On June 20, Illinois Governor Rod Blagojevich signed the Fair Patient Billing Act, Public Act 094-0885. The purpose of the Act is to advance the prompt and accurate payment of health care services through fair and reasonable billing and collection practices of hospitals. The Act imposes several obligations on hospitals and will require hospitals to possibly adjust some of their internal procedures. While the Act becomes effective January 1, 2007, hospitals have until July 1, 2007, to implement appropriate policies and procedures to comply with the new obligations under the Act. It should be noted that there will be proposed rules, yet to be published, by the Attorney Generals Office implementing the provisions of the Act.

The obligations imposed upon hospitals involve: 1) patient notification; 2) billing information; 3) how hospitals may pursue collection against uninsured and insured patients and any limitations thereon; 4) notification to patients receiving services from out-of-network providers.

In addition, the Act details certain responsibilities for patients if they are to receive the benefits and protections of this new Act.

Patient Notification
Hospitals are required to post a sign with the following notice:

"You may be eligible for financial assistance under the terms and conditions the Hospital offers to qualified patients. For more information, contact (Hospital financial assistance representative)."

This sign is to be posted conspicuously in the Admission and Registration areas of hospitals. In addition to English, this sign should be in any other language that is the primary language of at least 5 percent of the patients served by a particular hospital annually.

For hospitals that have a Web site, the site must prominently disclose that financial assistance is available at the hospital. The site must also contain a description of the financial assistance application process and a copy of the financial assistance application.

Furthermore, each hospital must make available information regarding financial assistance from the hospital in the form of a brochure, an application for financial assistance, or other written material that is displayed in the hospital admission or registration areas.

Billing Information
The second major component of this legislation involves providing billing information. Hospital bills for services must provide the following information: 1) the date or dates that the health care services were provided to the patient; 2) a brief description of the hospital services; 3) the amount owed for hospital services; 4) hospital contact information for addressing billing inquiries; 5) a statement regarding how uninsured patients may apply for consideration under the hospital's financial assistance policy (on or with each bill sent to an uninsured patient); and, 6) notice that the patient may obtain an itemized bill upon request.

Hospitals are required to implement a process for patients to inquire about a disputed bill. While many hospitals have procedures in place, these should now be communicated in writing and must include the following:

1. A telephone number for billing inquiries and disputes that may include any of the following options

• a toll-free telephone number that the patient may call
• an address to which the patient may write
• a department or identified individual within the hospital to whom the patient may write with appropriate contact information; or,
• a Web site or e-mail address. 

2. A telephone number on all hospital bills and collection notices allowing the patient to inquire about or dispute the bill

In addition, the hospital must return calls made by patients as promptly as possible, but no later than two business days after the call is made. If a billing inquiry involves correspondence from the patient, the hospital must respond within 10 business days of receipt of the patient's correspondence. Hospitals will not face the penalties under the Act if they miss either the two- or the 10-day deadline, provided there is no pattern of practice regarding those missed deadlines.

Collection Activity Against Patients
The third major component of the legislation places limitations on hospitals collecting from patients. Hospitals and their agents are permitted to pursue collection actions against uninsured patients only if the hospital first meets the conditions required under the Act. These conditions include:

1. Giving the uninsured patient the opportunity to assess the accuracy of the bill, apply for financial assistance under the hospital's financial assistance policy, and establish a reasonable payment plan.
2. If the uninsured patient has indicated an inability to pay the full amount in one payment, the hospital must offer the patient a reasonable payment plan.
3. To the extent the hospital provides financial assistance and the circumstances of the uninsured patient suggest the potential for eligibility for charity care, the uninsured patient must be given at least 60 days following the date of discharge or receipt of outpatient care to submit an application for financial assistance.
4. If the uninsured patient has agreed to a reasonable payment plan with the hospital and the patient has failed to make payments in accordance with a reasonable payment plan, the hospital may commence collection activity.
5. If the uninsured patient informs the hospital that he or she has applied for health care coverage under a government-sponsored healthcare program such as Medicare, Medicaid or Kidcare, and there is a reasonable basis to believe the patient will qualify for such program, the hospital may not pursue collection against the patient until the application for government benefits is denied. If the patient has a liability claim in addition to having applied for benefits under a government-funded healthcare program, the Act does not prohibit a hospital from filing a lien under the Health Care Services Lien Act.

