Public Act 90-0618 of the 90th General Assembly
Public Act 90-0618
HB3431 Enrolled LRB9010626DJcd
AN ACT concerning managed care community networks,
amending named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Health Maintenance Organization Act is
amended by changing Section 2-1 as follows:
(215 ILCS 125/2-1) (from Ch. 111 1/2, par. 1403)
Sec. 2-1. Certificate of authority - Exception for
corporate employee programs - Applications - Material
modification of operation.
(a) No organization shall establish or operate a Health
Maintenance Organization in this State without obtaining a
certificate of authority under this Act. No person other
than an organization may lawfully establish or operate a
Health Maintenance Organization in this State. This Act
shall not apply to the establishment and operation of a
Health Maintenance Organization exclusively providing or
arranging for health care services to employees of a
corporate affiliate of such Health Maintenance Organization.
This exclusion shall be available only to those Health
Maintenance Organizations which require employee
contributions which equal less than 50% of the total cost of
the health care plan, with the remainder of the cost being
paid by the corporate affiliate which is the employer of the
participants in the plan. This Act shall not apply to the
establishment and operation of a Health Maintenance
Organization exclusively providing or arranging health care
services under contract with the State to persons committed
to the custody of the Illinois Department of Corrections.
This Act does not apply to the establishment and operation of
(i) a managed care community network providing or arranging
health care services under contract with the State
exclusively to persons who are enrolled in the integrated
health care program established under Section 5-16.3 of the
Illinois Public Aid Code or (ii) a managed care community
network owned, operated, or governed by a county provider as
defined in Section 15-1 of that Code.
This Act does not apply to the establishment and
operation of managed care community networks that are
certified as risk-bearing entities under Section 5-11 of the
Illinois Public Aid Code and that contract with the Illinois
Department of Public Aid pursuant to that Section.
(b) Any organization may apply to the Director for and
obtain a certificate of authority to establish and operate a
Health Maintenance Organization in compliance with this Act.
A foreign corporation may qualify under this Act, subject to
its registration to do business in this State as a foreign
corporation.
(c) Each application for a certificate of authority
shall be filed in triplicate and verified by an officer or
authorized representative of the applicant, shall be in a
form prescribed by the Director, and shall set forth, without
limiting what may be required by the Director, the following:
(1) A copy of the organizational document;
(2) A copy of the bylaws, rules and regulations, or
similar document regulating the conduct of the internal
affairs of the applicant, which shall include a mechanism
to afford the enrollees an opportunity to participate in
an advisory capacity in matters of policy and operations;
(3) A list of the names, addresses, and official
positions of the persons who are to be responsible for
the conduct of the affairs of the applicant; including,
but not limited to, all members of the board of
directors, executive committee, the principal officers,
and any person or entity owning or having the right to
acquire 10% or more of the voting securities or
subordinated debt of the applicant;
(4) A statement generally describing the applicant,
geographic area to be served, its facilities, personnel
and the health care services to be offered;
(5) A copy of the form of any contract made or to
be made between the applicant and any providers regarding
the provision of health care services to enrollees;
(6) A copy of the form of any contract made or to
be made between the applicant and any person listed in
paragraph (3) of this subsection;
(7) A copy of the form of any contract made or to
be made between the applicant and any person,
corporation, partnership or other entity for the
performance on the applicant's behalf of any functions
including, but not limited to, marketing, administration,
enrollment, investment management and subcontracting for
the provision of health services to enrollees;
(8) A copy of the form of any group contract which
is to be issued to employers, unions, trustees, or other
organizations and a copy of any form of evidence of
coverage to be issued to any enrollee or subscriber and
any advertising material;
(9) Descriptions of the applicant's procedures for
resolving enrollee grievances which must include
procedures providing for enrollees participation in the
resolution of grievances;
(10) A copy of the applicant's most recent
financial statements audited by an independent certified
public accountant. If the financial affairs of the
applicant's parent company are audited by an independent
certified public accountant but those of the applicant
are not, then a copy of the most recent audited financial
statement of the applicant's parent, attached to which
shall be consolidating financial statements of the parent
including separate unaudited financial statements of the
applicant, unless the Director determines that additional
or more recent financial information is required for the
proper administration of this Act;
(11) A copy of the applicant's financial plan,
including a three-year projection of anticipated
operating results, a statement of the sources of working
capital, and any other sources of funding and provisions
for contingencies;
(12) A description of rate methodology;
(13) A description of the proposed method of
marketing;
(14) A copy of every filing made with the Illinois
Secretary of State which relates to the applicant's
registered agent or registered office;
(15) A description of the complaint procedures to
be established and maintained as required under Section
4-6 of this Act;
(16) A description, in accordance with regulations
promulgated by the Illinois Department of Public Health,
of the quality assessment and utilization review
procedures to be utilized by the applicant;
(17) The fee for filing an application for issuance
of a certificate of authority provided in Section 408 of
the Illinois Insurance Code, as now or hereafter amended;
and
(18) Such other information as the Director may
reasonably require to make the determinations required by
this Act.
