State of Illinois
92nd General Assembly
Legislation

   [ Search ]   [ PDF text ]   [ Legislation ]   
[ Home ]   [ Back ]   [ Bottom ]


[ Introduced ][ Engrossed ][ Enrolled ]
[ House Amendment 002 ]


92_HB1040ham001

 










                                             LRB9206171JSpcam

 1                    AMENDMENT TO HOUSE BILL 1040

 2        AMENDMENT NO.     .  Amend House Bill 1040  by  replacing
 3    everything after the enacting clause with the following:

 4        "Section  5.  The  Health Maintenance Organization Act is
 5    amended by changing Sections 2-3, 2-4,  and  2-6  and  adding
 6    Article 4.5 as follows:

 7        (215 ILCS 125/2-3) (from Ch. 111 1/2, par. 1405)
 8        Sec.  2-3.   Powers  of health maintenance organizations.
 9    The powers of a health maintenance organization include,  but
10    are not limited to the following:
11        (a)  The   purchase,   lease,  construction,  renovation,
12    operation, or maintenance of hospitals, medical facilities or
13    both, and their ancillary equipment, and such property as may
14    reasonably be required for its principal office or  for  such
15    other  purposes as may be necessary in the transaction of the
16    business of the organization.
17        (b)  The  making  of  loans  to  a  medical  group  under
18    contract with it and in furtherance of  its  program  or  the
19    making  of  loans  to a corporation or corporations under its
20    control for the purpose of acquiring or constructing  medical
21    facilities  at  hospitals  or  in  furtherance  of  a program
22    providing health care services for enrollees.
 
                            -2-              LRB9206171JSpcam
 1        (c)  The  furnishing  of  health  care  services  through
 2    providers which are under contract with or  employed  by  the
 3    health maintenance organization.
 4        (d)  The  contracting with any person for the performance
 5    on  its  behalf  of  certain  functions  such  as  marketing,
 6    enrollment and administration.
 7        (e)  The contracting with an insurance  company  licensed
 8    in this State, or with a hospital, medical, dental, vision or
 9    pharmaceutical  service corporation authorized to do business
10    in this State, for the provision of insurance, indemnity,  or
11    reimbursement   against  the  cost  of  health  care  service
12    provided by the health maintenance organization.
13        (f)  The offering,  in  addition  to  basic  health  care
14    services, of (1) health care services, (2) indemnity benefits
15    covering out of area or emergency services, and (3) indemnity
16    benefits  provided  through  insurers  or  hospital, medical,
17    dental, vision, or pharmaceutical service  corporations,  and
18    (4) health maintenance organization point-of-service benefits
19    as authorized under Article 4.5.
20        (g)  Rendering services related to the functions involved
21    in  the  operating  of  its  health  maintenance organization
22    business  including  but  not  limited  to  providing  health
23    services, data processing, accounting, or claims.
24        (g-5)  Indemnification for services provided to  a  child
25    as required under subdivision (e)(3) of Section 4-2.
26        (h)  Any other business activity reasonably complementary
27    or  supplementary  to  its  health  maintenance  organization
28    business to the extent approved by the Director.
29    (Source: P.A. 89-183, eff. 1-1-96.)

30        (215 ILCS 125/2-4) (from Ch. 111 1/2, par. 1406)
31        Sec.  2-4. Required minimum net worth; special contingent
32    reserve; deficiency; impairment.
33        (a)  A   health   maintenance   organization   issued   a
 
