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The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) (formerly the PWBA) issued final Regulations regarding claim determinations and rights of appeal several years ago. However, I continue to receive questions concerning the timing for claim determinations by plan administrators and appeal procedures by claimants. The claim Regulations relate to health claims, including those for medical, dental, vision, prescription drug, and certain employee assistance programs that provide medical benefits, and for disability claims. The primary reason for the Regulations is to facilitate and expedite decision-making on medical issues. These Regulations are of interest to plan administrators of Section 125 Flexible Spending Accounts (FSAs). FSA plan administrators adjudicate and pay "post-service claims" for plan participants. These types of claims, as well as the others listed below are specifically targeted by these Regulations. The Regulations divide claims into four categories:
Time Frame for Responding The Regulations set out time limits in which the initial claims must receive a response. It’s important to note that these time limits are not safe-harbors. All claims described above must be responded to as soon as is reasonably possible, but in no event, can it be later than the time frame described below. Administrators of post-service claims have up to 30 days in which to respond to any Health FSA claim, with a one-time 15-day extension allowed. If the extension is due to insufficient information, the notice of the extension must specifically describe the required information and the claimant has 45 days to provide information. Claims Determination The written claim determination can be delivered either electronically or in paper format, and must include the following information:
The claimant must be provided with the rules, guidelines, or other protocols relied upon in making the determination or the claimant must be advised that such information is available free of charge. If the denial is based on merit, medical necessity, or the experimental nature of the treatment, the denial must explain the scientific or clinical basis for the denial, or state that such information is available at no charge. Time Frame for Appeal of Denied Claims Under previous Regulations, a claimant had 60 days to file an appeal. But, the final Regulations allow claimants 180 days in which to file an appeal. Post-service claims administrators then have 60 days in which to respond to the appeal. And remember, this appeal time frame is not based on the underlying plan’s period of coverage. If a claim is denied on the last day of the plan year, or even the last day of the run-out period; the participant still has the full 180 days in which to file an appeal or perfect their claim and resubmit. Full and Fair Review According to the Regulations, claimants must receive a full and fair review. This simply means that the review cannot be made by the same person who made the initial determination, nor any of his/her subordinates. On appeal, claimants can submit additional documentation supporting their positions. They must have access to all relevant documents relied upon in the review. The review must take into account all newly submitted information, and cannot be based solely on information relied upon in the initial determination. If the appeal is based on medical necessity or the experimental nature of a treatment, the person reviewing the appeal must consult with a medical professional who has the appropriate expertise and training. Review Current Documents and Processes It‘s a good idea for plan administrators to review their plan documents, including third party administration agreements, insurance contracts, and all other related documents. These documents will need to uphold the claim and appeal procedures outlined by the DOL to ensure compliance with these Regulations. The cafeteria plan document and summary plan description needs to contain an accurate description of the claims denial and appeal processes. And, the plan sponsor must ensure that this information is communicated to plan participants and their beneficiaries. The plan sponsor must also inquire into the procedures used by any third party administrators they rely on. It is the employer’s ultimate responsibility to make certain that the plan adheres to prevailing guidelines.
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