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.