LRB-2852/1
PJK:kmg:kaf
1995 - 1996 LEGISLATURE
May 24, 1995 - Introduced by Representatives Robson, Kunicki, Baldus, Bell,
Black, Bock, Boyle, Carpenter, Coggs, Grobschmidt, Hanson, Huber,
Morris-Tatum, Notestein, Plache, Plombon, R. Potter, Springer, Vander
Loop, Wirch, L. Young, R. Young and Hasenohrl, cosponsored by Senators
Moen, Clausing and Burke. Referred to Committee on Health.
AB394,1,13
1An Act to repeal subchapter I of chapter 635 [precedes 635.01.], subchapter II
2(title) of chapter 635 [precedes 635.20] and 635.26 (1s);
to amend 15.735 (1),
3111.70 (1) (a), 185.981 (4t), 185.983 (1) (intro.), 185.983 (1g), 600.01 (2) (b),
4619.12 (1) (intro.), 619.12 (2) (e) 2. (intro.), 619.12 (2) (e) 2. b., 625.03 (6), 625.12
5(2), 625.15 (1), 625.22 (1), 625.22 (4), 628.36 (2) (b) 1., 3. and 5., 631.01 (4),
6632.70, 632.76 (2) (a), 632.896 (4), 632.897 (2) (d), 632.897 (9) (c), chapter 635
7(title), 635.20 (intro.), 635.20 (10), 635.25 (1) (a) (intro.), 635.25 (1) (b), 635.25
8(1m), 635.254 (1), 635.254 (3), 635.28, 635.29, 635.31 and 646.35 (5);
to repeal
9and recreate 635.20 (1c), 635.20 (1m) and 635.20 (13); and
to create 20.145
10(1) (h), 111.70 (4) (m), 601.424, 628.34 (3) (c), 632.727, 632.745, 632.746,
11632.7465, 632.747, 632.748, 632.749 and 632.83 of the statutes;
relating to:
12health insurance market reform, granting rule-making authority and making
13an appropriation.
Analysis by the Legislative Reference Bureau
Health insurance market reform
Scope of reform
This bill imposes a number of general requirements on insurers with respect
to individual and group health benefit plans that are issued or renewed on or after
October 1, 1996. 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 and automobile medical payment insurance policies.
Community rating
All health benefit plans must be community rated. The community rates,
however, may be modified by the insured's age and gender and by whether the
insured's coverage is single or a type of family. The commissioner of insurance
(commissioner) must by rule define "community" for the purpose of determining
community rates. A "community" may not be a geographical area that includes less
than an entire county or federal metropolitan statistical area, whichever is larger.
The 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.
Guaranteed issue
With certain specified exceptions, an insurer that has in force a health benefit
plan 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 and any of the employer's
other employes for whom the employer desires to provide coverage, including
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, group plans, and related individual
conversion policies, for employers with more than 25 employes or individual plans.
Reinsurance
The bill requires the commissioner to establish a risk adjustment mechanism
by rule for insurers issuing health benefit plans. The rules must define "high-risk
medical conditions", determine the percentage of individuals with coverage under all
health benefit plans who have high-risk medical conditions and provide for an
assessment against each insurer that insures a lower percentage of individuals with
high-risk medical conditions than the overall percentage and a reimbursement for
each insurer that insures a higher percentage of individuals with high-risk medical
conditions than the overall percentage. The commissioner must establish an
advisory committee to advise the commissioner on the contents of the rules and to
review the rules and make recommendations on them to the legislature. The
committee members are to be appointed by the commissioner and must be, in
addition to the commissioner, representatives of insurers, including a health
maintenance organization; 2 actuaries; 2 underwriters; and a medical director.
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 more 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 may not exclude or limit benefits on
account of a preexisting condition for more than 12 months, as under current law.
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 covered prenatal care expenses or for other covered
expenses for such a pregnancy that exceed a separate deductible amount prescribed
by the commissioner by rule. 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 is a resident 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, employer or
employe applies for coverage during the 45-day period beginning on October 1, 1996,
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 must waive any period applicable to a preexisting condition
exclusion or limitation that was satisfied under another plan, including the health
insurance risk-sharing plan (HIRSP), under which coverage terminated not more
than 60 days before the effective date of coverage under the new plan.
