Minnesota Department of Commerce
Considered and decided by Schumacher , Presiding Judge, Halbrooks , Judge,
and Hudson , Judge.
Payments made by the Health Care Finance Administration (HCFA) to contributing members of the Minnesota Comprehensive Health Association (MCHA) under Medicare cost contracts are payments received "for coverage" under Minn. Stat. §á62E.02, subd. 23 (2002), such that the payments are includable in a contributing member's "total accident and health insurance premium[s]" under Minn. Stat. § 62E.11, subd. 5 (2002), for purposes of determining a contributing member's MCHA assessment.
The opinion of the court was delivered by: Halbrooks, Judge
Relator HealthPartners, Inc. challenges the decision of the Commissioner of the Minnesota Department of Commerce denying its appeal of its MCHA assessments for the years 1997, 1998, and 1999. HealthPartners argues that the payments it received pursuant to Medicare cost contracts were not payments received "for coverage" under Minn. Stat. §á62E.02, subd. 23 (2002). As a result, HealthPartners contends, the payments are not includable in its "total accident and health insurance premium[s]" under Minn. Stat. § 62E.11, subd. 5 (2002), for purposes of determining its annual MCHA assessment. Because we conclude that the payments received by HealthPartners under Medicare cost contracts are payments received "for coverage" that are includable in HealthPartners' "total accident and health insurance premiums[s]" for purposes of determining HealthPartners' MCHA assessments, we affirm.
In 1976, the Minnesota legislature established the MCHA, a nonprofit corporation created to provide health-insurance coverage to Minnesota residents who are unable to obtain insurance in the private market. Minn. Stat. § 62E.10 (2002). Membership in the MCHA is a mandatory condition of doing business in Minnesota in the fields of accident and health insurance, self-insurance, health-maintenance organization (HMO), or as a community integrated service network. Minn. Stat. § 62E.10, subd. 3. MCHA membership includes insurers, self-insurers, fraternal organizations, HMOs, and other insurance-related organizations. Minn. Stat. § 62E.10, subd. 1. HealthPartners is an HMO operating in Minnesota and a contributing member of the MCHA.
The cost of the MCHA's plan is paid in part by annual assessments that the MCHA levies on its members. Members are liable for claims expenses that exceed premium payments allocated to the payment of benefits. Minn. Stat. § 62E.11, subd. 5 (2002). Each contributing member shares in the expenses of the comprehensive health-care plan in an amount equal to the ratio of the contributing member's total accident- and health-insurance premiums received from Minnesota residents, divided by the total accident- and health-insurance premiums received by all contributing members from or on behalf of Minnesota residents. Id. For purposes of determining a member's assessment, the phrase "accident and health insurance premiums" is defined as "payments received from or on behalf of Minnesota residents for coverage by a health maintenance organization." Minn. Stat. §á62E.02, subd. 23 (2002).
Subchapter XVIII of the Social Security Act, commonly known as Medicare, established a program under which the federal government provides health insurance to eligible individuals. See 42 U.S.C. §§ 1395-1395ggg (2000). Medicare has two categories of benefits: Part A and Part B. Part A provides coverage for inpatient hospital services, and Part B provides supplemental medical-insurance coverage. See id. §§á1395c-1395i-5, 1395j-1395w-4. To provide benefits under Part B, the Health Care Finance Administration (HCFA),*fn1 the federal agency responsible for administering Medicare, may contract with third parties, such as HMOs, to furnish covered health-care services to Medicare enrollees. Third parties who contract with HCFA to furnish services to Medicare enrollees may be compensated by HCFA in one of two ways—on a "risk basis" pursuant to a Medicare risk contract or on a "reasonable cost basis" pursuant to a Medicare cost contract known as a Health Care Prepayment Plan.
The HCFA compensates a party providing health-care services under a Medicare risk contract at a predetermined fixed rate that does not increase or decrease if the amount of service actually provided is greater or less than anticipated. Under a Medicare risk contract, the party providing service bears the risk that the value of the service actually provided will exceed the amount paid for that service.
Under a Medicare cost contract, such is at issue here, the HCFA pays a party its actual cost of providing service. If the amount of service increases or decreases, the amount of payment to the health-care service provider also increases and decreases. The party providing the service under a Medicare cost contract bears no risk.
Each year, contributing members of the MCHA submit a Minnesota Premium Plan/Plan Cost Report form to the MCHA. The form requires each contributing member to identify the amount of accident- and health-insurance premiums it received that year as well as any payments it received that fall under certain statutory exclusions. The MCHA uses the data to determine the amount of accident- and health-insurance premiums received by each contributing member and the total amount of ...