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Minnesota Legislature

Office of the Revisor of Statutes

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

                            CHAPTER 398-S.F.No. 3626 
                  An act relating to insurance; adjusting aspects of 
                  eligibility and coverage in the comprehensive health 
                  association; requiring a study of premium rates; 
                  requiring an annual report; amending Minnesota 
                  Statutes 1998, sections 62E.05, subdivision 2; 62E.08; 
                  62E.10, by adding a subdivision; 62E.101; 62E.13, 
                  subdivision 2; 62E.15, by adding a subdivision; and 
                  62E.18; Minnesota Statutes 1999 Supplement, section 
                  62E.12. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 1998, section 62E.05, 
        subdivision 2, is amended to read: 
           Subd. 2.  [ANNUAL REPORT.] (a) All health plan companies, 
        as defined in section 62Q.01, shall annually report to the 
        commissioner responsible for their regulation.  The following 
        information shall be reported to the appropriate commissioner on 
        February 1 of each year: 
           (1) the number of individuals and groups who received 
        coverage in the prior year through the qualified plans; and 
           (2) the number of individuals and groups who received 
        coverage in the prior year through each of the unqualified plans 
        sold by the company. 
           (b) The state of Minnesota or any of its departments, 
        agencies, programs, instrumentalities, or political 
        subdivisions, shall report in writing to the association and to 
        the commissioner of commerce no later than September 15 of each 
        year regarding the number of persons and the amount of premiums, 
        deductibles, copayments, or coinsurance that it paid for on 
        behalf of enrollees in the comprehensive health association.  
        This report must contain only summary information and must not 
        include any individually identifiable data.  The report must 
        cover the 12-month period ending the preceding June 30. 
           Sec. 2.  Minnesota Statutes 1998, section 62E.08, is 
        amended to read: 
           62E.08 [STATE PLAN PREMIUM.] 
           Subdivision 1.  [ESTABLISHMENT.] The association shall 
        establish the following maximum premiums to be charged for 
        membership in the comprehensive health insurance plan: 
           (a) the premium for the number one qualified plan shall 
        range from a minimum of 101 percent to a maximum of 125 percent 
        of the weighted average of rates charged by those insurers and 
        health maintenance organizations with individuals enrolled in: 
           (1) number one $1,000 annual deductible individual 
        qualified plans of insurance in force in Minnesota; 
           (2) individual health maintenance organization contracts of 
        coverage with a $1,000 annual deductible which are in force in 
        Minnesota and which are, or are adjusted to be, actuarially 
        equivalent to number one individual qualified plans; and 
           (3) individual policies and individual health maintenance 
        organization contracts of coverage which are in force in 
        Minnesota, are not qualified under section 62E.06, are, or are 
        adjusted to be, actuarially equivalent to number one individual 
        qualified plans, and do not fall under clause (2) other plans of 
        coverage similar to plans offered by the association based on 
        generally accepted actuarial principles; 
           (b) the premium for the number two qualified plan shall 
        range from a minimum of 101 percent to a maximum of 125 percent 
        of the weighted average of rates charged by those insurers and 
        health maintenance organizations with individuals enrolled in: 
           (1) number two $500 annual deductible individual qualified 
        plans of insurance in force in Minnesota; 
           (2) individual health maintenance organization contracts of 
        coverage with a $500 annual deductible which are in force in 
        Minnesota and which are, or are adjusted to be, actuarially 
        equivalent to number two individual qualified plans; and 
           (3) individual policies and individual health maintenance 
        organization contracts of coverage which are in force in 
        Minnesota, are not qualified under section 62E.06, are, or are 
        adjusted to be, actuarially equivalent to number two individual 
        qualified plans, and do not fall under clause (2) other plans of 
        coverage similar to plans offered by the association based on 
        generally accepted actuarial principles; 
           (c) the premium for the plan with a $2,000 annual 
        deductible shall range from a minimum of 101 percent to a 
        maximum of 125 percent of the weighted average of rates charged 
        by those insurers and health maintenance organizations with 
        individuals enrolled in: 
           (1) $2,000 annual deductible individual plans in force in 
        Minnesota; and 
           (2) individual health maintenance organization contracts of 
        coverage with a $2,000 annual deductible which are in force in 
        Minnesota; or 
           (3) other plans of coverage similar to plans offered by the 
        association based on generally accepted actuarial principles. 
