93RD GENERAL ASSEMBLY
State of Illinois
2003 and 2004
HB4549

 

Introduced 02/03/04, by Frank J. Mautino

 

SYNOPSIS AS INTRODUCED:
 
215 ILCS 105/2   from Ch. 73, par. 1302
215 ILCS 105/12   from Ch. 73, par. 1312

    Amends the Illinois Insurance Code. In provisions defining an insurer, adds any self-insurance arrangement covered by stop-loss insurance that provides health care benefits in this State. In provisions requiring any deficit incurred or expected to be incurred on behalf of federally eligible individuals who qualify for Plan coverage be recouped by an assessment of insurers, provides instruction for computing an assessment. Requires each insurer to pay its assessment as required by the Plan. Requires that if assessments exceed the amounts actually needed, the excess shall be held and invested and used by the Plan to offset future net losses or reduce pool premiums. Defines future net losses. Makes other changes.


LRB093 20789 SAS 46704 b

 

 

A BILL FOR

 

HB4549 LRB093 20789 SAS 46704 b

1     AN ACT concerning insurance.
 
2     Be it enacted by the People of the State of Illinois,
3 represented in the General Assembly:
 
4     Section 5. The Comprehensive Health Insurance Plan Act is
5 amended by changing Sections 2 and 12 as follows:
 
6     (215 ILCS 105/2)  (from Ch. 73, par. 1302)
7     Sec. 2. Definitions. As used in this Act, unless the
8 context otherwise requires:
9     "Plan administrator" means the insurer or third party
10 administrator designated under Section 5 of this Act.
11     "Benefits plan" means the coverage to be offered by the
12 Plan to eligible persons and federally eligible individuals
13 pursuant to this Act.
14     "Board" means the Illinois Comprehensive Health Insurance
15 Board.
16     "Church plan" has the same meaning given that term in the
17 federal Health Insurance Portability and Accountability Act of
18 1996.
19     "Continuation coverage" means continuation of coverage
20 under a group health plan or other health insurance coverage
21 for former employees or dependents of former employees that
22 would otherwise have terminated under the terms of that
23 coverage pursuant to any continuation provisions under federal
24 or State law, including the Consolidated Omnibus Budget
25 Reconciliation Act of 1985 (COBRA), as amended, Sections 367.2,
26 367e, and 367e.1 of the Illinois Insurance Code, or any other
27 similar requirement in another State.
28     "Covered person" means a person who is and continues to
29 remain eligible for Plan coverage and is covered under one of
30 the benefit plans offered by the Plan.
31     "Creditable coverage" means, with respect to a federally
32 eligible individual, coverage of the individual under any of

 

 

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1 the following:
2         (A) A group health plan.
3         (B) Health insurance coverage (including group health
4     insurance coverage).
5         (C) Medicare.
6         (D) Medical assistance.
7         (E) Chapter 55 of title 10, United States Code.
8         (F) A medical care program of the Indian Health Service
9     or of a tribal organization.
10         (G) A state health benefits risk pool.
11         (H) A health plan offered under Chapter 89 of title 5,
12     United States Code.
13         (I) A public health plan (as defined in regulations
14     consistent with Section 104 of the Health Care Portability
15     and Accountability Act of 1996 that may be promulgated by
16     the Secretary of the U.S. Department of Health and Human
17     Services).
18         (J) A health benefit plan under Section 5(e) of the
19     Peace Corps Act (22 U.S.C. 2504(e)).
20         (K) Any other qualifying coverage required by the
21     federal Health Insurance Portability and Accountability
22     Act of 1996, as it may be amended, or regulations under
23     that Act.
24     "Creditable coverage" does not include coverage consisting
25 solely of coverage of excepted benefits, as defined in Section
26 2791(c) of title XXVII of the Public Health Service Act (42
27 U.S.C. 300 gg-91), nor does it include any period of coverage
28 under any of items (A) through (K) that occurred before a break
29 of more than 90 days or, if the individual has been certified
30 as eligible pursuant to the federal Trade Act of 2002, a break
31 of more than 63 days during all of which the individual was not
32 covered under any of items (A) through (K) above.
33     Any period that an individual is in a waiting period for
34 any coverage under a group health plan (or for group health
35 insurance coverage) or is in an affiliation period under the
36 terms of health insurance coverage offered by a health

 

 

