1.2relating to health care; creating a withhold to managed care plans and
1.3county-based purchasing plans for reducing second hospitalizations within 30
1.4days of a hospitalization;amending Minnesota Statutes 2010, sections 256B.69,
1.5subdivision 5a; 256L.12, subdivision 9.
1.6BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

1.7    Section 1. Minnesota Statutes 2010, section 256B.69, subdivision 5a, is amended to
1.8read:
1.9    Subd. 5a. Managed care contracts. (a) Managed care contracts under this section
1.10and section 256L.12 shall be entered into or renewed on a calendar year basis beginning
1.11January 1, 1996. Managed care contracts which were in effect on June 30, 1995, and set to
1.12renew on July 1, 1995, shall be renewed for the period July 1, 1995 through December
1.1331, 1995 at the same terms that were in effect on June 30, 1995. The commissioner may
1.14issue separate contracts with requirements specific to services to medical assistance
1.15recipients age 65 and older.
1.16    (b) A prepaid health plan providing covered health services for eligible persons
1.17pursuant to chapters 256B and 256L is responsible for complying with the terms of its
1.18contract with the commissioner. Requirements applicable to managed care programs
1.19under chapters 256B and 256L established after the effective date of a contract with the
1.20commissioner take effect when the contract is next issued or renewed.
1.21    (c) Effective for services rendered on or after January 1, 2003, the commissioner
1.22shall withhold five percent of managed care plan payments under this section and
1.23county-based purchasing plan payments under section 256B.692 for the prepaid medical
1.24assistance program pending completion of performance targets. Each performance target
1.25must be quantifiable, objective, measurable, and reasonably attainable, except in the case
2.1of a performance target based on a federal or state law or rule. Criteria for assessment
2.2of each performance target must be outlined in writing prior to the contract effective
2.3date. The managed care plan must demonstrate, to the commissioner's satisfaction,
2.4that the data submitted regarding attainment of the performance target is accurate. The
2.5commissioner shall periodically change the administrative measures used as performance
2.6targets in order to improve plan performance across a broader range of administrative
2.7services. The performance targets must include measurement of plan efforts to contain
2.8spending on health care services and administrative activities. The commissioner may
2.9adopt plan-specific performance targets that take into account factors affecting only one
2.10plan, including characteristics of the plan's enrollee population. The withheld funds
2.11must be returned no sooner than July of the following year if performance targets in the
2.12contract are achieved. The commissioner may exclude special demonstration projects
2.13under subdivision 23.
2.14    (d) Effective for services rendered on or after January 1, 2009, through December
2.1531, 2009, the commissioner shall withhold three percent of managed care plan payments
2.16under this section and county-based purchasing plan payments under section 256B.692
2.17for the prepaid medical assistance program. The withheld funds must be returned no
2.18sooner than July 1 and no later than July 31 of the following year. The commissioner may
2.19exclude special demonstration projects under subdivision 23.
2.20(e) Effective for services provided on or after January 1, 2010, the commissioner
2.21shall require that managed care plans use the assessment and authorization processes,
2.22forms, timelines, standards, documentation, and data reporting requirements, protocols,
2.23billing processes, and policies consistent with medical assistance fee-for-service or the
2.24Department of Human Services contract requirements consistent with medical assistance
2.25fee-for-service or the Department of Human Services contract requirements for all
2.26personal care assistance services under section 256B.0659.
2.27(f) Effective for services rendered on or after January 1, 2010, through December
2.2831, 2010, the commissioner shall withhold 4.5 percent of managed care plan payments
2.29under this section and county-based purchasing plan payments under section 256B.692
2.30for the prepaid medical assistance program. The withheld funds must be returned no
2.31sooner than July 1 and no later than July 31 of the following year. The commissioner may
2.32exclude special demonstration projects under subdivision 23.
2.33(g) Effective for services rendered on or after January 1, 2011, the commissioner
2.34shall include as part of the performance targets described in paragraph (c) a reduction in
2.35the health plan's emergency room utilization rate for state health care program enrollees
3.1by a measurable rate of five percent from the plan's utilization rate for state health care
3.2program enrollees for the previous calendar year.
3.3The withheld funds must be returned no sooner than July 1 and no later than July 31
3.4of the following calendar year if the managed care plan demonstrates to the satisfaction of
3.5the commissioner that a reduction in the utilization rate was achieved.
