2001 - 2002 LEGISLATURE
March 4, 2002 - Introduced by Representatives Seratti, Underheim, Montgomery,
Rhoades, Urban, Ainsworth, Bies, J. Fitzgerald, Friske, Gronemus,
Gunderson, Hahn, Hundertmark, Johnsrud, Kestell, Krawczyk, Ladwig, La
Fave, J. Lehman, Lippert, McCormick, D. Meyer, Musser, Olsen, Petrowski,
Pettis, Starzyk, Sykora, Townsend, Vrakas and Albers, cosponsored by
Senators Plache, Darling, Harsdorf and
Roessler. Referred to Committee
on Health.
AB876,2,4
1An Act to renumber and amend 40.51 (6);
to amend 20.145 (1) (g), 20.515 (2)
2(g), 149.12 (1) (intro.), 149.14 (6) (a) and 632.835 (2) (b); and
to create 15.735,
316.735, 20.145 (1) (j), 20.145 (1) (q), 25.17 (1) (pd), 25.57, 40.51 (6) (b), 40.98 (2)
4(h), 40.98 (6m), 149.12 (4), 149.14 (6) (c), 601.34, 632.835 (2) (bg), 635.25 and
5635.30 of the statutes;
relating to: a loan from the general fund for the private
6employer health care coverage program, requiring the group insurance board
7to offer an additional health insurance plan for state employees, creating a
8small employer catastrophic reinsurance board, creating a small employer
9catastrophic care board, creating a small employer catastrophic care program
10fund, requiring small employer insurers to specify threshold levels of covered
11benefits and reimbursing small employer insurers that pay benefits in excess
12of the threshold, imposing an additional premium on small employer insurance
13to pay reimbursements to small employer insurers, creating a pilot program for
14reimbursing small employer insurers for claims costs for certain employees of
1small employers, authorizing assistance in negotiating prescription drug
2rebates and reducing prescription drug charges, providing notice of the right to
3independent review, requiring reports, providing exemptions from emergency
4rule procedures, granting rule-making authority, and making appropriations.
Analysis by the Legislative Reference Bureau
Private employer health care coverage program
Under current law, the private employer health care coverage board, attached
to the department of employee trust funds (DETF), is required to design and oversee
a health care coverage program for employers in the private sector. This bill requires
that $850,000 in moneys received by the office of the commissioner of insurance for
general program operations be used as a loan for the private employer health care
coverage program. In addition, the bill authorizes DETF to seek funding from any
person for the payment of costs of designing, marketing, and contracting for or
providing administrative services under the private employer health care coverage
program and for repaying the loan to the office of the commissioner of insurance.
Small employer catastrophic care
This bill creates a catastrophic care program for employees of small employers,
which are, generally, employers with two to 50 employees. The program is to operate
for five years, and is to be administered by a small employer catastrophic care board
(catastrophic care board), which is attached to the office of the commissioner of
insurance for administrative purposes. The catastrophic care board is composed of
the commissioner of insurance (commissioner) and 10 other members who represent
the medical professions, small employers, and small employer insurers, which are
insurers that offer group health benefit plans to small employers. The program will
operate in a limited region of the state, which must be determined and described by
the commissioner by rule, but which must include Winnebago County.
Under the bill, an employee of a small employer is eligible for coverage under
the program if: 1) the small employer is located in the region in which the program
operates, 2) the employee is eligible for coverage under a group health benefit plan
issued or renewed to the small employer, 3) the employee is determined by the small
employer insurer issuing or renewing the group health benefit plan to be eligible in
accordance with health status underwriting guidelines established by the
catastrophic care board, 4) the small employer agrees to enroll the employee in the
program, and 5) the small employer pays an additional premium for the employee's
coverage under the program. If a small employer does not agree to enroll in the
program an employee who is eligible for enrollment, the small employer insurer
issuing or renewing the group health benefit plan to the small employer may
disregard the rate restrictions in current law for small employer health insurance
when determining the premium for the small employer's group health benefit plan.
The covered benefits for an employee enrolled in the program are the same as
the benefits under the group health benefit plan for which the employee is eligible.
