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| [ 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.
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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
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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
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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.
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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
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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
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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,
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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
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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).".