Contract renewability and fair marketing standards
A health benefit plan 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 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.
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, 1996. 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.
For further information see the state and local 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:
AB394, s. 1
1Section
1. 15.735 (1) of the statutes is amended to read:
AB394,4,112
15.735
(1) Small employer insurance board. There is created a small employer
3insurance board which is attached to the office of the commissioner of insurance
4under s. 15.03. The board shall consist of 11 members. Notwithstanding s. 15.07 (2)
5(intro.), one member shall be the commissioner of insurance, or his or her designee,
6who shall be a nonvoting member and who shall serve permanently as chairperson
7of the board. The other 10 members shall be nominated by the governor, and with
8the advice and consent of the senate appointed, for 3-year terms. Five members shall
9represent employers that are eligible to participate in the plan under
subch. II of ch.
10635, and 5 members shall represent employes of employers that are eligible to
11participate in the plan under
subch. II of ch. 635.
AB394, s. 2
12Section
2. 20.145 (1) (h) of the statutes is created to read:
AB394,5,3
120.145
(1) (h)
Risk adjustment mechanism. All moneys received from risk
2adjustment assessments against health insurers for risk adjustment
3reimbursements to health insurers under rules promulgated under s. 632.747 (4).
AB394, s. 3
4Section
3. 111.70 (1) (a) of the statutes is amended to read:
AB394,5,255
111.70
(1) (a) "Collective bargaining" means the performance of the mutual
6obligation of a municipal employer, through its officers and agents, and the
7representatives of its employes, to meet and confer at reasonable times, in good faith,
8with the intention of reaching an agreement, or to resolve questions arising under
9such an agreement, with respect to wages, hours and conditions of employment, and
10with respect to a requirement of the municipal employer for a municipal employe to
11perform law enforcement and fire fighting services under s. 61.66, except as provided
12in
sub. (4) (m) and s. 40.81 (3) and except that a municipal employer shall not meet
13and confer with respect to any proposal to diminish or abridge the rights guaranteed
14to municipal employes under ch. 164. The duty to bargain, however, does not compel
15either party to agree to a proposal or require the making of a concession. Collective
16bargaining includes the reduction of any agreement reached to a written and signed
17document. The employer shall not be required to bargain on subjects reserved to
18management and direction of the governmental unit except insofar as the manner
19of exercise of such functions affects the wages, hours and conditions of employment
20of the employes. In creating this subchapter the legislature recognizes that the
21public employer must exercise its powers and responsibilities to act for the
22government and good order of the municipality, its commercial benefit and the
23health, safety and welfare of the public to assure orderly operations and functions
24within its jurisdiction, subject to those rights secured to public employes by the
25constitutions of this state and of the United States and by this subchapter.
AB394, s. 4
1Section
4. 111.70 (4) (m) of the statutes is created to read:
AB394,6,52
111.70
(4) (m)
Health insurance market reform requirements. A municipal
3employer that is an employer under the definition specified in s. 632.745 (1) (b) 2. is
4prohibited from bargaining collectively with respect to the health insurance
5requirements under ss. 632.745 to 632.749.
AB394, s. 5
6Section
5. 185.981 (4t) of the statutes is amended to read:
AB394,6,97
185.981
(4t) A sickness care plan operated by a cooperative association is
8subject to ss. 252.14, 631.89, 632.72 (2),
632.745 to 632.749, 632.87 (2m), (3), (4) and
9(5), 632.895 (10) and 632.897 (10) and ch. 155.
AB394, s. 6
10Section
6. 185.983 (1) (intro.) of the statutes is amended to read:
AB394,6,1611
185.983
(1) (intro.) Every such voluntary nonprofit sickness care plan shall be
12exempt from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41,
13601.42, 601.43, 601.44, 601.45, 611.67, 619.04, 628.34 (10), 631.89, 631.93, 632.72
14(2),
632.745 to 632.749, 632.775, 632.79, 632.795, 632.87 (2m), (3), (4) and (5),
15632.895 (5), (9) and (10), 632.896 and 632.897 (10), subch. II of ch. 619 and chs. 609,
16630, 635, 645 and 646, but the sponsoring association shall:
AB394, s. 7
17Section
7. 185.983 (1g) of the statutes is amended to read:
AB394,6,2118
185.983
(1g) A cooperative association that is a small employer insurer, as
19defined in s.
