State of Illinois
90th General Assembly
Legislation

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90_SB0480

      215 ILCS 5/356t new
      215 ILCS 125/5-3          from Ch. 111 1/2, par. 1411.2
      215 ILCS 130/3009         from Ch. 73, par. 1503-9
      215 ILCS 165/10           from Ch. 32, par. 604
          Amends the Illinois Insurance  Code,  Health  Maintenance
      Organization  Act,  Limited  Health Service Organization Act,
      and Voluntary  Health  Services  Plans  Act.   Provides  that
      health   benefit  coverage  under  those  Acts  must  include
      coverage for child health supervision services  for  children
      under  the  age  of  6.   Child  health  supervision services
      provide for a periodic  review  of  a  child's  physical  and
      emotional  status  by  a  physician  or  under  a physician's
      supervision. Defines terms.  Effective immediately.
                                                     LRB9002353JSmg
                                               LRB9002353JSmg
 1        AN ACT concerning children's health insurance coverage.
 2        Be it enacted by the People of  the  State  of  Illinois,
 3    represented in the General Assembly:
 4        Section  5.   The  Illinois  Insurance Code is amended by
 5    adding Section 356t as follows:
 6        (215 ILCS 5/356t new)
 7        Sec. 356t.  Child health supervision services.
 8        (a)  An individual or group policy of accident and health
 9    insurance amended, delivered,  issued,  or  renewed  in  this
10    State after the effective date of this amendatory Act of 1997
11    must  provide  coverage for child health supervision services
12    for children under the age of 6.  The policy must provide, at
13    a minimum, benefits for  child  health  supervision  services
14    according to the current practices of the American Academy of
15    Pediatrics  as defined by its "Recommendations for Preventive
16    Pediatric Health Care".
17        (b)  Benefits for child health supervision services shall
18    be exempt from any  copayment,  coinsurance,  deductible,  or
19    dollar  limit  provisions in the policy. This exemption shall
20    be explicitly set forth in the policy.
21        (c)  "Child  health  supervision  services"   means   the
22    periodic review of a child's physical and emotional status by
23    a  physician  or  pursuant to a physician's supervision.  The
24    review   shall   include   a   history,   complete   physical
25    examination, developmental assessment, anticipatory guidance,
26    appropriate immunizations, and laboratory  tests  in  keeping
27    with  prevailing  medical  standards.   The  term  applies to
28    services furnished from birth and includes one prenatal visit
29    by  first-time  parents  or  in  the  case  of  a  high  risk
30    pregnancy.
                            -2-                LRB9002353JSmg
 1        Section 10.  The Health Maintenance Organization  Act  is
 2    amended by changing Section 5-3 as follows:
 3        (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
 4        Sec. 5-3.  Insurance Code provisions.
 5        (a)  Health Maintenance Organizations shall be subject to
 6    the  provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
 7    141.3, 143, 143c, 147, 148, 149, 151, 152, 153,  154,  154.5,
 8    154.6,  154.7,  154.8,  155.04, 355.2, 356m, 356t, 367i, 401,
 9    401.1, 402, 403, 403A, 408, 408.2, and 412, paragraph (c)  of
10    subsection  (2)  of  Section 367, and Articles VIII 1/2, XII,
11    XII 1/2, XIII, XIII 1/2, and XXVI of the  Illinois  Insurance
12    Code.
13        (b)  For  purposes of the Illinois Insurance Code, except
14    for  Articles  XIII  and   XIII   1/2,   Health   Maintenance
15    Organizations  in  the  following categories are deemed to be
16    "domestic companies":
