What is external review?
PPACA includes a new requirement that certain claims denials may be submitted to a new level of external appeal, in addition to any appeals already decided by the plan. Generally, any claim denial, except those involving whether someone is eligible under the plan in the first place, may be eligible for external review. The external review must be conducted by a third party not affiliated with the plan, and the external reviewer’s decision is binding on the plan.
We already send appeals out to our TPA or insurer – does this qualify as external review?
Probably not. While many plans delegate claims and appeals decisions to a third party administrator or insurer (and may call these “external” appeals since they are not decided in-house), these appeals usually are still part of the plan’s internal claims and appeals procedures – they are just delegated to a third party. Under the Department of Labor claims regulations, a typical “internal” claim procedure involves an initial claim and either one or two levels of appeal. After that, a participant is permitted to bring a claim in court. The new external review requirement is a new appeal level that will take place after the internal claims and appeals and will be conducted by an independent third party.
Who decides external reviews?
Many states already have an external review structure that is required for health insurance claims. So, for fully insured plans, external reviews likely will be decided by the state insurance authority that already conducts external reviews in that state. PPACA provides that if a state has an external review process that meets certain requirements, a plan already subject to this process must comply with the state process. The appeal regulations also include a transition period that deems existing state processes as compliant for plan years beginning before July 1, 2011, giving these states a chance to make any changes to come into compliance with the new rules, if needed.
Plans that are not subject to a state external review process (such as self-funded plans), are required to contract with three independent review organizations (“IROs”) to handle external reviews. The Department of Labor has issued guidance on how this process will work, including what notices must be provided to claimants, deadlines to make decisions, and what must be in a contract between the plan and the IRO. (More on that in our next column.).
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.