Bill Text: IL HB5142 | 2009-2010 | 96th General Assembly | Introduced

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Bill Title: Amends the Illinois Insurance Code and the Health Maintenance Organization Act. Provides that coverage for autism spectrum disorders shall be subject to the parity requirements of the provision concerning mental health parity. Provides that an accident and health policy or managed care plan must provide a minimum (instead of a maximum) benefit of $36,000 per year. Deletes language concerning copayments, deductibles, and limits. Provides that every insurer that issues an accident and health policy that provides coverage for hospital or medical treatment, and for the treatment of mental, emotional, nervous, or substance use disorders shall ensure that the financial requirements and treatment limitations for such coverage are no more restrictive than the requirements and limitations applied to substantially all hospital and medical benefits covered by the policy. Contains a nonacceleration clause. Makes other changes. Effective immediately.

Spectrum: Partisan Bill (Democrat 3-0)

Status: (Introduced - Dead) 2010-03-17 - Added Co-Sponsor Rep. Michael K. Smith [HB5142 Detail]

Download: Illinois-2009-HB5142-Introduced.html

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96TH GENERAL ASSEMBLY State of Illinois 2009 and 2010 HB5142 Introduced 1/29/2010, by Rep. Lou Lang SYNOPSIS AS INTRODUCED:
215 ILCS 5/356z.14
215 ILCS 5/370c from Ch. 73, par. 982c
215 ILCS 5/370c.1 new
215 ILCS 125/5-3 from Ch. 111 1/2, par. 1411.2
Amends the Illinois Insurance Code and the Health Maintenance Organization Act. Provides that coverage for autism spectrum disorders shall be subject to the parity requirements of the provision concerning mental health parity. Provides that an accident and health policy or managed care plan must provide a minimum (instead of a maximum) benefit of $36,000 per year. Deletes language concerning copayments, deductibles, and limits. Provides that every insurer that issues an accident and health policy that provides coverage for hospital or medical treatment, and for the treatment of mental, emotional, nervous, or substance use disorders shall ensure that the financial requirements and treatment limitations for such coverage are no more restrictive than the requirements and limitations applied to substantially all hospital and medical benefits covered by the policy. Contains a nonacceleration clause. Makes other changes. Effective immediately.
LRB096 18809 RPM 34195 b
A BILL FOR
HB5142 LRB096 18809 RPM 34195 b
AN ACT concerning 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 Sections 356z.14 and 370c and by adding Sections
370c.1 and 370c as follows:
(215 ILCS 5/356z.14)
Sec. 356z.14. Autism spectrum disorders.
(a) A group or individual policy of accident and health
insurance or managed care plan amended, delivered, issued, or
renewed after the effective date of this amendatory Act of the
95th General Assembly must provide individuals under 21 years
of age coverage for the diagnosis of autism spectrum disorders
and for the treatment of autism spectrum disorders to the
extent that the diagnosis and treatment of autism spectrum
disorders are not already covered by the policy of accident and
health insurance or managed care plan.
(b) Coverage provided under this Section through a group or
individual policy of accident and health insurance or managed
care plan shall be subject to the parity requirements of
Section 370c.1 of this Code. A group or individual policy of
accident and health insurance or managed care plan amended,
delivered, issued, or renewed on or after the effective date of

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this amendatory Act of the 96th General Assembly must provide a
minimum maximum benefit of $36,000 per year, but shall not be
subject to any limits on the number of visits to a service
provider. After December 30, 2009, the Director of the
Department Division of Insurance shall, on an annual basis,
adjust the minimum maximum benefit for inflation using the
Medical Care Component of the United States Department of Labor
Consumer Price Index for All Urban Consumers. Payments made by
an insurer on behalf of a covered individual for any care,
treatment, intervention, service, or item, the provision of
which was for the treatment of a health condition not diagnosed
as an autism spectrum disorder, shall not be applied toward any
minimum maximum benefit established under this subsection.
(c) (Blank). Coverage under this Section shall be subject
to copayment, deductible, and coinsurance provisions of a
policy of accident and health insurance or managed care plan to
the extent that other medical services covered by the policy of
accident and health insurance or managed care plan are subject
to these provisions.
(d) This Section shall not be construed as limiting
benefits that are otherwise available to an individual under a
policy of accident and health insurance or managed care plan
and benefits provided under this Section may not be subject to
dollar limits, deductibles, copayments, or coinsurance
provisions that are less favorable to the insured than the
dollar limits, deductibles, or coinsurance provisions that

