Bill Text: IL HB2624 | 2017-2018 | 100th General Assembly | Engrossed


Bill Title: Creates the Health Insurance Rate Review Act. Creates the independent quasi-judicial Health Insurance Rate Review Board to ensure insurance rates are reasonable and justified. Sets forth duties and prohibited activities concerning the Board. Creates the Health Insurance Rate Review Board Nomination Panel to provide a list of nominees to the Governor for appointment to the Health Insurance Rate Review Board. Sets forth the procedures for nomination. Provides requirements and procedures for health carriers to file current and proposed rates and rate schedules with the Health Insurance Rate Review Board. Provides that the Board shall review and approve or disapprove all rates and rate schedules filed or used by a health carrier. Sets forth provisions concerning rate standards, public notice, hearings, and the disapproval and approval of rates and rate schedules.

Spectrum: Partisan Bill (Democrat 11-0)

Status: (Engrossed) 2017-05-25 - Alternate Chief Sponsor Changed to Sen. John J. Cullerton [HB2624 Detail]

Download: Illinois-2017-HB2624-Engrossed.html



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1 AN ACT concerning insurance.
2 Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4 Section 1. Short title. This Act may be cited as the Health
5Insurance Rate Review Act.
6 Section 5. Definitions. For the purposes of this Act:
7 "Board" means the Health Insurance Rate Review Board.
8 "Director" means the Director of Insurance.
9 "Health benefit plan" means a policy, contract,
10certificate, plan, or agreement offered or issued by a health
11carrier to provide, deliver, arrange for, pay for, or reimburse
12any of the costs of health care services.
13 "Health care services" means services for the diagnosis,
14prevention, treatment, cure, or relief of a health condition,
15illness, injury or disease.
16 "Health carrier" means an entity subject to the insurance
17laws and regulations of this State, or subject to the
18jurisdiction of the Director, that contracts or offers to
19contract to provide, deliver, arrange for, pay for, or
20reimburse any of the costs of health care services, including a
21sickness and accident insurance company, a health maintenance
22organization, or any other entity providing a plan of health
23insurance, health benefits, or health care services. "Health

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1carrier" also means Limited Health Service Organizations and
2Voluntary Health Service Plans.
3 "Insured" means an individual who is enrolled in or
4otherwise participating in a health benefit plan.
5 "Rate" means premium, deductible, co-payment, or any other
6amount that the health carrier requires its policyholders to
7pay.
8 "Supplementary rating information" means any manual,
9rating schedule, plan of rules, rating rules, classification
10systems, territory codes and descriptions, rating plans, and
11other similar information used by the insurer or health
12maintenance organization to determine the applicable rates for
13an insured. The term includes factors and relativities,
14including increased limits factors, classification
15relativities, deductible relativities, premium discount, and
16other similar factors and rating plans such as experience,
17schedule, and retrospective rating.
18 Section 10. Health Insurance Rate Review Board.
19 (a) There is created the Health Insurance Rate Review Board
20independent of the Department of Insurance to ensure insurance
21rates are reasonable and justified. The Board shall be a
22quasi-judicial body. The Board shall consist of 5 persons
23appointed, with the advice and consent of the Senate, by the
24Governor with the assistance of a Nomination Panel. The term of
25each member of the Board shall be 4 years.

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1 (b) No member of the Board shall be involved in the
2operation or management of, have a pecuniary interest or a
3direct financial interest in, or be otherwise employed by a
4health carrier or any other organization or entity regulated by
5the Department of Insurance.
6 (c) Each member of the Board shall devote his or her entire
7time to the duties of his or her office, and shall hold no
8other office or position of profit, or engage in any other
9business, employment, or vocation.
10 (d) No member of the Board or person employed by the Board
11shall solicit or accept any gift, gratuity, emolument, or
12employment from any person or corporation subject to the
13supervision of the Board, or from any officer, agent, or
14employee thereof; nor solicit, request from, or recommend,
15directly or indirectly, to any such person or corporation, and
16every officer, agent, or employee thereof, the appointment of
17any persons to any place or position. If any Board member or
18person employed by the Board violates any provisions of this
19subsection (d), then he or she shall be removed from the Board
20or employment. Every person violating the provisions of this
21subsection (d) shall be guilty of a Class A misdemeanor.
22 (e) No former member of the Board or person formerly
23employed by the Board may represent any person before the Board
24in any capacity with respect to any particular Board proceeding
25in which he or she participated personally and substantially as
26a member or employee of the Board.

