2005 Minnesota Statutes

CHAPTER 62D. Health maintenance organizations

     62D.01 Citation and purpose. 

    Subdivision 1.    Title.  Sections 62D.01 to 62D.24 may 
 be cited as the "Health Maintenance Act of 1973". 

    Subd. 2.    Legislative findings and intent; policy.  
 (a) Faced with the continuation of mounting costs of health care 
 coupled with its inaccessibility to large segments of the 
 population, the legislature has determined that there is a need 
 to explore alternative methods for the delivery of health care 
 services, with a view toward achieving greater efficiency and 
 economy in providing these services. 

    (b) It is, therefore, the policy of the state to eliminate 
 the barriers to the organization, promotion, and expansion of 
 health maintenance organizations; to provide for their 
 regulation by the state commissioner of health; and to exempt 
 them from the operation of the insurance and nonprofit health 
 service plan corporation laws of the state except as hereinafter 
 provided. 

    (c) It is further the intention of the legislature to 
 closely monitor the development of health maintenance 
 organizations in order to assess their impact on the costs of 
 health care to consumers, the accessibility of health care to 
 consumers, and the quality of health care provided to consumers. 

    HIST: 1973 c 670 s 1; 1977 c 305 s 45; 1996 c 305 art 1 s 139 

     62D.02 Definitions. 

    Subdivision 1.    Applicability.  For the purposes of 
 sections 62D.01 to 62D.30, unless the context clearly indicates 
 otherwise, the terms defined in this section shall have the 
 meaning here given them. 

    Subd. 2.  Repealed, 1990 c 538 s 32 

    Subd. 3.    Commissioner of health or commissioner.  
 "Commissioner of health" or "commissioner" means the state 
 commissioner of health or a designee. 

    Subd. 4.    Health maintenance organization.  (a) 
 "Health maintenance organization" means a nonprofit corporation 
 organized under chapter 317A, or a local governmental unit as 
 defined in subdivision 11, controlled and operated as provided 
 in sections 62D.01 to 62D.30, which provides, either directly or 
 through arrangements with providers or other persons, 
 comprehensive health maintenance services, or arranges for the 
 provision of these services, to enrollees on the basis of a 
 fixed prepaid sum without regard to the frequency or extent of 
 services furnished to any particular enrollee.  

    (b)  (Expired) 

    Subd. 5.    Evidence of coverage.  "Evidence of 
 coverage" means any certificate, agreement or contract, and 
 amendments thereto, issued to an enrollee which sets out the 
 coverage to which the enrollee is entitled under the health 
 maintenance contract which covers the enrollee. 

    Subd. 6.    Enrollee.  "Enrollee" means any person who 
 has entered into, or is covered by, a health maintenance 
 contract. 

    Subd. 7.    Comprehensive health maintenance services.  
 "Comprehensive health maintenance services" means a set of 
 comprehensive health services which the enrollees might 
 reasonably require to be maintained in good health including as 
 a minimum, but not limited to, emergency care, emergency ground 
 ambulance transportation services, inpatient hospital and 
 physician care, outpatient health services and preventive health 
 services.  Elective, induced abortion, except as medically 
 necessary to prevent the death of the mother, whether performed 
 in a hospital, other abortion facility or the office of a 
 physician, shall not be mandatory for any health maintenance 
 organization. 

    Subd. 8.    Health maintenance contract.  "Health 
 maintenance contract" means any contract whereby a health 
 maintenance organization agrees to provide to enrollees 
 comprehensive health maintenance services and any other health 
 care service set forth in the contract.  The contract may 
 contain enrollee cost-sharing provisions if the provisions meet 
 the requirements of section 62D.095. 

    Subd. 9.    Provider.  "Provider" means any person who 
 furnishes health services and is licensed or otherwise 
 authorized to render such services in the state. 

    Subd. 10.    Consumer.  "Consumer" means any person, 
 including an enrollee, to whom a health maintenance organization 
 directs marketing materials. 

    Subd. 11.    Local governmental unit.  "Local 
 governmental unit" means any statutory or home rule charter city 
 or county.  

    Subd. 12.    Participating entity.  "Participating 
 entity" means any of the following persons, providers, 
 companies, or other organizations with which the health 
 maintenance organization has contracts or other agreements:  

    (1) a health care facility licensed under sections 144.50 
 to 144.56, a nursing home licensed under sections 144A.02 to 
 144A.11, and any other health care facility otherwise licensed 
 under the laws of this state or registered with the commissioner 
 of health; 

    (2) a health care professional licensed under 
 health-related licensing boards, as defined in section 214.01, 
 subdivision 2, and any other health care professional otherwise 
 licensed under the laws of this state or registered with the 
 commissioner of health; 

    (3) a group, professional corporation, or other 
 organization which provides the services of individuals or 
 entities identified in (2), including but not limited to a 
 medical clinic, a medical group, a home health care agency, an 
 urgent care center, and an emergent care center; 

    (4) any person or organization providing administrative, 
 financial, or management services to the health maintenance 
 organization if the total payment for all services exceeds three 
 percent of the gross revenues of the health maintenance 
 organization.  

    "Participating entity" does not include (a) another health 
 maintenance organization with which a health maintenance 
 organization has made contractual arrangements or (b) any entity 
 with which a health maintenance organization has contracted 
 primarily in order to purchase or lease equipment or space or 
 (c) employees of the health maintenance organization or (d) 
 employees of any participating entity identified in clause (3). 

    Subd. 13.    Major participating entity.  "Major 
 participating entity" shall include the following:  

    (1) a participating entity that receives from the health 
 maintenance organization as compensation for services a sum 
 greater than 30 percent of the health maintenance organization's 
 gross annual revenues; 

    (2) a participating entity providing administrative, 
 financial, or management services to the health maintenance 
 organization, if the total payment for all services provided by 
 the participating entity exceeds three percent of the gross 
 revenue of the health maintenance organization; 

    (3) a participating entity that nominates or appoints 30 
 percent or more of the board of directors of the health 
 maintenance organization.  

    Subd. 14.    Separate health services contracts.  
 "Separate health services contracts" means prepaid dental 
 services contracts and other similar types of prepaid health 
 services agreements in which services are provided by 
 participating entities or employees of the health maintenance 
 organization, but does not include contracts subject to chapter 
 62A or 62C.  

    Subd. 15.    Net worth.  "Net worth" means admitted 
 assets, as defined in section 62D.044, minus liabilities.  
 Liabilities do not include those obligations that are 
 subordinated in the same manner as preferred ownership claims 
 under section 60B.44, subdivision 10. For purposes of this 
 subdivision, preferred ownership claims under section 60B.44, 
 subdivision 10, include promissory notes subordinated to all 
 other liabilities of the health maintenance organization. 

    Subd. 16.    Affiliate.  "Affiliate" means a person or 
 entity controlling, controlled by, or under common control with 
 the person or entity. 

    HIST: 1973 c 670 s 2; 1974 c 284 s 1; 1977 c 305 s 45; 1981 c 
 122 s 1; 1983 c 205 s 1,2; 1983 c 289 s 114 subd 1; 1984 c 464 s 
 8-11; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 384 art 2 s 1; 
 1988 c 612 s 1,2; 1989 c 304 s 137; 1990 c 538 s 12,13; 1993 c 
 50 s 1; 1994 c 625 art 8 s 5; 1995 c 234 art 7 s 6; 1995 c 258 s 
 39; 1996 c 305 art 1 s 18; 1997 c 205 s 1; 1997 c 225 art 2 s 6; 
 2002 c 387 s 2 

     62D.03 Establishment of health maintenance organizations.

    Subdivision 1.    Certificate of authority required.  
 Notwithstanding any law of this state to the contrary, any 
 nonprofit corporation organized to do so or a local governmental 
 unit may apply to the commissioner of health for a certificate 
 of authority to establish and operate a health maintenance 
 organization in compliance with sections 62D.01 to 62D.30.  No 
 person shall establish or operate a health maintenance 
 organization in this state, nor sell or offer to sell, or 
 solicit offers to purchase or receive advance or periodic 
 consideration in conjunction with a health maintenance 
 organization or health maintenance contract unless the 
 organization has a certificate of authority under sections 
 62D.01 to 62D.30. 

    Subd. 2. Repealed, 1997 c 205 s 40 

    Subd. 3.    Required application.  The commissioner of 
 health may require any person providing physician and hospital 
 services with payments made in the manner set forth in section 
 62D.02, subdivision 4, to apply for a certificate of authority 
 under sections 62D.01 to 62D.30.  An applicant may continue to 
 operate until the commissioner of health acts upon the 
 application.  In the event that an application is denied, the 
 applicant shall henceforth be treated as a health maintenance 
 organization whose certificate of authority has been revoked.  
 Any person directed to apply for a certificate of authority 
 shall be subject to the provisions of this subdivision. 

    Subd. 4.    Application requirements.  Each application 
 for a certificate of authority shall be verified by an officer 
 or authorized representative of the applicant, and shall be in a 
 form prescribed by the commissioner of health.  Each application 
 shall include the following: 

    (a) a copy of the basic organizational document, if any, of 
 the applicant and of each major participating entity; such as 
 the articles of incorporation, or other applicable documents, 
 and all amendments thereto; 

    (b) a copy of the bylaws, rules and regulations, or similar 
 document, if any, and all amendments thereto which regulate the 
 conduct of the affairs of the applicant and of each major 
 participating entity; 

    (c) a list of the names, addresses, and official positions 
 of the following: 

    (1) all members of the board of directors, or governing 
 body of the local government unit, and the principal officers 
 and shareholders of the applicant organization; and 

    (2) all members of the board of directors, or governing 
 body of the local government unit, and the principal officers of 
 the major participating entity and each shareholder beneficially 
 owning more than ten percent of any voting stock of the major 
 participating entity; 

    The commissioner may by rule identify persons included in 
 the term "principal officers"; 

    (d) a full disclosure of the extent and nature of any 
 contract or financial arrangements between the following:  

    (1) the health maintenance organization and the persons 
 listed in clause (c)(1); 

    (2) the health maintenance organization and the persons 
 listed in clause (c)(2); 

    (3) each major participating entity and the persons listed 
 in clause (c)(1) concerning any financial relationship with the 
 health maintenance organization; and 

    (4) each major participating entity and the persons listed 
 in clause (c)(2) concerning any financial relationship with the 
 health maintenance organization; 

    (e) the name and address of each participating entity and 
 the agreed upon duration of each contract or agreement; 

    (f) a copy of the form of each contract binding the 
 participating entities and the health maintenance organization.  
 Contractual provisions shall be consistent with the purposes of 
 sections 62D.01 to 62D.30, in regard to the services to be 
 performed under the contract, the manner in which payment for 
 services is determined, the nature and extent of 
 responsibilities to be retained by the health maintenance 
 organization, the nature and extent of risk sharing permissible, 
 and contractual termination provisions; 

    (g) a copy of each contract binding major participating 
 entities and the health maintenance organization.  Contract 
 information filed with the commissioner shall be confidential 
 and subject to the provisions of section 13.37, subdivision 1, 
 clause (b), upon the request of the health maintenance 
 organization.  

    Upon initial filing of each contract, the health 
 maintenance organization shall file a separate document 
 detailing the projected annual expenses to the major 
 participating entity in performing the contract and the 
 projected annual revenues received by the entity from the health 
 maintenance organization for such performance.  The commissioner 
 shall disapprove any contract with a major participating entity 
 if the contract will result in an unreasonable expense under 
 section 62D.19.  The commissioner shall approve or disapprove a 
 contract within 30 days of filing.  

    Within 120 days of the anniversary of the implementation of 
 each contract, the health maintenance organization shall file a 
 document detailing the actual expenses incurred and reported by 
 the major participating entity in performing the contract in the 
 preceding year and the actual revenues received from the health 
 maintenance organization by the entity in payment for the 
 performance; 

    (h) a statement generally describing the health maintenance 
 organization, its health maintenance contracts and separate 
 health service contracts, facilities, and personnel, including a 
 statement describing the manner in which the applicant proposes 
 to provide enrollees with comprehensive health maintenance 
 services and separate health services; 

    (i) a copy of the form of each evidence of coverage to be 
 issued to the enrollees; 

    (j) a copy of the form of each individual or group health 
 maintenance contract and each separate health service contract 
 which is to be issued to enrollees or their representatives; 

    (k) financial statements showing the applicant's assets, 
 liabilities, and sources of financial support.  If the 
 applicant's financial affairs are audited by independent 
 certified public accountants, a copy of the applicant's most 
 recent certified financial statement may be deemed to satisfy 
 this requirement; 

    (l) a description of the proposed method of marketing the 
 plan, a schedule of proposed charges, and a financial plan which 
 includes a three-year projection of the expenses and income and 
 other sources of future capital; 

    (m) a statement reasonably describing the geographic area 
 or areas to be served and the type or types of enrollees to be 
 served; 

    (n) a description of the complaint procedures to be 
 utilized as required under section 62D.11; 

    (o) a description of the procedures and programs to be 
 implemented to meet the requirements of section 62D.04, 
 subdivision 1, clauses (b) and (c) and to monitor the quality of 
 health care provided to enrollees; 

    (p) a description of the mechanism by which enrollees will 
 be afforded an opportunity to participate in matters of policy 
 and operation under section 62D.06; 

    (q) a copy of any agreement between the health maintenance 
 organization and an insurer or nonprofit health service 
 corporation regarding reinsurance, stop-loss coverage, 
 insolvency coverage, or any other type of coverage for potential 
 costs of health services, as authorized in sections 62D.04, 
 subdivision 1, clause (f), 62D.05, subdivision 3, and 62D.13; 

    (r) a copy of the conflict of interest policy which applies 
 to all members of the board of directors and the principal 
 officers of the health maintenance organization, as described in 
 section 62D.04, subdivision 1, paragraph (g).  All currently 
 licensed health maintenance organizations shall also file a 
 conflict of interest policy with the commissioner within 60 days 
 after August 1, 1990, or at a later date if approved by the 
 commissioner; 

    (s) a copy of the statement that describes the health 
 maintenance organization's prior authorization administrative 
 procedures; 

    (t) a copy of the agreement between the guaranteeing 
 organization and the health maintenance organization, as 
 described in section 62D.043, subdivision 6; and 

    (u) other information as the commissioner of health may 
 reasonably require to be provided. 

    HIST: 1973 c 670 s 3; 1977 c 305 s 45; 1983 c 205 s 3,4; 1984 
 c 464 s 12; 1984 c 641 s 2; 1985 c 248 s 21,22; 1987 c 384 art 2 
 s 1; 1988 c 612 s 3; 1990 c 538 s 14; 1997 c 205 s 2,3 

     62D.04 Issuance of certificate authority. 

    Subdivision 1.    Application review.  Upon receipt of 
 an application for a certificate of authority, the commissioner 
 of health shall determine whether the applicant for a 
 certificate of authority has: 

    (a) demonstrated the willingness and potential ability to 
 assure that health care services will be provided in such a 
 manner as to enhance and assure both the availability and 
 accessibility of adequate personnel and facilities; 

    (b) arrangements for an ongoing evaluation of the quality 
 of health care; 

    (c) a procedure to develop, compile, evaluate, and report 
 statistics relating to the cost of its operations, the pattern 
 of utilization of its services, the quality, availability and 
 accessibility of its services, and such other matters as may be 
 reasonably required by regulation of the commissioner of health; 

    (d) reasonable provisions for emergency and out of area 
 health care services; 

    (e) demonstrated that it is financially responsible and may 
 reasonably be expected to meet its obligations to enrollees and 
 prospective enrollees.  In making this determination, the 
 commissioner of health shall require the amount of initial net 
 worth required in section 62D.042, compliance with the 
 risk-based capital standards under sections 60A.50 to 60A.592, 
 the deposit required in section 62D.041, and in addition shall 
 consider: 

    (1) the financial soundness of its arrangements for health 
 care services and the proposed schedule of charges used in 
 connection therewith; 

    (2) arrangements which will guarantee for a reasonable 
 period of time the continued availability or payment of the cost 
 of health care services in the event of discontinuance of the 
 health maintenance organization; and 

    (3) agreements with providers for the provision of health 
 care services; 

    (f) demonstrated that it will assume full financial risk on 
 a prospective basis for the provision of comprehensive health 
 maintenance services, including hospital care; provided, 
 however, that the requirement in this paragraph shall not 
 prohibit the following: 

    (1) a health maintenance organization from obtaining 
 insurance or making other arrangements (i) for the cost of 
 providing to any enrollee comprehensive health maintenance 
 services, the aggregate value of which exceeds $5,000 in any 
 year, (ii) for the cost of providing comprehensive health care 
 services to its members on a nonelective emergency basis, or 
 while they are outside the area served by the organization, or 
 (iii) for not more than 95 percent of the amount by which the 
 health maintenance organization's costs for any of its fiscal 
 years exceed 105 percent of its income for such fiscal years; 
 and 

    (2) a health maintenance organization from having a 
 provision in a group health maintenance contract allowing an 
 adjustment of premiums paid based upon the actual health 
 services utilization of the enrollees covered under the 
 contract, except that at no time during the life of the contract 
 shall the contract holder fully self-insure the financial risk 
 of health care services delivered under the contract.  Risk 
 sharing arrangements shall be subject to the requirements of 
 sections 62D.01 to 62D.30; 

    (g) demonstrated that it has made provisions for and 
 adopted a conflict of interest policy applicable to all members 
 of the board of directors and the principal officers of the 
 health maintenance organization.  The conflict of interest 
 policy shall include the procedures described in section 
 317A.255, subdivisions 1 and 2.  However, the commissioner is 
 not precluded from finding that a particular transaction is an 
 unreasonable expense as described in section 62D.19 even if the 
 directors follow the required procedures; and 

    (h) otherwise met the requirements of sections 62D.01 to 
 62D.30. 

