LRB-2476/5
PJK:kmg:rs
2003 - 2004 LEGISLATURE
February 16, 2004 - Introduced by Representatives Underheim, Gielow, Hahn,
Townsend, Bies, Miller, Albers, Johnsrud, Balow, Van Roy, Seratti
and
McCormick, cosponsored by Senators Roessler and Schultz. Referred to
Committee on Health.
AB840,2,6 1An Act to repeal 149.14 (3) (a) to (r), 149.14 (4), 149.14 (4c), 149.15 (3) (c), 149.15
2(3) (f), 149.15 (5) and 149.16; to renumber 149.143 (1) (bm) 1. and 149.143 (1)
3(bm) 2.; to renumber and amend 149.14 (3) (intro.); to amend 25.55 (3),
449.475 (2) (a) (intro.), 149.10 (3), 149.11, 149.115, 149.12 (1) (a), 149.12 (1) (am),
5149.12 (1) (b), 149.12 (1) (c), 149.12 (3) (c), 149.13 (1), 149.13 (3), 149.13 (4),
6149.14 (5) (d), 149.14 (5) (e), 149.14 (5m) (c), 149.14 (7) (b) and (c), 149.14 (8),
7149.142 (1), 149.143 (1) (intro.), 149.143 (1) (am), 149.143 (1) (bm) (intro.),
8149.143 (2) (a) (intro.), 149.143 (2) (a) 1. a., 149.143 (2) (a) 2., 149.143 (2) (a) 3.,
9149.143 (2) (a) 4., 149.143 (2) (b), 149.143 (2m) (a) (intro.), 149.143 (2m) (a) 2.,
10149.143 (2m) (b) 1., 149.143 (2m) (b) 2., 149.143 (2m) (b) 3., 149.143 (3) (a),
11149.143 (3) (a), 149.143 (3) (b), 149.143 (4), 149.143 (5) (a), 149.143 (5) (a),
12149.143 (5) (b), 149.144, 149.145, 149.145, 149.146 (1) (b), 149.146 (2) (a),
13149.146 (2) (am) 4., 149.146 (2) (am) 5., 149.146 (2) (b) (intro.), 149.146 (2) (b)
141., 149.146 (2) (b) 2., 149.15 (1), 149.165 (1), 149.165 (2), 149.165 (3) (a), 149.165

1(3) (b) (intro.), 149.17 (4), 149.175, 149.20, 149.25 (2) (a) and 149.25 (4); and to
2create
149.10 (5f), 149.10 (5r), 149.125, 149.132, 149.142 (3), 149.143 (1) (bm)
31m., 149.143 (1) (bm) 2m. (intro.), 149.143 (2m) (c), 149.15 (3) (b), 149.15 (3) (e),
4149.15 (4) (c), 149.15 (4) (d), 149.165 (3r) and 450.10 (2m) of the statutes;
5relating to: making various miscellaneous changes to the Health Insurance
6Risk-Sharing Plan, granting rule-making authority, and providing a penalty.
Analysis by the Legislative Reference Bureau
The Health Insurance Risk-Sharing Plan (HIRSP) provides major medical
health insurance coverage for persons who are covered under Medicare because they
are disabled, persons who have tested positive for human immunodeficiency virus,
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. Also eligible for coverage are persons who do not currently have health
insurance coverage, but who were covered under certain types of health insurance
coverage for at least 18 months in the past.
Premiums paid by covered persons fund 60 percent of the operating costs of
HIRSP and health insurer assessments and health care provider payment discounts
fund the remaining 40 percent of operating costs. HIRSP provides premium and
deductible subsidies for covered persons with annual household incomes below
$25,000. The subsidies are funded equally by health insurer assessments and health
care provider payment discounts. HIRSP is administered primarily by the
Department of Health and Family Services (DHFS), but a board of governors (board)
and a plan administrator also have certain responsibilities and powers with respect
to HIRSP administration.
