Application for Certificate of Incorporation
and Certificate of Authority For
Domestic, For Profit, Health Maintenance Organizations
Licensed Under Ch. 611, Wis. Stat.

To view any of the listed statutes, see the Wisconsin Revisor of Statutes Web site.

All applicants seeking to do an insurance business in Wisconsin must first obtain a Certificate of Incorporation and a Certificate of Authority from the Office of the Commissioner of Insurance (OCI).

This packet summarizes the procedures for incorporating and licensing a domestic, for profit, health maintenance organization insurer in Wisconsin under ch. 611, Wis. Stat. Chapter 609, Wis. Stat., as created by 1985 Wisconsin Act 29, Wis. Stat., defines an HMO as "a health care plan offered by an organization established under chs. 185, 611, 613, Wis. Stat., or issued a Certificate of Authority under ch. 618, Wis. Stat., that makes available to its enrolled participants in consideration for predetermined periodic fixed payments, comprehensive health care services performed by providers selected by the organization."

Section 611.13, Wis. Stat., describes the information which must be filed with OCI to obtain a Certificate of Incorporation and a Certificate of Authority for a domestic insurance corporation. All other provisions of ch. 611, Wis. Stat., should be reviewed carefully for reference to other sections and chapters of the Wisconsin Statutes, including management of the corporation and other provisions relevant to contractual arrangements with the corporation.

The following documents must be completed and returned with the application for incorporation and licensing:

  1. Application for Certificate of Incorporation and Certificate of Authority.
  2. Authority for the Commissioner to Make Inquiry.
  3. Form A - Biographical information for all initial incorporators and proposed directors and principal officers.
  4. Form B - Biographical information for new directors, trustees, or officers.

Copies of the following documents are attached for informational purposes:

Bulletin on Wisconsin Insurance Laws
Information for Newly Licensed HMOs

In addition to the items included in this packet, the application should include a letter of transmittal with an index using the identification system in this letter. An explanation for the omission of any material should accompany the application.

After review of all the materials filed with the application, and a determination that the applicant is eligible for incorporation, a Certificate of Incorporation will be issued by OCI. Written instructions will accompany the Certificate of Incorporation with regard to any additional information necessary before a Certificate of Authority will be issued.

A statutory fee of $400.00 must be filed with the initial application to help defray the costs of examining the filing. There is also an initial Certificate of Authority fee of $400.00. The applicant will be billed for this when the Certificate of Authority is issued.

Complete NAIC Company Code Application and return to NAIC as indicated.

Insurers may not solicit business or market a plan unless their forms have been approved by the Bureau of Market Regulation. Anyone marketing products of the insurer must be licensed as an agent and listed with OCI as a representative for the company.

Please file the following material with OCI in the following order:

I. ARTICLES OF INCORPORATION AND BYLAWS

Proposed Articles and Bylaws should be prepared in accordance with s. 611.12, Wis. Stat.

II. APPLICATION INFORMATION

  1. Application for Certificate of Incorporation and Certificate of Authority.
  2. Authority of the Commissioner to Make Inquiry into the affairs of the company.

III. BIOGRAPHICAL SKETCHES AND COMPENSATION INFORMATION

  1. Biographical Form - Form A should be filed for all initial incorporators, proposed directors, and officers. Form B should be filed for any new director, trustee, or officer within 15 days after appointment or election.
  2. The proposed compensation of directors and officers.

IV. AFFILIATED ORGANIZATIONS

  1. Copies of all management, exclusive agency, administrative services, or other operating contracts with affiliates or sponsors.
  2. A copy of the latest prospectus of any affiliate required to file under the Federal Securities Act.
  3. A copy of the organization chart showing the relationship and percentage of ownership among affiliated companies and a brief description of the principal business of affiliates within the organization.
  4. Financial statements of any controlling affiliates or sponsors, including a balance sheet as of the end of each fiscal year, and an operating statement for each year for the most recent three years.

