[ Home ] [ ILCS ] [ Search ] [ Bottom ]
[ Other General Assemblies ]
Public Act 92-0135
HB1040 Enrolled LRB9206171JSpc
AN ACT relating to insurance.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Health Maintenance Organization Act is
amended by changing Sections 2-3, 2-4, and 2-6 and adding
Article 4.5 as follows:
(215 ILCS 125/2-3) (from Ch. 111 1/2, par. 1405)
Sec. 2-3. Powers of health maintenance organizations.
The powers of a health maintenance organization include, but
are not limited to the following:
(a) The purchase, lease, construction, renovation,
operation, or maintenance of hospitals, medical facilities or
both, and their ancillary equipment, and such property as may
reasonably be required for its principal office or for such
other purposes as may be necessary in the transaction of the
business of the organization.
(b) The making of loans to a medical group under
contract with it and in furtherance of its program or the
making of loans to a corporation or corporations under its
control for the purpose of acquiring or constructing medical
facilities at hospitals or in furtherance of a program
providing health care services for enrollees.
(c) The furnishing of health care services through
providers which are under contract with or employed by the
health maintenance organization.
(d) The contracting with any person for the performance
on its behalf of certain functions such as marketing,
enrollment and administration.
(e) The contracting with an insurance company licensed
in this State, or with a hospital, medical, dental, vision or
pharmaceutical service corporation authorized to do business
in this State, for the provision of insurance, indemnity, or
reimbursement against the cost of health care service
provided by the health maintenance organization.
(f) The offering, in addition to basic health care
services, of (1) health care services, (2) indemnity benefits
covering out of area or emergency services, and (3) indemnity
benefits provided through insurers or hospital, medical,
dental, vision, or pharmaceutical service corporations, and
(4) health maintenance organization point-of-service benefits
as authorized under Article 4.5.
(g) Rendering services related to the functions involved
in the operating of its health maintenance organization
business including but not limited to providing health
services, data processing, accounting, or claims.
(g-5) Indemnification for services provided to a child
as required under subdivision (e)(3) of Section 4-2.
(h) Any other business activity reasonably complementary
or supplementary to its health maintenance organization
business to the extent approved by the Director.
(Source: P.A. 89-183, eff. 1-1-96.)
(215 ILCS 125/2-4) (from Ch. 111 1/2, par. 1406)
Sec. 2-4. Required minimum net worth; special contingent
reserve; deficiency; impairment.
(a) A health maintenance organization issued a
certificate of authority on or after the effective date of
this amendatory Act of 1987 shall have and at all times
maintain net worth of not less than $1,500,000. As an
allocation of net worth, organizations certified prior to the
effective date of this amendatory Act of 1987 shall maintain
a special contingent reserve. The special contingent reserve
for an organization certified between January 1, 1986 and the
effective date of this amendatory Act of 1987 shall be equal
to 5% of its net earned subscription revenue for health care
services through December 31st of the year in which
certified. In subsequent years such organization shall
accumulate additions to the contingent reserve in an amount
which is equal to 2% of its net earned subscription revenue
for each calendar year. For purposes of this Section, net
earned subscription revenue means premium minus reinsurance
expenses. Maintenance of the contingent reserve requires
that net worth equals or exceeds the contingent reserve at
any balance sheet date.
(b) Additional accumulations under subsection (a) will
no longer be required at such time that the total special
contingent reserve required by subsection (a) is equal to
$1,500,000.
(c) A deficiency in meeting amounts required in
subsections (a), (b), and (d) will require (1) filing with
the Director a plan for correction of the deficiency,
acceptable to the Director and (2) correction of the
deficiency within a reasonable time, not to exceed 60 days
unless an extension of time, not to exceed 60 additional
days, is granted by the Director. Such a deficiency will be
deemed an impairment, and failure to correct the deficiency
in the prescribed time shall be grounds for suspension or
revocation pursuant to subsection (h) of Section 5-5.