    Subd. 2.    Issuance; notice.  Within 90 days after the 
 receipt of the application for a certificate of authority, the 
 commissioner of health shall determine whether or not the 
 applicant meets the requirements of this section.  If the 
 commissioner of health determines that the applicant meets the 
 requirements of sections 62D.01 to 62D.30, the commissioner 
 shall issue a certificate of authority to the applicant.  If the 
 commissioner of health determines that the applicant is not 
 qualified, the commissioner shall so notify the applicant and 
 shall specify the reason or reasons for such disqualification. 

    Subd. 3.    Use of terms.  Except as provided in section 
 62D.03, subdivision 2, no person who has not been issued a 
 certificate of authority shall use the words "health maintenance 
 organization" or the initials "HMO" in its name, contracts or 
 literature.  Provided, however, that persons who are operating 
 under a contract with, operating in association with, enrolling 
 enrollees for, or otherwise authorized by a health maintenance 
 organization licensed under sections 62D.01 to 62D.30 to act on 
 its behalf may use the terms "health maintenance organization" 
 or "HMO" for the limited purpose of denoting or explaining their 
 association or relationship with the authorized health 
 maintenance organization.  No health maintenance organization 
 which has a minority of enrollees and members elected according 
 to section 62D.06, subdivision 1, as members of its board of 
 directors shall use the words "consumer controlled" in its name 
 or in any way represent to the public that it is controlled by 
 consumers. 

    Subd. 4.    Continued compliance.  Upon being granted a 
 certificate of authority to operate as a health maintenance 
 organization, the organization must continue to operate in 
 compliance with the standards set forth in subdivision 1.  
 Noncompliance may result in the imposition of a fine or the 
 suspension or revocation of the certificate of authority, in 
 accordance with sections 62D.15 to 62D.17.  

    Subd. 5.    Participation; government programs.  Health 
 maintenance organizations shall, as a condition of receiving and 
 retaining a certificate of authority, participate in the medical 
 assistance, general assistance medical care, and MinnesotaCare 
 programs.  A health maintenance organization is required to 
 submit proposals in good faith that meet the requirements of the 
 request for proposal provided that the requirements can be 
 reasonably met by a health maintenance organization to serve 
 individuals eligible for the above programs in a geographic 
 region of the state if, at the time of publication of a request 
 for proposal, the percentage of recipients in the public 
 programs in the region who are enrolled in the health 
 maintenance organization is less than the health maintenance 
 organization's percentage of the total number of individuals 
 enrolled in health maintenance organizations in the same 
 region.  Geographic regions shall be defined by the commissioner 
 of human services in the request for proposals. 

    HIST: 1973 c 670 s 4; 1977 c 305 s 45; 1984 c 464 s 13; 1985 c 
 248 s 23; 1986 c 444; 1987 c 130 s 1; 1987 c 384 art 2 s 1; 1988 
 c 612 s 4; 1990 c 538 s 15; 1994 c 625 art 8 s 6; 1996 c 451 art 
 5 s 1; 1997 c 203 art 4 s 1; 1997 c 205 s 4; 2004 c 285 art 3 s 
 3 

     62D.041 Protection in the event of insolvency. 

    Subdivision 1.    Definition.  (a) For the purposes of 
 this section, the term "uncovered expenditures" means the costs 
 of health care services that are covered by a health maintenance 
 organization for which an enrollee would also be liable in the 
 event of the organization's insolvency, and that are not 
 guaranteed, insured, or assumed by a person other than the 
 health maintenance organization. 

    (b) For purposes of this section, if a health maintenance 
 organization offers supplemental benefits as described in 
 section 62D.05, subdivision 6, "uncovered expenditures" excludes 
 any expenditures attributable to the supplemental benefit.  

    Subd. 2.    Required deposit.  Each health maintenance 
 organization shall deposit with any organization or trustee 
 acceptable to the commissioner through which a custodial or 
 controlled account is utilized, bankable funds in the amount 
 required in this section.  The commissioner may allow a health 
 maintenance organization's deposit requirement to be funded by 
 an organization approved by the commissioner. 

    Subd. 3.    Amount for beginning organizations.  (a) 
 Organizations that obtain a certificate of authority after April 
 25, 1988, shall deposit, before receiving a certificate of 
 authority, $500,000.  The health maintenance organization shall 
 provide the commissioner with evidence of the deposit before 
 receiving a certificate of authority. 

    (b) By April 1 of the year following the organization's 
 first 12 months of operation under a certificate of authority, 
 an organization shall deposit an amount equal to the difference 
 between the initial deposit and 33 percent of its uncovered 
 expenditures in its first 12 months of operation. 

    (c) By April 1 of subsequent years, an organization shall 
 deposit an amount equal to the difference between the amount on 
 deposit and 33 percent of its uncovered expenditures in the 
 preceding calendar year. 

    Subd. 4.    Amount for existing organizations.  By 
 December 31, 1989, an organization that has received a 
 certificate of authority on or before April 25, 1988, shall have 
 on deposit an amount equal to the larger of:  

    (a) 33 percent of its uncovered expenditures in the 
 preceding calendar year; or 

    (b) $500,000. 

    By April 1 of each subsequent year, an organization shall 
 deposit an amount equal to the difference between the amount on 
 deposit and 33 percent of its uncovered expenditures in the 
 preceding calendar year. 

    Subd. 5. Repealed, 1988 c 612 s 32 

    Subd. 5a.    Waiver of additional deposit.  In any year 
 when the amount determined according to this section is zero or 
 less than zero, the commissioner shall not require the 
 organization to make any additional deposit. 

    Subd. 6. Repealed, 1988 c 612 s 32 

    Subd. 6a.    Withdrawal of deposit.  If the amount 
 previously deposited by the organization under this section 
 exceeds the amount required under this section by more than 
 $50,000 for a continuous 12-month period, the commissioner shall 
 allow the organization to withdraw the portion of the deposit 
 that exceeds by more than $50,000 the amount required to be on 
 deposit for the organization, unless the commissioner determines 
 that release of a portion of the deposit could be hazardous to 
 enrollees, creditors, or the general public.  An organization 
 shall not apply for the withdrawal more than once in each 
 calendar year. 

    Subd. 6b.    Evidence of deposit.  An organization shall 
 provide the commissioner with evidence of every deposit made on 
 or before the date of the deposit. 

    Subd. 7.    Control of over deposits.  All income from 
 deposits shall belong to the depositing organizations and shall 
 be paid to it as it becomes available.  

    Subd. 8. Repealed, 1988 c 612 s 32 

    Subd. 9.    Letter of credit.  A health maintenance 
 organization may satisfy one-half of its deposit requirement 
 through use of a letter of credit issued by a bank authorized to 
 do business in this state, provided that: 

    (1) nothing more than a demand for payment is necessary for 
 payment; 

    (2) the letter of credit is irrevocable; 

    (3) according to its terms, the letter of credit cannot 
 expire without due notice from the issuer and the notice must 
 occur at least 60 days before the expiration date and be in the 
 form of a written notice to the commissioner; 

    (4) the letter of credit is issued or confirmed by a bank 
 which is a member of the Federal Reserve system; 

    (5) the letter of credit is unconditional, is not 
 contingent upon reimbursement to the bank or the bank's ability 
 to perfect any lien or security interest, and does not contain 
 references to any other agreements, documents, or entities; 

    (6) the letter of credit designates the commissioner as 
 beneficiary; and 

    (7) the letter of credit may be drawn upon after insolvency 
 of the health maintenance organization. 

    Subd. 10.    Supplemental deposit.  A health maintenance 
 organization offering supplemental benefits as described in 
 section 62D.05, subdivision 6, must maintain an additional 
 deposit in the first year such benefits are offered equal to 
 $50,000.  At the end of the second year such benefits are 
 offered, the health maintenance organization must maintain an 
 additional deposit equal to $150,000.  At the end of the third 
 year such benefits are offered and every year thereafter, the 
 health maintenance organization must maintain an additional 
 deposit of $250,000. 

    HIST: 1984 c 464 s 14; 1985 c 248 s 24; 1988 c 612 s 5-13; 
 1989 c 282 art 2 s 3,4; 1990 c 538 s 16; 2004 c 285 art 3 s 4 

     62D.042 Initial net worth requirement. 

    Subdivision 1.    Definition.  For purposes of this 
 section, if a health maintenance organization offers 
 supplemental benefits as described in section 62D.05, 
 subdivision 6, "expenses" does not include any expenses 
 attributable to the supplemental benefit.  

    Subd. 2.    Initial net worth requirement.  Beginning 
 organizations shall maintain net worth of at least 8-1/3 percent 
 of the sum of all expenses expected to be incurred in the 12 
 months following the date the certificate of authority is 
 granted, or $1,500,000, whichever is greater. 

    Subd. 3. Repealed, 1998 c 407 art 8 s 14 

    Subd. 4.    Reduction for reinsurance.  In calculating 
 expenses for purposes of the net worth requirement, a health 
 maintenance organization may subtract 90 percent of the cost of 
 premiums it pays for insurance coverage specified in section 
 62D.04, subdivision 1, clause (f). 

    Subd. 5. Repealed, 2004 c 285 art 3 s 11 

    Subd. 6. Repealed, 2004 c 285 art 3 s 11 

    Subd. 7. Repealed, 2004 c 285 art 3 s 11 

    HIST: 1988 c 612 s 14; 1989 c 282 art 2 s 5; 1993 c 345 art 2 
 s 1; 1995 c 234 art 7 s 7; 1997 c 205 s 5; 1998 c 407 art 8 s 2; 
 2004 c 285 art 3 s 5,6,10 

  62D.043 Repealed, 2004 c 285 art 3 s 11 

     62D.044 Admitted assets. 

    "Admitted assets" includes the following: 

    (1) petty cash and other cash funds in the organization's 
 principal or official branch office that are under the 
 organization's control; 

    (2) immediately withdrawable funds on deposit in demand 
 accounts, in a bank or trust company organized and regularly 
 examined under the laws of the United States or any state, and 
 insured by an agency of the United States government, or like 
 funds actually in the principal or official branch office at 
 statement date, and, in transit to a bank or trust company with 
 authentic deposit credit given before the close of business on 
 the fifth bank working day following the statement date; 

    (3) the amount fairly estimated as recoverable on cash 
 deposited in a closed bank or trust company, if the assets 
 qualified under this section before the suspension of the bank 
 or trust company; 

    (4) bills and accounts receivable that are collateralized 
 by securities in which the organization is authorized to invest; 

    (5) premiums due from groups or individuals that are not 
 more than 90 days past due; 

    (6) amounts due under reinsurance arrangements from 
 insurance companies authorized to do business in this state; 

    (7) tax refunds due from the United States or this state; 

    (8) principal and interest accrued on mortgage loans not 
 exceeding in aggregate one year's total due and accrued 
 principal and interest on an individual loan; 

    (9) the rents due to the organization on real and personal 
 property, directly or beneficially owned, not exceeding the 
 amount of one year's total due and accrued rent on each 
 individual property; 

    (10) principal and interest or rents accrued on conditional 
 sales agreements, security interests, chattel mortgages, and 
 real or personal property under lease to other corporations that 
 do not exceed the amount of one year's total due and accrued 
 interest or rent on an individual investment; 

    (11) the fixed required principal and interest due and 
 accrued on bonds and other evidences of indebtedness that are 
 not in default; 

    (12) dividends receivable on shares of stock, provided that 
 the market price for valuation purposes does not include the 
 value of the dividend; 

    (13) the interest on dividends due and payable, but not 
 credited, on deposits in banks and trust companies or on 
 accounts with savings associations; 

    (14) principal and interest accrued on secured loans that 
 do not exceed the amount of one year's interest on any loan; 

    (15) interest accrued on tax anticipation warrants; 

    (16) the amortized value of electronic computer or data 
 processing machines or systems purchased for use in the business 
 of the organization, including software purchased and developed 
 specifically for the organization's use; 

    (17) the cost of furniture, equipment, and medical 
 equipment, less accumulated depreciation thereon, and medical 
 and pharmaceutical supplies that are used to deliver health care 
 and are under the organization's control, provided such assets 
 do not exceed 30 percent of admitted assets; 

    (18) amounts currently due from an affiliate that has 
 liquid assets with which to pay the balance and maintain its 
 accounts on a current basis.  Any amount outstanding more than 
 three months is not current; 

    (19) amounts on deposit under section 62D.041; 

    (20) accounts receivable from participating health care 
 providers that are not more than 60 days past due; and 

    (21) investments allowed by section 62D.045, except for 
 investments in securities and properties described under section 
 61A.284. 

    HIST: 1988 c 612 s 15; 1990 c 538 s 18; 1991 c 286 s 1; 1991 c 
 325 art 10 s 11; 1995 c 202 art 1 s 25 

     62D.045 Investment restrictions. 

    Subdivision 1.    Restrictions.  Funds of a health 
 maintenance organization shall be invested only in securities 
 and property designated by law for investment by domestic life 
 insurance companies, except that money may be used to purchase 
 real estate, including leasehold estates and leasehold 
 improvements, for the convenient accommodation of the 
 organization's business operations, including the home office, 
 branch offices, medical facilities, and field office operations, 
 on the following conditions: 

    (1) a parcel of real estate acquired under this subdivision 
 may include excess space for rent to others if it is reasonably 
 anticipated that the excess will be required by the organization 
 for expansion or if the excess is reasonably required in order 
 to have one or more buildings that will function as an economic 
 unit; 

    (2) the real estate may be subject to a mortgage; and 

    (3) the purchase price of the asset, including capitalized 
 permanent improvements, less depreciation spread evenly over the 
 life of the property or less depreciation computed on any basis 
 permitted under the Internal Revenue Code and its regulations, 
 or the organization's equity, plus all encumbrances on the real 
 estate owned by a company under this subdivision, whichever is 
 greater, does not exceed 20 percent of its admitted assets, 
 except if, when calculated in combination with the assets 
 described in section 62D.044, clause (17), the total of said 
 assets and the real estate assets described hereunder do not 
 exceed the total combined percent limitations allowable under 
 this section and section 62D.044, clause (17), or, if permitted 
 by the commissioner upon a finding that the percentage of the 
 health maintenance organization's admitted assets is 
 insufficient to provide convenient accommodation for the 
 organization's business.  However, a health maintenance 
 organization that owns property used in the delivery of medical 
 services for its enrollees may invest an additional 20 percent 
 of its admitted assets in real estate, not requiring the 
 permission of the commissioner. 

    Subd. 2.    Authorization and written investment policy 
 required.  A health maintenance organization shall not make or 
 engage in a loan or investment unless the loan or investment has 
 been authorized or ratified by the board of directors or by a 
 committee supervising investments and loans.  In addition, a 
 health maintenance organization must comply with section 60A.112.

    Subd. 3.    Limits on commissions.  A health maintenance 
 organization shall not pay a commission or brokerage for the 
 purchase or sale of real or personal property that exceeds usual 
 and customary commissions or brokerage at the time and place of 
 the purchases or sales.  Information regarding payments of 
 commissions and brokerage must be maintained by the health 
 maintenance organization. 

    Subd. 4.    Officer's conflict of interest.  A health 
 maintenance organization shall not knowingly, directly or 
 indirectly, invest in or loan upon any real or personal 
 property, in which any principal officer or director of the 
 organization has a financial interest.  An organization shall 
 not make a loan to a principal officer or director of the 
 organization. 

    Subd. 5.    Exemption.  This section shall not apply to 
 a health maintenance organization which has a city or county as 
 a guaranteeing organization. 

    HIST: 1988 c 612 s 16; 1991 c 286 s 2; 1991 c 325 art 10 s 12; 
 art 18 s 2; 2000 c 260 s 97 para (g) 

     62D.05 Powers of health maintenance organizations. 

    Subdivision 1.    Authority granted.  Any nonprofit 
 corporation or local governmental unit may, upon obtaining a 
 certificate of authority as required in sections 62D.01 to 
 62D.30, operate as a health maintenance organization.  

    Subd. 2.    Contracts; generally.  A health maintenance 
 organization may enter into health maintenance contracts in this 
 state and engage in any other activities consistent with 
 sections 62D.01 to 62D.30 which are necessary to the performance 
 of its obligations under such contracts or authorize its 
 representatives to do so.  

