AZ Regulatory Bulletin 2011-07
AZ Regulatory Bulletin 2011-07: Temporary Consumer Protection Standards Applicable to Arizona’s Existing External Review Process
Department of Insurance
State of Arizona
Office of the Director
Telephone: (602) 364-3471
Telecopier: (602) 364-3470
JANICE K. BREWER
2910 North 44th Street, Suite 210
CHRISTINA URIAS
Governor
Phoenix, Arizona 85018
Director of Insurance
www.azinsurance.gov
REGULATORY BULLETIN 2011-071
TO:
All Health Insurance Issuers
FROM:
Christina Urias
Director
DATE:
July 21, 2011
RE:
Temporary Consumer Protection Standards Applicable to Arizona’s Existing External Review
Process
The purpose of this Regulatory Bulletin is to notify health insurance issuers in this state of the impact of the
Department of Health & Human Services’ (HHS) Technical Release 2011-02 on external review processes. A
copy of HHS Technical Release 2011-02 is attached to this Bulletin and this is a link to the same document:
http://cciio.hhs.gov/resources/files/appeals_srg_06222011.pdf. Among other things, Technical Release 2011-
02 establishes a set of temporary consumer protection standards for NAIC-similar external review processes
that will apply until January 1, 2014. If all health plans and health insurance issuers offering insurance in
Arizona in the individual and group health market voluntarily comply with this Regulatory Bulletin, we believe
HHS will determine our process complies with the temporary standards.
Background
As you know, the Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on March 23,
2010; the Health Care and Education Reconciliation Act, Public Law 111-152, was enacted on March 30, 2010
(collectively known as the “Affordable Care Act”). The Affordable Care Act reorganizes, amends, and adds to
the provisions of part A of title XXVII of the Public Health Service Act (“PHS Act”) relating to group health plans
and health insurance issuers offering group and individual health insurance coverage. The Affordable Care
Act adds section 715(a)(1) to the Employee Retirement Income Security Act (ERISA) and section 9815(a)(1) to
the Internal Revenue Code (the Code) to incorporate the provisions of part A of title XXVII of the PHS Act into
ERISA and the Code, and make them applicable to group health plans, and health insurance issuers providing
health insurance coverage in connection with group plans.
Minimum Consumer Protection Standards Established
HHS, along with the Department of Labor and the Treasury (collectively referred to as the Departments) issued
regulations in several phases to implement provisions of the PHS Act and the Affordable Care Act. On July
23, 2010, the Departments published interim final rules implementing section 2719 of the PHS Act and those
rules were amended contemporaneously with Technical Release 2011-02. Section 2719 of the PHS Act
applies to group health plans and health insurance issuers in the individual and group health insurance
markets that are not grandfathered health plans.
1This Substantive Policy Statement is advisory only. A Substantive Policy Statement does not include internal procedural
documents that only affect the internal procedures of the Agency, and does not impose additional requirements or
penalties on regulated parties or include confidential information or rules made in accordance with the Arizona
Administrative Procedure Act. If you believe that this Substantive Policy Statement does impose additional requirements
or penalties on regulated parties you may petition the agency under Arizona Revised Statutes Section 41-1033 for a
review of the Statement.
2
Section 2719(b) of the PHS Act requires group health plans and health insurance issuers in the group and
individual market comply with a State external review process if that process includes, at a minimum, the
consumer protections set forth in the Uniform Health Carrier External Review Model Act issued by the National
Association of Insurance Commissioners (NAIC). Paragraph (c)(2) of the July 2010 regulations included 16
minimum consumer protection standards that a State external review process must include in order to be
authorized under section 2719(b)(1) of the PHS Act. These 16 minimum consumer protection standards were
amended contemporaneously with the issuance of the HHS Technical Release. In addition to establishing a
modified transition period until January 1, 2012, the attached HHS Technical Release establishes minimum
consumer protection standards for NAIC-similar processes that will temporarily apply for a State-administered
external review process. These temporary standards will apply to health insurance issuers (and, if applicable,
self-insured nonfederal governmental plans) in Arizona until January 1, 2014.
Temporary Standards for NAIC-similar Consumer Protections
There are 13 temporary standards for a State-administered external review process and states must meet all
of the temporary standards to be considered to have an NAIC-similar process. The 13 temporary standards
are listed in the attached HHS Technical Release 2011-02 and we satisfied many of the HHS temporary
standards by incorporating requirements in the current Request for Proposal for Health Care Appeal
Independent Review Organization Services.
Arizona’s existing external review process meets these temporary standards with one exception. Temporary
standard #7 requires that the claimant must have at least 60 days to file for an external review after the receipt
of the notice of adverse benefit determination or final internal adverse benefit determination. Under A.R.S. §
20-2537(B), the claimant only has 30 days after receiving written notice of an adverse decision to initiate an
external independent review. While we can only enforce existing Arizona state law, we strongly encourage all
health plans and health insurance issuers in the individual and group health market to accept claimants’
requests for external independent review for at least 60, rather than 30, days after an adverse benefit decision.
Currently, if the Department receives a request for external review outside of the 30 days, we do not reject it.
