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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 225-S.F.No. 1208 
                  An act relating to health; modifying the MinnesotaCare 
                  program; modifying general assistance medical care 
                  provisions; modifying loss ratio provisions for health 
                  care policies; modifying Medicare supplement plan 
                  provisions; modifying the regional coordinating 
                  boards; modifying the health technology advisory 
                  committee; eliminating the health care commission; 
                  modifying mandatory Medicare assignment; modifying 
                  MinnesotaCare tax provisions; regulating community 
                  purchasing arrangements; modifying disclosure 
                  provisions; eliminating integrated service networks; 
                  modifying community integrated service network 
                  provisions; modifying provisions of the public 
                  programs risk adjustment work group; modifying 
                  essential community provider provisions; modifying 
                  requirements for health plan companies; modifying 
                  provisions of the rural physician education account; 
                  modifying rural hospital provisions; modifying medical 
                  assistance provisions; establishing a senior citizen 
                  drug proram; modifying Minnesota comprehensive health 
                  association provisions; requiring studies; making 
                  technical changes; appropriating money; providing 
                  criminal penalties; amending Minnesota Statutes 1996, 
                  sections 60A.15, subdivision 1; 60A.951, subdivision 
                  5; 62A.021, subdivision 1, and by adding a 
                  subdivision; 62A.316; 62A.61; 62D.02, subdivision 5; 
                  62D.09, subdivision 3; 62E.02, subdivisions 13 and 18; 
                  62E.11, subdivision 5; 62E.13, subdivision 2; 62J.017; 
                  62J.06; 62J.07, subdivisions 1 and 3; 62J.09, 
                  subdivision 1; 62J.15, subdivision 1; 62J.152, 
                  subdivisions 1, 2, 4, 5, and by adding subdivisions; 
                  62J.17, subdivision 6a; 62J.22; 62J.25; 62J.2914, 
                  subdivision 1; 62J.2915; 62J.2916, subdivision 1; 
                  62J.2917, subdivision 2; 62J.2921, subdivision 2; 
                  62J.451, subdivision 6b; 62M.02, subdivision 21; 
                  62N.01, subdivision 1; 62N.22; 62N.23; 62N.25, 
                  subdivision 5; 62N.26; 62N.40; 62Q.01, subdivisions 3, 
                  4, and 5; 62Q.03, subdivision 5a; 62Q.106; 62Q.19, 
                  subdivision 1; 62Q.33, subdivision 2; 62Q.45, 
                  subdivision 2; 136A.1355; 144.147, subdivisions 1, 2, 
                  3, and 4; 144.1484, subdivision 1; 256.01, subdivision 
                  2; 256.045, subdivision 3a; 256.9352, subdivision 3; 
                  256.9353, subdivisions 1, 3, and 7; 256.9354, 
                  subdivisions 4, 5, 6, 7, and by adding a subdivision; 
                  256.9355, subdivisions 1, 4, and by adding a 
                  subdivision; 256.9357, subdivision 3; 256.9358, 
                  subdivision 4; 256.9359, subdivision 2; 256.9362, 
                  subdivision 6; 256.9363, subdivisions 1 and 5; 
                  256.9657, subdivision 3; 256B.056, subdivision 8; 
                  256B.0625, subdivisions 13 and 15; 256B.0911, 
                  subdivision 2, as amended; 256B.0913, subdivision 16, 
                  as added; 256D.03, subdivisions 3 and 3b; 295.50, 
                  subdivisions 3, 4, 6, 7, 13, and 14; 295.51, 
                  subdivision 1; 295.52, subdivision 4, and by adding 
                  subdivisions; 295.53, subdivisions 1, 3, 4, and by 
                  adding a subdivision; 295.54, subdivisions 1 and 2; 
                  295.55, subdivision 2; 295.582; S. F. No. 1908, 
                  article 1, sections 2; 3, subdivision 2; article 4, 
                  sections 70 and 73; and article 9, section 24; 
                  proposing coding for new law in Minnesota Statutes, 
                  chapters 16A; 62Q; 144; and 256; proposing coding for 
                  new law as Minnesota Statutes, chapter 62T; repealing 
                  Minnesota Statutes 1996, sections 62E.11, subdivision 
                  12; 62J.03, subdivision 3; 62J.04, subdivisions 4 and 
                  7; 62J.05; 62J.051; 62J.09, subdivision 3a; 62J.37; 
                  62N.01, subdivision 2; 62N.02, subdivisions 2, 3, 4b, 
                  4c, 6, 7, 8, 9, 10, and 12; 62N.03; 62N.04; 62N.05; 
                  62N.06; 62N.065; 62N.071; 62N.072; 62N.073; 62N.074; 
                  62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 62N.12; 
                  62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 
                  62N.38; 62Q.165, subdivision 3; 62Q.25; 62Q.29; 
                  62Q.41; 147.01, subdivision 6; 295.52, subdivision 1b; 
                  and 295.53, subdivision 5; Laws 1993, chapter 247, 
                  article 4, section 8; Laws 1994, chapter 625, article 
                  5, section 5, as amended; Laws 1995, chapter 96, 
                  section 2; Laws 1995, First Special Session chapter 3, 
                  article 13, section 2; Laws 1997, chapters 31, article 
                  4; and 84, article 4. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
                                   ARTICLE 1 
                           MINNESOTACARE PROGRAM/GAMC 
           Section 1.  Minnesota Statutes 1996, 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, nursing home or 
        intermediate care facilities services, inpatient mental health 
        services, and chemical dependency services.  Effective July 1, 
        1998, adult dental care for nonpreventive services with the 
        exception of orthodontic services is available to persons who 
        qualify under section 256.9354, subdivisions 1 to 5, or 
        256.9366, with family gross income equal to or less than 175 
        percent of the federal poverty guidelines.  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. 2.  Minnesota Statutes 1996, 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.  Prior to July 1, 1997, 
        the inpatient hospital benefit for adult enrollees is subject to 
        an annual benefit limit of $10,000.  Effective July 1, 1997, the 
        inpatient hospital benefit for adult enrollees who qualify under 
        section 256.9354, subdivision 5, or who qualify under section 
        256.9354, subdivisions 1 to 4a, or section 256.9366 with family 
        gross income that exceeds 175 percent of the federal poverty 
        guidelines and who are not pregnant, is subject to an annual 
        limit of $10,000.  
           (b) Enrollees who qualify under section 256.9354, 
        subdivision 5, or who qualify under section 256.9354, 
        subdivisions 1 to 4a, or section 256.9366 with family gross 
        income that exceeds 175 percent of the federal poverty 
        guidelines and who are not pregnant, and are 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 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. 3.  Minnesota Statutes 1996, section 256.9353, 
        subdivision 7, is amended to read: 
           Subd. 7.  [COPAYMENTS AND COINSURANCE.] The MinnesotaCare 
        benefit plan shall include the following copayments and 
        coinsurance requirements:  
           (1) ten percent of the paid charges submitted for inpatient 
        hospital services for adult enrollees not eligible for medical 
        assistance, subject to an annual inpatient out-of-pocket maximum 
        of $1,000 per individual and $3,000 per family; 
           (2) $3 per prescription for adult enrollees; and 
           (3) $25 for eyeglasses for adult enrollees; and 
           (4) effective July 1, 1998, 50 percent of the 
        fee-for-service rate for adult dental care services other than 
        preventive care services for persons eligible under section 
        256.9354, subdivisions 1 to 5, or 256.9366, with income equal to 
        or less than 175 percent of the federal poverty guidelines. 
           Prior to July 1, 1997, enrollees who are not eligible for 
        medical assistance with or without a spenddown shall be 
        financially responsible for the coinsurance amount and amounts 
        which exceed the $10,000 benefit limit.  MinnesotaCare shall be 
        financially responsible for the spenddown amount up to the 
        $10,000 benefit limit for enrollees who are eligible for medical 
        assistance with a spenddown; enrollees who are eligible for 
        medical assistance with a spenddown are financially responsible 
        for amounts which exceed the $10,000 benefit limit.  Effective 
        July 1, 1997, adult enrollees who qualify under section 
        256.9354, subdivision 5, or who qualify under section 256.9354, 
        subdivisions 1 to 4a, or section 256.9366 with family gross 
        income that exceeds 175 percent of the federal poverty 
        guidelines and who are not pregnant, and who are not eligible 
        for medical assistance with or without a spenddown, shall be 
        financially responsible for the coinsurance amount and amounts 
        which exceed the $10,000 inpatient hospital benefit limit. 
           When a MinnesotaCare enrollee becomes a member of a prepaid 
        health plan, or changes from one prepaid health plan to another 
        during a calendar year, any charges submitted towards the 
        $10,000 annual inpatient benefit limit, and any out-of-pocket 
        expenses incurred by the enrollee for inpatient services, that 
        were submitted or incurred prior to enrollment, or prior to the 
        change in health plans, shall be disregarded. 
           Sec. 4.  Minnesota Statutes 1996, 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 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. 5.  Minnesota Statutes 1996, 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" 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) 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. 
           (d) (b) Beginning July 1, 1997, the definition of eligible 
        persons is expanded to include all individuals and households 
        with no children who have gross family incomes that are equal to 
        or less than 175 percent of the federal poverty guidelines and 
        who are not eligible for medical assistance without a spenddown 
        under chapter 256B. 
           (c) 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. 6.  Minnesota Statutes 1996, section 256.9354, 
        subdivision 6, is amended to read: 
           Subd. 6.  [APPLICANTS POTENTIALLY ELIGIBLE FOR MEDICAL 
        ASSISTANCE.] Individuals who apply for MinnesotaCare who qualify 
        under section 256.9354, subdivision 5, but who are potentially 
        eligible for medical assistance without a spenddown shall be 
        allowed to enroll in MinnesotaCare for a period of 60 days, so 
        long as the applicant meets all other conditions of 
        eligibility.  The commissioner shall identify and refer such 
        individuals to their county social service agency.  The enrollee 
        must cooperate with the county social service agency in 
        determining medical assistance eligibility within the 60-day 
        enrollment period.  Enrollees who do not apply for and cooperate 
        with medical assistance within the 60-day enrollment period, and 
        their other family members, shall be disenrolled from the plan 
        within one calendar month.  Persons disenrolled for 
        nonapplication for medical assistance may not reenroll until 
        they have obtained a medical assistance eligibility 
        determination for the family member or members who were referred 
        to the county agency.  Persons disenrolled for noncooperation 
        with medical assistance may not reenroll until they have 
        cooperated with the county agency and have obtained a medical 
        assistance eligibility determination.  The commissioner shall 
        redetermine provider payments made under MinnesotaCare to the 
        appropriate medical assistance payments for those enrollees who 
        subsequently become eligible for medical assistance. 
           Sec. 7.  Minnesota Statutes 1996, section 256.9354, 
        subdivision 7, is amended to read: 
           Subd. 7.  [GENERAL ASSISTANCE MEDICAL CARE.] A person 
        cannot have coverage under both MinnesotaCare and general 
        assistance medical care in the same month, except that a 
        MinnesotaCare enrollee may be eligible for retroactive general 
        assistance medical care according to section 256D.03, 
        subdivision 3, paragraph (b). 
           Sec. 8.  Minnesota Statutes 1996, section 256.9354, is 
        amended by adding a subdivision to read: 
           Subd. 9.  [MINNESOTACARE OUTREACH.] (a) The commissioner 
        shall award grants to public or private organizations to provide 
        information on the importance of maintaining insurance coverage 
        and on how to obtain coverage through the MinnesotaCare program 
        in areas of the state with high uninsured populations.  
           (b) In awarding the grants, the commissioner shall consider 
        the following: 
           (1) geographic areas and populations with high uninsured 
        rates; 
           (2) the ability to raise matching funds; and 
           (3) the ability to contact or serve eligible populations. 
           The commissioner shall monitor the grants and may terminate 
        a grant if the outreach effort does not increase the 
        MinnesotaCare program enrollment. 
           Sec. 9.  Minnesota Statutes 1996, section 256.9355, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [APPLICATION AND INFORMATION AVAILABILITY.] 
        Applications and other information must be made available to 
        provider offices, local human services agencies, school 
        districts, public and private elementary schools in which 25 
        percent or more of the students receive free or reduced price 
        lunches, community health offices, and Women, Infants and 
        Children (WIC) program sites.  These sites may accept 
        applications, collect the enrollment fee or initial premium fee, 
        and forward the forms and fees to the commissioner.  Otherwise, 
        applicants may apply directly to the commissioner.  Beginning 
        January 1, 2000, MinnesotaCare enrollment sites will be expanded 
        to include local county human services agencies which choose to 
        participate.  
           Sec. 10.  Minnesota Statutes 1996, section 256.9355, 
        subdivision 4, is amended to read: 
           Subd. 4.  [APPLICATION PROCESSING.] The commissioner of 
        human services shall determine an applicant's eligibility for 
        MinnesotaCare no more than 30 days from the date that the 
        application is received by the department of human services.  
        This requirement shall be suspended for four months following 
        the dates in which single adults and families without children 
        become eligible for the program.  Beginning July 1, 2000, this 
        requirement also applies to local county human services agencies 
        that determine eligibility for MinnesotaCare.  
           Sec. 11.  Minnesota Statutes 1996, section 256.9355, is 
        amended by adding a subdivision to read: 
           Subd. 5.  [AVAILABILITY OF PRIVATE INSURANCE.] The 
        commissioner, in consultation with the commissioners of health 
        and commerce, shall provide information regarding the 
        availability of private health insurance coverage to all 
        families and individuals enrolled in the MinnesotaCare program 
        whose gross family income is equal to or more than 200 percent 
        of the federal poverty guidelines.  This information must be 
        provided upon initial enrollment and annually thereafter. 
           Sec. 12.  Minnesota Statutes 1996, 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 or as 
        required by 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; 
           (2) families and individuals initially enrolled under 
        section 256.9354, subdivisions 1, paragraph (a), and 2; 
           (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. 13.  Minnesota Statutes 1996, 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 family income is greater than 125 percent of the federal 
        poverty guidelines the amount specified in section 256.9354, 
        subdivision 5, are ineligible for the plan. 
           Sec. 14.  Minnesota Statutes 1996, section 256.9359, 
        subdivision 2, is amended to read: 
           Subd. 2.  [RESIDENCY REQUIREMENT.] (a) Prior to July 1, 
        1997, to be eligible for health coverage under the MinnesotaCare 
        program, families and individuals must be permanent residents of 
        Minnesota.  
           (b) Effective July 1, 1997, to be eligible for health 
        coverage under the MinnesotaCare program, adults without 
        children must be permanent residents of Minnesota. 
           (c) Effective July 1, 1997, to be eligible for health 
        coverage under the MinnesotaCare program, pregnant women, 
        families, and children must meet the residency requirements as 
        provided by Code of Federal Regulations, title 42, section 
        435.403, except that the provisions of section 256B.056, 
        subdivision 1, shall apply upon receipt of federal approval. 
           Sec. 15.  Minnesota Statutes 1996, section 256.9362, 
        subdivision 6, is amended to read: 
           Subd. 6.  [ENROLLEES 18 OR OLDER.] Payment by the 
        MinnesotaCare program for inpatient hospital services provided 
        to MinnesotaCare enrollees eligible under section 256.9354, 
        subdivision 5, or who qualify under section 256.9354, 
        subdivisions 1 to 4a, or section 256.9366 with family gross 
        income that exceeds 175 percent of the federal poverty 
        guidelines and who are not pregnant, who are 18 years old or 
        older on the date of admission to the inpatient hospital must be 
        in accordance with paragraphs (a) and (b).  Payment for adults 
        who are not pregnant and are eligible under section 256.9354, 
        subdivisions 1 to 4a, or section 256.9366, and whose incomes are 
        equal to or less than 175 percent of the federal poverty 
        guidelines, shall be as provided for under paragraph (c).  
           (a) If the medical assistance rate minus any copayment 
        required under section 256.9353, subdivision 6, is less than or 
        equal to the amount remaining in the enrollee's benefit limit 
        under section 256.9353, subdivision 3, payment must be the 
        medical assistance rate minus any copayment required under 
        section 256.9353, subdivision 6.  The hospital must not seek 
        payment from the enrollee in addition to the copayment.  The 
        MinnesotaCare payment plus the copayment must be treated as 
        payment in full. 
           (b) If the medical assistance rate minus any copayment 
        required under section 256.9353, subdivision 6, is greater than 
        the amount remaining in the enrollee's benefit limit under 
        section 256.9353, subdivision 3, payment must be the lesser of: 
           (1) the amount remaining in the enrollee's benefit limit; 
        or 
           (2) charges submitted for the inpatient hospital services 
        less any copayment established under section 256.9353, 
        subdivision 6. 
           The hospital may seek payment from the enrollee for the 
        amount by which usual and customary charges exceed the payment 
        under this paragraph.  If payment is reduced under section 
        256.9353, subdivision 3, paragraph (c), the hospital may not 
        seek payment from the enrollee for the amount of the reduction. 
           (c) For admissions occurring during the period of July 1, 
        1997, through June 30, 1998, for adults who are not pregnant and 
        are eligible under section 256.9354, subdivisions 1 to 4a, or 
        256.9366, and whose incomes are equal to or less than 175 
        percent of the federal poverty guidelines, the commissioner 
        shall pay hospitals directly, up to the medical assistance 
        payment rate, for inpatient hospital benefits in excess of the 
        $10,000 annual inpatient benefit limit. 
           Sec. 16.  Minnesota Statutes 1996, 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.  Effective January 1, 1998, MinnesotaCare 
        enrollees who were formerly eligible for general assistance 
        medical care pursuant to section 256D.03, subdivision 3, within 
        six months of MinnesotaCare enrollment and were enrolled in a 
        prepaid health plan pursuant to section 256D.03, subdivision 4, 
        paragraph (d), must 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. 17.  [256.937] [ASSET REQUIREMENT FOR MINNESOTACARE.] 
           Subdivision 1.  [DEFINITIONS.] For purposes of this 
        section, the following definitions apply. 
           (a) "Asset" means cash and other personal property, as well 
        as any real property, that a family or individual owns which has 
        monetary value. 
           (b) "Homestead" means the home that is owned by, and is the 
        usual residence of, the family or individual, together with the 
        surrounding property which is not separated from the home by 
        intervening property owned by others.  Public rights-of-way, 
        such as roads that run through the surrounding property and 
        separate it from the home, will not affect the exemption of the 
        property.  "Usual residence" includes the home from which the 
        family or individual is temporarily absent due to illness, 
        employment, or education, or because the home is temporarily not 
        habitable due to casualty or natural disaster. 
           (c) "Net asset" means the asset's fair market value minus 
        any encumbrances including, but not limited to, liens and 
        mortgages. 
           Subd. 2.  [LIMIT ON TOTAL ASSETS.] (a) Effective April 1, 
        1997, or upon federal approval, whichever is later, in order to 
        be eligible for the MinnesotaCare program, a household of two or 
        more persons must not own more than $30,000 in total net assets, 
        and a household of one person must not own more than $15,000 in 
        total net assets. 
           (b) For purposes of this subdivision, total net assets 
        include all assets, with the following exceptions: 
           (1) a homestead is not considered; 
           (2) household goods and personal effects are not 
        considered; 
           (3) any assets owned by children; 
           (4) vehicles used for employment; 
           (5) court ordered settlements up to $10,000; 
           (6) individual retirement accounts; and 
           (7) capital and operating assets of a trade or business up 
        to $200,000 in net assets are not considered. 
           (c) If an asset excluded under paragraph (b) has a negative 
        value, the negative value shall be subtracted from the total net 
        assets under paragraph (a). 
           Subd. 3.  [DOCUMENTATION.] (a) The commissioner of human 
        services shall require individuals and families, at the time of 
        application or renewal, to indicate on a checkoff form developed 
        by the commissioner whether they satisfy the MinnesotaCare asset 
        requirement.  This form must include the following or similar 
        language:  "To be eligible for MinnesotaCare, individuals and 
        families must not own net assets in excess of $30,000 for a 
        household of two or more persons or $15,000 for a household of 
        one person, not including a homestead, household goods and 
        personal effects, assets owned by children, vehicles used for 
        employment, court ordered settlements up to $10,000, individual 
        retirement accounts, and capital and operating assets of a trade 
        or business up to $200,000.  Do you and your household own net 
        assets in excess of these limits?" 
           (b) The commissioner may require individuals and families 
        to provide any information the commissioner determines necessary 
        to verify compliance with the asset requirement, if the 
        commissioner determines that there is reason to believe that an 
        individual or family has assets that exceed the program limit. 
           Subd. 4.  [PENALTIES.] Individuals or families who are 
        found to have knowingly misreported the amount of their assets 
        as described in this section shall be subject to the penalties 
        in section 256.98.  The commissioner shall present 
        recommendations on additional penalties to the 1998 legislature. 
           Subd. 5.  [EXEMPTION.] This section does not apply to 
        pregnant women.  For purposes of this subdivision, a woman is 
        considered pregnant for 60 days postpartum. 
           Sec. 18.  [256.9371] [PENALTIES.] 
           Whoever obtains or attempts to obtain, or aids or abets any 
        person to obtain by means of a willfully false statement or 
        representation, or by the intentional withholding or concealment 
        of a material fact, or by impersonation, or other fraudulent 
        device: 
           (1) benefits under the MinnesotaCare program to which the 
        person is not entitled; or 
           (2) benefits under the MinnesotaCare program greater than 
        that to which the person is reasonably entitled; 
        shall be considered to have violated section 256.98, and shall 
        be subject to both the criminal and civil penalties provided 
        under that section. 
           Sec. 19.  Minnesota Statutes 1996, section 256D.03, 
        subdivision 3, is amended to read: 
           Subd. 3.  [GENERAL ASSISTANCE MEDICAL CARE; ELIGIBILITY.] 
        (a) General assistance medical care may be paid for any person 
        who is not eligible for medical assistance under chapter 256B, 
        including eligibility for medical assistance based on a 
        spenddown of excess income according to section 256B.056, 
        subdivision 5, or MinnesotaCare as defined in clause (4), except 
        as provided in paragraph (b); and: 
           (1) who is receiving assistance under section 256D.05, or 
        except for families with children who are eligible under 
        Minnesota family investment program-statewide (MFIP-S), who is 
        having a payment made on the person's behalf under sections 
        256I.01 to 256I.06, or who resides in group residential housing 
        as defined in chapter 256I and can meet a spenddown using the 
        cost of remedial services received through group residential 
        housing; or 
           (2)(i) who is a resident of Minnesota; and whose equity in 
        assets is not in excess of $1,000 per assistance unit.  No asset 
        test shall be applied to children and their parents living in 
        the same household.  Exempt assets, the reduction of excess 
        assets, and the waiver of excess assets must conform to the 
        medical assistance program in chapter 256B, with the following 
        exception:  the maximum amount of undistributed funds in a trust 
        that could be distributed to or on behalf of the beneficiary by 
        the trustee, assuming the full exercise of the trustee's 
        discretion under the terms of the trust, must be applied toward 
        the asset maximum; and 
           (ii) who has countable income not in excess of the 
        assistance standards established in section 256B.056, 
        subdivision 4, or whose excess income is spent down pursuant to 
        section 256B.056, subdivision 5, using a six-month budget 
        period, except that a one-month budget period must be used for 
        recipients residing in a long-term care facility.  The method 
        for calculating earned income disregards and deductions for a 
        person who resides with a dependent child under age 21 shall be 
        as specified in section 256.74, subdivision 1 follow section 
        256B.056, subdivision 1a.  However, if a disregard of $30 and 
        one-third of the remainder described in section 256.74, 
        subdivision 1, clause (4), has been applied to the wage earner's 
        income, the disregard shall not be applied again until the wage 
        earner's income has not been considered in an eligibility 
        determination for general assistance, general assistance medical 
        care, medical assistance, or aid to families with dependent 
        children MFIP-S for 12 consecutive months.  The earned income 
        and work expense deductions for a person who does not reside 
        with a dependent child under age 21 shall be the same as the 
        method used to determine eligibility for a person under section 
        256D.06, subdivision 1, except the disregard of the first $50 of 
        earned income is not allowed; or 
           (3) who would be eligible for medical assistance except 
        that the person resides in a facility that is determined by the 
        commissioner or the federal health care financing administration 
        to be an institution for mental diseases. 
