1.1                          A bill for an act
  1.2             relating to insurance; transferring regulatory 
  1.3             authority for health maintenance organizations to the 
  1.4             commissioner of commerce; amending Minnesota Statutes 
  1.5             1994, sections 60B.03, subdivision 2; 60B.15; 60B.20; 
  1.6             60G.01, subdivisions 2 and 4; 62D.01, subdivision 2; 
  1.7             62D.02, subdivision 3; 62D.03, subdivisions 1, 3, and 
  1.8             4; 62D.04, subdivisions 1, 2, and 3; 62D.05, 
  1.9             subdivision 6; 62D.06, subdivision 2; 62D.07, 
  1.10            subdivisions 2, 3, and 10; 62D.08, subdivisions 1, 2, 
  1.11            and 3; 62D.09, subdivisions 1 and 8; 62D.10, 
  1.12            subdivision 4; 62D.11, subdivisions 2 and 3; 62D.12, 
  1.13            subdivisions 1, 2, and 9; 62D.121, subdivision 3a; 
  1.14            62D.14, subdivisions 1, 3, 5, and 6; 62D.15, 
  1.15            subdivisions 1 and 4; 62D.16, subdivisions 1 and 2; 
  1.16            62D.17, subdivisions 1, 3, 4, and 5; 62D.18, 
  1.17            subdivisions 1 and 7; 62D.19; 62D.20, subdivision 1; 
  1.18            62D.21; 62D.211; 62D.22, subdivisions 4 and 10; 
  1.19            62D.24; 62D.30, subdivisions 1 and 3; repealing 
  1.20            Minnesota Statutes 1994, section 62D.03, subdivision 2.
  1.21  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.22     Section 1.  Minnesota Statutes 1994, section 60B.03, 
  1.23  subdivision 2, is amended to read: 
  1.24     Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
  1.25  commissioner of commerce of the state of Minnesota and, in that 
  1.26  commissioner's absence or disability, a deputy or other person 
  1.27  duly designated to act in that commissioner's place.  ~~In the~~ 
  1.28  ~~context of rehabilitation or liquidation of a health maintenance~~ 
  1.29  ~~organization, "commissioner" means the commissioner of health of~~ 
  1.30  ~~the state of Minnesota and, in that commissioner's absence or~~ 
  1.31  ~~disability, a deputy or other person duly designated to act in~~ 
  1.32  ~~that commissioner's place.~~ 
  1.33     Sec. 2.  Minnesota Statutes 1994, section 60B.15, is 
  2.1   amended to read: 
  2.2      60B.15 [GROUNDS FOR REHABILITATION.] 
  2.3      The commissioner may apply by verified petition to the 
  2.4   district court for Ramsey county or for the county in which the 
  2.5   principal office of the insurer is located for an order 
  2.6   directing the commissioner to rehabilitate a domestic insurer or 
  2.7   an alien insurer domiciled in this state on any one or more of 
  2.8   the following grounds: 
  2.9      (1) Any ground on which the commissioner may apply for an 
  2.10  order of liquidation under section 60B.20, whenever the 
  2.11  commissioner believes that the insurer may be successfully 
  2.12  rehabilitated without substantial increase in the risk of loss 
  2.13  to creditors of the insurer, its policyholders or to the public; 
  2.14     (2) That the commissioner has reasonable cause to believe 
  2.15  that there has been theft from the insurer, wrongful 
  2.16  sequestration or diversion of the insurer's assets, forgery or 
  2.17  fraud affecting the insurer or other illegal conduct in, by or 
  2.18  with respect to the insurer, which endanger assets in an amount 
  2.19  threatening insolvency of the insurer; 
  2.20     (3) That substantial and unexplained discrepancies exist 
  2.21  between the insurer's records and the most recent annual report 
  2.22  or other official company reports; 
  2.23     (4) That the insurer, after written demand by the 
  2.24  commissioner, has failed to remove any person who in fact has 
  2.25  executive authority in the insurer, whether an officer, manager, 
  2.26  general agent, employee, or other person, if the person has been 
  2.27  found by the commissioner after notice and hearing to be 
  2.28  dishonest or untrustworthy in a way affecting the insurer's 
  2.29  business such as is the basis for action under section 60A.052; 
  2.30     (5) That control of the insurer, whether by stock ownership 
  2.31  or otherwise, and whether direct or indirect, is in one or more 
  2.32  persons found by the commissioner after notice and hearing to be 
  2.33  dishonest or untrustworthy such as is the basis for action under 
  2.34  section 60A.052; 
  2.35     (6) That the insurer, after written demand by the 
  2.36  commissioner, has failed within a reasonable period of time to 
  3.1   terminate the employment and status and all influences on 
  3.2   management of any person who in fact has executive authority in 
  3.3   the insurer, whether an officer, manager, general agent, 
  3.4   employee or other person if the person has refused to submit to 
  3.5   lawful examination under oath by the commissioner concerning the 
  3.6   affairs of the insurer, whether in this state or elsewhere; 
  3.7      (7) That after lawful written demand by the commissioner 
  3.8   the insurer has failed to submit promptly any of its own 
  3.9   property, books, accounts, documents, or other records, or those 
  3.10  of any subsidiary or related company within the control of the 
  3.11  insurer, or those of any person having executive authority in 
  3.12  the insurer so far as they pertain to the insurer, to reasonable 
  3.13  inspection or examination by the commissioner or an authorized 
  3.14  representative.  If the insurer is unable to submit the 
  3.15  property, books, accounts, documents, or other records of a 
  3.16  person having executive authority in the insurer, it shall be 
  3.17  excused from doing so if it promptly and effectively terminates 
  3.18  the relationship of the person to the insurer; 
  3.19     (8) That without first obtaining the written consent of the 
  3.20  commissioner, or if required by law, the written consent of the 
  3.21  attorney general, the insurer has transferred, or attempted to 
  3.22  transfer, substantially its entire property or business, or has 
  3.23  entered into any transaction the effect of which is to merge, 
  3.24  consolidate, or reinsure substantially its entire property or 
  3.25  business of any other person; 
  3.26     (9) That the insurer or its property has been or is the 
  3.27  subject of an application for the appointment of a receiver, 
  3.28  trustee, custodian, conservator or sequestrator or similar 
  3.29  fiduciary of the insurer or its property otherwise than as 
  3.30  authorized under sections 60B.01 to 60B.61, and that such 
  3.31  appointment has been made or is imminent, and that such 
  3.32  appointment might divest the courts of this state of 
  3.33  jurisdiction or prejudice orderly delinquency proceedings under 
  3.34  sections 60B.01 to 60B.61; 
  3.35     (10) That within the previous year the insurer has 
  3.36  willfully violated its charter or articles of incorporation or 
  4.1   its bylaws or any applicable insurance law or regulation of any 
  4.2   state, or of the federal government, or any valid order of the 
  4.3   commissioner under section 60B.11 in any manner or as to any 
  4.4   matter which threatens substantial injury to the insurer, its 
  4.5   creditors, it policyholders or the public, or having become 
  4.6   aware within the previous year of an unintentional or willful 
  4.7   violation has failed to take all reasonable steps to remedy the 
  4.8   situation resulting from the violation and to prevent the same 
  4.9   violations in the future; 
  4.10     (11) That the directors of the insurer are deadlocked in 
  4.11  the management of the insurer's affairs and that the members or 
  4.12  shareholders are unable to break the deadlock and that 
  4.13  irreparable injury to the insurer, its creditors, its 
  4.14  policyholders, or the public is threatened by reason thereof; 
  4.15     (12) That the insurer has failed to pay for 60 days after 
  4.16  due date any obligation to this state or any political 
  4.17  subdivision thereof or any judgment entered in this state, 
  4.18  except that such nonpayment shall not be a ground until 60 days 
  4.19  after any good faith effort by the insurer to contest the 
  4.20  obligation or judgment has been terminated, whether it is before 
  4.21  the commissioner or in the courts; 
  4.22     (13) That the insurer has failed to file its annual report 
  4.23  or other report within the time allowed by law, and after 
  4.24  written demand by the commissioner has failed to give an 
  4.25  adequate explanation immediately; 
  4.26     (14) That two-thirds of the board of directors, or the 
  4.27  holders of a majority of the shares entitled to vote, or a 
  4.28  majority of members or policyholders of an insurer subject to 
  4.29  control by its members or policyholders, consent to 
  4.30  rehabilitation under sections 60B.01 to 60B.61; 
  4.31     (15) That the insurer is engaging in a systematic practice 
  4.32  of reaching settlements with and obtaining releases from 
  4.33  policyholders or third party claimants and then unreasonably 
  4.34  delaying payment of or failing to pay the agreed upon 
  4.35  settlements; 
  4.36     (16) That the insurer is in such condition that the further 
  5.1   transaction of business would be hazardous, financially or 
  5.2   otherwise, to its policyholders, its creditors, or the public; 
  5.3      (17) That within the previous 12 months the insurer has 
  5.4   systematically attempted to compromise with its creditors on the 
  5.5   ground that it is financially unable to pay its claims in full; 
  5.6      (18) In the context of a health maintenance organization, 
  5.7   "insurer" when used in clauses (1) to (17) means "health 
  5.8   maintenance organization."  In addition to the grounds in 
  5.9   clauses (1) to (17), any one of the following constitutes 
  5.10  grounds for rehabilitation of a health maintenance organization: 
  5.11     (a) the health maintenance organization is unable or is 
  5.12  expected to be unable to meet its debts as they become due; 
  5.13     (b) grounds exist under section 62D.042, subdivision 7; 
  5.14     (c) the health maintenance organization's liabilities 
  5.15  exceed the current value of its assets, exclusive of intangibles 
  5.16  and, where the guaranteeing organization's financial condition 
  5.17  no longer meets the requirements of sections 62D.041 and 
  5.18  62D.042, exclusive of any deposits, letters of credit, or 
  5.19  guarantees provided by any guaranteeing organization under 
  5.20  chapter 62D; 
  5.21     (d) in addition to grounds under clause (16), within the 
  5.22  last year the health maintenance organization has failed, and 
  5.23  the commissioner ~~of health~~ expects such failure to continue in 
  5.24  the future, to make comprehensive medical care adequately 
  5.25  available and accessible to its enrollees and the health 
  5.26  maintenance organization has not successfully implemented a plan 
  5.27  of corrective action pursuant to section 62D.121, subdivision 7; 
  5.28  and 
  5.29     (e) in addition to grounds under clause (16), within the 
  5.30  last year the directors or officers of the health maintenance 
  5.31  organization willfully violated the requirements of section 
  5.32  317A.251, or having become aware within the previous year of an 
  5.33  unintentional or willful violation of section 317A.251, have 
  5.34  failed to take all reasonable steps to remedy the situation 
  5.35  resulting from the violation and to prevent the same violation 
  5.36  in the future; 
  6.1      (19) An affiliate of the insurer has been placed in 
  6.2   conservatorship, rehabilitation, liquidation, or other court 
  6.3   supervision such that the insurer's financial condition may be 
  6.4   jeopardized.  
