Health plan enrollees could soon be getting an automatic right to send internal health plan appeal denials to

New interim final rules governing group health plan and health insurer internal claims and appeals and external review processes were released today by the U.S. Department of Health and Human Services (HHS), the U.S. Labor Department and the U.S. Treasury Department.

Provisions in the new Affordable Care Act (ACA), the legislative package that includes the Patient Protection and Affordable Care Act (PPACA), set minimum standards for consumers’ ability to appeal claim denials, rescissions of coverage and other adverse decisions.

In the past, some states did not have external review requirements. Now, in all states, consumers who disagree with the results of in-plan appeals can submit disputes to independent reviewers.

Under the terms of the new regulations, which are set to take effect in policy or plan years starting on or after Sept. 23, health plans must have an internal appeals process that:

  • Lets consumers appeal when a health plan denies a claim for a covered service or rescinds coverage.
  • Gives consumers detailed information about the grounds for the denial of claims or coverage.
  • Requires plans to notify consumers about their right to appeal and instructs them on how to begin the appeals process.
  • Ensures a full and fair review of the denial.
  • Provides consumers with an expedited appeals process in urgent cases.

If a patient’s internal appeal is denied, the patient will then be allowed to appeal to a reviewer that is not employed by their health plan or insurer.

The regulations will not apply to the “grandfathered plans” that were in effect March 23, officials say. The regulations will apply to insured and self-insured plans started or substantially changed after the March 23 cut-off..

The affected group plans and health insurers must pay for the external reviews.

The regulations do not appear to include a provision referring to consumers who file frivolous, unjustified or repeated appeals or requests for external reviews. Plans cannot charge more than $25 for an external review filing fee, and they cannot charge a consumer more than $75 per year for external review filing fees.

States cannot set review standards that are looser than the new federal standards, but they can set stricter standards.

Officials are estimating that the new rules will change the appeal rights of 31 million people in new employer plans and 10 million holders of new individual plans in 2011.

Phyllis Borzi, assistant secretary for the Employee Benefits Security Administration at the Department of Labor, said today that the new regulations are important because explanations of claim denials are often unclear and incomplete.

“These rules will make the appeals process clearer and more transparent,” Borzi said.

About 44 states now have an external appeal process, but most don’t meet the new standards, Borzi said.

States have until July 1, 2011, to establish or update their external appeals process to meet the new standards, Borzi said.

Consumers in states where review processes fail to meet federal standards will have access to a federal external review program, officials say.

In addition to setting new review standards, the government is establishing a $30 million grant program to “establish and strengthen consumer assistance offices in states and territories.”

Officials estimate in an impact analysis that, in 2011, private-sector employer-sponsored plans will face about 85,000 internal appeals and 2,000 new external appeals, and that individual insurers will face about 53,000 internal appeals and 200 new external appeals.

The total direct cost of the new appeal and review requirements will be about $50 million in 2011, officials estimate.