17             (1)  a  corporation  authorized  under  the  Medical
18        Service Plan Act, the Dental Service Plan Act, the Vision
19        Service Plan Act, the Pharmaceutical  Service  Plan  Act,
20        the  Voluntary Health Services Plan Act, or the Nonprofit
21        Health Care Service Plan Act;
22             (2)  a corporation organized under the laws of  this
23        State; or
24             (3)  a  corporation  organized  under  the  laws  of
25        another  state, 30% or more of the enrollees of which are
26        residents of this State, except a corporation subject  to
27        substantially  the  same  requirements  in  its  state of
28        organization as is a  "domestic  company"  under  Article
29        VIII 1/2 of the Illinois Insurance Code.
30        (c)  In  considering  the merger, consolidation, or other
31    acquisition of control of a Health  Maintenance  Organization
32    pursuant to Article VIII 1/2 of the Illinois Insurance Code,
33             (1)  the  Director  shall give primary consideration
                            -3-                LRB9002353JSmg
 1        to the continuation of  benefits  to  enrollees  and  the
 2        financial  conditions  of the acquired Health Maintenance
 3        Organization after the merger,  consolidation,  or  other
 4        acquisition of control takes effect;
 5             (2)(i)  the  criteria specified in subsection (1)(b)
 6        of Section 131.8 of the Illinois Insurance Code shall not
 7        apply and (ii) the Director, in making his  determination
 8        with  respect  to  the  merger,  consolidation,  or other
 9        acquisition of control, need not take  into  account  the
10        effect  on  competition  of the merger, consolidation, or
11        other acquisition of control;
12             (3)  the Director shall have the  power  to  require
13        the following information:
14                  (A)  certification by an independent actuary of
15             the   adequacy   of   the  reserves  of  the  Health
16             Maintenance Organization sought to be acquired;
17                  (B)  pro forma financial statements  reflecting
18             the combined balance sheets of the acquiring company
19             and the Health Maintenance Organization sought to be
20             acquired  as of the end of the preceding year and as
21             of a date 90 days prior to the acquisition, as  well
22             as   pro   forma   financial  statements  reflecting
23             projected combined  operation  for  a  period  of  2
24             years;
25                  (C)  a  pro  forma  business  plan detailing an
26             acquiring  party's  plans  with   respect   to   the
27             operation  of  the  Health  Maintenance Organization
28             sought to be acquired for a period of not less  than
29             3 years; and
30                  (D)  such  other  information  as  the Director
31             shall require.
32        (d)  The provisions of Article VIII 1/2 of  the  Illinois
33    Insurance  Code  and this Section 5-3 shall apply to the sale
34    by any health maintenance organization of greater than 10% of
                            -4-                LRB9002353JSmg
 1    its enrollee population  (including  without  limitation  the
 2    health  maintenance organization's right, title, and interest
 3    in and to its health care certificates).
 4        (e)  In considering any management  contract  or  service
 5    agreement  subject to Section 141.1 of the Illinois Insurance
 6    Code, the Director (i) shall, in  addition  to  the  criteria
 7    specified  in  Section  141.2 of the Illinois Insurance Code,
 8    take into account the effect of the  management  contract  or
 9    service   agreement   on  the  continuation  of  benefits  to
10    enrollees  and  the  financial  condition   of   the   health
11    maintenance  organization to be managed or serviced, and (ii)
12    need not take into  account  the  effect  of  the  management
13    contract or service agreement on competition.
14        (f)  Except  for  small employer groups as defined in the
15    Small Employer Rating, Renewability  and  Portability  Health
16    Insurance  Act and except for medicare supplement policies as
17    defined in Section 363 of  the  Illinois  Insurance  Code,  a
18    Health  Maintenance Organization may by contract agree with a
19    group or other enrollment unit to effect  refunds  or  charge
20    additional premiums under the following terms and conditions:
21             (i)  the  amount  of, and other terms and conditions
22        with respect to, the refund or additional premium are set
23        forth in the group or enrollment unit contract agreed  in
24        advance of the period for which a refund is to be paid or
25        additional  premium  is to be charged (which period shall
26        not be less than one year); and
27             (ii)  the amount of the refund or additional premium
28        shall  not  exceed  20%   of   the   Health   Maintenance
29        Organization's profitable or unprofitable experience with
30        respect  to  the  group  or other enrollment unit for the
31        period (and, for  purposes  of  a  refund  or  additional
32        premium,  the profitable or unprofitable experience shall
33        be calculated taking into account a pro rata share of the
34        Health  Maintenance  Organization's  administrative   and
                            -5-                LRB9002353JSmg
 1        marketing  expenses,  but shall not include any refund to
 2        be made or additional premium to be paid pursuant to this
 3        subsection (f)).  The Health Maintenance Organization and
 4        the  group  or  enrollment  unit  may  agree   that   the
 5        profitable  or  unprofitable experience may be calculated
 6        taking into account the refund period and the immediately
 7        preceding 2 plan years.