  6.5      Sec. 3.  Minnesota Statutes 1994, section 60B.20, is 
  6.6   amended to read: 
  6.7      60B.20 [GROUNDS FOR LIQUIDATION.] 
  6.8      The commissioner may apply by verified petition to the 
  6.9   district court for Ramsey county or for the county in which the 
  6.10  principal office of the insurer is located for an order to 
  6.11  liquidate a domestic insurer or an alien insurer domiciled in 
  6.12  this state on any one or more of the following grounds: 
  6.13     (1) Any ground on which the commissioner may apply for an 
  6.14  order of rehabilitation under section 60B.15, whenever the 
  6.15  commissioner believes that attempts to rehabilitate the insurer 
  6.16  would substantially increase the risk of loss to its creditors, 
  6.17  its policyholders, or the public, or would be futile, or that 
  6.18  rehabilitation would serve no useful purpose; 
  6.19     (2) That the insurer is or is about to become insolvent; 
  6.20     (3) That the insurer has not transacted the business for 
  6.21  which it was organized or incorporated during the previous 12 
  6.22  months or has transacted only a token such business during that 
  6.23  period, although authorized to do so throughout that period, or 
  6.24  that more than 12 months after incorporation it has failed to 
  6.25  become authorized to do the business for which it was organized 
  6.26  or incorporated; 
  6.27     (4) That the insurer has commenced, or within the previous 
  6.28  year has attempted to commence, voluntary dissolution or 
  6.29  liquidation otherwise than as provided in section 60B.04, 
  6.30  subdivision 3 in the case of a solvent insurer; 
  6.31     (5) That the insurer has concealed records or assets from 
  6.32  the commissioner or improperly removed them from the 
  6.33  jurisdiction, or the commissioner believes that the insurer is 
  6.34  about to do so; 
  6.35     (6) That the insurer does not satisfy the requirements that 
  6.36  would be applicable if it were seeking initial authorization in 
  7.1   this state to do the business for which it was organized or 
  7.2   incorporated, except for: 
  7.3      (i) Requirements that are intended to apply only at the 
  7.4   time the initial authorization to do business is obtained, and 
  7.5   not thereafter; and 
  7.6      (ii) Requirements that are expressly made inapplicable by 
  7.7   the laws establishing the requirements; 
  7.8      (7) That the holders of two-thirds of the shares entitled 
  7.9   to vote, or two-thirds of the members or policyholders entitled 
  7.10  to vote in an insurer controlled by its members or 
  7.11  policyholders, have consented to a petition; 
  7.12     (8) In the context of a health maintenance organization, 
  7.13  "insurer" when used in clauses (1) to (7) means "health 
  7.14  maintenance organization."  In addition to the grounds in 
  7.15  clauses (1) to (7), any one of the following constitutes grounds 
  7.16  for liquidation of a health maintenance organization: 
  7.17     (i) the health maintenance organization is unable or is 
  7.18  expected to be unable to meet its debts as they become due; 
  7.19     (ii) grounds exist under section 62D.042, subdivision 7; 
  7.20     (iii) the health maintenance organization's liabilities 
  7.21  exceed the current value of its assets, exclusive of intangibles 
  7.22  and, where the guaranteeing organization's financial condition 
  7.23  no longer meets the requirements of sections 62D.041 and 
  7.24  62D.042, exclusive of any deposits, letters of credit, or 
  7.25  guarantees provided by any guaranteeing organization under 
  7.26  chapter 62D; 
  7.27     (iv) within the last year the health maintenance 
  7.28  organization has failed, and the commissioner ~~of health~~ expects 
  7.29  failure to continue in the future, to make comprehensive medical 
  7.30  care adequately available and accessible to its enrollees and 
  7.31  the health maintenance organization has not successfully 
  7.32  implemented a plan of corrective action pursuant to section 
  7.33  62D.121, subdivision 7; and 
  7.34     (v) within the last year the directors or officers of the 
  7.35  health maintenance organization willfully violated the 
  7.36  requirements of section 317A.251, or having become aware within 
  8.1   the previous year of an unintentional or willful violation of 
  8.2   section 317A.251, have failed to take all reasonable steps to 
  8.3   remedy the situation resulting from the violation and to prevent 
  8.4   the same violation in the future. 
  8.5      Sec. 4.  Minnesota Statutes 1994, section 60G.01, 
  8.6   subdivision 2, is amended to read: 
  8.7      Subd. 2.  [COMMISSIONER.] "Commissioner" means the 
  8.8   commissioner of commerce~~, except that "commissioner" means the~~ 
  8.9   ~~commissioner of health for administrative supervision of health~~ 
  8.10  ~~maintenance organizations~~. 
  8.11     Sec. 5.  Minnesota Statutes 1994, section 60G.01, 
  8.12  subdivision 4, is amended to read: 
  8.13     Subd. 4.  [DEPARTMENT.] "Department" means the department 
  8.14  of commerce~~, except that "department" means the department of~~ 
  8.15  ~~health for administrative supervision of health maintenance~~ 
  8.16  ~~organizations~~. 
  8.17     Sec. 6.  Minnesota Statutes 1994, section 62D.01, 
  8.18  subdivision 2, is amended to read: 
  8.19     Subd. 2.  (a) Faced with the continuation of mounting costs 
  8.20  of health care coupled with its inaccessibility to large 
  8.21  segments of the population, the legislature has determined that 
  8.22  there is a need to explore alternative methods for the delivery 
  8.23  of health care services, with a view toward achieving greater 
  8.24  efficiency and economy in providing these services. 
  8.25     (b) It is, therefore, the policy of the state to eliminate 
  8.26  the barriers to the organization, promotion, and expansion of 
  8.27  health maintenance organizations; to provide for their 
  8.28  regulation by the state commissioner of ~~health~~ commerce; and to 
  8.29  exempt them from the operation of the insurance and nonprofit 
  8.30  health service plan corporation laws of the state except as 
  8.31  hereinafter provided. 
  8.32     (c) It is further the intention of the legislature to 
  8.33  closely monitor the development of health maintenance 
  8.34  organizations in order to assess their impact on the costs of 
  8.35  health care to consumers, the accessibility of health care to 
  8.36  consumers, and the quality of health care provided to consumers. 
  9.1      Sec. 7.  Minnesota Statutes 1994, section 62D.02, 
  9.2   subdivision 3, is amended to read: 
  9.3      Subd. 3.  "Commissioner of ~~health~~ commerce" or 
  9.4   "commissioner" means the state commissioner of ~~health~~ commerce 
  9.5   or a designee. 
  9.6      Sec. 8.  Minnesota Statutes 1994, section 62D.03, 
  9.7   subdivision 1, is amended to read: 
  9.8      Subdivision 1.  Notwithstanding any law of this state to 
  9.9   the contrary, any nonprofit corporation organized to do so or a 
  9.10  local governmental unit may apply to the commissioner ~~of health~~ 
  9.11  for a certificate of authority to establish and operate a health 
  9.12  maintenance organization in compliance with sections 62D.01 to 
  9.13  62D.30.  No person shall establish or operate a health 
  9.14  maintenance organization in this state, nor sell or offer to 
  9.15  sell, or solicit offers to purchase or receive advance or 
  9.16  periodic consideration in conjunction with a health maintenance 
  9.17  organization or health maintenance contract unless the 
  9.18  organization has a certificate of authority under sections 
  9.19  62D.01 to 62D.30. 
  9.20     Sec. 9.  Minnesota Statutes 1994, section 62D.03, 
  9.21  subdivision 3, is amended to read: 
  9.22     Subd. 3.  The commissioner ~~of health may~~ shall require any 
  9.23  person providing physician and hospital services with payments 
  9.24  made in the manner set forth in section 62D.02, subdivision 4, 
  9.25  to apply for a certificate of authority under sections 62D.01 to 
  9.26  62D.30.  ~~Any person directed to apply for a certificate of~~ 
  9.27  ~~authority shall be subject to the provisions of subdivision 2.~~ 
  9.28     Sec. 10.  Minnesota Statutes 1994, section 62D.03, 
  9.29  subdivision 4, is amended to read: 
  9.30     Subd. 4.  Each application for a certificate of authority 
  9.31  shall be verified by an officer or authorized representative of 
  9.32  the applicant, and shall be in a form prescribed by the 
  9.33  commissioner ~~of health~~.  Each application shall include the 
  9.34  following: 
  9.35     (a) a copy of the basic organizational document, if any, of 
  9.36  the applicant and of each major participating entity; such as 
 10.1   the articles of incorporation, or other applicable documents, 
 10.2   and all amendments thereto; 
 10.3      (b) a copy of the bylaws, rules and regulations, or similar 
 10.4   document, if any, and all amendments thereto which regulate the 
 10.5   conduct of the affairs of the applicant and of each major 
 10.6   participating entity; 
 10.7      (c) a list of the names, addresses, and official positions 
 10.8   of the following: 
 10.9      (1) all members of the board of directors, or governing 
 10.10  body of the local government unit, and the principal officers 
 10.11  and shareholders of the applicant organization; and 
 10.12     (2) all members of the board of directors, or governing 
 10.13  body of the local government unit, and the principal officers of 
 10.14  the major participating entity and each shareholder beneficially 
 10.15  owning more than ten percent of any voting stock of the major 
 10.16  participating entity; 
 10.17     The commissioner may by rule identify persons included in 
 10.18  the term "principal officers"; 
 10.19     (d) a full disclosure of the extent and nature of any 
 10.20  contract or financial arrangements between the following:  
 10.21     (1) the health maintenance organization and the persons 
 10.22  listed in clause (c)(1); 
 10.23     (2) the health maintenance organization and the persons 
 10.24  listed in clause (c)(2); 
 10.25     (3) each major participating entity and the persons listed 
 10.26  in clause (c)(1) concerning any financial relationship with the 
 10.27  health maintenance organization; and 
 10.28     (4) each major participating entity and the persons listed 
 10.29  in clause (c)(2) concerning any financial relationship with the 
 10.30  health maintenance organization; 
 10.31     (e) the name and address of each participating entity and 
 10.32  the agreed upon duration of each contract or agreement; 
 10.33     (f) a copy of the form of each contract binding the 
 10.34  participating entities and the health maintenance organization.  
