SB201,9,6
1601.424 Reports on market reform impact on the health insurance
2risk-sharing plan.
The commissioner shall study the effects of the health
3insurance market reforms under ch. 635 on enrollment in, and other aspects of, the
4health insurance risk-sharing plan under subch. II of ch. 619. The commissioner
5shall annually submit a report on the effects and any recommendations to the
6legislature under s. 13.172 (2) commencing on October 1, 1999.
SB201, s. 13 7Section 13. 625.12 (2) of the statutes is amended to read:
SB201,9,178 625.12 (2) Classification. Risks Subject to s. 635.05 and any rules
9promulgated under s. 635.06, risks
may be classified in any reasonable way for the
10establishment of rates and minimum premiums, except that no classifications may
11be based on race, color, creed or national origin, and classifications in automobile
12insurance may not be based on physical condition or developmental disability as
13defined in s. 51.01 (5). Subject to s. ss. 632.365 and 635.05 and any rules promulgated
14under s. 635.06
, rates thus produced may be modified for individual risks in
15accordance with rating plans or schedules that establish reasonable standards for
16measuring probable variations in hazards, expenses, or both. Rates may also be
17modified for individual risks under s. 625.13 (2).
SB201, s. 14 18Section 14. 628.34 (3) of the statutes is amended to read:
SB201,9,2419 628.34 (3) Unfair discrimination. (a) No insurer may unfairly discriminate
20among policyholders by charging different premiums or by offering different terms
21of coverage except on the basis of classifications related to the nature and the degree
22of the risk covered or the expenses involved, subject to s. ss. 632.365 and 635.05 and
23any rules promulgated under s. 635.06
. Rates are not unfairly discriminatory if they
24are averaged broadly among persons insured under a group, blanket or franchise

1policy, and terms are not unfairly discriminatory merely because they are more
2favorable than in a similar individual policy.
SB201,10,93 (b) No insurer may refuse to insure or refuse to continue to insure, or limit the
4amount, extent or kind of coverage available to an individual, or charge an individual
5a different rate for the same coverage because of a mental or physical disability
6except when the refusal, limitation or rate differential is based on either sound
7actuarial principles supported by reliable data or actual or reasonably anticipated
8experience, subject to ss. 635.05, 635.07 and 635.15 and any rules promulgated
9under s. 635.06
.
SB201, s. 15 10Section 15. 628.36 (2) (b) 5. of the statutes is amended to read:
SB201,10,1611 628.36 (2) (b) 5. Except for the small employer health insurance plan under
12subch. II of ch. 635 to the extent determined by the small employer insurance board
13under s. 635.23 (1) (b), 1993 stats., or the comprehensive health care board under s.
14635.23 (1) (b), all health care plans, including health maintenance organizations,
15limited service health organizations and preferred provider plans are subject to s.
16632.87 (3).
SB201, s. 16 17Section 16. 632.70 of the statutes is amended to read:
SB201,10,22 18632.70 Exemption for plan under ch. 635. The health insurance mandates,
19as defined in s. 601.423 (1), that are provided under this subchapter apply to the
20small employer health insurance plan under subch. II of ch. 635 only to the extent
21determined by the small employer insurance board under s. 635.23 (1) (b), 1993
22stats., or the comprehensive health care board
under s. 635.23 (1) (b).
SB201, s. 17 23Section 17. 632.727 of the statutes is created to read:
SB201,10,25 24632.727 Electronic claims capability. (1) Definition. In this section,
25"health care provider" has the meaning given in s. 146.81 (1) (a) to (m).
SB201,11,4
1(2) Insurers. Beginning on January 1, 1997, every insurer that offers disability
2insurance must have and use the capability to accept all claims electronically and to
3allow electronic access to information on eligibility, claim status and remittance
4advice.
SB201,11,7 5(3) Health care providers. (a) Beginning on January 1, 1997, every health
6care provider that has annual gross revenues of more than $1,000,000 must have and
7use the capability to electronically transmit disability insurance claims information.
SB201,11,108 (b) Beginning on January 1, 1998, every health care provider not specified in
9par. (a) must have and use the capability to electronically transmit disability
10insurance claims information.
SB201, s. 18 11Section 18. 632.83 of the statutes is created to read:
SB201,11,16 12632.83 Regulation of certain related policies. The commissioner may, by
13rule, prescribe standards for specified disease policies, hospital indemnity policies,
14as defined in s. 632.895 (1) (c), or limited benefit health policies, including prohibiting
15certain specified types of products, prescribing minimum coverage and establishing
16marketing or suitability standards.
