Background

One of the most important features of a Preferred-Provider Organization (PPO) Health Plan is price protection. Not only does your Plan pay most of your health bill, usually 80%, but the PPO has negotiated discounted rates for the hospital's or doctor's services, so long as the patient sees a "service provider" in the network sought out by the health plan or insurer. (For insurance purposes, hospitals, doctors, and therapists are called "providers" or "service providers.") Often, the contract rate with the provider is less than half of the rate listed on the provider's bill. Under the PPO contract, and Illinois statute, the provider may send a bill to the patient only for the copayment (usually 20% of the contract rate), or a per visit deductible or annual deductible. The patient is not responsible for the amount discounted from the provider's bill. 

How the problem occurs

Usually, the billing process runs smoothly, so long as the patient visits a hospital or doctor in the network of providers under contract to the PPO Plan. Sometimes, however, a patient sees a provider outside the Plan without choosing that provider. For example, the patient can be brought to a local hospital in an emergency. Often, a patient will see a primary physician or hospital inside the network, only to get bills from doctors outside the network. This situation arises because doctors who work in a hospital are not employees of the hospital, but independent contractors. A patient visiting an emergency room after an accident can expect to get five bills: from the hospital , the emergency room physician, the radiologist who reads the X-ray scan, the pathologist who reads the lab test, and the ambulance. Also, the anesthesiologists, who are essential to any surgery, are often not part of a network. Even when the patient chooses the hospital, he or she may be shocked to get bills from the four other providers who may not be in the network. The PPO plan will usually pay only the amount it would have paid had these doctors been in the network. Then the provider sends the patient a bill for the balance, not in a discounted rate, but the full charges. What can the patient do?

The problem is increasing

With the passage of the Affordable Care Act, health insurers were required to offer policies to all people who asked, and at the same time, were forced to increase service and costs to their standard health policies. The insurers complied by increasing the premiums of its old policies but offering a lower cost policy with narrow networks. In these policies, the number of hospitals and doctors who agree to take the patient's insurance is severely limited. Many areas of Illinois have no doctors in the networks.

The solution: The patient must be held harmless

New: New Illinois statute protects patients who act in good faith.

The State of Illinois has recently codified the regulations, listed on this page for many years, protecting consumers from much balance billing from providers. This site has discussed the regulations, which should still apply. 

Under the new Network Adequacy and Transparency Act (NAT), starting in 2019, a health insurer in Illinois using a network of preferred providers must submit a plan which includes:

   (6) A provision ensuring that whenever a beneficiary has made a good faith effort to utilize preferred providers for a covered service and it is determined the insurer does not have the appropriate preferred providers due to insufficient number, type, or unreasonable travel distance or delay, the insurer shall ensure.. that the beneficiary will be provided the covered service at no greater cost to the beneficiary than if the service had been provided by a preferred provider.
   (7) A provision that the beneficiary shall receive emergency care coverage such that payment for this coverage is not dependent upon whether the emergency services are performed by a preferred or non-preferred provider and the coverage shall be at the same benefit level as if the service or treatment had been rendered by a preferred provider.
   (8) A limitation that, if the plan provides that the beneficiary will incur a penalty for failing to pre-certify inpatient hospital treatment, the penalty may not exceed $1,000 per occurrence in addition to the plan cost sharing provisions.

For paragraph (6), good faith effort may be evidenced by accessing the provider directory, calling the network plan, and calling the provider.
Paragraph (6) does not apply to: (A) a beneficiary who willfully chooses to access a non-preferred provider for health care services available through the panel of preferred providers, or (B) a beneficiary enrolled in a health maintenance organization. In these circumstances, the contractual requirements for non-preferred provider reimbursements shall apply.

The insurer must ensure payment directly or indirectly, by terms contained in the payer contract.

In Paragraph (7), "the same benefit level" means that the beneficiary is provided the covered service at no greater cost to the beneficiary than if the service had been provided by a preferred provider.

While the NAT Act is effective in 2019, the regulations of the Department of Insurance (listed below) should still apply now.

Previous: New Illinois statute protects patients who see nonparticipating facility-based providers.

• When a patient uses a participating network hospital and, due to any reason, in-network services are unavailable and are provided by a nonparticipating facility-based physician or provider, the insurer or health plan shall ensure that the patient shall incur no greater out-of-pocket costs than he or she would have incurred with a participating physician or provider for covered services.
• "facility-based provider" means a physician or other provider who provide
  
• radiology,
• anesthesiology,
• pathology,
• neonatology,
• or emergency department services
• in a participating hospital or ambulatory surgical treatment center.
• patient must assign benefits to the provider
• protection does not apply to a patient who willfully chooses to access a nonparticipating facility-based physician or provider

See 215 ILCS 5/356z.3a.:

Department of Insurance Regulations go further:

In Illinois, the Division of Insurance has implemented a bulletin to protect consumers caught in this situation:

To the extent that insurers provide access to providers through contractual arrangements with preferred provider administrators, it is the insurer’s responsibility to invoke and enforce the administrator’s responsibility under 50 IAC 2051.55 (e)(10)(A). To the extent that an insurer establishes its own provider network, the insured [patient] is to be held harmless in those instances where they have made a good faith effort to use the services of a contracted provider, but because of the lack of availability of ancillary providers, the insured's access to otherwise covered health care services is either inequitably restricted or simply not available (215 ILCS 5/370i).

