AIA: New Ill. WC Law a Mix of Costly Benefit Mandates, Unproven Reforms

The American Insurance Association (AIA) has called Illinois’ new workers’ compensation law an assortment of benefit increases and unproven reforms that may ultimately only inflate costs.

“The few provisions of the new law intended to rein in costs are outweighed by the many benefit increases that will continue to put cost pressures on the state’s workers’ compensation insurance market,” said Steve Schneider, AIA vice president, Midwest Region.

“The fee schedule is not based on the predictable Medicare-based schedule, the ban on balance billing contains loopholes, and, unlike in 38 other states, the American Medical Association’s impairment guidelines will not be used to reduce subjectivity in making injury determinations,” explained Schneider.

House Bill 2137 was signed this week by Gov. Rod Blagojevich (D) and was the result of intense, and at times acrimonious, negotiations between employers and organized labor.

Key provisions include:

* A medical fee schedule based on provider charges set at 90 percent of the 80th percentile of charges and fees, rather than the more proven Medicare-based fee schedule;
* A prohibition on balance billing, which is convoluted and may not end the practice of workers getting unduly hounded for payment by medical providers;
* Increased data reporting to the National Council on Compensation Insurance, which will be required to annually report on both paid and incurred losses, as well as medical payments and charges for each of the last 10 years;
* Utilization review to determine the appropriateness of both the level and quality of care;
* An increase in the maximum weekly benefits for wage differential cases for injuries sustained on or after Feb. 1, 2006, to 100 percent of the standard average weekly wage, and an increase in the minimum weekly benefits to 66.67 percent of the Illinois or federal minimum wage;
* Cost of living increases and a doubling of the death benefit to $500,000; and
* Creation of a fraud and insurance non-compliance unit within the Division of Insurance that is required to investigate an allegation of fraud against an employer or employee.

“What we do know is the benefit increases are real and immediate while only time will tell if the cost savings trumpeted by the administration will actually materialize. The best way to characterize this new law right now is a shade of gray,” added Schneider.