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    Subdivision 1. Reinsurance threshold. A health carrier participating in the association may
transfer up to 90 percent of the risk above a reinsurance threshold of $5,000 of eligible charges
resulting from issuance of a health benefit plan to an eligible employee or dependent of a small
employer group whose risk has been prospectively ceded to the association. If the eligible charges
exceed $55,000, a health carrier participating in the association may transfer 100 percent of the
risk each policy year not to exceed 12 months.
Satisfaction of the reinsurance threshold must be determined by the board of directors based
on discounted eligible charges. The board may establish an audit process to assure consistency in
the submission of charge calculations by health carriers to the association. The association shall
determine the amount to be paid to the health carrier for claims submitted based on discounted
eligible charges. The board may also establish upper limits on the amount paid by the association
based on a usual and customary determination. The board shall establish in the plan of operation a
procedure for determining the discounted eligible charge.
    Subd. 2. Conversion factors. The board shall establish a standardized conversion table for
determining equivalent charges for health carriers that use alternative provider reimbursement
methods. If a health carrier establishes to the board that the health carrier's conversion factor is
equivalent to the association's standardized conversion table, the association shall accept the
health carrier's conversion factor.
    Subd. 3. Board authority. The board shall establish criteria for changing the threshold
amount or retention percentage. The board shall review the criteria on an annual basis. The
board shall provide the members with an opportunity to comment on the criteria at the time
of the annual review.
    Subd. 4. Notification of transfer of risk. A participating health carrier must notify the
association, within 90 days of receipt of proof of loss, of satisfaction of a reinsurance threshold.
After satisfaction of the reinsurance threshold, a health carrier continues to be liable to its
providers, eligible employees, and dependents for payment of claims in accordance with the
health carrier's health benefit plan. Health carriers shall not pend or delay payment of otherwise
valid claims due to the transfer of risk to the association.
    Subd. 5. Periodic studies. The board shall, on a biennial basis, prepare and submit a report
to the commissioner of commerce on the effect of the reinsurance association on the small
employer market. The first study must be presented to the commissioner no later than January
1, 1995, and must specifically address whether there has been disruption in the small employer
market due to unnecessary churning of groups for the purpose of obtaining reinsurance and
whether it is appropriate for health carriers to transfer the risk of their existing small group
business to the reinsurance association. After two years of operation, the board shall study both
the effect of ceding both individuals and entire small groups of seven or fewer eligible employees
to the reinsurance association and the composition of the board and determine whether the initial
appointments reflect the types of health carriers participating in the reinsurance association and
whether the voting power of members of the association should be weighted and recommend
any necessary changes.
History: 1992 c 549 art 2 s 20; 1993 c 47 s 13; 1993 c 247 art 2 s 27,28

Official Publication of the State of Minnesota
Revisor of Statutes