HB4429 99TH GENERAL ASSEMBLY

LRB099 13077 MLM 36964 b

99TH GENERAL ASSEMBLY
State of Illinois
2015 and 2016
HB4429

Introduced , by Rep. Elaine Nekritz

SYNOPSIS AS INTRODUCED:

5 ILCS 375/6.12
30 ILCS 540/3-2
215 ILCS 5/368a

Amends the State Prompt Payment Act. Provides that after the effective date of the amendatory Act, any bill approved for payment under the Act and pursuant to a health benefit plan under the State Employees Group Insurance Act of 1971 or submitted under Article V of the Illinois Public Aid Code, except a bill for pharmacy or nursing facility services or goods, if payment is not issued to the payee in a timely manner under the Section, the following interest penalty shall apply to any amount approved and unpaid until final payment is made: the sum of the prime commercial rate plus 4.0% per year, applied pro rata for the amount of time the bill remains unpaid. Defines "prime commercial rate". Amends the Illinois Insurance Code. In provisions concerning timely payment for health care services, provides that the interest to be charged on late payments of periodic payments, payments by independent practice associations and physician-hospital organizations, and payments by health insurers, health maintenance organizations, managed care plans, health care plans, preferred provider organizations, and third party administrators shall be the sum of the prime commercial rate plus 4.0% per year. Defines "prime commercial rate". Amends the State Employees Group Insurance Act of 1971. Provides that the program of health benefits offered under the Act is subject to certain provisions of the Illinois Insurance Code concerning late payments and assignability except as otherwise provided.

A BILL FOR

AN ACT concerning government.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The State Employees Group Insurance Act of 1971 is amended by changing Section 6.12 as follows:

(5 ILCS 375/6.12)

Sec. 6.12. Payment for services. Except as otherwise provided, the The program of health benefits is subject to the provisions of Sections 368a and 370a of the Illinois Insurance Code, provided that, if a covered member or covered dependent assigns payments to a health care professional for covered services, then the health care professional shall only collect at point of service from that person the estimated amount not expected to be paid by the plan.

(Source: P.A. 97-1086, eff. 8-24-12.)

Section 10. The State Prompt Payment Act is amended by changing Section 3-2 as follows:

(30 ILCS 540/3-2)

Sec. 3-2. Beginning July 1, 1993, in any instance where a State official or agency is late in payment of a vendor's bill or invoice for goods or services furnished to the State, as defined in Section 1, properly approved in accordance with rules promulgated under Section 3-3, the State official or agency shall pay interest to the vendor in accordance with the following:

(1) Any bill, except a bill submitted under Article V of the Illinois Public Aid Code and except as provided under paragraph (1.05) of this Section, approved for payment under this Section must be paid or the payment issued to the payee within 60 days of receipt of a proper bill or invoice. If payment is not issued to the payee within this 60-day period, an interest penalty of 1.0% of any amount approved and unpaid shall be added for each month or fraction thereof after the end of this 60-day period, until final payment is made. Any bill, except a bill for pharmacy or nursing facility services or goods, and except as provided under paragraph (1.05) of this Section, submitted under Article V of the Illinois Public Aid Code approved for payment under this Section must be paid or the payment issued to the payee within 60 days after receipt of a proper bill or invoice, and, if payment is not issued to the payee within this 60-day period, an interest penalty of 2.0% of any amount approved and unpaid shall be added for each month or fraction thereof after the end of this 60-day period, until final payment is made. Any bill for pharmacy or nursing facility services or goods submitted under Article V of the Illinois Public Aid Code, except as provided under paragraph (1.05) of this Section, and approved for payment under this Section must be paid or the payment issued to the payee within 60 days of receipt of a proper bill or invoice. If payment is not issued to the payee within this 60-day period, an interest penalty of 1.0% of any amount approved and unpaid shall be added for each month or fraction thereof after the end of this 60-day period, until final payment is made.

(1.05) For State fiscal year 2012 and future fiscal years, any bill approved for payment under this Section must be paid or the payment issued to the payee within 90 days of receipt of a proper bill or invoice. If payment is not issued to the payee within this 90-day period, an interest penalty of 1.0% of any amount approved and unpaid shall be added for each month, or 0.033% (one-thirtieth of one percent) of any amount approved and unpaid for each day, after the end of this 90-day period, until final payment is made.

