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 1Section 1. 15.07 (1) (b) 21. of the statutes is created to read:
SB201,5,32 15.07 (1) (b) 21. The members of the comprehensive health care board
3appointed under s. 15.735 (3) (b) 1. to 4.
SB201, s. 2 4Section 2. 15.735 (1) of the statutes is repealed.
SB201, s. 3 5Section 3. 15.735 (3) of the statutes is created to read:
SB201,5,66 15.735 (3) Comprehensive health care board. (a) In this subsection:
SB201,6,37 1. "Eligible employe" means an employe who works on a full-time basis and has
8a normal work week of 30 or more hours. The term includes a sole proprietor, a
9business owner, including the owner of a farm business, a partner of a partnership,
10a member of a limited liability company and an independent contractor if the sole

1proprietor, business owner, partner, member or independent contractor is included
2as an employe under a health benefit plan of an employer, but the term does not
3include an employe who works on a part-time, temporary or substitute basis.
SB201,6,44 2. "Employer" means any of the following:
SB201,6,75 a. An individual, firm, corporation, partnership, limited liability company or
6association that is actively engaged in a business enterprise in this state, including
7a farm business, and that employs in this state not more than 100 eligible employes.
SB201,6,98 b. A municipality, as defined in s. 16.70 (8), that employs not more than 100
9eligible employes.
SB201,6,1510 (b) There is created a comprehensive health care board that is attached to the
11office of the commissioner of insurance under s. 15.03, consisting of the commissioner
12of insurance or his or her designee, the secretary of employe trust funds or his or her
13designee, 3 members of the board on health care information who are elected by the
14board on health care information and the following members appointed for 3-year
15terms:
SB201,6,1616 1. Five members who represent employers.
SB201,6,1717 2. Three members who represent eligible employes.
SB201,6,1818 3. One member who represents a labor organization.
SB201,6,2019 4. Three members who represent purchasing coalitions, as defined in s. 600.03
20(40m).
SB201,6,2221 (c) Notwithstanding s. 15.07 (2) (intro.), the commissioner of insurance shall
22be a nonvoting member who shall serve permanently as chairperson of the board.
SB201, s. 4 23Section 4. 40.02 (48g) of the statutes is created to read:
SB201,6,2424 40.02 (48g) "Purchasing coalition" has the meaning given in s. 600.03 (40m).
SB201, s. 5 25Section 5. 40.03 (6) (a) 2. of the statutes is amended to read:
SB201,7,6
140.03 (6) (a) 2. May, wholly or partially in lieu of subd. 1., on behalf of the state,
2provide any group insurance plan on a self-insured basis in which case the group
3insurance board shall approve a written description setting forth the terms and
4conditions of the plan, and may contract directly with providers of hospital, medical
5or ancillary services to provide insured employes with the benefits provided under
6this chapter.; or
SB201, s. 6 7Section 6. 40.03 (6) (a) 3. of the statutes is created to read:
SB201,7,108 40.03 (6) (a) 3. May, wholly or partially in lieu of subd. 1., on behalf of the state,
9enter into a contract with one or more purchasing coalitions to further the purpose
10of ss. 40.51 and 40.52.
SB201, s. 7 11Section 7. 111.70 (1) (a) of the statutes is amended to read:
SB201,8,712 111.70 (1) (a) "Collective bargaining" means the performance of the mutual
13obligation of a municipal employer, through its officers and agents, and the
14representatives of its employes, to meet and confer at reasonable times, in good faith,
15with the intention of reaching an agreement, or to resolve questions arising under
16such an agreement, with respect to wages, hours and conditions of employment, and
17with respect to a requirement of the municipal employer for a municipal employe to
18perform law enforcement and fire fighting services under s. 61.66, except as provided
19in sub. (4) (m) and s. 40.81 (3) and except that a municipal employer shall not meet
20and confer with respect to any proposal to diminish or abridge the rights guaranteed
21to municipal employes under ch. 164. The duty to bargain, however, does not compel
22either party to agree to a proposal or require the making of a concession. Collective
23bargaining includes the reduction of any agreement reached to a written and signed
24document. The employer shall not be required to bargain on subjects reserved to
25management and direction of the governmental unit except insofar as the manner

1of exercise of such functions affects the wages, hours and conditions of employment
2of the employes. In creating this subchapter the legislature recognizes that the
3public employer must exercise its powers and responsibilities to act for the
4government and good order of the municipality, its commercial benefit and the
5health, safety and welfare of the public to assure orderly operations and functions
6within its jurisdiction, subject to those rights secured to public employes by the
7constitutions of this state and of the United States and by this subchapter.
