1.1 	A bill for an act
1.2 	relating to health; providing for a statewide plan for
1.3 	improving health and a grant program for collaborative
1.4 	health improvement projects; requiring persons to
1.5 	refrain from smoking in certain areas; requiring all
1.6 	persons to maintain health coverage; requiring health
1.7 	plans to issue coverage to all applicants and charge
1.8 	community rates; increasing the tax on cigarettes and
1.9 	tobacco products; modifying price of cigarette stamps
1.10 	and disposition of revenue received from cigarette
1.11 	taxes; establishing an essential benefit set for all
1.12 	health plans; creating an income tax deduction for
1.13 	health plan premiums; limiting corporate income tax
1.14 	deductions for employee health coverage to the value
1.15 	of the essential benefit set; amending laws promoting
1.16 	high-quality, evidence-based health care; providing
1.17 	for public information on health care cost and
1.18 	quality; creating a revolving loan fund for electronic
1.19 	medical record systems; authorizing the sale of state
1.20 	revenue bonds; requiring reports; appropriating money;
1.21 	amending Minnesota Statutes 2004, sections 62J.43;
1.22 	144.412; 144.413, subdivisions 2, 4, by adding
1.23 	subdivisions; 144.414; 144.416; 144.417; 145A.12, by
1.24 	adding subdivisions; 290.01, subdivisions 19b, 19c;
1.25 	297F.05, subdivisions 1, 3, 4; 297F.08, subdivision 7;
1.26 	297F.09, subdivision 2; 297F.10; proposing coding for
1.27 	new law in Minnesota Statutes, chapters 62J; 62Q; 144;
1.28 	repealing Minnesota Statutes 2004, section 144.415.
1.29 	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.30 	ARTICLE 1
1.31 	INVESTMENT IN PREVENTION AND WELLNESS

1.32 	Section 1. Minnesota Statutes 2004, section 145A.12, is
1.33 	amended by adding a subdivision to read:
1.34 		Subd. 8.Coordinated statewide health improvement action
1.35 	plan. The commissioner, in consultation with the Minnesota
1.36 	Health Improvement Partnership, shall develop and implement a
1.37 	statewide action plan for improving the health status of
2.1 	Minnesotans and promoting primary prevention through strategic
2.2 	and coordinated action of communities, businesses, health care
2.3 	professionals, health care organizations, health plans, schools,
2.4 	and other public and private entities.  The plan must identify
2.5 	up to three of the statewide public health outcomes as
2.6 	determined under subdivision 7 and provide for specific steps to
2.7 	be taken that will produce measurable improvements in health
2.8 	status and corresponding reductions in the incidence of disease
2.9 	or injury and related health care costs.  The plan must
2.10 	encourage and facilitate the formation of local public-private
2.11 	partnerships to take action on the statewide goals.
2.12 	
EFFECTIVE DATE. This section is effective July 1, 2005.

2.13 	Sec. 2. Minnesota Statutes 2004, section 145A.12, is
2.14 	amended by adding a subdivision to read:
2.15 		Subd. 9.Health improvement grant fund. The commissioner
2.16 	shall establish a public health grant fund and program to award
2.17 	grants to statewide and local health improvement public-private
2.18 	partnerships to support collaborative actions that will reduce
2.19 	the rate of increase in health care costs through improvements
2.20 	in the health status or the prevention of illness and injury in
2.21 	the population of the state or a local community.  The
2.22 	commissioner shall require grantees to provide an equal match of
2.23 	local funding provided from public or private sources.  Each
2.24 	grant program must include a methodology approved by the
2.25 	commissioner for measuring the financial and health improvement
2.26 	impact of the grantees' actions.  The commissioner must submit a
2.27 	report to the legislature by June 30, 2009, describing the
2.28 	impact of the programs funded under this section.
2.29 	
EFFECTIVE DATE. This section is effective July 1, 2005.

2.30 	Sec. 3. APPROPRIATION.
 2.31 	$....... is appropriated from the general fund to the
2.32 	commissioner of health for the health improvement grant fund for
2.33 	the fiscal year ending June 30, 2006.

2.34 	EFFECTIVE DATE. This section is effective July 1, 2005.

2.35 	ARTICLE 2
2.36 	HEALTHIER MINNESOTANS

3.1 	Section 1. Minnesota Statutes 2004, section 144.412, is
3.2 	amended to read:
3.3 	144.412 PUBLIC POLICY.
3.4 	The purpose of sections 144.411 to 144.417 is to protect
3.5 	the public health, comfort and environment by prohibiting
3.6 	smoking in areas where children or ill or injured persons are
3.7 	present, and employees and the general public from the known
3.8 	hazards of secondhand smoke by limiting eliminating smoking in
3.9 	public places, places of employment, and public transportation 
3.10 	and at public meetings to designated smoking areas.

3.11 	Sec. 2. Minnesota Statutes 2004, section 144.413, is
3.12 	amended by adding a subdivision to read:
3.13 		Subd. 1a.Place of employment. "Place of employment"
3.14 	means any indoor area at which two or more individuals perform
3.15 	any type of a service for consideration of payment under any
3.16 	type of employment relationship, including, but not limited to,
3.17 	an employment relationship with or for a private corporation,
3.18 	partnership, individual, or government agency.  Place of
3.19 	employment includes any location where two or more individuals
3.20 	gratuitously perform services for which individuals are
3.21 	ordinarily paid.  Examples of a place of employment include
3.22 	public conveyances, factories, warehouses, offices, retail
3.23 	stores, restaurants, bars, banquet facilities, theaters, food
3.24 	stores, banks, financial institutions, employee cafeterias,
3.25 	lounges, auditoriums, gymnasiums, restrooms, elevators,
3.26 	hallways, museums, libraries, bowling establishments, employee
3.27 	medical facilities, rooms or areas containing photocopying
3.28 	equipment or other office equipment used in common, vehicles
3.29 	owned or leased by a company if a nonsmoking employee is
3.30 	present, government-owned vehicles, or a similar place of
3.31 	employment.

3.32 	Sec. 3. Minnesota Statutes 2004, section 144.413,
3.33 	subdivision 2, is amended to read:
3.34 		Subd. 2.Public place.  "Public place" means any
3.35 	enclosed, indoor area used by the general public or serving as a
3.36 	place of work, including, but not limited to, restaurants,;
4.1 	bars; outdoor seating at restaurants and bars;retail stores,
4.2 	offices and other commercial establishments, public
4.3 	conveyances,;educational facilities other than public schools,
4.4 	as defined in section 120A.05, subdivisions 9, 11, and 13,;
4.5 	hospitals,;nursing homes,;auditoriums,;arenas,;
4.6 	meeting rooms,;and common areas of rental apartment buildings,
4.7 	but excluding private, enclosed offices occupied exclusively by
4.8 	smokers even though such offices may be visited by nonsmokers.

4.9 	Sec. 4. Minnesota Statutes 2004, section 144.413,
4.10 	subdivision 4, is amended to read:
4.11 		Subd. 4.Smoking.  "Smoking" means the inhaling,
4.12 	exhaling, or combustion of any cigar, cigarette, pipe, or other
4.13 	lighted smoking equipment.  Smoking includes carrying a lighted
4.14 	cigar, cigarette, pipe, or any other lighted smoking equipment.

4.15 	Sec. 5. Minnesota Statutes 2004, section 144.413, is
4.16 	amended by adding a subdivision to read:
4.17 		Subd. 5.Public transportation. "Public transportation"
4.18 	means a public means of transportation, including light and
4.19 	commuter rail transit; buses; enclosed bus and transit stops;
4.20 	taxis, vans, limousines, and other for-hire vehicles other than
4.21 	those being operated by the lessee; and ticketing, boarding, and
4.22 	waiting areas in public transportation terminals.

