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91_SB1511eng SB1511 Engrossed LRB9111306JSpc 1 AN ACT relating to payment for certain services, amending 2 named Acts. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The State Employees Group Insurance Act of 6 1971 is amended by changing Section 6.12 as follows: 7 (5 ILCS 375/6.12) 8 Sec. 6.12. Payment for services. The program of health 9 benefits is subject to the provisions of Section 368a,356z,10356yof the Illinois Insurance Code. 11 (Source: P.A. 91-605, eff. 12-14-99; revised 10-18-99.) 12 Section 10. The Illinois Insurance Code is amended by 13 renumbering Section 356y, as added by Public Act 91-605, and 14 changing Section 370a as follows: 15 (215 ILCS 5/356y) 16 Sec. 368a.356y. 356z.Timely payment for health care 17 services. 18 (a) This Section applies to insurers, health maintenance 19 organizations, managed care plans, health care plans, 20 preferred provider organizations, third party administrators, 21 independent practice associations, and physician-hospital 22 organizations (hereinafter referred to as "payors") that 23 provide periodic payments, which are payments not requiring a 24 claim, bill, capitation encounter data, or capitation 25 reconciliation reports, such as prospective capitation 26 payments, to health care professionals and health care 27 facilities to provide medical or health care services for 28 insureds or enrollees. 29 (1) A payor shall make periodic payments in SB1511 Engrossed -2- LRB9111306JSpc 1 accordance with item (3). Failure to make periodic 2 payments within the period of time specified in item (3) 3 shall entitle the health care professional or health care 4 facility to interest at the rate of 9% per year from the 5 date payment was required to be made to the date of the 6 late payment, provided that interest amounting to less 7 than $1 need not be paid. Any required interest payments 8 shall be made within 30 days after the payment. 9 (2) When a payor requires selection of a health 10 care professional or health care facility, the selection 11 shall be completed by the insured or enrollee no later 12 than 30 days after enrollment. The payor shall provide 13 written notice of this requirement to all insureds and 14 enrollees. Nothing in this Section shall be construed to 15 require a payor to select a health care professional or 16 health care facility for an insured or enrollee. 17 (3) A payor shall provide the health care 18 professional or health care facility with notice of the 19 selection as a health care professional or health care 20 facility by an insured or enrollee and the effective date 21 of the selection within 60 calendar days after the 22 selection. No later than the 60th day following the date 23 an insured or enrollee has selected a health care 24 professional or health care facility or the date that 25 selection becomes effective, whichever is later, or in 26 cases of retrospective enrollment only, 30 days after 27 notice by an employer to the payor of the selection, a 28 payor shall begin periodic payment of the required 29 amounts to the insured's or enrollee's health care 30 professional or health care facility, or the designee of 31 either, calculated from the date of selection or the date 32 the selection becomes effective, whichever is later. All 33 subsequent payments shall be made in accordance with a 34 monthly periodic cycle. SB1511 Engrossed -3- LRB9111306JSpc 1 (b) Notwithstanding any other provision of this Section, 2 independent practice associations and physician-hospital 3 organizations shall begin making periodic payment of the 4 required amounts within 60 days after an insured or enrollee 5 has selected a health care professional or health care 6 facility or the date that selection becomes effective, 7 whichever is later. Before January 1, 2001, subsequent 8 periodic payments shall be made in accordance with a 60-day 9 periodic schedule, and after December 31, 2000, subsequent 10 periodic payments shall be made in accordance with a monthly 11 periodic schedule. 12 Notwithstanding any other provision of this Section, 13 independent practice associations and physician-hospital 14 organizations shall make all other payments for health 15 services within 60 days after receipt of due proof of loss 16 received before January 1, 2001 and within 30 days after 17 receipt of due proof of loss received after December 31, 18 2000. Independent practice associations and 19 physician-hospital organizations shall notify the insured, 20 insured's assignee, health care professional, or health care 21 facility of any failure to provide sufficient documentation 22 for a due proof of loss within 30 days after receipt of the 23 claim for health services. 