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1 (f) No former member of the Board may appear before the
2Board in connection with any Board proceeding for a period of 2
3years following the termination of service with the Board.
4 (g) No former member of the Board may accept any employment
5for 2 years following the termination of services with the
6Board with any entity subject to Board regulation or with any
7industry trade association that (1) receives a majority of its
8funding from entities regulated by the Board or (ii) has a
9majority of members regulated by the Board.
10 (h) No entity subject to Board regulation or trade
11association that (i) receives a majority of its funding from
12entities regulated by the Board or (ii) has a majority of
13members regulated by the Board shall offer a former member of
14the Board employment for a period of 2 years following the
15termination of member's services with the Board, or otherwise
16hire such person as an agent, consultant, or attorney where
17such employment or contractual relation would be in violation
18of this Act.
19 (i) The Board shall employ employees as may be necessary to
20carry out the provisions of this Act or to perform duties and
21exercise the powers conferred by law upon the Board.
22 (j) The Board shall adopt rules that the Board considers
23necessary to carry out the provisions of this Act or to perform
24duties and exercise the powers conferred by law upon the Board.
25 Section 15. Nomination panel.

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1 (a) The Health Insurance Rate Review Board Nomination Panel
2is established to provide a list of nominees to the Governor
3for appointment to the Health Insurance Rate Review Board.
4 The Panel shall consist of 5 members. Members of the Panel
5must be appointed by majority vote of the following appointing
6authorities: the Governor, the Director, and the Attorney
7General. The term of each member of the Panel shall be 4 years.
8The Panel shall solicit recommendations from consumer
9advocates, health providers, insurers, and business advocates.
10 Candidates for nomination to the Health Insurance Rate
11Review Board may apply or be nominated. The Panel has 30 days
12after it is established to accept applications and nominations.
13All candidates must fill out a written application and submit
14to a background investigation to be eligible for consideration.
15The written application must include a sworn statement signed
16by the candidate disclosing communications relating to the
17regulation of health insurance, managed care plans, and health
18maintenance organizations that the applicant has engaged in
19within the last year with a constitutional officer, a member of
20the General Assembly, an officer or other employee of the
21executive branch of the State, or an employee of the
22legislative branch of this State.
23 A person who provides false or misleading information on
24the application or fails to disclose a communication required
25to be disclosed in the sworn statement under this Section is
26guilty of a Class 4 felony.

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1 Once an application is submitted to the Nomination Panel
2and until (i) the candidate is rejected by the Nomination
3Panel, (ii) the candidate is rejected by the Governor, (iii)
4the candidate is rejected by the Senate, or (iv) the candidate
5is confirmed by the Senate, whichever is applicable, a
6candidate may not engage in ex parte communications.
7 Within 60 days after the Nomination Panel is established,
8the Nomination Panel must review written applications,
9determine eligibility for oral interviews, confirm
10satisfactory background investigations, and hold public
11hearings on qualifications of the candidates. Initial
12interviews of candidates need not be held in meetings subject
13to the Open Meetings Act; members or staff may arrange for
14informal interviews. Prior to recommendation, however, the
15Nomination Panel must question candidates under oath in a
16meeting subject to the Open Meetings Act.
17 The Nomination Panel must recommend 10 nominees for
18appointment to the Health Insurance Rate Review Board within 60
19days after the Nomination Panel is established. The Governor
20may choose only from these nominations. The Nomination Panel
21shall deliver a list of the nominees, including a memorandum
22detailing the nominees' qualifications, to the Governor. After
23submitting the list to the Governor, the Nomination Panel shall
24file a copy along with a statement confirming delivery of the
25list and memorandum to the Governor with the Secretary of
26State. The Secretary of State shall indicate the date and time

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1of filing.
2 After reviewing the nominations, the Governor may select 5
3nominees, including the chairperson, for appointment to the
4Health Insurance Rate Review Board, to be confirmed by the
5Senate. The Governor shall file the names of his or her
6appointments with the Senate and the Secretary of State. The
7Secretary of State shall indicate the date and time of filing.
8 The Governor shall have 30 days from the date the
9Nomination Panel files its list of nominees with the Secretary
10of State to make appointments to be confirmed by the Senate. If
11the Governor does not select all appointees within the 30 days,
12the Nomination Panel may appoint those members not yet selected
13for appointment by the Governor. The Nomination Panel shall
14file the names of its appointments with the Senate and the
15Secretary of State. The Secretary of State shall indicate the
16date and time of filing.
17 Appointments by the Governor or Nomination Panel must be
18confirmed by the Senate by two-thirds of its members by record
19vote. Any appointment not acted upon within 30 calendar days
20after the date of filing the names of appointments with the
21Secretary of State shall be deemed to have received the advice
22and consent of the Senate.
23 (b) When a vacancy occurs on the Health Insurance Rate
24Review Board, the Nomination Panel shall accept applications
25and nominations of candidates for 30 days from the date the
26vacancy occurs. All candidates must fill out a written

