AB394: Bill Text

AB394, s. 24 Section 24. 632.746 of the statutes is created to read:

AB394,17,19 632.746 Community rating. (1) Definitions. In this section:

AB394,18,2 (a) "Community rate" means a uniform rate charged by an insurer that is determined in such a manner that all insured individuals with the same level of coverage and plan design in the same community, as that term is defined by the commissioner by rule under sub. (6), pay the same rate for that coverage without regard to claims experience, health condition, duration of coverage or such demographic, actuarially based characteristics as age, gender, occupation or geographic area within the insured individual's community.

AB394,18,5 (b) "Federal metropolitan statistical area" means an area defined by the federal office of management and budget under 44 USC 3504 (d) (3) as a metropolitan statistical area or a primary metropolitan statistical area.

AB394,18,12 (c) "Trade association" means an association or other organization of businesses or of a profession or trade that is solely organized and controlled by, and solely operated for the benefit of, the members of the association or other organization and that sponsors a health benefit plan that covers at least 500 residents who are either members of the association or other organization or employes of at least 3 different employers that are members of the association or organization.

AB394,18,15 (2) Mandatory use. (a) Except as provided in par. (b) and sub. (3), an insurer shall charge a community rate for coverage under a health benefit plan that is issued or renewed on or after October 1, 1996.

AB394,18,18 (b) Subject to rate bands prescribed by the commissioner by rule, an insurer may modify the community rate under par. (a) by taking into account any of the following factors:

AB394,18,19 1. The insured's age.

AB394,18,20 2. Whether the insured's coverage is single or a type of family coverage.

AB394,18,21 3. The insured's gender.

AB394,18,24 (bm) For each of the following factors, the rate bands prescribed by the commissioner by rule shall restrict the ratio of the highest variance to the lowest variance to a ratio that is not more than the ratio shown after each factor:

AB394,18,25 (a) For age, a ratio of 2.5.

AB394,19,1 (b) For gender, a ratio of 1.2.

AB394,19,4 (c) If an insurer raises a community rate for a health benefit plan, the insurer shall raise all community rates for that health benefit plan and for all other health benefit plans offered by the insurer by the same percentage.

AB394,19,10 (3) Trade association rate reductions. (a) For a health benefit plan issued to a trade association, the commissioner may allow an insurer to reduce the community rate required under sub. (2) (a) and modifiable under sub. (2) (b) if the commissioner determines that a rate reduction is justified because of a reduction in the cost of coverage due to functions performed by the trade association, such as administrative or managed care functions.

AB394,19,16 (b) A trade association may submit an application for a rate reduction under par. (a) for a health benefit plan that it sponsors. The commissioner shall review the application and approve or disapprove a complete application within 30 days after it is received. The commissioner shall allow a rate reduction of up to 20% under par. (a) if the trade association establishes that it performs one or more material functions with respect to the health benefit plan that it sponsors.

AB394,19,21 (c) The commissioner may by rule or order exclude any trade association or category or class of trade associations from the application of pars. (a) and (b) if the commissioner determines that the trade association or category or class of trade associations is organized for a purpose that is inconsistent with the purposes of this chapter.

AB394,19,25 (4) Rate service organizations. If an insurer uses rates for health benefit plans that are prepared by a rate service organization designated under s. 625.15, rates filed by the rate service organization on behalf of the insurer shall comply with this section.

AB394,20,4 (5) Certification of compliance. An insurer that issues or renews a health benefit plan on or after October 1, 1996, shall file with the commissioner on or before May 1 annually an actuarial opinion by a member of the American Academy of Actuaries certifying all of the following:

AB394,20,5 (a) That the insurer is in compliance with the rate provisions of this section.

AB394,20,7 (b) That the insurer's rating methods are based on generally accepted and sound actuarial principles, policies and procedures.

AB394,20,10 (c) That the opinion is based on the actuary's examination of the insurer's records and a review of the insurer's actuarial assumptions and statistical methods used in setting rates and procedures used in implementing rating plans.

AB394,20,15 (6) Commissioner defines community. The commissioner shall by rule define "community" for purposes of the definition of "community rate" under sub. (1) (a). The commissioner may not define "community" as a geographical area that includes less than an entire federal metropolitan statistical area or an entire county, whichever is larger.

AB394, s. 25 Section 25. 632.7465 of the statutes is created to read:

AB394,20,23 632.7465 Transition by rule. Notwithstanding s. 632.746 (1) and (2), the commissioner may promulgate rules that permit an insurer to vary from the community rate required under s. 632.746 (2) (a) and modified under s. 632.746 (2) (b) within restrictions provided in the rules. The restrictions provided in the rules shall be reasonably designed to provide for an orderly transition to the community rates required under s. 632.746 (2) (a) and modified under s. 632.746 (2) (b) by no later than October 1, 1997.

