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90_HB3431ham001
LRB9010626DJcdam
1 AMENDMENT TO HOUSE BILL 3431
2 AMENDMENT NO. . Amend House Bill 3431 as follows:
3 by replacing the title with the following:
4 "AN ACT concerning managed care community networks,
5 amending named Acts."; and
6 by replacing everything after the enacting clause with the
7 following:
8 "Section 5. The Health Maintenance Organization Act is
9 amended by changing Section 2-1 as follows:
10 (215 ILCS 125/2-1) (from Ch. 111 1/2, par. 1403)
11 Sec. 2-1. Certificate of authority - Exception for
12 corporate employee programs - Applications - Material
13 modification of operation.
14 (a) No organization shall establish or operate a Health
15 Maintenance Organization in this State without obtaining a
16 certificate of authority under this Act. No person other
17 than an organization may lawfully establish or operate a
18 Health Maintenance Organization in this State. This Act
19 shall not apply to the establishment and operation of a
20 Health Maintenance Organization exclusively providing or
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1 arranging for health care services to employees of a
2 corporate affiliate of such Health Maintenance Organization.
3 This exclusion shall be available only to those Health
4 Maintenance Organizations which require employee
5 contributions which equal less than 50% of the total cost of
6 the health care plan, with the remainder of the cost being
7 paid by the corporate affiliate which is the employer of the
8 participants in the plan. This Act shall not apply to the
9 establishment and operation of a Health Maintenance
10 Organization exclusively providing or arranging health care
11 services under contract with the State to persons committed
12 to the custody of the Illinois Department of Corrections.
13 This Act does not apply to the establishment and operation of
14 (i) a managed care community network providing or arranging
15 health care services under contract with the State
16 exclusively to persons who are enrolled in the integrated
17 health care program established under Section 5-16.3 of the
18 Illinois Public Aid Code or (ii) a managed care community
19 network owned, operated, or governed by a county provider as
20 defined in Section 15-1 of that Code.
21 This Act does not apply to the establishment and
22 operation of managed care community networks that are
23 certified as risk-bearing entities under Section 5-11 of the
24 Illinois Public Aid Code and that contract with the Illinois
25 Department of Public Aid pursuant to that Section. The
26 Department of Insurance may implement the amendatory changes
27 to this Act made by this amendatory Act of 1998 through the
28 use of emergency rules in accordance with Section 5-45 of the
29 Illinois Administrative Procedure Act. For purposes of that
30 Act, the adoption of rules to implement these changes is
31 deemed an emergency and necessary for the public interest,
32 safety, and welfare.
33 (b) Any organization may apply to the Director for and
34 obtain a certificate of authority to establish and operate a
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1 Health Maintenance Organization in compliance with this Act.
2 A foreign corporation may qualify under this Act, subject to
3 its registration to do business in this State as a foreign
4 corporation.
