclosure of the data would cause harm 
to the competitive or economic position of the source of the 
data. 
    Sec. 6.  [USE AND DISTRIBUTION OF HEALTH TECHNOLOGY.] 
    The health care commission, in consultation with the health 
technology advisory committee, shall submit a report to the 
legislature and the governor by January 15, 1994, regarding the 
necessity of a health technology advisory committee to address 
the use and distribution of health technology under a system of 
integrated service networks with global limits on growth, and in 
a regulated all-payer system.  The report may also include 
recommendations for the future role of the health technology 
advisory committee, and further changes, programs, or activities 
that may be necessary to ensure that the use and distribution of 
health technology in Minnesota is consistent with the state's 
cost containment goals.  In preparing the report, the health 
care commission shall consult with the medical technology 
industry in Minnesota for its input and reactions. 
    Sec. 7.  [REPEALER.] 
    Minnesota Statutes 1992, section 62J.15, subdivision 2, is 
repealed. 

                               ARTICLE 5 

                             MISCELLANEOUS 
    Section 1.  Minnesota Statutes 1992, section 3.732, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] As used in this section and 
section 3.736 the terms defined in this section have the 
meanings given them. 
    (1) "State" includes each of the departments, boards, 
agencies, commissions, courts, and officers in the executive, 
legislative, and judicial branches of the state of Minnesota and 
includes but is not limited to the housing finance agency, the 
higher education coordinating board, the higher education 
facilities authority, the health technology advisory committee, 
the armory building commission, the zoological board, the iron 
range resources and rehabilitation board, the state agricultural 
society, the University of Minnesota, state universities, 
community colleges, state hospitals, and state penal 
institutions.  It does not include a city, town, county, school 
district, or other local governmental body corporate and politic.
    (2) "Employee of the state" means all present or former 
officers, members, directors, or employees of the state, members 
of the Minnesota national guard, members of a bomb disposal unit 
approved by the commissioner of public safety and employed by a 
municipality defined in section 466.01 when engaged in the 
disposal or neutralization of bombs outside the jurisdiction of 
the municipality but within the state, or persons acting on 
behalf of the state in an official capacity, temporarily or 
permanently, with or without compensation.  It does not include 
either an independent contractor or members of the Minnesota 
national guard while engaged in training or duty under United 
States Code, title 10, or title 32, section 316, 502, 503, 504, 
or 505, as amended through December 31, 1983.  "Employee of the 
state" includes a public defender appointed by the state board 
of public defense, and a member of the health technology 
advisory committee. 
    (3) "Scope of office or employment" means that the employee 
was acting on behalf of the state in the performance of duties 
or tasks lawfully assigned by competent authority. 
    (4) "Judicial branch" has the meaning given in section 
43A.02, subdivision 25. 
    Sec. 2.  Minnesota Statutes 1992, section 43A.17, is 
amended by adding a subdivision to read: 
    Subd. 12.  [ACTUARIES.] Actuaries employed by the 
department of health, human services, or commerce are not 
subject to subdivision 1. 
    Sec. 3.  Minnesota Statutes 1992, section 60K.14, is 
amended by adding a subdivision to read: 
    Subd. 7.  Before selling, or offering to sell, any health 
insurance or a health plan as defined in section 62A.011, 
subdivision 3, an agent shall disclose to the prospective 
purchaser the amount of any commission or other compensation the 
agent will receive as a direct result of the sale.  The 
disclosure may be expressed in dollars or as a percentage of the 
premium.  The amount disclosed need not include any anticipated 
renewal commissions. 
    Sec. 4.  [62A.024] [RATE DISCLOSURE.] 
     If any health carrier, as defined in section 62A.011, 
informs a policyholder or contract holder that a rate increase 
is due to a statutory change, the health carrier must disclose 
the specific amount of the rate increase directly due to the 
statutory change and must identify the specific statutory 
change.  This disclosure must also separate any rate increase 
due to medical inflation or other reasons from the rate increase 
directly due to statutory changes in chapter 62A, 62C, 62D, 62E, 
62H, 62J, 62L, or 64B. 
    Sec. 5.  Minnesota Statutes 1992, section 62C.16, is 
amended by adding a subdivision to read: 
    Subd. 4.  [RETALIATORY ACTION PROHIBITED.] No service plan 
corporation may take retaliatory action against a provider 
solely on the grounds that the provider disseminated accurate 
information regarding coverage of benefits or accurate benefit 
limitations of a subscriber's contract or accurate 
interpretations of the provider agreement that limit the 
prescribing, providing, or ordering of care. 
    Sec. 6.  Minnesota Statutes 1992, section 62D.12, is 
amended by adding a subdivision to read: 
    Subd. 17.  [DISCLOSURE OF COMMISSIONS.] Any person 
receiving commissions for the sale of coverage or enrollment in 
a health maintenance organization shall, before selling or 
offering to sell coverage or enrollment, disclose to the 
prospective purchaser the amount of any commission or other 
compensation the person will receive as a direct result of the 
sale.  The disclosure may be expressed in dollars or as a 
percentage of the premium.  The amount disclosed need not 
include any anticipated renewal commissions. 
    Sec. 7.  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 but excluding Chisago, Isanti, Wright, and 
Sherburne counties, 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 issue recommendations regarding uniform billing 
forms, uniform electronic billing procedures and data 
interchanges, patient identification cards, and other uniform 
claims and administrative procedures for health care providers 
by January 1, 1993 and private and public sector payers.  In 
developing the recommendations, the commissioner shall review 
the work of the work group on electronic data interchange (WEDI) 
and the American National Standards Institute (ANSI) at the 
national level, and the work being done at the state and local 
level.  The commissioner may adopt rules requiring the use of 
the Uniform Bill 82/92 form, the National Council of 
Prescription Drug Providers (NCPDP) 3.2 electronic version, the 
Health Care Financing Administration 1500 form, or other 
standardized forms or procedures; 
    (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) within the limits of appropriations for these 
purposes, 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, 
undertake prevention programs including initiatives to improve 
birth outcomes, expand childhood immunization efforts, and 
provide start-up grants for worksite wellness programs; 
    (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. 8.  Minnesota Statutes 1992, section 62J.04, 
subdivision 4, is amended to read: 
    Subd. 4.  [CONSULTATION WITH THE COMMISSION.] Before When 
the law requires the commissioner of health to consult with the 
Minnesota health care commission when undertaking any of the 
duties required under this chapter and chapter 62N, 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 must be provided at least ten days before the 
commissioner takes final action.  If emergency action is 
necessary that does not allow the commissioner to obtain the 
advice and recommendations of the Minnesota health care 
commission or to provide advance notice and an opportunity for 
comment as required in this subdivision, the commissioner shall 
provide a written notice and explanation to the Minnesota health 
care commission and the legislative oversight commission at the 
earliest possible time. 
    Sec. 9.  [62J.212] [COLLABORATION ON PUBLIC HEALTH GOALS.] 
    The commissioner may increase regional spending limits if 
public health goals for that region are achieved. 
    Sec. 10.  Minnesota Statutes 1992, section 151.21, is 
amended to read: 
    151.21 [SUBSTITUTION.] 
    Subdivision 1.  Except as provided in subdivision 2 this 
section, it shall be unlawful for any pharmacist, assistant 
pharmacist, or pharmacist intern who dispenses prescriptions, 
drugs, and medicines to substitute an article different from the 
one ordered, or deviate in any manner from the requirements of 
an order or prescription without the approval of the prescriber. 
    Subd. 2.  When a pharmacist receives a written prescription 
on which the prescriber has personally written in handwriting 
"dispense as written" or "D.A.W.," or an oral prescription in 
which the prescriber has expressly indicated that the 
prescription is to be dispensed as communicated, the pharmacist 
shall dispense the brand name legend drug as prescribed. 
    Subd. 2 3.  A pharmacist who receives a prescription for a 
brand name legend drug may, with the written or verbal consent 
of the purchaser, dispense any drug having the same generic name 
as the brand name drug prescribed if the prescriber has not 
personally written in handwriting "dispense as written" or 
"D.A.W."  on the prescription or, when an oral prescription is 
given, has not expressly indicated the prescription is to be 
dispensed as communicated.  A pharmacist who receives a 
prescription marked "D.A.W."  or "dispense as written", or an 
oral prescription indicating that the prescription is to be 
dispensed as communicated, may substitute for the prescribed 
brand name drug a generically equivalent drug product which is 
manufactured in the same finished dosage form having the same 
active ingredients and strength by the same manufacturer as the 
prescribed brand name drug When a pharmacist receives a written 
prescription on which the prescriber has not personally written 
in handwriting "dispense as written" or "D.A.W.," or an oral 
prescription in which the prescriber has not expressly indicated 
that the prescription is to be dispensed as communicated, and 
there is available in the pharmacist's stock a less expensive 
generically equivalent drug that, in the pharmacist's 
professional judgment, is safely interchangeable with the 
prescribed drug, then the pharmacist shall, after disclosing the 
substitution to the purchaser, dispense the generic drug, unless 
the purchaser objects.  A pharmacist may also substitute 
pursuant to the oral instructions of the prescriber.  A 
pharmacist may not substitute a generically equivalent drug 
product unless, in the pharmacist's professional judgment, the 
substituted drug is therapeutically equivalent and 
interchangeable to the prescribed drug.  A pharmacist shall 
notify the purchaser if the pharmacist is dispensing a drug 
other than the brand name drug prescribed.  
    Subd. 3 4.  A pharmacist dispensing a drug under the 
provisions of subdivision 2 3 shall not dispense a drug of a 
higher retail price than that of the brand name drug 
prescribed.  If more than one safely interchangeable generic 
drug is available in a pharmacist's stock, then the pharmacist 
shall dispense the least expensive alternative.  Any difference 
between acquisition cost to the pharmacist of the drug dispensed 
and the brand name drug prescribed shall be passed on to the 
purchaser. 
    Subd. 5.  Nothing in this section requires a pharmacist to 
substitute a generic drug if the substitution will make the 
transaction ineligible for third-party reimbursement. 
    Subd. 6.  When a pharmacist dispenses a brand name legend 
drug and, at that time, a less expensive generically equivalent 
drug is also available in the pharmacist's stock, the pharmacist 
shall disclose to the purchaser that a generic drug is available.
    Subd. 7.  This section does not apply to prescription drugs 
dispensed to persons covered by a health plan that covers 
prescription drugs under a managed care formulary or similar 
practices. 
    Subd. 8.  The following drugs are excluded from this 
section:  coumadin, dilantin, lanoxin, premarin, theophylline, 
synthroid, tegretol, and phenobarbital. 
    Sec. 11.  [151.461] [GIFTS TO PRACTITIONERS PROHIBITED.] 
    It is unlawful for any manufacturer or wholesale drug 
distributor, or any agent thereof, to offer or give any gift of 
value to a practitioner.  A medical device manufacturer that 
distributes drugs as an incidental part of its device business 
shall not be considered a manufacturer, a wholesale drug 
distributor, or agent under this section.  As used in this 
section, "gift" does not include: 
    (1) professional samples of a drug provided to a prescriber 
for free distribution to patients; 
    (2) items with a total combined retail value, in any 
calendar year, of not more than $50; 
    (3) a payment to the sponsor of a medical conference, 
professional meeting, or other educational program, provided the 
payment is not made directly to a practitioner and is used 
solely for bona fide educational purposes; 
    (4) reasonable honoraria and payment of the reasonable 
expenses of a practitioner who serves on the faculty at a 
professional or educational conference or meeting; 
    (5) compensation for the substantial professional or 
consulting services of a practitioner in connection with a 
genuine research project; 
    (6) publications and educational materials; or 
    (7) salaries or other benefits paid to employees. 
    Sec. 12.  Minnesota Statutes 1992, section 151.47, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REQUIREMENTS.] All wholesale drug 
distributors are subject to the requirements in paragraphs (a) 
to (e) (f).  
    (a) No person or distribution outlet shall act as a 
wholesale drug distributor without first obtaining a license 
from the board and paying the required fee. 
    (b) No license shall be issued or renewed for a wholesale 
drug distributor to operate unless the applicant agrees to 
operate in a manner prescribed by federal and state law and 
according to the rules adopted by the board. 
    (c) The board may require a separate license for each 
facility directly or indirectly owned or operated by the same 
business entity within the state, or for a parent entity with 
divisions, subsidiaries, or affiliate companies within the 
state, when operations are conducted at more than one location 
and joint ownership and control exists among all the entities. 
    (d) As a condition for receiving and retaining a wholesale 
drug distributor license issued under sections 151.42 to 151.51, 
an applicant shall satisfy the board that it has and will 
continuously maintain: 
    (1) adequate storage conditions and facilities; 
    (2) minimum liability and other insurance as may be 
required under any applicable federal or state law; 
    (3) a viable security system that includes an after hours 
central alarm, or comparable entry detection capability; 
restricted access to the premises; comprehensive employment 
applicant screening; and safeguards against all forms of 
employee theft; 
     (4) a system of records describing all wholesale drug 
distributor activities set forth in section 151.44 for at least 
the most recent two-year period, which shall be reasonably 
accessible as defined by board regulations in any inspection 
authorized by the board; 
     (5) principals and persons, including officers, directors, 
primary shareholders, and key management executives, who must at 
all times demonstrate and maintain their capability of 
conducting business in conformity with sound financial practices 
as well as state and federal law; 
     (6) complete, updated information, to be provided to the 
board as a condition for obtaining and retaining a license, 
about each wholesale drug distributor to be licensed, including 
all pertinent corporate licensee information, if applicable, or 
other ownership, principal, key personnel, and facilities 
information found to be necessary by the board; 
    (7) written policies and procedures that assure reasonable 
wholesale drug distributor preparation for, protection against, 
and handling of any facility security or operation problems, 
including, but not limited to, those caused by natural disaster 
or government emergency, inventory inaccuracies or product 
shipping and receiving, outdated product or other unauthorized 
product control, appropriate disposition of returned goods, and 
product recalls; 
    (8) sufficient inspection procedures for all incoming and 
outgoing product shipments; and 
    (9) operations in compliance with all federal requirements 
applicable to wholesale drug distribution. 
    (e) An agent or employee of any licensed wholesale drug 
distributor need not seek licensure under this section. 
    (f) A wholesale drug distributor shall file with the board 
an annual report, in a form and on the date prescribed by the 
board, identifying all payments, honoraria, reimbursement or 
other compensation authorized under section 151.461, clauses (3) 
to (5), paid to practitioners in Minnesota during the preceding 
calendar year.  The report shall identify the nature and value 
of any payments totaling $100 or more, to a particular 
practitioner during the year, and shall identify the 
practitioner.  Reports filed under this provision are public 
data. 
    Sec. 13.  [MEDICAL CARE SAVINGS ACCOUNTS.] 
    (a) The commissioner of health, in consultation with the 
commissioners of employee relations, commerce, and revenue and 
the Minnesota health care commission, shall conduct a study to 
determine the feasibility of establishing a medical and health 
care benefits plan such as one to help provide incentives for 
persons in Minnesota whose employers pay all or part of the cost 
of medical and health care benefits for their employees to 
forego unnecessary medical treatment and to shop for the best 
value in cases where treatment is necessary.  The study must 
address, at a minimum, the advantages and disadvantages of 
establishing a medical and health care benefits plan and may 
contain the components and criteria in paragraphs (b) to (f). 
    (b) Employers each year shall set aside in an account for 
each of their employees a substantial percentage of the amount 
that the employers currently or would otherwise spend for 
medical and health care benefits for each employee.  The account 
is an allowance for medical and health care for the employee 
during that year. 
    (c) Employers shall use the remaining percentage amount to 
purchase or self fund major medical and health care benefits for 
all employees, which shall pay 100 percent of the cost of any 
portion of an employee's medical and health care that exceeds 
the amount in the employee's medical and health care account. 
    (d) Any amount in an employee's medical and health care 
account that is unspent belongs to the employee with no 
restrictions on the purposes for which it may be used. 
    (e) The amount in an employee's medical and health care 
account is not subject to state income taxation while it remains 
in the account.  Any amount spent from the account on medical 
and health care is totally exempt from state income taxation.  
Any amount spent from the account for any purpose other than 
medical and health care is subject to state income taxation. 
    (f) Employers that provide medical and health care benefits 
to their employees in accordance with the plan shall receive 
state tax credits against their income for each year that the 
benefits are provided. 
    (g) The results of the study must be submitted to the 
legislature by January 15, 1994. 
    Sec. 14.  [REQUESTS FOR FEDERAL ACTION.] 
    The commissioner of health shall seek changes in or waivers 
from federal statutes or regulations as necessary to implement 
the provisions of this act.  The commissioner of human services 
shall request and diligently pursue waivers from the federal 
laws relating to health coverages provided under the medical 
assistance and Medicare programs, so as to permit the state to 
provide medical assistance benefits through integrated service 
networks and permit Medicare to be provided in Minnesota through 
integrated service networks. 
    Sec. 15.  [PRESCRIPTION DRUG STUDY.] 
    The commissioner of health shall prepare and submit to the 
legislature by February 15, 1994, a study of the manufacturing, 
wholesale, and retail prescription drug market in Minnesota.  In 
conducting the study, the commissioner of health shall consult 
with the commissioners of administration, employee relations, 
and human services, the Minnesota health care commission, and 
the University of Minnesota pharmaceutical research, management, 
and economics programs.  The commissioner shall also consult 
with representatives of retail and other pharmacists, drug 
manufacturers, consumers, senior citizen organizations, 
hospitals, nursing homes, physicians, health maintenance 
organizations, and other stakeholders and persons with relevant 
expertise. 
    The study shall examine: 
    (1) how distinctions based on volume purchased or class of 
purchaser affect manufacturer, wholesale, and retail pricing; 
    (2) how manufacturer and wholesale pricing are affected by 
other industry practices, by federal and state law, and by other 
factors such as marketing, promotion, and research and 
development; 
    (3) how manufacturer and wholesale pricing affect retail 
pricing; 
    (4) other factors affecting retail pricing; and 
    (5) methods of reducing manufacturer, wholesale, and retail 
prices, including but not limited to: 
    (i) mandatory prescription drug contracting programs 
operated by the state; 
    (ii) voluntary prescription drug contracting programs 
operated by the state; 
    (iii) legislation to facilitate the development of 
manufacturer and wholesale purchasing programs in the private 
sector; 
    (iv) most favored purchaser legislation; 
    (v) legislation limiting manufacturer and wholesale price 
increases; 
    (vi) legislation providing for preferential treatment for 
underserved or disadvantaged retail purchasers; 
    (vii) legislation providing for the use of a state 
formulary or other formularies; 
    (viii) legislation requiring pharmacists to substitute for 
prescribed drugs a less expensive therapeutic alternative in 
appropriate circumstances. 
    (ix) legislation providing for price disclosure; and 
    (x) limitations on drug promotion and marketing. 
    The study must include recommendations and draft 
legislation for reducing the cost of prescription drugs for 
wholesale purchasers, consumers, retail pharmacies, and 
third-party payors.  The recommendations must ensure that 
parties benefiting from price savings at the manufacturer or 
wholesale level pass these savings on to consumers.  The 
recommendations must not reduce costs through methods that would 
adversely affect access to prescription drugs, reduce the 
quality of prescription drugs, or cause a significant increase 
in manufacturer, wholesale, or retail prices for certain market 
segments. 
    Sec. 16.  [REVIEW.] 
    The commissioner of commerce shall review the health care 
policies currently in use in the state, and prepare standardized 
health care policy forms to be used by all insurers, health 
service plans, or others subject to the jurisdiction of 
Minnesota Statutes, chapter 62A, 62C, 62E, or 62H.  The 
commissioner shall recommend possible legislative changes 
necessary to adopt the policy forms to the chairs of the senate 
commerce and consumer protection committee and the house of 
representatives financial institutions and insurance committee 
by February 1, 1994. 
    Sec. 17.  [LEAVE DONATION PROGRAM.] 
    Subdivision 1.  [DONATION OF VACATION TIME.] A state 
employee may donate up to 12 hours of accrued vacation leave for 
the benefit of a state employee in Morrison county whose child 
was attacked by a dog in 1993.  The number of hours donated must 
be credited to the sick leave account of the receiving state 
employee.  If the receiving state employee uses all of the 
donated time, additional hours up to 50 hours per employee of 
accrued vacation leave time may be donated. 
    Subd. 2.  [PROCESS FOR CREDITING.] The donating employee 
must notify the employee's agency head of the amount of accrued 
vacation time the employee wishes to donate.  The agency head 
shall transfer that amount to the sick leave account of the 
recipient.  A donation of accrued vacation leave time is 
irrevocable once it has been transferred to the account. 
    Sec. 18.  [INSTRUCTION TO REVISOR.] 
    The revisor of statutes shall change the words "centers of 
excellence" to "referral centers" wherever they appear in 
Minnesota Statutes, chapters 62D and 62J, in the next and 
subsequent editions of Minnesota Statutes and Minnesota Rules, 
parts 4685.0100 to 4685.3400. 
    Sec. 19.  [EFFECTIVE DATE.] 
    Sections 1, 4, 5, 7, 8, 9, 13, 14, 15, and 16 are effective 
the day following final enactment.  
    Section 17 is effective the day following final enactment 
and applies retroactively to January 1, 1993. 
    Sections 3, 6, 10, 11, and 12 are effective January 1, 1994.

