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[ House Amendment 002 ] |
92_HB1040ham001 LRB9206171JSpcam 1 AMENDMENT TO HOUSE BILL 1040 2 AMENDMENT NO. . Amend House Bill 1040 by replacing 3 everything after the enacting clause with the following: 4 "Section 5. The Health Maintenance Organization Act is 5 amended by changing Sections 2-3, 2-4, and 2-6 and adding 6 Article 4.5 as follows: 7 (215 ILCS 125/2-3) (from Ch. 111 1/2, par. 1405) 8 Sec. 2-3. Powers of health maintenance organizations. 9 The powers of a health maintenance organization include, but 10 are not limited to the following: 11 (a) The purchase, lease, construction, renovation, 12 operation, or maintenance of hospitals, medical facilities or 13 both, and their ancillary equipment, and such property as may 14 reasonably be required for its principal office or for such 15 other purposes as may be necessary in the transaction of the 16 business of the organization. 17 (b) The making of loans to a medical group under 18 contract with it and in furtherance of its program or the 19 making of loans to a corporation or corporations under its 20 control for the purpose of acquiring or constructing medical 21 facilities at hospitals or in furtherance of a program 22 providing health care services for enrollees. -2- LRB9206171JSpcam 1 (c) The furnishing of health care services through 2 providers which are under contract with or employed by the 3 health maintenance organization. 4 (d) The contracting with any person for the performance 5 on its behalf of certain functions such as marketing, 6 enrollment and administration. 7 (e) The contracting with an insurance company licensed 8 in this State, or with a hospital, medical, dental, vision or 9 pharmaceutical service corporation authorized to do business 10 in this State, for the provision of insurance, indemnity, or 11 reimbursement against the cost of health care service 12 provided by the health maintenance organization. 13 (f) The offering, in addition to basic health care 14 services, of (1) health care services, (2) indemnity benefits 15 covering out of area or emergency services,and(3) indemnity 16 benefits provided through insurers or hospital, medical, 17 dental, vision, or pharmaceutical service corporations, and 18 (4) health maintenance organization point-of-service benefits 19 as authorized under Article 4.5. 20 (g) Rendering services related to the functions involved 21 in the operating of its health maintenance organization 22 business including but not limited to providing health 23 services, data processing, accounting, or claims. 24 (g-5) Indemnification for services provided to a child 25 as required under subdivision (e)(3) of Section 4-2. 26 (h) Any other business activity reasonably complementary 27 or supplementary to its health maintenance organization 28 business to the extent approved by the Director. 29 (Source: P.A. 89-183, eff. 1-1-96.) 30 (215 ILCS 125/2-4) (from Ch. 111 1/2, par. 1406) 31 Sec. 2-4. Required minimum net worth; special contingent 32 reserve; deficiency; impairment. 33 (a) A health maintenance organization issued a -3- LRB9206171JSpcam 1 certificate of authority on or after the effective date of 2 this amendatory Act of 1987 shall have and at all times 3 maintain net worth of not less than $1,500,000. As an 4 allocation of net worth, organizations certified prior to the 5 effective date of this amendatory Act of 1987 shall maintain 6 a special contingent reserve. The special contingent reserve 7 for an organization certified between January 1, 1986 and the 8 effective date of this amendatory Act of 1987 shall be equal 9 to 5% of its net earned subscription revenue for health care 10 services through December 31st of the year in which 11 certified. In subsequent years such organization shall 12 accumulate additions to the contingent reserve in an amount 13 which is equal to 2% of its net earned subscription revenue 14 for each calendar year. For purposes of this Section, net 15 earned subscription revenue means premium minus reinsurance 16 expenses. Maintenance of the contingent reserve requires 17 that net worth equals or exceeds the contingent reserve at 18 any balance sheet date. 19 (b) Additional accumulations under subsection (a) will 20 no longer be required at such time that the total special 21 contingent reserve required by subsection (a) is equal to 22 $1,500,000. 23 (c) A deficiency in meeting amounts required in 24 subsections (a), (b), and (d) will require (1) filing with 25 the Director a plan for correction of the deficiency, 26 acceptable to the Director and (2) correction of the 27 deficiency within a reasonable time, not to exceed 60 days 28 unless an extension of time, not to exceed 60 additional 29 days, is granted by the Director. Such a deficiency will be 30 deemed an impairment, and failure to correct the deficiency 31 in the prescribed time shall be grounds for suspension or 32 revocation pursuant to subsection (h) of Section 5-5. 