SB2241ham002 93RD GENERAL ASSEMBLY

Rep. John A. Fritchey

Filed: 5/27/2004

09300SB2241ham002 LRB093 15873 WGH 51755 a

AMENDMENT TO SENATE BILL 2241

AMENDMENT NO. ______. Amend Senate Bill 2241, AS AMENDED, by inserting after Article 3 the following:

"ARTICLE 4. HEALTHCARE PROVIDER STABILIZATION BOARD ACT

Section 401. Short title. This Article 4 may be cited as the Healthcare Provider Stabilization Board Act, and references in this Article to "this Act" mean this Article.

Section 405. Findings. The General Assembly finds that:

(1) The Healthcare Provider Stabilization Plan is established as a State program to provide stabilization in the healthcare market by making grants to healthcare providers to help compensate for disproportionate cost increases in medical malpractice insurance, particularly for those physician specialists and those physicians in healthcare markets that are the most severely affected, and to assist in attracting new medical school graduates to practice in this State.

(2) The Healthcare Provider Stabilization Board shall operate the Plan in a manner so that the estimated cost of the program will not exceed the total revenues it expects to receive from investment income, assessments, or fees collected or received by the Board and other funds that are made available from appropriations by the General Assembly.

Section 410. Definitions: As used in this Act, unless the context otherwise requires:

"Board" means the Illinois Healthcare Provider Stabilization Board.

"Department" means the Illinois Department of Insurance.

"Director" means the Director of the Illinois Department of Insurance.

"Educational loans" means higher education student loans that a person has incurred in attending a registered professional physician education program.

"Fund" means the Healthcare Provider Stabilization Plan Fund.

"Healthcare provider" means a physician, hospital, or other licensed healthcare provider.

"Hospital" means a person, partnership, corporation, or other entity defined as a hospital in the Hospital Licensing Act.

"Medical malpractice insurance" means insurance coverage against the legal liability of the insured for loss, damage, or expense incident to a claim, arising out of the death or injury of any person as a result of negligence or malpractice in rendering or failing to render professional service by any physician, hospital, or other healthcare provider.

"Other healthcare providers" includes those providers of health care services as defined in the Plan and who are licensed in Illinois to furnish medical care.

"Physician" means a physician licensed to practice medicine in all its branches under the Medical Practice Act of 1987.

"Plan" means the Healthcare Provider Stabilization Plan program established by this Act.

"Revenue" means fees, charges, interest, collections, appropriations, donations, and other funds, income, or profit received or to be received by the Board from any source.

Section 415. Board; membership.

(a) The Board is hereby created. Nothing in this Act shall be construed in such a way that the Board shall be deemed to be a State agency or moneys in the Fund shall be deemed State funds.

(b) The Board shall consist of 9 members. Seven of the members shall be public members appointed by the Governor, by and with the consent of the Senate, who are residents of the State, not more than 4 of whom shall be members of the same political party. The Governor shall appoint 3 representatives of the insurance industry, at least 2 of whom shall have medical malpractice insurance underwriting experience; 2 physicians; one hospital representative; and one member of the general public not currently associated with any of the aforementioned professions. The Director or the Director's designated representative shall be a member of the Board. A representative of the Illinois Department of Public Aid shall also be a member of the Board.

(c) The Board members shall be appointed as soon as practicable after the effective date of this Act.

(d) By lot, the terms of the Governor's initial appointees shall be staggered so that the terms of 2 members shall expire 2 years after the effective date of this Act, the terms of 2 members shall expire 3 years after the effective date of this Act, and the terms of 3 members shall expire 4 years after the effective date of this Act. A successor shall serve for a term of 3 years. An appointment to fill a vacancy shall be for the unexpired term of the member whose vacancy is being filled. Board members may be reappointed.

(e) After notice and a public hearing, unless the notice and hearing shall be expressly waived in writing, any member of the Board may be removed by the Governor for cause.

(f) Four members of the General Assembly, one each appointed by the President and the Minority Leader of the Senate and by the Speaker and the Minority Leader of the House of Representatives, shall serve as non-voting advisors to the Board and shall be entitled to notice of meetings and an opportunity to participate in Board meetings.

(g) As soon as practicable after the appointment of the initial members, the Board shall organize for the transaction of business. The Board shall annually elect one of its public members as Chairman and one as Vice-Chairman. The Board shall appoint and employ an Executive Director who shall not be a member of the Board and who shall serve at the pleasure of the Board. The Executive Director shall receive such compensation as may be fixed by the Board.

