Minnesota Session Laws - 2005, Regular Session

                            CHAPTER 77-S.F.No. 1998 
                  An act relating to health; assessing health 
                  maintenance organizations for purposes of the 
                  insurance fraud prevention account; regulating certain 
                  rates, claims, filing, and reporting practices; 
                  eliminating expanded provider network requirements; 
                  amending Minnesota Statutes 2004, sections 45.0135, 
                  subdivision 7; 62E.05, subdivision 2; 62L.08, 
                  subdivision 8; 62Q.75; 72A.201, subdivision 4; 
                  256B.692, subdivision 2; 295.582; repealing Minnesota 
                  Statutes 2004, sections 62E.035; 62Q.095. 
        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
           Section 1.  Minnesota Statutes 2004, section 45.0135, 
        subdivision 7, is amended to read: 
           Subd. 7.  [ASSESSMENT.] Each insurer authorized to sell 
        insurance in the state of Minnesota shall remit an assessment to 
        the commissioner for deposit in the insurance fraud prevention 
        account on or before June 1 of each year.  The amount of the 
        assessment shall be based on the insurer's total assets and on 
        the insurer's total written Minnesota premium, for the preceding 
        fiscal year, as reported pursuant to section 60A.13.  The 
        assessment is calculated as follows: 
                  Total Assets                      Assessment
             Less than $100,000,000                   $  200
             $100,000,000 to $1,000,000,000           $  750
             Over $1,000,000,000                      $2,000
             
             Minnesota Written Premium              Assessment 
             Less than $10,000,000                    $  200
             $10,000,000 to $100,000,000              $  750
             Over $100,000,000                        $2,000
           For purposes of this subdivision, the following entities 
        are not considered to be insurers authorized to sell insurance 
        in the state of Minnesota:  risk retention groups; or township 
        mutuals organized under chapter 67A; or health maintenance 
        organizations organized under chapter 62D. 
           Sec. 2.  Minnesota Statutes 2004, 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, co-payments, 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. 3.  Minnesota Statutes 2004, section 62L.08, 
        subdivision 8, is amended to read: 
           Subd. 8.  [FILING REQUIREMENT.] No later than July 1, 1993, 
        and each year thereafter, A health carrier that offers, sells, 
        issues, or renews a health benefit plan for small employers 
        shall file with the commissioner the index rates and must 
        demonstrate that all rates shall be within the rating 
        restrictions defined in this chapter.  Such demonstration must 
        include the allowable range of rates from the index rates and a 
        description of how the health carrier intends to use demographic 
        factors including case characteristics in calculating the 
        premium rates.  The rates shall not be approved, unless the 
        commissioner has determined that the rates are reasonable.  In 
        determining reasonableness, the commissioner shall consider the 
        growth rates applied under section 62J.04, subdivision 1, 
        paragraph (b), to the calendar year or years that the proposed 
        premium rate would be in effect, actuarially valid changes in 
        risk associated with the enrollee population, and actuarially 
        valid changes as a result of statutory changes in Laws 1992, 
        chapter 549.  For premium rates proposed to go into effect 
        between July 1, 1993 and December 31, 1993, the pertinent growth 
        rate is the growth rate applied under section 62J.04, 
        subdivision 1, paragraph (b), to calendar year 1994.  
           Sec. 4.  Minnesota Statutes 2004, section 62Q.75, is 
        amended to read: 
           62Q.75 [PROMPT PAYMENT REQUIRED.] 
           Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
        section, the following terms have the meanings given to them. 
           (b) "Clean claim" means a claim that has no defect or 
        impropriety, including any lack of any required substantiating 
        documentation, including, but not limited to, coordination of 
        benefits information, or particular circumstance requiring 
        special treatment that prevents timely payment from being made 
        on a claim under this section.  Nothing in this section alters 
        an enrollee's obligation to disclose information as required by 
        law.  
