EBSA
Final Rules
Group Health Plans and Health Insurance Issuers: Rules Relating to Internal Claims and Appeals and External Review Processes
[ 6/24/2011]
[ PDF]
Federal Register, Volume 76 Issue 122 (Friday, June 24, 2011)
[Federal Register Volume 76, Number 122 (Friday, June 24, 2011)]
[Rules and Regulations]
[Pages 37208-37234]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15890]
[[Page 37207]]
Vol. 76
Friday,
No. 122
June 24, 2011
Part III
Department of the Treasury
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Internal Revenue Service
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26 CFR Part 54
Department of Labor
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Employee Benefits Security Administration
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29 CFR Part 2590
Department of Health and Human Services
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45 CFR Part 147
Group Health Plans and Health Insurance Issuers: Rules Relating to
Internal Claims and Appeals and External Review Processes; Final Rule
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules
and Regulations
[[Page 37208]]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9532]
RIN 1545-BK30
DEPARTMENT OF LABOR
Employee Benefits Security Administration
29 CFR Part 2590
RIN 1210-AB45
DEPARTMENT OF HEALTH AND HUMAN SERVICES
[CMS-9993-IFC2]
45 CFR Part 147
RIN 0938-AQ66
Group Health Plans and Health Insurance Issuers: Rules Relating
to Internal Claims and Appeals and External Review Processes
AGENCIES: Internal Revenue Service, Department of the Treasury;
Employee Benefits Security Administration, Department of Labor; Centers
for Medicare & Medicaid Services, Department of Health and Human
Services.
ACTION: Amendment to interim final rules with request for comments.
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SUMMARY: This document contains amendments to interim final regulations
implementing the requirements regarding internal claims and appeals and
external review processes for group health plans and health insurance
coverage in the group and individual markets under provisions of the
Affordable Care Act. These rules are intended to respond to feedback
from a wide range of stakeholders on the interim final regulations and
to assist plans and issuers in coming into full compliance with the law
through an orderly and expeditious implementation process.
DATES: Effective date. This amendment to the interim final regulations
is effective on July 22, 2011.
Comment date. Comments are due on or before July 25, 2011.
ADDRESSES: Written comments may be submitted to any of the addresses
specified below. Any comment that is submitted to any Department will
be shared with the other Departments. Please do not submit duplicates.
All comments will be made available to the public. Warning: Do not
include any personally identifiable information (such as name, address,
or other contact information) or confidential business information that
you do not want publicly disclosed. All comments may be posted on the
Internet and can be retrieved by most Internet search engines. Comments
may be submitted anonymously.
Department of Labor. Comments to the Department of Labor,
identified by RIN 1210-AB45, by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: E-OHPSCA2719amend.EBSA@dol.gov.
Mail or Hand Delivery: Office of Health Plan Standards and
Compliance Assistance, Employee Benefits Security Administration, Room
N-5653, U.S. Department of Labor, 200 Constitution Avenue, NW.,
Washington, DC 20210, Attention: RIN 1210-AB45.
Comments received by the Department of Labor will be posted without
change to http://www.regulations.gov and http://www.dol.gov/ebsa, and
available for public inspection at the Public Disclosure Room, N-1513,
Employee Benefits Security Administration, 200 Constitution Avenue,
NW., Washington, DC 20210.
Department of Health and Human Services. In commenting, please
refer to file code CMS-9993-IFC2. Because of staff and resource
limitations, we cannot accept comments by facsimile (FAX) transmission.
You may submit comments in one of four ways (please choose only one
of the ways listed):
1. Electronically. You may submit electronic comments on this
regulation to http://www.regulations.gov. Follow the instructions under
the ``More Search Options'' tab.
2. By regular mail. You may mail written comments to the following
address ONLY: Centers for Medicare & Medicaid Services, Department of
Health and Human Services, Attention: CMS-9993-IFC2, P.O. Box 8010,
Baltimore, MD 21244-8010.
Please allow sufficient time for mailed comments to be received
before the close of the comment period.
3. By express or overnight mail. You may send written comments to
the following address ONLY: Centers for Medicare & Medicaid Services,
Department of Health and Human Services, Attention: CMS-9993-IFC2, Mail
Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.
4. By hand or courier. If you prefer, you may deliver (by hand or
courier) your written comments before the close of the comment period
to either of the following addresses:
a. For delivery in Washington, DC--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, Room 445-G, Hubert
H. Humphrey Building, 200 Independence Avenue, SW., Washington, DC
20201.
(Because access to the interior of the Hubert H. Humphrey Building
is not readily available to persons without Federal government
identification, commenters are encouraged to leave their comments in
the CMS drop slots located in the main lobby of the building. A stamp-
in clock is available for persons wishing to retain a proof of filing
by stamping in and retaining an extra copy of the comments being
filed.)
b. For delivery in Baltimore, MD--Centers for Medicare & Medicaid
Services, Department of Health and Human Services, 7500 Security
Boulevard, Baltimore, MD 21244-1850.
If you intend to deliver your comments to the Baltimore address,
please call telephone number (410) 786-9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and received after the comment
period.
Internal Revenue Service. Comments to the IRS, identified by REG-
125592-10, by one of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: CC:PA:LPD:PR (REG-125592-10), Room 5205, Internal
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC
20044.
Hand or courier delivery: Monday through Friday between
the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-125592-10),
Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue,
NW., Washington, DC 20224.
All submissions to the IRS will be open to public inspection and
copying in Room 1621, 1111 Constitution Avenue, NW., Washington, DC
from 9 a.m. to 4 p.m.
FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum, Employee
Benefits Security Administration, Department of Labor, at (202) 693-
8335; Karen Levin, Internal Revenue Service, Department of the
Treasury, at (202) 622-6080; Ellen Kuhn, Centers for Medicare &
Medicaid Services, Department of Health and Human Services, at (301)
492-4100.
Customer Service Information: Individuals interested in obtaining
[[Page 37209]]
information from the Department of Labor concerning employment-based
health coverage laws may call the EBSA Toll-Free Hotline at 1-866-444-
EBSA (3272) or visit the Department of Labor's Web site (http://www.dol.gov/ebsa). In addition, information from HHS on private health
insurance for consumers can be found on the Centers for Medicare &
Medicaid Services (CMS) Web site (http://www.cms.hhs.gov/HealthInsReformforConsume/01_Overview.asp). Information on health
reform can be found at http://www.healthcare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
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.\1\ The Affordable Care Act
adds section 715(a)(1) to the Employee Retirement Income Security Act
(ERISA) and section 9815(a)(1) to the Internal Revenue Code (the Code)
to incorporate the provisions of part A of title XXVII of the PHS Act
into ERISA and the Code, and make them applicable to group health
plans, and health insurance issuers providing health insurance coverage
in connection with group health plans. The PHS Act sections
incorporated by this reference are sections 2701 through 2728. PHS Act
sections 2701 through 2719A are substantially new, though they
incorporate some provisions of prior law. PHS Act sections 2722 through
2728 are sections of prior law renumbered, with some, mostly minor,
changes.
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\1\ The term ``group health plan'' is used in title XXVII of the
PHS Act, part 7 of ERISA, and chapter 100 of the Code, and is
distinct from the term ``health plan'', as used in other provisions
of title I of the Affordable Care Act. The term ``health plan'', as
used in those provisions, does not include self-insured group health
plans.
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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.\2\
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\2\ The Departments published interim final regulations
implementing section 1251 of the Affordable Care Act on June 17,
2010, at 75 FR 34538, as amended on November 17, 2010 at 75 FR
70114.
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A. Internal Claims and Appeals
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
\3\ for internal claims and appeals processes:
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\3\ To address certain relevant differences in the group and
individual markets, the July 2010 regulations provided that health
insurance issuers offering individual health insurance coverage must
comply with three additional requirements for internal claims and
appeals processes. First, the July 2010 regulations include initial
eligibility determinations in the individual market within the scope
of claims eligible for internal appeals. Second, health insurance
issuers offering individual health insurance coverage are permitted
only one level of internal appeal. Third, health insurance issuers
offering individual health insurance coverage must maintain all
records of claims and notices associated with internal claims and
appeals for six years and must make these records available for
examination by the claimant, State or Federal oversight agency. 75
FR 43330, 43334 (July 23, 2010).
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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).\4\
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\4\ This definition is broader than the definition in the DOL
claims procedure regulation, which provides that a denial,
reduction, or termination of, or a failure to provide payment (in
whole or in part) for a benefit is an adverse benefit determination
eligible for internal claims and appeals processes.
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2. Notwithstanding the rule in the DOL claims procedure regulation
that provides for notification in the case of urgent care claims \5\
not later than 72 hours after the receipt of the claim, 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 soon
as possible, taking into account the medical exigencies, but not later
than 24 hours after the receipt of the claim by the plan or issuer.\6\
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\5\ A claim involving urgent care is generally a claim for
medical care or treatment with respect to which the application of
the time periods for making non-urgent care determinations could
seriously jeopardize the life or health of the claimant or the
ability of the claimant to regain maximum function; or, in the
opinion of the physician with knowledge of the claimant's medical
condition, would subject the claimant to severe pain that cannot be
adequately managed without the care or treatment that is the subject
of the claim.
\6\ Under the July 2010 regulations, there is a special
exception if the claimant fails to provide sufficient information to
determine whether, or to what extent, benefits are covered or
payable under the plan.
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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.
[[Page 37210]]
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.\7\
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\7\ Technical Release 2010-02 is available at http://www.dol.gov/ebsa/pdf/ACATechnicalRelease2010-02.pdf. HHS published a
corresponding guidance document, available at: http://cciio.cms.gov/resources/files/interim_procedures_for_internal_claims_and_appeals.pdf.
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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.\8\
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\8\ T.R. 2010-02 also stated that HHS was encouraging States to
provide similar grace periods with respect to issuers and HHS would
not cite a State for failing to substantially enforce the provisions
of part A of title XXVII of the PHS Act in these situations.
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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 \9\ (T.R. 2011-01), which modified and
extended the enforcement grace period set forth in T.R. 2010-02.
Specifically, T.R. 2011-01 extended the enforcement grace period until
plan years beginning on or after January 1, 2012 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), and
standard 7 above (regarding exhaustion). Moreover, whereas
T.R. 2010-02 required plans to be working in good faith to implement
such standards for the enforcement grace period to apply, T.R. 2011-01
stated that no such requirement would apply for either the extended or
the original enforcement grace period.
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\9\ T.R. 2011-01 is available at http://www.dol.gov/ebsa/pdf/tr11-01.pdf.
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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.\10\ With respect to the other disclosure requirements of standard
6, the enforcement grace period was extended from July 1, 2011
until the first day of the first plan year beginning on or after July
1, 2011 (which is January 1, 2012 for calendar year plans), affecting:
(a) The disclosure of information sufficient to identify a claim (other
than the diagnosis and treatment information), (b) the reasons for an
adverse benefit determination, (c) the description of available
internal appeals and external review processes, and (d) for plans and
issuers in States in which an office of health consumer assistance
program or ombudsman is operational, the disclosure of the availability
of, and contact information for, such program.\11\
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\10\ Information related to diagnosis and treatment codes (and/
or their meanings) is, however, generally required to be provided to
claimants upon request under existing DOL claims procedures. See 29
CFR 2560.503-1(h)(2)(iii), which is also applicable to plans
(whether or not they are ERISA plans) and issuers that are not
grandfathered health plans pursuant to paragraph (b)(2)(i) of the
July 2010 regulations. Nevertheless, a request for such information,
in itself, should not be considered to be a request for (and
therefore trigger the start of) an internal appeal or external
review.
\11\ Any enforcement grace period with respect to disclosure
requirements that has been provided under T.R. 2010-02 or T.R. 2011-
01 does not affect disclosure requirements still in effect for ERISA
plans under the DOL claims procedure regulation and/or Part 1 of
ERISA.
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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.
B. External Review
1. Applicability of Federal and State External Review Processes
PHS Act section 2719, the July 2010 regulations, and technical
guidance issued by the Departments \12\ provide a system with respect
to applicability of either a State external review process or a Federal
external review process for non-grandfathered plans and issuers. How
this impacts plans and issuers varies, depending on the type of
coverage:
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\12\ See DOL Technical Release 2010-01, available at http://www.dol.gov/ebsa/pdf/ACATechnicalRelease2010-01.pdf; HHS Technical
Guidance issued August 26, 2010, available at http://cciio.cms.gov/resources/files/interim_appeals_guidance.pdf; and HHS Technical
Guidance issued September 23, 2010, available at http://cciio.cms.gov/resources/files/technical_guidance_for_self_funded_non_fed_plans.pdf. Additional clarifications were provided
in the form of frequently-asked questions (FAQs), available at
http://www.dol.gov/ebsa/faqs/faq-aca.html and http://cciio.cms.gov/resources/factsheets/aca_implementation_faqs.html#claims.
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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
[[Page 37211]]
Federal external review process supervised by DOL and Treasury applies
(the ``private accredited IRO process'' \13\). On August 23, 2010, the
Department of Labor issued Technical Release 2010-01 (T.R. 2010-01),
which set forth an interim enforcement safe harbor for self-insured
plans not subject to a State external review process or to the HHS-
supervised process (the ``HHS-administered process'').\14\ This interim
enforcement safe harbor essentially permits a private contract process
under which plans contract with accredited independent review
organizations (IROs) to perform reviews. Separate guidance being issued
contemporaneous with the publication of this amendment makes
adjustments to, and provides clarifications regarding, the operation of
the private accredited IRO process.
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\13\ For simplicity, the Federal external review process for
self-insured plans subject to ERISA and/or the Code supervised by
DOL and Treasury is referred to as the ``private accredited IRO
process'' throughout this preamble. However, the interim procedures
for Federal external review issued as DOL Technical Release 2010-01
also recognizes that States may choose to expand access to their
State external review process to plans not subject to applicable
State laws (such as self-insured ERISA plans) and allows those plans
to meet their responsibilities to provide external review under PHS
Act section 2719(b) by voluntarily complying with the provisions of
that State external review process.
\14\ HHS Technical Guidance issued August 26, 2010 provided
that, for insured coverage, the Federal external review process
would be fulfilled through the HHS-administered process.
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b. Insured coverage.
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.\15\ (In States and territories that did not have an existing
external review process (Alabama, Mississippi, Nebraska, Guam, American
Samoa, U.S. Virgin Islands and the Northern Mariana Islands), previous
HHS guidance generally provided that such plans may choose to follow
the HHS-administered process or follow the private accredited IRO
process.) Separate guidance being issued contemporaneous with the
publication of this amendment generally treats self-insured nonfederal
governmental plans the same as health insurance issuers. That is, a
State may temporarily operate such an external review process
applicable to a self-insured nonfederal governmental plan under Federal
standards similar to the process under the NAIC Uniform Model Act. If
no such State-operated process exists, self-insured nonfederal
governmental plans have the choice of participating in either the HHS-
administered process or the private accredited IRO process.
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\15\ See HHS Technical Guidance issued September 23, 2010.
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2. Scope of Claims Eligible for External Review
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.\16\ For coverage subject to either
the HHS-administered process or the private accredited IRO process, the
July 2010 regulations provided that any adverse benefit determination
(or final internal adverse benefit determination) could be reviewed
unless it is related to a participant's or beneficiary's failure to
meet the requirements for eligibility under the terms of a group health
plan. As explained later in this preamble, this amendment to the July
2010 regulations modifies the scope of claims eligible for
[[Page 37212]]
external review under the Federal external review process.