5 (c) Each application for a certificate of authority
6 shall be filed in triplicate and verified by an officer or
7 authorized representative of the applicant, shall be in a
8 form prescribed by the Director, and shall set forth, without
9 limiting what may be required by the Director, the following:
10 (1) A copy of the organizational document;
11 (2) A copy of the bylaws, rules and regulations, or
12 similar document regulating the conduct of the internal
13 affairs of the applicant, which shall include a mechanism
14 to afford the enrollees an opportunity to participate in
15 an advisory capacity in matters of policy and operations;
16 (3) A list of the names, addresses, and official
17 positions of the persons who are to be responsible for
18 the conduct of the affairs of the applicant; including,
19 but not limited to, all members of the board of
20 directors, executive committee, the principal officers,
21 and any person or entity owning or having the right to
22 acquire 10% or more of the voting securities or
23 subordinated debt of the applicant;
24 (4) A statement generally describing the applicant,
25 geographic area to be served, its facilities, personnel
26 and the health care services to be offered;
27 (5) A copy of the form of any contract made or to
28 be made between the applicant and any providers regarding
29 the provision of health care services to enrollees;
30 (6) A copy of the form of any contract made or to
31 be made between the applicant and any person listed in
32 paragraph (3) of this subsection;
33 (7) A copy of the form of any contract made or to
34 be made between the applicant and any person,
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1 corporation, partnership or other entity for the
2 performance on the applicant's behalf of any functions
3 including, but not limited to, marketing, administration,
4 enrollment, investment management and subcontracting for
5 the provision of health services to enrollees;
6 (8) A copy of the form of any group contract which
7 is to be issued to employers, unions, trustees, or other
8 organizations and a copy of any form of evidence of
9 coverage to be issued to any enrollee or subscriber and
10 any advertising material;
11 (9) Descriptions of the applicant's procedures for
12 resolving enrollee grievances which must include
13 procedures providing for enrollees participation in the
14 resolution of grievances;
15 (10) A copy of the applicant's most recent
16 financial statements audited by an independent certified
17 public accountant. If the financial affairs of the
18 applicant's parent company are audited by an independent
19 certified public accountant but those of the applicant
20 are not, then a copy of the most recent audited financial
21 statement of the applicant's parent, attached to which
22 shall be consolidating financial statements of the parent
23 including separate unaudited financial statements of the
24 applicant, unless the Director determines that additional
25 or more recent financial information is required for the
26 proper administration of this Act;
27 (11) A copy of the applicant's financial plan,
28 including a three-year projection of anticipated
29 operating results, a statement of the sources of working
30 capital, and any other sources of funding and provisions
31 for contingencies;
32 (12) A description of rate methodology;
33 (13) A description of the proposed method of
34 marketing;
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1 (14) A copy of every filing made with the Illinois
2 Secretary of State which relates to the applicant's
3 registered agent or registered office;
4 (15) A description of the complaint procedures to
5 be established and maintained as required under Section
6 4-6 of this Act;
7 (16) A description, in accordance with regulations
8 promulgated by the Illinois Department of Public Health,
9 of the quality assessment and utilization review
10 procedures to be utilized by the applicant;
11 (17) The fee for filing an application for issuance
12 of a certificate of authority provided in Section 408 of
13 the Illinois Insurance Code, as now or hereafter amended;
14 and
15 (18) Such other information as the Director may
16 reasonably require to make the determinations required by
17 this Act.
18 (Source: P.A. 88-554, eff. 7-26-94.)
19 Section 10. The Illinois Public Aid Code is amended by
20 changing Sections 5-11, 15-2, 15-3, and 15-5 as follows:
21 (305 ILCS 5/5-11) (from Ch. 23, par. 5-11)
22 Sec. 5-11. Co-operative arrangements; contracts with
23 other State agencies, health care and rehabilitation
24 organizations, and fiscal intermediaries.
25 (a) The Illinois Department may enter into co-operative
26 arrangements with State agencies responsible for
27 administering or supervising the administration of health
28 services and vocational rehabilitation services to the end
29 that there may be maximum utilization of such services in the
30 provision of medical assistance.
31 The Illinois Department shall, not later than June 30,
32 1993, enter into one or more co-operative arrangements with
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1 the Department of Mental Health and Developmental
