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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 625-S.F.No. 2192 
                  An act relating to health; MinnesotaCare; establishing 
                  and regulating community integrated service networks; 
                  defining terms; creating a reinsurance and risk 
                  adjustment association; classifying data; requiring 
                  reports; mandating studies; modifying provisions 
                  relating to the regulated all-payer option; modifying 
                  provisions relating to nursing facilities; requiring 
                  administrative rulemaking; setting timelines and 
                  requiring plans for implementation; designating 
                  essential community providers; establishing an 
                  expedited fact finding and dispute resolution process; 
                  requiring proposed legislation; establishing task 
                  forces; providing for demonstration models; mandating 
                  universal coverage; requiring insurance reforms; 
                  providing grant programs; establishing the Minnesota 
                  health care administrative simplification act; 
                  implementing electronic data interchange standards; 
                  creating the Minnesota center for health care 
                  electronic data interchange; providing standards for 
                  the Minnesota health care identification card; 
                  appropriating money; providing penalties; amending 
                  Minnesota Statutes 1992, sections 60A.02, subdivision 
                  3; 60A.15, subdivision 1; 62A.303; 62A.48, subdivision 
                  1; 62D.02, subdivision 4; 62D.04, by adding a 
                  subdivision; 62E.02, subdivisions 10, 18, 20, and 23; 
                  62E.10, subdivisions 1, 2, and 3; 62E.141; 62E.16; 
                  62J.03, by adding a subdivision; 62J.04, by adding a 
                  subdivision; 62J.05, subdivision 2; 62L.02, 
                  subdivisions 9, 13, 17, 24, and by adding 
                  subdivisions; 62L.03, subdivisions 1 and 6; 62L.05, 
                  subdivisions 1, 5, and 8; 62L.06; 62L.07, subdivision 
                  2; 62L.08, subdivisions 2, 5, 6, 7, and by adding a 
                  subdivision; 62L.12; 62L.21, subdivision 2; 62M.02, 
                  subdivisions 5 and 21; 62M.03, subdivisions 1, 2, and 
                  3; 62M.05, subdivision 3; 62M.06, subdivision 3; 
                  72A.20, by adding a subdivision; 144.1485; 144.335, by 
                  adding a subdivision; 144.581, subdivision 2; 145.64, 
                  subdivision 1; 256.9355, by adding a subdivision; 
                  256.9358, subdivision 4; 295.50, by adding 
                  subdivisions; 295.55, subdivisions 2 and 3; 308A.005, 
                  by adding a subdivision; 308A.635, by adding a 
                  subdivision; and 318.02, by adding a subdivision; 
                  Minnesota Statutes 1993 Supplement, sections 43A.317, 
                  by adding a subdivision; 60K.14, subdivision 7; 
                  61B.20, subdivision 13; 62A.011, subdivision 3; 
                  62A.31, subdivision 1h; 62A.36, subdivision 1; 62A.65, 
                  subdivisions 2, 3, 4, 5, and by adding a subdivision; 
                  62D.12, subdivision 17; 62J.03, subdivision 6; 62J.04, 
                  subdivisions 1 and 1a; 62J.09, subdivisions 1a and 2; 
                  62J.23, subdivision 4; 62J.2916, subdivision 2; 
                  62J.32, subdivision 4; 62J.33, by adding subdivisions; 
                  62J.35, subdivisions 2 and 3; 62J.38; 62J.41, 
                  subdivision 2; 62J.45, subdivision 11, and by adding 
                  subdivisions; 62L.02, subdivisions 8, 11, 15, 16, 19, 
                  and 26; 62L.03, subdivisions 3, 4, and 5; 62L.04, 
                  subdivision 1; 62L.08, subdivisions 4 and 8; 62N.01; 
                  62N.02, subdivisions 1, 8, and by adding a 
                  subdivision; 62N.06, subdivision 1; 62N.065, 
                  subdivision 1; 62N.10, subdivisions 1 and 2; 62N.22; 
                  62N.23; 62P.01; 62P.03; 62P.04; 62P.05; 144.1464; 
                  144.1486; 144.335, subdivision 3a; 144.802, 
                  subdivision 3b; 144A.071, subdivision 4a, as amended; 
                  151.21, subdivisions 7 and 8; 256.9352, subdivision 3; 
                  256.9353, subdivisions 3 and 7; 256.9354, subdivisions 
                  1, 4, 5, 6, and by adding a subdivision; 256.9356, 
                  subdivision 3; 256.9357, subdivision 2; 256.9362, 
                  subdivision 6; 256.9363, subdivisions 6, 7, and 9; 
                  256.9657, subdivision 3; 256.9695, subdivision 3, as 
                  amended; 256B.0917, subdivision 2; 295.50, 
                  subdivisions 3, 4, and 12b; 295.52, subdivision 5; 
                  295.53, subdivisions 1, 2, and 5; 295.54; 295.58; and 
                  295.582; H.F. 3210, article 1, section 2, subdivision 
                  3; proposing coding for new law in Minnesota Statutes, 
                  chapters 62A; 62J; 62N; 62P; 144; 308A; and 317A; 
                  proposing coding for new law as Minnesota Statutes, 
                  chapters 62Q and 62R; repealing Minnesota Statutes 
                  1992, sections 62A.02, subdivision 5; 62E.51; 62E.52; 
                  62E.53; 62E.531; 62E.54; 62E.55; and 256.362, 
                  subdivision 5; Minnesota Statutes 1993 Supplement, 
                  sections 62J.04, subdivision 8; 62N.07; 62N.075; 
                  62N.08; 62N.085; and 62N.16; Laws 1992, chapter 549, 
                  article 9, section 22. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1
                     COMMUNITY INTEGRATED SERVICE NETWORKS
           Section 1.  [62J.016] [GOALS OF RESTRUCTURING.] 
           The state seeks to bring about changes in the health care 
        delivery and financing system that will assure quality, 
        affordable, and accessible health care for all Minnesotans.  
        This goal will be accomplished by restructuring the delivery 
        system, the financial incentives, and the regulatory environment 
        in a way that will make health care providers and health plan 
        companies more accountable to consumers, group purchasers, and 
        communities for their costs and quality, their effectiveness in 
        meeting the health care needs of all of their patients and 
        enrollees, and their contributions to improving the health of 
        the greater community. 
           Sec. 2.  [62J.017] [IMPLEMENTATION TIMETABLE.] 
           The state seeks to complete the restructuring of the health 
        care delivery and financing system by July 1, 1997.  The 
        restructured system will have two options:  (1) integrated 
        service networks, which will be accountable for meeting state 
        cost containment, quality, and access standards; or (2) a 
        uniform set of price and utilization controls for all health 
        care services for Minnesota residents not provided through an 
        integrated service network.  Both systems will operate under the 
        state's growth limits and will be structured to promote 
        competition in the health care marketplace. 
           Beginning July 1, 1994, measures will be taken to increase 
        the public accountability of existing health plan companies, to 
        promote the development of small, community-based integrated 
        service networks, and to reduce administrative costs by 
        standardizing third-party billing forms and procedures and 
        utilization review requirements.  Voluntary formation of other 
        integrated service networks will begin after rules have been 
        adopted, but not before July 1, 1996.  Statutes and rules for 
        the entire restructured health care financing and delivery 
        system must be enacted or adopted by January 1, 1996, and a 
        phase-in of the all-payer reimbursement system must begin on 
        that date.  By July 1, 1997, all health coverage must be 
        regulated under integrated service network or community 
        integrated service network law pursuant to chapter 62N or 
        all-payer law pursuant to chapter 62P. 
           Sec. 3.  Minnesota Statutes 1993 Supplement, section 
        62N.02, is amended by adding a subdivision to read: 
           Subd. 4a.  [COMMUNITY INTEGRATED SERVICE NETWORK.] (a) 
        "Community integrated service network" or "community network" 
        means a formal arrangement licensed by the commissioner under 
        section 62N.25 for providing prepaid health services to enrolled 
        populations of 50,000 or fewer enrollees, including enrollees 
        who are residents of other states.  
           (b) Notwithstanding paragraph (a), an organization licensed 
        as a community network that accepts payments for health care 
        services on a capitated basis, or under another similar risk 
        sharing agreement, from a program of self-insurance as described 
        in section 60A.02, subdivision 3, paragraph (b), shall not be 
        regulated as a community network with respect to the receipt of 
        the payments.  The payments are not premium revenues for the 
        purpose of calculating the community network's liability for 
        otherwise applicable state taxes, assessments, or surcharges, 
        with the exception of: 
           (1) the MinnesotaCare provider tax; 
           (2) the one percent premium tax imposed in section 60A.15, 
        subdivision 1, paragraph (d); and 
           (3) effective July 1, 1995, assessments by the Minnesota 
        comprehensive health association. 
        This paragraph applies only where: 
           (1) the community network does not bear risk in excess of 
        110 percent of the self-insurance program's expected costs; 
           (2) the employer does not carry stop loss, excess loss, or 
        similar coverage with an attachment point lower than 120 percent 
        of the self-insurance program's expected costs; 
           (3) the community network and the employer comply with the 
        data submission and administrative simplification provisions of 
        chapter 62J; 
           (4) the community network and the employer comply with the 
        provider tax pass-through provisions of section 295.582; 
           (5) the community network's required minimum reserves 
        reflect the risk borne by the community network under this 
        paragraph, with an appropriate adjustment for the 110 percent 
        limit on risk borne by the community network; 
           (6) on or after July 1, 1994, but prior to January 1, 1995, 
        the employer has at least 1,500 current employees, as defined in 
        section 62L.02, or, on or after January 1, 1995, the employer 
        has at least 750 current employees, as defined in section 
        62L.02; 
           (7) the employer does not exclude any eligible employees or 
        their dependents, both as defined in section 62L.02, from 
        coverage offered by the employer, under this paragraph or any 
        other health coverage, insured or self-insured, offered by the 
        employer, on the basis of the health status or health history of 
        the person.  
           This paragraph expires December 31, 1997.  
           Sec. 4.  Minnesota Statutes 1993 Supplement, section 
        62N.02, subdivision 8, is amended to read: 
           Subd. 8.  [INTEGRATED SERVICE NETWORK.] (a) "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.  Integrated service network does not include a 
        community integrated service network.  
           (b) Notwithstanding paragraph (a), an organization licensed 
        as an integrated service network that accepts payments for 
        health care services on a capitated basis, or under another 
        similar risk sharing agreement, from a program of self-insurance 
        as described in section 60A.02, subdivision 3, paragraph (b), 
        shall not be regulated as an integrated service network with 
        respect to the receipt of the payments.  The payments are not 
        premium revenues for the purpose of calculating the integrated 
        service network's liability for otherwise applicable state 
        taxes, assessments, or surcharges, with the exception of: 
           (1) the MinnesotaCare provider tax; 
           (2) the one percent premium tax imposed in section 60A.15, 
        subdivision 1, paragraph (d); and 
           (3) effective July 1, 1995, assessments by the Minnesota 
        comprehensive health association. 
        This paragraph applies only where: 
           (1) the integrated service network does not bear risk in 
        excess of 110 percent of the self-insurance program's expected 
        costs; 
           (2) the employer does not carry stop loss, excess loss, or 
        similar coverage with an attachment point lower than 120 percent 
        of the self-insurance program's expected costs; 
           (3) the integrated service network and the employer comply 
        with the data submission and administrative simplification 
        provisions of chapter 62J; 
           (4) the integrated service network and the employer comply 
        with the provider tax pass-through provisions of section 
        295.582; 
           (5) the integrated service network's required minimum 
        reserves reflect the risk borne by the integrated service 
        network under this paragraph, with an appropriate adjustment for 
        the 110 percent limit on risk borne by the integrated service 
        network; 
           (6) on or after July 1, 1994, but prior to January 1, 1995, 
        the employer has at least 1,500 current employees, as defined in 
        section 62L.02, or, on or after January 1, 1995, the employer 
        has at least 750 current employees, as defined in section 
        62L.02; 
           (7) the employer does not exclude any eligible employees or 
        their dependents, both as defined in section 62L.02, from 
        coverage offered by the employer, under this paragraph or any 
        other health coverage, insured or self-insured, offered by the 
        employer, on the basis of the health status or health history of 
        the person.  
           This paragraph expires December 31, 1997. 
           Sec. 5.  [62N.25] [COMMUNITY INTEGRATED SERVICE NETWORKS.] 
           Subdivision 1.  [SCOPE OF LICENSURE.] Beginning July 1, 
        1994, the commissioner shall accept applications for licensure 
        as a community integrated service network under this section.  
        Licensed community integrated service networks may begin 
        providing health coverage to enrollees no earlier than January 
        1, 1995, and may begin marketing coverage to prospective 
        enrollees upon licensure. 
           Subd. 2.  [LICENSURE REQUIREMENTS GENERALLY.] To be 
        licensed and to operate as a community integrated service 
        network, an applicant must satisfy the requirements of chapter 
        62D, and all other legal requirements that apply to entities 
        licensed under chapter 62D, except as exempted or modified in 
        this section.  Community networks must, as a condition of 
        licensure, comply with rules adopted under section 256B.0644 
        that apply to entities governed by chapter 62D. 
           Subd. 3.  [REGULATION; APPLICABLE LAW.] Community 
        integrated service networks are regulated and licensed by the 
        commissioner under the same authority that applies to entities 
        licensed under chapter 62D, except as exempted or modified under 
        this section.  All statutes or rules that apply to health 
        maintenance organizations apply to community networks, unless 
        otherwise specified.  A cooperative organized under chapter 308A 
        may establish a community integrated service network. 
           Subd. 4.  [GOVERNING BODY.] In addition to the requirements 
        of section 62D.06, at least 51 percent of the members of the 
        governing body of the community integrated service network must 
        be residents of the community integrated service network's 
        service area.  Service area, for purposes of this subdivision, 
        may include contiguous geographic areas outside the state of 
        Minnesota.  
           Subd. 5.  [BENEFITS.] Community integrated service networks 
        must offer the health maintenance organization benefit set, as 
        defined in chapter 62D, and other laws applicable to entities 
        regulated under chapter 62D, except that the community 
        integrated service network may impose a deductible, not to 
        exceed $1,000 per person per year, provided that out-of-pocket 
        expenses on covered services do not exceed $3,000 per person or 
        $5,000 per family per year.  The deductible must not apply to 
        preventive health services as described in Minnesota Rules, part 
        4685.0801, subpart 8.  Community networks and chemical 
        dependency facilities under contract with a community network 
        shall use the assessment criteria in Minnesota Rules, parts 
        9530.6600 to 9530.6660, when assessing enrollees for chemical 
        dependency treatment.  
           Subd. 6.  [SOLVENCY.] A community integrated service 
        network is exempt from the deposit, reserve, and solvency 
        requirements specified in sections 62D.041, 62D.042, 62D.043, 
        and 62D.044 and shall comply instead with sections 62N.27 to 
        62N.32.  In applying sections 62N.27 to 62N.32, the commissioner 
        is exempt from the rulemaking requirements of chapter 14.  
        However, to the extent that there are analogous definitions or 
        procedures in chapter 62D or in rules promulgated thereunder, 
        the commissioner shall follow those existing provisions rather 
        than adopting a contrary approach or interpretation.  This 
        rulemaking exemption shall expire on June 1, 1995. 
           Subd. 7.  [EXEMPTIONS FROM EXISTING REQUIREMENTS.] 
        Community integrated service networks are exempt from the 
        following requirements applicable to health maintenance 
        organizations: 
           (1) conducting focused studies under Minnesota Rules, part 
        4685.1125; 
           (2) preparing and filing, as a condition of licensure, a 
        written quality assurance plan, and annually filing such a plan 
        and a work plan, under Minnesota Rules, parts 4685.1110 and 
        4685.1130; 
           (3) maintaining statistics under Minnesota Rules, part 
        4685.1200; 
           (4) filing provider contract forms under sections 62D.03, 
        subdivision 4, and 62D.08, subdivision 1; 
           (5) reporting any changes in the address of a network 
        provider or length of a provider contract or additions to the 
        provider network to the commissioner within ten days under 
        section 62D.08, subdivision 5.  Community networks must report 
        such information to the commissioner on a quarterly basis.  
        Community networks that fail to make the required quarterly 
        filing are subject to the penalties set forth in section 62D.08, 
        subdivision 5; and 
           (6) preparing and filing, as a condition of licensure, a 
        marketing plan, and annually filing a marketing plan, under 
        sections 62D.03, subdivision 4, paragraph (l), and 62D.08, 
        subdivision 1. 
           Subd. 8.  [PROVIDER CONTRACTS.] The provisions of section 
        62D.123 are implied in every provider contract or agreement 
        between a community integrated service network and a provider, 
        regardless of whether those provisions are expressly included in 
        the contract.  No participating provider, agent, trustee, or 
        assignee of a participating provider has or may maintain any 
        cause of action against a subscriber or enrollee to collect sums 
        owed by the community network. 
           Subd. 9.  [EXCEPTIONS TO ENROLLMENT LIMIT.] A community 
        integrated service network may enroll enrollees in excess of 
        50,000 if necessary to comply with guaranteed issue or 
        guaranteed renewal requirements of chapter 62L or section 62A.65.
           Sec. 6.  [62N.255] [EXPANDED PROVIDER NETWORKS.] 
           Subdivision 1.  [PROVIDER ACCEPTANCE REQUIRED.] Each health 
        plan company, with the exception of any health plan company with 
        50,000 or fewer enrollees and health plan companies that are 
        exempt under subdivision 6, shall establish an expanded network 
        of allied independent health providers, in addition to a 
        preferred network.  A health plan company shall accept as a 
        provider in the expanded network any allied independent health 
        provider who:  (1) meets the health plan company's credentialing 
        standards; (2) agrees to the terms of the health plan company's 
        provider contract; and (3) agrees to comply with all managed 
        care protocols of the health plan company.  A preferred network 
        shall be considered an expanded network if all allied 
        independent health providers who meet the requirements of 
        clauses (1), (2), and (3), are accepted into the preferred 
        network.  A community integrated service network may offer to 
        its enrollees an expanded network of allied independent health 
        providers as described under this section.  
           Subd. 2.  [MANAGED CARE.] The managed care protocols used 
        by the health plan company may include:  (1) a requirement that 
        an enrollee obtain a referral from the health plan company 
        before obtaining services from an allied independent health 
        provider in the expanded network; (2) limits on the number and 
        length of visits to allied independent health providers in the 
        expanded network allowed by each referral, as long as the number 
        and length of visits allowed is not less than the number and 
        length allowed for comparable referrals to allied independent 
        health providers in the preferred network; and (3) ongoing 
        management and review by the health plan company of the care 
        provided by an allied independent health provider in the 
        expanded network after a referral is made. 
           Subd. 3.  [MANDATORY OFFERING TO ENROLLEES.] Each health 
        plan company shall offer to enrollees the option of receiving 
        covered services through the expanded network of allied 
        independent health providers established under subdivisions 1 
        and 2.  This expanded network option may be offered as a 
        separate health plan.  The network may establish separate 
        premium rates and cost-sharing requirements for this expanded 
        network plan, as long as these premium rates and cost-sharing 
        requirements are actuarially justified and approved by the 
        commissioner.  This subdivision does not apply to Medicare, 
        medical assistance, general assistance medical care, and 
        MinnesotaCare.  This subdivision is effective January 1, 1995, 
        and applies to health plans issued or renewed, or offers of 
        health plans to be issued or renewed, on or after January 1, 
        1995, except that this subdivision is effective January 1, 1996, 
        for collective bargaining agreements of the department of 
        employee relations and the University of Minnesota. 
           Subd. 4.  [PROVIDER REIMBURSEMENT.] A health plan company 
        shall pay each allied independent health provider in the 
        expanded network the same rate per unit of service as paid to 
        allied independent health providers in the preferred network. 
           Subd. 5.  [DEFINITIONS.] (a) For purposes of this section, 
        the following definitions apply. 
           (b) "Allied independent health provider" means an 
        independently enrolled audiologist, chiropractor, dietitian, 
        home health care provider, licensed marriage and family 
        therapist, nurse practitioner or advanced practice nurse, 
        occupational therapist, optometrist, optician, outpatient 
        chemical dependency counselor, pharmacist who is not employed by 
        and based on the premises of a health plan company, physical 
        therapist, podiatrist, licensed psychologist, psychological 
        practitioner, licensed social worker, or speech therapist. 
           (c) "Home health care provider" means a provider of 
        personal care assistance, home health aide, homemaker, respite 
        care, adult day care, or home therapies and home health nursing 
        services. 
           (d) "Independently enrolled" means that a provider can 
        bill, and receive direct payment for services from, a 
        third-party payer or patient. 
           Subd. 6.  [EXEMPTION.] A health plan company, to the extent 
        that it operates as a staff model health plan company as defined 
        in section 295.50, subdivision 12b, by employing allied 
        independent health care providers to deliver health care 
        services to enrollees, is exempt from this section.  
           Sec. 7.  [62N.26] [SHARED SERVICES COOPERATIVE.] 
           The commissioner of health shall establish, or assist in 
        establishing, a shared services cooperative organized under 
        chapter 308A to make available administrative and legal 
        services, technical assistance, provider contracting and billing 
        services, and other services to those community integrated 
        service networks and integrated service networks that choose to 
        participate in the cooperative.  The commissioner shall provide, 
        to the extent funds are appropriated, start-up loans sufficient 
        to maintain the shared services cooperative until its operations 
        can be maintained by fees and contributions.  The cooperative 
        must not be staffed, administered, or supervised by the 
        commissioner of health.  The cooperative shall make use of 
        existing resources that are already available in the community, 
        to the extent possible. 
           Sec. 8.  [62N.27] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] For purposes of sections 
        62N.27 to 62N.32, the terms defined in this section have the 
        meanings given.  Other terms used in those sections have the 
        meanings given in sections 62D.041, 62D.042, 62D.043, and 
        62D.044. 
           Subd. 2.  [NET WORTH.] "Net worth" means admitted assets as 
        defined in subdivision 3, minus liabilities.  Liabilities do not 
        include those obligations that are subordinated in the same 
        manner as preferred ownership claims under section 60B.44, 
        subdivision 10.  For purposes of this subdivision, preferred 
        ownership claims under section 60B.44, subdivision 10, include 
        promissory notes subordinated to all other liabilities of the 
        community integrated service network. 
           Subd. 3.  [ADMITTED ASSETS.] "Admitted assets" means 
        admitted assets as defined in section 62D.044, except that real 
        estate investments allowed by section 62D.045 are not admitted 
        assets.  Admitted assets include the deposit required under 
        section 62N.32. 
           Subd. 4.  [ACCREDITED CAPITATED PROVIDER.] "Accredited 
        capitated provider" means a health care providing entity that: 
           (1) receives capitated payments from a community network 
        under a contract to provide health services to the network's 
        enrollees.  For purposes of this section, a health care 
        providing entity is "capitated" when its compensation 
        arrangement with a network involves the provider's acceptance of 
        material financial risk for the delivery of a predetermined set 
        of services for a specified period of time; 
           (2) is licensed to provide and provides the contracted 
        services, either directly or through an affiliate.  For purposes 
        of this section, an "affiliate" is any person that directly or 
        indirectly controls, is controlled by, or is under common 
        control with the health care providing entity, and "control" 
        exists when any person, directly or indirectly, owns, controls, 
        or holds the power to vote or holds proxies representing no less 
        than 80 percent of the voting securities or governance rights of 
        any other person; 
           (3) agrees to serve as an accredited capitated provider of 
        a community network or for the purpose of reducing the network's 
        net worth and deposit requirements under section 62N.28; and 
           (4) is approved by the commissioner as an accredited 
        capitated provider for a community network in accordance with 
        section 62N.31. 
           Subd. 5.  [PERCENTAGE OF RISK CEDED.] "Percentage of risk 
        ceded" means the ratio, expressed as a percentage, between 
        capitated payments made or, in the case of a new entity, 
        expected to be made by a community network to all accredited 
        capitated providers during any contract year and the total 
        premium revenue, adjusted to eliminate expected administrative 
        costs, received for the same time period by the community 
        network. 
           Subd. 6.  [PROVIDER AMOUNT AT RISK.] "Provider amount at 
        risk" means a dollar amount certified by a qualified actuary to 
        represent the expected direct costs to an accredited capitated 
        provider for providing the contracted, covered health care 
        services to the enrollees of the network to which it is 
        accredited for a period of 120 days. 
           Sec. 9.  [62N.28] [NET WORTH REQUIREMENT.] 
           Subdivision 1.  [REQUIREMENT.] Except as otherwise 
        permitted by this chapter, each community network must maintain 
        a minimum net worth equal to the greater of: 
           (1) $1,000,000; 
           (2) two percent of the first $150,000,000 of annual premium 
        revenue plus one percent of annual premium revenue in excess of 
        $150,000,000; 
           (3) eight percent of the annual health services costs, 
        except those paid on a capitated or managed hospital payment 
        basis, plus four percent of the annual capitation and managed 
        hospital payment costs; or 
           (4) four months uncovered health services costs. 
           Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
        following terms have the meanings given: 
           (1) "capitated basis" means fixed per member per month 
        payment or percentage of premium paid to a provider that assumes 
        the full risk of the cost of contracted services without regard 
        to the type, value, or frequency of services provided.  For 
        purposes of this definition, capitated basis includes the cost 
        associated with operating staff model facilities; 
           (2) "managed hospital payment basis" means agreements in 
        which the financial risk is primarily related to the degree of 
        utilization rather than to the cost of services; and 
           (3) "uncovered health services costs" means the cost to the 
        community network of health services covered by the community 
        network for which the enrollee would also be liable in the event 
        of the community network's insolvency, and that are not 
        guaranteed, insured, or assumed by a person other than the 
        community network. 
           Subd. 3.  [REINSURANCE CREDIT.] A community network may use 
        the subtraction for premiums paid for insurance permitted under 
        section 62D.042, subdivision 4. 
           Subd. 4.  [PHASE-IN FOR NET WORTH REQUIREMENT.] A community 
        network may choose to comply with the net worth requirement on a 
        phase-in basis according to the following schedule: 
           (1) 50 percent of the amount required under subdivisions 1 
        to 3 at the time that the community network begins enrolling 
        enrollees; 
           (2) 75 percent of the amount required under subdivisions 1 
        to 3 at the end of the first full calendar year of operation; 
           (3) 87.5 percent of the amount required under subdivisions 
        1 to 3 at the end of the second full calendar year of operation; 
        and 
           (4) 100 percent of the amount required under subdivisions 1 
        to 3 at the end of the third full calendar year of operation. 
           Subd. 5.  [NET WORTH CORRIDOR.] A community network shall 
        not maintain net worth that exceeds two and one-half times the 
        amount required of the community network under subdivision 1.  
        Subdivision 4 is not relevant for purposes of this subdivision. 
           Subd. 6.  [NET WORTH REDUCTION.] If a community network has 
        contracts with accredited capitated providers, and only for so 
        long as those contracts or successor contracts remain in force, 
        the net worth requirement of subdivision 1 shall be reduced by 
        the percentage of risk ceded, but in no event shall the net 
        worth requirements be reduced by this subdivision to less than 
        $1,000,000.  The phase-in requirements of subdivision 4 shall 
        not be affected by this reduction. 
           Sec. 10.  [62N.29] [GUARANTEEING ORGANIZATION.] 
           A community network may satisfy its net worth and deposit 
        requirements, in whole or in part, through the use of one or 
        more guaranteeing organizations, with the approval of the 
        commissioner, under the conditions permitted in chapter 62D.  
        Governmental entities, such as counties, may serve as 
        guaranteeing organizations subject to the requirements of 
        chapter 62D. 
           Sec. 11.  [62N.31] [STANDARDS FOR ACCREDITED CAPITATED 
        PROVIDER ACCREDITATION.] 
           Subdivision 1.  [GENERAL.] Each health care providing 
        entity seeking initial accreditation as an accredited capitated 
        provider shall submit to the commissioner of health sufficient 
        information to establish that the applicant has operational 
        capacity, facilities, personnel, and financial capability to 
        provide the contracted covered services to the enrollees of the 
        network for which it seeks accreditation (1) on an ongoing 
        basis; and (2) for a period of 120 days following the insolvency 
        of the network without receiving payment from the network.  
        Accreditation shall continue until abandoned by the accredited 
        capitated provider or revoked by the commissioner in accordance 
        with subdivision 4.  The applicant may establish financial 
        capability by demonstrating that the provider amount at risk can 
        be covered by or through any of allocated or restricted funds, a 
        letter of credit, the taxing authority of the applicant or 
        governmental sponsor of the applicant, an unrestricted fund 
        balance at least two times the provider amount at risk, 
        reinsurance, either purchased directly by the applicant or by 
        the community network to which it will be accredited, or any 
        other method accepted by the commissioner.  Accreditation of a 
        health care providing entity shall not in itself limit the right 
        of the accredited capitated provider to seek payment of unpaid 
        capitated amounts from a community network, whether the 
        community network is solvent or insolvent; provided that, if the 
        community network is subject to any liquidation, rehabilitation, 
        or conservation proceedings, the accredited capitated provider 
        shall have the status accorded creditors under chapter 60B.44, 
        subdivision 10. 
           Subd. 2.  [ANNUAL REPORTING PERIOD.] Each accredited 
        capitated provider shall submit to the commissioner annually, no 
        later than April 15, the following information for each network 
        to which it is accredited:  the provider amount at risk for that 
        year, the number of enrollees for the network, both for the 
        prior year and estimated for the current year, any material 
        change in the provider's operational or financial capacity since 
        its last report, and any other information reasonably requested 
        by the commissioner. 
           Subd. 3.  [ADDITIONAL REPORTING.] Each accredited capitated 
        provider shall provide the commissioner with 60 days' advance 
        written notice of termination of the accredited capitated 
        provider relationship with a network. 
           Subd. 4.  [REVOCATION OF ACCREDITATION.] The commissioner 
        may revoke the accreditation of an accredited capitated provider 
        if the accredited capitated provider's ongoing operational or 
        financial capabilities fail to meet the requirements of this 
        section.  The revocation shall be handled in the same fashion as 
        placing a health maintenance organization under administrative 
        supervision. 
           Sec. 12.  [62N.32] [DEPOSIT REQUIREMENT.] 
           A community network must satisfy the deposit requirement 
        provided in section 62D.041.  The deposit counts as an admitted 
        asset and as part of the required net worth.  The deposit 
        requirement cannot be reduced by the alternative means that may 
        be used to reduce the net worth requirement, other than through 
        the use of a guaranteeing organization. 
           Sec. 13.  [62N.33] [COVERAGE FOR ENROLLEES OF INSOLVENT 
        NETWORKS.] 
           In the event of a community network insolvency, the 
        commissioner shall determine whether one or more community 
        networks or health plan companies are willing and able to 
        provide replacement coverage to all of the failed community 
        network's enrollees, and if so, the commissioner shall 
        facilitate the provision of the replacement coverage.  If such 
        replacement coverage is not available, the commissioner shall 
        randomly assign enrollees of the insolvent community network to 
        other community networks and health plan companies in the 
        service area, in proportion to their market share, for the 
        remaining terms of the enrollees' contracts with the insolvent 
        network.  The other community networks and health plan companies 
        must accept the allocated enrollees under their policy or 
        contract most similar to the enrollees' contracts with the 
        insolvent community network.  The allocation must keep groups 
        together.  Enrollees with special continuity of care needs may, 
        in the commissioner's discretion, be given a choice of 
        replacement coverage rather than random assignment.  Individuals 
        and groups that are assigned randomly may choose a different 
        community network or health plan company when their contracts 
        expire, on the same basis as any other individual or group.  The 
        replacement health plan company must comply with any guaranteed 
        renewal or other renewal provisions of the prior coverage, 
        including but not limited to, provisions regarding preexisting 
        conditions and health conditions that developed during prior 
        coverage. 
           Sec. 14.  [62N.34] [INSOLVENCY FUNDING.] 
           (a) In the event of an insolvency of a community network, 
        all other community networks and health plan companies shall be 
        assessed a surcharge, if necessary to pay expenses and claims 
        set forth in paragraph (b), based on average annual premiums on 
        health plans as defined in section 62A.011.  For purposes of 
        this section, "average annual premiums" means annual premiums 
        averaged over the three most recent calendar years for which 
        information is available preceding the calendar year in which 
        the community network became insolvent.  The total of all such 
        surcharges upon a community network or health plan company shall 
        not, in any one calendar year, exceed two percent of the 
        community network's or health plan company's average annual 
        premium in this state on health plans as defined in section 
        62A.011. 
           (b) Money raised by the assessment shall be used to pay for 
        the following, to the extent that they exceed the community 
        network's deposit and other remaining assets: 
           (1) expenses in connection with the insolvency and transfer 
        of enrollees; 
           (2) outstanding fee-for-service claims from 
        nonparticipating providers, discounted by 25 percent of the 
        claim amount.  Claims incurred after the implementation of the 
        fee schedules provided under chapter 62P will be reimbursed at 
        the fee schedule amount discounted by 25 percent.  Providers may 
        not seek to recover the unpaid portion of their claim from 
        enrollees; and 
           (3) premiums to community networks and health plan 
        companies that take enrollees of the insolvent community 
        network, prorated to account for premiums already paid to the 
        insolvent community network on behalf of those enrollees, to 
        purchase coverage for time periods for which the insolvent 
        community network can no longer provide coverage. 
           (c) In any year in which an assessment is made, the 
        commissioner, in consultation with community networks and other 
        health carriers, shall report to the legislature and governor on 
        the continuing viability of the assessment approach and on the 
        merits of potential alternative funding sources. 
           Sec. 15.  [62N.35] [BORDER ISSUES.] 
           To the extent feasible and appropriate, community networks 
        that also operate under the health maintenance organization or 
        similar prepaid health care law of another state must be 
        licensed and regulated by this state in a manner that avoids 
        unnecessary duplication and expense for the community network.  
        The commissioner shall communicate with regulatory authorities 
        in neighboring states to explore the feasibility of cooperative 
        approaches to streamline regulation of border community 
        networks, such as joint financial audits, and shall report to 
        the legislature on any changes to Minnesota law that may be 
        needed to implement appropriate collaborative approaches to 
        regulation. 
           Sec. 16.  [STUDY OF SOLVENCY REGULATION OF INTEGRATED 
        SERVICE NETWORKS.] 
           The commissioners of health and commerce shall develop the 
        solvency standards for the integrated service networks created 
        by Minnesota Statutes, chapter 62N.  The solvency standards for 
        integrated service networks must be effective no later than 
        January 1, 1996. 
           The standards may use a risk-based capital standard as an 
        integral tool to assess solvency of the integrated service 
        networks.  The standards may require that integrated service 
        networks file the risk based capital calculation as part of the 
        annual financial statement.  The risk-based capital standard for 
        integrated service networks may be based upon the national 
        association of insurance commissioners health organization risk 
        based capital standards currently under development, with any 
        necessary modifications to reflect the unique risk 
        characteristics of integrated service networks.  Those 
        modifications must be based upon an actuarial analysis of the 
        effect on risk. 
           Sec. 17.  [MONITORING OF REINSURANCE ACCESSIBILITY FOR 
        COMMUNITY NETWORKS.] 
           The commissioners of commerce and health shall monitor the 
        private sector market for reinsurance, in order to determine 
        whether community integrated service networks are able to 
        purchase reinsurance at competitive rates.  If the commissioners 
        find that the private market for reinsurance is not accessible 
        or not affordable to community integrated service networks, the 
        commissioners shall recommend to the legislature a voluntary or 
        mandatory reinsurance purchasing pool for community integrated 
        service networks.  The commissioners' recommendations shall 
        address the conditions under which community networks would be 
        permitted or required to participate in the pool and the role of 
        the state in overseeing or administering the pool. 
           Sec. 18.  [REVISOR INSTRUCTIONS.] 
           The revisor of statutes shall recode section 6 establishing 
        an expanded provider network from Minnesota Statutes, chapter 
        62N to Minnesota Statutes, chapter 62Q, and change all 
        references to that section in Minnesota Statutes accordingly. 
           Sec. 19.  [EFFECTIVE DATE.] 
           Sections 1 to 18 are effective July 1, 1994. 
                                   ARTICLE 2
                   REQUIREMENTS FOR ALL HEALTH PLAN COMPANIES
           Section 1.  Minnesota Statutes 1993 Supplement, section 
        62J.33, is amended by adding a subdivision to read: 
           Subd. 3.  [OFFICE OF CONSUMER INFORMATION.] The 
        commissioner shall create an office of consumer information to 
        assist health plan company enrollees and to serve as a resource 
        center for enrollees.  The office shall operate within the 
        information clearinghouse.  The functions of the office are: 
           (1) to assist enrollees in understanding their rights; 
           (2) to explain and assist in the use of all available 
        complaint systems, including internal complaint systems within 
        health carriers, community integrated service networks, 
        integrated service networks, and the departments of health and 
        commerce; 
           (3) to provide information on coverage options in each 
        regional coordinating board region of the state; 
           (4) to provide information on the availability of 
        purchasing pools and enrollee subsidies; and 
           (5) to help consumers use the health care system to obtain 
        coverage. 
           The office of consumer information shall not provide legal 
        services to consumers and shall not represent a consumer or 
        enrollee.  The office of consumer information shall not serve as 
        an advocate for consumers in disputes with health plan companies.
        Nothing in this subdivision shall interfere with the ombudsman 
        program established under section 256B.031, subdivision 6, or 
        other existing ombudsman programs. 
           Sec. 2.  Minnesota Statutes 1993 Supplement, section 
        62J.33, is amended by adding a subdivision to read: 
           Subd. 4.  [INFORMATION ON HEALTH PLAN COMPANIES.] The 
        information clearinghouse shall provide information on all 
        health plan companies operating in a specific geographic area to 
        consumers and purchasers who request it. 
           Sec. 3.  Minnesota Statutes 1993 Supplement, section 
        62J.33, is amended by adding a subdivision to read: 
           Subd. 5.  [DISTRIBUTION OF DATA ON QUALITY.] The 
        commissioner shall make available through the clearinghouse 
        hospital quality data collected under section 62J.45, 
        subdivision 4b, and health plan company quality data collected 
        under section 62J.45, subdivision 4c. 
           Sec. 4.  Minnesota Statutes 1993 Supplement, section 
        62J.45, is amended by adding a subdivision to read: 
           Subd. 4a.  [EVALUATION OF CONSUMER SATISFACTION; PROVIDER 
        INFORMATION PILOT STUDY.] (a) The commissioner may make a grant 
        to the data institute to develop and implement a mechanism for 
        collecting comparative data on consumer satisfaction through 
        adoption of a standard consumer satisfaction survey.  As a 
        condition of receiving this grant, the data institute shall 
        appoint a consumer advisory group which shall consist of 13 
        individuals, representing enrollees from public and private 
        health plan companies and programs and two uninsured consumers, 
        to advise the data institute on issues of concern to consumers.  
        The advisory group must have at least one member from each 
        regional coordinating board region of the state.  The advisory 
        group expires June 30, 1997.  This survey shall include 
        enrollees in community integrated service networks, integrated 
        service networks, health maintenance organizations, preferred 
        provider organizations, indemnity insurance plans, public 
        programs, and other health plan companies.  The data institute 
        shall determine a mechanism for the inclusion of the uninsured.  
        Health plan companies and group purchasers shall provide 
        enrollment information, including the names, addresses, and 
        telephone numbers of enrollees and former enrollees and other 
        data necessary for the completion of this study to the data 
        institute.  This enrollment information provided by the health 
        plan companies and group purchasers is classified as private 
        data on individuals, as defined in section 13.02, subdivision 
        12.  The data institute shall provide raw unaggregated data to 
        the data analysis unit.  The data institute may analyze and 
        prepare findings from the raw, unaggregated data, and the 
        findings from this survey may be included in the health plan 
        company report cards, and in other reports developed by the data 
        analysis unit, in consultation with the data institute, to be 
        disseminated by the information clearinghouse.  The raw 
        unaggregated data is classified as private data on individuals 
        as defined in section 13.02, subdivision 12.  The survey may 
        include information on the following subjects: 
           (1) enrollees' overall satisfaction with their health care 
        plan; 
           (2) consumers' perception of access to emergency, urgent, 
        routine, and preventive care, including locations, hours, 
        waiting times, and access to care when needed; 
           (3) premiums and costs; 
           (4) technical competence of providers; 
           (5) communication, courtesy, respect, reassurance, and 
        support; 
           (6) choice and continuity of providers; 
           (7) continuity of care; 
           (8) outcomes of care; 
           (9) services offered by the plan, including range of 
        services, coverage for preventive and routine services, and 
        coverage for illness and hospitalization; 
           (10) availability of information; and 
           (11) paperwork. 
           (b) The commissioner, in consultation with the data 
        institute, shall develop a pilot study to collect comparative 
        data from health care providers on opportunities and barriers to 
        the provision of quality, cost-effective health care.  The 
        provider information pilot study shall include providers in 
        community integrated service networks, integrated service 
        networks, health maintenance organizations, preferred provider 
        organizations, indemnity insurance plans, public programs, and 
        other health plan companies.  Health plan companies and group 
        purchasers shall provide to the commissioner providers' names, 
        health plan assignment, and other appropriate data necessary for 
        the commissioner to conduct the study.  The provider information 
        pilot study shall examine factors that increase and hinder 
        access to the provision of quality, cost-effective health care.  
        The study may examine: 
           (1) administrative barriers and facilitators; 
           (2) time spent obtaining permission for appropriate and 
        necessary treatments; 
           (3) latitude to order appropriate and necessary tests, 
        pharmaceuticals, and referrals to specialty providers; 
           (4) assistance available for decreasing administrative and 
        other routine paperwork activities; 
           (5) continuing education opportunities provided; 
           (6) access to readily available information on diagnoses, 
        diseases, outcomes, and new technologies; 
           (7) continuous quality improvement activities; 
           (8) inclusion in administrative decision-making; 
           (9) access to social services and other services that 
        facilitate continuity of care; 
           (10) economic incentives and disincentives; 
           (11) peer review procedures; and 
           (12) the prerogative to address public health needs. 
           In selecting additional data for collection, the 
        commissioner shall consider the:  (1) statistical validity of 
        the indicator; (2) public need for the information; (3) 
        estimated expense of collecting and reporting the indicator; and 
        (4) usefulness of the indicator to identify barriers and 
        opportunities to improve quality care provision within health 
        plan companies. 
           Sec. 5.  Minnesota Statutes 1993 Supplement, section 
        62J.45, is amended by adding a subdivision to read: 
           Subd. 4b.  [HOSPITAL QUALITY INDICATORS.] The commissioner, 
        in consultation with the data institute, shall develop a system 
        for collecting data on hospital quality.  The commissioner shall 
        require a licensed hospital to collect and report data as needed 
        for the system.  Data to be collected shall include structural 
        characteristics including staff-mix and nurse-patient ratios.  
        In selecting additional data for collection, the commissioner 
        shall consider:  (1) feasibility and statistical validity of the 
        indicator; (2) purchaser and public demand for the indicator; 
        (3) estimated expense of collecting and reporting the indicator; 
        and (4) usefulness of the indicator for internal improvement 
        purposes.  
           Sec. 6.  Minnesota Statutes 1993 Supplement, section 
        62J.45, is amended by adding a subdivision to read: 
           Subd. 4c.  [QUALITY REPORT CARDS.] (a) Each health plan 
        company shall report annually by April 1 to the commissioner 
        specific quality indicators, in the form specified by the 
        commissioner in consultation with the data institute.  The 
        quality indicators must be reported using standard definitions 
        and measurement processes as specified by the commissioner.  
        Wherever possible, the commissioner's specifications must be 
        consistent with any outlined in the health plan employer data 
        and information set (HEDIS 2.0).  The commissioner, in 
        consultation with the data institute, may modify the quality 
        indicators to be reported to incorporate improvements in quality 
        measurement tools.  When HEDIS 2.0 indicators or health care 
        financing administration approved quality indicators for medical 
        assistance and Medicare are used, the commissioner is exempt 
        from rulemaking.  For additions or modifications to the HEDIS 
        indicators or if other quality indicators are added, the 
        commissioner shall proceed through rulemaking pursuant to 
        chapter 14.  The data analysis unit shall develop quality report 
        cards, and these report cards shall be disseminated through the 
        information clearinghouse.  
           (b) Data shall be collected by county and high-risk and 
        special needs populations as well as by health plan but shall 
        not be reported.  The commissioner, in consultation with the 
        data institute and counties, shall provide this data to a 
        community health board as defined in section 145A.02 in a manner 
        that would not allow the identification of individuals. 
           Sec. 7.  Minnesota Statutes 1992, section 62M.02, 
        subdivision 5, is amended to read: 
           Subd. 5.  [CERTIFICATION.] "Certification" means a 
        determination by a utilization review organization that an 
        admission, extension of stay, or other health care service has 
        been reviewed and that it, based on the information provided, 
        meets the utilization review requirements of the applicable 
        health plan and the health carrier will then pay for the covered 
        benefit, provided the preexisting limitation provisions, the 
        general exclusion provisions, and any deductible, copayment, 
        coinsurance, or other policy requirements have been met. 
           Sec. 8.  Minnesota Statutes 1992, section 62M.02, 
        subdivision 21, is amended to read: 
           Subd. 21.  [UTILIZATION REVIEW ORGANIZATION.] "Utilization 
        review organization" means an entity including but not limited 
        to an insurance company licensed under chapter 60A to offer, 
        sell, or issue a policy of accident and sickness insurance as 
        defined in section 62A.01; a health service plan licensed under 
        chapter 62C; a health maintenance organization licensed under 
        chapter 62D; a community integrated service network or an 
        integrated service network licensed under chapter 62N; a 
        fraternal benefit society operating under chapter 64B; a joint 
        self-insurance employee health plan operating under chapter 62H; 
        a multiple employer welfare arrangement, as defined in section 3 
        of the Employee Retirement Income Security Act of 1974 (ERISA), 
        United States Code, title 29, section 1103, as amended; a third 
        party administrator licensed under section 60A.23, subdivision 
        8, which conducts utilization review and determines 
        certification of an admission, extension of stay, or other 
        health care services for a Minnesota resident; or any entity 
        performing utilization review that is affiliated with, under 
        contract with, or conducting utilization review on behalf of, a 
        business entity in this state. 
           Sec. 9.  Minnesota Statutes 1992, section 62M.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LICENSED UTILIZATION REVIEW ORGANIZATION.] 
        Beginning January 1, 1993, any organization that is licensed in 
        this state and that meets the definition of utilization review 
        organization in section 62M.02, subdivision 21, must be licensed 
        under chapter 60A, 62C, 62D, 62N, or 64B, or registered under 
        this chapter and must comply with sections 62M.01 to 62M.16 and 
        section 72A.201, subdivisions 8 and 8a.  Each licensed community 
        integrated service network, integrated service network, or 
        health maintenance organization that has an employed staff model 
        of providing health care services shall comply with sections 
        62M.01 to 62M.16 and section 72A.201, subdivisions 8 and 8a for 
        any services provided by providers under contract. 
           Sec. 10.  Minnesota Statutes 1992, section 62M.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NONLICENSED UTILIZATION REVIEW ORGANIZATION.] An 
        organization that meets the definition of a utilization review 
        organization under section 62M.02, subdivision 21, that is not 
        licensed in this state that performs utilization review services 
        for Minnesota residents must register with the commissioner of 
        commerce and must certify compliance with sections 62M.01 to 
        62M.16. 
           Initial registration must occur no later than January 1, 
        1993.  The registration is effective for two years and may be 
        renewed for another two years by written request.  Each 
        utilization review organization registered under this chapter 
        shall notify the commissioner of commerce within 30 days of any 
        change in the name, address, or ownership of the organization. 
