We pointed out that many insured plans already had been complying with state external review laws, but the requirements generally are new for self-funded plans. This week, we address questions that specifically apply to self-funded plans (or other plans that are not subject to state external review).
The external review requirement applies to plan years beginning on or after September 23, 2010 (so already is applicable for calendar year plans). Generally, plans must establish a new level of review following the final appeal under the plan. The new external review level must be performed by an independent third party and is binding on the plan.
Who handles external reviews for self-funded plans?
The plan must arrange for and contract with three independent review organizations (IROs) to handle external reviews for the plan. The IROs must be accredited by URAC or a similar nationally-recognized accrediting organization. DOL Technical Release 2010-1 sets out specific provisions that must be included in the contract, including the deadlines the IRO must meet, what information it must consider, and what notice it must provide to the claimant. The agencies have issued informal guidance that says the plan may contract with the three IROs directly or look to its TPAs to contract with the IROs (in that case, the plan may need to amend its TPA agreement or enter into a side letter requiring the TPA to contract with the three IROs).
What is the plan required to do when it receives a request for external review?
The plan will be required to review the request and, if eligible for external review, assign it to an IRO.
- Preliminary Review – Claimants will file their request for external review with the plan (unless the plan delegates this function). Claimants must file their request within 4 months of the receipt of their adverse benefit determination. Within 5 days of the request (or immediately, if an urgent claim), the plan must review the request to determine if the claimant is eligible for external review. For example, a claimant will not be eligible if (1) the claimant was not covered under the plan at time the service was provided or requested; (2) the claim is related to eligibility; (3) the claimant has not exhausted the plan’s internal appeals; or (4) the claimant has not provided necessary forms to process the request. Within 1 business day after completing the preliminary review, the plan must notify the claimant in writing of its decision.
- Assign External Review – If the plan’s preliminary review determines that the claimant is eligible for external review, the plan then assigns the request to one of the three IROs with which it has contracted. DOL Technical Release 2010-1 states that the plan “must take action against bias to ensure independence when assigning claims,” such as rotating claims assignments among the three IROs or randomly selecting the IRO that will decide the claim.
Once a claim has been referred to an IRO, is there anything more for the plan to do?
Yes – Within 5 days of assignment to the IRO, the plan must forward to the IRO any information it previously considered as part of the claim. The IRO also will forward to the plan any additional information it receives from the claimant, and the plan will have a chance to reconsider its earlier denial based on the additional information.
Once the external reviewer has made a decision, it will notify both the claimant and the plan. If the external reviewer reverses the plan's earlier denial, the plan must provide coverage immediately.
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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.