New Rules for Health Plan Appeals Processes

Health plans newly created or significantly amended after Sept. 22 will have to adhere to a new federal appeals process that allows consumers to challenge initial claims denials/rescissions. The U.S. Departments of Health and Human Services (HHS), Labor, and the Treasury issued an interim final rule July 23 for group health plans and health insurance issuers under the Patient and Affordable Care Act.

Many health plans already have internal appeals, but the process may not be swift or objective, HHS said; and 44 states currently offer external appeals of health plan decisions, but these state laws vary widely as well. The new regulations serve to standardize the internal/external appeals process.
Note: Plans that were in effect March 23 or earlier and that were not significantly modified thereafter will be “grandfathered.” Grandfathered health plans are not subject to these regulations.

Internal Appeals

Under the new rules, new health plans beginning on or after Sept. 23 must have an internal appeals process that:

• Allows consumers to appeal when a health plan denies a claim for a covered service or rescinds coverage;
• Gives consumers detailed information about the grounds for the denial of claims or coverage;
• Requires plans to notify consumers about their right to appeal and instructs them on how to begin the appeals process;
• Ensures a full and fair review of the denial; and
• Provides consumers with an expedited appeals process in urgent cases.

External Appeals

Standards established by the National Association of Insurance Commissioners (NAIC) call for:

• External review of plan decisions to deny coverage for care based on medical necessity, appropriateness, health care setting, level of care, or effectiveness of a covered benefit.
• Clear information for consumers about their right to both internal and external appeals – both in the standard plan materials, and at the time the company denies a claim.
• Expedited access to external review in some cases – including emergency situations, or cases where their health plan did not follow the rules in the internal appeal.
• Health plans must pay the cost of the external appeal under state law, and states may not require consumers to pay more than a nominal fee.
• Review by an independent body assigned by the state. The state must also ensure the reviewers meet certain standards, keep written records, and are not affected by conflicts of interest.
• Emergency processes for urgent claims, and a process for experimental or investigational treatment.
• Final decisions must be binding so, if the consumer wins, the health plan is expected to pay for the previously denied benefit.

Although the federal government will provide an appeals process for residents of states that do not offer one, states are encouraged to adopt the rule’s external appeals standards by July 1, 2011.

Consumer Assistance Grants

Also under the Affordable Care Act, the Consumer Assistance Grants program provides $30 million to states and territories to expand consumer assistance efforts, such as helping consumers file complaints and appeals against health plans, educating consumers about their rights and empowering them to take action, and tracking consumer complaints.
For complete details, read the interim final rule on the Federal Register website.

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