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ficiary whose claim for benefits under the plan has been denied, setting forth the specific reasons for such denial, written in a manner calculated to be understood by the participant" and to "afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." Regulations accompanying this section of ERISA set out specific periods of time for private employment-based plans to evaluate a claim and inform an individual of its decision. While these limits do not govern when the benefits must be paid or provided, plans are required to pay or provide benefits within a reasonable time after a claim is approved. Urgent care claims must be decided as soon as possible, taking into account the medical needs of the patient, but no later than 72 hours after the plan receives the claim. The plan must inform an individual within 24 hours if more information is needed; and they have no less than 48 hours to respond. Then the plan must decide the claim within 48 hours after the missing information is supplied or the time to supply it has elapsed. The plan must provide notice that a claim has been granted or denied before the end of the time allotted for the decision.

Pre-service claims must be decided within a reasonable period of time appropriate to the medical circumstances, but no later than 15 days after the plan has received the claim. The plan may extend the time period up to an additional 15 days if, for reasons beyond the plan's control, the decision cannot be made within the first 15 days. If more information is requested, the individual has at least 45 days to supply it. The plan then must decide the claim no later than 15 days after they are supplied with the additional information or after the period of time allowed to supply additional information ends, whichever comes first.

Post-service health claims must be decided within a reasonable period of time, but not later than 30 days after the plan has received the claim. If, because of reasons beyond the plan's control, more time is needed to review a request, the plan may extend the time period up to an additional 15 days. However, the plan administrator has to let the individual know before the end of the first 30-day period, explaining the reason for the delay, requesting any additional information needed, and advising when a final decision is expected. If more information is requested, the individual has at least 45 days to supply it. The claim then must be decided no later than 15 days after it has been supplied with the additional information or the period of time given by the plan to do so ends, whichever comes first. The plan must give notice that a claim has been denied in whole or in part before the end of the time allotted for the decision.

Proposed Law

A QHBP and a QHBP offering entity that offers a plan would be required to conduct utilization review (UR) activities meeting the requirements of this section. UR could be contracted out. Those activities include procedures to monitor or evaluate the use of coverage, clinical necessity, appropriateness, efficacy, or efficiency of healthcare services, procedures or settings, and include prospective review, concurrent review, second opinions, case management, discharge planning, and retrospective review. The UR program would

include written clinical review criteria, based on valid clinical evidence, directed specifically at meeting the needs of at-risk populations and covered individuals with chronic conditions or severe illnesses. Once a service has been specifically pre-authorized for an enrollee, it could not be changed by a retrospective review. UR programs must be administered by qualified health care professionals who oversee review decisions.

The UR program would be conducted by trained personnel, who could not be offered compensation to encourage claims denials, and could not be conducted by the practitioner who provided services to the individual in question, among other restrictions. UR activities involving prior authorization of services would be made as soon as possible in accordance with the medical exigencies of the case, but no later than 14 days after the request and no later than 3 business days after the date of receipt of information necessary to make a determination. An extension could be requested for additional information, within 5 business days of receiving the initial request. The deadline would then be extended to 14 days after receiving the additional information, but no later than 28 days after the request for prior authorization. For expedited cases (where the individual's life, health, or ability to regain maximum function was in jeopardy, or for continuity of care) the deadline would be 72 hours after the request. No prior authorization would be required for emergency services.

For concurrent review of ongoing care, the decision must be provided no later than 1 business day after the date of receipt of necessary information, with sufficient time for an appeal before the service is reduced or eliminated. Plans would not be required to provide coverage that exceeded their limitations. In the case of UR for previously provided services, the decision would have to be provided within 30 days of the date of receipt of necessary information, but no later than 60 days after the request.

Failure by a QHBP or QHBP entity to make a timely determination would be treated as a claims denial. Denials would have to be provided in writing, along with the reasons, instructions on how to initiate an appeal, and the availability, upon request, of the clinical criteria used, and other information. Claims for benefits would mean any request for coverage, for eligibility, or payment for items or services under a QHBP.

Sec. 139A. Internal appeals procedures

Current Law

Under ERISA regulations, an individual covered by a private employment-based health plan has at least 180 days to file an appeal following an adverse benefit determination. The plan must provide claimants, on request and free of charge, copies of documents, records, and other information relevant to the claim for benefits. The plan also must identify, upon request, any medical or vocational expert whose advice was obtained by the plan.

On appeal, claims must be reviewed by someone new who looks at all of the information submitted and consults with qualified medical professionals if a medical judgment is involved. This reviewer cannot be a subordinate of the person who made the initial decision and must give no consideration to that decision.

Plans have specific periods of time within which to review an appeal, depending on the type of claim. Urgent care claims must be reviewed as soon as possible, taking into account the medical needs of the patient, but not later than 72 hours after the plan receives a request to review a denied claim. Pre-service claims must be reviewed within a reasonable period of time appropriate to the medical circumstances, but not later than 30 days after the plan receives a request to review a denied claim. Post-service claims must be reviewed within a reasonable period of time, but not later than 60 days after the plan receives a request to review a denied claim. There are two exceptions to these time limits. In general, singleemployer collectively bargained plans may use a collectively bargained grievance process for their claims appeal procedure if it has provisions on filing, determination, and review of benefit claims. Multi-employer collectively bargained plans are given special timeframes to allow them to schedule reviews on appeal of post-service claims and disability claims for the regular quarterly meetings of their boards of trustees.

Plans can require two levels of review of a denied health claim to finish the plan's claims process. If two levels of review are required, the maximum time for each review generally is half of the time limit permitted for one review.