           (4) Beginning July 1, 1998, applicants or recipients who 
        meet all eligibility requirements of MinnesotaCare as defined in 
        sections 256.9351 to 256.9363 and 256.9366 to 256.9369, and are: 
           (i) adults with dependent children under 21 whose gross 
        family income is equal to or less than 275 percent of the 
        federal poverty guidelines; or 
           (ii) adults without children with earned income and whose 
        family gross income is between 75 percent of the federal poverty 
        guidelines and the amount set by section 256.9354, subdivision 
        5, shall be terminated from general assistance medical care upon 
        enrollment in MinnesotaCare. 
           (b) Eligibility is available for the month of application, 
        and for three months prior to application if the person was 
        eligible in those prior months. For services rendered on or 
        after July 1, 1997, eligibility is limited to one month prior to 
        application if the person is determined eligible in the prior 
        month.  A redetermination of eligibility must occur every 12 
        months.  Beginning July 1, 1998, Minnesota health care program 
        applications completed by recipients and applicants who are 
        persons described in paragraph (a), clause (4), may be returned 
        to the county agency to be forwarded to the department of human 
        services or sent directly to the department of human services 
        for enrollment in MinnesotaCare.  If all other eligibility 
        requirements of this subdivision are met, eligibility for 
        general assistance medical care shall be available in any month 
        during which a MinnesotaCare eligibility determination and 
        enrollment are pending.  Upon notification of eligibility for 
        MinnesotaCare, notice of termination for eligibility for general 
        assistance medical care shall be sent to an applicant or 
        recipient.  If all other eligibility requirements of this 
        subdivision are met, eligibility for general assistance medical 
        care shall be available until enrollment in MinnesotaCare 
        subject to the provisions of paragraph (d). 
           (c) The date of an initial Minnesota health care program 
        application necessary to begin a determination of eligibility 
        shall be the date the applicant has provided a name, address, 
        and social security number, signed and dated, to the county 
        agency or the department of human services.  If the applicant is 
        unable to provide an initial application when health care is 
        delivered due to a medical condition or disability, a health 
        care provider may act on the person's behalf to complete the 
        initial application.  The applicant must complete the remainder 
        of the application and provide necessary verification before 
        eligibility can be determined.  The county agency must assist 
        the applicant in obtaining verification if necessary. 
           (d) County agencies are authorized to use all automated 
        databases containing information regarding recipients' or 
        applicants' income in order to determine eligibility for general 
        assistance medical care or MinnesotaCare.  Such use shall be 
        considered sufficient in order to determine eligibility and 
        premium payments by the county agency. 
           (c) (e) General assistance medical care is not available 
        for a person in a correctional facility unless the person is 
        detained by law for less than one year in a county correctional 
        or detention facility as a person accused or convicted of a 
        crime, or admitted as an inpatient to a hospital on a criminal 
        hold order, and the person is a recipient of general assistance 
        medical care at the time the person is detained by law or 
        admitted on a criminal hold order and as long as the person 
        continues to meet other eligibility requirements of this 
        subdivision.  
           (d) (f) General assistance medical care is not available 
        for applicants or recipients who do not cooperate with the 
        county agency to meet the requirements of medical 
        assistance.  General assistance medical care is limited to 
        payment of emergency services only for applicants or recipients 
        as described in paragraph (a), clause (4), whose MinnesotaCare 
        coverage is denied or terminated for nonpayment of premiums as 
        required by sections 256.9356 to 256.9358.  
           (e) (g) In determining the amount of assets of an 
        individual, there shall be included any asset or interest in an 
        asset, including an asset excluded under paragraph (a), that was 
        given away, sold, or disposed of for less than fair market value 
        within the 60 months preceding application for general 
        assistance medical care or during the period of eligibility.  
        Any transfer described in this paragraph shall be presumed to 
        have been for the purpose of establishing eligibility for 
        general assistance medical care, unless the individual furnishes 
        convincing evidence to establish that the transaction was 
        exclusively for another purpose.  For purposes of this 
        paragraph, the value of the asset or interest shall be the fair 
        market value at the time it was given away, sold, or disposed 
        of, less the amount of compensation received.  For any 
        uncompensated transfer, the number of months of ineligibility, 
        including partial months, shall be calculated by dividing the 
        uncompensated transfer amount by the average monthly per person 
        payment made by the medical assistance program to skilled 
        nursing facilities for the previous calendar year.  The 
        individual shall remain ineligible until this fixed period has 
        expired.  The period of ineligibility may exceed 30 months, and 
        a reapplication for benefits after 30 months from the date of 
        the transfer shall not result in eligibility unless and until 
        the period of ineligibility has expired.  The period of 
        ineligibility begins in the month the transfer was reported to 
        the county agency, or if the transfer was not reported, the 
        month in which the county agency discovered the transfer, 
        whichever comes first.  For applicants, the period of 
        ineligibility begins on the date of the first approved 
        application. 
           (f)(1) (h) Beginning October 1, 1993, an undocumented alien 
        or a nonimmigrant is ineligible for general assistance medical 
        care other than emergency services.  For purposes of this 
        subdivision, a nonimmigrant is an individual in one or more of 
        the classes listed in United States Code, title 8, section 
        1101(a)(15), and an undocumented alien is an individual who 
        resides in the United States without the approval or 
        acquiescence of the Immigration and Naturalization Service. 
           (2) (i) This subdivision does not apply to a child under 
        age 18, to a Cuban or Haitian entrant as defined in Public Law 
        Number 96-422, section 501(e)(1) or (2)(a), or to an alien who 
        is aged, blind, or disabled as defined in United States Code, 
        title 42, section 1382c(a)(1). 
           (3) (j) For purposes of paragraph paragraphs (f) and (h), 
        "emergency services" has the meaning given in Code of Federal 
        Regulations, title 42, section 440.255(b)(1), except that it 
        also means services rendered because of suspected or actual 
        pesticide poisoning. 
           Sec. 20.  [TRANSITION PLAN FOR MINNESOTACARE ENROLLEES.] 
           (a) The commissioner of human services, in consultation 
        with the legislative commission on health care access and the 
        commissioners of employee relations, health, and commerce, shall 
        develop an implementation plan to transition higher-income 
        MinnesotaCare enrollees to private sector or other nonsubsidized 
        coverage.  In developing the plan, the commissioner shall 
        examine the feasibility of using the health insurance program 
        for state employees administered by the commissioner of employee 
        relations as a source of coverage, and shall also examine 
        methods to increase the affordability of private sector coverage 
        for individuals and families transitioning off MinnesotaCare.  
        The commissioner shall submit the implementation plan to the 
        legislature by December 15, 1997. 
           (b) The commissioner of human services shall report to the 
        legislature by January 15, 1998, on the impact of the outreach 
        efforts for the MinnesotaCare program, and on the reasons why 
        enrollees are leaving the MinnesotaCare program, and make 
        recommendations on:  
           (1) the affordability of the MinnesotaCare premium 
        schedule; 
           (2) the eligibility income level for the MinnesotaCare 
        program that will result in the greatest number of individuals 
        having health coverage; 
           (3) what will encourage greater availability of health 
        coverage in the private market; 
           (4) steps to increase the availability of health coverage 
        in the small employer market; 
           (5) the need, if any, and the feasibility of increasing the 
        MinnesotaCare program income eligibility level for individuals 
        and households without children; and 
           (6) the possibility of alternative premium payments and of 
        waiving the premiums for the MinnesotaCare program for certain 
        low-income enrollees. 
           Sec. 21.  [INPATIENT BENEFIT LIMIT PILOT PROJECT.] 
           The commissioner of human services shall develop a pilot 
        project in a designated area of the state to determine whether 
        the presence of the $10,000 inpatient hospital benefit limit 
        prevents erosion of the private health insurance market by 
        eliminating the $10,000 inpatient benefit limit for that area of 
        the state.  The commissioner shall work with the legislative 
        commission on health care access in designing the elements of 
        the pilot project. 
           Sec. 22.  [EFFECTIVE DATE.] 
           Section 3, subdivision 7, clause (1), is effective July 1, 
        1998. 
                                   ARTICLE 2 
                  MISCELLANEOUS CHANGES TO HEALTH CARE REFORM 
           Section 1.  Minnesota Statutes 1996, section 60A.951, 
        subdivision 5, is amended to read: 
           Subd. 5.  [INSURER.] "Insurer" means insurance company, 
        risk retention group as defined in section 60E.02, service plan 
        corporation as defined in section 62C.02, health maintenance 
        organization as defined in section 62D.02, community integrated 
        service network as defined in section 62N.02, fraternal benefit 
        society regulated under chapter 64B, township mutual company 
        regulated under chapter 67A, joint self-insurance plan or 
        multiple employer trust regulated under chapter 60F, 62H, or 
        section 471.617, subdivision 2, persons administering a 
        self-insurance plan as defined in section 60A.23, subdivision 8, 
        clause (2), paragraphs (a) and (d), and the workers' 
        compensation reinsurance association established in section 
        79.34. 
           Sec. 2.  Minnesota Statutes 1996, section 62A.021, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LOSS RATIO STANDARDS.] (a) Notwithstanding 
        section 62A.02, subdivision 3, relating to loss ratios, health 
        care policies or certificates shall not be delivered or issued 
        for delivery to an individual or to a small employer as defined 
        in section 62L.02, unless the policies or certificates can be 
        expected, as estimated for the entire period for which rates are 
        computed to provide coverage, to return to Minnesota 
        policyholders and certificate holders in the form of aggregate 
        benefits not including anticipated refunds or credits, provided 
        under the policies or certificates, (1) at least 75 percent of 
        the aggregate amount of premiums earned in the case of policies 
        issued in the small employer market, as defined in section 
        62L.02, subdivision 27, calculated on an aggregate basis; and 
        (2) at least 65 percent of the aggregate amount of premiums 
        earned in the case of each policy form or certificate form 
        issued in the individual market; calculated on the basis of 
        incurred claims experience or incurred health care expenses 
        where coverage is provided by a health maintenance organization 
        on a service rather than reimbursement basis and earned premiums 
        for the period and according to accepted actuarial principles 
        and practices.  Assessments by the reinsurance association 
        created in chapter 62L and any all types of taxes, surcharges, 
        or assessments created by Laws 1992, chapter 549, or created on 
        or after April 23, 1992, are included in the calculation of 
        incurred claims experience or incurred health care expenses.  
        The applicable percentage for policies and certificates issued 
        in the small employer market, as defined in section 62L.02, 
        increases by one percentage point on July 1 of each year, 
        beginning on July 1, 1994, until an 82 percent loss ratio is 
        reached on July 1, 2000.  The applicable percentage for policy 
        forms and certificate forms issued in the individual market 
        increases by one percentage point on July 1 of each year, 
        beginning on July 1, 1994, until a 72 percent loss ratio is 
        reached on July 1, 2000.  A health carrier that enters a market 
        after July 1, 1993, does not start at the beginning of the 
        phase-in schedule and must instead comply with the loss ratio 
        requirements applicable to other health carriers in that market 
        for each time period.  Premiums earned and claims incurred in 
        markets other than the small employer and individual markets are 
        not relevant for purposes of this section. 
           Notwithstanding section 645.26, any act enacted at the 1992 
        regular legislative session that amends or repeals section 
        62A.135 or that otherwise changes the loss ratios provided in 
        that section is void. 
           (b) All filings of rates and rating schedules shall 
        demonstrate that actual expected claims in relation to premiums 
        comply with the requirements of this section when combined with 
        actual experience to date.  Filings of rate revisions shall also 
        demonstrate that the anticipated loss ratio over the entire 
        future period for which the revised rates are computed to 
        provide coverage can be expected to meet the appropriate loss 
        ratio standards, and aggregate loss ratio from inception of the 
        policy form or certificate form shall equal or exceed the 
        appropriate loss ratio standards. 
           (c) A health carrier that issues health care policies and 
        certificates to individuals or to small employers, as defined in 
        section 62L.02, in this state shall file annually its rates, 
        rating schedule, and supporting documentation including ratios 
        of incurred losses to earned premiums by policy form or 
        certificate form duration for approval by the commissioner 
        according to the filing requirements and procedures prescribed 
        by the commissioner.  The supporting documentation shall also 
        demonstrate in accordance with actuarial standards of practice 
        using reasonable assumptions that the appropriate loss ratio 
        standards can be expected to be met over the entire period for 
        which rates are computed.  The demonstration shall exclude 
        active life reserves.  If the data submitted does not confirm 
        that the health carrier has satisfied the loss ratio 
        requirements of this section, the commissioner shall notify the 
        health carrier in writing of the deficiency.  The health carrier 
        shall have 30 days from the date of the commissioner's notice to 
        file amended rates that comply with this section.  If the health 
        carrier fails to file amended rates within the prescribed time, 
        the commissioner shall order that the health carrier's filed 
        rates for the nonconforming policy form or certificate form be 
        reduced to an amount that would have resulted in a loss ratio 
        that complied with this section had it been in effect for the 
        reporting period of the supplement.  The health carrier's 
        failure to file amended rates within the specified time or the 
        issuance of the commissioner's order amending the rates does not 
        preclude the health carrier from filing an amendment of its 
        rates at a later time.  The commissioner shall annually make the 
        submitted data available to the public at a cost not to exceed 
        the cost of copying.  The data must be compiled in a form useful 
        for consumers who wish to compare premium charges and loss 
        ratios. 
           (d) Each sale of a policy or certificate that does not 
        comply with the loss ratio requirements of this section is an 
        unfair or deceptive act or practice in the business of insurance 
        and is subject to the penalties in sections 72A.17 to 72A.32. 
           (e)(1) For purposes of this section, health care policies 
        issued as a result of solicitations of individuals through the 
        mail or mass media advertising, including both print and 
        broadcast advertising, shall be treated as individual policies. 
           (2) For purposes of this section, (1) (i) "health care 
        policy" or "health care certificate" is a health plan as defined 
        in section 62A.011; and (2) (ii) "health carrier" has the 
        meaning given in section 62A.011 and includes all health 
        carriers delivering or issuing for delivery health care policies 
        or certificates in this state or offering these policies or 
        certificates to residents of this state.  
           (f) The loss ratio phase-in as described in paragraph (a) 
        does not apply to individual policies and small employer 
        policies issued by a health plan company that is assessed less 
        than three percent of the total annual amount assessed by the 
        Minnesota comprehensive health association.  These policies must 
        meet a 68 percent loss ratio for individual policies, a 71 
        percent loss ratio for small employer policies with fewer than 
        ten employees, and a 75 percent loss ratio for all other small 
        employer policies. 
           (g) The commissioners of commerce and health shall each 
        annually issue a public report listing, by health plan company, 
        the actual loss ratios experienced in the individual and small 
        employer markets in this state by the health plan companies that 
        the commissioners respectively regulate.  The commissioners 
        shall coordinate release of these reports so as to release them 
        as a joint report or as separate reports issued the same day.  
        The report or reports shall be released no later than June 1 for 
        loss ratios experienced for the preceding calendar year.  Health 
        plan companies shall provide to the commissioners any 
        information requested by the commissioners for purposes of this 
        paragraph. 
           Sec. 3.  Minnesota Statutes 1996, section 62A.021, is 
        amended by adding a subdivision to read: 
           Subd. 3.  [LOSS RATIO DISCLOSURE.] (a) Each health care 
        policy form or health care certificate form for which 
        subdivision 1 requires compliance with a loss ratio requirement 
        shall prominently display the disclosure provided in paragraph 
        (b) on its declarations sheet if it has one and, if not, on its 
        front page.  The disclosure must also be prominently displayed 
        in any marketing materials used in connection with it. 
           (b) The disclosure must be in the following format:  
           Notice:  This disclosure is required by Minnesota law.  
        This policy or certificate is expected to return on average 
        (fill in anticipated loss ratio approved by the commissioner) 
        percent of your premium dollar for health care.  The lowest 
        percentage permitted by state law for this policy or certificate 
        is (fill in applicable minimum loss ratio). 
           (c) This subdivision applies to policies and certificates 
        issued on or after January 1, 1998. 
           Sec. 4.  Minnesota Statutes 1996, section 62A.316, is 
        amended to read: 
           62A.316 [BASIC MEDICARE SUPPLEMENT PLAN; COVERAGE.] 
           (a) The basic Medicare supplement plan must have a level of 
        coverage that will provide: 
           (1) coverage for all of the Medicare part A inpatient 
        hospital coinsurance amounts, and 100 percent of all Medicare 
        part A eligible expenses for hospitalization not covered by 
        Medicare, after satisfying the Medicare part A deductible; 
           (2) coverage for the daily copayment amount of Medicare 
        part A eligible expenses for the calendar year incurred for 
        skilled nursing facility care; 
           (3) coverage for the copayment amount of Medicare eligible 
        expenses under Medicare part B regardless of hospital 
        confinement, subject to the Medicare part B deductible amount; 
           (4) 80 percent of the hospital and medical expenses and 
        supplies incurred during travel outside the United States as a 
        result of a medical emergency; 
           (5) coverage for the reasonable cost of the first three 
        pints of blood, or equivalent quantities of packed red blood 
        cells as defined under federal regulations under Medicare parts 
        A and B, unless replaced in accordance with federal regulations; 
        and 
           (6) 100 percent of the cost of immunizations and routine 
        screening procedures for cancer screening including mammograms 
        and pap smears. 
           (b) Only the following optional benefit riders may be added 
        to this plan: 
           (1) coverage for all of the Medicare part A inpatient 
        hospital deductible amount; 
           (2) a minimum of 80 percent of eligible medical expenses 
        and supplies not covered by Medicare part B, not to exceed any 
        charge limitation established by the Medicare program or state 
        law; 
           (3) coverage for all of the Medicare part B annual 
        deductible; 
           (4) coverage for at least 50 percent, or the equivalent of 
        50 percent, of usual and customary prescription drug expenses; 
           (5) coverage for the following preventive health services: 
           (i) an annual clinical preventive medical history and 
        physical examination that may include tests and services from 
        clause (ii) and patient education to address preventive health 
        care measures; 
           (ii) any one or a combination of the following preventive 
        screening tests or preventive services, the frequency of which 
        is considered medically appropriate: 
           (A) fecal occult blood test and/or digital rectal 
        examination; 
           (B) dipstick urinalysis for hematuria, bacteriuria, and 
        proteinuria; 
           (C) pure tone (air only) hearing screening test, 
        administered or ordered by a physician; 
           (D) serum cholesterol screening every five years; 
           (E) thyroid function test; 
           (F) diabetes screening; 
           (iii) any other tests or preventive measures determined 
        appropriate by the attending physician. 
           Reimbursement shall be for the actual charges up to 100 
        percent of the Medicare-approved amount for each service, as if 
        Medicare were to cover the service as identified in American 
        Medical Association current procedural terminology (AMA CPT) 
        codes, to a maximum of $120 annually under this benefit.  This 
        benefit shall not include payment for a procedure covered by 
        Medicare; 
           (6) coverage for services to provide short-term at-home 
        assistance with activities of daily living for those recovering 
        from an illness, injury, or surgery: 
           (i) For purposes of this benefit, the following definitions 
        apply: 
           (A) "activities of daily living" include, but are not 
        limited to, bathing, dressing, personal hygiene, transferring, 
        eating, ambulating, assistance with drugs that are normally 
        self-administered, and changing bandages or other dressings; 
           (B) "care provider" means a duly qualified or licensed home 
        health aide/homemaker, personal care aid, or nurse provided 
        through a licensed home health care agency or referred by a 
        licensed referral agency or licensed nurses registry; 
           (C) "home" means a place used by the insured as a place of 
        residence, provided that the place would qualify as a residence 
        for home health care services covered by Medicare.  A hospital 
        or skilled nursing facility shall not be considered the 
        insured's place of residence; 
           (D) "at-home recovery visit" means the period of a visit 
        required to provide at-home recovery care, without limit on the 
        duration of the visit, except each consecutive four hours in a 
        24-hour period of services provided by a care provider is one 
        visit; 
           (ii) Coverage requirements and limitations: 
           (A) at-home recovery services provided must be primarily 
        services that assist in activities of daily living; 
           (B) the insured's attending physician must certify that the 
        specific type and frequency of at-home recovery services are 
        necessary because of a condition for which a home care plan of 
        treatment was approved by Medicare; 
           (C) coverage is limited to: 
           (I) no more than the number and type of at-home recovery 
        visits certified as necessary by the insured's attending 
        physician.  The total number of at-home recovery visits shall 
        not exceed the number of Medicare-approved home care visits 
        under a Medicare-approved home care plan of treatment; 
           (II) the actual charges for each visit up to a maximum 
        reimbursement of $40 per visit; 
           (III) $1,600 per calendar year; 
           (IV) seven visits in any one week; 
           (V) care furnished on a visiting basis in the insured's 
        home; 
           (VI) services provided by a care provider as defined in 
        this section; 
           (VII) at-home recovery visits while the insured is covered 
        under the policy or certificate and not otherwise excluded; 
           (VIII) at-home recovery visits received during the period 
        the insured is receiving Medicare-approved home care services or 
        no more than eight weeks after the service date of the last 
        Medicare-approved home health care visit; 
           (iii) Coverage is excluded for: 
           (A) home care visits paid for by Medicare or other 
        government programs; and 
           (B) care provided by family members, unpaid volunteers, or 
        providers who are not care providers.; 
           (7) coverage for at least 50 percent, or the equivalent of 
        50 percent, of usual and customary prescription drug expenses to 
        a maximum of $1,200 paid by the issuer annually under this 
        benefit.  An issuer of Medicare supplement insurance policies 
        that elects to offer this benefit rider shall also make 
        available coverage that contains the rider specified in clause 
        (4). 
           Sec. 5.  Minnesota Statutes 1996, section 62A.61, is 
        amended to read: 
           62A.61 [DISCLOSURE OF METHODS USED BY HEALTH CARRIERS TO 
        DETERMINE USUAL AND CUSTOMARY FEES.] 
           (a) A health carrier that bases reimbursement to health 
        care providers upon a usual and customary fee must maintain in 
        its office a copy of a description of the methodology used to 
        calculate fees including at least the following: 
           (1) the frequency of the determination of usual and 
        customary fees; 
           (2) a general description of the methodology used to 
        determine usual and customary fees; and 
           (3) the percentile of usual and customary fees that 
        determines the maximum allowable reimbursement. 
           (b) A health carrier must provide a copy of the information 
        described in paragraph (a) to the Minnesota health care 
        commission, the commissioner of health, or the commissioner of 
        commerce, upon request. 
           (c) The commissioner of health or the commissioner of 
        commerce, as appropriate, may use to enforce this section any 
        enforcement powers otherwise available to the commissioner with 
        respect to the health carrier.  The appropriate commissioner 
        shall enforce compliance with a request made under this section 
        by the Minnesota health care commission, at the request of the 
        commissioner.  The commissioner of health or commerce, as 
        appropriate, may require health carriers to provide the 
        information required under this section and may use any powers 
        granted under other laws relating to the regulation of health 
        carriers to enforce compliance. 
           (d) For purposes of this section, "health carrier" has the 
        meaning given in section 62A.011. 
           Sec. 6.  Minnesota Statutes 1996, section 62D.02, 
        subdivision 5, is amended to read: 
           Subd. 5.  "Evidence of coverage" means any certificate, 
        agreement or contract, and amendments thereto, issued to an 
        enrollee which sets out the coverage to which the enrollee is 
        entitled under the health maintenance contract which covers the 
        enrollee. 
           Sec. 7.  Minnesota Statutes 1996, section 62D.09, 
        subdivision 3, is amended to read: 
           Subd. 3.  Every health maintenance organization or its 
        representative shall annually, before June 1, provide to its 
        enrollees the following:  (1) a summary of its most recent 
        annual financial statement including a balance sheet and 
        statement of receipts and disbursements; (2) a description of 
        the health maintenance organization, its health care plan or 
        plans, its facilities and personnel, any material changes 
        therein since the last report; (3) the current evidence of 
        coverage, or contract amendments thereto; and (4) a statement of 
        consumer information and rights as described in section 62D.07, 
        subdivision 3, paragraph (c).  Under clause (3), a health 
        maintenance organization may annually alternate between 
        providing enrollees with amendments and providing current 
        evidence of coverage. 