    Subd. 3.    Contracts; health services.  A health 
 maintenance organization may contract with providers of health 
 care services to render the services the health maintenance 
 organization has promised to provide under the terms of its 
 health maintenance contracts, may, subject to section 62D.12, 
 subdivision 11, enter into separate prepaid dental contracts, or 
 other separate health service contracts, may, subject to the 
 limitations of section 62D.04, subdivision 1, clause (f), 
 contract with insurance companies and nonprofit health service 
 plan corporations for insurance, indemnity or reimbursement of 
 its cost of providing health care services for enrollees or 
 against the risks incurred by the health maintenance 
 organization, may contract with insurance companies and 
 nonprofit health service plan corporations for insolvency 
 insurance coverage, and may contract with insurance companies 
 and nonprofit health service plan corporations to insure or 
 cover the enrollees' costs and expenses in the health 
 maintenance organization, including the customary prepayment 
 amount and any co-payment obligations.  

    Subd. 4.    Contracts; administrative services.  A 
 health maintenance organization may contract with other persons 
 for the provision of services, including, but not limited to, 
 managerial and administration, marketing and enrolling, data 
 processing, actuarial analysis, and billing services.  If 
 contracts are made with insurance companies or nonprofit health 
 service plan corporations, such companies or corporations must 
 be authorized to transact business in this state.  

    Subd. 5.    Payment acceptance.  Each health maintenance 
 organization authorized to operate under sections 62D.01 to 
 62D.30, or its representative, may accept from governmental 
 agencies, private agencies, corporations, associations, groups, 
 individuals, or other persons payments covering all or part of 
 the cost of health care services provided to enrollees.  Any 
 recipient of medical assistance, pursuant to chapter 256B, may 
 make application to join a health maintenance organization which 
 has been approved for medical assistance by the commissioner of 
 human services.  

    Subd. 6.    Supplemental benefits.  (a) A health 
 maintenance organization may, as a supplemental benefit, provide 
 coverage to its enrollees for health care services and supplies 
 received from providers who are not employed by, under contract 
 with, or otherwise affiliated with the health maintenance 
 organization.  Supplemental benefits may be provided if the 
 following conditions are met:  

    (1) a health maintenance organization desiring to offer 
 supplemental benefits must at all times comply with the 
 requirements of sections 62D.041 and 62D.042; 

    (2) a health maintenance organization offering supplemental 
 benefits must maintain an additional surplus in the first year 
 supplemental benefits are offered equal to the lesser of 
 $500,000 or 33 percent of the supplemental benefit expenses.  At 
 the end of the second year supplemental benefits are offered, 
 the health maintenance organization must maintain an additional 
 surplus equal to the lesser of $1,000,000 or 33 percent of the 
 supplemental benefit expenses.  At the end of the third year 
 benefits are offered and every year after that, the health 
 maintenance organization must maintain an additional surplus 
 equal to the greater of $1,000,000 or 33 percent of the 
 supplemental benefit expenses.  When in the judgment of the 
 commissioner the health maintenance organization's surplus is 
 inadequate, the commissioner may require the health maintenance 
 organization to maintain additional surplus; 

    (3) claims relating to supplemental benefits must be 
 processed in accordance with the requirements of section 
 72A.201; and 

    (4) in marketing supplemental benefits, the health 
 maintenance organization shall fully disclose and describe to 
 enrollees and potential enrollees the nature and extent of the 
 supplemental coverage, and any claims filing and other 
 administrative responsibilities in regard to supplemental 
 benefits.  

    (b) The commissioner may, pursuant to chapter 14, adopt, 
 enforce, and administer rules relating to this subdivision, 
 including:  rules insuring that these benefits are supplementary 
 and not substitutes for comprehensive health maintenance 
 services by addressing percentage of out-of-plan coverage; rules 
 relating to the establishment of necessary financial reserves; 
 rules relating to marketing practices; and other rules necessary 
 for the effective and efficient administration of this 
 subdivision.  The commissioner, in adopting rules, shall give 
 consideration to existing laws and rules administered and 
 enforced by the Department of Commerce relating to health 
 insurance plans.  

    HIST: 1973 c 670 s 5; 1983 c 205 s 5; 1984 c 464 s 15; 1984 c 
 654 art 5 s 58; 1987 c 337 s 64; 1987 c 384 art 2 s 1; 1988 c 
 612 s 17; 1989 c 282 art 2 s 6 

     62D.06 Governing body. 

    Subdivision 1.    Governing body composition; enrollee 
 advisory body.  The governing body of any health maintenance 
 organization which is a nonprofit corporation may include 
 enrollees, providers, or other individuals; provided, however, 
 that after a health maintenance organization which is a 
 nonprofit corporation has been authorized under sections 62D.01 
 to 62D.30 for one year, at least 40 percent of the governing 
 body shall be composed of enrollees and members elected by the 
 enrollees and members from among the enrollees and members.  For 
 purposes of this section, "member" means a consumer who receives 
 health care services through a self-insured contract that is 
 administered by the health maintenance organization or its 
 related third-party administrator.  The number of members 
 elected to the governing body shall not exceed the number of 
 enrollees elected to the governing body.  An enrollee or member 
 elected to the governing board may not be a person: 

    (1) whose occupation involves, or before retirement 
 involved, the administration of health activities or the 
 provision of health services; 

    (2) who is or was employed by a health care facility as a 
 licensed health professional; or 

    (3) who has or had a direct substantial financial or 
 managerial interest in the rendering of a health service, other 
 than the payment of a reasonable expense reimbursement or 
 compensation as a member of the board of a health maintenance 
 organization. 

    After a health maintenance organization which is a local 
 governmental unit has been authorized under sections 62D.01 to 
 62D.30 for one year, an enrollee advisory body shall be 
 established.  The enrollees who make up this advisory body shall 
 be elected by the enrollees from among the enrollees. 

    Subd. 2.    Enrollee input.  The governing body shall 
 establish a mechanism to afford the enrollees an opportunity to 
 express their opinions in matters of policy and operation 
 through the establishment of advisory panels, by the use of 
 advisory referenda on major policy decisions, or through the use 
 of other mechanisms as may be prescribed or permitted by the 
 commissioner of health. 

    HIST: 1973 c 670 s 6; 1974 c 284 s 10; 1977 c 305 s 45; 1983 c 
 205 s 6; 1987 c 384 art 2 s 1; 1988 c 592 s 1; 1997 c 205 s 6 

     62D.07 Evidence of coverage; required terms. 

    Subdivision 1.    Requirement.  Every health maintenance 
 organization enrollee residing in this state is entitled to 
 evidence of coverage or contract.  The health maintenance 
 organization or its designated representative shall issue the 
 evidence of coverage or contract. 

    Subd. 2.    Filing with commissioner.  No evidence of 
 coverage or contract, or amendment thereto shall be issued or 
 delivered to any person in this state until a copy of the form 
 of the evidence of coverage or contract or amendment thereto has 
 been filed with the commissioner of health pursuant to section 
 62D.03 or 62D.08. 

    Subd. 3.    Required provisions.  Contracts and 
 evidences of coverage shall contain: 

    (a) no provisions or statements which are unjust, unfair, 
 inequitable, misleading, deceptive, or which are untrue, 
 misleading, or deceptive as defined in section 62D.12, 
 subdivision 1; 

    (b) a clear, concise and complete statement of: 

    (1) the health care services and the insurance or other 
 benefits, if any, to which the enrollee is entitled under the 
 health maintenance contract; 

    (2) any exclusions or limitations on the services, kind of 
 services, benefits, or kind of benefits, to be provided, 
 including any deductible or co-payment feature and requirements 
 for referrals, prior authorizations, and second opinions; 

    (3) where and in what manner information is available as to 
 how services, including emergency and out of area services, may 
 be obtained; 

    (4) the total amount of payment and co-payment, if any, for 
 health care services and the indemnity or service benefits, if 
 any, which the enrollee is obligated to pay with respect to 
 individual contracts, or an indication whether the plan is 
 contributory or noncontributory with respect to group 
 certificates; and 

    (5) a description of the health maintenance organization's 
 method for resolving enrollee complaints and a statement 
 identifying the commissioner as an external source with whom 
 complaints may be registered; and 

    (c) on the cover page of the evidence of coverage and 
 contract, a clear and complete statement of enrollees' rights.  
 The statement must be in bold print and captioned "Important 
 Enrollee Information and Enrollee Bill of Rights" and must 
 include but not be limited to the following provisions in the 
 following language or in substantially similar language approved 
 in advance by the commissioner, except that paragraph (8) does 
 not apply to prepaid health plans providing coverage for 
 programs administered by the commissioner of human services:  

                       ENROLLEE INFORMATION 

    (1) COVERED SERVICES:  Services provided by (name of health 
 maintenance organization) will be covered only if services are 
 provided by participating (name of health maintenance 
 organization) providers or authorized by (name of health 
 maintenance organization).  Your contract fully defines what 
 services are covered and describes procedures you must follow to 
 obtain coverage. 

    (2) PROVIDERS:  Enrolling in (name of health maintenance 
 organization) does not guarantee services by a particular 
 provider on the list of providers.  When a provider is no longer 
 part of (name of health maintenance organization), you must 
 choose among remaining (name of the health maintenance 
 organization) providers. 

    (3) REFERRALS:  Certain services are covered only upon 
 referral.  See section (section number) of your contract for 
 referral requirements.  All referrals to non-(name of health 
 maintenance organization) providers and certain types of health 
 care providers must be authorized by (name of health maintenance 
 organization). 

    (4) EMERGENCY SERVICES:  Emergency services from providers 
 who are not affiliated with (name of health maintenance 
 organization) will be covered only if proper procedures are 
 followed.  Your contract explains the procedures and benefits 
 associated with emergency care from (name of health maintenance 
 organization) and non-(name of health maintenance organization) 
 providers. 

    (5) EXCLUSIONS:  Certain services or medical supplies are 
 not covered.  You should read the contract for a detailed 
 explanation of all exclusions. 

    (6) CONTINUATION:  You may convert to an individual health 
 maintenance organization contract or continue coverage under 
 certain circumstances.  These continuation and conversion rights 
 are explained fully in your contract. 

    (7) CANCELLATION:  Your coverage may be canceled by you or 
 (name of health maintenance organization) only under certain 
 conditions.  Your contract describes all reasons for 
 cancellation of coverage. 

    (8) NEWBORN COVERAGE:  If your health plan provides for 
 dependent coverage, a newborn infant is covered from birth, but 
 only if services are provided by participating (name of health 
 maintenance organization) providers or authorized by (name of 
 health maintenance organization).  Certain services are covered 
 only upon referral.  (Name of health maintenance organization) 
 will not automatically know of the infant's birth or that you 
 would like coverage under your plan.  You should notify (name of 
 health maintenance organization) of the infant's birth and that 
 you would like coverage.  If your contract requires an 
 additional premium for each dependent, (name of health 
 maintenance organization) is entitled to all premiums due from 
 the time of the infant's birth until the time you notify (name 
 of health maintenance organization) of the birth.  (Name of 
 health maintenance organization) may withhold payment of any 
 health benefits for the newborn infant until any premiums you 
 owe are paid. 

    (9) PRESCRIPTION DRUGS AND MEDICAL EQUIPMENT:  Enrolling in 
 (name of health maintenance organization) does not guarantee 
 that any particular prescription drug will be available nor that 
 any particular piece of medical equipment will be available, 
 even if the drug or equipment is available at the start of the 
 contract year. 

                     ENROLLEE BILL OF RIGHTS 

    (1) Enrollees have the right to available and accessible 
 services including emergency services, as defined in your 
 contract, 24 hours a day and seven days a week; 

    (2) Enrollees have the right to be informed of health 
 problems, and to receive information regarding treatment 
 alternatives and risks which is sufficient to assure informed 
 choice; 

    (3) Enrollees have the right to refuse treatment, and the 
 right to privacy of medical and financial records maintained by 
 the health maintenance organization and its health care 
 providers, in accordance with existing law; 

    (4) Enrollees have the right to file a complaint with the 
 health maintenance organization and the commissioner of health 
 and the right to initiate a legal proceeding when experiencing a 
 problem with the health maintenance organization or its health 
 care providers; 

    (5) Enrollees have the right to a grace period of 31 days 
 for the payment of each premium for an individual health 
 maintenance contract falling due after the first premium during 
 which period the contract shall continue in force; 

    (6) Medicare enrollees have the right to voluntarily 
 disenroll from the health maintenance organization and the right 
 not to be requested or encouraged to disenroll except in 
 circumstances specified in federal law; and 

    (7) Medicare enrollees have the right to a clear 
 description of nursing home and home care benefits covered by 
 the health maintenance organization. 

    Subd. 4.    Payment grace period.  A grace period of 31 
 days shall be granted for payment of each premium for an 
 individual health maintenance contract falling due after the 
 first premium, during which period the contract shall continue 
 in force.  Individual health maintenance organization contracts 
 shall clearly state the existence of the grace period. 

    Subd. 5.    Contract cancellation.  Individual health 
 maintenance contracts shall state that any person may cancel the 
 contract within ten days of its receipt and have the premium 
 paid refunded if, after examination of the contract, the 
 individual is not satisfied with it for any reason.  The 
 individual is responsible for repaying the health maintenance 
 organization for any services rendered or claims paid by the 
 health maintenance organization during the ten days.  

    Subd. 6.    Coverage termination.  The contract and 
 evidence of coverage shall clearly explain the conditions upon 
 which a health maintenance organization may terminate coverage. 

    Subd. 7.    Continuation and conversion.  The contract 
 and evidence of coverage shall clearly explain continuation and 
 conversion rights afforded to enrollees. 

    Subd. 8.    Notice of changes.  Individual and group 
 contract holders shall be given 30 days' advance, written notice 
 of any change in subscriber fees or benefits. 

    Subd. 9.    Delivery.  Individual health maintenance 
 organization contracts shall be delivered to enrollees no later 
 than the date coverage is effective.  For enrollees with group 
 contracts, an evidence of coverage shall be delivered or issued 
 for delivery not more than 15 days from the date the health 
 maintenance organization is notified of the enrollment or the 
 effective date of coverage, whichever is later. 

    Subd. 10.    Complaint telephone number.  An individual 
 health maintenance organization contract and an evidence of 
 coverage must contain a Department of Health telephone number 
 that the enrollee can call to register a complaint about a 
 health maintenance organization. 

    HIST: 1973 c 670 s 7; 1977 c 305 s 45; 1984 c 464 s 16-19; 
 1986 c 444; 1988 c 434 s 3; 1988 c 592 s 2; 1997 c 205 s 7 

     62D.08 Annual report. 

    Subdivision 1.    Notice of changes.  A health 
 maintenance organization shall, unless otherwise provided for by 
 rules adopted by the commissioner of health, file notice with 
 the commissioner of health prior to any modification of the 
 operations or documents described in the information submitted 
 under clauses (a), (b), (e), (f), (g), (i), (j), (l), (m), (n), 
 (o), (p), (q), (r), (s), and (t) of section 62D.03, subdivision 
 4.  If the commissioner of health does not disapprove of the 
 filing within 60 days, it shall be deemed approved and may be 
 implemented by the health maintenance organization.  

    Subd. 2.    Annual report required.  Every health 
 maintenance organization shall annually, on or before April 1, 
 file a verified report with the commissioner of health covering 
 the preceding calendar year.  However, utilization data required 
 under subdivision 3, clause (c), shall be filed on or before 
 July 1. 

    Subd. 3.    Report requirements.  Such report shall be 
 on forms prescribed by the commissioner of health, and shall 
 include: 

    (a) a financial statement of the organization, including 
 its balance sheet and receipts and disbursements for the 
 preceding year certified by an independent certified public 
 accountant, reflecting at least (1) all prepayment and other 
 payments received for health care services rendered, (2) 
 expenditures to all providers, by classes or groups of 
 providers, and insurance companies or nonprofit health service 
 plan corporations engaged to fulfill obligations arising out of 
 the health maintenance contract, (3) expenditures for capital 
 improvements, or additions thereto, including but not limited to 
 construction, renovation or purchase of facilities and capital 
 equipment, and (4) a supplementary statement of assets, 
 liabilities, premium revenue, and expenditures for risk sharing 
 business under section 62D.04, subdivision 1, on forms 
 prescribed by the commissioner; 

    (b) the number of new enrollees enrolled during the year, 
 the number of group enrollees and the number of individual 
 enrollees as of the end of the year and the number of enrollees 
 terminated during the year; 

    (c) a summary of information compiled pursuant to section 
 62D.04, subdivision 1, clause (c), in such form as may be 
 required by the commissioner of health; 

    (d) a report of the names and addresses of all persons set 
 forth in section 62D.03, subdivision 4, clause (c), who were 
 associated with the health maintenance organization or the major 
 participating entity during the preceding year, and the amount 
 of wages, expense reimbursements, or other payments to such 
 individuals for services to the health maintenance organization 
 or the major participating entity, as those services relate to 
 the health maintenance organization, including a full disclosure 
 of all financial arrangements during the preceding year required 
 to be disclosed pursuant to section 62D.03, subdivision 4, 
 clause (d); 

    (e) a separate report addressing health maintenance 
 contracts sold to individuals covered by Medicare, title XVIII 
 of the Social Security Act, as amended, including the 
 information required under section 62D.30, subdivision 6; and 

    (f) such other information relating to the performance of 
 the health maintenance organization as is reasonably necessary 
 to enable the commissioner of health to carry out the duties 
 under sections 62D.01 to 62D.30. 

    Subd. 4.    Penalty; extension for good cause.  Any 
 health maintenance organization which fails to file a verified 
 report with the commissioner on or before April 1 of the year 
 due shall be subject to the levy of a fine up to $500 for each 
 day the report is past due.  This failure will serve as a basis 
 for other disciplinary action against the organization, 
 including suspension or revocation, in accordance with sections 
 62D.15 to 62D.17.  The commissioner may grant an extension of 
 the reporting deadline upon good cause shown by the health 
 maintenance organization.  Any fine levied or disciplinary 
 action taken against the organization under this subdivision is 
 subject to the contested case and judicial review provisions of 
 sections 14.57 to 14.69.  

    Subd. 5.    Changes in participating entities; penalty.  
 Any cancellation or discontinuance of any contract or agreement 
 listed in section 62D.03, subdivision 4, clause (e), or listed 
 subsequently in accordance with this subdivision, shall be 
 reported to the commissioner 120 days before the effective 
 date.  When the health maintenance organization terminates a 
 provider for cause, death, disability, or loss of license, the 
 health maintenance organization must notify the commissioner 
 within ten working days of the date the health maintenance 
 organization sends out or receives the notice of cancellation, 
 discontinuance, or termination.  Any health maintenance 
 organization which fails to notify the commissioner within the 
 time periods prescribed in this subdivision shall be subject to 
 the levy of a fine up to $200 per contract for each day the 
 notice is past due, accruing up to the date the organization 
 notifies the commissioner of the cancellation or 
 discontinuance.  Any fine levied under this subdivision is 
 subject to the contested case and judicial review provisions of 
 chapter 14.  The levy of a fine does not preclude the 
 commissioner from using other penalties described in sections 
 62D.15 to 62D.17. 

    Subd. 6.    Financial statements.  A health maintenance 
 organization shall submit to the commissioner unaudited 
 financial statements of the organization for the first three 
 quarters of the year on forms prescribed by the commissioner.  
 The statements are due 30 days after the end of the quarter and 
 shall be maintained as nonpublic data, as defined by section 
 13.02, subdivision 9.  Unaudited financial statements for the 
 fourth quarter shall be submitted at the request of the 
 commissioner. 

    HIST: 1973 c 670 s 8; 1974 c 284 s 2; 1977 c 305 s 45; 1983 c 
 289 s 114 subd 1; 1984 c 464 s 20-23; 1984 c 655 art 1 s 92; 
 1985 c 248 s 70; 1986 c 444; 1987 c 130 s 2; 1987 c 329 s 21; 
 1987 c 384 art 2 s 1; 1988 c 434 s 4,5; 1988 c 612 s 18; 1990 c 
 538 s 19-21; 2001 c 170 s 1 

     62D.09 Information to enrollees. 

    Subdivision 1.    Marketing requirements.  (a) Any 
 written marketing materials which may be directed toward 
 potential enrollees and which include a detailed description of 
 benefits provided by the health maintenance organization shall 
 include a statement of enrollee information and rights as 
 described in section 62D.07, subdivision 3, paragraphs (b) and 
 (c).  Prior to any oral marketing presentation, the agent 
 marketing the plan must inform the potential enrollees that any 
 complaints concerning the material presented should be directed 
 to the health maintenance organization, the commissioner of 
 health, or, if applicable, the employer. 

    (b) Detailed marketing materials must affirmatively 
 disclose all exclusions and limitations in the organization's 
 services or kinds of services offered to the contracting party, 
 including but not limited to the following types of exclusions 
 and limitations: 

    (1) health care services not provided; 

    (2) health care services requiring co-payments or 
 deductibles paid by enrollees; 

    (3) the fact that access to health care services does not 
 guarantee access to a particular provider type; and 

    (4) health care services that are or may be provided only 
 by referral of a physician. 

    (c) No marketing materials may lead consumers to believe 
 that all health care needs will be covered.  All marketing 
 materials must alert consumers to possible uncovered expenses 
 with the following language in bold print:  "THIS HEALTH CARE 
 PLAN MAY NOT COVER ALL YOUR HEALTH CARE EXPENSES; READ YOUR 
 CONTRACT CAREFULLY TO DETERMINE WHICH EXPENSES ARE COVERED."  
 Immediately following the disclosure required under paragraph 
 (b), clause (3), consumers must be given a telephone number to 
 use to contact the health maintenance organization for specific 
 information about access to provider types. 

    (d) The disclosures required in paragraphs (b) and (c) are 
 not required on billboards or image, and name identification 
 advertisement. 

    Subd. 2.    Information upon application.  The 
 application for coverage by the health maintenance organization 
 shall be accompanied by the statement of consumer information 
 and rights as described in section 62D.07, subdivision 3, 
 paragraph (c).  

    Subd. 3.    Annual report to enrollees.  Every health 
 maintenance organization or its representative shall annually, 
 before June 1, provide to its enrollees the following:  

    (1) a summary of its most recent annual financial statement 
 including a balance sheet and statement of receipts and 
 disbursements; 

    (2) a description of the health maintenance organization, 
 its health care plan or plans, its facilities and personnel, any 
 material changes therein since the last report; 

    (3) the current evidence of coverage, or amendments 
 thereto; and 

    (4) a statement of enrollee information and rights as 
 described in section 62D.07, subdivision 3, paragraph (c).  

    Under clause (3), a health maintenance organization may 
 annually alternate between providing enrollees with amendments 
 and providing current evidence of coverage. 

    Subd. 4.    Medicare information.  Health maintenance 
 organizations which issue contracts to persons who are covered 
 by title XVIII of the Social Security Act (Medicare) must give 
 the applicant, at the time of application, an outline containing 
 at least the following information: 

    (1) a description of the principal benefits and coverage 
 provided in the contract, including a clear description of 
 nursing home and home care benefits covered by the health 
 maintenance organization; 

    (2) a statement of the exceptions, reductions, and 
 limitations contained in the contract; 

    (3) the following language:  "This contract does not cover 
 all skilled nursing home care or home care services and does not 
 cover custodial or residential nursing care.  Read your contract 
 carefully to determine which nursing home facilities and home 
 care services are covered by your contract, and what procedures 
 you must follow to receive these benefits."; 

    (4) a statement of the renewal provisions including any 
 reservation by the health maintenance organization of the right 
 to change fees; 

    (5) a statement that the outline of coverage is a summary 
 of the contract issued or applied for and that the contract 
 should be read to determine governing contractual provisions; 
 and 

    (6) a statement explaining that the enrollee's Medicare 
 coverage is altered by enrollment with the health maintenance 
 organization, if applicable. 

    Subd. 5.    Participating providers.  Health maintenance 
 organizations shall provide enrollees with a list of the names 
 and locations of participating providers to whom enrollees have 
 direct access without referral no later than the effective date 
 of enrollment or date the evidence of coverage is issued and 
 upon request.  Health maintenance organizations need not provide 
 the names of their employed providers. 

    Subd. 6.    List of providers; requirements.  Any list 
 of providers issued by the health maintenance organization shall 
 include the date the list was published and contain a bold type 
 notice in a prominent location on the list of providers with the 
 following language, or substantially similar language approved 
 in advance by the commissioner: 

    "Enrolling in (name of health maintenance organization) 
 does not guarantee services by a particular provider on this 
 list.  If you wish to be certain of receiving care from a 
 specific provider listed, you should contact that provider to 
 ask whether or not the provider is still a (name of health 
 maintenance organization) provider and whether or not the 
 provider is accepting additional patients." 

    Subd. 7.    Requests for information.  Every health 
 maintenance organization shall provide the information described 
 in section 62D.07, subdivision 3, paragraphs (b) and (c), to 
 enrollees or their representatives on request, within a 
 reasonable time.  Information on how to obtain referrals, prior 
 authorization, or second opinion shall be given to the enrollee 
 or an enrollee's representative in person or by telephone within 
 one business day following the day the health maintenance 
 organization or its representative receives the request for 
 information. 

    Subd. 8.    Membership cards; summary of complaints.  
 Each health maintenance organization shall issue a membership 
 card to its enrollees.  The membership card must: 

    (1) identify the health maintenance organization; 

    (2) include the name, address, and telephone number to call 
 if the enrollee has a complaint; 

    (3) include the telephone number to call or the instruction 
 on how to receive authorization for emergency care; and 

    (4) include one of the following: 

    (i) the telephone number to call to appeal to or file a 
 complaint with the commissioner of health; or 

    (ii) for persons enrolled under section 256B.69, 256B.77, 
 256D.03, or 256L.12, the telephone number to call to file a 
 complaint with the ombudsperson designated by the commissioner 
 of human services under section 256B.69 or the Office of the 
 Ombudsman for Mental Health and Mental Retardation under section 
 256B.77 and the address to appeal to the commissioner of human 
 services.  The ombudsperson shall annually provide the 
 commissioner of health with a summary of complaints and actions 
 taken. 

    HIST: 1973 c 670 s 9; 1984 c 464 s 24; 1985 c 248 s 25; 1986 c 
 444; 1988 c 434 s 6; 1988 c 592 s 3-5; 1997 c 205 s 8-10; 1997 c 
 225 art 2 s 7; 2000 c 474 s 1 

     62D.095 Enrollee cost sharing. 

    Subdivision 1.    General application.  A health 
 maintenance contract may contain enrollee cost-sharing 
 provisions as specified in this section.  Co-payment and 
 deductible provisions in a group contract must not discriminate 
 on the basis of age, sex, race, disability, economic status, or 
 length of enrollment in the health plan.  During an open 
 enrollment period in which all offered health plans fully 
 participate without any underwriting restrictions, co-payment 
 and deductible provisions must not discriminate on the basis of 
 preexisting health status. 

    Subd. 2.    Co-payments.  (a) A health maintenance 
 contract may impose a co-payment as authorized under Minnesota 
 Rules, part 4685.0801, or under this section.  

    (b) A health maintenance organization may impose a flat fee 
 co-payment on outpatient office visits not to exceed 40 percent 
 of the median provider's charges for similar services or goods 
 received by the enrollees as calculated under Minnesota Rules, 
 part 4685.0801.  A health maintenance organization may impose a 
 flat fee co-payment on outpatient prescription drugs not to 
 exceed 50 percent of the median provider's charges for similar 
 services or goods received by the enrollees as calculated under 
 Minnesota Rules, part 4685.0801.  

    (c) If a health maintenance contract is permitted to impose 
 a co-payment for preexisting health status under sections 62D.01 
 to 62D.30, these provisions may vary with respect to length of 
 enrollment in the health plan.  

    Subd. 3.    Deductibles.  (a) A health maintenance 
 contract issued by a health maintenance organization that is 
 assessed less than three percent of the total annual amount 
 assessed by the Minnesota comprehensive health association may 
 impose deductibles not to exceed $3,000 per person, per year and 
 $6,000 per family, per year.  For purposes of the percentage 
 calculation, a health maintenance organization's assessments 
 include those of its affiliates.  

    (b) All other health maintenance contracts may impose 
 deductibles not to exceed $2,250 per person, per year and $4,500 
 per family, per year.  

    Subd. 4.    Annual out-of-pocket maximums.  (a) A health 
 maintenance contract issued by a health maintenance organization 
 that is assessed less than three percent of the total annual 
 amount assessed by the Minnesota comprehensive health 
 association must include a limitation not to exceed $4,500 per 
 person and $7,500 per family on total annual out-of-pocket 
 enrollee cost-sharing expenses.  For purposes of the percentage 
 calculation, a health maintenance organization's assessments 
 include those of its affiliates.  

    (b) All other health maintenance contracts must include a 
 limitation not to exceed $3,000 per person and $6,000 per family 
 on total annual out-of-pocket enrollee cost-sharing expenses.  

    Subd. 5.    Exceptions.  No co-payments or deductibles 
 may be imposed on preventive health care services as described 
 in Minnesota Rules, part 4685.0801, subpart 8.  

    Subd. 6.    Public programs.  This section does not 
 apply to the prepaid medical assistance program, the 
 MinnesotaCare program, the prepaid general assistance program, 
 the federal Medicare program, or the health plans provided 
 through any of those programs. 

    HIST: 2002 c 387 s 3; 1Sp2003 c 14 art 7 s 8,9 

     62D.10 Provisions applicable to all health plans. 

    Subdivision 1.    Applicability.  The provisions of this 
 section shall be applicable to nonprofit prepaid health care 
 plans regulated under chapter 317A, and health maintenance 
 organizations regulated pursuant to sections 62D.01 to 62D.30, 
 both of which for purposes of this section shall be known as 
 "health plans". 

    Subd. 2. Repealed, 1984 c 464 s 46 

    Subd. 3.    Open enrollment.  A health plan providing 
 health maintenance services or reimbursement for health care 
 costs to a specified group or groups may limit the open 
 enrollment in each group plan to members of such group or 
 groups, but after it has been in operation 24 months shall have 
 an annual open enrollment period of at least 14 days during 
 which it shall accept all otherwise eligible individuals in the 
 order in which they apply for enrollment in a manner which does 
 not discriminate on the basis of age, sex, race, health, or 
 economic status.  The health maintenance organization shall 
 notify potential enrollees of any limitations on the number of 
 new enrollees to be accepted.  "Specified groups" may include, 
 but shall not be limited to: 

    (a) employees of one or more specified employers; 

    (b) members of one or more specified labor unions; 

    (c) members of one or more specified associations; 

    (d) patients of physicians providing services through a 
 health care plan who had previously provided services outside 
 the health care plan; and 

    (e) members of an existing group insurance policy. 

    Subd. 4.    Waivers.  A health plan may apply to the 
 commissioner of health for a waiver of the requirements of this 
 section or for authorization to impose such underwriting 
 restrictions upon open enrollment as are necessary (a) to 
 preserve its financial stability, (b) to prevent excessive 
 adverse selection by prospective enrollees, or (c) to avoid 
 unreasonably high or unmarketable charges for enrollee coverage 
 for health care services.  The commissioner of health upon a 
 showing of good cause, shall approve or upon failure to show 
 good cause shall deny such application within 30 days of the 
 receipt thereof from the health plan. The commissioner of health 
 may, in accordance with chapter 14, promulgate rules to 
 implement this section. 

    Subd. 5.    Application fee.  Any fee charged by a 
 health maintenance organization for the process of determining 
 an applicant's eligibility, and any other application fee 
 charged, shall be refunded with interest to the applicant if the 
 applicant is not accepted for enrollment in the health 
 maintenance organization, or credited with interest to the 
 applicant's premiums due if the applicant is accepted for 
 enrollment in the organization.  

    Subd. 6.    Statement of risk sharing.  Health 
 maintenance organization contracts under section 62D.04, 
 subdivision 1, shall include a clear statement of the risk 
 sharing arrangement. 

    HIST: 1973 c 670 s 10; 1974 c 284 s 3,4; 1977 c 305 s 45; 1977 
 c 409 s 3; 1982 c 424 s 130; 1984 c 464 s 25,26; 1987 c 130 s 3; 
 1987 c 384 art 2 s 1; 1989 c 304 s 137 

     62D.101 Continuation and conversion privileges for 
  former spouses and children. 

    Subdivision 1.    Termination of coverage.  No health 
 maintenance contract which, in addition to covering an enrollee, 
 also covers the enrollee's spouse shall contain a provision for 
 termination of coverage for a spouse covered under the health 
 maintenance contract solely as a result of a break in the 
 marital relationship. 

    Subd. 2.    Conversion privilege.  Every health 
 maintenance contract, as described in subdivision 1 shall 
 contain a provision allowing a former spouse and dependent 
 children of an enrollee, without providing evidence of 
 insurability, to obtain from the health maintenance organization 
 at the expiration of any continuation of coverage required under 
 subdivision 2a or sections 62A.146 and 62D.105, an individual 
 health maintenance contract providing at least the minimum 
 benefits of a qualified plan as prescribed by section 62E.06 and 
 the option of a number three qualified plan, a number two 
 qualified plan, a number one qualified plan as provided by 
 section 62E.06, subdivisions 1 to 3, provided application is 
 made to the health maintenance organization within 30 days 
 following notice of the expiration of the continued coverage and 
 upon payment of the appropriate fee.  A contract providing 
 reduced benefits at a reduced fee may be accepted by the former 
 spouse and dependent children in lieu of the optional coverage 
 otherwise required by this subdivision.  The individual health 
 maintenance contract shall be renewable at the option of the 
 former spouse as long as the former spouse is not covered under 
 another qualified plan as defined in section 62E.02, subdivision 
 4.  Any revisions in the table of rate for the individual 
 contract shall apply to the former spouse's original age at 
 entry and shall apply equally to all similar contracts issued by 
 the health maintenance organization.  

    Subd. 2a.    Continuation privilege.  Every health 
 maintenance contract as described in subdivision 1 shall contain 
 a provision which permits continuation of coverage under the 
 contract for the enrollee's former spouse and children upon 
 entry of a valid decree of dissolution of marriage.  The 
 coverage shall be continued until the earlier of the following 
 dates:  

    (a) the date the enrollee's former spouse becomes covered 
 under another group plan or Medicare; or 

    (b) the date coverage would otherwise terminate under the 
 health maintenance contract.  