           Sec. 11.  Minnesota Statutes 1992, section 62M.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PENALTIES AND ENFORCEMENTS.] If a nonlicensed 
        utilization review organization fails to comply with sections 
        62M.01 to 62M.16, the organization may not provide utilization 
        review services for any Minnesota resident.  The commissioner of 
        commerce may issue a cease and desist order under section 
        45.027, subdivision 5, to enforce this provision.  The cease and 
        desist order is subject to appeal under chapter 14.  A 
        nonlicensed utilization review organization that fails to comply 
        with the provisions of sections 62M.01 to 62M.16 is subject to 
        all applicable penalty and enforcement provisions of section 
        72A.201.  Each utilization review organization licensed under 
        chapter 60A, 62C, 62D, 62N, or 64B shall comply with sections 
        62M.01 to 62M.16 as a condition of licensure. 
           Sec. 12.  Minnesota Statutes 1992, section 62M.05, 
        subdivision 3, is amended to read: 
           Subd. 3.  [NOTIFICATION OF DETERMINATIONS.] A utilization 
        review organization must have written procedures for providing 
        notification of its determinations on all certifications in 
        accordance with the following: 
           (a) When an initial determination is made to certify, 
        notification must be provided promptly by telephone to the 
        provider.  The utilization review organization shall send 
        written notification to the hospital, attending physician, or 
        applicable service provider within ten business days of the 
        determination in accordance with section 72A.20, subdivision 4a, 
        or shall maintain an audit trail of the determination and 
        telephone notification.  For purposes of this subdivision, 
        "audit trail" includes documentation of the telephone 
        notification, including the date; the name of the person spoken 
        to, the enrollee or patient; the service, procedure, or 
        admission certified; and the date of the service, procedure, or 
        admission.  If the utilization review organization indicates 
        certification by use of a number, the number must be called the 
        "certification number." 
           (b) When a determination is made not to certify a hospital 
        or surgical facility admission or extension of a hospital stay, 
        or other service requiring review determination, within one 
        working day after making the decision the attending physician 
        and hospital must be notified by telephone and a written 
        notification must be sent to the hospital, attending physician, 
        and enrollee or patient.  The written notification must include 
        the principal reason or reasons for the determination and the 
        process for initiating an appeal of the determination.  Upon 
        request, the utilization review organization shall provide the 
        attending physician or provider with the criteria used to 
        determine the necessity, appropriateness, and efficacy of the 
        health care service and identify the database, professional 
        treatment parameter, or other basis for the criteria.  Reasons 
        for a determination not to certify may include, among other 
        things, the lack of adequate information to certify after a 
        reasonable attempt has been made to contact the attending 
        physician. 
           Sec. 13.  Minnesota Statutes 1992, section 62M.06, 
        subdivision 3, is amended to read: 
           Subd. 3.  [STANDARD APPEAL.] The utilization review 
        organization must establish procedures for appeals to be made 
        either in writing or by telephone. 
           (a) Each utilization review organization shall notify in 
        writing the enrollee or patient, attending physician, and claims 
        administrator of its determination on the appeal as soon as 
        practical, but in no case later than 45 days after receiving the 
        required documentation on the appeal. 
           (b) The documentation required by the utilization review 
        organization may include copies of part or all of the medical 
        record and a written statement from the health care provider. 
           (c) Prior to upholding the original decision not to certify 
        for clinical reasons, the utilization review organization shall 
        conduct a review of the documentation by a physician who did not 
        make the original determination not to certify. 
           (d) The process established by a utilization review 
        organization may include defining a period within which an 
        appeal must be filed to be considered.  The time period must be 
        communicated to the patient, enrollee, or attending physician 
        when the initial determination is made. 
           (e) An attending physician who has been unsuccessful in an 
        attempt to reverse a determination not to certify shall, 
        consistent with section 72A.285, be provided the following: 
           (1) a complete summary of the review findings; 
           (2) qualifications of the reviewers, including any license, 
        certification, or specialty designation; and 
           (3) the relationship between the enrollee's diagnosis and 
        the review criteria used as the basis for the decision, 
        including the specific rationale for the reviewer's decision. 
           (f) In cases where an of appeal to reverse a determination 
        not to certify for clinical reasons is unsuccessful, the 
        utilization review organization must, upon request of the 
        attending physician, ensure that a physician of the utilization 
        review organization's choice in the same or a similar general 
        specialty as typically manages the medical condition, procedure, 
        or treatment under discussion is reasonably available to review 
        the case. 
           Sec. 14.  [62Q.01] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] For purposes of this 
        chapter, the terms defined in this section have the meanings 
        given. 
           Subd. 2.  [COMMISSIONER.] "Commissioner"  means the 
        commissioner of health. 
           Subd. 3.  [HEALTH PLAN.] "Health plan" means a health plan 
        as defined in section 62A.011 or a policy, contract, or 
        certificate issued by a community integrated service network; an 
        integrated service network; or an all-payer insurer as defined 
        in section 62P.02. 
           Subd. 4.  [HEALTH PLAN COMPANY.] "Health plan company" 
        means: 
           (1) a health carrier as defined under section 62A.011, 
        subdivision 2; 
           (2) an integrated service network as defined under section 
        62N.02, subdivision 8; 
           (3) an all-payer insurer as defined under section 62P.02; 
        or 
           (4) a community integrated service network as defined under 
        section 62N.02, subdivision 4a. 
           Sec. 15.  [62Q.03] [PROCESS FOR DEFINING, DEVELOPING, AND 
        IMPLEMENTING A RISK ADJUSTMENT SYSTEM.] 
           Subdivision 1.  [PURPOSE.] Risk adjustment is a vital 
        element of the state's strategy for achieving a more equitable, 
        efficient system of health care delivery and financing for all 
        state residents.  Risk adjustment is needed to:  remove current 
        disincentives in the health care system to insure and serve high 
        risk and special needs populations; promote fair competition 
        among health plan companies on the basis of their ability to 
        efficiently and effectively provide services rather than on the 
        health status of those in a given insurance pool; and help 
        assure the viability of all health plan companies, including 
        community integrated service networks.  It is the commitment of 
        the state to develop and implement a risk adjustment system by 
        July 1, 1997, and to continue to improve and refine risk 
        adjustment over time.  The process for designing and 
        implementing risk adjustment shall be open, explicit, utilize 
        resources and expertise from both the private and public 
        sectors, and include at least the representation described in 
        subdivision 4.  The process shall take into account the 
        formative nature of risk adjustment as an emerging science, and 
        shall develop and implement risk adjustment to allow continual 
        modifications, expansions, and refinements over time.  The 
        process shall have at least two stages, as described in 
        subdivision 2 and 3. 
           Subd. 2.  [FIRST STAGE OF RISK ADJUSTMENT DEVELOPMENT 
        PROCESS.] The objective of the first stage is to report to the 
        legislature by January 15, 1995, with recommendations on the 
        process, organization, resource needs, and specific work plan to 
        define, develop, and implement a risk adjustment mechanism by 
        July 1, 1997, and to continually improve risk adjustment over 
        time.  The report shall address the specific issues listed in 
        subdivision 5, and shall also identify any additional policy 
        issues, questions and concerns that must be addressed to 
        facilitate development and implementation of risk adjustment. 
           Subd. 3.  [SECOND STAGE OF THE RISK ADJUSTMENT DEVELOPMENT 
        PROCESS.] The second stage of the process, following review and 
        any modification by the legislature of the January 15, 1995 
        report, shall be to carry out the work plan to develop and 
        implement a risk adjustment mechanism by July 1, 1997, and to 
        continue to improve and refine a risk adjustment over time.  The 
        second stage of the process shall be carried out by the 
        association created in subdivision 6. 
           Subd. 4.  [EXPERT PANEL.] The commissioners of health and 
        commerce shall convene an expert advisory panel comprised of, 
        but not limited to, the board members of the Minnesota risk 
        adjustment association, as described in subdivision 8, and 
        experts from the fields of epidemiology, health services 
        research, and health economics.  The commissioners may also 
        convene technical work groups that may include members of the 
        expert advisory panel and other persons, all selected in the 
        sole discretion of the commissioners.  The expert advisory panel 
        and the workgroups shall assist and advise the commissioners of 
        health and commerce in preparing the implementation report 
        described in subdivision 5. 
           Subd. 5.  [IMPLEMENTATION REPORT TO THE LEGISLATURE.] The 
        commissioners of health and commerce shall submit a report to 
        the legislature by January 15, 1995, with recommendations on the 
        process, organization, resource needs, and specific work plan to 
        define, develop, and implement a risk adjustment system by July 
        1, 1997, and to continually improve risk adjustment over time.  
        In developing the January 15, 1995 report, the commissioners of 
        commerce and health must consider and describe the following: 
           (1) the relationship of risk adjustment to the 
        implementation of universal coverage and community rating; 
           (2) the role of reinsurance in the risk adjustment system, 
        as a short-term alternative in the absence of a risk adjustment 
        methodology; 
           (3) the relationship of the risk adjustment system to the 
        implementation of reforms in underwriting and rating 
        requirements; 
           (4) the potential role of the health coverage reinsurance 
        association in the risk adjustment system; 
           (5) the need for mandatory participation of all health plan 
        companies in the risk adjustment system; 
           (6) current and emerging applications of risk adjustment 
        methodologies used for reimbursement purposes at the state and 
        national level and the reliability and validity of current risk 
        assessment and risk adjustment methodologies; 
           (7) the levels and types of risk to be distributed through 
        the risk adjustment system; 
           (8) the extent to which prepaid contracting by public 
        programs needs to be addressed by the risk adjustment 
        methodology; 
           (9) a plan for testing of the risk adjustment options being 
        proposed, including simulations using existing health plan data, 
        and development and testing of models on simulated data to 
        assess the feasibility and efficacy of specific methodologies; 
           (10) the appropriate role of the state in the supervision 
        of the risk adjustment association created pursuant to 
        subdivision 6; 
           (11) risk adjustment methodologies that take into account 
        differences among health plan companies due to their relative 
        efficiencies, characteristics, and relative to existing insured 
        contracts, new business, underwriting, or rating restrictions 
        required or permitted by law; and 
           (12) methods to encourage health plan companies to enroll 
        higher risk populations.  
           To the extent possible, the implementation report shall 
        identify a specific methodology or methodologies that may serve 
        as a starting point for risk adjustment, explain the advantages 
        and disadvantages of each such methodology, and provide a 
        specific workplan for implementing the methodology. 
           Subd. 6.  [CREATION OF RISK ADJUSTMENT ASSOCIATION.] The 
        Minnesota risk adjustment association is created on July 1, 
        1994, and may operate as a nonprofit unincorporated association. 
           Subd. 7.  [PURPOSE OF ASSOCIATION.] The association is 
        established to carry out the purposes of subdivision 1, as 
        further elaborated on by the implementation report described in 
        subdivision 5 and by legislation enacted in 1995 or subsequently.
           Subd. 8.  [GOVERNANCE.] (a) The association shall be 
        governed by an interim 19-member board as follows:  one provider 
        member appointed by the Minnesota Hospital Association; one 
        provider member appointed by the Minnesota Medical Association; 
        one provider member appointed by the governor; three members 
        appointed by the Minnesota Council of HMOs to include an HMO 
        with at least 50 percent of total membership enrolled through a 
        public program; three members appointed by Blue Cross and Blue 
        Shield of Minnesota, to include a member from a Blue Cross and 
        Blue Shield of Minnesota affiliated health plan with fewer than 
        50,000 enrollees and located outside the Minneapolis-St. Paul 
        metropolitan area; two members appointed by the Insurance 
        Federation of Minnesota; one member appointed by the Minnesota 
        Association of Counties; and three public members appointed by 
        the governor, to include at least one representative of a public 
        program.  The commissioners of health, commerce, human services, 
        and employee relations shall be nonvoting ex-officio members. 
           (b) The board may elect officers and establish committees 
        as necessary. 
           (c) A majority of the members of the board constitutes a 
        quorum for the transaction of business. 
           (d) Approval by a majority of the board members present is 
        required for any action of the board. 
           (e) Interim board members shall be appointed by July 1, 
        1994, and shall serve until a new board is elected according to 
        the plan developed by the association. 
           (f) A member may designate a representative to act as a 
        member of the interim board in the member's absence. 
           Subd. 9.  [DATA COLLECTION.] The board of the association 
        shall consider antitrust implications and establish procedures 
        to assure that pricing and other competitive information is 
        appropriately shared among competitors in the health care market 
        or members of the board.  Any information shared shall be 
        distributed only for the purposes of administering or developing 
        any of the tasks identified in subdivisions 2 and 4.  In 
        developing these procedures, the board of the association may 
        consider the identification of a state agency or other 
        appropriate third party to receive information of a confidential 
        or competitive nature. 
           Subd. 10.  [SUPERVISION.] The association's activities 
        shall be supervised by the commissioners of health and commerce. 
           Subd. 11.  [REPORTING.] The board of the association shall 
        provide a status report on its activities to the health care 
        commission on a quarterly basis. 
           Sec. 16.  [62Q.07] [ACTION PLANS.] 
           Subdivision 1.  [ACTION PLANS REQUIRED.] (a) To increase 
        public awareness and accountability of health plan companies, 
        all health plan companies must annually file with the applicable 
        commissioner an action plan that satisfies the requirements of 
        this section beginning July 1, 1994, as a condition of doing 
        business in Minnesota.  Each health plan company must also file 
        its action plan with the information clearinghouse.  Action 
        plans are required solely to provide information to consumers, 
        purchasers, and the larger community as a first step toward 
        greater accountability of health plan companies.  The sole 
        function of the commissioner in relation to the action plans is 
        to ensure that each health plan company files a complete action 
        plan, that the action plan is truthful and not misleading, and 
        that the action plan is reviewed by appropriate community 
        agencies. 
           (b) If a commissioner responsible for regulating a health 
        plan company required to file an action plan under this section 
        has reason to believe an action plan is false or misleading, the 
        commissioner may conduct an investigation to determine whether 
        the action plan is truthful and not misleading, and may require 
        the health plan company to submit any information that the 
        commissioner reasonably deems necessary to complete the 
        investigation.  If the commissioner determines that an action 
        plan is false or misleading, the commissioner may require the 
        health plan company to file an amended plan or may take any 
        action authorized under chapter 72A. 
           Subd. 2.  [CONTENTS OF ACTION PLANS.] (a) An action plan 
        must include a detailed description of all of the health plan 
        company's methods and procedures, standards, qualifications, 
        criteria, and credentialing requirements for designating the 
        providers who are eligible to participate in the health plan 
        company's provider network, including any limitations on the 
        numbers of providers to be included in the network.  This 
        description must be updated by the health plan company and filed 
        with the applicable agency on a quarterly basis.  
           (b) An action plan must include the number of full-time 
        equivalent physicians, by specialty, nonphysician providers, and 
        allied health providers used to provide services.  The action 
        plan must also describe how the health plan company intends to 
        encourage the use of nonphysician providers, midlevel 
        practitioners, and allied health professionals, through at least 
        consumer education, physician education, and referral and 
        advisement systems.  The annual action plan must also include 
        data that is broken down by type of provider, reflecting actual 
        utilization of midlevel practitioners and allied professionals 
        by enrollees of the health plan company during the previous 
        year.  Until July 1, 1995, a health plan company may use 
        estimates if actual data is not available.  For purposes of this 
        paragraph, "provider" has the meaning given in section 62J.03, 
        subdivision 8.  
           (c) An action plan must include a description of the health 
        plan company's policy on determining the number and the type of 
        providers that are necessary to deliver cost-effective health 
        care to its enrollees.  The action plan must also include the 
        health plan company's strategy, including provider recruitment 
        and retention activities, for ensuring that sufficient providers 
        are available to its enrollees. 
           (d) An action plan must include a description of actions 
        taken or planned by the health plan company to ensure that 
        information from report cards, outcome studies, and complaints 
        is used internally to improve quality of the services provided 
        by the health plan company. 
           (e) An action plan must include a detailed description of 
        the health plan company's policies and procedures for enrolling 
        and serving high risk and special needs populations.  This 
        description must also include the barriers that are present for 
        the high risk and special needs population and how the health 
        plan company is addressing these barriers in order to provide 
        greater access to these populations.  "High risk and special 
        needs populations" includes, but is not limited to, recipients 
        of medical assistance, general assistance medical care, and 
        MinnesotaCare; persons with chronic conditions or disabilities; 
        individuals within certain racial, cultural, and ethnic 
        communities; individuals and families with low income; 
        adolescents; the elderly; individuals with limited or no English 
        language proficiency; persons with high-cost preexisting 
        conditions; homeless persons; chemically dependent persons; 
        persons with serious and persistent mental illness and children 
        with severe emotional disturbance; and persons who are at 
        high-risk of requiring treatment.  The action plan must also 
        reflect actual utilization of providers by enrollees defined by 
        this section as high risk or special needs populations during 
        the previous year.  For purposes of this paragraph, "provider" 
        has the meaning given in section 62J.03, subdivision 8. 
           (f) An action plan must include a general description of 
        any action the health plan company has taken and those it 
        intends to take to offer health coverage options to rural 
        communities and other communities not currently served by the 
        health plan company. 
           (g) A health plan company other than a large managed care 
        plan company may satisfy any of the requirements of the action 
        plan in paragraphs (a) to (f) by stating that it has no 
        policies, procedures, practices, or requirements, either written 
        or unwritten, or formal or informal, and has undertaken no 
        activities or plans on the issues required to be addressed in 
        the action plan, provided that the statement is truthful and not 
        misleading.  For purposes of this paragraph, "large managed care 
        plan company" means a health maintenance organization, 
        integrated service network, or other health plan company that 
        employs or contracts with health care providers, that has more 
        than 50,000 enrollees in this state.  If a health plan company 
        employs or contracts with providers for some of its health plans 
        and does not do so for other health plans that it offers, the 
        health plan company is a large managed care plan company if it 
        has more than 50,000 enrollees in this state in health plans for 
        which it does employ or contract with providers. 
           Sec. 17.  [62Q.09] [PROHIBITION ON EXCLUSIVE 
        RELATIONSHIPS.] 
           Subdivision 1.  [PROHIBITION ON EXCLUSIVE CONTRACTS.] No 
        provider or health plan company shall restrict any person's 
        right to provide health services or procedures to another 
        provider or health plan company, unless the person is an 
        employee. 
           Subd. 2.  [PROHIBITION ON RESTRICTIVE CONTRACT TERMS.] No 
        provider or person providing goods or health services to a 
        provider shall enter into any contract or subcontract with any 
        health plan company on terms that require the provider or person 
        not to contract with any other health plan company, unless the 
        provider or person is an employee. 
           Subd. 3.  [ENFORCEMENT.] Either the commissioner of health 
        or commerce shall periodically review contracts among health 
        care providing entities and health plan companies to determine 
        compliance with this section.  Any provider may submit a 
        contract to the commissioner for review if the provider believes 
        this section has been violated.  Any provision of a contract 
        found to violate this section is null and void, and the 
        commissioner may seek civil penalties in an amount not to exceed 
        $25,000 for each such contract. 
           Subd. 4.  [APPLICATION; VOLUNTARY RENEWAL.] This section 
        applies to contracts entered into on or after the effective date 
        of this section.  This section does not prohibit the voluntary 
        renewal of exclusive contracts entered into prior to the 
        effective date of this section. 
           Subd. 5.  [SUNSET.] This section expires January 1, 1997. 
           Sec. 18.  [62Q.10] [NONDISCRIMINATION.] 
           If a health plan company, with the exception of a community 
        integrated service network or an indemnity insurer licensed 
        under chapter 60A who does not offer a product through a 
        preferred provider network, offers coverage of a health care 
        service as part of its plan, it may not deny provider network 
        status to a qualified health care provider type who meets the 
        credentialing requirements of the health plan company solely 
        because the provider is an allied independent health care 
        provider as defined in section 62N.255. 
           Sec. 19.  [62Q.11] [DISPUTE RESOLUTION.] 
           Subdivision 1.  [ESTABLISHED.] The commissioners of health 
        and commerce shall make dispute resolution processes available 
        to encourage early settlement of disputes in order to avoid the 
        time and cost associated with litigation and other formal 
        adversarial hearings.  For purposes of this section, "dispute 
        resolution" means the use of negotiation, mediation, 
        arbitration, mediation-arbitration, neutral fact finding, and 
        minitrials.  These processes shall be nonbinding unless 
        otherwise agreed to by all parties to the dispute. 
           Subd. 2.  [REQUIREMENTS.] (a) If an enrollee, health care 
        provider, or applicant for network provider status chooses to 
        use a dispute resolution process prior to the filing of a formal 
        claim or of a lawsuit, the health plan company must participate. 
           (b) If an enrollee, health care provider, or applicant for 
        network provider status chooses to use a dispute resolution 
        process after the filing of a lawsuit, the health plan company 
        must participate in dispute resolution, including, but not 
        limited to, alternative dispute resolution under rule 114 of the 
        Minnesota general rules of practice. 
           (c) The commissioners of health and commerce shall inform 
        and educate health plan companies' enrollees about dispute 
        resolution and its benefits. 
           (d) A health plan company may encourage but not require an 
        enrollee to submit a complaint to alternative dispute resolution.
           Sec. 20.  [62Q.12] [DENIAL OF ACCESS.] 
           No health plan company may deny access to a covered health 
        care service unless the denial is made by, or under the 
        direction of, or subject to the review of a health care 
        professional licensed to provide the service in question. 
           Sec. 21.  [62Q.135] [CONTRACTING FOR CHEMICAL DEPENDENCY 
        SERVICES.] 
           No health plan company shall contract with a chemical 
        dependency treatment program, unless the program participates in 
        the chemical dependency treatment accountability plan 
        established by the commissioner of human services.  The 
        commissioner of human services shall make data on chemical 
        dependency services and outcomes collected through this program 
        available to health plan companies. 
           Sec. 22.  [62Q.14] [RESTRICTIONS ON ENROLLEE SERVICES.] 
           No health plan company may restrict the choice of an 
        enrollee as to where the enrollee receives services related to: 
           (1) the voluntary planning of the conception and bearing of 
        children, provided that this clause does not refer to abortion 
        services; 
           (2) the diagnosis of infertility; 
           (3) the testing and treatment of a sexually transmitted 
        disease; and 
           (4) the testing for AIDS or other HIV-related conditions. 
           Sec. 23.  [62Q.16] [MID-MONTH TERMINATION PROHIBITED.] 
           The termination of a person's coverage under any health 
        plan as defined in section 62A.011, subdivision 3, with the 
        exception of individual health plans, issued or renewed on or 
        after January 1, 1995, must provide coverage until the end of 
        the month in which coverage was terminated. 
           Sec. 24.  [UTILIZATION REVIEW STUDY.] 
           The commissioners of health and commerce shall study means 
        of funding the registration required by Minnesota Statutes, 
        section 62M.03, and of monitoring and enforcing the requirements 
        of Minnesota Statutes, chapter 62M.  They shall jointly report 
        their recommendations to the legislature by January 15, 1995. 
           Sec. 25.  [EFFECTIVE DATE.] 
           Sections 1, 5, 6, 14 to 17, and 24 are effective the day 
        following final enactment.  Sections 7 to 13 and 23 are 
        effective January 1, 1995.  Section 2 to 4, and 18 to 21 are 
        effective July 1, 1994.  Section 22 is effective January 1, 
        1995, and applies to policies and contracts issued or renewed on 
        or after that date. 
                                   ARTICLE 3
                         THE REGULATED ALL-PAYER OPTION
           Section 1.  Minnesota Statutes 1993 Supplement, section 
        62P.01, is amended to read: 
           62P.01 [REGULATED ALL-PAYER SYSTEM OPTION.] 
           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.  The purpose of the 
        regulated all-payer option is to provide an alternative to 
        integrated service networks for those consumers, providers, 
        third-party payers, and group purchasers who prefer to 
        participate in a fee-for-service system.  The initial goal of 
        the all-payer option is to reduce administrative costs and 
        burdens by including the all-payer option in a uniform, 
        standardized system of billing forms and procedures and 
        utilization review.  The longer-term goal of the all-payer 
        option is to establish a uniform reimbursement system, 
        reimbursement and utilization controls, and quality standards 
        and monitoring; to ensure that the annual growth in the costs 
        for all services not provided through integrated service 
        networks will remain within the growth limits established under 
        section 62J.04; and to ensure that quality for these services is 
        maintained or improved. 
           Sec. 2.  [62P.02] [DEFINITIONS.] 
           (a) For purposes of this chapter, the following definitions 
        apply: 
           (b) "All-payer insurer" means a health carrier as defined 
        in section 62A.011, subdivision 2.  The term does not include 
        community integrated service networks or integrated service 
        networks licensed under chapter 62N. 
           (c) "All-payer reimbursement level" means the reimbursement 
        amount specified by the all-payer reimbursement system. 
           (d) "All-payer reimbursement system" means the 
        Minnesota-specific physician and independent provider fee 
        schedule, the Minnesota-specific hospital reimbursement system, 
        and other provider payment methods established under this 
        chapter or rules adopted under this chapter. 
           (e) "Commissioner" means the commissioner of health. 
           (f) "Health care provider" has the meaning given in section 
        62J.03, subdivision 8. 
           Sec. 3.  Minnesota Statutes 1993 Supplement, section 
        62P.03, is amended to read: 
           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 option 
        shall begin to be phased in with full implementation of the 
        all-payer reimbursement system by July 1, 1996 1997.  During the 
        transition period, expenditure limits for health carriers shall 
        be established in accordance with section 62P.04 and health care 
        provider revenue limits shall be established in accordance with 
        section 62P.05. 
           Sec. 4.  Minnesota Statutes 1993 Supplement, section 
        62P.04, is amended to read: 
           62P.04 [EXPENDITURE INTERIM HEALTH PLAN COMPANY EXPENDITURE 
        LIMITS FOR HEALTH PLAN COMPANY.] 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the following definitions apply. 
           (b) "Health carrier plan company" has the definition 
        provided in section 62A.011 62Q.01. 
           (c) "Total expenditures" means incurred claims or 
        expenditures on health care services, administrative expenses, 
        charitable contributions, and all other payments made by health 
        plan companies out of premium revenues. 
           (d) "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 "Net expenditures" means total expenditures minus exempted 
        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 
           (e) "Exempted taxes and assessments" means direct payments 
        for taxes to government agencies, contributions to the Minnesota 
        comprehensive health association, the medical assistance 
        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, assessments by 
        the Minnesota risk adjustment association, and any new 
        assessments imposed by federal or state law. 
           (f) "Consumer cost-sharing or subscriber liability" means 
        enrollee coinsurance, copayment, deductible payments, and 
        amounts in excess of benefit plan maximums. 
           Subd. 2.  [ESTABLISHMENT.] The commissioner of health shall 
        establish limits on the increase in total net expenditures by 
        each health carrier plan company for calendar years 1994 and , 
        1995, 1996, and 1997.  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 plan 
        companies that are affiliates may elect to meet one combined 
        expenditure limit. 
           Subd. 3.  [DETERMINATION OF EXPENDITURES.] Health carriers 
        plan companies shall submit to the commissioner of health, by 
        April 1, 1994, for calendar year 1993, and by; April 1, 1995, 
        for calendar year 1994,; April 1, 1996, for calendar year 1995; 
        April 1, 1997, for calendar year 1996; and April 1, 1998, for 
        calendar year 1997 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 plan 
        companies.  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 
        plan company 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 plan companies must be 
        submitted to the commissioner by September 1, 1993 September 1, 
        1994.  Community integrated service networks may submit the 
        information with their application for licensure.  The 
        commissioner shall also accept changes to methodologies already 
        submitted.  The adjustment methodology submitted and approved by 
        the commissioner must apply to the data submitted for calendar 
        years 1994 and 1995.  The commissioner may allow changes to 
        accepted adjustment methodologies for data submitted for 
        calendar years 1996 and 1997.  Changes to the adjustment 
        methodology must be received by September 1, 1996, and must be 
        approved by the commissioner. 
           Subd. 4.  [MONITORING OF RESERVES.] (a) The commissioner 
        commissioners of health and commerce shall monitor health 
        carrier plan company reserves and net worth as established under 
        chapters 60A, 62C, 62D, 62H, and 64B, with respect to the health 
        plan companies that each commissioner respectively regulates 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 plan companies 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, currently reviewed by the departments of health 
        or commerce, may be approved for those health carriers plan 
        companies unless the health carrier plan company 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. 
           (c) Health plan companies, except those licensed under 
        chapter 60A to sell accident and sickness insurance under 
        chapter 62A, shall annually before the end of the fourth fiscal 
        quarter provide to the commissioner of health or commerce, as 
        applicable, a projection of the level of reserves the company 
        expects to attain during each quarter of the following fiscal 
        year.  These health plan companies shall submit with required 
        quarterly financial statements a calculation of the actual 
        reserve level attained by the company at the end of each quarter 
        including identification of the sources of any significant 
        changes in the reserve level and an updated projection of the 
        level of reserves the health plan company expects to attain by 
        the end of the fiscal year.  In cases where the health plan 
        company has been given a certificate to operate a new health 
        maintenance organization under chapter 62D, or been licensed as 
        an integrated service network or community integrated service 
        network under chapter 62N, or formed an affiliation with one of 
        these organizations, the health plan company shall also submit 
        with its quarterly financial statement, total enrollment at the 
        beginning and end of the quarter and enrollment changes within 
        each service area of the new organization.  The reserve 
        calculations shall be maintained by the commissioners as trade 
        secret information, except to the extent that such information 
        is also required to be filed by another provision of state law 
        and is not treated as trade secret information under such other 
        provisions. 
           (d) Health plan companies in paragraph (c) whose reserves 
        are less than the required minimum or more than the required 
        maximum at the end of the fiscal year shall submit a plan of 
        corrective action to the commissioner of health or commerce 
        under subdivision 7. 
           (e) The commissioner of commerce, in consultation with the 
        commissioner of health, shall report to the legislature no later 
        than January 15, 1995, as to whether the concept of a reserve 
        corridor or other mechanism for purposes of monitoring reserves 
        is adaptable for use with indemnity health insurers that do 
        business in multiple states and that must comply with their 
        domiciliary state's reserves requirements. 
           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 plan companies 
        that exceeded their expenditure target limit 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 plan companies that exceeded their 
        combined expenditure limit for calendar years 1994 and 1995.  
        The commissioner shall notify each health carrier plan company 
        that the commissioner has determined that the carrier health 
        plan company exceeded its expenditure limit, at least 30 days 
        before publishing the list, and shall provide each carrier 
        health plan company with ten days to provide an explanation for 
        exceeding the expenditure target limit.  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 plan 
        companies regulated by the commissioner of commerce.  The 
        commissioner of commerce, in consultation with the commissioner 
        of health, shall enforce compliance by with expenditure limits 
        for those health carriers plan companies. 
           Subd. 7.  [ENFORCEMENT.] (a) The commissioners of health 
        and commerce shall enforce the reserve limits referenced in 
        subdivision 4, with respect to the health carriers plan 
        companies that each commissioner respectively regulates.  Each 
        commissioner shall require health carriers plan companies 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 The plan of correction must address the following: 
           (1) actuarial assumptions used in forecasting future 
        financial results; 
           (2) trend assumptions used in setting future premiums; 
           (3) demographic, geographic, and private and public sector 
        mix of the population covered by the health plan company; 
           (4) proposed rate increases or decreases; 
           (5) growth limits applied under section 62J.04, subdivision 
        1, paragraph (b); and 
           (6) other factors deemed appropriate by the health plan 
        company or commissioner. 
        If the health plan company's reserves exceed the required 
        maximum, the plan of correction shall address how the health 
        plan company will come into compliance and set forth a timetable 
        within which compliance would be achieved.  The plan of 
        correction may propose premium refunds, credits for prior 
        premiums paid, policyholder dividends, or any combination of 
        these or other methods which will benefit enrollees and/or 
        Minnesota residents and are such that the reserve requirements 
        can reasonably be expected to be met.  The commissioner's 
        evaluation of the plan of correction must consider: 
           (1) whether implementation of the plan would provide the 
        company with an unfair advantage in the market; 
           (2) the extent to which the reserve excess was created by 
        any movement of enrolled persons to another organization formed 
        by the company; 
           (3) whether any proposed premium refund, credit, and/or 
        dividend represents an equitable allocation to policyholders 
        covered in prior periods as determined using sound actuarial 
        practice; and 
           (4) any other factors deemed appropriate by the applicable 
        commissioner. 
           (b) The plan of correction is subject to approval by the 
        commissioner of health or commerce, as applicable.  If such a 
        plan is not approved by the applicable commissioner, the 
        applicable commissioner shall enter an order stating the steps 
        that the health plan company must take to come into compliance.  
        Within 30 days of the date of such order, the health plan 
        company must file a notice of appeal with the applicable 
        commissioner or comply with the commissioner's order.  If an 
        appeal is filed, such appeal is governed by chapter 14. 
           (c) Health plan companies that exceed the expenditure 
        limits based on two-year average expenditure data or whose 
        reserves exceed the limits referenced in subdivision 4 (1994 and 
        1995, 1996 and 1997) shall be required by the appropriate 
        commissioner to pay back the amount overspent exceeding the 
        expenditure limit through an assessment on the carrier health 
        plan company.  A health plan company may appeal the 
        commissioner's order to pay back the amount exceeding the 
        expenditure limit by mailing to the commissioner a written 
        notice of appeal within 30 days from the date the commissioner's 
        order was mailed.  The contested case and judicial review 
        provisions of chapter 14 apply to the appeal.  The health plan 
        company shall pay the amount specified by the commissioner 
        either to the commissioner or into an escrow account until final 
        resolution of the appeal.  Notwithstanding sections 3.762 to 
        3.765, each party is responsible for its own fees and expenses, 
        including attorneys fees, for the appeal.  Any amount required 
        to be paid back under this section shall be deposited in the 
        health care access fund.  The appropriate commissioner may 
        approve a different repayment method to take into account 
        the carrier's health plan company's financial condition.  Health 
        plan companies shall comply with the limits but shall also 
        guarantee that their contractual obligations are met.  Health 
        plan companies are prohibited from meeting spending obligations 
        by increasing subscriber liability, including copayments and 
        deductibles and amounts in excess of benefit plan maximums. 
           Sec. 5.  Minnesota Statutes 1993 Supplement, section 
        62P.05, is amended to read: 
           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, 1996, and 1997.  
        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, certain taxes 
        and assessments including the MinnesotaCare provider tax and 
        provider surcharge, any new assessments imposed by federal or 
        state law, research and education costs, donations, grants, and 
        legislative initiatives that materially change health care costs 
        revenues, 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 1994.  The 
        commissioner shall also accept changes to methodologies already 
        submitted.  The adjustment methodology submitted and approved by 
        the commissioner must apply to the data submitted for calendar 
        years 1994 and 1995.  The commissioner may allow changes to 
        accepted adjustment methodologies for data submitted for 
        calendar years 1996 and 1997.  Changes to the adjustment 
        methodology must be received by September 1, 1996, and must be 
        approved by the commissioner.  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 1, 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 inpatient revenue per adjusted admission and net 
        outpatient revenue per outpatient visit.  The commissioner shall 
        monitor the revenue of physicians and other health care 
        providers by examining revenue per patient per year or revenue 
        per encounter.  For purposes of this section, definitions 
        related to the implementation of limits for providers other than 
        hospitals are included in Minnesota Rules, chapter 4650, and 
        definitions related to the implementation of limits for 
        hospitals are included in Minnesota Rules, chapter 4651. 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 exceeding the revenue limits during the 
        following calendar year.  
           Pharmacists may adjust their revenue figures for increases 
        in drug product costs that are set by the manufacturer.  The 
        commissioner shall consult with pharmacy groups, including 
        pharmacies, wholesalers, drug manufacturers, health plans, and 
        other interested parties, to determine the methodology for 
        measuring and implementing the interim growth limits while 
        taking into account the adjustments for drug product costs. 
           The commissioner shall monitor providers meeting the growth 
        limits based on their current fees on an annual basis.  The fee 
        charged for each service must be based on a weighted average 
        across 12 months and compared to the weighted average for the 
        previous 12-month period.  The percentage increase in the 
        average fee from 1993 to 1994, from 1994 to 1995, from 1995 to 
        1996, and from 1996 to 1997 is subject to the growth limits 
        established under section 62J.04, subdivision 1, paragraph (b).  
        The audit process may include a review of the provider's monthly 
        fee schedule, and a random claims analysis for the provider 
        during different parts of the year to monitor variations in 
        fees.  The commissioner shall require providers that exceed 
        growth limits, based on annual fees, to pay back during the 
        following calendar year the amount of fees received exceeding 
        the limit. 
           The commissioner shall notify each provider that has 
        exceeded its revenue or fee limit, at least 30 days before 
        taking action, and shall provide each provider with ten days to 
        provide an explanation for exceeding the revenue or fee limit.  
        The commissioner shall review the explanation and may change a 
        determination if the commissioner determines the explanation to 
        be valid. 
           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. 
           A provider may appeal the commissioner's order to pay back 
        the amount exceeding the revenue or fee limit by mailing a 
        written notice of appeal to the commissioner within 30 days 
        after the commissioner's order was mailed.  The contested case 
        and judicial review provisions of chapter 14 apply to the 
        appeal.  The provider shall pay the amount specified by the 
        commissioner either to the commissioner or into an escrow 
        account until final resolution of the appeal.  Notwithstanding 
        sections 3.762 to 3.765, each party is responsible for its own 
        fees and expenses, including attorneys fees, for the appeal.  
        Any amount required to be paid back under this section shall be 
        deposited in the health care access fund.  
           Sec. 6.  [62P.07] [SCOPE.] 
           Subdivision 1.  [GENERAL APPLICABILITY.] (a) Minnesota 
        health care providers shall comply with the requirements and 
        rules established under this chapter for:  (1) all health care 
        services provided to Minnesota residents who are not enrolled in 
        a community integrated service network or an integrated service 
        network; (2) all out-of-network services provided to enrollees 
        of community integrated service networks and integrated service 
        networks; and (3) all health care services provided to persons 
        covered by an all-payer insurer. 
           (b) All-payer insurers shall comply with the requirements 
        and rules established under this chapter for all coverage 
        provided. 
           (c) Community integrated service networks and integrated 
        service networks shall comply with the requirements and rules 
        established under this chapter when reimbursing health care 
        providers for out-of-network services. 
           Subd. 2.  [PROGRAMS EXCLUDED.] This chapter does not apply 
        to services reimbursed under Medicare, medical assistance, 
        general assistance medical care, the MinnesotaCare program, or 
        worker's compensation programs. 
           Subd. 3.  [PAYMENT REQUIRED AT ALL-PAYER LEVEL.] (a) All 
        reimbursements to Minnesota health care providers from all-payer 
        insurers, for services provided to covered persons, shall be at 
        the all-payer reimbursement level. 
           (b) All-payer insurers shall reimburse out-of-state health 
        care providers for nonemergency services provided to covered 
        persons at the all-payer reimbursement level.  For purposes of 
        this paragraph, "nonemergency services" means services that do 
        not meet the definition of "emergency care" under Minnesota 
        Rules, part 4685.0100, subpart 5. 
           (c) Community integrated service networks and integrated 
        service networks shall reimburse Minnesota health care providers 
        for out-of-network services at the all-payer reimbursement level.
           (d) Community integrated service networks and integrated 
        service networks shall reimburse out-of-network health care 
        providers located out-of-state for nonemergency out-of-network 
        services at the all-payer reimbursement level.  For purposes of 
        this paragraph, "nonemergency out-of-network services" means 
        out-of-network services that do not meet the definition of 
        "emergency care" under Minnesota Rules, part 4685.0100, subpart 
        5. 
           Subd. 4.  [BALANCE BILLING PROHIBITED.] Minnesota health 
        care providers shall accept reimbursement at the all-payer 
        reimbursement level, including applicable copayments, 
        deductibles, and coinsurance, as payment in full for services 
        provided to Minnesota residents and persons covered by all-payer 
        insurers, and for out-of-network services provided to enrollees 
        of community integrated service networks and integrated service 
        networks. 
           Sec. 7.  [62P.09] [DUTIES OF THE COMMISSIONER.] 
           Subdivision 1.  [GENERAL DUTIES.] The commissioner of 
        health is responsible for developing and administering the 
        all-payer option.  The commissioner shall: 
           (1) develop, implement, and administer fee schedules for 
        physicians and providers with independent billing rights; 
           (2) develop, implement, and administer a reimbursement 
        system for hospitals and other institutional providers, but 
        excluding intermediate care facilities for the mentally 
        retarded, nursing homes, state-operated community service sites 
        operated by the commissioner of human services, and regional 
        treatment centers; 
           (3) modify and adjust all-payer reimbursement levels so 
        that health care spending under the all-payer option does not 
        exceed the growth limits on health care spending established 
        under section 62J.04; 
           (4) collect data from all-payer insurers, health care 
        providers, and patients to monitor revenues, spending, and 
        quality of care; 
           (5) provide incentives for the appropriate utilization of 
        services and the appropriate use and distribution of technology; 
           (6) coordinate the development and administration of the 
        all-payer option with the development and administration of the 
        integrated service network system; and 
           (7) develop and implement a fair and efficient system for 
        resolving appeals by providers and insurers. 
           Subd. 2.  [COORDINATION.] The commissioner shall regularly 
        consult with the commissioner of commerce in developing and 
        administering the all-payer option and in applying the all-payer 
        reimbursement system to health carriers regulated by the 
        commissioner of commerce. 
           Subd. 3.  [TIMELINES FOR IMPLEMENTATION.] In developing and 
        implementing the all-payer option, the commissioner shall comply 
        with the following implementation schedule: 
           (a) The phase-in of standardized billing requirements must 
        be completed following the timetable set forth in article 9. 
           (b) The phase-in of the all-payer reimbursement system must 
        begin January 1, 1996, or upon the date rules for the all-payer 
        option reimbursement system are adopted, whichever is later. 
           (c) The all-payer reimbursement system must be fully 
        implemented by July 1, 1997.  
           Subd. 4.  [ADVISORY COMMITTEE.] The commissioner shall 
        convene an advisory committee made up of a broad array of health 
        care professionals that will be affected by the fee schedule.  
        Recommendations of this committee must be submitted to the 
        commissioner by November 15, 1994, and may be incorporated in 
        the implementation report due January 1, 1995. 
           Subd. 5.  [RULEMAKING.] The commissioner shall adopt rules 
        to establish and administer the all-payer option.  The rules 
        must include, but are not limited to:  (1) the reimbursement 
        methods used in the all-payer option reimbursement system; (2) a 
        plan and implementation schedule to phase-in the all-payer 
        reimbursement system, beginning January 1, 1996; and (3) 
        mechanisms to ensure compliance by all-payer insurers, health 
        care providers, and patients with the all-payer reimbursement 
        system and the growth limits established under section 62J.04.  
        The commissioner shall seek to ensure that the rules for the 
        all-payer option are adopted by January 1, 1996.  The 
        commissioner shall comply with section 62J.07, subdivision 3, 
        when adopting rules for the all-payer option. 
           Sec. 8.  [62P.11] [PAYMENT TO PHYSICIANS AND INDEPENDENT 
        PROVIDERS.] 
           Subdivision 1.  [FEE SCHEDULE.] The commissioner shall 
        adopt a Minnesota-specific fee schedule, based upon the Medicare 
        resource based relative value scale, to reimburse physicians and 
        other independent providers.  The fee schedule must assign each 
        service a relative value unit that measures the relative 
        resources required to provide the service.  Payment levels for 
        each service must be determined by multiplying relative value 
        units by a conversion factor that converts relative value units 
        into monetary payment.  The conversion factor used to derive the 
        fee schedule must be set at a level that is consistent with 
        current relevant health care spending, subject to the state's 
        growth limits as defined in section 62J.04.  The conversion 
        factor must be set at a level that equalizes total aggregate 
        expenditures for a given period before and after implementation 
        of the all-payer option.  
           Subd. 2.  [DEVELOPMENT AND MODIFICATION OF RELATIVE VALUE 
        UNITS.] (a) When appropriate, the relative value unit for each 
        service shall be the Medicare value adjusted to reflect 
        Minnesota health care costs.  The commissioner may assign a 
        different relative value to a service if, in the judgment of the 
        commissioner, the Medicare relative value unit is not accurate.  
        The commissioner may also develop or adopt relative value units 
        for services not covered under the Medicare resource based 
        relative value scale.  Except as provided in paragraph (b), 
        modifications or additions to relative value units are subject 
        to the rulemaking requirements of chapter 14. 
           (b) The commissioner may modify the relative value units 
        used in the Minnesota-specific fee schedule, or change the 
        number of services assigned relative value units, to reflect 
        changes and improvements in the Medicare resource based relative 
        value scale.  When adopting these federal changes, the 
        commissioner is exempt from the rulemaking requirements of 
        chapter 14, but shall publish a notice of modifications and 
        additions to relative value units in the State Register 30 days 
        before they take effect. 
           Subd. 3.  [DEVELOPMENT OF THE CONVERSION FACTOR.] The 
        commissioner shall develop a conversion factor using actual 
        Minnesota claims data available to the commissioner. 
           Sec. 9.  [62P.13] [VOLUME PERFORMANCE STANDARD FOR 
        PHYSICIAN AND OUTPATIENT SERVICES.] 
           Subdivision 1.  [DEVELOPMENT.] The commissioner shall 
        establish an annual, statewide volume performance standard for 
        physician and outpatient services.  The volume performance 
        standard shall serve as an expenditure target and must be set at 
        a level that is consistent with achieving the growth limits 
        pursuant to section 62J.04.  The volume performance standard 
        must combine expenditures for all services provided by 
        physicians and other independent providers and all ambulatory 
        care services that are not provided through an integrated 
        service network.  The statewide volume performance standard must 
        be developed from aggregate and encounter level data reported to 
        the state, including the claims database established under 
        section 62J.38, when it becomes operational. 
           Subd. 2.  [APPLICATION.] The commissioner shall compare 
        actual expenditures for physician and outpatient services with 
        the volume performance standard in order to keep the all-payer 
        option expenditures within the statewide growth limits.  If 
        total expenditures during a particular year exceed the 
        expenditure target for that year, the commissioner shall update 
        the fee schedule rates for the second year following the year in 
        which the target was exceeded, by adjusting the conversion 
        factor, in order to offset this increase. 
           Sec. 10.  [62P.15] [REIMBURSEMENT.] 
           The commissioner, as part of the implementation report due 
        January 1, 1995, shall recommend to the legislature and the 
        governor which health care professionals should be paid at the 
        full fee schedule rate and which at a partial rate, for services 
        covered in the fee schedule. 
           Sec. 11.  [62P.17] [PAYMENT FOR SERVICES NOT IN THE FEE 
        SCHEDULE.] 
           The commissioner shall examine options for paying for 
        services not covered in the fee schedule and shall present 
        recommendations to the legislature and the governor as part of 
        the implementation report due January 1, 1995.  The options 
        examined by the commissioner must include, but are not limited 
        to, updates and modifications to the Medicare resource based 
        relative value scale; development of additional relative value 
        units; development of a fee schedule based on a percentage of 
        usual, customary, and reasonable charges; and use of rate of 
        increase controls. 
           Sec. 12.  [62P.19] [PAYMENT FOR URBAN AND SELECTED RURAL 
        HOSPITALS.] 
           Subdivision 1.  [ESTABLISHMENT OF RATE.] The commissioner 
        shall develop a Minnesota-specific hospital reimbursement system 
        to pay for inpatient services in those acute-care general 
        hospitals not qualifying for reimbursement under section 
        62P.25.  In developing this system, the commissioner shall 
        consider the all-patient refined diagnosis related groups system 
        and other diagnosis related groups systems.  Payment rates must 
        be standardized on a statewide basis based on Minnesota specific 
        claims level data available to the commissioner.  Rates must be 
        consistent with the overall growth limit for health care 
        spending.  Payment rates may be adjusted for area wage rates and 
        other factors, including uncompensated care.  The commissioner 
        shall recommend any needed adjustments to the legislature and 
        governor as part of the implementation report due January 1, 
        1995. 
