SB201: Bill Text

LRB-1623/1

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1995 - 1996 LEGISLATURE

1995 Senate BILL 201

May 16, 1995 - Introduced by Senators Rosenzweig, Schultz, Buettner, A. Lasee, Darling, Plewa and Rude, cosponsored by Representatives Underheim, Albers, Brancel, Ourada, Hanson, Johnsrud, Grobschmidt, Goetsch, Handrick, Duff, Kreibich, Powers, Zukowski, Huber, Springer and Boyle. Referred to Committee on Insurance.

SB201,2,10 An Act to repeal 15.735 (1), 635.02 (1), 635.02 (4m), 635.02 (5), 635.02 (6), 635.02 (7) (b), 635.02 (8), 635.09, 635.17 (1) (b) 3. and 635.23 (3); to renumber and amend 635.17 (1) (a) 1., 635.17 (1) (a) 2. and 635.18 (1); to consolidate, renumber and amend 635.02 (7) (intro.) and (a); to amend 40.03 (6) (a) 2., 111.70 (1) (a), 185.983 (1g), 625.12 (2), 628.34 (3), 628.36 (2) (b) 5., 632.70, 632.897 (2) (d), 632.897 (9) (c), chapter 635 (title), 635.02 (1c), 635.02 (2), 635.02 (3f), 635.02 (3j), 635.02 (3m), 635.02 (6m), 635.07 (1) (intro.), (b), (d) and (e), 635.07 (2), 635.07 (3), 635.11 (intro.), (1) and (4), 635.13 (1), 635.13 (2), 635.17 (title), 635.17 (1) (a) (intro.), 635.17 (1) (a) 3., 635.17 (1) (b) 1. and 2., 635.17 (2), 635.17 (3), 635.18 (2), 635.18 (3), 635.18 (4), 635.18 (5), 635.18 (6), 635.18 (7), 635.18 (8), 635.20 (1), 635.20 (2), 635.20 (11), 635.21, 635.23 (title) and (1) (intro.), 635.23 (1) (a), (d), (dp), (dr) and (e) (intro.), 1., 2. and 3., 635.23 (1m), 635.23 (1r), 635.23 (2), 635.23 (4) and (5), 635.25 (title), 635.25 (1) (a) (intro.), 635.25 (1) (a) 2., 635.25 (1) (b), 635.25 (1m), 635.25 (2), 635.254, 635.26 (1), 635.26 (1m), 635.26 (1s), 635.26 (4), 635.272 (1), 635.28 and 635.29; to repeal and recreate 635.01, 635.02 (3), 635.05, 635.13 (1), 635.15 and 635.20 (13); and to create 15.07 (1) (b) 21., 15.735 (3), 40.02 (48g), 40.03 (6) (a) 3., 111.70 (4) (m), 153.07 (4), 600.03 (40m), 601.424, 632.727, 632.83, 635.02 (1r), 635.02 (3h), 635.02 (4g), 635.02 (5m) (d), 635.03, 635.06, 635.07 (1) (f), 635.17 (1) (a) 1. b., 635.17 (1) (a) 2. b., 635.17 (1) (ac), 635.17 (1) (am), 635.17 (1) (ar), 635.17 (1) (c), 635.18 (1) (a) to (c), 635.18 (9), (9m) and (10), 635.20 (1b) and 635.26 (5) of the statutes; relating to: expanding the small employer insurance board and renaming it the comprehensive health care board; modified community rating, fair market standards, portability, preexisting condition exclusions and guaranteed issue for individual and certain group health benefit plans; allowing the group insurance board to contract with purchasing coalitions; and granting rule-making authority.

Analysis by the Legislative Reference Bureau

Health insurance market reform

Scope of reform

This bill imposes a number of insurance market reform requirements on insurers with respect to individual health benefit plans and group health benefit plans sold to employers with 2 to 100 employes with a normal work week of 30 or more hours. A health benefit plan is defined in the bill as any hospital or medical policy or certificate, including a conversion health insurance policy, but excluding such insurance policies as dental, vision, long-term care, medicare supplement, medicare replacement, worker's compensation, specified disease, health insurance risk-sharing plan (HIRSP) and automobile medical payment insurance policies.

