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WASHINGTON -- Proposed Labor Department rules would impose new and fast deadlines on health care plans for processing claims and notifying participants whether they will cover a procedure.
The proposed rules, which would replace what benefit experts say are obsolete 1977 regulations, set up new deadlines for health plans to handle requests for coverage and claims processing.
* In the case of benefit determinations, plans would have 72 hours in the case of "urgent care" to notify a beneficiary whether coverage will be provided for a procedure or service. For non-urgent care, the deadline would be 15 days.
Those deadlines would apply in situations such as those in which plans require precertification before a beneficiary can obtain coverage for operations performed in hospitals.
If coverage is denied, a beneficiary would have 180 days in which to appeal the decision to the plan.
* In the case of services that already have been performed by providers, health care plans generally would have 15 days to notify participants -- typically through a written explanation of benefits -- of the payments it will make, whether the claim will be denied or whether more information from the participant or provider is needed before a payment decision can be made.
These new deadlines are far more stringent than a vague 1977 Labor Department regulation that says health care plans must handle claims as quickly as possible but no later than 90 days after receipt. The current regulation does not distinguish between initial benefit determinations and claims processing.
For the most part, health care plans -- in the case of initial benefit determinations -- already respond faster than the standard the Labor Department is proposing.
For example, Blue Cross & Blue Shield of the National Capital Area, which serves the Washington, D.C. metropolitan area, says requests for urgent care typically are decided within 24 hours, while requests for non-urgent care generally are decided within two working days.
In some cases, though, the proposed deadlines for benefit determinations could be more difficult to meet, benefit experts say.
One example would be requests for coverage for procedures involving experimental therapy, such as bone marrow transplants, where a physician believes the therapy is the only means to save a patient's life.
While the patient and doctor are anxious for a decision, in those situations the plan likely will require a thorough review of the patient's past treatments and the patient's response to those treatments.
"Decisions for those kinds of surgeries may not come that fast," said Tracy Cassidy, a consultant with William M. Mercer Inc. in Washington.
More problematic, say insurers, are Labor Department requirements that health care plans notify participants within 15 days whether they will cover a claim for a service that already has been performed.
Insurers say most determinations -- or requests for additional information -- are sent out within two weeks of the time a claim is received. Still, that target can't always be met during certain times of the year when there is a heavy claims load.
"The time frames may be unrealistic," says Jane Galvin, managed care director for the Health Insurance Assn. of America, an insurer trade group in Washington.
In addition, complicated cases involving multiple procedures or accident cases involving subrogation with other parties can require much more time, said Diana Dean, a Mercer consultant in New York.
John Piro, a consultant with Hewitt Associates L.L.C. in Rowayton, Conn., adds, "These are pretty tight deadlines."
Deadlines for responding to requests for coverage and processing claims, though, aren't the only problems the proposed regulations pose, benefit experts say.
A more general problem is the vagueness of certain requirements. One example: a provision that sets new standards for participant appeal of adverse benefit determinations.
Under this provision, a participant has the right to appeal a coverage decision to the plan. The parties reviewing the appeal cannot be the same party that made the original decision or a subordinate.
The regulations, however, are not clear on who is the "party" that made the initial coverage decision. It could, for example, mean the actual individual who made the decision or possibly the unit that person is in.
"This will be an area of some controversy," said Henry Saveth, a Mercer attorney in Washington.
Another problem area, benefit experts say, is a provision giving participants access to "pertinent documents." Participants would be entitled to review all documents, records and information relevant to their claims for benefits.
That information would include internal rules, guidelines, protocols and criteria under which the plan is operated.
In addition, the department is considering, though it has not actually proposed, an additional disclosure requirement that would apply in situations where a participant is suing the plan for denial of benefits.
In those situations, the department is considering whether to add to the final regulation a requirement that participants be entitled to receive "reasonable access and copies of all documents relating to previous claims involving the same diagnosis and treatment that were decided within five years of the previous adverse benefit determination."
Employer groups are concerned that requiring plans to disclose information on how prior claims with a similar diagnosis were handled could violate the privacy of other beneficiaries.
Even if the names of other beneficiaries were, for example, blacked out, their identity, especially at smaller firms, in some cases could be determined.
"The question is how you do you provide information without violating an employee's right to privacy?" asked Paul Dennett, vp-health policy with the Assn. of Private Pension & Welfare Plans in Washington.
In addition, maintaining five years of records of coverage decisions by diagnosis could impose a big administrative burden on plan administrators.
"There are real-world concerns that have to be worked out. You have to balance the need to give participants more information without imposing an undue burden on those who have to provide that information and have to do so more quickly than ever," the APPWP's Mr. Dennett said.
Written comments on the proposed regulations are due by Nov. 9. According to the Labor Department, health care plans would have to comply 180 days after final regulations are published.