           Sec. 8.  Minnesota Statutes 1996, section 62E.11, 
        subdivision 5, is amended to read: 
           Subd. 5.  Each contributing member of the association shall 
        share the losses due to claims expenses of the comprehensive 
        health insurance plan for plans issued or approved for issuance 
        by the association, and shall share in the operating and 
        administrative expenses incurred or estimated to be incurred by 
        the association incident to the conduct of its affairs.  Claims 
        expenses of the state plan which exceed the premium payments 
        allocated to the payment of benefits shall be the liability of 
        the contributing members.  Contributing members shall share in 
        the claims expense of the state plan and operating and 
        administrative expenses of the association in an amount equal to 
        the ratio of the contributing member's total accident and health 
        insurance premium, received from or on behalf of Minnesota 
        residents as divided by the total accident and health insurance 
        premium, received by all contributing members from or on behalf 
        of Minnesota residents, as determined by the commissioner.  
        Payments made by the state to a contributing member for medical 
        assistance, MinnesotaCare, or general assistance medical care 
        services according to chapters 256, 256B, and 256D shall be 
        excluded when determining a contributing member's total premium. 
           Sec. 9.  Minnesota Statutes 1996, 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.  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 restructured health care 
        financing and delivery system must be enacted or adopted by 
        January 1, 1996. 
           Sec. 10.  Minnesota Statutes 1996, 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 technology 
        advisory committee established under section 62J.15, 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. 11.  Minnesota Statutes 1996, section 62J.07, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [LEGISLATIVE OVERSIGHT.] The legislative 
        commission on health care access reviews the activities of the 
        commissioner of health, the state health care 
        commission regional coordinating boards, the health technology 
        advisory committee, and all other state agencies involved in the 
        implementation and administration of this chapter, including 
        efforts to obtain federal approval through waivers and other 
        means.  
           Sec. 12.  Minnesota Statutes 1996, section 62J.07, 
        subdivision 3, is amended to read: 
           Subd. 3.  [REPORTS TO THE COMMISSION.] The commissioner of 
        health and the Minnesota health care commission, the regional 
        coordinating boards, and the health technology advisory 
        committee shall report on their activities and the activities of 
        the regional boards annually and at other times at the request 
        of the legislative commission on health care access.  The 
        commissioners of health, commerce, and human services shall 
        provide periodic reports to the legislative commission on the 
        progress of rulemaking that is authorized or required under this 
        act and shall notify members of the commission when a draft of a 
        proposed rule has been completed and scheduled for publication 
        in the State Register.  At the request of a member of the 
        commission, a commissioner shall provide a description and a 
        copy of a proposed rule. 
           Sec. 13.  Minnesota Statutes 1996, section 62J.09, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERAL DUTIES.] (a) The commissioner 
        shall divide the state into six regions, one of these regions 
        being the seven-county metropolitan area.  
           The (b) Each region shall establish a locally controlled 
        regional coordinating boards are locally controlled boards board 
        consisting of providers, health plan companies, employers, 
        consumers, and elected officials.  Regional coordinating boards 
        may: 
           (1) undertake voluntary activities to educate consumers, 
        providers, and purchasers about community plans and projects 
        promoting health care cost containment, consumer accountability, 
        access, and quality and efforts to achieve public health goals; 
           (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. 14.  Minnesota Statutes 1996, section 62J.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [HEALTH TECHNOLOGY ADVISORY COMMITTEE.] The 
        Minnesota health care commission shall convene legislative 
        commission on health care access may convene or authorize the 
        commissioner of health to convene an advisory committee to 
        conduct evaluations of existing research and technology 
        assessments conducted by other entities of new and existing 
        health care technologies as designated by the legislative 
        commission on health care access, the commissioner, or the 
        advisory committee.  The advisory committee may include members 
        of the state commission and other persons appointed by the 
        commission.  The advisory committee must include at least one 
        person representing physicians, at least one person representing 
        hospitals, and at least one person representing the health care 
        technology industry.  Health care technologies include high-cost 
        drugs, devices, procedures, or processes applied to human health 
        care, such as high-cost transplants and expensive scanners and 
        imagers.  The advisory committee is governed by section 15.0575, 
        subdivision 3, except that members do not receive per diem 
        payments. 
           Sec. 15.  Minnesota Statutes 1996, section 62J.152, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [GENERALLY.] The health technology advisory 
        committee established in section 62J.15 shall: 
           (1) develop criteria and processes for evaluating health 
        care technology assessments made by other entities; 
           (2) conduct evaluations of specific technologies and their 
        specific use and application; 
           (3) provide the legislature with scientific evaluations of 
        proposed benefit mandates that utilize health care technologies 
        for a specific use and application; 
           (4) report the results of the evaluations to the 
        commissioner and the Minnesota health care 
        commission legislative commission on health care access; and 
           (4) (5) carry out other duties relating to health 
        technology assigned by the commission legislature or the 
        legislative commission on health care access. 
           Sec. 16.  Minnesota Statutes 1996, section 62J.152, is 
        amended by adding a subdivision to read: 
           Subd. 1a.  [LEGISLATIVE ACTION.] Nothing in subdivision 1 
        shall be construed to: 
           (1) require the legislature to postpone hearings or 
        legislative action on a proposed benefit mandate; or 
           (2) require the legislature to act in accordance with any 
        recommendations of the health technology advisory committee. 
           Sec. 17.  Minnesota Statutes 1996, section 62J.152, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PRIORITIES FOR DESIGNATING TECHNOLOGIES CRITERIA 
        FOR ASSESSMENT EVALUATION.] The health technology advisory 
        committee shall consider the following criteria in designating 
        assessing or evaluating technologies for evaluation: 
           (1) the level of controversy within the medical or 
        scientific community, including questionable or undetermined 
        efficacy; 
           (2) the cost implications; 
           (3) the potential for rapid diffusion; 
           (4) the impact on a substantial patient population; 
           (5) the existence of alternative technologies; 
           (6) the impact on patient safety and health outcome; 
           (7) the public health importance; 
           (8) the level of public and professional demand; 
           (9) the social, ethical, and legal concerns; and 
           (10) the prevalence of the disease or condition. 
        The committee may give different weights or attach different 
        importance to each of the criteria, depending on the technology 
        being considered.  The committee shall consider any additional 
        criteria approved by the commissioner and the Minnesota health 
        care commission legislative commission on health care access.  
        The committee shall present its list of technologies for 
        evaluation to the legislative commission on health care access 
        for review. 
           Sec. 18.  Minnesota Statutes 1996, section 62J.152, 
        subdivision 4, is amended to read: 
           Subd. 4.  [TECHNOLOGY EVALUATION PROCESS.] (a) The health 
        technology advisory committee shall collect and evaluate studies 
        and research findings on the technologies selected for 
        evaluation from as wide of a range of sources as needed, 
        including, but not limited to:  federal agencies or other units 
        of government, international organizations conducting health 
        care technology assessments, health carriers, insurers, 
        manufacturers, professional and trade associations, nonprofit 
        organizations, and academic institutions.  The health technology 
        advisory committee may use consultants or experts and solicit 
        testimony or other input as needed to evaluate a specific 
        technology. 
           (b) When the evaluation process on a specific technology 
        has been completed, the health technology advisory committee 
        shall submit a preliminary report to the health care 
        commission commissioner and the legislative commission on health 
        care access and publish a summary of the preliminary report in 
        the State Register with a notice that written comments may be 
        submitted.  The preliminary report must include the results of 
        the technology assessment evaluation, studies and research 
        findings considered in conducting the evaluation, and the health 
        technology advisory committee's summary statement about the 
        evaluation.  Any interested persons or organizations may submit 
        to the health technology advisory committee written comments 
        regarding the technology evaluation within 30 days from the date 
        the preliminary report was published in the State Register.  The 
        health technology advisory committee's final report on its 
        technology evaluation must be submitted to the health care 
        commission commissioner, to the legislature, and to the 
        information clearinghouse.  A summary of written comments 
        received by the health technology advisory committee within the 
        30-day period must be included in the final report.  The health 
        care commission shall review the final report and prepare its 
        comments and recommendations.  Before completing its final 
        comments and recommendations, the health care commission shall 
        provide adequate public notice that testimony will be accepted 
        by the health care commission.  The health care commission shall 
        then forward the final report, its comments and recommendations, 
        and a summary of the public's comments to the commissioner and 
        information clearinghouse. 
           (c) The reports of the health technology advisory committee 
        and the comments and recommendations of the health care 
        commission should not eliminate or bar new technology, and are 
        not rules as defined in the administrative procedure act. 
           Sec. 19.  Minnesota Statutes 1996, 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 organizations in the development of practice 
        parameters; 
           (4) by health care providers in making decisions about 
        adding or replacing technology and the appropriate use of 
        technology; 
           (5) by consumers in making decisions about treatment; 
           (6) by medical device manufacturers in developing and 
        marketing new technologies; and 
           (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. 
           Sec. 20.  Minnesota Statutes 1996, section 62J.152, is 
        amended by adding a subdivision to read: 
           Subd. 8.  [REPEALER.] This section and sections 62J.15 and 
        62J.156 are repealed effective July 1, 2001. 
           Sec. 21.  Minnesota Statutes 1996, 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 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 
        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 health technology advisory committee 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)  [PENALTIES AND REMEDIES.] The commissioner of health 
        has the authority to issue fines, seek injunctions, and pursue 
        other remedies as provided by law. 
           Sec. 22.  Minnesota Statutes 1996, section 62J.22, is 
        amended to read: 
           62J.22 [PARTICIPATION OF FEDERAL PROGRAMS.] 
           The commissioner of health shall seek the full 
        participation of federal health care programs under this 
        chapter, including Medicare, medical assistance, veterans 
        administration programs, and other federal programs.  The 
        commissioner of human services shall under the direction of the 
        health care commission submit waiver requests and take other 
        action necessary to obtain federal approval to allow 
        participation of the medical assistance program.  Other state 
        agencies shall provide assistance at the request of the 
        commission.  If federal approval is not given for one or more 
        federal programs, data on the amount of health care spending 
        that is collected under section 62J.04 shall be adjusted so that 
        state and regional spending limits take into account the failure 
        of the federal program to participate. 
           Sec. 23.  Minnesota Statutes 1996, section 62J.25, is 
        amended to read: 
           62J.25 [MANDATORY MEDICARE ASSIGNMENT.] 
           (a) Effective January 1, 1993, a health care provider 
        authorized to participate in the Medicare program shall not 
        charge to or collect from a Medicare beneficiary who is a 
        Minnesota resident any amount in excess of 115 percent of the 
        Medicare-approved amount for any Medicare-covered service 
        provided. 
           (b) Effective January 1, 1994, a health care provider 
        authorized to participate in the Medicare program shall not 
        charge to or collect from a Medicare beneficiary who is a 
        Minnesota resident any amount in excess of 110 percent of the 
        Medicare-approved amount for any Medicare-covered service 
        provided. 
           (c) Effective January 1, 1995, a health care provider 
        authorized to participate in the Medicare program shall not 
        charge to or collect from a Medicare beneficiary who is a 
        Minnesota resident any amount in excess of 105 percent of the 
        Medicare-approved amount for any Medicare-covered service 
        provided. 
           (d) Effective January 1, 1996, a health care provider 
        authorized to participate in the Medicare program shall not 
        charge to or collect from a Medicare beneficiary who is a 
        Minnesota resident any amount in excess of the Medicare-approved 
        amount for any Medicare-covered service provided. 
           (e) This section does not apply to ambulance services as 
        defined in section 144.801, subdivision 4, or medical supplies 
        and equipment. 
           Sec. 24.  Minnesota Statutes 1996, section 62J.2914, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DISCLOSURE.] An application for approval 
        must include, to the extent applicable, disclosure of the 
        following: 
           (1) a descriptive title; 
           (2) a table of contents; 
           (3) exact names of each party to the application and the 
        address of the principal business office of each party; 
           (4) the name, address, and telephone number of the persons 
        authorized to receive notices and communications with respect to 
        the application; 
           (5) a verified statement by a responsible officer of each 
        party to the application attesting to the accuracy and 
        completeness of the enclosed information; 
           (6) background information relating to the proposed 
        arrangement, including: 
           (i) a description of the proposed arrangement, including a 
        list of any services or products that are the subject of the 
        proposed arrangement; 
           (ii) an identification of any tangential services or 
        products associated with the services or products that are the 
        subject of the proposed arrangement; 
           (iii) a description of the geographic territory involved in 
        the proposed arrangement; 
           (iv) if the geographic territory described in item (iii), 
        is different from the territory in which the applicants have 
        engaged in the type of business at issue over the last five 
        years, a description of how and why the geographic territory 
        differs; 
           (v) identification of all products or services that a 
        substantial share of consumers would consider substitutes for 
        any service or product that is the subject of the proposed 
        arrangement; 
           (vi) identification of whether any services or products of 
        the proposed arrangement are currently being offered, capable of 
        being offered, utilized, or capable of being utilized by other 
        providers or purchasers in the geographic territory described in 
        item (iii); 
           (vii) identification of the steps necessary, under current 
        market and regulatory conditions, for other parties to enter the 
        territory described in item (iii) and compete with the 
        applicant; 
           (viii) a description of the previous history of dealings 
        between the parties to the application; 
           (ix) a detailed explanation of the projected effects, 
        including expected volume, change in price, and increased 
        revenue, of the arrangement on each party's current businesses, 
        both generally as well as the aspects of the business directly 
        involved in the proposed arrangement; 
           (x) the present market share of the parties to the 
        application and of others affected by the proposed arrangement, 
        and projected market shares after implementation of the proposed 
        arrangement; 
           (xi) a statement of why the projected levels of cost, 
        access, or quality could not be achieved in the existing market 
        without the proposed arrangement; and 
           (xii) an explanation of how the arrangement relates to any 
        Minnesota health care commission or applicable regional 
        coordinating board plans for delivery of health care; and 
           (7) a detailed explanation of how the transaction will 
        affect cost, access, and quality.  The explanation must address 
        the factors in section 62J.2917, subdivision 2, paragraphs (b) 
        to (d), to the extent applicable. 
           Sec. 25.  Minnesota Statutes 1996, section 62J.2915, is 
        amended to read: 
           62J.2915 [NOTICE AND COMMENT.] 
           Subdivision 1.  [NOTICE.] The commissioner shall cause the 
        notice described in section 62J.2914, subdivision 2, to be 
        published in the State Register and sent to the Minnesota health 
        care commission, the regional coordinating boards for any 
        regions that include all or part of the territory covered by the 
        proposed arrangement, and any person who has requested to be 
        placed on a list to receive notice of applications.  The 
        commissioner may maintain separate notice lists for different 
        regions of the state.  The commissioner may also send a copy of 
        the notice to any person together with a request that the person 
        comment as provided under subdivision 2.  Copies of the request 
        must be provided to the applicant. 
           Subd. 2.  [COMMENTS.] Within 20 days after the notice is 
        published, any person may mail to the commissioner written 
        comments with respect to the application.  Within 30 days after 
        the notice is published, the Minnesota health care commission or 
        any regional coordinating board may mail to the commissioner 
        comments with respect to the application.  Persons submitting 
        comments shall provide a copy of the comments to the applicant.  
        The applicant may mail to the commissioner written responses to 
        any comments within ten days after the deadline for mailing such 
        comments.  The applicant shall send a copy of the response to 
        the person submitting the comment. 
           Sec. 26.  Minnesota Statutes 1996, section 62J.2916, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CHOICE OF PROCEDURES.] After the 
        conclusion of the period provided in section 62J.2915, 
        subdivision 2, for the applicant to respond to comments, the 
        commissioner shall select one of the three procedures provided 
        in subdivision 2.  In determining which procedure to use, the 
        commissioner shall consider the following criteria: 
           (1) the size of the proposed arrangement, in terms of 
        number of parties and amount of money involved; 
           (2) the complexity of the proposed arrangement; 
           (3) the novelty of the proposed arrangement; 
           (4) the substance and quantity of the comments received; 
           (5) any comments received from the Minnesota health care 
        commission or regional coordinating boards; and 
           (6) the presence or absence of any significant gaps in the 
        factual record. 
           If the applicant demands a contested case hearing no later 
        than the conclusion of the period provided in section 62J.2915, 
        subdivision 2, for the applicant to respond to comments, the 
        commissioner shall not select a procedure.  Instead, the 
        applicant shall be given a contested case proceeding as a matter 
        of right. 
           Sec. 27.  Minnesota Statutes 1996, section 62J.2917, 
        subdivision 2, is amended to read: 
           Subd. 2.  [FACTORS.] (a)  [GENERALLY APPLICABLE FACTORS.] 
        In making a determination about cost, access, and quality, the 
        commissioner may consider the following factors, to the extent 
        relevant: 
           (1) whether the proposal is compatible with the cost 
        containment plan or other plan of the Minnesota health care 
        commission or the applicable regional plans of the regional 
        coordinating boards; 
           (2) market structure: 
           (i) actual and potential sellers and buyers, or providers 
        and purchasers; 
           (ii) actual and potential consumers; 
           (iii) geographic market area; and 
           (iv) entry conditions; 
           (3) current market conditions; 
           (4) the historical behavior of the market; 
           (5) performance of other, similar arrangements; 
           (6) whether the proposal unnecessarily restrains 
        competition or restrains competition in ways not reasonably 
        related to the purposes of this chapter; and 
           (7) the financial condition of the applicant. 
           (b)  [COST.] The commissioner's analysis of cost must focus 
        on the individual consumer of health care.  Cost savings to be 
        realized by providers, health carriers, group purchasers, or 
        other participants in the health care system are relevant only 
        to the extent that the savings are likely to be passed on to the 
        consumer.  However, where an application is submitted by 
        providers or purchasers who are paid primarily by third party 
        payers unaffiliated with the applicant, it is sufficient for the 
        applicant to show that cost savings are likely to be passed on 
        to the unaffiliated third party payers; the applicants do not 
        have the burden of proving that third party payers with whom the 
        applicants are not affiliated will pass on cost savings to 
        individuals receiving coverage through the third party payers.  
        In making determinations as to costs, the commissioner may 
        consider: 
           (1) the cost savings likely to result to the applicant; 
           (2) the extent to which the cost savings are likely to be 
        passed on to the consumer and in what form; 
           (3) the extent to which the proposed arrangement is likely 
        to result in cost shifting by the applicant onto other payers or 
        purchasers of other products or services; 
           (4) the extent to which the cost shifting by the applicant 
        is likely to be followed by other persons in the market; 
           (5) the current and anticipated supply and demand for any 
        products or services at issue; 
           (6) the representations and guarantees of the applicant and 
        their enforceability; 
           (7) likely effectiveness of regulation by the commissioner; 
           (8) inferences to be drawn from market structure; 
           (9) the cost of regulation, both for the state and for the 
        applicant; and 
           (10) any other factors tending to show that the proposed 
        arrangement is or is not likely to reduce cost. 
           (c)  [ACCESS.] In making determinations as to access, the 
        commissioner may consider: 
           (1) the extent to which the utilization of needed health 
        care services or products by the intended targeted population is 
        likely to increase or decrease.  When a proposed arrangement is 
        likely to increase access in one geographic area, by lowering 
        prices or otherwise expanding supply, but limits access in 
        another geographic area by removing service capabilities from 
        that second area, the commissioner shall articulate the criteria 
        employed to balance these effects; 
           (2) the extent to which the proposed arrangement is likely 
        to make available a new and needed service or product to a 
        certain geographic area; and 
           (3) the extent to which the proposed arrangement is likely 
        to otherwise make health care services or products more 
        financially or geographically available to persons who need them.
           If the commissioner determines that the proposed 
        arrangement is likely to increase access and bases that 
        determination on a projected increase in utilization, the 
        commissioner shall also determine and make a specific finding 
        that the increased utilization does not reflect overutilization. 
           (d)  [QUALITY.] In making determinations as to quality, the 
        commissioner may consider the extent to which the proposed 
        arrangement is likely to: 
           (1) decrease morbidity and mortality; 
           (2) result in faster convalescence; 
           (3) result in fewer hospital days; 
           (4) permit providers to attain needed experience or 
        frequency of treatment, likely to lead to better outcomes; 
           (5) increase patient satisfaction; and 
           (6) have any other features likely to improve or reduce the 
        quality of health care. 
           Sec. 28.  Minnesota Statutes 1996, section 62J.2921, 
        subdivision 2, is amended to read: 
           Subd. 2.  [NOTICE.] The commissioner shall begin a 
        proceeding to revoke approval by providing written notice to the 
        applicant describing in detail the basis for the proposed 
        revocation.  Notice of the proceeding must be published in the 
        State Register and submitted to the Minnesota health care 
        commission and the applicable regional coordinating boards.  The 
        notice must invite the submission of comments to the 
        commissioner. 
           Sec. 29.  Minnesota Statutes 1996, section 62J.451, 
        subdivision 6b, is amended to read: 
           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. 
           Sec. 30.  Minnesota Statutes 1996, section 62M.02, 
        subdivision 21, is amended to read: 
           Subd. 21.  [UTILIZATION REVIEW ORGANIZATION.] "Utilization 
        review organization" means an entity including but not limited 
        to an insurance company licensed under chapter 60A to offer, 
        sell, or issue a policy of accident and sickness insurance as 
        defined in section 62A.01; a health service plan licensed under 
        chapter 62C; a health maintenance organization licensed under 
        chapter 62D; a community integrated service network or an 
        integrated service network licensed under chapter 62N; a 
        fraternal benefit society operating under chapter 64B; a joint 
        self-insurance employee health plan operating under chapter 62H; 
        a multiple employer welfare arrangement, as defined in section 3 
        of the Employee Retirement Income Security Act of 1974 (ERISA), 
        United States Code, title 29, section 1103, as amended; a third 
        party administrator licensed under section 60A.23, subdivision 
        8, which conducts utilization review and determines 
        certification of an admission, extension of stay, or other 
        health care services for a Minnesota resident; or any entity 
        performing utilization review that is affiliated with, under 
        contract with, or conducting utilization review on behalf of, a 
        business entity in this state. 
           Sec. 31.  Minnesota Statutes 1996, section 62N.01, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [CITATION.] This chapter may be cited as 
        the "Minnesota community integrated service network act." 
           Sec. 32.  Minnesota Statutes 1996, section 62N.22, is 
        amended to read: 
           62N.22 [DISCLOSURE OF COMMISSIONS.] 
           Before selling any coverage or enrollment in a community 
        integrated service network or an integrated service network, a 
        person selling the coverage or enrollment shall disclose in 
        writing to the prospective purchaser the amount of any 
        commission or other compensation the person will receive as a 
        direct result of the sale.  The disclosure may be expressed in 
        dollars or as a percentage of the premium.  The amount disclosed 
        need not include any anticipated renewal commissions. 
           Sec. 33.  Minnesota Statutes 1996, section 62N.23, is 
        amended to read: 
           62N.23 [TECHNICAL ASSISTANCE; LOANS.] 
           (a) The commissioner shall provide technical assistance to 
        parties interested in establishing or operating a community 
        integrated service network or an integrated service network.  
        This shall be known as the community integrated service network 
        technical assistance program (ISNTAP) (CISNTAP). 
           The technical assistance program shall offer seminars on 
        the establishment and operation of community integrated service 
        networks or integrated service networks in all regions of 
        Minnesota.  The commissioner shall advertise these seminars in 
        local and regional newspapers, and attendance at these seminars 
        shall be free. 
           The commissioner shall write a guide to establishing and 
        operating a community integrated service network or an 
        integrated service network.  The guide must provide basic 
        instructions for parties wishing to establish a community 
        integrated service network or an integrated service network.  
        The guide must be provided free of charge to interested 
        parties.  The commissioner shall update this guide when 
        appropriate. 
           The commissioner shall establish a toll-free telephone line 
        that interested parties may call to obtain assistance in 
        establishing or operating a community integrated service network 
        or an integrated service network. 
           (b) The commissioner shall grant loans for organizational 
        and start-up expenses to entities forming community integrated 
        service networks or integrated service networks, or to networks 
        less than one year old, to the extent of any appropriation for 
        that purpose.  The commissioner shall allocate the available 
        funds among applicants based upon the following criteria, as 
        evaluated by the commissioner within the commissioner's 
        discretion: 
           (1) the applicant's need for the loan; 
           (2) the likelihood that the loan will foster the formation 
        or growth of a network; and 
           (3) the likelihood of repayment. 