(1.06) After the effective date of this amendatory Act of the 99th General Assembly, for any bill approved for payment under this Section and pursuant to a health benefit plan under the State Employees Group Insurance Act of 1971 or submitted under Article V of the Illinois Public Aid Code, except a bill for pharmacy or nursing facility services or goods, if payment is not issued to the payee in a timely manner under this Section, the following interest penalty shall apply to any amount approved and unpaid until final payment is made: the sum of the prime commercial rate plus 4.0% per year, applied pro rata for the amount of time the bill remains unpaid. As used in this paragraph, "prime commercial rate" means the Wall Street Journal Prime Rate, as published from time to time.

(1.1) A State agency shall review in a timely manner each bill or invoice after its receipt. If the State agency determines that the bill or invoice contains a defect making it unable to process the payment request, the agency shall notify the vendor requesting payment as soon as possible after discovering the defect pursuant to rules promulgated under Section 3-3; provided, however, that the notice for construction related bills or invoices must be given not later than 30 days after the bill or invoice was first submitted. The notice shall identify the defect and any additional information necessary to correct the defect. If one or more items on a construction related bill or invoice are disapproved, but not the entire bill or invoice, then the portion that is not disapproved shall be paid.

(2) Where a State official or agency is late in payment of a vendor's bill or invoice properly approved in accordance with this Act, and different late payment terms are not reduced to writing as a contractual agreement, the State official or agency shall automatically pay interest penalties required by this Section amounting to $50 or more to the appropriate vendor. Each agency shall be responsible for determining whether an interest penalty is owed and for paying the interest to the vendor. Except as provided in paragraph (4), an individual interest payment amounting to $5 or less shall not be paid by the State. Interest due to a vendor that amounts to greater than $5 and less than $50 shall not be paid but shall be accrued until all interest due the vendor for all similar warrants exceeds $50, at which time the accrued interest shall be payable and interest will begin accruing again, except that interest accrued as of the end of the fiscal year that does not exceed $50 shall be payable at that time. In the event an individual has paid a vendor for services in advance, the provisions of this Section shall apply until payment is made to that individual.

(3) The provisions of Public Act 96-1501 reducing the interest rate on pharmacy claims under Article V of the Illinois Public Aid Code to 1.0% per month shall apply to any pharmacy bills for services and goods under Article V of the Illinois Public Aid Code received on or after the date 60 days before January 25, 2011 (the effective date of Public Act 96-1501) except as provided under paragraph (1.05) of this Section.

(4) Interest amounting to less than $5 shall not be paid by the State, except for claims (i) to the Department of Healthcare and Family Services or the Department of Human Services, (ii) pursuant to Article V of the Illinois Public Aid Code, the Covering ALL KIDS Health Insurance Act, or the Children's Health Insurance Program Act, and (iii) made (A) by pharmacies for prescriptive services or (B) by any federally qualified health center for prescriptive services or any other services.

(Source: P.A. 96-555, eff. 8-18-09; 96-802, eff. 1-1-10; 96-959, eff. 7-1-10; 96-1000, eff. 7-2-10; 96-1501, eff. 1-25-11; 96-1530, eff. 2-16-11; 97-72, eff. 7-1-11; 97-74, eff. 6-30-11; 97-348, eff. 8-12-11; 97-813, eff. 7-13-12; 97-932, eff. 8-10-12; 97-1142, eff. 12-28-12.)

Section 15. The Illinois Insurance Code is amended by changing Section 368a as follows:

(215 ILCS 5/368a)

Sec. 368a. Timely payment for health care services.

(a) This Section applies to insurers, health maintenance organizations, managed care plans, health care plans, preferred provider organizations, third party administrators, independent practice associations, and physician-hospital organizations (hereinafter referred to as "payors") that provide periodic payments, which are payments not requiring a claim, bill, capitation encounter data, or capitation reconciliation reports, such as prospective capitation payments, to health care professionals and health care facilities to provide medical or health care services for insureds or enrollees.

