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Guest Article

(From the September 27, 2010 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Labor Department Grants Enforcement Grace Period for New Claims Procedures

Responding to reports from group health plans and issuers that they need more time to comply with some of the additional requirements for internal claims review, the Department of Labor announced an "enforcement grace period" until July 1, 2011 for certain of the new requirements.

PPACA Imposed New Requirements

Effective for plan years beginning on and after September 23, 2010, the Patient Protection and Affordable Care Act (PPACA) requires non-grandfathered group health plans and group health issuers to provide enhanced internal claims review procedures. Interim final regulations, issued on July 23, 2010, implement the PPACA provisions and require plans to comply with the current ERISA claims procedures, but modified to further require, among other things, that:

A rescission of coverage be treated as an "adverse benefit determination" eligible for review under the internal claims and appeals procedures.
Urgent care claims be decided within 24 hours (instead of the previous 72-hour standard) after the plan's receipt of the claim.
Additional procedures be implemented when new or additional evidence is considered - or when a new or additional rationale is the basis for a decision.
Notices be given in a "culturally and linguistically appropriate" manner.
Additional content be included in notices of adverse benefit determination (e.g., denial code, discussion of the decision, contact information for any health insurance consumer assistance ombudsman, etc.).
The internal claims review process be deemed exhausted - and the claimant be permitted to proceed to the external claims review - if the plan fails to strictly adhere to the enhanced requirements, even where the plan has substantially complied with those requirements.

Enforcement Grace Period Granted

After the interim regulations were issued, group health plans and issuers responded that some of the changes were unexpected and more time would be needed to comply. In turn, the Department of Labor announced this week that, until July 1, 2011, it would not take enforcement action against a group health plan that is working in good faith to comply (but is not yet compliant with) the new requirements to:

decide urgent care claims within 24 hours,
give notices in a "culturally and linguistically appropriate manner,"
include the additional required content in notices of adverse benefit determination (e.g., the denial code and its meaning, discussion of the decision, etc.), and
deem claimants to have exhausted their administrative remedies - thereby allowing them to proceed to the external claims review - if the plan fails to strictly adhere to the new requirements.

Along the same lines, the Department of Health and Human Services agreed to the same enforcement grace period with respect to self-funded nonfederal governmental plans. With regard to insured plans, the Technical Release states that the Labor Department is encouraging the states to provide similar grace periods for group health plan issuers, and the Department of Health and Human Services will not cite a state for failing to enforce the particular requirements in that case. See Technical Release 2010-02. The Labor Department also released a revised Model Notice of Adverse Benefit Determination that omits reference to the 24-hour time frame for urgent care decisions.

The information in this Washington Bulletin is general in nature only and not intended to provide advice or guidance for specific situations.

If you have any questions or need additional information about articles appearing in this or previous versions of Washington Bulletin, please contact:

Robert Davis 202.879.3094, Elizabeth Drigotas 202.879.4985, Mary Jones 202.378.5067, Stephen LaGarde 202.879-5608, Bart Massey 202.220.2104, Tom Pevarnik 202.879.5314, Sandra Rolitsky 202.220.2025, Deborah Walker 202.879.4955.

BenefitsLink is an independent national employee benefits information provider, not formally affiliated with the firms and companies who kindly provide much of the content and advertisements published on this Web site, including the article shown above.