How Will External Review Expansion Affect You? External Review Under PPACA

How Will External Review Expansion Affect You?

External Review Under PPACA

Healthcare reform will make seeking external review of denied claims more accessible. The big question remains, “Will external review play a role in improving quality?”

The Patient Protection and Affordable Care Act (ACA) protection of external appeal rights is aimed at reducing the troublesome concerns of conflict of interest in medical decision making. The interim final regulations on appeals released in July outlines expansive new external review requirements.

Independent review organizations who have played a marginal role in healthcare quality may now be deciding many of the troubling issues surrounding quality of care.

The National Organization of Independent Review Organizations (NAIRO) recommends use of independent reviewers for both initial and final levels of appeal review. Although PPACA requires use of external review for final adverse determinations, not initial decisions, the NAIRO’s published statement on PPACA reflects confidence in external review’s ability to drive better care.

“IROs (Independent Review Organizations) provide a mechanism for quickly and consistently applying expert knowledge to claims decision and ensuring consumer protections and rights are afforded, leading to improved patient health outcomes. Information and scientific advancements in the medical field are increasing at unprecedented rates. Medical disciplines fragment into new specialties every year. Then those specializations fragment again. This means medical directors and claims managers need access to outside medical knowledge beyond their expertise and their internal clinician resources. IROs have timely access to specialized medical resources that payers cannot afford or to which they have limited and/or untimely access,” states the National Organization of Independent Review Organizations (NAIRO) in published comments on healthcare reform rules at www.nairo.org/payors-downloads.php.

47 states and the District of Columbia currently mandate an external review process. An ACA Fact Sheet issued July 22, 2010, notes that these laws “vary greatly and fail to cover millions of Americans.” Just as the practice of medicine has developed fragmentally, state regulation has various departments with inconsistent oversight and reporting. As PPACA is implemented, state complaint data will likely be used as a measure of success. A report by the Assistance Secretary for Planning and Evaluation in the U.S. Department of Health & Human Services notes the challenges ahead.

“There is immense variation in terms of the independence of ombudsman programs across states, a critical factor in determining the ability of such programs to undertake consumer advocacy,” states the report.

However, the report cites consumer assistance programs in Vermont and California as “strong examples of the value of using casework to drive policy advocacy” with Vermont, in particular, taking a wide view of their goal.

“Staff at the Center for Health Care Rights challenged the view that the primary function of ombudsman programs should be to assist individual consumers, arguing that this was a bottomless task, with the goal instead being to use examples of individual consumer problems to drive systemic reforms for all consumers,” states the report available at www.aspe.hhs.gov/health/Reports/consumer/phi/conclusion.htm

Unfortunately, PPACA external review impact will take time to manifest. The external review requirements are not applicable to grandfathered plans and policies and, like the very complaint leveled against state regulatory efforts, continue to leave out millions of Americans.

Providers need a system in place to determine whether external review is available or not. One way to attempt upfront clarification regarding external review availability is to seek disclosure of the appeals and grievance protections at the time coverage is verified. Disclosure of this information prior to treatment can be especially critical to taking advantage of the PPACA requirement that carriers must extend coverage for a course of treatment pending the outcome of the appeals process.

A request for appeal/grievances process disclosure can added to written forms. If disclosure is not sought prior to treatment, a demand for appeal/grievance process disclosure would be an important improvement to appeal letters. A paragraph such as the following would make clear that you seek information regarding the patient’s right to external review:

“Please provide the internal/external appeals processes available in this patient’s plan or policy. It is our position that failure to provide the requested information may violate state and/or federal claim processing disclosure laws or, in the minimum, non disclosure reflects a poor quality medical review process which discourages treatment provider input. If external review of an adverse determination is not available, please provide information regarding the final appeal process available to an authorized representative, including ERISA fiduciary review, so that we may assess our rights in regards to this matter.”

Insurance carriers may simply refer providers to appeal processes as detailed in provider contracts. However, if the provider has the appropriate authorization from the patient, the right to disclosure of the patient’s appeal procedures is well protected.

Studies have attributed lack of consumer participation in external review processes to confusion and lack of confidence in the independence of the reviewers. External review decisions tend to slightly favor the insurance carrier decision with an average of 45 percent being in the patient’s favor, according for a Kaiser Family Foundation 2002 study. However, lack of participation and average overturn rates are also affected by providers’ willingness, or lack thereof, to act on behalf of patients in the external review process.

Providers should also keep close watch on how state external review process changes. Under PPACA, carriers who are not grandfathered must offer external review compliant with either state or federal external review processes. If the carrier is already subject to a state external review process, that process can be continued. However, state processes must be consistent with the National Association of Insurance Commissioners (NAIC) model standards for external review and are assumed to be compliant only until July 1, 2011.

PPACA has awarded $30 million in consumer assistance program grants to states. Some of the grant money is specifically designated for external review-related spending. See www.healthcare.gov/news/factsheets/capgrants_states.html for information on if your state has received funds to apply to the external review development.

Self funded plans, typically exempt from state external review, and plans operating in a state with limited or no external review process, will be required to follow the new federal external review standards. The DOL provides a temporary enforcement safe harbor for plans subject to the federal external review allowing plans that met certain requirements to temporarily avoid enforcement actions.

Under the PPACA interim appeals regulation, health plans can require participants to exhaust internal appeals before seeking external review. Insurers are required to cover the costs of the external review and may only charge a filing fee not to exceed $25. Further, precautions must be taken to assure the absence of conflict of interest in the review. For example, the federal external review process requires plans to contract with at least three URAC-accredited independent review organizations to which external reviews will be sent on a rotating or random basis.

Carriers will begin using a Model Notice of Final Internal Adverse Benefit Determination which features an Appeal Filing Form on the back. This form will allow a patient to specify the name of the person filing an appeal and whether that designee is the covered person, patient or authorized representative.

Total costs of an independent review can vary. However, at least one independent review company, AllMed, states at their website that overall costs tend to be minimal.

“While it does cost something to use IROs, the cost is minimal. IROs actually reduce the overall cost of health care because they look at every case objectively, based on the most current medical evidence, they suggest alternative – often less expensive – treatments, and weed out unnecessary or even fraudulent procedures. One IRO found that for every $1 spent with an IRO on a case, customers saved $16 overall,” states the company’s frequently asked questions page at www.allmedmd.com.

Although providers will not incur the cost of the external review, staff resources for preparing external reviews may impact participation. One potential threat to more widespread use of external review would be lack of provider support damping the patient interest in external review.

Effective external appeals can be complex. In addition to discussing the provider’s standard of care related to the diagnosis and how it was developed, the appeal should also include a review of the latest evidence-based medical studies and draw attention to patient-specific care challenges. Providers are in the best position to provide guidance to patients or assume complete responsibility for the effort via becoming the authorized representative.