SB562: Bill Text

LRB-2885/3

PJK/RAC/MES/JK:jld:nwn

2007 - 2008 LEGISLATURE

2007 Senate BILL 562

March 5, 2008 - Introduced by Senator Erpenbach. Referred to Committee on Health, Human Services, Insurance, and Job Creation.

SB562,2,8 An Act to repeal 40.05 (4) (ar), 609.01 (7), 609.10, 609.20 (1m) (c), 609.20 (1m) (d), 628.36 (4) (b) 1., 628.36 (4) (b) 2. and 628.36 (4) (b) 3.; to renumber and amend 40.51 (6) and 62.61; to amend 13.172 (1), 13.48 (13) (a), 13.62 (2), 13.95 (intro.), 16.002 (2), 16.004 (4), 16.004 (5), 16.004 (12) (a), 16.045 (1) (a), 16.41 (4), 16.417 (1) (a), 16.52 (7), 16.528 (1) (a), 16.53 (2), 16.54 (9) (a) 1., 16.70 (2), 16.765 (1), 16.765 (2), 16.765 (4), 16.765 (5), 16.765 (6), 16.765 (7) (intro.), 16.765 (7) (d), 16.765 (8), 16.85 (2), 16.865 (8), 40.05 (4) (ag) (intro.), 40.05 (4) (b), 40.05 (4) (be), 40.51 (1), 40.51 (2), 40.51 (7), 40.51 (8), 40.51 (8m), 40.52 (1) (intro.), 40.52 (2), 40.98 (2) (a) 1., 49.473 (2) (c), 49.68 (3) (d) 1., 49.683 (3), 49.685 (6) (b), 59.52 (11) (c), 60.23 (25), 66.0137 (4), 66.0137 (4m) (b), 66.0137 (5), 71.26 (1) (be), 77.54 (9a) (a), 100.45 (1) (dm), 111.70 (1) (dm), 111.70 (4) (cm) 8s., 120.13 (2) (b), 120.13 (2) (g), 230.03 (3), 285.59 (1) (b), 628.36 (4) (a) (intro.), 632.87 (5), 632.895 (10) (a), 632.895 (11) (a) (intro.), 632.895 (11) (c) 1., 632.895 (11) (d), 632.895 (12) (b) (intro.), 632.895 (12) (c), 632.895 (13) (a), 632.895 (13) (b), 632.895 (14) (b) and 632.895 (14) (c); and to create 13.94 (1) (dj), 13.94 (1s) (c) 5., 16.004 (7d), 16.004 (7h), 20.855 (4m), 25.17 (1) (gd), 25.775, 40.05 (4) (a) 4., 40.05 (4g) (d), 40.51 (6) (b), 40.52 (1m), 49.45 (54), 49.687 (1m) (d), 62.61 (1) (b), 70.11 (41p), 109.075 (9), 111.91 (2) (pt), 149.12 (2) (em), chapter 260, 632.895 (8) (f) 4., 632.895 (9) (d) 4., 632.895 (10) (b) 6., 632.895 (11) (e) 3. and 632.895 (14) (d) 7. of the statutes; relating to: the establishment of the Healthy Wisconsin Plan and the Healthy Wisconsin Authority, granting rule-making authority, and making an appropriation.

Analysis by the Legislative Reference Bureau

Healthy Wisconsin Authority and Plan

This bill creates the Healthy Wisconsin Authority (HWA), a public body corporate and politic that is created by state law but that is not a state agency. HWA is governed by a board of trustees (board) consisting of, as nonvoting members, the secretary of employee trust funds and four members of a health care advisory committee created in the bill, and all of the following voting members, nominated by the governor and with the advice and consent of the senate appointed, for staggered six-year terms: four members selected from a list of names submitted by statewide labor or union coalitions; four members selected from a list of names submitted by statewide business and employer organizations; one member selected from a list of names submitted by statewide public school teacher labor organizations; one member selected from a list of names submitted by statewide small business organizations; two members who are farmers, selected from a list of names submitted by statewide general farm organizations; one member who is a self-employed person; and three members selected from a list of names submitted by statewide health care consumer organizations.