(h) The Executive Director or other person designated by resolution of the Board shall keep a record of the proceedings of the Board and shall be custodian of all books, documents, and papers filed with the Board, the minute book or journal of the Board, and the Board's official seal. The Executive Director or his or her designee may cause copies to be made of all minutes and other records and documents of the Board and may certify under the official seal of the Board that the copies are true copies and that all persons dealing with the Board may rely upon the copies.

(i) Five members of the Board shall constitute a quorum. The affirmative vote of a majority of all the members of the Board shall be necessary for any action taken by the Board, except that amendments to the Plan for any year within which grants have been made shall require a two-thirds vote of all members of the Board. A vacancy in the membership of the Board shall not impair the right of a quorum to exercise all the rights and perform all the duties of the Board.

(j) Each meeting of the Board shall be open to the public. Notice of meetings, or waivers thereof, shall be given in the manner provided in the by-laws. Resolutions of the Board need not be published or posted. The Board may delegate by resolution to one or more of its members or its Executive Director any powers or duties that it may deem proper.

(k) The members of the Board shall receive no compensation for the performance of their duties as members, but each member shall be paid necessary expenses while engaged in the performance of his or her duties.

Section 420. Powers and duties of Board.

(a) The Board has the following powers and functions:

(1) To adopt by-laws and rules for the regulation of its affairs and the conduct of its business.

(2) To adopt an official seal and alter the same at the Board's pleasure.

(3) To maintain an office.

(4) To develop and implement the Plan, including creating grant programs and making grants to healthcare providers to help compensate for disproportionate cost increases in medical malpractice insurance, to assist in attracting new medical school graduates to practice in this State by offering loan repayment assistance, and to adopt regulations and rules required to implement the Plan.

(5) To determine what funding, if any, is necessary to operate the Plan, subject to the limitation in subsection (c) of Section 510 of the Assessment Mechanism for the Healthcare Provider Stabilization Board Act.

(6) To sue and be sued in its own name and plead and be pleaded.

(7) To employ or to contract for attorneys, accountants, financial experts, and any other employees and agents as may be necessary in its judgment, and to fix their compensation and benefits. The Board may take any action as it deems appropriate to enable its employees to come within the provisions and obtain the benefits of the Federal Social Security Act.

(8) To appoint any technical or professional advisory committees that may be necessary in the Board's judgment, to define their duties, and to provide reimbursement of their expenses.

(9) To enter into contracts as are necessary or proper to carry out any of its corporate purposes.

(10) To do all things necessary or convenient to carry out the purposes of this Act.

(b) The Board shall keep an accurate account of all activities, receipts, and expenditures related to the Plan and shall annually, in the month of April, make a report to the Governor, the State Comptroller, the Clerk of the House of Representatives, and the Secretary of the Senate. The report shall be a public record and open for inspection at the offices of the Board during normal business hours. The report shall summarize the activities of the Plan during the preceding calendar year including all grants to healthcare providers. The Auditor General of the State of Illinois may, according to the provisions of the Illinois State Auditing Act, investigate the affairs of the Board, examine the properties and records of the Board, and prescribe methods of accounting and the rendering of periodical reports in relation to projects undertaken by the Board.

Section 425. Creation and operation of the Plan. The Board shall create the Illinois Healthcare Provider Stabilization Plan. The Plan shall operate subject to the control and supervision of the Board.

Section 430. Contents of the Plan. The Plan shall include, but shall not be limited to, the following:

(1) An analysis of revenues available to the Board for the making of grants to healthcare providers.

(2) A prioritization of those healthcare providers to whom grants shall be made consistent with the following:

(A) Physicians shall receive a priority over hospitals and hospitals shall receive a priority over other healthcare providers, except that hospitals that directly or through a controlled affiliate employ physicians or otherwise purchase or provide medical malpractice insurance for residents or physicians on staff shall receive equal priority with physicians who purchase coverage for themselves. Physicians seeking assistance for the financing of tail coverage policies (policies covering claims made during the policy term for events that occurred during a designated previous policy term) have priority over other physicians. Physician specialties and subspecialties disproportionately affected, as determined by the Board, shall receive a priority over physician specialties less affected.