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1 maintenance organization shall not be taken into account in
2 determining if there has been a break of more than 90 days in
3 any creditable coverage.
4     "Department" means the Illinois Department of Insurance.
5     "Dependent" means an Illinois resident: who is a spouse; or
6 who is claimed as a dependent by the principal insured for
7 purposes of filing a federal income tax return and resides in
8 the principal insured's household, and is a resident unmarried
9 child under the age of 19 years; or who is an unmarried child
10 who also is a full-time student under the age of 23 years and
11 who is financially dependent upon the principal insured; or who
12 is a child of any age and who is disabled and financially
13 dependent upon the principal insured.
14     "Direct Illinois premiums" means, for Illinois business,
15 an insurer's direct premium income for the kinds of business
16 described in clause (b) of Class 1 or clause (a) of Class 2 of
17 Section 4 of the Illinois Insurance Code, and direct premium
18 income of a health maintenance organization or a voluntary
19 health services plan, except it shall not include credit health
20 insurance as defined in Article IX 1/2 of the Illinois
21 Insurance Code.
22     "Director" means the Director of the Illinois Department of
23 Insurance.
24     "Eligible person" means a resident of this State who
25 qualifies for Plan coverage under Section 7 of this Act.
26     "Employee" means a resident of this State who is employed
27 by an employer or has entered into the employment of or works
28 under contract or service of an employer including the
29 officers, managers and employees of subsidiary or affiliated
30 corporations and the individual proprietors, partners and
31 employees of affiliated individuals and firms when the business
32 of the subsidiary or affiliated corporations, firms or
33 individuals is controlled by a common employer through stock
34 ownership, contract, or otherwise.
35     "Employer" means any individual, partnership, association,
36 corporation, business trust, or any person or group of persons

 

 

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1 acting directly or indirectly in the interest of an employer in
2 relation to an employee, for which one or more persons is
3 gainfully employed.
4     "Family" coverage means the coverage provided by the Plan
5 for the covered person and his or her eligible dependents who
6 also are covered persons.
7     "Federally eligible individual" means an individual
8 resident of this State:
9         (1)(A) for whom, as of the date on which the individual
10     seeks Plan coverage under Section 15 of this Act, the
11     aggregate of the periods of creditable coverage is 18 or
12     more months or, if the individual has been certified as
13     eligible pursuant to the federal Trade Act of 2002, 3 or
14     more months, and (B) whose most recent prior creditable
15     coverage was under group health insurance coverage offered
16     by a health insurance issuer, a group health plan, a
17     governmental plan, or a church plan (or health insurance
18     coverage offered in connection with any such plans) or any
19     other type of creditable coverage that may be required by
20     the federal Health Insurance Portability and
21     Accountability Act of 1996, as it may be amended, or the
22     regulations under that Act;
23         (2) who is not eligible for coverage under (A) a group
24     health plan (other than an individual who has been
25     certified as eligible pursuant to the federal Trade Act of
26     2002), (B) part A or part B of Medicare due to age (other
27     than an individual who has been certified as eligible
28     pursuant to the federal Trade Act of 2002), or (C) medical
29     assistance, and does not have other health insurance
30     coverage (other than an individual who has been certified
31     as eligible pursuant to the federal Trade Act of 2002);
32         (3) with respect to whom (other than an individual who
33     has been certified as eligible pursuant to the federal
34     Trade Act of 2002) the most recent coverage within the
35     coverage period described in paragraph (1)(A) of this
36     definition was not terminated based upon a factor relating

 

 

HB4549 - 5 - LRB093 20789 SAS 46704 b

1     to nonpayment of premiums or fraud;
2         (4) if the individual (other than an individual who has
3     been certified as eligible pursuant to the federal Trade
4     Act of 2002) had been offered the option of continuation
5     coverage under a COBRA continuation provision or under a
6     similar State program, who elected such coverage; and
7         (5) who, if the individual elected such continuation
8     coverage, has exhausted such continuation coverage under
9     such provision or program.
10     However, an individual who has been certified as eligible
11 pursuant to the federal Trade Act of 2002 shall not be required
12 to elect continuation coverage under a COBRA continuation
13 provision or under a similar state program.
14     "Group health insurance coverage" means, in connection
15 with a group health plan, health insurance coverage offered in
16 connection with that plan.
17     "Group health plan" has the same meaning given that term in
18 the federal Health Insurance Portability and Accountability
19 Act of 1996.
20     "Governmental plan" has the same meaning given that term in
21 the federal Health Insurance Portability and Accountability
22 Act of 1996.
23     "Health insurance coverage" means benefits consisting of
24 medical care (provided directly, through insurance or
25 reimbursement, or otherwise and including items and services
26 paid for as medical care) under any hospital and medical
27 expense-incurred policy, certificate, or contract provided by
28 an insurer, non-profit health care service plan contract,
29 health maintenance organization or other subscriber contract,
30 or any other health care plan or arrangement that pays for or
31 furnishes medical or health care services whether by insurance
32 or otherwise. Health insurance coverage shall not include short
33 term, accident only, disability income, hospital confinement
34 or fixed indemnity, dental only, vision only, limited benefit,
35 or credit insurance, coverage issued as a supplement to
36 liability insurance, insurance arising out of a workers'