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apply to physical illness generally.
(e) An insurer may not deny or refuse to provide otherwise
covered services, or refuse to renew, refuse to reissue, or
otherwise terminate or restrict coverage under an individual
contract to provide services to an individual because the
individual or their dependent is diagnosed with an autism
spectrum disorder or due to the individual utilizing benefits
in this Section.
(f) Upon request of the reimbursing insurer, a provider of
treatment for autism spectrum disorders shall furnish medical
records, clinical notes, or other necessary data that
substantiate that initial or continued medical treatment is
medically necessary and is resulting in improved clinical
status. When treatment is anticipated to require continued
services to achieve demonstrable progress, the insurer may
request a treatment plan consisting of diagnosis, proposed
treatment by type, frequency, anticipated duration of
treatment, the anticipated outcomes stated as goals, and the
frequency by which the treatment plan will be updated.
(g) When making a determination of medical necessity for a
treatment modality for autism spectrum disorders, an insurer
must make the determination in a manner that is consistent with
the manner used to make that determination with respect to
other diseases or illnesses covered under the policy, including
an appeals process. During the appeals process, any challenge
to medical necessity must be viewed as reasonable only if the

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review includes a physician with expertise in the most current
and effective treatment modalities for autism spectrum
disorders.
(h) Coverage for medically necessary early intervention
services must be delivered by certified early intervention
specialists, as defined in 89 Ill. Admin. Code 500 and any
subsequent amendments thereto.
(i) As used in this Section:
"Autism spectrum disorders" means pervasive developmental
disorders as defined in the most recent edition of the
Diagnostic and Statistical Manual of Mental Disorders,
including autism, Asperger's disorder, and pervasive
developmental disorder not otherwise specified.
"Diagnosis of autism spectrum disorders" means one or more
tests, evaluations, or assessments to diagnose whether an
individual has autism spectrum disorder that is prescribed,
performed, or ordered by (A) a physician licensed to practice
medicine in all its branches or (B) a licensed clinical
psychologist with expertise in diagnosing autism spectrum
disorders.
"Medically necessary" means any care, treatment,
intervention, service or item which will or is reasonably
expected to do any of the following: (i) prevent the onset of
an illness, condition, injury, disease or disability; (ii)
reduce or ameliorate the physical, mental or developmental
effects of an illness, condition, injury, disease or

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disability; or (iii) assist to achieve or maintain maximum
functional activity in performing daily activities.
"Treatment for autism spectrum disorders" shall include
the following care prescribed, provided, or ordered for an
individual diagnosed with an autism spectrum disorder by (A) a
physician licensed to practice medicine in all its branches or
(B) a certified, registered, or licensed health care
professional with expertise in treating effects of autism
spectrum disorders when the care is determined to be medically
necessary and ordered by a physician licensed to practice
medicine in all its branches:
(1) Psychiatric care, meaning direct, consultative, or
diagnostic services provided by a licensed psychiatrist.
(2) Psychological care, meaning direct or consultative
services provided by a licensed psychologist.
(3) Habilitative or rehabilitative care, meaning
professional, counseling, and guidance services and
treatment programs, including applied behavior analysis,
that are intended to develop, maintain, and restore the
functioning of an individual. As used in this subsection
(i), "applied behavior analysis" means the design,
implementation, and evaluation of environmental
modifications using behavioral stimuli and consequences to
produce socially significant improvement in human
behavior, including the use of direct observation,
measurement, and functional analysis of the relations