Because HWA is not a state agency, numerous laws that apply to state agencies do not apply to HWA. However, HWA is treated like a state agency in the following respects, among others: 1) it is generally subject to the open records and open meetings laws; 2) it is treated like a state agency for purposes of the law regulating lobbying; 3) it is exempt from income tax, sales and use tax, and property taxes; 4) the Code of Ethics for Public Officials and Employees covers HWA; and 5) it is subject to auditing by the Legislative Audit Bureau.

HWA is unlike a state agency in many other ways, including: 1) it may approve its own budget without going through the state budgetary process; 2) its employees are not state employees, are not included in the state system of personnel management, and are hired outside the state hiring system; and 3) it is not subject to statutory rule-making procedures, including requirements for legislative review of proposed rules. Unlike most other authorities, HWA may not issue bonds.

HWA must establish and administer a health care plan (plan), known as Healthy Wisconsin, for all eligible persons in the state. HWA must establish an office of outreach, enrollment, and advocacy to perform outreach services to enroll persons in the plan, to assist persons in choosing their health care coverage options, to act as an advocate for plan participants, and to provide information to the public, agencies, and legislators regarding the plan. HWA also must establish a health care advisory committee to advise HWA on various health matters, such as promoting healthier lifestyles, disease management, increasing transparency in health care cost and quality information, reducing health care costs, and confidentiality of medical information. The committee is comprised of the following members: at least one member each designated by the Wisconsin Medical Society, Inc., the Wisconsin Academy of Family Physicians, and the Wisconsin Hospital Association, Inc.; one member each designated by the president of the Board of Regents of the University of Wisconsin System, the president of the Medical College of Wisconsin, the Wisconsin Dental Association, and statewide organizations interested in mental health issues; two members designated by the Wisconsin Nurses Association, the Wisconsin Federation of Nurses and Health Professionals, and the Service Employees International Union; one member representing health care administrators; and one member representing health care professionals.

Plan eligibility

A person is eligible to participate in the plan if he or she has maintained his or her place of permanent abode in this state for at least 12 months, maintains a substantial presence in this state, is under 65 years of age, is not eligible for health care coverage from the federal or a foreign government, is not an inmate of a penal facility or confined in or committed to an institution for the mentally ill or developmentally disabled, and, unless a federal waiver is granted and in effect, is not eligible for a Medical Assistance (MA) program, including the BadgerCare Plus program, unless the MA program or an eligibility category under an MA program is not receiving federal matching funds for the benefits under the program or category. Under the bill, the Department of Health and Family Services (DHFS) is required to request a federal waiver allowing those eligible for MA to participate in the plan. Persons who are gainfully employed in the state and pregnant women who reside in this state are also eligible for the plan if they meet all of the eligibility criteria except that they have not maintained a permanent abode in this state for at least 12 months. Children under the age of 18 years who reside in this state with parents who have not maintained a permanent abode in this state for at least 12 months are also eligible regardless of how long they have lived in the state if they meet the other eligibility criteria.

Benefits and cost sharing

The plan must provide the same benefits that were in effect as of January 1, 2008, under the state employee health benefit plan. The board may adjust the benefits to provide additional cost-effective treatment options that would reduce health care costs, avoid health risks, or result in better health outcomes. In addition, the plan must cover preventive dental care for children up to 18 years of age and must cover mental health services and alcohol and other drug abuse treatment to the same extent as the plan covers treatment for physical conditions. Generally, except for prescription drugs to which a deductible applies, and except for copayments for drugs, the board assumes the risk for and pays directly for prescription drugs provided to participants. The board is directed to replicate the prescription drug buying system developed by the Group Insurance Board for prescription drug coverage for state employees, and may join with other states to form a multistate purchasing group to negotiate with prescription drug manufacturers for reduced prices.

Certain specified preventive services, such as prenatal care, preventive dental care for children, and medically appropriate colonoscopies and gynecological exams, are covered without any cost sharing. Except for those specified preventive services, copayments during a year are $20 for medical and hospital and related services for persons who are at least 18 years of age on January 1 of that year. Certain other services, such as inappropriate emergency room use, have higher copayments. All persons, regardless of age, must pay copayments of $5 for generic prescription drugs, $15 for brand-name prescription drugs on the formulary determined by the board, and $40 for brand-name prescription drugs not on the formulary.

