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91_HB2713enr HB2713 Enrolled LRB9103967SMpr 1 AN ACT concerning payment for medical services, amending 2 named Acts. 3 Be it enacted by the People of the State of Illinois, 4 represented in the General Assembly: 5 Section 5. The State Employees Group Insurance Act of 6 1971 is amended by adding Section 6.12 as follows: 7 (5 ILCS 375/6-12 new) 8 Sec. 6.12. Payment for services. The program of health 9 benefits is subject to the provisions of Section 356y of the 10 Illinois Insurance Code. 11 Section 10. The Illinois Insurance Code is amended by 12 adding Section 356y and changing Sections 357.9 and 370a as 13 follows: 14 (215 ILCS 5/356y new) 15 Sec. 356y. Timely payment for health care services. 16 (a) This Section applies to insurers, health maintenance 17 organizations, managed care plans, health care plans, 18 preferred provider organizations, third party administrators, 19 independent practice associations, and physician-hospital 20 organizations (hereinafter referred to as "payors") that 21 provide periodic payments, which are payments not requiring a 22 claim, bill, capitation encounter data, or capitation 23 reconciliation reports, such as prospective capitation 24 payments, to health care professionals and health care 25 facilities to provide medical or health care services for 26 insureds or enrollees. 27 (1) A payor shall make periodic payments in 28 accordance with item (3). Failure to make periodic 29 payments within the period of time specified in item (3) HB2713 Enrolled -2- LRB9103967SMpr 1 shall entitle the health care professional or health care 2 facility to interest at the rate of 9% per year from the 3 date payment was required to be made to the date of the 4 late payment, provided that interest amounting to less 5 than $1 need not be paid. Any required interest payments 6 shall be made within 30 days after the payment. 7 (2) When a payor requires selection of a health 8 care professional or health care facility, the selection 9 shall be completed by the insured or enrollee no later 10 than 30 days after enrollment. The payor shall provide 11 written notice of this requirement to all insureds and 12 enrollees. Nothing in this Section shall be construed to 13 require a payor to select a health care professional or 14 health care facility for an insured or enrollee. 15 (3) A payor shall provide the health care 16 professional or health care facility with notice of the 17 selection as a health care professional or health care 18 facility by an insured or enrollee and the effective date 19 of the selection within 60 calendar days after the 20 selection. No later than the 60th day following the date 21 an insured or enrollee has selected a health care 22 professional or health care facility or the date that 23 selection becomes effective, whichever is later, or in 24 cases of retrospective enrollment only, 30 days after 25 notice by an employer to the payor of the selection, a 26 payor shall begin periodic payment of the required 27 amounts to the insured's or enrollee's health care 28 professional or health care facility, or the designee of 29 either, calculated from the date of selection or the date 30 the selection becomes effective, whichever is later. All 31 subsequent payments shall be made in accordance with a 32 monthly periodic cycle. 33 (b) Notwithstanding any other provision of this Section, 34 independent practice associations and physician-hospital HB2713 Enrolled -3- LRB9103967SMpr 1 organizations shall begin making periodic payment of the 2 required amounts within 60 days after an insured or enrollee 3 has selected a health care professional or health care 4 facility or the date that selection becomes effective, 5 whichever is later. Before January 1, 2001, subsequent 6 periodic payments shall be made in accordance with a 60-day 7 periodic schedule, and after December 31, 2000, subsequent 8 periodic payments shall be made in accordance with a monthly 9 periodic schedule. 10 Notwithstanding any other provision of this Section, 11 independent practice associations and physician-hospital 12 organizations shall make all other payments for health 13 services within 60 days after receipt of due proof of loss 14 received before January 1, 2001 and within 30 days after 15 receipt of due proof of loss received after December 31, 16 2000. Independent practice associations and 17 physician-hospital organizations shall notify the insured, 18 insured's assignee, health care professional, or health care 19 facility of any failure to provide sufficient documentation 20 for a due proof of loss within 30 days after receipt of the 21 claim for health services. 22 Failure to pay within the required time period shall 23 entitle the payee to interest at the rate of 9% per year from 24 the date the payment is due to the date of the late payment, 25 provided that interest amounting to less that $1 need not be 26 paid. Any required interest payments shall be made within 30 27 days after the payment. 