Chapter Ins 9

Ins 9.01 Ins 9.01 Definitions. In this chapter, and for the purposes of applying ch. 609, Stats.:

Ins 9.01(1) (1) “Acceptable letter of credit” means a clean, unconditional, irrevocable letter of credit issued by a Wisconsin bank or any other financial institution acceptable to the commissioner which renews on an annual basis for a 3–year term unless written notice of nonrenewal is given to the commissioner and the limited service health organization at least 60 days prior to the renewal date.

Ins 9.01(2) (2) “Commissioner” means the “commissioner of insurance” of this state or the commissioner’s designee.

Ins 9.01(3) (3) “Complaint” means any expression of dissatisfaction expressed to an insurer by an enrollee, or an enrollee’s authorized representative, about the insurer or its participating providers.

Ins 9.01(3m) (3m) “Defined network plan” has the meaning provided under s. 609.01 (1b), Stats., and includes Medicare select policies and certificates, as defined in s. Ins 3.39 (3) (vm) and (ve), respectively, and health benefit plans that contract for use of participating providers.

Ins 9.01(4) (4) “Expedited grievance” means a grievance where the standard resolution process may include any of the following:

Ins 9.01(4)(a) (a) Serious jeopardy to the life or health of the enrollee or the ability of the enrollee to regain maximum function.

Ins 9.01(4)(b) (b) In the opinion of a physician with knowledge of the enrollee’s medical condition, would subject the enrollee to severe pain that cannot be adequately managed without the care or treatment that is the subject of the grievance.

Ins 9.01(4)(c) (c) It is determined to be an expedited grievance by a physician with knowledge of the enrollee’s medical condition.

Ins 9.01(5) (5) “Grievance” means any dissatisfaction with the provision of services or claims practices of an insurer offering a defined network plan, preferred provider plan or limited service health organization, or administration of a defined network, preferred provider plan or limited service health organization, that is expressed to the insurer by, or on behalf of, an enrollee.

Ins 9.01(6) (6) “Health benefit plan” has the meaning provided under s. 632.745 (11), Stats.

Ins 9.01(7) (7) “HMO” or “health maintenance organization” means a health care plan as defined in s. 609.01 (2), Stats.

Ins 9.01(8) (8) “Health maintenance organization insurer” has the meaning provided under s. 600.03 (23c), Stats.

Ins 9.01(9) (9) “Hospital emergency facility” means any hospital facility that offers services for emergency medical conditions as described in s. 632.85 (1) (a), Stats., within its capability to do so and in accordance with s. DHS 124.24, or the licensure requirements of the jurisdiction in which the hospital resides.

Ins 9.01(9m) (9m) “Intermediate entity” means a provider network, a provider association, a provider leasing arrangement or other similar entity that contracts with providers for the rendering of health care services, items or supplies to enrollees of a defined network plan, preferred provider plan or limited service health organization and also contracts with the insurer offering a defined network plan, preferred provider plan or limited service health organization.

Ins 9.01(10) (10) “IPA” or “individual practice association” has the meaning provided under s. 600.03 (23g), Stats.

Ins 9.01(11) (11) “Limited service health organization” means a health care plan as defined in s. 609.01 (3), Stats.

Ins 9.01(13) (13) “OCI complaint” means any written complaint received by the office of the commissioner of insurance by, or on behalf of, an enrollee of an insurer offering a defined network plan, preferred provider plan or limited service health organization.

Ins 9.01(14) (14) “Office” means the “office of the commissioner of insurance.”

Ins 9.01(14m) (14m) “Participating” has the meaning provided under s. 609.01 (3m), Stats., and includes a provider as being under contract with the insurer when the provider is under contract with an intermediate entity.

Ins 9.01(15) (15) “Preferred provider plan” has the meaning provided under s. 609.01 (4), Stats.

Ins 9.01(16) (16) “Primary provider” has the meaning provided under s. 609.01 (5), Stats.

Ins 9.01(17) (17) “Silent provider network” means one or more participating providers that provide services covered under a defined network plan where all of the following apply:

Ins 9.01(17)(a) (a) The insurer does not include any incentives or penalties in the defined network plan related to utilization or failure to utilize the provider.

