1.1                          A bill for an act 
  1.2             relating to insurance; adjusting aspects of 
  1.3             eligibility and coverage in the comprehensive health 
  1.4             association; requiring a study of premium rates; 
  1.5             amending Minnesota Statutes 1998, sections 62E.08; 
  1.6             62E.13, subdivision 2; 62E.14, subdivision 1; 62E.15, 
  1.7             by adding a subdivision; and 62E.18; Minnesota 
  1.8             Statutes 1999 Supplement, section 62E.12. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1998, section 62E.08, is 
  1.11  amended to read: 
  1.12     62E.08 [STATE PLAN PREMIUM.] 
  1.13     Subdivision 1.  [ESTABLISHMENT.] The association shall 
  1.14  establish the following maximum premiums to be charged for 
  1.15  membership in the comprehensive health insurance plan: 
  1.16     (a) the premium for the number one qualified plan shall 
  1.17  range from a minimum of 101 percent to a maximum of 125 percent 
  1.18  of the weighted average of rates charged by those insurers and 
  1.19  health maintenance organizations with individuals enrolled in: 
  1.20     (1) ~~number one~~ $1,000 annual deductible individual 
  1.21  ~~qualified~~ plans of insurance in force in Minnesota; 
  1.22     (2) individual health maintenance organization contracts of 
  1.23  coverage with a $1,000 annual deductible which are in force in 
  1.24  Minnesota ~~and which are, or are adjusted to be, actuarially~~ 
  1.25  ~~equivalent to number one individual qualified plans~~; and 
  1.26     (3) ~~individual policies and individual health maintenance~~ 
  1.27  ~~organization contracts of coverage which are in force in~~ 
  2.1   ~~Minnesota, are not qualified under section 62E.06, are, or are~~ 
  2.2   ~~adjusted to be, actuarially equivalent to number one individual~~ 
  2.3   ~~qualified plans, and do not fall under clause (2)~~ other plans of 
  2.4   coverage similar to plans offered by the association based on 
  2.5   generally accepted actuarial principles; 
  2.6      (b) the premium for the number two qualified plan shall 
  2.7   range from a minimum of 101 percent to a maximum of 125 percent 
  2.8   of the weighted average of rates charged by those insurers and 
  2.9   health maintenance organizations with individuals enrolled in: 
  2.10     (1) ~~number two~~ $500 annual deductible individual ~~qualified~~ 
  2.11  plans of insurance in force in Minnesota; 
  2.12     (2) individual health maintenance organization contracts of 
  2.13  coverage with a $500 annual deductible which are in force in 
  2.14  Minnesota ~~and which are, or are adjusted to be, actuarially~~ 
  2.15  ~~equivalent to number two individual qualified plans~~; and 
  2.16     (3) ~~individual policies and individual health maintenance~~ 
  2.17  ~~organization contracts of coverage which are in force in~~ 
  2.18  ~~Minnesota, are not qualified under section 62E.06, are, or are~~ 
  2.19  ~~adjusted to be, actuarially equivalent to number two individual~~ 
  2.20  ~~qualified plans, and do not fall under clause (2)~~ other plans of 
  2.21  coverage similar to plans offered by the association based on 
  2.22  generally accepted actuarial principles; 
  2.23     (c) the premium for the plan with a $2,000 annual 
  2.24  deductible shall range from a minimum of 101 percent to a 
  2.25  maximum of 125 percent of the weighted average of rates charged 
  2.26  by those insurers and health maintenance organizations with 
  2.27  individuals enrolled in: 
  2.28     (1) $2,000 annual deductible individual plans in force in 
  2.29  Minnesota; and 
  2.30     (2) individual health maintenance organization contracts of 
  2.31  coverage with a $2,000 annual deductible which are in force in 
  2.32  Minnesota; or 
  2.33     (3) other plans of coverage similar to plans offered by the 
  2.34  association based on generally accepted actuarial principles. 
