Health Care Reform – Guidance Published For Federal External Review Procedures and Model Notices for Internal Claims and Appeals and External Reviews
This is the eighth in a series of advisories on Health Care Reform and other recent developments in health care. This advisory summarizes the most recent guidance jointly released by the Department of Labor (“DOL”), Department of Health and Human Services (“HHS”) and the Department of the Treasury (“IRS”) (collectively, the “Departments”) relating to new claims and appeals procedures for group health plans pursuant to the Patient Protection and Affordable Care Act (“PPACA”).
Background
The Departments jointly released interim final regulations on July 23, 2010, relating to internal claims and appeals and external review processes for non-grandfathered group health plans under the PPACA (the “July Regulations”) (click here for a copy of our e-alert regarding the July Regulations). The July Regulations require group health plans, and health insurance issuers providing health insurance coverage in connection with group health plans, to comply with the DOL’s claims procedure regulations and impose additional requirements for internal claims and appeals. In addition, the July Regulations require that group health plans comply with either a state external review process (applicable to fully insured plans and non-ERISA self-funded plans, such as governmental plans and church plans) or a federal external review process (applicable to self-funded ERISA plans and in cases where no applicable state external review process is in place). The July Regulations also indicate that the Departments would release standards for the federal external review process and issue model notices that could be used to satisfy the notice requirements under the PPACA.
On August 26, 2010, the Departments published the promised guidance regarding the availability of interim procedures for the federal external review process pursuant to the PPACA (the “Guidance”). In conjunction with the Guidance, the Departments released model notices for both the internal and external review process relating to claims and appeals for self-funded group health plans and health insurance issuers. The DOL also released Technical Release 2010-1 (the “Technical Release”), which contains an enforcement safe harbor for non-grandfathered self-funded group health plans that are not subject to a state external review process, and therefore subject to the federal external review process (for more information about maintaining grandfathered status, click here). The enforcement safe harbor applies to both standard external reviews and expedited external reviews.
The interim enforcement safe harbor applies for plan years beginning on or after September 23, 2010, (i.e., effective January 1, 2011, for calendar year plans) and continues until superseded by future guidance. During the period that the interim enforcement safe harbor is in effect, the DOL and the IRS will not take any enforcement action against a self-funded group health plan that complies with either of the following interim compliance methods:
1) The external review procedures outlined in the Technical Release; or
2) Voluntary compliance with a state external review process (if the state allows the review process to be used by plans not subject to it).
The Guidance also provides three model forms that may be used to satisfy the PPACA’s notice requirements: (1) Model Notice of Adverse Benefit Determination; (2) Model Notice of Final Internal Adverse Benefit Determination; and (3) Model Notice of Final External Review Decision. The model notices are available on the DOL’s website.
Because an Independent Review Organization (“IRO”) (as discussed below) is a plan fiduciary and compliance with strict timelines and notice requirements are crucial, plans sponsors should carefully consider the process used to select the IRO or the delegation of that selection to the third party claims administrator.
Standard External Review Process for Self-Funded Group Health Plans
The Technical Release sets forth the requirements a non-grandfathered self-funded group health plan must satisfy in order to take advantage of the standard external review enforcement safe harbor. A standard external review is an external review that is not considered expedited (expedited external review for self-funded group health plans is discussed below).
1. Request for external review - a group health plan must allow a claimant to file a request for an external review if the request is filed within four (4) months after the date of receipt of a notice of an adverse benefit determination or final internal adverse benefit determination (i.e., decision regarding a claim appeal).
2. Preliminary review – Within five business days following the date of receipt of the external review request, the group health plan must complete a preliminary review of the request to determine whether:
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The claimant is or was covered under the plan at the time the health care item or service was requested;
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The denial does not relate to the claimant’s failure to meet the eligibility requirements under the terms of the group health plan (e.g., worker classification or similar determination); thus, the external review process does not apply to claims based on an eligibility determination;
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The claimant has exhausted the plan’s internal appeal process (if required by the plan); and
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The claimant has provided all the information required to process an external review.
Within one business day after completion of the preliminary review, the plan must issue a notification in writing to the claimant of whether the claim is eligible for external review. The Technical Release contains special rules for notification to the claimant in cases where the request is complete but not eligible for external review or where the request is not complete.
3. Referral to an Independent Review Organization - The group health plan must assign an IRO that is accredited by URAC (a nonprofit organization promoting healthcare quality by accrediting healthcare organizations) or by a similar nationally recognized accrediting organization to conduct the external review.
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The plan must contract with at least three (3) IROs and rotate claims assignments among them (or incorporate other independent, unbiased methods for selections of IROs, such as random selection).
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The IROs may not be eligible for any financial incentives based on the likelihood that the IRO will support the denial of benefits.
