Daily Rules, Proposed Rules, and Notices of the Federal Government
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The Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on March 23, 2010; the Health Care and Education Reconciliation Act, Public Law 111-152, was enacted on March 30, 2010 (collectively known as the “Affordable Care Act”). The Affordable Care Act reorganizes, amends, and adds to the provisions in part A of title XXVII of the Public Health Service Act (PHS Act) relating to group health plans and health insurance issuers in the group and individual markets. The term “group health plan” includes both insured and self-insured group health plans.
On July 23, 2010, the Departments of Health and Human Services (HHS), Labor, and the Treasury (the Departments) issued interim final regulations implementing PHS Act section 2719 at 75 FR 43330 (July 2010 regulations), regarding internal claims and appeals and external review processes for group health plans and health insurance issuers offering coverage in the group and individual markets. The requirements of PHS Act section 2719 and the July 2010 regulations do not apply to grandfathered health plans under section 1251 of the Affordable Care Act.
With respect to internal claims and appeals processes for group health plans and health insurance issuers offering group health insurance coverage, PHS Act section 2719 provides that plans and issuers must initially incorporate the internal claims and appeals processes set forth in regulations promulgated by the Department of Labor (DOL) at 29 CFR 2560.503-1 (the DOL claims procedure regulation) and update such processes in accordance with standards established by the Secretary of Labor. Similarly, with respect to internal claims and appeals processes for individual health insurance coverage, issuers must initially incorporate the internal claims and appeals processes set forth in applicable State law and update such processes in accordance with standards established by the Secretary of HHS.
The July 2010 regulations provided such updated standards for compliance and invited comment on the updated standards. In particular, the July 2010 regulations provided the following additional standards
1. The scope of adverse benefit determinations eligible for internal claims and appeals includes a rescission of coverage (whether or not the rescission has an adverse effect on any particular benefit at the time).
2. Notwithstanding the rule in the DOL claims procedure regulation that provides for notification in the case of urgent care claims
3. Clarifications with respect to full and fair review, such that plans and issuers are clearly required to provide the claimant (free of charge) with new or additional evidence considered, relied upon, or generated by (or at the direction of) the plan or issuer in connection with the claim, as well as any new or additional rationale for a denial at the internal appeals stage, and a reasonable opportunity for the claimant to respond to such new evidence or rationale.
4. Clarifications regarding conflicts of interest, such that decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to an individual, such as a claims adjudicator or medical expert, must not be based upon the likelihood that the individual will support the denial of benefits.
5. Notices must be provided in a culturally and linguistically appropriate manner, as required by the statute, and as set forth in paragraph (e) of the July 2010 regulations.
6. Notices to claimants must provide additional content. Specifically:
a. Any notice of adverse benefit determination or final internal adverse benefit determination must include information sufficient to identify the claim involved, including the date of the service, the health care provider, the claim amount (if applicable), the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning.
b. The plan or issuer must ensure that the reason or reasons for an adverse benefit determination or final internal adverse benefit determination includes the denial code and its corresponding meaning, as well as a description of the plan's or issuer's standard, if any, that was used in denying the claim. In the case of a final internal adverse benefit determination, this description must also include a discussion of the decision.
c. The plan or issuer must provide a description of available internal appeals and external review processes, including information regarding how to initiate an appeal.
d. The plan or issuer must disclose the availability of, and contact information for, an applicable office of health insurance consumer assistance or ombudsman established under PHS Act section 2793.
7. If a plan or issuer fails to strictly adhere to all the requirements of the July 2010 regulations, the claimant is deemed to have exhausted the plan's or issuer's internal claims and appeals process, regardless of whether the plan or issuer asserts that it has substantially complied, and the claimant may initiate any available external review process or remedies available under ERISA or under State law.
