New regulations issued by the U.S. Department of Labor will require both self-insured and insured employee health plans covered by the Employee Retirement Income Security Act (ERISA) to make significant changes in their claims and appeals procedures. The new regulations:
A. Current Time Frame
Under the existing claims and appeals regulations, plans have 90 days to rule on claims, with a 90-day extension available, and 60 days to rule on appeals, with a 60-day extension available. Under the new regulations, the time within which a plan must rule on a claim or an appeal depends on the nature of the claim.
B. New Claim Categories
The new regulations divide claims into four categories:
A claim is "urgent" if application of the longer time periods for making non-urgent care determinations could seriously jeopardize the life or health of the claimant or the ability of the claimant to regain maximum function, or would subject the claimant to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.
If a physician with knowledge of the claimant's medical condition determines a claim is urgent, the plan must treat it as urgent. Otherwise, the plan, applying the judgment of a prudent layperson with average knowledge of health and medicine, may make the determinations.
"Concurrent care" is treatment that was previously authorized by the plan for a specific period or number of visits, or for as long as medically necessary.
C. New Time Limits Applicable to Claims
Under the new regulations, urgent preservice claims must be decided within 72 hours, non-urgent pre-service claims must be decided within 15 days (with a 15-day extension available), and post-service claims must be decided within 30 days (with a 15-day extension available).
If the plan wishes to reduce or terminate concurrent care before the end of the period or number of visits that was authorized, the plan must notify the covered person sufficiently in advance to allow an appeal and determination before the reduction or termination takes effect.
Although the new regulations are not specific, it appears that if treatment is authorized for as long as medically necessary, then any decision by the plan to terminate the treatment could be appealed.
D. New Time Limits Applicable to Appeals
Under the new regulations, a covered person must be allowed at least 180 days to file an appeal, regardless of the category of the claim.
Also under the new regulations, appeals on urgent pre-service claims must be decided within 72 hours, and appeals on non-urgent pre-service claims must be decided within 30 days if the plan provides for one level of appeal or within 15 days if the plan provides for two levels of appeal. Post-service appeals must be decided within 60 days if the plan provides for one level of appeal or within 30 days if the plan provides for two levels of appeal.
(Multiemployer plans may be able to take advantage of longer periods to decide appeals on post-service claims, if the board or appeals committee meets at least quarterly.)
E. Full and Fair Review
All plans must establish and follow procedures that give claimants a reasonable opportunity to appeal claim denials, and to obtain a "full and fair review" of denials. A full and fair review requires:
The new regulations also broaden the definition of what documents and information are "relevant" to a claim, and, therefore, must be disclosed to a claimant.
Also under the new regulations, a plan may not require more than two levels of appeal, but may require arbitration as one of the levels of appeal. The arbitration may not be binding, however, and a claimant who is dissatisfied with the arbitrator's decision must be permitted to go to court.
F. Denial Notices If a plan denies a claim or an appeal, in whole or in part, the new regulations set forth the information that must be included in the notice of denial.
G. State Laws Some states have enacted their own appeals and grievance procedures for insured employee health plans. The new federal regulations provide, however, that those state procedures may only apply to insured employee health plans covered by ERISA to the extent that the state requirements do not prevent the implementation of the new federal regulations.
H. Effective Date Plans must comply with the new federal regulations for claims filed on or after January 1, 2002. (It is noteworthy that the new regulations escaped President George W. Bush's directive postponing the effect of certain other regulations.)