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90_HB1311
New Act
Creates the Health Care Purchasing Group Act. Authorizes
the formation, operation, and regulation of health care
purchasing groups. Provides that health care purchasing
groups may be organized by 2 or more employers, an HPG
sponsor, or a risk-bearer for the purpose of contracting for
health coverage for employees and dependents of HPG members.
Establishes prerequisites for the formation of an HPG. Sets
forth minimum coverage requirements and underwriting
provisions. Defines terms. Provides for regulation by the
Department of Insurance.
LRB9003839JSgc
LRB9003839JSgc
1 AN ACT to create the Health Care Purchasing Group Act.
2 Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the
5 Health Care Purchasing Group Act.
6 Section 5. Purpose. The purpose and intent of this Act
7 is to authorize the formation, operation, and regulation of
8 health care purchasing groups (referred to in this Act as
9 "HPGs") as described by this Act, to authorize the sale and
10 regulation of health insurance products for employers that
11 are sold to HPGs, and to encourage the development of
12 financially secure and cost effective markets for the basic
13 health care needs of employers, employees, and their
14 dependents in this State. Nothing in this Act authorizes an
15 employer to join with other employers to self-insure through
16 risk pooling.
17 Section 10. Definitions. As used in this Act:
18 "Director" means the Director of Insurance.
19 "Employee" means a person who works on a full-time basis
20 for the employer, with a normal week of 30 or more hours, and
21 has satisfied any applicable waiting periods for insurance.
22 "Employee" may also include a sole proprietor, a partner of a
23 partnership, a retired employee, or an independent
24 contractor, provided the sole proprietor, partner, retired
25 employee, or independent contractor is included as an
26 employee under a health benefit plan of the employer. It
27 does not need to include an employee who works on a
28 part-time, temporary, seasonal, or substitute basis.
29 "Employer" may include any legal form of doing business
30 or employing people, including a self-employed sole
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1 proprietor.
2 "Health benefit plan" means any hospital or medical
3 expense-incurred policy or certificate, hospital or medical
4 service plan contract, or health maintenance organization
5 subscriber contract. Health benefit plan shall not include a
6 policy or certificate of individual, accident-only, credit,
7 dental, vision, medicare supplement, hospital indemnity,
8 specified disease, long term care or disability income
9 insurance, coverage issued as a supplement to liability
10 insurance, workers' compensation or similar insurance, or
11 automobile medical payment insurance.
12 "Health insurance contract", "group or master health
13 insurance contract" and "insurance" refer to the forms of
14 insurance obligations which a "risk-bearer" as defined in
15 this Section has been authorized to issue.
16 "Late enrollee" means an employee or dependent who
17 requests enrollment in a health benefit plan of an employer
18 following the initial enrollment period during which the
19 individual is entitled to enroll under the terms of the
20 health insurance contract, provided that the initial
21 enrollment period is a period of at least 30 days. However,
22 an employee or dependent shall not be considered a late
23 enrollee if:
24 (1) The individual meets each of the following:
25 (A) the individual was covered under a prior
26 employer based health benefit plan at the time of the
27 initial enrollment;
28 (B) the individual lost coverage under qualifying
29 previous coverage as a result of termination of
30 employment or eligibility, the involuntary termination of
31 the qualifying previous coverage, death of a spouse or
32 divorce; and
33 (C) the individual requests enrollment within 30
34 days after the termination of the qualifying previous
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1 coverage;
2 (2) the individual is employed by an employer that
3 offers multiple health insurance alternatives and the
4 individual elects a different coverage during an open
5 enrollment period; or
6 (3) a court has ordered coverage be provided for a
7 spouse or minor or dependent child under a covered employee's
8 health insurance contract and request for enrollment is made
9 within 30 days after issuance of the court order.
10 "Preexisting condition" means a condition that, during a
11 period of no more than 12 months immediately preceding the
12 effective date of coverage, had manifested itself in a manner
13 that would cause an ordinarily prudent person to seek medical
14 advice, diagnosis, care, or treatment, or for which medical
15 advice, diagnosis, care, or treatment was recommended or
16 received.