           The commissioner shall determine any necessary application 
        deadlines and forms and is exempt from rulemaking in doing so.  
           Sec. 34.  Minnesota Statutes 1996, section 62N.25, 
        subdivision 5, is amended to read: 
           Subd. 5.  [BENEFITS.] Community integrated service networks 
        must offer the health maintenance organization benefit set, as 
        defined in chapter 62D, and other laws applicable to entities 
        regulated under chapter 62D, except that the community 
        integrated service network may impose a deductible, not to 
        exceed $1,000 per person per year, provided that out-of-pocket 
        expenses on covered services do not exceed $3,000 per person or 
        $5,000 per family per year.  The deductible must not apply to 
        preventive health services as described in Minnesota Rules, part 
        4685.0801, subpart 8.  Community networks and chemical 
        dependency facilities under contract with a community network 
        shall use the assessment criteria in Minnesota Rules, parts 
        9530.6600 to 9530.6660, when assessing enrollees for chemical 
        dependency treatment. 
           Sec. 35.  Minnesota Statutes 1996, section 62N.26, is 
        amended to read: 
           62N.26 [SHARED SERVICES COOPERATIVE.] 
           The commissioner of health shall establish, or assist in 
        establishing, a shared services cooperative organized under 
        chapter 308A to make available administrative and legal 
        services, technical assistance, provider contracting and billing 
        services, and other services to those community integrated 
        service networks and integrated service networks that choose to 
        participate in the cooperative.  The commissioner shall provide, 
        to the extent funds are appropriated, start-up loans sufficient 
        to maintain the shared services cooperative until its operations 
        can be maintained by fees and contributions.  The cooperative 
        must not be staffed, administered, or supervised by the 
        commissioner of health.  The cooperative shall make use of 
        existing resources that are already available in the community, 
        to the extent possible. 
           Sec. 36.  Minnesota Statutes 1996, section 62N.40, is 
        amended to read: 
           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. 37.  Minnesota Statutes 1996, 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; a policy, contract, or 
        certificate issued by a community integrated service network; or 
        an integrated service network. 
           Sec. 38.  Minnesota Statutes 1996, 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; or 
           (2) an integrated service network as defined under section 
        62N.02, subdivision 8; or 
           (3) a community integrated service network as defined under 
        section 62N.02, subdivision 4a. 
           Sec. 39.  Minnesota Statutes 1996, section 62Q.01, 
        subdivision 5, is amended 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; or (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. 40.  Minnesota Statutes 1996, section 62Q.03, 
        subdivision 5a, is amended 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 public programs 
        risk adjustment work group is governed by section 15.059 for 
        purposes of membership terms and removal of members and shall 
        terminate on June 30, 1999.  The work group shall meet at the 
        discretion of the commissioners of health and human services. 
        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 programs 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. 41.  Minnesota Statutes 1996, section 62Q.106, is 
        amended to read: 
           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, or chapter 45, 60A, or 62D.  
           Sec. 42.  Minnesota Statutes 1996, section 62Q.19, 
        subdivision 1, is amended to read: 
           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; 
           (3) status as a local government unit as defined in section 
        62D.02, subdivision 11, a hospital district created or 
        reorganized under sections 447.31 to 447.37, an Indian tribal 
        government, an Indian health service unit, or a community health 
        board as defined in chapter 145A; or 
           (4) a former state hospital that specializes in the 
        treatment of cerebral palsy, spina bifida, epilepsy, closed head 
        injuries, specialized orthopedic problems, and other disabling 
        conditions; or 
           (5) a rural hospital that has qualified for a sole 
        community hospital financial assistance grant in the past three 
        years under section 144.1484, subdivision 1.  For these rural 
        hospitals, the essential community provider designation applies 
        to all health services provided, including both inpatient and 
        outpatient services. 
           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. 
           Sec. 43.  Minnesota Statutes 1996, section 62Q.33, 
        subdivision 2, is amended to read: 
           Subd. 2.  [REPORT ON SYSTEM DEVELOPMENT.] The commissioner 
        of health, in consultation with the state community health 
        services advisory committee and the commissioner of human 
        services, and representatives of local health departments, 
        county government, a municipal government acting as a local 
        board of health, the Minnesota health care commission, area 
        Indian health services, health care providers, and citizens 
        concerned about public health, shall coordinate the process for 
        defining implementation and financing responsibilities of the 
        local government core public health functions.  The commissioner 
        shall submit recommendations and an initial and final report on 
        local government core public health functions according to the 
        timeline established in subdivision 5. 
           Sec. 44.  Minnesota Statutes 1996, section 62Q.45, 
        subdivision 2, is amended to read: 
           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; or (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. 45.  [62Q.54] [REFERRALS FOR RESIDENTS OF HEALTH CARE 
        FACILITIES.] 
           If an enrollee is a resident of a health care facility 
        licensed under chapter 144A or a housing with services 
        establishment registered under chapter 144D, the enrollee's 
        primary care physician must refer the enrollee to that 
        facility's skilled nursing unit or that facility's appropriate 
        care setting, provided that the health plan company and the 
        provider can best meet the patient's needs in that setting, if 
        the following conditions are met: 
           (1) the facility agrees to be reimbursed at that health 
        plan company's contract rate negotiated with similar providers 
        for the same services and supplies; and 
           (2) the facility meets all guidelines established by the 
        health plan company related to quality of care, utilization, 
        referral authorization, risk assumption, use of health plan 
        company network, and other criteria applicable to providers 
        under contract for the same services and supplies. 
           Sec. 46.  [62Q.65] [ACCESS TO PROVIDER DISCOUNTS.] 
           Subdivision 1.  [REQUIREMENT.] A high deductible health 
        plan must, when used in connection with a medical savings 
        account, provide the enrollee access to any discounted provider 
        fees for services covered by the high deductible health plan, 
        regardless of whether the enrollee has satisfied the deductible 
        for the high deductible health plan. 
           Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
        following terms have the meanings given: 
           (1) "high deductible health plan" has the meaning given 
        under the Internal Revenue Code of 1986, section 220(c)(2); 
           (2) "medical savings account" has the meaning given under 
        the Internal Revenue Code of 1986, section 220(d)(1); and 
           (3) "discounted provider fees" means fees contained in a 
        provider agreement entered into by the issuer of the high 
        deductible health plan, or an affiliate of the issuer, for use 
        in connection with the high deductible health plan. 
           Sec. 47.  Minnesota Statutes 1996, section 136A.1355, is 
        amended to read: 
           136A.1355 [RURAL PHYSICIANS.] 
           Subdivision 1.  [CREATION OF ACCOUNT.] A rural physician 
        education account is established in the health care access 
        fund.  The higher education services office shall use money from 
        the account to establish a loan forgiveness program for 
        medical students residents agreeing to practice in designated 
        rural areas, as defined by the commissioner.  
           Subd. 2.  [ELIGIBILITY.] To be eligible to participate in 
        the program, a prospective physician must submit a letter of 
        interest to the higher education services office.  A student or 
        resident who is accepted must sign a contract to agree to serve 
        at least three of the first five years following residency in a 
        designated rural area. 
           Subd. 3.  [LOAN FORGIVENESS.] For fiscal years beginning on 
        and after July 1, 1995, the higher education services office may 
        accept up to four applicants who are fourth year medical 
        students, three 12 applicants who are medical residents, four 
        applicants who are pediatric residents, and four six applicants 
        who are family practice residents, and one applicant who is 
        an two applicants who are internal medicine resident residents, 
        per fiscal year for participation in the loan forgiveness 
        program.  If the higher education services office 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 12 
        resident applicants 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 services 
        office 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. 
           Subd. 4.  [PENALTY FOR NONFULFILLMENT.] If a participant 
        does not fulfill the required three-year minimum commitment of 
        service in a designated rural area, the higher education 
        services office shall collect from the participant the amount 
        paid by the commissioner under the loan forgiveness program.  
        The higher education services office shall deposit the money 
        collected in the rural physician education account established 
        in subdivision 1.  The commissioner shall allow waivers of all 
        or part of the money owed the commissioner if emergency 
        circumstances prevented fulfillment of the three-year service 
        commitment.  
           Subd. 5.  [LOAN FORGIVENESS; UNDERSERVED URBAN 
        COMMUNITIES.] For fiscal years beginning on and after July 1, 
        1995, the higher education services office 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 services office 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 
        services office 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. 48.  Minnesota Statutes 1996, 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 50 or fewer beds; and 
           (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. 49.  Minnesota Statutes 1996, section 144.147, 
        subdivision 2, is amended to read: 
           Subd. 2.  [GRANTS AUTHORIZED.] The commissioner shall 
        establish a program of grants to assist eligible rural 
        hospitals.  The commissioner shall award grants to hospitals and 
        communities for the purposes set forth in paragraphs (a) and (b).
           (a) Grants may be used by hospitals and their communities 
        to develop strategic plans for preserving or enhancing access to 
        health services.  At a minimum, a strategic plan must consist of:
           (1) a needs assessment to determine what health services 
        are needed and desired by the community.  The assessment must 
        include interviews with or surveys of area health professionals, 
        local community leaders, and public hearings; 
           (2) an assessment of the feasibility of providing needed 
        health services that identifies priorities and timeliness for 
        potential changes; and 
           (3) an implementation plan.  
           The strategic plan must be developed by a committee that 
        includes representatives from the hospital, local public health 
        agencies, other health providers, and consumers from the 
        community.  
           (b) The grants may also be used by eligible rural hospitals 
        that have developed strategic plans to implement transition 
        projects to modify the type and extent of services provided, in 
        order to reflect the needs of that plan.  Grants may be used by 
        hospitals under this paragraph to develop hospital-based 
        physician practices that integrate hospital and existing medical 
        practice facilities that agree to transfer their practices, 
        equipment, staffing, and administration to the hospital.  The 
        grants may also be used by the hospital to establish a health 
        provider cooperative, a telemedicine system, or a rural health 
        care system.  Not more than one-third of any grant shall be used 
        to offset losses incurred by physicians agreeing to transfer 
        their practices to hospitals.  
           Sec. 50.  Minnesota Statutes 1996, section 144.147, 
        subdivision 3, is amended to read: 
           Subd. 3.  [CONSIDERATION OF GRANTS.] In determining which 
        hospitals will receive grants under this section, the 
        commissioner shall take into account:  
           (1) improving community access to hospital or health 
        services; 
           (2) changes in service populations; 
           (3) demand for ambulatory and emergency services; 
           (4) the extent that the health needs of the community are 
        not currently being met by other providers in the service area; 
           (5) the need to recruit and retain health professionals; 
           (6) the involvement and extent of community support of the 
        community and local health care providers; and 
           (7) the coordination with local community organizations, 
        such as community development and public health agencies; and 
           (8) the financial condition of the hospital. 
           Sec. 51.  Minnesota Statutes 1996, section 144.147, 
        subdivision 4, is amended to read: 
           Subd. 4.  [ALLOCATION OF GRANTS.] (a) Eligible hospitals 
        must apply to the commissioner no later than September 1 of each 
        fiscal year for grants awarded for that fiscal year.  A grant 
        may be awarded upon signing of a grant contract. 
           (b) The commissioner must make a final decision on the 
        funding of each application within 60 days of the deadline for 
        receiving applications. 
           (c) Each relevant community health board has 30 days in 
        which to review and comment to the commissioner on grant 
        applications from hospitals in their community health service 
        area. 
           (d) In determining which hospitals will receive grants 
        under this section, the commissioner shall consider the 
        following factors: 
           (1) Description of the problem, description of the project, 
        and the likelihood of successful outcome of the project.  The 
        applicant must explain clearly the nature of the health services 
        problems in their service area, how the grant funds will be 
        used, what will be accomplished, and the results expected.  The 
        applicant should describe achievable objectives, a timetable, 
        and roles and capabilities of responsible individuals and 
        organizations. 
           (2) The extent of community support for the hospital and 
        this proposed project.  The applicant should demonstrate support 
        for the hospital and for the proposed project from other local 
        health service providers and from local community and government 
        leaders.  Evidence of such support may include past commitments 
        of financial support from local individuals, organizations, or 
        government entities; and commitment of financial support, 
        in-kind services or cash, for this project. 
           (3) The comments, if any, resulting from a review of the 
        application by the community health board in whose community 
        health service area the hospital is located. 
           (e) In evaluating applications, the commissioner shall 
        score each application on a 100 point scale, assigning the 
        maximum of 70 points for an applicant's understanding of the 
        problem, description of the project, and likelihood of 
        successful outcome of the project; and a maximum of 30 points 
        for the extent of community support for the hospital and this 
        project.  The commissioner may also take into account other 
        relevant factors. 
           (f) A grant to a hospital, including hospitals that submit 
        applications as consortia, may not exceed $37,500 $50,000 a year 
        and may not exceed a term of two years.  Prior to the receipt of 
        any grant, the hospital must certify to the commissioner that at 
        least one-half of the amount, which may include in-kind 
        services, is available for the same purposes from nonstate 
        sources.  A hospital receiving a grant under this section may 
        use the grant for any expenses incurred in the development of 
        strategic plans or the implementation of transition projects 
        with respect to which the grant is made.  Project grants may not 
        be used to retire debt incurred with respect to any capital 
        expenditure made prior to the date on which the project is 
        initiated. 
           (g) The commissioner may adopt rules to implement this 
        section. 
           Sec. 52.  [144.1475] [RURAL HOSPITAL DEMONSTRATION 
        PROJECT.] 
           Subdivision 1.  [ESTABLISHMENT.] The commissioner of 
        health, for the biennium ending June 30, 1999, shall establish 
        at least three demonstration projects per fiscal year to assist 
        rural hospitals in the planning and implementation process to 
        either consolidate or cooperate with another existing hospital 
        in its service area to provide better quality health care to its 
        community.  A demonstration project must include at least two 
        eligible hospitals.  For purposes of this section, an "eligible 
        hospital" means a hospital that:  
           (1) is located outside the seven-county metropolitan area; 
           (2) has 50 or fewer licensed beds; and 
           (3) is located within a 25-mile radius of another hospital. 
           At least one of the eligible hospitals in a demonstration 
        project must have had a negative operating margin during one of 
        the two years prior to application.  
           Subd. 2.  [APPLICATION.] (a) An eligible hospital seeking 
        to be a participant in a demonstration project must submit an 
        application to the commissioner of health detailing the 
        hospital's efforts to consolidate health care delivery in its 
        service area, cooperate with another hospital in the delivery of 
        health care, or both consolidate and cooperate.  Applications 
        must be submitted by October 15 of each fiscal year for grants 
        awarded for that fiscal year. 
           (b) Applications must:  
           (1) describe the problem that the proposed consolidation or 
        cooperation will address, the consolidation or cooperation 
        project, how the grant funds will be used, what will be 
        accomplished, and the results expected; 
           (2) describe achievable objectives, a timetable, and the 
        roles and capabilities of responsible individuals and 
        organizations; 
           (3) include written commitments from the applicant hospital 
        and at least one other hospital that will participate in the 
        consolidation or cooperation demonstration project, that specify 
        the activities the organization will undertake during the 
        project, the resources the organization will contribute to the 
        demonstration project, and the expected role and nature of the 
        organization's involvement in proposed consolidation or 
        cooperation activities; and 
           (4) provide evidence of support for the proposed project 
        from other local health service providers and from local 
        community and government leaders. 
           Subd. 3.  [GRANTS.] The commissioner of health shall 
        allocate a grant of up to $100,000 to the highest scoring 
        applicants each year until available funding is expended.  
        Grants may be used by eligible hospitals to: 
           (1) conduct consolidation or cooperation negotiations; 
           (2) develop consolidation or cooperation plans, including 
        financial plans and architectural designs; 
           (3) seek community input and conduct community education on 
        proposed or planned consolidations or cooperative activities; 
        and 
           (4) implement consolidation or cooperation plans. 
           Subd. 4.  [CONSIDERATION OF GRANTS.] In evaluating 
        applications, the commissioner shall score each application on a 
        100 point scale, assigning:  a maximum of 40 points for an 
        applicant's understanding of the problem, description of the 
        project, and likelihood of successful outcome of the project; a 
        maximum of 30 points for explicit and unequivocal written 
        commitments from organizations participating in the project; a 
        maximum of 20 points for matching funds or in-kind services 
        committed by the applicant or others to the project; and a 
        maximum of ten points for the extent of community support for 
        the project.  The commissioner shall consider the comments, if 
        any, resulting from a review of the application by the community 
        health board in whose community health service area the 
        applicant is located.  The commissioner may also take into 
        account other relevant factors. 
           Subd. 5.  [EVALUATION.] The commissioner of health shall 
        evaluate the overall effectiveness of the demonstration projects 
        and report to the legislature by September 1, 2000.  The 
        commissioner may collect, from the hospitals receiving grants, 
        any information necessary to evaluate the demonstration project. 
           Sec. 53.  [144.148] [RURAL HOSPITAL CAPITAL IMPROVEMENT 
        GRANT AND LOAN PROGRAM.] 
           Subdivision 1.  [DEFINITION.] (a) For purposes of this 
        section, the following definitions apply. 
           (b) "Eligible rural hospital" means a hospital that: 
           (1) is located outside the seven-county metropolitan area; 
           (2) has 50 or fewer licensed hospital beds with a net 
        hospital operating margin not greater than two percent in the 
        two fiscal years prior to application; and 
           (3) is 25 miles or more from another hospital. 
           (c) "Eligible project" means a modernization project to 
        update, remodel, or replace aging hospital facilities and 
        equipment necessary to maintain the operations of a hospital. 
           Subd. 2.  [PROGRAM.] The commissioner of health shall award 
        rural hospital capital improvement grants or loans to eligible 
        rural hospitals.  A grant or loan shall not exceed $1,500,000 
        per hospital.  Grants or loans shall be interest free.  An 
        eligible rural hospital may apply the funds retroactively to 
        capital improvements made during the two fiscal years preceding 
        the fiscal year in which the grant or loan was received, 
        provided the hospital met the eligibility criteria during that 
        time period.  
           Subd. 3.  [APPLICATIONS.] Eligible hospitals seeking a 
        grant or loan shall apply to the commissioner.  Applications 
        must include a description of the problem that the proposed 
        project will address, a description of the project including 
        construction and remodeling drawings or specifications, sources 
        of funds for the project, uses of funds for the project, the 
        results expected, and a plan to maintain or operate any facility 
        or equipment included in the project.  The applicant must 
        describe achievable objectives, a timetable, and roles and 
        capabilities of responsible individuals and organization.  
        Applicants must submit to the commissioner evidence that 
        competitive bidding was used to select contractors for the 
        project.  
           Subd. 4.  [CONSIDERATION OF APPLICATIONS.] The commissioner 
        shall review each application to determine whether or not the 
        hospital's application is complete and whether the hospital and 
        the project are eligible for a grant or loan.  In evaluating 
        applications, the commissioner shall score each application on a 
        100 point scale, assigning:  a maximum of 40 points for an 
        applicant's clarity and thoroughness in describing the problem 
        and the project; a maximum of 40 points for the extent to which 
        the applicant has demonstrated that it has made adequate 
        provisions to assure proper and efficient operation of the 
        facility once the project is completed; and a maximum of 20 
        points for the extent to which the proposed project is 
        consistent with the hospital's capital improvement plan or 
        strategic plan.  The commissioner may also take into account 
        other relevant factors.  During application review, the 
        commissioner may request additional information about a proposed 
        project, including information on project cost.  Failure to 
        provide the information requested disqualifies a loan applicant. 
           Subd. 5.  [PROGRAM OVERSIGHT.] The commissioner of health 
        shall review audited financial information of the hospital to 
        assess eligibility.  The commissioner shall determine the amount 
        of a grant or loan to be given to an eligible rural hospital 
        based on the relative score of each eligible hospital's 
        application and the funds available to the commissioner.  The 
        grant or loan shall be used to update, remodel, or replace aging 
        facilities and equipment necessary to maintain the operations of 
        the hospital.  
           Subd. 6.  [LOAN PAYMENT.] Loans shall be repaid as provided 
        in this subdivision over a period of 15 years.  In those years 
        when an eligible rural hospital experiences a positive net 
        operating margin in excess of two percent, the eligible rural 
        hospital shall pay to the state one-half of the excess above two 
        percent, up to the yearly payment amount based upon a loan 
        period of 15 years.  If the amount paid back in any year is less 
        than the yearly payment amount, or if no payment is required 
        because the eligible rural hospital does not experience a 
        positive net operating margin in excess of two percent, the 
        amount unpaid for that year shall be forgiven by the state 
        without any financial penalty.  As a condition of receiving an 
        award through this program, eligible hospitals must agree to any 
        and all collection activities the commissioner finds necessary 
        to collect loan payments in those years a payment is due. 
           Subd. 7.  [ACCOUNTING TREATMENT.] The commissioner of 
        finance shall record as grants in the state accounting system 
        funds obligated by this section.  Loan payments received under 
        this section shall be deposited in the health care access fund. 
           Subd. 8.  [EXPIRATION.] This section expires June 30, 1999. 
           Sec. 54.  Minnesota Statutes 1996, 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 operating income losses in the two of the 
        previous three 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 operating loss margin (total 
        operating losses as a percentage of total operating revenue) for 
        the two of the previous three most recent consecutive fiscal 
        years for which audited financial information is available and 
        the total amount of funding available.  For purposes of 
        calculating a hospital's operating loss margin, total operating 
        revenue does not include grant funding provided under this 
        subdivision.  One hundred percent of the available funds will be 
        disbursed proportionately based on the operating loss margins of 
        the eligible hospitals. 
           Sec. 55.  Minnesota Statutes 1996, section 256.045, 
        subdivision 3a, is amended to read: 
           Subd. 3a.  [PREPAID HEALTH PLAN APPEALS.] (a) All prepaid 
        health plans under contract to the commissioner under chapter 
        256B or 256D must provide for a complaint system according to 
        section 62D.11.  When a prepaid health plan denies, reduces, or 
        terminates a health service or denies a request to authorize a 
        previously authorized health service, the prepaid health plan 
        must notify the recipient of the right to file a complaint or an 
        appeal.  The notice must include the name and telephone number 
        of the ombudsman and notice of the recipient's right to request 
        a hearing under paragraph (b).  When a complaint is filed, the 
        prepaid health plan must notify the ombudsman within three 
        working days.  Recipients may request the assistance of the 
        ombudsman in the complaint system process.  The prepaid health 
        plan must issue a written resolution of the complaint to the 
        recipient within 30 days after the complaint is filed with the 
        prepaid health plan.  A recipient is not required to exhaust the 
        complaint system procedures in order to request a hearing under 
        paragraph (b). 
           (b) Recipients enrolled in a prepaid health plan under 
        chapter 256B or 256D may contest a prepaid health plan's denial, 
        reduction, or termination of health services, a prepaid health 
        plan's denial of a request to authorize a previously authorized 
        health service, or the prepaid health plan's written resolution 
        of a complaint by submitting a written request for a hearing 
        according to subdivision 3.  A state human services referee 
        shall conduct a hearing on the matter and shall recommend an 
        order to the commissioner of human services.  The commissioner 
        need not grant a hearing if the sole issue raised by a recipient 
        is the commissioner's authority to require mandatory enrollment 
        in a prepaid health plan in a county where prepaid health plans 
        are under contract with the commissioner.  The state human 
        services referee may order a second medical opinion from the 
        prepaid health plan or may order a second medical opinion from a 
        nonprepaid health plan provider at the expense of the prepaid 
        health plan.  Recipients may request the assistance of the 
        ombudsman in the appeal process. 
           (c) In the written request for a hearing to appeal from a 
        prepaid health plan's denial, reduction, or termination of a 
        health service, a prepaid health plan's denial of a request to 
        authorize a previously authorized service, or the prepaid health 
        plan's written resolution to a complaint, a recipient may 
        request an expedited hearing.  If an expedited appeal is 
        warranted, the state human services referee shall hear the 
        appeal and render a decision within a time commensurate with the 
        level of urgency involved, based on the individual circumstances 
        of the case. 
           Sec. 56.  Minnesota Statutes 1996, section 256.9363, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [SELECTION OF VENDORS.] In order to contain 
        costs, the commissioner of human services shall select vendors 
        of medical care who can provide the most economical care 
        consistent with high medical standards and shall, where 
        possible, contract with organizations on a prepaid capitation 
        basis to provide these services.  The commissioner shall 
        consider proposals by counties and vendors for managed care 
        plans which may include:  prepaid capitation programs, 
        competitive bidding programs, or other vendor payment mechanisms 
        designed to provide services in an economical manner or to 
        control utilization, with safeguards to ensure that necessary 
        services are provided.  Managed care plans may include 
        integrated service networks as defined in section 62N.02. 