Ins 9.01(17)(b) (b) The only direct or indirect compensation arrangement the insurer has with the provider provides for compensation that is:

Ins 9.01(17)(b)1. 1. On a fee for service basis and not on a risk sharing basis, including, but not limited to, capitation, withholds, global budgets, or target expected expenses or claims;

Ins 9.01(17)(b)2. 2. The compensation arrangement provides for compensation that is not less than 80% of the provider’s usual fee or charge.

Ins 9.01(17)(c) (c) The insurer, in any arrangement described under par. (b), requires that the reduction in fees will be applied with respect to cost sharing portions of expenses incurred under the defined network plan to the extent the provider submits the claim directly to the insurer.

Ins 9.01(17)(d) (d) The provider is not directly or indirectly managed, owned, or employed by the insurer.

Ins 9.01(17)(e) (e) The insurer does not disclose, market, advertise, provide a telephone service or number relating to, or include in policyholder or enrollee material information relating to, the availability of the compensation arrangement described under par. (b), or the names or addresses of the provider or an entity that maintains a compensation arrangement described under par. (b), except to the extent required by law in processing of explanation of benefits. The insurer may not indirectly cause or permit a prohibited disclosure and may not make any such disclosure in the course of utilization review or pre-authorization functions.

Ins 9.01 History History: Cr. Register, February, 2000, No. 530, eff. 3-1-00; correction in (12) made under s. 13.93 (2m) (b) 7., Stats., Register February 2006 No. 602; CR 05-059: renum. (12) to be (3m), am. (3), (3m), (5), (13), (17) (a) and (c), cr. (9m), (10m) and (14m) Register February 2006 No. 602, eff. 3-1-06; CR 06-083: am. (5), (9m) and (13), r. (10m) Register December 2006 No. 612, eff. 1-1-07; correction in (9) made under s. 13.92 (4) (b) 7., Stats., Register February 2013 No. 686; CR 19-036: am. (3m) Register December 2019 No. 768, eff. 1-1-20; correction in (3m) made under s. 35.17, Stats., Register December 2019 No. 768.

Ins 9.015 Ins 9.015 Scope. This chapter applies to all insurers offering a defined network plan, a preferred provider plan or a limited service health organization plan except to an insurer offering a preferred provider plan that also meets the subject matter of s. 632.745 (11) (b) 9., Stats.

Ins 9.015 History History: CR 06-083: cr. Register December 2006 No. 612, eff. 1-1-07.

subch. II of ch. Ins 9 Subchapter II — Financial Standards for Health Maintenance Organizations or Limited Service Health Organizations

Ins 9.02 Ins 9.02 Purpose. This subchapter establishes financial standards for health maintenance organizations and limited service health organizations doing business in Wisconsin. These requirements are in addition to any other statutory or administrative rule requirements that apply to health maintenance organizations and limited service health organizations.

Ins 9.02 History History: Cr. Register, February, 2000, No. 530, eff. 3-1-00.

Ins 9.03 Ins 9.03 Scope. This subchapter applies to all insurers writing health maintenance organization or limited service health organization business in this state.

Ins 9.03 History History: Cr. Register, February, 2000, No. 530, eff. 3-1-00.

Ins 9.04 Ins 9.04 Financial requirements. The following are the minimum financial requirements for compliance with this section unless a different amount is ordered by the commissioner:

Ins 9.04(1) (1) Capital. Unless otherwise ordered by the commissioner the minimum capital or permanent surplus of:

Ins 9.04(1)(a) (a) A health maintenance organization insurer first licensed or organized on or after July 1, 1989, is $750,000;

Ins 9.04(1)(b) (b) A health maintenance organization insurer first licensed or organized prior to July 1, 1989, is $200,000;

Ins 9.04(1)(c) (c) The minimum capital or permanent surplus requirement for an insurer licensed to write only limited service health organization business shall be not less than $75,000. The commissioner may accept the deposit or letter of credit under sub. (3) to satisfy the minimum capital or permanent surplus requirement under this par. (c), if the insurer licensed to write only limited service health organization business demonstrates to the satisfaction of the commissioner that it does not retain any risk of financial loss because all risk of loss has been transferred to providers through provider agreements.

