The Treasury, DOL, and the Department of Health and Human Services jointly issued amendments to the interim final rules governing the internal claims and appeals and the external review processes required under the Patient Protection and Affordable Care Act (PPACA). As previously reported, PPACA contains a number of provisions affecting the claims and appeal procedures of non-grandfathered health plans. During the past 12 months, the agencies issued two rounds of guidance regarding the implementation of these important provisions. As with the previous guidance, the most recent guidance generally provides relief for plan sponsors and administrators. Below is a summary of the amendments:

Expedited Notification for Urgent Care Benefit Determinations. Previously, the interim final regulations required a plan to notify a claimant of benefit determinations involving urgent care as soon as possible, but no later than 24 hours after receipt of the claim. Under the new amended regulations, so long as the plan defers to the attending provider over whether the claim involves a matter of urgent care, the urgent care determination can be made as soon as possible, but not later than 72 hours. This extension is consistent with the urgent claim review process required by ERISA.

Additional Notice Requirements for Internal Claims and Appeals. The July 2010 regulations required a plan to include treatment and diagnostic codes, and the meaning of those codes, in any notice of adverse benefit determination. Under the amended regulations, plans are no longer required to automatically provide diagnosis and treatment codes. Instead, the adverse benefit determination must notify the claimant of his or her opportunity to request the codes and their meanings. The amendment also clarifies that a plan must not consider a request for diagnosis or treatment information as a request for an internal appeal or external review.

Deemed Exhaustion of Internal Claims and Appeals Processes. Courts generally require claimants to exhaust administrative proceedings before going to court or seeking external review. However, the July 2010 regulations permitted claimants to immediately seek judicial review if a plan failed to strictly adhere to all of the July 2010 regulation requirements for internal claims and appeals processes. The amended regulations provide exception to the strict compliance standard for procedural errors that are considered:

  • De minimis
  • Non-prejudicial
  • Attributable to good cause or matters beyond the plan’s control
  • In the context of an ongoing good-faith exchange of information
  • Not reflective of a pattern or practice of non-compliance

Also, the claimant is entitled upon written request to an explanation of the plan’s basis for asserting that it meets the exception.

Form and Manner of Notice. PPACA requires group health plans to provide relevant notices in a culturally and linguistically appropriate manner. The July 2010 regulations required that notices be provided in a non-English language based on separate thresholds depening on the number of plan participants who are literate in the same non-English language. The amended regulations establish a single threshold for people literate only in the same non-English language: 10 percent or more of the population residing in the claimant’s county, as determined by American Community Survey data published by the United States Census Bureau.

Scope of the Federal External Review Process. Under the July 2010 regulations, claims eligible for external review included any adverse benefit determination unless it related to a participant’s or beneficiary’s failure to meet the requirements for eligibility under the terms of the group health plan. The new amendment restricts the broad scope of claims eligible for the federal external review process and to claims that involve medical judgment, as determined by an external reviewer, or a rescission of coverage.

Clarification Regarding Requirement That External Review Decisions Be Binding. The July 2010 regulations provided that an external review decision by an Independent Review Organization (IRO) is binding on the plan as well as the claimant, except to the extent that other remedies are available under state or federal law. The new amendment adds language to the final regulations stating that the plan must provide benefits pursuant to the final external review decision without delay, regardless of whether the plan intends to seek judicial review and unless or until there is a judicial decision otherwise.

The effective date of the amendments to the claims and appeals procedures affecting non-grandfathered plans is July 22, 2011.

The amended regulations and revised model notices for adverse benefit determinations are available at www.dol.gov/ebsa/healthreform.