Public Act 90-0254 of the 90th General Assembly

State of Illinois
Public Acts
90th General Assembly

[ Home ] [ Public Acts ] [ ILCS ] [ Search ] [ Bottom ]


Public Act 90-0254

SB648 Enrolled                                 LRB9001222SMdv

    AN ACT to amend the Illinois Public Aid Code by  changing
Section 5-16.3.

    Be  it  enacted  by  the People of the State of Illinois,
represented in the General Assembly:

    Section 5.  The Illinois Public Aid Code  is  amended  by
changing Section 5-16.3 as follows:

    (305 ILCS 5/5-16.3)
    (Text of Section before amendment by P.A. 89-507)
    Sec. 5-16.3.  System for integrated health care services.
    (a)  It shall be the public policy of the State to adopt,
to  the  extent  practicable,  a  health  care  program  that
encourages  the  integration  of  health  care  services  and
manages the health care of program enrollees while preserving
reasonable  choice  within  a  competitive and cost-efficient
environment.  In  furtherance  of  this  public  policy,  the
Illinois Department shall develop and implement an integrated
health  care  program  consistent with the provisions of this
Section.  The provisions of this Section apply  only  to  the
integrated  health  care  program created under this Section.
Persons enrolled in the integrated health  care  program,  as
determined  by  the  Illinois  Department  by  rule, shall be
afforded a choice among health care delivery  systems,  which
shall  include,  but  are not limited to, (i) fee for service
care managed by a primary care physician licensed to practice
medicine in  all  its  branches,  (ii)  managed  health  care
entities,   and  (iii)  federally  qualified  health  centers
(reimbursed according  to  a  prospective  cost-reimbursement
methodology)  and  rural health clinics (reimbursed according
to  the  Medicare  methodology),  where  available.   Persons
enrolled in the integrated health care program  also  may  be
offered indemnity insurance plans, subject to availability.
    For  purposes  of  this  Section,  a "managed health care
entity" means a health maintenance organization or a  managed
care community network as defined in this Section.  A "health
maintenance   organization"   means   a   health  maintenance
organization   as   defined   in   the   Health   Maintenance
Organization Act.  A "managed care community  network"  means
an entity, other than a health maintenance organization, that
is  owned,  operated, or governed by providers of health care
services within this State  and  that  provides  or  arranges
primary, secondary, and tertiary managed health care services
under  contract  with  the Illinois Department exclusively to
enrollees of the integrated health care  program.  A  managed
care   community  network  may  contract  with  the  Illinois
Department to provide only pediatric health care services.  A
county  provider  as defined in Section 15-1 of this Code may
contract with the Illinois Department to provide services  to
enrollees  of the integrated health care program as a managed
care community  network  without  the  need  to  establish  a
separate   entity   that  provides  services  exclusively  to
enrollees of the integrated health care program and shall  be
deemed  a managed care community network for purposes of this
Code only to the extent of the provision of services to those
enrollees in conjunction  with  the  integrated  health  care
program.   A  county  provider  shall be entitled to contract
with the Illinois Department with respect to any  contracting
region  located  in  whole  or  in part within the county.  A
county provider shall not be required to accept enrollees who
do not reside within the county.
    Each managed care community network must demonstrate  its
ability to bear the financial risk of serving enrollees under
this  program.   The  Illinois Department shall by rule adopt
criteria  for  assessing  the  financial  soundness  of  each
managed care community network. These  rules  shall  consider
the  extent  to  which  a  managed  care community network is
comprised of providers who directly render  health  care  and
are  located  within  the  community  in  which  they seek to
contract rather than solely arrange or finance  the  delivery
of health care.  These rules shall further consider a variety
of  risk-bearing  and  management  techniques,  including the
sufficiency of quality assurance and  utilization  management
programs  and  whether  a  managed care community network has
sufficiently demonstrated  its  financial  solvency  and  net
worth.  The  Illinois  Department's criteria must be based on
sound actuarial, financial, and  accounting  principles.   In
adopting  these  rules, the Illinois Department shall consult
with the  Illinois  Department  of  Insurance.  The  Illinois
Department  is  responsible  for  monitoring  compliance with
these rules.
    This Section may not be implemented before the  effective
date  of  these  rules, the approval of any necessary federal
waivers, and the completion of the review of  an  application
submitted,  at  least  60  days  before the effective date of
rules adopted under this Section, to the Illinois  Department
by a managed care community network.
    All  health  care delivery systems that contract with the
Illinois Department under the integrated health care  program
shall  clearly  recognize  a  health care provider's right of
conscience under the Right of Conscience Act.  In addition to
the provisions of that Act, no health  care  delivery  system
that   contracts  with  the  Illinois  Department  under  the
integrated health care program shall be required to  provide,
arrange  for,  or pay for any health care or medical service,
procedure, or product if that health care delivery system  is
owned,  controlled,  or  sponsored  by  or  affiliated with a
religious institution or religious  organization  that  finds
that health care or medical service, procedure, or product to
violate its religious and moral teachings and beliefs.
    (b)  The  Illinois  Department  may, by rule, provide for
different  benefit  packages  for  different  categories   of
persons  enrolled  in  the  program.  Mental health services,
alcohol and substance abuse  services,  services  related  to
children   with   chronic   or   acute  conditions  requiring
longer-term treatment and follow-up, and rehabilitation  care
provided  by  a  free-standing  rehabilitation  hospital or a
hospital rehabilitation unit may be excluded from  a  benefit
package  if  the  State  ensures that those services are made
available through a separate delivery system.   An  exclusion
does not prohibit the Illinois Department from developing and
implementing demonstration projects for categories of persons
or  services.   Benefit  packages  for  persons  eligible for
medical assistance under Articles V, VI,  and  XII  shall  be
based  on  the  requirements  of  those Articles and shall be
consistent with the Title XIX of  the  Social  Security  Act.
Nothing  in  this Act shall be construed to apply to services
purchased by the Department of Children and  Family  Services
and   the  Department  of  Mental  Health  and  Developmental
Disabilities under the provisions of Title 59 of the Illinois
Administrative Code, Part  132  ("Medicaid  Community  Mental
Health Services Program").
    (c)  The  program  established  by  this  Section  may be
implemented by the Illinois Department in various contracting
areas at various times.  The health care delivery systems and
providers available under the program may vary throughout the
State.  For purposes of contracting with managed health  care
entities   and   providers,  the  Illinois  Department  shall
establish contracting areas similar to the  geographic  areas
designated   by   the  Illinois  Department  for  contracting
purposes  under   the   Illinois   Competitive   Access   and
Reimbursement  Equity  Program (ICARE) under the authority of
Section 3-4 of the Illinois  Health  Finance  Reform  Act  or
similarly-sized  or  smaller  geographic areas established by
the Illinois Department by rule. A managed health care entity
shall be permitted to contract in any  geographic  areas  for
which  it  has  a  sufficient  provider network and otherwise
meets the  contracting  terms  of  the  State.  The  Illinois
Department  is  not  prohibited from entering into a contract
with a managed health care entity at any time.
    (d)  A managed health care entity that contracts with the
Illinois Department for the provision of services  under  the
program shall do all of the following, solely for purposes of
the integrated health care program:
         (1)  Provide  that any individual physician licensed
    to practice medicine in all its branches,  any  pharmacy,
    any    federally    qualified    health    center,    any
    therapeutically    certified    optometrist,    and   any
    podiatrist, that consistently meets the reasonable  terms
    and  conditions  established  by  the managed health care
    entity,  including  but  not  limited  to   credentialing
    standards,   quality   assurance   program  requirements,
    utilization    management     requirements,     financial
    responsibility     standards,     contracting     process
    requirements, and provider network size and accessibility
    requirements, must be accepted by the managed health care
    entity  for  purposes  of  the Illinois integrated health
    care program.  Any individual who  is  either  terminated
    from  or  denied  inclusion in the panel of physicians of
    the managed health care entity shall be given, within  10
    business   days   after  that  determination,  a  written
    explanation of the reasons for his or  her  exclusion  or
    termination  from  the panel. This paragraph (1) does not
    apply to the following:
              (A)  A  managed   health   care   entity   that
         certifies to the Illinois Department that:
                   (i)  it  employs  on a full-time basis 125
              or  more  Illinois   physicians   licensed   to
              practice medicine in all of its branches; and
                   (ii)  it  will  provide  medical  services
              through  its  employees to more than 80% of the
              recipients enrolled  with  the  entity  in  the
              integrated health care program; or
              (B)  A   domestic   stock   insurance   company
         licensed under clause (b) of class 1 of Section 4 of
         the  Illinois  Insurance Code if (i) at least 66% of
         the stock of the insurance company  is  owned  by  a
         professional   corporation   organized   under   the
         Professional Service Corporation Act that has 125 or
         more   shareholders   who  are  Illinois  physicians
         licensed to practice medicine in all of its branches
         and (ii) the  insurance  company  certifies  to  the
         Illinois  Department  that  at  least  80%  of those
         physician  shareholders  will  provide  services  to
         recipients  enrolled  with  the   company   in   the
         integrated health care program.
