1.1                          A bill for an act 
  1.2             relating to health; conforming to federal tax changes 
  1.3             to encourage consumer-driven health plans; encouraging 
  1.4             efficiency in providing health care; reforming medical 
  1.5             malpractice liability; reducing and providing a 
  1.6             moratorium on state-imposed private-sector health 
  1.7             coverage mandates; providing a pilot project for 
  1.8             health plans that do not cover all mandated benefits; 
  1.9             eliminating capital expenditure reporting 
  1.10            requirements; permitting nonprofit hospitals to 
  1.11            garnish state tax refunds; permitting file-and-use for 
  1.12            health insurance policy forms; permitting for-profit 
  1.13            health maintenance organizations; transferring 
  1.14            regulatory authority for health maintenance 
  1.15            organizations; addressing the cost-shifting impacts of 
  1.16            public sector health care programs; amending Minnesota 
  1.17            Statutes 2002, sections 16A.10, by adding a 
  1.18            subdivision; 62A.02, subdivision 2; 62D.02, 
  1.19            subdivision 4, by adding a subdivision; 62D.03, 
  1.20            subdivision 1; 62D.04, subdivision 1; 147.03, 
  1.21            subdivision 1; 256B.04, by adding a subdivision; 
  1.22            Minnesota Statutes 2003 Supplement, sections 62J.26, 
  1.23            by adding a subdivision; 144.7063, subdivision 3; 
  1.24            270A.03, subdivision 2; 290.01, subdivisions 19, 31; 
  1.25            proposing coding for new law in Minnesota Statutes, 
  1.26            chapters 3; 62L; 147; 604; repealing Minnesota 
  1.27            Statutes 2002, sections 62A.309; 62J.17, as amended; 
  1.28            62Q.65. 
  1.29  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.30                             ARTICLE 1 
  1.31                        CONSUMER EMPOWERMENT 
  1.32     Section 1.  Minnesota Statutes 2003 Supplement, section 
  1.33  290.01, subdivision 19, is amended to read: 
  1.34     Subd. 19.  [NET INCOME.] The term "net income" means the 
  1.35  federal taxable income, as defined in section 63 of the Internal 
  1.36  Revenue Code of 1986, as amended through the date named in this 
  1.37  subdivision, incorporating any elections made by the taxpayer in 
  2.1   accordance with the Internal Revenue Code in determining federal 
  2.2   taxable income for federal income tax purposes, and with the 
  2.3   modifications provided in subdivisions 19a to 19f. 
  2.4      In the case of a regulated investment company or a fund 
  2.5   thereof, as defined in section 851(a) or 851(g) of the Internal 
  2.6   Revenue Code, federal taxable income means investment company 
  2.7   taxable income as defined in section 852(b)(2) of the Internal 
  2.8   Revenue Code, except that:  
  2.9      (1) the exclusion of net capital gain provided in section 
  2.10  852(b)(2)(A) of the Internal Revenue Code does not apply; 
  2.11     (2) the deduction for dividends paid under section 
  2.12  852(b)(2)(D) of the Internal Revenue Code must be applied by 
  2.13  allowing a deduction for capital gain dividends and 
  2.14  exempt-interest dividends as defined in sections 852(b)(3)(C) 
  2.15  and 852(b)(5) of the Internal Revenue Code; and 
  2.16     (3) the deduction for dividends paid must also be applied 
  2.17  in the amount of any undistributed capital gains which the 
  2.18  regulated investment company elects to have treated as provided 
  2.19  in section 852(b)(3)(D) of the Internal Revenue Code.  
  2.20     The net income of a real estate investment trust as defined 
  2.21  and limited by section 856(a), (b), and (c) of the Internal 
  2.22  Revenue Code means the real estate investment trust taxable 
  2.23  income as defined in section 857(b)(2) of the Internal Revenue 
  2.24  Code.  
  2.25     The net income of a designated settlement fund as defined 
  2.26  in section 468B(d) of the Internal Revenue Code means the gross 
  2.27  income as defined in section 468B(b) of the Internal Revenue 
  2.28  Code. 
  2.29     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  2.30  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  2.31  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  2.32  Protection Act, Public Law 104-188, the provisions of Public Law 
  2.33  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  2.34  913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  2.35  1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  2.36  and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  3.1   1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  3.2   105-34, the provisions of section 6010 of the Internal Revenue 
  3.3   Service Restructuring and Reform Act of 1998, Public Law 
  3.4   105-206, the provisions of section 4003 of the Omnibus 
  3.5   Consolidated and Emergency Supplemental Appropriations Act, 
  3.6   1999, Public Law 105-277, and the provisions of section 318 of 
  3.7   the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  3.8   shall become effective at the time they become effective for 
  3.9   federal purposes. 
  3.10     The Internal Revenue Code of 1986, as amended through 
  3.11  December 31, 1996, shall be in effect for taxable years 
  3.12  beginning after December 31, 1996. 
