DOL Extends the Grace Period for Certain Internal Claims and Appeals Procedures Applicable to Non-Grandfathered Group Health Plans

 

March 31, 2011

DOL Extends the Grace Period for Certain Internal Claims and Appeals Procedures Applicable to Non-Grandfathered Group
Health Plans

On March 18, 2011, the Employee Benefits Security Administration of the Department of Labor (DOL) issued Technical Release 2011-01,1 which provides extra time for plan sponsors to comply with certain parts of the new internal claims and appeals procedures requirements for non-grandfathered group health plans under the Affordable Care Act.2 This is the second Technical Release granting a grace period for compliance with the new internal appeal rules. The first was discussed in an issue of Sibson Consulting's Health Care Reform Insights.3 This Capital Checkup lists the extension grace periods now applicable to each part of the claims and appeals rules.

Technical Release 2011-01 applies only to non-grandfathered group health plans. Grandfathered plans are not subject to the new internal and external appeals requirements under the Affordable Care Act. However, the requirements would apply when grandfather status is lost.

During the extended grace period, the three federal agencies overseeing the implementation of the Affordable Care Act — the DOL, Treasury Department and Department of Health and Human Services (HHS) — intend to issue further guidance to implement the internal claims and appeals procedures covered by the grace period. The primary reason for extending the grace period is to minimize the cost, delay and confusion that health plans and participants would likely experience if health plans were required to comply with internal claims and appeals procedures that were subsequently adjusted by the upcoming guidance and regulations.4

Background

Under the Affordable Care Act, non-grandfathered plans must comply with requirements related to internal claims and appeals that are in addition to those required under the existing DOL claims and appeals regulations.5 On September 10, 2010, the DOL issued guidance addressing the new, additional internal claims and appeals procedures that included a grace period until July 1, 2011 for compliance with certain new provisions, which are noted in a table in the next section, "Requirements Not Covered by the Grace Period that Are Enforceable Now" of this Capital Checkup (the "initial grace period").6

During the extended grace period, the agencies will not take any enforcement action against a group health plan (including a multiemployer plan) or a self-funded nonfederal governmental health plan, with respect to the covered provisions. Further, this guidance states that HHS is encouraging states to provide similar grace periods with respect to insurers, and pledges that HHS will not cite a state for failing to substantially enforce the internal claims and appeals requirements.

The new guidance also states that no enforcement action will be taken with regard to the provisions covered by the grace period regardless of whether a health plan is working toward good-faith compliance. In essence, the agencies appear to be allowing plan sponsors to wait and see what is required in the final regulations before beginning implementation efforts.

Requirements Not Covered by the Grace Period that Are Enforceable Now

The following new requirements were not covered by the initial grace period and are still are not covered under the extended grace period, consequently, they are effective and will be enforced when applicable to a particular plan:

  • Individuals have the right to appeal a rescission of coverage,
  • Health plans must provide participants, free of charge, with new or additional evidence considered, relied upon or generated by the plan, and any new or additional rationale for the denial, as well as a reasonable opportunity for the participant to respond, and
  • Prohibitions against conflicts of interest, such as making compensation, promotion, or other employment decisions about a claims adjudicator, medical expert, or other employee based on the likelihood that the individual will support a denial of benefits.

The Extended Grace Period

For the each of the additional requirements noted in the table below, the grace period is extended from the initial grace period date of July 1, 2011. The new effective date, considering the grace period, is included in the table.

Additional Requirement Effective Date

Urgent care claims determinations generally must be made within 24 hours.

Effective for first plan year beginning on or after January 1, 2012

Participant notices must be provided in a culturally and linguistically appropriate manner.

Effective for first plan year beginning on or after January 1, 2012

If the health plan fails to strictly adhere to the internal claims and appeals procedures, the participant will be permitted to immediately initiate external review or seek remedies available under the Employee Retirement Income Security Act (ERISA) and applicable state law, as if they had exhausted all required internal appeals.

Effective for first plan year beginning on or after January 1, 2012

Notices of adverse benefit determinations or final internal adverse benefit determinations must include the diagnosis and treatment codes and their corresponding meanings.

