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90_HB3016
215 ILCS 125/6-8 from Ch. 111 1/2, par. 1418.8
Amends the Health Maintenance Organization Act. Makes a
stylistic change in a Section concerning the powers of the
Health Maintenance Organization Guaranty Association.
LRB9009041JSmg
LRB9009041JSmg
1 AN ACT to amend the Health Maintenance Organization Act
2 by changing Section 6-8.
3 Be it enacted by the People of the State of Illinois,
4 represented in the General Assembly:
5 Section 5. The Health Maintenance Organization Act is
6 amended by changing Section 6-8 as follows:
7 (215 ILCS 125/6-8) (from Ch. 111 1/2, par. 1418.8)
8 Sec. 6-8. Powers and duties of the Association. In
9 addition to the powers and duties enumerated in other
10 Sections of this Article, the Association has shall have the
11 powers set forth in this Section.
12 (1) If a domestic organization is an impaired
13 organization, the Association may, subject to any conditions
14 imposed by the Association other than those which impair the
15 contractual obligations of the impaired organization, and
16 approved by the impaired organization and the Director:
17 (a) guarantee or reinsure, or cause to be
18 guaranteed, assumed or reinsured, any or all of the
19 covered health care plan certificates of covered persons
20 of the impaired organization;
21 (b) provide such monies, pledges, notes,
22 guarantees, or other means as are proper to effectuate
23 paragraph (a), and assure payment of the contractual
24 obligations of the impaired organization pending action
25 under paragraph (a); and
26 (c) loan money to the impaired organization.;
27 (2) If a domestic, foreign, or alien organization is an
28 insolvent organization, the Association shall, subject to the
29 approval of the Director:
30 (a) guarantee, assume, indemnify or reinsure or
31 cause to be guaranteed, assumed, indemnified or reinsured
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1 the covered health care plan benefits of covered persons
2 of the insolvent organization; however, in the event that
3 the Director of the Department of Public Aid assigns
4 individuals that are recipients of public aid from an
5 insolvent organization to another organization, the
6 Director of the Department of Public Aid shall, before
7 fixing the rates to be paid by the Department of Public
8 Aid to the transferee organization on account of such
9 individuals, consult with the Director of the Department
10 of Insurance as to the reasonableness of such rates in
11 light of the health care needs of such individuals and
12 the costs of providing health care services to such
13 individuals;.
14 (b) assure payment of the contractual obligations
15 of the insolvent organization to covered persons;
16 (c) make payments to providers of health care, or
17 indemnity payments to covered persons, so as to assure
18 the continued payment of benefits substantially similar
19 to those provided for under covered health care plan
20 certificate issued by the insolvent organization to
21 covered persons; and
22 (d) provide such monies, pledges, notes,
23 guaranties, or other means as are reasonably necessary to
24 discharge such duties.
25 (e) Provided, however, that This subsection (2) shall
26 not apply when the Director has determined that the foreign
27 or alien organization's domiciliary jurisdiction or state of
28 entry provides, by statute, protection substantially similar
29 to that provided by this Article for residents of this State
30 and such protection will be provided in a timely manner.
31 (3) There shall be no liability on the part of and no
32 cause of action shall arise against the Association or
33 against any transferee from the Association in connection
34 with the transfer by reinsurance or otherwise of all or any
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1 part of an impaired or insolvent organization's business by
2 reason of any action taken or any failure to take any action
3 by the impaired or insolvent organization at any time.
4 (4) If the Association fails to act within a reasonable
5 period of time as provided in subsection (2) of this Section
6 with respect to an insolvent organization, the Director shall
7 have the powers and duties of the Association under this
8 Article with regard to such insolvent organization.
9 (5) The Association or its designated representatives
10 may render assistance and advice to the Director, upon his
11 request, concerning rehabilitation, payment of claims,
12 continuations of coverage, or the performance of other
13 contractual obligations of any impaired or insolvent
14 organization.
15 (6) The Association has standing to appear before any
16 court concerning all matters germane to the powers and duties
17 of the Association, including, but not limited to, proposals
18 for reinsuring or guaranteeing the covered health care plan
19 certificates of the impaired or insolvent organization and
20 the determination of the covered health care plan
21 certificates and contractual obligations.
22 (7) (a) Any person receiving benefits under this Article
23 is deemed to have assigned the rights under the covered
24 health care plan certificates to the Association to the
25 extent of the benefits received because of this Article
26 whether the benefits are payments of contractual obligations
27 or continuation of coverage. The Association may require an
28 assignment to it of such rights by any payee, enrollee or
29 beneficiary as a condition precedent to the receipt of any
30 rights or benefits conferred by this Article upon such
31 person. The Association is subrogated to these rights
32 against the assets of any insolvent organization and against
33 any other party who may be liable to such payee, enrollee or
34 beneficiary.
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1 (b) The subrogation rights of the Association under this
2 subsection have the same priority against the assets of the
3 insolvent organization as that possessed by the person
4 entitled to receive benefits under this Article.
5 (8) (a) The contractual obligations of the insolvent
6 organization for which the Association becomes or may become
7 liable are as great as but no greater than the contractual
8 obligations of the insolvent organization would have been in
9 the absence of an insolvency unless such obligations are
10 reduced as permitted by subsection (3), but the aggregate
11 liability of the Association shall not exceed $300,000 with
12 respect to any one natural person.
