LRB-3593/2
PJK:nwn:md
2009 - 2010 LEGISLATURE
January 22, 2010 - Introduced by Senators Erpenbach, Hansen, Wirch, Vinehout,
Taylor, Kreitlow, Risser
and Cowles, cosponsored by Representatives
Richards, Vruwink, Benedict, Turner, Brooks, Pope-Roberts, Ripp, Tauchen
and Smith. Referred to Committee on Health, Health Insurance, Privacy,
Property Tax Relief, and Revenue.
SB471,1,7 1An Act to repeal 185.981 (4t), 185.981 (6) and 185.982 (3); and to amend 71.26
2(1) (a), 71.45 (1) (a), 71.45 (5), 146.81 (1) (k), 146.997 (1) (d) 17., 155.01 (7),
3185.09, 185.981 (title), 185.981 (1), 185.981 (2), 185.981 (3), 185.981 (4), 185.981
4(5), 185.981 (7), 185.981 (8), 185.981 (9), 185.982 (1), 185.982 (2), 185.983 (1)
5(intro.), 185.983 (1) (a), 185.983 (1m), 185.983 (2), 185.985, 252.14 (1) (ar) 12.,
6254.11 (13), 632.86 (1) (a) and 655.002 (1) (f) of the statutes; relating to: health
7care plans operated by cooperative associations.
Analysis by the Legislative Reference Bureau
Under current law, associations may be organized on a cooperative nonprofit
basis (cooperative associations) to establish and operate sickness care plans for their
members through contracts with providers. This bill makes various changes to those
provisions, including the following:
1. The bill changes the name of the plans that cooperative associations may
establish and operate from "sickness care plans" to "health care plans."
2. The bill specifies that establishing and maintaining these plans may be the
primary, as opposed to exclusive, purpose of the cooperative association.
3. Current law provides that cooperative associations may enter into contracts
for services with physicians and surgeons, optometrists, chiropractors, and dentists.
The bill allows contracts with other providers, too.

4. The bill adds that nothing in the provisions pertaining to the purpose of the
cooperative association as being primarily to establish and operate a health care plan
precludes a cooperative association from owning an interest in other entities for
improving member services or for investment.
5. Under current law, a cooperative association may not spend more than 5
percent of capital stock or membership fees on promotional expenses. The bill
provides that this limit does not apply to a cooperative association operating a health
care plan.
6. Current law prohibits a contract by or on behalf of a cooperative association
from providing for the payment of cash or other material benefit to a subscriber or
the subscriber's estate on account of death, illness, or injury. The bill eliminates this
provision.
7. Under current law, a cooperative association may stipulate in a plan that it
will pay a nonparticipating physician and surgeon, optometrist, chiropractor, or
dentist outside of the cooperative association's normal territory for care rendered to
a member or a member's covered dependent who needs the care when he or she is
outside the cooperative association's territory in which the plan benefits are
normally available. Under the bill, a cooperative association may stipulate in its
plans that it will pay a nonparticipating physician and surgeon, optometrist,
chiropractor, dentist, or other provider for health care rendered to a covered person,
without limitation to being outside the association's normal territory.
8. Current law provides that a cooperative association may provide benefits
only to its members. The bill allows a cooperative association to offer its services to
nonmembers, too.
9. Finally, the bill makes various technical changes, such as conforming the
language to current statutory drafting practice and eliminating redundant
provisions.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB471, s. 1 1Section 1. 71.26 (1) (a) of the statutes is amended to read:
SB471,3,202 71.26 (1) (a) Certain corporations. Income of corporations organized under ch.
3185, except income of a cooperative sickness health care association organized under
4s. 185.981, or of a service insurance corporation organized under ch. 613, that is
5derived from a health maintenance organization as defined in s. 609.01 (2) or a
6limited service health organization as defined in s. 609.01 (3), or operating under
7subch. I of ch. 616 which are bona fide cooperatives operated without pecuniary profit

1to any shareholder or member, or operated on a cooperative plan pursuant to which
2they determine and distribute their proceeds in substantial compliance with s.