This bill makes the following changes to HIRSP:
1. Under the bill, as a condition of coverage of their prescription drugs under
HIRSP, each drug manufacturer or labeler is required to pay an assessment that is
based on the total claims paid by HIRSP in the previous calendar year to pharmacies
and pharmacists for the manufacturer's or labeler's drugs. The assessment amount
for each claim is equal to the rebate amount that the manufacturer or labeler pays
for the drug under Medical Assistance. Under the bill, the 40 percent of HIRSP's
operating costs that remain after premiums are used to pay 60 percent of the costs
are first to be paid with the drug manufacturer and labeler assessments. The
remainder of the 40 percent of the costs are paid, in equal proportions, by the health
insurer assessments and the health care provider payment discounts. The bill allows
the Pharmacy Examining Board to assess a forfeiture of not more than $1,000 per
day against a drug manufacturer or labeler that fails to pay an assessment for
HIRSP.

2. The bill removes most of the administrative responsibilities from DHFS and
transfers them to the board. For example, under current law, DHFS may establish
different deductible amounts and a different coinsurance percentage from what is
provided in the statutes, while under the bill the board may do so; under current law,
DHFS must establish payment rates by adding an enhancement determined by
DHFS to the allowable charges under Medical Assistance, while under the bill the
board establishes the allowable charges in the same manner and must consult with
DHFS; under current law, DHFS establishes a program budget in consultation with
the board and may implement the budget only if it is approved by the board, while
under the bill the board establishes the program budget and must consult with
DHFS in deriving the provider payment rate; under current law, prior to each plan
year DHFS must estimate the operating and administrative costs of HIRSP and set
premiums, insurer assessment amounts, and provider payment rate discounts,
while under the bill the board performs these functions, as well as setting the drug
manufacturer and labeler assessment amounts; and under current law, DHFS is
required to promulgate rules for the operation of HIRSP and must consult with the
board before promulgating any rules related to HIRSP, while under the bill the board
is required to promulgate rules for the design and operation of HIRSP, consulting
with DHFS as necessary, and DHFS may promulgate a rule only if the board has
approved the proposed rule.
3. Under current law, the secretary of health and family services, or his or her
representative, is the chairperson of the board. The bill provides that the board will
annually select the chairperson. The bill also adds a representative of
Pharmaceutical Research and Manufacturers of America to the board, the members
of which are appointed by the secretary of health and family services.
4. Under current law, expenses covered under HIRSP and exclusions are set
out in the statutes. The bill eliminates those provisions and requires the board to
establish by rule the plan design, including covered expenses and exclusions.
5. Under current law, DHFS may select the plan administrator in a competitive
bidding process. The bill requires the board to select the plan administrator in a
competitive, request-for-proposals process and allows the board to contract with
other persons to provide professional services to the board and HIRSP.
6. The bill allows the board to establish for covered persons with annual
household incomes over $100,000 a separate schedule of premium rates that are
higher than the rates for other covered persons. The additional premium collected
must be used to further reduce the premiums paid by lower-income covered persons
who receive a subsidy for premiums and deductibles.
7. Under current law, a person is eligible for HIRSP coverage if he or she is
rejected for coverage by one or more insurers, has coverage canceled by one or more
insurers, or receives notice of a substantial reduction in coverage or a 50 percent
increase in premium. Under the bill, a person is eligible if he or she is rejected for
coverage by two or more insurers or if he or she is rejected for coverage by at least
one insurer in addition to having coverage canceled or reduced, or premiums
increased, by one or more insurers.

8. Under current law, a person is not eligible for coverage under HIRSP if he
or she is eligible for coverage provided by an employer. The bill requires DHFS to
verify information that an applicant provides about his or her employment and
whether health care coverage is available through that employment and to
periodically verify the information if the person receives coverage under HIRSP.
DHFS must maintain a data base with the information and submit a quarterly report
to the board on the information.
9. Finally, the bill requires that any federal grant moneys received by the state
under the Trade Adjustment Assistance Reform Act of 2002 be used for HIRSP to pay
plan costs before any costs are paid with premiums or insurer and drug
manufacturer and labeler assessments and provider payment discounts.