4.23 	Sec. 6. Minnesota Statutes 2004, section 144.414, is
4.24 	amended to read:
4.25 	144.414 PROHIBITIONS AND EXCEPTIONS.
4.26 		Subdivision 1.Public places, places of employment,
4.27 	public transportation, and public meetings. Smoking shall not
4.28 	be permitted in and no person shall smoke in a public place or ,
4.29 	at a public meeting except in designated smoking areas , in a
4.30 	place of employment, or in public transportation, except as
4.31 	provided in this section or section 144.4167. This prohibition
4.32 	does not apply in cases in which an entire room or hall is used
4.33 	for a private social function and seating arrangements are under
4.34 	the control of the sponsor of the function and not of the
4.35 	proprietor or person in charge of the place.  Furthermore, this
4.36 	prohibition shall not apply to places of work not usually
5.1 	frequented by the general public, except that the state
5.2 	commissioner of health shall establish rules to restrict or
5.3 	prohibit smoking in factories, warehouses, and those places of
5.4 	work where the close proximity of workers or the inadequacy of
5.5 	ventilation causes smoke pollution detrimental to the health and
5.6 	comfort of nonsmoking employees.
5.7 		Subd. 2.Day care premises. Smoking is prohibited in a
5.8 	day care center licensed under Minnesota Rules, parts 9503.0005
5.9 	to 9503.0175, or in a family home or in a group family day care
5.10 	provider home licensed under Minnesota Rules, parts 9502.0300 to
5.11 	9502.0445, during its hours of operation. The proprietor of a
5.12 	family home or group family day care provider must disclose to
5.13 	parents or guardians of children cared for on the premises if
5.14 	the proprietor permits smoking outside of its hours of
5.15 	operation.  Disclosure must include posting on the premises a
5.16 	conspicuous written notice and orally informing parents or
5.17 	guardians.
5.18 		Subd. 3.Health care facilities and clinics. (a) Smoking
5.19 	is prohibited in any area of a hospital, health care clinic,
5.20 	doctor's office, licensed residential facility for children,or
5.21 	other health care-related facility, other than except that a
5.22 	patient or resident in a nursing home, boarding care facility,
5.23 	or licensed residential facility, except as allowed in this
5.24 	subdivision.
5.25 	(b) Smoking by participants in peer reviewed scientific
5.26 	studies related to the health effects of smoking may be allowed
5.27 	in a separated room ventilated at a rate of 60 cubic feet per
5.28 	minute per person pursuant to a policy that is approved by the
5.29 	commissioner and is established by the administrator of the
5.30 	program to minimize exposure of nonsmokers to for adults may 
5.31 	smoke in a designated separate, enclosed room if the room has a
5.32 	separate ventilation system from the rest of the facility.
5.33 		Subd. 4.Public transportation vehicles. Smoking is
5.34 	prohibited in public transportation vehicles except that the
5.35 	driver of a public transportation vehicle may smoke when the
5.36 	vehicle is being used for personal use.  For purposes of this
6.1 	subdivision, "personal use" means that the public transportation
6.2 	vehicle is being used by the driver for private purposes and no
6.3 	for-hire passengers are present.  If a driver smokes as
6.4 	permitted under this subdivision, the driver must post a
6.5 	conspicuous sign inside the vehicle to inform passengers.
6.6 		Subd. 5.Outdoor seating. Smoking is prohibited in the
6.7 	outdoor seating area of a restaurant or bar, except that the
6.8 	proprietor may designate for smoking up to 50 percent of the
6.9 	outdoor seating capacity of the restaurant or bar provided the
6.10 	location is appropriately signed as a smoking area.

6.11 	Sec. 7. Minnesota Statutes 2004, section 144.416, is
6.12 	amended to read:
6.13 	144.416 RESPONSIBILITIES OF PROPRIETORS.
6.14 	(a) The proprietor or other person in charge of a public
6.15 	place, public transportation, place of employment, or public
6.16 	meeting shall make reasonable efforts to prevent smoking in the
6.17 	public place, public transportation, place of employment, or
6.18 	public meeting by:
6.19 	(a) (1) posting appropriate signs or by any other means
6.20 	which may be appropriate; and 
6.21 	(b) arranging seating to provide a smoke-free area;
6.22 	(c) asking smokers to refrain from smoking upon request of
6.23 	a client or employee suffering discomfort from the smoke; or 
6.24 	(d) any other means which may be appropriate.
6.25 	(2) asking any person who smokes in an area where smoking
6.26 	is prohibited to refrain from smoking and, if the person does
6.27 	not refrain from smoking after being asked to do so, asking the
6.28 	person to leave.  If the offending party refuses to leave, the
6.29 	proprietor or other person in charge shall handle the situation
6.30 	consistent with lawful methods for handling other persons acting
6.31 	in a disorderly manner or as a trespasser.
6.32 	(b) The proprietor or other person in charge of a public
6.33 	place, public meeting, public transportation, or place of
6.34 	employment must not provide smoking equipment, including
6.35 	ashtrays or matches, in areas where smoking is prohibited.
6.36 	Nothing in this section prohibits the proprietor or other person
7.1 	in charge from taking more stringent measures than those under
7.2 	sections 144.414 to 144.417 to protect individuals from
7.3 	secondhand smoke.  The proprietor or other person in charge of a
7.4 	restaurant or bar may not serve an individual who is in
7.5 	violation of sections 144.411 to 144.417.

7.6 	Sec. 8. [144.4167] PERMITTED SMOKING.
7.7 		Subdivision 1.Scientific study participants. Smoking by
7.8 	participants in peer reviewed scientific studies related to the
7.9 	health effects of smoking may be allowed in a separated room
7.10 	ventilated at a rate of 60 cubic feet per minute per person
7.11 	pursuant to a policy that is approved by the commissioner and is
7.12 	established by the administrator of the program to minimize
7.13 	exposure of nonsmokers to smoke.
7.14 		Subd. 2.Traditional native american
7.15 	ceremonies. Sections 144.414 to 144.417 do not prohibit the
7.16 	lighting of tobacco by an Indian adult as part of a traditional
7.17 	Indian spiritual or cultural ceremony.  For purposes of this
7.18 	section, an Indian is a person who is a member of an Indian
7.19 	tribe as defined in section 260.755, subdivision 12.
7.20 		Subd. 3.Private places. Except as provided in section
7.21 	144.414, subdivision 2, nothing in sections 144.411 to 144.417
7.22 	prohibits smoking in:
7.23 	(1) private homes, private residences, or private
7.24 	automobiles; or 
7.25 	(2) a hotel or motel sleeping room rented to one or more
7.26 	guests.

