AB840: Bill Text

LRB-2476/5

PJK:kmg:rs

2003 - 2004 LEGISLATURE

2003 Assembly BILL 840

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 An Act to repeal 149.14 (3) (a) to (r), 149.14 (4), 149.14 (4c), 149.15 (3) (c), 149.15 (3) (f), 149.15 (5) and 149.16; to renumber 149.143 (1) (bm) 1. and 149.143 (1) (bm) 2.; to renumber and amend 149.14 (3) (intro.); to amend 25.55 (3), 49.475 (2) (a) (intro.), 149.10 (3), 149.11, 149.115, 149.12 (1) (a), 149.12 (1) (am), 149.12 (1) (b), 149.12 (1) (c), 149.12 (3) (c), 149.13 (1), 149.13 (3), 149.13 (4), 149.14 (5) (d), 149.14 (5) (e), 149.14 (5m) (c), 149.14 (7) (b) and (c), 149.14 (8), 149.142 (1), 149.143 (1) (intro.), 149.143 (1) (am), 149.143 (1) (bm) (intro.), 149.143 (2) (a) (intro.), 149.143 (2) (a) 1. a., 149.143 (2) (a) 2., 149.143 (2) (a) 3., 149.143 (2) (a) 4., 149.143 (2) (b), 149.143 (2m) (a) (intro.), 149.143 (2m) (a) 2., 149.143 (2m) (b) 1., 149.143 (2m) (b) 2., 149.143 (2m) (b) 3., 149.143 (3) (a), 149.143 (3) (a), 149.143 (3) (b), 149.143 (4), 149.143 (5) (a), 149.143 (5) (a), 149.143 (5) (b), 149.144, 149.145, 149.145, 149.146 (1) (b), 149.146 (2) (a), 149.146 (2) (am) 4., 149.146 (2) (am) 5., 149.146 (2) (b) (intro.), 149.146 (2) (b) 1., 149.146 (2) (b) 2., 149.15 (1), 149.165 (1), 149.165 (2), 149.165 (3) (a), 149.165 (3) (b) (intro.), 149.17 (4), 149.175, 149.20, 149.25 (2) (a) and 149.25 (4); and to create 149.10 (5f), 149.10 (5r), 149.125, 149.132, 149.142 (3), 149.143 (1) (bm) 1m., 149.143 (1) (bm) 2m. (intro.), 149.143 (2m) (c), 149.15 (3) (b), 149.15 (3) (e), 149.15 (4) (c), 149.15 (4) (d), 149.165 (3r) and 450.10 (2m) of the statutes; relating to: making various miscellaneous changes to the Health Insurance Risk-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 Section 1. 25.55 (3) of the statutes is amended to read:

AB840,4,3 25.55 (3) Insurer and drug manufacturer and labeler assessments under ch. 149.

AB840, s. 2 Section 2. 49.475 (2) (a) (intro.) of the statutes is amended to read:

AB840,4,8 49.475 (2) (a) (intro.) Information that the department needs to identify beneficiaries of medical assistance, and persons applying for coverage or who are covered under the Health Insurance Risk-Sharing Plan under ch. 149, who satisfy any of the following:

AB840, s. 3 Section 3. 149.10 (3) of the statutes is amended to read:

AB840,4,12 149.10 (3) "Eligible person" means a resident of this state who qualifies under s. 149.12 whether or not the person is legally responsible for the payment of medical expenses incurred on the person's behalf.

AB840, s. 4 Section 4. 149.10 (5f) of the statutes is created to read:

AB840,5,2 149.10 (5f) "Labeler" means a person that receives prescription drugs from a manufacturer or wholesaler and repackages those drugs for later retail sale and that has a labeler code issued by the federal food and drug administration under 21 CFR 207.20 (b).

AB840, s. 5 Section 5. 149.10 (5r) of the statutes is created to read:

AB840,5,6 149.10 (5r) "Manufacturer" means a person engaged in the production, preparation, propagation, compounding, conversion, or processing of prescription drugs.

AB840, s. 6 Section 6. 149.11 of the statutes is amended to read:

AB840,5,13 149.11 Operation of plan. The department board shall promulgate rules for the design and operation of a plan of health insurance coverage for an eligible person which persons that satisfies the requirements of this chapter. The board shall consult with the department as necessary in promulgating the rules under this section. The department shall provide the board with the support necessary for the board to carry out its responsibilities under this chapter.

AB840, s. 7 Section 7. 149.115 of the statutes is amended to read:

AB840,5,19 149.115 Rules relating to creditable coverage. The commissioner, in consultation with the department and the board, shall promulgate rules that specify how creditable coverage is to be aggregated for purposes of s. 149.10 (2t) (a) and that determine the creditable coverage to which s. 149.10 (2t) (b) and (d) applies. The rules shall comply with section 2701 (c) of P.L. 104-191.