The small employer insurer issuing the group health benefit plan for which the
employee is eligible pays or denies payment of the employee's benefit claims. The
commissioner, at the direction of the catastrophic care board, reimburses a small
employer insurer for benefit claims that are properly paid for employees enrolled in
the program. The program is funded by: 1) $500,000 annually from fees imposed
under current law by the office of the commissioner of insurance for
insurance-related services to pay for regulation of the insurance industry, 2)
assessments, which must equal $500,000 annually, that are paid by all insurers
authorized to sell health insurance in this state, 3) assessments that are paid by
health care professionals, facilities, and organizations and that, in conjunction with
health care provider payment rate discounts that the commissioner sets by rule,
must equal $500,000 annually, and 4) the additional premiums that must be paid by
small employers that agree to enroll under the program employees who are eligible
for coverage under the program. The additional premiums, which are determined
by the catastrophic care board by rule, must be calculated to cover the anticipated
reimbursements to small employer insurers for benefit payments under the program
to the extent that the other funding sources will not.
In addition to establishing various procedures for the operation of the program,
the catastrophic care board must establish a budget every year, reconcile the
program costs with the program funding every year and increase or decrease for the
next fiscal year the insurer or provider assessments or provider payment rate
discounts if they did not equal the required $500,000 in the previous year, and
provide for a program administrator procurement process.
The bill provides that, if an employee who is enrolled in the small employer
catastrophic care program loses eligibility, the employee may apply for coverage
under the state's health insurance risk-sharing plan (HIRSP), which provides major
medical health insurance coverage for persons who are covered under medicare
because they are disabled, persons who have tested positive for HIV, and persons who
have been refused coverage, or coverage at an affordable price, in the private health
insurance market because of their mental or physical health condition. The HIRSP
board may, in its discretion, certify an employee who loses coverage under the small
employer catastrophic care program as eligible for coverage under HIRSP even if the
employee does not satisfy HIRSP's eligibility requirements. In addition, if such an
employee obtains coverage under HIRSP and his or her application was received
within 63 days after his or her coverage under the small employer catastrophic care
program was terminated, he or she is not required to satisfy the six-month
preexisting condition exclusion period that applies under HIRSP.
Small employer catastrophic reinsurance
This bill creates a catastrophic reinsurance program for small employers,
which are, generally, employers with two to 50 employees. The program is to operate
for five years, and is to be administered by a small employer catastrophic reinsurance
board (reinsurance board), which is attached to the office of the commissioner of
insurance for administrative purposes. The reinsurance board is composed of the
commissioner of insurance (commissioner) and eight other members, one of whom
is a physician and the rest of whom represent hospitals, small employers, and small
employer insurers, which are insurers that offer group health benefit plans to small
employers.
Under the program, a small employer insurer must select by December 1 every
other year a threshold level of covered benefits, which may be $50,000 per calendar
year, $100,000 per calendar year, $150,000 per calendar year, or $250,000 per
calendar year. The threshold level selected by a small employer insurer will apply
for the next two calendar years to each individual insured under every group health
benefit plan issued by the small employer insurer to a small employer. If in a
calendar year a small employer insurer pays benefits on behalf of an insured that
exceed the threshold level selected by the small employer insurer, the commissioner,
at the direction of the reinsurance board, reimburses the small employer insurer for
80% of the benefits payments that exceed the threshold level.
The reimbursements to the small employer insurers are funded by additional
premium amounts paid by small employers for coverage under group health benefit
plans. The additional premium amount, which is determined by a rule developed by
the reinsurance board and promulgated by the commissioner, is based on a charge
per covered individual that will generate sufficient funding to cover the small
employer insurer reimbursements of 80% of costs over their selected threshold
levels. In addition, during the program's operation, providers of health care services
to employees covered under group health benefit plans issued to small employers
must accept discounts to their payment rates and may not bill employees receiving
the services for the difference. The payment rate discounts are set by the
commissioner by rule.
State employee health care coverage
Under current law, the state is required to provide health care coverage for
eligible state employees. The state must offer state employees at least two insured
or uninsured health care coverage plans that provide substantially equivalent
hospital and medical benefits. This bill requires the state also to offer state
employees a defined contribution plan that permits employees to choose the level of
premiums, deductibles, and co-payments and to select the hospital and medical
benefits offered under the plan, but only if the group insurance board determines
that such a defined contribution plan is available in the area of the place of
employment and approves the plan.
