Appeals

The IFR provides guidance on internal and external appeal processes for both the group and individual markets. The IFR also indicates the Department of Labor (DOL) plans to issue further guidance beyond the IFR that will propose additional, more comprehensive updates to the core internal appeal standards, and on the new Federal external review process.

New and non-grandfathered plans will need to comply with this provision beginning on the first plan year following the sixth month anniversary of the law (9/23/2010).

The rules do not apply to grandfathered plans.

Plans not subject to State law (self funded ERISA plans governed by the Federal requirements) are subject to the Federal external review program and this process is not yet defined. Additional guidance from the Department of Labor (DOL) is anticipated and will likely bring more comprehensive requirements beyond those set forth in the IFR.

This IFR also sets forth six new requirements in addition to those in the DOL claims procedure regulation (DOL claims regulation) impacting group health plans. The six component requirements impacting group health plans are highlighted as follows:

• The definition of an "adverse benefit determination" is now broader than the definition in the DOL claims regulation, in that an adverse benefit determination for purposes of this IFR also includes a rescission of coverage.

An adverse benefit determination eligible for "internal" claims and appeals processes under the IFR also includes a "denial, reduction, or termination of, or a failure to provide or make a payment (in whole or in part) for a benefit, including any such denial, reduction, termination, or failure to provide or make a payment" that is based on, among other things

• a determination of an individual's eligibility for coverage (e.g., rescission), or
• the imposition of a preexisting condition exclusion, or
• a denial of part of the claim due to the terms of a coverage document regarding co-pays, deductibles, or other cost sharing requirements.

• A plan or issuer must notify a claimant of a benefit determination (whether adverse or not) with respect to a claim involving urgent care as soon as possible, taking into account the medical exigencies, but not later than 24 hours after the receipt of the claim.

• Additional criteria to ensure that a claimant receives a full and fair review. Specifically, the claimant must be provided, free of charge, with any "new or additional evidence considered, relied upon, or generated" in connection with the claim. Such evidence must be provided in advance of the review date. This gives the claimant a reasonable opportunity to respond prior to that date (e.g., for urgent claims within the 24 hour window).

• New criteria with respect to avoiding conflicts of interest when adjudicating claims to ensure the independence and impartiality of the persons involved in making the decision. For example:

• A plan or issuer cannot provide bonuses based on the number of denials made by a medical expert (e.g., defined as a "claims adjudicator" in the IFR).
• A plan or issuer cannot contract with a medical expert based on the expert's reputation for outcomes in contested cases.

• New standards regarding notice to plan participants:
• A plan or issuer is required to provide notice to enrollees, in a culturally and linguistically appropriate manner.
• Additional content requirements apply for these notices, including information on the diagnosis code (such as an ICD-9 code, ICD-10 code, or DSM-IV code), the treatment code (such as a CPT code), and code definition.
• A plan or issuer is required to provide a description of the standard, if any, that was used in denying the claim. For example: if a plan applies a medical necessity standard in denying a claim, the notice must include a description of the medical necessity standard.
• A plan or issuer must disclose the availability of, and contact information for, any applicable office of health insurance consumer assistance or ombudsman established under PPACA.

• If a plan or issuer fails to strictly adhere to all the requirements of the internal claims and appeals process with respect to a claim, the claimant is deemed to have exhausted the internal claims and appeals process. The claimant may subsequently initiate an external review and pursue any available remedies under applicable law, such as judicial review.

Yes. To address certain relevant differences in the group and individual markets, health insurance issuers offering individual health insurance coverage must comply with three additional requirements.

• Expansion of scope: Many of the group health coverage internal claims and appeals processes are extended to the individual market. This protection is important since eligibility determinations in the individual market are frequently based on the health status of the applicant, including preexisting conditions.

• Second Level of Review: Although the DOL claims regulations permits group health plans to have a second level of internal appeals, the IFR requires health insurance issuers in the individual market to have only one level of internal appeals. This allows the claimant to seek either external review or judicial review immediately after an adverse determination is upheld in the first level of internal appeals.

• Maintenance of Records: The IFR requires health insurance issuers to maintain records of all claims and notices associated with their internal claims and appeals processes. An issuer must make such records available for examination upon request. Accordingly, a claimant or State or Federal agency official generally would be able to request and receive such documents free of charge.

Under the new law, a plan and issuer must provide continued coverage pending the outcome of an internal appeal. Plans must comply with the requirements of the DOL claims regulations, which generally prohibit a plan or issuer from reducing or terminating an ongoing course of treatment without providing advance notice and an opportunity for advance review. Unfortunately, at this time the IFR does not further define the "continuing coverage" rules and requirements.

A claimant must be notified of a benefit determination (whether adverse or not) with respect to a claim involving urgent care as soon as possible, taking into account the medical demands, but not later than 24 hours after the receipt of the claim, unless the claimant fails to provide sufficient information to make the determination. This is a change from the previous 72 hour notification requirement on urgent care claims.

The IFR indicates that the agencies intend to issue model notices that could be used to satisfy all the notice requirements "in the very near future".

Plans normally subject to State mandates and governance (e.g., fully insured plans, or non-ERISA or governmental plans) will follow the State process if it includes, at a minimum, the consumer protection processes set forth in the NAIC Uniform Model. All other plans will follow the Federal program once established. In order for the State process to be considered a NAIC model rule compliant process it must match up with 16 requirements set forth in the IFR.

For the plans subject to the State processes the IFR includes a transition period until July 1, 2011 to allow States to implement necessary changes. Until that time the State programs are entitled to still function as they do today. For plans not subject to existing State external review process a Federal process will apply for plan years beginning on or after September 23, 2010.

The government will be issuing more guidance "in the near future" on the Federal external review process.