This is the 19th in a series of WorkCite articles concerning the Patient Protection and Affordable Care Act and its companion bill, the Health Care and Education Reconciliation Act of 2010 (referred to collectively as the Act). This WorkCite discusses guidance issued by the DOL, IRS and HHS (the Departments) that extends a grace period to all non-grandfathered plans that must comply with the internal claims and appeals process and external review process as required under the Act.
Background
Since its inception in 1974, ERISA has contained a requirement that all covered plans contain specific rules regarding the processing of initial claims for benefits and appeals of those claims. The Act supplemented those long-standing procedures regarding internal claims and appeals in non-grandfathered health plans, and it added new rules regarding implementing an external review process.
In July, 2010, the Departments jointly issued interim final regulations that described seven new requirements for the internal claims and appeals process for non-grandfathered plans, effective for plan years beginning on and after September 23, 2010. Plan sponsors and insurers complained about both the substance and the timing of the new rules, so the Departments granted an enforcement grace period for four of the new rules to July 1, 2011. See DOL Technical Release 2010-02.
In DOL Technical Release 2011-01, the Departments have further extended the enforcement grace period for some of the changes covered under Technical Release 2010-02 to plan years beginning on or after January 1, 2012; however, for other changes the enforcement deadline was not extended, and the effective date remains plan years beginning on or after July 1, 2011. Therefore, plan sponsors and insurers must now adhere to as many as three separate effective or enforcement dates for the seven new rules, depending on the fiscal year on which their plans are operated.
Three Enforcement/Effective Dates for New Claims Process Rules
Technical Release 2011-01, requires plan sponsors and insurers to comply with three sets of effective dates for the seven new rules (described in more detail here) that apply to internal claims and appeals:
Changes Required for Plan Years Beginning on or after September 23, 2010,
(effective January 1, 2011 for plans that operate on a calendar plan year).
- The scope of adverse benefit determinations eligible for claims and appeals is extended to include rescissions of coverage.
- The plan’s claims administrator must provide the claimant with any new evidence considered in connection with the claim and may not base its decision on the new evidence without giving the claimant a right to respond.
- Claims and appeals must be adjudicated by impartial and independent persons who are free of conflicts of interest and whose remuneration is not based on the outcome of the claim or appeal.
Plan Years Beginning on or after July 1, 2011,
(effective January 1, 2012 for plans that operate on a calendar plan year).
- Notices of adverse determination must provide the following additional content: A description of the claim involved, date of service, health provider and claim amount. The denial code (and its meaning) and a description of the standard(s) used to deny the claim. A description of internal appeals and external review processes, including information on how to initiate an appeal. Contact information for the applicable office of health insurance consumer assistance or ombudsman. Technical Release 2011-01 contains a helpful list of the current contact information for all of these state offices. Upon request of the claimant, diagnostic and treatment codes (and their meaning). It is possible the claimant is entitled to this information on request before July 1, 2011, to the extent it is relevant to a healthcare claim under existing DOL claims regulation 29 C.F.R. §2560.503-1(m)(8).
- A description of the claim involved, date of service, health provider and claim amount.
- The denial code (and its meaning) and a description of the standard(s) used to deny the claim.
- A description of internal appeals and external review processes, including information on how to initiate an appeal.
- Contact information for the applicable office of health insurance consumer assistance or ombudsman. Technical Release 2011-01 contains a helpful list of the current contact information for all of these state offices.
- Upon request of the claimant, diagnostic and treatment codes (and their meaning). It is possible the claimant is entitled to this information on request before July 1, 2011, to the extent it is relevant to a healthcare claim under existing DOL claims regulation 29 C.F.R. §2560.503-1(m)(8).
Plan Years Beginning on or after January 1, 2012,
(effective January 1, 2012 for plans that operate on a calendar plan year).
- The time frame for processing urgent care claims is reduced from 72 hours to a maximum of 24 hours.
- Notices of adverse determination must provide diagnostic and treatment codes (and their meaning).
- Notices must be provided in a manner that is culturally and linguistically appropriate.
- If the plan or insurer fails to “strictly adhere” to all requirements, the claimant may forego the remaining internal review process, and may initiate external review or go directly to court.
MW Comment: The Departments intend that the new rules will supersede any conflicting provisions in the DOL regulations that have been in place for many years. However, to date, the DOL has not issued any correlative amendment to those regulations.
What Non-Enforcement Means: “Good Faith Compliance” No Longer Required
As with the initial grace period, during the extended grace period, the Departments will not take any enforcement action against a non-grandfathered group health plan with respect to these provisions. HHS is encouraging states to provide similar grace periods with respect to enforcement with these standards against insurance issuers, and HHS will not cite a state for failing to substantially enforce compliance with the standards.
Most important, where Technical Release 2010-02 required non-grandfathered plans to be working in good faith to implement the standards for the enforcement grace period to apply, under this Technical Release 2011-01, no such “working in good faith” requirement will apply. Therefore, a non-grandfathered plan will not need to demonstrate good faith compliance efforts in order to benefit from the non-enforcement period for the original and extended grace periods.
Update on Federal External Review
The Departments note that, while there have been a number of comments following the interim final regulations with respect to the scope of the federal external review process, neither Technical Release 2011-01, nor the prior guidance in Technical Release 2010-02 and the model notices authorized by the Departments specifically address the federal external review process, which is still being reviewed and may be addressed in future guidance.
The Departments do note, however, that where any state has established external review processes, the scope of claims eligible for those external review processes is determined under applicable state law.
If you have any questions regarding Technical Release 2011-01 or your plan’s internal claims and appeals or external review process, please contact any member of the McGuireWoods Employee Benefits Team.