• New Fairness in Contracting Act Affects Illinois Insurers, Providers and Beneficiaries
  • March 26, 2004 | Author: Victoria R. Glidden
  • Law Firm: Hinshaw & Culbertson LLP - Rockford Office
  • The Illinois Insurance Code was recently amended to regulate the contracting procedures between a healthcare provider or professional and an insurer, health maintenance organization, independent practice association, or physician hospital organization. The new law is commonly known as the Fairness in Contracting Act. The law applies to commercial insurance contracts and is intended to assist providers and professionals in obtaining sufficient information and adequate time to decide whether to sign or extend a health care services contract. The section of the Insurance Code amended is 215 ICLS 5/368(b) and may be viewed in its entirety at www.legis.state.il.us

    Some of the new contracting procedures effective January 1, 2004 are listed below. For purposes of this summary of key provisions of the Act, the term, "Provider" refers to healthcare providers and professionals. The term, "Insurer" refers to insurers, health maintenance organizations, practice associations and physician hospital organizations.

    • An Insurer may not require a Provider to sign a proposed health care services contract before first giving the Provider at least 30 days to review the proposed contract, including all referenced exhibits and attachments. The 30-day review period begins on the date the Provider receives this information.
    • A Provider is entitled to review and obtain a copy of the following information within 35 days of written request:

      • A specialty specific fee schedule sample based on a minimum of the 50 highest volume fee schedule codes with the rates applicable to the Provider;
      • The network provider administration manual to help end deceptive and confusing administrative requirements; and
      • A summary capitation schedule, if payment is made on a capitation basis.

    • The Insurer must provide the contracted Provider with any changes to the fee schedule within 35 days after the effective date of the changes, unless such changes are specified in the contract and the Provider is able to calculate the changed rates based on information in the contract and information available to the public.
    • The Insurer must provide a Remittance Advice to the Provider that identifies the disposition of each claim. The Remittance Advice must identify the services billed; the patient responsibility, if any; the actual payment for the services billed; and the reason for any reduction to the amount of the claim. This provision should help Providers in appealing benefits denied and in confirming what the Provider may bill to the patient level.

    The Act has two important provisions for Providers to consider in submitting insurance claims. First, the Act permits an Insurer to pay benefits to either the patient or the Provider when the health care services are provided by a non-participating Provider. The Illinois Department of Insurance has suggested that this provision does not conflict with an assignment of benefits. The argument is that once the patient signs an assignment of benefits, the patient contracts away the right to direct payment and the Insurer must pay the Provider. The Department of Insurance has not issued regulations on this issue. Therefore, we urge Providers to inform the Illinois Hospital Association of any Insurer that pays benefits to a patient contrary to an assignment of benefits.

    Secondly, when a person presents a benefits information card, the Provider must make a good faith effort to inform the person if the Provider has a participation contract with the Insurer. The provision is designed to allow a patient to confirm benefits before consenting to treatment. However, it may be impossible for a Provider to fully comply. For example, a Provider may be a participating provider, but ancillary professionals to the procedure such as radiologists, cardiologists, neurosurgeons, or anesthesiologists may be non-participating Providers. In addition, central scheduling may assemble an entire medical team of participating Providers, but a medical emergency on the day of the procedure may pull Providers off the team to be replaced by non-participating Providers. The open issue is whether the Act will cause Providers to become liable for the consequential out of network charges billed to the patient. Providers contracting with physicians should consider requiring employed physicians to contract with the same managed care plans.

    The provisions of the Fairness in Contract Act are deemed incorporated into the health care service contracts entered into on or before the January 1, 2004 effective date.