2001 - 2002 LEGISLATURE
April 24, 2001 - Introduced by Representatives Albers, Wade, Loeffelholz,
Urban, Grothman, Nass, Huber, Lassa, Lippert
and F. Lasee, cosponsored by
Senators Darling, Cowles, Schultz, Harsdorf and Lazich. Referred to
Committee on Health.
AB348,1,4 1An Act to repeal 149.10 (8b), 149.16 (1) and 149.16 (5); to amend 149.15 (3) (g);
2and to create 149.15 (3) (g) 2., 149.16 (1m), 149.16 (3m), 149.16 (6) and 149.162
3of the statutes; relating to: a competitive bidding process for administration
4of the health insurance risk-sharing plan.
Analysis by the Legislative Reference Bureau
The health insurance risk-sharing plan (HIRSP) under current law provides
major medical health insurance coverage for persons who are covered under
medicare because they are disabled, persons who have tested positive for the human
immunodeficiency virus, and persons who have been refused coverage, or coverage
at an affordable price, in the private health insurance market because of their mental
or physical health condition. Also eligible for coverage are persons who do not
currently have health insurance coverage, but who were covered under certain types
of health insurance coverage for at least 18 months in the past. HIRSP is
administered by the department of health and family services (DHFS), in
conjunction with a plan administrator and a board of governors (board). Under
current law, the plan administrator is the same fiscal agent with which DHFS
contracts to administer the medical assistance program.
This bill eliminates the requirement that the plan administrator be the fiscal
agent for the medical assistance program and provides for a competitive,
request-for-proposals process for selecting the plan administrator. Under the bill,
the board must establish an oversight committee to assist in the selection process.
The committee must develop and recommend to the board the request for proposals,

which must specify and describe the work to be performed and the evaluation process
and criteria that will be used in selecting the plan administrator. The bill lists the
minimum specifications that the request for proposals must include. DHFS and the
board must approve and prepare and issue the request for proposals that is actually
used in the selection process. The committee must evaluate the proposals that are
submitted in response to the request for proposals and may negotiate with, and
request best and final offers from, up to three of the offerors that are the most likely
to receive the contract for administration of HIRSP. After considering the
recommendation of the committee on the selection of the plan administrator, DHFS
and the board must award the contract for plan administration to the person that
DHFS and the board determine offers the best combination of price and technical
expertise. The administration contracts awarded under the process under the bill
must have three-year terms running from July 1 to June 30, with the first contract
under the new selection process beginning on July 1, 2002.
The bill provides that the plan administrator will be paid as provided in the
contract for direct and indirect expenses that DHFS determines are incurred in the
administration of HIRSP. The bill requires the plan administrator to submit regular
reports on the operation of HIRSP to DHFS and the board. Since DHFS and the
board select the plan administrator together in the process under the bill, the bill
eliminates a provision in current law that requires DHFS to obtain the approval of
the board before implementing any contract with the plan administrator.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
AB348, s. 1 1Section 1. 149.10 (8b) of the statutes is repealed.
AB348, s. 2 2Section 2. 149.15 (3) (g) of the statutes is amended to read:
AB348,2,53 149.15 (3) (g) 1. Establish oversight committees to address various
4administrative issues, such as financial management of the plan and plan
5administrator performance standards.
AB348,2,7 63. A representative of the department may not be the chairperson of any
7committee established under this paragraph.
AB348, s. 3 8Section 3. 149.15 (3) (g) 2. of the statutes is created to read:
1149.15 (3) (g) 2. Establish one or more contract procurement oversight
2committees to do all of the following with respect to the plan administrator selection
3process under s. 149.162:
AB348,3,64 a. Develop and recommend to the board the request for proposals to be used to
5solicit contract proposals. The board and the department must approve any request
6for proposals used.
AB348,3,87 b. Evaluate the technical proposals and the accompanying cost proposals
8submitted in response to a request for proposals.
AB348,3,119 c. Request and evaluate best and final offers under s. 149.162 (3) and undertake
10any related negotiations needed to obtain the most advantageous combination of
11price and technical expertise.
AB348,3,1312 d. Recommend to the board the selection of a plan administrator and the award
13of a contract for plan administration.
AB348, s. 4 14Section 4. 149.16 (1) of the statutes is repealed.
AB348, s. 5 15Section 5. 149.16 (1m) of the statutes is created to read:
AB348,3,1816 149.16 (1m) The plan administrator shall be selected by the department and
17the board together in the manner provided in s. 149.162 in a competitive,
18request-for-proposals process.
AB348, s. 6 19Section 6. 149.16 (3m) of the statutes is created to read:
AB348,3,2320 149.16 (3m) The plan administrator shall submit regular reports to the
21department and to the board regarding the operation of the plan. The frequency,
22content, and form of the reports shall be determined by the department and the
AB348, s. 7 24Section 7. 149.16 (5) of the statutes is repealed.
AB348, s. 8 25Section 8. 149.16 (6) of the statutes is created to read:
1149.16 (6) The plan administrator shall be paid as provided in the contract for
2plan administration for direct and indirect expenses that the department
3determines are incurred by the plan administrator in the administration of the plan,
4including all of the following:
AB348,4,55 (a) Printing costs.
AB348,4,66 (b) Claims administration costs.
AB348,4,77 (c) Management costs.
AB348,4,88 (d) Building overhead expenses.
AB348,4,99 (e) Other actual operating and administrative expenses.
AB348, s. 9 10Section 9. 149.162 of the statutes is created to read:
AB348,4,16 11149.162 Plan administrator selection process. (1) Subject to s. 149.15 (3)
12(g) 2. a., the department and the board shall prepare and issue a request for proposals
13that specifies and describes the requirements for work to be performed under the
14contract for administration of the plan and the form in which cost proposals must be
15submitted, and that discloses the evaluation process and the evaluation criteria that
16will be used to select the plan administrator.
AB348,4,18 17(2) The request for proposals shall include, at a minimum, contract award
18specifications related to all of the following:
AB348,4,2019 (a) The offeror's demonstrated experience and ability to administer large group
20health benefit plans.
AB348,4,2221 (b) The offeror's technical proposal for performing the work required under the
22contract, including descriptions and documentation of all of the following:
AB348,4,2423 1. The technical capabilities of the offeror's computerized system of
12. The qualifications of the offeror's management staff designated for
2administration of the plan.
AB348,5,53 3. The range and scope of procedures and resources that will be used to perform
4various functions and to provide various services under the contract, including, at
5a minimum, functions and services related to all of the following:
AB348,5,66 a. Claims administration.
AB348,5,77 b. Policyholders.
AB348,5,88 c. The premium and deductible subsidy program.
AB348,5,99 d. Reporting.
AB348,5,1110 e. Financial transactions, including collection of and accounting for plan
AB348,5,1212 f. The plan budget and reconciliation.