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90_HB3431eng
305 ILCS 5/5-1 from Ch. 23, par. 5-1
Amends the Medicaid Article of the Public Aid Code.
Makes a stylistic change in a Section concerning purpose of
the Medicaid program.
LRB9010626DJcd
HB3431 Engrossed LRB9010626DJcd
1 AN ACT concerning managed care community networks,
2 amending named Acts.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Health Maintenance Organization Act is
6 amended by changing Section 2-1 as follows:
7 (215 ILCS 125/2-1) (from Ch. 111 1/2, par. 1403)
8 Sec. 2-1. Certificate of authority - Exception for
9 corporate employee programs - Applications - Material
10 modification of operation.
11 (a) No organization shall establish or operate a Health
12 Maintenance Organization in this State without obtaining a
13 certificate of authority under this Act. No person other
14 than an organization may lawfully establish or operate a
15 Health Maintenance Organization in this State. This Act
16 shall not apply to the establishment and operation of a
17 Health Maintenance Organization exclusively providing or
18 arranging for health care services to employees of a
19 corporate affiliate of such Health Maintenance Organization.
20 This exclusion shall be available only to those Health
21 Maintenance Organizations which require employee
22 contributions which equal less than 50% of the total cost of
23 the health care plan, with the remainder of the cost being
24 paid by the corporate affiliate which is the employer of the
25 participants in the plan. This Act shall not apply to the
26 establishment and operation of a Health Maintenance
27 Organization exclusively providing or arranging health care
28 services under contract with the State to persons committed
29 to the custody of the Illinois Department of Corrections.
30 This Act does not apply to the establishment and operation of
31 (i) a managed care community network providing or arranging
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1 health care services under contract with the State
2 exclusively to persons who are enrolled in the integrated
3 health care program established under Section 5-16.3 of the
4 Illinois Public Aid Code or (ii) a managed care community
5 network owned, operated, or governed by a county provider as
6 defined in Section 15-1 of that Code.
7 This Act does not apply to the establishment and
8 operation of managed care community networks that are
9 certified as risk-bearing entities under Section 5-11 of the
10 Illinois Public Aid Code and that contract with the Illinois
11 Department of Public Aid pursuant to that Section. The
12 Department of Insurance may implement the amendatory changes
13 to this Act made by this amendatory Act of 1998 through the
14 use of emergency rules in accordance with Section 5-45 of the
15 Illinois Administrative Procedure Act. For purposes of that
16 Act, the adoption of rules to implement these changes is
17 deemed an emergency and necessary for the public interest,
18 safety, and welfare.
19 (b) Any organization may apply to the Director for and
20 obtain a certificate of authority to establish and operate a
21 Health Maintenance Organization in compliance with this Act.
22 A foreign corporation may qualify under this Act, subject to
23 its registration to do business in this State as a foreign
24 corporation.
