State of Illinois
90th General Assembly
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90_SB0438

      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   patient   care    provided    pursuant    to
      investigational  cancer treatments. Defines terms.  Effective
      January 1, 1998.
                                                    LRB9002217JScbA
                                              LRB9002217JScbA
 1        AN ACT concerning benefits for certain health treatments.
 2        WHEREAS, It is the intent  of  the  General  Assembly  to
 3    recognize that cancer clinical trials are designed to compare
 4    the  effectiveness  of  the standard medical treatment with a
 5    new  therapy  that  researchers  believe  will   prove   more
 6    effective,   based  on  scientific  evidence  and  that  such
 7    research provides the foundation for  improved  patient  care
 8    and decreased health care costs; and
 9        WHEREAS,  It  is  the  intent  of the General Assembly to
10    recognize that cancer clinical trials  involve  a  rigorously
11    developed  clinical  protocol  that includes goals, rationale
12    and background,  criteria  for  patient  selection,  specific
13    directions for administering therapy and monitoring patients,
14    definition of quantitative measures for determining treatment
15    response,  and  methods  for documenting and treating adverse
16    reactions; and
17        WHEREAS, It is the intent  of  the  General  Assembly  to
18    recognize that virtually every major breakthrough for current
19    standard  medical  treatment  has  been developed through the
20    clinical trial system; and
21        WHEREAS, It is the intent  of  the  General  Assembly  to
22    acknowledge  that  cancer clinical trials can be cost neutral
23    in comparison to the standard therapy; therefore
24        Be it enacted by the People of  the  State  of  Illinois,
25    represented in the General Assembly:
26        Section  5.   The  Illinois  Insurance Code is amended by
27    adding Section 356t as follows:
28        (215 ILCS 5/356t new)
29        Sec.   356t.  Coverage   for    investigational    cancer
                            -2-               LRB9002217JScbA
 1    treatments.
 2        (a)  An individual or group policy of accident and health
 3    insurance  issued,  delivered,  amended,  or  renewed in this
 4    State after the effective date of this amendatory Act of 1997
 5    must provide coverage for  patient  care  of  insureds,  when
 6    medically appropriate, to participate in an approved research
 7    trial  and  shall  provide  coverage  for  the  patient  care
 8    provided  pursuant  to  investigational  cancer treatments as
 9    provided in subsection (b).
10        (b)  Coverage must be included for  an  item  or  service
11    that  would  otherwise be covered, subject to the limitations
12    and cost sharing  requirements  applicable  to  the  item  or
13    service,  when that item or service is provided to an insured
14    in the course of an investigational cancer treatment if:
15             (1)  the   treatment   is   a   qualifying    cancer
16        investigational treatment; and
17             (2)  the cancer treatment is administered as part of
18        the  medical  management  of  a life-threatening disease,
19        disorder, or health condition.
20        Coverage must be included for an  item  or  service  when
21    that  item  or  service  is  required to provide patient care
22    pursuant to the design of  a  research  trial,  except  those
23    items or services normally paid for by other funding sources,
24    such  as  the  costs  of  certain investigational agents, the
25    costs of any nonhealth services that might be required for  a
26    person to receive cancer treatment, and the costs of managing
27    the research; items or services subject to this exception may
28    be  covered  in addition to patient care at the discretion of
29    the health plan.
30        (c)  For  purposes  of  this  Section,  (A)   "qualifying
31    investigational  cancer  treatment" means a treatment (i) the
32    effectiveness of which has not been determined and (ii)  that
33    is under clinical investigation as part of an approved cancer
34    research trial and (B) "approved cancer research trial" means
                            -3-               LRB9002217JScbA
 1    (i) a cancer research trial approved by the U.S. Secretary of
 2    Health  and  Human  Services,  the  Director  of the National
 3    Institutes of Health, the Commissioner of the Food  and  Drug
 4    Administration (through an investigational new drug exemption
 5    under  Section  505(1) of the federal Food, Drug and Cosmetic
 6    Act or an  investigational  device  exemption  under  Section
 7    520(g)  of  that Act), the Secretary of Veterans Affairs, the
 8    Secretary of Defense, or a qualified  nongovernmental  cancer
 9    research  entity  as  defined  in  guidelines of the National
10    Institutes of Health or (ii)  a  peer-reviewed  and  approved
11    cancer  research program, as defined by the U.S. Secretary of
12    Health and Human Services, conducted for the primary  purpose
13    of  determining  whether or not a cancer treatment is safe or
14    efficacious or has  any  other  characteristic  of  a  cancer
15    treatment  that  must be demonstrated in order for the cancer
16    treatment to be medically necessary or appropriate.
