093_SB1777

 
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 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 changing  and  renumbering  Section
 6    356z.2 (as added by P.A. 92-579) as follows:

 7        (215 ILCS 5/356z.3)
 8        Sec.  356z.3  356z.2.  Disclosure  of limited benefit. An
 9    insurer  that  issues,  delivers,  amends,   or   renews   an
10    individual  or  group policy of accident and health insurance
11    in this State after the effective date of this amendatory Act
12    of the 92nd General Assembly and arranges, contracts with, or
13    administers contracts with a provider  whereby  beneficiaries
14    are  provided  an  incentive  to  use  the  services  of such
15    provider  must  include  the  following  disclosure  on   its
16    contracts   and  evidences  of  coverage:  "WARNING,  LIMITED
17    BENEFITS WILL BE PAID WHEN  NON-PARTICIPATING  PROVIDERS  ARE
18    USED.  You 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 such
21    non-participating provider are  not  based  upon  the  amount
22    billed.  The basis of your benefit payment will be determined
23    according to your policy's fee schedule, usual and  customary
24    charge  (which is determined by comparing charges for similar
25    services adjusted to the geographical area where the services
26    are performed), or other method as defined by the policy. YOU
27    CAN EXPECT TO  PAY  MORE  THAN  THE  COINSURANCE,  COPAYMENT,
28    DEDUCTIBLE, AND OTHER OUT-OF-POCKET AMOUNTS AMOUNT DEFINED IN
29    THE  POLICY  AFTER  THE  PLAN  HAS PAID ITS REQUIRED PORTION.
30    Non-participating providers may bill members for  any  amount
31    up  to  the billed charge after the plan has paid its portion
 
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 1    of the bill. Participating providers have  agreed  to  accept
 2    discounted  payments  for services with no additional billing
 3    to the member other than co-insurance,  and  deductible,  and
 4    other  out-of-pocket  amounts  defined  in  your policy. BOTH
 5    PARTICIPATING AND NON-PARTICIPATING PROVIDERS  MAY  BILL  FOR
 6    SERVICES  NOT COVERED BY YOUR POLICY.  You may obtain further
 7    information about the participating  status  of  professional
 8    providers   and  information  on  out-of-pocket  expenses  by
 9    calling the toll free telephone number on your identification
10    card.".
11    (Source: P.A. 92-579, eff. 1-1-03; revised 9-3-02.)

12        (215 ILCS 5/370i) (from Ch. 73, par. 982i)
13        Sec. 370i.  Policies,  agreements  or  arrangements  with
14    incentives or limits on reimbursement authorized.
15        (a)  Policies,  agreements  or  arrangements issued under
16    this Article may not contain terms or conditions  that  would
17    operate  unreasonably to restrict the access and availability
18    of health care services for the insured.
19        (b)  An insurer or administrator may:
20             (1)  enter into agreements with certain providers of
21        its choice relating to health care services which may  be
22        rendered  to  insureds or beneficiaries of the insurer or
23        administrator,  including  agreements  relating  to   the
24        amounts  to  be charged the insureds or beneficiaries for
25        services rendered;
26             (2)  issue  or  administer  programs,  policies   or
27        subscriber   contracts   in   this   State  that  include
28        incentives for the insured or beneficiary to utilize  the
29        services   of  a  provider  which  has  entered  into  an
30        agreement with the insurer or administrator  pursuant  to
31        paragraph (1) above.
32        (c)  After  the  effective date of this amendatory Act of
33    the  92nd  General  Assembly,  any  insurer  that   arranges,
 
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 1    contracts  with,  or  administers  contracts  with a provider
 2    whereby beneficiaries are provided an incentive  to  use  the
 3    services   of   such  provider  must  include  the  following
 4    disclosure  on  its  contracts  and  evidences  of  coverage:
 5    "WARNING,   LIMITED    BENEFITS    WILL    BE    PAID    WHEN
 6    NON-PARTICIPATING  PROVIDERS  ARE  USED.  You should be aware
 7    that  when  you  elect  to  utilize   the   services   of   a
 8    non-participating   provider   for   a   covered  service  in
 9    non-emergency   situations,   benefit   payments   to    such
10    non-participating  provider  are  not  based  upon the amount
11    billed. The basis of your benefit payment will be  determined
12    according  to your policy's fee schedule, usual and customary
13    charge (which is determined by comparing charges for  similar
14    services adjusted to the geographical area where the services
15    are performed), or other method as defined by the policy. YOU
16    CAN  EXPECT  TO  PAY  MORE  THAN THE COINSURANCE, CO-PAYMENT,
17    DEDUCTIBLE, AND OTHER OUT-OF-POCKET AMOUNTS AMOUNT DEFINED IN
18    THE POLICY AFTER THE PLAN  HAS  PAID  ITS  REQUIRED  PORTION.
19    Non-participating  providers  may bill members for any amount
20    up to the billed charge after the plan has paid  its  portion
21    of  the  bill.  Participating providers have agreed to accept
22    discounted payments for services with no  additional  billing
23    to  the  member  other than co-insurance, and deductible, and
24    other out-of-pocket amounts  defined  in  your  policy.  BOTH
25    PARTICIPATING  AND  NON-PARTICIPATING  PROVIDERS MAY BILL FOR
26    SERVICES NOT COVERED BY YOUR POLICY.  You may obtain  further
27    information  about  the  participating status of professional
28    providers  and  information  on  out-of-pocket  expenses   by
29    calling the toll free telephone number on your identification
30    card.".
31    (Source: P.A. 92-579, eff. 1-1-03.)

32        Section  10.   The Health Maintenance Organization Act is
33    amended by changing Section 4.5-1 as follows:
 
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 1        (215 ILCS 125/4.5-1)
 2        Sec. 4.5-1.  Point-of-service health service contracts.
 3        (a)  A health  maintenance  organization  that  offers  a
 4    point-of-service contract:
 5             (1)  must  include  as  in-plan covered services all
 6        services required by law  to  be  provided  by  a  health
 7        maintenance organization;
 8             (2)  must  provide  incentives,  which shall include
 9        financial  incentives,  for  enrollees  to  use   in-plan
10        covered services;
11             (3)  may  not  offer  services  out-of-plan  without
12        providing those services on an in-plan basis;
13             (4)  may  include  annual  out-of-pocket  limits and
14        lifetime  maximum  benefits  allowances  for  out-of-plan
15        services that are separate from any limits or  allowances
16        applied to in-plan services;
17             (5)  may not consider emergency services, authorized
18        referral  services,  or non-routine services obtained out
19        of the service area to be point-of-service services;
20             (6)  may  treat  as   out-of-plan   services   those
21        services  that  an  enrollee obtains from a participating
22        provider, but for which the proper authorization was  not
23        given by the health maintenance organization; and
24             (7)  after the effective date of this amendatory Act
25        of  the 92nd General Assembly, must include the following
26        disclosure  on   its   point-of-service   contracts   and
27        evidences of coverage: "WARNING, LIMITED BENEFITS WILL BE
28        PAID  WHEN  NON-PARTICIPATING  PROVIDERS  ARE  USED.  You
29        should  be  aware  that  when  you  elect  to utilize the
30        services of a non-participating provider  for  a  covered
31        service  in non-emergency situations, benefit payments to
32        such non-participating provider are not  based  upon  the
33        amount  billed. The basis of your benefit payment will be
34        determined according to your policy's fee schedule, usual
 
                            -5-      LRB093 03736 JLS 03766 b
 1        and customary charge (which is  determined  by  comparing
 2        charges for similar services adjusted to the geographical
 3        area  where  the services are performed), or other method
 4        as defined by the policy. YOU CAN EXPECT TO PAY MORE THAN
 5        THE  COINSURANCE,  CO-PAYMENT,  DEDUCTIBLE,   AND   OTHER
 6        OUT-OF-POCKET  AMOUNTS AMOUNT DEFINED IN THE POLICY AFTER
 7        THE PLAN HAS PAID ITS REQUIRED PORTION. Non-participating
 8        providers may bill members  for  any  amount  up  to  the
 9        billed  charge after the plan has paid its portion of the
10        bill.  Participating  providers  have  agreed  to  accept
11        discounted  payments  for  services  with  no  additional
12        billing  to  the  member  other  than  co-insurance,  and
13        deductible, and other out-of-pocket  amounts  defined  in
14        your  policy.  BOTH  PARTICIPATING  AND NON-PARTICIPATING
15        PROVIDERS MAY BILL  FOR  SERVICES  NOT  COVERED  BY  YOUR
16        POLICY.   You  may  obtain  further information about the
17        participating  status  of  professional   providers   and
18        information on out-of-pocket expenses by calling the toll
19        free telephone number on your identification card.".
20        (b)  A   health   maintenance   organization  offering  a
21    point-of-service contract is subject to all of the  following
22    limitations:
23             (1)  The  health  maintenance  organization  may not
24        expend in any calendar quarter more than 20% of its total
25        expenditures for all its members for out-of-plan  covered
26        services.
27             (2)  If  the  amount  specified  in item (1) of this
28        subsection is exceeded by 2% in  a  quarter,  the  health
29        maintenance organization must effect compliance with item
30        (1)  of  this  subsection  by  the  end  of the following
31        quarter.
32             (3)  If compliance with the amount specified in item
33        (1) of this subsection is not demonstrated in the  health
34        maintenance  organization's  next  quarterly  report, the
 
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 1        health  maintenance  organization  may  not   offer   the
 2        point-of-service  contract  to  new groups or include the
 3        point-of-service option in the  renewal  of  an  existing
 4        group  until compliance with the amount specified in item
 5        (1) of this subsection is demonstrated or until otherwise
 6        allowed by the Director.
 7             (4)  A  health  maintenance  organization   failing,
 8        without just cause, to comply with the provisions of this
 9        subsection  shall  be required, after notice and hearing,
10        to pay a penalty of $250 for each day out of  compliance,
11        to  be  recovered  by the Director. Any penalty recovered
12        shall be paid into the General Revenue Fund. The Director
13        may  reduce  the  penalty  if  the   health   maintenance
14        organization   demonstrates  to  the  Director  that  the
15        imposition of the penalty would  constitute  a  financial
16        hardship to the health maintenance organization.
17        (c)  A  health  maintenance  organization  that  offers a
18    point-of-service product must do all of the following:
19             (1)  File a quarterly financial statement  detailing
20        compliance with the requirements of subsection (b).
21             (2)  Track out-of-plan, point-of-service utilization
22        separately    from   in-plan   or   non-point-of-service,
23        out-of-plan emergency care,  referral  care,  and  urgent
24        care out of the service area utilization.
25             (3)  Record out-of-plan utilization in a manner that
26        will  permit  such  utilization and cost reporting as the
27        Director may, by rule, require.
28             (4)  Demonstrate to the Director's satisfaction that
29        the  health  maintenance  organization  has  the  fiscal,
30        administrative, and marketing  capacity  to  control  its
31        point-of-service enrollment, utilization, and costs so as
32        not  to  jeopardize  the financial security of the health
33        maintenance organization.
34             (5)  Maintain, in  addition  to  any  other  deposit
 
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 1        required  under this Act, the deposit required by Section
 2        2-6.
 3             (6)  Maintain   cash   and   cash   equivalents   of
 4        sufficient amount to fully  liquidate  10  days'  average
 5        claim payments, subject to review by the Director.
 6             (7)  Maintain    and   file   with   the   Director,
 7        reinsurance  coverage  protecting  against   catastrophic
 8        losses  on  out  of  network  point-of-service  services.
 9        Deductibles  may not exceed $100,000 per covered life per
10        year, and the portion of  risk  retained  by  the  health
11        maintenance   organization  once  deductibles  have  been
12        satisfied may not exceed 20%. Reinsurance must be  placed
13        with  licensed  authorized  reinsurers  qualified  to  do
14        business in this State.
15        (d)  A  health  maintenance  organization may not issue a
16    point-of-service contract until it has filed and had approved
17    by the Director a plan to comply with the provisions of  this
18    Section.   The  compliance  plan  must, at a minimum, include
19    provisions  demonstrating   that   the   health   maintenance
20    organization will do all of the following:
21             (1)  Design  the  benefit  levels  and conditions of
22        coverage for in-plan  covered  services  and  out-of-plan
23        covered services as required by this Article.
24             (2)  Provide   or   arrange  for  the  provision  of
25        adequate systems to:
26                  (A)  process and pay claims for all out-of-plan
27             covered services;
28                  (B)  meet the requirements for point-of-service
29             contracts  set  forth  in  this  Section   and   any
30             additional requirements that may be set forth by the
31             Director; and
32                  (C)  generate  accurate  data and financial and
33             regulatory reports on a timely  basis  so  that  the
34             Department  of  Insurance  can  evaluate  the health
 
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 1             maintenance  organization's  experience   with   the
 2             point-of-service  contract  and  monitor  compliance
 3             with point-of-service contract provisions.
 4             (3)  Comply with the requirements of subsections (b)
 5        and (c).
 6    (Source: P.A. 92-135, eff. 1-1-02; 92-579, eff. 1-1-03.)

 7        Section  99.   Effective  date.  This Act takes effect on
 8    December 1, 2003.