Purpose

• Update and align health maintenance organization (HMO) regulation with insurer regulation in Minnesota.
• Clarify who has regulatory authority over HMOs and how examinations, information sharing, and rulemaking should work.
• Establish that HMOs are subject to insurer-related provisions, rules, and financial examinations, with the appropriate health or commerce commissioner having jurisdiction as specified.

Main Provisions

• Authority and regulator definitions

  • The term "commissioner" for certain provisions can refer to the commissioner of commerce or, for regulating HMOs as defined in statute, the commissioner of health, with appropriate deputies as needed.
  • For HMOs, the health commissioner is the responsible regulator in applying the relevant sections.

• Examinations of HMOs and holding company systems

  • The commissioner (as applicable) has the power to examine an insurer registered under the relevant statute and its affiliates to determine the insurer’s financial condition and enterprise risk. This includes risk stemming from the ultimate controlling party or from entities within the insurance holding company system, on a consolidated basis.

• Examination expenses

  • The insurer that is examined is responsible for paying the expenses of that examination, consistent with existing reimbursements in other sections.

• Rules and rulemaking

  • The commissioner may adopt rules and orders necessary to carry out these provisions.
  • HMOs must follow Minnesota Rules chapter 2720 and the insurer provisions unless the health commissioner adopts different rules to implement these provisions.
  • The authority to adopt rules under this section does not expire (the rulemaking power remains in effect indefinitely).

• Application to HMOs under insurer provisions

  • HMOs are subject to specific insurer-related sections (such as financial and regulatory provisions) and must comply with those provisions applicable to insurers.
  • The health commissioner is the “commissioner” for applying these sections to HMOs.
  • HMOs must comply with Minnesota Rules 2720 as applicable to insurers, unless the health commissioner adopts alternative rules to implement these provisions.

Significant Changes to Existing Law

• Clarifies that HMOs may be regulated under either the commerce or health regulatory framework, depending on the provision, and designates the health commissioner as the applying regulator for several sections.
• Expands the scope of regulatory examinations to include HMOs and their holding company systems, with financial condition and enterprise risk assessments on a consolidated basis.
• Introduces explicit cost recovery for examination expenses from the inspected insurers.
• formalizes rulemaking authority related to HMOs and insurers, including a non-expiring power to adopt rules.
• Requires HMOs to be governed by insurer-related statutes and rules, and to follow the health department’s or applicable regulator’s implementation rules where specified.

Practical Implications

• HMOs will face regulatory scrutiny and financial examinations similar to other insurers.
• The health commissioner may take the lead in applying these insurer-related provisions to HMOs, with the option to adopt specific rules for HMOs.
• Insurance holding company structures and enterprise risks will be more closely monitored, including costs borne by the inspected insurers.

Terminology and Notes

• Key terms referenced in the bill include: health maintenance organizations (HMOs), insurance holding company system, enterprise risk, ultimate controlling party, insurer registered under section 60D.19, commissioner's authority, rules (Minnesota Rules chapter 2720), cost of examination, and consolidated basis.
• Related statutes and rules cited: sections 60D.17, 60D.18, 60D.20, 60D.21, 60D.23, 60A.03, 62D.14, and Minnesota Rules chapter 2720.

Key Terms (for quick reference)

• health maintenance organizations (HMOs)
• insurance holding company system
• enterprise risk
• ultimate controlling party
• commissioner of commerce
• commissioner of health
• insurer registered under section 60D.19
• examinations
• financial condition
• Minnesota Rules chapter 2720
• rules and orders
• not expire (rulemaking authority)
• Section 14.125 reference (non-expiring rulemaking authority)
• Sections 60A.135-60A.161, 60D.17, 60D.18, 60D.20

Relevant Terms - HMO, health maintenance organization - insurer, holding company system, enterprise risk - examination, financial condition - commissioner of commerce, commissioner of health - Minnesota Rules chapter 2720 - rulemaking authority, costs of examination - 60D.21, 60D.23, 62D.221, 60D.15, 13.7191 (as amended)