(Source: P.A. 88-554, eff. 7-26-94.)
Section 10. The Illinois Public Aid Code is amended by
changing Sections 5-11, 15-2, 15-3, and 15-5 as follows:
(305 ILCS 5/5-11) (from Ch. 23, par. 5-11)
Sec. 5-11. Co-operative arrangements; contracts with
other State agencies, health care and rehabilitation
organizations, and fiscal intermediaries.
(a) The Illinois Department may enter into co-operative
arrangements with State agencies responsible for
administering or supervising the administration of health
services and vocational rehabilitation services to the end
that there may be maximum utilization of such services in the
provision of medical assistance.
The Illinois Department shall, not later than June 30,
1993, enter into one or more co-operative arrangements with
the Department of Mental Health and Developmental
Disabilities providing that the Department of Mental Health
and Developmental Disabilities will be responsible for
administering or supervising all programs for services to
persons in community care facilities for persons with
developmental disabilities, including but not limited to
intermediate care facilities, that are supported by State
funds or by funding under Title XIX of the federal Social
Security Act. The responsibilities of the Department of
Mental Health and Developmental Disabilities under these
agreements are transferred to the Department of Human
Services as provided in the Department of Human Services Act.
The Department may also contract with such State health
and rehabilitation agencies and other public or private
health care and rehabilitation organizations to act for it in
supplying designated medical services to persons eligible
therefor under this Article. Any contracts with health
services or health maintenance organizations shall be
restricted to organizations which have been certified as
being in compliance with standards promulgated pursuant to
the laws of this State governing the establishment and
operation of health services or health maintenance
organizations. The Department may also contract with
insurance companies or other corporate entities serving as
fiscal intermediaries in this State for the Federal
Government in respect to Medicare payments under Title XVIII
of the Federal Social Security Act to act for the Department
in paying medical care suppliers. The provisions of Section
9 of "An Act in relation to State finance", approved June 10,
1919, as amended, notwithstanding, such contracts with State
agencies, other health care and rehabilitation organizations,
or fiscal intermediaries may provide for advance payments.
(b) For purposes of this subsection (b), "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 persons participating in
programs administered by the Illinois Department.
The Illinois Department may certify managed care
community networks, including managed care community networks
owned, operated, managed, or governed by State-funded medical
schools, as risk-bearing entities eligible to contract with
the Illinois Department as Medicaid managed care
organizations. The Illinois Department may contract with
those managed care community networks to furnish health care
services to or arrange those services for individuals
participating in programs administered by the Illinois
Department. The rates for those provider-sponsored
organizations may be determined on a prepaid, capitated
basis. A managed care community network may choose to
contract with the Illinois Department to provide only
pediatric health care services. The Illinois Department shall
by rule adopt the criteria, standards, and procedures by
which a managed care community network may be permitted to
contract with the Illinois Department and shall consult with
the Department of Insurance in adopting these rules.
A county provider as defined in Section 15-1 of this Code
may contract with the Illinois Department to provide primary,
secondary, or tertiary managed health care services as a
managed care community network without the need to establish
a separate entity and shall be deemed a managed care
community network for purposes of this Code only to the
extent it provides services to participating individuals. A
county provider is 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 is not
required to accept enrollees who do not reside within the
county.
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
from managed care community networks owned, operated,
managed, or governed by State-funded medical schools. The
Illinois Department shall prescribe by rule the criteria,
standards, and procedures for effecting this demonstration
program.
