CR_12-026 Hearing to consider revising sections Ins 17.01 (3) and 17.28, relating to Injured Patients and Families Compensation Fund annual fund fees and mediation panel fees for fiscal year 2013 and affecting small business.

Wisconsin Administrative Register No. 677, 5/31/2012

Rule-Making Notices

Notice of Hearing

Insurance

CR 12-026

Notice is hereby given that pursuant to the authority granted under section 601.41 (3) , Stats., and the procedures set forth in under sections 227.18 and 227.24 (4) , Stats., OCI will hold a public hearing to consider the adoption of the attached proposed rulemaking order affecting sections Ins 17.01 (3) and 17.28 , Wis. Adm. Code, relating to Injured Patients and Families Compensation Fund annual fund fees and mediation panel fees for fiscal year 2013 and affecting small business.

Hearing Information

Date:   Tuesday, June 19, 2012

Time:   10.:00 a.m.
(or as soon thereafter as the matter may be reached)

Location:   OCI
  2 nd Floor Room 227
  125 South Webster St.
  Madison, WI 53703

Comments

Written comments can be mailed to:

  Julie E. Walsh

  Legal Unit - OCI Rule Comment for Rule Ins 1728

  Office of the Commissioner of Insurance

  PO Box 7873

  Madison WI 53707-7873

Written comments can be hand delivered to:

  Julie E. Walsh

  Legal Unit - OCI Rule Comment for Rule Ins 1728

  Office of the Commissioner of Insurance

  125 South Webster St – 2 nd Floor

  Madison WI 53703-3474

Comments can be emailed to:

  Julie E. Walsh

  [e-mail]

Comments submitted through the Wisconsin Administrative Rule Web site at:
http://adminrules.wisconsin.gov on the proposed rule will be considered.

The deadline for submitting comments is 4:00 p.m. on the 14 th day after the date for the hearing stated in this Notice of Hearing.

Copies

A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the OCI internet Web site at http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, Public Information and Communications, OCI, at: [e-mail] , [phone], 125 South Webster Street – 2 nd Floor, Madison WI or PO Box 7873, Madison WI 53707-7873.

Analysis Prepared by the Office of the Commissioner of Insurance

Statutes interpreted

Sections 655.27 (3) , and 655.61 , Wis. Stats.

Statutory authority

Sections 601.41 (3) , 655.004 , 655.27 (3) (b) , and 655.61 , Wis. Stats.

Explanation of OCI's authority to promulgate the proposed rule under these statutes

The injured patients and families compensation fund (fund), was established by and operated under ch. 655 , Stats. The commissioner of insurance with approval of the board of governors (board) is required to annually set the fees for the fund and the medical mediation panel by administrative rule. Section 655.04 , Stats., provides that the director of state courts and the commissioner may promulgate rules necessary to enable them to perform their responsibilities under this chapter. Pursuant to s. 655.27 (3) (b) , Stats., the commissioner, after approval by the board, shall by rule set the fees to the fund and s. 655.61 , Stats., requires the board, by rule, to set the fees charged to health care providers at a level sufficient to provide the necessary revenue to fund the medical mediation panels. Further, s. 601.41 (3) , Stats., provides that the commissioner shall have rule-making authority pursuant to s. 227.11 (2) , Stats.

Related statutes or rules

None.

Plain language analysis and summary of the proposed rule

This proposed rule establishes the fees that participating health care providers must pay to the fund for the fiscal year beginning July 1, 2012. These fees represent a 5% increase from fees paid for the 2011-12 fiscal year. The board approved these fees at its meeting on December 14, 2011, based on the recommendation of the board's actuarial and underwriting committee and reports of the fund's actuaries.

The board is also required to promulgate by rule the annual fees for the operation of the injured patients and families compensation medical mediation system, based on the recommendation of the director of state courts. The recommendation of the director of state courts was reviewed by the board's actuarial and underwriting committee. This rule implements the funding level approved by the board by establishing mediation panel fees for the next fiscal year at $22.50 for physicians and $4.50 per occupied bed for hospitals, representing a decrease of $2.50 per physician and a decrease of $0.50 per occupied bed for hospitals from 2011-12 fiscal year mediation panel fees.

Summary of, and preliminary comparison with any existing or proposed federal regulation that is intended to address the activities to be regulated by the proposed rule

To the fund board's and OCI's knowledge there is no existing or proposed federal regulation that is intended to address fund rates, administration or to fund medical mediation panel activities.

Comparison of similar rules in adjacent states as found by OCI

To the fund board's and OCI's knowledge there are no similar rules in the adjacent states to compare this rule to as none of adjacent states have a fund created by statute where rates are directed to be established yearly by rule as is true in Wisconsin.

Summary of the factual data and analytical methodologies that OCI used in support of the proposed rule and how any related findings support the regulatory approach chosen for the proposed rule

This rule establishes annual fund fees and mediation panel fees pursuant to the requirements of the above-noted Wisconsin statutes. The recommendation to the board regarding the fund fee and the medical mediation panel assessment is developed by an actuarial firm under contract with the fund. The actuarial firm outlines its assumptions and trending data in a report to the board's actuarial and underwriting committee. After information is presented, the report and supporting documentation is discussed and results in a recommendation to the board. The chair of the actuarial and underwriting committee presents the information and the actuary's report to the board for consideration. This proposed rule reflects the rates approved by the board at the December 14, 2011 board meeting.

