Skip to main content Skip to office menu Skip to footer
Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 234-S.F.No. 845 
                  An act relating to health; MinnesotaCare; expanding 
                  provisions of health care; establishing requirements 
                  for integrated service networks; modifying 
                  requirements for health plan companies; repealing the 
                  regulated all-payer option; modifying universal 
                  coverage and insurance reform provisions; revising the 
                  research and data initiatives; modifying eligibility 
                  for the MinnesotaCare program; creating the 
                  prescription drug purchasing authority; establishing a 
                  drug purchasing benefit program for senior citizens; 
                  extending the health care commission and regional 
                  coordinating boards; making technical changes; 
                  providing penalties; appropriating money; amending 
                  Minnesota Statutes 1994, sections 13.99, by adding a 
                  subdivision; 16A.724; 60A.02, by adding a subdivision; 
                  60B.02; 60B.03, subdivision 2; 60G.01, subdivisions 2, 
                  4, and 5; 62A.10, subdivisions 1 and 2; 62A.65, 
                  subdivisions 5 and 8; 62D.02, subdivision 8; 62D.042, 
                  subdivision 2; 62D.11, subdivision 1; 62D.181, 
                  subdivisions 2, 3, 6, and 9; 62E.05; 62E.141; 62H.04; 
                  62H.08; 62J.017; 62J.04, subdivisions 1a and 3; 
                  62J.05, subdivisions 2 and 9; 62J.06; 62J.09, 
                  subdivisions 1, 1a, 2, 6, 8, and by adding a 
                  subdivision; 62J.152, subdivision 5; 62J.17, 
                  subdivisions 4a, 6a, and by adding a subdivision; 
                  62J.212; 62J.37; 62J.38; 62J.40; 62J.41, subdivisions 
                  1 and 2; 62J.48; 62J.54; 62J.55; 62J.58; 62L.02, 
                  subdivisions 11, 16, 24, and 26; 62L.03, subdivisions 
                  3, 4, and 5; 62L.09, subdivision 1; 62L.12, 
                  subdivision 2; 62L.17, by adding a subdivision; 
                  62L.18, subdivision 2; 62M.07; 62M.09, subdivision 5; 
                  62M.10, by adding a subdivision; 62N.02, by adding 
                  subdivisions; 62N.04; 62N.10, by adding a subdivision; 
                  62N.11, subdivision 1; 62N.13; 62N.14, subdivision 3; 
                  62N.25, subdivision 2; 62P.05, subdivision 4, and by 
                  adding a subdivision; 62Q.01, subdivisions 2, 3, 4, 
                  and by adding subdivisions; 62Q.03, subdivisions 1, 6, 
                  7, 8, 9, 10, and by adding subdivisions; 62Q.07, 
                  subdivisions 1 and 2; 62Q.075, subdivision 4; 62Q.09, 
                  subdivision 3; 62Q.11, subdivision 2; 62Q.165; 62Q.17, 
                  subdivisions 2, 6, 8, and by adding a subdivision; 
                  62Q.18; 62Q.19; 62Q.30; 62Q.32; 62Q.33, subdivisions 4 
                  and 5; 62Q.41; 72A.20, by adding subdivisions; 
                  72A.201, by adding a subdivision; 136A.1355, 
                  subdivisions 3 and 5; 136A.1356, subdivisions 3 and 4; 
                  144.1464, subdivisions 2, 3, and 4; 144.147, 
                  subdivision 1; 144.1484, subdivision 1; 144.1486, 
                  subdivision 4; 144.1487, subdivision 1; 144.1488, 
                  subdivisions 1 and 4; 144.1489, subdivisions 1, 3, and 
                  4; 144.1490; 144.1491, subdivision 2; 144.801, by 
                  adding a subdivision; 144.804, subdivision 1; 145.414; 
                  148B.32, subdivision 1; 151.48; 214.16, subdivisions 2 
                  and 3; 256.9354, subdivisions 1, 4, 5, and by adding a 
                  subdivision; 256.9355, subdivision 2; 256.9357, 
                  subdivisions 1, 2, and 3; 256.9358, subdivisions 3, 4, 
                  and by adding a subdivision; 256.9363, subdivision 5; 
                  256B.037, subdivisions 1, 3, 4, and by adding 
                  subdivisions; 256B.04, by adding a subdivision; 
                  256B.055, by adding a subdivision; 256B.057, by adding 
                  subdivisions; 256B.0625, subdivision 30; 256B.69, 
                  subdivisions 2 and 4; 270.101, subdivision 1; 295.50, 
                  subdivisions 3, 4, and 10a; 295.53, subdivisions 1, 3, 
                  and 4; 295.55, subdivision 4; 295.57; and 295.582; 
                  Laws 1990, chapter 591, article 4, section 9; Laws 
                  1993, chapter 224, article 4, section 40; Laws 1993, 
                  First Special Session chapter 1, article 8, section 
                  30, subdivision 2; Laws 1994, chapter 625, article 5, 
                  sections 5, subdivision 1; 7; and 10, subdivision 2; 
                  proposing coding for new law in Minnesota Statutes, 
                  chapters 16B; 62J; 62L; 62N; 62Q; 62R; 137; 144; 256; 
                  256B; and 295; repealing Minnesota Statutes 1994, 
                  sections 62J.045; 62J.07, subdivision 4; 62J.09, 
                  subdivision 1a; 62J.152, subdivision 6; 62J.19; 
                  62J.30; 62J.31; 62J.32; 62J.33; 62J.34; 62J.35; 
                  62J.41, subdivisions 3 and 4; 62J.44; 62J.45; 62J.65; 
                  62L.08, subdivision 7a; 62N.34; 62P.01; 62P.02; 
                  62P.03; 62P.07; 62P.09; 62P.11; 62P.13; 62P.15; 
                  62P.17; 62P.19; 62P.21; 62P.23; 62P.25; 62P.27; 
                  62P.29; 62P.31; 62P.33; 62Q.03, subdivisions 2, 3, 4, 
                  5, and 11; 62Q.18, subdivisions 2, 3, 4, 5, 6, 8, and 
                  9; 62Q.21; 62Q.27; 144.1488, subdivision 2; 148.236; 
                  and 256.9353, subdivisions 4 and 5; Laws 1993, chapter 
                  247, article 1, sections 12, 13, 14, 15, 18, and 19; 
                  Minnesota Rules, part 4685.1700, subpart 1, item D. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1
                          INTEGRATED SERVICE NETWORKS 
           Section 1.  Minnesota Statutes 1994, section 60B.02, is 
        amended to read: 
           60B.02 [PERSONS COVERED.] 
           The proceedings authorized by sections 60B.01 to 60B.61 may 
        be applied to: 
           (1) All insurers who are doing, or have done, an insurance 
        business in this state, and against whom claims arising from 
        that business may exist now or in the future; 
           (2) All insurers who purport to do an insurance business in 
        this state; 
           (3) All insurers who have insureds resident in this state; 
           (4) All other persons organized or in the process of 
        organizing with the intent to do an insurance business in this 
        state; and 
           (5) All nonprofit service plan corporations incorporated or 
        operating under the nonprofit health service plan corporation 
        act, any health plan incorporated under chapter 317A, all 
        fraternal benefit societies operating under chapter 64B, except 
        those associations enumerated in section 64B.38, all assessment 
        benefit associations operating under chapter 63, all township 
        mutual or other companies operating under chapter 67A, and all 
        reciprocals or interinsurance exchanges operating under chapter 
        71A, and all integrated service networks operating under chapter 
        62N.  
           Sec. 2.  Minnesota Statutes 1994, section 60B.03, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of commerce of the state of Minnesota and, in that 
        commissioner's absence or disability, a deputy or other person 
        duly designated to act in that commissioner's place.  In the 
        context of rehabilitation or liquidation of a health maintenance 
        organization or integrated service network, "commissioner" means 
        the commissioner of health of the state of Minnesota and, in 
        that commissioner's absence or disability, a deputy or other 
        person duly designated to act in that commissioner's place. 
           Sec. 3.  Minnesota Statutes 1994, section 60G.01, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of commerce, except that "commissioner" means the 
        commissioner of health for administrative supervision of health 
        maintenance organizations and integrated service networks. 
           Sec. 4.  Minnesota Statutes 1994, section 60G.01, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DEPARTMENT.] "Department" means the department 
        of commerce, except that "department" means the department of 
        health for administrative supervision of health maintenance 
        organizations and integrated service networks. 
           Sec. 5.  Minnesota Statutes 1994, section 60G.01, 
        subdivision 5, is amended to read: 
           Subd. 5.  [INSURER.] "Insurer" means and includes every 
        person engaged as indemnitor, surety, or contractor in the 
        business of entering into contracts of insurance or of annuities 
        as limited to: 
           (1) any insurer who is doing an insurer business, or has 
        transacted insurance in this state, and against whom claims 
        arising from that transaction may exist now or in the future; 
           (2) any fraternal benefit society which is subject to 
        chapter 64B; 
           (3) nonprofit health service plan corporations subject to 
        chapter 62C; 
           (4) cooperative life and casualty companies subject to 
        sections 61A.39 to 61A.52; and 
           (5) health maintenance organizations regulated under 
        chapter 62D; and 
           (6) integrated service networks regulated under chapter 62N.
           Sec. 6.  Minnesota Statutes 1994, section 62D.181, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBLE INDIVIDUALS.] An individual is eligible 
        for alternative coverage under this section if: 
           (1) the individual had individual health coverage through a 
        health maintenance organization, integrated service network, or 
        community integrated service network, the coverage is no longer 
        available due to the insolvency of the health maintenance 
        organization, integrated service network, or community 
        integrated service network, and the individual has not obtained 
        alternative coverage; or 
           (2) the individual had group health coverage through a 
        health maintenance organization, integrated service network, or 
        community integrated service network, the coverage is no longer 
        available due to the insolvency of the health maintenance 
        organization, integrated service network, or community 
        integrated service network, and the individual has not obtained 
        alternative coverage. 
           Sec. 7.  Minnesota Statutes 1994, section 62D.181, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPLICATION AND ISSUANCE.] If a health 
        maintenance organization, integrated service network, or 
        community integrated service network will be liquidated, 
        individuals eligible for alternative coverage under subdivision 
        2 may apply to the association to obtain alternative coverage.  
        Upon receiving an application and evidence that the applicant 
        was enrolled in the health maintenance organization, integrated 
        service network, or community integrated service network at the 
        time of an order for liquidation, the association shall issue 
        policies to eligible individuals, without the limitation on 
        preexisting conditions described in section 62E.14, subdivision 
        3. 
           Sec. 8.  Minnesota Statutes 1994, section 62D.181, 
        subdivision 6, is amended to read: 
           Subd. 6.  [DURATION.] The duration of alternative coverage 
        issued under this section is: 
           (1) for individuals eligible under subdivision 2, clause 
        (1), 90 days; and 
           (2) for individuals eligible under subdivision 2, clause 
        (2), 90 days or the length of time remaining in the group 
        contract with the insolvent health maintenance organization, 
        integrated service network, or community integrated service 
        network, whichever is greater. 
           Sec. 9.  Minnesota Statutes 1994, section 62D.181, 
        subdivision 9, is amended to read: 
           Subd. 9.  [COORDINATION OF POLICIES.] If an insolvent 
        health maintenance organization, integrated service network, or 
        community integrated service network has insolvency insurance 
        coverage at the time of an order for liquidation, the 
        association may coordinate the benefits of the policy issued 
        under this section with those of the insolvency insurance policy 
        available to the enrollees.  The premium level for the combined 
        association policy and the insolvency insurance policy may not 
        exceed those described in subdivision 5. 
           Sec. 10.  Minnesota Statutes 1994, section 62N.02, is 
        amended by adding a subdivision to read: 
           Subd. 4b.  [CREDENTIALING.] "Credentialing" means the 
        process of collecting, verifying, and reviewing evidence that 
        relates to a health care professional's qualifications to 
        practice the health care profession as a provider within a 
        specific integrated service network. 
           Sec. 11.  Minnesota Statutes 1994, section 62N.02, is 
        amended by adding a subdivision to read: 
           Subd. 4c.  [CREDENTIALING STANDARDS.] An integrated service 
        network may set credentialing standards for providers.  A 
        network may recredential providers on a recurring basis.  If a 
        network sets credentialing standards, the network must provide a 
        written description of those standards upon request.  An 
        integrated service network may participate in a centralized 
        credentialing program and must provide a written description of 
        that program upon request. 
           Sec. 12.  Minnesota Statutes 1994, section 62N.04, is 
        amended to read: 
           62N.04 [REGULATION.] 
           Integrated service networks are under the supervision of 
        the commissioner, who shall enforce this chapter, and the 
        requirements of chapter 62Q as they apply to these networks.  
        The commissioner has, with respect to this chapter and chapter 
        62Q, all enforcement and rulemaking powers available to the 
        commissioner under section 62D.17. 
           Sec. 13.  [62N.071] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] The definitions in this 
        section apply to sections 62N.071 to 62N.078.  Unless otherwise 
        specified, terms used in those sections have the meanings 
        required to be used in preparation of the National Association 
        of Insurance Commissioners (NAIC) annual statement blanks for 
        health maintenance organizations. 
           Subd. 2.  [ADMITTED ASSETS.] "Admitted assets" means 
        admitted assets as defined under section 62D.044, including the 
        deposit required under section 62N.074. 
           Subd. 3.  [NET WORTH.] "Net worth" means admitted assets 
        minus liabilities. 
           Subd. 4.  [LIABILITIES.] "Liabilities" means a network's 
        debts and other obligations, including estimates of the 
        network's reported and unreported claims incurred for covered 
        services and supplies provided to enrollees.  Liabilities do not 
        include those obligations that are subordinated in the same 
        manner as preferred ownership claims under section 60B.44, 
        subdivision 10, including promissory notes subordinated to all 
        other liabilities of the integrated service network. 
           Subd. 5.  [UNCOVERED EXPENDITURES.] "Uncovered expenditures"
        means the charges for health care services and supplies that are 
        covered by an integrated service network for which an enrollee 
        would also be liable if the network becomes insolvent.  
        Uncovered expenditures includes charges for covered health care 
        services and supplies received by enrollees from providers that 
        are not employed by, under contract with, or otherwise 
        affiliated with the network.  Uncovered expenditures does not 
        include amounts that enrollees would not have to pay due to the 
        obligations being guaranteed, insured, or assumed by a person 
        other than the network. 
           Subd. 6.  [WORKING CAPITAL.] "Working capital" means 
        current assets minus current liabilities. 
           Sec. 14.  [62N.072] [NET WORTH REQUIREMENT.] 
           Subdivision 1.  [INITIAL REQUIREMENT.] An integrated 
        service network must, at time of licensure, have a minimum net 
        worth of the greater of: 
           (1) $1,500,000; or 
           (2) 8-1/3 percent of the sum of all expenses expected to be 
        incurred in the first full year of operation, less 90 percent of 
        the expected reinsurance premiums for that period. 
           Subd. 2.  [ONGOING REQUIREMENT.] After a network's initial 
        year of operation, the network must maintain net worth of no 
        less than $1,000,000 or 8-1/3 percent of the previous years' 
        expenditures, whichever is greater. 
           Sec. 15.  [62N.073] [DEPOSIT REQUIREMENT.] 
           Subdivision 1.  [INITIAL DEPOSIT.] An integrated service 
        network shall deposit, at time of licensure, a deposit 
        consisting of cash and direct United States Treasury obligations 
        in the total amount of not less than $300,000. 
           Subd. 2.  [CUSTODIAL ACCOUNT.] The deposit must be held in 
        a custodial or other controlled account under a written account 
        agreement acceptable to the commissioner. 
           Subd. 3.  [ONGOING DEPOSIT.] After the initial year of 
        operation, the required amount of the deposit is the greater of 
           (1) $300,000; or 
           (2) 33-1/3 percent of the network's uncovered expenditures 
        incurred in the previous calendar year. 
           Subd. 4.  [USE OF DEPOSIT.] (a) In the event of any 
        delinquency proceeding as defined in section 60B.03, the 
        required minimum deposit shall be applied first to pay for or 
        reimburse the commissioner for expenses incurred by the 
        commissioner in performing the commissioner's duties in 
        connection with the insolvency, including any legal, actuarial 
        or accounting fees.  The balance of the required minimum 
        deposit, if any, shall be used to reimburse enrollees for 
        uncovered expenditures, on a pro rata basis. 
           (b) If a deposit exceeds the required minimum deposit, the 
        excess shall be applied first to uncovered expenditures and the 
        balance, if any, to the commissioner's expenses. 
           (c) The deposit is not subject to garnishment or levy under 
        any circumstances. 
           Subd. 5.  [ACTUAL DEPOSIT REQUIRED.] The deposit must be in 
        the form specified in subdivision 1; a guarantee or letter of 
        credit are not acceptable, in whole or in part, as substitutes. 
           Sec. 16.  [62N.074] [WORKING CAPITAL.] 
           Subdivision 1.  [REQUIREMENT.] An integrated service 
        network must maintain a positive working capital at all times. 
           Subd. 2.  [NOTICE REQUIRED.] If an integrated service 
        network's working capital is no longer positive, or is likely to 
        soon become no longer positive, the network shall immediately 
        notify the commissioner. 
           Subd. 3.  [PLAN OF CORRECTION.] If at any time an 
        integrated service network's net worth, working capital, 
        investments, deposits, or guarantees do not conform with the 
        provisions of this chapter, the network shall promptly submit to 
        the commissioner a written proposed plan of correction.  The 
        commissioner shall promptly approve, approve as modified, or 
        reject the proposed plan.  If a plan of correction has been 
        approved by the commissioner, the network shall comply with it 
        and shall cooperate fully with any activities the commissioner 
        undertakes to monitor the network's compliance. 
           Subd. 4.  [ACTION BY COMMISSIONER.] The commissioner may 
        take any action permitted to the commissioner that the 
        commissioner deems necessary or appropriate to protect the 
        network or its enrollees if: 
           (1) the network fails to propose an approved plan of 
        correction promptly; 
           (2) the network fails to comply with an approved plan of 
        correction; or 
           (3) the commissioner determines that a deficiency in 
        working capital cannot be corrected within a reasonable time. 
           Subd. 5.  [OTHER REMEDIES.] This section does not limit the 
        commissioner's power to use at any time other remedies available 
        to the commissioner. 
           Sec. 17.  [62N.076] [INVESTMENT RESTRICTIONS.] 
           Subdivision 1.  [INVESTMENT POLICY.] An integrated service 
        network shall have a written investment policy to govern 
        investment of the network's assets.  The written policy must be 
        reviewed and approved annually by the network's board of 
        directors. 
           Subd. 2.  [APPROVAL; INVESTMENTS.] A network shall not make 
        loans or investments, unless authorized by its board of 
        directors, or ratified by the board no later than the next 
        regular board meeting. 
           Subd. 3.  [PERMITTED INVESTMENT.] An integrated service 
        network shall make investments only in securities or property 
        designated by law as permitted for domestic life insurance 
        companies; this restriction includes compliance with percentage 
        limitations that apply to domestic life insurance companies.  A 
        network may, however, invest in real estate, including leasehold 
        improvements, for the convenience and accommodation of its 
        operations, including the home office, branch offices, medical 
        facilities, and field operations, in excess of the percentage 
        permitted for a domestic life insurance company, but not to 
        exceed 25 percent of its total admitted assets. 
           Subd. 4.  [CONFLICTS OF INTEREST.] An integrated service 
        network shall not make loans to any of its directors or 
        principal officers or make loans to or investments in any 
        organization in which a director or principal officer has an 
        interest. 
           Subd. 5.  [PROOF OF COMPLIANCE.] An integrated service 
        network shall annually file with the commissioner proof of 
        compliance with this section in a form and on a date prescribed 
        by the commissioner. 
           Sec. 18.  [62N.077] [USE OF GUARANTEES.] 
           Subdivision 1.  [GUARANTEE PERMITTED.] An integrated 
        service network may, with the consent of the commissioner, 
        satisfy up to 50 percent of its minimum net worth requirement by 
        means of a guarantee provided by another organization. 
           Subd. 2.  [SECURITY FOR GUARANTEE.] (a) If the guaranteeing 
        organization is regulated for solvency by the commissioner of 
        commerce or health, the guarantee must be treated as a liability 
        for purposes of solvency regulation of the guaranteeing 
        organization.  If the guaranteeing organization becomes 
        insolvent, a claim by the network on the guarantee must be at 
        least of equal priority with claims of enrollees or other policy 
        holders of the insolvent guaranteeing organization. 
           (b) If the guaranteeing organization is not regulated for 
        solvency by the commissioner of commerce or health, the 
        organization must maintain assets, except if, when calculated in 
        combination with the assets described in section 62D.044, clause 
        (17), the total of those assets and the real estate assets 
        described in this subdivision do not exceed the total combined 
        percent limitations allowable under this section and section 
        62D.044, clause (17), or except if permitted by the commissioner 
        upon a finding that the percentage of the integrated service 
        network's admitted assets is insufficient to provide convenient 
        accommodation of the network's business acceptable to the 
        commissioner, with a market value at least equal to the amount 
        of the guarantee, in a custodial or other controlled account on 
        terms acceptable to the commissioner of health.  
           Subd. 3.  [GOVERNMENTAL ENTITIES.] When a guaranteeing 
        organization is a governmental entity, sections 62N.073 and 
        62N.076 do not apply.  The commissioner may consider factors 
        which provide evidence that the governmental entity is a 
        financially reliable guaranteeing organization. 
           Sec. 19.  [62N.078] [FINANCIAL REPORTING AND EXAMINATION.] 
           Subdivision 1.  [FINANCIAL STATEMENTS.] An integrated 
        service network shall file with the commissioner, annually on 
        April 1, an audited financial statement.  The financial 
        statement must include the National Association of Insurance 
        Commissioners (NAIC) annual statement blanks for health 
        maintenance organizations, prepared in accordance with the NAIC 
        annual statement instructions, and using the methods prescribed 
        in the NAIC's accounting practices and procedures manual for 
        health maintenance organizations.  The financial statement must 
        also include any other form or information prescribed by the 
        commissioner. 
           Subd. 2.  [QUARTERLY STATEMENTS.] An integrated service 
        network shall file with the commissioner quarterly financial 
        statements for the first three quarters of each year, on a date 
        and form and in a manner prescribed by the commissioner. 
           Subd. 3.  [OTHER INFORMATION.] An integrated service 
        network shall comply promptly and fully with requests by the 
        commissioner for other information that the commissioner deems 
        necessary to monitor or assess the network's financial solvency. 
           Subd. 4.  [FINANCIAL EXAMINATION.] The commissioner shall 
        conduct a complete financial examination of each integrated 
        service network at least once every three years, and more 
        frequently if the commissioner deems it necessary.  The 
        examinations must be conducted according to the standards 
        provided in the NAIC examiners handbook. 
           Sec. 20.  Minnesota Statutes 1994, section 62N.10, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [DATA SUBMISSION.] As a condition of licensure, 
        an integrated service network shall comply fully with section 
        62J.38. 
           Sec. 21.  Minnesota Statutes 1994, section 62N.11, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICABILITY.] Every integrated service 
        network enrollee residing in this state is entitled to evidence 
        of coverage or contract.  The integrated service network or its 
        designated representative shall issue the evidence of coverage 
        or contract.  The commissioner shall adopt rules specifying the 
        requirements for contracts and evidence of coverage.  "Evidence 
        of coverage" means evidence that an enrollee is covered by a 
        group contract issued to the group.  The evidence of coverage 
        must contain a description of provider locations, a list of the 
        types of providers available, and information about the types of 
        allied and midlevel practitioners and pharmacists that are 
        available. 
           Sec. 22.  Minnesota Statutes 1994, section 62N.13, is 
        amended to read: 
           62N.13 [ENROLLEE COMPLAINT SYSTEM.] 
           Every integrated service network must establish and 
        maintain an enrollee complaint system, including an impartial 
        arbitration provision as required under section 62Q.105, to 
        provide reasonable procedures for the resolution of written 
        complaints initiated by enrollees concerning the provision of 
        health care services.  The integrated service network must 
        inform enrollees that they may choose to use an alternative 
        dispute resolution process.  If an enrollee chooses to use an 
        alternative dispute resolution process, the network must 
        participate.  The commissioner shall adopt rules specifying 
        requirements relating to enrollee complaints. 
           Sec. 23.  Minnesota Statutes 1994, section 62N.14, 
        subdivision 3, is amended to read: 
           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 address, telephone number, and a brief description 
        of the state's office of consumer information clearinghouse; 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. 
           Sec. 24.  [62N.15] [PROVIDER REQUIREMENTS.] 
           Subdivision 1.  [SERVICES.] An integrated service network 
        may operate as a staff model as defined in section 295.50, 
        subdivision 12b, or may contract with providers or provider 
        organizations for the provision of services. 
           Subd. 2.  [LOCATION.] (a) An integrated service network 
        must ensure that primary care providers, including allied 
        independent health providers as defined in section 62Q.095, 
        subdivision 5, midlevel practitioners as defined in section 
        136A.1356, subdivision 1, are located at adequate locations 
        within the service area of the network.  In determining whether 
        locations are adequate, the integrated service network may 
        consider the practice and referral patterns in each community 
        served throughout the service area.  
           (b) Urgent and emergency care providers must be located 
        within a distance of 30 miles or a travel time of 30 minutes 
        from every enrollee. 
           Subd. 3.  [NUMBERS.] An integrated service network must 
        provide a sufficient number of providers to meet the projected 
        needs of its enrollees, including special needs and high-risk 
        enrollees, for all covered health care services. 
           Subd. 4.  [TYPES.] An integrated service network must 
        determine what types of providers are needed to deliver all 
        appropriate and necessary health services to its enrollees.  In 
        determining which types of providers are necessary, networks 
        shall use allied and midlevel practitioners and pharmacists 
        within their respective scopes of practice.  
           Subd. 5.  [CAPACITY.] An integrated service network shall 
        monitor the capacity of the network to provide services to 
        enrollees and take steps to increase capacity when parts of the 
        network are not able to meet enrollee needs. 
           Subd. 6.  [ACCESS.] (a) An integrated service network shall 
        make available and accessible all covered health care services 
        on a 24-hour per day, seven days per week basis.  This 
        requirement may be fulfilled through the use of: 
           (1) regularly scheduled appointments; 
           (2) after-hour clinics; 
           (3) use of a 24-hour answering service; 
           (4) backup coverage by another participating physician; or 
           (5) referrals to urgent care centers and to hospital 
        emergency care. 
           (b) An integrated service network shall arrange for covered 
        health care services, including referrals to specialty 
        physicians, to be accessible to enrollees on a timely basis in 
        accordance with medically appropriate guidelines.  An integrated 
        service network shall have appointment scheduling guidelines 
        based on the type of health care service. 
           (c) Nothing in this act shall be construed to require the 
        creation or maintenance of abortion clinics or other abortion 
        providers within any integrated service network; nor shall 
        anything in this act be construed to authorize any agency to 
        require the creation or maintenance of abortion clinics or 
        abortion providers or to deny certification or any other benefit 
        granted by this act to a health plan company based on the number 
        of or the presence or absence of abortion clinics or other 
        abortion providers in or affiliated with the health plan company.
           Subd. 7.  [CONTINUITY.] (a) An integrated service network 
        shall provide continuing care for enrollees in the event of 
        contract termination between the integrated service network and 
        any of its contracted providers or in the event of site closings 
        involving a provider with more than one location of service.  
           (b) An integrated service network shall provide to its 
        enrollees a written disclosure of the process by which 
        continuity of care will be provided to all enrollees. 
           Subd. 8.  [REVIEW.] The commissioner shall review each 
        network's compliance with subdivisions 1 to 7.  If the 
        commissioner determines that a network is not meeting the 
        requirements of this section, the commissioner may order the 
        network to submit a plan of corrective action, and may order the 
        network to comply with the provisions of that plan, as amended 
        by the commissioner. 
           Sec. 25.  [62N.17] [OUT-OF-NETWORK SERVICES.] 
           (a) An integrated service network shall provide coverage 
        for all emergency services provided outside the network, when 
        the care is immediately necessary or believed to be necessary to 
        preserve life, prevent impairment of bodily functions, or to 
        prevent placing the physical or mental health of the enrollee in 
        jeopardy.  
           (b) An integrated service network shall include in its 
        marketing materials a description of all limitations of coverage 
        for out-of-network services, including when enrollees reside or 
        travel outside the network's service area. 
           Sec. 26.  [62N.18] [QUALITY IMPROVEMENT.] 
           Subdivision 1.  [INTERNAL MEASURES.] Every integrated 
        service network shall establish and maintain an internal quality 
        improvement process.  A network shall disclose these processes 
        to enrollees, and to the commissioner upon request. 
           Subd. 2.  [ENROLLEE SURVEYS.] (a) Every integrated service 
        network shall, on at least a biennial basis, survey enrollee 
        satisfaction with network performance and quality of care, and 
        shall make survey results available to enrollees and potential 
        enrollees.  Integrated service networks shall also submit survey 
        results to the information clearinghouse. 
           (b) Every integrated service network shall participate in 
        the consumer survey efforts established under section 62J.451, 
        subdivision 6b, to evaluate enrollee satisfaction, network 
        performance, and quality of care.  Participation in the consumer 
        survey efforts of section 62J.451, subdivision 6b, shall satisfy 
        paragraph (a) of this subdivision. 
           Subd. 3.  [QUALITY IMPROVEMENT WORKPLANS.] (a) An 
        integrated service network shall submit annual quality 
        improvement workplans to the commissioner.  A workplan must: 
           (1) identify the four most common enrollee complaints 
        related to service delivery and the four most common enrollee 
        complaints related to administration; 
           (2) identify the specific measures that the network plans 
        to take to address each of these complaint areas; 
           (3) provide an assessment of how these complaints affect 
        health care outcomes; and 
           (4) identify the mechanisms that the network will use to 
        communicate and implement the changes needed to address each of 
        these complaints identified in clause (1).  
           (b) An integrated service network shall disclose in 
        marketing materials the complaints identified in paragraph (a), 
        and measures that will be taken by the network to address these 
        complaints. 
           Sec. 27.  Minnesota Statutes 1994, section 62N.25, 
        subdivision 2, is amended to read: 
           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.  A community 
        integrated service network that phases in its net worth over a 
        three-year period is not required to respond to requests for 
        proposals under section 256B.0644 during the first 12 months of 
        licensure.  These community networks are not prohibited from 
        responding to requests for proposals, however, if they choose to 
        do so during that time period.  After the initial 12 months of 
        licensure, these community networks are required to respond to 
        the requests for proposals as required under section 256B.0644. 
           Sec. 28.  [62N.40] [CHEMICAL DEPENDENCY SERVICES.] 
           Each community integrated service network and integrated 
        service network regulated under this chapter must ensure that 
        chemically dependent individuals have access to cost-effective 
        treatment options that address the specific needs of 
        individuals.  These include, but are not limited to, the need 
        for:  treatment that takes into account severity of illness and 
        comorbidities; provision of a continuum of care, including 
        treatment and rehabilitation programs licensed under Minnesota 
        Rules, parts 9530.4100 to 9530.4410 and 9530.5000 to 9530.6500; 
        the safety of the individual's domestic and community 
        environment; gender appropriate and culturally appropriate 
        programs; and access to appropriate social services. 
           Sec. 29.  [REPEALER.] 
           Minnesota Statutes 1994, section 62N.34, is repealed. 
                                   ARTICLE 2 
            MODIFICATIONS OF REQUIREMENTS FOR HEALTH PLAN COMPANIES 
           Section 1.  Minnesota Statutes 1994, section 62D.11, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ENROLLEE COMPLAINT SYSTEM.] Every health 
        maintenance organization shall establish and maintain a 
        complaint system including an impartial arbitration 
        provision, as required under section 62Q.105 to provide 
        reasonable procedures for the resolution of written complaints 
        initiated by enrollees concerning the provision of health care 
        services.  "Provision of health services" includes, but is not 
        limited to, questions of the scope of coverage, quality of care, 
        and administrative operations.  Arbitration shall be subject to 
        chapter 572, except (a) in the event that an enrollee elects to 
        litigate a complaint prior to submission to arbitration, and (b) 
        no medical malpractice damage claim shall be subject to 
        arbitration unless agreed to by both parties subsequent to the 
        event giving rise to the claim.  The health maintenance 
        organization must inform enrollees that they may choose to use 
        an alternative dispute resolution process.  If an enrollee 
        chooses to use an alternative dispute resolution process, the 
        health maintenance organization must participate. 
           Sec. 2.  Minnesota Statutes 1994, section 62Q.01, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of health for purposes of regulating health 
        maintenance organizations, community integrated service 
        networks, and integrated service networks, or the commissioner 
        of commerce for purposes of regulating all other health plan 
        companies.  For all other purposes, "commissioner" means the 
        commissioner of health. 
           Sec. 3.  Minnesota Statutes 1994, section 62Q.01, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [ENROLLEE.] "Enrollee" means a natural person 
        covered by a health plan and includes an insured, policyholder, 
        subscriber, contract holder, member, covered person, or 
        certificate holder. 
           Sec. 4.  Minnesota Statutes 1994, section 62Q.01, 
        subdivision 3, is amended to read: 
           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; or 
        an integrated service network; or an all-payer insurer as 
        defined in section 62P.02. 
           Sec. 5.  Minnesota Statutes 1994, section 62Q.01, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [MANAGED CARE ORGANIZATION.] "Managed care 
        organization" means:  (1) a health maintenance organization 
        operating under chapter 62D; (2) a community integrated service 
        network as defined under section 62N.02, subdivision 4a; (3) an 
        integrated service network as defined under section 62N.02, 
        subdivision 8; or (4) an insurance company licensed under 
        chapter 60A, nonprofit health service plan corporation operating 
        under chapter 62C, fraternal benefit society operating under 
        chapter 64B, or any other health plan company, to the extent 
        that it covers health care services delivered to Minnesota 
        residents through a preferred provider organization or a network 
        of selected providers. 
           Sec. 6.  Minnesota Statutes 1994, section 62Q.01, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [MEDICARE-RELATED COVERAGE.] "Medicare-related 
        coverage" means a policy, contract, or certificate issued as a 
        supplement to Medicare, regulated under sections 62A.31 to 
        62A.44, including Medicare select coverage; policies, contracts, 
        or certificates that supplement Medicare issued by health 
        maintenance organizations; or policies, contracts, or 
        certificates governed by section 1833 (known as "cost" or "HCPP" 
        contracts) or 1876 (known as "TEFRA" or "risk" contracts) of the 
        federal Social Security Act, United States Code, title 42, 
        section 1395, et seq., as amended. 
           Sec. 7.  [62Q.02] [APPLICABILITY OF CHAPTER.] 
           (a) This chapter applies only to health plans, as defined 
        in section 62Q.01, and not to other types of insurance issued or 
        renewed by health plan companies, unless otherwise specified. 
           (b) This chapter applies to a health plan company only with 
        respect to health plans, as defined in section 62Q.01, issued or 
        renewed by the health plan company, unless otherwise specified. 
           (c) If a health plan company issues or renews health plans 
        in other states, this chapter applies only to health plans 
        issued or renewed in this state for Minnesota residents, or to 
        cover a resident of the state, unless otherwise specified. 