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\16\ Under paragraphs (c)(2)(i) and (c)(2)(xvi) of the July 2010
regulations, State processes must provide external review for
adverse benefit determinations (including final internal adverse
benefit determinations) that are based on issuer's (or plan's)
requirements for medical necessity, appropriateness, health care
setting, level of care, or effectiveness of a covered benefit; or
that involve experimental or investigational treatment. (A State
external review process may also provide for external review of a
broader scope of adverse benefit determinations.) At the same time,
paragraph (c)(3) of the July 2010 regulations provides a transition
period during which a State external review process will be
considered binding on an issuer (or a plan), in lieu of the
requirements of any Federal external review process, even if the
State process does not meet all the requirements of paragraph (c)(2)
of the July 2010 regulations. That transition period is being
modified by this amendment, as described below.
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II. Overview of Amendments to the Interim Final Regulations
A. Internal Claims and Appeals
1. Expedited Notification of Benefit Determinations Involving Urgent
Care (Paragraph (b)(2)(ii)(B) of the July 2010 Regulations)
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) \17\ as soon as possible, taking into
account the medical exigencies, but not later than 24 hours after the
receipt of the claim by the plan or issuer, unless the claimant fails
to provide sufficient information to determine whether, or to what
extent, benefits are covered or payable under the plan or health
insurance coverage. This was a change from the DOL claims procedure
regulation, which generally requires a determination not later than 72
hours after receipt of the claim by a group health plan for urgent care
claims. The preamble to the July 2010 regulations stated that the
Departments expected electronic communication would enable faster
decision-making than in the year 2000, when the DOL claims procedure
regulation was issued.\18\
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\17\ Under the DOL claims procedure regulation, a ``claim
involving urgent care'' is a claim for medical care or treatment
with respect to which the application of the time periods for making
non-urgent care determinations could seriously jeopardize the life
or health of the claimant or the ability of the claimant to regain
maximum function; or, in the opinion of a physician with knowledge
of the claimant's medical condition, would subject the claimant to
severe pain that cannot be adequately managed without the care or
treatment that is the subject of the claim.
\18\ 75 FR 43330, 43333 (July 23, 2010).
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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),\19\ which generally requires hospitals to provide emergency
care to individuals with or without insurance or preauthorization and,
therefore, mitigates the need for expedited pre-service emergency
claims determinations in many situations. Finally, some commenters
stated that a firm 24-hour turnaround for urgent care claims will
adversely affect claimants, as plans and issuers will not have
sufficient time to properly review a claim, adversely affecting the
quality of the review process in cases where the provider cannot be
consulted in time, and leading to unnecessary denials of claims.
---------------------------------------------------------------------------
\19\ 42 U.S.C. 1395dd.
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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), provided that the plan or issuer defers to the
attending provider with respect to the decision as to whether a claim
constitutes ``urgent care.'' At the same time, the Departments
underscore that the 72-hour timeframe remains only an outside limit and
that, in cases where a decision must be made more quickly based on the
medical exigencies involved, the requirement remains that the decision
should be made sooner than 72 hours after receipt of the claim.
2. Additional Notice Requirements for Internal Claims and Appeals
(Paragraph (b)(2)(ii)(E) of the July 2010 Regulations)
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),\20\ as well as the
diagnosis code (such as an ICD-9 code, ICD-10 code, or DSM-IV
code),\21\ the treatment code (such as a CPT code),\22\ and the
corresponding meanings of these codes.
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\20\ The amount of the claim may not be knowable or available at
the time, such as in a case of preauthorization, or there may be no
specific claim, such as in a case of rescission that is not
connected to a claim.
\21\ ICD-9 and ICD-10 codes refer to the International
Classification of Diseases, 9th revision and 10th revision,
respectively. The DSM-IV codes refer to the Diagnostic and
Statistical Manual of Mental Disorders, Fourth Edition.
\22\ CPT refers to Current Procedural Terminology.
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(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) \23\
and its corresponding meaning. It must also include a description of
the plan's or issuer's standard, if any, that was used in denying the
claim (for example, if a plan applies a medical necessity standard in
denying a claim, the notice must include a description of the medical
necessity standard). In the case of a notice of final internal adverse
benefit determination, this description must include a discussion of
the decision.
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\23\ CARC refers to Claim Adjustment Reason Code and RARC refers
to Remittance Advice Remark Code.
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(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.\24\
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\24\ To assist plans and issuers in making these disclosures,
the Departments provided a current list of relevant consumer
assistance programs and ombudsmen in the Appendix to T.R. 2011-01.
Plans and issuers with July 1 plan years may rely upon the list in
that Appendix when developing their notices of adverse benefit
determination and final internal adverse benefit determination for
plan years beginning on July 1, 2011. The Departments are committed
to reviewing and updating this list. The first update is being made
available contemporaneous with publication of this amendment. The
first update is available (and any future updates will be made
available) at http://www.dol.gov/ebsa/healthreform and http://cciio.cms.gov/programs/consumer/capgrants/index.html.
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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
[[Page 37213]]
and treatment codes (and their meanings). Concerns were raised about
privacy (because explanations of benefits (EOBs) often are sent to an
individual who is not the patient, such as an employee who is the
patient's spouse or parent), interference with the doctor-patient
relationship,\25\ and high costs.\26\ More specifically, commenters
highlighted that sensitive issues such as mental health treatments
would be identified by specific treatment or diagnosis codes and that
privacy concerns are magnified for adult dependents under age 26 who
may be covered by their parent's health plan. Others pointed out that
there are over 20,000 treatment and diagnosis codes in use today,
presenting a costly administrative and operational challenge for plans
and issuers. Comments also questioned the efficacy of providing the
codes, which some argued are often very difficult for the average
patient to understand.\27\
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\25\ Several commenters raised concerns that providers' initial
or suspected diagnosis may not match the ultimate diagnosis or
patients' perception of their diagnosis. One commenter gave the
example of a patient who has a biopsy procedure. In that case, the
patient would receive an EOB with an initial diagnosis code of
cancer, however the results of the biopsy may rule out cancer. In
that situation, the EOB can result in confusion and unnecessary
mental anguish.
\26\ In particular, comment letters cited concerns with respect
to programming aspects of providing diagnosis codes at a time when
plans and issuers are changing over from ICD-9 diagnosis codes to
more extensive and technical ICD-10 codes.
\27\ Several commenters noted that technical ICD-9 and/or ICD-10
codes can be confusing and/or cause worry. One commenter gave the
example of a patient presenting with a white coating on his tongue,
who is told not to worry and to brush the tongue with a toothbrush.
The diagnosis code is 529.3, hypertrophy of tongue papillae, a term
not used by the patient's doctor during the office visit and,
therefore, prone to cause confusion and/or concern.
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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.\28\ This amendment also clarifies that, in any case, a
plan or issuer must not consider a request for such diagnosis and
treatment information, in itself, to be a request for (and therefore
trigger the start of) an internal appeal or external review.
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\28\ As discussed earlier, in footnote 9, information related to
diagnosis and treatment codes (and/or their meanings) is, however,
generally required to be provided to claimants upon request under
existing DOL claims procedures, which is also incorporated in the
July 2010 regulations. See 29 CFR 2560.503-1(h)(2)(iii) and
paragraph (b)(2)(i) of the July 2010 regulations.
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3. Deemed Exhaustion of Internal Claims and Appeals Processes
(Paragraph (b)(2)(ii)(F) of the July 2010 Regulations)
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 de novo. Consumer groups generally supported this ``strict
adherence'' approach, but the approach received a number of negative
comments from some issuers and plan sponsors, who advocate a
``substantial compliance'' approach.
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)(2) to the July 2010 regulations to provide an
exception to the strict compliance standard for errors that are minor
and meet certain other specified conditions. The new paragraph will
also protect claimants whose attempts to pursue other remedies under
paragraph (b)(2)(ii)(F)(1) of the interim final regulations are
rejected by a reviewing tribunal. Under the amended approach, any
violation of the procedural rules of the July 2010 regulations
pertaining to internal claims and appeals would permit a claimant to
seek immediate external review or court action, as applicable, unless
the violation was:
(1) De minimis;
(2) Non-prejudicial;
(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.
4. Form and Manner of Notice (Paragraph (e) of the July 2010
Regulations)
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
[[Page 37214]]
all plan participants being literate only in the same non-English
language.
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.\29\ The Departments will update this guidance annually
on their Web site if there are changes to the list of the counties
determined to meet this 10 percent threshold for the county's
population being literate only in the same non-English language.\30\
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\29\ At the time of publication of this amendment, 255 U.S.
counties (78 of which are in Puerto Rico) meet this threshold. The
overwhelming majority of these are Spanish; however, Chinese,
Tagalog, and Navajo are present in a few counties, affecting five
states (specifically, Alaska, Arizona, California, New Mexico, and
Utah). A full list of the affected U.S. counties in 2011 is included
in Table 2 later in this preamble, under the heading, ``IV. Economic
Impact and Paperwork Burden.''
\30\ This information will be made available at http://www.dol.gov/ebsa/healthreform and http://cciio.cms.gov/.
---------------------------------------------------------------------------
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 http://www.hhs.gov/ocr/civilrights/resources/
[[Page 37215]]
specialtopics/lep/policyguidancedocument.html.)
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.
B. External Review
1. Duration of Transition Period for State External Review Processes
In general, if State laws do not meet the minimum consumer
protections of the NAIC Uniform Model Act,\31\ as set forth in
paragraph (c)(2) of the July 2010 regulations, insurance coverage (as
well as self-insured nonfederal governmental plan and church plan
coverage) is subject to the requirements of an external review process
under Federal standards similar to the process under the NAIC Uniform
Model Act, such as the HHS-administered process. Paragraph (c)(3) of
the July 2010 regulations provided a transition period for plan years
(in the individual market, policy years) beginning before July 1, 2011
in order to allow States time to amend their laws to meet or go beyond
the minimum consumer protections of the NAIC Uniform Model Act set
forth in paragraph (c)(2) of the July 2010 regulations. HHS has been
working closely with States regarding enactment of laws to conform to
paragraph (c)(2) and much progress has been made. However, enacting
State legislation and regulations can often be a complex and time-
consuming process. Accordingly, the Departments are modifying the
transition period under paragraph (c)(3) of the July 2010 regulations
so that the last day of the transition period is December 31, 2011 to
give States, which are making substantial progress in implementing
State external review processes that conform to paragraph (c)(2), the
requisite time to complete that process. Because the July 2010
regulations would have ended the transition period for plan years (in
the individual market, policy years) beginning on or after July 1,
2011, the Departments note that ending the transition period on
December 31, 2011 will reduce the length of the transition period for
plans and policies with plan years (in the individual market, policy
years) beginning after January 1 but before July 1. When the July 2010
regulations were published, the Departments anticipated that issuers in
every State that had not enacted laws to conform to paragraph (c)(2) of
the July 2010 regulations would need to participate in the HHS-
administered process. Now, the Departments have decided that issuers
may continue to participate in a State external review process under
Federal standards similar to the process under the NAIC Uniform Model
Act (an NAIC-similar process), which the Departments anticipate will
reduce market disruption when the transition period ends. Therefore,
based on the Departments' concerns for making the consumer protections
of the Affordable Care Act available without undue delay and for
ensuring as much uniformity as possible in the availability of those
protections regardless of the form of a consumer's health coverage, the
Departments have decided to end the transition period on December 31,
2011. Therefore, this amendment to the July 2010 regulations provides
that, before January 1, 2012, an applicable State external process will
apply in lieu of the requirements of the Federal external review
process. PHS Act section 2719(c) authorizes the Departments to deem an
external review process ``in operation as of the date of enactment'' of
the Affordable Care Act as compliant with the external review
requirements of PHS Act section 2719(b). Through December 31, 2011, any
currently effective State external review process satisfies the
requirements of either PHS Act section 2719(c) or section 2719(b)(2).
If there is no applicable State external review process, separate
guidance being issued contemporaneous with the publication of this
amendment generally provides a choice between the HHS-administered
process or the private accredited IRO process.
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\31\ The NAIC Uniform Model Act in place on July 23, 2010
provides external review for claims involving medical necessity,
appropriateness, health care setting, level of care, effectiveness
(of a covered benefit), whether a treatment is experimental, and
whether a treatment is investigational.
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2. Scope of the Federal External Review Process
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 (i.e., worker classification and similar issues were not
within the scope of the Federal external review process).
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
[[Page 37216]]
Federal external review process as set forth in the July 2010
regulations. These commenters argued very strongly that it is nearly
impossible to adjudicate contractual claims through traditional ERISA
enforcement (which generally relies on Federal court adjudication),
leaving plan participants and beneficiaries with no effective means of
enforcing their rights to benefits under a plan. Consumer organizations
further commented that external review finally provides the free,
independent means of enforcement to level the playing field of claims
adjudication and, therefore, the scope of claims eligible for the
Federal external review process should be as broad as possible.
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; \32\
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\32\ See 26 CFR 54.9802-1(f)(2)(iv)(A), 29 CFR
2590.702(f)(2)(iv)(A), and 45 CFR 146.121(f)(2)(iv)(A), requiring
that wellness programs that require individuals to satisfy a
standard related to a health factor in order to obtain a reward
allow a reasonable alternative standard (or waiver of the otherwise
applicable standard) for obtaining the reward for any individual for
whom, for that period, it is either unreasonably difficult due to a
medical condition to satisfy the otherwise applicable standard, or
medically inadvisable to attempt to satisfy the otherwise applicable
standard.
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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); \33\ and
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\33\ See 26 CFR 54.9815-2713T, 29 CFR 2590.715-2713, and 45 CFR
147.130; see also FAQ 8, FAQs About the Affordable Care Act
Implementation Part II, regarding the scope, setting, or frequency
of the items or services to be covered under the preventive health
services recommendations and guidelines (available at http://www.dol.gov/ebsa/faqs/faq-aca2.html and http://cciio.cms.gov/resources/factsheets/aca_implementation_faqs2.html).
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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.\34\
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\34\ See Code section 9812 and 26 CFR 54.9812-1T, ERISA section
712 and 29 CFR 2590.712, and PHS Act section 2726 and 45 CFR
146.136.
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The suspension is intended to give the marketplace time to adjust
to providing external review. It will also allow the Departments time
to evaluate IROs' capacity for handling external reviews; to consider
whether current accreditation standards are sufficient to ensure that
IROs are capable of making accurate and consistent decisions (both
across different plans and across different IROs) regarding legal and
contractual issues that do not involve medical judgment or rescissions;
and to assess the mechanics of the Federal external review process (and
any potential adjustments). The Departments solicit comments on these
issues, including on whether limiting the scope of claims during the
suspension period will impose administrative costs in determining
whether a claim is eligible for external review. The Departments also
welcome any data on external review claims actually performed to date
under private contracts pursuant to the private accredited IRO process
for implementing PHS Act Sec. 2719(b), including number of claims
reviewed, type of review (such as whether it involved any medical
judgment or not), and costs associated with the review. The Departments
expect that the suspension will be lifted by January 1, 2014, when
other consumer protections under the Affordable Care Act take effect.
Moreover, if, after taking into account all the relevant information,
including public comments, the Departments decide to return to the
original rule providing for a broad scope of claims or permanently
modify the scope of claims through rulemaking, the Departments will
give sufficient advance notice to enable plans, their service
providers, IROs, and other affected parties sufficient time to comply
with a new rule.