33 (d) All health maintenance organizations issued a 34 certificate of authority on or prior to December 31, 1985 and -4- LRB9206171JSpcam 1 regulated under this Act must have and at all times maintain, 2 prior to December 31, 1988, the net worth and special 3 contingent reserve that was required for that particular 4 organization at the time it was certified. All such 5 organizations must have by December 31, 1988 and thereafter 6 maintain at all times, net worth of not less than $300,000 7 and a special contingent reserve calculated and accumulated 8 in the same manner as required of a health maintenance 9 organization issued a certificate of authority on or between 10 January 1, 1986 and the effective date of this amendatory Act 11 of 1987. Such calculation shall commence with the financial 12 reporting period first following certification. 13 All organizations issued a certificate of authority 14 between January 1, 1986 and the effective date of this 15 amendatory Act of 1987 must have and at all times maintain 16 the net worth and special contingent reserve that was 17 required for that particular organization at the time it was 18 certified. 19 (d-5) A health maintenance organization that offers a 20 point-of-service product must maintain minimum net worth of 21 not less than: 22 (1) the greater of 300% of the "authorized control 23 level" as defined by Article IIA of the Illinois 24 Insurance Code; or 25 (2) $3,500,000 if the health maintenance 26 organization's annual projected out-of-plan claims are 27 less than $500,0000; or 28 (3) $4,500,000 if the health maintenance 29 organization's annual projected out-of-plan claims are 30 equal to or greater than $500,000 but less than 31 $1,000,000; or 32 (4) $6,000,000 if the health maintenance 33 organization's annual projected out-of-plan claims are 34 $1,000,000 or greater. -5- LRB9206171JSpcam 1 (e) Unless allowed by the Director, no health 2 maintenance organization, officer, director, trustee, 3 producer, or employee of such organization may renew, issue, 4 or deliver, or cause to be renewed, issued or delivered, any 5 certificate, agreement, or contract of coverage in this 6 State, for which a premium is charged or collected, when the 7 organization writing such coverage is insolvent or impaired, 8 and the fact of such insolvency or impairment is known to the 9 organization, officer, director, trustee, producer, or 10 employee of such organization. An organization is impaired 11 when a deficiency exists in meeting the amounts required in 12 subsections(a), (b), and (d) of Section 2-4. 13 However, the existence of an impairment does not prevent 14 the issuance or renewal of a certificate, agreement or 15 contract when the enrollee exercises an option granted under 16 the plan to obtain new, renewed or converted coverage. 17 Any organization, officer, director, trustee, producer, 18 or employee of such organization violating this subsection 19 shall be guilty of a Class A misdemeanor. 20 (Source: P.A. 85-20.) 21 (215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2) 22 Sec. 2-6. Statutory deposits. 23 (a) Every organization subject to the provisions of this 24 Act shall make and maintain with the Director through 25 December 30, 1993, for the protection of enrollees of the 26 organization, a deposit of securities which are authorized 27 investments under paragraphs (1) and (2) of subsection (h) of 28 Section 3-1 having a fair market value equal to at least 29 $100,000. Effective December 31, 1993 and through December 30 30, 1994, the deposit shall have a fair market value at least 31 equal to $200,000. Effective December 31, 1994 and 32 thereafter, the deposit shall have a fair market value at 33 least equal to $300,000. An organization issued a -6- LRB9206171JSpcam 1 certificate of authority on or after the effective date of 2 this Amendatory Act of 1993, shall make and maintain with the 3 Director; for the protection of enrollees of the 4 organization, a deposit of securities which are authorized 5 investments under paragraphs (1) and (2) of subsection (h) of 6 Section 3-1 having a fair market value equal to at least 7 $300,000. The amount on deposit shall remain as an admitted 8 asset of the organization in the determination of its net 9 worth. 10 (b) An organization that offers a point-of-service 11 product, as permitted by Article 4.5, must maintain an 12 additional deposit in an amount that is not less than the 13 greater of 125% of the organization's annual projected 14 point-of-service claims or $300,000. 15 (Source: P.A. 88-364.) 16 (215 ILCS 125/Art. 4.5, heading new) 17 ARTICLE 4.5. POINT-OF-SERVICE 18 PRODUCTS 19 (215 ILCS 125/4.5-1 new) 20 Sec. 4.5-1. Point-of-service health service contracts. 