 10.35  Contractual provisions shall be consistent with the purposes of 
 10.36  sections 62D.01 to 62D.30, in regard to the services to be 
 11.1   performed under the contract, the manner in which payment for 
 11.2   services is determined, the nature and extent of 
 11.3   responsibilities to be retained by the health maintenance 
 11.4   organization, the nature and extent of risk sharing permissible, 
 11.5   and contractual termination provisions; 
 11.6      (g) a copy of each contract binding major participating 
 11.7   entities and the health maintenance organization.  Contract 
 11.8   information filed with the commissioner shall be confidential 
 11.9   and subject to the provisions of section 13.37, subdivision 1, 
 11.10  clause (b), upon the request of the health maintenance 
 11.11  organization.  
 11.12     Upon initial filing of each contract, the health 
 11.13  maintenance organization shall file a separate document 
 11.14  detailing the projected annual expenses to the major 
 11.15  participating entity in performing the contract and the 
 11.16  projected annual revenues received by the entity from the health 
 11.17  maintenance organization for such performance.  The commissioner 
 11.18  shall disapprove any contract with a major participating entity 
 11.19  if the contract will result in an unreasonable expense under 
 11.20  section 62D.19.  The commissioner shall approve or disapprove a 
 11.21  contract within 30 days of filing.  
 11.22     Within 120 days of the anniversary of the implementation of 
 11.23  each contract, the health maintenance organization shall file a 
 11.24  document detailing the actual expenses incurred and reported by 
 11.25  the major participating entity in performing the contract in the 
 11.26  preceding year and the actual revenues received from the health 
 11.27  maintenance organization by the entity in payment for the 
 11.28  performance~~.~~; 
 11.29     ~~Contracts implemented prior to April 25, 1984, shall be~~ 
 11.30  ~~filed within 90 days of April 25, 1984.  These contracts are~~ 
 11.31  ~~subject to the provisions of section 62D.19, but are not subject~~ 
 11.32  ~~to the prospective review prescribed by this clause, unless or~~ 
 11.33  ~~until the terms of the contract are modified.  Commencing with~~ 
 11.34  ~~the next anniversary of the implementation of each of these~~ 
 11.35  ~~contracts immediately following filing, the health maintenance~~ 
 11.36  ~~organization shall, as otherwise required by this subdivision,~~ 
 12.1   ~~file annual actual expenses and revenues;~~ 
 12.2      (h) a statement generally describing the health maintenance 
 12.3   organization, its health maintenance contracts and separate 
 12.4   health service contracts, facilities, and personnel, including a 
 12.5   statement describing the manner in which the applicant proposes 
 12.6   to provide enrollees with comprehensive health maintenance 
 12.7   services and separate health services; 
 12.8      (i) a copy of the form of each evidence of coverage to be 
 12.9   issued to the enrollees; 
 12.10     (j) a copy of the form of each individual or group health 
 12.11  maintenance contract and each separate health service contract 
 12.12  which is to be issued to enrollees or their representatives; 
 12.13     (k) financial statements showing the applicant's assets, 
 12.14  liabilities, and sources of financial support.  If the 
 12.15  applicant's financial affairs are audited by independent 
 12.16  certified public accountants, a copy of the applicant's most 
 12.17  recent certified financial statement may be deemed to satisfy 
 12.18  this requirement; 
 12.19     (l) a description of the proposed method of marketing the 
 12.20  plan, a schedule of proposed charges, and a financial plan which 
 12.21  includes a three-year projection of the expenses and income and 
 12.22  other sources of future capital; 
 12.23     (m) a statement reasonably describing the geographic area 
 12.24  or areas to be served and the type or types of enrollees to be 
 12.25  served; 
 12.26     (n) a description of the complaint procedures to be 
 12.27  utilized as required under section 62D.11; 
 12.28     (o) a description of the procedures and programs to be 
 12.29  implemented to meet the requirements of section 62D.04, 
 12.30  subdivision 1, clauses (b) and (c) and to monitor the quality of 
 12.31  health care provided to enrollees; 
 12.32     (p) a description of the mechanism by which enrollees will 
 12.33  be afforded an opportunity to participate in matters of policy 
 12.34  and operation under section 62D.06; 
 12.35     (q) a copy of any agreement between the health maintenance 
 12.36  organization and an insurer or nonprofit health service 
 13.1   corporation regarding reinsurance, stop-loss coverage, 
 13.2   insolvency coverage, or any other type of coverage for potential 
 13.3   costs of health services, as authorized in sections 62D.04, 
 13.4   subdivision 1, clause (f), 62D.05, subdivision 3, and 62D.13; 
 13.5      (r) a copy of the conflict of interest policy which applies 
 13.6   to all members of the board of directors and the principal 
 13.7   officers of the health maintenance organization, as described in 
 13.8   section 62D.04, subdivision 1, paragraph (g)~~.  All currently~~ 
 13.9   ~~licensed health maintenance organizations shall also file a~~ 
 13.10  ~~conflict of interest policy with the commissioner within 60 days~~ 
 13.11  ~~after August 1, 1990, or at a later date if approved by the~~ 
 13.12  ~~commissioner~~; 
 13.13     (s) a copy of the statement that describes the health 
 13.14  maintenance organization's prior authorization administrative 
 13.15  procedures; 
 13.16     (t) a copy of the agreement between the guaranteeing 
 13.17  organization and the health maintenance organization, as 
 13.18  described in section 62D.043, subdivision 6; and 
 13.19     (u) other information as the commissioner ~~of health~~ may 
 13.20  reasonably require to be provided. 
 13.21     Sec. 11.  Minnesota Statutes 1994, section 62D.04, 
 13.22  subdivision 1, is amended to read: 
 13.23     Subdivision 1.  Upon receipt of an application for a 
 13.24  certificate of authority, the commissioner ~~of health~~ shall 
 13.25  determine whether the applicant for a certificate of authority 
 13.26  has: 
 13.27     (a) demonstrated the willingness and potential ability to 
 13.28  assure that health care services will be provided in such a 
 13.29  manner as to enhance and assure both the availability and 
 13.30  accessibility of adequate personnel and facilities; 
 13.31     (b) arrangements for an ongoing evaluation of the quality 
 13.32  of health care; 
 13.33     (c) a procedure to develop, compile, evaluate, and report 
 13.34  statistics relating to the cost of its operations, the pattern 
 13.35  of utilization of its services, the quality, availability and 
 13.36  accessibility of its services, and such other matters as may be 
 14.1   reasonably required by ~~regulation~~ rule of the commissioner ~~of~~ 
 14.2   ~~health~~; 
 14.3      (d) reasonable provisions for emergency and out of area 
 14.4   health care services; 
 14.5      (e) demonstrated that it is financially responsible and may 
 14.6   reasonably be expected to meet its obligations to enrollees and 
 14.7   prospective enrollees.  In making this determination, the 
 14.8   commissioner ~~of health~~ shall require the amounts of net worth 
 14.9   and working capital required in section 62D.042, the deposit 
 14.10  required in section 62D.041, and in addition shall consider: 
 14.11     (1) the financial soundness of its arrangements for health 
 14.12  care services and the proposed schedule of charges used in 
 14.13  connection therewith; 
 14.14     (2) arrangements which will guarantee for a reasonable 
 14.15  period of time the continued availability or payment of the cost 
 14.16  of health care services in the event of discontinuance of the 
 14.17  health maintenance organization; and 
 14.18     (3) agreements with providers for the provision of health 
 14.19  care services; 
 14.20     (f) demonstrated that it will assume full financial risk on 
 14.21  a prospective basis for the provision of comprehensive health 
 14.22  maintenance services, including hospital care; provided, 
 14.23  however, that the requirement in this paragraph shall not 
 14.24  prohibit the following: 
 14.25     (1) a health maintenance organization from obtaining 
 14.26  insurance or making other arrangements (i) for the cost of 
 14.27  providing to any enrollee comprehensive health maintenance 
 14.28  services, the aggregate value of which exceeds $5,000 in any 
 14.29  year, (ii) for the cost of providing comprehensive health care 
 14.30  services to its members on a nonelective emergency basis, or 
 14.31  while they are outside the area served by the organization, or 
 14.32  (iii) for not more than 95 percent of the amount by which the 
 14.33  health maintenance organization's costs for any of its fiscal 
 14.34  years exceed 105 percent of its income for such fiscal years; 
 14.35  and 
 14.36     (2) a health maintenance organization from having a 
 15.1   provision in a group health maintenance contract allowing an 
 15.2   adjustment of premiums paid based upon the actual health 
 15.3   services utilization of the enrollees covered under the 
 15.4   contract, except that at no time during the life of the contract 
 15.5   shall the contract holder fully self-insure the financial risk 
 15.6   of health care services delivered under the contract.  Risk 
 15.7   sharing arrangements shall be subject to the requirements of 
 15.8   sections 62D.01 to 62D.30; 
 15.9      (g) demonstrated that it has made provisions for and 
 15.10  adopted a conflict of interest policy applicable to all members 
 15.11  of the board of directors and the principal officers of the 
 15.12  health maintenance organization.  The conflict of interest 
 15.13  policy shall include the procedures described in section 
 15.14  317A.255, subdivisions 1 and 2.  However, the commissioner is 
 15.15  not precluded from finding that a particular transaction is an 
 15.16  unreasonable expense as described in section 62D.19 even if the 
 15.17  directors follow the required procedures; and 
 15.18     (h) otherwise met the requirements of sections 62D.01 to 
 15.19  62D.30. 