There is no deductible during a year for persons who are under age 18 on January 1 of that year. Persons who are at least 18 years of age on January 1 of a year must pay a deductible of $300 during that year, but the deductible amount is limited to $600 per year for families with two or more persons who are at least 18 years of age on January 1 of that year. The maximum out-of-pocket amount for copayments, coinsurance, and deductibles is $2,000 a year for a person who is at least 18 years of age on January 1 of that year, but not more than $3,000 a year for a family consisting of two or more persons.

The bill contains certain requirements for providers with respect to charging interest on deductible amounts not paid, providing services to persons who have not paid a deductible amount, and charging for services to which a deductible applies.

Choice of health care network or fee-for-service option

Under the bill, the board may establish areas in the state for the purpose of receiving bids from health care networks. In each area designated by the board, the plan must offer participants two options for the delivery of their health care services: a fee-for-service option and a health care network (network) option. Annually, the board must solicit bids from networks, which are defined in the bill as a provider-driven, coordinated group of health care providers and facilities. Only qualifying networks may be selected to provide services in an area. The bill specifies various criteria related to a network's organization and provision of services that a network must satisfy to be qualifying. On the basis of the bids and other information submitted by the networks, the board must certify which networks are qualifying, and then classify the certified networks according to price and quality measures as the lowest-cost network, low-cost networks, and higher-cost networks.

During annual open enrollment periods, plan participants may select a fee-for-service option or a certified network for the delivery of their health care. Participants who do not make a selection are assigned randomly to the lowest-cost network or a low-cost network, or to a fee-for-service option that is the lowest-cost option. In addition, a participant who selects a higher-cost network or a fee-for-service option and who fails to pay any required additional premium amount will be assigned randomly to the lowest-cost network or a low-cost network, or to a fee-for-service option that is the lowest-cost option. Each participant must select a primary care provider who is responsible for overseeing all of the participant's care.

On behalf of a participant who selects a network classified as the lowest-cost network or a low-cost network, the board pays to the network on a monthly basis the amount that the network bid, and the participant pays no additional amount as premium. On behalf of a participant who chooses a network classified as a higher-cost network, the board pays to the network on a monthly basis the amount that was bid by the lowest-cost network, and the participant must pay the difference between what the network bid and the amount that the board pays.

The board establishes provider payment rates for services provided under a fee-for-service option. A provider that provides services to a participant who has selected a fee-for-service option must accept the rate established by the board as the full payment and may not charge the participant any amount by which the provider's charge has been reduced. In addition to establishing provider payment rates, the board, with the assistance of actuarial consultants, establishes the monthly risk-adjusted cost of the fee-for-service option and classifies the fee-for-service option in the same manner as networks are classified. A participant who selects a fee-for-service option that is classified as a higher-cost choice must pay an additional amount, which is capped in the bill, that is based on the classification of the fee-for-service option chosen by the participant and the number of certified low-cost networks available to the participant. There is no additional cost to a participant who chooses a fee-for-service option if the board determines that there are no low-cost networks available to the participant.

Assessments on individuals and employers

Under the bill, the Department of Revenue (DOR) must impose and collect assessments that are calculated by the board, based on the board's anticipated revenue needs. The assessments may be collected from individuals and employers through the income tax system, or through another system devised by DOR.

Generally, the assessment for an individual who is the employee of another person is between 2 percent and 4 percent of the individual's social security wages. If the individual's social security wages are 150 percent or less of the federal poverty line, however, the assessment is zero. If such wages are between 150 percent and 300 percent of the poverty line, the assessment is on a sliding scale between zero and 4 percent, depending on the amount of the individual's social security wages and on the number his or her dependents.

The assessment on a self-employed individual is between 9 percent and 10 percent. The assessment on someone who is eligible to participate in the plan but who is neither self-employed nor the employee of another person is 10 percent of the individual's federal adjusted gross income, up to the maximum amount of the income subject to social security tax.

The maximum amount of an assessment that DOR may impose on a household, defined as an individual, his or her spouse, and his or her immediate family, as that term is defined by the board, is 4 percent of the annual limit on the contribution and benefit base of the Old-Age, Survivors, and Disability Insurance program, as calculated annually by the U.S. Social Security Administration. For 2008, this base is $102,000.