28 (c) All insurers, health maintenance organizations, 29 managed care plans, health care plans, preferred provider 30 organizations, and third party administrators shall ensure 31 that all claims and indemnities concerning health care 32 services other than for any periodic payment shall be paid 33 within 30 days after receipt of due written proof of such 34 loss. An insured, insured's assignee, health care HB2713 Enrolled -4- LRB9103967SMpr 1 professional, or health care facility shall be notified of 2 any known failure to provide sufficient documentation for a 3 due proof of loss within 30 days after receipt of the claim 4 for health care services. Failure to pay within such period 5 shall entitle the payee to interest at the rate of 9% per 6 year from the 30th day after receipt of such proof of loss to 7 the date of late payment, provided that interest amounting to 8 less than one dollar need not be paid. Any required interest 9 payments shall be made within 30 days after the payment. 10 (d) The Department shall enforce the provisions of this 11 Section pursuant to the enforcement powers granted to it by 12 law. 13 (e) The Department is hereby granted specific authority 14 to issue a cease and desist order, fine, or otherwise 15 penalize independent practice associations and 16 physician-hospital organizations that violate this Section. 17 The Department shall adopt reasonable rules to enforce 18 compliance with this Section by independent practice 19 associations and physician-hospital organizations. 20 (215 ILCS 5/357.9) (from Ch. 73, par. 969.9) 21 Sec. 357.9. "TIME OF PAYMENT OF CLAIMS: Indemnities 22 payable under this policy for any loss other than loss for 23 which this policy provides any periodic payment will be paid 24 immediately upon receipt of due written proof of such loss. 25 Subject to due written proof of loss, all accrued indemnities 26 for loss for which this policy provides periodic payment will 27 be paid .... (insert period for payment which must not be 28 less frequently than monthly) and any balance remaining 29 unpaid upon the termination of liability, will be paid 30 immediately upon receipt of due written proof." 31 All claims and indemnities payable under the terms of a 32 policy of accident and health insurance shall be paid within 33 30 days following receipt by the insurer of due proof of HB2713 Enrolled -5- LRB9103967SMpr 1 loss. Failure to pay within such period shall entitle the 2 insured to interest at the rate of 9 per cent per annum from 3 the 30th day after receipt of such proof of loss to the date 4 of late payment, provided that interest amounting to less 5 than one dollar need not be paid. An insured or an insured's 6 assignee shall be notified by the insurer, health maintenance 7 organization, managed care plan, health care plan, preferred 8 provider organization, or third party administrator of any 9 known failure to provide sufficient documentation for a due 10 proof of loss within 30 days after receipt of the claim. Any 11 required interest payments shall be made within 30 days after 12 the payment. 13 The requirements of this Section shall apply to any 14 policy of accident and health insurance delivered, issued for 15 delivery, renewed or amended on or after 180 days following 16 the effective date of this amendatory Act of 1985. The 17 requirements of this Section also shall specifically apply to 18 any group policy of dental insurance only, delivered, issued 19 for delivery, renewed or amended on or after 180 days 20 following the effective date of this amendatory Act of 1987. 21 (Source: P.A. 85-395.) 22 (215 ILCS 5/370a) (from Ch. 73, par. 982a) 23 Sec. 370a. Assignability of Accident and Health 24 Insurance. 25 No provision of the Illinois Insurance Code, or any other 26 law, prohibits an insured under any policy of accident and 27 health insurance or any other person who may be the owner of 28 any rights under such policy from making an assignment of all 29 or any part of his rights and privileges under the policy 30 including but not limited to the right to designate a 31 beneficiary and to have an individual policy issued in 32 accordance with its terms. Subject to the terms of the policy 33 or any contract relating thereto, an assignment by an insured HB2713 Enrolled -6- LRB9103967SMpr 1 or by any other owner of rights under the policy, made before 2 or after the effective date of this amendatory Act of 1969 is 3 valid for the purpose of vesting in the assignee, in 4 accordance with any provisions included therein as to the 5 time at which it is effective, all rights and privileges so 6 assigned. However, such assignment is without prejudice to 7 the company on account of any payment it makes or individual 8 policy it issues before receipt of notice of the assignment. 