(215 ILCS 125/Art. II heading)
(215 ILCS 125/2-1) (from Ch. 111 1/2, par. 1403)
Sec. 2-1. Certificate of authority - Exception for corporate employee programs - Applications - Material modification of operation.
(a) No organization shall establish or operate a Health Maintenance Organization in this State without obtaining a certificate of authority under this Act. No person other than an organization may lawfully establish or operate a Health Maintenance Organization in this State. This Act shall not apply to the establishment and operation of a Health Maintenance Organization exclusively providing or arranging for health care services to employees of a corporate affiliate of such Health Maintenance Organization. This exclusion shall be available only to those Health Maintenance Organizations which require employee contributions which equal less than 50% of the total cost of the health care plan, with the remainder of the cost being paid by the corporate affiliate which is the employer of the participants in the plan. This Act shall not apply to the establishment and operation of a Health Maintenance Organization exclusively providing or arranging health care services under contract with the State to persons committed to the custody of the Illinois Department of Corrections.
This Act does not apply to the establishment and operation of managed care community networks that are certified as risk-bearing entities under Section 5-11 of the Illinois Public Aid Code and that contract with the Department of Healthcare and Family Services (formerly Illinois Department of Public Aid) pursuant to that Section.
(b) Any organization may apply to the Director for and obtain a certificate of authority to establish and operate a Health Maintenance Organization in compliance with this Act. A foreign corporation may qualify under this Act, subject to its registration to do business in this State as a foreign corporation.
(c) Each application for a certificate of authority shall be filed in triplicate and verified by an officer or authorized representative of the applicant, shall be in a form prescribed by the Director, and shall set forth, without limiting what may be required by the Director, the following:
(Source: P.A. 95-331, eff. 8-21-07.)
(215 ILCS 125/2-2) (from Ch. 111 1/2, par. 1404)
Sec. 2-2. Determination by Director.
(a) Upon receipt of an application for issuance of a certificate of authority, the Director shall transmit copies of such application and accompanying documents to the Director of the Illinois Department of Public Health. The Director of the Department of Public Health shall then determine whether the applicant for certificate of authority, with respect to health care services to be furnished: (1) has demonstrated the willingness and potential ability to assure that such health care service will be provided in a manner to insure both availability and accessibility of adequate personnel and facilities and in a manner enhancing availability, accessibility, and continuity of service; and (2) has arrangements, established in accordance with regulations promulgated by the Department of Public Health for an ongoing quality of health care assurance program concerning health care processes and outcomes. Upon investigation, the Director of the Department of Public Health shall certify to the Director whether the proposed Health Maintenance Organization meets the requirements of this subsection (a). If the Director of the Department of Public Health certifies that the Health Maintenance Organization does not meet such requirements, he shall specify in what respect it is deficient.
(b) Issuance of a certificate of authority shall be granted if the following conditions are met:
(Source: P.A. 100-63, eff. 8-11-17.)
(215 ILCS 125/2-3) (from Ch. 111 1/2, par. 1405)
Sec. 2-3. Powers of health maintenance organizations. The powers of a health maintenance organization include, but are not limited to the following:
(a) The purchase, lease, construction, renovation, operation, or maintenance of hospitals, medical facilities or both, and their ancillary equipment, and such property as may reasonably be required for its principal office or for such other purposes as may be necessary in the transaction of the business of the organization.
(b) The making of loans to a medical group under contract with it and in furtherance of its program or the making of loans to a corporation or corporations under its control for the purpose of acquiring or constructing medical facilities at hospitals or in furtherance of a program providing health care services for enrollees.
(c) The furnishing of health care services through providers which are under contract with or employed by the health maintenance organization.
(d) The contracting with any person for the performance on its behalf of certain functions such as marketing, enrollment and administration.
(e) The contracting with an insurance company licensed in this State, or with a hospital, medical, dental, vision or pharmaceutical service corporation authorized to do business in this State, for the provision of insurance, indemnity, or reimbursement against the cost of health care service provided by the health maintenance organization.
