By Lauren Bikoff, MLS
The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) requires group health plans and health insurers to implement an “effective” process for appeals of coverage determinations and claims, including an internal claims appeal process and employee notification. The IRS, Employee Benefits Security Administration (EBSA), and the Department of Health and Human Services (HHS) recently issued final rules implementing the internal claims appeal and external review requirements in PHSA Sec. 2719 (Final rules, 80 FR 72192, November 18, 2015).
The ACA added ERISA Section 715(a)(1) and IRC Sec. 9815(a)(1) to incorporate the provisions of part A of title XXVII of the PHSA into ERISA and the IRC, and make them applicable to group health plans, and to health insurance issuers providing health insurance coverage in connection with group health plans. State laws imposing on health insurers requirements that are stricter than those in the ACA are not superseded by the ACA.
The appeals process must include, at a minimum, the following: an established internal claims appeal process; a notice to participants, in a “culturally and linguistically appropriate manner,” of available internal and external appeals processes, including the availability of assistance with the appeals processes; and a provision allowing an enrollee to review his or her file, to present evidence and testimony as part of the appeals process, and to receive continued coverage during the appeals process.
The Government Accountability Office (GAO) found that when a coverage denial was appealed, the decisions were frequently reversed in the consumer’s favor (GAO-11-268, March 2011). For example, the GAO found that 39 percent to 59 percent of appeals resulted in the insurer reversing its original coverage denial. This data illustrates how the ACA’s internal claims appeals requirements can be viewed a strong consumer protection.
Note that these rules do not apply to grandfathered health plans.
Regs and guidance issued
Since the ACA was enacted in 2010, the Departments have issued interim final regulations and other subregulatory guidance regarding the internal claims appeals and external review requirements. Some of the important items are:
- Interim final regulations (75 FR 43329, July 23, 2010);
- Technical Release 2010-01, August 23, 2010;
- Affordable Care Act Implementation FAQ Part I, September 20, 2010;
- Technical Release 2011-01, March 18, 2011;
- Amendments to the interim final regulations (76 FR 37207, June 24, 2011); and
- Technical Release 2013-01, March 23, 2013.
The final regulations adopt the interim final regulations, without substantial change, and also codify some of the enforcement safe harbors, transition relief, and clarifications set forth through the subregulatory guidance.
Internal claims appeal standards
The final rules specify that plans and issuers are required to comply with the following standards:
- The scope of adverse benefit determinations eligible for internal claims and appeals includes a rescission of coverage (whether or not the rescission has an adverse effect on any particular benefit at the time);
- A plan or issuer must notify a claimant of a benefit determination (whether adverse or not) with respect to a claim involving urgent care as soon as possible, taking into account the medical exigencies, but not later than 72 hours after the receipt of the claim by the plan or issuer;
- Clarifications with respect to full and fair review, such that plans and issuers are clearly required to provide the claimant (free of charge) with new or additional evidence considered, relied upon, or generated by the plan or issuer in connection with the claim, as well as any new or additional rational for a denial at the internal appeals stage, and a reasonable opportunity for the claimant to respond to such new evidence or rationale;
- Clarifications regarding conflicts of interest, such that decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to an individual, such as a claims adjudicator or medical expert, must not be based upon the likelihood that the individual will support the denial of benefits;
- Notices must be provided in a culturally and linguistically appropriate manner;
- Notices to claimants must provide additional content, including that any notice of adverse benefit determination or final internal adverse benefit determination must include information sufficient to identify the claim involved, including the date of service, the health care provider, the claim amount, and a statement describing the availability of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning; and
- With the exception of de minimis violations under specified circumstances, if a plan or issuer fails to adhere to all the requirements of the final regulations, the claimant is deemed to have exhausted the plan’s or issuer’s internal claims and appeals process, and the claimant may initiate any available external review processes.
Adverse benefit determination. The definition of an “adverse benefit determination” has been expanded from the definition in the DOL claims procedure to include a rescission of coverage. A “rescission” is defined as a cancellation or discontinuance of coverage that has retroactive effect, except when it is due to a failure to timely pay required premiums or contributions towards the cost of coverage.
An adverse benefit determination eligible for internal claims and appeals processes under the final regulations includes a denial, reduction, or termination of, or failure to provide or make a payment for, a benefit, based on 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.
A denial, reduction, or termination of, or a failure to provide or make a payment (in whole or in part) for a benefit can include both pre-service claims (for example, a claim resulting from the application of any utilization review), as well as post-service claims. Failure to make a payment in whole or in part includes any instance where a plan pays less than the total amount of expenses submitted for a claim, including a denial of part of the claim due to the terms of a plan or health insurance coverage regarding copayments, deductibles, or other cost-sharing requirements.