 8        The  Health  Maintenance  Organization  shall  include  a
 9    statement in the evidence of coverage issued to each enrollee
10    describing the possibility of a refund or additional premium,
11    and upon request of any group or enrollment unit, provide  to
12    the group or enrollment unit a description of the method used
13    to   calculate  (1)  the  Health  Maintenance  Organization's
14    profitable experience with respect to the group or enrollment
15    unit and the resulting refund to the group or enrollment unit
16    or (2) the  Health  Maintenance  Organization's  unprofitable
17    experience  with  respect to the group or enrollment unit and
18    the resulting additional premium to be paid by the  group  or
19    enrollment unit.
20        In   no  event  shall  the  Illinois  Health  Maintenance
21    Organization  Guaranty  Association  be  liable  to  pay  any
22    contractual obligation of an insolvent  organization  to  pay
23    any refund authorized under this Section.
24    (Source: P.A. 88-313; 89-90, eff. 6-30-95.)
25        Section  15.  The Limited Health Service Organization Act
26    is amended by changing Section 3009 as follows:
27        (215 ILCS 130/3009) (from Ch. 73, par. 1503-9)
28        Sec.  3009.  Point-of-service  limited   health   service
29    contracts.
30        (a)  An LHSO that offers a POS contract:
31             (1)  shall  include  as in-plan covered services all
32        services required by law to be provided by an LHSO;
                            -6-                LRB9002353JSmg
 1             (2)  shall provide incentives, which  shall  include
 2        financial   incentives,  for  enrollees  to  use  in-plan
 3        covered services;
 4             (3)  shall not offer  services  out-of-plan  without
 5        providing those services on an in-plan basis;
 6             (4)  may limit or exclude specific types of services
 7        from coverage when obtained out-of-plan;
 8             (5)  may  include  annual  out-of-pocket  limits and
 9        lifetime  maximum  benefits  allowances  for  out-of-plan
10        services that are separate from any limits or  allowances
11        applied to in-plan services;
12             (6)  shall   include   an   annual  maximum  benefit
13        allowance not to exceed $2,500 per year that is  separate
14        from   any   limits  or  allowances  applied  to  in-plan
15        services;
16             (7)  may limit the groups to which a POS product  is
17        offered, however, if a POS product is offered to a group,
18        then  it  must be offered to all eligible members of that
19        group, when an LHSO provider is available;
20             (8)  shall   not   consider   emergency    services,
21        authorized  referral  services,  or  non-routine services
22        obtained out of the service area to be POS services; and
23             (9)  may  treat  as   out-of-plan   services   those
24        services  that  an  enrollee obtains from a participating
25        provider, but for which the proper authorization was  not
26        given by the LHSO.
27        (b)  An  LHSO offering a POS contract shall be subject to
28    the following limitations:
29             (1)  The LHSO  shall  not  expend  in  any  calendar
30        quarter  more  than  20%  of  its  total  limited  health
31        services expenditures for all its members for out-of-plan
32        covered services.
33             (2)  If  the  amount  specified  in paragraph (1) is
34        exceeded by 2%  in  a  quarter,  the  LHSO  shall  effect
                            -7-                LRB9002353JSmg
 1        compliance with paragraph (1) by the end of the following
 2        quarter.