In all situations where an Illinois insured has made a good faith effort to use the services of a contracted provider and where there is not equitable access to such provider(s), it is the insurer’s contractual and statutory responsibility to ensure that the covered person be provided covered services at no greater cost than if such services had been provided by a contracted provider.

CB #2007-04.:

The Illinois Director of Insurance based the bulletin on this regulation:
Each applicant for registration shall file with the Director the following information and documents ... :
e)        A description of the standards by which the administrator assures that the health care services to be rendered under the preferred provider program are reasonably accessible and available to beneficiaries. Standards shall address such issues as:
10)        Policies and procedures to assure access to covered services when:

• A)       The covered service is not available from a network provider; in any case whereby a beneficiary has made a good faith effort to utilize network providers for a covered service and it is determined the administrator does not have the appropriate preferred providers due to insufficient number, type or distance, the administrator shall ensure, by terms contained in the payor contract, that the beneficiary will be provided the covered service at no greater cost than if the service had been provided by a preferred provider;
• B)       The beneficiary has a medical emergency within the network service area; 
• C)       The beneficiary has a medical emergency outside the network's service area.

Ill. Admin. Code ch. 50, sec. 2051.55.(50 IAC 2051.55 (e)(10)(A)). See also 215 ILCS 370i.

Now recodified at 50 IAC 2051.310(a)(6).

The regulations require the insurer to have a sufficient number of physicians to meet the patient's needs.

Section 370i states that PPO policies, agreements or arrangements may not contain terms or conditions that would operate unreasonably to restrict the access and availability of health care services for the insured.

These laws combined can help your lawyer get your insurer to cover your claims without owing high balances.

Conclusion

If you are a Illinois patient who acted in good faith by going to a hospital within the network, or had an emergency, and receive a bill from a doctor outside the network, you should contact the provider and your insurer that you acted in good faith and that you must be covered to the same extent (at no more cost to you) than if the provider were in the network. 

Of course, the laws are complex, and you may encounter challenges under Federal preemption or administrative theories. Do not rely upon this article as legal advice. Consult a legal professional about the particulars of your situation. This page does not create an attorney-client relation.

Motor Vehicle Accidents - special situations

After a Motor Vehicle Accident, a patient may have more than one insurance policy which can pay accident bills: the general health plan, the patient's own automobile policy medical-payments coverage ("medpay"), and the at-fault driver's automobile liability policy. The liability policy usually does not pay medical bills until all aspects of a case are settled, often years later. The hospital will try to get payment from the medpay because there is no PPO discount. However, most automobile medpay policies carry only $1,000 to $5,000 in coverage. For that reason, I usually advise people to submit the accident bills to their PPO plan and use the medpay to take care of the 20% copayments and deductibles. This way, the limited dollars stretch further, and the patient is exposed to lower bills. Many PPO health plans have contractual provisions which prevent providers sending an undiscounted balance bill to the automobile policies after the bill is submitted to the Plan. Courts also restrict this practice when the PPO contract prohibits balance billing. 

Be aware, however, that many plans may have clauses which require medpay to pay first and to be exhausted before the PPO plan pays, and the Plan may seek reimbursement from the medpay. Similarly, an automobile policy may state it is secondary to the general health plan, and the medpay pays only after the general health plan pays primary. The clauses may conflict with each other. Another wrinkle occurs when a general PPO health plan does not require its network providers from submitting a bill to the PPO; the PPO may be happy to see the auto medpay take the bill. There are no easy answers to these situations, as they are determined by the contractual provisions of the various contracts, many of which are not accessible to the patient.

Finally, you expect that both the general health plan and the automobile medpay insurer want to be repaid out of your settlement with the at-fault party or his insurer. This reimbursement is sometimes called subrogation, and how it applies depends on the written language of the policies. Still, having the PPO plan pay first costs the patient less because the reimbursement is to the extent the plan has paid. The application with HMO (Health Maintenance Organizations) is often different. The HMO contract may permit the providers to impose a lien on a personal injury settlement for the "reasonable" or "usual and customary" (U&C) charges, which may bes higher than the contractual rate. Court sometimes permit providers paid under a HMO capitation rate to submit accident bills at the U&C rates.

 In 2013, in Falls v. Silver Cross Hospital,  the United States District Court for the Northern District of Illinois held that a hospital cannot place a lien on a negligence action for the balance of its claim after the PPO plan paid. The PPO insurer had issued payment in full, meaning there was no balance for the hospital to assert a lien for further payment. However this case was later dismissed, but in 2018, a class action was announced prohibiting this hospital from refusing to accept health insurance.

Of course, the laws are complex, and you may encounter challenges under Federal preemption or administrative theories. Do not rely upon this article as legal advice. Consult a legal professional about the particulars of your situation.