21 (a) A health maintenance organization that offers a 22 point-of-service contract: 23 (1) must include as in-plan covered services all 24 services required by law to be provided by a health 25 maintenance organization; 26 (2) must provide incentives, which shall include 27 financial incentives, for enrollees to use in-plan 28 covered services; 29 (3) may not offer services out-of-plan without 30 providing those services on an in-plan basis; 31 (4) may include annual out-of-pocket limits and 32 lifetime maximum benefits allowances for out-of-plan -7- LRB9206171JSpcam 1 services that are separate from any limits or allowances 2 applied to in-plan services; 3 (5) may not consider emergency services, authorized 4 referral services, or non-routine services obtained out 5 of the service area to be point-of-service services; and 6 (6) 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 health maintenance organization. 10 (b) A health maintenance organization offering a 11 point-of-service contract is subject to all of the following 12 limitations: 13 (1) The health maintenance organization may not 14 expend in any calendar quarter more than 20% of its total 15 expenditures for all its members for out-of-plan covered 16 services. 17 (2) If the amount specified in item (1) of this 18 subsection is exceeded by 2% in a quarter, the health 19 maintenance organization must effect compliance with item 20 (1) of this subsection by the end of the following 21 quarter. 22 (3) If compliance with the amount specified in item 23 (1) of this subsection is not demonstrated in the health 24 maintenance organization's next quarterly report, the 25 health maintenance organization may not offer the 26 point-of-service contract to new groups or include the 27 point-of-service option in the renewal of an existing 28 group until compliance with the amount specified in item 29 (1) of this subsection is demonstrated or until otherwise 30 allowed by the Director. 31 (4) A health maintenance organization failing, 32 without just cause, to comply with the provisions of this 33 subsection shall be required, after notice and hearing, 34 to pay a penalty of $250 for each day out of compliance, -8- LRB9206171JSpcam 1 to be recovered by the Director. Any penalty recovered 2 shall be paid into the General Revenue Fund. The Director 3 may reduce the penalty if the health maintenance 4 organization demonstrates to the Director that the 5 imposition of the penalty would constitute a financial 6 hardship to the health maintenance organization. 7 (c) A health maintenance organization that offers a 8 point-of-service product must do all of the following: 9 (1) File a quarterly financial statement detailing 10 compliance with the requirements of subsection (b). 11 (2) Track out-of-plan, point-of-service utilization 12 separately from in-plan or non-point-of-service, 13 out-of-plan emergency care, referral care, and urgent 14 care out of the service area utilization. 15 (3) Record out-of-plan utilization in a manner that 16 will permit such utilization and cost reporting as the 17 Director may, by rule, require. 18 (4) Demonstrate to the Director's satisfaction that 19 the health maintenance organization has the fiscal, 20 administrative, and marketing capacity to control its 21 point-of-service enrollment, utilization, and costs so as 22 not to jeopardize the financial security of the health 23 maintenance organization. 24 (5) Maintain, in addition to any other deposit 25 required under this Act, the deposit required by Section 26 2-6. 27 (6) Maintain cash and cash equivalents of 28 sufficient amount to fully liquidate 10 days' average 29 claim payments, subject to review by the Director. 30 (7) Maintain and file with the Director, 31 reinsurance coverage protecting against catastrophic 32 losses on out of network point-of-service services. 33 Deductibles may not exceed $100,000 per covered life per 34 year, and the portion of risk retained by the health -9- LRB9206171JSpcam 1 maintenance organization once deductibles have been 2 satisfied may not exceed 20%. Reinsurance must be placed 3 with licensed authorized reinsurers qualified to do 4 business in this State. 5 (d) A health maintenance organization may not issue a 6 point-of-service contract until it has filed and had approved 7 by the Director a plan to comply with the provisions of this 8 Section. The compliance plan must, at a minimum, include 9 provisions demonstrating that the health maintenance 10 organization will do all of the following: 11 (1) Design the benefit levels and conditions of 12 coverage for in-plan covered services and out-of-plan 13 covered services as required by this Article. 14 (2) Provide or arrange for the provision of 15 adequate systems to: 16 (A) process and pay claims for all out-of-plan 17 covered services; 18 (B) meet the requirements for point-of-service 19 contracts set forth in this Section and any 20 additional requirements that may be set forth by the 21 Director; and 22 (C) generate accurate data and financial and 23 regulatory reports on a timely basis so that the 24 Department of Insurance can evaluate the health 25 maintenance organization's experience with the 26 point-of-service contract and monitor compliance 27 with point-of-service contract provisions. 28 (3) Comply with the requirements of subsections (b) 29 and (c).".