17        Section 10.  The Health Maintenance Organization  Act  is
18    amended by changing Section 5-3 as follows:
19        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
20        Sec. 5-3.  Insurance Code provisions.
21        (a)  Health Maintenance Organizations shall be subject to
22    the  provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
23    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
24    154.6,  154.7,  154.8,  155.04, 355.2, 356m, 356t, 367i, 401,
25    401.1, 402, 403, 403A, 408, 408.2, and 412, paragraph (c)  of
26    subsection  (2)  of  Section 367, and Articles VIII 1/2, XII,
27    XII 1/2, XIII, XIII 1/2, and XXVI of the  Illinois  Insurance
28    Code.
29        (b)  For  purposes of the Illinois Insurance Code, except
30    for  Articles  XIII  and   XIII   1/2,   Health   Maintenance
31    Organizations  in  the  following categories are deemed to be
32    "domestic companies":
                            -4-               LRB9002217JScbA
 1             (1)  a  corporation  authorized  under  the  Medical
 2        Service Plan Act, the Dental Service Plan Act, the Vision
 3        Service Plan Act, the Pharmaceutical  Service  Plan  Act,
 4        the  Voluntary Health Services Plan Act, or the Nonprofit
 5        Health Care Service Plan Act;
 6             (2)  a corporation organized under the laws of  this
 7        State; or
 8             (3)  a  corporation  organized  under  the  laws  of
 9        another  state, 30% or more of the enrollees of which are
10        residents of this State, except a corporation subject  to
11        substantially  the  same  requirements  in  its  state of
12        organization as is a  "domestic  company"  under  Article
13        VIII 1/2 of the Illinois Insurance Code.
14        (c)  In  considering  the merger, consolidation, or other
15    acquisition of control of a Health  Maintenance  Organization
16    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
17             (1)  the  Director  shall give primary consideration
18        to the continuation of  benefits  to  enrollees  and  the
19        financial  conditions  of the acquired Health Maintenance
20        Organization after the merger,  consolidation,  or  other
21        acquisition of control takes effect;
22             (2)(i)  the  criteria specified in subsection (1)(b)
23        of Section 131.8 of the Illinois Insurance Code shall not
24        apply and (ii) the Director, in making his  determination
25        with  respect  to  the  merger,  consolidation,  or other
26        acquisition of control, need not take  into  account  the
27        effect  on  competition  of the merger, consolidation, or
28        other acquisition of control;
29             (3)  the Director shall have the  power  to  require
30        the following information:
31                  (A)  certification by an independent actuary of
32             the   adequacy   of   the  reserves  of  the  Health
33             Maintenance Organization sought to be acquired;
34                  (B)  pro forma financial statements  reflecting
                            -5-               LRB9002217JScbA
 1             the combined balance sheets of the acquiring company
 2             and the Health Maintenance Organization sought to be
 3             acquired  as of the end of the preceding year and as
 4             of a date 90 days prior to the acquisition, as  well
 5             as   pro   forma   financial  statements  reflecting
 6             projected combined  operation  for  a  period  of  2
 7             years;
 8                  (C)  a  pro  forma  business  plan detailing an
 9             acquiring  party's  plans  with   respect   to   the
10             operation  of  the  Health  Maintenance Organization
11             sought to be acquired for a period of not less  than
12             3 years; and
13                  (D)  such  other  information  as  the Director
14             shall require.
15        (d)  The provisions of Article VIII 1/2 of  the  Illinois
16    Insurance  Code  and this Section 5-3 shall apply to the sale
17    by any health maintenance organization of greater than 10% of
18    its enrollee population  (including  without  limitation  the
19    health  maintenance organization's right, title, and interest
20    in and to its health care certificates).
21        (e)  In considering any management  contract  or  service
22    agreement  subject to Section 141.1 of the Illinois Insurance
23    Code, the Director (i) shall, in  addition  to  the  criteria
24    specified  in  Section  141.2 of the Illinois Insurance Code,
25    take into account the effect of the  management  contract  or
26    service   agreement   on  the  continuation  of  benefits  to
27    enrollees  and  the  financial  condition   of   the   health
28    maintenance  organization to be managed or serviced, and (ii)
29    need not take into  account  the  effect  of  the  management
30    contract or service agreement on competition.
