Effective April 1, 2009, the Illinois Hospital Uninsured Patient Discount Act (Act) will require hospitals to give discounted medical care to eligible uninsured Illinois residents. Amendment of Charity Care Policies and collection procedures may be needed to implement the obligations imposed upon hospitals under the Act.

This Act does not change how hospitals determine and account for charity care. To the extent a patient eligible for a discount under the Act is also eligible for financial assistance under the hospital’s charity program, the adjusted charges may be considered charity charges. Hospitals should review their charity policies within the context of the uninsured discount required under the Act to determine whether the discount may be adjusted to charity.

Key components of the law include: (1) definition of eligible uninsured patients; (2) definition of eligible health care services; (3) definition of the discount and collection cap; (4) hospital obligations; (5) patient responsibilities to receive discounted care; and (6) enforcement.

Eligible Uninsured Patient

• Must be an Illinois resident. The patient must live in Illinois and intend to remain living in Illinois indefinitely. A patient who relocates to Illinois for the sole purpose of receiving health care does not satisfy the residency requirement. Verification of residency may be established with any one of the following documents:

1. An Income Verification Document;
2. Valid state-issued identification card;
3. Recent residential utility bill;
4. Lease agreement;
5. Vehicle registration card;
6. Voter registration card;
7. Mail addressed to patient at an Illinois address from a government or other credible source;
8. Verification of residency presented by a family member who states the patient resides at the same address;
9. Letter from a homeless shelter or similar facility verifying the patient resides at the facility.

• Must have no insurance coverage. The patient is not covered under any health benefit including a high deductible plan, workers’ compensation, accident liability insurance or any third party liability.
• Must be financially eligible. The gross family income from all earnings and cash benefits including distributions from pension and retirement plans, less payments for child support, cannot exceed 600 percent of the federal poverty income guidelines in urban areas or 300 percent at Critical Access Hospitals or in rural areas. Funds distributed from a pension or retirement account constitute income for purposes of determining financial eligibility.
  

Eligible Health Care Services

• Must be hospital services. The discount does not apply to physician services.
• Must be medically necessary services. The medical services must be covered by Medicare for patients presenting with the same condition. The Act does not apply to social and vocational services.
• Must exceed $300. Total charges must exceed $300 in any one inpatient admission or outpatient encounter.

Discount and Collection Cap

• Discount. Billed charges must be discounted to 135 percent of the hospital’s cost to charge ratio from its most recently filed Medicare Cost Report. Hospitals were required to file a copy of Worksheet C from their most recently filed Medicare Cost Report with the Office of the Attorney General by February 20, 2009. Thereafter, hospitals must file the Report annually within 30 days of filing their Medicare Cost Report with the hospital’s fiscal intermediary.
• Collection cap. A patient eligible for discounted hospital charges qualifies for a collection cap, if the patient does not have assets exceeding a value of 600 percent of the federal poverty income guidelines in urban areas or 300 percent at Critical Access Hospitals or in rural areas. The maximum amount the hospital may collect from the patient in a 12-month period is 25 percent of the patient’s gross family income. The 12-month time period begins on the first date of eligible services. Assets exempt from consideration in determining eligibility for the collection cap include the primary residence, funds held in pension and retirement plans, and the personal property exempt from collection under 735 ILCS 5/12-1001.
  

Hospital Obligations

• Opportunity to apply for discount. Hospitals must give uninsured patients at least 60 days from the date of discharge or date of service to apply for the discount. Hospitals may require applicants to provide verification of family income and assets.

1. Family income documentation shall include one of the following documents: most recent tax return; most recent W-2 form and 1099 forms; two most recent pay stubs; written income verification from employer paying wages in cash; or one other reasonable form of third-party income verification.
2. Asset verification may include statements from financial institutions or other third-party documents verifying the value of assets.
3. Hospitals may require patients to certify that the information submitted in the application is true. The application may state that any discount granted will be forfeited if the information provided is false.

• Notification. Every hospital bill must include a prominent statement on or mailed with it, which provides information on how uninsured patients may apply for financial assistance and which advises that an uninsured discount is available to patients who meet certain income requirements.

Patient Obligations

• Cooperation. A hospital’s obligations under the Act cease if the patient fails to apply for coverage under public programs or to provide acceptable income or asset documentation within 30 days of the hospital’s request.
• Disclosure. An uninsured patient eligible for the collection cap must inform the hospital that he or she received prior services from the hospital eligible for the discount to extend the collection cap to subsequent services.
  

Enforcement

• Attorney General. The Illinois Attorney General is responsible for administering the Act and enforcing compliance, including the development of rules necessary for implementation.
• Protection. The law cannot be used by private insurers to discount hospital charges.
• Fair Patient Billing Act. The law does not change any of the obligations required under the Fair Patient Billing Act, including the obligation to give a patient requesting a reasonable payment plan at least 30 days to agree to payment terms.

Hospitals are urged to examine the Act’s provisions and to develop appropriate policies and procedures to ensure compliance.

For further information, please contact Victoria R. 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.