Summary of Main Provisions of ERISA Claims Procedure Regulations
Requirement to Establish and Maintain A Reasonable Claims Procedure (§ 2560.503-1(b) and (c))
Every employee benefit plan has to establish and follow reasonable claims procedures. In order for the procedure to be deemed reasonable by the Department of Labor, it must comply with this regulation. Specific requirements for a reasonable claims procedure include:
1. The Summary Plan document has to describe all procedures for obtaining prior approval for a benefit and all related time frames.
2. The Claims Procedures cannot contain any requirement and cannot be administered in any way that unduly hampers or inhibits the initiation or processing of a claim. For example, no fee may be charged in connection with filing a claim, and no one may be required to obtain pre-authorization when doing so would endanger his or her health or would be physically impossible.
3. An authorized representative of the claimant must be allowed to pursue a benefit claim or appeal with a Health Plan. The Plan is allowed to have reasonable procedures for determining if a representative is duly authorized. In the case of a claim involving urgent care, a health care professional with knowledge of a claimant's medical condition is allowed to act on the claimant's behalf with no further authorization.
4. The Plan cannot require that a claimant file more than two levels of internal appeals of an adverse benefit determination before having the option of bringing suit in federal court.
5. If the Plan offers additional voluntary levels of appeal to the claimant, the Plan must make extensive information available to the claimant about the procedure, including the possible bias or conflict of any decision maker. The appeal must be truly voluntary, and the claimant cannot suffer any negative consequences for not choosing to participate in it.
6. The Plan's procedures may provide for arbitration of benefit disputes at one of the two levels of appeal only if the following two conditions are met: 1) the arbitration is conducted in a manner that meets the timeframe and notice requirements; and 2) the arbitration is non-binding, meaning that it may not limit the claimant's ability to challenge the determination in court.
Timing of notification of benefits determinations (§ 2560.503-1(f)(2) and (4))
The timing rules for notification of a Health Plan decision fall into four distinct categories:
1. Urgent Care
In cases of urgent care, a Health Plan should notify the claimant of the Plan's decision (adverse or not) as soon as possible, taking into account the medical exigencies of the situation, but no later than 72 hours after receipt of the claim. The Plan has a duty to determine whether a claim is urgent based on the information provided by the claimant or his or her authorized representative. However, if the claimant does not provide sufficient information for the Plan to make a decision, the Plan must notify the claimant as soon as possible, and no later than 24 hours after receipt of the claim, of the specific information that is required. The claimant then must be given reasonable time, and in no case less than 48 hours, to provide that information. The Plan must then notify the claimant of the plan decision no later than 48 hours after the earlier of the Plan's receipt of the requested information or the end of the time given to the claimant to provide the information.
2. Concurrent Care
(A) Reduction or Termination
When a Health Plan has already approved an ongoing course of treatment to be given over a period of time or number of treatments, any reduction in that course is considered an adverse benefit determination. The Health Plan must then give the claimant notice, sufficient time to appeal that determination and time to receive a decision of the appeal before any interruption of care occurs.
(B) Extension
When a claimant has received approval for an ongoing treatment and wishes to extend the treatment beyond what has already been approved, this process is given expedited consideration when the requested treatment is for urgent care. If the request for an extension is made at least 24 hours before the end of the approved treatment, the Plan must notify the claimant of the Plan decision as soon as possible but no later than 24 hours after receipt of the claim. An appeal of this decision is conducted according to the urgent care appeals procedures described below.
3. Pre-Service Claims
The Plan must notify the claimant of the Plan decision within 15 days of receipt of the claim. If the Plan is unable to make a decision within that time due to circumstances beyond the Plan's control (such as late receipt of medical records), it must notify the claimant before expiration of the original 15 days that it intends to extend the time and then may take as long as 15 additional days to reach a decision. If the extension is due to failure of the claimant to submit necessary information, the notice of delay must give specific information about what the claimant has to provide and the claimant must be given at least 45 days to submit the requested information.
4. Post-Service Claims
Post-service claims have the same time frame as pre-service claims described above, with one exception, which is that the Plan has 30 days to make the initial decision after receipt of the claim.
5. Time Limits Stopped While Claimant Provides Additional Information
All time limits begin once the Plan receives a claim, without regard to whether all necessary information was filed with the original claim. If the Plan requires an extension due to the claimant's failure to submit necessary information, the time for making a decision is tolled from the date that notice of what is required is sent to the claimant until the date that the claimant provides the necessary information.