Extending the period to allow a claimant to request an external review does not impose any substantial burden
on the health plans or insurance issuers and we are not aware that requests outside the 30 day period are
routinely rejected by the plans now.
After an initial HHS determination that Arizona has an NAIC-similar external review process, we must not
reduce the consumer protections in our external review process below the level applicable at the time of the
determination to ensure continued compliance. If our process reduces consumer protections below the
applicable level, the law requires Arizona to participate in a Federally-administered external review process,
detailed starting at page 7 of Technical Release 2011-02.
The Department strongly believes that working under our existing NAIC-similar external review process is in
the best interest of the health plans and insurance issuers and that will only be possible if the plans and
issuers are willing to accept requests for external review for at least 60, rather than 30, days after an adverse
benefit determination.
Please direct any questions related to this Regulatory Bulletin to Mary Butterfield or Susana Lesmeister at
(602) 364-2399.
TECHNICAL RELEASE 2011-02
DATE:
JUNE 22, 2011
SUBJECT:
GUIDANCE ON EXTERNAL REVIEW FOR GROUP HEALTH PLANS AND
HEALTH INSURANCE ISSUERS OFFERING GROUP AND INDIVIDUAL
HEALTH COVERAGE, AND GUIDANCE FOR STATES ON STATE
EXTERNAL REVIEW PROCESSES
BACKGROUND:
The Patient Protection and Affordable Care Act, Public Law 111-148, was enacted on
March 23, 2010; the Health Care and Education Reconciliation Act, Public Law 111-152,
was enacted on March 30, 2010 (collectively known as the “Affordable Care Act”). The
Affordable Care Act reorganizes, amends, and adds to the provisions of part A of title
XXVII of the Public Health Service Act (PHS Act) relating to group health plans and
health insurance issuers offering group and individual health insurance coverage. The
Affordable Care Act adds section 715(a)(1) to the Employee Retirement Income Security
Act (ERISA) and section 9815(a)(1) to the Internal Revenue Code (the Code) to
incorporate the provisions of part A of title XXVII of the PHS Act into ERISA and the
Code, and make them applicable to group health plans, and health insurance issuers
providing health insurance coverage in connection with group health plans.
The Departments of Health and Human Services (HHS), Labor, and the Treasury
(collectively referred to as the Departments) have been issuing regulations in several
phases to implement the revised sections 2701 through 2719A of the PHS Act and related
provisions of the Affordable Care Act. Section 2719 of the PHS Act applies to group
health plans and health insurance issuers in the individual and group health insurance
markets that are not grandfathered health plans within the meaning of section 1251 of the
Affordable Care Act.1
It sets forth standards for plans and issuers regarding both internal
claims and appeals process and external review. The Departments published interim final
rules implementing section 2719 of the PHS Act on July 23, 2010, at 75 FR 43330 (the
July 2010 regulations) and are issuing an amendment to those rules contemporaneously
with this technical guidance.
Section 2719(b)(1) of the PHS Act requires that group health plans and health insurance
issuers in the group and individual market comply with a State external review process if
that process includes, at a minimum, the consumer protections set forth in the Uniform
Health Carrier External Review Model Act issued by the National Association of
1 The Departments published interim final regulations implementing section 1251 of the Affordable Care
Act on June 17, 2010, at 75 FR 34538, and amended them on November 17, 2010 at 75 FR 70114.
DEPARTMENT OF HEALTH & HUMAN SERVICES
Centers for Medicare & Medicaid Services
200 Independence Avenue SW
Washington, DC 20201
2
Insurance Commissioners (the NAIC Uniform Model Act).2
Paragraph (c)(2) of the July
2010 regulations sets forth the 16 minimum consumer protection standards from the
NAIC Uniform Model Act that a State external review process must include in order to
be authorized under section 2719(b)(1) of the PHS Act.
Therefore, under previous guidance, for a State external review process to apply (or
continue to apply) to health insurance issuers (and certain plans3
These 16 minimum consumer protection standards, as amended, may be summarized as
follows:
) for plan years (in the
individual market, policy years) beginning on or after July 1, 2011, the State process was
required to include the 16 minimum consumer protection standards set forth in paragraph
(c)(2) of the July 2010 regulations. These 16 minimum consumer protection standards
are being amended, in limited respects, by an amendment to the July 2010 regulations
that is being issued contemporaneously with this technical guidance. That amendment to
the July 2010 regulations also modifies (as described below) the transition period
described in the first sentence of this paragraph.
4
1. The process must provide for external review of adverse benefit determinations
(and final internal adverse benefit determinations) based on medical necessity,
appropriateness, health care setting, level of care, or effectiveness of a covered
benefit.
2. Issuers (or plans) must be required to provide effective written notice to claimants
of their rights to external review.
3. If exhaustion of internal appeals is required prior to external review, exhaustion
must be unnecessary if – (a) the issuer (or plan) waives the exhaustion
requirement; (b) the issuer (or plan) is considered to have exhausted the internal
appeals process by failing to comply with the requirements of the internal appeals
process except those failures that are based on de minimis violations that do not
cause, and are not likely to cause, prejudice or harm to the claimant5
2 The July 2010 regulations specify that the relevant NAIC Uniform Model Act is the version in place on
July 23, 2010. This version of the NAIC Uniform Model Act is available at
; or (c) the
claimant simultaneously requests an expedited internal appeal and an expedited
external review.
www.dol.gov/ebsa and
cciio.cms.gov.
