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Employee Benefits Law Report Reporting on recent trends and developments affecting employee benefits

Department of Labor Extends More Grace on Internal Health Claims and Appeals

Posted in Health and Welfare Plans, Health Care Reform

In Technical Release 2011-01, the Department of Labor has extended the enforcement grace period with respect to certain internal claims and appeals requirements applicable to non-grandfathered health plans under the Patient Protection and Affordable Care Act (PPACA) and its implementing regulations. The internal health claims and appeals requirements generally apply to non-grandfathered plans as of the first plan year beginning on or after September 23, 2010. The requirements do not apply to grandfathered plans.

Last year, in Technical Release 2010-02, the Department announced an enforcement grace period until July 1, 2011 for certain of the internal claims and appeals requirements (see table below) that apply to non-grandfathered health plans for plan years beginning on or after September 23, 2010. In anticipation of issuing an amendment to its 2010 interim final regulations, the Department has extended the enforcement grace period, with certain modifications (see table below) until the first plan year beginning on or after January 1, 2012.

Enforcement Grace Period for Internal Health Claims and Appeals

DOL Technical Release 2010-02(Grace Period Expires 07/01/11)

DOL Technical Release 2011-01(Grace Period generally expires first day of first plan year beginning on or after 01/01/12)

Notify claimant of urgent care benefit determination ASAP, but not later than 24 hours after receipt of claim

No change,
except for extension of grace period

Notices must be provided in culturally and linguistically appropriate manner, as required by statute.

No change,
except for extension of grace period

Notices to claimants must contain additional content and greater specificity (see below).

Grace period fully extended only to disclosure of diagnosis codes and treatment codes (and their corresponding meanings) in notices, but information must be provided upon request.

Note:  Grace period for other disclosure requirements extended to first plan year beginning on or after 07/01/11.

For plans or issuers failing to strictly adhere to 2010 interim final regulations, claimant is deemed to have exhausted internal claims and appeals process.

No change,
except for extension of grace period

The Technical Release indicates that neither the Department nor the Internal Revenue Service will take any enforcement action against a group health plan, and the Department of Health and Human Services will not any enforcement action against a self-funded non-federal governmental plan, with respect to the provisions noted in the table above. However, the Technical Release does not address the rights of private parties in private litigation.

With respect to the additional content requirement for notices to claimants, the Department chose not to extend fully the enforcement grace period (see table above), although for calendar year plans and plans whose plan years begin between January 1 and June 30, the extension will be the same as for the other internal claims and appeal requirements subject to the enforcement grace period.

To comply with the additional content requirement:

  • 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.
  • 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.
  • The plan or issuer must provide a description of available internal appeals and external review processes, including information regarding how to initiate an appeal.
  • 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.

In an Appendix to Technical Release 2011-01, the Department has provided a list of relevant consumer assistance programs and ombudsmen. Issuers and sponsors of group health plans can use this list in fulfilling their disclosure requirements. Plans and issuers with plan years beginning after July 1, 2011 will want to consult the Department websites (both here and here) for updates to the list.

The Technical Release does not address the scope of the Federal external review process, which has been the subject of many comments and may be addressed in future guidance.

Issuers and sponsors of group health plans must take into account the enforcement grace period provided by Technical Release 2011-01 in modifying their claims procedures and notices to claimants and in describing these claims procedures in summary plan descriptions and other participant communications.