           Sec. 8.  Minnesota Statutes 1994, section 62Q.03, 
        subdivision 1, is amended to read: 
           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.  The purpose of risk adjustment is to reduce 
        the effects of risk selection on health insurance premiums by 
        making monetary transfers from health plan companies that insure 
        lower risk populations to health plan companies that insure 
        higher risk populations.  Risk adjustment is needed to:  achieve 
        a more equitable, efficient system of health care financing; 
        remove current disincentives in the health care system to insure 
        and serve provide adequate access for 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 risk 
        status of those in a given insurance pool; and help 
        assure maintain the viability of all health plan companies, 
        including community integrated service networks by protecting 
        them from the financial effects of enrolling a disproportionate 
        number of high risk individuals.  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 subdivisions 2 and 3.  The 
        risk adjustment system shall:  
           (1) possess a reasonable level of accuracy and 
        administrative feasibility, be adaptable to changes as methods 
        improve, incorporate safeguards against fraud and manipulation, 
        and shall neither reward inefficiency nor penalize for 
        verifiable improvements in health status; 
           (2) require participation by all health plan companies 
        providing coverage in the individual, small group, and Medicare 
        supplement markets; 
           (3) address unequal distribution of risk between health 
        plan companies, but shall not address the financing of public 
        programs or subsidies for low-income people; and 
           (4) be developed and implemented by the risk adjustment 
        association with joint oversight by the commissioners of health 
        and commerce. 
           Sec. 9.  Minnesota Statutes 1994, section 62Q.03, is 
        amended by adding a subdivision to read: 
           Subd. 5a.  [PUBLIC PROGRAMS.] (a) A separate risk 
        adjustment system must be developed for state-run public 
        programs, including medical assistance, general assistance 
        medical care, and MinnesotaCare.  The system must be developed 
        in accordance with the general risk adjustment methodologies 
        described in this section, must include factors in addition to 
        age and sex adjustment, and may include additional demographic 
        factors, different targeted conditions, and/or different payment 
        amounts for conditions.  The risk adjustment system for public 
        programs must attempt to reflect the special needs related to 
        poverty, cultural, or language barriers and other needs of the 
        public program population. 
           (b) The commissioners of health and human services shall 
        jointly convene a public programs risk adjustment work group 
        responsible for advising the commissioners in the design of the 
        public programs risk adjustment system.  The commissioner of 
        health shall work with the risk adjustment association to ensure 
        coordination between the risk adjustment systems for the public 
        and private sectors.  The commissioner of human services shall 
        seek any needed federal approvals necessary for the inclusion of 
        the medical assistance program in the public program risk 
        adjustment system.  
           (c) The public programs risk adjustment work group must be 
        representative of the persons served by publicly paid health 
        programs and providers and health plans that meet their needs.  
        To the greatest extent possible, the appointing authorities 
        shall attempt to select representatives that have historically 
        served a significant number of persons in publicly paid health 
        programs or the uninsured.  Membership of the work group shall 
        be as follows: 
           (1) one provider member appointed by the Minnesota Medical 
        Association; 
           (2) two provider members appointed by the Minnesota 
        Hospital Association, at least one of whom must represent a 
        major disproportionate share hospital; 
           (3) five members appointed by the Minnesota Council of 
        HMOs, one of whom must represent an HMO with fewer than 50,000 
        enrollees located outside the metropolitan area and one of whom 
        must represent an HMO with at least 50 percent of total 
        membership enrolled through a public program; 
           (4) two representatives of counties appointed by the 
        Association of Minnesota Counties; 
           (5) three representatives of organizations representing the 
        interests of families, children, childless adults, and elderly 
        persons served by the various publicly paid health programs 
        appointed by the governor; 
           (6) two representatives of persons with mental health, 
        developmental or physical disabilities, chemical dependency, or 
        chronic illness appointed by the governor; and 
           (7) three public members appointed by the governor, at 
        least one of whom must represent a community health board.  The 
        risk adjustment association may appoint a representative, if a 
        representative is not otherwise appointed by an appointing 
        authority. 
           (d) The commissioners of health and human services, with 
        the advice of the public programs risk adjustment work group, 
        shall develop a work plan and time frame and shall coordinate 
        their efforts with the private sector risk adjustment 
        association's activities and other state initiatives related to 
        public program managed care reimbursement.  The commissioners of 
        health and human services shall report to the health care 
        commission and to the appropriate legislative committees on 
        January 15, 1996, and on January 15, 1997, on any policy or 
        legislative changes necessary to implement the public program 
        risk adjustment system. 
           Sec. 10.  Minnesota Statutes 1994, section 62Q.03, is 
        amended by adding a subdivision to read: 
           Subd. 5b.  [MEDICARE SUPPLEMENT MARKET.] A risk adjustment 
        system may be developed for the Medicare supplement market.  The 
        Medicare supplement risk adjustment system may include a 
        demographic component and may, but is not required to, include a 
        condition-specific risk adjustment component.  
           Sec. 11.  Minnesota Statutes 1994, section 62Q.03, 
        subdivision 6, is amended to read: 
           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., but is authorized to incorporate under chapter 
        317A. 
           The provisions of this chapter govern if the provisions of 
        chapter 317A conflict with this chapter.  The association may 
        operate under the approved plan of operation and shall be 
        governed in accordance with this chapter and may operate in 
        accordance with chapter 317A.  If the association incorporates 
        as a nonprofit corporation under chapter 317A, the filing of the 
        plan of operation meets the requirements of filing articles of 
        incorporation. 
           The association, its transactions, and all property owned 
        by it are exempt from taxation under the laws of this state or 
        any of its subdivisions, including, but not limited to, income 
        tax, sales tax, use tax, and property tax.  The association may 
        seek exemption from payment of all fees and taxes levied by the 
        federal government.  Except as otherwise provided in this 
        chapter, the association is not subject to the provisions of 
        chapters 14, 60A, 62A, and 62P.  The association is not a public 
        employer and is not subject to the provisions of chapters 179A 
        and 353.  The board of directors and health carriers who are 
        members of the association are exempt from sections 325D.49 to 
        325D.66 in the performance of their duties as directors and 
        members of the association.  The risk adjustment association is 
        subject to the open meeting law. 
           Sec. 12.  Minnesota Statutes 1994, section 62Q.03, 
        subdivision 7, is amended to read: 
           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.
        established to develop and implement a private sector risk 
        adjustment system.  
           Subject to state oversight set forth in subdivision 10, the 
        association shall:  
           (1) develop and implement comprehensive risk adjustment 
        systems for individual, small group, and Medicare Supplement 
        markets consistent with the provisions of this chapter; 
           (2) submit a plan for the development of the risk 
        adjustment system which identifies appropriate implementation 
        dates consistent with the rating and underwriting restrictions 
        of each market, recommends whether transfers attributable to 
        risk adjustment should be required between the individual and 
        small group markets, and makes other appropriate recommendations 
        to the commissioners of health and commerce by November 5, 1995; 
           (3) develop a combination of a demographic risk adjustment 
        system and payments for targeted conditions; 
           (4) test an ambulatory care groups (ACGs) and diagnostic 
        cost groups (DCGs) system, and recommend whether such a 
        methodology should be adopted; 
           (5) fund the development and testing of the risk adjustment 
        system; 
           (6) recommend market conduct guidelines; and 
           (7) develop a plan for assessing members for the costs of 
        administering the risk adjustment system. 
           Sec. 13.  Minnesota Statutes 1994, section 62Q.03, 
        subdivision 8, is amended to read: 
           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 of operation 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. 
           Sec. 14.  Minnesota Statutes 1994, section 62Q.03, is 
        amended by adding a subdivision to read: 
           Subd. 8a.  [PLAN OF OPERATION.] The board shall submit a 
        proposed plan of operation by August 15, 1995, to the 
        commissioners of health and commerce for review.  The 
        commissioners of health and commerce shall have the authority to 
        approve or reject the plan of operation. 
           Amendments to the plan of operation may be made by the 
        commissioners or by the directors of the association, subject to 
        the approval of the commissioners. 
           Sec. 15.  Minnesota Statutes 1994, section 62Q.03, 
        subdivision 9, is amended to read: 
           Subd. 9.  [DATA COLLECTION AND DATA PRIVACY.] 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. The association members shall not have access to 
        unaggregated data on individuals or health plan companies.  The 
        association shall develop, as a part of the plan of operation, 
        procedures for ensuring that data is collected by an appropriate 
        entity.  The commissioners of health and commerce shall have the 
        authority to audit and examine data collected by the association 
        for the purposes of the development and implementation of the 
        risk adjustment system.  Data on individuals obtained for the 
        purposes of risk adjustment development, testing, and operation 
        are designated as private data.  Data not on individuals which 
        is obtained for the purposes of development, testing, and 
        operation of risk adjustment are designated as nonpublic data.  
        Except for the proposed and approved plan of operation, the risk 
        adjustment methodologies examined, the plan for testing, the 
        plan of the risk adjustment system, minutes of meetings, and 
        other general operating information are classified as public 
        data.  Nothing in this section is intended to prohibit the 
        preparation of summary data under section 13.05, subdivision 7.  
        The association, state agencies, and any contractors having 
        access to this data shall maintain it in accordance with this 
        classification.  The commissioners of health and human services 
        have the authority to collect data from health plan companies as 
        needed for the purpose of developing a risk adjustment mechanism 
        for public programs. 
           Sec. 16.  Minnesota Statutes 1994, section 62Q.03, 
        subdivision 10, is amended to read: 
           Subd. 10.  [SUPERVISION STATE OVERSIGHT OF RISK ADJUSTMENT 
        ACTIVITIES.] The association's activities shall be supervised by 
        the commissioners of health and commerce.  The commissioners 
        shall provide specific oversight functions during the 
        development and implementation phases of the risk adjustment 
        system as follows: 
           (1) the commissioners shall approve or reject the 
        association's plan for testing risk adjustment methods, the 
        methods to be used, and any changes to those methods; 
           (2) the commissioners must have the right to attend and 
        participate in all meetings of the association and its work 
        groups or committees, except for meetings involving privileged 
        communication between the association and its counsel as 
        permitted under section 471.705, subdivision 1d, paragraph (e); 
           (3) the commissioners shall approve any consultants or 
        administrators used by the association; 
           (4) the commissioners shall approve or reject the 
        association's plan of operation; and 
           (5) the commissioners shall approve or reject the plan for 
        the risk adjustment system described in subdivision 7, clause 
        (2). 
           If the commissioners reject any of the plans identified in 
        clauses (1), (4), and (5) of this subdivision, the directors 
        shall submit for review an appropriate revised plan within 30 
        days. 
           Sec. 17.  Minnesota Statutes 1994, section 62Q.03, is 
        amended by adding a subdivision to read: 
           Subd. 12.  [PARTICIPATION BY ALL HEALTH PLAN 
        COMPANIES.] Upon its implementation, all health plan companies, 
        as a condition of licensure, must participate in the risk 
        adjustment system to be implemented under this section. 
           Sec. 18.  Minnesota Statutes 1994, section 62Q.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [ACTION PLANS REQUIRED.] (a) To increase 
        public awareness and accountability of health plan companies, 
        all health plan companies that issue or renew a health plan, as 
        defined in section 62Q.01, 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.  For purposes of this 
        subdivision, "health plan" includes the coverages described in 
        section 62A.011, subdivision 3, clause (10).  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. 
           Sec. 19.  Minnesota Statutes 1994, section 62Q.07, 
        subdivision 2, is amended to read: 
           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. 20.  Minnesota Statutes 1994, section 62Q.09, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ENFORCEMENT.] Either The commissioner 
        commissioners of health or and commerce shall each periodically 
        review contracts among health care providing entities and health 
        plan companies to determine compliance with this section, with 
        respect to health plan companies that the commissioners 
        respectively regulate.  Any provider may submit a contract to 
        the relevant commissioner for review if the provider believes 
        this section has been violated.  Any provision of a contract 
        found by the relevant commissioner to violate this section is 
        null and void, and the relevant commissioner may seek assess 
        civil penalties against the health plan company in an amount not 
        to exceed $25,000 for each such contract, using the enforcement 
        procedures otherwise available to the commissioner involved. 
           Sec. 21.  [62Q.105] [HEALTH PLAN COMPANY COMPLAINT 
        PROCEDURE.] 
           Subdivision 1.  [ESTABLISHMENT.] Each health plan company 
        shall establish and make available to enrollees, by July 1, 
        1997, an informal complaint resolution process that meets the 
        requirements of this section.  A health plan company must make 
        reasonable efforts to resolve enrollee complaints, and must 
        inform complainants in writing of the company's decision within 
        30 days of receiving the complaint.  The complaint resolution 
        process must treat the complaint and information related to it 
        as required under sections 72A.49 to 72A.505. 
           Subd. 2.  [MEDICALLY URGENT COMPLAINTS.] Health plan 
        companies shall make reasonable efforts to resolve medically 
        urgent enrollee complaints within 72 hours of receiving the 
        complaint. 
           Subd. 3.  [APPEALS PROCESS.] Health plan companies shall 
        establish and make available to enrollees an impartial appeals 
        process.  If a decision by a health plan company regarding a 
        complaint is partially or wholly adverse to the complainant, the 
        health plan company shall advise the complainant of the right to 
        appeal through the impartial appeals process or to the 
        commissioner.  
           Subd. 4.  [ALTERNATIVE DISPUTE RESOLUTION.] Health plan 
        companies shall make available to enrollees an alternative 
        dispute resolution process, and shall participate in alternative 
        dispute resolution at the request of an enrollee, as required 
        under section 62Q.11.  A health plan company may meet the 
        requirements of subdivision 3 by providing an alternative 
        dispute resolution process.  If the health plan company chooses 
        to provide alternative dispute resolution to meet the 
        requirements of subdivision 3, the process shall be provided at 
        no cost to the enrollee. 
           Subd. 5.  [REQUIREMENTS FOR MANAGED CARE 
        ORGANIZATIONS.] Each managed care organization shall submit all 
        health care quality related complaints to its quality review 
        board or quality review organization for evaluation and possible 
        action.  The complaint resolution process for managed care 
        organizations must clearly indicate the entity responsible for 
        resolving complaints made by enrollees against hospitals, other 
        health care facilities, and health care providers, that are 
        owned by or under contract with the managed care organization. 
           Subd. 6.  [RECORD KEEPING.] Health plan companies shall 
        maintain records of all enrollee complaints and their 
        resolutions.  These records must be retained for five years, and 
        must be made available to the appropriate commissioner upon 
        request. 
           Subd. 7.  [REPORTING.] Each health plan company shall 
        submit to the appropriate commissioner, as part of the company's 
        annual filing, data on the number and type of complaints that 
        are not resolved within 30 days.  A health plan company shall 
        also make this information available to the public upon request. 
           Subd. 8.  [NOTICE TO ENROLLEES.] Health plan companies 
        shall provide a clear and complete description of their 
        complaint resolution procedures to enrollees as part of their 
        evidence of coverage or contract.  The description must 
        specifically inform enrollees: 
           (1) how to file a complaint with the health plan company; 
           (2) how to request an impartial appeal; 
           (3) that they have the right to request the use of 
        alternative methods of dispute resolution; and 
           (4) that they have the right to litigate. 
           Sec. 22.  [62Q.1055] [CHEMICAL DEPENDENCY.] 
           All health plan companies shall use the assessment criteria 
        in Minnesota Rules, parts 9530.6600 to 9530.6660, when assessing 
        and placing enrollees for chemical dependency treatment. 
           Sec. 23.  [62Q.106] [DISPUTE RESOLUTION BY COMMISSIONER.] 
           A complainant may at any time submit a complaint to the 
        appropriate commissioner to investigate.  After investigating a 
        complaint, or reviewing a company's decision, the appropriate 
        commissioner may order a remedy as authorized under section 
        62N.04, 62Q.30, chapter 45, 60A, or 62D. 
           Sec. 24.  Minnesota Statutes 1994, section 62Q.11, 
        subdivision 2, is amended to read: 
           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, and shall establish appropriate 
        cost-sharing requirements for parties taking part in alternative 
        dispute resolution. 
           (d) A health plan company may encourage but not require an 
        enrollee to submit a complaint to alternative dispute resolution.
           Sec. 25.  [62Q.145] [ABORTION AND SCOPE OF PRACTICE.] 
           Health plan company policies related to scope of practice 
        for allied independent health providers as defined in section 
        62Q.095, subdivision 5, midlevel practitioners as defined in 
        section 136A.1356, subdivision 1, and other nonphysician health 
        care professionals must comply with the requirements governing 
        the performance of abortions in section 145.412, subdivision 1. 
           Sec. 26.  Minnesota Statutes 1994, section 62Q.19, is 
        amended to read: 
           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 unit as defined in section 
        62D.02, subdivision 11, an Indian tribal government, an Indian 
        health service unit, or community health board as defined in 
        chapter 145A.  
           Prior to designation, the commissioner shall publish the 
        names of all applicants in the State Register.  The public shall 
        have 30 days from the date of publication to submit written 
        comments to the commissioner on the application.  No designation 
        shall be made by the commissioner until the 30-day period has 
        expired. 
           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.] (a) Any provider may apply to the 
        commissioner for designation as an essential community 
        provider by submitting an application form developed by the 
        commissioner.  Applications must be accepted within two years 
        after the effective date of the rules adopted by the 
        commissioner to implement this section. 
           (b) Each application submitted must be accompanied by an 
        application fee in an amount determined by the commissioner.  
        The fee shall be no more than what is needed to cover the 
        administrative costs of processing the application. 
           (c) The name, address, contact person, and the date by 
        which the commissioner's decision is expected to be made shall 
        be classified as public data under section 13.41.  All other 
        information contained in the application form shall be 
        classified as private data under section 13.41 until the 
        application has been approved, approved as modified, or denied 
        by the commissioner.  Once the decision has been made, all 
        information shall be classified as public data unless the 
        applicant designates and the commissioner determines that the 
        information contains trade secret information. 
           Subd 2a.  [DEFINITION OF HEALTH PLAN COMPANY.] For purposes 
        of this section, "health plan company" does not include a health 
        plan company as defined in section 62Q.01 with fewer than 50,000 
        enrollees, all of whose enrollees are covered under medical 
        assistance, general assistance medical care, or MinnesotaCare. 
           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 services designated to be provided 
        by 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 for these services.  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 in which 
        the essential community provider is certified to serve located. 
           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 the same rate per unit of service as 
        is paid to other health plan providers for the same or similar 
        services. 
           Subd. 5a.  [COOPERATION.] Each health plan company and 
        essential community provider shall cooperate to facilitate the 
        use of the essential community provider by the high risk and 
        special needs populations.  This includes cooperation on the 
        submission and processing of claims, sharing of all pertinent 
        records and data, including performance indicators and specific 
        outcomes data, and the use of all dispute resolution methods as 
        defined in section 62Q.11, subdivision 1. 
           Subd. 5b.  [ENFORCEMENT.] For any violation of this section 
        or any rule applicable to an essential community provider, the 
        commissioner may suspend, modify, or revoke an essential 
        community provider designation.  The commissioner may also use 
        the enforcement authority specified in section 62D.17. 
           Subd. 6.  [TERMINATION.] The designation as an essential 
        community provider is terminated terminates five years after it 
        is granted, and or when universal coverage as defined under 
        section 62Q.165 is achieved, whichever is later.  Once the 
        designation terminates, the former essential community provider 
        has no rights or privileges beyond those of any other health 
        care provider.  The commissioner shall make a recommendation to 
        the legislature on whether an essential community provider 
        designation should be longer than five years. 
           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.  The rules shall require health plan companies to 
        comply with all provisions of section 62Q.14 with respect to 
        enrollee use of essential community providers. 
           Sec. 27.  [62Q.43] [GEOGRAPHIC ACCESS.] 
           Subdivision 1.  [CLOSED-PANEL HEALTH PLAN.] For purposes of 
        this section, "closed-panel health plan" means a health plan as 
        defined in section 62Q.01 that requires an enrollee to receive 
        all or a majority of primary care services from a specific 
        clinic or physician designated by the enrollee that is within 
        the health plan company's clinic or physician network. 
           Subd. 2.  [ACCESS REQUIREMENT.] Every closed-panel health 
        plan must allow enrollees who are full-time students under the 
        age of 25 years to change their designated clinic or physician 
        at least once per month, as long as the clinic or physician is 
        part of the health plan company's statewide clinic or physician 
        network.  A health plan company shall not charge enrollees who 
        choose this option higher premiums or cost sharing than would 
        otherwise apply to enrollees who do not choose this option.  A 
        health plan company may require enrollees to provide 15 days 
        written notice of intent to change their designated clinic or 
        physician. 
           Sec. 28.  [62Q.45] [COVERAGE FOR OUT-OF-AREA PRIMARY CARE.] 
           Subdivision 1.  [STUDY.] The commissioner of health shall 
        develop methods to allow enrollees of managed care organizations 
        to obtain primary care health services outside of the service 
        area of their managed care organization, from health care 
        providers who are employed by or under contract with another 
        managed care organization.  The commissioner shall make 
        recommendations on:  (1) whether this out-of-area primary care 
        coverage should be available to students and/or other enrollees 
        without additional premium charges or cost sharing; (2) methods 
        to coordinate the services provided by different managed care 
        organizations; (3) methods to manage the quality of care 
        provided by different managed care organizations and monitor 
        health care outcomes; (4) methods to reimburse managed care 
        organizations for care provided to enrollees of other managed 
        care organizations; and (5) other issues relevant to the design 
        and administration of out-of-area primary care coverage.  The 
        commissioner shall present recommendations to the legislature by 
        January 15, 1996. 
           Subd. 2.  [DEFINITION.] For purposes of this section, 
        "managed care organization" means:  (1) a health maintenance 
        organization operating under chapter 62D; (2) a community 
        integrated service network as defined under section 62N.02, 
        subdivision 4a; (3) an integrated service network as defined 
        under section 62N.02, subdivision 8; or (4) an insurance company 
        licensed under chapter 60A, nonprofit health service plan 
        corporation operating under chapter 62C, fraternal benefit 
        society operating under chapter 64B, or any other health plan 
        company, to the extent that it covers health care services 
        delivered to Minnesota residents through a preferred provider 
        organization or a network of selected providers. 
           Sec. 29.  [62Q.47] [MENTAL HEALTH AND CHEMICAL DEPENDENCY 
        SERVICES.] 
           (a) All health plans, as defined in section 62Q.01, that 
        provide coverage for mental health or chemical dependency 
        services, must comply with the requirements of this section. 
           (b) 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. 
           (c) Cost-sharing requirements and benefit or service 
        limitations for inpatient hospital mental health and inpatient 
        hospital and residential chemical dependency services, except 
        for persons placed in chemical dependency services under 
        Minnesota Rules, parts 9530.6600 to 9530.6660, must not place a 
        greater financial burden on the insured or enrollee, or be more 
        restrictive than those requirements and limitations for 
        inpatient hospital medical services. 
           Sec. 30.  Minnesota Statutes 1994, section 145.414, is 
        amended to read: 
           145.414 [ABORTION NOT MANDATORY.] 
           (a) No person and no hospital or institution shall be 
        coerced, held liable or discriminated against in any manner 
        because of a refusal to perform, accommodate, assist or submit 
        to an abortion for any reason.  
           (b) It is the policy of the state of Minnesota that no 
        health plan company as defined under section 62Q.01, subdivision 
        4, or health care cooperative as defined under section 62R.04, 
        subdivision 2, shall be required to provide or provide coverage 
        for an abortion.  No provision of this chapter; of chapter 62A, 
        62C, 62D, 62H, 62L, 62M, 62N, 62R, 64B, or of any other chapter; 
        of Minnesota Rules; or of this act shall be construed as 
        requiring a health plan company as defined under section 62Q.01, 
        subdivision 4, or a health care cooperative as defined under 
        section 62R.04, subdivision 2, to provide or provide coverage 
        for an abortion. 
           (c) This section supersedes any provision of this act, or 
        any act enacted prior to enactment of this act, that in any way 
        limits or is inconsistent with this section.  No provision of 
        any act enacted subsequent to this act shall be construed as in 
        any way limiting or being inconsistent with this section, unless 
        the act amends this section or expressly provides that it is 
        intended to limit or be inconsistent with this section. 
           Sec. 31.  [SINGLE ENTRY POINT FOR COMPLAINTS.] 
           The commissioner of health shall establish a single entry 
        point within the health department for consumer complaints about 
        the quality and cost of health care services, whether these 
        services are delivered by individual providers, health care 
        facilities, or health plan companies.  The commissioner shall 
        present a work plan to the legislature by February 1, 1996. 
           Sec. 32.  [CHEMICAL DEPENDENCY STANDARDS AND INCENTIVES.] 
           Subdivision 1.  [STANDARDS.] As part of the department of 
        human service's household survey of chemical dependency needs in 
        Minnesota, the commissioner of human services shall study 
        whether utilization standards pertaining to the number of 
        chemical dependency treatment inpatient and outpatient referrals 
        per 1,000 enrollees and lengths of stay are needed for the state 
        to address chemical dependency treatment needs. 
           Subd. 2.  [INCENTIVES SYSTEM.] The commissioners of human 
        services and health shall develop recommendations for a 
        financial or other incentive system for health plan companies to 
        meet the standards developed in subdivision 1.  The 
        commissioners shall report to the health care commission and 
        appropriate legislative committees by January 15, 1997. 
           Sec. 33.  [CONSTRUCTION.] 
           Nothing in this act shall be construed to expand existing 
        law with respect to coverage of abortion. 
           Sec. 34.  [STUDY OF HEALTH CARE DELIVERY.] 
           The Minnesota health care commission shall study the impact 
        of managed care and other methods of health care delivery on the 
        quality of life and care provided to terminally ill patients.  
        The commission shall also study the impact of managed care and 
        other methods of health care delivery on the quality of life and 
        care provided to persons with chronic illness or disability.  
        The commission shall hold hearings at various sites in Minnesota 
        and take testimony from concerned citizens.  The commission 
        shall present a report on these issues to the legislature and 
        the governor by December 15, 1996. 
           Sec. 35.  [REPEALER; HMO ARBITRATION RULES.] 
           Minnesota Rules, part 4685.1700, subpart 1, item D, is 
        repealed. 
           Sec. 36.  [REPEALER.] 
           Minnesota Statutes 1994, sections 62Q.03, subdivisions 2, 
        3, 4, 5, and 11; 62Q.21; and 62Q.27, are repealed. 
           Sec. 37.  [EFFECTIVE DATE.] 
           Sections 1, 31, and 36 are effective January 1, 1996. 
           Section 27 is effective July 1, 1995, and applies to 
        closed-panel health plans offered, sold, issued, or renewed on 
        or after that date. 
           Section 29 is effective August 1, 1995, and applies to 
        health plans offered, issued, or renewed on or after that date. 
                                   ARTICLE 3 
                           REGULATED ALL-PAYER OPTION 
           Section 1.  Minnesota Statutes 1994, section 62J.017, is 
        amended to read: 
           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. 2.  Minnesota Statutes 1994, 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 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 
        February 15 of each year on the implementation of the growth 
        limits.  This annual report shall describe the differences 
        between the projected increase in health care expenditures, 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, in consultation with the Minnesota 
        health care commission, shall research and include in the annual 
        report required in paragraph (a) for 1996, recommendations 
        regarding the implementation of growth limits for health plan 
        companies and providers.  The commissioner shall: 
           (1) consider both spending and revenue approaches and 
        report on the implementation of the interim limits as defined in 
        sections 62J.041 and 62J.042; 
           (2) make recommendations regarding the enforcement 
        mechanism and consider mechanisms to adjust future growth limits 
        as well as mechanisms to establish financial penalties for 
        noncompliance; 
           (3) address the feasibility of systemwide limits imposed on 
        all integrated service networks; and 
           (4) make recommendations on the most effective way to 
        implement growth limits on the fee-for-service system in the 
        absence of a regulated all-payer system. 
           (b) (c) The commissioner shall enforce limits on growth in 
        spending and revenues for integrated service networks and for 
        the regulated all-payer option health plan companies and 
        revenues for providers.  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) (d) The commissioner shall impose and enforce overall 
        limits on growth in revenues and spending for integrated service 
        networks health plan companies, with adjustments for changes in 
        enrollment, benefits, severity, and risks.  If an integrated 
        service network a health plan company exceeds 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 impose 
        financial penalties up to the amount exceeding the applicable 
        growth limit. 
           (d) The commissioner shall set prices, utilization 
        controls, and other requirements for the regulated all-payer 
        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 growth limits for a calendar year 
        are exceeded, the commissioner may reduce reimbursement rates or 
        otherwise recoup amounts exceeding the limit for all or part of 
        the next calendar year.  To the extent possible, the 
        commissioner may reduce reimbursement rates or otherwise recoup 
        amounts over the limit from individual providers who exceed the 
        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 systemwide 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. 3.  Minnesota Statutes 1994, 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 option 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 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. 4.  Minnesota Statutes 1994, section 62J.152, 
        subdivision 5, is amended to read: 
           Subd. 5.  [USE OF TECHNOLOGY EVALUATION.] (a) The final 
        report on the technology evaluation and the commission's 
        comments and recommendations may be used: 
           (1) by the commissioner in retrospective and prospective 
        review of major expenditures; 
           (2) by integrated service networks and other group 
        purchasers and by employers, in making coverage, contracting, 
        purchasing, and reimbursement decisions; 
           (3) by government programs and regulators of the regulated 
        all-payer option, in making coverage, contracting, purchasing, 
        and reimbursement decisions; 
           (4) by the commissioner and other organizations in the 
        development of practice parameters; 
           (5) (4) by health care providers in making decisions about 
        adding or replacing technology and the appropriate use of 
        technology; 
           (6) (5) by consumers in making decisions about treatment; 
           (7) (6) by medical device manufacturers in developing and 
        marketing new technologies; and 
           (8) (7) as otherwise needed by health care providers, 
        health care plans, consumers, and purchasers. 
           (b) At the request of the commissioner, the health care 
        commission, in consultation with the health technology advisory 
        committee, shall submit specific recommendations relating to 
        technologies that have been evaluated under this section for 
        purposes of retrospective and prospective review of major 
        expenditures and coverage, contracting, purchasing, and 
        reimbursement decisions affecting state programs and the 
        all-payer option. 
           Sec. 5.  Minnesota Statutes 1994, section 62Q.01, 
        subdivision 4, is amended to read: 
           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; or 
           (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. 6.  Minnesota Statutes 1994, section 62Q.30, is 
        amended to read: 
           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 health plan companies 
        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 
        health coverage.  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 
        a health plan company that is the subject of repeated orders by 
        the commissioner that suggests a pattern of inappropriate 
        underutilization. 
           Sec. 7.  Minnesota Statutes 1994, section 62Q.41, is 
        amended to read: 
           62Q.41 [ANNUAL IMPLEMENTATION REPORT.] 
           (a) 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.  
           (b) As part of the report required in paragraph (a) due for 
        1996, the commissioner, in consultation with the health care 
        commission, shall make recommendations on the design and 
        development of an appropriate framework to apply regulations 
        uniformly among all health plan companies and to ensure adequate 
        oversight and consumer protection in the absence of a regulated 
        all-payer system. 
           Sec. 8.  Laws 1994, chapter 625, article 5, section 5, 
        subdivision 1, is amended to read: 
           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. 
           Sec. 9.  [INSTRUCTION TO REVISOR; RECODIFICATION OF INTERIM 
        LIMITS.] 
           The revisor of statutes shall recode Minnesota Statutes, 
        section 62P.04, as amended, as section 62J.041, and shall recode 
        section 62P.05, as amended, as section 62J.042. 
           Sec. 10.  [REPEALER.] 
           Minnesota Statutes 1994, sections 62J.152, subdivision 6; 
        62P.01; 62P.02; 62P.03; 62P.07; 62P.09; 62P.11; 62P.13; 62P.15; 
        62P.17; 62P.19; 62P.21; 62P.23; 62P.25; 62P.27; 62P.29; 62P.31; 
        and 62P.33, are repealed. 
                                   ARTICLE 4 
                               UNIVERSAL COVERAGE 
           Section 1.  Minnesota Statutes 1994, section 62Q.165, is 
        amended to read: 
           62Q.165 [UNIVERSAL COVERAGE.] 
           Subdivision 1.  [DEFINITION.] 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.  Universal coverage is achieved 
        when:  
           (1) every Minnesotan has access to a full range of quality 
        health care services; 
           (2) every Minnesotan is able to obtain affordable health 
        coverage which pays for the full range of services, including 
        preventive and primary care; and 
           (3) every Minnesotan pays into the health care system 
        according to that person's ability.  
           Subd. 2.  [GOAL.] It is the goal of the state to make 
        continuous progress toward reducing the number of Minnesotans 
        who do not have health coverage so that by January 1, 2000, 
        fewer than four percent of the state's population will be 
        without health coverage.  The goal will be achieved by improving 
        access to private health coverage through insurance reforms and 
        market reforms, by making health coverage more affordable for 
        low-income Minnesotans through purchasing pools and state 
        subsidies, and by reducing the cost of health coverage through 
        cost containment programs and methods of ensuring that all 
        Minnesotans are paying into the system according to their 
        ability. 
           Subd. 3.  [REPORT ON HEALTH CARE ACCESS.] (a) The health 
        care commission shall annually report to the legislature 
        regarding the extent to which the state is making progress 
        toward the goal of universal coverage described in this 
        section.  As part of this report, the commission shall monitor 
        the number of uninsured in the state.  The annual report must be 
        submitted no later than January 15 of each year in compliance 
        with section 3.195. 
           (b) The annual report required under paragraph (a), due 
        January 15, 1996, shall advise the legislature regarding 
        possible additional steps in insurance reform that would be 
        helpful in progressing toward universal coverage.  The 
        commission shall consider further initiatives involving group 
        purchasing pools, narrowing premium variations, guaranteed issue 
        and portability requirements, preexisting condition limitations, 
        and other provisions that provide greater opportunities to 
        obtain affordable health coverage.  The commission shall 
        consider the small employer reforms contained in the model laws 
        recommended by the National Association of Insurance 
        Commissioners and shall recommend whether these reforms should 
        be adopted.  
           (c) The annual report due required under paragraph (a), 
        required on January 15, 1996, shall advise the legislature 
        regarding possible changes in the individual insurance market.  
        The report shall consider initiatives regarding purchasing 
        pools, including specific design details of a state-run or 
        state-initiated purchasing pool for individuals, specific 
        legislative reforms needed to encourage the formation of 
        purchasing pools, and point-by-point consideration of the 
        obstacles to enactment of these purchasing pools, including 
        adverse selection.  The report shall consider the creation of a 
        standard and objective definition of eligibility for the 
        comprehensive health association, and whether the enactment of 
        such a definition could be coupled with guaranteed issuance for 
        the remainder of the individual market.  The report should 
        include all other considerations of the commission as to the 
        optimal reforms of the individual market. 
           (d) The health care commission shall in its annual report 
        make recommendations regarding any steps toward achieving 
        universal coverage that became feasible as a result of changes 
        in federal law that remove barriers to state efforts to expand 
        health care access. 
           (e) To the extent possible, the health care commission 
        shall utilize existing information, including information 
        collected by other state or federal agencies and organizations, 
        to complete the studies and reports in this subdivision.  State 
        agencies and organizations shall provide information, technical 
        and analytic support, and other assistance to the commission as 
        possible, to ensure the timely and efficient completion of the 
        studies and reports in this subdivision.  Staff from the 
        appropriate state agencies shall participate with the commission 
        executive director no later than June 15 each year in initial 
        planning and coordination for the annual reports and studies of 
        this subdivision.  Following this initial planning, the 
        executive director shall report to the legislative oversight 
        commission on health care access by July 1 each year on the 
        initial study plan, and on any commission tasks or studies which 
        may not be completed as scheduled due to such constraints as 
        lack of sufficient available information or resources. 