SB201, s. 8 8Section 8. 111.70 (4) (m) of the statutes is created to read:
SB201,8,129 111.70 (4) (m) Health insurance market reform. A municipal employer that is
10an employer under the definition specified in s. 635.02 (3h) (b) is prohibited from
11bargaining collectively with respect to the health insurance requirements under
12subch. I of ch. 635.
SB201, s. 9 13Section 9. 153.07 (4) of the statutes is created to read:
SB201,8,1514 153.07 (4) The board shall elect 3 members to serve on the comprehensive
15health care board.
SB201, s. 10 16Section 10. 185.983 (1g) of the statutes is amended to read:
SB201,8,2017 185.983 (1g) A cooperative association that is a small employer insurer, as
18defined in s. 635.02 (8) 635.20 (13), is subject to the health insurance mandates, as
19defined in s. 601.423 (1), to the same extent as any other small employer insurer, as
20defined in s. 635.02 (8) 635.20 (13).
SB201, s. 11 21Section 11. 600.03 (40m) of the statutes is created to read:
SB201,8,2422 600.03 (40m) "Purchasing coalition" means a corporation or cooperative that
23purchases or arranges for the purchase of health care coverage or services for 2 or
24more employers and that is controlled by those employers.
SB201, s. 12 25Section 12. 601.424 of the statutes is created to read:
SB201,9,6
1601.424 Reports on market reform impact on the health insurance
2risk-sharing plan.
The commissioner shall study the effects of the health
3insurance market reforms under ch. 635 on enrollment in, and other aspects of, the
4health insurance risk-sharing plan under subch. II of ch. 619. The commissioner
5shall annually submit a report on the effects and any recommendations to the
6legislature under s. 13.172 (2) commencing on October 1, 1999.
SB201, s. 13 7Section 13. 625.12 (2) of the statutes is amended to read:
SB201,9,178 625.12 (2) Classification. Risks Subject to s. 635.05 and any rules
9promulgated under s. 635.06, risks
may be classified in any reasonable way for the
10establishment of rates and minimum premiums, except that no classifications may
11be based on race, color, creed or national origin, and classifications in automobile
12insurance may not be based on physical condition or developmental disability as
13defined in s. 51.01 (5). Subject to s. ss. 632.365 and 635.05 and any rules promulgated
14under s. 635.06
, rates thus produced may be modified for individual risks in
15accordance with rating plans or schedules that establish reasonable standards for
16measuring probable variations in hazards, expenses, or both. Rates may also be
17modified for individual risks under s. 625.13 (2).
SB201, s. 14 18Section 14. 628.34 (3) of the statutes is amended to read:
SB201,9,2419 628.34 (3) Unfair discrimination. (a) No insurer may unfairly discriminate
20among policyholders by charging different premiums or by offering different terms
21of coverage except on the basis of classifications related to the nature and the degree
22of the risk covered or the expenses involved, subject to s. ss. 632.365 and 635.05 and
23any rules promulgated under s. 635.06
. Rates are not unfairly discriminatory if they
24are averaged broadly among persons insured under a group, blanket or franchise

1policy, and terms are not unfairly discriminatory merely because they are more
2favorable than in a similar individual policy.
