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Public Act 91-0605
HB2713 Enrolled LRB9103967SMpr
AN ACT concerning payment for medical services, amending
named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The State Employees Group Insurance Act of
1971 is amended by adding Section 6.12 as follows:
(5 ILCS 375/6-12 new)
Sec. 6.12. Payment for services. The program of health
benefits is subject to the provisions of Section 356y of the
Illinois Insurance Code.
Section 10. The Illinois Insurance Code is amended by
adding Section 356y and changing Sections 357.9 and 370a as
follows:
(215 ILCS 5/356y new)
Sec. 356y. Timely payment for health care services.
(a) This Section applies to insurers, health maintenance
organizations, managed care plans, health care plans,
preferred provider organizations, third party administrators,
independent practice associations, and physician-hospital
organizations (hereinafter referred to as "payors") that
provide periodic payments, which are payments not requiring a
claim, bill, capitation encounter data, or capitation
reconciliation reports, such as prospective capitation
payments, to health care professionals and health care
facilities to provide medical or health care services for
insureds or enrollees.
(1) A payor shall make periodic payments in
accordance with item (3). Failure to make periodic
payments within the period of time specified in item (3)
shall entitle the health care professional or health care
facility to interest at the rate of 9% per year from the
date payment was required to be made to the date of the
late payment, provided that interest amounting to less
than $1 need not be paid. Any required interest payments
shall be made within 30 days after the payment.
(2) When a payor requires selection of a health
care professional or health care facility, the selection
shall be completed by the insured or enrollee no later
than 30 days after enrollment. The payor shall provide
written notice of this requirement to all insureds and
enrollees. Nothing in this Section shall be construed to
require a payor to select a health care professional or
health care facility for an insured or enrollee.
(3) A payor shall provide the health care
professional or health care facility with notice of the
selection as a health care professional or health care
facility by an insured or enrollee and the effective date
of the selection within 60 calendar days after the
selection. No later than the 60th day following the date
an insured or enrollee has selected a health care
professional or health care facility or the date that
selection becomes effective, whichever is later, or in
cases of retrospective enrollment only, 30 days after
notice by an employer to the payor of the selection, a
payor shall begin periodic payment of the required
amounts to the insured's or enrollee's health care
professional or health care facility, or the designee of
either, calculated from the date of selection or the date
the selection becomes effective, whichever is later. All
subsequent payments shall be made in accordance with a
monthly periodic cycle.
(b) Notwithstanding any other provision of this Section,
independent practice associations and physician-hospital
organizations shall begin making periodic payment of the
required amounts within 60 days after an insured or enrollee
has selected a health care professional or health care
facility or the date that selection becomes effective,
whichever is later. Before January 1, 2001, subsequent
periodic payments shall be made in accordance with a 60-day
periodic schedule, and after December 31, 2000, subsequent
periodic payments shall be made in accordance with a monthly
periodic schedule.
Notwithstanding any other provision of this Section,
independent practice associations and physician-hospital
organizations shall make all other payments for health
services within 60 days after receipt of due proof of loss
received before January 1, 2001 and within 30 days after
receipt of due proof of loss received after December 31,
2000. Independent practice associations and
physician-hospital organizations shall notify the insured,
insured's assignee, health care professional, or health care
facility of any failure to provide sufficient documentation
for a due proof of loss within 30 days after receipt of the
claim for health services.
Failure to pay within the required time period shall
entitle the payee to interest at the rate of 9% per year from
the date the payment is due to the date of the late payment,
provided that interest amounting to less that $1 need not be
paid. Any required interest payments shall be made within 30
days after the payment.
(c) All insurers, health maintenance organizations,
managed care plans, health care plans, preferred provider
organizations, and third party administrators shall ensure
that all claims and indemnities concerning health care
services other than for any periodic payment shall be paid
within 30 days after receipt of due written proof of such
loss. An insured, insured's assignee, health care
professional, or health care facility shall be notified of
any known failure to provide sufficient documentation for a
due proof of loss within 30 days after receipt of the claim
for health care services. Failure to pay within such period
shall entitle the payee to interest at the rate of 9% per
year from the 30th day after receipt of such proof of loss to
the date of late payment, provided that interest amounting to
less than one dollar need not be paid. Any required interest
payments shall be made within 30 days after the payment.
