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; 43A.23, by adding a subdivision; 62A.02, 
  1.19            subdivision 2; 62D.02, subdivision 4, by adding a 
  1.20            subdivision; 62D.03, subdivision 1; 62D.04, 
  1.21            subdivision 1; 62Q.65; 72A.20, by adding a 
  1.22            subdivision; 147.03, subdivision 1; 256B.04, by adding 
  1.23            a subdivision; Minnesota Statutes 2003 Supplement, 
  1.24            sections 62J.26, by adding a subdivision; 144.7063, 
  1.25            subdivision 3; 270A.03, subdivision 2; 290.01, 
  1.26            subdivisions 19, 31; proposing coding for new law in 
  1.27            Minnesota Statutes, chapters 3; 62J; 62L; 62Q; 144; 
  1.28            147; 151; 604; repealing Minnesota Statutes 2002, 
  1.29            sections 62A.309; 62J.17, as amended. 
  1.30  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.31                             ARTICLE 1 
  1.32                        CONSUMER EMPOWERMENT 
  1.33     Section 1.  Minnesota Statutes 2002, section 43A.23, is 
  1.34  amended by adding a subdivision to read: 
  1.35     Subd. 4.  [HEALTH SAVINGS ACCOUNTS.] During collective 
  1.36  bargaining negotiations with the exclusive representatives of 
  1.37  state employees, the commissioner must propose that the state 
  2.1   make available to state employees at least one plan of hospital 
  2.2   and medical benefits that combines a high deductible health plan 
  2.3   with a health savings account, so as to qualify the health 
  2.4   savings account under section 223 of the Internal Revenue Code, 
  2.5   as amended. 
  2.6      Sec. 2.  [62J.81] [DISCLOSURE OF PAYMENTS FOR HEALTH CARE 
  2.7   SERVICES.] 
  2.8      Subdivision 1.  [REQUIRED DISCLOSURE OF PAYMENT RANGE.] A 
  2.9   health care provider, as defined in section 62J.03, subdivision 
  2.10  8, shall, at the request of a consumer, provide that consumer 
  2.11  with the beginning and end of the range of payments received by 
  2.12  the provider from health plan companies for a specific service 
  2.13  or services that the consumer may reasonably expect to receive 
  2.14  from the provider, based upon the consumer's medical condition.  
  2.15  The beginning of the range of payments received by a provider is 
  2.16  the lowest amount the provider is paid by a health plan company 
  2.17  for a specific service and the end of the range is the highest 
  2.18  amount the provider is paid by a health plan company for the 
  2.19  service, based upon the provider agreements in force at the time 
  2.20  of the request.  A provider is not required to identify the 
  2.21  names of health plan companies. 
  2.22     Subd. 2.  [APPLICABILITY.] For purposes of this section, 
  2.23  "consumer" does not include a medical assistance, MinnesotaCare, 
  2.24  or general assistance medical care enrollee, and a health care 
  2.25  provider shall not include in the range payments from the 
  2.26  medical assistance, MinnesotaCare, and general assistance 
  2.27  medical care programs. 
  2.28     Sec. 3.  Minnesota Statutes 2002, section 62Q.65, is 
  2.29  amended to read: 
  2.30     62Q.65 [ACCESS TO PROVIDER DISCOUNTS.] 
  2.31     Subdivision 1.  [REQUIREMENT.] A high deductible health 
  2.32  plan must, when used in connection with ~~a medical savings~~ 
  2.33  ~~account~~ an Archer MSA or with a health savings account, provide 
  2.34  the enrollee access to any discounted provider fees for services 
  2.35  covered by the high deductible health plan, regardless of 
  2.36  whether the enrollee has satisfied the deductible for the high 
  3.1   deductible health plan. 
  3.2      Subd. 2.  [DEFINITIONS.] For purposes of this section, the 
  3.3   following terms have the meanings given: 
  3.4      (1) "high deductible health plan" has the meaning given 
  3.5   under the Internal Revenue Code of 1986, section 220(c)(2) or 
  3.6   223(c)(2); 
  3.7      (2) "~~medical savings account~~ Archer MSA" has the meaning 
  3.8   given under the Internal Revenue Code of 1986, section 
  3.9   220(d)(1); ~~and~~ 
  3.10     (3) "discounted provider fees" means fees contained in a 
  3.11  provider agreement entered into by the issuer of the high 
  3.12  deductible health plan, or by an affiliate of the issuer, for 
  3.13  use in connection with the high deductible health plan; and 
  3.14     (4) "health savings account" has the meaning given under 
  3.15  the Internal Revenue Code of 1986, section 223(d). 
  3.16     Sec. 4.  [151.214] [PAYMENT DISCLOSURE.] 
  3.17     Subdivision 1.  [EXPLANATION OF PHARMACY BENEFITS.] Each 
  3.18  health plan company, as defined in section 62Q.01, subdivision 
  3.19  4, or its contracted pharmacy benefit manager, shall provide on 
  3.20  a quarterly basis an explanation of pharmacy benefits to 
  3.21  patients receiving prescription drugs covered under their health 
  3.22  plan.  The explanation of benefits must include the payment to 
  3.23  the pharmacy by the health plan company or its contracted 
  3.24  pharmacy benefit manager, the patient's co-payment, and the 
  3.25  amount billed to the patient's employer or health plan sponsor. 
  3.26     Subd. 2.  [NO PROHIBITION ON DISCLOSURE.] No contracting 
  3.27  agreement between a health plan company or its contracted 
  3.28  pharmacy benefit manager and a resident or nonresident pharmacy 
  3.29  registered under this chapter may prohibit the pharmacy from 
  3.30  disclosing to patients the total reimbursement to the pharmacy, 
  3.31  including the amount of the patient's co-payment and the amount 
  3.32  paid to the pharmacy by the health plan company or its 
  3.33  contracted pharmacy benefit manager. 
  3.34     Sec. 5.  Minnesota Statutes 2003 Supplement, section 
  3.35  290.01, subdivision 19, is amended to read: 
  3.36     Subd. 19.  [NET INCOME.] The term "net income" means the 
  4.1   federal taxable income, as defined in section 63 of the Internal 
  4.2   Revenue Code of 1986, as amended through the date named in this 
  4.3   subdivision, incorporating any elections made by the taxpayer in 
  4.4   accordance with the Internal Revenue Code in determining federal 
  4.5   taxable income for federal income tax purposes, and with the 
  4.6   modifications provided in subdivisions 19a to 19f. 