Separate guidance being issued contemporaneous with the publication
of this amendment announces standards under which, until January 1,
2014, a State may operate an external review process under Federal
standards similar to the process under the NAIC Uniform Model Act (an
NAIC-similar process). The Departments are adopting this approach to
permit States to operate their external review processes under
standards established by the Departments until January 1, 2014,
avoiding unnecessary disruption, while States work to adopt the
consumer protections set forth in paragraph (c) of the July 2010
regulations. Paragraph (d)(1) of the July 2010 regulations, as amended,
will govern the scope of a State external review process under Federal
standards similar to the process under the NAIC Uniform Model Act.
Because the amended paragraph (d)(1)
[[Page 37217]]
creates a broader scope of external review than is required under the
NAIC Uniform Model Act, and because it would be illogical to require
States to make changes to their process to encompass the broader scope
of paragraph (d)(1) in their external review process while they work to
adopt the consumer protections of the NAIC Uniform Model Act (which has
a narrower scope), the Departments are also amending paragraph (d)(1)
to permit the Secretaries to modify the scope of the Federal external
review process in future guidance to permit State external review
processes (both NAIC-similar processes and NAIC-parallel processes) to
the scope that applies under the NAIC Uniform Model Act.
3. Clarification Regarding Requirement That External Review Decision Be
Binding
The Departments have received a number of comments on the
requirement that an IRO decision be binding on parties. Specifically,
the July 2010 regulations provided that an external review decision by
an IRO is binding on the plan or issuer, as well as the claimant,
except to the extent that other remedies are available under State or
Federal law.\35\ This binding requirement is also one of the minimum
consumer protections set forth in paragraph (c) of the July 2010
regulations.\36\
---------------------------------------------------------------------------
\35\ See 26 CFR 54.9815-2719T(d)(2)(iv), 29 CFR 2590.715-
2719(d)(2)(iv), and 45 CFR 147.136(d)(2)(iv).
\36\ See 26 CFR 54.9815-2719T(c)(2)(xi), 29 CFR 2590.715-
2719(c)(2)(xi), and 45 CFR 147.136(c)(2)(xi).
---------------------------------------------------------------------------
Some comments received in response to the July 2010 regulations
highlighted the importance of this consumer protection and expressed
approval that this requirement would minimize delays that could further
hurt claimants, as the plan or issuer must provide coverage or payment
for the claim immediately upon receipt of a notice of a final external
review decision. Other commenters questioned whether the requirement
that external review is binding eliminates the plan's or issuer's
option to choose to pay a claim at any time during or after the
external review process.
Nothing in PHS Act section 2719(b), the July 2010 regulations, or
related guidance precludes a plan or issuer from choosing to provide
coverage or payment for a benefit. Instead, the Departments read the
requirement of the NAIC Uniform Model Act, which is incorporated into
the July 2010 regulations, to require plans and issuers to provide a
benefit if that is the decision of the IRO. A plan or issuer may not
delay payment because the plan disagrees and intends to seek judicial
review. Instead, while the plan may be entitled to seek judicial
review, it must act in accordance with the IRO's decision (including by
making payment on the claim) unless or until there is a judicial
decision otherwise. However, the requirement that the IRO's decision be
binding does not preclude the plan or issuer from making payment on the
claim or otherwise providing benefits at any time, including following
a final external review decision that denies the claim or otherwise
fails to require such payment or benefits.
After considering all the comments on the requirement that an IRO
decision be binding on the plan and issuer, as well as the claimant,
this amendment clarifies the language in paragraphs (c)(2)(xi)
(regarding the minimum standards for State external review processes)
and (d)(2)(iv) (regarding Federal external review process standards).
Specifically, these two provisions are amended to add language stating
that, for purposes of the binding provision, the plan or issuer must
provide benefits (including by making payment on the claim) pursuant to
the final external review decision without delay, regardless of whether
the plan or issuer intends to seek judicial review of the external
review decision and unless or until there is a judicial decision
otherwise. The Departments welcome comments as to whether any
additional clarifications about the binding provision would be helpful.
C. Separate, Contemporaneous Technical Guidance
Separate technical guidance is being issued by the Departments
contemporaneous with the publication of this amendment. This technical
guidance addresses both State- and Federally-administered external
review processes. An appendix to this technical guidance contains
revised versions of the three model notices issued by the Departments
in connection with the July 2010 regulations. The updated versions of
the model notice of adverse benefit determination, model notice of
final internal adverse benefit determination, and model notice of final
external review decision reflect the requirements contained in the
provisions of this amendment and the guidance. This technical guidance
will be available at http://www.dol.gov/ebsa/healthreform and http://cciio.cms.gov.
HHS is issuing also two additional technical guidance documents.
The first provides instructions for self-insured nonfederal
governmental plans and health insurance issuers with respect to
election of a Federal external review process. The second provides, for
transparency purposes, updated information on how the county-level
estimates pertaining to the 10 percent threshold were calculated for
the rules related to culturally and linguistically appropriate notices.
Both of these documents will be available at http://cciio.cms.gov.
III. Interim Final Rules
Section 9833 of the Code, section 734 of ERISA, and section 2792 of
the PHS Act authorize the Secretaries of the Treasury, Labor, and HHS
(collectively, the Secretaries) to promulgate any interim final rules
that they determine are appropriate to carry out the provisions of
chapter 100 of the Code, part 7 of subtitle B of title I of ERISA, and
part A of title XXVII of the PHS Act, which include PHS Act sections
2701 through 2728 and the incorporation of those sections into ERISA
section 715 and Code section 9815. The amendments promulgated in this
rulemaking carry out the provisions of these statutes. Therefore, the
foregoing interim final rule authority applies to these amendments.
Under the Administrative Procedure Act (APA) (5 U.S.C. 551 et
seq.), while a general notice of proposed rulemaking and an opportunity
for public comment is generally required before promulgation of
regulations, this is not required when an agency, for good cause, finds
that notice and public comment thereon are impracticable, unnecessary,
or contrary to the public interest. The provisions of the APA that
ordinarily require a notice of proposed rulemaking do not apply here
because of the specific authority to issue interim final rules granted
by section 9833 of the Code, section 734 of ERISA, and section 2792 of
the PHS Act. Moreover, even if the APA requirements for notice and
comment were applicable to this regulation, they have been satisfied.
This is because the matters that are the subject of these amendments
have already been subjected to public notice and comment, as they were
addressed in the July 2010 regulations, and are a logical outgrowth of
that document. The amendments made in this interim final rule are being
made in response to public comments received on the July 2010
regulations. While the Departments have determined that, even if the
APA were applicable, an additional opportunity for public comment is
unnecessary in the case of these amendments, the Departments are
issuing these amendments as an interim
[[Page 37218]]
final rule so as to provide the public with an opportunity for public
comment on these modifications.
IV. Economic Impact and Paperwork Burden
A. Summary and Need for Regulatory Action--Department of Labor and
Department of Health and Human Services
As stated earlier in this preamble, the Departments previously
issued the July 2010 regulations implementing PHS Act section 2719,
which were published in the Federal Register on July 23, 2010 (75 FR
43330). The July 2010 regulations set forth rules with respect to
internal claims and appeals and external appeals processes for group
health plans and health insurance issuers that are not grandfathered
health plans.
As described in detail in Section II of this preamble, after the
July 2010 regulations were issued, the Departments received public
comments expressing concerns about the burdens associated with several
of the regulations' provisions. In response to such comments, the
Departments are hereby amending the following provisions of the July
2010 regulations:
Expedited notification of benefit determinations involving
urgent care (paragraph (b)(2)((ii)(B) of the July 2010 regulations);
Additional notice requirements with respect to notice of
adverse benefit determinations or final internal adverse benefit
determination (paragraph (b)(2)(ii)(E) of the July 2010
regulations);\37\
---------------------------------------------------------------------------
\37\ Under the July 2010 regulations, this included the date of
service, the health care provider, and the claim amount (if
applicable), as well as the diagnosis code (such as an ICD-9 code,
ICD-10 code, or DSM-IV code), the treatment code (such as a CPT
code), and the corresponding meanings of these codes.
---------------------------------------------------------------------------
Deemed exhaustion of internal claims and appeals processes
(paragraph (b)(2)(ii)(F) of the July 2010 regulations);
Providing notices in a culturally and linguistically
appropriate manner (paragraph (e) of the July 2010 regulations);
The duration of the transition period for State external
review processes (paragraph (c)(3) of the July 2010 regulations); and
The scope of claims eligible for external review under the
Federal external appeals process (paragraph (d)(1) of the July 2010
regulations).
The Departments crafted these amendments to the July 2010
regulations to secure the protections intended by Congress. In
accordance with OMB Circular A-4, the Departments have quantified the
costs of these amendments where feasible and provided a qualitative
discussion of some of the benefits and costs that may stem from them.
The Departments believe that (i) the costs associated with the
amended rules are less than the costs associated with the July 2010
regulations, (ii) the amended rules adequately protect the rights of
participants, beneficiaries, and policyholders, and (iii) the benefits
of the amended rules justify their costs relative to the pre-Affordable
Care Act baseline and the July 2010 regulations.
B. Executive Orders 12866 and 13563--Department of Labor and Department
of Health and Human Services
Executive Orders 13563 and 12866 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. This rule has been designated a ``significant regulatory
action'' although not economically significant, under section 3(f) of
Executive Order 12866. Accordingly, the rule has been reviewed by the
Office of Management and Budget.
The Departments provide an assessment of the potential costs and
benefits associated with each amended regulatory provision below, as
summarized in Table 1.
Table 1--Accounting Table
------------------------------------------------------------------------
Benefits
-------------------------------------------------------------------------
Qualitative: Amendments to the interim final regulations ensure urgent
care benefit determinations are made in a timely manner, increase
patient privacy, ensure non-English speakers understand their rights,
and provide that claimants will be deemed to have exhausted their
administrative proceedings and can proceed to court or external review
if a plan or issuer fails to strictly adhere to the regulatory
requirements with the exception of the requirements that are described
in the amendment. These amendments are expected to reduce compliance
costs while still ensuring patient protections.
------------------------------------------------------------------------
Period
Cost Estimate Year dollar Discount rate covered
----------------------------------------------------------------------------------------------------------------
Annualized Monetized ($millions/year)........... 1.7 2011 7 percent 2012-2014
1.7 2011 3 percent 2012-2014
----------------------------------------------------------------------------------------------------------------
Qualitative: Monetized costs are for providing notices upon request in a culturally and linguistically
appropriate manner. Non-monetized costs include costs for plans and issuers to respond to requests for
diagnostic and treatment codes, and costs incurred by claimants to resolve whether a plan or insurer's failure
to strictly adhere to the regulatory requirements is sufficient for a claimant to proceed directly to an
external or court review.
----------------------------------------------------------------------------------------------------------------
1. Estimated Number of Affected Entities
For purposes of estimating the entities affected by these
amendments to the July 2010 regulations, the Departments have defined a
large group health plan as an employer plan with 100 or more workers
and a small group plan as an employer plan with fewer than 100 workers.
The Departments make the following estimates about plans and issuers
affected by these amendments: (1) There are approximately 72,000 large
and 2.8 million small ERISA-covered group health plans with an
estimated 97.0 million participants in large group plans and 40.9
million participants in small group plans;\38\ (2) there are
[[Page 37219]]
126,000 governmental plans with 36.1 million participants in large
plans and 2.3 million participants in small plans;\39\ and (3) there
are 16.7 million individuals under age 65 covered by individual health
insurance policies.\40\
---------------------------------------------------------------------------
\38\ All participant counts and the estimates of individual
policies are from the U.S. Department of Labor, EBSA calculations
using the March 2009 Current Population Survey Annual Social and
Economic Supplement and the 2008 Medical Expenditure Panel Survey.
\39\ Estimate is from the 2007 Census of Government.
\40\ US Census Bureau, Current Population Survey, March 2009.
---------------------------------------------------------------------------
The actual number of affected individuals depends on several
factors, including whether (i) a health plan retains its grandfather
status, (ii) the plan is subject to ERISA, (iii) benefits provided
under the plan are self-funded or financed by the purchase of an
insurance policy, (iii) the applicable State has enacted an internal
claims and appeals law, and (iv) the applicable State has enacted an
external review law, and if so the scope of such law, and (v) the
number of new plans and enrollees in such plans.
2. Benefits and Costs
The benefits and costs of the amendments to the July 2010
regulations are discussed together under this section, because the
primary effect of the amendments is to reduce the cost of compliance.
a. Expedited notification of benefit determination involving urgent
care. As discussed in detail above, the July 2010 regulations generally
provide that a plan or issuer must notify a claimant of a benefit
determination with respect to an urgent care claim as soon as possible
taking into account the medical exigencies, but no later than 24 hours
after the receipt of the claim by the plan or issuer. This was a change
from the DOL claims procedure regulation, which requires an urgent care
determination to be made not later than 72 hours after receipt of the
claim by a group health plan. The Departments received several comments
regarding the burdens associated with meeting the 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 decided within 24 hours. Moreover, a number of commenters
highlighted that the 72-hour provision was never anything more than a
``backstop''; the general rule under both the July 2010 regulations and
the DOL claims procedure regulation is for 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. Finally, some commenters cited the Emergency Medical Treatment
and Labor Act (EMTALA)\41\, which generally requires emergency room
care to be treated with or without insurance or preauthorization and,
therefore, mitigates much of the need for expedited pre-service
emergency claims determinations in many situations.
---------------------------------------------------------------------------
\41\ 42 U.S.C. 1395dd.
---------------------------------------------------------------------------
After considering the comments, and the costs and benefits of an
absolute 24-hour decision-making deadline, the 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 no later than 72 hours), provided
the plan or issuer defers to the attending provider with respect to the
decision as to whether a claim constitutes ``urgent care.''
The Departments expect that this amendment will ensure urgent care
benefit determinations are made in a timely manner while reducing
burden on plans and issuers for several reasons. ERISA-covered plans
were already subject to this requirement; therefore, there is no
additional burden imposed on such plans from the pre-Affordable Care
Act baseline. For self-insured nonfederal governmental plans and
issuers in the individual market, the 72-hour requirement would
increase burden from a pre-Affordable Care Act baseline to the extent
that such plans and issuers are not already meeting this standard. The
Departments do not have sufficient data to estimate the fraction of
plans and issuers that were not already in compliance with this
standard. Many claims filed with self-insured nonfederal governmental
plans and individual market issuers already could have been meeting
this requirement for urgent care claims, because ERISA claims
constitute a large portion of health claims, and the Departments
understand that, in general, issuers and service providers apply the
same claims and appeals standards to ERISA-covered and non-ERISA-
covered plans.
Plans and issuers that previously were not subject to the DOL
claims procedure regulation and that are not already meeting the claims
and appeals standard under the DOL claims procedure regulation, could
incur additional costs to become compliant with the 72-hour standard,
but the Departments expect these costs to be less than those associated
with a 24-hour standard. Speeding up the notification process for these
determinations to meet the 72-hour standard could necessitate incurring
additional cost to add more employees or find other ways to shorten the
timeframe, but again such costs are expected to be less than the costs
associated with meeting the 24-hour standard provided in the July 2010
regulations. Additional costs for claimants may be associated with this
requirement if meeting the 72-hour timeframe results in more claims
being denied than would have been denied under a longer notification
period, but again such costs are expected to be less than the costs
associated with meeting the 24-hour standard provided in the July 2010
regulations. The Departments do not have sufficient data to estimate
such costs.
b. Additional notice requirements for internal claims and appeals.