AB394, s. 26 Section 26. 632.747 of the statutes is created to read:

AB394,21,6 632.747 Guaranteed issue. (1) Group health benefit plans. (a) Except as provided in sub. (3), an insurer shall provide coverage under a group health benefit plan to an employer, to all of the employer's eligible employes and their dependents, and to any of the employer's other employes for whom the employer desires to provide coverage and their dependents, regardless of health condition or claims experience, if all of the following apply:

AB394,21,7 1. The insurer has in force a health benefit plan.

AB394,21,9 2. The employer group meets the insurer's minimum participation requirements.

AB394,21,11 3. The employer agrees to pay the premium required for coverage under the group health benefit plan.

AB394,21,14 4. The employer agrees to comply with all other provisions of the group health benefit plan that apply generally to a policyholder or an insured without regard to health condition or claims experience.

AB394,21,19 (b) An insurer shall provide coverage under a group health benefit plan to an eligible employe, or to any other employe for whom the employer desires to provide coverage, who becomes eligible for coverage according to the employer's requirements after the commencement of the employer's coverage, and to the eligible or other employe's dependents, regardless of health condition or claims experience.

AB394,21,24 (2) Individual health benefit plans. Except as provided in sub. (3) and notwithstanding s. 632.897 (4) (d), an insurer shall provide coverage under an individual health benefit plan to an individual who is a resident and to the individual's dependents, regardless of health condition or claims experience, if all of the following apply:

AB394,21,25 (a) The insurer has in force a health benefit plan.

AB394,22,2 (b) The individual agrees to pay the premium required for coverage under the individual health benefit plan.

AB394,22,5 (c) The individual agrees to comply with all other provisions of the individual health benefit plan that apply generally to a policyholder or an insured without regard to health condition or claims experience.

AB394,22,10 (3) Exceptions to guaranteed issue. (a) An insurer that is otherwise required to provide coverage under sub. (1) may refuse to issue a group health benefit plan to an employer if all of the individuals in the employer group that are to be covered under the group health benefit plan may be covered under an individual health benefit plan providing single or family coverage.

AB394,22,14 (b) An insurer that is otherwise required to provide coverage under sub. (2) may refuse to provide coverage to an individual if the individual was excluded from coverage under an employer's health benefit plan or self-funded health care plan for reasons related to the individual's health condition.

AB394,22,18 (c) An insurer that is otherwise required to provide coverage under sub. (2) may refuse to provide coverage to an individual if the individual waived coverage under an employer's health benefit plan or self-funded health care plan for reasons related to the individual's health condition.

AB394,22,20 (d) 1. In this paragraph, "municipal" means county, city, village, town or school district.

AB394,22,25 2. Subsections (1) and (2) do not require an insurer to issue coverage that the insurer is not authorized to issue under its bylaws, charter or certificate of incorporation or authority if the insurer is authorized under its bylaws, charter or certificate of incorporation or authority to issue coverage only to state or municipal employes and former employes and their dependents.

AB394,23,4 (e) An insurer that offers health care coverage exclusively to a single category or limited categories of employers may, with prior approval of the commissioner, limit its compliance with subs. (1) and (2) to that single category or those limited categories of employers.

AB394,23,6 (f) The commissioner may exempt an insurer from the requirements of sub. (1) or (2) if the commissioner determines that any of the following applies:

AB394,23,8 1. It is inequitable to apply sub. (1) or (2) to the insurer due to its disproportionate share of groups or individuals with high claims experience.

AB394,23,10 2. It is in the public interest to exempt the insurer from the requirements under sub. (1) or (2) because the insurer is in financially hazardous condition.

AB394,23,12 (g) An insurer may limit its issuance of health benefit plans under subs. (1) and (2) to any of the following:

AB394,23,14 1. Group health benefit plans, and related individual conversion policies, to small employer groups.

AB394,23,16 2. Group health benefit plans, and related individual conversion policies, to employer groups that are not small employer groups.

AB394,23,17 3. Individual health benefit plans.

AB394,23,20 (4) Risk adjustment; rules. (a) The commissioner shall promulgate rules establishing a risk adjustment mechanism for insurers issuing health benefit plans under this section.

AB394,23,21 (b) The rules promulgated under par. (a) shall do all of the following:

AB394,23,23 1. Define "high-risk medical conditions", using diagnostic criteria and other criteria.

AB394,23,25 2. Place a dollar value on each high-risk medical condition based on the severity of the condition.

AB394,24,2 3. Determine the percentage of individuals with high-risk medical conditions covered by health benefit plans.

AB394,24,7 4. Provide for an annual assessment against each insurer insuring a lower percentage of individuals with high-risk medical conditions than the percentage established under subd. 3. Any moneys received from assessments imposed under the rules promulgated under this subdivision shall be credited to the appropriation under s. 20.145 (1) (h).

AB394,24,10 5. Provide for an annual reimbursement for each insurer insuring a higher percentage of individuals with high-risk medical conditions than the percentage established under subd. 3.