  4.7      In the case of a regulated investment company or a fund 
  4.8   thereof, as defined in section 851(a) or 851(g) of the Internal 
  4.9   Revenue Code, federal taxable income means investment company 
  4.10  taxable income as defined in section 852(b)(2) of the Internal 
  4.11  Revenue Code, except that:  
  4.12     (1) the exclusion of net capital gain provided in section 
  4.13  852(b)(2)(A) of the Internal Revenue Code does not apply; 
  4.14     (2) the deduction for dividends paid under section 
  4.15  852(b)(2)(D) of the Internal Revenue Code must be applied by 
  4.16  allowing a deduction for capital gain dividends and 
  4.17  exempt-interest dividends as defined in sections 852(b)(3)(C) 
  4.18  and 852(b)(5) of the Internal Revenue Code; and 
  4.19     (3) the deduction for dividends paid must also be applied 
  4.20  in the amount of any undistributed capital gains which the 
  4.21  regulated investment company elects to have treated as provided 
  4.22  in section 852(b)(3)(D) of the Internal Revenue Code.  
  4.23     The net income of a real estate investment trust as defined 
  4.24  and limited by section 856(a), (b), and (c) of the Internal 
  4.25  Revenue Code means the real estate investment trust taxable 
  4.26  income as defined in section 857(b)(2) of the Internal Revenue 
  4.27  Code.  
  4.28     The net income of a designated settlement fund as defined 
  4.29  in section 468B(d) of the Internal Revenue Code means the gross 
  4.30  income as defined in section 468B(b) of the Internal Revenue 
  4.31  Code. 
  4.32     The provisions of sections 1113(a), 1117, 1206(a), 1313(a), 
  4.33  1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612, 
  4.34  1616, 1617, 1704(l), and 1704(m) of the Small Business Job 
  4.35  Protection Act, Public Law 104-188, the provisions of Public Law 
  4.36  104-117, the provisions of sections 313(a) and (b)(1), 602(a), 
  5.1   913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013, 
  5.2   1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b) 
  5.3   and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and 
  5.4   1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law 
  5.5   105-34, the provisions of section 6010 of the Internal Revenue 
  5.6   Service Restructuring and Reform Act of 1998, Public Law 
  5.7   105-206, the provisions of section 4003 of the Omnibus 
  5.8   Consolidated and Emergency Supplemental Appropriations Act, 
  5.9   1999, Public Law 105-277, and the provisions of section 318 of 
  5.10  the Consolidated Appropriation Act of 2001, Public Law 106-554, 
  5.11  shall become effective at the time they become effective for 
  5.12  federal purposes. 
  5.13     The Internal Revenue Code of 1986, as amended through 
  5.14  December 31, 1996, shall be in effect for taxable years 
  5.15  beginning after December 31, 1996. 
  5.16     The provisions of sections 202(a) and (b), 221(a), 225, 
  5.17  312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and 
  5.18  (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306, 
  5.19  1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528, 
  5.20  1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e) 
  5.21  of the Taxpayer Relief Act of 1997, Public Law 105-34, the 
  5.22  provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002, 
  5.23  and 7003 of the Internal Revenue Service Restructuring and 
  5.24  Reform Act of 1998, Public Law 105-206, the provisions of 
  5.25  section 3001 of the Omnibus Consolidated and Emergency 
  5.26  Supplemental Appropriations Act, 1999, Public Law 105-277, the 
  5.27  provisions of section 3001 of the Miscellaneous Trade and 
  5.28  Technical Corrections Act of 1999, Public Law 106-36, and the 
  5.29  provisions of section 316 of the Consolidated Appropriation Act 
  5.30  of 2001, Public Law 106-554, shall become effective at the time 
  5.31  they become effective for federal purposes. 
  5.32     The Internal Revenue Code of 1986, as amended through 
  5.33  December 31, 1997, shall be in effect for taxable years 
  5.34  beginning after December 31, 1997. 
  5.35     The provisions of sections 5002, 6009, 6011, and 7001 of 
  5.36  the Internal Revenue Service Restructuring and Reform Act of 
  6.1   1998, Public Law 105-206, the provisions of section 9010 of the 
  6.2   Transportation Equity Act for the 21st Century, Public Law 
  6.3   105-178, the provisions of sections 1004, 4002, and 5301 of the 
  6.4   Omnibus Consolidation and Emergency Supplemental Appropriations 
  6.5   Act, 1999, Public Law 105-277, the provision of section 303 of 
  6.6   the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law 
  6.7   105-369, the provisions of sections 532, 534, 536, 537, and 538 
  6.8   of the Ticket to Work and Work Incentives Improvement Act of 
  6.9   1999, Public Law 106-170, the provisions of the Installment Tax 
  6.10  Correction Act of 2000, Public Law 106-573, and the provisions 
  6.11  of section 309 of the Consolidated Appropriation Act of 2001, 
  6.12  Public Law 106-554, shall become effective at the time they 
  6.13  become effective for federal purposes. 
  6.14     The Internal Revenue Code of 1986, as amended through 
  6.15  December 31, 1998, shall be in effect for taxable years 
  6.16  beginning after December 31, 1998.  
  6.17     The provisions of the FSC Repeal and Extraterritorial 
  6.18  Income Exclusion Act of 2000, Public Law 106-519, and the 
  6.19  provision of section 412 of the Job Creation and Worker 
  6.20  Assistance Act of 2002, Public Law 107-147, shall become 
  6.21  effective at the time it became effective for federal purposes. 
  6.22     The Internal Revenue Code of 1986, as amended through 
  6.23  December 31, 1999, shall be in effect for taxable years 
  6.24  beginning after December 31, 1999.  The provisions of sections 
  6.25  306 and 401 of the Consolidated Appropriation Act of 2001, 
  6.26  Public Law 106-554, and the provision of section 632(b)(2)(A) of 
  6.27  the Economic Growth and Tax Relief Reconciliation Act of 2001, 
  6.28  Public Law 107-16, and provisions of sections 101 and 402 of the 
  6.29  Job Creation and Worker Assistance Act of 2002, Public Law 
  6.30  107-147, shall become effective at the same time it became 
  6.31  effective for federal purposes. 
  6.32     The Internal Revenue Code of 1986, as amended through 
  6.33  December 31, 2000, shall be in effect for taxable years 
  6.34  beginning after December 31, 2000.  The provisions of sections 
  6.35  659a and 671 of the Economic Growth and Tax Relief 
  6.36  Reconciliation Act of 2001, Public Law 107-16, the provisions of 
  7.1   sections 104, 105, and 111 of the Victims of Terrorism Tax 
  7.2   Relief Act of 2001, Public Law 107-134, and the provisions of 
  7.3   sections 201, 403, 413, and 606 of the Job Creation and Worker 
  7.4   Assistance Act of 2002, Public Law 107-147, shall become 
  7.5   effective at the same time it became effective for federal 
  7.6   purposes. 
