1.1                          A bill for an act 
  1.2             relating to health care; regulating policy rates and 
  1.3             conversion rights; modifying or eliminating certain 
  1.4             health care cost containment provisions; modifying 
  1.5             certain requirements for health plan companies; 
  1.6             amending Minnesota Statutes 1996, sections 62A.021, 
  1.7             subdivision 1; 62E.16; 62J.04, subdivision 1a; 62Q.07, 
  1.8             subdivision 1; 62Q.19, subdivision 2a; 62Q.32; 62Q.43, 
  1.9             subdivision 2; and 62Q.45, subdivision 2; repealing 
  1.10            Minnesota Statutes 1996, section 62Q.03. 
  1.11  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.12     Section 1.  Minnesota Statutes 1996, section 62A.021, 
  1.13  subdivision 1, is amended to read: 
  1.14     Subdivision 1.  [LOSS RATIO STANDARDS.] Notwithstanding 
  1.15  section 62A.02, subdivision 3, relating to loss ratios, health 
  1.16  care policies or certificates shall not be delivered or issued 
  1.17  for delivery to an individual or to a small employer as defined 
  1.18  in section 62L.02, unless the policies or certificates can be 
  1.19  expected, as estimated for the entire period for which rates are 
  1.20  computed to provide coverage, to return to Minnesota 
  1.21  policyholders and certificate holders in the form of aggregate 
  1.22  benefits not including anticipated refunds or credits, provided 
  1.23  under the policies or certificates, (1) at least 75 percent of 
  1.24  the aggregate amount of premiums earned in the case of policies 
  1.25  issued in the small employer market, as defined in section 
  1.26  62L.02, subdivision 27, calculated on an aggregate basis; (2) at 
  1.27  least 75 percent of the aggregate amount of premiums earned in 
  1.28  the case of group policies; and ~~(2)~~ (3) at least 65 percent of 
  2.1   the aggregate amount of premiums earned in the case of each 
  2.2   policy form or certificate form issued in the individual market; 
  2.3   calculated on the basis of incurred claims experience or 
  2.4   incurred health care expenses where coverage is provided by a 
  2.5   health maintenance organization on a service rather than 
  2.6   reimbursement basis and earned premiums for the period and 
  2.7   according to accepted actuarial principles and practices.  
  2.8   Assessments by the reinsurance association created in chapter 
  2.9   62L and any types of taxes, surcharges, or assessments created 
  2.10  by Laws 1992, chapter 549, or created on or after April 23, 
  2.11  1992, are included in the calculation of incurred claims 
  2.12  experience or incurred health care expenses.  The applicable 
  2.13  percentage for policies and certificates issued in the small 
  2.14  employer market, as defined in section 62L.02, increases by one 
  2.15  percentage point on July 1 of each year, beginning on July 1, 
  2.16  1994, until an 82 percent loss ratio is reached on July 1, 
  2.17  2000.  ~~The applicable percentage for policy forms and~~ 
  2.18  ~~certificate forms issued in the individual market increases by~~ 
  2.19  ~~one percentage point on July 1 of each year, beginning on July~~ 
  2.20  ~~1, 1994, until a 72 percent loss ratio is reached on July 1,~~ 
  2.21  ~~2000.~~  A health carrier that enters a market after July 1, 1993, 
  2.22  does not start at the beginning of the phase-in schedule and 
  2.23  must instead comply with the loss ratio requirements applicable 
  2.24  to other health carriers in that market for each time period.  
  2.25  Premiums earned and claims incurred in markets other than the 
  2.26  small employer and individual and group markets are not relevant 
  2.27  for purposes of this section. 
