Health Reform's New Claims Appeals & Review Processes: Employer Compliance & Contracting

1. Health Reform's New Claims Appeals & Review Processes: Employer Compliance & Contracting Presentation to Northeast Business Group on Health March 2, 2011 Patricia M. Wagner Epstein, Becker & Green, P.C. 1227 25th Street, N.W. Washington, D.C. 20037 (202) 861-4182 pwagner@ebglaw.com

2. Background • Section 1001 of the Patient Protection and Affordable Care Act (“PPACA”), added section 2719 to the Patient Health Service Act (“PHSA”) • all non-grandfathered group and individual health plans must implement “effective appeals processes.”

3. Background • On July 23, 2010, the U.S. Departments of Health and Human Services (“HHS”), Labor and the Treasury (collectively, the “Agencies”) issued Interim Final Rules (“IFR”) implementing this particular section of PPACA by setting forth the specific requirements for these appeals processes. • DOL has also issued 2 “Technical Guidance” documents

4. Original Claims Regulations • Original Claims Regulations, were effective after the first day of the first plan year beginning on or after July 1, 2002, but in no event later than January 1, 2003. • Specified the timeframes for participant and beneficiary notification of claims determinations and appeals • Also specified manner of notification.

5. Claims and Appeals Regulations • Claims and Appeals Regulations Address: • Initial Benefit Determination – set time frames and notice requirements • Internal Appeals (appeals handled by the plan or the plan’s administrator) • External Appeals (must be done by an independent external review agent –e.g., an IRO) (New requirement)

6. What’s New? • New regulations • Have broadened scope of adverse benefit determination • Change in determination time period • Conflict of interest protections • Change in Notification • Strict adherence to claims procedures • Continued coverage during appeal process • Require external appeals process

7. Adverse Benefit Determination • Definition of Claim • Still: a request for health care benefits made by plan participant or beneficiary. • Adverse benefit determination • Under old regulations: based on denial (in whole or in part) to pay for services and eligibility denials • Under new regulations: same, but also includes rescission of coverage

8. Change in Time Frame • Determination of Urgent Care – initial decisions • Old time frame, no more than 72 hours • New time frame, no more than 24 hours

9. Other General Changes • Must avoid conflicts of interest. Decisions on compensation, promotion, hiring, termination etc. cannot be made on likelihood that person will support denial of benefits • Before issuing a final adverse benefit determination must provide rationale – if rationale for decision is based on new or additional information.

10. Language Requirement • Notice must be given in culturally and linguistically appropriate manner • Culturally and Linguistically Appropriate • For plan with fewer than 100 participants, providing notice upon request in a non-English language in which 25% or more of all plan participants are literate only in the same non-English language • For plans with 100 or more participants, providing notice in non-English language which the lesser of 500 or more participants or 10% or more of all plan participants are literate

11. Language Requirement • If meet applicable threshold then must: • Include a statement in the English version of all notices offering the notice in the non-English language • Once a request is made, provide all further notices in the non-English language • If provide a customer assistance phone line, provide assistance in non-English language

12. Notice Requirements • Other New Notice Requirements • Must include information sufficient to identify the claim involved including: date of service, health care provider, claim amount, diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning.

13. Notice Requirements • Other Notice Requirements • Must include the denial code and its corresponding meaning • A description of the plan or issuers standard, if any, that was used in denying the claim. • Description must include a discussion of the decision.

14. Notice Requirements • Must provide a description of available internal and external review processes, including information regarding how to initiate an appeal. • The plan or issuer must disclose the availability of, and contact information for, any applicable office of health insurance consumer assistance or ombudsman to assist individuals with review processes

15. Other New Requirements • If a plan or issuer fails to strictly adhere to all of the internal review requirements, then that claimant is deemed to have exhausted the internal claims and appeals process, regardless of whether the plan or issuer asserts that it substantially complied or that any error was minimal. • Exhaustion could then trigger court review or external appeal process • Coverage during appeal process.

16. External Review Required • Mandated External Review • Follow state process? Rare if self-insured • Follow federal process- more likely if self-insured • Required to have Independent Review Organizations to do external appeal • Technical Guidance provides standards and requirements

17. Contact Information Patricia M. Wagner Epstein, Becker & Green, P.C. 1227 25th Street, N.W. Washington, D.C. 20037 (202) 861-4182 pwagner@ebglaw.com