(f) The offering, in addition to basic health care services, of (1) health care services, (2) indemnity benefits covering out of area or emergency services, (3) indemnity benefits provided through insurers or hospital, medical, dental, vision, or pharmaceutical service corporations, and (4) health maintenance organization point-of-service benefits as authorized under Article 4.5.
(g) Rendering services related to the functions involved in the operating of its health maintenance organization business including but not limited to providing health services, data processing, accounting, or claims.
(g-5) Indemnification for services provided to a child as required under subdivision (e)(3) of Section 4-2.
(h) Any other business activity reasonably complementary or supplementary to its health maintenance organization business to the extent approved by the Director.
(Source: P.A. 92-135, eff. 1-1-02.)
(215 ILCS 125/2-3.1) (from Ch. 111 1/2, par. 1405.1)
Sec. 2-3.1. (a) No health maintenance organization shall cause to be dispensed any drug other than that prescribed by a physician. Nothing herein shall prohibit drug product selection under Section 3.14 of the "Illinois Food, Drug and Cosmetic Act", approved June 29, 1967, as amended, and in accordance with the requirements of Section 25 of the "Pharmacy Practice Act", approved September 24, 1987, as amended.
(b) No health maintenance organization shall include in any contract with any physician providing for health care services any provision requiring such physician to prescribe any particular drug product to any enrollee unless the enrollee is a hospital in-patient where such drug product may be permitted pursuant to written guidelines or procedures previously established by a pharmaceutical or therapeutics committee of a hospital, approved by the medical staff of such hospital and specifically approved, in writing, by the prescribing physician for his or her patients in such hospital, and unless it is compounded, dispensed or sold by a pharmacy located in a hospital, as defined in Section 3 of the Hospital Licensing Act or a hospital organized under "An Act in relation to the founding and operation of the University of Illinois Hospital and the conduct of University of Illinois health care programs", approved July 3, 1931, as amended.
(Source: P.A. 95-689, eff. 10-29-07.)
(215 ILCS 125/2-4) (from Ch. 111 1/2, par. 1406)
Sec. 2-4. Required minimum net worth; special contingent reserve; deficiency; impairment.
(a) A health maintenance organization issued a certificate of authority on or after the effective date of this amendatory Act of 1987 shall have and at all times maintain net worth of not less than $1,500,000. As an allocation of net worth, organizations certified prior to the effective date of this amendatory Act of 1987 shall maintain a special contingent reserve. The special contingent reserve for an organization certified between January 1, 1986 and the effective date of this amendatory Act of 1987 shall be equal to 5% of its net earned subscription revenue for health care services through December 31st of the year in which certified. In subsequent years such organization shall accumulate additions to the contingent reserve in an amount which is equal to 2% of its net earned subscription revenue for each calendar year. For purposes of this Section, net earned subscription revenue means premium minus reinsurance expenses. Maintenance of the contingent reserve requires that net worth equals or exceeds the contingent reserve at any balance sheet date.
(b) Additional accumulations under subsection (a) will no longer be required at such time that the total special contingent reserve required by subsection (a) is equal to $1,500,000.
(c) A deficiency in meeting amounts required in subsections (a), (b), and (d) will require (1) filing with the Director a plan for correction of the deficiency, acceptable to the Director and (2) correction of the deficiency within a reasonable time, not to exceed 60 days unless an extension of time, not to exceed 60 additional days, is granted by the Director. Such a deficiency will be deemed an impairment, and failure to correct the deficiency in the prescribed time shall be grounds for suspension or revocation pursuant to subsection (h) of Section 5-5.
(d) All health maintenance organizations issued a certificate of authority on or prior to December 31, 1985 and regulated under this Act must have and at all times maintain, prior to December 31, 1988, the net worth and special contingent reserve that was required for that particular organization at the time it was certified. All such organizations must have by December 31, 1988 and thereafter maintain at all times, net worth of not less than $300,000 and a special contingent reserve calculated and accumulated in the same manner as required of a health maintenance organization issued a certificate of authority on or between January 1, 1986 and the effective date of this amendatory Act of 1987. Such calculation shall commence with the financial reporting period first following certification.
All organizations issued a certificate of authority between January 1, 1986 and the effective date of this amendatory Act of 1987 must have and at all times maintain the net worth and special contingent reserve that was required for that particular organization at the time it was certified.