Prescription drug rebates and reduced charges
Currently, under the program of prescription drug assistance for elderly
persons, moneys from rebate agreements negotiated with prescription drug
manufacturers that sell drugs for prescribed use in this state are used to reimburse
pharmacies and pharmacists that are required, under the program, to charge eligible
persons reduced rates for prescription drugs.
This bill authorizes the department of administration (DOA) or an entity with
which DOA contracts, to assist health care providers, insurers, or self-insurers in
this state or in conjunction with associations of health care providers, insurers, or
self-insurers in states other than Wisconsin to negotiate with manufacturers or
labelers rebate agreements or to develop in-state or multistate purchasing groups
to negotiate reduced charges for prescription drugs that are produced by the
manufacturers or repackaged by the labelers and sold for prescribed use. Under the
bill, DOA must submit a report by January 1, 2003, that identifies: 1) the
participation by health care providers, insurers, and self-insurers in negotiating
rebate agreements and developing in-state or multistate purchasing groups, and 2)
strategies that DOA proposes to pursue to reduce costs for prescription drugs. DOA
also must submit a report by January 1, 2005, that specifies the status, including
success or lack of success, in assisting health care providers, insurers, or
self-insurers to negotiate rebate agreements or reduce charges for prescription
drugs. Both reports must be submitted to appropriate standing committees of the
legislature, to the joint committee on finance, and to the governor.
Notice of independent review
Under current law, an insured under a health benefit plan has the right to
obtain, from an independent review organization certified by the commissioner of
insurance, an independent review of certain denials of coverage (adverse
determinations and experimental treatment determinations). Whenever an adverse
determination or experimental treatment determination is made, the insurer is
required to provide notice to the insured of his or her right to obtain an independent
review, of how to request the review, and of the time within which the review must
be requested and is required to provide a current listing of certified independent
review organizations.
This bill provides that an insurer is not required to provide the notice about the
independent review procedure to an insured who uses the insurer's internal
grievance procedure until the insurer sends notice of the disposition of the internal
grievance if the health benefit plan issued by the insurer contains a description of
the procedure, including a description of the insured's right to obtain an independent
review, how to request the review, the time within which the review must be
requested, and how to obtain a current listing of certified independent review
organizations. In addition, the insurer must provide on its explanation of benefits
form a reference to the section of the policy or certificate that contains the
description. (An insurer sends its explanation of benefits form to an insured after
the insured has received health care services to provide information about the extent
to which the insurance covered the services.)
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:
AB876, s. 1
1Section
1. 15.735 of the statutes is created to read:
AB876,6,4
115.735 Same; attached boards.
(1) Small employer catastrophic
2reinsurance board. (a) There is created a small employer catastrophic reinsurance
3board that is attached to the office of the commissioner of insurance under s. 15.03.
4The board shall consist of the commissioner of insurance and the following members:
AB876,6,75
1. Two members who represent small employers, as defined in s. 635.02 (7), and
6who are selected from a list of nominees submitted by the National Federation of
7Independent Business and Wisconsin Independent Businesses, Inc.
AB876,6,118
2. Four members who represent small employer insurers, as defined in s.
9635.02 (8), 2 of whom are selected from a list of nominees submitted by the Wisconsin
10Association of Life and Health Insurers, Inc., and 2 of whom are selected from a list
11of nominees submitted by the Wisconsin Association of Health Plans.
AB876,6,1312
3. One member who is a physician, as defined in s. 448.01 (5), and who is
13selected from a list of nominees submitted by the State Medical Society of Wisconsin.
AB876,6,1514
4. One member who represents hospitals and who is selected from a list of
15nominees submitted by the Wisconsin Health and Hospital Association.
AB876,6,1716
(b) The members under par. (a) 1. to 4. shall be appointed for 3-year terms. Any
17such member may be removed by the governor for just cause.
AB876,6,21
18(2) Small employer catastrophic care board. (a) There is created a small
19employer catastrophic care board that is attached to the office of the commissioner
20of insurance under s. 15.03. The board shall consist of the commissioner of insurance
21and the following members:
AB876,6,2222
1. Four members who are small employers, as defined in s. 635.02 (7).
AB876,6,2323
2. Four members who are small employer insurers, as defined in s. 635.02 (8).
AB876,6,2524
3. Two members who represent the medical professions, at least one of whom
25is a physician, as defined in s. 448.01 (5).