(d) All health maintenance organizations issued a
certificate of authority on or prior to December 31, 1985 and
regulated under this Act must have and at all times maintain,
prior to December 31, 1988, the net worth and special
contingent reserve that was required for that particular
organization at the time it was certified. All such
organizations must have by December 31, 1988 and thereafter
maintain at all times, net worth of not less than $300,000
and a special contingent reserve calculated and accumulated
in the same manner as required of a health maintenance
organization issued a certificate of authority on or between
January 1, 1986 and the effective date of this amendatory Act
of 1987. Such calculation shall commence with the financial
reporting period first following certification.
All organizations issued a certificate of authority
between January 1, 1986 and the effective date of this
amendatory Act of 1987 must have and at all times maintain
the net worth and special contingent reserve that was
required for that particular organization at the time it was
certified.
(d-5) A health maintenance organization that offers a
point-of-service product must maintain minimum net worth of
not less than:
(1) the greater of 300% of the "authorized control
level" as defined by Article IIA of the Illinois
Insurance Code; or
(2) $3,500,000 if the health maintenance
organization's annual projected out-of-plan claims are
less than $500,000; or
(3) $4,500,000 if the health maintenance
organization's annual projected out-of-plan claims are
equal to or greater than $500,000 but less than
$1,000,000; or
(4) $6,000,000 if the health maintenance
organization's annual projected out-of-plan claims are
$1,000,000 or greater.
(e) Unless allowed by the Director, no health
maintenance organization, officer, director, trustee,
producer, or employee of such organization may renew, issue,
or deliver, or cause to be renewed, issued or delivered, any
certificate, agreement, or contract of coverage in this
State, for which a premium is charged or collected, when the
organization writing such coverage is insolvent or impaired,
and the fact of such insolvency or impairment is known to the
organization, officer, director, trustee, producer, or
employee of such organization. An organization is impaired
when a deficiency exists in meeting the amounts required in
subsections(a), (b), and (d) of Section 2-4.
However, the existence of an impairment does not prevent
the issuance or renewal of a certificate, agreement or
contract when the enrollee exercises an option granted under
the plan to obtain new, renewed or converted coverage.
Any organization, officer, director, trustee, producer,
or employee of such organization violating this subsection
shall be guilty of a Class A misdemeanor.
(Source: P.A. 85-20.)
(215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2)
Sec. 2-6. Statutory deposits.
(a) Every organization subject to the provisions of this
Act shall make and maintain with the Director through
December 30, 1993, for the protection of enrollees of the
organization, a deposit of securities which are authorized
investments under paragraphs (1) and (2) of subsection (h) of
Section 3-1 having a fair market value equal to at least
$100,000. Effective December 31, 1993 and through December
30, 1994, the deposit shall have a fair market value at least
equal to $200,000. Effective December 31, 1994 and
thereafter, the deposit shall have a fair market value at
least equal to $300,000. An organization issued a
certificate of authority on or after the effective date of
this Amendatory Act of 1993, shall make and maintain with the
Director; for the protection of enrollees of the
organization, a deposit of securities which are authorized
investments under paragraphs (1) and (2) of subsection (h) of
Section 3-1 having a fair market value equal to at least
$300,000. The amount on deposit shall remain as an admitted
asset of the organization in the determination of its net
worth.
(b) An organization that offers a point-of-service
product, as permitted by Article 4.5, must maintain an
additional deposit in an amount that is not less than the
greater of 125% of the organization's annual projected
point-of-service claims or $300,000.
(Source: P.A. 88-364.)
(215 ILCS 125/Art. 4.5, heading new)
ARTICLE 4.5. POINT-OF-SERVICE
PRODUCTS
(215 ILCS 125/4.5-1 new)
Sec. 4.5-1. Point-of-service health service contracts.
