Illinois General Assembly - Full Text of HB6338
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Full Text of HB6338  95th General Assembly

HB6338 95TH GENERAL ASSEMBLY


 


 
95TH GENERAL ASSEMBLY
State of Illinois
2007 and 2008
HB6338

 

Introduced , by Rep. Mary E. Flowers

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 5/354.1 new
215 ILCS 125/5-3   from Ch. 111 1/2, par. 1411.2
215 ILCS 130/4003   from Ch. 73, par. 1504-3
215 ILCS 165/10   from Ch. 32, par. 604

    Amends the Illinois Insurance Code, the Health Maintenance Organization Act, the Limited Health Service Organization Act, and the Voluntary Health Services Plan Act to require policies of health insurance and health plans issued by insurers that have been licensed for 5 years or more to expend no less than 85% of the aggregate dues, fees, and other periodic payments received by the policy or plan for providing health care services to its subscribers or enrollees. Provides that policies or plans issued by insurers that have been licensed for less than 5 years may spend no less than 75% for providing health care services to its subscribers or enrollees. Extends the statutory authority of the Director to disapprove group health insurance policies that fail to comply with the provisions concerning health insurance administrative costs. Effective January 1, 2009.


LRB095 20919 RPM 49849 b

 

 

A BILL FOR

 

HB6338 LRB095 20919 RPM 49849 b

1     AN ACT concerning regulation.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Illinois Insurance Code is amended by adding
5 Section 354.1 as follows:
 
6     (215 ILCS 5/354.1 new)
7     Sec. 354.1. Health insurance administrative costs.
8     (a) Notwithstanding any other provision of law, a policy of
9 health insurance or a managed care plan amended, delivered,
10 issued, or renewed on or after the effective date of this
11 amendatory Act of the 95th General Assembly by an insurer
12 licensed for 5 years or more in this State shall expend no less
13 than 85% of the aggregate dues, fees, premiums, and other
14 periodic payments received by the policy or plan on health care
15 benefits. A policy of health insurance or a managed care plan
16 amended, delivered, issued, or renewed on or after the
17 effective date of this amendatory Act of the 95th General
18 Assembly by an insurer licensed less than 5 years in this State
19 shall expend no less than 75% of the aggregate dues, fees,
20 premiums, and other periodic payments received by the policy on
21 health care benefits.
22     (b) For purposes of this Section, "health care benefits"
23 shall include, but shall not be limited to, all of the

 

 

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1 following:
2         (1) health care services that are either provided or
3     reimbursed by the plan or its contracted providers as
4     covered benefits;
5         (2) disease management expenses using cost-effective
6     evidence-based guidelines;
7         (3) payments to providers;
8         (4) plan medical advice by telephone; and
9         (5) prescription drug management programs.
10     For purposes of this Section, "health care benefits" shall
11 not include administrative costs, agent and broker commission
12 and solicitation costs associated with the issuance of
13 individual and group health care service plan contracts,
14 dividends, profits, stock options, income tax or any other tax
15 the policy or plan expenses, assessments or fines levied by the
16 Division of Insurance, or administrative costs associated with
17 existing or new regulatory requirements.
18     (c) An insurer or health care service plan provider
19 licensed to operate in this State shall provide written
20 affirmation to the Division of Insurance that it meets the
21 requirements of this Section.
22     (d) The Director may disapprove an insurer or health care
23 service plan provider's use of a plan contract, issue a fine or
24 assessment against an insurer or health care service plan
25 provider, suspend or revoke the license issued to an insurer or
26 health care service plan provider, or take any other action the

 

 

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1 Director deems appropriate if the Director determines that the
2 policy or plan has failed to comply with this Section.
 