AB876,7,2
1(b) The members under par. (a) 1. to 3. shall be appointed for 3-year terms. Any
2such member may be removed by the governor for just cause.
AB876, s. 2
3Section
2. 16.735 of the statutes is created to read:
AB876,7,5
416.735 Negotiations for purchase of prescription drugs; rebates. (1) 5In this section:
AB876,7,66
(a) "Health care provider" has the meaning given in s. 146.81 (1).
AB876,7,77
(b) "Insurer" has the meaning given in s. 632.745 (15).
AB876,7,118
(c) "Labeler" means a person that receives prescription drugs from a
9manufacturer or wholesaler, repackages the prescription drugs for later retail sale,
10and has a labeler code issued by the federal food and drug administration under
21
11CFR 207.20 (b).
AB876,7,1312
(d) "Manufacturer" means a manufacturer of prescription drugs and includes
13a subsidiary or affiliate of the manufacturer.
AB876,7,1414
(e) "Pharmacist" has the meaning given in s. 450.01 (15).
AB876,7,1515
(f) "Prescription drug" has the meaning given in s. 450.01 (20).
AB876,7,1816
(g) "Self-insurer" means an employer or labor organization acting solely or
17acting jointly with a labor organization or an employer to provide employee health
18care benefits on a self-insured basis.
AB876,7,20
19(2) The department or an entity with which the department contracts may do
20all of the following:
AB876,7,2521
(a) Assist a health care provider, insurer, or self-insurer that acts in this state
22or that seeks to act in conjunction with associations of health care providers,
23insurers, or self-insurers in states other than this state to negotiate rebate
24agreements with manufacturers or labelers for prescription drugs that are produced
25by the manufacturers or repackaged by the labelers and are sold for prescribed use.
AB876,8,6
1(b) Assist a health care provider, insurer, or self-insurer to develop an in-state
2purchasing group or, in conjunction with associations of health care providers,
3insurers, or self-insurers in states other than this state, a multistate purchasing
4group, for the direct negotiation with prescription drug manufacturers and labelers
5of reduced charges for prescription drugs that are produced by the manufacturers or
6repackaged by the labelers and are sold for prescribed use.
AB876,8,159
20.145
(1) (g)
General program operations. The amounts in the schedule for
10general program operations
and to transfer to the small employer catastrophic care
11program fund $500,000 annually, by no later than January 30, beginning in 2003 and
12ending in 2007. Ninety percent of all moneys received under ss. 601.31, 601.32,
13601.42 (7), 601.45, and 601.47 and by the commissioner for expenses related to
14insurance company restructurings, except for restructurings specified in par. (h),
15shall be credited to this appropriation account.
AB876, s. 4
16Section
4. 20.145 (1) (j) of the statutes is created to read:
AB876,8,1917
20.145
(1) (j)
Small employer insurer catastrophic reimbursements. All moneys
18received under s. 635.25 (3) (b), to reimburse small employer insurers as provided in
19s. 635.25 (2) (c).
AB876, s. 5
20Section
5. 20.145 (1) (q) of the statutes is created to read:
AB876,8,2321
20.145
(1) (q)
Small employer catastrophic care program reimbursements. 22From the small employer catastrophic care program fund, a sum sufficient for
23reimbursing claims costs under s. 635.30 (6) (c).
AB876, s. 6
24Section
6. 20.515 (2) (g) of the statutes is amended to read:
AB876,9,6
120.515
(2) (g)
Private employer health care coverage plan. All moneys received
2under subch. X of ch. 40 from employers who elect to participate in the private
3employer health care coverage program under subch. X of ch. 40
and from any other
4person under s. 40.98 (2) (h), for the costs of designing, marketing
, and contracting
5for or providing administrative services for the program
and for lapsing to the
6general fund the amounts required under s. 40.98 (6m).
AB876, s. 7
7Section
7. 25.17 (1) (pd) of the statutes is created to read:
AB876,9,88
25.17
(1) (pd) Small employer catastrophic care program fund (s. 25.57);
AB876, s. 8
9Section
8. 25.57 of the statutes is created to read:
AB876,9,12
1025.57 Small employer catastrophic care program fund. There is
11established a separate nonlapsible trust fund designated as the small employer
12catastrophic care program fund, to consist of:
AB876,9,13
13(1) The moneys transferred under s. 20.145 (1) (g).