                            -3-              LRB9206171JSpcam
 1    certificate of authority on or after the  effective  date  of
 2    this  amendatory  Act  of  1987  shall  have and at all times
 3    maintain net worth  of  not  less  than  $1,500,000.   As  an
 4    allocation of net worth, organizations certified prior to the
 5    effective  date of this amendatory Act of 1987 shall maintain
 6    a special contingent reserve. The special contingent  reserve
 7    for an organization certified between January 1, 1986 and the
 8    effective  date of this amendatory Act of 1987 shall be equal
 9    to 5% of its net earned subscription revenue for health  care
10    services   through   December  31st  of  the  year  in  which
11    certified.   In  subsequent  years  such  organization  shall
12    accumulate additions to the contingent reserve in  an  amount
13    which  is  equal to 2% of its net earned subscription revenue
14    for each calendar year.  For purposes of  this  Section,  net
15    earned  subscription  revenue means premium minus reinsurance
16    expenses.  Maintenance of  the  contingent  reserve  requires
17    that  net  worth  equals or exceeds the contingent reserve at
18    any balance sheet date.
19        (b)  Additional accumulations under subsection  (a)  will
20    no  longer  be  required at such time that  the total special
21    contingent reserve required by subsection  (a)  is  equal  to
22    $1,500,000.
23        (c)  A   deficiency   in   meeting  amounts  required  in
24    subsections (a),  (b), and (d) will require (1)  filing  with
25    the  Director  a  plan  for  correction  of  the  deficiency,
26    acceptable   to  the  Director  and  (2)  correction  of  the
27    deficiency within a reasonable time, not to  exceed  60  days
28    unless  an  extension  of  time,  not to exceed 60 additional
29    days, is granted by the Director. Such a deficiency  will  be
30    deemed  an  impairment, and failure to correct the deficiency
31    in the prescribed time shall be  grounds  for  suspension  or
32    revocation pursuant to subsection (h) of Section 5-5.
33        (d)  All   health   maintenance  organizations  issued  a
34    certificate of authority on or prior to December 31, 1985 and
 
                            -4-              LRB9206171JSpcam
 1    regulated under this Act must have and at all times maintain,
 2    prior to  December  31,  1988,  the  net  worth  and  special
 3    contingent  reserve  that  was  required  for that particular
 4    organization  at  the  time  it  was  certified.   All   such
 5    organizations  must  have by December 31, 1988 and thereafter
 6    maintain at all times, net worth of not  less  than  $300,000
 7    and  a  special contingent reserve calculated and accumulated
 8    in the same  manner  as  required  of  a  health  maintenance
 9    organization  issued a certificate of authority on or between
10    January 1, 1986 and the effective date of this amendatory Act
11    of 1987.  Such calculation shall commence with the  financial
12    reporting period first following certification.
13        All  organizations  issued  a  certificate  of  authority
14    between  January  1,  1986  and  the  effective  date of this
15    amendatory Act of 1987 must have and at  all  times  maintain
16    the  net  worth  and  special  contingent  reserve  that  was
17    required  for that particular organization at the time it was
18    certified.
19        (d-5)  A health maintenance organization  that  offers  a
20    point-of-service  product  must maintain minimum net worth of
21    not less than:
22             (1)  the greater of 300% of the "authorized  control
23        level"   as  defined  by  Article  IIA  of  the  Illinois
24        Insurance Code; or
25             (2)  $3,500,000   if    the    health    maintenance
26        organization's  annual  projected  out-of-plan claims are
27        less than $500,0000; or
28             (3)  $4,500,000   if    the    health    maintenance
29        organization's  annual  projected  out-of-plan claims are
30        equal  to  or  greater  than  $500,000  but   less   than
31        $1,000,000; or
32             (4)  $6,000,000    if    the    health   maintenance
33        organization's annual projected  out-of-plan  claims  are
34        $1,000,000 or greater.
 
                            -5-              LRB9206171JSpcam
 1        (e)  Unless   allowed   by   the   Director,   no  health
 2    maintenance   organization,   officer,   director,   trustee,
 3    producer, or employee of such organization may renew,  issue,
 4    or  deliver, or cause to be renewed, issued or delivered, any
 5    certificate, agreement,  or  contract  of  coverage  in  this
 6    State,  for which a premium is charged or collected, when the
 7    organization writing such coverage is insolvent or  impaired,
 8    and the fact of such insolvency or impairment is known to the
 9    organization,   officer,   director,  trustee,  producer,  or
10    employee of such organization.  An organization  is  impaired
11    when  a  deficiency exists in meeting the amounts required in
12    subsections(a), (b), and (d) of Section 2-4.
13        However, the existence of an impairment does not  prevent
14    the  issuance  or  renewal  of  a  certificate,  agreement or
15    contract when the enrollee exercises an option granted  under
16    the plan to obtain new, renewed or converted coverage.
17        Any  organization,  officer, director, trustee, producer,
18    or employee of such organization  violating  this  subsection
19    shall be guilty of a Class A misdemeanor.
20    (Source: P.A. 85-20.)