           (d) The premium for each type of qualified Medicare 
        supplement plan required to be offered by the association 
        pursuant to section 62E.12 shall range from a minimum of 101 
        percent to a maximum of 125 percent of the weighted average of 
        rates charged by those insurers and health maintenance 
        organizations with individuals enrolled in:  
           (1) qualified Medicare supplement plans in force in 
        Minnesota; 
           (2) health maintenance organization Medicare supplement 
        contracts of coverage which are in force in Minnesota and which 
        are, or are adjusted to be, actuarially equivalent to qualified 
        Medicare supplement plans; and 
           (3) Medicare supplement policies and health maintenance 
        organization Medicare supplement contracts of coverage which are 
        in force in Minnesota, are not qualified under section 62E.07, 
        are, or are adjusted to be, actuarially equivalent to qualified 
        Medicare supplement plans, and do not fall under clause 
        (2) other plans of coverage similar to plans offered by the 
        association based on generally accepted actuarial principles; 
        and 
           (d) (e) the charge for health maintenance organization 
        coverage shall be based on generally accepted actuarial 
        principles. 
           The list of insurers and health maintenance organizations 
        whose rates are used to establish the premium for coverage 
        offered by the association pursuant to paragraphs (a) to (c) (d) 
        shall be established by the commissioner on the basis of 
        information which shall be provided to the association by all 
        insurers and health maintenance organizations annually at the 
        commissioner's request.  This information shall include the 
        number of individuals covered by each type of plan or contract 
        specified in paragraphs (a) to (c) (d) that is sold, issued, and 
        renewed by the insurers and health maintenance organizations, 
        including those plans or contracts available only on a renewal 
        basis.  The information shall also include the rates charged for 
        each type of plan or contract.  
           In establishing premiums pursuant to this section, the 
        association shall utilize generally accepted actuarial 
        principles, provided that the association shall not discriminate 
        in charging premiums based upon sex.  In order to compute a 
        weighted average for each type of plan or contract specified 
        under paragraphs (a) to (c) (d), the association shall, using 
        the information collected pursuant to this subdivision, list 
        insurers and health maintenance organizations in rank order of 
        the total number of individuals covered by each insurer or 
        health maintenance organization.  The association shall then 
        compute a weighted average of the rates charged for coverage by 
        all the insurers and health maintenance organizations by: 
           (1) multiplying the numbers of individuals covered by each 
        insurer or health maintenance organization by the rates charged 
        for coverage; 
           (2) separately summing both the number of individuals 
        covered by all the insurers and health maintenance organizations 
        and all the products computed under clause (1); and 
           (3) dividing the total of the products computed under 
        clause (1) by the total number of individuals covered.  
           The association may elect to use a sample of information 
        from the insurers and health maintenance organizations for 
        purposes of computing a weighted average.  If the association so 
        elects, the sample of information from insurers and health 
        maintenance organizations shall, at a minimum, include 
        information from those insurers and health maintenance 
        organizations which, according to their order of ranking from 
        the largest number of individuals covered to the smallest 
        number, account for at least the first 51 percent of all 
        individuals covered.  In no case, however, may a sample used by 
        the association to compute a weighted average include 
        information from fewer than the two insurers or health 
        maintenance organizations highest in rank order.  
           Subd. 2.  [SELF-SUPPORTING.] Subject to subdivision 1, the 
        schedule of premiums for coverage under the comprehensive health 
        insurance plan shall be designed to be self-supporting and based 
        on generally accepted actuarial principles. 
           Subd. 3.  [DETERMINATION OF RATES.] Premium rates under 
        this section must be determined annually.  These rates are 
        effective July 1 of each year and must be based on a survey of 
        approved rates of insurers and health maintenance organizations 
        in effect, or to be in effect, on April 1 of the same calendar 
        year.  These rates may be trended to July 1 in order to reflect 
        economic and inflationary changes. 
           Subd. 4.  [SMOKERS RATES.] The association may establish 
        smoker and nonsmoker premium rates that are based on generally 
        accepted actuarial principles. 
           Sec. 3.  Minnesota Statutes 1998, section 62E.10, is 
        amended by adding a subdivision to read: 
           Subd. 10.  [COST CONTAINMENT GOALS.] (a) By July 1, 2001, 
        the association shall investigate managed care delivery systems, 
        and if cost effective, enter into contracts with third-party 
        entities as provided in section 62E.101. 
           (b) By July 1, 2001, the association shall establish a 
        system to annually identify individuals insured by the Minnesota 
        comprehensive health association who may be eligible for private 
        health care coverage, medical assistance, state drug programs, 
        or other state or federal programs and notify them about their 
        eligibility for these programs. 
           (c) The association shall endeavor to reduce health care 
        costs using additional methods consistent with effective patient 
        care.  At a minimum, by July 1, 2001, the association shall: 
           (1) develop a focused chronic disease management and case 
        management program; 
           (2) develop a comprehensive program of preventive care; and 
           (3) implement a total drug formulary program. 
