New Public Act Further Limits the Time Insurance Companies Can Demand Recoupments
In 2011, the ICS initiated and passed legislation that prohibited insurance companies from requesting or withholding from future payments recoupment demands 18 months or more after the original payment on the claim was made. Before the new law, health plans had no limit on how far they could go back when making refund demands.
In fact, some ICS members received insurance company recoupment demands for claims going back several years after the insurance company had paid the claims, and some of these demands exceeded a million dollars. This sometimes occurred even after insurance companies had continued to pay claims for years without question. In order to protect our members, the ICS passed legislation so that there would be a time limit after which recoupments could no longer be requested.
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In 2010, the ICS sought as short a time frame as possible within which to limit recoupments. However, in order to overcome strong insurance industry opposition and succeed with the bill, we negotiated the 18-month time frame. However, since that time, many health care providers have deemed the 18-month timeframe to be too long for a recoupment demand, and that fairness dictates that providers can have financial peace of mind sooner than 18 months from payment.
Therefore, during this past 2021 legislative session, the National Association of Social Workers-Illinois Chapter introduced SB 1974 (Fine/Morgan) that would change the recoupment limitation amount from 18 months to 12 months. This legislation would prohibit insurance companies from requesting or withholding from future payments recoupment demands 12 months or more after the original payment on the claim was made. The ICS supported this legislation during the legislative session.
SB 1974, as amended, passed both chambers unanimously. The Governor has now signed the bill and it is now Public Act 102-0632.
The new law will become effective January 1, 2022. Therefore, beginning on that date an insurance company or other payer cannot request or withhold any amounts after 12 months from the original payment (in other words, the 12-month clock starts running on the date of payment). On or after January 1, if the insurance company seeks to recoup amounts after the expiration of 12 months from original payment, you should assert the 12-month rule to reduce the recoupment amount requested.
For more information on recoupment demand limitations, please click here.