As discussed above, the July 2010 regulations had additional content
requirements for the required notices. The Departments received
comments addressing the requirements to include the diagnosis code
(such as an ICD-9 code, ICD-10 code, or DSM-IV code), the treatment
code (such as a CPT code), and the corresponding meanings of these
codes. Concerns were raised about patient privacy, interference with
the doctor-patient relationship, and high costs. Commenters also
pointed out that there are currently over 20,000 treatment and
diagnosis codes in use today, presenting a costly administrative and
operational challenge for plans and issuers. Comments also questioned
the efficacy of providing codes which some argued are often very
difficult for the average patient to understand.
After considering all the comments, and the costs and benefits of
the additional disclosure, the amendment to the July 2010 regulations
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 requires
plans and issuers to 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 to provide this information upon request.
Making the codes only available upon request protects patients'
privacy while reducing the burden for plans and issuers to redesign
notices. However, plans and issuers will still incur costs to establish
procedures to receive, process, and mail the requests. The Departments
do not have a basis to estimate the net cost associated with this
amendment, because they do not have sufficient data available to
estimate
[[Page 37220]]
the savings that will result from plans and issuers not needing to
redesign notices or calculate the number of future requests.
c. Deemed exhaustion of internal claims and appeals process. The
July 2010 regulations provide that claimants can immediately seek
judicial or external 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. This approach received a number of negative comments from
some issuers and plan sponsors, who prefer a ``substantial compliance''
approach, especially in cases where deviations from the regulatory
standards were minor.
In response to these comments, the Departments are retaining the
approach to this requirement, but this amendment also adds a new
paragraph (b)(2)(ii)(F)(2) to the July 2010 regulations to provide an
exception to the strict compliance standard for errors that are minor
and meet certain other specified conditions. The new paragraph will
also protect claimants whose attempts to pursue other remedies under
paragraph (b)(2)(ii)(F)(1) of the interim final regulations are
rejected by a reviewing tribunal. Under the amended approach, any
violation of the procedural rules of July 2010 regulations pertaining
to internal claims and appeals would permit a claimant to seek
immediate external review or court action, as applicable, unless the
violation was:
(1) De minimis;
(2) Non-prejudicial;
(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.\42\
---------------------------------------------------------------------------
\42\ 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.
---------------------------------------------------------------------------
The Departments expect that this amendment will protect patients'
right to proceed to external review while lowering costs based on the
assumption that internal appeals are less expensive than external
reviews or litigation. However, the amendment may add some costs,
because participants and policyholders now may face uncertainty
regarding whether a particular violation is minor. Many claimants may
incur a cost to seek professional advice, because they will not be able
to make this judgment on their own behalf. Alternatively, some
claimants might seek immediate external review or judicial review and
be denied it. The Departments do not have a sufficient basis to
estimate these costs.
d. Culturally and Linguistically Appropriate Notices. 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 as follows:
For a plan that covers fewer than 100 participants at the
beginning of a plan year, the threshold is 25 percent of all plan
participants being literate only in the same non-English language.
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.\43\
---------------------------------------------------------------------------
\43\ 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.\44\
---------------------------------------------------------------------------
\44\ 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.
As discussed earlier in this preamble, the Departments received
comments that raised concerns regarding the burdens imposed by this
provision. In response to these comments, the Departments have decided
to amend the July 2010 regulations' provisions related to the provision
of notices in a culturally and linguistically appropriate manner to
establish a single threshold with respect to the number of people who
are literate only in the same non-English language for both the group
and individual markets. Under the amended provision, for 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 (ACS) data published by the United
States Census Bureau. Table 2, below provides a chart listing those 255
U.S. counties (78/255 are in Puerto Rico) in which at least 10 percent
of the population speak a particular non-English language and speak
English less than ``very well.'' These data are applicable for 2011 and
are calculated using 2005-2009 ACS data. The Departments will update
this guidance annually on their Web site if there are changes to the
list of the counties determined to meet this 10 percent threshold for
the county's population being literate only in the same non-English
language.
[[Page 37221]]
Table 2--Percent of the County Population That Speak a Particular Non-English Language and Speak English Less
Than ``Very Well'', by U.S. County \45\
----------------------------------------------------------------------------------------------------------------
Non-English language
State County ---------------------------------------------------
Spanish % Chinese % Tagalog % Navajo %
----------------------------------------------------------------------------------------------------------------
AK.......................... Aleutians West Census Area.... 13 ........... 16 ...........
AK.......................... Aleutians East Borough........ ........... ........... 35 ...........
AR.......................... Sevier County................. 17 ........... ........... ...........
AZ.......................... Apache County................. ........... ........... ........... 12
AZ.......................... Maricopa County............... 11 ........... ........... ...........
AZ.......................... Yuma County................... 22 ........... ........... ...........
AZ.......................... Santa Cruz County............. 39 ........... ........... ...........
CA.......................... Colusa County................. 27 ........... ........... ...........
CA.......................... Fresno County................. 15 ........... ........... ...........
CA.......................... Glenn County.................. 14 ........... ........... ...........
CA.......................... Imperial County............... 32 ........... ........... ...........
CA.......................... Kern County................... 16 ........... ........... ...........
CA.......................... Kings County.................. 18 ........... ........... ...........
CA.......................... Los Angeles County............ 19 ........... ........... ...........
CA.......................... Madera County................. 18 ........... ........... ...........
CA.......................... Merced County................. 20 ........... ........... ...........
CA.......................... Monterey County............... 25 ........... ........... ...........
CA.......................... Napa County................... 14 ........... ........... ...........
CA.......................... Orange County................. 14 ........... ........... ...........
CA.......................... Riverside County.............. 15 ........... ........... ...........
CA.......................... San Benito County............. 21 ........... ........... ...........
CA.......................... San Bernardino County......... 15 ........... ........... ...........
CA.......................... San Diego County.............. 11 ........... ........... ...........
CA.......................... San Francisco County.......... ........... 12 ........... ...........
CA.......................... San Joaquin County............ 12 ........... ........... ...........
CA.......................... Santa Barbara County.......... 15 ........... ........... ...........
CA.......................... Santa Cruz County............. 12 ........... ........... ...........
CA.......................... Stanislaus County............. 13 ........... ........... ...........
CA.......................... Sutter County................. 12 ........... ........... ...........
CA.......................... Tulare County................. 21 ........... ........... ...........
CA.......................... Ventura County................ 14 ........... ........... ...........
CO.......................... Adams County.................. 12 ........... ........... ...........
CO.......................... Costilla County............... 11 ........... ........... ...........
CO.......................... Denver County................. 12 ........... ........... ...........
CO.......................... Eagle County.................. 16 ........... ........... ...........
CO.......................... Garfield County............... 12 ........... ........... ...........
CO.......................... Lake County................... 11 ........... ........... ...........
CO.......................... Phillips County............... 12 ........... ........... ...........
CO.......................... Prowers County................ 12 ........... ........... ...........
CO.......................... Saguache County............... 15 ........... ........... ...........
CO.......................... Yuma County................... 10 ........... ........... ...........
FL.......................... Collier County................ 13 ........... ........... ...........
FL.......................... DeSoto County................. 21 ........... ........... ...........
FL.......................... Glades County................. 10 ........... ........... ...........
FL.......................... Hardee County................. 22 ........... ........... ...........
FL.......................... Hendry County................. 26 ........... ........... ...........
FL.......................... Miami-Dade County............. 31 ........... ........... ...........
FL.......................... Okeechobee County............. 12 ........... ........... ...........
FL.......................... Osceola County................ 16 ........... ........... ...........
GA.......................... Atkinson County............... 12 ........... ........... ...........
GA.......................... Echols County................. 20 ........... ........... ...........
GA.......................... Hall County................... 16 ........... ........... ...........
GA.......................... Telfair County................ 10 ........... ........... ...........
GA.......................... Whitfield County.............. 18 ........... ........... ...........
IA.......................... Buena Vista County............ 12 ........... ........... ...........
ID.......................... Clark County.................. 22 ........... ........... ...........
ID.......................... Minidoka County............... 11 ........... ........... ...........
ID.......................... Owyhee County................. 12 ........... ........... ...........
ID.......................... Power County.................. 13 ........... ........... ...........
IL.......................... Kane County................... 15 ........... ........... ...........
KS.......................... Finney County................. 16 ........... ........... ...........
KS.......................... Ford County................... 23 ........... ........... ...........
KS.......................... Grant County.................. 16 ........... ........... ...........
KS.......................... Hamilton County............... 11 ........... ........... ...........
KS.......................... Seward County................. 26 ........... ........... ...........
KS.......................... Stanton County................ 19 ........... ........... ...........
KS.......................... Stevens County................ 11 ........... ........... ...........
KS.......................... Wichita County................ 12 ........... ........... ...........
[[Page 37222]]
KS.......................... Wyandotte County.............. 10 ........... ........... ...........
NC.......................... Alleghany County.............. 14 ........... ........... ...........
NC.......................... Duplin County................. 14 ........... ........... ...........
NE.......................... Colfax County................. 23 ........... ........... ...........
NE.......................... Dakota County................. 14 ........... ........... ...........
NE.......................... Dawson County................. 15 ........... ........... ...........
NJ.......................... Hudson County................. 18 ........... ........... ...........
NJ.......................... Passaic County................ 16 ........... ........... ...........
NJ.......................... Union County.................. 13 ........... ........... ...........
NM.......................... Chaves County................. 11 ........... ........... ...........
NM.......................... Dona Ana County............... 18 ........... ........... ...........
NM.......................... Hidalgo County................ 12 ........... ........... ...........
NM.......................... Lea County.................... 11 ........... ........... ...........
NM.......................... Luna County................... 18 ........... ........... ...........
NM.......................... McKinley County............... ........... ........... ........... 15
NM.......................... Mora County................... 11 ........... ........... ...........
NM.......................... Santa Fe County............... 12 ........... ........... ...........
NM.......................... Chaves County................. 11 ........... ........... ...........
NV.......................... Clark County,................. 11 ........... ........... ...........
NY.......................... Bronx County.................. 20 ........... ........... ...........
NY.......................... New York County............... 10 ........... ........... ...........
NY.......................... Queens County................. 12 ........... ........... ...........
OK.......................... Texas County.................. 18 ........... ........... ...........
OR.......................... Hood River County............. 15 ........... ........... ...........
OR.......................... Marion County................. 11 ........... ........... ...........
OR.......................... Morrow County................. 14 ........... ........... ...........
TX.......................... Andrews County................ 11 ........... ........... ...........
TX.......................... Atascosa County............... 11 ........... ........... ...........
TX.......................... Bailey County................. 18 ........... ........... ...........
TX.......................... Bexar County.................. 12 ........... ........... ...........
TX.......................... Brooks County................. 18 ........... ........... ...........
TX.......................... Calhoun County................ 12 ........... ........... ...........
TX.......................... Cameron County................ 30 ........... ........... ...........
TX.......................... Camp County................... 11 ........... ........... ...........
TX.......................... Castro County................. 20 ........... ........... ...........
TX.......................... Cochran County................ 18 ........... ........... ...........
TX.......................... Concho County................. 29 ........... ........... ...........
TX.......................... Crane County.................. 10 ........... ........... ...........
TX.......................... Crockett County............... 20 ........... ........... ...........
TX.......................... Crosby County................. 11 ........... ........... ...........
TX.......................... Culberson County.............. 15 ........... ........... ...........
TX.......................... Dallam County................. 12 ........... ........... ...........
TX.......................... Dallas County................. 18 ........... ........... ...........
TX.......................... Dawson County................. 12 ........... ........... ...........
TX.......................... Deaf Smith County............. 20 ........... ........... ...........
TX.......................... Dimmit County................. 33 ........... ........... ...........
TX.......................... Duval County.................. 26 ........... ........... ...........
TX.......................... Ector County.................. 12 ........... ........... ...........
TX.......................... Edwards County................ 10 ........... ........... ...........
TX.......................... El Paso County................ 29 ........... ........... ...........
TX.......................... Frio County................... 16 ........... ........... ...........
TX.......................... Garza County.................. 35 ........... ........... ...........
TX.......................... Gonzales County............... 14 ........... ........... ...........
TX.......................... Hale County................... 12 ........... ........... ...........
TX.......................... Hall County................... 14 ........... ........... ...........
TX.......................... Hansford County............... 16 ........... ........... ...........
TX.......................... Harris County................. 18 ........... ........... ...........
TX.......................... Hidalgo County................ 35 ........... ........... ...........
TX.......................... Howard County................. 16 ........... ........... ...........
TX.......................... Hudspeth County............... 31 ........... ........... ...........
TX.......................... Jim Hogg County............... 26 ........... ........... ...........
TX.......................... Jim Wells County.............. 13 ........... ........... ...........
TX.......................... Karnes County................. 17 ........... ........... ...........
TX.......................... Kenedy County................. 14 ........... ........... ...........
TX.......................... Kinney County................. 15 ........... ........... ...........
TX.......................... Kleberg County................ 11 ........... ........... ...........
TX.......................... La Salle County............... 22 ........... ........... ...........
TX.......................... Lamb County................... 15 ........... ........... ...........
[[Page 37223]]
TX.......................... Lipscomb County............... 14 ........... ........... ...........
TX.......................... Lynn County................... 12 ........... ........... ...........
TX.......................... Maverick County............... 48 ........... ........... ...........
TX.......................... Midland County................ 11 ........... ........... ...........
TX.......................... Moore County.................. 19 ........... ........... ...........
TX.......................... Nueces County................. 12 ........... ........... ...........
TX.......................... Ochiltree County.............. 17 ........... ........... ...........
TX.......................... Parmer County................. 22 ........... ........... ...........
TX.......................... Pecos County.................. 18 ........... ........... ...........
TX.......................... Presidio County............... 36 ........... ........... ...........
TX.......................... Reagan County................. 21 ........... ........... ...........
TX.......................... Reeves County................. 27 ........... ........... ...........
TX.......................... San Patricio County........... 12 ........... ........... ...........
TX.......................... Schleicher County............. 12 ........... ........... ...........
TX.......................... Sherman County................ 14 ........... ........... ...........
TX.......................... Starr County.................. 43 ........... ........... ...........
TX.......................... Sterling County............... 11 ........... ........... ...........
TX.......................... Sutton County................. 18 ........... ........... ...........
TX.......................... Tarrant County................ 10 ........... ........... ...........
TX.......................... Terrell County................ 12 ........... ........... ...........
TX.......................... Terry County.................. 11 ........... ........... ...........
TX.......................... Titus County.................. 20 ........... ........... ...........
TX.......................... Travis County................. 12 ........... ........... ...........
TX.......................... Upton County.................. 11 ........... ........... ...........
TX.......................... Uvalde County................. 15 ........... ........... ...........
TX.......................... Val Verde County.............. 29 ........... ........... ...........
TX.......................... Ward County................... 12 ........... ........... ...........
TX.......................... Webb County................... 49 ........... ........... ...........
TX.......................... Willacy County................ 20 ........... ........... ...........
TX.......................... Winkler County................ 13 ........... ........... ...........
TX.......................... Yoakum County................. 23 ........... ........... ...........