  2.35     (d) The premium for each type of ~~qualified~~ Medicare 
  2.36  supplement plan required to be offered by the association 
  3.1   pursuant to section 62E.12 shall range from a minimum of 101 
  3.2   percent to a maximum of 125 percent of the weighted average of 
  3.3   rates charged by those insurers and health maintenance 
  3.4   organizations with individuals enrolled in:  
  3.5      (1) ~~qualified~~ Medicare supplement plans in force in 
  3.6   Minnesota; 
  3.7      (2) health maintenance organization Medicare supplement 
  3.8   contracts of coverage which are in force in Minnesota ~~and which~~ 
  3.9   ~~are, or are adjusted to be, actuarially equivalent to qualified~~ 
  3.10  ~~Medicare supplement plans~~; and 
  3.11     (3) ~~Medicare supplement policies and health maintenance~~ 
  3.12  ~~organization Medicare supplement contracts of coverage which are~~ 
  3.13  ~~in force in Minnesota, are not qualified under section 62E.07,~~ 
  3.14  ~~are, or are adjusted to be, actuarially equivalent to qualified~~ 
  3.15  ~~Medicare supplement plans, and do not fall under clause~~ 
  3.16  ~~(2)~~ other plans of coverage similar to plans offered by the 
  3.17  association based on generally accepted actuarial principles; 
  3.18  and 
  3.19     ~~(d)~~ (e) the charge for health maintenance organization 
  3.20  coverage shall be based on generally accepted actuarial 
  3.21  principles. 
  3.22     The list of insurers and health maintenance organizations 
  3.23  whose rates are used to establish the premium for coverage 
  3.24  offered by the association pursuant to paragraphs (a) to ~~(c)~~ (d) 
  3.25  shall be established by the commissioner on the basis of 
  3.26  information which shall be provided to the association by all 
  3.27  insurers and health maintenance organizations annually at the 
  3.28  commissioner's request.  This information shall include the 
  3.29  number of individuals covered by each type of plan or contract 
  3.30  specified in paragraphs (a) to ~~(c)~~ (d) that is sold, issued, and 
  3.31  renewed by the insurers and health maintenance organizations, 
  3.32  including those plans or contracts available only on a renewal 
  3.33  basis.  The information shall also include the rates charged for 
  3.34  each type of plan or contract.  
  3.35     In establishing premiums pursuant to this section, the 
  3.36  association shall utilize generally accepted actuarial 
  4.1   principles, provided that the association shall not discriminate 
  4.2   in charging premiums based upon sex.  In order to compute a 
  4.3   weighted average for each type of plan or contract specified 
  4.4   under paragraphs (a) to ~~(c)~~ (d), the association shall, using 
  4.5   the information collected pursuant to this subdivision, list 
  4.6   insurers and health maintenance organizations in rank order of 
  4.7   the total number of individuals covered by each insurer or 
  4.8   health maintenance organization.  The association shall then 
  4.9   compute a weighted average of the rates charged for coverage by 
  4.10  all the insurers and health maintenance organizations by: 
  4.11     (1) multiplying the numbers of individuals covered by each 
  4.12  insurer or health maintenance organization by the rates charged 
  4.13  for coverage; 
  4.14     (2) separately summing both the number of individuals 
  4.15  covered by all the insurers and health maintenance organizations 
  4.16  and all the products computed under clause (1); and 
  4.17     (3) dividing the total of the products computed under 
  4.18  clause (1) by the total number of individuals covered.  
  4.19     The association may elect to use a sample of information 
  4.20  from the insurers and health maintenance organizations for 
  4.21  purposes of computing a weighted average.  ~~If the association so~~ 
  4.22  ~~elects, the sample of information from insurers and health~~ 
  4.23  ~~maintenance organizations shall, at a minimum, include~~ 
  4.24  ~~information from those insurers and health maintenance~~ 
  4.25  ~~organizations which, according to their order of ranking from~~ 
  4.26  ~~the largest number of individuals covered to the smallest~~ 
  4.27  ~~number, account for at least the first 51 percent of all~~ 
  4.28  ~~individuals covered.~~  In no case, however, may a sample used by 
  4.29  the association to compute a weighted average include 
  4.30  information from fewer than the two insurers or health 
  4.31  maintenance organizations highest in rank order.  
  4.32     Subd. 2.  [SELF-SUPPORTING.] Subject to subdivision 1, the 
  4.33  schedule of premiums for coverage under the comprehensive health 
  4.34  insurance plan shall be designed to be self-supporting and based 
  4.35  on generally accepted actuarial principles. 