Effective for first plan year beginning on or after January 1, 2012 (See the discussion in the next section for more details.)

Participant notices must include the following additional content:

  • Notices of adverse benefit determinations or final internal adverse benefit determinations must include information sufficient to identify the claim, including the date of service, the health care provider, and the claim amount (if applicable),
  • The reasons for adverse benefit determinations must include the denial code and its corresponding meaning, a description of the health plan's standard used in denying the claim (if any), and, in a final internal adverse benefit determination, a discussion of the decision,
  • A description of the available internal appeals and external review processes, including information about how to initiate an appeal, and
  • Health plans in states that have an office of health consumer assistance program or ombudsman must disclose the availability and contact information for such program. This new guidance provides a list of applicable state offices.

Effective for first plan year beginning on or after July 1, 2011 (January 1, 2012 for calendar-year plans)


Requirement to Include Diagnosis and Treatment Codes on Explanations of Benefits

The requirement to disclose diagnosis and treatment codes, and their corresponding meanings, is extended to plan years beginning on or after January 1, 2012. This requirement is unique, and therefore has a different grace period from the other participant-notice requirements (listed in the last row of the above table) because it raises concerns about the privacy of diagnosis and treatment codes. Under the privacy and security rules of the Health Insurance Portability and Accountability Act (HIPAA), many plan sponsors had effectively removed diagnosis and treatment information from explanation of benefit (EOB) forms in an effort to protect the privacy of this information. EOB forms now contain payment information, but generally do not include information about the individual's medical condition. If that diagnosis and treatment information is returned to the EOBs, it will raise concerns about who receives the EOBs and how they are sent, in addition to who may have access to the information.

It appears that the agencies have delayed this requirement to allow these issues to be further developed before guidance is published.

Implications for Sponsors of Non-Grandfathered Group Health Plans

The extended grace period combined with the stated purpose of the extension and the less stringent compliance standard indicate that the agencies do not intend for health plans to try to comply with these provisions until further guidance is issued. Consequently, sponsors of non-grandfathered group health plans should focus on complying with the internal claims and appeals procedures that are not covered by this extended grace period, and the external review procedures.7 Attention should turn back to the internal claims and appeals procedures requirements covered by the extended grace period after the agencies issue further guidance.

• • •

As with all issues involving the interpretation or application of laws and regulations, sponsors of group health plans should rely on their legal counsel for authoritative advice on the interpretation and application of the Affordable Care Act and related regulations. Sibson can be retained to work with plan sponsors and their attorneys on compliance issues.

1
See DOL Technical Release 2011-01, Extension of Non-Enforcement Period Relating to Certain Interim Procedures for Internal Claims and Appeals under The Patient Protection and Affordable Care Act (March 18, 2011). (Return to the Capital Checkup.)
2
The Affordable Care Act is the abbreviated name for the Patient Protection and Affordable Care Act (PPACA), Public Law No. 111-148, as modified by the subsequently enacted Health Care and Education Reconciliation Act (HCERA), Public Law No. 111-152. (Return to the Capital Checkup.)
3
That issue of Health Care Reform Insights, "Guidance on Non-Grandfathered Plans' Claims and Appeals Procedures Required by the Affordable Care Act," was published in February 2011. (Return to the Capital Checkup.)
4
For purposes of this Capital Checkup, references to "health plan" include self-insured group health plans and insurers unless otherwise stated. (Return to the Capital Checkup.)
5
The existing DOL claims procedures are at 29 CFR 2560.503-1 (Return to the Capital Checkup.)
6
See DOL Technical Release 2010-02, Interim Procedures for Internal Claims and Appeals Under the Patient Protection and Affordable Care Act (September 20, 2010). (Return to the Capital Checkup.)
7
The issue of Sibson's Health Care Reform Insights cited in footnote 3 provides information about these requirements. (Return to the Capital Checkup.)

Capital Checkup is The Sibson Consulting's periodic electronic newsletter summarizing activity in Washington with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.

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