  7.7      The Internal Revenue Code of 1986, as amended through March 
  7.8   15, 2002, shall be in effect for taxable years beginning after 
  7.9   December 31, 2001. 
  7.10     The provisions of sections 101 and 102 of the Victims of 
  7.11  Terrorism Tax Relief Act of 2001, Public Law 107-134, shall 
  7.12  become effective at the same time it becomes effective for 
  7.13  federal purposes. 
  7.14     The Internal Revenue Code of 1986, as amended through June 
  7.15  15, 2003, shall be in effect for taxable years beginning after 
  7.16  December 31, 2002.  The provisions of section 201 of the Jobs 
  7.17  and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if 
  7.18  it is enacted into law, are effective at the same time it became 
  7.19  effective for federal purposes. 
  7.20     Section 1201 of the Medicare Prescription Drug, 
  7.21  Improvement, and Modernization Act of 2003, codified as section 
  7.22  223 of the Internal Revenue Code, as amended, relating to health 
  7.23  savings accounts, is effective at the same time it became 
  7.24  effective for federal purposes. 
  7.25     Except as otherwise provided, references to the Internal 
  7.26  Revenue Code in subdivisions 19a to 19g mean the code in effect 
  7.27  for purposes of determining net income for the applicable year. 
  7.28     Sec. 6.  Minnesota Statutes 2003 Supplement, section 
  7.29  290.01, subdivision 31, is amended to read: 
  7.30     Subd. 31.  [INTERNAL REVENUE CODE.] Unless specifically 
  7.31  defined otherwise, "Internal Revenue Code" means the Internal 
  7.32  Revenue Code of 1986, as amended through June 15, 2003, and as 
  7.33  amended by section 1201 of the Medicare Prescription Drug, 
  7.34  Improvement, and Modernization Act of 2003, codified as section 
  7.35  223 of the Internal Revenue Code, as amended, relating to health 
  7.36  savings accounts. 
  8.1                              ARTICLE 2 
  8.2                            BEST PRACTICES 
  8.3      Section 1.  [144.7035] [IDENTIFICATION AND TRACKING OF USE 
  8.4   OF PRACTICE GUIDELINES.] 
  8.5      The commissioner of health, in consultation with medical 
  8.6   researchers, consumers, and representatives of health care 
  8.7   providers and health plan companies, shall review health care 
  8.8   best practice guidelines and identify five best practice 
  8.9   guidelines for which, in the determination of the commissioner, 
  8.10  greater adherence to by Minnesota health care providers would 
  8.11  lead to a significant improvement in patient health outcomes.  
  8.12  The commissioner shall encourage Minnesota health care providers 
  8.13  to follow the guidelines identified and shall monitor and track 
  8.14  the extent to which Minnesota health care providers follow the 
  8.15  guidelines. 
  8.16     Sec. 2.  Minnesota Statutes 2003 Supplement, section 
  8.17  144.7063, subdivision 3, is amended to read: 
  8.18     Subd. 3.  [FACILITY.] "Facility" means a hospital licensed 
  8.19  under sections 144.50 to 144.58 or an outpatient surgical center 
  8.20  licensed under Minnesota Rules, chapter 4675. 
  8.21     Sec. 3.  [147.38] [BEST PRACTICES GUIDELINE.] 
  8.22     Subdivision 1.  [HEALTH-RELATED BOARD.] For purposes of 
  8.23  this section, "health-related board" means the Board of Medical 
  8.24  Practice established under section 147.01, the Board of Nursing 
  8.25  established under section 148.181, the Board of Chiropractic 
  8.26  Examiners established under section 148.02, the Board of 
  8.27  Optometry established under section 148.52, the Board of 
  8.28  Physical Therapy established under section 148.67, the Board of 
  8.29  Dentistry established under section 150A.02, the Board of 
  8.30  Pharmacy established under section 151.02, and the Board of 
  8.31  Podiatry established under section 153.02. 
  8.32     Subd. 2.  [BOARD APPROVAL.] A health-related board, in 
  8.33  consultation with a relevant professional association or 
  8.34  specialty organization and the commissioner of health, may 
  8.35  evaluate and approve best practice guidelines and shall make any 
  8.36  approved guidelines available to interested practitioners 
  9.1   through the board's Web site. 
  9.2      Sec. 4.  Minnesota Statutes 2002, section 256B.04, is 
  9.3   amended by adding a subdivision to read: 
  9.4      Subd. 20.  [INFORMATION AND REFERRAL CENTER FOR INTERPRETER 
  9.5   SERVICES.] The commissioner shall establish an information and 
  9.6   referral center to assist health care providers in obtaining 
  9.7   oral language interpreter services, when these services are 
  9.8   needed to enable a patient to obtain a health care service from 
  9.9   a provider.  The information and referral center must collect 
  9.10  and maintain contact and rate information for providers of oral 
  9.11  language interpreter services and must make this information 
  9.12  available to all health care providers, whether or not the 
  9.13  provider is enrolled in a state health care program.  The 
  9.14  commissioner may contract with a private sector, nonprofit 
  9.15  organization to implement this subdivision. 
  9.16     Sec. 5.  [BEST PRACTICES PILOT PROJECT.] 
  9.17     The commissioners of human services and employee relations 
  9.18  shall develop and implement a one-year best practices pilot 
  9.19  project to encourage greater use of at least three of the best 
  9.20  practice guidelines identified by the commissioner of health 
  9.21  under Minnesota Statutes, section 144.7035.  The pilot project 
  9.22  must provide health care providers and health plan companies 
  9.23  serving state employees and enrollees of state health care 
  9.24  programs administered by the commissioner of human services with 
  9.25  financial and other incentives to increase the use of the best 
  9.26  practice guidelines selected.  The commissioners shall implement 
  9.27  the pilot project beginning January 1, 2005, and shall report 
  9.28  the results of the pilot project to the legislature by June 1, 
  9.29  2006. 