25 (c) Each application for a certificate of authority
26 shall be filed in triplicate and verified by an officer or
27 authorized representative of the applicant, shall be in a
28 form prescribed by the Director, and shall set forth, without
29 limiting what may be required by the Director, the following:
30 (1) A copy of the organizational document;
31 (2) A copy of the bylaws, rules and regulations, or
32 similar document regulating the conduct of the internal
33 affairs of the applicant, which shall include a mechanism
34 to afford the enrollees an opportunity to participate in
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1 an advisory capacity in matters of policy and operations;
2 (3) A list of the names, addresses, and official
3 positions of the persons who are to be responsible for
4 the conduct of the affairs of the applicant; including,
5 but not limited to, all members of the board of
6 directors, executive committee, the principal officers,
7 and any person or entity owning or having the right to
8 acquire 10% or more of the voting securities or
9 subordinated debt of the applicant;
10 (4) A statement generally describing the applicant,
11 geographic area to be served, its facilities, personnel
12 and the health care services to be offered;
13 (5) A copy of the form of any contract made or to
14 be made between the applicant and any providers regarding
15 the provision of health care services to enrollees;
16 (6) A copy of the form of any contract made or to
17 be made between the applicant and any person listed in
18 paragraph (3) of this subsection;
19 (7) A copy of the form of any contract made or to
20 be made between the applicant and any person,
21 corporation, partnership or other entity for the
22 performance on the applicant's behalf of any functions
23 including, but not limited to, marketing, administration,
24 enrollment, investment management and subcontracting for
25 the provision of health services to enrollees;
26 (8) A copy of the form of any group contract which
27 is to be issued to employers, unions, trustees, or other
28 organizations and a copy of any form of evidence of
29 coverage to be issued to any enrollee or subscriber and
30 any advertising material;
31 (9) Descriptions of the applicant's procedures for
32 resolving enrollee grievances which must include
33 procedures providing for enrollees participation in the
34 resolution of grievances;
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1 (10) A copy of the applicant's most recent
2 financial statements audited by an independent certified
3 public accountant. If the financial affairs of the
4 applicant's parent company are audited by an independent
5 certified public accountant but those of the applicant
6 are not, then a copy of the most recent audited financial
7 statement of the applicant's parent, attached to which
8 shall be consolidating financial statements of the parent
9 including separate unaudited financial statements of the
10 applicant, unless the Director determines that additional
11 or more recent financial information is required for the
12 proper administration of this Act;
13 (11) A copy of the applicant's financial plan,
14 including a three-year projection of anticipated
15 operating results, a statement of the sources of working
16 capital, and any other sources of funding and provisions
17 for contingencies;
18 (12) A description of rate methodology;
19 (13) A description of the proposed method of
20 marketing;
21 (14) A copy of every filing made with the Illinois
22 Secretary of State which relates to the applicant's
23 registered agent or registered office;
24 (15) A description of the complaint procedures to
25 be established and maintained as required under Section
26 4-6 of this Act;
27 (16) A description, in accordance with regulations
28 promulgated by the Illinois Department of Public Health,
29 of the quality assessment and utilization review
30 procedures to be utilized by the applicant;
31 (17) The fee for filing an application for issuance
32 of a certificate of authority provided in Section 408 of
33 the Illinois Insurance Code, as now or hereafter amended;
34 and
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1 (18) Such other information as the Director may
2 reasonably require to make the determinations required by
3 this Act.
4 (Source: P.A. 88-554, eff. 7-26-94.)
5 Section 10. The Illinois Public Aid Code is amended by
6 changing Sections 5-11, 15-2, 15-3, and 15-5 as follows:
7 (305 ILCS 5/5-11) (from Ch. 23, par. 5-11)
8 Sec. 5-11. Co-operative arrangements; contracts with
9 other State agencies, health care and rehabilitation
10 organizations, and fiscal intermediaries.
11 (a) The Illinois Department may enter into co-operative
12 arrangements with State agencies responsible for
13 administering or supervising the administration of health
14 services and vocational rehabilitation services to the end
15 that there may be maximum utilization of such services in the
16 provision of medical assistance.
