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Patients will find it easier to appeal denials

Patients will find it easier to appeal the denials of health insurance claims under rules issued Thursday by the Administration. The regulations guarantee consumers the right to appeal claims denials -- directly to their insurers and then, if necessary, to external review boards. The new rules for internal appeals apply to group health plans (which includes both insured and self-insured group health insurance coverage) for plan years beginning on or after September 23, 2010. The new rules apply to individual health plans for policy years on or after September 23, 2010. The rules for both internal and external reviews, however, do not apply to "grandfathered" plans -- those that existed on March 23, 2010, when the health law was enacted. Plans can lose their "grandfathered" status if they make significant changes to their plans regarding costs or benefits. The new rules do not supersede any state requirements that are stricter than those in the new federal law.

The new rules require health insurance issuers offering group or individual health insurance coverage to implement an effective internal claims and appeals process. For group health plans, this includes: compliance with all the Department of Labor claims procedure regulations; notification, in most cases, to a claimant of a benefit determination involving urgent care within 24 hours; providing the claimant with any new or additional evidence considered; assurance that claims and appeals are adjudicated in a manner to avoid any conflict of interest; providing information to enrollees in a culturally and linguistically appropriate manner; and the deeming of the internal claims process as exhausted if the plan fails to strictly adhere to all the above requirements. Plans are required to continue coverage pending the outcome of an internal appeal.

Individual health plans must generally comply with all the requirements for the internal claims and appeals process for group health plans. In addition, they must include in the claims and appeals process initial eligibility determinations (including pre-existing conditions); they must limit the internal appeals process to one appeal, allowing the claimant to go immediately to external or judicial review; and they must maintain for six years all records in connection with their claims and appeals process.

The new rules also mandate an external review process. The external-review requirement will apply, for the first time, to companies that are self-insured -- ones that pay their employees' claims directly rather than buying insurance to cover their workers. Most states already guarantee consumers the right to external appeals, though their rules vary widely. Only Alabama, Mississippi, Nebraska, and North and South Dakota do not have external review laws. The new rules issued will largely end the patchwork of protections that apply to only some plans in some states, and simplify the system for consumers. If a state external review process applies to and is binding on insurance plans and includes, at a minimum, the consumer protections in the Uniform Model Act of the National Association of Insurance Commissioners (NAIC), then the issuer complies with the State process and not the federal external review process.

Under the regulations, states are "encouraged" to adopt the new external review standards by July 2011. The new regulations take effect for plan years starting Sept. 23, 2010, but they will not automatically apply to residents in states that have existing external review laws until next July, so that states have time to adjust to the new standards. If states fail to change their rules by next July, their residents will then be able to rely on the federal standards. But federal officials are still working out the details of how that will be done. For plans in states without an existing State external review process, including self-insured plans, the federal process will apply to plan years (in the individual market, policy years) beginning on or after September 23, 2010.