Plain language analysis
There are two changes in federal and state policy that precipitate this emergency rulemaking.
First, non-Medicaid entitlement to Family Care benefits was eliminated under 2007 Act 20. Consequently, persons who are currently enrolled in the Family Care program but who are ineligible for Medicaid benefits will be disenrolled from the Family Care program, unless they become eligible for Medicaid benefits on or before July 1, 2008. Non-Medicaid eligible persons enrolled on December 31, 2008, may stay enrolled until June 30, 2008, in order to have time to attain Medicaid eligibility. The Department, the Family Care managed care organizations, and the local aging and disability resource centers will assist individuals in that attempt. The Department will provide notice to individuals subject to disenrollment under 2007 Act 20.
Second, the federal Centers for Medicare & Medicaid Services has restricted the Family Care benefit for persons at the non-nursing home level of care. Individuals at the non-nursing home level of care are no longer entitled to receive the home and community-based services more typically provided to people who do have a nursing home level of care and, therefore, may have some services reduced or terminated because of the change in CMS policy. The Department will provide notice of reduction or termination to these individuals.
Section HFS 10.55 provides enrollees with a right to a fair hearing when services are reduced or terminated, or eligibility is denied. In addition, s. HFS 10.56 (2) provides that enrollees whose Family Care benefits are reduced or terminated have a right to have their current services continued pending the outcome of a grievance, Department review, or fair hearing. If a person notified of the elimination of the non-Medicaid benefit in Family Care or a reduction of services because of the change in benefit for people at the non-nursing home level of care appealed and requested continuation of services, under the current rules a hearing and continuation of services would have to be granted.
However, persons who are non-Medicaid eligible who appeal the loss of services will lose the appeal, because the loss of benefits is due to a change in state law, which makes it clear that the Family Care benefit is no longer available to them. Similarly, persons who have a non-nursing home level of care who have home and community-based services reduced or terminated as a result of the change in the available benefit will lose, because the CMS policy change in the benefit package makes it clear that such individuals are no longer entitled to those services. Holding a fair hearing in these situations would be an inefficient use of resources for the participant, the Department, and the Division of Hearings and Appeals.
If either group receive continuation of services during a fair hearing, Department review, or grievance and lose they will be responsible to pay for the cost of the services provided pending the outcome of the fair hearing, Department review, or grievance. The cost to the individual could amount to thousands of dollars. Such a situation would be detrimental to the welfare of affected individuals and should be prevented.
The Department has issued an emergency order providing an exception to the right to a fair hearing and continuation of services during a fair hearing, grievance, or Department review when Family Care benefits are reduced or terminated by an act of the federal government or the state legislature and the individual whose benefits have been terminated or reduced does not dispute that he or she falls within the category of persons for whom the benefit was reduced or terminated.
Comparison with federal regulations
There are similar provisions in Medicaid rules at 42 CFR §431.220(b), which provides that the State Medicaid Agency “need not grant a hearing if the sole issue is a Federal or State law requiring an automatic change adversely affecting some or all recipients." And, at 42 CFR § 431.230(a)(1), which provides that individuals have a right to continuation of services pending the outcome of an appeal unless, “it is determined at the hearing that the sole issue is one of Federal or State law or policy."
Comparison with rules in adjacent states
Illinois: does not have a program similar to Family Care.
Iowa: does not have a program similar to Family Care.
Michigan: does not have a program similar to Family Care.
Minnesota: does not have a program similar to Family Care.
Summary of factual data and analytical methodologies
The Department reviewed 2007 Act 20, and the policy change by the Center for Medicare and Medicaid Services. The Department also assessed the adverse impact of these changes on the individuals affected.
Analysis and supporting documents used to determine effect on small business
The rules would not have an effect on businesses.
Initial Regulatory Flexibility Analysis
The rules would not have an effect on businesses.
Small Business Regulatory Coordinator
Rosie Greer
Fiscal Estimate
The revised rule will result in an indeterminate decrease in costs to the Department and to Family Care managed care organizations (MCOs). Some MCOs are units of county government. Some MCOs are private non-profit organizations, which are not small businesses. The decrease in costs to the Department and to MCOs will result from not being required to assign staff to conduct or participate in fair hearings in which the appellant cannot be successful. In addition, MCOs may have decreased costs because they will not be required to continue to provide services during an appeal in which the appellant cannot be successful.
Notice of Hearing
NOTICE IS HEREBY GIVEN that pursuant to the authority granted under s. 601.41 (3), Stats., and the procedures set forth in under s. 227.18, Stats., the Office of the Commissioner of Insurance will hold a public hearing to consider the adoption of the proposed rules revising sections Ins 3.455 and 3.46, Wis. Adm. Code, relating to long-term care plans including the plans qualifying for the Wisconsin long-term care insurance partnership program and affecting small business.