         (2)  Provide  for  reimbursement  for  providers for
    emergency care, as defined by the Illinois Department  by
    rule,  that  must be provided to its enrollees, including
    an emergency room screening fee, and urgent care that  it
    authorizes   for   its   enrollees,   regardless  of  the
    provider's  affiliation  with  the  managed  health  care
    entity. Providers shall be reimbursed for emergency  care
    at   an   amount   equal  to  the  Illinois  Department's
    fee-for-service rates for those medical services rendered
    by providers not under contract with the  managed  health
    care entity to enrollees of the entity.
         (3)  Provide  that  any  provider  affiliated with a
    managed health care entity may also provide services on a
    fee-for-service basis to Illinois Department clients  not
    enrolled in a managed health care entity.
         (4)  Provide client education services as determined
    and  approved  by  the Illinois Department, including but
    not  limited  to  (i)  education  regarding   appropriate
    utilization  of  health  care  services in a managed care
    system, (ii) written disclosure of treatment policies and
    any  restrictions  or  limitations  on  health  services,
    including,  but  not  limited  to,   physical   services,
    clinical   laboratory   tests,   hospital   and  surgical
    procedures,  prescription  drugs   and   biologics,   and
    radiological  examinations, and (iii) written notice that
    the enrollee may  receive  from  another  provider  those
    services covered under this program that are not provided
    by the managed health care entity.
         (5)  Provide  that  enrollees  within its system may
    choose the site for provision of services and  the  panel
    of health care providers.
         (6)  Not   discriminate   in   its   enrollment   or
    disenrollment   practices  among  recipients  of  medical
    services or program enrollees based on health status.
         (7)  Provide a  quality  assurance  and  utilization
    review   program   that   (i)   for   health  maintenance
    organizations  meets  the  requirements  of  the   Health
    Maintenance  Organization  Act  and (ii) for managed care
    community networks meets the requirements established  by
    the  Illinois  Department in rules that incorporate those
    standards   set   forth   in   the   Health   Maintenance
    Organization Act.
         (8)  Issue   a   managed    health    care    entity
    identification  card  to  each  enrollee upon enrollment.
    The card must contain all of the following:
              (A)  The enrollee's signature.
              (B)  The enrollee's health plan.
              (C)  The  name  and  telephone  number  of  the
         enrollee's primary care physician.
              (D)  A  telephone  number  to   be   used   for
         emergency service 24 hours per day, 7 days per week.
         The  telephone  number  required  to  be  maintained
         pursuant to this subparagraph by each managed health
         care   entity  shall,  at  minimum,  be  staffed  by
         medically  trained   personnel   and   be   provided
         directly,  or  under  arrangement,  at  an office or
         offices in  locations maintained solely  within  the
         State    of   Illinois.   For   purposes   of   this
         subparagraph, "medically  trained  personnel"  means
         licensed   practical  nurses  or  registered  nurses
         located in the State of Illinois  who  are  licensed
         pursuant to the Illinois Nursing Act of 1987.
         (9)  Ensure  that  every  primary care physician and
    pharmacy in the managed  health  care  entity  meets  the
    standards  established  by  the  Illinois  Department for
    accessibility  and  quality   of   care.   The   Illinois
    Department shall arrange for and oversee an evaluation of
    the  standards  established  under this paragraph (9) and
    may recommend any necessary changes to  these  standards.
    The  Illinois Department shall submit an annual report to
    the Governor and the General Assembly by April 1 of  each
    year  regarding  the  effect of the standards on ensuring
    access and quality of care to enrollees.
         (10)  Provide a procedure  for  handling  complaints
    that  (i)  for health maintenance organizations meets the
    requirements of the Health Maintenance  Organization  Act
    and  (ii)  for  managed care community networks meets the
    requirements established by the  Illinois  Department  in
    rules  that  incorporate those standards set forth in the
    Health Maintenance Organization Act.
         (11)  Maintain, retain, and make  available  to  the
    Illinois  Department records, data, and information, in a
    uniform manner determined  by  the  Illinois  Department,
    sufficient   for   the  Illinois  Department  to  monitor
    utilization, accessibility, and quality of care.
         (12)  Except for providers who are prepaid, pay  all
    approved  claims  for covered services that are completed
    and submitted to the managed health care entity within 30
    days after  receipt  of  the  claim  or  receipt  of  the
    appropriate capitation payment or payments by the managed
    health  care entity from the State for the month in which
    the  services  included  on  the  claim  were   rendered,
    whichever  is  later. If payment is not made or mailed to
    the provider by the managed health care entity by the due
    date under this subsection, an interest penalty of 1%  of
    any  amount  unpaid  shall  be  added  for  each month or
    fraction of a month  after  the  due  date,  until  final
    payment  is  made. Nothing in this Section shall prohibit
    managed health care entities and providers from  mutually
    agreeing to terms that require more timely payment.
         (13)  Provide   integration   with   community-based
    programs  provided  by certified local health departments
    such as Women, Infants, and  Children  Supplemental  Food
    Program  (WIC),  childhood  immunization programs, health
    education programs, case management programs, and  health
    screening programs.
         (14)  Provide  that the pharmacy formulary used by a
    managed health care entity and its contract providers  be
    no   more  restrictive  than  the  Illinois  Department's
    pharmaceutical program on  the  effective  date  of  this
    amendatory Act of 1994 and as amended after that date.
         (15)  Provide   integration   with   community-based
    organizations,   including,   but  not  limited  to,  any
    organization  that  has  operated   within   a   Medicaid
    Partnership  as  defined  by  this Code or by rule of the
    Illinois Department, that may continue to operate under a
    contract with the Illinois Department or a managed health
    care entity under this Section to provide case management
    services to  Medicaid  clients  in  designated  high-need
    areas.
    The   Illinois   Department   may,   by  rule,  determine
methodologies to limit financial liability for managed health
care  entities  resulting  from  payment  for   services   to
enrollees provided under the Illinois Department's integrated
health  care  program.  Any  methodology so determined may be
considered or implemented by the Illinois Department  through
a  contract  with  a  managed  health  care entity under this
integrated health care program.
    The Illinois Department shall contract with an entity  or
entities  to  provide  external  peer-based quality assurance
review for the integrated health  care  program.  The  entity
shall  be  representative  of Illinois physicians licensed to
practice medicine in all  its  branches  and  have  statewide
geographic  representation in all specialties of medical care
that are provided within the integrated health care  program.
The  entity may not be a third party payer and shall maintain
offices in locations around the State  in  order  to  provide
service   and   continuing  medical  education  to  physician
participants within the integrated health care program.   The
review  process  shall be developed and conducted by Illinois
physicians licensed to practice medicine in all its branches.
In consultation with the entity, the Illinois Department  may
contract  with  other  entities  for  professional peer-based
quality assurance review of individual categories of services
other than services provided, supervised, or  coordinated  by
physicians licensed to practice medicine in all its branches.
The Illinois Department shall establish, by rule, criteria to
avoid  conflicts  of  interest  in  the  conduct  of  quality
assurance activities consistent with professional peer-review
standards.   All   quality   assurance  activities  shall  be
coordinated by the Illinois Department.
    (e)  All  persons  enrolled  in  the  program  shall   be
provided   with   a   full   written   explanation   of   all
fee-for-service  and  managed  health care plan options and a
reasonable  opportunity  to  choose  among  the  options   as
provided  by  rule.  The Illinois Department shall provide to
enrollees, upon enrollment  in  the  integrated  health  care
program  and  at  least  annually  thereafter,  notice of the
process  for  requesting  an  appeal   under   the   Illinois
Department's      administrative      appeal      procedures.
Notwithstanding  any other Section of this Code, the Illinois
Department may provide by rule for the Illinois Department to
assign a  person  enrolled  in  the  program  to  a  specific
provider  of  medical  services  or to a specific health care
delivery system if an enrollee has failed to exercise  choice
in  a  timely  manner.  An  enrollee assigned by the Illinois
Department shall be afforded the opportunity to disenroll and
to select a  specific  provider  of  medical  services  or  a
specific health care delivery system within the first 30 days
after  the assignment. An enrollee who has failed to exercise
choice in a timely manner may be assigned only if there are 3
or more managed health care  entities  contracting  with  the
Illinois Department within the contracting area, except that,
outside  the  City of Chicago, this requirement may be waived
for an area by rules adopted by the Illinois Department after
consultation with all hospitals within the contracting  area.