SB201,10,93 (b) No insurer may refuse to insure or refuse to continue to insure, or limit the
4amount, extent or kind of coverage available to an individual, or charge an individual
5a different rate for the same coverage because of a mental or physical disability
6except when the refusal, limitation or rate differential is based on either sound
7actuarial principles supported by reliable data or actual or reasonably anticipated
8experience, subject to ss. 635.05, 635.07 and 635.15 and any rules promulgated
9under s. 635.06
.
SB201, s. 15 10Section 15. 628.36 (2) (b) 5. of the statutes is amended to read:
SB201,10,1611 628.36 (2) (b) 5. Except for the small employer health insurance plan under
12subch. II of ch. 635 to the extent determined by the small employer insurance board
13under s. 635.23 (1) (b), 1993 stats., or the comprehensive health care board under s.
14635.23 (1) (b), all health care plans, including health maintenance organizations,
15limited service health organizations and preferred provider plans are subject to s.
16632.87 (3).
SB201, s. 16 17Section 16. 632.70 of the statutes is amended to read:
SB201,10,22 18632.70 Exemption for plan under ch. 635. The health insurance mandates,
19as defined in s. 601.423 (1), that are provided under this subchapter apply to the
20small employer health insurance plan under subch. II of ch. 635 only to the extent
21determined by the small employer insurance board under s. 635.23 (1) (b), 1993
22stats., or the comprehensive health care board
under s. 635.23 (1) (b).
SB201, s. 17 23Section 17. 632.727 of the statutes is created to read:
SB201,10,25 24632.727 Electronic claims capability. (1) Definition. In this section,
25"health care provider" has the meaning given in s. 146.81 (1) (a) to (m).
SB201,11,4
1(2) Insurers. Beginning on January 1, 1997, every insurer that offers disability
2insurance must have and use the capability to accept all claims electronically and to
3allow electronic access to information on eligibility, claim status and remittance
4advice.
SB201,11,7 5(3) Health care providers. (a) Beginning on January 1, 1997, every health
6care provider that has annual gross revenues of more than $1,000,000 must have and
7use the capability to electronically transmit disability insurance claims information.
SB201,11,108 (b) Beginning on January 1, 1998, every health care provider not specified in
9par. (a) must have and use the capability to electronically transmit disability
10insurance claims information.
SB201, s. 18 11Section 18. 632.83 of the statutes is created to read:
SB201,11,16 12632.83 Regulation of certain related policies. The commissioner may, by
13rule, prescribe standards for specified disease policies, hospital indemnity policies,
14as defined in s. 632.895 (1) (c), or limited benefit health policies, including prohibiting
15certain specified types of products, prescribing minimum coverage and establishing
16marketing or suitability standards.
SB201, s. 19 17Section 19. 632.897 (2) (d) of the statutes is amended to read:
SB201,12,918 632.897 (2) (d) If the employer is notified to terminate the coverage for any of
19the reasons provided under par. (b), the employer shall provide the terminated
20insured written notification of the right to continue group coverage or convert to
21individual coverage and the payment amounts required for either continued or
22converted coverage including the manner, place and time in which the payments
23shall be made. This notice shall be given not more than 5 days after the employer
24receives notice to terminate coverage. The payment amount for continued group
25coverage may not exceed the group rate in effect for a group member, including an

1employer's contribution, if any, for a group policy as defined in sub. (1) (c) 1. or 1m.
2or the equivalent value of the monthly contribution of a group member to a group
3policy as defined in sub. (1) (c) 2. or the equivalent value of the monthly premium for
4franchise insurance as defined in sub. (1) (c) 3. The premium for converted coverage
5shall be determined in accordance with the insurer's table of premium rates
6applicable to the age and class of risks of each person to be covered under that policy
7and to the type and amount of coverage provided, subject to s. 635.05 and any rules
8promulgated under s. 635.06
. The notice may be sent to the terminated insured's
9home address as shown on the records of the employer.
