Date:January 10, 2000
To:All Insurers Authorized to Write Insurance in Wisconsin
From:Connie L. O'Connell, Commissioner of Insurance
Subject:Newly Enacted Legislation, 1999 Wisconsin Act 9 and 1997 Wisconsin Act 231

The following is a summary of the provisions of 1999 Wisconsin Act 9, the 1999-2001 Biennial Budget, and 1997 Act 231, which directly affect OCI and the insurance industry. You should review the bulletin and determine which laws apply to your company. You may obtain copies of either piece of legislation from Legislative Documents, 1 East Main Street, Madison, Wisconsin 53703, (608) 266-2400 or through the Legislature's web page at www.legis.state.wi.us.

It is each insurer's responsibility to ensure that its policy forms and procedures are in compliance with the new laws.

Required Coverage of Mental and Nervous Disorders, Alcoholism and Other Drug Abuse

Section 632.89, Wis. Stat., requires group or blanket disability insurance policies that provide any coverage for inpatient hospital treatment and/or outpatient treatment, to also provide coverage for the treatment of mental and nervous disorders, alcoholism and other drug abuse.

The statute has been amended to allow coverage for such treatment to be subject to exclusions or limitations (including deductibles and copayments) that are generally applicable to other conditions covered under such policies. The restriction that an insurer may apply only a copayment of up to 10% for inpatient hospital services, outpatient services, or transitional treatment arrangements, has been deleted. Insurers are now allowed to reduce the minimum annual dollar benefit required for such services by any applicable cost sharing (deductibles, copayments, or coinsurance amounts) at the level charged under the policy for other inpatient, outpatient, or transitional treatment services.

Insurers are now required to provide an annual benefit for the treatment of mental and nervous disorders, alcoholism and other drug abuse as described below, except that the total annual coverage that an insurer is required to provide under a policy need not exceed $7,000, or the equivalent benefits measured in services rendered.

Insurers must provide annual benefits not less than:

$7,000 for inpatient hospital services, $2,000 for outpatient services, and $3,000 for transitional treatment arrangements, reduced by any applicable cost sharing (deductibles, copayments, or coinsurance amounts) at the level charged under the policy for other inpatient, outpatient, or transitional treatment services, or the equivalent benefit measured in services rendered (number of days or visits), or, if a policy does not use cost sharing, $6,300 in equivalent benefits measured in services rendered for inpatient hospital services, $1,800 in equivalent benefits measured in services rendered for outpatient services, and $2,700 for equivalent benefits measured in services rendered for transitional treatment arrangements.

These changes first apply to policies issued or renewed on or after October 29, 1999.

Obstetric and Gynecologic Services

Act 9 created Section 609.22 (4m), Wis. Stat., which prohibits a managed care plan from requiring a female enrollee to obtain a referral or a standing referral for covered obstetric or gynecologic benefits provided by a participating provider who specializes in obstetrics and gynecology, regardless of whether the participating provider is the enrollee's primary provider.

A managed care plan also may not penalize or restrict the coverage of the enrollee for obtaining obstetric or gynecologic services without a referral, or penalize or restrict the contract of the participating provider for providing obstetric or gynecologic services to an enrollee without a referral.

A managed care plan must include language which states a female enrollee may obtain obstetric or gynecologic services from a participating provider who specializes in obstetrics and gynecology without a referral, in every policy or group certificate issued by the managed care plan. Such language is not necessary if the managed care plan does not require its enrollees to obtain a referral from a primary care provider to obtain services from any of the plan's other participating providers.

These changes first apply to policies issued or renewed on or after October 29, 1999. For policies covering employes pursuant to a collective bargaining agreement, the changes first apply to such policies and group certificates that are issued or renewed on the earlier of the day on which the collective bargaining agreement expires or the day on which the collective bargaining agreement is extended, modified or renewed.

Standard Plan and Point-0f-Service Plan Required

Section 609.10, Wis. Stat., has been amended and now requires an employer who employs 25 or more full-time employees and who offers any of its employees a health maintenance organization plan or a preferred provider plan that provides comprehensive health care services, to also offer employees, at least annually, an opportunity to enroll in both a standard plan and a point-of-service plan. Employers are responsible for providing employees notice of the opportunity to enroll in such health plans and for providing information concerning the differences among the plans. If, after providing such notice and information to employees, fewer than 25 employees indicate that they wish to enroll in the standard plan, the employer need not offer that plan on that occasion.

The requirement does not apply for employers who offer their employees a health maintenance organization or preferred provider plan only through an insurer that is a cooperative association organized under ss. 185.981 to 185.985, or an insurer that is restricted under s. 609.03 (3), Wis. Stat. Many insurers that offer health maintenance organization policies have a license restricted under s. 609.03 (3), Wis. Stats. These insurers should take care to inform employers of their license status and of the exemption from the statutory requirement to also provide a standard and point of service plan.

The effective date of this change is April 1, 2001. For employers who issue policies covering employees pursuant to a collective bargaining agreement, the changes first apply to such policies and group certificates that are issued or renewed on the earlier of the day on which the collective bargaining agreement expires or the day on which the collective bargaining agreement is extended, modified or renewed.

Medical Records Privacy

Act 231 created s. 610.70, Wis. Stat., that regulates the disclosure of personal medical information. The new section places restrictions on both insurers and the persons that regularly assemble or collect personal medical information for the primary purpose of providing the personal medical information to insurers for the determination of an individual's eligibility for an insurance coverage, benefit or payment or for the servicing of an insurance application, policy or certificate. Specifically, the section delineates the form that is to be used in obtaining authorization for release of personal medical information, the timeframe for which such information may be requested and maintained, how and to whom information may be re-released to other entities or health care providers, notice requirements to individuals or insureds and the right of the individual to request a correction, amendment or deletion of personal medical information that is in the insurer's possession.

This section is effective June 1, 1999.

Disposal Of Records Containing Personal Information

Act 9 created s. 895.505, Wis. Stat., which places restrictions on how an organization, including insurers and its agents acting upon its behalf, that possesses information relating to a person's physical or mental health, medical history or medical treatment, is to dispose of this information. Insurers that obtain information from an insured, or an individual seeking coverage, pertaining to the individual's physical or mental health, medical history or medical treatment will be required to take specific steps to ensure that this personally identifiable information is shredded, erased, modified or otherwise handled so that no unauthorized person has access to the information. Failure to comply with the statute and protect personally identifiable information may result in a civil penalty and liability for damages to the individual whose personal information was improperly obtained.

This section is effective February 1, 2000.

PERSONS TO CONTACT FOR ADDITIONAL INFORMATION

If you have questions, please put them in writing and address them to the appropriate contact person listed below:

Mental/Nervous
&AODA Mandate
Pam Ellefson or
Diane Dambach
Health & Life Section
Market Regulation Bureau
 
Obstetric and Gynecologic Benefit Barbara Belling, or
Stephanie Cook
Health & Life Section
Market Regulation Bureau
 
Point of Service Requirement Julie Walsh
Legal Unit
 
Medical Records Privacy Julie Walsh
Legal Unit
 
Records Disposal Julie Walsh
Legal Unit