Contracting Law
Introduction:
Public Act 93-0261
or the "Fairness in Contracting" legislation
went into effect on January 1, 2004. The
law specifically states that the provisions below are
deemed incorporated into all commercial insurance contracts
as of the beginning of the year. Self-insured
contracts are exempt and continue to be governed by federal
law. This memorandum is to inform and update our
membership on those changes. All health insurance products
(indemnity, PPA and HMO) as well as IPAs/PHOs, to
the extent they enter into contracts with providers or pay
claims or make recoupments, are affected. To download the
Act, visit: http://www.ilga.gov.
Contracting Procedures:
- All
providers offered a contract must be provided the entire
contract including any referenced attachments.
Some insurers were at
times offering contracts without applicable exhibits.
Providers must now receive anything referenced in a
contract.
- Within 35 days of a written request, a provider
offered a contract will be given the opportunity to review
and obtain a copy of a specialty-specific fee schedule
sample with rates, the provider administration manual and a
summary capitation schedule, if applicable. The insurer can
substitute the sample fee schedule with a document
providing reference to the information needed to calculate
the fee schedule and the applicable conversion factor
(i.e., insurer can reference that they pay a % of
Medicare).
While the substance
of the information makes less of a difference to hospitals
than other providers, what is important for hospitals to
enforce is a new requirement that the information
referenced in the paragraph above is confidential and
subject to Illinois Trade Secrets Act provisions. This
means that the information is protected and may only be
disclosed on a need to know basis and ONLY to individual
and entities that provide services directly related to the
providers decision to enter into the contract or keep it in
force. Other than that, disclosure is only allowed pursuant
a valid court order or as required by a state or federal
government agency.
- A provider must be allowed 30 days to review the
contract before signing, but may sign earlier if they want
to.
The clock starts
ticking upon receipt of the contract, unless there was a
written request for fee information/provider administration
manual (referenced above) and it was not included in the
original contract. This means negotiations can be extended
if the information above was not received pursuant a
written request.
- The insurer must provide all contracted providers with
any increase/decrease to the fee schedule referenced in the
second bullet point not later than 35 days after the
effective date of the changes. The insurer does not have to
provide such if the changes are specified in the contract
and the provider can calculate the changed rates based on
information in the contract and data in the public domain.
Every calendar quarter a provider can ask for an updated
copy of the fee schedule referenced above.
- Upon
termination of a contract and at the request of a
patient, a provider must transfer copies of the patients
medical records. The cost for transfer is as agreed upon in
the insurance contract. If there was no agreement on
medical record transfer costs in the contract, then
Illinois statute with respect to what a provider may charge
for medical records applies.
Remittance Advice and Procedures:
- A
remittance advice will be furnished to the provider that
identifies the disposition of each claim including:
services billed; patient responsibility, if any; the actual
payment; and reason for any reduction. For any reductions,
the remittance will identify any withholds and the reason
for any denial or reduction. Capitation and prospective
payment arrangements are exempt and the remittance advice
is as agreed to in contract.
This information is
standard HIPAA.
- When services are provided by non-participating or out
of network providers, the insurer can pay either the
patient directly or the non-participating provider.
This provision was
put in by the insurance industry to leverage contract
negotiations. It directly conflicts with assignment of
benefits provisions in the Illinois Insurance Code.
If
for any reason insurers are not complying with assignment,
please inform us immediately.
- When a person presents a benefits card, a provider must
make a "good faith effort" to inform the person
if the provider has a participation contract with the
insurer or other entity identified on the card.
Hospitals must make
sure their policies and procedures allow for the above
information to reach any person whose insurance card is
presented.
Recoupments:
- A
provider must be provided a remittance advice, which
includes an explanation of any recoupment/offset taken. At
a minimum, the recoupment explanation shall include: the
name of the patient; the date of service; the service code
or if no service code is available a service description;
the recoupment amount; and the reason for the recoupment or
offset. In addition, the insurer must provide a telephone
number or mailing address to initiate an appeal of the
recoupment/offset. Retrospective reconciliations on
prospective/concurrent payment based on contractual terms
are exempt from this requirement.
1/04
Staff Contact:
Elena
Butkus: (630) 276-5526
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