2 Disabilities providing that the Department of Mental Health
3 and Developmental Disabilities will be responsible for
4 administering or supervising all programs for services to
5 persons in community care facilities for persons with
6 developmental disabilities, including but not limited to
7 intermediate care facilities, that are supported by State
8 funds or by funding under Title XIX of the federal Social
9 Security Act. The responsibilities of the Department of
10 Mental Health and Developmental Disabilities under these
11 agreements are transferred to the Department of Human
12 Services as provided in the Department of Human Services Act.
13 The Department may also contract with such State health
14 and rehabilitation agencies and other public or private
15 health care and rehabilitation organizations to act for it in
16 supplying designated medical services to persons eligible
17 therefor under this Article. Any contracts with health
18 services or health maintenance organizations shall be
19 restricted to organizations which have been certified as
20 being in compliance with standards promulgated pursuant to
21 the laws of this State governing the establishment and
22 operation of health services or health maintenance
23 organizations. The Department may also contract with
24 insurance companies or other corporate entities serving as
25 fiscal intermediaries in this State for the Federal
26 Government in respect to Medicare payments under Title XVIII
27 of the Federal Social Security Act to act for the Department
28 in paying medical care suppliers. The provisions of Section
29 9 of "An Act in relation to State finance", approved June 10,
30 1919, as amended, notwithstanding, such contracts with State
31 agencies, other health care and rehabilitation organizations,
32 or fiscal intermediaries may provide for advance payments.
33 (b) For purposes of this subsection (b), "managed care
34 community network" means an entity, other than a health
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1 maintenance organization, that is owned, operated, or
2 governed by providers of health care services within this
3 State and that provides or arranges primary, secondary, and
4 tertiary managed health care services under contract with the
5 Illinois Department exclusively to persons participating in
6 programs administered by the Illinois Department.
7 The Illinois Department may certify managed care
8 community networks, including managed care community networks
9 owned, operated, managed, or governed by State-funded medical
10 schools, as risk-bearing entities eligible to contract with
11 the Illinois Department as Medicaid managed care
12 organizations. The Illinois Department may contract with
13 those managed care community networks to furnish health care
14 services to or arrange those services for individuals
15 participating in programs administered by the Illinois
16 Department. The rates for those provider-sponsored
17 organizations may be determined on a prepaid, capitated
18 basis. A managed care community network may choose to
19 contract with the Illinois Department to provide only
20 pediatric health care services. The Illinois Department shall
21 by rule adopt the criteria, standards, and procedures by
22 which a managed care community network may be permitted to
23 contract with the Illinois Department and shall consult with
24 the Department of Insurance in adopting these rules.
25 A county provider as defined in Section 15-1 of this Code
26 may contract with the Illinois Department to provide primary,
27 secondary, or tertiary managed health care services as a
28 managed care community network without the need to establish
29 a separate entity and shall be deemed a managed care
30 community network for purposes of this Code only to the
31 extent it provides services to participating individuals. A
32 county provider is entitled to contract with the Illinois
33 Department with respect to any contracting region located in
34 whole or in part within the county. A county provider is not
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1 required to accept enrollees who do not reside within the
2 county.
3 In order to (i) accelerate and facilitate the development
4 of integrated health care in contracting areas outside
5 counties with populations in excess of 3,000,000 and counties
6 adjacent to those counties and (ii) maintain and sustain the
7 high quality of education and residency programs coordinated
8 and associated with local area hospitals, the Illinois
9 Department may develop and implement a demonstration program
10 from managed care community networks owned, operated,
11 managed, or governed by State-funded medical schools. The
12 Illinois Department shall prescribe by rule the criteria,
13 standards, and procedures for effecting this demonstration
14 program.
15 Each managed care community network must demonstrate its
16 ability to bear the financial risk of serving individuals
17 under this program. The Illinois Department shall by rule
18 adopt standards for assessing the solvency and financial
19 soundness of each managed care community network. Any
20 solvency and financial standards adopted for managed care
21 community networks shall be no more restrictive than the
22 solvency and financial standards adopted under Section
23 1856(a) of the Social Security Act for provider-sponsored
24 organizations under Part C of Title XVIII of the Social
25 Security Act.
26 The Illinois Department may implement the amendatory
27 changes to this Code made by this amendatory Act of 1998
28 through the use of emergency rules in accordance with Section
29 5-45 of the Illinois Administrative Procedure Act. For
30 purposes of that Act, the adoption of rules to implement
31 these changes is deemed an emergency and necessary for the
32 public interest, safety, and welfare.
