On June 22, 2011, HHS, IRS and the Department of Labor (collectively, the Departments) amended the PPACA internal claims and appeals and external review regulations and issued a new Technical Release 2011-02 (the Technical Release) that provides new guidance on external review. The Technical Release also updates the content requirements of the initial and final adverse benefit determinations notices.

PPACA mandated new internal claims and appeals and external review processes for nongrandfathered plans only. The Departments published interim final regulations implementing this requirement last fall, which were described in more detail in our August 2010 Employee Benefits Update.

Significant changes to the internal claims and appeals requirements include:

  • Urgent Care Notifications. Plans have up to 72 hours (not 24) after receipt of an urgent care claim to adjudicate the claim, provided the plan defers to the attending provider with respect to the decision as to whether a claim constitutes "urgent care."  
  • Additional Notice Content. The requirement to include diagnosis and treatment codes and their corresponding meanings in the notices of initial and final adverse benefit determinations has been eliminated in response to privacy concerns. However, plans must now notify claimants that they can request the diagnosis and treatment codes, and their corresponding meanings, in all notices of initial and final adverse benefit determinations.  
  • Culturally Appropriate Notices. The Departments revised the threshold triggering the requirement to provide notices in a non-English language. If the claimant lives in a county in which 10% or more of the population speaks the same non-English language, the notice must include a statement that notices are available in that non-English language upon request. Whether a county has a 10% or more population of non-English speakers is determined by the United States Census Bureau American Community Survey data. In addition, plans must now provide a customer assistance process (such as a telephone hotline) with oral language services in the relevant non-English language. However, plans no longer need to track who has requested non-English notices and provide all notices thereafter in that language.  
  • Deemed Exhaustion of Internal Claims and Appeals. The Departments added an exception to the strict compliance standard for failure to follow the plan's claims and appeals regulations. The failure will not trigger a deemed exhaustion of the internal claims and appeals process if the failure is de minimis, nonprejudicial, due to good cause or matters beyond the plan's control, in the context of an ongoing good faith exchange of information with the claimant, and not reflective of a pattern or practice of noncompliance.  

Changes to the external review requirements include the following:  

  • Scope of External Review. Until further guidance is published, the Departments narrowed the scope of claims eligible for external review to claims that involve medical judgment, as determined by the independent review organization (IRO), and rescissions of coverage. This change applies to claims initiated after September 20, 2011.  
  • Binding Determination. Plans must provide benefits pursuant to an IRO decision without delay and regardless of whether the plan intends to seek judicial review of the external review decision and unless or until there is a judicial decision otherwise.  
  • Deadline to Contract with IROs. To be eligible for the safe harbor from enforcement, plans must contract with at least two IROs by January 1, 2012, and with at least three IROs by July 1, 2012.  
  • Assignment Process. Plans may use an alternative method for assigning IROs (other than random or rotating assignment), but the plan must document how the selected method is random, independent and without bias.
  • Revisions to Model Adverse Benefit Determination Notices. The Departments added a model sentence to their model adverse benefit determination notice for plans to use if they meet the new threshold for non-English language notices. The model sentence has been provided in all four languages that meet the threshold throughout the country: Spanish, Tagalog, Chinese and Navajo.