Office of the Revisor of Statutes
Minnesota Session Laws - 1997, Regular Session
Key: (1) language to be deleted (2) new language
CHAPTER 150-H.F.No. 858
An act relating to health; regulating health plans;
providing for certain disclosures; amending Minnesota
Statutes 1996, sections 62J.04, subdivisions 1, 1a,
and 3; 62J.041; and 62J.301, subdivision 3; repealing
Minnesota Statutes 1996, section 62J.042.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
Section 1. Minnesota Statutes 1996, section 62J.04,
subdivision 1, is amended to read:
Subdivision 1. [LIMITS ON THE RATE OF GROWTH COST
CONTAINMENT GOALS.] (a) The commissioner of health shall set
annual limits on the rate of growth of cost containment goals
for public and private spending on health care services for
Minnesota residents, as provided in paragraph (b). The limits
on growth cost containment goals must be set at levels the
commissioner determines to be realistic and achievable but that
will reduce the rate of growth in health care spending by at
least ten percent per year for the next five years. The
commissioner shall set limits on growth cost containment goals
based on available data on spending and growth trends, including
data from group purchasers, national data on public and private
sector health care spending and cost trends, and trend
information from other states.
(b) The commissioner shall set the following annual limits
on the rate of growth of cost containment goals for public and
private spending on health care services for Minnesota residents:
(1) for calendar year 1994, the rate of growth cost
containment goal must not exceed the change in the regional
consumer price index for urban consumers for calendar year 1993
plus 6.5 percentage points;
(2) for calendar year 1995, the rate of growth cost
containment goal must not exceed the change in the regional
consumer price index for urban consumers for calendar year 1994
plus 5.3 percentage points;
(3) for calendar year 1996, the rate of growth cost
containment goal must not exceed the change in the regional
consumer price index for urban consumers for calendar year 1995
plus 4.3 percentage points;
(4) for calendar year 1997, the rate of growth cost
containment goal must not exceed the change in the regional
consumer price index for urban consumers for calendar year 1996
plus 3.4 percentage points; and
(5) for calendar year 1998, the rate of growth cost
containment goal must not exceed the change in the regional
consumer price index for urban consumers for calendar year 1997
plus 2.6 percentage points.
The commissioner shall adjust the growth limit cost
containment goal set for calendar year 1995 to recover savings
in health care spending required for the period July 1, 1993, to
December 31, 1993.
(c) The commissioner shall publish:
(1) the projected limits cost containment goal in the State
Register by April 15 of the year immediately preceding the year
in which the limit cost containment goal will be effective
except for the year 1993, in which the limit cost containment
goal shall be published by July 1, 1993;
(2) the quarterly change in the regional consumer price
index for urban consumers; and
(3) the health care financing administration forecast for
total growth in the national health care expenditures. In
setting an annual limit the cost containment goals, the
commissioner is exempt from the rulemaking requirements of
chapter 14. The commissioner's decision on an annual limit the
cost containment goals is not appealable.
Sec. 2. Minnesota Statutes 1996, section 62J.04,
subdivision 1a, is amended to read:
Subd. 1a. [ADJUSTED GROWTH LIMITS AND ENFORCEMENT COST
CONTAINMENT GOALS.] (a) The commissioner shall publish the final
adjusted growth limit cost containment goal in the State
Register by January 31 of the year that the expenditure limit
cost containment goal is to be in effect. The adjusted limit
cost containment goal must reflect the actual regional consumer
price index for urban consumers for the previous calendar year,
and may deviate from the previously published projected growth
limits cost containment goal to reflect differences between the
actual regional consumer price index for urban consumers and the
projected Consumer Price Index for urban consumers. The
commissioner shall report to the legislature by February 15 of
each year on the implementation of the growth limits cost
containment goal. This annual report shall describe the
differences between the projected increase in health care
expenditures, the actual expenditures based on data collected,
and the impact and validity of growth limits cost containment
goals within the overall health care reform strategy.
(b) The commissioner, in consultation with the Minnesota
health care commission, shall research and include in the annual
report required in paragraph (a) for 1996, recommendations
regarding the implementation of growth limits for health plan
companies and providers. The commissioner shall:
(1) consider both spending and revenue approaches and
report on the implementation of the interim limits as defined in
sections 62J.041 and 62J.042;
(2) make recommendations regarding the enforcement
mechanism and consider mechanisms to adjust future growth limits
as well as mechanisms to establish financial penalties for
noncompliance;
(3) address the feasibility of systemwide limits imposed on
all integrated service networks; and
(4) make recommendations on the most effective way to
implement growth limits on the fee-for-service system in the
absence of a regulated all-payer system.
(c) The commissioner shall enforce limits on growth in
spending for health plan companies and revenues for providers.