(B) Healthcare providers serving a disproportionately higher percentage or number of Medicaid recipients or inpatient days shall receive a priority over healthcare providers serving lower percentages of Medicaid recipients, except that the priority set forth in this item (B) shall not apply if the General Assembly appropriates new funds from the Fund to the Illinois Department of Public Aid.

(C) Geographic areas of the State disproportionately affected, as determined by the Board, shall receive a priority over geographic areas less affected.

(4) Reasonable means testing for recipients of grants.

(5) A loan repayment assistance program established by the Board for physicians in Illinois.

(A) To be eligible for loan repayment assistance, an applicant must meet all of the following qualifications:

(i) He or she must be a citizen or permanent resident of the United States.

(ii) He or she must be a resident of Illinois.

(iii) He or she must be a recent graduate of a registered professional physician education program or practicing full-time in Illinois as a physician.

(B) For each year that a qualified applicant practices full-time in Illinois as a physician, the Board shall, subject to available revenues, award assistance to that person in an amount equal to the amount in educational loans that the person must repay that year. However, the total amount of assistance that a person may be awarded under the program shall not exceed $25,000. The Board shall require recipients to use the assistance to pay off their educational loans.

(C) A physician receiving assistance under the loan repayment assistance program must agree to continue to practice full-time in Illinois for 3 years following receipt of loan repayment assistance.

(6) Procedures to apply for grants and loan repayment assistance, provided any licensed healthcare provider shall be entitled to apply. As soon as practicable, the application process shall be made available electronically.

Section 432. Limitation on grants or other assistance. The Board may award grants or other assistance pursuant to the Illinois Healthcare Provider Stabilization Plan only in calendar years in which an assessment is made pursuant to Section 520 of the Assessment Mechanism for the Healthcare Provider Stabilization Board Act.

Section 435. Healthcare Provider Stabilization Plan Fund. The Healthcare Provider Stabilization Plan Fund is created as a special fund in the State treasury. The Healthcare Provider Stabilization Plan Fund shall be used, subject to appropriation, to accomplish the purposes of the Plan and for the operating expenses of the Board. Only moneys collected pursuant to the Assessment Mechanism for the Healthcare Provider Stabilization Board Act may be deposited into the Fund.

The Healthcare Provider Stabilization Plan Fund is exempt from the provisions of subsection (c) of Section 5 of the State Finance Act. If the Fund is inactive for 5 years or longer, however, the balance remaining in the Fund shall be transferred by the Comptroller into the General Revenue Fund.

Section 495. The State Finance Act is amended by adding Section 5.625 as follows:

(30 ILCS 105/5.625 new)

Sec. 5.625. The Healthcare Provider Stabilization Plan Fund.

ARTICLE 5. ASSESSMENT MECHANISM FOR THE HEALTHCARE PROVIDER

STABILIZATION BOARD ACT

Section 501. Short title. This Article 5 may be cited as the Assessment Mechanism for the Healthcare Provider Stabilization Board Act, and references in this Article to "this Act" mean this Article.

Section 505. Definitions. As used in this Act:

"Department" means the Department of Insurance.

"Director" means the Director of Insurance.

"Board" means the Illinois Healthcare Provider Stabilization Board.

"Health maintenance organization" means an organization as defined in the Health Maintenance Organization Act.

"Insured" means any individual resident of this State who is eligible to receive benefits, either directly or indirectly, from any insurer.

"Insurer" means any insurance company authorized to transact health insurance business in this State and any corporation that provides medical services and is organized under the Voluntary Health Services Plans Act or the Health Maintenance Organization Act.

"Resident" means a person who is and continues to be legally domiciled and physically residing on a permanent and full-time basis in a place of permanent habitation in this State that remains that person's principal residence and from which that person is absent only for temporary or transitory purpose.

"Stop-loss coverage" means an arrangement whereby an insurer insures against the risk that any one claim will exceed a specific dollar amount or that the entire loss of a self-insurance plan will exceed a specific amount.

"Third party administrator" means an administrator as defined in Section 511.101 of the Illinois Insurance Code who is licensed under Article XXXI 1/4 of that Code.

Section 510. Funding of operations of the Board.

(a) Moneys needed to operate the Plan, as determined by the Board pursuant to item (5) of subsection (a) of Section 420 of the Healthcare Provider Stabilization Board Act, shall be funded by an assessment of all insurers made in accordance with the provisions of this Act. In any year during which assessments are made pursuant to Section 520 of this Act, the Board shall assess all insurers on a quarterly basis in accordance with the provisions of this Section. The Board may also assess additional amounts, subject to the limitation set forth in subsection (c) of this Section, no more than 4 times a year to fund unanticipated expenses, implementation expenses, and cash flow needs.