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:
AB840, s. 1 1Section 1. 25.55 (3) of the statutes is amended to read:
AB840,4,32 25.55 (3) Insurer and drug manufacturer and labeler assessments under ch.
3149.
AB840, s. 2 4Section 2. 49.475 (2) (a) (intro.) of the statutes is amended to read:
AB840,4,85 49.475 (2) (a) (intro.) Information that the department needs to identify
6beneficiaries of medical assistance, and persons applying for coverage or who are
7covered under the Health Insurance Risk-Sharing Plan under ch. 149,
who satisfy
8any of the following:
AB840, s. 3 9Section 3. 149.10 (3) of the statutes is amended to read:
AB840,4,1210 149.10 (3) "Eligible person" means a resident of this state who qualifies under
11s. 149.12 whether or not the person is legally responsible for the payment of medical
12expenses incurred on the person's behalf.
AB840, s. 4 13Section 4. 149.10 (5f) of the statutes is created to read:
AB840,5,214 149.10 (5f) "Labeler" means a person that receives prescription drugs from a
15manufacturer or wholesaler and repackages those drugs for later retail sale and that

1has a labeler code issued by the federal food and drug administration under 21 CFR
2207.20
(b).
AB840, s. 5 3Section 5. 149.10 (5r) of the statutes is created to read:
AB840,5,64 149.10 (5r) "Manufacturer" means a person engaged in the production,
5preparation, propagation, compounding, conversion, or processing of prescription
6drugs.
AB840, s. 6 7Section 6. 149.11 of the statutes is amended to read:
AB840,5,13 8149.11 Operation of plan. The department board shall promulgate rules for
9the design and operation of a plan of health insurance coverage for an eligible person
10which
persons that satisfies the requirements of this chapter. The board shall
11consult with the department as necessary in promulgating the rules under this
12section. The department shall provide the board with the support necessary for the
13board to carry out its responsibilities under this chapter.
AB840, s. 7 14Section 7. 149.115 of the statutes is amended to read:
AB840,5,19 15149.115 Rules relating to creditable coverage. The commissioner, in
16consultation with the department and the board, shall promulgate rules that specify
17how creditable coverage is to be aggregated for purposes of s. 149.10 (2t) (a) and that
18determine the creditable coverage to which s. 149.10 (2t) (b) and (d) applies. The
19rules shall comply with section 2701 (c) of P.L. 104-191.
AB840, s. 8 20Section 8. 149.12 (1) (a) of the statutes is amended to read:
AB840,5,2121 149.12 (1) (a) A notice of rejection of coverage from one 2 or more insurers.
AB840, s. 9 22Section 9. 149.12 (1) (am) of the statutes is amended to read:
AB840,5,2423 149.12 (1) (am) A notice of rejection of coverage from one or more insurers and
24a notice of
cancellation of coverage from one or more insurers.
AB840, s. 10 25Section 10. 149.12 (1) (b) of the statutes is amended to read:
AB840,6,5
1149.12 (1) (b) A notice of rejection of coverage from one or more insurers and
2a notice of
reduction or limitation of coverage, including restrictive riders, from an
3insurer if the effect of the reduction or limitation is to substantially reduce coverage
4substantially compared to the coverage available to a person considered a standard
5risk for the type of coverage provided by the plan.
AB840, s. 11 6Section 11. 149.12 (1) (c) of the statutes is amended to read:
AB840,6,107 149.12 (1) (c) A notice of rejection of coverage from one or more insurers and
8a notice of
increase in premium exceeding the premium then in effect for the insured
9person by 50% 50 percent or more, unless the increase applies to substantially all of
10the insurer's health insurance policies then in effect.
AB840, s. 12 11Section 12. 149.12 (3) (c) of the statutes is amended to read:
AB840,6,1412 149.12 (3) (c) The department board may promulgate rules specifying other
13deductible or coinsurance amounts that, if paid or reimbursed for persons, will not
14make the persons ineligible for coverage under the plan.