           Subd. 2.  [SHORT STAY AND LONG STAY OUTLIERS.] The 
        reimbursement system must provide, on a budget neutral basis, 
        lower charges for self-pay patients with short or low cost 
        stays.  The commissioner shall phase out this exception once 
        universal coverage is achieved.  The commissioner, as part of 
        the implementation report due January 1, 1995, shall recommend 
        to the legislature and the governor whether an outlier payment 
        for long stays is needed. 
           Sec. 13.  [62P.21] [STATEWIDE VOLUME PERFORMANCE STANDARD 
        FOR HOSPITALS.] 
           Subdivision 1.  [DEVELOPMENT.] The commissioner shall 
        establish an annual, statewide volume performance standard for 
        inpatient hospital expenditures.  The volume performance 
        standard shall serve as an expenditure target and must be set at 
        a level that is consistent with meeting the limits on health 
        care spending growth. 
           Subd. 2.  [APPLICATION.] The commissioner shall compare 
        actual inpatient hospital expenditures with the volume 
        performance standard in order to keep all-payer option 
        expenditures within the statewide growth limits.  If aggregate 
        inpatient hospital expenditures for a particular year exceed the 
        volume performance standard, the commissioner shall adjust the 
        annual increase in payment levels for the following year. 
           Sec. 14.  [62P.23] [FLEXIBILITY IN APPLYING THE VOLUME 
        PERFORMANCE STANDARD; REVIEW.] 
           Subdivision 1.  [REALLOCATION.] The commissioner may 
        reallocate spending limits between the inpatient hospital 
        services volume performance standard and the physician and 
        outpatient services volume performance standard, if this 
        promotes the efficient use of health care services and does not 
        cause total health care spending in the all-payer option to 
        exceed the level allowed by the growth limits on health care 
        spending. 
           Subd. 2.  [REVIEW.] The commissioner shall review the 
        effectiveness of the volume performance standard after the first 
        three years of operation and shall recommend any necessary 
        changes to the legislature and the governor. 
           Sec. 15.  [62P.25] [REIMBURSEMENT FOR SMALL RURAL 
        HOSPITALS.] 
           All-payer insurers shall pay small rural hospitals on the 
        basis of reasonable charges, subject to a rate of increase 
        control.  For purposes of this requirement, a "small rural 
        hospital" means a hospital with 40 or fewer licensed beds that 
        is located at least 25 miles from another facility licensed 
        under sections 144.50 to 144.58 and operating as an acute care 
        community hospital.  The commissioner shall recommend to the 
        legislature and the governor a methodology for determining 
        reasonable charges as part of the implementation report due 
        January 1, 1995. 
           Sec. 16.  [62P.27] [PAYMENT FOR OUTPATIENT SERVICES.] 
           Outpatient services provided in acute-care general 
        hospitals and freestanding ambulatory surgery centers shall be 
        paid on the basis of approved charges, subject to rate of 
        increase controls.  The rate of increase allowed must be 
        consistent with the volume performance standard for physician 
        and outpatient services. 
           Sec. 17.  [62P.29] [OTHER INSTITUTIONAL PROVIDERS.] 
           Subdivision 1.  [SPECIALTY HOSPITALS AND HOSPITAL 
        UNITS.] The commissioner shall develop payment mechanisms for 
        specialty hospitals providing pediatric and psychiatric care and 
        distinct psychiatric and rehabilitation units in hospitals.  The 
        commissioner shall present these recommendations to the 
        legislature and governor as part of the implementation report 
        due January 1, 1995. 
           Subd. 2.  [OTHER PROVIDERS.] The commissioner shall apply 
        rate of increase limits on charges or fees to other nonhospital 
        institutional providers.  These providers include, but are not 
        limited to, home health agencies, substance abuse treatment 
        centers, and nursing homes, to the extent their services are 
        included in the all-payer option.  In setting rate of increase 
        limits for institutional providers, the commissioner shall 
        consider outcomes, comprehensiveness of services, and the 
        special needs and severity of illness of patients treated by 
        individual providers. 
           Sec. 18.  [62P.31] [LIMITATIONS ON ALL-PAYER OPTION.] 
           Beginning July 1, 1997, all-payer insurers shall not employ 
        or contract with health care providers, establish a network of 
        exclusive or preferred providers, or negotiate provider payments 
        that differ from the all-payer fee schedule.  Preferred provider 
        organizations may continue to provide care to their existing 
        enrollees, without becoming licensed as an integrated service 
        network, through December 31, 1997. 
           Sec. 19.  [62P.33] [RECOMMENDATIONS FOR A USER FEE.] 
           The commissioner of health shall present to the 
        legislature, as part of the implementation plan due January 1, 
        1996, recommendations for establishing and collecting a user fee 
        from all-payer insurers.  The user fee must be set at a level 
        that reflects the state's investment in fee schedules, standard 
        utilization reviews, quality monitoring, and other regulatory 
        and administrative functions provided for the regulated 
        all-payer option.  The commissioner may consult actuaries in 
        developing recommendations for and setting the level of the user 
        fee.  The commissioner may also present recommendations to 
        establish additional fees and assessments if the commissioner 
        determines they are needed to assure equal levels of 
        accountability between the integrated service network system and 
        the regulated all-payer option in terms of public health goals, 
        serving high-risk and special needs populations, and other 
        obligations imposed on the integrated service network system.  
           Sec. 20.  Minnesota Statutes 1992, section 72A.20, is 
        amended by adding a subdivision to read: 
           Subd. 31.  [REASONABLE, ADEQUATE, AND NOT PREDATORY 
        PREMIUMS.] Premiums charged by a health plan company, as defined 
        in section 62Q.01, shall be reasonable, adequate, and not 
        predatory in relation to the benefits, considering actuarial 
        projection of the cost of providing or paying for the covered 
        health services, considering the costs of administration, and in 
        relation to the reserves and surplus required by law. 
           Sec. 21.  [STUDY OF STANDARD UTILIZATION REVIEW CRITERIA 
        FOR SERVICES.] 
           The commissioner of health, after consulting with 
        providers, utilization review organizations, the practice 
        parameters advisory committee, and the health technology 
        advisory committee, shall report to the legislature by July 1, 
        1995, and recommended clinical criteria for determining the 
        necessity, appropriateness, and efficacy of five frequently used 
        health care services for which standard criteria for utilization 
        review would decrease providers' administrative costs. 
           Sec. 22.  [INSTRUCTION TO THE REVISOR.] 
           The revisor, in the next edition of Minnesota Statutes, 
        shall replace the term "regulated all-payer system" and similar 
        terms with "regulated all-payer option" and similar terms in 
        sections 62J.04, 62J.09, 62J.152, 62P.01 and 62P.03. 
           Sec. 23.  [EFFECTIVE DATE.] 
           Sections 1 to 22 are effective the day following final 
        enactment. 
                                   ARTICLE 4
                 FUTURE REQUIREMENTS FOR HEALTH PLAN COMPANIES
           Section 1.  [62J.48] [CRITERIA FOR REIMBURSEMENT.] 
           All ambulance services licensed under section 144.802 are 
        eligible for reimbursement under the integrated service network 
        system and the regulated all-payer option.  The commissioner 
        shall require community integrated service networks, integrated 
        service networks, and all-payer insurers to adopt the following 
        reimbursement policies. 
           (1) All scheduled or prearranged air and ground ambulance 
        transports must be reimbursed if requested by an attending 
        physician or nurse, and, if the person is an enrollee in an 
        integrated service network or community integrated service 
        network, if approved by a designated representative of an 
        integrated service network or a community service network who is 
        immediately available on a 24-hour basis.  The designated 
        representative must be a registered nurse or a physician 
        assistant with at least three years of critical care or trauma 
        experience, or a licensed physician. 
           (2) Reimbursement must be provided for all emergency 
        ambulance calls in which a patient is transported or medical 
        treatment rendered. 
           (3) Special transportation services must not be billed or 
        reimbursed if the patient needs medical attention immediately 
        before transportation. 
           Sec. 2.  Minnesota Statutes 1993 Supplement, section 
        62N.06, subdivision 1, is amended to read: 
           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 an existing 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, that does not explicitly 
        mention the provider's relationship within an integrated service 
        network, or a future integrated service network, 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. 
           Sec. 3.  [62N.14] [OFFICE OF CONSUMER SERVICES.] 
           Subdivision 1.  [DUTIES.] Every integrated service network 
        must have an office of consumer services which will be 
        responsible for dealing with all enrollee complaints and 
        inquiries.  The integrated service network, through its office 
        of consumer services, will be responsible for: 
           (1) soliciting consumer comment on the quality and 
        accessibility of services available; 
           (2) disseminating information to consumers on the 
        integrated service network's enrollee complaint resolutions 
        system; 
           (3) receiving unsolicited comments on and complaints about 
        services; 
           (4) taking prompt action upon consumer complaints; and 
           (5) providing for and participating in alternative dispute 
        resolution processes including the fact-finding and dispute 
        resolution process established under section 62Q.30. 
           Subd. 2.  [CONTACT WITH COMMISSIONER.] Each integrated 
        service network shall designate a contact person for direct 
        communication with the commissioner.  Integrated service network 
        complaint files must be maintained by the integrated service 
        network for seven years and must be made available upon the 
        request of the commissioner.  The commissioner shall 
        periodically summarize the number, type, and resolution of 
        complaints received by the health department from integrated 
        service network enrollees, and shall make that information 
        available through the office of consumer information.  The 
        commissioner may at any time inspect the integrated service 
        network's office of consumer services complaint files. 
           Subd. 3.  [ENROLLEE MEMBERSHIP CARDS.] Integrated service 
        networks shall issue enrollee membership cards to each enrollee 
        of the integrated service network.  The enrollee card shall 
        contain, at minimum, the following information: 
           (1) the telephone number of the integrated service 
        network's office of consumer services; 
           (2) the telephone number of the state's office of consumer 
        information; and 
           (3) the telephone number of the department of health or 
        local ombudsperson. 
           The membership cards shall also conform to the requirements 
        set forth in section 62J.60. 
           Subd. 4.  [ENROLLEE DOCUMENTS.] Each integrated service 
        network, through its office of consumer services, is responsible 
        for providing enrollees, upon request, with any reasonable 
        information desired by an enrollee.  This information may 
        include duplicate copies of the evidence of coverage form 
        required under section 62N.11; an annually updated list of 
        addresses and telephone numbers of available integrated service 
        network providers, including midlevel practitioners and allied 
        professionals; and information on the enrollee complaint system 
        of the integrated service network. 
           Sec. 4.  [62N.38] [FEDERAL AGENCY PARTICIPATION.] 
           Subdivision 1.  [PARTICIPATION.] An integrated service 
        network may be organized by a department, agency, or 
        instrumentality of the United States government. 
           Subd. 2.  [ENROLLEES.] An integrated service network 
        organized under subdivision 1 may limit its enrollment to those 
        persons entitled to care under the federal program responsible 
        for the integrated service network. 
           Subd. 3.  [PARTICIPATION IN STATE PROGRAMS.] An integrated 
        service network organized under subdivision 1 may request that 
        the commissioner of health waive the requirement of section 
        62N.10, subdivision 4 with regard to some or all of the programs 
        listed in that provision.  The commissioner shall grant the 
        waiver unless the commissioner determines that the applicant 
        does not plan to provide care to low-income persons who are 
        otherwise eligible for enrollment in the integrated service 
        network.  The integrated service network may withdraw its waiver 
        with respect to some or all of the programs listed in section 
        62N.10, subdivision 4 at any time, as long as it is willing and 
        able to enroll in the programs previously waived on the same 
        basis as other integrated service networks. 
           Subd. 4.  [SOLVENCY.] The commissioner shall consult with 
        federal officials to develop procedures to allow integrated 
        service networks organized under subdivision 1 to use the United 
        States government as a guaranteeing organization. 
           Subd. 5.  [VETERANS.] In developing and implementing 
        initiatives to expand access to health care, the commissioner 
        shall recognize the unique problems of veterans and consider 
        methods to reach underserved portions of the veteran population. 
           Sec. 5.  [62N.381] [AMBULANCE SERVICE RATE NEGOTIATION.] 
           Subdivision 1.  [APPLICABILITY.] This section applies to 
        all reimbursement rate negotiations between ambulance services 
        and community integrated service networks or integrated service 
        networks. 
           Subd. 2.  [RANGE OF RATES.] The reimbursement rate 
        negotiated for a contract period must not be more than 20 
        percent above or below the individual ambulance service's 
        current customary charges, plus the rate of growth allowed under 
        section 62J.04, subdivision 1.  If the network and ambulance 
        service cannot agree on a reimbursement rate, each party shall 
        submit their rate proposal along with supportive data to the 
        commissioner. 
           Subd. 3.  [DEVELOPMENT OF CRITERIA.] The commissioner, in 
        consultation with representatives of the Minnesota Ambulance 
        Association, regional emergency medical services programs, 
        community integrated service networks and integrated service 
        networks, shall develop guidelines to use in reviewing rate 
        proposals and making a final reimbursement rate determination. 
           Subd. 4.  [REVIEW OF RATE PROPOSALS.] The commissioner, 
        using the guidelines developed under subdivision 3, shall review 
        the rate proposals of the ambulance service and community 
        integrated service network or integrated service network and 
        shall adopt either the network's or the ambulance service's 
        proposal.  The commissioner shall require the network and 
        ambulance service to adhere to this reimbursement rate for the 
        contract period. 
           Subd. 5.  [EXPIRATION.] This section expires July 1, 1996. 
           Sec. 6.  [62Q.19] [ESSENTIAL COMMUNITY PROVIDERS.] 
           Subdivision 1.  [DESIGNATION.] The commissioner shall 
        designate essential community providers.  The criteria for 
        essential community provider designation shall be the following: 
           (1) a demonstrated ability to integrate applicable 
        supportive and stabilizing services with medical care for 
        uninsured persons and high-risk and special needs populations as 
        defined in section 62Q.07, subdivision 2, paragraph (e), 
        underserved, and other special needs populations; and 
           (2) a commitment to serve low-income and underserved 
        populations by meeting the following requirements: 
           (i) has nonprofit status in accordance with chapter 317A; 
           (ii) has tax exempt status in accordance with the Internal 
        Revenue Service Code, section 501(c)(3); 
           (iii) charges for services on a sliding fee schedule based 
        on current poverty income guidelines; and 
           (iv) does not restrict access or services because of a 
        client's financial limitation; or 
           (3) status as a local government or community health board 
        as defined in chapter 145A. 
           The commissioner may designate an eligible provider as an 
        essential community provider for all the services offered by 
        that provider or for specific services designated by the 
        commissioner. 
           For the purpose of this subdivision, supportive and 
        stabilizing services include at a minimum, transportation, child 
        care, cultural, and linguistic services where appropriate. 
           Subd. 2.  [APPLICATION.] Any provider may apply to the 
        commissioner for designation as an essential community provider 
        within two years after the effective date of the rules adopted 
        by the commissioner to implement this section. 
           Subd. 3.  [HEALTH PLAN COMPANY AFFILIATION.] A health plan 
        company must offer a provider contract to any designated 
        essential community provider located within the area served by 
        the health plan company.  A health plan company shall not 
        restrict enrollee access to the essential community provider for 
        the population that the essential community provider is 
        certified to serve.  A health plan company may also make other 
        providers available to this same population.  A health plan 
        company may require an essential community provider to meet all 
        data requirements, utilization review, and quality assurance 
        requirements on the same basis as other health plan providers.  
           Subd. 4.  [ESSENTIAL COMMUNITY PROVIDER 
        RESPONSIBILITIES.] Essential community providers must agree to 
        serve enrollees of all health plan companies operating in the 
        area that the essential community provider is certified to serve.
           Subd. 5.  [CONTRACT PAYMENT RATES.] An essential community 
        provider and a health plan company may negotiate the payment 
        rate for covered services provided by the essential community 
        provider.  This rate must be competitive with rates paid to 
        other health plan providers for the same or similar services. 
           Subd. 6.  [TERMINATION.] The designation as an essential 
        community provider is terminated five years after it is granted, 
        and the former essential community provider has no rights or 
        privileges beyond those of any other health care provider. 
           Subd. 7.  [RECOMMENDATIONS AND RULEMAKING ON ESSENTIAL 
        COMMUNITY PROVIDERS.] (a) As part of the implementation plan due 
        January 1, 1995, the commissioner shall present proposed rules 
        and any necessary recommendations for legislation for defining 
        essential community providers, using the criteria established 
        under subdivision 1, and defining the relationship between 
        essential community providers and health plan companies. 
           (b) By January 1, 1996, the commissioner shall adopt rules 
        for establishing essential community providers and for governing 
        their relationship with health plan companies.  The commissioner 
        shall also identify and address any conflict of interest issues 
        regarding essential community provider designation for local 
        governments. 
           Sec. 7.  [62Q.21] [UNIVERSAL STANDARD BENEFITS SET.] 
           Subdivision 1.  [MANDATORY OFFERING.] Effective January 1, 
        1996, each health plan company shall offer the universal 
        standard benefits set to its enrollees. 
           Subd. 2.  [STANDARD BENEFIT SET.] Effective July 1, 1997, 
        health plan companies shall offer, sell, issue, or renew only 
        the universal standard benefits set and the cost-sharing and 
        supplemental coverage options established in accordance with 
        sections 62Q.25 and 62Q.27. 
           Subd. 3.  [GENERAL DESCRIPTION.] The universal standard 
        benefits set must contain all appropriate and necessary health 
        care services.  Benefits necessary to meet public health goals, 
        adequately serve high risk and special needs populations, 
        facilitate the utilization of cost effective alternatives to 
        traditional inpatient acute and extended health care delivery, 
        or meet other objectives of health care reform shall be 
        considered by the commissioner for inclusion in the universal 
        standard benefits set.  Appropriate and necessary dental 
        services must be included.  
           Subd. 4.  [BENEFIT SET RECOMMENDATIONS.] The commissioner 
        of health, in consultation with the Minnesota health care 
        commission and the commissioners of human services and commerce, 
        shall develop the universal standard benefits set and report 
        these recommendations to the legislature by January 1, 1995.  
        The commissioners shall include in this report a definition for 
        appropriate and necessary care, in terms of type, frequency, 
        level, setting, and duration of services which address the 
        enrollee's mental and physical condition.  In developing this 
        definition, the commissioners shall consider that a benefit set 
        that excludes genuinely appropriate and necessary services will 
        not reduce or contain costs, but will only transfer those costs 
        onto individuals and the public sector.  Therefore, the 
        definition of appropriate and necessary care must be 
        sufficiently broad to address the needs of those with chronic 
        conditions or disabilities, including those who need health 
        services to improve their functioning, and those for whom 
        maintenance of health may not be possible and those for whom 
        preventing deterioration in their health conditions might not be 
        achievable, and meet other health care reform objectives.  In 
        developing the universal standard benefits set, the 
        commissioners shall take into account factors including, but not 
        limited to: 
           (1) information regarding the benefits, risks, and 
        cost-effectiveness of health care interventions; 
           (2) development of practice parameters; 
           (3) technology assessments; 
           (4) medical innovations; 
           (5) health status assessments; 
           (6) identification of unmet needs or particular barriers to 
        access; 
           (7) public health goals; 
           (8) expenditure limits and available funding; 
           (9) cost savings resulting from the inclusion of a health 
        care service that will decrease the utilization of other health 
        care services in the benefit set; 
           (10) cost efficient and effective alternatives to inpatient 
        health care services for acute or extended health care needs, 
        such as home health care services; and 
           (11) the desirability of including coverage for all 
        court-ordered mental health services for juveniles. 
           Subd. 5.  [ADVISORY COMMITTEE ON THE UNIVERSAL BENEFITS 
        SET.] The commissioner shall appoint an advisory committee to 
        develop recommendations regarding the services other than dental 
        services to be included in the universal benefits set.  The 
        committee must include representatives of health care providers, 
        purchasers, consumers, health plan companies, and counties.  The 
        health care provider representatives must include both 
        physicians and allied independent health care providers 
        representing both physical and mental health conditions.  The 
        committee shall report these recommendations to the commissioner 
        by October 1, 1994.  
           Subd. 6.  [ADVISORY COMMITTEE ON DENTAL SERVICES.] The 
        commissioner shall appoint an advisory committee to develop 
        recommendations regarding the level of appropriate and necessary 
        dental services to be included in the universal standard 
        benefits set.  The committee shall also develop recommendations 
        on an appropriate system to deliver dental services.  In its 
        analysis the committee shall study the quality and 
        cost-effectiveness of dental services delivered through 
        capitated dental networks, discounted dental preferred provider 
        organizations, and independent practice dentistry.  The 
        committee shall report these recommendations to the commissioner 
        by October 1, 1994. 
           Subd. 7.  [CHEMICAL DEPENDENCY SERVICES.] If chemical 
        dependency services are included in the universal standard 
        benefits set, the commissioner shall consider the cost 
        effectiveness of requiring health plan companies and chemical 
        dependency facilities to use the assessment criteria in 
        Minnesota Rules, parts 9530.6600 to 9530.6660. 
           Sec. 8.  [62Q.23] [GENERAL SERVICES.] 
           (a) Health plan companies shall comply with all 
        continuation and conversion of coverage requirements applicable 
        to health maintenance organizations under state or federal law. 
           (b) Health plan companies shall comply with sections 
        62A.047, 62A.27, and any other coverage required under chapter 
        62A of newborn infants, dependent children who do not reside 
        with a covered person, handicapped children and dependents, and 
        adopted children.  A health plan company providing dependent 
        coverage shall comply with section 62A.302. 
           (c) Health plan companies shall comply with the equal 
        access requirements of section 62A.15. 
           Sec. 9.  [62Q.25] [SUPPLEMENTAL COVERAGE.] 
           Health plan companies may choose to offer separate 
        supplemental coverage for services not covered under the 
        universal benefits set.  Health plan companies may offer any 
        Medicare supplement, Medicare select, or other Medicare-related 
        product otherwise permitted for any type of health plan company 
        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. 
           Sec. 10.  [62Q.27] [ENROLLEE COST-SHARING.] 
           (a) The commissioner, as part of the implementation plan 
        due January 1, 1995, shall present to the legislature 
        recommendations and draft legislation to establish up to five 
        standardized benefit plans which may be offered by each health 
        plan company.  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.  Each plan offered may include 
        out-of-network coverage options. 
           (b) For purposes of this section, "enrollee 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 following principles must apply to cost-sharing: 
           (1) enrollees must have a choice of cost-sharing 
        arrangements; 
           (2) enrollee cost-sharing must be administratively feasible 
        and consistent with efforts to reduce the overall administrative 
        burden on the health care system; 
           (3) cost-sharing for recipients of medical assistance, 
        general assistance medical care, or the MinnesotaCare program 
        must be determined by applicable law and rules governing these 
        programs; 
           (4) cost-sharing must be capped at an annual limit 
        determined by the commissioner to protect individuals and 
        families from severe financial hardship and to protect 
        individuals with substantial health care needs; 
           (5) cost-sharing must not be applied to preventive health 
        services as defined in Minnesota Rules, part 4685.0801, subpart 
        8; 
           (6) the impact of enrollee cost-sharing requirements on 
        appropriate utilization must be considered when cost-sharing 
        requirements are developed; 
           (7) additional requirements may 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; 
           (8) a copayment may be no greater than 25 percent of the 
        paid charges for the service or product; 
           (9) 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 
           (10) 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. 
           (d) The commissioner shall consider whether a health plan 
        company may return to the enrollee all or part of an enrollee's 
        premium as an incentive for completing preventive care, and may 
        return all or part of an enrollee's cost-sharing for 
        participating in health education, improving health, or reducing 
        health risks. 
           Sec. 11.  [62Q.29] [STATE-ADMINISTERED PUBLIC PROGRAMS.] 
           Public agencies, in conjunction with the department of 
        health and the department of human services, on behalf of 
        eligible recipients enrolled in public programs such as medical 
        assistance, general assistance medical care, and MinnesotaCare, 
        may contract with health plan companies to provide services 
        included in these programs, but not included in the universal 
        standard benefits set. 
           Sec. 12.  [62Q.30] [EXPEDITED FACT FINDING AND DISPUTE 
        RESOLUTION PROCESS.] 
           The commissioner shall establish an expedited fact finding 
        and dispute resolution process to assist enrollees of integrated 
        service networks and all-payer insurers with contested 
        treatment, coverage, and service issues to be in effect July 1, 
        1997.  The commissioner may order an integrated service network 
        or an all-payer insurer to provide or pay for a service that is 
        within the universal standard benefits set.  If the disputed 
        issue relates to whether a service is appropriate and necessary, 
        the commissioner shall issue an order only after consulting with 
        appropriate experts knowledgeable, trained, and practicing in 
        the area in dispute, reviewing pertinent literature, and 
        considering the availability of satisfactory alternatives.  The 
        commissioner shall take steps including but not limited to 
        fining, suspending, or revoking the license of an integrated 
        service network or an all-payer insurer that is the subject of 
        repeated orders by the commissioner that suggests a pattern of 
        inappropriate underutilization. 
           Sec. 13.  [COMPLAINT PROCEDURE.] 
           The commissioners of health and commerce shall develop an 
        internal grievance procedure and appeals process to be used by 
        all health plan companies.  The commissioner shall make a report 
        of recommendations to the legislature by January 1, 1995.  In 
        developing the report and recommendations, the commissioner 
        shall consider the current prepaid medical assistance and health 
        maintenance organization internal grievance procedure as models. 
           Sec. 14.  [EFFECTIVE DATE.] 
           (a) Sections 2 and 7 are effective the day following final 
        enactment. 
           (b) Sections 1, 3, 4, 6, 10, 12, and 13 are effective July 
        1, 1994. 
           (c) Section 5 is effective January 1, 1995. 
           (d) Sections 8, 9, and 11 are effective July 1, 1997. 
                                   ARTICLE 5
                      IMPLEMENTATION AND TRANSITION PLANS
           Section 1.  [62Q.41] [ANNUAL IMPLEMENTATION REPORT.] 
           The commissioner of health, in consultation with the 
        Minnesota health care commission, shall develop an annual 
        implementation report to be submitted to the legislature each 
        year beginning January 1, 1995, describing the progress and 
        status of rule development and implementation of the integrated 
        service network system and the regulated all-payer option, and 
        providing recommendations for legislative changes that the 
        commissioner determines may be needed.  
           Sec. 2.  [TRANSITION PLAN.] 
           The commissioner of health, in consultation with the 
        Minnesota health care commission, shall develop a plan to 
        facilitate the transition from the existing health care delivery 
        and financing system to the integrated service network system 
        and the regulated all-payer option.  The plan may include 
        recommendations for integrated service network requirements or 
        other requirements that should become applicable to some or all 
        health plan companies prior to July 1, 1997, and recommendations 
        for requirements that should be modified or waived during a 
        transition period after July 1, 1997, as health plan companies 
        convert to integrated service networks or to the regulated 
        all-payer option.  The transition plan must be submitted to the 
        legislature by January 1, 1995. 
           Sec. 3.  [INTEGRATED STATE ADMINISTERED PUBLIC PROGRAM.] 
           The commissioner of human services in consultation with 
        representatives of counties and consumer groups shall develop an 
        implementation plan for the integration of MinnesotaCare and 
        general assistance medical care into a single cost effective 
        program by July 1, 1996, adding medical assistance into this 
        integrated program under a federal demonstration project waiver 
        by July 1, 1997.  The commissioner shall submit the plan 
        including necessary implementation legislation to the 
        legislature by February 1, 1995.  The legislation must include: 
           (1) a definition of services covered by the integrated 
        program, excluding supplemental and long-term care benefits, and 
        supporting actuarial data; 
           (2) a single set of criteria to determine eligibility for 
        the integrated program; 
           (3) a request to seek a federal demonstration project 
        waiver to include medical assistance in the integrated program; 
        and 
           (4) a plan to define the scope and delivery of supplemental 
        long-term care benefits to special populations. 
           The commissioner will present an update and an initial 
        budget analysis to the legislative commission on health care 
        access no later than December 1, 1994. 
           Sec. 4.  [STATE ADMINISTERED PUBLIC PROGRAM PHASE-IN.] 
           (a) The commissioner of human services shall present to the 
        legislature and the governor, as part of the implementation 
        report due January 1, 1996, a plan to incorporate state 
        administered health programs into the all-payer option and the 
        integrated service network system.  The plan must identify the 
        federal waivers and approvals required.  The plan must also 
        provide a schedule for phasing in the state administered health 
        programs beginning July 1, 1997, and for increasing 
        reimbursement levels in stages over the phase-in period.  For 
        purposes of this section, "state administered health programs" 
        means the medical assistance, general assistance medical care, 
        and MinnesotaCare programs. 
           (b) The commissioners of human services and employee 
        relations shall include with the plan required under paragraph 
        (a) recommendations, including proposed legislation, for a 
        coordinated program for purchasing health care services for the 
        state employees group insurance program and recipients of state 
        administered health programs, to be phased in beginning July 1, 
        1997. 
           (c) The recommendations shall include a requirement that 
        health plan companies interested in contracting to serve 
        enrollees or recipients of the programs listed in paragraph (b) 
        submit a bid to provide services to all enrollees and recipients 
        of those programs residing within the plan's service area. 
           (d) The commissioners of human services and employee 
        relations must convene an advisory task force to assist with the 
        preparation of plans, recommendations, and legislation required 
        by this section.  The task force must include representatives of 
        recipients of the publicly paid health care programs, providers 
        with substantial experience in providing services to recipients 
        of these programs, county human services, exclusive 
        representatives of state employees, and other affected persons. 
           (e) The commissioners of human services and employee 
        relations may begin integrating administrative functions 
        relating to the purchase of health care prior to July 1, 1997, 
        that do not affect eligibility or coverage policy for medical 
        assistance, general assistance medical care, or MinnesotaCare 
        enrollees.  All integration shall be included in the report 
        required under paragraph (a). 
           Sec. 5.  [RECODIFICATION AND HEALTH PLAN COMPANY REGULATORY 
        REFORM.] 
           Subdivision 1.  [PROPOSED LEGISLATION.] The commissioners 
        of health and commerce, in consultation with the Minnesota 
        health care commission and the legislative commission on health 
        care access, shall draft proposed legislation to recodify, 
        simplify, and standardize all statutes, rules, regulatory 
        requirements, and procedures relating to health plan companies.  
        The recodification and regulatory reform must become effective 
        simultaneously with the full implementation of the integrated 
        service network system and the regulated all-payer option on 
        July 1, 1997.  The commissioners of health and commerce shall 
        submit to the legislature by January 1, 1996, a report on the 
        recodification and regulatory reform with proposed legislation. 
           Subd. 2.  [ADVISORY TASK FORCE.] The commissioner of health 
        shall convene an advisory task force to advise the commissioner 
        on the recodification and reform of regulatory requirements 
        under this section.  The task force must include representatives 
        of health plan companies, consumers, counties, employers, labor 
        unions, providers, and other affected persons. 
           Sec. 6.  [HEALTH REFORM DEMONSTRATION MODELS.] 
           The commissioner of health, in consultation with 
        appropriate state agencies, is authorized to seek federal and 
        private foundation grants to supplement any funds appropriated 
        under this act in order to conduct demonstration models to 
        develop the implementation strategies for the various components 
        of health care reform.  The model projects may include the 
        following: 
           (1) risk adjustment formulas; 
           (2) integration of special needs populations into 
        integrated service networks; 
           (3) organization of health services delivery by 
        post-secondary educational facilities; 
           (4) establishment of rural purchasing pools and cooperative 
        service arrangements; 
           (5) integration of rural public health nursing agency 
        services with rural community integrated service networks; 
           (6) development of appropriate access services which 
        facilitate enrollment of low-income or special needs populations 
        into integrated service networks; 
           (7) evaluation methods for the action plans prepared by 
        health plan companies; and 
           (8) integration of services provided by licensed school 
        nurses into integrated service networks. 
           Sec. 7.  [24-HOUR COVERAGE.] 
           As part of the implementation report submitted on January 
        1, 1996, as required under Minnesota Statutes, section 62Q.41, 
        the commissioners of health and labor and industry shall develop 
        a 24-hour coverage plan incorporating and coordinating the 
        health component of workers' compensation with health care 
        coverage to be offered by an integrated service network.  The 
        commissioners shall also make recommendations of any legislative 
        changes that may be needed to implement this plan. 
           Sec. 8.  [AMBULANCE RATE STUDY.] 
           (a) The commissioner of health in consultation with the 
        Minnesota ambulance association and the regional emergency 
        medical services systems shall study the feasibility and 
        desirability of establishing a system of ambulance rate 
        regulation.  The commissioner shall report findings, 
        conclusions, and recommendations to the legislature by February 
        1, 1995, as part of the report on the financial condition of 
        licensed ambulance services in Minnesota required in Laws 1993, 
        First Special Session chapter 1, article 1, section 3, 
        subdivision 4. 
           (b) If the commissioner, under paragraph (a), recommends 
        establishing a system of ambulance rate regulation, the 
        commissioner, in consultation with the Minnesota ambulance 
        association and the regional emergency medical services systems, 
        shall develop a system of ambulance rate regulations for the 
        integrated service network and all-payer option systems.  The 
        commissioner shall present recommendations and an implementation 
        plan for this rate regulation system to the legislature by 
        January 1, 1996. 
           Sec. 9.  [SINGLE PAYER STUDY.] 
           The legislative audit commission is requested to direct the 
        legislative auditor to conduct an evaluation of the 
        administrative cost of paying Minnesota health care providers 
        through the multiple payers that currently reimburse the 
        providers.  The legislative auditor shall also analyze the 
        administrative cost of paying Minnesota health care providers 
        through one state government agency and, alternatively, through 
        one private sector health carrier.  "Administrative cost" 
        includes:  (1) the difference between all revenues received and 
        all claims paid out by all publicly financed health programs and 
        all private sector health carriers; and (2) billing costs for 
        Minnesota health care providers.  The legislative auditor shall 
        also study the different types of administrative expenses, 
        including costs that relate to the enhancement of quality of 
        care.  The report must, to the extent possible, rely solely on 
        data collected from Minnesota health care providers, health 
        carriers, and other group purchasers.  The legislative auditor 
        shall report findings of this study to the legislature by 
        January 15, 1995. 
           Sec. 10.  [CONTINUED STUDY OF MEDICAL EDUCATION AND 
        RESEARCH COSTS.] 
           Subdivision 1.  [PURPOSE.] The legislature finds that 
        health care research and the preparation of future health care 
        practitioners are of great importance to the quality of health 
        care available to the citizens of this state; that medical 
        education and research must be designed to meet the health needs 
        of the population and the changing needs of the health care 
        delivery system; and that the cost of medical education and 
        research should not place institutions engaged in these 
        activities at a competitive disadvantage in the marketplace. 
           Subd. 2.  [SCOPE OF STUDY.] The commissioner of health 
        shall continue the study developed as part of Minnesota 
        Statutes, section 62J.045, on the impact of state health care 
        reform on the financing of medical education and research 
        activities in the state.  The study shall address issues related 
        to the institutions engaged in these activities, including 
        hospitals, medical centers, and health plan companies, and will 
        report on the need for alternative funding mechanisms for 
        medical education and research activities.  The commissioner 
        shall monitor ongoing public and private sector activities 
        related to the study of the financing of medical education and 
        research activities and include a description of these 
        activities in the final report as applicable.  The commissioner 
        shall submit a report on the study findings, including 
        recommendations on mechanisms to finance medical education and 
        research activities, to the legislature by February 15, 1995. 
           Subd. 3.  [RECOMMENDATIONS.] The study shall explore both 
        private and public alternatives for funding medical education 
        and research activities.  The study shall include 
        recommendations which, when implemented, would: 
           (1) help to assure the coordination between federal and 
        state funding mechanisms; 
           (2) help assure adequate funding to support medical 
        education and research activities; 
           (3) create alternative funding mechanisms, if necessary, to 
        assure that medical education and research are responsive to the 
        health needs of the population and the needs of Minnesota's 
        health delivery system; 
           (4) help to assure that any changes in funding for medical 
        education and health care research do not destabilize 
        institutions that currently conduct, sponsor, or otherwise 
        engage in health care research and medical education; and 
           (5) allocate the costs of medical education and research 
        fairly across the health care system. 
           Subd. 4.  [TASK FORCE.] The commissioner may appoint an 
        advisory task force to provide expertise and advice on the 
        study.  The task force may include up to 20 members.  The 
        commissioner shall take under consideration representation of 
        the following groups:  the Minnesota association of public 
        teaching hospitals and other nonteaching hospitals; private 
        academic medical centers; the University of Minnesota medical 
        school and its primary care residency programs; payer 
        organizations including managed care, nonprofit health service 
        plan organizations, and commercial carriers; other providers 
        including the Minnesota medical association, the Minnesota 
        nurses association, and others; a representative of the health 
        technology advisory committee; employers; consumers; and medical 
        researchers.  The task force shall include representation of 
        rural areas in the state. 
           Sec. 11.  [PREPAID MEDICAL ASSISTANCE PLAN STUDY.] 
           The commissioners of health and human services shall study 
        the coordination between health care reform and the prepaid 
        medical assistance plan.  The study must also determine whether 
        there have been cost savings, cost increases, or cost shifting 
        under current implementation of the prepaid medical assistance 
        plan.  The commissioners shall jointly report their findings to 
        the legislature by January 1, 1995. 
           Sec. 12.  [EFFECTIVE DATE.] 
           Sections 1 to 11 are effective the day following final 
        enactment. 
                                   ARTICLE 6
                               UNIVERSAL COVERAGE
           Section 1.  [62Q.165] [UNIVERSAL COVERAGE.] 
           It is the commitment of the state to achieve universal 
        health coverage for all Minnesotans by July 1, 1997.  In order 
        to achieve this commitment, the following goals must be met: 
           (1) every Minnesotan shall have health coverage and shall 
        contribute to the costs of coverage based on ability to pay; 
           (2) no Minnesotan shall be denied coverage or forced to pay 
        more because of health status; 
           (3) quality health care services must be accessible to all 
        Minnesotans; 
           (4) all health care purchasers must be placed on an equal 
        footing in the health care marketplace; and 
           (5) a comprehensive and affordable health plan must be 
        available to all Minnesotans. 
           Sec. 2.  [62Q.17] [VOLUNTARY PURCHASING POOLS.] 
           Subdivision 1.  [PERMISSION TO FORM.] Notwithstanding 
        section 62A.10, employers, groups, and individuals may 
        voluntarily form purchasing pools, solely for the purpose of 
        negotiating and purchasing health plan coverage from health plan 
        companies for members of the pool. 
           Subd. 2.  [COMMON FACTORS.] All participants in a 
        purchasing pool must live within a common geographic region, be 
        employed in a similar occupation, or share some common factor as 
        approved by the commissioner. 
           Subd. 3.  [GOVERNING STRUCTURE.] Each pool must have a 
        governing structure controlled by its members.  The governing 
        structure of the pool is responsible for administration of the 
        pool.  The governing structure shall review and evaluate all 
        bids for coverage from health plan companies, shall determine 
        criteria for joining and leaving the pool, and may design 
        incentives for healthy lifestyles and health promotion programs. 
        The governing structure may design uniform entrance standards 
        for all employers, except small employers as defined under 
        section 62L.02.  Small employers must be permitted to enter any 
        pool if the small employer meets the pool's membership 
        requirements.  Pools must provide as much choice in health plans 
        to members as is financially possible.  The governing structure 
        may charge all members a fee for administrative purposes. 
           Subd. 4.  [ENROLLMENT.] Pools must have an annual open 
        enrollment period of not less than 15 days, during which all 
        individuals or groups that qualify for membership may enter the 
        pool without any preexisting condition limitations or exclusions 
        or exclusionary riders, except those permitted under chapter 62L 
        for groups or section 62A.65 for individuals.  Pools must reach 
        and maintain an enrolled population of at least 1,000 members 
        within six months of formation.  If a pool fails to reach or 
        maintain the minimum enrollment, all coverage subsequently 
        purchased through the purchasing pool must be regulated through 
        existing applicable laws and forego all advantages under this 
        section. 
           Subd. 5.  [MEMBERS.] The governing structure of the pool 
        shall set a minimum time period for membership.  Members must 
        stay in the purchasing pool for the entire minimum period to 
        avoid paying a penalty.  Penalties for early withdrawal from the 
        purchasing pool shall be established by the governing structure. 
           Subd. 6.  [EMPLOYER-BASED PURCHASING POOLS.] Employer-based 
        purchasing pools must, with respect to small employers as 
        defined in section 62L.02, meet all the requirements of chapter 
        62L.  The experience of the pool must be pooled and the rates 
        blended across all groups.  Pools may decide to create tiers 
        within the pool, based on experience of group members.  These 
        tiers must be designed within the requirements of section 
        62L.08.  The governing structure may establish criteria limiting 
        movement between tiers.  Tiers must be phased out within two 
        years of the pool's creation. 
           Subd. 7.  [INDIVIDUAL MEMBERS.] Purchasing pools that 
        contain individual members must meet all of the underwriting and 
        rate restrictions found in the individual health plan market. 
           Subd. 8.  [REPORTS.] Prior to the initial effective date of 
        coverage, and annually thereafter, each pool shall file a report 
        with the information clearinghouse.  The information 
        clearinghouse must use the report to promote the purchasing 
        pools.  The annual report must contain the following information:
           (1) the number of lives in the pool; 
           (2) the geographic area the pool intends to cover; 
           (3) the number of health plans offered; 
           (4) a description of the benefits under each plan; 
           (5) a description of the premium structure, including any 
        copayments or deductibles, of each plan offered; 
           (6) evidence of compliance with chapter 62L; 
           (7) a sample of marketing information, including a phone 
        number where the pool may be contacted; and 
           (8) a list of all administrative fees charged. 
           Sec. 3.  [62Q.18] [UNIVERSAL COVERAGE; INSURANCE REFORMS.] 
           Subdivision 1.  [DEFINITION.] For purposes of this section, 
           (1) "continuous coverage" has the meaning given in section 
        62L.02; 
           (2) "guaranteed issue" means: 
           (i) for individual health plans, that a health plan company 
        shall not decline an application by an individual for any 
        individual health plan offered by that health plan company, 
        including coverage for a dependent of the individual to whom the 
        health plan has been or would be issued; and 
           (ii) for group health plans, that a health plan company 
        shall not decline an application by a group for any group health 
        plan offered by that health plan company and shall not decline 
        to cover under the group health plan any person eligible for 
        coverage under the group's eligibility requirements, including 
        persons who become eligible after initial issuance of the group 
        health plan; 
           (3) "qualifying coverage" has the meaning given in section 
        62L.02; and 
           (4) "underwriting restrictions" has the meaning given in 
        section 62L.03, subdivision 4. 
           Subd. 2.  [INDIVIDUAL MANDATE.] Effective July 1, 1997, 
        each Minnesota resident shall obtain and maintain qualifying 
        coverage. 
           Subd. 3.  [GUARANTEED ISSUE.] (a) Effective July 1, 1997, 
        each health plan company shall offer, sell, issue, or renew each 
        of its individual health plan forms on a guaranteed issue basis 
        to any Minnesota resident. 
           (b) Effective July 1, 1997, each health plan company shall 
        offer, sell, issue, or renew each of its group health plan forms 
        to any employer that has its principal place of business in this 
        state on a guaranteed issue basis, provided that the guaranteed 
        issue requirement does not apply to employees, dependents, or 
        other persons to be covered, who are not residents of this state.
           Subd. 4.  [UNDERWRITING RESTRICTIONS LIMITED.] Effective 
        July 1, 1997, no health plan company shall offer, sell, issue, 
        or renew a health plan that has underwriting restrictions that 
        apply to a Minnesota resident, except as expressly permitted 
        under this section. 
           Subd. 5.  [PREEXISTING CONDITION LIMITATIONS.] Effective 
        July 1, 1997, no health plan company shall offer, sell, issue, 
        or renew a health plan that contains a preexisting condition 
        limitation or exclusion or exclusionary rider that applies to a 
        Minnesota resident, except a limitation which is no longer than 
        12 months and applies only to a person who has not maintained 
        continuous coverage.  An unexpired preexisting condition 
        limitation from previous qualifying coverage may be carried over 
        to new coverage under a health plan, if the unexpired condition 
        is one permitted under this section.  A Minnesota resident who 
        has not maintained continuous coverage may be subjected to a new 
        12-month preexisting condition limitation after each break in 
        continuous coverage. 
           Subd. 6.  [LIMITS ON PREMIUM RATE VARIATIONS.] (a) 
        Effective July 1, 1995, the premium rate variations permitted 
        under sections 62A.65 and 62L.08 become: 
           (1) for factors other than age and geography, 12.5 percent 
        of the index rate; and 
           (2) for age, 25 percent of the index rate. 
           (b) Effective July 1, 1996, the premium variations 
        permitted under sections 62A.65 and 62L.08 become: 
           (1) for factors other than age and geography, 7.5 percent 
        of the index rate; and 
           (2) for age, 15 percent of the index rate. 
           (c) Effective July 1, 1997, no health plan company shall 
        offer, sell, issue, or renew a health plan, that is subject to 
        section 62A.65 or 62L.08, for which the premium rate varies 
        between covered persons on the basis of any factor other than: 
           (1) for individual health plans, differences in benefits or 
        benefit design, and for group health plans, actuarially valid 
        differences in benefits or benefit design; 
           (2) the number of persons to be covered by the health plan; 
           (3) actuarially valid differences in expected costs between 
        adults and children; 
           (4) healthy lifestyle discounts authorized by statute; and 
           (5) for individual health plans, geographic variations 
        permitted under section 62A.65, and for group health plans, 
        geographic variations permitted under section 62L.08. 
           (d) All premium rate variations permitted under paragraph 
        (c) are subject to the approval of the commissioner. 
           (e) Notwithstanding paragraphs (a), (b), and (c), no health 
        plan company shall renew any individual or group health plan, 
        except in compliance with this paragraph.  No premium rate for 
        any policy holder or contract holder shall increase or decrease 
        upon renewal, as a result of this subdivision, by more than 15 
        percent per year.  The increase or decrease described in this 
        paragraph is in addition to any premium increase or decrease 
        caused by legally permissible factors other than this 
        subdivision.  If a premium increase or decrease is constrained 
        by this paragraph, the health plan company may implement the 
        remaining portion of the increase or decrease at the time of 
        subsequent annual renewals, but never to exceed 15 percent per 
        year for paragraphs (a), (b), and (c) combined. 
           Subd. 7.  [PORTABILITY OF COVERAGE.] (a) Effective July 1, 
        1997, no health plan company shall offer, sell, issue, or renew 
        any group or individual health plan that does not provide for 
        guaranteed issue, with full credit for previous qualifying 
        coverage against any preexisting condition limitation that would 
        otherwise apply under subdivision 5.  No health plan shall be 
        subject to any other type of underwriting restriction.  
           (b) Effective July 1, 1995, no health plan company shall 
        offer, sell, issue, or renew any group or individual health plan 
        that does not, with respect to individuals who maintain 
        continuous coverage and whose immediately preceding qualifying 
        coverage is a health plan issued by medical assistance under 
        chapter 256B, general assistance medical care under chapter 
        256D, or the MinnesotaCare plan established under section 
        256.9352, 
           (1) make coverage available on a guaranteed issue basis; 
        and 
           (2) give full credit for previous continuous coverage 
        against any applicable preexisting condition limitation or 
        exclusion. 