3185.45, and the income, except the unrelated business taxable income as defined in
4section 512 of the internal revenue code and except income that is derived from a
5health maintenance organization as defined in s. 609.01 (2) or a limited service
6health organization as defined in s. 609.01 (3), of all religious, scientific, educational,
7benevolent or other corporations or associations of individuals not organized or
8conducted for pecuniary profit. This paragraph does not apply to the income of
9savings banks, mutual loan corporations or savings and loan associations. This
10paragraph does not apply to income that is realized from the sale of or purchase and
11subsequent sale or redemption of lottery prizes if the winning tickets were originally
12bought in this state. This paragraph applies to the income of credit unions except
13to the income of any credit union that is derived from public deposits for any taxable
14year in which the credit union is approved as a public depository under ch. 34 and
15acts as a depository of state or local funds under s. 186.113 (20). For purposes of this
16paragraph, the income of a credit union that is derived from public deposits is the
17product of the credit union's gross annual income for the taxable year multiplied by
18a fraction, the numerator of which is the average monthly balance of public deposits
19in the credit union during the taxable year, and the denominator of which is the
20average monthly balance of all deposits in the credit union during the taxable year.
SB471, s. 2 21Section 2. 71.45 (1) (a) of the statutes is amended to read:
SB471,4,1422 71.45 (1) (a) Income of insurers exempt from federal income taxation pursuant
23to section 501 (c) (15) of the internal revenue code, town mutuals organized under or
24subject to ch. 612, foreign insurers, and domestic insurers engaged exclusively in life
25insurance business, domestic insurers insuring against financial loss by reason of

1nonpayment of principal, interest and other sums agreed to be paid under the terms
2of any note or bond or other evidence of indebtedness secured by a mortgage, deed
3of trust or other instrument constituting a lien or charge on real estate and
4corporations organized under ch. 185, but not including income of cooperative
5sickness health care associations organized under s. 185.981, or of a service
6insurance corporation organized under ch. 613, that is derived from a health
7maintenance organization as defined in s. 609.01 (2) or a limited service health
8organization as defined in s. 609.01 (3), or operating under subch. I of ch. 616 which
9are bona fide cooperatives operated without pecuniary profit to any shareholder or
10member, or operated on a cooperative plan pursuant to which they determine and
11distribute their proceeds in substantial compliance with s. 185.45. This paragraph
12does not apply to income that is realized from the sale of or purchase and subsequent
13sale or redemption of lottery prizes if the winning tickets were originally bought in
14this state.
SB471, s. 3 15Section 3. 71.45 (5) of the statutes is amended to read:
SB471,4,2216 71.45 (5) Exceptions. The net income of a cooperative sickness health care
17association organized under s. 185.981, or of a service insurance corporation
18organized under ch. 613, that is derived from a health maintenance organization, as
19defined in s. 609.01 (2), or a limited service health organization, as defined in s.
20609.01 (3), is the net income that would be determined if the cooperative sickness
21health care association or service insurance corporation were subject to federal
22income taxation and as if that income were that of an insurance company.
SB471, s. 4 23Section 4. 146.81 (1) (k) of the statutes is amended to read:
SB471,5,3
1146.81 (1) (k) An operational A cooperative sickness health care plan
2association organized under ss. s. 185.981 to 185.985 that directly provides services
3through salaried employees in its own facility.
SB471, s. 5 4Section 5. 146.997 (1) (d) 17. of the statutes is amended to read:
SB471,5,75 146.997 (1) (d) 17. An operational A cooperative sickness health care plan
6association organized under ss. s. 185.981 to 185.985 that directly provides services
7through salaried employees in its own facility.
SB471, s. 6 8Section 6. 155.01 (7) of the statutes is amended to read:
SB471,5,199 155.01 (7) "Health care provider" means a nurse licensed or permitted under
10ch. 441, a chiropractor licensed under ch. 446, a dentist licensed under ch. 447, a
11physician, physician assistant, perfusionist, podiatrist, physical therapist, physical
12therapist assistant, occupational therapist, or occupational therapy assistant
13licensed under ch. 448, a person practicing Christian Science treatment, an
14optometrist licensed under ch. 449, a psychologist licensed under ch. 455, a
15partnership thereof, a corporation or limited liability company thereof that provides
16health care services, an operational a cooperative sickness health care plan
17association organized under ss. s. 185.981 to 185.985 that directly provides services
18through salaried employees in its own facility, or a home health agency, as defined
19in s. 50.49 (1) (a).