A managed care community network that contracts with the
Illinois Department to furnish health care services to or
arrange those services for enrollees participating in
programs administered by the Illinois Department shall do all
of the following:
(1) Provide that any provider affiliated with the
managed care community network may also provide services
on a fee-for-service basis to Illinois Department clients
not enrolled in such managed care entities.
(2) 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
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
covered services that are not provided by the managed
care community network.
(3) Provide that enrollees within the system may
choose the site for provision of services and the panel
of health care providers.
(4) Not discriminate in enrollment or disenrollment
practices among recipients of medical services or
enrollees based on health status.
(5) Provide a quality assurance and utilization
review program that meets the requirements established by
the Illinois Department in rules that incorporate those
standards set forth in the Health Maintenance
Organization Act.
(6) Issue a managed care community network
identification card to each enrollee upon enrollment.
The card must contain all of the following:
(A) The enrollee's health plan.
(B) The name and telephone number of the
enrollee's primary care physician or the site for
receiving primary care services.
(C) A telephone number to be used to confirm
eligibility for benefits and authorization for
services that is available 24 hours per day, 7 days
per week.
(7) Ensure that every primary care physician and
pharmacy in the managed care community network 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 (7) and
may recommend any necessary changes to these standards.
(8) Provide a procedure for handling complaints
that meets the requirements established by the Illinois
Department in rules that incorporate those standards set
forth in the Health Maintenance Organization Act.
(9) 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.
(10) Provide that the pharmacy formulary used by
the managed care community network and its contract
providers be no more restrictive than the Illinois
Department's pharmaceutical program on the effective date
of this amendatory Act of 1998 and as amended after that
date.
The Illinois Department shall contract with an entity or
entities to provide external peer-based quality assurance
review for the managed health care programs administered by
the Illinois Department. The entity shall be representative
of Illinois physicians licensed to practice medicine in all
its branches and have statewide geographic representation in
all specialities of medical care that are provided in managed
health care programs administered by the Illinois Department.
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 those managed health care programs
administered by the Illinois Department. 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.
Each managed care community network must demonstrate its
ability to bear the financial risk of serving individuals
under this program. The Illinois Department shall by rule
adopt standards for assessing the solvency and financial
soundness of each managed care community network. Any
solvency and financial standards adopted for managed care
community networks shall be no more restrictive than the
solvency and financial standards adopted under Section
1856(a) of the Social Security Act for provider-sponsored
organizations under Part C of Title XVIII of the Social
Security Act.
The Illinois Department may implement the amendatory
changes to this Code made by this amendatory Act of 1998
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
these changes is deemed an emergency and necessary for the
public interest, safety, and welfare.
(c) Not later than June 30, 1996, the Illinois
Department shall enter into one or more cooperative
arrangements with the Department of Public Health for the
purpose of developing a single survey for nursing facilities,
including but not limited to facilities funded under Title
XVIII or Title XIX of the federal Social Security Act or
both, which shall be administered and conducted solely by the
Department of Public Health. The Departments shall test the
single survey process on a pilot basis, with both the
Departments of Public Aid and Public Health represented on
the consolidated survey team. The pilot will sunset June 30,
1997. After June 30, 1997, unless otherwise determined by
the Governor, a single survey shall be implemented by the
Department of Public Health which would not preclude staff
from the Department of Public Aid from going on-site to
nursing facilities to perform necessary audits and reviews
which shall not replicate the single State agency survey
required by this Act. This Section shall not apply to
community or intermediate care facilities for persons with
developmental disabilities.
(Source: P.A. 89-415, eff. 1-1-96; 89-507, eff. 7-1-97.)
(305 ILCS 5/15-2) (from Ch. 23, par. 15-2)
Sec. 15-2. County Provider Trust Fund.
(a) There is created in the State Treasury the County
Provider Trust Fund. Interest earned by the Fund shall be
credited to the Fund. The Fund shall not be used to replace
any funds appropriated to the Medicaid program by the General
Assembly.
(b) The Fund is created solely for the purposes of
receiving, investing, and distributing monies in accordance
with this Article XV. The Fund shall consist of:
(1) All monies collected or received by the
Illinois Department under Section 15-3 of this Code;
(2) All federal financial participation monies
received by the Illinois Department pursuant to Title XIX
of the Social Security Act, 42 U.S.C. 1396(b),
attributable to eligible expenditures made by the
Illinois Department pursuant to Section 15-5 of this
Code;
(3) All other monies received by the Fund from any
source, including interest thereon.