Hearing Information
Date:   May 12, 2008
Time:   10:00 a.m., or as soon thereafter as the matter may
  be reached
Place:   OCI, Room 227, 125 South Webster St., 2nd Floor
  Madison, WI
Submission of Written Comments
The deadline for submitting comments is 4:00 p.m. on the 14th day after the date for the hearing stated in the Notice of Hearing.
Mailing address:
Julie E. Walsh
Legal Unit - OCI Rule Comment for Rule Ins 34556
Office of the Commissioner of Insurance
PO Box 7873
Madison WI 53707-7873
Street address:
Julie E. Walsh
Legal Unit - OCI Rule Comment for Rule Ins 34556
Office of the Commissioner of Insurance
125 South Webster St – 2nd Floor
Madison WI 53703-3474
Email address:
Julie E. Walsh
Comments submitted through the Wisconsin Administrative Rule Web site at: http://adminrules. on the proposed rule will be considered.
Copies of Proposed Rule and Agency Contact Person
A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the OCI internet Web site at or by contacting Inger Williams, Public Information and Communications, OCI, at:, (608) 264-8110, 125 South Webster Street – 2nd Floor, Madison WI or PO Box 7873, Madison WI 53707-7873.
Small Business Regulatory Coordinator
The OCI small business coordinator is Eileen Mallow and may be reached at phone number (608) 266-7843 or at email address
Analysis Prepared by the Office of the Commissioner of Insurance (OCI)
Statutes interpreted
Sections 600.01, 601.415 (8), and 628.34 (12), 628.348, Stats.
Statutory authority
Explanation of agency authority
The OCI, in order to comply and implement the requirements of 2007 Wis. Act 20, creating the Wisconsin Long-Term Care Insurance Partnership Program (Partnership Program) including the requirements for intermediary training and the process by which insurers submit policies that are intended to qualify for the Partnership Program must adopt the 2000 and 2006 National Association of Insurance Commissioners (NAIC) Long-Term Care Insurance Model Act and Model Laws, pursuant to the Deficit Reduction Act of 2005 (Pub.L. 109-171) (DRA). These amendments are needed to expand consumer protection and comply with the requirements of the Center for Medicare and Medicaid Services (CMS) as delegated to the NAIC the function of regulating the insurers offering long-term care insurance products.
Related statutes or rules
The Partnership Program is described at s. 49.45 (31), Stats., and requires coordination between the OCI and the Department of Health and Family Services.
Plain language analysis
The current administrative rule was last revised in 2001 and is not fully compliant with the NAIC Long-Term Care Model Act and NAIC Long-Term Care Model Law (NAIC Model Act and Model Law). When 2007 Wis. Act 20 created the Partnership Program, the OCI is required to implement the NAIC Model Act and Model Law in order for insurers to offer policies compliant with the DRA. Significant portions of the proposed rule update and expand definitions and require disclosure of these definitions to insureds so that they understand how the long-term care, home health care or nursing home insurance policy is able to be used and the limitations or exclusions that may be applied by insurers.
In section 3.455, the modifications primarily address the conversion from a group long-term care insurance policy to an individual long-term care insurance policy. The expanded information is intended to both comply with the NAIC Model Act and Model Law and Wisconsin conversion and continuation law. The section also includes expanded definition related to conversion of long-term care insurance policies.
Section 3.46 modifications begin with updated and revised definitions that are intended to provide consumers with greater specificity regarding terms used within long-term care, home health care and nursing home care insurance policies. Of note the current NAIC Model Act and Model Law do not exempt group long-term care insurers and as such the exemption in s. 3.46 (2) has been struck. Consumer protection elements are introduced or existing protections expanded throughout this section. One tool to both provide a check on the industry and its intermediaries and better assist consumers with the purchase of long-term care, home health care or nursing home care insurance is through the consolidation and expansion of the marketing requirements. Intermediaries and insurers are required to report on their prior dealings with consumers and state that the policy being sold is an appropriate product for that person. Although similar tools are currently required, the expansion requires additional data reporting to the OCI so that as the regulator we are provided a clearer picture of what sales are occurring and trends in the marketplace. The information will also highlight for both OCI and the insurers contracting with intermediaries information that may reveal unacceptable practices including high pressure sales tactics or interactions with persons resulting in a higher rate of complaints than other intermediaries. Appropriateness of each sale is to be reviewed and must meet the insurer's guidelines.
Additionally, some of the modifications reflect changes in our society, for instance the recognition and use of the internet or on-line completion of applications. Also, nonforfeiture of benefits provisions reflect the increasing cost of long-term care and the affect those increases have on the insureds. Some seniors, at a time near to when the policy may be most useful are least able to afford premium increases. Nonforfeiture of benefits or contingent nonforfeiture provisions allow those who have paid premiums for many years benefits even after they are no longer able to keep their policy enforce.