The Illinois Department shall establish by rule the procedure
for  random  assignment  of  enrollees  who  fail to exercise
choice in a timely manner to a specific managed  health  care
entity  in  proportion  to  the  available  capacity  of that
managed health care entity. Assignment to a specific provider
of medical services or to  a  specific  managed  health  care
entity may not exceed that provider's or entity's capacity as
determined  by  the  Illinois Department.  Any person who has
chosen a specific provider of medical services or a  specific
managed  health  care  entity,  or  any  person  who has been
assigned  under  this  subsection,   shall   be   given   the
opportunity to change that choice or assignment at least once
every  12 months, as determined by the Illinois Department by
rule. The Illinois  Department  shall  maintain  a  toll-free
telephone  number  for  program  enrollees'  use in reporting
problems with managed health care entities.
    (f)  If a person becomes eligible  for  participation  in
the  integrated  health  care  program  while  he  or  she is
hospitalized, the Illinois Department  may  not  enroll  that
person  in  the  program  until  after  he  or  she  has been
discharged from the hospital.  This subsection does not apply
to  newborn  infants  whose  mothers  are  enrolled  in   the
integrated health care program.
    (g)  The  Illinois  Department  shall, by rule, establish
for managed health care entities rates that (i) are certified
to be actuarially sound, as determined by an actuary  who  is
an  associate  or  a  fellow of the Society of Actuaries or a
member of the American  Academy  of  Actuaries  and  who  has
expertise  and  experience  in  medical insurance and benefit
programs,  in  accordance  with  the  Illinois   Department's
current  fee-for-service  payment  system, and (ii) take into
account any difference of cost  to  provide  health  care  to
different  populations  based  on  gender, age, location, and
eligibility category.  The  rates  for  managed  health  care
entities shall be determined on a capitated basis.
    The  Illinois Department by rule shall establish a method
to adjust its payments to managed health care entities  in  a
manner intended to avoid providing any financial incentive to
a  managed  health  care entity to refer patients to a county
provider, in an Illinois county having a  population  greater
than  3,000,000,  that  is  paid  directly  by  the  Illinois
Department.   The Illinois Department shall by April 1, 1997,
and  annually  thereafter,  review  the  method   to   adjust
payments.  Payments  by the Illinois Department to the county
provider,  for  persons  not  enrolled  in  a  managed   care
community  network  owned  or  operated by a county provider,
shall be paid on a fee-for-service basis under Article XV  of
this Code.
    The  Illinois Department by rule shall establish a method
to reduce its payments to managed  health  care  entities  to
take  into  consideration (i) any adjustment payments paid to
hospitals under subsection (h) of this Section to the  extent
those  payments,  or  any  part  of those payments, have been
taken into account in establishing capitated rates under this
subsection (g) and (ii) the implementation  of  methodologies
to limit financial liability for managed health care entities
under subsection (d) of this Section.
    (h)  For  hospital  services  provided by a hospital that
contracts with  a  managed  health  care  entity,  adjustment
payments  shall  be  paid  directly  to  the  hospital by the
Illinois Department.  Adjustment  payments  may  include  but
need    not   be   limited   to   adjustment   payments   to:
disproportionate share hospitals under Section 5-5.02 of this
Code; primary care access health care education payments  (89
Ill. Adm. Code 149.140); payments for capital, direct medical
education,  indirect  medical education, certified registered
nurse anesthetist, and kidney acquisition costs (89 Ill. Adm.
Code 149.150(c)); uncompensated care payments (89  Ill.  Adm.
Code  148.150(h));  trauma center payments (89 Ill. Adm. Code
148.290(c)); rehabilitation hospital payments (89  Ill.  Adm.
Code  148.290(d));  perinatal  center  payments (89 Ill. Adm.
Code 148.290(e)); obstetrical care  payments  (89  Ill.  Adm.
Code 148.290(f)); targeted access payments (89 Ill. Adm. Code
148.290(g)); Medicaid high volume payments (89 Ill. Adm. Code
148.290(h));  and  outpatient indigent volume adjustments (89
Ill. Adm. Code 148.140(b)(5)).
    (i)  For  any  hospital  eligible  for   the   adjustment
payments described in subsection (h), the Illinois Department
shall  maintain,  through  the  period  ending June 30, 1995,
reimbursement levels in accordance with statutes and rules in
effect on April 1, 1994.
    (j)  Nothing contained in this Code in any way limits  or
otherwise  impairs  the  authority  or  power of the Illinois
Department to enter into a negotiated  contract  pursuant  to
this  Section  with  a managed health care entity, including,
but not limited to, a health maintenance  organization,  that
provides  for  termination  or  nonrenewal  of  the  contract
without  cause  upon  notice  as provided in the contract and
without a hearing.
    (k)  Section  5-5.15  does  not  apply  to  the   program
developed and implemented pursuant to this Section.
    (l)  The Illinois Department shall, by rule, define those
chronic or acute medical conditions of childhood that require
longer-term  treatment  and  follow-up  care.   The  Illinois
Department shall ensure that services required to treat these
conditions are available through a separate delivery system.
    A  managed  health  care  entity  that contracts with the
Illinois Department may refer a child with medical conditions
described in the rules adopted under this subsection directly
to a children's hospital or  to  a  hospital,  other  than  a
children's  hospital,  that is qualified to provide inpatient
and outpatient  services  to  treat  those  conditions.   The
Illinois    Department    shall    provide    fee-for-service
reimbursement  directly  to  a  children's hospital for those
services pursuant to Title 89 of the Illinois  Administrative
Code,  Section  148.280(a),  at  a rate at least equal to the
rate in effect on March 31, 1994. For hospitals,  other  than
children's hospitals, that are qualified to provide inpatient
and  outpatient  services  to  treat  those  conditions,  the
Illinois  Department  shall  provide  reimbursement for those
services on a fee-for-service basis, at a rate at least equal
to the rate in effect for those other hospitals on March  31,
1994.
    A  children's  hospital  shall be directly reimbursed for
all  services  provided  at  the  children's  hospital  on  a
fee-for-service basis pursuant to Title 89  of  the  Illinois
Administrative  Code,  Section 148.280(a), at a rate at least
equal to the rate in effect on  March  31,  1994,  until  the
later  of  (i)  implementation  of the integrated health care
program under this Section  and  development  of  actuarially
sound  capitation rates for services other than those chronic
or  acute  medical  conditions  of  childhood  that   require
longer-term  treatment  and  follow-up care as defined by the
Illinois  Department  in  the  rules   adopted   under   this
subsection or (ii) March 31, 1996.
    Notwithstanding   anything  in  this  subsection  to  the
contrary, a managed health care  entity  shall  not  consider
sources  or methods of payment in determining the referral of
a child.   The  Illinois  Department  shall  adopt  rules  to
establish   criteria   for  those  referrals.   The  Illinois
Department by rule shall establish a  method  to  adjust  its
payments to managed health care entities in a manner intended
to  avoid  providing  any  financial  incentive  to a managed
health care entity to refer patients to  a  provider  who  is
paid directly by the Illinois Department.
    (m)  Behavioral health services provided or funded by the
Department  of  Mental Health and Developmental Disabilities,
the  Department  of  Alcoholism  and  Substance  Abuse,   the
Department  of Children and Family Services, and the Illinois
Department  shall  be  excluded  from  a   benefit   package.
Conditions  of  an  organic  or  physical  origin  or nature,
including  medical  detoxification,  however,  may   not   be
excluded.   In  this subsection, "behavioral health services"
means  mental  health  services  and  subacute  alcohol   and
substance   abuse  treatment  services,  as  defined  in  the
Illinois Alcoholism and Other Drug Dependency Act.   In  this
subsection,  "mental health services" includes, at a minimum,
the following services funded by the Illinois Department, the
Department of Mental Health and  Developmental  Disabilities,
or  the  Department  of  Children  and  Family  Services: (i)
inpatient  hospital  services,  including  related  physician
services,    related    psychiatric    interventions,     and
pharmaceutical  services  provided  to  an eligible recipient
hospitalized  with  a  primary   diagnosis   of   psychiatric
disorder;  (ii)  outpatient mental health services as defined
and specified in Title  59  of  the  Illinois  Administrative
Code,  Part  132;  (iii)  any  other outpatient mental health
services funded by the Illinois Department  pursuant  to  the
State    of    Illinois    Medicaid    Plan;   (iv)   partial
hospitalization; and (v) follow-up stabilization  related  to
any of those services.  Additional behavioral health services
may  be  excluded under this subsection as mutually agreed in
writing by the Illinois Department  and  the  affected  State
agency  or  agencies.   The exclusion of any service does not
prohibit  the  Illinois  Department   from   developing   and
implementing demonstration projects for categories of persons
or   services.    The   Department   of   Mental  Health  and
Developmental Disabilities, the Department  of  Children  and
Family   Services,  and  the  Department  of  Alcoholism  and
Substance  Abuse  shall  each  adopt  rules   governing   the
integration  of  managed  care in the provision of behavioral
health services.  The  State  shall  integrate  managed  care
community  networks  and  affiliated providers, to the extent
practicable, in  any  separate  delivery  system  for  mental
health services.