SB201, s. 19 17Section 19. 632.897 (2) (d) of the statutes is amended to read:
SB201,12,918 632.897 (2) (d) If the employer is notified to terminate the coverage for any of
19the reasons provided under par. (b), the employer shall provide the terminated
20insured written notification of the right to continue group coverage or convert to
21individual coverage and the payment amounts required for either continued or
22converted coverage including the manner, place and time in which the payments
23shall be made. This notice shall be given not more than 5 days after the employer
24receives notice to terminate coverage. The payment amount for continued group
25coverage may not exceed the group rate in effect for a group member, including an

1employer's contribution, if any, for a group policy as defined in sub. (1) (c) 1. or 1m.
2or the equivalent value of the monthly contribution of a group member to a group
3policy as defined in sub. (1) (c) 2. or the equivalent value of the monthly premium for
4franchise insurance as defined in sub. (1) (c) 3. The premium for converted coverage
5shall be determined in accordance with the insurer's table of premium rates
6applicable to the age and class of risks of each person to be covered under that policy
7and to the type and amount of coverage provided, subject to s. 635.05 and any rules
8promulgated under s. 635.06
. The notice may be sent to the terminated insured's
9home address as shown on the records of the employer.
SB201, s. 20 10Section 20. 632.897 (9) (c) of the statutes is amended to read:
SB201,12,2311 632.897 (9) (c) When the insurer is notified that the coverage of a spouse may
12be terminated because of a divorce or annulment, the insurer shall provide the
13former spouse written notification of the right to obtain individual coverage under
14sub. (4), the premium amounts required and the manner, place and time in which
15premiums may be paid. This notice shall be given not less than 30 days before the
16former spouse's coverage would otherwise terminate. The premium shall be
17determined in accordance with the insurer's table of premium rates applicable to the
18age and class of risk of
every person to be covered and to the type and amount of
19coverage provided, subject to s. 635.05 and any rules promulgated under s. 635.06.
20If the former spouse tenders the first monthly premium to the insurer within 30 days
21after the notice provided by this paragraph, sub. (4) shall apply and the former
22spouse shall receive individual coverage commencing immediately upon termination
23of his or her coverage under the insured's policy.
SB201, s. 21 24Section 21. Chapter 635 (title) of the statutes is amended to read:
SB201,13,3
1Chapter 635
2SMALL EMPLOYER REGULATION
3OF HEALTH INSURANCE
SB201, s. 22 4Section 22. 635.01 of the statutes is repealed and recreated to read:
SB201,13,5 5635.01 Scope. (1) This subchapter applies to all of the following:
SB201,13,86 (a) Group health benefit plans, and insurers with respect to group health
7benefit plans, that are written on risks or operations in this state and that provide
8coverage for eligible employes of an employer.
SB201,13,119 (b) Individual health benefit plans, and insurers with respect to individual
10health benefit plans, that are issued or renewed to a policyholder who is a resident
11of this state and who was a resident of this state when the policy was first issued.
SB201,13,15 12(2) The provisions of this subchapter that apply to individual health benefit
13plans apply to certificates issued under a group health benefit plan as if the
14certificates were individual health benefit plans if the group health benefit plan
15certificates are marketed to individuals.
SB201, s. 23 16Section 23. 635.02 (1) of the statutes is repealed.
SB201, s. 24 17Section 24. 635.02 (1c) of the statutes is amended to read:
SB201,13,1918 635.02 (1c) "Basic health benefit plan" means the a small employer health
19insurance plan under subch. II.
SB201, s. 25 20Section 25. 635.02 (1r) of the statutes is created to read:
SB201,13,2121 635.02 (1r) "Board" means the comprehensive health care board.
SB201, s. 26 22Section 26. 635.02 (2) of the statutes is amended to read:
SB201,14,423 635.02 (2) "Case characteristics" means the demographic, actuarially based
24characteristics of the employes of a small employer, and the employer, if covered
25members of a group or of an individual, such as age, sex gender, geographic location

1area and occupation, used by a small employer an insurer to determine premium
2rates for a small employer health benefit plan. "Case characteristics" does not
3include loss or claim history, health status condition, duration of coverage or other
4factors related to claim claims experience.