3.6The withhold described in this paragraph shall continue for each consecutive
3.7contract period until the plan's emergency room utilization rate for state health care
3.8program enrollees is reduced by 25 percent of the plan's emergency room utilization
3.9rate for state health care program enrollees for calendar year 2009. Hospitals shall
3.10cooperate with the health plans in meeting this performance target and shall accept
3.11payment withholds that may be returned to the hospitals if the performance target is
3.12achieved. The commissioner shall structure the withhold so that the commissioner returns
3.13a portion of the withheld funds in amounts commensurate with achieved reductions in
3.14utilization less than the targeted amount. The withhold in this paragraph does not apply to
3.15county-based purchasing plans.
3.16(h) Effective for services rendered on or after January 1, 2012, the commissioner
3.17shall include as part of the performance targets described in paragraph (c) a reduction in
3.18the plan's hospitalization rate for subsequent hospitalizations within 30 days of a previous
3.19hospitalization of a patient regardless of the reason for the hospitalization for state health
3.20care program enrollees by a measurable rate of five percent from the plan's utilization rate
3.21for state health care program enrollees for the previous calendar year.
3.22The withheld funds must be returned no sooner than July 1 and no later than July
3.2331 of the following calendar year if the managed care plan or county-based purchasing
3.24plan demonstrates to the satisfaction of the commissioner that this reduction in the
3.25hospitalization rate was achieved.
3.26The withhold described in this paragraph shall continue for each consecutive
3.27contract period until the plan's subsequent hospitalization rate for state health care program
3.28enrollees is reduced by 25 percent of the plan's subsequent hospitalization rate for state
3.29health care program enrollees for calendar year 2010. Hospitals shall cooperate with the
3.30plans in meeting this performance target and shall accept payment withholds that may be
3.31returned to the hospitals if the performance target is achieved.
3.32(h) (i) Effective for services rendered on or after January 1, 2011, through December
3.3331, 2011, the commissioner shall withhold 4.5 percent of managed care plan payments
3.34under this section and county-based purchasing plan payments under section 256B.692
3.35for the prepaid medical assistance program. The withheld funds must be returned no
4.1sooner than July 1 and no later than July 31 of the following year. The commissioner may
4.2exclude special demonstration projects under subdivision 23.
4.3(i) (j) Effective for services rendered on or after January 1, 2012, through December
4.431, 2012, the commissioner shall withhold 4.5 percent of managed care plan payments
4.5under this section and county-based purchasing plan payments under section 256B.692
4.6for the prepaid medical assistance program. The withheld funds must be returned no
4.7sooner than July 1 and no later than July 31 of the following year. The commissioner may
4.8exclude special demonstration projects under subdivision 23.
4.9(j) (k) Effective for services rendered on or after January 1, 2013, through December
4.1031, 2013, the commissioner shall withhold 4.5 percent of managed care plan payments
4.11under this section and county-based purchasing plan payments under section 256B.692
4.12for the prepaid medical assistance program. The withheld funds must be returned no
4.13sooner than July 1 and no later than July 31 of the following year. The commissioner may
4.14exclude special demonstration projects under subdivision 23.
4.15(k) (l) Effective for services rendered on or after January 1, 2014, the commissioner
4.16shall withhold three percent of managed care plan payments under this section and
4.17county-based purchasing plan payments under section 256B.692 for the prepaid medical
4.18assistance program. The withheld funds must be returned no sooner than July 1 and
4.19no later than July 31 of the following year. The commissioner may exclude special
4.20demonstration projects under subdivision 23.
4.21(l) (m) A managed care plan or a county-based purchasing plan under section
4.22256B.692 may include as admitted assets under section 62D.044 any amount withheld
4.23under this section that is reasonably expected to be returned.
4.24(m) (n) Contracts between the commissioner and a prepaid health plan are exempt
4.25from the set-aside and preference provisions of section 16C.16, subdivisions 6, paragraph
4.26(a), and 7.
4.27(n) (o) The return of the withhold under paragraphs (d), (f), and (h) (i) to (k) (l) is
4.28not subject to the requirements of paragraph (c).