33 (c) Not later than June 30, 1996, the Illinois
34 Department shall enter into one or more cooperative
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1 arrangements with the Department of Public Health for the
2 purpose of developing a single survey for nursing facilities,
3 including but not limited to facilities funded under Title
4 XVIII or Title XIX of the federal Social Security Act or
5 both, which shall be administered and conducted solely by the
6 Department of Public Health. The Departments shall test the
7 single survey process on a pilot basis, with both the
8 Departments of Public Aid and Public Health represented on
9 the consolidated survey team. The pilot will sunset June 30,
10 1997. After June 30, 1997, unless otherwise determined by
11 the Governor, a single survey shall be implemented by the
12 Department of Public Health which would not preclude staff
13 from the Department of Public Aid from going on-site to
14 nursing facilities to perform necessary audits and reviews
15 which shall not replicate the single State agency survey
16 required by this Act. This Section shall not apply to
17 community or intermediate care facilities for persons with
18 developmental disabilities.
19 (Source: P.A. 89-415, eff. 1-1-96; 89-507, eff. 7-1-97.)
20 (305 ILCS 5/15-2) (from Ch. 23, par. 15-2)
21 Sec. 15-2. County Provider Trust Fund.
22 (a) There is created in the State Treasury the County
23 Provider Trust Fund. Interest earned by the Fund shall be
24 credited to the Fund. The Fund shall not be used to replace
25 any funds appropriated to the Medicaid program by the General
26 Assembly.
27 (b) The Fund is created solely for the purposes of
28 receiving, investing, and distributing monies in accordance
29 with this Article XV. The Fund shall consist of:
30 (1) All monies collected or received by the
31 Illinois Department under Section 15-3 of this Code;
32 (2) All federal financial participation monies
33 received by the Illinois Department pursuant to Title XIX
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1 of the Social Security Act, 42 U.S.C. 1396(b),
2 attributable to eligible expenditures made by the
3 Illinois Department pursuant to Section 15-5 of this
4 Code;
5 (3) All other monies received by the Fund from any
6 source, including interest thereon.
7 (c) Disbursements from the Fund shall be by warrants
8 drawn by the State Comptroller upon receipt of vouchers duly
9 executed and certified by the Illinois Department and shall
10 be made only:
11 (1) For hospital inpatient care, hospital
12 outpatient care, care provided by other outpatient
13 facilities operated by a county, and disproportionate
14 share hospital payments made under Title XIX of the
15 Social Security Act and Article V of this Code as
16 required by Section 15-5 of this Code;
17 (1.5) For services provided by county providers
18 pursuant to Section 5-11 or 5-16.3 of this Code;
19 (2) For the reimbursement of administrative
20 expenses incurred by county providers on behalf of the
21 Illinois Department as permitted by Section 15-4 of this
22 Code;
23 (3) For the reimbursement of monies received by the
24 Fund through error or mistake;
25 (4) For the payment of administrative expenses
26 necessarily incurred by the Illinois Department or its
27 agent in performing the activities required by this
28 Article XV; and
29 (5) For the payment of any amounts that are
30 reimbursable to the federal government, attributable
31 solely to the Fund, and required to be paid by State
32 warrant.
33 (Source: P.A. 87-13; 88-554, eff. 7-26-94.)
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1 (305 ILCS 5/15-3) (from Ch. 23, par. 15-3)
2 Sec. 15-3. Intergovernmental Transfers.
3 (a) Each qualifying county shall make an annual
4 intergovernmental transfer to the Illinois Department in an
5 amount equal to 71.7% of the difference between the total
6 payments made by the Illinois Department to such county
7 provider for hospital services under Title XIX of the Social
8 Security Act or pursuant to Section 5-11 or 5-16.3 of this
9 Code in each fiscal year ending June 30 (or fraction thereof
10 during the fiscal year ending June 30, 1993) and $108,800,000
11 (or fraction thereof), except that the annual
12 intergovernmental transfer shall not exceed the total
13 payments made by the Illinois Department to such county
14 provider for hospital services under this Code or pursuant to
15 Section 5-16.3 of this Code, less 50% of payments
16 reimbursable under Title XIX of the Social Security Act in
17 each fiscal year ending June 30 (or fraction thereof).
