State of Illinois
92nd General Assembly
Legislation

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92_HB5842

 
                                               LRB9214435JSpc

 1        AN ACT in relation to insurance.

 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
 5    changing Section 370i and adding Section 356z.2 as follows:

 6        (215 ILCS 5/356z.2 new)
 7        Sec. 356z.2.  Disclosure of limited benefit.  An  insurer
 8    that  issues,  delivers,  amends,  or renews an individual or
 9    group policy of accident and health insurance in  this  State
10    after  the  effective date of this amendatory Act of the 92nd
11    General Assembly and arranges, contracts with, or administers
12    contracts with a provider whereby beneficiaries are  provided
13    an  incentive  to  use  the  services  of  such provider must
14    include  the  following  disclosure  on  its  contracts   and
15    evidences  of  coverage:  "WARNING,  LIMITED BENEFITS WILL BE
16    PAID WHEN NON-PARTICIPATING PROVIDERS ARE USED. You should be
17    aware that when you  elect  to  utilize  the  services  of  a
18    non-participating   provider   for   a   covered  service  in
19    non-emergency   situations,   benefit   payments   to    such
20    non-participating  provider  are  not  based  upon the amount
21    billed. The basis of your benefit payment will be  determined
22    according  to your policy's fee schedule, usual and customary
23    charge (which is determined by comparing charges for  similar
24    services adjusted to the geographical area where the services
25    are performed), or other method as defined by the policy. YOU
26    CAN EXPECT TO PAY MORE THAN THE COINSURANCE AMOUNT DEFINED IN
27    THE  POLICY  AFTER  THE  PLAN  HAS PAID ITS REQUIRED PORTION.
28    Non-participating providers may bill members for  any  amount
29    up  to  the billed charge after the plan has paid its portion
30    of the bill. Participating providers have  agreed  to  accept
31    discounted  payments  for services with no additional billing
 
                            -2-                LRB9214435JSpc
 1    to the member other than co-insurance and deductible amounts.
 2    You may obtain further information  about  the  participating
 3    status   of   professional   providers   and  information  on
 4    out-of-pocket expenses by calling  the  toll  free  telephone
 5    number on your identification card.".

 6        (215 ILCS 5/370i) (from Ch. 73, par. 982i)
 7        Sec.  370i.   Policies,  agreements  or arrangements with
 8    incentives or limits on reimbursement authorized.
 9        (a)  Policies, agreements or  arrangements  issued  under
10    this  Article  may not contain terms or conditions that would
11    operate unreasonably to restrict the access and  availability
12    of health care services for the insured.
13        (b)  An insurer or administrator may:
14        (1)  enter  into agreements with certain providers of its
15    choice relating to health care services which may be rendered
16    to insureds or beneficiaries of the insurer or administrator,
17    including agreements relating to the amounts  to  be  charged
18    the insureds or beneficiaries for services rendered;
19        (2)  issue or administer programs, policies or subscriber
20    contracts  in  this  State  that  include  incentives for the
21    insured or beneficiary to utilize the services of a  provider
22    which  has  entered  into  an  agreement  with the insurer or
23    administrator pursuant to paragraph (1) above.
24        (c)  After the effective date of this amendatory  Act  of
25    the   92nd  General  Assembly,  any  insurer  that  arranges,
26    contracts with, or  administers  contracts  with  a  provider
27    whereby  beneficiaries  are  provided an incentive to use the
28    services  of  such  provider  must  include   the   following
29    disclosure  on  its  contracts  and  evidences  of  coverage:
30    "WARNING,    LIMITED    BENEFITS    WILL    BE    PAID   WHEN
31    NON-PARTICIPATING PROVIDERS ARE USED.  You  should  be  aware
32    that   when   you   elect   to  utilize  the  services  of  a
33    non-participating  provider  for   a   covered   service   in
 