  4.36     Subd. 3.  [DETERMINATION OF RATES.] Premium rates under 
  5.1   this section must be determined annually.  These rates are 
  5.2   effective July 1 of each year and must be based on a survey of 
  5.3   approved rates of insurers and health maintenance organizations 
  5.4   in effect, or to be in effect, on April 1 of the same calendar 
  5.5   year.  These rates may be trended to July 1 in order to reflect 
  5.6   economic and inflationary changes. 
  5.7      Subd. 4.  [SMOKERS RATES.] The association may establish 
  5.8   smoker and nonsmoker premium rates that are based on generally 
  5.9   accepted actuarial principles. 
  5.10     Sec. 2.  Minnesota Statutes 1999 Supplement, section 
  5.11  62E.12, is amended to read: 
  5.12     62E.12 [MINIMUM BENEFITS OF COMPREHENSIVE HEALTH INSURANCE 
  5.13  PLAN.] 
  5.14     (a) The association through its comprehensive health 
  5.15  insurance plan shall offer policies which provide the benefits 
  5.16  of a number one qualified plan and a number two qualified plan, 
  5.17  except that the maximum lifetime benefit on these plans shall be 
  5.18  $2,800,000~~,~~; and an extended basic Medicare supplement plan and 
  5.19  a basic Medicare supplement plan as described in sections 62A.31 
  5.20  to 62A.44 ~~and 62E.07~~.  The association may also offer a plan 
  5.21  that is identical to a number one and number two qualified plan 
  5.22  except that it has a $2,000 annual deductible and a $2,800,000 
  5.23  maximum lifetime benefit.  
  5.24     (b) The requirement that a policy issued by the association 
  5.25  must be a qualified plan is satisfied if the association 
  5.26  contracts with a preferred provider network and the level of 
  5.27  benefits for services provided within the network satisfies the 
  5.28  requirements of a qualified plan.  If the association uses a 
  5.29  preferred provider network, payments to nonparticipating 
  5.30  providers must meet the minimum requirements of section 72A.20, 
  5.31  subdivision 15.  ~~They~~ 
  5.32     (c) The association shall offer health maintenance 
  5.33  organization contracts in those areas of the state where a 
  5.34  health maintenance organization has agreed to make the coverage 
  5.35  available and has been selected as a writing carrier.  
  5.36     (d) Notwithstanding the provisions of section 62E.06 and 
  6.1   unless those charges are billed by a provider that is part of 
  6.2   the association's preferred provider network, the state plan 
  6.3   shall exclude coverage of services of a private duty nurse other 
  6.4   than on an inpatient basis and any charges for treatment in a 
  6.5   hospital located outside of the state of Minnesota in which the 
  6.6   covered person is receiving treatment for a mental or nervous 
  6.7   disorder, unless similar treatment for the mental or nervous 
  6.8   disorder is medically necessary, unavailable in Minnesota and 
  6.9   provided upon referral by a licensed Minnesota medical 
  6.10  practitioner. 
  6.11     Sec. 3.  Minnesota Statutes 1998, section 62E.13, 
  6.12  subdivision 2, is amended to read: 
  6.13     Subd. 2.  [SELECTION OF WRITING CARRIER.] The association 
  6.14  may select policies and contracts, or parts thereof, submitted 
  6.15  by a member or members of the association, or by the association 
  6.16  or others, to develop specifications for bids from any entity 
  6.17  which wishes to be selected as a writing carrier to administer 
  6.18  the state plan.  The selection of the writing carrier shall be 
  6.19  based upon criteria established by the board of directors of the 
  6.20  association and approved by the commissioner.  The criteria 
  6.21  shall outline specific qualifications that an entity must 
  6.22  satisfy in order to be selected and, at a minimum, shall include 
  6.23  the entity's proven ability to handle large group accident and 
  6.24  health insurance cases, efficient claim paying capacity, and the 
  6.25  estimate of total charges for administering the plan.  The 
  6.26  association may select separate writing carriers for the two 
  6.27  types of qualified plans and the $2,000 deductible plan, the 
  6.28  qualified medicare supplement plan, and the health maintenance 
  6.29  organization contract. 
