A federal court has dismissed a lawsuit challenging an Illinois law that bars hospital-based physicians from charging extra for out-of-network services. Pathologists behind the lawsuit will not appeal the decision, have dropped a companion lawsuit in state court and will now lobby to change the law, their lawyer says.
The new Illinois statute, enacted in June, applies only to radiologists, anesthesiologists, pathologists, neonatologists and emergency physicians -- and not to surgeons or other physicians. But Thomas J. Pliura, MD, an Illinois-based attorney who has been fighting insurers' efforts against out-of-network status, warns the law could be a step toward a broader law against surgery centers. "Our worry is for surgeons and everyone else," he says.
Ron Champagne, MD, a Galesburg, Ill.-based pathologist who was a plaintiff in the case, says the Illinois law involves good intentions gone awry. "The intent was to try to remove patients from being put in the middle of billing issues," he says. But the result is, the onus shifts from insurers having to pay more to hospital-based physicians getting paid less, he says.
Because insurers tend to underpay for in-network pathology services, pathologists sometimes refuse to directly contract with an insurer so that they can charge reasonable rates, says Dr. Champagne. Before the law, insurers were forced to pay higher rates or else pass them on to patients in the form of higher out-of-pocket charges. But Illinois legislators decided it was unfair to charge patients extra for hospital-based services because they often are not even aware of these services and thus have no choice in the matter.
Under the new law, hospital-based physicians have to accept the insurer's low rates or enter arbitration on a per-bill basis, says Dr. Champagne. This isn't a viable option, he says, because each separate pathology bill is so low that the cost of arbitration could exceed the disputed amount.
Illinois pathologists' federal and state lawsuits claimed the law unfairly singled out certain hospital-based specialists while not affecting surgeons and internists, or even some hospital-based specialists like hospitalists. The suits also alleged the law harmed the physicians' contractual rights. But the federal judge did not recognize these claims and dismissed the lawsuit.
Anne Owings Ford, an attorney for the pathologists, says her clients decided not to appeal because the legal fees to go forward would be substantial, and other hospital-based specialists were not helping to underwrite the costs. Meanwhile, Illinois anesthesiologists and the state medical society have already been focusing on legislative efforts to change the new law. "It seemed that it would make more sense to work through the legislature instead of going further through the litigation process," Ms. Ford says.
Leigh Page