           Sec. 2.  Minnesota Statutes 1994, section 62Q.18, is 
        amended to read: 
           62Q.18 [UNIVERSAL PORTABILITY OF 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; and 
           (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 program 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 program 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 and who qualify under the group's eligibility 
        requirements: 
           (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 
        preexisting condition exclusion. 
           To the extent that this paragraph subdivision conflicts 
        with chapter 62L, with respect to small employers as defined in 
        section 62L.02, chapter 62L governs, regardless of whether the 
        group sponsor is a small employer as defined in section 62L.02, 
        except that for group health plans issued to groups that are not 
        small employers, this subdivision's requirement that the 
        individual have maintained continuous coverage applies.  An 
        individual who has maintained continuous coverage, but would be 
        considered a late entrant under chapter 62L, may be treated as a 
        late entrant in the same manner under this subdivision as 
        permitted under chapter 62L.  
           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 section 62Q.165 and Laws 1994, chapter 
        625, article 6, sections 5, 6, and 7.  Subdivision 6 is not 
        effective until an effective date is specified in 1995 
        legislation. 
           Sec. 3.  [COORDINATION BETWEEN ACUTE AND LONG-TERM CARE.] 
           Subdivision 1.  [GOAL.] The health care commission shall 
        examine the relationship between the acute and long-term care 
        systems in order to address fragmentation and cost shifting 
        between these two systems. 
           Subd. 2.  [PLAN.] The commission shall prepare a plan for a 
        process to bring about greater coordination between acute and 
        long-term care that would maximize quality, overcome cost 
        shifting, and contain overall costs. 
           (a) The commission's plan shall identify: 
           (1) concepts, issues, perceived problems, or concerns to be 
        addressed as part of a process to achieve greater coordination 
        and improved outcomes in acute and long-term care; 
           (2) a suitable process for addressing the issues in clause 
        (1), including adequate involvement of appropriate stakeholder 
        groups, persons receiving long-term care, and the public; and 
           (3) recommendations for appropriate relationships, division 
        of responsibilities, resources, and a timetable for the process 
        of achieving greater coordination between acute and long-term 
        care. 
           (b) The commission's plan shall address: 
           (1) the need for an appropriate framework for measuring and 
        comparing potential costs and benefits of proposals to improve 
        coordination between acute and long-term care; 
           (2) specific information needs and how the information will 
        be developed or obtained; 
           (3) the role of the commission and any changes or 
        modifications of the commission in assisting the process 
        described in the plan; and 
           (4) the degree to which the process of coordinating acute 
        and long-term care might be undertaken sequentially or 
        incrementally, with descriptions of any recommended steps in the 
        process. 
           (c) In developing the plan, the commission shall take 
        testimony from interested persons, review findings of previous 
        studies and reports, and consult with other state agencies and 
        organizations, including, but not limited to: 
           (1) adults with disabilities, parents or guardians of 
        children with disabilities, and groups representing children and 
        adults with a variety of disabilities; and 
           (2) facility based and home and community-based long-term 
        care providers. 
           (d) The commission's plan shall be reported to the 
        legislature by January 15, 1996. 
           Sec. 4.  [REPEALER; ADDITIONAL INSURANCE REFORMS.] 
           Minnesota Statutes 1994, section 62Q.18, subdivisions 2, 3, 
        4, 5, 6, 8, and 9, are repealed. 
                                   ARTICLE 5 
                    DATA COLLECTION AND RESEARCH INITIATIVES 
           Section 1.  Minnesota Statutes 1994, section 13.99, is 
        amended by adding a subdivision to read: 
           Subd. 115.  [HEALTH DATA INSTITUTE DATA.] Data created, 
        collected, received, maintained, or disseminated by the 
        Minnesota health data institute established under section 
        62J.451 are classified under section 62J.452; access to and 
        disclosure of such data are governed by section 62J.452. 
           Sec. 2.  Minnesota Statutes 1994, section 62J.04, 
        subdivision 3, is amended to read: 
           Subd. 3.  [COST CONTAINMENT DUTIES.] After obtaining the 
        advice and recommendations of the Minnesota health care 
        commission, the commissioner shall: 
           (1) establish statewide and regional limits on growth in 
        total health care spending under this section, monitor regional 
        and statewide compliance with the spending limits, and take 
        action to achieve compliance to the extent authorized by the 
        legislature; 
           (2) divide the state into no fewer than four regions, with 
        one of those regions being the Minneapolis/St. Paul metropolitan 
        statistical area but excluding Chisago, Isanti, Wright, and 
        Sherburne counties, for purposes of fostering the development of 
        regional health planning and coordination of health care 
        delivery among regional health care systems and working to 
        achieve spending limits; 
           (3) provide technical assistance to regional coordinating 
        boards; 
           (4) monitor the quality of health care throughout the 
        state, conduct consumer satisfaction surveys, and take action as 
        necessary to ensure an appropriate level of quality; 
           (5) issue recommendations regarding uniform billing forms, 
        uniform electronic billing procedures and data interchanges, 
        patient identification cards, and other uniform claims and 
        administrative procedures for health care providers and private 
        and public sector payers.  In developing the recommendations, 
        the commissioner shall review the work of the work group on 
        electronic data interchange (WEDI) and the American National 
        Standards Institute (ANSI) at the national level, and the work 
        being done at the state and local level.  The commissioner may 
        adopt rules requiring the use of the Uniform Bill 82/92 form, 
        the National Council of Prescription Drug Providers (NCPDP) 3.2 
        electronic version, the Health Care Financing Administration 
        1500 form, or other standardized forms or procedures; 
           (6) undertake health planning responsibilities as provided 
        in section 62J.15; 
           (7) monitor and promote the development and implementation 
        of practice parameters; 
           (8) authorize, fund, or promote research and 
        experimentation on new technologies and health care procedures; 
           (9)  designate referral centers for specialized and 
        high-cost procedures and treatment and establish minimum 
        standards and requirements for particular procedures or 
        treatment; 
           (10) (8) within the limits of appropriations for these 
        purposes, administer or contract for statewide consumer 
        education and wellness programs that will improve the health of 
        Minnesotans and increase individual responsibility relating to 
        personal health and the delivery of health care services, 
        undertake prevention programs including initiatives to improve 
        birth outcomes, expand childhood immunization efforts, and 
        provide start-up grants for worksite wellness programs; and 
           (11) administer the data analysis unit; and 
           (12) (9) undertake other activities to monitor and oversee 
        the delivery of health care services in Minnesota with the goal 
        of improving affordability, quality, and accessibility of health 
        care for all Minnesotans. 
           Sec. 3.  Minnesota Statutes 1994, section 62J.06, is 
        amended to read: 
           62J.06 [IMMUNITY FROM LIABILITY.] 
           No member of the Minnesota health care commission 
        established under section 62J.05, regional coordinating boards 
        established under section 62J.09, or the health 
        planning technology advisory committee established under section 
        62J.15, data collection advisory committee established under 
        section 62J.30, or practice parameter advisory committee 
        established under section 62J.32 shall be held civilly or 
        criminally liable for an act or omission by that person if the 
        act or omission was in good faith and within the scope of the 
        member's responsibilities under this chapter. 
           Sec. 4.  Minnesota Statutes 1994, section 62J.212, is 
        amended to read: 
           62J.212 [COLLABORATION ON PUBLIC HEALTH GOALS.] 
           The commissioner may increase regional spending limits if 
        public health goals for that region are achieved.  The 
        commissioner shall establish specific public health goals 
        including, but not limited to, increased delivery of prenatal 
        care, improved birth outcomes, and expanded childhood 
        immunizations.  The commissioner shall consider the community 
        public health goals and the input of the statewide advisory 
        committee on community health in establishing the statewide 
        goals. 
           Sec. 5.  [62J.2930] [INFORMATION CLEARINGHOUSE.] 
           Subdivision 1.  [ESTABLISHMENT.] The commissioner of health 
        shall establish an information clearinghouse within the 
        department of health to facilitate the ability of consumers, 
        employers, providers, health plan companies, and others to 
        obtain information on health reform activities in Minnesota.  
        The commissioner shall make available through the clearinghouse 
        updates on federal and state health reform activities, including 
        information developed or collected by the department of health 
        on cost containment or other research initiatives, the 
        development of integrated service networks, and voluntary 
        purchasing pools, action plans submitted by health plan 
        companies, reports or recommendations of the health technology 
        advisory committee and other entities on technology assessments, 
        and reports or recommendations from other formal committees 
        applicable to health reform activities.  The clearinghouse shall 
        also refer requestors to sources of further information or 
        assistance.  The clearinghouse is subject to chapter 13. 
           Subd. 2.  [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. 
           Subd. 3.  [CONSUMER INFORMATION.] The information 
        clearinghouse or another entity designated by the commissioner 
        shall provide consumer information to health plan company 
        enrollees to: 
           (1) assist enrollees in understanding their rights; 
           (2) 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) provide information on coverage options in each 
        regional coordinating board region of the state; 
           (4) provide information on the availability of purchasing 
        pools and enrollee subsidies; and 
           (5) help consumers use the health care system to obtain 
        coverage. 
           The information clearinghouse or other entity designated by 
        the commissioner for the purposes of this subdivision shall not: 
           (1) provide legal services to consumers; 
           (2) represent a consumer or enrollee; or 
           (3) 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. 
           Subd. 4.  [COORDINATION.] To the extent possible, the 
        commissioner shall coordinate the activities of the 
        clearinghouse with the activities of the Minnesota health data 
        institute. 
           Sec. 6.  [62J.301] [RESEARCH AND DATA INITIATIVES.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of sections 
        62J.2930 to 62J.42, the following definitions apply: 
           (a) "Health outcomes data" means data used in research 
        designed to identify and analyze the outcomes and costs of 
        alternative interventions for a given clinical condition, in 
        order to determine the most appropriate and cost-effective means 
        to prevent, diagnose, treat, or manage the condition, or in 
        order to develop and test methods for reducing inappropriate or 
        unnecessary variations in the type and frequency of 
        interventions. 
           (b) "Encounter level data" means data related to the 
        utilization of health care services by, and the provision of 
        health care services to individual patients, enrollees, or 
        insureds, including claims data, abstracts of medical records, 
        and data from patient interviews and patient surveys. 
           Subd. 2.  [STATEMENT OF PURPOSE.] The commissioner of 
        health shall conduct data and research initiatives in order to 
        monitor and improve the efficiency and effectiveness of health 
        care in Minnesota. 
           Subd. 3.  [GENERAL DUTIES.] The commissioner shall: 
           (1) collect and maintain data which enable population-based 
        monitoring and trending of the access, utilization, quality, and 
        cost of health care services within Minnesota; 
           (2) collect and maintain data for the purpose of estimating 
        total Minnesota health care expenditures and trends; 
           (3) collect and maintain data for the purposes of setting 
        limits under section 62J.04, and measuring growth limit 
        compliance; 
           (4) conduct applied research using existing and new data 
        and promote applications based on existing research; 
           (5) develop and implement data collection procedures to 
        ensure a high level of cooperation from health care providers 
        and health plan companies, as defined in section 62Q.01, 
        subdivision 4; 
           (6) work closely with health plan companies and health care 
        providers to promote improvements in health care efficiency and 
        effectiveness; and 
           (7) participate as a partner or sponsor of private sector 
        initiatives that promote publicly disseminated applied research 
        on health care delivery, outcomes, costs, quality, and 
        management. 
           Subd. 4.  [INFORMATION TO BE COLLECTED.] (a) The data 
        collected may include health outcomes data, patient functional 
        status, and health status.  The data collected may include 
        information necessary to measure and make adjustments for 
        differences in the severity of patient condition across 
        different health care providers, and may include data obtained 
        directly from the patient or from patient medical records, as 
        provided in section 62J.321, subdivision 1. 
           (b) The commissioner may: 
           (1) collect the encounter level data required for the 
        research and data initiatives of sections 62J.301 to 62J.42, 
        using, to the greatest extent possible, standardized forms and 
        procedures; and 
           (2) process the data collected to ensure validity, 
        consistency, accuracy, and completeness, and as appropriate, 
        merge data collected from different sources. 
           (c) For purposes of estimating total health care spending 
        and forecasting rates of growth in health care spending, the 
        commissioner may collect from health care providers data on 
        patient revenues and health care spending during a time period 
        specified by the commissioner.  The commissioner may also 
        collect data on health care revenues and spending from group 
        purchasers of health care.  Health care providers and group 
        purchasers doing business in the state shall provide the data 
        requested by the commissioner at the times and in the form 
        specified by the commissioner.  Professional licensing boards 
        and state agencies responsible for licensing, registering, or 
        regulating providers and group purchasers shall cooperate fully 
        with the commissioner in achieving compliance with the reporting 
        requirements. 
           Subd. 5.  [NONLIMITING.] Nothing in this chapter shall be 
        construed to limit the powers granted to the commissioner of 
        health under chapter 62D, 62N, 144, or 144A. 
           Sec. 7.  [62J.311] [ANALYSIS AND USE OF DATA.] 
           Subdivision 1.  [DATA ANALYSIS.] The commissioner shall 
        analyze the data collected to: 
           (1) assist the state in developing and refining its health 
        policy in the areas of access, utilization, quality, and cost; 
           (2) assist the state in promoting efficiency and 
        effectiveness in the financing and delivery of health services; 
           (3) monitor and track accessibility, utilization, quality, 
        and cost of health care services within the state; 
           (4) evaluate the impact of health care reform activities; 
           (5) assist the state in its public health activities; and 
           (6) evaluate and determine the most appropriate methods for 
        ongoing data collection. 
           Subd. 2.  [CRITERIA FOR DATA AND RESEARCH INITIATIVES.] (a) 
        Data and research initiatives by the commissioner, pursuant to 
        sections 62J.301 to 62J.42, must: 
           (1) serve the needs of the general public, public sector 
        health care programs, employers and other purchasers of health 
        care, health care providers, including providers serving large 
        numbers of people with low-income, and health plan companies as 
        applicable; 
           (2) be based on scientifically sound and statistically 
        valid methods; 
           (3) be statewide in scope, to the extent feasible, in order 
        to benefit health care purchasers and providers in all parts of 
        Minnesota and to ensure broad and representative health care 
        data for research comparisons and applications; 
           (4) emphasize data that is useful, relevant, and 
        nonredundant of existing data.  The initiatives may duplicate 
        existing private data collection activities, if necessary to 
        ensure that the data collected will be in the public domain; 
           (5) be structured to minimize the administrative burden on 
        health plan companies, health care providers, and the health 
        care delivery system, and minimize any privacy impact on 
        individuals; and 
           (6) promote continuous improvement in the efficiency and 
        effectiveness of health care delivery. 
           (b) Data and research initiatives related to public sector 
        health care programs must: 
           (1) assist the state's current health care financing and 
        delivery programs to deliver and purchase health care in a 
        manner that promotes improvements in health care efficiency and 
        effectiveness; 
           (2) assist the state in its public health activities, 
        including the analysis of disease prevalence and trends and the 
        development of public health responses; 
           (3) assist the state in developing and refining its overall 
        health policy, including policy related to health care costs, 
        quality, and access; and 
           (4) provide data that allows the evaluation of state health 
        care financing and delivery programs. 
           Sec. 8.  [62J.321] [DATA COLLECTION AND PROCESSING 
        PROCEDURES.] 
           Subdivision 1.  [DATA COLLECTION.] (a) The commissioner 
        shall collect data from health care providers, health plan 
        companies, and individuals in the most cost-effective manner, 
        which does not unduly burden them.  The commissioner may require 
        health care providers and health plan companies to collect and 
        provide patient health records and claim files, and cooperate in 
        other ways with the data collection process.  The commissioner 
        may also require health care providers and health plan companies 
        to provide mailing lists of patients.  Patient consent shall not 
        be required for the release of data to the commissioner pursuant 
        to sections 62J.301 to 62J.42 by any group purchaser, health 
        plan company, health care provider; or agent, contractor, or 
        association acting on behalf of a group purchaser or health care 
        provider.  Any group purchaser, health plan company, health care 
        provider; or agent, contractor, or association acting on behalf 
        of a group purchaser or health care provider, that releases data 
        to the commissioner in good faith pursuant to sections 62J.301 
        to 62J.42 shall be immune from civil liability and criminal 
        prosecution. 
           (b) When a group purchaser, health plan company, or health 
        care provider submits patient identifying data, as defined in 
        section 62J.451, to the commissioner pursuant to sections 
        62J.301 to 62J.42, and the data is submitted to the commissioner 
        in electronic form, or through other electronic means including, 
        but not limited to, the electronic data interchange system 
        defined in section 62J.451, the group purchaser, health plan 
        company, or health care provider shall submit the patient 
        identifying data in encrypted form, using an encryption method 
        specified by the commissioner.  Submission of encrypted data as 
        provided in this paragraph satisfies the requirements of section 
        144.335, subdivision 3b. 
           (c) The commissioner shall require all health care 
        providers, group purchasers, and state agencies to use a 
        standard patient identifier and a standard identifier for 
        providers and health plan companies when reporting data under 
        this chapter.  The commissioner must encrypt patient identifiers 
        to prevent identification of individual patients and to enable 
        release of otherwise private data to researchers, providers, and 
        group purchasers in a manner consistent with chapter 13 and 
        sections 62J.55 and 144.335.  This encryption must ensure that 
        any data released must be in a form that makes it impossible to 
        identify individual patients.  
           Subd. 2.  [FAILURE TO PROVIDE DATA.] The intentional 
        failure to provide the data requested under this chapter is 
        grounds for 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. 
           Subd. 3.  [DATA COLLECTION AND REVIEW.] Data collection 
        must continue for a sufficient time to permit:  adequate 
        analysis by researchers and appropriate providers, including 
        providers who will be impacted by the data; feedback to 
        providers; monitoring for changes in practice patterns; and the 
        data and research criteria of section 62J.311, subdivision 2, to 
        be fulfilled. 
           Subd. 4.  [USE OF EXISTING DATA.] (a) The commissioner 
        shall negotiate with private sector organizations currently 
        collecting health care data of interest to the commissioner to 
        obtain required data in a cost-effective manner and minimize 
        administrative costs.  The commissioner shall attempt to 
        establish links between the health care data collected to 
        fulfill sections 62J.301 to 62J.42 and existing private sector 
        data and shall consider and implement methods to streamline data 
        collection in order to reduce public and private sector 
        administrative costs. 
           (b) The commissioner shall use existing public sector data, 
        such as those existing for medical assistance and Medicare, to 
        the greatest extent possible.  The commissioner shall establish 
        links between existing public sector data and consider and 
        implement methods to streamline public sector data collection in 
        order to reduce public and private sector administrative costs. 
           Subd. 5.  [DATA CLASSIFICATION.] (a) Data collected to 
        fulfill the data and research initiatives authorized by sections 
        62J.301 to 62J.42 that identify individual patients or providers 
        are private data on individuals.  Data not on individuals are 
        nonpublic data.  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, individual or group purchasers, or other specific 
        individuals and organizations, except with the permission of the 
        affected individual or organization, or as permitted elsewhere 
        in this chapter. 
           (b) Raw unaggregated data collected from household and 
        employer surveys used by the commissioner to monitor the number 
        of uninsured individuals, reasons for lack of insurance 
        coverage, and to evaluate the effectiveness of health care 
        reform, are subject to the same data classifications as data 
        collected pursuant to sections 62J.301 to 62J.42. 
           (c) Notwithstanding sections 13.03, subdivisions 6 to 8; 
        13.10, subdivisions 1 to 4; and 138.17, data received by the 
        commissioner pursuant to sections 62J.301 to 62J.42, shall 
        retain the classification designated under this section and 
        shall not be disclosed other than pursuant to this section. 
           (d) Summary data collected to fulfill the data and research 
        initiatives authorized by sections 62J.301 to 62J.42 may be 
        disseminated under section 13.05, subdivision 7.  For the 
        purposes of this section, summary data includes nonpublic data 
        not on individuals. 
           (e) Notwithstanding paragraph (a), the commissioner may 
        publish nonpublic or private data collected pursuant to sections 
        62J.301 to 62J.42 on health care costs and spending, quality and 
        outcomes, and utilization for health care institutions, 
        individual health care professionals and groups of health care 
        professionals, group purchasers, and integrated service 
        networks, with a description of the methodology used for 
        analysis.  The commissioner may not make public any patient 
        identifying information except as specified in law.  The 
        commissioner shall not reveal the name of an institution, group 
        of professionals, individual health care professional, group 
        purchaser, or integrated service network until after the 
        institution, group of professionals, individual health care 
        professional, group purchaser, or integrated service network has 
        had 21 days to review the data and comment.  The commissioner 
        shall include comments received in the release of the data. 
           (f) A provider or group purchaser may contest whether the 
        data meets the criteria of section 62J.311, subdivision 2, 
        paragraph (a), clause (2), in accordance with a contested case 
        proceeding as set forth in sections 14.57 to 14.62, subject to 
        appeal in accordance with sections 14.63 to 14.68.  To obtain a 
        contested case hearing, the provider or group purchaser must 
        make a written request to the commissioner before the end of the 
        time period for review and comment.  Within ten days of the 
        assignment of an administrative law judge, the provider or group 
        purchaser shall make a clear showing to the administrative law 
        judge of probable success in a hearing on the issue of whether 
        the data are accurate and valid and were collected based on the 
        criteria of section 62J.311, subdivision 2, paragraph (a), 
        clause (2).  If the administrative law judge determines that the 
        provider or group purchaser has made such a showing, the data 
        shall remain private or nonpublic during the contested case 
        proceeding and appeal.  If the administrative law judge 
        determines that the provider or group purchaser has not made 
        such a showing, the commissioner may publish the data 
        immediately, with comments received in the release of the data.  
        The contested case proceeding and subsequent appeal is not an 
        exclusive remedy and any person may seek a remedy pursuant to 
        section 13.08, subdivisions 1 to 4, or as otherwise authorized 
        by law. 
           Subd. 6.  [RULEMAKING.] The commissioner may adopt rules to 
        implement sections 62J.301 to 62J.452. 
           Subd. 7.  [FEDERAL AND OTHER GRANTS.] The commissioner may 
        seek federal funding, and funding from private and other 
        nonstate sources, for data and research initiatives. 
           Subd. 8.  [CONTRACTS AND GRANTS.] To carry out the duties 
        assigned in sections 62J.301 to 62J.42, the commissioner may 
        contract with or provide grants to private sector entities.  Any 
        contract or grant must require the private sector entity to 
        maintain the data which it receives according to the statutory 
        provisions applicable to the data. 
           Sec. 9.  [62J.322] [PROVIDER INFORMATION PILOT STUDY.] 
           The commissioner 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:  (i) statistical validity of 
        the data; (ii) public need for the data; (iii) estimated expense 
        of collecting and reporting the data; and (iv) usefulness of the 
        data to identify barriers and opportunities to improve quality 
        care provision within health plan companies. 
           Sec. 10.  Minnesota Statutes 1994, section 62J.37, is 
        amended to read: 
           62J.37 [COST CONTAINMENT DATA FROM INTEGRATED SERVICE 
        NETWORKS.] 
           The commissioner shall require integrated service networks 
        operating under section 62N.06, subdivision 1, to submit data on 
        health care spending and revenue for calendar year 1994 1996 by 
        February 15, 1995 April 1, 1997.  Each February 15 April 1 
        thereafter, integrated service networks shall submit to the 
        commissioner data on health care spending and revenue for the 
        preceding calendar year.  The data must be provided in the form 
        specified by the commissioner.  To the extent that an integrated 
        service network is operated by a group purchaser under section 
        62N.06, subdivision 2, the integrated service network is exempt 
        from this section and the group purchaser must provide data on 
        the integrated service network under section 62J.38. 
           Sec. 11.  Minnesota Statutes 1994, section 62J.38, is 
        amended to read: 
           62J.38 [COST CONTAINMENT 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 each calendar year 1993 and 
        successive calendar years.  Group purchasers shall submit data 
        for the 1993 calendar year by 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 may be provided separately for the following categories or 
        for other categories required by the commissioner:  physician 
        services, dental services, other professional services, 
        inpatient hospital services, outpatient hospital services, 
        emergency and out-of-area care, pharmacy services and 
        prescription drugs other nondurable medical goods, mental health 
        services, and chemical dependency services, other expenditures, 
        subscriber liability, and administrative costs.  The 
        commissioner may require each group purchaser to submit any 
        other data, including data in unaggregated form, for the 
        purposes of developing spending estimates, setting spending 
        limits, and monitoring actual spending and costs. 
           (c) The commissioner may collect information on: 
           (1) premiums, benefit levels, managed care procedures, and 
        other features of health plan companies; 
           (2) prices, provider experience, and other information for 
        services less commonly covered by insurance or for which 
        patients commonly face significant out-of-pocket expenses; and 
           (3) information on health care services not provided 
        through health plan companies, including information on prices, 
        costs, expenditures, and utilization. 
           (c) State agencies and (d) All other group purchasers shall 
        provide the required data using a uniform format and uniform 
        definitions, as prescribed by the commissioner. 
           Sec. 12.  Minnesota Statutes 1994, section 62J.40, is 
        amended to read: 
           62J.40 [COST CONTAINMENT DATA FROM STATE AGENCIES AND OTHER 
        GOVERNMENTAL UNITS.] 
           In addition to providing the data required under section 
        62J.38, the commissioners of human services, commerce, labor and 
        industry, and employee relations and (a) All other state 
        departments or agencies that administer one or more health care 
        programs shall provide to the commissioner of health any 
        additional data on the health care programs they administer that 
        is requested by the commissioner of health, including data in 
        unaggregated form, for purposes of developing estimates of 
        spending, setting spending limits, and monitoring actual 
        spending.  The data must be provided at the times and in the 
        form specified by the commissioner of health. 
           (b) For purposes of estimating total health care spending 
        as provided in section 62J.301, subdivision 4, clause (c), all 
        local governmental units shall provide expenditure data to the 
        commissioner.  The commissioner shall consult with 
        representatives of the affected local government units in 
        establishing definitions, reporting formats, and reporting time 
        frames.  As much as possible, the data shall be collected in a 
        manner that ensures that the data collected is consistent with 
        data collected from the private sector and minimizes the 
        reporting burden to local government. 
           Sec. 13.  Minnesota Statutes 1994, section 62J.41, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COST CONTAINMENT DATA TO BE COLLECTED FROM 
        PROVIDERS.] The commissioner shall require health care providers 
        to collect and provide both patient specific information and 
        descriptive and financial aggregate data on: 
           (1) the total number of patients served; 
           (2) the total number of patients served by state of 
        residence and Minnesota county; 
           (3) the site or sites where the health care provider 
        provides services; 
           (4) the number of individuals employed, by type of 
        employee, by the health care provider; 
           (5) the services and their costs for which no payment was 
        received; 
           (6) total revenue by type of payer or by groups of payers, 
        including but not limited to, revenue from Medicare, medical 
        assistance, MinnesotaCare, nonprofit health service plan 
        corporations, commercial insurers, integrated service networks, 
        health maintenance organizations, and individual patients; 
           (7) revenue from research activities; 
           (8) revenue from educational activities; 
           (9) revenue from out-of-pocket payments by patients; 
           (10) revenue from donations; and 
           (11) any other data required by the commissioner, including 
        data in unaggregated form, for the purposes of developing 
        spending estimates, setting spending limits, monitoring actual 
        spending, and monitoring costs and quality.  
        The commissioner may, by rule, modify the data submission 
        categories listed above if the commissioner determines that this 
        will reduce the reporting burden on providers without having a 
        significant negative effect on necessary data collection efforts.
           Sec. 14.  Minnesota Statutes 1994, 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 April 1, 1994.  Health care providers shall submit data for 
        the 1994 calendar year by April 1, 1995, and each 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 commissioners of health and revenue shall have the 
        authority to share data collected pursuant to this section. 
           Sec. 15.  [62J.451] [MINNESOTA HEALTH DATA INSTITUTE.] 
           Subdivision 1.  [STATEMENT OF PURPOSE.] It is the intention 
        of the legislature to create a partnership between the public 
        and the private sectors for the coordination of efforts related 
        to the collection, analysis, and dissemination of cost, access, 
        quality, utilization, and other performance data, to the extent 
        administratively efficient and effective. 
           The Minnesota health data institute shall be a partnership 
        between the commissioner of health and a board of directors 
        representing group purchasers, health care providers, and 
        consumers. 
           Subd. 2.  [DEFINITIONS.] For purposes of this section and 
        section 62J.452, the following definitions apply.  
           (a) "Analysis" means the identification of selected data 
        elements, a description of the methodology used to select or 
        analyze those data elements, and any other commentary, 
        conclusions, or other descriptive material that the health data 
        institute determines is appropriately included, all of which is 
        undertaken by the health data institute for one or more of the 
        purposes or objectives set forth in subdivisions 1 and 3, or by 
        other authorized researchers pursuant to section 62J.452, 
        subdivision 6.  
           (b) "Board" means the board of directors of the health data 
        institute. 
           (c) "Contractor" means an agent, association, or other 
        individual or entity that has entered into an agreement with an 
        industry participant, as defined in section 62J.452, subdivision 
        2, paragraph (i), to act on behalf of that industry participant 
        for purposes of fulfilling the data collection and reporting 
        activities established under this chapter. 
           (d) "Database" means a compilation of selected data 
        elements by the health data institute for the purpose of 
        conducting an analysis or facilitating an analysis by another 
        party. 
           (e) "Electronic data interchange system" or "EDI system" 
        means the electronic data system developed, implemented, 
        maintained, or operated by the health data institute, as 
        permitted by subdivisions 3, clause (2), and 5, according to 
        standards adopted by the health data institute. 
           (f) "Encounter level data" means data related to the 
        utilization of health care services by, and the provision of 
        health care services to, individual patients, enrollees, or 
        insureds, including claims data, abstracts of medical records, 
        and data from patient interviews and patient surveys. 
           (g) "Group purchaser" has the definition provided in 
        section 62J.03, subdivision 6. 
           (h) "Health data institute" means the public-private 
        partnership between the commissioner of health and the board of 
        directors established under this section. 
           (i) "Health plan company" has the definition provided in 
        section 62Q.01, subdivision 4. 
           (j) "Industry participant" means any group purchaser, 
        employers with employee health benefit plans, regardless of the 
        manner in which benefits are provided or paid for under the 
        plan, provider, or state agency or political subdivision, with 
        the exception of professional licensing boards or law 
        enforcement agencies. 
           (k) "Industry participant identifying data" means any data 
        that identifies a specific industry participant directly, or 
        which identifies characteristics which reasonably could uniquely 
        identify such specific industry participant circumstantially.  
        For purposes of this definition, an industry participant is not 
        "directly identified" by the use of a unique identification 
        number, provided that the number is coded or encrypted through a 
        reliable system that can reasonably assure that such numbers 
        cannot be traced back by an unauthorized person to determine the 
        identity of an industry participant with a particular number. 
           (l) "Patient" is an individual as defined in section 13.02, 
        subdivision 8, except that "patient" does not include any 
        industry participant acting as an industry participant rather 
        than as a consumer of health care services or coverage. 
           (m) "Patient identifying data" means data that identifies a 
        patient directly, or which identifies characteristics which 
        reasonably could uniquely identify such specific patients 
        circumstantially.  For purposes of this definition, a patient is 
        not "directly identified" by the use of a unique identification 
        number, provided that the number is coded or encrypted through a 
        reliable system that can reasonably assure that such numbers 
        cannot be traced back by an unauthorized person to determine the 
        identity of a patient with a particular number. 
           (n) "Performance" means the degree to which a health plan 
        company, provider organization, or other entity delivers 
        quality, cost-effective services compared to other similar 
        entities, or to a given level of care set as a goal to be 
        attained. 
           (o) "Provider" or "health care provider" has the meaning 
        given in section 62J.03, subdivision 8. 
           (p) "Roster data" with regard to the enrollee of a health 
        plan company or group purchaser means an enrollee's name, 
        address, telephone number, date of birth, gender, and enrollment 
        status under a group purchaser's health plan.  "Roster data" 
        with regard to a patient of a provider means the patient's name, 
        address, telephone number, date of birth, gender, and date or 
        dates treated, including, if applicable, the date of admission 
        and the date of discharge. 
           Subd. 3.  [OBJECTIVES OF THE HEALTH DATA INSTITUTE.] (a) 
        The health data institute shall: 
           (1) develop a data collection plan that provides 
        coordination for public and private sector data collection 
        efforts related to the performance measurement and improvement 
        of the health care delivery system; 
           (2) establish an electronic data interchange system that 
        may be used by the public and private sectors to exchange health 
        care data in a cost-efficient manner; 
           (3) develop a mechanism to collect, analyze, and 
        disseminate information for comparing the cost and quality of 
        health care delivery system components, including health plan 
        companies and provider organizations; 
           (4) develop policies and procedures to protect the privacy 
        of individual-identifiable data, and to assure appropriate 
        access to and disclosure of information specific to individual 
        health plan companies and provider organizations collected 
        pursuant to this section; and 
           (5) use and build upon existing data sources and 
        performance measurement efforts, and improve upon these existing 
        data sources and measurement efforts through the integration of 
        data systems and the standardization of concepts, to the 
        greatest extent possible. 
           (b) In carrying out its responsibilities, the health data 
        institute may contract with private sector organizations 
        currently collecting data on specific health-related areas of 
        interest to the health data institute, in order to achieve 
        maximum efficiency and cost-effectiveness.  The health data 
        institute may establish links between the data collected and 
        maintained by the health data institute and private sector data 
        through the health data institute's electronic data interchange 
        system, and may implement methods to streamline data collection 
        in order to reduce public and private sector administrative 
        costs.  The health data institute may use or establish links 
        with public sector data, such as that existing for medical 
        assistance and Medicare, to the extent permitted by state and 
        federal law.  The health data institute may also recommend 
        methods to streamline public sector data collection in order to 
        reduce public and private sector administrative costs. 
           (c) Any contract with a private sector entity must require 
        the private sector entity to maintain the data collected 
        according to the applicable data privacy provisions, as provided 
        in section 62J.452. 
           Subd. 4.  [DATA COLLECTION PLAN.] (a) The health data 
        institute shall develop a plan that: 
           (1) identifies the health care data needs of consumers, 
        group purchasers, providers, and the state regarding the 
        performance of health care delivery system components including 
        health plan companies and provider organizations; 
           (2) specifies data collection objectives, strategies, 
        priorities, cost estimates, administrative and operational 
        guidelines, and implementation timelines for the health data 
        institute; and 
           (3) identifies the data needed for the health data 
        institute to carry out the duties assigned in this section.  The 
        plan must take into consideration existing data sources and data 
        sources that can easily be made uniform for links to other data 
        sets. 
           (b) This plan shall be updated on an annual basis. 
           Subd. 5.  [HEALTH CARE ELECTRONIC DATA INTERCHANGE 
        SYSTEM.] (a) The health data institute shall establish an 
        electronic data interchange system that electronically 
        transmits, collects, archives, and provides users of data with 
        the data necessary for their specific interests, in order to 
        promote a high quality, cost-effective, consumer-responsive 
        health care system.  This public-private information system 
        shall be developed to make health care claims processing and 
        financial settlement transactions more efficient and to provide 
        an efficient, unobtrusive method for meeting the shared 
        electronic data interchange needs of consumers, group 
        purchasers, providers, and the state. 