  9.30                             ARTICLE 3 
  9.31                     MEDICAL MALPRACTICE REFORM 
  9.32     Section 1.  [147.37] [BEST PRACTICE GUIDELINES; USE IN 
  9.33  MEDICAL MALPRACTICE CASES.] 
  9.34     (a) In an action against a provider for malpractice, error, 
  9.35  mistake, or failure to cure, whether based in contract or tort, 
  9.36  adherence to a best practice guideline approved by either a 
 10.1   recognized specialty organization or an organization established 
 10.2   for the purpose of developing community-based clinical practice 
 10.3   guidelines is an absolute defense against an allegation that the 
 10.4   provider did not comply with accepted standards of practice in 
 10.5   the community.  This paragraph does not apply if the best 
 10.6   practice guideline authorizes or recommends denial of treatment, 
 10.7   food, or fluids necessary to sustain life on the basis of the 
 10.8   patient's age or expected length of life or the patient's 
 10.9   present or predicted disability, degree of medical dependency, 
 10.10  or quality of life. 
 10.11     (b) Evidence of a departure from a best practice guideline 
 10.12  is admissible only on the issue of whether the provider is 
 10.13  entitled to an absolute defense under paragraph (a). 
 10.14     (c) Paragraphs (a) and (b) apply to claims arising on or 
 10.15  after August 1, 2004. 
 10.16     (d) Nothing in this section changes the standard or burden 
 10.17  of proof in an action alleging a delay in diagnosis, a 
 10.18  misdiagnosis, inappropriate application of a best practice 
 10.19  guideline, failure to obtain informed consent, battery or other 
 10.20  intentional tort, or product liability. 
 10.21     Sec. 2.  [604.111] [HEALTH CARE PROVIDER ACTIONS; LIMITS ON 
 10.22  DAMAGES AND ATTORNEY FEES.] 
 10.23     Subdivision 1.  [DEFINITIONS.] (a) For the purposes of this 
 10.24  section, the terms in paragraphs (b) to (d) have the meanings 
 10.25  given them. 
 10.26     (b) "Economic loss" means all harm for which damages are 
 10.27  recoverable, other than noneconomic losses. 
 10.28     (c) "Health care provider" has the meaning given in section 
 10.29  541.076, paragraph (a), except that health care provider also 
 10.30  includes a physician assistant registered under chapter 147A and 
 10.31  ambulance services, medical directors, and personnel regulated 
 10.32  under chapter 144E. 
 10.33     (d) "Noneconomic loss" means all nonpecuniary harm for 
 10.34  which damages are recoverable, including, but not limited to, 
 10.35  pain, disability, disfigurement, embarrassment, emotional 
 10.36  distress, and loss of consortium.  
 11.1      Subd. 2.  [LIMITATIONS.] (a) In an action for injury or 
 11.2   death against a health care provider alleging malpractice, 
 11.3   error, mistake, or failure to cure, whether based in contract or 
 11.4   tort, the amount of damages awarded for noneconomic losses must 
 11.5   not exceed $250,000, regardless of the number of parties against 
 11.6   whom the action is brought or the number of separate claims or 
 11.7   actions brought with respect to the same occurrence. 
 11.8      (b) The limitation imposed by this subdivision must not be 
 11.9   disclosed to the trier of fact by any person at trial. 
 11.10     Subd. 3.  [FINDINGS.] (a) A court in an action tried 
 11.11  without a jury shall make a finding as to noneconomic loss 
 11.12  without regard to the limit under subdivision 2.  If noneconomic 
 11.13  loss in excess of the limit is found, the court shall make any 
 11.14  reduction required under this section and shall award as damages 
 11.15  for noneconomic loss the lesser of the reduced amount or the 
 11.16  limit.  
 11.17     (b) If an action is before a jury, the jury shall make a 
 11.18  finding as to noneconomic loss without regard to the limit under 
 11.19  subdivision 2.  If the jury finds that noneconomic loss exceeds 
 11.20  the limit, the court shall make any reduction required under 
 11.21  this section and shall award as damages for noneconomic loss the 
 11.22  lesser of the reduced amount or the limit. 
 11.23     Subd. 4.  [PUNITIVE DAMAGES LIMITED.] (a) Punitive, 
 11.24  exemplary, and similar damages recoverable against a health care 
 11.25  provider in a cause of action described in subdivision 2 must 
 11.26  not exceed $250,000.  The jury must not be informed of this 
 11.27  limitation. 
 11.28     (b) All damages described in paragraph (a) must be paid 
 11.29  directly to the Minnesota Comprehensive Health Association 
 11.30  created under section 62E.10, subdivision 1, to be used for the 
 11.31  purpose of reducing its assessments on its members.  
 11.32     (c) Notwithstanding paragraph (a), a private nonprofit 
 11.33  hospital licensed under sections 144.50 to 144.56 is not liable 
 11.34  for punitive, exemplary, or similar damages, in an action 
 11.35  described in subdivision 2. 
 11.36     Subd. 5.  [EXCESSIVE ATTORNEY FEES PROHIBITED.] (a) 
 12.1   Attorney fees payable by a plaintiff in any cause of action 
 12.2   referred to in subdivision 2 must not exceed the following 
 12.3   percentage of damages: 
 12.4      (1) 40 percent of the first $50,000; 
 12.5      (2) 33-1/3 percent of the next $50,000; 
 12.6      (3) 25 percent of the next $500,000; plus 
 12.7      (4) 15 percent of that portion of damages that exceeds 
 12.8   $600,000. 
 12.9      (b) This subdivision applies to the net damages actually 
 12.10  recovered by that plaintiff under the cause of action, whether 
 12.11  through settlement, alternative dispute resolution, court 
 12.12  judgment, or otherwise.  "Net damages actually recovered" means 
 12.13  the net sum recovered after deducting any disbursements or costs 
 12.14  incurred in connection with prosecution or settlement of the 
 12.15  claim, including all costs paid or advanced by any person.  
 12.16  Costs of health care incurred by the plaintiff and the 
 12.17  attorney's office overhead costs or charges for legal services 
 12.18  are not deductible disbursements of costs for such purpose. 
 12.19     (c) A fee agreement that violates this subdivision is void 
 12.20  and unenforceable, to the extent of the violation. 
 12.21     Sec. 3.  [EFFECTIVE DATE; APPLICATION.] 
 12.22     Section 2 is effective August 1, 2004, and applies to 
 12.23  causes of actions arising from incidents occurring on or after 
 12.24  that date. 
 12.25                             ARTICLE 4 
 12.26                    REDUCING GOVERNMENT MANDATES 
 12.27     Section 1.  Minnesota Statutes 2003 Supplement, section 
 12.28  62J.26, is amended by adding a subdivision to read: 
 12.29     Subd. 6.  [MANDATED BENEFITS MORATORIUM.] (a) No new 
 12.30  mandated health benefit proposal, as defined in subdivision 1, 
 12.31  shall be enacted. 
