State of Illinois
90th General Assembly
Legislation

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90_SB0447

      215 ILCS 5/356t new
      215 ILCS 125/5-3          from Ch. 111 1/2, par. 1411.2
      215 ILCS 130/4003         from Ch. 73, par. 1504-3
      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  Plan  Act.   Provides  that
      coverage under those Acts shall include  coverage  for  drugs
      when  prescribed  for  a use that is not approved by the Food
      and Drug Administration if the  medical  literature  supports
      the  use.   Requires  the  Director  of Insurance to create a
      panel of experts to advise on off-label uses.
                                                     LRB9002987JSgc
                                               LRB9002987JSgc
 1        AN ACT concerning insurance coverage  for  drug  therapy,
 2    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.  Drugs; alternative indications.
 9        (a)  An individual or group policy of accident and health
10    insurance  amended,  delivered,  issued, or renewed after the
11    effective date of this amendatory Act of 1997 may not exclude
12    coverage for a drug for a particular indication on the ground
13    that the drug has not been approved by the federal  Food  and
14    Drug  Administration  for  that  indication  if  the  drug is
15    recognized for treatment of that indication  in  one  of  the
16    standard  reference  compendia, in the medical literature, or
17    by the Director.  Coverage required under this Section for  a
18    drug   shall   also   include  medically  necessary  services
19    associated with the administration of the drug.  This Section
20    does not require coverage for drugs that:
21             (1)  have not been approved by the federal Food  and
22        Drug Administration;
23             (2)  the  federal  Food  and Drug Administration has
24        determined the use of is contra-indicated; or
25             (3)  are experimental drugs not  otherwise  approved
26        for   any   indication  by  the  federal  Food  and  Drug
27        Administration.
28        (b)  As used in this Section, "medical literature"  means
29    published  studies in any peer-reviewed national professional
30    journal and "standard reference compendia" means  the  United
31    States  Pharmacopeia  Drug  Information, the American Medical
                            -2-                LRB9002987JSgc
 1    Association  Drug  Evaluations,  or  the  American   Hospital
 2    Formulary Service Drug Information.
 3        (c)  The  Director  shall  create  a  panel  of 7 medical
 4    experts to review off-label uses not included in any  of  the
 5    standard reference compendia or in the medical literature and
 6    to   advise   the  Director  in  those  instances  whether  a
 7    particular off-label use is medically appropriate.  The panel
 8    shall make its recommendations periodically  and  whenever  a
 9    particular dispute about payment for off-label use is brought
10    to   the   Director.   The  panel  shall  include  3  medical
11    oncologists,  2  specialists  in  the  management   of   AIDS
12    patients,  one  specialist  in heart disease, and one general
13    practitioner.  The Department shall enforce the provisions of
14    this Section.
15        Section 10.  The Health Maintenance Organization  Act  is
16    amended by changing Section 5-3 as follows:
17        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
18        Sec. 5-3.  Insurance Code provisions.
19        (a)  Health Maintenance Organizations shall be subject to
20    the  provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
21    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
22    154.6,  154.7,  154.8,  155.04, 355.2, 356m, 356t, 367i, 401,
23    401.1, 402, 403, 403A, 408, 408.2, and 412, paragraph (c)  of
24    subsection  (2)  of  Section 367, and Articles VIII 1/2, XII,
25    XII 1/2, XIII, XIII 1/2, and XXVI of the  Illinois  Insurance
26    Code.
27        (b)  For  purposes of the Illinois Insurance Code, except
28    for  Articles  XIII  and   XIII   1/2,   Health   Maintenance
29    Organizations  in  the  following categories are deemed to be
30    "domestic companies":
31             (1)  a  corporation  authorized  under  the  Medical
32        Service Plan Act, the Dental Service Plan Act, the Vision
                            -3-                LRB9002987JSgc
 1        Service Plan Act, the Pharmaceutical  Service  Plan  Act,
 2        the  Voluntary Health Services Plan Act, or the Nonprofit
 3        Health Care Service Plan Act;
 4             (2)  a corporation organized under the laws of  this
 5        State; or
 6             (3)  a  corporation  organized  under  the  laws  of
 7        another  state, 30% or more of the enrollees of which are
 8        residents of this State, except a corporation subject  to
 9        substantially  the  same  requirements  in  its  state of
10        organization as is a  "domestic  company"  under  Article
11        VIII 1/2 of the Illinois Insurance Code.
12        (c)  In  considering  the merger, consolidation, or other
13    acquisition of control of a Health  Maintenance  Organization
14    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
15             (1)  the  Director  shall give primary consideration
16        to the continuation of  benefits  to  enrollees  and  the
17        financial  conditions  of the acquired Health Maintenance
18        Organization after the merger,  consolidation,  or  other
19        acquisition of control takes effect;
20             (2)(i)  the  criteria specified in subsection (1)(b)
21        of Section 131.8 of the Illinois Insurance Code shall not
22        apply and (ii) the Director, in making his  determination
23        with  respect  to  the  merger,  consolidation,  or other
24        acquisition of control, need not take  into  account  the
25        effect  on  competition  of the merger, consolidation, or
26        other acquisition of control;
27             (3)  the Director shall have the  power  to  require
28        the following information:
29                  (A)  certification by an independent actuary of
30             the   adequacy   of   the  reserves  of  the  Health
31             Maintenance Organization sought to be acquired;
32                  (B)  pro forma financial statements  reflecting
33             the combined balance sheets of the acquiring company
34             and the Health Maintenance Organization sought to be
                            -4-                LRB9002987JSgc
 1             acquired  as of the end of the preceding year and as
 2             of a date 90 days prior to the acquisition, as  well
 3             as   pro   forma   financial  statements  reflecting
 4             projected combined  operation  for  a  period  of  2
 5             years;
 6                  (C)  a  pro  forma  business  plan detailing an
 7             acquiring  party's  plans  with   respect   to   the
 8             operation  of  the  Health  Maintenance Organization
 9             sought to be acquired for a period of not less  than
10             3 years; and
11                  (D)  such  other  information  as  the Director
12             shall require.
13        (d)  The provisions of Article VIII 1/2 of  the  Illinois
14    Insurance  Code  and this Section 5-3 shall apply to the sale
15    by any health maintenance organization of greater than 10% of
16    its enrollee population  (including  without  limitation  the
17    health  maintenance organization's right, title, and interest
18    in and to its health care certificates).
19        (e)  In considering any management  contract  or  service
20    agreement  subject to Section 141.1 of the Illinois Insurance
21    Code, the Director (i) shall, in  addition  to  the  criteria
22    specified  in  Section  141.2 of the Illinois Insurance Code,
23    take into account the effect of the  management  contract  or
24    service   agreement   on  the  continuation  of  benefits  to
25    enrollees  and  the  financial  condition   of   the   health
26    maintenance  organization to be managed or serviced, and (ii)
27    need not take into  account  the  effect  of  the  management
28    contract or service agreement on competition.
29        (f)  Except  for  small employer groups as defined in the
30    Small Employer Rating, Renewability  and  Portability  Health
31    Insurance  Act and except for medicare supplement policies as
32    defined in Section 363 of  the  Illinois  Insurance  Code,  a
33    Health  Maintenance Organization may by contract agree with a
34    group or other enrollment unit to effect  refunds  or  charge
                            -5-                LRB9002987JSgc
 1    additional premiums under the following terms and conditions:
 2             (i)  the  amount  of, and other terms and conditions
 3        with respect to, the refund or additional premium are set
 4        forth in the group or enrollment unit contract agreed  in
 5        advance of the period for which a refund is to be paid or
 6        additional  premium  is to be charged (which period shall
 7        not be less than one year); and
 8             (ii)  the amount of the refund or additional premium
 9        shall  not  exceed  20%   of   the   Health   Maintenance
10        Organization's profitable or unprofitable experience with
11        respect  to  the  group  or other enrollment unit for the
12        period (and, for  purposes  of  a  refund  or  additional
13        premium,  the profitable or unprofitable experience shall
14        be calculated taking into account a pro rata share of the
15        Health  Maintenance  Organization's  administrative   and
16        marketing  expenses,  but shall not include any refund to
17        be made or additional premium to be paid pursuant to this
18        subsection (f)).  The Health Maintenance Organization and
19        the  group  or  enrollment  unit  may  agree   that   the
20        profitable  or  unprofitable experience may be calculated
21        taking into account the refund period and the immediately
22        preceding 2 plan years.
