January 19, 2010
By Patricia D. King
with Megan R. Rooney and Elizabeth LaRocca*
P.A. 96-0857, known as the Illinois Insurance Fairness Act, was signed by Governor Pat Quinn (D) on January 5, 2010. The new law: (1) creates the Health Carrier External Review Act, which establishes a system for review of certain healthcare plan adverse determinations by independent review organizations approved by the Illinois Department of Insurance (Department); (2) establishes a committee of the Department to develop a uniform employee health status questionnaire to be used for small employers and a uniform employee health status questionnaire for the individual market; and (3) requires reporting to the Department of administrative expenses of accident and health insurance carriers, including but not limited to medical loss.
Health Carrier External Review Act
The Illinois Managed Care Reform and Patient Rights Act, in effect since 2000, has required Health Maintenance Organizations (HMOs) to maintain an appeals procedure, including independent external review using a reviewer jointly selected by the enrollee, provider, and plan. The Health Carrier External Review Act (Act) applies not only to HMOs, but also to any insurance carrier subject to jurisdiction of the Department that covers the cost of healthcare services. The Act does not apply to disability policies, long term care insurance, or other limited or supplemental benefits; or to Medicare supplemental, Medicare, or Medicaid plans; or the federal employee health benefits program. The Act is effective beginning July 1, 2010.
The Act gives covered persons the right to external review upon a final adverse determination by the carrier that an admission, availability of care, continued stay, or other healthcare service does not meet the carrier's requirements for medical necessity, appropriateness, healthcare setting, level of care, or effectiveness following exhaustion of internal appeals procedures. Covered persons are entitled to expedited review if the covered person has a medical condition where the timeframe for completing an expedited internal review or standard external review would seriously jeopardize the person's life or health, or jeopardize the person's ability to regain maximum function. The covered person may also request an expedited external review along with a contemporaneous expedited internal review if the adverse determination involved denial of coverage based on a determination that the requested healthcare service is experimental or investigational, and the provider certifies that the recommended service would be significantly less effective if not promptly initiated.
For standard reviews, the covered person has four months after notice of an adverse determination to file a request for external review. The carrier must complete a preliminary review of the request within five days after receipt, including determination that the individual was covered at the time the service was requested and that the healthcare service would have been a covered benefit but for the carrier's determination that the service did not meet the carrier's requirements for medical necessity, appropriateness, healthcare setting, level of care, or effectiveness. If the request is eligible for external review, the carrier must assign an independent review organization (IRO) from the list of IROs approved by the Department, notify the covered person of such assignment, and provide to the IRO all documents and information relied upon by the carrier in making the adverse determination. The covered person has five days from receipt of the notice to provide additional information to the IRO. The IRO may also consider the covered person's medical record and other information, including evidence-based practice guidelines, in reaching its determination.
Within five days after receiving all necessary information, the IRO is to notify carrier and the covered person or representative of its decision to uphold or reverse the adverse determination. The IRO's decision is binding upon the carrier and binding upon the covered person, except to the extent the covered person has other remedies under state or federal law.
The Act provides that to be approved to conduct external reviews, IROs must meet certain quality assurance standards, assign qualified experts, and may not be associated with a health benefit plan or trade association of plans or providers. An IRO or individual reviewer may not participate in review of an individual case if a conflict of interest is present. IROs and their reviewers are not liable for damages for their acts or omissions, except in case of bad faith or gross negligence.
Uniform Small Employer Group Health Status Questionnaire and Individual Health Statement
The Department will create a standardized health insurance application for use by insurers and HMOs offering coverage in the individual and small group (two to fifty employees) markets. The standardized application must be used starting January 1, 2011.
Insurer Expense Reporting
Carriers must furnish expense reports starting January 1, 2011, and every six months thereafter.
*We would like to thank Patricia D. King, Esquire (Swedish Covenant Hospital, Chicago, IL), Megan R. Rooney, Esquire (McDermott Will & Emery LLP, Chicago, IL), and Elizabeth LaRocca, Esquire (Office of the President of the Illinois Senate, Springfield, IL), for providing this email alert.