3 While the preemption provisions of ERISA ordinarily would prevent a State external review process from
applying to most self-insured plans, the preamble to the July 2010 regulations states that a State external
review process could apply to and be binding on a self-insured group health plan under some circumstances
(e.g., nonfederal governmental plans not covered by ERISA preemption).
4 This list is intended only to summarize the consumer protection standards set forth at paragraph (c)(2) of
the July 2010 regulations, as amended, not to make any substantive change to those standards. To the
extent there is any difference between the standards summarized in this Technical Release and the
standards set forth in the July 2010 regulations, as amended, the standards set forth in the July 2010
regulations control.
5 The amendment to the July 2010 regulations issued contemporaneously with this Technical Release adds
a new paragraph (b)(2)(ii)(F)(2) to reflect an exception to the strict compliance standard for certain de
minimis violations. The effect of this amendment on the standard set forth in paragraph (c)(2)(iii) is shown
here for completeness; however, paragraph (c)(2)(iii) itself has not been amended.
3
4. The cost of an independent review organization (IRO) to conduct an external
review must be borne by the issuer (or plan), although the process may require a
nominal filing fee6
5. There cannot be any restriction on the minimum dollar amount of a claim in order
to be eligible for external review.
from the claimant requesting external review.
6. The process must allow at least four months to file a request for external review
after the receipt of the notice of adverse benefit determination or final internal
adverse benefit determination.
7. The IRO must be assigned by the State or an independent entity, on a random
basis or another method of assignment that ensures the independence and
impartiality of the assignment process (such as rotational assignment), and in no
event assigned by the issuer, the plan, or the individual.
8. The process must provide for the maintenance of a list of approved IROs (only
those that are accredited by a nationally recognized private accrediting
organization) qualified to conduct the external review based on the nature of the
health care service that is the subject of the review.
9. Approved IROs must have no conflicts of interest that will influence their
independence.
10. Claimants must be allowed to submit to the IRO additional information in writing
that the IRO must consider when conducting the external review, and the claimant
must be notified of the right to submit additional information to the IRO; the IRO
must allow the claimant at least 5 business days to submit any additional
information and any additional information submitted by the claimant must be
forwarded to the issuer (or plan) within one business day of receipt by the IRO.
11. The IRO decision must be binding on the claimant, as well as the plan or issuer
(except to the extent that other remedies are available under State or Federal
law).7
12. For standard external review, the IRO must provide written notice to the issuer (or
plan) and the claimant of its decision to uphold or reverse the adverse benefit
determination within no more than 45 days after the receipt of the request for
external review.
13. The process must provide for an expedited external review in certain
circumstances and, in such cases, provide notice of the decision as expeditiously
as possible, but not later than 72 hours after receipt of the request for external
review (and if notice of the IRO’s decision is not in writing, the IRO must provide
written confirmation of its decision within 48 hours after the date of the notice of
the decision).
6 For this purpose, to be considered nominal, a filing fee must not exceed $25, must be refunded to the
claimant if the adverse benefit determination or final internal adverse benefit determination is reversed
through external review, must be waived if it would impose an undue financial hardship, and the annual
limit on filing fees for any claimant within a single plan year must not exceed $75.
7 The amendment to the July 2010 regulations issued contemporaneously with this Technical Release
clarifies that the requirement that the decision be binding does not preclude a plan or issuer from making
payment on the claim or otherwise providing benefits at any time, including after a final external review
decision that denies the claim or otherwise fails to require such payment or benefits. In addition, the
amendment clarifies that a plan or issuer 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 issuer
intends to seek judicial review of the external review decision and unless or until there is a judicial decision
otherwise.
4
14. Issuers (or plans) must provide a description of the external review process in or
attached to the summary plan descriptions, policy, certificate, membership
booklet, outline of coverage, or other evidence of coverage provided to
participants, beneficiaries, or enrollees, substantially similar to section 17 of the
NAIC Uniform Model Act.
15. The IRO must maintain written records and make them available upon request to
the State, substantially similar to section 15 of the NAIC Uniform Model Act.
16. The process must follow procedures for external reviews involving experimental
or investigational treatment, substantially similar to section 10 of the NAIC
Uniform Model Act.
Under section 2719(b)(2) of the PHS Act, if a State’s external review process does not
meet these minimum consumer protection standards, group health plans and health
insurance issuers in the group and individual market in that State are required to
implement an effective external review process that meets minimum standards
established by the Secretary through guidance. These standards must be similar to the
standards established under section 2719(b)(1) of the PHS Act and must meet the
requirements set forth in paragraph (d) of the July 2010 regulations.
