Judy Kamens Compliance Specialist View Bio

Interim Final Rules on New Appeals Process

July 30, 2010

 

Under the Patient Protection and Affordable Care Act, a non-grandfathered group health plan must adopt an improved internal claims and appeal process and follow minimum requirements for external review. On July 23, 2010, interim final regulations were issued implementing these requirements (the Interim Final Rule). The appeals process rules are effective for plan years beginning on or after September 23, 2010. It does not apply to grandfathered health plans.

Key provisions of the Interim Final Rule include information on:

  • How to comply with updated internal claims and appeals processes;
  • Determining whether a state or federal external review process applies for appeals, along with guidance for each process; and
  • Requirements for notices in connection with the appeals process.

SUMMARY OF THE INTERIM FINAL RULE

-Internal Claims and Appeals Process for Group Health  Health care reform requires group health plans to implement an effective internal claims and appeals process. These plans, as well as health insurance issuers providing their health insurance coverage, must follow the Department of Labor’s claims procedure rules for group health plans.1 In addition to the existing DOL claims procedure regulations, group health plans must follow a number of new requirements:

  1. New Definition of “Adverse Benefit Determination.” The definition of the term adverse benefit determination is found in the claims procedure regulations. It includes a denial, reduction, termination of, or failure to pay for (in whole or in part), a benefit under the plan. It includes decisions based on an eligibility to participate in the plan, a benefit not being a covered benefit, imposition of an exclusion, or a benefit being experimental or not medically necessary.
  2. Denials can include both pre- and post-service claims. The Interim Final Rule adds rescissions of coverage to the definition of the term adverse benefit determination. A rescission is a cancellation or discontinuation of coverage that has a retroactive effect. A cancellation because of a failure to timely pay premiums for coverage is not considered a rescission.
  3.  Expedited Notice for Urgent Care Claims. Under the Interim Final Rule, group health plans must notify claimants of a benefit determination involving an urgent care claim more quickly. The new deadline is as soon as possible, taking into account the medical circumstances, but not later than 24 hours after the plan gets the claim. There is an exception to the deadline if the claimant does not provide enough information to 1 www.federalregister.gov/a/00-29766
  4. the plan. The prior rule required the notice to be given within 72 hours. The change is attributable to faster decision-making capabilities, due to electronic communication.
  5. Full and Fair Review. In addition to complying with the claims procedure regulations’ existing requirements, group health plans must follow additional rules to make sure claimants receive a full and fair review. Specifically, the plan must give the claimant any new evidence related to the claim or new rationale for a decision, free of charge. It must be provided as soon as possible and early enough before the appeal deadline to let the claimant respond.
  6. Avoiding Conflicts of Interest. Group health plans must make sure that all claims and appeals are decided in a way that avoids conflicts of interest. The decision method must be designed to ensure the independence and impartiality of the decision-makers. The decision to hire a person involved in deciding claims or appeals must not be made based on the likelihood that they will support a denial of benefits. For example, a plan cannot provide bonuses based on the number of denials made by a claims adjudicator. Also, a plan cannot hire a medical expert based on his or her reputation for outcomes in contested cases, rather than his or her professional qualifications.
  7. Deemed Exhaustion of Internal Claims and Appeals Processes. If a plan fails to comply with these rules, the claimant will be deemed to have exhausted the plan’s internal claims and appeals process, even if the plan claims that it substantially complied with the requirements. That means that the claimant is free to pursue other remedies, such as external review or a lawsuit.
  8. Continued Coverage Pending Outcome of Internal Appeals. Under the new rules, a plan must continue to provide coverage to the claimant until an internal appeal is resolved. Generally, this means that plans may not reduce or terminate an ongoing course of treatment without advance notice and an opportunity for advance review. Also, anyone in an urgent care situation or receiving an ongoing course of treatment may be allowed to proceed with an expedited external review at the same time as the internal appeal.

-External Review Standards

Group health plans must comply with either a state external review process or the federal external review process.The Interim Final Rule provides guidance on which process must be followed.

 

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