23        The  Health  Maintenance  Organization  shall  include  a
24    statement in the evidence of coverage issued to each enrollee
25    describing the possibility of a refund or additional premium,
26    and upon request of any group or enrollment unit, provide  to
27    the group or enrollment unit a description of the method used
28    to   calculate  (1)  the  Health  Maintenance  Organization's
29    profitable experience with respect to the group or enrollment
30    unit and the resulting refund to the group or enrollment unit
31    or (2) the  Health  Maintenance  Organization's  unprofitable
32    experience  with  respect to the group or enrollment unit and
33    the resulting additional premium to be paid by the  group  or
34    enrollment unit.
                            -6-                LRB9002987JSgc
 1        In   no  event  shall  the  Illinois  Health  Maintenance
 2    Organization  Guaranty  Association  be  liable  to  pay  any
 3    contractual obligation of an insolvent  organization  to  pay
 4    any refund authorized under this Section.
 5    (Source: P.A. 88-313; 89-90, eff. 6-30-95.)
 6        Section  15.  The Limited Health Service Organization Act
 7    is amended by changing Section 4003 as follows:
 8        (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
 9        Sec. 4003.  Illinois Insurance Code provisions.   Limited
10    health   service   organizations  shall  be  subject  to  the
11    provisions of Sections 133,  134,  137,  140,  141.1,  141.2,
12    141.3,  143,  143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
13    154.6, 154.7, 154.8, 155.04, 355.2, 356t,  401,  401.1,  402,
14    403,  403A,  408, 408.2, and 412, and Articles VIII 1/2, XII,
15    XII 1/2, XIII, XIII 1/2, and XXVI of the  Illinois  Insurance
16    Code.   For  purposes  of the Illinois Insurance Code, except
17    for Articles  XIII  and  XIII  1/2,  limited  health  service
18    organizations  in  the  following categories are deemed to be
19    domestic companies:
20             (1)  a corporation under the laws of this State; or
21             (2)  a  corporation  organized  under  the  laws  of
22        another state, 30% of more of the enrollees of which  are
23        residents  of this State, except a corporation subject to
24        substantially the  same  requirements  in  its  state  of
25        organization  as is a domestic company under Article VIII
26        1/2 of the Illinois Insurance Code.
27    (Source: P.A. 86-600; 87-587; 87-1090.)
28        Section 20.  The Voluntary Health Services Plans  Act  is
29    amended by changing Section 10 as follows:
30        (215 ILCS 165/10) (from Ch. 32, par. 604)
                            -7-                LRB9002987JSgc
 1        Sec.   10.  Application  of  Insurance  Code  provisions.
 2    Health services plan corporations and all persons  interested
 3    therein   or  dealing  therewith  shall  be  subject  to  the
 4    provisions of Article XII 1/2 and  Sections  3.1,  133,  140,
 5    143,  143c,  149,  354, 355.2, 356r, 356t, 367.2, 401, 401.1,
 6    402, 403, 403A, 408, 408.2, and 412, and paragraphs  (7)  and
 7    (15) of Section 367 of the Illinois Insurance Code.
 8    (Source: P.A. 89-514, eff. 7-17-96.)

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