  6.30     Sec. 4.  Minnesota Statutes 1998, section 62E.14, 
  6.31  subdivision 1, is amended to read: 
  6.32     Subdivision 1.  [CERTIFICATE, CONTENTS.] The comprehensive 
  6.33  health insurance plan shall be open for enrollment by eligible 
  6.34  persons.  An eligible person shall enroll by submission of a 
  6.35  certificate of eligibility to the writing carrier.  The 
  6.36  certificate shall provide the following: 
  7.1      (a) Name, address, age, list of residences for the 
  7.2   immediately preceding six months and length of time at current 
  7.3   residence of the applicant; 
  7.4      (b) Name, address, and age of spouse and children if any, 
  7.5   if they are to be insured; 
  7.6      (c) Evidence of rejection, a requirement of restrictive 
  7.7   riders, a rate up, or a preexisting conditions limitation on a 
  7.8   qualified plan, the effect of which is to substantially reduce 
  7.9   coverage from that received by a person considered a standard 
  7.10  risk, by at least ~~one~~ two association ~~member~~ members within six 
  7.11  months of the date of the certificate, or other eligibility 
  7.12  requirements adopted by rule by the commissioner which are not 
  7.13  inconsistent with this chapter and which evidence that a person 
  7.14  is unable to obtain coverage substantially similar to that which 
  7.15  may be obtained by a person who is considered a standard risk; 
  7.16     (d) If the applicant has been terminated from individual 
  7.17  health coverage which does not provide replacement coverage, 
  7.18  evidence that no replacement coverage that meets the 
  7.19  requirements of section 62D.121 was offered, and evidence of 
  7.20  termination of individual health coverage by an insurer, 
  7.21  nonprofit health service plan corporation, or health maintenance 
  7.22  organization provided that the contract or policy has been 
  7.23  terminated for reasons other than (1) failure to pay the charge 
  7.24  for health care coverage; (2) failure to make copayments 
  7.25  required by the health care plan; (3) enrollee moving out of the 
  7.26  area served; or (4) a materially false statement or 
  7.27  misrepresentation by the enrollee in the application for 
  7.28  membership; and 
  7.29     (e) A designation of the coverage desired. 
  7.30     An eligible person may not purchase more than one policy 
  7.31  from the state plan.  Upon ceasing to be a resident of Minnesota 
  7.32  a person is no longer eligible to purchase or renew coverage 
  7.33  under the state plan. 
  7.34     Sec. 5.  Minnesota Statutes 1998, section 62E.15, is 
  7.35  amended by adding a subdivision to read: 
  7.36     Subd. 2a.  [ANNUAL VERIFICATION.] The association may 
  8.1   annually verify the uninsurability of each policyholder to 
  8.2   insure that only eligible persons are enrolled in the plan. 
  8.3      Sec. 6.  Minnesota Statutes 1998, section 62E.18, is 
  8.4   amended to read: 
  8.5      62E.18 [HEALTH INSURANCE FOR RETIRED EMPLOYEES NOT ELIGIBLE 
  8.6   FOR MEDICARE.] 
  8.7      A Minnesota resident who is age 65 or over and is not 
  8.8   eligible for the health insurance benefits of the federal 
  8.9   Medicare program is entitled to purchase the benefits of a 
  8.10  qualified plan, one or two, or the $2,000 annual deductible plan 
  8.11  if available, offered by the Minnesota comprehensive health 
  8.12  association without any of the limitations set forth in section 
  8.13  62E.14, subdivision 1, paragraph (c), and subdivision 3. 
  8.14     Sec. 7.  [STUDY OF MCHA PREMIUM RATES.] 
  8.15     The Minnesota comprehensive health association shall submit 
  8.16  to the legislature, by February 1, 2001, a study regarding the 
  8.17  impact of increasing the maximum premium range of the plans that 
  8.18  the association offers to above 125 percent of the weighted 
  8.19  average of rates charged in the individual market for similar 
  8.20  plans.  The study must also include an analysis of the 
  8.21  feasibility of establishing a sliding scale premium program for 
  8.22  policyholders including establishing a premium rate lower than 
  8.23  the market rate. 
  8.24     Sec. 8.  [EFFECTIVE DATE.] 
  8.25     Sections 1 to 7 are effective the day following final 
  8.26  enactment.