17 The Illinois Department shall, not later than June 30,
18 1993, enter into one or more co-operative arrangements with
19 the Department of Mental Health and Developmental
20 Disabilities providing that the Department of Mental Health
21 and Developmental Disabilities will be responsible for
22 administering or supervising all programs for services to
23 persons in community care facilities for persons with
24 developmental disabilities, including but not limited to
25 intermediate care facilities, that are supported by State
26 funds or by funding under Title XIX of the federal Social
27 Security Act. The responsibilities of the Department of
28 Mental Health and Developmental Disabilities under these
29 agreements are transferred to the Department of Human
30 Services as provided in the Department of Human Services Act.
31 The Department may also contract with such State health
32 and rehabilitation agencies and other public or private
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1 health care and rehabilitation organizations to act for it in
2 supplying designated medical services to persons eligible
3 therefor under this Article. Any contracts with health
4 services or health maintenance organizations shall be
5 restricted to organizations which have been certified as
6 being in compliance with standards promulgated pursuant to
7 the laws of this State governing the establishment and
8 operation of health services or health maintenance
9 organizations. The Department may also contract with
10 insurance companies or other corporate entities serving as
11 fiscal intermediaries in this State for the Federal
12 Government in respect to Medicare payments under Title XVIII
13 of the Federal Social Security Act to act for the Department
14 in paying medical care suppliers. The provisions of Section
15 9 of "An Act in relation to State finance", approved June 10,
16 1919, as amended, notwithstanding, such contracts with State
17 agencies, other health care and rehabilitation organizations,
18 or fiscal intermediaries may provide for advance payments.
19 (b) For purposes of this subsection (b), "managed care
20 community network" means an entity, other than a health
21 maintenance organization, that is owned, operated, or
22 governed by providers of health care services within this
23 State and that provides or arranges primary, secondary, and
24 tertiary managed health care services under contract with the
25 Illinois Department exclusively to persons participating in
26 programs administered by the Illinois Department.
27 The Illinois Department may certify managed care
28 community networks, including managed care community networks
29 owned, operated, managed, or governed by State-funded medical
30 schools, as risk-bearing entities eligible to contract with
31 the Illinois Department as Medicaid managed care
32 organizations. The Illinois Department may contract with
33 those managed care community networks to furnish health care
34 services to or arrange those services for individuals
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1 participating in programs administered by the Illinois
2 Department. The rates for those provider-sponsored
3 organizations may be determined on a prepaid, capitated
4 basis. A managed care community network may choose to
5 contract with the Illinois Department to provide only
6 pediatric health care services. The Illinois Department shall
7 by rule adopt the criteria, standards, and procedures by
8 which a managed care community network may be permitted to
9 contract with the Illinois Department and shall consult with
10 the Department of Insurance in adopting these rules.
11 A county provider as defined in Section 15-1 of this Code
12 may contract with the Illinois Department to provide primary,
13 secondary, or tertiary managed health care services as a
14 managed care community network without the need to establish
15 a separate entity and shall be deemed a managed care
16 community network for purposes of this Code only to the
17 extent it provides services to participating individuals. A
18 county provider is entitled to contract with the Illinois
19 Department with respect to any contracting region located in
20 whole or in part within the county. A county provider is not
21 required to accept enrollees who do not reside within the
22 county.
23 In order to (i) accelerate and facilitate the development
24 of integrated health care in contracting areas outside
25 counties with populations in excess of 3,000,000 and counties
26 adjacent to those counties and (ii) maintain and sustain the
27 high quality of education and residency programs coordinated
28 and associated with local area hospitals, the Illinois
29 Department may develop and implement a demonstration program
30 from managed care community networks owned, operated,
31 managed, or governed by State-funded medical schools. The
32 Illinois Department shall prescribe by rule the criteria,
33 standards, and procedures for effecting this demonstration
34 program.
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1 Each managed care community network must demonstrate its
2 ability to bear the financial risk of serving individuals
3 under this program. The Illinois Department shall by rule
4 adopt standards for assessing the solvency and financial
5 soundness of each managed care community network. Any
6 solvency and financial standards adopted for managed care
7 community networks shall be no more restrictive than the
8 solvency and financial standards adopted under Section
9 1856(a) of the Social Security Act for provider-sponsored
10 organizations under Part C of Title XVIII of the Social
11 Security Act.
12 The Illinois Department may implement the amendatory
13 changes to this Code made by this amendatory Act of 1998
14 through the use of emergency rules in accordance with Section
15 5-45 of the Illinois Administrative Procedure Act. For
16 purposes of that Act, the adoption of rules to implement
17 these changes is deemed an emergency and necessary for the
18 public interest, safety, and welfare.