Manner and Content of Notification of Benefit Determination (§ 2560.503-1(g))
Any notice sent by a Plan under any provision of this regulation has to follow these guidelines:
1. It must be in writing or sent electronically and written in a manner calculated to be understood by the claimant, unless it is a case involving urgent care, in which case a decision may be communicated orally and then followed with a written communication.
2. It must include:
a. the specific reasons for the adverse determination,
b. reference to the specific plan provision being relied on,
c. any information the claimant needs to provide to complete the claim and an explanation as to why that information is required,
d. a description of the Plan's review procedures and time limits, and
e. a statement that the claimant is entitled to bring suit in federal court after exhausting the internal process.
3. If the Plan makes an adverse benefit decision, it must also do the following:
a. if any internal rule, guideline or similar procedure was relied upon in making the decision, that rule or guideline must be provided or a statement included that the specific rule was relied on and is available to the claimant free of charge upon the claimant's request.
b. if the decision was based on medical necessity or experimental or similar exclusion, the Plan must provide an explanation of the scientific or clinical judgement made, applying that to the terms of the specific plan and to the claimant's medical condition, or must make a statement that this information is available free of charge to the claimant upon request.
c. For Urgent Care, the Plan may notify the claimant orally, but then must follow up with a written communication no later than three days after the oral communication. The oral and written communications must both give all of the information required by this section.
Appeals of Adverse Benefits Determinations (§ 2560.503-1(h))
In general, every Plan must establish a procedure where the claimant can appeal an adverse decision and receive a full and fair review of the claim and the adverse decision. In order to do this the Plan must do the following:
1. Provide claimants with the opportunity to submit written comments, documents and other information relating to the claim.
2. Allow the claimant reasonable access to and copies of, upon request and free of charge, all documents, records and other relevant information related to the claim.
3. Provide a review that takes into account everything submitted by the claimant (whether submitted in the original claim or not).
4. Provide claimants at least 180 days after receipt of an adverse benefit determination to appeal.
5. Provide a review that does not give deference to the original decision and that is not conducted by either the same person who made the initial decision or by or a subordinate of that individual.
6. When a decision is based on a medical judgement, the reviewer shall consult with an expert in the necessary field with appropriate training and experience and shall disclose the identity of any expert consulted by the Plan, whether that expert was relied upon or not in making the final decision. Any expert consulted in connection with this requirement cannot be the same person or a subordinate of the person who was consulted in making the original adverse benefit determination.
7. For cases involving a urgent care claims, the Plan must provide for an expedited review process which allows the claimant to submit the appeal either orally or in writing and which provides for all necessary information and communications under the regulation to be made by telephone, facsimile or other available and expeditious manner.
Timing of Notification of Appeals Determinations (§ 2560.503-1(i)(2))
1. Urgent Care Claims: The claimant must be given a decision within 72 hours of the appeal, but this must be done sooner if medical exigencies require it.
2. Pre-Service Claims: A claimant must be notified within 30 days of the determination made by the Plan. Even if the Plan has two levels of review, the review must be completed within 30 days.
3. Post-Service Claims: A claimant must be notified within 60 days of a decisions made by the Plan. If the Plan has two levels of appeal, the claimant must be notified within 30 days of the decision made by each level of review.
Manner and Content of Notification of Appeals Decision (§ 2560.503-1(j))
The Plan must provide a written or electronic communication stating the decision made upon review of a benefits determination. If the decision is an adverse benefits determination, it must follow these rules, in a manner calculated to be understood by the claimant:
1. The specific reason or reasons for the denial.
2. Reference to the specific plan provision relied upon.
3. A statement that the claimant is allowed to have, free of charge, all documents, records and other information relevant to the claimant's claim for benefits.
4. A statement describing any voluntary appeals procedure available, and a description of all required information to be given in connection with that procedure.
5. If a specific rule, guideline or protocol was relied on in making the decision, either a copy of that document or a statement that it was used and is available, free of charge, to the claimant.
6. If the decision was based in whole or in part on a medical judgement, an explanation of the basis for the judgement or a statement that the explanation is available, free of charge, to the claimant.
Interaction with State Law (§ 2560.503-1(k))
While ERISA preempts state law, the regulation specifically states that state laws that regulate insurance are not preempted and external review as conducted by different states is still a viable option. However state external review boards cannot deprive a claimant of their right to pursue a remedy in federal court under ERISA.
Failure to Establish and Follow Reasonable Claims Procedures (§ 2560.503-1(l))
If a Plan fails to follow these regulations, the claimant will be deemed to have exhausted all internal review and will be allowed to pursue all remedies under ERISA.