 15.20     Sec. 12.  Minnesota Statutes 1994, section 62D.04, 
 15.21  subdivision 2, is amended to read: 
 15.22     Subd. 2.  Within 90 days after the receipt of the 
 15.23  application for a certificate of authority, the commissioner ~~of~~ 
 15.24  ~~health~~ shall determine whether or not the applicant meets the 
 15.25  requirements of this section.  If the commissioner ~~of health~~ 
 15.26  determines that the applicant meets the requirements of sections 
 15.27  62D.01 to 62D.30, the commissioner shall issue a certificate of 
 15.28  authority to the applicant.  If the commissioner ~~of health~~ 
 15.29  determines that the applicant is not qualified, the commissioner 
 15.30  shall so notify the applicant and shall specify the reason or 
 15.31  reasons for such disqualification. 
 15.32     Sec. 13.  Minnesota Statutes 1994, section 62D.04, 
 15.33  subdivision 3, is amended to read: 
 15.34     Subd. 3.  ~~Except as provided in section 62D.03, subdivision~~ 
 15.35  ~~2,~~ No person who has not been issued a certificate of authority 
 15.36  shall use the words "health maintenance organization" or the 
 16.1   initials "HMO" in its name, contracts or literature.  Provided, 
 16.2   however, that persons who are operating under a contract with, 
 16.3   operating in association with, enrolling enrollees for, or 
 16.4   otherwise authorized by a health maintenance organization 
 16.5   licensed under sections 62D.01 to 62D.30 to act on its behalf 
 16.6   may use the terms "health maintenance organization" or "HMO" for 
 16.7   the limited purpose of denoting or explaining their association 
 16.8   or relationship with the authorized health maintenance 
 16.9   organization.  No health maintenance organization which has a 
 16.10  minority of consumers as members of its board of directors shall 
 16.11  use the words "consumer controlled" in its name or in any way 
 16.12  represent to the public that it is controlled by consumers. 
 16.13     Sec. 14.  Minnesota Statutes 1994, section 62D.05, 
 16.14  subdivision 6, is amended to read: 
 16.15     Subd. 6.  [SUPPLEMENTAL BENEFITS.] (a) A health maintenance 
 16.16  organization may, as a supplemental benefit, provide coverage to 
 16.17  its enrollees for health care services and supplies received 
 16.18  from providers who are not employed by, under contract with, or 
 16.19  otherwise affiliated with the health maintenance organization.  
 16.20  Supplemental benefits may be provided if the following 
 16.21  conditions are met:  
 16.22     (1) a health maintenance organization desiring to offer 
 16.23  supplemental benefits must at all times comply with the 
 16.24  requirements of sections 62D.041 and 62D.042; 
 16.25     (2) a health maintenance organization offering supplemental 
 16.26  benefits must maintain an additional surplus in the first year 
 16.27  supplemental benefits are offered equal to the lesser of 
 16.28  $500,000 or 33 percent of the supplemental benefit expenses.  At 
 16.29  the end of the second year supplemental benefits are offered, 
 16.30  the health maintenance organization must maintain an additional 
 16.31  surplus equal to the lesser of $1,000,000 or 33 percent of the 
 16.32  supplemental benefit expenses.  At the end of the third year 
 16.33  benefits are offered and every year after that, the health 
 16.34  maintenance organization must maintain an additional surplus 
 16.35  equal to the greater of $1,000,000 or 33 percent of the 
 16.36  supplemental benefit expenses.  When in the judgment of the 
 17.1   commissioner the health maintenance organization's surplus is 
 17.2   inadequate, the commissioner may require the health maintenance 
 17.3   organization to maintain additional surplus; 
 17.4      (3) claims relating to supplemental benefits must be 
 17.5   processed in accordance with the requirements of section 
 17.6   72A.201; and 
 17.7      (4) in marketing supplemental benefits, the health 
 17.8   maintenance organization shall fully disclose and describe to 
 17.9   enrollees and potential enrollees the nature and extent of the 
 17.10  supplemental coverage, and any claims filing and other 
 17.11  administrative responsibilities in regard to supplemental 
 17.12  benefits.  
 17.13     (b) The commissioner may, pursuant to chapter 14, adopt, 
 17.14  enforce, and administer rules relating to this subdivision, 
 17.15  including:  rules insuring that these benefits are supplementary 
 17.16  and not substitutes for comprehensive health maintenance 
 17.17  services by addressing percentage of out-of-plan coverage; rules 
 17.18  relating to the establishment of necessary financial reserves; 
 17.19  rules relating to marketing practices; and other rules necessary 
 17.20  for the effective and efficient administration of this 
 17.21  subdivision.  The commissioner, in adopting rules, shall give 
 17.22  consideration to existing laws and rules administered and 
 17.23  enforced by the ~~department of commerce~~ commissioner relating to 
 17.24  health insurance plans.  
 17.25     Sec. 15.  Minnesota Statutes 1994, section 62D.06, 
 17.26  subdivision 2, is amended to read: 
 17.27     Subd. 2.  The governing body shall establish a mechanism to 
 17.28  afford the enrollees an opportunity to express their opinions in 
 17.29  matters of policy and operation through the establishment of 
 17.30  advisory panels, by the use of advisory referenda on major 
 17.31  policy decisions, or through the use of other mechanisms as may 
 17.32  be prescribed or permitted by the commissioner ~~of health~~. 
 17.33     Sec. 16.  Minnesota Statutes 1994, section 62D.07, 
 17.34  subdivision 2, is amended to read: 
 17.35     Subd. 2.  No evidence of coverage or contract, or amendment 
 17.36  thereto shall be issued or delivered to any person in this state 
 18.1   until a copy of the form of the evidence of coverage or contract 
 18.2   or amendment thereto has been filed with the commissioner ~~of~~ 
 18.3   ~~health~~ pursuant to section 62D.03 or 62D.08. 
 18.4      Sec. 17.  Minnesota Statutes 1994, section 62D.07, 
 18.5   subdivision 3, is amended to read: 
 18.6      Subd. 3.  Contracts and evidences of coverage shall contain:
 18.7      (a) No provisions or statements which are unjust, unfair, 
 18.8   inequitable, misleading, deceptive, or which are untrue, 
 18.9   misleading, or deceptive as defined in section 62D.12, 
 18.10  subdivision 1; and 
 18.11     (b) A clear, concise and complete statement of: 
 18.12     (1) the health care services and the insurance or other 
 18.13  benefits, if any, to which the enrollee is entitled under the 
 18.14  health maintenance contract; 
 18.15     (2) any exclusions or limitations on the services, kind of 
 18.16  services, benefits, or kind of benefits, to be provided, 
 18.17  including any deductible or copayment feature and requirements 
 18.18  for referrals, prior authorizations, and second opinions; 
 18.19     (3) where and in what manner information is available as to 
 18.20  how services, including emergency and out of area services, may 
 18.21  be obtained; 
 18.22     (4) the total amount of payment and copayment, if any, for 
 18.23  health care services and the indemnity or service benefits, if 
 18.24  any, which the enrollee is obligated to pay with respect to 
 18.25  individual contracts, or an indication whether the plan is 
 18.26  contributory or noncontributory with respect to group 
 18.27  certificates; and 
 18.28     (5) a description of the health maintenance organization's 
 18.29  method for resolving enrollee complaints and a statement 
 18.30  identifying the commissioner as an external source with whom 
 18.31  grievances may be registered.  
 18.32     (c) On the cover page of the evidence of coverage and 
 18.33  contract, a clear and complete statement of enrollees' rights as 
 18.34  consumers.  The statement must be in bold print and captioned 
 18.35  "Important Consumer Information and Enrollee Bill of Rights" and 
 18.36  must include but not be limited to the following provisions in 
 19.1   the following language or in substantially similar language 
 19.2   approved in advance by the commissioner:  
 19.3                         CONSUMER INFORMATION 
 19.4      (1) COVERED SERVICES:  Services provided by (name of health 
 19.5   maintenance organization) will be covered only if services are 
 19.6   provided by participating (name of health maintenance 
 19.7   organization) providers or authorized by (name of health 
 19.8   maintenance organization).  Your contract fully defines what 
 19.9   services are covered and describes procedures you must follow to 
 19.10  obtain coverage. 
 19.11     (2) PROVIDERS:  Enrolling in (name of health maintenance 
 19.12  organization) does not guarantee services by a particular 
 19.13  provider on the list of providers.  When a provider is no longer 
 19.14  part of (name of health maintenance organization), you must 
 19.15  choose among remaining (name of the health maintenance 
 19.16  organization) providers. 
 19.17     (3) REFERRALS:  Certain services are covered only upon 
 19.18  referral.  See section (section number) of your contract for 
 19.19  referral requirements.  All referrals to non-(name of health 
 19.20  maintenance organization) providers and certain types of health 
 19.21  care providers must be authorized by (name of health maintenance 
 19.22  organization). 
 19.23     (4) EMERGENCY SERVICES:  Emergency services from providers 
 19.24  who are not affiliated with (name of health maintenance 
 19.25  organization) will be covered only if proper procedures are 
 19.26  followed.  Your contract explains the procedures and benefits 
 19.27  associated with emergency care from (name of health maintenance 
 19.28  organization) and non-(name of health maintenance organization) 
 19.29  providers. 
 19.30     (5) EXCLUSIONS:  Certain services or medical supplies are 
 19.31  not covered.  You should read the contract for a detailed 
 19.32  explanation of all exclusions. 
 19.33     (6) CONTINUATION:  You may convert to an individual health 
 19.34  maintenance organization contract or continue coverage under 
 19.35  certain circumstances.  These continuation and conversion rights 
 19.36  are explained fully in your contract. 