4.29    Sec. 2. Minnesota Statutes 2010, section 256L.12, subdivision 9, is amended to read:
4.30    Subd. 9. Rate setting; performance withholds. (a) Rates will be prospective,
4.31per capita, where possible. The commissioner may allow health plans to arrange for
4.32inpatient hospital services on a risk or nonrisk basis. The commissioner shall consult with
4.33an independent actuary to determine appropriate rates.
4.34    (b) For services rendered on or after January 1, 2004, the commissioner shall
4.35withhold five percent of managed care plan payments and county-based purchasing
5.1plan payments under this section pending completion of performance targets. Each
5.2performance target must be quantifiable, objective, measurable, and reasonably attainable,
5.3except in the case of a performance target based on a federal or state law or rule. Criteria
5.4for assessment of each performance target must be outlined in writing prior to the
5.5contract effective date. The managed care plan must demonstrate, to the commissioner's
5.6satisfaction, that the data submitted regarding attainment of the performance target is
5.7accurate. The commissioner shall periodically change the administrative measures used
5.8as performance targets in order to improve plan performance across a broader range of
5.9administrative services. The performance targets must include measurement of plan
5.10efforts to contain spending on health care services and administrative activities. The
5.11commissioner may adopt plan-specific performance targets that take into account factors
5.12affecting only one plan, such as characteristics of the plan's enrollee population. The
5.13withheld funds must be returned no sooner than July 1 and no later than July 31 of the
5.14following calendar year if performance targets in the contract are achieved.
5.15(c) For services rendered on or after January 1, 2011, the commissioner shall
5.16withhold an additional three percent of managed care plan or county-based purchasing
5.17plan payments under this section. The withheld funds must be returned no sooner than
5.18July 1 and no later than July 31 of the following calendar year. The return of the withhold
5.19under this paragraph is not subject to the requirements of paragraph (b).
5.20(d) Effective for services rendered on or after January 1, 2011, the commissioner
5.21shall include as part of the performance targets described in paragraph (b) a reduction in
5.22the plan's emergency room utilization rate for state health care program enrollees by a
5.23measurable rate of five percent from the plan's utilization rate for the previous calendar
5.24year.
5.25The withheld funds must be returned no sooner than July 1 and no later than July 31
5.26of the following calendar year if the managed care plan demonstrates to the satisfaction of
5.27the commissioner that a reduction in the utilization rate was achieved.
5.28The withhold described in this paragraph shall continue for each consecutive
5.29contract period until the plan's emergency room utilization rate for state health care
5.30program enrollees is reduced by 25 percent of the plan's emergency room utilization rate
5.31for state health care program enrollees for calendar year 2009. Hospitals shall cooperate
5.32with the health plans in meeting this performance target and shall accept payment
5.33withholds that may be returned to the hospitals if the performance target is achieved. The
5.34commissioner shall structure the withhold so that the commissioner returns a portion of
5.35the withheld funds in amounts commensurate with achieved reductions in utilization less
6.1than the targeted amount. The withhold described in this paragraph does not apply to
6.2county-based purchasing plans.
6.3(e) Effective for services rendered on or after January 1, 2012, the commissioner
6.4shall include as part of the performance targets described in paragraph (b) a reduction in
6.5the plan's hospitalization rate for a subsequent hospitalization within 30 days of a previous
6.6hospitalization of a patient regardless of the reason for the hospitalization for state health
6.7care program enrollees by a measurable rate of five percent from the plan's hospitalization
6.8rate for the previous calendar year.
6.9The withheld funds must be returned no sooner than July 1 and no later than July
6.1031 of the following calendar year if the managed care plan or county-based purchasing
6.11plan demonstrates to the satisfaction of the commissioner that this reduction in the
6.12hospitalization rate was achieved.
6.13The withhold described in this paragraph shall continue for each consecutive
6.14contract period until the plan's subsequent hospitalization rate for state health care program
6.15enrollees is reduced by 25 percent of the plan's subsequent hospitalization rate for state
6.16health care program enrollees for calendar year 2010. Hospitals shall cooperate with the
6.17plans in meeting this performance target and shall accept payment withholds that may be
6.18returned to the hospitals if the performance target is achieved.
6.19(e) (f) A managed care plan or a county-based purchasing plan under section
6.20256B.692 may include as admitted assets under section 62D.044 any amount withheld
6.21under this section that is reasonably expected to be returned.