 

 

HB4549 - 6 - LRB093 20789 SAS 46704 b

1 compensation or similar law, automobile medical-payment
2 insurance, or insurance under which benefits are payable with
3 or without regard to fault and which is statutorily required to
4 be contained in any liability insurance policy or equivalent
5 self-insurance.
6     "Health insurance issuer" means an insurance company,
7 insurance service, or insurance organization (including a
8 health maintenance organization and a voluntary health
9 services plan) that is authorized to transact health insurance
10 business in this State. Such term does not include a group
11 health plan.
12     "Health Maintenance Organization" means an organization as
13 defined in the Health Maintenance Organization Act.
14     "Hospice" means a program as defined in and licensed under
15 the Hospice Program Licensing Act.
16     "Hospital" means a duly licensed institution as defined in
17 the Hospital Licensing Act, an institution that meets all
18 comparable conditions and requirements in effect in the state
19 in which it is located, or the University of Illinois Hospital
20 as defined in the University of Illinois Hospital Act.
21     "Individual health insurance coverage" means health
22 insurance coverage offered to individuals in the individual
23 market, but does not include short-term, limited-duration
24 insurance.
25     "Insured" means any individual resident of this State who
26 is eligible to receive benefits from any insurer (including
27 health insurance coverage offered in connection with a group
28 health plan) or health insurance issuer as defined in this
29 Section.
30     "Insurer" means any insurance company authorized to
31 transact health insurance business in this State and any
32 corporation that provides medical services and is organized
33 under the Voluntary Health Services Plans Act or the Health
34 Maintenance Organization Act. "Insurer" also includes any
35 self-insurance arrangement covered by stop-loss insurance that
36 provides health care benefits in this State.

 

 

HB4549 - 7 - LRB093 20789 SAS 46704 b

1     "Medical assistance" means the State medical assistance or
2 medical assistance no grant (MANG) programs provided under
3 Title XIX of the Social Security Act and Articles V (Medical
4 Assistance) and VI (General Assistance) of the Illinois Public
5 Aid Code (or any successor program) or under any similar
6 program of health care benefits in a state other than Illinois.
7     "Medically necessary" means that a service, drug, or supply
8 is necessary and appropriate for the diagnosis or treatment of
9 an illness or injury in accord with generally accepted
10 standards of medical practice at the time the service, drug, or
11 supply is provided. When specifically applied to a confinement
12 it further means that the diagnosis or treatment of the covered
13 person's medical symptoms or condition cannot be safely
14 provided to that person as an outpatient. A service, drug, or
15 supply shall not be medically necessary if it: (i) is
16 investigational, experimental, or for research purposes; or
17 (ii) is provided solely for the convenience of the patient, the
18 patient's family, physician, hospital, or any other provider;
19 or (iii) exceeds in scope, duration, or intensity that level of
20 care that is needed to provide safe, adequate, and appropriate
21 diagnosis or treatment; or (iv) could have been omitted without
22 adversely affecting the covered person's condition or the
23 quality of medical care; or (v) involves the use of a medical
24 device, drug, or substance not formally approved by the United
25 States Food and Drug Administration.
26     "Medical care" means the ordinary and usual professional
27 services rendered by a physician or other specified provider
28 during a professional visit for treatment of an illness or
29 injury.
30     "Medicare" means coverage under both Part A and Part B of
31 Title XVIII of the Social Security Act, 42 U.S.C. Sec. 1395, et
32 seq.
33     "Minimum premium plan" means an arrangement whereby a
34 specified amount of health care claims is self-funded, but the
35 insurance company assumes the risk that claims will exceed that
36 amount.