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between environment and behavior.
(4) Therapeutic care, including behavioral, speech,
occupational, and physical therapies that provide
treatment in the following areas: (i) self care and
feeding, (ii) pragmatic, receptive, and expressive
language, (iii) cognitive functioning, (iv) applied
behavior analysis, intervention, and modification, (v)
motor planning, and (vi) sensory processing.
(j) Rulemaking authority to implement this amendatory Act
of the 95th General Assembly, if any, is conditioned on the
rules being adopted in accordance with all provisions of the
Illinois Administrative Procedure Act and all rules and
procedures of the Joint Committee on Administrative Rules; any
purported rule not so adopted, for whatever reason, is
unauthorized.
(Source: P.A. 95-1005, eff. 12-12-08.)
(215 ILCS 5/370c) (from Ch. 73, par. 982c)
Sec. 370c. Mental and emotional disorders.
(a) (1) On and after the effective date of this amendatory
Act of the 96th General Assembly Section, every insurer which
amends, delivers, issues, or renews delivers, issues for
delivery or renews or modifies group accident and health A&H
policies providing coverage for hospital or medical treatment
or services for illness on an expense-incurred basis shall
offer to the applicant or group policyholder subject to the

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insurers standards of insurability, coverage for reasonable
and necessary treatment and services for mental, emotional or
nervous disorders or conditions, other than serious mental
illnesses as defined in item (2) of subsection (b) consistent
with the parity requirements of section 370c.1 , up to the
limits provided in the policy for other disorders or
conditions, except (i) the insured may be required to pay up to
50% of expenses incurred as a result of the treatment or
services, and (ii) the annual benefit limit may be limited to
the lesser of $10,000 or 25% of the lifetime policy limit.
(2) Each insured that is covered for mental, emotional or
nervous disorders or conditions shall be free to select the
physician licensed to practice medicine in all its branches,
licensed clinical psychologist, licensed clinical social
worker, licensed clinical professional counselor, or licensed
marriage and family therapist, or licensed speech therapist of
his choice to treat such disorders, and the insurer shall pay
the covered charges of such physician licensed to practice
medicine in all its branches, licensed clinical psychologist,
licensed clinical social worker, licensed clinical
professional counselor, or licensed marriage and family
therapist up to the limits of coverage, provided (i) the
disorder or condition treated is covered by the policy, and
(ii) the physician, licensed psychologist, licensed clinical
social worker, licensed clinical professional counselor, or
licensed marriage and family therapist is authorized to provide

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said services under the statutes of this State and in
accordance with accepted principles of his profession.
(3) Insofar as this Section applies solely to licensed
clinical social workers, licensed clinical professional
counselors, and licensed marriage and family therapists, those
persons who may provide services to individuals shall do so
after the licensed clinical social worker, licensed clinical
professional counselor, or licensed marriage and family
therapist has informed the patient of the desirability of the
patient conferring with the patient's primary care physician
and the licensed clinical social worker, licensed clinical
professional counselor, or licensed marriage and family
therapist has provided written notification to the patient's
primary care physician, if any, that services are being
provided to the patient. That notification may, however, be
waived by the patient on a written form. Those forms shall be
retained by the licensed clinical social worker, licensed
clinical professional counselor, or licensed marriage and
family therapist for a period of not less than 5 years.
(b) (1) An insurer that provides coverage for hospital or
medical expenses under a group policy of accident and health
insurance or health care plan amended, delivered, issued, or
renewed on or after the effective date of this amendatory Act
of the 96th 92nd General Assembly shall provide coverage under
the policy for treatment of serious mental illness consistent
with the parity requirements of Section 370c.1 of this Code

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under the same terms and conditions as coverage for hospital or
medical expenses related to other illnesses and diseases. The
coverage required under this Section must provide for same
durational limits, amount limits, deductibles, and
co-insurance requirements for serious mental illness as are
provided for other illnesses and diseases. This subsection does
not apply to any group policy of accident and health insurance
or health care plan for any plan year of a small employer as
defined in section 5 of the Illinois Health Insurance
Portability and Accountability Act coverage provided to
employees by employers who have 50 or fewer employees.
(2) "Serious mental illness" means the following
psychiatric illnesses as defined in the most current edition of
the Diagnostic and Statistical Manual (DSM) published by the
American Psychiatric Association:
(A) schizophrenia;
(B) paranoid and other psychotic disorders;
(C) bipolar disorders (hypomanic, manic, depressive,
and mixed);
(D) major depressive disorders (single episode or
recurrent);
(E) schizoaffective disorders (bipolar or depressive);
(F) pervasive developmental disorders;
(G) obsessive-compulsive disorders;
(H) depression in childhood and adolescence;
(I) panic disorder;