  3.13     The provisions of sections 202(a) and (b), 221(a), 225, 
  3.14  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  3.15  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  3.16  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  3.17  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  3.18  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  3.19  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  3.20  and 7003 of the Internal Revenue Service Restructuring and 
  3.21  Reform Act of 1998, Public Law 105-206, the provisions of 
  3.22  section 3001 of the Omnibus Consolidated and Emergency 
  3.23  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  3.24  provisions of section 3001 of the Miscellaneous Trade and 
  3.25  Technical Corrections Act of 1999, Public Law 106-36, and the 
  3.26  provisions of section 316 of the Consolidated Appropriation Act 
  3.27  of 2001, Public Law 106-554, shall become effective at the time 
  3.28  they become effective for federal purposes. 
  3.29     The Internal Revenue Code of 1986, as amended through 
  3.30  December 31, 1997, shall be in effect for taxable years 
  3.31  beginning after December 31, 1997. 
  3.32     The provisions of sections 5002, 6009, 6011, and 7001 of 
  3.33  the Internal Revenue Service Restructuring and Reform Act of 
  3.34  1998, Public Law 105-206, the provisions of section 9010 of the 
  3.35  Transportation Equity Act for the 21st Century, Public Law 
  3.36  105-178, the provisions of sections 1004, 4002, and 5301 of the 
  4.1   Omnibus Consolidation and Emergency Supplemental Appropriations 
  4.2   Act, 1999, Public Law 105-277, the provision of section 303 of 
  4.3   the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  4.4   105-369, the provisions of sections 532, 534, 536, 537, and 538 
  4.5   of the Ticket to Work and Work Incentives Improvement Act of 
  4.6   1999, Public Law 106-170, the provisions of the Installment Tax 
  4.7   Correction Act of 2000, Public Law 106-573, and the provisions 
  4.8   of section 309 of the Consolidated Appropriation Act of 2001, 
  4.9   Public Law 106-554, shall become effective at the time they 
  4.10  become effective for federal purposes. 
  4.11     The Internal Revenue Code of 1986, as amended through 
  4.12  December 31, 1998, shall be in effect for taxable years 
  4.13  beginning after December 31, 1998.  
  4.14     The provisions of the FSC Repeal and Extraterritorial 
  4.15  Income Exclusion Act of 2000, Public Law 106-519, and the 
  4.16  provision of section 412 of the Job Creation and Worker 
  4.17  Assistance Act of 2002, Public Law 107-147, shall become 
  4.18  effective at the time it became effective for federal purposes. 
  4.19     The Internal Revenue Code of 1986, as amended through 
  4.20  December 31, 1999, shall be in effect for taxable years 
  4.21  beginning after December 31, 1999.  The provisions of sections 
  4.22  306 and 401 of the Consolidated Appropriation Act of 2001, 
  4.23  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
  4.24  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
  4.25  Public Law 107-16, and provisions of sections 101 and 402 of the 
  4.26  Job Creation and Worker Assistance Act of 2002, Public Law 
  4.27  107-147, shall become effective at the same time it became 
  4.28  effective for federal purposes. 
  4.29     The Internal Revenue Code of 1986, as amended through 
  4.30  December 31, 2000, shall be in effect for taxable years 
  4.31  beginning after December 31, 2000.  The provisions of sections 
  4.32  659a and 671 of the Economic Growth and Tax Relief 
  4.33  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
  4.34  sections 104, 105, and 111 of the Victims of Terrorism Tax 
  4.35  Relief Act of 2001, Public Law 107-134, and the provisions of 
  4.36  sections 201, 403, 413, and 606 of the Job Creation and Worker 
  5.1   Assistance Act of 2002, Public Law 107-147, shall become 
  5.2   effective at the same time it became effective for federal 
  5.3   purposes. 
  5.4      The Internal Revenue Code of 1986, as amended through March 
  5.5   15, 2002, shall be in effect for taxable years beginning after 
  5.6   December 31, 2001. 
  5.7      The provisions of sections 101 and 102 of the Victims of 
  5.8   Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
  5.9   become effective at the same time it becomes effective for 
  5.10  federal purposes. 
  5.11     The Internal Revenue Code of 1986, as amended through June 
  5.12  15, 2003, shall be in effect for taxable years beginning after 
  5.13  December 31, 2002.  The provisions of section 201 of the Jobs 
  5.14  and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
  5.15  it is enacted into law, are effective at the same time it became 
  5.16  effective for federal purposes. 
  5.17     Section 1201 of the Medicare Prescription Drug Improvement 
  5.18  and Modernization Act of 2003, relating to health savings 
  5.19  accounts, is effective at the same time it became effective for 
  5.20  federal purposes. 
  5.21     Except as otherwise provided, references to the Internal 
  5.22  Revenue Code in subdivisions 19a to 19g mean the code in effect 
  5.23  for purposes of determining net income for the applicable year. 