19 (c) Not later than June 30, 1996, the Illinois
20 Department shall enter into one or more cooperative
21 arrangements with the Department of Public Health for the
22 purpose of developing a single survey for nursing facilities,
23 including but not limited to facilities funded under Title
24 XVIII or Title XIX of the federal Social Security Act or
25 both, which shall be administered and conducted solely by the
26 Department of Public Health. The Departments shall test the
27 single survey process on a pilot basis, with both the
28 Departments of Public Aid and Public Health represented on
29 the consolidated survey team. The pilot will sunset June 30,
30 1997. After June 30, 1997, unless otherwise determined by
31 the Governor, a single survey shall be implemented by the
32 Department of Public Health which would not preclude staff
33 from the Department of Public Aid from going on-site to
34 nursing facilities to perform necessary audits and reviews
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1 which shall not replicate the single State agency survey
2 required by this Act. This Section shall not apply to
3 community or intermediate care facilities for persons with
4 developmental disabilities.
5 (Source: P.A. 89-415, eff. 1-1-96; 89-507, eff. 7-1-97.)
6 (305 ILCS 5/15-2) (from Ch. 23, par. 15-2)
7 Sec. 15-2. County Provider Trust Fund.
8 (a) There is created in the State Treasury the County
9 Provider Trust Fund. Interest earned by the Fund shall be
10 credited to the Fund. The Fund shall not be used to replace
11 any funds appropriated to the Medicaid program by the General
12 Assembly.
13 (b) The Fund is created solely for the purposes of
14 receiving, investing, and distributing monies in accordance
15 with this Article XV. The Fund shall consist of:
16 (1) All monies collected or received by the
17 Illinois Department under Section 15-3 of this Code;
18 (2) All federal financial participation monies
19 received by the Illinois Department pursuant to Title XIX
20 of the Social Security Act, 42 U.S.C. 1396(b),
21 attributable to eligible expenditures made by the
22 Illinois Department pursuant to Section 15-5 of this
23 Code;
24 (3) All other monies received by the Fund from any
25 source, including interest thereon.
26 (c) Disbursements from the Fund shall be by warrants
27 drawn by the State Comptroller upon receipt of vouchers duly
28 executed and certified by the Illinois Department and shall
29 be made only:
30 (1) For hospital inpatient care, hospital
31 outpatient care, care provided by other outpatient
32 facilities operated by a county, and disproportionate
33 share hospital payments made under Title XIX of the
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1 Social Security Act and Article V of this Code as
2 required by Section 15-5 of this Code;
3 (1.5) For services provided by county providers
4 pursuant to Section 5-11 or 5-16.3 of this Code;
5 (2) For the reimbursement of administrative
6 expenses incurred by county providers on behalf of the
7 Illinois Department as permitted by Section 15-4 of this
8 Code;
9 (3) For the reimbursement of monies received by the
10 Fund through error or mistake;
11 (4) For the payment of administrative expenses
12 necessarily incurred by the Illinois Department or its
13 agent in performing the activities required by this
14 Article XV; and
15 (5) For the payment of any amounts that are
16 reimbursable to the federal government, attributable
17 solely to the Fund, and required to be paid by State
18 warrant.
19 (Source: P.A. 87-13; 88-554, eff. 7-26-94.)
20 (305 ILCS 5/15-3) (from Ch. 23, par. 15-3)
21 Sec. 15-3. Intergovernmental Transfers.
22 (a) Each qualifying county shall make an annual
23 intergovernmental transfer to the Illinois Department in an
24 amount equal to 71.7% of the difference between the total
25 payments made by the Illinois Department to such county
26 provider for hospital services under Title XIX of the Social
27 Security Act or pursuant to Section 5-11 or 5-16.3 of this
28 Code in each fiscal year ending June 30 (or fraction thereof
29 during the fiscal year ending June 30, 1993) and $108,800,000
30 (or fraction thereof), except that the annual
31 intergovernmental transfer shall not exceed the total
32 payments made by the Illinois Department to such county
33 provider for hospital services under this Code or pursuant to
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1 Section 5-16.3 of this Code, less 50% of payments
2 reimbursable under Title XIX of the Social Security Act in
3 each fiscal year ending June 30 (or fraction thereof).