           (b) The health data institute shall operate the Minnesota 
        center for health care electronic data interchange established 
        in section 62J.57, and shall integrate the goals, objectives, 
        and activities of the center with those of the health data 
        institute's electronic data interchange system. 
           Subd. 6.  [PERFORMANCE MEASUREMENT INFORMATION.] (a) The 
        health data institute shall develop and implement a performance 
        measurement plan to analyze and disseminate health care data to 
        address the needs of consumers, group purchasers, providers, and 
        the state for performance measurement at various levels of the 
        health care system in the state.  The plan shall include a 
        mechanism to: 
           (1) provide comparative information to consumers, 
        purchasers, and policymakers for use in performance assessment 
        of health care system components, including health plan 
        companies and provider organizations; 
           (2) complement and enhance, but not replace, existing 
        internal performance improvement efforts of health care 
        providers and plans; and 
           (3) reduce unnecessary administrative costs in the health 
        care system by eliminating duplication in the collection of data 
        for both evaluation and improvement efforts. 
           (b) Performance measurement at the provider organization 
        level may be conducted on a condition-specific basis.  Criteria 
        for selecting conditions for measurement may include: 
           (1) relevance to consumers and purchasers; 
           (2) prevalence of conditions; 
           (3) costs related to diagnosis and treatment; 
           (4) demonstrated efficacy of treatments; 
           (5) evidence of variability in management; 
           (6) existence of risk adjustment methodologies to control 
        for patient and other risk factors contributing to variation in 
        cost and quality; 
           (7) existence of practice guidelines related to the 
        condition; and 
           (8) relevance of the condition to public health goals. 
           (c) Performance measurement on a condition-specific basis 
        may consider multiple dimensions of performance, including, but 
        not limited to: 
           (1) accessibility; 
           (2) appropriateness; 
           (3) effectiveness, including clinical outcomes, patient 
        satisfaction, and functional status; and 
           (4) efficiency. 
           (d) Collection of data for condition-specific performance 
        measurement may be conducted at the patient level.  
        Encounter-level data collected for this purpose may include 
        unique identifiers for patients, providers, payers, and 
        employers in order to link episodes of care across care settings 
        and over time.  The health data institute must encrypt patient 
        identifiers to prevent identification of individual patients and 
        to enable release of otherwise private data to researchers, 
        providers, and group purchasers in a manner consistent with 
        chapter 13 and sections 62J.452 and 144.335. 
           Subd. 6a.  [HEALTH PLAN COMPANY PERFORMANCE 
        MEASUREMENT.] As part of the performance measurement plan 
        specified in subdivision 6, the health data institute shall 
        develop a mechanism to assess the performance of health plan 
        companies, and to disseminate this information through reports 
        and other means to consumers, purchasers, policymakers, and 
        other interested parties, consistent with the data policies 
        specified in section 62J.452.  
           Subd. 6b.  [CONSUMER SURVEYS.] (a) The health data 
        institute shall develop and implement a mechanism for collecting 
        comparative data on consumer perceptions of the health care 
        system, including consumer satisfaction, through adoption of a 
        standard consumer survey.  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 health data institute, in 
        consultation with the health care commission, shall determine a 
        mechanism for the inclusion of the uninsured.  This consumer 
        survey may be conducted every two years.  A focused survey may 
        be conducted on the off years.  Health plan companies and group 
        purchasers shall provide to the health data institute roster 
        data as defined in subdivision 2, including the names, 
        addresses, and telephone numbers of enrollees and former 
        enrollees and other data necessary for the completion of this 
        survey.  This roster data provided by the health plan companies 
        and group purchasers is classified as provided under section 
        62J.452.  The health 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 
        performance reports specified in subdivision 6a, and in other 
        reports developed and disseminated by the health data institute 
        and the commissioner.  The raw, unaggregated data is classified 
        as provided under section 62J.452, and may be made available by 
        the health data institute to the extent permitted under section 
        62J.452.  The health data institute shall provide raw, 
        unaggregated data to the commissioner.  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 health 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 health 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, 1996. 
           Subd. 6c.  [PROVIDER ORGANIZATION PERFORMANCE MEASUREMENT.] 
        As part of the performance measurement plan specified in 
        subdivision 6, the health data institute shall develop a 
        mechanism to assess the performance of hospitals and other 
        provider organizations, and to disseminate this information to 
        consumers, purchasers, policymakers, and other interested 
        parties, consistent with the data policies specified in section 
        62J.452.  Data to be collected may include structural 
        characteristics including staff-mix and nurse-patient ratios.  
        In selecting additional data for collection, the health data 
        institute may 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. 
           Subd. 7.  [DISSEMINATION OF REPORTS; OTHER 
        INFORMATION.] (a) The health data institute shall establish a 
        mechanism for the dissemination of reports and other information 
        to consumers, group purchasers, health plan companies, 
        providers, and the state.  When applicable, the health data 
        institute shall coordinate its dissemination of information 
        responsibilities with those of the commissioner, to the extent 
        administratively efficient and effective. 
           (b) The health data institute may require those requesting 
        data from its databases to contribute toward the cost of data 
        collection through the payments of fees. 
           (c) The health data institute shall not allow a group 
        purchaser or health care provider to use or have access to the 
        electronic data interchange system or to access data under 
        section 62J.452, subdivision 6 or 7, unless the group purchaser 
        or health care provider cooperates with the data collection 
        efforts of the health data institute by submitting or making 
        available through the EDI system or other means all data 
        requested by the health data institute.  The health data 
        institute shall prohibit group purchasers and health care 
        providers from transferring, providing, or sharing data obtained 
        from the health data institute under section 62J.452, 
        subdivision 6 or 7, with a group purchaser or health care 
        provider that does not cooperate with the data collection 
        efforts of the health data institute. 
           Subd. 8.  [ANNUAL REPORT.] (a) The health data institute 
        shall submit to the chairs of the senate joint crime prevention 
        and judiciary subcommittee on privacy, the house of 
        representatives judiciary committee, the legislative commission 
        on health care access, the commissioner, and the governor a 
        report on the activities of the health data institute by 
        February 1 of each year beginning February 1, 1996.  The report 
        shall include: 
           (1) a description of the data initiatives undertaken by the 
        health data institute, including a statement of the purpose and 
        a summary of the results of the initiative; 
           (2) a description of the steps taken by the health data 
        institute to comply with the confidentiality requirements of 
        this section and other applicable laws, and of the health data 
        institute's internal policies and operating procedures relating 
        to data privacy and confidentiality; and 
           (3) a description of the actions taken by the health data 
        institute to ensure that the EDI system being established 
        pursuant to section 62J.451, subdivision 3, clause (2), and 
        subdivision 5, protects the confidentiality requirements of this 
        section and other applicable laws. 
           (b) If the health data institute amends or adopts an 
        internal policy or operating procedure relating to data privacy 
        and confidentiality, it shall submit copies of such policy or 
        procedure within 30 days of its adoption to the public officials 
        identified in this subdivision. 
           Subd. 9.  [BOARD OF DIRECTORS.] The health data institute 
        is governed by a 20-member board of directors consisting of the 
        following members: 
           (1) two representatives of hospitals, one appointed by the 
        Minnesota Hospital Association and one appointed by the 
        Metropolitan HealthCare Council, to reflect a mix of urban and 
        rural institutions; 
           (2) four representatives of health carriers, two appointed 
        by the Minnesota council of health maintenance organizations, 
        one appointed by Blue Cross and Blue Shield of Minnesota, and 
        one appointed by the Insurance Federation of Minnesota; 
           (3) two consumer members, one appointed by the 
        commissioner, and one appointed by the AFL-CIO as a labor union 
        representative; 
           (4) five group purchaser representatives appointed by the 
        Minnesota consortium of health care purchasers to reflect a mix 
        of urban and rural, large and small, and self-insured 
        purchasers; 
           (5) two physicians appointed by the Minnesota Medical 
        Association, to reflect a mix of urban and rural practitioners; 
           (6) one representative of teaching and research 
        institutions, appointed jointly by the Mayo Foundation and the 
        Minnesota Association of Public Teaching Hospitals; 
           (7) one nursing representative appointed by the Minnesota 
        Nurses Association; and 
           (8) three representatives of state agencies, one member 
        representing the department of employee relations, one member 
        representing the department of human services, and one member 
        representing the department of health. 
           Subd. 10.  [TERMS; COMPENSATION; REMOVAL; AND 
        VACANCIES.] The board is governed by section 15.0575. 
           Subd. 11.  [STATUTORY GOVERNANCE.] The health data 
        institute is subject to chapter 13 and section 471.705 but is 
        not otherwise subject to laws governing state agencies except as 
        specifically provided in this chapter. 
           Subd. 12.  [STAFF.] The board may hire an executive 
        director.  The executive director and other health data 
        institute staff are not state employees but are covered by 
        section 3.736.  The executive director and other health data 
        institute staff may participate in the following plans for 
        employees in the unclassified service until January 1, 1996:  
        the state retirement plan, the state deferred compensation plan, 
        and the health, dental, and life insurance plans.  The attorney 
        general shall provide legal services to the board. 
           Subd. 13.  [FEDERAL AND OTHER GRANTS.] The health data 
        institute may seek federal funding, and funding from private and 
        other nonstate sources for the initiative required by the board. 
           Subd. 14.  [CONTRACTS.] To carry out the duties assigned in 
        this section, the health data institute may contract with 
        private sector entities.  Any contract must require the private 
        sector entity to maintain the data which it receives according 
        to the statutory provisions applicable to the data and any other 
        applicable provision specified in section 62J.452. 
           Subd. 15.  [NONLIMITING.] Nothing in this section shall be 
        construed to limit the powers granted to the commissioner of 
        health in chapter 62D, 62N, 144, or 144A. 
           Subd. 16.  [CLARIFICATION OF INTENT.] This section is 
        intended to provide the health data institute with primary 
        responsibility for establishing a data collection plan, 
        establishing an electronic data interchange system, measuring 
        performance at the provider organization and health plan company 
        levels, collecting condition-specific data, developing and 
        administering consumer surveys, and performing other duties 
        specifically assigned in this section.  The commissioner of 
        health may perform these duties only if the commissioner 
        determines that these duties will not be performed by the health 
        data institute. 
           Sec. 16.  [62J.452] [PROTECTION OF PRIVACY AND 
        CONFIDENTIALITY OF HEALTH CARE DATA.] 
           Subdivision 1.  [STATEMENT OF PURPOSE.] The health data 
        institute shall adopt data collection, analysis, and 
        dissemination policies that reflect the importance of protecting 
        the right of privacy of patients in their health care data in 
        connection with each data initiative that the health data 
        institute intends to undertake. 
           Subd. 2.  [DATA CLASSIFICATIONS.] (a) Data collected, 
        obtained, received, or created by the health data institute 
        shall be private or nonpublic, as applicable, unless given a 
        different classification in this subdivision.  Data classified 
        as private or nonpublic under this subdivision may be released 
        or disclosed only as permitted under this subdivision and under 
        the other subdivisions referenced in this subdivision.  For 
        purposes of this section, data that identify individual patients 
        or industry participants are private data on individuals or 
        nonpublic data, as appropriate.  Data not on individuals are 
        nonpublic data.  Notwithstanding sections 13.03, subdivisions 6 
        to 8; 13.10, subdivisions 1 to 4; and 138.17, data received by 
        the health data institute shall retain the classification 
        designated under this chapter and shall not be disclosed other 
        than pursuant to this chapter.  Nothing in this subdivision 
        prevents patients from gaining access to their health record 
        information pursuant to section 144.335. 
           (b) When industry participants, as defined in section 
        62J.451, are required by statute to provide, either directly or 
        through a contractor, as defined in section 62J.451, subdivision 
        2, paragraph (c), patient identifying data to the commissioner 
        pursuant to this chapter or to the health data institute 
        pursuant to section 62J.451, the industry participant or its 
        contractor shall be able to provide the data with or without 
        patient consent, and may not be held liable for doing so. 
           (c) When an industry participant submits patient 
        identifying data to the health data institute, and the data is 
        submitted to the health data institute in electronic form, or 
        through other electronic means including, but not limited to, 
        the electronic data interchange system defined in section 
        62J.451, the industry participant shall submit the patient 
        identifying data in encrypted form, using an encryption method 
        supplied or specified by the health data institute.  Submission 
        of encrypted data as provided in this paragraph satisfies the 
        requirements of section 144.335, subdivision 3b. 
           (d) Patient identifying data may be disclosed only as 
        permitted under subdivision 3. 
           (e) Industry participant identifying data which is not 
        patient identifying data may be disclosed only by being made 
        public in an analysis as permitted under subdivisions 4 and 5 or 
        through access to an approved researcher, industry participant, 
        or contractor as permitted under subdivision 6 or 7. 
           (f) Data that is not patient identifying data and not 
        industry participant identifying data is public data. 
           (g) Data that describes the finances, governance, internal 
        operations, policies, or operating procedures of the health data 
        institute, and that does not identify patients or industry 
        participants or identifies them only in connection with their 
        involvement with the health data institute, is public data. 
           Subd. 3.  [PATIENT IDENTIFYING DATA.] (a) The health data 
        institute must not make public any analysis that contains 
        patient identifying data. 
           (b) The health data institute may disclose patient 
        identifying data only as follows: 
           (1) to research organizations that meet the requirements 
        set forth in subdivision 6, paragraph (a), but only to the 
        extent that such disclosure is also permitted by section 
        144.335, subdivision 3a, paragraph (a); or 
           (2) to a contractor of, or vendor of services to the health 
        data institute for the purposes of conducting a survey or 
        analysis, provided that such contractor or vendor agrees to 
        comply with all data privacy requirements applicable to the 
        health data institute, and to destroy or return to the health 
        data institute all copies of patient identifying data in the 
        possession of such contractor or vendor upon completion of the 
        contract. 
           Subd. 4.  [ANALYSIS TO BE MADE PUBLIC BY THE HEALTH DATA 
        INSTITUTE.] (a) Notwithstanding the classification under 
        subdivision 2 or other provision of state law of data included 
        or used in an analysis, the health data institute may make 
        public data in an analysis pursuant to this subdivision and 
        subdivision 5.  Such analysis may include industry participant 
        identifying data but must not include patient identifying data.  
        In making its determination as to whether to make an analysis or 
        the data used in the analysis public, the health data institute 
        shall consider and determine, in accordance with policies and 
        criteria developed by the health data institute, that the data 
        and analysis are sufficiently accurate, complete, reliable, 
        valid, and as appropriate, case-mixed and severity adjusted, and 
        statistically and clinically significant.  
           (b) Prior to making an analysis public, the health data 
        institute must provide to any industry participant identified in 
        the analysis an opportunity to use the fair hearing procedure 
        established under subdivision 5. 
           (c) Accompanying an analysis made public by the health data 
        institute, the health data institute shall also make public 
        descriptions of the database used in the analysis, the methods 
        of adjusting for case mix and severity, and assuring accuracy, 
        completeness, reliability, and statistical and clinical 
        significance, as appropriate, and appropriate uses of the 
        analysis and related analytical data, including precautionary 
        statements regarding the limitations of the analysis and related 
        analytical data. 
           Subd. 5.  [FAIR HEARING PROCEDURE PRIOR TO MAKING AN 
        ANALYSIS PUBLIC.] (a) The health data institute may not make 
        public an analysis that identifies an industry participant 
        unless the health data institute first complies with this 
        subdivision.  A draft of the portion of the analysis that 
        identifies an industry participant must be furnished upon an 
        industry participant's request to that industry participant 
        prior to making that portion of the analysis public.  Such draft 
        analysis is private or nonpublic, as applicable.  The industry 
        participants so identified have the right to a hearing, at which 
        the industry participants or their contractors, as defined in 
        section 62J.451, subdivision 2, paragraph (c), may object to or 
        seek modification of the analysis.  The cost of the hearing 
        shall be borne by the industry participant requesting the 
        hearing. 
           (b) The health data institute shall establish the hearing 
        procedure in writing.  The hearing procedure shall include the 
        following: 
           (1) the provision of reasonable notice of the health data 
        institute's intention to make such analysis public; 
           (2) an opportunity for the identified industry participants 
        to submit written statements to the health data institute board 
        of directors or its designate, to be represented by a 
        contractor, as defined in section 62J.451, subdivision 2, 
        paragraph (c), or other individual or entity acting on behalf of 
        and chosen by the industry participant for this purpose, and to 
        append a statement to such analysis to be included with it when 
        and if the analysis is made public; and 
           (3) access by the identified industry participants to 
        industry participant identifying data, but only as permitted by 
        subdivision 6 or 7. 
           (c) The health data institute shall make the hearing 
        procedure available in advance to industry participants which 
        are identified in an analysis.  The written hearing procedure is 
        public data.  The following data related to a hearing is public: 
           (1) the parties involved; 
           (2) the dates of the hearing; and 
           (3) a general description of the issue and the results of 
        the hearing; all other data relating to the hearing is private 
        or nonpublic. 
           Subd. 6.  [ACCESS BY APPROVED RESEARCHERS TO DATA THAT 
        IDENTIFIES INDUSTRY PARTICIPANTS BUT DOES NOT IDENTIFY 
        PATIENTS.] (a) The health data institute shall provide access to 
        industry participant identifying data, but not patient 
        identifying data, once those data are in analyzable form, upon 
        request to research organizations or individuals that: 
           (1) have as explicit goals research purposes that promote 
        individual or public health and the release of research results 
        to the public as determined by the health data institute 
        according to standards it adopts for evaluating such goals; 
           (2) enforce strict and explicit policies which protect the 
        confidentiality and integrity of data as determined by the 
        health data institute according to standards it adopts for 
        evaluating such policies; 
           (3) agree not to make public, redisclose, or transfer the 
        data to any other individual or organization, except as 
        permitted under paragraph (b); 
           (4) demonstrate a research purpose for the data that can be 
        accomplished only if the data are provided in a form that 
        identifies specific industry participants as determined by the 
        health data institute according to standards it adopts for 
        evaluating such research purposes; and 
           (5) agree to disclose analysis in a public forum or 
        publication only pursuant to subdivisions 4 and 5 and other 
        applicable statutes and the health data institute's operating 
        rules governing the making of an analysis public by the health 
        data institute. 
           (b) Contractors of entities that have access under 
        paragraph (a) may also have access to industry participant 
        identifying data, provided that the contract requires the 
        contractor to comply with the confidentiality requirements set 
        forth in this section and under any other statute applicable to 
        the entity. 
           Subd. 7.  [ACCESS BY INDUSTRY PARTICIPANTS TO DATA THAT 
        IDENTIFIES INDUSTRY PARTICIPANTS BUT DOES NOT IDENTIFY 
        PATIENTS.] (a) The health data institute may provide, to an 
        industry participant, data that identifies that industry 
        participant or other industry participants, to the extent 
        permitted under this subdivision.  An employer or an employer 
        purchasing group may receive data relating to care provided to 
        patients for which that employer acts as the payer.  A health 
        plan company may receive data relating to care provided to 
        enrollees of that health plan company.  A provider may receive 
        data relating to care provided to patients of that provider. 
           (b) An industry participant may receive data that 
        identifies that industry participant or other industry 
        participants and that relates to care purchased or provided by 
        industry participants other than the industry participant 
        seeking the data.  These data must be provided by the health 
        data institute only with appropriate authorization from all 
        industry participants identified. 
           (c) The health data institute must not provide access to 
        any data under this subdivision that is patient identifying data 
        as defined in section 62J.451, subdivision 2, paragraph (m), 
        even if providing that data would otherwise be allowed under 
        this subdivision. 
           (d) To receive data under this subdivision, an industry 
        participant must cooperate with the health data institute as 
        provided under section 62J.451, subdivision 7, paragraph (c). 
           (e) Contractors of entities that have access under 
        paragraph (b) may have access to industry participant 
        identifying data, provided that the contract requires the 
        contractor to comply with the confidentiality requirements set 
        forth in this section and under any other statute applicable to 
        the entity. 
           Subd. 8.  [STATUS OF DATA ON THE ELECTRONIC DATA 
        INTERCHANGE SYSTEM.] (a) Data created or generated by or in the 
        custody of an industry participant, and transferred 
        electronically by that industry participant to another industry 
        participant using the EDI system developed, implemented, 
        maintained, or operated by the health data institute, as 
        permitted by section 62J.451, subdivision 3, clause (2), and 
        subdivision 5, is not subject to this section or to chapter 13 
        except as provided below. 
           (b) Data created or generated by or in the custody of an 
        industry participant is subject to the privacy protections 
        applicable to the data, including, but not limited to, chapter 
        13 with respect to state agencies and political subdivisions, 
        the Minnesota insurance fair information reporting act with 
        respect to industry participants subject to it, and section 
        144.335, with respect to providers and other industry 
        participants subject to such section. 
           Subd. 9.  [AUTHORIZATION OF STATE AGENCIES AND POLITICAL 
        SUBDIVISIONS TO PROVIDE DATA.] (a) Notwithstanding any 
        limitation in chapter 13 or section 62J.321, subdivision 5, 
        regarding the disclosure of not public data, all state agencies 
        and political subdivisions, including, but not limited to, 
        municipalities, counties, and hospital districts may provide not 
        public data relating to health care costs, quality, or outcomes 
        to the health data institute for the purposes set forth in 
        section 62J.451.  
           (b) Data provided by the commissioner pursuant to paragraph 
        (a) of this subdivision may not include patient identifying data 
        as defined in section 62J.451, subdivision 2, paragraph (m).  
        For data provided by the commissioner of health pursuant to 
        paragraph (a), the health data institute and anyone receiving 
        the data from the health data institute, is prohibited from 
        unencrypting or attempting to link the data with other patient 
        identifying data sources. 
           (c) Any data provided to the health data institute pursuant 
        to paragraph (a) shall retain the same classification that it 
        had with the state agency or political subdivision that provided 
        it.  The authorization in this subdivision is subject to any 
        federal law restricting or prohibiting such disclosure of the 
        data described above. 
           (d) Notwithstanding any limitation in chapter 13 or 
        sections 62J.451 and 62J.452 regarding the disclosure of 
        nonpublic and private data, the health data institute may 
        provide nonpublic and private data to any state agency that is a 
        member of the board of the health data institute.  Any such data 
        provided to a state agency shall retain nonpublic or private 
        classification, as applicable. 
           Subd. 10.  [CIVIL REMEDIES.] Violation of any of the 
        confidentiality requirements set forth in subdivision 3; 4, 
        paragraph (a); 6; or 7, by the health data institute, its board 
        members, employees and contractors, any industry participant, or 
        by any other person shall be subject to section 13.08, 
        including, but not limited to, the immunities set forth in 
        section 13.08, subdivisions 5 and 6.  The health data institute 
        shall not be liable for exercising its discretion in a manner 
        that is not an abuse of discretion with respect to matters under 
        its discretion by this section or section 62J.451.  The health 
        data institute shall not be liable for the actions of persons 
        not under the direction and control of the health data 
        institute, where it has performed its responsibilities to 
        protect data privacy by complying with the requirements of this 
        section and other applicable laws with regard to the disclosure 
        of data.  The remedies set forth in this section do not preclude 
        any person from pursuing any other remedies authorized by law. 
           Subd. 11.  [PENALTIES.] (a) Any person who willfully 
        violates the confidentiality requirements set forth in 
        subdivision 3; 4, paragraph (a); 6; or 7, shall be guilty of a 
        misdemeanor. 
           (b) Any person who willfully violates the confidentiality 
        requirements of subdivision 3, 4, 6, 7, 8, or 9, by willfully 
        disclosing patient or industry participant identifying data for 
        compensation or remuneration of any kind or for the purpose of 
        damaging the reputation of any patient or industry participant 
        or any other malicious purpose, shall be guilty of a gross 
        misdemeanor. 
           Subd. 12.  [DISCOVERABILITY OF HEALTH DATA INSTITUTE 
        DATA.] (a) Data created, collected, received, maintained, or 
        disseminated by the health data institute shall not be subject 
        to discovery or introduction into evidence in any civil or 
        criminal action.  Data created, collected, received, maintained, 
        or disseminated by the health data institute that is otherwise 
        available from original sources is subject to discovery from 
        those sources and may be introduced into evidence in civil or 
        criminal actions in accordance with and subject to applicable 
        laws and rules of evidence and civil or criminal procedure, as 
        applicable. 
           (b) Information related to submission of data to the health 
        data institute by industry participants or contractors of 
        industry participants is not discoverable from the health data 
        institute, the industry participants, the contractors, or any 
        other person or entity, in any civil or criminal action.  
        Discovery requests prohibited under this paragraph include, but 
        are not limited to, document requests or interrogatories that 
        ask for "all data provided to the Minnesota health data 
        institute." 
           Sec. 17.  Minnesota Statutes 1994, section 62J.54, is 
        amended to read: 
           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 1998, 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 1998, 
        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 1998, 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 1998, 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. 18.  Minnesota Statutes 1994, section 62J.55, is 
        amended to read: 
           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 62J.321, subdivision 6 
        1.  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. 19.  Minnesota Statutes 1994, section 62J.58, is 
        amended to read: 
           62J.58 [IMPLEMENTATION OF STANDARD TRANSACTION SETS.] 
           Subdivision 1.  [CLAIMS PAYMENT.] (a) By July 1, 1995 Six 
        months from the date the commissioner formally recommends the 
        use of guides to implement core transaction sets pursuant to 
        section 62J.56, subdivision 3, 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, and 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 Six 
        months from the date the commissioner formally recommends the 
        use of guides to implement core transaction sets pursuant to 
        section 62J.56, subdivision 3, all category I and category II 
        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 Six months from the date the commissioner formally 
        recommends the use of guides to implement core transaction sets 
        pursuant to section 62J.56, subdivision 3, all category I and 
        category II 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 Six 
        months from the date the commissioner formally recommends the 
        use of guides to implement core transaction sets pursuant to 
        section 62J.56, subdivision 3, all category I and category II 
        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. 20.  Minnesota Statutes 1994, section 214.16, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BOARD COOPERATION REQUIRED.] The board shall 
        assist the commissioner of health and the data analysis unit in 
        data collection activities required under Laws 1992, chapter 
        549, article 7, and shall assist the commissioner of revenue in 
        activities related to collection of the health care provider tax 
        required under Laws 1992, chapter 549, article 9.  Upon the 
        request of the commissioner, the data analysis unit, or the 
        commissioner of revenue, the board shall make available names 
        and addresses of current licensees and provide other information 
        or assistance as needed. 
           Sec. 21.  Minnesota Statutes 1994, section 214.16, 
        subdivision 3, is amended to read: 
           Subd. 3.  [GROUNDS FOR DISCIPLINARY ACTION.] The board 
        shall take disciplinary action, which may include license 
        revocation, against a regulated person for: 
           (1) intentional failure to provide the commissioner of 
        health or the data analysis unit established under section 
        62J.30 with the data required under chapter 62J; 
           (2) intentional failure to provide the commissioner of 
        revenue with data on gross revenue and other information 
        required for the commissioner to implement sections 295.50 to 
        295.58; and 
           (3) intentional failure to pay the health care provider tax 
        required under section 295.52. 
           Sec. 22.  [RULES.] 
           Notwithstanding Minnesota Statutes, section 14.05, 
        subdivision 1, Minnesota Rules, chapters 4650, 4651, and 4652, 
        shall continue in effect under the authority granted in 
        Minnesota Statutes, section 62J.321, subdivision 6. 
           Sec. 23.  [INSTRUCTION TO REVISOR.] 
           (a) The revisor of statutes is instructed to change the 
        term "data institute" or "institute", where applicable, to 
        "health data institute" in the 1996 edition of Minnesota 
        Statutes and Minnesota Rules.  
           (b) The revisor of statutes is instructed to change any 
        statutory reference to the information clearinghouse from 
        Minnesota Statutes, section 62J.33 or 62J.33, subdivision 2, to 
        62J.2930, in the 1996 edition of Minnesota Statutes and 
        Minnesota Rules. 
           Sec. 24.  [REPEALER.] 
           Minnesota Statutes 1994, sections 62J.30; 62J.31; 62J.32; 
        62J.33; 62J.34; 62J.35; 62J.41, subdivisions 3 and 4; 62J.44; 
        and 62J.45, are repealed. 
                                   ARTICLE 6
               MINNESOTACARE PROGRAM, PRESCRIPTION DRUG COVERAGE,
                       AND THE HEALTH CARE REFORM WAIVER
           Section 1.  [62J.66] [DEFINITIONS.] 
           Subdivision 1.  [APPLICABILITY.] For purposes of section 
        62J.66 and 62J.68, the following definitions apply. 
           Subd. 2.  [DISCOUNTED PRICE.] The "discounted price" means 
        the lesser of the average wholesale price for a prescription 
        drug minus 20 percent or the usual and customary retail price, 
        including any dispensing fee, minus five percent. 
           Subd. 3.  [ELIGIBLE SENIOR.] "Eligible senior" means a 
        senior citizen eligible for the senior drug discount program 
        under section 62J.68, subdivision 3. 
           Subd. 4.  [SENIOR CITIZEN.] "Senior citizen" means a 
        resident of Minnesota who is age 65 or older. 
           Subd. 5.  [SENIOR DRUG DISCOUNT PROGRAM.] "Senior drug 
        discount program" means the program established in section 
        62J.68. 
           Subd. 6.  [PARTICIPATING DRUG MANUFACTURER.] "Participating 
        drug manufacturer" means any manufacturer who agrees to 
        voluntarily participate in the senior drug discount program. 
           Subd. 7.  [PARTICIPATING CLAIMS PROCESSING 
        COMPANIES.] "Participating claims processing companies" means 
        entities, including, but not limited to, pharmacy benefit 
        management companies, that are awarded a contract by the 
        department of administration to provide on-line services to 
        process payments to participating pharmacies. 
           Subd. 8.  [AVERAGE MANUFACTURER PRICE.] "Average 
        manufacturer price" has the meaning assigned to the term by the 
        Secretary of Health and Human Services for purposes of the 
        federal drug rebate program established under the Omnibus Budget 
        Reconciliation Act of 1990 and section 1927 of the Social 
        Security Act. 
           Sec. 2.  [62J.68] [SENIOR DRUG DISCOUNT PROGRAM.] 
           Subdivision 1.  [ESTABLISHMENT AND ADMINISTRATION.] (a) The 
        commissioner of administration shall award a contract or 
        contracts to claims processing companies to process payments to 
        participating pharmacies.  The contract must include: 
           (1) provisions for participating manufacturers to provide 
        discount payments, through participating claims processing 
        companies, equal to four percent of the average manufacturer 
        price; and 
           (2) quality assurance and verification procedures and 
        authority to conduct audits of pharmacy claims as necessary to 
        ensure that pharmacy reimbursement payments are appropriate and 
        justified. 
           (b) The commissioner of administration may establish an 
        expert panel to assist in the development of the request for 
        proposal for awarding the contract or contracts to process 
        payments for the senior drug discount program. 
           Subd. 2.  [PARTICIPATING MANUFACTURERS.] Participating 
        manufacturers agree to: 
           (1) pay participating pharmacies through the claims 
        processor an amount equal to four percent of the average 
        manufacturer price; 
           (2) process discount payments through participating claims 
        processing companies according to the timelines used under the 
        medical assistance program; 
           (3) pay administrative fees established under subdivision 7.
           Subd. 3.  [PARTICIPATING PHARMACIES.] Participating 
        pharmacies agree to: 
           (1) provide eligible seniors the discounted price 
        established by the senior drug discount program; 
           (2) accept payments from participating claims processing 
        companies equal to four percent of the average manufacturer 
        price; and 
           (3) not charge eligible seniors a dispensing fee greater 
        than $3. 
           Subd. 4.  [ENROLLMENT.] The commissioner of human services 
        shall determine eligibility as specified in subdivision 5 and 
        enroll senior citizens in the senior drug discount program. The 
        commissioner may use volunteers to assist in eligibility and 
        enrollment duties.  The commissioner of human services shall 
        post the eligibility of the enrollees to the Medicaid Management 
        Information System (MMIS) where it can be assessed by 
        participating pharmacies through the department's eligibility 
        verification system and point-of-sale system upon presentation 
        of the enrollee's Minnesota health care programs card. 
           Subd. 5.  [ELIGIBILITY.] (a) Senior citizens are eligible 
        for the program if: 
           (1) their household income does not exceed 200 percent of 
        the federal poverty guidelines; 
           (2) they are enrolled in Medicare Part A and Part B; 
           (3) they do not have coverage for prescription drugs under 
        a health plan, as defined in section 62Q.01, subdivision 3; 
           (4) they do not have coverage for prescription drugs under 
        a Medicare supplement plan, 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 
        1976 of the federal Social Social Security Act, United States 
        Code, title 42, section 1395, et seq., as amended, or coverage 
        for prescription drugs under medical assistance under chapter 
        256B, general assistance medical care under chapter 256D, 
        MinnesotaCare, or the qualified medical beneficiaries program; 
           (5) they meet the residency requirements established under 
        section 256.9359; and 
           (6) they do not have coverage for prescription drugs under 
        medical assistance, general assistance medical care, 
        MinnesotaCare, or the qualified Medicare beneficiary program. 
           (b) The commissioner of human services shall provide each 
        eligible senior with a Minnesota health care programs card 
        indicating enrollment in the senior drug discount program.  
        Eligible seniors must present this card to the participating 
        pharmacy in order to receive the discounted price. 
           Subd. 6.  [ENROLLMENT FEE.] The commissioner of human 
        services may establish an annual enrollment fee of $5 for 
        purposes of administering the senior drug discount program.  The 
        fees shall be deposited in a special revenue account for the 
        purpose of administration of enrollment to the senior drug 
        discount program.  This account shall be exempt from paying 
        statewide and agency indirect costs as required under section 
        16A.127. 
           Subd. 7.  [ADMINISTRATIVE FEE.] The commissioner of 
        administration may authorize a claims processing contractor to 
        charge a fixed claims processing fee not to exceed ten cents for 
        each prescription drug provided to participating seniors under 
        this section.  In the event the commissioner authorizes a claims 
        processing fee, one-half of the fee must be paid by the 
        participating manufacturer and one-half by the participating 
        pharmacy. 
           Subd. 8.  [DISEASE MANAGEMENT FOR DRUG THERAPY.] The 
        commissioner of human services may establish a disease 
        management program for drug therapy for eligible senior 
        citizens.  The commissioner may seek grants and donations from 
        drug manufacturers, drug wholesalers, and other nonstate 
        entities to establish and administer this disease management 
        program. 
           Subd. 9.  [SENIOR DRUG DISCOUNT PROGRAM EVALUATION.] The 
        commissioners of human services and health, in consultation with 
        the commissioner of administration, shall study the efficiency 
        and effectiveness of the senior drug discount program.  The 
        commissioners shall examine methods of encouraging participation 
        by drug manufacturers and pharmacies in the program and any 
        program modifications necessary to effectively serve eligible 
        senior citizens.  The commissioners shall present a progress 
        report on the program to the legislature by January 15, 1996, 
        and recommendations for program changes to the legislature by 
        January 15, 1997. 
           Sec. 3.  Minnesota Statutes 1994, section 256.9352, 
        subdivision 3, is amended to read: 
           Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
        shall manage spending for the 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 biennium and for the following two fiscal years biennium.  
        The estimated expenditure, including minimum reserve 
        requirements, 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, make the 
        adjustments specified in paragraph (b) to ensure that 
        expenditures remain within the limits of available revenues for 
        the remainder of the current biennium and for the following 
        biennium.  The commissioner shall not hire additional staff 
        using appropriations from the health care access fund until the 
        commissioner of finance makes a determination that the 
        adjustments implemented under paragraph (b) are sufficient to 
        allow MinnesotaCare expenditures to remain within the limits of 
        available revenues for the remainder of the current biennium and 
        for the following biennium. 