           (c) Paragraph (b) applies to individuals whose immediately 
        preceding qualifying coverage is medical assistance under 
        chapter 256B, general assistance medical care under chapter 
        256D, or the MinnesotaCare plan established under section 
        256.9352, only if the individual has disenrolled from the public 
        program or will disenroll upon issuance of the new coverage.  
        Paragraph (b) does not apply if the public program uses or will 
        use public funds to pay the premiums for an individual who 
        remains or will remain enrolled in the public program.  No 
        public funds may be used to purchase private coverage available 
        under this paragraph.  This paragraph does not prohibit public 
        payment of premiums to continue private sector coverage 
        originally obtained prior to enrollment in the public program, 
        where otherwise permitted by state or federal law.  Portability 
        coverage under this paragraph is subject to the provisions of 
        section 62A.65, subdivision 5, clause (b). 
           (d) Effective July 1, 1994, no health plan company shall 
        offer, sell, issue, or renew any group health plan that does 
        not, with respect to individuals who maintain continuous 
        coverage: 
           (1) make coverage available on a guaranteed issue basis; 
        and 
           (2) give full credit for previous continuous coverage 
        against any applicable preexisting condition limitation or 
        exclusion. 
           To the extent that this paragraph conflicts with chapter 
        62L, with respect to small employers as defined in section 
        62L.02, chapter 62L governs. 
           Subd. 8.  [COMPREHENSIVE HEALTH ASSOCIATION.] Effective 
        July 1, 1997, the comprehensive health association created in 
        section 62E.10 shall not accept new applicants for enrollment, 
        except for medicare-related coverage described in section 62E.12 
        and for coverage described in section 62E.18. 
           Subd. 9.  [CONTINGENCY; FUTURE LEGISLATION.] This section, 
        except for subdivision 7, paragraphs (b), (c), and (d), is not 
        intended to be implemented prior to legislation enacted to 
        achieve the objectives of sections 1, 5, 6, and 7.  Subdivision 
        6 is not effective until an effective date is specified in 1995 
        legislation. 
           Sec. 4.  [MARKET REFORM STRATEGIES STUDY.] 
           The health care commission shall study and recommend to the 
        legislature by January 1, 1995, insurance market reforms 
        designed to promote the formation of large purchasing pools to 
        be available to individuals and small employers by July 1, 
        1997.  The health care commission shall study: 
           (1) integrating workers' compensation and the medical 
        component of automobile no-fault coverage with coverage 
        purchased through a purchasing pool; 
           (2) integrating public and private sector financing 
        mechanisms to extend MinnesotaCare subsidies to employees and 
        dependents who are eligible for employer-based coverage without 
        eroding existing coverage; 
           (3) requiring purchasing pools to make available to 
        consumers all plans that submit bids to the pool; 
           (4) whether some or all purchasers should be required to 
        obtain coverage through a public or private pool; 
           (5) the impact and effectiveness of the Minnesota employees 
        insurance program under section 43A.317 and the public employees 
        insurance plan under section 43A.316; and 
           (6) how statewide or regional purchasing pools could be 
        developed for all individuals and small groups that do not have 
        access to a private purchasing pool, and for the MinnesotaCare 
        program and other state-subsidized health care programs, by 
        expanding the Minnesota employees insurance program currently 
        operated by the department of employee relations or by other 
        means. 
           Sec. 5.  [SURVEY OF THE UNINSURED AND EVALUATION OF 
        EXISTING REFORMS.] 
           Subdivision 1.  [SURVEY.] The Minnesota health care 
        commission shall authorize a survey of Minnesota households and 
        employers to provide current data on the uninsured population 
        and assess the effectiveness of the existing health care 
        reforms.  As part of this survey, the commissioner of human 
        services shall conduct a survey of the MinnesotaCare population 
        to determine the effects of existing health care reforms on this 
        population.  Results of this survey shall be presented to the 
        legislature by January 15, 1995. 
           Subd. 2.  [EVALUATION.] The commissioner of health, in 
        consultation with the health care commission and the 
        commissioners of human services and commerce, shall evaluate the 
        effect of existing reforms and the effect of the MinnesotaCare 
        program on the uninsured population.  Based on this evaluation, 
        the commissioners of health, commerce, and human services shall 
        recommend modifications to existing reforms as necessary to 
        continue to make progress toward universal coverage by 1997 and 
        report these modifications to the legislature by January 15, 
        1996. 
           Sec. 6.  [HEALTH CARE AFFORDABILITY STUDY.] 
           (a) The commissioner of health, in consultation with the 
        commissioners of human services, commerce, and revenue, shall 
        study and report to the Minnesota health care commission by 
        October 1, 1994, the various factors that affect health care 
        affordability, including out-of-pocket spending, insurance 
        premiums, and taxes. 
           (b) Based on the study in paragraph (a), the Minnesota 
        health care commission shall recommend to the legislature by 
        January 15, 1995, a specific percentage of income that overall 
        health care costs to a family or individual should not exceed. 
           (c) The recommendations in paragraph (b) must be used by 
        the commissioners of health and human services to develop an 
        appropriate premium subsidy and sliding fee scale for a 
        permanent health care subsidy program. 
           Sec. 7.  [FINANCING STUDY.] 
           The Minnesota health care commission, in consultation with 
        the commissioners of health, commerce, human services, and 
        revenue, and representatives of county government shall report 
        to the legislature by January 1, 1995, with an implementation 
        schedule and plan for a stable, long-term health care funding 
        system for all government health programs.  The report must 
        include recommendations for overhauling the current system, 
        specific financing methods, and detailed cost estimates for an 
        expanded, fully-funded subsidy program to guarantee universal 
        coverage to all Minnesota residents.  The report must include an 
        inventory and analysis of the existing system of government 
        financing of health care.  It must include recommendations for 
        capturing savings that will accrue under health care reform and 
        reallocating them to offset additional costs of universal 
        coverage.  The commission may contract for actuarial, finance, 
        and taxation expertise. 
           The study must take into account the following goals and 
        guiding principles: 
           (a) To the extent possible, universal coverage should be 
        achieved without a net increase in total health spending, taxes, 
        or government spending by recapturing savings and reallocating 
        resources within the system. 
           (b) To the extent that universal coverage will require 
        additional funding, revenues may be raised by reducing other 
        general fund spending or through a variety of funding options, 
        including broad-based taxes such as income or payroll, as long 
        as they can be adjusted to provide appropriate offsets for 
        low-income individuals.  Taxing items that are considered to be 
        health risks and contribute to preventable illness and injury 
        shall be considered as a possible funding source. 
           (c) Financing reform should ensure adequate and equitable 
        financing of all necessary components of the health system. 
           (d) Activities that benefit the entire community, such as 
        core public health activities, including collection of data on 
        health status and community health needs, and medical education 
        should be financed by broad-based funding sources.  Funding 
        mechanisms should promote collaboration between the public and 
        private sectors. 
           (e) Personal health care services for individuals who are 
        enrolled in a health plan should be provided or paid for by the 
        health plan. 
           (f) Government subsidy programs for low-income Minnesotans 
        should be financed by broad-based funding sources.  
           (g) Funding mechanisms that are inequitable or create 
        undesirable incentives, such as the Minnesota comprehensive 
        health association assessment, should be restructured. 
           Sec. 8.  [PREEXISTING CONDITIONS STUDY.] 
           The health care commission shall study the feasibility and 
        impact of the following:  
           (1) eliminating preexisting condition limitations in steps; 
           (2) standardizing preexisting condition limitations; 
           (3) narrowing the preexisting condition limitation period 
        from 12 months to six months; and 
           (4) requiring limited coverage of services for preexisting 
        conditions.  
           The health care commission shall provide a written report 
        to the legislature on or before December 15, 1994. 
           Sec. 9.  [REQUIRED OFFER OF INDIVIDUAL HEALTH PLANS.] 
           The health care commission shall study the effects and 
        desirability of the requirement that all health plan companies 
        offer individual health plans.  The health care commission shall 
        provide a written report, including recommendations on 
        implementation, to the legislature on or before December 15, 
        1994. 
           Sec. 10.  [EFFECTIVE DATE.] 
           Sections 1 and 4 to 9 are effective the day following final 
        enactment.  Sections 2 and 3 are effective July 1, 1994. 
                                   ARTICLE 7 
                                 PUBLIC HEALTH 
           Section 1.  [62Q.075] [LOCAL PUBLIC ACCOUNTABILITY AND 
        COLLABORATION PLAN.] 
           Subdivision 1.  [DEFINITION.] For purposes of this section, 
        "managed care organization" means a health maintenance 
        organization, community integrated service network, or 
        integrated service network. 
           Subd. 2.  [REQUIREMENT.] Beginning July 1, 1995, all 
        managed care organizations shall annually file with the action 
        plans required under section 62Q.07 a plan describing the 
        actions the managed care organization has taken and those it 
        intends to take to contribute to achieving public health goals 
        for each service area in which an enrollee of the managed care 
        organization resides.  This plan must be jointly developed in 
        collaboration with the local public health units, appropriate 
        regional coordinating boards, and other community organizations 
        providing health services within the same service area as the 
        managed care organization.  Local government units with 
        responsibilities and authority defined under chapters 145A and 
        256E may designate individuals to participate in the 
        collaborative planning with the managed care organization to 
        provide expertise and represent community needs and goals as 
        identified under chapters 145A and 256E. 
           Subd. 3.  [CONTENTS.] The plan must address the following: 
           (a) specific measurement strategies and a description of 
        any activities which contribute to public health goals and needs 
        of high risk and special needs populations as defined and 
        developed under chapters 145A and 256E; 
           (b) description of the process by which the managed care 
        organization will coordinate its activities with the community 
        health boards, regional coordinating boards, and other relevant 
        community organizations servicing the same area; 
           (c) documentation indicating that local public health units 
        and local government unit designees were involved in the 
        development of the plan; 
           (d) documentation of compliance with the plan filed the 
        previous year, including data on the previously identified 
        progress measures. 
           Subd. 4.  [REVIEW.] Upon receipt of the plan, the 
        appropriate commissioner shall provide a copy to the regional 
        coordinating boards, local community health boards, and other 
        relevant community organizations within the managed care 
        organization's service area.  After reviewing the plan, these 
        community groups may submit written comments on the plan to 
        either the commissioner of health or commerce, as applicable, 
        and may advise the commissioner of the managed care 
        organization's effectiveness in assisting to achieve regional 
        public health goals.  The plan may be reviewed by the county 
        boards, or city councils acting as a local board of health in 
        accordance with chapter 145A, within the managed care 
        organization's service area to determine whether the plan is 
        consistent with the goals and objectives of the plans required 
        under chapters 145A and 256E and whether the plan meets the 
        needs of the community.  The county board, or applicable city 
        council, may also review and make recommendations on the 
        availability and accessibility of services provided by the 
        managed care organization.  The county board, or applicable city 
        council, may submit written comments to the appropriate 
        commissioner, and may advise the commissioner of the managed 
        care organization's effectiveness in assisting to meet the needs 
        and goals as defined under the responsibilities of chapters 145A 
        and 256E.  Copies of these written comments must be provided to 
        the managed care organization.  The plan and any comments 
        submitted must be filed with the information clearinghouse to be 
        distributed to the public. 
           Sec. 2.  [62Q.32] [LOCAL OMBUDSPERSON.] 
           County board or community health service agencies may 
        establish an office of ombudsperson to provide a system of 
        consumer advocacy for persons receiving health care services 
        through a health plan company.  The ombudsperson's functions may 
        include, but are not limited to: 
           (a) mediation or advocacy on behalf of a person accessing 
        the complaint and appeal procedures to ensure that necessary 
        medical services are provided by the health plan company; and 
           (b) investigation of the quality of services provided to a 
        person and determine the extent to which quality assurance 
        mechanisms are needed or any other system change may be needed. 
           Sec. 3.  [62Q.33] [LOCAL GOVERNMENT PUBLIC HEALTH 
        FUNCTIONS.] 
           Subdivision 1.  [FINDINGS.] The legislature finds that the 
        local government public health functions of community 
        assessment, policy development, and assurance of service 
        delivery are essential elements in consumer protection and in 
        achieving the objectives of health care reform in Minnesota.  
        The legislature further finds that the site-based and 
        population-based services provided by state and local health 
        departments are a critical strategy for the long-term 
        containment of health care costs.  The legislature further finds 
        that without adequate resources, the local government public 
        health system will lack the capacity to fulfill these functions 
        in a manner consistent with the needs of a reformed health care 
        delivery system. 
           Subd. 2.  [REPORT ON SYSTEM DEVELOPMENT.] The commissioner 
        of health, in consultation with the state community health 
        services advisory committee and the commissioner of human 
        services, and representatives of local health departments, 
        county government, a municipal government acting as a local 
        board of health, the Minnesota health care commission, area 
        Indian health services, health care providers, and citizens 
        concerned about public health, shall coordinate the process for 
        defining implementation and financing responsibilities of the 
        local government core public health functions.  The commissioner 
        shall submit recommendations and an initial and final report on 
        local government core public health functions according to the 
        timeline established in subdivision 5. 
           Subd. 3.  [CORE PUBLIC HEALTH FUNCTIONS.] (a) The report 
        required by subdivision 2 must describe the local government 
        core public health functions of:  assessment of community health 
        needs; goal-determination, public policy, and program 
        development for addressing these needs; and assurance of service 
        availability and accessibility to meet community health goals 
        and needs.  The report must further describe activities for 
        implementation of these functions that are the continuing 
        responsibility of the local government public health system, 
        taking into account the ongoing reform of the health care 
        delivery system. 
           (b) The activities to be defined in terms of the local 
        government core public health functions include, but are not 
        limited to: 
           (1) consumer protection and advocacy; 
           (2) targeted outreach and linkage to personal services; 
           (3) health status monitoring and disease surveillance; 
           (4) investigation and control of diseases and injuries; 
           (5) protection of the environment, work places, housing, 
        food, and water; 
           (6) laboratory services to support disease control and 
        environmental protection; 
           (7) health education and information; 
           (8) community mobilization for health-related issues; 
           (9) training and education of public health professionals; 
           (10) public health leadership and administration; 
           (11) emergency medical services; 
           (12) violence prevention; and 
           (13) other activities that have the potential to improve 
        the health of the population or special needs populations and 
        reduce the need for or cost of health care services. 
           Subd. 4.  [CAPACITY BUILDING, ACCOUNTABILITY AND 
        FUNDING.] The recommendations required by subdivision 2 shall 
        include: 
           (1) a definition of minimum outcomes for implementing core 
        public health functions, including a local ombudsperson under 
        the assurance of services function; 
           (2) the identification of counties and applicable cities 
        with public health programs that need additional assistance to 
        meet the minimum outcomes; 
           (3) a budget for supporting all functions needed to achieve 
        the minimum outcomes, including the local ombudsperson assurance 
        of services function; 
           (4) an analysis of the costs and benefits expected from 
        achieving the minimum outcomes; 
           (5) strategies for improving local government public health 
        functions throughout the state to meet the minimum outcomes 
        including:  (i) funding distribution for local government public 
        health functions necessary to meet the minimum outcomes; and (ii)
        strategies for the financing of personal health care services 
        within the uniform benefits set and identifying appropriate 
        mechanisms for the delivery of these services; and 
           (6) a recommended level of dedicated funding for local 
        government public health functions in terms of a percentage of 
        total health service expenditures by the state or in terms of a 
        per capita basis, including methods of allocating the dedicated 
        funds to local government. 
           Subd. 5.  [TIMELINE.] (a) By October 1, 1994, the 
        commissioner shall submit to the legislative commission on 
        health care access the initial report and recommendations 
        required by subdivisions 2 to 4. 
           (b) By February 15, 1995, the commissioner, in cooperation 
        with the legislative commission on health care access, shall 
        submit a final report to the legislature, with specific 
        recommendations for capacity building and financing to be 
        implemented over the period from January 1, 1996, through 
        December 31, 1997. 
           (c) By January 1, 1997, and by January 1 of each 
        odd-numbered year thereafter, the commissioner shall present to 
        the legislature an updated report and recommendations. 
           Sec. 4.  [PUBLIC HEALTH GOALS REPORT.] 
           The commissioner of health shall provide a written report 
        to the legislature by January 1, 1996, of recommendations on how 
        providers and payers participating in the regulated all-payer 
        option shall participate in achieving public health goals. 
           Sec. 5.  [EFFECTIVE DATE.] 
           Sections 1 to 4 are effective the day following final 
        enactment. 
                                   ARTICLE 8
                      CONFORMING AND MISCELLANEOUS CHANGES
           Section 1.  Minnesota Statutes 1992, section 60A.02, 
        subdivision 3, is amended to read: 
           Subd. 3.  [INSURANCE.] (a) "Insurance" is any agreement 
        whereby one party, for a consideration, undertakes to indemnify 
        another to a specified amount against loss or damage from 
        specified causes, or to do some act of value to the assured in 
        case of such loss or damage.  A program of self-insurance, 
        self-insurance revolving fund or pool established under section 
        471.981 is not insurance for purposes of this subdivision.  
           (b) Notwithstanding paragraph (a), capitation payments to a 
        capitated entity by an employer that maintains a program of 
        self-insurance described in this paragraph, do not constitute 
        insurance with respect to the receipt of the payments.  The 
        payments are not premium revenues for the purpose of calculating 
        liability for otherwise applicable state taxes, assessments, or 
        surcharges, with the exception of: 
           (1) the MinnesotaCare provider tax; 
           (2) the one percent premium tax imposed in section 60A.15, 
        subdivision 1, paragraph (d); and 
           (3) effective July 1, 1995, assessments by the Minnesota 
        comprehensive health association. 
        This paragraph applies only where: 
           (1) the capitated entity does not bear risk in excess of 
        110 percent of the self-insurance program's expected costs; 
           (2) the employer does not carry stop loss, excess loss, or 
        similar coverage with an attachment point lower than 120 percent 
        of the self-insurance program's expected costs; 
           (3) the capitated entity and the employer comply with the 
        data submission and administrative simplification provisions of 
        chapter 62J; 
           (4) the capitated entity and the employer comply with the 
        provider tax pass-through provisions of section 295.582; 
           (5) the capitated entity's required minimum reserves 
        reflect the risk borne by the capitated entity under this 
        paragraph, with an appropriate adjustment for the 110 percent 
        limit on risk borne by the capitated entity; 
           (6) on or after July 1, 1994, but prior to January 1, 1995, 
        the employer has at least 1,500 current employees, as defined in 
        section 62L.02, or, on or after January 1, 1995, the employer 
        has at least 750 current employees, as defined in section 
        62L.02; 
           (7) the employer does not exclude any eligible employees or 
        their dependents, both as defined in section 62L.02, from 
        coverage offered by the employer, under this paragraph or any 
        other health coverage, insured or self-insured, offered by the 
        employer, on the basis of the health status or health history of 
        the person.  For purposes of this subdivision, a capitated 
        entity must be licensed as a health maintenance organization, 
        integrated service network, or community integrated service 
        network, or must be a preferred provider organization.  For 
        purposes of this section, a preferred provider organization is a 
        health plan company that contracts with providers to provide 
        health care to its enrollees.  All other insurance as defined in 
        paragraph (a), even if maintained by an employer that also 
        offers programs of self-insurance, continues to be subject to 
        all applicable state regulations. 
           This paragraph expires December 31, 1997. 
           Sec. 2.  Minnesota Statutes 1992, section 60A.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
        before April 1, June 1, and December 1 of each year, every 
        domestic and foreign company, including town and farmers' mutual 
        insurance companies, domestic mutual insurance companies, marine 
        insurance companies, health maintenance 
        organizations, integrated service networks, community integrated 
        service networks, and nonprofit health service plan 
        corporations, shall pay to the commissioner of revenue 
        installments equal to one-third of the insurer's total estimated 
        tax for the current year.  Except as provided in paragraphs (b) 
        and (e), installments must be based on a sum equal to two 
        percent of the premiums described in paragraph (c). 
           (b) For town and farmers' mutual insurance companies and 
        mutual property and casualty insurance companies other than 
        those (i) writing life insurance, or (ii) whose total assets on 
        December 31, 1989, exceeded $1,600,000,000, the installments 
        must be based on an amount equal to the following percentages of 
        the premiums described in paragraph (c): 
           (1) for premiums paid after December 31, 1988, and before 
        January 1, 1992, one percent; and 
           (2) for premiums paid after December 31, 1991, one-half of 
        one percent. 
           (c) Installments under paragraph (a), (b), or (e) are 
        percentages of gross premiums less return premiums on all direct 
        business received by the insurer in this state, or by its agents 
        for it, in cash or otherwise, during such year. 
           (d) Failure of a company to make payments of at least 
        one-third of either (1) the total tax paid during the previous 
        calendar year or (2) 80 percent of the actual tax for the 
        current calendar year shall subject the company to the penalty 
        and interest provided in this section, unless the total tax for 
        the current tax year is $500 or less. 
           (e) For health maintenance organizations and, nonprofit 
        health services plan corporations, integrated service networks, 
        and community integrated service networks, the installments must 
        be based on an amount equal to one percent of premiums described 
        in paragraph (c) that are paid after December 31, 1995. 
           (f) Premiums under the children's health plan medical 
        assistance, the health right plan MinnesotaCare program, and the 
        Minnesota comprehensive health insurance plan are not subject to 
        tax under this section. 
           Sec. 3.  Minnesota Statutes 1993 Supplement, section 
        61B.20, subdivision 13, is amended to read: 
           Subd. 13.  [MEMBER INSURER.] "Member insurer" means an 
        insurer licensed or holding a certificate of authority to 
        transact in this state any kind of insurance for which coverage 
        is provided under section 61B.19, subdivision 2, and includes an 
        insurer whose license or certificate of authority in this state 
        may have been suspended, revoked, not renewed, or voluntarily 
        withdrawn.  The term does not include: 
           (1) a nonprofit hospital or medical service organization, 
        other than a nonprofit health service plan corporation that 
        operates under chapter 62C; 
           (2) a health maintenance organization; 
           (3) a fraternal benefit society; 
           (4) a mandatory state pooling plan; 
           (5) a mutual assessment company or an entity that operates 
        on an assessment basis; 
           (6) an insurance exchange; or 
           (7) an integrated service network or a community integrated 
        service network; or 
           (8) an entity similar to those listed in clauses (1) to 
        (6) (7). 
           Sec. 4.  Minnesota Statutes 1992, section 62A.48, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [POLICY REQUIREMENTS.] No individual or 
        group policy, certificate, subscriber contract, or other 
        evidence of coverage of nursing home care or other long-term 
        care services shall be offered, issued, delivered, or renewed in 
        this state, whether or not the policy is issued in this state, 
        unless the policy is offered, issued, delivered, or renewed by a 
        qualified insurer and the policy satisfies the requirements of 
        sections 62A.46 to 62A.56.  A long-term care policy must cover 
        prescribed long-term care in nursing facilities and at least the 
        prescribed long-term home care services in section 62A.46, 
        subdivision 4, clauses (1) to (5), provided by a home health 
        agency.  Coverage under a long-term care policy AA must 
        include:  a maximum lifetime benefit limit of at least $100,000 
        for services, and nursing facility and home care coverages must 
        not be subject to separate lifetime maximums.  Coverage under a 
        long-term care policy A must include:  a maximum lifetime 
        benefit limit of at least $50,000 for services, and nursing 
        facility and home care coverages must not be subject to separate 
        lifetime maximums.  Prior hospitalization may not be required 
        under a long-term care policy. 
           Coverage under either policy designation must cover 
        preexisting conditions during the first six months of coverage 
        if the insured was not diagnosed or treated for the particular 
        condition during the 90 days immediately preceding the effective 
        date of coverage.  Coverage under either policy designation may 
        include a waiting period of up to 90 days before benefits are 
        paid, but there must be no more than one waiting period per 
        benefit period; for purposes of this sentence, "days" means 
        calendar days.  No policy may exclude coverage for mental or 
        nervous disorders which have a demonstrable organic cause, such 
        as Alzheimer's and related dementias.  No policy may require the 
        insured to be homebound or house confined to receive home care 
        services.  The policy must include a provision that the plan 
        will not be canceled or renewal refused except on the grounds of 
        nonpayment of the premium, provided that the insurer may change 
        the premium rate on a class basis on any policy anniversary 
        date.  A provision that the policyholder may elect to have the 
        premium paid in full at age 65 by payment of a higher premium up 
        to age 65 may be offered.  A provision that the premium would be 
        waived during any period in which benefits are being paid to the 
        insured during confinement in a nursing facility must be 
        included.  A nongroup policyholder may return a policy within 30 
        days of its delivery and have the premium refunded in full, less 
        any benefits paid under the policy, if the policyholder is not 
        satisfied for any reason. 
           No individual long-term care policy shall be offered or 
        delivered in this state until the insurer has received from the 
        insured a written designation of at least one person, in 
        addition to the insured, who is to receive notice of 
        cancellation of the policy for nonpayment of premium.  The 
        insured has the right to designate up to a total of three 
        persons who are to receive the notice of cancellation, in 
        addition to the insured.  The form used for the written 
        designation must inform the insured that designation of one 
        person is required and that designation of up to two additional 
        persons is optional and must provide space clearly designated 
        for listing between one and three persons.  The designation 
        shall include each person's full name, home address, and 
        telephone number.  Each time an individual policy is renewed or 
        continued, the insurer shall notify the insured of the right to 
        change this written designation. 
           The insurer may file a policy form that utilizes a plan of 
        care prepared as provided under section 62A.46, subdivision 5, 
        clause (1) or (2). 
           Sec. 5.  Minnesota Statutes 1992, section 62D.02, 
        subdivision 4, is amended to read: 
           Subd. 4.  (a) "Health maintenance organization" means a 
        nonprofit corporation organized under chapter 317A, or a local 
        governmental unit as defined in subdivision 11, controlled and 
        operated as provided in sections 62D.01 to 62D.30, which 
        provides, either directly or through arrangements with providers 
        or other persons, comprehensive health maintenance services, or 
        arranges for the provision of these services, to enrollees on 
        the basis of a fixed prepaid sum without regard to the frequency 
        or extent of services furnished to any particular enrollee.  
           (b) Notwithstanding paragraph (a), an organization licensed 
        as a health maintenance organization that accepts payments for 
        health care services on a capitated basis, or under another 
        similar risk sharing agreement, from a program of self-insurance 
        as described in section 60A.02, subdivision 3, paragraph (b), 
        shall not be regulated as a health maintenance organization with 
        respect to the receipt of the payments.  The payments are not 
        premium revenues for the purpose of calculating the health 
        maintenance organization's liability for otherwise applicable 
        state taxes, assessments, or surcharges, with the exception of: 
           (1) the MinnesotaCare provider tax; 
           (2) the one percent premium tax imposed in section 60A.15, 
        subdivision 1, paragraph (d); and 
           (3) effective July 1, 1995, assessments by the Minnesota 
        comprehensive health association. 
        This paragraph applies only where: 
           (1) the health maintenance organization does not bear risk 
        in excess of 110 percent of the self-insurance program's 
        expected costs; 
           (2) the employer does not carry stop loss, excess loss, or 
        similar coverage with an attachment point lower than 120 percent 
        of the self-insurance program's expected costs; 
           (3) the health maintenance organization and the employer 
        comply with the data submission and administrative 
        simplification provisions of chapter 62J; 
           (4) the health maintenance organization and the employer 
        comply with the provider tax pass-through provisions of section 
        295.582; 
           (5) the health maintenance organization's required minimum 
        reserves reflect the risk borne by the health maintenance 
        organization under this paragraph, with an appropriate 
        adjustment for the 110 percent limit on risk borne by the 
        community network; 
           (6) on or after July 1, 1994, but prior to January 1, 1995, 
        the employer has at least 1,500 current employees, as defined in 
        section 62L.02, or, on or after January 1, 1995, the employer 
        has at least 750 current employees, as defined in section 
        62L.02; 
           (7) the employer does not exclude any eligible employees or 
        their dependents, both as defined in section 62L.02, from 
        coverage offered by the employer, under this paragraph or any 
        other health coverage, insured or self-insured, offered by the 
        employer, on the basis of the health status or health history of 
        the person.  
           This paragraph expires December 31, 1997. 
           Sec. 6.  Minnesota Statutes 1992, section 62D.04, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [PARTICIPATION; GOVERNMENT PROGRAMS.] Health 
        maintenance organizations shall, as a condition of receiving and 
        retaining a certificate of authority, participate in the medical 
        assistance, general assistance medical care, and MinnesotaCare 
        programs.  The participation required from health maintenance 
        organizations shall be pursuant to rules adopted under section 
        256B.0644. 
           Sec. 7.  Minnesota Statutes 1992, section 62E.02, 
        subdivision 10, is amended to read: 
           Subd. 10.  [INSURER.] "Insurer" means those companies 
        operating pursuant to chapter 62A or 62C and offering, selling, 
        issuing, or renewing policies or contracts of accident and 
        health insurance.  "Insurer" does not include health maintenance 
        organizations, integrated service networks, or community 
        integrated service networks. 
           Sec. 8.  Minnesota Statutes 1992, section 62E.02, 
        subdivision 18, is amended to read: 
           Subd. 18.  [WRITING CARRIER.] "Writing carrier" means the 
        insurer or insurers and, health maintenance organization or 
        organizations, integrated service network or networks, and 
        community integrated service network or networks selected by the 
        association and approved by the commissioner to administer the 
        comprehensive health insurance plan. 
           Sec. 9.  Minnesota Statutes 1992, section 62E.02, 
        subdivision 20, is amended to read: 
           Subd. 20.  [COMPREHENSIVE INSURANCE PLAN OR STATE PLAN.] 
        "Comprehensive health insurance plan" or "state plan" means 
        policies of insurance and contracts of health maintenance 
        organization, integrated service network, or community 
        integrated service network coverage offered by the association 
        through the writing carrier. 
           Sec. 10.  Minnesota Statutes 1992, section 62E.02, 
        subdivision 23, is amended to read: 
           Subd. 23.  [CONTRIBUTING MEMBER.] "Contributing member" 
        means those companies regulated under chapter 62A and offering, 
        selling, issuing, or renewing policies or contracts of accident 
        and health insurance; health maintenance organizations regulated 
        under chapter 62D; nonprofit health service plan corporations 
        regulated under chapter 62C; integrated service network and 
        community integrated service networks regulated under chapter 
        62N; fraternal benefit societies regulated under chapter 64B; 
        the private employers insurance program established in section 
        43A.317, effective July 1, 1993; and joint self-insurance plans 
        regulated under chapter 62H.  For the purposes of determining 
        liability of contributing members pursuant to section 62E.11 
        payments received from or on behalf of Minnesota residents for 
        coverage by a health maintenance organization, integrated 
        service network, or community integrated service network shall 
        be considered to be accident and health insurance premiums. 
           Sec. 11.  Minnesota Statutes 1992, section 62E.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CREATION; TAX EXEMPTION.] There is 
        established a comprehensive health association to promote the 
        public health and welfare of the state of Minnesota with 
        membership consisting of all insurers; self-insurers; 
        fraternals; joint self-insurance plans regulated under chapter 
        62H; the private employers insurance program established in 
        section 43A.317, effective July 1, 1993; and health maintenance 
        organizations; integrated service networks; and community 
        integrated service networks licensed or authorized to do 
        business in this state.  The comprehensive health association 
        shall be exempt from taxation under the laws of this state and 
        all property owned by the association shall be exempt from 
        taxation. 
           Sec. 12.  Minnesota Statutes 1992, section 62E.10, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BOARD OF DIRECTORS; ORGANIZATION.] The board of 
        directors of the association shall be made up of nine members as 
        follows:  five insurer directors selected by participating 
        members, subject to approval by the commissioner; four public 
        directors selected by the commissioner, at least two of whom 
        must be plan enrollees.  Public members may include licensed 
        insurance agents.  In determining voting rights at members' 
        meetings, each member shall be entitled to vote in person or 
        proxy.  The vote shall be a weighted vote based upon the 
        member's cost of self-insurance, accident and health insurance 
        premium, subscriber contract charges, or health maintenance 
        contract payment, integrated service network, or community 
        integrated service network payment derived from or on behalf of 
        Minnesota residents in the previous calendar year, as determined 
        by the commissioner.  In approving directors of the board, the 
        commissioner shall consider, among other things, whether all 
        types of members are fairly represented.  Insurer directors may 
        be reimbursed from the money of the association for expenses 
        incurred by them as directors, but shall not otherwise be 
        compensated by the association for their services.  The costs of 
        conducting meetings of the association and its board of 
        directors shall be borne by members of the association. 
           Sec. 13.  Minnesota Statutes 1992, section 62E.10, 
        subdivision 3, is amended to read: 
           Subd. 3.  [MANDATORY MEMBERSHIP.] All members shall 
        maintain their membership in the association as a condition of 
        doing accident and health insurance, self-insurance, or health 
        maintenance organization, integrated service network, or 
        community integrated service network business in this state.  
        The association shall submit its articles, bylaws and operating 
        rules to the commissioner for approval; provided that the 
        adoption and amendment of articles, bylaws and operating rules 
        by the association and the approval by the commissioner thereof 
        shall be exempt from the provisions of sections 14.001 to 14.69. 
           Sec. 14.  Minnesota Statutes 1993 Supplement, 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; 
        community 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. 15.  Minnesota Statutes 1992, section 62J.03, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [HEALTH PLAN COMPANY.] "Health plan company" 
        means a health plan company as defined in section 62Q.01, 
        subdivision 4. 
           Sec. 16.  Minnesota Statutes 1993 Supplement, section 
        62J.04, subdivision 1, is amended to read: 
           Subdivision 1.  [LIMITS ON THE RATE OF GROWTH.] (a) The 
        commissioner of health shall set annual limits on the rate of 
        growth of public and private spending on health care services 
        for Minnesota residents, as provided in paragraph (b).  The 
        limits on growth must be set at levels the commissioner 
        determines to be realistic and achievable but that will reduce 
        the rate of growth in health care spending by at least ten 
        percent per year 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. 17.  Minnesota Statutes 1993 Supplement, section 
        62J.04, subdivision 1a, is amended 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 31 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 February 15 of each year on differences between 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 the actual 
        expenditures based on data collected, and the impact and 
        validity of growth limits within the overall health care reform 
        strategy. 
           (b) The commissioner shall enforce limits on growth in 
        spending and revenues for integrated service networks and for 
        the regulated all-payer system option.  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 growth limits, 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 option 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 amounts 
        exceeding the limit 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 amounts over the limit 
        from individual providers who exceed the spending growth limits. 
           (e) The commissioner, in consultation with the Minnesota 
        health care commission, shall research and make recommendations 
        to the legislature regarding the implementation of growth limits 
        for integrated service networks and the regulated all-payer 
        option.  The commissioner must consider both spending and 
        revenue approaches and will report on the implementation of the 
        interim limits as defined in sections 62P.04 and 62P.05.  The 
        commissioner must examine and make recommendations on the use of 
        annual update factors based on volume performance standards as a 
        mechanism for achieving controls on spending in the all-payer 
        option.  The commissioner must make recommendations regarding 
        the enforcement mechanism and must consider mechanisms to adjust 
        future growth limits as well as mechanisms to establish 
        financial penalties for noncompliance.  The commissioner must 
        also address the feasibility of system-wide limits imposed on 
        all integrated service networks. 
           (f) The commissioner shall report to the legislative 
        commission on health care access by December 1, 1994, on trends 
        in aggregate spending and premium revenue for health plan 
        companies.  The commissioner shall use data submitted under 
        section 62P.04 and other available data to complete this report. 
           Sec. 18.  Minnesota Statutes 1992, section 62J.04, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [GROWTH LIMITS; FEDERAL PROGRAMS.] The 
        commissioners of health and human services shall establish a 
        rate methodology for Medicare and Medicaid risk-based 
        contracting with health plan companies that is consistent with 
        statewide growth limits.  The methodology shall be presented for 
        review by the Minnesota health care commission and the 
        legislative commission on health care access prior to the 
        submission of a waiver request to the health care financing 
        administration and subsequent implementation of the methodology. 
           Sec. 19.  Minnesota Statutes 1992, section 62J.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MEMBERSHIP.] (a)  [NUMBER.] The Minnesota health 
        care commission consists of 25 27 members, as specified in this 
        subdivision.  A member may designate a representative to act as 
        a member of the commission in the member's absence.  The 
        governor and legislature shall coordinate appointments under 
        this subdivision to ensure gender balance and ensure that 
        geographic areas of the state are represented in proportion to 
        their population. 
           (b)  [HEALTH PLAN COMPANIES.] The commission includes four 
        members representing health plan companies, including one member 
        appointed by the Minnesota Council of Health Maintenance 
        Organizations, one member appointed by the Insurance Federation 
        of Minnesota, one member appointed by Blue Cross and Blue Shield 
        of Minnesota, and one member appointed by the governor. 
           (c)  [HEALTH CARE PROVIDERS.] The commission includes six 
        members representing health care providers, including one member 
        appointed by the Minnesota Hospital Association, one member 
        appointed by the Minnesota Medical Association, one member 
        appointed by the Minnesota Nurses' Association, one rural 
        physician appointed by the governor, and two members appointed 
        by the governor to represent providers other than hospitals, 
        physicians, and nurses. 
           (d)  [EMPLOYERS.] The commission includes four members 
        representing employers, including (1) two members appointed by 
        the Minnesota Chamber of Commerce, including one self-insured 
        employer and one small employer; and (2) two members appointed 
        by the governor. 
           (e)  [CONSUMERS.] The commission includes five seven 
        consumer members, including three members appointed by the 
        governor, one of whom must represent persons over age 65; one 
        member appointed by the consortium of citizens with disabilities 
        to represent consumers with physical disabilities or chronic 
        illness; one member appointed by the mental health association 
        of Minnesota, in consultation with the Minnesota chapter of the 
        society of Americans for recovery, to represent consumers with 
        mental illness or chemical dependency; one appointed under the 
        rules of the senate; and one appointed under the rules of the 
        house of representatives. 
           (f)  [EMPLOYEE UNIONS.] The commission includes three 
        representatives of labor unions, including two appointed by the 
        AFL-CIO Minnesota and one appointed by the governor to represent 
        other unions. 
           (g)  [STATE AGENCIES.] The commission includes the 
        commissioners of commerce, employee relations, and human 
        services. 
           (h)  [CHAIR.] The governor shall designate the chair of the 
        commission from among the governor's appointees. 
           Sec. 20.  [62J.051] [DISTRIBUTION OF HEALTH CARE 
        TECHNOLOGY, FACILITIES, AND FUNCTIONS; PUBLIC FORUMS.] 
           The commission may promote and facilitate an open, 
        voluntary, nonregulatory, and public process for regional and 
        statewide discussion regarding the appropriate distribution of 
        health care technologies, facilities, and functions.  The 
        process must include the participation of consumers, employers 
        and other group purchasers, providers, health plan companies, 
        and the health care technology industry.  The commission shall 
        ensure opportunities for broadbased public input from other 
        interested persons and organizations as well.  The purpose of 
        the process is to create an open public forum with the goal of 
        facilitating collaboration for the distribution of a particular 
        technology, facility, or function to achieve health reform 
        goals.  Participation in the forums is voluntary and agreements 
        or distribution plans that may be recommended through this 
        process are not mandatory or binding on any person or 
        organization.  The recommendations may be considered by the 
        commissioner of health for purposes of the antitrust exception 
        process under sections 62J.2911 to 62J.2921, and the process for 
        reviewing major spending commitments under section 62J.17, but 
        are not binding on the commissioner.  The commission may develop 
        criteria for selecting specific technologies, facilities, and 
        functions for discussion and may establish procedures and ground 
        rules for discussion and the development of recommended 
        agreements or distribution plans.  The commission may appoint 
        advisory committees to facilitate discussion and planning and 
        may request that regional coordinating boards serve as or 
        convene regional public forums. 
           Sec. 21.  Minnesota Statutes 1993 Supplement, section 
        62J.09, subdivision 1a, is amended to read: 
           Subd. 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 
        a community integrated service network or integrated service 
        network within the region.  This assistance must complement 
        assistance provided by the commissioner under section 62N.23. 
           Sec. 22.  Minnesota Statutes 1993 Supplement, section 
        62J.09, subdivision 2, is amended to read: 
           Subd. 2.  [MEMBERSHIP.] (a) [NUMBER OF MEMBERS.] Each 
        regional coordinating board consists of 17 members as provided 
        in this subdivision.  A member may designate a representative to 
        act as a member of the board 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 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 appointed by the Minnesota chamber of commerce from 
        nominations provided by 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. 23.  Minnesota Statutes 1993 Supplement, section 
        62J.23, subdivision 4, is amended to read: 
           Subd. 4.  [INTEGRATED SERVICE CHAPTER 62N NETWORKS.] (a) 
        The legislature finds that the formation and operation of 
        integrated service networks and community 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 and community 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 community integrated service 
        networks or to impose liability for arrangements between an 
        integrated service network or a community integrated service 
        network and its participating entities. 
           (b) An arrangement between an integrated service network or 
        a community integrated service network and any or all of its 
        participating entities is not subject to liability under 
        subdivisions 1 and 2. 
           Sec. 24.  Minnesota Statutes 1993 Supplement, section 
        62J.2916, subdivision 2, is amended to read: 
           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 or members 
        designated by the commissioner.  The commissioner or the 
        commissioner's designee or designees 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 or designees 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. 25.  Minnesota Statutes 1993 Supplement, section 
        62J.32, subdivision 4, is amended to read: 
           Subd. 4.  [PRACTICE PARAMETER ADVISORY COMMITTEE.] (a) The 
        commissioner shall convene a 15-member 17-member practice 
        parameter advisory committee comprised of eight health care 
        professionals, and representatives of the research community and 
        the medical technology industry.  One representative of the 
        research community must be an individual with expertise in 
        pharmacology or pharmaceutical economics who is familiar with 
        the results of the pharmaceutical care research project at the 
        University of Minnesota and the potential cost savings that can 
        be achieved through use of a comprehensive pharmaceutical care 
        model.  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, except 
        that its existence does not terminate and members do not receive 
        per diem compensation. 
           (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. 26.  Minnesota Statutes 1993 Supplement, section 
        62J.35, subdivision 2, is amended to read: 
           Subd. 2.  [FAILURE TO PROVIDE DATA.] The intentional 
        failure to provide the data requested under this chapter is 
        grounds for revocation of a license or other disciplinary or 
        regulatory action against a regulated provider or group 
        purchaser.  The commissioner may assess a fine against a 
        provider or group purchaser who refuses to provide data required 
        by the commissioner.  If a provider or group purchaser refuses 
        to provide the data required, the commissioner may obtain a 
        court order requiring the provider or group purchaser to produce 
        documents and allowing the commissioner to inspect the records 
        of the provider or group purchaser for purposes of obtaining the 
        data required.  
           Sec. 27.  Minnesota Statutes 1993 Supplement, section 
        62J.35, subdivision 3, is amended to read: 
           Subd. 3.  [DATA PRIVACY.] All data received under this 
        section or under section 62J.04, 62J.37, 62J.38, 62J.41, or 
        62J.42 is private or nonpublic, as applicable except to the 
        extent that it is given a different classification elsewhere in 
        this chapter.  The commissioner shall establish procedures and 
        safeguards to ensure that data released by the commissioner is 
        in a form that does not identify 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. 28.  Minnesota Statutes 1993 Supplement, section 
        62J.38, is amended to read: 
           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 April 1, 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, subscriber liability, 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. 29.  Minnesota Statutes 1993 Supplement, section 
        62J.41, subdivision 2, is amended to read: 
           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 April 1, 1994.  Health care providers shall 
        submit data for the 1994 calendar year by February 15 April 1, 
        1995, and each February 15 April 1 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. 
           Sec. 30.  Minnesota Statutes 1993 Supplement, section 
        62J.45, subdivision 11, is amended to read: 
           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.  
           (d) The commissioner and the board shall not allow a group 
        purchaser or health care provider to use or have access to data 
        collected by the data institute, unless the group purchaser or 
        health care provider cooperates with the data collection efforts 
        of the data institute by submitting all data requested in the 
        form and manner specified by the board.  The commissioner and 
        the board shall prohibit group purchasers and health care 
        providers from transferring, providing, or sharing data obtained 
        from the data institute with a group purchaser or health care 
        provider that does not cooperate with the data collection 
        efforts of the data institute. 
           Sec. 31.  [62J.47] [MORATORIUM ON MERGERS OR ACQUISITIONS 
        BY HEALTH CARRIERS.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, "health carrier" has the meaning given in section 
        62A.011, subdivision 2. 
           Subd. 2.  [RESTRICTIONS.] Until July 1, 1996, the following 
        health carriers are prohibited from merging with, or acquiring, 
        directly or indirectly, any other health carrier: 
           (1) a health carrier whose number of enrollees residing in 
        the state in the previous calendar year exceeds five percent of 
        the total number of insured persons in that year residing in the 
        state of Minnesota; and 
           (2) a health carrier whose number of enrollees residing in 
        the seven-county metropolitan area in the previous calendar year 
        exceeds ten percent of the total number of insured persons in 
        that year residing in the seven-county metropolitan area. 
           Subd. 3.  [ENFORCEMENT.] The district court in Ramsey 
        county has jurisdiction to enjoin an alleged violation of 
        subdivision 2.  The attorney general may bring an action to 
        enjoin an alleged violation.  The commissioner of health or 
        commerce shall not issue or renew a license or certificate of 
        authority to any health carrier in violation of subdivision 2.  
           Subd. 4.  [EXCEPTIONS.] This section does not apply to: 
           (1) any merger or direct or indirect acquisition approved 
        by the commissioner that is intended to assure continuous 
        coverage for enrollees and avoid liquidation or insolvency under 
        chapter 60B; 
           (2) any merger or direct or indirect acquisition that 
        develops pursuant to a letter of intent, memorandum of 
        understanding, or other agreement signed before March 17, 1994; 
           (3) any merger or direct or indirect acquisition that 
        develops pursuant to an affiliation for which a letter of 
        intent, memorandum of understanding, or other agreement was 
        signed before March 17, 1994; or 
           (4) any merger or direct or indirect acquisition of health 
        carriers that are related organizations, as defined in section 
        317A.011, subdivision 18, as of March 17, 1994. 
           Sec. 32.  [62J.65] [EXEMPTION.] 
           Patient revenues derived from non-Minnesota patients are 
        exempt from the regulated all-payer system and Medicare balance 
        billing prohibition under section 62J.25. 
           Sec. 33.  Minnesota Statutes 1993 Supplement, section 
        62N.01, is amended to read: 
           62N.01 [CITATION AND PURPOSE.] 
           Subdivision 1.  [CITATION.] Sections 62N.01 to 62N.24 This 
        chapter may be cited as the "Minnesota integrated service 
        network act." 
           Subd. 2.  [PURPOSE.] Sections 62N.01 to 62N.24 allow This 
        chapter allows 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.  
        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. 34.  Minnesota Statutes 1993 Supplement, section 
        62N.02, subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION.] The definitions in this 
        section apply to sections 62J.04, subdivision 8, and 62N.01 to 
        62N.24 this chapter. 
           Sec. 35.  Minnesota Statutes 1993 Supplement, section 
        62N.065, subdivision 1, is amended to read: 
           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.24 this chapter; 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. 
           Sec. 36.  Minnesota Statutes 1993 Supplement, section 
        62N.10, subdivision 1, is amended to read: 
           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 develop and complete the action plans 
        required by law; and 
           (5) 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. 
           Sec. 37.  Minnesota Statutes 1993 Supplement, section 
        62N.10, subdivision 2, is amended to read: 
           Subd. 2.  [FEES.] Licensees shall pay an initial fee and a 
        renewal fee each following year to be established by the 
        commissioner of health.  The fee must be imposed at a rate 
        sufficient to cover the cost of regulation. 
           Sec. 38.  Minnesota Statutes 1993 Supplement, section 
        62N.22, is amended to read: 
           62N.22 [DISCLOSURE OF COMMISSIONS.] 
