Minnesota Session Laws - 1993, Regular Session

  
    Laws of Minnesota 1993 

                        CHAPTER 47-H.F.No. 1100 
           An act relating to insurance; regulating the health 
          coverage reinsurance association; amending Minnesota 
          Statutes 1992, sections 62L.02, by adding a 
          subdivision; 62L.13, subdivisions 1, 3, and 4; 62L.14, 
          subdivisions 2, 4, 6, and 7; 62L.15, subdivision 2; 
          62L.16, subdivision 5, and by adding a subdivision; 
          62L.19; and 62L.20, subdivision 1.  
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
    Section 1.  Minnesota Statutes 1992, section 62L.02, is 
amended by adding a subdivision to read: 
    Subd. 11a.  [DISCOUNTED ELIGIBLE CHARGES.] "Discounted 
eligible charges" means the amount paid to a health carrier for 
claims submitted to the association. 
    Sec. 2.  Minnesota Statutes 1992, section 62L.13, 
subdivision 1, is amended to read: 
    Subdivision 1.  [CREATION.] The health coverage reinsurance 
association is established as a nonprofit corporation may 
operate as a nonprofit unincorporated association, but is 
authorized to incorporate under chapter 317A.  All health 
carriers in the small employer market shall be and remain 
members of the association as a condition of their authority to 
transact business.  
    Sec. 3.  Minnesota Statutes 1992, section 62L.13, 
subdivision 3, is amended to read: 
    Subd. 3.  [EXEMPTIONS.] The association, its transactions, 
and all property owned by it are exempt from taxation under the 
laws of this state or any of its subdivisions, including, but 
not limited to, income tax, sales tax, use tax, and property 
tax. The association may seek exemption from payment of all fees 
and taxes levied by the federal government.  Except as otherwise 
provided in this chapter, the association is not subject to the 
provisions of chapters 13, 14, 60A, 62A to 62H, and section 
471.705.  The association is not a public employer and is not 
subject to the provisions of chapters 179A and 353.  The board 
of directors and health carriers who are members of the 
association are exempt from the provisions of sections 325D.49 
to 325D.66 in the performance of their duties as members of the 
association. 
    Sec. 4.  Minnesota Statutes 1992, section 62L.13, 
subdivision 4, is amended to read: 
    Subd. 4.  [POWERS OF ASSOCIATION.] The association may 
exercise all of the powers of a corporation formed under chapter 
317A, including, but not limited to, the authority to: 
    (1) establish operating rules, conditions, and procedures 
relating to the reinsurance of members' risks; 
    (2) assess members in accordance with the provisions of 
this section and to make advance interim assessments as may be 
reasonable and necessary for organizational and interim 
operating expenses; 
    (3) sue and be sued, including taking any legal action 
necessary to recover any assessments; 
    (4) enter into contracts necessary to carry out the 
provisions of this chapter; 
    (5) establish operating, administrative, and accounting 
procedures for the operation of the association; and 
    (6) borrow money against the future receipt of premiums and 
assessments up to the amount of the previous year's assessment, 
with the prior approval of the commissioner. 
    The provisions of this chapter govern if the provisions of 
chapter 317A conflict with this chapter.  The association shall 
adopt bylaws may operate under the plan of operation approved by 
the board and shall be governed in accordance with this chapter 
and may operate in accordance with chapter 317A.  If the 
association incorporates as a nonprofit corporation under 
chapter 317A, the filing of the plan of operation must meet the 
requirements of filing articles. 
    Sec. 5.  Minnesota Statutes 1992, section 62L.14, 
subdivision 2, is amended to read: 
    Subd. 2.  [ELECTION OF BOARD.] On or before July 1, 1992, 
the commissioner shall appoint an interim board of directors of 
the association who shall serve through the first annual meeting 
of the members and for the next two years until the annual 
meeting in 1994.  Except for the public members, the 
commissioner's initial appointments must be equally apportioned 
among the following three categories:  accident and health 
insurance companies, nonprofit health service plan corporations, 
and health maintenance organizations. Thereafter, members of the 
association shall elect the board of directors in accordance 
with this chapter and the bylaws of the association plan of 
operation, subject to approval by the commissioner.  Members of 
the association may vote in person or by proxy.  The public 
members shall continue to be appointed by the commissioner to 
terms meeting the requirements of subdivision 3.  
    Sec. 6.  Minnesota Statutes 1992, section 62L.14, 
subdivision 4, is amended to read: 
    Subd. 4.  [RESIGNATION AND REMOVAL.] A director may resign 
at any time by giving written notice to the commissioner.  The 
resignation takes effect at the time the resignation is received 
unless the resignation specifies a later date.  A nonpublic 
director may be removed at any time, with cause, by the 
members.  If a vacancy occurs for a public member board 
position, the commissioner shall appoint a new public member for 
the duration of the unexpired term. 