Accordingly, there may be external review processes authorized under PHS Act section
2719(b)(1) and paragraph (c) of the July 2010 regulations (hereinafter referred to as
“NAIC-parallel processes”) and there may be external review processes authorized under
statutory PHS Act section 2719(b)(2) and paragraph (d) of the July 2010 regulations
(hereinafter referred to as “NAIC-similar processes”).
DISCUSSION:
A. STATUS OF STATE EXTERNAL REVIEW IMPLEMENTATION
The Departments understand that many States have been working to make changes to
implement NAIC-parallel processes. HHS continues to evaluate State external review
processes to determine whether they meet the standards for an NAIC-parallel process. If
HHS determines that a State’s external review process does not meet those minimum
consumer protection standards, issuers (and plans) will need a reasonable opportunity to
respond and change to a different process.
For these reasons, the Departments are establishing: (1) a transition period until January
1, 2012 for State external review process implementation; and (2) a set of temporary
standards for NAIC-similar processes that will apply until January 1, 2014.
Transition period
In light of these circumstances, and in order to allow time for issuers (and plans) to make
a reasonable transition to a different process, the Departments are modifying the
transition period for States to implement external review processes.8
8 The Departments acknowledge that some States have enacted consumer protections beyond those in
operation on the date the Affordable Care Act was enacted. Of course, those later-added consumer
Specifically, under
5
an amendment to the July 2010 regulations being published contemporaneously with this
technical guidance, the transition period is modified to extend through December 31,
2011. As discussed below, HHS intends to issue determinations regarding State external
review implementation no later than July 31, 2011.
Temporary standards for NAIC-similar consumer protections
In addition to the transition period, this technical guidance establishes minimum
consumer protection standards for NAIC-similar processes that will temporarily apply for
a State-administered external review process authorized under section 2719(b)(2) of the
PHS Act and paragraph (d) of the July 2010 regulations. These temporary standards will
apply to health insurance issuers (and, if applicable, self-insured nonfederal governmental
plans) in a State until January 1, 2014.9
Until the earlier of these two dates, issuers (and plans) will comply with an applicable
State external review process that meets these temporary standards even if it does not
meet all the minimum consumer protections of paragraph (c)(2) of the July 2010
regulations, as amended. Beginning January 1, 2014, a State external review process will
need to satisfy the standards of paragraph (c)(2) of the July 2010 regulations, as amended,
or the issuer (or plan) will become subject to a Federally-administered external review
process.
The temporary standards for a State-administered external review process to be
considered an NAIC-similar process are all of the following:
1. The process must provide for external review of adverse benefit determinations
(and final internal adverse benefit determinations) based on medical necessity,
appropriateness, health care setting, level of care, or effectiveness of a covered
benefit.10
2. The process provides for external review of adverse benefit determinations (and
final internal adverse benefit determinations) involving experimental or
investigational treatments or services and must have at least all of the protections
that are available for external reviews based on medical necessity,
protections will generally apply to coverage in such States, in accordance with ERISA section 731 and PHS
Act section 2724.
9 Of course, if a State enacts an NAIC-parallel law prior to January 1, 2014, coverage subject to that State
law will be required to comply with the provisions of that State law, in accordance with ERISA section 731
and PHS Act section 2724.
10 The amendment to the July 2010 regulations issued contemporaneously with this technical release sets
forth temporary modifications to the scope of claims eligible for review under a Federal external review
process, except to the extent the Departments determine otherwise through guidance. Because this
modified Federal scope is broader than the scope of external review required by the NAIC Uniform Model
Act, and the Departments expects that States that are temporarily operating an external review process
under Federal standards (the States with NAIC-similar processes) are working on implementing the
minimum consumer protections of paragraph (c)(2) of the July 2010 regulations, the Departments
determine that the scope of external review under the temporary standards in such States will equal the
scope of external review under the NAIC Uniform Model Act. That is, in States where HHS determines a
temporary process authorized under section 2719(b)(2) of the PHS Act may operate under Federal
standards before 2014, the scope of adverse benefit determinations eligible for external review must include
decisions that are based on the issuer’s or plan’s requirements for medical necessity, appropriateness,
health care setting, level of care, or effectiveness of a covered benefit.
6
appropriateness, health care setting, level of care, or effectiveness of a covered
benefit.
3. Issuers (or plans) are required to provide effective written notice to claimants of
their rights to external review in their summary plan descriptions and plan
materials and on each notice of adverse benefit determination. These notice
requirements may not be articulated in a State’s external review statute but may
be established in other areas of State law, rules, or procedures - for example, those
that apply to internal appeals, claims payment practices, or other areas of State
oversight.
4. If exhaustion of internal appeals is required prior to external review, exhaustion
must be unnecessary if -- (a) the internal appeal process timelines are not met; or
(b) in an urgent care situation, the claimant files for an external review without
having exhausted the internal appeal process. These requirements may not be
articulated in a State’s external review statute but may be established in other
areas of State law, rules, or procedures - for example, those that apply to internal
appeals, claims payment practices, or other areas of State oversight.
5. The cost of an external review must be borne by the issuer (or plan), and the
claimant cannot be charged a filing fee in excess of $25 per external review.
6. There cannot be any restriction on the minimum dollar amount of a claim in order
to be eligible for external review.
