ppaca s claims and appeals regulation

1. New Claims and AppealsRules Under PPACA Mark C. Nielsen, Groom Law Group NLC/AGRIP Health Care Reform Workshop October 26, 2010

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3. 3 New Internal Claims and Appeals Rule Six Changes From Existing DOL Regulation: Definition of �adverse benefit determination� Urgent care decision timeframe reduced Appeals procedure changes: automatic disclosures Conflicts of interest rules Content of EOB and appeal denial notices Strict adherence/�deemed exhaustion� rule

4. 4 New Claims and Appeals Rules: Penalties for Non-Compliance Why do we care? Failure to follow new rules results in �deemed exhaustion� and participant can go right to court; DOL enforcement action; and Financial penalties: Self-funded plans--$100 per day, per violation civil penalty imposed by Internal Revenue Code. Must self-report liability on IRS Form 8928.�� Insurers subject to similar penalties assessed by HHS.

5. 5 PPACA Claims Procedure Rules Extends DOL rules to non-ERISA plans (such as non-federal governmental plans and church plans) and individual plans. DOL expects to issue future regulations with �additional, more comprehensive updates� to existing regulations. New rules apply in addition to DOL rules, but only to group health plans. (So other plans, such as pension, life, disability still only subject to original DOL rules.)

6. 6 Refresher:DOL Claims Regulations Initial Claims Deadlines Urgent � as soon as possible taking into account medical exigencies, but no later than 72 hours. Pre-Service � reasonable time appropriate to medical circumstances, but no later than 15 days (plus 15-day extension). Post-Service � reasonable time, but no later than 30 days (plus 15-day extension). Concurrent � if approved ongoing course of treatment, any reduction to be sufficiently in advance to allow claimant to appeal before benefit reduced. Request to extend treatment within 24 hours (for urgent) or regular post-service period (non-urgent). Appeals Deadlines Only two levels allowed, no extensions. Urgent � as soon as possible taking into account medical exigencies, but no later than 72 hours. Pre-Service � reasonable time appropriate to medical circumstances, but no later than 30 days (15 days each if two levels). Post-Service � reasonable time, but no later than 60 days (30 days each if two levels).

7. 7 Refresher:DOL Claims Regulations - Appeals 180 days to file appeal (for group health plans). Claimant may provide written comments, documents, or other information. Claimant may request �relevant� documents from plan. Review must be de novo (no deference to initial claim) and conducted by individual not involved in initial claim. If medical judgment involved, must consult health care professional with appropriate experience who was not involved in initial claim.

8. 8 Refresher: DOL Claims Regulations � Notices Reason for denial with reference to specific plan provision. Additional information necessary to perfect claim and why information necessary. Description of appeal procedures and time limits. Right to bring civil action under ERISA. If internal rule, guideline, or procedure relied upon, either rule or statement that it is available upon request. If based on medical necessity or experimental treatment exclusion, either explanation or statement that it is available upon request. Statement of right to request relevant documents (appeal denial notice). Description of any voluntary appeal procedure (appeal denial notice).

9. 9 New Internal Appeals RuleChange No. 1 - Scope Defines �adverse benefit determination� same as DOL rules. DOL regulations apply to �claims for benefits,� not general inquiries or claims involving eligibility. Also applies to rescissions. For individual coverage, applies to initial eligibility claims, too.

10. 10 New Internal Appeals RuleChange No. 2 � Urgent Claims Timeframe for deciding urgent care claims reduced from maximum of 72 hours to 24 hours. FAQ guidance issued by DOL in September 2010 makes clear that only urgent care claims must be decided in 24 hours�appeals of urgent care claims must be decided within 72 hours.

11. 11 New Internal Appeals RuleChange No. 3 � New Disclosure Obligation Plan must provide, free of charge, any new or additional evidence considered, relied upon, or generated in connection with claim. Must be provided as soon as possible and �sufficiently in advance of� appeal decision deadline to give claimant opportunity to respond prior to deadline. Before plan can base decision on new or additional rationale, must provide claimant with rationale �sufficiently in advance� of deadline to allow opportunity respond. Appears to be automatic (not just upon request).

12. 12 New Internal Appeals RuleChange No. 4 � Conflict of Interest Rule Plan must adjudicate claims and appeals fairly�by ensuring reviewers are independent and impartial. Decisions involving hiring, compensation, and promotion must not be based on likelihood individual will support denial. Example: Plan cannot pay bonus based on number of denials or contract with medical expert based on reputation for outcomes.

