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92_HB5842enr HB5842 Enrolled 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 HB5842 Enrolled -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 HB5842 Enrolled -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 HB5842 Enrolled -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;and9 (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 HB5842 Enrolled -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 HB5842 Enrolled -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 HB5842 Enrolled -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.