7.27 	Sec. 9. Minnesota Statutes 2004, section 144.417, is
7.28 	amended to read:
7.29 	144.417 COMMISSIONER OF HEALTH, ENFORCEMENT,
7.30 	PENALTIES VIOLATIONS.
7.31 		Subdivision 1.Rules. (a) The state commissioner of
7.32 	health shall adopt rules necessary and reasonable to implement
7.33 	the provisions of sections 144.411 to 144.417, except as
7.34 	provided for in section 144.414.
7.35 	(b) Rules implementing sections 144.411 to 144.417 adopted
7.36 	after January 1, 2002, may not take effect until approved by a
8.1 	law enacted after January 1, 2002.  This paragraph does not
8.2 	apply to a rule or severable portion of a rule governing smoking
8.3 	in office buildings, factories, warehouses, or similar places of
8.4 	work, or in health care facilities.  This paragraph does not
8.5 	apply to a rule changing the definition of "restaurant" to make
8.6 	it the same as the definition in section 157.15, subdivision 12.
8.7 		Subd. 2.penalties violations. (a) It is unlawful for
8.8 	any person, firm, limited liability company, corporation, or
8.9 	other entity that owns, manages, operates, or otherwise controls
8.10 	the use of an area in which smoking is prohibited under sections
8.11 	144.414 to 144.417 to fail to comply with sections 144.414 to
8.12 	144.417.  For violations of this subdivision, it is an
8.13 	affirmative defense that during the relevant time period, actual
8.14 	control of the area was not exercised by the respondent, but
8.15 	rather by a lessee, a sublessee, or any other person.  To
8.16 	establish an affirmative defense, the respondent shall submit an
8.17 	affidavit and may submit any other relevant proof indicating
8.18 	that the respondent did not exercise actual control of the area
8.19 	during the relevant time period.  The affidavit and other proof
8.20 	shall be mailed by certified mail to the appropriate enforcement
8.21 	officer within 30 days of receipt of a notice of violation.
8.22 	(b) It is unlawful for an employer whose place of
8.23 	employment is subject to sections 144.414 to 144.417 to fail to
8.24 	comply with sections 144.414 to 144.417.  For violations of
8.25 	sections 144.414 to 144.417, it is an affirmative defense that
8.26 	the employer has made good faith efforts to ensure that
8.27 	employees comply with sections 144.414 to 144.417.
8.28 	(c) It is unlawful for any person to smoke in an area where
8.29 	smoking is prohibited or restricted under sections 144.414 to
8.30 	144.417.
8.31 	(d) Any person who violates section 144.414 or
8.32 	144.4165 paragraph (c) is guilty of a petty misdemeanor.
8.33 	(e) A proprietor or person in charge of a public place, a
8.34 	public meeting, a place of employment, or public transportation
8.35 	must not retaliate or take adverse action against an employee or
8.36 	anyone else who, in good faith, reports a violation of sections
9.1 	144.414 to 144.417 to the proprietor or person in charge of the
9.2 	public place, public meeting, place of employment, or public
9.3 	transportation or to the commissioner of health or other
9.4 	designee responsible for enforcing sections 144.414 to 144.417.
9.5 	(f) No person or employer shall discharge, refuse to hire,
9.6 	penalize, discriminate against, or in any manner retaliate
9.7 	against any employee, applicant for employment, or customer
9.8 	because the employee, applicant, or customer exercises any right
9.9 	to a smoke-free environment provided by sections 144.414 to
9.10 	144.417 or other law.
9.11 		Subd. 3.Injunction. The state commissioner of health, a
9.12 	board of health as defined in section 145A.02, subdivision 2, or
9.13 	any affected party may institute an action in any court with
9.14 	jurisdiction to enjoin repeated violations of section 144.416 or
9.15 	144.4165 sections 144.414 to 144.417.

9.16 	Sec. 10. Minnesota Statutes 2004, section 297F.05,
9.17 	subdivision 1, is amended to read:
9.18 		Subdivision 1.Rates; cigarettes.  A tax is imposed upon
9.19 	the sale of cigarettes in this state, upon having cigarettes in
9.20 	possession in this state with intent to sell, upon any person
9.21 	engaged in business as a distributor, and upon the use or
9.22 	storage by consumers, at the following rates:
9.23 	(1) on cigarettes weighing not more than three pounds per
9.24 	thousand, 24 74 mills on each such cigarette; and
9.25 	(2) on cigarettes weighing more than three pounds per
9.26 	thousand, 48 148 mills on each such cigarette.

9.27 	Sec. 11. Minnesota Statutes 2004, section 297F.05,
9.28 	subdivision 3, is amended to read:
9.29 		Subd. 3.Rates; tobacco products.  A tax is imposed upon
9.30 	all tobacco products in this state and upon any person engaged
9.31 	in business as a distributor, at the rate of 35 108 percent of
9.32 	the wholesale sales price of the tobacco products.  The tax is
9.33 	imposed at the time the distributor:
9.34 	(1) brings, or causes to be brought, into this state from
9.35 	outside the state tobacco products for sale;
9.36 	(2) makes, manufactures, or fabricates tobacco products in
10.1 	this state for sale in this state; or
10.2 	(3) ships or transports tobacco products to retailers in
10.3 	this state, to be sold by those retailers.

10.4 	Sec. 12. Minnesota Statutes 2004, section 297F.05,
10.5 	subdivision 4, is amended to read:
10.6 		Subd. 4.Use tax; tobacco products.  A tax is imposed
10.7 	upon the use or storage by consumers of tobacco products in this
10.8 	state, and upon such consumers, at the rate of 35 108 percent of
10.9 	the cost to the consumer of the tobacco products.

10.10 	Sec. 13. Minnesota Statutes 2004, section 297F.08,
10.11 	subdivision 7, is amended to read:
10.12 		Subd. 7.Price of stamps.  The commissioner shall sell
10.13 	stamps to any person licensed as a distributor at a discount of
10.14 	.32 percent from the face amount of the stamps for the first
10.15 	$1,500,000 of such stamps purchased in any fiscal year and at a
10.16 	discount of .19 percent on the remainder of such stamps
10.17 	purchased in any fiscal year.  The commissioner shall not sell
10.18 	stamps to any other person.  The commissioner may prescribe the
10.19 	method of shipment of the stamps to the distributor as well as
10.20 	the quantities of stamps purchased.

10.21 	Sec. 14. Minnesota Statutes 2004, section 297F.09,
10.22 	subdivision 2, is amended to read:
10.23 		Subd. 2.Monthly return; tobacco products distributor.
 10.24 	On or before the 18th day of each calendar month, a distributor
10.25 	with a place of business in this state shall file a return with
10.26 	the commissioner showing the quantity and wholesale sales price
10.27 	of each tobacco product:
10.28 	(1) brought, or caused to be brought, into this state for
10.29 	sale; and
10.30 	(2) made, manufactured, or fabricated in this state for
10.31 	sale in this state, during the preceding calendar month.
10.32 	Every licensed distributor outside this state shall in like
10.33 	manner file a return showing the quantity and wholesale sales
10.34 	price of each tobacco product shipped or transported to
10.35 	retailers in this state to be sold by those retailers, during
10.36 	the preceding calendar month.  Returns must be made in the form
11.1 	and manner prescribed by the commissioner and must contain any
11.2 	other information required by the commissioner.  The return must
11.3 	be accompanied by a remittance for the full tax liability shown,
11.4 	less .49 percent of the liability as compensation to reimburse
11.5 	the distributor for expenses incurred in the administration of
11.6 	this chapter.  The return for the May liability and 85 percent
11.7 	of the estimated June liability is due on the date payment of
11.8 	the tax is due.

11.9 	Sec. 15. Minnesota Statutes 2004, section 297F.10, is
11.10 	amended to read:
11.11 	297F.10 DEPOSIT OF PROCEEDS.
11.12 		Subdivision 1.Tax and use tax on cigarettes. Revenue
11.13 	received from cigarette taxes, as well as related penalties,
11.14 	interest, license fees, and miscellaneous sources of revenue
11.15 	shall be deposited by the commissioner in the state treasury and
11.16 	credited as follows:
11.17 	(1) the revenue produced by 3.25 mills of the tax on
11.18 	cigarettes weighing not more than three pounds a thousand and
11.19 	6.5 mills of the tax on cigarettes weighing more than three
11.20 	pounds a thousand must be credited to the Academic Health Center
11.21 	special revenue fund hereby created and is annually appropriated
11.22 	to the Board of Regents at the University of Minnesota for
11.23 	Academic Health Center funding at the University of Minnesota;
11.24 	and
11.25 	(2) the revenue produced by 1.25 mills of the tax on
11.26 	cigarettes weighing not more than three pounds a thousand and
11.27 	2.5 mills of the tax on cigarettes weighing more than three
11.28 	pounds a thousand must be credited to the medical education and
11.29 	research costs account hereby created in the special revenue
11.30 	fund and is annually appropriated to the commissioner of health
11.31 	for distribution under section 62J.692, subdivision 4; and
11.32 	(3) the balance of the revenues derived from taxes,
11.33 	penalties, and interest (under this chapter) and from license
11.34 	fees and miscellaneous sources of revenue shall be credited to
11.35 	the general fund, except that the revenue produced by 50 mills
11.36 	of the tax on cigarettes weighing not more than three pounds a
12.1 	thousand and 100 mills of the tax on cigarettes weighing more
12.2 	than three pounds a thousand must be credited to the health care
12.3 	access fund.
12.4 		Subd. 2.Tax and use tax on tobacco products. Revenue
12.5 	received from taxes on tobacco products, as well as related
12.6 	penalties, interest, and license fees shall be deposited by the
12.7 	commissioner in the state treasury and credited to the general
12.8 	fund, except that the revenue produced by 73 percent of the
12.9 	wholesale price of taxable tobacco products must be credited to
12.10 	the health care access fund.