On September 20, 2010, based on a preliminary review of comments from stakeholders which indicated that they believed more time was needed to come into compliance with PHS Act section 2719 and the additional internal claims and appeal standards in the July 2010 regulations, the Department of Labor issued Technical Release 2010-02 (T.R. 2010-02), which set forth an enforcement grace period until July 1, 2011 for compliance with certain new provisions with respect to internal claims and appeals.
Specifically, T.R. 2010-02 set forth an enforcement grace period until July 1, 2011 with respect to standard #2 above (regarding the timeframe for making urgent care claims decisions), standard #5 above (regarding providing notices in a culturally and linguistically appropriate manner), standard #6 above (requiring broader content and specificity in notices), and standard #7 above (regarding exhaustion). T.R. 2010-02 also stated that, during that period, the Department of Labor and the Internal Revenue Service (IRS) would not take any enforcement action against a group health plan, and HHS would not take any enforcement action against a self-funded nonfederal governmental health plan that is working in good faith to implement such additional standards but does not yet have them in place.
Based on further review of the comments received on the July 2010 regulations and T.R. 2010-02, and other feedback from interested stakeholders, on March 18, 2011, the Department of Labor issued Technical Release 2011-01
With respect to standard #6 above (requiring broader content and specificity in notices), T.R. 2011-01 extended the enforcement grace period only in part. Specifically, with respect to the requirement to disclose diagnosis codes and treatment codes (and their corresponding meanings), T.R. 2011-01 extended the enforcement grace period until plan years beginning on or after January 1, 2012.
T.R. 2011-01 also stated the Departments' intent to issue an amendment to the July 2010 regulations that would take into account comments and other feedback received from stakeholders and make modifications to certain provisions of the July 2010 regulations. T.R. 2011-01 went on to state that the relief was intended to act as a bridge until an amendment to the July 2010 regulations was issued.
This amendment to the July 2010 regulations makes changes with respect to the provisions subject to the enforcement grace period under T.R. 2011-01. At the expiration of the enforcement grace period, the Departments will begin enforcing the relevant requirements of the July 2010 regulations, as amended by this rulemaking.
PHS Act section 2719, the July 2010 regulations, and technical guidance issued by the Departments
a. Self-insured plans subject to ERISA and/or the Code.
In the case of self-insured plans subject to ERISA and/or the Code, a
In the case of health insurance issuers in the group and individual market, the July 2010 regulations set forth 16 minimum consumer protections based on the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners (NAIC) that, if provided by a State external review process, will result in the State's process applying in lieu of a Federal external review process. Moreover, for insured group health plans, as provided under paragraph (c)(1) of the July 2010 regulations, if a State external review process applies to and is binding on the plan's health insurance issuer under paragraph (c) of the July 2010 regulations (regarding State standards for external review), then the insured group health plan is not required to comply with either the State external review process or the Federal external review process. The July 2010 regulations provided a transition period for plan years (in the individual market, policy years) beginning before July 1, 2011, during which any existing State external review process will be considered sufficient (and will apply to health insurance issuers in that State). During the transition period, in States and territories without an existing State external review process (Alabama, Mississippi, Nebraska, Guam, American Samoa, U.S. Virgin Islands and the Northern Mariana Islands), HHS guidance generally provided that health insurance issuers will participate in the HHS-administered process. As explained later in this preamble, this amendment to the July 2010 regulations modifies the transition period originally issued as part of the July 2010 regulations so that the last day of the transition period for all health insurance issuers offering group and individual health insurance coverage is December 31, 2011.