    If coverage is provided under a group policy, any required 
 premium contributions for the coverage shall be paid by the 
 enrollee on a monthly basis to the group contract holder to be 
 paid to the health maintenance organization.  The contract must 
 require the group contract holder to, upon request, provide the 
 enrollee with written verification from the insurer of the cost 
 of this coverage promptly at the time of eligibility for this 
 coverage and at any time during the continuation period.  In no 
 event shall the fee charged exceed 102 percent of the cost to 
 the plan for the period of coverage for other similarly situated 
 spouses and dependent children when the marital relationship has 
 not dissolved, regardless of whether the cost is paid by the 
 employer or employee. 

    Subd. 3.    Application.  Subdivision 1 applies to every 
 health maintenance contract which is delivered, issued for 
 delivery, renewed or amended on or after July 19, 1977. 

    Subdivisions 2 and 2a apply to every health maintenance 
 contract which is delivered, issued for delivery, renewed, or 
 amended on or after March 1, 1983.  

    HIST: 1977 c 186 s 3; 1982 c 555 s 10; 1982 c 642 s 16; 1984 c 
 464 s 27,28; 1988 c 434 s 7; 1990 c 403 s 10; 1992 c 564 art 4 s 
 10 

     62D.102 Family therapy. 

    Covered treatment for a minor includes treatment for the 
 family if family therapy is recommended by a health maintenance 
 organization provider.  For purposes of determining benefits 
 under this section, "hours of treatment" means treatment 
 rendered on an individual or single-family basis.  If treatment 
 is rendered on a group basis, the hours of covered group 
 treatment must be provided at a ratio of no less than two group 
 treatment sessions to one individual treatment hour.  For a 
 health maintenance contract that is offered as a companion to a 
 health insurance subscriber contract, the benefits for mental or 
 nervous disorders must be calculated in aggregate for the health 
 maintenance contract and the health insurance subscriber 
 contract. 

    HIST: 1984 c 641 s 3; 1987 c 337 s 65; 1988 c 689 art 2 s 12; 
 1997 c 205 s 11 

     62D.103 Second opinion related to chemical dependency 
  and mental health. 

    A health maintenance organization shall promptly evaluate 
 the treatment needs of any enrollee who is seeking treatment for 
 a problem related to chemical dependency or mental health 
 conditions.  In the event that the health maintenance 
 organization or a participating provider determines that no type 
 of structured treatment is necessary, the enrollee shall be 
 immediately entitled to a second opinion paid for by the health 
 maintenance organization, by a health care professional 
 qualified in diagnosis and treatment of the problem and not 
 affiliated with the health maintenance organization.  The health 
 maintenance organization or participating provider shall 
 consider the second opinion but is not obligated to accept the 
 conclusion of the second opinion.  The health maintenance 
 organization or participating provider shall document its 
 consideration of the second opinion.  

    HIST: 1984 c 641 s 4 

     62D.104 Required out-of-area conversion. 

    Enrollees who have individual health maintenance 
 organization contracts and who have become nonresidents of the 
 health maintenance organization's service area but remain 
 residents of the state of Minnesota shall be given the option, 
 to be arranged by the health maintenance organization if an 
 agreement with an insurer can reasonably be made, of a number 
 three qualified plan, a number two qualified plan, or a number 
 one qualified plan as provided by section 62E.06, subdivisions 1 
 to 3, or, if such enrollees are covered by title XVIII of the 
 Social Security Act (Medicare), they shall be given the option 
 of a Medicare supplement plan as provided by chapter 62A. 

    This option shall be made available at the enrollee's 
 expense, without further evidence of insurability and without 
 interruption of coverage. 

    If a health maintenance organization cannot make 
 arrangements for conversion coverage, the health maintenance 
 organization shall notify enrollees of health plans available in 
 other service areas. 

    HIST: 1988 c 434 s 8; 1989 c 258 s 9 

     62D.105 Coverage of current spouse and children. 

    Subdivision 1.    Requirement.  Every health maintenance 
 contract, which in addition to covering the enrollee also 
 provides coverage to the spouse and dependent children of the 
 enrollee shall:  (1) permit the spouse and dependent children to 
 elect to continue coverage when the enrollee becomes enrolled 
 for benefits under title XVIII of the Social Security Act 
 (Medicare); and (2) permit the dependent children to continue 
 coverage when they cease to be dependent children under the 
 generally applicable requirement of the plan. 

    Subd. 2.    Continuation privilege.  The coverage 
 described in subdivision 1 may be continued until the earlier of 
 the following dates: 

    (1) the date coverage would otherwise terminate under the 
 contract; 

    (2) 36 months after continuation by the spouse or dependent 
 was elected; or 

    (3) the date the spouse or dependent children become 
 covered under another group health plan or Medicare. 

    If coverage is provided under a group policy, any required 
 fees for the coverage shall be paid by the enrollee on a monthly 
 basis to the group contract holder for remittance to the health 
 maintenance organization.  In no event shall the fee charged 
 exceed 102 percent of the cost to the plan for such coverage for 
 other similarly situated spouse and dependent children to whom 
 subdivision 1 is not applicable, without regard to whether such 
 cost is paid by the employer or employee. 

    HIST: 1988 c 434 s 9 

  62D.106 Repealed, 1995 c 207 art 10 s 25 

  62D.108 Repealed, 2000 c 349 s 2 

     62D.109 Services associated with clinical trials. 

    A health maintenance organization must inform an enrollee 
 who is a participant in a clinical trial upon inquiry by the 
 enrollee that coverage shall be provided as required under the 
 enrollee's health maintenance contract or under state or federal 
 rule or statute. 

    HIST: 1Sp2001 c 9 art 16 s 2; 2002 c 379 art 1 s 113 

     62D.11 Complaint system. 

    Subdivision 1.    Enrollee complaint system.  Every 
 health maintenance organization shall establish and maintain a 
 complaint system, as required under sections 62Q.68 to 62Q.72 to 
 provide reasonable procedures for the resolution of written 
 complaints initiated by or on behalf of enrollees concerning the 
 provision of health care services.  

    Subd. 1a.    Service coverage.  Where a complaint 
 involves a dispute about a health maintenance organization's 
 coverage of a service, the commissioner may review the complaint 
 and any information and testimony necessary in order to make a 
 determination and order the appropriate remedy pursuant to 
 sections 62D.15 to 62D.17. 

    Subd. 1b.  Repealed, 1999 c 239 s 43 para (a) 

    Subd. 2.  Repealed, 1999 c 239 s 43 para (a) 

    Subd. 3.    Denial of coverage.  Within a reasonable 
 time after receiving an enrollee's written or oral communication 
 to the health maintenance organization concerning a denial of 
 coverage or inadequacy of services, the health maintenance 
 organization shall provide the enrollee with a written statement 
 of the reason for the denial of coverage, and a statement 
 approved by the commissioner of health which explains the health 
 maintenance organization complaint procedures, and in the case 
 of Medicare enrollees, which also explains Medicare appeal 
 procedures. 

    Subd. 4. Repealed, 1997 c 205 s 40 

    HIST: 1973 c 670 s 11; 1974 c 284 s 5; 1977 c 305 s 45; 1986 c 
 444; 1988 c 434 s 10; 1988 c 592 s 6,7; 1990 c 538 s 22-24; 1995 
 c 234 art 2 s 1; 1997 c 205 s 12-14; 1998 c 407 art 2 s 2; 1999 
 c 239 s 1 

     62D.12 Prohibited practices. 

    Subdivision 1.    False representations.  No health 
 maintenance organization or representative thereof may cause or 
 knowingly permit the use of advertising or solicitation which is 
 untrue or misleading, or any form of evidence of coverage which 
 is deceptive.  Each health maintenance organization shall be 
 subject to sections 72A.17 to 72A.32, relating to the regulation 
 of trade practices, except (a) to the extent that the nature of 
 a health maintenance organization renders such sections clearly 
 inappropriate and (b) that enforcement shall be by the 
 commissioner of health and not by the commissioner of commerce.  
 Every health maintenance organization shall be subject to 
 sections 8.31 and 325F.69. 

    Subd. 1a.    Swing-out products.  Notwithstanding 
 subdivision 1, nothing in sections 62A.049, 62A.60, and 72A.201, 
 subdivision 4a, applies to a commercial health policy issued 
 under this chapter as a companion to a health maintenance 
 contract. 

    Subd. 2.    Coverage cancellation; nonrenewal.  No 
 health maintenance organization may cancel or fail to renew the 
 coverage of an enrollee except for (a) failure to pay the charge 
 for health care coverage; (b) termination of the health care 
 plan; (c) termination of the group plan; (d) enrollee moving out 
 of the area served, subject to section 62A.17, subdivisions 1 
 and 6, and section 62D.104; (e) enrollee moving out of an 
 eligible group, subject to section 62A.17, subdivisions 1 and 6, 
 and section 62D.104; (f) failure to make co-payments required by 
 the health care plan; (g) fraud or misrepresentation by the 
 enrollee with respect to eligibility for coverage or any other 
 material fact; or (h) other reasons established in rules 
 promulgated by the commissioner of health. 

    Subd. 2a.    Cancellation or nonrenewal notice.  
 Enrollees shall be given 30 days' notice of any cancellation or 
 nonrenewal, except that enrollees who are eligible to receive 
 replacement coverage under section 62D.121, subdivision 1, shall 
 receive 90 days' notice as provided under section 62D.121, 
 subdivision 5. 

    Subd. 3.    Use of terms.  No health maintenance 
 organization may use in its name, contracts, or literature any 
 of the words "insurance," "casualty," "surety," "mutual," or any 
 other words which are descriptive of the insurance, casualty or 
 surety business or deceptively similar to the name or 
 description of any insurance or surety corporation doing 
 business in this state; provided, however, that when a health 
 maintenance organization has contracted with an insurance 
 company for any coverage permitted by sections 62D.01 to 62D.30, 
 it may so state. 

    Subd. 4.    Enrollee reimbursement.  No health 
 maintenance contract or evidence of coverage shall provide for 
 the reimbursement of an enrollee other than through a policy of 
 insurance, except as stated in this subdivision:  

    (a) the health maintenance organization may refund payments 
 made by or on behalf of an enrollee; 

    (b) the health maintenance organization may make direct 
 payments to enrollees or providers for obligations incurred for 
 nonelective emergency or out-of-area services received. 

    Subd. 5.    Recourse limited.  The providers under 
 agreement with a health maintenance organization to provide 
 health care services shall not have recourse against enrollees 
 or persons acting on their behalf for amounts above those 
 specified in the evidence of coverage as co-payments for health 
 care services.  The health maintenance organization shall not 
 have recourse against enrollees or persons acting on their 
 behalf for amounts above those specified in the evidence of 
 coverage as the periodic prepayment, or co-payment, for health 
 care services.  This subdivision applies but is not limited to 
 the following events: 

    (1) nonpayment by the health maintenance organization; 

    (2) insolvency of the health maintenance organization; and 

    (3) breach of the agreement between the health maintenance 
 organization and the provider. 

    This subdivision does not limit a provider's ability to 
 seek payment from any person other than the enrollee, the 
 enrollee's guardian or conservator, the enrollee's immediate 
 family members, or the enrollee's legal representative in the 
 event of nonpayment by the health maintenance organization. 

    Subd. 6.    Nondiscriminatory rates.  The rates charged 
 by health maintenance organizations and their representatives 
 shall not discriminate except in accordance with accepted 
 actuarial principles. 

    Subd. 7. Repealed, 1984 c 464 s 46 

    Subd. 8.    Nondiscriminatory enrollment.  No health 
 maintenance organization shall discriminate in enrollment policy 
 against any person solely by virtue of status as a recipient of 
 medical assistance or Medicare. 

    Subd. 9.    Net earnings.  All net earnings of the 
 health maintenance organization shall be devoted to the 
 nonprofit purposes of the health maintenance organization in 
 providing comprehensive health care.  No health maintenance 
 organization shall provide for the payment, whether directly or 
 indirectly, of any part of its net earnings, to any person as a 
 dividend or rebate; provided, however, that health maintenance 
 organizations may make payments to providers or other persons 
 based upon the efficient provision of services or as incentives 
 to provide quality care.  The commissioner of health shall, 
 pursuant to sections 62D.01 to 62D.30, revoke the certificate of 
 authority of any health maintenance organization in violation of 
 this subdivision. 

    Subd. 9a.    Authorized expenses.  Authorized expenses 
 of a health maintenance organization shall include:  

    (1) cash rebates to enrollees, or to persons who have made 
 payments on behalf of enrollees; 

    (2) direct payments to enrollees or providers as provided 
 in subdivision 4, clause (b); 

    (3) free or reduced cost health service to enrollees; 

    (4) payments to any organization or organizations selected 
 by the health maintenance organization which are operated for 
 charitable, educational, or religious or scientific purposes.  

    Subd. 9b.    Hospital risk agreement.  A health 
 maintenance organization shall not enter into an agreement with 
 a hospital in which the hospital agrees to assume the financial 
 risk for services provided by other facilities or providers not 
 owned, operated, or otherwise subject to the control of the 
 hospital assuming the financial risk. 

    Subd. 10.    Offsetting.  No health maintenance contract 
 or evidence of coverage entered into, issued, amended, renewed 
 or delivered on or after January 1, 1976 shall contain any 
 provision offsetting, or in any other manner reducing, any 
 benefit to an enrollee or other beneficiary by the amount of, or 
 in any proportion to, any increase in disability benefits 
 received or receivable under the federal Social Security Act, as 
 amended subsequent to the date of commencement of such benefit, 
 the Railroad Retirement Act, any Veteran's Disability 
 Compensation and Survivor Benefits Act, workers' compensation, 
 or any similar federal or state law, as amended subsequent to 
 the date of commencement of that benefit. 

    Subd. 11.    Dental service rates.  Any health 
 maintenance organization which includes coverage of 
 comprehensive dental services in its comprehensive health 
 maintenance services shall not include the charge for the dental 
 services in the same rate as the charge for other comprehensive 
 health maintenance services. The rates for dental services shall 
 be computed, stated and bid separately.  No employer shall be 
 required to purchase dental services in combination with other 
 comprehensive health services.  An employer may purchase dental 
 services separately. 

    Subd. 12. Repealed, 1996 c 310 s 1 

    Subd. 13.    Refusal based on workers' compensation.  No 
 health maintenance organization offering an individual or group 
 health maintenance contract shall refuse to provide or renew the 
 coverage because the applicant or enrollee has an option to 
 elect workers' compensation coverage pursuant to section 176.041.

    Subd. 14.    Telephone number.  Each health maintenance 
 organization shall establish a telephone number, which need not 
 be toll free, that providers may call with questions about 
 coverage, prior authorization, and approval of medical 
 services.  The telephone number must be staffed by an employee 
 of the health maintenance organization during normal working 
 hours during the normal work week.  After normal working hours, 
 the telephone number must be equipped with an answering machine 
 and recorded message to allow the caller an opportunity to leave 
 a message.  The health maintenance organization must respond to 
 questions within 24 hours after they are received, excluding 
 weekends and holidays.  At the request of a provider, the health 
 maintenance organization shall provide a copy of the health 
 maintenance contract for enrollees in the provider's service 
 area. 

    Subd. 15.    Retaliatory action prohibited.  No health 
 maintenance organization may take retaliatory action against a 
 provider solely on the grounds that the provider disseminated 
 accurate information regarding coverage of benefits or accurate 
 benefit limitations of an enrollee's contract or accurate 
 interpreted provisions of the provider agreement that limit the 
 prescribing, providing, or ordering of care. 

    Subd. 16. Repealed, 1990 c 538 s 32 

    Subd. 17.    Disclosure of commissions.  Any person 
 receiving commissions for the sale of coverage or enrollment in 
 a health plan, as defined in section 62A.011, offered by a 
 health maintenance organization shall, before selling coverage 
 or enrollment, disclose in writing to the prospective purchaser 
 the amount of any commission or other compensation the person 
 will receive as a direct result of the sale.  The disclosure may 
 be expressed in dollars or as a percentage of the premium.  The 
 amount disclosed need not include any anticipated renewal 
 commissions. 

    Subd. 18.    Special reinstatement privilege.  No health 
 maintenance organization shall fail to comply with the special 
 reinstatement privilege provided under section 62A.04, 
 subdivision 2, clause (4), for the Medicare-related coverage 
 referred to in that clause. 

    Subd. 19.    Coverage of service.  A health maintenance 
 organization may not deny or limit coverage of a service which 
 the enrollee has already received solely on the basis of lack of 
 prior authorization or second opinion, to the extent that the 
 service would otherwise have been covered under the member's 
 contract by the health maintenance organization had prior 
 authorization or second opinion been obtained. 

    HIST: 1973 c 670 s 12; 1974 c 284 s 8,9; 1975 c 323 s 4; 1976 
 c 296 art 1 s 18; 1977 c 305 s 45; 1980 c 614 s 74; 1983 c 289 s 
 114 subd 1; 1984 c 464 s 30-36; 1984 c 641 s 5; 1984 c 655 art 1 
 s 92; 1985 c 248 s 70; 1987 c 384 art 2 s 1; 1988 c 434 s 11,12; 
 1988 c 592 s 8,9; 1988 c 612 s 19,20; 1989 c 330 s 23; 1993 c 
 345 art 5 s 6; 1994 c 485 s 65; 1994 c 625 art 10 s 13; 1995 c 
 75 s 2; 1996 c 305 art 1 s 20; 1997 c 205 s 15; 1999 c 177 s 43 

     62D.121 Required replacement coverage. 

