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Recent HIPAA and ERISA Guidance and Rules Issued by Department of Labor and HHS



On May 29, 2002, the U.S. Department of Labor's Pension and Welfare Benefits Administration ("PWBA") released additional guidance on the ERISA Claims Regulation (29 C.F.R. § 2560.503-1)(the "Claims Regulation") scheduled to become effective starting July 1, 2002. The guidance was issued in the form of "Frequently Asked Questions" supplementing the PWBA's original FAQs issued in December 2001. While many of the FAQs relate to disability plans, several few questions address health benefit plan issues.

In the supplemental FAQs the PWBA attempts to clarify, although not as succinctly as it could have, that interactions between health plan members and network providers do not constitute "claims for benefits" under the ERISA claims regulation. This position is premised on the requirement that the network provider not exercise any discretion in determining whether a service is a covered benefit under the plan.

The PWBA provides the following example: If a network pharmacy refuses to fill a prescription and requires the plan member to pay the entire cost of the prescription, the PWBA does not view the member's request to the pharmacy for a prescription as a claim for benefits and the pharmacy's refusal to fill the prescription "an adverse benefit determination." However, the plan must have a process whereby the plan member can submit a claim to the plan for reimbursement for the cost of the prescription. A denial of the member's claim submission would then be an adverse benefit determination under ERISA.

Question C-19 of the supplemental FAQs confirms that the Claims Regulation does not limit a plan's ability to establish timely claims filing requirements. However, the PWBA cautions that the timely filing limit must be reasonable and not "unduly limit claimants' reasonable, good faith efforts to make claims for and obtain benefits under the plan."

Question C-21 states that a plan may, but does not have to, extend the initial claim review period if the plan needs additional information to complete its review of the claim. Consequently, a plan can (1) request the additional information and deny the claim if the plan does not receive the requested information within the original review period, (2) request the additional information and if the information is not received within the original review period extend the review period in accordance with the Claims Regulation, or (3) deny the claim because the plan does not have all of the necessary information.

If the plan chooses to extend the review period, it may include in the member's notice of extension a notice of the plan's adverse benefit determination if the requested information is not received within the extended review period. If the plan does this, the plan must make sure that the notice clearly indicates that the period for appealing the denied claim begins to run at the end of the extended review period.


On Friday, May 31, 2002, HHS released three new rules affecting electronic transactions and code sets under HIPAA. First, HHS issued a Final Rule which adopts as the "standard unique employer identifier" for HIPAA transactions, the employer identification number assigned by the IRS. This final rule is substantially the same as initially proposed. The second is a proposed rule which would modify standards for certain retail pharmacy transactions (specifically, referral certification and authorization, health care payment and remittance advice, and certain batch transactions) and would repeal the adoption of National Drug Codes (NDC) as the standard medical data code set for reporting drugs and biologics for all standard transactions (excluding retail pharmacy transactions), thereby allowing the industry to utilize nonstandard coding systems. HHS requests comment on the adoption of HCPCS as an alternative standard code set for reporting drugs and biologics for non- retail pharmacy transactions. Third, HHS issued a proposed rule which would adopt, by reference, certain limited technical modifications to some of the transactions standards previously identified by the Designated Standard Maintenance Organizations and approved by National Committee on Vital and Health Statistics. The proposed rule does not list these modifications specifically, but rather refers to the website.

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