1.1    .................... moves to amend H. F. No. 1873 as follows:
1.2Delete everything after the enacting clause and insert:


1.5    Section 1. Minnesota Statutes 2006, section 62A.65, subdivision 3, is amended to read:
1.6    Subd. 3. Premium rate restrictions. No individual health plan may be offered,
1.7sold, issued, or renewed to a Minnesota resident unless the premium rate charged is
1.8determined in accordance with the following requirements:
1.9    (a) Premium rates must be no more than 25 percent above and no more than 25
1.10percent below the index rate charged to individuals for the same or similar coverage,
1.11adjusted pro rata for rating periods of less than one year. The premium variations
1.12permitted by this paragraph must be based only upon health status, claims experience,
1.13and occupation. For purposes of this paragraph, health status includes refraining from
1.14tobacco use or other actuarially valid lifestyle factors associated with good health,
1.15provided that the lifestyle factor and its effect upon premium rates have been determined
1.16by the commissioner to be actuarially valid and have been approved by the commissioner.
1.17Variations permitted under this paragraph must not be based upon age or applied
1.18differently at different ages. This paragraph does not prohibit use of a constant percentage
1.19adjustment for factors permitted to be used under this paragraph.
1.20    (b) Premium rates may vary based upon the ages of covered persons only as
1.21provided in this paragraph. In addition to the variation permitted under paragraph (a),
1.22each health carrier may use an additional premium variation based upon age for adults
1.23aged 19 and above of up to plus or minus 50 percent of the index rate. Premium rates for
1.24children under the age of 19 may not vary based on age, regardless of whether the child is
1.25covered as a dependent or as a primary insured.
1.26    (c) A health carrier may request approval by the commissioner to establish separate
1.27geographic regions determined by the health carrier and to establish separate index rates
2.1for each such region. The commissioner shall grant approval if the following conditions
2.2are met:
2.3    (1) the geographic regions must be applied uniformly by the health carrier;
2.4    (2) each geographic region must be composed of no fewer than seven counties that
2.5create a contiguous region; and
2.6    (3) the health carrier provides actuarial justification acceptable to the commissioner
2.7for the proposed geographic variations in index rates, establishing that the variations are
2.8based upon differences in the cost to the health carrier of providing coverage.
2.9    (d) Health carriers may use rate cells and must file with the commissioner the rate
2.10cells they use. Rate cells must be based upon the number of adults or children covered
2.11under the policy and may reflect the availability of Medicare coverage. The rates for
2.12different rate cells must not in any way reflect generalized differences in expected costs
2.13between principal insureds and their spouses.
2.14    (e) In developing its index rates and premiums for a health plan, a health carrier shall
2.15take into account only the following factors:
2.16    (1) actuarially valid differences in rating factors permitted under paragraphs (a)
2.17and (b); and
2.18    (2) actuarially valid geographic variations if approved by the commissioner as
2.19provided in paragraph (c).
2.20    (f) All premium variations must be justified in initial rate filings and upon request of
2.21the commissioner in rate revision filings. All rate variations are subject to approval by
2.22the commissioner.
2.23    (g) The loss ratio must comply with the section 62A.021 requirements for individual
2.24health plans.
2.25    (h) The rates must not be approved, unless the commissioner has determined that the
2.26rates are reasonable. In determining reasonableness, the commissioner shall consider the
2.27growth rates applied under section 62J.04, subdivision 1, paragraph (b), to the calendar
2.28year or years that the proposed premium rate would be in effect, actuarially valid changes
2.29in risks associated with the enrollee populations, and actuarially valid changes as a result
2.30of statutory changes in Laws 1992, chapter 549.
2.31    (i) An insurer may, as part of a minimum lifetime loss ratio guarantee filing under
2.32section 62A.02, subdivision 3a, include a rating practices guarantee as provided in this
2.33paragraph. The rating practices guarantee must be in writing and must guarantee that
2.34the policy form will be offered, sold, issued, and renewed only with premium rates and
2.35premium rating practices that comply with subdivisions 2, 3, 4, and 5. The rating practices
2.36guarantee must be accompanied by an actuarial memorandum that demonstrates that the
3.1premium rates and premium rating system used in connection with the policy form will
3.2satisfy the guarantee. The guarantee must guarantee refunds of any excess premiums to
3.3policyholders charged premiums that exceed those permitted under subdivision 2, 3, 4,
3.4or 5. An insurer that complies with this paragraph in connection with a policy form is
3.5exempt from the requirement of prior approval by the commissioner under paragraphs
3.6(c), (f), and (h).