SB201, s. 27 5Section 27. 635.02 (3) of the statutes is repealed and recreated to read:
SB201,14,106 635.02 (3) "Community rate" means a uniform rate determined in such a
7manner that all insured individuals with the same level of coverage and plan design
8pay the same rate for that coverage, without regard to case characteristics or to loss
9or claim history, health condition, duration of coverage or other factors related to
10claims experience.
SB201, s. 28 11Section 28. 635.02 (3f) of the statutes is amended to read:
SB201,14,1912 635.02 (3f) "Eligible employe" means an employe who works on a full-time
13basis and has a normal work week of 30 or more hours. The term includes a sole
14proprietor, a business owner, including the owner of a farm business, a partner of a
15partnership, a member of a limited liability company and an independent contractor
16if the sole proprietor, business owner, partner, member or independent contractor is
17included as an employe under a health benefit plan of a small an employer, but the
18term does not include an employe who works on a part-time, temporary or substitute
19basis.
SB201, s. 29 20Section 29. 635.02 (3h) of the statutes is created to read:
SB201,14,2121 635.02 (3h) "Employer" means any of the following:
SB201,15,222 (a) An individual, firm, corporation, partnership, limited liability company or
23association that is actively engaged in a business enterprise in this state, including
24a farm business, and that employs in this state not fewer than 2 nor more than 100
25eligible employes. In determining the number of eligible employes, employers that

1are affiliated, or that are eligible to file a combined tax return for purposes of state
2taxation, shall be considered one employer.
SB201,15,43 (b) A municipality, as defined in s. 16.70 (8), that employs not fewer than 2 nor
4more than 100 eligible employes.
SB201, s. 30 5Section 30. 635.02 (3j) of the statutes is amended to read:
SB201,15,86 635.02 (3j) "Established geographic service area" means a geographic area
7within which a small employer an insurer provides coverage and that has been
8approved by the commissioner.
SB201, s. 31 9Section 31. 635.02 (3m) of the statutes is amended to read:
SB201,15,1810 635.02 (3m) "Health benefit plan" means any hospital or medical policy or
11certificate, and includes a conversion health insurance policy. "Health benefit plan"
12does not include accident-only, credit, dental, vision, medicare supplement,
13medicare replacement, long-term care, or disability income insurance, coverage
14issued as a supplement to liability insurance, worker's compensation or similar
15insurance, automobile medical payment insurance, specified disease policies,
16hospital indemnity policies, as defined in s. 632.895 (1) (c), policies or certificates
17issued under the health insurance risk-sharing plan or an alternative plan under
18subch. II of ch. 619
or other insurance exempted by rule of the commissioner.
SB201, s. 32 19Section 32. 635.02 (4g) of the statutes is created to read:
SB201,16,320 635.02 (4g) "Insurer" means an insurer that is authorized to do business in this
21state, in one or more lines of insurance that includes health insurance, and that
22offers group health benefit plans covering eligible employes of one or more employers
23in this state, or that sells individual health benefit plans to individuals who are
24residents of this state. The term includes a health maintenance organization, as
25defined in s. 609.01 (2), a preferred provider plan, as defined in s. 609.01 (4), and an

1insurer operating as a cooperative association organized under ss. 185.981 to
2185.985, but does not include a limited service health organization, as defined in s.
3609.01 (3).
SB201, s. 33 4Section 33. 635.02 (4m) of the statutes is repealed.
SB201, s. 34 5Section 34. 635.02 (5) of the statutes is repealed.
SB201, s. 35 6Section 35. 635.02 (5m) (d) of the statutes is created to read:
SB201,16,87 635.02 (5m) (d) The health insurance risk-sharing plan or an alternative plan
8under subch. II of ch. 619.
SB201, s. 36 9Section 36. 635.02 (6) of the statutes is repealed.
SB201, s. 37 10Section 37. 635.02 (6m) of the statutes is amended to read:
SB201,16,1411 635.02 (6m) "Restricted network provision" means a provision of a health
12benefit plan that conditions the payment of benefits, in whole or in part, on obtaining
13services or articles from health care providers that have contracted with the small
14employer
insurer to provide health care services or articles to covered individuals.
SB201, s. 38 15Section 38. 635.02 (7) (intro.) and (a) of the statutes are consolidated,
16renumbered 635.02 (7) and amended to read:
SB201,16,2317 635.02 (7) "Small employer" means any of the following: (a) An individual,
18firm, corporation, partnership, limited liability company or association that is
19actively engaged in a business enterprise in this state, including a farm business,
20and
an employer that employs in this state not fewer than 2 nor more than 25 eligible
21employes. In determining the number of eligible employes, employers that are
22affiliated, or that are eligible to file a combined tax return for purposes of state
23taxation, shall be considered one employer.