 20.1      (7) CANCELLATION:  Your coverage may be canceled by you or 
 20.2   (name of health maintenance organization) only under certain 
 20.3   conditions.  Your contract describes all reasons for 
 20.4   cancellation of coverage. 
 20.5                       ENROLLEE BILL OF RIGHTS 
 20.6      (1) Enrollees have the right to available and accessible 
 20.7   services including emergency services, as defined in your 
 20.8   contract, 24 hours a day and seven days a week; 
 20.9      (2) Enrollees have the right to be informed of health 
 20.10  problems, and to receive information regarding treatment 
 20.11  alternatives and risks which is sufficient to assure informed 
 20.12  choice; 
 20.13     (3) Enrollees have the right to refuse treatment, and the 
 20.14  right to privacy of medical and financial records maintained by 
 20.15  the health maintenance organization and its health care 
 20.16  providers, in accordance with existing law; 
 20.17     (4) Enrollees have the right to file a grievance with the 
 20.18  health maintenance organization and the commissioner of ~~health~~ 
 20.19  commerce and the right to initiate a legal proceeding when 
 20.20  experiencing a problem with the health maintenance organization 
 20.21  or its health care providers; 
 20.22     (5) Enrollees have the right to a grace period of 31 days 
 20.23  for the payment of each premium for an individual health 
 20.24  maintenance contract falling due after the first premium during 
 20.25  which period the contract shall continue in force; 
 20.26     (6) Medicare enrollees have the right to voluntarily 
 20.27  disenroll from the health maintenance organization and the right 
 20.28  not to be requested or encouraged to disenroll except in 
 20.29  circumstances specified in federal law; and 
 20.30     (7) Medicare enrollees have the right to a clear 
 20.31  description of nursing home and home care benefits covered by 
 20.32  the health maintenance organization. 
 20.33     Sec. 18.  Minnesota Statutes 1994, section 62D.07, 
 20.34  subdivision 10, is amended to read: 
 20.35     Subd. 10.  An individual health maintenance organization 
 20.36  contract and an evidence of coverage must contain a department 
 21.1   of ~~health~~ commerce telephone number that the enrollee can call 
 21.2   to register a complaint about a health maintenance organization. 
 21.3      Sec. 19.  Minnesota Statutes 1994, section 62D.08, 
 21.4   subdivision 1, is amended to read: 
 21.5      Subdivision 1.  A health maintenance organization shall, 
 21.6   unless otherwise provided for by rules adopted by the 
 21.7   commissioner ~~of health~~, file notice with the commissioner ~~of~~ 
 21.8   ~~health~~ prior to any modification of the operations or documents 
 21.9   described in the information submitted under clauses (a), (b), 
 21.10  (e), (f), (g), (i), (j), (l), (m), (n), (o), (p), (q), (r), (s), 
 21.11  and (t) of section 62D.03, subdivision 4.  If the commissioner 
 21.12  ~~of health~~ does not disapprove of the filing within 60 days, it 
 21.13  shall be deemed approved and may be implemented by the health 
 21.14  maintenance organization. 
 21.15     Sec. 20.  Minnesota Statutes 1994, section 62D.08, 
 21.16  subdivision 2, is amended to read: 
 21.17     Subd. 2.  Every health maintenance organization shall 
 21.18  annually, on or before April 1, file a verified report with the 
 21.19  commissioner ~~of health~~ covering the preceding calendar year.  
 21.20  However, utilization data required under subdivision 3, clause 
 21.21  (c), shall be filed on or before July 1. 
 21.22     Sec. 21.  Minnesota Statutes 1994, section 62D.08, 
 21.23  subdivision 3, is amended to read: 
 21.24     Subd. 3.  Such report shall be on forms prescribed by the 
 21.25  commissioner ~~of health~~, and shall include: 
 21.26     (a) A financial statement of the organization, including 
 21.27  its balance sheet and receipts and disbursements for the 
 21.28  preceding year certified by an independent certified public 
 21.29  accountant, reflecting at least (1) all prepayment and other 
 21.30  payments received for health care services rendered, (2) 
 21.31  expenditures to all providers, by classes or groups of 
 21.32  providers, and insurance companies or nonprofit health service 
 21.33  plan corporations engaged to fulfill obligations arising out of 
 21.34  the health maintenance contract, (3) expenditures for capital 
 21.35  improvements, or additions thereto, including but not limited to 
 21.36  construction, renovation or purchase of facilities and capital 
 22.1   equipment, and (4) a supplementary statement of assets, 
 22.2   liabilities, premium revenue, and expenditures for risk sharing 
 22.3   business under section 62D.04, subdivision 1, on forms 
 22.4   prescribed by the commissioner; 
 22.5      (b) The number of new enrollees enrolled during the year, 
 22.6   the number of group enrollees and the number of individual 
 22.7   enrollees as of the end of the year and the number of enrollees 
 22.8   terminated during the year; 
 22.9      (c) A summary of information compiled pursuant to section 
 22.10  62D.04, subdivision 1, clause (c), in such form as may be 
 22.11  required by the commissioner ~~of health~~; 
 22.12     (d) A report of the names and addresses of all persons set 
 22.13  forth in section 62D.03, subdivision 4, clause (c), who were 
 22.14  associated with the health maintenance organization or the major 
 22.15  participating entity during the preceding year, and the amount 
 22.16  of wages, expense reimbursements, or other payments to such 
 22.17  individuals for services to the health maintenance organization 
 22.18  or the major participating entity, as those services relate to 
 22.19  the health maintenance organization, including a full disclosure 
 22.20  of all financial arrangements during the preceding year required 
 22.21  to be disclosed pursuant to section 62D.03, subdivision 4, 
 22.22  clause (d); 
 22.23     (e) A separate report addressing health maintenance 
 22.24  contracts sold to individuals covered by Medicare, title XVIII 
 22.25  of the Social Security Act, as amended, including the 
 22.26  information required under section 62D.30, subdivision 6; and 
 22.27     (f) Such other information relating to the performance of 
 22.28  the health maintenance organization as is reasonably necessary 
 22.29  to enable the commissioner ~~of health~~ to carry out the duties 
 22.30  under sections 62D.01 to 62D.30. 
 22.31     Sec. 22.  Minnesota Statutes 1994, section 62D.09, 
 22.32  subdivision 1, is amended to read: 
 22.33     Subdivision 1.  (a) Any written marketing materials which 
 22.34  may be directed toward potential enrollees and which include a 
 22.35  detailed description of benefits provided by the health 
 22.36  maintenance organization shall include a statement of consumer 
 23.1   information and rights as described in section 62D.07, 
 23.2   subdivision 3, paragraphs (b) and (c).  Prior to any oral 
 23.3   marketing presentation, the agent marketing the plan must inform 
 23.4   the potential enrollees that any complaints concerning the 
 23.5   material presented should be directed to the health maintenance 
 23.6   organization, the commissioner ~~of health~~, or, if applicable, the 
 23.7   employer. 
 23.8      (b) Detailed marketing materials must affirmatively 
 23.9   disclose all exclusions and limitations in the organization's 
 23.10  services or kinds of services offered to the contracting party, 
 23.11  including but not limited to the following types of exclusions 
 23.12  and limitations: 
 23.13     (1) health care services not provided; 
 23.14     (2) health care services requiring copayments or 
 23.15  deductibles paid by enrollees; 
 23.16     (3) the fact that access to health care services does not 
 23.17  guarantee access to a particular provider type; and 
 23.18     (4) health care services that are or may be provided only 
 23.19  by referral of a physician. 
 23.20     (c) No marketing materials may lead consumers to believe 
 23.21  that all health care needs will be covered.  All marketing 
 23.22  materials must alert consumers to possible uncovered expenses 
 23.23  with the following language in bold print:  "THIS HEALTH CARE 
 23.24  PLAN MAY NOT COVER ALL YOUR HEALTH CARE EXPENSES; READ YOUR 
 23.25  CONTRACT CAREFULLY TO DETERMINE WHICH EXPENSES ARE COVERED."  
 23.26  Immediately following the disclosure required under paragraph 
 23.27  (b), clause (3), consumers must be given a telephone number to 
 23.28  use to contact the health maintenance organization for specific 
 23.29  information about access to provider types. 
 23.30     (d) The disclosures required in paragraphs (b) and (c) are 
 23.31  not required on billboards or image, and name identification 
 23.32  advertisement. 
 23.33     Sec. 23.  Minnesota Statutes 1994, section 62D.09, 
 23.34  subdivision 8, is amended to read: 
 23.35     Subd. 8.  Each health maintenance organization shall issue 
 23.36  a membership card to its enrollees.  The membership card must: 
 24.1      (1) identify the health maintenance organization; 
 24.2      (2) include the name, address, and telephone number to call 
 24.3   if the enroller has a complaint; 
 24.4      (3) include the telephone number to call or the instruction 
 24.5   on how to receive authorization for emergency care; and 
 24.6      (4) include the telephone number to call to appeal to the 
 24.7   commissioner ~~of health~~. 
 24.8      Sec. 24.  Minnesota Statutes 1994, section 62D.10, 
 24.9   subdivision 4, is amended to read: 
 24.10     Subd. 4.  A health plan may apply to the commissioner ~~of~~ 
 24.11  ~~health~~ for a waiver of the requirements of this section or for 
 24.12  authorization to impose such underwriting restrictions upon open 
 24.13  enrollment as are necessary (a) to preserve its financial 
 24.14  stability, (b) to prevent excessive adverse selection by 
 24.15  prospective enrollees, or (c) to avoid unreasonably high or 
 24.16  unmarketable charges for enrollee coverage for health care 
 24.17  services.  The commissioner ~~of health~~ upon a showing of good 
 24.18  cause, shall approve or upon failure to show good cause shall 
 24.19  deny such application within 30 days of the receipt thereof from 
 24.20  the health plan.  The commissioner ~~of health~~ may, in accordance 
 24.21  with chapter 14, promulgate rules to implement this section. 
 24.22     Sec. 25.  Minnesota Statutes 1994, section 62D.11, 
 24.23  subdivision 2, is amended to read: 
 24.24     Subd. 2.  The health maintenance organization shall 
 24.25  maintain a record of each written complaint filed with it for 
 24.26  five years and the commissioner ~~of health~~ shall have access to 
 24.27  the records. 