  5.24     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  5.25  290.01, subdivision 31, is amended to read: 
  5.26     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
  5.27  defined otherwise, "Internal Revenue Code" means the Internal 
  5.28  Revenue Code of 1986, as amended through June 15, 2003, and as 
  5.29  amended by section 1201 of the Medicare Prescription Drug 
  5.30  Improvement and Modernization Act of 2003, relating to health 
  5.31  savings accounts. 
  5.32     Sec. 3.  [REPEALER; MSA NETWORK REQUIREMENT.] 
  5.33     Minnesota Statutes 2002, section 62Q.65, is repealed. 
  5.34                             ARTICLE 2 
  5.35                      PROVIDER BEST PRACTICES 
  5.36     Section 1.  Minnesota Statutes 2003 Supplement, section 
  6.1   144.7063, subdivision 3, is amended to read: 
  6.2      Subd. 3.  [FACILITY.] "Facility" means a hospital licensed 
  6.3   under sections 144.50 to 144.58; an outpatient surgical center 
  6.4   licensed under Minnesota Rules, chapter 4675; or a medical or 
  6.5   community clinic, physician group practice, physician office, or 
  6.6   other location at which a physician regularly provides 
  6.7   outpatient services. 
  6.8      Sec. 2.  Minnesota Statutes 2002, section 256B.04, is 
  6.9   amended by adding a subdivision to read: 
  6.10     Subd. 20.  [INFORMATION AND REFERRAL CENTER FOR INTERPRETER 
  6.11  SERVICES.] The commissioner shall establish an information and 
  6.12  referral center to assist health care providers in obtaining 
  6.13  oral language interpreter services, when these services are 
  6.14  needed to enable a patient to obtain a health care service from 
  6.15  a provider.  The information and referral center must collect 
  6.16  and maintain contact and rate information for providers of oral 
  6.17  language interpreter services, and must make this information 
  6.18  available to all health care providers, whether or not the 
  6.19  provider is enrolled in a state health care program.  The 
  6.20  commissioner may contract with a private sector, nonprofit 
  6.21  organization to implement this subdivision. 
  6.22                             ARTICLE 3 
  6.23                     MEDICAL MALPRACTICE REFORM 
  6.24     Section 1.  [147.37] [BEST PRACTICE GUIDELINES.] 
  6.25     Subdivision 1.  [BOARD APPROVAL.] The Board of Medical 
  6.26  Practice may evaluate and approve best practice guidelines and 
  6.27  shall make any approved guidelines available to interested 
  6.28  physicians through the board's Web site. 
  6.29     Subd. 2.  [MEDICAL MALPRACTICE CASES.] (a) In an action 
  6.30  against a provider for malpractice, error, mistake, or failure 
  6.31  to cure, whether based in contract or tort, adherence to a best 
  6.32  practice guideline approved by the Board of Medical Practice 
  6.33  under subdivision 1 is an absolute defense against an allegation 
  6.34  that the provider did not comply with accepted standards of 
  6.35  practice in the community. 
  6.36     (b) Evidence of a departure from a best practice guideline 
  7.1   is admissible only on the issue of whether the provider is 
  7.2   entitled to an absolute defense under paragraph (a). 
  7.3      (c) Paragraphs (a) and (b) apply to claims arising on or 
  7.4   after August 1, 2004, or 90 days after the date the board 
  7.5   approves the applicable best practice guideline, whichever is 
  7.6   later. 
  7.7      (d) Nothing in this section changes the standard or burden 
  7.8   of proof in an action alleging a delay in diagnosis, a 
  7.9   misdiagnosis, inappropriate application of a best practice 
  7.10  guideline, failure to obtain informed consent, battery or other 
  7.11  intentional tort, or product liability.  
  7.12     Sec. 2.  [604.111] [HEALTH CARE PROVIDER ACTIONS; LIMITS ON 
  7.13  DAMAGES AND ATTORNEY FEES.] 
  7.14     Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
  7.15  section, the terms in paragraphs (b) to (d) have the meanings 
  7.16  given them. 
  7.17     (b) "Economic damages" means objectively verifiable 
  7.18  monetary losses, such as past and future medical expenses, loss 
  7.19  of past and future earnings, cost of obtaining domestic 
  7.20  services, loss of employment, loss due to death, burial costs, 
  7.21  and loss of business or employment opportunities.  Economic 
  7.22  damages does not include noneconomic damages.  
  7.23     (c) "Health care provider" has the meaning given in section 
  7.24  541.076, paragraph (a). 
  7.25     (d) "Noneconomic damages" means money intended to 
  7.26  compensate for pain and suffering; humiliation; embarrassment; 
  7.27  worry; mental distress; noneconomic effects of disability, 
  7.28  including loss of enjoyment of the normal activities, benefits, 
  7.29  and pleasures of life, and loss of mental or physical health, 
  7.30  well-being, or bodily functions; loss of consortium, society, 
  7.31  and companionship; or loss of love and affection. 
