The IRS, DOL & HHS (the Departments) jointly issued Amendments to the Interim Rules on Internal Claims and Appeals and External Review Processes for Group Health Plans and Health Insurance Issuers. (June 23, 2011) The Departments also issued revised Model Notices on Final Internal Adverse Benefit Determination, Adverse Benefit Determination, and Notice of Final External Review Decision (June 22, 2011).These rules apply to non-grandfathered insured and self-funded group health plans of all sizes, and to health insurance issuers in both the group and individual markets. These Amendments will be effective July 23, 2011 (30 days after publication date), but the changes made do not apply to calendar year plans until January 1, 2012.
The HCR law and Interim Final Regulations (published June 23, 2010) required non-grandfathered health plans to implement additional claims and appeals and external review procedures by January 1, 2011 for calendar-year plans (specifically, the first day of the first plan year beginning on or after September 23, 2010). In September 2010 the DOL extended the deadline to July 1, 2011 (Technical Release 2010-02, issued September 20, 2010). Then, on March 18, 2011 (Technical Release 2011-01 ) the DOL modified and further extended the enforcement grace period for internal claims and appeal from July 1, 2011 to January 1, 2012 for calendar year plans. (An earlier effective date applies for certain provisions for non-calendar year plans.) The Departments stated in the March 18th Tech. Rel. that one reason they were further extending the deadline was that they would soon issue Amendments, which they now have. (See the March 30, 2011, post on Leavitt’s HealthreformUpdates.com.)
Short Summary of the June 2011 Amendments
The June 24th Amendments make four changes to the Internal claims and appeals procedures and three changes to the External review procedures. A more detailed summary is provided below, but for those of you who only want the short summary, the changes are:
Internal claims and appeals procedures
1. For benefit determinations of “urgent care” claims, the Amendments revert back to the 72 hour timeframe under the existing DOL/ERISA claims procedures. The July 2010 Interim regulations had shortened this timeframe to 24 hours.
2. In claim denials, a plan or issuer must provide notification of the opportunity to request the diagnosis and treatment codes (and their meanings) in all claims and appeals notices provided to claimants, and must provide this information upon request. The July 2010 Interim regulations had required that plans or issuers provide the actual diagnosis and treatment codes in all such notices.
3. Claimants can seek immediate external review or court action if the plan or issuer does not “strictly comply” with its internal review procedures only if the non-compliance is not “de minimis” and comes within the categories listed in the Amendment.
4. Plans and issuers must provide denial notices in the same non-English language (or a one-sentence statement about the availability of non-English language services) if 10% or more of the population residing in the claimant’s county are literate only in that non-English language. Previously, the threshold was applied to the employer’s plan.The Departments provide a lengthy table of 225 U.S. counties in which the threshold applies as of June 2011. In the overwhelming majority of these 225 counties, the non-English language is Spanish.
External review procedures
1. Before January 1, 2012, applicable State external processes will apply in lieu of the requirements of the Federal external review process.
2. The Amendments narrow the scope of claims eligible for the Federal external review process (for external reviews initiated on and after September 20, 2011) to those involving medical judgment or rescission of coverage, and excluding claims involving only legal or contractual interpretations.
3. The Amendments clarify the requirement that external review decisions are binding by specifying that the health plan or issuer must provide benefits without delay (including by making payment on the claim) as required by the final external review decision, even if the plan or issuer intends to seek judicial review of the external review decision and unless or until there is a judicial decision otherwise.
Next Steps for Employers
- Check with your insurers and TPAs to make sure they have or will incorporate the above changes into their claims denial notices and claims and review procedures.
- Make sure your summary plan descriptions (SPDs) for the 2012 plan year include the above changes, and issue summaries of material modifications (SMMs) next year if necessary.
- No immediate changes are necessary for calendar year plans because the changes made by the Amendments (and the previously-issued Technical Releases) do not apply until January 1, 2012.
More Detailed Summary of the 2011 Amendments
These June 24th Amendments make the following changes to the previously-issued guidance on Internal Claims and Appeals and on External Review.
Changes to the Internal Claims and Appeals Procedures:
1. Expedited notification of benefit determinations involving “urgent care”
(paragraph (b)(2)(ii)(B) of the July 2010 regulations).
For claims involving “urgent care” ERISA required that participants must be notified of benefit determinations within 72 hours. The July 2010 Interim Regulations shortened this timeframe to 24 hours, but many of the comments received on the regulations were that 24 hours was too short. These June 24th Amendments change it back to the original timeframe of: as soon as possible consistent with the medical exigencies involved but in no event later than 72 hours, provided that the plan or issuer defers to the attending provider with respect to the decision as to whether a claim constitutes “urgent care.”
(Under the DOL claims procedure regulation (in ERISA), a “claim involving urgent care” is a claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations could seriously jeopardize the life or health of the claimant or the ability of the claimant to regain maximum function; or, in the opinion of a physician with knowledge of the claimant’s medical condition, would subject the claimant to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.”)