9 This amendatory Act of 1969 acknowledges, declares and 10 codifies the existing right of assignment of interests under 11 accident and health insurance policies. If an enrollee or 12 insured of an insurer, health maintenance organization, 13 managed care plan, health care plan, preferred provider 14 organization, or third party administrator assigns a claim to 15 a health care professional or health care facility, then 16 payment shall be made directly to the health care 17 professional or health care facility including any interest 18 required under Section 356y of this Code for failure to pay 19 claims within 30 days after receipt by the insurer of due 20 proof of loss. Nothing in this Section shall be construed to 21 prevent any parties from reconciling duplicate payments. 22 (Source: P. A. 76-1709.) 23 Section 15. The Health Maintenance Organization Act is 24 amended by changing Section 5-3 as follows: 25 (215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2) 26 Sec. 5-3. Insurance Code provisions. 27 (a) Health Maintenance Organizations shall be subject to 28 the provisions of Sections 133, 134, 137, 140, 141.1, 141.2, 29 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 30 154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x, 31 356y, 367i, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 32 444, and 444.1, paragraph (c) of subsection (2) of Section HB2713 Enrolled -7- LRB9103967SMpr 1 367, and Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, 2 XXV, and XXVI of the Illinois Insurance Code. 3 (b) For purposes of the Illinois Insurance Code, except 4 for Sections 444 and 444.1 and Articles XIII and XIII 1/2, 5 Health Maintenance Organizations in the following categories 6 are deemed to be "domestic companies": 7 (1) a corporation authorized under the Dental 8 Service Plan Act or the Voluntary Health Services Plans 9 Act; 10 (2) a corporation organized under the laws of this 11 State; or 12 (3) a corporation organized under the laws of 13 another state, 30% or more of the enrollees of which are 14 residents of this State, except a corporation subject to 15 substantially the same requirements in its state of 16 organization as is a "domestic company" under Article 17 VIII 1/2 of the Illinois Insurance Code. 18 (c) In considering the merger, consolidation, or other 19 acquisition of control of a Health Maintenance Organization 20 pursuant to Article VIII 1/2 of the Illinois Insurance Code, 21 (1) the Director shall give primary consideration 22 to the continuation of benefits to enrollees and the 23 financial conditions of the acquired Health Maintenance 24 Organization after the merger, consolidation, or other 25 acquisition of control takes effect; 26 (2)(i) the criteria specified in subsection (1)(b) 27 of Section 131.8 of the Illinois Insurance Code shall not 28 apply and (ii) the Director, in making his determination 29 with respect to the merger, consolidation, or other 30 acquisition of control, need not take into account the 31 effect on competition of the merger, consolidation, or 32 other acquisition of control; 33 (3) the Director shall have the power to require 34 the following information: HB2713 Enrolled -8- LRB9103967SMpr 1 (A) certification by an independent actuary of 2 the adequacy of the reserves of the Health 3 Maintenance Organization sought to be acquired; 4 (B) pro forma financial statements reflecting 5 the combined balance sheets of the acquiring company 6 and the Health Maintenance Organization sought to be 7 acquired as of the end of the preceding year and as 8 of a date 90 days prior to the acquisition, as well 9 as pro forma financial statements reflecting 10 projected combined operation for a period of 2 11 years; 12 (C) a pro forma business plan detailing an 13 acquiring party's plans with respect to the 14 operation of the Health Maintenance Organization 15 sought to be acquired for a period of not less than 16 3 years; and 17 (D) such other information as the Director 18 shall require. 19 (d) The provisions of Article VIII 1/2 of the Illinois 20 Insurance Code and this Section 5-3 shall apply to the sale 21 by any health maintenance organization of greater than 10% of 22 its enrollee population (including without limitation the 23 health maintenance organization's right, title, and interest 24 in and to its health care certificates). 