           (b) The adjustments the commissioner may shall 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 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 MinnesotaCare program.  If 
        these measures are insufficient to limit the expenditures to the 
        estimated amount of revenue, the commissioner may shall 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, 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 taxes imposed under section 
        295.52 and the gross premiums tax imposed under section 60A.15, 
        subdivision 1, paragraph (e), for fiscal year 1997.  
           (b) (c) Notwithstanding paragraph (a) paragraphs (a) and 
        (b), 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) (b). 
           Sec. 4.  Minnesota Statutes 1994, section 256.9353, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [COVERED HEALTH SERVICES.] "Covered health 
        services" means the health services reimbursed under chapter 
        256B, with the exception of inpatient hospital services, special 
        education services, private duty nursing services, adult dental 
        care services other than preventive services, orthodontic 
        services, nonemergency medical transportation services, personal 
        care assistant and case management services, hospice care 
        services, nursing home or intermediate care facilities services, 
        inpatient mental health services, and chemical dependency 
        services.  Outpatient mental health services covered under the 
        MinnesotaCare program are limited to diagnostic assessments, 
        psychological testing, explanation of findings, medication 
        management by a physician, day treatment, partial 
        hospitalization, and individual, family, and group psychotherapy.
           No public funds shall be used for coverage of abortion 
        under MinnesotaCare except where the life of the female would be 
        endangered or substantial and irreversible impairment of a major 
        bodily function would result if the fetus were carried to term; 
        or where the pregnancy is the result of rape or incest. 
           Covered health services shall be expanded as provided in 
        this section. 
           Sec. 5.  Minnesota Statutes 1994, 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 spenddown.  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 and 
        they may not reenroll until 12 calendar months have elapsed.  
        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. 
           (d) Any enrollee or family member of an enrollee who has 
        previously been permanently disenrolled from MinnesotaCare for 
        not applying for and cooperating with medical assistance shall 
        be eligible to reenroll if 12 calendar months have elapsed since 
        the date of disenrollment. 
           Sec. 6.  Minnesota Statutes 1994, section 256.9354, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CHILDREN; EXPANSION AND CONTINUATION OF 
        ELIGIBILITY.] (a)  [CHILDREN.] Prior to October 1, 
        1992, "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 150 185 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 program 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 program under the 
        eligibility criteria in subdivisions 2 to 5 remain eligible for 
        the MinnesotaCare program, 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 program 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. 7.  Minnesota Statutes 1994, 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 or 4a shall continue to be enrolled pursuant to subdivision 1 
        those subdivisions.  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. 8.  Minnesota Statutes 1994, section 256.9354, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [CHILDREN WITH LOWER INCOMES.] Beginning July 1, 
        1993, the definition of "eligible persons" is expanded to 
        include 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.  The commissioner shall exclude all earned income 
        of dependent children who: 
           (1) are full-time or part-time students; 
           (2) are employed for less than 37.5 hours per week; and 
           (3) earn less than $10,000 a year in total from all sources 
        of employment, when calculating gross family incomes for 
        applicants who would otherwise be eligible under this 
        subdivision.  
           Sec. 9.  Minnesota Statutes 1994, section 256.9354, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ADDITION OF SINGLE ADULTS AND HOUSEHOLDS WITH NO 
        CHILDREN.] (a) Beginning October 1, 1994, the definition 
        of "eligible persons" shall is expanded to include all 
        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.  After 
        October 1, 1995, the commissioner of human services may expand 
        the definition of "eligible persons" to include all individuals 
        and households with no children who have gross family incomes 
        that are equal to or less than 135 percent of federal poverty 
        guidelines and are not eligible for medical assistance without a 
        spenddown under chapter 256B.  This expansion may occur only if 
        the financial management requirements of section 256.9352, 
        subdivision 3, can be met. 
           (c) The commissioners of health and human services, in 
        consultation with the legislative commission on health care 
        access, shall make preliminary recommendations to the 
        legislature by October 1, 1995, and final recommendations to the 
        legislature by February 1, 1996, on whether a further expansion 
        of the definition of "eligible persons" to include all 
        individuals and households with no children who have gross 
        family incomes that are equal to or less than 150 percent of 
        federal poverty guidelines and are not eligible for medical 
        assistance without a spenddown under chapter 256B would be 
        allowed under the financial management constraints outlined in 
        section 256.9352, subdivision 3.  
           (c) (d) All eligible persons under paragraphs (a) and (b) 
        are eligible for coverage through the MinnesotaCare 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 program. 
           Sec. 10.  Minnesota Statutes 1994, section 256.9355, 
        subdivision 2, is amended to read: 
           Subd. 2.  [COMMISSIONER'S DUTIES.] The commissioner shall 
        use individuals' social security numbers as identifiers for 
        purposes of administering the plan and conduct data matches to 
        verify income.  Applicants shall submit evidence of family 
        income, earned and unearned, including the most recent income 
        tax return, wage slips, or other documentation that is necessary 
        to verify income eligibility.  The commissioner shall perform 
        random audits to verify reported income and eligibility.  The 
        commissioner may execute data sharing arrangements with the 
        department of revenue and any other governmental agency in order 
        to perform income verification related to eligibility and 
        premium payment under the MinnesotaCare program. 
           Sec. 11.  Minnesota Statutes 1994, section 256.9357, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL REQUIREMENTS.] Families and 
        individuals are eligible for subsidized premium payments based 
        on a sliding scale under section 256.9358 only if the family or 
        individual meets the requirements in subdivisions 2 and 
        3.  Families and individuals who enroll on or after October 1, 
        1992, are eligible for subsidized premium payments based on a 
        sliding scale under section 256.9358 only if the family or 
        individual meets the requirements in subdivisions 2 and 3.  
        Children already enrolled in the children's health plan as of 
        September 30, 1992, eligible under section 256.9354, subdivision 
        1, paragraph (a), children who enroll in the MinnesotaCare 
        program after September 30, 1992, pursuant to Laws 1992, chapter 
        549, article 4, section 17, and children who enroll under 
        section 256.9354, subdivision 4a, are eligible for subsidized 
        premium payments without meeting these requirements, as long as 
        they maintain continuous coverage in the MinnesotaCare plan or 
        medical assistance.  
           Families and individuals who initially enrolled in 
        MinnesotaCare under section 256.9354, and whose income increases 
        above the limits established in section 256.9358, may continue 
        enrollment and pay the full cost of coverage. 
           Sec. 12.  Minnesota Statutes 1994, 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 program.  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:  (1) employer-subsidized coverage was 
        lost due to the death of an employee or divorce; (2) 
        employer-subsidized coverage was lost because an individual 
        became ineligible for coverage as a child or dependent; or (3) 
        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 loss of 
        coverage.  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.  The requirement that the family or 
        individual must not have had access to employer-subsidized 
        coverage during the previous 18 months does apply if 
        employer-subsidized coverage is lost due to an employer 
        terminating health care coverage as an employee benefit.  
           (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. 13.  Minnesota Statutes 1994, section 256.9357, 
        subdivision 3, is amended to read: 
           Subd. 3.  [PERIOD UNINSURED.] To be eligible for subsidized 
        premium payments based on a sliding scale, families and 
        individuals initially enrolled in the MinnesotaCare program 
        under section 256.9354, subdivisions 4 and 5, must have had no 
        health coverage for at least four months prior to application.  
        The commissioner may change this eligibility criterion for 
        sliding scale premiums without complying with rulemaking 
        requirements in order to remain within the limits of available 
        appropriations.  The requirement of at least four months of no 
        health coverage prior to application for the MinnesotaCare 
        program does not apply to: 
           (1) families, children, and individuals who want to apply 
        for the MinnesotaCare program upon termination from the medical 
        assistance program, general assistance medical care program, or 
        coverage under a regional demonstration project for the 
        uninsured funded under section 256B.73, the Hennepin county 
        assured care program, or the Group Health, Inc., community 
        health plan.  This subdivision does not apply to; 
           (2) families and individuals initially enrolled under 
        sections section 256.9354, subdivisions 1, paragraph (a), and 2, 
        or to; 
           (3) children enrolled pursuant to Laws 1992, chapter 549, 
        article 4, section 17; or 
           (4) individuals currently serving or who have served in the 
        military reserves, and dependents of these individuals, if these 
        individuals:  (i) reapply for MinnesotaCare coverage after a 
        period of active military service during which they had been 
        covered by the Civilian Health and Medical Program of the 
        Uniformed Services (CHAMPUS); (ii) were covered under 
        MinnesotaCare immediately prior to obtaining coverage under 
        CHAMPUS; and (iii) have maintained continuous coverage. 
           Sec. 14.  Minnesota Statutes 1994, section 256.9358, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SLIDING SCALES AFTER JUNE 30, 1993.] Beginning 
        July 1, 1993, the sliding scales begin with a premium of 1.5 
        percent of gross family income for individuals with incomes 
        below the limits for the medical assistance program set at 
        133-1/3 percent of the AFDC payment standard and proceed through 
        the following evenly spaced steps:  1.8, 2.3, 3.1, 3.8, 4.8, 
        5.9, 7.4, and 8.8.  These percentages are matched to evenly 
        spaced income steps ranging from the medical assistance income 
        limit to a gross monthly income of $1,600 for an individual, 
        $2,160 for a household of two, $2,720 for a household of three, 
        $3,280 for a household of four, and $3,840 for a household of 
        five, and $4,400 for households of six or more persons.  For the 
        period October 1, 1992 through June 30, 1993, the commissioner 
        shall employ a sliding scale that sets required premiums at 
        percentages of gross family income equal to two-thirds of the 
        percentages specified in this subdivision. 
           Sec. 15.  Minnesota Statutes 1994, section 256.9358, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INELIGIBILITY.] Families with children whose 
        gross monthly income is above the amount specified in 
        subdivision 3 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 greater than 125 percent of the federal poverty guidelines 
        are ineligible for the plan. 
           Sec. 16.  Minnesota Statutes 1994, section 256.9358, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [MINIMUM PREMIUM PAYMENT.] Beginning with premium 
        payments due on or after July 1, 1995, the commissioner shall 
        require all MinnesotaCare enrollees to pay a minimum premium of 
        $4 per month. 
           Sec. 17.  Minnesota Statutes 1994, section 256.9363, 
        subdivision 5, is amended to read: 
           Subd. 5.  [ELIGIBILITY FOR OTHER STATE PROGRAMS.] 
        MinnesotaCare enrollees who become eligible for medical 
        assistance or general assistance medical care will remain in the 
        same managed care plan if the managed care plan has a contract 
        for that population.  Contracts between the department of human 
        services and managed care plans must include MinnesotaCare, and 
        medical assistance and may, at the option of the commissioner of 
        human services, also include general assistance medical care.  
           Sec. 18.  [256.9366] [ELIGIBILITY FOR MINNESOTACARE FOR 
        FAMILIES AND CHILDREN UNDER THE MINNESOTACARE HEALTH CARE REFORM 
        WAIVER.] 
           Subdivision 1.  [FAMILIES WITH CHILDREN; IN 
        GENERAL.] Families with children with family income equal to or 
        less than 275 percent of the federal poverty guidelines for the 
        applicable family size shall be determined eligible for 
        MinnesotaCare according to this section, and section 256.9354, 
        subdivisions 2 to 4a, shall no longer apply.  All other 
        provisions of sections 256.9351 to 256.9363, including the 
        insurance-related barriers to enrollment under section 256.9357, 
        shall apply unless otherwise specified in sections 256.9366 to 
        256.9369.  
           Subd. 2.  [CHILDREN.] For purposes of sections 256.9366 to 
        256.9369, a "child" is an individual under 21 years of age, 
        including the unborn child of a pregnant woman, and including an 
        emancipated minor, and the emancipated minor's spouse.  
           Subd. 3.  [FAMILIES WITH CHILDREN.] For purposes of 
        sections 256.9366 to 256.9369, a "family with children" means a 
        parent or parents and their children, or legal guardians and 
        their wards who are children, and dependent siblings, residing 
        in the same household.  The term includes children and dependent 
        siblings who are temporarily absent from the household in 
        settings such as schools, camps, or visitation with noncustodial 
        parents.  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. 
           Subd. 4.  [CHILDREN IN FAMILIES WITH INCOME AT OR LESS THAN 
        150 PERCENT OF FEDERAL POVERTY GUIDELINES.] Children who have 
        gross family incomes that are equal to or less than 150 percent 
        of the federal poverty guidelines and who are not otherwise 
        insured for the covered services, are eligible for enrollment 
        under sections 256.9366 to 256.9369.  For the purposes of this 
        section, "not otherwise insured for covered services" has the 
        meaning given in Minnesota Rules, part 9506.0020, subpart 3, 
        item B.  
           Subd. 5.  [RESIDENCY.] Families and children who are 
        otherwise eligible for enrollment under section 256.9366 are 
        exempt from the Minnesota residency requirements of section 
        256.9359, if they meet the residency requirements of the medical 
        assistance program according to chapter 256B.  
           Subd. 6.  [COOPERATION WITH MEDICAL ASSISTANCE.] Pregnant 
        women and children applying for MinnesotaCare under this section 
        are not required to apply for the medical assistance program as 
        a condition of enrollment.  Other adults enrolled in 
        MinnesotaCare determined by the commissioner to have a basis of 
        eligibility for medical assistance must cooperate in completing 
        an application for medical assistance by the last day of the 
        third month following admission to an inpatient hospital.  If an 
        enrollee fails to complete an application for medical assistance 
        within this time period, the enrollee shall be disenrolled and 
        may not reenroll. 
           Subd. 7.  [COOPERATION IN ESTABLISHING PATERNITY AND OTHER 
        MEDICAL SUPPORT.] Families and children enrolled in the 
        MinnesotaCare program must cooperate with the department of 
        human services and the local agency in establishing paternity of 
        an enrolled child and in obtaining medical care support and 
        payments for the child and any other person for whom the person 
        can legally assign rights, in accordance with applicable laws 
        and rules governing the medical assistance program.  A child 
        shall not be ineligible for or disenrolled from the 
        MinnesotaCare program solely because of the child's parent or 
        caretaker's failure to cooperate in establishing paternity or 
        obtaining medical support. 
           Sec. 19.  [256.9367] [COVERED SERVICES FOR PREGNANT WOMEN 
        AND CHILDREN UNDER THE MINNESOTACARE HEALTH CARE REFORM WAIVER.] 
           Children and pregnant women are eligible for coverage of 
        all services that are eligible for reimbursement under the 
        medical assistance program according to chapter 256B.  Pregnant 
        women and children are exempt from the provisions of section 
        256.9353, subdivision 7, regarding copayments.  
           Sec. 20.  [256.9368] [PREMIUMS.] 
           Subdivision 1.  [PREMIUM DETERMINATION.] Families and 
        children enrolled according to sections 256.9366 to 256.9369 
        shall pay a premium determined according to a sliding fee based 
        on the cost of coverage as a percentage of the family's gross 
        family income.  Pregnant women and children under age two are 
        exempt from the provisions of section 256.9356, subdivision 3, 
        clause (3), requiring disenrollment for failure to pay 
        premiums.  For pregnant women, this exemption continues until 
        the first day of the month following the 60th day postpartum.  
        Women who remain enrolled during pregnancy or the postpartum 
        period, despite nonpayment of premiums, shall be disenrolled on 
        the first of the month following the 60th day postpartum for the 
        penalty period that otherwise applies under section 256.9356. 
           Subd. 2.  [SLIDING SCALE TO DETERMINE PERCENTAGE OF GROSS 
        FAMILY INCOME.] The commissioner shall establish a sliding fee 
        scale to determine the percentage of gross family income that 
        households at different income levels must pay to obtain 
        coverage through the MinnesotaCare program.  The sliding fee 
        scale must be based on the enrollee's gross family income during 
        the previous four months.  The sliding fee scale begins with a 
        premium of 1.5 percent of gross family income for families with 
        incomes below the limits for the medical assistance program for 
        families and children and proceeds through the following evenly 
        spaced steps:  1.8, 2.3, 3.1, 3.8, 4.8, 5.9, 7.4, and 8.8 
        percent.  These percentages are matched to evenly spaced income 
        steps ranging from the medical assistance income limit for 
        families and children to 275 percent of the federal poverty 
        guidelines for the applicable family size.  The sliding fee 
        scale and percentages are not subject to the provisions of 
        chapter 14.  If a family reports increased income after 
        enrollment, premiums shall not be adjusted until eligibility 
        renewal.  
           Subd. 3.  [EXCEPTIONS TO SLIDING SCALE.] An annual premium 
        of $48 is required for all children who are eligible according 
        to section 256.9366, subdivision 4.  
           Sec. 21.  [256.9369] [PAYMENT RATES; SERVICES FOR FAMILIES 
        AND CHILDREN UNDER THE MINNESOTACARE HEALTH CARE REFORM WAIVER.] 
           Section 256.9362, subdivision 2, shall not apply to 
        services provided to children who are eligible to receive 
        expanded services according to section 256.9367. 
           Sec. 22.  Minnesota Statutes 1994, section 256B.037, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CONTRACT FOR DENTAL SERVICES.] The 
        commissioner may conduct a demonstration project to contract, on 
        a prospective per capita payment basis, with an organization or 
        organizations licensed under chapter 62C or, 62D, or 62N for the 
        provision of all dental care services beginning July 1, 1994, 
        under the medical assistance, general assistance medical care, 
        and MinnesotaCare programs, or when necessary waivers are 
        granted by the secretary of health and human services, whichever 
        occurs later.  The commissioner shall identify a geographic area 
        or areas, including both urban and rural areas, where access to 
        dental services has been inadequate, in which to conduct 
        demonstration projects.  The commissioner shall seek any federal 
        waivers or approvals necessary to implement this section from 
        the secretary of health and human services. 
           The commissioner may exclude from participation in the 
        demonstration project any or all groups currently excluded from 
        participation in the prepaid medical assistance program under 
        section 256B.69.  Except for persons excluded from participation 
        in the demonstration project, all persons who have been 
        determined eligible for medical assistance, general assistance 
        medical care and, if applicable, MinnesotaCare and reside in the 
        designated geographic areas are required to enroll in a dental 
        plan to receive their dental care services.  Except for 
        emergency services or out-of-plan services authorized by the 
        dental plan, recipients must receive their dental services from 
        dental care providers who are part of the dental plan provider 
        network.  
           The commissioner shall select either multiple dental plans 
        or a single dental plan in a designated area.  A dental plan 
        under contract with the department must serve both medical 
        assistance recipients and general assistance medical care 
        recipients in a designated geographic area and may serve 
        MinnesotaCare recipients.  The commissioner may limit the number 
        of dental plans with which the department contracts within a 
        designated geographic area, taking into consideration the number 
        of recipients within the designated geographic area; the number 
        of potential dental plan contractors; the size of the provider 
        network offered by dental plans; the dental care services 
        offered by a dental plan; qualifications of dental plan 
        personnel; accessibility of services to recipients; dental plan 
        assurances of recipient confidentiality; dental plan marketing 
        and enrollment activities; dental plan compliance with this 
        section; dental plan performance under other contracts with the 
        department to serve medical assistance, general assistance 
        medical care, or MinnesotaCare recipients; or any other factors 
        necessary to provide the most economical care consistent with 
        high standards of dental care.  
           For purposes of this section, "dental plan" means an 
        organization licensed under chapter 62C, 62D, or 62N that 
        contracts with the department to provide covered dental care 
        services to recipients on a prepaid capitation basis.  
        "Emergency services" has the meaning given in section 256B.0625, 
        subdivision 4.  "Multiple dental plan area" means a designated 
        area in which more than one dental plan is offered.  
        "Participating provider" means a dentist or dental clinic who is 
        employed by or under contract with a dental plan to provide 
        dental care services to recipients.  "Single dental plan area" 
        means a designated area in which only one dental plan is 
        available. 
           Sec. 23.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [MULTIPLE DENTAL PLAN AREAS.] After the 
        department has executed contracts with dental plans to provide 
        covered dental care services in a multiple dental plan area, the 
        department shall:  
           (1) inform applicants and recipients, in writing, of 
        available dental plans, when written notice of dental plan 
        selection must be submitted to the department, and when dental 
        plan participation begins; 
           (2) randomly assign to a dental plan recipients who fail to 
        notify the department in writing of their dental plan choice; 
        and 
           (3) notify recipients, in writing, of their assigned dental 
        plan before the effective date of the recipient's dental plan 
        participation.  
           Sec. 24.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 1b.  [SINGLE DENTAL PLAN AREAS.] After the department 
        has executed a contract with a dental plan to provide covered 
        dental care services as the sole dental plan in a geographic 
        area, the provisions in paragraphs (a) to (c) apply.  
           (a) The department shall assure that applicants and 
        recipients are informed, in writing, of participating providers 
        in the dental plan and when dental plan participation begins.  
           (b) The dental plan may require the recipient to select a 
        specific dentist or dental clinic and may assign to a specific 
        dentist or dental clinic recipients who fail to notify the 
        dental plan of their selection.  
           (c) The dental plan shall notify recipients in writing of 
        their assigned providers before the effective date of dental 
        plan participation.  
           Sec. 25.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 1c.  [DENTAL CHOICE.] (a) In multiple dental plan 
        areas, recipients may change dental plans once within the first 
        year the recipient participates in a dental plan.  After the 
        first year of dental plan participation, recipients may change 
        dental plans during the annual 30-day open enrollment period.  
           (b) In single dental plan areas, recipients may change 
        their specific dentist or clinic at least once during the first 
        year of dental plan participation.  After the first year of 
        dental plan participation, recipients may change their specific 
        dentist or clinic at least once annually.  The dental plan shall 
        notify recipients of this change option.  
           (c) If a dental plan's contract with the department is 
        terminated for any reason, recipients in that dental plan shall 
        select a new dental plan and may change dental plans or a 
        specific dentist or clinic within the first 60 days of 
        participation in the second dental plan.  
           (d) Recipients may change dental plans or a specific 
        dentist or clinic at any time as follows:  
           (1) in multiple dental plan areas, if the travel time from 
        the recipient's residence to a general practice dentist is over 
        30 minutes, the recipient may change dental plans; 
           (2) in single dental plan areas, if the travel time from 
        the recipient's residence to the recipient's specific dentist or 
        clinic is over 30 minutes, the recipient may change providers; 
        or 
           (3) if the recipient's dental plan or specific dentist or 
        clinic was incorrectly designated due to department or dental 
        plan error.  
           (e) Requests for change under this subdivision must be 
        submitted to the department or dental plan in writing.  The 
        department or dental plan shall notify recipients whether the 
        request is approved or denied within 30 days after receipt of 
        the written request. 
           Sec. 26.  Minnesota Statutes 1994, section 256B.037, 
        subdivision 3, is amended to read: 
           Subd. 3.  [APPEALS.] All recipients of services under this 
        section have the right to appeal to the commissioner under 
        section 256.045.  A recipient participating in a dental plan may 
        utilize the dental plan's internal complaint procedure but is 
        not required to exhaust the internal complaint procedure before 
        appealing to the commissioner.  The appeal rights and procedures 
        in Minnesota Rules, part 9500.1463, apply to recipients who 
        enroll in dental plans. 
           Sec. 27.  Minnesota Statutes 1994, section 256B.037, 
        subdivision 4, is amended to read: 
           Subd. 4.  [INFORMATION REQUIRED BY COMMISSIONER.] A 
        contractor shall submit encounter-specific information as 
        required by the commissioner, including, but not limited to, 
        information required for assessing client satisfaction, quality 
        of care, and cost and utilization of services.  Dental plans and 
        participating providers must provide the commissioner access to 
        recipient dental records to monitor compliance with the 
        requirements of this section.  
           Sec. 28.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [RECIPIENT COSTS.] A dental plan and its 
        participating providers or nonparticipating providers who 
        provide emergency services or services authorized by the dental 
        plan shall not charge recipients for any costs for covered 
        services.  
           Sec. 29.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [FINANCIAL ACCOUNTABILITY.] A dental plan is 
        accountable to the commissioner for the fiscal management of 
        covered dental care services.  The state of Minnesota and 
        recipients shall be held harmless for the payment of obligations 
        incurred by a dental plan if the dental plan or a participating 
        provider becomes insolvent and the department has made the 
        payments due to the dental plan under the contract. 
           Sec. 30.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [QUALITY IMPROVEMENT.] A dental plan shall have 
        an internal quality improvement system.  A dental plan shall 
        permit the commissioner or the commissioner's agents to evaluate 
        the quality, appropriateness, and timeliness of covered dental 
        care services through inspections, site visits, and review of 
        dental records.  
           Sec. 31.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [THIRD-PARTY LIABILITY.] To the extent required 
        under section 62A.046 and Minnesota Rules, part 9506.0080, a 
        dental plan shall coordinate benefits for or recover the cost of 
        dental care services provided recipients who have other dental 
        care coverage.  Coordination of benefits includes the dental 
        plan paying applicable copayments or deductibles on behalf of a 
        recipient.  
           Sec. 32.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [FINANCIAL CAPACITY.] A dental plan shall 
        demonstrate that its financial risk capacity is acceptable to 
        its participating providers; except, an organization licensed as 
        a health maintenance organization under chapter 62D, a nonprofit 
        health service plan under chapter 62C, or an integrated service 
        network or a community integrated service network under chapter 
        62N, is not required to demonstrate financial risk capacity 
        beyond the requirements in those chapters for licensure or a 
        certificate of authority.  
           Sec. 33.  Minnesota Statutes 1994, section 256B.037, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [DATA PRIVACY.] The contract between the 
        commissioner and the dental plan must specify that the dental 
        plan is an agent of the welfare system and shall have access to 
        welfare data on recipients to the extent necessary to carry out 
        the dental plan's responsibilities under the contract.  The 
        dental plan shall comply with chapter 13, the Minnesota 
        government data practices act. 
           Sec. 34.  Minnesota Statutes 1994, section 256B.04, is 
        amended by adding a subdivision to read: 
           Subd. 18.  [APPLICATIONS FOR MEDICAL ASSISTANCE.] The state 
        agency may take applications for medical assistance and conduct 
        eligibility determinations for MinnesotaCare enrollees who are 
        required to apply for medical assistance according to section 
        256.9353, subdivision 3, paragraph (b). 
           Sec. 35.  Minnesota Statutes 1994, section 256B.055, is 
        amended by adding a subdivision to read: 
           Subd. 10a.  [CHILDREN.] This subdivision supersedes 
        subdivision 10, as long as the Minnesota health care reform 
        waiver remains in effect.  When the waiver expires, this 
        subdivision expires and the commissioner of human services shall 
        publish a notice in the State Register and notify the revisor of 
        statutes.  Medical assistance may be paid for a child less than 
        two years of age, whose mother was eligible for and receiving 
        medical assistance at the time of birth and who remains in the 
        mother's household or who is in a family with countable income 
        that is equal to or less than the income standard established 
        under section 256B.057, subdivision 1.  
           Sec. 36.  Minnesota Statutes 1994, section 256B.057, is 
        amended by adding a subdivision to read: 
           Subd. 1b.  [PREGNANT WOMEN AND INFANTS; EXPANSION.] This 
        subdivision supersedes subdivision 1 as long as the Minnesota 
        health care reform waiver remains in effect.  When the waiver 
        expires, the commissioner of human services shall publish a 
        notice in the State Register and notify the revisor of 
        statutes.  An infant less than two years of age or a pregnant 
        woman who has written verification of a positive pregnancy test 
        from a physician or licensed registered nurse, is eligible for 
        medical assistance if countable family income is equal to or 
        less than 275 percent of the federal poverty guideline for the 
        same family size.  For purposes of this subdivision, "countable 
        family income" means the amount of income considered available 
        using the methodology of the AFDC program, except for the earned 
        income disregard and employment deductions.  An amount equal to 
        the amount of earned income exceeding 275 percent of the federal 
        poverty guideline, up to a maximum of the amount by which the 
        combined total of 185 percent of the federal poverty guideline 
        plus the earned income disregards and deductions of the AFDC 
        program exceeds 275 percent of the federal poverty guideline 
        will be deducted for pregnant women and infants less than two 
        years of age.  Eligibility for a pregnant woman or infant less 
        than two years of age under this subdivision must be determined 
        without regard to asset standards established in section 
        256B.056, subdivision 3.  
           An infant born on or after January 1, 1991, to a woman who 
        was eligible for and receiving medical assistance on the date of 
        the child's birth shall continue to be eligible for medical 
        assistance without redetermination until the child's second 
        birthday, as long as the child remains in the woman's household. 
           Sec. 37.  Minnesota Statutes 1994, section 256B.057, is 
        amended by adding a subdivision to read: 
           Subd. 2b.  [NO ASSET TEST FOR CHILDREN AND THEIR PARENTS; 
        EXPANSION.] This subdivision supersedes subdivision 2a as long 
        as the Minnesota health care reform waiver remains in effect.  
        When the waiver expires, this subdivision expires and the 
        commissioner of human services shall publish a notice in the 
        State Register and notify the revisor of statutes.  Eligibility 
        for medical assistance for a person under age 21, and the 
        person's parents or relative caretakers as defined in the aid to 
        families with dependent children program according to chapter 
        256, who are eligible under section 256B.055, subdivision 3, and 
        who live in the same household as the person eligible under age 
        21, must be determined without regard to asset standards 
        established in section 256B.056. 
           Sec. 38.  Minnesota Statutes 1994, section 256B.0625, 
        subdivision 30, is amended to read: 
           Subd. 30.  [OTHER CLINIC SERVICES.] (a) Medical assistance 
        covers rural health clinic services, federally qualified health 
        center services, nonprofit community health clinic services, 
        public health clinic services, and the services of a clinic 
        meeting the criteria established in rule by the commissioner.  
        Rural health clinic services and federally qualified health 
        center services mean services defined in United States Code, 
        title 42, section 1396d(a)(2)(B) and (C).  Payment for rural 
        health clinic and federally qualified health center services 
        shall be made according to applicable federal law and regulation.
           (b) A federally qualified health center that is beginning 
        initial operation shall submit an estimate of budgeted costs and 
        visits for the initial reporting period in the form and detail 
        required by the commissioner.  A federally qualified health 
        center that is already in operation shall submit an initial 
        report using actual costs and visits for the initial reporting 
        period.  Within 90 days of the end of its reporting period, a 
        federally qualified health center shall submit, in the form and 
        detail required by the commissioner, a report of its operations, 
        including allowable costs actually incurred for the period and 
        the actual number of visits for services furnished during the 
        period, and other information required by the commissioner.  
        Federally qualified health centers that file Medicare cost 
        reports shall provide the commissioner with a copy of the most 
        recent Medicare cost report filed with the Medicare program 
        intermediary for the reporting year which support the costs 
        claimed on their cost report to the state. 
           (c) In order to continue cost-based payment under the 
        medical assistance program according to paragraphs (a) and (b), 
        a federally qualified health center or rural health clinic must 
        apply for designation as an essential community provider within 
        six months of final adoption of rules by the department of 
        health according to section 62Q.19, subdivision 7.  For those 
        federally qualified health centers and rural health clinics that 
        have applied for essential community provider status within the 
        six-month time prescribed, medical assistance payments will 
        continue to be made according to paragraphs (a) and (b) for the 
        first three years of essential community provider status.  For 
        federally qualified health centers and rural health clinics that 
        either do not apply within the time specified above, that are 
        denied essential community provider status by the department of 
        health, or who have had essential community provider status for 
        three years, medical assistance payments for health services 
        provided by these entities shall be according to the same rates 
        and conditions applicable to the same service provided by health 
        care providers that are not federally qualified health centers 
        or rural health clinics.  This paragraph takes effect only if 
        the Minnesota health care reform waiver is approved by the 
        federal government, and remains in effect for as long as the 
        Minnesota health care reform waiver remains in effect.  When the 
        waiver expires, this paragraph expires, and the commissioner of 
        human services shall publish a notice in the State Register and 
        notify the revisor of statutes. 
           Sec. 39.  [256B.0645] [PROVIDER PAYMENTS; RETROACTIVE 
        CHANGES IN ELIGIBILITY.] 
           Payment to a provider for a health care service provided to 
        a general assistance medical care recipient who is later 
        determined eligible for medical assistance or MinnesotaCare 
        according to section 256.9367 for the period in which the health 
        care service was provided, shall be considered payment in full, 
        and shall not be adjusted due to the change in eligibility.  
        This section applies to both fee-for-service payments and 
        payments made to health plans on a prepaid capitated basis. 
           Sec. 40.  Minnesota Statutes 1994, section 256B.69, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DEFINITIONS.] For the purposes of this section, 
        the following terms have the meanings given.  
           (a) "Commissioner" means the commissioner of human services.
        For the remainder of this section, the commissioner's 
        responsibilities for methods and policies for implementing the 
        project will be proposed by the project advisory committees and 
        approved by the commissioner.  
           (b) "Demonstration provider" means an individual, agency, 
        organization, or group of these entities that participates in 
        the demonstration project according to criteria, standards, 
        methods, and other requirements established for the project and 
        approved by the commissioner.  
           (c) "Eligible individuals" means those persons eligible for 
        medical assistance benefits as defined in sections 256B.055, 
        256B.056, and 256B.06. 
           (d) "Limitation of choice" means suspending freedom of 
        choice while allowing eligible individuals to choose among the 
        demonstration providers.  
           (e) This paragraph supersedes paragraph (c) as long as the 
        Minnesota health care reform waiver remains in effect.  When the 
        waiver expires, this paragraph expires and the commissioner of 
        human services shall publish a notice in the State Register and 
        notify the revisor of statutes.  "Eligible individuals" means 
        those persons eligible for medical assistance benefits as 
        defined in sections 256B.055, 256B.056, and 256B.06.  
        Notwithstanding sections 256B.055, 256B.056, and 256B.06, an 
        individual who becomes ineligible for the program because of 
        failure to submit income reports or recertification forms in a 
        timely manner, shall remain enrolled in the prepaid health plan 
        and shall remain eligible to receive medical assistance coverage 
        through the last day of the month following the month in which 
        the enrollee became ineligible for the medical assistance 
        program. 
           Sec. 41.  Minnesota Statutes 1994, section 256B.69, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LIMITATION OF CHOICE.] The commissioner shall 
        develop criteria to determine when limitation of choice may be 
        implemented in the experimental counties.  The criteria shall 
        ensure that all eligible individuals in the county have 
        continuing access to the full range of medical assistance 
        services as specified in subdivision 6.  The commissioner shall 
        exempt the following persons from participation in the project, 
        in addition to those who do not meet the criteria for limitation 
        of choice:  (1) persons eligible for medical assistance 
        according to section 256B.055, subdivision 1, and children under 
        age 21 who are in foster placement; (2) persons eligible for 
        medical assistance due to blindness or disability as determined 
        by the social security administration or the state medical 
        review team, unless they are 65 years of age or older, or unless 
        they reside in Itasca county or they reside in a county in which 
        the commissioner conducts a pilot project under a waiver granted 
        pursuant to section 1115 of the Social Security Act; (3) 
        recipients who currently have private coverage through a health 
        maintenance organization; and (4) recipients who are eligible 
        for medical assistance by spending down excess income for 
        medical expenses other than the nursing facility per diem 
        expense.  Before limitation of choice is implemented, eligible 
        individuals shall be notified and after notification, shall be 
        allowed to choose only among demonstration providers.  After 
        initially choosing a provider, the recipient is allowed to 
        change that choice only at specified times as allowed by the 
        commissioner.  If a demonstration provider ends participation in 
        the project for any reason, a recipient enrolled with that 
        provider must select a new provider but may change providers 
        without cause once more within the first 60 days after 
        enrollment with the second provider. 