                            -3-                LRB9214435JSpc
 1    non-emergency    situations,   benefit   payments   to   such
 2    non-participating provider are  not  based  upon  the  amount
 3    billed.  The basis of your benefit payment will be determined
 4    according to your policy's fee schedule, usual and  customary
 5    charge  (which is determined by comparing charges for similar
 6    services adjusted to the geographical area where the services
 7    are performed), or other method as defined by the policy. YOU
 8    CAN EXPECT TO PAY MORE THAN THE COINSURANCE AMOUNT DEFINED IN
 9    THE POLICY AFTER THE PLAN  HAS  PAID  ITS  REQUIRED  PORTION.
10    Non-participating  providers  may bill members for any amount
11    up to the billed charge after the plan has paid  its  portion
12    of  the  bill.  Participating providers have agreed to accept
13    discounted payments for services with no  additional  billing
14    to the member other than co-insurance and deductible amounts.
15    You  may  obtain  further information about the participating
16    status  of  professional   providers   and   information   on
17    out-of-pocket  expenses  by  calling  the toll free telephone
18    number on your identification card.".
19    (Source: P.A. 84-618.)

20        Section 10.  The Health Maintenance Organization  Act  is
21    amended by changing Section 4.5-1 as follows:

22        (215 ILCS 125/4.5-1)
23        Sec. 4.5-1.  Point-of-service health service contracts.
24        (a)  A  health  maintenance  organization  that  offers a
25    point-of-service contract:
26             (1)  must include as in-plan  covered  services  all
27        services  required  by  law  to  be  provided by a health
28        maintenance organization;
29             (2)  must provide incentives,  which  shall  include
30        financial   incentives,  for  enrollees  to  use  in-plan
31        covered services;
32             (3)  may  not  offer  services  out-of-plan  without
 
                            -4-                LRB9214435JSpc
 1        providing those services on an in-plan basis;
 2             (4)  may include  annual  out-of-pocket  limits  and
 3        lifetime  maximum  benefits  allowances  for  out-of-plan
 4        services  that are separate from any limits or allowances
 5        applied to in-plan services;
 6             (5)  may not consider emergency services, authorized
 7        referral services, or non-routine services  obtained  out
 8        of the service area to be point-of-service services; and
 9             (6)  may   treat   as   out-of-plan  services  those
10        services that an enrollee obtains  from  a  participating
11        provider,  but for which the proper authorization was not
12        given by the health maintenance organization and;.
13             (7)  after the effective date of this amendatory Act
14        of the 92nd General Assembly, must include the  following
15        disclosure   on   its   point-of-service   contracts  and
16        evidences of coverage: "WARNING, LIMITED BENEFITS WILL BE
17        PAID  WHEN  NON-PARTICIPATING  PROVIDERS  ARE  USED.  You
18        should be aware  that  when  you  elect  to  utilize  the
19        services  of  a  non-participating provider for a covered
20        service in non-emergency situations, benefit payments  to
21        such  non-participating  provider  are not based upon the
22        amount billed. The basis of your benefit payment will  be
23        determined according to your policy's fee schedule, usual
24        and  customary  charge  (which is determined by comparing
25        charges for similar services adjusted to the geographical
26        area where the services are performed), or  other  method
27        as defined by the policy. YOU CAN EXPECT TO PAY MORE THAN
28        THE  COINSURANCE  AMOUNT  DEFINED IN THE POLICY AFTER THE
29        PLAN HAS PAID  ITS  REQUIRED  PORTION.  Non-participating
30        providers  may  bill  members  for  any  amount up to the
31        billed charge after the plan has paid its portion of  the
32        bill.  Participating  providers  have  agreed  to  accept
33        discounted  payments  for  services  with  no  additional
34        billing   to  the  member  other  than  co-insurance  and
 