(b) An insurer's assessment shall be determined by multiplying the total operational expenses of the Plan, as determined in subsection (a) of this Section, by a fraction, the numerator of which equals that insurer's direct Illinois premiums during the preceding calendar year and the denominator of which equals the total of all insurers' direct Illinois premiums. The Board may exempt those insurers whose share as determined under this subsection would be so minimal as to not exceed the estimated cost of levying the assessment.

(c) The Board shall charge and collect from each insurer the amounts determined to be due under this Section. In no event shall the Board assess an amount greater than 0.5% of all insurers' total direct Illinois premiums. This assessment shall be billed by Board invoice, based upon reports filed with the Director of Insurance on forms prescribed by the Director. The invoice shall be due upon receipt and must be paid no later than 30 days after receipt by the insurer.

(d) When an insurer fails to pay the full amount of any assessment of $100 or more due under this Section there shall be added to the amount due as a penalty the greater of $50 or an amount equal to 5% of the deficiency for each month or part of a month that the deficiency remains unpaid.

(e) Amounts collected under this Section shall be held in accordance with Section 435 of the Healthcare Provider Stabilization Board Act.

(f) An insurer may petition the Director for an abatement or deferment of all or part of an assessment imposed by the Board. The Director may abate or defer, in whole or in part, if payment of the assessment would endanger the ability of the insurer to fulfill its contractual obligations. If an assessment against an insurer is abated or deferred, in whole or in part, the amount by which the assessment is abated or deferred shall be assessed against the other insurers in a manner consistent with the basis for assessments set forth in this subsection. The insurer receiving a deferment shall remain liable to the plan for the deficiency for 4 years.

Section 515. Appeal of assessment. The Board shall establish procedures for appeal by an insurer subject to assessment pursuant to this Act. These procedures shall require that:

(1) Any insurer that wishes to appeal all or any part of an assessment made pursuant to Section 510 shall first pay the amount of the assessment as set forth in the invoice provided by the Board within the time provided in subsection (a) of Section 510. The Board shall hold such payments in a separate interest-bearing account. The payments shall be accompanied by a statement in writing that the payment is made under appeal. The statement shall specify the grounds for the appeal. The insurer may be represented in its appeal by counsel or other representative of its choosing.

(2) Within 90 days following the payment of an assessment under appeal by any insurer, the Board shall notify the insurer or representative designated by the insurer in writing of its determination with respect to the appeal and the basis or bases for that determination, unless the Board notifies the insurer that a reasonable amount of additional time is required to resolve the issues raised by the appeal.

(3) The Board shall refer to the Director any question concerning the reports required under subsection (c) of Section 510. Unless additional time is required to resolve the question, the Director shall within 60 days report to the Board in writing his or her determination with respect to any such questions.

(4) If the Board determines that the insurer is entitled to a refund, the refund shall be paid within 30 days following the date upon which the Board makes its determination, together with the accrued interest. Interest on any refund due an insurer shall be paid at the rate actually earned by the Board on the separate account.

(5) The amount of any refund shall then be assessed against all insurers in a manner consistent with the basis for assessment as otherwise authorized by this Act.

(6) The Board's determination with respect to any appeal received pursuant to this Section shall be a final administrative decision as defined in Section 3-101 of the Code of Civil Procedure. The provisions of the Administrative Review Law shall apply to and govern all proceedings for the judicial review of final administrative decisions of the Board.

(7) If an insurer fails to appeal an assessment in accordance with the provisions of this Section, the insurer shall be deemed to have waived its right of appeal.

Section 520. Assessment.

(a) If the premiums in the preceding calendar year for all medical malpractice insurance carriers in the State increased by an amount equal to or greater than 10%, assessments shall be made pursuant to this Act, the moneys shall be deposited into the Healthcare Provider Stabilization Plan Fund, and grants and assistance shall be paid in accordance with the Healthcare Provider Stabilization Plan established under the Healthcare Provider Stabilization Board Act.

(b) If the premiums in the preceding calendar year for all medical malpractice insurance carriers in the State increased by an amount less than 10%, assessments shall not be made pursuant to this Act.".