           Sec. 42.  Laws 1993, First Special Session chapter 1, 
        article 8, section 30, subdivision 2, is amended to read: 
           Subd. 2.  Sections 1 to 3, 8, 9, 13 to 17, 22, 23, and 26 
        to 29 are effective July 1, 1994, contingent upon federal 
        recognition that group residential housing payments qualify as 
        optional state supplement payments to the supplemental security 
        income program under title XVI of the Social Security Act and 
        confer categorical eligibility for medical assistance under the 
        state plan for medical assistance.  The amendments and repeals 
        by Laws 1993, First Special Session chapter 1, article 8, 
        sections 1 to 3, 8, 9, 13 to 17, 22, 23, 26, and 29, are 
        effective July 1, 1994. 
           Sec. 43.  [MANAGED CARE IMPLEMENTATION PLANS.] 
           Prior to enrollment of medical assistance or general 
        assistance medical care recipients residing on an Indian 
        Reservation into managed care plans, the commissioner shall 
        consult with representatives of the Indian Reservation in 
        developing a plan to implement managed care in that community, 
        and shall present this implementation plan to the legislature 
        and to the legislative commission on health care access. 
           Sec. 44.  [MINNESOTACARE PROGRAM ADMINISTRATION.] 
           The commissioner of administration shall study the 
        potential effectiveness of contracting with a private sector 
        third-party administrator to administer the MinnesotaCare 
        program.  The commissioner shall determine whether the use of a 
        third-party administrator to determine enrollee eligibility and 
        process provider claims will reduce state administrative costs, 
        improve the accuracy and timeliness of eligibility determination 
        and claims payment, and allow effective coordination of 
        MinnesotaCare with the medical assistance program and county 
        social service agencies.  The commissioner shall present 
        recommendations to the legislature by February 1, 1996. 
           Sec. 45. [WAIVER REQUEST.] 
           (a) The commissioner of human services shall seek federal 
        approval to add the benefit of drug coverage for qualified 
        Medicare beneficiaries with incomes up to 150 percent of the 
        federal poverty guidelines and to charge a copayment for this 
        benefit. 
           (b) If federal approval is obtained, the commissioner of 
        human services shall report to the legislature and present draft 
        legislation expanding the qualified Medicare beneficiary program 
        to the legislature for approval. 
           Sec. 46.  [REPEALER.] 
           Minnesota Statutes 1994, section 256.9353, subdivisions 4 
        and 5, are repealed. 
           Sec. 47.  [EFFECTIVE DATE.] 
           Sections 18 to 21 (256.9366 to 256.9369), 35, 36, 37, and 
        38 (256B.055, subdivision 10a; 256B.057, subdivision 1b; 
        256B.057, subdivision 2b; and 256B.0625, subdivision 30) are 
        effective July 1, 1995.  The commissioner of human services 
        shall publish a notice in the State Register and notify the 
        revisor of statutes when the waiver expires and the provisions 
        in this section expire. 
                                   ARTICLE 7 
                                INSURANCE REFORM 
           Section 1.  Minnesota Statutes 1994, section 60A.02, is 
        amended by adding a subdivision to read: 
           Subd. 29.  [MULTIPLE EMPLOYER TRUST.] "Multiple employer 
        trust" means a trust organized for the benefit of two or more 
        employers for the purpose of providing health insurance coverage 
        to employees and dependents. 
           Sec. 2.  Minnesota Statutes 1994, section 62A.10, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [REQUIREMENTS.] Group accident and health 
        insurance is hereby declared to be that form of accident and 
        health insurance covering not less than two employees nor less 
        than ten members, and which may include the employee's or 
        member's dependents, consisting of husband, wife, children, and 
        actual dependents residing in the household, written under a 
        master policy issued to any governmental corporation, unit, 
        agency, or department thereof, or to any corporation, 
        copartnership, individual, employer, or to a purchasing pool as 
        described in section 62Q.17, to any association as defined by 
        section 60A.02, subdivision 1a, or to a multiple employer trust, 
        or to the trustee of a fund, established or adopted by two or 
        more employers or maintained for the benefit of members of an 
        association, where officers, members, employees, or classes or 
        divisions thereof, may be insured for their individual benefit. 
           Any insurer authorized to write accident and health 
        insurance in this state shall have power to issue group accident 
        and health policies. 
           Sec. 3.  Minnesota Statutes 1994, section 62A.10, 
        subdivision 2, is amended to read: 
           Subd. 2.  [POLICY FORMS.] No policy or certificate of group 
        accident and health insurance may be issued or delivered in this 
        state unless the same has been approved by the commissioner in 
        accordance with section 62A.02, subdivisions 1 to 6.  These 
        forms shall contain the standard provisions relating and 
        applicable to health and accident insurance and shall conform 
        with the other requirements of law relating to the contents and 
        terms of policies of accident and sickness insurance in so far 
        as they may be applicable to group accident and health 
        insurance, and also the following provisions: 
           (1) [ENTIRE CONTRACT.] A provision that the policy and the 
        application of the employer, trustee, or executive officer or 
        trustee of any association, and the individual applications, if 
        any, of the employees or members insured, shall constitute the 
        entire contract between the parties, and that all statements 
        made by the employer, trustee, or any executive officer or 
        trustee in behalf of the group to be insured, shall, in the 
        absence of fraud, be deemed representations and not warranties, 
        and that no such statement shall be used in defense to a claim 
        under the policy, unless it is contained in the written 
        application; 
           (2) [MASTER POLICY-CERTIFICATES.] A provision that the 
        insurer will issue a master policy to the employer, trustee, or 
        to the executive officer or trustee of the association; and the 
        insurer shall also issue to the employer, trustee, or to the 
        executive officer or trustee of the association, for delivery to 
        the employee or member who is insured under the policy, an 
        individual certificate setting forth a statement as to the 
        insurance protection to which the employee or member is entitled 
        and to whom payable, together with a statement as to when and 
        where the master policy, or a copy thereof, may be seen for 
        inspection by the individual insured; this individual 
        certificate may contain the names of, and insure the dependents 
        of, the employee or member, as provided for herein; 
           (3) [NEW INSUREDS.] A provision that to the group or class 
        thereof originally insured may be added, from time to time, all 
        new employees of the employer or members of the association 
        eligible to and applying for insurance in that group or class 
        and covered or to be covered by the master policy. 
           Sec. 4.  Minnesota Statutes 1994, 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, preexisting 
        condition exclusion, or exclusionary rider, unless the 
        limitation or exclusion is permitted under 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 subjected to an 18-month preexisting 
        condition limitation, unless the individual has maintained 
        continuous coverage as defined in 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 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.  Credit must be given for all qualifying 
        coverage with respect to all preexisting conditions, regardless 
        of whether the conditions were preexisting with respect to any 
        previous qualifying coverage.  The individual must not be 
        subjected to an exclusionary rider.  Thereafter, the individual 
        must not be subject to any preexisting condition limitation or, 
        preexisting condition 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 as defined in 
        section 62L.02. 
           (b) A health carrier must offer an individual health plan 
        to any individual previously covered under a group health plan 
        issued by that health carrier, regardless of the size of the 
        group, so long as the individual maintained continuous coverage 
        as defined in 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 
        as defined in section 62E.02 and must not contain any 
        preexisting condition limitation or, preexisting condition 
        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.  Coverage issued under this 
        paragraph must provide that it cannot be canceled or nonrenewed 
        as a result of the health carrier's subsequent decision to leave 
        the individual, small employer, or other group market.  Section 
        72A.20, subdivision 28, applies to this paragraph. 
           Sec. 5.  Minnesota Statutes 1994, section 62A.65, 
        subdivision 8, is amended 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 health plan market in this state if it complies with 
        the requirements of this subdivision.  For purposes of this 
        section, "cease doing business" means to discontinue issuing new 
        individual health plans and to refuse to renew all of the health 
        carrier's existing individual health plans issued in this state 
        whose terms permit refusal to renew under the circumstances 
        specified in this subdivision.  This subdivision does not permit 
        cancellation of an individual health plan, unless the terms of 
        the health plan permit cancellation under the circumstances 
        specified in this subdivision.  A health carrier electing to 
        cease doing business in the individual health plan market in 
        this state 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 health plan market or continue an 
        existing product line in that market, provided that a health 
        carrier does not terminate, cancel, or fail to renew its current 
        individual health plan business or other product lines.  A 
        health carrier electing to cease doing business in the 
        individual health plan market shall provide 120 days' written 
        notice to each policyholder covered by a an individual health 
        plan issued by the health carrier.  A health carrier that ceases 
        to write new business in the individual health plan market shall 
        continue to be governed by this section with respect to 
        continuing individual health plan business conducted by the 
        health carrier.  A health carrier that ceases to do business in 
        the individual health plan market after July 1, 1994, is 
        prohibited from writing new business in the individual health 
        plan 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 health plan 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 health plan 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 that does not permit 
        refusal to renew under the circumstances specified in this 
        subdivision.  
           Sec. 6.  Minnesota Statutes 1994, section 62D.02, 
        subdivision 8, is amended to read: 
           Subd. 8.  "Health maintenance contract" means any contract 
        whereby a health maintenance organization agrees to provide 
        comprehensive health maintenance services to enrollees, provided 
        that the contract may contain reasonable enrollee copayment 
        provisions.  An individual or group health maintenance contract 
        may contain the copayment and deductible provisions specified in 
        this subdivision.  Copayment and deductible provisions in group 
        contracts shall not discriminate on the basis of age, sex, race, 
        length of enrollment in the plan, or economic status; and during 
        every open enrollment period in which all offered health benefit 
        plans, including those subject to the jurisdiction of the 
        commissioners of commerce or health, fully participate without 
        any underwriting restrictions, copayment and deductible 
        provisions shall not discriminate on the basis of preexisting 
        health status.  In no event shall the sum of the annual 
        copayment copayments and deductible exceed the maximum 
        out-of-pocket expenses allowable for a number three 
        qualified insurance policy plan under section 62E.06, nor shall 
        that sum exceed $5,000 per family.  The annual deductible must 
        not exceed $1,000 per person.  The annual deductible must not 
        apply to preventive health services as described in Minnesota 
        Rules, part 4685.0801, subpart 8.  Where sections 62D.01 to 
        62D.30 permit a health maintenance organization to contain 
        reasonable copayment provisions for preexisting health status, 
        these provisions may vary with respect to length of enrollment 
        in the plan.  Any contract may provide for health care services 
        in addition to those set forth in subdivision 7. 
           Sec. 7.  Minnesota Statutes 1994, section 62D.042, 
        subdivision 2, is amended to read: 
           Subd. 2.  [BEGINNING ORGANIZATIONS.] (a) Beginning 
        organizations shall maintain net worth of at least 8-1/3 percent 
        of the sum of all expenses expected to be incurred in the 12 
        months following the date the certificate of authority is 
        granted, or $1,500,000, whichever is greater. 
           (b) After the first full calendar year of operation, 
        organizations shall maintain net worth of at least 8-1/3 percent 
        and at most 16-2/3 percent of the sum of all expenses incurred 
        during the most recent calendar year, but in no case shall net 
        worth fall below $1,000,000. 
           (c) Notwithstanding paragraphs (a) and (b), any health 
        maintenance organization owned by a political subdivision of 
        this state, which has a higher than average percentage of 
        enrollees who are enrolled in medical assistance or general 
        assistance medical care, may exceed the maximum net worth limits 
        provided in paragraphs (a) and (b), with the advance approval of 
        the commissioner. 
           Sec. 8.  Minnesota Statutes 1994, section 62E.05, is 
        amended to read: 
           62E.05 [CERTIFICATION OF INFORMATION ON QUALIFIED PLANS.] 
           Subdivision 1.  [CERTIFICATION.] Upon application by an 
        insurer, fraternal, or employer for certification of a plan of 
        health coverage as a qualified plan or a qualified medicare 
        supplement plan for the purposes of sections 62E.01 to 62E.16, 
        the commissioner shall make a determination within 90 days as to 
        whether the plan is qualified.  All plans of health coverage, 
        except Medicare supplement policies, shall be labeled as 
        "qualified" or "nonqualified" on the front of the policy or 
        evidence of insurance.  All qualified plans shall indicate 
        whether they are number one, two, or three coverage plans. 
           Subd. 2.  [ANNUAL REPORT.] All health plan companies, as 
        defined in section 62Q.01, shall annually report to the 
        commissioner responsible for their regulation.  The following 
        information shall be reported to the appropriate commissioner on 
        February 1 of each year: 
           (1) the number of individuals and groups who received 
        coverage in the prior year through the qualified plans; and 
           (2) the number of individuals and groups who received 
        coverage in the prior year through each of the unqualified plans 
        sold by the company. 
           Sec. 9.  Minnesota Statutes 1994, section 62E.141, is 
        amended to read: 
           62E.141 [INCLUSION IN EMPLOYER-SPONSORED PLAN.] 
           No employee, or dependent of an employee, of an employer 
        that offers a health plan, under which the employee or dependent 
        is eligible 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, preexisting condition exclusion, or exclusionary 
        rider under the employer's health 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. 10.  Minnesota Statutes 1994, section 62H.04, is 
        amended to read: 
           62H.04 [COMPLIANCE WITH OTHER LAWS.] 
           A joint self-insurance plan is subject to the requirements 
        of chapters 62A, and 62E, and 62L, and sections 72A.17 to 72A.32 
        unless otherwise specifically exempt.  A joint self-insurance 
        plan must not offer less than a number two qualified plan or its 
        actuarial equivalent.  
           Sec. 11.  Minnesota Statutes 1994, section 62H.08, is 
        amended to read: 
           62H.08 [EXEMPTION.] 
           A homogenous joint employer plan providing group health 
        benefits, which was in existence prior to March 1, 1983, and 
        which is associated with, or organized or sponsored by, an 
        association exempt from taxation under United States Code, title 
        26, section 501(c)(6), and controlled by a board of trustees a 
        majority of whom are members of the association, is exempt from 
        the requirements of sections 62H.01 to 62H.08 and 471.617, 
        subdivisions 1 to 3, and the insurance laws of this state, 
        except that the association must comply with the provisions of 
        chapter 62L with respect to any members that are small employers.
           Sec. 12.  Minnesota Statutes 1994, 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, 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 includes a child for whom the 
        employee or the employee's spouse has been appointed legal 
        guardian. 
           Sec. 13.  Minnesota Statutes 1994, 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 corporation licensed under 
        chapter 62C; a health maintenance organization licensed under 
        chapter 62D; a community integrated service network and an 
        integrated service network operating under chapter 62N; 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.  For 
        purposes of sections 62L.01 to 62L.12, but not for purposes of 
        sections 62L.13 to 62L.22, "health carrier" includes 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. 14.  Minnesota Statutes 1994, section 62L.02, 
        subdivision 24, is amended to read: 
           Subd. 24.  [QUALIFYING COVERAGE.] "Qualifying 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 MinnesotaCare 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) the Civilian Health and Medical Program of the 
        Uniformed Services (CHAMPUS); 
           (10) coverage provided by a health care network cooperative 
        under chapter 62R or by a health provider cooperative under 
        section 62R.17; or 
           (11) a plan similar to any of the above plans provided in 
        this state or in another state as determined by the commissioner.
           Sec. 15.  Minnesota Statutes 1994, 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, including a political 
        subdivision of the state, that, on at least 50 percent of its 
        working days during the preceding 12 months, employed no fewer 
        than two nor more than 29, 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 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 as defined in section 
        62A.10, subdivision 1 62L.045, 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 and 
        health benefit plans it provides to small employer employers, 
        are subject to section 62L.045, with respect to those small 
        employers in the association that employ no fewer than two nor 
        more than 29, or after June 30, 1995, more than 49, current 
        employees, even though the association also 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 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 
        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. 16.  Minnesota Statutes 1994, 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 each eligible employees employee 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 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; or (4) coverage under 
        medical assistance under chapter 256B or general assistance 
        medical care under chapter 256D. 
           (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 health plans, 
        or a health benefit plan which must fully comply with this 
        chapter.  A health carrier that provides 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 health plan, 
        purchased through an arrangement between the employer and the 
        health carrier, to any employee unless the health carrier also 
        offers 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. 17.  Minnesota Statutes 1994, 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 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, any preexisting condition 
        limitation or, preexisting condition 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 preexisting 
        condition exclusion.  The credit must be given for all 
        qualifying coverage with respect to all preexisting conditions, 
        regardless of whether the conditions were preexisting with 
        respect to any previous qualifying coverage.  Section 60A.082, 
        relating to replacement of group coverage, and the rules adopted 
        under that section apply to this chapter, and this chapter's 
        requirements are in addition to the requirements of that section 
        and the rules adopted under it.  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 coverage, if the person 
        has maintained continuous coverage.  
           Sec. 18.  Minnesota Statutes 1994, 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. 
           (b) 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 required under subdivision 3; or 
           (4) 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. 
           (c) A health carrier may fail to renew a health benefit 
        plan: 
           (1) 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; 
           (5) (2) if the health carrier ceases to do business in the 
        small employer market under section 62L.09; or 
           (6) (3) 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) (d) 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. 19.  [62L.045] [ASSOCIATIONS.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following terms have the meanings given: 
           (a) "Association" means: 
           (1) an association as defined in section 60A.02; 
           (2) a group or organization of political subdivisions; 
           (3) an educational cooperative service unit created under 
        section 123.58; or 
           (4) a joint self-insurance pool authorized under section 
        471.617, subdivision 2. 
           (b) "Qualified association" means an association, as 
        defined in this subdivision, that: 
           (1) is registered with the commissioner of commerce; 
           (2) provides health plan coverage through a health carrier 
        that participates in the small employer market in this state, 
        other than through associations; 
           (3) has and adheres to membership and participation 
        criteria and health plan eligibility criteria that are not 
        designed to disproportionately include or attract small 
        employers that are likely to have low costs of health coverage 
        or to disproportionately exclude or repel small employers that 
        are likely to have high costs of health coverage; and 
           (4) permits any small employer that meets its membership, 
        participation, and eligibility criteria to become a member and 
        to obtain health plan coverage through the association.  
           Subd. 2.  [QUALIFIED ASSOCIATIONS.] (a) A qualified 
        association, as defined in this section, and health benefit 
        plans offered by it, to it, or through it, to a small employer 
        in this state must comply with the requirements of this chapter 
        regarding guaranteed issue, guaranteed renewal, preexisting 
        condition limitations, credit against preexisting condition 
        limitations for continuous coverage, treatment of MCHA 
        enrollees, and the definition of dependent, and with section 
        62A.65, subdivision 5, paragraph (b).  They must also comply 
        with all other requirements of this chapter not specifically 
        exempted in paragraph (b) or (c). 
           (b) A qualified association and a health carrier offering, 
        selling, issuing, or renewing a health benefit plan to, or to 
        cover, a small employer in this state through the qualified 
        association, may, but are not, in connection with that health 
        benefit plan, required to: 
           (1) offer the two small employer plans described in section 
        62L.05; and 
           (2) offer to small employers that are not members of the 
        association, health benefit plans offered to, by, or through the 
        qualified association. 
           (c) A qualified association, and a health carrier offering, 
        selling, issuing, and renewing a health benefit plan to, or to 
        cover, a small employer in this state must comply with section 
        62L.08, except that a separate index rate may be applied by a 
        health carrier to each qualified association, provided that: 
           (1) the premium rate applied to participating small 
        employer members of the qualified association is no more than 25 
        percent above and no more than 25 percent below the index rate 
        applied to the qualified association, irrespective of when 
        members applied for health coverage; and 
           (2) the index rate applied by a health carrier to a 
        qualified association is no more than 20 percent above and no 
        more than 20 percent below the index rate applied by the health 
        carrier to any other qualified association or to any small 
        employer.  In comparing index rates for purposes of this clause, 
        the 20 percent shall be calculated as a percent of the larger 
        index rate. 
           Subd. 3.  [OTHER ASSOCIATIONS.] Associations as defined in 
        this section that are not qualified associations; health benefit 
        plans offered, sold, issued, or renewed through them; and the 
        health carriers doing so, must fully comply with this chapter 
        with respect to small employers that are members of the 
        association. 
           Subd. 4.  [PRINCIPLES; ASSOCIATION COVERAGE.] (a) This 
        subdivision applies to associations as defined in this section, 
        whether qualified associations or not, and is intended to 
        clarify subdivisions 1 to 3.  
           (b) This section applies only to associations that provide 
        coverage to small employers. 
           (c) The requirements of guaranteed issue and guaranteed 
        renewal apply to coverage issued to cover small employers and 
        persons covered through them, within the context of an 
        arrangement between an association and a health carrier.  A 
        health carrier is not required under this chapter to comply with 
        guaranteed issue and guaranteed renewal with respect to its 
        relationship with the association itself.  An arrangement 
        between the health carrier and the association, once entered 
        into, must comply with guaranteed issue and guaranteed renewal 
        with respect to members of the association that are small 
        employers and persons covered through them. 
           (d) When an arrangement between a health carrier and an 
        association has validly terminated, the health carrier has no 
        continuing obligation to small employers and persons covered 
        through them, except as otherwise provided in: 
           (1) section 62A.65, subdivision 5, paragraph (b); 
           (2) any other continuation or conversion rights applicable 
        under state or federal law; and 
           (3) section 60A.082, relating to group replacement 
        coverage, and rules adopted under that section. 
           (e) When an association's arrangement with a health carrier 
        has terminated and the association has entered into a new 
        arrangement with that health carrier or a different health 
        carrier, the new arrangement is subject to section 60A.082 and 
        rules adopted under it, with respect to members of the 
        association that are small employers and persons covered through 
        them. 
           (f) An association that offers its members more than one 
        health plan may have uniform rules restricting movement between 
        the health plans, if the rules do not discriminate against small 
        employers. 
           (g) This chapter does not require or prohibit separation of 
        an association's members into one group consisting only of small 
        employers and another group or other groups consisting of all 
        other members.  The association must comply with this section 
        with respect to the small employer group. 
           (h) For purposes of this section, "member" of an 
        association includes an employer participant in the association. 
           (i) For purposes of this section, coverage issued to, or to 
        cover, a small employer includes a certificate of coverage 
        issued directly to the employer's employees and dependents, 
        rather than to the small employer. 
           Subd. 5.  [REGISTRATION.] The commissioner may require all 
        associations that are subject to this section to register with 
        the commissioner prior to an initial purchase of coverage under 
        this section. 
           Sec. 20.  Minnesota Statutes 1994, section 62L.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [NOTICE TO COMMISSIONER.] A health carrier 
        electing to cease doing business in the small employer market 
        shall notify the commissioner 180 days prior to the effective 
        date of the cessation.  The health carrier shall simultaneously 
        provide a copy of the notice to each small employer covered by a 
        health benefit plan issued by the health carrier.  For purposes 
        of this section, "cease doing business" means to discontinue 
        issuing new health benefit plans to small employers and to 
        refuse to renew all of the health carrier's existing health 
        benefit plans issued to small employers, the terms of which 
        permit refusal to renew under the circumstances specified in 
        this subdivision.  This section does not permit cancellation of 
        a health benefit plan, unless permitted under its terms. 
           Upon making the notification, the health carrier shall not 
        offer or issue new business in the small employer market.  The 
        health carrier shall renew its current small employer business 
        due for renewal within 120 days after the date of the 
        notification but shall not renew any small employer business 
        more than 120 days after the date of the notification.  The 
        renewal period for business renewed during that 120-day period 
        shall end on the effective date of the cessation. 
           A health carrier that elects to cease doing business in the 
        small employer market shall continue to be governed by this 
        chapter with respect to any continuing small employer business 
        conducted by the health carrier.  
           Sec. 21.  Minnesota Statutes 1994, section 62L.12, 
        subdivision 2, is amended to read: 
           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 
        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 health plan or due to the 
        person's need for health care services not covered under the 
        employer's group health plan. 
           (f) A health carrier may sell, issue, or renew an 
        individual health plan, if the individual has elected to buy the 
        individual health plan not as part of a general plan to 
        substitute individual health plans for a group 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. 
           Sec. 22.  Minnesota Statutes 1994, section 62L.17, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [PARTICIPATION OF NEW SMALL EMPLOYER HEALTH 
        CARRIERS.] A health carrier that enters the small employer 
        market subsequent to February 1993, may elect to not participate 
        in the reinsurance association by filing an application within 
        60 days of entry into the small employer market or the effective 
        date of this section, whichever is later.  The commissioner 
        shall make a determination and notify the health carrier no 
        later than 60 days after receipt of the application.  In 
        determining whether to approve the application, the commissioner 
        shall consider the standards defined in subdivision 2, except 
        that the commissioner may also consider whether the health 
        carrier has a guaranteeing organization as defined in section 
        62D.043, subdivision 1, or as permitted under chapter 62N. 
           Sec. 23.  Minnesota Statutes 1994, section 62L.18, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ELIGIBILITY FOR REINSURANCE.] (a) A health 
        carrier may not reinsure existing small employer business 
        through the association.  A health carrier may reinsure an 
        employee or dependent who previously had coverage from MCHA who 
        is now eligible for coverage through the small employer group at 
        the time of enrollment as defined in section 62L.03, subdivision 
        6.  A health carrier may not reinsure individuals who have 
        existing individual health care coverage with that health 
        carrier upon replacement of the individual coverage with group 
        coverage as provided in section 62L.04, subdivision 1. 
           (b) A health carrier may cede to the association the risk 
        of any newly eligible employees or continue to reinsure small 
        employer business for employers who, at the time of renewal of 
        coverage by the same health carrier prior to July 1, 1995, have 
        more than 29 current employees but fewer than 49 current 
        employees.  This paragraph is effective retroactively for 
        coverage renewed on or after July 1, 1994. 
           Sec. 24.  Minnesota Statutes 1994, section 62Q.17, 
        subdivision 2, is amended to read: 
           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 other common 
        factor as approved by the commissioner of commerce.  The 
        membership criteria must not be designed to include 
        disproportionately employers, groups, or individuals likely to 
        have low costs of health coverage, or to exclude 
        disproportionately employers, groups, or individuals likely to 
        have high costs of health coverage.  
           Sec. 25.  Minnesota Statutes 1994, section 62Q.17, 
        subdivision 8, is amended to read: 
           Subd. 8.  [REPORTS.] Prior to the initial effective date of 
        coverage, and annually on July 1 thereafter, each pool shall 
        file a report with the information clearinghouse and the 
        commissioner of commerce.  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. 26.  Minnesota Statutes 1994, section 62Q.17, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [ENFORCEMENT.] Purchasing pools must register 
        prior to offering coverage, and annually on July 1 thereafter, 
        with the commissioner of commerce on a form prescribed by the 
        commissioner.  The commissioner of commerce shall enforce this 
        section and all other state laws with respect to purchasing 
        pools, and has for that purpose all general rulemaking and 
        enforcement powers otherwise available to the commissioner of 
        commerce.  The commissioner may charge an annual registration 
        fee sufficient to meet the costs of the commissioner's duties 
        under this section. 
           Sec. 27.  Minnesota Statutes 1994, section 72A.201, is 
        amended by adding a subdivision to read: 
           Subd. 13.  [IMPROPER CLAIM OF DISCOUNT.] (a) No insurer, 
        integrated service network, or community integrated service 
        network shall intentionally provide a health care provider with 
        an explanation of benefits or similar document claiming a right 
        to a discounted fee, price, or other charge, when the insurer, 
        integrated service network, or community integrated service 
        network does not have an agreement with the provider for the 
        discount with respect to the patient involved. 
           (b) The insurer, integrated service network, or community 
        integrated service network may, notwithstanding paragraph (a), 
        claim the right to a discount based upon a discount agreement 
        between the health care provider and another entity, but only if:
           (1) that agreement expressly permitted the entity to assign 
        its right to receive the discount; 
           (2) an assignment to the insurer, integrated service 
        network, or community integrated service network of the right to 
        receive the discount complies with any relevant requirements for 
        assignments contained in the discount agreement; and 
           (3) the insurer, integrated service network, or community 
        integrated service network has complied with any relevant 
        requirements contained in the assignment. 
           (c) When an explanation of benefits or similar document 
        claims a discount permitted under paragraph (b), it shall 
        prominently state that the discount claimed is based upon an 
        assignment and shall state the name of the entity from whom the 
        assignment was received.  This paragraph does not apply if the 
        entity that issues the explanation of benefits or similar 
        document has a provider agreement with the provider.  
           (d) No insurer, integrated service network, or community 
        integrated service network that has entered into an agreement 
        with a health care provider that involves discounted fees, 
        prices, or other charges shall disclose the discounts to another 
        entity, with the knowledge or expectation that the disclosure 
        will result in claims for discounts prohibited under paragraphs 
        (a) and (b). 
           Sec. 28.  [REPEALER; POLITICAL SUBDIVISION ASSOCIATIONS.] 
           Minnesota Statutes 1994, section 62L.08, subdivision 7a, is 
        repealed effective January 1, 1996. 
           Sec. 29.  [EFFECTIVE DATES.] 
           Sections 1, 2, 3, 10, 11, 15, and 19 are effective January 
        1, 1996.  Section 13 is effective retroactively to January 1, 
        1995.  Sections 17 and 22 are effective the day following final 
        enactment.  Section 23 is effective retroactively to July 1, 
        1994. 
                                   ARTICLE 8 
             RURAL HEALTH INITIATIVES AND MISCELLANEOUS PROVISIONS 
           Section 1.  Minnesota Statutes 1994, section 62J.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [MEMBERSHIP.] (a)  [NUMBER.] The Minnesota health 
        care commission consists of 27 28 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 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) [REGIONAL COORDINATING BOARDS.] The commission includes 
        one member who is the chair of a regional coordinating board, 
        elected by a majority vote of the chairs of the regional 
        coordinating boards. 
           (h) (i) [CHAIR.] The governor shall designate the chair of 
        the commission from among the governor's appointees. 
           Sec. 2.  Minnesota Statutes 1994, section 62J.05, 
        subdivision 9, is amended to read: 
           Subd. 9.  [REPEALER.] This section is repealed effective 
        July 1, 1996 2000. 
           Sec. 3.  Minnesota Statutes 1994, section 62J.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL DUTIES.] The regional coordinating 
        boards are locally controlled boards consisting of providers, 
        health plan companies, employers, consumers, and elected 
        officials.  Regional coordinating boards may: 
           (1) recommend that the commissioner approve voluntary 
        agreements between providers in the region that will improve 
        quality, access, or affordability of health care but might 
        constitute a violation of antitrust laws if undertaken without 
        government direction; 
           (2) make recommendations to the commissioner regarding 
        major capital expenditures or the introduction of expensive new 
        technologies and medical practices that are being proposed or 
        considered by providers; 
           (3) undertake voluntary activities to educate consumers, 
        providers, and purchasers or to promote voluntary, cooperative 
        community cost containment, access, or quality of care 
        projects about community plans and projects promoting health 
        care cost containment, consumer accountability, access, and 
        quality and efforts to achieve public health goals; 
           (4) (2) make recommendations to the commissioner regarding 
        ways of improving affordability, accessibility, and quality of 
        health care in the region and throughout the state.; 
           (3) provide technical assistance to parties interested in 
        establishing or operating 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; 
           (4) advise the commissioner on public health goals, taking 
        into consideration the relevant portions of the community health 
        service plans, plans required by the Minnesota comprehensive 
        adult mental health act, the Minnesota comprehensive children's 
        mental health act, and the community social service act plans 
        developed by county boards or community health boards in the 
        region under chapters 145A, 245, and 256E; 
           (5) prepare an annual regional education plan that is 
        consistent with and supportive of public health goals identified 
        by community health boards in the region; and 
           (6) serve as advisory bodies to identify potential 
        applicants for federal Health Professional Shortage Area and 
        federal Medically Underserved Area designation as requested by 
        the commissioner. 
           Sec. 4.  Minnesota Statutes 1994, 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 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 legislative 
        commission on health care access.  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. 5.  Minnesota Statutes 1994, section 62J.09, is 
        amended by adding a subdivision to read: 
           Subd. 3a.  [COMMUNICATION WITH HEALTH CARE COMMISSION.] The 
        chairs of the regional coordinating boards shall meet with the 
        chair and the executive director of the health care commission 
        on a periodic basis, but no less than biennially.  
           Sec. 6.  Minnesota Statutes 1994, section 62J.09, 
        subdivision 6, is amended to read: 
           Subd. 6.  [TECHNICAL ASSISTANCE.] The commissioner shall 
        provide technical assistance to regional coordinating 
        boards.  Technical assistance includes providing each regional 
        board with timely information concerning action plans, 
        enrollment data, and health care expenditures affecting the 
        regional board's region.  
           Sec. 7.  Minnesota Statutes 1994, section 62J.09, 
        subdivision 8, is amended to read: 
           Subd. 8.  [REPEALER.] This section is repealed effective 
        July 1, 1996 2000. 
           Sec. 8.  Minnesota Statutes 1994, section 62J.17, 
        subdivision 4a, is amended to read: 
           Subd. 4a.  [EXPENDITURE REPORTING.] (a)  [GENERAL 
        REQUIREMENT.] A provider making a major spending commitment 
        after April 1, 1992, shall submit notification of the 
        expenditure to the commissioner and provide the commissioner 
        with any relevant background information.  
           (b)  [REPORT.] Notification must include a report, 
        submitted within 60 days after the date of the major spending 
        commitment, using terms conforming to the definitions in section 
        62J.03 and this section.  Each report is subject to 
        retrospective review and must contain:  
           (1) a detailed description of the major spending 
        commitment, including the specific dollar amount of each 
        expenditure, and its purpose; 
           (2) the date of the major spending commitment; 
           (3) a statement of the expected impact that the major 
        spending commitment will have on charges by the provider to 
        patients and third party payers; 
           (4) a statement of the expected impact on the clinical 
        effectiveness or quality of care received by the patients that 
        the provider expects to serve; 
           (5) a statement of the extent to which equivalent services 
        or technology are already available to the provider's actual and 
        potential patient population; 
           (6) a statement of the distance from which the nearest 
        equivalent services or technology are already available to the 
        provider's actual and potential population; 
           (7) a statement describing the pursuit of any lawful 
        collaborative arrangements; and 
           (8) a statement of assurance that the provider will not 
        use, purchase, or perform health care technologies and 
        procedures that are not clinically effective and cost-effective, 
        unless the technology is used for experimental or research 
        purposes to determine whether a technology or procedure is 
        clinically effective and cost-effective.  
           The provider may submit any additional information that it 
        deems relevant.  
           (c)  [ADDITIONAL INFORMATION.] The commissioner may request 
        additional information from a provider for the purpose of review 
        of a report submitted by that provider, and may consider 
        relevant information from other sources.  A provider shall 
        provide any information requested by the commissioner within the 
        time period stated in the request, or within 30 days after the 
        date of the request if the request does not state a time.  
           (d)  [FAILURE TO COMPLY.] If the provider fails to submit a 
        complete and timely expenditure report, including any additional 
        information requested by the commissioner, the commissioner may 
        make the provider's subsequent major spending commitments 
        subject to the procedures of prospective review and approval 
        under subdivision 6a.  
