Will New Claims and Appeals Procedures Change Case Law?
Thousands of providers of employee benefits plans have spent the past year reviewing their plan documents and external communications to comply with Patient Protection and Affordable Care Act regulations that affect the claims and appeals process.
The law requires non-grandfathered group health plans and health insurance issuers offering group or individual health insurance coverage to comply with revised procedures, which may extend to grandfathered plans in the future. The legislation took effect for plan years starting on or after Sept. 23, 2010.
"There was nothing broken in the existing system, so many wonder what, if anything, they were trying to fix," says Patrick J. Haraden, a principal with Boston-based Longfellow Benefits, an employee benefits consulting firm. "Most employers receive a small number of appeals over black-and-white issues, such as plastic surgery or an experimental treatment that is clearly not covered by their health plan, and the system worked well without a lot of complaints or lawsuits. I don't think employers were trying to get out of paying valid claims."
Haraden says plan providers have had to revise claimant communications to include additional information and specifics about a case, while making them more user-friendly, and have amended plan documents as well. And if they haven't done so already, they need to contract with at least three independent review organizations, or IROs, by July 13 for the now-required external reviews.
"This puts more burdens on the plan provider for essentially the same volume of claims and appeals, especially the external review that will follow the internal review," Haraden says. "Additionally, claimants will have access to a state advocate to help them with their appeal, which could slow the process down. There is some concern that plans may simply pay out claims to save time and expense, though we haven't seen any evidence of that yet."
Other changes include allowing plans to take up to 72 hours to decide urgent care claims, provided certain conditions are met, and must provide non-English language versions of claims denial notices if at least 10 percent of the residents in the claimant's county are literate in the same foreign language.
Additionally, letters to participants filing an appeal will take more time to generate and will be lengthier as a result of the new information required, and claimants will be allowed to review their files and present evidence and testimony. The plan or insurer must provide, free of charge, new or additional evidence related to the claim.
"This was certainly something large employers didn't think needed changing, and it appears [so far that] these new requirements are not helping," says Debbie Harrison, a senior manager of public policy at the National Business Group on Health in Washington. "Employers are complying. However, contracting with the IROs has been a challenge, because there aren't many available."
Harrison says she believes more IROs will have to be established to meet the demand.
"Another issue is that plan providers have a lot of discretion as to how they interpret their own plan, but everyone is wondering if the same interpretation will apply in the external reviews," she says. "The external reviewer may interpret the claim differently than the internal review committee did. Therefore, there is concern about how the courts will handle two different decisions, or two different interpretations of the same health care plan, and if the body of law will change as a result."
Employers have a responsibility to provide consistent coverage based on their plan's design to all participants and the majority try their best to do so, says Natalie Nathanson, a partner with McDermott Will & Emery in Chicago.
"This is not so much an 'oh gosh, one more thing' response from employers as it is an attempt to be fair," she says. "Employers walk a tightrope trying to provide good coverage to employees while providing that coverage consistently and in compliance with the plan design.
"The new regulations definitely require a faster response time which increases the workload, and we've worked with a number of clients to review their standard materials as well as specific claimant correspondence to make sure it correctly captures the situation and complies with the law to try and reduce any issues with the new process," Nathanson says.
Lisa Beyer is a Workforce Management contributing editor. To comment email firstname.lastname@example.org.