13. 13 New Internal Appeals RuleChange No. 5 � New Content of Denial Notices Claim and appeal denial notices must be provided in �culturally and linguistically appropriate manner.� New Content Date of service, provider, and claim amount (if known) Diagnosis code, treatment code, and denial code � and meaning of codes. Standard used in denying claim (for example, if medical necessity, must include description of standard). Description of internal and external appeals. Contact information for office of health insurance consumer assistance or ombudsman. Agencies have issued model notices; available at DOL website.

14. 14 New Internal Appeals RuleChange No. 6 � Strict Adherence Rule If plan fails to �strictly adhere� to all requirements, claimant is deemed to have exhausted internal claims and appeals process. May initiate external review or go to court. Plan does not get benefit of Firestone deference. Applies regardless of whether plan �substantially complied� or whether error was �de minimis.�

15. 15 New Internal Appeals RuleContinued Coverage PPACA: Plan must provide continued coverage pending outcome of internal appeal. Regulation says plans must comply with DOL regulations related to �concurrent care.� Under existing regulation, a plan cannot reduce or terminate benefits for an ongoing course of treatment without providing advance notice New regulation appears to require plan to provide continued coverage for an ongoing course of treatment pending the outcome of any appeal.

16. 16 New Internal Appeals RuleLinguistically Appropriate Notices 100 or more participants � Plan must provide non-English notice upon request if lesser of at least (1) 500 participants or (2) 10% of plan participants are literate only in same non-English language. Fewer than 100 participants � Plan must provide non-English notice upon request if at least 25% of plan participants are literate only in same non-English language. For individual coverage � applies if at least 10% of population in claimant�s county are literate only in same non-English language. Also must include prominent statement in English version (in non-English language) of notices offering notice upon request and provide future notices to that claimant in non-English language. If plan maintains a customer assistance hotline, must maintain in the applicable non-English language, too.

17. 17 Summary New regulation issued in late July included seven major changes from existing DOL claims regulation: First, definition of �adverse benefit determination� expanded to include rescissions; Second, time to decide urgent claims reduced from 72 to 24 hours; Third, automatic disclosure of new evidence or rationale considered on appeal, before decision on appeal; Fourth, establishes new conflicts of interest rules; Fifth, notices re: claims and appeals must be provided in �culturally and linguistically appropriate manner� if numerical threshold satisfied and claimant requests; Sixth, content of EOBs and appeal denial notices expanded to require disclosure of diagnosis and treatment codes and their meanings; Seventh, a failure to strictly adhere to requirements in regulation results in deemed denial, even if de minimis and no prejudice to claimant. Also established differing external review requirements for insured and self-funded plans, which are discussed later.

18. 18 Enforcement �Grace Period� Until July 1, 2011 Technical Release 2010-2 issued on September 20th (and similar guidance issued by HHS on same date) establishes a non-enforcement grace period until July 1, 2011 with respect to some � but not all � of the additional standards set forth in the regulation. Specifically, guidance provides that the enforcement grace period will apply with respect to the following new standards established by the IFR: Standard No. 2, regarding the timeframe for deciding urgent care claims; Standard No. 5, regarding providing notices in a culturally and linguistically appropriate manner; Standard No. 6, requiring broader content and specificity in notices � including the disclosure of diagnosis and treatment codes and their corresponding meanings; and Standard No. 7, regarding a claimant's deemed exhaustion of the plan's internal claims and appeals process where a plan has not "strictly adhered" to the requirements under the IFR.

19. 19 Claims and Appeals--Grace Period Grace period applies only to plans and insurers that are working in good faith to come into compliance. If a plan is working in good faith to implement the above standards, DOL nor the IRS will take enforcement action against a group health plan during the grace period. And, plan will not have to report any excise tax liability on IRS Form 8928 for failure to comply. Additionally, HHS will not take enforcement action against a self-funded non-federal governmental health plan, and HHS will encourage States to provide a similar grace period for insurers.

20. 20 External Review All plans must comply with either a State external review process or a new Federal external review process. External review required for insured and self-funded plans. Regulation describes when plans and insurers must comply with State external review process or new Federal process Gives HHS the authority to deem external review processes in effect as of March 23, 2010 as compliant.

21. 21 External Review: Self-Funded Plans For self-funded group health plans: If ERISA-governed, will need to comply with the Federal external review process If not ERISA-governed (such as church and governmental plans), subject to State external review process�if such review process covers these plans (many do not); If none applies, look to new Federal process.

22. 22 External Review: Insured Plans For insured group health plans and individual insurance policies: Must comply with qualifying State external review process. If none applies, must comply with Federal process. Regulation specifies that the obligation to comply with the claims and appeals rules is on the insurer, not the plan that is purchasing the insurance.

