Benefit plans covered by ERISA must have a reasonable
claims procedure that must be set out in the plan's SPD (29 CFR 2560.503-1). The description of the claims procedure must include the circumstances
that might result in the loss or denial of benefits and the procedure
for making a claim for benefits, including the procedures for appealing
a claim denial. ERISA requires that claim denials must be in writing
and must include a clear explanation of the specific reasons for the
denial. The plan document and the SPD must provide a procedure for
appealing a denial to an authorized plan official or committee for
a full and fair review.
ACA requirements. In
addition, the ACA added a new requirement that health plans and insurers
implement effective internal and external claims and appeals processes.
The new requirements do not apply to grandfathered health plans. The
DOL, HHS, and the IRS have issued regulations (29 CFR 2590.715-2719) implementing this requirement. These regulations build on the existing
ERISA claims procedure regulations for group health plans described
The regulations set out notice requirements for internal
claims and appeals and external review processes. The regulations
also provide that the external review processes in operation on March
23, 2010, may either permanently or temporarily be deemed to be in
compliance with the new requirements. The requirements to implement
effective internal and external claims and appeals processes apply
for plan years of nongrandfathered group health plans that begin on
or after September 23, 2010.
For pension benefit plans and welfare plans other than
health and disability plans, initial benefit claims have to be answered
in 90 days, with a possible extension of another 90 days (29 CFR 2560.503-1(f)(1)). Appeals must be filed within 60 days of a denial (29 CFR 2560.503-1(h)).
Shorter time limits for health
plans. Claims of health plans must be processed much more
quickly. The time limits for claims decisions depend on the type of
claim. For claims involving urgent care, the decision must be made
within 72 hours after the claim is received (29 CFR 2560.503-1(f)(2)). Claimants must be informed within 24 hours if an urgent claim
is incomplete. They then will have 48 hours to provide the needed
information, and the plan must respond within 48 additional hours.
Decisions on claims where receipt of the benefit depends
on approval before receiving medical care must be made within 15 days.
These claims are called "preservice" claims. The decision period may
be extended for 15 days for reasons beyond the plan's control. If
the extension is needed because of lack of information submitted with
the claim, the claimant must be informed that the claim is defective
and be given at least 45 days to provide the necessary information.
Decisions on post-service claims (where no prior approval
is needed) have to be provided within 30 days, subject to the same
15-day extension provision.
will have 180 days to appeal a denied claim (29 CFR 2560.503-1(h)(3)). A plan may require that such requests be in writing except for
urgent care claims.
If a group health plan decides to reduce or terminate
a previously approved course of treatment before it was scheduled
to end, there is an adverse benefit determination that triggers the
claimant's appeals rights (29 CFR 2560.503-1(f)(2)). The plan must give
the claimant a reasonable amount of notice of the reduction or termination
to allow an appeal.
Urgent care definition. A claim is an urgent care claim if application of the time limits
for non-urgent care could seriously jeopardize the life or health
of the claimant or if delay in treatment would subject the claimant
to severe pain (29 CFR 2560.503-1(m)(1)). In determining whether a claim involves
urgent care, a plan must apply the judgment of a prudent layperson
who possesses an average knowledge of health and medicine. However,
if a physician with knowledge of the claimant's condition asserts
that a claim is an urgent care claim, the claim must be so treated.
A request to extend a previously approved course of treatment,
by either increasing the number of treatments or the period of time
for treatment, that is determined by the treating physician to involve
urgent care must be decided as soon as possible after it is made (29 CFR 2560.503-1(f)(2)). If the request is made at least 24 hours before the previous expiration
date, the claimant must be notified within 24 hours of receipt of
the claim. If the request is made less than 24 hours before the expiration
date, the regular urgent care time frame applies.
Shorter time limits for disability
plans. Disability plan claims must generally be decided
in 45 days, with the possibility of two 30-day extensions for circumstances
beyond the plan's control (29 CFR 2560.503-1(f)(3)).
A claims procedure may not include any provision that
unduly inhibits or hampers the filing or processing of a claim (29 CFR 2560.503-1(b)(3)). ERISA imposes a strict time frame on plan administrator decisions
on claims for benefits. The clock starts when a participant makes
a claim for benefits in accordance with the plan’s procedures (29 CFR 2560.503-1(e)).
The DOL has issued a series of questions and answers
that clarify what requests for determinations and other questions
directed at a plan are benefit claims covered by the claims procedure.