In addition, the July 2010 regulations provided that, following the conclusion of the transition period, health insurance issuers in a State that does not meet the minimum consumer protection standards set forth in paragraph (c) of the July 2010 regulations will participate in an external review process under Federal standards similar to the process under the NAIC Uniform Model Act, such as the HHS-administered process. Separate guidance being issued contemporaneous with the publication of this amendment announces standards under which, until January 1, 2014, a State may also operate such an external review process under Federal standards similar to the process under the NAIC Uniform Model Act (an “NAIC-similar process”). Accordingly, if HHS determines that a State has neither implemented the minimum consumer protections required under paragraph (c) of the July 2010 regulations, nor an NAIC-similar process, issuers in the State will have the choice of participating in either the HHS-administered process or the private accredited IRO process. HHS is adopting this approach to permit States to operate their external review processes under standards established by the Secretary until January 1, 2014, avoiding unnecessary disruption, while States work to adopt an “NAIC-parallel process,” consistent with the consumer protections set forth in paragraph (c) of the July 2010 regulations.
c. Self-insured, nonfederal governmental plans.
For self-insured, nonfederal governmental plans (which are subject to the PHS Act, but not ERISA or the Code), previous HHS guidance generally provided that they follow the private accredited IRO process.
While the process varies depending on the type of coverage, so does the scope of claims eligible for external review. That is, for insurance coverage and self-insured nonfederal governmental plans subject to a State external review process (either an NAIC-parallel process or an NAIC-similar process), the State determines the scope of claims eligible for external review.
The July 2010 regulations provided that a plan or issuer must notify a claimant of a benefit determination (whether adverse or not) with respect to a claim involving urgent care (as defined in the DOL claims procedure regulation)
While some commenters supported the 24-hour rule (particularly consumer advocates and medical associations, including mental health providers who noted the 24-hour standard was especially important for people in psychiatric crisis), concerns were raised by many plans and issuers regarding the burden of a 24-hour turnaround. Some commenters argued that some of the claims constituting “urgent care” and thus qualifying for the expedited timeframe really do not need to be made within 24 hours. Moreover, a number of commenters highlighted that the 72-hour provision was intended only to serve as a “backstop”; as the general rule under both the July 2010 regulations and the DOL claims procedure regulation requires a decision as soon as possible consistent with the medical exigencies involved, making the change to a 24-hour timeframe unnecessary for the most serious medical cases. Some commenters cited the Emergency Medical Treatment and Labor Act (EMTALA),
After considering the comments, and the costs and benefits of an absolute 24-hour decision-making deadline for pre-service urgent care claims, this amendment permits plans and issuers to follow the original rule in the DOL claims procedure regulation (requiring decision-making in the context of pre-service urgent care claims as soon as possible consistent with the medical exigencies involved but in no event later than 72 hours),
The July 2010 regulations also provided additional content requirements for any notice of adverse benefit determination or final internal adverse benefit determination. The July 2010 regulations required a plan or issuer to:
(a) Ensure that any notice of adverse benefit determination or final internal adverse benefit determination includes information sufficient to identify the claim involved. Under the July 2010 regulations, this information included the date of service, the health care provider, and the claim amount (if applicable),
(b) Ensure that the description of the reason or reasons for the adverse benefit determination or final internal adverse benefit determination includes the denial code (such as a CARC and RARC)
(c) Provide a description of available internal appeals and external review processes, including information regarding how to initiate an appeal.
(d) Disclose the availability of, and contact information for, any applicable office of health insurance consumer assistance or ombudsman established under PHS Act section 2793 to assist enrollees with the internal claims and appeals and external review processes.
Many comments received on the July 2010 regulations raised concerns about the additional content required to be included in the notices. Comments by a range of stakeholders, including plans, issuers, and consumer advocacy organizations focused heavily on the automatic provision of the diagnosis
Other comments were received in support of the coding provisions. Consumer advocates commented positively on the requirement that denial notices include information for consumers about their right to appeal denials and the availability of state consumer assistance programs (CAPs) that will help consumers file appeals. There were also positive comments on the requirement to provide a rationale for the denial (including a description of the plan's or issuer's standard (such as “medical necessity”), if any, that was used denying the claim). With respect to the provision of coding information, some commented that this would be helpful to consumers because coding errors and missing coding information often are the basis for denying claims.
