DOL Publishes Q&A on Claims Processing and Appeals Regulations

The Department of Labor has published a set of questions and answers expanding on a number of important issues under its November 21, 2000 final regulation setting new standards for processing benefit claims of participants and beneficiaries covered under employee benefit plans governed by ERISA. The "Frequently Asked Questions and Answers" can be found at http://www.dol.gov/ebsa/faqs/faq_claims_proc_reg.html.

The Q&A addresses the scope of the regulation as well as requirements for reasonable claims procedures, initial determinations of claims, review of denied claims, and post-appeal level reviews. The new claims procedure regulation will begin to apply to some plans for new claims filed on or after January 1, 2002. It will not begin to apply to group health plans until the first day of the first plan year beginning on or after July 1, 2002, but not later than January 1, 2003.

Issues clarified by the questions and answers include:

• Health care providers with assignments of benefits are not automatically considered "authorized representatives" entitled to the protections of the claims processing and appeals rules.
• Health care provider disputes over payor payment of claims will often not be subject to the rule's requirements. The rule does not apply where the claims are submitted based on the terms of the provider's managed care contracts and the plan participant would not be responsible for any amount in dispute.
• The regulation does not prescribe any particular process or safeguard to ensure consistent decision making; rather, plans have flexibility in designing and operating appropriate claims processing systems.
• Although plans may require the submission of "coordination of benefits" information, plans may in some instances have to make a decision on claims before receiving all the requested such information in order to comply with the time requirements for deciding claims.
• The regulation requires plans to provide a claimant with copies of his/her medical records relating to the claimant's benefit claim, but prohibits plans from providing a claimant with copies of others' medical records.
• Plans may provide claimants the ability to appeal their benefit claim beyond the two appeal levels required by the regulation, and this additional appeal level may include binding arbitration; however, a claimant must elect the additional appeal voluntarily.

The questions and answers notably fail to tackle several important issues. For example, the Q&A does not address how the rules should be applied when plan participants present prescriptions to be filled at plan pharmacies. A variety of situations, involving the interplay of formularies, copayments, and prior approval requirements, might trigger different treatment under the regulations. The Q&A simply confirms the obvious -- that the regulation applies to prescription drug benefit programs.

Also, the Q&A states that a plan's mere application of its co-payment or deductible policy to a benefit "claim," which results in the plan paying less than 100% of the medical bill, will be considered an adverse benefit determination and will trigger the notice requirement and permit the claimant to challenge the decision. The questions and answers explain that this interpretation of the regulation would not result in significant burden in light of the current practice of providing "Explanation of Benefits." However, the questions and answers do not address situations in which EOBs are not routinely provided. The Q& A does not discuss whether an adverse claim determination is made when a patient obtains services from a plan provider, who imposes a $10 office visit copay pursuant to the participant's benefit plan, and bills the plan for the rest of the bill. The issue would be whether the patient has implicitly made a "claim" by seeking services from the physician, and whether collection of the copayment is, in effect, an adverse determination.