New Claims Procedure Rules - Drastic Changes For Group Health Plans And Disability Plans

Background And Effective Date

The Department of Labor ("DOL") recently finalized the claims procedure rules, which are similar, but not identical, to the proposed claims procedure rules from 1998.

The new claims procedure rules are applicable for claims filed under a plan on or after January 1, 2002, and focus on claims under group health plans and disability plans.

Summary Of The Timing Under New Claims Procedure Rules

The following charts summarize the major differences between the current claims procedure rules and the new claims procedure rules.

Note that special rules apply for incomplete or incorrectly filed claims, and for claims relating to concurrent care decisions (when a group health plan has approved an ongoing course of treatment to be provided over a period of time or number of treatments).

A "claim involving urgent care" means a claim for which the non-urgent care time frames either:

1. could seriously jeopardize the life or health of the claimant or the ability of the claimant to regain maximum function, or
2. 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.

The determination of whether a claim involves urgent care is usually made by an individual acting on behalf of the plan and applying the standard of using the judgment of a prudent layperson who possesses an average knowledge of health and medicine. However, if a physician with knowledge of a claimant's medical condition determines that a claim involves urgent care, then the claim is treated as such for purposes of these rules.

Time Period In Which To Appeal

Adverse benefit determinations may be appealed within 180 days following receipt by the claimant of a written notification of an adverse benefit determination. The current rules provide only a 60-day appeal period.

Special Rules For Group Health Plans.

• No Deference: The review may not afford deference to the initial adverse benefit determination.
• Record: The review must take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, even if that information was not submitted or considered in the initial benefit determination. This is a change from current law, under which courts usually review only the facts presented to the claims administrator.
• Reviewing Party: The party who reviews the claim must be a named fiduciary of the plan who is neither (1) the party who made the adverse benefit determination that is being appealed, or (2) the subordinate of that party.
• Medical Consultation: If an appeal of an adverse benefit determination involves medical judgment (e.g., whether a particular treatment, drug, or other item is experimental, investigational, or not medically necessary or appropriate), the appropriate named fiduciary must consult with a health care professional who has appropriate training and experience in that field (who is independent from the health care professional who participated in the initial adverse benefit determination).

• Internal Rules, Guidelines, Protocols: If an internal rule, guideline, protocol, or other similar criterion was relied upon in making an adverse determination, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse determination and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the claimant upon request.
• Explanation of Scientific or Clinical Judgment: If an adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant's medical circumstances, or a statement that such explanation will be provided free of charge upon request.

There are also numerous other important items discussed in the new claims procedure rules.

ACTION NEEDED: If your company sponsors group health plans or disability plans, you should adopt new claims procedures which comply with the new claims procedures rules effective for claims filed on or after January 1, 2002. You should also make sure that these new claims procedures are described in the Summary Plan Descriptions for your group health plans and disability plans.