4 (b) The payment schedule for the intergovernmental
5 transfer made hereunder shall be established by
6 intergovernmental agreement between the Illinois Department
7 and the applicable county, which agreement shall at a minimum
8 provide:
9 (1) For periodic payments no less frequently than
10 monthly to the county provider for inpatient and
11 outpatient approved or adjudicated claims and for
12 disproportionate share payments under Section 5-5.02 of
13 this Code (in the initial year, for services after July
14 1, 1991, or such other date as an approved State Medical
15 Assistance Plan shall provide) and to the county provider
16 pursuant to Section 5-16.3 of this Code.
17 (2) For periodic payments no less frequently than
18 monthly to the county provider for supplemental
19 disproportionate share payments hereunder based on a
20 federally approved State Medical Assistance Plan.
21 (3) For calculation of the intergovernmental
22 transfer payment to be made by the county equal to 71.7%
23 of the difference between the amount of the periodic
24 payment and the base amount; provided, however, that if
25 the periodic payment for any period is less than the base
26 amount for such period, the base amount for the
27 succeeding period (and any successive period if
28 necessary) shall be increased by the amount of such
29 shortfall.
30 (4) For an intergovernmental transfer methodology
31 which obligates the Illinois Department to notify the
32 county and county provider in writing of each impending
33 periodic payment and the intergovernmental transfer
34 payment attributable thereto and which obligates the
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1 Comptroller to release the periodic payment to the county
2 provider within one working day of receipt of the
3 intergovernmental transfer payment from the county.
4 (Source: P.A. 87-13; 87-861; 88-85; 88-88; 88-554, eff.
5 7-26-94.)
6 (305 ILCS 5/15-5) (from Ch. 23, par. 15-5)
7 Sec. 15-5. Disbursements from the Fund.
8 (a) The monies in the Fund shall be disbursed only as
9 provided in Section 15-2 of this Code and as follows:
10 (1) To pay the county hospitals' inpatient
11 reimbursement rate based on actual costs, trended forward
12 annually by an inflation index and supplemented by
13 teaching, capital, and other direct and indirect costs,
14 according to a State plan approved by the federal
15 government. Effective October 1, 1992, the inpatient
16 reimbursement rate (including any disproportionate or
17 supplemental disproportionate share payments) for
18 hospital services provided by county operated facilities
19 within the County shall be no less than the reimbursement
20 rates in effect on June 1, 1992, except that this minimum
21 shall be adjusted as of July 1, 1992 and each July 1
22 thereafter by the annual percentage change in the per
23 diem cost of inpatient hospital services as reported in
24 the most recent annual Medicaid cost report.
25 (2) To pay county hospitals and county operated
26 outpatient facilities for outpatient services based on a
27 federally approved methodology to cover the maximum
28 allowable costs per patient visit. Effective October 1,
29 1992, the outpatient reimbursement rate for outpatient
30 services provided by county hospitals and county operated
31 outpatient facilities shall be no less than the
32 reimbursement rates in effect on June 1, 1992, except
33 that this minimum shall be adjusted as of July 1, 1992
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1 and each July 1 thereafter by the annual percentage
2 change in the per diem cost of inpatient hospital
3 services as reported in the most recent annual Medicaid
4 cost report.
5 (3) To pay the county hospitals' disproportionate
6 share payments as established by the Illinois Department
7 under Section 5-5.02 of this Code. Effective October 1,
8 1992, the disproportionate share payments for hospital
9 services provided by county operated facilities within
10 the County shall be no less than the reimbursement rates
11 in effect on June 1, 1992, except that this minimum shall
12 be adjusted as of July 1, 1992 and each July 1 thereafter
13 by the annual percentage change in the per diem cost of
14 inpatient hospital services as reported in the most
15 recent annual Medicaid cost report.