TX.......................... Zapata County................. 36 ........... ........... ...........
TX.......................... Zavala County................. 33 ........... ........... ...........
UT.......................... San Juan County............... ........... ........... ........... 12
VA.......................... Manassas city................. 17 ........... ........... ...........
VA.......................... Manassas Park city............ 18 ........... ........... ...........
WA.......................... Adams County.................. 23 ........... ........... ...........
WA.......................... Douglas County................ 11 ........... ........... ...........
WA.......................... Franklin County............... 27 ........... ........... ...........
WA.......................... Grant County.................. 16 ........... ........... ...........
WA.......................... Yakima County................. 17 ........... ........... ...........
PR.......................... Anasco Municipio.............. 85 ........... ........... ...........
PR.......................... Adjuntas Municipio............ 86 ........... ........... ...........
PR.......................... Aguada Municipio.............. 81 ........... ........... ...........
PR.......................... Aguadilla Municipio........... 78 ........... ........... ...........
PR.......................... Aguas Buenas Municipio........ 90 ........... ........... ...........
PR.......................... Aibonito Municipio............ 82 ........... ........... ...........
PR.......................... Arecibo Municipio............. 83 ........... ........... ...........
PR.......................... Arroyo Municipio.............. 84 ........... ........... ...........
PR.......................... Barceloneta Municipio......... 78 ........... ........... ...........
PR.......................... Barranquitas Municipio........ 87 ........... ........... ...........
PR.......................... Bayamon Municipio............. 78 ........... ........... ...........
PR.......................... Cabo Rojo Municipio........... 82 ........... ........... ...........
PR.......................... Caguas Municipio.............. 80 ........... ........... ...........
PR.......................... Camuy Municipio............... 88 ........... ........... ...........
PR.......................... Canovanas Municipio........... 83 ........... ........... ...........
PR.......................... Carolina Municipio............ 77 ........... ........... ...........
PR.......................... Catano Municipio.............. 82 ........... ........... ...........
PR.......................... Cayey Municipio............... 86 ........... ........... ...........
PR.......................... Ceiba Municipio............... 73 ........... ........... ...........
PR.......................... Ciales Municipio.............. 88 ........... ........... ...........
PR.......................... Cidra Municipio............... 86 ........... ........... ...........
PR.......................... Coamo Municipio............... 84 ........... ........... ...........
PR.......................... Comero Municipio.............. 93 ........... ........... ...........
PR.......................... Corozal Municipio............. 88 ........... ........... ...........
PR.......................... Culebra Municipio............. 76 ........... ........... ...........
PR.......................... Dorado Municipio.............. 77 ........... ........... ...........
PR.......................... Fajardo Municipio............. 78 ........... ........... ...........
[[Page 37224]]
PR.......................... Florida Municipio............. 81 ........... ........... ...........
PR.......................... Guayama Municipio............. 80 ........... ........... ...........
PR.......................... Guayanilla Municipio.......... 85 ........... ........... ...........
PR.......................... Guaynabo Municipio............ 69 ........... ........... ...........
PR.......................... Gurabo Municipio.............. 81 ........... ........... ...........
PR.......................... Gu[szlig]nica Municipio....... 83 ........... ........... ...........
PR.......................... Hatillo Municipio............. 86 ........... ........... ...........
PR.......................... Hormigueros Municipio......... 74 ........... ........... ...........
PR.......................... Humacao Municipio............. 83 ........... ........... ...........
PR.......................... Isabela Municipio............. 85 ........... ........... ...........
PR.......................... Jayuya Municipio.............. 91 ........... ........... ...........
PR.......................... Juana Diaz Municipio.......... 86 ........... ........... ...........
PR.......................... Juncos Municipio.............. 85 ........... ........... ...........
PR.......................... Lajas Municipio............... 83 ........... ........... ...........
PR.......................... Lares Municipio............... 87 ........... ........... ...........
PR.......................... Las Marias Municipio.......... 91 ........... ........... ...........
PR.......................... Las Piedras Municipio......... 85 ........... ........... ...........
PR.......................... Loiza Municipio............... 89 ........... ........... ...........
PR.......................... Luquillo Municipio............ 79 ........... ........... ...........
PR.......................... Manati Municipio.............. 84 ........... ........... ...........
PR.......................... Maricao Municipio............. 95 ........... ........... ...........
PR.......................... Maunabo Municipio............. 88 ........... ........... ...........
PR.......................... Mayaguez Municipio............ 77 ........... ........... ...........
PR.......................... Moca Municipio................ 86 ........... ........... ...........
PR.......................... Morovis Municipio............. 87 ........... ........... ...........
PR.......................... Naguabo Municipio............. 83 ........... ........... ...........
PR.......................... Naranjito Municipio........... 91 ........... ........... ...........
PR.......................... Orocovis Municipio............ 91 ........... ........... ...........
PR.......................... Patillas Municipio............ 84 ........... ........... ...........
PR.......................... Penuelas Municipio............ 86 ........... ........... ...........
PR.......................... Ponce Municipio............... 80 ........... ........... ...........
PR.......................... Quebradillas Municipio........ 83 ........... ........... ...........
PR.......................... Rincon Municipio.............. 73 ........... ........... ...........
PR.......................... Rio Grande Municipio.......... 85 ........... ........... ...........
PR.......................... Sabana Grande Municipio....... 83 ........... ........... ...........
PR.......................... Salinas Municipio............. 86 ........... ........... ...........
PR.......................... San German Municipio.......... 85 ........... ........... ...........
PR.......................... San Juan Municipio............ 73 ........... ........... ...........
PR.......................... San Lorenzo Municipio......... 83 ........... ........... ...........
PR.......................... San Sebastian Municipio....... 84 ........... ........... ...........
PR.......................... Santa Isabel Municipio........ 86 ........... ........... ...........
PR.......................... Toa Alta Municipio............ 80 ........... ........... ...........
PR.......................... Toa Baja Municipio............ 80 ........... ........... ...........
PR.......................... Trujillo Alto Municipio....... 79 ........... ........... ...........
PR.......................... Utuado Municipio.............. 83 ........... ........... ...........
PR.......................... Vega Alta Municipio........... 83 ........... ........... ...........
PR.......................... Vega Baja Municipio........... 76 ........... ........... ...........
PR.......................... Vieques Municipio............. 83 ........... ........... ...........
PR.......................... Villalba Municipio............ 88 ........... ........... ...........
PR.......................... Yabucoa Municipio............. 86 ........... ........... ...........
PR.......................... Yauco Municipio............... 85 ........... ........... ...........
----------------------------------------------------------------------------------------------------------------
These amendments also require each notice sent by a plan or issuer
to an address in a county that meets this threshold to include a one-
sentence statement in the relevant non-English language about the
availability of language services to be provided by the Departments.
The Departments have provided guidance with sample sentences in the
relevant languages in separate guidance being issued contemporaneous
with the publication of this amendment.
---------------------------------------------------------------------------
\45\ Data are from the 2005-2009 ACS available at http://www.census.gov/acs. Only those counties where at least 10% of the
county speak a particular non-English language and speak English
less than ``very well'' are listed.
---------------------------------------------------------------------------
In addition to including a statement in all notices in the relevant
non-English language, a plan or issuer would be required 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.
The Departments expect that the largest cost associated with the
amended rules for culturally and linguistically appropriate notices
will be for plans and issuers to provide notices in the applicable non-
English language upon request. Based on the ACS data, the Departments
estimate that there are about 12 million individuals living in
[[Page 37225]]
covered counties that are literate in a non-English Language. The ACS
did not start collecting insurance coverage information until 2008.
Therefore, to estimate the percentage of the 12 million affected
individuals that were insured, the Departments used the percentage of
the population in the State that reported being insured by private or
public employer insurance or in the individual market from the 2009
Current Population Survey (CPS).\46\ This results in an estimate of
approximately seven million individuals who are eligible to request
translation services.
---------------------------------------------------------------------------
\46\ Please note that using state estimates of insurance
coverage could lead to an over estimate if those reporting in the
ACS survey that they speak English less than ``very well'' are less
likely to be insured than the state average.
---------------------------------------------------------------------------
In discussions with the regulated community, the Departments found
that experience in California, which has a State law requirement for
providing translation services, indicates that requests for
translations of written documents averages 0.098 requests per 1,000
members. While the California law is not identical to the amendment to
the July 2010 regulations, and the demographics for California do not
match other counties, for purposes of this analysis, the Departments
used this percentage to estimate of the number of translation service
requests that plan and issuers can expect to receive. Industry experts
also told the Departments that while the cost of translation services
varies, $500 per document is a reasonable approximation of translation
cost.
Using the ACS and the CPS, the Departments estimate 34 million
insured lives in the affected counties. Based on the foregoing, the
Departments estimate that the cost to provide translation services will
be approximately $1.7 million annually (34,087,000 lives * 0.098/1000 *
$500).
e. Duration of the transition period for State external review
processes. These amendments to the July 2010 regulations modify the
transition period under paragraph (c)(3) so that the last day of the
transition period is December 31, 2011. Modifying the transition period
gives states additional time to implement State external review
processes that conform to paragraph (c)(2). This modification produces
benefits and costs to participants and beneficiaries depending upon
which state they live in and the timing of the beginning of the plan
year. HHS is working closely with states to help them have external
review processes that meet the requirements of paragraph (c)(2). The
July 2010 regulations would have participants living in states with
laws that do not meet the minimum consumer protections in paragraph
(c)(2) entering the Federal external review process that would provide
more consumer protections. However, this requirement to enter the
Federal external review process would take effect upon the start of a
new plan year beginning on or after July 1, 2011.
This modification delays coverage of external review for
participants whose plan year would have started between July 1, 2011
and December 31, 2011, but provides coverage sooner for participants in
plans with plan years beginning after January 1, 2012, and has no
change for participants in plans with plan years beginning on January
1, 2012.
The annual reporting form for certain ERISA covered health plans,
the Form 5500, has information on health plan year end dates and also
the number of participants in health plans. While most health plans
with less than 100 participants are not required to file the Form 5500,
the Departments are able to observe the plan year end dates and hence
the plan year start dates for large plans. The Departments looked at
the dispersion of plan year start dates for plans that filed the Form
5500 and found that nearly 76 percent of participants are in plans with
a plan year start date of January 1, 2012 and hence will not be
effected by the change in the rule; nearly 13 percent of participants
are in plans that could possibly see a delay in receiving the
protections of external review, while just over 10 percent of
participants will be able to access the protections sooner. These
estimates did not take into account the state in which the plan was
located. The Departments do not have data on the start date of policies
in the individual market. While on net about 2.4 percent of
participants in affected plans could see a delay in receiving the
protections, these costs are offset by giving states, and issuers
additional time, and hence lower costs, to prepare for complying with
the rule.
f. Scope of Federal External Review. Paragraph (d)(1) of the July
2010 regulations provides that any adverse benefit determination
(including a final internal adverse benefit determination) could be
brought to the Federal external review process 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 (i.e., worker
classification and similar issues were not within the scope of the
Federal external review process). As discussed earlier in this
preamble, comments received in response to the July 2010 regulations
indicate that the scope of external review claims was too broad.
After considering all the comments, with respect to plans subject
to the Federal external review process, for 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 the
Federal process, temporarily replacing it with a different scope.
Specifically, this amendment suspends the broad scope of claims
eligible for external review and narrows the scope to those 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 suspension is intended to give the marketplace time to
adjust to providing external review. The Departments believe that, once
the market has so adjusted, it will become clear that the benefits of
the July 2010 regulations' broader scope would be likely to justify its
costs.
C. Regulatory Flexibility Act--Department of Labor and Department of
Health and Human Services
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the APA (5
U.S.C. 551 et seq.) and that are likely to have a significant economic
impact on a substantial number of small entities. Under Section 553(b)
of the APA, a general notice of proposed rulemaking is not required
when an agency, for good cause, finds that notice and public comment
thereon are impracticable, unnecessary, or contrary to the public
interest. The interim final regulations were exempt from the APA,
because the Departments made a good cause finding that a general notice
of proposed rulemaking is not necessary earlier in this preamble.
Therefore, the RFA did not apply and the Departments were not required
to either certify that the regulations or this amendment would not have
a significant economic impact on a substantial number of small entities
or conduct a regulatory flexibility analysis.
Nevertheless, the Departments carefully considered the likely
impact of the rule on small entities in connection with their
assessment under Executive Order 12866. Consistent with the policy of
the RFA, the Departments encourage the public to submit comments that
suggest alternative rules that accomplish
[[Page 37226]]
the stated purpose of the Affordable Care Act and minimize the impact
on small entities.
D. Special Analyses--Department of the Treasury
Notwithstanding the determinations of the Department of Labor and
Department of Health and Human Services, for purposes of the Department
of the Treasury, it has been determined that this Treasury decision is
not a significant regulatory action for purposes of Executive Order
12866. Therefore, a regulatory assessment is not required. It has also
been determined that section 553(b) of the APA (5 U.S.C. chapter 5)
does not apply to these temporary regulations. For the applicability of
the RFA, refer to the Special Analyses section in the preamble to the
cross-referencing notice of proposed rulemaking published elsewhere in
this issue of the Federal Register. Pursuant to section 7805(f) of the
Code, these temporary regulations have been submitted to the Chief
Counsel for Advocacy of the Small Business Administration for comment
on their impact on small businesses.
E. Paperwork Reduction Act
1. Department of Labor and Department of the Treasury
Currently, the Departments are soliciting 60 days of public
comments concerning these disclosures. The Departments have submitted a
copy of these interim final regulations to OMB in accordance with 44
U.S.C. 3507(d) for review of the information collections. The
Departments and OMB are particularly interested in comments that:
Evaluate whether the collection of information is
necessary for the proper performance of the functions of the agency,
including whether the information will have practical utility;
Evaluate the accuracy of the agency's estimate of the
burden of the collection of information, including the validity of the
methodology and assumptions used;
Enhance the quality, utility, and clarity of the
information to be collected; and
Minimize the burden of the collection of information on
those who are to respond, including through the use of appropriate
automated, electronic, mechanical, or other technological collection
techniques or other forms of information technology, for example, by
permitting electronic submission of responses.
Comments should be sent to the Office of Information and Regulatory
Affairs, Attention: Desk Officer for the Employee Benefits Security
Administration either by fax to (202) 395-7285 or by e-mail to oira_submission@omb.eop.gov. A copy of the ICR may be obtained by contacting
the PRA addressee: G. Christopher Cosby, Office of Policy and Research,
U.S. Department of Labor, Employee Benefits Security Administration,
200 Constitution Avenue, NW., Room N-5718, Washington, DC 20210.
Telephone: (202) 693-8410; Fax: (202) 219-4745. These are not toll-free
numbers. E-mail: ebsa.opr@dol.gov. ICRs submitted to OMB also are
available at reginfo.gov (http://www.reginfo.gov/public/do/PRAMain).
a. Department of Labor and Department of the Treasury: Affordable Care
Act Internal Claims and Appeals and External Review Disclosures for
Non-Grandfathered Plans
These amendments make two changes to the interim final regulations
that affect the paperwork burden. The first is an amendment no longer
requiring that diagnosis and treatment codes be included on notices of
adverse benefit determination and final internal adverse benefit
determination. Instead, they must notify claimants of the opportunity
to receive the codes on request and plans and issuers must provide the
codes upon request. The Departments expect that this change will lower
costs, because plans and issuers no longer will have to provide the
codes on the notices. Plans and issuers will incur a cost to establish
procedures for receive, process, and mail the codes upon request;
however, the Departments are unable to estimate such cost due to a lack
of a basis for an estimate of the number of requests that will be made
for the codes.
