Claims Appeals – The New Order Of Affairs For ERISA Plans (Part II)

Following up on an earlier post, the new claims appeals and review rules present some opportunities to claimants and concomitant risks to plans.  PHS incorporate the existing claims regulation DOL Reg. Sec. 2560.503-1 into an augmented claims procedure for internal appeals.  PHS Act § 2719 provides that plans and issuers must initially incorporate the internal claims and appeals processes set forth in 29 CFR 2560.503-1 and update these processes as required by the DOL.

The interim final regulations (Interim Final Rules for Group Health Plans and Health Insurance Issuers Relating to Internal Claims and Appeals and External Review Processes Under the Patient Protection and Affordable Care Act) released on July 23, 2010 appear in the Federal Register at Volume 75, Number 141, Pages 43329-43364.

Grandfathered plans are exempt. The value of this exemption will become vividly apparent as the new rules are reviewed.

The regulations require “strict adherence” to the new claims procedure. Substantial compliance or de minimus violations are not, the regulations state, sufficient to avoid the determination of non-compliance.  (The consequences of non-compliance will be reviewed later — but note for now that the regulations purport to change the standard of review to de novo in this event.   Thus, plan fiduciaries would be well advised to put maximum effort toward compliance.

At the outset, careful observance of what constitutes an adverse benefit determination is necessary. The definition is broader than the definition in the DOL claims procedure regulation.

For example,

Failure to make a payment in whole or in part includes any instance where a plan pays less than the total amount of expenses submitted with regard to a claim, including a denial of part of the claim due to the terms of a plan or health insurance coverage regarding copayments, deductibles, or other cost- sharing requirement.

In the next post I will summarize the new requirements for the claims regulations as augmented.