(d) The Department shall enforce the provisions of this
Section pursuant to the enforcement powers granted to it by
law.
(e) The Department is hereby granted specific authority
to issue a cease and desist order, fine, or otherwise
penalize independent practice associations and
physician-hospital organizations that violate this Section.
The Department shall adopt reasonable rules to enforce
compliance with this Section by independent practice
associations and physician-hospital organizations.
(215 ILCS 5/357.9) (from Ch. 73, par. 969.9)
Sec. 357.9. "TIME OF PAYMENT OF CLAIMS: Indemnities
payable under this policy for any loss other than loss for
which this policy provides any periodic payment will be paid
immediately upon receipt of due written proof of such loss.
Subject to due written proof of loss, all accrued indemnities
for loss for which this policy provides periodic payment will
be paid .... (insert period for payment which must not be
less frequently than monthly) and any balance remaining
unpaid upon the termination of liability, will be paid
immediately upon receipt of due written proof."
All claims and indemnities payable under the terms of a
policy of accident and health insurance shall be paid within
30 days following receipt by the insurer of due proof of
loss. Failure to pay within such period shall entitle the
insured to interest at the rate of 9 per cent per annum from
the 30th day after receipt of such proof of loss to the date
of late payment, provided that interest amounting to less
than one dollar need not be paid. An insured or an insured's
assignee shall be notified by the insurer, health maintenance
organization, managed care plan, health care plan, preferred
provider organization, or third party administrator of any
known failure to provide sufficient documentation for a due
proof of loss within 30 days after receipt of the claim. Any
required interest payments shall be made within 30 days after
the payment.
The requirements of this Section shall apply to any
policy of accident and health insurance delivered, issued for
delivery, renewed or amended on or after 180 days following
the effective date of this amendatory Act of 1985. The
requirements of this Section also shall specifically apply to
any group policy of dental insurance only, delivered, issued
for delivery, renewed or amended on or after 180 days
following the effective date of this amendatory Act of 1987.
(Source: P.A. 85-395.)
(215 ILCS 5/370a) (from Ch. 73, par. 982a)
Sec. 370a. Assignability of Accident and Health
Insurance.
No provision of the Illinois Insurance Code, or any other
law, prohibits an insured under any policy of accident and
health insurance or any other person who may be the owner of
any rights under such policy from making an assignment of all
or any part of his rights and privileges under the policy
including but not limited to the right to designate a
beneficiary and to have an individual policy issued in
accordance with its terms. Subject to the terms of the policy
or any contract relating thereto, an assignment by an insured
or by any other owner of rights under the policy, made before
or after the effective date of this amendatory Act of 1969 is
valid for the purpose of vesting in the assignee, in
accordance with any provisions included therein as to the
time at which it is effective, all rights and privileges so
assigned. However, such assignment is without prejudice to
the company on account of any payment it makes or individual
policy it issues before receipt of notice of the assignment.
This amendatory Act of 1969 acknowledges, declares and
codifies the existing right of assignment of interests under
accident and health insurance policies. If an enrollee or
insured of an insurer, health maintenance organization,
managed care plan, health care plan, preferred provider
organization, or third party administrator assigns a claim to
a health care professional or health care facility, then
payment shall be made directly to the health care
professional or health care facility including any interest
required under Section 356y of this Code for failure to pay
claims within 30 days after receipt by the insurer of due
proof of loss. Nothing in this Section shall be construed to
prevent any parties from reconciling duplicate payments.
(Source: P. A. 76-1709.)