  7.32     Subd. 2.  [RECOVERY REGULATED.] The total noneconomic 
  7.33  damages recoverable for bodily injury or death by or on behalf 
  7.34  of a patient or former patient, against a health care provider 
  7.35  or an employee of a health care provider, alleging malpractice, 
  7.36  error, mistake, or failure to cure, whether based on contract or 
  8.1   tort, including any action or proceeding based on contribution 
  8.2   or indemnification, may not exceed the limit under subdivision 3 
  8.3   for each occurrence from all health care providers and all 
  8.4   employees of health care providers, acting within the scope of 
  8.5   their employment and providing health care services, who are 
  8.6   found liable. 
  8.7      Subd. 3.  [LIMITATION ON NONECONOMIC DAMAGES.] The limit on 
  8.8   total noneconomic damages for each occurrence is $250,000.  This 
  8.9   amount must be adjusted by the state court administrator to 
  8.10  reflect changes in the Consumer Price Index for all urban 
  8.11  consumers, United States city average, as determined by the 
  8.12  United States Department of Labor, at least annually, with the 
  8.13  adjusted limit to apply to awards for causes of action arising 
  8.14  subsequent to the adjustment. 
  8.15     Subd. 4.  [FINDINGS.] (a) A court in an action tried 
  8.16  without a jury shall make a finding as to noneconomic damages 
  8.17  without regard to the limit under subdivision 3.  If noneconomic 
  8.18  damages in excess of the limit are found, the court shall make 
  8.19  any reduction required under this chapter and shall award as 
  8.20  noneconomic damages the lesser of the reduced amount or the 
  8.21  limit.  
  8.22     (b) If an action is before a jury, the jury shall make a 
  8.23  finding as to noneconomic damages without regard to the limit 
  8.24  under subdivision 3.  If the jury finds that noneconomic damages 
  8.25  exceed the limit, the jury shall make any reduction required 
  8.26  under this chapter, and the court shall award as noneconomic 
  8.27  damages the lesser of the reduced amount or the limit. 
  8.28     Subd. 5.  [DAMAGE AWARDS; SPECIFICATION OF CERTAIN 
  8.29  COMPONENTS.] Every award of damages in an action referred to in 
  8.30  subdivision 2 shall specify the sum of money, if any, awarded 
  8.31  for each of the following for each claimant for the period from 
  8.32  the date of injury to the date of award and for the period after 
  8.33  the date of award, without regard to the limit under subdivision 
  8.34  3: 
  8.35     (1) pain, suffering, and noneconomic effects of disability; 
  8.36     (2) loss of consortium, society, and companionship, or loss 
  9.1   of love and affection; 
  9.2      (3) loss of earnings or earning capacity; 
  9.3      (4) each element of medical expenses; and 
  9.4      (5) other economic injuries and damages. 
  9.5      Subd. 6.  [PUNITIVE DAMAGES LIMITED.] Punitive, exemplary, 
  9.6   and similar damages recoverable against a health care provider 
  9.7   and an employee of a health care provider, in a cause of action 
  9.8   described in subdivision 2, must not exceed the greater of 
  9.9   $250,000 or two times the amount of economic damages.  The jury 
  9.10  must not be informed of this limitation.  
  9.11     Subd. 7.  [EXCESSIVE ATTORNEY FEES PROHIBITED.] (a) 
  9.12  Attorney fees payable by a plaintiff in any cause of action 
  9.13  referred to in subdivision 2 must not exceed the following 
  9.14  percentage of damages: 
  9.15     (1) 40 percent of the first $50,000; 
  9.16     (2) 33-1/3 percent of the next $50,000; 
  9.17     (3) 25 percent of the next $500,000; plus 
  9.18     (4) 15 percent of that portion of damages that exceeds 
  9.19  $600,000. 
  9.20     (b) This subdivision applies to the net damages actually 
  9.21  recovered by that plaintiff under the cause of action, whether 
  9.22  through settlement, alternative dispute resolution, court 
  9.23  judgment, or otherwise.  "Net damages actually recovered" means 
  9.24  the net sum recovered after deducting any disbursements or costs 
  9.25  incurred in connection with prosecution or settlement of the 
  9.26  claim, including all costs paid or advanced by any person.  
  9.27  Costs of health care incurred by the plantiff and the attorney's 
  9.28  office overhead costs or charges for legal services are not 
  9.29  deductible disbursements of costs for such purpose. 
  9.30     (c) A fee agreement that violates this subdivision is void 
  9.31  and unenforceable, to the extent of the violation. 
  9.32     Subd. 8.  [NONPROFIT HOSPITALS; DAMAGES LIMIT.] (a) With 
  9.33  respect to a cause of action described in subdivision 2, the 
  9.34  limitations on damages provided in section 466.04 apply to 
  9.35  damages recoverable from any private, nonprofit hospital 
  9.36  licensed under sections 144.50 to 144.56 that is incorporated 
 10.1   under chapter 317A. 
 10.2      (b) All other provisions of this section apply with respect 
 10.3   to hospitals described in paragraph (a), except as otherwise 
 10.4   provided in section 466.04. 
