Government, Courts, and the World of Work

Three federal agencies have issued interim Final regulations requiring non-grandfathered health care plans to provide internal claims and appeals procedures and external review processes effective September 23, 2010.

Internal Claims Appeal

The interim final regulations set forth six new requirements

Adverse Benefit Determination. The definition of an “adverse benefit determination” is broader than the definition under existing ERISA claims procedure regulations, in that an adverse benefit determination for purposes of these interim final regulations also includes a rescission of coverage.

An adverse benefit determination eligible for internal claims and appeals processes under these regulations includes a denial of, reduction of, termination of, or failure to provide or make a payment for a benefit, including the following:

A determination of an individual’s eligibility to participate in a plan or health insurance coverage;

A determination that a benefit is not a covered benefit;

The imposition of a preexisting condition exclusion, source-of-injury exclusion, network exclusion, or other limitation on otherwise covered benefits; or

A determination that a benefit is experimental, investigational, or not medically necessary or appropriate.

24-Hour Notice.  For urgent care claims, the regulations provide that a plan must notify a claimant of a benefit determination (whether adverse or not) as soon as possible, but not later than 24 hours after the receipt of the claim by the plan or health insurance coverage, unless the claimant fails to provide sufficient information to determine whether benefits are covered or payable.

Review. In addition to existing ERISA regulations, the regulations provide criteria to ensure that a claimant receives a full and fair review. A plan must provide the claimant, free of charge, with any new or additional evidence considered by the plan in connection with the claim. Such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to respond. Also, before the plan can issue an adverse benefit determination based on a new or additional rationale, the claimant must be provided, free of charge, with the rationale. The rationale also must be provided as soon as possible and sufficiently in advance of the date on which the notice of adverse benefit determination on review is required.

Conflict Of Interest. New criteria are provided with respect to avoiding conflicts of interest. The plan or issuer must ensure that all claims and appeals are adjudicated in a manner designed to ensure the independence and impartiality of the persons involved in making the decision. Thus, decisions regarding hiring, compensation, termination, promotion, or other similar matters must not be made based upon the likelihood that the individual will support a denial of benefits. For example, a plan or issuer cannot provide bonuses based on the number of denials made by a claims adjudicator. Similarly, a plan or issuer cannot contract with a medical expert based on the expert’s reputation for outcomes in contested cases, rather than based on the expert’s professional qualifications.

“Culturally Appropriate.” The regulations require a plan to provide a notice to enrollees “in a culturally and linguistically appropriate manner.” This provision applies to internal and external claims appeals processes. Plans and issuers are considered to provide relevant notices in a culturally and linguistically appropriate manner if notices are provided in a non-English language based on thresholds of the number of people who are literate in the same non-English language.

For group plans, the threshold differs depending on the number of participants in the plan. For a plan that covers fewer than 100 participants, the threshold is 25% of participants being literate only in the same non-English language. For a plan that covers 100 or more participants at the beginning of a plan year, the threshold is the lesser of 500 participants, or 10% of all plan participants.

In addition, a plan must ensure that any notice of adverse benefit determination or final internal adverse benefit determination includes information sufficient to identify the claim involved. This includes the date of service, the health care provider, and the claim amount (if applicable), as well as the diagnosis code, the treatment code, and the corresponding meanings of these codes.

Additionally, the plan or issuer must provide a description of available internal appeals and external review processes, including information regarding how to initiate an appeal. Finally, the plan or issuer must disclose the availability of, and contact information for, any applicable office of health insurance consumer assistance or ombudsman to assist enrollees with the internal claims and appeals and external review processes.

Failure to Comply.  If a plan fails to strictly adhere to all the requirements of the internal claims and appeals process, and the claimant “is deemed to have exhausted the internal claims and appeals process, regardless of whether the plan or issuer asserts that it substantially complied with these requirements or that any error it committed was de minimis.” Upon such a failure, the claimant may initiate an external review and pursue any available remedies under applicable law, such as judicial review.

External Review

The regulations provide that plans must comply with either a state external review process or the federal external review process.

These requirements do not apply to grandfathered health plans (see prior posts). How non-grandfathered self-insured group health plans may comply or be brought into compliance with the requirements of the new federal external review process will be addressed in future “sub-regulatory guidance.”

On July 14, 2010, Interim Final Regulations implementing provisions of the Patient Protection and Affordable Care Act (the “Act”), concerning mandatory preventive health care benefits were issued by the U.S. Departments’ of Health and Human Services, Labor and Treasury.  Unless grandfathered (see earlier posts) all insured and self-insured health care plans will be required to offer these benefits at no cost effective on or after September 23, 2010.  

Treatments for the prevention of alcohol abuse, depression and obesity are among services that will have no cost-sharing.   For adults, the list of covered services includes mammograms, colonosopies and other cancer screnings, diabetes screenings, counseling for tobacco use and prenatal care.

For children, covered services include pediatric visits, vision and hearing screenings, immunizations and obesity screenings.

The cost sharing probihition appy to the specific perventive services provided.  Therefore, if the preventive service is billed separately from an office visit, it is the preventive service that will be no cost, not the entire office visit.

If the preventive service is not billed separately from the office visit, if the primary purpose of the visit was to receive the preventive service, the entire visit will be no cost.

On the other  hand, plans will not be required to provide coverage for preventive care delivered by an out-of-network provider.  If out-of-network preventive services are provided, plans are allowed to impose cost sharing for out-of-network services.

The agencies’ estimate that no cost preventive care will increase the cost of premiums by at least 1.5% per year, although evidence suggests a healthier workforce and higher productivity will make up for the increase over time.