Illinois HB 1085: How Illinois Therapy Practices Should Prepare Before 2027

When Illinois HB 1085 was signed into law, the initial conversation focused on what the new reimbursement floors would mean for behavioral health practices. If you haven’t read that breakdown yet, start there: Higher Reimbursement Is Coming, But Practices Must Plan to Benefit.

This post picks up where that one left off. Knowing that reimbursement rates are likely to increase is one thing. Knowing what to do with that information, and how to prepare your practice to actually benefit, is another.

What could you be doing now to prepare your practice thoughtfully and strategically?

While some portions of the law become effective in 2027, implementation timing will vary by insurer, plan structure, and renewal cycle. That means the window between now and then isn’t a waiting period. It’s working time. Here are the most important operational and administrative considerations that practice owners should understand now so they can make informed decisions about reimbursement, staffing, compensation structures, and practice systems over time.

Know Your Payer Mix Before Anything Else

Before making assumptions about revenue increases or future compensation decisions, it helps to understand one foundational issue:

Which of your current insurance plans are actually likely to be affected by HB 1085?

Before drawing conclusions about future revenue or making compensation decisions, you need to understand one foundational question: which of your current insurance plans are actually affected by HB 1085?

The law generally applies to Illinois-regulated commercial insurance plans. It does not apply to most self-funded plans governed by the federal Employee Retirement Income Security Act (ERISA), federal employee health plans, Medicare, or Medicare Advantage. It also excludes certain Medicaid managed care plans covering populations enrolled under the Illinois Public Aid Code or the Children’s Health Insurance Program.

For many practices, a significant share of employer-sponsored coverage comes through self-funded ERISA plans that fall outside the law’s reach. Two practices with similar payer panels may see very different financial outcomes depending on the underlying plan structures of their clients.

That’s why payer names alone don’t tell you enough. What matters is the actual plan type behind each claim.

This gives you a realistic foundation for forecasting how HB 1085 may affect your practice and for making decisions with actual numbers rather than assumptions.

If you are unsure how to identify plan types, your biller, clearinghouse reports, or EHR reporting may help. You can also request plan information directly from insurers or you can  download a free copy of “Is this Insurance Plan Covered by HB1085?”

Review Your Current Contracted Rates Now

One mistake many practice owners may make is waiting until 2027 to begin reviewing reimbursement data.

Waiting until 2027 to pull reimbursement data is a mistake. By then, changes will already be in motion and you’ll have no clean baseline to compare against.

Pull your fee schedules and reimbursement records now, before implementation begins. 

Organized data allows you to:

• Compare future rate changes accurately
• Identify discrepancies
• Verify reimbursement updates when they occur
• Estimate how changes may affect your practice financially

At minimum, gather:

• Current contracted rates by payer and CPT code
• Actual reimbursement received
• Volume by payer and CPT code
• Percentage of revenue by payer
• Average reimbursement per DOS

Because implementation timing will vary across insurers and plans, having this baseline in place makes it much easier to identify when changes occur, and when they haven’t yet.

Understand the Credentialing Timeline Changes

HB 1085 includes provisions related to credentialing timelines and retroactive reimbursement. For growing practices, these changes could affect onboarding timelines and cash flow management.

Many practices currently manage credentialing through informal email chains or shared staff knowledge. A more centralized tracking process, even a simple spreadsheet, can reduce confusion and improve follow-through.

Verify Your Directory Listings and Create an Internal Notification Process

HB 1085 addresses provider directory accuracy and network accessibility concerns. Under portions of the law, providers may be required to notify insurers when they stop accepting new patients for extended periods of time. 

For most practices, this is a process question more than a compliance emergency. Start by asking:

• Who tracks whether clinicians are accepting new patients? 
• How is intake status communicated internally? 
• Who would notify insurers if required? 
• Is this tracked consistently across locations or clinicians? 

This may be especially important for larger group practices where clinician availability changes frequently.

Even outside of HB 1085, inaccurate directory information can create referral problems, frustrated prospective clients, and administrative confusion.

HB 1085 May Create an Opportunity to Re-evaluate Compensation Structure

When reimbursement rates increase for some portion of your practice’s claims, you’ll face decisions about how those increases will be distributed.

In practices already operating with high percentage-based compensation models and small or nonexistent profit margins, they may find that maintaining existing splits leaves margins thin and operational capacity constrained, even if reimbursement improves.

HB 1085 may create a rare opportunity to:

• improve or stabilize margins,
• strengthen operational systems,
• Reduce owner overextension and build in appropriate owner compensation
• Share reimbursement improvements with clinicians in a way that supports the long-term health of the practice

The key is to model the numbers carefully before making assumptions or commitments.