 24.28     Sec. 26.  Minnesota Statutes 1994, section 62D.11, 
 24.29  subdivision 3, is amended to read: 
 24.30     Subd. 3.  [DENIAL OF SERVICE.] Within a reasonable time 
 24.31  after receiving an enrollee's written or oral communication to 
 24.32  the health maintenance organization concerning a refusal of 
 24.33  service or inadequacy of services, the health maintenance 
 24.34  organization shall provide the enrollee with a written statement 
 24.35  of the reason for the refusal of service, and a statement 
 24.36  approved by the commissioner ~~of health~~ which explains the health 
 25.1   maintenance organization complaint procedures, and in the case 
 25.2   of Medicare enrollees, which also explains Medicare appeal 
 25.3   procedures. 
 25.4      Sec. 27.  Minnesota Statutes 1994, section 62D.12, 
 25.5   subdivision 1, is amended to read: 
 25.6      Subdivision 1.  No health maintenance organization or 
 25.7   representative thereof may cause or knowingly permit the use of 
 25.8   advertising or solicitation which is untrue or misleading, or 
 25.9   any form of evidence of coverage which is deceptive.  Each 
 25.10  health maintenance organization shall be subject to sections 
 25.11  72A.17 to 72A.32, relating to the regulation of trade practices, 
 25.12  except ~~(a)~~ to the extent that the nature of a health maintenance 
 25.13  organization renders such sections clearly inappropriate ~~and (b)~~ 
 25.14  ~~that enforcement shall be by the commissioner of health and not~~ 
 25.15  ~~by the commissioner of commerce~~.  Every health maintenance 
 25.16  organization shall be subject to sections 8.31 and 325F.69. 
 25.17     Sec. 28.  Minnesota Statutes 1994, section 62D.12, 
 25.18  subdivision 2, is amended to read: 
 25.19     Subd. 2.  No health maintenance organization may cancel or 
 25.20  fail to renew the coverage of an enrollee except for (a) failure 
 25.21  to pay the charge for health care coverage; (b) termination of 
 25.22  the health care plan; (c) termination of the group plan; (d) 
 25.23  enrollee moving out of the area served, subject to section 
 25.24  62A.17, subdivisions 1 and 6, and section 62D.104; (e) enrollee 
 25.25  moving out of an eligible group, subject to section 62A.17, 
 25.26  subdivisions 1 and 6, and section 62D.104; (f) failure to make 
 25.27  copayments required by the health care plan; or (g) other 
 25.28  reasons established in rules promulgated by the commissioner ~~of~~ 
 25.29  ~~health~~. 
 25.30     Sec. 29.  Minnesota Statutes 1994, section 62D.12, 
 25.31  subdivision 9, is amended to read: 
 25.32     Subd. 9.  All net earnings of the health maintenance 
 25.33  organization shall be devoted to the nonprofit purposes of the 
 25.34  health maintenance organization in providing comprehensive 
 25.35  health care.  No health maintenance organization shall provide 
 25.36  for the payment, whether directly or indirectly, of any part of 
 26.1   its net earnings, to any person as a dividend or rebate; 
 26.2   provided, however, that health maintenance organizations may 
 26.3   make payments to providers or other persons based upon the 
 26.4   efficient provision of services or as incentives to provide 
 26.5   quality care.  The commissioner ~~of health~~ shall, pursuant to 
 26.6   sections 62D.01 to 62D.30, revoke the certificate of authority 
 26.7   of any health maintenance organization in violation of this 
 26.8   subdivision. 
 26.9      Sec. 30.  Minnesota Statutes 1994, section 62D.121, 
 26.10  subdivision 3a, is amended to read: 
 26.11     Subd. 3a.  If the replacement coverage is health 
 26.12  maintenance organization coverage, as explained in subdivisions 
 26.13  2 and 2a, the fee shall not exceed 125 percent of the cost of 
 26.14  the average fee charged by health maintenance organizations for 
 26.15  a similar health plan.  The commissioner ~~of health will~~ shall 
 26.16  determine the average cost of the plan on the basis of 
 26.17  information provided annually by the health maintenance 
 26.18  organizations concerning the rates charged by the health 
 26.19  maintenance organizations for the plans offered.  Fees or 
 26.20  premiums charged under this section must be actuarially 
 26.21  justified. 
 26.22     Sec. 31.  Minnesota Statutes 1994, section 62D.14, 
 26.23  subdivision 1, is amended to read: 
 26.24     Subdivision 1.  The commissioner ~~of health~~ may make an 
 26.25  examination of the affairs of any health maintenance 
 26.26  organization and its contracts, agreements, or other 
 26.27  arrangements with any participating entity as often as the 
 26.28  commissioner ~~of health~~ deems necessary for the protection of the 
 26.29  interests of the people of this state, but not less frequently 
 26.30  than once every three years.  Examinations of participating 
 26.31  entities pursuant to this subdivision shall be limited to their 
 26.32  dealings with the health maintenance organization and its 
 26.33  enrollees, except that examinations of major participating 
 26.34  entities may include inspection of the entity's financial 
 26.35  statements kept in the ordinary course of business.  The 
 26.36  commissioner may require major participating entities to submit 
 27.1   the financial statements directly to the commissioner.  
 27.2   Financial statements of major participating entities are subject 
 27.3   to the provisions of section 13.37, subdivision 1, clause (b), 
 27.4   upon request of the major participating entity or the health 
 27.5   maintenance organization with which it contracts. 
 27.6      Sec. 32.  Minnesota Statutes 1994, section 62D.14, 
 27.7   subdivision 3, is amended to read: 
 27.8      Subd. 3.  In order to accomplish the duties under this 
 27.9   section with respect to the dealings of the participating 
 27.10  entities with the health maintenance organization, the 
 27.11  commissioner ~~of health shall have~~ has the right to: 
 27.12     (a) inspect or otherwise evaluate the quality, 
 27.13  appropriateness, and timeliness of services performed; 
 27.14     (b) audit and inspect any books and records of a health 
 27.15  maintenance organization and a participating entity which 
 27.16  pertain to services performed and determinations of amounts 
 27.17  payable under such contract; 
 27.18     (c) require persons or organizations under examination to 
 27.19  be deposed and to answer interrogatories, regardless of whether 
 27.20  an administrative hearing or other civil proceeding has been or 
 27.21  will be initiated; and 
 27.22     (d) employ site visits, public hearings, or any other 
 27.23  procedures considered appropriate to obtain the information 
 27.24  necessary to determine the issues.  
 27.25     Sec. 33.  Minnesota Statutes 1994, section 62D.14, 
 27.26  subdivision 5, is amended to read: 
 27.27     Subd. 5.  The commissioner ~~of health~~ shall have the power 
 27.28  to administer oaths to and examine witnesses, and to issue 
 27.29  subpoenas. 
 27.30     Sec. 34.  Minnesota Statutes 1994, section 62D.14, 
 27.31  subdivision 6, is amended to read: 
 27.32     Subd. 6.  Reasonable expenses of examinations under this 
 27.33  section shall be assessed by the commissioner ~~of health~~ against 
 27.34  the organization being examined, and shall be remitted to the 
 27.35  commissioner ~~of health~~ for deposit in the general fund of the 
 27.36  state treasury. 
 28.1      Sec. 35.  Minnesota Statutes 1994, section 62D.15, 
 28.2   subdivision 1, is amended to read: 
 28.3      Subdivision 1.  The commissioner ~~of health~~ may suspend or 
 28.4   revoke any certificate of authority issued to a health 
 28.5   maintenance organization under sections 62D.01 to 62D.30 if the 
 28.6   commissioner finds that: 
 28.7      (a) The health maintenance organization is operating 
 28.8   significantly in contravention of its basic organizational 
 28.9   document, its health maintenance contract, or in a manner 
 28.10  contrary to that described in and reasonably inferred from any 
 28.11  other information submitted under section 62D.03, unless 
 28.12  amendments to such submissions have been filed with and approved 
 28.13  by the commissioner ~~of health~~; 
 28.14     (b) The health maintenance organization issues evidences of 
 28.15  coverage which do not comply with the requirements of section 
 28.16  62D.07; 
 28.17     (c) The health maintenance organization is unable to 
 28.18  fulfill its obligations to furnish comprehensive health 
 28.19  maintenance services as required under its health maintenance 
 28.20  contract; 
 28.21     (d) The health maintenance organization is no longer 
 28.22  financially responsible and may reasonably be expected to be 
 28.23  unable to meet its obligations to enrollees or prospective 
 28.24  enrollees; 
 28.25     (e) The health maintenance organization has failed to 
 28.26  implement a mechanism affording the enrollees an opportunity to 
 28.27  participate in matters of policy and operation under section 
 28.28  62D.06; 
 28.29     (f) The health maintenance organization has failed to 
 28.30  implement the complaint system required by section 62D.11 in a 
 28.31  manner designed to reasonably resolve valid complaints; 
 28.32     (g) The health maintenance organization, or any person 
 28.33  acting with its sanction, has advertised or merchandised its 
 28.34  services in an untrue, misrepresentative, misleading, deceptive, 
 28.35  or unfair manner; 
 28.36     (h) The continued operation of the health maintenance 
 29.1   organization would be hazardous to its enrollees; or 
 29.2      (i) The health maintenance organization has otherwise 
 29.3   failed to substantially comply with sections 62D.01 to 62D.30 or 
 29.4   with any other statute or administrative rule applicable to 
 29.5   health maintenance organizations, or has submitted false 
 29.6   information in any report required hereunder. 
 29.7      Sec. 36.  Minnesota Statutes 1994, section 62D.15, 
 29.8   subdivision 4, is amended to read: 
 29.9      Subd. 4.  When the certificate of authority of a health 
 29.10  maintenance organization is revoked, the organization shall 
 29.11  proceed, immediately following the effective date of the order 
 29.12  of revocation, to wind up its affairs, and shall conduct no 
 29.13  further business except as may be essential to the orderly 
 29.14  conclusion of the affairs of the organization. It shall engage 
 29.15  in no further advertising or solicitation whatsoever.  The 
 29.16  commissioner ~~of health~~ may, by written order, permit further 
 29.17  operation of the organization as the commissioner may find to be 
 29.18  in the best interest of enrollees, to the end that enrollees 
 29.19  will be afforded the greatest practical opportunity to obtain 
 29.20  continuing health care coverage. 