635.02 (8) 635.20 (13), is subject to the health insurance mandates, as
20defined in s. 601.423 (1), to the same extent as any other small employer insurer, as
21defined in s.
635.02 (8) 635.20 (13).
AB394, s. 8
22Section
8. 600.01 (2) (b) of the statutes is amended to read:
AB394,6,2423
600.01
(2) (b) Group or blanket insurance described in sub. (1) (b) 3. and 4. is
24not exempt from
ss. 632.745 to 632.749 or ch. 633 or 635.
AB394, s. 9
25Section
9. 601.424 of the statutes is created to read:
AB394,7,7
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 ss. 632.745 to 632.749 on enrollment under, and
4other aspects of, the health insurance risk-sharing plan under subch. II of ch. 619.
5The commissioner shall annually submit a report on the effects and any
6recommendations to the legislature under s. 13.172 (2) commencing on October 1,
71997.
AB394, s. 10
8Section
10. 619.12 (1) (intro.) of the statutes is amended to read:
AB394,7,159
619.12
(1) (intro.) Except as provided in subs. (1m)
and (2) to (3), the board or
10administering carrier shall certify as eligible a person who is covered by medicare
11because he or she is disabled under
42 USC 423, a person who submits evidence that
12he or she has tested positive for the presence of HIV, antigen or nonantigenic
13products of HIV or an antibody to HIV, and any person who receives and submits any
14of the following based wholly or partially on medical underwriting considerations
15within 9 months prior to making application for coverage by the plan:
AB394, s. 11
16Section
11. 619.12 (2) (e) 2. (intro.) of the statutes is amended to read:
AB394,7,1917
619.12
(2) (e) 2. (intro.) Subdivision 1 does not apply to a person who is eligible
18for health care benefits under the small employer health insurance plan under
19subch. II of ch. 635 if all of the following apply:
AB394, s. 12
20Section
12. 619.12 (2) (e) 2. b. of the statutes is amended to read:
AB394,7,2321
619.12
(2) (e) 2. b. The board determines that the coverage under the small
22employer health insurance plan under
subch. II of ch. 635 is not substantially
23equivalent to or greater than the coverage under the plan.
AB394, s. 13
24Section
13. 625.03 (6) of the statutes is amended to read:
AB394,8,3
1625.03
(6) Group and blanket accident and sickness insurance other than
2credit accident and sickness insurance
, except as provided in s. 625.22 with regard
3to s. 632.746 and any rules promulgated under s. 632.7465.
AB394, s. 14
4Section
14. 625.12 (2) of the statutes is amended to read:
AB394,8,145
625.12
(2) Classification. Risks Subject to s. 632.746 and any rules
6promulgated under s. 632.7465, risks may be classified in any reasonable way for the
7establishment of rates and minimum premiums, except that no
such classifications
8may be based on race, color, creed or national origin, and classifications in automobile
9insurance may not be based on physical condition or developmental disability as
10defined in s. 51.01 (5). Subject to
s. ss. 632.365
and 632.746 and any rules
11promulgated under s. 632.7465, rates thus produced may be modified for individual
12risks in accordance with rating plans or schedules that establish reasonable
13standards for measuring probable variations in hazards, expenses, or both. Rates
14may also be modified for individual risks under s. 625.13 (2).
AB394, s. 15
15Section
15. 625.15 (1) of the statutes is amended to read:
AB394,8,2416
625.15
(1) Rate making. An insurer may itself establish rates and
17supplementary rate information for one or more market segments based on the
18factors in s. 625.12 and
, subject to s. 632.365 if the rates are for motor vehicle liability
19insurance
, subject to s. 632.365, or
s. 632.746 and any rules promulgated under s.
