GOVERNMENT & MEDICINE

New Labor Dept. rules call for faster HMO appeals

New managed care rules are a good thing, but enactment of a strong patients' bill of rights would be even better, says the AMA.

By Susan J. Landers, AMNews staff. Dec. 11, 2000. Additional information

Washington -- While Congress remained deadlocked over passage of managed care legislation, the Clinton administration released final rules that could at least hasten health plans' coverage decisions and internal reviews of contested claims.

The Labor Dept. issued final regulations Nov. 20 that require health plans to "make coverage decisions quickly -- within 72 hours for urgent requests -- and to provide consumers with meaningful information on their rights and benefits," said President Clinton when announcing the rules.

In the works for more than two years, the final rules apply to employer-sponsored health plans covered by the 1974 Employee Retirement Income Security Act. More than 130 million people will be affected.

AMA Trustee Donald J. Palmisano, MD, applauded the Labor Dept. for ensuring that patients in ERISA plans "have access to timely and fair internal appeals procedures."

"But we still need a comprehensive patients' bill of rights," Dr. Palmisano was quick to note. "The Labor Dept. rules don't go far enough. They only fix part of the problem."

For one thing, the rules do not address external appeals of health plans' decisions -- a subject addressed in the more wide-ranging patients' rights legislation that has been under debate in Congress for many months.

As far as it goes

The Labor Dept. says it lacks the authority to regulate plans' external review procedures. "In other words, they have done what they can do," Dr. Palmisano said.

The new claims and appeals rules are the first issued since 1977, before the widespread practice of managed care.

The rules will go into effect Jan. 20, 2001, inauguration day, and join a flurry of last-minute regulatory activity that is accompanying Clinton's leave-taking. Final rules to protect the privacy of individuals' medical records are also expected to be released shortly.

Plans will have one year to prepare for the HMO rules' implementation, which is to begin with claims filed on or after Jan. 1, 2002.

The clock is running

In addition to a 72-hour response time for urgent care, the regulations require plans to respond:

• Within 15 calendar days for preauthorization decisions and 30 days for appeals of those decisions.
• Within 30 days for claims involving services already provided and 60 days for appeals of those decisions.

The timelines apply even if a health plan requires two levels of internal appeals.

Plans previously had up to 90 days to process an initial claim and 60 days to rule on an appeal.

The rules also allow patients to sue health plans if the new requirements are not followed.

The liability provision prompted American Assn. of Health Plans President Karen Ignagni to express concern that the regulations could turn into a "litigation bonanza" for trial lawyers. AAHP represents more than 1,000 HMOs and preferred provider organizations that cover 140 million Americans.

Ignagni said the final regulations represent "a step forward" from the proposed rules issued in 1998 because they follow appeals processes similar to those established under Medicare and state law.

"At the same time, we remain concerned that incentives to thwart effective appeals processes remain in the form of a fast track to the courts for any departure from the regulations, however minor or technical," she said.

Ignagni also said she was concerned that the new regulations would only supplement state requirements and lead to "administrative confusion and excessive compliance costs" for health plans.

The Health Insurance Assn. of America took a harsher view of the new rules. "The regulations will likely 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," said HIAA President Chip Kahn.

Health plans already have well-defined appeals and grievance procedures that serve the needs of enrollees, Kahn said.

Medical professionals get a say

The new rules also require health plans to consult a health care professional with appropriate training and expertise when hearing an appeal of a claim denial that involves medical judgment. The professional must be different from and not subordinate to any individual consulted in connection with the initial decision, according to the rules.

The consumer advocacy group Families USA praised the consultation provision.

"We are pleased these new rules require that appropriate health care professionals be consulted in decisions where there is an issue about a medical judgment," said Ron Pollack, the group's executive director.

The rules also require that denials on the basis of medical necessity or experimental treatment must include the scientific or clinical judgment used by the plan or include a statement that an explanation is available.

Toiling on

An inclusive patients' bill of rights (for example, the bill that was passed by the House and is known as the Norwood-Dingell bill) would include many of the provisions sought by the AMA -- well beyond those the Labor Dept. is permitted to make, Dr. Palmisano noted.

For example, the bill would cover 30 million more people and establish an independent, external and timely appeals process, he said.

Dr. Palmisano has not given up on the Norwood-Dingell bill's passage during Congress' scheduled lame-duck session. "Who knows, we might wake up some morning and find that a meaningful patients' bill of rights has been tacked onto some other legislative vehicle that's moving through the process."

But if the current Congress goes home without having passed a patient protection bill, "we'll come back," Dr. Palmisano promised.

"Next session we're going to fight for a meaningful patients' bill of rights," he said. "And we believe it will be passed or the public will let Congress know of its displeasure in future elections."

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New Labor Dept. rules establish requirements for the internal claims and appeals processes of most employee health insurance plans. Under the rules, plans must:

• Respond to urgent care claims within 72 hours, preauthorization claims within 15 days and claims for services already provided within 30 days.
• Use appropriately trained professionals to review disputes.
• Provide patients with information on why their claims or appeals were denied.
• Face lawsuits if they do not follow the new rules.

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Additional information

Box: Shoring up appeals