  2.28     ~~Notwithstanding section 645.26, any act enacted at the 1992~~ 
  2.29  ~~regular legislative session that amends or repeals section~~ 
  2.30  ~~62A.135 or that otherwise changes the loss ratios provided in~~ 
  2.31  ~~that section is void.~~ 
  2.32     All filings of rates and rating schedules shall demonstrate 
  2.33  that actual expected claims in relation to premiums comply with 
  2.34  the requirements of this section when combined with actual 
  2.35  experience to date.  Filings of rate revisions shall also 
  2.36  demonstrate that the anticipated loss ratio over the entire 
  3.1   future period for which the revised rates are computed to 
  3.2   provide coverage can be expected to meet the appropriate loss 
  3.3   ratio standards, and aggregate loss ratio from inception of the 
  3.4   policy form or certificate form shall equal or exceed the 
  3.5   appropriate loss ratio standards. 
  3.6      A health carrier that issues health care policies and 
  3.7   certificates to individuals or to small employers, as defined in 
  3.8   section 62L.02, in this state shall file annually its rates, 
  3.9   rating schedule, and supporting documentation including ratios 
  3.10  of incurred losses to earned premiums by policy form or 
  3.11  certificate form duration for approval by the commissioner 
  3.12  according to the filing requirements and procedures prescribed 
  3.13  by the commissioner.  The supporting documentation shall also 
  3.14  demonstrate in accordance with actuarial standards of practice 
  3.15  using reasonable assumptions that the appropriate loss ratio 
  3.16  standards can be expected to be met over the entire period for 
  3.17  which rates are computed.  The demonstration shall exclude 
  3.18  active life reserves.  If the data submitted does not confirm 
  3.19  that the health carrier has satisfied the loss ratio 
  3.20  requirements of this section, the commissioner shall notify the 
  3.21  health carrier in writing of the deficiency.  The health carrier 
  3.22  shall have 30 days from the date of the commissioner's notice to 
  3.23  file amended rates that comply with this section.  If the health 
  3.24  carrier fails to file amended rates within the prescribed time, 
  3.25  the commissioner shall order that the health carrier's filed 
  3.26  rates for the nonconforming policy form or certificate form be 
  3.27  reduced to an amount that would have resulted in a loss ratio 
  3.28  that complied with this section had it been in effect for the 
  3.29  reporting period of the supplement.  The health carrier's 
  3.30  failure to file amended rates within the specified time or the 
  3.31  issuance of the commissioner's order amending the rates does not 
  3.32  preclude the health carrier from filing an amendment of its 
  3.33  rates at a later time.  The commissioner shall annually make the 
  3.34  submitted data available to the public at a cost not to exceed 
  3.35  the cost of copying.  The data must be compiled in a form useful 
  3.36  for consumers who wish to compare premium charges and loss 
  4.1   ratios. 
  4.2      Each sale of a policy or certificate that does not comply 
  4.3   with the loss ratio requirements of this section is an unfair or 
  4.4   deceptive act or practice in the business of insurance and is 
  4.5   subject to the penalties in sections 72A.17 to 72A.32. 
  4.6      For purposes of this section, health care policies issued 
  4.7   as a result of solicitations of individuals through the mail or 
  4.8   mass media advertising, including both print and broadcast 
  4.9   advertising, shall be treated as individual policies.  
  4.10     For purposes of this section, (1) "health care policy" or 
  4.11  "health care certificate" is a health plan as defined in section 
  4.12  62A.011; and (2) "health carrier" has the meaning given in 
  4.13  section 62A.011 and includes all health carriers delivering or 
  4.14  issuing for delivery health care policies or certificates in 
  4.15  this state or offering these policies or certificates to 
  4.16  residents of this state.  
  4.17     Sec. 2.  Minnesota Statutes 1996, section 62E.16, is 
  4.18  amended to read: 
  4.19     62E.16 [POLICY CONVERSION RIGHTS.] 