20632.7465 if the rates are for health benefit plans, as defined in s. 632.745 (1) (d). In
21the alternative, the insurer may use rates and supplementary rate information
22prepared by a rate service organization, with average expense factors determined by
23the rate service organization or with such modification for its own expense and loss
24experience as the credibility of that experience allows.
AB394, s. 16
25Section
16. 625.22 (1) of the statutes is amended to read:
AB394,9,4
1625.22
(1) Order in event of violation. If the commissioner finds after a
2hearing that a rate is not in compliance with s. 625.11
or 632.746 or rules
3promulgated under s. 632.7465, the commissioner shall order that its use be
4discontinued for any policy issued or renewed after a date specified in the order.
AB394, s. 17
5Section
17. 625.22 (4) of the statutes is amended to read:
AB394,9,156
625.22
(4) Interim rates. Whenever an insurer has no legally effective rates
7as a result of the commissioner's disapproval of rates or other act, the commissioner
8shall on request specify interim rates for the insurer that are high enough to protect
9the interests of all parties
, and that comply with s. 632.746 and any rules
10promulgated under s. 632.7465 if the rates are for health benefit plans, as defined
11in s. 632.745 (1) (d), and may order that a specified portion of the premiums be placed
12in an escrow account approved by the commissioner. When new rates become legally
13effective, the commissioner shall order the escrowed funds or any overcharge in the
14interim rates to be distributed appropriately, except that refunds to policyholders
15that are trifling shall not be required.
AB394, s. 18
16Section
18. 628.34 (3) (c) of the statutes is created to read:
AB394,9,1817
628.34
(3) (c) Paragraphs (a) and (b) do not apply to coverage under a health
18benefit plan, as defined in s. 632.745 (1) (d), which is subject to ss. 632.745 to 632.749.
AB394, s. 19
19Section
19. 628.36 (2) (b) 1., 3. and 5. of the statutes are amended to read:
AB394,9,2520
628.36
(2) (b) 1. Except for health maintenance organizations, preferred
21provider plans, limited service health organizations and the small employer health
22insurance plan under
subch. II of ch. 635, no health care plan may prevent any
23person covered under the plan from choosing freely among providers who have
24agreed to participate in the plan and abide by its terms, except by requiring the
25person covered to select primary providers to be used when reasonably possible.
AB394,10,5
13. Except as provided in subd. 4., no provider may be denied the opportunity
2to participate in a health care plan, other than a health maintenance organization,
3a limited service health organization, a preferred provider plan or the small
4employer health insurance plan under
subch. II of ch. 635, under the terms of the
5plan.
AB394,10,96
5. Except for the small employer health insurance plan under
subch. II of ch.
7635 to the extent determined by the small employer insurance board under s. 635.23
8(1) (b), all health care plans, including health maintenance organizations, limited
9service health organizations and preferred provider plans are subject to s. 632.87 (3).
AB394, s. 20
10Section
20. 631.01 (4) of the statutes is amended to read:
AB394,10,2011
631.01
(4) Group policies and annuities for eleemosynary institutions. This
12chapter, ch. 632 and the health insurance mandates under ch. 632 that apply to the
13plan under
subch. II of ch. 635 do not apply to group policies or annuities provided
14on a basis as uniform nationally as state statutes permit to educational, scientific
15research, religious or charitable institutions organized without profit to any person,
16for the benefit of employes of such institutions. The commissioner may by order
17subject such contracts issued by a particular insurer to this chapter, ch. 632 or the
18health insurance mandates under ch. 632 that apply to the plan under
subch. II of 19ch. 635 or any portion of those provisions upon a finding, after a hearing, that the
20interests of Wisconsin insureds or creditors or the public of this state so require.
AB394, s. 21
21Section
21. 632.70 of the statutes is amended to read:
AB394,10,25
22632.70 Exemption for plan under ch. 635. The health insurance mandates,
23as defined in s. 601.423 (1), that are provided under this subchapter apply to the
24small employer health insurance plan under
subch. II of ch. 635 only to the extent
25determined by the small employer insurance board under s. 635.23 (1) (b).