After considering all of the comments, and the costs and benefits of the additional disclosure, this amendment eliminates the requirement to automatically provide the diagnosis and treatment codes as part of a notice of adverse benefit determination (or final internal adverse benefit determination) and instead substitutes a requirement that the plan or issuer must provide notification of the opportunity to request the diagnosis and treatment codes (and their meanings) in all notices of adverse benefit determination (and notices of final internal adverse benefit determination), and a requirement to provide this information upon request.
The courts generally require claimants to exhaust administrative proceedings before going to court or seeking external review. When plans and issuers offer full and fair internal procedures for resolving claims, it is reasonable to insist that claimants first turn to those procedures before seeking judicial or external review of benefit denials. There is less justification, however, for insisting that a claimant exhaust administrative procedures that do not comply with the law. Accordingly, the July 2010 regulations permitted claimants to immediately seek review if a plan or issuer failed to “strictly adhere” to all of the July 2010 regulations' requirements for internal claims and appeals processes, regardless of whether the plan or issuer asserted that it “substantially complied” with the July 2010 regulations. The July 2010 regulations also clarified that, in such circumstances, the reviewing tribunal should not give special deference to the plan's or issuer's decision, but rather should resolve the dispute
The Departments continue to believe that claimants should not have to follow an internal claims and appeals procedure that is less than full, fair, and timely, as set forth in the July 2010 regulations. In response to comments, the Departments are retaining the general approach to this requirement, but this amendment also adds a new paragraph (b)(2)(ii)(F)(
(1) De minimis;
(3) Attributable to good cause or matters beyond the plan's or issuer's control;
(4) In the context of an ongoing good-faith exchange of information; and
(5) Not reflective of a pattern or practice of non-compliance.
In addition, the claimant would be entitled, upon written request, to an explanation of the plan's or issuer's basis for asserting that it meets this standard, so that the claimant could make an informed judgment about whether to seek immediate review. Finally, if the external reviewer or the court rejects the claimant's request for immediate review on the basis that the plan met this standard, this amendment would give the claimant the right to resubmit and pursue the internal appeal of the claim.
PHS Act section 2719 requires group health plans and health insurance issuers to provide relevant notices in a culturally and linguistically appropriate manner. The July 2010 regulations set forth a requirement to provide notices in a non-English language based on separate thresholds of the number of people who are literate in the same non-English language. In the group market, the threshold set forth in the July 2010 regulations differs depending on the number of participants in the plan:
• For a plan that covers fewer than 100 participants at the beginning of a plan year, the threshold is 25 percent of
• For a plan that covers 100 or more participants at the beginning of a plan year, the threshold is the lesser of 500 participants, or 10 percent of all plan participants, being literate only in the same non-English language.
These thresholds were adapted from the DOL regulations regarding style and format for a summary plan description, at 29 CFR 2520.102-2(c) for participants who are not literate in English. For the individual market, the threshold is 10 percent of the population residing in the county being literate only in the same non-English language. The individual market threshold was generally adapted from the approach used under the Medicare Advantage program, which required translation of materials in languages spoken by more than 10 percent of the general population in a service area at the time the threshold was established.
Under the July 2010 regulations, if an applicable threshold is met with respect to a non-English language, the plan or issuer must provide the notice upon request in the non-English language. Additionally, the plan or issuer must include a statement in the English versions of all notices, prominently displayed in the non-English language, offering the provision of such notices in the non-English language. Finally, to the extent the plan or issuer maintains a customer assistance process (such as a telephone hotline) that answers questions or provides assistance with filing claims and appeals, the plan or issuer must provide such assistance in the non-English language.
Comments received in response to the July 2010 regulations raised several concerns about this requirement. One group of commenters stated that the thresholds for the group market were difficult to comply with, especially for small plans (where an individual or a small number of individuals could cause a plan to change status with respect to the threshold) and insured plans (where the issuer may be in a very difficult position to determine the English literacy of an employer's workforce). Some commenters stated that the threshold requirements for the group and individual markets should be consistent.