Once the decision on a claim is made following review, the plan must provide to the claimant a written or electronic notification of the decision. The notice must be in plain language that can be understood by participants in the plan. It must include all the specific reasons for the denial of the claim on appeal, refer the individual to the plan provisions on which the decision is based, provide information on any additional voluntary levels of appeal, explain the right to receive documents that are relevant to the benefit claim free of charge, and describe rights to seek judicial review of the plan's decision.

Proposed Law

Each QHBP and each QHPB offering entity that offers a plan would be required to provide adequate written notice to individuals (participants, beneficiaries and enrollees) who are denied a claim for benefits. The notice would include specific reasons for the denial and rights to further review or appeal. Individuals would have no less than 180 days to file for a full and fair review. Reviews of denied claims would be made by a physician (for cases involving a medical judgment) or a specialist (in the case of limited scope coverage) who is selected by the plan and did not make the initial denial. The QHBP offering entity would be required to complete the review and either affirm, reverse or modify the original denial. If the decision did not reverse the denial, the plan or issuer would transmit a written notice stating the reason for the decision, including a description of rights to any further appeal. Failure to issue such a decision by the deadline would be treated as final decision denying the claim.

Generally, the deadline would be 14 days after the date of receipt of the request for internal review. An extension for additional necessary information would be allowed if the requestor was notified within 5 business days. The deadline would then be extended to 14 days after receiving the additional information, but no later than

28 days after the request for internal review. For expedited cases (where the individual's life, health, or ability to regain maximum function was in jeopardy, or for continuity of care) the deadline would be 72 hours after the request, or for ongoing care, before the end of the approved period of care. A plan or entity could waive its right for internal review, and in such cases the individual could proceed directly to any applicable external appeals process.

Sec. 139B. External appeals procedures

Current Law

No specific provision in federal law. As of February 2008, however, 44 States and the District of Columbia mandate the independent review of benefit denials by an entity outside of the health plan ("external review").

Proposed Law

A QHBP and a QHPB entity would be required to provide for an external appeals process. An externally appealable decision would be defined as a denial of claims based in whole or in part on a decision that the item or service is not medically necessary or appropriate, is investigational or experimental, or in which the decision as to whether the benefit is covered involved a medical judgment. It would also include a failure to meet the applicable deadline for internal review. It would not include specific exclusions or express limitations on the amount, duration or scope of coverage that do not involve medical judgment, or a decision regarding whether an individual is a participant beneficiary or enrollee under the plan. A plan or entity may require that external review only be conducted after a final decision is made on internal review (except in cases where the internal review decision is not made within necessary deadlines). A filing fee may be required, of no more than $25, except in cases where the individuals certify to the Secretary that they cannot afford the fee. The fee would be refunded if the external appeal entity reverses or modifies the denial.

The external appeal process would be conducted under a contract between the plan or issuer and one or more qualified external appeal entities. Procedures would be implemented to ensure that the external appeal entity did not have incentives to make biased decisions. There would be a sample audit of decisions. The Secretary would establish other terms and conditions. A state could designate an entity to provide external review activities.

The standards for external review would include at least the following: (1) fair, de novo determinations; (2) determinations of whether the decision was in accordance with the medical needs of the patient; (3) consideration of language in the plan or coverage documents relating to the definition of terms, such as medical necessity; and (4) evidence from the internal review, any personal health and medical information supplied by the individual, the opinion of the treating physician or health care professional. The external entity could also take into consideration other information such as results of studies and professional consensus. The external appeals entity would determine whether the claim was externally appealable and whether the decision should be expedited.

Each party could submit information. The decision would be made no later than 21 days after the date (or 72 hours for expedited review) of the request for an external appeal, and written in layperson language. The appeals entity would also inform the participant of any rights, including review by courts. If the decision was to reverse or modify the denial, the plan would be required to authorize benefits, take action to provide benefits in a timely manner, and submit information documenting compliance.

External appeals entities would have to be independent, use a panel of at least 3 clinical peers, have sufficient medical legal and other expertise, and meet other requirements. The entity must be certified, and periodically recertified, as specified by the bill. Reviewers exercising due care would not be criminally or civilly liable for performance of their duties.

The decision by the external appeals entity would be binding on the plan. If the plan did not follow the decision, it would be subject to a civil money penalty of up to $1,000 per day, until it adhered to the decision. An additional civil monetary penalty could be assessed against a person acting in the capacity of authorizing benefits determined by an external review entity for any pattern or practice of repeated refusal to authorize such benefits or for any pattern or practice of repeated violations of requirements of this section. The penalty would not exceed the lesser of 25% of the aggregate value of denied benefits or $500,000.

This Act would not alter or eliminate any cause of action or legal rights or remedies of participants, beneficiaries, enrollees, and others under state or federal law. The provisions of this section would apply to all acceptable coverage in the same manner as such provisions apply with respect to QHBPs.

Subtitle E-Governance

Sec. 141. Health Choices Administration; Health Choices Commissioner

Current Law

No provision.

Proposed Law

This provision would establish an independent agency in the executive branch of the United States called the Health Choices Administration ("Administration"). The Administration would be headed by a Health Choices Commissioner ("Commissioner"), who would be appointed by the President, with advice and consent of the Senate. Section 702 of the Social Security Act (detailing compensation, terms, general powers, rule-making, and delegation as applied to the Commissioner of Social Security and the Social Security Administration) would apply to the Commissioner.

Sec. 142. Duties and authority of Commissioner

Current Law

No provision.

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