                               ARTICLE 6 

                      COST CONTAINMENT AMENDMENTS 
    Section 1.  Minnesota Statutes 1992, section 62J.03, 
subdivision 8, is amended to read: 
    Subd. 8.  [PROVIDER OR HEALTH CARE PROVIDER.] "Provider" or 
"health care provider" means a person or organization other than 
a nursing home that provides health care or medical care 
services within Minnesota for a fee, as further defined in rules 
adopted by the commissioner. and is eligible for reimbursement 
under the medical assistance program under chapter 256B.  For 
purposes of this subdivision, "for a fee" includes traditional 
fee-for-service arrangements, capitation arrangements, and any 
other arrangement in which a provider receives compensation for 
providing health care services or has the authority to directly 
bill a group purchaser, health carrier, or individual for 
providing health care services.  For purposes of this 
subdivision, "eligible for reimbursement under the medical 
assistance program" means that the provider's services would be 
reimbursed by the medical assistance program if the services 
were provided to medical assistance enrollees and the provider 
sought reimbursement, or that the services would be eligible for 
reimbursement under medical assistance except that those 
services are characterized as experimental, cosmetic, or 
voluntary. 
    Sec. 2.  Minnesota Statutes 1992, section 62J.04, 
subdivision 5, is amended to read: 
    Subd. 5.  [APPEALS.] A person or organization aggrieved may 
appeal a decision of the commissioner under sections 62J.17 and 
62J.23 through a contested case proceeding governed under 
chapter 14.  The notice of appeal must be served on the 
commissioner within 30 days of receiving notice of the 
decision.  The commissioner shall decide the contested case. 
    Sec. 3.  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, beginning July 1, 1993.  The goal of the plan shall 
be to reduce the growth rate of health care spending, adjusted 
for population changes, so that it declines by at least ten 
percent per year for each of the next five years.  The 
commission shall use the rate of spending growth in 1991 as the 
base year for developing its plan.  The plan may include 
tentative targets for reducing the growth in spending for 
consideration by the legislature. 
    (b) In developing the plan, the commission shall consider 
the advisability and feasibility of the following options, but 
is not obligated to incorporate them into the plan: 
    (1) data and methods that could be used to calculate 
regional and statewide spending limits and the various options 
for expressing spending limits, such as maximum percentage 
growth rates or actuarially adjusted average per capita rates 
that reflect the demographics of the state or a region of the 
state; 
    (2) methods of adjusting spending limits to account for 
patients who are not Minnesota residents, to reflect care 
provided to a person outside the person's region, and to adjust 
for demographic changes over time; 
     (3) methods that could be used to monitor compliance with 
the limits; 
     (4) criteria for exempting spending on research and 
experimentation on new technologies and medical practices when 
setting or enforcing spending limits; 
     (5) methods that could be used to help providers, 
purchasers, consumers, and communities control spending growth; 
     (6) methods of identifying activities of consumers, 
providers, or purchasers that contribute to excessive growth in 
spending; 
     (7) methods of encouraging voluntary activities that will 
help keep spending within the limits; 
     (8) methods of consulting providers and obtaining their 
assistance and cooperation and safeguards that are necessary to 
protect providers from abrupt changes in revenues or practice 
requirements; 
     (9) methods of avoiding, preventing, or recovering spending 
in excess of the rate of growth identified by the commission; 
     (10) methods of depriving those who benefit financially 
from overspending of the benefit of overspending, including the 
option of recovering the amount of the excess spending from the 
greater provider community or from individual providers or 
groups of providers through targeted assessments; 
     (11) methods of reallocating health care resources among 
provider groups to correct existing inequities, reward desirable 
provider activities, discourage undesirable activities, or 
improve the quality, affordability, and accessibility of health 
care services; 
     (12) methods of imposing mandatory requirements relating to 
the delivery of health care, such as practice parameters, 
hospital admission protocols, 24-hour emergency care screening 
systems, or designated specialty providers; 
     (13) methods of preventing unfair health care practices 
that give a provider or group purchaser an unfair advantage or 
financial benefit or that significantly circumvent, subvert, or 
obstruct the goals of this chapter; 
     (14) methods of providing incentives through special 
spending allowances or other means to encourage and reward 
special projects to improve outcomes or quality of care; and 
     (15) the advisability or feasibility of a system of 
permanent, regional coordinating boards to ensure community 
involvement in activities to improve affordability, 
accessibility, and quality of health care in each region. 
    Sec. 4.  Minnesota Statutes 1992, section 62J.05, is 
amended by adding a subdivision to read: 
    Subd. 9.  [REPEALER.] This section is repealed effective 
July 1, 1996. 
    Sec. 5.  Minnesota Statutes 1992, section 62J.09, 
subdivision 2, is amended to read: 
    Subd. 2.  [MEMBERSHIP.] (a) [NUMBER OF MEMBERS.] 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 
in the member's absence.  The governor shall appoint the chair 
of each regional board from among its members.  The appointing 
authorities under each paragraph for which there is to be chosen 
more than one member shall consult prior to appointments being 
made to ensure that, to the extent possible, the board includes 
a representative from each county within the region.  
    (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. 6.  Minnesota Statutes 1992, section 62J.09, 
subdivision 5, is amended to read: 
    Subd. 5.  [CONFLICTS OF INTEREST.] No member may 
participate or vote in regional coordinating board proceedings 
involving an individual provider, purchaser, or patient, or a 
specific activity or transaction, if the member has a direct 
financial interest in the outcome of the regional coordinating 
board's proceedings other than as an individual consumer of 
health care services.  A member with a direct financial interest 
may participate in the proceedings, without voting, provided 
that the member discloses any direct financial interest to the 
regional coordinating board at the beginning of the proceedings. 
     Sec. 7.  Minnesota Statutes 1992, section 62J.09, is 
amended by adding a subdivision to read: 
    Subd. 6a.  [CONTRACTING.] The commissioner, at the request 
of a regional coordinating board, may contract on behalf of the 
board with an appropriate regional organization to provide staff 
support to the board, in order to assist the board in carrying 
out the duties assigned in this section. 
    Sec. 8.  Minnesota Statutes 1992, section 62J.09, 
subdivision 8, is amended to read: 
    Subd. 8.  [REPEALER.] This section is repealed effective 
July 1, 1993 1996. 
    Sec. 9.  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) [ACCESS.] "Access" has the meaning given in section 
62J.2912, subdivision 2. 
    (b) [CAPITAL EXPENDITURE.] "Capital expenditure" means an 
expenditure which, under generally accepted accounting 
principles, is not properly chargeable as an expense of 
operation and maintenance. 
    (c) [COST.] "Cost" means the amount paid by consumers or 
third party payers for health care services or products. 
    (d) [DATE OF THE MAJOR SPENDING COMMITMENT.] "Date of the 
major spending commitment" means the date the provider formally 
obligated itself to the major spending commitment.  The 
obligation may be incurred by entering into a contract, making a 
down payment, issuing bonds or entering a loan agreement to 
provide financing for the major spending commitment, or taking 
some other formal, tangible action evidencing the provider's 
intention to make the major spending commitment.  
    (b) (e) [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) (f) [MAJOR SPENDING COMMITMENT.] "Major spending 
commitment" means an expenditure in excess of $500,000 for: 
    (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) (g) [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) (h) [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.  
    Sec. 10.  Minnesota Statutes 1992, section 62J.17, is 
amended by adding a subdivision to read: 
    Subd. 4a.  [EXPENDITURE REPORTING.] (a) [GENERAL 
REQUIREMENT.] A provider making a major spending commitment 
after April 1, 1992, shall submit notification of the 
expenditure to the commissioner and provide the commissioner 
with any relevant background information.  
    (b) [REPORT.] Notification must include a report, submitted 
within 60 days after the date of the major spending commitment, 
using terms conforming to the definitions in section 62J.03 and 
this section.  Each report is subject to retrospective review 
and must contain:  
    (1) a detailed description of the major spending commitment 
and its purpose; 
    (2) the date of the major spending commitment; 
    (3) a statement of the expected impact that the major 
spending commitment will have on charges by the provider to 
patients and third party payors; 
    (4) a statement of the expected impact on the clinical 
effectiveness or quality of care received by the patients that 
the provider expects to serve; 
    (5) a statement of the extent to which equivalent services 
or technology are already available to the provider's actual and 
potential patient population; 
    (6) a statement of the distance from which the nearest 
equivalent services or technology are already available to the 
provider's actual and potential population; 
    (7) a statement describing the pursuit of any lawful 
collaborative arrangements; and 
    (8) a statement of assurance that the provider will not 
use, purchase, or perform health care technologies and 
procedures that are not clinically effective and cost-effective, 
unless the technology is used for experimental or research 
purposes to determine whether a technology or procedure is 
clinically effective and cost-effective.  
    The provider may submit any additional information that it 
deems relevant.  
    (c) [ADDITIONAL INFORMATION.] The commissioner may request 
additional information from a provider for the purpose of review 
of a report submitted by that provider, and may consider 
relevant information from other sources.  A provider shall 
provide any information requested by the commissioner within the 
time period stated in the request, or within 30 days after the 
date of the request if the request does not state a time.  
    (d) [FAILURE TO COMPLY.] If the provider fails to submit a 
complete and timely expenditure report, including any additional 
information requested by the commissioner, the commissioner may 
make the provider's subsequent major spending commitments 
subject to the procedures of prospective review and approval 
under subdivision 6a.  
    Sec. 11.  Minnesota Statutes 1992, section 62J.17, is 
amended by adding a subdivision to read: 
    Subd. 5a.  [RETROSPECTIVE REVIEW.] (a) The commissioner 
shall retrospectively review each major spending commitment and 
notify the provider of the results of the review.  The 
commissioner shall determine whether the major spending 
commitment was appropriate.  In making the determination, the 
commissioner may consider the following criteria:  the major 
spending commitment's impact on the cost, access, and quality of 
health care; the clinical effectiveness and cost-effectiveness 
of the major spending commitment; and the alternatives available 
to the provider. 
    (b) The commissioner may not prevent or prohibit a major 
spending commitment subject to retrospective review.  However, 
if the provider fails the retrospective review, any major 
spending commitments by that provider for the five-year period 
following the commissioner's decision are subject to prospective 
review under subdivision 6a.  
    Sec. 12.  Minnesota Statutes 1992, section 62J.17, is 
amended by adding a subdivision to read: 
    Subd. 6a.  [PROSPECTIVE REVIEW AND APPROVAL.] (a) 
[REQUIREMENT.] No health care provider subject to prospective 
review under this subdivision shall make a major spending 
commitment unless:  
    (1) the provider has filed an application with the 
commissioner to proceed with the major spending commitment and 
has provided all supporting documentation and evidence requested 
by the commissioner; and 
    (2) the commissioner determines, based upon this 
documentation and evidence, that the major spending commitment 
is appropriate under the criteria provided in subdivision 5a in 
light of the alternatives available to the provider.  
    (b) [APPLICATION.] A provider subject to prospective review 
and approval shall submit an application to the commissioner 
before proceeding with any major spending commitment.  The 
application must address each item listed in subdivision 4a, 
paragraph (a), and must also include documentation to support 
the response to each item.  The provider may submit information, 
with supporting documentation, regarding why the major spending 
commitment should be excepted from prospective review under 
paragraph (d).  The submission may be made either in addition to 
or instead of the submission of information relating to the 
items listed in subdivision 4a, paragraph (a).  
    (c) [REVIEW.] The commissioner shall determine, based upon 
the information submitted, whether the major spending commitment 
is appropriate under the criteria provided in subdivision 5a, or 
whether it should be excepted from prospective review under 
paragraph (d).  In making this determination, the commissioner 
may also consider relevant information from other sources.  At 
the request of the commissioner, the Minnesota health care 
commission shall convene an expert review panel made up of 
persons with knowledge and expertise regarding medical 
equipment, specialized services, health care expenditures, and 
capital expenditures to review applications and make 
recommendations to the commissioner.  The commissioner shall 
make a decision on the application within 60 days after an 
application is received.  
    (d) [EXCEPTIONS.] The prospective review and approval 
process 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. 
    (e) [NOTIFICATION REQUIRED FOR EXCEPTED MAJOR SPENDING 
COMMITMENT.] A provider making a major spending commitment 
covered by paragraph (d) shall provide notification of the major 
spending commitment as provided under subdivision 4a. 
    (f) [PENALTIES AND REMEDIES.] The commissioner of health 
has the authority to issue fines, seek injunctions, and pursue 
other remedies as provided by law. 
    Sec. 13.  Minnesota Statutes 1992, section 62J.23, is 
amended by adding a subdivision to read: 
    Subd. 4.  [INTEGRATED SERVICE NETWORKS.] (a) The 
legislature finds that the formation and operation of integrated 
service networks will accomplish the purpose of the federal 
Medicare antikickback statute, which is to reduce the 
overutilization and overcharging that may result from 
inappropriate provider incentives.  Accordingly, it is the 
public policy of the state of Minnesota to support the 
development of integrated service networks.  The legislature 
finds that the federal Medicare antikickback laws should not be 
interpreted to interfere with the development of integrated 
service networks or to impose liability for arrangements between 
an integrated service network and its participating entities. 
    (b) An arrangement between an integrated service network 
and any or all of its participating entities is not subject to 
liability under subdivisions 1 and 2. 
    Sec. 14.  [62J.2911] [ANTITRUST EXCEPTIONS; 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 cooperative 
arrangements involving providers or purchasers that might be 
prohibited by state and federal antitrust laws if undertaken 
without governmental involvement.  The purpose of sections 
62J.2911 to 62J.2921 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 marketplace.  The legislature intends that approval of 
arrangements be accompanied by appropriate conditions, 
supervision, and regulation to protect against private abuses of 
economic power, and that an arrangement approved by the 
commissioner and accompanied by such appropriate conditions, 
supervision, and regulation shall not be subject to state and 
federal antitrust liability. 
    Sec. 15.  [62J.2912] [DEFINITIONS.] 
    Subdivision 1.  [SCOPE.] For purposes of sections 62J.2911 
to 62J.2921, the terms defined in this section have the meanings 
given them. 
    Subd. 2.  [ACCESS.] "Access" means the financial, temporal, 
and geographic availability of health care to individuals who 
need it. 
    Subd. 3.  [APPLICANT.] "Applicant" means the party or 
parties to an agreement or business arrangement for which the 
commissioner's approval is sought under this section. 
    Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
commissioner of health. 
    Subd. 5.  [CONTESTED CASE.] "Contested case" means a 
proceeding conducted by the office of administrative hearings 
under sections 14.57 to 14.62. 
    Subd. 6.  [COST OR COST OF HEALTH CARE.] "Cost" or "cost of 
health care" means the amount paid by consumers or third party 
payers for health care services or products. 
    Subd. 7.  [CRITERIA.] "Criteria" means the cost, access, 
and quality of health care. 
    Subd. 8.  [HEALTH CARE PRODUCTS.] "Health care products" 
means durable medical equipment and "medical equipment" as 
defined in section 62J.17, subdivision 2, paragraph (g). 
    Subd. 9.  [HEALTH CARE SERVICE.] "Health care service" has 
the meaning given in section 62J.17, subdivision 2, paragraph 
(e). 
    Subd. 10.  [PERSON.] "Person" means an individual or legal 
entity. 
    Sec. 16.  [62J.2913] [SCOPE.] 
    Subdivision 1.  [AVAILABILITY OF EXCEPTION.] Providers or 
purchasers wishing to engage in contracts, business or financial 
arrangements, or other activities, practices, or arrangements 
that might be construed to be violations of state or federal 
antitrust laws but which are in the best interests of the state 
and further the policies and goals of this chapter may apply to 
the commissioner for an exception. 
    Subd. 2.  [ABSOLUTE DEFENSE.] Approval by the commissioner 
is an absolute defense against any action under state and 
federal antitrust laws, except as provided under section 
62J.2921, subdivision 5. 
    Subd. 3.  [APPLICATION CANNOT BE USED TO IMPOSE LIABILITY.] 
The commissioner may ask the attorney general to comment on an 
application.  The application and any information obtained by 
the commissioner under sections 62J.2914 to 62J.2916 that is not 
otherwise available is not admissible in any civil or criminal 
proceeding brought by the attorney general or any other person 
based on an antitrust claim, except:  
    (1) a proceeding brought under section 62J.2921, 
subdivision 5, based on an applicant's failure to substantially 
comply with the terms of the application; or 
    (2) a proceeding based on actions taken by the applicant 
prior to submitting the application, where such actions are 
admitted to in the application. 
    Subd. 4.  [OUT-OF-STATE APPLICANTS.] Providers or 
purchasers not physically located in Minnesota are eligible to 
seek an exception for arrangements in which they transact 
business in Minnesota as defined in section 295.51. 
    Sec. 17.  [62J.2914] [APPLICATION.] 
    Subdivision 1.  [DISCLOSURE.] An application for approval 
must include, to the extent applicable, disclosure of the 
following: 
    (1) a descriptive title; 
    (2) a table of contents; 
    (3) exact names of each party to the application and the 
address of the principal business office of each party; 
    (4) the name, address, and telephone number of the persons 
authorized to receive notices and communications with respect to 
the application; 
    (5) a verified statement by a responsible officer of each 
party to the application attesting to the accuracy and 
completeness of the enclosed information; 
    (6) background information relating to the proposed 
arrangement, including: 
    (i) a description of the proposed arrangement, including a 
list of any services or products that are the subject of the 
proposed arrangement; 
    (ii) an identification of any tangential services or 
products associated with the services or products that are the 
subject of the proposed arrangement; 
    (iii) a description of the geographic territory involved in 
the proposed arrangement; 
    (iv) if the geographic territory described in item (iii), 
is different from the territory in which the applicants have 
engaged in the type of business at issue over the last five 
years, a description of how and why the geographic territory 
differs; 
    (v) identification of all products or services that a 
substantial share of consumers would consider substitutes for 
any service or product that is the subject of the proposed 
arrangement; 
    (vi) identification of whether any services or products of 
the proposed arrangement are currently being offered, capable of 
being offered, utilized, or capable of being utilized by other 
providers or purchasers in the geographic territory described in 
item (iii); 
    (vii) identification of the steps necessary, under current 
market and regulatory conditions, for other parties to enter the 
territory described in item (iii) and compete with the 
applicant; 
    (viii) a description of the previous history of dealings 
between the parties to the application; 
    (ix) a detailed explanation of the projected effects, 
including expected volume, change in price, and increased 
revenue, of the arrangement on each party's current businesses, 
both generally as well as the aspects of the business directly 
involved in the proposed arrangement; 
    (x) the present market share of the parties to the 
application and of others affected by the proposed arrangement, 
and projected market shares after implementation of the proposed 
arrangement; 
    (xi) a statement of why the projected levels of cost, 
access, or quality could not be achieved in the existing market 
without the proposed arrangement; and 
    (xii) an explanation of how the arrangement relates to any 
Minnesota health care commission or applicable regional 
coordinating board plans for delivery of health care; and 
    (7) a detailed explanation of how the transaction will 
affect cost, access, and quality.  The explanation must address 
the factors in section 62J.2917, subdivision 2, paragraphs (b) 
to (d), to the extent applicable. 
    Subd. 2.  [STATE REGISTER NOTICE.] In addition to the 
disclosures required in subdivision 1, the application must 
contain a written description of the proposed arrangement for 
purposes of publication in the State Register.  The notice must 
include sufficient information to advise the public of the 
nature of the proposed arrangement and to enable the public to 
provide meaningful comments concerning the expected results of 
the arrangement.  The notice must also state that any person may 
provide written comments to the commissioner, with a copy to the 
applicant, within 20 days of the notice's publication.  The 
commissioner shall approve the notice before publication.  If 
the commissioner determines that the submitted notice does not 
provide sufficient information, the commissioner may amend the 
notice before publication and may consult with the applicant in 
preparing the amended notice.  The commissioner shall not 
publish an amended notice without the applicant's approval. 
    Subd. 3.  [MULTIPLE PARTIES TO A PROPOSED ARRANGEMENT.] For 
a proposed arrangement involving multiple parties, one joint 
application must be submitted on behalf of all parties to the 
arrangement. 
    Subd. 4.  [FILING FEE.] An application must be accompanied 
by a filing fee, which must be deposited in the health care 
access fund.  The total of the deposited application fees is 
appropriated annually to the commissioner to administer the 
antitrust exceptions program.  The filing fee is $1,000 for any 
application submitted by parties whose combined gross revenues 
exceeded $20 million in the most recent calendar or fiscal year 
for which such figures are available.  The filing fee for all 
other applications is $250. 
    Subd. 5.  [TRADE SECRET INFORMATION; PROTECTION.] Trade 
secret information, as defined in section 13.37, subdivision 1, 
paragraph (b), must be protected to the extent required under 
chapter 13.  
    Subd. 6.  [COMMISSIONER'S AUTHORITY TO REFUSE TO 
REVIEW.] (a) If the commissioner determines that an application 
is unclear, incomplete, or provides an insufficient basis on 
which to base a decision, the commissioner may return the 
application.  The applicant may complete or revise the 
application and resubmit it. 
    (b) If, upon review of the application and upon advice from 
the attorney general, the commissioner concludes that the 
proposed arrangement does not present any potential for 
liability under the state or federal antitrust laws, the 
commissioner may decline to review the application and so notify 
the applicant. 
    (c) The commissioner may decline to review any application 
relating to arrangements already in effect before the submission 
of the application.  However, the commissioner shall review any 
application if the review is expressly provided for in a 
settlement agreement entered into before the enactment of this 
section by the applicant and the attorney general. 
     Subd. 7.  [COMMISSIONER'S AUTHORITY TO EXTEND TIME LIMIT.] 
Upon the showing of good cause, the commissioner may extend any 
of the time limits stated in sections 62J.2915 and 62J.2916 at 
the request of the applicant or another person. 
    Sec. 18.  [62J.2915] [NOTICE AND COMMENT.] 
    Subdivision 1.  [NOTICE.] The commissioner shall cause the 
notice described in section 62J.2914, subdivision 2, to be 
published in the State Register and sent to the Minnesota health 
care commission, the regional coordinating boards for any 
regions that include all or part of the territory covered by the 
proposed arrangement, and any person who has requested to be 
placed on a list to receive notice of applications.  The 
commissioner may maintain separate notice lists for different 
regions of the state.  The commissioner may also send a copy of 
the notice to any person together with a request that the person 
comment as provided under subdivision 2.  Copies of the request 
must be provided to the applicant. 
    Subd. 2.  [COMMENTS.] Within 20 days after the notice is 
published, any person may mail to the commissioner written 
comments with respect to the application.  Within 30 days after 
the notice is published, the Minnesota health care commission or 
any regional coordinating board may mail to the commissioner 
comments with respect to the application.  Persons submitting 
comments shall provide a copy of the comments to the applicant.  
The applicant may mail to the commissioner written responses to 
any comments within ten days after the deadline for mailing such 
comments.  The applicant shall send a copy of the response to 
the person submitting the comment. 
    Sec. 19.  [62J.2916] [PROCEDURE FOR REVIEW OF 
APPLICATIONS.] 
    Subdivision 1.  [CHOICE OF PROCEDURES.] After the 
conclusion of the period provided in section 62J.2915, 
subdivision 2, for the applicant to respond to comments, the 
commissioner shall select one of the three procedures provided 
in subdivision 2.  In determining which procedure to use, the 
commissioner shall consider the following criteria: 
    (1) the size of the proposed arrangement, in terms of 
number of parties and amount of money involved; 
    (2) the complexity of the proposed arrangement; 
    (3) the novelty of the proposed arrangement; 
    (4) the substance and quantity of the comments received; 
    (5) any comments received from the Minnesota health care 
commission or regional coordinating boards; and 
    (6) the presence or absence of any significant gaps in the 
factual record. 
    If the applicant demands a contested case hearing no later 
than the conclusion of the period provided in section 62J.2915, 
subdivision 2, for the applicant to respond to comments, the 
commissioner shall not select a procedure.  Instead, the 
applicant shall be given a contested case proceeding as a matter 
of right. 
    Subd. 2.  [PROCEDURES AVAILABLE.] (a) [DECISION ON THE 
WRITTEN RECORD.] The commissioner may issue a decision based on 
the application, the comments, and the applicant's responses to 
the comments, to the extent each is relevant.  In making the 
decision, the commissioner may consult with staff of the 
department of health and may rely on department of health data. 
    (b) [LIMITED HEARING.] (1) The commissioner may order a 
limited hearing.  A copy of the order must be mailed to the 
applicant and to all persons who have submitted comments or 
requested to be kept informed of the proceedings involving the 
application.  The order must state the date, time, and location 
of the limited hearing and must identify specific issues to be 
addressed at the limited hearing.  The issues may include the 
feasibility and desirability of one or more alternatives to the 
proposed arrangement.  The order must require the applicant to 
submit written evidence, in the form of affidavits and 
supporting documents, addressing the issues identified, within 
20 days after the date of the order.  The order shall also state 
that any person may arrange to receive a copy of the written 
evidence from the commissioner, at the person's expense, and may 
provide written comments on the evidence within 40 days after 
the date of the order.  A person providing written comments 
shall provide a copy of the comments to the applicant. 
    (2) The limited hearing must be held before the 
commissioner or department of health staff member designated by 
the commissioner.  The commissioner or the commissioner's 
designee shall question the applicant about the evidence 
submitted by the applicant.  The questions may address relevant 
issues identified in the comments submitted in response to the 
written evidence or identified by department of health staff or 
brought to light by department of health data.  At the 
conclusion of the applicant's responses to the questions, any 
person who submitted comments about the applicant's written 
evidence may make a statement addressing the applicant's 
responses to the questions.  The commissioner or the 
commissioner's designee may ask questions of any person making a 
statement.  At the conclusion of all statements, the applicant 
may make a closing statement. 
    (3) The commissioner's decision after a limited hearing 
must be based upon the application, the comments, the 
applicant's response to the comments, the applicant's written 
evidence, the comments in response to the written evidence, and 
the information presented at the limited hearing, to the extent 
each is relevant.  In making the decision, the commissioner may 
consult with staff of the department of health and may rely on 
department of health data. 
    (c) [CONTESTED CASE HEARING.] The commissioner may order a 
contested case hearing.  A contested case hearing shall be tried 
before an administrative law judge who shall issue a written 
recommendation to the commissioner and shall follow the 
procedures in sections 14.57 to 14.62.  All factual issues 
relevant to a decision must be presented in the contested case.  
The attorney general may appear as a party.  Additional parties 
may appear to the extent permitted under sections 14.57 to 
14.62.  The record in the contested case includes the 
application, the comments, the applicant's response to the 
comments, and any other evidence that is part of the record 
under sections 14.57 to 14.62. 
    Sec. 20.  [62J.2917] [CRITERIA FOR DECISION.] 
    Subdivision 1.  [CRITERIA.] The commissioner shall not 
approve an application unless the commissioner determines that 
the arrangement is more likely to result in lower costs, 
increased access, or increased quality of health care, than 
would otherwise occur under existing market conditions or 
conditions likely to develop without an exemption from state and 
federal antitrust law.  In the event that a proposed arrangement 
appears likely to improve one or two of the criteria at the 
expense of another one or two of the criteria, the commissioner 
shall not approve the application unless the commissioner 
determines that the proposed arrangement, taken as a whole, is 
likely to substantially further the purpose of this chapter.  In 
making such a determination, the commissioner may employ a 
cost/benefit analysis. 
    Subd. 2.  [FACTORS.] (a) [GENERALLY APPLICABLE FACTORS.] In 
making a determination about cost, access, and quality, the 
commissioner may consider the following factors, to the extent 
relevant: 
    (1) whether the proposal is compatible with the cost 
containment plan or other plan of the Minnesota health care 
commission or the applicable regional plans of the regional 
coordinating boards; 
    (2) market structure: 
    (i) actual and potential sellers and buyers, or providers 
and purchasers; 
    (ii) actual and potential consumers; 
    (iii) geographic market area; and 
    (iv) entry conditions; 
    (3) current market conditions; 
    (4) the historical behavior of the market; 
    (5) performance of other, similar arrangements; 
    (6) whether the proposal unnecessarily restrains 
competition or restrains competition in ways not reasonably 
related to the purposes of this chapter; and 
    (7) the financial condition of the applicant. 
    (b) [COST.] The commissioner's analysis of cost must focus 
on the individual consumer of health care.  Cost savings to be 
realized by providers, health carriers, group purchasers, or 
other participants in the health care system are relevant only 
to the extent that the savings are likely to be passed on to the 
consumer.  However, where an application is submitted by 
providers or purchasers who are paid primarily by third party 
payers unaffiliated with the applicant, it is sufficient for the 
applicant to show that cost savings are likely to be passed on 
to the unaffiliated third party payers; the applicants do not 
have the burden of proving that third party payers with whom the 
applicants are not affiliated will pass on cost savings to 
individuals receiving coverage through the third party payers.  
In making determinations as to costs, the commissioner may 
consider: 
    (1) the cost savings likely to result to the applicant; 
    (2) the extent to which the cost savings are likely to be 
passed on to the consumer and in what form; 
    (3) the extent to which the proposed arrangement is likely 
to result in cost shifting by the applicant onto other payers or 
purchasers of other products or services; 
    (4) the extent to which the cost shifting by the applicant 
is likely to be followed by other persons in the market; 
    (5) the current and anticipated supply and demand for any 
products or services at issue; 
    (6) the representations and guarantees of the applicant and 
their enforceability; 
    (7) likely effectiveness of regulation by the commissioner; 
    (8) inferences to be drawn from market structure; 
    (9) the cost of regulation, both for the state and for the 
applicant; and 
    (10) any other factors tending to show that the proposed 
arrangement is or is not likely to reduce cost. 
    (c) [ACCESS.] In making determinations as to access, the 
commissioner may consider: 
    (1) the extent to which the utilization of needed health 
care services or products by the intended targeted population is 
likely to increase or decrease.  When a proposed arrangement is 
likely to increase access in one geographic area, by lowering 
prices or otherwise expanding supply, but limits access in 
another geographic area by removing service capabilities from 
that second area, the commissioner shall articulate the criteria 
employed to balance these effects; 
    (2) the extent to which the proposed arrangement is likely 
to make available a new and needed service or product to a 
certain geographic area; and 
    (3) the extent to which the proposed arrangement is likely 
to otherwise make health care services or products more 
financially or geographically available to persons who need them.
    If the commissioner determines that the proposed 
arrangement is likely to increase access and bases that 
determination on a projected increase in utilization, the 
commissioner shall also determine and make a specific finding 
that the increased utilization does not reflect overutilization. 
    (d) [QUALITY.] In making determinations as to quality, the 
commissioner may consider the extent to which the proposed 
arrangement is likely to: 
    (1) decrease morbidity and mortality; 
    (2) result in faster convalescence; 
    (3) result in fewer hospital days; 
    (4) permit providers to attain needed experience or 
frequency of treatment, likely to lead to better outcomes; 
    (5) increase patient satisfaction; and 
    (6) have any other features likely to improve or reduce the 
quality of health care. 
    Sec. 21.  [62J.2918] [DECISION.] 
    Subdivision 1.  [APPROVAL OR DISAPPROVAL.] The commissioner 
shall issue a written decision approving or disapproving the 
application.  The commissioner may condition approval on a 
modification of all or part of the proposed arrangement to 
eliminate any restriction on competition that is not reasonably 
related to the goals of reducing cost or improving access or 
quality.  The commissioner may also establish conditions for 
approval that are reasonably necessary to protect against abuses 
of private economic power and to ensure that the arrangement is 
appropriately supervised and regulated by the state. 
    Subd. 2.  [FINDINGS OF FACT.] The commissioner's decision 
shall make specific findings of fact concerning the cost, 
access, and quality criteria, and identify one or more of those 
criteria as the basis for the decision. 
    Subd. 3.  [DATA FOR SUPERVISION.] A decision approving an 
application must require the periodic submission of specific 
data relating to cost, access, and quality, and to the extent 
feasible, identify objective standards of cost, access, and 
quality by which the success of the arrangement will be 
measured.  However, if the commissioner determines that the 
scope of a particular proposed arrangement is such that the 
arrangement is certain to have neither a positive or negative 
impact on one or two of the criteria, the commissioner's 
decision need not require the submission of data or establish an 
objective standard relating to those criteria. 
    Sec. 22.  [62J.2919] [APPEAL.] 
    After the commissioner has rendered a decision, the 
applicant or any other person aggrieved may appeal the decision 
to the Minnesota court of appeals within 30 days after receipt 
of the commissioner's decision.  The appeal is governed by 
sections 14.63 to 14.69.  The appellate process does not include 
a contested case under sections 14.57 to 14.62.  The 
commissioner's determination, under section 62J.2916, 
subdivision 1, of which procedure to use may not be raised as an 
issue on appeal. 
    Sec. 23.  [62J.2920] [SUPERVISION AFTER APPROVAL.] 
    Subdivision 1.  [APPROPRIATE SUPERVISION.] The commissioner 
shall appropriately supervise, monitor, and regulate approved 
arrangements.  
    Subd. 2.  [PROCEDURES.] The commissioner shall review data 
submitted periodically by the applicant.  The commissioner's 
order shall set forth the time schedule for the submission of 
data, which shall be at least once a year.  The commissioner's 
order must identify the data that must be submitted, although 
the commissioner may subsequently require the submission of 
additional data or alter the time schedule.  Upon review of the 
data submitted, the commissioner shall notify the applicant of 
whether the arrangement is in compliance with the commissioner's 
order.  If the arrangement is not in compliance with the 
commissioner's order, the commissioner shall identify those 
respects in which the arrangement does not conform to the 
commissioner's order. 
    An applicant receiving notification that an arrangement is 
not in compliance has 30 days in which to respond with 
additional data.  The response may include a proposal and a time 
schedule by which the applicant will bring the arrangement into 
compliance with the commissioner's order.  If the arrangement is 
not in compliance and the commissioner and the applicant cannot 
agree to the terms of bringing the arrangement into compliance, 
the matter shall be set for a contested case hearing. 
    The commissioner shall publish notice in the State Register 
two years after the date of an order approving an application, 
and at two-year intervals thereafter, soliciting comments from 
the public concerning the impact that the arrangement has had on 
cost, access, and quality.  The commissioner may request 
additional oral or written information from the applicant or 
from any other source. 
    Subd. 3.  [STUDY.] The commissioner shall study and make 
recommendations by January 15, 1995, on the appropriate length 
and scope of supervision of arrangements approved for exemption 
from the antitrust laws.  
    Sec. 24.  [62J.2921] [REVOCATION.] 
    Subdivision 1.  [CONDITIONS.] The commissioner may revoke 
approval of a cooperative arrangement only if: 
    (1) the arrangement is not in substantial compliance with 
the terms of the application; 
    (2) the arrangement is not in substantial compliance with 
the conditions of approval; 
    (3) the arrangement has not and is not likely to 
substantially achieve the improvements in cost, access, or 
quality identified in the approval order as the basis for the 
commissioner's approval of the arrangement; or 
    (4) the conditions in the marketplace have changed to such 
an extent that competition would promote reductions in cost and 
improvements in access and quality better than does the 
arrangement at issue.  In order to revoke on the basis that 
conditions in the marketplace have changed, the commissioner's 
order must identify specific changes in the marketplace and 
articulate why those changes warrant revocation. 
    Subd. 2.  [NOTICE.] The commissioner shall begin a 
proceeding to revoke approval by providing written notice to the 
applicant describing in detail the basis for the proposed 
revocation.  Notice of the proceeding must be published in the 
State Register and submitted to the Minnesota health care 
commission and the applicable regional coordinating boards.  The 
notice must invite the submission of comments to the 
commissioner. 
    Subd. 3.  [PROCEDURE.] A proceeding to revoke an approval 
must be conducted as a contested case proceeding upon the 
written request of the applicant.  Decisions of the commissioner 
in a proceeding to revoke approval are subject to judicial 
review under sections 14.63 to 14.69. 
    Subd. 4.  [ALTERNATIVES TO REVOCATION PREFERRED.] In 
deciding whether to revoke an approval, the commissioner shall 
take into account the hardship that the revocation may impose on 
the applicant and any potential disruption of the market as a 
whole.  The commissioner shall not revoke an approval if the 
arrangement can be modified, restructured, or regulated so as to 
remedy the problem upon which the revocation proceeding is based.
The applicant may submit proposals for alternatives to 
revocation.  Before approving an alternative to revocation that 
involves modifying or restructuring an arrangement, the 
commissioner shall publish notice in the State Register that any 
person may comment on the proposed modification or restructuring 
within 20 days after publication of the notice.  The 
commissioner shall not approve the modification or restructuring 
until the comment period has concluded.  An approved modified or 
restructured arrangement is subject to appropriate supervision 
under section 62J.2920.  
    Subd. 5.  [IMPACT OF REVOCATION.] An applicant that has had 
its approval revoked is not required to terminate the 
arrangement.  The applicant cannot be held liable under state or 
federal antitrust law for acts that occurred while the approval 
was in effect, except to the extent that the applicant failed to 
substantially comply with the terms of its application or failed 
to substantially comply with the terms of the approval.  The 
applicant is fully subject to state and federal antitrust law 
after the revocation becomes effective and may be held liable 
for acts that occur after the revocation. 
    Sec. 25.  [UNIVERSAL COVERAGE PLAN.] 
    The health care commission shall develop and submit to the 
legislature and the governor by December 15, 1993, a 
comprehensive plan that will lead to universal health coverage 
for all Minnesotans by January 1, 1997.  The plan must include 
an implementation plan and time schedule for the coordinated 
phasing in of health insurance reforms, including the expansion 
of community rating and the phasing out of underwriting 
restrictions, changes or expansions in government programs, and 
other actions recommended by the commission.  The plan must also 
include annual targets for expanding coverage to uninsured 
persons and populations and periodic evaluations of the progress 
being made toward achieving annual targets and universal 
coverage. 
    Sec. 26.  [REPEALER.] 
    Minnesota Statutes 1992, sections 62J.17, subdivisions 4, 
5, and 6; and 62J.29, are repealed.  
    Sec. 27.  [EFFECTIVE DATE.] 
    Sections 1 to 24 are effective the day following final 
enactment.  Sections 9 to 12 apply retroactively to any major 
spending commitment entered into after April 1, 1992, except 
that the requirements of section 62J.17, subdivision 4a, 
paragraph (a), that a report be submitted within 60 days after a 
major spending commitment and that a report include the items 
specifically listed are not retroactive. 