31        (f)  Except  for  small employer groups as defined in the
32    Small Employer Rating, Renewability  and  Portability  Health
33    Insurance  Act and except for medicare supplement policies as
34    defined in Section 363 of  the  Illinois  Insurance  Code,  a
                            -6-               LRB9002217JScbA
 1    Health  Maintenance Organization may by contract agree with a
 2    group or other enrollment unit to effect  refunds  or  charge
 3    additional premiums under the following terms and conditions:
 4             (i)  the  amount  of, and other terms and conditions
 5        with respect to, the refund or additional premium are set
 6        forth in the group or enrollment unit contract agreed  in
 7        advance of the period for which a refund is to be paid or
 8        additional  premium  is to be charged (which period shall
 9        not be less than one year); and
10             (ii)  the amount of the refund or additional premium
11        shall  not  exceed  20%   of   the   Health   Maintenance
12        Organization's profitable or unprofitable experience with
13        respect  to  the  group  or other enrollment unit for the
14        period (and, for  purposes  of  a  refund  or  additional
15        premium,  the profitable or unprofitable experience shall
16        be calculated taking into account a pro rata share of the
17        Health  Maintenance  Organization's  administrative   and
18        marketing  expenses,  but shall not include any refund to
19        be made or additional premium to be paid pursuant to this
20        subsection (f)).  The Health Maintenance Organization and
21        the  group  or  enrollment  unit  may  agree   that   the
22        profitable  or  unprofitable experience may be calculated
23        taking into account the refund period and the immediately
24        preceding 2 plan years.
25        The  Health  Maintenance  Organization  shall  include  a
26    statement in the evidence of coverage issued to each enrollee
27    describing the possibility of a refund or additional premium,
28    and upon request of any group or enrollment unit, provide  to
29    the group or enrollment unit a description of the method used
30    to   calculate  (1)  the  Health  Maintenance  Organization's
31    profitable experience with respect to the group or enrollment
32    unit and the resulting refund to the group or enrollment unit
33    or (2) the  Health  Maintenance  Organization's  unprofitable
34    experience  with  respect to the group or enrollment unit and
                            -7-               LRB9002217JScbA
 1    the resulting additional premium to be paid by the  group  or
 2    enrollment unit.
 3        In   no  event  shall  the  Illinois  Health  Maintenance
 4    Organization  Guaranty  Association  be  liable  to  pay  any
 5    contractual obligation of an insolvent  organization  to  pay
 6    any refund authorized under this Section.
 7    (Source: P.A. 88-313; 89-90, eff. 6-30-95.)
 8        Section  15.  The Limited Health Service Organization Act
 9    is amended by changing Section 3009 as follows:
10        (215 ILCS 130/3009) (from Ch. 73, par. 1503-9)
11        Sec.  3009.  Point-of-service  limited   health   service
12    contracts.
13        (a)  An LHSO that offers a POS contract:
14             (1)  shall  include  as in-plan covered services all
15        services required by law to be provided by an LHSO;
16             (2)  shall provide incentives, which  shall  include
17        financial   incentives,  for  enrollees  to  use  in-plan
18        covered services;
19             (3)  shall not offer  services  out-of-plan  without
20        providing those services on an in-plan basis;
21             (4)  may limit or exclude specific types of services
22        from coverage when obtained out-of-plan;
23             (5)  may  include  annual  out-of-pocket  limits and
24        lifetime  maximum  benefits  allowances  for  out-of-plan
25        services that are separate from any limits or  allowances
26        applied to in-plan services;
27             (6)  shall   include   an   annual  maximum  benefit
28        allowance not to exceed $2,500 per year that is  separate
29        from   any   limits  or  allowances  applied  to  in-plan
30        services;
31             (7)  may limit the groups to which a POS product  is
32        offered, however, if a POS product is offered to a group,
                            -8-               LRB9002217JScbA
 1        then  it  must be offered to all eligible members of that
 2        group, when an LHSO provider is available;
 3             (8)  shall   not   consider   emergency    services,
 4        authorized  referral  services,  or  non-routine services
 5        obtained out of the service area to be POS services; and
 6             (9)  may  treat  as   out-of-plan   services   those
 7        services  that  an  enrollee obtains from a participating
 8        provider, but for which the proper authorization was  not
 9        given by the LHSO.
