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DOL (Department of Labor) claim procedures

Medical Claim Processing Overhaul

     An overhaul in the claims procedures for health and disability plans is required because the Department of Labor is drastically changing the claims procedure rules, especially those for health plans (including medical, dental, vision and prescription drug programs). The changes which are effective 1/1/02 include: (this date applies even plans having a non-calendar year)

• Urgent care claims are to be processed within 72 hours and all other claims within 15 days.

• Fiduciary handling appeals will have to make full and independent review of each claim.

• Medical professionals may need to be hired to consult on appeals requiring medical judgment.

• Claimants need to be provided with greater detail for personal review.

• Your plan will have to apply these rules to a range of benefit determinations beyond simple denials (see the "adverse benefits determination" discussion below).

Claim deadlines

Different deadlines based on urgency of health claims. (For a complete overview of these time limits, see chart below). For purposes of this discussion a pre-service claim is one where participants are required to obtain approval before obtaining care. 

• Definition of urgent care: A medical situation where failing to make a determination quickly could seriously harm a claimant's life, health, or ability to regain maximum function or could subject a claimant to serve pain that could not be managed without the requested treatment. Under these conditions an urgent claim is one that a physician cognizant of the situation judges as such.

It has been suggested that plans which do not treat non-certification of benefits through pre-authorization or utilization review as denials will have to begin doing so, and will have to begin giving participants the full range of ERISA rights.

Ongoing treatments. Reduction of or termination of ongoing treatment before a previously established time period ends is considered an adverse benefit determination. Sufficient advance notice must be given to a claimant so that they have an opportunity to appeal the decision.

Quicker notification of incomplete claims. If a claimant improperly submits a claim, they must be informed of that fact within 5 days or 24 hours for urgent claims. This does not apply to general benefit inquiries.

More detailed, of initial claims and appeals. Notices of adverse benefit determinations should include any internal rule, guideline, protocol or similar criterion used in making the determination, or at least a statement that any such criterion will be provided free upon request. If an adverse determination is based on plan restrictions involving "medical necessity" or "experimental" treatment, the notice must include an explanation of the scientific or clinical judgment behind the determination (or at least indicate that such explanation is available free upon request). It should be noted that current ERISA notices for initial and appeal notices still apply.

On appeal, all "relevant" information must be made available to claimants. 
Documents, records and other information will be considered "relevant" to a given claim if:

• They were relied on by the plan in making the benefit determination;

• They were submitted, considered, or generated in the course of making the benefit determination (even if the plan didn't rely on them);

• They demonstrate that, in making the determination, the plan complied with its own processes for ensuring appropriate decision making and consistency (e.g., documents produced during an internal audit); or

• The information constitutes a statement of policy or guidance with respect to the plan concerning the denied treatment option or benefit for the claimant's diagnosis, without regard to whether such advice or statement was relied upon in making the benefit determination.

Full-blown review required on appeals. The reviewer considering an adverse decision must consider all information submitted by the claimant, must make his or her own independent determination, and may not give any weight to the initial adverse determination. Also, the reviewer may not be the same person that made the initial determination, or a subordinate of that person.

Appeals may require consultations with health professionals. In an appeal of a determination based wholly or partly on medical judgment, a plan or its service provider must consult with a health care professional who has appropriate training and experience in the relevant area of medicine. That professional must also be independent of any professional consulted on the initial determination.

Two levels of appeal. Two levels of appeal are allowed, however, all appeals must be completed within the new time periods (i.e., for pre-service claims two appeals must be completed within 30 days and for post-service claims two appeals must be completed within 60 days).

Added rules for voluntary levels of appeal. Plans may still offer voluntary levels of appeal beyond the one or two mandatory levels of review

No binding arbitration. Your plan may use non-binding arbitration. These rules prohibit binding arbitration and allow the claimant to challenge in court any arbitration decision.

Plans without "reasonable" claims procedures may be sued. If a plan fails to comply with the new claims procedure rules, claimants will not be required to appeal an adverse benefit decision under the plan terms. Instead, they will be determined to have exhausted all administrative remedies are able to pursue any available remedies under ERISA, including filing a lawsuit.

ERISA claims rules do not pre-empt state "external review" laws. Many states have enacted laws requiring insurers and HMOs to participate in binding, third-party reviews of disputed claims. The new ERISA rules place two limits on these state laws: (i) they may not prevent an ERISA plan from complying with the claims procedure rules; and (ii) they may only require reviews to be done by someone other than the insurer, the plan, plan fiduciaries, the employer, an agent of these parties, or an employee.

DOL changes to requirements for Summary Plan Documents.

The SPD's must be revised to comply with the new regulations by the first day of of the second plan year that begins after January 22, 2001. For calendar year plans this deadline is January 1, 2003.

Health care plans SPDs must now describe the following:

• annual and lifetime maximums and other limits

• coverage for preventive services, existing or new drugs and medical tests, devices and procedures

• how to access both in network and out of network providers

• any restrictions on selecting primary or specialty-care providers

     A plan sponsor may now decide to state in the SPD that information on claims procedures and related deadlines will be furnished automatically in separate documents free of charge. Previously, this information had to be outlined in the SPD.

     Plan sponsors of a pension plan's SPD may now elect to state that the procedures for qualified domestic relation orders are available separately and free of charge as opposed to being in the SPD. The same holds true for the procedures for qualified medical child support orders which are also available separately free of charge.

     A health care plan may now fulfill its initial COBRA notice requirement by giving participants a copy of the health care plan SPD (which must include a description of COBRA rights).

Health care plan SPDs must now summarize any federally qualified HMO coverage offered to plan participants.

     SPDs must now describe both the federal minimum requirements under the Newborn and Mothers Health Protection Act of 1996 and any state law requirement that is more stringent.

© 2003 Connecticut Business & Industry Association (CBIA). All rights reserved.

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