The new external review must be conducted by an independent review organization (IRO), whose decision is binding on the plan. Insured plans generally are subject to state external review, while self-funded plans are subject to a new federal requirement that the health plan contract with 3 IROs to conduct external reviews for the plan.
There has been some question about what types of claims (or whether all claims) are subject to external review. A recent amendment to earlier issued regulations makes changes to the scope of external review for self-funded plans. The amendment was issued June 24, 2011. So, we answer questions about exactly what types of claims are subject to external review?
What claims were required to go to external review before the amendment?
Under the original Interim Final Rule, “any” adverse benefit determination was subject to external review, other than a claim for eligibility. This meant that even those denials based on clear plan terms were subject to external review. For example, if a plan allowed 10 physician visits for a certain treatment, and an individual filed a claim for the 11th visit, this claim was eligible for external review.
What is the new standard for external review claims?
The amendment narrows the scope of the original external review rule and provides that only claims involving medical judgment will be subject to the federal external review process. (Also, as in the original rule, claims involving rescissions are subject to external review.)
This means that a decision that is purely based on the plan terms (such as a claim for the 11th visit, when the plan clearly only allows 10) would not be eligible for external review. However, the amendment and Preamble provide several examples showing that some decisions that may appear not to involve medical judgment actually may and consequently, be subject to external review. The amendment says the following would be examples of medical judgment decisions subject to external review:
- The plan’s rejection of a claim based on a number of visit limit where the plan allows more visits if under an approved treatment plan;
- An exclusion for out-of-network coverage, unless services cannot be effectively provided in-network;
- The appropriate health care setting, such as outpatient versus inpatient;
- Whether treatment by a specialist is medically necessary;
- Whether a treatment involve “emergency” care and thus, different coinsurance;
- A determination whether a condition is a pre-existing condition;
- An exclusion for a service, such as speech therapy, if the plan covers the service in certain circumstances based on a medical condition, such as to aid in the restoration of speech loss resulting from a medical condition;
- Whether a participant is entitled to a reasonable alternative under a wellness program;
- The frequency, method, treatment, or setting for a recommended preventive care service to the extent not specified in recommendations; and
- Whether a plan is complying with the nonquantitative treatment limits under the Mental Health Parity and Addiction Equity Act.
Who decides whether a claim involves medical judgment?
While, as a practical issue, the plan will have to decide whether a claim is eligible for external review when someone first requests, the amendment states that whether a claim involves a medical judgment is "determined by the external reviewer." This suggests that the IRO will have the ultimate determination as to whether a claim is eligible for external review.
When does the new scope rule apply?
The amendment says that the original rule is "suspended" with respect to claims for which external review that has not been initiated before 9/20/11. Thus, it appears that if an external review was requested before 9/20/11, a plan still must use the broader scope, but may begin using the narrower scope rule for new external review claims as of 9/20/11.
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
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.