    (n)  The   Illinois   Department  shall  adopt  rules  to
establish reserve requirements  for  managed  care  community
networks,   as   required   by  subsection  (a),  and  health
maintenance organizations to protect against  liabilities  in
the  event  that  a  managed  health  care entity is declared
insolvent or bankrupt.  If a managed health care entity other
than a county provider is  declared  insolvent  or  bankrupt,
after  liquidation  and  application of any available assets,
resources, and reserves, the Illinois Department shall pay  a
portion of the amounts owed by the managed health care entity
to  providers  for  services  rendered to enrollees under the
integrated health care program under this  Section  based  on
the  following  schedule: (i) from April 1, 1995 through June
30, 1998, 90% of the amounts owed; (ii)  from  July  1,  1998
through  June  30,  2001,  80% of the amounts owed; and (iii)
from July 1, 2001 through June 30, 2005, 75% of  the  amounts
owed.   The  amounts  paid  under  this  subsection  shall be
calculated based on the total  amount  owed  by  the  managed
health  care  entity  to  providers before application of any
available assets, resources, and reserves.   After  June  30,
2005, the Illinois Department may not pay any amounts owed to
providers  as  a  result  of an insolvency or bankruptcy of a
managed health care entity occurring after that  date.    The
Illinois Department is not obligated, however, to pay amounts
owed  to  a provider that has an ownership or other governing
interest in the managed health care entity.  This  subsection
applies only to managed health care entities and the services
they  provide  under the integrated health care program under
this Section.
    (o)  Notwithstanding  any  other  provision  of  law   or
contractual agreement to the contrary, providers shall not be
required to accept from any other third party payer the rates
determined   or   paid   under  this  Code  by  the  Illinois
Department, managed health care entity, or other health  care
delivery system for services provided to recipients.
    (p)  The  Illinois  Department  may  seek  and obtain any
necessary  authorization  provided  under  federal   law   to
implement  the  program,  including the waiver of any federal
statutes or regulations. The Illinois Department may  seek  a
waiver   of   the   federal  requirement  that  the  combined
membership of Medicare and Medicaid enrollees  in  a  managed
care community network may not exceed 75% of the managed care
community   network's   total   enrollment.    The   Illinois
Department  shall  not  seek a waiver of this requirement for
any other  category  of  managed  health  care  entity.   The
Illinois  Department shall not seek a waiver of the inpatient
hospital reimbursement methodology in Section  1902(a)(13)(A)
of  Title  XIX of the Social Security Act even if the federal
agency responsible for  administering  Title  XIX  determines
that  Section  1902(a)(13)(A)  applies to managed health care
systems.
    Notwithstanding any other provisions of this Code to  the
contrary,  the  Illinois  Department  shall  seek a waiver of
applicable federal law in order to impose a co-payment system
consistent with this  subsection  on  recipients  of  medical
services  under  Title XIX of the Social Security Act who are
not enrolled in a managed health  care  entity.   The  waiver
request  submitted  by  the Illinois Department shall provide
for co-payments of up to $0.50 for prescribed drugs and up to
$0.50 for x-ray services and shall provide for co-payments of
up to $10 for non-emergency services provided in  a  hospital
emergency  room  and  up  to  $10 for non-emergency ambulance
services.  The purpose of the co-payments shall be  to  deter
those  recipients  from  seeking  unnecessary  medical  care.
Co-payments  may not be used to deter recipients from seeking
necessary medical care.  No recipient shall  be  required  to
pay  more  than a total of $150 per year in co-payments under
the waiver request required by this subsection.  A  recipient
may  not  be  required to pay more than $15 of any amount due
under this subsection in any one month.
    Co-payments authorized under this subsection may  not  be
imposed  when  the  care  was  necessitated by a true medical
emergency.  Co-payments may not be imposed  for  any  of  the
following classifications of services:
         (1)  Services  furnished to person under 18 years of
    age.
         (2)  Services furnished to pregnant women.
         (3)  Services furnished to any individual who is  an
    inpatient  in  a hospital, nursing facility, intermediate
    care facility, or  other  medical  institution,  if  that
    person is required to spend for costs of medical care all
    but  a  minimal  amount of his or her income required for
    personal needs.
         (4)  Services furnished to a person who is receiving
    hospice care.
    Co-payments authorized under this subsection shall not be
deducted from or reduce  in  any  way  payments  for  medical
services  from  the  Illinois  Department  to  providers.  No
provider may deny those services to  an  individual  eligible
for  services  based on the individual's inability to pay the
co-payment.
    Recipients  who  are  subject  to  co-payments  shall  be
provided notice, in plain and clear language, of  the  amount
of the co-payments, the circumstances under which co-payments
are  exempted,  the circumstances under which co-payments may
be assessed, and their manner of collection.
    The  Illinois  Department  shall  establish  a   Medicaid
Co-Payment Council to assist in the development of co-payment
policies  for  the  medical assistance program.  The Medicaid
Co-Payment Council shall also have jurisdiction to develop  a
program  to  provide financial or non-financial incentives to
Medicaid recipients in order to encourage recipients to  seek
necessary  health  care.  The Council shall be chaired by the
Director  of  the  Illinois  Department,  and  shall  have  6
additional members.  Two of the 6 additional members shall be
appointed by the Governor, and one each shall be appointed by
the President of the  Senate,  the  Minority  Leader  of  the
Senate,  the Speaker of the House of Representatives, and the
Minority Leader of the House of Representatives.  The Council
may be convened and make recommendations upon the appointment
of a majority of its members.  The Council shall be appointed
and convened no later than September 1, 1994 and shall report
its  recommendations  to  the  Director   of   the   Illinois
Department  and the General Assembly no later than October 1,
1994.  The chairperson of the Council  shall  be  allowed  to
vote  only  in  the  case  of  a tie vote among the appointed
members of the Council.
    The Council shall be guided by the  following  principles
as  it considers recommendations to be developed to implement
any approved waivers that the Illinois Department  must  seek
pursuant to this subsection:
         (1)  Co-payments  should not be used to deter access
    to adequate medical care.
         (2)  Co-payments should be used to reduce fraud.
         (3)  Co-payment  policies  should  be  examined   in
    consideration   of  other  states'  experience,  and  the
    ability  of  successful  co-payment  plans   to   control
    unnecessary  or  inappropriate  utilization  of  services
    should be promoted.
         (4)  All    participants,    both   recipients   and
    providers,  in  the  medical  assistance   program   have
    responsibilities to both the State and the program.
         (5)  Co-payments are primarily a tool to educate the
    participants  in  the  responsible  use  of  health  care
    resources.
         (6)  Co-payments  should  not  be  used  to penalize
    providers.
         (7)  A  successful  medical  program  requires   the
    elimination of improper utilization of medical resources.
    The  integrated  health care program, or any part of that
program,  established  under  this   Section   may   not   be
implemented  if matching federal funds under Title XIX of the
Social Security Act are not available for  administering  the
program.
    The  Illinois  Department shall submit for publication in
the Illinois Register the name, address, and telephone number
of the individual to whom a request may  be  directed  for  a
copy  of  the request for a waiver of provisions of Title XIX
of the Social  Security  Act  that  the  Illinois  Department
intends to submit to the Health Care Financing Administration
in  order to implement this Section.  The Illinois Department
shall  mail  a  copy  of  that  request  for  waiver  to  all
requestors at least 16 days before filing  that  request  for
waiver with the Health Care Financing Administration.
    (q)  After  the  effective  date  of  this  Section,  the
Illinois  Department  may  take  all planning and preparatory
action necessary to implement this  Section,  including,  but
not  limited  to,  seeking requests for proposals relating to
the  integrated  health  care  program  created  under   this
Section.
    (r)  In  order  to  (i)  accelerate  and  facilitate  the
development  of  integrated  health care in contracting areas
outside counties with populations in excess of 3,000,000  and
counties  adjacent  to  those  counties and (ii) maintain and
sustain the high quality of education and residency  programs
coordinated  and  associated  with  local area hospitals, the
Illinois Department may develop and implement a demonstration
program for managed care community networks owned,  operated,
or  governed  by  State-funded medical schools.  The Illinois
Department shall prescribe by rule the  criteria,  standards,
and procedures for effecting this demonstration program.
    (s)  (Blank).
    (t)  On  April 1, 1995 and every 6 months thereafter, the
Illinois Department shall report to the Governor and  General
Assembly  on  the  progress  of  the  integrated  health care
program  in  enrolling  clients  into  managed  health   care
entities.   The  report  shall indicate the capacities of the
managed health care entities with which the State  contracts,
the  number of clients enrolled by each contractor, the areas
of the State in which managed care options do not exist,  and
the  progress  toward  meeting  the  enrollment  goals of the
integrated health care program.
    (u)  The Illinois Department may implement  this  Section
through the use of emergency rules in accordance with Section
5-45  of  the  Illinois  Administrative  Procedure  Act.  For
purposes of that Act, the adoption of rules to implement this
Section is deemed an emergency and necessary for  the  public
interest, safety, and welfare.