AB840, s. 8 Section 8. 149.12 (1) (a) of the statutes is amended to read:

AB840,5,21 149.12 (1) (a) A notice of rejection of coverage from one 2 or more insurers.

AB840, s. 9 Section 9. 149.12 (1) (am) of the statutes is amended to read:

AB840,5,24 149.12 (1) (am) A notice of rejection of coverage from one or more insurers and a notice of cancellation of coverage from one or more insurers.

AB840, s. 10 Section 10. 149.12 (1) (b) of the statutes is amended to read:

AB840,6,5 149.12 (1) (b) A notice of rejection of coverage from one or more insurers and a notice of reduction or limitation of coverage, including restrictive riders, from an insurer if the effect of the reduction or limitation is to substantially reduce coverage substantially compared to the coverage available to a person considered a standard risk for the type of coverage provided by the plan.

AB840, s. 11 Section 11. 149.12 (1) (c) of the statutes is amended to read:

AB840,6,10 149.12 (1) (c) A notice of rejection of coverage from one or more insurers and a notice of increase in premium exceeding the premium then in effect for the insured person by 50% 50 percent or more, unless the increase applies to substantially all of the insurer's health insurance policies then in effect.

AB840, s. 12 Section 12. 149.12 (3) (c) of the statutes is amended to read:

AB840,6,14 149.12 (3) (c) The department board may promulgate rules specifying other deductible or coinsurance amounts that, if paid or reimbursed for persons, will not make the persons ineligible for coverage under the plan.

AB840, s. 13 Section 13. 149.125 of the statutes is created to read:

AB840,6,21 149.125 Employment verification; maintenance of data; report. (1) In determining a person's initial and continued eligibility, the department shall verify, at the time that the person applies for coverage and periodically thereafter, information submitted by the person about his or her employment and whether creditable coverage is available to the person. The department shall use information obtained under s. 49.475 for verification purposes under this subsection.

AB840,6,25 (2) The department shall maintain and regularly update a computer data base with information about eligible persons that includes employment status and economic and demographic information. The department shall submit a quarterly report to the board on the information contained in the data base.

AB840, s. 14 Section 14. 149.13 (1) of the statutes is amended to read:

AB840,7,6 149.13 (1) Every insurer shall participate in the cost of administering the plan, except that the commissioner may by rule exempt as a class those insurers whose share as determined under sub. (2) would be so minimal as to not to exceed the estimated cost of levying the assessment. The commissioner shall advise the department board of the insurers participating in the cost of administering the plan.

AB840, s. 15 Section 15. 149.13 (3) of the statutes is amended to read:

AB840,7,12 149.13 (3) (a) Each insurer's proportion of participation under sub. (2) shall be determined annually by the commissioner based on annual statements and other reports filed by the insurer with the commissioner. The commissioner shall assess an insurer for the insurer's proportion of participation based on the total assessments estimated by the department board under s. 149.143 (2) (a) 3.

AB840,7,19 (b) If the department or the, commissioner, or board finds that the commissioner's authority to require insurers to report under chs. 600 to 646 and 655 is not adequate to permit the department, the commissioner, or the board to carry out the department's, commissioner's, or board's responsibilities under this chapter, the commissioner shall promulgate rules requiring insurers to report the information necessary for the department, commissioner, and board to make the determinations required under this chapter.

AB840, s. 16 Section 16. 149.13 (4) of the statutes is amended to read:

AB840,7,24 149.13 (4) Notwithstanding subs. (1) to (3), the department, with the agreement of the commissioner and the board, may perform various administrative functions related to the assessment of insurers participating in the cost of administering the plan.

AB840, s. 17 Section 17. 149.132 of the statutes is created to read:

AB840,8,8 149.132 Participation of manufacturers and labelers. (1) As a condition of coverage under the plan of the prescription drugs of a manufacturer or labeler, the manufacturer or labeler shall pay an assessment on the total claims that the plan paid, in the previous calendar year, to pharmacists and pharmacies for the prescription drugs of the manufacturer or labeler. The assessment amount per claim shall be equal to the rebate paid under the Medical Assistance program by the manufacturer or labeler for the prescription drug that is the subject of the claim, not including any rebate under s. 49.45 (49m) (c) 2.

AB840,8,13 (2) The plan administrator shall notify each manufacturer and each labeler of the amount paid by the plan in claims for the prescription drugs of each manufacturer and labeler and shall advise the board and the department of the amounts. The department shall levy and collect the assessments and deposit the amounts collected in the health insurance risk-sharing plan fund.