16 (3.5) To pay county providers for services provided
17 pursuant to Section 5-11 or 5-16.3 of this Code.
18 (4) To reimburse the county providers for expenses
19 contractually assumed pursuant to Section 15-4 of this
20 Code.
21 (5) To pay the Illinois Department its necessary
22 administrative expenses relative to the Fund and other
23 amounts agreed to, if any, by the county providers in the
24 agreement provided for in subsection (c).
25 (6) To pay the county hospitals' supplemental
26 disproportionate share payments, hereby authorized, as
27 specified in the agreement provided for in subsection (c)
28 and according to a federally approved State plan.
29 Effective October 1, 1992, the supplemental
30 disproportionate share payments for hospital services
31 provided by county operated facilities within the County
32 shall be no less than the reimbursement rates in effect
33 on June 1, 1992, except that this minimum shall be
34 adjusted as of July 1, 1992 and each July 1 thereafter by
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1 the annual percentage change in the per diem cost of
2 inpatient hospital services as reported in the most
3 recent annual Medicaid cost report.
4 (b) The Illinois Department shall promptly seek all
5 appropriate amendments to the Illinois State Plan to effect
6 the foregoing payment methodology.
7 (c) The Illinois Department shall implement the changes
8 made by Article 3 of this amendatory Act of 1992 beginning
9 October 1, 1992. All terms and conditions of the
10 disbursement of monies from the Fund not set forth expressly
11 in this Article shall be set forth in the agreement executed
12 under the Intergovernmental Cooperation Act so long as those
13 terms and conditions are not inconsistent with this Article
14 or applicable federal law. The Illinois Department shall
15 report in writing to the Hospital Service Procurement
16 Advisory Board and the Health Care Cost Containment Council
17 by October 15, 1992, the terms and conditions of all such
18 initial agreements and, where no such initial agreement has
19 yet been executed with a qualifying county, the Illinois
20 Department's reasons that each such initial agreement has not
21 been executed. Copies and reports of amended agreements
22 following the initial agreements shall likewise be filed by
23 the Illinois Department with the Hospital Service Procurement
24 Advisory Board and the Health Care Cost Containment Council
25 within 30 days following their execution. The foregoing
26 filing obligations of the Illinois Department are
27 informational only, to allow the Board and Council,
28 respectively, to better perform their public roles, except
29 that the Board or Council may, at its discretion, advise the
30 Illinois Department in the case of the failure of the
31 Illinois Department to reach agreement with any qualifying
32 county by the required date.
33 (d) The payments provided for herein are intended to
34 cover services rendered on and after July 1, 1991, and any
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1 agreement executed between a qualifying county and the
2 Illinois Department pursuant to this Section may relate back
3 to that date, provided the Illinois Department obtains
4 federal approval. Any changes in payment rates resulting
5 from the provisions of Article 3 of this amendatory Act of
6 1992 are intended to apply to services rendered on or after
7 October 1, 1992, and any agreement executed between a
8 qualifying county and the Illinois Department pursuant to
9 this Section may be effective as of that date.
10 (e) If one or more hospitals file suit in any court
11 challenging any part of this Article XV, payments to
12 hospitals from the Fund under this Article XV shall be made
13 only to the extent that sufficient monies are available in
14 the Fund and only to the extent that any monies in the Fund
15 are not prohibited from disbursement and may be disbursed
16 under any order of the court.
17 (f) All payments under this Section are contingent upon
18 federal approval of changes to the State plan, if that
19 approval is required.
20 (Source: P.A. 87-13; 87-861; 88-554, eff. 7-26-94.)
21 Section 99. Effective date. This Act takes effect upon
22 becoming law.