Other commenters were concerned with the high costs of compliance with this rule, particularly the “tagging and tracking requirement” to the extent that individuals who request a document in a non-English language would need to be “tagged” and “tracked” so that any future notices would be provided automatically in the non-English language. Some of these commenters cited the high costs associated with implementing translation requirements pursuant to California State law and the low take-up rates of translated materials in California. Some commenters also cited the importance of having written translation of documents available (at a minimum, upon request), as well as having oral language services for customer assistance.
Following review of the comments submitted on this issue and further review and consideration of the provisions of PHS Act section 2719, the Departments have determined it is appropriate to amend the provisions of the July 2010 regulations related to the provision of notices in a culturally and linguistically appropriate manner. This amendment establishes a single threshold with respect to the percentage of people who are literate only in the same non-English language for both the group and individual markets. With respect to group health plans and health insurance issuers offering group or individual health insurance coverage, the threshold percentage of people who are literate only in the same non-English language will be set at 10 percent or more of the population residing in the claimant's county, as determined based on American Community Survey data published by the United States Census Bureau.
This amendment to the July 2010 regulations requires that each notice sent by a plan or issuer to an address in a county that meets this threshold include a one-sentence statement in the relevant non-English language about the availability of language services. The Departments have provided guidance with sample sentences in the relevant languages in separate guidance being issued contemporaneous with the publication of this amendment. For ease of administration, some plans and issuers may choose to use a one-sentence statement for all notices within an entire State (or for a particular service area) that reflects the threshold language or languages in any county within the State or service area. For example, statewide notices in California could include the relevant one-sentence statement in Spanish and Chinese because, using the data from Table 2, Spanish meets the 10 percent threshold in Los Angeles County and 22 other counties and Chinese meets the 10 percent threshold in San Francisco County. This would be a permissible approach to meeting the rule under this amendment.
In addition to including a statement in all notices in the relevant non-English language, this amendment requires a plan or issuer to provide a customer assistance process (such as a telephone hotline) with oral language services in the non-English language and provide written notices in the non-English language upon request. For this purpose, plans and issuers are permitted to direct claimants to the same customer service telephone number where representatives can first attempt to address the consumer's questions with an oral discussion, but also provide a written translation upon request in the threshold non-English language. Finally, this amendment removes any “tagging and tracking” requirement that would have otherwise applied under the July 2010 regulations.
This amendment to the July 2010 regulations provides standards for providing culturally and linguistically appropriate notices that balance the objective of protecting consumers by providing understandable notices to individuals who speak primary languages other than English with the goal of simplifying information collection burdens on plans and issuers. (Note, nothing in these regulations should be construed as limiting an individual's rights under Federal or State civil rights statutes, such as Title VI of the Civil Rights Act of 1964 (Title VI) which prohibits recipients of Federal financial assistance, including issuers participating in Medicare Advantage, from discriminating on the basis of race, color, or national origin. To ensure non-discrimination on the basis of national origin, recipients are required to take reasonable steps to ensure meaningful access to their programs and activities by limited English proficient persons. For more information, see, “Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons,” available at
The Departments welcome comments on this amendment, including whether it would be appropriate to include a provision in the final rules requiring health insurance issuers providing group health insurance coverage to provide language services in languages that do not meet the requisite threshold for an applicable non-English language, if requested by the administrator or sponsor of the group health plan to which the coverage relates. For example, if Chinese does not meet the 10 percent threshold in New York County, but an employer with a large Chinese-speaking population asks the health insurance issuer providing its group health insurance coverage to provide language services in Chinese (as described in the amendment), the Departments invite comment on what obligations should be imposed on the issuer, if any, to provide language services in Chinese.