           Sec. 4.  Minnesota Statutes 1998, section 62E.101, is 
        amended to read: 
           62E.101 [MANAGED CARE DELIVERY METHOD.] 
           The association may form a preferred provider network or 
        contract with an existing provider network, health maintenance 
        organization, or nonprofit health service plan corporation to 
        deliver the services and benefits provided for in the plans of 
        health coverage offered.  If the association does not contract 
        with an existing provider network, health maintenance 
        organization, or nonprofit health service plan corporation, the 
        association may adopt a provider payment schedule and negotiate 
        provider payment rates subject to the approval of the 
        commissioner. 
           Sec. 5.  Minnesota Statutes 1999 Supplement, section 
        62E.12, is amended to read: 
           62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE 
        PLAN.] 
           (a) The association through its comprehensive health 
        insurance plan shall offer policies which provide the benefits 
        of a number one qualified plan and a number two qualified plan, 
        except that the maximum lifetime benefit on these plans shall be 
        $2,800,000,; and an extended basic Medicare supplement plan and 
        a basic Medicare supplement plan as described in sections 62A.31 
        to 62A.44 and 62E.07.  The association may also offer a plan 
        that is identical to a number one and number two qualified plan 
        except that it has a $2,000 annual deductible and a $2,800,000 
        maximum lifetime benefit.  
           (b) The requirement that a policy issued by the association 
        must be a qualified plan is satisfied if the association 
        contracts with a preferred provider network and the level of 
        benefits for services provided within the network satisfies the 
        requirements of a qualified plan.  If the association uses a 
        preferred provider network, payments to nonparticipating 
        providers must meet the minimum requirements of section 72A.20, 
        subdivision 15.  They 
           (c) The association shall offer health maintenance 
        organization contracts in those areas of the state where a 
        health maintenance organization has agreed to make the coverage 
        available and has been selected as a writing carrier.  
           (d) Notwithstanding the provisions of section 62E.06 and 
        unless those charges are billed by a provider that is part of 
        the association's preferred provider network, the state plan 
        shall exclude coverage of services of a private duty nurse other 
        than on an inpatient basis and any charges for treatment in a 
        hospital located outside of the state of Minnesota in which the 
        covered person is receiving treatment for a mental or nervous 
        disorder, unless similar treatment for the mental or nervous 
        disorder is medically necessary, unavailable in Minnesota and 
        provided upon referral by a licensed Minnesota medical 
        practitioner. 
           Sec. 6.  Minnesota Statutes 1998, section 62E.13, 
        subdivision 2, is amended to read: 
           Subd. 2.  [SELECTION OF WRITING CARRIER.] 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 entity 
        which wishes to be selected as a writing carrier to administer 
        the state plan.  The selection of the writing carrier shall be 
        based upon criteria 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 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 and the $2,000 deductible plan, the 
        qualified medicare supplement plan, and the health maintenance 
        organization contract. 
           Sec. 7.  Minnesota Statutes 1998, section 62E.15, is 
        amended by adding a subdivision to read: 
           Subd. 2a.  [ANNUAL VERIFICATION.] The association may 
        annually verify the uninsurability of each policyholder to 
        insure that only eligible persons are enrolled in the plan. 
           Sec. 8.  Minnesota Statutes 1998, section 62E.18, is 
        amended to read: 
           62E.18 [HEALTH INSURANCE FOR RETIRED EMPLOYEES NOT ELIGIBLE 
        FOR MEDICARE.] 
           A Minnesota resident who is age 65 or over and is not 
        eligible for the health insurance benefits of the federal 
        Medicare program is entitled to purchase the benefits of a 
        qualified plan, one or two, or the $2,000 annual deductible plan 
        if available, offered by the Minnesota comprehensive health 
        association without any of the limitations set forth in section 
        62E.14, subdivision 1, paragraph (c), and subdivision 3. 
           Sec. 9.  [STUDY OF MCHA PREMIUM RATES.] 
           The Minnesota comprehensive health association shall submit 
        to the legislature and the commissioner of commerce, by November 
        15, 2000, a study regarding the impact of increasing the maximum 
        premium range of the plans that the association offers to above 
        125 percent of the weighted average of rates charged in the 
        individual market for similar plans.  The study must also 
        include an analysis of: 
           (1) the feasibility of establishing a sliding scale premium 
        program for policyholders; and 
           (2) the plan's annual out-of-pocket expense limitation. 
           Sec. 10.  [EFFECTIVE DATE.] 
           Sections 1 to 9 are effective the day following final 
        enactment. 
           Presented to the governor April 11, 2000 
           Signed by the governor April 14, 2000, 2:43 p.m.