Amended Appeal Rules for Employer and Individual Health Plans

On June 24, 2011, the Centers for Medicare & Medicaid Services (CMS), in conjunction with the Internal Revenue Service (IRS) and the Employee Benefits Security Administration (EBSA), released amendments to a set of interim final rules regarding claims and appeals review processes that were originally published in July 2010.[1]

The rules and amendments implement requirements of the Affordable Care Act (ACA) by establishing requirements for internal claims and appeals, and for external review processes, for health insurance coverage in the group and individual markets.[2]  The interim final regulations, as amended, were effective on July 22, 2011.[3]  However, it remains uncertain when these "interim final regulations" will become "final regulations."

As described below, the 2011 amendments weaken the 2010 interim final rules in some respects while offering certain procedural clarifications.

Amendments Concerning Internal Claims and Appeals

1. Expedited Notification of Determinations on Claims Involving Urgent Care

2010 Rule:  Shortened from 72 hours to 24 hours the maximum time limit for plans to notify claimants of determinations on urgent care claims.[4]  Comments on the rules noted that the shortened period would be especially important for people in psychiatric crisis, but that such a rule was burdensome and would give plans insufficient time to properly review claims.

2011 Amendments: Eliminate the shortened time period of the July 2010 rules.  Plans may follow the original rule regarding urgent care claims, which requires notification as soon as possible but no later than 72 hours, but must defer to the attending provider with respect to whether a claim is "urgent care."[5]  The 2011 amendments emphasize that the 72 hour limit remains an outside limit, or a "backstop;" and that for medical exigencies, determinations should be made sooner.[6]

2. Additional Notice Requirements for Internal Claims and Appeals

2010 Rules: Provided content requirements for notices of adverse benefit determinations or final internal adverse benefit determinations.  The content requirements stated that the notice must contain information sufficient to identify the claim, including the provider, the claim amount (if applicable), the date of service, the diagnosis code and meaning, and the treatment code and meaning.[7]  They also required that notice include the denial code and meaning; a description of the standard used in denial; and a discussion of the decision, in the case of final adverse determinations.[8]  Finally, the 2010 rules required that notice include information on availability of internal appeals and external review processes, how to initiate an appeal, and availability of – and contact information for – any applicable office of health insurance consumer assistance or ombudsman.  Comments noted the helpfulness to consumers of providing codes, which are often the basis of claim denials.  Comments also expressed concerns about high costs, privacy concerns, interference with doctor-patient relationships, and potential confusion arising from technical terminology or changes in diagnosis.

2011 Amendments: Eliminate the requirement to provide codes, and instead substitute a requirement to provide notice of the opportunity to request these codes, and to state that the codes must be provided if requested.[9]  All other content requirements for notice of adverse benefit determinations or final internal adverse benefit determinations, as included in the July 2010 rules, remain intact.[10]

3. Deemed Exhaustion of Internal Claims and Appeals Processes

2010 Rules: Allowed claimants to seek external review immediately if the plan failed to adhere strictly to the July 2010 rules' requirements for internal claims and appeals processes.[11]  The rules included a clarification that reviewing tribunals should resolve disputes de novo, rather than giving special deference to the plan's decision.[12]  Comments included general support from consumer groups, but some negative comments from the industry.

2011 Amendments: Keep the 2010 rule, but create an exception for a de minimis violation that is non-prejudicial, attributable to good cause or to matters beyond the plan's control; and is not reflective of a pattern or practice of non-compliance.[13]  The amendments also entitle the claimant, upon request, to receive a written explanation of the violation within 10 days, as well as a description of the basis for asserting that the plan met the exception standard.[14]  Where the claimant's request for immediate review is rejected on the basis that the plan met the exception standard, the claimant may resubmit and pursue an internal appeal of a claim.[15]

4. Provision of Culturally and Linguistically Appropriate Notices

2010 Rules: Required a plan to provide notices in a non-English language based on separate thresholds determined by the number of people literate in the same non-English language.  For the group market, the threshold would differ depending on how many participants are in the plan in question.  Under the 2010 rules, when a non-English language threshold is met, all English versions of notices must include a prominently-displayed statement in that language that offers the notices in that non-English language. Similarly, when a non-English language threshold is met, a plan or issuer who maintains a customer assistance process must provide that assistance in that non-English language.[16]

2011 Amendments: Establish a single threshold percentage for both the group market and individual market, with respect to the number of people literate only in the same non-English language.[17] The threshold is set at 10% or more of the population in the claimant's county of residence.[18]  The plan must include, in each notice sent to an address that meets the 10% threshold, a sentence in the relevant non-English language describing the availability of language services.[19]  The plan must also provide customer service with oral language services, and written notices upon request, in the non-English language.[20]

Amendments Concerning External Review

1. Duration of Transition Period for State External Review Processing

July 2010 Rules: Provided a transition period for plan years (or policy years, in the individual market) beginning before July 1, 2011.  This was to give States time to amend their laws to at least meet the minimum consumer protections, as laid out in the July 2010 rules.[21]

2011 Amendments: Modify the transition period to provide that the transition period must be completed by December 31, 2011.[22]  This is designed to give States time to complete the process of implementing State external review processes that conform to the July 2010 rules. The 2011 amendments provide that, if a state gets its external review processes up and running before December 31, 2011, the state's external review process will apply rather than the federal transition process.[23]

2. Scope of the Federal External Review Process

2010 Rules: Set a broad scope of claims that are eligible for federal external review, such that any adverse benefit determination could be reviewed unless the determination related to the participant's failure to meet eligibility requirements under the terms of a group health plan.[24]

2011 Amendments: Suspend the broad scope of the July 2010 rules.[25] The scope of external review is narrowed to claims that involve: (1) medical judgment (except for those involving only contractual or legal interpretation, without using medical judgment), as determined by the external reviewer; or (2) a rescission of coverage.[26]  Examples of such claims include adverse benefit determinations based on: whether treatment by a specialist is medically necessary or appropriate (pursuant to the plan's standard for medical necessity or appropriateness); a determination that a medical condition is a preexisting condition; the appropriate health care setting for providing medical care to an individual; and whether treatment involved "emergency care" or "urgent care," affecting coverage or the level of coinsurance.[27]

3.  Clarification Regarding Requirement that External Review Decision Be Binding

2010 Rules: Set forth a provision that external review decisions made by Independent Review Organizations (IROs) are binding on the plan involved, as well as the claimant involved, except where other remedies under State or Federal law are available.[28]  IROs are private, accredited independent review organizations under contract with self-insured plans to perform review processes.[29]

2011 Amendments: Add language to clarify the binding provision, stating that the plan must provide, without delay, benefits pursuant to the final external review decision, whether or not the plan intends to pursue judicial review of the decision.  This is required unless a court rules otherwise.[30]

Conclusion

Group health plans, and health insurers in the group and individual markets, are growing.  As claims, appeals, and the review processes that accompany them proliferate, health care advocates will need to become familiar with the review systems that are emerging.  Similarly, advocates may wish to develop pamphlets and other educational materials to guide their clients through these new review systems.