(1) A payor shall make periodic payments in accordance with item (3). Failure to make periodic payments within the period of time specified in item (3) shall entitle the health care professional or health care facility to interest at the rate of 9% per year from the date payment was required to be made to the date of the late payment, provided that interest amounting to less than $1 need not be paid. For periodic payments due on or after the effective date of this amendatory Act of the 99th General Assembly, failure to make periodic payments within the period of time specified in item (3) shall entitle the health care professional or health care facility to interest at the rate of the sum of the prime commercial rate plus 4.0% per year from the date payment was required to be made to the date of the late payment, provided that interest amounting to less than $1 need not be paid. Any required interest payments shall be made within 30 days after the payment.

(2) When a payor requires selection of a health care professional or health care facility, the selection shall be completed by the insured or enrollee no later than 30 days after enrollment. The payor shall provide written notice of this requirement to all insureds and enrollees. Nothing in this Section shall be construed to require a payor to select a health care professional or health care facility for an insured or enrollee.

(3) A payor shall provide the health care professional or health care facility with notice of the selection as a health care professional or health care facility by an insured or enrollee and the effective date of the selection within 60 calendar days after the selection. No later than the 60th day following the date an insured or enrollee has selected a health care professional or health care facility or the date that selection becomes effective, whichever is later, or in cases of retrospective enrollment only, 30 days after notice by an employer to the payor of the selection, a payor shall begin periodic payment of the required amounts to the insured's or enrollee's health care professional or health care facility, or the designee of either, calculated from the date of selection or the date the selection becomes effective, whichever is later. All subsequent payments shall be made in accordance with a monthly periodic cycle.

(b) Notwithstanding any other provision of this Section, independent practice associations and physician-hospital organizations shall make periodic payment of the required amounts in accordance with a monthly periodic schedule after an insured or enrollee has selected a health care professional or health care facility or after that selection becomes effective, whichever is later.

Notwithstanding any other provision of this Section, independent practice associations and physician-hospital organizations shall make all other payments for health services within 30 days after receipt of due proof of loss. Independent practice associations and physician-hospital organizations shall notify the insured, insured's assignee, health care professional, or health care facility of any failure to provide sufficient documentation for a due proof of loss within 30 days after receipt of the claim for health services.

Failure to pay within the required time period shall entitle the payee to interest at the rate of 9% per year from the date the payment is due to the date of the late payment, provided that interest amounting to less than $1 need not be paid. For any periodic payments or other payments due on or after the effective date of this amendatory Act of the 99th General Assembly, failure to pay within the required time period shall entitle the payee to interest at the rate of the sum of the prime commercial rate plus 4.0% per year from the date the payment is due to the date of the late payment, provided that interest amounting to less than $1 need not be paid. Any required interest payments shall be made within 30 days after the payment.

(c) All insurers, health maintenance organizations, managed care plans, health care plans, preferred provider organizations, and third party administrators shall ensure that all claims and indemnities concerning health care services other than for any periodic payment shall be paid within 30 days after receipt of due written proof of such loss. An insured, insured's assignee, health care professional, or health care facility shall be notified of any known failure to provide sufficient documentation for a due proof of loss within 30 days after receipt of the claim for health care services. Failure to pay within such period shall entitle the payee to interest at the rate of 9% per year from the 30th day after receipt of such proof of loss to the date of late payment, provided that interest amounting to less than one dollar need not be paid. For any claims and indemnities due on or after the effective date of this amendatory Act of the 99th General Assembly, failure to pay within such period shall entitle the payee to interest at the rate of the sum of the prime commercial rate plus 4.0% per year from the 30th day after receipt of such proof of loss to the date of late payment, provided that interest amounting to less than one dollar need not be paid. Any required interest payments shall be made within 30 days after the payment.

(d) The Department shall enforce the provisions of this Section pursuant to the enforcement powers granted to it by law.

(e) The Department is hereby granted specific authority to issue a cease and desist order, fine, or otherwise penalize independent practice associations and physician-hospital organizations that violate this Section. The Department shall adopt reasonable rules to enforce compliance with this Section by independent practice associations and physician-hospital organizations.

(f) As used in this Section, "prime commercial rate" means the Wall Street Journal Prime Rate, as published from time to time.

(Source: P.A. 97-813, eff. 7-13-12.)