(c) Disbursements from the Fund shall be by warrants
drawn by the State Comptroller upon receipt of vouchers duly
executed and certified by the Illinois Department and shall
be made only:
(1) For hospital inpatient care, hospital
outpatient care, care provided by other outpatient
facilities operated by a county, and disproportionate
share hospital payments made under Title XIX of the
Social Security Act and Article V of this Code as
required by Section 15-5 of this Code;
(1.5) For services provided by county providers
pursuant to Section 5-11 or 5-16.3 of this Code;
(2) For the reimbursement of administrative
expenses incurred by county providers on behalf of the
Illinois Department as permitted by Section 15-4 of this
Code;
(3) For the reimbursement of monies received by the
Fund through error or mistake;
(4) For the payment of administrative expenses
necessarily incurred by the Illinois Department or its
agent in performing the activities required by this
Article XV; and
(5) For the payment of any amounts that are
reimbursable to the federal government, attributable
solely to the Fund, and required to be paid by State
warrant.
(Source: P.A. 87-13; 88-554, eff. 7-26-94.)
(305 ILCS 5/15-3) (from Ch. 23, par. 15-3)
Sec. 15-3. Intergovernmental Transfers.
(a) Each qualifying county shall make an annual
intergovernmental transfer to the Illinois Department in an
amount equal to 71.7% of the difference between the total
payments made by the Illinois Department to such county
provider for hospital services under Title XIX of the Social
Security Act or pursuant to Section 5-11 or 5-16.3 of this
Code in each fiscal year ending June 30 (or fraction thereof
during the fiscal year ending June 30, 1993) and $108,800,000
(or fraction thereof), except that the annual
intergovernmental transfer shall not exceed the total
payments made by the Illinois Department to such county
provider for hospital services under this Code or pursuant to
Section 5-16.3 of this Code, less 50% of payments
reimbursable under Title XIX of the Social Security Act in
each fiscal year ending June 30 (or fraction thereof).
(b) The payment schedule for the intergovernmental
transfer made hereunder shall be established by
intergovernmental agreement between the Illinois Department
and the applicable county, which agreement shall at a minimum
provide:
(1) For periodic payments no less frequently than
monthly to the county provider for inpatient and
outpatient approved or adjudicated claims and for
disproportionate share payments under Section 5-5.02 of
this Code (in the initial year, for services after July
1, 1991, or such other date as an approved State Medical
Assistance Plan shall provide) and to the county provider
pursuant to Section 5-16.3 of this Code.
(2) For periodic payments no less frequently than
monthly to the county provider for supplemental
disproportionate share payments hereunder based on a
federally approved State Medical Assistance Plan.
(3) For calculation of the intergovernmental
transfer payment to be made by the county equal to 71.7%
of the difference between the amount of the periodic
payment and the base amount; provided, however, that if
the periodic payment for any period is less than the base
amount for such period, the base amount for the
succeeding period (and any successive period if
necessary) shall be increased by the amount of such
shortfall.
(4) For an intergovernmental transfer methodology
which obligates the Illinois Department to notify the
county and county provider in writing of each impending
periodic payment and the intergovernmental transfer
payment attributable thereto and which obligates the
Comptroller to release the periodic payment to the county
provider within one working day of receipt of the
intergovernmental transfer payment from the county.
(Source: P.A. 87-13; 87-861; 88-85; 88-88; 88-554, eff.
7-26-94.)
(305 ILCS 5/15-5) (from Ch. 23, par. 15-5)
Sec. 15-5. Disbursements from the Fund.
(a) The monies in the Fund shall be disbursed only as
provided in Section 15-2 of this Code and as follows:
(1) To pay the county hospitals' inpatient
reimbursement rate based on actual costs, trended forward
annually by an inflation index and supplemented by
teaching, capital, and other direct and indirect costs,
according to a State plan approved by the federal
government. Effective October 1, 1992, the inpatient
reimbursement rate (including any disproportionate or
supplemental disproportionate share payments) for
hospital services provided by county operated facilities
within the County shall be no less than the reimbursement
rates in effect on June 1, 1992, except that this minimum
shall be adjusted as of July 1, 1992 and each July 1
thereafter by the annual percentage change in the per
diem cost of inpatient hospital services as reported in
the most recent annual Medicaid cost report.
