Chapter Ins 57

Ins 57.04(5)(d) (d) Identification of the key assumptions impacting the care management organization’s projections and the sensitivity of the projections to the assumptions.

Ins 57.04(5)(e) (e) Such other information as is requested by the commissioner, after consultation with the department.

Ins 57.04 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.05 Ins 57.05 Business plan. All applications for permits of a care management organization shall include a proposed business plan. In addition to the items listed in s. 648.05 (2), Stats., the following information shall be contained in the business plan:

Ins 57.05(1) (1) Organizational information. All care management organization business plans shall include:

Ins 57.05(1)(a) (a) A narrative that discusses the business environment, the strategies and tactics that will be employed to manage the business including a plan to utilize mandated care principles and targets associated with that plan, and other areas of focus, stress, change, efficiency or any other information that supports or affects the financial projections.

Ins 57.05(1)(b) (b) A description of the general business model to be employed by the care management organization.

Ins 57.05(1)(c) (c) A brief organizational history, providing and describing major milestones in the development of the care management organization including organizational strengths and deficits, as they relate to the ongoing delivery of the Family Care program.

Ins 57.05(1)(d) (d) A description of the care management organization’s governance structure, including organizing documents (e.g., articles, by-laws, mission statement, etc.), and an organizational chart that clearly demonstrates reporting lines and domains of management authority, with names of current incumbents for management positions.

Ins 57.05(1)(e) (e) Information for all persons or entities who are in direct control of the care management organization, including the names, addresses and occupations of all controlling persons, directors and principal officers of the care management organization currently and for the preceding 10 years. The care management organization information shall also include the position held and target group representation, if applicable, for each member of the board of directors.

Ins 57.05(2) (2) Geographical service area. The geographical service area by county including a chart showing the number of providers with locations and service areas by county. A description and the method of handling out–of–area services shall also be included.

Ins 57.05(3) (3) Enrollment. A description of the target populations being served by the care management organization, in what proportions these target groups are currently being served, what the long range expectations of the care management organization are in serving each target group (i.e., anticipated program growth), and how historical trends or projections are similar to, or different, from program averages.

Ins 57.05(4) (4) Provider agreements. The extent to which any of the following are included in provider agreements and the form of any provisions that do any of the following:

Ins 57.05(4)(a) (a) Permit or require the provider to assume a financial risk in the care management organization, including any provisions for assessing the provider, adjusting capitation or fee–for–service rates, or sharing in the earnings or losses.

Ins 57.05(4)(b) (b) Govern amending or terminating agreements with providers.

Ins 57.05(5) (5) Provider availability. A description of the care management organization’s general plan for delivering care management services to its members. Differences in the delivery of this service across target groups or counties shall be described. Changes in the delivery of care management over time, either completed or anticipated shall be described.

Ins 57.05(6) (6) Plan administration. A summary of how administrative services are provided, including the size and qualifications of the administrative staff and the projected cost of administration in relation to capitation income. If administrative services are to be provided by a person outside the organization, the business plan shall include a copy of the contract. The contract shall include all of the following:

Ins 57.05(6)(a) (a) The services to be provided.

Ins 57.05(6)(b) (b) The standards of performance for the manager.

Ins 57.05(6)(c) (c) The method of payment.

Ins 57.05(6)(d) (d) The duration of the contract.

Ins 57.05(6)(e) (e) Any provisions for modifying, terminating or renewing the contract.

Ins 57.05(7) (7) Financial projections. A summary of all of the following:

Ins 57.05(7)(a) (a) Current and projected enrollment.

Ins 57.05(7)(b) (b) Income from capitation payments.

Ins 57.05(7)(c) (c) Other income.

Ins 57.05(7)(d) (d) Expenses associated with providing services to enrollees. A budget narrative that accompanies any projections related to care management utilization shall be provided. The narrative will identify assumed staff-to-member ratios, by type of staff; historical trends and projections regarding care management utilization; explanations regarding any major changes; and unit cost trends for each time period and target group.

Ins 57.05(7)(e) (e) Administrative and other costs.

Ins 57.05(7)(f) (f) The estimated break even point if a loss is being projected.

Ins 57.05(7)(g) (g) A summary of the assumptions made in developing projected operating results.

Ins 57.05(8) (8) Strengths, Weaknesses, Opportunities and Threats analysis. An analysis of the CMO’s strengths, weaknesses, opportunities and threats, a description of the major challenges the CMO faces, both internal and external to the organization, in providing services to each target group, and the strategies it is employing, or plans to employ, to address those challenges.