           Sec. 57.  Minnesota Statutes 1996, section 256.9657, 
        subdivision 3, is amended to read: 
           Subd. 3.  [HEALTH MAINTENANCE ORGANIZATION; COMMUNITY 
        INTEGRATED SERVICE NETWORK SURCHARGE.] (a) Effective October 1, 
        1992, each health maintenance organization with a certificate of 
        authority issued by the commissioner of health under chapter 62D 
        and each integrated service network and community integrated 
        service network licensed by the commissioner under chapter 62N 
        shall pay to the commissioner of human services a surcharge 
        equal to six-tenths of one percent of the total premium revenues 
        of the health maintenance organization, integrated service 
        network, or community integrated service network as reported to 
        the commissioner of health according to the schedule in 
        subdivision 4.  
           (b) For purposes of this subdivision, total premium revenue 
        means: 
           (1) premium revenue recognized on a prepaid basis from 
        individuals and groups for provision of a specified range of 
        health services over a defined period of time which is normally 
        one month, excluding premiums paid to a health maintenance 
        organization, integrated service network, or community 
        integrated service network from the Federal Employees Health 
        Benefit Program; 
           (2) premiums from Medicare wrap-around subscribers for 
        health benefits which supplement Medicare coverage; 
           (3) Medicare revenue, as a result of an arrangement between 
        a health maintenance organization, an integrated service 
        network, or a community integrated service network and the 
        health care financing administration of the federal Department 
        of Health and Human Services, for services to a Medicare 
        beneficiary; and 
           (4) medical assistance revenue, as a result of an 
        arrangement between a health maintenance organization, 
        integrated service network, or community integrated service 
        network and a Medicaid state agency, for services to a medical 
        assistance beneficiary. 
           If advance payments are made under clause (1) or (2) to the 
        health maintenance organization, integrated service network, or 
        community integrated service network for more than one reporting 
        period, the portion of the payment that has not yet been earned 
        must be treated as a liability. 
           (c) When a health maintenance organization or an integrated 
        service network or community integrated service network merges 
        or consolidates with or is acquired by another health 
        maintenance organization, integrated service network, or 
        community integrated service network, the surviving corporation 
        or the new corporation shall be responsible for the annual 
        surcharge originally imposed on each of the entities or 
        corporations subject to the merger, consolidation, or 
        acquisition, regardless of whether one of the entities or 
        corporations does not retain a certificate of authority under 
        chapter 62D or a license under chapter 62N. 
           (d) Effective July 1 of each year, the surviving 
        corporation's or the new corporation's surcharge shall be based 
        on the revenues earned in the second previous calendar year by 
        all of the entities or corporations subject to the merger, 
        consolidation, or acquisition regardless of whether one of the 
        entities or corporations does not retain a certificate of 
        authority under chapter 62D or a license under chapter 62N until 
        the total premium revenues of the surviving corporation include 
        the total premium revenues of all the merged entities as 
        reported to the commissioner of health. 
           (e) When a health maintenance organization, integrated 
        service network, or community integrated service network, which 
        is subject to liability for the surcharge under this chapter, 
        transfers, assigns, sells, leases, or disposes of all or 
        substantially all of its property or assets, liability for the 
        surcharge imposed by this chapter is imposed on the transferee, 
        assignee, or buyer of the health maintenance organization, 
        integrated service network, or community integrated service 
        network. 
           (f) In the event a health maintenance organization, 
        integrated service network, or community integrated service 
        network converts its licensure to a different type of entity 
        subject to liability for the surcharge under this chapter, but 
        survives in the same or substantially similar form, the 
        surviving entity remains liable for the surcharge regardless of 
        whether one of the entities or corporations does not retain a 
        certificate of authority under chapter 62D or a license under 
        chapter 62N. 
           (g) The surcharge assessed to a health maintenance 
        organization, integrated service network, or community 
        integrated service network ends when the entity ceases providing 
        services for premiums and the cessation is not connected with a 
        merger, consolidation, acquisition, or conversion. 
           Sec. 58.  [MEIP STUDY.] 
           The commissioner of employee relations shall study the 
        current Minnesota employees insurance program (MEIP) and report 
        to the legislature by January 15, 1998, on recommendations on 
        whether this program provides greater accessibility to small 
        employers for purchasing health insurance and on the continued 
        viability of the program, including whether the program could be 
        modified in terms of underwriting, marketing, and advertising to 
        create a program that would provide a cost incentive for small 
        employers to purchase health coverage through this program. 
           Sec. 59.  [MCHA STANDARDS STUDY.] 
           The commissioner of commerce, in consultation with the 
        commissioner of health, shall study and make recommendations 
        regarding the feasibility of establishing a comprehensive set of 
        eligibility standards for coverage under the Minnesota 
        comprehensive health association and on guaranteed issuance in 
        the individual market for individuals who do not meet the 
        eligibility standards for coverage under the Minnesota 
        comprehensive health association.  The recommendations shall be 
        reported to the legislature by January 15, 1998. 
           Sec. 60.  [PRESCRIPTION DRUG INSURANCE PROGRAM.] 
           The commissioner of commerce shall study the feasibility of 
        providing an insurance program to provide prescription drugs to 
        Minnesotans who are 65 and older.  The program shall be 
        administered by the Minnesota comprehensive health association, 
        but shall be separate from the health coverage programs operated 
        by the association under Minnesota Statutes, chapter 62E.  In 
        studying the feasibility of the program, the commissioner shall 
        incorporate, to the extent feasible, the administrative 
        procedures and health care delivery methods used by the 
        association under Minnesota Statutes, chapter 62E.  The 
        commissioner shall study the program based upon independent 
        actuarial analysis, and shall present recommendations to the 
        legislature by December 15, 1997. 
           Sec. 61.  [PUBLIC PROGRAMS RATE SETTING AND RISK 
        ADJUSTMENT.] 
           The commissioners of health and of human services shall 
        submit a coordinated report on rate setting and risk adjustment 
        methods to the legislature by February 1, 1998.  An interim 
        report shall be provided to the legislative commission on health 
        care access to facilitate a public hearing and testimony prior 
        to the 1998 legislative session.  Changes in the rate setting 
        and risk adjustment methods shall not be implemented until after 
        the 1998 legislative session. 
           Sec. 62.  [REVISOR INSTRUCTIONS.] 
           The revisor of statutes shall delete references to 
        "integrated service network," but not "community integrated 
        service network," wherever it appears in Minnesota Statutes and 
        make conforming changes as necessary. 
           Sec. 63.  [REPEALER.] 
           (a) Minnesota Statutes 1996, sections 62E.11, subdivision 
        12; 62J.03, subdivision 3; 62J.04, subdivisions 4 and 7; 62J.05; 
        62J.051; 62J.09, subdivision 3a; 62J.37; 62N.01, subdivision 2; 
        62N.02, subdivisions 2, 3, 4b, 4c, 6, 7, 8, 9, 10, and 12; 
        62N.03; 62N.04; 62N.05; 62N.06; 62N.065; 62N.071; 62N.072; 
        62N.073; 62N.074; 62N.076; 62N.077; 62N.078; 62N.10; 62N.11; 
        62N.12; 62N.13; 62N.14; 62N.15; 62N.17; 62N.18; 62N.24; 62N.38; 
        62Q.165, subdivision 3; 62Q.25; 62Q.29; 62Q.41 and 147.01, 
        subdivision 6, are repealed. 
           (b) Laws 1993, chapter 247, article 4, section 8; Laws 
        1995, chapter 96, section 2; and Laws 1995, First Special 
        Session chapter 3, article 13, section 2, are repealed. 
           (c) Laws 1994, chapter 625, article 5, section 5, as 
        amended by Laws 1995, chapter 234, article 3, section 8, is 
        repealed. 
           Sec. 64.  [EFFECTIVE DATE.] 
           Section 23 is effective the day following final enactment.  
        Section 46 is effective January 1, 1998, and applies to high 
        deductible health plans issued or renewed on or after that date. 
                                   ARTICLE 3 
                              MINNESOTACARE TAXES 
           Section 1.  [16A.76] [FEDERAL RESERVE; HEALTH CARE ACCESS 
        FUND.] 
           Subdivision 1.  [ESTABLISH RESERVE.] The federal 
        contingency reserve is established within the health care access 
        fund for uses necessary to preserve access to basic health care 
        services when federal funding is significantly reduced. 
           Subd. 2.  [RESERVE FINANCING.] The funds in reserve shall 
        be equal to the amount of federal financial participation 
        received since July 1, 1995, for services and administrative 
        activities funded by the health care access fund up to a reserve 
        limit of $150,000,000.  Investment income attributed to the 
        federal contingency reserve balances shall also be included in 
        the total reserve amount. 
           Subd. 3.  [PERMITTED USE.] The federal contingency reserve 
        is established to protect access to basic health care services 
        that are publicly funded.  Funds held in the federal contingency 
        reserve are available for appropriation in the event that 
        federal funds for basic health care services are significantly 
        reduced such as under federal reform or other significant 
        changes to federal law. 
           Subd. 4.  [LIMITS ON USE.] The federal contingency reserve 
        is not available for supplementing reductions in federal funding 
        resulting from application of current federal law funding 
        formulas, for funding long-term care services, or for replacing 
        existing general fund commitments. 
           Sec. 2.  Minnesota Statutes 1996, section 60A.15, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [DOMESTIC AND FOREIGN COMPANIES.] (a) On or 
        before April 1, June 1, and December 1 of each year, every 
        domestic and foreign company, including town and farmers' mutual 
        insurance companies, domestic mutual insurance companies, marine 
        insurance companies, health maintenance organizations, 
        integrated service networks, community integrated service 
        networks, and nonprofit health service plan corporations, shall 
        pay to the commissioner of revenue installments equal to 
        one-third of the insurer's total estimated tax for the current 
        year.  Except as provided in paragraphs (d) and, (e), (g), and 
        (h), installments must be based on a sum equal to two percent of 
        the premiums described in paragraph (b). 
           (b) Installments under paragraph (a), (d), or (e) are 
        percentages of gross premiums less return premiums on all direct 
        business received by the insurer in this state, or by its agents 
        for it, in cash or otherwise, during such year. 
           (c) Failure of a company to make payments of at least 
        one-third of either (1) the total tax paid during the previous 
        calendar year or (2) 80 percent of the actual tax for the 
        current calendar year shall subject the company to the penalty 
        and interest provided in this section, unless the total tax for 
        the current tax year is $500 or less. 
           (d) For health maintenance organizations, nonprofit health 
        services service plan corporations, integrated service networks, 
        and community integrated service networks, the installments must 
        be based on an amount equal to one percent of premiums described 
        in paragraph (b) that are paid after December 31, 
        1995 determined under paragraph (g) or (h). 
           (e) For purposes of computing installments for town and 
        farmers' mutual insurance companies and for mutual property 
        casualty companies with total assets on December 31, 1989, of 
        $1,600,000,000 or less, the following rates apply: 
           (1) for all life insurance, two percent; 
           (2) for town and farmers' mutual insurance companies and 
        for mutual property and casualty companies with total assets of 
        $5,000,000 or less, on all other coverages, one percent; and 
           (3) for mutual property and casualty companies with total 
        assets on December 31, 1989, of $1,600,000,000 or less, on all 
        other coverages, 1.26 percent. 
           (f) Premiums under medical assistance, general assistance 
        medical care, the MinnesotaCare program, and the Minnesota 
        comprehensive health insurance plan and all payments, revenues, 
        and reimbursements received from the federal government for 
        Medicare-related coverage as defined in section 62A.31, 
        subdivision 3, paragraph (e), are not subject to tax under this 
        section. 
           (g) For calendar years 1998 and 1999, the installments for 
        health maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations must be 
        based on an amount equal to one percent of premiums described 
        under paragraph (b).  Health maintenance organizations, 
        community integrated service networks, and nonprofit health 
        service plan corporations that have met the cost containment 
        goals established under section 62J.04 in the individual and 
        small employer market for calendar year 1996 are exempt from 
        payment of the tax imposed under this section for premiums paid 
        after March 30, 1997, and before April 1, 1998.  Health 
        maintenance organizations, community integrated service 
        networks, and nonprofit health service plan corporations that 
        have met the cost containment goals established under section 
        62J.04 in the individual and small employer market for calendar 
        year 1997 are exempt from payment of the tax imposed under this 
        section for premiums paid after March 30, 1998, and before April 
        1, 1999.  
           (h) For calendar years after 1999, the commissioner of 
        finance shall determine the balance of the health care access 
        fund on September 1 of each year beginning September 1, 1999.  
        If the commissioner determines that there is no structural 
        deficit for the next fiscal year, no tax shall be imposed under 
        paragraph (d) for the following calendar year.  If the 
        commissioner determines that there will be a structural deficit 
        in the fund for the following fiscal year, then the 
        commissioner, in consultation with the commissioner of revenue, 
        shall determine the amount needed to eliminate the structural 
        deficit and a tax shall be imposed under paragraph (d) for the 
        following calendar year.  The commissioner shall determine the 
        rate of the tax as either one-quarter of one percent, one-half 
        of one percent, three-quarters of one percent, or one percent of 
        premiums described in paragraph (b), whichever is the lowest of 
        those rates that the commissioner determines will produce 
        sufficient revenue to eliminate the projected structural 
        deficit.  The commissioner of finance shall publish in the State 
        Register by October 1 of each year the amount of tax to be 
        imposed for the following calendar year. 
           (i) In approving the premium rates as required in sections 
        62L.08, subdivision 8, and 62A.65, subdivision 3, the 
        commissioners of health and commerce shall ensure that any 
        exemption from the tax as described in paragraphs (g) and (h) is 
        reflected in the premium rate. 
           Sec. 3.  Minnesota Statutes 1996, 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 in accordance with 
        section 16A.76.  The commissioner must make a quarterly 
        assessment of the expected expenditures for the covered services 
        for the remainder of the current biennium and for the following 
        biennium.  The estimated expenditure, including minimum the 
        reserve requirements described in section 16A.76, 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, 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 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 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.  
           (c) Notwithstanding 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 (b). 
           Sec. 4.  Minnesota Statutes 1996, 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 hospital for patient services; 
           (2) a surgical center for patient services; 
           (3) a health care provider, other than a staff model health 
        carrier, for patient services; 
           (4) 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; and 
           (5) 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; and 
           (6) a pharmacy for medical supplies, appliances, and 
        equipment. 
           Sec. 5.  Minnesota Statutes 1996, section 295.50, 
        subdivision 4, is amended to read: 
           Subd. 4.  [HEALTH CARE PROVIDER.] (a) "Health care 
        provider" means: 
           (1) a person whose health care occupation is regulated or 
        required to be regulated by the state of Minnesota 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; (2) a person who provides goods and services 
        not listed above in clause (1) that qualify 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) (3) a staff model health plan company; or 
           (3) (4) an ambulance service required to be licensed; or 
           (5) a person who sells or repairs hearing aids and related 
        equipment or prescription eyewear. 
           (b) Health care provider does not include hospitals,; 
        medical supplies distributors, except as specified under 
        paragraph (a), clause (5); nursing homes licensed under chapter 
        144A or licensed in any other jurisdiction,; pharmacies,; 
        surgical centers,; bus and taxicab transportation, or any other 
        providers of transportation services other than ambulance 
        services required to be licensed,; supervised living facilities 
        for persons with mental retardation or related conditions, 
        licensed under Minnesota Rules, parts 4665.0100 to 4665.9900,; 
        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 
        157.17 to provide supportive services or health supervision 
        services,; adult foster homes as defined in Minnesota Rules, 
        part 9555.5105,; day training and habilitation services for 
        adults with mental retardation and related conditions as defined 
        in section 252.41, subdivision 3,; and boarding care homes, as 
        defined in Minnesota Rules, part 4655.0100. 
           (c) For purposes of this subdivision, "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. 
           Sec. 6.  Minnesota Statutes 1996, section 295.50, 
        subdivision 6, is amended to read: 
           Subd. 6.  [HOME HEALTH CARE SERVICES.] "Home health care 
        services" are services: 
           (1) defined under the state medical assistance program as 
        home health agency services provided by a home health agency, 
        personal care services and supervision of personal care 
        services, private duty nursing services, and waivered 
        services or services by home care providers required to be 
        licensed under chapter 144A; and 
           (2) provided at a recipient's residence, if the recipient 
        does not live in a hospital, nursing facility, as defined in 
        section 62A.46, subdivision 3, or intermediate care facility for 
        persons with mental retardation as defined in section 256B.055, 
        subdivision 12, paragraph (d). 
           Sec. 7.  Minnesota Statutes 1996, section 295.50, 
        subdivision 7, is amended to read: 
           Subd. 7.  [HOSPITAL.] "Hospital" means a hospital licensed 
        under chapter 144, or a hospital licensed by any other state or 
        province or territory of Canada jurisdiction. 
           Sec. 8.  Minnesota Statutes 1996, section 295.50, 
        subdivision 13, is amended to read: 
           Subd. 13.  [SURGICAL CENTER.] "Surgical center" is an 
        outpatient surgical center as defined in Minnesota Rules, 
        chapter 4675 or a similar facility located in any other state or 
        province or territory of Canada jurisdiction. 
           Sec. 9.  Minnesota Statutes 1996, section 295.50, 
        subdivision 14, is amended to read: 
           Subd. 14.  [WHOLESALE DRUG DISTRIBUTOR.] "Wholesale drug 
        distributor" means a wholesale drug distributor required to be 
        licensed under sections 151.42 to 151.51 or a nonresident 
        pharmacy required to be registered under section 151.19. 
           Sec. 10.  Minnesota Statutes 1996, section 295.51, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [BUSINESS TRANSACTIONS IN MINNESOTA.] A 
        hospital, surgical center, pharmacy, or health care provider is 
        subject to tax under sections 295.50 to 295.59 if it is 
        "transacting business in Minnesota."  A hospital, surgical 
        center, pharmacy, or health care provider is transacting 
        business in Minnesota if it maintains contacts with or presence 
        in the state of Minnesota sufficient to permit taxation of gross 
        revenues received for patient services under the United States 
        Constitution. 
           Sec. 11.  Minnesota Statutes 1996, section 295.52, 
        subdivision 4, is amended to read: 
           Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] A person that 
        receives prescription drugs for resale or use in Minnesota, 
        other than from a wholesale drug distributor that paid the tax 
        under subdivision 3, is subject to a tax equal to two percent of 
        the price paid multiplied by the tax percentage specified in 
        this section.  Liability for the tax is incurred when 
        prescription drugs are received or delivered in Minnesota by the 
        person. 
           Sec. 12.  Minnesota Statutes 1996, section 295.52, is 
        amended by adding a subdivision to read: 
           Subd. 6.  [HEARING AIDS AND PRESCRIPTION EYEWEAR.] The tax 
        liability of a person who meets the definition of a health care 
        provider solely because the person sells or repairs hearing aids 
        and related equipment or prescription eyewear is limited to the 
        gross revenues received from the sale or repair of these items. 
           Sec. 13.  Minnesota Statutes 1996, section 295.52, is 
        amended by adding a subdivision to read: 
           Subd. 7.  [TAX REDUCTION.] Notwithstanding subdivisions 1, 
        1a, 2, 3, and 4, the tax imposed under this section for calendar 
        years 1998 and 1999 shall be equal to 1.5 percent of the gross 
        revenues received on or after January 1, 1998, and before 
        January 1, 2000.  The commissioner shall extend the reduced tax 
        rate of 1.5 percent for gross revenues received on or after 
        January 1, 2000, and before January 1, 2002, if the commissioner 
        of finance determines that the health care access fund 
        structural balance projected for fiscal year 2001 will remain 
        positive, prior to any increase of the one percent premium tax 
        under section 60A.15, subdivision 1, paragraph (h), and prior to 
        any tax expenditures related to the increase in the maximum tax 
        credit for research expenses under section 295.53, subdivision 
        4, as amended by this act. 
           Sec. 14.  Minnesota Statutes 1996, 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 Medicare 
        enrollee or by 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 this 
        chapter 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 who is subject to tax 
        under section 295.52, subdivision 3, 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 health care provider or the 
        wholly owned subsidiary of a 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 
        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 health care provider for 
        medical supplies, appliances, and equipment hearing aids and 
        related equipment or prescription eyewear delivered outside of 
        Minnesota; 
           (18) 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 
           (19) payments received for services provided by:  assisted 
        living programs and congregate housing programs. 
           (b) Payments received by wholesale drug distributors for 
        prescription legend 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. 15.  Minnesota Statutes 1996, section 295.53, 
        subdivision 3, is amended to read: 
           Subd. 3.  [SEPARATE STATEMENT OF TAX.] A hospital, surgical 
        center, pharmacy, or health care provider must not state the tax 
        obligation under section 295.52 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 multiplied by the tax 
        percentage specified in section 295.52.  Pharmacies must not 
        state the tax obligation as two percent of based on 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. 16.  Minnesota Statutes 1996, 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 qualifying research conducted by an allowable research 
        programs program.  
           (b) For purposes of this subdivision, the following 
        requirements apply: 
           (1) expenditures for allowable research programs are the 
        direct and general must be for program costs for activities 
        which are part of qualifying research conducted by an allowable 
        research program; 
           (2) an allowable research program must be 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.  Allowable conducted by an entity 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; 
           (3) qualifying research must:  
           (A) be approved in writing by the governing body of the 
        hospital or health care provider which is taking the deduction 
        under this subdivision; 
           (1) (B) 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) (C) be subject to review 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) (D) be subject to review and supervision by an 
        institutional review board operating in conformity with federal 
        regulations 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 tax 
        percentage specified in section 295.52.  The commissioner shall 
        pay the refund no later than May 15 of the calendar year. 
           (e) This subdivision expires January 1, 2000. 
           Sec. 17.  Minnesota Statutes 1996, section 295.53, is 
        amended by adding a subdivision to read: 
           Subd. 4a.  [CREDIT FOR RESEARCH.] (a) In addition to the 
        exemptions allowed under subdivision 1, a hospital or health 
        care provider may claim an annual credit against the total 
        amount of tax, if any, the hospital or health care provider owes 
        for that calendar year under sections 295.50 to 295.57.  The 
        credit shall equal 2.5 percent of revenues for patient services 
        used to fund expenditures for qualifying research conducted by 
        an allowable research program.  The amount of the credit shall 
        not exceed the tax liability of the hospital or health care 
        provider under sections 295.50 to 295.57. 
           (b) For purposes of this subdivision, the following 
        requirements apply: 
           (1) expenditures must be for program costs of qualifying 
        research conducted by an allowable research program; 
           (2) an allowable research program must be a formal program 
        of medical and health care research conducted by an entity 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; 
           (3) qualifying research must:  
           (A) be approved in writing by the governing body of the 
        hospital or health care provider which is taking the deduction 
        under this subdivision; 
           (B) 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; 
           (C) be subject to review 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 
           (D) be subject to review and supervision by an 
        institutional review board operating in conformity with federal 
        regulations 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 credit 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. 
           (d) The taxpayer shall apply for the credit under this 
        section on the annual return under section 295.55, subdivision 5.
           (e) Beginning September 1, 2000, if the actual or estimated 
        amount paid under this section for the calendar year exceeds 
        $2,500,000, the commissioner of finance shall determine the rate 
        of the research credit for the following calendar year to the 
        nearest one-half percent so that refunds paid under this section 
        will most closely equal $2,500,000.  The commissioner of finance 
        shall publish in the State Register by October 1 of each year 
        the rate of the credit for the following calendar year.  A 
        determination under this section is not subject to the 
        rulemaking provisions of chapter 14. 
           Sec. 18.  Minnesota Statutes 1996, section 295.54, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [TAXES PAID TO ANOTHER STATE.] A hospital, 
        surgical center, pharmacy, or health care provider that has paid 
        taxes to another state or province or territory of 
        Canada jurisdiction measured by gross revenues and is subject to 
        tax under sections 295.52 to 295.59 on the same gross revenues 
        is entitled to a credit for the tax legally due and paid to 
        another state or province or territory of Canada jurisdiction to 
        the extent of the lesser of (1) the tax actually paid to the 
        other state or province or territory of Canada jurisdiction, or 
        (2) the amount of tax imposed by Minnesota on the gross revenues 
        subject to tax in the other taxing jurisdictions. 
