New Health Plan Regulations: Internal & External Review for Denied Claims

The Internal Revenue Service and the Departments of Labor (DOL) and Health and Human Services have issued interim final regulations imposing new requirements on group health plans (both self-insured and insured) that dictate procedures for internal appeals of adverse claims decisions and require an independent external appeal process for denied health plan claims.  The new regulations expand the types of decisions to which the appeal procedures apply, and generally modify or expand requirements under the existing DOL claims procedure regulations.  For example, under the new rules, a response to an "urgent care" claim must be made within 24 hours of receipt of the claim, instead of within 72 hours as currently provided in the DOL regulations on ERISA plan appeals. 

The proposed regulations would also impose new notice requirements, add requirements to the "full and fair review" standard (such as requiring a claim denial to include an explanation of the "rationale" for the denial), and impose impartiality standards for decision-makers.  If the regulations are adopted, employers may need to change the language of their health plans to comply with the new requirements.  In addition, employers would be well-advised to review the terms of their contracts with insurance companies and third-party administrators to assure that they are contractually bound to comply with any new regulations enacted for internal and external reviews.  Covered plans must also include a description of the new internal review process requirements and the plan's external review process in all summary plan descriptions, insurance policies, certificates of coverage, membership booklets, outlines of coverage or other evidence of coverage provided to participants in accordance with the Uniform Health Carrier External Review Model Act developed by the National Association of Insurance Commissioners (NAIC). 

Generally, these proposed regulations would apply to non-grandfathered insured and self-insured group health plans (or plans that lose their grandfathered status) the first plan year beginning on or after September 23, 2010.  Therefore, for calendar-year plans, the effective date of these new regulations will be January 1, 2011.

Russell D. Chapman authored this entry.