12.11 	Sec. 16. FLOOR STOCKS TAX.
 12.12 		Subdivision 1.Cigarettes. (a) A floor stocks tax is
12.13 	imposed on every person engaged in business in this state as a
12.14 	distributor, retailer, subjobber, vendor, manufacturer, or
12.15 	manufacturer's representative of cigarettes, on the stamped
12.16 	cigarettes and unaffixed stamps in the person's possession or
12.17 	under the person's control at 12:01 a.m. on January 1, 2006.
12.18 	The tax is imposed at the following rates, subject to the
12.19 	discounts in Minnesota Statutes, section 297F.08, subdivision 7:
12.20 	(1) on cigarettes weighing not more than three pounds per
12.21 	thousand, 50 mills on each cigarette; and 
12.22 	(2) on cigarettes weighing more than three pounds per
12.23 	thousand, 100 mills on each cigarette.
12.24 	(b) Each distributor, by January .., 2006, shall file a
12.25 	report with the commissioner of revenue, in the form the
12.26 	commissioner prescribes, showing the stamped cigarettes and
12.27 	unaffixed stamps on hand at 12:01 a.m. on January 1, 2006, and
12.28 	the amount of tax due on the cigarettes and unaffixed stamps.
12.29 	The tax imposed by this section is due and payable by February
12.30 	1, 2006, and after that date bears interest as provided in
12.31 	Minnesota Statutes, section 270.75.  Each retailer, subjobber,
12.32 	vendor, manufacturer, or manufacturer's representative shall
12.33 	file a return with the commissioner, in the form the
12.34 	commissioner prescribes, showing the cigarettes on hand at 12:01
12.35 	a.m. on January 1, 2006, and pay the tax due on them by February
12.36 	1, 2006.  Tax not paid by the due date bears interest as
13.1 	provided in Minnesota Statutes, section 270.75.
13.2 		Subd. 2.Tobacco products. A floor stocks tax is imposed
13.3 	on every person engaged in business in this state as a
13.4 	distributor of tobacco products, at the rate of 73 percent of
13.5 	the wholesale sales price of each tobacco product in the
13.6 	person's possession or under the person's control at 12:01 a.m.
13.7 	on January 1, 2006, and the amount of tax due on them.  The tax
13.8 	imposed by this section, less the discount provided in Minnesota
13.9 	Statutes, section 297F.09, subdivision 2, is due and payable by
13.10 	February 1, 2006, and thereafter bears interest as provided in
13.11 	Minnesota Statutes, section 270.75.
13.12 		Subd. 3.Audit and enforcement. The tax imposed by this
13.13 	section is subject to the audit, assessment, and collection
13.14 	provisions applicable to the taxes imposed under Minnesota
13.15 	Statutes, chapter 297F.  The commissioner of revenue shall
13.16 	deposit the revenue from the tax imposed under this section in
13.17 	the health care access fund in the state treasury.

13.18 	Sec. 17. LOCAL GOVERNMENT ORDINANCES.
 13.19 	Nothing in Minnesota Statutes, sections 144.414 to 144.417,
13.20 	prohibits a statutory or home rule charter city or county from
13.21 	enacting and enforcing more stringent measures to protect
13.22 	individuals from secondhand smoke.

13.23 	Sec. 18. REPEALER.
 13.24 	Minnesota Statutes 2004, section 144.415, is repealed.

13.25 	Sec. 19. EFFECTIVE DATE.
 13.26 	Sections 1 to 18 are effective January 1, 2006.

13.27 	ARTICLE 3
13.28 	HEALTH INSURANCE REFORM

13.29 	Section 1. [62Q.166] UNIVERSAL HEALTH COVERAGE.
13.30 		Subdivision 1.Requirement of coverage. (a) Each
13.31 	Minnesota resident shall obtain and maintain health coverage
13.32 	that includes at least the essential benefit set described in
13.33 	section 62Q.167.
13.34 	(b) A person who becomes a Minnesota resident must obtain
13.35 	the coverage no later than 30 days after becoming a Minnesota
13.36 	resident.
14.1 	(c) A child must have the coverage from the moment of birth.
14.2 		Subd. 2.Essential benefit set. (a) Every health plan
14.3 	offered, issued, sold, or renewed to cover a Minnesota resident
14.4 	must include the essential benefit set described in section
14.5 	62Q.167.
14.6 	(b) A health plan may include coverage in addition to the
14.7 	essential benefit set, provided that the additional coverages
14.8 	are provided as optional coverage, for a separately stated
14.9 	premium.
14.10 		Subd. 3.Guaranteed issue. (a) Each health plan company
14.11 	shall offer, sell, issue, or renew the essential benefit set on
14.12 	a guaranteed issue basis, as defined in section 62Q.18,
14.13 	subdivision 1, clause (2).
14.14 	(b) Optional coverages under subdivision 2, paragraph (b),
14.15 	need not be provided on a guaranteed issue basis.
14.16 		Subd. 4.Community rating. (a) The premium rate for the
14.17 	essential benefit set must not vary based upon age, health
14.18 	history, or status, whether coverage is group or individual,
14.19 	gender, geographic location, purchase of additional coverage, or
14.20 	any other factor except as permitted under paragraph (b).
14.21 	(b) Premium rates for the essential benefit set may vary to
14.22 	reflect actuarially valid differences attributable to nonuse of
14.23 	tobacco, compliance with recommended health screenings and
14.24 	preventive care, or other health-promoting behaviors.  Premium
14.25 	rate variations must be approved by the commissioner prior to
14.26 	their use.
14.27 	(c) Paragraphs (a) and (b) do not apply to optional
14.28 	coverage provided as an addition to the essential benefit set.
14.29 	
EFFECTIVE DATE. This section is effective January 1, 2007.