(d-5) A health maintenance organization that offers a point-of-service product must maintain minimum net worth of not less than:
(e) Unless allowed by the Director, no health maintenance organization, officer, director, trustee, producer, or employee of such organization may renew, issue, or deliver, or cause to be renewed, issued or delivered, any certificate, agreement, or contract of coverage in this State, for which a premium is charged or collected, when the organization writing such coverage is insolvent or impaired, and the fact of such insolvency or impairment is known to the organization, officer, director, trustee, producer, or employee of such organization. An organization is impaired when a deficiency exists in meeting the amounts required in subsections (a), (b), and (d) of Section 2-4.
However, the existence of an impairment does not prevent the issuance or renewal of a certificate, agreement or contract when the enrollee exercises an option granted under the plan to obtain new, renewed or converted coverage.
Any organization, officer, director, trustee, producer, or employee of such organization violating this subsection shall be guilty of a Class A misdemeanor.
(Source: P.A. 92-135, eff. 1-1-02.)
(215 ILCS 125/2-5) (from Ch. 111 1/2, par. 1406.1)
Sec. 2-5. Claims Liabilities. Every Health Maintenance Organization shall, at all times, maintain liabilities in an amount estimated in the aggregate to provide for the payment of all claims incurred and any due and unpaid provider capitation, whether reported or unreported, which are unpaid and for which such organization is or may be liable, and to provide for the expense of adjustment or settlement of such claims. Such liabilities shall be computed in accordance with regulations promulgated by the Director upon reasonable consideration of the ascertained experience and character of such business for the purpose of adequately protecting enrollees and securing the solvency of such organizations.
Whenever the claim and claim expense experience of any such organization shows the liabilities calculated in accordance with such regulations to be inadequate, the Director may require such organization to maintain additional liabilities.
(Source: P.A. 86-620.)
(215 ILCS 125/2-6) (from Ch. 111 1/2, par. 1406.2)
Sec. 2-6. Statutory deposits.
(a) An organization subject to the provisions of this Act shall make and maintain with the Director through December 30, 1993, for the protection of enrollees of the organization, a deposit of securities which are authorized investments under paragraphs (1) and (2) of subsection (h) of Section 3-1 having a fair market value equal to at least $100,000. Effective December 31, 1993 and through December 30, 1994, the deposit shall have a fair market value at least equal to $200,000. Effective December 31, 1994 and thereafter, the deposit shall have a fair market value at least equal to $300,000. An organization issued a certificate of authority on or after the effective date of this Amendatory Act of 1993, shall make and maintain with the Director; for the protection of enrollees of the organization, a deposit of securities which are authorized investments under paragraphs (1) and (2) of subsection (h) of Section 3-1 having a fair market value equal to at least $300,000. The amount on deposit shall remain as an admitted asset of the organization in the determination of its net worth. The Director may release the required deposit of securities upon receipt of an order of a court having proper jurisdiction or upon: (i) certification by the organization that it has no outstanding enrollee creditors, enrollees, certificate holders, or enrollee obligations in effect and no plans to engage in the business of insurance as a health maintenance organization; (ii) receipt of a lawful resolution of the organization's governing body effecting the surrender of its certificate of authority, articles of incorporation, or other organizational documents to their issuing governmental officer for voluntary or administrative dissolution; and (iii) receipt of the name and forwarding address for each of the final officers and directors of the organization, together with a plan of dissolution approved by the Director.
(b) An organization that offers a point-of-service product, as permitted by Article 4.5, must maintain an additional deposit in an amount that is not less than the greater of 125% of the organization's annual projected point-of-service claims or $300,000.
(Source: P.A. 92-75, eff. 7-12-01; 92-135, eff. 1-1-02; 92-651, eff. 7-11-02.)
(215 ILCS 125/2-7)
Sec. 2-7. (Repealed).
(Source: P.A. 92-16, eff. 6-28-01. Repealed by P.A. 97-486, eff. 1-1-12.)
