This is the 22nd in a series of WorkCite articles concerning the Patient Protection and Affordable Care Act and its companion bill, the Health Care and Education Reconciliation Act of 2010 (referred to collectively as the Act). This WorkCite discusses recent guidance issued by the DOL, IRS and HHS (the Departments) that amends and clarifies the rules regarding the internal claims and appeals and external review process required under the Act. These rules apply only to non-grandfathered plans. Plans and insurers, alike, should welcome these changes, which are largely aimed at easing the administrative burdens of compliance.
Background
On July 23, 2010, the Departments jointly issued regulations regarding internal claims and appeals and external review process under the Act (the July 2010 regulations). The July 2010 regulations and subsequent guidance described the new requirements for the internal claims and appeals process for non-grandfathered plans, set forth the rules governing compliant state external review processes, and outlined the requirements of the Federal external review process.
MW Comment: For more information about these requirements see the following articles: Installment No. 9, Installment No. 10, Installment No.19.
To assist plans and insurers with compliance, the Departments issued additional guidance on June 22, 2011, consisting of (1) an amendment to the July 2010 regulations, which becomes effective July 22, 2011, and (2) DOL Technical Release 2011-02 (including revised model notices), that clarify and make changes to the July 2010 regulations and subsequent enforcement guidance.
Internal Claims and Appeals Process
1. Expedited Notification Requirements for Urgent Care Claims
The Departments are abandoning the requirement that a claimant be notified of a benefit determination (whether adverse or not) regarding a pre-service urgent care claim as soon as possible, but not later than 24 hours after the receipt of the claim. Plans and insurers are now permitted to follow the original rule in the DOL claims procedure, which requires a determination as soon as possible, consistent with the medical exigencies involved, but in no event later than 72 hours after receipt of the claim. However, plans and insurers must defer to the attending provider with respect to the decision as to whether a claim constitutes “urgent care.”
2. Additional Notification Requirements
Disclosure of Diagnosis and Treatment Information. The Departments are eliminating the requirement to automatically provide diagnosis and treatment codes as part of a notice of adverse benefit determination. Instead, the notice must inform the claimant that he or she may request the diagnosis and treatment codes and that the diagnosis and treatment codes and their meanings must be provided upon request. Further, any request for such information, in itself, may not be considered to be a request for (and thereby constitute the start of) an internal appeal or external review.
Notice to Enrollees in a “Culturally and Linguistically Appropriate” Manner. The Departments have simplified the criteria to determine when individuals must be provided notifications in a “culturally and linguistically appropriate” manner (i.e., a non-English language).
- Single Threshold: The July 2010 regulations set different standards for the group and individual markets for providing notices in a non-English language; the Departments, however, are now establishing a single threshold for both markets. The threshold of people who are literate only in the same non-English language is now set at 10% of the population residing in the claimant’s county, as determined based on U.S. census data which will be available on the DOL website.
- Non-English Language Statements: Each notice sent by a plan or insurer to an address in a county that meets the 10% threshold must include a one-sentence statement in the relevant non-English language about the availability of language services. Sample sentences are included in the model notices.
MW Comment: Most of the listed counties are in Puerto Rico, Texas, or California, and the vast majority list Spanish as the non-English language. (One lists Chinese, two list Tagalog, and three list Navajo.) But, note that the rule is applied to the county in which the claimant is located. Therefore, unless the plan sponsor or insurer provides the required Spanish language on all group health plan notices, the plan sponsor or insurer will need to tailor the content of each notice based on the address to which the notice will be sent.
- Non-English Language Assistance: Plans or insurers are required to provide a customer assistance process with oral language services (e.g., a telephone hotline) in the non-English language and provide written notices in the non-English language upon request.
- No “Tag and Track”: Plans and insurers are no longer required to “tag and track” individuals and automatically provide them with future notices in a non-English language.
3. New Exceptions to the Deemed Exhaustion Rule
Under the July 2010 regulations, if a plan or insurer failed to strictly adhere to the July 2010 regulations, the claimant would be deemed to have exhausted the internal claims and appeals process, thereby permitting the claimant to seek immediate external or judicial review. Though plans and insurers are still required to strictly adhere to the July 2010 regulations’ requirements, claimants will not be entitled to seek immediate external or judicial review if the noncompliance by the plan or insurer is:
- de minimis;
- non-prejudicial;
- attributable to good cause or matters beyond the plan’s or insurer’s control;
- made in the context of an ongoing good faith exchange of information; and
- not reflective of a pattern or practice of noncompliance.
However, claimants may request in writing an explanation of the plan’s or insurer’s basis for asserting that it meets the criteria outlined above. In addition, if the external reviewer or the court rejects the claimant’s request for immediate review because the plan or insurer met the criteria, the claimant is entitled to resubmit and pursue the internal appeal of the claim.
External Review
1. Duration of Transition Period for State External Review Processes
The July 2010 regulations require that each state’s external review process include 16 minimum consumer protection standards (based on the Model Health Carrier External Review Act promulgated by the National Association of Insurance Commissioners). The Departments have established a transition period to give states additional time to amend their external review processes to meet or exceed these standards. The transition period extends to December 31, 2011. In addition, the Departments have also established a set of temporary standards that will apply until January 1, 2014. Until the earlier of these two dates, plans and insurers may comply with an applicable state external review process that meets the temporary standards even if it does not meet all of the standards in the July 2010 regulations. Beginning January 1, 2014, a state external review process must satisfy the standards in the July 2010 regulations, or the plan or insurer will be subject to the Federal external review process.
2. Scope of Federal External Review
For plans that are subject to the federal external review process, the July 2010 regulations provide that an adverse benefit determination generally can be reviewed under the federal external review process unless it relates to the claimant’s failure to meet the plan’s or insurer’s eligibility requirements. The Departments have temporarily narrowed the scope of claims that are eligible for the federal external review process. Until January 1, 2014, claims for external review that are not initiated before September 20, 2011 will also be denied review under the federal external review process unless the claim involves medical judgment, as determined by the external reviewer, or a rescission of coverage. Claims that involve only contractual or legal interpretation without any use of medical judgment will be denied. The January 1, 2014 date may be modified by subsequent action of the Departments.
3. Self-Insured Plan Enforcement Safe Harbor
DOL and IRS are modifying their enforcement policy with respect to independent review organizations (IROs). To be eligible for a safe harbor from enforcement from DOL and IRS, self-insured plans will be required to contract with at least two IROs by January 1, 2012 (and with at least three IROs by July 1, 2012) and to rotate assignments among them. These requirements remain part of an enforcement safe harbor. A plan may use an alternative process to meet the standards regarding random assignment; however, DOL and IRS will look closely case-by-case at any process other than the rotational assignment. At a minimum, plans are expected to document how any alternative process constitutes random assignment, as well as how it ensures that the process is independent and unbiased.
4. Binding Decisions on External Review
In the new guidance, the Departments reiterate that IRO decisions are binding. If an IRO rules in favor of the claimant, plans and insurers must continue to provide benefits and pay claims, without delay, until the plan or insurer receives a judicial decision otherwise.
MW Comment: The amendment does not modify the controversial rule in the July 2010 regulations requiring non-grandfathered plans to extend coverage or pay claims where the IRO has held in favor of the claimant, even where the plan sponsor or insurer subsequently files a judicial appeal of the IRO’s decision. In those instances where the IRO ultimately wins on judicial appeal, it will be very difficult to recover for any coverage or payments already provided, thus magnifying the practical finality of the IRO’s decision.