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The contract between a plan and an IRO must provide the following:
- The IRO will utilize legal experts where appropriate to make coverage determinations under the plan;
- The IRO will timely (the Technical Release does not define “timely”) notify the claimant in writing of the request’s eligibility and acceptance for external review, including a statement that the claimant may submit in writing, within ten (10) business days, additional information which the IRO must then consider when conducting the review; and
- Within five (5) business days after the date of assignment to the IRO, the plan must provide the IRO the documents and any information considered in making the adverse benefit determination or final internal adverse benefit determination.
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Failure by the plan to timely provide the documents and information may not delay the external review.
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Failure by the plan to timely provide the documents and information allows the IRO to terminate the external review and make a decision to reverse the adverse benefit determination or final internal adverse benefit determination. Within one business day after making the decision, the IRO must notify the claimant and the plan.
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Upon receipt of any information submitted by the claimant, the IRO must within one business day forward the information to the plan.
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Upon receipt of any such information, the plan may reconsider its adverse benefit determination or final internal adverse benefit determination that is the subject of the external review;
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Reconsideration by the plan may not delay the external review; and
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The external review may be terminated as a result of the reconsideration only if the plan decides, upon completion of its reconsideration, to reverse its adverse benefit determination or final internal adverse benefit determination and provide coverage or payments. Within one business day after making such a decision, the plan must provide written notice of its decision to the claimant and the IRO. The IRO must terminate the external review upon receipt of the notice from the plan.
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The IRO will review all of the information and documents timely received.
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In reaching a decision, the IRO will review the claim de novo and is not bound by any decisions or conclusions reached during the plan’s internal claims and appeals process.
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In addition to the documents and information provided, the IRO will consider where appropriate and available the following:
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The claimant’s medical records;
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The attending health care professional’s recommendation;
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Reports from appropriate health care professionals and other documents submitted by the plan or issuer, claimant, or the claimant’s treating provider;
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The terms of the claimant’s plan;
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Appropriate practice guidelines;
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Any applicable clinical review criteria developed and used by the plan; and
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The opinion of the IRO’s clinical reviewer.
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The IRO must provide written notice of the final external review decision within 45 days (this likely means 45 calendar days, but not specified in the Technical Release) after the IRO receives the request for the external review. The IRO must deliver the notice of final external review decision to the claimant and the plan.
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The IRO’s decision notice must contain:
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A general description of the reason for the external review, including information sufficient to identify the claim;
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The date the IRO received the assignment to conduct the review and the date of the IRO’s decision;
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References to the evidence or documentation the IRO considered in reaching its decision;
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A discussion of the principal reason(s) for the IRO’s decision;
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A statement that the determination is binding and that judicial review may be available to the claimant; and
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Contact information for any applicable office of health insurance consumer assistance or ombudsman established under the PPACA.
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Model notices are available on the DOL’s website.
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After a final external review decision, the IRO must maintain records of all claims and notices associated with the external review process for six years.
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4. Reversal of plan’s decision – Upon receipt of a notice that the IRO has reversed the plan’s denial of benefits, the plan immediately must provide coverage or payment for the claim.
Expedited External Review Process for Self-Funded Group Health Plans
The Technical Release also establishes procedures regarding requests for expedited external reviews that a non-grandfathered self-funded group health must follow in order to take advantage of the enforcement safe harbor.
1. Request for expedited external review - A group health plan must allow a claimant to make a request for an expedited external review with the plan at the time the claimant receives:
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An adverse benefit determination if such determination involves a medical condition for which the time for completion of the plan’s internal appeal process would seriously jeopardize the claimant’s life or health or ability to regain maximum function and the claimant has filed a request for an expedited internal review; or
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A final internal adverse benefit determination, if it involves a medical condition where the time for completion of a standard external review process would seriously jeopardize the claimant’s life or health or the claimant’s ability to regain maximum function, or if the final internal adverse benefit 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.
2. Preliminary review - Immediately (the Technical Release does not define “immediately”) upon receipt of a request for expedited external review, the plan must determine whether the request satisfies the reviewability requirements under the described above procedures described above for a standard external review and immediately send a notice of the plan’s eligibility determination.
3. Referral to IRO - If the plan determines that the claim is eligible for an expedited external review:
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The claim will be assigned to an IRO pursuant to the requirements described above for a standard review;
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The plan must provide all necessary documents and information to the IRO in a expeditious manner (e.g., e-mail, fax, phone); and
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The IRO must consider the documents and information under the procedures described above for a standard review.
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The IRO must review the claim de novo
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The IRO is not bound by any decisions or conclusion reached during the plan’s internal claims and appeals process
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4. Notice of final external review decision -
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The IRO must provide a notice of the final external review decision as expeditiously as the claimant’s medical condition or circumstance require, but in no event more than 72 hours after the IRO receives the request for an expedited external review.
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If the notice is not in writing, within 48 hours after providing the notice, the IRO must provide written confirmation of the decision to both the claimant and the plan.
If you need any assistance or have any questions, please contact any member of Troutman Sanders LLP’s Employee Benefits & Executive Compensation Practice Group.