    Subdivision 1.    Replacement coverage.  When membership 
 of an enrollee who has individual health coverage is terminated 
 by the health maintenance organization for a reason other than 
 (a) failure to pay the charge for health care coverage; (b) 
 failure to make co-payments required by the health care plan; (c) 
 enrollee moving out of the area served; or (d) a materially 
 false statement or misrepresentation by the enrollee in the 
 application for membership, the health maintenance organization 
 must offer or arrange to offer replacement coverage, without 
 evidence of insurability, without preexisting condition 
 exclusions, and without interruption of coverage. 

    Subd. 2.    Health maintenance organization coverage 
 required.  If the health maintenance organization has 
 terminated individuals from coverage in a service area, the 
 replacement coverage shall be health maintenance organization 
 coverage issued by the health maintenance organization 
 terminating coverage unless the health maintenance organization 
 can demonstrate to the commissioner that offering health 
 maintenance organization replacement coverage would not be 
 feasible.  In making the determination, the commissioner shall 
 consider (1) loss ratios and forecasts, (2) lack of agreements 
 between health care providers and the health maintenance 
 organization to offer that product, (3) evidence of anticipated 
 premium needs compared with established rates, (4) the financial 
 impact of the replacement coverage on the overall financial 
 solvency of the plan, and (5) the cost to the enrollee of health 
 maintenance organization replacement coverage as compared to 
 cost to the enrollee of the replacement coverage required under 
 subdivision 3. 

    Subd. 2a.    Other coverage permitted.  The terminating 
 health maintenance organization may also offer as replacement 
 coverage health maintenance organization coverage issued by 
 another health maintenance organization. 

    Subd. 3.    Required coverage.  If health maintenance 
 organization replacement coverage is not offered by the health 
 maintenance organization, as explained under subdivisions 2 and 
 2a, the replacement coverage shall provide, for enrollees 
 covered by title XVIII of the Social Security Act, coverage at 
 least equivalent to a basic Medicare supplement plan as defined 
 in section 62A.316, except that the replacement coverage shall 
 also cover the liability for any Medicare Part A and Part B 
 deductible as defined under title XVIII of the Social Security 
 Act.  After satisfaction of the Medicare Part B deductible, the 
 replacement coverage shall be at least 80 percent of usual and 
 customary eligible medical expenses and supplies not covered by 
 Medicare Part B eligible expenses.  This does not include 
 outpatient prescription drugs.  The fee or premium of the 
 replacement coverage shall not exceed the premium charged by the 
 state comprehensive health plan as established under section 
 62E.08, for a qualified Medicare supplement plan.  All enrollees 
 not covered by Medicare shall be given the option of a number 
 three qualified plan or a number two qualified plan as defined 
 in section 62E.06, subdivisions 1 and 2, for replacement 
 coverage.  The fee or premium for a number three qualified plan 
 shall not exceed 125 percent of the average of rates charged by 
 the five insurers with the largest number of individuals in a 
 number three qualified plan of insurance in force in Minnesota.  
 The fee or premium for a number two qualified plan shall not 
 exceed 125 percent of the average of rates charged by the five 
 insurers with the largest number of individuals in a number two 
 qualified plan of insurance in force in Minnesota.  

    Subd. 3a.    Fee.  If the replacement coverage is health 
 maintenance organization coverage, as explained in subdivisions 
 2 and 2a, the fee shall not exceed 125 percent of the cost of 
 the average fee charged by health maintenance organizations for 
 a similar health plan.  The commissioner of health will 
 determine the average cost of the plan on the basis of 
 information provided annually by the health maintenance 
 organizations concerning the rates charged by the health 
 maintenance organizations for the plans offered.  Fees or 
 premiums charged under this section must be actuarially 
 justified. 

    Subd. 4.    Approval required.  The commissioner will 
 approve or disapprove the replacement coverage within 30 days.  
 A health maintenance organization shall not give enrollees a 
 notice of cancellation of coverage until a replacement policy 
 has been filed with the commissioner and approved or disapproved.

    Subd. 5.    Notice of cancellation.  The health 
 maintenance organization must provide the terminated enrollees 
 with a notice of cancellation 90 days before the date the 
 cancellation takes effect.  If the replacement coverage is 
 approved by the commissioner under subdivision 4, the notice 
 shall clearly and completely describe the replacement coverage 
 that the enrollees are eligible to receive and explain the 
 procedure for enrolling.  If the replacement coverage is not 
 approved by the commissioner, the health maintenance 
 organization shall provide a cancellation notice with 
 information that the enrollee is entitled to enroll in the state 
 comprehensive health insurance plan with a waiver of the waiting 
 period for preexisting conditions under section 62E.14, 
 subdivisions 1, paragraph (d), and 6. 

    Subd. 6.    Notice exception.  The commissioner may 
 waive the notice required in this section if the commissioner 
 determines that the health maintenance organization has not 
 received information regarding Medicare reimbursement rates from 
 the Centers for Medicare and Medicaid Services before September 
 1 for contracts renewing on January 1 of the next year.  In no 
 event shall enrollees covered by title XVIII of the Social 
 Security Act receive less than 60 days' notice of contract 
 termination. 

    Subd. 7.    Geographic accessibility.  If the 
 commissioner determines that there are not enough providers to 
 assure that enrollees have accessible health services available 
 in a geographic service area, the commissioner shall institute a 
 plan of corrective action that shall be followed by the health 
 maintenance organization.  Such a plan may include but not be 
 limited to requiring the health maintenance organization to make 
 payments to nonparticipating providers for health services for 
 enrollees, requiring the health maintenance organization to 
 discontinue accepting new enrollees in that service area, and 
 requiring the health maintenance organization to reduce its 
 geographic service area.  If a nonparticipating provider has 
 been a participating provider with the health maintenance 
 organization within the last year, any payments made under this 
 section must not exceed the payment level of the previous 
 contract unless the commissioner determines that without 
 adjusting payments the health maintenance organization will be 
 unable to meet the health care needs of enrollees in the area. 

    HIST: 1988 c 434 s 13; 1989 c 258 s 10; 1990 c 538 s 25,26; 
 2002 c 277 s 32 

  62D.122 Repealed, 1988 c 434 s 24; 1990 c 538 s 31 

     62D.123 Provider contracts. 

    Subdivision 1.    Provider agreement.  Except for an 
 employment agreement between a provider and health maintenance 
 organization, an agreement to provide health care services 
 between a provider and a health maintenance organization entered 
 into or renewed after April 25, 1988, must contain the following 
 provision: 

    PROVIDER AGREES NOT TO BILL, CHARGE, COLLECT A DEPOSIT 
 FROM, SEEK REMUNERATION FROM, OR HAVE ANY RECOURSE AGAINST AN 
 ENROLLEE OR PERSONS ACTING ON THEIR BEHALF FOR SERVICES PROVIDED 
 UNDER THIS AGREEMENT.  THIS PROVISION APPLIES TO BUT IS NOT 
 LIMITED TO THE FOLLOWING EVENTS:  (1) NONPAYMENT BY THE HEALTH 
 MAINTENANCE ORGANIZATION OR (2) BREACH OF THIS AGREEMENT.  THIS 
 PROVISION DOES NOT PROHIBIT THE PROVIDER FROM COLLECTING 
 CO-PAYMENTS OR FEES FOR UNCOVERED SERVICES.  

    THIS PROVISION SURVIVES THE TERMINATION OF THIS AGREEMENT 
 FOR AUTHORIZED SERVICES PROVIDED BEFORE THIS AGREEMENT 
 TERMINATES, REGARDLESS OF THE REASON FOR TERMINATION.  THIS 
 PROVISION IS FOR THE BENEFIT OF THE HEALTH MAINTENANCE 
 ORGANIZATION ENROLLEES.  THIS PROVISION DOES NOT APPLY TO 
 SERVICES PROVIDED AFTER THIS AGREEMENT TERMINATES. 

    THIS PROVISION SUPERSEDES ANY CONTRARY ORAL OR WRITTEN 
 AGREEMENT EXISTING NOW OR ENTERED INTO IN THE FUTURE BETWEEN THE 
 PROVIDER AND THE ENROLLEE OR PERSONS ACTING ON THEIR BEHALF 
 REGARDING LIABILITY FOR PAYMENT FOR SERVICES PROVIDED UNDER THIS 
 AGREEMENT. 

    Subd. 2.    Cooperation required.  An agreement to 
 provide health care services between a provider and a health 
 maintenance organization must require the provider to cooperate 
 with and participate in the health maintenance organization's 
 quality assurance program, dispute resolution procedure, and 
 utilization review program. 

    Subd. 3.    Notice of termination.  An agreement to 
 provide health care services between a provider and a health 
 maintenance organization must require that if the provider 
 terminates the agreement, without cause, the provider shall give 
 the organization 120 days' advance notice of termination. 

    Subd. 4.    Late payments.  If a health maintenance 
 organization's payments to a provider are delayed beyond the 
 payment date in the contract, the provider may notify the 
 commissioner who shall consider that information in assessing 
 the financial solvency of the health maintenance organization. 

    HIST: 1988 c 612 s 21 

     62D.124 Geographic accessibility. 

    Subdivision 1.    Primary care; mental health services; 
 general hospital services.  Within the health maintenance 
 organization's service area, the maximum travel distance or time 
 shall be the lesser of 30 miles or 30 minutes to the nearest 
 provider of each of the following services:  primary care 
 services, mental health services, and general hospital 
 services.  The health maintenance organization must designate 
 which method is used.  

    Subd. 2.    Other health services.  Within a health 
 maintenance organization's service area, the maximum travel 
 distance or time shall be the lesser of 60 miles or 60 minutes 
 to the nearest provider of specialty physician services, 
 ancillary services, specialized hospital services, and all other 
 health services not listed in subdivision 1.  The health 
 maintenance organization must designate which method is used. 

    Subd. 3.    Exception.  The commissioner shall grant an 
 exception to the requirements of this section according to 
 Minnesota Rules, part 4685.1010, subpart 4, if the health 
 maintenance organization can demonstrate with specific data that 
 the requirement of subdivision 1 or 2 is not feasible in a 
 particular service area or part of a service area. 

    Subd. 4.    Application.  (a) Subdivisions 1 and 2 do 
 not apply if an enrollee is referred to a referral center for 
 health care services.  

    (b) Subdivision 1 does not apply: 

    (1) if an enrollee has chosen a health plan with full 
 knowledge that the health plan has no participating providers 
 within 30 miles or 30 minutes of the enrollee's place of 
 residence; or 

    (2) to service areas approved before May 24, 1993. 

    HIST: 1999 c 239 s 2 

     62D.13 Powers of insurers and nonprofit health service 
  plans.  

    Notwithstanding any law to the contrary, an insurer or a 
 hospital or medical service plan corporation may contract with a 
 health maintenance organization to provide insurance or similar 
 protection against the cost of care provided through health 
 maintenance organizations and to provide coverage in the event 
 of the failure of the health maintenance organization to meet 
 its obligations.  The enrollees of a health maintenance 
 organization constitute a permissible group for group coverage 
 under the insurance laws and the Nonprofit Health Service Plan 
 Corporations Act.  Under such contracts, the insurer or 
 nonprofit health service plan corporation may make benefit 
 payments to health maintenance organizations for health care 
 services rendered, or to be rendered, by providers pursuant to 
 the health care plan.  Any insurer, or nonprofit health service 
 plan corporation, licensed to do business in this state, is 
 authorized to provide the types of coverages described in 
 section 62D.05, subdivision 3.  

    HIST: 1973 c 670 s 13 

     62D.14 Examinations. 

    Subdivision 1.    Examination authority.  The 
 commissioner of health may make an examination of the affairs of 
 any health maintenance organization and its contracts, 
 agreements, or other arrangements with any participating entity 
 as often as the commissioner of health deems necessary for the 
 protection of the interests of the people of this state, but not 
 less frequently than once every three years.  Examinations of 
 participating entities pursuant to this subdivision shall be 
 limited to their dealings with the health maintenance 
 organization and its enrollees, except that examinations of 
 major participating entities may include inspection of the 
 entity's financial statements kept in the ordinary course of 
 business.  The commissioner may require major participating 
 entities to submit the financial statements directly to the 
 commissioner.  Financial statements of major participating 
 entities are subject to the provisions of section 13.37, 
 subdivision 1, clause (b), upon request of the major 
 participating entity or the health maintenance organization with 
 which it contracts. 

    Subd. 2.    Notice of examination.  The commissioner 
 will notify the organization and any involved participating 
 entity in writing when an examination has been initiated.  The 
 commissioner will include in this notice a full statement of the 
 pertinent facts and of the matters being examined, and may 
 include a statement that the organization or participating 
 entity must submit to the commissioner within 30 days from the 
 date of the notice a complete written report concerning those 
 matters. 

    Subd. 3.    Commissioner's authority.  In order to 
 accomplish the duties under this section with respect to the 
 dealings of the participating entities with the health 
 maintenance organization, the commissioner of health shall have 
 the right to: 

    (a) inspect or otherwise evaluate the quality, 
 appropriateness, and timeliness of services performed; 

    (b) audit and inspect any books and records of a health 
 maintenance organization and a participating entity which 
 pertain to services performed and determinations of amounts 
 payable under such contract; 

    (c) require persons or organizations under examination to 
 be deposed and to answer interrogatories, regardless of whether 
 an administrative hearing or other civil proceeding has been or 
 will be initiated; and 

    (d) employ site visits, public hearings, or any other 
 procedures considered appropriate to obtain the information 
 necessary to determine the issues.  

    Subd. 4. Repealed, 2000 c 468 s 33 

    Subd. 4a.    Classification of data.  Any data or 
 information obtained by the commissioner under this section or 
 section 62D.145 shall be classified as private data on 
 individuals as defined in chapter 13.  Such data shall be 
 protected and may be released consistent with the provisions of 
 section 60A.03, subdivision 9. 

    Subd. 5.    Oaths; witnesses; subpoenas.  The 
 commissioner of health shall have the power to administer oaths 
 to and examine witnesses, and to issue subpoenas. 

    Subd. 6.    Examination expenses.  Reasonable expenses 
 of examinations under this section shall be assessed by the 
 commissioner of health against the organization being examined, 
 and shall be remitted to the commissioner of health for deposit 
 in the general fund of the state treasury. 

    Subd. 7.    Penalty.  Failure to provide relevant 
 information necessary for conducting examinations pursuant to 
 this section shall be subject to the levy of a fine up to $200 
 for each day the information is not provided.  A fine levied 
 under this subdivision shall be subject to the contested case 
 and judicial review provisions of chapter 14.  In the event a 
 timely request for review is made, accrual of a fine levied 
 shall be stayed pending completion of the contested case and 
 judicial review proceeding.  

    HIST: 1973 c 670 s 14; 1977 c 305 s 45; 1984 c 464 s 37; 1986 
 c 444; 1987 c 384 art 2 s 1; 1988 c 612 s 22; 2000 c 468 s 18 

     62D.145 Disclosure of information held by health 
  maintenance organizations. 

    Subdivision 1.    Personal and privileged information.  
 The ability of a health maintenance organization to disclose 
 personal information, as defined in section 72A.491, subdivision 
 17, and privileged information, as defined in section 72A.491, 
 subdivision 19, is governed by sections 72A.497, 72A.499, and 
 72A.502. 

    Subd. 2.    Health data or information.  (a) A health 
 maintenance organization is prohibited from disclosing to any 
 person any individually identifiable data or information held by 
 the health maintenance organization pertaining to the diagnosis, 
 treatment, or health of any enrollee, or any application 
 obtained from any person, except: 

    (1) to the extent necessary to carry out the purposes of 
 this chapter, the commissioner and a designee shall have access 
 to the above data or information but the data removed from the 
 health maintenance organization or participating entity shall 
 not identify any particular patient or client by name or contain 
 any other unique personal identifier; 

    (2) upon the express consent of the enrollee or applicant; 

    (3) pursuant to statute or court order for the production 
 of evidence or the discovery thereof; 

    (4) in the event of claim or litigation between the person 
 and the provider or health maintenance organization wherein such 
 data or information is pertinent; 

    (5) to meet the requirements of contracts for prepaid 
 medical services with the commissioner of human services 
 authorized under chapter 256B, 256D, or 256L; 

    (6) to meet the requirements of contracts for benefit plans 
 with the commissioner of employee relations under chapter 43A; 
 or 

    (7) as otherwise authorized pursuant to statute. 

    No provision in a contract for a benefit plan under chapter 
 43A shall authorize dissemination of individually identifiable 
 health records, unless the dissemination of the health records 
 is required to carry out the requirements of the contract and 
 employees whose health records will be disseminated are fully 
 informed of the dissemination by the Department of Employee 
 Relations at the time the employees are enrolling for or 
 changing insurance coverage. 