(215 ILCS 125/2-8) (from Ch. 111 1/2, par. 1407.01)
Sec. 2-8. Provider agreements. (a) All provider contracts currently in existence between any organization and any hospital which are renewed on or after 180 days following the effective date of this amendatory Act of 1987, and all contracts between any organization and any hospital executed on or after 180 days after such effective date, shall contain the following "hold-harmless" clause: "The provider agrees that in no event, including but not limited to nonpayment by the organization of amounts due the hospital provider under this contract, insolvency of the organization or any breach of this contract by the organization, shall the hospital provider or its assignees or subcontractors have a right to seek any type of payment from, bill, charge, collect a deposit from, or have any recourse against, the enrollee, persons acting on the enrollee's behalf (other than the organization), the employer or group contract holder for services provided pursuant to this contract except for the payment of applicable co-payments or deductibles for services covered by the organization or fees for services not covered by the organization. The requirements of this clause shall survive any termination of this contract for services rendered prior to such termination, regardless of the cause of such termination. The organization's enrollees, the persons acting on the enrollee's behalf (other than the organization) and the employer or group contract holder shall be third party beneficiaries of this clause. This clause supersedes any oral or written agreement now existing or hereafter entered into between the provider and the enrollee, persons acting on the enrollee's behalf (other than the organization) and the employer or group contract holder." To the extent that any hospital provider contract, which is renewed or entered into on or after 180 days following the effective date of this amendatory Act of 1987, fails to incorporate such provisions, such provisions shall be deemed incorporated into such contracts by operation of law as of the date of such renewal or execution.
(b) All provider and subcontractor contracts must contain provisions whereby the provider or subcontractor shall provide, arrange for, or participate in the quality assurance programs mandated by this Act, unless the Illinois Department of Public Health certifies that such programs will be fully implemented without any participation or action from such contracting provider.
(c) The Director may promulgate rules requiring that provider contracts contain provisions concerning reasonable notices to be given between the parties and for the organization to provide reasonable notice to its enrollees and to the Director. Notice shall be given for such events as, but not limited to, termination of insurance protection, quality assurance or availability of medical care.
(Source: P.A. 86-620.)
(215 ILCS 125/2-9) (from Ch. 111 1/2, par. 1407.02)
Sec. 2-9. Subordinated Indebtedness. An organization having a certificate of authority under this Act may borrow or assume a liability for the repayment of a sum of money upon a written agreement that the loan or advance with interest thereon not exceeding a reasonable rate shall be repaid only out of net worth of the organization in excess of such minimum net worth as is stipulated in and by the agreement. The agreement form shall first be submitted to and approved by the appropriate authoritative body of the organization and the Director. Repayment of principal or payment of interest may be made only with the approval of the Director when he is satisfied that the financial condition of the organization warrants such action, but such approval may not be withheld if the organization shall have and submit satisfactory evidence of net worth of not less than the amount stipulated in the repayment of principal or interest payment clause of the agreement. No loan or advance made under this Section or interest accruing thereon shall form a part of the legal liabilities of the organization until authorized for payment by the Director, but, until such authorization, all statements published by the organization or filed with the Director shall show the amount thereof then remaining unpaid as a special surplus account. Nothing in this Section shall be construed to mean that an organization may not otherwise borrow money, but the amount so borrowed with accrued interest thereon shall be carried by the organization as a liability.
(Source: P.A. 86-620.)
(215 ILCS 125/2-10)
Sec. 2-10. Directors.
(a) After June 30, 2002, the corporate powers for domestic organizations issued a certificate of authority under this Act must be exercised by, and its business and affairs must be under the control of, a board of directors composed of not less than 3 nor more than 21 natural persons who are at least 18 years of age. At least 3 of the directors must be residents and citizens of this State. A person convicted of a felony may not be a director. A director must be of good character and known professional, administrative, or business ability. The requisite ability must include a practical knowledge of managed health care, insurance, finance, or investment.
(b) After June 30, 2002, not less than one-third of the directors of a domestic organization that is not a controlled insurer for purposes of Section 131.20b of the Illinois Insurance Code must be persons who are not officers or employees of the organization. At least one of those persons must be included in any quorum for the transaction of business at any meeting of the board of directors or any committee thereof.
(Source: P.A. 92-140, eff. 7-24-01.)