New paragraphs are also added regarding upgrade and down-grades of policies, and expanded disclosure requirements are included for various benefits including nonforfeiture benefits. These modifications reflect the marketplace and include oversight provisions. These types of benefits potentially give consumers greater control and options when faced with increasing premiums rather than just lapsing the policy due in part to financial constraints. Expanded notification to insureds of new benefits or changing access to providers is also contained in this proposed rule, a modification that allows insureds options that they may not previously been informed of or had access to from within the same carrier. Requirements monitoring replacement of policies is also expanded to enhance oversight of actions by intermediaries and insurers.
Finally, s. 3.46 includes a new section related to initial and on-going intermediary training for long-term care insurance products. In part, this provision delineates training requirements related to the Wisconsin Partnership Program, but is required for all intermediaries offering, selling or negotiating long-term care contracts. Insurers are required to verify compliance to the OCI and OCI assure the Department of Health and Family Services that the intermediaries dealing with Wisconsin consumers are aware of the unique programs available in Wisconsin.
Section 3.465 is newly created to implement the requirements of the Wisconsin Long-Term Care Insurance Partnership Program. This section contains minimum inflation protection percentage increases by age as outlined by the federal government in order for the policies offered by insurers both meet the requirements of the Deficit Reduction Act of 2005 (Pub.L. 109-171). The section also delineates when and how insurers exchange existing long-term care insurance policies for policies that are intended to qualify for the Partnership Program in both the individual and group market. Appendices outline various notices that are to be provided to consumers at the time of solicitation and again at the point of sale. These are intended to educate the consumer so that the may be better able to make informed decisions.
Comparison with federal regulations
It is understood that CMS is anticipating promulgating rules related to the reciprocity of the Partnership Program. Those rules are not anticipated to affect OCI.
Comparison of rules in adjacent states
Illinois: Illinois adopted NAIC Model Act and Law in January 2003 with no substantive deviations. Illinois noticed proposed regulations in compliance with the 2006 NAIC Model Act and Law on August 3, 2007, without substantive deviations. Illinois HB 517 authorizing the Medicaid Office to file the review State Partnership Application for participation in the Partnership Program on August 16, 2007.
Iowa: Iowa adopted the 2000 version of the NAIC Model Act and Model Law in July 2003. With the exception of the intermediary training that Iowa promulgated effective January 1, 2009, the state has notice proposals to adopt the 2006 NAIC Model Act and Law. The requirement for intermediary training requires 4 hours of initial training and 3 hour on-going training every 3 years thereafter. Iowa has not implemented the Partnership Program in accordance with the DRA as yet.
Michigan: Michigan adopted the 200 version of the NAIC Model Act and Law in June 2007. Michigan regulates long-term care insurance by statute and as such did not adopt exact language as the NAIC Model but did incorporate each area covered by the Model. Michigan did enact authorizing legislation to implement the Partnership Program in 2007 and filed its State Partnership Application retroactive to October, 2007. Michigan has not implemented the intermediary training for all intermediaries and is currently formalizing the process.
Minnesota: Minnesota adopted the 2000 NAIC Model Act and Law in January 2002, without substantial deviation. The DRA, Partnership Program became effective July 1, 2006. However there has been delays it was not operational until October 2007. Minnesota adopted the intermediary training and additionally requires non-resident intermediaries demonstrate knowledge of unique aspects of the Minnesota medial assistance program.
Summary of factual data and analytical methodologies
The OCI was required to implement portions of the Partnership Program in compliance with 2007 Wis. Act 20, and utilized a subcommittee comprised of consumer, industry, intermediary and regulatory members to achieve its duty. The group met, in open meetings, two times in the past two months to review and discuss Partnership drafts proposed by the OCI.
For the provisions updating and incorporating the NAIC models, the OCI reviewed each NAIC provision against existing Wisconsin law and rule to ensure consumer protections were not lost in the process and to expand consumer information.
Analysis and supporting documentation used to determine effect on small business
The key provision that may have an effect on small businesses is the requirement for long-term care intermediary initial and on-going training. The OCI included a provision to permit the training to qualify as continuing education credits and to recognize courses non-resident intermediaries may take in states other than Wisconsin. With the exception of two-credit hours that must include the training information developed and maintained by the Department of Health and Family Services, the training requirements allow for the greatest flexibility to not unduly burden intermediaries or unnecessarily increase expenses related to receiving the required training. It is expected, in light of these considerations that if there is any effect, the effect on small businesses will not be significant.
Description of the effect on small business
This rule will have little or no effect on small businesses.
Links to Admin. Code and Statutes in this Register are to current versions, which may not be the version that was referred to in the original published document.