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    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.
History: 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

Official Publication of the State of Minnesota
Revisor of Statutes