SB201, s. 20 10Section 20. 632.897 (9) (c) of the statutes is amended to read:
SB201,12,2311 632.897 (9) (c) When the insurer is notified that the coverage of a spouse may
12be terminated because of a divorce or annulment, the insurer shall provide the
13former spouse written notification of the right to obtain individual coverage under
14sub. (4), the premium amounts required and the manner, place and time in which
15premiums may be paid. This notice shall be given not less than 30 days before the
16former spouse's coverage would otherwise terminate. The premium shall be
17determined in accordance with the insurer's table of premium rates applicable to the
18age and class of risk of
every person to be covered and to the type and amount of
19coverage provided, subject to s. 635.05 and any rules promulgated under s. 635.06.
20If the former spouse tenders the first monthly premium to the insurer within 30 days
21after the notice provided by this paragraph, sub. (4) shall apply and the former
22spouse shall receive individual coverage commencing immediately upon termination
23of his or her coverage under the insured's policy.
SB201, s. 21 24Section 21. Chapter 635 (title) of the statutes is amended to read:
SB201,13,3
1Chapter 635
2SMALL EMPLOYER REGULATION
3OF HEALTH INSURANCE
SB201, s. 22 4Section 22. 635.01 of the statutes is repealed and recreated to read:
SB201,13,5 5635.01 Scope. (1) This subchapter applies to all of the following:
SB201,13,86 (a) Group health benefit plans, and insurers with respect to group health
7benefit plans, that are written on risks or operations in this state and that provide
8coverage for eligible employes of an employer.
SB201,13,119 (b) Individual health benefit plans, and insurers with respect to individual
10health benefit plans, that are issued or renewed to a policyholder who is a resident
11of this state and who was a resident of this state when the policy was first issued.
SB201,13,15 12(2) The provisions of this subchapter that apply to individual health benefit
13plans apply to certificates issued under a group health benefit plan as if the
14certificates were individual health benefit plans if the group health benefit plan
15certificates are marketed to individuals.
SB201, s. 23 16Section 23. 635.02 (1) of the statutes is repealed.
SB201, s. 24 17Section 24. 635.02 (1c) of the statutes is amended to read:
SB201,13,1918 635.02 (1c) "Basic health benefit plan" means the a small employer health
19insurance plan under subch. II.
SB201, s. 25 20Section 25. 635.02 (1r) of the statutes is created to read:
SB201,13,2121 635.02 (1r) "Board" means the comprehensive health care board.
SB201, s. 26 22Section 26. 635.02 (2) of the statutes is amended to read:
SB201,14,423 635.02 (2) "Case characteristics" means the demographic, actuarially based
24characteristics of the employes of a small employer, and the employer, if covered
25members of a group or of an individual, such as age, sex gender, geographic location

1area and occupation, used by a small employer an insurer to determine premium
2rates for a small employer health benefit plan. "Case characteristics" does not
3include loss or claim history, health status condition, duration of coverage or other
4factors related to claim claims experience.
SB201, s. 27 5Section 27. 635.02 (3) of the statutes is repealed and recreated to read:
SB201,14,106 635.02 (3) "Community rate" means a uniform rate determined in such a
7manner that all insured individuals with the same level of coverage and plan design
8pay the same rate for that coverage, without regard to case characteristics or to loss
9or claim history, health condition, duration of coverage or other factors related to
10claims experience.
SB201, s. 28 11Section 28. 635.02 (3f) of the statutes is amended to read:
SB201,14,1912 635.02 (3f) "Eligible employe" means an employe who works on a full-time
13basis and has a normal work week of 30 or more hours. The term includes a sole
14proprietor, a business owner, including the owner of a farm business, a partner of a
15partnership, a member of a limited liability company and an independent contractor
16if the sole proprietor, business owner, partner, member or independent contractor is
17included as an employe under a health benefit plan of a small an employer, but the
18term does not include an employe who works on a part-time, temporary or substitute
19basis.
SB201, s. 29 20Section 29. 635.02 (3h) of the statutes is created to read:
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