SB201, s. 39 24Section 39. 635.02 (7) (b) of the statutes is repealed.
SB201, s. 40 25Section 40. 635.02 (8) of the statutes is repealed.
SB201, s. 41
1Section 41. 635.03 of the statutes is created to read:
SB201,17,3 2635.03 Duties of the board. In addition to any other duties specifically
3required under this subchapter, the board shall do all of the following:
SB201,17,4 4(1) Perform the duties required under subch. II.
SB201,17,5 5(2) Provide data or technical assistance to any purchasing coalition.
SB201,17,7 6(3) Develop quality outcomes measures, quality and practice pattern
7standards and health plan performance criteria.
SB201,17,8 8(4) Provide information on technology assessment to any purchasing coalition.
SB201,17,10 9(5) Recommend cost containment measures and provide assessments of health
10care needs to any purchasing coalition.
SB201, s. 42 11Section 42. 635.05 of the statutes is repealed and recreated to read:
SB201,17,15 12635.05 Community rating. (1) Except as provided in subs. (2) and (4), an
13insurer shall charge a community rate for coverage under a health benefit plan that
14is subject to this subchapter and that is issued or renewed on or after the effective
15date of this subsection .... [revisor inserts date].
SB201,17,18 16(2) Subject to rate bands prescribed by the commissioner by rule, the
17community rate under sub. (1) may be modified by taking into account the following
18factors:
SB201,17,1919 (a) The insured's age.
SB201,17,2020 (b) The insured's gender.
SB201,17,2221 (c) The insured's geographic area, which may not include less than an entire
22county.
SB201,17,2323 (d) The insured's tobacco use.
SB201,17,2524 (e) Whether the insured's coverage is single coverage or a type of family
25coverage.
SB201,18,3
1(3) For each of the following factors, the rate bands prescribed by the
2commissioner by rule may not restrict the ratio of the highest variance to the lowest
3variance to a ratio that is less than the ratio shown after each factor:
SB201,18,44 (a) For age, a ratio of 2.5.
SB201,18,55 (b) For gender, a ratio of 1.2.
SB201,18,66 (c) For geographic area, a ratio of 1.2.
SB201,18,9 7(4) An insurer may provide a rate discount for healthy lifestyle choices on the
8part of an insured individual that, given the individual's health condition, tend to
9reduce the risk of loss.
SB201, s. 43 10Section 43. 635.06 of the statutes is created to read:
SB201,18,18 11635.06 Transition by rule. Notwithstanding s. 635.05 (1) and (2), the
12commissioner may promulgate rules that permit an insurer to vary from the
13community rate required under s. 635.05 (1) and modified under s. 635.05 (2) within
14restrictions provided in the rules. The restrictions provided in the rules shall be
15reasonably designed to provide for an orderly transition to the community rates
16required under s. 635.05 (1) and modified under s. 635.05 (2) for all health benefit
17plans subject to this subchapter by no later than the first day of the 12th month
18beginning after the effective date of this section .... [revisor inserts date].
SB201, s. 44 19Section 44. 635.07 (1) (intro.), (b), (d) and (e) of the statutes are amended to
20read:
SB201,19,221 635.07 (1) (intro.) Notwithstanding s. 631.36 (2) to (4m), a health benefit plan
22or policy subject to this subchapter may not be canceled by an insurer before the
23expiration of the agreed term, and shall be renewable to the employer and all
24employes
policyholder and all insureds and dependents eligible under the terms of

1the health benefit plan or policy at the expiration of the agreed term at the option of
2the small employer policyholder, except for any of the following reasons:
SB201,19,53 (b) Fraud or misrepresentation by the small employer policyholder, or, with
4respect to coverage for an insured individual, fraud or misrepresentation by the that
5insured individual.
SB201,19,76 (d) The number of individuals covered under the health benefit plan or policy
7is less than the number required by the health benefit plan or policy.
SB201,19,88 (e) The small employer is no longer actively engaged in a business enterprise.
SB201, s. 45 9Section 45. 635.07 (1) (f) of the statutes is created to read:
SB201,19,1110 635.07 (1) (f) The health benefit plan is an individual policy and the
11commissioner permits cancellation or nonrenewal of such a policy by rule.
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