AB876,9,14
14(2) Insurer assessments established under s. 635.30 (3) (a) 2.
AB876,9,15
15(3) Provider assessments established under s. 635.30 (3) (a) 3.
AB876,9,16
16(4) Premiums established under s. 635.30 (3) (a) 4.
AB876, s. 9
17Section
9. 40.51 (6) of the statutes is renumbered 40.51 (6) (a) and amended
18to read:
AB876,9,2419
40.51
(6) (a)
This Except as provided in par. (b), the state shall offer to all of
20its employees at least 2 insured or uninsured health care coverage plans providing
21substantially equivalent hospital and medical benefits, including a health
22maintenance organization or a preferred provider plan, if those health care plans are
23determined by the group insurance board to be available in the area of the place of
24employment and are approved by the group insurance board.
AB876, s. 10
25Section
10. 40.51 (6) (b) of the statutes is created to read:
AB876,10,7
140.51
(6) (b) Notwithstanding s. 40.03 (6) (c), in addition to the health care
2coverage plans offered under par. (a), the state shall also offer to all of its employees
3a defined contribution plan that permits employees to choose the level of premiums,
4deductibles, and co-payments and to select the hospital and medical benefits offered
5under the plan, but only if the group insurance board determines that such a defined
6contribution plan is available in the area of the place of employment and approves
7the plan.
AB876, s. 11
8Section
11. 40.98 (2) (h) of the statutes is created to read:
AB876,10,149
40.98
(2) (h) The department may seek funding from any person for the
10payment of costs of designing, marketing, and contracting for or providing
11administrative services under the health care coverage program and for lapsing to
12the general fund any amount required under sub. (6m). Any moneys received by the
13department under this paragraph shall be credited to the appropriation account
14under s. 20.515 (2) (g).
AB876, s. 12
15Section
12. 40.98 (6m) of the statutes is created to read:
AB876,10,2416
40.98
(6m) The secretary of administration shall lapse from the appropriation
17under s. 20.515 (2) (g) to the general fund the amounts necessary to repay the loan
18under s. 601.34 when the secretary of administration, after consulting with the
19board, determines that funds in the appropriation under s. 20.515 (2) (g) are
20sufficient to make the lapse. The amounts that are required to be lapsed under s.
2120.515 (2) (g) shall equal the amount necessary to pay all principal and interest costs
22on the loan, less any amount that is lapsed to the general fund under s. 20.515 (2)
23(a) at the end of the 2001-03 fiscal biennium. The secretary of administration may
24lapse the amounts under s. 20.515 (2) (g) in installments.
AB876, s. 13
25Section
13. 149.12 (1) (intro.) of the statutes is amended to read:
AB876,11,8
1149.12
(1) (intro.) Except as provided in subs. (1m)
and, (2)
, and (4), the board
2or plan administrator shall certify as eligible a person who is covered by medicare
3because he or she is disabled under
42 USC 423, a person who submits evidence that
4he or she has tested positive for the presence of HIV, antigen or nonantigenic
5products of HIV
, or an antibody to HIV, a person who is an eligible individual, and
6any person who receives and submits any of the following based wholly or partially
7on medical underwriting considerations within 9 months prior to making application
8for coverage by the plan:
AB876, s. 14
9Section
14. 149.12 (4) of the statutes is created to read:
AB876,11,1710
149.12
(4) Notwithstanding subs. (1) to (3), the board may, in its discretion,
11certify as eligible for coverage under the plan a person who applies for coverage after
12his or her enrollment in the program under s. 635.30 is terminated under s. 635.30
13(4) (b), regardless of whether the person satisfies the eligibility requirements under
14subs. (1) to (3). The board shall determine whether a person who obtains coverage
15under the plan under this subsection and who does not satisfy the eligibility
16requirements under subs. (1) to (3) may remain covered under the plan after the
17program under s. 635.30 is no longer in operation.
AB876, s. 15
18Section
15. 149.14 (6) (a) of the statutes is amended to read:
AB876,11,2319
149.14
(6) (a) Except as provided in
par. pars. (b)
and (c), no person who obtains
20coverage under the plan may be covered for any preexisting condition during the first
216 months of coverage under the plan if the person was diagnosed or treated for that
22condition during the 6 months immediately preceding the filing of an application
23with the plan.