V. BUSINESS PLAN

All applications for Certificates of Incorporation and Certificates of Authority for health maintenance organizations shall include a proposed business plan. In addition to the items listed in s. 611.13, Wis. Stat., the following information shall be contained in the business plan:

  1. Organization Type. The type of organization, including whether the health maintenance organization is to be a staff model, group model, individual practice association, or a variation of these types.
  2. Feasibility Studies and Marketing Surveys. A summary of feasibility studies or marketing surveys which support the financial and enrollment projections for the plan. These should include the potential number of enrollees for the first five years, the underwriting standards to be applied, and the method of marketing the organization.
  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 claims for out-of-area services.
  4. Provider Agreements. A draft of provider agreements with sufficient detail to determine the extent of risk assumed by the provider; the method of reimbursing both primary and specialty providers, including any hold-harmless provisions; the terms for modifying or cancelling the agreement; and any method of sharing profits or recovering operating losses through assessing providers or adjusting the capitation for fee-for-service rates. Any contractual arrangements intended to cover liabilities or provide health care services must be filed with the Commissioner in final form with signatures of the parties to the agreement before the initial Certificate of Authority will be issued. In cases where identical contracts are used for several providers, the names of those who have signed the contract will suffice.
  5. 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 an organization, the business plan shall include a copy of the contract. The contract shall include the services to be provided, the standards of performance for the manager, the method of payment including any provisions for the administrator to participate in the profit or losses of the plan, the duration of the contract, and any provisions for modifying, terminating, or renewing the contract. Contracts for delegated management authority shall be filed with the Commissioner under s. 611.67, Wis. Stat. The Commissioner may disapprove a contract only if the Commissioner makes one of the findings specified in s. 618.22, Wis. Stat.
  6. 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, and rates and classes of subscribers.
  7. Quality Assurance. A summary of the quality assurance standards required by s. 609.32, Wis. Stat., that are adequate to identify, evaluate and remedy problems related to access to, and continuity and quality of, care. The standards shall address at least all of the following:
    1. An ongoing, written internal quality assurance program.
    2. Specific written guidelines for quality of care studies and monitoring.
    3. Performance and clinical outcomes-based criteria.
    4. A procedure for remedial action to address quality problems, including written procedures for taking appropriate corrective action.
    5. A plan for gathering and assessing data.
    6. A peer review process.
    7. Processes for credentialing and recredentialing participating providers.

VI. FINANCIAL AND CONTRACTUAL OBLIGATIONS

All HMO insurers licensed after July 1, 1989, under ch. 611, Wis. Stat., must meet the following financial requirements:

  1. Minimum Permanent Surplus. The minimum initial surplus requirement shall be at least $750,000.
  2. Initial Expendable Surplus. The initial expendable surplus requirements shall be operating funds sufficient to finance any operating deficits in the business and to prevent impairment of permanent surplus. To determine the adequacy of such funds the Commissioner shall take into account reasonable projections of enrollments, claims and administrative costs, financial guarantees given to the organization, the financial condition of any guarantors, and any other relevant information.
  3. Insolvency Protection for Policyholders. Each health maintenance organization seeking licensure under ch. 611, Wis. Stat., must demonstrate that in the event of insolvency:
    1. Enrollees hospitalized on the date of insolvency will be covered until discharged; and
    2. Enrollees will be entitled to similar, alternate coverage which does not contain any medical underwriting or preexisting limitation requirements.
  4. Setting Greater Amounts. The Commissioner may set greater amounts for permanent surplus, expendable surplus, and deposits or letter of credit on finding that the financial stability of the organization requires it.
  5. Financial Guarantees. Financial guarantee information should include a summary of all financial guarantees by providers, sponsors, controlling affiliates, or parents, or any other guarantee which is intended to ensure the financial success of the plan. Such guarantees include, but are not limited to, hold-harmless agreements by providers, solvency insurance, reinsurance, or other guarantees.
  6. Financial Projections. Financial projections should include projected enrollment, premiums and other income, benefits, administrative and other costs, and the projected point of break-even in terms of income compared to disbursements and enrollment. The method of funding the accumulated losses until break-even and a summary of the assumptions that are made in developing projected operating results should be included.

Materials and documents filed by existing HMOs incorporated and licensed under ch. 611, Wis. Stat., are available for your review from the Central Files Section of OCI. All such materials may be copied for a minimal fee. You are encouraged to review such files before making application for the incorporation and licensing of a ch. 611, Wis. Stat., corporation.

Questions about application procedure and licensing requirements should be addressed to:

Richard Hinkel
Insurance Examiner Supervisor
Bureau of Financial Analysis and Examinations
(608) 267-7910
richard.hinkel@wisconsin.gov
or Kristin Forsberg
Licensing Specialist
Bureau of Financial Analysis and Examinations
(608) 266-9896
kristin.forsberg@wisconsin.gov

APPROVAL OF POLICY FORMS

Insurers may not solicit business or market a plan unless their policy forms have been approved by the Bureau of Market Regulation of the Commissioner’s Office.