A Simple Example

Assume a practice currently pays master’s-level clinicians 65% of collected revenue for CPT 90837, and insurance reimburses $130 per session.

Under the current model:

Under HB 1085, reimbursement for master’s-level clinicians for CPT 90837 is calculated at 75% of the doctoral-level reimbursement floor. Using current Medicare rates as the baseline, estimated reimbursement per session for master’s-level therapists would increase to approximately $177.48.

If the practice maintained its current 65% compensation structure:

Therapist compensation would increase by approximately $31 per session. Revenue retained by the practice would increase by approximately $16.62 per session.

The retained revenue ($16.62) still needs to fund administrative payroll, software, billing, insurance, marketing, owner compensation, reserves, and profit. But this path doesn’t account for the fact that increases in therapist compensation raise payroll-related employer expenses: taxes, retirement matching, workers compensation, and other compensation-linked costs.

Critically, not all dates of service will be affected by HB 1085. Implementation timing will vary by payer and plan type. The actual impact on your practice depends entirely on your payer mix. Check with the Illinois Department of Insurance or request plan information directly from your insurers.

These numbers illustrate why reimbursement increases alone may not automatically stabilize a practice. How you structure compensation in response matters as much as the rate change itself.

Implications for Internal Practice Dynamics

Not all clinicians within a practice are likely to benefit equally from reimbursement increases.

Therapists carry different payer mixes; fully insured commercial plans, self-funded ERISA plans, Medicare, private pay, and out-of-network reimbursement. Two clinicians with similar schedules and caseloads may generate meaningfully different reimbursement totals depending on how those mixes break down.

Over time, this may create new compensation disparities inside practices. Some clinicians may prefer to increase the percentage of commercially insured clients on their caseload if those sessions generate substantially higher reimbursement and compensation.

For practice owners, this is another reason to evaluate whether purely percentage-based compensation models continue to support fair wages across clinicians, operational stability, and sustainable margins. Some practices may eventually move toward compensation models that reduce how much individual income fluctuates based on payer mix alone.

If You Supervise Clinicians, Review Your Billing Process Now

Practices that employ interns, unlicensed associates, post-docs, or other clinicians who require supervision should review their billing structure carefully. HB 1085 appears to expand certain behavioral health coverage provisions involving supervised clinicians and trainees, and how those claims are submitted will matter.

Practices should confirm:

• How supervised services are billed
• Which supervising clinician’s NPI is attached to those claims
• Whether documentation requirements are being followed consistently
• Whether insurers maintain plan-specific restrictions related to supervising or supervised clinicians

In many practices, billing procedures for supervised clinicians evolve informally. Different clinicians may be documented differently, supervising NPIs may not be attached consistently, or billing staff may rely on workarounds that were never formally reviewed.

Ask your biller or EHR vendor directly:

• How are claims for supervised clinicians currently submitted?
• Which clinician’s NPI is attached to those claims?
• Are all supervised clinicians being billed the same way?
• Are documentation and supervision notes consistent across clinicians?
• Have your billing procedures been reviewed recently for payer-specific requirements?

Do not assume that because claims were paid historically, the process is necessarily optimized or fully compliant with evolving standards.

How Illinois Therapy Practices Can Prepare for HB 1085 Before 2027

The practices that navigate HB 1085 most effectively will be the ones that understand their payer mix, know their numbers, and have the operational systems in place to make thoughtful decisions when the time comes.

For many owners, that’s the real opportunity here: using this window of time to strengthen the underlying business systems of your practice, regardless of how reimbursement ultimately changes.

Here’s a practical starting point:

• Identify fully insured commercial plans vs. self-funded ERISA plans
• Audit your payer mix by actual dates of service
• Pull and organize your current fee schedules
• Create baseline reimbursement reports
• Model the likely financial impact on your practice
• Review supervised clinician billing workflows
• Create or improve credentialing tracking systems
• Audit provider directory listings
• Develop an internal intake-status notification process
• Re-evaluate clinician compensation structures and practice margins
• Begin discussing operational readiness with your leadership team or advisors

Frequently Asked Questions

Want Help Thinking Through Your Practice’s HB 1085 Readiness?

HB 1085 isn’t only a reimbursement issue. It’s an operations issue, a compensation issue, and for many practice owners, a leadership issue.

If you’re ready to go deeper and work through what this law means for your specific practice — your payer mix, your compensation structure, your margins — the HB 1085 Decision Lab opens this July and it is designed for exactly that. It’s a small-group intensive where we model the numbers together and build an action plan you can actually use.

Schedule a complimentary discovery call and we can talk through where your practice stands.