  4.20     Every program of self-insurance, policy of group accident 
  4.21  and health insurance or contract of coverage by a health 
  4.22  maintenance organization written or renewed in this state, shall 
  4.23  include, in addition to the provisions required by section 
  4.24  62A.17, the right to convert to an individual coverage qualified 
  4.25  plan without the addition of underwriting restrictions if the 
  4.26  individual insured leaves the group regardless of the reason for 
  4.27  leaving the group or if an employer member of a group ceases to 
  4.28  remit payment so as to terminate coverage for its employees, or 
  4.29  upon cancellation or termination of the coverage for the group 
  4.30  except where uninterrupted and continuous group coverage is 
  4.31  otherwise provided to the group.  If the health maintenance 
  4.32  organization has canceled coverage for the group because of a 
  4.33  loss of providers in a service area, the health maintenance 
  4.34  organization shall arrange for other health maintenance or 
  4.35  indemnity conversion options that shall be offered to enrollees 
  4.36  without the addition of underwriting restrictions.  The required 
  5.1   conversion contract must treat pregnancy the same as any other 
  5.2   covered illness under the conversion contract.  The person may 
  5.3   exercise this right to conversion within ~~30~~ 62 days of leaving 
  5.4   the group or within ~~30~~ 62 days following receipt of due notice 
  5.5   of cancellation or termination of coverage of the group or of 
  5.6   the employer member of the group and upon payment of premiums 
  5.7   from the date of termination or cancellation.  Due notice of 
  5.8   cancellation or termination of coverage for a group or of the 
  5.9   employer member of the group shall be provided to each employee 
  5.10  having coverage in the group by the insurer, self-insurer or 
  5.11  health maintenance organization canceling or terminating the 
  5.12  coverage except where reasonable evidence indicates that 
  5.13  uninterrupted and continuous group coverage is otherwise 
  5.14  provided to the group.  Every employer having a policy of group 
  5.15  accident and health insurance, group subscriber or contract of 
  5.16  coverage by a health maintenance organization shall, upon 
  5.17  request, provide the insurer or health maintenance organization 
  5.18  a list of the names and addresses of covered employees.  Plans 
  5.19  of health coverage shall also include a provision which, upon 
  5.20  the death of the individual in whose name the contract was 
  5.21  issued, permits every other individual then covered under the 
  5.22  contract to elect, within the period specified in the contract, 
  5.23  to continue coverage under the same or a different contract 
  5.24  without the addition of underwriting restrictions until the 
  5.25  individual would have ceased to have been entitled to coverage 
  5.26  had the individual in whose name the contract was issued lived.  
  5.27  An individual conversion contract issued by a health maintenance 
  5.28  organization shall not be deemed to be an individual enrollment 
  5.29  contract for the purposes of section 62D.10.  An individual 
  5.30  health plan offered under section 62A.65, subdivision 5, 
  5.31  paragraph (b), to a person satisfies the health carrier's 
  5.32  obligation to offer conversion coverage under this section with 
  5.33  respect to that person. 
  5.34     Sec. 3.  Minnesota Statutes 1996, section 62J.04, 
  5.35  subdivision 1a, is amended to read: 
  5.36     Subd. 1a.  [ADJUSTED GROWTH LIMITS AND ENFORCEMENT.] ~~(a)~~ 
  6.1   The commissioner shall publish the final adjusted growth limit 
  6.2   in the State Register by January 31 of the year that the 
  6.3   expenditure limit is to be in effect.  The adjusted limit must 
  6.4   reflect the actual regional consumer price index for urban 
  6.5   consumers for the previous calendar year, and may deviate from 
  6.6   the previously published projected growth limits to reflect 
  6.7   differences between the actual regional consumer price index for 
  6.8   urban consumers and the projected Consumer Price Index for urban 
  6.9   consumers.  The commissioner shall report to the legislature by 
  6.10  February 15 of each year on the implementation of the growth 
  6.11  limits.  This annual report shall describe the differences 
  6.12  between the projected increase in health care expenditures, the 
  6.13  actual expenditures based on data collected, and the impact and 
  6.14  validity of growth limits within the overall health care reform 
  6.15  strategy. 