           (c) "Third-party administrator" means a third-party 
        administrator or other entity subject to section 60A.23, 
        subdivision 8, and Minnesota Rules, chapter 2767. 
           Subd. 2.  [CLAIMS PAYMENTS.] (a) This section applies to 
        clean claims submitted to a health plan company or third-party 
        administrator for services provided by any: 
           (1) health care provider, as defined in section 62Q.74, but 
        does not include a provider licensed under chapter 151; 
           (2) home health care provider, as defined in section 
        144A.43, subdivision 4; or 
           (3) health care facility. 
        All health plan companies and third-party administrators must 
        pay or deny claims that are clean claims within 30 calendar days 
        after the date upon which the health plan company or third-party 
        administrator received the claim. 
           (b) The health plan company or third-party administrator 
        shall, upon request, make available to the provider information 
        about the status of a claim submitted by the provider consistent 
        with section 62J.581. 
           (c) If a health plan company or third-party administrator 
        does not pay or deny a clean claim within the period provided in 
        paragraph (a), the health plan company or third-party 
        administrator must pay interest on the claim for the period 
        beginning on the day after the required payment date specified 
        in paragraph (a) and ending on the date on which the health plan 
        company or third-party administrator makes the payment or denies 
        the claim.  In any payment, the health plan company or 
        third-party administrator must itemize any interest payment 
        being made separately from other payments being made for 
        services provided.  The health plan company or third-party 
        administrator shall not require the health care provider to bill 
        the health plan company or third-party administrator for the 
        interest required under this section before any interest payment 
        is made.  Interest payments must be made to the health care 
        provider no less frequently than quarterly. 
           (d) The rate of interest paid by a health plan company or 
        third-party administrator under this subdivision shall be 1.5 
        percent per month or any part of a month. 
           (e) A health plan company or third-party administrator is 
        not required to make an interest payment on a claim for which 
        payment has been delayed for purposes of reviewing potentially 
        fraudulent or abusive billing practices. 
           (f) The commissioner may assess a financial administrative 
        penalty against a health plan company for violation of this 
        subdivision when there is a pattern of abuse that demonstrates a 
        lack of good faith effort and a systematic failure of the health 
        plan company to comply with this subdivision. 
           Subd. 3.  [CLAIMS FILING.] Unless otherwise provided by 
        contract, by section 16A.124, subdivision 4a, or by federal law, 
        the health care providers and facilities specified in 
        subdivision 2, must submit their charges to a health plan 
        company or third-party administrator within six months from the 
        date of service or the date the health care provider knew or was 
        informed of the correct name and address of the responsible 
        health plan company or third-party administrator, whichever is 
        later.  A health care provider or facility that does not make an 
        initial submission of charges within the six-month period shall 
        not be reimbursed for the charge and may not collect the charge 
        from the recipient of the service or any other payer.  The 
        six-month submission requirement may be extended to 12 months in 
        cases where a health care provider or facility specified in 
        subdivision 2 has determined and can substantiate that it has 
        experienced a significant disruption to normal operations that 
        materially affects the ability to conduct business in a normal 
        manner and to submit claims on a timely basis.  This subdivision 
        also applies to all health care providers and facilities that 
        submit charges to workers' compensation payers for treatment of 
        a workers' compensation injury compensable under chapter 176, or 
        to reparation obligors for treatment of an injury compensable 
        under chapter 65B. 