           Before selling, or offering to sell, any coverage or 
        enrollment in a community integrated service network or an 
        integrated service network, a person selling the coverage or 
        enrollment shall disclose in writing 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. 39.  Minnesota Statutes 1992, section 144.1485, is 
        amended to read: 
           144.1485 [DATA BASE ON HEALTH PERSONNEL.] 
           (a) The commissioner of health shall develop and maintain a 
        data base on health services personnel.  The commissioner shall 
        use this information to assist local communities and units of 
        state government to develop plans for the recruitment and 
        retention of health personnel.  Information collected in the 
        data base must include, but is not limited to, data on levels of 
        educational preparation, specialty, and place of employment.  
        The commissioner may collect information through the 
        registration and licensure systems of the state health licensing 
        boards. 
           (b) Health professionals who report their practice or place 
        of employment address to the commissioner of health under 
        section 144.052 may request in writing that their practice or 
        place of employment address be classified as private data on 
        individuals, as defined in section 13.02, subdivision 12.  The 
        commissioner shall grant the classification upon receipt of a 
        signed statement by the health professional that the 
        classification is required for the safety of the health 
        professional, if the statement also provides a valid, existing 
        address where the health professional consents to receive 
        service of process.  The commissioner shall use the mailing 
        address in place of the practice or place of employment address 
        in all documents available to the general public.  The practice 
        or place of employment address and any information provided in 
        the classification request, other than the mailing address, are 
        private data on individuals and may be provided to other state 
        agencies.  The practice or place of employment address may be 
        used to develop summary reports that show in aggregate the 
        distribution of health care providers in Minnesota. 
           Sec. 40.  Minnesota Statutes 1993 Supplement, section 
        144.1486, is amended to read: 
           144.1486 [RURAL COMMUNITY HEALTH CENTERS.] 
           The commissioner of health shall develop and implement a 
        program to establish community health centers in rural areas of 
        Minnesota that are underserved by health care providers.  The 
        program shall provide rural communities and community 
        organizations with technical assistance, capital grants for 
        start-up costs, and short-term assistance with operating costs.  
        The technical assistance component of the program must provide 
        assistance in review of practice management, market analysis, 
        practice feasibility analysis, medical records system analysis, 
        and scheduling and patient flow analysis.  The program must:  
        (1) include a local match requirement for state dollars 
        received; (2) require local communities, through 
        instrumentalities of the state of Minnesota or nonprofit boards 
        comprised of local residents, to operate and own their 
        community's health care program; (3) encourage the use of 
        midlevel practitioners; and (4) incorporate a quality assurance 
        strategy that provides regular evaluation of clinical 
        performance and allows peer review comparisons for rural 
        practices.  The commissioner shall report to the legislature on 
        implementation of the program by February 15, 1994. 
           Subdivision 1.  [COMMUNITY HEALTH CENTER.] "Community 
        health center" means a community owned and operated primary and 
        preventive health care practice that meets the unique, essential 
        health care needs of a specified population. 
           Subd. 2.  [PROGRAM GOALS.] The Minnesota community health 
        center program shall increase health care access for residents 
        of rural Minnesota by creating new community health centers in 
        areas where they are needed and maintaining essential rural 
        health care services.  The program is not intended to duplicate 
        the work of current health care providers. 
           Subd. 3.  [GRANTS.] (a) The commissioner shall provide 
        grants to communities for planning and establishing community 
        health centers through the Minnesota community health center 
        program.  Grant recipients shall develop and implement a 
        strategy that allows them to become self-sufficient and qualify 
        for other supplemental funding and enhanced reimbursement.  The 
        commissioner shall coordinate the grant program with the federal 
        rural health clinic, federally qualified health center, and 
        migrant and community health center programs to encourage 
        federal certification.  The commissioner may award planning, 
        project, and initial operating expense grants, as provided in 
        paragraphs (b) to (d). 
           (b) Planning grants may be awarded to communities to plan 
        and develop state funded community health centers, federally 
        qualified health centers, or migrant and community health 
        centers. 
           (c) Project grants may be awarded to communities for 
        community health center start-up or expansion, and the 
        conversion of existing practices to community health centers.  
        Start-up grants may be used for facilities, capital equipment, 
        moving expenses, initial staffing, and setup.  Communities must 
        provide reasonable assurance of their ability to obtain health 
        care providers and effectively utilize existing health care 
        provider resources.  Funded community health center projects 
        must become operational before funding expires.  Communities may 
        obtain funding for conversion of existing health care practices 
        to community health centers.  Communities with existing 
        community health centers may apply for grants to add sites in 
        underserved areas.  Governing boards must include 
        representatives of new service areas. 
           (d) Centers may apply for grants for up to two years to 
        subsidize initial operating expenses.  Applicants for initial 
        operating expense grants must demonstrate that expenses exceed 
        revenues by a minimum of ten percent or demonstrate other 
        extreme need that cannot be met using organizational reserves. 
           Subd. 4.  [ELIGIBILITY REQUIREMENTS.] In order to qualify 
        for community health center program funding, a project must: 
           (1) be located in a rural shortage area that is a medically 
        underserved, federal health professional shortage, or governor 
        designated shortage area.  "Rural" means an area of the state 
        outside the ten-county Twin Cities metropolitan area and outside 
        of the Duluth, St. Cloud, East Grand Forks, Moorhead, Rochester, 
        and LaCrosse census defined urbanized areas; 
           (2) represent or propose the formation of a nonprofit 
        corporation with local resident governance, or be a governmental 
        entity.  Applicants in the process of forming a nonprofit 
        corporation may have a nonprofit coapplicant serve as financial 
        agent through the remainder of the formation period.  With the 
        exception of governmental entities, all applicants must submit 
        application for nonprofit incorporation and 501(c)(3) tax-exempt 
        status within six months of accepting community health center 
        grant funds; 
           (3) result in a locally owned and operated community health 
        center that provides primary and preventive health care 
        services, and incorporates quality assurance, regular reviews of 
        clinical performance, and peer review; 
           (4) seek to employ midlevel professionals, where 
        appropriate; 
           (5) demonstrate community and popular support and provide a 
        20 percent local match of state funding; and 
           (6) propose to serve an area that is not currently served 
        by a federally certified medical organization. 
           Subd. 5.  [REVIEW PROCESS, RATING CRITERIA AND POINT 
        ALLOCATION.] (a) The commissioner shall establish grant 
        application guidelines and procedures that allow the 
        commissioner to assess relative need and the applicant's ability 
        to plan and manage a health care project.  Program documentation 
        must communicate program objectives, philosophy, expectations, 
        and other conditions of funding to potential applicants. 
           The commissioner shall establish an impartial review 
        process to objectively evaluate grant applications.  Proposals 
        must be categorized, ranked, and funded using a 100-point rating 
        scale.  Fifty-two points shall be assigned to relative need and 
        48 points to project merit. 
           (b) The scoring of relative need must be based on proposed 
        service area factors, including but not limited to: 
           (1) population below 200 percent of poverty; 
           (2) geographic barriers based on average travel time and 
        distance to the next nearest source of primary care that is 
        accessible to Medicaid and Medicare recipients and uninsured 
        low-income individuals; 
           (3) a shortage of primary care health professionals, based 
        on the ratio of the population in the service area to the number 
        of full-time equivalent primary care physicians in the service 
        area; and 
           (4) other community health issues including a high 
        unemployment rate, high percentage of uninsured population, high 
        growth rate of minority and special populations, high teenage 
        pregnancy rate, high morbidity rates due to specific diseases, 
        late entry into prenatal care, high percentage geriatric 
        population, high infant mortality rate, high percentage of low 
        birth weight, cultural and language barriers, high percentage 
        minority population, excessive average travel time and distance 
        to next nearest source of subsidized primary care. 
           (c) Project merit shall be determined based on expected 
        benefit from the project, organizational capability to develop 
        and manage the project, and probability of success, including 
        but not limited to the following factors: 
           (1) proposed scope of health services; 
           (2) clinical management plan; 
           (3) governance; 
           (4) financial and administrative management; and 
           (5) community support, integration, collaboration, 
        resources, and innovation. 
           The commissioner may elect not to award any of the 
        community health center grants if applications fail to meet 
        criteria or lack merit.  The commissioner's decision on an 
        application is final. 
           Subd. 6.  [ELIGIBLE EXPENDITURES.] Grant recipients may use 
        grant funds for the following types of expenditures: 
           (1) salaries and benefits for employees, to the extent they 
        are involved in project planning and implementation; 
           (2) purchase, repair, and maintenance of necessary medical 
        and dental equipment and furnishings; 
           (3) purchase of office, medical, and dental supplies; 
           (4) in-state travel to obtain training or improve 
        coordination; 
           (5) initial operating expenses of community health centers; 
           (6) programs or plans to improve the coordination, 
        effectiveness, or efficiency of the primary health care delivery 
        system; 
           (7) facilities; 
           (8) necessary consultant fees; and 
           (9) reimbursement to rural-based primary care practitioners 
        for equipment, supplies, and furnishings that are transferred to 
        community health centers.  Up to 65 percent of the grant funds 
        may be used to reimburse owners of rural practices for the 
        reasonable market value of usable facilities, equipment, 
        furnishings, supplies, and other resources that the community 
        health center chooses to purchase. 
           Grant funds shall not be used to reimburse applicants for 
        preexisting debt amortization, entertainment, and lobbying 
        expenses. 
           Subd. 7.  [SPECIAL CONSIDERATION.] The commissioner, 
        through the office of rural health, shall make special efforts 
        to identify areas of the state where need is the greatest, 
        notify representatives of those areas about grant opportunities, 
        and encourage them to submit applications. 
           Subd. 8.  [REQUIREMENTS.] The commissioner shall develop a 
        list of requirements for community health centers and a tracking 
        and reporting system to assess benefits realized from the 
        program to ensure that projects are on schedule and effectively 
        utilizing state funds. 
           The commissioner shall require community health centers 
        established through the grant program to: 
           (1) abide by all federal and state laws, rules, 
        regulations, and executive orders; 
           (2) establish policies, procedures, and services equivalent 
        to those required for federally certified rural health clinics 
        or federally qualified health centers.  Written policies are 
        required for description of services, medical management, drugs, 
        biologicals and review of policies; 
           (3) become a Minnesota nonprofit corporation and apply for 
        501(c)(3) tax-exempt status within six months of accepting state 
        funding.  Local governmental or tribal entities are exempt from 
        this requirement; 
           (4) establish a governing board composed of nine to 25 
        members who are residents of the area served and representative 
        of the social, economic, linguistic, ethnic, and racial target 
        population.  At least 35 percent of the board must represent 
        consumers; 
           (5) establish corporate bylaws that reflect all functions 
        and responsibilities of the board; 
           (6) develop an appropriate management and organizational 
        structure with clear lines of authority and responsibility to 
        the board; 
           (7) provide for adequate patient management and continuity 
        of care on site and from referral sources; 
           (8) establish quality assurance and risk management 
        programs, policies, and procedures; 
           (9) develop a strategic staffing plan to acquire an 
        appropriate mix of primary care providers and clinical support 
        staff; 
           (10) establish billing policies and procedures to maximize 
        patient collections, except where federal regulations or 
        contractual obligations prohibit the use of these measures; 
           (11) develop and implement policies and procedures, 
        including a sliding scale fee schedule, that assure that no 
        person will be denied services because of inability to pay; 
           (12) establish an accounting and internal control system in 
        accordance with sound financial management principles; 
           (13) provide a local match equal to 20 percent of the grant 
        amount; 
           (14) work cooperatively with the local community and other 
        health care organizations, other grant recipients, and the 
        office of rural health; 
           (15) obtain an independent annual audit and submit audit 
        results to the office of rural health; 
           (16) maintain detailed records and, upon request, make 
        these records available to the commissioner for examination; and 
           (17) pursue supplemental funding sources, when practical, 
        for implementation and initial operating expenses. 
           Subd. 9.  [PRECAUTIONS.] The commissioner may withhold, 
        delay, or cancel grant funding if a grant recipient does not 
        comply with program requirements and objectives. 
           Subd. 10.  [TECHNICAL ASSISTANCE.] The commissioner may 
        provide, contract for, or provide supplemental funding for 
        technical assistance to community health centers in the areas of 
        clinical operations, medical practice management, community 
        development, and program management. 
           Sec. 41.  [144.1492] [STATE RURAL HEALTH NETWORK REFORM 
        INITIATIVE.] 
           Subdivision 1.  [PURPOSE AND MATCHING FUNDS.] The 
        commissioner of health shall apply for federal grant funding 
        under the state rural health network reform initiative, a health 
        care financing administration program to provide grant funds to 
        states to encourage innovations in rural health financing and 
        delivery systems.  The commissioner may use state funds 
        appropriated to the department of health for the provision of 
        technical assistance for community integrated service network 
        development as matching funds for the federal grant. 
           Subd. 2.  [USE OF FEDERAL FUNDS.] If the department of 
        health receives federal funding under the state rural health 
        network reform initiative, the department shall use these funds 
        to implement a program to provide technical assistance and 
        grants to rural communities to establish health care networks 
        and to develop and test a rural health network reform model. 
           Subd. 3.  [ELIGIBLE APPLICANTS AND CRITERIA FOR AWARDING OF 
        GRANTS TO RURAL COMMUNITIES.] (a) Funding which the department 
        receives to award grants to rural communities to establish 
        health care networks shall be awarded through a request for 
        proposals process.  Planning grant funds may be used for 
        community facilitation and initial network development 
        activities including incorporation as a nonprofit organization 
        or cooperative, assessment of network models, and determination 
        of the best fit for the community.  Implementation grant funds 
        can be used to enable incorporated nonprofit organizations and 
        cooperatives to purchase technical services needed for further 
        network development such as legal, actuarial, financial, 
        marketing, and administrative services. 
           (b) In order to be eligible to apply for a planning or 
        implementation grant under the federally funded health care 
        network reform program, an organization must be located in a 
        rural area of Minnesota excluding the seven-county Twin Cities 
        metropolitan area and the census-defined urbanized areas of 
        Duluth, Rochester, St. Cloud, and Moorhead.  The proposed 
        network organization must also meet or plan to meet the criteria 
        for a community integrated service network. 
           (c) In determining which organizations will receive grants, 
        the commissioner may consider the following factors: 
           (1) the applicant's description of their plans for health 
        care network development, their need for technical assistance, 
        and other technical assistance resources available to the 
        applicant.  The applicant must clearly describe the service area 
        to be served by the network, how the grant funds will be used, 
        what will be accomplished, and the expected results.  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 applicant and 
        the health care network.  The applicant should demonstrate 
        support from private and public health care providers in the 
        service area, local community and government leaders, and the 
        regional coordinating board for the area.  Evidence of such 
        support may include a commitment of financial support, in-kind 
        services, or cash, for development of the network; 
           (3) the size and demographic characteristics of the 
        population in the service area for the proposed network and the 
        distance of the service area from the nearest metropolitan area; 
        and 
           (4) the technical assistance resources available to the 
        applicant from nonstate sources and the financial ability of the 
        applicant to purchase technical assistance services with 
        nonstate funds. 
           Sec. 42.  Minnesota Statutes 1993 Supplement, section 
        144.335, subdivision 3a, is amended to read: 
           Subd. 3a.  [PATIENT CONSENT TO RELEASE OF RECORDS; 
        LIABILITY.] (a) A provider, or a person who receives health 
        records from a provider, may not release a patient's health 
        records to a person without a signed and dated consent from the 
        patient or the patient's legally authorized representative 
        authorizing the release, unless the release is specifically 
        authorized by law.  Except as provided in paragraph (c), a 
        consent is valid for one year or for a lesser period specified 
        in the consent or for a different period provided by law.  
           (b) This subdivision does not prohibit the release of 
        health records for a medical emergency when the provider is 
        unable to obtain the patient's consent due to the patient's 
        condition or the nature of the medical emergency. 
           (c) Notwithstanding paragraph (a), if a patient explicitly 
        gives informed consent to the release of health records for the 
        purposes and pursuant to the restrictions in clauses (1) and 
        (2), the consent does not expire after one year for: 
           (1) the release of health records to a provider who is 
        being advised or consulted with in connection with the current 
        treatment of the patient; 
           (2) the release of health records to an accident and health 
        insurer, health service plan corporation, health maintenance 
        organization, or third-party administrator for purposes of 
        payment of claims, fraud investigation, or quality of care 
        review and studies, provided that: 
           (i) the use or release of the records complies with 
        sections 72A.49 to 72A.505; 
           (ii) further use or release of the records in individually 
        identifiable form to a person other than the patient without the 
        patient's consent is prohibited; and 
           (iii) the recipient establishes adequate safeguards to 
        protect the records from unauthorized disclosure, including a 
        procedure for removal or destruction of information that 
        identifies the patient. 
           (d) Until June 1, 1994 1996, paragraph (a) does not 
        prohibit the release of health records to qualified personnel 
        solely for purposes of medical or scientific research, if the 
        patient has not objected to a release for research purposes and 
        the provider who releases the records makes a reasonable effort 
        to determine that: 
           (i) the use or disclosure does not violate any limitations 
        under which the record was collected; 
           (ii) the use or disclosure in individually identifiable 
        form is necessary to accomplish the research or statistical 
        purpose for which the use or disclosure is to be made; 
           (iii) the recipient has established and maintains adequate 
        safeguards to protect the records from unauthorized disclosure, 
        including a procedure for removal or destruction of information 
        that identifies the patient; and 
           (iv) further use or release of the records in individually 
        identifiable form to a person other than the patient without the 
        patient's consent is prohibited. 
           (e) A person who negligently or intentionally releases a 
        health record in violation of this subdivision, or who forges a 
        signature on a consent form, or who obtains under false 
        pretenses the consent form or health records of another person, 
        or who, without the person's consent, alters a consent form, is 
        liable to the patient for compensatory damages caused by an 
        unauthorized release, plus costs and reasonable attorney's fees. 
           (f) Upon the written request of a spouse, parent, child, or 
        sibling of a patient being evaluated for or diagnosed with 
        mental illness, a provider shall inquire of a patient whether 
        the patient wishes to authorize a specific individual to receive 
        information regarding the patient's current and proposed course 
        of treatment.  If the patient so authorizes, the provider shall 
        communicate to the designated individual the patient's current 
        and proposed course of treatment.  Paragraph (a) applies to 
        consents given under this paragraph. 
           Sec. 43.  Minnesota Statutes 1992, section 144.335, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [NOTICE OF RIGHTS; INFORMATION ON RELEASE.] A 
        provider shall provide to patients, in a clear and conspicuous 
        manner, a written notice concerning practices and rights with 
        respect to access to health records.  The notice must include an 
        explanation of: 
           (1) disclosures of health records that may be made without 
        the written consent of the patient, including the type of 
        records and to whom the records may be disclosed; and 
           (2) the right of the patient to have access to and obtain 
        copies of the patient's health records and other information 
        about the patient that is maintained by the provider. 
           The notice requirements of this paragraph are satisfied if 
        the notice is included with the notice and copy of the patient 
        and resident bill of rights under section 144.652 or if it is 
        displayed prominently in the provider's place of business.  The 
        commissioner of health shall develop the notice required in this 
        subdivision and publish it in the State Register.  
           Sec. 44.  Minnesota Statutes 1992, section 144.581, 
        subdivision 2, is amended to read: 
           Subd. 2.  [USE OF HOSPITAL FUNDS FOR CORPORATE PROJECTS.] 
        In the event that the municipality, political subdivision, state 
        agency, or other governmental entity provides direct financial 
        subsidy to the hospital from tax revenue at the time an 
        undertaking authorized under subdivision 1, clauses (a) to (g), 
        is established or funded, the hospital may not contribute funds 
        to the undertaking for more than three years and thereafter all 
        funds must be repaid, with interest in no more than ten years. 
           Sec. 45.  Minnesota Statutes 1993 Supplement, section 
        144.802, subdivision 3b, is amended to read: 
           Subd. 3b.  [SUMMARY APPROVAL OF PRIMARY SERVICE AREAS.] 
        Except for submission of a written application to the 
        commissioner on a form provided by the commissioner, an 
        application to provide changes in a primary service area shall 
        be exempt from subdivisions 3, paragraphs (d) to (g); and 4, if: 
           (1) the application is for a change of primary service area 
        to improve coverage, to improve coordination with 911 emergency 
        dispatching, or to improve efficiency of operations; 
           (2) the application requests redefinition of contiguous or 
        overlapping primary service areas; 
           (3) the application shows approval from all the ambulance 
        licensees whose primary service area is either contiguous, 
        overlapping, or both, with those of the current and proposed 
        primary service area of the applicant areas are directly 
        affected by a change in the applicant's primary service area; 
           (4) the application shows that the applicant requested 
        review and comment on the application, and has included those 
        comments received from:  all county boards in the areas of 
        coverage included in the application; all community health 
        boards in the areas of coverage included in the application; all 
        directors of 911 public safety answering point areas in the 
        areas of coverage included in the application; and all regional 
        emergency medical systems areas designated under section 
        144.8093 in the areas of coverage included in the application; 
        and 
           (5) the application shows consideration of the factors 
        listed in subdivision 3, paragraph (g). 
           Sec. 46.  Minnesota Statutes 1993 Supplement, section 
        144A.071, subdivision 4a, as amended by 1994 H.F. No. 3210, 
        article 3, section 4, if enacted, is amended to read: 
           Subd. 4a.  [EXCEPTIONS FOR REPLACEMENT BEDS.] It is in the 
        best interest of the state to ensure that nursing homes and 
        boarding care homes continue to meet the physical plant 
        licensing and certification requirements by permitting certain 
        construction projects.  Facilities should be maintained in 
        condition to satisfy the physical and emotional needs of 
        residents while allowing the state to maintain control over 
        nursing home expenditure growth. 
           The commissioner of health in coordination with the 
        commissioner of human services, may approve the renovation, 
        replacement, upgrading, or relocation of a nursing home or 
        boarding care home, under the following conditions: 
           (a) to license or certify beds in a new facility 
        constructed to replace a facility or to make repairs in an 
        existing facility that was destroyed or damaged after June 30, 
        1987, by fire, lightning, or other hazard provided:  
           (i) destruction was not caused by the intentional act of or 
        at the direction of a controlling person of the facility; 
           (ii) at the time the facility was destroyed or damaged the 
        controlling persons of the facility maintained insurance 
        coverage for the type of hazard that occurred in an amount that 
        a reasonable person would conclude was adequate; 
           (iii) the net proceeds from an insurance settlement for the 
        damages caused by the hazard are applied to the cost of the new 
        facility or repairs; 
           (iv) the new facility is constructed on the same site as 
        the destroyed facility or on another site subject to the 
        restrictions in section 144A.073, subdivision 5; 
           (v) the number of licensed and certified beds in the new 
        facility does not exceed the number of licensed and certified 
        beds in the destroyed facility; and 
           (vi) the commissioner determines that the replacement beds 
        are needed to prevent an inadequate supply of beds. 
        Project construction costs incurred for repairs authorized under 
        this clause shall not be considered in the dollar threshold 
        amount defined in subdivision 2; 
           (b) to license or certify beds that are moved from one 
        location to another within a nursing home facility, provided the 
        total costs of remodeling performed in conjunction with the 
        relocation of beds does not exceed 25 percent of the appraised 
        value of the facility or $500,000, whichever is less; 
           (c) to license or certify beds in a project recommended for 
        approval under section 144A.073; 
           (d) to license or certify beds that are moved from an 
        existing state nursing home to a different state facility, 
        provided there is no net increase in the number of state nursing 
        home beds; 
           (e) to certify and license as nursing home beds boarding 
        care beds in a certified boarding care facility if the beds meet 
        the standards for nursing home licensure, or in a facility that 
        was granted an exception to the moratorium under section 
        144A.073, and if the cost of any remodeling of the facility does 
        not exceed 25 percent of the appraised value of the facility or 
        $500,000, whichever is less.  If boarding care beds are licensed 
        as nursing home beds, the number of boarding care beds in the 
        facility must not increase beyond the number remaining at the 
        time of the upgrade in licensure.  The provisions contained in 
        section 144A.073 regarding the upgrading of the facilities do 
        not apply to facilities that satisfy these requirements; 
           (f) to license and certify up to 40 beds transferred from 
        an existing facility owned and operated by the Amherst H. Wilder 
        Foundation in the city of St. Paul to a new unit at the same 
        location as the existing facility that will serve persons with 
        Alzheimer's disease and other related disorders.  The transfer 
        of beds may occur gradually or in stages, provided the total 
        number of beds transferred does not exceed 40.  At the time of 
        licensure and certification of a bed or beds in the new unit, 
        the commissioner of health shall delicense and decertify the 
        same number of beds in the existing facility.  As a condition of 
        receiving a license or certification under this clause, the 
        facility must make a written commitment to the commissioner of 
        human services that it will not seek to receive an increase in 
        its property-related payment rate as a result of the transfers 
        allowed under this paragraph; 
           (g) to license and certify nursing home beds to replace 
        currently licensed and certified boarding care beds which may be 
        located either in a remodeled or renovated boarding care or 
        nursing home facility or in a remodeled, renovated, newly 
        constructed, or replacement nursing home facility within the 
        identifiable complex of health care facilities in which the 
        currently licensed boarding care beds are presently located, 
        provided that the number of boarding care beds in the facility 
        or complex are decreased by the number to be licensed as nursing 
        home beds and further provided that, if the total costs of new 
        construction, replacement, remodeling, or renovation exceed ten 
        percent of the appraised value of the facility or $200,000, 
        whichever is less, the facility makes a written commitment to 
        the commissioner of human services that it will not seek to 
        receive an increase in its property-related payment rate by 
        reason of the new construction, replacement, remodeling, or 
        renovation.  The provisions contained in section 144A.073 
        regarding the upgrading of facilities do not apply to facilities 
        that satisfy these requirements; 
           (h) to license as a nursing home and certify as a nursing 
        facility a facility that is licensed as a boarding care facility 
        but not certified under the medical assistance program, but only 
        if the commissioner of human services certifies to the 
        commissioner of health that licensing the facility as a nursing 
        home and certifying the facility as a nursing facility will 
        result in a net annual savings to the state general fund of 
        $200,000 or more; 
           (i) to certify, after September 30, 1992, and prior to July 
        1, 1993, existing nursing home beds in a facility that was 
        licensed and in operation prior to January 1, 1992; 
           (j) to license and certify new nursing home beds to replace 
        beds in a facility condemned as part of an economic 
        redevelopment plan in a city of the first class, provided the 
        new facility is located within one mile of the site of the old 
        facility.  Operating and property costs for the new facility 
        must be determined and allowed under existing reimbursement 
        rules; 
           (k) to license and certify up to 20 new nursing home beds 
        in a community-operated hospital and attached convalescent and 
        nursing care facility with 40 beds on April 21, 1991, that 
        suspended operation of the hospital in April 1986.  The 
        commissioner of human services shall provide the facility with 
        the same per diem property-related payment rate for each 
        additional licensed and certified bed as it will receive for its 
        existing 40 beds; 
           (l) to license or certify beds in renovation, replacement, 
        or upgrading projects as defined in section 144A.073, 
        subdivision 1, so long as the cumulative total costs of the 
        facility's remodeling projects do not exceed 25 percent of the 
        appraised value of the facility or $500,000, whichever is less; 
           (m) to license and certify beds that are moved from one 
        location to another for the purposes of converting up to five 
        four-bed wards to single or double occupancy rooms in a nursing 
        home that, as of January 1, 1993, was county-owned and had a 
        licensed capacity of 115 beds; 
           (n) to allow a facility that on April 16, 1993, was a 
        106-bed licensed and certified nursing facility located in 
        Minneapolis to layaway all of its licensed and certified nursing 
        home beds.  These beds may be relicensed and recertified in a 
        newly-constructed teaching nursing home facility affiliated with 
        a teaching hospital upon approval by the legislature.  The 
        proposal must be developed in consultation with the interagency 
        committee on long-term care planning.  The beds on layaway 
        status shall have the same status as voluntarily delicensed and 
        decertified beds, except that beds on layaway status remain 
        subject to the surcharge in section 256.9657.  This layaway 
        provision expires July 1, 1995; 
           (o) to allow a project which will be completed in 
        conjunction with an approved moratorium exception project for a 
        nursing home in southern Cass county and which is directly 
        related to that portion of the facility that must be repaired, 
        renovated, or replaced, to correct an emergency plumbing problem 
        for which a state correction order has been issued and which 
        must be corrected by August 31, 1993; or 
           (p) to allow a facility that on April 16, 1993, was a 
        368-bed licensed and certified nursing facility located in 
        Minneapolis to layaway, upon 30 days prior written notice to the 
        commissioner, up to 30 of the facility's licensed and certified 
        beds by converting three-bed wards to single or double 
        occupancy.  Beds on layaway status shall have the same status as 
        voluntarily delicensed and decertified beds except that beds on 
        layaway status remain subject to the surcharge in section 
        256.9657, remain subject to the license application and renewal 
        fees under section 144A.07 and shall be subject to a $100 per 
        bed reactivation fee.  In addition, at any time within three 
        years of the effective date of the layaway, the beds on layaway 
        status may be: 
           (1) relicensed and recertified upon relocation and 
        reactivation of some or all of the beds to an existing licensed 
        and certified facility or facilities located in Pine River, 
        Brainerd, or International Falls; provided that the total 
        project construction costs related to the relocation of beds 
        from layaway status for any facility receiving relocated beds 
        may not exceed the dollar threshold provided in subdivision 2 
        unless the construction project has been approved through the 
        moratorium exception process under section 144A.073.; 
           (2) relicensed and recertified, upon reactivation of some 
        or all of the beds within the facility which placed the beds in 
        layaway status, if the commissioner has determined a need for 
        the reactivation of the beds on layaway status. 
           The property-related payment rate of a facility placing 
        beds on layaway status must be adjusted by the incremental 
        change in its rental per diem after recalculating the rental per 
        diem as provided in section 256B.431, subdivision 3a, paragraph 
        (d).  The property-related payment rate for a facility 
        relicensing and recertifying beds from layaway status must be 
        adjusted by the incremental change in its rental per diem after 
        recalculating its rental per diem using the number of beds after 
        the relicensing to establish the facility's capacity day 
        divisor, which shall be effective the first day of the month 
        following the month in which the relicensing and recertification 
        became effective.  Any beds remaining on layaway status more 
        than three years after the date the layaway status became 
        effective must be removed from layaway status and immediately 
        delicensed and decertified; 
           (q) to license and certify up to 24 nursing home beds in a 
        facility located in St. Louis county which, as of January 1, 
        1993, has a licensed capacity of 26 hospital beds and 24 nursing 
        home beds under the following conditions: 
           (1) no more than 12 nursing home beds can be licensed and 
        certified during fiscal year 1995; and 
           (2) the additional 12 nursing home beds can be licensed and 
        certified during fiscal year 1996 only if the 1994 occupancy 
        rate for nursing homes within a 25-mile radius of the facility 
        exceeds 96 percent. 
        This facility shall not be required to comply with the new 
        construction standards contained in the nursing home licensure 
        rules for resident bedrooms; 
           (r) to license and certify up to 117 beds that are 
        relocated from a licensed and certified 138-bed nursing facility 
        located in St. Paul to a hospital with 130 licensed hospital 
        beds located in South St. Paul, provided that the nursing 
        facility and hospital are owned and operated by the same 
        organization and that prior to the date the relocation is 
        completed the hospital ceases operation of its inpatient 
        hospital services at that hospital. 
           The total project construction cost estimate for the 
        project must not exceed the cost estimate submitted for the 
        replacement of the nursing facility in connection with the 
        moratorium exception process initiated under section 144A.073 in 
        1993. 
           At the time of licensure and certification of the 117 
        nursing facility beds in the new location, the facility may 
        layaway the remaining 21 nursing facility beds, which shall have 
        the same status as voluntarily delicensed and decertified beds 
        except that beds on layaway status remain subject to the 
        surcharge in section 256.9657.  The 21 nursing facility beds on 
        layaway status may be relicensed and recertified within the 
        identifiable complex of health care facilities in which the beds 
        are currently located upon recommendation by the commissioner of 
        human services; 
           (s) to license and certify a newly constructed 118-bed 
        facility in Crow Wing county when the following conditions are 
        met: 
           (1) the owner of the new facility delicenses an existing 
        68-bed facility located in the same county; 
           (2) the owner of the new facility delicenses 60 beds in 
        three-bed rooms in other owned facilities located in the 
        seven-county metropolitan area; and 
           (3) the project results in a ten-bed reduction in the 
        number of licensed beds operated statewide by the owner of the 
        new facility. 
           All beds in the newly constructed facility shall be 
        licensed as nursing home beds regardless of the licensure of 
        beds at the closed facility.; 
           (t) to license and certify beds in a renovation and 
        remodeling project to convert 13 three-bed wards into 13 two-bed 
        rooms and 13 single-bed rooms, expand space, and add 
        improvements in a nursing home that, as of January 1, 1994, met 
        the following conditions:  the nursing home was located in 
        Ramsey county; was not owned by a hospital corporation; had a 
        licensed capacity of 64 beds; and had been ranked among the top 
        15 applicants by the 1993 moratorium exceptions advisory review 
        panel.  The total project construction cost estimate for this 
        project must not exceed the cost estimate submitted in 
        connection with the 1993 moratorium exception process; or 
           (u) to license and certify beds in a renovation and 
        remodeling project to convert 12 four-bed wards into 24 two-bed 
        rooms, expand space, and add improvements in a nursing home 
        that, as of January 1, 1994, met the following conditions:  the 
        nursing home was located in Ramsey county; had a licensed 
        capacity of 154 beds; and had been ranked among the top 15 
        applicants by the 1993 moratorium exceptions advisory review 
        panel.  The total project construction cost estimate for this 
        project must not exceed the cost estimate submitted in 
        connection with the 1993 moratorium exception process. 
           The property-related payment rate of a facility placing 
        beds on layaway status must be adjusted by the incremental 
        change in its rental per diem after recalculating the rental per 
        diem as provided in section 256B.431, subdivision 3a, paragraph 
        (d).  The property-related payment rate for a facility 
        relicensing and recertifying beds from layaway status must be 
        adjusted by the incremental change in its rental per diem after 
        recalculating its rental per diem using the number of beds after 
        the relicensing to establish the facility's capacity day 
        divisor, which shall be effective the first day of the month 
        following the month in which the relicensing and recertification 
        became effective.  Any beds remaining on layaway status more 
        than three years after the date the layaway status became 
        effective must be removed from layaway status and immediately 
        delicensed and decertified. 
           Sec. 47.  Minnesota Statutes 1992, section 145.64, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DATA AND INFORMATION.] All data and 
        information acquired by a review organization, in the exercise 
        of its duties and functions, shall be held in confidence, shall 
        not be disclosed to anyone except to the extent necessary to 
        carry out one or more of the purposes of the review 
        organization, and shall not be subject to subpoena or 
        discovery.  No person described in section 145.63 shall disclose 
        what transpired at a meeting of a review organization except to 
        the extent necessary to carry out one or more of the purposes of 
        a review organization.  The proceedings and records of a review 
        organization shall not be subject to discovery or introduction 
        into evidence in any civil action against a professional arising 
        out of the matter or matters which are the subject of 
        consideration by the review organization.  Information, 
        documents or records otherwise available from original sources 
        shall not be immune from discovery or use in any civil action 
        merely because they were presented during proceedings of a 
        review organization, nor shall any person who testified before a 
        review organization or who is a member of it be prevented from 
        testifying as to matters within the person's knowledge, but a 
        witness cannot be asked about the witness' testimony before a 
        review organization or opinions formed by the witness as a 
        result of its hearings.  
           The confidentiality protection and protection from 
        discovery or introduction into evidence provided in this 
        subdivision shall also apply to the governing body of the review 
        organization and shall not be waived as a result of referral of 
        a matter from the review organization to the governing body or 
        consideration by the governing body of decisions, 
        recommendations, or documentation of the review organization.  
           The governing body of a hospital, health maintenance 
        organization, community integrated service network, or 
        integrated service network, that is owned or operated by a 
        governmental entity, may close a meeting to discuss decisions, 
        recommendations, deliberations, or documentation of the review 
        organization.  A meeting may not be closed except by a majority 
        vote of the governing body in a public meeting.  The closed 
        meeting must be tape recorded and the tape must be retained by 
        the governing body for five years.  
           Sec. 48.  Minnesota Statutes 1993 Supplement, section 
        151.21, subdivision 7, is amended to read: 
           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.  This section does not apply when a pharmacist is 
        dispensing a prescribed drug to persons covered under a managed 
        health care plan that maintains a mandatory or closed drug 
        formulary.  
           Sec. 49.  Minnesota Statutes 1993 Supplement, section 
        151.21, subdivision 8, is amended to read: 
           Subd. 8.  The following drugs are excluded from this 
        section:  coumadin, dilantin, lanoxin, premarin, theophylline, 
        synthroid, tegretol, and phenobarbital.  The drug formulary 
        committee established under section 256B.0625, subdivision 13, 
        shall establish a list of drug products that are to be excluded 
        from this section.  This list shall be updated on an annual 
        basis and shall be provided to the board for dissemination to 
        pharmacists licensed in the state. 
           Sec. 50.  Minnesota Statutes 1993 Supplement, section 
        256.9353, subdivision 3, is amended to read: 
           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 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 determined by the commissioner to have a 
        basis of eligibility for medical assistance 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. 
           (c) Admissions for inpatient hospital services paid for 
        under section 256.9362, subdivision 3, must be certified as 
        medically necessary in accordance with Minnesota Rules, parts 
        9505.0500 to 9505.0540, except as provided in clauses (1) and 
        (2): 
           (1) all admissions must be certified, except those 
        authorized under rules established under section 254A.03, 
        subdivision 3, or approved under Medicare; and 
           (2) payment under section 256.9362, subdivision 3, shall be 
        reduced by five percent for admissions for which certification 
        is requested more than 30 days after the day of admission.  The 
        hospital may not seek payment from the enrollee for the amount 
        of the payment reduction under this clause. 
           Sec. 51.  Minnesota Statutes 1993 Supplement, section 
        256.9353, subdivision 7, is amended to read: 
           Subd. 7.  [COPAYMENTS AND COINSURANCE.] The MinnesotaCare 
        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 inpatient out-of-pocket maximum 
        of $1,000 per individual and $3,000 per family; 
           (2) $3 per prescription for adult enrollees; and 
           (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.  Enrollees who are not eligible for 
        medical assistance with or without a spenddown shall be 
        financially responsible for the coinsurance amount and amounts 
        which exceed the $10,000 benefit limit.  MinnesotaCare shall be 
        financially responsible for the spenddown amount up to the 
        $10,000 benefit limit for enrollees who are eligible for medical 
        assistance with a spenddown; enrollees who are eligible for 
        medical assistance with a spenddown are financially responsible 
        for amounts which exceed the $10,000 benefit limit. 
           Sec. 52.  Minnesota Statutes 1993 Supplement, section 
        256.9354, subdivision 1, is amended to read: 
           Subdivision 1.  [CHILDREN; EXPANSION AND CONTINUATION OF 
        ELIGIBILITY.] (a)  [CHILDREN.] "Eligible persons" means children 
        who are one year of age or older but less than 18 years of age 
        who have gross family incomes that are equal to or less than 150 
        percent of the federal poverty guidelines and who are not 
        eligible for medical assistance without a spenddown under 
        chapter 256B and who are not otherwise insured for the covered 
        services.  The period of eligibility extends from the first day 
        of the month in which the child's first birthday occurs to the 
        last day of the month in which the child becomes 18 years old. 
           (b)  [EXPANSION OF ELIGIBILITY.] Eligibility for 
        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.  The 
        enrollment requirements in this paragraph apply to enrollment 
        under subdivisions 1 to 5.  Parents who enroll in the 
        MinnesotaCare plan must also enroll their children and dependent 
        siblings, if the children and their dependent siblings are 
        eligible.  Children and dependent siblings may be enrolled 
        separately without enrollment by parents.  However, if one 
        parent in the household enrolls, both parents must enroll, 
        unless other insurance is available.  If one child from a family 
        is enrolled, all children must be enrolled, unless other 
        insurance is available.  If one spouse in a household enrolls, 
        the other spouse in the household must also enroll, unless other 
        insurance is available.  Families cannot choose to enroll only 
        certain uninsured members.  For purposes of this section, a 
        "dependent sibling" means an unmarried child who is a full-time 
        student under the age of 25 years who is financially dependent 
        upon a parent.  Proof of school enrollment will be required.  
           (c)  [CONTINUATION OF ELIGIBILITY.] Individuals who 
        initially enroll in the MinnesotaCare plan under the eligibility 
        criteria in subdivisions 2 to 5 remain eligible for the 
        MinnesotaCare plan, regardless of age, place of residence, or 
        the presence or absence of children in the same household, as 
        long as all other eligibility criteria are met and residence in 
        Minnesota and continuous enrollment in the MinnesotaCare plan or 
        medical assistance are maintained.  In order for either parent 
        or either spouse in a household to remain enrolled, both must 
        remain enrolled, unless other insurance is available. 
           Sec. 53.  Minnesota Statutes 1993 Supplement, 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 without a spenddown under 
        chapter 256B.  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 MinnesotaCare.  
           Sec. 54.  Minnesota Statutes 1993 Supplement, section 
        256.9354, subdivision 6, is amended to read: 
           Subd. 6.  [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 
        ASSISTANCE.] Individuals who apply for MinnesotaCare, but who 
        are potentially eligible for medical assistance without a 
        spenddown 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. 55.  Minnesota Statutes 1993 Supplement, section 
        256.9354, is amended by adding a subdivision to read: 
           Subd. 7.  [GENERAL ASSISTANCE MEDICAL CARE.] A person 
        cannot have coverage under both MinnesotaCare and general 
        assistance medical care in the same month, except that a 
        MinnesotaCare enrollee may be eligible for retroactive general 
        assistance medical care according to section 256D.03, 
        subdivision 3, paragraph (b). 
           Sec. 56.  Minnesota Statutes 1993 Supplement, section 
        256.9357, subdivision 2, is amended to read: 
           Subd. 2.  [MUST NOT HAVE ACCESS TO EMPLOYER-SUBSIDIZED 
        COVERAGE.] (a) To be eligible for subsidized premium payments 
        based on a sliding scale, a family or individual must not have 
        access to subsidized health coverage through an employer, and 
        must not have had access to subsidized health coverage through 
        an employer for the 18 months prior to application for 
        subsidized coverage under the MinnesotaCare plan.  The 
        requirement that the family or individual must not have had 
        access to employer-subsidized coverage during the previous 18 
        months does not apply if employer-subsidized coverage was lost 
        for reasons that would not disqualify the individual for 
        unemployment benefits under section 268.09 and the family or 
        individual has not had access to employer-subsidized coverage 
        since the layoff.  If employer-subsidized coverage was lost for 
        reasons that disqualify an individual for unemployment benefits 
        under section 268.09, children of that individual are exempt 
        from the requirement of no access to employer subsidized 
        coverage for the 18 months prior to application, as long as the 
        children have not had access to employer subsidized coverage 
        since the disqualifying event. 
           (b) For purposes of this requirement, subsidized health 
        coverage means health coverage for which the employer pays at 
        least 50 percent of the cost of coverage for the employee, 
        excluding dependent coverage, or a higher percentage as 
        specified by the commissioner.  Children are eligible for 
        employer-subsidized coverage through either parent, including 
        the noncustodial parent.  The commissioner must treat employer 
        contributions to Internal Revenue Code Section 125 plans as 
        qualified employer subsidies toward the cost of health coverage 
        for employees for purposes of this subdivision. 
           Sec. 57.  Minnesota Statutes 1993 Supplement, section 
        256.9362, subdivision 6, is amended to read: 
           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.  If payment is reduced under section 
        256.9353, subdivision 3, paragraph (c), the hospital may not 
        seek payment from the enrollee for the amount of the reduction. 
           Sec. 58.  Minnesota Statutes 1993 Supplement, section 
        256.9363, subdivision 6, is amended to read: 
           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. 
           Sec. 59.  Minnesota Statutes 1993 Supplement, section 
        256.9363, subdivision 7, is amended to read: 
           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; and 
           (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 spend-down 
        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 
        spend-down requirements. 
           Sec. 60.  Minnesota Statutes 1993 Supplement, section 
        256.9363, subdivision 9, is amended to read: 
           Subd. 9.  [RATE SETTING.] Rates will be prospective, per 
        capita, where possible.  The commissioner may allow health plans 
        to arrange for inpatient hospital services on a risk or nonrisk 
        basis.  The commissioner shall consult with an independent 
        actuary to determine appropriate rates. 
           Sec. 61.  Minnesota Statutes 1993 Supplement, section 
        256.9657, subdivision 3, is amended to read: 
           Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; INTEGRATED 
        SERVICE NETWORK SURCHARGE.] (a) 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 and community integrated service 
        network licensed by the commissioner under sections 62N.01 to 
        62N.22 chapter 62N 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, or community 
        integrated service network as reported to the commissioner of 
        health according to the schedule in subdivision 4.  
           (b) For purposes of this subdivision, total premium revenue 
        means: 
           (1) premium revenue recognized on a prepaid basis from 
        individuals and groups for provision of a specified range of 
        health services over a defined period of time which is normally 
        one month, excluding premiums paid to a health maintenance 
        organization, integrated service network, or community 
        integrated service network from the Federal Employees Health 
        Benefit Program; 
           (2) premiums from Medicare wrap-around subscribers for 
        health benefits which supplement Medicare coverage; 
           (3) Medicare revenue, as a result of an arrangement between 
        a health maintenance organization, an integrated service 
        network, or a community integrated service network and the 
        health care financing administration of the federal Department 
        of Health and Human Services, for services to a Medicare 
        beneficiary; and 
           (4) medical assistance revenue, as a result of an 
        arrangement between a health maintenance organization, 
        integrated service network, or community integrated service 
        network and a Medicaid state agency, for services to a medical 
        assistance beneficiary. 
           If advance payments are made under clause (1) or (2) to the 
        health maintenance organization, integrated service network, or 
        community integrated service network for more than one reporting 
        period, the portion of the payment that has not yet been earned 
        must be treated as a liability. 
           Sec. 62.  Minnesota Statutes 1993 Supplement, section 
        256.9695, subdivision 3, as amended by 1994 House File No. 3210, 
        article 3, section 49, if enacted, is amended to read: 
           Subd. 3.  [TRANSITION.] Except as provided in section 
        256.969, subdivision 8, the commissioner shall establish a 
        transition period for the calculation of payment rates from July 
        1, 1989, to the implementation date of the upgrade to the 
        Medicaid management information system or July 1, 1992, 
        whichever is earlier. 
           During the transition period: 
           (a) Changes resulting from section 256.969, subdivisions 7, 
        9, 10, 11, and 13, shall not be implemented, except as provided 
        in section 256.969, subdivisions 12 and 20. 
           (b) The beginning of the 1991 rate year shall be delayed 
        and the rates notification requirement shall not be applicable. 
           (c) Operating payment rates shall be indexed from the 
        hospital's most recent fiscal year ending prior to January 1, 
        1991, by prorating the hospital cost index methodology in effect 
        on January 1, 1989.  For payments made for admissions occurring 
        on or after June 1, 1990, until the implementation date of the 
        upgrade to the Medicaid management information system the 
        hospital cost index excluding the technology factor shall not 
        exceed five percent.  This hospital cost index limitation shall 
        not apply to hospitals that meet the requirements of section 
        256.969, subdivision 20, paragraphs (a) and (b). 
           (d) Property and pass-through payment rates shall be 
        maintained at the most recent payment rate effective for June 1, 
        1990.  However, all hospitals are subject to the hospital cost 
        index limitation of subdivision 2c, for two complete fiscal 
        years.  Property and pass-through costs shall be retroactively 
        settled through the transition period.  The laws in effect on 
        the day before July 1, 1989, apply to the retroactive settlement.
