Employee Benefits-Government Issues Regulations On New Claims Review Procedures
The Affordable Care Act provides that group health care plans must provide an internal and external review procedure for benefit claims. This requirement builds on the claims procedure currently required by ERISA. It applies, in any plan year starting on or after September 23, 2010, to any group health care plan, other than a plan which is "gandfathered" (generally defined as being in existence on March 23, 2010 and not being changed since that date). A group health care plan to which the new claims procedure rules apply is referred to as a "covered health care plan". The Departments of Health and Human Services, Labor, and the Treasury have now jointly issued final, interim regulations which implement the new claims procedure rules. Here is a summary of what the new regulations say.
The new regulations give a participant in a covered health care plan the right to appeal any decision, including a benefit claim denial or rescission, made by the plan. More specifically, the new regulations give a participant:
--the right to appeal plan decisions through the plan's internal procedure; and
--for the first time, the right to appeal plan decisions to an outside, independent decision-maker.
These internal and external appeals procedures must be clearly defined, impartial, and designed to ensure that, when health care is needed and covered, the participant will have it.
A covered group health care plan must comply with all the requirements applicable to group health plans under the current ERISA claims procedure, as set forth in the Department of Labor's regulations (at 29 CFR 2560.503-1). The new regulations also contain the following six new requirements:
--the internal review procedure must apply to any adverse benefit determination, which includes any denial, reduction, termination or rescission of coverage, or any failure to pay a benefit;
--the plan must notify the participant of a benefit determination (whether adverse or not) with respect to a claim involving urgent care no later than 24 hours after receiving the claim (the DOL regs required 72 hours);
--the plan must provide the participant, free of charge and before any adverse benefit determination is issued, with the rationale for the upcoming determination, and with any new or additional evidence considered, relied upon, or generated by the plan in connection with the claim;
--to avoid conflicts of interest, the plan must ensure that all claims are handled in a manner designed to ensure the independence and impartiality of the decision-makers (e.g., the decision to hire a claims adjudicator or a medical reviewer cannot be made based upon the likelihood that the individual will support a denial of benefits);
--notice regarding benefit determinations must: (1) be written in a culturally and linguistically appropriate manner, (2) include information sufficient to identify the claim involved (such as date of service, the health care provider, the claim amount and any diagnosis codes), (3) describe the plan's internal/external claims procedure and how to initiate an appeal and (4) provide contact information for any government office established to assist the participant pursue internal and external claims; and
--if the plan fails to strictly adhere to all of the requirements of the internal claims procedure, the participant is deemed to have exhausted that procedure and may immediately initiate an external claim.
In addition, the plan is required to provide continued health care coverage to the participant pending the outcome of the internal appeal.
A covered health care plan must generally comply with either a State external review procedure or the Federal external review procedure. When the plan is insured, if there is a State external review procedure which applies to and is binding on the plan's insurer, and which includes, at a minimum, the consumer protections in the NAIC Uniform Model Act in place on July 23, 2010, then that insurer must comply with that State external review procedure, and the plan itself need not provide an external review. Any other covered health care plan, including a covered plan that is self-insured, must follow the Federal external review procedure (as discussed below, not yet established).
Under the new regulations, a State external review procedure will be treated as containing the requisite consumer protections if it:
--provides for the external review of an adverse benefit determination (including a final internal adverse benefit determination), which is based on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit;
--requires the insurer to provide effective written notice to a plan participant of his or her rights in connection with an external review;
--if the State procedure requires exhaustion of an internal claims procedure, makes exhaustion unnecessary if the insurer has waived the exhaustion requirement, the participant has exhausted (or is considered to have exhausted) the internal claims procedure or the participant has applied for expedited external review;
--requires the insurer to pay the cost of an independent review organization (an "IRO") for conducting the external review (other than a minimal filing fee);
--does not impose a minimum dollar amount of a claim for it to be eligible for external review;
--gives the participant at least four months, after receiving a notice of an adverse benefit determination (including a final internal adverse benefit determination), to file a request for an external review;
--provides that an IRO will be assigned on a random basis, or utilizes
another method of assignment that assures independence and impartiality of the assignment procedure-the IRO cannot be selected by the insurer, plan or participant;
--provides for maintenance of a list of approved IROs-any IRO must be accredited by a nationally recognized private accrediting organization;
--provides that any approved IRO has no conflicts of interest that will influence its independence;
--allows the participant to submit to the IRO in writing additional information that the IRO must consider when conducting the external review, and requires that the participant is notified of this right;
--provides that the IRO's decision is binding on the insurer, plan and
participant, except to the extent that other remedies are available under State or Federal law;
--provides that the IRO must provide written notice to the insurer and the participant of its decision to uphold or reverse the adverse benefit determination, by no more than 45 days after it receives the request for external review;
--provides for an expedited external review in certain urgent circumstances and, in such cases, provides that the IRO will provide notice of its decision within 72 hours after it receives the request for review.
--requires that the external review procedures be described in the plan's summary plan description, policy, certificate, membership booklet, outline of coverage, or other evidence of coverage;
--requires that the IRO maintains written records of its decisions and makes them available to the State upon request; and
--follows procedures for external review of adverse benefit determinations involving experimental or investigational treatment, substantially similar to what is set forth in section 10 of the NAIC Uniform Model Act.
As a transitional rule, any existing State external review procedure will be treated as meeting the foregoing requirements, until the first plan year beginning after July 1, 2011. At that time, the Federal external review procedure will apply unless the State procedure is revised to meet these requirements.
The Departments of Health and Human Services, Labor, and the Treasury will establish a Federal external review procedure. The new regulations describe the standards which the Federal external review procedure must follow.