Ins 57.05(9) (9) Financial guarantees. A summary of all financial guarantees by providers, sponsors, affiliates or parents within a holding company system, or any other guarantees which are intended to ensure the financial success of the care management organization. These include hold harmless agreements by providers, stop loss insurance, or other guarantees.

Ins 57.05(10) (10) Business plan requirements of the department. The business plan filed with the department pursuant to provisions in the family care contract is acceptable for the purposes of this section.

Ins 57.05 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.06 Ins 57.06 Changes in the business plan. A care management organization shall file a written report of any proposed substantial change in its business plan. The care management organization shall file the report at least 30 days prior to the effective date of the change. The office, after consulting with the department, may disapprove the change. The care management organization may not enter into any transaction, contract, amendment to a transaction or contract or take action or make any omission that is a substantial change in the care management organization’s business plan prior to the effective date of the change or if the change is disapproved. Substantial changes include changes in articles and bylaws, organization type, geographical service areas, provider agreements, provider availability, plan administration, financial projections and guarantees and any other change that might affect the financial solvency of the organization. Any transaction or series of transactions that exceed the lesser of 5% of the care management organization’s assets or 10% of net assets as of December 31 of the immediately preceding calendar year shall be deemed material. Any changes in the items listed in s. Ins 9.05 (3) shall be filed under this section.

Ins 57.06 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.07 Ins 57.07 Copies of provider agreements.

Ins 57.07(1) (1) Notwithstanding any claim of trade secret or proprietary information, all care management organizations shall, upon request, from the commissioner, make available to the commissioner all executed copies of any provider agreements between the care management organization and intermediate entities or individual providers. Any party to a provider agreement may assert that a portion of the contracts contain trade secrets, and the commissioner may withhold that portion to the extent it may be withheld under s. Ins 6.13.

Ins 57.07(2) (2) All care management organizations shall file with the commissioner a list of providers executing a standard contract and a copy of the form of the contract may be filed instead of copies of the executed contracts.

Ins 57.07 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.10 Ins 57.10 Acquisition of control of or merger with a care management organization.

Ins 57.10(1) (1) Filing requirements.

Ins 57.10(1)(a) (a) No person other than the care management organization may enter into an agreement to merge with or otherwise to acquire or attempt to acquire control of a care management organization or any person having control of a care management organization unless all of the following are complied with:

Ins 57.10(1)(a)1. 1. The person first files the information required under sub. (2) with the commissioner and sends a copy of the information to the care management organization; and

Ins 57.10(1)(a)2. 2. The offer, request, invitation, agreement or acquisition has been approved by the commissioner.

Ins 57.10(1)(b) (b) For purposes of this section “care management organization” includes any person having control of a care management organization.

Ins 57.10(2) (2) Content of statement. A person required to file under sub. (1) shall file the following information not less than 30 days after the care management organization signs a letter of intent, using information substantially similar to that contained in form A in Appendix 1 to this chapter, in a sworn statement by an official of the care management organization:

Ins 57.10(2)(a) (a) For each acquiring person:

Ins 57.10(2)(a)1. 1. The acquiring person’s name and address;

Ins 57.10(2)(a)2. 2. If the acquiring person is an individual, his or her principal occupation and all offices and positions held during the past 5 years, any conviction of crimes other than traffic violations not involving death or injury during the past 10 years and all relevant information regarding any occupational license or registration; and

Ins 57.10(2)(a)3. 3. If the acquiring person is not an individual, a report of the nature of its business operations during the past 5 years or for the lesser period that the acquiring person and any predecessors of the acquiring person have been in existence, if shorter; an informative description of the business intended to be done by the acquiring person and the acquiring person’s subsidiaries; and a list of all individuals who are or who have been selected to become directors or executive officers of the acquiring person, or who perform or will perform functions similar to those positions. The list shall include for each individual the information required by subds. 1. and 2.

Ins 57.10(2)(b) (b) The source, nature and amount of the consideration used or to be used in effecting the merger or other acquisition of control, a description of any transaction from which funds were or are to be obtained for that purpose, including any pledge of the care management organization’s assets or the assets of any of its subsidiaries or affiliates which control the care management organization, the criteria used in determining the nature and amount of consideration and the identity of persons furnishing the consideration.

Ins 57.10(2)(c) (c) Fully audited financial information as to the earnings and financial condition of each acquiring person for the preceding 5 fiscal years of each acquiring person or for the period the acquiring person and any predecessors of the acquiring person have been in existence, if shorter, and similar unaudited information as of a date not earlier than 90 days prior to the filing of the statement.

Ins 57.10(2)(d) (d) Any plans or proposals under which any acquiring person is considering to liquidate, to sell assets of, or to merge or consolidate the care management organization or to make any other material change in the care management organization’s business or corporate structure or management.

Ins 57.10(2)(e) (e) A full description of any contracts, arrangements or understandings with respect to any security in which any acquiring person is involved, including, but not limited to, transfer of any of the securities, joint ventures, loan or option arrangements, guarantees of loans, guarantees against loss or guarantees of profits, or division of losses or profits. The description shall identify the persons with whom the contracts, arrangements or understandings have been entered into.

Ins 57.10(3) (3) Material changes. A person required to file under sub. (1) shall file an amendment to the filing if any material change occurs in the facts set forth in a statement previously filed with the commissioner. The person shall include in the amendment a description of the change and copies of all documents and other material relevant to the change. The amendment shall be filed with the commissioner and sent to the care management organization within 2 business days after the person learns of the change.

Ins 57.10 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.12 Ins 57.12 Standards for transactions within a holding company system.

Ins 57.12(1) (1) Transactions within a holding company system. A care management organization or affiliate of a care management organization may not enter directly or indirectly into a transaction between the care management organization and the affiliate unless the care management organization and affiliate comply with all of the following:

Ins 57.12(1)(a) (a) Comply with s. 648.45 (5) and (6), Stats.

Ins 57.12(1)(b) (b) Allocate to the care management organization for expenses incurred and payment received for the transaction in conformity with customary accounting practices consistently applied.

Ins 57.12(1)(c) (c) Disclose clearly and accurately in books, accounts and records of each party the nature and details of the transaction including the accounting information which is necessary to support the reasonableness of the charges or fees to the respective parties.

Ins 57.12(2) (2) Transactions required to be reported and subject to disapproval. A care management organization, and a person attempting to acquire control of a care management organization, or an affiliate of a care management organization, which directly or indirectly is involved in or benefits from, a transaction, shall report, under s. 648.45 (6), Stats., each of the following transactions to the commissioner in writing at least 30 days before the care management organization enters into the transaction, unless the commissioner in writing approves a shorter period:

Ins 57.12(2)(a) (a) Sales, purchases, exchanges, loans, extensions of credit, guarantees, or investments involving the care management organization and an affiliate or a person attempting to acquire control of the care management organization if the transactions are equal to or exceed the lesser of 2% of the care management organization’s assets or 10% of net assets as of December 31 of the immediately preceding calendar year.

Ins 57.12(2)(b) (b) Loans, extensions of credit, or guarantees to any person who is not an affiliate, where the care management organization makes loans, extensions of credit or guarantees with the agreement or understanding that the proceeds of the transactions or benefit of the guarantees, in whole or in significant part, directly or indirectly, are to be used to make loans or extensions of credit to, to purchase assets of, or to make investments in, any affiliate of the care management organization making the loans, extensions of credit, or guarantee, or any person attempting to acquire control of the care management organization, if the transactions are equal to or exceed the lesser of 2% of the care management organization’s assets or 10% of net assets as of December 31 of the immediately preceding calendar year.

Ins 57.12(2)(c) (c) All management agreements, exclusive agency agreements, service contracts or cost-sharing arrangements which involve a care management organization and either an affiliate or a person attempting to acquire control of the care management organization.

Ins 57.12(2)(d) (d) A transaction not in the ordinary course of business which involves a care management organization and either an affiliate of, or a person attempting to acquire control of, a care management organization and which involves or exposes to risk an amount equal to or exceeding the lesser of 2% of the care management organization’s assets or 10% of net assets as of the 31st day of December of the immediately preceding calendar year.

Ins 57.12(2)(e) (e) Any material transactions which the commissioner requires to be reported by order.

Ins 57.12(3) (3) Illegal transactions not authorized. This section does not authorize or permit any transaction which would be otherwise contrary to law.

Ins 57.12(4) (4) Group or series of related transactions. For the purpose of applying sub. (2), a group or series of related transactions shall be treated as if they are a single transaction.

Ins 57.12(5) (5) Subterfuge prohibited. A care management organization, person attempting to acquire control of a care management organization, person having control of a care management organization or affiliate of a care management organization may not enter into transactions which are part of a group or series of transactions if the purpose of those separate transactions is to attempt to avoid a threshold amount under this chapter.

Ins 57.12(6) (6) Disapproval. Transactions subject to reporting under sub. (2) may be disapproved by the commissioner, after consulting with the department, under s. 648.45 (6) (b), Stats. No person may enter into or assent to a transaction that is disapproved by the commissioner or which is subject to reporting under sub. (2) but not reported.

Ins 57.12(7) (7) Care management organization may report on behalf of affiliate or person attempting to acquire control. A care management organization may file a report under sub. (2) on behalf of its affiliate or of the person attempting to acquire control of the care management organization. Lack of knowledge that a care management organization has not reported on behalf of the affiliate or person or that the report is incomplete or inaccurate is not a defense for the affiliate or person attempting to acquire control of the care management organization.

Ins 57.12 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.13 Ins 57.13 Privileged information. The information required to be filed with the commissioner under s. Ins 57.10 is required under s. 601.42, Stats., and the commissioner may keep it confidential as provided under s. 601.465, Stats.

Ins 57.13 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.20 Ins 57.20 Forms and Instructions.

Ins 57.20(1) (1) General. Forms A and B contained in Appendix 1 to this chapter are intended to be guides in the preparation of the statements required by this chapter. They are not intended to be blank forms which are to be filled in. The statements filed shall contain the numbers and captions of all items, but the text of the items may be omitted provided the answers are prepared in such a manner as to indicate clearly the scope and coverage of the items. All instructions, whether appearing under the items of the form or elsewhere therein, are to be omitted. Unless expressly provided otherwise, if any item is inapplicable or the answer is in the negative, an appropriate statement to that effect shall be made.

Ins 57.20(2) (2) Filing format and procedure.

Ins 57.20(2)(a) (a) One complete copy of each statement, including exhibits and all other papers and documents filed as a part of the statement, shall be filed with the commissioner. At least one of the copies shall be manually signed in the manner prescribed on the form. Unsigned copies shall be conformed. If the signature of any person is affixed pursuant to a power of attorney or other similar authority, a copy of the power of attorney or other authority shall also be filed with the statement.

Ins 57.20(2)(b) (b) Statements shall be prepared on paper 8 ½ x 11 inches in size and preferably bound at the top or the top left-hand corner. Exhibits and financial statements, unless specifically prepared for the filing, may be submitted in their original size. All copies of any statement, financial statements or exhibits shall be clear, easily readable and suitable for photocopying. Debits in credit categories and credits in debit categories shall be designated so as to be clearly distinguishable as such on photocopies. Statements shall be in the English language and monetary values shall be stated in United States currency. If any exhibit or other paper or document filed with the statement is in a foreign language, it shall be accompanied by a translation into the English language and any monetary value shown in a foreign currency shall be converted into United States currency.

Ins 57.20 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.22 Ins 57.22 Forms — incorporation by reference, summaries and omissions.

Ins 57.22(1) (1) Incorporation by reference. Information required by any item of forms A, B or C contained at Appendix 1, may be incorporated by reference in answer or partial answer to any other item. Information contained in any financial statement, annual report, proxy statement, statement filed with a governmental authority, or any other document may be incorporated by reference in answer or partial answer to any item of form A, B or C provided the document or paper is filed as an exhibit to the statement. Excerpts of documents may be filed as exhibits if the documents are extensive. Documents currently on file with the commissioner which were filed within the preceding 3 years need not be attached as exhibits. References to information contained in exhibits or in documents already on file shall clearly identify the material and shall specifically indicate that the material is to be incorporated by reference in answer to the item. Information may not be incorporated by reference in any case where the incorporation would render the statement incomplete, unclear or confusing.

Ins 57.22(2) (2) Summary. Where an item requires a summary or outline of the provisions of any document, only a brief statement shall be made as to the pertinent provisions of the document. In addition to the statement, the summary or outline may incorporate by reference particular parts of any exhibit or document currently on file with the commissioner which was filed within 3 years and may be incorporated in its entirety by the reference. In any case where 2 or more documents required to be filed as exhibits are substantially identical in all material respects except as to the parties to the documents, the dates of execution, or other details, a copy of only one of the documents need be filed with a schedule identifying the omitted documents and setting forth the material details in which such documents differ from the documents that were filed.

Ins 57.22 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.23 Ins 57.23 Transactions subject to prior notice — notice filing. A person required to give notice of a proposed transaction under this chapter shall furnish the required information in substantially similar in format and in response to questions presented on form B in Appendix 1.

Ins 57.23 History History: EmR0927: emerg. cr. eff. 10-10-09; CR 09-093: cr. Register May 2010 No. 653, eff. 6-1-10.

Ins 57.24 Ins 57.24 Dividends and other distributions. Requests for approval of dividends or any other distributions to shareholders or corporate members shall include the following: