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:
Loading...
Loading...