The Departments of Labor, Treasury, and Health and Human Services have issued joint interim final rules under the Patient Protection and Affordable Care Act ("PPACA") that establish standards for the internal claims and appeals and external review procedures that must be available to individuals covered by non-grandfathered group health plans and insurance issuers offering group or individual health coverage. These changes will apply to plan years beginning on or after September 23, 2010 (or January 1, 2011 for calendar year plans). Insured plans may rely on their insurers to comply with these requirements. Affected plans and insurers should contact counsel with any questions. Below is a summary of some of the key requirements:
Model Notices: The government has issued some model notices that satisfy these new requirements, including notices for: (1) adverse benefit determinations; (2) final internal adverse benefit determinations; and (3) final external review decisions. More model notices and model language are expected in the future.
Internal Claims and Appeals: Beginning on or after September 23, 2010, non-grandfathered plans and insurers must have an internal claims and appeals process for beneficiaries to challenge adverse benefits decisions. The new rules add some new requirements to ERISA's existing claims procedures:
1. Notice: Enrollees must be notified in a culturally and linguistically understandable manner of the internal and external claims and appeals process and the availability of any office of health insurance consumer assistance or ombudsman. Notices of adverse decisions must include specific information, including but not limited to: (i) date of service, (ii) health care provider, (iii) claim amount, and (iv) diagnosis/treatment codes, and their respective meanings.
2. Access to Files: Enrollees must be allowed to review their files and to present evidence during the appeals process. Further, the claimants must be provided with any information not submitted as part of the claim or appeal that is considered in the review process and given the opportunity to respond to the use of that information.
3. Continuing Coverage: Enrollees must be provided with continuing coverage for ongoing treatment pending the outcome of an internal claim or appeal. This requirement may also apply during expedited external appeals. Further guidance is expected on this issue
4. External Review: Claimants may now proceed immediately to an external review or a judicial review if the Plan does not strictly comply with these procedures.
5. Urgent Claims: Urgent care claims must be decided within 24 hours, rather than 72 hours.
6. Impartial Adjudication/Conflict of Interest: To protect the impartiality of reviewers, there can be no employment decisions (i.e. hiring, compensation, termination, promotion, etc.) regarding individuals involved in the adjudications process based on whether the individual will support a denial of the claim or appeal.
7. Special Health Insurer Rules: There are three special rules that apply only to health insurers: (a) initial eligibility determinations for individual insurance coverage are subject to the internal appeal process; (b) individual policies may have only one level of internal appeal, whereas group health plans may have two levels; and (c) issuers of individual policies must keep records of all claims and notices related to internal claims and appeals for at least six years.
External Review: All non-grandfathered plans and insurers also must have an external review process that complies with federal standards. Plans or insurers subject to state external review processes that meet the minimum consumer protection standards set forth in the interim final regulations must continue to follow those requirements until July 1, 2011. Afterwards, all external review requirements must be in conformity with federal requirements. For plans and insurers that are not subject to state processes (including self-insured plans), there is a federal external review process which applies to plan years beginning on or after September 23, 2010. No enforcement action will be taken against plans or insurers that comply with applicable state or federal external review. The federal external review requirements are summarized as follows:
1. Request for External Review: The federal process begins with a "Request for External Review", which must be allowed within 4 months of an adverse benefits determination.
2. Preliminary Review: Within 5 business days of the request for an external review, the plan or insurer must complete a "Preliminary Review" to determine whether an external review is available. Written notice of the preliminary review determination must be given within 1 business day. If the enrollee is determined to be ineligible, the notice must include the reasons of ineligibility and the contact information of the Employee Benefits Security Administration. If the request is incomplete, the claimant must be notified so that he or she can provide the missing information either within the four month filing period or within the 48 hour period following the receipt of the notification, whichever is later.
3. Referral to an IRO: Plans or insurers must contract with at least 3 accredited Independent Review Organizations ("IROs") and assign reviews to them using an unbiased method of selection (e.g. rotating or random). Contracts with IROs must provide that the IRO will use legal experts where appropriate to make coverage determinations. IROs must be provided with all information used to decide the claim or appeal within 5 business days, otherwise the IRO may terminate external review and reverse the denial of benefits. The reviewing IRO is not bound by any previous decisions or conclusions and it may consider materials outside of the claim file. The IRO must provide written notice of its decision within 45 days of receiving a request for external review, describing the nature of request and the basis for its decision. The notice must also state that judicial review is available, and provide contact information for any available consumer assistance or ombudsman.
4. Reversal of Plan's Decision: If the IRO reverses a plan's decision, the plan must immediately provide the coverage or payment for the claim.
5. Expedited Federal Review Process: An expedited process is available in two situations: (a) after an adverse determination of a claim, if the time for completing the plan's internal appeals process would jeopardize the claimant's life or health; and (b) after a final internal adverse determination, if the time for completing the plan's internal appeals process would jeopardize the claimant's life or health. Expedited requests require the plan to immediately conduct the preliminary review procedures, discussed above. Such requests must be decided as quickly as the medical circumstances require and under no circumstances may the IRO take longer than 72 hours to render its decision.