AB840, s. 18 Section 18. 149.14 (3) (intro.) of the statutes is renumbered 149.14 (3) and amended to read:

AB840,9,3 149.14 (3) Covered expenses. Except as provided in sub. (4), except as restricted by cost containment provisions under s. 149.17 (4) and except as reduced by the department board under ss. 149.143 and 149.144, covered expenses for the coverage under this section shall be the payment rates established by the department under s. 149.142 for the services provided by persons licensed under ch. 446 and certified under s. 49.45 (2) (a) 11. Except as provided in sub. (4), except as restricted by cost containment provisions under s. 149.17 (4) and except as reduced by the department board under ss. 149.143 and 149.144, covered expenses for the coverage under this section shall also be the payment rates established by the department under s. 149.142 for the following services and articles specified by the board if the service or article is prescribed by a physician who is licensed under ch. 448 or in another state and who is certified under s. 49.45 (2) (a) 11. and if the service or article is provided by a provider certified under s. 49.45 (2) (a) 11.:

AB840, s. 19 Section 19. 149.14 (3) (a) to (r) of the statutes are repealed.

AB840, s. 20 Section 20. 149.14 (4) of the statutes is repealed.

AB840, s. 21 Section 21. 149.14 (4c) of the statutes is repealed.

AB840, s. 22 Section 22. 149.14 (5) (d) of the statutes is amended to read:

AB840,9,12 149.14 (5) (d) Notwithstanding pars. (a) to (c), the department board may establish different deductible amounts, a different coinsurance percentage, and different covered costs and deductible aggregate amounts from those specified in pars. (a) to (c) in accordance with cost containment provisions established by the department board under s. 149.17 (4).

AB840, s. 23 Section 23. 149.14 (5) (e) of the statutes, as affected by 2003 Wisconsin Act 33, is amended to read:

AB840,9,25 149.14 (5) (e) Subject to sub. (8) (b), the department board may, by rule under s. 149.17 (4), establish for prescription drug coverage under sub. (3) (d) this section copayment amounts, coinsurance rates, and copayment and coinsurance out-of-pocket limits over which the plan will pay 100% 100 percent of covered costs under sub. (3) (d) for prescription drugs. The department board may provide subsidies for prescription drug copayment amounts paid by eligible persons under s. 149.165 (2) (a) 1. to 5. Any copayment amount, coinsurance rate, or out-of-pocket limit established under this paragraph is subject to the approval of the board. Copayments and coinsurance paid by an eligible person under this paragraph are separate from and do not count toward the deductible and covered costs not paid by the plan under pars. (a) to (c).

AB840, s. 24 Section 24. 149.14 (5m) (c) of the statutes is amended to read:

AB840,10,3 149.14 (5m) (c) Other economic factors that the department and the board consider considers relevant.

AB840, s. 25 Section 25. 149.14 (7) (b) and (c) of the statutes are amended to read:

AB840,10,8 149.14 (7) (b) The department board has a cause of action against an eligible participant person for the recovery of the amount of benefits paid which that are not for covered expenses under the plan. Benefits under the plan may be reduced or refused as a setoff against any amount recoverable under this paragraph.

AB840,10,12 (c) The department board is subrogated to the rights of an eligible person to recover special damages for illness or injury to the person caused by the act of a 3rd person to the extent that benefits are provided under the plan. Section 814.03 (3) applies to the department board under this paragraph.

AB840, s. 26 Section 26. 149.14 (8) of the statutes is amended to read:

AB840,10,19 149.14 (8) Applicability of medical assistance provisions. (a) Except as provided in par. (b), the department board may, by rule under s. 149.17 (4), apply to the plan the same utilization and cost control procedures that apply under rules promulgated by the department to medical assistance under subch. IV of ch. 49. The board shall consult with the department as necessary in the application of the utilization and cost control procedures specified in this paragraph.

AB840,10,22 (b) The department board may not apply to eligible persons for covered services or articles the same copayments that apply to recipients of medical assistance under subch. IV of ch. 49 for services or articles covered under that program.

AB840, s. 27 Section 27. 149.142 (1) of the statutes is amended to read:

AB840,11,8 149.142 (1) (a) Except as provided in par. (b), the department board shall establish payment rates for covered expenses that consist of the allowable charges paid under s. 49.46 (2) for the services and articles provided plus an enhancement determined by the department board. The rates shall be based on the allowable charges paid under s. 49.46 (2), projected plan costs, and trend factors. Using the same methodology that applies to medical assistance under subch. IV of ch. 49, the department board shall establish hospital outpatient per visit reimbursement rates and hospital inpatient reimbursement rates that are specific to diagnostically related groups of eligible persons. The board shall consult with the department in establishing the payment and reimbursement rates under this paragraph.