093_HB2774ham001

 










                                     LRB093 07794 JLS 12980 a

 1                    AMENDMENT TO HOUSE BILL 2774

 2        AMENDMENT NO.     .  Amend House Bill 2774  by  replacing
 3    the title with the following:
 4        "AN ACT concerning insurance."; and

 5    by  replacing  everything  after the enacting clause with the
 6    following:

 7        "Section 5.  The Illinois Insurance Code  is  amended  by
 8    adding Section 368b as follows:

 9        (215 ILCS 5/368b new)
10        Sec.  368b.  Prohibition  of  waiver  of requirements and
11    prohibitions.  No  contract  between   an   insurer,   health
12    maintenance  organization,  independent practice association,
13    or  physician  hospital  organization  and  a   health   care
14    professional  or  health  care  provider  shall  contain  any
15    provision,  term,  or  condition  that  limits, restricts, or
16    otherwise waives any of the requirements and prohibitions set
17    forth in this Article. Any provision purporting to make  such
18    a waiver is void and unenforceable.

19        Section  10.  The  Health Maintenance Organization Act is
20    amended by changing Section 5-3 as follows:
 
                            -2-      LRB093 07794 JLS 12980 a
 1        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
 2        Sec. 5-3.  Insurance Code provisions.
 3        (a)  Health Maintenance Organizations shall be subject to
 4    the provisions of Sections 133, 134, 137, 140, 141.1,  141.2,
 5    141.3,  143,  143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
 6    154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v,  356w,  356x,
 7    356y,  356z.2,  367i, 368a, 368b, 401, 401.1, 402, 403, 403A,
 8    408, 408.2, 409,  412,  444,  and  444.1,  paragraph  (c)  of
 9    subsection  (2)  of  Section 367, and Articles IIA, VIII 1/2,
10    XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of  the  Illinois
11    Insurance Code.
12        (b)  For  purposes of the Illinois Insurance Code, except
13    for Sections 444 and 444.1 and Articles XIII  and  XIII  1/2,
14    Health  Maintenance Organizations in the following categories
15    are deemed to be "domestic companies":
16             (1)  a  corporation  authorized  under  the   Dental
17        Service  Plan  Act or the Voluntary Health Services Plans
18        Act;
19             (2)  a corporation organized under the laws of  this
20        State; or
21             (3)  a  corporation  organized  under  the  laws  of
22        another  state, 30% or 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
26        VIII 1/2 of the Illinois Insurance Code.
27        (c)  In  considering  the merger, consolidation, or other
28    acquisition of control of a Health  Maintenance  Organization
29    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
30             (1)  the  Director  shall give primary consideration
31        to the continuation of  benefits  to  enrollees  and  the
32        financial  conditions  of the acquired Health Maintenance
33        Organization after the merger,  consolidation,  or  other
34        acquisition of control takes effect;
 
                            -3-      LRB093 07794 JLS 12980 a
 1             (2)(i)  the  criteria specified in subsection (1)(b)
 2        of Section 131.8 of the Illinois Insurance Code shall not
 3        apply and (ii) the Director, in making his  determination
 4        with  respect  to  the  merger,  consolidation,  or other
 5        acquisition of control, need not take  into  account  the
 6        effect  on  competition  of the merger, consolidation, or
 7        other acquisition of control;
 8             (3)  the Director shall have the  power  to  require
 9        the following information:
10                  (A)  certification by an independent actuary of
11             the   adequacy   of   the  reserves  of  the  Health
12             Maintenance Organization sought to be acquired;
13                  (B)  pro forma financial statements  reflecting
14             the combined balance sheets of the acquiring company
15             and the Health Maintenance Organization sought to be
16             acquired  as of the end of the preceding year and as
17             of a date 90 days prior to the acquisition, as  well
18             as   pro   forma   financial  statements  reflecting
19             projected combined  operation  for  a  period  of  2
20             years;
21                  (C)  a  pro  forma  business  plan detailing an
22             acquiring  party's  plans  with   respect   to   the
23             operation  of  the  Health  Maintenance Organization
24             sought to be acquired for a period of not less  than
25             3 years; and
26                  (D)  such  other  information  as  the Director
27             shall require.
28        (d)  The provisions of Article VIII 1/2 of  the  Illinois
29    Insurance  Code  and this Section 5-3 shall apply to the sale
30    by any health maintenance organization of greater than 10% of
31    its enrollee population  (including  without  limitation  the
32    health  maintenance organization's right, title, and interest
33    in and to its health care certificates).
34        (e)  In considering any management  contract  or  service
 