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(J) post-traumatic stress disorders (acute, chronic,
or with delayed onset); and
(K) anorexia nervosa and bulimia nervosa.
(3) Upon request of the reimbursing insurer, a provider of
treatment of serious mental illness shall furnish medical
records or other necessary data that substantiate that initial
or continued treatment is at all times medically necessary. An
insurer shall provide a mechanism for the timely review by a
provider holding the same license and practicing in the same
specialty as the patient's provider, who is unaffiliated with
the insurer, jointly selected by the patient (or the patient's
next of kin or legal representative if the patient is unable to
act for himself or herself), the patient's provider, and the
insurer in the event of a dispute between the insurer and
patient's provider regarding the medical necessity of a
treatment proposed by a patient's provider. If the reviewing
provider determines the treatment to be medically necessary,
the insurer shall provide reimbursement for the treatment.
Future contractual or employment actions by the insurer
regarding the patient's provider may not be based on the
provider's participation in this procedure. Nothing prevents
the insured from agreeing in writing to continue treatment at
his or her expense. When making a determination of the medical
necessity for a treatment modality for serous mental illness,
an insurer must make the determination in a manner that is
consistent with the manner used to make that determination with

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respect to other diseases or illnesses covered under the
policy, including an appeals process.
(4) A group health benefit plan amended, delivered, issued,
or renewed on or after the effective date of this amendatory
Act of the 96th General Assembly:
(A) shall provide coverage based upon medical
necessity for the following treatment of mental illness
consistent with the parity requirements of Section 370c.1
of this Code. In in each calendar year, coverage shall not
be less than the following:
(i) 45 days of inpatient treatment; and
(ii) beginning on June 26, 2006 (the effective date
of Public Act 94-921), 60 visits for outpatient
treatment including group and individual outpatient
treatment; and
(iii) for plans or policies delivered, issued for
delivery, renewed, or modified after January 1, 2007
(the effective date of Public Act 94-906), 20
additional outpatient visits for speech therapy for
treatment of pervasive developmental disorders that
will be in addition to speech therapy provided pursuant
to item (ii) of this subparagraph (A); and
(B) may not include a lifetime limit on the number of
days of inpatient treatment or the number of outpatient
visits covered under the plan. ; and
(C) shall include the same amount limits, deductibles,

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copayments, and coinsurance factors for serious mental
illness as for physical illness.
(5) An issuer of a group health benefit plan may not count
toward the number of outpatient visits required to be covered
under this Section an outpatient visit for the purpose of
medication management and shall cover the outpatient visits
under the same terms and conditions as it covers outpatient
visits for the treatment of physical illness.
(6) An issuer of a group health benefit plan may provide or
offer coverage required under this Section through a managed
care plan.
(7) This Section shall not be interpreted to require a
group health benefit plan to provide coverage for treatment of:
(A) an addiction to a controlled substance or cannabis
that is used in violation of law; or
(B) mental illness resulting from the use of a
controlled substance or cannabis in violation of law.
(8) (Blank).
(c) This Section shall not be interpreted to require
coverage for speech therapy or other habilitative services for
those individuals covered under Section 356z.15 356z.14 of this
Code.
(Source: P.A. 95-331, eff. 8-21-07; 95-972, eff. 9-22-08;
95-973, eff. 1-1-09; 95-1049, eff. 1-1-10; 96-328, eff.
8-11-09; revised 9-25-09.)