23. 23 External Review�Federal Process DOL Technical Release 2010-01, released August 23, contains a limited �non-enforcement safe harbor� for self-funded group health plans. DOL will not take enforcement action against a self-funded group health plan that either: Voluntarily complies with State external review law (if state permits); or Complies with external review procedures described in the Technical Release.

24. 24 External Review�Federal Safe-Harbor Process Assuming no state process is available, DOL�s safe harbor would require plans to: Allow claimants to file a request for external review within four months after receiving adverse benefit determination or final plan decision denying an appeal; Complete, within five business days of receiving a request for external review, a �preliminary review� of the request.�

25. 25 External Review: Federal Safe-Harbor Process �Preliminary Review�: within five business days of receiving external review request, plan must determine whether: � Claimant was covered by the plan at the time the service was provided or requested; Claim is eligible for federal external review (i.e., the claim does not relate to the claimant's failure to satisfy the plan's eligibility requirements); Claimant has exhausted the internal claims and appeals process (unless not required to do so under the regulation); and The claimant has provided all forms and information�required to process�the external review request.

26. 26 External Review�Federal Safe-Harbor Process Plan must issue written notice�to the claimant, within one business day after completing preliminary review, as to whether the claim is eligible for external review. If the claim not eligible for external review (e.g., involves an eligibility issue), notice must include the reasons why and contact information for the DOL; If the request is not complete, notice must describe materials needed to complete the request, and plan must permit submission of such materials within the later of: (i) the four-month filing period, or (ii) the 48 hour period following the claimant's receipt of the notification.

27. 27 External Review�Federal Safe-Harbor Process Plans must contract with at least three independent review organizations ("IROs") accredited by URAC (or other nationally-recognized accrediting organization). External reviews must be sent to IROs on rotating basis (or assigned by another unbiased method for selecting the IRO, such as random selection). IRO must not be eligible for any financial incentive based on the likelihood that the IRO will uphold the plan's denial of a benefits.

28. 28 External Review�Federal Safe-Harbor Process Plan contracts with IROs must provide: IRO will use legal experts where appropriate to make coverage determinations under the plan; The plan will provide the assigned IRO, within five business days of the claim's assignment, all documents and information that the plan considered in denying claim. If plan fails to provide the documents within this five day period, the IRO may unilaterally reverse the plan's benefit denial. The IRO will decide the claim de novo, and not be bound by any decisions or conclusions reached during the plan's internal claims and appeals process.

29. 29 External Review�Federal Safe-Harbor Process Plan contracts with IROs must also provide: IRO may consider materials outside of the plan's claim file, including: the recommendation of the claimant's treating�health care provider;� any appropriate clinical practice guidelines; and the terms of the plan document.��

30. 30 External Review: Federal Safe-Harbor Process Plan contracts with IROs must also specify that: IRO will provide written notice of its decision to the claimant and the plan within 45 days of the receipt. Notification must include: A general description of the reason for the request for review; References to the evidence and documents considered; The principal reason for the IRO's decision, including the evidence-based standards that the IRO relied upon; A statement that the IRO's decision is binding, except that other remedies may be available under Federal or State law, and a statement that judicial review of the decision may be available to the claimant; Contact information for any applicable office of health insurance consumer assistance or ombudsman.

31. 31 External Review�Federal Safe-Harbor Process If IRO reverses the plan's denial of benefits: the plan "must immediately provide coverage or payment (including immediately authorizing or immediately paying benefits) for the claim."� No guidance as to what �immediately� means.

32. 32 External Review�Federal Safe-Harbor Process Expedited external review available when claimant: Receives an adverse benefit determination (e.g. EOB) and the claim involves a medical condition for which the time for completing�the plan's internal appeals process would seriously jeopardize the claimant's life or health, or ability to regain maximum function; or If the internal appeal has been decided,�the time for completing�the standard 45-day external review�process would seriously jeopardize the claimant's life,�health, or ability to regain maximum function, Or if the claim claimant has received emergency services, but has not yet been discharged.

33. 33 External Review�Federal Safe-Harbor Process Expedited external review (cont.) Upon receipt of a request for an expedited external review, the plan must "immediately" conduct the �preliminary review� to determine if the appeal is eligible for external review (i.e., it does not involve an eligibility claim). The plan must then "immediately" provide a written notice to the claimant detailing whether the claim is eligible for external review If not eligible, the plan must detail the reasons for its ineligibility, or any materials needed to complete the request. No guidance on what �immediately� means in this context.