For an employer, the assessment calculated by the board must be between 9 percent and 12 percent of an employer's aggregate social security wages, except that for taxable year 2010 the assessment imposed on a small employer (an employer who has no more than ten employees) is 33 percent of the amount calculated that would otherwise be collected. For taxable year 2011, the assessment on a small employer is 67 percent of the amount calculated that would otherwise be collected.

The assessments that are collected by DOR must be deposited into the Healthy Wisconsin trust fund. The board may annually increase or decrease the assessment percentages for individuals and employers, but an annual increase may not exceed the percentage increase in medical inflation, unless otherwise provided by law.

Miscellaneous matters

Under current law, DHFS provides financial assistance to eligible persons who have chronic kidney disease, cystic fibrosis, or hemophilia for the cost of medical treatment for those diseases. This assistance is collectively referred to as the Chronic Disease Aids Program. Generally, a person with one of these chronic diseases who has other health care coverage is not eligible for assistance under the Chronic Disease Aids Program. Under the bill, a person with coverage under the plan is still eligible for assistance under the Chronic Disease Aids Program.

Under current law, the state is required to, and counties, cities, villages, and towns (political subdivisions) may, provide health care coverage through insurance or on a self-insured basis for their employees. The bill provides that the state and political subdivisions may provide for their employees health care benefits that are not provided under the plan, since state and political subdivision employees, if they satisfy the eligibility criteria, will have coverage under the plan.

Under the bill, if a entity that levies a property tax reduces the costs of providing health care benefits to its employees as a result of providing benefits under the plan, the entity must distribute at least 50 percent of the reduction amount as reduction in property taxes levied for 2010. The reduction amount for each taxpayer is based on the equalized value of the taxpayer's property.

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:

SB562, s. 1 Section 1. 13.172 (1) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,7,8 13.172 (1) In this section, "agency" means an office, department, agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, and any authority created in subch. II of ch. 114 or subch. III of ch. 149 or in ch. 231, 233, 234, 260, or 279.

SB562, s. 2 Section 2. 13.48 (13) (a) of the statutes is amended to read:

SB562,7,21 13.48 (13) (a) Except as provided in par. (b) or (c), every building, structure or facility that is constructed for the benefit of or use of the state, any state agency, board, commission or department, the University of Wisconsin Hospitals and Clinics Authority, the Fox River Navigational System Authority, the Healthy Wisconsin Authority, or any local professional baseball park district created under subch. III of ch. 229 if the construction is undertaken by the department of administration on behalf of the district, shall be in compliance with all applicable state laws, rules, codes and regulations but the construction is not subject to the ordinances or regulations of the municipality in which the construction takes place except zoning, including without limitation because of enumeration ordinances or regulations relating to materials used, permits, supervision of construction or installation, payment of permit fees, or other restrictions.

SB562, s. 3 Section 3. 13.62 (2) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,8,3 13.62 (2) "Agency" means any board, commission, department, office, society, institution of higher education, council, or committee in the state government, or any authority created in subch. II of ch. 114 or subch. III of ch. 149 or in ch. 231, 232, 233, 234, 237, 260, or 279, except that the term does not include a council or committee of the legislature.

SB562, s. 4 Section 4. 13.94 (1) (dj) of the statutes is created to read:

SB562,8,7 13.94 (1) (dj) Annually, conduct a financial audit of the Healthy Wisconsin Plan under ch. 260 and file copies of each audit report under this paragraph with the distributees specified in par. (b).

SB562, s. 5 Section 5. 13.94 (1s) (c) 5. of the statutes is created to read:

SB562,8,10 13.94 (1s) (c) 5. The Healthy Wisconsin Authority for the cost of the audit under sub. (1) (dj).

SB562, s. 6 Section 6. 13.95 (intro.) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,8,25 13.95 Legislative fiscal bureau. (intro.) There is created a bureau to be known as the "Legislative Fiscal Bureau" headed by a director. The fiscal bureau shall be strictly nonpartisan and shall at all times observe the confidential nature of the research requests received by it; however, with the prior approval of the requester in each instance, the bureau may duplicate the results of its research for distribution. Subject to s. 230.35 (4) (a) and (f), the director or the director's designated employees shall at all times, with or without notice, have access to all state agencies, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Health Insurance Risk-Sharing Plan Authority, the Healthy Wisconsin Authority, the Lower Fox River Remediation Authority, and the Fox River Navigational System Authority, and to any books, records, or other documents maintained by such agencies or authorities and relating to their expenditures, revenues, operations, and structure.