           Sec. 5.  Minnesota Statutes 2004, section 72A.201, 
        subdivision 4, is amended to read: 
           Subd. 4.  [STANDARDS FOR CLAIM FILING AND HANDLING.] The 
        following acts by an insurer, an adjuster, a self-insured, or a 
        self-insurance administrator constitute unfair settlement 
        practices:  
           (1) except for claims made under a health insurance policy, 
        after receiving notification of claim from an insured or a 
        claimant, failing to acknowledge receipt of the notification of 
        the claim within ten business days, and failing to promptly 
        provide all necessary claim forms and instructions to process 
        the claim, unless the claim is settled within ten business 
        days.  The acknowledgment must include the telephone number of 
        the company representative who can assist the insured or the 
        claimant in providing information and assistance that is 
        reasonable so that the insured or claimant can comply with the 
        policy conditions and the insurer's reasonable requirements.  If 
        an acknowledgment is made by means other than writing, an 
        appropriate notation of the acknowledgment must be made in the 
        claim file of the insurer and dated.  An appropriate notation 
        must include at least the following information where the 
        acknowledgment is by telephone or oral contact:  
           (i) the telephone number called, if any; 
           (ii) the name of the person making the telephone call or 
        oral contact; 
           (iii) the name of the person who actually received the 
        telephone call or oral contact; 
           (iv) the time of the telephone call or oral contact; and 
           (v) the date of the telephone call or oral contact; 
           (2) failing to reply, within ten business days of receipt, 
        to all other communications about a claim from an insured or a 
        claimant that reasonably indicate a response is requested or 
        needed; 
           (3)(i) unless provided otherwise by clause (ii) or (iii), 
        other law, or in the policy, failing to complete its 
        investigation and inform the insured or claimant of acceptance 
        or denial of a claim within 30 business days after receipt of 
        notification of claim unless the investigation cannot be 
        reasonably completed within that time. In the event that the 
        investigation cannot reasonably be completed within that time, 
        the insurer shall notify the insured or claimant within the time 
        period of the reasons why the investigation is not complete and 
        the expected date the investigation will be complete.  For 
        claims made under a health policy the notification of claim must 
        be in writing; 
           (ii) for claims submitted under a health policy, the 
        insurer must comply with all of the requirements of section 
        62Q.75; 
           (iii) for claims submitted under a health policy that are 
        accepted, the insurer must notify the insured or claimant no 
        less than semiannually of the disposition of claims of the 
        insured or claimant.  For purposes of this clause, acceptance of 
        a claim means that there is no additional financial liability 
        for the insured or claimant, either because there is a flat 
        co-payment amount specified in the health plan or because there 
        is no co-payment, deductible, or coinsurance owed; 
           (4) where evidence of suspected fraud is present, the 
        requirement to disclose their reasons for failure to complete 
        the investigation within the time period set forth in clause (3) 
        need not be specific.  The insurer must make this evidence 
        available to the Department of Commerce if requested; 
           (5) failing to notify an insured who has made a 
        notification of claim of all available benefits or coverages 
        which the insured may be eligible to receive under the terms of 
        a policy and of the documentation which the insured must supply 
        in order to ascertain eligibility; 
           (6) unless otherwise provided by law or in the policy, 
        requiring an insured to give written notice of loss or proof of 
        loss within a specified time, and thereafter seeking to relieve 
        the insurer of its obligations if the time limit is not complied 
        with, unless the failure to comply with the time limit 
        prejudices the insurer's rights and then only if the insurer 
        gave prior notice to the insured of the potential prejudice; 
           (7) advising an insured or a claimant not to obtain the 
        services of an attorney or an adjuster, or representing that 
        payment will be delayed if an attorney or an adjuster is 
        retained by the insured or the claimant; 
           (8) failing to advise in writing an insured or claimant who 
        has filed a notification of claim known to be unresolved, and 
        who has not retained an attorney, of the expiration of a statute 
        of limitations at least 60 days prior to that expiration.  For 
        the purposes of this clause, any claim on which the insurer has 
        received no communication from the insured or claimant for a 
        period of two years preceding the expiration of the applicable 
        statute of limitations shall not be considered to be known to be 
        unresolved and notice need not be sent pursuant to this clause; 
           (9) demanding information which would not affect the 
        settlement of the claim; 
           (10) unless expressly permitted by law or the policy, 
        refusing to settle a claim of an insured on the basis that the 
        responsibility should be assumed by others; 
           (11) failing, within 60 business days after receipt of a 
        properly executed proof of loss, to advise the insured of the 
        acceptance or denial of the claim by the insurer.  No insurer 
        shall deny a claim on the grounds of a specific policy 
        provision, condition, or exclusion unless reference to the 
        provision, condition, or exclusion is included in the denial. 