18 (b) The payment schedule for the intergovernmental
19 transfer made hereunder shall be established by
20 intergovernmental agreement between the Illinois Department
21 and the applicable county, which agreement shall at a minimum
22 provide:
23 (1) For periodic payments no less frequently than
24 monthly to the county provider for inpatient and
25 outpatient approved or adjudicated claims and for
26 disproportionate share payments under Section 5-5.02 of
27 this Code (in the initial year, for services after July
28 1, 1991, or such other date as an approved State Medical
29 Assistance Plan shall provide) and to the county provider
30 pursuant to Section 5-16.3 of this Code.
31 (2) For periodic payments no less frequently than
32 monthly to the county provider for supplemental
33 disproportionate share payments hereunder based on a
34 federally approved State Medical Assistance Plan.
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1 (3) For calculation of the intergovernmental
2 transfer payment to be made by the county equal to 71.7%
3 of the difference between the amount of the periodic
4 payment and the base amount; provided, however, that if
5 the periodic payment for any period is less than the base
6 amount for such period, the base amount for the
7 succeeding period (and any successive period if
8 necessary) shall be increased by the amount of such
9 shortfall.
10 (4) For an intergovernmental transfer methodology
11 which obligates the Illinois Department to notify the
12 county and county provider in writing of each impending
13 periodic payment and the intergovernmental transfer
14 payment attributable thereto and which obligates the
15 Comptroller to release the periodic payment to the county
16 provider within one working day of receipt of the
17 intergovernmental transfer payment from the county.
18 (Source: P.A. 87-13; 87-861; 88-85; 88-88; 88-554, eff.
19 7-26-94.)
20 (305 ILCS 5/15-5) (from Ch. 23, par. 15-5)
21 Sec. 15-5. Disbursements from the Fund.
22 (a) The monies in the Fund shall be disbursed only as
23 provided in Section 15-2 of this Code and as follows:
24 (1) To pay the county hospitals' inpatient
25 reimbursement rate based on actual costs, trended forward
26 annually by an inflation index and supplemented by
27 teaching, capital, and other direct and indirect costs,
28 according to a State plan approved by the federal
29 government. Effective October 1, 1992, the inpatient
30 reimbursement rate (including any disproportionate or
31 supplemental disproportionate share payments) for
32 hospital services provided by county operated facilities
33 within the County shall be no less than the reimbursement
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1 rates in effect on June 1, 1992, except that this minimum
2 shall be adjusted as of July 1, 1992 and each July 1
3 thereafter by the annual percentage change in the per
4 diem cost of inpatient hospital services as reported in
5 the most recent annual Medicaid cost report.
6 (2) To pay county hospitals and county operated
7 outpatient facilities for outpatient services based on a
8 federally approved methodology to cover the maximum
9 allowable costs per patient visit. Effective October 1,
10 1992, the outpatient reimbursement rate for outpatient
11 services provided by county hospitals and county operated
12 outpatient facilities shall be no less than the
13 reimbursement rates in effect on June 1, 1992, except
14 that this minimum shall be adjusted as of July 1, 1992
15 and each July 1 thereafter by the annual percentage
16 change in the per diem cost of inpatient hospital
17 services as reported in the most recent annual Medicaid
18 cost report.
19 (3) To pay the county hospitals' disproportionate
20 share payments as established by the Illinois Department
21 under Section 5-5.02 of this Code. Effective October 1,
22 1992, the disproportionate share payments for hospital
23 services provided by county operated facilities within
24 the County shall be no less than the reimbursement rates
25 in effect on June 1, 1992, except that this minimum shall
26 be adjusted as of July 1, 1992 and each July 1 thereafter
27 by the annual percentage change in the per diem cost of
28 inpatient hospital services as reported in the most
29 recent annual Medicaid cost report.
