The Affordable Care Act requires group health plans to comply with claims procedures established by the Department of Labor (DOL) and also establishes a new external review level (on top of the plan’s internal appeals). DOL, Treasury, and the Department of Health and Human Services jointly issued an Interim Final Rule (IFR) in July, which added several new requirements to the existing ERISA claims procedure regulations, including a shorter deadline for deciding urgent claims, new information that must be included in an explanation of benefits, and new appeals procedures. The Interim Final Rule also set out the framework for the external review level and provided generally that insured claims would go to a state external review, while self-funded plans would use a federal external review process.
The Department of Labor subsequently issued a Technical Release outlining the requirements for the federal external review program. Later, after much confusion by plans about these new requirements, DOL issued a second Technical Release that provided a non-enforcement grace period for certain requirements of the new rules until July 1, 2011, as long as plans were working toward compliance. These new rules – along with the guidance – have led to a number of questions from plan sponsors.
Do the new rules supplant the DOL claims procedure regulations under ERISA?
No – the IFR adopts the DOL claims procedure rules under ERISA and then makes changes to them. So plans will be required to comply with the existing DOL claims procedure regulations, as amended by the IFR. For example, the IFR changes the deadline to decide urgent claims from 72 hours to 24 hours. The IFR also adds several new items that must be included in a denial notice (in addition to the items already required under the existing DOL regulations). The IFR also imposes new requirements for appeals, where the plan must provide new information to a claimant and give the claimant an opportunity to respond during the appeal process, as the timeframes are running. Finally, the IFR provides new rules for providing notices in foreign languages. The IFR says that if a plan fails to strictly adhere to all of the requirements of the IFR (even if there is a de minimus error), the claimant is deemed to exhaust all internal claims and appeals and may proceed to court or external review.
We are a governmental plan, so were not required to comply with the existing ERISA claims procedure rules. How do these new rules apply to us?
The IFR adopts the existing ERISA claims procedure rules and then makes changes to them. That means that plans that did not have to comply with the ERISA claims procedure rules before will need to comply not only with the new IFR under the Affordable Care Act, but also the ERISA claims procedure rules.
What requirements are effective today?
Generally, the internal claims and appeals requirements are effective for plan years beginning on or after September 23, 2010 (or January 1, 2011 for calendar year plans). However, DOL issued a Technical Release that gives an "enforcement grace period" on the following provisions until July 1, 2011:
- The new timeframe for deciding urgent claims;
- The requirement to provide notices in a culturally and linguistically appropriate manner (i.e., foreign languages);
- The requirement adding new content to denial notices; and
- The requirement that a claimant is deemed to have exhausted the internal appeals process if a plan has not strictly adhered to the IFR requirements.
The Technical Release says that the grace period only applies to plans that are working in "good faith" to implement the new rules.
Other IFR provisions, such as the new appeals procedure requirements and the new external review rules are not part of the grace period and are applicable for plan years beginning on or after September 23, 2010. This means that, for calendar year plans, claims decided today are subject to the new appeals and external review requirements. Plans sponsors should review their claims procedures to determine what changes must be made and when.
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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.