Internal and External Review

For plan years beginning on or after September 23, 2010, non-grandfathered health plans must comply with new claims procedures, including improved internal claim review procedures and a new requirement for external review. Insured plans must comply with state external review processes. Self-funded plans (or insured plans in states that do not have external review laws) must comply with new federal external review rules.

Note: The internal and external claims review standards only apply to certain types of health plans, such as major medical insurance.

Under the ACA statute and federal agency guidance published to date, they do not apply to HIPAA excepted benefits, such as disability, cancer, hospital indemnity, or accident insurance. Click here for more information about the types of benefits that are exempt from the ACA plan design mandates.

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If the plan sponsor of a self-funded plan currently contracts with a third party administrator (TPA) to administer claims and appeals, can the plan contract with the TPA to administer external review?

Answer: Yes. According to a Department of Labor FAQ, federal guidance does not require a plan to contract directly with an Independent Review Organization (IRO) to perform the required external review. Where a self-funded plan contracts with a TPA that, in turn, contracts with an IRO, the external review requirements can be satisfied in the same manner as if the plan had contracted with the IRO directly. Of course, such a contract does not automatically relieve the plan from responsibility if there is a failure to provide an individual with external review. The Department of Labor guidance also notes that fiduciaries of plans that are subject to ERISA have a duty to monitor the service providers to the plan.

Do the new internal claims review requirements apply to all ERISA health plans?

Answer: This isn’t entirely clear. At the moment, the new internal claims review requirements apply to non-grandfathered plans that are subject to the plan design mandates (e.g., major medical plans). However, the preamble to the interim final regulations indicates that the Department of Labor intends to update the ERISA claims procedure rules that apply to all ERISA health and welfare plans to include the internal claims review rules added by the ACA law. (For more information, see the summary of exemptions.)

Neither American Fidelity Assurance Company nor American Fidelity Administrative Services provides tax or legal advice and, given the complexity of these laws, we always recommend working with your legal counsel on how the laws impact your specific situation.

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Hot Topics

If the plan sponsor of a self­-funded plan currently contracts with a third party administrator (TPA) to administer claims and appeals, can the plan contract with the TPA to administer external review?

Do the new internal claims review requirements apply to all ERISA health plans?

If the plan sponsor of a self-funded plan currently contracts with a third party administrator (TPA) to administer claims and appeals, can the plan contract with the TPA to administer external review?