 12.32     (b) This subdivision expires January 1, 2007. 
 12.33     Sec. 2.  [62L.056] [SMALL EMPLOYER ALTERNATIVE BENEFIT 
 12.34  PLANS.] 
 12.35     (a) Notwithstanding any provision of this chapter, chapter 
 12.36  363A, or any other law to the contrary, the commissioner of 
 13.1   commerce shall by January 1, 2005, permit health carriers to 
 13.2   offer alternative health benefit plans to small employers if the 
 13.3   following requirements are satisfied: 
 13.4      (1) the health carrier is assessed less than ten percent of 
 13.5   the total amount assessed by the Minnesota Comprehensive Health 
 13.6   Association; 
 13.7      (2) the health plans must be offered in compliance with 
 13.8   this chapter, except as otherwise permitted in this section; 
 13.9      (3) the health plans to be offered must be designed to 
 13.10  enable employers and covered persons to better manage costs and 
 13.11  coverage options through the use of co-pays, deductibles, and 
 13.12  other cost-sharing arrangements; 
 13.13     (4) the health plans must be issued and administered in 
 13.14  compliance with sections 62E.141; 62L.03, subdivision 6; and 
 13.15  62L.12, subdivisions 3 and 4, relating to prohibitions against 
 13.16  enrolling in the Minnesota Comprehensive Health Association 
 13.17  persons eligible for employer group coverage; 
 13.18     (5) loss ratio requirements do not apply to health plans 
 13.19  issued under this section; 
 13.20     (6) the health plans may alter or eliminate coverages that 
 13.21  would otherwise be required by law; 
 13.22     (7) each health plan must be approved by the commissioner 
 13.23  of commerce; and 
 13.24     (8) the commissioner may limit the types and numbers of 
 13.25  health plan forms permitted under this section, but must permit, 
 13.26  as one option, a health plan form in which a health carrier may 
 13.27  exclude or alter coverage of any or all benefits otherwise 
 13.28  mandated by state law. 
 13.29     (b) The definitions in section 62L.02 apply to this section 
 13.30  as modified by this section. 
 13.31     (c) An employer may provide health plans permitted under 
 13.32  this section to its employees, the employees' dependents, and 
 13.33  other persons eligible for coverage under the employer's plan, 
 13.34  notwithstanding chapter 363A or any other law to the contrary. 
 13.35     Sec. 3.  [REPEALER; BONE MARROW TRANSPLANT MANDATE.] 
 13.36     Minnesota Statutes 2002, section 62A.309, is repealed. 
 14.1                              ARTICLE 5 
 14.2                        ADMINISTRATIVE REFORM 
 14.3      Section 1.  Minnesota Statutes 2002, section 147.03, 
 14.4   subdivision 1, is amended to read: 
 14.5      Subdivision 1.  [ENDORSEMENT; RECIPROCITY.] (a) The board 
 14.6   may issue a license to practice medicine to any person who 
 14.7   satisfies the requirements in paragraphs (b) to (f).  
 14.8      (b) The applicant shall satisfy all the requirements 
 14.9   established in section 147.02, subdivision 1, paragraphs (a), 
 14.10  (b), (d), (e), and (f).  
 14.11     (c) The applicant shall: 
 14.12     (1) have passed an examination prepared and graded by the 
 14.13  Federation of State Medical Boards, the National Board of 
 14.14  Medical Examiners, or the United States Medical Licensing 
 14.15  Examination program in accordance with section 147.02, 
 14.16  subdivision 1, paragraph (c), clause (2); the National Board of 
 14.17  Osteopathic Examiners; or the Medical Council of Canada; and 
 14.18     (2) have a current license from the equivalent licensing 
 14.19  agency in another state or Canada and, if the examination in 
 14.20  clause (1) was passed more than ten years ago, either: 
 14.21     (i) pass the Special Purpose Examination of the Federation 
 14.22  of State Medical Boards with a score of 75 or better within 
 14.23  three attempts; or 
 14.24     (ii) have a current certification by a specialty board of 
 14.25  the American Board of Medical Specialties, of the American 
 14.26  Osteopathic Association Bureau of Professional Education, or of 
 14.27  the Royal College of Physicians and Surgeons of Canada. 
 14.28     (d) The applicant shall pay a fee established by the board 
 14.29  by rule.  The fee may not be refunded.  
 14.30     (e) The applicant must not be under license suspension or 
 14.31  revocation by the licensing board of the state or jurisdiction 
 14.32  in which the conduct that caused the suspension or revocation 
 14.33  occurred. 
 14.34     (f) The applicant must not have engaged in conduct 
 14.35  warranting disciplinary action against a licensee, or have been 
 14.36  subject to disciplinary action other than as specified in 
 15.1   paragraph (e).  If an applicant does not satisfy the 
 15.2   requirements stated in this paragraph, the board may issue a 
 15.3   license only on the applicant's showing that the public will be 
 15.4   protected through issuance of a license with conditions or 
 15.5   limitations the board considers appropriate. 
 15.6      (g) Upon the request of an applicant, the board may conduct 
 15.7   the final interview of the applicant by teleconference. 
 15.8      Sec. 2.  Minnesota Statutes 2003 Supplement, section 
 15.9   270A.03, subdivision 2, is amended to read: 
 15.10     Subd. 2.  [CLAIMANT AGENCY.] "Claimant agency" means any 
 15.11  state agency, as defined by section 14.02, subdivision 2, the 
 15.12  regents of the University of Minnesota, any district court of 
 15.13  the state, any county, any statutory or home rule charter city 
 15.14  presenting a claim for a municipal hospital or a public library 
 15.15  or a municipal ambulance service, a hospital district, a private 
 15.16  nonprofit hospital ~~that leases its building from the county in~~ 
 15.17  ~~which it is located~~, any public agency responsible for child 
 15.18  support enforcement, any public agency responsible for the 
 15.19  collection of court-ordered restitution, and any public agency 
 15.20  established by general or special law that is responsible for 
 15.21  the administration of a low-income housing program, and the 
 15.22  Minnesota collection enterprise as defined in section 16D.02, 
 15.23  subdivision 8, for the purpose of collecting the costs imposed 
 15.24  under section 16D.11.  A county may act as a claimant agency on 
 15.25  behalf of an ambulance service licensed under chapter 144E if 
 15.26  the ambulance service's primary service area is located at least 
 15.27  in part within the county, but more than one county may not act 
 15.28  as a claimant agency for a licensed ambulance service with 
 15.29  respect to the same debt. 