Analysis and supporting documentation that OCI used in support of OCI's determination of the rule's effect on small business under s. 227.114

This increase in fund fees will have an effect on some small businesses in Wisconsin, particularly those that employ physicians and other health care professionals. The mediation panel fee is assessed only on physicians and hospitals, not on corporations or other health care entities. The fund fee increases will affect only those small businesses that pay the fund fees and mediation panel fees on behalf of their employed physicians. However, the fund fee increase will not have a significant effect nor should it negatively affect the small business' ability to compete with other providers. Specifically for providers in the highest risk classification the fees will increase by $482 and for those in the lowest risk classification the increase is $73 for the fiscal year.

Summary of Fiscal Estimate

There will be no state or local government fiscal effect.

The increase in fees promulgated by this rule does not result in a significant fiscal effect on the private sector. Although a health care provider may pass this increase on to its patients, there will not be a significant fiscal effect on the private sector as a result of this proposed rule.

Effect on Small Business

This rule will have little or no effect on small businesses. The increase contained in the proposed rule will require providers to pay an increased fund fee which will increase the operational expenses for the providers. However, this increase is not considered to be significant and will have no effect on the provider's competitive abilities.

Initial regulatory flexibility analysis

This rule does not impose any additional requirements on small businesses.

Notice is hereby further given that pursuant to s. 227.114 , Stats., the proposed rule may have an effect on small businesses. The initial regulatory flexibility analysis is as follows:

a.   Types of small businesses affected:
Health care providers and possibly businesses to the extent any increase in fund fees is forwarded to employers.

b.   Description of reporting and bookkeeping procedures required:

  None beyond those currently required.

c.   Description of professional skills required:

  None beyond those currently required.

OCI Small business regulatory coordinator

The OCI small business coordinator is Louie Cornelius and may be reached at phone number [phone] or at email address [e-mail] .

Agency Contact Person

A copy of the full text of the proposed rule changes, analysis and fiscal estimate may be obtained from the Web site at: http://oci.wi.gov/ocirules.htm or by contacting Inger Williams, OCI Services Section, at:

Phone:   [phone]

Email:   [e-mail]

Address:   125 South Webster St – 2 nd Floor, Madison WI 53703-3474

Mail:   PO Box 7873, Madison, WI 53707-7873

Fiscal Estimate & Economic Impact Analysis

1. Type of Estimate and Analysis
X Original   Updated   Corrected
2. Administrative Rule Chapter, Title and Number
Agency 145 Sections Ins 17.01 and 17.28 (6)
3. Subject
Injured Patients and Families Compensation Fund Annual Fund fees and Mediation Panel Fees for fiscal year 2013.
4. Fund Sources Affected			5. Chapter 20, Stats. Appropriations Affected
GPR   FED   PRO   PRS   X SEG   SEG-S			None
6. Fiscal Effect of Implementing the Rule
X No Fiscal Effect Indeterminate	Increase Existing Revenues Decrease Existing Revenues		Increase Costs Could Absorb Within Agency's Budget Decrease Cost
7. The Rule Will Impact the Following (Check All That Apply)
State's Economy Local Government Units		X Specific Businesses/Sectors Public Utility Rate Payers X Small Businesses (if checked, complete Attachment A)
8. Would Implementation and Compliance Costs Be Greater Than $20 million? Yes     X No
9. Policy Problem Addressed by the Rule
To establish the annual fees that participating health care providers must pay to the Injured Patients and Families Compensation Fund ("Fund") as required by s. 655.27 (3), Wis. Stats., for fiscal year beginning July 1, 2012. The proposed rule will also establish the mediation panel fees for fiscal year 2013 commencing on July 1, 2012. This rule provides the Fund with appropriate and adequate funding and solvency for future years. This is the main vehicle for achieving and maintaining the Fund's solvency.
10. Summary of the businesses, business sectors, associations representing business, local governmental units, and individuals that may be affected by the proposed rule that were contacted for comments.
OCI solicited comments generally through publication requesting comments from the public utilizing the OCI website. Additionally OCI solicited comments from businesses, individuals, and local government units related to the implementation and compliance costs. Solicitations were sent to health insurance members of OCI's Health and Life Insurance Advisory Council and interested parties. Members included health insurance companies, health insurance agent representatives, consumer representatives, provider representatives and representatives of small business. Additional solicitations were made to associations representing various affected parties and local government representatives including: •   Wisconsin Association of Health Plans •   Wisconsin Association of Health Underwriters •   Independent Agents of Wisconsin •   National Federation of Independent Business-Wisconsin •   America's Health Insurance Plans •   Wisconsin Manufacturers and Commerce •   Wisconsin Dental Association •   Wisconsin Medical Society •   Professional Insurance Agents of Wisconsin •   National Association of Insurance and Financial Advisors-Wisconsin •   Wisconsin Hospital Association •   The League of Wisconsin Municipalities •   Wisconsin Counties Association •   Wisconsin Towns Association •   Wisconsin Association of School Boards •   Wisconsin Association of School District Administrators
11. Identify the local governmental units that participated in the development of this EIA.
None beyond solitiation for comments.
12. Summary of Rule's Economic and Fiscal Impact on Specific Businesses, Business Sectors, Public Utility Rate Payers, Local Governmental Units and the State's Economy as a Whole (Include Implementation and Compliance Costs Expected to be Incurred)
All health care provider participants in the Fund as set forth in s. 655.002 (1), Wis. Stat., will be required to pay an additional 5% assessment for their medical malpractice coverage under Ch.655, Wis. Stat. The impact is considered to be minimal in that the majority of the Fund's participants are physicians, the majority of which are assessed fees in Class 1 and 2. The change in fund fees will result in an increase of $73 and $131, respectively, in Fund fees for fiscal year 2013.
13. Benefits of Implementing the Rule and Alternative(s) to Implementing the Rule
The proposed rule will benefit Fund participants by ensuring that fee revenue is adequate to cover anticipated administrative, operating and claims payments costs. The alternatives to this rule would be to establish a Fund fee increase that is higher or lower than the proposed 5%, to maintain current fee amounts or to lower Fund fees. A lower proposed increase, a static fee level, or a lowered fee would leave the Fund with inadequate funding to cover actuarially-based projected costs, while a higher fee increase would present an unnecessary cost to Fund participants. The proposed rule does not significantly impact Wisconsin's economy, productivity, jobs or the overall economic competitiveness of Wisconsin. Wisconsin's health care marketplace is strengthened with an affordable layer of medical malpractice coverage. The Fund has existed in Wisconsin since 1975. Fund participants will benefit from a stable and solvent fund. Additionally, Fund participants should not experience increased compliance costs.
14. Long Range Implications of Implementing the Rule
The long-range implication of the rule as proposed will be an adequately funded and solvent Fund.
15. Compare With Approaches Being Used by Federal Government
Federal government does not address this subject matter.
16. Compare With Approaches Being Used by Neighboring States (Illinois, Iowa, Michigan and Minnesota)
None of the neighboring states have a patient compensation fund or a general program of state-sponsored liability insurance for physicians.
17. Contact Name				18. Contact Phone Number
Louie Cornelius				608-264-8113