17 "Risk-bearer" means an insurance company licensed in this
18 State and authorized to transact the kinds of business
19 described in clause (b) of Class 1 and clause (a) of Class 2
20 of Section 4 of the Illinois Insurance Code and entities
21 authorized under the Health Maintenance Organization Act.
22 Section 15. Health care purchasing groups; membership;
23 formation.
24 (a) An HPG may be an organization formed by 2 or more
25 employers with no more than 2,500 covered individuals, an HPG
26 sponsor or a risk-bearer for purposes of contracting for
27 health insurance under this Act to cover employees and
28 dependents of HPG members. An HPG shall not be prevented
29 from supplementing health insurance coverage purchased under
30 this Act by contracting for services from entities licensed
31 and authorized in Illinois to provide those services under
32 the Dental Service Plan Act, the Limited Health Service
33 Organization Act, Vision Service Plan Act, or Voluntary
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1 Health Services Plans Act. An HPG may be a separate legal
2 entity or simply a group of 2 or more employers with no more
3 than 2,500 covered individuals aggregated under this Act by
4 an HPG sponsor or risk-bearer for insurance purposes. There
5 shall be no limit as to the number of HPGs that may operate
6 in any geographic area of the State. No insurance risk may
7 be borne or retained by the HPG. All health insurance
8 contracts issued to the HPG must be delivered or issued for
9 delivery in Illinois.
10 (b) Members of an HPG must be Illinois domiciled
11 employers, except that an employer domiciled elsewhere may
12 become a member of an Illinois HPG for the sole purpose of
13 insuring its employees whose place of employment is located
14 within this State. HPG membership may include employers
15 having no more than 2,500 covered individuals.
16 (c) If an HPG is formed by any 2 or more employers with
17 no more than 2,500 covered individuals, it is authorized to
18 negotiate, solicit, market, obtain proposals for, and enter
19 into group or master health insurance contracts on behalf of
20 its members and their employees and employee dependents so
21 long as it meets all of the following requirements:
22 (1) The HPG must be an organization having the
23 legal capacity to contract and having its legal situs in
24 Illinois.
25 (2) The principal persons responsible for the
26 conduct of the HPG must perform their HPG related
27 functions in Illinois.
28 (3) No HPG may collect premium in its name or hold
29 or manage premium or claim fund accounts unless duly
30 licensed and qualified as a managing general agent
31 pursuant to Section 141a of the Illinois Insurance Code
32 or a third party administrator pursuant to Section
33 511.105 of the Illinois Insurance Code.
34 (4) If the HPG gives an offer, application, notice,
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1 or proposal of insurance to an employer, it must disclose
2 to that employer the total cost of the insurance. Dues,
3 fees, or charges to be paid to the HPG, HPG sponsor, or
4 any other entity as a condition to purchasing the
5 insurance must be itemized. The HPG shall also disclose
6 to its members the amount of any dividends, experience
7 refunds, or other such payments it receives from the
8 risk-bearer.
9 (5) An HPG must register with the Director before
10 entering into a group or master health insurance contract
11 on behalf of its members and must renew the registration
12 annually on forms and at times prescribed by the Director
13 in rules specifying, at minimum, (i) the identity of the
14 officers and directors, trustees, or attorney-in-fact of
15 the HPG; (ii) a certification that those persons have not
16 been convicted of any felony offense involving a breach
17 of fiduciary duty or improper manipulation of accounts;
18 and (iii) the number of employer members then enrolled in
19 the HPG, together with any other information that may be
20 needed to carry out the purposes of this Act.