           Sec. 9.  Minnesota Statutes 1994, section 62J.17, 
        subdivision 6a, is amended to read: 
           Subd. 6a.  [PROSPECTIVE REVIEW AND APPROVAL.] (a) 
        [REQUIREMENT.] No health care provider subject to prospective 
        review under this subdivision shall make a major spending 
        commitment unless:  
           (1) the provider has filed an application with the 
        commissioner to proceed with the major spending commitment and 
        has provided all supporting documentation and evidence requested 
        by the commissioner; and 
           (2) the commissioner determines, based upon this 
        documentation and evidence, that the major spending commitment 
        is appropriate under the criteria provided in subdivision 5a in 
        light of the alternatives available to the provider.  
           (b)  [APPLICATION.] A provider subject to prospective 
        review and approval shall submit an application to the 
        commissioner before proceeding with any major spending 
        commitment.  The application must address each item listed in 
        subdivision 4a, paragraph (a), and must also include 
        documentation to support the response to each item.  The 
        provider may submit information, with supporting documentation, 
        regarding why the major spending commitment should be excepted 
        from prospective review under paragraph (d) subdivision 7.  The 
        submission may be made either in addition to or instead of the 
        submission of information relating to the items listed in 
        subdivision 4a, paragraph (a).  
           (c)  [REVIEW.] The commissioner shall determine, based upon 
        the information submitted, whether the major spending commitment 
        is appropriate under the criteria provided in subdivision 5a, or 
        whether it should be excepted from prospective review 
        under paragraph (d) subdivision 7.  In making this 
        determination, the commissioner may also consider relevant 
        information from other sources.  At the request of the 
        commissioner, the Minnesota health care commission shall convene 
        an expert review panel made up of persons with knowledge and 
        expertise regarding medical equipment, specialized services, 
        health care expenditures, and capital expenditures to review 
        applications and make recommendations to the commissioner.  The 
        commissioner shall make a decision on the application within 60 
        days after an application is received.  
           (d)  [EXCEPTIONS.] The prospective review and approval 
        process does not apply to: 
           (1) a major spending commitment to replace existing 
        equipment with comparable equipment, if the old equipment will 
        no longer be used in the state; 
           (2) a major spending commitment made by a research and 
        teaching institution for purposes of conducting medical 
        education, medical research supported or sponsored by a medical 
        school or by a federal or foundation grant, or clinical trials; 
           (3) a major spending commitment to repair, remodel, or 
        replace existing buildings or fixtures if, in the judgment of 
        the commissioner, the project does not involve a substantial 
        expansion of service capacity or a substantial change in the 
        nature of health care services provided; and 
           (4) mergers, acquisitions, and other changes in ownership 
        or control that, in the judgment of the commissioner, do not 
        involve a substantial expansion of service capacity or a 
        substantial change in the nature of health care services 
        provided. 
           (e)  [NOTIFICATION REQUIRED FOR EXCEPTED MAJOR SPENDING 
        COMMITMENT.] A provider making a major spending commitment 
        covered by paragraph (d) shall provide notification of the major 
        spending commitment as provided under subdivision 4a. 
           (f) (d)  [PENALTIES AND REMEDIES.] The commissioner of 
        health has the authority to issue fines, seek injunctions, and 
        pursue other remedies as provided by law. 
           Sec. 10.  Minnesota Statutes 1994, section 62J.17, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [EXCEPTIONS.] (a) The retrospective review 
        process as described in subdivision 5a and the prospective 
        review and approval process as described in subdivision 6a do 
        not apply to: 
           (1) a major spending commitment to replace existing 
        equipment with comparable equipment used for direct patient 
        care, upgrades of equipment beyond the current model, or 
        comparable model must be reported; 
           (2) a major spending commitment made by a research and 
        teaching institution for purposes of conducting medical 
        education, medical research supported or sponsored by a medical 
        school, or by a federal or foundation grant or clinical trials; 
           (3) a major spending commitment to repair, remodel, or 
        replace existing buildings or fixtures if, in the judgment of 
        the commissioner, the project does not involve a substantial 
        expansion of service capacity or a substantial change in the 
        nature of health care services provided; 
           (4) a major spending commitment for building maintenance 
        including heating, water, electricity, and other 
        maintenance-related expenditures; 
           (5) a major spending commitment for activities, not 
        directly related to the delivery of patient care services, 
        including food service, laundry, housekeeping, and other 
        service-related activities; and 
           (6) a major spending commitment for computer equipment or 
        data systems not directly related to the delivery of patient 
        care services, including computer equipment or data systems 
        related to medical record automation. 
           (b) In addition to the exceptions listed in subdivision 7, 
        paragraph (a), the prospective review and approval process 
        described in subdivision 6a does not apply to mergers, 
        acquisitions, and other changes in ownership or control that, in 
        the judgment of the commissioner, do not involve a substantial 
        expansion of service capacity or a substantial change in the 
        nature of health care services provided. 
           Sec. 11.  Minnesota Statutes 1994, section 62J.48, is 
        amended to read: 
           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 health plan companies. 
        The commissioner shall require community integrated service 
        networks, integrated service networks, and all-payer 
        insurers health plan companies 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 a health plan company, if approved by a designated 
        representative of an integrated service network or a community 
        service network a health plan company 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. 12.  Minnesota Statutes 1994, section 62M.07, is 
        amended to read: 
           62M.07 [PRIOR AUTHORIZATION OF SERVICES.] 
           (a) Utilization review organizations conducting prior 
        authorization of services must have written standards that meet 
        at a minimum the following requirements: 
           (1) written procedures and criteria used to determine 
        whether care is appropriate, reasonable, or medically necessary; 
           (2) a system for providing prompt notification of its 
        determinations to enrollees and providers and for notifying the 
        provider, enrollee, or enrollee's designee of appeal procedures 
        under clause (4); 
           (3) compliance with section 72A.201, subdivision 4a, 
        regarding time frames for approving and disapproving prior 
        authorization requests; 
           (4) written procedures for appeals of denials of prior 
        authorization which specify the responsibilities of the enrollee 
        and provider, and which meet the requirements of section 
        72A.285, regarding release of summary review findings; and 
           (5) procedures to ensure confidentiality of 
        patient-specific information, consistent with applicable law. 
           (b) No utilization review organization, health plan 
        company, or claims administrator may conduct or require prior 
        authorization of emergency confinement or emergency treatment.  
        The enrollee or the enrollee's authorized representative may be 
        required to notify the health plan company, claims 
        administrator, or utilization review organization as soon after 
        the beginning of the emergency confinement or emergency 
        treatment as reasonably possible. 
           Sec. 13.  Minnesota Statutes 1994, section 62M.09, 
        subdivision 5, is amended to read: 
           Subd. 5.  [WRITTEN CLINICAL CRITERIA.] A utilization review 
        organization's decisions must be supported by written clinical 
        criteria and review procedures in compliance with section 
        62M.07, paragraph (c).  Clinical criteria and review procedures 
        must be established with appropriate involvement from actively 
        practicing physicians.  A utilization review organization must 
        use written clinical criteria, as required, for determining the 
        appropriateness of the certification request.  The utilization 
        review organization must have a procedure for ensuring, at a 
        minimum, the periodic annual evaluation and updating of the 
        written criteria based on sound clinical principles. 
           Sec. 14.  Minnesota Statutes 1994, section 62M.10, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [AVAILABILITY OF CRITERIA.] Upon request, a 
        utilization review organization shall provide to an enrollee or 
        to an attending physician or provider the criteria used for a 
        specific procedure to determine the necessity, appropriateness, 
        and efficacy of that procedure and identify the database, 
        professional treatment guideline, or other basis for the 
        criteria. 
           Sec. 15.  Minnesota Statutes 1994, section 62P.05, 
        subdivision 4, is amended to read: 
           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.  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 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 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, and 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 percentage increase in the average fee from 1995 to 1996, 
        and from 1996 to 1997 is subject to the change in the regional 
        consumer price index for urban consumers for the previous year 
        published in the State Register in January of the year that the 
        growth limit is in effect.  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.  
           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. 16.  Minnesota Statutes 1994, section 62P.05, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [SMALL RURAL HOSPITALS.] Each small rural 
        hospital shall file information with the commissioner of health 
        and calculate its growth in revenues pursuant to the 
        requirements of this chapter.  Small rural hospitals that do not 
        file as part of a hospital system are exempt from the repayment 
        provisions of subdivision 4.  However, the commissioner retains 
        the authority to initiate an investigation and order repayment 
        pursuant to this section, if the commissioner believes that 
        there is an unreasonable rate of growth in revenues and if the 
        hospital fails to demonstrate good cause for exceeding the 
        statutory growth limits.  For purposes of this subdivision, 
        small rural hospital is defined as a hospital with less than 50 
        licensed beds. 
           Sec. 17.  Minnesota Statutes 1994, section 62Q.075, 
        subdivision 4, is amended to read: 
           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.  The commissioner of health shall develop 
        recommendations to utilize the written comments submitted as 
        part of the licensure process to ensure local public 
        accountability.  These recommendations shall be reported to the 
        legislative commission on health care access by January 15, 
        1996.  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. 18.  Minnesota Statutes 1994, section 62Q.32, is 
        amended to read: 
           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.  
        The commissioner of health shall make recommendations for 
        funding these functions including the amount of funding needed 
        and a plan for distribution.  The commissioner shall submit 
        these recommendations to the legislative commission on health 
        care access by January 15, 1996. 
           Sec. 19.  Minnesota Statutes 1994, section 62Q.33, 
        subdivision 4, is amended to read: 
           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 through the health plan 
        companies 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.  Funding recommendations must be 
        broad-based and must consider all financial resources. 
           Sec. 20.  Minnesota Statutes 1994, section 62Q.33, 
        subdivision 5, is amended to read: 
           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 January 15, 1995 1996, 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) (b) By January 1 15, 1997, and by January 1 15 of 
        each odd-numbered year thereafter, the commissioner shall 
        present to the legislature an updated report and recommendations.
           Sec. 21.  Minnesota Statutes 1994, section 72A.20, is 
        amended by adding a subdivision to read: 
           Subd. 32.  [UNFAIR HEALTH RISK AVOIDANCE.] No insurer or 
        health plan company may design a network of providers, policies 
        on access to providers, or marketing strategy in such a way as 
        to discourage enrollment by individuals or groups whose health 
        care needs are perceived as likely to be more expensive than the 
        average.  This subdivision does not prohibit underwriting and 
        rating practices that comply with Minnesota law. 
           Sec. 22.  Minnesota Statutes 1994, section 72A.20, is 
        amended by adding a subdivision to read: 
           Subd. 33.  [PROHIBITION OF INAPPROPRIATE INCENTIVES.] No 
        insurer or health plan company may give any financial incentive 
        to a health care provider based solely on the number of services 
        denied or referrals not authorized by the provider.  This 
        subdivision does not prohibit capitation or other compensation 
        methods that serve to hold health care providers financially 
        accountable for the cost of caring for a patient population. 
           Sec. 23.  Minnesota Statutes 1994, section 136A.1355, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LOAN FORGIVENESS.] For the period July 1, 1993 
        through June 30, 1995 fiscal years beginning on and after July 
        1, 1995, the higher education coordinating board may accept up 
        to four applicants who are fourth year medical students, three 
        applicants who are pediatric residents, and four applicants who 
        are family practice residents, and one applicant who is an 
        internal medicine resident, per fiscal year for participation in 
        the loan forgiveness program.  If the higher education 
        coordinating board does not receive enough applicants per fiscal 
        year to fill the number of residents in the specific areas of 
        practice, the resident applicants may be from any area of 
        practice.  The eight resident applicants can may be in any year 
        of training; however, priority must be given to the following 
        categories of residents in descending order:  third year 
        residents, second year residents, and first year residents.  
        Applicants are responsible for securing their own loans.  
        Applicants chosen to participate in the loan forgiveness program 
        may designate for each year of medical school, up to a maximum 
        of four years, an agreed amount, not to exceed $10,000, as a 
        qualified loan.  For each year that a participant serves as a 
        physician in a designated rural area, up to a maximum of four 
        years, the higher education coordinating board shall annually 
        pay an amount equal to one year of qualified loans.  
        Participants who move their practice from one designated rural 
        area to another remain eligible for loan repayment.  In 
        addition, if a resident participating in the loan forgiveness 
        program serves at least four weeks during a year of residency 
        substituting for a rural physician to temporarily relieve the 
        rural physician of rural practice commitments to enable the 
        rural physician to take a vacation, engage in activities outside 
        the practice area, or otherwise be relieved of rural practice 
        commitments, the participating resident may designate up to an 
        additional $2,000, above the $10,000 maximum, for each year of 
        residency during which the resident substitutes for a rural 
        physician for four or more weeks. 
           Sec. 24.  Minnesota Statutes 1994, section 136A.1355, 
        subdivision 5, is amended to read: 
           Subd. 5.  [LOAN FORGIVENESS; UNDERSERVED URBAN 
        COMMUNITIES.] For the period July 1, 1993 to June 30, 
        1995 fiscal years beginning on and after July 1, 1995, the 
        higher education coordinating board may accept up to four 
        applicants who are either fourth year medical students, or 
        residents in family practice, pediatrics, or internal medicine 
        per fiscal year for participation in the urban primary care 
        physician loan forgiveness program.  The resident applicants may 
        be in any year of residency training; however, priority will be 
        given to the following categories of residents in descending 
        order:  third year residents, second year residents, and first 
        year residents.  If the higher education coordinating board does 
        not receive enough qualified applicants per fiscal year to fill 
        the number of slots for urban underserved communities, the slots 
        may be allocated to students or residents who have applied for 
        the rural physician loan forgiveness program in subdivision 1.  
        Applicants are responsible for securing their own loans.  For 
        purposes of this provision, "qualifying educational loans" are 
        government and commercial loans for actual costs paid for 
        tuition, reasonable education expenses, and reasonable living 
        expenses related to the graduate or undergraduate education of a 
        health care professional.  Applicants chosen to participate in 
        the loan forgiveness program may designate for each year of 
        medical school, up to a maximum of four years, an agreed amount, 
        not to exceed $10,000, as a qualified loan.  For each year that 
        a participant serves as a physician in a designated underserved 
        urban area, up to a maximum of four years, the higher education 
        coordinating board shall annually pay an amount equal to one 
        year of qualified loans.  Participants who move their practice 
        from one designated underserved urban community to another 
        remain eligible for loan repayment. 
           Sec. 25.  Minnesota Statutes 1994, section 136A.1356, 
        subdivision 3, is amended to read: 
           Subd. 3.  [ELIGIBILITY.] To be eligible to participate in 
        the program, a prospective midlevel practitioner must submit a 
        letter of interest to the higher education coordinating board 
        prior to or while attending a program of study designed to 
        prepare the individual for service as a midlevel practitioner.  
        Before completing the first year of this program, A midlevel 
        practitioner student who is accepted into this program must sign 
        a contract to agree to serve at least two of the first four 
        years following graduation from the program in a designated 
        rural area. 
           Sec. 26.  Minnesota Statutes 1994, section 136A.1356, 
        subdivision 4, is amended to read: 
           Subd. 4.  [LOAN FORGIVENESS.] The higher education 
        coordinating board may accept up to eight applicants per year 
        for participation in the loan forgiveness program.  Applicants 
        are responsible for securing their own loans.  Applicants chosen 
        to participate in the loan forgiveness program may designate for 
        each year of midlevel practitioner study, up to a maximum of two 
        years, an agreed amount, not to exceed $7,000, as a qualified 
        loan.  For purposes of this provision, "qualifying educational 
        loans" are government and commercial loans for actual costs paid 
        for tuition, reasonable education expenses, and reasonable 
        living expenses related to the graduate or undergraduate 
        education of a health care professional.  For each year that a 
        participant serves as a midlevel practitioner in a designated 
        rural area, up to a maximum of four years, the higher education 
        coordinating board shall annually repay an amount equal to 
        one-half a qualified loan.  Participants who move their practice 
        from one designated rural area to another remain eligible for 
        loan repayment.  
           Sec. 27.  [137.42] [GRANTS FOR AREA HEALTH EDUCATION CENTER 
        PROGRAMS.] 
           Subdivision 1.  [GRANT APPLICATION.] The board of regents 
        of the University of Minnesota, through the academic health 
        center and the University of Minnesota-Duluth School of 
        Medicine, is requested to apply for a federal Area Health 
        Education Center Program grant.  If awarded a grant, the 
        University of Minnesota-Duluth School of Medicine, in 
        cooperation with public or private, nonprofit area health 
        education centers, is requested to plan, develop, and operate 
        area health education center programs.  The University of 
        Minnesota-Duluth School of Medicine is requested to develop 
        cooperative arrangements with two area health education centers 
        in year two of the grant, and develop cooperative arrangements 
        with an additional two centers in year three of the grant. 
           Subd. 2.  [PROGRAM REQUIREMENTS.] Each program must: 
           (1) provide preceptorship educational experiences for 
        health science students; 
           (2) maintain community-based primary care residency 
        programs or be affiliated with such programs; 
           (3) maintain continuing education programs for health 
        professionals or coordinate its activities with such programs; 
           (4) maintain learning resources and dissemination systems; 
           (5) have agreements with community-based organizations for 
        educating and training health professionals; 
           (6) train health professionals, including nurses and allied 
        health professionals; and 
           (7) carry out recruitment and health career awareness 
        programs among minority and other students in medically 
        underserved areas of the state. 
           Sec. 28.  [137.43] [SUBSTITUTE PHYSICIAN DEMONSTRATION 
        PROJECT.] 
           Subdivision 1.  [ESTABLISHMENT.] The board of regents, 
        through the University of Minnesota academic health center, is 
        requested to establish and administer a substitute physician 
        (locum tenens and emergency room coverage) demonstration project 
        at up to four rural demonstration sites within the state.  The 
        academic health center is requested to coordinate the 
        administration of the project with the commissioner of health 
        and the office of rural health and primary health care. 
           Subd. 2.  [PROJECT ACTIVITIES.] The project must: 
           (1) encourage physicians to serve as substitute physicians 
        for the demonstration sites; 
           (2) provide a central register of physicians interested in 
        serving as substitute physicians at the demonstration sites; 
           (3) provide a referral service for requests from 
        demonstration sites for substitute physicians; and 
           (4) provide substitute physician services at rates that 
        reflect the administrative savings resulting from centralized 
        referral and credentialing. 
           Subd. 3.  [CREDENTIALING; PROFESSIONAL EDUCATION.] The 
        academic health center is requested to credential persons 
        desiring to serve as substitute physicians.  The academic health 
        center may employ substitute physicians serving in the 
        demonstration project as temporary clinical faculty and may 
        provide substitute physicians with additional opportunities for 
        professional education and interaction. 
           Subd. 4.  [DEMONSTRATION SITES.] The academic health center 
        is requested to designate up to four rural communities as 
        demonstration sites for the project.  The academic health center 
        is requested to choose sites based on a community's need for 
        substitute physician services and the willingness of the 
        community to work cooperatively with the academic health center 
        and participate in the demonstration project evaluation. 
           Sec. 29.  Minnesota Statutes 1994, section 144.1464, 
        subdivision 2, is amended to read: 
           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 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; and 
           (5) employ at least one secondary student for each 
        post-secondary student employed, to the extent that there are 
        sufficient qualifying secondary student applicants. 
           (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 enrolled in a Minnesota educational institution or 
        be a resident of the state of Minnesota; priority must be given 
        to applicants 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.  
           Sec. 30.  Minnesota Statutes 1994, section 144.1464, 
        subdivision 3, is amended to read: 
           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 secondary and post-secondary pupils in a hospital or 
        clinic during the course of the program.  No more than 50 
        percent of the participants may be post-secondary students, 
        unless the program does not receive enough qualified secondary 
        applicants per fiscal year.  No more than five pupils may be 
        selected from any 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. 
           Sec. 31.  Minnesota Statutes 1994, section 144.1464, 
        subdivision 4, is amended to read: 
           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.  Grant funds that are not used in one fiscal year may 
        be carried over to the next fiscal year.  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. 32.  Minnesota Statutes 1994, section 144.147, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITION.] "Eligible rural hospital" 
        means any nonfederal, general acute care hospital that: 
           (1) is either located in a rural area, as defined in the 
        federal Medicare regulations, Code of Federal Regulations, title 
        42, section 405.1041, or located in a community with a 
        population of less than 5,000, according to United States Census 
        Bureau statistics, outside the seven-county metropolitan area; 
           (2) has 100 or fewer beds; 
           (3) is not for profit; and 
           (4) has not been awarded a grant under the federal rural 
        health transition grant program, which would be received 
        concurrently with any portion of the grant period for this 
        program.  
           Sec. 33.  Minnesota Statutes 1994, section 144.1484, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SOLE COMMUNITY HOSPITAL FINANCIAL 
        ASSISTANCE GRANTS.] The commissioner of health shall award 
        financial assistance grants to rural hospitals in isolated areas 
        of the state.  To qualify for a grant, a hospital must:  (1) be 
        eligible to be classified as a sole community hospital according 
        to the criteria in Code of Federal Regulations, title 42, 
        section 412.92 or be located in a community with a population of 
        less than 5,000 and located more than 25 miles from a like 
        hospital currently providing acute short-term services; (2) have 
        experienced net income losses in the two most recent consecutive 
        hospital fiscal years for which audited financial information is 
        available; (3) consist of 40 or fewer licensed beds; and (4) 
        demonstrate to the commissioner that it has obtained local 
        support for the hospital and that any state support awarded 
        under this program will not be used to supplant local support 
        for the hospital.  The commissioner shall review audited 
        financial statements of the hospital to assess the extent of 
        local support.  Evidence of local support may include bonds 
        issued by a local government entity such as a city, county, or 
        hospital district for the purpose of financing hospital 
        projects; and loans, grants, or donations to the hospital from 
        local government entities, private organizations, or 
        individuals.  The commissioner shall determine the amount of the 
        award to be given to each eligible hospital based on the 
        hospital's financial need operating loss margin (total operating 
        losses as a percentage of total operating revenue) for the two 
        most recent consecutive fiscal years for which audited financial 
        information is available and the total amount of funding 
        available.  One hundred percent of the available funds will be 
        disbursed proportionately based on the operating loss margins of 
        the eligible hospitals. 
           Sec. 34.  Minnesota Statutes 1994, section 144.1486, 
        subdivision 4, is amended to read: 
           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 seven-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 or was not served prior to establishment of a 
        state-funded community health center by a federally certified 
        medical organization. 
           Sec. 35.  Minnesota Statutes 1994, section 144.1487, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of sections 
        144.1487 to 144.1492, the following definitions apply definition 
        applies. 
           (b) "Board" means the higher education coordinating board. 
           (c) "Health professional shortage area" means an area 
        designated as such by the federal Secretary of Health and Human 
        Services, as provided under Code of Federal Regulations, title 
        42, part 5, and United States Code, title 42, section 254E. 
           Sec. 36.  Minnesota Statutes 1994, section 144.1488, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DUTIES OF THE COMMISSIONER OF HEALTH.] The 
        commissioner shall administer the state loan repayment program.  
        The commissioner shall: 
           (1) ensure that federal funds are used in accordance with 
        program requirements established by the federal National Health 
        Services Corps; 
           (2) notify potentially eligible loan repayment sites about 
        the program; 
           (3) develop and disseminate application materials to sites; 
           (4) review and rank applications using the scoring criteria 
        approved by the federal Department of Health and Human Services 
        as part of the Minnesota department of health's National Health 
        Services Corps state loan repayment program application; 
           (5) select sites that qualify for loan repayment based upon 
        the availability of federal and state funding; 
           (6) provide the higher education coordinating board with a 
        list of qualifying sites; and 
           (7) carry out other activities necessary to implement and 
        administer sections 144.1487 to 144.1492.; 
           The commissioner shall enter into an interagency agreement 
        with the higher education coordinating board to carry out the 
        duties assigned to the board under sections 144.1487 to 144.1492.
           (7) verify the eligibility of program participants; 
           (8) sign a contract with each participant that specifies 
        the obligations of the participant and the state; 
           (9) arrange for the payment of qualifying educational loans 
        for program participants; 
           (10) monitor the obligated service of program participants; 
           (11) waive or suspend service or payment obligations of 
        participants in appropriate situations; 
           (12) place participants who fail to meet their obligations 
        in default; and 
           (13) enforce penalties for default. 
           Sec. 37.  Minnesota Statutes 1994, section 144.1488, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ELIGIBLE HEALTH PROFESSIONALS.] (a) To be 
        eligible to apply to the higher education coordinating board 
        commissioner for the loan repayment program, health 
        professionals must be citizens or nationals of the United 
        States, must not have any unserved obligations for service to a 
        federal, state, or local government, or other entity, and must 
        be ready to begin full-time clinical practice upon signing a 
        contract for obligated service. 
           (b) In selecting physicians for participation, the board 
        commissioner shall give priority to physicians who are board 
        certified or have completed a residency in family practice, 
        osteopathic general practice, obstetrics and gynecology, 
        internal medicine, or pediatrics.  A physician selected for 
        participation is not eligible for loan repayment until the 
        physician has an employment agreement or contract with an 
        eligible loan repayment site and has signed a contract for 
        obligated service with the higher education coordinating 
        board commissioner. 
           Sec. 38.  Minnesota Statutes 1994, section 144.1489, 
        subdivision 1, is amended to read:  
           Subdivision 1.  [CONTRACT REQUIRED.] Before starting the 
        period of obligated service, a participant must sign a contract 
        with the higher education coordinating board commissioner that 
        specifies the obligations of the participant and the board 
        commissioner. 
           Sec. 39.  Minnesota Statutes 1994, section 144.1489, 
        subdivision 3, is amended to read: 
           Subd. 3.  [LENGTH OF SERVICE.] Participants must agree to 
        provide obligated service for a minimum of two years.  A 
        participant may extend a contract to provide obligated service 
        for a third and fourth year, subject to board approval and the 
        availability of federal and state funding. 
           Sec. 40.  Minnesota Statutes 1994, section 144.1489, 
        subdivision 4, is amended to read: 
           Subd. 4.  [AFFIDAVIT OF SERVICE REQUIRED.] Within 30 days 
        of the start of obligated service, and by February 1 of each 
        succeeding calendar year, a participant shall submit an 
        affidavit to the board commissioner stating that the participant 
        is providing the obligated service and which is signed by a 
        representative of the organizational entity in which the service 
        is provided.  Participants must provide written notice to 
        the board commissioner within 30 days of:  a change in name or 
        address, a decision not to fulfill a service obligation, or 
        cessation of clinical practice. 
           Sec. 41.  Minnesota Statutes 1994, section 144.1490, is 
        amended to read: 
           144.1490 [RESPONSIBILITIES OF THE LOAN REPAYMENT PROGRAM.] 
           Subdivision 1.  [LOAN REPAYMENT.] Subject to the 
        availability of federal and state funds for the loan repayment 
        program, the higher education coordinating board commissioner 
        shall pay all or part of the qualifying education loans up to 
        $20,000 annually for each primary care physician participant 
        that fulfills the required service obligation.  For purposes of 
        this provision, "qualifying educational loans" are government 
        and commercial loans for actual costs paid for tuition, 
        reasonable education expenses, and reasonable living expenses 
        related to the graduate or undergraduate education of a health 
        care professional. 
           Subd. 2.  [PROCEDURE FOR LOAN REPAYMENT.] Program 
        participants, at the time of signing a contract, shall designate 
        the qualifying loan or loans for which the higher education 
        coordinating board commissioner is to make payments.  The 
        participant shall submit to the board commissioner all payment 
        books for the designated loan or loans or all monthly billings 
        for the designated loan or loans within five days of receipt.  
        The board commissioner shall make payments in accordance with 
        the terms and conditions of the designated loans, in an amount 
        not to exceed $20,000 when annualized.  If the amount paid by 
        the board commissioner is less than $20,000 during a 12-month 
        period, the board commissioner shall pay during the 12th month 
        an additional amount towards a loan or loans designated by the 
        participant, to bring the total paid to $20,000.  The total 
        amount paid by the board commissioner must not exceed the amount 
        of principal and accrued interest of the designated loans. 
           Sec. 42.  Minnesota Statutes 1994, section 144.1491, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SUSPENSION OR WAIVER OF OBLIGATION.] Payment or 
        service obligations cancel in the event of a participant's 
        death.  The board commissioner may waive or suspend payment or 
        service obligations in case of total and permanent disability or 
        long-term temporary disability lasting for more than two years.  
        The board commissioner shall evaluate all other requests for 
        suspension or waivers on a case-by-case basis. 
           Sec. 43.  [144.1493] [NURSING GRANT PROGRAM.] 
           Subdivision 1.  [ESTABLISHMENT.] A nursing grant program is 
        established under the supervision of the commissioner of health 
        and the administration of the metropolitan healthcare 
        foundation's project LINC to provide grants to Minnesota health 
        care facility employees seeking to complete a baccalaureate or 
        master's degree in nursing. 
           Subd. 2.  [RESPONSIBILITY OF METROPOLITAN HEALTHCARE 
        FOUNDATION'S PROJECT LINC.] The metropolitan healthcare 
        foundation's project LINC shall administer the grant program and 
        award grants to eligible health care facility employees.  To be 
        eligible to receive a grant, a person must be: 
           (1) an employee of a health care facility located in 
        Minnesota, whom the facility has recommended to the metropolitan 
        healthcare foundation's project LINC for consideration; 
           (2) working part time, up to 32 hours per pay period, for 
        the health care facility, while maintaining full salary and 
        benefits; 
           (3) enrolled full time in a Minnesota school or college of 
        nursing to complete a baccalaureate or master's degree in 
        nursing; and 
           (4) a resident of the state of Minnesota. 
           The grant must be awarded for one academic year but is 
        renewable for a maximum of six semesters or nine quarters of 
        full-time study, or their equivalent.  The grant must be used 
        for tuition, fees, and books.  Priority in awarding grants shall 
        be given to persons with the greatest financial need.  The 
        health care facility may require its employee to commit to a 
        reasonable postprogram completion of employment at the health 
        care facility as a condition for the financial support the 
        facility provides. 
           Subd. 3.  [RESPONSIBILITY OF COMMISSIONER.] The 
        commissioner shall distribute money each year to the 
        metropolitan healthcare foundation's project LINC to be used to 
        award grants under this section, provided that the commissioner 
        shall not distribute the money unless the metropolitan 
        healthcare foundation's project LINC matches the money with an 
        equal amount from nonstate sources.  The metropolitan healthcare 
        foundation's project LINC shall expend nonstate money prior to 
        expending state money and shall return to the commissioner all 
        state money not used each year for nursing program grants to be 
        redistributed under this section.  The metropolitan healthcare 
        foundation's project LINC shall report to the commissioner on 
        its program activity as requested by the commissioner.  
           Sec. 44.  Minnesota Statutes 1994, section 144.801, is 
        amended by adding a subdivision to read: 
           Subd. 11.  [FIRST RESPONDER.] "First responder" means an 
        individual who is certified by the commissioner to perform, at a 
        minimum, basic emergency skills before the arrival of a licensed 
        ambulance service, and is: 
           (1) a member of an organized service recognized by a local 
        political subdivision whose primary responsibility is to respond 
        to medical emergencies to provide initial medical care before 
        the arrival of a licensed ambulance service; or 
           (2) a member of an organized industrial medical first 
        response team. 
           Sec. 45.  Minnesota Statutes 1994, section 144.804, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DRIVERS AND ATTENDANTS.] No publicly or 
        privately owned basic ambulance service shall be operated in the 
        state unless its drivers and attendants possess a current 
        emergency care course certificate authorized by rules adopted by 
        the commissioner of health according to chapter 14.  Until 
        August 1, 1994 1997, a licensee may substitute a person 
        currently certified by the American Red Cross in advanced first 
        aid and emergency care or a person who has successfully 
        completed the United States Department of Transportation first 
        responder curriculum, and who has also been trained to use basic 
        life support equipment as required by rules adopted by the 
        commissioner under section 144.804, subdivision 3, for one of 
        the persons on a basic ambulance, provided that person will 
        function as the driver while transporting a patient.  The 
        commissioner may grant a variance to allow a licensed ambulance 
        service to use attendants certified by the American Red Cross in 
        advanced first aid and emergency care and, until August 1, 1997, 
        to use attendants who have successfully completed the United 
        States Department of Transportation first responder curriculum, 
        and who have been trained to use basic life support equipment as 
        required by rules adopted by the commissioner under subdivision 
        3, in order to ensure 24-hour emergency ambulance coverage.  The 
        commissioner shall study the roles and responsibilities of first 
        responder units and report the findings by January 1, 1991.  
        This study shall address at a minimum:  
           (1) education and training; 
           (2) appropriate equipment and its use; 
           (3) medical direction and supervision; and 
           (4) supervisory and regulatory requirements. 
           Sec. 46.  Minnesota Statutes 1994, section 148B.32, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [UNLICENSED PRACTICE PROHIBITED.] After 
        adoption of rules by the board implementing sections 148B.29 to 
        148B.39, no individual shall engage in marriage and family 
        therapy practice unless that individual holds a valid license 
        issued under sections 148B.29 to 148B.39. 
           Marriage and family therapy practice is not medical care 
        nor any other type of remedial care that may be reimbursed under 
        medical assistance, chapter 256B, except to the extent such care 
        is reimbursed under section 256B.0625, subdivision 5.  Marriage 
        and family therapists may not be reimbursed under medical 
        assistance, chapter 256B, except to the extent such care is 
        reimbursed under section 256B.0625, subdivision 5, or when 
        marriage and family therapists are employed by a managed care 
        organization with a contract to provide mental health care to 
        medical assistance enrollees, and are reimbursed through the 
        managed care organization. 
           Sec. 47.  Laws 1993, chapter 224, article 4, section 40, is 
        amended to read: 
           Sec. 40.  [INTEGRATED CHILDREN'S DATABASE.] 
           Subdivision 1.  [PLAN.] The departments of education, 
        administration, health and human services, and the office of 
        strategic and long-range planning shall jointly develop a plan 
        for an integrated statewide children's service database.  The 
        plan must contain common essential data elements that include 
        all children from birth through kindergarten enrollment by July 
        1, 1995.  The essential data elements shall be the basis for a 
        statewide children's service database.  Initial service areas 
        shall include but are not limited to:  early childhood and 
        family education, ECFE tribal schools, children with special 
        health care needs, learning readiness, way to grow, early 
        childhood special education part H, even start, school health, 
        home visitor, lead poisoning screening, child care resources and 
        referral, child care service development, child trust fund, 
        migrant child care, dependent child care, headstart and 
        community resource program. 
           In developing a plan for a statewide integrated children's 
        database the joint planning team must: 
           (1) conduct a high-level needs analysis of service delivery 
        and reporting and decision making areas; 
           (2) catalogue current information systems; 
           (3) establish outcomes for developing systems; 
           (4) analyze the needs of individuals and organizations that 
        will use the system; and 
           (5) identify barriers to sharing information and recommend 
        changes to the Data Practices Act to remove those barriers. 
           Subd. 2.  [DATA STORAGE.] The departments of education, 
        administration, corrections, health and human services, and the 
        office of strategic and long-range planning must provide to the 
        legislature by January 30, 1995, a plan for storing essential 
        data elements for family service centers to use.  This plan will 
        include reporting of data to the state as a by-product of both 
        family service and school district internal operations. 
           Subd. 3.  [AGENCY SYSTEM INTEGRATION.] Any state agency or 
        department with programs serving children that is designing or 
        redesigning its information system must ensure that the 
        resulting information system can be fully integrated into the 
        statewide children's service database by June 30, 1995.  
        Agencies or departments must submit plans to design or redesign 
        information systems for review by the information policy office 
        to ensure that agency or department information can be fully 
        integrated into the statewide children's service database. 
