In many cases, the plan’s third party administrator (TPA) will take care of these steps for the plan. But plans can’t assume that will happen. Below is a roadmap of the new steps that specifically apply to plan sponsors. Plan sponsors should go through each one, decide whether to take on this role themselves or delegate, and then verify that someone is handling each task.
Individuals have 4 months following the final internal appeal denial to request external review. The plan must decide within 5 business days (immediately for urgent claims) whether the request is eligible for external review. This step is called Preliminary Review. Eligibility is based on whether the individual was covered at the time of service, the type of claim, and whether the claimant has exhausted prior appeal levels. The plan must notify the individual of its decision in writing within 1 business day after completing the Preliminary Review and refer the appeal to an Independent Review Organization (IRO). Then, the plan must forward any information considered in connection with the internal appeal within 5 business days of assigning the appeal to the IRO.
Plans either may handle these requirements themselves or delegate the Preliminary Review to a third party (such as the TPA). Whatever the decision, plan materials, such as claims procedures and denial notices, should be clear where participants should file their request for external review, particularly since the plan – or third party to whom it has delegated this task – only has 5 days to consider the request.
Contracting with IROs
DOL Technical Release 2010-01 sets out the external review requirements for self-funded plans in order to meet a nonenforcement safe harbor. Plans must contract with three IROs and rotate claims assignments among them. The Technical Release sets out specific content requirements for the IRO contract. Recently, DOL provided an extension on this contract requirement and said that a plan contract with two IROs by 1/1/12 and three by 7/1/12.
Plans wither may contract with three IROs themselves or ask that their TPA handle this for them. In many cases, TPAs already have a relationship with IROs so may be in a better position to take on this step. If delegating, plans should ensure that the TPA contact with the IRO meets the content requirements of DOL Technical Release 2010-01. The delegation also should spell out any responsibilities (or liability) of the plan versus the TPA. In addition, the delegation should be clear what types of claims are involved. The plan’s TPA for medical benefits may not handle prescription drug claims, so the plan may need to delegate contracting with three IROs for pharmacy benefits to another party, such as its PBM.
Other External Review Steps
External review responsibilities do not end there. During the external review process, if a participant submits additional information, the plan may reconsider its internal appeal decision. If it reverses its decision, the plan must notify the claimant and IRO in writing within 1 business day. Alternatively, if the external review moves forward and the IRO reverses the plan’s decision, the plan must immediately provide coverage. The plan should make sure someone is responsible for these steps. For example, the plan should decide where the IRO should send new information or its final decision, so someone at the plan can act quickly.
While many of these external review steps can be handled by a TPA or other third party, plans must walk through each one and decide which party is handling – whether in house or delegated – and be clear on who has what responsibility.
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.