State of Illinois
90th General Assembly
Legislation

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90_HB1686

      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  Plans  Act  to  prohibit  the
      denial  of  coverage  to  an  individual  solely  because the
      individual is being treated for drug abuse.
                                                     LRB9004888JSgc
                                               LRB9004888JSgc
 1        AN ACT  concerning  health  coverage  for  persons  being
 2    treated for drug abuse, 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.  Drug  treatment;  denial  of  coverage.   An
 9    individual  or  group policy of accident and health insurance
10    amended, delivered, issued, or renewed  after  the  effective
11    date  of  this  amendatory  Act  of  1997  may  not contain a
12    provision limiting,  excluding,  or  denying  coverage  to  a
13    covered  individual  or  an  applicant  for  coverage  solely
14    because the individual is being treated for drug abuse.
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
                            -2-                LRB9004888JSgc
 1    "domestic companies":
 2             (1)  a  corporation  authorized  under  the  Medical
 3        Service Plan Act, the Dental Service Plan Act, the Vision
 4        Service  Plan  Act,  the Pharmaceutical Service Plan Act,
 5        the Voluntary Health Services Plan Act, or the  Nonprofit
 6        Health Care Service Plan Act;
 7             (2)  a  corporation organized under the laws of this
 8        State; or
 9             (3)  a  corporation  organized  under  the  laws  of
10        another state, 30% or more of the enrollees of which  are
11        residents  of this State, except a corporation subject to
12        substantially the  same  requirements  in  its  state  of
13        organization  as  is  a  "domestic company" under Article
14        VIII 1/2 of the Illinois Insurance Code.
15        (c)  In considering the merger, consolidation,  or  other
16    acquisition  of  control of a Health Maintenance Organization
17    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
18             (1)  the Director shall give  primary  consideration
19        to  the  continuation  of  benefits  to enrollees and the
20        financial conditions of the acquired  Health  Maintenance
21        Organization  after  the  merger, consolidation, or other
22        acquisition of control takes effect;
23             (2)(i)  the criteria specified in subsection  (1)(b)
24        of Section 131.8 of the Illinois Insurance Code shall not
25        apply  and (ii) the Director, in making his determination
26        with respect  to  the  merger,  consolidation,  or  other
27        acquisition  of  control,  need not take into account the
28        effect on competition of the  merger,  consolidation,  or
29        other acquisition of control;
30             (3)  the  Director  shall  have the power to require
31        the following information:
32                  (A)  certification by an independent actuary of
33             the  adequacy  of  the  reserves   of   the   Health
34             Maintenance Organization sought to be acquired;
                            -3-                LRB9004888JSgc
 1                  (B)  pro  forma financial statements reflecting
 2             the combined balance sheets of the acquiring company
 3             and the Health Maintenance Organization sought to be
 4             acquired as of the end of the preceding year and  as
 5             of  a date 90 days prior to the acquisition, as well
 6             as  pro  forma   financial   statements   reflecting
 7             projected  combined  operation  for  a  period  of 2
 8             years;
 9                  (C)  a pro forma  business  plan  detailing  an
10             acquiring   party's   plans   with  respect  to  the
11             operation of  the  Health  Maintenance  Organization
12             sought  to be acquired for a period of not less than
13             3 years; and
14                  (D)  such other  information  as  the  Director
15             shall require.
16        (d)  The  provisions  of Article VIII 1/2 of the Illinois
17    Insurance Code and this Section 5-3 shall apply to  the  sale
18    by any health maintenance organization of greater than 10% of
19    its  enrollee  population  (including  without limitation the
20    health maintenance organization's right, title, and  interest
21    in and to its health care certificates).
22        (e)  In  considering  any  management contract or service
23    agreement subject to Section 141.1 of the Illinois  Insurance
24    Code,  the  Director  (i)  shall, in addition to the criteria
25    specified in Section 141.2 of the  Illinois  Insurance  Code,
26    take  into  account  the effect of the management contract or
27    service  agreement  on  the  continuation  of   benefits   to
28    enrollees   and   the   financial  condition  of  the  health
29    maintenance organization to be managed or serviced, and  (ii)
30    need  not  take  into  account  the  effect of the management
31    contract or service agreement on competition.