If the commissioner determines that artificial inflation or
padding of costs or prices has occurred in anticipation of the
implementation of growth limits, the commissioner may adjust the
base year spending totals or growth limits or take other action
to reverse the effect of the artificial inflation or padding.
(d) The commissioner shall impose and enforce overall
limits on growth in spending for health plan companies, with
adjustments for changes in enrollment, benefits, severity, and
risks. If a health plan company exceeds the growth limits, the
commissioner may impose financial penalties up to the amount
exceeding the applicable growth limit.
Sec. 3. Minnesota Statutes 1996, section 62J.04,
subdivision 3, is amended to read:
Subd. 3. [COST CONTAINMENT DUTIES.] After obtaining the
advice and recommendations of the Minnesota health care
commission, the commissioner shall:
(1) establish statewide and regional limits on growth in
cost containment goals for total health care spending under this
section, and collect data as described in sections 62J.37 to
62J.41 to monitor statewide compliance with the spending limits,
and take action to achieve compliance to the extent authorized
by the legislature achievement of the cost containment goals;
(2) divide the state into no fewer than four regions, with
one of those regions being the Minneapolis/St. Paul metropolitan
statistical area but excluding Chisago, Isanti, Wright, and
Sherburne counties, for purposes of fostering the development of
regional health planning and coordination of health care
delivery among regional health care systems and working to
achieve spending limits the cost containment goals;
(3) provide technical assistance to regional coordinating
boards;
(4) monitor the quality of health care throughout the state
and take action as necessary to ensure an appropriate level of
quality;
(5) issue recommendations regarding uniform billing forms,
uniform electronic billing procedures and data interchanges,
patient identification cards, and other uniform claims and
administrative procedures for health care providers and private
and public sector payers. In developing the recommendations,
the commissioner shall review the work of the work group on
electronic data interchange (WEDI) and the American National
Standards Institute (ANSI) at the national level, and the work
being done at the state and local level. The commissioner may
adopt rules requiring the use of the Uniform Bill 82/92 form,
the National Council of Prescription Drug Providers (NCPDP) 3.2
electronic version, the Health Care Financing Administration
1500 form, or other standardized forms or procedures;
(6) undertake health planning responsibilities as provided
in section 62J.15;
(7) authorize, fund, or promote research and
experimentation on new technologies and health care procedures;
(8) within the limits of appropriations for these purposes,
administer or contract for statewide consumer education and
wellness programs that will improve the health of Minnesotans
and increase individual responsibility relating to personal
health and the delivery of health care services, undertake
prevention programs including initiatives to improve birth
outcomes, expand childhood immunization efforts, and provide
start-up grants for worksite wellness programs; and
(9) undertake other activities to monitor and oversee the
delivery of health care services in Minnesota with the goal of
improving affordability, quality, and accessibility of health
care for all Minnesotans; and
(10) make the cost containment goal data available to the
public in a consumer-oriented manner.
Sec. 4. Minnesota Statutes 1996, section 62J.041, is
amended to read:
62J.041 [INTERIM HEALTH PLAN COMPANY EXPENDITURE LIMITS
COST CONTAINMENT GOALS.]
Subdivision 1. [DEFINITIONS.] (a) For purposes of this
section, the following definitions apply.
(b) "Health plan company" has the definition provided in
section 62Q.01.
(c) "Total expenditures" means incurred claims or
expenditures on health care services, administrative expenses,
charitable contributions, and all other payments made by health
plan companies out of premium revenues.
(d) "Net expenditures" means total expenditures minus
exempted taxes and assessments and payments or allocations made
to establish or maintain reserves.
(e) "Exempted taxes and assessments" means direct payments
for taxes to government agencies, contributions to the Minnesota
comprehensive health association, the medical assistance
provider's surcharge under section 256.9657, the MinnesotaCare
provider tax under section 295.52, assessments by the health
coverage reinsurance association, assessments by the Minnesota
life and health insurance guaranty association, assessments by
the Minnesota risk adjustment association, and any new
assessments imposed by federal or state law.
(f) "Consumer cost-sharing or subscriber liability" means
enrollee coinsurance, copayment, deductible payments, and
amounts in excess of benefit plan maximums.
Subd. 2. [ESTABLISHMENT.] The commissioner of health shall
establish limits on cost containment goals for the increase in
net expenditures by each health carrier plan company for
calendar years 1994, 1995, 1996, and 1997. The limits cost
containment goals must be the same as the annual rate of growth
in cost containment goals for health care spending established
under section 62J.04, subdivision 1, paragraph (b). Health plan
companies that are affiliates may elect to meet one
combined expenditure limit cost containment goal.
