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92nd General Assembly

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Public Act 92-0579

HB5842 Enrolled                                LRB9214435JSpc

    AN ACT in relation to insurance.

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

    Section  5.  The  Illinois  Insurance  Code is amended by
changing Section 370i and adding Section 356z.2 as follows:

    (215 ILCS 5/356z.2 new)
    Sec. 356z.2.  Disclosure of limited benefit.  An  insurer
that  issues,  delivers,  amends,  or renews an individual or
group policy of accident and health insurance in  this  State
after  the  effective date of this amendatory Act of the 92nd
General Assembly and arranges, contracts with, or administers
contracts with a provider whereby beneficiaries are  provided
an  incentive  to  use  the  services  of  such provider must
include  the  following  disclosure  on  its  contracts   and
evidences  of  coverage:  "WARNING,  LIMITED BENEFITS WILL BE
PAID WHEN NON-PARTICIPATING PROVIDERS ARE USED. You should be
aware that when you  elect  to  utilize  the  services  of  a
non-participating   provider   for   a   covered  service  in
non-emergency   situations,   benefit   payments   to    such
non-participating  provider  are  not  based  upon the amount
billed. The basis of your benefit payment will be  determined
according  to your policy's fee schedule, usual and customary
charge (which is determined by comparing charges for  similar
services adjusted to the geographical area where the services
are performed), or other method as defined by the policy. YOU
CAN EXPECT TO PAY MORE THAN THE COINSURANCE AMOUNT DEFINED IN
THE  POLICY  AFTER  THE  PLAN  HAS PAID ITS REQUIRED PORTION.
Non-participating providers may bill members for  any  amount
up  to  the billed charge after the plan has paid its portion
of the bill. Participating providers have  agreed  to  accept
discounted  payments  for services with no additional billing
to the member other than co-insurance and deductible amounts.
You may obtain further information  about  the  participating
status   of   professional   providers   and  information  on
out-of-pocket expenses by calling  the  toll  free  telephone
number on your identification card.".

    (215 ILCS 5/370i) (from Ch. 73, par. 982i)
    Sec.  370i.   Policies,  agreements  or arrangements with
incentives or limits on reimbursement authorized.
    (a)  Policies, agreements or  arrangements  issued  under
this  Article  may not contain terms or conditions that would
operate unreasonably to restrict the access and  availability
of health care services for the insured.
    (b)  An insurer or administrator may:
    (1)  enter  into agreements with certain providers of its
choice relating to health care services which may be rendered
to insureds or beneficiaries of the insurer or administrator,
including agreements relating to the amounts  to  be  charged
the insureds or beneficiaries for services rendered;
    (2)  issue or administer programs, policies or subscriber
contracts  in  this  State  that  include  incentives for the
insured or beneficiary to utilize the services of a  provider
which  has  entered  into  an  agreement  with the insurer or
administrator pursuant to paragraph (1) above.
    (c)  After the effective date of this amendatory  Act  of
the   92nd  General  Assembly,  any  insurer  that  arranges,
contracts with, or  administers  contracts  with  a  provider
whereby  beneficiaries  are  provided an incentive to use the
services  of  such  provider  must  include   the   following
disclosure  on  its  contracts  and  evidences  of  coverage:
"WARNING,    LIMITED    BENEFITS    WILL    BE    PAID   WHEN
NON-PARTICIPATING PROVIDERS ARE USED.  You  should  be  aware
that   when   you   elect   to  utilize  the  services  of  a
non-participating  provider  for   a   covered   service   in
non-emergency    situations,   benefit   payments   to   such
non-participating provider are  not  based  upon  the  amount
billed.  The basis of your benefit payment will be determined
according to your policy's fee schedule, usual and  customary
charge  (which is determined by comparing charges for similar
services adjusted to the geographical area where the services
are performed), or other method as defined by the policy. YOU
CAN EXPECT TO PAY MORE THAN THE COINSURANCE AMOUNT DEFINED IN
THE POLICY AFTER THE PLAN  HAS  PAID  ITS  REQUIRED  PORTION.
Non-participating  providers  may bill members for any amount
up to the billed charge after the plan has paid  its  portion
of  the  bill.  Participating providers have agreed to accept
discounted payments for services with no  additional  billing
to the member other than co-insurance and deductible amounts.
You  may  obtain  further information about the participating
status  of  professional   providers   and   information   on
out-of-pocket  expenses  by  calling  the toll free telephone
number on your identification card.".
(Source: P.A. 84-618.)

    Section 10.  The Health Maintenance Organization  Act  is
amended by changing Section 4.5-1 as follows:

    (215 ILCS 125/4.5-1)
    Sec. 4.5-1.  Point-of-service health service contracts.
    (a)  A  health  maintenance  organization  that  offers a
point-of-service contract:
         (1)  must include as in-plan  covered  services  all
    services  required  by  law  to  be  provided by a health
    maintenance organization;
         (2)  must provide incentives,  which  shall  include
    financial   incentives,  for  enrollees  to  use  in-plan
    covered services;
         (3)  may  not  offer  services  out-of-plan  without
    providing those services on an in-plan basis;
         (4)  may include  annual  out-of-pocket  limits  and
    lifetime  maximum  benefits  allowances  for  out-of-plan
    services  that are separate from any limits or allowances
    applied to in-plan services;
         (5)  may not consider emergency services, authorized
    referral services, or non-routine services  obtained  out
    of the service area to be point-of-service services; and
         (6)  may   treat   as   out-of-plan  services  those
    services that an enrollee obtains  from  a  participating
    provider,  but for which the proper authorization was not
    given by the health maintenance organization; and.
         (7)  after the effective date of this amendatory Act
    of the 92nd General Assembly, must include the  following
    disclosure   on   its   point-of-service   contracts  and
    evidences of coverage: "WARNING, LIMITED BENEFITS WILL BE
    PAID  WHEN  NON-PARTICIPATING  PROVIDERS  ARE  USED.  You
    should be aware  that  when  you  elect  to  utilize  the
    services  of  a  non-participating provider for a covered
    service in non-emergency situations, benefit payments  to
    such  non-participating  provider  are not based upon the
    amount billed. The basis of your benefit payment will  be
    determined according to your policy's fee schedule, usual
    and  customary  charge  (which is determined by comparing
    charges for similar services adjusted to the geographical
    area where the services are performed), or  other  method
    as defined by the policy. YOU CAN EXPECT TO PAY MORE THAN
    THE  COINSURANCE  AMOUNT  DEFINED IN THE POLICY AFTER THE
    PLAN HAS PAID  ITS  REQUIRED  PORTION.  Non-participating
    providers  may  bill  members  for  any  amount up to the
    billed charge after the plan has paid its portion of  the
    bill.  Participating  providers  have  agreed  to  accept
    discounted  payments  for  services  with  no  additional
    billing   to  the  member  other  than  co-insurance  and
    deductible amounts. You may  obtain  further  information
    about  the participating status of professional providers
    and information on out-of-pocket expenses by calling  the
    toll free telephone number on your identification card.".
    (b)  A   health   maintenance   organization  offering  a
point-of-service contract is subject to all of the  following
limitations:
         (1)  The  health  maintenance  organization  may not
    expend in any calendar quarter more than 20% of its total
    expenditures for all its members for out-of-plan  covered
    services.
         (2)  If  the  amount  specified  in item (1) of this
    subsection is exceeded by 2% in  a  quarter,  the  health
    maintenance organization must effect compliance with item
    (1)  of  this  subsection  by  the  end  of the following
    quarter.
         (3)  If compliance with the amount specified in item
    (1) of this subsection is not demonstrated in the  health
    maintenance  organization's  next  quarterly  report, the
    health  maintenance  organization  may  not   offer   the
    point-of-service  contract  to  new groups or include the
    point-of-service option in the  renewal  of  an  existing
    group  until compliance with the amount specified in item
    (1) of this subsection is demonstrated or until otherwise
    allowed by the Director.
         (4)  A  health  maintenance  organization   failing,
    without just cause, to comply with the provisions of this
    subsection  shall  be required, after notice and hearing,
    to pay a penalty of $250 for each day out of  compliance,
    to  be  recovered  by the Director. Any penalty recovered
    shall be paid into the General Revenue Fund. The Director
    may  reduce  the  penalty  if  the   health   maintenance
    organization   demonstrates  to  the  Director  that  the
    imposition of the penalty would  constitute  a  financial
    hardship to the health maintenance organization.
    (c)  A  health  maintenance  organization  that  offers a
point-of-service product must do all of the following:
         (1)  File a quarterly financial statement  detailing
    compliance with the requirements of subsection (b).
         (2)  Track out-of-plan, point-of-service utilization
    separately    from   in-plan   or   non-point-of-service,
    out-of-plan emergency care,  referral  care,  and  urgent
    care out of the service area utilization.
         (3)  Record out-of-plan utilization in a manner that
    will  permit  such  utilization and cost reporting as the
    Director may, by rule, require.
         (4)  Demonstrate to the Director's satisfaction that
    the  health  maintenance  organization  has  the  fiscal,
    administrative, and marketing  capacity  to  control  its
    point-of-service enrollment, utilization, and costs so as
    not  to  jeopardize  the financial security of the health
    maintenance organization.
         (5)  Maintain, in  addition  to  any  other  deposit
    required  under this Act, the deposit required by Section
    2-6.
         (6)  Maintain   cash   and   cash   equivalents   of
    sufficient amount to fully  liquidate  10  days'  average
    claim payments, subject to review by the Director.
         (7)  Maintain    and   file   with   the   Director,
    reinsurance  coverage  protecting  against   catastrophic
    losses  on  out  of  network  point-of-service  services.
    Deductibles  may not exceed $100,000 per covered life per
    year, and the portion of  risk  retained  by  the  health
    maintenance   organization  once  deductibles  have  been
    satisfied may not exceed 20%. Reinsurance must be  placed
    with  licensed  authorized  reinsurers  qualified  to  do
    business in this State.
    (d)  A  health  maintenance  organization may not issue a
point-of-service contract until it has filed and had approved
by the Director a plan to comply with the provisions of  this
Section.   The  compliance  plan  must, at a minimum, include
provisions  demonstrating   that   the   health   maintenance
organization will do all of the following:
         (1)  Design  the  benefit  levels  and conditions of
    coverage for in-plan  covered  services  and  out-of-plan
    covered services as required by this Article.
         (2)  Provide   or   arrange  for  the  provision  of
    adequate systems to:
              (A)  process and pay claims for all out-of-plan
         covered services;
              (B)  meet the requirements for point-of-service
         contracts  set  forth  in  this  Section   and   any
         additional requirements that may be set forth by the
         Director; and
              (C)  generate  accurate  data and financial and
         regulatory reports on a timely  basis  so  that  the
         Department  of  Insurance  can  evaluate  the health
         maintenance  organization's  experience   with   the
         point-of-service  contract  and  monitor  compliance
         with point-of-service contract provisions.
         (3)  Comply with the requirements of subsections (b)
    and (c).
(Source: P.A. 92-135, eff. 1-1-02.)

    Section  99.   Effective  date.  This Act takes effect on
January 1, 2003.
    Passed in the General Assembly April 25, 2002.
    Approved June 26, 2002.
    Effective January 01, 2003.

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