                               ARTICLE 7 

                    SMALL EMPLOYER INSURANCE REFORM 
     Section 1.  Minnesota Statutes 1992, section 62L.02, 
subdivision 19, is amended to read: 
    Subd. 19.  [LATE ENTRANT.] "Late entrant" means an eligible 
employee or dependent who requests enrollment in a health 
benefit plan of a small employer following the initial 
enrollment period applicable to the employee or dependent under 
the terms of the health benefit plan, provided that the initial 
enrollment period must be a period of at least 30 days.  
However, an eligible employee or dependent must not be 
considered a late entrant if: 
    (1) the individual was covered under qualifying existing 
coverage at the time the individual was eligible to enroll in 
the health benefit plan, declined enrollment on that basis, and 
presents to the carrier a certificate of termination of the 
qualifying prior coverage, due to loss of eligibility for that 
coverage, provided that the individual maintains continuous 
coverage.  For purposes of this clause, eligibility for prior 
coverage does not include eligibility for continuation coverage 
required under state or federal law; 
    (2) the individual has lost coverage under another group 
health plan due to the expiration of benefits available under 
the Consolidated Omnibus Budget Reconciliation Act of 1985, 
Public Law Number 99-272, as amended, and any state continuation 
laws applicable to the employer or carrier, provided that the 
individual maintains continuous coverage; 
    (3) the individual is a new spouse of an eligible employee, 
provided that enrollment is requested within 30 days of becoming 
legally married; 
    (4) the individual is a new dependent child of an eligible 
employee, provided that enrollment is requested within 30 days 
of becoming a dependent; 
    (5) the individual is employed by an employer that offers 
multiple health benefit plans and the individual elects a 
different plan during an open enrollment period; or 
    (6) a court has ordered that coverage be provided for a 
dependent child under a covered employee's health benefit plan 
and request for enrollment is made within 30 days after issuance 
of the court order. 
    Sec. 2.  Minnesota Statutes 1992, section 62L.02, 
subdivision 26, is amended to read: 
    Subd. 26.  [SMALL EMPLOYER.] "Small employer" means a 
person, firm, corporation, partnership, association, or other 
entity actively engaged in business who, on at least 50 percent 
of its working days during the preceding calendar year, employed 
no fewer than two nor more than 29 eligible employees, the 
majority of whom were employed in this state.  If a small 
employer has only two eligible employees, one employee must not 
be the spouse, child, sibling, parent, or grandparent of the 
other, except that If an employer has only two eligible 
employees and one is the spouse, child, sibling, parent, or 
grandparent of the other, the employer must be a Minnesota 
domiciled employer and have paid social security or 
self-employment tax on behalf of both eligible employees.  A 
small employer plan may be offered through a domiciled 
association to self-employed individuals and small employers who 
are members of the association, even if the self-employed 
individual or small employer has fewer than two employees or the 
employees are family members.  Entities that are eligible to 
file a combined tax return for purposes of state tax laws are 
considered a single employer for purposes of determining the 
number of eligible employees.  Small employer status must be 
determined on an annual basis as of the renewal date of the 
health benefit plan.  The provisions of this chapter continue to 
apply to an employer who no longer meets the requirements of 
this definition until the annual renewal date of the employer's 
health benefit plan.  Where an association, described in section 
62A.10, subdivision 1, comprised of employers contracts with a 
health carrier to provide coverage to its members who are small 
employers, the association may elect to shall be considered to 
be a small employer, with respect to those employers in the 
association that employ no fewer than two nor more than 29 
eligible employees, even though the association provides 
coverage to more than 29 employees of its members, so long as 
each employer that is provided coverage through the association 
qualifies as a small employer.  An association's election to be 
considered a small employer under this section is not effective 
unless filed with the commissioner of commerce.  The association 
may revoke its election at any time by filing notice of 
revocation with the commissioner. its members that do not 
qualify as small employers.  An association in existence prior 
to July 1, 1993, is exempt from this chapter with respect to 
small employers that are members as of that date.  However, in 
providing coverage to new groups after July 1, 1993, the 
existing association must comply with all requirements of 
chapter 62L.  Existing associations must register with the 
commissioner of commerce prior to July 1, 1993.  If an employer 
has employees covered under a trust established in a collective 
bargaining agreement under the federal Labor-Management 
Relations Act of 1947, United States Code, title 29, section 
141, et seq., as amended, those employees are excluded in 
determining whether the employer qualifies as a small employer. 
    Sec. 3.  Minnesota Statutes 1992, section 62L.02, 
subdivision 27, is amended to read: 
    Subd. 27.  [SMALL EMPLOYER MARKET.] (a) "Small employer 
market" means the market for health benefit plans for small 
employers. 
    (b) A health carrier is considered to be participating in 
the small employer market if the carrier offers, sells, issues, 
or renews a health benefit plan to:  (1) any small employer; or 
(2) the eligible employees of a small employer offering a health 
benefit plan if, with the knowledge of the health carrier, both 
either of the following conditions are is met: 
    (i) any portion of the premium or benefits is paid for or 
reimbursed by a small employer; and or 
    (ii) the health benefit plan is treated by the employer or 
any of the eligible employees or dependents as part of a plan or 
program for the purposes of the Internal Revenue Code, section 
106, 125, or 162. 
    Sec. 4.  Minnesota Statutes 1992, section 62L.03, 
subdivision 3, is amended to read: 
    Subd. 3.  [MINIMUM PARTICIPATION AND CONTRIBUTION.] (a) A 
small employer that has at least 75 percent of its eligible 
employees who have not waived coverage participating in a health 
benefit plan and that contributes at least 50 percent toward the 
cost of coverage of eligible employees must be guaranteed 
coverage from any health carrier participating in the small 
employer market.  The participation level of eligible employees 
must be determined at the initial offering of coverage and at 
the renewal date of coverage.  A health carrier may not increase 
the participation requirements applicable to a small employer at 
any time after the small employer has been accepted for 
coverage.  For the purposes of this subdivision, waiver of 
coverage includes only waivers due to coverage under another 
group health plan. 
    (b) A health carrier may require that small employers 
contribute a specified minimum percentage toward the cost of the 
coverage of eligible employees, so long as the requirement is 
uniformly applied for all small employers 
    (b) If a small employer does not satisfy the contribution 
or participation requirements under this subdivision, a health 
carrier may voluntarily issue or renew individual coverage or a 
health benefit plan which, except for guaranteed issue, must 
fully comply with this chapter.  A health carrier that provides 
group coverage to a small employer that does not meet the 
contribution or participation requirements of this subdivision 
must maintain this information in its files for audit by the 
commissioner.  A health carrier may not offer individual 
coverage, purchased through an arrangement between the employer 
and the health carrier, to any employee unless the health 
carrier also offers coverage, on a guaranteed issue basis, to 
all other employees of the same employer. 
    For the small employer plans, a health carrier must require 
that small employers contribute at least 50 percent of the cost 
of the coverage of eligible employees.  The health carrier must 
impose this requirement on a uniform basis for both small 
employer plans and for all small employers. 
    (c) Nothing in this section obligates a health carrier to 
issue coverage to a small employer that currently offers 
coverage through a health benefit plan from another health 
carrier, unless the new coverage will replace the existing 
coverage and not serve as one of two or more health benefit 
plans offered by the employer. 
    Sec. 5.  Minnesota Statutes 1992, section 62L.03, 
subdivision 4, is amended to read: 
    Subd. 4.  [UNDERWRITING RESTRICTIONS.] Health carriers may 
apply underwriting restrictions to coverage for health benefit 
plans for small employers, including any preexisting condition 
limitations, only as expressly permitted under this 
chapter.  For purposes of this subdivision, "underwriting 
restrictions" means any refusal of the health carrier to issue 
or renew coverage, any premium rate higher than the lowest rate 
charged by the health carrier for the same coverage, or any 
preexisting condition limitation or exclusion.  Health carriers 
may collect information relating to the case characteristics and 
demographic composition of small employers, as well as health 
status and health history information about employees of small 
employers.  Except as otherwise authorized for late entrants, 
preexisting conditions may be excluded by a health carrier for a 
period not to exceed 12 months from the effective date of 
coverage of an eligible employee or dependent.  When calculating 
a preexisting condition limitation, a health carrier shall 
credit the time period an eligible employee or dependent was 
previously covered by qualifying prior coverage, provided that 
the individual maintains continuous coverage.  Late entrants may 
be subject to a preexisting condition limitation not to exceed 
18 months from the effective date of coverage of the late 
entrant.  Late entrants may also be excluded from coverage for a 
period not to exceed 18 months, provided that if a health 
carrier imposes an exclusion from coverage and a preexisting 
condition limitation, the combined time period for both the 
coverage exclusion and preexisting condition limitation must not 
exceed 18 months.  A health carrier shall, at the time of first 
issuance or renewal of a health benefit plan on or after July 1, 
1993, credit against any preexisting condition limitation or 
exclusion permitted under this section, the time period prior to 
July 1, 1993, during which an eligible employee or dependent was 
covered by qualifying existing coverage or qualifying prior 
coverage, if the person has maintained continuous coverage.  
    Sec. 6.  Minnesota Statutes 1992, section 62L.04, 
subdivision 1, is amended to read: 
    Subdivision 1.  [APPLICABILITY OF CHAPTER REQUIREMENTS.] 
Beginning July 1, 1993, health carriers participating in the 
small employer market must offer and make available any health 
benefit plan that they offer, including both of the small 
employer plans provided in section 62L.05, to all small 
employers who satisfy the small employer participation and 
contribution requirements specified in this chapter.  Compliance 
with these requirements is required as of the first renewal date 
of any small employer group occurring after July 1, 1993.  For 
new small employer business, compliance is required as of the 
first date of offering occurring after July 1, 1993. 
    Compliance with these requirements is required as of the 
first renewal date occurring after July 1, 1994, with respect to 
employees of a small employer who had been issued individual 
coverage prior to July 1, 1993, administered by the health 
carrier on a group basis.  Notwithstanding any other law to the 
contrary, the health carrier shall offer to terminate any 
individual coverage for employees of small employers who satisfy 
the small employer participation requirements specified in 
section 62L.03 and offer to replace it with a health benefit 
plan.  If the employer elects not to purchase a health benefit 
plan, the health carrier must offer all covered employees and 
dependents the option of maintaining their current coverage, 
administered on an individual basis, or replacement individual 
coverage.  Small employer and replacement individual coverage 
provided under this subdivision must be without application of 
underwriting restrictions, provided continuous coverage is 
maintained. 
    Sec. 7.  Minnesota Statutes 1992, section 62L.05, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEDUCTIBLE-TYPE SMALL EMPLOYER PLAN.] The 
benefits of the deductible-type small employer plan offered by a 
health carrier must be equal to 80 percent of the eligible 
charges, as specified in subdivision 10, for health care 
services, supplies, or other articles covered under the small 
employer plan, in excess of an annual deductible which must be 
$500 per individual and $1,000 per family. 
    Sec. 8.  Minnesota Statutes 1992, section 62L.05, 
subdivision 3, is amended to read: 
    Subd. 3.  [COPAYMENT-TYPE SMALL EMPLOYER PLAN.] The 
benefits of the copayment-type small employer plan offered by a 
health carrier must be equal to 80 percent of the eligible 
charges, as specified in subdivision 10, for health care 
services, supplies, or other articles covered under the small 
employer plan, in excess of the following copayments: 
    (1) $15 per outpatient visit, other than including visits 
to an urgent care center but not including visits to a hospital 
outpatient department or emergency room, urgent care center, or 
similar facility; 
    (2) $15 per day visit for the services of a home health 
agency or private duty registered nurse; 
    (3) $50 per outpatient visit to a hospital outpatient 
department or emergency room, urgent care center, or similar 
facility; and 
    (4) $300 per inpatient admission to a hospital. 
    Sec. 9.  Minnesota Statutes 1992, section 62L.05, 
subdivision 4, is amended to read: 
    Subd. 4.  [BENEFITS.] The medical services and supplies 
listed in this subdivision are the benefits that must be covered 
by the small employer plans described in subdivisions 2 and 3:.  
Benefits under this subdivision may be provided through the 
managed care procedures practiced by health carriers.  
    (1) inpatient and outpatient hospital services, excluding 
services provided for the diagnosis, care, or treatment of 
chemical dependency or a mental illness or condition, other than 
those conditions specified in clauses (10), (11), and (12).  The 
health care services required to be covered under this clause 
must also be covered if rendered in a nonhospital environment, 
on the same basis as coverage provided for those same treatments 
or services if rendered in a hospital, provided, however, that 
this sentence must not be interpreted as expanding the types or 
extent of services covered; 
    (2) physician, chiropractor, and nurse practitioner 
services for the diagnosis or treatment of illnesses, injuries, 
or conditions; 
     (3) diagnostic X-rays and laboratory tests; 
     (4) ground transportation provided by a licensed ambulance 
service to the nearest facility qualified to treat the 
condition, or as otherwise required by the health carrier; 
     (5) services of a home health agency if the services 
qualify as reimbursable services under Medicare and are directed 
by a physician or qualify as reimbursable under the health 
carrier's most commonly sold health plan for insured group 
coverage; 
    (6) services of a private duty registered nurse if 
medically necessary, as determined by the health carrier; 
    (7) the rental or purchase, as appropriate, of durable 
medical equipment, other than eyeglasses and hearing aids; 
    (8) child health supervision services up to age 18, as 
defined in section 62A.047; 
    (9) maternity and prenatal care services, as defined in 
sections 62A.041 and 62A.047; 
    (10) inpatient hospital and outpatient services for the 
diagnosis and treatment of certain mental illnesses or 
conditions, as defined by the International Classification of 
Diseases-Clinical Modification (ICD-9-CM), seventh edition 
(1990) and as classified as ICD-9 codes 295 to 299; 
    (11) ten hours per year of outpatient mental health 
diagnosis or treatment for illnesses or conditions not described 
in clause (10); 
    (12) 60 hours per year of outpatient treatment of chemical 
dependency; and 
    (13) 50 percent of eligible charges for prescription drugs, 
up to a separate annual maximum out-of-pocket expense of $1,000 
per individual for prescription drugs, and 100 percent of 
eligible charges thereafter. 
    Sec. 10.  Minnesota Statutes 1992, section 62L.05, 
subdivision 6, is amended to read: 
     Subd. 6.  [CHOICE PRODUCTS EXCEPTION.] Nothing in 
subdivision 1 prohibits a health carrier from offering a small 
employer plan which provides for different benefit coverages 
based on whether the benefit is provided through a primary 
network of providers or through a secondary network of providers 
so long as the benefits provided in the primary network equal 
the benefit requirements of the small employer plan as described 
in this section.  For purposes of products issued under this 
subdivision, out-of-pocket costs in the secondary network may 
exceed the out-of-pocket limits described in subdivision 1.  A 
secondary network must not be used to provide "benefits in 
addition" as defined in subdivision 5, except in compliance with 
that subdivision. 
    Sec. 11.  Minnesota Statutes 1992, section 62L.08, 
subdivision 4, is amended to read: 
    Subd. 4.  [GEOGRAPHIC PREMIUM VARIATIONS.] A health carrier 
may request approval by the commissioner to establish no more 
than three geographic regions and to establish separate index 
rates for each region, provided that the index rates do not vary 
between any two regions by more than 20 percent.  Health 
carriers that do not do business in the Minneapolis/St. Paul 
metropolitan area may request approval for no more than two 
geographic regions, and clauses (2) and (3) do not apply to 
approval of requests made by those health carriers.  A health 
carrier may also request approval to establish one additional 
geographic region and a separate index rate for premiums for 
employees residing outside of Minnesota, and that index rate 
must not be more than 30 percent higher than the next highest 
index rate.  The commissioner may grant approval if the 
following conditions are met: 
    (1) the geographic regions must be applied uniformly by the 
health carrier; 
    (2) one geographic region must be based on the 
Minneapolis/St. Paul metropolitan area; 
    (3) if one geographic region is rural, the index rate for 
the rural region must not exceed the index rate for the 
Minneapolis/St. Paul metropolitan area; 
    (4) the health carrier provides actuarial justification 
acceptable to the commissioner for the proposed geographic 
variations in index rates, establishing that the variations are 
based upon differences in the cost to the health carrier of 
providing coverage. 
    Sec. 12.  Minnesota Statutes 1992, section 62L.08, 
subdivision 8, is amended to read: 
    Subd. 8.  [FILING REQUIREMENT.] No later than July 1, 1993, 
and each year thereafter, a health carrier that offers, sells, 
issues, or renews a health benefit plan for small employers 
shall file with the commissioner the index rates and must 
demonstrate that all rates shall be within the rating 
restrictions defined in this chapter.  Such demonstration must 
include the allowable range of rates from the index rates and a 
description of how the health carrier intends to use demographic 
factors including case characteristics in calculating the 
premium rates.  The rates shall not be approved, unless the 
commissioner has determined that the rates are reasonable.  In 
determining reasonableness, the commissioner shall consider the 
growth rates applied under section 62J.04, subdivision 1, 
paragraph (b), to the calendar year or years that the proposed 
premium rate would be in effect, actuarially valid changes in 
risk associated with the enrollee population, and actuarially 
valid changes as a result of statutory changes in Laws 1992, 
chapter 549.  For premium rates proposed to go into effect 
between July 1, 1993, and December 31, 1993, the pertinent 
growth rate is the growth rate applied under section 62J.04, 
subdivision 1, paragraph (b), to calendar year 1994.  As 
provided in section 62A.65, subdivision 3, this subdivision 
applies to the individual market, as well as to the small 
employer market. 
    Sec. 13.  Minnesota Statutes 1992, section 62L.09, 
subdivision 1, is amended to read: 
    Subdivision 1.  [NOTICE TO COMMISSIONER.] A health carrier 
electing to cease doing business in the small employer market 
shall notify the commissioner 180 days prior to the effective 
date of the cessation.  The cessation of business does not 
include the failure of a health carrier to offer or issue new 
business in the small employer market or continue an existing 
product line, provided that a health carrier does not terminate, 
cancel, or fail to renew its current small employer business or 
other product lines.  The health carrier shall simultaneously 
provide a copy of the notice to each small employer covered by a 
health benefit plan issued by the health carrier. 
    Upon making the notification, the health carrier shall not 
offer or issue new business in the small employer market.  The 
health carrier shall renew its current small employer business 
due for renewal within 120 days after the date of the 
notification but shall not renew any small employer business 
more than 120 days after the date of the notification. 
    A health carrier that elects to cease doing business in the 
small employer market shall continue to be governed by this 
chapter with respect to any continuing small employer business 
conducted by the health carrier.  
    Sec. 14.  Minnesota Statutes 1992, section 62L.11, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DISCIPLINARY PROCEEDINGS.] The 
commissioner may, by order, suspend or revoke a health carrier's 
license or certificate of authority and impose a monetary 
penalty not to exceed $25,000 for each violation of this 
chapter, including.  Violations include the failure to pay an 
assessment required by section 62L.22, and knowingly and 
willfully encouraging a small employer to not meet the 
contribution or participation requirements of section 62L.03, 
subdivision 3, in order to avoid the requirements of this 
chapter.  The notice, hearing, and appeal procedures specified 
in section 60A.051 or 62D.16, as appropriate, apply to the 
order.  The order is subject to judicial review as provided 
under chapter 14. 
    Sec. 15.  [PHASE-IN.] 
    Subdivision 1.  [COMPLIANCE.] No health carrier, as defined 
in Minnesota Statutes, section 62L.02, shall renew any health 
benefit plan, as defined in Minnesota Statutes, section 62L.02, 
except in compliance with this section. 
    Subd. 2.  [PREMIUM ADJUSTMENTS.] (a) Any increase or 
decrease in premiums by a health carrier that is caused by 
Minnesota Statutes, section 62L.08, and that is greater than 30 
percent, is subject to this subdivision.  A health carrier shall 
determine renewal premiums only as follows: 
    (1) one-half of that premium increase or decrease may be 
charged upon the first renewal of the coverage on or after July 
1, 1993; and 
    (2) the remaining one-half of that premium increase or 
decrease may be charged upon the renewal of the coverage one 
year after the date of the renewal under clause (1). 
    (b) For purposes of this subdivision, the premium increase 
or decrease is the total premium increase or decrease caused by 
section 62L.08 and not just the portion that exceeds 30 
percent.  This subdivision does not apply to any portion of a 
premium increase or decrease that is not caused by section 
62L.08. 
    Sec. 16.  [REPEALER.] 
    Minnesota Statutes 1992, section 62L.09, subdivision 2, is 
repealed. 
    Sec. 17.  [EFFECTIVE DATE.] 
    Sections 1 to 16 are effective July 1, 1993. 