    Sec. 7.  Minnesota Statutes 1992, section 62L.14, 
subdivision 6, is amended to read: 
    Subd. 6.  [DUTIES OF DIRECTORS.] The board of directors 
shall adopt or amend the association's bylaws.  The bylaws may 
contain any provision for the purpose of administering the 
association that is not inconsistent with this chapter.  The 
board shall manage the association in furtherance of its 
purposes and as provided in its bylaws.  On or before January 1, 
1993, the board or the interim board shall develop a plan of 
operation and reasonable operating rules to assure the fair, 
reasonable, and equitable administration of the association.  
The plan of operation must include the development of procedures 
for selecting an administering carrier, establishment of the 
powers and duties of the administering carrier, and 
establishment of procedures for collecting assessments from 
members, including the imposition of interest penalties for late 
payments of assessments.  The plan of operation must be 
submitted to the commissioner for review and approval and must 
be submitted to the members for approval at the first meeting of 
the members.  The board of directors may subsequently amend, 
change, or revise the plan of operation without approval by the 
members. 
    Sec. 8.  Minnesota Statutes 1992, section 62L.14, 
subdivision 7, is amended to read: 
    Subd. 7.  [COMPENSATION.] Public members of the board may 
be reimbursed by the association for reasonable and necessary 
expenses incurred by them in performing their duties as 
directors, but shall not otherwise be compensated by the 
association for their services. 
    Sec. 9.  Minnesota Statutes 1992, section 62L.15, 
subdivision 2, is amended to read: 
    Subd. 2.  [SPECIAL MEETINGS.] Special meetings of the 
members must be held whenever called by any three of the 
directors.  At least two categories must be represented among 
the directors calling a special meeting of the members.  The 
categories are public members, accident and health insurance 
companies, nonprofit health service plan corporations, and 
health maintenance organizations.  Special meetings of the 
members must be held at a time and place designated in the 
notice of the meeting. 
    Sec. 10.  Minnesota Statutes 1992, section 62L.16, 
subdivision 5, is amended to read: 
    Subd. 5.  [AUDITS.] The board of directors may conduct 
periodic audits to verify the accuracy of financial data and 
reports submitted by the administrator.  The board may establish 
in the plan of operation a uniform audit program.  All costs of 
the uniform audit program and any additional audits conducted by 
the board to verify the accuracy of claims submissions are the 
responsibility of the health carrier.  Failure of a health 
carrier to comply with the requirements of the audit program, 
including the failure to pay the costs of an audit, may subject 
the health carrier to the penalties described in section 62L.11. 
    Sec. 11.  Minnesota Statutes 1992, section 62L.16, is 
amended by adding a subdivision to read: 
    Subd. 7.  [INDEMNIFICATION.] The association shall 
indemnify members, directors, officers, employees, and agents to 
the same extent that persons may be indemnified by corporations 
pursuant to section 317A.521. 
    Sec. 12.  Minnesota Statutes 1992, section 62L.19, is 
amended to read: 
    62L.19 [ALLOWED REINSURANCE BENEFITS.] 
    A health carrier may reinsure through the association only 
those benefits described in section 62L.05.  The board may 
establish guidelines to clarify what coverage is included within 
the benefits described in this chapter.  If a health plan 
conforms to those benefits as clarified by the board, the 
benefits are considered to be in accordance with this chapter. 
    Sec. 13.  Minnesota Statutes 1992, section 62L.20, 
subdivision 1, is amended to read: 
    Subdivision 1.  [REINSURANCE THRESHOLD.] A health carrier 
participating in the association may transfer up to 90 percent 
of the risk above a reinsurance threshold of $5,000 of eligible 
charges resulting from issuance of a health benefit plan to an 
eligible employee or dependent of a small employer group whose 
risk has been prospectively ceded to the association.  If the 
eligible charges exceed $50,000 $55,000, a health carrier 
participating in the association may transfer 100 percent of the 
risk each policy year not to exceed 12 months. 
    Satisfaction of the reinsurance threshold must be 
determined by the board of directors based on discounted 
eligible charges.  The board may establish an audit process to 
assure consistency in the submission of charge calculations by 
health carriers to the association.  The association shall 
determine the amount to be paid to the health carrier for claims 
submitted based on discounted eligible charges.  The board may 
also establish upper limits on the amount paid by the 
association based on a usual and customary determination.  The 
board shall establish in the plan of operation a procedure for 
determining the discounted eligible charge.  
    Sec. 14.  [TEMPORARY ADDITIONAL ASSESSMENTS.] 
    If the board of directors determines that the association's 
funds are insufficient to meet the obligations of the 
association, the board of directors shall assess each member in 
the small employer market, in proportion to the member's 
respective share of the total insurance premiums, subscriber 
contract payments, health maintenance organization payments, and 
other health benefit plan revenue derived from or on behalf of 
small employers during the preceding calendar year.  The 
assessment must be calculated by the board of directors based on 
annual statements and other reports considered necessary by the 
board of directors and filed by members with the association.  
The amount of the assessment may not exceed two percent of the 
member's small employer premium for the preceding year. 
    This section expires August 1, 1994. 
    Presented to the governor April 22, 1993 
    Signed by the governor April 23, 1993, 11:47 a.m.