HEALTH PLAN BENEFIT CLAIMS ARE ON THE
FAST TRACK
Regulations that substantially alter the way health plan benefit
claims are processed took effect July 1, 2002. All plans must
be in compliance and disclosure provided to plan participants
by January 1, 2003. These rules greatly accelerate the time periods
for processing claims and establish new procedures for appealing
denied claims. Regulations take effect based on the plan year
of the health plan.
Plan Year Begins New Rules Apply for
the First Day of Claims on or After
July July 1, 2002
August August 1, 2002
September September 1, 2002
October October 1, 2002
November November 1, 2002
December December 1, 2002
January, February, March,
April, May, June January 1, 2003
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 72 hours after the claim is received.
- The Plan must rule on an appeal of an urgent-care claim within
72 hours after the appeal is received.
- The Plan must rule on a pre-service claim within a reasonable
period of time, but not later than 15 days after receipt of
the claim or request for pre-approval. An appeal of a denied
claim must be ruled on within 30 days.
- The Plan must rule on a post-service claim within a reasonable
period of time, but no later than 30 days after the claim is
received. An appeal of a denied claim must be ruled on within
60 days.
- 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 another individual (fiduciary) who is not
supervised by or subordinate to the individual who denied the
initial claim, and 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 reviewer must consult with an independent health care professional.
- The claimant has 180 days to appeal an adverse determination.
- On appeal, non-urgent pre-service claims are to be reviewed
within 30 days and post-service claims are to be reviewed within
60 days.
Disability benefits payable through a retirement plan (including
a 401(k) plan) or disability plan must now be processed in no
less than 45 days.
Plan sponsors should contact their third-party claims administrators
and insurance carriers to verify that they have the appropriate
procedures in place to comply with the rules. Failure to follow
these new rules would allow a participant to bypass the administrative
review process and seek immediate review of a benefits claim through
the federal court system.
Cash Balance Plans—Under the Microscope
Companies considering con-verting their defined benefit plans
to cash balance plans need to be aware that the Pension Protection
Act has been recently introduced by Rep. Bernard Sanders. The
Act follows a report by the inspector general to the Department
of Labor which found that 13 of 60 cash balance plans allegedly
failed to pay participants the amount to which they were entitled.
While the conclusions of the report have been criticized, there
is no question that legislators and plan participants will be
closely scrutinizing the conversion of defined benefit plans to
cash balance plans.
If we can assist you in customizing the notice, please contact
Ira Friedrich or Carl Cannon in our Atlanta office at (404) 525-8622
or Dana Thrasher in our Birmingham office at (205) 205-9321.
The information in this publication is for the
purpose of informing and educating our clients about various aspects
of the law and is not intended to be used as legal advice.