           Sec. 48.  Laws 1990, chapter 591, article 4, section 9, is 
        amended to read: 
           Sec. 9.  [SUNSET.] 
           Sections 1 to 2, 3, 4, and 6, are repealed on June 30, 1995.
           Sec. 49.  Laws 1994, chapter 625, article 5, section 7, is 
        amended to read: 
           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, commerce, and labor and industry 
        shall develop a 24-hour coverage plan, on a pilot project basis, 
        incorporating and coordinating the health component medical 
        benefits of workers' compensation with health care coverage 
        benefits to be offered by an integrated service network, health 
        maintenance organization, or an insurer or self-insured employer 
        under chapters 79, 79A, 176, 181, 62C, 62D, 62H, and 62N.  The 
        commissioners shall also make provide the plan and 
        recommendations of any legislative changes that may be needed to 
        implement this plan, to the legislature by January 15, 1996. 
           Sec. 50.  Laws 1994, chapter 625, article 5, section 10, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SCOPE OF STUDY.] The commissioner of health 
        shall continue the study developed as part of Minnesota 
        Statutes, section 62J.045, on study 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 
        1996. 
           Sec. 51.  [MALPRACTICE REFORM STUDY.] 
           The attorney general shall study issues related to medical 
        malpractice reform and shall present to the legislature, by 
        December 15, 1995, recommendations and draft legislation for 
        medical malpractice reforms that will reduce health care costs 
        in Minnesota.  In developing these recommendations, the attorney 
        general shall consider medical malpractice laws in other states, 
        with particular attention to medical malpractice laws in 
        California. 
           Sec. 52.  [HEALTH COVERAGE DEMONSTRATION PROJECT.] 
           Subdivision 1.  [ESTABLISHMENT.] The commissioner of health 
        shall award a grant to regional coordinating board five to 
        develop a pilot project to provide information about health 
        coverage and advocacy services to individuals obtaining health 
        care services within the geographic area served by the regional 
        coordinating board.  The board may contract with a nonprofit 
        organization to develop and administer the pilot project.  The 
        pilot project must: 
           (1) provide individuals with assistance in interpreting the 
        terms of their certificate, contract, or policy of health 
        coverage, including but not limited to, terms relating to 
        covered services, limitations on services, limitations on access 
        to providers, and enrollee complaint and appeal procedures; 
           (2) maintain a current listing of health care providers 
        serving health plan company enrollees within regional 
        coordinating board five and assist individuals in determining 
        whether services provided by a specific provider are covered 
        under the health plan; 
           (3) assist and serve as advocates for enrollees in the 
        complaint and appeals process; and 
           (4) provide information supplied by the health plan 
        companies to individuals obtaining health care services within 
        the geographic area served by the regional coordinating board 
        regarding each company's expenditure and activity dedicated 
        directly to community-based prevention and health promotion.  
        The information supplied by the health plan company shall 
        include a description of the community-based prevention and 
        health promotion projects conducted or to be conducted in the 
        geographic area served by the regional coordinating board. 
           The commissioner of health and the commissioner of commerce 
        shall require all health plan companies serving enrollees within 
        regional coordinating board five to regularly provide the 
        regional coordinating board, or the entity under contract with 
        the board, with current listings of providers and current 
        certificates, contracts, or policies of coverage. 
           Subd. 2.  [EVALUATION.] The commissioner of health, through 
        the office of rural health and in consultation with the 
        commissioner of commerce, shall evaluate the effectiveness of 
        the pilot project.  The commissioner of health shall recommend 
        to the legislature by January 15, 1997, whether the pilot 
        project should be extended beyond the sunset date, and whether 
        the services provided by the pilot project should be made 
        available to enrollees living within the areas served by other 
        regional coordinating boards. 
           Subd. 3.  [SUNSET.] This section expires July 1, 1997. 
           Sec. 53.  [SURVEY OF LICENSURE RENEWAL.] 
           The legislative commission on health care access shall 
        survey medical doctors and doctors of osteopathy who have 
        discontinued their Minnesota licenses.  The survey must identify 
        the reasons why licensed physicians fail to renew licenses and 
        determine whether the loss of licensed physicians is resulting 
        in increased problems in accessing medical care.  The 
        legislative commission on health care access shall report survey 
        findings to the legislature by December 15, 1995. 
           Sec. 54.  [ALTERNATIVE LICENSING MODEL FOR RURAL 
        HOSPITALS.] 
           The rural health advisory committee shall examine rural 
        health care access needs and present recommendations on the need 
        for an alternative licensing model for rural hospitals.  
           The committee must first examine: 
           (1) the projected demographics of rural populations; 
           (2) access to emergency care, obstetrics, and other 
        traditional hospital-based services; 
           (3) access issues related to transportation; 
           (4) health care needs of different regions of the state, 
        including those areas where access to care may be threatened by 
        the financial instability of local hospitals; and 
           (5) other factors related to access to rural health care 
        and hospital-based services. 
           Based upon this examination of access to health care in 
        rural areas, the committee shall evaluate the need for and the 
        feasibility of implementing an alternative licensing model for 
        rural hospitals.  This evaluation must consider: 
           (1) the goals of an alternative licensing model; 
           (2) federal and state regulatory barriers and options for 
        reconfiguring traditional hospital-based health care services; 
        and 
           (3) the feasibility of implementing an alternative 
        licensing model, including the potential for integration with 
        integrated networks and likelihood of obtaining a Medicare 
        waiver and other necessary federal law changes. 
           If the committee determines that a need for an alternative 
        licensing model exists and implementation is feasible, the 
        committee shall identify changes needed in federal and state 
        law, and develop draft legislation for a Minnesota-specific 
        alternative licensing model. 
           The committee shall present a report to the legislature by 
        December 15, 1996.  This report must summarize rural access 
        needs and present initial recommendations on the need for an 
        alternative licensing model for rural hospitals.  
           Sec. 55.  [STUDY OF REGULATORY BARRIERS.] 
           The rural health advisory committee, in consultation with 
        the regional coordination boards, shall examine federal and 
        state regulatory barriers that limit rural access to care or 
        limit the ability of rural health care providers to provide care 
        efficiently, without improving the quality of care.  The 
        commissioner of health shall provide staff and technical 
        assistance to the advisory committee and the regional 
        coordinating boards.  The commissioner shall apply for federal 
        and private-sector grants and seek other nonstate sources of 
        funding to supplement state funds appropriated for this study.  
        The barriers to be studied must include, but are not limited to: 
           (1) requirements for emergency room staffing that increase 
        hospital costs and limit access to care; 
           (2) limits on the ability of nurses to prescribe and 
        administer prescription drugs under a physician's supervision in 
        emergency situations; 
           (3) state and federal inspection and regulatory 
        requirements that are duplicative and increase administrative 
        costs; 
           (4) physician supervision requirements that limit the use 
        of physician assistants; and 
           (5) the requirement that a hospital and its attached 
        nursing home have separate directors of nursing. 
           The advisory committee shall present recommendations for 
        eliminating these and other regulatory barriers to the 
        commissioner of health by December 1, 1995.  The commissioner of 
        health shall consider these recommendations and shall present 
        recommendations and draft legislation to the legislature on any 
        needed changes in state and federal regulatory requirements, by 
        February 1, 1996. 
           Sec. 56.  [REVISOR INSTRUCTION.] 
           (a) The revisor of statutes is instructed to change the 
        term "children's health plan" and similar terms to 
        "MinnesotaCare program" and similar terms, wherever in Minnesota 
        Statutes and Minnesota Rules the term "children's health plan" 
        and similar terms appear, including the revisor's heading that 
        immediately precedes Minnesota Statutes 1994, section 256.9351, 
        except that the revisor shall retain the reference to 
        "children's health plan" in Minnesota Statutes, section 
        256.9357, subdivision 1. 
           (b) The revisor of statutes is instructed to change the 
        title of Minnesota Statutes, chapter 62Q, to "REQUIREMENTS FOR 
        HEALTH PLAN COMPANIES." 
           Sec. 57.  [REPEALER.] 
           Minnesota Statutes 1994, sections 62J.045; 62J.07, 
        subdivision 4; 62J.09, subdivision 1a; 62J.19; 62J.65; 144.1488, 
        subdivision 2; and 148.236, are repealed. 
           Laws 1993, chapter 247, article 1, sections 12, 13, 14, 15, 
        18, and 19, are repealed.  
           Sec. 58.  [EFFECTIVE DATE.] 
           Sections 31 to 34, 39, and 48 are effective the day 
        following final enactment. 
                                   ARTICLE 9 
                                   FINANCING 
           Section 1.  Minnesota Statutes 1994, section 16A.724, is 
        amended to read: 
           16A.724 [HEALTH CARE ACCESS FUND.] 
           A health care access fund is created in the state 
        treasury.  The fund is a direct appropriated special revenue 
        fund.  The commissioner shall deposit to the credit of the fund 
        money made available to the fund.  Notwithstanding section 
        11A.20, after June 30, 1997, all investment income and all 
        investment losses attributable to the investment of the health 
        care access fund not currently needed shall be credited to the 
        health care access fund. 
           Sec. 2.  Minnesota Statutes 1994, section 151.48, is 
        amended to read: 
           151.48 [OUT-OF-STATE WHOLESALE DRUG DISTRIBUTOR LICENSING 
        REQUIREMENTS.] 
           (a) It is unlawful for an out-of-state wholesale drug 
        distributor to conduct business in the state without first 
        obtaining a license from the board and paying the required fee. 
           (b) Application for an out-of-state wholesale drug 
        distributor license under this section shall be made on a form 
        furnished by the board.  
           (c) The issuance of a license under sections 151.42 to 
        151.51 shall not change or affect tax liability imposed by the 
        department of revenue on any out-of-state wholesale drug 
        distributor. 
           (d) No person acting as principal or agent for any 
        out-of-state wholesale drug distributor may sell or distribute 
        drugs in the state unless the distributor has obtained a license.
           (e) (d) The board may adopt regulations that permit 
        out-of-state wholesale drug distributors to obtain a license on 
        the basis of reciprocity to the extent that an out-of-state 
        wholesale drug distributor: 
           (1) possesses a valid license granted by another state 
        under legal standards comparable to those that must be met by a 
        wholesale drug distributor of this state as prerequisites for 
        obtaining a license under the laws of this state; and 
           (2) can show that the other state would extend reciprocal 
        treatment under its own laws to a wholesale drug distributor of 
        this state. 
           Sec. 3.  Minnesota Statutes 1994, section 270.101, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LIABILITY IMPOSED.] A person who, either 
        singly or jointly with others, has the control of, supervision 
        of, or responsibility for filing returns or reports, paying 
        taxes, or collecting or withholding and remitting taxes and who 
        fails to do so, or a person who is liable under any other law, 
        is liable for the payment of taxes, penalties, and interest 
        arising under chapters 295, 296, 297, 297A, and 297C, or 
        sections 290.92 and 297E.02. 
           Sec. 4.  Minnesota Statutes 1994, 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 or patient 
        services provided in Minnesota; 
           (7) a wholesale drug distributor for sale or distribution 
        of 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 legend drugs are delivered to another wholesale drug 
        distributor who sells legend drugs exclusively at wholesale.  
        Legend drugs do not include nutritional products as defined in 
        Minnesota Rules, part 9505.0325; 
           (8) a staff model health 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 provided to consumers domiciled in 
        Minnesota or delivered into Minnesota. 
           Sec. 5.  Minnesota Statutes 1994, 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.  For 
        purposes of this clause, "directly to a patient or consumer" 
        includes goods and services provided in connection with 
        independent medical examinations under section 65B.56 or other 
        examinations for purposes of litigation or insurance claims; 
           (2) a staff model health 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. 6.  Minnesota Statutes 1994, section 295.50, 
        subdivision 10a, is amended to read: 
           Subd. 10a.  [PHARMACY.] "Pharmacy" means a pharmacy, as 
        defined in section 151.01 required to be licensed under chapter 
        151, or a pharmacy required to be licensed by any other 
        jurisdiction. 
           Sec. 7.  Minnesota Statutes 1994, section 295.53, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [EXEMPTIONS.] (a) 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 
        Medicare enrollee or by insurer or other third party a Medicare 
        supplemental coverage as defined in section 62A.011, subdivision 
        3, clause (10).  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 legend drugs, other than nutritional 
        products, to a wholesale drug distributor reduced by 
        reimbursements received for 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;.  For purposes of this clause, 
        coinsurance means the portion of payment that the enrollee is 
        required to pay for the covered service; 
           (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 incurred through a formal program of health care 
        research conducted in conformity with federal regulations 
        governing research on human subjects.  Payments received from 
        patients or from other persons paying on behalf of the patients 
        are subject to tax; 
           (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; 
           (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. 
           (b) Payments received by wholesale drug distributors for 
        prescription drugs sold directly to veterinarians or veterinary 
        bulk purchasing organizations are excluded from the gross 
        revenues subject to the wholesale drug distributor tax under 
        sections 295.50 to 295.59. 
           Sec. 8.  Minnesota Statutes 1994, section 295.53, 
        subdivision 3, is amended to read: 
           Subd. 3.  [RESTRICTION ON ITEMIZATION SEPARATE STATEMENT OF 
        TAX.] A hospital, surgical center, pharmacy, or health care 
        provider must not separately state the tax obligation under 
        section 295.52 on bills provided to individual patients in a 
        deceptive or misleading manner.  It must not separately state 
        tax obligations on bills provided to patients, consumers, or 
        other payers when the amount received for the services or goods 
        is not subject to tax.  
           Pharmacies that separately state the tax obligations on 
        bills provided to consumers or to other payers who purchase 
        legend drugs may state the tax obligation as two percent of the 
        wholesale price of the legend drugs.  Pharmacies must not state 
        the tax obligation as two percent of the retail price.  
           Whenever the commissioner determines that a person has 
        engaged in any act or practice constituting a violation of this 
        subdivision, the commissioner may bring an action in the name of 
        the state in the district court of the appropriate county to 
        enjoin the act or practice and to enforce compliance with this 
        subdivision, or the commissioner may refer the matter to the 
        attorney general or the county attorney of the appropriate 
        county.  Upon a proper showing, a permanent or temporary 
        injunction, restraining order, or other appropriate relief must 
        be granted.  
           Sec. 9.  Minnesota Statutes 1994, section 295.53, 
        subdivision 4, is amended to read: 
           Subd. 4.  [DEDUCTION FOR RESEARCH.] (a) In addition to the 
        exemptions allowed under subdivision 1, a hospital or health 
        care provider which is exempt under section 501(c)(3) of the 
        Internal Revenue Code of 1986 or is owned and operated under 
        authority of a governmental unit, may deduct from its gross 
        revenues subject to the hospital or health care provider taxes 
        under sections 295.50 to 295.57 revenues equal to expenditures 
        for allowable research programs.  
           (b) For purposes of this subdivision, expenditures for 
        allowable research programs are the direct and general program 
        costs for activities which are part of a formal program of 
        medical and health care research approved by the governing body 
        of the hospital or health care provider which also includes 
        active solicitation of research funds from government and 
        private sources.  Any Allowable research on humans or animals 
        must:  
           (1) have as its purpose the development of new knowledge in 
        basic or applied science relating to the diagnosis and treatment 
        of conditions affecting the human body; 
           (2) be subject to review by appropriate regulatory 
        committees by individuals with expertise in the subject matter 
        of the proposed study but who have no financial interest in the 
        proposed study and are not involved in the conduct of the 
        proposed study; and 
           (3) be subject to review and supervision by an 
        institutional review board operating in conformity with federal 
        regulations such as an institutional review board if the 
        research involves human subjects or an institutional animal care 
        and use committee operating in conformity with federal 
        regulations if the research involves animal subjects.  Research 
        expenses are not exempt if the study is a routine evaluation of 
        health care methods or products used in a particular setting 
        conducted for the purpose of making a management decision.  
        Costs of clinical research activities paid directly for the 
        benefit of an individual patient are excluded from this 
        exemption.  Basic research in fields including biochemistry, 
        molecular biology, and physiology are also included if such 
        programs are subject to a peer review process. 
           (c) No deduction shall be allowed under this subdivision 
        for any revenue received by the hospital or health care provider 
        in the form of a grant, gift, or otherwise, whether from a 
        government or nongovernment source, on which the tax liability 
        under section 295.52 is not imposed or for which the tax 
        liability under section 295.52 has been received from a third 
        party as provided for in section 295.582. 
           (d) Effective beginning with calendar year 1995, the 
        taxpayer shall not take the deduction under this section into 
        account in determining estimated tax payments or the payment 
        made with the annual return under section 295.55.  The total 
        deduction allowable to all taxpayers under this section for 
        calendar years beginning after December 31, 1994, may not exceed 
        $65,000,000.  To implement this limit, each qualifying hospital 
        and qualifying health care provider shall submit to the 
        commissioner by March 15 its total expenditures qualifying for 
        the deduction under this section for the previous calendar 
        year.  The commissioner shall sum the total expenditures of all 
        taxpayers qualifying under this section for the calendar year.  
        If the resulting amount exceeds $65,000,000, the commissioner 
        shall allocate a part of the $65,000,000 deduction limit to each 
        qualifying hospital and health care provider in proportion to 
        its share of the total deductions.  The commissioner shall pay a 
        refund to each qualifying hospital or provider equal to its 
        share of the deduction limit multiplied by two percent.  The 
        commissioner shall pay the refund no later than May 15 of the 
        calendar year. 
           Sec. 10.  Minnesota Statutes 1994, section 295.55, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ELECTRONIC FUNDS TRANSFER PAYMENTS.] A taxpayer 
        with an aggregate tax liability of $30,000 or more during a 
        calendar quarter ending the last day of March, June, September, 
        or December of the first year the taxpayer is subject to the tax 
        must remit all liabilities by means of a funds transfer as 
        defined in section 336.4A-104, paragraph (a), for the remainder 
        of the year.  A taxpayer with an aggregate tax liability of 
        $120,000 or more during a calendar fiscal year ending June 30, 
        must remit all liabilities by means of a funds transfer as 
        defined in section 336.4A-104, paragraph (a), in the subsequent 
        calendar year.  The funds transfer payment date, as defined in 
        section 336.4A-401, is on or before the date the tax is due.  If 
        the date the tax is due is not a funds-transfer business day, as 
        defined in section 336.4A-105, paragraph (a), clause (4), the 
        payment date is on or before the first funds-transfer business 
        day after the date the tax is due. 
           Sec. 11.  [295.56] [TRANSFER OF ACCOUNTS RECEIVABLE.] 
           When a hospital or health care provider transfers, assigns, 
        or sells accounts receivable to another person who is subject to 
        tax under this chapter, liability for the tax on the accounts 
        receivable is imposed on the transferee, assignee, or buyer of 
        the accounts receivable.  No liability for these accounts 
        receivable is imposed on the transferor, assignor, or seller of 
        the accounts receivable.  
           Sec. 12.  Minnesota Statutes 1994, section 295.57, is 
        amended to read: 
           295.57 [COLLECTION AND ENFORCEMENT; REFUNDS; RULEMAKING; 
        APPLICATION OF OTHER CHAPTERS; ACCESS TO RECORDS.] 
           Subdivision 1.  [APPLICATION OF OTHER CHAPTERS.] Unless 
        specifically provided otherwise by sections 295.50 to 295.58, 
        the enforcement, interest, and penalty provisions under chapter 
        294, appeal provisions in sections 289A.43 and 289A.65, criminal 
        penalties in section 289A.63, and refunds provisions in section 
        289A.50, and collection and rulemaking provisions under chapter 
        270, apply to a liability for the taxes imposed under sections 
        295.50 to 295.58. 
           Subd. 2.  [ACCESS TO RECORDS.] For purposes of 
        administering the taxes imposed by sections 295.50 to 295.59, 
        the commissioner may access patients' records that contain 
        billing or other financial information without prior consent 
        from the patients.  The data collected is classified as private 
        or nonpublic data. 
           Sec. 13.  [295.581] [PROHIBITION ON NON-MINNESOTACARE 
        TRANSFERS FROM FUND.] 
           Notwithstanding any law to the contrary, and 
        notwithstanding section 645.33, money in the health care access 
        fund shall be appropriated only for purposes that are consistent 
        with past and current MinnesotaCare appropriations in Laws 1992, 
        chapter 549; Laws 1993, chapter 345; Laws 1994, chapter 625; and 
        this act or for initiatives that are part of the section 1115 of 
        the Social Security Act health care reform waiver submitted to 
        the federal health care financing administration by the 
        commissioner of human services as appropriated in this act. 
           Sec. 14.  Minnesota Statutes 1994, 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 additional expense 
        transferred to the third-party purchaser must not exceed two 
        percent of the gross revenues received under the third-party 
        contract, plus and 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, 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 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 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. 15.  [EFFECTIVE DATE.] 
           Sections 2 and 6 are effective the day following final 
        enactment. 
           Sections 3, 7, and 10 are effective for tax periods 
        beginning on or after January 1, 1996. 
           Section 4 is effective for services provided on or after 
        July 1, 1995. 
           Section 5 is effective January 1, 1995. 
           Section 8 is effective for statements of the tax made on or 
        after July 1, 1995. 
           Section 9 is effective for research deductions incurred on 
        or after July 1, 1995.  
           Section 11 is effective for transfers of accounts 
        receivable on or after July 1, 1995. 
           Section 12 is effective for audits conducted on or after 
        the day following final enactment. 
           Section 13, prohibiting non-MinnesotaCare transfers from 
        the health care access fund, is effective the day following 
        final enactment. 
                                   ARTICLE 10 
                          HEALTH PROVIDER COOPERATIVES 
           Section 1.  [62R.17] [PROVIDER COOPERATIVE DEMONSTRATION.] 
           A health provider cooperative incorporated and having 
        adopted bylaws before May 1, 1995, that has members who provide 
        services in Sibley, Nicollet, Blue Earth, Brown, Watonwan, 
        Martin, Faribault, Waseca, and LeSueur counties, may contract 
        with a qualified employer or self-insured employer plan to 
        provide health care services in accordance with sections 62R.17 
        to 62R.26.  The health provider cooperative, the qualified 
        employer, or the self-insured employer plan shall not, solely on 
        account of that contract, be subject to any provision of 
        Minnesota Statutes relating to health carriers except as 
        provided in section 62R.21.  The grant of contracting power 
        under this section shall not be interpreted to permit or 
        prohibit any other lawful arrangement between a health care 
        provider and a self-insured employee welfare benefit plan or its 
        sponsor. 
           Sec. 2.  [62R.18] [DEFINITIONS.] 
           Subdivision 1. [APPLICATION.] For purposes of sections 
        62R.17 to 62R.26, the terms defined in this section have the 
        meanings given. 
           Subd. 2.  [HEALTH CARRIER.] "Health carrier" means a health 
        carrier as defined in section 62A.011.  
           Subd. 3. [PLAN PARTICIPANT.] "Plan participant" means an 
        eligible employee or retiree of a qualified employer or an 
        eligible dependent of an employee or retired employee of a 
        qualified employer. 
           Subd. 4.  [QUALIFIED EMPLOYER.] "Qualified employer" means 
        an employer sponsoring or maintaining a self-insured employer 
        plan meeting the requirements of sections 62R.19 and 62R.21. 
           Subd. 5.  [SELF-INSURED EMPLOYER PLAN.] "Self-insured 
        employer plan" means a plan, fund, or program established or 
        maintained by a qualified employer on or before January 1, 1995, 
        for the purpose of providing medical, surgical, hospital, or 
        other health care benefits to plan participants primarily on a 
        self-insured basis.  A governmental joint self-insurance plan 
        established under chapter 471 is a self-insured employer plan 
        for purposes of this definition. 
           Sec. 3.  [62R.19] [STOP LOSS REQUIREMENT.] 
           A health provider cooperative shall not contract with a 
        qualified employer or self-insured employer plan under section 
        62R.17 unless the qualified employer or self-insured employer 
        plan maintains a policy of stop loss or excess loss insurance 
        from an insurance company licensed to do business in this state 
        in accordance with the following: 
           (1) A qualified employer with more than 750 employees as 
        defined in section 62L.02 must not maintain a policy of stop 
        loss, excess loss, or similar coverage with an attachment point 
        less than 120 percent of the self-insured employer plan's annual 
        expected benefit costs; 
           (2) A qualified employer with 200 or more but fewer than 
        750 employees as defined in section 62L.02 must maintain a 
        policy providing aggregate stop loss insurance with an annual 
        attachment point of no less than 120 percent of the self-insured 
        employer plan's annual expected benefit costs and providing 
        individual stop loss coverage with a deductible of no less than 
        $10,000; and 
           (3) A qualified employer with fewer than 200 employees as 
        defined in section 62L.02 must maintain a policy meeting the 
        requirements of section 60A.235. 
           Sec. 4.  [62R.20] [CONTRACT REQUIREMENTS.] 
           Any contract for health care services described in section 
        62R.17 is subject to the following requirements: 
           (1) The contract must be structured so that the health 
        provider cooperative does not bear financial risk in excess of 
        50 percent of the self-insured employer plan's expected annual 
        costs. 
           (2) The contract must not be effective prior to January 1, 
        1996. 
           (3) The contract must be limited to those services 
        regularly provided by the cooperative or its members. 
           (4) The contract must obligate the qualified employer to 
        maintain its self-insured employer plan in accordance with 
        section 62R.21. 
           Sec. 5.  [62R.21] [PLAN REQUIREMENTS.] 
           The requirements described in section 62R.20, clause (4), 
        are as follows: 
           (1) The plan shall 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.  
           (2) Contributions to the cost of the self-insured employer 
        plan from plan participants must not be based upon the gender of 
        the plan participant. 
           Sec. 6.  [62R.22] [PARTICIPANT HOLD HARMLESS.] 
           The health provider cooperative and its members and patrons 
        must not have recourse against the plan participants of any 
        self-insured employer plan with which the cooperative has 
        contracted in accordance with sections 62R.17 to 62R.26, except 
        for collection of copayments, coinsurance, or deductibles, or 
        for health care services rendered that are not covered by the 
        self-insured employer plan or that are in excess of the lifetime 
        maximum benefit limit.  This requirement applies to, but is not 
        limited to, nonpayment of the cooperative by the self-insured 
        employer plan or qualified employer, insolvency of the qualified 
        employer, insolvency of the health provider cooperative, or 
        nonpayment by the cooperative to the cooperative member or 
        patron. 
           Sec. 7.  [62R.23] [CONTINUATION OF CARE.] 
           In the event of the insolvency or bankruptcy of a qualified 
        employer, a health provider cooperative described in section 
        62R.17 and its members shall continue to deliver the contracted 
        health care services to plan participants for a period of 30 
        days, whether or not the cooperative receives payment from the 
        qualified employer, its estate in bankruptcy, or from the 
        self-insured employer plan.  Section 62R.22 applies to this 
        section.  Nothing in this section, however, limits the right of 
        the cooperative to seek payment from the qualified employer, its 
        estate, or the self-insured employer plan for services so 
        rendered. 
           Sec. 8.  [62R.24] [TAXES AND ASSESSMENTS.] 
           Effective January 1, 1998, as a condition to entering a 
        contract described in section 62R.17, a self-insured employer 
        plan or the qualified employer must voluntarily pay the one 
        percent premium tax imposed in section 60A.15, subdivision 1, 
        paragraph (d), and assessments by the Minnesota Comprehensive 
        Health Association. 
           Sec. 9.  [62R.25] [NOTIFICATION OF CONTRACT; REPORT TO 
        LEGISLATURE.] 
           (a) Each health provider cooperative shall notify the 
        Office of Rural Health in writing upon entering a contract 
        described in section 62R.17. 
           (b) The Department of Health, Office of Rural Health, shall 
        provide an information report to the MinnesotaCare Finance 
        Division of the House Health and Human Services Committee and 
        the Senate Health Care Committee no later than January 15, 1999, 
        on the status of direct contracting between health provider 
        cooperatives and self-insured employer plans or qualified 
        employers in accordance with sections 62R.17 to 62R.26.  The 
        report shall consider the effects on public policy and on health 
        provider cooperatives of a possible requirement that health 
        provider cooperatives using direct contracting be obligated to 
        become community integrated service networks. 
           Sec. 10.  [62R.26] [SUNSET.] 
           Sections 62R.17 to 62R.25 expire on December 31, 1999. 
           Sec. 11.  [EFFECTIVE DATE.] 
           Sections 1 to 10 are effective the day following final 
        enactment. 
                                   ARTICLE 11 
                                 APPROPRIATIONS 
        Section 1.  [APPROPRIATIONS; SUMMARY.] 
           Except as otherwise provided in this act, the sums set 
        forth in the columns designated "fiscal year 1996" and "fiscal 
        year 1997" are appropriated from the general fund, or other 
        named fund, to the agencies for the purposes specified in this 
        act for the fiscal years ending June 30, 1996, and June 30, 1997.
        Sec. 2.  APPROPRIATIONS 
                                SUMMARY BY FUND
                                  1996          1997           TOTAL
        Health Care 
        Access Fund            $ 98,472,000  $145,882,000  $244,354,000
        State Government
        Special Revenue        $    413,000  $    557,000  $    970,000
        Subdivision 1.  Department of Human 
        Services 
        Health Care
        Access Fund            $ 85,420,000  $133,740,000  $219,160,000
        [FEDERAL RECEIPTS FOR ADMINISTRATION.] 
        Receipts received as a result of 
        federal participation pertaining to 
        administrative costs of the Minnesota 
        Health Care Reform Waiver shall be 
        deposited as a nondedicated revenue to 
        the Health Care Access Fund, while 
        receipts received as a result of 
        federal participation pertaining to 
        grants shall be deposited to the 
        federal fund and shall offset health 
        care access funds for payments to 
        providers. 
        [1115 WAIVER] Of this appropriation 
        $695,000 in the fiscal year beginning 
        July 1, 1995 and $855,000 in the fiscal 
        year beginning July 1, 1996, is for 
        administration of the section 1115 
        federal waiver.  This appropriation 
        shall not become part of the base for 
        the fiscal year 1998-1999 biennium. 
        [SENIOR DRUG PROGRAM ADMINISTRATION.] 
        Fees for the senior drug discount 
        program are appropriated to and may be 
        retained by the commissioner in the 
        health care access fund for the purpose 
        of administration of enrollment for the 
        program. 
        Subd. 2.  Department of Employee 
        Relations 
        Health Care 
        Access Fund             1,000,000  .,...,-0-,...     1,000,000
        Subd. 3.  Department of Health 
        Health Care 
        Access Fund             7,609,000      7,528,000     15,137,000
        State Government
        Special Revenue           413,000        557,000        970,000
        [1-800 PHONE LINE.] Of this 
        appropriation, $90,000 is for the 
        fiscal year beginning July 1, 1996, for 
        the operation of a 1-800 resource phone 
        line for information on programs and 
        services with children with special 
        health care needs, and to conduct 
        outreach and communications activities 
        related to this resource phone line.  
        The commissioner shall evaluate the 
        effectiveness of this program and 
        report to the House MinnesotaCare 
        Finance Division and the Senate Health 
        Care Committee by January 15, 1997.  
        This appropriation shall not become 
        part of the base for the fiscal year 
        1998-1999 biennium. 
        [HEALTH COVERAGE DEMONSTRATION GRANT.] 
        Of this appropriation, $100,000 is for 
        the fiscal year beginning July 1, 1996, 
        for implementation of the health 
        coverage demonstration project.  This 
        appropriation shall not become part of 
        the base for the fiscal year 1998-1999 
        biennium. 
        [STATE GOVERNMENT SPECIAL REVENUE 
        FUND.]Fees collected from integrated 
        service networks and community 
        integrated service networks shall be 
        deposited in the state government 
        special revenue fund. 
        [COMPARATIVE PERFORMANCE MEASURES.] Of 
        this appropriation, $150,000 for the 
        fiscal year beginning July 1, 1995, and 
        $150,000 for the fiscal year beginning 
        July 1, 1996, is for a grant to the 
        Minnesota Health Data Institute, to 
        transfer the responsibility for the 
        development and implementation of 
        comparative performance measurement. 
        [ALTERNATIVE LICENSING.] Of this 
        appropriation, $50,000 for the fiscal 
        year beginning July 1, 1995, is for an 
        evaluation of alternative hospital 
        licensing models.  Unspent funds may be 
        carried forward to the fiscal year 
        beginning July 1, 1996. 
        Subd. 4.  University of Minnesota 
        Health Care 
        Access Fund             2,867,000      3,082,000      5,949,000
        [AHEC GRANT.] Of this appropriation, 
        $100,000 for the fiscal year beginning 
        July 1, 1996, is to match federal 
        funding received through the area 
        health education center grant applied 
        for under Minnesota Statutes, section 
        137.42.  This appropriation is 
        available to the board of regents only 
        if the University of Minnesota-Duluth 
        School of Medicine receives a federal 
        area health education center grant.  
        This appropriation shall not become 
        part of the base for the fiscal year 
        1998-1999 biennium. 
        [PHYSICIAN SUBSTITUTE DEMONSTRATION 
        PROJECT.] Of this appropriation, 
        $85,000 for the fiscal year beginning 
        July 1, 1995, is for costs incurred by 
        the academic health center in 
        credentialing physician substitutes and 
        employing physician substitutes as 
        temporary clinical faculty under 
        Minnesota Statutes, section 137.43.  
        The academic health center must report 
        to the House MinnesotaCare Finance 
        Division and the Senate Health Care 
        Committee by February 15, 1996, on 
        progress in credentially and employing 
        physician substitutes under Minnesota 
        Statutes, section 137.43.  Unspent 
        funds may be carried forward to the 
        fiscal year beginning July 1. 1996. 
        [PRIMARY CARE TRAINING INITIATIVE.] Of 
        this appropriation, $125,000 for the 
        fiscal year beginning July 1, 1995, and 
        $125,000 for the fiscal year beginning 
        July 1, 1996, is for increasing the 
        number of primary care physicians in 
        Minnesota as requested in Minnesota 
        Statutes, section 137.38, subdivision 
        3.  This appropriation is available 
        only if the University can provide 
        evidence of matching funding.  This 
        appropriation shall not become part of 
        the base for the fiscal year 1998-1999 
        biennium. 
        [INDIGENT DENTAL CARE.] Of this 
        appropriation, $300,000 for the fiscal 
        year beginning July 1, 1995, and 
        $300,000 for the fiscal year beginning 
        July 1, 1996, is to cover the cost of 
        indigent care at the University of 
        Minnesota Dental School.  This 
        appropriation shall not become part of 
        the base for the fiscal year 1998-1999 
        biennium.* (The preceding paragraph 
        beginning "[INDIGENT DENTAL CARE.]" was 
        vetoed by the governor.) 
        [UMD MEDICAL SCHOOL.] Of this 
        appropriation, $200,000 for the fiscal 
        year beginning July 1, 1996, is for the 
        University of Minnesota-Duluth.  This 
        appropriation shall not become part of 
        the base for the fiscal year 1998-1999 
        biennium.* (The preceding paragraph 
        beginning "[UMD MEDICAL SCHOOL.]" was 
        vetoed by the governor.) 
        Subd. 5.  Department of Revenue 
        Health Care 
        Access Fund             1,375,000      1,381,000      2,756,000
        Subd. 6.  Department of Commerce 
        Health Care 
        Access Fund                26,000         26,000         52,000
        Subd. 7.  Legislative Coordinating 
        Commission 
        Health Care 
        Access Fund               175,000        125,000        300,000
           Presented to the governor May 23, 1995 
           Signed by the governor May 25, 1995, 2:32 p.m.