3.7    Sec. 2. [62A.67] MINNESOTA HEALTH INSURANCE EXCHANGE.
3.8    Subdivision 1. Title; citation. This section may be cited as the "Minnesota Health
3.9Insurance Exchange."
3.10    Subd. 2. Creation; tax exemption. The Minnesota Health Insurance Exchange
3.11is created for the limited purpose of providing individuals with greater access, choice,
3.12portability, and affordability of health insurance products. The Minnesota Health
3.13Insurance Exchange is a not-for-profit corporation under chapter 317A and section 501(c)
3.14of the Internal Revenue Code.
3.15    Subd. 3. Definitions. The following terms have the meanings given them unless
3.16otherwise provided in text.
3.17    (a) "Board" means the board of directors of the Minnesota Health Insurance
3.18Exchange under subdivision 13.
3.19    (b) "Commissioner" means:
3.20    (1) the commissioner of commerce for health insurers subject to the jurisdiction
3.21of the Department of Commerce;
3.22    (2) the commissioner of health for health insurers subject to the jurisdiction of the
3.23Department of Health; or
3.24    (3) either commissioner's designated representative.
3.25    (c) "Exchange" means the Minnesota Health Insurance Exchange.
3.26    (d) "HIPAA" means the Health Insurance Portability and Accountability Act of 1996.
3.27    (e) "Individual market health plans," unless otherwise specified, means individual
3.28market health plans defined in section 62A.011.
3.29    (f) "Section 125 Plan" means a cafeteria or Premium Only Plan under section 125 of
3.30the Internal Revenue Code that allows employees to pay for health insurance premiums
3.31with pretax dollars.
3.32    Subd. 4. Insurer and health plan participation. All health plans as defined in
3.33section 62A.011, subdivision 3, issued or renewed in the individual market shall participate
3.34in the exchange. No health plans in the individual market may be issued or renewed
3.35outside of the exchange. Group health plans as defined in section 62A.10 shall not be
4.1offered through the exchange. Health plans offered through the Minnesota Comprehensive
4.2Health Association as defined in section 62E.10 are offered through the exchange to
4.3eligible enrollees as determined by the Minnesota Comprehensive Health Association.
4.4Health plans offered through MinnesotaCare under chapter 256L are offered through the
4.5exchange to eligible enrollees as determined by the commissioner of human services.
4.6    Subd. 5. Approval of health plans. No health plan may be offered through the
4.7exchange unless the commissioner has first certified that:
4.8    (1) the insurer seeking to offer the health plan is licensed to issue health insurance in
4.9the state; and
4.10    (2) the health plan meets the requirements of this section, and the health plan and the
4.11insurer are in compliance with all other applicable health insurance laws.
4.12    Subd. 6. Individual market health plans. Individual market health plans offered
4.13through the exchange continue to be regulated by the commissioner as specified in
4.14chapters 62A, 62C, 62D, 62E, 62Q, and 72A, and must include the following provisions
4.15that apply to all health plans issued or renewed through the exchange:
4.16    (1) premiums for children under the age of 19 shall not vary by age in the exchange;
4.17and
4.18    (2) premiums for children under the age of 19 must be excluded from rating factors
4.19under section 62A.65, subdivision 3, paragraph (b).
4.20    Subd. 7. Individual participation and eligibility. Individuals are eligible to
4.21purchase health plans directly through the exchange or through an employer Section
4.22125 Plan under section 62A.68. Nothing in this section requires guaranteed issue of
4.23individual market health plans offered through the exchange. Individuals are eligible to
4.24purchase individual market health plans through the exchange by meeting one or more
4.25of the following qualifications:
4.26    (1) the individual is a Minnesota resident, meaning the individual is physically
4.27residing on a permanent basis in a place that is the person's principal residence and from
4.28which the person is absent only for temporary purposes;
4.29    (2) the individual is a student attending an institution outside of Minnesota and
4.30maintains Minnesota residency;
4.31    (3) the individual is not a Minnesota resident but is employed by an employer
4.32physically located within the state and the individual's employer is required to offer a
4.33Section 125 Plan under section 62A.68;
4.34    (4) the individual is not a Minnesota resident but is self-employed and the
4.35individual's principal place of business is in the state; or
5.1    (5) the individual is a dependent as defined in section 62L.02, of another individual
5.2who is eligible to participate in the exchange.
5.3    Subd. 8. Continuation of coverage. Enrollment in a health plan may be canceled
5.4for nonpayment of premiums, fraud, or changes in eligibility for MinnesotaCare under
5.5chapter 256L. Enrollment in an individual market health plan may not be canceled or
5.6nonrenewed because of any change in employer or employment status, marital status,
5.7health status, age, residence, or any other change that does not affect eligibility as defined
5.8in this section.
5.9    Subd. 9. Responsibilities of the exchange. The exchange shall serve as the sole
5.10entity for enrollment and collection and transfer of premium payments for health plans
5.11sold to individuals through the exchange. The exchange shall be responsible for the
5.12following functions:
5.13    (1) publicize the exchange, including but not limited to its functions, eligibility
5.14rules, and enrollment procedures;
5.15    (2) provide assistance to employers to establish Section 125 Plans under section
5.1662A.68;
5.17    (3) provide education and assistance to employers to help them understand the
5.18requirements of Section 125 Plans and compliance with applicable regulations;
5.19    (4) create a system to allow individuals to compare and enroll in health plans offered
5.20through the exchange;
5.21    (5) create a system to collect and transmit to the applicable plans all premium
5.22payments made by individuals, including developing mechanisms to receive and process
5.23automatic payroll deductions for individuals who purchase coverage through employer
5.24Section 125 Plans;
5.25    (6) refer individuals interested in MinnesotaCare under chapter 256L to the
5.26Department of Human Services to determine eligibility;
5.27    (7) establish a mechanism with the Department of Human Services to transfer
5.28premiums and subsidies for MinnesotaCare to qualify for federal matching payments;
5.29    (8) upon request, issue certificates of previous coverage according to the provisions
5.30of HIPAA and as referenced in section 62Q.181 to all such individuals who cease to be
5.31covered by a participating health plan through the exchange;
5.32    (9) establish procedures to account for all funds received and disbursed by the
5.33exchange for individual participants of the exchange; and
5.34    (10) make available to the public, at the end of each calendar year, a report of an
5.35independent audit of the exchange's accounts. The exchange shall not accept premium
5.36payments for individual market health plans from an employer Section 125 Plan if the
6.1employer offers a group health plan as defined in section 62A.10 or if the employer is a
6.2self-insurer as defined in section 62E.02.
6.3    Subd. 10. Powers of the exchange. The exchange shall have the power to:
6.4    (1) contract with insurance producers licensed in accident and health insurance
6.5under chapter 60K and vendors to perform one or more of the functions specified in
6.6subdivision 10;
6.7    (2) contract with employers to collect premiums through a Section 125 Plan for
6.8eligible individuals who purchase an individual market health plan through the exchange;
6.9    (3) establish and assess fees on health plan premiums of health plans purchased
6.10through the exchange to fund the cost of administering the exchange;
6.11    (4) seek and directly receive grant funding from government agencies or private
6.12philanthropic organizations to defray the costs of operating the exchange;
6.13    (5) establish and administer rules and procedures governing the operations of the
6.14exchange;
6.15    (6) establish one or more service centers within Minnesota;
6.16    (7) sue or be sued or otherwise take any necessary or proper legal action;
6.17    (8) establish bank accounts and borrow money; and
6.18    (9) enter into agreements with the commissioners of commerce, health, human
6.19services, revenue, employment and economic development, and other state agencies as
6.20necessary for the exchange to implement the provisions of this section.
6.21    Subd. 11. Dispute resolution. The exchange shall establish procedures for
6.22resolving disputes with respect to the eligibility of an individual to participate in the
6.23exchange. The exchange does not have the authority or responsibility to intervene in or
6.24resolve disputes between an individual and a health plan or health insurer. The exchange
6.25shall refer complaints from individuals participating in the exchange to the commissioner
6.26to be resolved according to sections 62Q.68 to 62Q.73.
6.27    Subd. 12. Governance. The exchange shall be governed by a board of directors
6.28with 11 members. The board shall convene on or before July 1, 2007, after the initial board
6.29members have been selected. The initial board membership consists of the following:
6.30    (1) the commissioner of commerce;
6.31    (2) the commissioner of human services;
6.32    (3) the commissioner of health;
6.33    (4) four members appointed by a joint committee of the Minnesota senate and the
6.34Minnesota house of representatives to serve three-year terms; and
6.35    (5) four members appointed by the governor to serve three-year terms.
7.1    Subd. 13. Subsequent board membership. Ongoing membership of the exchange
7.2consists of the following effective July 1, 2010:
7.3    (1) the commissioner of commerce;
7.4    (2) the commissioner of human services;
7.5    (3) the commissioner of health;
7.6    (4) four members appointed by the governor with the approval of a joint committee
7.7of the senate and house of representatives to serve two- or three-year terms. Appointed
7.8members may serve more than one term; and
7.9    (5) four members elected by the membership of the exchange of which two are
7.10elected to serve a two-year term and two are elected to serve a three-year term. Elected
7.11members may serve more than one term.
7.12    Subd. 14. Operations of the board. Officers of the board of directors are elected by
7.13members of the board and serve one-year terms. Six members of the board constitutes a
7.14quorum, and the affirmative vote of six members of the board is necessary and sufficient
7.15for any action taken by the board. Board members serve without pay, but are reimbursed
7.16for actual expenses incurred in the performance of their duties.
7.17    Subd. 15. Operations of the exchange. The board of directors shall appoint an
7.18exchange director who shall:
7.19    (1) be a full-time employee of the exchange;
7.20    (2) administer all of the activities and contracts of the exchange; and
7.21    (3) hire and supervise the staff of the exchange.
7.22    Subd. 16. Insurance producers. When a producer licensed in accident and health
7.23insurance under chapter 60K enrolls an eligible individual in the exchange, the health plan
7.24chosen by an individual may pay the producer a commission.
7.25    Subd. 17. Implementation. Health plan coverage through the exchange begins on
7.26January 1, 2009. The exchange must be operational to assist employers and individuals
7.27by September 1, 2008, and be prepared for enrollment by December 1, 2008. Enrollees
7.28of individual market health plans, MinnesotaCare, and the Minnesota Comprehensive
7.29Health Association as of December 2, 2008, are automatically enrolled in the exchange
7.30on January 1, 2009, in the same health plan and at the same premium that they were
7.31enrolled as of December 2, 2008, subject to the provisions of this section. As of January 1,
7.322009, all enrollees of individual market health plans, MinnesotaCare, and the Minnesota
7.33Comprehensive Health Association shall make premium payments to the exchange.

7.34    Sec. 3. [62A.68] SECTION 125 PLANS.
8.1    Subdivision 1. Definitions. The following terms have the meanings given unless
8.2otherwise provided in text:
8.3    (a) "Current employee" means an employee currently on an employer's payroll other
8.4than a retiree or disabled former employee.
8.5    (b) "Employer" means a person, firm, corporation, partnership, association, business
8.6trust, or other entity employing one or more persons, including a political subdivision of
8.7the state, filing payroll tax information on such employed person or persons.
8.8    (c) "Section 125 Plan" means a cafeteria or Premium Only Plan under section 125
8.9of the Internal Revenue Code that allows employees to purchase health insurance with
8.10pretax dollars.
8.11    (d) "Exchange" means the Minnesota Health Insurance Exchange under section
8.1262A.67.
8.13    (e) "Exchange director" means the appointed director under section 62A.67,
8.14subdivision 16.
8.15    Subd. 2. Section 125 Plan requirement. (a) Effective January 1, 2009, all
8.16employers with 11 or more current employees shall establish a Section 125 Plan to allow
8.17their employees to purchase individual market health plan coverage with pretax dollars.
8.18The following employers are exempt from the Section 125 Plan requirement:
8.19    (1) employers that offer a group health insurance plan as defined in 62A.10;
8.20    (2) employers that are self-insurers as defined in section 62E.02; and
8.21    (3) employers with fewer than 11 current employees, except that employers under
8.22this clause may voluntarily offer a Section 125 Plan.
8.23    (b) Employers that offer a Section 125 Plan may enter into an agreement with the
8.24exchange to administer the employer's Section 125 Plan.
8.25    Subd. 3. Tracking compliance. By July 1, 2008, the exchange, in consultation with
8.26the commissioners of commerce, health, employment and economic development, and
8.27revenue shall establish a method for tracking employer compliance with the Section 125
8.28Plan requirement.
8.29    Subd. 4. Employer requirements. Employers that are required to offer or choose
8.30to offer a Section 125 Plan shall:
8.31    (1) allow employees to purchase an individual market health plan for themselves
8.32and their dependents through the exchange;
8.33    (2) upon an employee's request, deduct premium amounts on a pretax basis in an
8.34amount not to exceed an employee's wages, and remit these employee payments to the
8.35exchange; and
9.1    (3) provide notice to employees that individual market health plans purchased
9.2through the exchange are not employer-sponsored.
9.3    Subd. 5. Section 125 eligible health plans. Individuals who are eligible to use
9.4an employer Section 125 Plan to pay for health insurance coverage purchased through
9.5the exchange may enroll in any health plan offered through the exchange for which the
9.6individual is eligible including individual market health plans, MinnesotaCare, and the
9.7Minnesota Comprehensive Health Association.

9.8    Sec. 4. Minnesota Statutes 2006, section 62E.141, is amended to read:
9.962E.141 INCLUSION IN EMPLOYER-SPONSORED PLAN.
9.10    No employee of an employer that offers a group health plan, under which the
9.11employee is eligible for coverage, is eligible to enroll, or continue to be enrolled, in
9.12the comprehensive health association, except for enrollment or continued enrollment
9.13necessary to cover conditions that are subject to an unexpired preexisting condition
9.14limitation, preexisting condition exclusion, or exclusionary rider under the employer's
9.15health plan. This section does not apply to persons enrolled in the Comprehensive Health
9.16Association as of June 30, 1993. With respect to persons eligible to enroll in the health
9.17plan of an employer that has more than 29 current employees, as defined in section
9.1862L.02 , this section does not apply to persons enrolled in the Comprehensive Health
9.19Association as of December 31, 1994.