                               ARTICLE 8 

                INDIVIDUAL MARKET REFORM; MISCELLANEOUS 
    Section 1.  Minnesota Statutes 1992, section 43A.317, 
subdivision 5, is amended to read: 
    Subd. 5.  [EMPLOYER ELIGIBILITY.] (a)  [PROCEDURES.] All 
employers are eligible for coverage through the program subject 
to the terms of this subdivision.  The commissioner shall 
establish procedures for an employer to apply for coverage 
through the program. 
    (b)  [TERM.] The initial term of an employer's coverage 
will be two years from the effective date of the employer's 
application.  After that, coverage will be automatically renewed 
for additional two-year terms unless the employer gives notice 
of withdrawal from the program according to procedures 
established by the commissioner or the commissioner gives notice 
to the employer of the discontinuance of the program.  The 
commissioner may establish conditions under which an employer 
may withdraw from the program prior to the expiration of a 
two-year term, including by reason of a midyear increase in 
health coverage premiums of 50 percent or more.  An employer 
that withdraws from the program may not reapply for coverage for 
a period of two years from its date of withdrawal. 
    (c)  [MINNESOTA WORK FORCE.] An employer is not eligible 
for coverage through the program if five percent or more of its 
eligible employees work primarily outside Minnesota, except that 
an employer may apply to the program on behalf of only those 
employees who work primarily in Minnesota.  
     (d)  [EMPLOYEE PARTICIPATION; AGGREGATION OF GROUPS.] An 
employer is not eligible for coverage through the program unless 
its application includes all eligible employees who work 
primarily in Minnesota, except employees who waive coverage as 
permitted by subdivision 6.  Private entities that are eligible 
to file a combined tax return for purposes of state tax laws are 
considered a single employer, except as otherwise approved by 
the commissioner. 
    (e)  [PRIVATE EMPLOYER.] A private employer is not eligible 
for coverage unless it has two or more eligible employees in the 
state of Minnesota.  If an employer has only two eligible 
employees, one employee must not be the spouse, child, sibling, 
parent, or grandparent of the other.  If an employer has only 
two eligible employees and one is the spouse, child, sibling, 
parent, or grandparent of the other, the employer must be a 
Minnesota domiciled employer and have paid social security or 
self-employment tax on behalf of both eligible employees. 
    (f)  [MINIMUM PARTICIPATION.] The commissioner must require 
as a condition of employer eligibility that at least 75 percent 
of its eligible employees who have not waived coverage 
participate in the program.  The participation level of eligible 
employees must be determined at the initial offering of coverage 
and at the renewal date of coverage.  For purposes of this 
section, waiver of coverage includes only waivers due to 
coverage under another group health benefit plan.  
    (g)  [EMPLOYER CONTRIBUTION.] The commissioner must require 
as a condition of employer eligibility that the employer 
contribute at least 50 percent toward the cost of the premium of 
the employee and may require that the contribution toward the 
cost of coverage is structured in a way that promotes price 
competition among the coverage options available through the 
program. 
    (h)  [ENROLLMENT CAP.] The commissioner may limit employer 
enrollment in the program if necessary to avoid exceeding the 
program's reserve capacity. 
    Sec. 2.  Minnesota Statutes 1992, section 62A.021, 
subdivision 1, is amended to read: 
    Subdivision 1.  [LOSS RATIO STANDARDS.] Notwithstanding 
section 62A.02, subdivision 3, relating to loss ratios, a health 
care policy form or certificate form policies or certificates 
shall not be delivered or issued for delivery to an individual 
or to a small employer as defined in section 62L.02, unless 
the policy form or certificate form policies or certificates can 
be expected, as estimated for the entire period for which rates 
are computed to provide coverage, to return to Minnesota 
policyholders and certificate holders in the form of aggregate 
benefits not including anticipated refunds or credits, provided 
under the policy form or certificate form policies or 
certificates, (1) at least 75 percent of the aggregate amount of 
premiums earned in the case of policies issued in the small 
employer market, as defined in section 62L.02, subdivision 27, 
calculated on an aggregate basis; and (2) at least 65 percent of 
the aggregate amount of premiums earned in the case of 
policies each policy form or certificate form issued in the 
individual market,; calculated on the basis of incurred claims 
experience or incurred health care expenses where coverage is 
provided by a health maintenance organization on a service 
rather than reimbursement basis and earned premiums for the 
period and according to accepted actuarial principles and 
practices.  A health carrier shall demonstrate that the 
third-year loss ratio is greater than or equal to the applicable 
percentage.  Assessments by the reinsurance association created 
in chapter 62L and any types of taxes, surcharges, or 
assessments created by Laws 1992, chapter 549, or created on or 
after April 23, 1992, are included in the calculation of 
incurred claims experience or incurred health care expenses.  
The applicable percentage for policy forms policies 
and certificate forms certificates issued in the small employer 
market, as defined in section 62L.02, increases by one 
percentage point on July 1 of each year, beginning on July 1, 
1994, until an 80 82 percent loss ratio is reached on July 
1, 1998 2000.  The applicable percentage for policy forms and 
certificate forms issued in the individual market increases by 
one percentage point on July 1 of each year, beginning on July 
1, 1994, until a 70 72 percent loss ratio is reached on July 
1, 1998 2000.  A health carrier that enters a market after July 
1, 1993, does not start at the beginning of the phase-in 
schedule and must instead comply with the loss ratio 
requirements applicable to other health carriers in that market 
for each time period.  Premiums earned and claims incurred in 
markets other than the small employer and individual markets are 
not relevant for purposes of this section. 
     Notwithstanding section 645.26, any act enacted at the 1992 
regular legislative session that amends or repeals section 
62A.135 or that otherwise changes the loss ratios provided in 
that section is void. 
     All filings of rates and rating schedules shall demonstrate 
that actual expected claims in relation to premiums comply with 
the requirements of this section when combined with actual 
experience to date.  Filings of rate revisions shall also 
demonstrate that the anticipated loss ratio over the entire 
future period for which the revised rates are computed to 
provide coverage can be expected to meet the appropriate loss 
ratio standards, and aggregate loss ratio from inception of the 
policy form or certificate form shall equal or exceed the 
appropriate loss ratio standards. 
     A health carrier that issues health care policies and 
certificates to individuals or to small employers, as defined in 
section 62L.02, in this state shall file annually its rates, 
rating schedule, and supporting documentation including ratios 
of incurred losses to earned premiums by policy form or 
certificate form duration for approval by the commissioner 
according to the filing requirements and procedures prescribed 
by the commissioner.  The supporting documentation shall also 
demonstrate in accordance with actuarial standards of practice 
using reasonable assumptions that the appropriate loss ratio 
standards can be expected to be met over the entire period for 
which rates are computed.  The demonstration shall exclude 
active life reserves.  An expected third-year loss ratio which 
is greater than or equal to the applicable percentage shall be 
demonstrated for policy forms or certificate forms in force less 
than three years.  If the data submitted does not confirm that 
the health carrier has satisfied the loss ratio requirements of 
this section, the commissioner shall notify the health carrier 
in writing of the deficiency.  The health carrier shall have 30 
days from the date of the commissioner's notice to file amended 
rates that comply with this section.  If the health carrier 
fails to file amended rates within the prescribed time, the 
commissioner shall order that the health carrier's filed rates 
for the nonconforming policy form or certificate form be reduced 
to an amount that would have resulted in a loss ratio that 
complied with this section had it been in effect for the 
reporting period of the supplement.  The health carrier's 
failure to file amended rates within the specified time or the 
issuance of the commissioner's order amending the rates does not 
preclude the health carrier from filing an amendment of its 
rates at a later time.  The commissioner shall annually make the 
submitted data available to the public at a cost not to exceed 
the cost of copying.  The data must be compiled in a form useful 
for consumers who wish to compare premium charges and loss 
ratios. 
    Each sale of a policy or certificate that does not comply 
with the loss ratio requirements of this section is an unfair or 
deceptive act or practice in the business of insurance and is 
subject to the penalties in sections 72A.17 to 72A.32. 
    For purposes of this section, health care policies issued 
as a result of solicitations of individuals through the mail or 
mass media advertising, including both print and broadcast 
advertising, shall be treated as individual policies.  
    For purposes of this section, (1) "health care policy" or 
"health care certificate" is a health plan as defined in section 
62A.011; and (2) "health carrier" has the meaning given in 
section 62A.011 and includes all health carriers delivering or 
issuing for delivery health care policies or certificates in 
this state or offering these policies or certificates to 
residents of this state.  
    Sec. 3.  [62A.61] [DISCLOSURE OF METHODS USED BY HEALTH 
CARRIERS TO DETERMINE USUAL AND CUSTOMARY FEES.] 
    (a) A health carrier that bases reimbursement to health 
care providers upon a usual and customary fee must maintain in 
its office a copy of a description of the methodology used to 
calculate fees including at least the following: 
    (1) the frequency of the determination of usual and 
customary fees; 
    (2) a general description of the methodology used to 
determine usual and customary fees; and 
    (3) the percentile of usual and customary fees that 
determines the maximum allowable reimbursement. 
    (b) A health carrier must provide a copy of the information 
described in paragraph (a) to the Minnesota health care 
commission, the commissioner of health, or the commissioner of 
commerce, upon request. 
    (c) The commissioner of health or the commissioner of 
commerce, as appropriate, may use to enforce this section any 
enforcement powers otherwise available to the commissioner with 
respect to the health carrier.  The appropriate commissioner 
shall enforce compliance with a request made under this section 
by the Minnesota health care commission, at the request of the 
commissioner.  The commissioner of health or commerce, as 
appropriate, may require health carriers to provide the 
information required under this section and may use any powers 
granted under other laws relating to the regulation of health 
carriers to enforce compliance. 
    (d) For purposes of this section, "health carrier" has the 
meaning given in section 62A.011. 
    Sec. 4.  Minnesota Statutes 1992, section 62A.65, is 
amended to read: 
    62A.65 [INDIVIDUAL MARKET REGULATION.] 
    Subdivision 1.  [APPLICABILITY.] No health carrier, as 
defined in chapter 62L section 62A.011, shall offer, sell, 
issue, or renew any individual policy of accident and sickness 
coverage, as defined in section 62A.01, subdivision 1, any 
individual subscriber contract regulated under chapter 62C, any 
individual health maintenance contract regulated under chapter 
62D, any individual health benefit certificate regulated under 
chapter 64B, or any individual health coverage provided by a 
multiple employer welfare arrangement, health plan, as defined 
in section 62A.011, to a Minnesota resident except in compliance 
with this section.  For purposes of this section, "health 
benefit plan" has the meaning given in chapter 62L, except that 
the term means individual coverage, including family coverage, 
rather than employer group coverage.  This section does not 
apply to the comprehensive health association established in 
section 62E.10 or to coverage described in section 62A.31, 
subdivision 1, paragraph (h), or to long-term care policies as 
defined in section 62A.46, subdivision 2. 
    Subd. 2.  [GUARANTEED RENEWAL.] No individual health 
benefit plan may be offered, sold, issued, or renewed to a 
Minnesota resident unless the health benefit plan provides that 
the plan is guaranteed renewable at a premium rate that does not 
take into account the claims experience or any change in the 
health status of any covered person that occurred after the 
initial issuance of the health benefit plan to the person.  The 
premium rate upon renewal must also otherwise comply with this 
section.  A An individual health benefit plan may be subject to 
refusal to renew only under the conditions provided in chapter 
62L for health benefit plans. 
    Subd. 3.  [PREMIUM RATE RESTRICTIONS.] No individual health 
benefit plan may be offered, sold, issued, or renewed to a 
Minnesota resident unless the premium rate charged is determined 
in accordance with the rating and premium restrictions provided 
under chapter 62L, except that the minimum loss ratio applicable 
to an individual coverage health plan is as provided in section 
62A.021.  All provisions rating and premium restrictions of 
chapter 62L apply to rating and premium restrictions in the 
individual market, unless clearly inapplicable to the individual 
market. 
    Subd. 4.  [GENDER RATING PROHIBITED.] No individual health 
benefit plan offered, sold, issued, or renewed to a Minnesota 
resident may determine the premium rate or any other 
underwriting decision, including initial issuance, on the gender 
of any person covered or to be covered under the health benefit 
plan. 
    Subd. 5.  [PORTABILITY OF COVERAGE.] (a) No individual 
health benefit plan may be offered, sold, issued, or with 
respect to children age 18 or under renewed, to a Minnesota 
resident that contains a preexisting condition limitation or 
exclusion, unless the limitation or exclusion would be permitted 
under chapter 62L, provided that, except for children age 18 or 
under, underwriting restrictions may be retained on individual 
contracts that are issued without evidence of insurability as a 
replacement for prior individual coverage that was sold before 
May 17, 1993.  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 under an individual 
coverage health plan by any health carrier.  Thereafter, the 
person must not be subject to any preexisting condition 
limitation under an individual health plan by any health 
carrier, except an unexpired portion of a limitation under prior 
coverage, so long as the individual maintains continuous 
coverage. 
    (b) A health carrier must offer an individual coverage 
health plan 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 A health plan issued under this paragraph 
must be a qualified plan and 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 health plan 
must comply with subdivision 3.  The premium rate upon renewal 
must comply with subdivision 2.  In no event shall the premium 
rate exceed 90 percent of the premium charged for comparable 
individual coverage by the Minnesota comprehensive health 
association. 
    Subd. 6.  [GUARANTEED ISSUE NOT REQUIRED.] Nothing in this 
section requires a health carrier to initially issue a 
health benefit plan to a Minnesota resident, except as otherwise 
expressly provided in subdivision 4 or 5. 
    Sec. 5.  Minnesota Statutes 1992, section 62E.11, 
subdivision 12, is amended to read: 
    Subd. 12.  [FUNDING.] Notwithstanding subdivision 5, the 
claims expenses and operating and administrative expenses of the 
association incurred on or after January 1, 1994, to the extent 
that they exceed the premiums received, shall be paid from the 
health care access account established in section 16A.724, to 
the extent appropriated for that purpose by the legislature.  
Any such expenses not paid from that account shall be paid as 
otherwise provided in this section.  All contributing members 
shall adjust their premium rates to fully reflect funding 
provided under this subdivision.  The commissioner of commerce 
or the commissioner of health, as appropriate, shall require 
contributing members to prove compliance with this rate 
adjustment requirement. 
    Sec. 6.  [PHASE-IN.] 
    Subdivision 1.  [COMPLIANCE.] No health carrier, as defined 
in Minnesota Statutes, section 62A.011, shall renew any 
individual health plan, as defined in Minnesota Statutes, 
section 62A.011, except in compliance with this section. 
    Subd. 2.  [PREMIUM ADJUSTMENTS.] Any increase or decrease 
in premiums by a health carrier that is caused by Minnesota 
Statutes, section 62A.65, is subject to the premium adjustments 
in this subdivision.  A health carrier shall determine renewal 
premiums for any coverage under subdivision 1 as follows: 
    (1) one-half of the premium increase or decrease may be 
charged upon the first renewal of the coverage on or after July 
1, 1993; and 
    (2) the remaining half of the premium increase or decrease 
may be charged upon the first renewal of the coverage one year 
after the date of the renewal under clause (1). 
    Sec. 7.  [EFFECTIVE DATE.] 
    Sections 1, 2, and 4 to 6 are effective July 1, 1993. 