7. The claimant must have at least 60 days to file for external review after the receipt
of the notice of adverse benefit determination or final internal adverse benefit
determination.
8. The IRO must be assigned impartially. The claimant and issuer (or plan) should
have no discretion as to the IRO that is chosen.
9. If the State contracts with, or otherwise identifies one or more IROs to provide
external review, the State must have a process in place for quality assurance of
IROs.
10. If the State contracts with, or otherwise identifies one or more IROs to conduct
external reviews, the State must ensure conflict of interest protections on the part
of the IRO when it participates in external review decisions.
11. The IRO decision is binding and must be enforceable by the State.
12. For standard external reviews (those not involving urgent care), the IRO must
inform the issuer and the claimant, in writing, of its decision within 60 days from
receipt of the request for external review.
13. The process must provide for expedited external review of urgent care claims. In
such cases, the IRO must inform the issuer and the claimant of an urgent care
decision within four business days or less (depending on medical exigencies of
the case) from receipt of the request for review. If the IRO’s decision was given
orally, the IRO must provide written notice of its decision within 48 hours of the
oral notification.
Determinations regarding individual State external review processes
Not later than July 31, 2011, HHS will determine whether each State external review
process meets the standards for NAIC-parallel processes outlined in paragraph (c)(2) of
the July 2010 regulations, as amended, or the standards for NAIC-similar processes
outlined in this technical guidance. If a State process meets neither standard, health
insurance issuers (and, if applicable, self-insured nonfederal governmental plans) in the
7
State will be subject to a Federally-administered external review process (discussed
further below). If a State believes that this determination is not accurate, the State may
request, within 30 days of receiving its determination letter, that HHS re-evaluate the
State’s external review process. Additional instructions on redeterminations will be
available in the initial determination letters. If a State does not request a redetermination, this initial determination will be considered a final determination. Final
determinations will be in place no later than October 1, 2011, which gives plans and
issuers three months to transition to a different process, if warranted, by January 1, 2012.
If, at any time after HHS makes a final determination, the State changes its external
review process, the State may request a new determination.11
Finally, in order to continue to be considered a NAIC-similar process under section
2719(b)(2) of the PHS Act and this technical guidance, States may not reduce the
consumer protections in their external review process below the level that applies at the
time HHS makes its finding. For example, if on or before July 31, 2011, HHS determines
a State external review process is an NAIC-similar process and the State external review
process allows consumers up to 120 days to file for external review, that protection
cannot be narrowed later to allow consumers only up to 60 days to file for external
review. If a State-administered process reduces consumer protections below the level
that applies at the time HHS makes its finding, plans and issuers in the State will be
required to participate in a Federally-administered external review process.
B. FEDERAL EXTERNAL REVIEW PROCESSES
Since publication of the July 2010 regulations, the Departments have issued several
technical guidance documents that set forth the Federally-administered external review
process for specified types of health coverage.12
Certain aspects of this previous
technical guidance are modified by this Technical Release 2011-02, as discussed below.
Health insurance issuers and self-insured nonfederal governmental plans
All self-insured nonfederal governmental health plans, as well as health insurance issuers
in the group and individual market in States whose external review processes are found
not to meet the requirements to be an NAIC-parallel process or an NAIC-similar process,
must participate in a Federally-administered external review process. Such plans and
issuers may choose to participate in the Federal external review process administered by
HHS agreement through the Office of Personnel Management (the HHS-administered
process) or engage in the private accredited IRO process for plans subject to ERISA
and/or the Code. This includes issuers (and self-insured nonfederal governmental plans)
in Alabama, Nebraska, Mississippi, U.S. Virgin Islands, Guam, American Samoa, and
Northern Mariana Islands that are currently using the HHS-administered process.
11 Future guidance will address compliance dates for issuers (and, if applicable, nonfederal governmental
plans) if a State changes its external review process and requests a new determination.
12 In any case, if a State external review process applies to and is binding on a health insurance issuer of
an insured group health plan, including an insured ERISA plan, under paragraph (c) of the July 2010
regulations (regarding State standards for external review), as amended, then it is the issuer, not the
insured group health plan, that is required to provide an external review process (by complying with either
the State external review process or the Federal external review process).
8
Separate guidance published contemporaneously by HHS addresses how issuers and selfinsured nonfederal governmental plans elect one of these two Federal external review
processes.
Self-insured plans subject to ERISA and/or the Internal Revenue Code
On August 23, 2010, the Department of Labor issued Technical Release 2010-01 (T.R.
2010-01)13
setting forth an interim enforcement safe harbor regarding external review for
self-insured plans subject to ERISA and/or the Code. In general, T.R. 2010-01 provided
that the Department of Labor and the Internal Revenue Service (IRS) would not take
enforcement action against a group health plan that either: (1) complied with the
standards set forth in the technical release; or (2) voluntarily complied with a State
external review process.
