Repository: UIHistories Project: Board of Trustees Minutes - 1986 [PAGE 231]

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BOARD OF TRUSTEES

[March 21

livering health-care services at the University of Illinois Hospital. An H M O is believed necessary to remain competitive in the Chicago health care market. Because of regulations issued by the Illinois Department of Insurance, the University cannot directly constitute an H M O but can only do so through a separate entity. The Department of Insurance has recommended that a trust be established by the University as an acceptable mechanism to meet the entity requirement. Accordingly, it is recommended that the board adopt the resolution that follows. The resolution contemplates the establishment of a trust through a trust agreement, with the Board of Trustees as the initial trustees of the trust. The resolution would further cause $300,000 to be deposited with the trust as a required initial minimum capitalization and a required special contingent reserve fund for the H M O . The resolution also authorizes a servicing agreement whereby the trustees of the trust would contract with the University to administer the H M O and provide health-care services to H M O subscribers. As provided in the trust agreement, the trust would be established for the sole purpose of obtaining all necessary approvals for the operation of an H M O and then operating the H M O in accordance with State law. The principal place of business of the trust will be the Office of the Comptroller of the Board of Trustees of the University, and the power of the trustees of the trust would be specifically limited so that such powers would be no greater than those enjoyed by the Board of Trustees of the University. The Board of Trustees of the University will be entitled to appoint additional trustees of the trust from time to time as may be required to meet changing requirements of State and Federal law. T h e Board of Trustees of the University will have the right to terminate the trust at any time, causing all assets of the trust to revert to the University, and to receive periodic reports from the trust. T h e trust agreement will also establish a grievance committee and advisory board. The grievance committee will hear subscriber complaints and propose adjustments thereof. The advisory committee will consult with and make recommendations to the trustees concerning matters of policy and the operation of the trust. Under the service agreement, the University will have the authority and responsibility to: establish terms and conditions for subscriber agreements, including monthly capitation rates; market the H M O plan; provide all H M O health care services; receive all subscriber payments in behalf of the trust; contract in behalf of the trust; and account for the funds of the trust in a manner prescribed by law. Funds are available in the Hospital Income Fund. A copy of the proposed trust agreement and accompanying exhibits are being filed with the secretary of the board for record. The president of the University is authorized to approve minor modifications in the trust agreement as may be required in the future. I concur. Resolution Whereas the University of Illinois is authorized by law to conduct various types of health care programs, Whereas the University has determined that a Health Maintenance Organization ( H M O ) should be established as a University Health Care Program to further the teaching, research, and public service functions of the University, Whereas the University must obtain the approval of the Illinois Department of Insurance to operate as an H M O . Whereas the Illinois Department of Insurance has established a regulation requiring that any person seeking authorization to operate an H M O must be constituted as a separate and distinct entity solely for the purpose of operating an H M O , and