SB471, s. 7 20Section 7. 185.09 of the statutes is amended to read:
SB471,5,24 21185.09 Promotion expense; limitation. No cooperative funds may be used,
22nor any stock issued, in payment of any promotion expenses in excess of 5 per cent
23of the paid-up capital stock or membership fees. This section does not apply to a
24cooperative association organized under s. 185.981.
SB471, s. 8 25Section 8. 185.981 (title) of the statutes is amended to read:
SB471,6,1
1185.981 (title) Cooperative sickness health care.
SB471, s. 9 2Section 9. 185.981 (1) of the statutes is amended to read:
SB471,6,93 185.981 (1) Cooperative associations may be organized under this chapter
4without capital stock, exclusively primarily to establish and operate in the state or
5in any county or counties therein a in the state nonprofit plan or plans or programs
6for sickness health care, including hospital care, for their members and, their
7members' dependents, and others through contracts with physicians, medical
8societies, chiropractors, optometrists, dentists, dental societies, hospitals, and
9others.
SB471, s. 10 10Section 10. 185.981 (2) of the statutes is amended to read:
SB471,7,311 185.981 (2) Such associations A cooperative association organized under this
12section
shall operate only on a cooperative nonprofit basis and for the primary
13purpose of establishing, maintaining, and operating a voluntary nonprofit health,
14dental, or vision care plan or plans, or additional programs, or for constructing,
15operating, and maintaining nonprofit hospitals or other facilities whereby sickness
16health care, including hospital, dental, or vision care, is provided at the expense of
17such association,
to its members or both, and to such other persons or groups of
18persons as shall who become subscribers to such plan, the plans, subject to s. 185.982
19(2),
under contracts which will entitle each such subscriber to definite that provide
20access to
medical, surgical, chiropractic, vision, dental, or hospital care, other health
21care services,
appliances, and supplies, by physicians and surgeons licensed and
22registered under ch. 448, optometrists licensed under ch. 449, chiropractors licensed
23under ch. 446 and, dentists licensed under ch. 447, and other health care providers
24in their offices, in hospitals, in other facilities, and in the home. Nothing in this
25subsection precludes a cooperative association organized under this section from

1owning an interest in other entities for enhancing or improving member services or
2for investment or other purposes, as long as the association's primary purpose
3remains as provided in this subsection.
SB471, s. 11 4Section 11. 185.981 (3) of the statutes is amended to read:
SB471,7,135 185.981 (3) No cooperative association organized primarily for the purposes
6provided in ss. 185.981 to 185.983 shall be prevented from contracting with any
7hospital in this state for the rendition of such hospital care as is included within such
8a plan
the cooperative association's plans because such the hospital participates in
9a plan of any other such plan cooperative association, or in a plan organized and
10operated under ss. 148.03 and 613.80. No hospital may discriminate against any
11physician and surgeon, chiropractor, or dentist with respect to the use of such the
12hospital's facilities by reason of his or her participation in a sickness health care plan
13of a cooperative.
SB471, s. 12 14Section 12. 185.981 (4) of the statutes is amended to read:
SB471,8,215 185.981 (4) No contract by or on behalf of any such A cooperative association
16shall provide for the payment of any cash, indemnity or other material benefit by that
17association to the subscriber or the subscriber's estate on account of death, illness or
18injury, nor be in any way related to the payment of any such benefit by any other
19agency, but any such association
may stipulate in its plan plans that it will pay any
20nonparticipating physician and surgeon, optometrist, chiropractor, dentist or,
21hospital outside of its normal territory for sickness or, or other provider for hospital
22or other health care rendered to any covered member or a member's covered
23dependent
person who is in need of the a plan's benefits of such plan when he or she
24is outside of the territory of such association in which the benefits of such plan are

1normally available. Any such plan
plans may prescribe monetary limitations with
2respect to such extraterritorial the benefits.
SB471, s. 13 3Section 13. 185.981 (4t) of the statutes, as affected by 2009 Wisconsin Act 28,
4is repealed.
SB471, s. 14 5Section 14. 185.981 (5) of the statutes is amended to read:
SB471,8,76 185.981 (5) Every such cooperative association organized under this section is
7a charitable and benevolent corporation.
SB471, s. 15 8Section 15. 185.981 (6) of the statutes is repealed.