Among the standards set forth in T.R. 2010-01, plans were to contract with at least three
accredited IROs and rotate assignments among them (or incorporate other independent,
unbiased methods for selection of IROs, such as random selection). Immediately after
publication of that technical guidance, many plans and issuers indicated that they were
experiencing difficulty contracting with three IROs. While many IROs indicated that
they had capacity to handle the additional external reviews, it appeared they were
experiencing difficulty responding to numerous requests to negotiate new contracts from
multiple plans and their service providers in a brief period. Accordingly, on September
20, 2010, the Departments issued Affordable Care Act Implementation FAQs Part I.14
Among other things, these FAQs provided that, for plans that do not strictly comply with
the enforcement safe harbor of T.R. 2010-01, compliance would be determined on a caseby-case basis. An example was given in FAQ-8 of a plan that had failed to contract with
three IROs. The FAQ provided that the example was not a per se violation of PHS Act
section 2719(b) and that, instead, the plan could demonstrate other steps taken to ensure
that its external review process was independent and without bias.
During the approximately nine months since publication of these FAQs, the marketplace
for IROs has had an opportunity to adjust. Plans and IROs have had time to develop
standard contractual documents, and many plans and issuers are using service providers
such as third-party administrators (TPAs) to enter into global contracts, eliminating the
need for each plan to have its own contract, and building economies of scale and
contracting efficiencies into the process. 15
At the same time, concerns have been
identified about the potential for bias when large plans use only one IRO, since the IRO
can become very dependent on the plan for its financial security.
Accordingly, in response to these concerns, and in recognition of the experience that has
been gained in the past nine months, the Department of Labor and the IRS are modifying
13 T.R. 2010-01 is available at http://www.dol.gov/ebsa/pdf/ACATechnicalRelease2010-01.pdf.
14 Part I of the Affordable Care Act Implementation FAQs is available at available at
http://www.dol.gov/ebsa/faqs/faq-aca.html and
http://cciio.cms.gov/resources/factsheets/aca_implementation_faqs.html#claims.
15 FAQ-9, issued as part of the same guidance package, recognized that plans are not required to contract
directly with IROs and may, instead, rely on contracts with TPAs. That FAQ guidance is not modified in
any way by this technical release.
9
their enforcement policy with respect to IROs. Specifically, to be eligible for a safe
harbor from enforcement from the Department of Labor and the IRS, self-insured plans
will be required to contract with at least two IROs by January 1, 2012 and with at least
three IROs by July 1, 2012 and to rotate assignments among them. These requirements
remain part of an enforcement safe harbor, and a plan may use an alternative process to
meet the standards of paragraph (d)(2)(i) of the July 2010 regulations regarding random
assignment. However, the Department of Labor and the IRS will look closely at any
process other than the rotational assignment referred to in T.R. 2010-01, and modified in
this T.R. 2011-02 when making its case-by-case determinations. At a minimum, the
Department of Labor and the IRS expect plans to document how any alternative process
constitutes random assignment, as well as how it ensures that the process is independent
(not subject to undue influence by the plan) and without bias.
C. FEDERAL EXTERNAL REVIEW PROCESSES
Consistent with this technical guidance and the contemporaneous amendment to the July
2010 regulations, the Departments are also issuing a 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.
These notices are included in the Appendix to this T.R. 2011-02.
The Department of the Treasury and the IRS have reviewed and concur with this
Technical Release.
FOR FURTHER INFORMATION CONTACT: Amy Turner or Beth Baum,
Employee Benefits Security Administration, Department of Labor, at 202-693-8335; and
Ellen Kuhn, Centers for Medicare & Medicaid Services, Department of Health and
Human Services, at 301-492-4100.
APPENDIX
Model Notice of Adverse Benefit Determination – Revised as of June 22, 2011
OMB Control Number 1210-0144 (expires 04/30/2014)
Date of Notice
Name of Plan
Telephone/Fax
Address
Website/Email Address
This document contains important information that you should retain for your records.
This document serves as notice of an adverse benefit determination. We have declined to
provide benefits, in whole or in part, for the requested treatment or service described below. If
you think this determination was made in error, you have the right to appeal (see the back of this
page for information about your appeal rights).
Case Details:
Patient Name:
ID Number:
Address: (street, county, state, zip)
Claim #:
Date of Service:
Provider:
Reason for Denial (in whole or in part):
Amt.
Charged
Allowed
Amt.
Other
Insurance
Deductible Co-pay
Coinsurance Other Amts.
Not Covered
Amt. Paid
YTD Credit toward Deductible:
YTD Credit toward Out-of-Pocket Maximum:
Description of service:
Denial Codes:
[If denial is not related to a specific claim, only name and ID number need to be included in the
box. The reason for the denial would need to be clear in the narrative below.]
Explanation of Basis for Determination:
If the claim is denied (in whole or in part) and there is more explanation for the basis of the
denial, such as the definition of a plan or policy term, include that information here.
[Insert language assistance disclosure here, if applicable.
SPANISH (Español): Para obtener asistencia en Español, llame al [insert telephone number].
TAGALOG (Tagalog): Kung kailangan niyo ang tulong sa Tagalog tumawag sa [insert
telephone number].
