Employer Bulletin No. 329
November 2000

NEW REGULATIONS REGARDING HEALTH PLAN BENEFIT CLAIMS

On November 21, 2000, the Department of Labor issued final regulations that substantially alter the way health plan benefit claims are to be processed.  These new procedures apply to all claims filed on or after January 1, 2002.  Although the time period for compliance appears lengthy, it reflects the time needed to comply with these regulations and to make appropriate plan changes.

Plan sponsors, third-party plan administrators and insurers should begin to determine how they are going to deal with these stringent new requirements.  These rules greatly accelerate the time periods for processing claims and establish new procedures for appealing denied claims.

Major changes to the claims procedures for health plans include the following:

• The Plan must rule on an urgent-care claim as soon as possible, but not later than seventy-two (72) hours after the claim is received by the Plan.
• The Plan must rule on a request to extend the course of urgent-care treatment beyond what was previously approved as soon as possible, but not later than twenty-four (24) hours after receiving the request.
• The Plan must rule on a pre-service claim within a reasonable period of time, but not later than fifteen (15) days after receipt of the claim or request for pre-approval.
• The Plan must rule on a post-service claim within a reasonable period of time, but no later than thirty (30) days after the claim is received by the Plan.
• The internal rule, guideline or protocol, if any, relied upon to deny a claim must be made available to the claimant upon request.
• The scientific or clinical basis for determining that a procedure or course of treatment is not medically necessary, or is experimental, must be made available to the claimant.
• If the claimant appeals the initial denial of a claim, it must be reviewed by a fiduciary who is not the subordinate of the individual who denied the initial claim.
• Deference is not to be given to the initial decision to deny a claim on appeal.
• In reviewing a claim denied based on a medical determination, the fiduciary must consult with an independent health care professional.
• The claimant now has 180 days to appeal an adverse determination.
• On appeal, urgent-care claims are to be reviewed no later than seventy-two hours after the receipt of the request for review, pre-service claims are to be reviewed within thirty (30) days and post-service claims are to be reviewed within sixty (60) days.

In addition to these changes, the final regulations revise the requirements for processing disability claims and make it necessary to revise summary plan descriptions.  Technically, the required summary plan description changes do not have to be made next year.  However, employers planning to issue new summary plan descriptions next year, or to revise existing ones, should take these new requirements into account at the same time.

If you would like additional information regarding these new rules, please call Ira Friedrich or Carl Cannon in Atlanta (404-525-8622), Dana Thrasher in Birmingham (205-252-9321), Rob Floyd in Arlington (703-527-0900) or Angela Hubbell in Nashville (615-320-5200).