24 Failure to pay within the required time period shall 25 entitle the payee to interest at the rate of 9% per year from 26 the date the payment is due to the date of the late payment, 27 provided that interest amounting to less that $1 need not be 28 paid. Any required interest payments shall be made within 30 29 days after the payment. 30 (c) All insurers, health maintenance organizations, 31 managed care plans, health care plans, preferred provider 32 organizations, and third party administrators shall ensure 33 that all claims and indemnities concerning health care 34 services other than for any periodic payment shall be paid SB1511 Engrossed -4- LRB9111306JSpc 1 within 30 days after receipt of due written proof of such 2 loss. An insured, insured's assignee, health care 3 professional, or health care facility shall be notified of 4 any known failure to provide sufficient documentation for a 5 due proof of loss within 30 days after receipt of the claim 6 for health care services. Failure to pay within such period 7 shall entitle the payee to interest at the rate of 9% per 8 year from the 30th day after receipt of such proof of loss to 9 the date of late payment, provided that interest amounting to 10 less than one dollar need not be paid. Any required interest 11 payments shall be made within 30 days after the payment. 12 (d) The Department shall enforce the provisions of this 13 Section pursuant to the enforcement powers granted to it by 14 law. 15 (e) The Department is hereby granted specific authority 16 to issue a cease and desist order, fine, or otherwise 17 penalize independent practice associations and 18 physician-hospital organizations that violate this Section. 19 The Department shall adopt reasonable rules to enforce 20 compliance with this Section by independent practice 21 associations and physician-hospital organizations. 22 (Source: P.A. 91-605, eff. 12-14-99; revised 10-18-99.) 23 (215 ILCS 5/370a) (from Ch. 73, par. 982a) 24 Sec. 370a. Assignability of Accident and Health 25 Insurance. 26 No provision of the Illinois Insurance Code, or any other 27 law, prohibits an insured under any policy of accident and 28 health insurance or any other person who may be the owner of 29 any rights under such policy from making an assignment of all 30 or any part of his rights and privileges under the policy 31 including but not limited to the right to designate a 32 beneficiary and to have an individual policy issued in 33 accordance with its terms. Subject to the terms of the policy SB1511 Engrossed -5- LRB9111306JSpc 1 or any contract relating thereto, an assignment by an insured 2 or by any other owner of rights under the policy, made before 3 or after the effective date of this amendatory Act of 1969 is 4 valid for the purpose of vesting in the assignee, in 5 accordance with any provisions included therein as to the 6 time at which it is effective, all rights and privileges so 7 assigned. However, such assignment is without prejudice to 8 the company on account of any payment it makes or individual 9 policy it issues before receipt of notice of the assignment. 10 This amendatory Act of 1969 acknowledges, declares and 11 codifies the existing right of assignment of interests under 12 accident and health insurance policies. If an enrollee or 13 insured of an insurer, health maintenance organization, 14 managed care plan, health care plan, preferred provider 15 organization, or third party administrator assigns a claim to 16 a health care professional or health care facility, then 17 payment shall be made directly to the health care 18 professional or health care facility including any interest 19 required under Section 368a,356z, 356yof this Code for 20 failure to pay claims within 30 days after receipt by the 21 insurer of due proof of loss. Nothing in this Section shall 22 be construed to prevent any parties from reconciling 23 duplicate payments. 24 (Source: P.A. 91-605, eff. 12-14-99; revised 10-18-99.) 25 Section 15. The Health Maintenance Organization Act is 26 amended by changing Section 5-3 as follows: 27 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2) 28 Sec. 5-3. Insurance Code provisions. 