On August 23, 2010, the Departments of Labor, Health and Human Services, and Treasury (the Departments) announced the release of EBSA Technical Release 2010-01 (the Technical Release), which establishes an interim federal external review process for non-grandfathered self-insured group health plans. The notice also announces the availability of three model notices that can be used to satisfy the Affordable Care Act disclosure requirements relating to the internal claims and appeals process and the federal external review process. This guidance builds on the interim final regulations (Interim Rules) issued by the Departments on July 23, 2010, regarding internal claims and appeals and external review processes required under Section 2719 of the Public Health Service (PHS) Act. (Prior guidance and our related Legal Alerts may be accessed from our Emerging Issues webpage at www.kilpatrickstockton.com.)
Interim Federal External Review Process
Section 2719(b) of the PHS Act requires self-insured health plans and other plans that are not subject to an existing state external review process meeting certain minimum requirements to comply with the federal external review process for plan years beginning on or after September 23, 2010. The statute directs the Departments to establish the minimum requirements for the federal external review process. The Interim Rules issued in July described the scope of claims eligible for the federal external review process, but not the process itself. For example, eligibility appeals are not subject to the new federal external review process.
The Technical Release describes an interim federal external review process that can be used by non-grandfathered self-insured health plans until the Departments issue guidance establishing a permanent process, which is expected to occur prior to July 1, 2011. The Technical Release also provides for a non-enforcement policy with respect to Section 2719(b) for self-insured group health plans that follow the federal external review process or that comply with the State external review process (provided the state process covers self-insured health plans). The interim enforcement safe harbor applies for plan years beginning on or after September 23, 2010, and ends when guidance is issued establishing a permanent federal external review process.
Eligibility for External Review. The Technical Release provides that a claimant (including the claimant’s authorized representative) may request an external review of any adverse benefit determination and any final internal adverse determination, as those terms are defined in the Interim Rules. This language alone suggests that a participant would be able to skip an internal appeal and go straight to the external appeal. However, we think the better view is that a participant is still required to exhaust an internal appeal before the external appeal, except in narrow circumstances (e.g., a claimant’s deemed exhaustion of internal appeal rights or an urgent care claim entitled to expedited review).
Standard External Review vs. Expedited External Review. The Technical Release establishes two types of federal external review processes – standard external review and expedited external review. The expedited external review must be provided to any claimant, upon request, if the claimant receives:
- An adverse benefit determination (as that term is defined in the Interim Rules), if the adverse benefit determination involves a medical condition for which the timeframe for completion of an expedited internal appeal (e.g., an appeal of an urgent care claim) would seriously jeopardize the life or health of the claimant or would jeopardize the claimant’s ability to regain maximum function; or
- A final internal adverse benefit determination (as that term is defined in the Interim Rules) if (1) the claimant has a medical condition where the timeframe for completion of a standard external review would seriously jeopardize the life or health of the claimant or would jeopardize the claimant’s ability to regain maximum function or (2) the determination concerns an admission, availability of care, continued stay, or health care item or service for which the claimant received emergency services, but has not been discharged from a facility.
Any external review request that is not eligible for expedited external review must be handled through the standard external review process.
Federal Standard External Review Process for Self-Insured Plans
The standard external review process must include the following steps:
Request for External Review. Claimants must be permitted to request an external review within four months of receipt of notice of an adverse benefit determination or a final internal adverse benefit determination.
Preliminary Review of an External Review Request. The plan must complete a preliminary review of the request within five business days to confirm that:
- The claimant is or was a participant at the time the health care item or service was requested, or in the case of a retrospective review, was covered under the plan when the item or service was provided;
- The adverse benefit determination does not relate to an individual’s failure to meet the applicable eligibility requirements;
- The claimant has exhausted the plan’s internal appeal process (unless the claimant is not required to do so under the Interim Rules – e.g., the plan has violated the procedures and the participant is deemed to have exhausted the participant’s internal appeal rights); and
- The claimant has provided all of the required information and forms.
Notice of Preliminary Review. The plan must notify the claimant regarding eligibility for external review within one business day of completing the preliminary review. If the claimant is not eligible, the notice must include the reason(s) and the contact information for the Employee Benefits Security Administration. If the claimant’s request is not complete, the plan must notify the claimant of the information or materials needed to complete the request and allow the claimant to perfect the request within the 4-month filing period or within 48 hours following receipt of the notice, whichever is later.
