AllMed Addresses Complexities of PPACA Internal-External Appeals Regulations

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Company’s recent webinar and new white paper aim to help health plans avoid making changes to their appeal processes that are unnecessary, potentially disruptive and costly

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As a result, payer organizations are instituting changes in their review procedures that may not need to be made.

The complexities of the recently enacted Patient Protection and Affordable Care Act (PPACA) are causing many health industry organizations to implement appeals processes that may be unnecessary. This is a key issue that has been raised by the URAC-accredited independent review organization, AllMed Healthcare Management. The company has taken steps to resolve the confusion in a webinar it convened recently, and also in a white paper entitled Healthcare Reform, How to Interpret the New Internal & External Appeals Regulation s.

At the heart of the issue are the Interim Final Regulations (IFR) and a series of documents published by the Departments of Labor (DOL) and Health and Human Services (HHS), and the U.S. Treasury Department. While these documents are intended to help plans and issuers understand the latest requirements regarding external and internal review processes, the IFR’s complexity makes this understanding challenging. “As a result, payer organizations are instituting changes in their review procedures that may not need to be made,” said Chris Senz, vice president of clinical operations for AllMed Healthcare Management.

Senz said that AllMed takes no issue with the intent of the new rules which is to ensure that plans and issuers implement more uniform internal and external claims and appeals processes, to level the playing field, so to speak. “The point for plans to understand is that the new rules will lead to lower costs because it will no longer be necessary for a plan to establish and follow different appeal rules for all the different types of programs they administer.”

Within the new rules, however, one common misunderstanding is the belief that payers are now required to contract with at least three URAC-accredited independent review organizations for both internal and external reviews. As emphasized in both the webinar and the white paper, the three-IRO rule applies only to the external review process, and contracts for internal appeal processes will require no change. However, some states have not had regulations covering all types of plans, and some of these regulations have been expanded. “So, a plan needs to check its state rules, and then make changes only in areas where it is not in compliance with these expanded regulations.”

A second point of confusion is exactly to whom section 2719 applies. Its rules are effective for all group health plans – including those not previously subject to ERISA’s claims procedure requirements, and to those that pay benefits on an insured or self-insured basis.
Further, plans and issuers must also modify their internal claims procedures to meet additional requirements. These include expanding definition of adverse benefits determinations, reducing timeframes for deciding urgent care claims, continuing coverage during an appeal, and taking steps to avoid conflicts of interest.

While the rules may seem onerous, external reviews may not be the large issue they appear since they represent such a small volume; historically, 1.3 requests for external appeals are filed per year for each 10,000 covered lives. “But these reviews can’t be ignored,” Senz said. “Remembering that there is a $100-per-day fine for non-compliance, if we apply that to a 10,000-member health plan that is out of compliance, it’s not implausible to project a non-compliance penalty of up to $1,000,000 per day; which is a truly non-trivial number.”

Senz also advises plans to become knowledgeable about the Model Act, which has been issued by the National Association of Insurance Commissioners, and which applies to external reviews. “Specifically, health plans not governed by a state program will now fall under the Model Act. It has become the standard for state, federal and health plans’ own external review plans. It’s an example of how standardization is emerging under the healthcare reform initiative.”

Senz summarized several other key points that should be understood:

  • Self-funded plans- Pending further guidance, self funded plans will be viewed as compliant with federal external review requirements if they either comply with review procedures set forth in Technical Release 2010-02, or voluntarily comply with a state’s external review process.
  • Issuers- Until further guidance is issued, issuers in states without NAIC Model Act standards will be deemed in compliance with federal review requirements as long as these requirements meet minimum compliance methods determined by HHS.
  • Failure to Comply- Plans and issuers are required to “strictly adhere” to the internal claims procedure requirements. However, when all internal claims and appeals procedures have been exhausted, external review may be initiated and other available remedies may be pursued under applicable laws.

About AllMed Healthcare Management
Founded in 1995, AllMed is a URAC-accredited independent review organization (IRO) serving leading hospital groups, ASCs, insurance payers, and medical management firms, nationwide. More than 400 licensed and board-certified physicians in active practice conduct AllMed’s evidence-based peer reviews. The company’s PeerScore products meet or exceed The Joint Commission standards for OPPE and FPPE evaluations. More information about AllMed can be found on the company’s Web site at http://www.allmedmd.com.

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Brent Moszer

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