34. 34 External Review Process Plans or their insurers must comply with either a state or federal external review process For insured plans, insurer must satisfy state external review process (if there is one). If not, insurer must follow federal process. Regulation provides that state external review processes in effect as of March 23, 2010 � which are primarily applicable to insured plans � are deemed as compliant with new regulation until July 1, 2011. Self-funded ERISA plans must generally follow federal external process For plans subject to Federal external review process � primarily self-funded plans or insurers in states with no external review law � DOL and HHS issued Technical Releases in August describing non-enforcement safe harbors.

35. 35 External Review Among other things, the safe harbor for federal external review requires that plans contract with at least 3 Independent Review Organizations. DOL issued FAQs on September 20th, clarifying that: A plan�s failure to comply with each aspect of the safe-harbor does not necessarily mean the plan is in violation. Enforcement will be determined on a case-by-case basis. Plans are not required to contract with IROs directly; TPAs may contract on the plan�s behalf. Plans may contract with out-of-state IROs.

36. 36 External Review � State Process A qualifying state external review process is one that is �binding� on an issuer and includes the consumer protections in the NAIC Uniform Model Act. Regulation encourages states to establish qualifying external review processes, with Federal enforcement �only as a fallback measure.�

37. 37 External Review � State Process To be a qualifying state external review process, the state process must: Provide for external review of �adverse benefit determinations� based on medical necessity, appropriateness, setting, level of care, or effectiveness Require insurers to provide written notice to claimants of external review rights Make exhaustion of internal claims and appeals process unnecessary where (i) insurer waived exhaustion, (ii) claimant has exhausted under applicable law, or (iii) claimant has applied for expedited external review.

38. 38 External Review � State Process Qualifying state external review process (cont.) Require that claimants be provided at least four months to request external review, from receipt of notice of adverse benefit determination. Require insurers to include a description of the external review process in the SPD or other evidence of coverage State process cannot impose a minimum dollar threshold For example, a $100 minimum claim threshold is not permitted

39. 39 External Review � State Process Qualifying state external review process (cont.) State must maintain a list of approved IROs, accredited by URAC or other nationally recognized accrediting organization IROs must be assigned on random basis or another method that assures IRO independence. Put simply, insurer or claimant cannot choose the IRO

40. 40 External Review � State Process Qualifying state external review process (cont) Insurer or state must pay for the cost of external review State may impose filing fee of $25 per claim on participant (with financial hardship exception); annual limit of $75. IRO must allow claimant to submit additional information, and IRO must consider that information Information submitted by claimant must be forwarded to insurer.

41. 41 External Review � State Process Qualifying state external review process (cont.) Conflict of interest rules: IRO may not own or control (or be owned or controlled by) an insurer, plan, or healthcare provider; or trade associations of such groups. IRO and clinical reviewer may not have a �material professional, familial, or financial conflict of interest� with respect to the various stakeholders IRO�s decision is binding on the insurer and claimant (subject to judicial review under ERISA or state law)

42. 42 External Review � State Process Qualifying state external review process (cont) IRO must provide written notice to claimant and insurer within 45 days after IRO�s receipt. Expedited external review � Available when (i) standard review process would �seriously jeopardize the life or health of the claimant� or ability to regain �maximum function�; or (ii) where claimant has received emergency services, but has not yet been discharged IRO must make decision �as expeditiously as possible�, but within 72 hours, and must notify claimant and issuer of determination

43. 43 External Review � Transition Transition Rule for State External Review Processes: For plan years beginning before 7/1/2011, a state external review process is deemed to be compliant with DOL rule. The state external review process is �considered binding� on applicable plans and insurers (such as non-ERISA plans and insured plans). If no state external review process, insurer or plan must comply with Federal process. For adverse benefit determinations provided after the first day of the first plan year beginning on or after 7/1/2011, the Federal process applies�unless state program is determined to be compliant by HHS.

44. 44 External Review�What If State Law Is Not Applicable to Insured Product? Issue for insured plans: what if state external review law only applies to a specific product (e.g. HMO), but not other products sold in the state�such as PPO. Is insurer subject to Federal external review for PPO appeals? Informal guidance from HHS: Interim federal external appeals process only applies in states in which there is no current external appeals law -- Mississippi, Nebraska, and Alabama. In any state that has an external review law, that external review process applies during the transition period (until July 1, 2011).� This includes states in which the external review process applies only to a segment of the health insurance market.� �� For example, even though Florida�s law currently covers only HMOs, the interim federal external appeals process does not apply to those non-HMO segments of Florida�s market.�

45. 45 Questions?