(Source:  P.A.  88-554,  eff.  7-26-94;  89-21,  eff. 7-1-95;
89-673, eff. 8-14-96; revised 8-26-96.)

    (Text of Section after amendment by P.A. 89-507)
    Sec. 5-16.3.  System for integrated health care services.
    (a)  It shall be the public policy of the State to adopt,
to  the  extent  practicable,  a  health  care  program  that
encourages  the  integration  of  health  care  services  and
manages the health care of program enrollees while preserving
reasonable choice within  a  competitive  and  cost-efficient
environment.   In  furtherance  of  this  public  policy, the
Illinois Department shall develop and implement an integrated
health care program consistent with the  provisions  of  this
Section.   The  provisions  of this Section apply only to the
integrated health care program created  under  this  Section.
Persons  enrolled  in  the integrated health care program, as
determined by the  Illinois  Department  by  rule,  shall  be
afforded  a  choice among health care delivery systems, which
shall include, but are not limited to, (i)  fee  for  service
care managed by a primary care physician licensed to practice
medicine  in  all  its  branches,  (ii)  managed  health care
entities,  and  (iii)  federally  qualified  health   centers
(reimbursed  according  to  a  prospective cost-reimbursement
methodology) and rural health clinics  (reimbursed  according
to  the  Medicare  methodology),  where  available.   Persons
enrolled  in  the  integrated health care program also may be
offered indemnity insurance plans, subject to availability.
    For purposes of this  Section,  a  "managed  health  care
entity"  means a health maintenance organization or a managed
care community network as defined in this Section.  A "health
maintenance  organization"   means   a   health   maintenance
organization   as   defined   in   the   Health   Maintenance
Organization  Act.   A "managed care community network" means
an entity, other than a health maintenance organization, that
is owned, operated, or governed by providers of  health  care
services  within  this  State  and  that provides or arranges
primary, secondary, and tertiary managed health care services
under contract with the Illinois  Department  exclusively  to
enrollees  of  the  integrated health care program. A managed
care  community  network  may  contract  with  the   Illinois
Department  to provide only pediatric health care services. A
county provider as defined in Section 15-1 of this  Code  may
contract  with the Illinois Department to provide services to
enrollees of the integrated health care program as a  managed
care  community  network  without  the  need  to  establish a
separate  entity  that  provides  services   exclusively   to
enrollees  of the integrated health care program and shall be
deemed a managed care community network for purposes of  this
Code only to the extent of the provision of services to those
enrollees  in  conjunction  with  the  integrated health care
program.  A county provider shall  be  entitled  to  contract
with  the Illinois Department with respect to any contracting
region located in whole or in  part  within  the  county.   A
county provider shall not be required to accept enrollees who
do not reside within the county.
    Each  managed care community network must demonstrate its
ability to bear the financial risk of serving enrollees under
this program.  The Illinois Department shall  by  rule  adopt
criteria  for  assessing  the  financial  soundness  of  each
managed  care  community  network. These rules shall consider
the extent to which  a  managed  care  community  network  is
comprised  of  providers  who directly render health care and
are located within  the  community  in  which  they  seek  to
contract  rather  than solely arrange or finance the delivery
of health care.  These rules shall further consider a variety
of risk-bearing  and  management  techniques,  including  the
sufficiency  of  quality assurance and utilization management
programs and whether a managed  care  community  network  has
sufficiently  demonstrated  its  financial  solvency  and net
worth. The Illinois Department's criteria must  be  based  on
sound  actuarial,  financial,  and accounting principles.  In
adopting these rules, the Illinois Department  shall  consult
with  the  Illinois  Department  of  Insurance.  The Illinois
Department is  responsible  for  monitoring  compliance  with
these rules.
    This  Section may not be implemented before the effective
date of these rules, the approval of  any  necessary  federal
waivers,  and  the completion of the review of an application
submitted, at least 60 days  before  the  effective  date  of
rules  adopted under this Section, to the Illinois Department
by a managed care community network.
    All health care delivery systems that contract  with  the
Illinois  Department under the integrated health care program
shall clearly recognize a health  care  provider's  right  of
conscience under the Right of Conscience Act.  In addition to
the  provisions  of  that Act, no health care delivery system
that  contracts  with  the  Illinois  Department  under   the
integrated  health care program shall be required to provide,
arrange for, or pay for any health care or  medical  service,
procedure,  or product if that health care delivery system is
owned, controlled, or  sponsored  by  or  affiliated  with  a
religious  institution  or  religious organization that finds
that health care or medical service, procedure, or product to
violate its religious and moral teachings and beliefs.
    (b)  The Illinois Department may, by  rule,  provide  for
different   benefit  packages  for  different  categories  of
persons enrolled in the  program.   Mental  health  services,
alcohol  and  substance  abuse  services, services related to
children  with  chronic   or   acute   conditions   requiring
longer-term  treatment and follow-up, and rehabilitation care
provided by a  free-standing  rehabilitation  hospital  or  a
hospital  rehabilitation  unit may be excluded from a benefit
package if the State ensures that  those  services  are  made
available  through  a separate delivery system.  An exclusion
does not prohibit the Illinois Department from developing and
implementing demonstration projects for categories of persons
or services.   Benefit  packages  for  persons  eligible  for
medical  assistance  under  Articles  V, VI, and XII shall be
based on the requirements of  those  Articles  and  shall  be
consistent  with  the  Title  XIX of the Social Security Act.
Nothing in this Act shall be construed to apply  to  services
purchased  by  the Department of Children and Family Services
and the Department of Human Services  (as  successor  to  the
Department  of  Mental Health and Developmental Disabilities)
under  the  provisions  of   Title   59   of   the   Illinois
Administrative  Code,  Part  132  ("Medicaid Community Mental
Health Services Program").
    (c)  The program  established  by  this  Section  may  be
implemented by the Illinois Department in various contracting
areas at various times.  The health care delivery systems and
providers available under the program may vary throughout the
State.   For purposes of contracting with managed health care
entities  and  providers,  the  Illinois   Department   shall
establish  contracting  areas similar to the geographic areas
designated  by  the  Illinois  Department   for   contracting
purposes   under   the   Illinois   Competitive   Access  and
Reimbursement Equity Program (ICARE) under the  authority  of
Section  3-4  of  the  Illinois  Health Finance Reform Act or
similarly-sized or smaller geographic  areas  established  by
the Illinois Department by rule. A managed health care entity
shall  be  permitted  to contract in any geographic areas for
which it has a  sufficient  provider  network  and  otherwise
meets  the  contracting  terms  of  the  State.  The Illinois
Department is not prohibited from entering  into  a  contract
with a managed health care entity at any time.
    (d)  A managed health care entity that contracts with the
Illinois  Department  for the provision of services under the
program shall do all of the following, solely for purposes of
the integrated health care program:
         (1)  Provide that any individual physician  licensed
    to  practice  medicine in all its branches, any pharmacy,
    any    federally    qualified    health    center,    any
    therapeutically   certified    optometrist,    and    any
    podiatrist,  that consistently meets the reasonable terms
    and conditions established by  the  managed  health  care
    entity,   including  but  not  limited  to  credentialing
    standards,  quality   assurance   program   requirements,
    utilization     management     requirements,    financial
    responsibility     standards,     contracting     process
    requirements, and provider network size and accessibility
    requirements, must be accepted by the managed health care
    entity for purposes of  the  Illinois  integrated  health
    care  program.   Any  individual who is either terminated
    from or denied inclusion in the panel  of  physicians  of
    the  managed health care entity shall be given, within 10
    business  days  after  that  determination,   a   written
    explanation  of  the  reasons for his or her exclusion or
    termination from the panel. This paragraph (1)  does  not
    apply to the following:
              (A)  A   managed   health   care   entity  that
         certifies to the Illinois Department that:
                   (i)  it employs on a full-time  basis  125
              or   more   Illinois   physicians  licensed  to
              practice medicine in all of its branches; and
                   (ii)  it  will  provide  medical  services
              through its employees to more than 80%  of  the
              recipients  enrolled  with  the  entity  in the
              integrated health care program; or
              (B)  A   domestic   stock   insurance   company
         licensed under clause (b) of class 1 of Section 4 of
         the Illinois Insurance Code if (i) at least  66%  of
         the  stock  of  the  insurance company is owned by a
         professional   corporation   organized   under   the
         Professional Service Corporation Act that has 125 or
         more  shareholders  who  are   Illinois   physicians
         licensed to practice medicine in all of its branches
         and  (ii)  the  insurance  company  certifies to the
         Illinois Department  that  at  least  80%  of  those
         physician  shareholders  will  provide  services  to
         recipients   enrolled   with   the  company  in  the
         integrated health care program.
