Under the Patient Protection and Affordable Care Act (PPACA), group health plans and health insurance issuers that are not grandfathered health plans, or that lose their grandfathered health plan status, are required to comply with specific internal claims and appeals procedures and external review processes, effective as of the first day of the first plan year beginning on or after September 23, 2010. The DOL, the Department of Health and Human Services, and the Treasury (the Departments) previously issued an interim final regulation regarding the internal claims and appeals procedure providing that additional guidance on the external review process would be forthcoming.

On July 23, 2010, the Departments jointly issued interim procedures and model notices for the new Federal external review process. An enforcement safe harbor was established for self-funded plans that comply either with the external review process included in Technical Release 2010-01 or with a state external review process available in a state where the state chooses to expand access for self-funded plans to participate in its external review process. The federal process included in Technical Release 2010-01 includes procedures for standard and expedited external reviews.

Under the "standard external review," a participant has four months to request external review following receipt of notice of an adverse benefit determination or final internal adverse benefit determination. The plan must then complete a preliminary review of the external request within five days to determine eligibility for external review. Plans must contract with at least three accredited independent review organizations (IROs) and then, when eligibility of a claim is established, rotate those claim assignments among the IROs (the Technical Release includes additional requirements for an agreement between an IRO and a plan). The IRO review is completed on a de novo basis. IROs must provide written notice of the final external review decision to the plan and the participant within 45 days of receiving the request. The plan must immediately provide coverage or payment for a claim if the IRO decision reverses the prior adverse benefit determination.

Plans must allow participants an "expedited external review" if the timeframe for either the internal review process or standard external review process would seriously jeopardize the life or health of the claimant, or the claim concerns an admission, availability of care, continued stay, or health care item or service for which the claimant received emergency services, but was not discharged from the facility. Plans must immediately complete a preliminary review of an expedited external review request, and if eligible, refer to an IRO. The IRO again reviews the claim de novo, and must provide a decision as expeditiously as the claimant's medical condition requires, but in no event more than 72 hours after receipt by the IRO.

Reinhart Comment: Self-funded plans that have lost or lose grandfathered status are subject to these requirements the first day of the plan year beginning on or after September 23, 2010. These plans will need to move quickly to establish contracts with three IROs. Additional questions still exist regarding the potential fiduciary status of IROs and whether plans can challenge an IRO determination.