Agencies Amend Claims & Appeals Regulation

The Departments of Labor, Treasury, and Health and Human Services have just issued an amendment to their earlier claims and appeals Interim Final Regulation (IFR).  Many of the changes made in the amendment respond directly to health plan concerns that were raised in comments to the earlier IFR.

Below we highlight the new changes: 

Urgent Care Claims Deadline Remains 72 Hours – The earlier regulation changed the deadline to decide urgent care claims to 24 hours.  The new amendment retains the current DOL claim procedure rule that urgent care claims must be decided as soon as possible, taking into account medical exigencies, but no later than 72 hours.  However, the Agencies emphasized that the 72-hour window is an “outside limit” and that plans may need to act more quickly in cases where the medical situation merits.

Diagnostic & Treatment Codes Upon Request (Not in EOB) – The IFR required that explanations of benefit (EOBs) inlcude a number of new items, including more information about the claim, denial codes and their corresponding meanings, and diagnostic and treatment codes and meanings.  The amendment eliminated the requirement that diagnostic and treatment codes, and their corresponding meanings, be disclosed in the EOB (but retains the other content requirements).  Instead, plans must provide diagnostic and treatment codes upon request.   

Exception to “Strict Adherence” Standard For Certain De Minimis Violations – The original IFR adopted a “strict adherence” standard that provided a claim would be “deemed denied” if the plan failed to “strictly adhere” to any requirement set forth in the IFR, without regard to whether the claimant was harmed by the plan’s error.  This meant that participants could skip the plan’s internal appeals process and go directly to external review or court.  The amendment provides an exception if the violation is: de minimis, non-prejudicial, attributable to good cause or matters beyond the plan’s control, in the context of an ongoing, good faith exchange of information between the claimant and the plan, and not reflective of a pattern or practice of non-compliance.  Under the amendment, a claimant may request a written explanation of any violation from the plan, which the plan must provide within 10 days. 

Instructions on Notices in Foreign Language Requirement – The IFR required plans to provide claim and appeal notices in a "culturally and linguistically appropriate manner," meaning that the plan had to provide notices in foreign languages if enough participants were literate only in the same non-English language.  There was some confusion as to how plans would know whether these thresholds were met and if they were permitted to even ask participants if they were literate only in a non-English language.  The amendment sets out a method to identify whether non-English language notices must be provided.  Plans are required to provide a notice as to the availability of services in a non-English language if – based upon data published by the U.S. Census Bureau (which was included in the amendment) – 10% or more of the population residing in the claimant's county are literate only in the same non-English language.  These plans are required to include a one-sentence statement on all claim and appeal notices in the applicable non-English language about how to obtain language assistance.  In addition, a plan must provide oral language services, such as a telephone customer assistance hotline, to answer questions in the applicable non-English language. 

Changes to External Review – The amendment also made changes to the new external review requirement, which we have discussed in prior columns.  Most notably, the amendment tightened the scope of the types of claims eligible for the federal external review process (the external review procedure primarily for self-funded plans).  Previously, any claims for benefits were eligible for external review, even if no medical judgment was involved.  The amendment changes the rule so that only claims involving medical judgment and rescissions will be subject to the federal external review process.  Under the amendment, whether a claim involves a medical judgment is determined by the external reviewer.

The agencies also issued guidance that granted some relief to self-funded plans, which are required to contract with at least three Independent Review Organizations (IROs) to perform external review.  Many plans were having trouble getting these contracts finalized. The new guidance (Technical Release 2011-2) requires that plans using the federal external review process (i.e., self-funded plans) contract with at least two IROs by January 1, 2012 and with at least three IROs by July 1, 2012.

Health plans should review these new rules and amendments to consider how these requirements impact their own claims procedures, whether claims and appeals are decided in-house or delegated to a third party administrator.  In some cases, internal procedures may need to be updated.  In others, ASO agreements may need to be amended to ensure that third party administrators are providing these services.  Comments on the amendment are due July 25, 2011, so plans also need to watch for future guidance. 

Got a health-care reform question?  You can ask YOUR health-care reform legislation question online at http://www.surveymonkey.com/s/second_opinions 

You can find a handy list of Key Provisions of the Patient Protection and Affordable Care Act and their effective dates at http://www.groom.com/HCR-Chart.html  

Contributors:

Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm's Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.

PLEASE NOTE:  This feature is intended to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.