3     Section 10. The Health Maintenance Organization Act is
4 amended by changing Section 5-3 as follows:
 
5     (215 ILCS 125/5-3)  (from Ch. 111 1/2, par. 1411.2)
6     Sec. 5-3. Insurance Code provisions.
7     (a) Health Maintenance Organizations shall be subject to
8 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
9 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
10 154.6, 154.7, 154.8, 155.04, 354.1, 355.2, 356m, 356v, 356w,
11 356x, 356y, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 356z.9,
12 356z.10 356z.9, 364.01, 367.2, 367.2-5, 367i, 368a, 368b, 368c,
13 368d, 368e, 370c, 401, 401.1, 402, 403, 403A, 408, 408.2, 409,
14 412, 444, and 444.1, paragraph (c) of subsection (2) of Section
15 367, and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2,
16 XXV, and XXVI of the Illinois Insurance Code.
17     (b) For purposes of the Illinois Insurance Code, except for
18 Sections 444 and 444.1 and Articles XIII and XIII 1/2, Health
19 Maintenance Organizations in the following categories are
20 deemed to be "domestic companies":
21         (1) a corporation authorized under the Dental Service
22     Plan Act or the Voluntary Health Services Plans Act;
23         (2) a corporation organized under the laws of this
24     State; or

 

 

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1         (3) a corporation organized under the laws of another
2     state, 30% or more of the enrollees of which are residents
3     of this State, except a corporation subject to
4     substantially the same requirements in its state of
5     organization as is a "domestic company" under Article VIII
6     1/2 of the Illinois Insurance Code.
7     (c) In considering the merger, consolidation, or other
8 acquisition of control of a Health Maintenance Organization
9 pursuant to Article VIII 1/2 of the Illinois Insurance Code,
10         (1) the Director shall give primary consideration to
11     the continuation of benefits to enrollees and the financial
12     conditions of the acquired Health Maintenance Organization
13     after the merger, consolidation, or other acquisition of
14     control takes effect;
15         (2)(i) the criteria specified in subsection (1)(b) of
16     Section 131.8 of the Illinois Insurance Code shall not
17     apply and (ii) the Director, in making his determination
18     with respect to the merger, consolidation, or other
19     acquisition of control, need not take into account the
20     effect on competition of the merger, consolidation, or
21     other acquisition of control;
22         (3) the Director shall have the power to require the
23     following information:
24             (A) certification by an independent actuary of the
25         adequacy of the reserves of the Health Maintenance
26         Organization sought to be acquired;

 

 

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1             (B) pro forma financial statements reflecting the
2         combined balance sheets of the acquiring company and
3         the Health Maintenance Organization sought to be
4         acquired as of the end of the preceding year and as of
5         a date 90 days prior to the acquisition, as well as pro
6         forma financial statements reflecting projected
7         combined operation for a period of 2 years;
8             (C) a pro forma business plan detailing an
9         acquiring party's plans with respect to the operation
10         of the Health Maintenance Organization sought to be
11         acquired for a period of not less than 3 years; and
12             (D) such other information as the Director shall
13         require.
14     (d) The provisions of Article VIII 1/2 of the Illinois
15 Insurance Code and this Section 5-3 shall apply to the sale by
16 any health maintenance organization of greater than 10% of its
17 enrollee population (including without limitation the health
18 maintenance organization's right, title, and interest in and to
19 its health care certificates).
20     (e) In considering any management contract or service
21 agreement subject to Section 141.1 of the Illinois Insurance
22 Code, the Director (i) shall, in addition to the criteria
23 specified in Section 141.2 of the Illinois Insurance Code, take
24 into account the effect of the management contract or service
25 agreement on the continuation of benefits to enrollees and the
26 financial condition of the health maintenance organization to

 

 

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1 be managed or serviced, and (ii) need not take into account the
2 effect of the management contract or service agreement on
3 competition.
4     (f) Except for small employer groups as defined in the
5 Small Employer Rating, Renewability and Portability Health
6 Insurance Act and except for medicare supplement policies as
7 defined in Section 363 of the Illinois Insurance Code, a Health
8 Maintenance Organization may by contract agree with a group or
9 other enrollment unit to effect refunds or charge additional
10 premiums under the following terms and conditions:
11         (i) the amount of, and other terms and conditions with
12     respect to, the refund or additional premium are set forth
13     in the group or enrollment unit contract agreed in advance
14     of the period for which a refund is to be paid or
15     additional premium is to be charged (which period shall not
16     be less than one year); and
17         (ii) the amount of the refund or additional premium
18     shall not exceed 20% of the Health Maintenance
19     Organization's profitable or unprofitable experience with
20     respect to the group or other enrollment unit for the
21     period (and, for purposes of a refund or additional
22     premium, the profitable or unprofitable experience shall
23     be calculated taking into account a pro rata share of the
24     Health Maintenance Organization's administrative and
25     marketing expenses, but shall not include any refund to be
26     made or additional premium to be paid pursuant to this

