Federal regulators are pushing the deadline for state compliance with health insurance decision external review requirements back to Jan. 1, 2012.

The U.S. Treasury Department, the U.S. Labor Department and the U.S. Department of Health and Human Services (HHS) have announced that change and other, related changes in the rules governing handling of internal claims and appeals and external review processes in a preliminary version of a final rule posted on the website of the Labor Department’s Employee Benefits Security Administration.

The rules apply to non-grandfathered group health plans, holders of individual health coverage and members of governmental health plans. Depending on how many insured and self-insured plans retain “grandfathered status,” the rules could apply to about 157 million U.S. residents.

Congress included new federal internal review and external appeals standards in the Patient Protection and Affordable Care Act of 2010 (PPACA), which was signed into law March 23, 2010.

Federal departments issued interim final regulations implementing the PPACA appeal review standards in July 2010, and the Labor Deaprtment put out a technical release that postponed the enforcement data for some of the standards in September 2010. The Labor Department then changed and extended the grace period rules in March.

The Labor Department now is joining with the Treasury Department ahd HHS to change the end of a state external review transition period that was created for states.

The new transition period will end Dec. 31, 2011, rather than July 1, 2011.

The change means that affected insurers and self-insured plans can use the relevant state external

review process, rather than the federal review process, up until Jan. 1, 2012.

If a state has no external review process that meets interim federal standards, then affected insurers and self-insured plans in state can choose between using an external review process administered by HHS or a private, accredited independent review organization (IRO) process, officials say in the preamble to the proposed rule amendments.

In related news:

  • The Labor Department has published a guide for consumers showing that many states have failed to set up consumer assistance operations that can help guide patients through the appeals and review process.
  • The federal departments have eased health plan appeal and review consumer notice translation requirements, because of indications that take-up rates for translated materials have been low in California, a state that already has strict translation requirements. If a plan finds that 10% or more of the speakers of a language in a county it serves are unable to read English, it still must include a notice of availability of language services in that language in plan materials, but a plan now can meet the requirements by including a single-sentence notice for each target language in all materials distributed throughout the state.
  • The departments have eliminated a provision that could have required plans and insurers to “tag” non-English speaking enrollees, to ensure that those enrollees would always receive service in the preferred language.
  • A health insurer or health plan will not necessarily have to make urgent care decisions within 24 hours, if it accepts the provider’s definition of “urgent care,” but it must make urgent care decisions within 72 hours, and it must be able to make decisions more quickly “based on the medical exigencies involved,” officials say.

James Klein, president of the American Benefits Council, Washington, has put out a statement noting that the Obama administration has made some changes recommended by the council, such as adding a provision requiring that IRO reviews should focus on matters of medical judgment, rather than “any” adverse benefit determination.

“The proper role of independent review organizations is to resolve coverage disputes that sometimes involve complex questions such as whether a particular treatment is medically necessary,” Klein says in the statement. “But it certainly is not appropriate for these organizations to be making legal interpretations of the contractual terms of a health plan. The agencies got it right on this matter.”

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