  6.16     ~~(b) The commissioner, in consultation with the Minnesota~~ 
  6.17  ~~health care commission, shall research and include in the annual~~ 
  6.18  ~~report required in paragraph (a) for 1996, recommendations~~ 
  6.19  ~~regarding the implementation of growth limits for health plan~~ 
  6.20  ~~companies and providers.  The commissioner shall:~~ 
  6.21     ~~(1) consider both spending and revenue approaches and~~ 
  6.22  ~~report on the implementation of the interim limits as defined in~~ 
  6.23  ~~sections 62J.041 and 62J.042;~~ 
  6.24     ~~(2) make recommendations regarding the enforcement~~ 
  6.25  ~~mechanism and consider mechanisms to adjust future growth limits~~ 
  6.26  ~~as well as mechanisms to establish financial penalties for~~ 
  6.27  ~~noncompliance;~~ 
  6.28     ~~(3) address the feasibility of systemwide limits imposed on~~ 
  6.29  ~~all integrated service networks; and~~ 
  6.30     ~~(4) make recommendations on the most effective way to~~ 
  6.31  ~~implement growth limits on the fee-for-service system in the~~ 
  6.32  ~~absence of a regulated all-payer system.~~ 
  6.33     ~~(c) The commissioner shall enforce limits on growth in~~ 
  6.34  ~~spending for health plan companies and revenues for providers.~~  
  6.35  ~~If the commissioner determines that artificial inflation or~~ 
  6.36  ~~padding of costs or prices has occurred in anticipation of the~~ 
  7.1   ~~implementation of growth limits, the commissioner may adjust the~~ 
  7.2   ~~base year spending totals or growth limits or take other action~~ 
  7.3   ~~to reverse the effect of the artificial inflation or padding.~~ 
  7.4      ~~(d) The commissioner shall impose and enforce overall~~ 
  7.5   ~~limits on growth in spending for health plan companies, with~~ 
  7.6   ~~adjustments for changes in enrollment, benefits, severity, and~~ 
  7.7   ~~risks.  If a health plan company exceeds the growth limits, the~~ 
  7.8   ~~commissioner may impose financial penalties up to the amount~~ 
  7.9   ~~exceeding the applicable growth limit.~~ 
  7.10     Sec. 4.  Minnesota Statutes 1996, section 62Q.07, 
  7.11  subdivision 1, is amended to read: 
  7.12     Subdivision 1.  [ACTION PLANS REQUIRED.] (a) To increase 
  7.13  public awareness and accountability of health plan companies, 
  7.14  all health plan companies that issue or renew a health plan, as 
  7.15  defined in section 62Q.01, must annually file with the 
  7.16  applicable commissioner an action plan that satisfies the 
  7.17  requirements of this section beginning July 1, 1994, as a 
  7.18  condition of doing business in Minnesota.  For purposes of this 
  7.19  subdivision, "health plan":  (1) includes the coverages 
  7.20  described in section 62A.011, subdivision 3, clause (10); and 
  7.21  (2) does not include a policy or certificate of accident and 
  7.22  sickness insurance as defined in section 62A.01 offered by an 
  7.23  insurance company licensed under chapter 60A.  Each health plan 
  7.24  company must also file its action plan with the information 
  7.25  clearinghouse.  Action plans are required solely to provide 
  7.26  information to consumers, purchasers, and the larger community 
  7.27  as a first step toward greater accountability of health plan 
  7.28  companies.  The sole function of the commissioner in relation to 
  7.29  the action plans is to ensure that each health plan company 
  7.30  files a complete action plan, that the action plan is truthful 
  7.31  and not misleading, and that the action plan is reviewed by 
  7.32  appropriate community agencies. 
  7.33     (b) If a commissioner responsible for regulating a health 
  7.34  plan company required to file an action plan under this section 
  7.35  has reason to believe an action plan is false or misleading, the 
  7.36  commissioner may conduct an investigation to determine whether 
  8.1   the action plan is truthful and not misleading, and may require 
  8.2   the health plan company to submit any information that the 
  8.3   commissioner reasonably deems necessary to complete the 
  8.4   investigation.  If the commissioner determines that an action 
  8.5   plan is false or misleading, the commissioner may require the 
  8.6   health plan company to file an amended plan or may take any 
  8.7   action authorized under chapter 72A. 