CHINESE (中文): 如果需要中文的帮助，请拨打这个号码 [insert telephone number]。
NAVAJO (Dine): Dinek'ehgo shika at'ohwol ninisingo, kwiijigo holne' [insert telephone number]. ]
Model Notice of Adverse Benefit Determination – Revised as of June 22, 2011
Important Information about Your Appeal Rights
What if I need help understanding this denial?
Contact us at [insert contact information] if you need
assistance understanding this notice or our decision to
deny you a service or coverage.
What if I don’t agree with this decision? You have a
right to appeal any decision not to provide or pay for
an item or service (in whole or in part).
How do I file an appeal? [Complete the bottom of
this page, make a copy, and send this document to
{insert address}.] [or] [insert alternative instructions]
See also the “Other resources to help you” section of
this form for assistance filing a request for an appeal.
What if my situation is urgent? If your situation
meets the definition of urgent under the law, your
review will generally be conducted within 72 hours.
Generally, an urgent situation is one in which your
health may be in serious jeopardy or, in the opinion of
your physician, you may experience pain that cannot
be adequately controlled while you wait for a decision
on your appeal. If you believe your situation is urgent,
you may request an expedited appeal by following the
instructions above for filing an internal appeal and also
[insert instructions for filing request for simultaneous
external review)].
Who may file an appeal? You or someone you name
to act for you (your authorized representative) may file
an appeal. [Insert information on how to designate an
authorized representative.]
Can I provide additional information about my
claim? Yes, you may supply additional information.
[Insert any applicable procedures for submission of
additional information.]
Can I request copies of information relevant to my
claim? Yes, you may request copies (free of charge).
If you think a coding error may have caused this claim
to be denied, you have the right to have billing and
diagnosis codes sent to you, as well. You can request
copies of this information by contacting us at [insert
contact information].
What happens next? If you appeal, we will review
our decision and provide you with a written
determination. If we continue to deny the payment,
coverage, or service requested or you do not receive a
timely decision, you may be able to request an external
review of your claim by an independent third party,
who will review the denial and issue a final decision.
Other resources to help you: For questions about
your rights, this notice, or for assistance, you can
contact: [if coverage is group health plan coverage,
insert: the Employee Benefits Security Administration
at 1-866-444-EBSA (3272)] [and/or] [if coverage is
insured, insert State Department of Insurance contact
information]. [Insert, if applicable in your state:
Additionally, a consumer assistance program can help
you file your appeal. Contact [insert contact
information].]
Appeal Filing Form
NAME OF PERSON FILING APPEAL: ____________________________
Circle one: Covered person Patient Authorized Representative
Contact information of person filing appeal (if different from patient)
Address: _________________ Daytime phone:________________ Email:_______________
If person filing appeal is other than patient, patient must indicate authorization by signing here:
_______________________________________________
Are you requesting an urgent appeal? Yes No
Briefly describe why you disagree with this decision (you may attach additional information, such as a
physician’s letter, bills, medical records, or other documents to support your claim):
______________________________________________________________________________
______________________________________________________________________________
Send this form and your denial notice to: [Insert name and contact information]
Be certain to keep copies of this form, your denial notice, and all documents and correspondence related
to this claim.
Model Notice of Final Internal Adverse Benefit Determination – Revised as of June 22, 2011
OMB Control Number 1210-0144 (expires 04/30/2014)
Date of Notice
Name of Plan
Telephone/Fax
Address
Website/Email Address
This document contains important information that you should retain for your records.
This document serves as notice of a final internal adverse benefit determination. We have declined to
provide benefits, in whole or in part, for the requested treatment or service described below. If you
think this determination was made in error, you may have the right to appeal (see the back of this page
for information about your appeal rights).
Internal Appeal Case Details:
Patient Name:
ID Number:
Address: (street, county, state, zip)
Claim #:
Date of Service:
Provider:
Reason for Upholding Denial (in whole or in part):
Amt.
Charged
Allowed
Amt.
Other
Insurance
Deductible Co-pay
Coinsurance Other Amts.
Not Covered
Amt. Paid
YTD Credit toward Deductible:
YTD Credit toward Out-of-Pocket Maximum:
Description of Service:
Denial Codes:
[If denial is not related to a specific claim, only name and ID number need to be included in the box.
The reason for the denial would need to be clear in the narrative below.]
Background Information: Describe facts of the case including type of appeal and date appeal filed.
Final Internal Adverse Benefit Determination: State that adverse benefit determination has been
upheld. List all documents and statements that were reviewed to make this final internal adverse
benefit determination.
Findings: Discuss the reason or reasons for the final internal adverse benefit determination.
[Insert language assistance disclosure here, if applicable.
SPANISH (Español): Para obtener asistencia en Español, llame al [insert telephone number].
TAGALOG (Tagalog): Kung kailangan niyo ang tulong sa Tagalog tumawag sa [insert telephone
number].
CHINESE (中文): 如果需要中文的帮助，请拨打这个号码 [insert telephone number]。
NAVAJO (Dine): Dinek'ehgo shika at'ohwol ninisingo, kwiijigo holne' [insert telephone number]. ]
Model Notice of Final Internal Adverse Benefit Determination – Revised as of June 22, 2011
Important Information about Your Rights to External Review
What if I need help understanding this denial?