The forms filing procedure is described in the Information for Newly Licensed Health Maintenance Organizations section, along with information on marketing, soliciting, advertising, underwriting, and grievance procedures.

Questions about policy forms, premium rate filings, and marketing practices should be addressed to:

Bureau of Market Regulation
Division of Regulation and Enforcement
(608) 266-3709
ocicomplaints@wisconsin.gov

LICENSING OF AGENTS

Anyone who markets for the insurer must be licensed as an agent and be listed with the Insurance Commissioner’s office as a representative for the company.

Questions about licensing agents should be addressed to:

Agent Licensing Section
Division of Administrative Services
(608) 267-1238
ociagentlicensing@wisconsin.gov


The application packet forms are available to be downloaded below. Note, however, that you will need an Adobe Acrobat Reader to view or print the application, which you can download at no cost from Adobe .

Application Packet Forms (opens in new window)


INFORMATION FOR NEWLY LICENSED
HEALTH MAINTENANCE ORGANIZATIONS

Note: The following address is a link to the administrative code in pdf format:
http://www.legis.state.wi.us/rsb/code/ins/

To link to chapters in the administrative code, add insxxx.pdf to the end of the address. xxx represents the chapter number in three digits (003 for chapter 3).

The following information applies to insurers operating as health maintenance organizations and addresses frequently noted problems. Insurers are encouraged to review chs. 600 to 646, Wis. Stat., and the Wisconsin Administrative Code, Rules of the Commissioner of Insurance, before drafting policy forms or developing marketing campaigns in Wisconsin. Chapter 609, Wis. Stat., and s. Ins 3.50, Wis. Adm. Code, contain specific requirements for health maintenance organizations. Approved policy forms are available for review in the Commissioner’s Office during regular business hours. Insurers may find it helpful to review approved forms before drafting their own documents.

I. MARKETING, SOLICITATION, AND ADVERTISING

  1. Newly licensed HMOs should be aware that there are strict requirements regarding advertising and marketing practices in Wisconsin. See s. Ins 3.27, Wis. Adm. Code.
  2. HMOs may not advertise specific benefits or rates or accept applications until policy forms are filed with and approved by the Market Regulation Bureau. Advertisement is broadly defined in s. Ins 3.27 (5), Wis. Adm. Code. If you are contemplating marketing activities prior to approval of your forms, you may wish to contact the Bureau of Market Regulation staff at (608) 266-0103 for further information.
  3. In most cases, HMOs must use licensed insurance agents to market policies. See s. 628.02, Wis. Stat., for the definition of who is considered an agent.

II. FORMS FILING PROCEDURES

  1. Forms must be filed under s. 631.20, Wis. Stat., and s. Ins 6.05, Wis. Adm. Code. The rule outlines the contents of the filing letter and the use of Certificate of Compliance.
  2. All individual policy forms and group certificate forms must be in simplified language. A certification of readability required by s. Ins 6.07, Wis. Adm. Code, must accompany each filing.
  3. Rate filings for individual contracts must be accompanied by a statement of the anticipated loss ratio, and a rate filing transmittal form. See s. Ins 3.13 (6), Wis. Adm. Code.
  4. For group policy forms submit the following:
    1. Master policy
    2. Certificate
    3. Policyholder application
    4. Certificate holder enrollment form
    5. Riders, endorsements (if any)
  5. For individual policy forms submit the following:
    1. Policy
    2. Riders, endorsements (if any)
    3. Policyholder application
    4. Premium rates
    5. Anticipated loss ratio

III. REQUIRED CONTRACT PROVISIONS FOR HMO POLICY FORMS

The list below contains some but not all of the required contract provisions for HMOs policy forms. Review subchapter 6 of ch. 632, Wis. Stat., for more specific requirements and restrictions. If you have a question about the applicability of a contract provision to your particular policy, call the Bureau of Market Regulation at (608) 266-0103 for assistance before drafting your policy forms.