Subd. 3. [DETERMINATION OF EXPENDITURES.] Health plan
companies shall submit to the commissioner of health, by April
1, 1994, for calendar year 1993; April 1, 1995, for calendar
year 1994; April 1, 1996, for calendar year 1995; April 1, 1997,
for calendar year 1996; and April 1, 1998, for calendar year
1997 all information the commissioner determines to be necessary
to implement and enforce this section. The information must be
submitted in the form specified by the commissioner. The
information must include, but is not limited to, expenditures
per member per month or cost per employee per month, and
detailed information on revenues and reserves. The
commissioner, to the extent possible, shall coordinate the
submittal of the information required under this section with
the submittal of the financial data required under chapter 62J,
to minimize the administrative burden on health plan companies.
The commissioner may adjust final expenditure figures for
demographic changes, risk selection, changes in basic benefits,
and legislative initiatives that materially change health care
costs, as long as these adjustments are consistent with the
methodology submitted by the health plan company to the
commissioner, and approved by the commissioner as actuarially
justified. The methodology to be used for adjustments and the
election to meet one expenditure limit cost containment goal for
affiliated health plan companies must be submitted to the
commissioner by September 1, 1994. Community integrated service
networks may submit the information with their application for
licensure. The commissioner shall also accept changes to
methodologies already submitted. The adjustment methodology
submitted and approved by the commissioner must apply to the
data submitted for calendar years 1994 and 1995. The
commissioner may allow changes to accepted adjustment
methodologies for data submitted for calendar years 1996 and
1997. Changes to the adjustment methodology must be received by
September 1, 1996, and must be approved by the commissioner.
Subd. 4. [MONITORING OF RESERVES.] (a) The commissioners
of health and commerce shall monitor health plan company
reserves and net worth as established under chapters 60A, 62C,
62D, 62H, and 64B, with respect to the health plan companies
that each commissioner respectively regulates to ensure
that assess the degree to which savings resulting from the
establishment of expenditure limits cost containment goals are
passed on to consumers in the form of lower premium rates.
(b) Health plan companies shall fully reflect in the
premium rates the savings generated by the expenditure limits
cost containment goals. No premium rate, currently reviewed by
the departments of health or commerce, may be approved for those
health plan companies unless the health plan company establishes
to the satisfaction of the commissioner of commerce or the
commissioner of health, as appropriate, that the proposed new
rate would comply with this paragraph.
(c) Health plan companies, except those licensed under
chapter 60A to sell accident and sickness insurance under
chapter 62A, shall annually before the end of the fourth fiscal
quarter provide to the commissioner of health or commerce, as
applicable, a projection of the level of reserves the company
expects to attain during each quarter of the following fiscal
year. These health plan companies shall submit with required
quarterly financial statements a calculation of the actual
reserve level attained by the company at the end of each quarter
including identification of the sources of any significant
changes in the reserve level and an updated projection of the
level of reserves the health plan company expects to attain by
the end of the fiscal year. In cases where the health plan
company has been given a certificate to operate a new health
maintenance organization under chapter 62D, or been licensed as
an integrated service network or community integrated service
network under chapter 62N, or formed an affiliation with one of
these organizations, the health plan company shall also submit
with its quarterly financial statement, total enrollment at the
beginning and end of the quarter and enrollment changes within
each service area of the new organization. The reserve
calculations shall be maintained by the commissioners as trade
secret information, except to the extent that such information
is also required to be filed by another provision of state law
and is not treated as trade secret information under such other
provisions.
(d) Health plan companies in paragraph (c) whose reserves
are less than the required minimum or more than the required
maximum at the end of the fiscal year shall submit a plan of
corrective action to the commissioner of health or commerce
under subdivision 7.
(e) The commissioner of commerce, in consultation with the
commissioner of health, shall report to the legislature no later
than January 15, 1995, as to whether the concept of a reserve
corridor or other mechanism for purposes of monitoring reserves
is adaptable for use with indemnity health insurers that do
business in multiple states and that must comply with their
domiciliary state's reserves requirements.
Subd. 5. [NOTICE.] The commissioner of health shall
publish in the State Register and make available to the public
by July 1, 1995, a list of all health plan companies that
exceeded their expenditure limit cost containment goal for the
1994 calendar year. The commissioner shall publish in the State
Register and make available to the public by July 1, 1996, a
list of all health plan companies that exceeded their
combined expenditure limit cost containment goal for calendar
years 1994 and 1995. The commissioner shall notify each health
plan company that the commissioner has determined that the
health plan company exceeded its expenditure limit cost
containment goal, at least 30 days before publishing the list,
and shall provide each health plan company with ten days to
provide an explanation for exceeding the expenditure limit cost
containment goal. The commissioner shall review the explanation
and may change a determination if the commissioner determines
the explanation to be valid.
