New Illinois law expands protection when medical claims are denied

By Bruce Japsen
Chicago Tribune
January 5, 2010

More than 3 million Illinois residents, particularly those who buy health insurance on their own or get it from a small employer, will have the right to get their denied medical claims reviewed by outside health experts under legislation signed into law by Gov. Pat Quinn today.

Quinn this afternoon signed a bill that ensures consumers in state-regulated health plans are allowed to have their denied medical claims reviewed by a physician independent of the insurance company and at the plan's expense. About 4 million of Illinois' nearly 13 million people are in private insured plans, which fall under state regulations.

The new rights, which take effect July 1, build on a state law that protects only HMO-covered consumers whose claims are denied. Lawmakers said they wanted to extend the protections to all consumers.

"This important consumer protection legislation will improve health insurance in Illinois and help people fight back when claims are unfairly denied," Quinn said in a statement.

Reviews by outside parties of denied medical claims have become common at larger self-insured companies, which are not subject to state rules yet voluntarily have adopted such policies for much of the last decade, according to analysts.

The new rules also will affect the uninsured who will become covered under Congress' efforts to reform health care. Most analysts expect the uninsured to buy coverage from state-regulated plans that will be offered on newly created exchanges, or an insurance marketplace, many using federal subsidies.

"While some companies may have afforded consumers some opportunity for an independent review, now all companies will be required to pay for an independent external review," said Illinois Insurance Director Michael McRaith.

HMOs provide coverage to less than 1 million Illinois residents, the state said. When patients rights legislation was passed in 1999, more than 2 million people were enrolled in HMOs.

HMOs increasingly have become less popular because they are the most restrictive form of health insurance, limiting enrollees to choices of doctors and hospitals only in the HMOs' networks.

The new law would subject preferred provider organizations, or PPOs, to such regulations. PPOs are the most popular form of health insurance, allowing enrollees to see doctors and hospitals outside of the network often at a larger cost than if they stay in-network.

Under the new law, an "external review will be conducted by a qualified, independent doctor, who is selected by a nationally accredited and Illinois Department of Insurance-approved independent review organization," the state said in a statement. The external review must be completed within 20 business days and in urgent cases must be completed within "72 to 120 hours."