29 (a) Health Maintenance Organizations shall be subject to 30 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2, 31 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 32 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x, SB1511 Engrossed -6- LRB9111306JSpc 1 356y,356z,367i, 368a, 401, 401.1, 402, 403, 403A, 408, 2 408.2, 409, 412, 444, and 444.1, paragraph (c) of subsection 3 (2) of Section 367, and Articles IIA, VIII 1/2, XII, XII 1/2, 4 XIII, XIII 1/2, XXV, and XXVI of the Illinois Insurance Code. 5 (b) For purposes of the Illinois Insurance Code, except 6 for Sections 444 and 444.1 and Articles XIII and XIII 1/2, 7 Health Maintenance Organizations in the following categories 8 are deemed to be "domestic companies": 9 (1) a corporation authorized under the Dental 10 Service Plan Act or the Voluntary Health Services Plans 11 Act; 12 (2) a corporation organized under the laws of this 13 State; or 14 (3) a corporation organized under the laws of 15 another state, 30% or more of the enrollees of which are 16 residents of this State, except a corporation subject to 17 substantially the same requirements in its state of 18 organization as is a "domestic company" under Article 19 VIII 1/2 of the Illinois Insurance Code. 20 (c) In considering the merger, consolidation, or other 21 acquisition of control of a Health Maintenance Organization 22 pursuant to Article VIII 1/2 of the Illinois Insurance Code, 23 (1) the Director shall give primary consideration 24 to the continuation of benefits to enrollees and the 25 financial conditions of the acquired Health Maintenance 26 Organization after the merger, consolidation, or other 27 acquisition of control takes effect; 28 (2)(i) the criteria specified in subsection (1)(b) 29 of Section 131.8 of the Illinois Insurance Code shall not 30 apply and (ii) the Director, in making his determination 31 with respect to the merger, consolidation, or other 32 acquisition of control, need not take into account the 33 effect on competition of the merger, consolidation, or 34 other acquisition of control; SB1511 Engrossed -7- LRB9111306JSpc 1 (3) the Director shall have the power to require 2 the following information: 3 (A) certification by an independent actuary of 4 the adequacy of the reserves of the Health 5 Maintenance Organization sought to be acquired; 6 (B) pro forma financial statements reflecting 7 the combined balance sheets of the acquiring company 8 and the Health Maintenance Organization sought to be 9 acquired as of the end of the preceding year and as 10 of a date 90 days prior to the acquisition, as well 11 as pro forma financial statements reflecting 12 projected combined operation for a period of 2 13 years; 14 (C) a pro forma business plan detailing an 15 acquiring party's plans with respect to the 16 operation of the Health Maintenance Organization 17 sought to be acquired for a period of not less than 18 3 years; and 19 (D) such other information as the Director 20 shall require. 21 (d) The provisions of Article VIII 1/2 of the Illinois 22 Insurance Code and this Section 5-3 shall apply to the sale 23 by any health maintenance organization of greater than 10% of 24 its enrollee population (including without limitation the 25 health maintenance organization's right, title, and interest 26 in and to its health care certificates). 27 (e) In considering any management contract or service 28 agreement subject to Section 141.1 of the Illinois Insurance 29 Code, the Director (i) shall, in addition to the criteria 30 specified in Section 141.2 of the Illinois Insurance Code, 31 take into account the effect of the management contract or 32 service agreement on the continuation of benefits to 33 enrollees and the financial condition of the health 34 maintenance organization to be managed or serviced, and (ii) SB1511 Engrossed -8- LRB9111306JSpc 1 need not take into account the effect of the management 2 contract or service agreement on competition. 