         (2)  Provide for  reimbursement  for  providers  for
    emergency  care, as defined by the Illinois Department by
    rule, that must be provided to its  enrollees,  including
    an  emergency room screening fee, and urgent care that it
    authorizes  for  its   enrollees,   regardless   of   the
    provider's  affiliation  with  the  managed  health  care
    entity.  Providers shall be reimbursed for emergency care
    at  an  amount  equal  to   the   Illinois   Department's
    fee-for-service rates for those medical services rendered
    by  providers  not under contract with the managed health
    care entity to enrollees of the entity.
         (3)  Provide that any  provider  affiliated  with  a
    managed health care entity may also provide services on a
    fee-for-service  basis to Illinois Department clients not
    enrolled in a managed health care entity.
         (4)  Provide client education services as determined
    and approved by the Illinois  Department,  including  but
    not   limited  to  (i)  education  regarding  appropriate
    utilization of health care services  in  a  managed  care
    system, (ii) written disclosure of treatment policies and
    any  restrictions  or  limitations  on  health  services,
    including,   but   not  limited  to,  physical  services,
    clinical  laboratory   tests,   hospital   and   surgical
    procedures,   prescription   drugs   and  biologics,  and
    radiological examinations, and (iii) written notice  that
    the  enrollee  may  receive  from  another provider those
    services covered under this program that are not provided
    by the managed health care entity.
         (5)  Provide that enrollees within  its  system  may
    choose  the  site for provision of services and the panel
    of health care providers.
         (6)  Not   discriminate   in   its   enrollment   or
    disenrollment  practices  among  recipients  of   medical
    services or program enrollees based on health status.
         (7)  Provide  a  quality  assurance  and utilization
    review  program   that   (i)   for   health   maintenance
    organizations   meets  the  requirements  of  the  Health
    Maintenance Organization Act and (ii)  for  managed  care
    community  networks meets the requirements established by
    the Illinois Department in rules that  incorporate  those
    standards   set   forth   in   the   Health   Maintenance
    Organization Act.
         (8)  Issue    a    managed    health   care   entity
    identification card to  each  enrollee  upon  enrollment.
    The card must contain all of the following:
              (A)  The enrollee's signature.
              (B)  The enrollee's health plan.
              (C)  The  name  and  telephone  number  of  the
         enrollee's primary care physician.
              (D)  A   telephone   number   to  be  used  for
         emergency service 24 hours per day, 7 days per week.
         The  telephone  number  required  to  be  maintained
         pursuant to this subparagraph by each managed health
         care  entity  shall,  at  minimum,  be  staffed   by
         medically   trained   personnel   and   be  provided
         directly, or under  arrangement,  at  an  office  or
         offices  in   locations maintained solely within the
         State   of   Illinois.   For   purposes   of    this
         subparagraph,  "medically  trained  personnel" means
         licensed  practical  nurses  or  registered   nurses
         located  in  the  State of Illinois who are licensed
         pursuant to the Illinois Nursing Act of 1987.
         (9)  Ensure that every primary  care  physician  and
    pharmacy  in  the  managed  health  care entity meets the
    standards established  by  the  Illinois  Department  for
    accessibility   and   quality   of   care.  The  Illinois
    Department shall arrange for and oversee an evaluation of
    the standards established under this  paragraph  (9)  and
    may  recommend  any necessary changes to these standards.
    The Illinois Department shall submit an annual report  to
    the  Governor and the General Assembly by April 1 of each
    year regarding the effect of the  standards  on  ensuring
    access and quality of care to enrollees.
         (10)  Provide  a  procedure  for handling complaints
    that (i) for health maintenance organizations  meets  the
    requirements  of  the Health Maintenance Organization Act
    and (ii) for managed care community  networks  meets  the
    requirements  established  by  the Illinois Department in
    rules that incorporate those standards set forth  in  the
    Health Maintenance Organization Act.
         (11)  Maintain,  retain,  and  make available to the
    Illinois Department records, data, and information, in  a
    uniform  manner  determined  by  the Illinois Department,
    sufficient  for  the  Illinois  Department   to   monitor
    utilization, accessibility, and quality of care.
         (12)  Except  for providers who are prepaid, pay all
    approved claims for covered services that  are  completed
    and submitted to the managed health care entity within 30
    days  after  receipt  of  the  claim  or  receipt  of the
    appropriate capitation payment or payments by the managed
    health care entity from the State for the month in  which
    the   services  included  on  the  claim  were  rendered,
    whichever is later. If payment is not made or  mailed  to
    the provider by the managed health care entity by the due
    date  under this subsection, an interest penalty of 1% of
    any amount unpaid  shall  be  added  for  each  month  or
    fraction  of  a  month  after  the  due date, until final
    payment is made. Nothing in this Section  shall  prohibit
    managed  health care entities and providers from mutually
    agreeing to terms that require more timely payment.
         (13)  Provide   integration   with   community-based
    programs provided by certified local  health  departments
    such  as  Women,  Infants, and Children Supplemental Food
    Program (WIC), childhood  immunization  programs,  health
    education  programs, case management programs, and health
    screening programs.
         (14)  Provide that the pharmacy formulary used by  a
    managed  health care entity and its contract providers be
    no  more  restrictive  than  the  Illinois   Department's
    pharmaceutical  program  on  the  effective  date of this
    amendatory Act of 1994 and as amended after that date.
         (15)  Provide   integration   with   community-based
    organizations,  including,  but  not  limited   to,   any
    organization   that   has   operated  within  a  Medicaid
    Partnership as defined by this Code or  by  rule  of  the
    Illinois Department, that may continue to operate under a
    contract with the Illinois Department or a managed health
    care entity under this Section to provide case management
    services  to  Medicaid  clients  in  designated high-need
    areas.
    The  Illinois  Department   may,   by   rule,   determine
methodologies to limit financial liability for managed health
care   entities   resulting  from  payment  for  services  to
enrollees provided under the Illinois Department's integrated
health care program. Any methodology  so  determined  may  be
considered  or implemented by the Illinois Department through
a contract with a  managed  health  care  entity  under  this
integrated health care program.
    The  Illinois Department shall contract with an entity or
entities to provide  external  peer-based  quality  assurance
review  for  the  integrated  health care program. The entity
shall be representative of Illinois  physicians  licensed  to
practice  medicine  in  all  its  branches and have statewide
geographic representation in all specialties of medical  care
that  are provided within the integrated health care program.
The entity may not be a third party payer and shall  maintain
offices  in  locations  around  the State in order to provide
service  and  continuing  medical  education   to   physician
participants  within the integrated health care program.  The
review process shall be developed and conducted  by  Illinois
physicians licensed to practice medicine in all its branches.
In  consultation with the entity, the Illinois Department may
contract with  other  entities  for  professional  peer-based
quality assurance review of individual categories of services
other  than  services provided, supervised, or coordinated by
physicians licensed to practice medicine in all its branches.
The Illinois Department shall establish, by rule, criteria to
avoid  conflicts  of  interest  in  the  conduct  of  quality
assurance activities consistent with professional peer-review
standards.  All  quality  assurance   activities   shall   be
coordinated by the Illinois Department.
    (e)  All   persons  enrolled  in  the  program  shall  be
provided   with   a   full   written   explanation   of   all
fee-for-service and managed health care plan  options  and  a
reasonable   opportunity  to  choose  among  the  options  as
provided by rule.  The Illinois Department shall  provide  to
enrollees,  upon  enrollment  in  the  integrated health care
program and at  least  annually  thereafter,  notice  of  the
process   for   requesting   an  appeal  under  the  Illinois
Department's      administrative      appeal      procedures.
Notwithstanding any other Section of this Code, the  Illinois
Department may provide by rule for the Illinois Department to
assign  a  person  enrolled  in  the  program  to  a specific
provider of medical services or to  a  specific  health  care
delivery  system if an enrollee has failed to exercise choice
in a timely manner. An  enrollee  assigned  by  the  Illinois
Department shall be afforded the opportunity to disenroll and
to  select  a  specific  provider  of  medical  services or a
specific health care delivery system within the first 30 days
after the assignment. An enrollee who has failed to  exercise
choice in a timely manner may be assigned only if there are 3
or  more  managed  health  care entities contracting with the
Illinois Department within the contracting area, except that,
outside the City of Chicago, this requirement may  be  waived
for an area by rules adopted by the Illinois Department after
consultation  with all hospitals within the contracting area.
The Illinois Department shall establish by rule the procedure
for random assignment  of  enrollees  who  fail  to  exercise
choice  in  a timely manner to a specific managed health care
entity in  proportion  to  the  available  capacity  of  that
managed health care entity. Assignment to a specific provider
of  medical  services  or  to  a specific managed health care
entity may not exceed that provider's or entity's capacity as
determined by the Illinois Department.  Any  person  who  has
chosen  a specific provider of medical services or a specific
managed health care  entity,  or  any  person  who  has  been
assigned   under   this   subsection,   shall  be  given  the
opportunity to change that choice or assignment at least once
every 12 months, as determined by the Illinois Department  by
rule.  The  Illinois  Department  shall  maintain a toll-free
telephone number for  program  enrollees'  use  in  reporting
problems with managed health care entities.
