The Patient Protection and Affordable Care Act (PPACA) interim rules for Internal Claims and Appeals and External Review Processes, released last month, contain numerous changes aimed at simplifying appeals for health insurance plans and issuers, patients and providers. The interim rules are designed to enforce a standardized internal and external claim and appeal process and set minimum consumer protection standards.
While simplification is the goal, the short-term effect expected on the Sept 24 implementation date may be confusion over exactly which plans and policies must comply with what protections. The National Association of Insurance Commissions issued a publication in May titled PPACA Implementation: Consumer Recommendation for Regulators and Lawmakers discussing anticipated challenges with the law’s phase-in. The regulations are expected to be phased in over the upcoming years as plans and insurers make decisions on how long to maintain “grandfathered” status thereby delaying full PPACA-compliance.
“Grandfathering will create confusion for consumers. Because some health reform provisions apply to grandfathered plans while others do not will make it difficult for consumers to determine whether their policy has or should have new rights and benefits. This complexity may make it harder for consumers to get accurate assistance when needed from employers, brokers and regulators,” states the publication.
Plans and policies which maintain grandfathered status must follow the PPACA grandfathering disclosure requirements. As a result, the majority of group health plans and policies are expected to issue grandfathered status-related communications over the course of the upcoming year.
“The Departments estimate that 18 percent of large employer plans and 30 percent of small employer plans would relinquish grandfather status in 2011, increasing over time to 45 percent and 66 percent respectively by 2013, although there is substantial uncertainty surrounding these estimates,” according to the interim rules’ information on the estimated number of entities affected by the regulation’s claim and appeal review requirements.
The interim rule describes the need for more standardized review processes and minimum protections by calling the existing regulatory environment a “patchwork of consumer protections.”
“These uneven protections created an appearance of unfairness, increased cost for issuers and plans operating in multiple States, and may have lead to confusion among consumers about their rights,” the interim rule states.
Group health plan sponsors and issuers who do not claim grandfathered status will be required to comply with the Department of Labor’s ERISA claim procedure rules regarding appeal review and disclosure protections. In addition to the expansion of ERISA applicability, some of the new standards required of non-grandfathered plans and policies include:
- Group health plans must comply with either a state external review process or the federal external review process while individual issuers must comply with the state external review process. The cost of the external review will be born by the plan or issuer with the exception of any applicable state filing fees not to exceed $25.
- Group health plans and individual issuers must notify a claimant of a benefit determination on urgent care claims as soon as possible, taking into account medical exigencies, but no later than 24 hours after receipt of the claim. (ERISA required urgent claim responses within 72 hours)
- Group health plans and individual insurers must allow a claim to review the claim file and to present evidence and testimony as part of the internal claim and appeal process. To insure quality communication regarding decisions, plans must provide the claimant, free of charge, any new or additional evidence relied upon or generated by the plan and any new or additional rationale for making a final adverse benefit determination. Disclosure must be made sufficiently in advance of an adverse benefit determination notice in order to give the participant reasonable opportunity to respond.
- Group health plans and individual issuers must provide certain notices in a culturally and linguistically appropriate manner. Further, adverse benefit determinations must comply with DOL claims procedure requirements and include information sufficient to allow identification of the claim including the date of service, the health care provider, claim amount (if applicable), diagnosis code(s), treatment code(s), denial code and the corresponding meaning of the codes. Determinations must also include a description of the plan or issuer’s standard, if any, that was used in denying the claim. For example, if the medical necessity standard was used to deny the claim, the notice must include a description of the medical necessity standard.
- A plan or issuer’s failure to abide by internal claims and appeal processes results in the claimant being deemed to have exhausted the internal claims and appeals process and allowed to proceed with requesting external review and other remedies under applicable law, such as judicial review.
Group health plans and individual health insurance coverage must generally comply with similar claim and appeal requirements. However, the interim rule allows individual coverage participants to seek external review after only one internal appeal review. “There is no need for a second level of an internal appeal in the individual market since the issuer conducts all levels of the internal appeal, unlike the group market, where a third party administrator may conduct the first level of internal appeal and the employer may conduct the second level of internal appeal,” the rule states.
Providers who are trying to assist patients with understanding the law or take advantage of any of the specific protections may consider adding a PPACA-related query to the verification of benefits process. If the coverage cannot be clarified as “grandfathered” or “fully PPACA compliant” during verification, provider appeal personnel will need to clarify status before initiating an appeal. PPACA interim rules anticipate that carriers will disclose status through electronic means so carrier web sites may be helpful in distinguishing PPACA status.
The interim rules do not address disclosure of status to providers. Instead, plan’s wishing to claim grandfathered status must notify plan participants and/or policy holders of the plan’s status. The interim final regulation on grandfathered status provides model language which can be incorporated into plan documents.
However, that does not necessarily mean the providers have no right to disclosure of status. In fact, an ERISA-complaint assignment of benefits gives providers the right to act on the participant’s behalf. Therefore, requesting such information on behalf of a participant in an effort to file claims correctly may require disclosure of PPACA status to the provider. Further, a plan or policy’s inability to provide such information could weigh in the provider’s favor if the claim proceeds through the appeals process and into litigation.
Go to http://www.healthcare.gov to read the interim rule as well as more complete information regarding PPACA implementation and frequently asked questions.
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