Community rating

All health benefit plans subject to the market reform requirements must be community rated. The community rates, however, may be modified by the insured's age, gender, geographic area and tobacco use and by whether the insured's coverage is single or family. An insured's "geographic area" for this purpose may not be less than an entire county. The commissioner of insurance (commissioner) must by rule prescribe rate bands for the modifications and may also by rule prescribe rate restrictions that provide for a transition to the modified community rates. Additionally, an insurer may provide discounts for insured individuals for healthy lifestyle choices.

Guaranteed issue

With some exceptions, an insurer that has in force a health benefit plan that is subject to the market reform requirements must issue a group health benefit plan to an employer that agrees to pay the premium and comply with all other plan provisions, and to all of the employer's employes with a normal work week of 30 or more hours, including employes who were excluded from coverage previously and employes who become eligible for coverage after the commencement of the employer's coverage, without regard to health condition or claims experience. Such an insurer is also required to issue an individual health benefit plan to an individual who agrees to pay the premium and comply with all other plan provisions, without regard to health condition or claims experience. An insurer, however, may limit its issuance of health benefit plans to group plans, and related individual conversion policies, for employers with 2 to 25 employes, to group plans, and related individual conversion policies, for employers with 26 to 100 employes or to individual plans.

Preexisting conditions and portability

Under current law a group health benefit plan issued to an employer with 2 to 25 employes may not exclude or limit benefits on account of a preexisting condition for more than 12 months after the commencement of coverage and may not define a preexisting condition more restrictively than a pregnancy existing on the effective date of coverage or a condition for which the insured sought or should have sought medical care during the 6 months immediately preceding coverage. Additionally, such a plan must waive any period applicable to a preexisting condition exclusion or limitation that was satisfied under another plan under which the insured had coverage to a date not less than 30 days before the effective date of coverage under the new plan.

Under the bill, except for a conversion health insurance policy, which under current law may not impose any preexisting condition limitations or exclusions, a group or an individual health benefit plan subject to the market reform requirements may not exclude or limit benefits on account of a preexisting condition for more than 12 months. A group or individual health benefit plan may not define a preexisting condition more restrictively than a pregnancy existing on the effective date of coverage, except that coverage may not be excluded for any covered prenatal care expenses or for other covered expenses that exceed a deductible amount prescribed by the commissioner by rule. The deductibles prescribed by the commissioner may not exceed $5,000 and must be based on a sliding scale related to the stage of the pregnancy on the effective date of coverage. Additionally, a group health benefit plan may not define a preexisting condition more restrictively than a condition for which the insured sought or should have sought medical care during the 6 months immediately preceding coverage, and an individual plan may not define a preexisting condition more restrictively than a condition for which the insured sought or should have sought medical care during the 12 months immediately preceding coverage. An individual who has been a resident for at least 6 months or an employe who has satisfied any necessary waiting period may obtain coverage under a group or individual health benefit plan without any preexisting condition exclusion or limitation if the individual or employe applies for coverage within 30 days after the later of the date on which the individual or employe becomes 18 years old or the date on which the individual's or employe's coverage under a health benefit plan as a dependent ceases or during a biennial 30-day open enrollment period specified by the commissioner by rule. Both group and individual health benefit plans subject to the market reform requirements must waive any period applicable to a preexisting condition exclusion or limitation that was satisfied under another plan, including HIRSP, under which the insured had coverage if that coverage terminated 60 days or less before the effective date of coverage under the new plan.

Contract renewability and fair marketing standards

A health benefit plan that is subject to the market reform requirements may not be canceled before the expiration of the agreed term, and must be renewed at the option of the policyholder, except for such reasons as failure to pay a premium when due or fraud or misrepresentation. An insurer may elect not to renew a health benefit plan only if the insurer thereafter ceases to issue or renew any health benefit plans for a minimum of 5 years.

Insurers that offer health benefit plans that are subject to the requirements must actively market such health benefit plans and are prohibited from such marketing practices as discouraging an employer or individual from applying for coverage, or encouraging an employer or individual to seek coverage from a different insurer, for reasons related to health condition, claims experience or other characteristics of the employer or individual.

These contract renewability and fair marketing provisions apply under current law to group health benefit plans that are issued to an employer with 2 to 25 employes.