25 (e) In considering any management contract or service 26 agreement subject to Section 141.1 of the Illinois Insurance 27 Code, the Director (i) shall, in addition to the criteria 28 specified in Section 141.2 of the Illinois Insurance Code, 29 take into account the effect of the management contract or 30 service agreement on the continuation of benefits to 31 enrollees and the financial condition of the health 32 maintenance organization to be managed or serviced, and (ii) 33 need not take into account the effect of the management 34 contract or service agreement on competition. HB2713 Enrolled -9- LRB9103967SMpr 1 (f) Except for small employer groups as defined in the 2 Small Employer Rating, Renewability and Portability Health 3 Insurance Act and except for medicare supplement policies as 4 defined in Section 363 of the Illinois Insurance Code, a 5 Health Maintenance Organization may by contract agree with a 6 group or other enrollment unit to effect refunds or charge 7 additional premiums under the following terms and conditions: 8 (i) the amount of, and other terms and conditions 9 with respect to, the refund or additional premium are set 10 forth in the group or enrollment unit contract agreed in 11 advance of the period for which a refund is to be paid or 12 additional premium is to be charged (which period shall 13 not be less than one year); and 14 (ii) the amount of the refund or additional premium 15 shall not exceed 20% of the Health Maintenance 16 Organization's profitable or unprofitable experience with 17 respect to the group or other enrollment unit for the 18 period (and, for purposes of a refund or additional 19 premium, the profitable or unprofitable experience shall 20 be calculated taking into account a pro rata share of the 21 Health Maintenance Organization's administrative and 22 marketing expenses, but shall not include any refund to 23 be made or additional premium to be paid pursuant to this 24 subsection (f)). The Health Maintenance Organization and 25 the group or enrollment unit may agree that the 26 profitable or unprofitable experience may be calculated 27 taking into account the refund period and the immediately 28 preceding 2 plan years. 29 The Health Maintenance Organization shall include a 30 statement in the evidence of coverage issued to each enrollee 31 describing the possibility of a refund or additional premium, 32 and upon request of any group or enrollment unit, provide to 33 the group or enrollment unit a description of the method used 34 to calculate (1) the Health Maintenance Organization's HB2713 Enrolled -10- LRB9103967SMpr 1 profitable experience with respect to the group or enrollment 2 unit and the resulting refund to the group or enrollment unit 3 or (2) the Health Maintenance Organization's unprofitable 4 experience with respect to the group or enrollment unit and 5 the resulting additional premium to be paid by the group or 6 enrollment unit. 7 In no event shall the Illinois Health Maintenance 8 Organization Guaranty Association be liable to pay any 9 contractual obligation of an insolvent organization to pay 10 any refund authorized under this Section. 11 (Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98; 12 90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-583, eff. 13 5-29-98; 90-655, eff. 7-30-98; 90-741, eff. 1-1-99; revised 14 9-8-98.) 15 Section 20. The Limited Health Service Organization Act 16 is amended by changing Section 4003 as follows: 17 (215 ILCS 130/4003) (from Ch. 73, par. 1504-3) 18 Sec. 4003. Illinois Insurance Code provisions. Limited 19 health service organizations shall be subject to the 20 provisions of Sections 133, 134, 137, 140, 141.1, 141.2, 21 141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5, 22 154.6, 154.7, 154.8, 155.04, 355.2, 356v, 356y, 401, 401.1, 23 402, 403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and 24 Articles VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and 25 XXVI of the Illinois Insurance Code. For purposes of the 26 Illinois Insurance Code, except for Sections 444 and 444.1 27 and Articles XIII and XIII 1/2, limited health service 28 organizations in the following categories are deemed to be 29 domestic companies: 30 (1) a corporation under the laws of this State; or 31 (2) a corporation organized under the laws of 32 another state, 30% of more of the enrollees of which are HB2713 Enrolled -11- LRB9103967SMpr 1 residents of this State, except a corporation subject to 2 substantially the same requirements in its state of 3 organization as is a domestic company under Article VIII 4 1/2 of the Illinois Insurance Code. 5 (Source: P.A. 90-25, eff. 1-1-98; 90-583, eff. 5-29-98; 6 90-655, eff. 7-30-98.) 7 Section 25. The Voluntary Health Services Plans Act is 8 amended by changing Section 10 as follows: 9 (215 ILCS 165/10) (from Ch. 32, par. 604) 10 Sec. 10. Application of Insurance Code provisions. 11 Health services plan corporations and all persons interested 12 therein or dealing therewith shall be subject to the 13 provisions of Article XII 1/2 and Sections 3.1, 133, 140, 14 143, 143c, 149, 354, 355.2, 356r, 356t, 356u, 356v, 356w, 15 356x, 356y, 367.2, 401, 401.1, 402, 403, 403A, 408, 408.2, 16 and 412, and paragraphs (7) and (15) of Section 367 of the 17 Illinois Insurance Code. 18 (Source: P.A. 89-514, eff. 7-17-96; 90-7, eff. 6-10-97; 19 90-25, eff. 1-1-98; 90-655, eff. 7-30-98; 90-741, eff. 20 1-1-99.) 21 Section 99. Effective date. This Act takes effect 120 22 days after becoming law.