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1application and submit to a background investigation to be
2eligible for consideration. The written application must
3include a sworn statement signed by the candidate disclosing
4communications relating to the regulation of health insurance,
5managed care plans, and health maintenance organizations that
6the applicant engaged in within the last year with a
7constitutional officer, a member of the General Assembly, an
8officer or other employee of the executive branch of this
9State, or an employee of the legislative branch of this State.
10 A person who provides false or misleading information on
11the application or fails to disclose a communication required
12to be disclosed in the sworn statement under this Section is
13guilty of a Class 4 felony.
14 Once an application is submitted to the Nomination Panel
15and until (i) the candidate is rejected by the Nomination
16Panel, (ii) the candidate is rejected by the Governor, (iii)
17the candidate is rejected by the Senate, or (iv) the candidate
18is confirmed by the Senate, whichever is applicable, a
19candidate may not engage in ex parte communications.
20 The Nomination Panel must review written applications,
21determine eligibility for oral interviews, confirm
22satisfactory background investigations, and hold public
23hearings on the qualifications of the candidates. Initial
24interviews of candidates need not be held in meetings subject
25to the Open Meetings Act; members or staff may arrange for
26informal interviews. Prior to recommendation, however, the

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1Nomination Panel must question candidates under oath in a
2meeting subject to the Open Meetings Act.
3 The Nomination Panel must recommend 2 nominees for the
4vacancy within 60 days after the vacancy occurs. Within 30 days
5after the Nomination Panel's recommendation, the Governor
6shall appoint one of the nominees to fill the vacancy for the
7remainder of the unexpired term. If the Governor does not fill
8the vacancy within the 30 days, the Nomination Panel may make
9the appointment. Vacancies shall be confirmed by the Senate in
10the same manner as full-term appointments
11 Section 20. Filing and approval of rates and rate
12schedules.
13 (a) Notwithstanding any law to the contrary, a health
14carrier may not deliver or issue for delivery any health
15benefit plan after the effective date of this Act unless:
16 (1) the health carrier has filed with the Health
17 Insurance Rate Review Board:
18 (a) all current and proposed rates and rate
19 schedules of the health benefit plan; and
20 (b) if filing changes to a previously approved rate
21 or rate schedule:
22 (i) proposed changes to the rate or rate
23 schedule;
24 (ii) an explanation of the changes;
25 (iii) financial information describing the

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1 basis for the proposed changes;
2 (iv) the rate of return anticipated if the rate
3 or rate schedule is approved;
4 (v) the average rate increase or decrease
5 anticipated per insured;
6 (vi) the medical loss ratio reserves and
7 surpluses anticipated if the rate or rate schedule
8 is approved;
9 (vii) a summary of the health carrier's
10 nonmedical expenses for the most recent fiscal
11 year;
12 (viii) supplementary rating information;
13 (ix) any other information required by the
14 Board by rule; and
15 (2) the Board has approved the rates and rate schedules
16 of the health benefit plan.
17 (b) The Board shall review and approve or disapprove all
18rates and rate schedules filed or used by a health carrier or
19filed by a rating or advisory organization on behalf of a
20health carrier.
21 (c) Within 30 days after the date a rate or rate schedule
22is filed with the Board, the Board shall:
23 (1) approve the rate or rate schedule if the Board
24 determines that the rate or rate schedule is not excessive,
25 inadequate, or unfairly discriminatory; or
26 (2) disapprove the rate or rate schedule if the Board

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1 determines the rate or rate schedule is excessive,
2 inadequate, or unfairly discriminatory.
3 (d) Except as provided in subsection (e), if a rate or rate
4schedule has not been approved or disapproved by the Board
5before the expiration of the 30-day period, the rate or rate
6schedule is considered approved and the rate or rate schedule
7may be used.
8 (e) For good cause, the Board may, on expiration of the
930-day period, extend the period for approval or disapproval of
10a rate or rate schedule for one additional 30-day period.
11 (f) If the Board determines that the information filed by a
12health carrier under this Section is incomplete or otherwise
13deficient, the Board may request additional information from
14the health carrier. If the Board requests additional
15information from the insurer during the 30-day period provided
16in subsection (c) or under a second 30-day period provided
17under subsection (e), then the time between the date the that
18Board submits the request to the health carrier and the date
19that the Board receives the information requested is not
20included in the computation of the first 30-day period or the
21second 30-day period, as applicable.
22 Section 25. Rate standards.
23 (a) A rate or rate schedule is excessive if the rate or
24rate schedule is likely to produce a long-term profit that is
25unreasonably high in relation to the insurance coverage