AB840, s. 13 15Section 13. 149.125 of the statutes is created to read:
AB840,6,21 16149.125 Employment verification; maintenance of data; report. (1) In
17determining a person's initial and continued eligibility, the department shall verify,
18at the time that the person applies for coverage and periodically thereafter,
19information submitted by the person about his or her employment and whether
20creditable coverage is available to the person. The department shall use information
21obtained under s. 49.475 for verification purposes under this subsection.
AB840,6,25 22(2) The department shall maintain and regularly update a computer data base
23with information about eligible persons that includes employment status and
24economic and demographic information. The department shall submit a quarterly
25report to the board on the information contained in the data base.
AB840, s. 14
1Section 14. 149.13 (1) of the statutes is amended to read:
AB840,7,62 149.13 (1) Every insurer shall participate in the cost of administering the plan,
3except that the commissioner may by rule exempt as a class those insurers whose
4share as determined under sub. (2) would be so minimal as to not to exceed the
5estimated cost of levying the assessment. The commissioner shall advise the
6department board of the insurers participating in the cost of administering the plan.
AB840, s. 15 7Section 15. 149.13 (3) of the statutes is amended to read:
AB840,7,128 149.13 (3) (a) Each insurer's proportion of participation under sub. (2) shall be
9determined annually by the commissioner based on annual statements and other
10reports filed by the insurer with the commissioner. The commissioner shall assess
11an insurer for the insurer's proportion of participation based on the total
12assessments estimated by the department board under s. 149.143 (2) (a) 3.
AB840,7,1913 (b) If the department or the, commissioner, or board finds that the
14commissioner's authority to require insurers to report under chs. 600 to 646 and 655
15is not adequate to permit the department, the commissioner, or the board to carry out
16the department's, commissioner's, or board's responsibilities under this chapter, the
17commissioner shall promulgate rules requiring insurers to report the information
18necessary for the department, commissioner, and board to make the determinations
19required under this chapter.
AB840, s. 16 20Section 16. 149.13 (4) of the statutes is amended to read:
AB840,7,2421 149.13 (4) Notwithstanding subs. (1) to (3), the department, with the
22agreement of the commissioner and the board, may perform various administrative
23functions related to the assessment of insurers participating in the cost of
24administering the plan.
AB840, s. 17 25Section 17. 149.132 of the statutes is created to read:
AB840,8,8
1149.132 Participation of manufacturers and labelers. (1) As a condition
2of coverage under the plan of the prescription drugs of a manufacturer or labeler, the
3manufacturer or labeler shall pay an assessment on the total claims that the plan
4paid, in the previous calendar year, to pharmacists and pharmacies for the
5prescription drugs of the manufacturer or labeler. The assessment amount per claim
6shall be equal to the rebate paid under the Medical Assistance program by the
7manufacturer or labeler for the prescription drug that is the subject of the claim, not
8including any rebate under s. 49.45 (49m) (c) 2.
AB840,8,13 9(2) The plan administrator shall notify each manufacturer and each labeler of
10the amount paid by the plan in claims for the prescription drugs of each
11manufacturer and labeler and shall advise the board and the department of the
12amounts. The department shall levy and collect the assessments and deposit the
13amounts collected in the health insurance risk-sharing plan fund.
AB840, s. 18 14Section 18. 149.14 (3) (intro.) of the statutes is renumbered 149.14 (3) and
15amended to read:
AB840,9,316 149.14 (3) Covered expenses. Except as provided in sub. (4), except as
17restricted by cost containment provisions under s. 149.17 (4) and except as reduced
18by the department board under ss. 149.143 and 149.144, covered expenses for the
19coverage under this section shall be the payment rates established by the
20department
under s. 149.142 for the services provided by persons licensed under ch.
21446 and certified under s. 49.45 (2) (a) 11. Except as provided in sub. (4), except as
22restricted by cost containment provisions under s. 149.17 (4) and except as reduced
23by the department board under ss. 149.143 and 149.144, covered expenses for the
24coverage under this section shall also be the payment rates established by the
25department
under s. 149.142 for the following services and articles specified by the

1board
if the service or article is prescribed by a physician who is licensed under ch.