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(215 ILCS 5/370c.1 new)
Sec. 370c.1. Mental health parity.
(a) As used in this Section:
"Financial requirement" means deductibles, copayments,
coinsurance, and out-of-pocket expenses, but excludes an
aggregate lifetime limit and an annual limit subject to
subsections (c), (d), and (e) of this Section.
"Treatment limitation" means limits on the frequency of
treatment, number of visits, days of coverage, or other similar
limits on the scope or duration of treatment.
(b) Beginning on the effective date of this amendatory Act
of the 96th General Assembly, every insurer that amends,
delivers, issues, or renews a group policy of accident and
health insurance in this State providing coverage for hospital
or medical treatment and for the treatment of mental,
emotional, nervous, or substance use disorders or conditions
shall ensure that:
(1) the financial requirements applicable to such
mental, emotional, nervous, or substance use disorder or
condition benefits are no more restrictive than the
predominant financial requirements applied to
substantially all hospital and medical benefits covered by
the policy and that there are no separate cost-sharing
requirements that are applicable only with respect to
mental, emotional, nervous, or substance use disorder or
condition benefits; and

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(2) the treatment limitations applicable to such
mental, emotional, nervous, or substance use disorder or
condition benefits are no more restrictive than the
predominant treatment limitations applied to substantially
all hospital and medical benefits covered by the policy and
that there are no separate treatment limitations that are
applicable only with respect to mental, emotional,
nervous, or substance use disorder or condition benefits.
(c) In the case of a group policy of accident and health
insurance amended, delivered, issued, or renewed in this State
on and after the effective date of this amendatory Act of the
96th General Assembly that provides coverage for hospital or
medical treatment and for the treatment of mental, emotional,
nervous, or substance use disorders or conditions:
(1) if the policy does not include an aggregate
lifetime limit on substantially all hospital and medical
benefits, then the policy may not impose any aggregate
lifetime limit on mental, emotional, nervous, or substance
use disorder or condition benefits; or
(2) if the policy includes an aggregate lifetime limit
on substantially all hospital and medical benefits (in this
subsection (c), referred to as the "applicable lifetime
limit"), then the policy shall either:
(A) apply the applicable lifetime limit both to the
hospital and medical benefits to which it otherwise
would apply and to mental, emotional, nervous, or

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substance use disorder or condition benefits and not
distinguish in the application of such limit between
such hospital and medical benefits and mental,
emotional, nervous, or substance use disorder or
condition benefits; or
(B) not include any aggregate lifetime limit on
mental, emotional, nervous, or substance use disorder
or condition benefits that is less than the applicable
lifetime limit.
(d) In the case of a policy that is not described in items
(1) or (2) of subsection (c) of this Section and that includes
no or different aggregate lifetime limits on different
categories of hospital and medical benefits, the Director shall
establish rules under which item (2) of subsection (c) of this
Section is applied to such policy with respect to mental,
emotional, nervous, or substance use disorder or condition
benefits by substituting for the applicable lifetime limit an
average aggregate lifetime limit that is computed taking into
account the weighted average of the aggregate lifetime limits
applicable to such categories.
(e) In the case of a group policy of accident and health
insurance amended, delivered, issued, or renewed in this State
on or after the effective date of this amendatory Act of the
96th General Assembly that provides coverage for hospital or
medical treatment and for the treatment of mental, emotional,
nervous, or substance use disorders or conditions:

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(1) if the policy does not include an annual limit on
substantially all hospital and medical benefits, the
policy may not impose any annual limits on mental,
emotional, nervous, or substance use disorder or condition
benefits; or
(2) if the policy includes an annual limit on
substantially all hospital and medical benefits (in this
subsection, referred to as the "applicable annual limit"),
the policy shall either:
(A) apply the applicable annual limit both to the
hospital and medical benefits to which it otherwise
would apply and to mental, emotional, nervous, or
substance use disorder or condition benefits and not
distinguish in the application of such limit between
such hospital and medical benefits and mental,
emotional, nervous, or substance use disorder or
condition benefits; or
(B) not include any annual limit on mental,
emotional, nervous, or substance use disorder or
condition benefits that is less than the applicable
annual limit.
(f) In the case of a policy that is not described in items
(1) or (2) of subsection (e) of this Section and that includes
no or different annual limits on different categories of
hospital and medical benefits, the Director shall establish
rules under which item (2) of subsection (e) of this Section is