Ins 9.04(1)(d) (d) Any other insurer writing health maintenance organization or limited service health organization business, is the amount of capital or required surplus required under the statutes governing the organization of the insurer.

Ins 9.04(2) (2) Compulsory surplus.

Ins 9.04(2)(a) (a) An insurer, including an insurer organized under ch. 613, Stats., writing health maintenance organization or limited service health organization business, except for a health maintenance organization insurer or an insurer licensed to write only limited service health organization business, is subject to s. Ins 51.80.

Ins 9.04(2)(b) (b) A health maintenance organization insurer shall maintain a compulsory surplus as follows, or a greater amount required by order of the commissioner: the greater of $750,000 or an amount equal to the sum of:

Ins 9.04(2)(b)1. 1. 10% of premiums earned in the previous 12 months for policies that include coverages that are considered other insurance business under s. 609.03 (3) (a) 3., Stats., plus;

Ins 9.04(2)(b)2. 2. 3% of other premiums earned in the previous 12 months except that if the percentage of the liabilities of the health maintenance organization insurer that are covered liabilities is less than 90%, 6% of other premiums earned in the previous 12 months.

Ins 9.04(2)(c) (c) Each insurer licensed to write only limited service health organization business shall maintain a compulsory surplus to provide security against contingencies that affect its financial position but which are not fully covered by provider contracts, insolvency insurance, reinsurance, or other forms of financial guarantees. The compulsory surplus shall be the greater of 3% of the premiums earned by the limited service health organization in the previous 12 months, or $75,000.

Ins 9.04(2)(d) (d) The commissioner may accept a deposit of securities or letter of credit with the same terms and conditions as required under sub. (3) to satisfy the compulsory surplus requirement if the limited service health organization demonstrates to the satisfaction of the commissioner that it does not retain any risk of financial loss because all risk of loss has been transferred to providers through provider agreements. The commissioner may, by order, require a higher or lower compulsory surplus or may establish additional factors for determining the amount of compulsory surplus required for a particular limited service health organization.

Ins 9.04(3) (3) Deposit or letter of credit. Each limited service health organization shall maintain either a deposit of securities with the state treasurer or an acceptable letter of credit on file with the commissioner’s office. The amount of the deposit or letter of credit shall be not less than $75,000 for limited service health organizations. The letter of credit shall be payable to the commissioner whenever rehabilitation or liquidation proceedings are initiated against the limited service health organization.

Ins 9.04(4) (4) Risks. Risks and factors the commissioner may consider in determining whether to require greater compulsory surplus by order include, but are not limited to, those described under s. 623.11 (1) (a) and (b), Stats., and the extent to which the insurer effectively transfers risk to providers. A health maintenance organization insurer may transfer risk through any mechanism including, but not limited to, those provided under s. Ins 9.05 (4).

Ins 9.04(5) (5) Security surplus.

Ins 9.04(5)(a) (a) An insurer, including an insurer organized under ch. 613, Stats., writing health maintenance organization insurance or limited service health organization business, except for a health maintenance organization insurer or an insurer licensed to write only limited service health organization business, is subject to s. Ins 51.80.

Ins 9.04(5)(b) (b) Health maintenance organization insurers and insurers licensed to write only limited service health organization business should maintain a security surplus to provide an ample margin of safety and clearly assure a sound operation. The security surplus of a health maintenance organization insurer shall be the greater of:

Ins 9.04(5)(b)1. 1. Compulsory surplus plus 40% reduced by 1% for each $33 million of premium in excess of $10 million earned in the previous 12 months; or

Ins 9.04(5)(b)2. 2. 110% of its compulsory surplus.

Ins 9.04(5)(c) (c) The security surplus of an insurer licensed to write only limited service health organization business shall be not less than 110% of compulsory surplus.

Ins 9.04(6) (6) Insolvency protection for policyholders.

Ins 9.04(6)(a) (a) Each health maintenance organization insurer is required to either maintain compulsory surplus as required for other insurers under s. Ins 51.80 or to demonstrate that in the event of insolvency all of the following shall be met:

Ins 9.04(6)(a)1. 1. Enrollees hospitalized on the date of insolvency will be covered until discharged.