Referral to Independent Review Organization. The plan must assign the external review to an independent accredited Independent Review Organization (IRO). To ensure impartiality, the plan must contract with at least three IROs and rotate claims assignments among them or assign the reviews in some other unbiased method, such as random assignment. The IRO may not receive any financial incentives based on the likelihood that the IRO will support the denial of benefits.
IRO Contracts. The plan must enter into a written contract with each IRO to whom it assigns the external reviews. The contract must include provisions that require the following:
- The IRO must consult legal experts as appropriate to make coverage determinations.
- The IRO must timely notify the claimant in writing that the request has been accepted for external review and that the claimant may submit in writing within ten business days additional information for the IRO to consider when conducting the external review.
- Within 5 business days of the assignment to the IRO, the plan must provide the IRO any documents and information considered in making the adverse benefit determination or final internal adverse benefit determination. Failure to timely provide this information will not delay the external review, but may result in the reversal of the plan’s earlier determination.
- The IRO must forward any information that is submitted by the claimant to the plan within one business day. The plan may reconsider its earlier decision based on this information, but may not delay the external review. If the plan reverses its earlier decision, it must notify the claimant and the IRO in writing within one business day, and the external review will be terminated.
- Before reaching a decision, the IRO must review all information and documents that are timely submitted by the plan and claimant, along with other available information identified in the Technical Release. The IRO must review the claim de novo and may not be bound by any decisions or conclusions reached during the internal claims and appeals process.
- The IRO must provide written notice of the final external review decision within 45 days of the IRO’s receipt of the external review request. The Departments have drafted a model notice for this purpose.
- The IRO must maintain records of all claims and notices related to the external review process for six years. These records must be made available for examination by the claimant, plan and state or federal agencies, unless prohibited under state or federal privacy laws.
Reversal of the Plan’s Decision. If the IRO reverses the plan’s determination, the plan must immediately provide the requested coverage or pay the claim. In most cases, the IRO’s decision will be binding on the plan, but language in the Technical Release suggests that the plan may pursue other available remedies. It is unclear how broadly this language will be interpreted. The IRO’s decision is not binding on the claimant.
Federal Expedited External Review Process for Self-Insured Plans
The expedited external review process generally operates in the same manner as the standard external review process except for the changes noted below –
Request for Expedited Review. A group health plan must allow a claimant to make a request for expedited review at the time the claimant receives an adverse benefit determination or final internal adverse benefit determination that qualifies for expedited review.
Shorter Period for the Preliminary Review. Upon receiving a request for an expedited review, the group health plan must immediately complete the preliminary review and send the preliminary review notice to the claimant.
Shorter Period to Transmit Documents to the IRO. Upon referral to the IRO, the plan must send the IRO all necessary documents and information considered in making the adverse benefit determination or final internal adverse determination electronically, or by telephone or facsimile or some other expeditious manner.
Additional Contract Provisions. In addition to the required contractual provisions relating to the standard external review process, the contract between the plan and the IRO must also require the IRO to provide notice of the final external review decision as expeditiously as the claimant’s medical condition or circumstances require, but not later than 72 hours after the IRO receives the request. If the notice is not in writing, the IRO must provide written confirmation of its decision to the claimant and the plan within 48 hours after providing the notice.
The Departments have released three model notices which may be used to satisfy the disclosure requirements of the interim final regulations. The notices may be accessed through the Department of Labor’s website at www.dol.gov/ebsa. The notices include:
- A notice of adverse benefit determination (internal claim).
- Notice of final adverse benefit determination (internal appeal).
- Notice of final external review decision (external appeal).
Administrative Issues for Plans and Plan Sponsors
The Technical Release includes a number of issues for plans and plan sponsors, and unfortunately there is little time to manage them. For example, calendar year plans will have until January 1, 2011, to accomplish the following:
- The rules require the plan to process external appeals, send notices to participants and send the appeal to an appropriate IRO. Presumably, a plan can contract with their existing TPAs to perform these actions, but TPAs will need to be contacted, procedures will need to be developed and TPA contracts will need to be updated.
- Rather than an IRO being a subcontractor of a TPA, plans are required to independently contract with at least three IROs. Presumably, TPAs can assist in finding appropriate IROs, but the independent contracting requirement for plans is significant not only because separate contracts must be negotiated and signed with each IRO, but also because each IRO will also need to execute a HIPAA business associate agreement.
- In order to bind participants to the external review process, a description of the procedures will need to be added to the plan’s SPD or an applicable SMM.
- Each TPA’s form of EOB will need to be updated based on the new model notices for EOBs.