2448 or in another state and who is certified under s. 49.45 (2) (a) 11. and if the service
3or article is provided by a provider certified under s. 49.45 (2) (a) 11.:
AB840, s. 19 4Section 19. 149.14 (3) (a) to (r) of the statutes are repealed.
AB840, s. 20 5Section 20. 149.14 (4) of the statutes is repealed.
AB840, s. 21 6Section 21. 149.14 (4c) of the statutes is repealed.
AB840, s. 22 7Section 22. 149.14 (5) (d) of the statutes is amended to read:
AB840,9,128 149.14 (5) (d) Notwithstanding pars. (a) to (c), the department board may
9establish different deductible amounts, a different coinsurance percentage, and
10different covered costs and deductible aggregate amounts from those specified in
11pars. (a) to (c) in accordance with cost containment provisions established by the
12department board under s. 149.17 (4).
AB840, s. 23 13Section 23. 149.14 (5) (e) of the statutes, as affected by 2003 Wisconsin Act 33,
14is amended to read:
AB840,9,2515 149.14 (5) (e) Subject to sub. (8) (b), the department board may, by rule under
16s. 149.17 (4), establish for prescription drug coverage under sub. (3) (d) this section
17copayment amounts, coinsurance rates, and copayment and coinsurance
18out-of-pocket limits over which the plan will pay 100% 100 percent of covered costs
19under sub. (3) (d) for prescription drugs. The department board may provide
20subsidies for prescription drug copayment amounts paid by eligible persons under
21s. 149.165 (2) (a) 1. to 5. Any copayment amount, coinsurance rate, or out-of-pocket
22limit established under this paragraph is subject to the approval of the board.

23Copayments and coinsurance paid by an eligible person under this paragraph are
24separate from and do not count toward the deductible and covered costs not paid by
25the plan under pars. (a) to (c).
AB840, s. 24
1Section 24. 149.14 (5m) (c) of the statutes is amended to read:
AB840,10,32 149.14 (5m) (c) Other economic factors that the department and the board
3consider considers relevant.
AB840, s. 25 4Section 25. 149.14 (7) (b) and (c) of the statutes are amended to read:
AB840,10,85 149.14 (7) (b) The department board has a cause of action against an eligible
6participant person for the recovery of the amount of benefits paid which that are not
7for covered expenses under the plan. Benefits under the plan may be reduced or
8refused as a setoff against any amount recoverable under this paragraph.
AB840,10,129 (c) The department board is subrogated to the rights of an eligible person to
10recover special damages for illness or injury to the person caused by the act of a 3rd
11person to the extent that benefits are provided under the plan. Section 814.03 (3)
12applies to the department board under this paragraph.
AB840, s. 26 13Section 26. 149.14 (8) of the statutes is amended to read:
AB840,10,1914 149.14 (8) Applicability of medical assistance provisions. (a) Except as
15provided in par. (b), the department board may, by rule under s. 149.17 (4), apply to
16the plan the same utilization and cost control procedures that apply under rules
17promulgated by the department to medical assistance under subch. IV of ch. 49. The
18board shall consult with the department as necessary in the application of the
19utilization and cost control procedures specified in this paragraph
.
AB840,10,2220 (b) The department board may not apply to eligible persons for covered services
21or articles the same copayments that apply to recipients of medical assistance under
22subch. IV of ch. 49
for services or articles covered under that program.
AB840, s. 27 23Section 27. 149.142 (1) of the statutes is amended to read:
AB840,11,824 149.142 (1) (a) Except as provided in par. (b), the department board shall
25establish payment rates for covered expenses that consist of the allowable charges

1paid under s. 49.46 (2) for the services and articles provided plus an enhancement
2determined by the department board. The rates shall be based on the allowable
3charges paid under s. 49.46 (2), projected plan costs, and trend factors. Using the
4same methodology that applies to medical assistance under subch. IV of ch. 49, the
5department board shall establish hospital outpatient per visit reimbursement rates
6and hospital inpatient reimbursement rates that are specific to diagnostically
7related groups of eligible persons. The board shall consult with the department in
8establishing the payment and reimbursement rates under this paragraph.
Loading...
Loading...