 15.30     Sec. 3.  [COST OF HEALTH CARE REPORTING.] 
 15.31     The commissioners of human services, health, and commerce 
 15.32  shall meet with representatives of health plan companies as 
 15.33  defined in section 62Q.01, subdivision 4, and hospitals to 
 15.34  evaluate reporting requirements for these regulated entities and 
 15.35  develop recommendations for reducing required reports.  The 
 15.36  commissioner must meet with the specified representatives prior 
 16.1   to August 30, 2004, and must submit a consolidated report to the 
 16.2   legislature by January 15, 2005.  The report must: 
 16.3      (1) identify the name and scope of each required report; 
 16.4      (2) evaluate the need for and use of each report, including 
 16.5   the value of the report to consumers; 
 16.6      (3) evaluate the extent to which the report is used to 
 16.7   reduce costs and increase quality of care; 
 16.8      (4) identify reports that are no longer required; and 
 16.9      (5) specify any statutory changes necessary to eliminate 
 16.10  required reports. 
 16.11     Sec. 4.  [REPEALER.] 
 16.12     Minnesota Statutes 2002, section 62J.17, as amended by Laws 
 16.13  2003, First Special Session chapter 14, article 7, section 11, 
 16.14  is repealed effective the day following final enactment. 
 16.15                             ARTICLE 6 
 16.16                 HEALTH PLAN COMPETITION AND REFORM 
 16.17     Section 1.  Minnesota Statutes 2002, section 62A.02, 
 16.18  subdivision 2, is amended to read: 
 16.19     Subd. 2.  [APPROVAL.] (a) The health plan form shall not be 
 16.20  issued, nor shall any application, rider, endorsement, or rate 
 16.21  be used in connection with it, until the expiration of 60 days 
 16.22  after it has been filed unless the commissioner approves it 
 16.23  before that time.  
 16.24     (b) Notwithstanding paragraph (a), a health plan form or a 
 16.25  rate, filed with respect to a policy of accident and sickness 
 16.26  insurance as defined in section 62A.01 by an insurer licensed 
 16.27  under chapter 60A, may be used on or after the date of filing 
 16.28  with the commissioner.  Health plan forms and rates that are not 
 16.29  approved or disapproved within the 60-day time period are deemed 
 16.30  approved.  This paragraph does not apply to Medicare-related 
 16.31  coverage as defined in section 62A.31, subdivision 3, paragraph 
 16.32  (q). 
 16.33     Sec. 2.  Minnesota Statutes 2002, section 62D.02, 
 16.34  subdivision 4, is amended to read: 
 16.35     Subd. 4.  [HEALTH MAINTENANCE ORGANIZATION.] (a) "Health 
 16.36  maintenance organization" means a ~~nonprofit corporation~~ 
 17.1   ~~organized under chapter 317A, or~~ person, including a local 
 17.2   governmental unit as defined in subdivision 11, controlled and 
 17.3   operated as provided in sections 62D.01 to 62D.30, which 
 17.4   provides, either directly or through arrangements with providers 
 17.5   or other persons, comprehensive health maintenance services, or 
 17.6   arranges for the provision of these services, to enrollees on 
 17.7   the basis of a fixed prepaid sum without regard to the frequency 
 17.8   or extent of services furnished to any particular enrollee.  
 17.9      Sec. 3.  Minnesota Statutes 2002, section 62D.02, is 
 17.10  amended by adding a subdivision to read: 
 17.11     Subd. 17.  [PERSON.] "Person" means a natural or artificial 
 17.12  person, including but not limited to individuals, partnerships, 
 17.13  limited liability companies, associations, trusts, corporations, 
 17.14  other business entities, or governmental entities. 
 17.15     Sec. 4.  Minnesota Statutes 2002, section 62D.03, 
 17.16  subdivision 1, is amended to read: 
 17.17     Subdivision 1.  [CERTIFICATE OF AUTHORITY REQUIRED.] 
 17.18  Notwithstanding any law of this state to the contrary, any 
 17.19  ~~nonprofit corporation organized to do so or a local governmental~~ 
 17.20  ~~unit~~ person may apply to the commissioner of health for a 
 17.21  certificate of authority to establish and operate a health 
 17.22  maintenance organization in compliance with sections 62D.01 to 
 17.23  62D.30.  No person shall establish or operate a health 
 17.24  maintenance organization in this state, nor sell or offer to 
 17.25  sell, or solicit offers to purchase or receive advance or 
 17.26  periodic consideration in conjunction with a health maintenance 
 17.27  organization or health maintenance contract unless the 
 17.28  organization has a certificate of authority under sections 
 17.29  62D.01 to 62D.30.  An out-of-state corporation may qualify under 
 17.30  this chapter, subject to obtaining a certificate of authority to 
 17.31  do business in this state as an out-of-state corporation under 
 17.32  chapter 303 and compliance with this chapter and other 
 17.33  applicable state laws. 