9.20    Sec. 5. Minnesota Statutes 2006, section 62L.12, subdivision 2, is amended to read:
9.21    Subd. 2. Exceptions. (a) A health carrier may sell, issue, or renew individual
9.22conversion policies to eligible employees otherwise eligible for conversion coverage under
9.23section 62D.104 as a result of leaving a health maintenance organization's service area.
9.24    (b) A health carrier may sell, issue, or renew individual conversion policies to
9.25eligible employees otherwise eligible for conversion coverage as a result of the expiration
9.26of any continuation of group coverage required under sections 62A.146, 62A.17, 62A.21,
9.2762C.142 , 62D.101, and 62D.105.
9.28    (c) A health carrier may sell, issue, or renew conversion policies under section
9.2962E.16 to eligible employees.
9.30    (d) A health carrier may sell, issue, or renew individual continuation policies to
9.31eligible employees as required.
9.32    (e) A health carrier may sell, issue, or renew individual health plans if the coverage
9.33is appropriate due to an unexpired preexisting condition limitation or exclusion applicable
9.34to the person under the employer's group health plan or due to the person's need for health
9.35care services not covered under the employer's group health plan.
10.1    (f) A health carrier may sell, issue, or renew an individual health plan, if the
10.2individual has elected to buy the individual health plan not as part of a general plan to
10.3substitute individual health plans for a group health plan nor as a result of any violation of
10.4subdivision 3 or 4.
10.5    (g) Nothing in this subdivision relieves a health carrier of any obligation to provide
10.6continuation or conversion coverage otherwise required under federal or state law.
10.7    (h) Nothing in this chapter restricts the offer, sale, issuance, or renewal of coverage
10.8issued as a supplement to Medicare under sections 62A.3099 to 62A.44, or policies or
10.9contracts that supplement Medicare issued by health maintenance organizations, or those
10.10contracts governed by sections 1833, 1851 to 1859, 1860D, or 1876 of the federal Social
10.11Security Act, United States Code, title 42, section 1395 et seq., as amended.
10.12    (i) Nothing in this chapter restricts the offer, sale, issuance, or renewal of individual
10.13health plans necessary to comply with a court order.
10.14    (j) A health carrier may offer, issue, sell, or renew an individual health plan to
10.15persons eligible for an employer group health plan, if the individual health plan is a high
10.16deductible health plan for use in connection with an existing health savings account, in
10.17compliance with the Internal Revenue Code, section 223. In that situation, the same or
10.18a different health carrier may offer, issue, sell, or renew a group health plan to cover
10.19the other eligible employees in the group.
10.20    (k) A health carrier may offer, sell, issue, or renew an individual health plan to one
10.21or more employees of a small employer if the individual health plan is marketed directly to
10.22all employees of the small employer and the small employer does not contribute directly
10.23or indirectly to the premiums or facilitate the administration of the individual health plan.
10.24The requirement to market an individual health plan to all employees does not require the
10.25health carrier to offer or issue an individual health plan to any employee. For purposes
10.26of this paragraph, an employer is not contributing to the premiums or facilitating the
10.27administration of the individual health plan if the employer does not contribute to the
10.28premium and merely collects the premiums from an employee's wages or salary through
10.29payroll deductions and submits payment for the premiums of one or more employees in a
10.30lump sum to the health carrier. Except for coverage under section 62A.65, subdivision 5,
10.31paragraph (b), or 62E.16, at the request of an employee, the health carrier may bill the
10.32employer for the premiums payable by the employee, provided that the employer is not
10.33liable for payment except from payroll deductions for that purpose. If an employer is
10.34submitting payments under this paragraph, the health carrier shall provide a cancellation
10.35notice directly to the primary insured at least ten days prior to termination of coverage for
10.36nonpayment of premium. Individual coverage under this paragraph may be offered only
11.1if the small employer has not provided coverage under section 62L.03 to the employees
11.2within the past 12 months.
11.3    The employer must provide a written and signed statement to the health carrier that
11.4the employer is not contributing directly or indirectly to the employee's premiums. The
11.5health carrier may rely on the employer's statement and is not required to guarantee-issue
11.6individual health plans to the employer's other current or future employees.
11.7    (l) Nothing in this chapter restricts the offer, sale, issuance, or renewal of individual
11.8health plans through the Minnesota Health Insurance Exchange under section 62A.67
11.9or 62A.68.


11.12    Section 1. [62A.67] UNIFORM CLAIMS PROCESSING.
11.13    (a) The commissioner may seek recommendations on standards to establish a
11.14uniform claim form and uniform billing and claim codes from a council of representatives
11.15from the health care industry. Based upon the recommendations of such a council, the
11.16commissioner may issue rules pursuant to section 14.389 requiring the use by all health
11.17plans, health carriers, licensed insurers or third-party administrators, collectively "payers,"
11.18and health care providers, collectively "providers," of a uniform claim form, uniform
11.19billing, or uniform claim codes.
11.20    (b) To the extent that the commissioner does not issue rules establishing a uniform
11.21claim form, uniform billing, and uniform claim codes, beginning January 15, 2008,
11.22the commissioner shall adopt rules pursuant to section 14.389 requiring all payers and
11.23providers to use a uniform claim form and uniform billing and claim codes. Before
11.24adopting such rules, the commissioner shall seek recommendations from a council of
11.25representatives from the health care industry. The commissioner may base the rules
11.26required by this paragraph, in whole or in part, on standards identical to those required by
11.27the Medicare program, or on such alternative standard as the commissioner finds will be
11.28most effective in fulfilling the mandate for uniformity articulated in this section.
11.29    (c) Beginning January 15, 2009, all payers shall offer, and all providers shall
11.30use, compatible systems of electronic billing approved by the commissioner through
11.31rulemaking under section 14.389. The systems approved by the commissioner may
11.32include monitoring and disseminating information concerning eligibility and coverage of
11.33individuals. The systems must be capable of accepting all permissible data elements on a
11.34claim form in order to ensure the most accurate payment and claim determination.
11.35    No payer or provider shall add to or modify these requirements and no payer shall
11.36impose any fee for use of this system.
12.1    (d) For purposes of this section, "health carrier" and "health plan" have the meanings
12.2given in section 62A.011, and "third-party administrator" and "licensed insurer" have the
12.3meanings given in section 62H.10.
12.4EFFECTIVE DATE.This section is effective the day following final enactment.

12.5    Sec. 2. Minnesota Statutes 2006, section 62J.04, subdivision 3, is amended to read:
12.6    Subd. 3. Cost containment duties. The commissioner shall:
12.7    (1) establish statewide and regional cost containment goals for total health care
12.8spending under this section and, collect data as described in sections 62J.38 to 62J.41 to
12.9monitor statewide achievement of the cost containment goals, and annually report to the
12.10legislature on whether the goals were achieved and, if not, what action should be taken to
12.11ensure that goals are achieved in the future;
12.12    (2) divide the state into no fewer than four regions, with one of those regions being
12.13the Minneapolis/St. Paul metropolitan statistical area but excluding Chisago, Isanti,
12.14Wright, and Sherburne Counties, for purposes of fostering the development of regional
12.15health planning and coordination of health care delivery among regional health care
12.16systems and working to achieve the cost containment goals;
12.17    (3) monitor the quality of health care throughout the state and take action as
12.18necessary to ensure an appropriate level of quality;
12.19    (4) issue recommendations regarding uniform billing forms, uniform electronic
12.20billing procedures and data interchanges, patient identification cards, and other uniform
12.21claims and administrative procedures for health care providers and private and public
12.22sector payers. In developing the recommendations, the commissioner shall review the
12.23work of the work group on electronic data interchange (WEDI) and the American National
12.24Standards Institute (ANSI) at the national level, and the work being done at the state and
12.25local level. The commissioner may adopt rules requiring the use of the Uniform Bill
12.2682/92 form, the National Council of Prescription Drug Providers (NCPDP) 3.2 electronic
12.27version, the Centers for Medicare and Medicaid Services 1500 form, or other standardized
12.28forms or procedures;
12.29    (5) undertake health planning responsibilities;
12.30    (6) authorize, fund, or promote research and experimentation on new technologies
12.31and health care procedures;
12.32    (7) within the limits of appropriations for these purposes, administer or contract for
12.33statewide consumer education and wellness programs that will improve the health of
12.34Minnesotans and increase individual responsibility relating to personal health and the
12.35delivery of health care services, undertake prevention programs including initiatives to
13.1improve birth outcomes, expand childhood immunization efforts, and provide start-up
13.2grants for worksite wellness programs;
13.3    (8) undertake other activities to monitor and oversee the delivery of health care
13.4services in Minnesota with the goal of improving affordability, quality, and accessibility of
13.5health care for all Minnesotans; and
13.6    (9) make the cost containment goal data available to the public in a
13.7consumer-oriented manner.
13.8EFFECTIVE DATE.This section is effective July 1, 2007.