This document can be made available in alternate formats to individuals with disabilities upon request.

ATTACHMENT A

1. Summary of Rule's Economic and Fiscal Impact on Small Businesses (Separately for each Small Business Sector, Include Implementation and Compliance Costs Expected to be Incurred)

The agency does not anticipate any implementation costs or additional compliance costs for fund participants. All health care provider participants in the Fund as set forth in s. 655.002 (1), Wis. Stat., will be required to pay an additional 5% assessment for their medical malpractice coverage under Ch. 655, Wis. Stat. The impact is considered to be minimal in that the majority of the Fund's participants are physicians, the majority of which are assessed fees in Class 1 and 2. The change in fees will result in an increase of $73 and $131, respectively, in Fund fees for fiscal year 2013.

2. Summary of the data sources used to measure the Rule's impact on Small Businesses

The Fund contracts for actuarial services to develop the documentation and analysis necessary for the Actuarial and Underwriting Committee of the Fund. The data includes the change, if any is proposed, at the physician level. Since many physicians are small employer practices this information does relay information to the Committee and Board for the impact on small businesses directly impacted by the proposal. The actuarial firm presents its analysis to the Actuarial and Underwriting Committee of the Fund Board of Governors. The Committee reviews all data and projections and makes a recommendation to the full Board of Governors for consideration. The Fund Board of Governors reviewed the Committee's recommendation at its December 14, 2011 meeting as well as the underlying analysis by the actuarial firm. Following deliberation, the Board of Governors affirmed the Committee's recommendation of an increase of 5% for Fund fees and affirmed the change to the mediation panel fees of a decrease per physician of $2.50 and $0.50 per hospital bed.

3. Did the agency consider the following methods to reduce the impact of the Rule on Small Businesses?

Less Stringent Compliance or Reporting Requirements

Less Stringent Schedules or Deadlines for Compliance or Reporting

Consolidation or Simplification of Reporting Requirements

Establishment of performance standards in lieu of Design or Operational Standards

Exemption of Small Businesses from some or all requirements

X Other, describe:

The Board of Governors discussed a lower or neutral increase in Fund fees but determined that such action would inadequately fund the Fund for claims incurred during fiscal year 2013 and shift the burden of funding to future years and providers.

4. Describe the methods incorporated into the Rule that will reduce its impact on Small Businesses

The proposed increase is below breakeven financing for the Fund but sufficient to cover anticipated claims, administrative and operating expenses.

5. Describe the Rule's Enforcement Provisions

This rule proposes fees. Failure to pay Fund fees is governed by s. Ins 17.01, Wis. Adm. Code, which requires the Fund to notify the medical examining board of each physician who has not paid the fee and notify the Department of Health Services of each hospital that has not paid the fee as required.

6. Did the Agency prepare a Cost Benefit Analysis (if Yes, attach to form)

Yes X No