14.30 	Sec. 2. [62Q.167] ESSENTIAL HEALTH CARE BENEFITS.
14.31 		Subdivision 1.Report and draft legislation. (a) The
14.32 	commissioners of commerce, health, and human services shall
14.33 	convene an expert advisory committee, including physicians,
14.34 	researchers, actuaries, human resources professionals, medical
14.35 	educators, quality improvement professionals, and other persons
14.36 	with expertise in assessing evidence of treatment effectiveness,
15.1 	determining health plan benefits, and determining the costs of
15.2 	health plan benefits to develop a report, recommendations, and
15.3 	proposed legislation to establish an essential health care
15.4 	benefit set that will serve as the consistent core of coverage
15.5 	for all licensed health plan products.  The essential benefits
15.6 	must cover those health care services that are essential for the
15.7 	protection of individual and public health and effective in
15.8 	treating a health condition.
15.9 	(b) The legislation must include at least the following:
15.10 	(1) the criteria and methods for determining whether the
15.11 	covered services, drugs, and equipment are essential;
15.12 	(2) the criteria and methods for determining effectiveness,
15.13 	which must be consistent with those established under section
15.14 	62J.43;
15.15 	(3) a list of the services, drugs, and equipment that must
15.16 	be covered based on the criteria in paragraph (a).
15.17 	Age-appropriate health risk assessment must be covered for all
15.18 	patients and behavioral health services must be covered on the
15.19 	same basis as any other health care service; and 
15.20 	(4) a process for continuous review and updating of the
15.21 	essential health care benefit set.
15.22 		Subd. 2.Relation to other health coverage plans. The
15.23 	proposed legislation must include changes to existing laws
15.24 	governing health plans to require that all health plan companies
15.25 	as defined in section 62A.011, subdivision 3, must offer among
15.26 	their other products a product that covers only the essential
15.27 	benefits.  All other products offered must cover at least the
15.28 	essential benefits.  Products that offer additional coverage
15.29 	must separately itemize the cost of the essential benefits and
15.30 	the cost of the additional coverage.
15.31 		Subd. 3.Public programs. In conjunction with the
15.32 	report, recommendations, and proposed legislation required under
15.33 	subdivision 1, the commissioner of human services shall submit
15.34 	recommendations and proposed legislation for establishing the
15.35 	essential benefits as the core coverage for medical assistance,
15.36 	general assistance medical care, and MinnesotaCare.
16.1 		Subd. 4.Community input. During the process of
16.2 	preparing the reports, recommendations, and proposed legislation
16.3 	required under this section, the commissioners shall obtain
16.4 	community input through public meetings, surveys, focus groups,
16.5 	and other appropriate means.  The report must include a
16.6 	description of community input activities, a description of the
16.7 	input received, the commissioners' findings and conclusions, and
16.8 	how community input was used in the preparation of the report,
16.9 	recommendations, and proposed legislation.
16.10 		Subd. 5.Timeline. The report and proposed legislation
16.11 	must be submitted to the legislature by November 15, 2005.  The
16.12 	proposed legislation must call for an effective date of January
16.13 	1, 2007, for the implementation of requirements related to the
16.14 	essential benefit set.
16.15 	
EFFECTIVE DATE. This section is effective July 1, 2005.

16.16 	Sec. 3. Minnesota Statutes 2004, section 290.01,
16.17 	subdivision 19b, is amended to read:
16.18 		Subd. 19b.Subtractions from federal taxable income.  For
16.19 	individuals, estates, and trusts, there shall be subtracted from
16.20 	federal taxable income:
16.21 	(1) interest income on obligations of any authority,
16.22 	commission, or instrumentality of the United States to the
16.23 	extent includable in taxable income for federal income tax
16.24 	purposes but exempt from state income tax under the laws of the
16.25 	United States;
16.26 	(2) if included in federal taxable income, the amount of
16.27 	any overpayment of income tax to Minnesota or to any other
16.28 	state, for any previous taxable year, whether the amount is
16.29 	received as a refund or as a credit to another taxable year's
16.30 	income tax liability;
16.31 	(3) the amount paid to others, less the amount used to
16.32 	claim the credit allowed under section 290.0674, not to exceed
16.33 	$1,625 for each qualifying child in grades kindergarten to 6 and
16.34 	$2,500 for each qualifying child in grades 7 to 12, for tuition,
16.35 	textbooks, and transportation of each qualifying child in
16.36 	attending an elementary or secondary school situated in
17.1 	Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
17.2 	wherein a resident of this state may legally fulfill the state's
17.3 	compulsory attendance laws, which is not operated for profit,
17.4 	and which adheres to the provisions of the Civil Rights Act of
17.5 	1964 and chapter 363A.  For the purposes of this clause,
17.6 	"tuition" includes fees or tuition as defined in section
17.7 	290.0674, subdivision 1, clause (1).  As used in this clause,
17.8 	"textbooks" includes books and other instructional materials and
17.9 	equipment purchased or leased for use in elementary and
17.10 	secondary schools in teaching only those subjects legally and
17.11 	commonly taught in public elementary and secondary schools in
17.12 	this state.  Equipment expenses qualifying for deduction
17.13 	includes expenses as defined and limited in section 290.0674,
17.14 	subdivision 1, clause (3).  "Textbooks" does not include
17.15 	instructional books and materials used in the teaching of
17.16 	religious tenets, doctrines, or worship, the purpose of which is
17.17 	to instill such tenets, doctrines, or worship, nor does it
17.18 	include books or materials for, or transportation to,
17.19 	extracurricular activities including sporting events, musical or
17.20 	dramatic events, speech activities, driver's education, or
17.21 	similar programs.  For purposes of the subtraction provided by
17.22 	this clause, "qualifying child" has the meaning given in section
17.23 	32(c)(3) of the Internal Revenue Code;
17.24 	(4) income as provided under section 290.0802;
17.25 	(5) to the extent included in federal adjusted gross
17.26 	income, income realized on disposition of property exempt from
17.27 	tax under section 290.491;
17.28 	(6) to the extent included in federal taxable income,
17.29 	postservice benefits for youth community service under section
17.30 	124D.42 for volunteer service under United States Code, title
17.31 	42, sections 12601 to 12604;
17.32 	(7) to the extent not deducted in determining federal
17.33 	taxable income by an individual who does not itemize deductions
17.34 	for federal income tax purposes for the taxable year, an amount
17.35 	equal to 50 percent of the excess of charitable contributions
17.36 	allowable as a deduction for the taxable year under section
18.1 	170(a) of the Internal Revenue Code over $500;
18.2 	(8) for taxable years beginning before January 1, 2008, the
18.3 	amount of the federal small ethanol producer credit allowed
18.4 	under section 40(a)(3) of the Internal Revenue Code which is
18.5 	included in gross income under section 87 of the Internal
18.6 	Revenue Code;
18.7 	(9) for individuals who are allowed a federal foreign tax
18.8 	credit for taxes that do not qualify for a credit under section
18.9 	290.06, subdivision 22, an amount equal to the carryover of
18.10 	subnational foreign taxes for the taxable year, but not to
18.11 	exceed the total subnational foreign taxes reported in claiming
18.12 	the foreign tax credit.  For purposes of this clause, "federal
18.13 	foreign tax credit" means the credit allowed under section 27 of
18.14 	the Internal Revenue Code, and "carryover of subnational foreign
18.15 	taxes" equals the carryover allowed under section 904(c) of the
18.16 	Internal Revenue Code minus national level foreign taxes to the
18.17 	extent they exceed the federal foreign tax credit;
18.18 	(10) in each of the five tax years immediately following
18.19 	the tax year in which an addition is required under subdivision
18.20 	19a, clause (7), an amount equal to one-fifth of the delayed
18.21 	depreciation.  For purposes of this clause, "delayed
18.22 	depreciation" means the amount of the addition made by the
18.23 	taxpayer under subdivision 19a, clause (7), minus the positive
18.24 	value of any net operating loss under section 172 of the
18.25 	Internal Revenue Code generated for the tax year of the
18.26 	addition.  The resulting delayed depreciation cannot be less
18.27 	than zero; and 
18.28 	(11) job opportunity building zone income as provided under
18.29 	section 469.316; and 
18.30 	(12) to the extent not deducted in determining federal
18.31 	taxable income, amounts paid for health coverage described as
18.32 	the essential benefit set in subdivision 19c.
18.33 	
EFFECTIVE DATE. This section is effective January 1, 2007.