                               ARTICLE 9 

                         MINNESOTACARE PROGRAM 
    Section 1.  Minnesota Statutes 1992, section 256.9351, 
subdivision 3, is amended to read: 
    Subd. 3.  [ELIGIBLE PROVIDERS.] "Eligible providers" means 
those health care providers who provide covered health services 
to medical assistance recipients under rules established by the 
commissioner for that program.  Reimbursement under this section 
shall be at the same rates and conditions established for 
medical assistance. 
    Sec. 2.  Minnesota Statutes 1992, section 256.9352, 
subdivision 3, is amended to read: 
    Subd. 3.  [FINANCIAL MANAGEMENT.] The commissioner shall 
manage spending for the health right plan in a manner that 
maintains a minimum reserve equal to five percent of the 
expected cost of state premium subsidies.  The commissioner must 
make a quarterly assessment of the expected expenditures for the 
covered services for the remainder of the current fiscal year 
and for the following two fiscal years.  The estimated 
expenditure shall be compared to an estimate of the revenues 
that will be deposited in the health care access fund.  Based on 
this comparison, and after consulting with the chairs of the 
house appropriations committee and the senate finance committee, 
and the legislative commission on health care access, the 
commissioner shall make adjustments as necessary to ensure that 
expenditures remain within the limits of available revenues.  
The adjustments the commissioner may use must be implemented in 
this order:  first, stop enrollment of single adults and 
households without children; second, upon 45 days' notice, stop 
coverage of single adults and households without children 
already enrolled in the health right plan; third, upon 90 days' 
notice, decrease the premium subsidy amounts by ten percent for 
families with gross annual income above 200 percent of the 
federal poverty guidelines; fourth, upon 90 days' notice, 
decrease the premium subsidy amounts by ten percent for families 
with gross annual income at or below 200 percent; and fifth, 
require applicants to be uninsured for at least six months prior 
to eligibility in the health right plan.  If these measures are 
insufficient to limit the expenditures to the estimated amount 
of revenue, the commissioner may further limit enrollment or 
decrease premium subsidies. 
    If the commissioner determines that, despite adjustments 
made as authorized under this subdivision, estimated costs will 
exceed the forecasted amount of available revenues other than 
the reserve, the commissioner may, with the approval of the 
commissioner of finance, use all or part of the reserve to cover 
the costs of the program.  The reserve referred to in this 
subdivision is appropriated to the commissioner but may only be 
used upon approval of the commissioner of finance, if estimated 
costs will exceed the forecasted amount of available revenues 
after all adjustments authorized under this subdivision have 
been made. 
     By February 1, 1994, the department of human services and 
the department of health shall develop a plan to adjust benefit 
levels, eligibility guidelines, or other steps necessary to 
ensure that expenditures for the MinnesotaCare program are 
contained within the two percent provider tax and the one 
percent HMO gross premiums tax for the 1996-1997 biennium.  
Notwithstanding any law to the contrary, no further enrollment 
in MinnesotaCare, and no additional hiring of staff for the 
departments shall take place after June 1, 1994, unless a plan 
to balance the MinnesotaCare budget for the 1996-1997 biennium 
has been passed by the 1994 legislature. 
    Sec. 3.  Minnesota Statutes 1992, section 256.9353, is 
amended to read: 
    Subdivision 1.  [COVERED HEALTH SERVICES.] "Covered health 
services" means the health services reimbursed under chapter 
256B, with the exception of inpatient hospital services, special 
education services, private duty nursing services, adult dental 
care services other than preventive services, orthodontic 
services, medical transportation services, personal care 
assistant and case management services, hospice care services, 
nursing home or intermediate care facilities services, inpatient 
mental health services, outpatient mental health services in 
excess of $1,000 per adult enrollee and $2,500 per child 
enrollee per 12-month eligibility period, and chemical 
dependency services.  Outpatient mental health services covered 
under the health right plan are limited to diagnostic 
assessments, psychological testing, explanation of findings, day 
treatment, partial hospitalization, and individual, family, and 
group psychotherapy.  Medication management by a physician is 
not subject to the $1,000 and $2,500 limitations on outpatient 
mental health services.  Covered health services shall be 
expanded as provided in this section. 
    Subd. 2.  [ALCOHOL AND DRUG DEPENDENCY.] Beginning October 
July 1, 1992 1993, 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.  A local agency or 
managed care plan under contract with the department of human 
services must place a person in need of chemical dependency 
services as provided in Minnesota Rules, parts 9530.6600 to 
9530.6660.  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. 
    Subd. 3.  [INPATIENT HOSPITAL SERVICES.] (a) Beginning July 
1, 1993, covered health services shall include inpatient 
hospital services, including inpatient hospital mental health 
services and inpatient hospital and residential chemical 
dependency treatment, subject to those limitations necessary to 
coordinate the provision of these services with eligibility 
under the medical assistance spend-down.  The inpatient hospital 
benefit for adult enrollees not eligible for medical assistance 
is subject to an annual benefit limit of $10,000.  The 
commissioner shall provide enrollees with at least 60 days' 
notice of coverage for inpatient hospital services and any 
premium increase associated with the inclusion of this benefit. 
    (b) Enrollees shall apply for and cooperate with the 
requirements of medical assistance by the last day of the third 
month following admission to an inpatient hospital.  If an 
enrollee fails to apply for medical assistance within this time 
period, the enrollee and the enrollee's family shall be 
disenrolled from the plan within one calendar month.  Enrollees 
and enrollees' families disenrolled for not applying for or not 
cooperating with medical assistance may not reenroll. 
     Subd. 4.  [HOSPICE.] Beginning July 1, 1993, covered health 
services shall include hospice care services. 
    Subd. 4 5.  [EMERGENCY MEDICAL TRANSPORTATION SERVICES.] 
Beginning July 1, 1993, covered health services shall include 
emergency medical transportation services. 
    Subd. 5 6.  [FEDERAL WAIVERS AND APPROVALS COORDINATION 
WITH MEDICAL ASSISTANCE.] The commissioner shall coordinate the 
provision of hospital inpatient services under the health right 
plan with enrollee eligibility under the medical assistance 
spend-down, and shall apply to the secretary of health and human 
services for any necessary federal waivers or approvals. 
    Subd. 6 7.  [COPAYMENTS AND COINSURANCE.] The health right 
benefit plan shall include the following copayments and 
coinsurance requirements:  
    (1) ten percent of the charges submitted for inpatient 
hospital services for adult enrollees not eligible for medical 
assistance, subject to an annual 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) (2) $3 per prescription for adult enrollees; and 
    (4) (3) $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 256.9354, 
subdivision 1, is amended to read: 
    Subdivision 1.  [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 185 150 percent of the federal poverty guidelines and who 
are not eligible for medical assistance under chapter 256B and 
who are not otherwise insured for the covered services.  The 
period of eligibility extends from the first day of the month in 
which the child's first birthday occurs to the last day of the 
month in which the child becomes 18 years old.  Eligibility 
for the health right plan MinnesotaCare shall be expanded as 
provided in subdivisions 2 to 5, except children who meet the 
criteria in this subdivision shall continue to be enrolled 
pursuant to this subdivision.  Under subdivisions 2 1 to 5, 
parents who enroll in the health right plan must also enroll 
their children and dependent siblings, if the children and their 
dependent siblings are eligible.  Children and dependent 
siblings may be enrolled separately without enrollment by 
parents.  However, if one parent in the household enrolls, both 
parents must enroll, unless other insurance is available.  If 
one child from a family is enrolled, all children must be 
enrolled, unless other insurance is available.  Families cannot 
choose to enroll only certain uninsured members.  For purposes 
of this 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.  
    Sec. 5.  Minnesota Statutes 1992, section 256.9354, 
subdivision 4, is amended to read: 
    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 plan 
but Children who meet the criteria in subdivision 1 shall 
continue to be enrolled pursuant to subdivision 1.  Persons who 
are eligible under this subdivision or subdivision 2, 3, or 5 
must pay a premium as determined under sections 256.9357 and 
256.9358, and children eligible under subdivision 1 must pay the 
premium required under section 256.9356, subdivision 1.  
Individuals and families whose income is greater than the limits 
established under section 256.9358 may not enroll in the health 
right plan MinnesotaCare.  Individuals who initially enroll 
in the health right plan MinnesotaCare under the eligibility 
criteria in this subdivision remain eligible for the health 
right plan MinnesotaCare, 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 
MinnesotaCare or medical assistance is maintained. 
    Sec. 6.  Minnesota Statutes 1992, section 256.9354, is 
amended by adding a subdivision to read: 
    Subd. 6.  [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 
ASSISTANCE.] Individuals who apply for MinnesotaCare, but who 
are potentially eligible for medical assistance shall be allowed 
to enroll in MinnesotaCare for a period of 60 days, so long as 
the applicant meets all other conditions of eligibility.  The 
commissioner shall identify and refer such individuals to their 
county social service agency.  The enrollee must cooperate with 
the county social service agency in determining medical 
assistance eligibility within the 60-day enrollment period.  
Enrollees who do not apply for and cooperate with medical 
assistance within the 60-day enrollment period, and their other 
family members, shall be disenrolled from the plan within one 
calendar month.  Persons disenrolled for nonapplication for 
medical assistance may not reenroll until they have obtained a 
medical assistance eligibility determination for the family 
member or members who were referred to the county agency.  
Persons disenrolled for noncooperation with medical assistance 
may not reenroll until they have cooperated with the county 
agency and have obtained a medical assistance eligibility 
determination.  The commissioner shall redetermine provider 
payments made under MinnesotaCare to the appropriate medical 
assistance payments for those enrollees who subsequently become 
eligible for medical assistance. 
     Sec. 7.  Minnesota Statutes 1992, section 256.9356, is 
amended to read: 
    256.9356 [ENROLLMENT AND PREMIUM FEE FEES AND PAYMENTS.] 
    Subdivision 1.  [ENROLLMENT FEE PREMIUM FEES.] Until 
October 1, 1992, An annual enrollment premium fee of $25, not to 
exceed $150 per family, $48 is required from eligible persons 
for covered health services all MinnesotaCare enrollees eligible 
under section 256.9354, subdivision 1. 
    Subd. 2.  [PREMIUM PAYMENTS.] Beginning October 1, 1992, 
The commissioner shall require health right plan MinnesotaCare 
enrollees eligible under section 256.9354, subdivisions 2 to 5, 
to pay a premium based on a sliding scale, as established under 
section 256.9357 256.9358.  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.  
Before July 1, 1993, these individuals shall continue to pay the 
annual enrollment fee required by subdivision 1.  
    Subd. 3.  [ADMINISTRATION AND COMMISSIONER'S DUTIES.] 
Enrollment and premium fees Premiums are dedicated to the 
commissioner for the health right plan MinnesotaCare.  The 
commissioner shall make an annual redetermination of continued 
eligibility and identify people who may become eligible for 
medical assistance.  The commissioner shall develop and 
implement procedures to:  (1) require enrollees to report 
changes in income; (2) adjust sliding scale premium payments, 
based upon changes in enrollee income; and (3) disenroll 
enrollees from the health right plan MinnesotaCare for failure 
to pay required premiums.  Premiums are calculated on a calendar 
month basis and may be paid on a monthly or, quarterly, or 
annual basis, with the first payment due upon notice from the 
commissioner of the premium amount required.  Premium payment is 
required before enrollment is complete and to maintain 
eligibility in the health right plan MinnesotaCare.  Nonpayment 
of the premium will result in disenrollment from the plan within 
one calendar month after the due date.  Persons disenrolled for 
nonpayment may not reenroll until four calendar months have 
elapsed. 
    Sec. 8.  Minnesota Statutes 1992, section 256.9357, 
subdivision 1, is amended to read: 
    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 plan as of September 30, 1992, are eligible 
for subsidized premium payments without meeting these 
requirements, as long as they maintain continuous coverage in 
the health right plan or medical assistance. 
    Families and individuals who initially enrolled in the 
health right 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. 
    Sec. 9.  [256.9362] [PROVIDER PAYMENT.] 
    Subdivision 1.  [MEDICAL ASSISTANCE RATE TO BE 
USED.] Payment to providers under sections 256.9351 to 256.9362 
shall be at the same rates and conditions established for 
medical assistance, except as provided in subdivisions 2 to 6. 
    Subd. 2.  [PAYMENT OF CERTAIN PROVIDERS.] Services provided 
by federally qualified health centers, rural health clinics, and 
facilities of the Indian health service shall be paid for 
according to the same rates and conditions applicable to the 
same service provided by providers that are not federally 
qualified health centers, rural health clinics, or facilities of 
the Indian health service. 
    Subd. 3.  [INPATIENT HOSPITAL SERVICES.] Inpatient hospital 
services provided under section 256.9353, subdivision 3, shall 
be paid for as provided in subdivisions 4 to 6. 
    Subd. 4.  [DEFINITION OF MEDICAL ASSISTANCE RATE FOR 
INPATIENT HOSPITAL SERVICES.] The "medical assistance rate," as 
used in this section to apply to rates for providing inpatient 
hospital services, means the rates established under sections 
256.9685 to 256.9695 for providing inpatient hospital services 
to medical assistance recipients who receive aid to families 
with dependent children. 
    Subd. 5.  [ENROLLEES YOUNGER THAN 18.] Payment for 
inpatient hospital services provided to MinnesotaCare enrollees 
who are younger than 18 years old on the date of admission to 
the inpatient hospital shall be at the medical assistance rate. 
    Subd. 6.  [ENROLLEES 18 OR OLDER.] Payment by the 
MinnesotaCare program for inpatient hospital services provided 
to MinnesotaCare enrollees who are 18 years old or older on the 
date of admission to the inpatient hospital must be in 
accordance with paragraphs (a) and (b). 
    (a) If the medical assistance rate minus any copayment 
required under section 256.9353, subdivision 6, is less than or 
equal to the amount remaining in the enrollee's benefit limit 
under section 256.9353, subdivision 3, payment must be the 
medical assistance rate minus any copayment required under 
section 256.9353, subdivision 6.  The hospital must not seek 
payment from the enrollee in addition to the copayment.  The 
MinnesotaCare payment plus the copayment must be treated as 
payment in full. 
    (b) If the medical assistance rate minus any copayment 
required under section 256.9353, subdivision 6, is greater than 
the amount remaining in the enrollee's benefit limit under 
section 256.9353, subdivision 3, payment must be the lesser of: 
    (1) the amount remaining in the enrollee's benefit limit; 
or 
    (2) charges submitted for the inpatient hospital services 
less any copayment established under section 256.9353, 
subdivision 6. 
    The hospital may seek payment from the enrollee for the 
amount by which usual and customary charges exceed the payment 
under this paragraph. 
     Sec. 10.  [256.9363] [MANAGED CARE.] 
    Subdivision 1.  [SELECTION OF VENDORS.] In order to contain 
costs, the commissioner of human services shall select vendors 
of medical care who can provide the most economical care 
consistent with high medical standards and shall, where 
possible, contract with organizations on a prepaid capitation 
basis to provide these services.  The commissioner shall 
consider proposals by counties and vendors for managed care 
plans which may include:  prepaid capitation programs, 
competitive bidding programs, or other vendor payment mechanisms 
designed to provide services in an economical manner or to 
control utilization, with safeguards to ensure that necessary 
services are provided.  Managed care plans may include 
integrated service networks as defined in section 62N.02. 
    Subd. 2.  [GEOGRAPHIC AREA.] The commissioner shall 
designate the geographic areas in which eligible individuals 
must receive services through managed care plans. 
    Subd. 3.  [LIMITATION OF CHOICE.] Persons enrolled in the 
MinnesotaCare program who reside in the designated geographic 
areas must enroll in a managed care plan to receive their health 
care services.  Enrollees must receive their health care 
services from health care providers who are part of the managed 
care plan provider network, unless authorized by the managed 
care plan, in cases of medical emergency, or when otherwise 
required by law or by contract. 
    If only one managed care option is available in a 
geographic area, the managed care plan may require that 
enrollees designate a primary care provider from which to 
receive their health care.  Enrollees will be permitted to 
change their designated primary care provider upon request to 
the managed care plan.  Requests to change primary care 
providers may be limited to once annually.  If more than one 
managed care plan is offered in a geographic area, enrollees 
will be enrolled in a managed care plan for up to one year from 
the date of enrollment, but shall have the right to change to 
another managed care plan once within the first year of initial 
enrollment.  Enrollees may also change to another managed care 
plan during an annual 30 day open enrollment period.  Enrollees 
shall be notified of the opportunity to change to another 
managed care plan before the start of each annual open 
enrollment period.  
    Enrollees may change managed care plans or primary care 
providers at other than the above designated times for cause as 
determined through an appeal pursuant to section 256.045. 
    Subd. 4.  [EXEMPTIONS TO LIMITATIONS ON CHOICE.] All 
contracts between the department of human services and prepaid 
health plans or integrated service networks to serve medical 
assistance, general assistance medical care, and MinnesotaCare 
recipients must comply with the requirements of United States 
Code, title 42, section 1396a (a) (23) (B), notwithstanding any 
waivers authorized by the United States Department of Health and 
Human Services pursuant to United States Code, title 42, section 
1315. 
    Subd. 5.  [ELIGIBILITY FOR OTHER STATE 
PROGRAMS.] MinnesotaCare enrollees who become eligible for 
medical assistance or general assistance medical care will 
remain in the same managed care plan if the managed care plan 
has a contract for that population.  Contracts between the 
department of human services and managed care plans must include 
MinnesotaCare, and medical assistance and may also include 
general assistance medical care. 
    Subd. 6.  [COPAYMENTS AND BENEFIT LIMITS.] Enrollees are 
responsible for all copayments in section 256.9353, subdivision 
6, and shall pay copayments to the managed care plan or to its 
participating providers.  The enrollee is also responsible for 
payment of inpatient hospital charges which exceed the 
MinnesotaCare benefit limit to the managed care plan or its 
participating providers. 
    Subd. 7.  [MANAGED CARE PLAN VENDOR REQUIREMENTS.] The 
following requirements apply to all counties or vendors who 
contract with the department of human services to serve 
MinnesotaCare recipients.  Managed care plan contractors: 
    (1) shall authorize and arrange for the provision of the 
full range of services listed in section 256.9353 in order to 
ensure appropriate health care is delivered to enrollees; 
    (2) shall accept the prospective, per capita payment or 
other contractually defined payment from the commissioner in 
return for the provision and coordination of covered health care 
services for eligible individuals enrolled in the program; 
    (3) may contract with other health care and social service 
practitioners to provide services to enrollees; 
    (4) shall provide for an enrollee grievance process as 
required by the commissioner and set forth in the contract with 
the department; 
    (5) shall retain all revenue from enrollee copayments; 
    (6) shall accept all eligible MinnesotaCare enrollees, 
without regard to health status or previous utilization of 
health services; 
    (7) shall demonstrate capacity to accept financial risk 
according to requirements specified in the contract with the 
department.  A health maintenance organization licensed under 
chapter 62D, or a nonprofit health plan licensed under chapter 
62C, is not required to demonstrate financial risk capacity, 
beyond that which is required to comply with chapters 62C and 
62D; 
    (8) shall submit information as required by the 
commissioner, including data required for assessing enrollee 
satisfaction, quality of care, cost, and utilization of 
services; and 
    (9) shall submit to the commissioner claims in the format 
specified by the commissioner of human services for all hospital 
services provided to enrollees for the purpose of determining 
whether enrollees meet medical assistance spenddown requirements 
and shall provide to the enrollee, upon the enrollee's request, 
information on the cost of services provided to the enrollee by 
the managed care plan for the purpose of establishing whether 
the enrollee has met medical assistance spenddown requirements. 
    Subd. 8.  [CHEMICAL DEPENDENCY ASSESSMENTS.] The managed 
care plan shall be responsible for assessing the need and 
placement for chemical dependency services according to criteria 
set forth in Minnesota Rules, parts 9530.6600 to 9530.6660. 
    Subd. 9.  [RATE SETTING.] Rates will be prospective, per 
capita, where possible.  The commissioner shall consult with an 
independent actuary to determine appropriate rates. 
    Subd. 10.  [CHILDHOOD IMMUNIZATION.] Each managed care plan 
contracting with the department of human services under this 
section shall collaborate with the local public health agencies 
to ensure childhood immunization to all enrolled families with 
children.  As part of this collaboration the plan must provide 
the families with a recommended immunization schedule. 
    Sec. 11.  Minnesota Statutes 1992, section 256B.057, 
subdivision 1, is amended to read: 
    Subdivision 1.  [PREGNANT WOMEN AND INFANTS.] An infant 
less than one year of age or a pregnant woman who has written 
verification of a positive pregnancy test from a physician or 
licensed registered nurse, is eligible for medical assistance if 
countable family income is equal to or less than 185 275 percent 
of the federal poverty guideline for the same family size.  For 
purposes of this subdivision, "countable family income" means 
the amount of income considered available using the methodology 
of the AFDC program, except for the earned income disregard and 
employment deductions.  An amount equal to the amount of earned 
income exceeding 275 percent of the federal poverty guideline, 
up to a maximum of the combined total of 185 percent of the 
federal poverty guideline plus the earned income disregards and 
deductions of the AFDC program will be deducted for pregnant 
women and infants less than one year of age.  Eligibility for a 
pregnant woman or infant less than one year of age under this 
subdivision must be determined without regard to asset standards 
established in section 256B.056, subdivision 3.  
    An infant born on or after January 1, 1991, to a woman who 
was eligible for and receiving medical assistance on the date of 
the child's birth shall continue to be eligible for medical 
assistance without redetermination until the child's first 
birthday, as long as the child remains in the woman's household. 
     Sec. 12.  Minnesota Statutes 1992, section 256B.057, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [PREMIUMS.] Women and infants who are eligible 
under subdivision 1 and whose countable family income is equal 
to or greater than 185 percent of the federal poverty guideline 
for the same family size shall be required to pay a premium for 
medical assistance coverage based on a sliding scale as 
established under section 256.9358. 
    Sec. 13.  Minnesota Statutes 1992, section 256B.057, 
subdivision 2a, is amended to read: 
    Subd. 2a.  [NO ASSET TEST FOR CHILDREN AND THEIR PARENTS.] 
Eligibility for medical assistance for a person under age 21, 
and the person's parents who are eligible under section 
256B.055, subdivision 3, and who live in the same household as 
the person eligible under age 21, must be determined without 
regard to asset standards established in section 256B.056. 
    Sec. 14.  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 plan MinnesotaCare 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, for 
health insurance plans offered to local statutory or home rule 
charter city, county, and school district employees, 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.  The 
limitations on insurance plans offered to local government 
employees shall not be applicable in geographic areas where 
provider participation is limited by managed care contracts with 
the department of human services.  For providers other than 
health maintenance organizations, participation in the medical 
assistance program means that (1) the provider accepts new 
medical assistance patients or (2) at least 20 percent of the 
provider's patients are covered by medical assistance, general 
assistance medical care, or the health right plan MinnesotaCare 
as their primary source of coverage.  The commissioner shall 
establish participation requirements for health maintenance 
organizations.  The commissioner shall provide lists of 
participating medical assistance providers on a quarterly basis 
to the commissioner of employee relations, the commissioner of 
labor and industry, and the commissioner of commerce.  Each of 
the commissioners shall develop and implement procedures to 
exclude as participating providers in the program or programs 
under their jurisdiction those providers who do not participate 
in the medical assistance program. 
    Sec. 15.  Minnesota Statutes 1992, section 256D.03, 
subdivision 3, is amended to read: 
    Subd. 3.  [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 
(a) General assistance medical care may be paid for any person 
who is not eligible for medical assistance under chapter 256B, 
including eligibility for medical assistance based on a 
spend-down of excess income according to section 256B.056, 
subdivision 5, and: 
    (1) who is receiving assistance under section 256D.05 or 
256D.051; or 
    (2)(i) who is a resident of Minnesota; and whose equity in 
assets is not in excess of $1,000 per assistance unit.  No asset 
test shall be applied to children and their parents living in 
the same household.  Exempt assets, the reduction of excess 
assets, and the waiver of excess assets must conform to the 
medical assistance program in chapter 256B, with the following 
exception:  the maximum amount of undistributed funds in a trust 
that could be distributed to or on behalf of the beneficiary by 
the trustee, assuming the full exercise of the trustee's 
discretion under the terms of the trust, must be applied toward 
the asset maximum; and 
    (ii) who has countable income not in excess of the 
assistance standards established in section 256B.056, 
subdivision 4, or whose excess income is spent down pursuant to 
section 256B.056, subdivision 5, using a six-month budget 
period, except that a one-month budget period must be used for 
recipients residing in a long-term care facility.  The method 
for calculating earned income disregards and deductions for a 
person who resides with a dependent child under age 21 shall be 
as specified in section 256.74, subdivision 1.  However, if a 
disregard of $30 and one-third of the remainder described in 
section 256.74, subdivision 1, clause (4), has been applied to 
the wage earner's income, the disregard shall not be applied 
again until the wage earner's income has not been considered in 
an eligibility determination for general assistance, general 
assistance medical care, medical assistance, or aid to families 
with dependent children for 12 consecutive months.  The earned 
income and work expense deductions for a person who does not 
reside with a dependent child under age 21 shall be the same as 
the method used to determine eligibility for a person under 
section 256D.06, subdivision 1, except the disregard of the 
first $50 of earned income is not allowed; or 
      (3) who would be eligible for medical assistance except 
that the person resides in a facility that is determined by the 
commissioner or the federal health care financing administration 
to be an institution for mental diseases. 
      (b) Eligibility is available for the month of application, 
and for three months prior to application if the person was 
eligible in those prior months.  A redetermination of 
eligibility must occur every 12 months. 
      (c) General assistance medical care is not available for a 
person in a correctional facility unless the person is detained 
by law for less than one year in a county correctional or 
detention facility as a person accused or convicted of a crime, 
or admitted as an inpatient to a hospital on a criminal hold 
order, and the person is a recipient of general assistance 
medical care at the time the person is detained by law or 
admitted on a criminal hold order and as long as the person 
continues to meet other eligibility requirements of this 
subdivision.  
       (d) General assistance medical care is not available for 
applicants or recipients who do not cooperate with the county 
agency to meet the requirements of medical assistance. 
       (e) In determining the amount of assets of an individual, 
there shall be included any asset or interest in an asset, 
including an asset excluded under paragraph (a), that was given 
away, sold, or disposed of for less than fair market value 
within the 30 months preceding application for general 
assistance medical care or during the period of eligibility.  
Any transfer described in this paragraph shall be presumed to 
have been for the purpose of establishing eligibility for 
general assistance medical care, unless the individual furnishes 
convincing evidence to establish that the transaction was 
exclusively for another purpose.  For purposes of this 
paragraph, the value of the asset or interest shall be the fair 
market value at the time it was given away, sold, or disposed 
of, less the amount of compensation received.  For any 
uncompensated transfer, the number of months of ineligibility, 
including partial months, shall be calculated by dividing the 
uncompensated transfer amount by the average monthly per person 
payment made by the medical assistance program to skilled 
nursing facilities for the previous calendar year.  The 
individual shall remain ineligible until this fixed period has 
expired.  The period of ineligibility may exceed 30 months, and 
a reapplication for benefits after 30 months from the date of 
the transfer shall not result in eligibility unless and until 
the period of ineligibility has expired.  The period of 
ineligibility begins in the month the transfer was reported to 
the county agency, or if the transfer was not reported, the 
month in which the county agency discovered the transfer, 
whichever comes first.  For applicants, the period of 
ineligibility begins on the date of the first approved 
application. 
    Sec. 16.  [DEMONSTRATION WAIVER.] 
    The commissioner of human services shall seek a 
demonstration waiver or otherwise obtain federal approval to:  
(1) allow the state to charge premiums as described in section 
12; (2) increase the income standard to 275 percent of the 
federal poverty guideline; and (3) continue eligibility without 
redetermination for infants 13 to 24 months of age. 
    Sec. 17.  [MINNESOTACARE PROGRAM STUDY.] 
    The commissioner of human services shall examine the impact 
the MinnesotaCare program is having on the increase in medical 
assistance enrollment and costs.  As part of this study, the 
commissioner shall determine whether other factors unrelated to 
the MinnesotaCare program may be contributing to the increase in 
medical assistance enrollment.  The commissioner shall also make 
recommendations on necessary adjustments in revenues or 
expenditures to ensure that the health care access fund remains 
solvent for the 1996-1997 biennium.  The commissioner shall 
present findings and recommendations to the legislative 
oversight commission by November 15, 1993. 
    Sec. 18.  [EFFECTIVE DATE.] 
    Section 12 is effective July 1, 1993, or after the 
effective date of the waiver referred to in section 16, 
whichever is later.  Sections 10 and 16 are effective the day 
following final enactment.  Section 10, subdivision 4, is 
effective for all contracts entered into or renewed on or after 
the day following final enactment.  Section 14 is effective for 
health insurance contracts negotiated after November 1, 1993. 