    (b) In any case involving a suspected violation of a law 
 applicable to health maintenance organizations in which access 
 to health data maintained by the health maintenance organization 
 or participating entity is necessary, the commissioner and 
 agents, while maintaining the privacy rights of individuals and 
 families, shall be permitted to obtain data that identifies any 
 particular patient or client by name.  A health maintenance 
 organization shall be entitled to claim any statutory privileges 
 against such disclosure which the provider who furnished the 
 information to the health maintenance organization is entitled 
 to claim. 

    HIST: 2000 c 468 s 19 

     62D.15 Suspension or revocation of certificate of 
  authority. 

    Subdivision 1.    Grounds for suspension or revocation.  
 The commissioner of health may suspend or revoke any certificate 
 of authority issued to a health maintenance organization under 
 sections 62D.01 to 62D.30 if the commissioner finds that: 

    (a) the health maintenance organization is operating 
 significantly in contravention of its basic organizational 
 document, its health maintenance contract, or in a manner 
 contrary to that described in and reasonably inferred from any 
 other information submitted under section 62D.03, unless 
 amendments to such submissions have been filed with and approved 
 by the commissioner of health; 

    (b) the health maintenance organization issues evidences of 
 coverage which do not comply with the requirements of section 
 62D.07; 

    (c) the health maintenance organization is unable to 
 fulfill its obligations to furnish comprehensive health 
 maintenance services as required under its health maintenance 
 contract; 

    (d) the health maintenance organization is no longer 
 financially responsible and may reasonably be expected to be 
 unable to meet its obligations to enrollees or prospective 
 enrollees; 

    (e) the health maintenance organization has failed to 
 implement a mechanism affording the enrollees an opportunity to 
 participate in matters of policy and operation under section 
 62D.06; 

    (f) the health maintenance organization has failed to 
 implement the complaint system required by section 62D.11 in a 
 manner designed to reasonably resolve valid complaints; 

    (g) the health maintenance organization, or any person 
 acting with its sanction, has advertised or merchandised its 
 services in an untrue, misrepresentative, misleading, deceptive, 
 or unfair manner; 

    (h) the continued operation of the health maintenance 
 organization would be hazardous to its enrollees; or 

    (i) the health maintenance organization has otherwise 
 failed to substantially comply with sections 62D.01 to 62D.30 or 
 with any other statute or administrative rule applicable to 
 health maintenance organizations, or has submitted false 
 information in any report required hereunder. 

    Subd. 2.    Procedure.  A certificate of authority shall 
 be suspended or revoked only after compliance with the 
 requirements of section 62D.16. 

    Subd. 3.    Restrictions during suspension.  When the 
 certificate of authority of a health maintenance organization is 
 suspended, the health maintenance organization shall not, during 
 the period of such suspension, enroll any additional enrollees 
 except newborn children or other newly acquired dependents of 
 existing enrollees, and shall not engage in any advertising or 
 solicitation whatsoever. 

    Subd. 4.    Restrictions upon revocation.  When the 
 certificate of authority of a health maintenance organization is 
 revoked, the organization shall proceed, immediately following 
 the effective date of the order of revocation, to wind up its 
 affairs, and shall conduct no further business except as may be 
 essential to the orderly conclusion of the affairs of the 
 organization. It shall engage in no further advertising or 
 solicitation whatsoever.  The commissioner of health may, by 
 written order, permit further operation of the organization as 
 the commissioner may find to be in the best interest of 
 enrollees, to the end that enrollees will be afforded the 
 greatest practical opportunity to obtain continuing health care 
 coverage. 

    HIST: 1973 c 670 s 15; 1977 c 305 s 45; 1984 c 464 s 38; 1986 
 c 444; 1987 c 384 art 2 s 1 

     62D.16 Denial, suspension, and revocation; 
  administrative procedures. 

    Subdivision 1.    Notice and hearing.  When the 
 commissioner of health has cause to believe that grounds for the 
 denial, suspension or revocation of a certificate of authority 
 exists, the commissioner shall notify the health maintenance 
 organization in writing specifically stating the grounds for 
 denial, suspension or revocation and fixing a time of at least 
 20 days thereafter for a hearing on the matter, except in 
 summary proceedings as provided in section 62D.18. 

    Subd. 2.    Written findings.  After such hearing, or 
 upon the failure of the health maintenance organization to 
 appear at the hearing, the commissioner of health shall take 
 action as is deemed advisable and shall issue written findings 
 which shall be mailed to the health maintenance organization.  
 The action of the commissioner of health shall be subject to 
 judicial review pursuant to chapter 14. 

    HIST: 1973 c 670 s 16; 1977 c 305 s 45; 1982 c 424 s 130; 1986 
 c 444 

     62D.17 Penalties and enforcement. 

    Subdivision 1.    Administrative penalty.  The 
 commissioner of health may, for any violation of statute or rule 
 applicable to a health maintenance organization, or in lieu of 
 suspension or revocation of a certificate of authority under 
 section 62D.15, levy an administrative penalty in an amount up 
 to $25,000 for each violation.  In the case of contracts or 
 agreements made pursuant to section 62D.05, subdivisions 2 to 4, 
 each contract or agreement entered into or implemented in a 
 manner which violates sections 62D.01 to 62D.30 shall be 
 considered a separate violation.  In determining the level of an 
 administrative penalty, the commissioner shall consider the 
 following factors: 

    (1) the number of enrollees affected by the violation; 

    (2) the effect of the violation on enrollees' health and 
 access to health services; 

    (3) if only one enrollee is affected, the effect of the 
 violation on that enrollee's health; 

    (4) whether the violation is an isolated incident or part 
 of a pattern of violations; and 

    (5) the economic benefits derived by the health maintenance 
 organization or a participating provider by virtue of the 
 violation. 

    Reasonable notice in writing to the health maintenance 
 organization shall be given of the intent to levy the penalty 
 and the reasons therefor, and the health maintenance 
 organization may have 15 days within which to file a written 
 request for an administrative hearing and review of the 
 commissioner of health's determination.  Such administrative 
 hearing shall be subject to judicial review pursuant to chapter 
 14.  If an administrative penalty is levied, the commissioner 
 must divide 50 percent of the amount among any enrollees 
 affected by the violation, unless the commissioner certifies in 
 writing that the division and distribution to enrollees would be 
 too administratively complex or that the number of enrollees 
 affected by the penalty would result in a distribution of less 
 than $50 per enrollee. 

    Subd. 2.    Criminal penalty.  Any person who violates 
 sections 62D.01 to 62D.30 or knowingly submits false information 
 in any report required hereunder shall be guilty of a 
 misdemeanor. 

    Subd. 3.    Alternative proceedings.  (a) If the 
 commissioner of health shall, for any reason, have cause to 
 believe that any violation of sections 62D.01 to 62D.30 has 
 occurred or is threatened, the commissioner of health may, 
 before commencing action under sections 62D.15 and 62D.16, and 
 subdivision 1, give notice to the health maintenance 
 organization and to the representatives, or other persons who 
 appear to be involved in such suspected violation, to arrange a 
 voluntary conference with the alleged violators or their 
 authorized representatives for the purpose of attempting to 
 ascertain the facts relating to such suspected violation and, in 
 the event it appears that any violation has occurred or is 
 threatened, to arrive at an adequate and effective means of 
 correcting or preventing such violation. 

    (b) Proceedings under this subdivision shall not be 
 governed by any formal procedural requirements, and may be 
 conducted in such manner as the commissioner of health may deem 
 appropriate under the circumstances. 

    Subd. 4.    Cease and desist order; hearing; stay.  (a) 
 The commissioner of health may issue an order directing a health 
 maintenance organization or a representative of a health 
 maintenance organization to cease and desist from engaging in 
 any act or practice in violation of the provisions of sections 
 62D.01 to 62D.30. 

    (1) The cease and desist order may direct a health 
 maintenance organization to pay for or provide a service when 
 that service is required by statute or rule to be provided. 

    (2) The commissioner may issue a cease and desist order 
 directing a health maintenance organization to pay for a service 
 that is required by statute or rule to be provided, only if 
 there is a demonstrable and irreparable harm to the public or an 
 enrollee.  

    (3) If the cease and desist order involves a dispute over 
 the medical necessity of a procedure based on its experimental 
 nature, the commissioner may issue a cease and desist order only 
 if the following conditions are met:  

    (i) the commissioner has consulted with appropriate and 
 identified experts; 

    (ii) the commissioner has reviewed relevant scientific and 
 medical literature; and 

    (iii) the commissioner has considered all other relevant 
 factors including whether final approval of the technology or 
 procedure has been granted by the appropriate government agency; 
 the availability of scientific evidence concerning the effect of 
 the technology or procedure on health outcomes; the availability 
 of scientific evidence that the technology or procedure is as 
 beneficial as established alternatives; and the availability of 
 evidence of benefit or improvement without the technology or 
 procedure. 

    (b) Within 20 days after service of the order to cease and 
 desist, the respondent may request a hearing on the question of 
 whether acts or practices in violation of sections 62D.01 to 
 62D.30 have occurred.  Such hearings shall be subject to 
 judicial review as provided by chapter 14. 

    If the acts or practices involve violation of the reporting 
 requirements of section 62D.08, or if the commissioner has 
 ordered the rehabilitation, liquidation, or conservation of the 
 health maintenance organization in accordance with section 
 62D.18, the health maintenance organization may request an 
 expedited hearing on the matter.  The hearing shall be held 
 within 15 days of the request.  Within ten days thereafter, an 
 administrative law judge shall issue a recommendation on the 
 matter.  The commissioner shall make a final determination on 
 the matter within ten days of receipt of the administrative law 
 judge's recommendation.  

    When a request for a stay accompanies the hearing request, 
 the matter shall be referred to the Office of Administrative 
 Hearings within three working days of receipt of the request. 
 Within ten days thereafter, an administrative law judge shall 
 issue a recommendation to grant or deny the stay.  The 
 commissioner shall grant or deny the stay within five days of 
 receipt of the administrative law judge's recommendation. 

    To the extent the acts or practices alleged do not involve 
 (1) violations of section 62D.08; (2) violations which may 
 result in the financial insolvency of the health maintenance 
 organization; (3) violations which threaten the life and health 
 of enrollees; (4) violations which affect whole classes of 
 enrollees; or (5) violations of benefits or service requirements 
 mandated by law; if a timely request for a hearing is made, the 
 cease and desist order shall be stayed for a period of 90 days 
 from the date the hearing is requested or until a final 
 determination is made on the order, whichever is earlier.  
 During this stay, the respondent may show cause why the order 
 should not become effective upon the expiration of the stay.  
 Arguments on this issue shall be made through briefs filed with 
 the administrative law judge no later than ten days prior to the 
 expiration of the stay.  

    Subd. 5.    Injunctive relief.  In the event of 
 noncompliance with a cease and desist order issued pursuant to 
 subdivision 4, the commissioner of health may institute a 
 proceeding to obtain injunctive relief or other appropriate 
 relief in Ramsey County District Court. 

    HIST: 1973 c 670 s 17; 1977 c 305 s 45; 1982 c 424 s 130; 1984 
 c 464 s 39; 1984 c 640 s 32; 1984 c 641 s 6; 1987 c 384 art 2 s 
 1; 1988 c 434 s 15; 1990 c 538 s 27,28; 1Sp2001 c 9 art 16 s 3; 
 2002 c 379 art 1 s 113 

     62D.18 Rehabilitation or liquidation of health 
  maintenance organization. 

    Subdivision 1.    Commissioner of health; order.  The 
 commissioner of health may apply by verified petition to the 
 district court of Ramsey County or the county in which the 
 principal office of the health maintenance organization is 
 located for an order directing the commissioner of health to 
 rehabilitate or liquidate a health maintenance organization.  
 The rehabilitation or liquidation of a health maintenance 
 organization shall be conducted under the supervision of the 
 commissioner of health under the procedures, and with the powers 
 granted to a rehabilitator or liquidator, in chapter 60B, except 
 to the extent that the nature of health maintenance 
 organizations renders the procedures or powers clearly 
 inappropriate and as provided in this subdivision or in chapter 
 60B.  A health maintenance organization shall be considered an 
 insurance company for the purposes of rehabilitation or 
 liquidation as provided in subdivisions 4, 6, and 7. 

    Subd. 2. Repealed, 1990 c 538 s 32 

    Subd. 3. Repealed, 1990 c 538 s 32 

    Subd. 4.    Powers of rehabilitator.  The powers of the 
 rehabilitator include, subject to the approval of the court the 
 power to change premium rates, without the notice requirements 
 of section 62D.07, and the power to amend the terms of provider 
 contracts, and of contracts with participating entities for the 
 provision of administrative, financial, or management services, 
 relating to reimbursement and termination, considering the 
 interests of providers and other contracting participating 
 entities and the continued viability of the health plan. 

    If the court approves a contract amendment that diminishes 
 the compensation of a provider or of a participating entity 
 providing administrative, financial, or management services to 
 the health maintenance organization, the amendment may not be 
 effective for more than 60 days and shall not be renewed or 
 extended. 

    Subd. 5. Repealed, 1990 c 538 s 32 

    Subd. 6.    Special examiner.  The commissioner as 
 rehabilitator shall make every reasonable effort to employ a 
 senior executive from a successful health maintenance 
 organization to serve as special examiner to rehabilitate the 
 health maintenance organization, provided that the individual 
 does not have a conflict of interest.  The special examiner 
 shall have all the powers of the rehabilitator granted under 
 this section and section 60B.17. 

    Subd. 7.    Examination account.  The commissioner of 
 health shall assess against a health maintenance organization 
 not yet in rehabilitation or liquidation a fee sufficient to 
 cover the costs of a special examination.  The fee must be 
 deposited in an examination account.  Money in the account is 
 appropriated to the commissioner of health to pay for the 
 examinations.  If the money in the account is insufficient to 
 pay the initial costs of examinations, the commissioner may use 
 other money appropriated to the commissioner, provided the other 
 appropriation is reimbursed from the examination account when it 
 contains sufficient money.  Money from the examination account 
 must be used to pay per diem salaries and expenses of special 
 examiners, including meals, lodging, laundry, transportation, 
 and mileage.  The salary of regular employees of the Health 
 Department must not be paid out of the account. 

    HIST: 1973 c 670 s 18; 1977 c 305 s 45; 1983 c 289 s 114 subd 
 1; 1984 c 655 art 1 s 92; 1988 c 612 s 23; 1990 c 538 s 29 

     62D.181 Insolvency; MCHA alternative coverage. 

    Subdivision 1.    Definition.  "Association" means the 
 Minnesota Comprehensive Health Association created in section 
 62E.10. 

    Subd. 2.    Eligible individuals.  An individual is 
 eligible for alternative coverage under this section if: 

    (1) the individual had individual health coverage through a 
 health maintenance organization or community integrated service 
 network, the coverage is no longer available due to the 
 insolvency of the health maintenance organization or community 
 integrated service network, and the individual has not obtained 
 alternative coverage; or 

    (2) the individual had group health coverage through a 
 health maintenance organization or community integrated service 
 network, the coverage is no longer available due to the 
 insolvency of the health maintenance organization or community 
 integrated service network, and the individual has not obtained 
 alternative coverage. 

    Subd. 3.    Application and issuance.  If a health 
 maintenance organization or community integrated service network 
 will be liquidated, individuals eligible for alternative 
 coverage under subdivision 2 may apply to the association to 
 obtain alternative coverage.  Upon receiving an application and 
 evidence that the applicant was enrolled in the health 
 maintenance organization or community integrated service network 
 at the time of an order for liquidation, the association shall 
 issue policies to eligible individuals, without the limitation 
 on preexisting conditions described in section 62E.14, 
 subdivision 3. 

    Subd. 4.    Coverage.  Alternative coverage issued under 
 this section must be at least a number two qualified plan, as 
 described in section 62E.06, subdivision 2, or for individuals 
 over age 65, a basic Medicare supplement plan, as described in 
 section 62A.316. 

    Subd. 5.    Premium.  The premium for alternative 
 coverage issued under this section must not exceed 80 percent of 
 the premium for the comparable coverage offered by the 
 association. 

    Subd. 6.    Duration.  The duration of alternative 
 coverage issued under this section is: 

    (1) for individuals eligible under subdivision 2, clause 
 (1), 90 days; and 

    (2) for individuals eligible under subdivision 2, clause 
 (2), 90 days or the length of time remaining in the group 
 contract with the insolvent health maintenance organization or 
 community integrated service network, whichever is greater. 

    Subd. 7.    Replacement coverage; limitations.  The 
 association is not obligated to offer replacement coverage under 
 this chapter or conversion coverage under section 62E.16 at the 
 end of the periods specified in subdivision 6.  Any continuation 
 obligation arising under this chapter or chapter 62A will cease 
 at the end of the periods specified in subdivision 6. 

    Subd. 8.    Claims expenses exceeding premiums.  Claims 
 expenses resulting from the operation of this section which 
 exceed premiums received shall be borne by contributing members 
 of the association in accordance with section 62E.11, 
 subdivision 5. 

    Subd. 9.    Coordination of policies.  If an insolvent 
 health maintenance organization or community integrated service 
 network has insolvency insurance coverage at the time of an 
 order for liquidation, the association may coordinate the 
 benefits of the policy issued under this section with those of 
 the insolvency insurance policy available to the enrollees.  The 
 premium level for the combined association policy and the 
 insolvency insurance policy may not exceed those described in 
 subdivision 5. 