21        (215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2)
22        Sec. 2-6.  Statutory deposits.
23        (a)  Every organization subject to the provisions of this
24    Act  shall  make  and  maintain  with  the  Director  through
25    December  30,  1993,  for  the protection of enrollees of the
26    organization, a deposit of securities  which  are  authorized
27    investments under paragraphs (1) and (2) of subsection (h) of
28    Section  3-1  having  a  fair  market value equal to at least
29    $100,000.  Effective December 31, 1993 and  through  December
30    30, 1994, the deposit shall have a fair market value at least
31    equal   to   $200,000.    Effective  December  31,  1994  and
32    thereafter, the deposit shall have a  fair  market  value  at
33    least   equal   to   $300,000.    An  organization  issued  a
 
                            -6-              LRB9206171JSpcam
 1    certificate of authority on or after the  effective  date  of
 2    this Amendatory Act of 1993, shall make and maintain with the
 3    Director;   for   the   protection   of   enrollees   of  the
 4    organization, a deposit of securities  which  are  authorized
 5    investments under paragraphs (1) and (2) of subsection (h) of
 6    Section  3-1  having  a  fair  market value equal to at least
 7    $300,000.  The amount on deposit shall remain as an  admitted
 8    asset  of  the  organization  in the determination of its net
 9    worth.
10        (b)  An  organization  that  offers  a   point-of-service
11    product,  as  permitted  by  Article  4.5,  must  maintain an
12    additional deposit in an amount that is  not  less  than  the
13    greater  of  125%  of  the  organization's  annual  projected
14    point-of-service claims or $300,000.
15    (Source: P.A. 88-364.)

16        (215 ILCS 125/Art. 4.5, heading new)
17                   ARTICLE 4.5.  POINT-OF-SERVICE
18                              PRODUCTS

19        (215 ILCS 125/4.5-1 new)
20        Sec. 4.5-1.  Point-of-service health service contracts.
21        (a)  A  health  maintenance  organization  that  offers a
22    point-of-service contract:
23             (1)  must include as in-plan  covered  services  all
24        services  required  by  law  to  be  provided by a health
25        maintenance organization;
26             (2)  must provide incentives,  which  shall  include
27        financial   incentives,  for  enrollees  to  use  in-plan
28        covered services;
29             (3)  may  not  offer  services  out-of-plan  without
30        providing those services on an in-plan basis;
31             (4)  may include  annual  out-of-pocket  limits  and
32        lifetime  maximum  benefits  allowances  for  out-of-plan
 
                            -7-              LRB9206171JSpcam
 1        services  that are separate from any limits or allowances
 2        applied to in-plan services;
 3             (5)  may not consider emergency services, authorized
 4        referral services, or non-routine services  obtained  out
 5        of the service area to be point-of-service services; and
 6             (6)  may   treat   as   out-of-plan  services  those
 7        services that an enrollee obtains  from  a  participating
 8        provider,  but for which the proper authorization was not
 9        given by the health maintenance organization.
10        (b)  A  health  maintenance   organization   offering   a
11    point-of-service  contract is subject to all of the following
12    limitations:
13             (1)  The health  maintenance  organization  may  not
14        expend in any calendar quarter more than 20% of its total
15        expenditures  for all its members for out-of-plan covered
16        services.
17             (2)  If the amount specified in  item  (1)  of  this
18        subsection  is  exceeded  by  2% in a quarter, the health
19        maintenance organization must effect compliance with item
20        (1) of this  subsection  by  the  end  of  the  following
21        quarter.
22             (3)  If compliance with the amount specified in item
23        (1)  of this subsection is not demonstrated in the health
24        maintenance organization's  next  quarterly  report,  the
25        health   maintenance   organization  may  not  offer  the
26        point-of-service contract to new groups  or  include  the
27        point-of-service  option  in  the  renewal of an existing
28        group until compliance with the amount specified in  item
29        (1) of this subsection is demonstrated or until otherwise
30        allowed by the Director.
31             (4)  A   health  maintenance  organization  failing,
32        without just cause, to comply with the provisions of this
33        subsection shall be required, after notice  and  hearing,
34        to  pay a penalty of $250 for each day out of compliance,
 