SB471, s. 16 9Section 16. 185.981 (7) of the statutes is amended to read:
SB471,8,1310 185.981 (7) Notwithstanding sub. (4) and s. ss. 185.982 (1) and 185.983 (1), a
11sickness health care plan that is operated by a cooperative association and that
12qualifies as a health maintenance organization, as defined in s. 609.01 (2), is subject
13to s. 609.655.
SB471, s. 17 14Section 17. 185.981 (8) of the statutes is amended to read:
SB471,8,2015 185.981 (8) A sickness care plan operated by a cooperative association is
16subject to s. 632.895 (8).
Coverage by a health care plan operated by a cooperative
17association that qualifies as a health maintenance organization, as defined in s.
18609.01 (2),
of mammograms under s. 632.895 (8) may be subject to any requirements
19that the sickness health care plan imposes under s. 609.05 (2) and (3) on the coverage
20of other health care services obtained by members and their dependents.
SB471, s. 18 21Section 18. 185.981 (9) of the statutes is amended to read:
SB471,9,522 185.981 (9) Every cooperative sickness care association organized under this
23section that provides coverage for dependent children of members shall provide
24coverage for adopted children and children placed for adoption, as required under s.
25632.896.
Coverage by a health care plan operated by a cooperative association that

1qualifies as a health maintenance organization, as defined in s. 609.01 (2),
of health
2care services obtained by adopted children and children placed for adoption may be
3subject to any requirements that the sickness health care plan imposes under s.
4609.05 (2) and (3) on the coverage of health care services obtained by other members
5and their dependents.
SB471, s. 19 6Section 19. 185.982 (1) of the statutes is amended to read:
SB471,9,217 185.982 (1) No sickness health care plan or contract issued thereunder by such
8a cooperative association shall interfere with the manner or mode of the practice of
9medicine, optometry, chiropractic, or dentistry, the manner or mode of providing
10wellness or other services,
the relationship of physician, chiropractor, optometrist or,
11dentist, or other provider and patient, nor the responsibility of physician,
12chiropractor, optometrist or, dentist , or other provider to patient. A plan Plans may
13require persons covered to utilize health care providers designated by the
14cooperative association. The cooperative association may provide health care
15services directly through providers who are employees of the cooperative association
16or through agreements with individual providers or groups of providers organized
17on a group practice or individual practice basis. In making such agreements, no plan
18may refuse to provide coverage for vision care services or procedures provided by an
19optometrist licensed under ch. 449 within the scope of the practice of optometry, as
20defined in s. 449.01 (1), if the plan provides coverage for the same services or
21procedures when provided by another health care provider.
SB471, s. 20 22Section 20. 185.982 (2) of the statutes is amended to read:
SB471,9,2523 185.982 (2) Any cooperative association operating a voluntary sickness health
24care plan plans under the provisions of this chapter may pay physicians and
25surgeons, optometrists, chiropractors or, dentists, or other providers on a salary, per

1person, or fee-for-service basis to provide sickness health care to members of such
2the association. Every cooperative association shall contract only with its own
3members for the benefits of any plan which it operates, but any
may offer its health
4care services to nonmembers. Any cooperative
association which that operates a
5hospital may make the hospital's facilities thereof available to nonmembers and to
6nonparticipating physicians, optometrists or, dentists, or other providers.
SB471, s. 21 7Section 21. 185.982 (3) of the statutes is repealed.
SB471, s. 22 8Section 22. 185.983 (1) (intro.) of the statutes, as affected by 2009 Wisconsin
9Act 28
, is amended to read:
SB471,10,1710 185.983 (1) (intro.) Every such voluntary nonprofit sickness health care plan
11operated by a cooperative association organized under s. 185.981 shall be exempt
12from chs. 600 to 646, with the exception of ss. 601.04, 601.13, 601.31, 601.41, 601.42,
13601.43, 601.44, 601.45, 611.67, 619.04, 628.34 (10), 631.17, 631.89, 631.93, 631.95,
14632.72 (2), 632.745 to 632.749, 632.775, 632.79, 632.795, 632.85, 632.853, 632.855,
15632.87 (2), (2m), (3), (4), (5), and (6), 632.885, 632.895 (5) and (9) (8) to (17), 632.896,
16and 632.897 (10) and chs. 609, 630, 635, 645, and 646, but the sponsoring association
17shall:
SB471, s. 23 18Section 23. 185.983 (1) (a) of the statutes is amended to read:
SB471,11,219 185.983 (1) (a) File with the commissioner of insurance a declaration defining
20the organization and operation of the plan, all printed literature , and specimen
21copies of all proposed contracts of insurance with persons covered and with
22participating physicians and, hospitals, and other providers, including all
23amendments thereto. The form of all such contracts and amendments shall be
24subject to approval by the commissioner of insurance but the commissioner may not

1withhold approval if the form of such the contracts or changes therein in the
2contracts
comply with the provisions of ss. 185.981 to 185.985.