        The denial must be given to the insured in writing with a copy 
        filed in the claim file; 
           (12) denying or reducing a claim on the basis of an 
        application which was altered or falsified by the agent or 
        insurer without the knowledge of the insured; 
           (13) failing to notify the insured of the existence of the 
        additional living expense coverage when an insured under a 
        homeowners policy sustains a loss by reason of a covered 
        occurrence and the damage to the dwelling is such that it is not 
        habitable; 
           (14) failing to inform an insured or a claimant that the 
        insurer will pay for an estimate of repair if the insurer 
        requested the estimate and the insured or claimant had 
        previously submitted two estimates of repair.  
           Sec. 6.  Minnesota Statutes 2004, section 256B.692, 
        subdivision 2, is amended to read: 
           Subd. 2.  [DUTIES OF THE COMMISSIONER OF HEALTH.] (a) 
        Notwithstanding chapters 62D and 62N, a county that elects to 
        purchase medical assistance and general assistance medical care 
        in return for a fixed sum without regard to the frequency or 
        extent of services furnished to any particular enrollee is not 
        required to obtain a certificate of authority under chapter 62D 
        or 62N.  The county board of commissioners is the governing body 
        of a county-based purchasing program.  In a multicounty 
        arrangement, the governing body is a joint powers board 
        established under section 471.59.  
           (b) A county that elects to purchase medical assistance and 
        general assistance medical care services under this section must 
        satisfy the commissioner of health that the requirements for 
        assurance of consumer protection, provider protection, and 
        fiscal solvency of chapter 62D, applicable to health maintenance 
        organizations, or chapter 62N, applicable to community 
        integrated service networks, will be met.  
           (c) A county must also assure the commissioner of health 
        that the requirements of sections 62J.041; 62J.48; 62J.71 to 
        62J.73; 62M.01 to 62M.16; all applicable provisions of chapter 
        62Q, including sections 62Q.075; 62Q.1055; 62Q.106; 62Q.12; 
        62Q.135; 62Q.14; 62Q.145; 62Q.19; 62Q.23, paragraph (c); 62Q.43; 
        62Q.47; 62Q.50; 62Q.52 to 62Q.56; 62Q.58; 62Q.64; 62Q.68 to 
        62Q.72; and 72A.201 will be met.  
           (d) All enforcement and rulemaking powers available under 
        chapters 62D, 62J, 62M, 62N, and 62Q are hereby granted to the 
        commissioner of health with respect to counties that purchase 
        medical assistance and general assistance medical care services 
        under this section.  
           (e) The commissioner, in consultation with county 
        government, shall develop administrative and financial reporting 
        requirements for county-based purchasing programs relating to 
        sections 62D.041, 62D.042, 62D.045, 62D.08, 62N.28, 62N.29, and 
        62N.31, and other sections as necessary, that are specific to 
        county administrative, accounting, and reporting systems and 
        consistent with other statutory requirements of counties.  
           Sec. 7.  Minnesota Statutes 2004, section 295.582, is 
        amended to read: 
           295.582 [AUTHORITY.] 
           (a) A hospital, surgical center, 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 the tax percentage 
        specified in section 295.52 multiplied against the gross 
        revenues received under the third-party contract, and the tax 
        percentage specified in section 295.52 multiplied against 
        co-payments 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 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) (c) 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. 8.  [REPEALER.] 
           Minnesota Statutes 2004, sections 62E.035 and 62Q.095, are 
        repealed. 
           Presented to the governor May 20, 2005 
           Signed by the governor May 24, 2005, 1:55 p.m.