Date:November 22, 2006
To:All Insurers Licensed to Write Health Insurance in Wisconsin
From:Jorge Gomez, Commissioner of Insurance
Subject:Implementation of Ch. Ins 9, Wis. Adm. Code, Relating to Defined Network Plans, Preferred Provider Plans or Limited Service Health Organizations

This bulletin applies to insurers with defined network plans, preferred provider plans (PPP), or limited service health organizations doing business in Wisconsin and is effective January 1, 2007, for policies or certificates newly issued and January 1, 2008, for renewed policies or certificates.

Background

Chapter 609, Wis. Stat., was revised by 2001 Wis. Act 16 and replaced the term "managed care plan" with the term "defined network plan." 2001 Wis. Act 16 defines the term "defined network plan" as a health benefit plan that requires an enrollee of the health benefit plan, or creates incentives, including financial incentives, for an enrollee of the health benefit plan, to use providers that are managed, owned, under contract with, or employed by the insurer offering the health benefit plan. [Section 609.01 (1b), Wis. Stat.]

2001 Wis. Act 16 relaxed some of the statutory requirements applicable to PPPs formerly under ch. 609, Wis. Stat., by creating distinctions between the requirements applicable to PPPs that meet the definition of a defined network plan and those that do not. Specifically, those requirements related to access to care, continuity of care, quality of care, data reporting, and all mandated benefits are considered as applicable. The amendments to ch. 609, Wis. Stat., became effective on September 1, 2001.

This bulletin is intended to provide information to defined network plans, PPP and limited service health organization insurers related to changes in Wisconsin's defined network rule, ch. Ins 9, Wis. Adm. Code, which correspond with the statutory requirements in ch. 609, Wis. Stat., as amended by 2001 Wis. Act 16. Throughout this bulletin, the term PPP refers only to those PPPs that meet the definition of preferred provider plan even though the plan may also meet the definition of a defined network plan.

This bulletin is not intended to be a complete discussion of the rule or of how the Office of the Commissioner of Insurance will interpret and implement the new regulation. It is each insurer's responsibility to determine which provisions are applicable to its plans, and to ensure that its policy forms and procedures are in compliance with the new rule.

A copy of the complete rule can be obtained by sending a written request, along with a large self-addressed, stamped envelope to OCI's Central Files Section, or you may review the rule on OCI's Web site at http://oci.wi.gov/rules/0900fn06_2.pdf (opens in new window) and http://oci.wi.gov/rules/0900fn06.pdf (opens in new window). (Note: You will need an Adobe Acrobat Reader to view or print the rule listed above, which you can download at no cost from Adobe )

SUBCHAPTER I - DEFINITIONS

Sections Ins 3.67, 9.01, and 18.03, Wis. Adm. Code, have been amended to reflect the change from the term "managed care plan" to "defined network plan." Further, the definitions of "grievance" and "complaint" in s. Ins 9.01, Wis. Adm. Code, have been modified to be consistent with the corresponding definitions in ch. Ins 18, Wis. Adm. Code.

Section Ins 9.01, Wis. Adm. Code, includes new definitions, including definitions of the terms "intermediate entity" and "participating."

An "intermediate entity" is defined as 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 to enrollees and also contracts with an insurer so the contracted services are provided to the insurer's enrollees.

The definition of "participating" includes a provider as being under contract with the insurer when the provider is under contract with an intermediate entity.

SUBCHAPTER II - FINANCIAL STANDARDS

The existing standard in s. Ins 9.07, Wis. Adm. Code, relating to copies of provider agreements, has been modified to clarify that any party to a provider agreement may assert that a portion of the contracts contain trade secrets that the commissioner may withhold to the extent it may be withheld under s. Ins 6.13, Wis. Adm. Code.

SUBCHAPTER III - MARKET CONDUCT STANDARDS

I. Preferred Provider Compliance

Sections Ins 9.25, 9.26, 9.27 and 9.32 (2), Wis. Adm. Code, contain newly created regulatory provisions pertaining to PPPs that reflect the nature of PPPs as compared to defined network plans. The sections denote the requirements that a plan must meet in order to be regulated as an insurer offering a PPP rather than a defined network plan even though many PPPs also meet the requirements of a defined network plan.