The amendments also change the method for determining who is
eligible to receive a notice in a culturally and linguistically
appropriate manner, and the information that must be provided to such
persons. The previous rule was based on the number of employees at a
firm. The new rule is based on whether a participant or beneficiary
resides in a county where ten percent or more of the population
residing in the county is literate only in the same non-English
language.
Participants and beneficiaries residing in an affected county and
speaking an applicable non-English language will now receive a one-
sentence statement in all notices written in the applicable non-English
language about the availability of language services. In addition to
including the statement, plan and issuers are required 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 requests.
The Departments understand that oral translation services are
already provided for nearly all covered participants and beneficiaries.
Therefore, no additional burden is associated with this requirement of
the amendment. The Departments estimate that plans will incur an annual
cost burden of $1.2 million to translate written notices into the
relevant non-English language.\47\
---------------------------------------------------------------------------
\47\ The Department's methodology for this estimate is explained
in IV, B, 2, d, above.
---------------------------------------------------------------------------
Based on the foregoing, the Departments have adjusted the total
estimated cost burden for this information collection. The cost burden
is $243,000 in 2011, $1.7 million in 2012, and $1.8 million in 2013.
Type of Review: Revised collection.
Agencies: Employee Benefits Security Administration, Department of
Labor; Internal Revenue Service, U.S. Department of the Treasury,
Title: Affordable Care Act Internal Claims and Appeals and External
Review Disclosures for Non-Grandfathered Plans.
OMB Number: 1210-0144; 1545-2182.
Affected Public: Business or other for-profit; not-for-profit
institutions.
Total Respondents: 1,020,000 (three-year average).
Total Responses: 111,000(three-year average).
Frequency of Response: Occasionally.
Estimated Total Annual Burden Hours: 233 hours (Employee Benefits
Security Administration); 233 hours (Internal Revenue Service) (three-
year average).
Estimated Total Annual Burden Cost: $628,900 (Employee Benefits
Security Administration); $628,900 (Internal Revenue Service) (three-
year average).
2. Department of Health and Human Services
a. ICR Regarding Affordable Care Act Internal Claims and Appeals and
External Review Disclosures for Non-grandfathered Plans
As discussed above in the Department of Labor and Department of the
Treasury PRA section, these amendments make two changes to the interim
final regulations that affect the paperwork burden. The first is an
amendment no longer requiring that diagnosis and treatment codes be
included on notices of adverse benefit determination and final internal
adverse benefit
[[Page 37227]]
determination. Instead these codes are available upon request. The
Departments expect that this change will lower costs compared to the
July 2010 regulations because plans and issuers no longer will have to
provide the codes on the notices. Plans and issuers will incur a cost
to establish procedures for receiving, processing, and mailing the
codes upon request; however, the Departments are unable to estimate
such cost due to lack of a basis for an estimate of the number of
requests that will be made for the codes. Second, the amendments also
changes who is eligible to receive a notice in a culturally or
linguistically appropriate manner.
The Departments estimated the new cost burden of providing the
translation of requested notices into the applicable non-English
language. The annual cost burden is estimated to be $430,000 annually
starting in 2012. The derivation of this estimate was discussed above
in the Economic Impact section.
Due to the amendments, the Department has adjusted the total
estimated costs of this information collection. The Department
estimates that State and local governmental plans and issuers offering
coverage in the individual market will incur a total hour burden of
570,804 hours in 2011, 998,807 hours in 2012, and 1.22 million hours in
2013 to comply with equivalent costs of $28.2 million in 2011, $57.4
million in 2012, and $70.5 million in 2013. The total cost burden for
those plans that use service providers, including the cost of mailing
all responses is estimated to be $20.7 million in 2011, $37.9 million
in 2012, and $51.7 million in 2013.
The hour and cost burden is summarized below:
Type of Review: Revised collection.
Agency: Department of Health and Human Services.
Title: Affordable Care Act Internal Claims and Appeals and External
Review Disclosures
OMB Number: 0938-1099.
Affected Public: Business; State, Local, or Tribal Governments.
Respondents: 46,773 (three-year average).
Responses: 218,650,000 (three-year average).
Frequency of Response: Occasionally.
Estimated Total Annual Burden Hours: 929,870 hours (three-year
average).
Estimated Total Annual Burden Cost: $36,600,000 (three-year
average).
We have requested emergency OMB review and approval of the
aforementioned information collection requirements by July 1, 2011. To
obtain copies of the supporting statement and any related forms for the
proposed paperwork collections referenced above, access CMS' Web site
at http://www.cms.gov/PaperworkReductionActof1995/PRAL/list.asp#TopOfPage or e-mail your request, including your address,
phone number, OMB number, and CMS document identifier, to
Paperwork@cms.hhs.gov, or call the Reports Clearance Office at 410-786-
1326.
If you comment on any of these information collection requirements,
please do either of the following:
1. Submit your comments electronically as specified in the
ADDRESSES section of this proposed rule; or
2. Submit your comments to the Office of Information and Regulatory
Affairs, Office of Management and Budget,
Attention: CMS Desk Officer, CMS-9993-IFC2
Fax: (202) 395-6974; or
E-mail: OIRA_submission@omb.eop.gov
F. Congressional Review Act
These amendments to the interim final regulations are subject to
the Congressional Review Act provisions of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.) and
have been transmitted to Congress and the Comptroller General for
review.
G. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires
agencies to prepare several analytic statements before proposing any
rules that may result in annual expenditures of $100 million (as
adjusted for inflation) by State, local and tribal governments or the
private sector. These amendments to the interim final regulations are
not subject to the Unfunded Mandates Reform Act because they are being
issued as interim final regulations. However, consistent with the
policy embodied in the Unfunded Mandates Reform Act, the regulation has
been designed to be the least burdensome alternative for State, local
and tribal governments, and the private sector, while achieving the
objectives of the Affordable Care Act.
H. Federalism Statement--Department of Labor and Department of Health
and Human Services
Executive Order 13132 outlines fundamental principles of
federalism, and requires the adherence to specific criteria by Federal
agencies in the process of their formulation and implementation of
policies that have ``substantial direct effects'' on the States, the
relationship between the national government and States, or on the
distribution of power and responsibilities among the various levels of
government. Federal agencies promulgating regulations that have
federalism implications must consult with State and local officials,
and describe the extent of their consultation and the nature of the
concerns of State and local officials in the preamble to the
regulation.
In the Departments' view, these amendments to the interim final
regulations have federalism implications, because they have direct
effects on the States, the relationship between the national government
and States, or on the distribution of power and responsibilities among
various levels of government. However, in the Departments' view, the
federalism implications of these interim final regulations are
substantially mitigated because, with respect to health insurance
issuers, the Departments expect that the majority of States will enact
laws or take other appropriate action to implement an internal and
external appeals process that will meet or exceed federal standards.
In general, through section 514, ERISA supersedes State laws to the
extent that they relate to any covered employee benefit plan, and
preserves State laws that regulate insurance, banking, or securities.
While ERISA prohibits States from regulating a plan as an insurance or
investment company or bank, the preemption provisions of section 731 of
ERISA and section 2724 of the PHS Act (implemented in 29 CFR
2590.731(a) and 45 CFR 146.143(a)) apply so that the HIPAA requirements
(including those of the Affordable Care Act) are not to be ``construed
to supersede any provision of State law which establishes, implements,
or continues in effect any standard or requirement solely relating to
health insurance issuers in connection with group health insurance
coverage except to the extent that such standard or requirement
prevents the application of a requirement'' of a Federal standard. The
conference report accompanying HIPAA indicates that this is intended to
be the ``narrowest'' preemption of State laws. (See House Conf. Rep.
No. 104-736, at 205, reprinted in 1996 U.S. Code Cong. & Admin. News
2018.) States may continue to apply State law requirements except to
the extent that such requirements prevent the application of the
Affordable Care Act
[[Page 37228]]
requirements that are the subject of this rulemaking. State insurance
laws that are more stringent than the Federal requirements are unlikely
to ``prevent the application of'' the Affordable Care Act, and be
preempted. Accordingly, States have significant latitude to impose
requirements on health insurance issuers that are more restrictive than
the Federal law. Furthermore, the Departments have opined that, in the
instance of a group health plan providing coverage through group health
insurance, the issuer will be required to follow the external review
procedures established in State law (assuming the State external review
procedure meets the minimum standards set out in these interim final
rules).
In compliance with the requirement of Executive Order 13132 that
agencies examine closely any policies that may have federalism
implications or limit the policy making discretion of the States, the
Departments have engaged in efforts to consult with and work
cooperatively with affected State and local officials, including
attending conferences of the National Association of Insurance
Commissioners (NAIC), meeting with NAIC staff counsel on issues arising
from the interim final regulations and consulting with State insurance
officials on an individual basis. It is expected that the Departments
will act in a similar fashion in enforcing the Affordable Care Act
requirements, including the provisions of section 2719 of the PHS Act.
Throughout the process of developing these amendments to the interim
final regulations, to the extent feasible within the specific
preemption provisions of HIPAA as it applies to the Affordable Care
Act, the Departments have attempted to balance the States' interests in
regulating health insurance issuers, and Congress' intent to provide
uniform minimum protections to consumers in every State. By doing so,
it is the Departments' view that they have complied with the
requirements of Executive Order 13132.
Pursuant to the requirements set forth in section 8(a) of Executive
Order 13132, and by the signatures affixed to these regulations, the
Departments certify that the Employee Benefits Security Administration
and the Centers for Medicare and Medicaid Services have complied with
the requirements of Executive Order 13132 for the attached amendment to
the interim final regulations in a meaningful and timely manner.
V. Statutory Authority
The Department of the Treasury temporary regulations are adopted
pursuant to the authority contained in sections 7805 and 9833 of the
Code.
The Department of Labor interim final regulations are adopted
pursuant to the authority contained in 29 U.S.C. 1027, 1059, 1135,
1161-1168, 1169, 1181-1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a,
1191b, and 1191c; sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec.
401(b), Pub. L. 105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec.
512(d), Pub. L. 110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e),
Pub. L. 111-148, 124 Stat. 119, as amended by Pub. L. 111-152, 124
Stat. 1029; Secretary of Labor's Order 6-2009, 74 FR 21524 (May 7,
2009).
The Department of Health and Human Services interim final
regulations are adopted pursuant to the authority contained in sections
2701 through 2763, 2791, and 2792 of the PHS Act (42 U.S.C. 300gg
through 300gg-63, 300gg-91, and 300gg-92), as amended.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health insurance, Pensions, Reporting
and recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure, Employee benefit plans, Group
health plans, Health care, Health insurance, Medical child support,
Reporting and recordkeeping requirements.
45 CFR Part 147
Health care, Health insurance, Reporting and recordkeeping
requirements, and State regulation of health insurance.
Steven T. Miller,
Deputy Commissioner for Services and Enforcement, Internal Revenue
Service.
Approved: June 21, 2011.
Emily S. McMahon,
Acting Assistant Secretary of the Treasury (Tax Policy).
Signed this 20th day of June 2011.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits Security Administration,
Department of Labor.
CMS-9993-IFC2
Approved: June 16, 2011.
Donald Berwick,
Administrator, Centers for Medicare & Medicaid Services.
Approved: June 17, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human Services.
Department of the Treasury
Internal Revenue Service
26 CFR Chapter I
Accordingly, 26 CFR part 54 is amended as follows:
PART 54--PENSION EXCISE TAXES
0
Paragraph 1. The general authority citation for part 54 continues to
read as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 54.9815-2719T is amended by:
0
1. Revising paragraphs (b)(2)(ii)(B), (b)(2)(ii)(E)(1), (b)(2)(ii)(F),
(c)(2)(xi), (c)(3), (d)(1), (d)(2)(iv) and (e).
0
2. Redesignating (b)(2)(ii)(E)(2), (b)(2)(ii)(E)(3), and
(b)(2)(ii)(E)(4) as (b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and
(b)(2)(ii)(E)(5), respectively.
0
3. Adding new paragraph (b)(2)(ii)(E)(2).
The revisions and addition read as follows:
Sec. 54.9815-2719T Internal claims and appeals and external review
processes (temporary).
* * * * *
(b) * * *
(2) * * *
(ii) * * *
(B) Expedited notification of benefit determinations involving
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which
generally provide, among other things, in the case of urgent care
claims for notification of the plan's benefit determination (whether
adverse or not) as soon as possible, taking into account the medical
exigencies, but not later than 72 hours after receipt of the claim)
continue to apply to the plan and issuer. For purposes of this
paragraph (b)(2)(ii)(B), a claim involving urgent care has the meaning
given in 29 CFR 2560.503-1(m)(1), as determined by the attending
provider, and the plan or issuer shall defer to such determination of
the attending provider.
* * * * *
(E) * * *
(1) The plan and issuer must ensure that any notice of adverse
benefit determination or final internal adverse benefit determination
includes information sufficient to identify the
[[Page 37229]]
claim involved (including the date of service, the health care
provider, the claim amount (if applicable), and a statement describing
the availability, upon request, of the diagnosis code and its
corresponding meaning, and the treatment code and its corresponding
meaning).
(2) The plan and issuer must provide to participants and
beneficiaries, as soon as practicable, upon request, the diagnosis code
and its corresponding meaning, and the treatment code and its
corresponding meaning, associated with any adverse benefit
determination or final internal adverse benefit determination. The plan
or issuer must not consider a request for such diagnosis and treatment
information, in itself, to be a request for an internal appeal under
this paragraph (b) or an external review under paragraphs (c) and (d)
of this section.
* * * * *
(F) Deemed exhaustion of internal claims and appeals processes--(1)
In the case of a plan or issuer that fails to adhere to all the
requirements of this paragraph (b)(2) with respect to a claim, the
claimant is deemed to have exhausted the internal claims and appeals
process of this paragraph (b), except as provided in paragraph
(b)(2)(ii)(F)(2) of this section. Accordingly, the claimant may
initiate an external review under paragraph (c) or (d) of this section,
as applicable. The claimant is also entitled to pursue any available
remedies under section 502(a) of ERISA or under State law, as
applicable, on the basis that the plan or issuer has failed to provide
a reasonable internal claims and appeals process that would yield a
decision on the merits of the claim. If a claimant chooses to pursue
remedies under section 502(a) of ERISA under such circumstances, the
claim or appeal is deemed denied on review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph (b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of this paragraph (b) will not be
deemed exhausted based on de minimis violations that do not cause, and
are not likely to cause, prejudice or harm to the claimant so long as
the plan or issuer demonstrates that the violation was for good cause
or due to matters beyond the control of the plan or issuer and that the
violation occurred in the context of an ongoing, good faith exchange of
information between the plan and the claimant. This exception is not
available if the violation is part of a pattern or practice of
violations by the plan or issuer. The claimant may request a written
explanation of the violation from the plan or issuer, and the plan or
issuer must provide such explanation within 10 days, including a
specific description of its bases, if any, for asserting that the
violation should not cause the internal claims and appeals process of
this paragraph (b) to be deemed exhausted. If an external reviewer or a
court rejects the claimant's request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section on the basis that the plan
met the standards for the exception under this paragraph
(b)(2)(ii)(F)(2), the claimant has the right to resubmit and pursue the
internal appeal of the claim. In such a case, within a reasonable time
after the external reviewer or court rejects the claim for immediate
review (not to exceed 10 days), the plan shall provide the claimant
with notice of the opportunity to resubmit and pursue the internal
appeal of the claim. Time periods for re-filing the claim shall begin
to run upon claimant's receipt of such notice.