  8.8      Sec. 5.  Minnesota Statutes 1996, section 62Q.19, 
  8.9   subdivision 2a, is amended to read: 
  8.10     Subd. 2a.  [DEFINITION OF HEALTH PLAN COMPANY.] For 
  8.11  purposes of this section, "health plan company" does not 
  8.12  include:  (1) a health plan company as defined in section 62Q.01 
  8.13  with fewer than 50,000 enrollees, all of whose enrollees are 
  8.14  covered under medical assistance, general assistance medical 
  8.15  care, or MinnesotaCare; or (2) an insurance company licensed 
  8.16  under chapter 60A to offer, sell, or issue a policy of accident 
  8.17  and sickness insurance as defined in section 62A.01. 
  8.18     Sec. 6.  Minnesota Statutes 1996, section 62Q.32, is 
  8.19  amended to read: 
  8.20     62Q.32 [LOCAL OMBUDSPERSON.] 
  8.21     County board or community health service agencies may 
  8.22  establish an office of ombudsperson to provide a system of 
  8.23  consumer advocacy for persons receiving health care services 
  8.24  through a ~~health plan company~~ state-run public program, 
  8.25  including medical assistance, general assistance medical care, 
  8.26  and MinnesotaCare.  The ombudsperson's functions may include, 
  8.27  but are not limited to: 
  8.28     (a) mediation or advocacy on behalf of a person accessing 
  8.29  the complaint and appeal procedures to ensure that necessary 
  8.30  medical services are provided ~~by the health plan company~~; and 
  8.31     (b) investigation of the quality of services provided to a 
  8.32  person and determine the extent to which quality assurance 
  8.33  mechanisms are needed or any other system change may be needed.  
  8.34  ~~The commissioner of health shall make recommendations for~~ 
  8.35  ~~funding these functions including the amount of funding needed~~ 
  8.36  ~~and a plan for distribution.  The commissioner shall submit~~ 
  9.1   ~~these recommendations to the legislative commission on health~~ 
  9.2   ~~care access by January 15, 1996.~~ 
  9.3      Sec. 7.  Minnesota Statutes 1996, section 62Q.43, 
  9.4   subdivision 2, is amended to read: 
  9.5      Subd. 2.  [ACCESS REQUIREMENT.] Every closed-panel health 
  9.6   plan must allow enrollees who are full-time students under the 
  9.7   age of 25 years to change their designated clinic or physician 
  9.8   at least ~~once~~ twice per ~~month~~ year, as long as the clinic or 
  9.9   physician is part of the health plan company's statewide clinic 
  9.10  or physician network.  A health plan company shall not charge 
  9.11  enrollees who choose this option higher premiums or cost sharing 
  9.12  than would otherwise apply to enrollees who do not choose this 
  9.13  option.  A health plan company may require enrollees to provide 
  9.14  15 days written notice of intent to change their designated 
  9.15  clinic or physician. 
  9.16     Sec. 8.  Minnesota Statutes 1996, section 62Q.45, 
  9.17  subdivision 2, is amended to read: 
  9.18     Subd. 2.  [DEFINITION.] For purposes of this section, 
  9.19  "managed care organization" means:  (1) a health maintenance 
  9.20  organization operating under chapter 62D; (2) a community 
  9.21  integrated service network as defined under section 62N.02, 
  9.22  subdivision 4a; (3) an integrated service network as defined 
  9.23  under section 62N.02, subdivision 8; or (4) ~~an insurance company~~ 
  9.24  ~~licensed under chapter 60A,~~ a nonprofit health service plan 
  9.25  corporation operating under chapter 62C, fraternal benefit 
  9.26  society operating under chapter 64B, or any other health plan 
  9.27  company, to the extent that it covers health care services 
  9.28  delivered to Minnesota residents through a preferred provider 
  9.29  organization or a network of selected providers. 
  9.30     Sec. 9.  [REPEALER.] 
  9.31     Minnesota Statutes 1996, section 62Q.03, is repealed. 
  9.32     Sec. 10.  [REVISOR INSTRUCTION.] 
  9.33     The revisor shall recodify Minnesota Statutes, section 
  9.34  62Q.32, as 145A.16.