ERIC Cautions Regulators to Avoid Burdensome Claims and Appeals Requirements

July 25, 2011


Washington, D.C. -- The ERISA Industry Committee (ERIC) today submitted comments on the amendment to the interim final regulations implementing the internal claims and appeals and external review processes under the Patient Protection and Affordable Care Act (ACA).

A copy of the letter.

The Departments of Labor, Health and Human Services, and Treasury published the amendment to the interim final regulations in the Federal Register on June 24, 2011.

ERIC commended the departments for amending the interim final regulation to provide relief from a number of features that would have increased employers' administrative costs without producing a corresponding increase in employees' welfare. "Overall, we believe that the amended interim final regulations strike a more balanced approach that provide participants reasonable access to internal and external review procedures without imposing unduly burdensome requirements on employers," said ERIC President Mark Ugoretz.

ERIC continued to warn, however, that employers do not have unlimited resources to spend on health care and urged the departments to consider adopting several recommendations on the internal claims and appeals process, including recommendations from ERIC's September 2010, letter to the departments.

Among ERIC's September 2010 recommendations are that the departments should give plans more time to provide a claimant with any new or additional evidence or rationales discovered during internal review of a claim; and clarify that the requirement for plans to allow participants to continue receiving coverage pending the outcome of the appeals process does not impose any new or additional requirements on group health plans and does not require plans to continue coverage during the period of external review.

ERIC also encourages the departments to consider ERIC's earlier comments regarding the external review process. ERIC contends that the amendment's clarifications to the external review process have heightened the need for the departments (1) to acknowledge that external reviewers are plan fiduciaries to the extent that their decisions are binding on plan administrators and (2) to require external reviewers to follow the terms of a plan in deciding a claim on review. To that end, ERIC renewed its request for the Department of Labor to acknowledge that an external reviewer is a plan fiduciary.

External Review Process

ERIC urges the departments to further narrow and clarify, on a permanent basis, the scope of adverse benefit determinations eligible for external review by defining adverse benefit determinations involving "medical judgment" to include only the types of adverse benefit determinations eligible for review through a state external review process.

"Plan administrators and participants need a clear definition of the types of determinations that are eligible for external review so that plan administrators can clearly advise participants of the circumstances in which a claim is eligible for external review and so that participants can make an informed decision about whether to request external review of a claim," ERIC says.

In addition, ERIC recommends that plan administrators should be permitted to determine whether an adverse benefit determination involves "medical judgment." "Assigning this responsibility to the external reviewer diminishes the administrative relief and cost savings that we believe the departments intended to provide by narrowing the scope of claims eligible for external review," ERIC argues.

The letter further suggests that issues relating to plan design or a plan's compliance with law should not be eligible for review under a plan's internal or external claims procedures. ERIC urges the departments to clarify that claims involving plan design issues, such as coverage limitations on preventive services, the exclusion of a provider from a network, the established and specified co-payments for benefits, and similar design issues, do not involve benefit determinations and are not eligible for either internal appeal or external review.

Finally, ERIC recommends that in any case where external review is binding, the guidance should make clear that the external reviewer acts as a fiduciary and must follow the plan terms. "We urge the Department of Labor to make clear that an [Independent Review Organization] has the same duty as any other fiduciary to follow the terms of an ERISA-governed plan."


For more information:
Ted Godbout
Director, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400

The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.