           (e) If the upgrade to the Medicaid management information 
        system has not been completed by July 1, 1992, the commissioner 
        shall make adjustments for admissions occurring on or after that 
        date as follows: 
           (1) provide a ten percent increase to hospitals that meet 
        the requirements of section 256.969, subdivision 20, or, upon 
        written request from the hospital to the commissioner, 50 
        percent of the rate change that the commissioner estimates will 
        occur after the upgrade to the Medicaid management information 
        system; and 
           (2) adjust the Minnesota and local trade area rebased 
        payment rates that are established after the upgrade to the 
        Medicaid management information system to compensate for a 
        rebasing effective date of July 1, 1992.  The adjustment shall 
        be determined using claim specific payment changes that result 
        from the rebased rates and revised methodology in effect after 
        the systems upgrade.  Any adjustment that is greater than zero 
        shall be ratably reduced by 20 percent.  In addition, every 
        adjustment shall be reduced for payments under clause (1), and 
        differences in the hospital cost index.  Hospitals shall revise 
        claims so that services provided by rehabilitation units of 
        hospitals are reported separately.  The adjustment shall be in 
        effect until the amount due to or owed by the hospital is fully 
        paid over a number of admissions that is equal to the number of 
        admissions under adjustment multiplied by 1.5, except that a 
        hospital with a 20 percent or greater negative adjustment that 
        exceeds $1,000,000 for admissions occurring from July 1, 1992, 
        to December 31, 1992, must use a schedule that is three times 
        the number of admissions under adjustment and the adjustment 
        shall be in effect only over a number of admissions that is 
        equal to the number of admissions under adjustment multiplied by 
        1.5.  The adjustment for admissions occurring from July 1, 1992 
        to December 31, 1992, shall be based on claims paid as of August 
        1, 1993, and the adjustment shall begin with the effective date 
        of rules governing rebasing.  The adjustment for admissions 
        occurring from January 1, 1993, to the effective date of the 
        rules shall be based on claims paid as of February 1, 1994, and 
        shall begin after the first adjustment period is fully paid.  
        For purposes of appeals under subdivision 1, the adjustment 
        shall be considered payment at the time of admission. 
           Sec. 63.  Minnesota Statutes 1993 Supplement, section 
        256B.0917, subdivision 2, is amended to read: 
           Subd. 2.  [DESIGN OF SAIL PROJECTS; LOCAL LONG-TERM CARE 
        COORDINATING TEAM.] (a) The commissioner of human services in 
        conjunction with the interagency long-term care planning 
        committee's long-range strategic plan shall contract with SAIL 
        projects in four to six counties or groups of counties to 
        demonstrate the feasibility and cost-effectiveness of a local 
        long-term care strategy that is consistent with the state's 
        long-term care goals identified in subdivision 1.  The 
        commissioner shall publish a notice in the State Register 
        announcing the availability of project funding and giving 
        instructions for making an application.  The instructions for 
        the application shall identify the amount of funding available 
        for project components. 
           (b) To be selected for the project, a county board or 
        boards must establish a long-term care coordinating team 
        consisting of county social service agencies, public health 
        nursing service agencies, local boards of health, a 
        representative of local nursing home providers, a representative 
        of local home care providers, and the area agencies on aging in 
        a geographic area which is responsible for: 
           (1) developing a local long-term care strategy consistent 
        with state goals and objectives; 
           (2) submitting an application to be selected as a project; 
           (3) coordinating planning for funds to provide services to 
        elderly persons, including funds received under Title III of the 
        Older Americans Act, Community Social Services Act, Title XX of 
        the Social Security Act and the Local Public Health Act; and 
           (4) ensuring efficient services provision and 
        nonduplication of funding. 
           (c) The board or boards shall designate a public agency to 
        serve as the lead agency.  The lead agency receives and manages 
        the project funds from the state and is responsible for the 
        implementation of the local strategy.  If selected as a project, 
        the local long-term care coordinating team must semiannually 
        evaluate the progress of the local long-term care strategy in 
        meeting state measures of performance and results as established 
        in the contract. 
           (d) Each member of the local coordinating team must 
        indicate its endorsement of the local strategy.  The local 
        long-term care coordinating team may include in its membership 
        other units of government which provide funding for services to 
        the frail elderly.  The team must cooperate with consumers and 
        other public and private agencies, including nursing homes, in 
        the geographic area in order to develop and offer a variety of 
        cost-effective services to the elderly and their caregivers. 
           (e) The board or boards shall apply to be selected as a 
        project.  If the project is selected, the commissioner of human 
        services shall contract with the lead agency for the project and 
        shall provide additional administrative funds for implementing 
        the provisions of the contract, within the appropriation 
        available for this purpose. 
           (f) Projects shall be selected according to the following 
        conditions.  
           No project may be selected unless it demonstrates that: 
           (i) the objectives of the local project will help to 
        achieve the state's long-term care goals as defined in 
        subdivision 1; 
           (ii) in the case of a project submitted jointly by several 
        counties, all of the participating counties are contiguous; 
           (iii) there is a designated local lead agency that is 
        empowered to make contracts with the state and local vendors on 
        behalf of all participants; 
           (iv) the project proposal demonstrates that the local 
        cooperating agencies have the ability to perform the project as 
        described and that the implementation of the project has a 
        reasonable chance of achieving its objectives; 
           (v) the project will serve an area that covers at least 
        four counties or contains at least 2,500 persons who are 85 
        years of age or older, according to the projections of the state 
        demographer or the census if the data is more recent; and 
           (vi) the local coordinating team documents efforts of 
        cooperation with consumers and other agencies and organizations, 
        both public and private, in planning for service delivery. 
           Sec. 64.  Minnesota Statutes 1993 Supplement, section 
        295.50, subdivision 4, is amended to read: 
           Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
        provider" 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 plan company; or 
           (3) a licensed ambulance service. 
           (b) Health care provider does not include hospitals, 
        nursing homes licensed under chapter 144A, pharmacies, and 
        surgical centers. 
           Sec. 65.  Minnesota Statutes 1993 Supplement, section 
        295.50, subdivision 12b, is amended to read: 
           Subd. 12b.  [STAFF MODEL HEALTH CARRIER PLAN COMPANY.] 
        "Staff model health carrier plan company" means a health carrier 
        plan company as defined in section 62L.02, subdivision 16 
        62Q.01, subdivision 4, which employs one or more types of health 
        care provider to deliver health care services to the 
        health carrier's plan company's enrollees. 
           Sec. 66.  [317A.022] [ELECTION BY CERTAIN CHAPTER 318 
        ASSOCIATIONS.] 
           Subdivision 1.  [GENERAL.] An association described in 
        section 318.02, subdivision 5, may elect to cease to be an 
        association subject to and governed by chapter 318 and to become 
        subject to and governed by this chapter in the same manner and 
        to the extent provided in this chapter as though it were a 
        nonprofit corporation by complying with this section. 
           Subd. 2.  [AMENDED TITLE AND OTHER CONFORMING 
        AMENDMENTS.] The declaration of trust, as defined in section 
        318.02, subdivision 1, of the association must be amended to 
        identify it as the "articles of an association electing to be 
        treated as a nonprofit corporation."  All references in this 
        chapter to "articles" or "articles of incorporation" include the 
        declaration of trust of an electing association.  If the 
        declaration of trust includes a provision prohibited by this 
        chapter for inclusion in articles of incorporation, omits a 
        provision required by this chapter to be included in articles of 
        incorporation, or is inconsistent with this chapter, the 
        electing association shall amend its declaration of trust to 
        conform to the requirements of this chapter.  The appropriate 
        provisions of the association's declaration of trust or bylaws 
        or chapter 318 control the manner of adoption of the amendments 
        required by this subdivision. 
           Subd. 3.  [METHOD OF ELECTION.] An election by an 
        association under subdivision 2 must be made by resolution 
        approved by the affirmative vote of the trustees of the 
        association and by the affirmative vote of the members or other 
        persons with voting rights in the association.  The affirmative 
        vote of both the trustees of the association and of the members 
        or other persons with voting rights, if any, in the association 
        must be of the same proportion that is required for an amendment 
        of the declaration of trust of the association before the 
        election, in each case upon proper notice that a purpose of the 
        meeting is to consider an election by the association to cease 
        to be an association subject to and governed by chapter 318 and 
        to become and be a nonprofit corporation subject to and governed 
        by this chapter.  The resolution and the articles of the 
        amendment of the declaration of trust must be filed with the 
        secretary of state and are effective upon filing, or a later 
        date as may be set forth in the filed resolution.  Upon the 
        effective date, without any other action or filing by or on 
        behalf of the association, the association automatically is 
        subject to this chapter in the same manner and to the same 
        extent as though it had been formed as a nonprofit corporation 
        pursuant to this chapter.  Upon the effective date of the 
        election, the association is not considered to be a new entity, 
        but is considered to be a continuation of the same entity. 
           Subd. 4.  [EFFECTS OF ELECTION.] Upon the effective date of 
        an association's election under subdivision 3, and consistent 
        with the continuation of the association under this chapter: 
           (1) the organization has the rights, privileges, 
        immunities, powers, and is subject to the duties and 
        liabilities, of a corporation formed under this chapter; 
           (2) all real or personal property, debts, including debts 
        arising from a subscription for membership and interests 
        belonging to the association, continue to be the real and 
        personal property, and debts of the organization without further 
        action; 
           (3) an interest in real estate possessed by the association 
        does not revert to the grantor, or otherwise, nor is it in any 
        way impaired by reason of the election, and the personal 
        property of the association does not revert by reason of the 
        election; 
           (4) except where the will or other instrument provides 
        otherwise, a devise, bequest, gift, or grant contained in a will 
        or other instrument, in a trust or otherwise, made before or 
        after the election has become effective, to or for the 
        association, inures to the organization; 
           (5) the debts, liabilities, and obligations of the 
        association continue to be the debts, liabilities, and 
        obligations of the organization, just as if the debts, 
        liabilities, and obligations had been incurred or contracted by 
        the organization after the election; 
           (6) existing claims or a pending action or proceeding by or 
        against the association may be prosecuted to judgment as though 
        the election had not been affected; 
           (7) the liabilities of the trustees, members, officers, 
        directors, or similar groups or persons, however denominated, of 
        the association, are not affected by the election; 
           (8) the rights of creditors or liens upon the property of 
        the association are not impaired by the election; 
           (9) an electing association may merge with one or more 
        nonprofit corporations in accordance with the applicable 
        provisions of this chapter, and either the association or a 
        nonprofit corporation may be the surviving entity in the merger; 
        and 
           (10) the provisions of the bylaws of the association that 
        are consistent with this chapter remain or become effective and 
        provisions of the bylaws that are inconsistent with this chapter 
        are not effective. 
           Sec. 67.  Minnesota Statutes 1992, section 318.02, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [ELECTION TO BE GOVERNED BY CHAPTER 317A.] An 
        association may cease to be subject to or governed by this 
        chapter by filing an election in the manner described in section 
        317A.022, to be subject to and governed by chapter 317A in the 
        same manner and to the same extent provided in chapter 317A as 
        though it were a nonprofit corporation if: 
           (1) it is not formed for a purpose involving pecuniary gain 
        to its members, other than to members that are nonprofit 
        organizations or subdivisions, units, or agencies of the United 
        States or a state or local government; and 
           (2) it does not pay dividends or other pecuniary 
        remuneration, directly or indirectly, to its members, other than 
        to members that are nonprofit organizations or subdivisions, 
        units, or agencies of the United States or a state or local 
        government. 
           Sec. 68.  [CHISAGO COUNTY HOSPITAL PROJECT.] 
           (a) Notwithstanding the provisions of Minnesota Statutes, 
        section 144.551, subdivision 1, paragraph (a), a project to 
        replace a hospital in Chisago county may be commenced if: 
           (1) the new hospital is located within ten miles of the 
        current site; 
           (2) the project will result in a net reduction of licensed 
        hospital beds; and 
           (3) all hospitals within ten miles of the project agree to 
        the general location criteria, or if the hospitals do not agree 
        by July 1, 1994, the commissioner of health approves the project 
        through the process described in paragraph (b).  The hospitals 
        may notify the commissioner and request a mutually agreed upon 
        extension of time not to extend beyond August 15, 1994, for 
        submission of this project to the commissioner.  The 
        commissioner shall render a decision on the project within 60 
        days after submission by the parties.  The commissioner's 
        decision is the final administrative decision of the agency. 
           (b) As expressly authorized under paragraph (a), the 
        commissioner shall approve a project if it is determined that 
        replacement of the existing hospital or hospitals will: 
           (1) promote high quality care and services; 
           (2) provide improved access to care; 
           (3) not involve a substantial expansion of inpatient 
        service capacity; and 
           (4) benefit the region to be served by the new regional 
        facility. 
           (c) Prior to making this determination, the commissioner 
        shall solicit and review written comments from hospitals and 
        community service agencies located within ten miles of the new 
        hospital site and from the regional coordinating board. 
           (d) For the purposes of pursuing the process established 
        under this section, Chisago health services and district 
        memorial hospital may pursue discussions and work cooperatively 
        with each other, and with another organization mutually agreed 
        upon, to plan for a new hospital facility to serve the area 
        presently served by the two hospitals. 
           Sec. 69.  [STUDY OF ANESTHESIA PRACTICES.] 
           The commissioner of health shall study and report to the 
        legislature by January 15, 1995, on anesthesia services provided 
        in health care facilities of this state by nurse anesthetists 
        and anesthesiologists.  The study shall compare different 
        third-party reimbursement practices and contractual and 
        employment arrangements between health care facilities, nurse 
        anesthetists, and anesthesiologists in terms of their effect on: 
           (1) patient outcomes in this state, including the incidence 
        of mortality/morbidity as related to provider and practice 
        methods in urban and rural settings as disclosed by a literature 
        search of available retrospective or prospective studies; 
           (2) the cost of the service provided under each arrangement 
        to health care facilities, third-party purchasers, and patients; 
        and 
           (3) the effects on competition under each arrangement. 
           The report shall also include the commissioner's findings 
        on the most appropriate methods to provide anesthesia services 
        to ensure cost-effective delivery of quality anesthesia services.
           Sec. 70.  [HOSPITAL STUDIES.] 
           The commissioner of human services must review rebased 
        hospital payment rates to determine whether hospitals with 
        exceptionally high cost inpatient admissions are reimbursed at 
        rates that are reasonable and adequate to meet the costs 
        associated with each such high cost admission.  The commissioner 
        must report the results of this review, along with 
        recommendations for any appropriate payment rate modifications.  
           The commissioners of health and human services shall also 
        study the distribution and scope of specialized health care 
        services for children, including the role of all children's 
        hospitals in the context of health care reform.  The 
        commissioners shall submit a report, including recommendations, 
        to the legislature and the governor by February 15, 1995. 
           Sec. 71.  [HEALTH CARE ADMINISTRATION.] 1994 House File No. 
        3210, article 1, section 2, subdivision 3, if enacted, is 
        amended to read: 
        Subd. 3.  Health Care Administration
        General
           (37,766,000)    17,756,000
        [MORATORIUM EXCEPTION PROPOSALS.] Of 
        this appropriation, $110,000 is 
        appropriated to the commissioner of 
        human services for the fiscal year 
        ending June 30, 1995, to pay the 
        medical assistance costs associated 
        with exceptions to the nursing home 
        moratorium granted under Minnesota 
        Statutes, section 144A.073.  
        Notwithstanding section 144A.073, the 
        interagency long-term care planning 
        committee shall issue a request for 
        proposals by June 6, 1994, and the 
        commissioner of health shall make a 
        final decision on project approvals by 
        October 15, 1994. 
        [MANAGED CARE CARRYOVER.] Unexpended 
        money appropriated for grants to 
        counties for managed care 
        administration in fiscal year 1994 does 
        not cancel but is available in fiscal 
        year 1995 for that purpose. 
        [HIGH COST INFANT AND YOUNG PEDIATRIC 
        ADMISSIONS.] The appropriation to the 
        aid to families with dependent children 
        program in Laws 1993, First Special 
        Session chapter 1, article 1, section 
        2, subdivision 5, for the fiscal year 
        ending June 30, 1994, is reduced by 
        $1,165,000.  The appropriation to the 
        medical assistance program is increased 
        by $1,165,000 for the fiscal year 
        ending June 30, 1995, for the purpose 
        of (1) exceptionally high cost 
        inpatient admissions for infants under 
        the age of one, and for children under 
        the age of six receiving services in a 
        hospital that receives payment under 
        Minnesota Statutes, section 256.969, 
        subdivision 9 or 9a; and (2) hospitals 
        with a 20 percent or greater negative 
        adjustment that exceeds $1,000,000, as 
        the adjustment is calculated under 
        Minnesota Statutes, section 256.9695, 
        subdivision 3. 
        [INFLATION ADJUSTMENTS.] The 
        commissioner of finance shall include, 
        as a budget change request in the 
        1996-1997 biennial detailed expenditure 
        budget submitted to the legislature 
        under Minnesota Statutes, section 
        16A.11, annual inflation adjustments in 
        operating costs for:  nursing services 
        and home health aide services under 
        Minnesota Statutes, section 256B.0625, 
        subdivision 6a; nursing supervision of 
        personal care services, under Minnesota 
        Statutes, section 256B.0625, 
        subdivision 19a; private duty nursing 
        services under Minnesota Statutes, 
        section 256B.0625, subdivision 7; home 
        and community-based services waiver for 
        persons with mental retardation and 
        related conditions under Minnesota 
        Statutes, section 256B.501; home and 
        community-based services waiver for the 
        elderly under Minnesota Statutes, 
        section 256B.0915; alternative care 
        program under Minnesota Statutes, 
        section 256B.0913; traumatic brain 
        injury waiver under Minnesota Statutes, 
        section 256B.093; adult residential 
        program grants, under rule 12, under 
        Minnesota Rules, parts 9535.2000 to 
        9535.3000; adult and family community 
        support grants, under rules 14 and 78, 
        under Minnesota Rules, parts 9535.1700 
        to 9535.1760. 
        [HOSPITAL TECHNOLOGY FACTOR.] For 
        admissions occurring on or after April 
        1, 1994, through June 30, 1995, the 
        hospital cost index shall be increased 
        by 0.51 percent for technology.  
        Notwithstanding the sunset provisions 
        of this article, this increase shall 
        become part of the base for the 
        1996-1997 biennium.  For fiscal year 
        1995 only, the commissioner shall 
        adjust rates paid to a health 
        maintenance organization under medical 
        assistance contract with the 
        commissioner to reflect the hospital 
        technology factor in this paragraph, 
        and the adjustment must be made on an 
        undiscounted basis. 
        [ICF/MR RECEIVERSHIP.] If an 
        intermediate care facility for persons 
        with mental retardation or related 
        conditions that is in receivership 
        under Minnesota Statutes, section 
        245A.12 or 245A.13, is sold to an 
        unrelated organization:  (1) the 
        facility shall be considered a newly 
        established facility for rate setting 
        purposes notwithstanding any provisions 
        to the contrary in section 256B.501, 
        subdivision 11; and (2) the facility's 
        historical basis for the physical 
        plant, land, and land improvements for 
        each facility must not exceed the prior 
        owner's aggregate historical basis for 
        these same assets for each facility.  
        The allocation of the purchase price 
        between land, land improvements, and 
        physical plant shall be based on the 
        real estate appraisal using the 
        depreciated replacement cost method. 
        [NEW ICF/MR.] A newly constructed or 
        newly established intermediate care 
        facility for persons with mental 
        retardation or related conditions that 
        is developed and financed during the 
        fiscal year ending June 30, 1995, shall 
        not be subject to the equity 
        requirements in Minnesota Statutes, 
        section 256B.501, subdivision 11, 
        paragraph (d), or Minnesota Rules, part 
        9553.0060, subpart 3, item F, provided 
        that the provider's interest rate does 
        not exceed the interest rate available 
        through state agency tax-exempt 
        financing. 
           Sec. 72.  [REVISOR INSTRUCTION.] 
           The revisor of statutes shall change the term "health right"
        to "MinnesotaCare," "health right plan" to "MinnesotaCare 
        program," and "MinnesotaCare plan" to "MinnesotaCare program," 
        wherever these terms are used in Minnesota Statutes or Minnesota 
        Rules. 
           Sec. 73.  [CONTINGENT REPEALER FOR MINNESOTACARE.] 
           Notwithstanding section 645.34, the article 13, section 2, 
        amendment to section 256.9354, subdivision 5, and the article 
        13, section 5, amendment to section 256.9358, subdivision 4, are 
        repealed July 1, 1994, and the provisions are revived as they 
        were before the amendments, if the 1994 Legislature passes and 
        the governor signs into law a provision that establishes and 
        provides money for a health care access reserve account to 
        ensure adequate funding for the MinnesotaCare program through 
        fiscal year 1996. 
           Sec. 74.  [REPEALER.] 
           Minnesota Statutes 1992, section 256.362, subdivision 5; 
        Minnesota Statutes 1993 Supplement, sections 62J.04, subdivision 
        8; 62N.07; 62N.075; 62N.08; 62N.085; and 62N.16, are repealed. 
           Sec. 75.  [EFFECTIVE DATE.] 
           Sections 4, 15, 18, 20, 22, 24, 27 to 29, 31 to 35, 39 to 
        42, 45, 47 to 49, 51 to 55, 62, 64 to 68, and 71 to 74 are 
        effective the day following final enactment.  All other sections 
        are effective July 1, 1994. 
                                   ARTICLE 9
                         ADMINISTRATIVE SIMPLIFICATION
           Section 1.  [62J.50] [CITATION AND PURPOSE.] 
           Subdivision 1.  [CITATION.] Sections 62J.50 to 62J.61 may 
        be cited as the Minnesota health care administrative 
        simplification act of 1994. 
           Subd. 2.  [PURPOSE.] The legislature finds that significant 
        savings throughout the health care industry can be accomplished 
        by implementing a set of administrative standards and simplified 
        procedures and by setting forward a plan toward the use of 
        electronic methods of data interchange.  The legislature finds 
        that initial steps have been taken at the national level by the 
        federal health care financing administration in its 
        implementation of nationally accepted electronic transaction 
        sets for its medicare program.  The legislature further 
        recognizes the work done by the workgroup for electronic data 
        interchange and the American national standards institute and 
        its accredited standards committee X12, at the national level, 
        and the Minnesota administrative uniformity committee, a 
        statewide, voluntary, public-private group representing payers, 
        hospitals, state programs, physicians, and other health care 
        providers in their work toward administrative simplification in 
        the health care industry. 
           Sec. 2.  [62J.51] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of sections 62J.50 to 
        62J.61, the following definitions apply. 
           Subd. 2.  [ANSI.] "ANSI" means the American national 
        standards institute. 
           Subd. 3.  [ASCX12] "ASC X12" means the American national 
        standards institute committee X12. 
           Subd. 4.  [CATEGORY I INDUSTRY PARTICIPANTS.] "Category I 
        industry participants" means the following:  group purchasers, 
        providers, and other health care organizations doing business in 
        Minnesota including public and private payers; hospitals; claims 
        clearinghouses; third-party administrators; billing service 
        bureaus; value added networks; self-insured plans and employers 
        with more than 100 employees; clinic laboratories; durable 
        medical equipment suppliers with a volume of at least 50,000 
        claims or encounters per year; and group practices with 20 or 
        more physicians. 
           Subd. 5.  [CATEGORY II INDUSTRY PARTICIPANTS.] "Category II 
        industry participants" means all group purchasers and providers 
        doing business in Minnesota not classified as category I 
        industry participants. 
           Subd. 6.  [CLAIM PAYMENT/ADVICE TRANSACTION SET (ANSI ASC 
        X12 835).] "Claim payment/advice transaction set (ANSI ASC X12 
        835)" means the electronic transaction format developed and 
        approved for implementation in October 1991, and used for 
        electronic remittance advice and electronic funds transfer. 
           Subd. 7. [CLAIM SUBMISSION TRANSACTION SET (ANSI ASC X12 
        837).] "Claim submission transaction set (ANSI ASC X12 837)" 
        means the electronic transaction format developed and approved 
        for implementation in October 1992, and used to submit all 
        health care claims information. 
           Subd. 8.  [EDI.] "EDI" or "electronic data interchange" 
        means the computer application to computer application exchange 
        of information using nationally accepted standard formats. 
           Subd. 9.  [ELIGIBILITY TRANSACTION SET (ANSI ASC X12 
        270/271).] "Eligibility transaction set (ANSI ASC X12 270/271)" 
        means the transaction format developed and approved for 
        implementation in February 1993, and used by providers to 
        request and receive coverage information on the member or 
        insured. 
           Subd. 10.  [ENROLLMENT TRANSACTION SET (ANSI ASC X12 
        834).] "Enrollment transaction set (ANSI ASC X12 834)" means the 
        electronic transaction format developed and approved for 
        implementation in February 1992, and used to transmit enrollment 
        and benefit information from the employer to the payer for the 
        purpose of enrolling in a benefit plan. 
           Subd. 11.  [GROUP PURCHASER.] "Group purchaser" has the 
        meaning given in section 62J.03, subdivision 6. 
           Subd. 12.  [ISO.] "ISO" means the international 
        standardization organization. 
           Subd. 13.  [NCPDP.] "NCPDP" means the national council for 
        prescription drug programs, inc. 
           Subd. 14.  [NCPDP TELECOMMUNICATION STANDARD FORMAT 
        3.2.] "NCPDP telecommunication standard format 3.2" means the 
        recommended transaction sets for claims transactions adopted by 
        the membership of NCPDP in 1992. 
           Subd. 15.  [NCPDP TAPE BILLING AND PAYMENT FORMAT 
        2.0.] "NCPDP tape billing and payment format 2.0" means the 
        recommended transaction standards for batch processing claims 
        adopted by the membership of the NCPDP in 1993. 
           Subd. 16.  [PROVIDER.] "Provider" or "health care provider" 
        has the meaning given in section 62J.03, subdivision 8. 
           Subd. 17.  [UNIFORM BILLING FORM HCFA 1450.] "Uniform 
        billing form HCFA 1450" means the uniform billing form known as 
        the HCFA 1450 or UB92, developed by the national uniform billing 
        committee in 1992 and approved for implementation in October 
        1993. 
           Subd. 18.  [UNIFORM BILLING FORM HCFA 1500.] "Uniform 
        billing form HCFA 1500" means the 1990 version of the health 
        insurance claim form, HCFA 1500, developed by the uniform claims 
        form task force of the federal health care financing 
        administration.  
           Subd. 19.  [UNIFORM DENTAL BILLING FORM.] "Uniform dental 
        billing form" means the 1990 uniform dental claim form developed 
        by the American dental association. 
           Subd. 20.  [UNIFORM PHARMACY BILLING FORM.] "Uniform 
        pharmacy billing form" means the national council for 
        prescription drug programs/universal claim form (NCPDP/UCF). 
           Subd. 21.  [WEDI.] "WEDI" means the national workgroup for 
        electronic data interchange report issued in October, 1993.  
           Sec. 3.  [62J.52] [ESTABLISHMENT OF UNIFORM BILLING FORMS.] 
           Subdivision 1.  [UNIFORM BILLING FORM HCFA 1450.] (a) On 
        and after January 1, 1996, all institutional inpatient hospital 
        services, ancillary services, and institutionally owned or 
        operated outpatient services rendered by providers in Minnesota, 
        that are not being billed using an equivalent electronic billing 
        format, must be billed using the uniform billing form HCFA 1450, 
        except as provided in subdivision 5. 
           (b) The instructions and definitions for the use of the 
        uniform billing form HCFA 1450 shall be in accordance with the 
        uniform billing form manual specified by the commissioner.  In 
        promulgating these instructions, the commissioner may utilize 
        the manual developed by the national uniform billing committee, 
        as adopted and finalized by the Minnesota uniform billing 
        committee.  
           (c) Services to be billed using the uniform billing form 
        HCFA 1450 include:  institutional inpatient hospital services 
        and distinct units in the hospital such as psychiatric unit 
        services, physical therapy unit services, swing bed (SNF)  
        services, inpatient state psychiatric hospital services, 
        inpatient skilled nursing facility services, home health 
        services (Medicare part A), and hospice services; ancillary 
        services, where benefits are exhausted or patient has no 
        Medicare part A, from hospitals, state psychiatric hospitals, 
        skilled nursing facilities, and home health (Medicare part B); 
        and institutional owned or operated outpatient services such as 
        hospital outpatient services, including ambulatory surgical 
        center services, hospital referred laboratory services, 
        hospital-based ambulance services, and other hospital outpatient 
        services, skilled nursing facilities, home health, including 
        infusion therapy, freestanding renal dialysis centers, 
        comprehensive outpatient rehabilitation facilities (CORF), 
        outpatient rehabilitation facilities (ORF), rural health 
        clinics, community mental health centers, and any other health 
        care provider certified by the Medicare program to use this form.
           (d) On and after January 1, 1996, a mother and newborn 
        child must be billed separately, and must not be combined on one 
        claim form. 
           Subd. 2.  [UNIFORM BILLING FORM HCFA 1500.] (a) On and 
        after January 1, 1996, all noninstitutional health care services 
        rendered by providers in Minnesota except dental or pharmacy 
        providers, that are not currently being billed using an 
        equivalent electronic billing format, must be billed using the 
        health insurance claim form HCFA 1500, except as provided in 
        subdivision 5. 
           (b) The instructions and definitions for the use of the 
        uniform billing form HCFA 1500 shall be in accordance with the 
        manual developed by the administrative uniformity committee 
        entitled standards for the use of the HCFA 1500 form, dated 
        February 1994, as further defined by the commissioner. 
           (c) Services to be billed using the uniform billing form 
        HCFA 1500 include physician services and supplies, durable 
        medical equipment, noninstitutional ambulance services, 
        independent ancillary services including occupational therapy, 
        physical therapy, speech therapy and audiology, podiatry 
        services, optometry services, mental health licensed 
        professional services, substance abuse licensed professional 
        services, nursing practitioner professional services, certified 
        registered nurse anesthetists, chiropractors, physician 
        assistants, laboratories, medical suppliers, and other health 
        care providers such as home health intravenous therapy 
        providers, personal care attendants, day activity centers, 
        waivered services, hospice, and other home health services, and 
        freestanding ambulatory surgical centers. 
           Subd. 3.  [UNIFORM DENTAL BILLING FORM.] (a) On and after 
        January 1, 1996, all dental services provided by dental care 
        providers in Minnesota, that are not currently being billed 
        using an equivalent electronic billing format, shall be billed 
        using the American dental association uniform dental billing 
        form. 
           (b) The instructions and definitions for the use of the 
        uniform dental billing form shall be in accordance with the 
        manual developed by the administrative uniformity committee 
        dated February 1994, and as amended or further defined by the 
        commissioner. 
           Subd. 4.  [UNIFORM PHARMACY BILLING FORM.] (a) On and after 
        January 1, 1996, all pharmacy services provided by pharmacists 
        in Minnesota that are not currently being billed using an 
        equivalent electronic billing format shall be billed using the 
        NCPDP/universal claim form, except as provided in subdivision 5. 
           (b) The instructions and definitions for the use of the 
        uniform claim form shall be in accordance with instructions 
        specified by the commissioner of health, except as provided in 
        subdivision 5. 
           Subd. 5.  [STATE AND FEDERAL HEALTH CARE PROGRAMS.] (a) 
        Skilled nursing facilities and ICF-MR services billed to state 
        and federal health care programs administered by the department 
        of human services shall use the form designated by the 
        department of human services. 
           (b) On and after July 1, 1996, state and federal health 
        care programs administered by the department of human services 
        shall accept the HCFA 1450 for community mental health center 
        services and shall accept the HCFA 1500 for freestanding 
        ambulatory surgical center services. 
           (c) State and federal health care programs administered by 
        the department of human services shall be authorized to use the 
        forms designated by the department of human services for 
        pharmacy services and for child and teen checkup services. 
           (d) State and federal health care programs administered by 
        the department of human services shall accept the form 
        designated by the department of human services, and the HCFA 
        1500 for supplies, medical supplies or durable medical 
        equipment.  Health care providers may choose which form to 
        submit. 
           Sec. 4.  [62J.53] [ACCEPTANCE OF UNIFORM BILLING FORMS BY 
        GROUP PURCHASERS.] 
           On and after January 1, 1996, all category I and II group 
        purchasers in Minnesota shall accept the uniform billing forms 
        prescribed under section 62J.52 as the only nonelectronic 
        billing forms used for payment processing purposes. 
           Sec. 5.  [62J.54] [IDENTIFICATION AND IMPLEMENTATION OF 
        UNIQUE IDENTIFIERS.] 
           Subdivision 1.  [UNIQUE IDENTIFICATION NUMBER FOR HEALTH 
        CARE PROVIDER ORGANIZATIONS.] (a) On and after January 1, 1996, 
        all group purchasers and health care providers in Minnesota 
        shall use a unique identification number to identify health care 
        provider organizations, except as provided in paragraph (d). 
           (b) Following the recommendation of the workgroup for 
        electronic data interchange, the federal tax identification 
        number assigned to each health care provider organization by the 
        internal revenue service of the department of the treasury shall 
        be used as the unique identification number for health care 
        provider organizations. 
           (c) The unique health care provider organization identifier 
        shall be used for purposes of submitting and receiving claims, 
        and in conjunction with other data collection and reporting 
        functions. 
           (d) The state and federal health care programs administered 
        by the department of human services shall use the unique 
        identification number assigned to health care providers for 
        implementation of the medicaid management information system or 
        the uniform provider identification number (UPIN) assigned by 
        the health care financing administration. 
           Subd. 2.  [UNIQUE IDENTIFICATION NUMBER FOR INDIVIDUAL 
        HEALTH CARE PROVIDERS.] (a) On and after January 1, 1996, all 
        group purchasers and health care providers in Minnesota shall 
        use a unique identification number to identify an individual 
        health care provider, except as provided in paragraph (d). 
           (b) The uniform provider identification number (UPIN) 
        assigned by the health care financing administration shall be 
        used as the unique identification number for individual health 
        care providers.  Providers who do not currently have a UPIN 
        number shall request one from the health care financing 
        administration. 
           (c) The unique individual health care provider identifier 
        shall be used for purposes of submitting and receiving claims, 
        and in conjunction with other data collection and reporting 
        functions. 
           (d) The state and federal health care programs administered 
        by the department of human services shall use the unique 
        identification number assigned to health care providers for 
        implementation of the medicaid management information system or 
        the uniform provider identification number (UPIN) assigned by 
        the health care financing administration. 
           Subd. 3.  [UNIQUE IDENTIFICATION NUMBER FOR GROUP 
        PURCHASERS.] (a) On and after January 1, 1996, all group 
        purchasers and health care providers in Minnesota shall use a 
        unique identification number to identify group purchasers. 
           (b) The federal tax identification number assigned to each 
        group purchaser by the internal revenue service of the 
        department of the treasury shall be used as the unique 
        identification number for group purchasers.  This paragraph 
        applies until the codes described in paragraph (c) are available 
        and feasible to use, as determined by the commissioner. 
           (c) A two-part code, consisting of 11 characters and 
        modeled after the national association of insurance 
        commissioners company code shall be assigned to each group 
        purchaser and used as the unique identification number for group 
        purchasers.  The first six characters, or prefix, shall contain 
        the numeric code, or company code, assigned by the national 
        association of insurance commissioners.  The last five 
        characters, or suffix, which is optional, shall contain further 
        codes that will enable group purchasers to further route 
        electronic transaction in their internal systems. 
           (d) The unique group purchaser identifier shall be used for 
        purposes of submitting and receiving claims, and in conjunction 
        with other data collection and reporting functions. 
           Subd. 4.  [UNIQUE PATIENT IDENTIFICATION NUMBER.] (a) On 
        and after January 1, 1996, all group purchasers and health care 
        providers in Minnesota shall use a unique identification number 
        to identify each patient who receives health care services in 
        Minnesota, except as provided in paragraph (e). 
           (b) Except as provided in paragraph (d), following the 
        recommendation of the workgroup for electronic data interchange, 
        the social security number of the patient shall be used as the 
        unique patient identification number. 
           (c) The unique patient identification number shall be used 
        by group purchasers and health care providers for purposes of 
        submitting and receiving claims, and in conjunction with other 
        data collection and reporting functions. 
           (d) The commissioner shall develop an alternate numbering 
        system for patients who do not have or refuse to provide a 
        social security number.  This provision does not require that 
        patients provide their social security numbers and does not 
        require group purchasers or providers to demand that patients 
        provide their social security numbers.  Group purchasers and 
        health care providers shall establish procedures to notify 
        patients that they can elect not to have their social security 
        number used as the unique patient identification number. 
           (e) The state and federal health care programs administered 
        by the department of human services shall use the unique person 
        master index (PMI) identification number assigned to clients 
        participating in programs administered by the department of 
        human services. 
           Sec. 6.  [62J.55] [PRIVACY OF UNIQUE IDENTIFIERS.] 
           (a) When the unique identifiers specified in section 62J.54 
        are used for data collection purposes, the identifiers must be 
        encrypted, as required in section 62J.30, subdivision 6.  
        Encryption must follow encryption standards set by the national 
        bureau of standards and approved by the American national 
        standards institute as ANSIX3. 92-1982/R 1987 to protect the 
        confidentiality of the data.  Social security numbers must not 
        be maintained in unencrypted form in the database, and the data 
        must never be released in a form that would allow for the 
        identification of individuals.  The encryption algorithm and 
        hardware used must not use clipper chip technology.  
           (b) Providers and group purchasers shall treat medical 
        records, including the social security number if it is used as a 
        unique patient identifier, in accordance with section 144.335.  
        The social security number may be disclosed by providers and 
        group purchasers to the commissioner as necessary to allow 
        performance of those duties set forth in section 144.05.  
           Sec. 7.  [62J.56] [IMPLEMENTATION OF ELECTRONIC DATA 
        INTERCHANGE STANDARDS.] 
           Subdivision 1.  [GENERAL PROVISIONS.] (a) The legislature 
        finds that there is a need to advance the use of electronic 
        methods of data interchange among all health care participants 
        in the state in order to achieve significant administrative cost 
        savings.  The legislature also finds that in order to advance 
        the use of health care electronic data interchange in a 
        cost-effective manner, the state needs to implement electronic 
        data interchange standards that are nationally accepted, widely 
        recognized, and available for immediate use.  The legislature 
        intends to set forth a plan for a systematic phase-in of uniform 
        health care electronic data interchange standards in all 
        segments of the health care industry. 
           (b) The commissioner of health, with the advice of the 
        Minnesota health data institute and the Minnesota administrative 
        uniformity committee, shall administer the implementation of and 
        monitor compliance with, electronic data interchange standards 
        of health care participants, according to the plan provided in 
        this section. 
           (c) The commissioner may grant exemptions to category I and 
        II industry participants from the requirements to implement some 
        or all of the provisions in this section if the commissioner 
        determines that the cost of compliance would place the 
        organization in financial distress, or if the commissioner 
        determines that appropriate technology is not available to the 
        organization. 
           Subd. 2.  [IDENTIFICATION OF CORE TRANSACTION SETS.] (a) 
        All category I and II industry participants in Minnesota shall 
        comply with the standards developed by the ANSI ASC X12 for the 
        following core transaction sets, according to the implementation 
        plan outlined for each transaction set. 
           (1) ANSI ASC X12 835 health care claim payment/advice 
        transaction set. 
           (2) ANSI ASC X12 837 health care claim transaction set. 
           (3) ANSI ASC X12 834 health care enrollment transaction set.
           (4) ANSI ASC X12 270/271 health care eligibility 
        transaction set. 
           (b) The commissioner, with the advice of the Minnesota 
        health data institute and the Minnesota administrative 
        uniformity committee, and in coordination with federal efforts, 
        may approve the use of new ASC X12 standards, or new versions of 
        existing standards, as they become available, or other 
        nationally recognized standards, where appropriate ASC X12 
        standards are not available for use.  These alternative 
        standards may be used during a transition period while ASC X12 
        standards are developed. 
           Subd. 3.  [IMPLEMENTATION GUIDES.] (a) The commissioner, 
        with the advice of the Minnesota administrative uniformity 
        committee, and the Minnesota Center for Health Care Electronic 
        Data Interchange shall review and recommend the use of guides to 
        implement the core transaction sets.  Implementation guides must 
        contain the background and technical information required to 
        allow health care participants to implement the transaction set 
        in the most cost-effective way. 
           (b) The commissioner shall promote the development of 
        implementation guides among health care participants for those 
        business transaction types for which implementation guides are 
        not available, to allow providers and group purchasers to 
        implement electronic data interchange.  In promoting the 
        development of these implementation guides, the commissioner 
        shall review the work done by the American hospital association 
        through the national uniform billing committee and its state 
        representative organization; the american medical association 
        through the uniform claim task force; the american dental 
        association; the national council of prescription drug programs; 
        and the workgroup for electronic data interchange. 
           Sec. 8.  [62J.57] [MINNESOTA CENTER FOR HEALTH CARE 
        ELECTRONIC DATA INTERCHANGE.] 
           (a) It is the intention of the legislature to support, to 
        the extent of funds appropriated for that purpose, the creation 
        of the Minnesota center for health care electronic data 
        interchange as a broad-based effort of public and private 
        organizations representing group purchasers, health care 
        providers, and government programs to advance the use of health 
        care electronic data interchange in the state.  The center shall 
        attempt to obtain private sector funding to supplement 
        legislative appropriations, and shall become self-supporting by 
        the end of the second year. 
           (b) The Minnesota center for health care electronic data 
        interchange shall facilitate the statewide implementation of 
        electronic data interchange standards in the health care 
        industry by: 
           (1) Coordinating and ensuring the availability of quality 
        electronic data interchange education and training in the state; 
           (2) Developing an extensive, cohesive health care 
        electronic data interchange education curriculum; 
           (3) Developing a communications and marketing plan to 
        publicize electronic data interchange education activities, and 
        the products and services available to support the 
        implementation of electronic data interchange in the state; 
           (4) Administering a resource center that will serve as a 
        clearinghouse for information relative to electronic data 
        interchange, including the development and maintenance of a 
        health care constituents data base, health care directory and 
        resource library, and a health care communications network 
        through the use of electronic bulletin board services and other 
        network communications applications; and 
           (5) Providing technical assistance in the development of 
        implementation guides, and in other issues including 
        legislative, legal, and confidentiality requirements.  
           Sec. 9.  [62J.58] [IMPLEMENTATION OF STANDARD TRANSACTION 
        SETS.] 
           Subdivision 1.  [CLAIMS PAYMENT.] (a) By July 1, 1995, all 
        category I industry participants, except pharmacists, shall be 
        able to submit or accept, as appropriate, the ANSI ASC X12 835 
        health care claim payment/advice transaction set (draft standard 
        for trial use version 3030) for electronic transfer of payment 
        information.  
           (b) By July 1, 1996, all category II industry participants, 
        except pharmacists, shall be able to submit or accept, as 
        appropriate, the ANSI ASC X12 835 health care claim 
        payment/advice transaction set (draft standard for trial use 
        version 3030) for electronic submission of payment information 
        to health care providers.  
           Subd. 2.  [CLAIMS SUBMISSION.] Beginning July 1, 1995 , all 
        category I industry participants, except pharmacists, shall be 
        able to accept or submit, as appropriate, the ANSI ASC X12 837 
        health care claim transaction set (draft standard for trial use 
        version 3030) for the electronic transfer of health care claim 
        information.  Category II industry participants, except 
        pharmacists, shall be able to accept or submit, as appropriate, 
        this transaction set, beginning July 1, 1996.  
           Subd. 3.  [ENROLLMENT INFORMATION.] Beginning January 1, 
        1996, all category I industry participants, excluding 
        pharmacists, shall be able to accept or submit, as appropriate, 
        the ANSI ASC X12 834 health care enrollment transaction set 
        (draft standard for trial use version 3030) for the electronic 
        transfer of enrollment and health benefit information.  Category 
        II industry participants, except pharmacists, shall be able to 
        accept or submit, as appropriate, this transaction set, 
        beginning January 1, 1997.  
           Subd. 4.  [ELIGIBILITY INFORMATION.] By January 1, 1996, 
        all category I industry participants, except pharmacists, shall 
        be able to accept or submit, as appropriate, the ANSI ASC X12 
        270/271 health care eligibility transaction set (draft standard 
        for trial use version 3030) for the electronic transfer of 
        health benefit eligibility information.  Category II industry 
        participants, except pharmacists, shall be able to accept or 
        submit, as appropriate, this transaction set, beginning January 
        1, 1997. 
           Subd. 5.  [APPLICABILITY.] This section does not require a 
        group purchaser, health care provider, or employer to use 
        electronic data interchange or to have the capability to do so.  
        This section applies only to the extent that a group purchaser, 
        health care provider, or employer chooses to use electronic data 
        interchange. 
           Sec. 10.  [62J.59] [IMPLEMENTATION OF NCPDP 
        TELECOMMUNICATIONS STANDARD FOR PHARMACY CLAIMS.] 
           (a) Beginning January 1, 1996, all category I and II 
        pharmacists licensed in this state shall accept the NCPDP 
        telecommunication standard format 3.2 or the NCPDP tape billing 
        and payment format 2.0 for the electronic submission of claims 
        as appropriate. 
           (b) Beginning January 1, 1996, all category I and category 
        II group purchasers in this state shall use the NCPDP 
        telecommunication standard format 3.2 or NCPDP tape billing and 
        payment format 2.0 for electronic submission of payment 
        information to pharmacists. 
           Sec. 11.  [62J.60] [STANDARDS FOR THE MINNESOTA UNIFORM 
        HEALTH CARE IDENTIFICATION CARD.] 
           Subdivision 1.  [MINNESOTA HEALTH CARE IDENTIFICATION 
        CARD.] All individuals with health care coverage shall be issued 
        health care identification cards by group purchasers as of 
        January 1, 1998.  The health care identification cards shall 
        comply with the standards prescribed in this section.  
           Subd. 2.  [GENERAL CHARACTERISTICS.] (a) The Minnesota 
        health care identification card must be a pre-printed card 
        constructed of plastic, paper, or any other medium that conforms 
        with ANSI and ISO 7810 physical characteristics standards.  The 
        card dimensions must also conform to ANSI and ISO 7810 physical 
        characteristics standard.  The use of a signature panel is 
        optional. 
           (b) The Minnesota health care identification card must have 
        an essential information window in the front side with the 
        following data elements left justified in the following top to 
        bottom sequence:  issuer name, issuer number, identification 
        number, identification name.  No optional data may be 
        interspersed between these data elements.  The window must be 
        left justified.  
           (c) Standardized labels are required next to human readable 
        data elements.  The card issuer may decide the location of the 
        standardized label relative to the data element.  
           Subd. 3.  [HUMAN READABLE DATA ELEMENTS.] (a) The following 
        are the minimum human readable data elements that must be 
        present on the front side of the Minnesota health care 
        identification card: 
           (1) Issuer name or logo, which is the name or logo that 
        identifies the card issuer.  The issuer name or logo may be the 
        card's front background.  No standard label is required for this 
        data element; 
           (2) Issuer number, which is the unique card issuer number 
        consisting of a base number assigned by a registry process 
        followed by a suffix number assigned by the card issuer.  The 
        use of this element is mandatory within one year of the 
        establishment of a process for this identifier.  The 
        standardized label for this element is "Issuer"; 
           (3) Identification number, which is the unique 
        identification number of the individual card holder established 
        and defined under this section.  The standardized label for the 
        data element is "ID"; 
           (4) Identification name, which is the name of the 
        individual card holder.  The identification name must be 
        formatted as follows:  first name, space, optional middle 
        initial, space, last name, optional space and name suffix.  The 
        standardized label for this data element is "Name"; 
           (5) Account number(s), which is any other number, such as a 
        group number, if required for part of the identification or 
        claims process.  The standardized label for this data element is 
        "Account"; 
           (6) Care type, which is the description of the group 
        purchaser's plan product under which the beneficiary is 
        covered.  The description shall include the health plan company 
        name and the plan or product name.  The standardized label for 
        this data element is "Care Type"; 
           (7) Service type, which is the description of coverage 
        provided such as hospital, dental, vision, prescription, or 
        mental health.  The standard label for this data element is "Svc 
        Type"; and 
           (8) Provider/clinic name, which is the name of the primary 
        care clinic the cardholder is assigned to by the health plan 
        company.  The standard label for this field is "PCP."  This 
        information is mandatory only if the health plan company assigns 
        a specific primary care provider to the cardholder. 
           (b) The following human readable data elements shall be 
        present on the back side of the Minnesota health identification 
        card.  These elements must be left justified, and no optional 
        data elements may be interspersed between them:  
           (1) Claims submission name(s) and address(es), which are 
        the name(s) and address(es) of the entity or entities to which 
        claims should be submitted.  If different destinations are 
        required for different types of claims, this must be labeled; 
           (2) Telephone number(s) and name(s); which are the 
        telephone number(s) and name(s) of the following contact(s) with 
        a standardized label describing the service function as 
        applicable:  
           (i) eligibility and benefit information; 
           (ii) utilization review; 
           (iii) pre-certification; or 
           (iv) customer services. 
           (c) The following human readable data elements are 
        mandatory on the back side of the card for health maintenance 
        organizations and integrated service networks: 
           (1) emergency care authorization telephone number or 
        instruction on how to receive authorization for emergency care.  
        There is no standard label required for this information; and 
           (2) telephone number to call to appeal to the commissioner 
        of health.  There is no standard label required for this 
        information. 
           (d) All human readable data elements not required under 
        paragraphs (a) to (c) are optional and may be used at the 
        issuer's discretion. 
           Subd. 4.  [MACHINE READABLE DATA CONTENT.] The Minnesota 
        health care identification card may be machine readable or 
        nonmachine readable.  If the card is machine readable, the card 
        must contain a magnetic stripe that conforms to ANSI and ISO 
        standards for Tracks 1.  
           Sec. 12.  [62J.61] [RULEMAKING; IMPLEMENTATION.] 
           The commissioner of health is exempt from rulemaking in 
        implementing sections 62J.50 to 62J.54, subdivision 3, and 
        62J.56 to 62J.59.  The commissioner shall publish proposed rules 
        in the State Register.  Interested parties have 30 days to 
        comment on the proposed rules.  After the commissioner has 
        considered all comments, the commissioner shall publish the 
        final rules in the State Register 30 days before they are to 
        take effect.  The commissioner may use emergency and permanent 
        rulemaking to implement the remainder of this article.  The 
        commissioner shall not adopt any rules requiring patients to 
        provide their social security numbers unless and until federal 
        laws are modified to allow or require such action nor shall the 
        commissioner adopt rules which allow medical records, claims, or 
        other treatment or clinical data to be included on the health 
        care identification card, except as specifically provided in 
        this chapter.  The commissioner shall seek comments from the 
        ethics and confidentiality committee of the Minnesota health 
        data institute and the department of administration, public 
        information policy analysis division, before adopting or 
        publishing final rules relating to issues of patient privacy and 
        medical records. 
           Sec. 13.  [COMMISSIONER; CONTINUED SIMPLIFICATION.] 
           The commissioner of health shall continue to develop 
        additional standard billing and administrative procedure 
        simplification.  These may include reduction or elimination of 
        payer-required attachments to claims, standard formularies, 
        standard format for direct patient billing, and increasing 
        standardization of claims forms and EDI formats. 
           Sec. 14.  [EVALUATIONS.] 
           Subdivision 1.  [UNIQUE EMPLOYER IDENTIFICATION 
        NUMBER.] The commissioner of health shall evaluate the need for 
        the development and implementation of unique employer 
        identification numbers to identify employers or entities that 
        provide health care coverage. 
           Subd. 2.  [UNIQUE "ISSUER" IDENTIFICATION NUMBER.] The 
        commissioner of health shall evaluate the need for the 
        development and implementation of unique identification numbers 
        to identify issuers of health care identification cards. 
           Sec. 15.  [EFFECTIVE DATE.] 
           Sections 1 to 14 are effective the day following final 
        enactment. 
                                   ARTICLE 10
                                INSURANCE REFORM
           Section 1.  Minnesota Statutes 1993 Supplement, section 
        43A.317, is amended by adding a subdivision to read: 
           Subd. 12.  [STATUS OF AGENTS.] Notwithstanding section 
        60K.03, subdivision 5, and 72A.07, the program may use, and pay 
        referral fees, commissions, or other compensation to, agents 
        licensed as life and health agents under chapter 60K or licensed 
        under section 62C.17, regardless of whether the agents are 
        appointed to represent the particular health carriers, 
        integrated service networks, or community integrated service 
        networks that provide the coverage available through the 
        program.  When acting under this subdivision, an agent is not an 
        agent of the health carrier, integrated service network, or 
        community integrated service network, with respect to that 
        transaction. 
           Sec. 2.  Minnesota Statutes 1993 Supplement, section 
        60K.14, subdivision 7, is amended to read: 
           Subd. 7.  [DISCLOSURE OF COMMISSIONS.] 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 in writing 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. 3.  Minnesota Statutes 1993 Supplement, section 
        62A.011, subdivision 3, is amended to read: 
           Subd. 3.  [HEALTH PLAN.] "Health plan" means a policy or 
        certificate of accident and sickness insurance as defined in 
        section 62A.01 offered by an insurance company licensed under 
        chapter 60A; a subscriber contract or certificate offered by a 
        nonprofit health service plan corporation operating under 
        chapter 62C; a health maintenance contract or certificate 
        offered by a health maintenance organization operating under 
        chapter 62D; a health benefit certificate offered by a fraternal 
        benefit society operating under chapter 64B; or health coverage 
        offered by a joint self-insurance employee health plan operating 
        under chapter 62H.  Health plan means individual and group 
        coverage, unless otherwise specified.  Health plan does not 
        include coverage that is: 
           (1) limited to disability or income protection coverage; 
           (2) automobile medical payment coverage; 
           (3) supplemental to liability insurance; 
           (4) designed solely to provide payments on a per diem, 
        fixed indemnity, or nonexpense-incurred basis; 
           (5) credit accident and health insurance as defined in 
        section 62B.02; 
           (6) designed solely to provide dental or vision care; 
           (7) blanket accident and sickness insurance as defined in 
        section 62A.11; 
           (8) accident-only coverage; 
           (9) a long-term care policy as defined in section 62A.46; 
           (10) issued as a supplement to Medicare, as defined in 
        sections 62A.31 to 62A.44, or policies, contracts, or 
        certificates that supplement Medicare issued by health 
        maintenance organizations or those policies, contracts, or 
        certificates governed by section 1833 or 1876 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., as amended through December 31, 1991; 
           (11) workers' compensation insurance; or 
           (12) issued solely as a companion to a health maintenance 
        contract as described in section 62D.12, subdivision 1a, so long 
        as the health maintenance contract meets the definition of a 
        health plan. 
           Sec. 4.  Minnesota Statutes 1992, section 62A.303, is 
        amended to read: 
           62A.303 [PROHIBITION; SEVERING OF GROUPS.] 
           Section 62L.12, subdivisions 1, 2, 3, and 4, apply to all 
        employer group health plans, as defined in section 62A.011, 
        regardless of the size of the group. 
           Sec. 5.  [62A.306] [USE OF GENDER PROHIBITED.] 
           Subdivision 1.  [APPLICABILITY.] This section applies to 
        all health plans as defined in section 62A.011 offered, sold, 
        issued, or renewed, by a health carrier on or after January 1, 
        1995. 
           Subd. 2.  [PROHIBITION ON USE OF GENDER.] No health plan 
        described in subdivision 1 shall determine the premium rate or 
        any other underwriting decision, including initial issuance, 
        through a method that is in any way based upon the gender of any 
        person covered or to be covered under the health plan.  This 
        subdivision prohibits use of marital status or generalized 
        differences in expected costs between employees and spouses or 
        between principal insureds and their spouses. 
           Sec. 6.  Minnesota Statutes 1993 Supplement, section 
        62A.31, subdivision 1h, is amended to read: 
           Subd. 1h.  [LIMITATIONS ON DENIALS, CONDITIONS, AND PRICING 
        OF COVERAGE.] No issuer of Medicare supplement policies, 
        including policies that supplement Medicare issued by health 
        maintenance organizations or those policies governed by section 
        1833 or 1876 of the federal Social Security Act, United States 
        Code, title 42, section 1395, et seq., in this state may impose 
        preexisting condition limitations or otherwise deny or condition 
        the issuance or effectiveness of any Medicare supplement 
        insurance policy form available for sale in this state, nor may 
        it discriminate in the pricing of such a policy, because of the 
        health status, claims experience, receipt of health care, or 
        medical condition of an applicant where an application for such 
        insurance is submitted during the six-month period beginning 
        with the first month in which an individual first enrolled for 
        benefits under Medicare Part B.  This paragraph applies 
        regardless of whether the individual has attained the age of 65 
        years.  If an individual who is enrolled in Medicare Part B due 
        to disability status is involuntarily disenrolled due to loss of 
        disability status, the individual is eligible for the six-month 
        enrollment period provided under this subdivision if the 
        individual later becomes eligible for and enrolls again in 
        Medicare Part B. 
           Sec. 7.  Minnesota Statutes 1993 Supplement, section 
        62A.36, subdivision 1, is amended to read: 
           Subdivision 1.  [LOSS RATIO STANDARDS.] (a) For purposes of 
        this section, "Medicare supplement policy or certificate" has 
        the meaning given in section 62A.31, subdivision 3, but also 
        includes a policy, contract, or certificate issued under a 
        contract under section 1833 or 1876 of the federal Social 
        Security Act, United States Code, title 42, section 1395 et 
        seq.  A Medicare supplement policy form or certificate form 
        shall not be delivered or issued for delivery unless the policy 
        form or certificate form can be expected, as estimated for the 
        entire period for which rates are computed to provide coverage, 
        to return to policyholders and certificate holders in the form 
        of aggregate benefits, not including anticipated refunds or 
        credits, provided under the policy form or certificate form:  
           (1) at least 75 percent of the aggregate amount of premiums 
        earned in the case of group policies, and 
           (2) at least 65 percent of the aggregate amount of premiums 
        earned in the case of individual policies, calculated on the 
        basis of incurred claims experience or incurred health care 
        expenses where coverage is provided by a health maintenance 
        organization on a service rather than reimbursement basis and 
        earned premiums for the period and according to accepted 
        actuarial principles and practices.  An insurer shall 
        demonstrate that the third year loss ratio is greater than or 
        equal to the applicable percentage.  
           All filings of rates and rating schedules shall demonstrate 
        that expected claims in relation to premiums comply with the 
        requirements of this section when combined with actual 
        experience to date.  Filings of rate revisions shall also 
        demonstrate that the anticipated loss ratio over the entire 
        future period for which the revised rates are computed to 
        provide coverage can be expected to meet the appropriate loss 
        ratio standards, and aggregate loss ratio from inception of the 
        policy or certificate shall equal or exceed the appropriate loss 
        ratio standards.  
           An application form for a Medicare supplement policy or 
        certificate, as defined in this section, must prominently 
        disclose the anticipated loss ratio and explain what it means. 
           (b) An issuer shall collect and file with the commissioner 
        by May 31 of each year the data contained in the National 
        Association of Insurance Commissioners Medicare Supplement 
        Refund Calculating form, for each type of Medicare supplement 
        benefit plan.  
           If, on the basis of the experience as reported, the 
        benchmark ratio since inception (ratio 1) exceeds the adjusted 
        experience ratio since inception (ratio 3), then a refund or 
        credit calculation is required.  The refund calculation must be 
        done on a statewide basis for each type in a standard Medicare 
        supplement benefit plan.  For purposes of the refund or credit 
        calculation, experience on policies issued within the reporting 
        year shall be excluded.  
           A refund or credit shall be made only when the benchmark 
        loss ratio exceeds the adjusted experience loss ratio and the 
        amount to be refunded or credited exceeds a de minimis level.  
        The refund shall include interest from the end of the calendar 
        year to the date of the refund or credit at a rate specified by 
        the secretary of health and human services, but in no event 
        shall it be less than the average rate of interest for 13-week 
        treasury bills.  A refund or credit against premiums due shall 
        be made by September 30 following the experience year on which 
        the refund or credit is based.  
           (c) An issuer of Medicare supplement policies and 
        certificates in this state shall file annually its rates, rating 
        schedule, and supporting documentation including ratios of 
        incurred losses to earned premiums by policy or certificate 
        duration for approval by the commissioner according to the 
        filing requirements and procedures prescribed by the 
        commissioner.  The supporting documentation shall also 
        demonstrate in accordance with actuarial standards of practice 
        using reasonable assumptions that the appropriate loss ratio 
        standards can be expected to be met over the entire period for 
        which rates are computed.  The demonstration shall exclude 
        active life reserves.  An expected third-year loss ratio which 
        is greater than or equal to the applicable percentage shall be 
        demonstrated for policies or certificates in force less than 
        three years. 
           As soon as practicable, but before the effective date of 
        enhancements in Medicare benefits, every issuer of Medicare 
        supplement policies or certificates in this state shall file 
        with the commissioner, in accordance with the applicable filing 
        procedures of this state:  
           (1) a premium adjustment that is necessary to produce an 
        expected loss ratio under the policy or certificate that will 
        conform with minimum loss ratio standards for Medicare 
        supplement policies or certificates.  No premium adjustment that 
        would modify the loss ratio experience under the policy or 
        certificate other than the adjustments described herein shall be 
        made with respect to a policy or certificate at any time other 
        than on its renewal date or anniversary date; 
           (2) if an issuer fails to make premium adjustments 
        acceptable to the commissioner, the commissioner may order 
        premium adjustments, refunds, or premium credits considered 
        necessary to achieve the loss ratio required by this section; 
           (3) any appropriate riders, endorsements, or policy or 
        certificate forms needed to accomplish the Medicare supplement 
        insurance policy or certificate modifications necessary to 
        eliminate benefit duplications with Medicare.  The riders, 
        endorsements, or policy or certificate forms shall provide a 
        clear description of the Medicare supplement benefits provided 
        by the policy or certificate. 
           (d) The commissioner may conduct a public hearing to gather 
        information concerning a request by an issuer for an increase in 
        a rate for a policy form or certificate form if the experience 
        of the form for the previous reporting period is not in 
        compliance with the applicable loss ratio standard.  The 
        determination of compliance is made without consideration of a 
        refund or credit for the reporting period.  Public notice of the 
        hearing shall be furnished in a manner considered appropriate by 
        the commissioner. 
           (e) An issuer shall not use or change premium rates for a 
        Medicare supplement policy or certificate unless the rates, 
        rating schedule, and supporting documentation have been filed 
        with, and approved by, the commissioner according to the filing 
        requirements and procedures prescribed by the commissioner. 
           Sec. 8.  Minnesota Statutes 1993 Supplement, section 
        62A.65, subdivision 2, is amended to read: 
           Subd. 2.  [GUARANTEED RENEWAL.] No individual health plan 
        may be offered, sold, issued, or renewed to a Minnesota resident 
        unless the health 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 plan to the person.  The premium rate upon renewal must 
        also otherwise comply with this section.  A health carrier must 
        not refuse to renew an individual health plan may be subject to 
        refusal to renew only under the conditions provided in chapter 
        62L for health benefit plans prior to enrollment in Medicare 
        Parts A and B, except for nonpayment of premiums, fraud, or 
        misrepresentation. 
           Sec. 9.  Minnesota Statutes 1993 Supplement, section 
        62A.65, subdivision 3, is amended to read: 
           Subd. 3.  [PREMIUM RATE RESTRICTIONS.] No individual health 
        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 health plan is as provided in section 62A.021.  
        All rating and premium restrictions of chapter 62L apply to the 
        individual market, unless clearly inapplicable to the individual 
        market. following requirements:  
           (a) Premium rates must be no more than 25 percent above and 
        no more than 25 percent below the index rate charged to 
        individuals for the same or similar coverage, adjusted pro rata 
        for rating periods of less than one year.  The premium 
        variations permitted by this paragraph must be based only upon 
        health status, claims experience, and occupation.  For purposes 
        of this paragraph, health status includes refraining from 
        tobacco use or other actuarially valid lifestyle factors 
        associated with good health, provided that the lifestyle factor 
        and its effect upon premium rates have been determined by the 
        commissioner to be actuarially valid and have been approved by 
        the commissioner.  Variations permitted under this paragraph 
        must not be based upon age or applied differently at different 
        ages.  This paragraph does not prohibit use of a constant 
        percentage adjustment for factors permitted to be used under 
        this paragraph. 
           (b) Premium rates may vary based upon the ages of covered 
        persons only as provided in this paragraph.  In addition to the 
        variation permitted under paragraph (a), each health carrier may 
        use an additional premium variation based upon age of up to plus 
        or minus 50 percent of the index rate. 
           (c) 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.  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) for each geographic region that is rural, the index 
        rate for that region must not exceed the index rate for the 
        Minneapolis/St. Paul metropolitan area; and 
           (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. 
           (d) Health carriers may use rate cells and must file with 
        the commissioner the rate cells they use.  Rate cells must be 
        based upon the number of adults or children covered under the 
        policy and may reflect the availability of medicare coverage.  
        The rates for different rate cells must not in any way reflect 
        generalized differences in expected costs between principal 
        insureds and their spouses. 
           (e) In developing its index rates and premiums for a health 
        plan, a health carrier shall take into account only the 
        following factors: 
           (1) actuarially valid differences in rating factors 
        permitted under paragraphs (a) and (b); and 
           (2) actuarially valid geographic variations if approved by 
        the commissioner as provided in paragraph (c). 
           (f) All premium variations must be justified in initial 
        rate filings and upon request of the commissioner in rate 
        revision filings.  All rate variations are subject to approval 
        by the commissioner. 
           (g) The loss ratio must comply with the section 62A.021 
        requirements for individual health plans. 
           (h) The rates must 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 risks associated with 
        the enrollee populations, and actuarially valid changes as a 
        result of statutory changes in Laws 1992, chapter 549. 
           Sec. 10.  Minnesota Statutes 1993 Supplement, section 
        62A.65, subdivision 4, is amended to read: 
           Subd. 4.  [GENDER RATING PROHIBITED.] No individual health 
        plan offered, sold, issued, or renewed to a Minnesota resident 
        may determine the premium rate or any other underwriting 
        decision, including initial issuance, on through a method that 
        is in any way based upon the gender of any person covered or to 
        be covered under the health plan.  This subdivision prohibits 
        the use of marital status or generalized differences in expected 
        costs between principal insureds and their spouses. 
           Sec. 11.  Minnesota Statutes 1993 Supplement, section 
        62A.65, subdivision 5, is amended to read: 
           Subd. 5.  [PORTABILITY OF COVERAGE.] (a) No individual 
        health 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 or 
        exclusionary rider, unless the limitation or exclusion would be 
        is permitted under chapter 62L this subdivision, 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 subjected to an 18-month preexisting condition limitation, 
        unless the individual has maintained continuous coverage as 
        defined in chapter 62L section 62L.02.  The individual must not 
        be subjected to an exclusionary rider.  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, of up to 12 months, with 
        credit for time covered under qualifying coverage as defined in 
        section 62L.02, at the time that the individual first is covered 
        under an individual health plan by any health carrier.  The 
        individual must not be subjected to an exclusionary rider.  
        Thereafter, the individual must not be subject to any 
        preexisting condition limitation or exclusion or exclusionary 
        rider 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 health plan 
        to any individual previously covered under a group health 
        benefit plan issued by that health carrier, regardless of the 
        size of the group, so long as the individual maintained 
        continuous coverage as defined in chapter 62L section 
        62L.02.  The offer must not be subject to underwriting, except 
        as permitted under this paragraph.  A health plan issued under 
        this paragraph must be a qualified plan and must not contain any 
        preexisting condition limitation or exclusion or exclusionary 
        rider, except for any unexpired limitation or exclusion under 
        the previous coverage.  The individual health plan must cover 
        pregnancy on the same basis as any other covered illness under 
        the individual health plan.  The initial premium rate for the 
        individual 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, and the premium rate must be 
        less than that amount if necessary to otherwise comply with this 
        section.  An individual health plan offered under this paragraph 
        to a person satisfies the health carrier's obligation to offer 
        conversion coverage under section 62E.16, with respect to that 
        person.  Section 72A.20, subdivision 28, applies to this 
        paragraph. 
           Sec. 12.  Minnesota Statutes 1993 Supplement, section 
        62A.65, is amended by adding a subdivision to read: 
           Subd. 8.  [CESSATION OF INDIVIDUAL BUSINESS.] 
        Notwithstanding the provisions of subdivisions 1 to 7, a health 
        carrier may elect to cease doing business in the individual 
        market if it complies with the requirements of this 
        subdivision.  A health carrier electing to cease doing business 
        in the individual 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 individual market or continue 
        an existing product line, provided that a health carrier does 
        not terminate, cancel, or fail to renew its current individual 
        business or other product lines.  A health carrier electing to 
        cease doing business in the individual market shall provide 120 
        days' written notice to each policyholder covered by a health 
        plan issued by the health carrier.  A health carrier that ceases 
        to write new business in the individual market shall continue to 
        be governed by this section with respect to continuing 
        individual business conducted by the carrier.  A health carrier 
        that ceases to do business in the individual market after July 
        1, 1994, is prohibited from writing new business in the 
        individual market in this state for a period of five years from 
        the date of notice to the commissioner.  This subdivision 
        applies to any health maintenance organization that ceases to do 
        business in the individual market in one service area with 
        respect to that service area only.  Nothing in this subdivision 
        prohibits an affiliated health maintenance organization from 
        continuing to do business in the individual market in that same 
        service area.  The right to cancel or refuse to renew an 
        individual health plan under this subdivision does not apply to 
        individual health plans originally issued prior to July 1, 1993, 
        on a guaranteed renewable basis. 
           Sec. 13.  Minnesota Statutes 1993 Supplement, section 
        62D.12, subdivision 17, is amended to read: 
           Subd. 17.  [DISCLOSURE OF COMMISSIONS.] Any person 
        receiving commissions for the sale of coverage or enrollment 
        in a health plan, as defined in section 62A.011, offered by a 
        health maintenance organization shall, before selling or 
        offering to sell coverage or enrollment, disclose in writing 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. 14.  Minnesota Statutes 1992, section 62E.141, is 
        amended to read: 
           62E.141 [INCLUSION IN EMPLOYER-SPONSORED PLAN.] 
           No employee, or dependent of an employee, of an employer 
        who that offers a health benefit plan, under which the employee 
        or dependent is eligible to enroll under chapter 62L for 
        coverage, is eligible to enroll, or continue to be enrolled, in 
        the comprehensive health association, except for enrollment or 
        continued enrollment necessary to cover conditions that are 
        subject to an unexpired preexisting condition limitation or 
        exclusion or exclusionary rider under the employer's 
        health benefit plan.  This section does not apply to persons 
        enrolled in the comprehensive health association as of June 30, 
        1993.  With respect to persons eligible to enroll in the health 
        plan of an employer that has more than 29 current employees, as 
        defined in section 62L.02, this section does not apply to 
        persons enrolled in the comprehensive health association as of 
        December 31, 1994.  
           Sec. 15.  Minnesota Statutes 1992, section 62E.16, is 
        amended to read: 
           62E.16 [POLICY CONVERSION RIGHTS.] 
           Every program of self-insurance, policy of group accident 
        and health insurance or contract of coverage by a health 
        maintenance organization written or renewed in this state, shall 
        include, in addition to the provisions required by section 
        62A.17, the right to convert to an individual coverage qualified 
        plan without the addition of underwriting restrictions if the 
        individual insured leaves the group regardless of the reason for 
        leaving the group or if an employer member of a group ceases to 
        remit payment so as to terminate coverage for its employees, or 
        upon cancellation or termination of the coverage for the group 
        except where uninterrupted and continuous group coverage is 
        otherwise provided to the group.  If the health maintenance 
        organization has canceled coverage for the group because of a 
        loss of providers in a service area, the health maintenance 
        organization shall arrange for other health maintenance or 
        indemnity conversion options that shall be offered to enrollees 
        without the addition of underwriting restrictions.  The required 
        conversion contract must treat pregnancy the same as any other 
        covered illness under the conversion contract.  The person may 
        exercise this right to conversion within 30 days of leaving the 
        group or within 30 days following receipt of due notice of 
        cancellation or termination of coverage of the group or of the 
        employer member of the group and upon payment of premiums from 
        the date of termination or cancellation.  Due notice of 
        cancellation or termination of coverage for a group or of the 
        employer member of the group shall be provided to each employee 
        having coverage in the group by the insurer, self-insurer or 
        health maintenance organization canceling or terminating the 
        coverage except where reasonable evidence indicates that 
        uninterrupted and continuous group coverage is otherwise 
        provided to the group.  Every employer having a policy of group 
        accident and health insurance, group subscriber or contract of 
        coverage by a health maintenance organization shall, upon 
        request, provide the insurer or health maintenance organization 
        a list of the names and addresses of covered employees.  Plans 
        of health coverage shall also include a provision which, upon 
        the death of the individual in whose name the contract was 
        issued, permits every other individual then covered under the 
        contract to elect, within the period specified in the contract, 
        to continue coverage under the same or a different contract 
        without the addition of underwriting restrictions until the 
        individual would have ceased to have been entitled to coverage 
        had the individual in whose name the contract was issued lived.  
        An individual conversion contract issued by a health maintenance 
        organization shall not be deemed to be an individual enrollment 
        contract for the purposes of section 62D.10.  An individual 
        health plan offered under section 62A.65, subdivision 5, 
        paragraph (b), to a person satisfies the health carrier's 
        obligation to offer conversion coverage under this section with 
        respect to that person. 
           Sec. 16.  Minnesota Statutes 1993 Supplement, section 
        62L.02, subdivision 8, is amended to read: 
           Subd. 8.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of commerce for health carriers subject to the 
        jurisdiction of the department of commerce or the commissioner 
        of health for health carriers subject to the jurisdiction of the 
        department of health, or the relevant commissioner's designated 
        representative.  For purposes of sections 62L.13 to 62L.22, 
        "commissioner" means the commissioner of commerce or that 
        commissioner's designated representative. 
           Sec. 17.  Minnesota Statutes 1992, section 62L.02, 
        subdivision 9, is amended to read: 
           Subd. 9.  [CONTINUOUS COVERAGE.] "Continuous coverage" 
        means the maintenance of continuous and uninterrupted qualifying 
        prior coverage by an eligible employee or dependent.  
        An eligible employee or dependent individual is considered to 
        have maintained continuous coverage if the individual requests 
        enrollment in a health benefit plan qualifying coverage within 
        30 days of termination of the qualifying prior coverage. 
           Sec. 18.  Minnesota Statutes 1992, section 62L.02, is 
        amended by adding a subdivision to read: 
           Subd. 9a.  [CURRENT EMPLOYEE.] "Current employee" means an 
        employee, as defined in this section, other than a retiree or 
        handicapped former employee. 
           Sec. 19.  Minnesota Statutes 1993 Supplement, section 
        62L.02, subdivision 11, is amended to read: 
           Subd. 11.  [DEPENDENT.] "Dependent" means an eligible 
        employee's spouse, unmarried child who is under the age of 19 
        years, unmarried child under the age of 25 years who is a 
        full-time student as defined in section 62A.301 and financially 
        dependent upon the eligible employee, or, dependent child of any 
        age who is handicapped and who meets the eligibility criteria in 
        section 62A.14, subdivision 2, or any other person whom state or 
        federal law requires to be treated as a dependent for purposes 
        of health plans.  For the purpose of this definition, a child 
        may include a child for whom the employee or the employee's 
        spouse has been appointed legal guardian. 
           Sec. 20.  Minnesota Statutes 1992, section 62L.02, 
        subdivision 13, is amended to read: 
           Subd. 13.  [ELIGIBLE EMPLOYEE.] "Eligible employee" means 
        an individual employed by a small employer for at least 20 hours 
        per week and employee who has satisfied all employer 
        participation and eligibility requirements, including, but not 
        limited to, the satisfactory completion of a probationary period 
        of not less than 30 days but no more than 90 days.  The term 
        includes a sole proprietor, a partner of a partnership, or an 
        independent contractor, if the sole proprietor, partner, or 
        independent contractor is included as an employee under a health 
        benefit plan of a small employer, but does not include employees 
        who work on a temporary, seasonal, or substitute basis. 
           Sec. 21.  Minnesota Statutes 1992, section 62L.02, is 
        amended by adding a subdivision to read: 
           Subd. 13a.  [EMPLOYEE.] "Employee" means an individual 
        employed for at least 20 hours per week and includes a sole 
        proprietor or a partner of a partnership, if the sole proprietor 
        or partner is included under a health benefit plan of the 
        employer, but does not include individuals who work on a 
        temporary, seasonal, or substitute basis.  "Employee" also 
        includes a retiree or a handicapped former employee required to 
        be covered under sections 62A.147 and 62A.148. 
           Sec. 22.  Minnesota Statutes 1992, section 62L.02, is 
        amended by adding a subdivision to read:  
           Subd. 14a.  [GUARANTEED ISSUE.] "Guaranteed issue" means 
        that a health carrier shall not decline an application by a 
        small employer for any health benefit plan offered by that 
        health carrier and shall not decline to cover under a health 
        benefit plan any eligible employee or eligible dependent, 
        including persons who become eligible employees or eligible 
        dependents after initial issuance of the health benefit plan, 
        subject to the health carrier's right to impose preexisting 
        condition limitations permitted under this chapter. 
           Sec. 23.  Minnesota Statutes 1993 Supplement, section 
        62L.02, subdivision 15, is amended to read:  
           Subd. 15.  [HEALTH BENEFIT PLAN.] "Health benefit plan" 
        means a policy, contract, or certificate offered, sold, issued, 
        or renewed by a health carrier to a small employer for the 
        coverage of medical and hospital benefits.  Health benefit plan 
        includes a small employer plan.  Health benefit plan does not 
        include coverage that is: 
           (1) limited to disability or income protection coverage; 
           (2) automobile medical payment coverage; 
           (3) supplemental to liability insurance; 
           (4) designed solely to provide payments on a per diem, 
        fixed indemnity, or nonexpense-incurred basis; 
           (5) credit accident and health insurance as defined in 
        section 62B.02; 
           (6) designed solely to provide dental or vision care; 
           (7) blanket accident and sickness insurance as defined in 
        section 62A.11; 
           (8) accident-only coverage; 
           (9) a long-term care policy as defined in section 62A.46; 
           (10) issued as a supplement to Medicare, as defined in 
        sections 62A.31 to 62A.44, or policies, contracts, or 
        certificates that supplement Medicare issued by health 
        maintenance organizations or those policies, contracts, or 
        certificates governed by section 1833 or 1876 of the federal 
        Social Security Act, United States Code, title 42, section 1395, 
        et seq., as amended through December 31, 1991; 
           (11) workers' compensation insurance; or 
           (12) issued solely as a companion to a health maintenance 
        contract as described in section 62D.12, subdivision 1a, so long 
        as the health maintenance contract meets the definition of a 
        health benefit plan. 
           For the purpose of this chapter, a health benefit plan 
        issued to eligible employees of a small employer who meets the 
        participation requirements of section 62L.03, subdivision 3, is 
        considered to have been issued to a small employer.  A health 
        benefit plan issued on behalf of a health carrier is considered 
        to be issued by the health carrier. 
           Sec. 24.  Minnesota Statutes 1993 Supplement, section 
        62L.02, subdivision 16, is amended to read: 
           Subd. 16.  [HEALTH CARRIER.] "Health carrier" means an 
        insurance company licensed under chapter 60A to offer, sell, or 
        issue a policy of accident and sickness insurance as defined in 
        section 62A.01; a health service plan licensed under chapter 
        62C; a health maintenance organization licensed under chapter 
        62D; a fraternal benefit society operating under chapter 64B; a 
        joint self-insurance employee health plan operating under 
        chapter 62H; and a multiple employer welfare arrangement, as 
        defined in United States Code, title 29, section 1002(40), as 
        amended through December 31, 1991.  For purposes of sections 
        62L.01 to 62L.12, but not for purposes of sections 62L.13 to 
        62L.22, "health carrier" includes a community integrated service 
        network or integrated service network licensed under chapter 62N.
        Any use of this definition in another chapter by reference does 
        not include a community integrated service network or integrated 
        service network, unless otherwise specified.  For the purpose of 
        this chapter, companies that are affiliated companies or that 
        are eligible to file a consolidated tax return must be treated 
        as one health carrier, except that any insurance company or 
        health service plan corporation that is an affiliate of a health 
        maintenance organization located in Minnesota, or any health 
        maintenance organization located in Minnesota that is an 
        affiliate of an insurance company or health service plan 
        corporation, or any health maintenance organization that is an 
        affiliate of another health maintenance organization in 
        Minnesota, may treat the health maintenance organization as a 
        separate health carrier. 
           Sec. 25.  Minnesota Statutes 1992, section 62L.02, 
        subdivision 17, is amended to read: 
           Subd. 17.  [HEALTH PLAN.] "Health plan" means a health 
        benefit plan issued by a health carrier, except that it may be 
        issued: 
           (1) to a small employer; 
           (2) to an employer who does not satisfy the definition of a 
        small employer as defined under subdivision 26; or 
           (3) to an individual purchasing an individual or conversion 
        policy of health care coverage issued by a health carrier as 
        defined in section 62A.011 and includes individual and group 
        coverage regardless of the size of the group, unless otherwise 
        specified. 
           Sec. 26.  Minnesota Statutes 1993 Supplement, 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 health 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 an individual is not a 
        late entrant if the individual elects coverage under the health 
        benefit plan rather than accepting continuation coverage 
        required for which the individual is eligible under state or 
        federal law with respect to the individual's previous qualifying 
        coverage; 
           (2) the individual has lost coverage under another group 
        health plan due to the expiration of benefits available under 
        the Consolidated Omnibus Budget Reconciliation Act of 1985, 
        Public Law Number 99-272, as amended, and any state continuation 
        laws applicable to the employer or health 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 
        former spouse or 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. 27.  Minnesota Statutes 1992, section 62L.02, 
        subdivision 24, is amended to read: 
           Subd. 24.  [QUALIFYING PRIOR COVERAGE OR QUALIFYING 
        EXISTING COVERAGE.] "Qualifying prior coverage" or "qualifying 
        existing coverage" means health benefits or health coverage 
        provided under: 
           (1) a health plan, as defined in this section; 
           (2) Medicare; 
           (3) medical assistance under chapter 256B; 
           (4) general assistance medical care under chapter 256D; 
           (5) MCHA; 
           (6) a self-insured health plan; 
           (7) the health right MinnesotaCare plan program established 
        under section 256.9352, when the plan includes inpatient 
        hospital services as provided in section 256.9353; 
           (8) a plan provided under section 43A.316, 43A.317, or 
        471.617; or 
           (9) a plan similar to any of the above plans provided in 
        this state or in another state as determined by the commissioner.
           Sec. 28.  Minnesota Statutes 1993 Supplement, section 
        62L.02, subdivision 26, is amended to read: 
           Subd. 26.  [SMALL EMPLOYER.] (a) "Small employer" means a 
        person, firm, corporation, partnership, association, or other 
        entity actively engaged in business who, including a political 
        subdivision of the state, that, on at least 50 percent of its 
        working days during the preceding calendar year 12 months, 
        employed no fewer than two nor more than 29 eligible, or after 
        June 30, 1995, more than 49, current employees, the majority of 
        whom were employed in this state.  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.  If an 
        employer has only one eligible employee who has not waived 
        coverage, the sale of a health plan to or for that eligible 
        employee is not a sale to a small employer and is not subject to 
        this chapter and may be treated as the sale of an individual 
        health plan.  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 
        current employees.  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 current 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.  
           (b) 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 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, or 
        after June 30, 1995, more than 49, current employees, even 
        though the association provides coverage to 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 employers after July 1, 
        1993, the existing association must comply with all requirements 
        of this chapter.  Existing associations must register with the 
        commissioner of commerce prior to July 1, 1993.  With respect to 
        small employers having not fewer than 30 nor more than 49 
        current employees, the July 1, 1993 date in this paragraph 
        becomes July 1, 1995, and the reference to "after" that date 
        becomes "on or after." 
           (c) If an employer has employees covered under a 
        trust established specified 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, or 
        employees whose health coverage is determined by a collective 
        bargaining agreement and, as a result of the collective 
        bargaining agreement, is purchased separately from the health 
        plan provided to other employees, those employees are excluded 
        in determining whether the employer qualifies as a small 
        employer.  Those employees are considered to be a separate small 
        employer if they constitute a group that would qualify as a 
        small employer in the absence of the employees who are not 
        subject to the collective bargaining agreement. 
           Sec. 29.  Minnesota Statutes 1992, section 62L.03, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GUARANTEED ISSUE AND REISSUE.] Every 
        health carrier shall, as a condition of authority to transact 
        business in this state in the small employer market, 
        affirmatively market, offer, sell, issue, and renew any of its 
        health benefit plans, on a guaranteed issue basis, to any small 
        employer that meets the participation and contribution 
        requirements of subdivision 3, as provided in this 
        chapter.  This requirement does not apply to a health benefit 
        plan designed for a small employer to comply with a collective 
        bargaining agreement, provided that the health benefit plan 
        otherwise complies with this chapter and is not offered to other 
        small employers, except for other small employers that need it 
        for the same reason.  Every health carrier participating in the 
        small employer market shall make available both of the plans 
        described in section 62L.05 to small employers and shall fully 
        comply with the underwriting and the rate restrictions specified 
        in this chapter for all health benefit plans issued to small 
        employers.  A health carrier may cease to transact business in 
        the small employer market as provided under section 62L.09. 
           Sec. 30.  Minnesota Statutes 1993 Supplement, 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 on a guaranteed issue basis 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 must 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:  (1) coverage under another group health plan; 
        (2) coverage under Medicare parts A and B; or (3) coverage under 
        MCHA permitted under section 62E.141. 
           (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 
        health plans, or a health benefit plan which, except for 
        guaranteed issue, must fully comply with this chapter.  A health 
        carrier that provides group coverage a health benefit plan 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 an individual coverage health plan, 
        purchased through an arrangement between the employer and the 
        health carrier, to any employee unless the health carrier also 
        offers coverage the individual health plan, on a guaranteed 
        issue basis, to all other employees of the same employer. 
           (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. 31.  Minnesota Statutes 1993 Supplement, 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 section, "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, or any 
        exclusionary rider.  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, and dependents of 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, but 
        exclusionary riders must not be used.  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, 
        but must not be subject to any exclusionary rider or exclusion.  
        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. 32.  Minnesota Statutes 1993 Supplement, section 
        62L.03, subdivision 5, is amended to read: 
           Subd. 5.  [CANCELLATIONS AND FAILURES TO RENEW.] (a) No 
        health carrier shall cancel, decline to issue, or fail to renew 
        a health benefit plan as a result of the claim experience or 
        health status of the persons covered or to be covered by the 
        health benefit plan.  A health carrier may cancel or fail to 
        renew a health benefit plan: 
           (1) for nonpayment of the required premium; 
           (2) for fraud or misrepresentation by the small employer, 
        or, with respect to coverage of an individual eligible employee 
        or dependent, fraud or misrepresentation by the eligible 
        employee or dependent, with respect to eligibility for coverage 
        or any other material fact; 
           (3) if eligible employee participation during the preceding 
        calendar year declines to less than 75 percent, subject to the 
        waiver of coverage provision in subdivision 3; 
           (4) if the employer fails to comply with the minimum 
        contribution percentage legally required by the health carrier 
        under subdivision 3; 
           (5) if the health carrier ceases to do business in the 
        small employer market under section 62L.09; or 
           (6) if a failure to renew is based upon the health 
        carrier's decision to discontinue the health benefit plan form 
        previously issued to the small employer, but only if the health 
        carrier permits each small employer covered under the prior form 
        to switch to its choice of any other health benefit plan offered 
        by the health carrier, without any underwriting restrictions 
        that would not have been permitted for renewal purposes; or 
           (7) for any other reasons or grounds expressly permitted by 
        the respective licensing laws and regulations governing a health 
        carrier, including, but not limited to, service area 
        restrictions imposed on health maintenance organizations under 
        section 62D.03, subdivision 4, paragraph (m), to the extent that 
        these grounds are not expressly inconsistent with this chapter. 
           (b) A health carrier need not renew a health benefit plan, 
        and shall not renew a small employer plan, if an employer ceases 
        to qualify as a small employer as defined in section 62L.02.  If 
        a health benefit plan, other than a small employer plan, 
        provides terms of renewal that do not exclude an employer that 
        is no longer a small employer, the health benefit plan may be 
        renewed according to its own terms.  If a health carrier issues 
        or renews a health plan to an employer that is no longer a small 
        employer, without interruption of coverage, the health plan is 
        subject to section 60A.082. 
           Sec. 33.  Minnesota Statutes 1992, section 62L.03, 
        subdivision 6, is amended to read: 
           Subd. 6.  [MCHA ENROLLEES.] Health carriers shall offer 
        coverage to any eligible employee or dependent enrolled in MCHA 
        at the time of the health carrier's issuance or renewal of a 
        health benefit plan to a small employer.  The health benefit 
        plan must require that the employer permit MCHA enrollees to 
        enroll in the small employer's health benefit plan as of the 
        first date of renewal of a health benefit plan occurring on or 
        after July 1, 1993, and as of each date of renewal after that, 
        or, in the case of a new group, as of the initial effective date 
        of the health benefit plan and as of each date of renewal after 
        that.  Unless otherwise permitted by this chapter, health 
        carriers must not impose any underwriting restrictions, 
        including any preexisting condition limitations or exclusions, 
        on any eligible employee or dependent previously enrolled in 
        MCHA and transferred to a health benefit plan so long as 
        continuous coverage is maintained, provided that the health 
        carrier may impose any unexpired portion of a preexisting 
        condition limitation under the person's MCHA coverage.  An MCHA 
        enrollee is not a late entrant, so long as the enrollee has 
        maintained continuous coverage. 
           Sec. 34.  Minnesota Statutes 1993 Supplement, section 
        62L.04, subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICABILITY OF CHAPTER REQUIREMENTS.] 
        (a) Beginning July 1, 1993, health carriers participating in the 
        small employer market must offer and make available on a 
        guaranteed issue basis any health benefit plan that they offer, 
        including both of the small employer plans provided in section 
        62L.05, to all small employers who that 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. 
           (b) 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 and contribution 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. 
           (c) With respect to small employers having no fewer than 30 
        nor more than 49 current employees, all dates in this 
        subdivision become July 1, 1995, and any reference to "after" a 
        date becomes "on or after" July 1, 1995. 
           Sec. 35.  Minnesota Statutes 1992, section 62L.05, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TWO SMALL EMPLOYER PLANS.] Each health 
        carrier in the small employer market must make available, on a 
        guaranteed issue basis, to any small employer that satisfies the 
        contribution and participation requirements of section 62L.03, 
        subdivision 3, both of the small employer plans described in 
        subdivisions 2 and 3.  Under subdivisions 2 and 3, coinsurance 
        and deductibles do not apply to child health supervision 
        services and prenatal services, as defined by section 62A.047.  
        The maximum out-of-pocket costs for covered services must be 
        $3,000 per individual and $6,000 per family per year.  The 
        maximum lifetime benefit must be $500,000.  The out-of-pocket 
        cost limits and the deductible amounts provided in subdivision 2 
        must be adjusted on July 1 every two years, based upon changes 
        in the consumer price index, as of the end of the previous 
        calendar year, as determined by the commissioner of commerce.  
        Adjustments must be in increments of $50 and must not be made 
        unless at least that amount of adjustment is required. 
           Sec. 36.  Minnesota Statutes 1992, section 62L.05, 
        subdivision 5, is amended to read:  
           Subd. 5.  [PLAN VARIATIONS.] (a) No health carrier shall 
        offer to a small employer a health benefit plan that differs 
        from the two small employer plans described in subdivisions 1 to 
        4, unless the health benefit plan complies with all provisions 
        of chapters 62A, 62C, 62D, 62E, 62H, 62N, and 64B that otherwise 
        apply to the health carrier, except as expressly permitted by 
        paragraph (b). 
           (b) As an exception to paragraph (a), a health benefit plan 
        is deemed to be a small employer plan and to be in compliance 
        with paragraph (a) if it differs from one of the two small 
        employer plans described in subdivisions 1 to 4 only by 
        providing benefits in addition to those described in subdivision 
        4, provided that the health care benefit plan has an actuarial 
        value that exceeds the actuarial value of the benefits described 
        in subdivision 4 by no more than two percent.  "Benefits in 
        addition" means additional units of a benefit listed in 
        subdivision 4 or one or more benefits not listed in subdivision 
        4. 
           Sec. 37.  Minnesota Statutes 1992, section 62L.05, 
        subdivision 8, is amended to read: 
           Subd. 8.  [CONTINUATION COVERAGE.] Small employer plans 
        must include the continuation of coverage provisions required by 
        the Consolidated Omnibus Budget Reconciliation Act of 1985 
        (COBRA), Public Law Number 99-272, as amended through December 
        31, 1991, and by state law. 
           Sec. 38.  Minnesota Statutes 1992, section 62L.06, is 
        amended to read: 
           62L.06 [DISCLOSURE OF UNDERWRITING RATING PRACTICES.] 
           When offering or renewing a health benefit plan, health 
        carriers shall disclose in all solicitation and sales materials: 
           (1) the case characteristics and other rating factors used 
        to determine initial and renewal rates; 
           (2) the extent to which premium rates for a small employer 
        are established or adjusted based upon actual or expected 
        variation in claim experience; 
           (3) provisions concerning the health carrier's right to 
        change premium rates and the factors other than claim experience 
        that affect changes in premium rates; 
           (4) provisions relating to renewability of coverage; 
           (5) the use and effect of any preexisting condition 
        provisions, if permitted; and 
           (6) the application of any provider network limitations and 
        their effect on eligibility for benefits; and 
           (7) the ability of small employers to insure eligible 
        employees and dependents currently receiving coverage from the 
        comprehensive health association through health benefit plans. 
           Sec. 39.  Minnesota Statutes 1992, section 62L.07, 
        subdivision 2, is amended to read: 
           Subd. 2.  [WAIVERS.] Health benefit plans must require that 
        small employers offering a health benefit plan maintain written 
        documentation of a waiver of coverage by an eligible employee or 
        dependent and provide the documentation indicating that each 
        eligible employee was informed of the availability of coverage 
        through the employer and of a waiver of coverage by the eligible 
        employee.  This documentation must be provided to the health 
        carrier upon reasonable request. 
           Sec. 40.  Minnesota Statutes 1992, section 62L.08, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GENERAL PREMIUM VARIATIONS.] Beginning July 1, 
        1993, each health carrier must offer premium rates to small 
        employers that are no more than 25 percent above and no more 
        than 25 percent below the index rate charged to small employers 
        for the same or similar coverage, adjusted pro rata for rating 
        periods of less than one year.  The premium variations permitted 
        by this subdivision must be based only on health status, claims 
        experience, industry of the employer, and duration of coverage 
        from the date of issue.  For purposes of this subdivision, 
        health status includes refraining from tobacco use or other 
        actuarially valid lifestyle factors associated with good health, 
        provided that the lifestyle factor and its effect upon premium 
        rates have been determined to be actuarially valid and approved 
        by the commissioner.  Variations permitted under this 
        subdivision must not be based upon age or applied differently at 
        different ages.  This subdivision does not prohibit use of a 
        constant percentage adjustment for factors permitted to be used 
        under this subdivision.  