These questions can be located at http://www.dol.gov/ebsa
Claims-processing requirements. The claims procedure regulations set out the following rules for
processing benefit claims:
• Plans must have administrative processes and safeguards
designed to ensure that claims decisions are made in accordance with
plan documents and are made in a consistent manner (29 CFR 2560.503-1(b)(5)).
• A claimant must be provided with written or electronic
notification of any adverse benefit determination that includes the
specific reason or reasons for the adverse determination, reference
to the specific plan provisions on which the determination is based,
a description of any additional material or information needed to
get the claim approved and an explanation of why such material or
information is necessary, and a description of the plan's review procedures
and the time limits applicable to such procedures, including a statement
of the claimant's right to sue (29 CFR 2560.503-1(g)).
• Claimants must be given the opportunity to submit written
comments, documents, records, and other information relating to the
claim for benefits (29 CFR 2560.503-1(h)(2)).
• Claimants must be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records,
and other information relevant to the claimant's claim for benefits.
• The review must consider all comments, documents, records,
and other information submitted by the claimant even if they were
not submitted or considered in the initial benefit determination and
must not give deference to the initial determination.
• Notice of an appeal denial must specify why the appeal
was rejected, including reference to the specific plan provisions
relied upon, and inform the claimant that he or she is entitled to
receive free copies of all documents, records, and information that
were considered in making the decision (29 CFR 2560.503-1(j)).
• An appeal denial must include a statement describing
any voluntary appeal procedures offered by the plan and the claimant's
right to obtain the information about these procedures and a statement
of the claimant's right to sue for benefits.
Health claim procedures. Additional requirements may apply to health plans, including, for
• If a specific internal rule guideline, protocol, or similar
criterion is relied on in making an adverse benefit determination,
the notification must either set forth that provision or indicate
that an internal rule, etc., was relied on and that the specific provision
will be provided free of charge on request (29 CFR 2560.503-1(g)).
• The notice that a claim is denied on the basis of a medical
necessity or experimental treatment or similar exclusion or limit
must include 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 on request.
• The review of a health claim must not give any deference
to the initial determination and must be done by an individual who
is not the same as, or a subordinate of, the individual who made the
initial determination (29 CFR 2560.503-1(h)(3)).
• When deciding an appeal of a health claim that is based
in whole or in part on a medical judgment, a healthcare professional
who has appropriate training and experience must be consulted.
• Health plans must identify medical or vocational experts
who were consulted if a claim is denied if so requested by the claimant,
even if their particular advice was not used in making the decision.
• Health plans may require no more than two levels of appeals
of a benefit denial before a claimant may sue (29 CFR 2560.503-1(c)(2)).
• Mandatory arbitration is allowed in health plans as one
of the two appeals if it meets all the requirements for such appeals
and if the claimant is not barred from challenging the results of
the arbitration in court (29 CFR 2560.503-1(c)(4)).
• Voluntary additional levels of appeal (including binding
arbitration) are permitted in health plans (29 CFR 2560.503-1(c)(3)). However, all of the following must apply:
--The plan won't assert a failure to exhaust administrative
remedies if a claimant elects to pursue a claim in court rather than
through the voluntary appeal process;
--The statute of limitation for suing is tolled during
the voluntary appeal process;
--The voluntary appeal process is available only after
the required appeals;
--The plan provides the claimant with sufficient information
to make an informed decision whether to use the voluntary level of
appeal, including a statement that using or not using the voluntary
level of appeal will have no effect on the claimant's rights to any
other benefits under the plan and information about the applicable
rules, the right to representation, the process for selecting the
decision maker, and the circumstances, if any, that may affect the
impartiality of the decision maker, such as any financial or personal
interests in the result or any past or present relationship with any
party to the review process; and
--No fees or costs are charged to the claimants.
Interaction with state laws. The required claims procedures do not supersede any applicable state
insurance review process unless that process prevents the application
of the required procedures (29 CFR 2560.503-1(k)). It is not necessary
to utilize the state procedures before suing for benefits.
Regulations under the ACA also set new requirements in
addition to those in the ERISA claims procedure regulations (29 CFR 2590.715-2719).
New definition of adverse benefit
determination. First, a broader definition of an adverse
benefit determination applies that includes any rescission of coverage
(whether or not the rescission has an adverse effect on any particular
benefit at that time).