 

 

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1     subsection (f)). The Health Maintenance Organization and
2     the group or enrollment unit may agree that the profitable
3     or unprofitable experience may be calculated taking into
4     account the refund period and the immediately preceding 2
5     plan years.
6     The Health Maintenance Organization shall include a
7 statement in the evidence of coverage issued to each enrollee
8 describing the possibility of a refund or additional premium,
9 and upon request of any group or enrollment unit, provide to
10 the group or enrollment unit a description of the method used
11 to calculate (1) the Health Maintenance Organization's
12 profitable experience with respect to the group or enrollment
13 unit and the resulting refund to the group or enrollment unit
14 or (2) the Health Maintenance Organization's unprofitable
15 experience with respect to the group or enrollment unit and the
16 resulting additional premium to be paid by the group or
17 enrollment unit.
18     In no event shall the Illinois Health Maintenance
19 Organization Guaranty Association be liable to pay any
20 contractual obligation of an insolvent organization to pay any
21 refund authorized under this Section.
22 (Source: P.A. 94-906, eff. 1-1-07; 94-1076, eff. 12-29-06;
23 95-422, eff. 8-24-07; 95-520, eff. 8-28-07; revised 12-4-07.)
 
24     Section 15. The Limited Health Service Organization Act is
25 amended by changing Section 4003 as follows:
 

 

 

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1     (215 ILCS 130/4003)  (from Ch. 73, par. 1504-3)
2     Sec. 4003. Illinois Insurance Code provisions. Limited
3 health service organizations shall be subject to the provisions
4 of Sections 133, 134, 137, 140, 141.1, 141.2, 141.3, 143, 143c,
5 147, 148, 149, 151, 152, 153, 154, 154.5, 154.6, 154.7, 154.8,
6 155.04, 155.37, 354.1, 355.2, 356v, 356z.10 356z.9, 368a, 401,
7 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and
8 Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
9 XXVI of the Illinois Insurance Code. For purposes of the
10 Illinois Insurance Code, except for Sections 444 and 444.1 and
11 Articles XIII and XIII 1/2, limited health service
12 organizations in the following categories are deemed to be
13 domestic companies:
14         (1) a corporation under the laws of this State; or
15         (2) a corporation organized under the laws of another
16     state, 30% of more of the enrollees of which are residents
17     of this State, except a corporation subject to
18     substantially the same requirements in its state of
19     organization as is a domestic company under Article VIII
20     1/2 of the Illinois Insurance Code.
21 (Source: P.A. 95-520, eff. 8-28-07; revised 12-5-07.)
 
22     Section 20. The Voluntary Health Services Plans Act is
23 amended by changing Section 10 as follows:
 

 

 

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1     (215 ILCS 165/10)  (from Ch. 32, par. 604)
2     Sec. 10. Application of Insurance Code provisions. Health
3 services plan corporations and all persons interested therein
4 or dealing therewith shall be subject to the provisions of
5 Articles IIA and XII 1/2 and Sections 3.1, 133, 140, 143, 143c,
6 149, 155.37, 354, 354.1, 355.2, 356g.5, 356r, 356t, 356u, 356v,
7 356w, 356x, 356y, 356z.1, 356z.2, 356z.4, 356z.5, 356z.6,
8 356z.8, 356z.9, 356z.10 356z.9, 364.01, 367.2, 368a, 401,
9 401.1, 402, 403, 403A, 408, 408.2, and 412, and paragraphs (7)
10 and (15) of Section 367 of the Illinois Insurance Code.
11 (Source: P.A. 94-1076, eff. 12-29-06; 95-189, eff. 8-16-07;
12 95-331, eff. 8-21-07; 95-422, eff. 8-24-07; 95-520, eff.
13 8-28-07; revised 12-5-07.)
 
14     Section 99. Effective date. This Act takes effect January
15 1, 2009.