 10.5      Sec. 3.  [EFFECTIVE DATE; APPLICATION.] 
 10.6      Section 2 is effective August 1, 2004, and applies to 
 10.7   causes of actions arising from incidents occurring on or after 
 10.8   that date. 
 10.9                              ARTICLE 4 
 10.10                    REDUCING GOVERNMENT MANDATES 
 10.11     Section 1.  Minnesota Statutes 2003 Supplement, section 
 10.12  62J.26, is amended by adding a subdivision to read: 
 10.13     Subd. 6.  [MANDATED BENEFITS MORATORIUM.] (a) No new 
 10.14  mandated health benefits proposal, as defined in subdivision 1, 
 10.15  shall be enacted. 
 10.16     (b) This subdivision expires January 1, 2007. 
 10.17     Sec. 2.  [62L.056] [SMALL EMPLOYER ALTERNATIVE BENEFIT 
 10.18  PLANS; PILOT PROJECT.] 
 10.19     (a) Notwithstanding any provision of this chapter, chapter 
 10.20  363, or any other law to the contrary, the commissioner of 
 10.21  commerce shall develop and implement a pilot project by January 
 10.22  1, 2005, to authorize health carriers to offer alternative 
 10.23  health benefit plans to small employers if the following 
 10.24  requirements are satisfied: 
 10.25     (1) the health carrier is assessed less than three percent 
 10.26  of the total amount assessed by the Minnesota Comprehensive 
 10.27  Health Association; 
 10.28     (2) the health plans must be offered in compliance with 
 10.29  this chapter, except as otherwise permitted in this section; 
 10.30     (3) the health plans to be offered must be designed to 
 10.31  enable employers and covered persons to better manage costs and 
 10.32  coverage options through the use of co-pays, deductibles, and 
 10.33  other cost-sharing arrangements; 
 10.34     (4) the health plans must be issued and administered in 
 10.35  compliance with sections 62E.141; 62L.03, subdivision 6; and 
 10.36  62L.12, subdivisions 3 and 4, relating to prohibitions against 
 11.1   enrolling in the Minnesota Comprehensive Health Association 
 11.2   persons eligible for employer group coverage; 
 11.3      (5) the health plans must meet a 71 percent loss ratio for 
 11.4   small employers with fewer than ten employees, and a 75 percent 
 11.5   loss ratio for all other plans, except as otherwise provided in 
 11.6   section 62A.021, subdivision 1, paragraph (g); 
 11.7      (6) the health plans may alter or eliminate coverages that 
 11.8   would otherwise be required by law; 
 11.9      (7) each health plan must be approved by the commissioner 
 11.10  of commerce; 
 11.11     (8) the commissioner may limit the types and numbers of 
 11.12  health plan forms permitted under this section, but must permit, 
 11.13  as one option, a health plan form in which a health carrier may 
 11.14  exclude or alter coverage of any or all benefits otherwise 
 11.15  mandated by state law; and 
 11.16     (9) a plan permitted under this section may be offered by a 
 11.17  health carrier only in a situation in which the small employer 
 11.18  permits employees to choose between that health plan and at 
 11.19  least one other health plan that fully complies with state law 
 11.20  other than this section. 
 11.21     (b) The definitions in section 62L.02 apply to this section 
 11.22  as modified by this section. 
 11.23     (c) An employer may provide health plans permitted under 
 11.24  this section to its employees, the employees' dependents, and 
 11.25  other persons eligible for coverage under the employer's plan, 
 11.26  notwithstanding chapter 363 or any other law to the contrary. 
 11.27     (d) This section expires August 1, 2010. 
 11.28     Sec. 3.  [REPEALER; BONE MARROW TRANSPLANT MANDATE.] 
 11.29     Minnesota Statutes 2002, section 62A.309, is repealed. 
 11.30                             ARTICLE 5 
 11.31                       ADMINISTRATIVE REFORM 
 11.32     Section 1.  Minnesota Statutes 2002, section 147.03, 
 11.33  subdivision 1, is amended to read: 
 11.34     Subdivision 1.  [ENDORSEMENT; RECIPROCITY.] (a) The board 
 11.35  may issue a license to practice medicine to any person who 
 11.36  satisfies the requirements in paragraphs (b) to (f).  
 12.1      (b) The applicant shall satisfy all the requirements 
 12.2   established in section 147.02, subdivision 1, paragraphs (a), 
 12.3   (b), (d), (e), and (f).  
 12.4      (c) The applicant shall: 
 12.5      (1) have passed an examination prepared and graded by the 
 12.6   Federation of State Medical Boards, the National Board of 
 12.7   Medical Examiners, or the United States Medical Licensing 
 12.8   Examination program in accordance with section 147.02, 
 12.9   subdivision 1, paragraph (c), clause (2); the National Board of 
 12.10  Osteopathic Examiners; or the Medical Council of Canada; and 
 12.11     (2) have a current license from the equivalent licensing 
 12.12  agency in another state or Canada and, if the examination in 
 12.13  clause (1) was passed more than ten years ago, either: 
 12.14     (i) pass the Special Purpose Examination of the Federation 
 12.15  of State Medical Boards with a score of 75 or better within 
 12.16  three attempts; or 
 12.17     (ii) have a current certification by a specialty board of 
 12.18  the American Board of Medical Specialties, of the American 
 12.19  Osteopathic Association Bureau of Professional Education, or of 
 12.20  the Royal College of Physicians and Surgeons of Canada. 
