Legal Bulletins

This summary covers only the application of the new regulations to group health plans. The new regulations cover all ERISA plans except apprenticeship plans. If you have questions on how the regulations affect disability plans or pension plans, please contact us.

***Provisions that are significantly different from existing requirements are marked with asterisks.***

Effective Date
Applies to claims filed on or after January 1, 2002.

General

• Every group health plan must establish and maintain reasonable procedures for filing benefit claims, notification of benefit determinations, and appeal of adverse determinations, and the procedures must comply with the regulations. 
• ***The procedures must include administrative processes and safeguards to ensure that benefit claim determinations are made in accordance with the governing plan documents and that plan provisions have been applied consistently to similarly-situated claimants.***
• A description of the procedures and applicable time limits must be included in the SPD. 

If a plan fails to establish or follow procedures, the claimant is deemed to have exhausted the administrative remedies under the plan.
***Authorized Representative***

• An authorized representative must be allowed to act for the claimant, but a plan may establish reasonable procedures for determining whether a representative is authorized. 
• However, if a claim is for urgent care, a health care professional with knowledge of the claimant's medical condition must be permitted to act as the authorized representative.

***Failure of claimant to follow plan's procedures***

• If the claimant fails to follow the plan's procedures for filing a pre-service claim, the claimant must be notified of the failure and the proper procedures. (See chart for time limits.) This requirement applies only if the claimant's communication is received by a person or organizational unit that customarily handles benefit matters, and names a specific claimant, specific medical condition or symptom, and specific treatment, service, or product for which approval is requested.
  

***Urgent care***
Defined as medical care or treatment with respect to which 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. 
• Whether a claim is for urgent care is to be determined by an individual acting on behalf of the plan, applying the judgment of a prudent layperson who possesses an average knowledge of health and medicine.
• But, any claim that a physician with knowledge of the claimant's medical condition determines is an urgent care claim, must be treated as an urgent care claim. 
• If the claimant fails to submit all necessary information, the plan must notify the claimant within 24 hours of the specific information necessary to complete the claim.
  Benefit determinations
  

• ***See chart for time limits. All time limits have been shortened.***
• If a plan needs an extension of time to make a determination because the claimant failed to submit all necessary information, the period for making the determination is tolled from the date the notice of extension and request for information is sent to the claimant until the date the claimant responds to the request. (See chart for time limits.)
• If, because of matters beyond the control of the plan, a plan needs an extension of time to make a determination, the plan must notify the claimant before the end of the initial period and indicate the matters that make the extension necessary, and the date by which the plan expects to make the determination. (See chart for time limits.) (Current regulations permit an extension of time if there are "special circumstances.")
• ***If a plan needs an extension of time to make a determination because the claimant failed to submit all necessary information, the extension notice must also specifically describe the required information.***
• ***A plan may not deny benefits for a failure to obtain prior approval if the circumstances make obtaining such prior approval impossible or would seriously jeopardize the life or health of the claimant.***
  ***Concurrent care***

• Reduction or termination: If a plan has approved an ongoing course of treatment for a period of time or a number of treatments, any reduction or termination by the plan before the end of the period of time or number of treatments is an adverse benefit determination. The plan must notify the claimant sufficiently in advance of the reduction or termination to allow the claimant to appeal and obtain a determination before the benefit is reduced or terminated. 
• Request to extend: If a plan has approved an ongoing course of treatment for a period of time or a number of treatments, and the claimant requests an extension of the course of treatment, and it is an urgent care claim, and the claim is made at least 24 hours before expiration of the course of treatment, the plan must make a determination as soon as possible and notify the claimant of the determination (whether adverse or not) within 24 hours after the plan receives the claim.
  Adverse determination
  ***Defined to include denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for, a benefit, including determinations as to eligibility, medical necessity, whether treatment is experimental or investigative, and utilization review decisions.***
• A notice of adverse determination shall set forth, in a manner calculated to be understood by the claimant:
  • specific reason(s) for the determination;
  • no references to specific plan provisions;
  • no description of any additional material or information necessary to perfect the claim, and an explanation of why the material or information is necessary;
  • ***description of review procedures and time limits, including a statement of claimant's right to bring a civil action under 502(a) following an adverse determination on appeal;***
  • ***if any internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, such rule, guideline, protocol or criterion must be included, or there must be a statement that such rule, guideline, protocol, or criterion will be provided free of charge upon request;***
  • ***if an adverse determination is based on medical necessity or experimental treatment or a similar exclusion or limit, an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant's medical circumstances, must be included, or there must be a statement that such explanation will be provided free of charge upon request;***
  • ***if urgent care claim, a description of the plan's expedited review process.***
  • ***If urgent care claim, the information required for the notice of adverse determination may be provided orally, if it is also provided in writing not later than 3 days later.***

Appeals

***A claimant must be given at least 180 days to file an appeal. (The current regulations require only 60 days.)***

***See chart for time limits for decisions.***

A plan must provide a procedure for a reasonable opportunity to appeal an adverse determination, to an appropriate named fiduciary, with full and fair review.

