Betty La France found a way to deal with a doctor who demanded she pay her entire bill upfront because the state could not be counted on to pay insurance reimbursement: She stopped going.
“I’m doing my job. I’m paying my bills. But the state is not doing their job, and they’re certainly not paying their bills,” said La France, a Northern Illinois University communications professor who lives in Sycamore. Her doctor, she added, “is irritated because she’s not getting paid, and I’m irritated because she’s trying to squeeze blood out of a turnip.”
While Illinois’ leaders waged a two-year budget battle, the state fell years behind in reimbursing medical providers for their services, skimping physicians and dentists even if their patients were up-to-date with their premiums.
At public universities, officials and workers say some doctors and dentists, particularly those outside an insurance plan’s provider network, increasingly asked patients to pick up the state’s tab during the impasse. Some physicians, like La France’s, required full payment in advance. Some sent outstanding bills directly to debt collection agencies. And some simply refused to accept insurance from state employees.
To be sure, medical providers felt the pain too. Advocate Health Care, the state’s largest hospital network, imposed a hiring freeze in the spring, citing the budget impasse. Company executives also pointed to the state’s insurance payment delays and low reimbursement rates in announcing $200 million in cuts in May.
The state now faces a $5 billion backlog of unpaid group health insurance claims as of June 30, according to the Governor’s Office of Management and Budget. The July 6 budget agreement sets aside funding to cover new insurance claims, but relies heavily upon different forms of borrowing to try to clear the deficit. Worse, the longer health insurance bills sit unpaid, the more interest accrues, ultimately costing the state hundreds of millions more.
All told, the state is grappling with roughly $15 billion in overdue bills, a tally that has nearly tripled since Gov. Bruce Rauner took office in 2015.
During the impasse, campuses laid off hundreds of workers, imposed steep program cuts and delayed maintenance to cope with the prolonged drought in state support.
University workers and officials say the disruption to their health insurance coverage on top of that took a heavy toll. The squeeze on employees through insurance costs could ultimately hurt a university’s ability to attract new talent.
That’s because affordable health insurance is an important incentive for workers taking a lower salary than they might earn in the private sector, according to higher education advocates.
“Waiting a year or two for reimbursement for medical and dental expenses is simply inexcusable,” said Thomas Harnisch, director of state relations and policy analysis for the American Association of State Colleges and Universities in Washington, D.C. “This is a great way to shed talent at the state universities, and it’s creating an insurmountable barrier for many lower-income employees and their families seeking care.”
Caught in the maelstrom are medical providers contracted with the State Employees Group Insurance Program.
State university faculty and staff employees who can participate in the State Universities Retirement System can enroll in the group insurance program, according to state law. Employees, retirees and their dependents are eligible for coverage.
The state’s Central Management Services, which operates the group insurance program, already was at least eight months late in reimbursing providers because of consistent underfunding of the program, according to department memos.
But CMS ran out of state funds to pay providers in September 2015 because no budgets were in place for fiscal years 2016 and 2017.
At the time, CMS officials said HMO plans were continuing to pay claims to health care providers but that the department was working with self-insured health plan administrators to ensure physicians did not charge patients upfront for services, according to a memo from September 2015.
Patients who were asked to pay the full amount were encouraged to contact insurance plan administrators, who would then try to work out a resolution with physicians, according to the memo.
“If the provider continues to require upfront payment, you will be reimbursed by the provider, plus applicable interest, once state funding has been released to the provider,” the CMS memo stated.
Some 22 months later, the state faces a ballooning pile of medical insurance bills that earn 9 or 12 percent interest for every year they sit unpaid.
HealthLink Open Access Plan, a subsidiary of Anthem, is owed more than $778 million plus another $56 million in interest as of June, for bills dating to Aug. 30, 2015, according to the governor’s budget office and Central Management Services.
Cigna is owed almost $857 million in claims and interest. Network providers have not been paid since Sept. 4, 2015, while out-of-network providers have not been paid since June 19, 2015.
Coventry is owed about $278 million, and Delta Dental awaits more than $169 million in payments as old as two years.
“Nearly all of Illinois’ in-network physicians and health-care providers continue to provide services to state employees,” Richard Bossert, a spokesman for CMS, said in an email. “In instances where issues have arisen, our benefits team has worked aggressively to maintain the delivery of services and supplies with great success.”
Memorial Health System in Springfield, where 1 in 4 patients is covered under the group insurance program, is owed about $120.5 million in reimbursements, a “devastating” amount, its chief executive, Edgar J. Curtis, said.
Curtis said providers are not asking patients to pay anything more than their copays, yet patients are scared they could be denied care. So far, the system can afford to absorb the expense but it is particularly tough on individual practices.
“For the physicians, this is a huge burden because they still have to pay their employees,” Curtis said.
In downstate Urbana-Champaign and Springfield, where dentists are typically out-of-network providers, most University of Illinois employees are paying their full tabs upfront and waiting for the state to reimburse them, according to Thomas Hardy, a university spokesman.
“The delay is now so long that we routinely hear from employees that they are owed large sums — or that they are putting off dental work entirely — and they feel like they have no dental insurance,” Hardy said. “I’ve spoken with an employee who is owed $11,000 and one who is owed $6,000.”
Joyce Coleman, associate vice president of human resources at Governors State University in University Park, said officials have repeatedly intervened on behalf of employees whose bills have been sent to collection agencies. Sometimes it has worked, sometimes it hasn’t, Coleman said. In other cases, they have encouraged employees to work out payment plans with their providers until the state sends money.
“We have tried to resolve these issues and work with CMS to express the urgency of the claim payments because the providers are threatening to sue the employees,” Coleman said. “You have a population that doesn’t make a lot of money anyway. On top of that, here are collections agencies calling to say, ‘You haven’t paid anything.'”
Thomas Griffin, who runs the language learning lab at Northeastern, had a $210 bill from his longtime primary care doctor sent to a debt collector before his physician reconsidered and recalled it.
Griffin, 50, said he caught a break in that situation, but he switched to an HMO this month in hopes his coverage will be more consistent.
“It’s extremely frustrating because what it does is cause me to delay medical treatments; it causes me to incur more debt because the copays and deductibles are expensive,” Griffin said. “I’m legally blind, so this insurance is important to keep me in the workforce and to keep me off of benefit entitlements.”
The health care bill backlog has budged somewhat since the budget passage.
Comptroller Susana Mendoza released $740 million to Medicaid providers Wednesday, a move that helps meet a federal court order that the state pay all new claims starting this month and another $1 billion in overdue vouchers over the next year. Mendoza said the payment will reduce Medicaid backlog by 18 percent.
Payments to some group insurance providers whittled several weeks’ worth of the oldest claims. Still, most of the largest companies are owed more than 18 months of reimbursements.
Anders Lindall, spokesman for American Federation of State County and Municipal Employees Council 31, the largest state employee union, said that even with a spending plan in place, it’s too early to say how much the landscape for group insurance will change.
“Full funding for the health plan in the current year should prevent new claims from piling up,” Lindall said. “We certainly hope that will mean providers who wouldn’t accept the state health plan, or who required plan participants to pay upfront, will revisit those policies, but I think only time will tell.”
Some say potential employees are doubting whether Illinois is the best place to establish their careers.
Kimberly Archer, a music professor at Southern Illinois University at Edwardsville and the head of the faculty union there, can see problems arising.
Younger faculty will ask, “‘Why would I come here for $45,000 with health insurance that doesn’t work and second-tier benefits?'” she said. “I think we haven’t begun to see the long-term damage of this.”