13 (b) Furthermore, the Association shall not be required
14 to pay, and shall have no liability to, any provider of
15 health care services to an enrollee:
16 (i) if such provider, or his or its affiliates or
17 members of his immediate family, at any time within the
18 one year prior to the date of the issuance of the first
19 order, by a court of competent jurisdiction, of
20 conservation, rehabilitation or liquidation pertaining to
21 the health maintenance organization:
22 (A) was a securityholder of such organization
23 (but excluding any securityholder holding an equity
24 interest of 5% or less);
25 (B) exercised control over the organization by
26 means such as serving as an officer or director,
27 through a management agreement or as a principal
28 member of a not-for-profit organization;
29 (C) had a representative serving by virtue or
30 his or her official position as a representative of
31 such provider on the board of any entity which
32 exercised control over the organization;
33 (D) received provider payments made by such
34 organization pursuant to a contract which was not a
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1 product of arms-length bargaining; or
2 (E) received distributions other than for
3 physician services from a not-for-profit
4 organization on account of such provider's status as
5 a a member of such organization.
6 For purposes of this subparagraph (i), the terms
7 "affiliate," "person," "control" and "securityholder"
8 shall have the meanings ascribed to such terms in Section
9 131.1 of the Illinois Insurance Code; or
10 (ii) if and to the extent such a provider has
11 agreed by contract not to seek payment from the enrollee
12 for services provided to such enrollee or if, and to the
13 extent, as a matter of law such provider may not seek
14 payment from the enrollee for services provided to such
15 enrollee.
16 (c) In no event shall the Association be required to pay
17 any provider participating in the insolvent organization any
18 amount for in-plan services rendered by such provider prior
19 to the insolvency of the organization in excess of (1) the
20 amount provided by a capitation contract between a physician
21 provider and the insolvent organization for such services; or
22 (2) the amounts provided by contract between a hospital
23 provider and the Department of Public Aid for similar
24 services to recipients of public aid; or (3) in the event
25 neither (1) nor (2) above is applicable, then the amounts
26 paid under the Medicare area prevailing rate for the area
27 where the services were provided, or if no such rate exists
28 with respect to such services, then 80% of the usual and
29 customary rates established by the Health Insurance
30 Association of America. The payments required to be made by
31 the Association under this Section shall constitute full and
32 complete payment for such provider services to the enrollee.
33 (d) The Association shall not be required to pay more
34 than an aggregate of $300,000 for any organization which is
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1 declared to be insolvent prior to July 1, 1987, and such
2 funds shall be distributed first to enrollees who are not
3 public aid recipients pursuant to a plan recommended by the
4 Association and approved by the Director and the court having
5 jurisdiction over the liquidation.
6 (9) The Association may:
7 (a) Enter into such contracts as are necessary or
8 proper to carry out the provisions and purposes of this
9 Article.;
10 (b) Sue or be sued, including taking any legal
11 actions necessary or proper for recovery of any unpaid
12 assessments under Section 6-9. The Association shall not
13 be liable for punitive or exemplary damages.;
14 (c) Borrow money to effect the purposes of this
15 Article. Any notes or other evidence of indebtedness of
16 the Association not in default are legal investments for
17 domestic organizations and may be carried as admitted
18 assets.
19 (d) Employ or retain such persons as are necessary
20 to handle the financial transactions of the Association,
21 and to perform such other functions as become necessary
22 or proper under this Article.
23 (e) Negotiate and contract with any liquidator,
24 rehabilitator, conservator, or ancillary receiver to
25 carry out the powers and duties of the Association.
26 (f) Take such legal action as may be necessary to
27 avoid payment of improper claims.
28 (g) Exercise, for the purposes of this Article and
29 to the extent approved by the Director, the powers of a
30 domestic organization, but in no case may the Association
31 issue evidence of coverage other than that issued to
32 perform the contractual obligations of the impaired or
33 insolvent organization.
34 (h) Exercise all the rights of the Director under
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1 Section 193(4) of the Illinois Insurance Code with
2 respect to covered health care plan certificates after
3 the association becomes obligated by statute.
4 (10) The obligations of the Association under this
5 Article shall not relieve any reinsurer, insurer or other
6 person of its obligations to the insolvent organization (or
7 its conservator, rehabilitator, liquidator or similar
8 official) or its enrollees, including without limitation any
9 reinsurer, insurer or other person liable to the insolvent
10 insurer (or its conservator, rehabilitator, liquidator or
11 similar official) or its enrollees under any contract of
12 reinsurance, any contract providing stop loss coverage or
13 similar coverage or any health care contract. With respect to
14 covered health care plan certificates for which the
15 Association becomes obligated after an entry of an order of
16 liquidation or rehabilitation, the Association may elect to
17 succeed to the rights of the insolvent organization arising
18 after the date of the order of liquidation or rehabilitation
19 under any contract of reinsurance, any contract providing
20 stop loss coverage or similar coverages or any health care
21 service contract to which the insolvent organization was a
22 party, on the terms set forth under such contract, to the
23 extent that such contract provides coverage for health care
24 services provided after the date of the order of liquidation
25 or rehabilitation. As a condition to making this election,
26 the Association must pay premiums for coverage relating to
27 periods after the date of the order of liquidation or
28 rehabilitation.
29 (11) The Association shall be entitled to collect
30 premiums due under or with respect to covered health care
31 certificates for a period from the date on which the
32 domestic, foreign, or alien organization became an insolvent
33 organization until the Association no longer has obligations
34 under subsection (2) of this Section 6-8 with respect to such
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1 certificates. The Association's obligations under subsection
2 (2) of this Section 6-8 with respect to any covered health
3 care plan certificates shall terminate in the event that all
4 such premiums due under or with respect to such covered
5 health care plan certificates are not paid to the Association
6 (i) within 30 days of the Association's demand therefor, or
7 (ii) in the event that such certificates provide for a longer
8 grace period for payment of premiums after notice of
9 non-payment or demand therefor, within the lesser of (A) the
10 period provided for in such certificates or (B) 60 days.
11 (Source: P.A. 86-620; revised 7-14-97.)