                               ARTICLE 10

                         RURAL HEALTH INITIATIVE
    Section 1.  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 $37,500 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. 2.  Minnesota Statutes 1992, section 144.1484, 
subdivision 1, is amended to read: 
    Subdivision 1.  [SOLE COMMUNITY HOSPITAL FINANCIAL 
ASSISTANCE GRANTS.] The commissioner of health shall award 
financial assistance grants to rural hospitals in isolated areas 
of the state.  To qualify for a grant, a hospital must:  (1) be 
eligible to be classified as a sole community hospital according 
to the criteria in Code of Federal Regulations, title 42, 
section 412.92 or be located in a community with a population of 
less than 5,000 and located more than 25 miles from a like 
hospital currently providing acute short-term services; (2) have 
experienced net income losses in the two most recent consecutive 
hospital fiscal years for which audited financial information is 
available; (3) consist of 30 40 or fewer licensed beds; and 
(4) have exhausted local sources of support.  Before applying 
for a grant, the hospital must have developed a strategic plan.  
The commissioner shall award grants in equal 
amounts. demonstrate to the commissioner that it has obtained 
local support for the hospital and that any state support 
awarded under this program will not be used to supplant local 
support for the hospital.  The commissioner shall review audited 
financial statements of the hospital to assess the extent of 
local support.  Evidence of local support may include bonds 
issued by a local government entity such as a city, county, or 
hospital district for the purpose of financing hospital 
projects; and loans, grants, or donations to the hospital from 
local government entities, private organizations, or 
individuals.  The commissioner shall determine the amount of the 
award to be given to each eligible hospital based on the 
hospital's financial need and the total amount of funding 
available. 
    Sec. 3.  Minnesota Statutes 1992, section 144.1484, 
subdivision 2, is amended to read: 
    Subd. 2.  [GRANTS TO AT-RISK RURAL HOSPITALS TO OFFSET THE 
IMPACT OF THE HOSPITAL TAX.] (a) The commissioner of health 
shall award financial assistance grants to rural hospitals that 
would otherwise close as a direct result of the hospital tax in 
section 295.52.  To be eligible for a grant, a hospital must 
have 50 or fewer beds and must not be located in a city of the 
first class.  To receive a grant, the hospital must demonstrate 
to the satisfaction of the commissioner of health that the 
hospital will close in the absence of state assistance under 
this subdivision and that the hospital tax is the principal 
reason for the closure.  
    (b) At a minimum the hospital must demonstrate that: 
    (1) it has had a net margin of minus ten percent or below 
in at least one of the last two years or a net margin of less 
than zero percent in at least three of the last four years.  For 
purposes of this subdivision, "net margin" means the ratio of 
net income from all hospital sources to total revenues generated 
by the hospital; 
    (2) it has had a negative cash flow in at least three of 
the last four years.  For purposes of this subdivision, "cash 
flow" means the total of net income plus depreciation; and 
    (3) its fund balance has declined by at least 25 percent 
over the last two years, and its fund balance at the end of its 
last fiscal year was equal to or less than its accumulated net 
loss during the last two years.  For purposes of this 
subdivision, "fund balance" means the excess of assets of the 
hospital's fund over its liabilities and reserves. 
    (c) A hospital seeking a grant shall submit the following 
with its application: 
    (1) a statement of the projected dollar amount of tax 
liability for the current fiscal year, projected monthly 
disbursements, and projected net patient revenue base for the 
current fiscal year, broken down by payer categories including 
Medicare, medical assistance, MinnesotaCare, general assistance 
medical care, and others.  The figures must be certified by the 
hospital administrator; 
    (2) a statement of all rate increases, listing the date and 
percentage of each increase during the last three years and the 
date and percentage of any increases for the current fiscal 
year.  The statement must be certified by the hospital 
administrator and must include a narrative explaining whether or 
not the rate increase incorporates a pass-through of the 
hospital tax; 
    (3) a statement certified by the chair or equivalent of the 
hospital board, and by an independent auditor, that the hospital 
will close within the next 12 months as a result of the hospital 
tax unless it receives a grant; and 
    (4) a statement certified by the chair or equivalent of the 
hospital board that the hospital will not close for financial 
reasons within the next 12 months if it receives a grant. 
    The amount of the grant must not exceed the amount of the 
tax the hospital would pay under section 295.52, based on the 
previous year's hospital revenues.  A hospital that closes 
within 12 months after receiving a grant under this subdivision 
must refund the amount of the grant to the commissioner of 
health. 

                               ARTICLE 11 

                     HEALTH PROFESSIONAL EDUCATION 
    Section 1.  Minnesota Statutes 1992, section 124C.62, is 
amended to read: 
    124C.62 [SUMMER HEALTH CARE INTERNS.] 
    Subdivision 1.  [SUMMER INTERNSHIPS.] The commissioner of 
education, through a contract with a nonprofit organization as 
required by subdivision 4, shall award grants to hospitals and 
clinics to establish a summer health care intern program for 
pupils who intend to complete high school graduation 
requirements and who are between their junior and senior year of 
high school.  The purpose of the program is to expose interested 
high school pupils to various careers within the health care 
profession. 
    Subd. 2.  [CRITERIA.] (a) The commissioner, with the advice 
of the Minnesota Medical Association and the Minnesota Hospital 
Association, through the organization under contract, shall 
establish criteria for awarding award grants to hospitals and 
clinics. that agree to:  
    (b) The criteria must include, among other things: 
    (1) the kinds of provide summer health care interns with 
formal exposure to the health care profession a hospital or 
clinic can provide to a pupil; 
    (2) the need for health care professionals in a particular 
area; and provide an orientation for summer health care interns; 
    (3) the willingness of a hospital or clinic to pay one-half 
the costs of employing a pupil summer health care intern, based 
on an overall hourly wage that is at least the minimum wage but 
does not exceed $6 an hour; and 
    (4) interview and hire pupils for a minimum of six weeks 
and a maximum of 12 weeks. 
    (b) In order to be eligible to be hired as a summer health 
intern by a hospital or clinic, a pupil must: 
     (1) intend to complete high school graduation requirements 
and be between the junior and senior year of high school; 
    (2) be from a school district in proximity to the facility; 
and 
    (3) provide the facility with a letter of recommendation 
from a health occupations or science educator. 
    (c) Hospitals and clinics awarded grants may employ pupils 
as summer health care interns beginning on or after June 15, 
1993, if they agree to pay the intern, during the period before 
disbursement of state grant money, with money designated as the 
facility's 50 percent contribution towards internship costs.  
    (c) The Minnesota Medical Association and the Minnesota 
Hospital Association must provide the commissioner, by January 
31, 1993, with a list of hospitals and clinics willing to 
participate in the program and what provisions those hospitals 
or clinics will make to ensure a pupil's adequate exposure to 
the health care profession, and indicate whether a hospital or 
clinic is willing to pay one-half the costs of employing a pupil.
    Subd. 3.  [GRANTS.] The commissioner, through the 
organization under contract, shall award grants to hospitals and 
clinics meeting the requirements of subdivision 2.  The grants 
must be used to pay one-half of the costs of employing a pupil 
in a hospital or clinic during the course of the program.  No 
more than five pupils may be selected from any one high school 
to participate in the program and no more than one-half of the 
number of pupils selected may be from the seven-county 
metropolitan area. 
    Subd. 4.  [CONTRACT.] The commissioner shall contract with 
a statewide, nonprofit organization representing facilities at 
which summer health care interns will serve, to administer the 
grant program established by this section.  The organization 
awarded the grant shall provide the commissioner with any 
information needed by the commissioner to evaluate the program, 
in the form and at the times specified by the commissioner. 
    Sec. 2.  Minnesota Statutes 1992, section 136A.1355, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
education account is established in the health care access 
fund.  The higher education coordinating board shall use money 
from the account to establish a loan forgiveness program for 
medical students agreeing to practice in designated rural areas, 
as defined by the board. 
    Sec. 3.  Minnesota Statutes 1992, section 136A.1355, 
subdivision 3, is amended to read: 
    Subd. 3.  [LOAN FORGIVENESS.] Prior to June 30, 1992, the 
higher education coordinating board may accept up to eight 
applicants who are fourth year medical students, up to eight 
applicants who are first year residents, and up to eight 
applicants who are second year residents for participation in 
the loan forgiveness program.  For the period July 1, 1992 1993 
through June 30, 1995, the higher education coordinating board 
may accept up to eight four applicants who are fourth year 
medical students, three applicants who are pediatric residents, 
and four applicants who are family practice residents, and one 
applicant who is an internal medicine resident, per fiscal year 
for participation in the loan forgiveness program.  If the 
higher education coordinating board does not receive enough 
applicants per fiscal year to fill the number of residents in 
the specific areas of practice, the resident applicants may be 
from any area of practice.  The eight resident applicants can be 
in any year of training.  Applicants are responsible for 
securing their own loans.  Applicants chosen to participate in 
the loan forgiveness program may designate for each year of 
medical school, up to a maximum of four years, an agreed amount, 
not to exceed $10,000, as a qualified loan.  For each year that 
a participant serves as a physician in a designated rural area, 
up to a maximum of four years, the higher education coordinating 
board shall annually pay an amount equal to one year of 
qualified loans.  Participants who move their practice from one 
designated rural area to another remain eligible for loan 
repayment.  In addition, if a resident participating in the loan 
forgiveness program serves at least four weeks during a year of 
residency substituting for a rural physician to temporarily 
relieve the rural physician of rural practice commitments to 
enable the rural physician to take a vacation, engage in 
activities outside the practice area, or otherwise be relieved 
of rural practice commitments, the participating resident may 
designate up to an additional $2,000, above the $10,000 maximum, 
for each year of residency during which the resident substitutes 
for a rural physician for four or more weeks. 
    Sec. 4.  Minnesota Statutes 1992, section 136A.1355, 
subdivision 4, is amended to read: 
    Subd. 4.  [PENALTY FOR NONFULFILLMENT.] If a participant 
does not fulfill the required three-year minimum commitment of 
service in a designated rural area, the higher education 
coordinating board shall collect from the participant the amount 
paid by the board under the loan forgiveness program.  The 
higher education coordinating board shall deposit the money 
collected in the rural physician education account established 
in subdivision 1.  The board shall allow waivers of all or part 
of the money owed the board if emergency circumstances prevented 
fulfillment of the three-year service commitment.  
    Sec. 5.  Minnesota Statutes 1992, section 136A.1355, is 
amended by adding a subdivision to read: 
    Subd. 5.  [LOAN FORGIVENESS; UNDERSERVED URBAN 
COMMUNITIES.] For the period July 1, 1993 to June 30, 1995, the 
higher education coordinating board may accept up to four 
applicants who are either fourth year medical students, or 
residents in family practice, pediatrics, or internal medicine 
per fiscal year for participation in the urban primary care 
physician loan forgiveness program.  The resident applicants may 
be in any year of residency training.  Applicants are 
responsible for securing their own loans.  Applicants chosen to 
participate in the loan forgiveness program may designate for 
each year of medical school, up to a maximum of four years, an 
agreed amount, not to exceed $10,000, as a qualified loan.  For 
each year that a participant serves as a physician in a 
designated underserved urban area, up to a maximum of four 
years, the higher education coordinating board shall annually 
pay an amount equal to one year of qualified loans.  
Participants who move their practice from one designated 
underserved urban community to another remain eligible for loan 
repayment. 
    Sec. 6.  Minnesota Statutes 1992, section 136A.1356, 
subdivision 2, is amended to read: 
    Subd. 2.  [CREATION OF ACCOUNT.] A midlevel practitioner 
education account is established in the health care access 
fund.  The higher education coordinating board shall use money 
from the account to establish a loan forgiveness program for 
midlevel practitioners agreeing to practice in designated rural 
areas.  
    Sec. 7.  Minnesota Statutes 1992, section 136A.1356, 
subdivision 5, is amended to read: 
    Subd. 5.  [PENALTY FOR NONFULFILLMENT.] If a participant 
does not fulfill the service commitment required under 
subdivision 4 for full repayment of all qualified loans, the 
higher education coordinating board shall collect from the 
participant 100 percent of any payments made for qualified loans 
and interest at a rate established according to section 270.75.  
The higher education coordinating board shall deposit the money 
collected in the midlevel practitioner education 
account established in subdivision 2.  The board shall allow 
waivers of all or part of the money owed the board if emergency 
circumstances prevented fulfillment of the required service 
commitment.  
     Sec. 8.  Minnesota Statutes 1992, section 136A.1357, is 
amended to read: 
    136A.1357 [EDUCATION ACCOUNT FOR NURSES WHO AGREE TO 
PRACTICE IN A NURSING HOME OR INTERMEDIATE CARE FACILITY FOR 
PERSONS WITH MENTAL RETARDATION OR RELATED CONDITIONS.] 
    Subdivision 1.  [CREATION OF THE ACCOUNT.] An education 
account in the general health care access fund is established 
for a loan forgiveness program for nurses who agree to practice 
nursing in a nursing home or intermediate care facility for 
persons with mental retardation or related conditions.  The 
account consists of money appropriated by the legislature and 
repayments and penalties collected under subdivision 4.  Money 
from the account must be used for a loan forgiveness program. 
    Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
the loan forgiveness program, a person planning to enroll or 
enrolled in a program of study designed to prepare the person to 
become a registered nurse or licensed practical nurse must 
submit a letter of interest to the board before completing the 
first year of study completion of a nursing education program.  
Before completing the first year of study completion of the 
program, the applicant must sign a contract in which the 
applicant agrees to practice nursing for at least one of the 
first two years following completion of the nursing education 
program providing nursing services in a licensed nursing home or 
intermediate care facility for persons with mental retardation 
or related conditions.  
    Subd. 3.  [LOAN FORGIVENESS.] The board may accept up to 
ten applicants a year.  Applicants are responsible for securing 
their own loans.  For each year of nursing education, for up to 
two years, applicants accepted into the loan forgiveness program 
may designate an agreed amount, not to exceed $3,000, as a 
qualified loan.  For each year that a participant practices 
nursing in a nursing home or intermediate care facility for 
persons with mental retardation or related conditions, up to a 
maximum of two years, the board shall annually repay an amount 
equal to one year of qualified loans.  Participants who move 
from one nursing home or intermediate care facility for persons 
with mental retardation or related conditions to another remain 
eligible for loan repayment.  
    Subd. 4.  [PENALTY FOR NONFULFILLMENT.] If a participant 
does not fulfill the service commitment required under 
subdivision 3 for full repayment of all qualified loans, 
the commissioner higher education coordinating board shall 
collect from the participant 100 percent of any payments made 
for qualified loans and interest at a rate established according 
to section 270.75.  The board shall deposit the collections in 
the general health care access fund to be credited to the 
account established in subdivision 1.  The board may grant a 
waiver of all or part of the money owed as a result of a 
nonfulfillment penalty if emergency circumstances prevented 
fulfillment of the required service commitment. 
    Subd. 5.  [RULES.] The board shall adopt rules to implement 
this section. 
    Sec. 9.  [136A.1358] [RURAL CLINICAL SITES FOR NURSE 
PRACTITIONER EDUCATION.] 
    Subdivision 1.  [DEFINITION.] For purposes of this section, 
"rural" means any area of the state outside of the counties of 
Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington, 
and outside the cities of Duluth, Mankato, Moorhead, Rochester, 
and St. Cloud. 
    Subd. 2.  [ESTABLISHMENT.] A grant program is established 
under the authority of the higher education coordinating board 
to provide grants to colleges or schools of nursing located in 
Minnesota that operate programs of study designed to prepare 
registered nurses for advanced practice as nurse practitioners. 
    Subd. 3.  [PROGRAM GOALS.] Colleges and schools of nursing 
shall use grants received to provide rural students with 
increased access to programs of study for nurse practitioners, 
by: 
    (1) developing rural clinical sites; 
    (2) allowing students to remain in their rural communities 
for clinical rotations; and 
    (3) providing faculty to supervise students at rural 
clinical sites. 
The overall goal of the grant program is to increase the number 
of graduates of nurse practitioner programs who work in rural 
areas of the state. 
    Subd. 4.  [RESPONSIBILITY OF NURSING PROGRAMS.] (a) 
Colleges or schools of nursing interested in participating in 
the grant program must apply to the higher education 
coordinating board, according to the policies established by the 
board.  Applications submitted by colleges or schools of nursing 
must include a detailed proposal for achieving the goals listed 
in subdivision 3, a plan for encouraging sufficient applications 
from rural applicants to meet the requirements of paragraph (b), 
and any additional information required by the board. 
    (b) Each college or school of nursing, as a condition of 
accepting a grant, shall make at least 25 percent of the 
openings in each nurse practitioner entering class available to 
applicants who live in rural areas and desire to practice as a 
nurse practitioner in rural areas.  This requirement is 
effective beginning with the fall 1994 entering class and 
remains in effect for each biennium thereafter for which a 
college or school of nursing is awarded a grant renewal.  The 
board may exempt colleges or schools of nursing from this 
requirement if the college or school can demonstrate, to the 
satisfaction of the board, that the nurse practitioner program 
did not receive enough applications or acceptance letters from 
qualified rural applicants to meet the requirement. 
    (c) Colleges or schools of nursing participating in the 
grant program shall report to the higher education coordinating 
board on their program activity as requested by the board. 
    Subd. 5.  [RESPONSIBILITIES OF THE HIGHER EDUCATION 
COORDINATING BOARD.] (a) The board shall establish an 
application process for interested colleges and schools of 
nursing, and shall require colleges and schools of nursing to 
submit grant applications to the board by November 1, 1993.  The 
board may award up to two grants for the biennium ending June 
30, 1995.  
    (b) In selecting grant recipients, the board shall consider:
    (1) the likelihood that an applicant's grant proposal will 
be successful in achieving the program goals listed in 
subdivision 3; 
    (2) the potential effectiveness of the college's or 
school's plan to encourage applications from rural applicants; 
and 
    (3) the academic quality of the college's or school's 
program of education for nurse practitioners. 
    (c) The board shall notify grant recipients of an award by 
December 1, 1993, and shall disburse the grants by January 1, 
1994.  The board may renew grants if a college or school of 
nursing demonstrates that satisfactory progress has been made 
during the past biennium toward achieving the goals listed in 
subdivision 3. 
    Sec. 10.  Minnesota Statutes 1992, section 137.38, 
subdivision 2, is amended to read: 
    Subd. 2.  [PRIMARY CARE.] For purposes of sections 137.38 
to 137.40, "primary care" means a type of medical care delivery 
that assumes ongoing responsibility for the patient in both 
health maintenance and illness treatment.  It is personal care 
involving a unique interaction and communication between the 
patient and the physician.  It is comprehensive in scope, and 
includes all the overall coordination of the care of the 
patient's health care problems including biological, behavioral, 
and social problems.  The appropriate use of consultants and 
community resources is an important aspect of effective primary 
care.  Primary care physicians include family practitioners, 
general pediatricians, and general internists. 
     Sec. 11.  Minnesota Statutes 1992, section 137.38, 
subdivision 3, is amended to read: 
    Subd. 3.  [GOALS.] The board of regents of the University 
of Minnesota, through the University of Minnesota medical 
school, is requested to implement the initiatives required by 
sections 137.38 to 137.40 in order to increase the number of 
graduates of residency programs of the medical school who 
practice primary care by 20 percent over an eight-year period.  
The initiatives must be designed to encourage newly graduated 
primary care physicians to establish practices in areas of rural 
and urban Minnesota that are medically underserved. 
     Sec. 12.  Minnesota Statutes 1992, section 137.38, 
subdivision 4, is amended to read: 
    Subd. 4.  [GRANTS.] The board of regents is requested to 
seek grants from private foundations and other nonstate sources, 
including community provider organizations, for the medical 
school initiatives outlined in sections 137.38 to 137.40. 
    Sec. 13.  Minnesota Statutes 1992, section 137.39, 
subdivision 2, is amended to read: 
    Subd. 2.  [DESIGN OF CURRICULUM.] The medical school is 
requested to ensure that its curriculum provides students with 
early exposure to primary care physicians and primary care 
practice, and to address other primary care curriculum issues 
such as public health, preventive medicine, and health care 
delivery.  The medical school is requested to also support 
premedical school educational initiatives that provide students 
with greater exposure to primary care physicians and practices. 
    Sec. 14.  Minnesota Statutes 1992, section 137.39, 
subdivision 3, is amended to read: 
    Subd. 3.  [CLINICAL EXPERIENCES IN PRIMARY CARE.] The 
medical school, in consultation with medical school faculty at 
the University of Minnesota, Duluth, is requested to develop a 
program to provide students with clinical experiences in primary 
care settings in internal medicine and pediatrics.  The program 
must provide training experiences in medical clinics in rural 
Minnesota communities, as well as in community clinics and 
health maintenance organizations in the Twin Cities metropolitan 
area. 
    Sec. 15.  Minnesota Statutes 1992, section 137.40, 
subdivision 3, is amended to read: 
    Subd. 3.  [CONTINUING MEDICAL EDUCATION.] The medical 
school is requested to develop continuing medical education 
programs for primary care physicians that are comprehensive, 
community-based, and accessible to primary care physicians in 
all areas of the state, and which enhance primary care skills. 
    Sec. 16.  [144.1487] [LOAN REPAYMENT PROGRAM FOR HEALTH 
PROFESSIONALS.] 
    Subdivision 1.  [DEFINITIONS.] (a) For purposes of sections 
144.1487 to 144.1492, the following definitions apply. 
    (b) "Board" means the higher education coordinating board. 
    (c) "Health professional shortage area" means an area 
designated as such by the federal secretary of health and human 
services, as provided under Code of Federal Regulations, title 
42, part 5, and United States Code, title 42, section 254E. 
    Subd. 2.  [ESTABLISHMENT AND PURPOSE.] The commissioner 
shall establish a National Health Services Corps state loan 
repayment program authorized by section 388I of the Public 
Health Service Act, United States Code, title 42, section 
254q-1, as amended by Public Law Number 101-597.  The purpose of 
the program is to assist communities with the recruitment and 
retention of health professionals in federally designated health 
professional shortage areas. 
    Sec. 17.  [144.1488] [PROGRAM ADMINISTRATION AND 
ELIGIBILITY.] 
    Subdivision 1.  [DUTIES OF THE COMMISSIONER OF HEALTH.] The 
commissioner shall administer the state loan repayment program.  
The commissioner shall: 
    (1) ensure that federal funds are used in accordance with 
program requirements established by the federal National Health 
Services Corps; 
    (2) notify potentially eligible loan repayment sites about 
the program; 
    (3) develop and disseminate application materials to sites; 
    (4) review and rank applications using the scoring criteria 
approved by the federal department of health and human services 
as part of the Minnesota department of health's National Health 
Services Corps state loan repayment program application; 
    (5) select sites that qualify for loan repayment based upon 
the availability of federal and state funding; 
    (6) provide the higher education coordinating board with a 
list of qualifying sites; and 
    (7) carry out other activities necessary to implement and 
administer sections 144.1487 to 144.1492. 
    The commissioner shall enter into an interagency agreement 
with the higher education coordinating board to carry out the 
duties assigned to the board under sections 144.1487 to 144.1492.
    Subd. 2.  [DUTIES OF THE HIGHER EDUCATION COORDINATING 
BOARD.] The higher education coordinating board, through an 
interagency agreement with the commissioner of health, shall: 
    (1) verify the eligibility of program participants; 
    (2) sign a contract with each participant that specifies 
the obligations of the participant and the state; 
    (3) arrange for the payment of qualifying educational loans 
for program participants; 
    (4) monitor the obligated service of program participants; 
    (5) waive or suspend service or payment obligations of 
participants in appropriate situations; 
    (6) place participants who fail to meet their obligations 
in default; 
    (7) enforce penalties for default; and 
    (8) report regularly to the commissioner. 
    Subd. 3.  [ELIGIBLE LOAN REPAYMENT SITES.] Private, 
nonprofit, and public entities located in and providing health 
care services in federally designated primary care health 
professional shortage areas are eligible to apply for the 
program.  The commissioner shall develop a list of Minnesota 
health professional shortage areas in greatest need of health 
care professionals and shall select loan repayment sites from 
that list.  The commissioner shall ensure, to the greatest 
extent possible, that the geographic distribution of sites 
within the state reflects the percentage of the population 
living in rural and urban health professional shortage areas. 
    Subd. 4.  [ELIGIBLE HEALTH PROFESSIONALS.] (a) To be 
eligible to apply to the higher education coordinating board for 
the loan repayment program, health professionals must be 
citizens or nationals of the United States, must not have any 
unserved obligations for service to a federal, state, or local 
government, or other entity, and must be ready to begin 
full-time clinical practice upon signing a contract for 
obligated service. 
    (b) In selecting physicians for participation, the board 
shall give priority to physicians who are board certified or 
have completed a residency in family practice, osteopathic 
general practice, obstetrics and gynecology, internal medicine, 
or pediatrics.  A physician selected for participation is not 
eligible for loan repayment until the physician has an 
employment agreement or contract with an eligible loan repayment 
site and has signed a contract for obligated service with the 
higher education coordinating board. 
    Sec. 18.  [144.1489] [OBLIGATIONS OF PARTICIPANTS.] 
    Subdivision 1.  [CONTRACT REQUIRED.] Before starting the 
period of obligated service, a participant must sign a contract 
with the higher education coordinating board that specifies the 
obligations of the participant and the board. 
    Subd. 2.  [OBLIGATED SERVICE.] A participant shall agree in 
the contract to fulfill the period of obligated service by 
providing primary health care services in full-time clinical 
practice.  The service must be provided in a private, nonprofit, 
or public entity that is located in and providing services to a 
federally designated health professional shortage area and that 
has been designated as an eligible site by the commissioner 
under the state loan repayment program. 
    Subd. 3.  [LENGTH OF SERVICE.] Participants must agree to 
provide obligated service for a minimum of two years.  A 
participant may extend a contract to provide obligated service 
for a third year, subject to board approval and the availability 
of federal and state funding. 
    Subd. 4.  [AFFIDAVIT OF SERVICE REQUIRED.] Within 30 days 
of the start of obligated service, and by February 1 of each 
succeeding calendar year, a participant shall submit an 
affidavit to the board stating that the participant is providing 
the obligated service and which is signed by a representative of 
the organizational entity in which the service is provided.  
Participants must provide written notice to the board within 30 
days of:  a change in name or address, a decision not to fulfill 
a service obligation, or cessation of clinical practice. 
    Subd. 5.  [TAX RESPONSIBILITY.] The participant is 
responsible for reporting on federal income tax returns any 
amount paid by the state on designated loans, if required to do 
so under federal law. 
    Subd. 6.  [NONDISCRIMINATION REQUIREMENTS.] Participants 
are prohibited from charging a higher rate for professional 
services than the usual and customary rate prevailing in the 
area where the services are provided.  If a patient is unable to 
pay this charge, a participant shall charge the patient a 
reduced rate or not charge the patient.  Participants must agree 
not to discriminate on the basis of ability to pay or status as 
a Medicare or medical assistance enrollee.  Participants must 
agree to accept assignment under the Medicare program and to 
serve as an enrolled provider under medical assistance. 
    Sec. 19.  [144.1490] [RESPONSIBILITIES OF THE LOAN 
REPAYMENT PROGRAM.] 
    Subdivision 1.  [LOAN REPAYMENT.] Subject to the 
availability of federal and state funds for the loan repayment 
program, the higher education coordinating board shall pay all 
or part of the qualifying education loans up to $20,000 annually 
for each primary care physician participant that fulfills the 
required service obligation.  For purposes of this provision, 
"qualifying educational loans" are government and commercial 
loans for actual costs paid for tuition, reasonable education 
expenses, and reasonable living expenses related to the graduate 
or undergraduate education of a health care professional. 
    Subd. 2.  [PROCEDURE FOR LOAN REPAYMENT.] Program 
participants, at the time of signing a contract, shall designate 
the qualifying loan or loans for which the higher education 
coordinating board is to make payments.  The participant shall 
submit to the board all payment books for the designated loan or 
loans or all monthly billings for the designated loan or loans 
within five days of receipt.  The board shall make payments in 
accordance with the terms and conditions of the designated 
loans, in an amount not to exceed $20,000 when annualized.  If 
the amount paid by the board is less than $20,000 during a 
12-month period, the board shall pay during the 12th month an 
additional amount towards a loan or loans designated by the 
participant, to bring the total paid to $20,000.  The total 
amount paid by the board must not exceed the amount of principal 
and accrued interest of the designated loans. 
    Sec. 20.  [144.1491] [FAILURE TO COMPLETE OBLIGATED 
SERVICE.] 
    Subdivision 1.  [PENALTIES FOR BREACH OF CONTRACT.] A 
program participant who fails to complete two years of obligated 
service shall repay the amount paid, as well as a financial 
penalty based upon the length of the service obligation not 
fulfilled.  If the participant has served at least one year, the 
financial penalty is the number of unserved months multiplied by 
$1,000.  If the participant has served less than one year, the 
financial penalty is the total number of obligated months 
multiplied by $1,000. 
    Subd. 2.  [SUSPENSION OR WAIVER OF OBLIGATION.] Payment or 
service obligations cancel in the event of a participant's 
death.  The board may waive or suspend payment or service 
obligations in case of total and permanent disability or 
long-term temporary disability lasting for more than two years.  
The board shall evaluate all other requests for suspension or 
waivers on a case-by-case basis. 
    Sec. 21.  [NURSE PRACTITIONER PROMOTION TEAMS.] 
    The commissioner of health, through the office of rural 
health, shall establish nurse practitioner promotion teams, 
consisting of one nurse practitioner and one physician who are 
practicing jointly.  The promotion teams shall travel to rural 
communities and provide physicians, medical clinic 
administrators, and other interested parties with information 
on:  the benefits of joint practices between nurse practitioners 
and physicians and methods of establishing and maintaining joint 
practices.  The office of rural health shall contract with 
promotion teams to visit up to 20 rural communities during the 
biennium ending June 30, 1995.  The office of rural health shall 
provide members of promotion teams with stipends for their time 
and travel expenses not to exceed the amount specified in 
Minnesota Statutes, section 15.059, subdivision 3. 
    Sec. 22.  [EFFECTIVE DATE.] 
    Section 1, relating to summer internships, is effective the 
day following final enactment.  Sections 16 to 20 related to the 
National Health Services Corps loan repayment program are 
effective the day following final enactment. 