 17.34     Sec. 5.  Minnesota Statutes 2002, section 62D.04, 
 17.35  subdivision 1, is amended to read: 
 17.36     Subdivision 1.  [APPLICATION REVIEW.] Upon receipt of an 
 18.1   application for a certificate of authority, the commissioner of 
 18.2   health shall determine whether the applicant for a certificate 
 18.3   of authority has: 
 18.4      (a) demonstrated the willingness and potential ability to 
 18.5   assure that health care services will be provided in such a 
 18.6   manner as to enhance and assure both the availability and 
 18.7   accessibility of adequate personnel and facilities; 
 18.8      (b) arrangements for an ongoing evaluation of the quality 
 18.9   of health care; 
 18.10     (c) a procedure to develop, compile, evaluate, and report 
 18.11  statistics relating to the cost of its operations, the pattern 
 18.12  of utilization of its services, the quality, availability and 
 18.13  accessibility of its services, and such other matters as may be 
 18.14  reasonably required by regulation of the commissioner of health; 
 18.15     (d) reasonable provisions for emergency and out of area 
 18.16  health care services; 
 18.17     (e) demonstrated that it is financially responsible and may 
 18.18  reasonably be expected to meet its obligations to enrollees and 
 18.19  prospective enrollees.  In making this determination, the 
 18.20  commissioner of health shall require the amounts of net worth 
 18.21  and working capital required in section 62D.042, the deposit 
 18.22  required in section 62D.041, and in addition shall consider: 
 18.23     (1) the financial soundness of its arrangements for health 
 18.24  care services and the proposed schedule of charges used in 
 18.25  connection therewith; 
 18.26     (2) arrangements which will guarantee for a reasonable 
 18.27  period of time the continued availability or payment of the cost 
 18.28  of health care services in the event of discontinuance of the 
 18.29  health maintenance organization; and 
 18.30     (3) agreements with providers for the provision of health 
 18.31  care services; 
 18.32     (f) demonstrated that it will assume full financial risk on 
 18.33  a prospective basis for the provision of comprehensive health 
 18.34  maintenance services, including hospital care; provided, 
 18.35  however, that the requirement in this paragraph shall not 
 18.36  prohibit the following: 
 19.1      (1) a health maintenance organization from obtaining 
 19.2   insurance or making other arrangements (i) for the cost of 
 19.3   providing to any enrollee comprehensive health maintenance 
 19.4   services, the aggregate value of which exceeds $5,000 in any 
 19.5   year, (ii) for the cost of providing comprehensive health care 
 19.6   services to its members on a nonelective emergency basis, or 
 19.7   while they are outside the area served by the organization, or 
 19.8   (iii) for not more than 95 percent of the amount by which the 
 19.9   health maintenance organization's costs for any of its fiscal 
 19.10  years exceed 105 percent of its income for such fiscal years; 
 19.11  and 
 19.12     (2) a health maintenance organization from having a 
 19.13  provision in a group health maintenance contract allowing an 
 19.14  adjustment of premiums paid based upon the actual health 
 19.15  services utilization of the enrollees covered under the 
 19.16  contract, except that at no time during the life of the contract 
 19.17  shall the contract holder fully self-insure the financial risk 
 19.18  of health care services delivered under the contract.  Risk 
 19.19  sharing arrangements shall be subject to the requirements of 
 19.20  sections 62D.01 to 62D.30; 
 19.21     (g) demonstrated that it has made provisions for and 
 19.22  adopted a conflict of interest policy applicable to all members 
 19.23  of the board of directors and the principal officers of the 
 19.24  health maintenance organization.  The conflict of interest 
 19.25  policy shall include the procedures described in section 
 19.26  317A.255, subdivisions 1 and 2, or a substantially similar 
 19.27  provision contained in the laws under which the health 
 19.28  maintenance organization is incorporated or otherwise 
 19.29  organized.  However, the commissioner is not precluded from 
 19.30  finding that a particular transaction is an unreasonable expense 
 19.31  as described in section 62D.19 even if the directors follow the 
 19.32  required procedures; and 
 19.33     (h) otherwise met the requirements of sections 62D.01 to 
 19.34  62D.30. 
 19.35     Sec. 6.  [62Q.732] [RECOGNITION OF ACCREDITATION BY 
 19.36  NATIONALLY RECOGNIZED ACCREDITING BODY.] 
 20.1      Subdivision 1.  [DEFINITIONS.] (a) For purposes of this 
 20.2   section, the terms defined in this subdivision have the meanings 
 20.3   given. 
 20.4      (b) "Commissioner" means the commissioner of health for 
 20.5   purposes of regulating health maintenance organizations and 
 20.6   community integrated service networks; the commissioner of 
 20.7   commerce for purposes of regulating all other health plan 
 20.8   companies; or the commissioner of human services for the purpose 
 20.9   of contracting with health plan companies serving persons 
 20.10  enrolled in programs under chapter 256B, 256D, or 256L. 
 20.11     (c) "Nationally recognized accrediting body" means an 
 20.12  organization that sets specific national standards governing 
 20.13  health care quality assurance processes, utilization review, 
 20.14  provider credentialing, market conduct, and other topics covered 
 20.15  by this chapter and other chapters and, based upon those 
 20.16  standards, provides accreditation to health plan companies.  The 
 20.17  American Accreditation Health Care Commission (URAC), the 
 20.18  National Committee for Quality Assurance (NCQA), and the Joint 
 20.19  Commission on Accreditation of Healthcare Organizations (JCAHO), 
 20.20  at a minimum, are nationally recognized accrediting bodies for 
 20.21  purposes of this section. 
 20.22     (d) "Acceptable accreditation status" means that a health 
 20.23  plan company has achieved an accredited, commendable, or 
 20.24  excellent determination, or comparable status, from a nationally 
 20.25  recognized accrediting body. 
 20.26     Subd. 2.  [APPLICATION OF ACCREDITATION STANDARDS TO STATE 
 20.27  REQUIREMENTS.] (a) Health plan companies that have achieved an 
 20.28  acceptable accreditation status or that have been determined to 
 20.29  be in substantial compliance with Medicare+Choice, cost 
 20.30  contract, or Medicare Advantage requirements by the federal 
 20.31  Centers for Medicare and Medicaid Services, and have forwarded 
 20.32  the determination to the commissioner, are deemed to have met 
 20.33  the comparable requirements of state law or contract.  
 20.34  Nationally recognized accrediting body and Medicare+Choice, cost 
 20.35  contract, or Medicare Advantage standards must be considered to 
 20.36  be comparable to similar state requirements if they are at least 
 21.1   as protective of the rights of the enrollee or at least as 
 21.2   stringent as the state requirements.  Provisions of state law or 
 21.3   contract that are covered under this subdivision include 
 21.4   requirements relating to health care quality assurance, 
 21.5   utilization review, provider credentialing, and market conduct.  
 21.6   Nothing in this section prohibits the commissioner from 
 21.7   performing an on-site review of complaint, utilization 
 21.8   management, and appeal files. 
 21.9      (b) If a health plan company has formally delegated certain 
 21.10  activities that are required under either state law or contract 
 21.11  to another organization that has achieved an acceptable 
 21.12  accreditation status, that health plan company may use the 
 21.13  nationally recognized accrediting body's determination on its 
 21.14  own behalf and must be deemed to have met the comparable 
 21.15  requirements of the applicable state law or contract. 
 21.16     Subd. 3.  [DISCLOSURE OF NATIONAL STANDARDS.] The 
 21.17  commissioner may request a copy of the national standards upon 
 21.18  which the acceptable accreditation status has been granted.  
 21.19  This request may be made to the nationally recognized 
 21.20  accrediting body. 
 21.21     Subd. 4.  [ACCREDITATION NOT REQUIRED.] Nothing in this 
 21.22  section requires a health plan company to seek an acceptable 
 21.23  accreditation status from a nationally recognized accrediting 
 21.24  body. 