Section 15. The Health Maintenance Organization Act is
amended by changing Section 5-3 as follows:
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
356y, 367i, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412,
444, and 444.1, paragraph (c) of subsection (2) of Section
367, and Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2,
XXV, and XXVI of the Illinois Insurance Code.
(b) For purposes of the Illinois Insurance Code, except
for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
Health Maintenance Organizations in the following categories
are deemed to be "domestic companies":
(1) a corporation authorized under the Dental
Service Plan Act or the Voluntary Health Services Plans
Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of
another state, 30% or more of the enrollees of which are
residents of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article
VIII 1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration
to the continuation of benefits to enrollees and the
financial conditions of the acquired Health Maintenance
Organization after the merger, consolidation, or other
acquisition of control takes effect;
(2)(i) the criteria specified in subsection (1)(b)
of Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require
the following information:
(A) certification by an independent actuary of
the adequacy of the reserves of the Health
Maintenance Organization sought to be acquired;
(B) pro forma financial statements reflecting
the combined balance sheets of the acquiring company
and the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as
of a date 90 days prior to the acquisition, as well
as pro forma financial statements reflecting
projected combined operation for a period of 2
years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the
operation of the Health Maintenance Organization
sought to be acquired for a period of not less than
3 years; and
(D) such other information as the Director
shall require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale
by any health maintenance organization of greater than 10% of
its enrollee population (including without limitation the
health maintenance organization's right, title, and interest
in and to its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code,
take into account the effect of the management contract or
service agreement on the continuation of benefits to
enrollees and the financial condition of the health
maintenance organization to be managed or serviced, and (ii)
need not take into account the effect of the management
contract or service agreement on competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a
Health Maintenance Organization may by contract agree with a
group or other enrollment unit to effect refunds or charge
additional premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions
with respect to, the refund or additional premium are set
forth in the group or enrollment unit contract agreed in
advance of the period for which a refund is to be paid or
additional premium is to be charged (which period shall
not be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to
be made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the
profitable or unprofitable experience may be calculated
taking into account the refund period and the immediately
preceding 2 plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and
the resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay
any refund authorized under this Section.
(Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-583, eff.
5-29-98; 90-655, eff. 7-30-98; 90-741, eff. 1-1-99; revised
9-8-98.)
Section 20. The Limited Health Service Organization Act
is amended by changing Section 4003 as follows:
(215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
Sec. 4003. Illinois Insurance Code provisions. Limited
health service organizations shall be subject to the
provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356v, 356y, 401, 401.1,
402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and
Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and
XXVI of the Illinois Insurance Code. For purposes of the
Illinois Insurance Code, except for Sections 444 and 444.1
and Articles XIII and XIII 1/2, limited health service
organizations in the following categories are deemed to be
domestic companies:
(1) a corporation under the laws of this State; or
(2) a corporation organized under the laws of
another state, 30% of more of the enrollees of which are
residents of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a domestic company under Article VIII
1/2 of the Illinois Insurance Code.
(Source: P.A. 90-25, eff. 1-1-98; 90-583, eff. 5-29-98;
90-655, eff. 7-30-98.)
Section 25. The Voluntary Health Services Plans Act is
amended by changing Section 10 as follows:
(215 ILCS 165/10) (from Ch. 32, par. 604)
Sec. 10. Application of Insurance Code provisions.
Health services plan corporations and all persons interested
therein or dealing therewith shall be subject to the
provisions of Article XII 1/2 and Sections 3.1, 133, 140,
143, 143c, 149, 354, 355.2, 356r, 356t, 356u, 356v, 356w,
356x, 356y, 367.2, 401, 401.1, 402, 403, 403A, 408, 408.2,
and 412, and paragraphs (7) and (15) of Section 367 of the
Illinois Insurance Code.
(Source: P.A. 89-514, eff. 7-17-96; 90-7, eff. 6-10-97;
90-25, eff. 1-1-98; 90-655, eff. 7-30-98; 90-741, eff.
1-1-99.)
Section 99. Effective date. This Act takes effect 120
days after becoming law.
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