           Sec. 41.  Minnesota Statutes 1993 Supplement, 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 or more 
        additional geographic region regions and a one or more separate 
        index rate rates for premiums for employees working and 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. 42.  Minnesota Statutes 1992, section 62L.08, 
        subdivision 5, is amended to read: 
           Subd. 5.  [GENDER-BASED RATES PROHIBITED.] Beginning July 
        1, 1993, no health carrier may determine premium rates through a 
        method that is in any way based upon the gender of eligible 
        employees or dependents.  Rates must not in any way reflect 
        marital status or generalized differences in expected costs 
        between employees and spouses. 
           Sec. 43.  Minnesota Statutes 1992, section 62L.08, 
        subdivision 6, is amended to read: 
           Subd. 6.  [RATE CELLS PERMITTED.] Health carriers may use 
        rate cells and must file with the commissioner the rate cells 
        they use.  Rate cells must be based on the number of adults and 
        children covered under the policy and may reflect the 
        availability of Medicare coverage.  The rates for different rate 
        cells must not in any way reflect marital status or differences 
        in expected costs between employees and spouses.  
           Sec. 44.  Minnesota Statutes 1992, section 62L.08, 
        subdivision 7, is amended to read: 
           Subd. 7.  [INDEX AND PREMIUM RATE DEVELOPMENT.] (a) In 
        developing its index rates and premiums, a health carrier may 
        take into account only the following factors: 
           (1) actuarially valid differences in benefit designs of 
        health benefit plans; 
           (2) actuarially valid differences in the rating factors 
        permitted in subdivisions 2 and 3; 
           (3) actuarially valid geographic variations if approved by 
        the commissioner as provided in subdivision 4. 
           (b) All premium variations permitted under this section 
        must be based upon actuarially valid differences in expected 
        cost to the health carrier of providing coverage.  The variation 
        must be justified in initial rate filings and upon request of 
        the commissioner in rate revision filings.  All premium 
        variations are subject to approval by the commissioner.  
           Sec. 45.  Minnesota Statutes 1992, section 62L.08, is 
        amended by adding a subdivision to read: 
           Subd. 7a.  [PARTIAL EXEMPTION; POLITICAL SUBDIVISIONS.] (a) 
        Health coverage provided by a political subdivision of the state 
        to its employees, officers, retirees, and their dependents, by 
        participation in group purchasing of health plan coverage by or 
        through an association of political subdivisions or by or 
        through an educational cooperative service unit created under 
        section 123.58 or by participating in a joint self-insurance 
        pool authorized under section 471.617, subdivision 2, is subject 
        to this subdivision.  Coverage that is subject to this 
        subdivision may have separate index rates and separate premium 
        rates, based upon data specific to the association, educational 
        cooperative service unit, or pool, so long as the rates, 
        including the rating bands, otherwise comply with this chapter.  
        The association, educational cooperative service unit, or pool 
        is not required to offer the small employer plans described in 
        section 62L.05 and is not required to comply with this chapter 
        for employers that are not small employers or that are not 
        eligible for coverage through the association, educational 
        cooperative service unit, or pool.  A health carrier that offers 
        a health plan only under this subdivision need not offer that 
        health plan to other small employers on a guaranteed issue basis.
           (b) An association, educational cooperative service unit, 
        or pool described in paragraph (a) may elect to be treated under 
        paragraph (a) by filing a notice of the election with the 
        commissioner of commerce no later than January 1, 1995.  The 
        election remains in effect for three years and applies to all 
        health coverage provided to members of the group.  It may be 
        renewed for subsequent three-year periods.  An entity eligible 
        for treatment under paragraph (a) that forms after January 1, 
        1995, must make the election prior to provision of coverage, and 
        the election remains in effect until January 1, 1998, or if 
        filed after that date, until the next regular renewal date.  
           Sec. 46.  Minnesota Statutes 1993 Supplement, 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. 47.  Minnesota Statutes 1992, section 62L.12, is 
        amended to read: 
           62L.12 [PROHIBITED PRACTICES.] 
           Subdivision 1.  [PROHIBITION ON ISSUANCE OF INDIVIDUAL 
        POLICIES.] A health carrier operating in the small employer 
        market shall not knowingly offer, issue, or renew an individual 
        policy, subscriber contract, or certificate health plan to an 
        eligible employee or dependent of a small employer that meets 
        the minimum participation and contribution requirements defined 
        in under section 62L.03, subdivision 3, except as authorized 
        under subdivision 2. 
           Subd. 2.  [EXCEPTIONS.] (a) A health carrier may sell, 
        issue, or renew individual conversion policies to eligible 
        employees and dependents otherwise eligible for conversion 
        coverage under section 62D.104 as a result of leaving a health 
        maintenance organization's service area. 
           (b) A health carrier may sell, issue, or renew individual 
        conversion policies to eligible employees and dependents 
        otherwise eligible for conversion coverage as a result of the 
        expiration of any continuation of group coverage required under 
        sections 62A.146, 62A.17, 62A.21, 62C.142, 62D.101, and 62D.105. 
           (c) A health carrier may sell, issue, or renew conversion 
        policies under section 62E.16 to eligible employees and 
        dependents. 
           (d) A health carrier may sell, issue, or renew individual 
        continuation policies to eligible employees and dependents as 
        required. 
           (e) A health carrier may sell, issue, or renew individual 
        coverage health plans if the coverage is appropriate due to an 
        unexpired preexisting condition limitation or exclusion 
        applicable to the person under the employer's group coverage 
        health plan or due to the person's need for health care services 
        not covered under the employer's group policy group health plan. 
           (f) A health carrier may sell, issue, or renew an 
        individual policy, with the prior consent of the commissioner, 
        health plan, if the individual has elected to buy the individual 
        coverage health plan not as part of a general plan to substitute 
        individual coverage health plans for a group coverage health 
        plan nor as a result of any violation of subdivision 3 or 4. 
           (g) Nothing in this subdivision relieves a health carrier 
        of any obligation to provide continuation or conversion coverage 
        otherwise required under federal or state law. 
           (h) Nothing in this chapter restricts the offer, sale, 
        issuance, or renewal of coverage issued as a supplement to 
        Medicare under sections 62A.31 to 62A.44, or policies or 
        contracts that supplement Medicare issued by health maintenance 
        organizations, or those contracts governed by section 1833 or 
        1876 of the federal Social Security Act, United States Code, 
        title 42, section 1395 et. seq., as amended. 
           (i) Nothing in this chapter restricts the offer, sale, 
        issuance, or renewal of individual health plans necessary to 
        comply with a court order. 
           Subd. 3.  [AGENT'S LICENSURE.] An agent licensed under 
        chapter 60A 60K or section 62C.17 who knowingly and willfully 
        breaks apart a small group for the purpose of selling individual 
        policies health plans to eligible employees and dependents of a 
        small employer that meets the participation and contribution 
        requirements of section 62L.03, subdivision 3, is guilty of an 
        unfair trade practice and subject to disciplinary action, 
        including the revocation or suspension of license, under section 
        60A.17, subdivision 6c, 60K.11 or 62C.17.  The action must be by 
        order and subject to the notice, hearing, and appeal procedures 
        specified in section 60A.17, subdivision 6d 60K.11.  The action 
        of the commissioner is subject to judicial review as provided 
        under chapter 14. 
           Subd. 4.  [EMPLOYER PROHIBITION.] A small employer shall 
        not encourage or direct an employee or applicant to: 
           (1) refrain from filing an application for health coverage 
        when other similarly situated employees may file an application 
        for health coverage; 
           (2) file an application for health coverage during initial 
        eligibility for coverage, the acceptance of which is contingent 
        on health status, when other similarly situated employees may 
        apply for health coverage, the acceptance of which is not 
        contingent on health status; 
           (3) seek coverage from another health carrier, including, 
        but not limited to, MCHA; or 
           (4) cause coverage to be issued on different terms because 
        of the health status or claims experience of that person or the 
        person's dependents. 
           Subd. 5.  [SALE OF OTHER PRODUCTS.] A health carrier shall 
        not condition the offer, sale, issuance, or renewal of a health 
        benefit plan on the purchase by a small employer of other 
        insurance products offered by the health carrier or a subsidiary 
        or affiliate of the health carrier, including, but not limited 
        to, life, disability, property, and general liability insurance. 
        This prohibition does not apply to insurance products offered as 
        a supplement to a health maintenance organization plan, 
        including, but not limited to, supplemental benefit plans under 
        section 62D.05, subdivision 6.  
           Sec. 48.  Minnesota Statutes 1992, section 62L.21, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ADJUSTMENT OF PREMIUM RATES.] The board of 
        directors shall establish operating rules to allocate 
        adjustments to the reinsurance premium charge of no more than 
        minus 25 percent of the monthly reinsurance premium for health 
        carriers that can demonstrate administrative efficiencies and 
        cost-effective handling of equivalent risks.  The adjustment 
        must be made annually on a retrospective basis monthly, unless 
        the board provides for a different interval in its operating 
        rules.  The operating rules must establish objective and 
        measurable criteria which must be met by a health carrier in 
        order to be eligible for an adjustment.  These criteria must 
        include consideration of efficiency attributable to case 
        management, but not consideration of such factors as provider 
        discounts. 
           Sec. 49.  [REPEALER.] 
           (a) Minnesota Statutes 1992, sections 62E.51, 62E.52, 
        62E.53, 62E.531, 62E.54, and 62E.55 are repealed. 
           (b) Minnesota Statutes 1992, section 62A.02, subdivision 5, 
        is repealed. 
           Sec. 50.  [REVISOR INSTRUCTIONS.] 
           (a) The revisor of statutes shall change the name of the 
        private employers insurance program established in Minnesota 
        Statutes, section 43A.317 to the Minnesota employees insurance 
        program, and the private employers insurance trust fund to the 
        Minnesota employees insurance trust fund, wherever either term 
        occurs in Minnesota Statutes or Minnesota Rules. 
           (b) The revisor of statutes shall renumber Minnesota 
        Statutes 1992, section 62L.23, as section 62L.08, subdivision 
        11, and shall change all references to that section in Minnesota 
        Statutes or Minnesota Rules accordingly. 
           Sec. 51.  [EFFECTIVE DATES.] 
           Sections 1, 3, 4, 6, 8, 10, 16 to 27, 29, 30, 32, 34 to 37, 
        40 to 45, and 47 to 50 are effective the day following final 
        enactment.  Sections 2, 12, 13, 33, 38, and 39 are effective 
        July 1, 1994.  Sections 5, 7, 9, 11, 14, 15, 28, 31, and 46 are 
        effective January 1, 1995. 
                                   ARTICLE 11 
                            HEALTH CARE COOPERATIVES 
           Section 1.  [62R.01] [STATEMENT OF LEGISLATIVE PURPOSE AND 
        INTENT.] 
           The legislature finds that the goals of containing health 
        care costs, improving the quality of health care, and increasing 
        the access of Minnesota citizens to health care services 
        reflected under chapters 62J and 62N may be further enhanced 
        through the promotion of health care cooperatives.  The 
        legislature further finds that locally based and controlled 
        efforts among health care providers, local businesses, units of 
        local government, and health care consumers, can promote the 
        attainment of the legislature's goals of health care reform, and 
        takes notice of the long history of successful operations of 
        cooperative organizations in this state.  Therefore, in order to 
        encourage cooperative efforts which are consistent with the 
        goals of health care reform, including efforts among health care 
        providers as sellers of health care services and efforts of 
        consumers as buyers of health care services and health plan 
        coverage, and to encourage the formation of and increase the 
        competition among health plans in Minnesota, the legislature 
        enacts the Minnesota health care cooperative act. 
           Sec. 2.  [62R.02] [CITATION.] 
           This chapter may be cited as the "Minnesota health care 
        cooperative act." 
           Sec. 3.  [62R.03] [APPLICABILITY OF OTHER LAWS.] 
           Subdivision 1.  [MINNESOTA COOPERATIVE LAW.] A health care 
        cooperative is subject to chapter 308A unless otherwise provided 
        in this chapter.  After incorporation, a health care cooperative 
        shall enjoy the powers and privileges and shall be subject to 
        the duties and liabilities of other cooperatives organized under 
        chapter 308A, to the extent applicable and except as limited or 
        enlarged by this chapter.  If any provision of this chapter 
        conflicts with a provision of chapter 308A, the provision of 
        this chapter takes precedence. 
           Subd. 2.  [HEALTH PLAN LICENSURE AND OPERATION.] A health 
        care network cooperative must be licensed as a health 
        maintenance organization licensed under chapter 62D, a nonprofit 
        health service plan corporation licensed under chapter 62C, or a 
        community integrated service network or an integrated service 
        network licensed under chapter 62N, at the election of the 
        health care network cooperative.  The health care network 
        cooperative shall be subject to the duties and liabilities of 
        health plans licensed pursuant to the chapter under which the 
        cooperative elects to be licensed, to the extent applicable and 
        except as limited or enlarged by this chapter.  If any provision 
        of any chapter under which the cooperative elects to be licensed 
        conflicts with the provisions of this chapter, the provisions of 
        this chapter take precedence.  A health care network 
        cooperative, upon licensure as provided in this subdivision, is 
        a contributing member of the Minnesota comprehensive health 
        association, on the same basis as other entities having the same 
        licensure. 
           Subd. 3.  [HEALTH PROVIDER COOPERATIVES.] A health provider 
        cooperative shall not be considered a mutual insurance company 
        under chapter 60A, a health maintenance organization under 
        chapter 62D, a nonprofit health services corporation under 
        chapter 62C, or a community integrated service network or an 
        integrated service network under chapter 62N.  A health provider 
        network shall not be considered to violate any limitations on 
        the corporate practice of medicine.  Health care service 
        contracts under section 62R.06 shall not be considered to 
        violate section 62J.23. 
           Sec. 4.  [62R.04] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of this chapter, the 
        terms defined in this section have the meanings given. 
           Subd. 2.  [HEALTH CARE COOPERATIVE.] "Health care 
        cooperative" means a health care network cooperative or a health 
        provider cooperative. 
           Subd. 3.  [HEALTH CARE NETWORK COOPERATIVE.] "Health care 
        network cooperative" means a corporation organized under this 
        chapter and licensed in accordance with section 62R.03, 
        subdivision 2.  A health care network cooperative shall not have 
        more than 50,000 enrollees, unless exceeding the enrollment 
        limit is necessary to comply with guaranteed issue or guaranteed 
        renewal requirements of chapter 62L or section 62A.65. 
           Subd. 4.  [HEALTH PROVIDER COOPERATIVE.] "Health provider 
        cooperative" means a corporation organized under this chapter 
        and operated on a cooperative plan to market health care 
        services to purchasers of those services. 
           Subd. 5.  [COMMISSIONER.] Unless otherwise specified, 
        "commissioner" means the commissioner of health for a health 
        care network cooperative licensed under chapter 62D or 62N and 
        the commissioner of commerce for a health care network 
        cooperative licensed under chapter 62C. 
           Subd. 6.  [HEALTH CARRIER.] "Health carrier" has the 
        meaning provided in section 62A.011. 
           Subd. 7.  [HEALTH CARE PROVIDING ENTITY.] "Health care 
        providing entity" means a participating entity that provides 
        health care to enrollees of a health care cooperative. 
           Sec. 5.  [62R.05] [POWERS.] 
           In addition to the powers enumerated under section 
        308A.201, a health care cooperative shall have all of the powers 
        granted a nonprofit corporation under section 317A.161, except 
        to the extent expressly inconsistent with the provisions of 
        chapter 308A. 
           Sec. 6.  [62R.06] [HEALTH CARE SERVICE CONTRACTS.] 
           Subdivision 1.  [PROVIDER CONTRACTS.] A health provider 
        cooperative and its licensed members may execute marketing and 
        service contracts requiring the provider members to provide some 
        or all of their health care services through the provider 
        cooperative to the enrollees, members, subscribers, or insureds, 
        of a health care network cooperative, community integrated 
        service network, integrated service network, nonprofit health 
        service plan, health maintenance organization, accident and 
        health insurance company, or any other purchaser, including the 
        state of Minnesota and its agencies, instruments, or units of 
        local government.  Each purchasing entity is authorized to 
        execute contracts for the purchase of health care services from 
        a health provider cooperative in accordance with this section.  
        Any contract between a provider cooperative and a purchaser must 
        provide for payment by the purchaser to the health provider 
        cooperative on a substantially capitated or similar risk-sharing 
        basis.  Each contract between a provider cooperative and a 
        purchaser shall be filed by the provider network cooperative 
        with the commissioner of health and is subject to the provisions 
        of section 62D.19. 
           Subd. 2.  [NO NETWORK LIMITATION.] A health care network 
        cooperative may contract with any health provider cooperative 
        and may contract with any other licensed health care provider to 
        provide health care services for its enrollees.  
           Subd. 3.  [RESTRAINT OF TRADE.] Subject to section 62R.08, 
        a health care provider cooperative is not a combination in 
        restraint of trade, and any contracts or agreements between a 
        health care provider cooperative and its members regarding the 
        price the cooperative will charge to purchasers of its services, 
        or regarding the prices the members will charge to the 
        cooperative, or regarding the allocation of gains or losses 
        among the members, or regarding the delivery, quality, 
        allocation, or location of services to be provided, are not 
        contracts that unreasonably restrain trade. 
           Sec. 7.  [62R.07] [RELICENSURE.] 
           (a) A health care network cooperative licensed under 
        chapter 62C or 62D may relinquish that license and be granted a 
        new license as a community integrated service network or an 
        integrated service network under chapter 62N in accordance with 
        this section, provided that the cooperative meets all 
        requirements for licensure as a network under chapter 62N, to 
        the extent not expressly inconsistent with the provisions of 
        chapter 308A. 
           (b) The relicensure shall be effective at the time 
        specified in the plan of relicensure, which must not be earlier 
        than the date upon which the previous license is surrendered. 
           (c) Upon the relicensure of the cooperative as a community 
        integrated service network or an integrated service network: 
           (1) all existing group and individual enrollee benefit 
        contracts in force on the effective date of the relicensure 
        shall continue in effect and with the same terms and conditions, 
        notwithstanding the cooperative's new licensure as a network, 
        until the date of each contract's next renewal or amendment, but 
        no later than one year from the date of the relicensure.  At 
        this time, each benefit contract then in force must be amended 
        to comply with all statutory and regulatory requirements for 
        network benefit contracts as of that date; and 
           (2) all contracts between the cooperative and any health 
        care providing entity, including a health care provider 
        cooperative, in force on the effective date of relicensure shall 
        remain in effect under the cooperative's new licensure as a 
        network until the date of the next renewal or amendment of that 
        contract, but no later than one year from the date of 
        relicensure. 
           (d) Except as otherwise provided in this section, nothing 
        in the relicensure of a health care network cooperative shall in 
        any way affect its corporate existence or any of its contracts, 
        rights, privileges, immunities, powers or franchises, debts, 
        duties or other obligations or liabilities. 
           Sec. 8.  [62R.08] [PROHIBITED PRACTICES.] 
           (a) It shall be unlawful for any person, company, or 
        corporation, or any agent, officer, or employee thereof, to 
        coerce or require any person to agree, either in writing or 
        orally, not to join or become or remain a member of, any health 
        care provider cooperative, as a condition of securing or 
        retaining a contract for health care services with the person, 
        firm, or corporation. 
           (b) It shall be unlawful for any person, company, or 
        corporation, or any combination of persons, companies, or 
        corporations, or any agents, officers, or employees thereof, to 
        engage in any acts of coercion, intimidation, or boycott of, or 
        any refusal to deal with, any health care providing entity 
        arising from that entity's actual or potential participation in 
        a health care network cooperative or health care provider 
        cooperative. 
           (c) It shall be unlawful for any health care network 
        cooperative, other than a health care network cooperative 
        operating on an employed, staff model basis, to require that its 
        participating providers provide health care services exclusively 
        to or through the health care network cooperative.  It shall be 
        unlawful for any health care provider cooperative to require 
        that its members provide health care services exclusively to or 
        through the health care provider cooperative. 
           (d) It shall be unlawful for any health care provider 
        cooperative to engage in any acts of coercion, intimidation, or 
        boycott of, or any concerted refusal to deal with, any health 
        plan company seeking to contract with the cooperative on a 
        competitive, reasonable, and nonexclusive basis. 
           (e) The prohibitions in this section are in addition to any 
        conduct that violates sections 325D.49 to 325D.66. 
           (f) This section shall be enforced in accordance with 
        sections 325D.56 to 325D.65. 
           Sec. 9.  Minnesota Statutes 1992, section 308A.005, is 
        amended by adding a subdivision to read: 
           Subd. 8a.  [HEALTH CARE COOPERATIVE.] "Health care 
        cooperative" has the meaning given in section 62R.04, 
        subdivision 2. 
           Sec. 10.  [308A.503] [HEALTH CARE COOPERATIVE MEMBERS.] 
           Subdivision 1.  [HEALTH CARE NETWORK COOPERATIVE.] For a 
        health care network cooperative, the policyholder is the member 
        provided that if the policyholder is an individual enrollee, the 
        individual enrollee is the member, and if the policyholder is an 
        employer or other group type, entity, or association, the group 
        policyholder is the member. 
           Subd. 2.  [HEALTH PROVIDER COOPERATIVE.] For a health 
        provider cooperative, the licensed health care provider, 
        professional corporation, partnership, hospital, or other 
        licensed provider is the member, as provided in the articles or 
        bylaws. 
           Subd. 3.  [STATE AND HOSPITAL MEMBERS AUTHORIZED.] The 
        state, or any agency, instrumentality, or political subdivision 
        of the state, may be a member of a health care cooperative.  Any 
        governmental hospital authorized, organized or operated under 
        chapters 158, 250, 376, or 397 or under sections 246A.10 to 
        246A.27, 412.221, 447.05 to 447.13, or 471.50, or under any 
        special law authorizing or establishing a hospital or hospital 
        district, may be a member of a health care provider cooperative. 
           Sec. 11.  Minnesota Statutes 1992, section 308A.635, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [HEALTH CARE COOPERATIVE.] Notwithstanding the 
        provisions of this section, the requirements and procedures for 
        membership voting for a health care cooperative shall be as 
        provided in the bylaws. 
                                   ARTICLE 12
                            RURAL HEALTH INITIATIVES
           Section 1.  Minnesota Statutes 1993 Supplement, section 
        62N.23, is amended to read: 
           62N.23 [TECHNICAL ASSISTANCE; LOANS.] 
           (a) The commissioner shall provide technical assistance to 
        parties interested in establishing or operating a community 
        integrated service network or 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 community integrated service 
        networks or 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 a community integrated service network or an 
        integrated service network.  The guide must provide basic 
        instructions for parties wishing to establish a community 
        integrated service network or 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 a community integrated service network 
        or 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. shall grant loans for organizational and start-up 
        expenses to entities forming community integrated service 
        networks or integrated service networks, or to networks less 
        than one year old, to the extent of any appropriation for that 
        purpose.  The commissioner shall allocate the available funds 
        among applicants based upon the following criteria, as evaluated 
        by the commissioner within the commissioner's discretion: 
           (1) the applicant's need for the loan; 
           (2) the likelihood that the loan will foster the formation 
        or growth of a network; and 
           (3) the likelihood of repayment. 
           The commissioner shall determine any necessary application 
        deadlines and forms and is exempt from rulemaking in doing so. 
           Sec. 2.  Minnesota Statutes 1993 Supplement, section 
        144.1464, is amended to read: 
           144.1464 [SUMMER HEALTH CARE INTERNS.] 
           Subdivision 1.  [SUMMER INTERNSHIPS.] The commissioner of 
        health, through a contract with a nonprofit organization as 
        required by subdivision 4, shall award grants to hospitals and 
        clinics to establish a secondary and post-secondary summer 
        health care intern program.  The purpose of the program is to 
        expose interested high school secondary and post-secondary 
        pupils to various careers within the health care profession. 
           Subd. 2.  [CRITERIA.] (a) The commissioner, through the 
        organization under contract, shall award grants to hospitals and 
        clinics that agree to:  
           (1) provide secondary and post-secondary summer health care 
        interns with formal exposure to the health care profession; 
           (2) provide an orientation for the secondary and 
        post-secondary summer health care interns; 
           (3) pay one-half the costs of employing a the secondary and 
        post-secondary 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 secondary and post-secondary pupils 
        for a minimum of six weeks and a maximum of 12 weeks. 
           (b) In order to be eligible to be hired as a secondary 
        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) In order to be eligible to be hired as a post-secondary 
        summer health care intern by a hospital or clinic, a pupil must: 
           (1) intend to complete a two-year or four-year degree 
        program and be planning on enrolling in or be enrolled in that 
        degree program; 
           (2) be from a school district or attend an educational 
        institution in proximity to the facility; and 
           (3) provide the facility with a letter of recommendation 
        from a health occupations or science educator. 
           (d) Hospitals and clinics awarded grants may employ pupils 
        as secondary and post-secondary 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.  
           Subd. 3.  [GRANTS.] The commissioner, through the 
        organization under contract, shall award separate 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 secondary and post-secondary pupils in a 
        hospital or clinic during the course of the program.  No more 
        than five pupils may be selected from any one high 
        school secondary or post-secondary institution 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 secondary and post-secondary 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. 3.  [EFFECTIVE DATE.] 
           Sections 1 and 2 are effective July 1, 1994. 
                                   ARTICLE 13
                                   FINANCING
           Section 1.  Minnesota Statutes 1993 Supplement, section 
        256.9352, subdivision 3, is amended to read: 
           Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
        shall manage spending for the health right plan MinnesotaCare 
        program 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 ways and means 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 MinnesotaCare program; 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 MinnesotaCare program.  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. 
           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 1995, 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 taxes imposed 
        under section 295.52 and the one percent HMO gross premiums tax 
        imposed under section 60A.15, subdivision 1, paragraph (e), for 
        the 1996-1997 biennium fiscal year 1997.  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. 
           (b) Notwithstanding paragraph (a), the commissioner shall 
        proceed with the enrollment of single adults and households 
        without children in accordance with section 256.9354, 
        subdivision 5, paragraph (a), even if the expenditures do not 
        remain within the limits of available revenues through fiscal 
        year 1997 to allow the departments of human services and health 
        to develop the plan required under paragraph (a). 
           Sec. 2.  Minnesota Statutes 1993 Supplement, section 
        256.9354, subdivision 5, is amended to read: 
           Subd. 5.  [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 
        CHILDREN.] (a) Beginning July October 1, 1994, "eligible persons"
        means shall include all families and individuals and households 
        with no children who have gross family incomes that are equal to 
        or less than 125 percent of the federal poverty guidelines and 
        who are not eligible for medical assistance without a spenddown 
        under chapter 256B.  
           (b) Beginning October 1, 1995, "eligible persons" means all 
        individuals and families who are not eligible for medical 
        assistance without a spenddown under chapter 256B.  
           (c) These persons All eligible persons under paragraphs (a) 
        and (b) are eligible for coverage through the MinnesotaCare plan 
        program but must pay a premium as determined under sections 
        256.9357 and 256.9358.  Individuals and families whose income is 
        greater than the limits established under section 256.9358 may 
        not enroll in the MinnesotaCare plan program. 
           Sec. 3.  Minnesota Statutes 1992, section 256.9355, is 
        amended by adding a subdivision to read: 
           Subd. 4.  [APPLICATION PROCESSING.] The commissioner of 
        human services shall determine an applicant's eligibility for 
        MinnesotaCare no more than 30 days from the date that the 
        application is received by the department of human services.  
        This requirement shall be suspended for four months following 
        the dates in which single adults and families without children 
        become eligible for the program. 
           Sec. 4.  Minnesota Statutes 1993 Supplement, section 
        256.9356, subdivision 3, is amended to read: 
           Subd. 3.  [ADMINISTRATION AND COMMISSIONER'S DUTIES.] 
        Premiums are dedicated to the commissioner for 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 MinnesotaCare for failure to pay required 
        premiums.  Premiums are calculated on a calendar month basis and 
        may be paid on a monthly, 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 
        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.  Persons disenrolled 
        for nonpayment may not reenroll for four calendar months unless 
        the person demonstrates good cause for nonpayment.  Good cause 
        does not exist if a person chooses to pay other family expenses 
        instead of the premium.  The commissioner shall define good 
        cause in rule. 
           Sec. 5.  Minnesota Statutes 1992, section 256.9358, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INELIGIBILITY.] An individual or family Families 
        with children whose gross monthly income is above the amount 
        specified in subdivision 3 is are not eligible for the plan.  
        Beginning October 1, 1994, an individual or households with no 
        children whose gross monthly income is greater than $767 for a 
        single individual and $1,025 for a married couple without 
        children are ineligible for the plan.  Beginning October 1, 
        1995, an individual or families whose gross monthly income is 
        above the amount specified in subdivision 3 are not eligible for 
        the plan. 
           Sec. 6.  Minnesota Statutes 1992, section 295.50, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [DELIVERED OUTSIDE OF MINNESOTA.] "Delivered 
        outside of Minnesota" means property which the seller delivers 
        to a common carrier for delivery outside Minnesota, places in 
        the United States mail or parcel post directed to the purchaser 
        outside Minnesota, or delivers to the purchaser outside 
        Minnesota by means of the seller's own delivery vehicles, and 
        which is not later returned to a point within Minnesota, except 
        in the course of interstate commerce. 
           Sec. 7.  Minnesota Statutes 1993 Supplement, section 
        295.50, subdivision 3, is amended to read: 
           Subd. 3.  [GROSS REVENUES.] "Gross revenues" are total 
        amounts received in money or otherwise by: 
           (1) a resident hospital for patient services; 
           (2) a resident surgical center for patient services; 
           (3) a nonresident hospital for patient services provided to 
        patients domiciled in Minnesota; 
           (4) a nonresident surgical center for patient services 
        provided to patients domiciled in Minnesota; 
           (5) a resident health care provider, other than a staff 
        model health carrier, for patient services; 
           (6) a nonresident health care provider for patient services 
        provided to an individual domiciled in Minnesota; 
           (7) a wholesale drug distributor for sale or distribution 
        of prescription legend drugs that are delivered:  (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 legend drugs are 
        delivered to another wholesale drug distributor who sells legend 
        drugs exclusively at wholesale.  Prescription Legend drugs do 
        not include nutritional products as defined in Minnesota Rules, 
        part 9505.0325; 
           (8) a staff model health carrier plan company as gross 
        premiums for enrollees, copayments, deductibles, coinsurance, 
        and fees for patient services covered under its contracts with 
        groups and enrollees; 
           (9) a resident pharmacy for medical supplies, appliances, 
        and equipment; and 
           (10) a nonresident pharmacy for medical supplies, 
        appliances, and equipment. 
           Sec. 8.  Minnesota Statutes 1992, section 295.50, is 
        amended by adding a subdivision to read: 
           Subd. 6a.  [HOSPICE CARE SERVICES.] "Hospice care services" 
        are services: 
           (1) as defined in Minnesota Rules, part 9505.0297; and 
           (2) provided at a recipient's residence, if the recipient 
        does not live in a hospital, nursing facility as defined in 
        section 62A.46, subdivision 3, or intermediate care facility for 
        persons with mental retardation as defined in section 256B.055, 
        subdivision 12, paragraph (d). 
           Sec. 9.  Minnesota Statutes 1992, section 295.50, is 
        amended by adding a subdivision to read: 
           Subd. 15.  [LEGEND DRUG.] "Legend drug" means a legend drug 
        as defined in section 151.01, subdivision 17. 
           Sec. 10.  Minnesota Statutes 1993 Supplement, section 
        295.52, subdivision 5, is amended to read: 
           Subd. 5.  [VOLUNTEER AMBULANCE SERVICES.] Licensed 
        Volunteer 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.  For purposes of this requirement, 
        "volunteer ambulance service" means an ambulance service in 
        which all of the individuals whose primary responsibility is 
        direct patient care meet the definition of volunteer under 
        section 144.8091, subdivision 2.  The ambulance service may 
        employ administrative and support staff, and remain eligible for 
        this exemption, if the primary responsibility of these staff is 
        not direct patient care. 
           Sec. 11.  Minnesota Statutes 1993 Supplement, 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 for services provided under the 
        Medicare program, including payments received from the 
        government, and organizations governed by sections 1833 and 1876 
        of title XVIII of the federal Social Security Act, United States 
        Code, title 42, section 1395, and enrollee deductibles, 
        coinsurance, and 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 home health care services; 
           (4)  payments received from hospitals or surgical centers 
        for goods and services 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 on which liability for tax is imposed under 
        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 legend drugs, other than 
        nutritional products, to a wholesale drug distributor reduced by 
        reimbursements received for prescription legend 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 
        MinnesotaCare program including payments received directly from 
        the government or from a prepaid plan and enrollee deductibles, 
        coinsurance, and copayments; 
           (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; 
           (16) payments received for hospice care services; 
           (17) payments received by a resident health care provider 
        or the wholly owned subsidiary of a resident health care 
        provider for medical supplies, appliances and equipment 
        delivered outside of Minnesota; 
           (18) payments received for services provided by community 
        supervised living facilities for persons with mental retardation 
        or related conditions licensed under Minnesota Rules, parts 
        4665.0100 to 4665.9900; 
           (19) payments received by a post-secondary educational 
        institution from student tuition, student activity fees, health 
        care service fees, government appropriations, donations, or 
        grants.  Fee for service payments and payments for extended 
        coverage are taxable; and 
           (20) payments received for services provided by: 
        residential care homes licensed under chapter 144B; board and 
        lodging establishments providing only custodial services, that 
        are licensed under chapter 157 and registered under section 
        157.031 to provide supportive services or health supervision 
        services; and assisted living programs, congregate housing 
        programs, and other senior housing options. 
           Sec. 12.  Minnesota Statutes 1993 Supplement, section 
        295.53, subdivision 2, is amended to read: 
           Subd. 2.  [DEDUCTIONS FOR STAFF MODEL HEALTH CARRIERS PLAN 
        COMPANY.] In addition to the exemptions allowed under 
        subdivision 1, a staff model health carrier plan company 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 plan company for services on which liability for the tax 
        is imposed under section 295.52; 
           (2) amounts added to reserves, if total reserves do not 
        exceed 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 plan companies; 
           (3) assessments for the comprehensive health insurance plan 
        under section 62E.11; and 
           (4) amounts spent for administration 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). 
           Sec. 13.  Minnesota Statutes 1993 Supplement, section 
        295.53, subdivision 5, is amended to read: 
           Subd. 5.  [DEDUCTIONS FOR PHARMACIES.] (a) Pharmacies may 
        deduct from their gross revenues subject to tax payments for 
        medical supplies, appliances, and devices that are exempt under 
        subdivision 1, except payments under subdivision 1, clauses (3), 
        (6), (9), (11), and (14). 
           (b) Resident pharmacies may deduct from their gross 
        revenues subject to tax payments received for medical supplies, 
        appliances, and equipment delivered outside of Minnesota. 
           Sec. 14.  Minnesota Statutes 1993 Supplement, section 
        295.54, is amended to read: 
           295.54 [CREDIT FOR TAXES PAID TO ANOTHER STATE.] 
           Subdivision 1.  [TAXES PAID TO ANOTHER STATE.] A resident 
        hospital, resident surgical center, pharmacy, 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. 
           Subd. 2.  [PHARMACY CREDIT.] A resident pharmacy may claim 
        a quarterly credit against the total amount of tax the pharmacy 
        owes during that quarter under section 295.52, subdivision 1b, 
        as provided in this subdivision.  The credit shall equal two 
        percent of the amount paid by the pharmacy to a wholesale drug 
        distributor subject to tax under section 295.52, subdivision 3, 
        for legend drugs delivered by the pharmacy outside of Minnesota. 
        If the amount of the credit exceeds the tax liability of the 
        pharmacy under section 295.52, subdivision 1b, the commissioner 
        shall provide the pharmacy with a refund equal to the excess 
        amount. 
           Sec. 15.  Minnesota Statutes 1992, section 295.55, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 
        Each hospital or surgical center must make estimated payments of 
        the taxes for the calendar year in monthly installments to the 
        commissioner within ten days after the end of the month. 
           (b) Estimated tax payments are not required of hospitals or 
        surgical centers if the tax for the calendar year is less than 
        $500 or if the a hospital has been allowed a grant under section 
        144.1484, subdivision 2, for the year. 
           (c) Underpayment of estimated installments bear interest at 
        the rate specified in section 270.75, from the due date of the 
        payment until paid or until the due date of the annual return at 
        the rate specified in section 270.75.  An underpayment of an 
        estimated installment is the difference between the amount paid 
        and the lesser of (1) 90 percent of one-twelfth of the tax for 
        the calendar year or (2) the tax for the actual gross revenues 
        received during the month. 
           Sec. 16.  Minnesota Statutes 1992, section 295.55, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ESTIMATED TAX; OTHER TAXPAYERS.] (a) Each 
        taxpayer, other than a hospital or surgical center, must make 
        estimated payments of the taxes for the calendar year in 
        quarterly installments to the commissioner by April 15, July 15, 
        October 15, and January 15 of the following calendar year. 
           (b) Estimated tax payments are not required if the tax for 
        the calendar year is less than $500. 
           (c) Underpayment of estimated installments bear interest at 
        the rate specified in section 270.75, from the due date of the 
        payment until paid or until the due date of the annual return at 
        the rate specified in section 270.75.  An underpayment of an 
        estimated installment is the difference between the amount paid 
        and the lesser of (1) 90 percent of one-quarter of the tax for 
        the calendar year or (2) the tax for the actual gross revenues 
        received during the quarter. 
           Sec. 17.  Minnesota Statutes 1993 Supplement, 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, community integrated service 
        networks, integrated service networks, and nonprofit health 
        service plan 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.  There is 
        annually appropriated from the health care access fund to the 
        commissioner of revenue the amount necessary to make any refunds 
        required under section 295.54. 
           Sec. 18.  Minnesota Statutes 1993 Supplement, section 
        295.582, is amended to read: 
           295.582 [AUTHORITY.] 
           (a) A hospital, surgical center, pharmacy, or health care 
        provider that is subject to a tax under section 295.52, or a 
        pharmacy that has paid additional expense transferred under this 
        section by a wholesale drug distributor, may transfer additional 
        expense generated by section 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 plus two percent of 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 295.53.  All 
        third-party purchasers of health care services including, but 
        not limited to, third-party purchasers regulated under chapter 
        60A, 62A, 62C, 62D, 62H, 62N, 64B, or 62H, 65A, 65B, 79, or 79A, 
        or under section 471.61 or 471.617, must pay the transferred 
        expense in addition to any payments due under existing or future 
        contracts with the hospital, surgical center, pharmacy, or 
        health care provider, to the extent allowed under federal law.  
        A third-party purchaser of health care services includes, but is 
        not limited to, a health carrier, integrated service network, or 
        community integrated service network that pays for health care 
        services on behalf of patients or that reimburses, indemnifies, 
        compensates, or otherwise insures patients for health care 
        services.  A third-party purchaser shall comply with this 
        section regardless of whether the third-party purchaser is a 
        for-profit, not-for-profit, or nonprofit entity.  A wholesale 
        drug distributor may transfer additional expense generated by 
        section 295.52 obligations to entities that purchase from the 
        wholesaler, and the entities must pay the additional expense.  
        Nothing in this subdivision section limits the ability of a 
        hospital, surgical center, pharmacy, wholesale drug distributor, 
        or health care provider to recover all or part of the section 
        295.52 obligation by other methods, including increasing fees or 
        charges. 
           (b) Each third-party purchaser regulated under any chapter 
        cited in paragraph (a) shall include with its annual renewal for 
        certification of authority or licensure documentation indicating 
        compliance with paragraph (a).  If the commissioner responsible 
        for regulating the third-party purchaser finds at any time that 
        the third-party purchaser has not complied with paragraph (a) 
        the commissioner may by order fine or censure the third-party 
        purchaser or revoke or suspend the certificate of authority or 
        license of the third-party purchaser to do business in this 
        state.  The third-party purchaser may appeal the commissioner's 
        order through a contested case hearing in accordance with 
        chapter 14. 
           Sec. 19.  Laws 1992, chapter 549, article 9, section 22, is 
        amended to read: 
           Sec. 22.  [GROSS RECEIPTS TAX; EFFECTIVE DATE.] 
           Sections 1 and 16 to 21 are effective the day following 
        final enactment.  Section 4 is effective for taxable years 
        beginning after December 31, 1992.  Section 7, subdivision 1, is 
        effective for gross revenues generated by services performed and 
        goods sold after December 31, 1992.  Section 7, subdivisions 2 
        to 4, are effective for gross revenues generated by services 
        performed and goods sold after December 31, 1993.  Section 8 is 
        effective for hospitals and surgical centers for gross revenues 
        generated by services performed and goods sold after December 
        31, 1992, except the exclusion under subdivision 1, clause (6) 
        applies to payments for prescription drug purchases made after 
        December 31, 1993.  Section 8 is effective for health care 
        providers for gross revenues generated by services performed and 
        goods sold after December 31, 1993, except the exclusion under 
        subdivision 1, clause (6) applies to payments for prescription 
        drug purchases made after December 31, 1993.  Sections 14 and 15 
        are effective July 1, 1992. 
           Sec. 20.  [STATEMENT OF INTENT.] 
           The amendment in section 19 clarifies an effective date in 
        the 1992 legislation enacting the gross receipts tax on 
        hospitals and health care providers.  This legislation imposed a 
        gross receipts tax on hospitals effective January 1, 1993, and 
        on health care providers and wholesale drug distributors 
        effective January 1, 1994.  To avoid double taxation or 
        pyramiding of the tax burden, hospitals and health care 
        providers were allowed an exclusion for amounts paid to 
        wholesale drug distributors for prescription drugs.  These 
        amounts would already be taxed to the wholesale drug 
        distributors.  The section creating this exclusion did not 
        contain an effective date.  As a result, under Minnesota 
        Statutes, section 645.02, the law may permit hospitals to deduct 
        these amounts for prescription drugs purchased during 1993, even 
        though no tax was imposed on the wholesale drug distributor and 
        no double taxation or pyramiding of the tax could occur.  
        Section 19 clarifies that the exclusion applies only after the 
        wholesale drug distributor tax goes into effect. 
           Sec. 21.  [EFFECTIVE DATE.] 
           Sections 1, 2, 5, 12, 15 to 17, 19, and 20 are effective 
        the day following final enactment. 
           Sections 3 and 4 are effective July 1, 1994. 
           Sections 6 to 11, 13, 14, and 18 are retroactively 
        effective from January 1, 1994. 
                                   ARTICLE 14
                                 APPROPRIATIONS
        Section 1.  [APPROPRIATIONS; SUMMARY.] 
           Except as otherwise provided in this act, the sums set 
        forth in the columns designated "fiscal year 1994" and "fiscal 
        year 1995" are appropriated from the general fund, or other 
        named fund, to the agencies for the purposes specified in this 
        act and are added to or subtracted from the appropriations for 
        the fiscal years ending June 30, 1994, and June 30, 1995, in 
        Laws 1993, chapter 345, or another named law. 
                                SUMMARY BY FUND
        APPROPRIATIONS 
                                                    1994           1995
        General Fund                             -0-         $4,844,000
        Health Care
        Access Fund                      (    10,828,000) (  17,562,000)
        State Government
        Special Revenue                          -0-             99,000
        Subdivision 1.  DEPARTMENT OF 
        HUMAN SERVICES
        Health Care Access Fund               (8,974,000)   (14,436,000)
        Of this appropriation, $150,000 the 
        second year is for administration of 
        the MinnesotaCare program.  The 
        appropriation for the MinnesotaCare 
        subsidized health care plan is reduced 
        by $8,974,000 in the first year and 
        $14,586,000 in the second year. 
        Subd. 2.  DEPARTMENT OF 
        EMPLOYEE RELATIONS  
        Health Care Access Fund               (1,854,000)    (6,125,000)
        This reduction is to the appropriation 
        in Laws 1993, chapter 345, article 14, 
        section 9, due to a negotiation of a 
        third-party carrier contract for 
        Minnesota employers insurance program. 
        Subd. 3.  DEPARTMENT OF HEALTH 
        State Government Special Revenue         -0-             99,000
        Health Care Access Fund                  -0-          2,999,000
        Of this appropriation, $100,000 is for 
        the purpose of making a grant to the 
        school of medicine at the Duluth campus 
        of the University of Minnesota for 
        planning to meet the increasing need 
        for rural family physicians. 
        Of this appropriation, $150,000 shall 
        be transferred to the general fund and 
        appropriated from the general fund to 
        the commissioner of human services for 
        a consumer satisfaction survey.  Any 
        federal matching money received through 
        the medical assistance program is 
        appropriated to the commissioner for 
        this purpose.  The commissioner of 
        human services shall contract with the 
        commissioner of health to conduct the 
        consumer satisfaction survey. 
        Of this appropriation, $8,000 in fiscal 
        year 1995 is appropriated to the 
        commissioner of health to fund a rural 
        ambulance demonstration project.  The 
        purpose of the project is to reduce the 
        ambulance response times in the Rail 
        Prairie and Scandia Valley townships.  
        The commissioner of health shall grant 
        the funds to the ambulance license 
        holder for this area contingent on 
        receiving a written statement from the 
        license holder, describing the methods 
        to be used to implement the 
        demonstration projects. 
        Unexpended money appropriated for 
        summer health care interns for fiscal 
        year 1994 does not cancel and shall be 
        available for that purpose in fiscal 
        year 1995. 
        At the request of the Minnesota Health 
        Care Commission, the commissioners of 
        revenue, finance, health, human 
        services, commerce, and employee 
        relations shall provide assistance with 
        research, policy analysis, modeling, 
        cost and revenue projections, actuarial 
        analysis, and other technical support 
        for the financing study required under 
        article 6, section 7.  Under the 
        direction of the commission, money from 
        this appropriation may be transferred 
        by the commissioner of health to other 
        state agencies to cover the costs of 
        technical support provided to the 
        commission. 
        Money appropriated before fiscal year 
        1995 to the commissioner of health for 
        the administrative functions in 
        connection with the data institute may 
        be used by the data institute for the 
        administration of the consumer 
        satisfaction survey to the extent that 
        there are matching financial 
        contributions from the private sector. 
        Subd. 4.  LEGISLATIVE AUDITOR
        General Fund                             -0-             65,000
        This appropriation is in addition to 
        the appropriation in Laws 1993, chapter 
        192, section 2, subdivision 5, for the 
        purpose of conducting a single payer 
        study. 
        Subd. 5.  ATTORNEY GENERAL 
        General Fund                             -0-            200,000
        This appropriation is in addition to 
        the appropriation in Laws 1993, chapter 
        192, section 11, subdivision 4.  The 
        attorney general shall work 
        cooperatively with the commissioner of 
        health in an effort to increase 
        Minnesota's Medicare reimbursement 
        rate.\H* (Subdivision 5 was vetoed by the\h 
        \Hgovernor.)\h 
        Sec. 2.  TRANSFERS
        Notwithstanding Laws 1993, chapter 345, 
        article 14, section 10, the 
        commissioner of finance shall transfer 
        $3,963,000 in fiscal year 1994 and 
        $11,101,000 in fiscal year 1995 from 
        the health care access fund to the 
        general fund.\H* (The governor vetoed the\h 
        \Hpreceding material beginning "Sec." and\h 
        \Hending "general fund.")\h 
        Of this amount transferred in fiscal 
        year 1995, $4,579,000 is appropriated 
        to the commissioner of human services 
        for general assistance medical care 
        grants. 
           Presented to the governor May 6, 1994 
           Signed by the governor May 10, 1994, 6:35 p.m.