 3             (3)  If  compliance  with  the  amount  specified in
 4        paragraph (1) is not  demonstrated  in  the  LHSO's  next
 5        quarterly report, the LHSO may not offer the POS contract
 6        to new groups or include the POS option in the renewal of
 7        an  existing  group  until  compliance  with  the  amount
 8        specified  in  paragraph (1) is demonstrated or otherwise
 9        allowed by the Director.
10             (4)  Any LHSO failing, without just cause, to comply
11        with the provisions of this subsection shall be required,
12        after notice and hearing, to pay a penalty  of  $250  for
13        each  day  out  of  compliance,  to  be  recovered by the
14        Director of Insurance.  Any penalty  recovered  shall  be
15        paid  into  the  General  Revenue Fund.  The Director may
16        reduce the  penalty  if  the  LHSO  demonstrates  to  the
17        Director   that  the  imposition  of  the  penalty  would
18        constitute a financial hardship to the LHSO.
19        (c)  Any LHSO that offers a POS product shall:
20             (1)  File a quarterly financial statement  detailing
21        compliance with the requirements of subsection (b).
22             (2)  Track  out-of-plan  POS  utilization separately
23        from  in-plan  or  non-POS  out-of-plan  emergency  care,
24        referral care, and urgent care out of  the  service  area
25        utilization.
26             (3)  Record out-of-plan utilization in a manner that
27        will  permit  such  utilization and cost reporting as the
28        Director may, by regulation, require.
29             (4)  Demonstrate to the Director's satisfaction that
30        the LHSO has the fiscal,  administrative,  and  marketing
31        capacity  to control its POS enrollment, utilization, and
32        costs so as not to jeopardize the financial  security  of
33        the LHSO.
34             (5)  Maintain the deposit required by subsection (b)
                            -8-                LRB9002353JSmg
 1        of Section 2006 in addition to any other deposit required
 2        under this Act.
 3        (d)  An  LHSO shall not issue a POS contract until it has
 4    filed and had approved by the Director a plan to comply  with
 5    the provisions of this Section.  The compliance plan shall at
 6    a minimum include provisions demonstrating that the LHSO will
 7    do all of the following:
 8             (1)  Design  the  benefit  levels  and conditions of
 9        coverage for in-plan  covered  services  and  out-of-plan
10        covered services as required by this Article.
11             (2)  Provide   or   arrange  for  the  provision  of
12        adequate systems to:
13                  (A)  process and pay claims for all out-of-plan
14             covered services;
15                  (B)  meet the requirements for a  POS  contract
16             set   forth  in  this  Section  and  any  additional
17             requirements that may be set forth by the  Director;
18             and
19                  (C)  generate  accurate  data and financial and
20             regulatory reports on a timely  basis  so  that  the
21             Department  can  evaluate the LHSO's experience with
22             the POS contract and  monitor  compliance  with  POS
23             contract provisions.
24             (3)  Comply  initially  and on an ongoing basis with
25        the requirements of subsections (b) and (c).
26        (e)  A POS contract must comply with the requirements  of
27    Section 356t of the Illinois Insurance Code.
28    (Source: P.A. 87-1079; 88-667, eff. 9-16-94.)
29        Section  20.  The  Voluntary Health Services Plans Act is
30    amended by changing Section 10 as follows:
31        (215 ILCS 165/10) (from Ch. 32, par. 604)
32        Sec.  10.  Application  of  Insurance  Code   provisions.
                            -9-                LRB9002353JSmg
 1    Health  services plan corporations and all persons interested
 2    therein  or  dealing  therewith  shall  be  subject  to   the
 3    provisions  of  Article  XII  1/2 and Sections 3.1, 133, 140,
 4    143, 143c, 149, 354, 355.2, 356r, 356t,  367.2,  401,  401.1,
 5    402,  403,  403A, 408, 408.2, and 412, and paragraphs (7) and
 6    (15) of Section 367 of the Illinois Insurance Code.
 7    (Source: P.A. 89-514, eff. 7-17-96.)

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