<nobr>Jul 23, 2010</nobr>

IRS, EBSA, HHS Issue Claims and Appeals Interim Final Regulation

The Departments of Labor, Treasury, and Health and Human Services on July 22 released one of the last significant regulations to implement the first wave of new Patient Protection and Affordable Care Act (PPACA) rules, those effective in 2010 or 2011. The new interim final regulation interprets the PPACA requirements regarding internal claims and appeals and external review processes.

The new rules are applicable to group health plans for plan years beginning on or after September 23, 2010. The rules do not apply to grandfathered plans. Following is a description of the new regulation.

Internal review: All non-grandfathered group health plans will need to incorporate the internal claims and appeal processes set out in DOL regulations; the preamble notes that DOL intends to update these regulations. In the meantime, the new regulation adds six new requirements to those already in the existing claims procedures regulation. These are:

• The definition of an "adverse benefit determination" includes a rescission of coverage as well as a denial, reduction, or termination of, or a failure to provide, or make a payment for, a benefit;


• The definition of an adverse benefit determination also includes any denial, reduction, termination or failure to make a payment based on a determination of plan eligibility; whether a benefit is a covered benefit; the imposition of a preexisting condition, source-of-injury, or network exclusion, or other limitation on a covered benefit; or a determination that a benefit is experimental, investigational, or not medically necessary or appropriate;


• The adverse determination can include both pre-service and post-service claims;


• The plan must notify a claimant of a benefit determination (whether adverse or not) involving urgent care not later than 72 hours after receipt of the claim unless insufficient information has been provided;


• The plan must provide the claimant -- as soon as possible, and at no charge to the claimant -- any new or additional evidence considered, relied upon, or generated by the plan in connection with the claim, as well as any new or additional rationale for an adverse determination;


• All claims and appeals must be adjudicated in a manner designed to ensure the independence and impartiality of those involved in make the decisions, such as the claims adjudicator or medical expert;


• Notices to enrollees must be provided in a culturally and linguistically appropriate manner;


• Adverse benefit determinations will be required to include specified information such as the date of service, health care provider, claim amount, diagnosis code, treatment code, denial code, and the meaning of these codes, and a description of the plan's standard that was used in denying the claim; and


• If a plan does not "strictly adhere" to the internal claims and appeals rules, the claimant will be deemed to have exhausted the internal processes and may initiate an external review and pursue any available remedies.

Coverage during appeals process: Plans are required to provide continued coverage during the course of the internal appeal. This means that plans will be prohibited from reducing or terminating an ongoing course of treatment without providing advance notice and an opportunity for advance review. Further, individuals receiving urgent care or an ongoing course of treatment may be allowed to simultaneously pursue an internal appeal and external review.

External review: Basically, the new regulation provides that plans and issuers must comply with either a state or federal external review process. Plans can fall into one of several situations determining whether they are subject to state or federal review.

Issuers of benefits in fully insured plans will need to comply with a state external review process if the process includes specified consumer protections described in the NAIC Uniform Model Act. In all other cases, including where the state review process does not include these protections, the plan/issuer will be subject to the federal external review process.

Some of the more significant NAIC consumer protections that are necessary for a state external review process to be valid under these rules include:

• The process must provide for the external review of adverse benefit determinations that are based on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit;


• The issuer must pay the cost of the external review;


• Claims eligible for review may not be restricted to those over a set minimum dollar amount;


• Claimants must be given at least four months to file for an external review; and


• The decision is binding on the plan or issuer and claimant, except to the extent that other remedies are available under state or federal law.

Transition period: The regulation specifies a transition rule for plan years beginning before July 1, 2011, during which state external review processes will be deemed to meet the new standards even if they do not currently provide these minimum consumer protections.

Federal External Review Process

The scope: Adverse benefit determinations and final internal adverse benefit determinations are defined as they are for internal appeals and thus include rescissions of coverage. Determinations based on a failure to meet a plan's eligibility requirements are not eligible for appeal.

The standards: The actual federal external review process appears to be a little murky. The regulation states that the federal process will be similar to the process set forth in the NAIC Model Act and will "meet standards issued by the Secretary." The regulation goes on to state that the standards will include:

• A description of how the external review process is initiated, procedures for determining when claims are eligible for external review; minimum qualifications, approval processes, and assignments of cases to Independent Review Organizations (IROs);


• An expedited review process;


• Additional consumer protections to ensure that adequate clinical and scientific experience and protocols are taken into account for claims involving experimental or investigational treatments;


• That the decision is binding on the plan or issuer and claimant, except to the extent that other remedies are available under state or federal law;


• Additional notice requirements to participants and beneficiaries describing the external review procedures; and


• That plans must provide information relevant to the processing of the external review, such as the information considered in making the determination.

The preamble to the regulation also specifies that the Departments will address in "sub-regulatory" guidance how non-grandfathered self-insured plans that currently maintain an internal appeals process that otherwise meets the federal external review standards may comply with the new federal external review process.

Form and manner of notice: Plans are required to provide relevant notices in a "culturally and linguistically appropriate" manner. Plans with 100 or more participants meet this standard if they provide notices upon request in a non-English language in which the lesser of 500 or more participants, or 10% of all plan participants, are literate. If this threshold is met, then the plans must include statements in their English-language notices that the notice is available in the other language upon request and that if a participant makes such a request, all future notices to that person will be made in this other language. Moreover, if the plan maintains a customer assistance process, the plan must provide the assistance in this non-English language.

Links to the interim final regulation, fact sheet, and other key documents appear below.

Questions or comments on the interim final regulation should be addressed to either Gretchen Young, gyoung@eric.org, or Adam Solander, asolander@eric.org.

###

Interim Final Regulation

DOL Fact Sheet

DOL Press Release

NAIC Uniform External Review Model Act

Back to Previous Page