  1. Required definitions: s. Ins 3.50 (9) (a), Wis. Adm. Code.
  2. Required disclosures, including the location of all exclusions, limitations and exceptions in one section: s. Ins 3.50 (9) (b), Wis. Adm. Code.
  3. Grievance procedures: s. 609.15, Wis. Stat., and s. Ins 3.50 (10), Wis. Adm. Code.
  4. Disenrollment procedures: s. Ins 3.50 (12), Wis. Adm. Code.
  5. Coordination of benefits - only applies to group policy forms: s. Ins 3.40, Wis. Adm. Code.
  6. Coverage for adopted children: s. 632.896, Wis. Stat.
  7. Mandated Benefits:
    1. Policy extension for handicapped children: s. 632.88, Wis. Stat.
    2. Alcoholism, drug abuse, and mental/nervous disorders for group policies: s. 632.89, Wis. Stat.
    3. Home care: s. 632.895 (1) and (2), Wis. Stat.
    4. Skilled nursing care: s. 632.895 (3), Wis. Stat.
    5. Kidney disease treatment: s. 632.895 (4), Wis. Stat.
    6. Coverage of newborn infants: s. 632.895 (5), Wis. Stat., and s. Ins 3.38, Wis. Adm. Code.
    7. Equipment and supplies for treatment of diabetics: s. 632.895 (6), Wis. Stat. It is the position of this office that insulin is considered to be a supply rather than a drug as far as policy limitations are considered.
    8. Maternity coverage for dependent children: s. 632.895 (7), Wis. Stat.--applies to group coverage.
    9. Coverage of mammograms: s. 632.895 (8), Wis. Stat.
    10. Coverage of drugs for HIV infection: s. 632.895 (9), Wis. Stat.
    11. Lead poisoning screening: s. 632.895 (10), Wis. Stat.
    12. Temporomandibular disorders: s. 632.895 (11), Wis. Stat.
    13. Facility charges and anesthetics for certain dental care: s. 632.895 (12), Wis. Stat.
    14. Breast reconstruction: s. 632.895 (13), Wis. Stat.
    15. Chiropractic services: s. 632.87 (3), Wis. Stat.
    16. Dentist services: s. 632.87 (4), Wis. Stat.
    17. Certain nurse practitioner services: s. 632.87 (5), Wis. Stat.
  8. Special requirements for individual policies: s. Ins 3.13, Wis. Adm. Code.
  9. Special requirements for group policies: s. Ins 3.14, Wis. Adm. Code.
  10. Grace period for Payment of Premiums: ss. 632.78 and 632.79, Wis. Stat.
  11. Termination and/or change of policy terms: s. 631.36, Wis. Stat., s. 632.749, Wis. Stat., s. 632.7495, Wis. Stat.
  12. Continuation and conversion: s. 632.897, Wis. Stat.
  13. Conversion policies: ss. Ins 3.41, 3.42, 3.43, and 3.45, Wis. Adm. Code.
  14. Standards for disability insurance sold to the Medicare eligible: s. Ins 3.39, Wis. Adm. Code.
  15. Standards for disability insurance sold to small employers with 2-25 employees: ch. 635, Wis. Stat., and ch. Ins 8, Wis. Adm. Code.
  16. Standards for disability insurance sold to employer groups: ss. 632.745 - 632.748, Wis. Stat.

IV. UNDERWRITING

  1. If the insurer plans to underwrite, the insurer should review ss. Ins 3.28 and Ins 3.31, Wis. Adm. Code, the restrictions on use of genetic test results in s. 631.89, Wis. Stat., and HIV test results in s. 631.90, Wis. Stat., and s. Ins 3.53, Wis. Adm. Code.
  2. Replacement forms - applies to replacement of individual policies only. See s. Ins 3.29, Wis. Adm. Code.

V. COMPLAINTS AND GRIEVANCES

HMOs are required to keep records of complaints and grievances for three years, and to file an annual report summarizing the grievances each year: ss. 609.15 (1) and (2), Wis. Stat., and s. Ins 3.50 (10) (g), Wis. Adm. Code.


A Designation of Registered Agent for Service of Process (OCI 12-014) form is available to be downloaded below. Note, however, that you will need an Adobe Acrobat Reader to view or print the application, which you can download at no cost from Adobe .

Designation of Registered Agent for Service of Process (opens in new window)
Fill and Print Version (opens in new window)


NAIC Company Code Application

A link to the NAIC Company Code Application form is provided below for your convenience. Note, however, that you will need an Adobe Acrobat Reader to view or print the application form, which you can download at no cost from Adobe .

NAIC Company Code Application (opens in new window)


Please direct questions to: ocifinancial@wisconsin.gov (please include your name, phone number, and e-mail address).