State of Illinois
91st General Assembly
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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,
10    356y of 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,  356y of 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.

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