(a) A health maintenance organization that offers a
point-of-service contract:
(1) must include as in-plan covered services all
services required by law to be provided by a health
maintenance organization;
(2) must provide incentives, which shall include
financial incentives, for enrollees to use in-plan
covered services;
(3) may not offer services out-of-plan without
providing those services on an in-plan basis;
(4) may include annual out-of-pocket limits and
lifetime maximum benefits allowances for out-of-plan
services that are separate from any limits or allowances
applied to in-plan services;
(5) may not consider emergency services, authorized
referral services, or non-routine services obtained out
of the service area to be point-of-service services; and
(6) may treat as out-of-plan services those
services that an enrollee obtains from a participating
provider, but for which the proper authorization was not
given by the health maintenance organization.
(b) A health maintenance organization offering a
point-of-service contract is subject to all of the following
limitations:
(1) The health maintenance organization may not
expend in any calendar quarter more than 20% of its total
expenditures for all its members for out-of-plan covered
services.
(2) If the amount specified in item (1) of this
subsection is exceeded by 2% in a quarter, the health
maintenance organization must effect compliance with item
(1) of this subsection by the end of the following
quarter.
(3) If compliance with the amount specified in item
(1) of this subsection is not demonstrated in the health
maintenance organization's next quarterly report, the
health maintenance organization may not offer the
point-of-service contract to new groups or include the
point-of-service option in the renewal of an existing
group until compliance with the amount specified in item
(1) of this subsection is demonstrated or until otherwise
allowed by the Director.
(4) A health maintenance organization failing,
without just cause, to comply with the provisions of this
subsection shall be required, after notice and hearing,
to pay a penalty of $250 for each day out of compliance,
to be recovered by the Director. Any penalty recovered
shall be paid into the General Revenue Fund. The Director
may reduce the penalty if the health maintenance
organization demonstrates to the Director that the
imposition of the penalty would constitute a financial
hardship to the health maintenance organization.
(c) A health maintenance organization that offers a
point-of-service product must do all of the following:
(1) File a quarterly financial statement detailing
compliance with the requirements of subsection (b).
(2) Track out-of-plan, point-of-service utilization
separately from in-plan or non-point-of-service,
out-of-plan emergency care, referral care, and urgent
care out of the service area utilization.
(3) Record out-of-plan utilization in a manner that
will permit such utilization and cost reporting as the
Director may, by rule, require.
(4) Demonstrate to the Director's satisfaction that
the health maintenance organization has the fiscal,
administrative, and marketing capacity to control its
point-of-service enrollment, utilization, and costs so as
not to jeopardize the financial security of the health
maintenance organization.
(5) Maintain, in addition to any other deposit
required under this Act, the deposit required by Section
2-6.
(6) Maintain cash and cash equivalents of
sufficient amount to fully liquidate 10 days' average
claim payments, subject to review by the Director.
(7) Maintain and file with the Director,
reinsurance coverage protecting against catastrophic
losses on out of network point-of-service services.
Deductibles may not exceed $100,000 per covered life per
year, and the portion of risk retained by the health
maintenance organization once deductibles have been
satisfied may not exceed 20%. Reinsurance must be placed
with licensed authorized reinsurers qualified to do
business in this State.
(d) A health maintenance organization may not issue a
point-of-service contract until it has filed and had approved
by the Director a plan to comply with the provisions of this
Section. The compliance plan must, at a minimum, include
provisions demonstrating that the health maintenance
organization will do all of the following:
(1) Design the benefit levels and conditions of
coverage for in-plan covered services and out-of-plan
covered services as required by this Article.
(2) Provide or arrange for the provision of
adequate systems to:
(A) process and pay claims for all out-of-plan
covered services;
(B) meet the requirements for point-of-service
contracts set forth in this Section and any
additional requirements that may be set forth by the
Director; and
(C) generate accurate data and financial and
regulatory reports on a timely basis so that the
Department of Insurance can evaluate the health
maintenance organization's experience with the
point-of-service contract and monitor compliance
with point-of-service contract provisions.
(3) Comply with the requirements of subsections (b)
and (c).
Passed in the General Assembly May 03, 2001.
Approved July 24, 2001.
[ Top ]