* * * * *
(c) * * *
(2) * * *
(xi) The State process must provide that the decision is binding on
the plan or issuer, as well as the claimant, except to the extent other
remedies are available under State or Federal law, and except that the
requirement that the decision be binding shall not preclude the plan or
issuer from making payment on the claim or otherwise providing benefits
at any time, including after a final external review decision that
denies the claim or otherwise fails to require such payment or
benefits. For this purpose, the plan or issuer must provide benefits
(including by making payment on the claim) pursuant to the final
external review decision without delay, regardless of whether the plan
or issuer intends to seek judicial review of the external review
decision and unless or until there is a judicial decision otherwise.
* * * * *
(3) Transition period for external review processes. (i) Through
December 31, 2011, an applicable State external review process
applicable to a health insurance issuer or group health plan is
considered to meet the requirements of PHS Act section 2719(b).
Accordingly, through December 31, 2011, an applicable State external
review process will be considered binding on the issuer or plan (in
lieu of the requirements of the Federal external review process). If
there is no applicable State external review process, the issuer or
plan is required to comply with the requirements of the Federal
external review process in paragraph (d) of this section.
(ii) For final internal adverse benefit determinations (or, in the
case of simultaneous internal appeal and external review, adverse
benefit determinations) provided on or after January 1, 2012, the
Federal external review process will apply unless the Department of
Health and Human Services determines that a State law meets all the
minimum standards of paragraph (c)(2) of this section.
(d) * * *
(1) Scope--(i) In general. Subject to the suspension provision in
paragraph (d)(1)(ii) of this section and except to the extent provided
otherwise by the Secretary in guidance, the Federal external review
process established pursuant to this paragraph (d) applies to any
adverse benefit determination or final internal adverse benefit
determination (as defined in paragraphs (a)(2)(i) and (a)(2)(v) of this
section), except that a denial, reduction, termination, or a failure to
provide payment for a benefit based on a determination that a
participant or beneficiary fails to meet the requirements for
eligibility under the terms of a group health plan is not eligible for
the Federal external review process under this paragraph (d).
(ii) Suspension of general rule. Unless or until this suspension is
revoked in guidance by the Secretary, with respect to claims for which
external review has not been initiated before September 20, 2011, the
Federal external review process established pursuant to this paragraph
(d) applies only to:
(A) An adverse benefit determination (including a final internal
adverse benefit determination) by a plan or issuer that involves
medical judgment (including, but not limited to, those based on the
plan's or issuer's requirements for medical necessity, appropriateness,
health care setting, level of care, or effectiveness of a covered
benefit; or its determination that a treatment is experimental or
investigational), as determined by the external reviewer; and
(B) A rescission of coverage (whether or not the rescission has any
effect on any particular benefit at that time).
(iii) Examples. The rules of paragraph (d)(1)(ii) of this section
are illustrated by the following examples:
Example 1. (i) Facts. A group health plan provides coverage for
30 physical therapy visits generally. After the 30th visit, coverage
is provided only if the service is preauthorized pursuant to an
approved treatment plan that takes into account medical necessity
using the plan's definition
[[Page 37230]]
of the term. Individual A seeks coverage for a 31st physical therapy
visit. A's health care provider submits a treatment plan for
approval, but it is not approved by the plan, so coverage for the
31st visit is not preauthorized. With respect to the 31st visit, A
receives a notice of final internal adverse benefit determination
stating that the maximum visit limit is exceeded.
(ii) Conclusion. In this Example 1, the plan's denial of
benefits is based on medical necessity and involves medical
judgment. Accordingly, the claim is eligible for external review
during the suspension period under paragraph (d)(1)(ii) of this
section. Moreover, the plan's notification of final internal adverse
benefit determination is inadequate under paragraphs (b)(2)(i) and
(b)(2)(ii)(E)(3) of this section because it fails to make clear that
the plan will pay for more than 30 visits if the service is
preauthorized pursuant to an approved treatment plan that takes into
account medical necessity using the plan's definition of the term.
Accordingly, the notice of final internal adverse benefit
determination should refer to the plan provision governing the 31st
visit and should describe the plan's standard for medical necessity,
as well as how the treatment fails to meet the plan's standard.
Example 2. (i) Facts. A group health plan does not provide
coverage for services provided out of network, unless the service
cannot effectively be provided in network. Individual B seeks
coverage for a specialized medical procedure from an out-of-network
provider because B believes that the procedure cannot be effectively
provided in network. B receives a notice of final internal adverse
benefit determination stating that the claim is denied because the
provider is out-of-network.
(ii) Conclusion. In this Example 2, the plan's denial of
benefits is based on whether a service can effectively be provided
in network and, therefore, involves medical judgment. Accordingly,
the claim is eligible for external review during the suspension
period under paragraph (d)(1)(ii) of this section. Moreover, the
plan's notice of final internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) of this
section because the plan does provide benefits for services on an
out-of-network basis if the services cannot effectively be provided
in network. Accordingly, the notice of final internal adverse
benefit determination is required to refer to the exception to the
out-of-network exclusion and should describe the plan's standards
for determining effectiveness of services, as well as how services
available to the claimant within the plan's network meet the plan's
standard for effectiveness of services.
* * * * *
(2) * * *
(iv) These standards will provide that an external review decision
is binding on the plan or issuer, as well as the claimant, except to
the extent other remedies are available under State or Federal law, and
except that the requirement that the decision be binding shall not
preclude the plan or issuer from making payment on the claim or
otherwise providing benefits at any time, including after a final
external review decision that denies the claim or otherwise fails to
require such payment or benefits. For this purpose, the plan or issuer
must provide any benefits (including by making payment on the claim)
pursuant to the final external review decision without delay,
regardless of whether the plan or issuer intends to seek judicial
review of the external review decision and unless or until there is a
judicial decision otherwise.
* * * * *
(e) Form and manner of notice--(1) In general. For purposes of this
section, a group health plan and a health insurance issuer offering
group health insurance coverage are considered to provide relevant
notices in a culturally and linguistically appropriate manner if the
plan or issuer meets all the requirements of paragraph (e)(2) of this
section with respect to the applicable non-English languages described
in paragraph (e)(3) of this section.
(2) Requirements--(i) The plan or issuer must provide oral language
services (such as a telephone customer assistance hotline) that include
answering questions in any applicable non-English language and
providing assistance with filing claims and appeals (including external
review) in any applicable non-English language;
(ii) The plan or issuer must provide, upon request, a notice in any
applicable non-English language; and
(iii) The plan or issuer must include in the English versions of
all notices, a statement prominently displayed in any applicable non-
English language clearly indicating how to access the language services
provided by the plan or issuer.
(3) Applicable non-English language. With respect to an address in
any United States county to which a notice is sent, a non-English
language is an applicable non-English language if ten percent or more
of the population residing in the county is literate only in the same
non-English language, as determined in guidance published by the
Secretary.
* * * * *
Department of Labor
Employee Benefits Security Administration
29 CFR Chapter XXV
29 CFR part 2590 is amended as follows:
PART 2590--RULES AND REGULATIONS FOR GROUP HEALTH PLANS
0
1. The authority citation for part 2590 continues to read as follows:
Authority: 29 U.S.C. 1027, 1059, 1135, 1161-1168, 1169, 1181-
1183, 1181 note, 1185, 1185a, 1185b, 1191, 1191a, 1191b, and 1191c;
sec. 101(g), Pub. L. 104-191, 110 Stat. 1936; sec. 401(b), Pub. L.
105-200, 112 Stat. 645 (42 U.S.C. 651 note); sec. 512(d), Pub. L.
110-343, 122 Stat. 3881; sec. 1001, 1201, and 1562(e), Pub. L. 111-
148, 124 Stat. 119, as amended by Pub. L. 111-152, 124 Stat. 1029;
Secretary of Labor's Order 6-2009, 74 FR 21524 (May 7, 2009).
0
2. Section 2590.715-2719 is amended by:
0
1. Revising paragraphs (b)(2)(ii)(B), (b)(2)(ii)(E)(1), (b)(2)(ii)(F),
(c)(2)(xi), (c)(3), (d)(1), (d)(2)(iv), and (e).
0
2. Redesignating (b)(2)(ii)(E)(2), (b)(2)(ii)(E)(3), and
(b)(2)(ii)(E)(4) as (b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and
(b)(2)(ii)(E)(5), respectively.
0
3. Adding new paragraph (b)(2)(ii)(E)(2).
The revisions and addition read as follows:
Sec. 2590.715-2719 Internal claims and appeals and external review
processes.
* * * * *
(b) * * *
(2) * * *
(ii) * * *
(B) Expedited notification of benefit determinations involving
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which
generally provide, among other things, in the case of urgent care
claims for notification of the plan's benefit determination (whether
adverse or not) as soon as possible, taking into account the medical
exigencies, but not later than 72 hours after receipt of the claim)
continue to apply to the plan and issuer. For purposes of this
paragraph (b)(2)(ii)(B), a claim involving urgent care has the meaning
given in 29 CFR 2560.503-1(m)(1), as determined by the attending
provider, and the plan or issuer shall defer to such determination of
the attending provider.
* * * * *
(E) * * *
(1) The plan and issuer must ensure that any notice of adverse
benefit determination or final internal adverse benefit determination
includes information sufficient to identify the claim involved
(including the date of service, the health care provider, the claim
amount (if applicable), and a statement describing the availability,
upon request, of the diagnosis code and its corresponding meaning, and
the treatment code and its corresponding meaning).
[[Page 37231]]
(2) The plan and issuer must provide to participants and
beneficiaries, as soon as practicable, upon request, the diagnosis code
and its corresponding meaning, and the treatment code and its
corresponding meaning, associated with any adverse benefit
determination or final internal adverse benefit determination. The plan
or issuer must not consider a request for such diagnosis and treatment
information, in itself, to be a request for an internal appeal under
this paragraph (b) or an external review under paragraphs (c) and (d)
of this section.
* * * * *
(F) Deemed exhaustion of internal claims and appeals processes--(1)
In the case of a plan or issuer that fails to adhere to all the
requirements of this paragraph (b)(2) with respect to a claim, the
claimant is deemed to have exhausted the internal claims and appeals
process of this paragraph (b), except as provided in paragraph
(b)(2)(ii)(F)(2) of this section. Accordingly, the claimant may
initiate an external review under paragraph (c) or (d) of this section,
as applicable. The claimant is also entitled to pursue any available
remedies under section 502(a) of ERISA or under State law, as
applicable, on the basis that the plan or issuer has failed to provide
a reasonable internal claims and appeals process that would yield a
decision on the merits of the claim. If a claimant chooses to pursue
remedies under section 502(a) of ERISA under such circumstances, the
claim or appeal is deemed denied on review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph (b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of this paragraph (b) will not be
deemed exhausted based on de minimis violations that do not cause, and
are not likely to cause, prejudice or harm to the claimant so long as
the plan or issuer demonstrates that the violation was for good cause
or due to matters beyond the control of the plan or issuer and that the
violation occurred in the context of an ongoing, good faith exchange of
information between the plan and the claimant. This exception is not
available if the violation is part of a pattern or practice of
violations by the plan or issuer. The claimant may request a written
explanation of the violation from the plan or issuer, and the plan or
issuer must provide such explanation within 10 days, including a
specific description of its bases, if any, for asserting that the
violation should not cause the internal claims and appeals process of
this paragraph (b) to be deemed exhausted. If an external reviewer or a
court rejects the claimant's request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section on the basis that the plan
met the standards for the exception under this paragraph
(b)(2)(ii)(F)(2), the claimant has the right to resubmit and pursue the
internal appeal of the claim. In such a case, within a reasonable time
after the external reviewer or court rejects the claim for immediate
review (not to exceed 10 days), the plan shall provide the claimant
with notice of the opportunity to resubmit and pursue the internal
appeal of the claim. Time periods for re-filing the claim shall begin
to run upon claimant's receipt of such notice.
* * * * *
(c) * * *
(2) * * *
(xi) The State process must provide that the decision is binding on
the plan or issuer, as well as the claimant, except to the extent other
remedies are available under State or Federal law, and except that the
requirement that the decision be binding shall not preclude the plan or
issuer from making payment on the claim or otherwise providing benefits
at any time, including after a final external review decision that
denies the claim or otherwise fails to require such payment or
benefits. For this purpose, the plan or issuer must provide benefits
(including by making payment on the claim) pursuant to the final
external review decision without delay, regardless of whether the plan
or issuer intends to seek judicial review of the external review
decision and unless or until there is a judicial decision otherwise.
* * * * *
(3) Transition period for external review processes. (i) Through
December 31, 2011, an applicable State external review process
applicable to a health insurance issuer or group health plan is
considered to meet the requirements of PHS Act section 2719(b).
Accordingly, through December 31, 2011, an applicable State external
review process will be considered binding on the issuer or plan (in
lieu of the requirements of the Federal external review process). If
there is no applicable State external review process, the issuer or
plan is required to comply with the requirements of the Federal
external review process in paragraph (d) of this section.
(ii) For final internal adverse benefit determinations (or, in the
case of simultaneous internal appeal and external review, adverse
benefit determinations) provided on or after January 1, 2012, the
Federal external review process will apply unless the Department of
Health and Human Services determines that a State law meets all the
minimum standards of paragraph (c)(2) of this section.
(d) * * *
(1) Scope--(i) In general. Subject to the suspension provision in
paragraph (d)(1)(ii) of this section and except to the extent provided
otherwise by the Secretary in guidance, the Federal external review
process established pursuant to this paragraph (d) applies to any
adverse benefit determination or final internal adverse benefit
determination (as defined in paragraphs (a)(2)(i) and (a)(2)(v) of this
section), except that a denial, reduction, termination, or a failure to
provide payment for a benefit based on a determination that a
participant or beneficiary fails to meet the requirements for
eligibility under the terms of a group health plan is not eligible for
the Federal external review process under this paragraph (d).
(ii) Suspension of general rule. Unless or until this suspension is
revoked in guidance by the Secretary, with respect to claims for which
external review has not been initiated before the effective date of
this paragraph (d)(1) (September 20, 2011), the Federal external review
process established pursuant to this paragraph (d) applies only to:
(A) An adverse benefit determination (including a final internal
adverse benefit determination) by a plan or issuer that involves
medical judgment (including, but not limited to, those based on the
plan's or issuer's requirements for medical necessity, appropriateness,
health care setting, level of care, or effectiveness of a covered
benefit; or its determination that a treatment is experimental or
investigational), as determined by the external reviewer; and
(B) A rescission of coverage (whether or not the rescission has any
effect on any particular benefit at that time).
(iii) Examples. This rules of paragraph (d)(1)(ii) of this section
are illustrated by the following examples:
Example 1. (i) Facts. A group health plan provides coverage for
30 physical therapy visits generally. After the 30th visit, coverage
is provided only if the service is preauthorized pursuant to an
approved treatment plan that takes into account medical necessity
using the plan's definition of the term. Individual A seeks coverage
for a 31st physical therapy visit. A's health care provider submits
a treatment plan for approval, but it is not approved by the plan,
so coverage for the 31st visit is not preauthorized. With respect to
the 31st visit, A receives a notice of final internal adverse
benefit determination stating that the maximum visit limit is
exceeded.
