State of Illinois
90th General Assembly

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      215 ILCS 5/356t new
      215 ILCS 125/5-3          from Ch. 111 1/2, par. 1411.2
      215 ILCS 130/3009         from Ch. 73, par. 1503-9
      215 ILCS 165/10           from Ch. 32, par. 604
          Amends the Illinois Insurance  Code,  Health  Maintenance
      Organization  Act,  Limited  Health Service Organization Act,
      and Voluntary  Health  Services  Plans  Act.   Provides  that
      health   benefit  coverage  under  those  Acts  must  include
      coverage  for  hospital  and  medical  expenses  when  dental
      services for insureds who are disabled  are  required  to  be
      delivered  in  a  hospital  or  medical  outpatient  facility
      because  of  the insured's medical condition.  Defines terms.
      Effective January 1, 1998.
HB0579 Engrossed                               LRB9000565JSgc
 1        AN ACT concerning insurance coverage for  certain  dental
 2    expenses, amending named Acts.
 3        Be  it  enacted  by  the People of the State of Illinois,
 4    represented in the General Assembly:
 5        Section 5.  The Illinois Insurance  Code  is  amended  by
 6    adding Section 356t as follows:
 7        (215 ILCS 5/356t new)
 8        Sec.  356t.  Coverage  of  medical  services ancillary to
 9    dental services for the disabled.   An  individual  or  group
10    policy  of  accident and health insurance amended, delivered,
11    issued,  or  renewed  after  the  effective  date   of   this
12    amendatory  Act  of  1997  that  covers  hospital and medical
13    expenses may not  deny  coverage  for  hospital  and  medical
14    expenses  incurred by an insured person who has a disability,
15    as defined by the federal Americans with Disabilities Act  of
16    1990,  when  those hospital and medical expenses are incurred
17    in conjunction with dental services that are required, due to
18    the nature of the disability, to be delivered in  a  hospital
19    or  medical  outpatient  facility.   Nothing  in this Section
20    requires that the actual dental services be covered.
21        Section 10.  The Health Maintenance Organization  Act  is
22    amended by changing Section 5-3 as follows:
23        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
24        Sec. 5-3.  Insurance Code provisions.
25        (a)  Health Maintenance Organizations shall be subject to
26    the  provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
27    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
28    154.6,  154.7,  154.8,  155.04, 355.2, 356m, 356t, 367i, 401,
29    401.1, 402, 403, 403A, 408, 408.2, and 412, paragraph (c)  of
HB0579 Engrossed            -2-                LRB9000565JSgc
 1    subsection  (2)  of  Section 367, and Articles VIII 1/2, XII,
 2    XII 1/2, XIII, XIII 1/2, and XXVI of the  Illinois  Insurance
 3    Code.
 4        (b)  For  purposes of the Illinois Insurance Code, except
 5    for  Articles  XIII  and   XIII   1/2,   Health   Maintenance
 6    Organizations  in  the  following categories are deemed to be
 7    "domestic companies":
 8             (1)  a  corporation  authorized  under  the  Medical
 9        Service Plan Act, the Dental Service Plan Act, the Vision
10        Service Plan Act, the Pharmaceutical  Service  Plan  Act,
11        the  Voluntary Health Services Plan Act, or the Nonprofit
12        Health Care Service Plan Act;
13             (2)  a corporation organized under the laws of  this
14        State; or
15             (3)  a  corporation  organized  under  the  laws  of
16        another  state, 30% or more of the enrollees of which are
17        residents of this State, except a corporation subject  to
18        substantially  the  same  requirements  in  its  state of
19        organization as is a  "domestic  company"  under  Article
20        VIII 1/2 of the Illinois Insurance Code.
21        (c)  In  considering  the merger, consolidation, or other
22    acquisition of control of a Health  Maintenance  Organization
23    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
24             (1)  the  Director  shall give primary consideration
25        to the continuation of  benefits  to  enrollees  and  the
26        financial  conditions  of the acquired Health Maintenance
27        Organization after the merger,  consolidation,  or  other
28        acquisition of control takes effect;
29             (2)(i)  the  criteria specified in subsection (1)(b)
30        of Section 131.8 of the Illinois Insurance Code shall not
31        apply and (ii) the Director, in making his  determination
32        with  respect  to  the  merger,  consolidation,  or other
33        acquisition of control, need not take  into  account  the
34        effect  on  competition  of the merger, consolidation, or
HB0579 Engrossed            -3-                LRB9000565JSgc
 1        other acquisition of control;
 2             (3)  the Director shall have the  power  to  require
 3        the following information:
 4                  (A)  certification by an independent actuary of
 5             the   adequacy   of   the  reserves  of  the  Health
 6             Maintenance Organization sought to be acquired;
 7                  (B)  pro forma financial statements  reflecting
 8             the combined balance sheets of the acquiring company
 9             and the Health Maintenance Organization sought to be
10             acquired  as of the end of the preceding year and as
11             of a date 90 days prior to the acquisition, as  well
12             as   pro   forma   financial  statements  reflecting
13             projected combined  operation  for  a  period  of  2
14             years;
15                  (C)  a  pro  forma  business  plan detailing an
16             acquiring  party's  plans  with   respect   to   the
17             operation  of  the  Health  Maintenance Organization
18             sought to be acquired for a period of not less  than
19             3 years; and
20                  (D)  such  other  information  as  the Director
21             shall require.
22        (d)  The provisions of Article VIII 1/2 of  the  Illinois
23    Insurance  Code  and this Section 5-3 shall apply to the sale
24    by any health maintenance organization of greater than 10% of
25    its enrollee population  (including  without  limitation  the
26    health  maintenance organization's right, title, and interest
27    in and to its health care certificates).
28        (e)  In considering any management  contract  or  service
29    agreement  subject to Section 141.1 of the Illinois Insurance
30    Code, the Director (i) shall, in  addition  to  the  criteria
31    specified  in  Section  141.2 of the Illinois Insurance Code,
32    take into account the effect of the  management  contract  or
33    service   agreement   on  the  continuation  of  benefits  to
34    enrollees  and  the  financial  condition   of   the   health
HB0579 Engrossed            -4-                LRB9000565JSgc
 1    maintenance  organization to be managed or serviced, and (ii)
 2    need not take into  account  the  effect  of  the  management
 3    contract or service agreement on competition.
 4        (f)  Except  for  small employer groups as defined in the
 5    Small Employer Rating, Renewability  and  Portability  Health
 6    Insurance  Act and except for medicare supplement policies as
 7    defined in Section 363 of  the  Illinois  Insurance  Code,  a
 8    Health  Maintenance Organization may by contract agree with a
 9    group or other enrollment unit to effect  refunds  or  charge
10    additional premiums under the following terms and conditions:
11             (i)  the  amount  of, and other terms and conditions
12        with respect to, the refund or additional premium are set
13        forth in the group or enrollment unit contract agreed  in
14        advance of the period for which a refund is to be paid or
15        additional  premium  is to be charged (which period shall
16        not be less than one year); and
17             (ii)  the amount of the refund or additional premium
18        shall  not  exceed  20%   of   the   Health   Maintenance
19        Organization's profitable or unprofitable experience with
20        respect  to  the  group  or other enrollment unit for the
21        period (and, for  purposes  of  a  refund  or  additional
22        premium,  the profitable or unprofitable experience shall
23        be calculated taking into account a pro rata share of the
24        Health  Maintenance  Organization's  administrative   and
25        marketing  expenses,  but shall not include any refund to
26        be made or additional premium to be paid pursuant to this
27        subsection (f)).  The Health Maintenance Organization and
28        the  group  or  enrollment  unit  may  agree   that   the
29        profitable  or  unprofitable experience may be calculated
30        taking into account the refund period and the immediately
31        preceding 2 plan years.
32        The  Health  Maintenance  Organization  shall  include  a
33    statement in the evidence of coverage issued to each enrollee
34    describing the possibility of a refund or additional premium,
HB0579 Engrossed            -5-                LRB9000565JSgc
 1    and upon request of any group or enrollment unit, provide  to
 2    the group or enrollment unit a description of the method used
 3    to   calculate  (1)  the  Health  Maintenance  Organization's
 4    profitable experience with respect to the group or enrollment
 5    unit and the resulting refund to the group or enrollment unit
 6    or (2) the  Health  Maintenance  Organization's  unprofitable
 7    experience  with  respect to the group or enrollment unit and
 8    the resulting additional premium to be paid by the  group  or
 9    enrollment unit.
10        In   no  event  shall  the  Illinois  Health  Maintenance
11    Organization  Guaranty  Association  be  liable  to  pay  any
12    contractual obligation of an insolvent  organization  to  pay
13    any refund authorized under this Section.
14    (Source: P.A. 88-313; 89-90, eff. 6-30-95.)
15        Section  15.  The Limited Health Service Organization Act
16    is amended by changing Section 3009 as follows:
17        (215 ILCS 130/3009) (from Ch. 73, par. 1503-9)
18        Sec.  3009.  Point-of-service  limited   health   service
19    contracts.
20        (a)  An LHSO that offers a POS contract:
21             (1)  shall  include  as in-plan covered services all
22        services required by law to be provided by an LHSO;
23             (2)  shall provide incentives, which  shall  include
24        financial   incentives,  for  enrollees  to  use  in-plan
25        covered services;
26             (3)  shall not offer  services  out-of-plan  without
27        providing those services on an in-plan basis;
28             (4)  may limit or exclude specific types of services
29        from coverage when obtained out-of-plan;
30             (5)  may  include  annual  out-of-pocket  limits and
31        lifetime  maximum  benefits  allowances  for  out-of-plan
32        services that are separate from any limits or  allowances
HB0579 Engrossed            -6-                LRB9000565JSgc
 1        applied to in-plan services;
 2             (6)  shall   include   an   annual  maximum  benefit
 3        allowance not to exceed $2,500 per year that is  separate
 4        from   any   limits  or  allowances  applied  to  in-plan
 5        services;
 6             (7)  may limit the groups to which a POS product  is
 7        offered, however, if a POS product is offered to a group,
 8        then  it  must be offered to all eligible members of that
 9        group, when an LHSO provider is available;
10             (8)  shall   not   consider   emergency    services,
11        authorized  referral  services,  or  non-routine services
12        obtained out of the service area to be POS services; and
13             (9)  may  treat  as   out-of-plan   services   those
14        services  that  an  enrollee obtains from a participating
15        provider, but for which the proper authorization was  not
16        given by the LHSO.
17        (b)  An  LHSO offering a POS contract shall be subject to
18    the following limitations:
19             (1)  The LHSO  shall  not  expend  in  any  calendar
20        quarter  more  than  20%  of  its  total  limited  health
21        services expenditures for all its members for out-of-plan
22        covered services.
23             (2)  If  the  amount  specified  in paragraph (1) is
24        exceeded by 2%  in  a  quarter,  the  LHSO  shall  effect
25        compliance with paragraph (1) by the end of the following
26        quarter.
27             (3)  If  compliance  with  the  amount  specified in
28        paragraph (1) is not  demonstrated  in  the  LHSO's  next
29        quarterly report, the LHSO may not offer the POS contract
30        to new groups or include the POS option in the renewal of
31        an  existing  group  until  compliance  with  the  amount
32        specified  in  paragraph (1) is demonstrated or otherwise
33        allowed by the Director.
34             (4)  Any LHSO failing, without just cause, to comply
HB0579 Engrossed            -7-                LRB9000565JSgc
 1        with the provisions of this subsection shall be required,
 2        after notice and hearing, to pay a penalty  of  $250  for
 3        each  day  out  of  compliance,  to  be  recovered by the
 4        Director of Insurance.  Any penalty  recovered  shall  be
 5        paid  into  the  General  Revenue Fund.  The Director may
 6        reduce the  penalty  if  the  LHSO  demonstrates  to  the
 7        Director   that  the  imposition  of  the  penalty  would
 8        constitute a financial hardship to the LHSO.
 9        (c)  Any LHSO that offers a POS product shall:
10             (1)  File a quarterly financial statement  detailing
11        compliance with the requirements of subsection (b).
12             (2)  Track  out-of-plan  POS  utilization separately
13        from  in-plan  or  non-POS  out-of-plan  emergency  care,
14        referral care, and urgent care out of  the  service  area
15        utilization.
16             (3)  Record out-of-plan utilization in a manner that
17        will  permit  such  utilization and cost reporting as the
18        Director may, by regulation, require.
19             (4)  Demonstrate to the Director's satisfaction that
20        the LHSO has the fiscal,  administrative,  and  marketing
21        capacity  to control its POS enrollment, utilization, and
22        costs so as not to jeopardize the financial  security  of
23        the LHSO.
24             (5)  Maintain the deposit required by subsection (b)
25        of Section 2006 in addition to any other deposit required
26        under this Act.
27        (d)  An  LHSO shall not issue a POS contract until it has
28    filed and had approved by the Director a plan to comply  with
29    the provisions of this Section.  The compliance plan shall at
30    a minimum include provisions demonstrating that the LHSO will
31    do all of the following:
32             (1)  Design  the  benefit  levels  and conditions of
33        coverage for in-plan  covered  services  and  out-of-plan
34        covered services as required by this Article.
HB0579 Engrossed            -8-                LRB9000565JSgc
 1             (2)  Provide   or   arrange  for  the  provision  of
 2        adequate systems to:
 3                  (A)  process and pay claims for all out-of-plan
 4             covered services;
 5                  (B)  meet the requirements for a  POS  contract
 6             set   forth  in  this  Section  and  any  additional
 7             requirements that may be set forth by the  Director;
 8             and
 9                  (C)  generate  accurate  data and financial and
10             regulatory reports on a timely  basis  so  that  the
11             Department  can  evaluate the LHSO's experience with
12             the POS contract and  monitor  compliance  with  POS
13             contract provisions.
14             (3)  Comply  initially  and on an ongoing basis with
15        the requirements of subsections (b) and (c).
16        (e)  A POS contract must comply with the requirements  of
17    Section 356t of the Illinois Insurance Code.
18    (Source: P.A. 87-1079; 88-667, eff. 9-16-94.)
19        Section  20.  The  Voluntary Health Services Plans Act is
20    amended by changing Section 10 as follows:
21        (215 ILCS 165/10) (from Ch. 32, par. 604)
22        Sec.  10.  Application  of  Insurance  Code   provisions.
23    Health  services plan corporations and all persons interested
24    therein  or  dealing  therewith  shall  be  subject  to   the
25    provisions  of  Article  XII  1/2 and Sections 3.1, 133, 140,
26    143, 143c, 149, 354, 355.2, 356r, 356t,  367.2,  401,  401.1,
27    402,  403,  403A, 408, 408.2, and 412, and paragraphs (7) and
28    (15) of Section 367 of the Illinois Insurance Code.
29    (Source: P.A. 89-514, eff. 7-17-96.)
30        Section 99.   Effective  date.   This  Act  takes  effect
31    January 1, 1998.

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