30 (3.5) To pay county providers for services provided
31 pursuant to Section 5-11 or 5-16.3 of this Code.
32 (4) To reimburse the county providers for expenses
33 contractually assumed pursuant to Section 15-4 of this
34 Code.
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1 (5) To pay the Illinois Department its necessary
2 administrative expenses relative to the Fund and other
3 amounts agreed to, if any, by the county providers in the
4 agreement provided for in subsection (c).
5 (6) To pay the county hospitals' supplemental
6 disproportionate share payments, hereby authorized, as
7 specified in the agreement provided for in subsection (c)
8 and according to a federally approved State plan.
9 Effective October 1, 1992, the supplemental
10 disproportionate share payments for hospital services
11 provided by county operated facilities within the County
12 shall be no less than the reimbursement rates in effect
13 on June 1, 1992, except that this minimum shall be
14 adjusted as of July 1, 1992 and each July 1 thereafter by
15 the annual percentage change in the per diem cost of
16 inpatient hospital services as reported in the most
17 recent annual Medicaid cost report.
18 (b) The Illinois Department shall promptly seek all
19 appropriate amendments to the Illinois State Plan to effect
20 the foregoing payment methodology.
21 (c) The Illinois Department shall implement the changes
22 made by Article 3 of this amendatory Act of 1992 beginning
23 October 1, 1992. All terms and conditions of the
24 disbursement of monies from the Fund not set forth expressly
25 in this Article shall be set forth in the agreement executed
26 under the Intergovernmental Cooperation Act so long as those
27 terms and conditions are not inconsistent with this Article
28 or applicable federal law. The Illinois Department shall
29 report in writing to the Hospital Service Procurement
30 Advisory Board and the Health Care Cost Containment Council
31 by October 15, 1992, the terms and conditions of all such
32 initial agreements and, where no such initial agreement has
33 yet been executed with a qualifying county, the Illinois
34 Department's reasons that each such initial agreement has not
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1 been executed. Copies and reports of amended agreements
2 following the initial agreements shall likewise be filed by
3 the Illinois Department with the Hospital Service Procurement
4 Advisory Board and the Health Care Cost Containment Council
5 within 30 days following their execution. The foregoing
6 filing obligations of the Illinois Department are
7 informational only, to allow the Board and Council,
8 respectively, to better perform their public roles, except
9 that the Board or Council may, at its discretion, advise the
10 Illinois Department in the case of the failure of the
11 Illinois Department to reach agreement with any qualifying
12 county by the required date.
13 (d) The payments provided for herein are intended to
14 cover services rendered on and after July 1, 1991, and any
15 agreement executed between a qualifying county and the
16 Illinois Department pursuant to this Section may relate back
17 to that date, provided the Illinois Department obtains
18 federal approval. Any changes in payment rates resulting
19 from the provisions of Article 3 of this amendatory Act of
20 1992 are intended to apply to services rendered on or after
21 October 1, 1992, and any agreement executed between a
22 qualifying county and the Illinois Department pursuant to
23 this Section may be effective as of that date.
24 (e) If one or more hospitals file suit in any court
25 challenging any part of this Article XV, payments to
26 hospitals from the Fund under this Article XV shall be made
27 only to the extent that sufficient monies are available in
28 the Fund and only to the extent that any monies in the Fund
29 are not prohibited from disbursement and may be disbursed
30 under any order of the court.
31 (f) All payments under this Section are contingent upon
32 federal approval of changes to the State plan, if that
33 approval is required.
34 (Source: P.A. 87-13; 87-861; 88-554, eff. 7-26-94.)
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1 Section 99. Effective date. This Act takes effect upon
2 becoming law.".