Contact us [insert contact information] if you need
assistance understanding this notice or our decision
to deny you a service or coverage.
What if I don’t agree with this decision? For
certain types of claims, you are entitled to request
an independent, external review of our decision.
Contact [insert external review contact information]
with any questions on your rights to external
review. [For insured coverage, insert: If your claim
is not eligible for independent external review but
you still disagree with the denial, your state
insurance regulator may be able to help to resolve
the dispute.] See the “Other resources section” of
this form for help filing a request for external
review.
How do I file a request for external review?
Complete the bottom of this page, make a copy, and
send this document to {insert address}.] [or] [insert
alternative instructions.] See also the “Other
resources to help you” section of this form for
assistance filing a request for external review.
What if my situation is urgent? If your situation
meets the definition of urgent under the law, the
external review of your claim will be conducted as
expeditiously as possible. Generally, an urgent
situation is one in which your health may be in
serious jeopardy or, in the opinion of your
physician, you may experience pain that cannot be
adequately controlled while you wait for a decision
on the external review of your claim. If you believe
your situation is urgent, you may request an
expedited external review by [insert instructions to
begin the process (such as by phone, fax, electronic
submission, etc.)].
Who may file a request for external review?
You or someone you name to act for you (your
authorized representative) may file a request for
external review. [Insert information on how to
designate an authorized representative.]
Can I provide additional information about my
claim? Yes, once your external review is initiated,
you will receive instructions on how to supply
additional information.
Can I request copies of information relevant to
my claim? Yes, you may request copies (free of
charge) by contacting us at [insert contact
information].
What happens next? If you request an external
review, an independent organization will review our
decision and provide you with a written
determination. If this organization decides to
overturn our decision, we will provide coverage or
payment for your health care item or service.
Other resources to help you: For questions about
your rights, this notice, or for assistance, you can
contact: [if coverage is group health plan coverage,
insert: the Employee Benefits Security
Administration at 1-866-444-EBSA (3272)]
[and/or] [if coverage is insured, insert State
Department of Insurance contact information].
[Insert, if applicable in your state: Additionally, a
consumer assistance program can help you file your
appeal. Contact:[insert contact information].]
NAME OF PERSON FILING REQUEST FOR EXTERNAL REVIEW: _________________________
Circle one:Covered person Patient Authorized Representative
Contact information of person filing request for external review (if different from patient)
Address: _________________ Daytime phone:________________ Email:_______________
If person filing request for external review is other than patient, patient must indicate authorization by
signing here: _______________________________________________
Are you requesting an urgent review? Yes No
Briefly describe why you disagree with this decision (you may attach additional information, such as a
physician’s letter, bills, medical records, or other documents to support your claim):
______________________________________________________________________________
______________________________________________________________________________
Send this form and your denial notice to: [Insert name and contact information]
Be certain to keep copies of this form, your denial notice, and all documents and correspondence related
to this claim.
Model Notice of Final External Review Decision – Revised June 22, 2011
OMB Control Number 1210-0144 (expires 04/30/2014)
Date of Notice
Name of Plan
Telephone/Fax
Address
Website/Email Address
This document contains important information that you should retain for your records.
This document serves as notice of a final external review decision. We have
[upheld/overturned/modified] the denial of your request for the provision of, or payment for, a
health care service or course of treatment.
Historical Case Details:
Patient Name:
ID Number:
Address: (street, county, state, zip)
Claim #:
Date of Service:
Provider:
Reason for Denial (in whole or in part):
Amt.
Charged
Allowed
Amt.
Other
Insurance
Deductible Co-pay
Coinsurance Other Amts.
Not Covered
Amt. Paid
YTD Credit toward Deductible:
YTD Credit toward Out-of-Pocket Maximum:
Description of Service:
Denial Codes:
[If denial is not related to a specific claim, only name and ID number need to be included in the
box. The reason for the denial would need to be clear in the narrative below.]
Background Information: Describe facts of the case including type of appeal, date appeal
filed, date appeal was received by IRO and date IRO decision was made.
Final External Review Decision: State decision. List all documents and statements that were
reviewed to make this final external review decision.
Findings: Discuss the principal reason or reasons for IRO decision, including the rationale and
any evidence-based standards or coverage provisions that were relied on in making this
decision.
Model Notice of Final External Review Decision – Revised June 22, 2011
Important Information about Your Appeal Rights
What if I need help understanding this decision?
Contact us [insert IRO contact information] if you need assistance understanding this notice.
What happens now? If we have overturned the denial, your plan or health insurance issuer will
now provide service or payment.
If we have upheld the denial, there is no further review available under the appeals process.
However, you may have other remedies available under State or Federal law, such as filing a
lawsuit.
Other resources to help you: For questions about your appeal rights, this notice, or for
assistance, you can contact [if coverage is group health plan coverage, insert: the Employee Benefits
Security Administration at 1-866-444-EBSA (3272)] [and/or] [if coverage is insured, insert State
Department of Insurance contact information]. [Insert, if applicable in your state: Additionally, you can
contact your consumer assistance program at [insert contact information].]