13.9    Sec. 3. Minnesota Statutes 2006, section 62J.81, subdivision 1, is amended to read:
13.10    Subdivision 1. Required disclosure of estimated payment. (a) A health care
13.11provider, as defined in section 62J.03, subdivision 8, or the provider's designee as agreed
13.12to by that designee, shall, at the request of a consumer, provide that consumer with a good
13.13faith estimate of the reimbursement allowable payment the provider expects to receive
13.14from the health plan company in which the consumer is enrolled has agreed to accept from
13.15the consumer's health plan company for the services specified by the consumer, specifying
13.16the amount of the allowable payment due from the health plan company. Health plan
13.17companies must allow contracted providers, or their designee, to release this information.
13.18A good faith estimate must also be made available at the request of a consumer who
13.19is not enrolled in a health plan company. If a consumer has no applicable public or
13.20private coverage, the health care provider must give the consumer a good faith estimate
13.21of the average allowable reimbursement the provider accepts as payment from private
13.22third-party payers for the services specified by the consumer and the estimated amount
13.23the noncovered consumer will be required to pay. Payment information provided by a
13.24provider, or by the provider's designee as agreed to by that designee, to a patient pursuant
13.25to this subdivision does not constitute a legally binding estimate of the allowable charge
13.26for or cost to the consumer of services.
13.27    (b) A health plan company, as defined in section 62J.03, subdivision 10, shall, at
13.28the request of an enrollee or the enrollee's designee, provide that enrollee with a good
13.29faith estimate of the reimbursement allowable amount the health plan company would
13.30expect to pay to has contracted for with a specified provider within the network as total
13.31payment for a health care service specified by the enrollee and the portion of the allowable
13.32amount due from the enrollee and the enrollee's out-of-pocket costs. If requested by the
13.33enrollee, the health plan company shall also provide to the enrollee a good faith estimate
13.34of the enrollee's out-of-pocket cost for the health care service. An estimate provided to
14.1an enrollee under this paragraph is not a legally binding estimate of the reimbursement
14.2allowable amount or enrollee's out-of-pocket cost.
14.3EFFECTIVE DATE.This section is effective August 1, 2007.

14.4    Sec. 4. Minnesota Statutes 2006, section 62Q.165, subdivision 1, is amended to read:
14.5    Subdivision 1. Definition. It is the commitment of the state to achieve universal
14.6health coverage for all Minnesotans by the year 2010. Universal coverage is achieved
14.7when:
14.8    (1) every Minnesotan has access to a full range of quality health care services;
14.9    (2) every Minnesotan is able to obtain affordable health coverage which pays for the
14.10full range of services, including preventive and primary care; and
14.11    (3) every Minnesotan pays into the health care system according to that person's
14.12ability.
14.13EFFECTIVE DATE.This section is effective July 1, 2007.

14.14    Sec. 5. Minnesota Statutes 2006, section 62Q.165, subdivision 2, is amended to read:
14.15    Subd. 2. Goal. It is the goal of the state to make continuous progress toward
14.16reducing the number of Minnesotans who do not have health coverage so that by January
14.171, 2000, fewer than four percent of the state's population will be without health coverage
14.182010, all Minnesota residents have access to affordable health care. The goal will be
14.19achieved by improving access to private health coverage through insurance reforms and
14.20market reforms, by making health coverage more affordable for low-income Minnesotans
14.21through purchasing pools and state subsidies, and by reducing the cost of health coverage
14.22through cost containment programs and methods of ensuring that all Minnesotans are
14.23paying into the system according to their ability.
14.24EFFECTIVE DATE.This section is effective July 1, 2007.

14.25    Sec. 6. Minnesota Statutes 2006, section 62Q.80, subdivision 3, is amended to read:
14.26    Subd. 3. Approval. (a) Prior to the operation of a community-based health care
14.27coverage program, a community-based health initiative shall submit to the commissioner
14.28of health for approval the community-based health care coverage program developed by
14.29the initiative. The commissioner shall only approve a program that has been awarded
14.30a community access program grant from the United States Department of Health and
14.31Human Services. The commissioner shall ensure that the program meets the federal grant
14.32requirements and any requirements described in this section and is actuarially sound based
14.33on a review of appropriate records and methods utilized by the community-based health
15.1initiative in establishing premium rates for the community-based health care coverage
15.2program.
15.3    (b) Prior to approval, the commissioner shall also ensure that:
15.4    (1) the benefits offered comply with subdivision 8 and that there are adequate
15.5numbers of health care providers participating in the community-based health network to
15.6deliver the benefits offered under the program;
15.7    (2) the activities of the program are limited to activities that are exempt under this
15.8section or otherwise from regulation by the commissioner of commerce;
15.9    (3) the complaint resolution process meets the requirements of subdivision 10; and
15.10    (4) the data privacy policies and procedures comply with state and federal law.

15.11    Sec. 7. Minnesota Statutes 2006, section 62Q.80, subdivision 4, is amended to read:
15.12    Subd. 4. Establishment. (a) The initiative shall establish and operate upon approval
15.13by the commissioner of health a community-based health care coverage program. The
15.14operational structure established by the initiative shall include, but is not limited to:
15.15    (1) establishing a process for enrolling eligible individuals and their dependents;
15.16    (2) collecting and coordinating premiums from enrollees and employers of enrollees;
15.17    (3) providing payment to participating providers;
15.18    (4) establishing a benefit set according to subdivision 8 and establishing premium
15.19rates and cost-sharing requirements;
15.20    (5) creating incentives to encourage primary care and wellness services; and
15.21    (6) initiating disease management services, as appropriate.
15.22    (b) The payments collected under paragraph (a), clause (2), may be used to capture
15.23available federal funds.

15.24    Sec. 8. Minnesota Statutes 2006, section 62Q.80, subdivision 13, is amended to read:
15.25    Subd. 13. Report. (a) The initiative shall submit quarterly status reports to the
15.26commissioner of health on January 15, April 15, July 15, and October 15 of each year,
15.27with the first report due January 15, 2007 2008. The status report shall include:
15.28    (1) the financial status of the program, including the premium rates, cost per member
15.29per month, claims paid out, premiums received, and administrative expenses;
15.30    (2) a description of the health care benefits offered and the services utilized;
15.31    (3) the number of employers participating, the number of employees and dependents
15.32covered under the program, and the number of health care providers participating;
15.33    (4) a description of the health outcomes to be achieved by the program and a status
15.34report on the performance measurements to be used and collected; and
15.35    (5) any other information requested by the commissioner of health or commerce or
15.36the legislature.
16.1    (b) The initiative shall contract with an independent entity to conduct an evaluation
16.2of the program to be submitted to the commissioners of health and commerce and the
16.3legislature by January 15, 2009 2010. The evaluation shall include:
16.4    (1) an analysis of the health outcomes established by the initiative and the
16.5performance measurements to determine whether the outcomes are being achieved;
16.6    (2) an analysis of the financial status of the program, including the claims to
16.7premiums loss ratio and utilization and cost experience;
16.8    (3) the demographics of the enrollees, including their age, gender, family income,
16.9and the number of dependents;
16.10    (4) the number of employers and employees who have been denied access to the
16.11program and the basis for the denial;
16.12    (5) specific analysis on enrollees who have aggregate medical claims totaling over
16.13$5,000 per year, including data on the enrollee's main diagnosis and whether all the
16.14medical claims were covered by the program;
16.15    (6) number of enrollees referred to state public assistance programs;
16.16    (7) a comparison of employer-subsidized health coverage provided in a comparable
16.17geographic area to the designated community-based geographic area served by the
16.18program, including, to the extent available:
16.19    (i) the difference in the number of employers with 50 or fewer employees offering
16.20employer-subsidized health coverage;
16.21    (ii) the difference in uncompensated care being provided in each area; and
16.22    (iii) a comparison of health care outcomes and measurements established by the
16.23initiative; and
16.24    (8) any other information requested by the commissioner of health or commerce.

16.25    Sec. 9. Minnesota Statutes 2006, section 62Q.80, subdivision 14, is amended to read:
16.26    Subd. 14. Sunset. This section expires December 31, 2011 2012.

16.27    Sec. 10. Minnesota Statutes 2006, section 144.698, subdivision 1, is amended to read:
16.28    Subdivision 1. Yearly reports. (a) Each hospital and each outpatient surgical center,
16.29which has not filed the financial information required by this section with a voluntary,
16.30nonprofit reporting organization pursuant to section 144.702, shall file annually with the
16.31commissioner of health after the close of the fiscal year:
16.32    (1) a balance sheet detailing the assets, liabilities, and net worth of the hospital or
16.33outpatient surgical center;
16.34    (2) a detailed statement of income and expenses;
16.35    (3) a copy of its most recent cost report, if any, filed pursuant to requirements of
16.36Title XVIII of the United States Social Security Act;
17.1    (4) a copy of all changes to articles of incorporation or bylaws;
17.2    (5) information on services provided to benefit the community, including services
17.3provided at no cost or for a reduced fee to patients unable to pay, teaching and research
17.4activities, or other community or charitable activities;
17.5    (6) information required on the revenue and expense report form set in effect on
17.6July 1, 1989, or as amended by the commissioner in rule;
17.7    (7) information on changes in ownership or control; and
17.8    (8) other information required by the commissioner in rule.
17.9    (b) Beginning with hospital fiscal year 2009, each nonprofit hospital shall report on
17.10community benefits under paragraph (a), clause (5). "Community benefit" means the costs
17.11of community care, underpayment for services provided under state health care programs,
17.12research costs, community health services costs, financial and in-kind contributions, costs
17.13of community building activities, costs of community benefit operations, education, and
17.14the cost of operating subsidized services. The cost of bad debts and underpayment for
17.15Medicare services are not included in the calculation of community benefit.