Coinsurance

Section Ins 9.25 (1), Wis. Adm. Code, establishes the coinsurance criteria that determine whether a health care plan meets the definition of a PPP by providing coverage of services regardless of whether the services are performed by a participating or nonparticipating provider. The section requires that a PPP pay a coinsurance rate of not less than 60% and the enrollee pay a coinsurance rate of not more than 40%, or that the PPP pay a coinsurance rate of not less than 50% and the enrollee pay not more than 50% coinsurance if the insurer provides the enrollee with the disclosure notice in s. Ins 9.25 (5), Wis. Adm. Code.

Material Exclusions

Section Ins 9.25 (2), Wis. Adm. Code, requires that a PPP equally applies material exclusions regardless of whether the services are performed by participating or nonparticipating providers. The section allows the use of cost-sharing differentials that exceed those in s. Ins 9.27, Wis. Adm. Code, in specific situations provided disclosure is made at the time of solicitation and in the policy form. The circumstances under which such deviation is permissible include: use of centers of excellence for transplant or other unique disease treatment services, preventive health care services limited to immunizations, consistent with s. 632.895 (14), Wis. Stat., and services with covered benefits greater than the minimum required for compliance with the mandated benefits under ss. 632.895 and 632.89, Wis. Stat.

Financial Incentives

Section Ins 9.25 (3), Wis. Adm. Code, restricts an insurer offering a PPP from using financial incentives other than maximum limits, out-of-pocket limits and incentives described in s. Ins 9.27, Wis. Adm. Code, to encourage enrollees to use participating providers.

Utilization Management

Section Ins 9.25 (4), Wis. Adm. Code, allows an insurer offering a PPP to use utilization management, including preauthorization or similar methods, for denying access to or coverage of services of nonparticipating providers with just cause and without such frequency as to indicate a general business practice.

Disclosure of Limited Benefits

Section Ins 9.25, Wis. Adm. Code, requires that an insurer offering a PPP that covers services of nonparticipating providers at a coinsurance rate of at least 50% but less than 60%, provide a disclosure notice. The disclosure notice informs the applicant at the time of solicitation and within the policy or certificate of the potential risk for additional financial expenses when using nonparticipating providers.

Section Ins 9.27, Wis. Adm. Code, requires an insurer offering a PPP to comply with the following:

  1. Limit a coinsurance differential between participating and nonparticipating providers performing the same services to 30% or less. If a coinsurance differential is greater than 30%, the insurer shall provide the enrollee with the required disclosure notice.
  2. Limit a deductible applicable to nonparticipating providers to no more than 2 times greater or no more than $2,000 higher than the deductible applicable to participating providers. If a deductible is more than 2 times greater or more than $2,000 higher than the deductible applicable to participating providers, the insurer shall provide the enrollee with the required disclosure notice.
  3. Limit a co-payment for nonparticipating providers to no more than 3 times greater than that applied to participating providers, or no more than $100 for services of a health care provider and $300 for a health care facility. If a co-payment is more than $100 for a health care provider or $300 for a health care facility, the insurer shall provide the enrollee with the required disclosure notice.

Certification

Section Ins 9.25 (6), Wis. Adm. Code, requires insurers offering a PPP to annually certify compliance with s. Ins 9.25, Wis. Adm. Code. The Certification of Preferred Provider Plan Same Service Provisions form that an insurer must use to annually certify to OCI its compliance with ss. Ins 9.25, 9.27 and 9.32 (2), Wis. Adm. Code, is included as Attachment 1 to this Bulletin.

Referrals

Section Ins 9.25 (7), Wis. Adm. Code, prohibits an insurer offering a PPP from requiring a referral to obtain coverage for care from participating or nonparticipating providers in accordance with s. 609.01 (4), Wis. Stat., and requires the insurer to comply with ss. Ins 9.27 and 9.32 (2), Wis. Adm. Code.

Access Standards

Section Ins 9.31, Wis. Adm. Code, requires that an insurer offering a PPP file an annual certification with the commissioner no later than August 1 of each year certifying compliance with the access standards contained in ss. 609.22 (1), (4m), (5), (6) and (8), Wis. Stat., and s. Ins 9.32 (2), Wis. Adm. Code.

Section Ins 9.32 (2) (a), Wis. Adm. Code, requires that an insurer offering a PPP provide covered benefits by plan providers with reasonable promptness consistent with normal practices and standards in the geographic area. The section does not require that an insurer offering a PPP offer a choice of participating providers in each geographic area.