 

 

HB4549 - 8 - LRB093 20789 SAS 46704 b

1     "Participating transplant center" means a hospital
2 designated by the Board as a preferred or exclusive provider of
3 services for one or more specified human organ or tissue
4 transplants for which the hospital has signed an agreement with
5 the Board to accept a transplant payment allowance for all
6 expenses related to the transplant during a transplant benefit
7 period.
8     "Physician" means a person licensed to practice medicine
9 pursuant to the Medical Practice Act of 1987.
10     "Plan" means the Comprehensive Health Insurance Plan
11 established by this Act.
12     "Plan of operation" means the plan of operation of the
13 Plan, including articles, bylaws and operating rules, adopted
14 by the board pursuant to this Act.
15     "Provider" means any hospital, skilled nursing facility,
16 hospice, home health agency, physician, registered pharmacist
17 acting within the scope of that registration, or any other
18 person or entity licensed in Illinois to furnish medical care.
19     "Qualified high risk pool" has the same meaning given that
20 term in the federal Health Insurance Portability and
21 Accountability Act of 1996.
22     "Resident" means a person who is and continues to be
23 legally domiciled and physically residing on a permanent and
24 full-time basis in a place of permanent habitation in this
25 State that remains that person's principal residence and from
26 which that person is absent only for temporary or transitory
27 purpose.
28     "Skilled nursing facility" means a facility or that portion
29 of a facility that is licensed by the Illinois Department of
30 Public Health under the Nursing Home Care Act or a comparable
31 licensing authority in another state to provide skilled nursing
32 care.
33     "Stop-loss coverage" means an arrangement whereby an
34 insurer insures against the risk that any one claim will exceed
35 a specific dollar amount or that the entire loss of a
36 self-insurance plan will exceed a specific amount.

 

 

HB4549 - 9 - LRB093 20789 SAS 46704 b

1     "Third party administrator" means an administrator as
2 defined in Section 511.101 of the Illinois Insurance Code who
3 is licensed under Article XXXI 1/4 of that Code.
4 (Source: P.A. 92-153, eff. 7-25-01; 93-33, eff. 6-23-03; 93-34,
5 eff. 6-23-03; 93-477, eff. 8-8-03; 93-622, eff. 12-18-03.)
 
6     (215 ILCS 105/12)  (from Ch. 73, par. 1312)
7     Sec. 12. Deficit or surplus.
8     a. If premiums or other receipts by the Board exceed the
9 amount required for the operation of the Plan, including actual
10 losses and administrative expenses of the Plan, the Board shall
11 direct that the excess be held at interest, in a bank
12 designated by the Board, or used to offset future losses or to
13 reduce Plan premiums. In this subsection, the term "future
14 losses" includes reserves for incurred but not reported claims.
15     b. Any deficit incurred or expected to be incurred on
16 behalf of eligible persons who qualify for plan coverage under
17 Section 7 of this Act shall be recouped by an appropriation
18 made by the General Assembly.
19     c. For the purposes of this Section, a deficit shall be
20 incurred when anticipated losses and incurred but not reported
21 claims expenses exceed anticipated income from earned premiums
22 net of administrative expenses.
23     d. Any deficit incurred or expected to be incurred on
24 behalf of federally eligible individuals who qualify for Plan
25 coverage under Section 15 of this Act shall be recouped by an
26 assessment of all insurers made in accordance with the
27 provisions of this Section. The Board shall within 90 days of
28 the effective date of this amendatory Act of 1997 and within
29 the first quarter of each fiscal year thereafter assess all
30 insurers for the anticipated deficit in accordance with the
31 provisions of this Section. The board may also make additional
32 assessments no more than 4 times a year to fund unanticipated
33 deficits, implementation expenses, and cash flow needs.
34         (1) Each insurer's assessment shall be determined by
35     multiplying the total amount to be assessed by a fraction,

 

 

HB4549 - 10 - LRB093 20789 SAS 46704 b

1     the numerator of which equals the number of Illinois
2     insureds and certificate holders insured, reinsured, or
3     covered, either directly or indirectly, by each insurer,
4     and the denominator of which equals the total of all
5     Illinois insureds and certificate holders insured,
6     reinsured, or covered, either directly or indirectly, by
7     all insurers, all determined as of the end of the prior
8     calendar year;
9         (2) The Plan shall ensure that each insured and
10     certificate holder is counted only once with respect to any
11     assessment. For that purpose, the Plan shall require each
12     insurer that obtains reinsurance of its insureds and
13     certificate holders to include in its count of insureds and
14     certificate holders all insureds and certificate holders
15     whose coverage is reinsured in whole or part. The Plan
16     shall allow an insurer who is a reinsurer to exclude from
17     its number of insureds those that have been counted by the
18     primary insurer or the primary reinsurer for the purpose of
19     determining its assessment under this subsection;
20         (3) Each insurer shall pay its assessment as required
21     by the Plan;
22         (4) If assessments exceed the amounts actually needed,
23     the excess shall be held and invested and, with the
24     earnings and interest, used by the Plan to offset future
25     net losses or to reduce pool premiums. For purposes of this
26     subsection, future net losses include reserves for
27     incurred but not reported claims;
28     e. An insurer's assessment shall be determined by
29 multiplying the total assessment, as determined in subsection
30 d. of this Section, by a fraction, the numerator of which
31 equals that insurer's direct Illinois premiums during the
32 preceding calendar year and the denominator of which equals the
33 total of all insurers' direct Illinois premiums. The Board may
34 exempt those insurers whose share as determined under this
35 subsection would be so minimal as to not exceed the estimated
36 cost of levying the assessment.