    (f)  If  a  person  becomes eligible for participation in
the integrated  health  care  program  while  he  or  she  is
hospitalized,  the  Illinois  Department  may not enroll that
person in  the  program  until  after  he  or  she  has  been
discharged from the hospital.  This subsection does not apply
to   newborn  infants  whose  mothers  are  enrolled  in  the
integrated health care program.
    (g)  The Illinois Department shall,  by  rule,  establish
for managed health care entities rates that (i) are certified
to  be  actuarially sound, as determined by an actuary who is
an associate or a fellow of the Society  of  Actuaries  or  a
member  of  the  American  Academy  of  Actuaries and who has
expertise and experience in  medical  insurance  and  benefit
programs,   in  accordance  with  the  Illinois  Department's
current fee-for-service payment system, and  (ii)  take  into
account  any  difference  of  cost  to provide health care to
different populations based on  gender,  age,  location,  and
eligibility  category.   The  rates  for  managed health care
entities shall be determined on a capitated basis.
    The Illinois Department by rule shall establish a  method
to  adjust  its payments to managed health care entities in a
manner intended to avoid providing any financial incentive to
a managed health care entity to refer patients  to  a  county
provider,  in  an Illinois county having a population greater
than  3,000,000,  that  is  paid  directly  by  the  Illinois
Department.  The Illinois Department shall by April 1,  1997,
and   annually   thereafter,  review  the  method  to  adjust
payments. Payments by the Illinois Department to  the  county
provider,   for  persons  not  enrolled  in  a  managed  care
community network owned or operated  by  a  county  provider,
shall  be paid on a fee-for-service basis under Article XV of
this Code.
    The Illinois Department by rule shall establish a  method
to  reduce  its  payments  to managed health care entities to
take into consideration (i) any adjustment payments  paid  to
hospitals  under subsection (h) of this Section to the extent
those payments, or any part  of  those  payments,  have  been
taken into account in establishing capitated rates under this
subsection  (g)  and (ii) the implementation of methodologies
to limit financial liability for managed health care entities
under subsection (d) of this Section.
    (h)  For hospital services provided by  a  hospital  that
contracts  with  a  managed  health  care  entity, adjustment
payments shall be  paid  directly  to  the  hospital  by  the
Illinois  Department.   Adjustment  payments  may include but
need   not   be   limited   to   adjustment   payments    to:
disproportionate share hospitals under Section 5-5.02 of this
Code;  primary care access health care education payments (89
Ill. Adm. Code 149.140); payments for capital, direct medical
education, indirect medical education,  certified  registered
nurse anesthetist, and kidney acquisition costs (89 Ill. Adm.
Code  149.150(c));  uncompensated care payments (89 Ill. Adm.
Code 148.150(h)); trauma center payments (89 Ill.  Adm.  Code
148.290(c));  rehabilitation  hospital payments (89 Ill. Adm.
Code 148.290(d)); perinatal center  payments  (89  Ill.  Adm.
Code  148.290(e));  obstetrical  care  payments (89 Ill. Adm.
Code 148.290(f)); targeted access payments (89 Ill. Adm. Code
148.290(g)); Medicaid high volume payments (89 Ill. Adm. Code
148.290(h)); and outpatient indigent volume  adjustments  (89
Ill. Adm. Code 148.140(b)(5)).
    (i)  For   any   hospital  eligible  for  the  adjustment
payments described in subsection (h), the Illinois Department
shall maintain, through the  period  ending  June  30,  1995,
reimbursement levels in accordance with statutes and rules in
effect on April 1, 1994.
    (j)  Nothing  contained in this Code in any way limits or
otherwise impairs the authority  or  power  of  the  Illinois
Department  to  enter  into a negotiated contract pursuant to
this Section with a managed health  care  entity,  including,
but  not  limited to, a health maintenance organization, that
provides  for  termination  or  nonrenewal  of  the  contract
without cause upon notice as provided  in  the  contract  and
without a hearing.
    (k)  Section   5-5.15  does  not  apply  to  the  program
developed and implemented pursuant to this Section.
    (l)  The Illinois Department shall, by rule, define those
chronic or acute medical conditions of childhood that require
longer-term  treatment  and  follow-up  care.   The  Illinois
Department shall ensure that services required to treat these
conditions are available through a separate delivery system.
    A managed health care  entity  that  contracts  with  the
Illinois Department may refer a child with medical conditions
described in the rules adopted under this subsection directly
to  a  children's  hospital  or  to  a hospital, other than a
children's hospital, that is qualified to  provide  inpatient
and  outpatient  services  to  treat  those  conditions.  The
Illinois    Department    shall    provide    fee-for-service
reimbursement directly to a  children's  hospital  for  those
services  pursuant to Title 89 of the Illinois Administrative
Code, Section 148.280(a), at a rate at  least  equal  to  the
rate  in  effect on March 31, 1994. For hospitals, other than
children's hospitals, that are qualified to provide inpatient
and  outpatient  services  to  treat  those  conditions,  the
Illinois Department shall  provide  reimbursement  for  those
services on a fee-for-service basis, at a rate at least equal
to  the rate in effect for those other hospitals on March 31,
1994.
    A children's hospital shall be  directly  reimbursed  for
all  services  provided  at  the  children's  hospital  on  a
fee-for-service  basis  pursuant  to Title 89 of the Illinois
Administrative Code, Section 148.280(a), at a rate  at  least
equal  to  the  rate  in  effect on March 31, 1994, until the
later of (i) implementation of  the  integrated  health  care
program  under  this  Section  and development of actuarially
sound capitation rates for services other than those  chronic
or   acute  medical  conditions  of  childhood  that  require
longer-term treatment and follow-up care as  defined  by  the
Illinois   Department   in   the  rules  adopted  under  this
subsection or (ii) March 31, 1996.
    Notwithstanding  anything  in  this  subsection  to   the
contrary,  a  managed  health  care entity shall not consider
sources or methods of payment in determining the referral  of
a  child.   The  Illinois  Department  shall  adopt  rules to
establish  criteria  for  those  referrals.    The   Illinois
Department  by  rule  shall  establish a method to adjust its
payments to managed health care entities in a manner intended
to avoid providing  any  financial  incentive  to  a  managed
health  care  entity  to  refer patients to a provider who is
paid directly by the Illinois Department.
    (m)  Behavioral health services provided or funded by the
Department of Human Services, the Department of Children  and
Family   Services,  and  the  Illinois  Department  shall  be
excluded from a benefit package.  Conditions of an organic or
physical origin or nature, including medical  detoxification,
however,   may   not   be   excluded.   In  this  subsection,
"behavioral health services" means mental health services and
subacute alcohol and substance abuse treatment  services,  as
defined  in the Illinois Alcoholism and Other Drug Dependency
Act.  In this subsection, "mental health services"  includes,
at  a  minimum, the following services funded by the Illinois
Department, the Department of Human Services (as successor to
the   Department   of   Mental   Health   and   Developmental
Disabilities), or  the  Department  of  Children  and  Family
Services:  (i) inpatient hospital services, including related
physician services, related  psychiatric  interventions,  and
pharmaceutical  services  provided  to  an eligible recipient
hospitalized  with  a  primary   diagnosis   of   psychiatric
disorder;  (ii)  outpatient mental health services as defined
and specified in Title  59  of  the  Illinois  Administrative
Code,  Part  132;  (iii)  any  other outpatient mental health
services funded by the Illinois Department  pursuant  to  the
State    of    Illinois    Medicaid    Plan;   (iv)   partial
hospitalization; and (v) follow-up stabilization  related  to
any of those services.  Additional behavioral health services
may  be  excluded under this subsection as mutually agreed in
writing by the Illinois Department  and  the  affected  State
agency  or  agencies.   The exclusion of any service does not
prohibit  the  Illinois  Department   from   developing   and
implementing demonstration projects for categories of persons
or  services.  The Department of Children and Family Services
and the Department of Human Services shall each  adopt  rules
governing the integration of managed care in the provision of
behavioral health services. The State shall integrate managed
care  community  networks  and  affiliated  providers, to the
extent practicable,  in  any  separate  delivery  system  for
mental health services.