2. Additional notice requirements for internal claims and appeals
(paragraph (b)(2)(ii)(E) of the July 2010 regulations).
This Amendment eliminates the requirement that a plan or issuer must automatically provide the diagnosis and treatment codes as part of a claim denial and instead substitutes a requirement that the plan or issuer must provide notification of the opportunity to request the diagnosis and treatment codes (and their meanings) if the plan or issuer denies the claim, and must also provide this information upon request. This amendment also clarifies that a participant’s request for diagnosis and treatment information, in itself, may not be considered a request for (and therefore trigger the start of) an internal appeal or external review.
3. Deemed exhaustion of internal claims and appeals processes
(paragraph (b)(2)(ii)(F) of the July 2010 regulations).
The courts generally require claimants to exhaust internal administrative proceedings before seeking external review or going to court. The July 2010 regulations allowed claimants to seek immediate external review or go to court if the plan did not “strictly comply” with all administrative proceedings. Commentators said this would allow claimants to go directly to court or external review even if a plan’s noncompliance was “de minimis.” The June 24th Amendments attempt to balance claimants’ and plan administrators’ concerns by providing that any violation of the procedural rules of the July 2010 regulations pertaining to internal claims and appeals will permit a claimant to seek immediate external review or court action, as applicable, unless the violation was:
(1) De minimis;
(3) Attributable to good cause or matters beyond the plan’s or issuer’s control;
(4) In the context of an ongoing good-faith exchange of information; and
(5) Not reflective of a pattern or practice of non-compliance.
4. Form and manner of notice
(paragraph (e) of the July 2010 regulations).
The HCR law (PHS Act section 2719) requires group health plans and health insurance issuers to provide claims and appeals notices to claimants in a “culturally and linguistically appropriate” manner. This includes a requirement that notices be provided in non-English languages if more than a specified percentage of plan participants are literate only in the same non-English language. Existing guidance provides for different thresholds (from 10-25%) for different sizes and types of health plans.
The June 24th Amendment establishes a single threshold of 10% for all size plans and for both the group and individual markets, and includes a new twist, intended to ease administration of this requirement. Plans and issuers will have to provide notices in the same non-English language (or notice of the availability of language services) if 10% or more of the population residing in the claimant’s county are literate only in that non-English language (as determined based on American Community Survey data published by the United States Census Bureau.) The preamble to the Amendments includes a Table listing all the affected U.S. counties (225) and the non-English language, as of June 2011. Spanish is the language in the overwhelming majority of these 225 counties; however, Chinese, Tagalog, and Navajo are present in a few counties, affecting five states (specifically, Alaska, Arizona, California, New Mexico, and Utah). The Departments will provide annual updates on their websites if there are changes. (www.dol.gov/ebsa/healthreform and http://cciio.cms.gov/.)
Plans or issuers must include a one-sentence statement in the relevant non-English language about the availability of language services, in each notice sent to an address in a county that meets this 10% threshold. In the Model Notices issued contemporaneous with these Amendments, the Departments have provided sample sentences in the relevant languages. Plans and issuers may choose to use a one-sentence statement for all notices within an entire State (or for a particular service area) rather than only a particular county within that state. For example, statewide notices in California could include the relevant one-sentence statement in Spanish and Chinese.
Changes to the External Review Procedures:
1. Duration of transition period for State external review processes.
The Amendments modify the July 2010 regulations to provide that, before January 1, 2012, an applicable State external process will apply in lieu of the requirements of the Federal external review process. If there is no applicable State external review process, separate guidance issued contemporaneous with these Amendments generally provides a choice between the HHS-administered process or the private accredited IRO process.
2. Scope of the Federal External Review Process
This Amendment suspends the broad scope of claims eligible for the Federal external review process and narrows the scope to more like the NAIC Uniform Model Act. Specifically, the only claims eligible for the Federal external review process will be claims that involve (1) medical judgment (excluding those that involve only contractual or legal interpretation without any use of medical judgment), as determined by the external reviewer; or (2) a rescission of coverage.
3. Clarification regarding requirement that external review decision be binding
This Amendment adds language stating that, for purposes of the provision requiring that external review decisions are binding, the health plan or issuer must provide benefits without delay (including by making payment on the claim) if required by the final external review decision, even if the plan or issuer intends to seek judicial review of the external review decision and unless or until there is a judicial decision otherwise.
The government guidance summarized or cited above is:
1. Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes, 76 Fed. Reg. __ (June 24, 2011);
2. Technical Release 2011-02 (June 22, 2011);
3. Model Notice of Final Internal Adverse Benefit Determination (June 22, 2011); Model Notice of Adverse Benefit Determination (June 22, 2011); Model Notice of Final External Review Decision (June 22, 2011)