10        (b)  An  LHSO offering a POS contract shall be subject to
11    the following limitations:
12             (1)  The LHSO  shall  not  expend  in  any  calendar
13        quarter  more  than  20%  of  its  total  limited  health
14        services expenditures for all its members for out-of-plan
15        covered services.
16             (2)  If  the  amount  specified  in paragraph (1) is
17        exceeded by 2%  in  a  quarter,  the  LHSO  shall  effect
18        compliance with paragraph (1) by the end of the following
19        quarter.
20             (3)  If  compliance  with  the  amount  specified in
21        paragraph (1) is not  demonstrated  in  the  LHSO's  next
22        quarterly report, the LHSO may not offer the POS contract
23        to new groups or include the POS option in the renewal of
24        an  existing  group  until  compliance  with  the  amount
25        specified  in  paragraph (1) is demonstrated or otherwise
26        allowed by the Director.
27             (4)  Any LHSO failing, without just cause, to comply
28        with the provisions of this subsection shall be required,
29        after notice and hearing, to pay a penalty  of  $250  for
30        each  day  out  of  compliance,  to  be  recovered by the
31        Director of Insurance.  Any penalty  recovered  shall  be
32        paid  into  the  General  Revenue Fund.  The Director may
33        reduce the  penalty  if  the  LHSO  demonstrates  to  the
34        Director   that  the  imposition  of  the  penalty  would
                            -9-               LRB9002217JScbA
 1        constitute a financial hardship to the LHSO.
 2        (c)  Any LHSO that offers a POS product shall:
 3             (1)  File a quarterly financial statement  detailing
 4        compliance with the requirements of subsection (b).
 5             (2)  Track  out-of-plan  POS  utilization separately
 6        from  in-plan  or  non-POS  out-of-plan  emergency  care,
 7        referral care, and urgent care out of  the  service  area
 8        utilization.
 9             (3)  Record out-of-plan utilization in a manner that
10        will  permit  such  utilization and cost reporting as the
11        Director may, by regulation, require.
12             (4)  Demonstrate to the Director's satisfaction that
13        the LHSO has the fiscal,  administrative,  and  marketing
14        capacity  to control its POS enrollment, utilization, and
15        costs so as not to jeopardize the financial  security  of
16        the LHSO.
17             (5)  Maintain the deposit required by subsection (b)
18        of Section 2006 in addition to any other deposit required
19        under this Act.
20        (d)  An  LHSO shall not issue a POS contract until it has
21    filed and had approved by the Director a plan to comply  with
22    the provisions of this Section.  The compliance plan shall at
23    a minimum include provisions demonstrating that the LHSO will
24    do all of the following:
25             (1)  Design  the  benefit  levels  and conditions of
26        coverage for in-plan  covered  services  and  out-of-plan
27        covered services as required by this Article.
28             (2)  Provide   or   arrange  for  the  provision  of
29        adequate systems to:
30                  (A)  process and pay claims for all out-of-plan
31             covered services;
32                  (B)  meet the requirements for a  POS  contract
33             set   forth  in  this  Section  and  any  additional
34             requirements that may be set forth by the  Director;
                            -10-              LRB9002217JScbA
 1             and
 2                  (C)  generate  accurate  data and financial and
 3             regulatory reports on a timely  basis  so  that  the
 4             Department  can  evaluate the LHSO's experience with
 5             the POS contract and  monitor  compliance  with  POS
 6             contract provisions.
 7             (3)  Comply  initially  and on an ongoing basis with
 8        the requirements of subsections (b) and (c).
 9        (e)  A POS contract must comply with the requirements  of
10    Section 356t of the Illinois Insurance Code.
11    (Source: P.A. 87-1079; 88-667, eff. 9-16-94.)
12        Section  20.   The Voluntary Health Services Plans Act is
13    amended by changing Section 10 as follows:
14        (215 ILCS 165/10) (from Ch. 32, par. 604)
15        Sec.  10.  Application  of  Insurance  Code   provisions.
16    Health  services plan corporations and all persons interested
17    therein  or  dealing  therewith  shall  be  subject  to   the
18    provisions  of  Article  XII  1/2 and Sections 3.1, 133, 140,
19    143, 143c, 149, 354, 355.2, 356r, 356t,  367.2,  401,  401.1,
20    402,  403,  403A, 408, 408.2, and 412, and paragraphs (7) and
21    (15) of Section 367 of the Illinois Insurance Code.
22    (Source: P.A. 89-514, eff. 7-17-96.)
23        Section 99.  Effective date.  This Act  takes  effect  on
24    January 1, 1998.

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