17.16    Sec. 11. Minnesota Statutes 2006, section 144.699, is amended by adding a subdivision
17.17to read:
17.18    Subd. 5. Annual reports on community benefit, community care amounts,
17.19and state program underfunding. (a) For each hospital reporting health care cost
17.20information under section 144.698 or 144.702, the commissioner shall report annually
17.21on the hospital's community benefit, community care, and underpayment for state public
17.22health care programs.
17.23    (b) For purposes of this subdivision, "community benefits" has the definition given
17.24in section 144.698, paragraph (b).
17.25    (c) For purposes of this subdivision, "community care" means the costs for medical
17.26care for which a hospital has determined is charity care, as defined under Minnesota Rules,
17.27part 4650.0115, or for which the hospital determines after billing for the services that there
17.28is a demonstrated inability to pay. Any costs forgiven under a hospital's community care
17.29plan or under section 62J.83 may be counted in the hospital's calculation of community
17.30care. Bad debt expenses and discounted charges available to the uninsured shall not be
17.31included in the calculation of community care. The amount of community care is the value
17.32of costs incurred and not the charges made for services.
17.33    (d) For purposes of this subdivision, underpayment for services provided by state
17.34public health care programs is the difference between hospital costs and public program
17.35payments. The information shall be reported in terms of total dollars and as a percentage
17.36of total operating costs for each hospital.

18.1    Sec. 12. Minnesota Statutes 2006, section 256.01, subdivision 2b, is amended to read:
18.2    Subd. 2b. Performance payments. (a) The commissioner shall develop and
18.3implement a pay-for-performance system to provide performance payments to:
18.4    (1) eligible medical groups and clinics that demonstrate optimum care in serving
18.5individuals with chronic diseases who are enrolled in health care programs administered
18.6by the commissioner under chapters 256B, 256D, and 256L.;
18.7    (2) medical groups that implement effective medical home models of patient care
18.8that improve quality and reduce costs through effective primary and preventive care, care
18.9coordination, and management of chronic conditions; and
18.10    (3) eligible medical groups and clinics that evaluate medical provider usage patterns
18.11and provide feedback to individual medical providers on that provider's practice patterns
18.12relative to peer medical providers.
18.13    (b) The commissioner shall also develop and implement a patient incentive health
18.14program to provide incentives and rewards to patients who are enrolled in health care
18.15programs administered by the commissioner under chapters 256B, 256D, and 256L, and
18.16who have agreed to and meet personal health goals established with their primary care
18.17provider to manage a chronic disease or condition including, but not limited to, diabetes,
18.18high blood pressure, and coronary artery disease.
18.19    (c) The commissioner may receive any federal matching money that is made
18.20available through the medical assistance program for managed care oversight contracted
18.21through vendors including consumer surveys, studies, and external quality reviews as
18.22required by the Federal Balanced Budget Act of 1997, Code of Federal Regulations,
18.23title 42, part 438, subpart E. Any federal money received for managed care oversight is
18.24appropriated to the commissioner for this purpose. The commissioner may expend the
18.25federal money received in either year of the biennium.
18.26EFFECTIVE DATE.This section is effective July 1, 2007.

18.27    Sec. 13. Minnesota Statutes 2006, section 256B.0625, is amended by adding a
18.28subdivision to read:
18.29    Subd. 49. Provider-directed care coordination services. The commissioner
18.30shall develop and implement a provider-directed care coordination program for medical
18.31assistance recipients who are not enrolled in the prepaid medical assistance program and
18.32who are receiving services on a fee-for-service basis. This program provides payment
18.33to primary care clinics for care coordination for people who have complex and chronic
18.34medical conditions. Clinics must meet certain criteria such as the capacity to develop care
18.35plans; have a dedicated care coordinator; and have an adequate number of fee-for-service
19.1clients, evaluation mechanisms, and quality improvement processes to qualify for
19.2reimbursement.

19.3    Sec. 14. HEALTH CARE PAYMENT SYSTEM REFORM.
19.4    Subdivision 1. Payment reform plan. The commissioners of employee relations,
19.5human services, commerce, and health shall develop a plan for promoting and facilitating
19.6changes in payment rates and methods for paying for health care services, drugs, devices,
19.7supplies, and equipment in order to:
19.8    (1) reward the provision of cost-effective primary and preventive care;
19.9    (2) reward the use of evidence-based care;
19.10    (3) discourage underutilization, overuse, and misuse;
19.11    (4) reward the use of the most cost-effective settings, drugs, devices, providers,
19.12and treatments; and
19.13    (5) encourage consumers to maintain good health and use the health care system
19.14appropriately.
19.15In developing the plan, the commissioners shall analyze existing data to determine
19.16specific services and health conditions for which changes in payment rates and methods
19.17would lead to significant improvements in quality of care.
19.18    Subd. 2. Report. The commissioners shall submit a report to the legislature by
19.19December 15, 2007, describing the payment reform plan. The report must include
19.20proposed legislation for implementing those components of the plan requiring legislative
19.21action or appropriations of money.
19.22EFFECTIVE DATE.This section is effective July 1, 2007.

19.23    Sec. 15. COMMUNITY COLLABORATIVE PILOT PROJECTS TO COVER
19.24THE UNINSURED.
19.25    Subdivision 1. Community collaboratives. The commissioner of human services
19.26shall provide grants to and authorization for up to three community collaboratives that
19.27satisfy the requirements in this section. To be eligible to receive a grant and authorization
19.28under this section, a community collaborative must include:
19.29    (1) one or more counties;
19.30    (2) one or more local hospitals;
19.31    (3) one or more local employers who collectively provide at least 300 jobs in the
19.32community;
19.33    (4) one or more health care clinics or physician groups; and
20.1    (5) a third-party payer, which may be a county-based purchasing plan operating
20.2under Minnesota Statutes, section 256B.692, a self-insured employer, or a health plan
20.3company as defined in Minnesota Statutes, section 62Q.01, subdivision 4.
20.4    Subd. 2. Pilot project requirements. (a) Community collaborative pilot projects
20.5must:
20.6    (1) identify and enroll persons in the community who are uninsured, and who have,
20.7or are at risk of developing, one of the following chronic conditions: mental illness,
20.8diabetes, asthma, hypertension, or other chronic condition designated by the project;
20.9    (2) assist uninsured persons to obtain private-sector health insurance coverage if
20.10possible or to enroll in any public health care programs for which they are eligible. If the
20.11uninsured individual is unable to obtain health coverage, the community collaborative
20.12must enroll the individual in a local health care assistance program that provides specified
20.13services to prevent or effectively manage the chronic condition;
20.14    (3) include components to help uninsured persons retain employment or to become
20.15employable, if currently unemployed;
20.16    (4) ensure that each uninsured person enrolled in the program has a medical home
20.17responsible for providing, or arranging for, health care services and assisting in the
20.18effective management of the chronic condition;
20.19    (5) coordinate services between all providers and agencies serving an enrolled
20.20individual; and
20.21    (6) be coordinated with the state's Q-Care initiative and improve the use of
20.22evidence-based treatments and effective disease management programs in the broader
20.23community, beyond those individuals enrolled in the project.
20.24    (b) Projects established under this section are not insurance and are not subject to
20.25state-mandated benefit requirements or insurance regulations.
20.26    Subd. 3. Criteria. Proposals must be evaluated by actuarial, financial, and clinical
20.27experts based on the likelihood that the project would produce a positive return on
20.28investment for the community. In awarding grants, the commissioner of human services
20.29shall give preference to proposals that:
20.30    (1) have broad community support from local businesses, provider counties, and
20.31other public and private organizations;
20.32    (2) would provide services to uninsured persons who have, or are at risk of
20.33developing, multiple, co-occurring chronic conditions;
20.34    (3) integrate or coordinate resources from multiple sources, such as employer
20.35contributions, county funds, social service programs, and provider financial or in-kind
20.36support;
21.1    (4) provide continuity of treatment and services when uninsured individuals in
21.2the program become eligible for public or private health insurance or when insured
21.3individuals lose their coverage;
21.4    (5) demonstrate how administrative costs for health plan companies and providers
21.5can be reduced through greater simplification, coordination, consolidation, standardization,
21.6reducing billing errors, or other methods; and
21.7    (6) involve local contributions to the cost of the pilot projects.
21.8    Subd. 4. Grants. The commissioner of human services shall provide
21.9implementation grants of up to one-half of the community collaborative's costs for
21.10planning, administration, and evaluation. The commissioner shall also provide grants to
21.11community collaboratives to develop a fund to pay up to 50 percent of the cost of the
21.12services provided to uninsured individuals. The remaining costs must be paid for through
21.13other sources or by agreement of a health care provider to contribute the cost as charity
21.14care.
21.15    Subd. 5. Evaluation. The commissioner of human services shall evaluate the
21.16effectiveness of each community collaborative project awarded a grant, by comparing
21.17actual costs for serving the identified uninsured persons to the predicted costs that would
21.18have been incurred in the absence of early intervention and consistent treatment to manage
21.19the chronic condition, including the costs to medical assistance, MinnesotaCare, and
21.20general assistance medical care. The commissioner shall require community collaborative
21.21projects, as a condition of receipt of a grant award, to provide the commissioner with all
21.22information necessary for this evaluation.
21.23EFFECTIVE DATE.This section is effective July 1, 2007.