                            -8-              LRB9206171JSpcam
 1        to be recovered by the Director.  Any  penalty  recovered
 2        shall be paid into the General Revenue Fund. The Director
 3        may   reduce   the  penalty  if  the  health  maintenance
 4        organization  demonstrates  to  the  Director  that   the
 5        imposition  of  the  penalty would constitute a financial
 6        hardship to the health maintenance organization.
 7        (c)  A health  maintenance  organization  that  offers  a
 8    point-of-service product must do all of the following:
 9             (1)  File  a quarterly financial statement detailing
10        compliance with the requirements of subsection (b).
11             (2)  Track out-of-plan, point-of-service utilization
12        separately   from   in-plan   or    non-point-of-service,
13        out-of-plan  emergency  care,  referral  care, and urgent
14        care out of the service area utilization.
15             (3)  Record out-of-plan utilization in a manner that
16        will permit such utilization and cost  reporting  as  the
17        Director may, by rule, require.
18             (4)  Demonstrate to the Director's satisfaction that
19        the  health  maintenance  organization  has  the  fiscal,
20        administrative,  and  marketing  capacity  to control its
21        point-of-service enrollment, utilization, and costs so as
22        not to jeopardize the financial security  of  the  health
23        maintenance organization.
24             (5)  Maintain,  in  addition  to  any  other deposit
25        required under this Act, the deposit required by  Section
26        2-6.
27             (6)  Maintain   cash   and   cash   equivalents   of
28        sufficient  amount  to  fully  liquidate 10 days' average
29        claim payments, subject to review by the Director.
30             (7)  Maintain   and   file   with   the    Director,
31        reinsurance   coverage  protecting  against  catastrophic
32        losses  on  out  of  network  point-of-service  services.
33        Deductibles may not exceed $100,000 per covered life  per
34        year,  and  the  portion  of  risk retained by the health
 
                            -9-              LRB9206171JSpcam
 1        maintenance  organization  once  deductibles  have   been
 2        satisfied  may not exceed 20%. Reinsurance must be placed
 3        with  licensed  authorized  reinsurers  qualified  to  do
 4        business in this State.
 5        (d)  A health maintenance organization may  not  issue  a
 6    point-of-service contract until it has filed and had approved
 7    by  the Director a plan to comply with the provisions of this
 8    Section.  The compliance plan must,  at  a  minimum,  include
 9    provisions   demonstrating   that   the   health  maintenance
10    organization will do all of the following:
11             (1)  Design the benefit  levels  and  conditions  of
12        coverage  for  in-plan  covered  services and out-of-plan
13        covered services as required by this Article.
14             (2)  Provide  or  arrange  for  the   provision   of
15        adequate systems to:
16                  (A)  process and pay claims for all out-of-plan
17             covered services;
18                  (B)  meet the requirements for point-of-service
19             contracts   set   forth  in  this  Section  and  any
20             additional requirements that may be set forth by the
21             Director; and
22                  (C)  generate accurate data and  financial  and
23             regulatory  reports  on  a  timely basis so that the
24             Department of  Insurance  can  evaluate  the  health
25             maintenance   organization's   experience  with  the
26             point-of-service  contract  and  monitor  compliance
27             with point-of-service contract provisions.
28             (3)  Comply with the requirements of subsections (b)
29        and (c).".

[ Top ]