           Sec. 19.  Minnesota Statutes 1996, section 295.54, 
        subdivision 2, is amended to read: 
           Subd. 2.  [PHARMACY CREDIT REFUND.] A pharmacy may claim a 
        quarterly credit an annual refund against the total amount of 
        tax, if any, the pharmacy owes during that quarter calendar year 
        under section 295.52, subdivision 1b, as provided in this 
        subdivision 2.  The credit refund shall equal two percent of 
        the amount paid by the pharmacy to a wholesale drug distributor 
        subject to tax under section 295.52, subdivision 3, for legend 
        drugs delivered by the pharmacy outside of Minnesota, multiplied 
        by the tax percentage specified in section 295.52.  If the 
        amount of the credit refund exceeds the tax liability of the 
        pharmacy under section 295.52, subdivision 1b, the commissioner 
        shall provide the pharmacy with a refund equal to the excess 
        amount.  Each qualifying pharmacy must apply for the refund on 
        the annual return as provided under section 295.55, subdivision 
        5.  The refund must be claimed within one year of the due date 
        of the return.  Interest on refunds paid under this subdivision 
        will begin to accrue 60 days after the date a claim for refund 
        is filed.  For purposes of this subdivision, the date a claim is 
        filed is the due date of the return or the date of the actual 
        claim for refund, whichever is later.  
           Sec. 20.  Minnesota Statutes 1996, section 295.55, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ESTIMATED TAX; HOSPITALS; SURGICAL CENTERS.] (a) 
        Each hospital or surgical center must make estimated payments of 
        the taxes for the calendar year in monthly installments to the 
        commissioner within ten 15 days after the end of the month. 
           (b) Estimated tax payments are not required of hospitals or 
        surgical centers if the tax for the calendar year is less than 
        $500 or if a hospital has been allowed a grant under section 
        144.1484, subdivision 2, for the year. 
           (c) Underpayment of estimated installments bear interest at 
        the rate specified in section 270.75, from the due date of the 
        payment until paid or until the due date of the annual return at 
        the rate specified in section 270.75.  An underpayment of an 
        estimated installment is the difference between the amount paid 
        and the lesser of (1) 90 percent of one-twelfth of the tax for 
        the calendar year or (2) the tax for the actual gross revenues 
        received during the month. 
           Sec. 21.  Minnesota Statutes 1996, 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 tax percentage specified in section 295.52 
        multiplied against the gross revenues received under the 
        third-party contract, and two percent of the tax percentage 
        specified in section 295.52 multiplied against 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).  
           (c) Any hospital, surgical center, or health care provider 
        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 file a complaint with the 
        commissioner responsible for regulating the third-party 
        purchaser if at any time the third-party purchaser fails to 
        comply with paragraph (a).  
           (d) 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 take enforcement action against a third-party purchaser 
        which is subject to the commissioner's regulatory jurisdiction 
        and which does not allow a hospital, surgical center, pharmacy, 
        or provider to pass-through the tax.  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 if the 
        commissioner finds that the third-party purchaser has not 
        complied with this section.  The third-party purchaser may 
        appeal the commissioner's order through a contested case hearing 
        in accordance with chapter 14. 
           Sec. 22.  [MCHA ASSESSMENT OFFSET.] 
           In approving the premium rates as required in Minnesota 
        Statutes, sections 62A.65, subdivision 3, and 62L.08, 
        subdivision 8, the commissioners of health and commerce shall 
        ensure that any appropriation to reduce the annual assessment 
        made on the contributing members to cover the costs of the 
        Minnesota comprehensive health insurance plan as required under 
        Minnesota Statutes, section 62E.11, is reflected in the premium 
        rate of each contributing member.  
           Sec. 23.  [REPEALER.] 
           (a) Minnesota Statutes 1996, sections 295.52, subdivision 
        1b; and 295.53, subdivision 5, are repealed. 
           (b) Laws 1997, chapters 31, article 4; and 84, article 4, 
        are repealed.  Notwithstanding Minnesota Statutes, section 
        645.34, the sections of statutes amended by the laws repealed 
        under this paragraph remain in effect as if not so amended. 
           Sec. 24.  [EFFECTIVE DATES.] 
           Section 2, subdivision 1, paragraph (f), is effective for 
        payments, revenues, and reimbursements received from the federal 
        government on or after December 31, 1996. 
           Sections 1 and 3 are effective July 1, 1997. 
           Sections 4, 5, 6, 9 to 13, 15, and 19 are effective for 
        gross revenues received after December 31, 1997. 
           Section 14, subdivision 1, paragraph (a), clause (6), and 
        paragraph (b) are effective the day following final enactment.  
        Section 14, paragraph (a), clause (17), is effective for gross 
        revenues received for hearing aids and related equipment or 
        prescription eyewear after December 31, 1997. 
           Section 18 is effective January 1, 1998.  Section 21, 
        paragraph (a), is effective January 1, 1998. 
           Section 20 is effective for estimated payments due after 
        July 1, 1997. 
           Sections 7, 8, and 21, paragraphs (c) and (d), are 
        effective the day following final enactment. 
           Section 16 is effective for research expenditures incurred 
        after December 31, 1995.  Section 17 is effective for research 
        expenditures incurred after December 31, 1999. 
           Section 23 is effective January 1, 1998. 
                                   ARTICLE 4 
                          SENIOR CITIZEN DRUG PROGRAM 
           Section 1.  Minnesota Statutes 1996, section 256.01, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SPECIFIC POWERS.] Subject to the provisions of 
        section 241.021, subdivision 2, the commissioner of human 
        services shall: 
           (1) Administer and supervise all forms of public assistance 
        provided for by state law and other welfare activities or 
        services as are vested in the commissioner.  Administration and 
        supervision of human services activities or services includes, 
        but is not limited to, assuring timely and accurate distribution 
        of benefits, completeness of service, and quality program 
        management.  In addition to administering and supervising human 
        services activities vested by law in the department, the 
        commissioner shall have the authority to: 
           (a) require county agency participation in training and 
        technical assistance programs to promote compliance with 
        statutes, rules, federal laws, regulations, and policies 
        governing human services; 
           (b) monitor, on an ongoing basis, the performance of county 
        agencies in the operation and administration of human services, 
        enforce compliance with statutes, rules, federal laws, 
        regulations, and policies governing welfare services and promote 
        excellence of administration and program operation; 
           (c) develop a quality control program or other monitoring 
        program to review county performance and accuracy of benefit 
        determinations; 
           (d) require county agencies to make an adjustment to the 
        public assistance benefits issued to any individual consistent 
        with federal law and regulation and state law and rule and to 
        issue or recover benefits as appropriate; 
           (e) delay or deny payment of all or part of the state and 
        federal share of benefits and administrative reimbursement 
        according to the procedures set forth in section 256.017; and 
           (f) make contracts with and grants to public and private 
        agencies and organizations, both profit and nonprofit, and 
        individuals, using appropriated funds. 
           (2) Inform county agencies, on a timely basis, of changes 
        in statute, rule, federal law, regulation, and policy necessary 
        to county agency administration of the programs. 
           (3) Administer and supervise all child welfare activities; 
        promote the enforcement of laws protecting handicapped, 
        dependent, neglected and delinquent children, and children born 
        to mothers who were not married to the children's fathers at the 
        times of the conception nor at the births of the children; 
        license and supervise child-caring and child-placing agencies 
        and institutions; supervise the care of children in boarding and 
        foster homes or in private institutions; and generally perform 
        all functions relating to the field of child welfare now vested 
        in the state board of control. 
           (4) Administer and supervise all noninstitutional service 
        to handicapped persons, including those who are visually 
        impaired, hearing impaired, or physically impaired or otherwise 
        handicapped.  The commissioner may provide and contract for the 
        care and treatment of qualified indigent children in facilities 
        other than those located and available at state hospitals when 
        it is not feasible to provide the service in state hospitals. 
           (5) Assist and actively cooperate with other departments, 
        agencies and institutions, local, state, and federal, by 
        performing services in conformity with the purposes of Laws 
        1939, chapter 431. 
           (6) Act as the agent of and cooperate with the federal 
        government in matters of mutual concern relative to and in 
        conformity with the provisions of Laws 1939, chapter 431, 
        including the administration of any federal funds granted to the 
        state to aid in the performance of any functions of the 
        commissioner as specified in Laws 1939, chapter 431, and 
        including the promulgation of rules making uniformly available 
        medical care benefits to all recipients of public assistance, at 
        such times as the federal government increases its participation 
        in assistance expenditures for medical care to recipients of 
        public assistance, the cost thereof to be borne in the same 
        proportion as are grants of aid to said recipients. 
           (7) Establish and maintain any administrative units 
        reasonably necessary for the performance of administrative 
        functions common to all divisions of the department. 
           (8) Act as designated guardian of both the estate and the 
        person of all the wards of the state of Minnesota, whether by 
        operation of law or by an order of court, without any further 
        act or proceeding whatever, except as to persons committed as 
        mentally retarded.  
           (9) Act as coordinating referral and informational center 
        on requests for service for newly arrived immigrants coming to 
        Minnesota. 
           (10) The specific enumeration of powers and duties as 
        hereinabove set forth shall in no way be construed to be a 
        limitation upon the general transfer of powers herein contained. 
           (11) Establish county, regional, or statewide schedules of 
        maximum fees and charges which may be paid by county agencies 
        for medical, dental, surgical, hospital, nursing and nursing 
        home care and medicine and medical supplies under all programs 
        of medical care provided by the state and for congregate living 
        care under the income maintenance programs. 
           (12) Have the authority to conduct and administer 
        experimental projects to test methods and procedures of 
        administering assistance and services to recipients or potential 
        recipients of public welfare.  To carry out such experimental 
        projects, it is further provided that the commissioner of human 
        services is authorized to waive the enforcement of existing 
        specific statutory program requirements, rules, and standards in 
        one or more counties.  The order establishing the waiver shall 
        provide alternative methods and procedures of administration, 
        shall not be in conflict with the basic purposes, coverage, or 
        benefits provided by law, and in no event shall the duration of 
        a project exceed four years.  It is further provided that no 
        order establishing an experimental project as authorized by the 
        provisions of this section shall become effective until the 
        following conditions have been met: 
           (a) The proposed comprehensive plan, including estimated 
        project costs and the proposed order establishing the waiver, 
        shall be filed with the secretary of the senate and chief clerk 
        of the house of representatives at least 60 days prior to its 
        effective date. 
           (b) The secretary of health, education, and welfare of the 
        United States has agreed, for the same project, to waive state 
        plan requirements relative to statewide uniformity. 
           (c) A comprehensive plan, including estimated project 
        costs, shall be approved by the legislative advisory commission 
        and filed with the commissioner of administration.  
           (13) In accordance with federal requirements, establish 
        procedures to be followed by local welfare boards in creating 
        citizen advisory committees, including procedures for selection 
        of committee members. 
           (14) Allocate federal fiscal disallowances or sanctions 
        which are based on quality control error rates for the aid to 
        families with dependent children, medical assistance, or food 
        stamp program in the following manner:  
           (a) One-half of the total amount of the disallowance shall 
        be borne by the county boards responsible for administering the 
        programs.  For the medical assistance and AFDC programs, 
        disallowances shall be shared by each county board in the same 
        proportion as that county's expenditures for the sanctioned 
        program are to the total of all counties' expenditures for the 
        AFDC and medical assistance programs.  For the food stamp 
        program, sanctions shall be shared by each county board, with 50 
        percent of the sanction being distributed to each county in the 
        same proportion as that county's administrative costs for food 
        stamps are to the total of all food stamp administrative costs 
        for all counties, and 50 percent of the sanctions being 
        distributed to each county in the same proportion as that 
        county's value of food stamp benefits issued are to the total of 
        all benefits issued for all counties.  Each county shall pay its 
        share of the disallowance to the state of Minnesota.  When a 
        county fails to pay the amount due hereunder, the commissioner 
        may deduct the amount from reimbursement otherwise due the 
        county, or the attorney general, upon the request of the 
        commissioner, may institute civil action to recover the amount 
        due. 
           (b) Notwithstanding the provisions of paragraph (a), if the 
        disallowance results from knowing noncompliance by one or more 
        counties with a specific program instruction, and that knowing 
        noncompliance is a matter of official county board record, the 
        commissioner may require payment or recover from the county or 
        counties, in the manner prescribed in paragraph (a), an amount 
        equal to the portion of the total disallowance which resulted 
        from the noncompliance, and may distribute the balance of the 
        disallowance according to paragraph (a).  
           (15) Develop and implement special projects that maximize 
        reimbursements and result in the recovery of money to the 
        state.  For the purpose of recovering state money, the 
        commissioner may enter into contracts with third parties.  Any 
        recoveries that result from projects or contracts entered into 
        under this paragraph shall be deposited in the state treasury 
        and credited to a special account until the balance in the 
        account reaches $1,000,000.  When the balance in the account 
        exceeds $1,000,000, the excess shall be transferred and credited 
        to the general fund.  All money in the account is appropriated 
        to the commissioner for the purposes of this paragraph. 
           (16) Have the authority to make direct payments to 
        facilities providing shelter to women and their children 
        pursuant to section 256D.05, subdivision 3.  Upon the written 
        request of a shelter facility that has been denied payments 
        under section 256D.05, subdivision 3, the commissioner shall 
        review all relevant evidence and make a determination within 30 
        days of the request for review regarding issuance of direct 
        payments to the shelter facility.  Failure to act within 30 days 
        shall be considered a determination not to issue direct payments.
           (17) Have the authority to establish and enforce the 
        following county reporting requirements:  
           (a) The commissioner shall establish fiscal and statistical 
        reporting requirements necessary to account for the expenditure 
        of funds allocated to counties for human services programs.  
        When establishing financial and statistical reporting 
        requirements, the commissioner shall evaluate all reports, in 
        consultation with the counties, to determine if the reports can 
        be simplified or the number of reports can be reduced. 
           (b) The county board shall submit monthly or quarterly 
        reports to the department as required by the commissioner.  
        Monthly reports are due no later than 15 working days after the 
        end of the month.  Quarterly reports are due no later than 30 
        calendar days after the end of the quarter, unless the 
        commissioner determines that the deadline must be shortened to 
        20 calendar days to avoid jeopardizing compliance with federal 
        deadlines or risking a loss of federal funding.  Only reports 
        that are complete, legible, and in the required format shall be 
        accepted by the commissioner.  
           (c) If the required reports are not received by the 
        deadlines established in clause (b), the commissioner may delay 
        payments and withhold funds from the county board until the next 
        reporting period.  When the report is needed to account for the 
        use of federal funds and the late report results in a reduction 
        in federal funding, the commissioner shall withhold from the 
        county boards with late reports an amount equal to the reduction 
        in federal funding until full federal funding is received.  
           (d) A county board that submits reports that are late, 
        illegible, incomplete, or not in the required format for two out 
        of three consecutive reporting periods is considered 
        noncompliant.  When a county board is found to be noncompliant, 
        the commissioner shall notify the county board of the reason the 
        county board is considered noncompliant and request that the 
        county board develop a corrective action plan stating how the 
        county board plans to correct the problem.  The corrective 
        action plan must be submitted to the commissioner within 45 days 
        after the date the county board received notice of noncompliance.
           (e) The final deadline for fiscal reports or amendments to 
        fiscal reports is one year after the date the report was 
        originally due.  If the commissioner does not receive a report 
        by the final deadline, the county board forfeits the funding 
        associated with the report for that reporting period and the 
        county board must repay any funds associated with the report 
        received for that reporting period. 
           (f) The commissioner may not delay payments, withhold 
        funds, or require repayment under paragraph (c) or (e) if the 
        county demonstrates that the commissioner failed to provide 
        appropriate forms, guidelines, and technical assistance to 
        enable the county to comply with the requirements.  If the 
        county board disagrees with an action taken by the commissioner 
        under paragraph (c) or (e), the county board may appeal the 
        action according to sections 14.57 to 14.69. 
           (g) Counties subject to withholding of funds under 
        paragraph (c) or forfeiture or repayment of funds under 
        paragraph (e) shall not reduce or withhold benefits or services 
        to clients to cover costs incurred due to actions taken by the 
        commissioner under paragraph (c) or (e). 
           (18) Allocate federal fiscal disallowances or sanctions for 
        audit exceptions when federal fiscal disallowances or sanctions 
        are based on a statewide random sample for the foster care 
        program under title IV-E of the Social Security Act, United 
        States Code, title 42, in direct proportion to each county's 
        title IV-E foster care maintenance claim for that period. 
           (19) Have the authority to administer a drug rebate program 
        for drugs purchased pursuant to the senior citizen drug program 
        established under section 256.955 after the beneficiary's 
        satisfaction of any deductible established in the program.  The 
        commissioner shall require a rebate agreement from all 
        manufacturers of covered drugs as defined in section 256B.0625, 
        subdivision 13.  For each drug, the amount of the rebate shall 
        be equal to the basic rebate as defined for purposes of the 
        federal rebate program in United States Code, title 42, section 
        1396r-8(c)(1).  This basic rebate shall be applied to 
        single-source and multiple-source drugs.  The manufacturers must 
        provide full payment within 30 days of receipt of the state 
        invoice for the rebate within the terms and conditions used for 
        the federal rebate program established pursuant to section 1927 
        of title XIX of the Social Security Act.  The manufacturers must 
        provide the commissioner with any information necessary to 
        verify the rebate determined per drug.  The rebate program shall 
        utilize the terms and conditions used for the federal rebate 
        program established pursuant to section 1927 of title XIX of the 
        Social Security Act. 
           Sec. 2.  [256.955] [SENIOR CITIZEN DRUG PROGRAM.] 
           Subdivision 1.  [ESTABLISHMENT.] The commissioner of human 
        services shall establish and administer a senior citizen drug 
        program.  Qualified senior citizens shall be eligible for 
        prescription drug coverage under the program beginning no later 
        than January 1, 1999. 
           Subd. 2.  [DEFINITIONS.] (a) For purposes of this section, 
        the following definitions apply. 
           (b) "Health plan" has the meaning provided in section 
        62Q.01, subdivision 3. 
           (c) "Health plan company" has the meaning provided in 
        section 62Q.01, subdivision 4. 
           (d) "Qualified senior citizen" means an individual age 65 
        or older who: 
           (1) is eligible as a qualified Medicare beneficiary 
        according to section 256B.057, subdivision 3 or 3a, or is 
        eligible under section 256B.057, subdivision 3 or 3a, and is 
        also eligible for medical assistance or general assistance 
        medical care with a spenddown as defined in section 256B.056, 
        subdivision 5.  Persons who are determined eligible for medical 
        assistance according to section 256B.0575, who are eligible for 
        medical assistance or general assistance medical care without a 
        spenddown, or who are enrolled in MinnesotaCare, are not 
        eligible for this program; 
           (2) is not enrolled in prescription drug coverage under a 
        health plan; 
           (3) is not enrolled in prescription drug coverage 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 
        1876 of the federal Social Security Act, United States Code, 
        title 42, section 1395, et seq., as amended; 
           (4) has not had coverage described in clauses (2) and (3) 
        for at least four months prior to application for the program; 
        and 
           (5) is a permanent resident of Minnesota as defined in 
        section 256.9359. 
           Subd. 3.  [PRESCRIPTION DRUG COVERAGE.] Coverage under the 
        program is limited to prescription drugs covered under the 
        medical assistance program as described in section 256B.0625, 
        subdivision 13, subject to a maximum deductible of $300 
        annually, except drugs cleared by the FDA shall be available to 
        qualified senior citizens enrolled in the program without 
        restriction when prescribed for medically accepted indication as 
        defined in the federal rebate program under section 1927 of 
        title XIX of the federal Social Security Act. 
           Subd. 4.  [APPLICATION PROCEDURES AND COORDINATION WITH 
        MEDICAL ASSISTANCE.] Applications and information on the program 
        must be made available at county social service agencies, health 
        care provider offices, and agencies and organizations serving 
        senior citizens.  Senior citizens shall submit applications and 
        any information specified by the commissioner as being necessary 
        to verify eligibility directly to the county social service 
        agencies:  
           (1) beginning January 1, 1999, the county social service 
        agency shall determine medical assistance spenddown eligibility 
        of individuals who qualify for the senior citizen drug program 
        of individuals; and 
           (2) program payments will be used to reduce the spenddown 
        obligations of individuals who are determined to be eligible for 
        medical assistance with a spenddown as defined in section 
        256B.056, subdivision 5. 
        Seniors who are eligible for medical assistance with a spenddown 
        shall be financially responsible for the deductible amount up to 
        the satisfaction of the spenddown.  No deductible applies once 
        the spenddown has been met.  Payments to providers for 
        prescription drugs for persons eligible under this subdivision 
        shall be reduced by the deductible.  
           County social service agencies shall determine an 
        applicant's eligibility for the program within 30 days from the 
        date the application is received. 
           Subd. 5.  [DRUG UTILIZATION REVIEW PROGRAM.] The 
        commissioner shall utilize the drug utilization review program 
        as described in section 256B.0625, subdivision 13a.  
           Subd. 6.  [PHARMACY REIMBURSEMENT.] The commissioner shall 
        reimburse participating pharmacies for drug and dispensing costs 
        at the medical assistance reimbursement level, minus the 
        deductible required under subdivision 7. 
           Subd. 7.  [COST SHARING.] (a) Enrollees shall pay an annual 
        premium of $120.  
           (b) Program enrollees must satisfy a $300 annual 
        deductible, based upon expenditures for prescription drugs, to 
        be paid as follows: 
           (1) $25 monthly deductible for persons with a monthly 
        spenddown; or 
           (2) $150 biannual deductible for persons with a six-month 
        spenddown.  
        The commissioner may adjust the annual deductible amount to stay 
        within the program's appropriation. 
           Subd. 8.  [REPORT.] The commissioner shall annually report 
        to the legislature on the senior citizen drug program.  The 
        report must include demographic information on enrollees, 
        per-prescription expenditures, total program expenditures, 
        hospital and nursing home costs avoided by enrollees, any 
        savings to medical assistance and Medicare resulting from the 
        provision of prescription drug coverage under Medicare by health 
        maintenance organizations, other public and private options for 
        drug assistance to the senior population, any hardships caused 
        by the annual premium and deductible, and any recommendations 
        for changes in the senior drug program. 
           Subd. 9.  [PROGRAM LIMITATION.] This section shall be 
        repealed upon federal approval of the waiver to allow the 
        commissioner to provide prescription drug coverage for qualified 
        Medicare beneficiaries whose income is less than 150 percent of 
        the federal poverty guidelines. 
           Sec. 3.  Minnesota Statutes 1996, section 256B.0625, 
        subdivision 13, is amended to read: 
           Subd. 13.  [DRUGS.] (a) Medical assistance covers drugs, 
        except for fertility drugs when specifically used to enhance 
        fertility, if prescribed by a licensed practitioner and 
        dispensed by a licensed pharmacist, by a physician enrolled in 
        the medical assistance program as a dispensing physician, or by 
        a physician or a nurse practitioner employed by or under 
        contract with a community health board as defined in section 
        145A.02, subdivision 5, for the purposes of communicable disease 
        control.  The commissioner, after receiving recommendations from 
        professional medical associations and professional pharmacist 
        associations, shall designate a formulary committee to advise 
        the commissioner on the names of drugs for which payment is 
        made, recommend a system for reimbursing providers on a set fee 
        or charge basis rather than the present system, and develop 
        methods encouraging use of generic drugs when they are less 
        expensive and equally effective as trademark drugs.  The 
        formulary committee shall consist of nine members, four of whom 
        shall be physicians who are not employed by the department of 
        human services, and a majority of whose practice is for persons 
        paying privately or through health insurance, three of whom 
        shall be pharmacists who are not employed by the department of 
        human services, and a majority of whose practice is for persons 
        paying privately or through health insurance, a consumer 
        representative, and a nursing home representative.  Committee 
        members shall serve three-year terms and shall serve without 
        compensation.  Members may be reappointed once.  
