2005 Minnesota Statutes

     62L.20 Transfer of risk. 

    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. 

    HIST: 1992 c 549 art 2 s 20; 1993 c 47 s 13; 1993 c 247 art 2 
 s 27,28