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New group health regulations bark, but don't bite

A new Department of Labor (DOL) regulation promises "fairer process" and "fuller disclosure" for the estimated 130 million people enrolled in employer-sponsored group health plans, who will see faster decisions on initial claim approvals and on appeals of denied claims.

Patients currently may wait months to hear the outcome of their health insurance claim or appeal. The DOL's new regulation gives insurers anywhere from three days for urgent-care claims, to 30 days for non-urgent claims, to approve or deny medical treatment. The appeals process may take no longer than 72 hours for urgent-care claims, 30 days for other claims, and 60 days for claims where the patient is awaiting reimbursement for treatment already received. In addition, patients have 180 days to file appeals under the new regulation, vs. 60 days under current law.

However, the regulation does not impose penalties on health plans that flaunt the deadline or otherwise do not comply. While patients may sue their HMOs for failing to meet the deadlines, the DOL itself cannot impose fines or other penalties for violation of the rules.

The new regulations are a change to the Employee Retirement Income Security Act (ERISA), one of the only federal laws that governs health insurance. (Most insurance laws are imposed by states.) Employers and health plans have until January 2002 to comply. A new president could rescind the regulation, but only through a lengthy administrative process.

The Health Insurance Association of America (HIAA), a managed care industry lobbying group, calls the regulation "expensive" and "unnecessary."

"The regulations likely will cause employers' health care costs to increase by millions of dollars, which will cause some employers to drop health coverage for workers and their families," says Chip Kahn, HIAA president. "These regulations will do little, if anything, to improve the quality of health care."

"This new regulation can't substitute for a patient's bill of rights, but it can safeguard some patient rights."

"This new regulation can't substitute for a patient's bill of rights, but it can safeguard some patient rights," counters Leslie Kramerich, acting assistant secretary for the Pension and Welfare Benefits Administration of the DOL.

Kramerich says the DOL held off announcing its patients' rights regulation in hopes that Congress would enact a proposed patients' bill of rights that would have included the right to sue an HMO for medical reasons, and other, stronger patient protections. That bill did not pass. The DOL's regulation still does not cover many of the issues addressed in a patients' rights bill, such as outlining the standard used to determine "medical necessity" in claims denial, or whether health plans must cover experimental treatments.

Highlights of the DOL's patients' rights regulation

  • Patients have 180 days to file appeals, rather than the current 60 days.
  • If a physician determines that a claim is "urgent," the health plan must treat it as such.
  • Plans cannot impose fees or other costs if a patient files or appeals a claim.
  • Arbitration is permitted, but only if the patient agrees after completing the internal appeal process, and only with full disclosure regarding the process, arbitrator, and patient's right to representation.
  • The decision-maker on appealed claims must be different than on the initial claim.
  • Plans must consult with health care professionals of the plan's choosing when deciding on claims appeals that require medical judgment.
  • Plans may not require more than two levels of review for appeals of denied claims.
  • Patients receiving approved care over a period of time must have the opportunity for a review before that care is terminated or reduced. Urgent requests for extension of these benefits must be decided within 24 hours.
  • Plans must have procedures for ensuring consistent decision making.
  • Plans must notify patients if their claim has not been properly filed.
  • Patients may sue their health plan in court if the health plan does not make timely decisions or otherwise fails to comply with the DOL's regulation.
  • Plans must provide specific reasons for denials.
  • Patients must have access to all documents and records relevant to their claim or appeal, regardless of whether the plan says it relied on the materials.
  • Plans must disclose the names of medical professionals consulted during the claims process.

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