SB471, s. 24 3Section 24. 185.983 (1m) of the statutes is amended to read:
SB471,11,114 185.983 (1m) In addition to ss. 601.04, 601.31, 632.79 , and 632.895 (5), the
5commissioner of insurance may by rule subject a medicare supplement policy, as
6defined in s. 600.03 (28r), a medicare replacement policy, as defined in s. 600.03 (28p),
7or a long-term care insurance policy, as defined in s. 600.03 (28g), that is sold by a
8voluntary nonprofit sickness cooperative health care plan association organized
9under s. 185.981
to other provisions of chs. 600 to 646, except that the commissioner
10may not subject a medicare supplement policy, a medicare replacement policy, or a
11long-term care insurance policy to s. 632.895 (8).
SB471, s. 25 12Section 25. 185.983 (2) of the statutes is amended to read:
SB471,11,1713 185.983 (2) Every such voluntary nonprofit health care plan operated by a
14cooperative association organized under s. 185.981
shall make provision for a
15minimum of one physician and surgeon, or dentist to each 2,000 persons covered for
16medical or dental care and a minimum of 6 hospital beds for each 2,000 persons
17covered for hospital care.
SB471, s. 26 18Section 26. 185.985 of the statutes is amended to read:
SB471,11,24 19185.985 Inconsistent provisions of the statutes. Sickness Health care or
20hospital plans operated by cooperative associations organized under this chapter
21shall be operated exclusively under the provisions of ss. 185.981 to 185.985. Other
22provisions of the statutes that are inconsistent with any of such those provisions
23shall not be applicable to cooperative associations or sickness health care plans
24operated by cooperative associations pursuant to under this chapter.
SB471, s. 27 25Section 27. 252.14 (1) (ar) 12. of the statutes is amended to read:
SB471,12,3
1252.14 (1) (ar) 12. An operational A cooperative sickness health care plan
2association organized under ss. s. 185.981 to 185.985 that directly provides services
3through salaried employees in its own facility.
SB471, s. 28 4Section 28. 254.11 (13) of the statutes is amended to read:
SB471,12,125 254.11 (13) "Third-party payer" means a disability insurance policy that is
6required to provide coverage for a blood lead test under s. 632.895 (10) (a); a health
7maintenance organization or preferred provider plan under ch. 609; a health care
8coverage plan offered by the state under s. 40.51 (6); a self-insured health plan
9offered by a city or village under s. 66.0137 (4), a political subdivision under s.
1066.0137 (4m), a town under s. 60.23 (25), a county under s. 59.52 (11) (c), or a school
11district under s. 120.13 (2) (b); or a sickness health care plan operated by a
12cooperative association organized under s. 185.981.
SB471, s. 29 13Section 29. 632.86 (1) (a) of the statutes is amended to read:
SB471,12,1914 632.86 (1) (a) "Disability insurance policy" has the meaning given in s. 632.895
15(1) (a), except that the term does not include coverage under a health maintenance
16organization, as defined in s. 609.01 (2), a limited service health organization, as
17defined in s. 609.01 (3), a preferred provider plan, as defined in s. 609.01 (4), or a
18sickness health care plan operated by a cooperative association organized under ss.
19s. 185.981 to 185.985.
SB471, s. 30 20Section 30. 655.002 (1) (f) of the statutes is amended to read:
SB471,12,2421 655.002 (1) (f) A cooperative sickness health care association organized under
22ss. s. 185.981 to 185.985 that operates a nonprofit sickness health care plan plans
23in this state and that directly provides services through salaried employees in its own
24facility.
SB471, s. 31 25Section 31. Effective date.
SB471,13,2
1(1) This act takes effect on January 1, 2010, or on the day after publication,
2whichever is later.
SB471,13,33 (End)
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