 12.21     (d) The applicant shall pay a fee established by the board 
 12.22  by rule.  The fee may not be refunded.  
 12.23     (e) The applicant must not be under license suspension or 
 12.24  revocation by the licensing board of the state or jurisdiction 
 12.25  in which the conduct that caused the suspension or revocation 
 12.26  occurred. 
 12.27     (f) The applicant must not have engaged in conduct 
 12.28  warranting disciplinary action against a licensee, or have been 
 12.29  subject to disciplinary action other than as specified in 
 12.30  paragraph (e).  If an applicant does not satisfy the 
 12.31  requirements stated in this paragraph, the board may issue a 
 12.32  license only on the applicant's showing that the public will be 
 12.33  protected through issuance of a license with conditions or 
 12.34  limitations the board considers appropriate. 
 12.35     (g) Upon the request of the applicant, the board may 
 12.36  conduct the final interview of an applicant by teleconference. 
 13.1      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 13.2   270A.03, subdivision 2, is amended to read: 
 13.3      Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
 13.4   state agency, as defined by section 14.02, subdivision 2, the 
 13.5   regents of the University of Minnesota, any district court of 
 13.6   the state, any county, any statutory or home rule charter city 
 13.7   presenting a claim for a municipal hospital or a public library 
 13.8   or a municipal ambulance service, a hospital district, a private 
 13.9   nonprofit hospital ~~that leases its building from the county in~~ 
 13.10  ~~which it is located~~, any public agency responsible for child 
 13.11  support enforcement, any public agency responsible for the 
 13.12  collection of court-ordered restitution, and any public agency 
 13.13  established by general or special law that is responsible for 
 13.14  the administration of a low-income housing program, and the 
 13.15  Minnesota collection enterprise as defined in section 16D.02, 
 13.16  subdivision 8, for the purpose of collecting the costs imposed 
 13.17  under section 16D.11.  A county may act as a claimant agency on 
 13.18  behalf of an ambulance service licensed under chapter 144E if 
 13.19  the ambulance service's primary service area is located at least 
 13.20  in part within the county, but more than one county may not act 
 13.21  as a claimant agency for a licensed ambulance service with 
 13.22  respect to the same debt. 
 13.23     Sec. 3.  [REPEALER.] 
 13.24     Minnesota Statutes 2002, section 62J.17, as amended by Laws 
 13.25  2003, First Special Session chapter 14, article 7, section 11, 
 13.26  is repealed effective the day following final enactment. 
 13.27                             ARTICLE 6 
 13.28                 HEALTH PLAN COMPETITION AND REFORM 
 13.29     Section 1.  Minnesota Statutes 2002, section 62A.02, 
 13.30  subdivision 2, is amended to read: 
 13.31     Subd. 2.  [APPROVAL.] (a) The health plan form shall not be 
 13.32  issued, nor shall any application, rider, endorsement, or rate 
 13.33  be used in connection with it, until the expiration of 60 days 
 13.34  after it has been filed unless the commissioner approves it 
 13.35  before that time.  
 13.36     (b) Notwithstanding paragraph (a), a health plan form or a 
 14.1   rate, filed with respect to a policy of accident and sickness 
 14.2   insurance as defined in section 62A.01 by an insurer licensed 
 14.3   under chapter 60A, may be used on or after the date of filing 
 14.4   with the commissioner.  Health plan forms and rates that are not 
 14.5   approved or disapproved within the 60-day time period are deemed 
 14.6   approved.  This paragraph does not apply to Medicare-related 
 14.7   coverage as defined in section 62A.31, subdivision 3, paragraph 
 14.8   (q). 
 14.9      Sec. 2.  Minnesota Statutes 2002, section 62D.02, 
 14.10  subdivision 4, is amended to read: 
 14.11     Subd. 4.  [HEALTH MAINTENANCE ORGANIZATION.] (a) "Health 
 14.12  maintenance organization" means a ~~nonprofit corporation~~ 
 14.13  ~~organized under chapter 317A, or~~ person, including a local 
 14.14  governmental unit as defined in subdivision 11, controlled and 
 14.15  operated as provided in sections 62D.01 to 62D.30, which 
 14.16  provides, either directly or through arrangements with providers 
 14.17  or other persons, comprehensive health maintenance services, or 
 14.18  arranges for the provision of these services, to enrollees on 
 14.19  the basis of a fixed prepaid sum without regard to the frequency 
 14.20  or extent of services furnished to any particular enrollee.  