AB394,24,16 (5) Advisory committee. (a) The commissioner shall establish and appoint the members of an advisory committee to advise the commissioner on the contents of the rules to be promulgated under sub. (4) including definitions, assessments and reimbursements. The committee shall also review the rules developed under sub. (4) and submitted to the legislature under s. 227.19 (2) and make recommendations to the legislature on the rules.

AB394,24,18 (b) The advisory committee established by the commissioner under par. (a) shall consist of the commissioner or his or her designee and all of the following:

AB394,24,19 1. A representative of an insurer that issues individual health benefit plans.

AB394,24,20 2. A representative of an insurer that issues group health benefit plans.

AB394,24,21 3. A representative of a health maintenance organization.

AB394,24,22 4. Two actuaries who are fellows of the American Academy of Actuaries.

AB394,24,24 5. An underwriter employed by an insurer that issues individual health benefit plans.

AB394,25,2 6. An underwriter employed by an insurer that issues group health benefit plans.

AB394,25,3 7. A medical director.

AB394, s. 27 Section 27. 632.748 of the statutes is created to read:

AB394,25,10 632.748 Contract termination and renewability. (1) Midterm cancellation. Notwithstanding s. 631.36 (2) to (4m), a health benefit plan may not be canceled by an insurer before the expiration of the agreed term, and shall be renewable to the policyholder and all insureds and dependents eligible under the terms of the health benefit plan at the expiration of the agreed term at the option of the policyholder, except for any of the following reasons:

AB394,25,11 (a) Failure to pay a premium when due.

AB394,25,13 (b) Fraud or misrepresentation by the policyholder or, with respect to coverage for an insured individual, fraud or misrepresentation by that insured individual.

AB394,25,14 (c) Substantial breaches of contractual duties, conditions or warranties.

AB394,25,16 (d) The number of individuals covered under the health benefit plan is less than the number required by the health benefit plan.

AB394,25,18 (e) If the health benefit plan covers an employer group, the employer is no longer actively engaged in a business enterprise.

AB394,25,20 (2) Nonrenewal. Notwithstanding sub. (1), an insurer may elect not to renew a health benefit plan if the insurer complies with all of the following:

AB394,25,22 (a) The insurer ceases to renew all other health benefit plans issued by the insurer.

AB394,25,25 (b) The insurer provides notice to all affected policyholders and to the commissioner in each state in which an affected insured individual resides not later than one year before termination of coverage.

AB394,26,2 (c) The insurer does not issue a health benefit plan earlier than 5 years after the nonrenewal of the health benefit plans.

AB394,26,6 (d) The insurer does not transfer or otherwise provide coverage to a policyholder from the nonrenewed business unless the insurer offers to transfer or provide coverage to all affected policyholders from the nonrenewed business without regard to claims experience, health condition or duration of coverage.

AB394,26,8 (3) Insurer in liquidation. This section does not apply to a health benefit plan if the insurer that issued the health benefit plan is in liquidation.

AB394, s. 28 Section 28. 632.749 of the statutes is created to read:

AB394,26,12 632.749 Fair marketing standards. (1) Active marketing. Every insurer shall actively market health benefit plan coverage to employers and individuals in this state.

AB394,26,15 (2) Prohibitions related to case characteristics. (a) 1. Except as provided in subd. 2., an insurer or an intermediary may not directly or indirectly do any of the following:

AB394,26,19 a. Discourage an employer or an individual from applying, or direct an employer or an individual not to apply, for coverage with the insurer because of the health condition, claims experience, industry, occupation or geographic area of the employer or individual.

AB394,26,22 b. Encourage or direct an employer or an individual to seek coverage from another insurer because of the health condition, claims experience, industry, occupation or geographic area of the employer or individual.

AB394,26,25 2. Subdivision 1. does not prohibit an insurer or an intermediary from providing an employer or an individual with information about an established geographic service area or a restricted network provision of the insurer.

AB394,27,6 (b) 1. Except as provided in subd. 2., an insurer may not directly or indirectly enter into any contract, agreement or arrangement with an intermediary that provides for or results in compensation to the intermediary for the sale of a health benefit plan that varies according to the health condition, claims experience, industry, occupation or geographic area of an employer, any of the employer's covered employes, an insured individual or any dependents.

AB394,27,10 2. Payment of compensation on the basis of percentage of premium is not a violation of subd. 1. if the percentage does not vary based on the health condition, claims experience, industry, occupation or geographic area of an employer, any of the employer's covered employes, an insured individual or any dependents.

AB394,27,15 (c) An insurer may not terminate, fail to renew or limit its contract or agreement of representation with an intermediary for any reason related to the health condition, claims experience, industry, occupation or geographic area of the employers, covered employes, insured individuals or dependents placed by the intermediary with the insurer.

AB394,27,19 (3) Prohibition related to excluding employe. An insurer or an intermediary may not induce or otherwise encourage an employer to separate or otherwise exclude an employe from health coverage or benefits provided in connection with the employe's employment.

AB394,27,22 (4) Written denial required. Denial by an insurer of an application for coverage from an employer shall be in writing and shall state the reason or reasons for the denial.