Note: Effective for plan years beginning on or after September 23, 2010; applies non-grandfathered plans only.
Under the ACA, all non-grandfathered group health plans are required to implement an effective internal claims and appeals process along with an external review process.
Internal Claims and Appeals
In general, the regulations require all plans to comply with the DOL claims procedure rules along with some speciﬁc additional requirements (outlined below). This includes both ERISA and non-ERISA plans but does not include stand-alone dental or vision plans or other non-health related welfare plans.
Adverse Benefit Determinations
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.
Urgent Care Benefit Determinations
The time period for providing notification in the case of an urgent care claim continues to be as soon as possible, taking into account the medical exigencies, but not later than 72 hours after the receipt of the claims.
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.
Conflicts of Interests
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
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.
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 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 must provide this information upon request.
Additionally, the plan 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.
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 claims appeals process has been exhausted, claimants will have the option of requesting a review by an independent external review organization, generally known as an Independent Review Organization (IRO).
The IRO does not have to give deference to the plan sponsor’s earlier claims and appeals decisions, but it must observe written terms of the plan document.
External review differs from the existing claims and appeals procedure because the final decision on the claim would be made by the IRO. The decision of the IRO is binding on the plan.
Under the Department's regulations the scope of the external review process applies to:
An adverse beneﬁt determination, including a ﬁnal internal adverse beneﬁt determination, by a plan that involves medical judgment, including but not limited to those based on the plan's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered beneﬁt; or its determination that a treatment is experimental or investigational; and
A rescission of coverage (regardless of whether or not the rescission has any effect on any particular beneﬁt at that time).