Subd. 6. [ASSISTANCE BY THE COMMISSIONER OF COMMERCE.] The
commissioner of commerce shall provide assistance to the
commissioner of health in monitoring health plan companies
regulated by the commissioner of commerce. The commissioner of
commerce, in consultation with the commissioner of health, shall
enforce compliance with expenditure limits for those health plan
companies.
Subd. 7. [ENFORCEMENT.] (a) The commissioners of health
and commerce shall enforce the reserve limits referenced in
subdivision 4, with respect to the health plan companies that
each commissioner respectively regulates. Each commissioner
shall require health plan companies under the commissioner's
jurisdiction to submit plans of corrective action when the
reserve requirement is not met. The plan of correction must
address the following:
(1) actuarial assumptions used in forecasting future
financial results;
(2) trend assumptions used in setting future premiums;
(3) demographic, geographic, and private and public sector
mix of the population covered by the health plan company;
(4) proposed rate increases or decreases;
(5) growth limits applied under section 62J.04, subdivision
1, paragraph (b); and
(6) other factors deemed appropriate by the health plan
company or commissioner.
If the health plan company's reserves exceed the required
maximum, the plan of correction shall address how the health
plan company will come into compliance and set forth a timetable
within which compliance would be achieved. The plan of
correction may propose premium refunds, credits for prior
premiums paid, policyholder dividends, or any combination of
these or other methods which will benefit enrollees and/or
Minnesota residents and are such that the reserve requirements
can reasonably be expected to be met. The commissioner's
evaluation of the plan of correction must consider:
(1) whether implementation of the plan would provide the
company with an unfair advantage in the market;
(2) the extent to which the reserve excess was created by
any movement of enrolled persons to another organization formed
by the company;
(3) whether any proposed premium refund, credit, and/or
dividend represents an equitable allocation to policyholders
covered in prior periods as determined using sound actuarial
practice; and
(4) any other factors deemed appropriate by the applicable
commissioner.
(b) The plan of correction is subject to approval by the
commissioner of health or commerce, as applicable. If such a
plan is not approved by the applicable commissioner, the
applicable commissioner shall enter an order stating the steps
that the health plan company must take to come into compliance.
Within 30 days of the date of such order, the health plan
company must file a notice of appeal with the applicable
commissioner or comply with the commissioner's order. If an
appeal is filed, such appeal is governed by chapter 14.
(c) Health plan companies that exceed the expenditure
limits based on two-year average expenditure data (1994 and
1995, 1996 and 1997) shall be required by the appropriate
commissioner to pay back the amount exceeding the expenditure
limit through an assessment on the health plan company. A
health plan company may appeal the commissioner's order to pay
back the amount exceeding the expenditure limit by mailing to
the commissioner a written notice of appeal within 30 days from
the date the commissioner's order was mailed. The contested
case and judicial review provisions of chapter 14 apply to the
appeal. The health plan company shall pay the amount specified
by the commissioner either to the commissioner or into an escrow
account until final resolution of the appeal. Notwithstanding
sections 15.472 to 15.475, each party is responsible for its own
fees and expenses, including attorneys fees, for the appeal.
Any amount required to be paid back under this section shall be
deposited in the health care access fund. The appropriate
commissioner may approve a different repayment method to take
into account the health plan company's financial condition.
Health plan companies shall comply with the limits but shall
also guarantee that their contractual obligations are met.
Health plan companies are prohibited from meeting spending
obligations by increasing subscriber liability, including
copayments and deductibles and amounts in excess of benefit plan
maximums.
Sec. 5. Minnesota Statutes 1996, section 62J.301,
subdivision 3, is amended to read:
Subd. 3. [GENERAL DUTIES.] The commissioner shall:
(1) collect and maintain data which enable population-based
monitoring and trending of the access, utilization, quality, and
cost of health care services within Minnesota;
(2) collect and maintain data for the purpose of estimating
total Minnesota health care expenditures and trends;
(3) collect and maintain data for the purposes of setting
limits cost containment goals under section 62J.04, and
measuring growth limit cost containment goal compliance;
(4) conduct applied research using existing and new data
and promote applications based on existing research;
(5) develop and implement data collection procedures to
ensure a high level of cooperation from health care providers
and health plan companies, as defined in section 62Q.01,
subdivision 4;
(6) work closely with health plan companies and health care
providers to promote improvements in health care efficiency and
effectiveness; and
(7) participate as a partner or sponsor of private sector
initiatives that promote publicly disseminated applied research
on health care delivery, outcomes, costs, quality, and
management.
Sec. 6. [REPEALER.]
Minnesota Statutes 1996, section 62J.042, is repealed.
Presented to the governor May 14, 1997
Signed by the governor May 15, 1997, 3:25 p.m.
Official Publication of the State of Minnesota
Revisor of Statutes