Section Ins 9.32 (2) (b), Wis. Adm. Code, requires that an insurer offering a PPP provide a sufficient number and type of participating providers to adequately deliver all covered services based on the demographics of the geographic area and to meet the anticipated needs of the enrollees served by the plan. The participating providers offered in each geographic area should include at least one primary care provider and a participating provider with expertise in obstetrics and gynecology accepting new enrollees.

Section Ins 9.32 (2) (d), Wis. Adm. Code, requires that an insurer offering a PPP include in its provider directory a prominent Important Notice encouraging enrollees to contact the insurer to verify whether providers involved in their care are participating providers. The notice must comply with Appendix D of ch. Ins 9, Wis. Adm. Code.

Section Ins 9.32 (2) (e), Wis. Adm. Code, requires that, when an insurer offering a PPP fails to comply with par. (d), the insurer cover benefits provided by nonparticipating providers involved in scheduled elective procedures or other scheduled non-emergency care at the rate the insurer pays a nonparticipating provider after applying any cost-sharing provisions that apply to participating providers.

Section Ins 9.32 (2) (fm), Wis. Adm. Code, requires that an insurer offering a PPP provide coverage for an emergency medical condition, as defined by s. 632.85, Wis. Stat., from a nonparticipating provider if the enrollee cannot reasonably reach a participating provider or is admitted for inpatient care. The insurer shall compensate the nonparticipating providers at the rate it pays nonparticipating providers and after applying any co-payments, coinsurance, deductibles or other cost-sharing provisions that apply to participating providers until the nonparticipating provider has met its obligations under the federal Emergency Medical Treatment and Active Labor Act. Note: An insurer may use UCR or the prevailing rate if it uses the methodology to determine the nonparticipating provider rate for its claims.

Section Ins 9.33, Wis. Adm. Code, provides that nothing in s. Ins 9.32, Wis. Adm. Code, changes the reimbursement payable or the amounts due, including cost-sharing provisions, from an enrollee when the enrollee of a PPP elects to utilize the services of a nonparticipating provider when a participating provider is available in accordance with s. Ins 9.32 (2) (a) and (b), Wis. Adm. Code, and the enrollee is provided with the disclosure and Important Notice required under s. Ins 9.32 (2) (d), Wis. Adm. Code.

Continuity of Care

Section Ins 9.35 (1m), Wis. Adm. Code, requires that an insurer offering a PPP either comply with the options under s. Ins 9.35 (1) (a) or (b), Wis. Adm. Code, or have a contract with participating providers requiring the provider to notify all plan enrollees of the enrollees' rights under s. 609.24, Wis. Stat., if the provider's participation terminates for reasons other than the provider no longer practices in the plan's geographic service area or the plan terminates the provider's contract due to provider misconduct.

Required Quality Assurance and Remedial Action Plans

Section Ins 9.40 (3), Wis. Adm. Code, requires that insurers offering a PPP develop procedures for taking effective and timely remedial action to address issues arising from quality of care including access to and continuity of care from participating primary care providers. The remedial action plan shall at least contain the designation of a senior level staff person responsible for the oversight of the remedial action plan; a written plan for the oversight of any delegated functions; a procedure for periodic review of services related to clinical protocols and utilization management; periodic and regular review of grievances, complaints and OCI complaints; a written plan for maintaining the confidentiality of protected information; and documentation of timely correction of access and continuity of care issues.

II. Defined Network Compliance

Section Ins 9.26, Wis. Adm. Code, states that an insurer offering a PPP that does not cover the same services when performed by a nonparticipating provider as it covers when those services are performed by a participating provider is subject to the requirements of a defined network plan.

Section Ins 9.31, Wis. Adm. Code, requires that an insurer offering a defined network plan that is not a PPP file with the Commissioner no later than August 1 of each year an annual certification of compliance with access standards.

Section Ins 9.32 (1), Wis. Adm. Code, requires that an insurer offering a defined network plan that is not a PPP provide covered benefits by plan providers with reasonable promptness with respect to geographic location, hours of operation, waiting times for appointments in provider offices and after hours care. The availability of plan providers should reflect the usual practice and usual medical travel times within the local area. The insurer must have a sufficient number and type of plan providers to adequately deliver all covered services based on the demographics and health status of current and expected enrollees. It must also have the capability to provide 24-hour nationwide toll-free telephone access for its enrollees to the plan or to a participating provider for authorization for care that is covered by the plan. Enrollees must have the opportunity to speak to a person.