 

 

HB4549 - 11 - LRB093 20789 SAS 46704 b

1     f. The Board shall charge and collect from each insurer the
2 amounts determined to be due under this Section. The assessment
3 shall be billed by Board invoice based upon the insurer's
4 direct Illinois premium income as shown in its annual statement
5 for the preceding calendar year as filed with the Director. The
6 invoice shall be due upon receipt and must be paid no later
7 than 30 days after receipt by the insurer.
8     g. When an insurer fails to pay the full amount of any
9 assessment of $100 or more due under this Section there shall
10 be added to the amount due as a penalty the greater of $50 or an
11 amount equal to 5% of the deficiency for each month or part of
12 a month that the deficiency remains unpaid.
13     h. Amounts collected under this Section shall be paid to
14 the Board for deposit into the Plan Fund authorized by Section
15 3 of this Act.
16     i. An insurer may petition the Director for an abatement or
17 deferment of all or part of an assessment imposed by the Board.
18 The Director may abate or defer, in whole or in part, the
19 assessment if, in the opinion of the Director, payment of the
20 assessment would endanger the ability of the insurer to fulfill
21 its contractual obligations. In the event an assessment against
22 an insurer is abated or deferred in whole or in part, the
23 amount by which the assessment is abated or deferred shall be
24 assessed against the other insurers in a manner consistent with
25 the basis for assessments set forth in this subsection. The
26 insurer receiving a deferment shall remain liable to the plan
27 for the deficiency for 4 years.
28     j. The board shall establish procedures for appeal by any
29 insurer subject to assessment pursuant to this Section. Such
30 procedures shall require that:
31         (1) Any insurer that wishes to appeal all or any part
32     of an assessment made pursuant to this Section shall first
33     pay the amount of the assessment as set forth in the
34     invoice provided by the board within the time provided in
35     subsection f. of this Section. The board shall hold such
36     payments in a separate interest-bearing account. The

 

 

HB4549 - 12 - LRB093 20789 SAS 46704 b

1     payments shall be accompanied by a statement in writing
2     that the payment is made under appeal. The statement shall
3     specify the grounds for the appeal. The insurer may be
4     represented in its appeal by counsel or other
5     representative of its choosing.
6         (2) Within 90 days following the payment of an
7     assessment under appeal by any insurer, the board shall
8     notify the insurer or representative designated by the
9     insurer in writing of its determination with respect to the
10     appeal and the basis or bases for that determination unless
11     the Board notifies the insurer that a reasonable amount of
12     additional time is required to resolve the issues raised by
13     the appeal.
14         (3) The board shall refer to the Director any question
15     concerning the amount of direct Illinois premium income as
16     shown in an insurer's annual statement for the preceding
17     calendar year on file with the Director on the invoice date
18     of the assessment. Unless additional time is required to
19     resolve the question, the Director shall within 60 days
20     report to the board in writing his determination respecting
21     the amount of direct Illinois premium income on file on the
22     invoice date of the assessment.
23         (4) In the event the board determines that the insurer
24     is entitled to a refund, the refund shall be paid within 30
25     days following the date upon which the board makes its
26     determination, together with the accrued interest.
27     Interest on any refund due an insurer shall be paid at the
28     rate actually earned by the Board on the separate account.
29         (5) The amount of any such refund shall then be
30     assessed against all insurers in a manner consistent with
31     the basis for assessment as otherwise authorized by this
32     Section.
33         (6) The board's determination with respect to any
34     appeal received pursuant to this subsection shall be a
35     final administrative decision as defined in Section 3-101
36     of the Code of Civil Procedure. The provisions of the

 

 

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1     Administrative Review Law shall apply to and govern all
2     proceedings for the judicial review of final
3     administrative decisions of the board.
4         (7) If an insurer fails to appeal an assessment in
5     accordance with the provisions of this subsection, the
6     insurer shall be deemed to have waived its right of appeal.
7     The provisions of this subsection apply to all assessments
8 made in any calendar year ending on or after December 31, 1997.
9 (Source: P.A. 90-30, eff. 7-1-97; 90-567, eff. 1-23-98.)