Conference Call Summary
Friday, August 28, 2002
New ERISA Claims Procedures for Group Health Plans
The guest speaker for this call was Alice Weiss. Ms. Weiss was a Special Assistant and Health Policy Analyst at the U.S. Department of Labor (DOL) and helped develop the ERISA claims regulations. She is now Director of Health Policy at the National Partnership for Women & Families in Washington, DC. This conference call focused on group health plans, but the regulations also establish new requirements for pension, disability, and other employer benefit plans covered under ERISA.
Support and background documents related to this call are available by clicking the titles below:
Overview
Summary
Glossary of Terms
Urgent Care Claims Chart
Pre-Service Claims Chart
Post-Service Claims Chart
Background
DOL released the first regulations governing claims procedures in 1977. During the Clinton Administration, DOL looked at regulatory changes that would give claimants better notice and quicker turn-around on decisions under managed care. In 1997, an advisory panel established by the administration recommended patient protections. The administration then ordered federal agencies with control over health plans to enforce patient protections to the greatest extent possible under current law.
In 1998, DOL issued a proposed rule on ERISA claims procedure, and in 2000; the final was issued rule. The Bush Administration delayed the applicability date for the new rule until July 1, 2002. By January 1, 2003, all ERISA plans will be subject to the claims regulations. Ms. Weiss said that many people perceived the final rule as a balanced approach. The Federal Register citation for this regulation is Federal Register, Tuesday, November 21, 2000, Vol. 65, No. 225, pages 70246-70271. It is available online at (http://www.dol.gov/pwba/regs/fedreg/final/2000029766.pdf). The citation for the effective date of the regulation is Federal Register, Monday, July 9, 2001, Vol. 66, No. 131, pages 35886-35888. It is available online at (http://www.dol.gov/pwba/regs/fedreg/final/2001017145.pdf). DOL has issued advisory guidance in the form of Frequently Asked Questions, which are available at (http://www.dol.gov/pwba/faqs/faq_claims_proc_reg.html).
Plans to Which these Claims Procedures Apply
The claims procedures apply to all private employer-sponsored group health plans regulated under ERISA, regardless of the size of the employer's work force. These group health plans may be fully insured or self-insured plans. DOL estimates that 129 million individuals receive coverage under ERISA plans.
ERISA does not cover plans sponsored by state or local government entities (for example, plans sponsored by the State of Washington or the City of New York) or so-called "church plans," plans sponsored by religious organizations that meet certain IRS requirements. In addition, individual or other non-group plans are not subject to ERISA.
Issues Outside the ERISA Claims Rules
Ms. Weiss outlined some areas to which the ERISA claims regulations do not apply:
- Decisions regarding eligibility for benefits (whether the person is a member of the plan).
- Requests for pre-approval where the plan does not require it--for example, a patient does not need to seek pre-approval for surgery, however expensive, in order to have the surgery covered if the plan does not require pre-approval.
- Casual inquiries about whether a benefit is covered--for example, if a doctor asks the plan whether a treatment might be covered, plan's response is not subject to these regulations.
- Timeframes in which a claim has to be paid.
- Decisions by a pharmacist regarding coverage for prescription drugs―plans have discretion to mandate whether and to what extent denials would be covered under the rules.
Regulation Expands Claimants' Rights and Access to Information
The regulation greatly expands the information that a claimant can receive from a health plan. The attached Summary of the regulations contains a detailed list and explanation of the documentation that claimants must receive or can request from their health plans.
Right to Sue under ERISA
The new regulations allow claimants to get into federal court faster. In fact, one goal in developing new regulations was to provide a fairer and faster way for claimants to get to the external review process or to federal court. Both self-insured and fully insured plans can be sued under ERISA.
The subject of exhaustion of internal process has been controversial. Congress has been concerned about the interpretation of the rule that claimants do not have to exhaust internal processes before going to court. Generally, claimants must exhaust internal processes before they can go to court under ERISA. Under the final rule, claimants can go directly to external review or to court without exhausting the internal claims process if the plan has failed to comply with the rule's requirements. Recent interpretive guidance (see F-2 in Frequently Asked Questions) from DOL clarified that this exception to the exhaustion rule would only apply if the plan failed to follow the rules and the failure is substantial and adversely affects the claimant's individual rights. However, the interpretive guidance also says that if a plan can rectify its failure to follow the rules in the appeal process, the claimant has to proceed with the internal process before going to federal court. The guidance adds that courts reviewing a challenge to the plan's actions should generally defer to the plan's judgment as to whether a violation was substantial. In this way, the interpretive guidance appears to give the plan the benefit of the doubt.