18.34 	Sec. 4. Minnesota Statutes 2004, section 290.01,
18.35 	subdivision 19c, is amended to read:
18.36 		Subd. 19c.Corporations; additions to federal taxable
19.1 	income.  For corporations, there shall be added to federal
19.2 	taxable income:
19.3 	(1) the amount of any deduction taken for federal income
19.4 	tax purposes for income, excise, or franchise taxes based on net
19.5 	income or related minimum taxes, including but not limited to
19.6 	the tax imposed under section 290.0922, paid by the corporation
19.7 	to Minnesota, another state, a political subdivision of another
19.8 	state, the District of Columbia, or any foreign country or
19.9 	possession of the United States;
19.10 	(2) interest not subject to federal tax upon obligations
19.11 	of:  the United States, its possessions, its agencies, or its
19.12 	instrumentalities; the state of Minnesota or any other state,
19.13 	any of its political or governmental subdivisions, any of its
19.14 	municipalities, or any of its governmental agencies or
19.15 	instrumentalities; the District of Columbia; or Indian tribal
19.16 	governments;
19.17 	(3) exempt-interest dividends received as defined in
19.18 	section 852(b)(5) of the Internal Revenue Code;
19.19 	(4) the amount of any net operating loss deduction taken
19.20 	for federal income tax purposes under section 172 or 832(c)(10)
19.21 	of the Internal Revenue Code or operations loss deduction under
19.22 	section 810 of the Internal Revenue Code;
19.23 	(5) the amount of any special deductions taken for federal
19.24 	income tax purposes under sections 241 to 247 of the Internal
19.25 	Revenue Code;
19.26 	(6) losses from the business of mining, as defined in
19.27 	section 290.05, subdivision 1, clause (a), that are not subject
19.28 	to Minnesota income tax;
19.29 	(7) the amount of any capital losses deducted for federal
19.30 	income tax purposes under sections 1211 and 1212 of the Internal
19.31 	Revenue Code;
19.32 	(8) the exempt foreign trade income of a foreign sales
19.33 	corporation under sections 921(a) and 291 of the Internal
19.34 	Revenue Code;
19.35 	(9) the amount of percentage depletion deducted under
19.36 	sections 611 through 614 and 291 of the Internal Revenue Code;
20.1 	(10) for certified pollution control facilities placed in
20.2 	service in a taxable year beginning before December 31, 1986,
20.3 	and for which amortization deductions were elected under section
20.4 	169 of the Internal Revenue Code of 1954, as amended through
20.5 	December 31, 1985, the amount of the amortization deduction
20.6 	allowed in computing federal taxable income for those
20.7 	facilities;
20.8 	(11) the amount of any deemed dividend from a foreign
20.9 	operating corporation determined pursuant to section 290.17,
20.10 	subdivision 4, paragraph (g);
20.11 	(12) the amount of any environmental tax paid under section
20.12 	59(a) of the Internal Revenue Code;
20.13 	(13) the amount of a partner's pro rata share of net income
20.14 	which does not flow through to the partner because the
20.15 	partnership elected to pay the tax on the income under section
20.16 	6242(a)(2) of the Internal Revenue Code;
20.17 	(14) the amount of net income excluded under section 114 of
20.18 	the Internal Revenue Code;
20.19 	(15) any increase in subpart F income, as defined in
20.20 	section 952(a) of the Internal Revenue Code, for the taxable
20.21 	year when subpart F income is calculated without regard to the
20.22 	provisions of section 614 of Public Law 107-147; and 
20.23 	(16) 80 percent of the depreciation deduction allowed under
20.24 	section 168(k) of the Internal Revenue Code.  For purposes of
20.25 	this clause, if the taxpayer has an activity that in the taxable
20.26 	year generates a deduction for depreciation under section 168(k)
20.27 	and the activity generates a loss for the taxable year that the
20.28 	taxpayer is not allowed to claim for the taxable year, "the
20.29 	depreciation allowed under section 168(k)" for the taxable year
20.30 	is limited to excess of the depreciation claimed by the activity
20.31 	under section 168(k) over the amount of the loss from the
20.32 	activity that is not allowed in the taxable year.  In succeeding
20.33 	taxable years when the losses not allowed in the taxable year
20.34 	are allowed, the depreciation under section 168(k) is allowed;
20.35 	and 
20.36 	(17) the amount of expense claimed for payment of employee
21.1 	health benefits that exceeds the value of the amount paid for
21.2 	the essential health care benefits established under section
21.3 	62Q.167.
21.4 	
EFFECTIVE DATE. This section is effective January 1, 2007.

21.5 	Sec. 5. DESIGN OF HEALTH REINSURANCE POOL.
 21.6 	The commissioner of commerce shall, no later than November
21.7 	15, 2005, present to the legislature a plan for reactivating the
21.8 	reinsurance pool established under Minnesota Statutes, sections
21.9 	62L.13 to 62L.23, and converting it to a reinsurance pool for
21.10 	high-cost cases in the entire individual and group market in
21.11 	this state.

21.12 	EFFECTIVE DATE. This section is effective July 1, 2005.

21.13 	Sec. 6. NETWORK HEALTH PLANS.
 21.14 	The commissioner of commerce shall, no later than January
21.15 	1, 2006, prepare a report, recommendations, and proposed
21.16 	legislation to prohibit health plan companies from offering
21.17 	coverage plans that limit or restrict a member's ability to
21.18 	obtain coverage from a qualified provider of the member's
21.19 	choosing.  The report, recommendations, and proposed legislation
21.20 	must include recommended changes to laws and rules governing
21.21 	health plan limits on balance billing, co-payments, deductibles,
21.22 	and out-of-pocket maximum benefits that are deemed by the
21.23 	commissioner to be appropriate.  The report shall be based upon
21.24 	an effective date of the proposed legislation of January 1, 2008.

21.25 	EFFECTIVE DATE. This section is effective July 1, 2005.

21.26 	Sec. 7. ENFORCEMENT OF COVERAGE REQUIREMENT.
 21.27 	The commissioner of health shall prepare and submit to the
21.28 	legislature by December 15, 2005, a report with recommendations
21.29 	and proposed legislation for enforcing the requirement that all
21.30 	individuals maintain continuous health coverage under Minnesota
21.31 	Statutes, section 62Q.166, subdivision 1.  In preparing the
21.32 	report, the commissioner shall consider whether to require
21.33 	evidence of coverage for applying for a driver's license,
21.34 	registering for school, or filing state income tax returns.

21.35 	EFFECTIVE DATE. This section is effective July 1, 2005.

21.36 	Sec. 8. APPROPRIATIONS.
 22.1 	The following amounts are appropriated from the general
22.2 	fund to the respective commissioners for the fiscal year ending
22.3 	June 30, 2006, to implement this article:
22.4 	(1) commissioner of commerce:  $.......;
22.5 	(2) commissioner of human services:  $.......; and 
22.6 	(3) commissioner of health:  $........

22.7 	EFFECTIVE DATE. This section is effective July 1, 2005.

22.8 	ARTICLE 4
22.9 	IMPROVING VALUE IN HEALTH CARE PURCHASING

22.10 	Section 1. INFORMATION FOR HEALTH CARE PURCHASING.
 22.11 		Subdivision 1.Purpose. It is the intent of the
22.12 	legislature to promote and support a health care purchasing
22.13 	system for public and private purchasers of health care that
22.14 	promotes individual consumer choice based on the value of health
22.15 	care services, drugs, and equipment.  A necessary component of
22.16 	value-based health care purchasing is convenient access to
22.17 	information about differences in quality and costs.
22.18 		Subd. 2.Quality disclosure. The state agency
22.19 	commissioners serving on the governor's Health Care Cabinet, in
22.20 	cooperation with organizations representing consumers,
22.21 	employers, physicians and other health professionals, hospitals,
22.22 	long-term care facilities, health plan companies, quality
22.23 	improvement organizations, research and education institutions,
22.24 	and other appropriate constituencies, shall identify and
22.25 	contract with a private, nonprofit organization to serve as a
22.26 	statewide source of comparative information on health care
22.27 	quality.
22.28 		Subd. 3.Cost information. The commissioner of health,
22.29 	in cooperation with other appropriate state agencies and in
22.30 	consultation with an advisory committee representing purchasers,
22.31 	consumers, physicians and other health care professionals,
22.32 	health plan companies, health care facilities and other health
22.33 	care organizations, and other interested persons and groups,
22.34 	shall develop a plan, no later than January 1, 2006, for the
22.35 	development of useful, reliable, and valid information on cost
22.36 	to support purchasing of health care based on value.
23.1 	
EFFECTIVE DATE. This section is effective July 1, 2005.

