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)(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)(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 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00. Ins 9.05Ins 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)(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)(b)(b) Written guidelines for quality of care studies and monitoring. 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)(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)(c)(c) The method of payment including, any provisions for the administrator to participate in the profit or losses of the plan. Ins 9.05(7)(e)(e) Any provisions for modifying, terminating or renewing the contract. Ins 9.05(8)(8) Financial projections. A summary of: current and projected enrollment; income from premiums by type of payor; other income; administrative and other costs; the projected break even point, including the method of funding the accumulated losses until the break even point is reached; and a summary of the assumptions made in developing projected operating results. Ins 9.05(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 health maintenance organization insurer. These include hold harmless agreements by providers, insolvency insurance, reinsurance or other guarantees. Ins 9.05(10)(10) Contracts with enrollees. A summary of benefits to be offered enrollees including any limitations and exclusions and the renewability of all contracts to be written. Ins 9.05 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00. Ins 9.06Ins 9.06 Changes in the business plan. Ins 9.06(1)(1) A health maintenance organization insurer or an insurer licensed to write only limited service health organization business shall file a written report of any proposed substantial change in its business plan. The insurer shall file the report at least 30 days prior to the effective date of the change. The office may disapprove the change. The insurer 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 insurer’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 plan. Any changes in the items listed in s. Ins 9.05 (4) shall be filed under this section. Ins 9.06(2)(2) A change in the quality assurance plan conducted in accordance with s. Ins 9.40 and s. 609.32, Stats., is not a reportable change in a business plan. Ins 9.06 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00. Ins 9.07Ins 9.07 Copies of provider agreements. Ins 9.07(1)(1) Notwithstanding any claim of trade secret or proprietary information, all insurers offering a defined network plan, preferred provider plan or limited service health organization shall, upon request, from the commissioner, make available to the commissioner all executed copies of any provider agreements between the insurer 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 9.07(2)(2) All health maintenance organization insurers or insurers licensed to write only limited service health organization business shall file with the commissioner, prior to doing business, copies of all executed provider agreements and other contracts covering liabilities of the health maintenance organization. For contracts with providers, 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 9.08Ins 9.08 Other reporting requirements. Ins 9.08(1)(1) Annual statement. All insurers authorized to write health maintenance organization business and insurers licensed to write only limited service health organization business shall file with the commissioner by March 1 of each year an annual statement for the preceding year. A health maintenance organization insurer and limited service health organization insurer shall use the current health annual statement blank prepared by the national association of insurance commissioners. Ins 9.08(1)(a)(a) A health maintenance organization insurer shall include with its annual statement a statement of covered expenses, and a special procedures opinion from a certified public accountant, in the form prescribed by the commissioner as appendix A. Ins 9.08(1)(b)(b) A health maintenance organization insurer shall file a quarterly report, including a report concerning covered expenses, in a form prescribed by the commissioner within 45 days after the close of each of the first 3 calendar quarters of the year unless the commissioner has notified the insurer that another reporting schedule is appropriate. Ins 9.08(1)(c)(c) A health maintenance organization insurer shall include with its annual audit financial reports filed under s. Ins 50.05 a statement of covered expenses and an audit opinion concerning the statement. Both the statement and opinion shall be in the form prescribed by the commissioner as appendix B and are due no later than May 1 of each year. Ins 9.08(1m)(1m) Medicare and Medicaid Health Maintenance Organizations. A health maintenance organization insurer that writes 100 % of its business to Medicare or Medicaid recipients, or a combination of the 2, is not required to include a special procedures opinion from a certified public accountant as required by sub. (1) (a) or an audit opinion concerning the statement of covered expenses as required by sub. (1) (c). Ins 9.08(2)(2) Quarterly report. An insurer writing health maintenance organization business, other than a health maintenance organization insurer, shall file a quarterly report in a form prescribed by the commissioner within 45 days after the close of each of the first 3 calendar quarters of the year unless the commissioner notifies the insurer that another reporting schedule is appropriate. Ins 9.08(3)(a)(a) If a health maintenance organization insurer fails to file a statement or opinion required under subs. (1) to (3) by the time required, it is presumed, in any action brought by the office within one year of the due date, that the health maintenance organization insurer is in financially hazardous condition and that the percentage of its liabilities for health care costs which are covered liabilities is and continues to be less than 65% for the purpose of s. 609.95, Stats. Ins 9.08(3)(b)(b) It is presumed that the percentage of liabilities that are covered liabilities of a health maintenance organization insurer is and continues to be not greater than the percentage of covered expenses stated in the report or statement filed under subs. (1) to (3) for the most recent period. Ins 9.08(3)(c)(c) The health maintenance organization insurer has the burden of refuting a presumption under par. (a) or (b). Ins 9.08 NoteNote: The form described in sub. (1) may be obtained from the Office of the Commissioner of Insurance, P. O. Box 7873, Madison, WI 53707-7873.