(2) To pay county hospitals and county operated
outpatient facilities for outpatient services based on a
federally approved methodology to cover the maximum
allowable costs per patient visit. Effective October 1,
1992, the outpatient reimbursement rate for outpatient
services provided by county hospitals and county operated
outpatient facilities shall be no less than the
reimbursement rates in effect on June 1, 1992, except
that this minimum shall be adjusted as of July 1, 1992
and each July 1 thereafter by the annual percentage
change in the per diem cost of inpatient hospital
services as reported in the most recent annual Medicaid
cost report.
(3) To pay the county hospitals' disproportionate
share payments as established by the Illinois Department
under Section 5-5.02 of this Code. Effective October 1,
1992, the disproportionate share payments for hospital
services provided by county operated facilities within
the County shall be no less than the reimbursement rates
in effect on June 1, 1992, except that this minimum shall
be adjusted as of July 1, 1992 and each July 1 thereafter
by the annual percentage change in the per diem cost of
inpatient hospital services as reported in the most
recent annual Medicaid cost report.
(3.5) To pay county providers for services provided
pursuant to Section 5-11 or 5-16.3 of this Code.
(4) To reimburse the county providers for expenses
contractually assumed pursuant to Section 15-4 of this
Code.
(5) To pay the Illinois Department its necessary
administrative expenses relative to the Fund and other
amounts agreed to, if any, by the county providers in the
agreement provided for in subsection (c).
(6) To pay the county hospitals' supplemental
disproportionate share payments, hereby authorized, as
specified in the agreement provided for in subsection (c)
and according to a federally approved State plan.
Effective October 1, 1992, the supplemental
disproportionate share payments for hospital services
provided by county operated facilities within the County
shall be no less than the reimbursement rates in effect
on June 1, 1992, except that this minimum shall be
adjusted as of July 1, 1992 and each July 1 thereafter by
the annual percentage change in the per diem cost of
inpatient hospital services as reported in the most
recent annual Medicaid cost report.
(b) The Illinois Department shall promptly seek all
appropriate amendments to the Illinois State Plan to effect
the foregoing payment methodology.
(c) The Illinois Department shall implement the changes
made by Article 3 of this amendatory Act of 1992 beginning
October 1, 1992. All terms and conditions of the
disbursement of monies from the Fund not set forth expressly
in this Article shall be set forth in the agreement executed
under the Intergovernmental Cooperation Act so long as those
terms and conditions are not inconsistent with this Article
or applicable federal law. The Illinois Department shall
report in writing to the Hospital Service Procurement
Advisory Board and the Health Care Cost Containment Council
by October 15, 1992, the terms and conditions of all such
initial agreements and, where no such initial agreement has
yet been executed with a qualifying county, the Illinois
Department's reasons that each such initial agreement has not
been executed. Copies and reports of amended agreements
following the initial agreements shall likewise be filed by
the Illinois Department with the Hospital Service Procurement
Advisory Board and the Health Care Cost Containment Council
within 30 days following their execution. The foregoing
filing obligations of the Illinois Department are
informational only, to allow the Board and Council,
respectively, to better perform their public roles, except
that the Board or Council may, at its discretion, advise the
Illinois Department in the case of the failure of the
Illinois Department to reach agreement with any qualifying
county by the required date.
(d) The payments provided for herein are intended to
cover services rendered on and after July 1, 1991, and any
agreement executed between a qualifying county and the
Illinois Department pursuant to this Section may relate back
to that date, provided the Illinois Department obtains
federal approval. Any changes in payment rates resulting
from the provisions of Article 3 of this amendatory Act of
1992 are intended to apply to services rendered on or after
October 1, 1992, and any agreement executed between a
qualifying county and the Illinois Department pursuant to
this Section may be effective as of that date.
(e) If one or more hospitals file suit in any court
challenging any part of this Article XV, payments to
hospitals from the Fund under this Article XV shall be made
only to the extent that sufficient monies are available in
the Fund and only to the extent that any monies in the Fund
are not prohibited from disbursement and may be disbursed
under any order of the court.
(f) All payments under this Section are contingent upon
federal approval of changes to the State plan, if that
approval is required.
(Source: P.A. 87-13; 87-861; 88-554, eff. 7-26-94.)
Section 99. Effective date. This Act takes effect upon
becoming law.