 14.21     Sec. 3.  Minnesota Statutes 2002, section 62D.02, is 
 14.22  amended by adding a subdivision to read: 
 14.23     Subd. 17.  [PERSON.] "Person" means a natural or artificial 
 14.24  person, including but not limited to individuals, partnerships, 
 14.25  limited liability companies, associations, trusts, corporations, 
 14.26  other business entities, or governmental entities. 
 14.27     Sec. 4.  Minnesota Statutes 2002, section 62D.03, 
 14.28  subdivision 1, is amended to read: 
 14.29     Subdivision 1.  [CERTIFICATE OF AUTHORITY REQUIRED.] 
 14.30  Notwithstanding any law of this state to the contrary, any 
 14.31  ~~nonprofit corporation organized to do so or a local governmental~~ 
 14.32  ~~unit~~ person may apply to the commissioner of health for a 
 14.33  certificate of authority to establish and operate a health 
 14.34  maintenance organization in compliance with sections 62D.01 to 
 14.35  62D.30.  No person shall establish or operate a health 
 14.36  maintenance organization in this state, nor sell or offer to 
 15.1   sell, or solicit offers to purchase or receive advance or 
 15.2   periodic consideration in conjunction with a health maintenance 
 15.3   organization or health maintenance contract unless the 
 15.4   organization has a certificate of authority under sections 
 15.5   62D.01 to 62D.30.  A foreign corporation may qualify under this 
 15.6   chapter, subject to obtaining a certificate of authority to do 
 15.7   business in this state as a foreign corporation under chapter 
 15.8   303 and compliance with this chapter and other applicable state 
 15.9   laws. 
 15.10     Sec. 5.  Minnesota Statutes 2002, section 62D.04, 
 15.11  subdivision 1, is amended to read: 
 15.12     Subdivision 1.  [APPLICATION REVIEW.] Upon receipt of an 
 15.13  application for a certificate of authority, the commissioner of 
 15.14  health shall determine whether the applicant for a certificate 
 15.15  of authority has: 
 15.16     (a) demonstrated the willingness and potential ability to 
 15.17  assure that health care services will be provided in such a 
 15.18  manner as to enhance and assure both the availability and 
 15.19  accessibility of adequate personnel and facilities; 
 15.20     (b) arrangements for an ongoing evaluation of the quality 
 15.21  of health care; 
 15.22     (c) a procedure to develop, compile, evaluate, and report 
 15.23  statistics relating to the cost of its operations, the pattern 
 15.24  of utilization of its services, the quality, availability and 
 15.25  accessibility of its services, and such other matters as may be 
 15.26  reasonably required by regulation of the commissioner of health; 
 15.27     (d) reasonable provisions for emergency and out of area 
 15.28  health care services; 
 15.29     (e) demonstrated that it is financially responsible and may 
 15.30  reasonably be expected to meet its obligations to enrollees and 
 15.31  prospective enrollees.  In making this determination, the 
 15.32  commissioner of health shall require the amounts of net worth 
 15.33  and working capital required in section 62D.042, the deposit 
 15.34  required in section 62D.041, and in addition shall consider: 
 15.35     (1) the financial soundness of its arrangements for health 
 15.36  care services and the proposed schedule of charges used in 
 16.1   connection therewith; 
 16.2      (2) arrangements which will guarantee for a reasonable 
 16.3   period of time the continued availability or payment of the cost 
 16.4   of health care services in the event of discontinuance of the 
 16.5   health maintenance organization; and 
 16.6      (3) agreements with providers for the provision of health 
 16.7   care services; 
 16.8      (f) demonstrated that it will assume full financial risk on 
 16.9   a prospective basis for the provision of comprehensive health 
 16.10  maintenance services, including hospital care; provided, 
 16.11  however, that the requirement in this paragraph shall not 
 16.12  prohibit the following: 
 16.13     (1) a health maintenance organization from obtaining 
 16.14  insurance or making other arrangements (i) for the cost of 
 16.15  providing to any enrollee comprehensive health maintenance 
 16.16  services, the aggregate value of which exceeds $5,000 in any 
 16.17  year, (ii) for the cost of providing comprehensive health care 
 16.18  services to its members on a nonelective emergency basis, or 
 16.19  while they are outside the area served by the organization, or 
 16.20  (iii) for not more than 95 percent of the amount by which the 
 16.21  health maintenance organization's costs for any of its fiscal 
 16.22  years exceed 105 percent of its income for such fiscal years; 
 16.23  and 
 16.24     (2) a health maintenance organization from having a 
 16.25  provision in a group health maintenance contract allowing an 
 16.26  adjustment of premiums paid based upon the actual health 
 16.27  services utilization of the enrollees covered under the 
 16.28  contract, except that at no time during the life of the contract 
 16.29  shall the contract holder fully self-insure the financial risk 
 16.30  of health care services delivered under the contract.  Risk 
 16.31  sharing arrangements shall be subject to the requirements of 
 16.32  sections 62D.01 to 62D.30; 
 16.33     (g) demonstrated that it has made provisions for and 
 16.34  adopted a conflict of interest policy applicable to all members 
 16.35  of the board of directors and the principal officers of the 
 16.36  health maintenance organization.  The conflict of interest 
 17.1   policy shall include the procedures described in section 
 17.2   317A.255, subdivisions 1 and 2, or a substantially similar 
 17.3   provision contained in the laws under which the health 
 17.4   maintenance organization is incorporated or otherwise 
 17.5   organized.  However, the commissioner is not precluded from 
 17.6   finding that a particular transaction is an unreasonable expense 
 17.7   as described in section 62D.19 even if the directors follow the 
 17.8   required procedures; and 
 17.9      (h) otherwise met the requirements of sections 62D.01 to 
 17.10  62D.30. 
