Appeals process standardized under health reform law

Sept. 29, 2010

For several years, Blue Cross Blue Shield of Michigan and Blue Care Network members have had access to a full and fair review of claims, with access to extensive internal claims review processes and, in many cases, an opportunity for external independent review of denied claims.

The Patient Protection and Affordable Care Act (PPACA) builds on existing federal requirements for internal claims processes and appeals. The federal requirements previously applied only to some employer group health care plans. Under PPACA, these protections are being extended to include the individual market and group health plans not previously subject to the federal requirements. PPACA also requires external independent review be made available either under applicable state law or, for coverage not subject to the state independent review laws, under a new federal process.

BCBSM and BCN are in the process of modifying our internal review processes to meet the additional PPACA requirements. Additionally, since PPACA will now require our self-funded ERISA groups to offer an external review process, we’re working to determine the impact on those groups, and are assisting them to develop a compliant process.

For adverse benefit determinations, enrollees have the option of appealing the decision first through their health plan or health carrier’s internal process, and then externally through an independent party if their internal appeal is denied. For our underwritten group enrollees, individuals and some self-funded non-ERISA group enrollees, the external appeals are coordinated through the Michigan Office of Financial and Insurance Regulation (OFIR). In the future, self-funded ERISA group external appeals will be reviewed by an independent review organization.

“Adverse benefit determination” is defined in the interim final regulations as a denial, reduction, or termination of benefits resulting from a decision that:

• An individual is not eligible for coverage 
• A benefit is not covered 
• A pre-existing condition exclusion or other benefit limit apply 
• A service is experimental or not medically necessary 

The health plan or carrier must comply with notice requirements, include and explain diagnosis and treatment codes, include details about the benefit determination and describe the appeals process.

The new requirements apply to fully insured and self-insured groups, and to individuals. The PPACA requirement does not apply to grandfathered health plans, groups exempt from PPACA, or to excepted benefits. PPACA also excludes Federal Employee Programs, Medicare Advantage, Medigap and Medicaid plans, as they have their own mandated processes.

Enrollees may also seek external review if their internal appeal is denied. By requiring all states to establish or update their external appeals process, and providing access to a new federal external review process, enrollees of non-grandfathered health plans will have access to a standardized process to guarantee a full and fair review. Fully insured groups already have an external appeals process in place through the State.

For more clarification, we have included some scenarios provided by HHS for examples of when an internal appeal or external review is available, and a description of what happens after a decision has been made.

• If your health insurer denies coverage of a test, such as an MRI, you and your doctor can appeal that decision to the insurer. If the insurer still refuses to cover the test, you can appeal to an external reviewer. If the external reviewer agrees with your appeal, your insurer must pay for the test. 
• If your insurer decides to rescind your coverage altogether based on the fact that information on your application for coverage was not accurate, you can appeal. If your appeal is successful, the insurer must reinstate your coverage. This would only occur if no evidence of fraud or intentional misrepresentation is found and proven during this process. 
• If you go to the emergency room and your insurer won’t pay the bill, you will have the chance to provide information to the insurer about why you needed emergency care – and take your request to an external reviewer if your appeal to your insurer is denied. 

You can read the press release or visit healthcare.gov to learn more about the appeals processes.

The information on this website is based on BCBSM's review of the national health care reform legislation and is not intended to impart legal advice. Interpretations of the reform legislation vary, and efforts will be made to present and update accurate information. This overview is intended as an educational tool only and does not replace a more rigorous review of the law's applicability to individual circumstances and attendant legal counsel and should not be relied upon as legal or compliance advice. Analysis is ongoing and additional guidance is also anticipated from the Department of Health and Human Services. Additionally, some reform regulations may differ for particular members enrolled in certain programs such as the Federal Employee Program, and those members are encouraged to consult with their benefit administrators for specific details.