This bulletin summarizes the changes to Chapter 655, Wis. Stats., enacted by Act 11 which became effective on July 1, 1997. This bulletin addresses the issues which are of an immediate nature. OCI will issue a subsequent bulletin after developing necessary changes to the administrative rules in s. Ins 17, Wis. Adm. Code. This bulletin discusses:
- The status of the bulletin to Medical Malpractice Insurers dated June 28, 1996,
- Certificates of insurance for the Wisconsin Patients Compensation Fund,
- Payment conditions for premium increases resulting from the increased insurance coverage and,
- Endorsements necessary to add the requirements of the enacted legislation.
The bill primarily makes two changes:
- It increases the required primary insurance limits for health care providers who are subject to the Wisconsin Patients Compensation Fund. The limits increased from $400,000 to $1,000,000 for each occurrence, and from $1,000,000 to $3,000,000 for an annual aggregate limit.
The providers must have coverage at the new insurance limits as of July 1, 1997, even if their current policy shows other limits. Insurers can assume that, unless the provider tells them otherwise, the policy was altered on July 1, 1997, to increase the limits of coverage required by the new law. As discussed below, insurers will need to endorse their existing policies to document the increase in coverage. - The bill clarifies that the provider can meet the required insurance limits by purchasing an occurrence policy, where coverage is determined using the year in which the claim occurred, or a claims-made policy, where the coverage is determined using the year the claim was reported.
Bulletin dated June 28, 1996
A previous bulletin dated June 28, 1996, to medical malpractice insurers who provide coverage required by Chapter 655, Wis. Stats., allowed an extension of time for insurers to file forms which complied with explanations in an earlier bulletin dated October 30, 1995. A June 28, 1996, bulletin extended the filing date to July 1, 1997. However, because of the 1997 law change, medical malpractice insurers should immediately file any endorsements (discussed below in "Endorsements to implements changes") adding the coverages required by the law to present policies, but should not file new policies at this time.
Also, this bulletin, dated July 15,1997, extends the filing requirement for medical malpractice policies, which provide coverage required by Chapter 655, Wis. Stats., until a subsequent bulletin is sent. OCI anticipates that the implementation of administrative rule changes to interpret Act 11 will require some time and will issue a bulletin promptly after the rule change is completed.
Certificates of insurance and billing adjustments for the Fund
The Patients Compensation Fund is not requiring submission of revised certificates of insurance by primary carriers in order to add the requirements of the new law. The Fund will automatically convert the health care liability limits to $1,000,000 per occurrence and $3,000,000 for the annual aggregate as of July 1, 1997. The certificates of insurance on file with the Patients Compensation Fund and in effect on July 1, 1997, will be deemed in conformance with the new liability limits, in accordance with s. 655.24 (1m), Wis. Stats. All new, renewal, and revised certificates of insurance submitted subsequent to July 1, 1997, with effective dates July 1, 1997, or later, will be rejected by the Fund if not submitted with the proper liability limits.
Fund fees will be reduced as a result of the increase in primary carrier liability limits. The Patients Compensation Fund will be producing revised billing notices for all health care providers upon the approval by the Fund's Board of Governors of new fee levels and after the promulgation of a revised fee rule. Since bills have already been generated based upon the previous liability limits, providers paying 100% of their fiscal 1997-98 Fund fees prior to receiving the revised billing will have credit balances. These providers will be entitled to a refund of the overpayment balance upon submitting a written request for a refund.
If you have questions about the certificates of insurance or the status of Patients Compensation Fund billing adjustments, please contact Theresa Wedekind at 608-266-0953 or Jeff Kohlmann at 608-267-1237.
Premium changes resulting from the legislation
OCI anticipates that insurers will need to adjust their premium rates for the new coverage limits required by Act 11. If insurers send billing notices to policyholders for midterm rate increases, insurers should provide an adequate period of time for the provider to assess the situation and make payment arrangements. OCI suggests a 30-day period and remind insurers that they will need to comply with s. 631.36 (2), Wis. Stats., if they need to cancel a policy for nonpayment of a premium. The cancellation law requires that a written notice be sent to the policyholder at least 10 days before canceling a policy for nonpayment of premium.
Wisconsin's rate filing requirements facilitate rate changes initiated by an insurer, see s. 625.13, Wis. Stats. Insurers may first develop and use a rate change and then follow-up with a rate filing to this office within 30 days of implementing the rate change. Medical malpractice insurers will need to file any rate changes they implement, within 30 days of its implementation, including rate changes resulting from the enactment of Act 11.
Endorsements to implement changes
Since the new law requires certain medical providers to have insurance policies which cover them for $1,000,000/$3,000,000, insurers will need to endorse current policies to provide the new minimum coverage limit. OCI will expedite the review process of the endorsements for insurers that need approval of endorsements to revise the limits. Insurers should indicate in the cover letter that they are requesting expedited review and approval.
Questions
If you have questions about this bulletin please call Jane Kovacik at 608-266-7077 or in her absence, Philip Kress at 608-266-0430. If you have question about the certificates of insurance or the status of Patients Compensation Fund billing adjustments please contact Theresa Wedekind at 608-266-0953 or Jeff Kohlmann at 608-267-1237.
Copy of Act 11
A copy of Act 11 is available on the Wisconsin State Legislature's 1997-1998 Wisconsin Acts Web page. For a paper copy, please call 608-264-6232 or send request to e-mail address below.