A hospital may not refer a bill or a portion thereof to a collection agency or to an attorney for collection action against an insured patient without first offering the patient the opportunity to request a reasonable payment plan for the amount personally owed by the patient. Such an opportunity shall be made available for 30 days following the date of the initial bill. If the patient requests a reasonable payment plan, the hospital must give the patient at least 30 days to agree to payment terms, before commencing collection. No collection agency, law firm or individual may initiate legal action for nonpayment of a hospital bill against a patient without the written approval of an authorized hospital employee, who reasonably believes the conditions for pursuing a collection action under this Act have been met. Therefore, hospitals must revise their collection policy to ensure the obligations under the Act are met.

In addition, hospitals should have a designated official at the hospital who signs off on all matters sent to collection agencies. Furthermore, hospitals now must ensure that any external collection agency, law firm or individual engaged to obtain payment for the benefit of the hospital, agrees in writing to comply with the collection provisions of this Act. Therefore, hospitals that have contracts with collection agencies will need to amend those contracts to include appropriate representations and warranties from the collection agencies as to their compliance with the provisions of the Act.

Finally, hospitals are not permitted to pursue legal action for non-payment of a hospital bill of an uninsured patient who has clearly demonstrated that he or she has neither sufficient income nor assets to meet the financial obligation, provided the patient has complied with the patient's obligations under the Act.

Notification of Out-of-Network Providers
The fourth major provision of the Act involves notifications concerning out-of-network providers. Hospitals must now provide an insured patient with written notice that: 1) the patient may receive separate bills for services provided by health care professionals affiliated with the hospital; 2) if applicable, some hospital staff members may not be participating providers in the same insurance plan as the network of the hospital; 3) if applicable, the patient may have a greater financial responsibility for services provided by those individuals at the hospital that are not under contract with the patient's health care plan; and 4) questions about coverage or benefit plans should be directed to the patient's health care plan and the patient's certificate of coverage.

This provision may require hospitals to modify their admissions process so that these notifications are provided at the time of admission and the time of service in outpatient situations. Revisions to the consent form or providing a patient with a brochure outlining the information at the time of admission can be ways to accomplish the above provision.

Patient Responsibilities
The fifth major provision of the Act limits the protection and benefits of the Act to patients who act reasonably and cooperate in good faith by providing the hospital with all reasonably requested financial and other relevant documentation needed to determine the patient's eligibility for financial assistance. The patient must produce the information and documents requested within 30 days of request.

Enforcement
The Act is to be enforced, including the development of rules for implementation, by the Attorney Generals Office. The Attorney General may conduct investigations deemed necessary regarding possible violations of the Act by hospitals. The Attorney General may issue subpoenas to require hospitals to file a statement or a report or to answer interrogatories, examine hospital personnel who possess knowledge or information related to the violations under oath, and examine records, books, documents, etc. If the Attorney General determines that there is reason to believe that the hospital has violated the Act, the Attorney General may bring an action in the name of the People of the State of Illinois against the hospital. In addition, the Attorney General may seek assessment of civil monetary penalties in any action filed under the Act where a hospital knowingly violates the Act.

For violations involving a pattern of practice of not providing the information to patients under the patient notification section, the billing information section, the billing inquiry section, and the notification of out-of-network provider section, civil monetary penalties shall not exceed $500 per violation. This penalty is for each violation. If the hospital has not developed appropriate protocols, the amount could quickly add up. For violations involving the failure to engage in or refrain from certain activities involving collection actions, the civil monetary penalty shall not exceed $1,000 per violation.

Hospitals are urged to examine the provisions of this legislation and develop appropriate policies and procedures to ensure compliance. For further information, please contact Roy Bossen, Victoria Glidden, or your regular Hinshaw attorney.

This alert has been prepared by Hinshaw & Culbertson LLP to provide information on recent legal developments of interest to our readers. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship.