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Illinois—Recent Healthcare Reform Developments


Email Alert

By Patricia D. King, Megan R. Rooney, and James W. Kim*

November 20, 2008

In Illinois, there have been several recent actions relating to healthcare reform, specifically relating to coverage of indigent and uninsured patients. Summarized below are: (1) the status of the ongoing debate regarding the Illinois FamilyCare Program; and (2) the details of the Illinois Hospital Uninsured Patient Discount Act.

Illinois FamilyCare Program

The Illinois KidCare Parent Coverage HIFA Demonstration Project (Demonstration Project) was established through a waiver pursuant to Section 1115 of the Social Security Act.1 The Demonstration Project permitted provision of subsidized healthcare for working families without insurance earning up to 185% of the federal poverty level (FPL) using federal matching funds through its expiration on September 30, 2007. Governor Rod Blagojevich, without the backing of the Illinois legislature, in an attempt to retain the federal matching funds, unilaterally reinstated the coverage and expanded it to 400% of the FPL under the Illinois FamilyCare Program, a program that qualifies for federal matching funds, through issuance of an Emergency Rule and Permanent Rule on November 7, 2007.

In April, Cook County Circuit Judge James R. Epstein issued a temporary restraining order in a lawsuit over the expansion. In a September 26, 2008 opinion, the 1st District Appellate Court of Illinois upheld Judge Epstein's ruling and issued an injunction putting the program on hold. On October 15, 2008, Judge Epstein ordered Blagojevich's administration to submit its plan for dismantling the program. The state stopped all FamilyCare reimbursement at that time.

On November 12, 2008, the Illinois Supreme Court granted a reprieve by temporarily putting on hold Judge Epstein's order to dismantle the program. Blagojevich's administration stated that it would resume paying healthcare providers for services under the FamilyCare program. The stay is in place until the Supreme Court decides whether to formally hear the case.

While the fate of the FamilyCare program plays out in Illinois courts, Illinois Senate Bill 1415 would preserve FamilyCare coverage for adults up to 185% of the poverty level. Senate Bill 1415 has been approved by the House and is expected to be approved by the Senate this week.

Hospital Uninsured Patient Discount Act

The Illinois Hospital Uninsured Patient Discount Act (P.A. 95-0965) (Act) requires hospitals to provide a discount from charges on bills of $300 or more to uninsured Illinois residents with incomes of less than 600% of the FPL (or less than 300% for critical access hospitals or hospitals in rural areas). In addition, a hospital may not collect more than 25% of the uninsured patient's family income during any twelve-month period. The Act applies only to hospitals, not physicians or any other healthcare providers. For eligible patients, the hospital's charges must be reduced to 135% of cost, using the cost-to-charge ratio from the hospital's most recently filed Medicare cost report. Hospitals are required to file Worksheet C from the cost report with the Illinois Attorney General on an annual basis. The Attorney General is responsible for enforcement of the Act.

A patient is considered "uninsured" if the patient is not covered under a private health insurance policy and is not a beneficiary under a public or private health insurance, health benefit, or health coverage program (including high deductible plans, workers' compensation, or liability coverage). A hospital may require that a patient apply for coverage under public programs, such as Medicare or Medicaid, if there is a reasonable basis to believe that the patient may be eligible for coverage. Hospitals must permit a patient to apply for a discount within sixty days of the date of discharge or date of service.

Hospitals may require a patient requesting the discount to submit documentation verifying his/her income and Illinois residence. One of the following is deemed acceptable documentation of income: most recent tax return, most recent W-2 and 1099 forms; two most recent pay stubs; written income verification from an employer who pays in cash; or other documentation acceptable to the hospital. Illinois residency may be verified through the documentation submitted for income verification, or by a state-issued identification card, recent residential utility bill, lease agreement, vehicle registration card, voter registration card, mail addressed to the patient's Illinois address from a government or other credible source; statement from a family member who resides at the same address and presents his/her own verification of residency; or a letter from a homeless shelter or similar facility.

A patient who owns assets with a value over 600% of the FPL (300% for rural areas and critical access hospitals) can be denied the discount. The patient's primary residence, personal property exempt from attachment under the Code of Civil Procedure (such as value of an automobile under $2,400), and pension and retirement plan assets are not included. If a hospital adopts a policy to exclude patients from eligibility for the discount based on assets, the hospital may require documentation of the patient's assets, such as statements from financial institutions.

All hospital bills must include a statement notifying patients of the availability of the discount and providing information on how to apply for the hospital's financial assistance policy.

The Act prohibits insurance companies from taking the discount into account in determining a hospital's customary charges.

1See Centers for Medicare and Medicaid Services, Details for Illinois KidCare Parent Coverage HIFA.

*We would like to thank Patricia D. King, Esquire (Swedish Covenant Hospital, Chicago, IL) and Megan R. Rooney and James W. Kim (McDermott Will & Emery LLP, Chicago, IL) for providing this email alert.

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