***"Full and fair review" requires:

• opportunity for claimant to submit written comments, documents, records, and other information, and all such material is taken into account;
• claimant must be provided, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claim (see below for definition of "relevant"); 
• review does not afford deference to initial adverse determination;
  o review conducted by named fiduciary, who is neither the individual who made the initial benefit determination nor a subordinate of that individual;
• if determination based on medical judgment (e.g., experimental
• treatment, medical necessity), the fiduciary shall consult with a health care professional with appropriate training and experience in the field of medicine involved, and such health care professional may not be one who was consulted on the original benefit determination nor a subordinate of any individual who was so consulted;
• identification of medical or vocational experts whose advice was obtained, without regard to whether it was relied upon; 
• ***if urgent care claim, provide for expedited review which may be requested orally or in writing, and which provides for all necessary information to be transmitted by telephone, fax, or other expeditious method.***
  
•  ***A plan may not require more than 2 levels of appeal.***
•  ***A plan may require mandatory arbitration if it is one of the 2 levels of appeal and if the claimant may challenge the arbitration decision under 502(a) or other applicable law.***
• ***If a plan provides voluntary levels of appeal, no fees or costs may be charged to the claimant and the plan must:
  •  waive any right to assert a failure to exhaust administrative remedies if the claimant does not utilize; 
  • agree that the statute of limitations and other defenses based on timeliness are waived while voluntary appeals are pending;
  • give the claimant, upon request, sufficient information to make an informed judgment about whether to utilize.***
    
• ***If a plan provides voluntary levels of appeal, the plan may require exhaustion of required levels of appeal before allowing the claimant to utilize voluntary levels of appeal.***
• ***If a plan needs an extension of time to make a determination on appeal because the claimant failed to submit all necessary information, the period for making the determination is tolled from the date the notice of extension and request for information is sent to the claimant until the date the claimant responds to the request.***
• ***Except for multiemployer health plans that have a board or committee that meets at least quarterly, there are no provisions to extend the time to make a determination on appeal.***

Notice of adverse determination on review

Must set forth, in a manner calculated to be understood by the claimant:

• specific reason(s) for the determination;
• references to specific plan provisions;
• ***a statement that the claimant is entitled to receive, free of charge, reasonable access to, and copies of, all documents, records, and other information relevant (see below for definition of "relevant") to the claim;***
• ***a statement describing any voluntary appeal procedures;***
• ***a statement of the claimant's right to bring an action under 502(a);***
• ***if any internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination, such rule, guideline, protocol or criterion must be included, or there must be a statement that such rule, guideline, protocol, or criterion will be provided free of charge upon request;***
• ***if an adverse determination is based on a medical necessity or experimental treatment or similar exclusion or limit, an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant's medical circumstances must be included, or there must be a statement that such explanation will be provided free of charge upon request;***
• ***the following statement: You and your plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency."***

***Relevant Information***

 Information is "relevant" to a claim if:

• it was relied upon in making the determination;
• it was submitted, considered, or generated in the course of making the determination, without regard to whether it was relied upon;
• it demonstrates compliance by the plan with required administrative processes and safeguards;
• it is a statement of policy or guidance in regard to the plan concerning the denied treatment or benefit for the claimant's diagnosis, without regard to whether it was relied upon.

NEW DOL CLAIMS AND APPEALS REGULATIONS: TIME LIMITS FOR GROUP HEALTH PLANS

	Urgent Pre-Service Claims	Non-urgent Pre-Service Claims	Post-Service Claims
Notify claimant of failure to follow procedures	Max. 24 hrs	Max. 5 days
Notify claimant if insufficient info	Max. 24 hrs
Notify of reduction or termination of previously-approved concurrent care	Sufficiently in advance to allow appeal and determination before reduction or termination
Notify claimant of determination	Max. 72 hrs after receipt of claim if all info included If info missing, max. 48 hrs after earlier of receipt of missing info or expiration of time permitted for submission of missing info If request to extend concurrent care beyond previously-approved treatment, and if claim made at least 24 hrs before expiration of previously-approved treatment, max. 24 hrs	Max. 15 days, with max. extension of 15 days	Max. 30 days, with max. extension of 15 days
Time for claimant to submit missing info		At least 45 days	At least 45 days
Time to file appeal	At least 180 days	At least 180 days	At least 180 days
Notify claimant of determination on appeal	Max. 72 hrs	Max. 30 days if plan provides for 1 appeal Max. 15 days if plan provides for 2 appeals	Max. 60 days if plan provides for 1 appeal Max. 30 days if plan provides for 2 appeals If multiemployer plan and board or comm. meets at least quarterly, see note

NOTE: If a committee or board of trustees is designated as the appropriate named fiduciary, and holds regularly scheduled meetings at least quarterly, the benefit determination must be made no later than the meeting that immediately follows the plan's receipt of an appeal. However, if the appeal is filed within 30 days before the meeting, the determination may be made no later than the second meeting after the plan's receipt of the appeal. If special circumstances require a further extension, the determination shall be made no later than the third meeting after the plan's receipt of the appeal. In any event, the administrator shall notify the claimant of the determination on appeal not later than 5 days after it is made.