Comprehensive health care board and reinsurance

The bill creates a comprehensive health care board (board) as an expansion of the small employer insurance board. The board consists of the commissioner, the secretary of employe trust funds, 3 members of the board on health care information who are elected by the board on health care information and the following members appointed for 3-year terms: 5 members who represent employers, 3 members who represent eligible employes, one member who represents a labor organization and 3 members who represent purchasing coalitions. (A purchasing coalition is a corporation or cooperative that purchases or arranges for the purchase of health care coverage or services for 2 or more employers and that is controlled by those employers.)

The bill repeals the small employer insurance board and the comprehensive health care board assumes the duties of the small employer insurance board with respect to administering the small employer health insurance plan under current law. In addition, the board is given additional duties to provide data or technical assistance to any purchasing coalition, develop quality outcomes measures, quality and practice pattern standards and health plan performance criteria, provide information on technology assessment to any purchasing coalition and recommend cost containment measures and provide assessments of health care needs to any purchasing coalition. The board must also submit proposed legislation for a reinsurance program for insurers that are subject to the market reform requirements. The reinsurance program must be optional, must allow an insurer to select among 3 different threshold amounts, must require the commissioner to pay 80% of claims above the threshold amount selected by an insurer and must provide for a premium and assessment arrangement for funding a health reinsurance fund out of which the claims will be paid.

Other

Electronic claims

The bill requires every insurer that offers health insurance (called disability insurance in the statutes) to accept all claims electronically and to allow electronic access to eligibility and claims status information. Insurers must have this capability and use it beginning on January 1, 1997. Also beginning on that date, health care providers that have annual gross revenues of more than $1,000,000 must be able to transmit health insurance claims electronically. All other health care providers must have and use this capability beginning on January 1, 1998.

Health insurance risk-sharing plan reports

The bill requires the commissioner to study the effects that the health insurance market reforms under the bill have on enrollment in, and other aspects of, HIRSP. Beginning on October 1, 1999, the commissioner must submit an annual report to the legislature on the effects.

Group insurance board

The bill authorizes the group insurance board to enter into contracts with purchasing coalitions to further the purposes of the health care plans for state employes.

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:

SB201, s. 1 Section 1. 15.07 (1) (b) 21. of the statutes is created to read:

SB201,5,3 15.07 (1) (b) 21. The members of the comprehensive health care board appointed under s. 15.735 (3) (b) 1. to 4.

SB201, s. 2 Section 2. 15.735 (1) of the statutes is repealed.

SB201, s. 3 Section 3. 15.735 (3) of the statutes is created to read:

SB201,5,6 15.735 (3) Comprehensive health care board. (a) In this subsection:

SB201,6,3 1. "Eligible employe" means an employe who works on a full-time basis and has a normal work week of 30 or more hours. The term includes a sole proprietor, a business owner, including the owner of a farm business, a partner of a partnership, a member of a limited liability company and an independent contractor if the sole proprietor, business owner, partner, member or independent contractor is included as an employe under a health benefit plan of an employer, but the term does not include an employe who works on a part-time, temporary or substitute basis.

SB201,6,4 2. "Employer" means any of the following:

SB201,6,7 a. An individual, firm, corporation, partnership, limited liability company or association that is actively engaged in a business enterprise in this state, including a farm business, and that employs in this state not more than 100 eligible employes.

SB201,6,9 b. A municipality, as defined in s. 16.70 (8), that employs not more than 100 eligible employes.

SB201,6,15 (b) There is created a comprehensive health care board that is attached to the office of the commissioner of insurance under s. 15.03, consisting of the commissioner of insurance or his or her designee, the secretary of employe trust funds or his or her designee, 3 members of the board on health care information who are elected by the board on health care information and the following members appointed for 3-year terms:

SB201,6,16 1. Five members who represent employers.

SB201,6,17 2. Three members who represent eligible employes.

SB201,6,18 3. One member who represents a labor organization.

SB201,6,20 4. Three members who represent purchasing coalitions, as defined in s. 600.03 (40m).

SB201,6,22 (c) Notwithstanding s. 15.07 (2) (intro.), the commissioner of insurance shall be a nonvoting member who shall serve permanently as chairperson of the board.