 29.21     Sec. 37.  Minnesota Statutes 1994, section 62D.16, 
 29.22  subdivision 1, is amended to read: 
 29.23     Subdivision 1.  When the commissioner ~~of health~~ has cause 
 29.24  to believe that grounds for the denial, suspension or revocation 
 29.25  of a certificate of authority exists, the commissioner shall 
 29.26  notify the health maintenance organization in writing 
 29.27  specifically stating the grounds for denial, suspension or 
 29.28  revocation and fixing a time of at least 20 days thereafter for 
 29.29  a hearing on the matter, except in summary proceedings as 
 29.30  provided in section 62D.18. 
 29.31     Sec. 38.  Minnesota Statutes 1994, section 62D.16, 
 29.32  subdivision 2, is amended to read: 
 29.33     Subd. 2.  After such hearing, or upon the failure of the 
 29.34  health maintenance organization to appear at the hearing, the 
 29.35  commissioner ~~of health~~ shall take action as is deemed advisable 
 29.36  and shall issue written findings which shall be mailed to the 
 30.1   health maintenance organization.  The action of the commissioner 
 30.2   ~~of health~~ shall be subject to judicial review pursuant to 
 30.3   chapter 14. 
 30.4      Sec. 39.  Minnesota Statutes 1994, section 62D.17, 
 30.5   subdivision 1, is amended to read: 
 30.6      Subdivision 1.  The commissioner ~~of health~~ may, for any 
 30.7   violation of statute or rule applicable to a health maintenance 
 30.8   organization, or in lieu of suspension or revocation of a 
 30.9   certificate of authority under section 62D.15, levy an 
 30.10  administrative penalty in an amount up to $25,000 for each 
 30.11  violation.  In the case of contracts or agreements made pursuant 
 30.12  to section 62D.05, subdivisions 2 to 4, each contract or 
 30.13  agreement entered into or implemented in a manner which violates 
 30.14  sections 62D.01 to 62D.30 shall be considered a separate 
 30.15  violation.  In determining the level of an administrative 
 30.16  penalty, the commissioner shall consider the following factors: 
 30.17     (1) the number of enrollees affected by the violation; 
 30.18     (2) the effect of the violation on enrollees' health and 
 30.19  access to health services; 
 30.20     (3) if only one enrollee is affected, the effect of the 
 30.21  violation on that enrollee's health; 
 30.22     (4) whether the violation is an isolated incident or part 
 30.23  of a pattern of violations; and 
 30.24     (5) the economic benefits derived by the health maintenance 
 30.25  organization or a participating provider by virtue of the 
 30.26  violation. 
 30.27     Reasonable notice in writing to the health maintenance 
 30.28  organization shall be given of the intent to levy the penalty 
 30.29  and the reasons therefor, and the health maintenance 
 30.30  organization may have 15 days within which to file a written 
 30.31  request for an administrative hearing and review of the 
 30.32  ~~commissioner of health's~~ commissioner's determination.  Such 
 30.33  administrative hearing shall be subject to judicial review 
 30.34  pursuant to chapter 14. 
 30.35     Sec. 40.  Minnesota Statutes 1994, section 62D.17, 
 30.36  subdivision 3, is amended to read: 
 31.1      Subd. 3.  (a) If the commissioner ~~of health~~ shall, for any 
 31.2   reason, have cause to believe that any violation of sections 
 31.3   62D.01 to 62D.30 has occurred or is threatened, the commissioner 
 31.4   ~~of health~~ may, before commencing action under sections 62D.15 
 31.5   and 62D.16, and subdivision 1, give notice to the health 
 31.6   maintenance organization and to the representatives, or other 
 31.7   persons who appear to be involved in such suspected violation, 
 31.8   to arrange a voluntary conference with the alleged violators or 
 31.9   their authorized representatives for the purpose of attempting 
 31.10  to ascertain the facts relating to such suspected violation and, 
 31.11  in the event it appears that any violation has occurred or is 
 31.12  threatened, to arrive at an adequate and effective means of 
 31.13  correcting or preventing such violation. 
 31.14     (b) Proceedings under this subdivision shall not be 
 31.15  governed by any formal procedural requirements, and may be 
 31.16  conducted in such manner as the commissioner ~~of health~~ may deem 
 31.17  appropriate under the circumstances. 
 31.18     Sec. 41.  Minnesota Statutes 1994, section 62D.17, 
 31.19  subdivision 4, is amended to read: 
 31.20     Subd. 4.  (a) The commissioner ~~of health~~ may issue an order 
 31.21  directing a health maintenance organization or a representative 
 31.22  of a health maintenance organization to cease and desist from 
 31.23  engaging in any act or practice in violation of the provisions 
 31.24  of sections 62D.01 to 62D.30. 
 31.25     (1) The cease and desist order may direct a health 
 31.26  maintenance organization to pay for or provide a service when 
 31.27  that service is required by statute or rule to be provided. 
 31.28     (2) The ~~commissioner may issue a~~ cease and desist order 
 31.29  ~~directing~~ may direct a health maintenance organization to pay 
 31.30  for a service that is required by statute or rule to be 
 31.31  provided, only if there is a demonstrable and irreparable harm 
 31.32  to the public or an enrollee.  
 31.33     (3) If the cease and desist order involves a dispute over 
 31.34  the medical necessity of a procedure based on its experimental 
 31.35  nature, the commissioner may issue a cease and desist order only 
 31.36  if the following conditions are met:  
 32.1      (i) the commissioner has consulted with appropriate and 
 32.2   identified experts; 
 32.3      (ii) the commissioner has reviewed relevant scientific and 
 32.4   medical literature; and 
 32.5      (iii) the commissioner has considered all other relevant 
 32.6   factors including whether final approval of the technology or 
 32.7   procedure has been granted by the appropriate government agency; 
 32.8   the availability of scientific evidence concerning the effect of 
 32.9   the technology or procedure on health outcomes; the availability 
 32.10  of scientific evidence that the technology or procedure is as 
 32.11  beneficial as established alternatives; and the availability of 
 32.12  evidence of benefit or improvement without the technology or 
 32.13  procedure. 
 32.14     (b) Within 20 days after service of the order to cease and 
 32.15  desist, the respondent may request a hearing on the question of 
 32.16  whether acts or practices in violation of sections 62D.01 to 
 32.17  62D.30 have occurred.  Such hearings shall be subject to 
 32.18  judicial review as provided by chapter 14. 
 32.19     If the acts or practices involve violation of the reporting 
 32.20  requirements of section 62D.08, or if the commissioner has 
 32.21  ordered the rehabilitation, liquidation, or conservation of the 
 32.22  health maintenance organization in accordance with section 
 32.23  62D.18, the health maintenance organization may request an 
 32.24  expedited hearing on the matter.  The hearing shall be held 
 32.25  within 15 days of the request.  Within ten days thereafter, an 
 32.26  administrative law judge shall issue a recommendation on the 
 32.27  matter.  The commissioner shall make a final determination on 
 32.28  the matter within ten days of receipt of the administrative law 
 32.29  judge's recommendation.  
 32.30     When a request for a stay accompanies the hearing request, 
 32.31  the matter shall be referred to the office of administrative 
 32.32  hearings within three working days of receipt of the request. 
 32.33  Within ten days thereafter, an administrative law judge shall 
 32.34  issue a recommendation to grant or deny the stay.  The 
 32.35  commissioner shall grant or deny the stay within five days of 
 32.36  receipt of the administrative law judge's recommendation. 
 33.1      To the extent the acts or practices alleged do not involve 
 33.2   (1) violations of section 62D.08; (2) violations which may 
 33.3   result in the financial insolvency of the health maintenance 
 33.4   organization; (3) violations which threaten the life and health 
 33.5   of enrollees; (4) violations which affect whole classes of 
 33.6   enrollees; or (5) violations of benefits or service requirements 
 33.7   mandated by law; if a timely request for a hearing is made, the 
 33.8   cease and desist order shall be stayed for a period of 90 days 
 33.9   from the date the hearing is requested or until a final 
 33.10  determination is made on the order, whichever is earlier.  
 33.11  During this stay, the respondent may show cause why the order 
 33.12  should not become effective upon the expiration of the stay.  
 33.13  Arguments on this issue shall be made through briefs filed with 
 33.14  the administrative law judge no later than ten days prior to the 
 33.15  expiration of the stay.  
 33.16     Sec. 42.  Minnesota Statutes 1994, section 62D.17, 
 33.17  subdivision 5, is amended to read: 
 33.18     Subd. 5.  In the event of noncompliance with a cease and 
 33.19  desist order issued pursuant to subdivision 4, the commissioner 
 33.20  ~~of health~~ may institute a proceeding to obtain injunctive relief 
 33.21  or other appropriate relief in Ramsey county district court. 
 33.22     Sec. 43.  Minnesota Statutes 1994, section 62D.18, 
 33.23  subdivision 1, is amended to read: 
 33.24     Subdivision 1.  [~~COMMISSIONER OF HEALTH;~~ COURT ORDER.] The 
 33.25  commissioner ~~of health~~ may apply by verified petition to the 
 33.26  district court of Ramsey county or the county in which the 
 33.27  principal office of the health maintenance organization is 
 33.28  located for an order directing the commissioner ~~of health~~ to 
 33.29  rehabilitate or liquidate a health maintenance organization.  
 33.30  The rehabilitation or liquidation of a health maintenance 
 33.31  organization shall be conducted under the supervision of the 
 33.32  commissioner ~~of health~~ under the procedures, and with the powers 
 33.33  granted to a rehabilitator or liquidator, in chapter 60B, except 
 33.34  to the extent that the nature of health maintenance 
 33.35  organizations renders the procedures or powers clearly 
 33.36  inappropriate and as provided in this subdivision or in chapter 
 34.1   60B.  A health maintenance organization shall be considered an 
 34.2   insurance company for the purposes of rehabilitation or 
 34.3   liquidation as provided in subdivisions 4, 6, and 7. 