Section Ins 9.40 (2) (b), Wis. Adm. Code, requires than an insurer offering a defined network plan that is not also a PPP or health maintenance organization (HMO), submit a quality assurance plan consistent with s. 609.32, Wis. Stat., by April 1 2007, and April 1 of each subsequent year.

III. PPP, Defined Network Plan and Limited Service Health Organization Compliance

Section Ins 9.41, Wis. Adm. Code, requires that an insurer offering a defined network plan, preferred provider plan or limited service health organization treat and process an OCI complaint as a grievance at the request of the Commissioner. Section Ins 9.42, Wis. Adm. Code, regarding compliance program requirements is amended to include preferred provider plans or limited service health organizations to the extent applicable.

IV. Group and Blanket Health Insurer Compliance

Section Ins 9.30, Wis. Adm. Code, requires that an insurer that covers 100 or more residents of this state under a policy otherwise exempt under s. 600.01 (1) (b) 3., Wis. Stat., comply with the access standards in s. Ins 9.32 (2), Wis. Adm. Code, and s. 609.22 (2), Wis. Stat.

Explanation of Other Amendments to Ch. Ins 9, Wis. Adm. Code

  • Repeals ss. Ins 9.30, 9.34, and 9.40 (1) (c), Wis. Adm. Code.
  • Renumbers ss. Ins 9.31 and 9.32, Wis. Adm. Code.

Section Ins 9.32 (2), Wis. Adm. Code, as created requires that an insurer offering a PPP file an annual certification with the commissioner no later than August 1 of each year certifying compliance with the access standards contained in ss. 609.22 (1), (4m), (5), (6) and (8), Wis. Stat., and s. Ins 9.32 (2), Wis. Adm. Code, for the preceding year, on a form prescribed by the Commissioner and signed by an officer of the company. The rule requires that the certification be filed within 3 months after March 1, 2006, and thereafter, no later than August 1 of each year. However, s. Ins 9.32 (2), Wis. Adm. Code, was newly created and first applies to newly issued policies or certificates of insurance on or after January 1, 2007, and to policies or certificates renewed on or after January 1, 2008. Therefore, insurers offering PPPs shall file certification of compliance under s. Ins 9.32 (2), Wis. Adm. Code, beginning within 3 months after March 2008, for newly issued policies or certificates of insurance and beginning within 3 months after March 2009, for policies or certificates renewed on or after January 1, 2008.

Insurers offering defined network plans should continue to file annual certification of compliance under s. Ins 9.34, Wis. Adm. Code, for those plans in effect during 2006. Insurers offering defined network plans should file a certification of compliance under s. Ins 9.32 (2), Wis. Adm. Code, beginning within 3 months after March 2008, for newly issued policies or certificates of insurance and beginning within 3 months after March 2009, for policies or certificates renewed on or after January 1, 2008.

OCI Rule Currently Pending and Relating to Ch. Ins 9, Wis. Adm. Code

The OCI has additionally repealed s. Ins 9.32 (2) (c) and (e) 1., Wis. Adm. Code, and modified s. Ins 9.33, Wis. Adm. Code, and incorporated those revisions within the rule that is expected to be effective January 1, 2007. Further, the OCI issued an emergency rule and has noticed both the permanent and emergency rule for hearing on December 12, 2006, creating ss. Ins 9.25 (8) and 9.27 (4), Wis. Adm. Code, that permits an insurer offering a PPP that issued a policy prior to January 1, 2007, and periodically renewed after December 31, 2006, from meeting the requirements of ss. Ins 9.25 and 9.27, Wis. Adm. Code, respectively, as to that policy or policies.

Persons To Contact For Additional Information

If you have questions, please put them in writing and address or e-mail them to the appropriate contact persons listed below:

Grievance Requirements: Stephanie Cook
Market Regulation Bureau
stephanie.cook@wisconsin.gov
General Requirements: Diane Dambach
Market Regulation Bureau
diane.dambach@wisconsin.gov
Financial Standards: Richard Hinkel
Financial Analysis & Examinations Bureau
richard.hinkel@wisconsin.gov

Attachment 1

Note: You will need an Adobe Acrobat Reader to view or print the form listed below, which you can download at no cost from Adobe .

OCI 26-112 Certification of Preferred Provider Plan Same Service Provisions (opens in new window)