32        (f)  Except for small employer groups as defined  in  the
33    Small  Employer  Rating,  Renewability and Portability Health
34    Insurance Act and except for medicare supplement policies  as
                            -4-                LRB9004888JSgc
 1    defined  in  Section  363  of  the Illinois Insurance Code, a
 2    Health Maintenance Organization may by contract agree with  a
 3    group  or  other  enrollment unit to effect refunds or charge
 4    additional premiums under the following terms and conditions:
 5             (i)  the amount of, and other terms  and  conditions
 6        with respect to, the refund or additional premium are set
 7        forth  in the group or enrollment unit contract agreed in
 8        advance of the period for which a refund is to be paid or
 9        additional premium is to be charged (which  period  shall
10        not be less than one year); and
11             (ii)  the amount of the refund or additional premium
12        shall   not   exceed   20%   of  the  Health  Maintenance
13        Organization's profitable or unprofitable experience with
14        respect to the group or other  enrollment  unit  for  the
15        period  (and,  for  purposes  of  a  refund or additional
16        premium, the profitable or unprofitable experience  shall
17        be calculated taking into account a pro rata share of the
18        Health   Maintenance  Organization's  administrative  and
19        marketing expenses, but shall not include any  refund  to
20        be made or additional premium to be paid pursuant to this
21        subsection (f)).  The Health Maintenance Organization and
22        the   group   or  enrollment  unit  may  agree  that  the
23        profitable or unprofitable experience may  be  calculated
24        taking into account the refund period and the immediately
25        preceding 2 plan years.
26        The  Health  Maintenance  Organization  shall  include  a
27    statement in the evidence of coverage issued to each enrollee
28    describing the possibility of a refund or additional premium,
29    and  upon request of any group or enrollment unit, provide to
30    the group or enrollment unit a description of the method used
31    to  calculate  (1)  the  Health  Maintenance   Organization's
32    profitable experience with respect to the group or enrollment
33    unit and the resulting refund to the group or enrollment unit
34    or  (2)  the  Health  Maintenance Organization's unprofitable
                            -5-                LRB9004888JSgc
 1    experience with respect to the group or enrollment  unit  and
 2    the  resulting  additional premium to be paid by the group or
 3    enrollment unit.
 4        In  no  event  shall  the  Illinois  Health   Maintenance
 5    Organization  Guaranty  Association  be  liable  to  pay  any
 6    contractual  obligation  of  an insolvent organization to pay
 7    any refund authorized under this Section.
 8    (Source: P.A. 88-313; 89-90, eff. 6-30-95.)
 9        Section 15.  The Limited Health Service Organization  Act
10    is amended by changing Section 4003 as follows:
11        (215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
12        Sec.  4003.  Illinois Insurance Code provisions.  Limited
13    health  service  organizations  shall  be  subject   to   the
14    provisions  of  Sections  133,  134,  137, 140, 141.1, 141.2,
15    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
16    154.6,  154.7,  154.8,  155.04, 355.2, 356t, 401, 401.1, 402,
17    403, 403A, 408, 408.2, and 412, and Articles VIII  1/2,  XII,
18    XII  1/2,  XIII, XIII 1/2, and XXVI of the Illinois Insurance
19    Code.  For purposes of the Illinois  Insurance  Code,  except
20    for  Articles  XIII  and  XIII  1/2,  limited  health service
21    organizations in the following categories are  deemed  to  be
22    domestic companies:
23             (1)  a corporation under the laws of this State; or
24             (2)  a  corporation  organized  under  the  laws  of
25        another  state, 30% of more of the enrollees of which are
26        residents of this State, except a corporation subject  to
27        substantially  the  same  requirements  in  its  state of
28        organization as is a domestic company under Article  VIII
29        1/2 of the Illinois Insurance Code.
30    (Source: P.A. 86-600; 87-587; 87-1090.)
31        Section  20.  The  Voluntary Health Services Plans Act is
                            -6-                LRB9004888JSgc
 1    amended by changing Section 10 as follows:
 2        (215 ILCS 165/10) (from Ch. 32, par. 604)
 3        Sec.  10.  Application  of  Insurance  Code   provisions.
 4    Health  services plan corporations and all persons interested
 5    therein  or  dealing  therewith  shall  be  subject  to   the
 6    provisions  of  Article  XII  1/2 and Sections 3.1, 133, 140,
 7    143, 143c, 149, 354, 355.2, 356r, 356t,  367.2,  401,  401.1,
 8    402,  403,  403A, 408, 408.2, and 412, and paragraphs (7) and
 9    (15) of Section 367 of the Illinois Insurance Code.
10    (Source: P.A. 89-514, eff. 7-17-96.)

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