Internal and external appeals: Health plans face quick turnaround in urgent cases

The federal government has issued interim final rules giving guaranteed appeal rights to health plan members whose claims have been denied, setting standards for internal claims and appeals, as well as external reviews, reports Kaiser Health News at the Washington Post. The new federal regulations provide national baseline protections that apply to fully insured and self-funded health plans (but not to grandfathered health plans that maintain their status).

For the internal appeals, the federal government spells out core requirements for group and individual health coverage. However, these rules appear to be just a starting point, stating "the Department of Labor ... expects to issue future regulations that will propose additional, more comprehensive updates to the standards." For plan/policy years beginning Sept. 23, 2010, non-grandfathered health plans must have an internal appeals process that:

  • Provides appeal rights when the plan makes an adverse benefit determination (which includes everything from coverage rescissions and pre-existing condition exclusions to non-covered benefits and experimental or medically unnecessary benefits).
  • Fully explains why a claim or coverage was denied.
  • Notifies members of their appeal rights and tells them how to appeal.
  • Provides a "full and fair review" of the denial (e.g., evidence must be provided free of charge and quickly enough to give the claimant time to respond, and plans must ensure "the independence and impartiality" of reviewers).
  • Offers expedited appeal process (24 hours from receipt of the claim) in urgent cases.

For the external reviews, plans that are already subject to a state-based external review process will continue to use that review process, and states have until July 1, 2011, to beef up existing laws to meet the federal minimum requirements. Plans that aren't currently subject to a state external review (including most self-insured plans) will have to comply with a federal external review process for plan/policy years beginning Sept. 23, 2010.

The new federal requirements are based on the Uniform Health Carrier External Review Model Act standards established by the National Association of Insurance Commissioners (NAIC). Basically, external review programs must:

  • Provide external review of adverse benefit determinations that are based on medical necessity, appropriateness, healthcare setting, level of care, or effectiveness of a covered benefit.
  • Require health plans to give members written notice of their right to an external review both in the standard plan materials and upon denial.
  • Ensure the external review is independently and impartially assigned (e.g., by random or rotational assignment) to an approved independent review organization (IRO) that keeps written records and follows certain NAIC-approved review procedures.
  • Require health plans to pay for the IRO review and limit consumer costs to a $25 per-claim filing fee (with an aggregate cap of $75 annually).
  • Provide expedited access to appeal (within 72 hours) in emergency and other special circumstances.
  • Ensure that final decisions are binding.

To learn more:
- access the interim final rules here
- review the NAIC's Uniform Health Carrier External Review Model Act (amended in spring 2010) here
- read the KHN/Washington Post article
- read this Life and Health: National Underwriter article
- read this Department of Labor press release and fact sheet
- visit the Office of Consumer Information and Insurance Oversight website

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