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1provided.
2 (b) A rate or rate schedule is inadequate if:
3 (1) the rate or rate schedule is insufficient to
4 sustain projected losses and expenses to which the rate
5 applies; and
6 (2) the continued use of the rate or rate schedule:
7 (a) endangers the solvency of an insurer using the
8 rate or rate schedule; or
9 (b) has the effect of substantially lessening
10 competition or creating a monopoly in a market.
11 (c) A rate or rate schedule is unfairly discriminatory if
12the rate or rate schedule:
13 (1) is not based on sound actuarial principles;
14 (2) does not bear a reasonable relationship to the
15 expected loss and expense experience among risks; or
16 (3) is based wholly or partly on the race, creed,
17 color, ethnicity, or national origin of the policyholder or
18 an insured.
19 Section 30. Public notice of filing.
20 (a) The Board must issue a notice to the public within 7
21days after a filing for approval of a rate or rate schedule is
22received by the Board. The notice must include:
23 (1) the filing health carrier;
24 (2) the current rate or rate schedule;
25 (3) the proposed rate or rate schedule;

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1 (4) notice that a consumer who is aggrieved by the rate
2 change may request a hearing on the proposed change within
3 30 days after the proposed change has been filed; and
4 (5) address and contact information of the Board.
5 Section 35. Hearings on proposed changes.
6 (a) Within 30 days after the proposed change to a rate or
7rate schedule has been filed, the Board may request a hearing
8on the filing to hear testimony on the filing.
9 (b) Within 30 days after the proposed change has been
10filed, any person who is aggrieved with respect to any filing
11under this Act, the Director, or any public official charged
12with protecting insurance consumers may submit a request in
13writing to the Board for a hearing on the filing. The request
14must specify the grounds for the requester's grievance.
15 (c) The Board must hold a hearing as requested under
16subsection (b) not later than 30 days after the date the Board
17receives the request for hearing if the Board determines that:
18 (1) the request is made in good faith;
19 (2) the requester would be aggrieved as alleged if the
20 grounds specified in request were established; and
21 (3) the grounds specified in the request otherwise
22 justify holding the hearing.
23 (d) The Board must provide written notice of a hearing to
24the requester, if any, and each affected health carrier not
25later than 10 days before the date of the hearing. The Board

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1shall also provide public notice of the hearing not later than
210 days before the date of the hearing.
3 (e) If, after the hearing, the Board disapproves of the
4filing, the Board shall issue an order:
5 (1) specifying in what respects the filing fails to
6 meet those requirements; and
7 (2) stating the date on which the filing is no longer
8 in effect, which must be within a reasonable period after
9 the order date.
10 The Board must send copies of the order to the requester,
11if any, and each affected health carrier.
12 Section 40. Hearings on filings in effect.
13 (a) The Board may disapprove a rate or rate schedule that
14is in effect only after a hearing. The Board must provide the
15filer at least 20 days written notice of the hearing.
16 The Board must issue an order disapproving a rate or rate
17schedule under this subsection (a) within 15 days after the
18close of the hearing. The order must:
19 (1) specify in what respects the filing fails to meet
20 those requirements; and
21 (2) state the date on which further use of the rate or
22 rate schedule is prohibited.
23 (b) Any person who is aggrieved with respect to any filing
24under this Act that is in effect, the Director, or any public
25official charged with protecting insurance consumers may apply

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1to the Board in writing for a hearing on the filing. The
2request must specify the grounds for the requester's grievance.
3 (c) The Board must hold a hearing as requested under
4subsection (b) not later than 30 days after the date the Board
5receives the request for hearing if the Board determines that:
6 (1) the request is made in good faith;
7 (2) the requester would be aggrieved as alleged if the
8 grounds specified in request were established; and
9 (3) the grounds specified in the request otherwise
10 justify holding the hearing.
11 (d) The Board must provide written notice of a hearing to
12the requester, if any, and each affected health carrier not
13later than 10 days before the date of the hearing. The Board
14shall also provide public notice of the hearing not later than
1510 days before the date of the hearing.
16 (e) If, after the hearing, the Board disapproves of the
17filing, the Board shall issue an order:
18 (1) specifying in what respects the filing fails to
19 meet those requirements; and
20 (2) stating the date on which the filing is no longer
21 in effect, which must be within a reasonable period after
22 the order date.
23 The Board must send copies of the order to the requester,
24if any, and each affected health carrier.
25 Section 45. Disapproval of rate or rate schedule.

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1 (a) If the Board disapproves a filing under this Act, then
2the Board shall issue an order specifying in what respects the
3filing fails to meet the requirements of this Act.
4 (b) The aggrieved filer is entitled to a hearing on written
5request made to the Board within 30 days after the date the
6order disapproving the rate or rate schedule filing takes
7effect.
8 Section 50. Approval of rate or rate schedule; use of the
9approved rate or rate schedule. If the board approves a rate or
10rate schedule filing under this Act, the Board shall provide
11the health carrier with a written or electronic notification of
12the approval. The health carrier may use the rate or rate
13schedule on receipt of the approval notice. The Board shall
14provide public notice of its approval or disapproval of all
15filings.
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