                            -5-                LRB9214435JSpc
 1        deductible amounts. You may  obtain  further  information
 2        about  the participating status of professional providers
 3        and information on out-of-pocket expenses by calling  the
 4        toll free telephone number on your identification card.".
 5        (b)  A   health   maintenance   organization  offering  a
 6    point-of-service contract is subject to all of the  following
 7    limitations:
 8             (1)  The  health  maintenance  organization  may not
 9        expend in any calendar quarter more than 20% of its total
10        expenditures for all its members for out-of-plan  covered
11        services.
12             (2)  If  the  amount  specified  in item (1) of this
13        subsection is exceeded by 2% in  a  quarter,  the  health
14        maintenance organization must effect compliance with item
15        (1)  of  this  subsection  by  the  end  of the following
16        quarter.
17             (3)  If compliance with the amount specified in item
18        (1) of this subsection is not demonstrated in the  health
19        maintenance  organization's  next  quarterly  report, the
20        health  maintenance  organization  may  not   offer   the
21        point-of-service  contract  to  new groups or include the
22        point-of-service option in the  renewal  of  an  existing
23        group  until compliance with the amount specified in item
24        (1) of this subsection is demonstrated or until otherwise
25        allowed by the Director.
26             (4)  A  health  maintenance  organization   failing,
27        without just cause, to comply with the provisions of this
28        subsection  shall  be required, after notice and hearing,
29        to pay a penalty of $250 for each day out of  compliance,
30        to  be  recovered  by the Director. Any penalty recovered
31        shall be paid into the General Revenue Fund. The Director
32        may  reduce  the  penalty  if  the   health   maintenance
33        organization   demonstrates  to  the  Director  that  the
34        imposition of the penalty would  constitute  a  financial
 
                            -6-                LRB9214435JSpc
 1        hardship to the health maintenance organization.
 2        (c)  A  health  maintenance  organization  that  offers a
 3    point-of-service product must do all of the following:
 4             (1)  File a quarterly financial statement  detailing
 5        compliance with the requirements of subsection (b).
 6             (2)  Track out-of-plan, point-of-service utilization
 7        separately    from   in-plan   or   non-point-of-service,
 8        out-of-plan emergency care,  referral  care,  and  urgent
 9        care out of the service area utilization.
10             (3)  Record out-of-plan utilization in a manner that
11        will  permit  such  utilization and cost reporting as the
12        Director may, by rule, require.
13             (4)  Demonstrate to the Director's satisfaction that
14        the  health  maintenance  organization  has  the  fiscal,
15        administrative, and marketing  capacity  to  control  its
16        point-of-service enrollment, utilization, and costs so as
17        not  to  jeopardize  the financial security of the health
18        maintenance organization.
19             (5)  Maintain, in  addition  to  any  other  deposit
20        required  under this Act, the deposit required by Section
21        2-6.
22             (6)  Maintain   cash   and   cash   equivalents   of
23        sufficient amount to fully  liquidate  10  days'  average
24        claim payments, subject to review by the Director.
25             (7)  Maintain    and   file   with   the   Director,
26        reinsurance  coverage  protecting  against   catastrophic
27        losses  on  out  of  network  point-of-service  services.
28        Deductibles  may not exceed $100,000 per covered life per
29        year, and the portion of  risk  retained  by  the  health
30        maintenance   organization  once  deductibles  have  been
31        satisfied may not exceed 20%. Reinsurance must be  placed
32        with  licensed  authorized  reinsurers  qualified  to  do
33        business in this State.
34        (d)  A  health  maintenance  organization may not issue a
 
                            -7-                LRB9214435JSpc
 1    point-of-service contract until it has filed and had approved
 2    by the Director a plan to comply with the provisions of  this
 3    Section.   The  compliance  plan  must, at a minimum, include
 4    provisions  demonstrating   that   the   health   maintenance
 5    organization will do all of the following:
 6             (1)  Design  the  benefit  levels  and conditions of
 7        coverage for in-plan  covered  services  and  out-of-plan
 8        covered services as required by this Article.
 9             (2)  Provide   or   arrange  for  the  provision  of
10        adequate systems to:
11                  (A)  process and pay claims for all out-of-plan
12             covered services;
13                  (B)  meet the requirements for point-of-service
14             contracts  set  forth  in  this  Section   and   any
15             additional requirements that may be set forth by the
16             Director; and
17                  (C)  generate  accurate  data and financial and
18             regulatory reports on a timely  basis  so  that  the
19             Department  of  Insurance  can  evaluate  the health
20             maintenance  organization's  experience   with   the
21             point-of-service  contract  and  monitor  compliance
22             with point-of-service contract provisions.
23             (3)  Comply with the requirements of subsections (b)
24        and (c).
25    (Source: P.A. 92-135, eff. 1-1-02.)

26        Section  99.   Effective  date.  This Act takes effect on
27    January 1, 2003.

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