           (b) The commissioner shall establish a drug formulary.  Its 
        establishment and publication shall not be subject to the 
        requirements of the administrative procedure act, but the 
        formulary committee shall review and comment on the formulary 
        contents.  The formulary committee shall review and recommend 
        drugs which require prior authorization.  The formulary 
        committee may recommend drugs for prior authorization directly 
        to the commissioner, as long as opportunity for public input is 
        provided.  Prior authorization may be requested by the 
        commissioner based on medical and clinical criteria before 
        certain drugs are eligible for payment.  Before a drug may be 
        considered for prior authorization at the request of the 
        commissioner:  
           (1) the drug formulary committee must develop criteria to 
        be used for identifying drugs; the development of these criteria 
        is not subject to the requirements of chapter 14, but the 
        formulary committee shall provide opportunity for public input 
        in developing criteria; 
           (2) the drug formulary committee must hold a public forum 
        and receive public comment for an additional 15 days; and 
           (3) the commissioner must provide information to the 
        formulary committee on the impact that placing the drug on prior 
        authorization will have on the quality of patient care and 
        information regarding whether the drug is subject to clinical 
        abuse or misuse.  Prior authorization may be required by the 
        commissioner before certain formulary drugs are eligible for 
        payment.  The formulary shall not include:  
           (i) drugs or products for which there is no federal 
        funding; 
           (ii) over-the-counter drugs, except for antacids, 
        acetaminophen, family planning products, aspirin, insulin, 
        products for the treatment of lice, vitamins for adults with 
        documented vitamin deficiencies, and vitamins for children under 
        the age of seven and pregnant or nursing women; 
           (iii) any other over-the-counter drug identified by the 
        commissioner, in consultation with the drug formulary committee, 
        as necessary, appropriate, and cost-effective for the treatment 
        of certain specified chronic diseases, conditions or disorders, 
        and this determination shall not be subject to the requirements 
        of chapter 14; 
           (iv) anorectics; and 
           (v) drugs for which medical value has not been established; 
        and 
           (vi) drugs from manufacturers who have not signed a rebate 
        agreement with the Department of Health and Human Services 
        pursuant to section 1927 of title XIX of the Social Security Act 
        and who have not signed an agreement with the state for drugs 
        purchased pursuant to the senior citizen drug program 
        established under section 256.955. 
           The commissioner shall publish conditions for prohibiting 
        payment for specific drugs after considering the formulary 
        committee's recommendations.  
           (c) The basis for determining the amount of payment shall 
        be the lower of the actual acquisition costs of the drugs plus a 
        fixed dispensing fee; the maximum allowable cost set by the 
        federal government or by the commissioner plus the fixed 
        dispensing fee; or the usual and customary price charged to the 
        public.  The pharmacy dispensing fee shall be $3.85.  Actual 
        acquisition cost includes quantity and other special discounts 
        except time and cash discounts.  The actual acquisition cost of 
        a drug shall be estimated by the commissioner, at average 
        wholesale price minus nine percent.  The maximum allowable cost 
        of a multisource drug may be set by the commissioner and it 
        shall be comparable to, but no higher than, the maximum amount 
        paid by other third-party payors in this state who have maximum 
        allowable cost programs.  Establishment of the amount of payment 
        for drugs shall not be subject to the requirements of the 
        administrative procedure act.  An additional dispensing fee of 
        $.30 may be added to the dispensing fee paid to pharmacists for 
        legend drug prescriptions dispensed to residents of long-term 
        care facilities when a unit dose blister card system, approved 
        by the department, is used.  Under this type of dispensing 
        system, the pharmacist must dispense a 30-day supply of drug.  
        The National Drug Code (NDC) from the drug container used to 
        fill the blister card must be identified on the claim to the 
        department.  The unit dose blister card containing the drug must 
        meet the packaging standards set forth in Minnesota Rules, part 
        6800.2700, that govern the return of unused drugs to the 
        pharmacy for reuse.  The pharmacy provider will be required to 
        credit the department for the actual acquisition cost of all 
        unused drugs that are eligible for reuse.  Over-the-counter 
        medications must be dispensed in the manufacturer's unopened 
        package.  The commissioner may permit the drug clozapine to be 
        dispensed in a quantity that is less than a 30-day supply.  
        Whenever a generically equivalent product is available, payment 
        shall be on the basis of the actual acquisition cost of the 
        generic drug, unless the prescriber specifically indicates 
        "dispense as written - brand necessary" on the prescription as 
        required by section 151.21, subdivision 2. 
           Sec. 4.  [SENIOR DRUG PROGRAM.] 
           The commissioner shall administer the senior drug program 
        so that the costs to the state total no more than $4,000,000 
        plus the amount of the rebate.  The commissioner is authorized 
        to discontinue enrollment in order to meet this level of funding.
           The commissioner shall report to the legislature the 
        estimated costs of the senior drug program without funding 
        caps.  The report shall be included as part of the November and 
        February forecasts. 
           The commissioner of finance shall annually reimburse the 
        general fund with health care access funds for the estimated 
        increased costs in the QMB/SLMB program directly associated with 
        the senior drug program.  This reimbursement shall sunset June 
        30, 2001. 
           Sec. 5.  [STUDY ON DUAL PRESCRIPTION DRUG COVERAGE.] 
           The commissioner of human services shall study the 
        implications to the senior citizen drug program if a health plan 
        company offers within the state a product that provides a 
        prescription drug benefit as part of the standard coverage for 
        Medicare enrollees and shall make recommendations on how to 
        address this issue to the legislature by January 15, 1998. 
                                   ARTICLE 5 
                       COMMUNITY PURCHASING ARRANGEMENTS 
           Section 1.  [62T.01] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] For purposes of this chapter, the 
        terms in this section have the meanings given. 
           Subd. 2.  [HEALTH CARE PURCHASING ALLIANCE.] "Health care 
        purchasing alliance" means a business organization created under 
        this chapter to negotiate the purchase of health care services 
        for employers.  Nothing in this chapter shall be deemed to 
        regulate or impose any requirements on a self-insured employer 
        or labor union.  A health care purchasing alliance may include a 
        grouping of: 
           (1) businesses, including small businesses with one 
        employee.  The businesses may or may not be organized under 
        section 62Q.17, as a purchasing pool; 
           (2) trade association members or church organizations under 
        section 60A.02, or union members who are not in a self-insured 
        benefit plan; 
           (3) multiple employer welfare associations under chapter 
        62H; 
           (4) municipalities, townships, or counties; 
           (5) other government entities; or 
           (6) any combination of clauses (1) to (5). 
           The alliance may determine the definition of a business of 
        one employee, but must adhere to its definition and show no bias 
        in selection of members, based on that definition. 
           Subd. 3.  [ACCOUNTABLE PROVIDER NETWORK.] "Accountable 
        provider network" means a group of health care providers 
        organized to market health care services on a risk-sharing or 
        nonrisk-sharing basis with a health care purchasing alliance.  
        Accountable provider networks shall operate as not-for-profit 
        entities or as health care cooperatives, as allowed under 
        chapter 62R.  This chapter applies only when an accountable 
        provider network is marketing and selling services and benefits 
        to the employees of businesses as authorized in section 62T.05. 
           Subd. 4.  [COMMISSIONER.] "Commissioner" means the 
        commissioner of health. 
           Sec. 2.  [62T.02] [PURCHASING ALLIANCES.] 
           Subdivision 1.  [REGISTRATION.] Purchasing alliances must 
        register prior to offering coverage, and annually on July 1 
        thereafter, with the commissioner on a form prescribed by the 
        commissioner.  
           Subd. 2.  [COMMON FACTORS.] All participants in a 
        purchasing alliance must live within a common geographic region, 
        be employed in a similar occupation, or share some other common 
        factor as approved by the commissioner.  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. 3.  [62T.03] [APPLICATION OF OTHER LAWS.] 
           An accountable provider network is subject to all 
        requirements applicable to a health plan company licensed in the 
        state, except as otherwise noted in this chapter.  An 
        accountable provider network and a health care purchasing 
        alliance must comply with all requirements of chapter 62L.  A 
        contracting arrangement between a health care purchasing 
        alliance and an accountable provider network for provision of 
        health care benefits must provide consumer protection functions 
        comparable to those currently required of a health plan company 
        licensed under section 62N.25, and other statutes referenced in 
        that section, except for modifications and waivers permitted 
        under this chapter. 
           Sec. 4.  [62T.04] [COMPLAINT SYSTEM.] 
           Accountable provider networks must establish and maintain 
        an enrollee complaint system as required under section 62Q.105.  
        The accountable provider network may contract with the health 
        care purchasing alliance or a vendor for operation of this 
        system. 
           Sec. 5.  [62T.05] [BENEFITS.] 
           An accountable provider network may offer and sell any 
        benefits permitted to be offered and sold by health plan 
        companies under Minnesota law. 
           Sec. 6.  [62T.06] [WAIVERS.] 
           Subdivision 1.  [AUTHORIZATION.] The commissioner may grant 
        waivers from the requirements of law for the contracting 
        arrangement between a health care purchasing alliance and an 
        accountable provider network in the areas listed in subdivisions 
        2 to 4.  The commissioner may not waive the following state 
        consumer protection and quality assurance laws:  
           (1) laws requiring that enrollees be informed of any 
        restrictions, requirements, or limitations on coverage, 
        services, or access to specialists and other providers; 
           (2) laws allowing consumers to complain to or appeal to a 
        state regulatory agency if denied benefits or services; 
           (3) laws prohibiting gag clauses and other restrictions on 
        communication between a patient and their physician or provider; 
           (4) laws allowing consumers to obtain information on 
        provider financial incentives, which may affect treatment; 
           (5) laws requiring the submission of information needed to 
        monitor quality of care and enrollee rights; 
           (6) laws protecting enrollee privacy and confidentiality of 
        records; 
           (7) minimum standards for adequate provider network 
        capacity and geographic access to services; 
           (8) laws assuring continuity of care when a patient must 
        change providers; 
           (9) laws governing coverage of emergency services; 
           (10) laws prohibiting excessive or unreasonable 
        administrative fees or expenses; and 
           (11) other laws or rules that are directly related to 
        quality of care, consumer protection, and due process rights. 
           Subd. 2.  [SOLVENCY PROTECTION.] (a) The commissioner may 
        waive the requirements of sections 62N.27 to 62N.32, and may 
        substitute capital and surplus requirements that are reduced 
        from the levels required of other risk-bearing entities in order 
        to reflect its reduced risk exposure.  If risk is being 
        underwritten, the underwriter cannot have more than 25 percent 
        of the representation on the governing board of the accountable 
        provider network.  The reduced requirements must include at 
        least the following levels of capital and surplus:  (i) a 
        deposit of $500,000 plus (ii) the greater of an estimated 15 
        percent of gross premium revenues or twice the net retained 
        annual risk up to $750,000 on a single enrollee.  Net retained 
        annual risk may be, for example, the lowest annual deductible 
        under a provider stop-loss insurance policy that covers all 
        costs above the deductible.  Assets supporting the deposit must 
        meet the standards for deposits referenced in section 62N.32.  
        Assets supporting the capital must meet the investment 
        guidelines referenced in section 62N.27. 
           (b) An accountable provider network may propose a method of 
        reporting income, expenses, claims payments, and other financial 
        information in a manner which adequately demonstrates ongoing 
        compliance with the standards for capital, surplus, and claims 
        reserves agreed to under this waiver. 
           (c) An accountable provider network may demonstrate ability 
        to continue to deliver the contracted health care services to 
        the purchasing alliance through arrangements which ensure that, 
        subject to 60 days' notice of intent to discontinue the 
        contracting arrangement, provider participants will continue to 
        meet their obligation to provide health care services to 
        enrollees for a period of 60 days. 
           Subd. 3.  [MARKETING AND DISCLOSURE.] The accountable 
        provider network, in conjunction with the health care purchasing 
        alliance, may propose alternative methods to present marketing 
        and disclosure information which assure the accountability to 
        consumers who are offered and who receive their services. 
           Subd. 4.  [QUALITY ASSURANCE.] The accountable provider 
        network may propose an alternative quality assurance program 
        which incorporates effective methods for reviewing and 
        evaluating data related to quality of care and ways to identify 
        and correct quality problems. 
           Sec. 7.  [62T.07] [CRITERIA FOR GRANTING WAIVERS.] 
           The commissioner may approve a request for waiver under 
        section 62T.06 if the applicant demonstrates that the 
        contracting arrangement between a health care purchasing 
        alliance and an accountable provider network will meet the 
        following criteria: 
           (a) The arrangement would be likely to result in: 
           (1) more choice in benefits and prices; 
           (2) lower costs; 
           (3) increased access to health care coverage by small 
        businesses; 
           (4) increased access to providers who have demonstrated a 
        long-term commitment to the community being serviced; or 
           (5) increased quality of health care than would otherwise 
        occur under the existing market conditions.  In the event that a 
        proposed arrangement appears likely to improve one or two of the 
        criteria at the expense of another one or two of the criteria, 
        the commissioner shall not approve the waiver. 
           (b) The proposed alternative methods would provide equal or 
        improved results in consumer protection than would result under 
        the existing consumer protections requirements. 
           Sec. 8.  [62T.08] [SUPERVISION AND REVOCATION OF WAIVERS.] 
           (a) The commissioner shall appropriately supervise and 
        monitor approved waivers. 
           (b) The commissioner may revoke approval of a waiver if the 
        contracting arrangement no longer satisfies the criteria in 
        section 62T.07, paragraphs (a) and (b). 
           Sec. 9.  [62T.09] [MINNESOTA COMPREHENSIVE HEALTH 
        ASSOCIATION.] 
           A health care purchasing alliance must pay the assessment 
        required of contributing members pursuant to section 62E.11. 
           Sec. 10.  [62T.10] [MINNESOTACARE TAX.] 
           An accountable provider network is subject to the premium 
        tax established in section 60A.15 and must pay installments as 
        described in section 60A.15, subdivision 1, paragraph (d). 
           Sec. 11.  [62T.11] [DUTIES OF COMMISSIONER.] 
           (a) By July 1, 1997, the commissioner shall make available 
        application forms for licensure as an accountable provider 
        network.  The accountable provider network may begin doing 
        business after application has been approved. 
           (b) Upon receipt of an application for a certificate of 
        authority, the commissioner shall grant or deny licensure and 
        waivers requested within 90 days of receipt of a complete 
        application if all requirements are substantially met.  For a 
        period of one year after the effective date of this chapter, the 
        commissioner may approve up to five applications, none of which 
        may be from health plan companies.  If no written response has 
        been received within 90 days, the application is approved.  When 
        the commissioner denies an application or waiver request, the 
        commissioner shall notify the applicant in writing specifically 
        stating the grounds for the denial and specific suggestions for 
        how to remedy the denial.  The commissioner will entertain 
        reconsiderations.  Within 90 days after the denial, the 
        applicant may file a written request for an administrative 
        hearing and review of the commissioner's determination.  The 
        hearing is subject to judicial review as provided by chapter 14. 
           (c) All monitoring, enforcement, and rulemaking powers 
        available under chapter 62N are granted to the commissioner to 
        assure continued compliance with provisions of this chapter. 
           (d) The commissioner may contract with other entities as 
        necessary to carry out the responsibilities in this chapter. 
           Sec. 12.  [62T.12] [FEES.] 
           Every accountable provider network subject to this chapter 
        shall pay to the commissioner fees as prescribed by the 
        commissioner pursuant to section 144.122.  The initial fees are: 
           (1) filing an application for licensure, $500; 
           (2) filing an amendment to a license, $90; 
           (3) filing an annual report, $200; 
           (4) filing of renewal of licensure based on a fee of $1,000 
        per 1,000 enrollees, with renewal every three years; and 
           (5) other filing fees as specified by rule. 
           Sec. 13.  [62T.13] [ENROLLMENT.] 
           An accountable provider network created under this chapter 
        is limited to a maximum enrollment of 30,000 persons. 
                                   ARTICLE 6 
                   MINNESOTA COMPREHENSIVE HEALTH ASSOCIATION 
           Section 1.  Minnesota Statutes 1996, section 62E.02, 
        subdivision 13, is amended to read: 
           Subd. 13.  [ELIGIBLE PERSON.] (a) "Eligible person" means 
        an individual who: 
           (1) is currently and has been a resident of Minnesota for 
        the six months immediately preceding the date of receipt by the 
        association or its writing carrier of a completed certificate of 
        eligibility and who; 
           (2) meets the enrollment requirements of section 62E.14; 
        and 
           (3) is not otherwise ineligible under this subdivision. 
           (b) No individual is eligible for coverage under a 
        qualified or a Medicare supplement plan issued by the 
        association for whom a premium is paid or reimbursed by the 
        medical assistance program or general assistance medical care 
        program as of the first day of any term for which a premium 
        amount is paid or reimbursed. 
           Sec. 2.  Minnesota Statutes 1996, section 62E.02, 
        subdivision 18, is amended to read: 
           Subd. 18.  [WRITING CARRIER.] "Writing carrier" means the 
        insurer or insurers, health maintenance organization or 
        organizations, integrated service network or networks, and 
        community integrated service network or networks, or other 
        entity selected by the association and approved by the 
        commissioner to administer the comprehensive health insurance 
        plan. 
           Sec. 3.  Minnesota Statutes 1996, section 62E.13, 
        subdivision 2, is amended to read: 
           Subd. 2.  The association may select policies and 
        contracts, or parts thereof, submitted by a member or members of 
        the association, or by the association or others, to develop 
        specifications for bids from any members entity which wish 
        wishes to be selected as a writing carrier to administer the 
        state plan.  The selection of the writing carrier shall be based 
        upon criteria including established by the board of directors of 
        the association and approved by the commissioner.  The criteria 
        shall outline specific qualifications that an entity must 
        satisfy in order to be selected and, at a minimum, shall include 
        the member's entity's proven ability to handle large group 
        accident and health insurance cases, efficient claim paying 
        capacity, and the estimate of total charges for administering 
        the plan.  The association may select separate writing carriers 
        for the two types of qualified plans, the qualified medicare 
        supplement plan, and the health maintenance organization 
        contract. 
           Sec. 4.  Minnesota Statutes 1996, section 256B.056, 
        subdivision 8, is amended to read: 
           Subd. 8.  [COOPERATION.] To be eligible for medical 
        assistance, applicants and recipients must cooperate with the 
        state and local agency to identify potentially liable 
        third-party payers and assist the state in obtaining third party 
        payments, unless good cause for noncooperation is determined 
        according to Code of Federal Regulations, title 42, part 
        433.147.  "Cooperation" includes identifying any third party who 
        may be liable for care and services provided under this chapter 
        to the applicant, recipient, or any other family member for whom 
        application is made and providing relevant information to assist 
        the state in pursuing a potentially liable third party.  
        Cooperation also includes providing information about a group 
        health plan for which the person may be eligible and if the plan 
        is determined cost-effective by the state agency and premiums 
        are paid by the local agency or there is no cost to the 
        recipient, they must enroll or remain enrolled with the group.  
        For purposes of this subdivision, coverage provided by the 
        Minnesota comprehensive health association under chapter 62E 
        shall not be considered group health plan coverage or 
        cost-effective by the state and local agency.  Cost-effective 
        insurance premiums approved for payment by the state agency and 
        paid by the local agency are eligible for reimbursement 
        according to section 256B.19. 
           Sec. 5.  Minnesota Statutes 1996, section 256B.0625, 
        subdivision 15, is amended to read: 
           Subd. 15.  [HEALTH PLAN PREMIUMS AND COPAYMENTS.] (a) 
        Medical assistance covers health care prepayment plan premiums, 
        insurance premiums, and copayments if determined to be 
        cost-effective by the commissioner.  For purposes of obtaining 
        Medicare part A and part B, and copayments, expenditures may be 
        made even if federal funding is not available. 
           (b) Effective for all premiums due on or after June 30, 
        1997, medical assistance does not cover premiums that a 
        recipient is required to pay under a qualified or Medicare 
        supplement plan issued by the Minnesota comprehensive health 
        association.  Medical assistance shall continue to cover 
        premiums for recipients who are covered under a plan issued by 
        the Minnesota comprehensive health association on June 30, 1997, 
        for a period of six months following receipt of the notice of 
        termination or until December 31, 1997, whichever is later. 
           Sec. 6.  Minnesota Statutes 1996, section 256D.03, 
        subdivision 3b, is amended to read: 
           Subd. 3b.  [COOPERATION.] (a) General assistance or general 
        assistance medical care applicants and recipients must cooperate 
        with the state and local agency to identify potentially liable 
        third-party payors and assist the state in obtaining third-party 
        payments.  Cooperation includes identifying any third party who 
        may be liable for care and services provided under this chapter 
        to the applicant, recipient, or any other family member for whom 
        application is made and providing relevant information to assist 
        the state in pursuing a potentially liable third party.  General 
        assistance medical care applicants and recipients must cooperate 
        by providing information about any group health plan in which 
        they may be eligible to enroll.  They must cooperate with the 
        state and local agency in determining if the plan is 
        cost-effective.  For purposes of this subdivision, coverage 
        provided by the Minnesota comprehensive health association under 
        chapter 62E shall not be considered group health plan coverage 
        or cost-effective by the state and local agency.  If the plan is 
        determined cost-effective and the premium will be paid by the 
        state or local agency or is available at no cost to the person, 
        they must enroll or remain enrolled in the group health plan.  
        Cost-effective insurance premiums approved for payment by the 
        state agency and paid by the local agency are eligible for 
        reimbursement according to subdivision 6. 
           (b) Effective for all premiums due on or after June 30, 
        1997, general assistance medical care does not cover premiums 
        that a recipient is required to pay under a qualified or 
        Medicare supplement plan issued by the Minnesota comprehensive 
        health association.  General assistance medical care shall 
        continue to cover premiums for recipients who are covered under 
        a plan issued by the Minnesota comprehensive health association 
        on June 30, 1997, for a period of six months following receipt 
        of the notice of termination or until December 31, 1997, 
        whichever is later. 
           Sec. 7.  [MCHA TERMINATION NOTICE.] 
           The Minnesota comprehensive health association, in 
        consultation with the commissioner of human services, shall 
        provide written notice to all persons whose coverage under the 
        comprehensive health insurance plan terminates due to the change 
        in policy described in Minnesota Statutes, sections 256B.056, 
        subdivision 15, and 256D.03, subdivision 3b. 
           The notice must include the following information: 
           (1) the reason for termination; 
           (2) a description of the eligibility requirements for the 
        comprehensive health insurance plan; 
           (3) a description of medical assistance and general 
        assistance medical care eligibility categories; 
           (4) a description of the participation requirement to the 
        prepaid medical assistance program, prepaid general assistance 
        medical care, and exemptions from participation due to 
        disability as determined by the social security administration; 
        and 
           (5) a telephone number for the department of human services 
        for specific questions regarding the medical assistance and 
        general assistance medical care program. 
           Notice must be given at least six months before coverage is 
        terminated. 
           The commissioner of human services shall release to the 
        association any data necessary to provide the notice required in 
        this section. 
           Sec. 8.  [SUNSET.] 
           The amendments made in this article to Minnesota Statutes, 
        sections 62E.02, subdivision 13; 256B.056, subdivision 8; 
        256B.0625, subdivision 15; and 256D.03, subdivision 3b, expire 
        June 30, 1999. 
           Sec. 9.  [EFFECTIVE DATE.] 
           Sections 2 to 8 are effective the day following final 
        enactment.  Section 1 is effective for coverage provided by the 
        comprehensive health association on or after January 1, 1998, 
        subject to the right to retain coverage for six months after 
        receipt of notice of termination under sections 5 and 6. 
                                   ARTICLE 7
                                 APPROPRIATIONS
        Section 1.  [APPROPRIATIONS; SUMMARY.] 
           Except as otherwise provided in this act, the sums set 
        forth in the columns designated "fiscal year 1998" and "fiscal 
        year 1999" 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, 1998, and June 30, 1999.
        Sec. 2.  APPROPRIATIONS 
                                SUMMARY BY FUND
                                  1998          1999           TOTAL
        Health Care 
        Access Fund            $130,613,000  $161,364,000  $291,977,000
        General Fund              1,357,000     6,127,000     7,484,000
        State Government
        Special Revenue Fund         21,000         37,000       58,000
        Subdivision 1.  Department of Human 
        Services 
        Health Care
        Access Fund              99,052,000   129,761,000   228,813,000
        General Fund              1,357,000     6,127,000     7,484,000
        [MEDICAL EDUCATION.] Of the fiscal year 
        1998 health care access fund 
        appropriation, $3,500,000 is for 
        medical education research costs.  This 
        appropriation, plus the federal 
        financial participation amount shall be 
        distributed to medical assistance 
        providers according to the distribution 
        methodology of the medical education 
        research trust fund established under 
        Minnesota Statutes, section 62J.69.  