    (n)  The   Illinois   Department  shall  adopt  rules  to
establish reserve requirements  for  managed  care  community
networks,   as   required   by  subsection  (a),  and  health
maintenance organizations to protect against  liabilities  in
the  event  that  a  managed  health  care entity is declared
insolvent or bankrupt.  If a managed health care entity other
than a county provider is  declared  insolvent  or  bankrupt,
after  liquidation  and  application of any available assets,
resources, and reserves, the Illinois Department shall pay  a
portion of the amounts owed by the managed health care entity
to  providers  for  services  rendered to enrollees under the
integrated health care program under this  Section  based  on
the  following  schedule: (i) from April 1, 1995 through June
30, 1998, 90% of the amounts owed; (ii)  from  July  1,  1998
through  June  30,  2001,  80% of the amounts owed; and (iii)
from July 1, 2001 through June 30, 2005, 75% of  the  amounts
owed.   The  amounts  paid  under  this  subsection  shall be
calculated based on the total  amount  owed  by  the  managed
health  care  entity  to  providers before application of any
available assets, resources, and reserves.   After  June  30,
2005, the Illinois Department may not pay any amounts owed to
providers  as  a  result  of an insolvency or bankruptcy of a
managed health care entity occurring after that  date.    The
Illinois Department is not obligated, however, to pay amounts
owed  to  a provider that has an ownership or other governing
interest in the managed health care entity.  This  subsection
applies only to managed health care entities and the services
they  provide  under the integrated health care program under
this Section.
    (o)  Notwithstanding  any  other  provision  of  law   or
contractual agreement to the contrary, providers shall not be
required to accept from any other third party payer the rates
determined   or   paid   under  this  Code  by  the  Illinois
Department, managed health care entity, or other health  care
delivery system for services provided to recipients.
    (p)  The  Illinois  Department  may  seek  and obtain any
necessary  authorization  provided  under  federal   law   to
implement  the  program,  including the waiver of any federal
statutes or regulations. The Illinois Department may  seek  a
waiver   of   the   federal  requirement  that  the  combined
membership of Medicare and Medicaid enrollees  in  a  managed
care community network may not exceed 75% of the managed care
community   network's   total   enrollment.    The   Illinois
Department  shall  not  seek a waiver of this requirement for
any other  category  of  managed  health  care  entity.   The
Illinois  Department shall not seek a waiver of the inpatient
hospital reimbursement methodology in Section  1902(a)(13)(A)
of  Title  XIX of the Social Security Act even if the federal
agency responsible for  administering  Title  XIX  determines
that  Section  1902(a)(13)(A)  applies to managed health care
systems.
    Notwithstanding any other provisions of this Code to  the
contrary,  the  Illinois  Department  shall  seek a waiver of
applicable federal law in order to impose a co-payment system
consistent with this  subsection  on  recipients  of  medical
services  under  Title XIX of the Social Security Act who are
not enrolled in a managed health  care  entity.   The  waiver
request  submitted  by  the Illinois Department shall provide
for co-payments of up to $0.50 for prescribed drugs and up to
$0.50 for x-ray services and shall provide for co-payments of
up to $10 for non-emergency services provided in  a  hospital
emergency  room  and  up  to  $10 for non-emergency ambulance
services.  The purpose of the co-payments shall be  to  deter
those  recipients  from  seeking  unnecessary  medical  care.
Co-payments  may not be used to deter recipients from seeking
necessary medical care.  No recipient shall  be  required  to
pay  more  than a total of $150 per year in co-payments under
the waiver request required by this subsection.  A  recipient
may  not  be  required to pay more than $15 of any amount due
under this subsection in any one month.
    Co-payments authorized under this subsection may  not  be
imposed  when  the  care  was  necessitated by a true medical
emergency.  Co-payments may not be imposed  for  any  of  the
following classifications of services:
         (1)  Services  furnished to person under 18 years of
    age.
         (2)  Services furnished to pregnant women.
         (3)  Services furnished to any individual who is  an
    inpatient  in  a hospital, nursing facility, intermediate
    care facility, or  other  medical  institution,  if  that
    person is required to spend for costs of medical care all
    but  a  minimal  amount of his or her income required for
    personal needs.
         (4)  Services furnished to a person who is receiving
    hospice care.
    Co-payments authorized under this subsection shall not be
deducted from or reduce  in  any  way  payments  for  medical
services  from  the  Illinois  Department  to  providers.  No
provider may deny those services to  an  individual  eligible
for  services  based on the individual's inability to pay the
co-payment.
    Recipients  who  are  subject  to  co-payments  shall  be
provided notice, in plain and clear language, of  the  amount
of the co-payments, the circumstances under which co-payments
are  exempted,  the circumstances under which co-payments may
be assessed, and their manner of collection.
    The  Illinois  Department  shall  establish  a   Medicaid
Co-Payment Council to assist in the development of co-payment
policies  for  the  medical assistance program.  The Medicaid
Co-Payment Council shall also have jurisdiction to develop  a
program  to  provide financial or non-financial incentives to
Medicaid recipients in order to encourage recipients to  seek
necessary  health  care.  The Council shall be chaired by the
Director  of  the  Illinois  Department,  and  shall  have  6
additional members.  Two of the 6 additional members shall be
appointed by the Governor, and one each shall be appointed by
the President of the  Senate,  the  Minority  Leader  of  the
Senate,  the Speaker of the House of Representatives, and the
Minority Leader of the House of Representatives.  The Council
may be convened and make recommendations upon the appointment
of a majority of its members.  The Council shall be appointed
and convened no later than September 1, 1994 and shall report
its  recommendations  to  the  Director   of   the   Illinois
Department  and the General Assembly no later than October 1,
1994.  The chairperson of the Council  shall  be  allowed  to
vote  only  in  the  case  of  a tie vote among the appointed
members of the Council.
    The Council shall be guided by the  following  principles
as  it considers recommendations to be developed to implement
any approved waivers that the Illinois Department  must  seek
pursuant to this subsection:
         (1)  Co-payments  should not be used to deter access
    to adequate medical care.
         (2)  Co-payments should be used to reduce fraud.
         (3)  Co-payment  policies  should  be  examined   in
    consideration   of  other  states'  experience,  and  the
    ability  of  successful  co-payment  plans   to   control
    unnecessary  or  inappropriate  utilization  of  services
    should be promoted.
         (4)  All    participants,    both   recipients   and
    providers,  in  the  medical  assistance   program   have
    responsibilities to both the State and the program.
         (5)  Co-payments are primarily a tool to educate the
    participants  in  the  responsible  use  of  health  care
    resources.
         (6)  Co-payments  should  not  be  used  to penalize
    providers.
         (7)  A  successful  medical  program  requires   the
    elimination of improper utilization of medical resources.
    The  integrated  health care program, or any part of that
program,  established  under  this   Section   may   not   be
implemented  if matching federal funds under Title XIX of the
Social Security Act are not available for  administering  the
program.
    The  Illinois  Department shall submit for publication in
the Illinois Register the name, address, and telephone number
of the individual to whom a request may  be  directed  for  a
copy  of  the request for a waiver of provisions of Title XIX
of the Social  Security  Act  that  the  Illinois  Department
intends to submit to the Health Care Financing Administration
in  order to implement this Section.  The Illinois Department
shall  mail  a  copy  of  that  request  for  waiver  to  all
requestors at least 16 days before filing  that  request  for
waiver with the Health Care Financing Administration.
    (q)  After  the  effective  date  of  this  Section,  the
Illinois  Department  may  take  all planning and preparatory
action necessary to implement this  Section,  including,  but
not  limited  to,  seeking requests for proposals relating to
the  integrated  health  care  program  created  under   this
Section.
    (r)  In  order  to  (i)  accelerate  and  facilitate  the
development  of  integrated  health care in contracting areas
outside counties with populations in excess of 3,000,000  and
counties  adjacent  to  those  counties and (ii) maintain and
sustain the high quality of education and residency  programs
coordinated  and  associated  with  local area hospitals, the
Illinois Department may develop and implement a demonstration
program for managed care community networks owned,  operated,
or  governed  by  State-funded medical schools.  The Illinois
Department shall prescribe by rule the  criteria,  standards,
and procedures for effecting this demonstration program.
    (s)  (Blank).
    (t)  On  April 1, 1995 and every 6 months thereafter, the
Illinois Department shall report to the Governor and  General
Assembly  on  the  progress  of  the  integrated  health care
program  in  enrolling  clients  into  managed  health   care
entities.   The  report  shall indicate the capacities of the
managed health care entities with which the State  contracts,
the  number of clients enrolled by each contractor, the areas
of the State in which managed care options do not exist,  and
the  progress  toward  meeting  the  enrollment  goals of the
integrated health care program.
    (u)  The Illinois Department may implement  this  Section
through the use of emergency rules in accordance with Section
5-45  of  the  Illinois  Administrative  Procedure  Act.  For
purposes of that Act, the adoption of rules to implement this
Section is deemed an emergency and necessary for  the  public
interest, safety, and welfare.
(Source:  P.A.  88-554,  eff.  7-26-94;  89-21,  eff. 7-1-95;
89-507, eff. 7-1-97; 89-673, eff. 8-14-96; revised 8-26-96.)

    Section 95.  No acceleration or delay.   Where  this  Act
makes changes in a statute that is represented in this Act by
text  that  is not yet or no longer in effect (for example, a
Section represented by multiple versions), the  use  of  that
text  does  not  accelerate or delay the taking effect of (i)
the changes made by this Act or (ii) provisions derived  from
any other Public Act.

[ Top ]