In general, if State laws do not meet the minimum consumer protections of the NAIC Uniform Model Act,
Paragraph (d)(1) of the July 2010 regulations sets forth the scope of claims eligible for external review under the Federal external review process. Specifically, any adverse benefit determination (including a final internal adverse benefit determination) could be reviewed unless it related to a participant's or beneficiary's failure to meet the requirements for eligibility under the terms of a group health plan (
Comments received in response to the July 2010 regulations were mixed on the scope of claims eligible for external review. Some commenters argued that PHS Act section 2719 requires the Federal external review process to be “similar to” the NAIC Uniform Model Act and that the broader scope of claims eligible for the Federal external review process is a major departure from the NAIC Uniform Model Act. In addition, some comments from plans and issuers stated that the IROs that are used in the private accredited IRO process traditionally have expertise in adjudicating medical claims, and questioned IROs' experience and expertise with legal and contractual claims. Other comments from IROs and the IRO industry stated that these organizations do currently conduct reviews that involve both medical judgment issues and legal and contractual issues, and that there is sufficient capacity for conducting reviews of such disputes.
Some plan and issuer comments highlighted that, with a limited number of accredited IROs and increased demand for their services, the cost of external review for self-insured group health plans will likely increase. By contrast, an IRO association group commented that member organizations are not at capacity with regard to the volume of work they can perform, and that they are confident that the number of accredited IROs can adequately handle the volume of reviews anticipated for the Federal external review process.
Some plans and issuers stated that handing plan document interpretation and legal interpretation issues over to an IRO may raise issues of consistency of interpretations within a plan, unwarranted consistency across plans that have unique standards, ERISA fiduciary responsibility concerns, and possible conflicts. At the same time, other comments generally supported the broad scope of claims eligible for the
After considering all the comments, with respect to claims for which external review has not been initiated before September 20, 2011, the amendment suspends the original rule in the July 2010 regulations regarding the scope of claims eligible for external review for plans using a Federal external review process (regardless of which type of Federal process), temporarily replacing it with a different scope. Specifically, this amendment suspends the broad scope of claims eligible for the Federal external review process and narrows the scope to claims that involve (1) medical judgment (excluding those that involve only contractual or legal interpretation without any use of medical judgment), as determined by the external reviewer; or (2) a rescission of coverage. The more narrow scope under this amendment is more similar to the scope of claims eligible for external review under the NAIC Uniform Model Act. This amendment provides an example describing a plan that generally only provides 30 physical therapy visits but will provide more with an approved treatment plan. The plan's rejection of a treatment plan submitted by a provider for the 31st visit based on a failure to meet the plan's standard for medical necessity involves medical judgment and, therefore, the claim is eligible for external review. Similarly, another example describes a plan that generally does not provide coverage for services provided on an out-of-network basis, but will provide coverage if the service cannot effectively be provided in network. In this example, again, the plan's rejection of a claim for out-of-network services involves medical judgment. Additional examples of situations in which a claim is considered to involve medical judgment include adverse benefit determinations based on:
• The appropriate health care setting for providing medical care to an individual (such as outpatient versus inpatient care or home care versus rehabilitation facility);
• Whether treatment by a specialist is medically necessary or appropriate (pursuant to the plan's standard for medical necessity or appropriateness);
• Whether treatment involved “emergency care” or “urgent care”, affecting coverage or the level of coinsurance;
• A determination that a medical condition is a preexisting condition;
• A plan's general exclusion of an item or service (such as speech therapy), if the plan covers the item or service in certain circumstances based on a medical condition (such as, to aid in the restoration of speech loss or impairment of speech resulting from a medical condition);
• Whether a participant or beneficiary is entitled to a reasonable alternative standard for a reward under the plan's wellness program;
• The frequency, method, treatment, or setting for a recommended preventive service, to the extent not specified, in the recommendation or guideline of the U.S. Preventive Services Task Force, the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention, or the Health Resources and Services Administration (as described in PHS Act section 2713 and its implementing regulations);
• Whether a plan is complying with the nonquantitative treatment limitation provisions of the Mental Health Parity and Addiction Equity Act and its implementing regulations, which generally require, among other things, parity in the application of medical management techniques.