        Any unspent funds in this appropriation 
        do not cancel but may carry forward and 
        be available in fiscal year 1999. 
        [GENERAL FUND APPROPRIATION.] The 
        general fund appropriation is for costs 
        associated with the senior drug 
        program, the QMB/SLMB cost increases 
        resulting from the senior drug program, 
        and the discontinuation of the MCHA 
        premium payments for MA and GAMC 
        recipients.  The health care access 
        fund shall reimburse the general fund 
        for the QMB/SLMB cost and the GAMC and 
        MA costs. 
        [ADMINISTRATIVE COSTS.] Of the health 
        care access appropriation, $342,000 in 
        fiscal year 1998 and $1,536,000 in 
        fiscal year 1999 is for administrative 
        costs associated with moving parents 
        and working adults GAMC into the 
        MinnesotaCare program.  Of this 
        appropriation, only $300,000 shall 
        become part of the base for the fiscal 
        2000-2001 biennium. 
        [SERVICE CHARGES.] For fiscal years 
        1998 and 1999, the department of human 
        services is exempt from service charges 
        imposed by other state agencies when 
        those charges exceed the base 
        appropriation provided to the 
        department for the particular service. 
        [DENTAL SERVICES REIMBURSEMENT 
        INCREASE.] Notwithstanding statutory 
        provisions to the contrary, the 
        commissioner shall increase 
        reimbursement rates by 15 percent for 
        dental services covered under the 
        MinnesotaCare program and rendered on 
        or after July 1, 1997.  The 
        commissioner shall increase the prepaid 
        capitation rates as appropriate to 
        reflect this rate increase.  
        Notwithstanding section 5, this 
        paragraph does not expire. 
        [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. 
        [MINNESOTA OUTREACH.] Of the health 
        care access fund appropriation, 
        $750,000 each year shall be disbursed 
        for grants to public and private 
        organizations to provide outreach for 
        the MinnesotaCare program in areas of 
        the state with high uninsured 
        populations. 
        Subd. 2.  Department of Health 
        Health Care 
        Access Fund            10,653,000     12,248,000     22,901,000
        State Government 
        Special Revenue Fund       21,000         37,000         58,000
        Health care access fund appropriations 
        for student loan forgiveness programs 
        for health care providers are available 
        for either year of the biennium. 
        [RURAL HOSPITAL CAPITAL GRANTS.] Of 
        this appropriation, $3,000,000 in 
        fiscal year 1998 and $4,500,000 in 
        fiscal year 1999 shall be disbursed for 
        rural hospital capital improvement 
        grants or loans.  Any unspent funds may 
        be used for rural hospital planning and 
        transition grant programs.  This 
        appropriation shall not become part of 
        the base for the fiscal year 2000-2001 
        biennium. 
        [RURAL HOSPITAL DEMONSTRATION 
        PROJECTS.] Of this appropriation, 
        $300,000 in each fiscal year shall be 
        disbursed for rural hospital 
        demonstration projects.  This 
        appropriation shall not become part of 
        the base for the fiscal year 2000-2001 
        biennium. 
        [ADMINISTRATIVE COSTS.] The base for 
        administrative costs shall be reduced 
        by $450,000 for fiscal years 2000 and 
        2001.  The commissioner shall examine 
        general fund resources to replace this 
        reduction. 
        Subd. 3.  University of Minnesota 
        Health Care 
        Access Fund             2,537,000      2,537,000      5,074,000
        [PRIMARY CARE EDUCATION INITIATIVES.] 
        Of this appropriation, $180,000 in each 
        fiscal year shall be disbursed to the 
        board of regents for primary care 
        physician education and training under 
        Minnesota Statutes, sections 137.38 to 
        137.40.  This appropriation is 
        available only if matched by $1 for 
        each $1 of the appropriation.  This 
        appropriation is in addition to the 
        current base appropriation for these 
        activities and shall become part of the 
        base appropriation for the fiscal year 
        2000-2001 biennium. 
        Subd. 4.  Department of Revenue 
        Health Care 
        Access Fund             3,121,000      1,668,000      4,789,000
        [RESEARCH DEDUCTION.] Of this 
        appropriation, $1,500,000 shall be 
        disbursed in fiscal year 1998 to be 
        used for research deduction claims 
        filed by hospitals and health care 
        providers under Minnesota Statutes, 
        section 295.53, subdivision 4, for 
        research expenditures incurred in 
        calendar year 1996.  These claims must 
        be filed by August 1, 1997, and the 
        commissioner must pay the refund no 
        later than October 1, 1997. 
        Subd. 5.  Department of Commerce 
        Health Care 
        Access Fund            15,100,000     15,000,000     30,100,000
        [MINNESOTA COMPREHENSIVE HEALTH 
        ASSOCIATION ASSESSMENT OFFSET.] Of this 
        appropriation, $15,000,000 in fiscal 
        year 1998 and $15,000,000 in fiscal 
        year 1999 is for a grant to the 
        Minnesota Comprehensive Health 
        Association and shall be made available 
        on January 1 of each fiscal year to be 
        used to offset the annual assessments 
        for calendar years 1998 and 1999 that 
        are required to be paid by each 
        contributing member in accordance with 
        Minnesota Statutes, section 62E.11.  
        This appropriation shall not become 
        part of the base for the fiscal year 
        2000-2001 biennium. 
        Subd. 6.  Legislative Coordinating 
        Commission 
        Health Care 
        Access Fund               150,000        150,000        300,000
        Sec. 3.  TRANSFERS 
        $4,112,000 in fiscal year 1998 and 
        $4,104,000 in fiscal year 1999 are 
        transferred from the health care access 
        fund to the general fund to replace the 
        revenue lost due to the repeal of the 
        $400 physician surcharge. 
        Sec. 4.  CARRYOVER 
        None of the appropriations in this act 
        which are allowed to be carried forward 
        from fiscal year 1998 to fiscal year 
        1999 shall become part of the base 
        level funding for the 2000-2001 
        biennial budget, unless specifically 
        directed by the legislature. 
        Sec. 5.  SUNSET 
        All uncodified language contained in 
        this article expires on June 30, 1999, 
        unless a different expiration is 
        explicit. 
                                   ARTICLE 8 
                HEALTH AND HUMAN SERVICES TECHNICAL CORRECTIONS
           Section 1.  S. F. No. 1908, article 1, section 2, if 
        enacted, is amended by adding a subdivision to read: 
        Subd. 10a.  Visitation Access Funds 
        [FEDERAL FUNDS FOR VISITATION ACCESS.] 
        The commissioner may accept on behalf 
        of the state any federal funding for 
        the purpose of financing visitation 
        access programs, and may expend these 
        funds on services described in Public 
        Law Number 104-193. 
           Sec. 2.  S. F. No. 1908, article 1, section 3, subdivision 
        2, if enacted, is amended to read: 
        Subd. 2.  Health Systems
        and Special Populations               48,517,000     48,233,000
                      Summary by Fund
        General              39,295,000    38,998,000
        State Government
        Special Revenue       9,222,000     9,235,000
        [FEES; DRUG AND ALCOHOL COUNSELOR 
        LICENSE.] When setting fees for the 
        drug and alcohol counselor license, the 
        department is exempt from Minnesota 
        Statutes, section 16A.1285, subdivision 
        2. 
        [STATE VITAL STATISTICS REDESIGN 
        PROJECT ACCOUNT.] The amount 
        appropriated from the state government 
        special revenue fund for the vital 
        records redesign project shall be 
        available until expended for 
        development and implementation. 
        [WIC PROGRAM.] Of this appropriation, 
        $650,000 in 1998 is provided to 
        maintain services of the program, 
        $700,000 in 1998 and $700,000 in 1999 
        is added to the base level funding for 
        the WIC food program in order to 
        maintain the existing level of the 
        program, and $100,000 in 1998 is for 
        the commissioner to develop and 
        implement an outreach program to 
        apprise potential recipients of the WIC 
        food program of the importance of good 
        nutrition and the availability of the 
        program. 
        [WIC TRANSFERS.] General fund 
        appropriations for the women, infants, 
        and children (WIC) food supplement 
        program are available for either year 
        of the biennium.  Transfers of 
        appropriations between fiscal years 
        must be for the purpose of maximizing 
        federal funds or minimizing 
        fluctuations in the number of 
        participants.  
        [LOCAL PUBLIC HEALTH FINANCING.] Of the 
        general fund appropriation, $5,000,000 
        each year shall be disbursed for local 
        public health financing and shall be 
        distributed according to the community 
        health service subsidy formula in 
        Minnesota Statutes, section 145A.13.  
        [MINNESOTA CHILDREN WITH SPECIAL HEALTH 
        NEEDS CARRYOVER.] General fund 
        appropriations for treatment services 
        in the services for children with 
        special health care needs program are 
        available for either year of the 
        biennium. 
        [HEALTH CARE ASSISTANCE FOR DISABLED 
        CHILDREN INELIGIBLE FOR SSI.] 
        Notwithstanding the requirements of 
        Minnesota Rules, part 4705.0100, 
        subpart 14, children who:  (a) are 
        eligible for medical assistance as of 
        June 30, 1997, and become ineligible 
        for medical assistance due to changes 
        in supplemental security income 
        disability standards for children 
        enacted in (PRWORA) Public Law Number 
        104-193; and (b) are not eligible for 
        MinnesotaCare, are eligible for health 
        care services through Minnesota 
        services for children with special 
        health care needs under Minnesota 
        Rules, parts 4705.0100 to 4705.1600 for 
        the fiscal year ending June 30, 1998, 
        until eligibility for medical 
        assistance is reestablished.  The 
        commissioner of health shall report to 
        the legislature by March 1, 1998, on 
        the number of children eligible under 
        this provision, their health care 
        needs, family income as a percentage of 
        the federal poverty level, the extent 
        to which families have employer-based 
        health coverage, and recommendations on 
        how to meet the future needs of 
        children eligible under this provision. 
        [AMERICAN INDIAN DIABETES.] Of this 
        appropriation, $90,000 each year shall 
        be disbursed for a comprehensive 
        school-based intervention program 
        designed to reduce the risk factors 
        associated with diabetes among American 
        Indian school children in grades 1 
        through 4. The appropriation for 1998 
        may be carried forward to 1999.  The 
        appropriation for fiscal year 1999 is 
        available only if matched by $1 of 
        nonstate money for each $1 of the 
        appropriation and may be expended in 
        either year of the biennium.  The 
        commissioner shall convene an American 
        Indian diabetes prevention advisory 
        task force.  The task force must 
        include representatives from the 
        American Indian tribes located in the 
        state and urban American Indian 
        representatives.  The task force shall 
        advise the commissioner on the 
        adaptation of curricula and the 
        dissemination of information designed 
        to reduce the risk factors associated 
        with diabetes among American Indian 
        school children in grades 1 through 4.  
        The curricula and information must be 
        sensitive to traditional American 
        Indian values and culture and must 
        encourage full participation by the 
        American Indian community. 
        [HOME VISITING PROGRAMS.] (a) Of this 
        appropriation, $140,000 in 1998 and 
        $870,000 in 1999 is for the home 
        visiting programs for infant care under 
        Minnesota Statutes, section 145A.16.  
        These amounts are available until June 
        30, 1999. 
        (b) Of this appropriation, $225,000 in 
        1998 and $180,000 in 1999 is to 
        continue funding the home visiting 
        programs that received one-year funding 
        under Laws 1995, chapter 480, article 
        1, section 9.  This amount is available 
        until expended. 
        [FETAL ALCOHOL SYNDROME.] Of the 
        general fund appropriation, $625,000 
        each year of the biennium shall be 
        disbursed to prevent and reduce harm 
        from fetal alcohol syndrome and fetal 
        alcohol effect.  
        [COMPLAINT INVESTIGATIONS.] Of the 
        appropriation, $127,000 each year from 
        the state government special revenue 
        fund, and $75,000 each year from the 
        general fund, is for the commissioner 
        to conduct complaint investigations of 
        nursing facilities, hospitals and home 
        health care providers. 
        [COMPLEMENTARY MEDICINE STUDY.] (a) Of 
        the general fund appropriation, $20,000 
        in fiscal year 1998 shall be disbursed 
        for the commissioner of health, in 
        consultation with the commissioner of 
        commerce, to conduct a study based on 
        existing literature, information, and 
        data on the scope of complementary 
        medicine offered in this state.  The 
        commissioner shall: 
        (1) include the types of complementary 
        medicine therapies available in this 
        state; 
        (2) contact national and state 
        complementary medicine associations for 
        literature, information, and data; 
        (3) conduct a general literary review 
        for information and data on 
        complementary medicine; 
        (4) contact the departments of commerce 
        and human services for information on 
        existing registrations, licenses, 
        certificates, credentials, policies, 
        and regulations; and 
        (5) determine by sample, if 
        complementary medicine is currently 
        covered by health plan companies and 
        the extent of the coverage. 
        In conducting this review, the 
        commissioner shall consult with the 
        office of alternative medicine through 
        the National Institute of Health. 
        (b) The commissioner shall, in 
        consultation with the advisory 
        committee, report the study findings to 
        the legislature by January 15, 1998.  
        As part of the report, the commissioner 
        shall make recommendations on whether 
        the state should credential or regulate 
        any of the complementary medicine 
        providers. 
        (c) The commissioner shall appoint an 
        advisory committee to provide expertise 
        and advice on the study.  The committee 
        must include representation from the 
        following groups:  health care 
        providers, including providers of 
        complementary medicine; health plan 
        companies; and consumers.  The advisory 
        committee is governed by Minnesota 
        Statutes, section 15.059, for 
        membership terms and removal of members.
        (d) For purposes of this study, the 
        term "complementary medicine" includes, 
        but is not limited to, acupuncture, 
        homeopathy, manual healing, 
        macrobiotics, naturopathy, biofeedback, 
        mind/body control therapies, 
        traditional and ethnomedicine 
        therapies, structural manipulations and 
        energetic therapies, bioelectromagnetic 
        therapies, and herbal medicine. 
        [DOWN'S DOWN SYNDROME.] Of the general 
        fund appropriation, $15,000 in fiscal 
        year 1998 shall be disbursed for a 
        grant to a nonprofit organization that 
        provides support to individuals 
        with Down's Down Syndrome and their 
        families, for the purpose of providing 
        all obstetricians, certified 
        nurse-midwives, and family physicians 
        licensed to practice in this state with 
        informational packets on Down's Down 
        Syndrome.  The packets must include, at 
        a minimum, a fact sheet on Down's Down 
        Syndrome, a list of counseling and 
        support groups for families with 
        children with Down's Down Syndrome, and 
        a list of special needs adoption 
        resources.  The informational packets 
        must be made available to any pregnant 
        patient who has tested positive 
        for Down's Down Syndrome, either 
        through a screening test or 
        amniocentesis. 
        [NEWBORN SCREENING FOR HEARING LOSS 
        PROGRAM IMPLEMENTATION PLAN.] (a) Of 
        the general fund appropriation, $18,000 
        in fiscal year 1998 shall be disbursed 
        to pay the costs of coordinating with 
        hospitals, the medical community, 
        audiologists, insurance companies, 
        parents, and deaf and hard-of-hearing 
        citizens to establish and implement a 
        voluntary plan for hospitals and other 
        health care facilities to screen all 
        infants for hearing loss. 
        (b) The plan to achieve universal 
        screening of infants for hearing loss 
        on a voluntary basis shall be 
        formulated by a department work group, 
        including the following representatives:
        (1) a representative of the health 
        insurance industry designated by the 
        health insurance industry; 
        (2) a representative of the Minnesota 
        Hospital and Healthcare Partnership; 
        (3) a total of two representatives from 
        the following physician groups 
        designated by the Minnesota Medical 
        Association:  pediatrics, family 
        practice, and ENT; 
        (4) two audiologists designated by the 
        Minnesota Speech-Language-Hearing 
        Association and the Minnesota Academy 
        of Audiology; 
        (5) a representative of hospital 
        neonatal nurseries; 
        (6) a representative of part H (IDEA) 
        early childhood special education; 
        (7) the commissioner of health or a 
        designee; 
        (8) a representative of the department 
        of human services; 
        (9) a public health nurse; 
        (10) a parent of a deaf or 
        hard-of-hearing child; 
        (11) a deaf or hard-of-hearing person; 
        and 
        (12) a representative of the Minnesota 
        commission serving deaf and 
        hard-of-hearing people. 
        Members of the work group shall not 
        collect a per diem or compensation as 
        provided in Minnesota Statutes, section 
        15.0575. 
        (c) The plan shall include measurable 
        goals and timetables for the 
        achievement of universal screening of 
        infants for hearing loss throughout the 
        state and shall include the design and 
        implementation of needed training to 
        assist hospitals and other health care 
        facilities screen infants for hearing 
        loss according to recognized standards 
        of care. 
        (d) The work group shall report to the 
        legislature by January 15, 1998, 
        concerning progress toward the 
        achievement of universal screening of 
        infants in Minnesota for the purpose of 
        assisting the legislature to determine 
        whether this goal can be accomplished 
        on a voluntary basis. 
        [INFANT HEARING SCREENING PROGRAM.] Of 
        the general fund appropriation, $25,000 
        in fiscal year 1998 shall be disbursed 
        for a grant to a hospital in Staples, 
        Minnesota, for the infant hearing 
        screening program. 
        [NURSING HOMES DAMAGED BY FLOODS.] The 
        commissioner shall conduct an expedited 
        process under Minnesota Statutes, 
        section 144A.073, solely to review 
        nursing home moratorium exceptions 
        necessary to repair or replace nursing 
        facilities damaged by spring flooding 
        in 1997.  The commissioner may not 
        issue a request for proposals for 
        moratorium projects not related to 
        spring flooding until this expedited 
        process is completed.  For facilities 
        that require total replacement and the 
        relocation of residents to other 
        facilities during construction, the 
        operating cost payment rates for the 
        new facility shall be determined using 
        the interim and settle-up payment 
        provisions of Minnesota Rules, part 
        9549.0057, and the reimbursement 
        provisions of Minnesota Statutes, 
        section 256B.431, except that 
        subdivision 25 26, paragraphs (a) 
        and (b), clause (3), and (d), shall not 
        apply until the second rate year after 
        the settle-up cost report is filed.  
        Property-related reimbursement rates 
        shall be determined under 
        Minnesota Rules, chapter 9549 Statutes, 
        section 256B.431, taking into account 
        any federal or state flood-related 
        loans or grants provided to a 
        facility.  The medical assistance costs 
        of this paragraph shall be paid from 
        the amount made available in section 2 
        of this article for moratorium 
        exceptions.  This paragraph is 
        effective the day following final 
        enactment and is not subject to section 
        13 of this article. 
           Sec. 3.  Minnesota Statutes 1996, section 256B.0913, 
        subdivision 16, as added by S. F. No. 1908, article 4, section 
        39, if enacted, is amended to read: 
           Subd. 16.  [CONVERSION OF ENROLLMENT.] Upon approval of the 
        elderly waiver amendments described in section 42 41, persons 
        currently receiving services shall have their eligibility for 
        the elderly waiver program determined under section 256B.0915.  
        Persons currently receiving alternative care services whose 
        income is under the special income standard according to Code of 
        Federal Regulations, title 42, section 435.236, who are eligible 
        for the elderly waiver program shall be transferred to that 
        program and shall receive priority access to elderly waiver 
        slots for six months after implementation of this subdivision.  
        Persons currently enrolled in the alternative care program who 
        are not eligible for the elderly waiver program shall continue 
        to be eligible for the alternative care program as long as 
        continuous eligibility is maintained.  Continued eligibility for 
        the alternative care program shall be reviewed every six 
        months.  Persons who apply for the alternative care program 
        after approval of the elderly waiver amendments in section 42 41 
        are not eligible for alternative care if they would qualify for 
        the elderly waiver, with or without a spenddown.  
           Sec. 4.  S. F. No. 1908, article 4, section 70, if enacted, 
        is amended to read: 
           Sec. 70.  [WAIVER MODIFICATION.] 
           The commissioner of human services shall seek federal 
        approval for any modifications to the health care reform waiver 
        necessary to implement the asset standard changes in sections 21 
        to 23 22 to 24, and 28 73, paragraph (a).  
           Sec. 5.  S. F. No. 1908, article 4, section 73, if enacted, 
        is amended to read: 
           Sec. 73.  [REPEALER.] 
           (a) Minnesota Statutes 1996, sections 256B.057, 
        subdivisions 2a and 2b; and 469.154, subdivision 6, are repealed.
           (b) Minnesota Statutes 1996, section 256B.0625, subdivision 
        13b, is repealed the day following final enactment. 
           (c) Minnesota Rules, part parts 9505.1000 to 9505.1040, is 
        are repealed. 
           Sec. 6.  Minnesota Statutes 1996, section 256B.0911, 
        subdivision 2, as amended by S. F. No. 1908, article 9, section 
        10, if enacted, is amended to read: 
           Subd. 2.  [PERSONS REQUIRED TO BE SCREENED; EXEMPTIONS.] 
        All applicants to Medicaid certified nursing facilities must be 
        screened prior to admission, regardless of income, assets, or 
        funding sources, except the following: 
           (1) patients who, having entered acute care facilities from 
        certified nursing facilities, are returning to a certified 
        nursing facility; 
           (2) residents transferred from other certified nursing 
        facilities located within the state of Minnesota; 
           (3) individuals who have a contractual right to have their 
        nursing facility care paid for indefinitely by the veteran's 
        administration; 
           (4) individuals who are enrolled in the Ebenezer/Group 
        Health social health maintenance organization project, or 
        enrolled in a demonstration project under section 256B.69, 
        subdivision 18, at the time of application to a nursing home; 
           (5) individuals previously screened and currently being 
        served under the alternative care program or under a home and 
        community-based services waiver authorized under section 1915(c) 
        of the Social Security Act; or 
           (6) individuals who are admitted to a certified nursing 
        facility for a short-term stay, which, based upon a physician's 
        certification, is expected to be 14 days or less in duration, 
        and who have been screened and approved for nursing facility 
        admission within the previous six months.  This exemption 
        applies only if the screener determines at the time of the 
        initial screening of the six-month period that it is appropriate 
        to use the nursing facility for short-term stays and that there 
        is an adequate plan of care for return to the home or 
        community-based setting.  If a stay exceeds 14 days, the 
        individual must be referred no later than the first county 
        working day following the 14th resident day for a screening, 
        which must be completed within five working days of the 
        referral.  Payment limitations in subdivision 7 will apply to an 
        individual found at screening to not meet the level of care 
        criteria for admission to a certified nursing facility. 
           Regardless of the exemptions in clauses (2) to (6), persons 
        who have a diagnosis or possible diagnosis of mental illness, 
        mental retardation, or a related condition must receive a 
        preadmission screening before admission unless the admission 
        prior to screening is authorized by the local mental health 
        authority or the local developmental disabilities case manager, 
        or unless authorized by the county agency according to Public 
        Law Number 101-508. 
           Before admission to a Medicaid certified nursing home or 
        boarding care home, all persons must be screened and approved 
        for admission through an assessment process.  The nursing 
        facility is authorized to conduct case mix assessments which are 
        not conducted by the county public health nurse under Minnesota 
        Rules, part 9549.0059.  The designated county agency is 
        responsible for distributing the quality assurance and review 
        form for all new applicants to nursing homes. 
           Other persons who are not applicants to nursing facilities 
        must be screened if a request is made for a screening. 
           Sec. 7.  S. F. No. 1908, article 9, section 24, if enacted, 
        is amended to read: 
           Sec. 24.  [EFFECTIVE DATE.] 
           Section Sections 14 and 16, amending Minnesota Statutes 
        1996, section 518.17, subdivision 1, is are effective the day 
        following final enactment. 
           Sec. 8.  [EFFECTIVE DATE.] 
           Section 7 is effective the day following final enactment. 
           Presented to the governor May 29, 1997 
           Signed by the governor June 2, 1997, 2:14 p.m.