AB394: Bill Text

AB394,12,24 (e) "Insurer" means an insurer that is authorized to do business in this state, in one or more lines of insurance that includes health insurance, and that offers group health benefit plans covering eligible employes of one or more employers in this state, or that sells individual health benefit plans to individuals who are residents of this state. The term includes a health maintenance organization, as defined in s. 609.01 (2), a preferred provider plan, as defined in s. 609.01 (4), and an insurer operating as a cooperative association organized under ss. 185.981 to 185.985, but does not include a limited service health organization, as defined in s. 609.01 (3).

AB394,13,2 (em) "Qualifying coverage" means benefits or coverage provided under any of the following:

AB394,13,3 1. Medicare or medicaid.

AB394,13,6 2. An employer-based health insurance or health benefit arrangement that provides benefits similar to or exceeding benefits provided under a small employer health insurance plan under ch. 635.

AB394,13,9 3. An individual health insurance policy that provides benefits similar to or exceeding benefits provided under a small employer health insurance plan under ch. 635, if the policy has been in effect for at least one year.

AB394,13,11 4. The health insurance risk-sharing plan or an alternative plan under subch. II of ch. 619.

AB394,13,19 (f) "Resident" means a person who has maintained his or her place of permanent abode in this state for a period of 180 days immediately preceding his or her application for coverage under a health benefit plan. Domiciliary intent is required to establish that a person is maintaining his or her place of permanent abode in this state. Mere ownership of property is not sufficient to establish domiciliary intent. Evidence of domiciliary intent includes, without limitation, the location where the person votes, pays personal income taxes or obtains a driver's license.

AB394,13,23 (g) "Restricted network provision" means a provision of a health benefit plan that conditions the payment of benefits, in whole or in part, on obtaining services or articles from health care providers that have contracted with the insurer to provide health care services or articles to covered individuals.

AB394,14,2 (h) "Small employer" means an employer that employs in this state not fewer than 2 nor more than 25 eligible employes. In determining the number of eligible employes, employers that are affiliated, or that are eligible to file a combined tax return for purposes of state taxation, shall be considered one employer.

AB394,14,7 (2) Underwriting, portability and preexisting conditions. (a) A group or individual health benefit plan may not deny, exclude or limit benefits for a covered individual for losses incurred more than 12 months after the effective date of the individual's coverage due to a preexisting condition. A health benefit plan may not define a preexisting condition more restrictively than any of the following:

AB394,14,12 1. a. With respect to a group health benefit plan, a condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care or treatment during the 6 months immediately preceding the effective date of coverage and for which the individual did not seek medical advice, diagnosis, care or treatment.

AB394,14,17 b. With respect to an individual health benefit plan, a condition that would have caused an ordinarily prudent person to seek medical advice, diagnosis, care or treatment during the 12 months immediately preceding the effective date of coverage and for which the individual did not seek medical advice, diagnosis, care or treatment.

AB394,14,20 2. a. With respect to a group health benefit plan, a condition for which medical advice, diagnosis, care or treatment was recommended or received during the 6 months immediately preceding the effective date of coverage.

AB394,14,23 b. With respect to an individual health benefit plan, a condition for which medical advice, diagnosis, care or treatment was recommended or received during the 12 months immediately preceding the effective date of coverage.

AB394,15,4 3. With respect to a group or individual health benefit plan, a pregnancy existing on the effective date of coverage, except that coverage may not be excluded for any covered prenatal care expenses related to such a pregnancy or for other covered expenses related to such a pregnancy that exceed the deductible amount prescribed by the commissioner under par. (ac). Coverage not excluded may be subject to any deductibles or copayments that apply generally under the policy.

AB394,15,11 (ac) The commissioner shall by rule prescribe a separate deductible for covered expenses related to a pregnancy existing on the effective date of coverage, excluding covered prenatal care expenses. The rule shall provide for a sliding scale deductible that does not exceed $5,000 and that is determined on the basis of the stage of the pregnancy on the effective date of the coverage, so that the deductible is lower if coverage is obtained early in the pregnancy and higher if coverage is obtained late in the pregnancy.

AB394,15,17 (am) Notwithstanding par. (a), a group or individual health benefit plan may not deny, exclude or limit benefits for a covered individual who is a resident or for a covered employe who has satisfied any waiting period imposed by his or her employer or for any of the covered dependents of the individual or employe for losses due to a preexisting condition if the individual, employe or employe's employer applies for coverage:

AB394,15,18 1. During the 45-day period beginning on October 1, 1996.

AB394,15,19 2. Within 30 days after the later of the following:

AB394,15,20 a. The date on which the individual or employe becomes 18 years of age.

AB394,15,22 b. The date on which the individual's or employe's coverage as a dependent under a health benefit plan ceases.

AB394,15,24 3. During a 30-day enrollment period specified by the commissioner by rule under par. (ar).

AB394,16,4 (ar) The commissioner shall by rule specify a biennial 30-day enrollment period during which an individual or employe may obtain coverage under a group or individual health benefit plan without any preexisting condition exclusion or limitation.

AB394,16,6 (aw) An individual or employe may obtain coverage without a preexisting condition exclusion or limitation under par. (am) only once every 10 years.

AB394,16,12 (b) 1. A group or individual health benefit plan shall waive any period applicable to a preexisting condition exclusion or limitation period with respect to particular services for the period that an individual was previously covered by qualifying coverage that provided benefits with respect to such services, if the qualifying coverage terminated not more than 60 days before the effective date of the new coverage.

AB394,16,18 2. Subdivision 1. does not prohibit the application of a waiting period to all new enrollees under a health benefit plan issued to an employer; however, a waiting period may not be counted when determining whether the qualifying coverage terminated not more than 60 days before the effective date of the new coverage. For the purpose of subd. 1., the new coverage shall be considered effective as of the date that it would be effective but for the waiting period.

AB394,16,20 (c) This subsection does not apply to a conversion health insurance policy, which is subject to s. 632.897 (4) (a).

AB394,17,2 (3) Minimum participation of employes. (a) Except as provided in par. (d), requirements used by an insurer in determining whether to provide coverage to an employer, including requirements for minimum participation of eligible employes and minimum employer contributions, shall be applied uniformly among all employers that apply for or receive coverage from the insurer and that have the same number of eligible employes.

AB394,17,5 (b) An insurer may vary its minimum participation requirements and minimum employer contribution requirements only by the size of the employer group.

AB394,17,9 (c) 1. Except as provided in subd. 2., in applying minimum participation requirements with respect to an employer, an insurer may not count eligible employes or their dependents who have other coverage that is qualifying coverage in determining whether the applicable percentage of participation is met.

AB394,17,14 2. If an employer has 10 or fewer eligible employes, an insurer may count eligible employes or their dependents who have coverage under another health benefit plan sponsored by that employer in applying minimum participation requirements to determine whether the applicable percentage of participation is met.

AB394,17,17 (d) An insurer may not increase a requirement for minimum employe participation or a requirement for minimum employer contribution that applies to an employer after the employer has been accepted for coverage.

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.