    HIST: 1988 c 612 s 24; 1989 c 258 s 11; 1995 c 234 art 1 s 
 6-9; 1997 c 225 art 2 s 62 

     62D.182 Liabilities. 

    Every health maintenance organization shall maintain 
 liabilities estimated in the aggregate to be sufficient to pay 
 all reported or unreported claims incurred that are unpaid and 
 for which the organization is liable.  Liabilities are computed 
 under rules adopted by the commissioner. 

    HIST: 1988 c 612 s 25 

     62D.19 Unreasonable expenses. 

    No health maintenance organization shall incur or pay for 
 any expense of any nature which is unreasonably high in relation 
 to the value of the service or goods provided.  The commissioner 
 of health shall implement and enforce this section by rules 
 adopted under this section. 

    In an effort to achieve the stated purposes of sections 
 62D.01 to 62D.30; in order to safeguard the underlying nonprofit 
 status of health maintenance organizations; and to ensure that 
 the payment of health maintenance organization money to major 
 participating entities results in a corresponding benefit to the 
 health maintenance organization and its enrollees, when 
 determining whether an organization has incurred an unreasonable 
 expense in relation to a major participating entity, due 
 consideration shall be given to, in addition to any other 
 appropriate factors, whether the officers and trustees of the 
 health maintenance organization have acted with good faith and 
 in the best interests of the health maintenance organization in 
 entering into, and performing under, a contract under which the 
 health maintenance organization has incurred an expense.  The 
 commissioner has standing to sue, on behalf of a health 
 maintenance organization, officers or trustees of the health 
 maintenance organization who have breached their fiduciary duty 
 in entering into and performing such contracts. 

    HIST: 1973 c 670 s 19; 1983 c 289 s 114 subd 1; 1984 c 464 s 
 41; 1984 c 655 art 1 s 92; 1Sp1985 c 10 s 62; 1987 c 384 art 2 s 
 1; 1988 c 612 s 26 

     62D.20 Rules. 

    Subdivision 1.    Rulemaking.  The commissioner of 
 health may, pursuant to chapter 14, promulgate such reasonable 
 rules as are necessary or proper to carry out the provisions of 
 sections 62D.01 to 62D.30.  Included among such rules shall be 
 those which provide minimum requirements for the provision of 
 comprehensive health maintenance services, as defined in section 
 62D.02, subdivision 7, and reasonable exclusions therefrom.  
 Nothing in such rules shall force or require a health 
 maintenance organization to provide elective, induced abortions, 
 except as medically necessary to prevent the death of the 
 mother, whether performed in a hospital, other abortion 
 facility, or the office of a physician; the rules shall provide 
 every health maintenance organization the option of excluding or 
 including elective, induced abortions, except as medically 
 necessary to prevent the death of the mother, as part of its 
 comprehensive health maintenance services.  

    Subd. 2.    Prior authorization.  The commissioner shall 
 adopt rules that address the issue of appropriate prior 
 authorization requirements, considering enrollee needs, 
 administrative concerns, and the nature of the benefit. 

    HIST: 1973 c 670 s 20; 1977 c 305 s 45; 1981 c 122 s 2; 1982 c 
 424 s 130; 1985 c 248 s 70; 1987 c 384 art 2 s 1; 1988 c 434 s 
 16; 1988 c 592 s 10; 1997 c 205 s 16 

     62D.21 Fees. 

    Every health maintenance organization subject to sections 
 62D.01 to 62D.30 shall pay to the commissioner of health fees as 
 prescribed by the commissioner of health pursuant to section 
 144.122 for the following: 

    (a) filing an application for a certificate of authority; 

    (b) filing an amendment to a certificate of authority; 

    (c) filing each annual report; and 

    (d) other filings, as specified by rule. 

    HIST: 1973 c 670 s 21; 1975 c 310 s 1; 1977 c 305 s 45; 1985 c 
 248 s 70; 1987 c 384 art 2 s 1 

     62D.211 Renewal fee. 

    Each health maintenance organization subject to sections 
 62D.01 to 62D.30 shall submit to the commissioner of health each 
 year before June 15 a certificate of authority renewal fee in 
 the amount of $10,000 each plus 20 cents per person enrolled in 
 the health maintenance organization on December 31 of the 
 preceding year.  The commissioner may adjust the renewal fee in 
 rule under the provisions of chapter 14. 

    HIST: 1987 c 384 art 2 s 1; 1987 c 403 art 2 s 2; 1990 c 538 s 
 30 

     62D.22 Statutory construction and relationship to other 
  laws. 

    Subdivision 1.    Applicability.  Except as otherwise 
 provided herein, sections 62D.01 to 62D.30 do not apply to an 
 insurer or nonprofit health service plan corporation licensed 
 and regulated pursuant to the laws governing such corporations 
 in this state. 

    Subd. 2.    Solicitation of enrollees.  Solicitation of 
 enrollees by a health maintenance organization granted a 
 certificate of authority, or its representatives, shall not be 
 construed to violate any provision of law relating to 
 solicitation or advertising by health professionals. 

    Subd. 3.    Not practicing a healing art.  Any health 
 maintenance organization authorized under sections 62D.01 to 
 62D.30 shall not be deemed to be practicing a healing art. 

    Subd. 4.    Federal law.  To the extent that it furthers 
 the purposes of sections 62D.01 to 62D.30, the commissioner of 
 health shall attempt to coordinate the operations of sections 
 62D.01 to 62D.30 relating to the quality of health care services 
 with the operations of United States Code, title 42, sections 
 1320c to 1320c-20. 

    Subd. 5.    Other state law.  Except as otherwise 
 provided in sections 62A.01 to 62A.42 and 62D.01 to 62D.30, and 
 except as they eliminate elective, induced abortions, wherever 
 performed, from health or maternity benefits, provisions of the 
 insurance laws and provisions of nonprofit health service plan 
 corporation laws shall not be applicable to any health 
 maintenance organization granted a certificate of authority 
 under sections 62D.01 to 62D.30. 

    Subd. 6.  Repealed, 1982 c 614 s 12 

    Subd. 7.    Prepaid group practice plan.  A licensed 
 health maintenance organization shall be deemed to be a prepaid 
 group practice plan for the purposes of chapter 43A and may be 
 allowed to participate as a carrier for state employees subject 
 to any collective bargaining agreement entered into pursuant to 
 chapter 179A and reasonable restrictions applied pursuant to 
 section 43A.23.  

    Subd. 8.    Insurance agents.  All agents, solicitors, 
 and brokers engaged in soliciting or dealing with enrollees or 
 prospective enrollees of a health maintenance organization, 
 whether employees or under contract to the health maintenance 
 organization, shall be subject to the provisions of sections 
 60K.30 to 60K.56, concerning the licensure of insurance 
 producers and lawful rules thereunder.  Medical doctors and 
 others who merely explain the operation of health maintenance 
 organizations shall be exempt from the provisions of sections 
 60K.30 to 60K.56.  Section 60K.37, subdivision 1, shall not 
 apply except as to provide for an examination of an applicant in 
 the applicant's knowledge concerning the operations and benefits 
 of health maintenance organizations and related insurance 
 matters. 

    Subd. 9. Repealed, 1984 c 464 s 46 

    Subd. 10.    Access to data.  Any person or committee 
 conducting a review of a health maintenance organization or a 
 participating entity, pursuant to sections 62D.01 to 62D.30, 
 shall have access to any data or information necessary to 
 conduct the review.  All data or information is subject to 
 admission into evidence in any civil action initiated by the 
 commissioner of health against the health maintenance 
 organization.  The data and information are subject to chapter 
 13.  

    HIST: 1973 c 670 s 22; 1974 c 284 s 6; 1977 c 305 s 45; 1979 c 
 332 art 1 s 57; 1980 c 617 s 18; 1981 c 122 s 3; 1981 c 210 s 
 54; 1Sp1981 c 4 art 1 s 50; 1984 c 464 s 42,43; 1985 c 248 s 70; 
 1Sp1985 c 17 s 10; 1986 c 444; 1Sp1986 c 3 art 1 s 8; 1987 c 384 
 art 2 s 1; 1992 c 564 art 3 s 23; 2001 c 117 art 2 s 9 

     62D.23 Filings and reports as public documents.  

    All applications, filings, and reports required under 
 sections 62D.01 to 62D.30 shall be treated as public documents.  

    HIST: 1973 c 670 s 23; 1987 c 384 art 2 s 1 

     62D.24 State commissioner of health's authority to 
  contract. 

    The commissioner of health, in carrying out the obligations 
 under sections 62D.01 to 62D.30, may contract with the 
 commissioner of commerce or other qualified persons to make 
 recommendations concerning the determinations required to be 
 made.  Such recommendations may be accepted in full or in part 
 by the commissioner of health. 

    HIST: 1973 c 670 s 24; 1977 c 305 s 45; 1983 c 289 s 114 subd 
 1; 1984 c 655 art 1 s 92; 1986 c 444; 1987 c 384 art 2 s 1 

  62D.25 Repealed, 1Sp1985 c 9 art 2 s 104 

  62D.26 Repealed, 1Sp1985 c 9 art 2 s 104 

  62D.27 Repealed, 1984 c 464 s 46 

  62D.28 Repealed, 1Sp1985 c 9 art 2 s 104 

  62D.29 Repealed, 1Sp1985 c 9 art 2 s 104 

     62D.30 Demonstration projects. 

    Subdivision 1.    Projects allowed.  The commissioner of 
 health may establish demonstration projects to allow health 
 maintenance organizations to extend coverage to:  

    (a) individuals enrolled in Part A or Part B, or both, of 
 the Medicare program, Title XVIII of the Social Security Act, 
 United States Code, title 42, section 1395 et seq.; 

    (b) groups of fewer than 50 employees where each group is 
 covered by a single group health policy; 

    (c) individuals who are not eligible for enrollment in any 
 group health maintenance contracts; and 

    (d) low income population groups.  

    For purposes of this section, the commissioner of health 
 may waive compliance with minimum benefits pursuant to sections 
 62A.151 and 62D.02, subdivision 7, full financial risk pursuant 
 to section 62D.04, subdivision 1, clause (f), open enrollment 
 pursuant to section 62D.10, and to applicable rules if there is 
 reasonable evidence that the rules prohibit the operation of the 
 demonstration project.  The commissioner shall provide for 
 public comment before any statute or rule is waived.  

    Subd. 2.    Minimum health benefits required.  A 
 demonstration project must provide health benefits equal to or 
 exceeding the level of benefits provided in Title XVIII of the 
 Social Security Act and an out of hospital prescription drug 
 benefit.  The out of hospital prescription drug benefit may be 
 waived by the commissioner if the health maintenance 
 organization presents evidence satisfactory to the commissioner 
 that the inclusion of the benefit would restrict the operation 
 of the demonstration project.  

    Subd. 3.    Application.  A health maintenance 
 organization electing to participate in a demonstration project 
 shall apply to the commissioner for approval on a form developed 
 by the commissioner.  The application shall include at least the 
 following:  

    (a) a statement identifying the population that the project 
 is designed to serve; 

    (b) a description of the proposed project including a 
 statement projecting a schedule of costs and benefits for the 
 enrollee; 

    (c) reference to the sections of Minnesota Statutes and 
 Department of Health rules for which waiver is requested; 

    (d) evidence that application of the requirements of 
 applicable Minnesota Statutes and Department of Health rules 
 would, unless waived, prohibit the operation of the 
 demonstration project; 

    (e) evidence that another arrangement is available for 
 assumption of full financial risk if full financial risk is 
 waived under subdivision 1; 

    (f) an estimate of the number of years needed to adequately 
 demonstrate the project's effects; and 

    (g) other information the commissioner may reasonably 
 require.  

    Subd. 4.    Consideration of application.  The 
 commissioner shall approve, deny, or refer back to the health 
 maintenance organization for modification, the application for a 
 demonstration project within 60 days of receipt from the health 
 maintenance organization.  

    Subd. 5.    Term of project.  The commissioner may 
 approve an application for a demonstration project for a maximum 
 of six years, with an option to renew.  

    Subd. 6.    Annual report.  Each health maintenance 
 organization for which a demonstration project is approved shall 
 annually file a report with the commissioner summarizing the 
 project's experience at the same time it files its annual report 
 required by section 62D.08.  The report shall be on a form 
 developed by the commissioner and shall be separate from the 
 annual report required by section 62D.08.  

    Subd. 7.    Approval rescission.  The commissioner may 
 rescind approval of a demonstration project if the commissioner 
 makes any of the findings listed in section 62D.15, subdivision 
 1, with respect to the project for which it has not been granted 
 a specific exemption, or if the commissioner finds that the 
 project's operation is contrary to the information contained in 
 the approved application.  

    Subd. 8.    Rural demonstration project.  (a) The 
 commissioner may permit demonstration projects to allow health 
 maintenance organizations to extend coverage to a health 
 improvement and purchasing coalition located in rural Minnesota, 
 comprised of the health maintenance organization and members 
 from a geographic area.  For purposes of this subdivision, rural 
 is defined as greater Minnesota excluding the seven-county 
 metropolitan area of Anoka, Carver, Dakota, Hennepin, Ramsey, 
 Scott, and Washington.  The coalition must be designed in such a 
 way that members will: 

    (1) become better informed about health care trends and 
 cost increases; 

    (2) be actively engaged in the design of health benefit 
 options that will meet the needs of their community; 

    (3) pool their insurance risk; 

    (4) purchase these products from the health maintenance 
 organization involved in the demonstration project; and 

    (5) actively participate in health improvement decisions 
 for their community. 

    (b) The commissioner must consider the following when 
 approving applications for rural demonstration projects: 

    (1) the extent of consumer involvement in development of 
 the project; 

    (2) the degree to which the project is likely to reduce the 
 number of uninsured or to maintain existing coverage; and 

    (3) a plan to evaluate and report to the commissioner and 
 legislature as prescribed by paragraph (e). 

    (c) For purposes of this subdivision, the commissioner must 
 waive compliance with the following statutes and rules:  the 
 cost-sharing restrictions under section 62D.095, subdivisions 2, 
 3, and 4, and Minnesota Rules, part 4685.0801, subparts 1 to 7; 
 for a period of at least two years, participation in government 
 programs under section 62D.04, subdivision 5, in the counties of 
 the demonstration project if that compliance would have been 
 required solely due to participation in the demonstration 
 project and shall continue to waive this requirement beyond two 
 years if the enrollment in the demonstration project is less 
 than 10,000 enrollees; small employer marketing under section 
 62L.05, subdivisions 1 to 3; and small employer geographic 
 premium variations under section 62L.08, subdivision 4.  The 
 commissioner shall approve enrollee cost-sharing features 
 desired by the coalition that appropriately share costs between 
 employers, individuals, and the health maintenance organization. 

    (d) The health maintenance organization may make the 
 starting date of the project contingent upon a minimum number of 
 enrollees as cited in the application, provide for an initial 
 term of contract with the purchasers of a minimum of three 
 years, and impose a reasonable penalty for employers who 
 withdraw early from the project.  For purposes of this 
 subdivision, loss ratios are to be determined as if the policies 
 issued under this section are considered individual or small 
 employer policies pursuant to section 62A.021, subdivision 1, 
 paragraph (f).  The health maintenance organization may consider 
 businesses of one to be a small employer under section 62L.02, 
 subdivision 26.  The health maintenance organization may limit 
 enrollment and establish enrollment criteria for businesses of 
 one.  Health improvement and purchasing coalitions under this 
 subdivision are not associations under section 62L.045, 
 subdivision 1, paragraph (a). 

    (e) The health improvement and purchasing coalition must 
 report to the commissioner and legislature annually on the 
 progress of the demonstration project and, to the extent 
 possible, any significant findings in the criteria listed in 
 clauses (1), (2), and (3) for the final report.  The coalition 
 must submit a final report five years from the starting date of 
 the project.  The final report must detail significant findings 
 from the project and must include, to the extent available, but 
 should not be limited to, information on the following: 

    (1) the extent to which the project had an impact on the 
 number of uninsured in the project area; 

    (2) the effect on health coverage premiums for groups in 
 the project's geographic area, including those purchasing health 
 coverage outside the health improvement and purchasing 
 coalition; and 

    (3) the degree to which health care consumers were involved 
 in the development and implementation of the demonstration 
 project. 

    (f) The commissioner must limit the number of demonstration 
 projects under this subdivision to five projects. 

    (g) Approval of the application for the demonstration 
 project is deemed to be in compliance with sections 62E.03 and 
 62E.06, subdivisions 1, paragraph (a), 2, and 3. 

    (h) Subdivisions 2 to 7 apply to demonstration projects 
 under this subdivision.  Waivers permitted under subdivision 1 
 do not apply to demonstration projects under this subdivision. 

    (i) If a demonstration project under this subdivision works 
 in conjunction with a purchasing alliance formed under chapter 
 62T, that chapter will apply to the purchasing alliance except 
 to the extent that chapter 62T is inconsistent with this 
 subdivision. 

    HIST: 1979 c 268 s 1; 2002 c 346 s 1; 2002 c 387 s 4