[[Page 37232]]
(ii) Conclusion. In this Example 1, the plan's denial of
benefits is based on medical necessity and involves medical
judgment. Accordingly, the claim is eligible for external review
during the suspension period under paragraph (d)(1)(ii) of this
section. Moreover, the plan's notification of final internal adverse
benefit determination is inadequate under paragraphs (b)(2)(i) and
(b)(2)(ii)(E)(3) of this section because it fails to make clear that
the plan will pay for more than 30 visits if the service is
preauthorized pursuant to an approved treatment plan that takes into
account medical necessity using the plan's definition of the term.
Accordingly, the notice of final internal adverse benefit
determination should refer to the plan provision governing the 31st
visit and should describe the plan's standard for medical necessity,
as well as how the treatment fails to meet the plan's standard.
Example 2. (i) Facts. A group health plan does not provide
coverage for services provided out of network, unless the service
cannot effectively be provided in network. Individual B seeks
coverage for a specialized medical procedure from an out-of-network
provider because B believes that the procedure cannot be effectively
provided in network. B receives a notice of final internal adverse
benefit determination stating that the claim is denied because the
provider is out-of-network.
(ii) Conclusion. In this Example 2, the plan's denial of
benefits is based on whether a service can effectively be provided
in network and, therefore, involves medical judgment. Accordingly,
the claim is eligible for external review during the suspension
period under paragraph (d)(1)(ii) of this section. Moreover, the
plan's notice of final internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) of this
section because the plan does provide benefits for services on an
out-of-network basis if the services cannot effectively be provided
in network. Accordingly, the notice of final internal adverse
benefit determination is required to refer to the exception to the
out-of-network exclusion and should describe the plan's standards
for determining effectiveness of services, as well as how services
available to the claimant within the plan's network meet the plan's
standard for effectiveness of services.
* * * * *
(2) * * *
(iv) These standards will provide that an external review decision
is binding on the plan or issuer, as well as the claimant, except to
the extent other remedies are available under State or Federal law, and
except that the requirement that the decision be binding shall not
preclude the plan or issuer from making payment on the claim or
otherwise providing benefits at any time, including after a final
external review decision that denies the claim or otherwise fails to
require such payment or benefits. For this purpose, the plan or issuer
must provide any benefits (including by making payment on the claim)
pursuant to the final external review decision without delay,
regardless of whether the plan or issuer intends to seek judicial
review of the external review decision and unless or until there is a
judicial decision otherwise.
* * * * *
(e) Form and manner of notice--(1) In general. For purposes of this
section, a group health plan and a health insurance issuer offering
group health insurance coverage are considered to provide relevant
notices in a culturally and linguistically appropriate manner if the
plan or issuer meets all the requirements of paragraph (e)(2) of this
section with respect to the applicable non-English languages described
in paragraph (e)(3) of this section.
(2) Requirements--(i) The plan or issuer must provide oral language
services (such as a telephone customer assistance hotline) that include
answering questions in any applicable non-English language and
providing assistance with filing claims and appeals (including external
review) in any applicable non-English language;
(ii) The plan or issuer must provide, upon request, a notice in any
applicable non-English language; and
(iii) The plan or issuer must include in the English versions of
all notices, a statement prominently displayed in any applicable non-
English language clearly indicating how to access the language services
provided by the plan or issuer.
(3) Applicable non-English language. With respect to an address in
any United States county to which a notice is sent, a non-English
language is an applicable non-English language if ten percent or more
of the population residing in the county is literate only in the same
non-English language, as determined in guidance published by the
Secretary.
* * * * *
Department of Health and Human Services
45 CFR Subtitle A
For the reasons stated in the preamble, the Department of Health
and Human Services amends 45 CFR part 147 as follows:
PART 147--HEALTH INSURANCE REFORM REQUIREMENTS FOR THE GROUP AND
INDIVIDUAL HEALTH INSURANCE MARKETS
0
1. The authority citation for part 147 continues to read as follows:
Authority: Sections 2701 through 2763, 2791, and 2792 of the
Public Health Service Act (42 U.S.C. 300gg through 300gg-63, 300gg-
91, and 300gg-92), as amended.
0
2. Section 147.136 is amended by:
0
1. Revising paragraphs (b)(2)(ii)(B), (b)(2)(ii)(E)(1), (b)(2)(ii)(F),
(c)(2)(xi), (c)(3), (d)(1), (d)(2)(iv), and (e).
0
2. Redesignating (b)(2)(ii)(E)(2), (b)(2)(ii)(E)(3), and
(b)(2)(ii)(E)(4) as (b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and
(b)(2)(ii)(E)(5), respectively.
0
3. Adding new paragraph (b)(2)(ii)(E)(2).
The revisions and addition read as follows:
Sec. 147.136 Internal claims and appeals and external review
processes.
* * * * *
(b) * * *
(2) * * *
(ii) * * *
(B) Expedited notification of benefit determinations involving
urgent care. The requirements of 29 CFR 2560.503-1(f)(2)(i) (which
generally provide, among other things, in the case of urgent care
claims for notification of the plan's benefit determination (whether
adverse or not) as soon as possible, taking into account the medical
exigencies, but not later than 72 hours after receipt of the claim)
continue to apply to the plan and issuer. For purposes of this
paragraph (b)(2)(ii)(B), a claim involving urgent care has the meaning
given in 29 CFR 2560.503-1(m)(1), as determined by the attending
provider, and the plan or issuer shall defer to such determination of
the attending provider.
* * * * *
(E) * * *
(1) The plan and issuer must ensure that any notice of adverse
benefit determination or final internal adverse benefit determination
includes information sufficient to identify the claim involved
(including the date of service, the health care provider, the claim
amount (if applicable), and a statement describing the availability,
upon request, of the diagnosis code and its corresponding meaning, and
the treatment code and its corresponding meaning).
(2) The plan and issuer must provide to participants and
beneficiaries, as soon as practicable, upon request, the diagnosis code
and its corresponding meaning, and the treatment code and its
corresponding meaning, associated with any adverse benefit
determination or final internal adverse benefit determination. The plan
or issuer must not consider a request for such diagnosis and treatment
information, in itself, to be a request for an internal appeal under
this paragraph (b) or an external review under paragraphs (c) and (d)
of this section.
* * * * *
[[Page 37233]]
(F) Deemed exhaustion of internal claims and appeals processes--(1)
In the case of a plan or issuer that fails to adhere to all the
requirements of this paragraph (b)(2) with respect to a claim, the
claimant is deemed to have exhausted the internal claims and appeals
process of this paragraph (b), except as provided in paragraph
(b)(2)(ii)(F)(2) of this section. Accordingly, the claimant may
initiate an external review under paragraph (c) or (d) of this section,
as applicable. The claimant is also entitled to pursue any available
remedies under section 502(a) of ERISA or under State law, as
applicable, on the basis that the plan or issuer has failed to provide
a reasonable internal claims and appeals process that would yield a
decision on the merits of the claim. If a claimant chooses to pursue
remedies under section 502(a) of ERISA under such circumstances, the
claim or appeal is deemed denied on review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph (b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of this paragraph (b) will not be
deemed exhausted based on de minimis violations that do not cause, and
are not likely to cause, prejudice or harm to the claimant so long as
the plan or issuer demonstrates that the violation was for good cause
or due to matters beyond the control of the plan or issuer and that the
violation occurred in the context of an ongoing, good faith exchange of
information between the plan and the claimant. This exception is not
available if the violation is part of a pattern or practice of
violations by the plan or issuer. The claimant may request a written
explanation of the violation from the plan or issuer, and the plan or
issuer must provide such explanation within 10 days, including a
specific description of its bases, if any, for asserting that the
violation should not cause the internal claims and appeals process of
this paragraph (b) to be deemed exhausted. If an external reviewer or a
court rejects the claimant's request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section on the basis that the plan
met the standards for the exception under this paragraph
(b)(2)(ii)(F)(2), the claimant has the right to resubmit and pursue the
internal appeal of the claim. In such a case, within a reasonable time
after the external reviewer or court rejects the claim for immediate
review (not to exceed 10 days), the plan shall provide the claimant
with notice of the opportunity to resubmit and pursue the internal
appeal of the claim. Time periods for re-filing the claim shall begin
to run upon claimant's receipt of such notice.
* * * * *
(c) * * *
(2) * * *
(xi) The State process must provide that the decision is binding on
the plan or issuer, as well as the claimant, except to the extent other
remedies are available under State or Federal law, and except that the
requirement that the decision be binding shall not preclude the plan or
issuer from making payment on the claim or otherwise providing benefits
at any time, including after a final external review decision that
denies the claim or otherwise fails to require such payment or
benefits. For this purpose, the plan or issuer must provide benefits
(including by making payment on the claim) pursuant to the final
external review decision without delay, regardless of whether the plan
or issuer intends to seek judicial review of the external review
decision and unless or until there is a judicial decision otherwise.
* * * * *
(3) Transition period for external review processes. (i) Through
December 31, 2011, an applicable State external review process
applicable to a health insurance issuer or group health plan is
considered to meet the requirements of PHS Act section 2719(b).
Accordingly, through December 31, 2011, an applicable State external
review process will be considered binding on the issuer or plan (in
lieu of the requirements of the Federal external review process). If
there is no applicable State external review process, the issuer or
plan is required to comply with the requirements of the Federal
external review process in paragraph (d) of this section.
(ii) For final internal adverse benefit determinations (or, in the
case of simultaneous internal appeal and external review, adverse
benefit determinations) provided on or after January 1, 2012, the
Federal external review process will apply unless the Department of
Health and Human Services determines that a State law meets all the
minimum standards of paragraph (c)(2) of this section.
(d) * * *
(1) Scope--(i) In general. Subject to the suspension provision in
paragraph (d)(1)(ii) of this section and except to the extent provided
otherwise by the Secretary in guidance, the Federal external review
process established pursuant to this paragraph (d) applies to any
adverse benefit determination or final internal adverse benefit
determination (as defined in paragraphs (a)(2)(i) and (a)(2)(v) of this
section), except that a denial, reduction, termination, or a failure to
provide payment for a benefit based on a determination that a
participant or beneficiary fails to meet the requirements for
eligibility under the terms of a group health plan is not eligible for
the Federal external review process under this paragraph (d).
(ii) Suspension of general rule. Unless or until this suspension is
revoked in guidance by the Secretary, with respect to claims for which
external review has not been initiated before September 20, 2011, the
Federal external review process established pursuant to this paragraph
(d) applies only to:
(A) An adverse benefit determination (including a final internal
adverse benefit determination) by a plan or issuer that involves
medical judgment (including, but not limited to, those based on the
plan's or issuer's requirements for medical necessity, appropriateness,
health care setting, level of care, or effectiveness of a covered
benefit; or its determination that a treatment is experimental or
investigational), as determined by the external reviewer; and
(B) A rescission of coverage (whether or not the rescission has any
effect on any particular benefit at that time).
(iii) Examples. This rules of paragraph (d)(1)(ii) of this section
are illustrated by the following examples:
Example 1. (i) Facts. A group health plan provides coverage for
30 physical therapy visits generally. After the 30th visit, coverage
is provided only if the service is preauthorized pursuant to an
approved treatment plan that takes into account medical necessity
using the plan's definition of the term. Individual A seeks coverage
for a 31st physical therapy visit. A's health care provider submits
a treatment plan for approval, but it is not approved by the plan,
so coverage for the 31st visit is not preauthorized. With respect to
the 31st visit, A receives a notice of final internal adverse
benefit determination stating that the maximum visit limit is
exceeded.
(ii) Conclusion. In this Example 1, the plan's denial of
benefits is based on medical necessity and involves medical
judgment. Accordingly, the claim is eligible for external review
during the suspension period under paragraph (d)(1)(ii) of this
section. Moreover, the plan's notification of final internal adverse
benefit determination is inadequate under paragraphs (b)(2)(i) and
(b)(2)(ii)(E)(3) of this section because it fails to make clear that
the plan will pay for more than 30 visits if the service is
preauthorized pursuant to an approved treatment plan that takes into
account medical necessity using the plan's definition of the term.
Accordingly, the notice of final internal adverse benefit
determination should refer to the plan provision governing the 31st
visit and should
[[Page 37234]]
describe the plan's standard for medical necessity, as well as how
the treatment fails to meet the plan's standard.
Example 2. (i) Facts. A group health plan does not provide
coverage for services provided out of network, unless the service
cannot effectively be provided in network. Individual B seeks
coverage for a specialized medical procedure from an out-of-network
provider because B believes that the procedure cannot be effectively
provided in network. B receives a notice of final internal adverse
benefit determination stating that the claim is denied because the
provider is out-of-network.
(ii) Conclusion. In this Example 2, the plan's denial of
benefits is based on whether a service can effectively be provided
in network and, therefore, involves medical judgment. Accordingly,
the claim is eligible for external review during the suspension
period under paragraph (d)(1)(ii) of this section. Moreover, the
plan's notice of final internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) of this
section because the plan does provide benefits for services on an
out-of-network basis if the services cannot effectively be provided
in network. Accordingly, the notice of final internal adverse
benefit determination is required to refer to the exception to the
out-of-network exclusion and should describe the plan's standards
for determining effectiveness of services, as well as how services
available to the claimant within the plan's network meet the plan's
standard for effectiveness of services.
* * * * *
(2) * * *
(iv) These standards will provide that an external review decision
is binding on the plan or issuer, as well as the claimant, except to
the extent other remedies are available under State or Federal law, and
except that the requirement that the decision be binding shall not
preclude the plan or issuer from making payment on the claim or
otherwise providing benefits at any time, including after a final
external review decision that denies the claim or otherwise fails to
require such payment or benefits. For this purpose, the plan or issuer
must provide any benefits (including by making payment on the claim)
pursuant to the final external review decision without delay,
regardless of whether the plan or issuer intends to seek judicial
review of the external review decision and unless or until there is a
judicial decision otherwise.
* * * * *
(e) Form and manner of notice--(1) In general. For purposes of this
section, a group health plan and a health insurance issuer offering
group or individual health insurance coverage are considered to provide
relevant notices in a culturally and linguistically appropriate manner
if the plan or issuer meets all the requirements of paragraph (e)(2) of
this section with respect to the applicable non-English languages
described in paragraph (e)(3) of this section.
(2) Requirements--(i) The plan or issuer must provide oral language
services (such as a telephone customer assistance hotline) that include
answering questions in any applicable non-English language and
providing assistance with filing claims and appeals (including external
review) in any applicable non-English language;
(ii) The plan or issuer must provide, upon request, a notice in any
applicable non-English language; and
(iii) The plan or issuer must include in the English versions of
all notices, a statement prominently displayed in any applicable non-
English language clearly indicating how to access the language services
provided by the plan or issuer.
(3) Applicable non-English language. With respect to an address in
any United States county to which a notice is sent, a non-English
language is an applicable non-English language if ten percent or more
of the population residing in the county is literate only in the same
non-English language, as determined in guidance published by the
Secretary.
* * * * *
[FR Doc. 2011-15890 Filed 6-22-11; 4:15 pm]
BILLING CODE 4830-01-P
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