Resources for Out-of-Network Claims

In late 2008, the Illinois Department of Insurance (DOI) passed a rule stating that the it was impermissible to balance bill patients by an out-of-network (OON) facility-based physician or provider giving care at in-network hospitals and ambulatory surgery centers in Illinois.

With the passage of Public Act 096-1523 in December, 2010, the State of Illinois legislatively enacted the actions of the DOI, by defining what a facility-based physician is and describing a process whereby conflicts between OON physicians and insurers are resolved. Thus, beginning June 1, 2011, patients receiving care at an in-network facility from an OON facility-based physician were to have no greater liability, from insurer and provider alike, than if an in-network provider had been in attendance.

Facility-based physicians are defined as anesthesiologists, emergency-room physicians, neonatologists, pathologists and radiologists. The bill includes services provided by physician-extenders utilized by these physicians groups, which includes CRNAs.

Insurers are mandated to pay OON physicians directly, and to provide an EOB specifying the proposed allowed amount and the applicable deductible, copayment or coinsurance amounts owed by the patient. A nonparticipating physician would be able to bill the patient only for the applicable copayment and deductible, after receiving the EOB from the insurer. Patients would be able to, and are heavily incentivized to, assign their benefits to the OON facility-based physician.

OON physicians may bill the insurer whatever fee they choose, for services provided to these patients, and the insurer may pay the bill or respond with a counter-offer. The legislation provides for a 30-day period for negotiation between insurer and physician. If this fails to resolve the payment dispute, then either side can ask for arbitration, the process of which is further described below. The arbitrator has a 45-day timeframe from the request date to provide a written judgment.

The prior discussion does not imply that the insurer will pay the OON physician at in-network rates. Indeed, one can realistically expect that rates offered by insurers will be at or below in-network rates.

Arbitration

Arbitration is a method of conflict resolution that is legally binding but occurs outside of the court system, and without the need for a trial. Parties bring their dispute before a neutral, private third-party who has been assigned to hear the case. Arbitrators are trained and certified by several national organizations, and often are former judges, lawyers or other professionals. In arbitration, each side has a right to be represented by an attorney, but may also proceed without.

Either party may initiate the arbitration. Additionally, it is possible that after filing for arbitration, the other party might decide to file a counterclaim, seeking money and any other remedy. Both the claim and the counterclaim would have to be proven in the arbitration.

Once both sides have presented all evidence to the arbitrator, then s/he considers the facts, applies pertinent law, and issues a decision, which has the force of a court decision. Although one can challenge an arbitrator’s decision in court, precedent exists that courts will overturn the decision only if it was clearly arbitrary and did not follow legal principles.

Arbitration Process

The arbitration for OON payment disputes is document-based and doesn’t involve either party’s presence in person. Both parties will be asked to submit self-selected documentation supporting their position, whereupon the arbitrator will base the ruling. Document submissions may include statements of facts and written arguments along with documents or evidence pertaining to the arbitration. Formal rules of evidence that usually apply in court do not apply in arbitration, but you must still be prepared to prove your case and submit all evidence that you think is appropriate. However, understand that the arbitrator may accept or reject evidence depending on whether he or she believes it will aid in resolving the dispute.

Prior arbitrations on similar billing issues will not be considered on their own merit, but the law makes no comment regarding evidence referencing prior arbitrations that the submitting physician or their corporation has experienced.

The Illinois Department of Insurance has written rules regarding OON arbitration, which identify the two Approved Entities for OON arbitration as the American Arbitration Association (www.adr.org) and the American Health Lawyers Association (www.healthlawyers.org) and gives their contact information.

The party initiating arbitration chooses which entity to use and pays the initial fees to the arbitration firm. The final apportionment of these fees is within the realm of the arbitrator. Documents describing each entities’ guidelines and costs are provided for both the AAA and the AHLA. Be forewarned that the costs and their distribution to each party are substantially different between these two entities, and as such these two documents deserve your attention.

All requests for binding arbitration must clearly identify that they are being made pursuant to “section 356z.3a – Nonparticipating facility-based physician and provider disputes” and utilize the guidelines of the chosen entity. All such requests must be copied to the Illinois Department of Insurance. These copies must be submitted electronically to the DOI (at doi.arbitrationrequest@illinois.gov). The date this request will be used to determine the 45-day timeframe for the arbitrator to issue a written decision.

The OON statute provides that a list of five (5) potential arbitrators be given to each of the parties. Both parties may mutually agree to an arbitrator. If there is no agreement on an arbitrator, then the insurer may veto two (2) names on the list and the provider may veto two (2) names on the list, and the remaining arbitrator on the list shall be the chosen arbitrator for the matter.

The arbitrator has 45 days from the filing of the arbitration request with the State to render a decision. Usually parties comply with the this decision; however neither the Arbitration Entity nor the arbitrator has the authority to actually force a party to comply with an award. In the case where one party would not comply with the award, the other party would need to go to court to “confirm” the award. The Illinois statute proscribes an interest penalty upon a delay in payment but does not address this possibility any further.

A Plea for Your Participation

This constitutionality of this law has been unsuccessfully challenged by a coalition of Illinois facility-based physician societies. It is therefore constitutional, but it clearly is not fair.

Physicians will undoubtedly initiate the majority of arbitrations, given that we will be attempting to collect a payment after providing a service. Insurers have no vested interest in initiating arbitration as they already have control of the purse strings. Moreover, arbitration is expensive; in many cases the potential cost of arbitration far eclipses any financial benefit it would bring to a practice or an insurer.

The coalition of physician groups continues to pursue a legislative solution to this very badly designed law. We need your help to collect appropriate data that we can present in Springfield. Specifically:

1) OON bills that you feel are not being negotiated in good faith and with fair payment, but are not candidates for arbitration.

2) a take-it-or-leave-it contract renewal offer, at a rate reduced by a substantial margin (e.g., more than 25%) from a prior contract.

3) a cancellation of an existing contract where the insurer's contract with the hospital remains intact.

4) any OON arbitration which you are considering.

Please contact Ms. Mary Hines, our Executive Director, in any of these circumstances. Thank you!