Ins 9.08 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00; CR 22-070: am. (1) (intro.), cr. (1m), r. (4) Register June 2023 No. 810, eff. 7-1-23; correction in (1m) made under s. 35.17, Stats., Register June 2023 No. 810. Ins 9.09Ins 9.09 Notice of election and termination of hold harmless. Ins 9.09(1)(1) A notice of election to be exempt from s. 609.91 (1) (b), Stats., or a notice of termination of election to be subject to s. 609.91 (1) (c), Stats., in accord with s. 609.925 (1), Stats., is effective only if filed on the form prescribed by the commissioner and if the form is properly completed. Ins 9.09(2)(2) A notice of termination of election to be exempt from s. 609.91 (1) (b), Stats., in accord with s. 609.92 (4), Stats., or a notice of termination of election to be subject to s. 609.91 (1) (c), Stats., in accord with s. 609.925 (2), Stats., shall be filed on the form prescribed by the commissioner. Notices described in this subsection that are filed with the commissioner but are not on the prescribed form or are not properly completed are nevertheless effective. Ins 9.09(3)(3) In accordance with s. 609.93, Stats., a provider may not exercise an election under s. 609.92 or 609.925, Stats., separately from a clinic or an individual practice association with respect to health care costs arising from health care provided under a contract with, or through membership in, the individual practice association or provided through the clinic. Ins 9.09 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00. Ins 9.10Ins 9.10 Receivables from affiliates. A receivable, note or other obligation of an affiliate to a health maintenance organization insurer and limited service health organization insurer shall be valued at zero by the insurer for all purposes including, but not limited to, the purpose of reports or statements filed with the office, unless the commissioner specifically approves a different value. The different value shall be not more than the amount of the receivable, note or other obligation which is fully secured by a security interest in cash or cash equivalents held in a segregated account or trust. Ins 9.10 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00. Ins 9.11Ins 9.11 Receivables from Individual Practice Association (“IPA”). After December 31, 1990, a health maintenance organization insurer shall value receivables, notes or obligations of individual practice associations as defined under s. 600.03 (23g), Stats., at zero for all purposes including, but not limited to, the purpose of reports or statements filed with the office, unless the receivable, note or obligation is fully secured by a security interest in cash or cash equivalents held in a segregated account or trust. Ins 9.11 HistoryHistory: Cr. Register, February, 2000, No. 530, eff. 3-1-00. Ins 9.12Ins 9.12 Incidental or immaterial indemnity business in health maintenance organizations. Ins 9.12(1)(1) Except as provided by sub. (2), insurance business is not incidental or immaterial under s. 609.03 (3) (a) 3., Stats., if a health maintenance organization insurer issues coverage which is not typically included in a health maintenance organization or limited service health organization policy and the insurer does any of the following: Ins 9.12(1)(b)(b) The total premium for policies containing the coverage exceeds or is projected to exceed 5% of total premium earned in any 12–month period. Ins 9.12(2)(2) Insurance business is incidental or immaterial under s. 609.03 (3) (a) 3., Stats., if the business is written according to the terms of a specific business plan for issuance of coverage under s. 609.03 (3) (a) 3., Stats., and the business plan is approved in writing by the office. A request for approval to do business under this paragraph including, but not limited to, issuance of policies with point of service coverage, shall include a detailed business plan, a copy of the policy form, a detailed description of how the business will be marketed and premium volume controlled, and other information prescribed by the office. The total premium for policies containing coverages subject to this paragraph and policies issued under sub. (1) may not exceed 10% of premium earned or projected to be earned in any 12–month period. Ins 9.12(3)(3) If the commissioner approves insurance business as incidental or immaterial the commissioner may also, by order under s. Ins 9.04 (2), require the insurer to maintain more than the minimum compulsory surplus.
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