21.24    Sec. 16. HEALTH CARE PAYMENT REFORM PILOT PROJECTS.
21.25    Subdivision 1. Pilot projects. (a) The commissioners of health, human services,
21.26and employee relations shall develop and administer payment reform pilot projects for
21.27state employees and persons enrolled in medical assistance, MinnesotaCare, or general
21.28assistance medical care, to the extent permitted by federal requirements. The purpose of
21.29the projects is to promote and facilitate changes in payment rates and methods for paying
21.30for health care services, drugs, devices, supplies, and equipment in order to:
21.31    (1) reward the provision of cost-effective primary and preventive care;
21.32    (2) reward the use of evidence-based care;
21.33    (3) reward coordination of care for patients with chronic conditions;
21.34    (4) discourage overuse and misuse;
22.1    (5) reward the use of the most cost-effective settings, drugs, devices, providers,
22.2and treatments;
22.3    (6) encourage consumers to maintain good health and use the health care system
22.4appropriately.
22.5    (b) The pilot projects must involve the use of designated care professionals or
22.6clinics to serve as a patient's medical home and be responsible for coordinating health
22.7care services across the continuum of care. The pilot projects must evaluate different
22.8payment reform models and must be coordinated with the Minnesota senior health options
22.9program and the Minnesota disability health options program. To the extent possible, the
22.10commissioners shall coordinate state purchasing activities with other public employers
22.11and with private purchasers, self-insured groups, and health plan companies to promote
22.12the use of pilot projects encompassing both public and private purchasers and markets.
22.13    Subd. 2. Payment methods and incentives. The commissioners shall modify
22.14existing payment methods and rates for those enrollees and health care providers
22.15participating in the pilot project in order to provide incentives for care management,
22.16team-based care, and practice redesign, and increase resources for primary care, chronic
22.17condition care, and care provided to complex patients. The commissioners may create
22.18financial incentives for patients to select a medical home under the pilot project by
22.19reducing, modifying, or eliminating deductibles and co-payments for certain services, or
22.20through other incentives. The commissioners may require patients to remain with their
22.21designated medical home for a specified period of time. Alternative payment methods
22.22may include complete or partial capitation, fee-for-service payments, or other payment
22.23methodologies. The payment methods may provide for the payment of bonuses to medical
22.24home providers or other providers, or to patients, for the achievement of performance
22.25goals. The payment methods may include allocating a portion of the payment that
22.26would otherwise be paid to health plans under state prepaid health care programs to the
22.27designated medical home for specified services.
22.28    Subd. 3. Requirements. In order to be designated a medical home under the pilot
22.29project, health care professionals or clinics must demonstrate their ability to:
22.30    (1) be the patient's first point of contact by telephone or other means, 24 hours a
22.31day, seven days a week;
22.32    (2) provide or arrange for patients' comprehensive health care needs, including the
22.33ability to structure planned chronic disease visits and to manage chronic disease through
22.34the use of disease registries;
22.35    (3) coordinate patients' care when care must be provided outside the medical home;
23.1    (4) provide longitudinal care, not just episodic care, including meeting long-term
23.2and unique personal needs;
23.3    (5) utilize an electronic health record and incorporate a plan to develop and make
23.4available to patients that choose a medical home an electronic personal health record that
23.5is prepopulated with the patient's data, consumer-directed, connected to the provider,
23.624-hour accessible, and owned and controlled by the patient;
23.7    (6) systematically improve quality of care using, among other inputs, patient
23.8feedback; and
23.9    (7) create a provider network that provides for increased reimbursement for a
23.10medical home in a cost-neutral manner.
23.11    Subd. 4. Evaluation. Pilot projects must be evaluated based on patient satisfaction,
23.12provider satisfaction, clinical process and outcome measures, program costs and savings,
23.13and economic impact on health care providers. Pilot projects must be evaluated based
23.14on the extent to which the medical home:
23.15    (1) coordinated health care services across the continuum of care and thereby
23.16reduced duplication of services and enhanced communication across providers;
23.17    (2) provided safe and high-quality care by increasing utilization of effective
23.18treatments, reduced use of ineffective treatments, reduced barriers to essential care and
23.19services, and eliminated barriers to access;
23.20    (3) reduced unnecessary hospitalizations and emergency room visits and increased
23.21use of cost-effective care and settings;
23.22    (4) encouraged long-term patient and provider relationships by shifting from
23.23episodic care to consistent, coordinated communication and care with a specified team of
23.24providers or individual providers;
23.25    (5) engaged and educated consumers by encouraging shared patient and provider
23.26responsibility and accountability for disease prevention, health promotion, chronic
23.27disease management, acute care, and overall well-being, encouraging informed medical
23.28decision-making, ensuring the availability of accurate medical information, and facilitated
23.29the transfer of accurate medical information;
23.30    (6) encouraged innovation in payment methodologies by using patient and provider
23.31incentives to coordinate care and utilize medical home services and fostering the
23.32expansion of a technology infrastructure that supports collaboration; and
23.33    (7) reduced overall health care costs as compared to conventional payment methods
23.34for similar patient populations.
23.35    Subd. 5. Rulemaking. The commissioners are exempt from administrative
23.36rulemaking under chapter 14 for purposes of developing, administering, contracting
24.1for, and evaluating pilot projects under this section. The commissioner shall publish a
24.2proposed request for proposals in the State Register and allow 30 days for comment
24.3before issuing the final request for proposals.
24.4    Subd. 6. Regulatory and payment barriers. The commissioners shall study state
24.5and federal statutory and regulatory barriers to the creation of medical homes and provide
24.6a report and recommendations to the legislature by December 15, 2007.

24.7    Sec. 17. HEALTH CARE SYSTEM CONSOLIDATION.
24.8    (a) The commissioner of health shall study the effect of health care provider and
24.9health plan company consolidation in the four metropolitan statistical areas in Minnesota
24.10on: health care costs, including provider payment rates; quality of care; and access to care.
24.11The commissioner shall separately consider hospitals, specialty groups, and primary care
24.12groups. The commissioner shall present findings and recommendations to the legislature
24.13by December 15, 2007.
24.14    (b) For purposes of this study, health carriers, provider networks, and other health
24.15care providers shall provide data on network participation, contracted payment rates,
24.16charges, costs, payments received, patient referrals, and other information requested by
24.17the commissioner, in the form and manner specified by the commissioner. Provider-level
24.18information on contracted payment rates and payments from health plans provided to the
24.19commissioner of health for the purposes of this study are (1) private data on individuals as
24.20defined in Minnesota Statutes, section 13.02, subdivision 12, and (2) nonpublic data as
24.21defined in Minnesota Statutes, section 13.02, subdivision 9. The commissioner may not
24.22collect patient-identified data for purposes of this study. Data collected for purposes of
24.23this study may not be used for any other purposes.

24.24    Sec. 18. REPEALER.
24.25Minnesota Statutes 2006, section 62J.052, subdivision 1, is repealed effective
24.26August 1, 2007.


24.29    Section 1. Minnesota Statutes 2006, section 62J.495, is amended to read:
24.3062J.495 HEALTH INFORMATION TECHNOLOGY AND
24.31INFRASTRUCTURE ADVISORY COMMITTEE.
24.32    Subdivision 1. Establishment; members; duties Implementation. By January
24.331, 2012, all hospitals and health care providers must have in place an interoperable
24.34electronic health records system within their hospital system or clinical practice setting.
24.35The commissioner of health, in consultation with the Health Information Technology and
25.1Infrastructure Advisory Committee, shall develop a statewide plan to meet this goal,
25.2including uniform standards to be used for the interoperable system for sharing and
25.3synchronizing patient data across systems. The standards must be compatible with federal
25.4efforts. The uniform standards must be developed by January 1, 2009, with a status report
25.5on the development of these standards submitted to the legislature by January 15, 2008.
25.6    Subd. 2. Health Information Technology and Infrastructure Advisory
25.7Committee. (a) The commissioner shall establish a Health Information Technology
25.8and Infrastructure Advisory Committee governed by section 15.059 to advise the
25.9commissioner on the following matters:
25.10    (1) assessment of the use of health information technology by the state, licensed
25.11health care providers and facilities, and local public health agencies;
25.12    (2) recommendations for implementing a statewide interoperable health information
25.13infrastructure, to include estimates of necessary resources, and for determining standards
25.14for administrative data exchange, clinical support programs, patient privacy requirements,
25.15and maintenance of the security and confidentiality of individual patient data; and
25.16    (3) other related issues as requested by the commissioner.
25.17    (b) The members of the Health Information Technology and Infrastructure Advisory
25.18Committee shall include the commissioners, or commissioners' designees, of health,
25.19human services, administration, and commerce and additional members to be appointed
25.20by the commissioner to include persons representing Minnesota's local public health
25.21agencies, licensed hospitals and other licensed facilities and providers, private purchasers,
25.22the medical and nursing professions, health insurers and health plans, the state quality
25.23improvement organization, academic and research institutions, consumer advisory
25.24organizations with an interest and expertise in health information technology, and other
25.25stakeholders as identified by the Health Information Technology and Infrastructure
25.26Advisory Committee.
25.27    Subd. 2. Annual report. (c) The commissioner shall prepare and issue an annual
25.28report not later than January 30 of each year outlining progress to date in implementing a
25.29statewide health information infrastructure and recommending future projects.
25.30    Subd. 3. Expiration. (d) Notwithstanding section 15.059, this section subdivision
25.31expires June 30, 2009 2012.