                               ARTICLE 12 

                       DATA RESEARCH INITIATIVES 
    Section 1.  Minnesota Statutes 1992, section 62J.30, 
subdivision 1, is amended to read: 
    Subdivision 1.  [DEFINITIONS.] For purposes of sections 
62J.30 to 62J.34, the following definitions apply: 
    (a) "Practice parameter" means a statement intended to 
guide the clinical decision making of health care providers and 
patients that is supported by the results of appropriately 
designed outcomes research studies, including those studies 
sponsored or that has been approved by the federal agency for 
health care policy and research, or has been adopted for use by 
a national medical society the American Medical Association, the 
National Medical Association, a member board of the American 
Board of Medical Specialties, a board approved by the American 
Osteopathic Association, a college or board approved by the 
Royal College of Physicians and Surgeons of Canada, a national 
health professional board or association, or a board approved by 
the American Dental Association. 
    (b) "Outcomes research" means research designed to identify 
and analyze the outcomes and costs of alternative interventions 
for a given clinical condition, in order to determine the most 
appropriate and cost-effective means to prevent, diagnose, 
treat, or manage the condition, or in order to develop and test 
methods for reducing inappropriate or unnecessary variations in 
the type and frequency of interventions. 
    Sec. 2.  Minnesota Statutes 1992, section 62J.30, 
subdivision 6, is amended to read: 
    Subd. 6.  [DATA COLLECTION PROCEDURES.] The health care 
analysis unit shall collect data from health care providers, 
health carriers, and individuals in the most cost-effective 
manner, which does not unduly burden providers them.  The unit 
may require health care providers and health carriers to collect 
and provide all patient health records and claim files, provide 
mailing lists of patients who have consented to release of data, 
and cooperate in other ways with the data collection 
process.  For purposes of this chapter, the health care analysis 
unit shall assign, or require health care providers and health 
carriers to assign, a unique identification number to each 
patient to safeguard patient identity.  The unit may also 
require health care providers and health carriers to provide 
mailing lists of patients who have consented to release of data. 
The commissioner shall require all health care providers, group 
purchasers, and state agencies to use a standard patient 
identifier and a standard identifier for providers and health 
plans when reporting data under this chapter.  The data analysis 
unit must code patient identifiers to prevent identification and 
to enable release of otherwise private data to researchers, 
providers, and group purchasers in a manner consistent with 
chapter 13 and section 144.335. 
    Sec. 3.  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 are private data on individuals.  Data not on 
individuals are nonpublic data.  The commissioner may release 
private data on individuals and nonpublic data to researchers 
affiliated with university research centers or departments who 
are conducting research on health outcomes, practice parameters, 
and medical practice style; researchers working under contract 
with the commissioner; and individuals purchasing health care 
services for health carriers and groups.  Prior to releasing any 
nonpublic or private data under this paragraph that identify or 
relate to a specific health carrier, medical provider, or health 
care facility, the commissioner shall provide at least 30 days' 
notice to the subject of the data, including a copy of the 
relevant data, and allow the subject of the data to provide a 
brief explanation or comment on the data which must be released 
with the data.  The commissioner shall require any person or 
organization receiving under this subdivision either private 
data on individuals or nonpublic data to sign an agreement to 
maintain the data that it receives according to the statutory 
provisions applicable to the data.  The agreement shall not 
limit the preparation and dissemination of summary data as 
permitted under section 13.05, subdivision 7.  To the extent 
reasonably possible, release of private or confidential data 
under this chapter shall be made without releasing data that 
could reveal the identity of individuals and should instead be 
released using the identification numbers required by 
subdivision 6. 
    (b) Summary data derived from data collected through the 
large-scale data base initiatives of the health care analysis 
unit may be provided under section 13.05, subdivision 7, and may 
be released in studies produced by the commissioner. 
    (c) The commissioner shall adopt rules to establish 
criteria and procedures to govern access to and the use of data 
collected through the initiatives of the health care analysis 
unit. 
     Sec. 4.  Minnesota Statutes 1992, section 62J.30, 
subdivision 8, is amended to read: 
     Subd. 8.  [DATA COLLECTION ADVISORY COMMITTEE.] (a) 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. 
    (b) The data collection advisory committee shall develop a 
timeline to complete all responsibilities and transfer any 
ongoing responsibilities to the data institute.  The timeline 
must specify the data on which ongoing responsibilities will be 
transferred.  This transfer must be completed by July 1, 1994. 
    Sec. 5.  Minnesota Statutes 1992, section 62J.32, 
subdivision 4, is amended to read: 
    Subd. 4.  [PRACTICE PARAMETER ADVISORY COMMITTEE.] (a) 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. 
    (b) The commissioner, upon the advice and recommendation of 
the practice parameter advisory committee, may convene expert 
review panels to assess practice parameters and outcome research 
associated with practice parameters. 
    Sec. 6.  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 
American Medical Association, the National Medical Association, 
a member board of the American Board of Medical Specialties, a 
board approved by the American Osteopathic Association, a 
college or board approved by the Royal College of Physicians and 
Surgeons of Canada, a national health professional board or 
association, a board approved by the American Dental 
Association.  The commissioner shall use rulemaking to approve 
practice parameters that are newly developed or substantially 
revised by the health care analysis unit.  Practice parameters 
adopted without rulemaking must be published in the State 
Register. 
    Sec. 7.  Minnesota Statutes 1992, section 144.335, is 
amended by adding a subdivision to read: 
    Subd. 3b.  [RELEASE OF RECORDS TO COMMISSIONER OF HEALTH OR 
DATA INSTITUTE.] Subdivision 3a does not apply to the release of 
health records to the commissioner of health or the data 
institute under chapter 62J, provided that the commissioner 
encrypts the patient identifier upon receipt of the data. 
    Sec. 8.  Minnesota Statutes 1992, section 214.16, 
subdivision 3, is amended to read: 
    Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
shall take disciplinary action, which may include license 
revocation, against a regulated person for: 
    (1) intentional failure to provide the commissioner of 
health or the health care analysis unit established under 
section 62J.30 with the data on gross patient revenue as 
required under section 62J.04 chapter 62J; 
    (2) failure to provide the health care analysis unit with 
data as required under Laws 1992, chapter 549, article 7; 
    (3) intentional failure to provide the commissioner of 
revenue with data on gross revenue and other information 
required for the commissioner to implement sections 295.50 to 
295.58; and 
    (4) (3) intentional failure to pay the health care provider 
tax required under section 295.52. 

