Illinois Hospital Association

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July 20, 2005/revised August 2, 2005

Workers' Compensation Reform

In May 2005, the General Assembly approved HB 2137. The Governor signed the bill on July 20, 2005. A copy is available at: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=094-0277. The bill is the first major overhaul of the Workers’ Compensation Act in over 20 years and was negotiated by business and labor via an "agreed bill process" as mediated by the Governor’s Office. In the end, IHA was neutral on the legislation.

Recall that at the beginning of 2004, labor and business identified workers compensation reform as one of their primary issues. In May 2004, as agreed to in embargoed discussions between the AFL-CIO, Illinois Trial Lawyers Association (ITLA), Illinois State Chamber of Commerce (ISCC), Illinois Manufacturers Association (IMA), and Illinois Retail Merchants Association (IRMA), the Senate Democrats released a preliminary bill reforming the workers compensation system. The bill increased payments to workers financed by savings generated from providers. Because of the makeup of the legislature, the precedent in 46 states that have legislated a workers compensation fee schedule, and the fact that Illinois is one of only four states left that allows balance billing under the workers compensation system, during the veto session IHA participated in negotiations with the groups named above to make the bill more palatable to our members. The bill we negotiated did not pass during veto session – however, major portions of the bill -- in particular all the fee schedule language -- are in HB 2137. In the more recent "agreed bill process" mediated by the Governor’s Office, IHA was not a part of the full process, during which business had provisions added on utilization review and labor made specific changes to the IHA language on the balance billing allowances.

In summary, there are both medical and indemnity provisions in HB 2137 that will affect hospitals as both providers and employers. The medical provisions of the bill are as follows:

  • Regulation of provider workers compensation payments as opposed to provider charges and payments;

  • Reimbursement will be the lesser of a negotiated rate, if applicable, or the lesser of the health care provider’s actual charges or according to a fee schedule established in the Act. The original bill never defined the charge basis so providers could not determine reimbursement;

  • Beginning February 1, 2006, fee schedule takes effect. Fee schedule will be 90% of the 80th percentile of charges for a specific two-year period as opposed to an undefined period. The fee schedule will be calculated for various geographic areas (based on the first 3 digits of zip code) and based upon other parameters outlined in the bill. There will be separate schedules for hospital inpatient, hospital outpatient, emergency room and trauma, ASTCs and professional services. The original bill was so vague that providers could not determine how much they would be reimbursed;

  • The fee schedule will be adjusted annually by CPI-U unless Commission finds there is significant limitation to services;

  • The Industrial Commission has opportunity to review outlier cases that require extra-ordinary treatment for provider reimbursement;

  • When there is no fee schedule amount (e.g., for new technologies or treatments or rare cases) reimbursement will occur at 76% of charge as consistent with the medical payment provisions in the Act;

  • Prohibition of beneficiary balance billing, except under specified circumstances. The original bill prohibited all balance billing and required that all payments would go to the beneficiary. The final bill requires employers to pay providers on non-disputed claims and establishes a process for billing and collection. In addition, if an employee does not provide information to the provider regarding participation in a group health plan, then there is a process for billing and collection established for compensable injuries;

  • Payment to providers for non-disputed bills within 60 days of receipt of bills. In the case of nonpayment, the bill or portion of the bill incurs interest 12% annually payable to the provider;

  • Utilization review program created whereby: (1) no person may conduct utilization review without registration and compliance with Utilization Review and Accreditation Commission (URAC) Workers’ Compensation Utilization Management standards; and (2) utilization review will be considered by the Industrial Commission in determination of the reasonableness and necessity of medical bills or treatment. Language was included that nothing diminishes the rights of employees to reasonable and necessary medical treatment or choice of health care provider or rights of medical examinations. This means standards of care can be applied by the Commission, but there is no requirement in the bill for the Industrial Commission to establish care guidelines.

The indemnity provisions of the bill are as follows:

  • Creation of Workers’ Compensation Fraud Unit within the Division of Insurance to investigate charges of workers’ comp fraud;

  • Creation of Third Commission Panel to try and ensure quicker resolution of claims;

  • Emergency hearings expanded and expedited;

  • Certified records procedures clarified;

  • Vocational rehabilitation clarified;

  • Penalties enhanced for failure by an employer to carry workers’ compensation insurance including stop work orders;

  • Reconstitution of Workers’ Compensation Advisory Board;

  • Rate adjustment fund structural deficit corrected via assessment;

  • Penalties for unreasonable conduct enhanced from $10 per day to $30 and from $2,500 per claim to $10,000;

  • Death benefits increased to greater of $500,000 or 25 years;

  • Burial benefit increased from $4,200 to $8,000;

  • Minimum compensation rates tied to minimum wage;

  • Minimum rates for amputations increased;

  • Increases in scheduled losses of body parts and disfigurement to 7 ½%;

  • Wage differential cap increased to 100% of statewide average weekly wage and reopening of claim extended to 60 months;

  • Workers’ Compensation Insurers’ Advisory Organization to provide to the state aggregate information on claims paid.

The Industrial Commission (IC) will not be able to release a medical fee schedule until it contracts with a firm that has employers’ and insurers’ charge information as specified in the Act. 

Staff Contact: Elena Butkus: (630) 276-5526