 21.25     Sec. 7.  Minnesota Statutes 2002, section 72A.20, is 
 21.26  amended by adding a subdivision to read: 
 21.27     Subd. 37.  [ELECTRONIC TRANSMISSION OF REQUIRED 
 21.28  INFORMATION.] A health carrier as defined in section 62A.011, 
 21.29  subdivision 2, is not in violation of this chapter for 
 21.30  electronically transmitting or electronically making available 
 21.31  information otherwise required to be delivered in writing under 
 21.32  chapters 62A to 62Q and 72A to an enrollee as defined in section 
 21.33  62Q.01, subdivision 2a, and with the requirements of those 
 21.34  chapters if the following conditions are met: 
 21.35     (1) the health carrier informs the enrollee that electronic 
 21.36  transmission or access is available and, at the discretion of 
 22.1   the health carrier, the enrollee is given one of the following 
 22.2   options: 
 22.3      (i) electronic transmission or access will occur only if 
 22.4   the enrollee affirmatively requests to the health carrier that 
 22.5   the required information be electronically transmitted or 
 22.6   available and a record of that request is retained by the health 
 22.7   carrier; or 
 22.8      (ii) electronic transmission or access will automatically 
 22.9   occur if the enrollee has not opted out of that manner of 
 22.10  transmission by request to the health carrier and requested that 
 22.11  the information be provided in writing.  If the enrollee opts 
 22.12  out of electronic transmission, a record of that request must be 
 22.13  retained by the health carrier; 
 22.14     (2) the enrollee is allowed to withdraw the request at any 
 22.15  time; 
 22.16     (3) if the information transmitted electronically contains 
 22.17  individually identifiable data, it must be transmitted to a 
 22.18  secured mailbox.  If the information made available 
 22.19  electronically contains individually identifiable data, it must 
 22.20  be made available at a password-protected secured Web site; 
 22.21     (4) the enrollee is provided a customer service number on 
 22.22  the enrollee's member card that may be called to request a 
 22.23  written copy of the document; and 
 22.24     (5) the electronic transmission or electronic availability 
 22.25  meets all other requirements of the chapter including, but not 
 22.26  limited to, size of the typeface and any required time frames 
 22.27  for distribution. 
 22.28     Sec. 8.  [CHANGE OF HEALTH MAINTENANCE ORGANIZATION 
 22.29  REGULATORY AUTHORITY.] 
 22.30     (a) Effective July 1, 2005, regulatory authority for health 
 22.31  maintenance organizations under Minnesota Statutes, chapter 62D, 
 22.32  community integrated service networks, as defined in Minnesota 
 22.33  Statutes, section 62N.02, subdivision 4a; health care 
 22.34  cooperatives operating under Minnesota Statutes, chapter 62R; 
 22.35  and health care purchasing alliances and accountable provider 
 22.36  networks operating under Minnesota Statutes, chapter 62T, is 
 23.1   transferred from the commissioner of health to the commissioner 
 23.2   of commerce. 
 23.3      (b) Minnesota Statutes, section 15.039, applies to this 
 23.4   transfer of authority. 
 23.5      (c) The revisor of statutes shall, in preparing Minnesota 
 23.6   Statutes 2004, make all conforming changes in Minnesota 
 23.7   Statutes, chapter 62D, and other chapters. 
 23.8                              ARTICLE 7 
 23.9                  TAXPAYER SUBSIDIZED HEALTH PROGRAM 
 23.10                           COST-SHIFTING 
 23.11     Section 1.  [3.990] [IMPACT OF COST-SHIFTING.] 
 23.12     The commissioner of human services and the commissioner of 
 23.13  finance, in preparing a fiscal note for any legislative proposal 
 23.14  that requires new or increased funding for an expansion of 
 23.15  eligibility or covered services for a state health care program, 
 23.16  shall include in the fiscal note an estimate of the financial 
 23.17  impact of cost-shifting on private sector payers and individuals 
 23.18  paying for health care services out-of-pocket.  The 
 23.19  commissioners shall measure the financial impact of 
 23.20  cost-shifting by calculating the extent to which estimated state 
 23.21  health care program reimbursement for the additional health care 
 23.22  services expected to be provided as a result of the expansion is 
 23.23  lower than the estimated cost to providers of providing the 
 23.24  services.  For purposes of this section, "state health care 
 23.25  program" means the medical assistance, MinnesotaCare, and 
 23.26  general assistance medical care programs. 
 23.27     Sec. 2.  Minnesota Statutes 2002, section 16A.10, is 
 23.28  amended by adding a subdivision to read: 
 23.29     Subd. 4.  [LIMIT ON STATE HEALTH CARE PROGRAM 
 23.30  EXPANSION.] No budget proposal shall include any provision that 
 23.31  requests new or increased funding for an expansion of 
 23.32  eligibility or covered services for a state health care program, 
 23.33  unless state health care program reimbursement rates for major 
 23.34  service categories, at the time the expansion is to take effect, 
 23.35  will be sufficient to cover estimated provider costs for each 
 23.36  major service category.  For purposes of this section, "state 
 24.1   health care program" means the medical assistance, 
 24.2   MinnesotaCare, and general assistance medical care programs. 
 24.3      Sec. 3.  [STUDY OF COST-SHIFTING.] 
 24.4      (a) The commissioner of human services shall evaluate the 
 24.5   extent to which state health care program reimbursement rates 
 24.6   result in health care provider cost-shifting to private sector 
 24.7   payers and individuals paying for services out-of-pocket.  In 
 24.8   conducting the evaluation, the commissioner shall: 
 24.9      (1) examine the extent to which average state health care 
 24.10  program reimbursement rates for major categories of services 
 24.11  vary from average private sector reimbursement rates; 
 24.12     (2) examine the extent to which average state health care 
 24.13  program reimbursement rates for major categories of services 
 24.14  cover average provider costs; 
 24.15     (3) estimate the amount by which average state health care 
 24.16  program reimbursement rates for major categories of services 
 24.17  would need to be increased to match average private sector 
 24.18  reimbursement rates and to cover average provider costs; and 
 24.19     (4) present recommendations to the legislature on methods 
 24.20  of increasing average state health care program reimbursement 
 24.21  rates for major categories of services, over a six-year period, 
 24.22  to the average private sector reimbursement rate and to a level 
 24.23  that covers average provider costs. 
 24.24     (b) The commissioner shall present results and 
 24.25  recommendations to the legislature by December 15, 2004.  The 
 24.26  commissioner may contract with an actuarial consulting firm to 
 24.27  implement this section.  For purposes of this section, "state 
 24.28  health care program" means the medical assistance, 
 24.29  MinnesotaCare, and general assistance medical care programs.