                               ARTICLE 13 

                               FINANCING 
    Section 1.  Minnesota Statutes 1992, section 256B.0625, 
subdivision 13, is amended to read: 
    Subd. 13.  [DRUGS.] (a) Medical assistance covers drugs if 
prescribed by a licensed practitioner and dispensed by a 
licensed pharmacist, or by a physician enrolled in the medical 
assistance program as a dispensing physician.  The commissioner, 
after receiving recommendations from the Minnesota Medical 
Association and the Minnesota Pharmacists Association, shall 
designate a formulary committee to advise the commissioner on 
the names of drugs for which payment is made, recommend a system 
for reimbursing providers on a set fee or charge basis rather 
than the present system, and develop methods encouraging use of 
generic drugs when they are less expensive and equally effective 
as trademark drugs.  The commissioner shall appoint the 
formulary committee members no later than 30 days following July 
1, 1981.  The formulary committee shall consist of nine members, 
four of whom shall be physicians who are not employed by the 
department of human services, and a majority of whose practice 
is for persons paying privately or through health insurance, 
three of whom shall be pharmacists who are not employed by the 
department of human services, and a majority of whose practice 
is for persons paying privately or through health insurance, a 
consumer representative, and a nursing home representative.  
Committee members shall serve two-year terms and shall serve 
without compensation.  The commissioner shall establish a drug 
formulary.  Its establishment and publication shall not be 
subject to the requirements of the administrative procedure act, 
but the formulary committee shall review and comment on the 
formulary contents.  The formulary committee shall review and 
recommend drugs which require prior authorization.  The 
formulary committee may recommend drugs for prior authorization 
directly to the commissioner, as long as opportunity for public 
input is provided.  Prior authorization may be requested by the 
commissioner based on medical and clinical criteria before 
certain drugs are eligible for payment.  Before a drug may be 
considered for prior authorization at the request of the 
commissioner:  
     (1) the drug formulary committee must develop criteria to 
be used for identifying drugs; the development of these criteria 
is not subject to the requirements of chapter 14, but the 
formulary committee shall provide opportunity for public input 
in developing criteria; 
     (2) the drug formulary committee must hold a public forum 
and receive public comment for an additional 15 days; and 
     (3) the commissioner must provide information to the 
formulary committee on the impact that placing the drug on prior 
authorization will have on the quality of patient care and 
information regarding whether the drug is subject to clinical 
abuse or misuse.  Prior authorization may be required by the 
commissioner before certain formulary drugs are eligible for 
payment.  The formulary shall not include:  drugs or products 
for which there is no federal funding; over-the-counter drugs, 
except for antacids, acetaminophen, family planning products, 
aspirin, insulin, products for the treatment of lice, and 
vitamins for children under the age of seven and pregnant or 
nursing women; or any other over-the-counter drug identified by 
the commissioner, in consultation with the drug formulary 
committee as necessary, appropriate and cost effective for the 
treatment of certain specified chronic diseases, conditions or 
disorders, and this determination shall not be subject to the 
requirements of chapter 14, the administrative procedure act; 
nutritional products, except for those products needed for 
treatment of phenylketonuria, hyperlysinemia, maple syrup urine 
disease, a combined allergy to human milk, cow milk, and soy 
formula, or any other childhood or adult diseases, conditions, 
or disorders identified by the commissioner as requiring a 
similarly necessary nutritional product; anorectics; and drugs 
for which medical value has not been established.  Nutritional 
products needed for the treatment of a combined allergy to human 
milk, cow's milk, and soy formula require prior authorization.  
Separate payment shall not be made for nutritional products for 
residents of long-term care facilities; payment for dietary 
requirements is a component of the per diem rate paid to these 
facilities.  Payment to drug vendors shall not be modified 
before the formulary is established except that the commissioner 
shall not permit payment for any drugs which may not by law be 
included in the formulary, and the commissioner's determination 
shall not be subject to chapter 14, the administrative procedure 
act.  The commissioner shall publish conditions for prohibiting 
payment for specific drugs after considering the formulary 
committee's recommendations.  
    (b) The basis for determining the amount of payment shall 
be the lower of the actual acquisition costs of the drugs plus a 
fixed dispensing fee established by the commissioner, the 
maximum allowable cost set by the federal government or by the 
commissioner plus the fixed dispensing fee or the usual and 
customary price charged to the public.  Actual acquisition cost 
includes quantity and other special discounts except time and 
cash discounts.  The actual acquisition cost of a drug may shall 
be estimated by the commissioner, at average wholesale price 
minus 7.6 percent effective January 1, 1994.  The maximum 
allowable cost of a multisource drug may be set by the 
commissioner and it shall be comparable to, but no higher than, 
the maximum amount paid by other third party payors in this 
state who have maximum allowable cost programs.  Establishment 
of the amount of payment for drugs shall not be subject to the 
requirements of the administrative procedure act.  An additional 
dispensing fee of $.30 may be added to the dispensing fee paid 
to pharmacists for legend drug prescriptions dispensed to 
residents of long-term care facilities when a unit dose blister 
card system, approved by the department, is used.  Under this 
type of dispensing system, the pharmacist must dispense a 30-day 
supply of drug.  The National Drug Code (NDC) from the drug 
container used to fill the blister card must be identified on 
the claim to the department.  The unit dose blister card 
containing the drug must meet the packaging standards set forth 
in Minnesota Rules, part 6800.2700, that govern the return of 
unused drugs to the pharmacy for reuse.  The pharmacy provider 
will be required to credit the department for the actual 
acquisition cost of all unused drugs that are eligible for 
reuse.  Over-the-counter medications must be dispensed in the 
manufacturer's unopened package.  The commissioner may permit 
the drug clozapine to be dispensed in a quantity that is less 
than a 30-day supply.  Whenever a generically equivalent product 
is available, payment shall be on the basis of the actual 
acquisition cost of the generic drug, unless the prescriber 
specifically indicates "dispense as written - brand necessary" 
on the prescription as required by section 151.21, subdivision 
2.  Implementation of any change in the fixed dispensing fee 
that has not been subject to the administrative procedure act is 
limited to not more than 180 days, unless, during that time, the 
commissioner initiates rulemaking through the administrative 
procedure act. 
     (c) Until January 4, 1993, or the date the Medicaid 
Management Information System (MMIS) upgrade is implemented, 
whichever occurs last, a pharmacy provider may require 
individuals who seek to become eligible for medical assistance 
under a one-month spend-down, as provided in section 256B.056, 
subdivision 5, to pay for services to the extent of the 
spend-down amount at the time the services are provided.  A 
pharmacy provider choosing this option shall file a medical 
assistance claim for the pharmacy services provided.  If medical 
assistance reimbursement is received for this claim, the 
pharmacy provider shall return to the individual the total 
amount paid by the individual for the pharmacy services 
reimbursed by the medical assistance program.  If the claim is 
not eligible for medical assistance reimbursement because of the 
provider's failure to comply with the provisions of the medical 
assistance program, the pharmacy provider shall refund to the 
individual the total amount paid by the individual.  Pharmacy 
providers may choose this option only if they apply similar 
credit restrictions to private pay or privately insured 
individuals.  A pharmacy provider choosing this option must 
inform individuals who seek to become eligible for medical 
assistance under a one-month spend-down of (1) their right to 
appeal the denial of services on the grounds that they have 
satisfied the spend-down requirement, and (2) their potential 
eligibility for the health right program or the children's 
health plan. 
     Sec. 2.  Minnesota Statutes 1992, section 270B.01, 
subdivision 8, is amended to read: 
    Subd. 8.  [MINNESOTA TAX LAWS.] For purposes of this 
chapter only, "Minnesota tax laws" means the taxes administered 
by or paid to the commissioner under chapters 289A, 290, 290A, 
291, and 297A and sections 295.50 to 295.59, and includes any 
laws for the assessment, collection, and enforcement of those 
taxes. 
    Sec. 3.  Minnesota Statutes 1992, section 295.50, 
subdivision 3, is amended to read: 
    Subd. 3.  [GROSS REVENUES.] (a) "Gross revenues" are total 
amounts received in money or otherwise by: 
    (1) a resident hospital for inpatient or outpatient patient 
services as defined in Minnesota Rules, part 4650.0102, subparts 
21 and 29; 
    (2) a resident surgical center for patient services; 
    (3) a nonresident hospital for inpatient or outpatient 
patient services as defined in Minnesota Rules, part 4650.0102, 
subparts 21 and 29, provided to patients domiciled in Minnesota; 
    (4) a nonresident surgical center for patient services 
provided to patients domiciled in Minnesota; 
    (3) (5) a resident health care provider, other than a 
health maintenance organization staff model health carrier, 
for covered patient services listed in section 256B.0625; 
    (4) (6) a nonresident health care provider for covered 
patient services listed in section 256B.0625 provided to an 
individual domiciled in Minnesota; 
    (5) (7) a wholesale drug distributor for sale or 
distribution of prescription drugs that are delivered in 
Minnesota by the distributor or a common carrier:  (i) to a 
Minnesota resident by a wholesale drug distributor who is a 
nonresident pharmacy directly, by common carrier, or by mail; or 
(ii) in Minnesota by the wholesale drug distributor, by common 
carrier, or by mail, unless the prescription drugs are delivered 
to another wholesale drug distributor.  Prescription drugs do 
not include nutritional products as defined in Minnesota Rules, 
part 9505.0325; and 
    (6) (8) a health maintenance organization staff model 
health carrier as gross premiums for enrollees, carrier 
copayments, deductibles, coinsurance, and fees for covered 
patient services listed in section 256B.0625 covered under its 
contracts with groups and enrollees. 
    (b) Gross revenues do not include governmental, foundation, 
or other grants or donations to a hospital or health care 
provider for operating or other costs. 
    Sec. 4.  Minnesota Statutes 1992, section 295.50, 
subdivision 4, is amended to read: 
    Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
provider" is a vendor of medical care qualifying for 
reimbursement under the medical assistance program provided 
under chapter 256B, and includes health maintenance 
organizations but excludes hospitals and pharmacies means: 
    (1) a person furnishing any or all of the following goods 
or services directly to a patient or consumer:  medical, 
surgical, optical, visual, dental, hearing, nursing services, 
drugs, medical supplies, medical appliances, laboratory, 
diagnostic or therapeutic services, or any goods and services 
not listed above that qualifies for reimbursement under the 
medical assistance program provided under chapter 256B; 
    (2) a staff model health carrier; 
    (3) a licensed ambulance service; or 
    (4) a pharmacy as defined in section 151.01. 
    (b) Health care provider does not include hospitals, 
nursing homes licensed under chapter 144A, and surgical centers. 
    Sec. 5.  Minnesota Statutes 1992, section 295.50, 
subdivision 7, is amended to read: 
    Subd. 7.  [HOSPITAL.] "Hospital" is means a hospital 
licensed under chapter 144, or a hospital providing inpatient or 
outpatient services licensed by any other state or province or 
territory of Canada or a surgical center. 
    Sec. 6.  Minnesota Statutes 1992, section 295.50, is 
amended by adding a subdivision to read: 
    Subd. 9b.  [PATIENT SERVICES.] "Patient services" means 
inpatient and outpatient services and other goods and services 
provided by hospitals, surgical centers, or health care 
providers.  They include the following health care goods and 
services provided to a patient or consumer: 
    (1) bed and board; 
    (2) nursing services and other related services; 
    (3) use of hospitals, surgical centers, or health care 
provider facilities; 
    (4) medical social services; 
    (5) drugs, biologicals, supplies, appliances, and 
equipment; 
    (6) other diagnostic or therapeutic items or services; 
    (7) medical or surgical services; 
    (8) items and services furnished to ambulatory patients not 
requiring emergency care; 
    (9) emergency services; and 
    (10) covered services listed in section 256B.0625 and in 
Minnesota Rules, parts 9505.0170 to 9505.0475. 
    Sec. 7.  Minnesota Statutes 1992, section 295.50, is 
amended by adding a subdivision to read: 
    Subd. 9c.  [PERSON.] "Person" means an individual, 
partnership, limited liability company, corporation, 
association, governmental unit or agency, or public or private 
organization of any kind. 
    Sec. 8.  Minnesota Statutes 1992, section 295.50, is 
amended by adding a subdivision to read: 
    Subd. 10b.  [REGIONAL TREATMENT CENTER.] "Regional 
treatment center" means a regional center as defined in section 
253B.02, subdivision 18, and named in sections 252.025, 
subdivision 1; 253.015, subdivision 1; 253.201; and 254.05. 
    Sec. 9.  Minnesota Statutes 1992, section 295.50, is 
amended by adding a subdivision to read: 
    Subd. 12b.  [STAFF MODEL HEALTH CARRIER.] "Staff model 
health carrier" means a health carrier as defined in section 
62L.02, subdivision 16, which employs one or more types of 
health care provider to deliver health care services to the 
health carrier's enrollees. 
    Sec. 10.  Minnesota Statutes 1992, section 295.50, 
subdivision 14, is amended to read: 
    Subd. 14.  [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 
distributor" means a wholesale drug distributor required to be 
licensed under sections 151.42 to 151.51 or a nonresident 
pharmacy required to be registered under section 151.19. 
    Sec. 11.  Minnesota Statutes 1992, section 295.51, 
subdivision 1, is amended to read: 
    Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
hospital, surgical center, or health care provider is subject to 
tax under sections 295.50 to 295.58 if it is "transacting 
business in Minnesota."  A hospital, surgical center, or health 
care provider is transacting business in Minnesota only if it: 
    (1) maintains an office in Minnesota used in the trade or 
business of providing patient services; 
    (2) has employees, representatives, or independent 
contractors conducting business in Minnesota related to the 
trade or business of providing patient services; 
    (3) regularly sells covered provides patient services to 
customers that receive the covered services in Minnesota; 
    (4) regularly solicits business from potential customers in 
Minnesota.  A hospital, surgical center, or health care provider 
is presumed to regularly solicit business within Minnesota if it 
receives gross receipts for patient services from 20 or more 
patients domiciled in Minnesota in a calendar year; 
    (5) regularly performs services outside Minnesota the 
benefits of which are consumed in Minnesota; 
    (6) owns or leases tangible personal or real property 
physically located in Minnesota and used in the trade or 
business of providing patient services; or 
    (7) receives medical assistance payments from the state of 
Minnesota. 
    Sec. 12.  Minnesota Statutes 1992, section 295.52, is 
amended by adding a subdivision to read: 
    Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
surgical center equal to two percent of its gross revenues. 
    Sec. 13.  Minnesota Statutes 1992, section 295.52, is 
amended by adding a subdivision to read: 
    Subd. 5.  [VOLUNTEER AMBULANCE SERVICES.] Licensed 
ambulance services for which all the ambulance attendants are 
"volunteer ambulance attendants" as defined in section 144.8091, 
subdivision 2, are not subject to the tax under this section. 
    Sec. 14.  Minnesota Statutes 1992, section 295.53, 
subdivision 1, is amended to read: 
    Subdivision 1.  [EXEMPTIONS.] The following payments are 
excluded from the gross revenues subject to the hospital, 
surgical center, or health care provider taxes under sections 
295.50 to 295.57: 
    (1) payments received from the federal government for 
services provided under the Medicare program, including payments 
received from the government, and organizations governed by 
sections 1833 and 1876 of title XVIII the federal Social 
Security Act, United States Code, title 42, section 
1395, excluding and enrollee deductible deductibles, 
coinsurance, and coinsurance payments copayments, whether paid 
by the individual or by insurer or other third party.  Payments 
for services not covered by Medicare are taxable; 
    (2) medical assistance payments including payments received 
directly from the government or from a prepaid plan; 
    (3) payments received for services performed by nursing 
homes licensed under chapter 144A, services provided in 
supervised living facilities and home health care services; 
    (4) payments received from hospitals or surgical centers 
for goods and services that are subject to tax on which 
liability for tax is imposed under section 295.52 or the source 
of funds for the payment is exempt under clause (1), (2), (7), 
(8), or (10); 
    (5) payments received from health care providers for goods 
and services that are subject to tax on which liability for tax 
is imposed under section sections 295.52 to 295.57 or the source 
of funds for the payment is exempt under clause (1), (2), (7), 
(8), or (10); 
    (6) amounts paid for prescription drugs, other than 
nutritional products, to a wholesale drug distributor reduced by 
reimbursements received for prescription drugs under clauses 
(1), (2), (7), and (8); 
    (7) payments received under the general assistance medical 
care program including payments received directly from the 
government or from a prepaid plan; 
    (8) payments received for providing services under the 
health right MinnesotaCare program under Laws 1992, chapter 549, 
article 4 including payments received directly from the 
government or from a prepaid plan and enrollee deductibles, 
coinsurance, and copayments; and 
    (9) payments received by a resident health care provider or 
the wholly owned subsidiary of a resident health care provider 
for care provided outside Minnesota to a patient who is not 
domiciled in Minnesota.; 
    (10) payments received from the chemical dependency fund 
under chapter 254B; 
    (11) payments received in the nature of charitable 
donations that are not designated for providing patient services 
to a specific individual or group; 
    (12) payments received for providing patient services if 
the services are incidental to conducting medical research; 
   (13) payments received from any governmental agency for 
services benefiting the public, not including payments made by 
the government in its capacity as an employer or insurer; 
    (14) payments received for services provided by community 
residential mental health facilities licensed under Minnesota 
Rules, parts 9520.0500 to 9520.0690, community support programs 
and family community support programs approved under Minnesota 
Rules, parts 9535.1700 to 9535.1760, and community mental health 
centers as defined in section 245.62, subdivision 2; and 
    (15) government payments received by a regional treatment 
center. 
    Sec. 15.  Minnesota Statutes 1992, section 295.53, 
subdivision 2, is amended to read: 
    Subd. 2.  [DEDUCTIONS FOR HEALTH MAINTENANCE 
ORGANIZATIONS STAFF MODEL HEALTH CARRIERS.] (a) In addition to 
the exemptions allowed under subdivision 1, a health maintenance 
organization staff model health carrier may deduct from its 
gross revenues for the year: 
    (1) amounts paid to hospitals, surgical centers, and health 
care providers that are not employees of the staff model health 
carrier for services on which liability for the tax is imposed 
under section 295.52; 
    (1) (2) amounts added to reserves, if total reserves do not 
exceed 25 percent of gross revenues for the prior year 200 
percent of the statutory net worth requirement, the calculation 
of which may be determined on a consolidated basis, taking into 
account the amounts held in reserve by affiliated staff model 
health carriers; 
    (2) (3) assessments for the comprehensive health insurance 
plan under section 62E.11 paid during the year; and 
    (3) an allowance (4) amounts spent for administration and 
underwriting as reported as total administration to the 
department of health in the statement of revenues, expenses, and 
net worth pursuant to section 62D.08, subdivision 3, clause (a). 
    (b) The commissioner of health, in consultation with the 
commissioners of commerce and revenue, shall establish by rule 
under chapter 14 the percentage of health maintenance revenue 
that will be allowed as a deduction for administrative and 
underwriting expenses.  The commissioner of health shall 
determine the percentage allowance based on the average expenses 
of health maintenance organizations that are equivalent to the 
claims administration and other underwriting services of third 
party payors.  These expenses do not include the portion of 
health maintenance organization costs that are similar to the 
administrative costs of direct health care providers, rather 
than third party payors, and do not include costs deductible 
under paragraph (a), clauses (1) and (2).  The commissioner of 
health may adopt emergency rules. 
     Sec. 16.  Minnesota Statutes 1992, section 295.53, 
subdivision 3, is amended to read: 
    Subd. 3.  [RESTRICTION ON ITEMIZATION.] A hospital, 
surgical center, or health care provider must not separately 
state the tax obligation under section 295.52 on bills provided 
to individual patients. 
    Sec. 17.  Minnesota Statutes 1992, section 295.53, is 
amended by adding a subdivision to read: 
    Subd. 4.  [DEDUCTION FOR RESEARCH.] (a) In addition to the 
exemptions allowed under subdivision 1, a hospital or health 
care provider which is exempt under section 501(c)(3) of the 
Internal Revenue Code of 1986 or is owned and operated under 
authority of a governmental unit, may deduct from its gross 
revenues subject to the hospital or health care provider taxes 
under sections 295.50 to 295.57 revenues equal to expenditures 
for allowable research programs.  
    (b) For purposes of this subdivision, expenditures for 
allowable research programs are the direct and general program 
costs for activities which are part of a formal program of 
medical and health care research approved by the governing body 
of the hospital or health care provider which also includes 
active solicitation of research funds from government and 
private sources.  Any allowable research on humans or animals 
must be subject to review by appropriate regulatory committees 
operating in conformity with federal regulations such as an 
institutional review board or an institutional animal care and 
use committee.  Costs of clinical research activities paid 
directly for the benefit of an individual patient are excluded 
from this exemption.  Basic research in fields including 
biochemistry, molecular biology, and physiology are also 
included if such programs are subject to a peer review process. 
    (c) No deduction shall be allowed under this subdivision 
for any revenue received by the hospital or health care provider 
in the form of a grant, gift, or otherwise, whether from a 
government or nongovernment source, on which the tax liability 
under section 295.52 is not imposed or for which the tax 
liability under section 295.52 has been received from a third 
party as provided for in section 295.582. 
    (d) Effective beginning with calendar year 1995, the 
taxpayer shall not take the deduction under this section into 
account in determining estimated tax payments or the payment 
made with the annual return under section 295.55.  The total 
deduction allowable to all taxpayers under this section for 
calendar years beginning after December 31, 1994, may not exceed 
$65,000,000.  To implement this limit, each qualifying hospital 
and qualifying health care provider shall submit to the 
commissioner by March 15 its total expenditures qualifying for 
the deduction under this section for the previous calendar 
year.  The commissioner shall sum the total expenditures of all 
taxpayers qualifying under this section for the calendar year.  
If the resulting amount exceeds $65,000,000, the commissioner 
shall allocate a part of the $65,000,000 deduction limit to each 
qualifying hospital and health care provider in proportion to 
its share of the total deductions.  The commissioner shall pay a 
refund to each qualifying hospital or provider equal to its 
share of the deduction limit multiplied by two percent.  The 
commissioner shall pay the refund no later than May 15 of the 
calendar year. 
    Sec. 18.  Minnesota Statutes 1992, section 295.54, is 
amended to read: 
    295.54 [CREDIT FOR TAXES PAID TO ANOTHER STATE.] 
    A resident hospital, resident surgical center, or resident 
health care provider who is liable for taxes payable to another 
state or province or territory of Canada measured by gross 
receipts and is subject to tax under section 295.52 is entitled 
to a credit for the tax paid to another state or province or 
territory of Canada to the extent of the lesser of (1) the tax 
actually paid to the other state or province or territory of 
Canada, or (2) the amount of tax imposed by Minnesota on the 
gross receipts subject to tax in the other taxing jurisdictions. 
    Sec. 19.  Minnesota Statutes 1992, section 295.55, 
subdivision 4, is amended to read: 
    Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
with an aggregate tax liability of $60,000 $30,000 or more 
during a calendar quarter ending the last day of March, June, 
September, or December of the first year the taxpayer is subject 
to the tax must thereafter remit all liabilities by means of a 
funds transfer as defined in section 336.4A-104, paragraph (a), 
for the remainder of the year.  A taxpayer with an aggregate tax 
liability of $120,000 or more during a calendar year, must remit 
all liabilities by means of a funds transfer as defined in 
section 336.4A-104, paragraph (a), in the subsequent calendar 
year.  The funds transfer payment date, as defined in section 
336.4A-401, is on or before the date the tax is due.  If the 
date the tax is due is not a funds-transfer business day, as 
defined in section 336.4A-105, paragraph (a), clause (4), the 
payment date is on or before the first funds-transfer business 
day after the date the tax is due. 
     Sec. 20.  Minnesota Statutes 1992, section 295.57, is 
amended to read: 
    295.57 [COLLECTION AND ENFORCEMENT; REFUNDS; RULEMAKING; 
APPLICATION OF OTHER CHAPTERS.] 
    Unless specifically provided otherwise by sections 295.50 
to 295.58, the enforcement, interest, and penalty provisions 
under chapter 294, appeal and provisions in sections 289A.43 and 
289A.65, criminal penalty penalties in section 289A.63, and 
refunds provisions under chapter 289A in section 289A.50, and 
collection and rulemaking provisions under chapter 270, apply to 
a liability for the taxes imposed under sections 295.50 to 
295.58. 
    Sec. 21.  Minnesota Statutes 1992, section 295.58, is 
amended to read: 
    295.58 [DEPOSIT OF REVENUES AND PAYMENT OF REFUNDS.] 
    The commissioner shall deposit all revenues, including 
penalties and interest, derived from the taxes imposed by 
sections 295.50 to 295.57 and from the insurance premiums tax on 
health maintenance organizations and nonprofit health service 
corporations in the health care access fund in the state 
treasury.  Refunds of overpayments must be paid from the health 
care access fund in the state treasury. 
    Sec. 22.  Laws 1992, chapter 549, article 9, section 19, is 
amended to read as follows: 
    Sec. 19.  [295.582] [PASSTHROUGH AUTHORITY.] 
    Subdivision 1.  [AUTHORITY.] A hospital, surgical center, 
or health care provider that is subject to a tax under section 7 
295.52 may transfer additional expense generated by section 7 
295.52 obligations on to all third-party contracts for the 
purchase of health care services on behalf of a patient or 
consumer.  The expense must not exceed two percent of the gross 
revenues received under the third-party contract, including 
copayments and deductibles paid by the individual patient or 
consumer.  The expense must not be generated on revenues derived 
from payments that are excluded from the tax under section 8 
295.53.  All third-party purchasers of health care services 
including, but not limited to, third-party purchasers regulated 
under chapters 60A, 62A, 62C, 62D, 64B, or 62H, must pay the 
transferred expense in addition to any payments due under 
existing or future contracts with the hospital, surgical center, 
or health care provider, to the extent allowed under federal 
law.  Nothing in this subdivision limits the ability of a 
hospital, surgical center, or health care provider to recover 
all or part of the section 7 295.52 obligation by other methods, 
including increasing fees or charges. 
    Subd. 2.  [EXPIRATION.] This section expires January 1, 
1994. 
    Sec. 23.  Minnesota Statutes 1992, section 295.59, is 
amended to read: 
    295.59 [SEVERABILITY.] 
    If any section, subdivision, clause, or phrase of sections 
295.50 to 295.58 295.582 is for any reason held to be 
unconstitutional or in violation of federal law, the decision 
shall not affect the validity of the remaining portions of 
sections 295.50 to 295.58 295.582.  The legislature declares 
that it would have passed sections 295.50 to 295.58 295.582 and 
each section, subdivision, sentence, clause, and phrase thereof, 
irrespective of the fact that any one or more sections, 
subdivisions, sentences, clauses, or phrases is declared 
unconstitutional. 
    Sec. 24.  [REPEALER.] 
    Minnesota Statutes 1992, section 295.50, subdivisions 5 and 
10, are repealed. 
    Minnesota Statutes 1992, section 295.51, subdivision 2, is 
repealed. 
    Sec. 25.  [EFFECTIVE DATE.] 
    Sections 1, 2, 4, 5, 7, and 21 are effective the day 
following final enactment. 
    Sections 3, 6, clauses (1) to (9), 8, 11, 12, 14, 16, and 
18 are effective retroactively to gross revenues generated by 
services performed and goods sold after December 31, 1992. 
    Section 6, clause (10), 9, 10, 13, and 15 are effective for 
services performed and goods sold after December 31, 1993. 
    For hospitals, section 17 is effective for gross revenues 
generated after December 31, 1992.  For health care providers, 
section 17 is effective for gross revenues generated after 
December 31, 1993. 
    Section 19 is effective for payments due in calendar year 
1994, and thereafter, based on the payments made in fiscal year 
ending June 30, 1993. 
    Sections 20, 22, and 23 are effective January 1, 1993. 

                               ARTICLE 14 

                             APPROPRIATIONS 
Section 1.  APPROPRIATIONS
    The sums shown in the columns marked "APPROPRIATIONS" are 
appropriated from the health care access fund, or any other fund 
named, to the agencies and for the purposes specified in the 
following sections of this article, to be available for the 
fiscal years indicated for each purpose.  The figures "1994" and 
"1995" where used in this article, mean that the appropriation 
or appropriations listed under them are available for the year 
ending June 30, 1994, or June 30, 1995, respectively. 
                                           APPROPRIATIONS 
                                       Available for the Year 
                                           Ending June 30 
                                          1994         1995 
Sec. 2.  DEPARTMENT OF 
HUMAN SERVICES
Health Care Access Fund              $44,475,000    $96,040,000
General Fund                           2,919,000      6,704,000
 The general fund appropriation is for 
costs in the medical assistance and 
general assistance medical care 
programs. 
 Of the health care access fund 
appropriation, $7,790,000 the first 
year and $10,897,000 the second year is 
for administration of the MinnesotaCare 
program and $36,685,000 the first year 
and $85,143,000 the second year is for 
the MinnesotaCare subsidized health 
care plan. 
Sec. 3.  DEPARTMENT OF
HEALTH                                 5,137,000      5,962,000
Sec. 4.  UNIVERSITY OF MINNESOTA       2,277,000      2,357,000
Sec. 5.  HIGHER EDUCATION 
COORDINATING BOARD                       578,000        707,000
Sec. 6.  LEGISLATIVE COORDINATING 
COMMISSION                               175,000        175,000
Sec. 7.  DEPARTMENT OF COMMERCE
GENERAL FUND                             175,000        162,000
Sec. 8.  DEPARTMENT OF
REVENUE                                1,037,000      1,367,000
Sec. 9.  DEPARTMENT OF 
EMPLOYEE RELATIONS                     3,554,000      7,125,000
    Sec. 10.  [TRANSFERS.] 
    The commissioner of finance shall transfer $10,907,000 in 
fiscal year 1994 and $25,842,000 in fiscal year 1995 from the 
health care access fund to the general fund. 
    The commissioner of finance shall transfer $189,000 in 
fiscal year 1994 and $239,000 in fiscal year 1995 from the 
health care access fund to the special revenue fund for MAXIS. 
    Sec. 11.  [CARRY FORWARD.] 
    Subdivision 1.  $250,000 of the appropriation in Laws 1992, 
chapter 549, article 10, section 1, subdivision 3, is available 
until June 30, 1994, to develop and implement a program to 
establish community health centers in rural areas of the state 
as authorized in Minnesota Statutes, section 144.1486. 
    Subd. 2.  $250,000 of the appropriation in Laws 1992, 
chapter 549, article 10, section 1, subdivision 3, is available 
until June 30, 1994, to award transition grants to rural 
hospitals as authorized in Minnesota Statutes, section 144.147. 
    Subd. 3.  $200,000 of the appropriation in Laws 1992, 
chapter 549, article 10, section 1, subdivision 3, is available 
until June 30, 1994, to award sole community hospital financial 
assistance grants as authorized by Minnesota Statutes, section 
144.1484. 
    Subd. 4.  The entire appropriation in Laws 1992, chapter 
549, article 10, section 1, subdivision 3, is available until 
June 30, 1994. 
     Subd. 5.  Notwithstanding Laws 1992, chapter 549, article 
10, section 1, subdivision 1, $569,000 of the amount 
appropriated to the commissioner of revenue in Laws 1992, 
chapter 549, article 10, section 1, subdivision 8, is available 
until June 30, 1994. 
     Subd. 6.  Up to $600,000 of the appropriation for systems 
modification and start-up costs for MinnesotaCare contained in 
Laws 1992, chapter 549, article 10, section 1, subdivision 4, 
shall not cancel, but may be transferred to the state systems 
account established in Minnesota Statutes, section 256.014, to 
complete the work of integrating MinnesotaCare into the Medicaid 
management information system. 
    Presented to the governor May 20, 1993 
    Signed by the governor May 24, 1993, 12:15 p.m.