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applied to such policy with respect to mental, emotional,
nervous, or substance use disorder or condition benefits by
substituting for the applicable annual limit an average annual
limit that is computed taking into account the weighted average
of the annual limits applicable to such categories.
Section 10. The Health Maintenance Organization Act is
amended by changing Section 5-3 as follows:
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
(Text of Section before amendment by P.A. 96-833)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356g.5-1, 356m, 356v, 356w,
356x, 356y, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 356z.9,
356z.10, 356z.11, 356z.12, 356z.13, 356z.14, 356z.15 356z.14,
356z.17 356z.15, 364.01, 367.2, 367.2-5, 367i, 368a, 368b,
368c, 368d, 368e, 370c, 370c.1, 401, 401.1, 402, 403, 403A,
408, 408.2, 409, 412, 444, and 444.1, paragraph (c) of
subsection (2) of Section 367, and Articles IIA, VIII 1/2, XII,
XII 1/2, XIII, XIII 1/2, XXV, and XXVI of the Illinois
Insurance Code.
(b) For purposes of the Illinois Insurance Code, except for
Sections 444 and 444.1 and Articles XIII and XIII 1/2, Health

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Maintenance Organizations in the following categories are
deemed to be "domestic companies":
(1) a corporation authorized under the Dental Service
Plan Act or the Voluntary Health Services Plans Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of another
state, 30% or more of the enrollees of which are residents
of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article VIII
1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration to
the continuation of benefits to enrollees and the financial
conditions of the acquired Health Maintenance Organization
after the merger, consolidation, or other acquisition of
control takes effect;
(2)(i) the criteria specified in subsection (1)(b) of
Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or

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other acquisition of control;
(3) the Director shall have the power to require the
following information:
(A) certification by an independent actuary of the
adequacy of the reserves of the Health Maintenance
Organization sought to be acquired;
(B) pro forma financial statements reflecting the
combined balance sheets of the acquiring company and
the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as of
a date 90 days prior to the acquisition, as well as pro
forma financial statements reflecting projected
combined operation for a period of 2 years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the operation
of the Health Maintenance Organization sought to be
acquired for a period of not less than 3 years; and
(D) such other information as the Director shall
require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale by
any health maintenance organization of greater than 10% of its
enrollee population (including without limitation the health
maintenance organization's right, title, and interest in and to
its health care certificates).
(e) In considering any management contract or service

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agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code, take
into account the effect of the management contract or service
agreement on the continuation of benefits to enrollees and the
financial condition of the health maintenance organization to
be managed or serviced, and (ii) need not take into account the
effect of the management contract or service agreement on
competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a Health
Maintenance Organization may by contract agree with a group or
other enrollment unit to effect refunds or charge additional
premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions with
respect to, the refund or additional premium are set forth
in the group or enrollment unit contract agreed in advance
of the period for which a refund is to be paid or
additional premium is to be charged (which period shall not
be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the

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period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to be
made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the profitable
or unprofitable experience may be calculated taking into
account the refund period and the immediately preceding 2
plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and the
resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay any

