Prompt Payment
During the 1999 Spring legislative session, the Illinois
General Assembly passed House Bill 2713, which amends several Acts including the Illinois
Insurance Code and the Health Maintenance Organization Act.
Highlights of HB 2713
HB 2713 contains the following key payment features:
- HMOs, PPOs and other insurers have 30 days to make payment
prior to incurring a 9% interest penalty.
- PHOs and IPAs are specifically included in the legislation
on prompt payment.
- For both capitated payments and other "clean
claims" (due proof of loss), PHOs and IPAs have 60 days to pay on claims received up
until January 1, 2001.
- After January 1, 2001, PHOs and IPAs only have 30 days to
pay on "clean claims".
- Unless payment is made within established timeframes, a 9%
interest penalty is assessed on the outstanding amount for the period beyond due date
until payment made.
- Determination and notification by the payor of insufficient
claims information for a due proof of loss must be made within 30 days (including IPAs and
PHOs).
Assessment of HB 2713
Hospitals and health systems may be both positively and negatively
affected by the prompt payment legislation. The establishment of timely payment provisions
into law strengthens provider rights. However, it also imposes a standard on PHOs and IPAs
who accept responsibility for delegated claims payment.
Payment for Medical Services (Prompt
Payment) (HB 2713) Summary by Key Sections*
*The following summary of the HB 2713 captures key parts of
the legislation. However, this summary is not intended to be all-inclusive. Any specific
language interpretation should be made from the actual text of the enrolled Act.
| Section 5 |
The State Employees Group
Insurance Act of 1971 is amended. |
| Section 10 |
The Illinois Insurance Code is
amended by adding Section 356y and changing Sections 357.9 and 370a. |
| Sec. 356y |
(a) Applies to
- Insurers;
- health maintenance organizations (HMOs);
- managed care plans;
- health care plans;
- preferred provider organizations (PPOs);
- third party administrators (TPAs);
- independent practice associations
(IPAs); and
- physician-hospital organizations (PHOs)
who provide periodic payments to health care professionals
and health care facilities to provide medical or health care services for "insureds
or enrollees" (Enrollees).
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(1)
Failure to pay according to timeframes of (3)
- Entitles health care provider to 9% interest rate.
- Interest penalties accrue on the day after payment required
until the date late payment made.
- Interest payments due within 30 days from date late payment
made.
(2)
- Selection of a health care professional or facility required
within 30 days after enrollment (if required by plan).
- Payor to provide written notice of requirement to all
Enrollees.
- Nothing requires payor to select a health care professional
or facility for an Enrollee.
(3)
- Payor provides notice to professional or facility within 60
calendar days of selection.
- Within later of 60 days following selection or the effective
date, payor begins periodic payment to the Enrollee’s health care professional or
health care facility (within 30 days for retrospective enrollment) and made monthly
thereafter.
- (b) The same 60-day timeframe to begin payments applies to
PHOs and
IPAs. PHOs will move from a 60-day periodic payment timeframe to a monthly
periodic payment timeframe on 1/1/2001.
- As of 1/1/2001, IPAs and PHOs move from a 60 day to a 30 day
payment requirement regarding all other claims payments upon receipt of a "due proof
of loss" received prior to 1/1/2001.
- Independent practice associations and physician-hospital
organizations shall notify the insured, insured's assignee, health care professional, or
health care facility of any failure to provide sufficient documentation for a due proof of
loss within 30 days after receipt of the claim for health services.
- Failure to pay within the required time period entitles
payee to interest at the rate of 9% per year from the date the payment is due until the
date of the late payment.
- (c) All insurers, HMOs, managed care plans, health care
plans, PPOs, and TPAs pay all claims other than periodic payments within 30 days after
receipt of due written proof of loss.
- Notification required of any known failure to provide
sufficient documentation for a due proof of loss within 30 days after receipt of the claim
for health care services.
- (d) The Department shall enforce pursuant to enforcement
powers granted by law.
- (e) Department granted specific authority to issue a cease
and desist order, fine, or otherwise penalize independent practice associations and
physician-hospital organizations that violate this Section.
- The Department shall adopt reasonable rules to enforce
compliance with this Section by independent practice associations and physician-hospital
organizations.
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Section
15. |
The
Health Maintenance Organization Act is amended.
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Section
20. |
The
Limited Health Service Organization Act is amended.
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Section
99. |
This
Act takes effect 120 days after becoming law.
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