COSTS NOT COVERED BY WORK COMP AIL EMPLOYERS

CHICAGO-Medical care providers in Illinois who bill injured workers for costs not covered by workers compensation insurance are causing headaches for employers.

Illinois workers injured on the job can be held liable for some medical treatment fees that nearly every other state considers the employer's sole responsibility.

That is because Illinois is one of very few states that do not ban "balance billing," which allows medical care providers to bill injured workers for payments in excess of the fee reimbursed by the workers comp insurer or self-insurer. A few providers even will sue to collect the balances, driving workers to their own lawyers for help and protection from creditors.

Such action often creates a great deal of tension between injured workers and their employers, who they thought would be covering all medical expenses from worker-selected doctors.

Delaware recently joined the majority of states that long have banned the practice, while Utah allows it to promote managed care in workers comp. Illinois is the only state in which balance billing causes significant problems, one expert says. However, interstate billing problems are emerging in the Pacific Northwest.

"It's at cross-purposes with the tenets of the workers compensation system," said Frederick P. McGarvey, regional vp in Skokie, Ill., with the American Insurance Assn.

Balance billing also thwarts insurers' and employers' efforts to control health care costs, which Illinois does not regulate.

"It undermines an insurer's ability to use managed care utilization review tools that are now available and have been effective" in controlling general health care costs, Mr. McGarvey said.

"In most states, the worker would not pay any portion of his workers compensation medical costs, and the employer would pay only what is reasonable and customary, as determined by the state workers compensation agency," said Douglas F. Stevenson, executive director of the National Council of Self-Insurers in Chicago.

No statistics are available on how many workers are balance-billed or for what amounts, though relatively few providers engage in the practice, and defense attorneys say they work hard to halt collections. Unions, employers and insurers, however, have been lobbying lawmakers jointly for years to ban it (see story, page 37).

The main problem is an individual worker's credit rating can be damaged, at least temporarily, for which they employers and the system are blamed.

"Balance billing can result in additional litigation and add cost by undermining common medical cost containment strategies," researchers from the Workers Compensation Research Institute in Cambridge, Mass., concluded last year in studying the Illinois system (BI, Dec. 2, 1996).

However, the Illinois State Medical Society defends balance billing because doctors oppose interference in the provision of care and reimbursement for it. The society also says a ban effectively would let insurers impose a reasonable and customary "fee schedule" on doctors that may not reflect the actual cost of care.

"It's not a general crisis, but for the affected worker it can be a big financial crisis," said Roberta Lynch, deputy director of Illinois Council 31 of the American Federation of State, County & Municipal Employees, which represents 65,000 employees in Illinois.

The crisis begins with an injured employee receiving unexpected bills, ranging from a few dollars to thousands of dollars. It can lead to repeated letters from collection agencies that are "very threatening," she said. Reports of the unpaid bill to credit bureaus may prevent the worker from getting a loan or buying a home. A few providers may even sue to collect.

"It is probably one of the most emotionally distressing issues in the workers compensation system," said David Menchetti, an employee attorney with Cullen, Haskins, Nicholson & Menchetti P.C. in Chicago. "Most of my clients work hard to have a good credit rating. Something like this that is beyond their control is very disturbing."

"It is one of the issues that will bring them straight to an attorney," he added.

"It's a real problem. It's not just a consensus-building issue (among labor, employers and insurers) or a red herring," Ms. Lynch said.

Consider the case of a Belleville, Ill.-area boiler maker in his late 30s who refused, on principle, to pay a $66 bill from a health care provider for work-related injury treatment not covered by a workers comp insurer. The provider turned the bill over to a collection agency, which passed it on to a credit reporting agency. Even though the payment ultimately was resolved by the provider and the workers comp insurer-as are most such cases-the employee still has that black mark on his credit record.

Balance billing is "a fairly extensive problem" for Illinois workers, said Sean Stott, legislative director for the Springfield-based Illinois AFL-CIO, which has 1.25 million members.

"It causes a lot of problems for employees," said John W. Hallock Jr., chairman of the Illinois Industrial Commission, which oversees the state's workers comp system.

But balance billing also causes problems for employers and insurers.

"Employers view it as a major hurdle in dealing with their injured employees," said Todd Maisch, director of government affairs for the Illinois State Chamber of Commerce in Springfield.

Ideally, employers want valuable workers who have been injured on the job to receive proper medical treatment so they can heal quickly and return to work, said Boro Reljic, vp-government affairs for the Illinois Manufacturers Assn. in Springfield. That approach also minimizes an injured worker's wage-loss benefits, a major component of an employer's workers comp costs.

"Some employers and insurers pay the billed amount to avoid the worker being billed," the WCRI concluded in its recent analysis of the state's workers comp system.

The Illinois Department of Insurance, which regulates about 85% of the employees insured for workers comp, strongly encourages workers comp insurers under its jurisdiction to pay a worker's balance billed claims.

The alternative is for the insurer to face the possibility of being cited for "an unfair claims practice," said Richard D. Rogers, deputy director of the Consumer Division.

"To use an injured employee as a pawn in such disputes is at best unfair and at worst, unconscionable," Mr. Rogers said in a statement mailed to insurers.

The threat has been effective, though no sanctions have been issued, he said. As a result, balance billing has not become a significant problem for the department, he said.

Workers comp insurers appreciate state regulators' view of the issue, though "it's difficult for us when we try to keep costs reasonable and premiums down," said the AIA's Mr. McGarvey.

The Industrial Commission, which oversees adjudication of both insured and self-insured workers comp claims, is less effective and usually does not provide prompt relief for workers facing threatening letters.

Industrial Commission rules give adjudicators authority "to determine the reasonableness and fix the amount of any fee," though adjudicators historically have exercised it primarily in contested cases, which can take several months to settle. In fiscal 1995, about 85% of all contested cases were settled an average of 1.6 years after the claims were filed, the Commission said.

In fact, an employee's attorney cannot request an emergency hearing to address the issue if the employee is receiving benefits or has returned to work.

Compounding the commission's lack of effectiveness is the fact that the commission has no power to enforce an adjudicator's fee determination. Only a civil court judge who hears a provider-filed suit can elevate the adjudicator's decision to a civil judgment.

Utah is one state that recognizes balance billing as a tool to encourage injured workers to seek managed medical care.

It permits balance billing of an injured worker if the worker initially visits a provider outside the insurer's managed care network, but only for the first visit.

Elsewhere, balance billing is causing conflict in the Pacific Northwest, where the contiguous states of Washington, Oregon and Idaho each prohibit balance billing.

Nevertheless, an Idaho hospital is arguing before a Washington state administrative appeals court that it is not covered by Washington's fee schedule and therefore may balance-bill Washington state workers comp claimants who seek care at the Idaho facility.

Also, Delaware banned balance billing, effective Jan. 1, due to "strong double backing" by labor and insurers, said Allen Hedgecock, director of the Central Delaware Chamber of Commerce in Dover, Del.

Employers or workers with balance billing problems may be able to get help from the following entities, suggests the Illinois Industrial Commission:

Problems with conventionally insured programs can call the Illinois Department of Insurance. Contact Mark Smith in the department's Consumer Services Division office in Springfield at 217-782-4515.

Problems with self-insured programs can be discussed with analysts from the commission's Self-Insurance Division. Call the division's Springfield office at 217-785-7084, or its Chicago office at 312-814-6064.