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refund authorized under this Section.
(g) Rulemaking authority to implement Public Act 95-1045
this amendatory Act of the 95th General Assembly, if any, is
conditioned on the rules being adopted in accordance with all
provisions of the Illinois Administrative Procedure Act and all
rules and procedures of the Joint Committee on Administrative
Rules; any purported rule not so adopted, for whatever reason,
is unauthorized.
(Source: P.A. 95-422, eff. 8-24-07; 95-520, eff. 8-28-07;
95-876, eff. 8-21-08; 95-958, eff. 6-1-09; 95-978, eff. 1-1-09;
95-1005, eff. 12-12-08; 95-1045, eff. 3-27-09; 95-1049, eff.
1-1-10; 96-328, eff. 8-11-09; 96-639, eff. 1-1-10; revised
10-23-09.)
(Text of Section after amendment by P.A. 96-833)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356g.5-1, 356m, 356v, 356w,
356x, 356y, 356z.2, 356z.4, 356z.5, 356z.6, 356z.8, 356z.9,
356z.10, 356z.11, 356z.12, 356z.13, 356z.14, 356z.15, 356z.17,
356z.18, 364.01, 367.2, 367.2-5, 367i, 368a, 368b, 368c, 368d,
368e, 370c, 370c.1, 401, 401.1, 402, 403, 403A, 408, 408.2,
409, 412, 444, and 444.1, paragraph (c) of subsection (2) of
Section 367, and Articles IIA, VIII 1/2, XII, XII 1/2, XIII,

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XIII 1/2, XXV, and XXVI of the Illinois Insurance Code.
(b) For purposes of the Illinois Insurance Code, except for
Sections 444 and 444.1 and Articles XIII and XIII 1/2, Health
Maintenance Organizations in the following categories are
deemed to be "domestic companies":
(1) a corporation authorized under the Dental Service
Plan Act or the Voluntary Health Services Plans Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of another
state, 30% or more of the enrollees of which are residents
of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article VIII
1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration to
the continuation of benefits to enrollees and the financial
conditions of the acquired Health Maintenance Organization
after the merger, consolidation, or other acquisition of
control takes effect;
(2)(i) the criteria specified in subsection (1)(b) of
Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination

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with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require the
following information:
(A) certification by an independent actuary of the
adequacy of the reserves of the Health Maintenance
Organization sought to be acquired;
(B) pro forma financial statements reflecting the
combined balance sheets of the acquiring company and
the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as of
a date 90 days prior to the acquisition, as well as pro
forma financial statements reflecting projected
combined operation for a period of 2 years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the operation
of the Health Maintenance Organization sought to be
acquired for a period of not less than 3 years; and
(D) such other information as the Director shall
require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale by
any health maintenance organization of greater than 10% of its
enrollee population (including without limitation the health

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maintenance organization's right, title, and interest in and to
its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code, take
into account the effect of the management contract or service
agreement on the continuation of benefits to enrollees and the
financial condition of the health maintenance organization to
be managed or serviced, and (ii) need not take into account the
effect of the management contract or service agreement on
competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a Health
Maintenance Organization may by contract agree with a group or
other enrollment unit to effect refunds or charge additional
premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions with
respect to, the refund or additional premium are set forth
in the group or enrollment unit contract agreed in advance
of the period for which a refund is to be paid or
additional premium is to be charged (which period shall not
be less than one year); and
(ii) the amount of the refund or additional premium

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shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to be
made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the profitable
or unprofitable experience may be calculated taking into
account the refund period and the immediately preceding 2
plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and the
resulting additional premium to be paid by the group or
enrollment unit.

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In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay any
refund authorized under this Section.
(g) Rulemaking authority to implement Public Act 95-1045,
if any, is conditioned on the rules being adopted in accordance
with all provisions of the Illinois Administrative Procedure
Act and all rules and procedures of the Joint Committee on
Administrative Rules; any purported rule not so adopted, for
whatever reason, is unauthorized.
(Source: P.A. 95-422, eff. 8-24-07; 95-520, eff. 8-28-07;
95-876, eff. 8-21-08; 95-958, eff. 6-1-09; 95-978, eff. 1-1-09;
95-1005, eff. 12-12-08; 95-1045, eff. 3-27-09; 95-1049, eff.
1-1-10; 96-328, eff. 8-11-09; 96-639, eff. 1-1-10; 96-833, eff.
6-1-10.)
Section 97. No acceleration or delay. Where this Act makes
changes in a statute that is represented in this Act by text
that is not yet or no longer in effect (for example, a Section
represented by multiple versions), the use of that text does
not accelerate or delay the taking effect of (i) the changes
made by this Act or (ii) provisions derived from any other
Public Act.
Section 99. Effective date. This Act takes effect upon
becoming law.