Pritzker’s health insurance reforms targeting ‘utilization management’ clear House

[April 20, 2024]  By PETER HANCOCK
Capitol News Illinois
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SPRINGFIELD – Gov. JB Pritzker celebrated a partial legislative victory Thursday night when the House passed his initiative to end some practices health insurance companies use to control the amount and cost of health care services individual patients receive.

The “Healthcare Protection Act,” House Bill 5395, cleared the House on a bipartisan vote of 81-25. It next moves to the Senate where Pritzker predicted it will pass easily.

“This bill will save lives and lower health care costs for millions of Illinoisans,” he said at a news conference Thursday night celebrating the House vote. “Together, we will get this bill through the Senate and land it on my desk where I’ll proudly sign it, because the people of Illinois deserve reliable and safe access to the quality care that they deserve.”

Pritzker first outlined the initiative during his State of the State address in February. It targets many of the “utilization management” practices insurance companies use to hold down costs by either denying claims or steering patients toward lower-cost options.

For example, the bill would require health insurers to use “generally accepted standards of care” when deciding whether to cover treatments recommended by a doctor.

It also bans a practice known as step therapy that is used in some prescription drug plans. That, practice, sometimes referred to as “fail first” therapy, requires patients to demonstrate that a lower-cost drug that is part of an insurance company’s preferred drug list is ineffective before the company will approve paying for a different drug prescribed by the patient’s doctor.

It also prohibits insurance companies from requiring prior authorization before covering the cost of in-patient psychiatric treatment. In circumstances where prior authorization is necessary, companies would be required to publicly post it on their websites.

In addition to those restrictions, the bill would require insurance companies to conduct internal audits of their own provider networks every 90 days. Those audits would ensure that the providers listed still participate in the network and that the network has enough providers in various practice areas to meet the needs of patients.

The bill also calls for banning the sale in Illinois of short-term, limited duration insurance policies that do not meet the minimum standards of the federal Affordable Care Act.

And it would give the Illinois Department of Insurance authority to review and either approve or disapprove rate hikes in large-group insurance plans, similar to the rate review authority the agency was given last year over small-group plans.

“For far too long, insurance companies, and not doctors, have been free to determine what treatment options patients should have and how quickly they can receive it,” Pritzker said. “With this bill, we're putting power back in the hands of doctors and patients.”

The bill would apply to traditional types of employer-based health plans, known as “fully insured” plans, in which the employer contracts with a third-party insurance company to provide coverage. It would also apply to insurance provided under the state’s Medicaid program as well as plans that cover state and local government employees and local school districts.

State Rep. Anna Moeller (right), D-Elgin, speaks on the House floor during debate on her bill to enact several reforms to the state’s insurance industry. The bill is an initiative of Gov. JB Pritzker, who is seated behind Moeller. The measure passed with bipartisan support. (Capitol News Illinois photo by Jerry Nowicki)

The rules would not, however, apply to self-insured plans typically offered by large businesses and labor unions because those are regulated under the federal Employee Retirement Income and Security Act of 1974, or ERISA.

“We are not allowed to regulate ERISA plans, the self-funded plans that are regulated by the federal government,” Rep. Anna Moeller, D-Elgin, the bill’s lead House sponsor, said during floor debate.

The bill also would not apply to the state-funded health care programs for noncitizens – Health Benefits for Immigrant Adults and Health Benefits for Immigrant Seniors – which provide benefits similar to those under Medicaid but which are not strictly part of the Medicaid program.

Emily Miller, a senior advisor in Pritzker’s office, said during a committee hearing earlier Thursday that details of the bill were the subject of intense negotiations leading up to the vote in the House. She conceded, though, that passage of the bill would cost the state roughly $40 million to $50 million in the form of higher Medicaid and state employee health plan costs, money that was not included in Pritzker’s budget proposal.

Rep. C.D. Davidsmeyer, R-Jacksonville, noted that those costs will be in addition to the substantial cost increases the state is already facing in its state employee health plan.

He pointed to a recent report presented to the Commission on Government Forecasting and Accountability – an oversight panel that he cochairs – projecting a 16.5 percent increase in state employee health care costs next year, or roughly $533 million in additional liabilities to the plan.

“Ultimately, I think this is going to be a large increase to the state of Illinois,” he said of the insurance reform bill. “I think it's going to be increased costs to taxpayers because the majority of our of our taxpayers will not be covered by this.”

Thursday’s vote came as the House worked to meet a Friday deadline for most of its bills to be sent to the Senate. The Senate’s deadline for passing its bills to the House was a week earlier, April 12.

Both chambers are scheduled to be in recess next week, April 22-26, and return Tuesday, April 30, for the final stretch of the spring session.

Pritzker said during his news conference Thursday that he will spend next week traveling the state to promote the health insurance reform plan.

“I'll be talking with doctors and patients and consumers with one message,” he said. “This bill will save lives and lower health care costs for millions of Illinoisans.”

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of newspapers, radio and TV stations statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.