Ins 9.04(6)(a)2. 2. Enrollees will be entitled to similar, alternate coverage that does not contain any medical underwriting or pre-existing limitation requirements.

Ins 9.04(6)(b) (b) Each insurer licensed to write only limited service health organization business that provides hospital benefits shall demonstrate that, in the event of an insolvency, enrollees hospitalized at the time of an insolvency will be covered until discharged.

Ins 9.04 History History: Cr. Register, February, 2000, No. 530, eff. 3-1-00.

Ins 9.05 Ins 9.05 Business plan. All applications for certificates of incorporation and certificates of authority of a health maintenance organization insurer or an insurer licensed to write only limited service health organization business shall include a proposed business plan. In addition to the items listed in ss. 611.13 (2) and 613.13 (1), Stats., the following information shall be contained in the business plan:

Ins 9.05(1) (1) Organization type.

Ins 9.05(1)(a) (a) The type of health maintenance organization insurer, including whether the providers affiliated with the organization will be salaried employees, group contractors, or individual contractors.

Ins 9.05(1)(b) (b) The type of limited service health organization insurer including:

Ins 9.05(1)(b)1. 1. The name and address of the insurer licensed to write only limited service health organization business and the names and addresses of individual providers, if any, who control the insurer licensed to write only limited service health organization business, and;

Ins 9.05(1)(b)2. 2. The type of organization, including information on whether providers will be salaried employees of the organization or individual or group contractors.

Ins 9.05(2) (2) Feasibility studies and marketing surveys. A summary of feasibility studies or marketing surveys that support the financial and enrollment projections for the health maintenance organization insurer or the insurer licensed to write only limited service health organization business. The summary shall include the potential number of enrollees in the operating territory, the projected number of enrollees for the first 5 years, the underwriting standards to be applied, and the method of marketing the organization.

Ins 9.05(3) (3) Geographical service area. The geographical service area by county including a chart showing the number of primary and specialty care providers with locations and service areas by county; the method of handling emergency care, with locations of emergency care facilities; and the method of handling out–of–area services.

Ins 9.05(4) (4) Provider agreements. The extent to which any of the following will be included in provider agreements and the form of any provisions that do any of the following:

Ins 9.05(4)(a) (a) Limit the providers’ ability to seek reimbursement for covered services from policyholders or enrollees.

Ins 9.05(4)(b) (b) Permit or require the provider to assume a financial risk in the health maintenance organization insurer, including any provisions for assessing the provider, adjusting capitation or fee–for–service rates, or sharing in the earnings or losses.

Ins 9.05(4)(c) (c) Govern amending or terminating agreements with providers.

Ins 9.05(5) (5) Provider availability. A description of how services will be provided to policyholders in each service area, including the extent to which primary care will be given by providers under contract with the health maintenance organization insurer.

Ins 9.05(6) (6) Quality assurance. A summary of comprehensive quality assurance standards that identify, evaluate and remedy problems related to access to care and continuity and quality of care. The summary shall address all of the following:

Ins 9.05(6)(a) (a) A written internal quality assurance program.

Ins 9.05(6)(b) (b) Written guidelines for quality of care studies and monitoring.

Ins 9.05(6)(c) (c) Performance and clinical outcomes–based criteria.

Ins 9.05(6)(d) (d) Procedures for remedial action to address quality problems, including written procedures for taking appropriate corrective action.

Ins 9.05(6)(e) (e) Plans for gathering and assessing data.

Ins 9.05(6)(f) (f) A peer review process.

Ins 9.05(6)(g) (g) A process to inform enrollees on the results of the insurer’s quality assurance program.

Ins 9.05(6)(h) (h) Any additional information requested by the commissioner.

Ins 9.05(7) (7) Plan administration. A summary of how administrative services will be provided, including the size and qualifications of the administrative staff and the projected cost of administration in relation to premium income. If management authority for a major corporate function is delegated to a person outside the organization, the business plan shall include a copy of the contract. Contracts for delegated management authority shall be filed for approval with the commissioner under ss. 611.67 and 618.22, Stats. The contract shall include all of the following:

Ins 9.05(7)(a) (a) The services to be provided.