21 (6) At the time of initial registration and each
22 renewal thereof an HPG shall pay a fee of $100 to the
23 Director.
24 (d) If an HPG is formed by an HPG sponsor or risk-bearer
25 and the HPG performs no marketing, negotiation, solicitation,
26 or proposing of insurance to HPG members, exclusive of
27 ministerial acts performed by individual employers to service
28 their own employees, then a group or master health insurance
29 contract may be issued in the name of the HPG and held by an
30 HPG sponsor, risk-bearer, or designated employer member
31 within the State. In these cases the HPG requirements
32 specified in subsection (c) shall not be applicable, however:
33 (1) the group or master health insurance contract
34 must contain a provision permitting the contract to be
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1 enforced through legal action initiated by any employer
2 member or by an employee of an HPG member who has paid
3 premium for the coverage provided;
4 (2) the group or master health insurance contract
5 must be available for inspection and copying by any HPG
6 member, employee, or insured dependent at a designated
7 location within the State at all normal business hours;
8 and
9 (3) any information concerning HPG membership
10 required by rule under item (5) of subsection (c) must be
11 provided by the HPG sponsor in its registration and
12 renewal forms or by the risk-bearer in its annual
13 reports.
14 Section 20. HPG sponsors. Except as provided by Sections
15 15 and 25 of this Act, only a corporation authorized by the
16 Secretary of State to transact business in Illinois may
17 sponsor one or more HPGs with no more than 10,000 covered
18 individuals by negotiating, soliciting, or servicing health
19 insurance contracts for HPGs and their members. Such a
20 corporation may assert and maintain authority to act as an
21 HPG sponsor by complying with all of the following
22 requirements:
23 (1) The principal officers and directors
24 responsible for the conduct of the HPG sponsor must
25 perform their HPG sponsor related functions in Illinois.
26 (2) No insurance risk may be borne or retained by
27 the HPG sponsor; all health insurance contracts issued to
28 HPGs through the HPG sponsor must be delivered in
29 Illinois.
30 (3) No HPG sponsor may collect premium in its name
31 or hold or manage premium or claim fund accounts unless
32 duly qualified and licensed as a managing general agent
33 pursuant to Section 141a of the Illinois Insurance Code
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1 or as a third party administrator pursuant to Section
2 511.105 of the Illinois Insurance Code.
3 (4) If the HPG gives an offer, application, notice,
4 or proposal of insurance to an employer, it must disclose
5 the total cost of the insurance. Dues, fees, or charges
6 to be paid to the HPG, HPG sponsor, or any other entity
7 as a condition to purchasing the insurance must be
8 itemized. The HPG shall also disclose to its members the
9 amount of any dividends, experience refunds, or other
10 such payments it receives from the risk-bearer.
11 (5) An HPG sponsor must register with the Director
12 before negotiating or soliciting any group or master
13 health insurance contract for any HPG and must renew the
14 registration annually on forms and at times prescribed by
15 the Director in rules specifying, at minimum, (i) the
16 identity of the officers and directors of the HPG sponsor
17 corporation; (ii) a certification that those persons have
18 not been convicted of any felony offense involving a
19 breach of fiduciary duty or improper manipulation of
20 accounts; (iii) the number of employer members then
21 enrolled in each HPG sponsored; (iv) the date on which
22 each HPG was issued a group or master health insurance
23 contract, if any; and (v) the date on which each such
24 contract, if any, was terminated.
25 (6) At the time of initial registration and each
26 renewal thereof an HPG sponsor shall pay a fee of $100 to
27 the Director.
28 Section 25. Risk-bearer.
29 (a) A risk-bearer may issue for delivery in this State
30 any health insurance contracts as provided by this Act. A
31 risk-bearer may also be a sponsor of an HPG.
32 (b) A risk-bearer must also file an annual report in the
33 form and at the time prescribed by the Director in rules that
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1 shall require, at minimum, (i) the number of employer
2 members then enrolled in each HPG; (ii) the date on which
3 each HPG was issued a group or master health insurance
4 contract, if any; and (iii) the date on which each such
5 contract, if any, was terminated, together with any other
6 information that may be necessary to carry out the purposes
7 of this Act. A fee of $25 shall be paid to the Director at
8 the time the annual report is filed.
9 Section 30. Insurance policy requirements.
10 (a) No health insurance contract may be issued or
11 delivered pursuant to this Act unless a copy of the form of
12 the contract has been filed with the Director and approved in
13 accordance with Section 355 of the Illinois Insurance Code.
14 It must also contain, in substance, those provisions
15 contained in Sections 357.1 through 357.30 of the Illinois
16 Insurance Code as may be applicable and contain all other
17 provisions applicable to group accident and health insurance
18 policies as provided in Article XX of the Illinois Insurance
19 Code, except as provided in Section 50 of this Act. This
20 subsection (a) does not apply to health maintenance
21 organizations.
22 (b) No health maintenance organization contract may be
23 issued or delivered under this Act unless a copy of the form
24 of the contract has been filed with the Director and approved
25 in accordance with Section 4-13 of the Health Maintenance
26 Organization Act. It must also provide or arrange for and
27 pay for or reimburse the cost of basic health care services
28 as defined in Section 1-2 of the Health Maintenance
29 Organization Act and provide the benefits specified in the
30 Health Maintenance Organization Act for group contracts.
31 (c) In the event that the enrollee has moved outside of
32 the service area of the health maintenance organization, the
33 HMO must make available conversion coverage through a
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1 contract with a licensed insurance carrier. The conversion
2 coverage must be similar to that which is provided through
3 the HMO. Coverage shall be considered "similar" if it
4 provides a comprehensive medical benefit plan for at least 18
5 months and is provided without imposing any preexisting
6 condition limitation or exclusion, other than those remaining
7 unexpired under the contract from which conversion is
8 exercised.
9 (d) Nothing in this Act shall preclude a risk-bearer and
10 an HPG or employer from entering into a contract that
11 contains provisions whereby each party agrees to continue the
12 contract in force for a prescribed period of time.
13 (e) Nothing in this Act shall preclude a risk-bearer
14 from offering health insurance contracts that contain
15 benefits in addition to those required in subsection (a).
16 (f) No HPG may purchase insurance providing for a
17 deductible or an aggregate limit unless the deductible or
18 aggregate limit applies separately to each individual insured
19 person of the purchasing group.
20 Section 35. Underwriting provisions. All health insurance
21 contracts issued under this Act shall be subject to the
22 following provisions, as applicable:
23 (1) Preexisting condition limitation: No health
24 insurance contract or certificate issued under the
25 contract shall exclude or limit coverage for a
26 preexisting condition for a period beyond 12 months from
27 the effective date of a person's coverage.
28 (2) Portability of coverage: Preexisting condition
29 limitation periods shall be reduced to the extent a
30 person was covered under a prior employer-based health
31 benefit plan, notwithstanding the benefit levels of the
32 prior plan, if:
33 (A) the person is not a late enrollee; and
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1 (B) the prior coverage was continuous to a
2 date not more than 30 days prior to the effective
3 date of the new coverage, exclusive of any
4 applicable waiting period.
5 (3) If a risk-bearer offers coverage to an
6 employer, the risk-bearer shall offer coverage to all of
7 the employees of an employer and their dependents. A
8 risk-bearer shall not offer coverage to only certain
9 individuals of an employer group, except in the case of
10 late enrollees.
11 (4) As to employees to whom portability provisions
12 do not apply, a risk-bearer shall not modify a health
13 insurance contract or certificate thereunder with respect
14 to an employer or any employee or dependent, except a
15 risk-bearer may restrict or exclude coverage or benefits
16 for a specific condition for a maximum period of 12
17 months from the effective date of the employee's or
18 dependent's coverage by way of rider or endorsement. As
19 to employees to whom the portability of coverage
20 provisions apply, no riders or endorsements may reduce or
21 limit benefits to be provided under the portability of
22 coverage provisions.
23 Section 40. Renewability.
24 (a) A health insurance contract subject to this Act
25 shall be renewable with respect to all insured employees or
26 dependents, at the option of the HPG or employer, whichever
27 is a party to the master health insurance contract, except in
28 any of the following cases:
29 (1) nonpayment of required premiums;
30 (2) fraud or misrepresentation of the employer or,
31 with respect to coverage of individual insureds, the
32 insureds or their representatives;
33 (3) noncompliance with the risk-bearer's minimum
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1 participation requirements;
2 (4) noncompliance with the risk-bearer's employer
3 contribution requirements;
4 (5) noncompliance with contract provisions;
5 (6) repeated misuse of a provider network
6 provision;
7 (7) the risk-bearer elects to non-renew all of its
8 health insurance contracts delivered or issued for
9 delivery to HPGs or employers under this Act; or
10 (8) the Director finds that the continuation of the
11 coverage would:
12 (A) Not be in the best interests of the policy
13 holders or certificate holders; or
14 (B) Impair the risk-bearer's ability to meet
15 its contractual obligations.
16 (b) A risk-bearer that elects not to renew a health
17 insurance contract under item (7) of subsection (a) shall
18 provide notice of the decision not to renew coverage to all
19 affected employers and to the official in charge of insurance
20 regulation in each state in which an affected insured
21 individual is known to reside at least 180 days prior to the
22 nonrenewal of any health insurance contract by the
23 risk-bearer. Notice to an official in charge of insurance
24 regulation under this subsection shall be provided at least
25 3 working days before the notice to the affected employers.
26 Further, the risk-bearer shall be prohibited from writing new
27 business under this Act for a period of 5 years from the date
28 of notice to the Director.
29 Section 45. Disclosure requirements. In connection with
30 the offering for sale of any health insurance contract or
31 certificate under the contract to an HPG sponsor, HPG,
32 employer, and employee, a risk-bearer shall make a reasonable
33 disclosure, as part of its solicitation and sales materials
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1 of all of the following:
2 (1) the provisions of the health insurance contracts
3 concerning the risk-bearer's right to change premium rates
4 and the factors, other than claim experience, that affect
5 changes in premium rates;
6 (2) that the rating restrictions contained in Section 30
7 of the Small Employer Rating, Renewability and Portability
8 Health Insurance Act are not applicable to the health
9 insurance contract being offered;
10 (3) the provisions relating to renewability of policies
11 and contracts;
12 (4) the provisions relating to any preexisting condition
13 provision; and
14 (5) the provisions relating to portability provisions.
15 Section 50. Benefit levels. Nothing in this Act
16 precludes those HPG members who meet the criteria established
17 in the Small Employer Group Health Insurance Law (Article
18 XIXB of the Illinois Insurance Code) or HPGs whose members
19 all meet the criteria established in that Law from being
20 eligible for the type of coverage set forth in that Law.
21 Section 60. Administrative and procedural authority
22 regarding HPGs and HPG sponsors. The Director is authorized
23 to make use of any of the powers established under the
24 Illinois Insurance Code to enforce the laws of this State.
25 This includes but is not limited to, the Director's
26 administrative authority to investigate, issue subpoenas,
27 conduct depositions and hearings, issue orders (including
28 without limitation orders pursuant to Article XII 1/2 and
29 Section 401.1 of the Illinois Insurance Code), and impose
30 penalties. With regard to any investigation, administrative
31 proceedings, or litigation, the Director shall rely on the
32 procedural law and regulations of this State.
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1 Section 65. Fees.
2 (a) The Director shall charge, collect, and give proper
3 acquittance for the payment all fees provided for by this
4 Act, except that any Illinois corporations licensed by the
5 Department of Insurance pursuant to the provisions of the
6 Illinois Insurance Code, the Dental Service Plan Act, the
7 Health Maintenance Organization Act, the Limited Health
8 Service Organization Act, the Vision Service Plan Act and the
9 Voluntary Health Services Plans Act or licensed as a third
10 party administrator or as a managing general agent is exempt
11 from the registration fee imposed under this Act.
12 (b) Any funds collected under provisions of this Act
13 shall be treated in the manner provided in subsection (11) of
14 Section 408 of the Illinois Insurance Code.
15 Section 70. Rules. The Director shall promulgate rules as
16 may be necessary or desirable to carry out the provisions of
17 this Act.
18 Section 75. Severability. The provisions of this Act are
19 severable under Section 1.31 of the Statute on Statutes.