 34.4      Sec. 44.  Minnesota Statutes 1994, section 62D.18, 
 34.5   subdivision 7, is amended to read: 
 34.6      Subd. 7.  [EXAMINATION ACCOUNT.] The commissioner ~~of health~~ 
 34.7   shall assess against a health maintenance organization not yet 
 34.8   in rehabilitation or liquidation a fee sufficient to cover the 
 34.9   costs of a special examination.  The fee must be deposited in an 
 34.10  examination account.  Money in the account is appropriated to 
 34.11  the commissioner ~~of health~~ to pay for the examinations.  If the 
 34.12  money in the account is insufficient to pay the initial costs of 
 34.13  examinations, the commissioner may use other money appropriated 
 34.14  to the commissioner, provided the other appropriation is 
 34.15  reimbursed from the examination account when it contains 
 34.16  sufficient money.  Money from the examination account must be 
 34.17  used to pay per diem salaries and expenses of special examiners, 
 34.18  including meals, lodging, laundry, transportation, and mileage.  
 34.19  The salary of regular employees of the ~~health~~ commerce 
 34.20  department must not be paid out of the account. 
 34.21     Sec. 45.  Minnesota Statutes 1994, section 62D.19, is 
 34.22  amended to read: 
 34.23     62D.19 [UNREASONABLE EXPENSES.] 
 34.24     No health maintenance organization shall incur or pay for 
 34.25  any expense of any nature which is unreasonably high in relation 
 34.26  to the value of the service or goods provided.  The commissioner 
 34.27  ~~of health~~ shall implement and enforce this section by rules 
 34.28  adopted under this section. 
 34.29     In an effort to achieve the stated purposes of sections 
 34.30  62D.01 to 62D.30; in order to safeguard the underlying nonprofit 
 34.31  status of health maintenance organizations; and to ensure that 
 34.32  the payment of health maintenance organization money to major 
 34.33  participating entities results in a corresponding benefit to the 
 34.34  health maintenance organization and its enrollees, when 
 34.35  determining whether an organization has incurred an unreasonable 
 34.36  expense in relation to a major participating entity, due 
 35.1   consideration shall be given to, in addition to any other 
 35.2   appropriate factors, whether the officers and trustees of the 
 35.3   health maintenance organization have acted with good faith and 
 35.4   in the best interests of the health maintenance organization in 
 35.5   entering into, and performing under, a contract under which the 
 35.6   health maintenance organization has incurred an expense.  The 
 35.7   commissioner has standing to sue, on behalf of a health 
 35.8   maintenance organization, officers or trustees of the health 
 35.9   maintenance organization who have breached their fiduciary duty 
 35.10  in entering into and performing such contracts. 
 35.11     Sec. 46.  Minnesota Statutes 1994, section 62D.20, 
 35.12  subdivision 1, is amended to read: 
 35.13     Subdivision 1.  [RULEMAKING.] The commissioner ~~of health~~ 
 35.14  may, pursuant to chapter 14, promulgate such reasonable rules as 
 35.15  are necessary or proper to carry out the provisions of sections 
 35.16  62D.01 to 62D.30.  Included among such rules shall be those 
 35.17  which provide minimum requirements for the provision of 
 35.18  comprehensive health maintenance services, as defined in section 
 35.19  62D.02, subdivision 7, and reasonable exclusions therefrom.  
 35.20  Nothing in such rules shall force or require a health 
 35.21  maintenance organization to provide elective, induced abortions, 
 35.22  except as medically necessary to prevent the death of the 
 35.23  mother, whether performed in a hospital, other abortion 
 35.24  facility, or the office of a physician; the rules shall provide 
 35.25  every health maintenance organization the option of excluding or 
 35.26  including elective, induced abortions, except as medically 
 35.27  necessary to prevent the death of the mother, as part of its 
 35.28  comprehensive health maintenance services.  
 35.29     Sec. 47.  Minnesota Statutes 1994, section 62D.21, is 
 35.30  amended to read: 
 35.31     62D.21 [FEES.] 
 35.32     Every health maintenance organization subject to sections 
 35.33  62D.01 to 62D.30 shall pay to the commissioner ~~of health~~ fees as 
 35.34  prescribed by the commissioner ~~of health pursuant to section~~ 
 35.35  ~~144.122~~ for the following: 
 35.36     (a) Filing an application for a certificate of authority, 
 36.1      (b) Filing an amendment to a certificate of authority, 
 36.2      (c) Filing each annual report, and 
 36.3      (d) Other filings, as specified by rule. 
 36.4      Sec. 48.  Minnesota Statutes 1994, section 62D.211, is 
 36.5   amended to read: 
 36.6      62D.211 [RENEWAL FEE.] 
 36.7      Each health maintenance organization subject to sections 
 36.8   62D.01 to 62D.30 shall submit to the commissioner ~~of health~~ each 
 36.9   year before June 15 a certificate of authority renewal fee in 
 36.10  the amount of $10,000 each plus 20 cents per person enrolled in 
 36.11  the health maintenance organization on December 31 of the 
 36.12  preceding year.  The commissioner may adjust the renewal fee in 
 36.13  rule under the provisions of chapter 14. 
 36.14     Sec. 49.  Minnesota Statutes 1994, section 62D.22, 
 36.15  subdivision 4, is amended to read: 
 36.16     Subd. 4.  To the extent that it furthers the purposes of 
 36.17  sections 62D.01 to 62D.30, the commissioner ~~of health~~ shall 
 36.18  attempt to coordinate the operations of sections 62D.01 to 
 36.19  62D.30 relating to the quality of health care services with the 
 36.20  operations of United States Code, title 42, sections 1320c to 
 36.21  1320c-20. 
 36.22     Sec. 50.  Minnesota Statutes 1994, section 62D.22, 
 36.23  subdivision 10, is amended to read: 
 36.24     Subd. 10.  Any person or committee conducting a review of a 
 36.25  health maintenance organization or a participating entity, 
 36.26  pursuant to sections 62D.01 to 62D.30, shall have access to any 
 36.27  data or information necessary to conduct the review.  All data 
 36.28  or information is subject to admission into evidence in any 
 36.29  civil action initiated by the commissioner ~~of health~~ against the 
 36.30  health maintenance organization.  The data and information are 
 36.31  subject to chapter 13.  
 36.32     Sec. 51.  Minnesota Statutes 1994, section 62D.24, is 
 36.33  amended to read: 
 36.34     62D.24 [~~STATE COMMISSIONER OF HEALTH'S~~ AUTHORITY TO 
 36.35  CONTRACT.] 
 36.36     The commissioner ~~of health~~, in carrying out the obligations 
 37.1   under sections 62D.01 to 62D.30, may contract with the 
 37.2   commissioner of ~~commerce~~ health or other qualified persons to 
 37.3   make recommendations concerning the determinations required to 
 37.4   be made.  Such recommendations may be accepted in full or in 
 37.5   part by the commissioner ~~of health~~. 
 37.6      Sec. 52.  Minnesota Statutes 1994, section 62D.30, 
 37.7   subdivision 1, is amended to read: 
 37.8      Subdivision 1.  The commissioner ~~of health~~ may establish 
 37.9   demonstration projects to allow health maintenance organizations 
 37.10  to extend coverage to:  
 37.11     (a) Individuals enrolled in Part A or Part B, or both, of 
 37.12  the Medicare program, Title XVIII of the Social Security Act, 
 37.13  United States Code, title 42, section 1395 et seq.; 
 37.14     (b) Groups of fewer than 50 employees where each group is 
 37.15  covered by a single group health policy; 
 37.16     (c) Individuals who are not eligible for enrollment in any 
 37.17  group health maintenance contracts; and 
 37.18     (d) Low income population groups.  
 37.19     For purposes of this section, the commissioner ~~of health~~ 
 37.20  may waive compliance with minimum benefits pursuant to sections 
 37.21  62A.151 and 62D.02, subdivision 7, full financial risk pursuant 
 37.22  to section 62D.04, subdivision 1, clause (f), open enrollment 
 37.23  pursuant to section 62D.10, and to applicable rules if there is 
 37.24  reasonable evidence that the rules prohibit the operation of the 
 37.25  demonstration project.  The commissioner shall provide for 
 37.26  public comment before any statute or rule is waived.  
 37.27     Sec. 53.  Minnesota Statutes 1994, section 62D.30, 
 37.28  subdivision 3, is amended to read: 
 37.29     Subd. 3.  A health maintenance organization electing to 
 37.30  participate in a demonstration project shall apply to the 
 37.31  commissioner for approval on a form developed by the 
 37.32  commissioner.  The application shall include at least the 
 37.33  following:  
 37.34     (a) A statement identifying the population that the project 
 37.35  is designed to serve; 
 37.36     (b) A description of the proposed project including a 
 38.1   statement projecting a schedule of costs and benefits for the 
 38.2   enrollee; 
 38.3      (c) Reference to the sections of Minnesota Statutes and 
 38.4   department of ~~health~~ commerce rules for which waiver is 
 38.5   requested; 
 38.6      (d) Evidence that application of the requirements of 
 38.7   applicable Minnesota Statutes and department of ~~health~~ commerce 
 38.8   rules would, unless waived, prohibit the operation of the 
 38.9   demonstration project; 
 38.10     (e) Evidence that another arrangement is available for 
 38.11  assumption of full financial risk if full financial risk is 
 38.12  waived under subdivision 1; 
 38.13     (f) An estimate of the number of years needed to adequately 
 38.14  demonstrate the project's effects; and 
 38.15     (g) Other information the commissioner may reasonably 
 38.16  require. 
 38.17     Sec. 54.  [EFFECT OF TRANSFER OF AUTHORITY.] 
 38.18     Minnesota Statutes, section 15.039, applies to this act. 
 38.19     Sec. 55.  [REPEALER.] 
 38.20     Minnesota Statutes 1994, section 62D.03, subdivision 2, is 
 38.21  repealed. 
 38.22     Sec. 56.  [EFFECTIVE DATE.] 
 38.23     Sections 1 to 53 are effective January 1, 1996.