25.32    Sec. 2. [62J.496] ELECTRONIC HEALTH RECORD SYSTEM REVOLVING
25.33ACCOUNT AND LOAN PROGRAM.
25.34    Subdivision 1. Account establishment. The commissioner of finance shall
25.35establish and implement a revolving account in the state government special revenue
25.36fund to provide loans to physicians or physician group practices to assist in financing the
26.1installation or support of an interoperable health record system. The system must provide
26.2for the interoperable exchange of health care information between the applicant and, at a
26.3minimum, a hospital system, pharmacy, and a health care clinic or other physician group.
26.4    Subd. 2. Eligibility. To be eligible for a loan under this section, the applicant
26.5must submit a loan application to the commissioner of health on forms prescribed by the
26.6commissioner. The application must include, at a minimum:
26.7    (1) the amount of the loan requested and a description of the purpose or project
26.8for which the loan proceeds will be used;
26.9    (2) a signed contract with a vendor;
26.10    (3) a description of the health care entities and other groups participating in the
26.11project;
26.12    (4) evidence of financial stability and a demonstrated ability to repay the loan; and
26.13    (5) a description of how the system to be financed interconnects or plans in the
26.14future to interconnect with other health care entities and provider groups located in the
26.15same geographical area.
26.16    Subd. 3. Loans. (a) The commissioner of health may make a no interest loan
26.17to a provider or provider group who is eligible under subdivision 2 on a first-come,
26.18first-served basis provided that the applicant is able to comply with this section. The total
26.19accumulative loan principal must not exceed $....... per loan. The commissioner of health
26.20has discretion over the size and number of loans made.
26.21    (b) The commissioner of health may prescribe forms and establish an application
26.22process and, notwithstanding section 16A.1283, may impose a reasonable nonrefundable
26.23application fee to cover the cost of administering the loan program.
26.24    (c) The borrower must begin repaying the principal no later than two years from the
26.25date of the loan. Loans must be amortized no later than 15 years from the date of the loan.
26.26    (d) Repayments must be credited to the account.

26.27    Sec. 3. [62J.536] UNIFORM ELECTRONIC TRANSACTIONS AND
26.28IMPLEMENTATION GUIDE STANDARDS.
26.29    Subdivision 1. Electronic claims and eligibility transactions required. (a)
26.30Beginning January 15, 2009, all group purchasers must accept from health care providers
26.31the eligibility for a health plan transaction described under Code of Federal Regulations,
26.32title 45, part 162, subpart L. Beginning July 15, 2009, all group purchasers must accept
26.33from health care providers the health care claims or equivalent encounter information
26.34transaction described under Code of Federal Regulations, title 45, part 162, subpart K.
27.1    (b) Beginning January 15, 2009, all group purchasers must transmit to providers the
27.2eligibility for a health plan transaction described under Code of Federal Regulations, title
27.345, part 162, subpart L. Beginning December 1, 2009, all group purchasers must transmit
27.4to providers the health care payment and remittance advice transaction described under
27.5Code of Federal Regulations, title 45, part 162, subpart P.
27.6    (c) Beginning January 15, 2009, all health care providers must submit to group
27.7purchasers the eligibility for a health plan transaction described under Code of Federal
27.8Regulations, title 45, part 162, subpart L. Beginning July 15, 2009, all health care
27.9providers must submit to group purchasers the health care claims or equivalent encounter
27.10information transaction described under Code of Federal Regulations, title 45, part 162,
27.11subpart K.
27.12    (d) Beginning January 15, 2009, all health care providers must accept from group
27.13purchasers the eligibility for a health plan transaction described under Code of Federal
27.14Regulations, title 45, part 162, subpart L. Beginning December 15, 2009, all health care
27.15providers must accept from group purchasers the health care payment and remittance
27.16advice transaction described under Code of Federal Regulations, title 45, part 162, subpart
27.17P.
27.18    (e) Each of the transactions described in paragraphs (a) to (d) shall require the use
27.19of a single, uniform companion guide to the implementation guides described under
27.20Code of Federal Regulations, title 45, part 162. The companion guides will be developed
27.21pursuant to subdivision 2.
27.22    (f) Notwithstanding any other provisions in sections 62J.50 to 62J.61, all group
27.23purchasers and health care providers must exchange claims and eligibility information
27.24electronically using the transactions, companion guides, implementation guides, and
27.25timelines required under this subdivision. Group purchasers may not impose any fee on
27.26providers for the use of the transactions prescribed in this subdivision.
27.27    (g) Nothing in this subdivision shall prohibit group purchasers and health care
27.28providers from using a direct data entry, Web-based methodology for complying with
27.29the requirements of this subdivision. Any direct data entry method for conducting
27.30the transactions specified in this subdivision must be consistent with the data content
27.31component of the single, uniform companion guides required in paragraph (e) and the
27.32implementation guides described under Code of Federal Regulations, title 45, part 162.
27.33    Subd. 2. Establishing uniform, standard companion guides. (a) At least 12
27.34months prior to the timelines required in subdivision 1, the commissioner of health shall
27.35promulgate rules pursuant to section 62J.61 establishing and requiring group purchasers
28.1and health care providers to use the transactions and the uniform, standard companion
28.2guides required under subdivision 1, paragraph (e).
28.3    (b) The commissioner of health must consult with the Minnesota Administrative
28.4Uniformity Committee on the development of the single, uniform companion guides
28.5required under subdivision 1, paragraph (e), for each of the transactions in subdivision 1.
28.6The single uniform companion guides required under subdivision 1, paragraph (e), must
28.7specify uniform billing and coding standards. The commissioner of health shall base the
28.8companion guides required under subdivision 1, paragraph (e), billing and coding rules,
28.9and standards on the Medicare program, with modifications that the commissioner deems
28.10appropriate after consulting the Minnesota Administrative Uniformity Committee.
28.11    (c) No group purchaser or health care provider may add to or modify the single,
28.12uniform companion guides defined in subdivision 1, paragraph (e), through additional
28.13companion guides or other requirements.

28.14    Sec. 4. Minnesota Statutes 2006, section 62J.692, subdivision 4, is amended to read:
28.15    Subd. 4. Distribution of funds. (a) The commissioner shall annually distribute
28.1690 percent of available medical education funds to all qualifying applicants based on a
28.17distribution formula that reflects a summation of two factors:
28.18    (1) an education factor, which is determined by the total number of eligible trainee
28.19FTEs and the total statewide average costs per trainee, by type of trainee, in each clinical
28.20medical education program; and
28.21    (2) a public program volume factor, which is determined by the total volume of
28.22public program revenue received charges submitted by each training site as a percentage of
28.23all public program revenue received charges submitted by all training sites in the fund pool.
28.24    In this formula, the education factor is weighted at 67 percent and the public program
28.25volume factor is weighted at 33 percent.
28.26    Public program revenue charges for the distribution formula includes revenue from
28.27include charges for medical assistance, prepaid medical assistance, general assistance
28.28medical care, and prepaid general assistance medical care submitted for payment to this
28.29state and to contiguous states. Training sites that receive have no public program revenue
28.30charges are ineligible for funds available under this paragraph. Total statewide average
28.31costs per trainee for medical residents is based on audited clinical training costs per trainee
28.32in primary care clinical medical education programs for medical residents. Total statewide
28.33average costs per trainee for dental residents is based on audited clinical training costs
28.34per trainee in clinical medical education programs for dental students. Total statewide
28.35average costs per trainee for pharmacy residents is based on audited clinical training costs
28.36per trainee in clinical medical education programs for pharmacy students.
29.1    (b) The commissioner shall annually distribute ten percent of total available medical
29.2education funds to all qualifying applicants based on the percentage received by each
29.3applicant under paragraph (a). These funds are to be used to offset clinical education
29.4costs at eligible clinical training sites based on criteria developed by the clinical medical
29.5education program. Applicants may choose to distribute funds allocated under this
29.6paragraph based on the distribution formula described in paragraph (a).
29.7    (c) Funds distributed shall not be used to displace current funding appropriations
29.8from federal or state sources.
29.9    (d) Funds shall be distributed to the sponsoring institutions indicating the amount
29.10to be distributed to each of the sponsor's clinical medical education programs based on
29.11the criteria in this subdivision and in accordance with the commissioner's approval letter.
29.12Each clinical medical education program must distribute funds allocated under paragraph
29.13(a) to the training sites as specified in the commissioner's approval letter. Sponsoring
29.14institutions, which are accredited through an organization recognized by the Department
29.15of Education or the Centers for Medicare and Medicaid Services, may contract directly
29.16with training sites to provide clinical training. To ensure the quality of clinical training,
29.17those accredited sponsoring institutions must:
29.18    (1) develop contracts specifying the terms, expectations, and outcomes of the clinical
29.19training conducted at sites; and
29.20    (2) take necessary action if the contract requirements are not met. Action may
29.21include the withholding of payments under this section or the removal of students from
29.22the site.
29.23    (e) Any funds not distributed in accordance with the commissioner's approval letter
29.24must be returned to the medical education and research fund within 30 days of receiving
29.25notice from the commissioner. The commissioner shall distribute returned funds to the
29.26appropriate training sites in accordance with the commissioner's approval letter.
29.27    (f) The commissioner shall distribute by June 30 of each year an amount equal to
29.28the funds transferred under subdivision 10, plus five percent interest to the University of
29.29Minnesota Board of Regents for the instructional costs of health professional programs
29.30at the Academic Health Center and for interdisciplinary academic initiatives within the
29.31Academic Health Center.
29.32    (g) A maximum of $150,000 of the funds dedicated to the commissioner under
29.33section 297F.10, subdivision 1, paragraph (b), clause (2), may be used by the commissioner
29.34for administrative expenses associated with implementing this section.

29.35    Sec. 5. Minnesota Statutes 2006, section 62J.82, is amended to read:
29.3662J.82 HOSPITAL CHARGE INFORMATION REPORTING DISCLOSURE.
30.1    Subdivision 1. Required information. The Minnesota Hospital Association shall
30.2develop a Web-based system, available to the public free of charge, for reporting charge
30.3information the following, for Minnesota residents,:
30.4    (1) hospital-specific performance on the measures of care developed under section
30.5256B.072 for acute myocardial infarction, heart failure, and pneumonia;
30.6    (2) by January 1, 2009, hospital-specific performance on the public reporting
30.7measures for hospital-acquired infections as published by the National Quality Forum
30.8and collected by the Minnesota Hospital Association and Stratis Health in collaboration
30.9with infection control practitioners; and
30.10    (3) charge information, including, but not limited to, number of discharges, average
30.11length of stay, average charge, average charge per day, and median charge, for each of the
30.1250 most common inpatient diagnosis-related groups and the 25 most common outpatient
30.13surgical procedures as specified by the Minnesota Hospital Association.
30.14    Subd. 2. Web site. The Web site must provide information that compares
30.15hospital-specific data to hospital statewide data. The Web site must be established by
30.16October 1, 2006, and must be updated annually. The commissioner shall provide a link to
30.17this reporting information on the department's Web site.
30.18    Subd. 3. Enforcement. The commissioner shall provide a link to this information
30.19on the department's Web site. If a hospital does not provide this information to the
30.20Minnesota Hospital Association, the commissioner of health may require the hospital to
30.21do so in accordance with section 144.55, subdivision 6. The commissioner shall provide a
30.22link to this information on the department's Web site.

30.23    Sec. 6. [62J.84] HEALTH CARE TRANSFORMATION TASK FORCE.
30.24    Subdivision 1. Task force. The governor shall convene a health care transformation
30.25task force to advise and assist the governor and the Minnesota legislature. The task force
30.26shall consist of:
30.27    (1) four legislators from the house of representatives, two appointed by the speaker
30.28of the house of representatives and two by the minority leader, and four legislators from
30.29the senate, two appointed by the majority leader and two by the minority leader;
30.30    (2) four representatives of the governor and state agencies appointed by the governor;
30.31    (3) at least four persons appointed by the governor who have demonstrated
30.32leadership in health care organizations, health improvement initiatives, health care trade or
30.33professional associations, or other collaborative health system improvement activities; and
31.1    (4) at least two persons appointed by the governor who have demonstrated leadership
31.2in employer and group purchaser activities related to health system improvement, at least
31.3one of which must be from a labor organization.
31.4    Subd. 2. Public input. The commissioner of health shall review available research,
31.5and conduct statewide, regional, and local surveys, focus groups, and other activities as
31.6needed to fill gaps in existing research, to determine Minnesotans' values, preferences,
31.7opinions, and perceptions related to health care and to the issues confronting the task
31.8force, and shall report the findings to the task force.
31.9    Subd. 3. Inventory and assessment of existing activities; action plan. The task
31.10force shall complete an inventory and assessment of all public and private organized
31.11activities, coalitions, and collaboratives working on tasks relating to health system
31.12improvement including, but not limited to, patient safety, quality measurement and
31.13reporting, evidence-based practice, adoption of health information technology, disease
31.14management and chronic care coordination, medical homes, access to health care,
31.15cultural competence, prevention and public health, consumer incentives, price and cost
31.16transparency, nonprofit organization community benefits, education, research, and health
31.17care workforce.
31.18    Subd. 4. Action plan. By December 15, 2007, the governor, with the advice
31.19and assistance of the task force, shall develop and present to the legislature a statewide
31.20action plan for transforming the health care system to improve affordability, quality,
31.21and access. The plan shall include draft legislation needed to implement the plan. The
31.22plan may consist of legislative actions, administrative actions of governmental entities,
31.23collaborative actions, and actions of individuals and individual organizations. Among
31.24other things, the action plan must include the following, with specific and measurable
31.25goals and deadlines for each:
31.26    (1) proposed actions that will slow the rate of increase in health care costs to a rate
31.27that does not exceed the increase in the Consumer Price Index for urban consumers for the
31.28preceding calendar year plus two percentage points, plus an additional percentage based
31.29on the added costs necessary to implement legislation enacted in 2007;
31.30    (2) actions that will increase the affordable health coverage options for uninsured
31.31and underinsured Minnesotans and other strategies that will ensure that all Minnesotans
31.32will have health coverage by January 2010;
31.33    (3) actions to improve the quality and safety of health care and reduce racial and
31.34ethnic disparities in access and quality;
32.1    (4) actions that will reduce the rate of preventable chronic illness through prevention
32.2and public health and wellness initiatives; and
32.3    (5) proposed changes to state health care purchasing and payment strategies used for
32.4state health care programs and state employees that will promote higher quality, lower
32.5cost health care through incentives that reward prevention and early intervention, use
32.6of cost-effective primary care, effective care coordination, and management of chronic
32.7disease;
32.8    (6) actions that will promote the appropriate and cost-effective investment in new
32.9facilities, technologies, and drugs;
32.10    (7) actions to reduce administrative costs; and
32.11    (8) the results of the inventory completed under subdivision 3 and recommendations
32.12for how these activities can be coordinated and improved.
32.13    Subd. 5. MinnesotaCare option for small employers. The task force shall study
32.14and report back to the legislature by December 15, 2008, on the feasibility of creating a
32.15small employer buy-in option to MinnesotaCare. For purposes of this study, an employer
32.16is eligible to apply for coverage through the program if the employer meets the following
32.17requirements:
32.18(1) agree to contribute toward the cost of the premium for the employee, the
32.19employee's spouse, and the employee's dependents according to subdivision 4;
32.20(2) certify that at least 75 percent of its eligible employees who do not have other
32.21creditable health coverage are enrolled in the program;
32.22(3) offer coverage to all eligible employees, spouses, and dependents of eligible
32.23employees; and
32.24(4) have not provided employer-subsidized health coverage as an employee benefit
32.25during the previous 12 months, as defined in section 256L.07, subdivision 2, paragraph (c).
32.26The task force shall include recommendations on the extent of coverage available,
32.27eligibility limits, and the amount of premiums.

32.28    Sec. 7. Minnesota Statutes 2006, section 62L.02, subdivision 11, is amended to read:
32.29    Subd. 11. Dependent. "Dependent" means an eligible employee's spouse,
32.30unmarried child who is under the age of 19 years, unmarried child under the age of 25
32.31years who is a full-time student as defined in section 62A.301 regardless of whether
32.32the dependent child is enrolled in an educational institution, dependent child of any age
32.33who is disabled and who meets the eligibility criteria in section 62A.14, subdivision 2,
32.34or any other person whom state or federal law requires to be treated as a dependent for
32.35purposes of health plans. For the purpose of this definition, a child includes a child for
33.1whom the employee or the employee's spouse has been appointed legal guardian and an
33.2adoptive child as provided in section 62A.27.
33.3EFFECTIVE DATE.This section is effective January 1, 2008.

33.4    Sec. 8. Minnesota Statutes 2006, section 256L.01, subdivision 4, is amended to read:
33.5    Subd. 4. Gross individual or gross family income. (a) "Gross individual or gross
33.6family income" for nonfarm self-employed means income calculated for the six-month
33.7period of eligibility using the net profit or loss reported on the applicant's federal income
33.8tax form for the previous year and using the medical assistance families with children
33.9methodology for determining allowable and nonallowable self-employment expenses and
33.10countable income.
33.11    (b) "Gross individual or gross family income" for farm self-employed means income
33.12calculated for the six-month period of eligibility using as the baseline the adjusted gross
33.13income reported on the applicant's federal income tax form for the previous year and
33.14adding back in reported depreciation amounts that apply to the business in which the
33.15family is currently engaged.
33.16    (c) "Gross individual or gross family income" means the total income for all family
33.17members, calculated for the six-month period of eligibility.
33.18EFFECTIVE DATE.This section is effective July 1, 2007."
33.19Delete the title and insert:
33.21relating to health; instituting health care reform; establishing the Minnesota
33.22Health Insurance Exchange; requiring certain employers to offer Section 125
33.23Plans; authorizing the commissioner to seek recommendations on uniform billing
33.24and claim codes; instituting health care payment system reform; making a goal
33.25and commitment of the state to achieve universal health care by the year 2010;
33.26implementing a patient incentive health program; requiring community benefit
33.27reports; implementing provider-directed care coordination services; creating
33.28pilots to cover the uninsured; creating payment reform pilots; requiring a study
33.29to consolidate health care systems; modifying health information; supporting
33.30interoperable health record systems; providing uniform claim standards; creating
33.31task forces; requiring reports;amending Minnesota Statutes 2006, sections
33.3262A.65, subdivision 3; 62E.141; 62J.04, subdivision 3; 62J.495; 62J.692,
33.33subdivision 4; 62J.81, subdivision 1; 62J.82; 62L.02, subdivision 11; 62L.12,
33.34subdivision 2; 62Q.165, subdivisions 1, 2; 62Q.80, subdivisions 3, 4, 13, 14;
33.35144.698, subdivision 1; 144.699, by adding a subdivision; 256.01, subdivision
33.362b; 256B.0625, by adding a subdivision; 256L.01, subdivision 4; proposing
33.37coding for new law in Minnesota Statutes, chapters 62A; 62J; repealing
33.38Minnesota Statutes 2006, section 62J.052, subdivision 1."