                            -4-      LRB093 07794 JLS 12980 a
 1    agreement  subject to Section 141.1 of the Illinois Insurance
 2    Code, the Director (i) shall, in  addition  to  the  criteria
 3    specified  in  Section  141.2 of the Illinois Insurance Code,
 4    take into account the effect of the  management  contract  or
 5    service   agreement   on  the  continuation  of  benefits  to
 6    enrollees  and  the  financial  condition   of   the   health
 7    maintenance  organization to be managed or serviced, and (ii)
 8    need not take into  account  the  effect  of  the  management
 9    contract or service agreement on competition.
10        (f)  Except  for  small employer groups as defined in the
11    Small Employer Rating, Renewability  and  Portability  Health
12    Insurance  Act and except for medicare supplement policies as
13    defined in Section 363 of  the  Illinois  Insurance  Code,  a
14    Health  Maintenance Organization may by contract agree with a
15    group or other enrollment unit to effect  refunds  or  charge
16    additional premiums under the following terms and conditions:
17             (i)  the  amount  of, and other terms and conditions
18        with respect to, the refund or additional premium are set
19        forth in the group or enrollment unit contract agreed  in
20        advance of the period for which a refund is to be paid or
21        additional  premium  is to be charged (which period shall
22        not be less than one year); and
23             (ii)  the amount of the refund or additional premium
24        shall  not  exceed  20%   of   the   Health   Maintenance
25        Organization's profitable or unprofitable experience with
26        respect  to  the  group  or other enrollment unit for the
27        period (and, for  purposes  of  a  refund  or  additional
28        premium,  the profitable or unprofitable experience shall
29        be calculated taking into account a pro rata share of the
30        Health  Maintenance  Organization's  administrative   and
31        marketing  expenses,  but shall not include any refund to
32        be made or additional premium to be paid pursuant to this
33        subsection (f)).  The Health Maintenance Organization and
34        the  group  or  enrollment  unit  may  agree   that   the
 
                            -5-      LRB093 07794 JLS 12980 a
 1        profitable  or  unprofitable experience may be calculated
 2        taking into account the refund period and the immediately
 3        preceding 2 plan years.
 4        The  Health  Maintenance  Organization  shall  include  a
 5    statement in the evidence of coverage issued to each enrollee
 6    describing the possibility of a refund or additional premium,
 7    and upon request of any group or enrollment unit, provide  to
 8    the group or enrollment unit a description of the method used
 9    to   calculate  (1)  the  Health  Maintenance  Organization's
10    profitable experience with respect to the group or enrollment
11    unit and the resulting refund to the group or enrollment unit
12    or (2) the  Health  Maintenance  Organization's  unprofitable
13    experience  with  respect to the group or enrollment unit and
14    the resulting additional premium to be paid by the  group  or
15    enrollment unit.
16        In   no  event  shall  the  Illinois  Health  Maintenance
17    Organization  Guaranty  Association  be  liable  to  pay  any
18    contractual obligation of an insolvent  organization  to  pay
19    any refund authorized under this Section.
20    (Source: P.A.  91-357,  eff.  7-29-99;  91-406,  eff. 1-1-00;
21    91-549, eff. 8-14-99; 91-605,  eff.  12-14-99;  91-788,  eff.
22    6-9-00; 92-764, eff. 1-1-03.)

23        Section  15.  The  Voluntary Health Services Plans Act is
24    amended by changing Section 10 as follows:

25        (215 ILCS 165/10) (from Ch. 32, par. 604)
26        Sec.  10.  Application  of  Insurance  Code   provisions.
27    Health  services plan corporations and all persons interested
28    therein  or  dealing  therewith  shall  be  subject  to   the
29    provisions of Articles IIA and XII 1/2 and Sections 3.1, 133,
30    140,  143,  143c,  149, 155.37, 354, 355.2, 356r, 356t, 356u,
31    356v, 356w, 356x, 356y, 356z.1, 356z.2,  367.2,  368a,  368b,
32    401,  401.1,  402,  403,  403A,  408,  408.2,  and  412,  and
 
                            -6-      LRB093 07794 JLS 12980 a
 1    paragraphs  (7)  and  (15)  of  Section  367  of the Illinois
 2    Insurance Code.
 3    (Source: P.A. 91-406,  eff.  1-1-00;  91-549,  eff.  8-14-99;
 4    91-605,  eff.  12-14-99;  91-788,  eff.  6-9-00; 92-130, eff.
 5    7-20-01; 92-440, eff. 8-17-01; 92-651, eff. 7-11-02;  92-764,
 6    eff. 1-1-03.)

 7        Section   99.  Effective  date.  This  Act  takes  effect
 8    December 1, 2003.".