3 (f) Except for small employer groups as defined in the 4 Small Employer Rating, Renewability and Portability Health 5 Insurance Act and except for medicare supplement policies as 6 defined in Section 363 of the Illinois Insurance Code, a 7 Health Maintenance Organization may by contract agree with a 8 group or other enrollment unit to effect refunds or charge 9 additional premiums under the following terms and conditions: 10 (i) the amount of, and other terms and conditions 11 with respect to, the refund or additional premium are set 12 forth in the group or enrollment unit contract agreed in 13 advance of the period for which a refund is to be paid or 14 additional premium is to be charged (which period shall 15 not be less than one year); and 16 (ii) the amount of the refund or additional premium 17 shall not exceed 20% of the Health Maintenance 18 Organization's profitable or unprofitable experience with 19 respect to the group or other enrollment unit for the 20 period (and, for purposes of a refund or additional 21 premium, the profitable or unprofitable experience shall 22 be calculated taking into account a pro rata share of the 23 Health Maintenance Organization's administrative and 24 marketing expenses, but shall not include any refund to 25 be made or additional premium to be paid pursuant to this 26 subsection (f)). The Health Maintenance Organization and 27 the group or enrollment unit may agree that the 28 profitable or unprofitable experience may be calculated 29 taking into account the refund period and the immediately 30 preceding 2 plan years. 31 The Health Maintenance Organization shall include a 32 statement in the evidence of coverage issued to each enrollee 33 describing the possibility of a refund or additional premium, 34 and upon request of any group or enrollment unit, provide to SB1511 Engrossed -9- LRB9111306JSpc 1 the group or enrollment unit a description of the method used 2 to calculate (1) the Health Maintenance Organization's 3 profitable experience with respect to the group or enrollment 4 unit and the resulting refund to the group or enrollment unit 5 or (2) the Health Maintenance Organization's unprofitable 6 experience with respect to the group or enrollment unit and 7 the resulting additional premium to be paid by the group or 8 enrollment unit. 9 In no event shall the Illinois Health Maintenance 10 Organization Guaranty Association be liable to pay any 11 contractual obligation of an insolvent organization to pay 12 any refund authorized under this Section. 13 (Source: P.A. 90-25, eff. 1-1-98; 90-177, eff. 7-23-97; 14 90-372, eff. 7-1-98; 90-583, eff. 5-29-98; 90-655, eff. 15 7-30-98; 90-741, eff. 1-1-99; 91-357, eff. 7-29-99; 91-406, 16 eff. 1-1-00; 91-549, eff. 8-14-99; 91-605, eff. 12-14-99; 17 revised 10-18-99.) 18 Section 20. The Limited Health Service Organization Act 19 is amended by changing Section 4003 as follows: 20 (215 ILCS 130/4003) (from Ch. 73, par. 1504-3) 21 Sec. 4003. Illinois Insurance Code provisions. Limited 22 health service organizations shall be subject to the 23 provisions of Sections 133, 134, 137, 140, 141.1, 141.2, 24 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 25 154.6, 154.7, 154.8, 155.04, 355.2, 356v, 368a,356z, 356y,26 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444, and 27 444.1 and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 28 1/2, XXV, and XXVI of the Illinois Insurance Code. For 29 purposes of the Illinois Insurance Code, except for Sections 30 444 and 444.1 and Articles XIII and XIII 1/2, limited health 31 service organizations in the following categories are deemed 32 to be domestic companies: SB1511 Engrossed -10- LRB9111306JSpc 1 (1) a corporation under the laws of this State; or 2 (2) a corporation organized under the laws of 3 another state, 30% of more of the enrollees of which are 4 residents of this State, except a corporation subject to 5 substantially the same requirements in its state of 6 organization as is a domestic company under Article VIII 7 1/2 of the Illinois Insurance Code. 8 (Source: P.A. 90-25, eff. 1-1-98; 90-583, eff. 5-29-98; 9 90-655, eff. 7-30-98; 91-549, eff. 8-14-99; 91-605, eff. 10 12-14-99; revised 10-18-99.) 11 Section 25. The Voluntary Health Services Plans Act is 12 amended by changing Section 10 as follows: 13 (215 ILCS 165/10) (from Ch. 32, par. 604) 14 Sec. 10. Application of Insurance Code provisions. 15 Health services plan corporations and all persons interested 16 therein or dealing therewith shall be subject to the 17 provisions of Articles IIA and XII 1/2 and Sections 3.1, 133, 18 140, 143, 143c, 149, 354, 355.2, 356r, 356t, 356u, 356v, 19 356w, 356x, 356y,356z,367.2, 368a, 401, 401.1, 402, 403, 20 403A, 408, 408.2, and 412, and paragraphs (7) and (15) of 21 Section 367 of the Illinois Insurance Code. 22 (Source: P.A. 90-7, eff. 6-10-97; 90-25, eff. 1-1-98; 90-655, 23 eff. 7-30-98; 90-741, eff. 1-1-99; 91-406, eff. 1-1-00; 24 91-549, eff. 8-14-99; 91-605, eff. 12-14-99; revised 25 10-18-99.) 26 Section 99. Effective date. This Act takes effect upon 27 becoming law.