Full and fair review. The regulations provide additional criteria to ensure that a claimant receives a full and fair review. In addition to complying with the requirements of the existing DOL claims procedure regulation, 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. In addition, this information must be provided automatically to the claimant.
The final regulations note that merely sending a notice informing participants of the availability of such information fails to satisfy this requirement. 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. The final regulations provide criteria to avoid conflicts of interest in claims determinations and appeals. 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 and linguistically appropriate standard. The statute and the regulations require a plan to provide a notice to enrollees “in a culturally and linguistically appropriate manner.” This provision applies to both the 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. The threshold for when the culturally appropriate notice must be provided is when at least 10 percent of the population residing in the claimant's county shares the same language and culture of the claimant.
The plan or issuer also must include a statement in the English versions of all notices, prominently displayed in the predominant non-English language, offering the provision of such notices in that non-English language. In addition, if the plan or issuer maintains a customer assistance process (such as a telephone hotline) that answers questions or provides assistance with filing claims and appeals, the plan or issuer must make available the opportunity for such assistance in the non-English language.
Notice of adverse determination. 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), and the reason or reasons for the adverse benefit determination or final internal adverse benefit determination including the denial code and its corresponding meaning. The notice also must include a description of the plan's or issuer's standard, if any, that was used in denying the claim. For example, if a medical necessity standard is used to deny a claim, that standard must be described. For a notice of final adverse benefit determination, this description must include a discussion of the decision.
The notice also must inform claimants of the opportunity to request the diagnosis and treatment codes in all notices of adverse benefit determination (and notices of final internal adverse benefit determination), and plans and issuers must provide this information upon request.
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. Model notices and related guidance that can be used to satisfy all the notice requirements under the final regulations are available at http://cciio.cms.gov.
For prior authorization, a plan or issuer has 15 calendar days to issue a notice. For a post-service review, a plan has 30 calendar days. For claims involving urgent care, plans or issuers should act as soon as possible, taking into account the medical exigencies, but not later than 72 hours after the receipt of the claim by the plan or issuer.
Failure to comply. If a plan fails to strictly adhere to all the requirements of the internal claims and appeals process, the claimant is considered to have exhausted the internal claims and appeals process and may proceed to request an external review and pursue any available remedies under applicable law, such as judicial review. The final regulations contain an exception to this strict adherence standard for errors or “violations” that are minor and that meet “certain other specified conditions” such as “non-prejudicial”; attributable to good cause or matter beyond the plan's control; or not reflective of a pattern or practice of non-compliance.
Pending the outcome of an internal appeal, a plan and issuer must provide continued coverage, which, under the DOL claims procedure regulation, means that a plan or issuer may not reduce or terminate an ongoing course of treatment without providing advance notice and an opportunity for advance review. In urgent care and in ongoing course of treatment situations, individuals may seek expedited external review at the same time as the internal appeals process, under the external review process of either a state or the federal government, according to the Uniform Health Carrier External Review Model Act issued by the NAIC (NAIC Uniform Model Act).
Once the internal review process has been exhausted, health plan enrollees may seek an external review. The statute and the regulations provide that group health plans must comply with either a state external review process or the federal external review process. The regulations provide a basis for determining when plans must comply with a state external review process and when they must comply with the federal external review process.
For health insurance coverage, if a state external review process includes, at a minimum, the consumer protections in the NAIC Uniform Model Act in place on July 23, 2010, then the insurer must comply with the applicable state external review process and not with the federal external review process. Therefore, if benefits under a group health plan are provided through health insurance coverage, the insurer, and not the plan itself, is required to satisfy the obligation to provide an external review process. However, if the state external review process does not meet, at a minimum, the consumer protections in the NAIC Uniform Model Act, and where there is no applicable state external review process, a plan or issuer then is subject to the federal external review process.
Transition relief. In June 2011, the Departments announced that plans and issuers could continue to participate in a state external review process that met federal standards that were NAIC-similar for a limited time. In the final regulations, the Departments noted that many states have done considerable work to bring their external review processes into compliance. However, not all states are in compliance and therefore, the Departments have extended the transition period to allow states more time to meet the NAIC-parallel external review process standards. This transition relief has been extended through December 31, 2017. This transition relief will provide states that are currently in the process of making changes to external review laws time to implement NAIC-parallel external review processes.
Once this transition period has ended, plans and issuers in a state that has not implemented the NAIC-parallel external review process will be required to comply with a federal external review process, the Departments noted.
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