New full and fair review requirement. A plan and insurer must allow a claimant to review the claim file
and to present evidence and testimony as part of the internal claims
and appeals process. In addition to complying with the current claims
• The plan or insurer must provide the claimant, free of
charge, with any new or additional evidence considered, relied upon,
or generated by the plan or insurer (or at the direction of the plan
or insurer) in connection with the claim; this evidence must be provided
as soon as possible and sufficiently before the date on which the
notice of final internal adverse benefit determination is required
to be provided to give the claimant a reasonable opportunity to respond; and
• Before the plan or insurer can issue a final internal
adverse benefit determination based on a new or additional rationale,
the claimant must be provided, free of charge, with the rationale;
the rationale must be provided as soon as possible and sufficiently
before the date on which the notice of final internal adverse benefit
determination is required to be provided to give the claimant a reasonable
opportunity to respond.
New requirement for avoiding
conflicts of interest. A plan must ensure that all claims
and appeals are adjudicated in a manner designed to ensure the independence
and impartiality of the persons involved in making the decision. Decisions
on hiring, compensation, termination, promotion, or other similar
matters of any individual (such as a claims adjudicator or medical
expert) must not be made based on the likelihood that the individual
will support the denial of benefits.
New notice requirements. Plans and insurers must provide notice to individuals, in a culturally
and linguistically appropriate manner and must also comply with the
following additional requirements:
• The plan and insurer must ensure that any notice of adverse
benefit determination or final internal adverse benefit determination
includes information sufficient to identify the claim involved (including
the date of service, the healthcare provider, and the claim amount
(if applicable). The notice must state that the diagnosis and treatment
codes and their meanings will be provided on request.
• The plan and insurer must provide to participants and
beneficiaries, as soon as practicable, on request, the diagnosis code
and its corresponding meaning, and the treatment code and its corresponding
meaning, associated with any adverse benefit determination or final
internal adverse benefit determination. Additionally, the plan or
insurer cannot consider a request for such diagnosis and treatment
information, in itself, to be a request for an internal appeal or
an external review.
• The plan and insurer must ensure that the reason or reasons
for the adverse benefit determination or final internal adverse benefit
determination includes the denial code and its corresponding meaning,
as well as a description of the plan's or insurer's standard, if any,
that was used in denying the claim. In the case of a notice of final
internal adverse benefit determination, this description must include
a discussion of the decision.
• The plan and insurer must provide a description of available
internal appeals and external review processes, including information
on how to initiate an appeal.
• The plan and insurer must disclose the availability of,
and contact information for, any applicable office of health insurance
consumer assistance or ombudsman established under Public Health Services Act (PHSA) Sec. 2793 to assist individuals
with the internal claims and appeals and external review processes.
Culturally and linguistically
appropriate notice requirement. Notices of available internal
claims and appeals and external review processes must be provided
in a culturally and linguistically appropriate manner. Plans and insurers
are considered to satisfy this requirement if notices are provided
in a non-English language when there are a threshold number of people
who are literate in the same non-English language.
Specific requirements. The plan must provide oral language services (such as a telephone
customer assistance hotline) that include answering questions in any
applicable non-English language and providing assistance with filing
claims and appeals (including external review) in any applicable non-English
language. The plan must provide, on request, a notice in any applicable
non-English language and must include, in the English versions of
all notices, a statement prominently displayed in any applicable non-English
language clearly indicating how to access the language services provided
by the plan or issuer.
Applicable non-English language
threshold. For an address in any U.S. county to which a
notice is sent, a non-English language is an applicable non-English
language if 10 percent or more of the population residing in the county
is literate only in the same non-English language.
Deemed exhaustion of internal
claims and appeals processes. In the case of a plan or
insurer that fails to strictly adhere to all the claims procedure
requirements, the claimant is deemed to have exhausted the internal
claims and appeals process and may seek immediate external review
or court action, as applicable, unless the violation was:
• De minimis;
• Attributable to good cause or matters beyond the plan’s
or issuer's control;
• In the context of an ongoing good-faith exchange of information; and
• Not reflective of a pattern or practice of noncompliance.
In addition, the claimant would be entitled, on written
request, to an explanation of the plan’s basis for asserting that
it meets this standard so that the claimant can make an informed decision
whether to seek immediate review. If the external reviewer or the
court rejects the claimant’s request for immediate review on the basis
that the plan met this standard, the claimant may resubmit and pursue
the internal appeal of the claim.
The claimant is also entitled to pursue any available
remedies under ERISA or under state law, as applicable, on the basis
that the plan or insurer has failed to provide a reasonable internal
claims and appeals process that would yield a decision on the merits
of the claim. If a claimant chooses to pursue remedies under ERISA Sec. 502(a), the claim or appeal is deemed denied on review without the exercise
of discretion by an appropriate fiduciary.