 17.11     Sec. 6.  [CHANGE OF HEALTH MAINTENANCE ORGANIZATION 
 17.12  REGULATORY AUTHORITY.] 
 17.13     (a) Effective July 1, 2005, regulatory authority for health 
 17.14  maintenance organizations under Minnesota Statutes, chapter 62D, 
 17.15  is transferred from the commissioner of health to the 
 17.16  commissioner of commerce. 
 17.17     (b) Minnesota Statutes, section 15.039, applies to this 
 17.18  transfer of authority. 
 17.19     (c) The revisor of statutes shall, in preparing Minnesota 
 17.20  Statutes 2004, make all conforming changes in Minnesota 
 17.21  Statutes, chapter 62D and other chapters. 
 17.22                             ARTICLE 7 
 17.23                 TAXPAYER SUBSIDIZED HEALTH PROGRAM 
 17.24                           COST-SHIFTING 
 17.25     Section 1.  [3.990] [IMPACT OF COST-SHIFTING.] 
 17.26     The commissioner of human services and the commissioner of 
 17.27  finance, in preparing a fiscal note for any legislative proposal 
 17.28  that requires new or increased funding for an expansion of 
 17.29  eligibility or covered services for a state health care program, 
 17.30  shall include in the fiscal note an estimate of the financial 
 17.31  impact of cost-shifting on private sector payors and individuals 
 17.32  paying for health care services out-of-pocket.  The commissioner 
 17.33  shall measure the financial impact of cost-shifting by 
 17.34  calculating the extent to which estimated state health care 
 17.35  program reimbursement for the additional health care services 
 17.36  expected to be provided as a result of the expansion is lower 
 18.1   than the estimated cost to providers of providing the services.  
 18.2   For purposes of this section, "state health care program" means 
 18.3   the medical assistance, MinnesotaCare, and general assistance 
 18.4   medical care programs. 
 18.5      Sec. 2.  Minnesota Statutes 2002, section 16A.10, is 
 18.6   amended by adding a subdivision to read: 
 18.7      Subd. 4.  [LIMIT ON STATE HEALTH CARE PROGRAM 
 18.8   EXPANSION.] No budget proposal shall include any provision that 
 18.9   requests new or increased funding for an expansion of 
 18.10  eligibility or covered services for a state health care program, 
 18.11  unless state health care program reimbursement rates for major 
 18.12  service categories, at the time the expansion is to take effect, 
 18.13  will be sufficient to cover estimated provider costs for each 
 18.14  major service category.  For purposes of this section, "state 
 18.15  health care program" means the medical assistance, 
 18.16  MinnesotaCare, and general assistance medical care programs. 
 18.17     Sec. 3.  [STUDY OF COST-SHIFTING.] 
 18.18     The commissioner of human services shall evaluate the 
 18.19  extent to which state health care program reimbursement rates 
 18.20  result in health care provider cost-shifting to private sector 
 18.21  payors and individuals paying for services out-of-pocket.  In 
 18.22  conducting the evaluation, the commissioner shall: 
 18.23     (1) examine the extent to which average state health care 
 18.24  program reimbursement rates for major categories of services 
 18.25  vary from average private sector reimbursement rates; 
 18.26     (2) examine the extent to which average state health care 
 18.27  program reimbursement rates for major categories of services 
 18.28  cover average provider costs; 
 18.29     (3) estimate the amount by which average state health care 
 18.30  program reimbursement rates for major categories of services 
 18.31  would need to be increased to match average private sector 
 18.32  reimbursement rates and to cover average provider costs; and 
 18.33     (4) present recommendations to the legislature on methods 
 18.34  of increasing average state health care program reimbursement 
 18.35  rates for major categories of services, over a six-year period, 
 18.36  to the average private sector reimbursement rate and to a level 
 19.1   that covers average provider costs. 
 19.2   The commissioner shall present results and recommendations to 
 19.3   the legislature by December 15, 2004.  The commissioner may 
 19.4   contract with an actuarial consulting firm to implement this 
 19.5   section.  For purposes of this section, "state health care 
 19.6   program" means the medical assistance, MinnesotaCare, and 
 19.7   general assistance medical care programs.