Interaction of ERISA with State Law
One participant raised the issue of ERISA's relationship to state law. Under the final claims rule, ERISA is considered the floor for regulation. States can provide greater rights for members of plans subject to state laws--that is, fully insured plans to the extent that such laws do not conflict with ERISA's claims rules and remedial scheme. Self-insured plans are never subject to state regulation.
ERISA and State External Review Laws
While these regulations provide no new federal external review protections, they do clarify that states' internal and external review laws are NOT preempted and are valid unless they conflict with the regulations' requirements or ERISA's remedial scheme. This interpretation of ERISA's preemption of state external review laws was generally validated by the Supreme Court in its decision in Rush Prudential HMO, Inc. v. Moran this year In Rush, the Court held that ERISA did not preempt Illinois's external review law. States can add protections, but states cannot do away with a claimant's federal right to an internal appeal or to the right to sue under ERISA.
In Massachusetts, external review decisions are currently binding. Ms. Weiss said that an external review decision could be considered binding on an HMO or insurer regulated under state law, but it is unclear whether an external review decision could be binding on a claimant since an individual has a right to bring an action under ERISA. However, the requirement in Massachusetts that claimants with urgent care claims under external review submit a physician certification is permitted under ERISA. Ms. Weiss reiterated that the requirement is acceptable under the regulations because the requirement is outside the scope of the ERISA claims process.
Timing of Decisions on Claims and Appeals
The attached Summary of the regulations outlines the requirements plans must follow in notifying a claimant of a denial ("Timing of Notification of Benefits Determinations"). Ms. Fox noted that since plans are required to answer urgent care claims within 72 hours, if plans do not meet that timeframe, the claimant should seek a temporary restraining order or preliminary injunction.
Authorized Representative
Highlights from the summary concerning authorized representatives include:
- Plans can prescribe procedures a claimant must follow to name a representative.
- Once named the authorized representative, that individual has all rights, including the notice rights, so the patient may not receive notice directly from the plan.
- In order to ensure that the patient receives all information from the plan, the authorized representative should write to the plan to request that all notices go to the patient as well as the authorized representative.
Arbitration Agreements
Ms. Weiss addressed some questions raised about arbitration agreements.
- For any collectively bargained (union) plans that have multiple employers contributing to the plan, arbitration may be permitted.
- For all other group health plans, binding arbitration is allowed only if four criteria are met:
1. Arbitration is truly voluntary, and no fees or costs are imposed.
2. Plan agrees not to bring statute-of-limitations defense.
3. All internal procedures have been exhausted.
4. Arbitration cannot limit a claimant's ability to go to court.
Method of Notifying Claimants of Decisions
Urgent care and pre-service claims decisions must be made in writing, whether approved or denied. Post-service claims denials must be in writing, but the regulation does not specify a requirement for notification in the event a post-service claim is approved. For more information, see DOL's advisory guidance.
Retroactively Canceled Policies
Ms. Weiss explained that eligibility questions are only exempt if they do not involve a claim for a benefit. If a claimant who was a member of the plan went to a doctor and then the plan retroactively canceled the member's coverage, the claim is covered by the rule.
ERISA Claims Procedures and COBRA Eligibility Determinations
To the extent that the issue involves a claim for a benefit, the rules do apply to COBRA eligibility determinations. To the extent the issue involves whether an individual is eligible for continuation of coverage, Ms. Weiss was not sure. She suggested that the applicability of the claims procedures to COBRA eligibility determinations would be a good question to ask DOL.
Summary of Main Thoughts
Several important aspects of the regulations were summarized:
- Patients can get a lot more information about how the decision on their claim was made. This information can be critical in understanding what went into the decision and in shaping an appeal.
- The new timeframes will limit the amount of time these things can be drawn out.
- In order for these rules to help consumers, people have to know that they have these rights and can appeal plans' decisions.
DOL as a Resource
Ms. Weiss encouraged health assistance programs to contact DOL staff for assistance and guidance. Consumer representatives should call the DOL regional offices and DOL's national hotline (1-866-275-7922) with questions or complaints. Although DOL generally does not enforce on behalf of individuals, it does investigate and prosecute patterns and practices of violations. Ms. Weiss emphasized that DOL will not know whether a pattern or practice of violation is occurring unless consumers and their advocates bring problems to the attention of the Department.
Lodging Complaints with DOL
Ms. Weiss urged state insurance departments to take evidence of noncompliance to DOL regional offices. If state insurance departments could show data/documentation and evidence of claims and appeals requirements being violated, it would be great to have DOL to take it up as an enforcement action. It is a good idea to develop relationships with DOL regional point persons. Advocates can also go through elected officials to make formal complaints at the regional or national level. DOL is interested in patterns of plan behavior, so this is potentially an excellent resource for them.