Continued coverage pending the
outcome of an appeal. A plan and insurer are required to
provide continued coverage pending the outcome of an appeal. Benefits
for an ongoing course of treatment cannot be reduced or terminated
without providing advance notice and an opportunity for advance review.
PHSA Sec. 2719 provides that either a state
external review process or a federal external review process must
apply for health plans and insurers. This requirement is specifically
incorporated into ERISA and the IRC. The ACA regulations provide rules
for determining which process applies, as well as guidance on each
Determining whether a state
or federal external review process applies. The regulations
set when plans must comply with an applicable state external review
process and when they must comply with the federal external review
process. If a state external review process that applies and is binding
on the insurer includes, at a minimum, the consumer protections in
the National Association of Insurance Commissioners (NAIC) Uniform
Model Act, the state external review process and not the federal external
review process applies.
To the extent that a group health plan provides benefits
other than through health insurance coverage (i.e., the plan is self-insured)
and is subject to a state external review process that applies to
and is binding on the plan (e.g., is not preempted by ERISA) and the
state external review process includes at a minimum the consumer protections
in the NAIC Uniform Model Act, then the plan must comply with the
applicable state external review process and is not required to comply
with the federal external review process.
Any plan not subject to a state external review process
must comply with the federal external review process.
Minimum state external appeals
process requirements. An applicable state external review
process must meet certain minimum consumer protections, and HHS will
determine whether state external review processes meet these requirements.
For example, such state external review processes must:
• Provide for the external review of adverse benefit determinations
(and final internal adverse benefit determinations) that are based
on medical necessity, appropriateness, healthcare setting, level of
care, or effectiveness of a covered benefit;
• Require insurers to provide effective written notice
to claimants of their rights in connection with an external review
for an adverse benefit determination;
• To the extent the state process requires exhaustion of
an internal claims and appeals process, make exhaustion unnecessary
if the insurer has waived the exhaustion requirement, the insurer
has exhausted (or is considered to have exhausted) the internal claims
and appeals process under applicable law, or the claimant has applied
for expedited external review at the same time as applying for an
expedited internal appeal;
• Provide that the insurer against which a request for
external review is filed must pay the cost of an independent review
organization (IRO) for conducting the external review;
• Not impose a restriction on the minimum dollar amount
of a claim for it to be eligible for external review;
• Allow at least 4 months after the receipt of a notice
of an adverse benefit determination or final internal adverse benefit
determination to file a request for an external review;
• Provide that an IRO will be assigned on a random basis
or another method of assignment that ensures the independence and
impartiality of the assignment process;
• Provide for a list of approved IROs qualified to conduct
the review based on the nature of the healthcare service that is the
subject of the review;
• Provide that any approved IRO has no conflicts of interest
that will influence its independence;
• Allow the claimant to submit to the IRO, in writing,
additional information that the IRO must consider when conducting
the external review and require that the claimant is notified of such
right to do so;
• Provide that the decision is binding on the plan or insurer,
as well as the claimant, except to the extent that other remedies
are available under state or federal law. (The plan or insurer must
provide benefits (including by making payment on the claim) pursuant
to the final external review decision without delay, regardless of
whether the plan or insurer intends to seek judicial review of the
external review decision and unless or until there is a judicial decision
• Provide for a written decision not more than 45 days
after the receipt of the request for external review by the IRO in
the case of a standard external review;
• Provide for an expedited external review in certain circumstances
with a decision not later than 72 hours after the receipt of the request;
• Require that insurers include a description of the external
review process in the summary plan description, policy, certificate,
membership booklet, outline of coverage, or other evidence of coverage
they provide to claimants;
• Require that IROs maintain written records and make them
available on request to the state; and
• Follow procedures for external review of adverse benefit
determinations involving experimental or investigational treatment,
substantially similar to what is set forth in Section 10 of the NAIC
Uniform Model Act.
The federal external review
process. The federal standards are intended to be similar
to the state requirements. The federal external review process initially
applies to claims that involve:
• Medical judgment (excluding those that involve only contractual
or legal interpretation without any use of medical judgment), as determined
by the external reviewer; or
• A rescission of coverage.
Expedited reviews. The federal external review process, like the state external review
process, provides for expedited external review and additional consumer
protections for external review for claims involving experimental
or investigational treatment.
revised model notice of adverse benefit determination, a revised model
notice of final internal adverse benefit determination, and a revised
model notice of final external adverse benefit determination can be
located at http://www.dol.gov/ebsa