Agencies Amend Internal Claims and Appeals and External Review Process Regulations, Issue Compliance Document

health benefit claim form2.JPGThe Departments of Labor, Health and Human Services, and the Treasury have amended the interim final regulations released in July 2010 that imposed new requirements on group health plans (both self-insured and insured) for internal appeals of claim denials and required an independent external appeal process in accordance with the Affordable Care Act. As discussed in Technical Release 2011-02, the amendments revise the minimum standards that a state external review process must include, update the compliance standards for internal claims and appeals processes, and modify the transition period for states to implement these external review processes in order to provide plans and issuers sufficient time to adapt to the new process. If a state's external review process does not meet these minimum standards, group health plans and health insurance issuers in the group and individual market in that state are required to establish their own external review process that meets the minimum standards established by the HHS.

Some modifications to the internal claims and appeals process include the following:

  • Plans and issuers are permitted to follow the original rule in the DOL claims procedure regulation (requiring notice of the decision regarding pre-service urgent care claims as soon as possible but not later than 72 hours after the request), provided that the plan or issuer defers to the attending provider with respect to the decision as to whether a claim constitutes “urgent care.”
  • The amendments eliminate the requirement to automatically provide the diagnosis and treatment codes as part of a notice of adverse benefit determination (or final internal adverse benefit determination) and instead substitute a requirement that the plan or issuer must provide notification of the opportunity to request the diagnosis and treatment codes (and their meanings) in all notices of adverse benefit determination, and provide the information upon request.
  • The amendments clarify that, in any case, a plan or issuer must not consider a request for such diagnosis and treatment information, in itself, to be a request for (and therefore trigger the start of) an internal appeal or external review.
  • Claimants are allowed to immediately seek review if a plan or issuer failed to “strictly adhere” to all of interim final regulation’s requirements for internal claims and appeals processes, regardless of whether the plan or issuer asserted that it “substantially complied” with these regulations. There is an exception to the strict compliance standard for errors that are minor and meet certain other specified conditions.
  • The amendments simplify the requirement that notices be provided in a culturally and linguistically appropriate manner. Among other simplifications, the amendments provide an easier way to calculate how many plan participants are considered literate in the same non-English language for purpose of determining whether required notices must be provided in that language.

As for external review, the amendments establish a transition period until January 1, 2012 for states to ensure that their external review processes include the necessary consumer protection standards. The HHS will determine whether each state external review process meets the required standards by July 31, 2011. The Technical Guidance issued in conjunction with the rule amendments also establishes a set of 13 temporary standards that external review processes must meet that will apply until Jan. 1, 2014, when all state external review plans must comply with the full set of standards. If these standards are not met, plans and issuers will be subject to federal external review.

The guidance document issued with the amendments also modifies the enforcement policy with respect to Independent Review Organizations (IROs). Two separate Technical Release documents (2010-01 and 2011-01) issued in August 2010 and March of this year set forth an interim enforcement safe harbor for self-insured plans not subject to a state external review process or to the HHS-supervised process. This safe harbor permits a private contract process under which plans contract with accredited IROs to perform reviews. The guidance provides that self-insured plans must contract with at least two IROs by January 1, 2012 and with at least three IROs by July 1, 2012 and to rotate assignments among them in order to be eligible for a safe harbor from enforcement from the DOL or IRS.

In addition, the agencies have released a Revised Model Notice of Adverse Benefit Determination; Revised Model Notice of Final Internal Adverse Benefit Determination; Revised Model Notice of Final External Review Decision, and an Updated List of Consumer Assistance Programs as of May 23, 2011.

Comments on these changes are due on or before July 25, 2011. Comments may be filed electronically through the federal eRulemaking portal or by email to: E-OHPSCA2719amend.EBSA@dol.gov. Alternatively, written comments may be sent or hand-delivered to: Office of Health Plan Standards and Compliance Assistance, Employee Benefits Security Administration, Room N-5653, U.S. Department of Labor, 200 Constitution Avenue NW, Washington, DC 20210, Attention: RIN 1210-AB45.

Photo credit: Teekid

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.