23.2 	ARTICLE 5
23.3 	HIGH-QUALITY CARE

23.4 	Section 1. Minnesota Statutes 2004, section 62J.43, is
23.5 	amended to read:
23.6 	62J.43  BEST PRACTICES EVIDENCE-BASED HEALTH CARE
23.7 	GUIDELINES AND QUALITY IMPROVEMENT.
23.8 	(a) Subdivision 1.[ADOPTION OF GUIDELINES.] To improve
23.9 	quality and reduce health care costs, state agencies shall
23.10 	encourage the adoption use of best practice evidence-based
23.11 	health care guidelines and participation in best practices 
23.12 	quality measurement activities by physicians, other health care
23.13 	providers, and health plan companies.  The commissioner of
23.14 	health shall facilitate access to best practice evidence-based
23.15 	health care guidelines and quality of care measurement
23.16 	information to providers, purchasers, and consumers by:
23.17 	(1) identifying and promoting local community-based,
23.18 	physician-designed best practices care evidence-based health
23.19 	care guidelines across the Minnesota health care system;
23.20 	(2) disseminating information available to the commissioner
23.21 	on adherence to best practices care evidence-based health care
23.22 	guidelines by physicians and other health care providers in
23.23 	Minnesota;
23.24 	(3) educating consumers and purchasers on how to
23.25 	effectively use this information in choosing their providers and
23.26 	in making purchasing decisions; and
23.27 	(4) making best practices evidence-based health care
23.28 	guidelines and quality care measurement information available to
23.29 	enrollees and program participants through the Department of
23.30 	Health's Web site.  The commissioner may convene an advisory
23.31 	committee to ensure that the Web site is designed to provide
23.32 	user friendly and easy accessibility.
23.33 	(b) Subd. 2.[COLLABORATION WITH MINNESOTA NONPROFIT
23.34 	ORGANIZATION.] The commissioner of health shall collaborate with
23.35 	a nonprofit Minnesota quality improvement organization
23.36 	specializing in best practices and quality of care measurements
24.1 	to provide best practices evidence-based health care guidelines 
24.2 	criteria and assist in the collection of the data.
24.3 	(c) Subd. 3.[CRITERIA FOR EVIDENCE-BASED
24.4 	GUIDELINES.] Guidelines identified under this section must meet
24.5 	the following criteria:
24.6 	(1) the scope and application are clear;
24.7 	(2) authorship is stated and any conflicts of interest
24.8 	disclosed;
24.9 	(3) authors represent all pertinent clinical fields or
24.10 	other means of input have been used;
24.11 	(4) the development process is explicitly stated;
24.12 	(5) the guideline is grounded in evidence;
24.13 	(6) the evidence is cited and graded;
24.14 	(7) the document itself is clear and practical;
24.15 	(8) the document is flexible in use, with exceptions noted
24.16 	or provided for with general statements;
24.17 	(9) measures are included for use in systems improvement;
24.18 	and 
24.19 	(10) the guideline has scheduled reviews and updating.
24.20 		Subd. 4.Initial evidence-based health care guidelines.
 24.21 	The initial best practices evidence-based health care guidelines 
24.22 	and quality of care measurement criteria developed shall include
24.23 	asthma, diabetes, and at least two other preventive health
24.24 	measures.  Hypertension and coronary artery disease shall be
24.25 	included within one year following availability.
24.26 	(d) Subd. 5.[USE IN STATE CONTRACTS WITH HEALTH PLANS.]
24.27 	The commissioners of human services and employee relations may
24.28 	use the data to make decisions about contracts they enter into
24.29 	with health plan companies and shall develop a financial reward
24.30 	program that compensates health care practices that implement
24.31 	effective quality improvement programs or systems in their
24.32 	practices, including, but not limited to, clinical information
24.33 	systems, patient education and support, and case and disease
24.34 	management.
24.35 	(e) Subd. 6.[LIMITATIONS.] This section does not apply if
24.36 	the best practices evidence-based health care guidelines
25.1 	authorize or recommend denial of treatment, food, or fluids
25.2 	necessary to sustain life on the basis of the patient's age or
25.3 	expected length of life or the patient's present or predicted
25.4 	disability, degree of medical dependency, or quality of life.
25.5 	(f) The commissioner of health, human services, and
25.6 	employee relations shall report to the legislature by January
25.7 	15, 2005, on the status of best practices and quality of care
25.8 	initiatives, and shall present recommendations to the
25.9 	legislature on any statutory changes needed to increase the
25.10 	effectiveness of these initiatives.
25.11 	(g) This section expires June 30, 2006.
25.12 	
EFFECTIVE DATE. This section is effective July 1, 2005.

25.13 	Sec. 2. [62J.82] ELECTRONIC MEDICAL RECORD SYSTEM LOAN
25.14 	PROGRAM.
25.15 		Subdivision 1.Establishment. The commissioner shall
25.16 	establish and implement a loan program to help physicians or
25.17 	physician group practices obtain the necessary finances to
25.18 	install an electronic medical record system.
25.19 		Subd. 2.Rules. The commissioner may adopt rules to
25.20 	administer the loan program.
25.21 		Subd. 3.Eligibility. To be eligible for a loan under
25.22 	this section, the borrower must:
25.23 	(1) have a signed contract with a vendor;
25.24 	(2) be a physician licensed in this state or a physician
25.25 	group practice located in this state;
25.26 	(3) provide evidence of financial stability;
25.27 	(4) demonstrate an ability to repay the loan;
25.28 	(5) demonstrate that the borrower has explored possible
25.29 	alliances or contractual opportunities with other provider
25.30 	groups located in the same geographical area to become part of
25.31 	the larger provider group's system; and 
25.32 	(6) meet any other requirement the commissioner imposes by
25.33 	administrative procedure or by rule.
25.34 		Subd. 4.Loans. (a) The commissioner may make a direct
25.35 	loan to a provider or provider group who is eligible under
25.36 	subdivision 3.  The total accumulative loan principal must not
26.1 	exceed $65,000 per loan.
26.2 	(b) The commissioner may prescribe forms and establish an
26.3 	application process and, notwithstanding section 16A.1283, may
26.4 	impose a reasonable nonrefundable application fee to cover the
26.5 	cost of administering the loan program.
26.6 	(c) Loan principal balance outstanding plus all assessed
26.7 	interest must be repaid no later than 15 years from the date of
26.8 	the loan.
26.9 	
EFFECTIVE DATE. This section is effective July 1, 2005.

26.10 	Sec. 3. [62J.83] ELECTRONIC MEDICAL RECORD SYSTEM LOAN
26.11 	FUND.
26.12 		Subdivision 1.Creation. The electronic medical record
26.13 	system loan fund is established as a special account in the
26.14 	state treasury.  All application fees, loan repayments, and
26.15 	other revenue received under section 62J.82 must be credited to
26.16 	the fund.
26.17 		Subd. 2.Bond proceeds account. An electronic medical
26.18 	record system revenue bond proceeds account is established in
26.19 	the electronic medical record system loan fund.  The proceeds of
26.20 	any bonds issued under section 62J.84 must be credited to the
26.21 	account.  Money in the account is appropriated to the
26.22 	commissioner to make loans under section 62J.82.
26.23 		Subd. 3.Debt service account. An electronic medical
26.24 	record system revenue bond debt service account is established
26.25 	in the electronic medical record system loan fund.  There must
26.26 	be credited to this debt service account in each fiscal year
26.27 	from the income to the electronic medical record system loan
26.28 	fund an amount sufficient to increase the balance on hand in the
26.29 	debt service account on each December 1 to an amount equal to
26.30 	the full amount of principal and interest to come due on all
26.31 	outstanding bonds issued under section 62J.84 to and including
26.32 	the second following July 1.  The assets of the account are
26.33 	pledged to and may only be used to pay principal and interest on
26.34 	bonds issued under section 62J.84.  Money in the debt service
26.35 	account is appropriated to the commissioner of finance to pay
26.36 	principal and interest on bonds issued under section 62J.84.
27.1 		Subd. 4.Appropriation. Money in the electronic medical
27.2 	record system loan fund not otherwise appropriated is
27.3 	appropriated to the commissioner to administer the loan program.
27.4 	
EFFECTIVE DATE. This section is effective July 1, 2005.

27.5 	Sec. 4. [62J.84] ELECTRONIC MEDICAL RECORD SYSTEM REVENUE
27.6 	BONDS.
27.7 		Subdivision 1.Bonding authority. Upon request of the
27.8 	commissioner, the commissioner of finance may sell and issue
27.9 	state revenue bonds to make loans under section 62J.82, to
27.10 	establish a reserve fund or funds, and to pay the cost of
27.11 	issuance of the bonds.
27.12 		Subd. 2.Amount. The principal amount of the bonds
27.13 	issued for the purposes specified in subdivision 1 must not
27.14 	exceed $5,000,000.
27.15 		Subd. 3.Procedure. The commissioner of finance may sell
27.16 	and issue the bonds on the terms and conditions the commissioner
27.17 	determines to be in the best interests of the state.  The bonds
27.18 	may be sold at public or private sale.  The commissioner of
27.19 	finance may enter any agreements or pledges the commissioner
27.20 	determines necessary or useful to sell the bonds that are not
27.21 	inconsistent with sections 62J.82 to 62J.84.  Sections 16A.672
27.22 	to 16A.675 apply to the bonds.
27.23 		Subd. 4.Revenue sources. The bonds are payable only
27.24 	from the following sources:
27.25 	(1) loan repayments credited to the electronic medical
27.26 	record system loan fund;
27.27 	(2) the principal and any investment earnings on the assets
27.28 	of the debt service account; and 
27.29 	(3) other revenues pledged to the payment of the bonds.
27.30 		Subd. 5.Refunding bonds. The commissioner of finance
27.31 	may issue bonds to refund outstanding bonds issued under
27.32 	subdivision 1, including the payment of any redemption premiums
27.33 	on the bonds and any interest accrued or to accrue to the first
27.34 	redemption date after delivery of the refunding bonds.  The
27.35 	proceeds of the refunding bonds may, in the discretion of the
27.36 	commissioner of finance, be applied to the purchases or payment
28.1 	at maturity of the bonds to be refunded, or the redemption of
28.2 	the outstanding bonds on the first redemption date after
28.3 	delivery of the refunding bonds and may, until so used, be
28.4 	placed in escrow to be applied to the purchase, retirement, or
28.5 	redemption.  Refunding bonds issued under this subdivision must
28.6 	be issued and secured in the manner provided by the commissioner
28.7 	of finance.
28.8 		Subd. 6.Not a general or moral obligation. Bonds issued
28.9 	under this section are not public debt, and the full faith,
28.10 	credit, and taxing powers of the state are not pledged for their
28.11 	payment.  The bonds may not be paid directly in whole or part
28.12 	from a tax of statewide application on any class of property,
28.13 	income, transaction, or privilege.  Payment of the bonds is
28.14 	limited to the revenues explicitly authorized to be pledged
28.15 	under this section.  The state neither makes nor has a moral
28.16 	obligation to pay the bonds if the pledged revenues and other
28.17 	legal security for them is insufficient.
28.18 		Subd. 7.Trustee. The commissioner of finance may
28.19 	contract with and appoint a trustee for bondholders.  The
28.20 	trustee has the powers and authority vested in it by the
28.21 	commissioner of finance under the bond and trust indentures.
28.22 		Subd. 8.Pledges. Any pledge made by the commissioner of
28.23 	finance is valid and binding from the time the pledge is made.
28.24 	The money or property pledged and later received by the
28.25 	commissioner of finance is immediately subject to the lien of
28.26 	the pledge without any physical delivery of the property or
28.27 	money or further act, and the lien of any pledge is valid and
28.28 	binding as against all parties having claims of any kind in
28.29 	tort, contract, or otherwise against the commissioner, whether
28.30 	or not those parties have notice of the lien or pledge.  Neither
28.31 	the order nor any other instrument by which a pledge is created
28.32 	need be recorded.
28.33 		Subd. 9.Bonds; purchase and cancellation. The
28.34 	commissioner of finance, subject to agreements with bondholders
28.35 	that may then exist, may, out of any money available for the
28.36 	purpose, purchase bonds of the commissioner at a price not
29.1 	exceeding:
29.2 	(1) if the bonds are then redeemable, the redemption price
29.3 	then applicable plus accrued interest to the next interest
29.4 	payment date thereon; or 
29.5 	(2) if the bonds are not redeemable, the redemption price
29.6 	applicable on the first date after the purchase upon which the
29.7 	bonds become subject to redemption plus accrued interest to that
29.8 	date.
29.9 		Subd. 10.State pledge against impairment of contracts.
 29.10 	The state pledges and agrees with the holders of any bonds that
29.11 	the state will not limit or alter the rights vested in the
29.12 	commissioner of finance to fulfill the terms of any agreements
29.13 	made with the bondholders, or in any way impair the rights and
29.14 	remedies of the holders until the bonds, together with interest
29.15 	on them, with interest on any unpaid installments of interest,
29.16 	and all costs and expenses in connection with any action or
29.17 	proceeding by or on behalf of the bondholders, are fully met and
29.18 	discharged.  The commissioner of finance may include this pledge
29.19 	and agreement of the state in any agreement with the holders of
29.20 	bonds issued under this section.
29.21 	
EFFECTIVE DATE. This section is effective July 1, 2005.

29.22 	Sec. 5. QUALITY IMPROVEMENT INVESTMENT PROGRAM.
 29.23 	The commissioner of health, in consultation with the
29.24 	commissioners of finance and administration, shall submit
29.25 	recommendations to the legislature by December 15, 2005, to
29.26 	establish a quality improvement investment program to provide
29.27 	technical assistance, grants, and low-interest loans to health
29.28 	care organizations and health professional associations to
29.29 	support establishing or updating electronic information systems
29.30 	in all health care settings to support the efficient and
29.31 	effective delivery of safe, evidence-based health care services
29.32 	and to reduce administrative costs.

29.33 	EFFECTIVE DATE. This section is effective July 1, 2005.

29.34 	Sec. 6. APPROPRIATIONS.
 29.35 	(a) $....... is appropriated from the general fund to the
29.36 	commissioner of finance for transfer to the electronic medical
30.1 	record system loan fund to capitalize the fund.  The
30.2 	appropriation is available until expended.
30.3 	(b) $....... is appropriated from the general fund to the
30.4 	commissioner of health for the fiscal year ending June 30, 2006,
30.5 	for the report required under section 5.

30.6 	EFFECTIVE DATE. This section is effective July 1, 2005.