SB562, s. 7 Section 7. 16.002 (2) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,9,7 16.002 (2) "Departments" means constitutional offices, departments, and independent agencies and includes all societies, associations, and other agencies of state government for which appropriations are made by law, but not including authorities created in subch. II of ch. 114 or subch. III of ch. 149 and in chs. 231, 232, 233, 234, 235, 237, 260, and 279.

SB562, s. 8 Section 8. 16.004 (4) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,9,15 16.004 (4) Freedom of access. The secretary and such employees of the department as the secretary designates may enter into the offices of state agencies and authorities created under subch. II of ch. 114 or subch. III of ch. 149 and under chs. 231, 233, 234, 237, 260, and 279, and may examine their books and accounts and any other matter that in the secretary's judgment should be examined and may interrogate the agency's employees publicly or privately relative thereto.

SB562, s. 9 Section 9. 16.004 (5) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,9,22 16.004 (5) Agencies and employees to cooperate. All state agencies and authorities created under subch. II of ch. 114 or subch. III of ch. 149 and under chs. 231, 233, 234, 237, 260, and 279, and their officers and employees, shall cooperate with the secretary and shall comply with every request of the secretary relating to his or her functions.

SB562, s. 10 Section 10. 16.004 (7d) of the statutes is created to read:

SB562,9,25 16.004 (7d) Containment of health care costs. In consultation with the board of the Healthy Wisconsin Authority, the secretary shall establish, by rule, a program to contain health care costs in this state during any year in which the board determines that health care costs increase at a rate exceeding the national average of medical inflation, as defined in s. 260.01 (4).

SB562, s. 11 Section 11. 16.004 (7h) of the statutes is created to read:

SB562,10,10 16.004 (7h) Employer assessments to the Healthy Wisconsin trust fund. The secretary shall establish a methodology for allocating employer assessments among state agencies to pay the Healthy Wisconsin trust fund for the operation and funding of the Healthy Wisconsin Plan under ch. 260. State agencies shall pay, from appropriations used to fund fringe benefit costs of state employees, to the Healthy Wisconsin trust fund amounts determined by the secretary.

SB562, s. 12 Section 12. 16.004 (12) (a) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,10,20 16.004 (12) (a) In this subsection, "state agency" means an association, authority, board, department, commission, independent agency, institution, office, society, or other body in state government created or authorized to be created by the constitution or any law, including the legislature, the office of the governor, and the courts, but excluding the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Health Insurance Risk-Sharing Plan Authority, the Healthy Wisconsin Authority, the Lower Fox River Remediation Authority, and the Fox River Navigational System Authority.

SB562, s. 13 Section 13. 16.045 (1) (a) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,11,3 16.045 (1) (a) "Agency" means an office, department, independent agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, but not including an authority created in subch. II of ch. 114 or subch. III of ch. 149 or in ch. 231, 232, 233, 234, 235, 237, 260, or 279.

SB562, s. 14 Section 14. 16.41 (4) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,11,7 16.41 (4) In this section, "authority" means a body created under subch. II of ch. 114 or subch. III of ch. 149 or under ch. 231, 233, 234, 237, 260, or 279.

SB562, s. 15 Section 15. 16.417 (1) (a) of the statutes is amended to read:

SB562,11,14 16.417 (1) (a) "Agency" means an office, department, independent agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, but not including an authority or the body created under subch. III of ch. 149 or under ch. 260.

SB562, s. 16 Section 16. 16.52 (7) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read:

SB562,12,2 16.52 (7) Petty cash account. With the approval of the secretary, each agency that is authorized to maintain a contingent fund under s. 20.920 may establish a petty cash account from its contingent fund. The procedure for operation and maintenance of petty cash accounts and the character of expenditures therefrom shall be prescribed by the secretary. In this subsection, "agency" means an office, department, independent agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, but not including an authority created in subch. II of ch. 114 or subch. III of ch. 149 or in ch. 231, 233, 234, 237, 260, or 279.

SB562, s. 17 Section 17. 16.528 (1) (a) of the statutes, as affected by 2007 Wisconsin Act 20, is amended to read: