37208 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

DEPARTMENT OF THE TREASURY 

Internal Revenue Service 

26 CFR Part 54 

[TD 9532] 

RIN 1545–BK30 

DEPARTMENT OF LABOR 

Employee Benefits Security 

Administration 

29 CFR Part 2590 

RIN 1210–AB45 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

[CMS–9993–IFC2] 

45 CFR Part 147 

RIN 0938–AQ66 

Group Health Plans and Health 

Insurance Issuers: Rules Relating to 

Internal Claims and Appeals and 

External Review Processes 

AGENCIES: Internal Revenue Service, 

Department of the Treasury; Employee 

Benefits Security Administration, 

Department of Labor; Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services. 

ACTION: Amendment to interim final 

rules with request for comments. 

SUMMARY: This document contains 

amendments to interim final regulations 

implementing the requirements 

regarding internal claims and appeals 

and external review processes for group 

health plans and health insurance 

coverage in the group and individual 

markets under provisions of the 

Affordable Care Act. These rules are 

intended to respond to feedback from a 

wide range of stakeholders on the 

interim final regulations and to assist 

plans and issuers in coming into full 

compliance with the law through an 

orderly and expeditious implementation 

process. 

DATES: Effective date. This amendment 

to the interim final regulations is 

effective on July 22, 2011. 

Comment date. Comments are due on 

or before July 25, 2011. 

ADDRESSES: Written comments may be 

submitted to any of the addresses 

specified below. Any comment that is 

submitted to any Department will be 

shared with the other Departments. 

Please do not submit duplicates. 

All comments will be made available 

to the public. Warning: Do not include 

any personally identifiable information 

(such as name, address, or other contact 

information) or confidential business 

information that you do not want 

publicly disclosed. All comments may 

be posted on the Internet and can be 

retrieved by most Internet search 

engines. Comments may be submitted 

anonymously. 

Department of Labor. Comments to 

the Department of Labor, identified by 

RIN 1210–AB45, by one of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: EOHPSCA2719amend.EBSA@dol.gov. 

• Mail or Hand Delivery: Office of 

Health Plan Standards and Compliance 

Assistance, Employee Benefits Security 

Administration, Room N–5653, U.S. 

Department of Labor, 200 Constitution 

Avenue, NW., Washington, DC 20210, 

Attention: RIN 1210–AB45. 

Comments received by the 

Department of Labor will be posted 

without change to http:// 

www.regulations.gov and http:// 

www.dol.gov/ebsa, and available for 

public inspection at the Public 

Disclosure Room, N–1513, Employee 

Benefits Security Administration, 200 

Constitution Avenue, NW., Washington, 

DC 20210. 

Department of Health and Human 

Services. In commenting, please refer to 

file code CMS–9993–IFC2. Because of 

staff and resource limitations, we cannot 

accept comments by facsimile (FAX) 

transmission. 

You may submit comments in one of 

four ways (please choose only one of the 

ways listed): 

1. Electronically. You may submit 

electronic comments on this regulation 

to http://www.regulations.gov. Follow 

the instructions under the ‘‘More Search 

Options’’ tab. 

2. By regular mail. You may mail 

written comments to the following 

address ONLY: Centers for Medicare & 

Medicaid Services, Department of 

Health and Human Services, Attention: 

CMS–9993–IFC2, P.O. Box 8010, 

Baltimore, MD 21244–8010. 

Please allow sufficient time for mailed 

comments to be received before the 

close of the comment period. 

3. By express or overnight mail. You 

may send written comments to the 

following address ONLY: Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, Attention: CMS–9993–IFC2, 

Mail Stop C4–26–05, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

4. By hand or courier. If you prefer, 

you may deliver (by hand or courier) 

your written comments before the close 

of the comment period to either of the 

following addresses: 

a. For delivery in Washington, DC— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, Room 445–G, Hubert 

H. Humphrey Building, 200 

Independence Avenue, SW., 

Washington, DC 20201. 

(Because access to the interior of the 

Hubert H. Humphrey Building is not 

readily available to persons without 

Federal government identification, 

commenters are encouraged to leave 

their comments in the CMS drop slots 

located in the main lobby of the 

building. A stamp-in clock is available 

for persons wishing to retain a proof of 

filing by stamping in and retaining an 

extra copy of the comments being filed.) 

b. For delivery in Baltimore, MD— 

Centers for Medicare & Medicaid 

Services, Department of Health and 

Human Services, 7500 Security 

Boulevard, Baltimore, MD 21244–1850. 

If you intend to deliver your 

comments to the Baltimore address, 

please call telephone number (410) 786– 

9994 in advance to schedule your 

arrival with one of our staff members. 

Comments mailed to the addresses 

indicated as appropriate for hand or 

courier delivery may be delayed and 

received after the comment period. 

Internal Revenue Service. Comments 

to the IRS, identified by REG–125592– 

10, by one of the following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Mail: CC:PA:LPD:PR (REG–125592– 

10), Room 5205, Internal Revenue 

Service, P.O. Box 7604, Ben Franklin 

Station, Washington, DC 20044. 

• Hand or courier delivery: Monday 

through Friday between the hours of 

8 a.m. and 4 p.m. to: CC:PA:LPD:PR 

(REG–125592–10), Courier’s Desk, 

Internal Revenue Service, 1111 

Constitution Avenue, NW., Washington, 

DC 20224. 

All submissions to the IRS will be 

open to public inspection and copying 

in Room 1621, 1111 Constitution 

Avenue, NW., Washington, DC from 

9 a.m. to 4 p.m. 

FOR FURTHER INFORMATION CONTACT: 

Amy Turner or Beth Baum, Employee 

Benefits Security Administration, 

Department of Labor, at (202) 693–8335; 

Karen Levin, Internal Revenue Service, 

Department of the Treasury, at (202) 

622–6080; Ellen Kuhn, Centers for 

Medicare & Medicaid Services, 

Department of Health and Human 

Services, at (301) 492–4100. 

Customer Service Information: 

Individuals interested in obtaining 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37209 

1The term ‘‘group health plan’’ is used in title 

XXVII of the PHS Act, part 7 of ERISA, and chapter 

100 of the Code, and is distinct from the term 

‘‘health plan’’, as used in other provisions of title 

I of the Affordable Care Act. The term ‘‘health 

plan’’, as used in those provisions, does not include 

self-insured group health plans. 

2The Departments published interim final 

regulations implementing section 1251 of the 

Affordable Care Act on June 17, 2010, at 75 FR 

34538, as amended on November 17, 2010 at 75 FR 

70114. 

3To address certain relevant differences in the 

group and individual markets, the July 2010 

regulations provided that health insurance issuers 

offering individual health insurance coverage must 

comply with three additional requirements for 

internal claims and appeals processes. First, the 

July 2010 regulations include initial eligibility 

determinations in the individual market within the 

scope of claims eligible for internal appeals. 

Second, health insurance issuers offering individual 

health insurance coverage are permitted only one 

level of internal appeal. Third, health insurance 

issuers offering individual health insurance 

coverage must maintain all records of claims and 

notices associated with internal claims and appeals 

for six years and must make these records available 

for examination by the claimant, State or Federal 

oversight agency. 75 FR 43330, 43334 (July 23, 

2010). 

4This definition is broader than the definition in 

the DOL claims procedure regulation, which 

provides that a denial, reduction, or termination of, 

or a failure to provide payment (in whole or in part) 

for a benefit is an adverse benefit determination 

eligible for internal claims and appeals processes. 

5A claim involving urgent care is generally a 

claim for medical care or treatment with respect to 

which the application of the time periods for 

making non-urgent care determinations could 

seriously jeopardize the life or health of the 

claimant or the ability of the claimant to regain 

maximum function; or, in the opinion of the 

physician with knowledge of the claimant’s medical 

condition, would subject the claimant to severe 

pain that cannot be adequately managed without 

the care or treatment that is the subject of the claim. 

6Under the July 2010 regulations, there is a 

special exception if the claimant fails to provide 

sufficient information to determine whether, or to 

what extent, benefits are covered or payable under 

the plan. 

information from the Department of 

Labor concerning employment-based 

health coverage laws may call the EBSA 

Toll-Free Hotline at 1–866–444–EBSA 

(3272) or visit the Department of Labor’s 

Web site (http://www.dol.gov/ebsa). In 

addition, information from HHS on 

private health insurance for consumers 

can be found on the Centers for 

Medicare & Medicaid Services (CMS) 

Web site (http://www.cms.hhs.gov/ 

HealthInsReformforConsume/ 

01_Overview.asp). Information on 

health reform can be found at http:// 

www.healthcare.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Patient Protection and Affordable 

Care Act, Public Law 111–148, was 

enacted on March 23, 2010; the Health 

Care and Education Reconciliation Act, 

Public Law 111–152, was enacted on 

March 30, 2010 (collectively known as 

the ‘‘Affordable Care Act’’). The 

Affordable Care Act reorganizes, 

amends, and adds to the provisions in 

part A of title XXVII of the Public 

Health Service Act (PHS Act) relating to 

group health plans and health insurance 

issuers in the group and individual 

markets. The term ‘‘group health plan’’ 

includes both insured and self-insured 

group health plans.1 The Affordable 

Care Act adds section 715(a)(1) to the 

Employee Retirement Income Security 

Act (ERISA) and section 9815(a)(1) to 

the Internal Revenue Code (the Code) to 

incorporate the provisions of part A of 

title XXVII of the PHS Act into ERISA 

and the Code, and make them 

applicable to group health plans, and 

health insurance issuers providing 

health insurance coverage in connection 

with group health plans. The PHS Act 

sections incorporated by this reference 

are sections 2701 through 2728. PHS 

Act sections 2701 through 2719A are 

substantially new, though they 

incorporate some provisions of prior 

law. PHS Act sections 2722 through 

2728 are sections of prior law 

renumbered, with some, mostly minor, 

changes. 

On July 23, 2010, the Departments of 

Health and Human Services (HHS), 

Labor, and the Treasury (the 

Departments) issued interim final 

regulations implementing PHS Act 

section 2719 at 75 FR 43330 (July 2010 

regulations), regarding internal claims 

and appeals and external review 

processes for group health plans and 

health insurance issuers offering 

coverage in the group and individual 

markets. The requirements of PHS Act 

section 2719 and the July 2010 

regulations do not apply to 

grandfathered health plans under 

section 1251 of the Affordable Care 

Act.2

A. Internal Claims and Appeals 

With respect to internal claims and 

appeals processes for group health plans 

and health insurance issuers offering 

group health insurance coverage, PHS 

Act section 2719 provides that plans 

and issuers must initially incorporate 

the internal claims and appeals 

processes set forth in regulations 

promulgated by the Department of Labor 

(DOL) at 29 CFR 2560.503–1 (the DOL 

claims procedure regulation) and update 

such processes in accordance with 

standards established by the Secretary 

of Labor. Similarly, with respect to 

internal claims and appeals processes 

for individual health insurance 

coverage, issuers must initially 

incorporate the internal claims and 

appeals processes set forth in applicable 

State law and update such processes in 

accordance with standards established 

by the Secretary of HHS. 

The July 2010 regulations provided 

such updated standards for compliance 

and invited comment on the updated 

standards. In particular, the July 2010 

regulations provided the following 

additional standards 3 for internal 

claims and appeals processes: 

1. The scope of adverse benefit 

determinations eligible for internal 

claims and appeals includes a rescission 

of coverage (whether or not the 

rescission has an adverse effect on any 

particular benefit at the time).4

2. Notwithstanding the rule in the 

DOL claims procedure regulation that 

provides for notification in the case of 

urgent care claims 5 not later than 72 

hours after the receipt of the claim, a 

plan or issuer must notify a claimant of 

a benefit determination (whether 

adverse or not) with respect to a claim 

involving urgent care as soon as 

possible, taking into account the 

medical exigencies, but not later than 24 

hours after the receipt of the claim by 

the plan or issuer.6

3. Clarifications with respect to full 

and fair review, such that plans and 

issuers are clearly required to provide 

the claimant (free of charge) with new 

or additional evidence considered, 

relied upon, or generated by (or at the 

direction of) the plan or issuer in 

connection with the claim, as well as 

any new or additional rationale for a 

denial at the internal appeals stage, and 

a reasonable opportunity for the 

claimant to respond to such new 

evidence or rationale. 

4. Clarifications regarding conflicts of 

interest, such that decisions regarding 

hiring, compensation, termination, 

promotion, or other similar matters with 

respect to an individual, such as a 

claims adjudicator or medical expert, 

must not be based upon the likelihood 

that the individual will support the 

denial of benefits. 

5. Notices must be provided in a 

culturally and linguistically appropriate 

manner, as required by the statute, and 

as set forth in paragraph (e) of the July 

2010 regulations. 

6. Notices to claimants must provide 

additional content. Specifically: 

a. Any notice of adverse benefit 

determination or final internal adverse 

benefit determination must include 

information sufficient to identify the 

claim involved, including the date of 

the service, the health care provider, the 

claim amount (if applicable), the 

diagnosis code and its corresponding 

meaning, and the treatment code and its 

corresponding meaning. 


emcdonald on DSK2BSOYB1PROD with RULES3
37210 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

7Technical Release 2010–02 is available at 

http://www.dol.gov/ebsa/pdf/ACATechnicalRelease

2010-02.pdf. HHS published a corresponding 

guidance document, available at: http:// 

cciio.cms.gov/resources/files/

interim_procedures_for_internal_claims_and

_appeals.pdf. 

8T.R. 2010–02 also stated that HHS was 

encouraging States to provide similar grace periods 

with respect to issuers and HHS would not cite a 

State for failing to substantially enforce the 

provisions of part A of title XXVII of the PHS Act 

in these situations. 

9T.R. 2011–01 is available at http://www.dol.gov/ 

ebsa/pdf/tr11-01.pdf. 

10 Information related to diagnosis and treatment 

codes (and/or their meanings) is, however, 

generally required to be provided to claimants upon 

request under existing DOL claims procedures. See 

29 CFR 2560.503–1(h)(2)(iii), which is also 

applicable to plans (whether or not they are ERISA 

plans) and issuers that are not grandfathered health 

plans pursuant to paragraph (b)(2)(i) of the July 

2010 regulations. Nevertheless, a request for such 

information, in itself, should not be considered to 

be a request for (and therefore trigger the start of) 

an internal appeal or external review. 

11Any enforcement grace period with respect to 

disclosure requirements that has been provided 

under T.R. 2010–02 or T.R. 2011–01 does not affect 

disclosure requirements still in effect for ERISA 

plans under the DOL claims procedure regulation 

and/or Part 1 of ERISA. 

12See DOL Technical Release 2010–01, available 

at http://www.dol.gov/ebsa/pdf/

ACATechnicalRelease2010-01.pdf; HHS Technical 

Guidance issued August 26, 2010, available at 

http://cciio.cms.gov/resources/files/interim_appeals

_guidance.pdf; and HHS Technical Guidance issued 

September 23, 2010, available at http:// 

cciio.cms.gov/resources/files/technical_guidance

_for_self_funded_non_fed_plans.pdf. Additional 

clarifications were provided in the form of 

frequently-asked questions (FAQs), available at 

http://www.dol.gov/ebsa/faqs/faq-aca.html and 

http://cciio.cms.gov/resources/factsheets/ 

aca_implementation_faqs.html#claims. 

b. The plan or issuer must ensure that 

the reason or reasons for an adverse 

benefit determination or final internal 

adverse benefit determination includes 

the denial code and its corresponding 

meaning, as well as a description of the 

plan’s or issuer’s standard, if any, that 

was used in denying the claim. In the 

case of a final internal adverse benefit 

determination, this description must 

also include a discussion of the 

decision. 

c. The plan or issuer must provide a 

description of available internal appeals 

and external review processes, 

including information regarding how to 

initiate an appeal. 

d. The plan or issuer must disclose 

the availability of, and contact 

information for, an applicable office of 

health insurance consumer assistance or 

ombudsman established under PHS Act 

section 2793. 

7. If a plan or issuer fails to strictly 

adhere to all the requirements of the 

July 2010 regulations, the claimant is 

deemed to have exhausted the plan’s or 

issuer’s internal claims and appeals 

process, regardless of whether the plan 

or issuer asserts that it has substantially 

complied, and the claimant may initiate 

any available external review process or 

remedies available under ERISA or 

under State law. 

On September 20, 2010, based on a 

preliminary review of comments from 

stakeholders which indicated that they 

believed more time was needed to come 

into compliance with PHS Act section 

2719 and the additional internal claims 

and appeal standards in the July 2010 

regulations, the Department of Labor 

issued Technical Release 2010–02 (T.R. 

2010–02), which set forth an 

enforcement grace period until July 1, 

2011 for compliance with certain new 

provisions with respect to internal 

claims and appeals.7

Specifically, T.R. 2010–02 set forth an 

enforcement grace period until July 1, 

2011 with respect to standard #2 above 

(regarding the timeframe for making 

urgent care claims decisions), standard 

#5 above (regarding providing notices in 

a culturally and linguistically 

appropriate manner), standard #6 above 

(requiring broader content and 

specificity in notices), and standard #7 

above (regarding exhaustion). T.R. 

2010–02 also stated that, during that 

period, the Department of Labor and the 

Internal Revenue Service (IRS) would 

not take any enforcement action against 

a group health plan, and HHS would not 

take any enforcement action against a 

self-funded nonfederal governmental 

health plan that is working in good faith 

to implement such additional standards 

but does not yet have them in place.8

Based on further review of the 

comments received on the July 2010 

regulations and T.R. 2010–02, and other 

feedback from interested stakeholders, 

on March 18, 2011, the Department of 

Labor issued Technical Release 2011– 

01 9 (T.R. 2011–01), which modified and 

extended the enforcement grace period 

set forth in T.R. 2010–02. Specifically, 

T.R. 2011–01 extended the enforcement 

grace period until plan years beginning 

on or after January 1, 2012 with respect 

to standard #2 above (regarding the 

timeframe for making urgent care claims 

decisions), standard #5 above (regarding 

providing notices in a culturally and 

linguistically appropriate manner), and 

standard #7 above (regarding 

exhaustion). Moreover, whereas T.R. 

2010–02 required plans to be working in 

good faith to implement such standards 

for the enforcement grace period to 

apply, T.R. 2011–01 stated that no such 

requirement would apply for either the 

extended or the original enforcement 

grace period. 

With respect to standard #6 above 

(requiring broader content and 

specificity in notices), T.R. 2011–01 

extended the enforcement grace period 

only in part. Specifically, with respect 

to the requirement to disclose diagnosis 

codes and treatment codes (and their 

corresponding meanings), T.R. 2011–01 

extended the enforcement grace period 

until plan years beginning on or after 

January 1, 2012.10 With respect to the 

other disclosure requirements of 

standard #6, the enforcement grace 

period was extended from July 1, 2011 

until the first day of the first plan year 

beginning on or after July 1, 2011 

(which is January 1, 2012 for calendar 

year plans), affecting: (a) The disclosure 

of information sufficient to identify a 

claim (other than the diagnosis and 

treatment information), (b) the reasons 

for an adverse benefit determination, (c) 

the description of available internal 

appeals and external review processes, 

and (d) for plans and issuers in States 

in which an office of health consumer 

assistance program or ombudsman is 

operational, the disclosure of the 

availability of, and contact information 

for, such program.11

T.R. 2011–01 also stated the 

Departments’ intent to issue an 

amendment to the July 2010 regulations 

that would take into account comments 

and other feedback received from 

stakeholders and make modifications to 

certain provisions of the July 2010 

regulations. T.R. 2011–01 went on to 

state that the relief was intended to act 

as a bridge until an amendment to the 

July 2010 regulations was issued. 

This amendment to the July 2010 

regulations makes changes with respect 

to the provisions subject to the 

enforcement grace period under T.R. 

2011–01. At the expiration of the 

enforcement grace period, the 

Departments will begin enforcing the 

relevant requirements of the July 2010 

regulations, as amended by this 

rulemaking. 

B. External Review 

1. Applicability of Federal and State 

External Review Processes 

PHS Act section 2719, the July 2010 

regulations, and technical guidance 

issued by the Departments 12 provide a 

system with respect to applicability of 

either a State external review process or 

a Federal external review process for 

non-grandfathered plans and issuers. 

How this impacts plans and issuers 

varies, depending on the type of 

coverage: 

a. Self-insured plans subject to ERISA 

and/or the Code. 

In the case of self-insured plans 

subject to ERISA and/or the Code, a 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37211 

13For simplicity, the Federal external review 

process for self-insured plans subject to ERISA and/ 

or the Code supervised by DOL and Treasury is 

referred to as the ‘‘private accredited IRO process’’ 

throughout this preamble. However, the interim 

procedures for Federal external review issued as 

DOL Technical Release 2010–01 also recognizes 

that States may choose to expand access to their 

State external review process to plans not subject 

to applicable State laws (such as self-insured ERISA 

plans) and allows those plans to meet their 

responsibilities to provide external review under 

PHS Act section 2719(b) by voluntarily complying 

with the provisions of that State external review 

process. 

14HHS Technical Guidance issued August 26, 

2010 provided that, for insured coverage, the 

Federal external review process would be fulfilled 

through the HHS-administered process. 

15See HHS Technical Guidance issued September 

23, 2010. 

16Under paragraphs (c)(2)(i) and (c)(2)(xvi) of the 

July 2010 regulations, State processes must provide 

external review for adverse benefit determinations 

(including final internal adverse benefit 

determinations) that are based on issuer’s (or plan’s) 

requirements for medical necessity, 

appropriateness, health care setting, level of care, or 

effectiveness of a covered benefit; or that involve 

experimental or investigational treatment. (A State 

external review process may also provide for 

external review of a broader scope of adverse 

benefit determinations.) At the same time, 

paragraph (c)(3) of the July 2010 regulations 

provides a transition period during which a State 

external review process will be considered binding 

on an issuer (or a plan), in lieu of the requirements 

of any Federal external review process, even if the 

State process does not meet all the requirements of 

paragraph (c)(2) of the July 2010 regulations. That 

transition period is being modified by this 

amendment, as described below. 

Federal external review process 

supervised by DOL and Treasury 

applies (the ‘‘private accredited IRO 

process’’ 13). On August 23, 2010, the 

Department of Labor issued Technical 

Release 2010–01 (T.R. 2010–01), which 

set forth an interim enforcement safe 

harbor for self-insured plans not subject 

to a State external review process or to 

the HHS-supervised process (the ‘‘HHSadministered process’’).14 This interim 

enforcement safe harbor essentially 

permits a private contract process under 

which plans contract with accredited 

independent review organizations 

(IROs) to perform reviews. Separate 

guidance being issued contemporaneous 

with the publication of this amendment 

makes adjustments to, and provides 

clarifications regarding, the operation of 

the private accredited IRO process. 

b. Insured coverage. 

In the case of health insurance issuers 

in the group and individual market, the 

July 2010 regulations set forth 16 

minimum consumer protections based 

on the Uniform External Review Model 

Act promulgated by the National 

Association of Insurance Commissioners 

(NAIC) that, if provided by a State 

external review process, will result in 

the State’s process applying in lieu of a 

Federal external review process. 

Moreover, for insured group health 

plans, as provided under paragraph 

(c)(1) of the July 2010 regulations, if a 

State external review process applies to 

and is binding on the plan’s health 

insurance issuer under paragraph (c) of 

the July 2010 regulations (regarding 

State standards for external review), 

then the insured group health plan is 

not required to comply with either the 

State external review process or the 

Federal external review process. The 

July 2010 regulations provided a 

transition period for plan years (in the 

individual market, policy years) 

beginning before July 1, 2011, during 

which any existing State external review 

process will be considered sufficient 

(and will apply to health insurance 

issuers in that State). During the 

transition period, in States and 

territories without an existing State 

external review process (Alabama, 

Mississippi, Nebraska, Guam, American 

Samoa, U.S. Virgin Islands and the 

Northern Mariana Islands), HHS 

guidance generally provided that health 

insurance issuers will participate in the 

HHS-administered process. As 

explained later in this preamble, this 

amendment to the July 2010 regulations 

modifies the transition period originally 

issued as part of the July 2010 

regulations so that the last day of the 

transition period for all health insurance 

issuers offering group and individual 

health insurance coverage is December 

31, 2011. 

In addition, the July 2010 regulations 

provided that, following the conclusion 

of the transition period, health 

insurance issuers in a State that does 

not meet the minimum consumer 

protection standards set forth in 

paragraph (c) of the July 2010 

regulations will participate in an 

external review process under Federal 

standards similar to the process under 

the NAIC Uniform Model Act, such as 

the HHS-administered process. Separate 

guidance being issued contemporaneous 

with the publication of this amendment 

announces standards under which, until 

January 1, 2014, a State may also 

operate such an external review process 

under Federal standards similar to the 

process under the NAIC Uniform Model 

Act (an ‘‘NAIC-similar process’’). 

Accordingly, if HHS determines that a 

State has neither implemented the 

minimum consumer protections 

required under paragraph (c) of the July 

2010 regulations, nor an NAIC-similar 

process, issuers in the State will have 

the choice of participating in either the 

HHS-administered process or the 

private accredited IRO process. HHS is 

adopting this approach to permit States 

to operate their external review 

processes under standards established 

by the Secretary until January 1, 2014, 

avoiding unnecessary disruption, while 

States work to adopt an ‘‘NAIC-parallel 

process,’’ consistent with the consumer 

protections set forth in paragraph (c) of 

the July 2010 regulations. 

c. Self-insured, nonfederal 

governmental plans. 

For self-insured, nonfederal 

governmental plans (which are subject 

to the PHS Act, but not ERISA or the 

Code), previous HHS guidance generally 

provided that they follow the private 

accredited IRO process.15 (In States and 

territories that did not have an existing 

external review process (Alabama, 

Mississippi, Nebraska, Guam, American 

Samoa, U.S. Virgin Islands and the 

Northern Mariana Islands), previous 

HHS guidance generally provided that 

such plans may choose to follow the 

HHS-administered process or follow the 

private accredited IRO process.) 

Separate guidance being issued 

contemporaneous with the publication 

of this amendment generally treats selfinsured nonfederal governmental plans 

the same as health insurance issuers. 

That is, a State may temporarily operate 

such an external review process 

applicable to a self-insured nonfederal 

governmental plan under Federal 

standards similar to the process under 

the NAIC Uniform Model Act. If no such 

State-operated process exists, selfinsured nonfederal governmental plans 

have the choice of participating in either 

the HHS-administered process or the 

private accredited IRO process. 

2. Scope of Claims Eligible for External 

Review 

While the process varies depending 

on the type of coverage, so does the 

scope of claims eligible for external 

review. That is, for insurance coverage 

and self-insured nonfederal 

governmental plans subject to a State 

external review process (either an NAICparallel process or an NAIC-similar 

process), the State determines the scope 

of claims eligible for external review.16

For coverage subject to either the HHSadministered process or the private 

accredited IRO process, the July 2010 

regulations provided that any adverse 

benefit determination (or final internal 

adverse benefit determination) could be 

reviewed unless it is related to a 

participant’s or beneficiary’s failure to 

meet the requirements for eligibility 

under the terms of a group health plan. 

As explained later in this preamble, this 

amendment to the July 2010 regulations 

modifies the scope of claims eligible for 


emcdonald on DSK2BSOYB1PROD with RULES3
37212 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

17Under the DOL claims procedure regulation, a 

‘‘claim involving urgent care’’ is a claim for medical 

care or treatment with respect to which the 

application of the time periods for making nonurgent care determinations could seriously 

jeopardize the life or health of the claimant or the 

ability of the claimant to regain maximum function; 

or, in the opinion of a physician with knowledge 

of the claimant’s medical condition, would subject 

the claimant to severe pain that cannot be 

adequately managed without the care or treatment 

that is the subject of the claim. 

18 75 FR 43330, 43333 (July 23, 2010). 19 42 U.S.C. 1395dd. 

20The amount of the claim may not be knowable 

or available at the time, such as in a case of 

preauthorization, or there may be no specific claim, 

such as in a case of rescission that is not connected 

to a claim. 

21 ICD–9 and ICD–10 codes refer to the 

International Classification of Diseases, 9th revision 

and 10th revision, respectively. The DSM–IV codes 

refer to the Diagnostic and Statistical Manual of 

Mental Disorders, Fourth Edition. 

22CPT refers to Current Procedural Terminology. 

23CARC refers to Claim Adjustment Reason Code 

and RARC refers to Remittance Advice Remark 

Code. 

24To assist plans and issuers in making these 

disclosures, the Departments provided a current list 

of relevant consumer assistance programs and 

ombudsmen in the Appendix to T.R. 2011–01. 

Plans and issuers with July 1 plan years may rely 

upon the list in that Appendix when developing 

their notices of adverse benefit determination and 

final internal adverse benefit determination for plan 

years beginning on July 1, 2011. The Departments 

are committed to reviewing and updating this list. 

The first update is being made available 

contemporaneous with publication of this 

amendment. The first update is available (and any 

future updates will be made available) at http:// 

www.dol.gov/ebsa/healthreform and http:// 

cciio.cms.gov/programs/consumer/capgrants/ 

index.html. 

external review under the Federal 

external review process. 

II. Overview of Amendments to the 

Interim Final Regulations 

A. Internal Claims and Appeals 

1. Expedited Notification of Benefit 

Determinations Involving Urgent Care 

(Paragraph (b)(2)(ii)(B) of the July 2010 

Regulations) 

The July 2010 regulations provided 

that a plan or issuer must notify a 

claimant of a benefit determination 

(whether adverse or not) with respect to 

a claim involving urgent care (as 

defined in the DOL claims procedure 

regulation) 17 as soon as possible, taking 

into account the medical exigencies, but 

not later than 24 hours after the receipt 

of the claim by the plan or issuer, unless 

the claimant fails to provide sufficient 

information to determine whether, or to 

what extent, benefits are covered or 

payable under the plan or health 

insurance coverage. This was a change 

from the DOL claims procedure 

regulation, which generally requires a 

determination not later than 72 hours 

after receipt of the claim by a group 

health plan for urgent care claims. The 

preamble to the July 2010 regulations 

stated that the Departments expected 

electronic communication would enable 

faster decision-making than in the year 

2000, when the DOL claims procedure 

regulation was issued.18

While some commenters supported 

the 24-hour rule (particularly consumer 

advocates and medical associations, 

including mental health providers who 

noted the 24-hour standard was 

especially important for people in 

psychiatric crisis), concerns were raised 

by many plans and issuers regarding the 

burden of a 24-hour turnaround. Some 

commenters argued that some of the 

claims constituting ‘‘urgent care’’ and 

thus qualifying for the expedited 

timeframe really do not need to be made 

within 24 hours. Moreover, a number of 

commenters highlighted that the 

72-hour provision was intended only to 

serve as a ‘‘backstop’’; as the general 

rule under both the July 2010 

regulations and the DOL claims 

procedure regulation requires a decision 

as soon as possible consistent with the 

medical exigencies involved, making 

the change to a 24-hour timeframe 

unnecessary for the most serious 

medical cases. Some commenters cited 

the Emergency Medical Treatment and 

Labor Act (EMTALA),19 which generally 

requires hospitals to provide emergency 

care to individuals with or without 

insurance or preauthorization and, 

therefore, mitigates the need for 

expedited pre-service emergency claims 

determinations in many situations. 

Finally, some commenters stated that a 

firm 24-hour turnaround for urgent care 

claims will adversely affect claimants, 

as plans and issuers will not have 

sufficient time to properly review a 

claim, adversely affecting the quality of 

the review process in cases where the 

provider cannot be consulted in time, 

and leading to unnecessary denials of 

claims. 

After considering the comments, and 

the costs and benefits of an absolute 24- 

hour decision-making deadline for preservice urgent care claims, this 

amendment permits plans and issuers to 

follow the original rule in the DOL 

claims procedure regulation (requiring 

decision-making in the context of preservice urgent care claims as soon as 

possible consistent with the medical 

exigencies involved but in no event later 

than 72 hours), provided that the plan 

or issuer defers to the attending 

provider with respect to the decision as 

to whether a claim constitutes ‘‘urgent 

care.’’ At the same time, the 

Departments underscore that the 72- 

hour timeframe remains only an outside 

limit and that, in cases where a decision 

must be made more quickly based on 

the medical exigencies involved, the 

requirement remains that the decision 

should be made sooner than 72 hours 

after receipt of the claim. 

2. Additional Notice Requirements for 

Internal Claims and Appeals (Paragraph 

(b)(2)(ii)(E) of the July 2010 Regulations) 

The July 2010 regulations also 

provided additional content 

requirements for any notice of adverse 

benefit determination or final internal 

adverse benefit determination. The July 

2010 regulations required a plan or 

issuer to: 

(a) Ensure that any notice of adverse 

benefit determination or final internal 

adverse benefit determination includes 

information sufficient to identify the 

claim involved. Under the July 2010 

regulations, this information included 

the date of service, the health care 

provider, and the claim amount (if 

applicable),20 as well as the diagnosis 

code (such as an ICD–9 code, ICD–10 

code, or DSM–IV code),21 the treatment 

code (such as a CPT code),22 and the 

corresponding meanings of these codes. 

(b) Ensure that the description of the 

reason or reasons for the adverse benefit 

determination or final internal adverse 

benefit determination includes the 

denial code (such as a CARC and 

RARC) 23 and its corresponding 

meaning. It must also include a 

description of the plan’s or issuer’s 

standard, if any, that was used in 

denying the claim (for example, if a plan 

applies a medical necessity standard in 

denying a claim, the notice must 

include a description of the medical 

necessity standard). In the case of a 

notice of final internal adverse benefit 

determination, this description must 

include a discussion of the decision. 

(c) Provide a description of available 

internal appeals and external review 

processes, including information 

regarding how to initiate an appeal. 

(d) Disclose the availability of, and 

contact information for, any applicable 

office of health insurance consumer 

assistance or ombudsman established 

under PHS Act section 2793 to assist 

enrollees with the internal claims and 

appeals and external review 

processes.24

Many comments received on the July 

2010 regulations raised concerns about 

the additional content required to be 

included in the notices. Comments by a 

range of stakeholders, including plans, 

issuers, and consumer advocacy 

organizations focused heavily on the 

automatic provision of the diagnosis 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37213 

25Several commenters raised concerns that 

providers’ initial or suspected diagnosis may not 

match the ultimate diagnosis or patients’ perception 

of their diagnosis. One commenter gave the 

example of a patient who has a biopsy procedure. 

In that case, the patient would receive an EOB with 

an initial diagnosis code of cancer, however the 

results of the biopsy may rule out cancer. In that 

situation, the EOB can result in confusion and 

unnecessary mental anguish. 

26 In particular, comment letters cited concerns 

with respect to programming aspects of providing 

diagnosis codes at a time when plans and issuers 

are changing over from ICD–9 diagnosis codes to 

more extensive and technical ICD–10 codes. 

27Several commenters noted that technical ICD– 

9 and/or ICD–10 codes can be confusing and/or 

cause worry. One commenter gave the example of 

a patient presenting with a white coating on his 

tongue, who is told not to worry and to brush the 

tongue with a toothbrush. The diagnosis code is 

529.3, hypertrophy of tongue papillae, a term not 

used by the patient’s doctor during the office visit 

and, therefore, prone to cause confusion and/or 

concern. 

28As discussed earlier, in footnote 9, information 

related to diagnosis and treatment codes (and/or 

their meanings) is, however, generally required to 

be provided to claimants upon request under 

existing DOL claims procedures, which is also 

incorporated in the July 2010 regulations. See 29 

CFR 2560.503–1(h)(2)(iii) and paragraph (b)(2)(i) of 

the July 2010 regulations. 

and treatment codes (and their 

meanings). Concerns were raised about 

privacy (because explanations of 

benefits (EOBs) often are sent to an 

individual who is not the patient, such 

as an employee who is the patient’s 

spouse or parent), interference with the 

doctor-patient relationship,25 and high 

costs.26 More specifically, commenters 

highlighted that sensitive issues such as 

mental health treatments would be 

identified by specific treatment or 

diagnosis codes and that privacy 

concerns are magnified for adult 

dependents under age 26 who may be 

covered by their parent’s health plan. 

Others pointed out that there are over 

20,000 treatment and diagnosis codes in 

use today, presenting a costly 

administrative and operational 

challenge for plans and issuers. 

Comments also questioned the efficacy 

of providing the codes, which some 

argued are often very difficult for the 

average patient to understand.27

Other comments were received in 

support of the coding provisions. 

Consumer advocates commented 

positively on the requirement that 

denial notices include information for 

consumers about their right to appeal 

denials and the availability of state 

consumer assistance programs (CAPs) 

that will help consumers file appeals. 

There were also positive comments on 

the requirement to provide a rationale 

for the denial (including a description of 

the plan’s or issuer’s standard (such as 

‘‘medical necessity’’), if any, that was 

used denying the claim). With respect to 

the provision of coding information, 

some commented that this would be 

helpful to consumers because coding 

errors and missing coding information 

often are the basis for denying claims. 

After considering all of the comments, 

and the costs and benefits of the 

additional disclosure, this amendment 

eliminates the requirement to 

automatically provide the diagnosis and 

treatment codes as part of a notice of 

adverse benefit determination (or final 

internal adverse benefit determination) 

and instead substitutes a requirement 

that the plan or issuer must provide 

notification of the opportunity to 

request the diagnosis and treatment 

codes (and their meanings) in all notices 

of adverse benefit determination (and 

notices of final internal adverse benefit 

determination), and a requirement to 

provide this information upon 

request.28 This amendment also clarifies 

that, in any case, a plan or issuer must 

not consider a request for such 

diagnosis and treatment information, in 

itself, to be a request for (and therefore 

trigger the start of) an internal appeal or 

external review. 

3. Deemed Exhaustion of Internal 

Claims and Appeals Processes 

(Paragraph (b)(2)(ii)(F) of the July 2010 

Regulations) 

The courts generally require claimants 

to exhaust administrative proceedings 

before going to court or seeking external 

review. When plans and issuers offer 

full and fair internal procedures for 

resolving claims, it is reasonable to 

insist that claimants first turn to those 

procedures before seeking judicial or 

external review of benefit denials. There 

is less justification, however, for 

insisting that a claimant exhaust 

administrative procedures that do not 

comply with the law. Accordingly, the 

July 2010 regulations permitted 

claimants to immediately seek review if 

a plan or issuer failed to ‘‘strictly 

adhere’’ to all of the July 2010 

regulations’ requirements for internal 

claims and appeals processes, regardless 

of whether the plan or issuer asserted 

that it ‘‘substantially complied’’ with 

the July 2010 regulations. The July 2010 

regulations also clarified that, in such 

circumstances, the reviewing tribunal 

should not give special deference to the 

plan’s or issuer’s decision, but rather 

should resolve the dispute de novo. 

Consumer groups generally supported 

this ‘‘strict adherence’’ approach, but 

the approach received a number of 

negative comments from some issuers 

and plan sponsors, who advocate a 

‘‘substantial compliance’’ approach. 

The Departments continue to believe 

that claimants should not have to follow 

an internal claims and appeals 

procedure that is less than full, fair, and 

timely, as set forth in the July 2010 

regulations. In response to comments, 

the Departments are retaining the 

general approach to this requirement, 

but this amendment also adds a new 

paragraph (b)(2)(ii)(F)(2) to the July 2010 

regulations to provide an exception to 

the strict compliance standard for errors 

that are minor and meet certain other 

specified conditions. The new 

paragraph will also protect claimants 

whose attempts to pursue other 

remedies under paragraph (b)(2)(ii)(F)(1) 

of the interim final regulations are 

rejected by a reviewing tribunal. Under 

the amended approach, any violation of 

the procedural rules of the July 2010 

regulations pertaining to internal claims 

and appeals would permit a claimant to 

seek immediate external review or court 

action, as applicable, unless the 

violation was: 

(1) De minimis; 

(2) Non-prejudicial; 

(3) Attributable to good cause or 

matters beyond the plan’s or issuer’s 

control; 

(4) In the context of an ongoing goodfaith exchange of information; and 

(5) Not reflective of a pattern or 

practice of non-compliance. 

In addition, the claimant would be 

entitled, upon written request, to an 

explanation of the plan’s or issuer’s 

basis for asserting that it meets this 

standard, so that the claimant could 

make an informed judgment about 

whether to seek immediate review. 

Finally, if the external reviewer or the 

court rejects the claimant’s request for 

immediate review on the basis that the 

plan met this standard, this amendment 

would give the claimant the right to 

resubmit and pursue the internal appeal 

of the claim. 

4. Form and Manner of Notice 

(Paragraph (e) of the July 2010 

Regulations) 

PHS Act section 2719 requires group 

health plans and health insurance 

issuers to provide relevant notices in a 

culturally and linguistically appropriate 

manner. The July 2010 regulations set 

forth a requirement to provide notices in 

a non-English language based on 

separate thresholds of the number of 

people who are literate in the same nonEnglish language. In the group market, 

the threshold set forth in the July 2010 

regulations differs depending on the 

number of participants in the plan: 

• For a plan that covers fewer than 

100 participants at the beginning of a 

plan year, the threshold is 25 percent of 


emcdonald on DSK2BSOYB1PROD with RULES3
37214 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

29At the time of publication of this amendment, 

255 U.S. counties (78 of which are in Puerto Rico) 

meet this threshold. The overwhelming majority of 

these are Spanish; however, Chinese, Tagalog, and 

Navajo are present in a few counties, affecting five 

states (specifically, Alaska, Arizona, California, 

New Mexico, and Utah). A full list of the affected 

U.S. counties in 2011 is included in Table 2 later 

in this preamble, under the heading, ‘‘IV. Economic 

Impact and Paperwork Burden.’’ 

30This information will be made available at 

http://www.dol.gov/ebsa/healthreform and http:// 

cciio.cms.gov/. 

all plan participants being literate only 

in the same non-English language. 

• For a plan that covers 100 or more 

participants at the beginning of a plan 

year, the threshold is the lesser of 500 

participants, or 10 percent of all plan 

participants, being literate only in the 

same non-English language. 

These thresholds were adapted from 

the DOL regulations regarding style and 

format for a summary plan description, 

at 29 CFR 2520.102–2(c) for participants 

who are not literate in English. For the 

individual market, the threshold is 10 

percent of the population residing in the 

county being literate only in the same 

non-English language. The individual 

market threshold was generally adapted 

from the approach used under the 

Medicare Advantage program, which 

required translation of materials in 

languages spoken by more than 10 

percent of the general population in a 

service area at the time the threshold 

was established. 

Under the July 2010 regulations, if an 

applicable threshold is met with respect 

to a non-English language, the plan or 

issuer must provide the notice upon 

request in the non-English language. 

Additionally, the plan or issuer must 

include a statement in the English 

versions of all notices, prominently 

displayed in the non-English language, 

offering the provision of such notices in 

the non-English language. Finally, to the 

extent the plan or issuer maintains a 

customer assistance process (such as a 

telephone hotline) that answers 

questions or provides assistance with 

filing claims and appeals, the plan or 

issuer must provide such assistance in 

the non-English language. 

Comments received in response to the 

July 2010 regulations raised several 

concerns about this requirement. One 

group of commenters stated that the 

thresholds for the group market were 

difficult to comply with, especially for 

small plans (where an individual or a 

small number of individuals could 

cause a plan to change status with 

respect to the threshold) and insured 

plans (where the issuer may be in a very 

difficult position to determine the 

English literacy of an employer’s 

workforce). Some commenters stated 

that the threshold requirements for the 

group and individual markets should be 

consistent. 

Other commenters were concerned 

with the high costs of compliance with 

this rule, particularly the ‘‘tagging and 

tracking requirement’’ to the extent that 

individuals who request a document in 

a non-English language would need to 

be ‘‘tagged’’ and ‘‘tracked’’ so that any 

future notices would be provided 

automatically in the non-English 

language. Some of these commenters 

cited the high costs associated with 

implementing translation requirements 

pursuant to California State law and the 

low take-up rates of translated materials 

in California. Some commenters also 

cited the importance of having written 

translation of documents available (at a 

minimum, upon request), as well as 

having oral language services for 

customer assistance. 

Following review of the comments 

submitted on this issue and further 

review and consideration of the 

provisions of PHS Act section 2719, the 

Departments have determined it is 

appropriate to amend the provisions of 

the July 2010 regulations related to the 

provision of notices in a culturally and 

linguistically appropriate manner. This 

amendment establishes a single 

threshold with respect to the percentage 

of people who are literate only in the 

same non-English language for both the 

group and individual markets. With 

respect to group health plans and health 

insurance issuers offering group or 

individual health insurance coverage, 

the threshold percentage of people who 

are literate only in the same non-English 

language will be set at 10 percent or 

more of the population residing in the 

claimant’s county, as determined based 

on American Community Survey data 

published by the United States Census 

Bureau.29 The Departments will update 

this guidance annually on their Web site 

if there are changes to the list of the 

counties determined to meet this 10 

percent threshold for the county’s 

population being literate only in the 

same non-English language.30

This amendment to the July 2010 

regulations requires that each notice 

sent by a plan or issuer to an address in 

a county that meets this threshold 

include a one-sentence statement in the 

relevant non-English language about the 

availability of language services. The 

Departments have provided guidance 

with sample sentences in the relevant 

languages in separate guidance being 

issued contemporaneous with the 

publication of this amendment. For ease 

of administration, some plans and 

issuers may choose to use a onesentence statement for all notices within 

an entire State (or for a particular 

service area) that reflects the threshold 

language or languages in any county 

within the State or service area. For 

example, statewide notices in California 

could include the relevant one-sentence 

statement in Spanish and Chinese 

because, using the data from Table 2, 

Spanish meets the 10 percent threshold 

in Los Angeles County and 22 other 

counties and Chinese meets the 10 

percent threshold in San Francisco 

County. This would be a permissible 

approach to meeting the rule under this 

amendment. 

In addition to including a statement 

in all notices in the relevant nonEnglish language, this amendment 

requires a plan or issuer to provide a 

customer assistance process (such as a 

telephone hotline) with oral language 

services in the non-English language 

and provide written notices in the nonEnglish language upon request. For this 

purpose, plans and issuers are permitted 

to direct claimants to the same customer 

service telephone number where 

representatives can first attempt to 

address the consumer’s questions with 

an oral discussion, but also provide a 

written translation upon request in the 

threshold non-English language. Finally, 

this amendment removes any ‘‘tagging 

and tracking’’ requirement that would 

have otherwise applied under the July 

2010 regulations. 

This amendment to the July 2010 

regulations provides standards for 

providing culturally and linguistically 

appropriate notices that balance the 

objective of protecting consumers by 

providing understandable notices to 

individuals who speak primary 

languages other than English with the 

goal of simplifying information 

collection burdens on plans and issuers. 

(Note, nothing in these regulations 

should be construed as limiting an 

individual’s rights under Federal or 

State civil rights statutes, such as Title 

VI of the Civil Rights Act of 1964 (Title 

VI) which prohibits recipients of 

Federal financial assistance, including 

issuers participating in Medicare 

Advantage, from discriminating on the 

basis of race, color, or national origin. 

To ensure non-discrimination on the 

basis of national origin, recipients are 

required to take reasonable steps to 

ensure meaningful access to their 

programs and activities by limited 

English proficient persons. For more 

information, see, ‘‘Guidance to Federal 

Financial Assistance Recipients 

Regarding Title VI Prohibition Against 

National Origin Discrimination 

Affecting Limited English Proficient 

Persons,’’ available at http:// 

www.hhs.gov/ocr/civilrights/resources/ 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37215 

31The NAIC Uniform Model Act in place on July 

23, 2010 provides external review for claims 

involving medical necessity, appropriateness, 

health care setting, level of care, effectiveness (of a 

covered benefit), whether a treatment is 

experimental, and whether a treatment is 

investigational. 

specialtopics/lep/ 

policyguidancedocument.html.) 

The Departments welcome comments 

on this amendment, including whether 

it would be appropriate to include a 

provision in the final rules requiring 

health insurance issuers providing 

group health insurance coverage to 

provide language services in languages 

that do not meet the requisite threshold 

for an applicable non-English language, 

if requested by the administrator or 

sponsor of the group health plan to 

which the coverage relates. For 

example, if Chinese does not meet the 

10 percent threshold in New York 

County, but an employer with a large 

Chinese-speaking population asks the 

health insurance issuer providing its 

group health insurance coverage to 

provide language services in Chinese (as 

described in the amendment), the 

Departments invite comment on what 

obligations should be imposed on the 

issuer, if any, to provide language 

services in Chinese. 

B. External Review 

1. Duration of Transition Period for 

State External Review Processes 

In general, if State laws do not meet 

the minimum consumer protections of 

the NAIC Uniform Model Act,31 as set 

forth in paragraph (c)(2) of the July 2010 

regulations, insurance coverage (as well 

as self-insured nonfederal governmental 

plan and church plan coverage) is 

subject to the requirements of an 

external review process under Federal 

standards similar to the process under 

the NAIC Uniform Model Act, such as 

the HHS-administered process. 

Paragraph (c)(3) of the July 2010 

regulations provided a transition period 

for plan years (in the individual market, 

policy years) beginning before July 1, 

2011 in order to allow States time to 

amend their laws to meet or go beyond 

the minimum consumer protections of 

the NAIC Uniform Model Act set forth 

in paragraph (c)(2) of the July 2010 

regulations. HHS has been working 

closely with States regarding enactment 

of laws to conform to paragraph (c)(2) 

and much progress has been made. 

However, enacting State legislation and 

regulations can often be a complex and 

time-consuming process. Accordingly, 

the Departments are modifying the 

transition period under paragraph (c)(3) 

of the July 2010 regulations so that the 

last day of the transition period is 

December 31, 2011 to give States, which 

are making substantial progress in 

implementing State external review 

processes that conform to paragraph 

(c)(2), the requisite time to complete 

that process. Because the July 2010 

regulations would have ended the 

transition period for plan years (in the 

individual market, policy years) 

beginning on or after July 1, 2011, the 

Departments note that ending the 

transition period on December 31, 2011 

will reduce the length of the transition 

period for plans and policies with plan 

years (in the individual market, policy 

years) beginning after January 1 but 

before July 1. When the July 2010 

regulations were published, the 

Departments anticipated that issuers in 

every State that had not enacted laws to 

conform to paragraph (c)(2) of the July 

2010 regulations would need to 

participate in the HHS-administered 

process. Now, the Departments have 

decided that issuers may continue to 

participate in a State external review 

process under Federal standards similar 

to the process under the NAIC Uniform 

Model Act (an NAIC-similar process), 

which the Departments anticipate will 

reduce market disruption when the 

transition period ends. Therefore, based 

on the Departments’ concerns for 

making the consumer protections of the 

Affordable Care Act available without 

undue delay and for ensuring as much 

uniformity as possible in the availability 

of those protections regardless of the 

form of a consumer’s health coverage, 

the Departments have decided to end 

the transition period on December 31, 

2011. Therefore, this amendment to the 

July 2010 regulations provides that, 

before January 1, 2012, an applicable 

State external process will apply in lieu 

of the requirements of the Federal 

external review process. PHS Act 

section 2719(c) authorizes the 

Departments to deem an external review 

process ‘‘in operation as of the date of 

enactment’’ of the Affordable Care Act 

as compliant with the external review 

requirements of PHS Act section 

2719(b). Through December 31, 2011, 

any currently effective State external 

review process satisfies the 

requirements of either PHS Act section 

2719(c) or section 2719(b)(2). If there is 

no applicable State external review 

process, separate guidance being issued 

contemporaneous with the publication 

of this amendment generally provides a 

choice between the HHS-administered 

process or the private accredited IRO 

process. 

2. Scope of the Federal External Review 

Process 

Paragraph (d)(1) of the July 2010 

regulations sets forth the scope of claims 

eligible for external review under the 

Federal external review process. 

Specifically, any adverse benefit 

determination (including a final internal 

adverse benefit determination) could be 

reviewed unless it related to a 

participant’s or beneficiary’s failure to 

meet the requirements for eligibility 

under the terms of a group health plan 

(i.e., worker classification and similar 

issues were not within the scope of the 

Federal external review process). 

Comments received in response to the 

July 2010 regulations were mixed on the 

scope of claims eligible for external 

review. Some commenters argued that 

PHS Act section 2719 requires the 

Federal external review process to be 

‘‘similar to’’ the NAIC Uniform Model 

Act and that the broader scope of claims 

eligible for the Federal external review 

process is a major departure from the 

NAIC Uniform Model Act. In addition, 

some comments from plans and issuers 

stated that the IROs that are used in the 

private accredited IRO process 

traditionally have expertise in 

adjudicating medical claims, and 

questioned IROs’ experience and 

expertise with legal and contractual 

claims. Other comments from IROs and 

the IRO industry stated that these 

organizations do currently conduct 

reviews that involve both medical 

judgment issues and legal and 

contractual issues, and that there is 

sufficient capacity for conducting 

reviews of such disputes. 

Some plan and issuer comments 

highlighted that, with a limited number 

of accredited IROs and increased 

demand for their services, the cost of 

external review for self-insured group 

health plans will likely increase. By 

contrast, an IRO association group 

commented that member organizations 

are not at capacity with regard to the 

volume of work they can perform, and 

that they are confident that the number 

of accredited IROs can adequately 

handle the volume of reviews 

anticipated for the Federal external 

review process. 

Some plans and issuers stated that 

handing plan document interpretation 

and legal interpretation issues over to an 

IRO may raise issues of consistency of 

interpretations within a plan, 

unwarranted consistency across plans 

that have unique standards, ERISA 

fiduciary responsibility concerns, and 

possible conflicts. At the same time, 

other comments generally supported the 

broad scope of claims eligible for the 


emcdonald on DSK2BSOYB1PROD with RULES3
37216 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

32See 26 CFR 54.9802–1(f)(2)(iv)(A), 29 CFR 

2590.702(f)(2)(iv)(A), and 45 CFR 

146.121(f)(2)(iv)(A), requiring that wellness 

programs that require individuals to satisfy a 

standard related to a health factor in order to obtain 

a reward allow a reasonable alternative standard (or 

waiver of the otherwise applicable standard) for 

obtaining the reward for any individual for whom, 

for that period, it is either unreasonably difficult 

due to a medical condition to satisfy the otherwise 

applicable standard, or medically inadvisable to 

attempt to satisfy the otherwise applicable standard. 

33See 26 CFR 54.9815–2713T, 29 CFR 2590.715– 

2713, and 45 CFR 147.130; see also FAQ 8, FAQs 

About the Affordable Care Act Implementation Part 

II, regarding the scope, setting, or frequency of the 

items or services to be covered under the preventive 

health services recommendations and guidelines 

(available at http://www.dol.gov/ebsa/faqs/faqaca2.html and http://cciio.cms.gov/resources/ 

factsheets/aca_implementation_faqs2.html). 

34See Code section 9812 and 26 CFR 54.9812–1T, 

ERISA section 712 and 29 CFR 2590.712, and PHS 

Act section 2726 and 45 CFR 146.136. 

Federal external review process as set 

forth in the July 2010 regulations. These 

commenters argued very strongly that it 

is nearly impossible to adjudicate 

contractual claims through traditional 

ERISA enforcement (which generally 

relies on Federal court adjudication), 

leaving plan participants and 

beneficiaries with no effective means of 

enforcing their rights to benefits under 

a plan. Consumer organizations further 

commented that external review finally 

provides the free, independent means of 

enforcement to level the playing field of 

claims adjudication and, therefore, the 

scope of claims eligible for the Federal 

external review process should be as 

broad as possible. 

After considering all the comments, 

with respect to claims for which 

external review has not been initiated 

before September 20, 2011, the 

amendment suspends the original rule 

in the July 2010 regulations regarding 

the scope of claims eligible for external 

review for plans using a Federal 

external review process (regardless of 

which type of Federal process), 

temporarily replacing it with a different 

scope. Specifically, this amendment 

suspends the broad scope of claims 

eligible for the Federal external review 

process and narrows the scope to claims 

that involve (1) medical judgment 

(excluding those that involve only 

contractual or legal interpretation 

without any use of medical judgment), 

as determined by the external reviewer; 

or (2) a rescission of coverage. The more 

narrow scope under this amendment is 

more similar to the scope of claims 

eligible for external review under the 

NAIC Uniform Model Act. This 

amendment provides an example 

describing a plan that generally only 

provides 30 physical therapy visits but 

will provide more with an approved 

treatment plan. The plan’s rejection of a 

treatment plan submitted by a provider 

for the 31st visit based on a failure to 

meet the plan’s standard for medical 

necessity involves medical judgment 

and, therefore, the claim is eligible for 

external review. Similarly, another 

example describes a plan that generally 

does not provide coverage for services 

provided on an out-of-network basis, 

but will provide coverage if the service 

cannot effectively be provided in 

network. In this example, again, the 

plan’s rejection of a claim for out-ofnetwork services involves medical 

judgment. Additional examples of 

situations in which a claim is 

considered to involve medical judgment 

include adverse benefit determinations 

based on: 

• The appropriate health care setting 

for providing medical care to an 

individual (such as outpatient versus 

inpatient care or home care versus 

rehabilitation facility); 

• Whether treatment by a specialist is 

medically necessary or appropriate 

(pursuant to the plan’s standard for 

medical necessity or appropriateness); 

• Whether treatment involved 

‘‘emergency care’’ or ‘‘urgent care’’, 

affecting coverage or the level of 

coinsurance; 

• A determination that a medical 

condition is a preexisting condition; 

• A plan’s general exclusion of an 

item or service (such as speech therapy), 

if the plan covers the item or service in 

certain circumstances based on a 

medical condition (such as, to aid in the 

restoration of speech loss or impairment 

of speech resulting from a medical 

condition); 

• Whether a participant or beneficiary 

is entitled to a reasonable alternative 

standard for a reward under the plan’s 

wellness program; 32

• The frequency, method, treatment, 

or setting for a recommended preventive 

service, to the extent not specified, in 

the recommendation or guideline of the 

U.S. Preventive Services Task Force, the 

Advisory Committee on Immunization 

Practices of the Centers for Disease 

Control and Prevention, or the Health 

Resources and Services Administration 

(as described in PHS Act section 2713 

and its implementing regulations); 33

and 

• Whether a plan is complying with 

the nonquantitative treatment limitation 

provisions of the Mental Health Parity 

and Addiction Equity Act and its 

implementing regulations, which 

generally require, among other things, 

parity in the application of medical 

management techniques.34

The suspension is intended to give 

the marketplace time to adjust to 

providing external review. It will also 

allow the Departments time to evaluate 

IROs’ capacity for handling external 

reviews; to consider whether current 

accreditation standards are sufficient to 

ensure that IROs are capable of making 

accurate and consistent decisions (both 

across different plans and across 

different IROs) regarding legal and 

contractual issues that do not involve 

medical judgment or rescissions; and to 

assess the mechanics of the Federal 

external review process (and any 

potential adjustments). The 

Departments solicit comments on these 

issues, including on whether limiting 

the scope of claims during the 

suspension period will impose 

administrative costs in determining 

whether a claim is eligible for external 

review. The Departments also welcome 

any data on external review claims 

actually performed to date under private 

contracts pursuant to the private 

accredited IRO process for 

implementing PHS Act § 2719(b), 

including number of claims reviewed, 

type of review (such as whether it 

involved any medical judgment or not), 

and costs associated with the review. 

The Departments expect that the 

suspension will be lifted by January 1, 

2014, when other consumer protections 

under the Affordable Care Act take 

effect. Moreover, if, after taking into 

account all the relevant information, 

including public comments, the 

Departments decide to return to the 

original rule providing for a broad scope 

of claims or permanently modify the 

scope of claims through rulemaking, the 

Departments will give sufficient 

advance notice to enable plans, their 

service providers, IROs, and other 

affected parties sufficient time to 

comply with a new rule. 

Separate guidance being issued 

contemporaneous with the publication 

of this amendment announces standards 

under which, until January 1, 2014, a 

State may operate an external review 

process under Federal standards similar 

to the process under the NAIC Uniform 

Model Act (an NAIC-similar process). 

The Departments are adopting this 

approach to permit States to operate 

their external review processes under 

standards established by the 

Departments until January 1, 2014, 

avoiding unnecessary disruption, while 

States work to adopt the consumer 

protections set forth in paragraph (c) of 

the July 2010 regulations. Paragraph 

(d)(1) of the July 2010 regulations, as 

amended, will govern the scope of a 

State external review process under 

Federal standards similar to the process 

under the NAIC Uniform Model Act. 

Because the amended paragraph (d)(1) 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37217 

35See 26 CFR 54.9815–2719T(d)(2)(iv), 29 CFR 

2590.715–2719(d)(2)(iv), and 45 CFR 

147.136(d)(2)(iv). 

36See 26 CFR 54.9815–2719T(c)(2)(xi), 29 CFR 

2590.715–2719(c)(2)(xi), and 45 CFR 

147.136(c)(2)(xi). 

creates a broader scope of external 

review than is required under the NAIC 

Uniform Model Act, and because it 

would be illogical to require States to 

make changes to their process to 

encompass the broader scope of 

paragraph (d)(1) in their external review 

process while they work to adopt the 

consumer protections of the NAIC 

Uniform Model Act (which has a 

narrower scope), the Departments are 

also amending paragraph (d)(1) to 

permit the Secretaries to modify the 

scope of the Federal external review 

process in future guidance to permit 

State external review processes (both 

NAIC-similar processes and NAICparallel processes) to the scope that 

applies under the NAIC Uniform Model 

Act. 

3. Clarification Regarding Requirement 

That External Review Decision Be 

Binding 

The Departments have received a 

number of comments on the 

requirement that an IRO decision be 

binding on parties. Specifically, the July 

2010 regulations provided that an 

external review decision by an IRO is 

binding on the plan or issuer, as well as 

the claimant, except to the extent that 

other remedies are available under State 

or Federal law.35 This binding 

requirement is also one of the minimum 

consumer protections set forth in 

paragraph (c) of the July 2010 

regulations.36

Some comments received in response 

to the July 2010 regulations highlighted 

the importance of this consumer 

protection and expressed approval that 

this requirement would minimize 

delays that could further hurt claimants, 

as the plan or issuer must provide 

coverage or payment for the claim 

immediately upon receipt of a notice of 

a final external review decision. Other 

commenters questioned whether the 

requirement that external review is 

binding eliminates the plan’s or issuer’s 

option to choose to pay a claim at any 

time during or after the external review 

process. 

Nothing in PHS Act section 2719(b), 

the July 2010 regulations, or related 

guidance precludes a plan or issuer 

from choosing to provide coverage or 

payment for a benefit. Instead, the 

Departments read the requirement of the 

NAIC Uniform Model Act, which is 

incorporated into the July 2010 

regulations, to require plans and issuers 

to provide a benefit if that is the 

decision of the IRO. A plan or issuer 

may not delay payment because the 

plan disagrees and intends to seek 

judicial review. Instead, while the plan 

may be entitled to seek judicial review, 

it must act in accordance with the IRO’s 

decision (including by making payment 

on the claim) unless or until there is a 

judicial decision otherwise. However, 

the requirement that the IRO’s decision 

be binding does not preclude the plan 

or issuer from making payment on the 

claim or otherwise providing benefits at 

any time, including following a final 

external review decision that denies the 

claim or otherwise fails to require such 

payment or benefits. 

After considering all the comments on 

the requirement that an IRO decision be 

binding on the plan and issuer, as well 

as the claimant, this amendment 

clarifies the language in paragraphs 

(c)(2)(xi) (regarding the minimum 

standards for State external review 

processes) and (d)(2)(iv) (regarding 

Federal external review process 

standards). Specifically, these two 

provisions are amended to add language 

stating that, for purposes of the binding 

provision, the plan or issuer must 

provide benefits (including by making 

payment on the claim) pursuant to the 

final external review decision without 

delay, regardless of whether the plan or 

issuer intends to seek judicial review of 

the external review decision and unless 

or until there is a judicial decision 

otherwise. The Departments welcome 

comments as to whether any additional 

clarifications about the binding 

provision would be helpful. 

C. Separate, Contemporaneous 

Technical Guidance 

Separate technical guidance is being 

issued by the Departments 

contemporaneous with the publication 

of this amendment. This technical 

guidance addresses both State- and 

Federally-administered external review 

processes. An appendix to this technical 

guidance contains revised versions of 

the three model notices issued by the 

Departments in connection with the July 

2010 regulations. The updated versions 

of the model notice of adverse benefit 

determination, model notice of final 

internal adverse benefit determination, 

and model notice of final external 

review decision reflect the requirements 

contained in the provisions of this 

amendment and the guidance. This 

technical guidance will be available at 

http://www.dol.gov/ebsa/healthreform 

and http://cciio.cms.gov. 

HHS is issuing also two additional 

technical guidance documents. The first 

provides instructions for self-insured 

nonfederal governmental plans and 

health insurance issuers with respect to 

election of a Federal external review 

process. The second provides, for 

transparency purposes, updated 

information on how the county-level 

estimates pertaining to the 10 percent 

threshold were calculated for the rules 

related to culturally and linguistically 

appropriate notices. Both of these 

documents will be available at http:// 

cciio.cms.gov. 

III. Interim Final Rules 

Section 9833 of the Code, section 734 

of ERISA, and section 2792 of the PHS 

Act authorize the Secretaries of the 

Treasury, Labor, and HHS (collectively, 

the Secretaries) to promulgate any 

interim final rules that they determine 

are appropriate to carry out the 

provisions of chapter 100 of the Code, 

part 7 of subtitle B of title I of ERISA, 

and part A of title XXVII of the PHS Act, 

which include PHS Act sections 2701 

through 2728 and the incorporation of 

those sections into ERISA section 715 

and Code section 9815. The 

amendments promulgated in this 

rulemaking carry out the provisions of 

these statutes. Therefore, the foregoing 

interim final rule authority applies to 

these amendments. 

Under the Administrative Procedure 

Act (APA) (5 U.S.C. 551 et seq.), while 

a general notice of proposed rulemaking 

and an opportunity for public comment 

is generally required before 

promulgation of regulations, this is not 

required when an agency, for good 

cause, finds that notice and public 

comment thereon are impracticable, 

unnecessary, or contrary to the public 

interest. The provisions of the APA that 

ordinarily require a notice of proposed 

rulemaking do not apply here because of 

the specific authority to issue interim 

final rules granted by section 9833 of 

the Code, section 734 of ERISA, and 

section 2792 of the PHS Act. Moreover, 

even if the APA requirements for notice 

and comment were applicable to this 

regulation, they have been satisfied. 

This is because the matters that are the 

subject of these amendments have 

already been subjected to public notice 

and comment, as they were addressed in 

the July 2010 regulations, and are a 

logical outgrowth of that document. The 

amendments made in this interim final 

rule are being made in response to 

public comments received on the July 

2010 regulations. While the 

Departments have determined that, even 

if the APA were applicable, an 

additional opportunity for public 

comment is unnecessary in the case of 

these amendments, the Departments are 

issuing these amendments as an interim 


emcdonald on DSK2BSOYB1PROD with RULES3
37218 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

37Under the July 2010 regulations, this included 

the date of service, the health care provider, and the 

claim amount (if applicable), as well as the 

diagnosis code (such as an ICD–9 code, ICD–10 

code, or DSM–IV code), the treatment code (such 

as a CPT code), and the corresponding meanings of 

these codes. 

38All participant counts and the estimates of 

individual policies are from the U.S. Department of 

Labor, EBSA calculations using the March 2009 

Current Population Survey Annual Social and 

Economic Supplement and the 2008 Medical 

Expenditure Panel Survey. 

final rule so as to provide the public 

with an opportunity for public comment 

on these modifications. 

IV. Economic Impact and Paperwork 

Burden 

A. Summary and Need for Regulatory 

Action—Department of Labor and 

Department of Health and Human 

Services 

As stated earlier in this preamble, the 

Departments previously issued the July 

2010 regulations implementing PHS Act 

section 2719, which were published in 

the Federal Register on July 23, 2010 

(75 FR 43330). The July 2010 

regulations set forth rules with respect 

to internal claims and appeals and 

external appeals processes for group 

health plans and health insurance 

issuers that are not grandfathered health 

plans. 

As described in detail in Section II of 

this preamble, after the July 2010 

regulations were issued, the 

Departments received public comments 

expressing concerns about the burdens 

associated with several of the 

regulations’ provisions. In response to 

such comments, the Departments are 

hereby amending the following 

provisions of the July 2010 regulations: 

• Expedited notification of benefit 

determinations involving urgent care 

(paragraph (b)(2)((ii)(B) of the July 2010 

regulations); 

• Additional notice requirements 

with respect to notice of adverse benefit 

determinations or final internal adverse 

benefit determination (paragraph 

(b)(2)(ii)(E) of the July 2010 

regulations);37

• Deemed exhaustion of internal 

claims and appeals processes (paragraph 

(b)(2)(ii)(F) of the July 2010 regulations); 

• Providing notices in a culturally 

and linguistically appropriate manner 

(paragraph (e) of the July 2010 

regulations); 

• The duration of the transition 

period for State external review 

processes (paragraph (c)(3) of the July 

2010 regulations); and 

• The scope of claims eligible for 

external review under the Federal 

external appeals process (paragraph 

(d)(1) of the July 2010 regulations). 

The Departments crafted these 

amendments to the July 2010 

regulations to secure the protections 

intended by Congress. In accordance 

with OMB Circular A–4, the 

Departments have quantified the costs 

of these amendments where feasible and 

provided a qualitative discussion of 

some of the benefits and costs that may 

stem from them. 

The Departments believe that (i) the 

costs associated with the amended rules 

are less than the costs associated with 

the July 2010 regulations, (ii) the 

amended rules adequately protect the 

rights of participants, beneficiaries, and 

policyholders, and (iii) the benefits of 

the amended rules justify their costs 

relative to the pre-Affordable Care Act 

baseline and the July 2010 regulations. 

B. Executive Orders 12866 and 13563— 

Department of Labor and Department of 

Health and Human Services 

Executive Orders 13563 and 12866 

direct agencies to assess all costs and 

benefits of available regulatory 

alternatives and, if regulation is 

necessary, to select regulatory 

approaches that maximize net benefits 

(including potential economic, 

environmental, public health and safety 

effects, distributive impacts, and 

equity). Executive Order 13563 

emphasizes the importance of 

quantifying both costs and benefits, of 

reducing costs, of harmonizing rules, 

and of promoting flexibility. This rule 

has been designated a ‘‘significant 

regulatory action’’ although not 

economically significant, under section 

3(f) of Executive Order 12866. 

Accordingly, the rule has been reviewed 

by the Office of Management and 

Budget. 

The Departments provide an 

assessment of the potential costs and 

benefits associated with each amended 

regulatory provision below, as 

summarized in Table 1. 

TABLE 1—ACCOUNTING TABLE

Benefits 

Qualitative: Amendments to the interim final regulations ensure urgent care benefit determinations are made in a timely manner, increase patient privacy, ensure non-English speakers understand their rights, and provide that claimants will be deemed to have exhausted their administrative proceedings and can proceed to court or external review if a plan or issuer fails to strictly adhere to the regulatory requirements with 

the exception of the requirements that are described in the amendment. These amendments are expected to reduce compliance costs while 

still ensuring patient protections. 

Cost Estimate Year dollar Discount 

rate 

Period 

covered 

Annualized Monetized ($millions/year) ............................................................ 1.7 2011 7 percent 2012–2014 

1.7 2011 3 percent 2012–2014 

Qualitative: Monetized costs are for providing notices upon request in a culturally and linguistically appropriate manner. Non-monetized costs include costs for plans and issuers to respond to requests for diagnostic and treatment codes, and costs incurred by claimants to resolve 

whether a plan or insurer’s failure to strictly adhere to the regulatory requirements is sufficient for a claimant to proceed directly to an external 

or court review. 

1. Estimated Number of Affected 

Entities 

For purposes of estimating the entities 

affected by these amendments to the 

July 2010 regulations, the Departments 

have defined a large group health plan 

as an employer plan with 100 or more 

workers and a small group plan as an 

employer plan with fewer than 100 

workers. The Departments make the 

following estimates about plans and 

issuers affected by these amendments: 

(1) There are approximately 72,000 large 

and 2.8 million small ERISA-covered 

group health plans with an estimated 

97.0 million participants in large group 

plans and 40.9 million participants in 

small group plans;38 (2) there are 


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Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37219 

39Estimate is from the 2007 Census of 

Government. 

40US Census Bureau, Current Population Survey, 

March 2009. 41 42 U.S.C. 1395dd. 

126,000 governmental plans with 36.1 

million participants in large plans and 

2.3 million participants in small 

plans;39 and (3) there are 16.7 million 

individuals under age 65 covered by 

individual health insurance policies.40

The actual number of affected 

individuals depends on several factors, 

including whether (i) a health plan 

retains its grandfather status, (ii) the 

plan is subject to ERISA, (iii) benefits 

provided under the plan are self-funded 

or financed by the purchase of an 

insurance policy, (iii) the applicable 

State has enacted an internal claims and 

appeals law, and (iv) the applicable 

State has enacted an external review 

law, and if so the scope of such law, and 

(v) the number of new plans and 

enrollees in such plans. 

2. Benefits and Costs 

The benefits and costs of the 

amendments to the July 2010 

regulations are discussed together under 

this section, because the primary effect 

of the amendments is to reduce the cost 

of compliance. 

a. Expedited notification of benefit 

determination involving urgent care. As 

discussed in detail above, the July 2010 

regulations generally provide that a plan 

or issuer must notify a claimant of a 

benefit determination with respect to an 

urgent care claim as soon as possible 

taking into account the medical 

exigencies, but no later than 24 hours 

after the receipt of the claim by the plan 

or issuer. This was a change from the 

DOL claims procedure regulation, 

which requires an urgent care 

determination to be made not later than 

72 hours after receipt of the claim by a 

group health plan. The Departments 

received several comments regarding 

the burdens associated with meeting the 

24-hour turnaround. Some commenters 

argued that some of the claims 

constituting ‘‘urgent care’’ and thus 

qualifying for the expedited timeframe 

really do not need to be decided within 

24 hours. Moreover, a number of 

commenters highlighted that the 72- 

hour provision was never anything more 

than a ‘‘backstop’’; the general rule 

under both the July 2010 regulations 

and the DOL claims procedure 

regulation is for a decision as soon as 

possible consistent with the medical 

exigencies involved, making the change 

to a 24-hour timeframe unnecessary for 

the most serious medical cases. Finally, 

some commenters cited the Emergency 

Medical Treatment and Labor Act 

(EMTALA)41, which generally requires 

emergency room care to be treated with 

or without insurance or 

preauthorization and, therefore, 

mitigates much of the need for 

expedited pre-service emergency claims 

determinations in many situations. 

After considering the comments, and 

the costs and benefits of an absolute 24- 

hour decision-making deadline, the 

amendment permits plans and issuers to 

follow the original rule in the DOL 

claims procedure regulation (requiring 

decision-making in the context of preservice urgent care claims as soon as 

possible consistent with the medical 

exigencies involved but in no event no 

later than 72 hours), provided the plan 

or issuer defers to the attending 

provider with respect to the decision as 

to whether a claim constitutes ‘‘urgent 

care.’’ 

The Departments expect that this 

amendment will ensure urgent care 

benefit determinations are made in a 

timely manner while reducing burden 

on plans and issuers for several reasons. 

ERISA-covered plans were already 

subject to this requirement; therefore, 

there is no additional burden imposed 

on such plans from the pre-Affordable 

Care Act baseline. For self-insured 

nonfederal governmental plans and 

issuers in the individual market, the 72- 

hour requirement would increase 

burden from a pre-Affordable Care Act 

baseline to the extent that such plans 

and issuers are not already meeting this 

standard. The Departments do not have 

sufficient data to estimate the fraction of 

plans and issuers that were not already 

in compliance with this standard. Many 

claims filed with self-insured 

nonfederal governmental plans and 

individual market issuers already could 

have been meeting this requirement for 

urgent care claims, because ERISA 

claims constitute a large portion of 

health claims, and the Departments 

understand that, in general, issuers and 

service providers apply the same claims 

and appeals standards to ERISA-covered 

and non-ERISA-covered plans. 

Plans and issuers that previously were 

not subject to the DOL claims procedure 

regulation and that are not already 

meeting the claims and appeals 

standard under the DOL claims 

procedure regulation, could incur 

additional costs to become compliant 

with the 72-hour standard, but the 

Departments expect these costs to be 

less than those associated with a 24- 

hour standard. Speeding up the 

notification process for these 

determinations to meet the 72-hour 

standard could necessitate incurring 

additional cost to add more employees 

or find other ways to shorten the 

timeframe, but again such costs are 

expected to be less than the costs 

associated with meeting the 24-hour 

standard provided in the July 2010 

regulations. Additional costs for 

claimants may be associated with this 

requirement if meeting the 72-hour 

timeframe results in more claims being 

denied than would have been denied 

under a longer notification period, but 

again such costs are expected to be less 

than the costs associated with meeting 

the 24-hour standard provided in the 

July 2010 regulations. The Departments 

do not have sufficient data to estimate 

such costs. 

b. Additional notice requirements for 

internal claims and appeals. As 

discussed above, the July 2010 

regulations had additional content 

requirements for the required notices. 

The Departments received comments 

addressing the requirements to include 

the diagnosis code (such as an ICD–9 

code, ICD–10 code, or DSM–IV code), 

the treatment code (such as a CPT code), 

and the corresponding meanings of 

these codes. Concerns were raised about 

patient privacy, interference with the 

doctor-patient relationship, and high 

costs. Commenters also pointed out that 

there are currently over 20,000 

treatment and diagnosis codes in use 

today, presenting a costly administrative 

and operational challenge for plans and 

issuers. Comments also questioned the 

efficacy of providing codes which some 

argued are often very difficult for the 

average patient to understand. 

After considering all the comments, 

and the costs and benefits of the 

additional disclosure, the amendment to 

the July 2010 regulations eliminates the 

requirement to automatically provide 

the diagnosis and treatment codes as 

part of a notice of adverse benefit 

determination (or final internal adverse 

benefit determination) and instead 

requires plans and issuers to provide 

notification of the opportunity to 

request the diagnosis and treatment 

codes (and their meanings) in all notices 

of adverse benefit determination (and 

notices of final internal adverse benefit 

determination) and to provide this 

information upon request. 

Making the codes only available upon 

request protects patients’ privacy while 

reducing the burden for plans and 

issuers to redesign notices. However, 

plans and issuers will still incur costs 

to establish procedures to receive, 

process, and mail the requests. The 

Departments do not have a basis to 

estimate the net cost associated with 

this amendment, because they do not 

have sufficient data available to estimate 


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37220 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

42 In addition, the claimant would be entitled, 

upon written request, to an explanation of the 

plan’s or issuer’s basis for asserting that it meets 

this standard, so that the claimant could make an 

informed judgment about whether to seek 

immediate review. Finally, if the external reviewer 

or the court rejects the claimant’s request for 

immediate review on the basis that the plan met 

this standard, this amendment would give the 

claimant the right to resubmit and pursue the 

internal appeal of the claim. 

43These thresholds were adapted from the DOL 

regulations regarding style and format for a 

summary plan description, at 29 CFR 2520.102–2(c) 

for participants who are not literate in English. 

44The individual market threshold was generally 

adapted from the approach used under the 

Medicare Advantage program, which required 

translation of materials in languages spoken by 

more than 10 percent of the general population in 

a service area at the time the threshold was 

established. 

the savings that will result from plans 

and issuers not needing to redesign 

notices or calculate the number of future 

requests. 

c. Deemed exhaustion of internal 

claims and appeals process. The July 

2010 regulations provide that claimants 

can immediately seek judicial or 

external review if a plan or issuer failed 

to ‘‘strictly adhere’’ to all of the July 

2010 regulations’ requirements for 

internal claims and appeals processes, 

regardless of whether the plan or issuer 

asserted that it ‘‘substantially complied’’ 

with the July 2010 regulations. This 

approach received a number of negative 

comments from some issuers and plan 

sponsors, who prefer a ‘‘substantial 

compliance’’ approach, especially in 

cases where deviations from the 

regulatory standards were minor. 

In response to these comments, the 

Departments are retaining the approach 

to this requirement, but this amendment 

also adds a new paragraph 

(b)(2)(ii)(F)(2) to the July 2010 

regulations to provide an exception to 

the strict compliance standard for errors 

that are minor and meet certain other 

specified conditions. The new 

paragraph will also protect claimants 

whose attempts to pursue other 

remedies under paragraph (b)(2)(ii)(F)(1) 

of the interim final regulations are 

rejected by a reviewing tribunal. Under 

the amended approach, any violation of 

the procedural rules of July 2010 

regulations pertaining to internal claims 

and appeals would permit a claimant to 

seek immediate external review or court 

action, as applicable, unless the 

violation was: 

(1) De minimis; 

(2) Non-prejudicial; 

(3) Attributable to good cause or 

matters beyond the plan’s or issuer’s 

control; 

(4) In the context of an ongoing goodfaith exchange of information; and 

(5) Not reflective of a pattern or 

practice of non-compliance.42

The Departments expect that this 

amendment will protect patients’ right 

to proceed to external review while 

lowering costs based on the assumption 

that internal appeals are less expensive 

than external reviews or litigation. 

However, the amendment may add 

some costs, because participants and 

policyholders now may face uncertainty 

regarding whether a particular violation 

is minor. Many claimants may incur a 

cost to seek professional advice, because 

they will not be able to make this 

judgment on their own behalf. 

Alternatively, some claimants might 

seek immediate external review or 

judicial review and be denied it. The 

Departments do not have a sufficient 

basis to estimate these costs. 

d. Culturally and Linguistically 

Appropriate Notices. PHS Act section 

2719 requires group health plans and 

health insurance issuers to provide 

relevant notices in a culturally and 

linguistically appropriate manner. The 

July 2010 regulations set forth a 

requirement to provide notices in a nonEnglish language based on separate 

thresholds of the number of people who 

are literate in the same non-English 

language. In the group market, the 

threshold set forth in the July 2010 

regulations differs depending on the 

number of participants in the plan as 

follows: 

• For a plan that covers fewer than 

100 participants at the beginning of a 

plan year, the threshold is 25 percent of 

all plan participants being literate only 

in the same non-English language. 

• For a plan that covers 100 or more 

participants at the beginning of a plan 

year, the threshold is the lesser of 500 

participants, or 10 percent of all plan 

participants, being literate only in the 

same non-English language.43

For the individual market, the threshold 

is 10 percent of the population residing 

in the county being literate only in the 

same non-English language.44

Under the July 2010 regulations, if an 

applicable threshold is met with respect 

to a non-English language, the plan or 

issuer must provide the notice upon 

request in the non-English language. 

Additionally, the plan or issuer must 

include a statement in the English 

versions of all notices, prominently 

displayed in the non-English language, 

offering the provision of such notices in 

the non-English language. Finally, to the 

extent the plan or issuer maintains a 

customer assistance process (such as a 

telephone hotline) that answers 

questions or provides assistance with 

filing claims and appeals, the plan or 

issuer must provide such assistance in 

the non-English language. 

As discussed earlier in this preamble, 

the Departments received comments 

that raised concerns regarding the 

burdens imposed by this provision. In 

response to these comments, the 

Departments have decided to amend the 

July 2010 regulations’ provisions related 

to the provision of notices in a 

culturally and linguistically appropriate 

manner to establish a single threshold 

with respect to the number of people 

who are literate only in the same nonEnglish language for both the group and 

individual markets. Under the amended 

provision, for group health plans and 

health insurance issuers offering group 

or individual health insurance coverage, 

the threshold percentage of people who 

are literate only in the same non-English 

language will be set at 10 percent or 

more of the population residing in the 

claimant’s county, as determined based 

on American Community Survey (ACS) 

data published by the United States 

Census Bureau. Table 2, below provides 

a chart listing those 255 U.S. counties 

(78/255 are in Puerto Rico) in which at 

least 10 percent of the population speak 

a particular non-English language and 

speak English less than ‘‘very well.’’ 

These data are applicable for 2011 and 

are calculated using 2005–2009 ACS 

data. The Departments will update this 

guidance annually on their Web site if 

there are changes to the list of the 

counties determined to meet this 10 

percent threshold for the county’s 

population being literate only in the 

same non-English language. 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37221 

TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK

ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45

State County 

Non-English language 

Spanish 

% 

Chinese 

% 

Tagalog 

% 

Navajo 

% 

AK .................. Aleutians West Census Area ............................................................... 13 .................... 16 ....................

AK .................. Aleutians East Borough ....................................................................... .................... .................... 35 ....................

AR ................. Sevier County ...................................................................................... 17 .................... .................... ....................

AZ .................. Apache County .................................................................................... .................... .................... .................... 12 

AZ .................. Maricopa County .................................................................................. 11 .................... .................... ....................

AZ .................. Yuma County ....................................................................................... 22 .................... .................... ....................

AZ .................. Santa Cruz County .............................................................................. 39 .................... .................... ....................

CA ................. Colusa County ..................................................................................... 27 .................... .................... ....................

CA ................. Fresno County ..................................................................................... 15 .................... .................... ....................

CA ................. Glenn County ....................................................................................... 14 .................... .................... ....................

CA ................. Imperial County .................................................................................... 32 .................... .................... ....................

CA ................. Kern County ......................................................................................... 16 .................... .................... ....................

CA ................. Kings County ........................................................................................ 18 .................... .................... ....................

CA ................. Los Angeles County ............................................................................. 19 .................... .................... ....................

CA ................. Madera County .................................................................................... 18 .................... .................... ....................

CA ................. Merced County ..................................................................................... 20 .................... .................... ....................

CA ................. Monterey County .................................................................................. 25 .................... .................... ....................

CA ................. Napa County ........................................................................................ 14 .................... .................... ....................

CA ................. Orange County ..................................................................................... 14 .................... .................... ....................

CA ................. Riverside County .................................................................................. 15 .................... .................... ....................

CA ................. San Benito County ............................................................................... 21 .................... .................... ....................

CA ................. San Bernardino County ....................................................................... 15 .................... .................... ....................

CA ................. San Diego County ................................................................................ 11 .................... .................... ....................

CA ................. San Francisco County ......................................................................... .................... 12 .................... ....................

CA ................. San Joaquin County ............................................................................ 12 .................... .................... ....................

CA ................. Santa Barbara County ......................................................................... 15 .................... .................... ....................

CA ................. Santa Cruz County .............................................................................. 12 .................... .................... ....................

CA ................. Stanislaus County ................................................................................ 13 .................... .................... ....................

CA ................. Sutter County ....................................................................................... 12 .................... .................... ....................

CA ................. Tulare County ...................................................................................... 21 .................... .................... ....................

CA ................. Ventura County .................................................................................... 14 .................... .................... ....................

CO ................. Adams County ..................................................................................... 12 .................... .................... ....................

CO ................. Costilla County ..................................................................................... 11 .................... .................... ....................

CO ................. Denver County ..................................................................................... 12 .................... .................... ....................

CO ................. Eagle County ....................................................................................... 16 .................... .................... ....................

CO ................. Garfield County .................................................................................... 12 .................... .................... ....................

CO ................. Lake County ......................................................................................... 11 .................... .................... ....................

CO ................. Phillips County ..................................................................................... 12 .................... .................... ....................

CO ................. Prowers County ................................................................................... 12 .................... .................... ....................

CO ................. Saguache County ................................................................................ 15 .................... .................... ....................

CO ................. Yuma County ....................................................................................... 10 .................... .................... ....................

FL .................. Collier County ...................................................................................... 13 .................... .................... ....................

FL .................. DeSoto County ..................................................................................... 21 .................... .................... ....................

FL .................. Glades County ..................................................................................... 10 .................... .................... ....................

FL .................. Hardee County ..................................................................................... 22 .................... .................... ....................

FL .................. Hendry County ..................................................................................... 26 .................... .................... ....................

FL .................. Miami-Dade County ............................................................................. 31 .................... .................... ....................

FL .................. Okeechobee County ............................................................................ 12 .................... .................... ....................

FL .................. Osceola County ................................................................................... 16 .................... .................... ....................

GA ................. Atkinson County ................................................................................... 12 .................... .................... ....................

GA ................. Echols County ...................................................................................... 20 .................... .................... ....................

GA ................. Hall County .......................................................................................... 16 .................... .................... ....................

GA ................. Telfair County ....................................................................................... 10 .................... .................... ....................

GA ................. Whitfield County ................................................................................... 18 .................... .................... ....................

IA ................... Buena Vista County ............................................................................. 12 .................... .................... ....................

ID ................... Clark County ........................................................................................ 22 .................... .................... ....................

ID ................... Minidoka County .................................................................................. 11 .................... .................... ....................

ID ................... Owyhee County ................................................................................... 12 .................... .................... ....................

ID ................... Power County ...................................................................................... 13 .................... .................... ....................

IL ................... Kane County ........................................................................................ 15 .................... .................... ....................

KS .................. Finney County ...................................................................................... 16 .................... .................... ....................

KS .................. Ford County ......................................................................................... 23 .................... .................... ....................

KS .................. Grant County ........................................................................................ 16 .................... .................... ....................

KS .................. Hamilton County .................................................................................. 11 .................... .................... ....................

KS .................. Seward County .................................................................................... 26 .................... .................... ....................

KS .................. Stanton County .................................................................................... 19 .................... .................... ....................

KS .................. Stevens County .................................................................................... 11 .................... .................... ....................

KS .................. Wichita County ..................................................................................... 12 .................... .................... ....................


emcdonald on DSK2BSOYB1PROD with RULES3
37222 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK

ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45—Continued 

State County 

Non-English language 

Spanish 

% 

Chinese 

% 

Tagalog 

% 

Navajo 

% 

KS .................. Wyandotte County ............................................................................... 10 .................... .................... ....................

NC ................. Alleghany County ................................................................................. 14 .................... .................... ....................

NC ................. Duplin County ...................................................................................... 14 .................... .................... ....................

NE ................. Colfax County ...................................................................................... 23 .................... .................... ....................

NE ................. Dakota County ..................................................................................... 14 .................... .................... ....................

NE ................. Dawson County .................................................................................... 15 .................... .................... ....................

NJ .................. Hudson County .................................................................................... 18 .................... .................... ....................

NJ .................. Passaic County .................................................................................... 16 .................... .................... ....................

NJ .................. Union County ....................................................................................... 13 .................... .................... ....................

NM ................. Chaves County .................................................................................... 11 .................... .................... ....................

NM ................. Dona Ana County ................................................................................ 18 .................... .................... ....................

NM ................. Hidalgo County .................................................................................... 12 .................... .................... ....................

NM ................. Lea County ........................................................................................... 11 .................... .................... ....................

NM ................. Luna County ......................................................................................... 18 .................... .................... ....................

NM ................. McKinley County .................................................................................. .................... .................... .................... 15 

NM ................. Mora County ........................................................................................ 11 .................... .................... ....................

NM ................. Santa Fe County .................................................................................. 12 .................... .................... ....................

NM ................. Chaves County .................................................................................... 11 .................... .................... ....................

NV ................. Clark County, ....................................................................................... 11 .................... .................... ....................

NY ................. Bronx County ....................................................................................... 20 .................... .................... ....................

NY ................. New York County ................................................................................. 10 .................... .................... ....................

NY ................. Queens County .................................................................................... 12 .................... .................... ....................

OK ................. Texas County ....................................................................................... 18 .................... .................... ....................

OR ................. Hood River County .............................................................................. 15 .................... .................... ....................

OR ................. Marion County ...................................................................................... 11 .................... .................... ....................

OR ................. Morrow County ..................................................................................... 14 .................... .................... ....................

TX .................. Andrews County ................................................................................... 11 .................... .................... ....................

TX .................. Atascosa County .................................................................................. 11 .................... .................... ....................

TX .................. Bailey County ....................................................................................... 18 .................... .................... ....................

TX .................. Bexar County ....................................................................................... 12 .................... .................... ....................

TX .................. Brooks County ..................................................................................... 18 .................... .................... ....................

TX .................. Calhoun County ................................................................................... 12 .................... .................... ....................

TX .................. Cameron County .................................................................................. 30 .................... .................... ....................

TX .................. Camp County ....................................................................................... 11 .................... .................... ....................

TX .................. Castro County ...................................................................................... 20 .................... .................... ....................

TX .................. Cochran County ................................................................................... 18 .................... .................... ....................

TX .................. Concho County .................................................................................... 29 .................... .................... ....................

TX .................. Crane County ....................................................................................... 10 .................... .................... ....................

TX .................. Crockett County ................................................................................... 20 .................... .................... ....................

TX .................. Crosby County ..................................................................................... 11 .................... .................... ....................

TX .................. Culberson County ................................................................................ 15 .................... .................... ....................

TX .................. Dallam County ..................................................................................... 12 .................... .................... ....................

TX .................. Dallas County ....................................................................................... 18 .................... .................... ....................

TX .................. Dawson County .................................................................................... 12 .................... .................... ....................

TX .................. Deaf Smith County ............................................................................... 20 .................... .................... ....................

TX .................. Dimmit County ..................................................................................... 33 .................... .................... ....................

TX .................. Duval County ....................................................................................... 26 .................... .................... ....................

TX .................. Ector County ........................................................................................ 12 .................... .................... ....................

TX .................. Edwards County ................................................................................... 10 .................... .................... ....................

TX .................. El Paso County .................................................................................... 29 .................... .................... ....................

TX .................. Frio County .......................................................................................... 16 .................... .................... ....................

TX .................. Garza County ....................................................................................... 35 .................... .................... ....................

TX .................. Gonzales County ................................................................................. 14 .................... .................... ....................

TX .................. Hale County ......................................................................................... 12 .................... .................... ....................

TX .................. Hall County .......................................................................................... 14 .................... .................... ....................

TX .................. Hansford County .................................................................................. 16 .................... .................... ....................

TX .................. Harris County ....................................................................................... 18 .................... .................... ....................

TX .................. Hidalgo County .................................................................................... 35 .................... .................... ....................

TX .................. Howard County .................................................................................... 16 .................... .................... ....................

TX .................. Hudspeth County ................................................................................. 31 .................... .................... ....................

TX .................. Jim Hogg County ................................................................................. 26 .................... .................... ....................

TX .................. Jim Wells County ................................................................................. 13 .................... .................... ....................

TX .................. Karnes County ..................................................................................... 17 .................... .................... ....................

TX .................. Kenedy County .................................................................................... 14 .................... .................... ....................

TX .................. Kinney County ...................................................................................... 15 .................... .................... ....................

TX .................. Kleberg County .................................................................................... 11 .................... .................... ....................

TX .................. La Salle County ................................................................................... 22 .................... .................... ....................

TX .................. Lamb County ........................................................................................ 15 .................... .................... ....................


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37223 

TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK

ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45—Continued 

State County 

Non-English language 

Spanish 

% 

Chinese 

% 

Tagalog 

% 

Navajo 

% 

TX .................. Lipscomb County ................................................................................. 14 .................... .................... ....................

TX .................. Lynn County ......................................................................................... 12 .................... .................... ....................

TX .................. Maverick County .................................................................................. 48 .................... .................... ....................

TX .................. Midland County .................................................................................... 11 .................... .................... ....................

TX .................. Moore County ...................................................................................... 19 .................... .................... ....................

TX .................. Nueces County .................................................................................... 12 .................... .................... ....................

TX .................. Ochiltree County .................................................................................. 17 .................... .................... ....................

TX .................. Parmer County ..................................................................................... 22 .................... .................... ....................

TX .................. Pecos County ....................................................................................... 18 .................... .................... ....................

TX .................. Presidio County .................................................................................... 36 .................... .................... ....................

TX .................. Reagan County .................................................................................... 21 .................... .................... ....................

TX .................. Reeves County .................................................................................... 27 .................... .................... ....................

TX .................. San Patricio County ............................................................................. 12 .................... .................... ....................

TX .................. Schleicher County ................................................................................ 12 .................... .................... ....................

TX .................. Sherman County .................................................................................. 14 .................... .................... ....................

TX .................. Starr County ......................................................................................... 43 .................... .................... ....................

TX .................. Sterling County .................................................................................... 11 .................... .................... ....................

TX .................. Sutton County ...................................................................................... 18 .................... .................... ....................

TX .................. Tarrant County ..................................................................................... 10 .................... .................... ....................

TX .................. Terrell County ...................................................................................... 12 .................... .................... ....................

TX .................. Terry County ........................................................................................ 11 .................... .................... ....................

TX .................. Titus County ......................................................................................... 20 .................... .................... ....................

TX .................. Travis County ....................................................................................... 12 .................... .................... ....................

TX .................. Upton County ....................................................................................... 11 .................... .................... ....................

TX .................. Uvalde County ..................................................................................... 15 .................... .................... ....................

TX .................. Val Verde County ................................................................................. 29 .................... .................... ....................

TX .................. Ward County ........................................................................................ 12 .................... .................... ....................

TX .................. Webb County ....................................................................................... 49 .................... .................... ....................

TX .................. Willacy County ..................................................................................... 20 .................... .................... ....................

TX .................. Winkler County ..................................................................................... 13 .................... .................... ....................

TX .................. Yoakum County ................................................................................... 23 .................... .................... ....................

TX .................. Zapata County ..................................................................................... 36 .................... .................... ....................

TX .................. Zavala County ...................................................................................... 33 .................... .................... ....................

UT .................. San Juan County ................................................................................. .................... .................... .................... 12 

VA .................. Manassas city ...................................................................................... 17 .................... .................... ....................

VA .................. Manassas Park city .............................................................................. 18 .................... .................... ....................

WA ................. Adams County ..................................................................................... 23 .................... .................... ....................

WA ................. Douglas County ................................................................................... 11 .................... .................... ....................

WA ................. Franklin County .................................................................................... 27 .................... .................... ....................

WA ................. Grant County ........................................................................................ 16 .................... .................... ....................

WA ................. Yakima County ..................................................................................... 17 .................... .................... ....................

PR ................. Anasco Municipio ................................................................................. 85 .................... .................... ....................

PR ................. Adjuntas Municipio ............................................................................... 86 .................... .................... ....................

PR ................. Aguada Municipio ................................................................................ 81 .................... .................... ....................

PR ................. Aguadilla Municipio .............................................................................. 78 .................... .................... ....................

PR ................. Aguas Buenas Municipio ..................................................................... 90 .................... .................... ....................

PR ................. Aibonito Municipio ................................................................................ 82 .................... .................... ....................

PR ................. Arecibo Municipio ................................................................................. 83 .................... .................... ....................

PR ................. Arroyo Municipio .................................................................................. 84 .................... .................... ....................

PR ................. Barceloneta Municipio .......................................................................... 78 .................... .................... ....................

PR ................. Barranquitas Municipio ........................................................................ 87 .................... .................... ....................

PR ................. Bayamon Municipio .............................................................................. 78 .................... .................... ....................

PR ................. Cabo Rojo Municipio ............................................................................ 82 .................... .................... ....................

PR ................. Caguas Municipio ................................................................................ 80 .................... .................... ....................

PR ................. Camuy Municipio ................................................................................. 88 .................... .................... ....................

PR ................. Canovanas Municipio ........................................................................... 83 .................... .................... ....................

PR ................. Carolina Municipio ............................................................................... 77 .................... .................... ....................

PR ................. Catano Municipio ................................................................................. 82 .................... .................... ....................

PR ................. Cayey Municipio ................................................................................... 86 .................... .................... ....................

PR ................. Ceiba Municipio ................................................................................... 73 .................... .................... ....................

PR ................. Ciales Municipio ................................................................................... 88 .................... .................... ....................

PR ................. Cidra Municipio .................................................................................... 86 .................... .................... ....................

PR ................. Coamo Municipio ................................................................................. 84 .................... .................... ....................

PR ................. Comero Municipio ................................................................................ 93 .................... .................... ....................

PR ................. Corozal Municipio ................................................................................ 88 .................... .................... ....................

PR ................. Culebra Municipio ................................................................................ 76 .................... .................... ....................

PR ................. Dorado Municipio ................................................................................. 77 .................... .................... ....................

PR ................. Fajardo Municipio ................................................................................. 78 .................... .................... ....................


emcdonald on DSK2BSOYB1PROD with RULES3
37224 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

45 Data are from the 2005–2009 ACS available at 

http://www.census.gov/acs. Only those counties 

where at least 10% of the county speak a particular 

non-English language and speak English less than 

‘‘very well’’ are listed. 

TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK

ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45—Continued 

State County 

Non-English language 

Spanish 

% 

Chinese 

% 

Tagalog 

% 

Navajo 

% 

PR ................. Florida Municipio .................................................................................. 81 .................... .................... ....................

PR ................. Guayama Municipio ............................................................................. 80 .................... .................... ....................

PR ................. Guayanilla Municipio ............................................................................ 85 .................... .................... ....................

PR ................. Guaynabo Municipio ............................................................................ 69 .................... .................... ....................

PR ................. Gurabo Municipio ................................................................................. 81 .................... .................... ....................

PR ................. Gu+nica Municipio ............................................................................... 83 .................... .................... ....................

PR ................. Hatillo Municipio ................................................................................... 86 .................... .................... ....................

PR ................. Hormigueros Municipio ........................................................................ 74 .................... .................... ....................

PR ................. Humacao Municipio ............................................................................. 83 .................... .................... ....................

PR ................. Isabela Municipio ................................................................................. 85 .................... .................... ....................

PR ................. Jayuya Municipio ................................................................................. 91 .................... .................... ....................

PR ................. Juana Diaz Municipio ........................................................................... 86 .................... .................... ....................

PR ................. Juncos Municipio ................................................................................. 85 .................... .................... ....................

PR ................. Lajas Municipio .................................................................................... 83 .................... .................... ....................

PR ................. Lares Municipio .................................................................................... 87 .................... .................... ....................

PR ................. Las Marias Municipio ........................................................................... 91 .................... .................... ....................

PR ................. Las Piedras Municipio .......................................................................... 85 .................... .................... ....................

PR ................. Loiza Municipio .................................................................................... 89 .................... .................... ....................

PR ................. Luquillo Municipio ................................................................................ 79 .................... .................... ....................

PR ................. Manati Municipio .................................................................................. 84 .................... .................... ....................

PR ................. Maricao Municipio ................................................................................ 95 .................... .................... ....................

PR ................. Maunabo Municipio .............................................................................. 88 .................... .................... ....................

PR ................. Mayaguez Municipio ............................................................................ 77 .................... .................... ....................

PR ................. Moca Municipio .................................................................................... 86 .................... .................... ....................

PR ................. Morovis Municipio ................................................................................ 87 .................... .................... ....................

PR ................. Naguabo Municipio .............................................................................. 83 .................... .................... ....................

PR ................. Naranjito Municipio .............................................................................. 91 .................... .................... ....................

PR ................. Orocovis Municipio ............................................................................... 91 .................... .................... ....................

PR ................. Patillas Municipio ................................................................................. 84 .................... .................... ....................

PR ................. Penuelas Municipio .............................................................................. 86 .................... .................... ....................

PR ................. Ponce Municipio ................................................................................... 80 .................... .................... ....................

PR ................. Quebradillas Municipio ......................................................................... 83 .................... .................... ....................

PR ................. Rincon Municipio .................................................................................. 73 .................... .................... ....................

PR ................. Rio Grande Municipio .......................................................................... 85 .................... .................... ....................

PR ................. Sabana Grande Municipio ................................................................... 83 .................... .................... ....................

PR ................. Salinas Municipio ................................................................................. 86 .................... .................... ....................

PR ................. San German Municipio ........................................................................ 85 .................... .................... ....................

PR ................. San Juan Municipio ............................................................................. 73 .................... .................... ....................

PR ................. San Lorenzo Municipio ........................................................................ 83 .................... .................... ....................

PR ................. San Sebastian Municipio ..................................................................... 84 .................... .................... ....................

PR ................. Santa Isabel Municipio ......................................................................... 86 .................... .................... ....................

PR ................. Toa Alta Municipio ............................................................................... 80 .................... .................... ....................

PR ................. Toa Baja Municipio .............................................................................. 80 .................... .................... ....................

PR ................. Trujillo Alto Municipio ........................................................................... 79 .................... .................... ....................

PR ................. Utuado Municipio ................................................................................. 83 .................... .................... ....................

PR ................. Vega Alta Municipio ............................................................................. 83 .................... .................... ....................

PR ................. Vega Baja Municipio ............................................................................ 76 .................... .................... ....................

PR ................. Vieques Municipio ................................................................................ 83 .................... .................... ....................

PR ................. Villalba Municipio ................................................................................. 88 .................... .................... ....................

PR ................. Yabucoa Municipio ............................................................................... 86 .................... .................... ....................

PR ................. Yauco Municipio ................................................................................... 85 .................... .................... ....................

These amendments also require each 

notice sent by a plan or issuer to an 

address in a county that meets this 

threshold to include a one-sentence 

statement in the relevant non-English 

language about the availability of 

language services to be provided by the 

Departments. The Departments have 

provided guidance with sample 

sentences in the relevant languages in 

separate guidance being issued 

contemporaneous with the publication 

of this amendment. 

In addition to including a statement 

in all notices in the relevant nonEnglish language, a plan or issuer would 

be required to provide a customer 

assistance process (such as a telephone 

hotline) with oral language services in 

the non-English language and provide 

written notices in the non-English 

language upon request. 

The Departments expect that the 

largest cost associated with the 

amended rules for culturally and 

linguistically appropriate notices will be 

for plans and issuers to provide notices 

in the applicable non-English language 

upon request. Based on the ACS data, 

the Departments estimate that there are 

about 12 million individuals living in 


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46Please note that using state estimates of 

insurance coverage could lead to an over estimate 

if those reporting in the ACS survey that they speak 

English less than ‘‘very well’’ are less likely to be 

insured than the state average. 

covered counties that are literate in a 

non-English Language. The ACS did not 

start collecting insurance coverage 

information until 2008. Therefore, to 

estimate the percentage of the 12 

million affected individuals that were 

insured, the Departments used the 

percentage of the population in the State 

that reported being insured by private or 

public employer insurance or in the 

individual market from the 2009 

Current Population Survey (CPS).46 This 

results in an estimate of approximately 

seven million individuals who are 

eligible to request translation services. 

In discussions with the regulated 

community, the Departments found that 

experience in California, which has a 

State law requirement for providing 

translation services, indicates that 

requests for translations of written 

documents averages 0.098 requests per 

1,000 members. While the California 

law is not identical to the amendment 

to the July 2010 regulations, and the 

demographics for California do not 

match other counties, for purposes of 

this analysis, the Departments used this 

percentage to estimate of the number of 

translation service requests that plan 

and issuers can expect to receive. 

Industry experts also told the 

Departments that while the cost of 

translation services varies, $500 per 

document is a reasonable approximation 

of translation cost. 

Using the ACS and the CPS, the 

Departments estimate 34 million 

insured lives in the affected counties. 

Based on the foregoing, the Departments 

estimate that the cost to provide 

translation services will be 

approximately $1.7 million annually 

(34,087,000 lives * 0.098/1000 * $500). 

e. Duration of the transition period for 

State external review processes. These 

amendments to the July 2010 

regulations modify the transition period 

under paragraph (c)(3) so that the last 

day of the transition period is December 

31, 2011. Modifying the transition 

period gives states additional time to 

implement State external review 

processes that conform to paragraph 

(c)(2). This modification produces 

benefits and costs to participants and 

beneficiaries depending upon which 

state they live in and the timing of the 

beginning of the plan year. HHS is 

working closely with states to help them 

have external review processes that 

meet the requirements of paragraph 

(c)(2). The July 2010 regulations would 

have participants living in states with 

laws that do not meet the minimum 

consumer protections in paragraph 

(c)(2) entering the Federal external 

review process that would provide more 

consumer protections. However, this 

requirement to enter the Federal 

external review process would take 

effect upon the start of a new plan year 

beginning on or after July 1, 2011. 

This modification delays coverage of 

external review for participants whose 

plan year would have started between 

July 1, 2011 and December 31, 2011, but 

provides coverage sooner for 

participants in plans with plan years 

beginning after January 1, 2012, and has 

no change for participants in plans with 

plan years beginning on January 1, 2012. 

The annual reporting form for certain 

ERISA covered health plans, the Form 

5500, has information on health plan 

year end dates and also the number of 

participants in health plans. While most 

health plans with less than 100 

participants are not required to file the 

Form 5500, the Departments are able to 

observe the plan year end dates and 

hence the plan year start dates for large 

plans. The Departments looked at the 

dispersion of plan year start dates for 

plans that filed the Form 5500 and 

found that nearly 76 percent of 

participants are in plans with a plan 

year start date of January 1, 2012 and 

hence will not be effected by the change 

in the rule; nearly 13 percent of 

participants are in plans that could 

possibly see a delay in receiving the 

protections of external review, while 

just over 10 percent of participants will 

be able to access the protections sooner. 

These estimates did not take into 

account the state in which the plan was 

located. The Departments do not have 

data on the start date of policies in the 

individual market. While on net about 

2.4 percent of participants in affected 

plans could see a delay in receiving the 

protections, these costs are offset by 

giving states, and issuers additional 

time, and hence lower costs, to prepare 

for complying with the rule. 

f. Scope of Federal External Review. 

Paragraph (d)(1) of the July 2010 

regulations provides that any adverse 

benefit determination (including a final 

internal adverse benefit determination) 

could be brought to the Federal external 

review process unless it related to a 

participant’s or beneficiary’s failure to 

meet the requirements for eligibility 

under the terms of a group health plan 

(i.e., worker classification and similar 

issues were not within the scope of the 

Federal external review process). As 

discussed earlier in this preamble, 

comments received in response to the 

July 2010 regulations indicate that the 

scope of external review claims was too 

broad. 

After considering all the comments, 

with respect to plans subject to the 

Federal external review process, for 

claims for which external review has 

not been initiated before September 20, 

2011, the amendment suspends the 

original rule in the July 2010 regulations 

regarding the scope of claims eligible for 

external review for plans using the 

Federal process, temporarily replacing it 

with a different scope. Specifically, this 

amendment suspends the broad scope of 

claims eligible for external review and 

narrows the scope to those that involve 

(1) medical judgment (excluding those 

that involve only contractual or legal 

interpretation without any use of 

medical judgment), as determined by 

the external reviewer; or (2) a rescission 

of coverage. The suspension is intended 

to give the marketplace time to adjust to 

providing external review. The 

Departments believe that, once the 

market has so adjusted, it will become 

clear that the benefits of the July 2010 

regulations’ broader scope would be 

likely to justify its costs. 

C. Regulatory Flexibility Act— 

Department of Labor and Department of 

Health and Human Services 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) (RFA) imposes 

certain requirements with respect to 

Federal rules that are subject to the 

notice and comment requirements of 

section 553(b) of the APA (5 U.S.C. 551 

et seq.) and that are likely to have a 

significant economic impact on a 

substantial number of small entities. 

Under Section 553(b) of the APA, a 

general notice of proposed rulemaking 

is not required when an agency, for 

good cause, finds that notice and public 

comment thereon are impracticable, 

unnecessary, or contrary to the public 

interest. The interim final regulations 

were exempt from the APA, because the 

Departments made a good cause finding 

that a general notice of proposed 

rulemaking is not necessary earlier in 

this preamble. Therefore, the RFA did 

not apply and the Departments were not 

required to either certify that the 

regulations or this amendment would 

not have a significant economic impact 

on a substantial number of small entities 

or conduct a regulatory flexibility 

analysis. 

Nevertheless, the Departments 

carefully considered the likely impact of 

the rule on small entities in connection 

with their assessment under Executive 

Order 12866. Consistent with the policy 

of the RFA, the Departments encourage 

the public to submit comments that 

suggest alternative rules that accomplish 


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47The Department’s methodology for this 

estimate is explained in IV, B, 2, d, above. 

the stated purpose of the Affordable 

Care Act and minimize the impact on 

small entities. 

D. Special Analyses—Department of the 

Treasury 

Notwithstanding the determinations 

of the Department of Labor and 

Department of Health and Human 

Services, for purposes of the Department 

of the Treasury, it has been determined 

that this Treasury decision is not a 

significant regulatory action for 

purposes of Executive Order 12866. 

Therefore, a regulatory assessment is not 

required. It has also been determined 

that section 553(b) of the APA (5 U.S.C. 

chapter 5) does not apply to these 

temporary regulations. For the 

applicability of the RFA, refer to the 

Special Analyses section in the 

preamble to the cross-referencing notice 

of proposed rulemaking published 

elsewhere in this issue of the Federal 

Register. Pursuant to section 7805(f) of 

the Code, these temporary regulations 

have been submitted to the Chief 

Counsel for Advocacy of the Small 

Business Administration for comment 

on their impact on small businesses. 

E. Paperwork Reduction Act 

1. Department of Labor and Department 

of the Treasury 

Currently, the Departments are 

soliciting 60 days of public comments 

concerning these disclosures. The 

Departments have submitted a copy of 

these interim final regulations to OMB 

in accordance with 44 U.S.C. 3507(d) for 

review of the information collections. 

The Departments and OMB are 

particularly interested in comments 

that: 

• Evaluate whether the collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including whether the 

information will have practical utility; 

• Evaluate the accuracy of the 

agency’s estimate of the burden of the 

collection of information, including the 

validity of the methodology and 

assumptions used; 

• Enhance the quality, utility, and 

clarity of the information to be 

collected; and 

• Minimize the burden of the 

collection of information on those who 

are to respond, including through the 

use of appropriate automated, 

electronic, mechanical, or other 

technological collection techniques or 

other forms of information technology, 

for example, by permitting electronic 

submission of responses. 

Comments should be sent to the 

Office of Information and Regulatory 

Affairs, Attention: Desk Officer for the 

Employee Benefits Security 

Administration either by fax to (202) 

395–7285 or by e-mail to 

oira_submission@omb.eop.gov. A copy 

of the ICR may be obtained by 

contacting the PRA addressee: G. 

Christopher Cosby, Office of Policy and 

Research, U.S. Department of Labor, 

Employee Benefits Security 

Administration, 200 Constitution 

Avenue, NW., Room N–5718, 

Washington, DC 20210. Telephone: 

(202) 693–8410; Fax: (202) 219–4745. 

These are not toll-free numbers. E-mail: 

ebsa.opr@dol.gov. ICRs submitted to 

OMB also are available at reginfo.gov 

(http://www.reginfo.gov/public/do/ 

PRAMain). 

a. Department of Labor and Department 

of the Treasury: Affordable Care Act 

Internal Claims and Appeals and 

External Review Disclosures for NonGrandfathered Plans 

These amendments make two changes 

to the interim final regulations that 

affect the paperwork burden. The first is 

an amendment no longer requiring that 

diagnosis and treatment codes be 

included on notices of adverse benefit 

determination and final internal adverse 

benefit determination. Instead, they 

must notify claimants of the opportunity 

to receive the codes on request and 

plans and issuers must provide the 

codes upon request. The Departments 

expect that this change will lower costs, 

because plans and issuers no longer will 

have to provide the codes on the 

notices. Plans and issuers will incur a 

cost to establish procedures for receive, 

process, and mail the codes upon 

request; however, the Departments are 

unable to estimate such cost due to a 

lack of a basis for an estimate of the 

number of requests that will be made for 

the codes. 

The amendments also change the 

method for determining who is eligible 

to receive a notice in a culturally and 

linguistically appropriate manner, and 

the information that must be provided 

to such persons. The previous rule was 

based on the number of employees at a 

firm. The new rule is based on whether 

a participant or beneficiary resides in a 

county where ten percent or more of the 

population residing in the county is 

literate only in the same non-English 

language. 

Participants and beneficiaries residing 

in an affected county and speaking an 

applicable non-English language will 

now receive a one-sentence statement in 

all notices written in the applicable 

non-English language about the 

availability of language services. In 

addition to including the statement, 

plan and issuers are required to provide 

a customer assistance process (such as 

a telephone hotline) with oral language 

services in the non-English language 

and provide written notices in the nonEnglish language upon requests. 

The Departments understand that oral 

translation services are already provided 

for nearly all covered participants and 

beneficiaries. Therefore, no additional 

burden is associated with this 

requirement of the amendment. The 

Departments estimate that plans will 

incur an annual cost burden of $1.2 

million to translate written notices into 

the relevant non-English language.47

Based on the foregoing, the 

Departments have adjusted the total 

estimated cost burden for this 

information collection. The cost burden 

is $243,000 in 2011, $1.7 million in 

2012, and $1.8 million in 2013. 

Type of Review: Revised collection. 

Agencies: Employee Benefits Security 

Administration, Department of Labor; 

Internal Revenue Service, U.S. 

Department of the Treasury, 

Title: Affordable Care Act Internal 

Claims and Appeals and External 

Review Disclosures for NonGrandfathered Plans. 

OMB Number: 1210–0144; 1545– 

2182. 

Affected Public: Business or other forprofit; not-for-profit institutions. 

Total Respondents: 1,020,000 (threeyear average). 

Total Responses: 111,000(three-year 

average). 

Frequency of Response: Occasionally. 

Estimated Total Annual Burden 

Hours: 233 hours (Employee Benefits 

Security Administration); 233 hours 

(Internal Revenue Service) (three-year 

average). 

Estimated Total Annual Burden Cost: 

$628,900 (Employee Benefits Security 

Administration); $628,900 (Internal 

Revenue Service) (three-year average). 

2. Department of Health and Human 

Services 

a. ICR Regarding Affordable Care Act 

Internal Claims and Appeals and 

External Review Disclosures for Nongrandfathered Plans 

As discussed above in the Department 

of Labor and Department of the Treasury 

PRA section, these amendments make 

two changes to the interim final 

regulations that affect the paperwork 

burden. The first is an amendment no 

longer requiring that diagnosis and 

treatment codes be included on notices 

of adverse benefit determination and 

final internal adverse benefit 


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determination. Instead these codes are 

available upon request. The 

Departments expect that this change 

will lower costs compared to the July 

2010 regulations because plans and 

issuers no longer will have to provide 

the codes on the notices. Plans and 

issuers will incur a cost to establish 

procedures for receiving, processing, 

and mailing the codes upon request; 

however, the Departments are unable to 

estimate such cost due to lack of a basis 

for an estimate of the number of 

requests that will be made for the codes. 

Second, the amendments also changes 

who is eligible to receive a notice in a 

culturally or linguistically appropriate 

manner. 

The Departments estimated the new 

cost burden of providing the translation 

of requested notices into the applicable 

non-English language. The annual cost 

burden is estimated to be $430,000 

annually starting in 2012. The 

derivation of this estimate was 

discussed above in the Economic Impact 

section. 

Due to the amendments, the 

Department has adjusted the total 

estimated costs of this information 

collection. The Department estimates 

that State and local governmental plans 

and issuers offering coverage in the 

individual market will incur a total hour 

burden of 570,804 hours in 2011, 

998,807 hours in 2012, and 1.22 million 

hours in 2013 to comply with 

equivalent costs of $28.2 million in 

2011, $57.4 million in 2012, and $70.5 

million in 2013. The total cost burden 

for those plans that use service 

providers, including the cost of mailing 

all responses is estimated to be $20.7 

million in 2011, $37.9 million in 2012, 

and $51.7 million in 2013. 

The hour and cost burden is 

summarized below: 

Type of Review: Revised collection. 

Agency: Department of Health and 

Human Services. 

Title: Affordable Care Act Internal 

Claims and Appeals and External 

Review Disclosures 

OMB Number: 0938–1099. 

Affected Public: Business; State, 

Local, or Tribal Governments. 

Respondents: 46,773 (three-year 

average). 

Responses: 218,650,000 (three-year 

average). 

Frequency of Response: Occasionally. 

Estimated Total Annual Burden 

Hours: 929,870 hours (three-year 

average). 

Estimated Total Annual Burden Cost: 

$36,600,000 (three-year average). 

We have requested emergency OMB 

review and approval of the 

aforementioned information collection 

requirements by July 1, 2011. To obtain 

copies of the supporting statement and 

any related forms for the proposed 

paperwork collections referenced above, 

access CMS’ Web site at http:// 

www.cms.gov/ 

PaperworkReductionActof1995/PRAL/ 

list.asp#TopOfPage or e-mail your 

request, including your address, phone 

number, OMB number, and CMS 

document identifier, to 

Paperwork@cms.hhs.gov, or call the 

Reports Clearance Office at 410–786– 

1326. 

If you comment on any of these 

information collection requirements, 

please do either of the following: 

1. Submit your comments 

electronically as specified in the 

ADDRESSES section of this proposed rule; 

or 

2. Submit your comments to the 

Office of Information and Regulatory 

Affairs, Office of Management and 

Budget, 

Attention: CMS Desk Officer, CMS– 

9993–IFC2 

Fax: (202) 395–6974; or 

E-mail: 

OIRA_submission@omb.eop.gov 

F. Congressional Review Act 

These amendments to the interim 

final regulations are subject to the 

Congressional Review Act provisions of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996 (5 

U.S.C. 801 et seq.) and have been 

transmitted to Congress and the 

Comptroller General for review. 

G. Unfunded Mandates Reform Act 

The Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4) requires 

agencies to prepare several analytic 

statements before proposing any rules 

that may result in annual expenditures 

of $100 million (as adjusted for 

inflation) by State, local and tribal 

governments or the private sector. These 

amendments to the interim final 

regulations are not subject to the 

Unfunded Mandates Reform Act 

because they are being issued as interim 

final regulations. However, consistent 

with the policy embodied in the 

Unfunded Mandates Reform Act, the 

regulation has been designed to be the 

least burdensome alternative for State, 

local and tribal governments, and the 

private sector, while achieving the 

objectives of the Affordable Care Act. 

H. Federalism Statement—Department 

of Labor and Department of Health and 

Human Services 

Executive Order 13132 outlines 

fundamental principles of federalism, 

and requires the adherence to specific 

criteria by Federal agencies in the 

process of their formulation and 

implementation of policies that have 

‘‘substantial direct effects’’ on the 

States, the relationship between the 

national government and States, or on 

the distribution of power and 

responsibilities among the various 

levels of government. Federal agencies 

promulgating regulations that have 

federalism implications must consult 

with State and local officials, and 

describe the extent of their consultation 

and the nature of the concerns of State 

and local officials in the preamble to the 

regulation. 

In the Departments’ view, these 

amendments to the interim final 

regulations have federalism 

implications, because they have direct 

effects on the States, the relationship 

between the national government and 

States, or on the distribution of power 

and responsibilities among various 

levels of government. However, in the 

Departments’ view, the federalism 

implications of these interim final 

regulations are substantially mitigated 

because, with respect to health 

insurance issuers, the Departments 

expect that the majority of States will 

enact laws or take other appropriate 

action to implement an internal and 

external appeals process that will meet 

or exceed federal standards. 

In general, through section 514, 

ERISA supersedes State laws to the 

extent that they relate to any covered 

employee benefit plan, and preserves 

State laws that regulate insurance, 

banking, or securities. While ERISA 

prohibits States from regulating a plan 

as an insurance or investment company 

or bank, the preemption provisions of 

section 731 of ERISA and section 2724 

of the PHS Act (implemented in 29 CFR 

2590.731(a) and 45 CFR 146.143(a)) 

apply so that the HIPAA requirements 

(including those of the Affordable Care 

Act) are not to be ‘‘construed to 

supersede any provision of State law 

which establishes, implements, or 

continues in effect any standard or 

requirement solely relating to health 

insurance issuers in connection with 

group health insurance coverage except 

to the extent that such standard or 

requirement prevents the application of 

a requirement’’ of a Federal standard. 

The conference report accompanying 

HIPAA indicates that this is intended to 

be the ‘‘narrowest’’ preemption of State 

laws. (See House Conf. Rep. No. 104– 

736, at 205, reprinted in 1996 U.S. Code 

Cong. & Admin. News 2018.) States may 

continue to apply State law 

requirements except to the extent that 

such requirements prevent the 

application of the Affordable Care Act 


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37228 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

requirements that are the subject of this 

rulemaking. State insurance laws that 

are more stringent than the Federal 

requirements are unlikely to ‘‘prevent 

the application of’’ the Affordable Care 

Act, and be preempted. Accordingly, 

States have significant latitude to 

impose requirements on health 

insurance issuers that are more 

restrictive than the Federal law. 

Furthermore, the Departments have 

opined that, in the instance of a group 

health plan providing coverage through 

group health insurance, the issuer will 

be required to follow the external 

review procedures established in State 

law (assuming the State external review 

procedure meets the minimum 

standards set out in these interim final 

rules). 

In compliance with the requirement 

of Executive Order 13132 that agencies 

examine closely any policies that may 

have federalism implications or limit 

the policy making discretion of the 

States, the Departments have engaged in 

efforts to consult with and work 

cooperatively with affected State and 

local officials, including attending 

conferences of the National Association 

of Insurance Commissioners (NAIC), 

meeting with NAIC staff counsel on 

issues arising from the interim final 

regulations and consulting with State 

insurance officials on an individual 

basis. It is expected that the 

Departments will act in a similar 

fashion in enforcing the Affordable Care 

Act requirements, including the 

provisions of section 2719 of the PHS 

Act. Throughout the process of 

developing these amendments to the 

interim final regulations, to the extent 

feasible within the specific preemption 

provisions of HIPAA as it applies to the 

Affordable Care Act, the Departments 

have attempted to balance the States’ 

interests in regulating health insurance 

issuers, and Congress’ intent to provide 

uniform minimum protections to 

consumers in every State. By doing so, 

it is the Departments’ view that they 

have complied with the requirements of 

Executive Order 13132. 

Pursuant to the requirements set forth 

in section 8(a) of Executive Order 

13132, and by the signatures affixed to 

these regulations, the Departments 

certify that the Employee Benefits 

Security Administration and the Centers 

for Medicare and Medicaid Services 

have complied with the requirements of 

Executive Order 13132 for the attached 

amendment to the interim final 

regulations in a meaningful and timely 

manner. 

V. Statutory Authority 

The Department of the Treasury 

temporary regulations are adopted 

pursuant to the authority contained in 

sections 7805 and 9833 of the Code. 

The Department of Labor interim final 

regulations are adopted pursuant to the 

authority contained in 29 U.S.C. 1027, 

1059, 1135, 1161–1168, 1169, 1181– 

1183, 1181 note, 1185, 1185a, 1185b, 

1191, 1191a, 1191b, and 1191c; sec. 

101(g), Pub. L. 104–191, 110 Stat. 1936; 

sec. 401(b), Pub. L. 105–200, 112 Stat. 

645 (42 U.S.C. 651 note); sec. 512(d), 

Pub. L. 110–343, 122 Stat. 3881; sec. 

1001, 1201, and 1562(e), Pub. L. 111– 

148, 124 Stat. 119, as amended by Pub. 

L. 111–152, 124 Stat. 1029; Secretary of 

Labor’s Order 6–2009, 74 FR 21524 

(May 7, 2009). 

The Department of Health and Human 

Services interim final regulations are 

adopted pursuant to the authority 

contained in sections 2701 through 

2763, 2791, and 2792 of the PHS Act (42 

U.S.C. 300gg through 300gg–63, 300gg– 

91, and 300gg–92), as amended. 

List of Subjects 

26 CFR Part 54 

Excise taxes, Health care, Health 

insurance, Pensions, Reporting and 

recordkeeping requirements. 

29 CFR Part 2590 

Continuation coverage, Disclosure, 

Employee benefit plans, Group health 

plans, Health care, Health insurance, 

Medical child support, Reporting and 

recordkeeping requirements. 

45 CFR Part 147 

Health care, Health insurance, 

Reporting and recordkeeping 

requirements, and State regulation of 

health insurance. 

Steven T. Miller, 

Deputy Commissioner for Services and 

Enforcement, Internal Revenue Service. 

Approved: June 21, 2011. 

Emily S. McMahon, 

Acting Assistant Secretary of the Treasury 

(Tax Policy). 

Signed this 20th day of June 2011. 

Phyllis C. Borzi, 

Assistant Secretary, Employee Benefits 

Security Administration, Department of 

Labor. 

CMS–9993–IFC2 

Approved: June 16, 2011. 

Donald Berwick, 

Administrator, Centers for Medicare & 

Medicaid Services. 

Approved: June 17, 2011. 

Kathleen Sebelius, 

Secretary, Department of Health and Human 

Services. 

Department of the Treasury 

Internal Revenue Service 

26 CFR Chapter I 

Accordingly, 26 CFR part 54 is 

amended as follows: 

PART 54—PENSION EXCISE TAXES 

■ Paragraph 1. The general authority 

citation for part 54 continues to read as 

follows: 

Authority: 26 U.S.C. 7805 * * * 

■ Par. 2. Section 54.9815–2719T is 

amended by: 

■ 1. Revising paragraphs (b)(2)(ii)(B), 

(b)(2)(ii)(E)(1), (b)(2)(ii)(F), (c)(2)(xi), 

(c)(3), (d)(1), (d)(2)(iv) and (e). 

■ 2. Redesignating (b)(2)(ii)(E)(2), 

(b)(2)(ii)(E)(3), and (b)(2)(ii)(E)(4) as 

(b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and 

(b)(2)(ii)(E)(5), respectively. 

■ 3. Adding new paragraph 

(b)(2)(ii)(E)(2). 

The revisions and addition read as 

follows: 

§ 54.9815–2719T Internal claims and 

appeals and external review processes 

(temporary). 

* * * * * 

(b) * * * 

(2) * * * 

(ii) * * * 

(B) Expedited notification of benefit 

determinations involving urgent care. 

The requirements of 29 CFR 2560.503– 

1(f)(2)(i) (which generally provide, 

among other things, in the case of urgent 

care claims for notification of the plan’s 

benefit determination (whether adverse 

or not) as soon as possible, taking into 

account the medical exigencies, but not 

later than 72 hours after receipt of the 

claim) continue to apply to the plan and 

issuer. For purposes of this paragraph 

(b)(2)(ii)(B), a claim involving urgent 

care has the meaning given in 29 CFR 

2560.503–1(m)(1), as determined by the 

attending provider, and the plan or 

issuer shall defer to such determination 

of the attending provider. 

* * * * * 

(E) * * * 

(1) The plan and issuer must ensure 

that any notice of adverse benefit 

determination or final internal adverse 

benefit determination includes 

information sufficient to identify the 


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Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37229 

claim involved (including the date of 

service, the health care provider, the 

claim amount (if applicable), and a 

statement describing the availability, 

upon request, of the diagnosis code and 

its corresponding meaning, and the 

treatment code and its corresponding 

meaning). 

(2) The plan and issuer must provide 

to participants and beneficiaries, as 

soon as practicable, upon request, the 

diagnosis code and its corresponding 

meaning, and the treatment code and its 

corresponding meaning, associated with 

any adverse benefit determination or 

final internal adverse benefit 

determination. The plan or issuer must 

not consider a request for such 

diagnosis and treatment information, in 

itself, to be a request for an internal 

appeal under this paragraph (b) or an 

external review under paragraphs (c) 

and (d) of this section. 

* * * * * 

(F) Deemed exhaustion of internal 

claims and appeals processes—(1) In 

the case of a plan or issuer that fails to 

adhere to all the requirements of this 

paragraph (b)(2) with respect to a claim, 

the claimant is deemed to have 

exhausted the internal claims and 

appeals process of this paragraph (b), 

except as provided in paragraph 

(b)(2)(ii)(F)(2) of this section. 

Accordingly, the claimant may initiate 

an external review under paragraph (c) 

or (d) of this section, as applicable. The 

claimant is also entitled to pursue any 

available remedies under section 502(a) 

of ERISA or under State law, as 

applicable, on the basis that the plan or 

issuer has failed to provide a reasonable 

internal claims and appeals process that 

would yield a decision on the merits of 

the claim. If a claimant chooses to 

pursue remedies under section 502(a) of 

ERISA under such circumstances, the 

claim or appeal is deemed denied on 

review without the exercise of 

discretion by an appropriate fiduciary. 

(2) Notwithstanding paragraph 

(b)(2)(ii)(F)(1) of this section, the 

internal claims and appeals process of 

this paragraph (b) will not be deemed 

exhausted based on de minimis 

violations that do not cause, and are not 

likely to cause, prejudice or harm to the 

claimant so long as the plan or issuer 

demonstrates that the violation was for 

good cause or due to matters beyond the 

control of the plan or issuer and that the 

violation occurred in the context of an 

ongoing, good faith exchange of 

information between the plan and the 

claimant. This exception is not available 

if the violation is part of a pattern or 

practice of violations by the plan or 

issuer. The claimant may request a 

written explanation of the violation 

from the plan or issuer, and the plan or 

issuer must provide such explanation 

within 10 days, including a specific 

description of its bases, if any, for 

asserting that the violation should not 

cause the internal claims and appeals 

process of this paragraph (b) to be 

deemed exhausted. If an external 

reviewer or a court rejects the claimant’s 

request for immediate review under 

paragraph (b)(2)(ii)(F)(1) of this section 

on the basis that the plan met the 

standards for the exception under this 

paragraph (b)(2)(ii)(F)(2), the claimant 

has the right to resubmit and pursue the 

internal appeal of the claim. In such a 

case, within a reasonable time after the 

external reviewer or court rejects the 

claim for immediate review (not to 

exceed 10 days), the plan shall provide 

the claimant with notice of the 

opportunity to resubmit and pursue the 

internal appeal of the claim. Time 

periods for re-filing the claim shall 

begin to run upon claimant’s receipt of 

such notice. 

* * * * * 

(c) * * * 

(2) * * * 

(xi) The State process must provide 

that the decision is binding on the plan 

or issuer, as well as the claimant, except 

to the extent other remedies are 

available under State or Federal law, 

and except that the requirement that the 

decision be binding shall not preclude 

the plan or issuer from making payment 

on the claim or otherwise providing 

benefits at any time, including after a 

final external review decision that 

denies the claim or otherwise fails to 

require such payment or benefits. For 

this purpose, the plan or issuer must 

provide benefits (including by making 

payment on the claim) pursuant to the 

final external review decision without 

delay, regardless of whether the plan or 

issuer intends to seek judicial review of 

the external review decision and unless 

or until there is a judicial decision 

otherwise. 

* * * * * 

(3) Transition period for external 

review processes. (i) Through December 

31, 2011, an applicable State external 

review process applicable to a health 

insurance issuer or group health plan is 

considered to meet the requirements of 

PHS Act section 2719(b). Accordingly, 

through December 31, 2011, an 

applicable State external review process 

will be considered binding on the issuer 

or plan (in lieu of the requirements of 

the Federal external review process). If 

there is no applicable State external 

review process, the issuer or plan is 

required to comply with the 

requirements of the Federal external 

review process in paragraph (d) of this 

section. 

(ii) For final internal adverse benefit 

determinations (or, in the case of 

simultaneous internal appeal and 

external review, adverse benefit 

determinations) provided on or after 

January 1, 2012, the Federal external 

review process will apply unless the 

Department of Health and Human 

Services determines that a State law 

meets all the minimum standards of 

paragraph (c)(2) of this section. 

(d) * * * 

(1) Scope—(i) In general. Subject to 

the suspension provision in paragraph 

(d)(1)(ii) of this section and except to 

the extent provided otherwise by the 

Secretary in guidance, the Federal 

external review process established 

pursuant to this paragraph (d) applies to 

any adverse benefit determination or 

final internal adverse benefit 

determination (as defined in paragraphs 

(a)(2)(i) and (a)(2)(v) of this section), 

except that a denial, reduction, 

termination, or a failure to provide 

payment for a benefit based on a 

determination that a participant or 

beneficiary fails to meet the 

requirements for eligibility under the 

terms of a group health plan is not 

eligible for the Federal external review 

process under this paragraph (d). 

(ii) Suspension of general rule. Unless 

or until this suspension is revoked in 

guidance by the Secretary, with respect 

to claims for which external review has 

not been initiated before September 20, 

2011, the Federal external review 

process established pursuant to this 

paragraph (d) applies only to: 

(A) An adverse benefit determination 

(including a final internal adverse 

benefit determination) by a plan or 

issuer that involves medical judgment 

(including, but not limited to, those 

based on the plan’s or issuer’s 

requirements for medical necessity, 

appropriateness, health care setting, 

level of care, or effectiveness of a 

covered benefit; or its determination 

that a treatment is experimental or 

investigational), as determined by the 

external reviewer; and 

(B) A rescission of coverage (whether 

or not the rescission has any effect on 

any particular benefit at that time). 

(iii) Examples. The rules of paragraph 

(d)(1)(ii) of this section are illustrated by 

the following examples: 

Example 1. (i) Facts. A group health plan 

provides coverage for 30 physical therapy 

visits generally. After the 30th visit, coverage 

is provided only if the service is 

preauthorized pursuant to an approved 

treatment plan that takes into account 

medical necessity using the plan’s definition 


emcdonald on DSK2BSOYB1PROD with RULES3
37230 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

of the term. Individual A seeks coverage for 

a 31st physical therapy visit. A’s health care 

provider submits a treatment plan for 

approval, but it is not approved by the plan, 

so coverage for the 31st visit is not 

preauthorized. With respect to the 31st visit, 

A receives a notice of final internal adverse 

benefit determination stating that the 

maximum visit limit is exceeded. 

(ii) Conclusion. In this Example 1, the 

plan’s denial of benefits is based on medical 

necessity and involves medical judgment. 

Accordingly, the claim is eligible for external 

review during the suspension period under 

paragraph (d)(1)(ii) of this section. Moreover, 

the plan’s notification of final internal 

adverse benefit determination is inadequate 

under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) 

of this section because it fails to make clear 

that the plan will pay for more than 30 visits 

if the service is preauthorized pursuant to an 

approved treatment plan that takes into 

account medical necessity using the plan’s 

definition of the term. Accordingly, the 

notice of final internal adverse benefit 

determination should refer to the plan 

provision governing the 31st visit and should 

describe the plan’s standard for medical 

necessity, as well as how the treatment fails 

to meet the plan’s standard. 

Example 2. (i) Facts. A group health plan 

does not provide coverage for services 

provided out of network, unless the service 

cannot effectively be provided in network. 

Individual B seeks coverage for a specialized 

medical procedure from an out-of-network 

provider because B believes that the 

procedure cannot be effectively provided in 

network. B receives a notice of final internal 

adverse benefit determination stating that the 

claim is denied because the provider is outof-network. 

(ii) Conclusion. In this Example 2, the 

plan’s denial of benefits is based on whether 

a service can effectively be provided in 

network and, therefore, involves medical 

judgment. Accordingly, the claim is eligible 

for external review during the suspension 

period under paragraph (d)(1)(ii) of this 

section. Moreover, the plan’s notice of final 

internal adverse benefit determination is 

inadequate under paragraphs (b)(2)(i) and 

(b)(2)(ii)(E)(3) of this section because the plan 

does provide benefits for services on an outof-network basis if the services cannot 

effectively be provided in network. 

Accordingly, the notice of final internal 

adverse benefit determination is required to 

refer to the exception to the out-of-network 

exclusion and should describe the plan’s 

standards for determining effectiveness of 

services, as well as how services available to 

the claimant within the plan’s network meet 

the plan’s standard for effectiveness of 

services. 

* * * * * 

(2) * * * 

(iv) These standards will provide that 

an external review decision is binding 

on the plan or issuer, as well as the 

claimant, except to the extent other 

remedies are available under State or 

Federal law, and except that the 

requirement that the decision be 

binding shall not preclude the plan or 

issuer from making payment on the 

claim or otherwise providing benefits at 

any time, including after a final external 

review decision that denies the claim or 

otherwise fails to require such payment 

or benefits. For this purpose, the plan or 

issuer must provide any benefits 

(including by making payment on the 

claim) pursuant to the final external 

review decision without delay, 

regardless of whether the plan or issuer 

intends to seek judicial review of the 

external review decision and unless or 

until there is a judicial decision 

otherwise. 

* * * * * 

(e) Form and manner of notice—(1) In 

general. For purposes of this section, a 

group health plan and a health 

insurance issuer offering group health 

insurance coverage are considered to 

provide relevant notices in a culturally 

and linguistically appropriate manner if 

the plan or issuer meets all the 

requirements of paragraph (e)(2) of this 

section with respect to the applicable 

non-English languages described in 

paragraph (e)(3) of this section. 

(2) Requirements—(i) The plan or 

issuer must provide oral language 

services (such as a telephone customer 

assistance hotline) that include 

answering questions in any applicable 

non-English language and providing 

assistance with filing claims and 

appeals (including external review) in 

any applicable non-English language; 

(ii) The plan or issuer must provide, 

upon request, a notice in any applicable 

non-English language; and 

(iii) The plan or issuer must include 

in the English versions of all notices, a 

statement prominently displayed in any 

applicable non-English language clearly 

indicating how to access the language 

services provided by the plan or issuer. 

(3) Applicable non-English language. 

With respect to an address in any 

United States county to which a notice 

is sent, a non-English language is an 

applicable non-English language if ten 

percent or more of the population 

residing in the county is literate only in 

the same non-English language, as 

determined in guidance published by 

the Secretary. 

* * * * * 

Department of Labor 

Employee Benefits Security 

Administration 

29 CFR Chapter XXV 

29 CFR part 2590 is amended as 

follows: 

PART 2590—RULES AND 

REGULATIONS FOR GROUP HEALTH 

PLANS 

■ 1. The authority citation for part 2590 

continues to read as follows: 

Authority: 29 U.S.C. 1027, 1059, 1135, 

1161–1168, 1169, 1181–1183, 1181 note, 

1185, 1185a, 1185b, 1191, 1191a, 1191b, and 

1191c; sec. 101(g), Pub. L. 104–191, 110 Stat. 

1936; sec. 401(b), Pub. L. 105–200, 112 Stat. 

645 (42 U.S.C. 651 note); sec. 512(d), Pub. L. 

110–343, 122 Stat. 3881; sec. 1001, 1201, and 

1562(e), Pub. L. 111–148, 124 Stat. 119, as 

amended by Pub. L. 111–152, 124 Stat. 1029; 

Secretary of Labor’s Order 6–2009, 74 FR 

21524 (May 7, 2009). 

■ 2. Section 2590.715–2719 is amended 

by: 

■ 1. Revising paragraphs (b)(2)(ii)(B), 

(b)(2)(ii)(E)(1), (b)(2)(ii)(F), (c)(2)(xi), 

(c)(3), (d)(1), (d)(2)(iv), and (e). 

■ 2. Redesignating (b)(2)(ii)(E)(2), 

(b)(2)(ii)(E)(3), and (b)(2)(ii)(E)(4) as 

(b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and 

(b)(2)(ii)(E)(5), respectively. 

■ 3. Adding new paragraph 

(b)(2)(ii)(E)(2). 

The revisions and addition read as 

follows: 

§ 2590.715–2719 Internal claims and 

appeals and external review processes. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) * * * 

(B) Expedited notification of benefit 

determinations involving urgent care. 

The requirements of 29 CFR 2560.503– 

1(f)(2)(i) (which generally provide, 

among other things, in the case of urgent 

care claims for notification of the plan’s 

benefit determination (whether adverse 

or not) as soon as possible, taking into 

account the medical exigencies, but not 

later than 72 hours after receipt of the 

claim) continue to apply to the plan and 

issuer. For purposes of this paragraph 

(b)(2)(ii)(B), a claim involving urgent 

care has the meaning given in 29 CFR 

2560.503–1(m)(1), as determined by the 

attending provider, and the plan or 

issuer shall defer to such determination 

of the attending provider. 

* * * * * 

(E) * * * 

(1) The plan and issuer must ensure 

that any notice of adverse benefit 

determination or final internal adverse 

benefit determination includes 

information sufficient to identify the 

claim involved (including the date of 

service, the health care provider, the 

claim amount (if applicable), and a 

statement describing the availability, 

upon request, of the diagnosis code and 

its corresponding meaning, and the 

treatment code and its corresponding 

meaning). 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37231 

(2) The plan and issuer must provide 

to participants and beneficiaries, as 

soon as practicable, upon request, the 

diagnosis code and its corresponding 

meaning, and the treatment code and its 

corresponding meaning, associated with 

any adverse benefit determination or 

final internal adverse benefit 

determination. The plan or issuer must 

not consider a request for such 

diagnosis and treatment information, in 

itself, to be a request for an internal 

appeal under this paragraph (b) or an 

external review under paragraphs (c) 

and (d) of this section. 

* * * * * 

(F) Deemed exhaustion of internal 

claims and appeals processes—(1) In 

the case of a plan or issuer that fails to 

adhere to all the requirements of this 

paragraph (b)(2) with respect to a claim, 

the claimant is deemed to have 

exhausted the internal claims and 

appeals process of this paragraph (b), 

except as provided in paragraph 

(b)(2)(ii)(F)(2) of this section. 

Accordingly, the claimant may initiate 

an external review under paragraph (c) 

or (d) of this section, as applicable. The 

claimant is also entitled to pursue any 

available remedies under section 502(a) 

of ERISA or under State law, as 

applicable, on the basis that the plan or 

issuer has failed to provide a reasonable 

internal claims and appeals process that 

would yield a decision on the merits of 

the claim. If a claimant chooses to 

pursue remedies under section 502(a) of 

ERISA under such circumstances, the 

claim or appeal is deemed denied on 

review without the exercise of 

discretion by an appropriate fiduciary. 

(2) Notwithstanding paragraph 

(b)(2)(ii)(F)(1) of this section, the 

internal claims and appeals process of 

this paragraph (b) will not be deemed 

exhausted based on de minimis 

violations that do not cause, and are not 

likely to cause, prejudice or harm to the 

claimant so long as the plan or issuer 

demonstrates that the violation was for 

good cause or due to matters beyond the 

control of the plan or issuer and that the 

violation occurred in the context of an 

ongoing, good faith exchange of 

information between the plan and the 

claimant. This exception is not available 

if the violation is part of a pattern or 

practice of violations by the plan or 

issuer. The claimant may request a 

written explanation of the violation 

from the plan or issuer, and the plan or 

issuer must provide such explanation 

within 10 days, including a specific 

description of its bases, if any, for 

asserting that the violation should not 

cause the internal claims and appeals 

process of this paragraph (b) to be 

deemed exhausted. If an external 

reviewer or a court rejects the claimant’s 

request for immediate review under 

paragraph (b)(2)(ii)(F)(1) of this section 

on the basis that the plan met the 

standards for the exception under this 

paragraph (b)(2)(ii)(F)(2), the claimant 

has the right to resubmit and pursue the 

internal appeal of the claim. In such a 

case, within a reasonable time after the 

external reviewer or court rejects the 

claim for immediate review (not to 

exceed 10 days), the plan shall provide 

the claimant with notice of the 

opportunity to resubmit and pursue the 

internal appeal of the claim. Time 

periods for re-filing the claim shall 

begin to run upon claimant’s receipt of 

such notice. 

* * * * * 

(c) * * * 

(2) * * * 

(xi) The State process must provide 

that the decision is binding on the plan 

or issuer, as well as the claimant, except 

to the extent other remedies are 

available under State or Federal law, 

and except that the requirement that the 

decision be binding shall not preclude 

the plan or issuer from making payment 

on the claim or otherwise providing 

benefits at any time, including after a 

final external review decision that 

denies the claim or otherwise fails to 

require such payment or benefits. For 

this purpose, the plan or issuer must 

provide benefits (including by making 

payment on the claim) pursuant to the 

final external review decision without 

delay, regardless of whether the plan or 

issuer intends to seek judicial review of 

the external review decision and unless 

or until there is a judicial decision 

otherwise. 

* * * * * 

(3) Transition period for external 

review processes. (i) Through December 

31, 2011, an applicable State external 

review process applicable to a health 

insurance issuer or group health plan is 

considered to meet the requirements of 

PHS Act section 2719(b). Accordingly, 

through December 31, 2011, an 

applicable State external review process 

will be considered binding on the issuer 

or plan (in lieu of the requirements of 

the Federal external review process). If 

there is no applicable State external 

review process, the issuer or plan is 

required to comply with the 

requirements of the Federal external 

review process in paragraph (d) of this 

section. 

(ii) For final internal adverse benefit 

determinations (or, in the case of 

simultaneous internal appeal and 

external review, adverse benefit 

determinations) provided on or after 

January 1, 2012, the Federal external 

review process will apply unless the 

Department of Health and Human 

Services determines that a State law 

meets all the minimum standards of 

paragraph (c)(2) of this section. 

(d) * * * 

(1) Scope—(i) In general. Subject to 

the suspension provision in paragraph 

(d)(1)(ii) of this section and except to 

the extent provided otherwise by the 

Secretary in guidance, the Federal 

external review process established 

pursuant to this paragraph (d) applies to 

any adverse benefit determination or 

final internal adverse benefit 

determination (as defined in paragraphs 

(a)(2)(i) and (a)(2)(v) of this section), 

except that a denial, reduction, 

termination, or a failure to provide 

payment for a benefit based on a 

determination that a participant or 

beneficiary fails to meet the 

requirements for eligibility under the 

terms of a group health plan is not 

eligible for the Federal external review 

process under this paragraph (d). 

(ii) Suspension of general rule. Unless 

or until this suspension is revoked in 

guidance by the Secretary, with respect 

to claims for which external review has 

not been initiated before the effective 

date of this paragraph (d)(1) (September 

20, 2011), the Federal external review 

process established pursuant to this 

paragraph (d) applies only to: 

(A) An adverse benefit determination 

(including a final internal adverse 

benefit determination) by a plan or 

issuer that involves medical judgment 

(including, but not limited to, those 

based on the plan’s or issuer’s 

requirements for medical necessity, 

appropriateness, health care setting, 

level of care, or effectiveness of a 

covered benefit; or its determination 

that a treatment is experimental or 

investigational), as determined by the 

external reviewer; and 

(B) A rescission of coverage (whether 

or not the rescission has any effect on 

any particular benefit at that time). 

(iii) Examples. This rules of paragraph 

(d)(1)(ii) of this section are illustrated by 

the following examples: 

Example 1. (i) Facts. A group health plan 

provides coverage for 30 physical therapy 

visits generally. After the 30th visit, coverage 

is provided only if the service is 

preauthorized pursuant to an approved 

treatment plan that takes into account 

medical necessity using the plan’s definition 

of the term. Individual A seeks coverage for 

a 31st physical therapy visit. A’s health care 

provider submits a treatment plan for 

approval, but it is not approved by the plan, 

so coverage for the 31st visit is not 

preauthorized. With respect to the 31st visit, 

A receives a notice of final internal adverse 

benefit determination stating that the 

maximum visit limit is exceeded. 


emcdonald on DSK2BSOYB1PROD with RULES3
37232 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

(ii) Conclusion. In this Example 1, the 

plan’s denial of benefits is based on medical 

necessity and involves medical judgment. 

Accordingly, the claim is eligible for external 

review during the suspension period under 

paragraph (d)(1)(ii) of this section. Moreover, 

the plan’s notification of final internal 

adverse benefit determination is inadequate 

under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) 

of this section because it fails to make clear 

that the plan will pay for more than 30 visits 

if the service is preauthorized pursuant to an 

approved treatment plan that takes into 

account medical necessity using the plan’s 

definition of the term. Accordingly, the 

notice of final internal adverse benefit 

determination should refer to the plan 

provision governing the 31st visit and should 

describe the plan’s standard for medical 

necessity, as well as how the treatment fails 

to meet the plan’s standard. 

Example 2. (i) Facts. A group health plan 

does not provide coverage for services 

provided out of network, unless the service 

cannot effectively be provided in network. 

Individual B seeks coverage for a specialized 

medical procedure from an out-of-network 

provider because B believes that the 

procedure cannot be effectively provided in 

network. B receives a notice of final internal 

adverse benefit determination stating that the 

claim is denied because the provider is outof-network. 

(ii) Conclusion. In this Example 2, the 

plan’s denial of benefits is based on whether 

a service can effectively be provided in 

network and, therefore, involves medical 

judgment. Accordingly, the claim is eligible 

for external review during the suspension 

period under paragraph (d)(1)(ii) of this 

section. Moreover, the plan’s notice of final 

internal adverse benefit determination is 

inadequate under paragraphs (b)(2)(i) and 

(b)(2)(ii)(E)(3) of this section because the plan 

does provide benefits for services on an outof-network basis if the services cannot 

effectively be provided in network. 

Accordingly, the notice of final internal 

adverse benefit determination is required to 

refer to the exception to the out-of-network 

exclusion and should describe the plan’s 

standards for determining effectiveness of 

services, as well as how services available to 

the claimant within the plan’s network meet 

the plan’s standard for effectiveness of 

services. 

* * * * * 

(2) * * * 

(iv) These standards will provide that 

an external review decision is binding 

on the plan or issuer, as well as the 

claimant, except to the extent other 

remedies are available under State or 

Federal law, and except that the 

requirement that the decision be 

binding shall not preclude the plan or 

issuer from making payment on the 

claim or otherwise providing benefits at 

any time, including after a final external 

review decision that denies the claim or 

otherwise fails to require such payment 

or benefits. For this purpose, the plan or 

issuer must provide any benefits 

(including by making payment on the 

claim) pursuant to the final external 

review decision without delay, 

regardless of whether the plan or issuer 

intends to seek judicial review of the 

external review decision and unless or 

until there is a judicial decision 

otherwise. 

* * * * * 

(e) Form and manner of notice—(1) In 

general. For purposes of this section, a 

group health plan and a health 

insurance issuer offering group health 

insurance coverage are considered to 

provide relevant notices in a culturally 

and linguistically appropriate manner if 

the plan or issuer meets all the 

requirements of paragraph (e)(2) of this 

section with respect to the applicable 

non-English languages described in 

paragraph (e)(3) of this section. 

(2) Requirements—(i) The plan or 

issuer must provide oral language 

services (such as a telephone customer 

assistance hotline) that include 

answering questions in any applicable 

non-English language and providing 

assistance with filing claims and 

appeals (including external review) in 

any applicable non-English language; 

(ii) The plan or issuer must provide, 

upon request, a notice in any applicable 

non-English language; and 

(iii) The plan or issuer must include 

in the English versions of all notices, a 

statement prominently displayed in any 

applicable non-English language clearly 

indicating how to access the language 

services provided by the plan or issuer. 

(3) Applicable non-English language. 

With respect to an address in any 

United States county to which a notice 

is sent, a non-English language is an 

applicable non-English language if ten 

percent or more of the population 

residing in the county is literate only in 

the same non-English language, as 

determined in guidance published by 

the Secretary. 

* * * * * 

Department of Health and Human 

Services 

45 CFR Subtitle A 

For the reasons stated in the 

preamble, the Department of Health and 

Human Services amends 45 CFR part 

147 as follows: 

PART 147—HEALTH INSURANCE 

REFORM REQUIREMENTS FOR THE 

GROUP AND INDIVIDUAL HEALTH 

INSURANCE MARKETS 

■ 1. The authority citation for part 147 

continues to read as follows: 

Authority: Sections 2701 through 2763, 

2791, and 2792 of the Public Health Service 

Act (42 U.S.C. 300gg through 300gg–63, 

300gg–91, and 300gg–92), as amended. 

■ 2. Section 147.136 is amended by: 

■ 1. Revising paragraphs (b)(2)(ii)(B), 

(b)(2)(ii)(E)(1), (b)(2)(ii)(F), (c)(2)(xi), 

(c)(3), (d)(1), (d)(2)(iv), and (e). 

■ 2. Redesignating (b)(2)(ii)(E)(2), 

(b)(2)(ii)(E)(3), and (b)(2)(ii)(E)(4) as 

(b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and 

(b)(2)(ii)(E)(5), respectively. 

■ 3. Adding new paragraph 

(b)(2)(ii)(E)(2). 

The revisions and addition read as 

follows: 

§ 147.136 Internal claims and appeals and 

external review processes. 

* * * * * 

(b) * * * 

(2) * * * 

(ii) * * * 

(B) Expedited notification of benefit 

determinations involving urgent care. 

The requirements of 29 CFR 2560.503– 

1(f)(2)(i) (which generally provide, 

among other things, in the case of urgent 

care claims for notification of the plan’s 

benefit determination (whether adverse 

or not) as soon as possible, taking into 

account the medical exigencies, but not 

later than 72 hours after receipt of the 

claim) continue to apply to the plan and 

issuer. For purposes of this paragraph 

(b)(2)(ii)(B), a claim involving urgent 

care has the meaning given in 29 CFR 

2560.503–1(m)(1), as determined by the 

attending provider, and the plan or 

issuer shall defer to such determination 

of the attending provider. 

* * * * * 

(E) * * * 

(1) The plan and issuer must ensure 

that any notice of adverse benefit 

determination or final internal adverse 

benefit determination includes 

information sufficient to identify the 

claim involved (including the date of 

service, the health care provider, the 

claim amount (if applicable), and a 

statement describing the availability, 

upon request, of the diagnosis code and 

its corresponding meaning, and the 

treatment code and its corresponding 

meaning). 

(2) The plan and issuer must provide 

to participants and beneficiaries, as 

soon as practicable, upon request, the 

diagnosis code and its corresponding 

meaning, and the treatment code and its 

corresponding meaning, associated with 

any adverse benefit determination or 

final internal adverse benefit 

determination. The plan or issuer must 

not consider a request for such 

diagnosis and treatment information, in 

itself, to be a request for an internal 

appeal under this paragraph (b) or an 

external review under paragraphs (c) 

and (d) of this section. 

* * * * * 


emcdonald on DSK2BSOYB1PROD with RULES3
Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 37233 

(F) Deemed exhaustion of internal 

claims and appeals processes—(1) In 

the case of a plan or issuer that fails to 

adhere to all the requirements of this 

paragraph (b)(2) with respect to a claim, 

the claimant is deemed to have 

exhausted the internal claims and 

appeals process of this paragraph (b), 

except as provided in paragraph 

(b)(2)(ii)(F)(2) of this section. 

Accordingly, the claimant may initiate 

an external review under paragraph (c) 

or (d) of this section, as applicable. The 

claimant is also entitled to pursue any 

available remedies under section 502(a) 

of ERISA or under State law, as 

applicable, on the basis that the plan or 

issuer has failed to provide a reasonable 

internal claims and appeals process that 

would yield a decision on the merits of 

the claim. If a claimant chooses to 

pursue remedies under section 502(a) of 

ERISA under such circumstances, the 

claim or appeal is deemed denied on 

review without the exercise of 

discretion by an appropriate fiduciary. 

(2) Notwithstanding paragraph 

(b)(2)(ii)(F)(1) of this section, the 

internal claims and appeals process of 

this paragraph (b) will not be deemed 

exhausted based on de minimis 

violations that do not cause, and are not 

likely to cause, prejudice or harm to the 

claimant so long as the plan or issuer 

demonstrates that the violation was for 

good cause or due to matters beyond the 

control of the plan or issuer and that the 

violation occurred in the context of an 

ongoing, good faith exchange of 

information between the plan and the 

claimant. This exception is not available 

if the violation is part of a pattern or 

practice of violations by the plan or 

issuer. The claimant may request a 

written explanation of the violation 

from the plan or issuer, and the plan or 

issuer must provide such explanation 

within 10 days, including a specific 

description of its bases, if any, for 

asserting that the violation should not 

cause the internal claims and appeals 

process of this paragraph (b) to be 

deemed exhausted. If an external 

reviewer or a court rejects the claimant’s 

request for immediate review under 

paragraph (b)(2)(ii)(F)(1) of this section 

on the basis that the plan met the 

standards for the exception under this 

paragraph (b)(2)(ii)(F)(2), the claimant 

has the right to resubmit and pursue the 

internal appeal of the claim. In such a 

case, within a reasonable time after the 

external reviewer or court rejects the 

claim for immediate review (not to 

exceed 10 days), the plan shall provide 

the claimant with notice of the 

opportunity to resubmit and pursue the 

internal appeal of the claim. Time 

periods for re-filing the claim shall 

begin to run upon claimant’s receipt of 

such notice. 

* * * * * 

(c) * * * 

(2) * * * 

(xi) The State process must provide 

that the decision is binding on the plan 

or issuer, as well as the claimant, except 

to the extent other remedies are 

available under State or Federal law, 

and except that the requirement that the 

decision be binding shall not preclude 

the plan or issuer from making payment 

on the claim or otherwise providing 

benefits at any time, including after a 

final external review decision that 

denies the claim or otherwise fails to 

require such payment or benefits. For 

this purpose, the plan or issuer must 

provide benefits (including by making 

payment on the claim) pursuant to the 

final external review decision without 

delay, regardless of whether the plan or 

issuer intends to seek judicial review of 

the external review decision and unless 

or until there is a judicial decision 

otherwise. 

* * * * * 

(3) Transition period for external 

review processes. (i) Through December 

31, 2011, an applicable State external 

review process applicable to a health 

insurance issuer or group health plan is 

considered to meet the requirements of 

PHS Act section 2719(b). Accordingly, 

through December 31, 2011, an 

applicable State external review process 

will be considered binding on the issuer 

or plan (in lieu of the requirements of 

the Federal external review process). If 

there is no applicable State external 

review process, the issuer or plan is 

required to comply with the 

requirements of the Federal external 

review process in paragraph (d) of this 

section. 

(ii) For final internal adverse benefit 

determinations (or, in the case of 

simultaneous internal appeal and 

external review, adverse benefit 

determinations) provided on or after 

January 1, 2012, the Federal external 

review process will apply unless the 

Department of Health and Human 

Services determines that a State law 

meets all the minimum standards of 

paragraph (c)(2) of this section. 

(d) * * * 

(1) Scope—(i) In general. Subject to 

the suspension provision in paragraph 

(d)(1)(ii) of this section and except to 

the extent provided otherwise by the 

Secretary in guidance, the Federal 

external review process established 

pursuant to this paragraph (d) applies to 

any adverse benefit determination or 

final internal adverse benefit 

determination (as defined in paragraphs 

(a)(2)(i) and (a)(2)(v) of this section), 

except that a denial, reduction, 

termination, or a failure to provide 

payment for a benefit based on a 

determination that a participant or 

beneficiary fails to meet the 

requirements for eligibility under the 

terms of a group health plan is not 

eligible for the Federal external review 

process under this paragraph (d). 

(ii) Suspension of general rule. Unless 

or until this suspension is revoked in 

guidance by the Secretary, with respect 

to claims for which external review has 

not been initiated before September 20, 

2011, the Federal external review 

process established pursuant to this 

paragraph (d) applies only to: 

(A) An adverse benefit determination 

(including a final internal adverse 

benefit determination) by a plan or 

issuer that involves medical judgment 

(including, but not limited to, those 

based on the plan’s or issuer’s 

requirements for medical necessity, 

appropriateness, health care setting, 

level of care, or effectiveness of a 

covered benefit; or its determination 

that a treatment is experimental or 

investigational), as determined by the 

external reviewer; and 

(B) A rescission of coverage (whether 

or not the rescission has any effect on 

any particular benefit at that time). 

(iii) Examples. This rules of paragraph 

(d)(1)(ii) of this section are illustrated by 

the following examples: 

Example 1. (i) Facts. A group health plan 

provides coverage for 30 physical therapy 

visits generally. After the 30th visit, coverage 

is provided only if the service is 

preauthorized pursuant to an approved 

treatment plan that takes into account 

medical necessity using the plan’s definition 

of the term. Individual A seeks coverage for 

a 31st physical therapy visit. A’s health care 

provider submits a treatment plan for 

approval, but it is not approved by the plan, 

so coverage for the 31st visit is not 

preauthorized. With respect to the 31st visit, 

A receives a notice of final internal adverse 

benefit determination stating that the 

maximum visit limit is exceeded. 

(ii) Conclusion. In this Example 1, the 

plan’s denial of benefits is based on medical 

necessity and involves medical judgment. 

Accordingly, the claim is eligible for external 

review during the suspension period under 

paragraph (d)(1)(ii) of this section. Moreover, 

the plan’s notification of final internal 

adverse benefit determination is inadequate 

under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3) 

of this section because it fails to make clear 

that the plan will pay for more than 30 visits 

if the service is preauthorized pursuant to an 

approved treatment plan that takes into 

account medical necessity using the plan’s 

definition of the term. Accordingly, the 

notice of final internal adverse benefit 

determination should refer to the plan 

provision governing the 31st visit and should 


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37234 Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations 

describe the plan’s standard for medical 

necessity, as well as how the treatment fails 

to meet the plan’s standard. 

Example 2. (i) Facts. A group health plan 

does not provide coverage for services 

provided out of network, unless the service 

cannot effectively be provided in network. 

Individual B seeks coverage for a specialized 

medical procedure from an out-of-network 

provider because B believes that the 

procedure cannot be effectively provided in 

network. B receives a notice of final internal 

adverse benefit determination stating that the 

claim is denied because the provider is outof-network. 

(ii) Conclusion. In this Example 2, the 

plan’s denial of benefits is based on whether 

a service can effectively be provided in 

network and, therefore, involves medical 

judgment. Accordingly, the claim is eligible 

for external review during the suspension 

period under paragraph (d)(1)(ii) of this 

section. Moreover, the plan’s notice of final 

internal adverse benefit determination is 

inadequate under paragraphs (b)(2)(i) and 

(b)(2)(ii)(E)(3) of this section because the plan 

does provide benefits for services on an outof-network basis if the services cannot 

effectively be provided in network. 

Accordingly, the notice of final internal 

adverse benefit determination is required to 

refer to the exception to the out-of-network 

exclusion and should describe the plan’s 

standards for determining effectiveness of 

services, as well as how services available to 

the claimant within the plan’s network meet 

the plan’s standard for effectiveness of 

services. 

* * * * * 

(2) * * * 

(iv) These standards will provide that 

an external review decision is binding 

on the plan or issuer, as well as the 

claimant, except to the extent other 

remedies are available under State or 

Federal law, and except that the 

requirement that the decision be 

binding shall not preclude the plan or 

issuer from making payment on the 

claim or otherwise providing benefits at 

any time, including after a final external 

review decision that denies the claim or 

otherwise fails to require such payment 

or benefits. For this purpose, the plan or 

issuer must provide any benefits 

(including by making payment on the 

claim) pursuant to the final external 

review decision without delay, 

regardless of whether the plan or issuer 

intends to seek judicial review of the 

external review decision and unless or 

until there is a judicial decision 

otherwise. 

* * * * * 

(e) Form and manner of notice—(1) In 

general. For purposes of this section, a 

group health plan and a health 

insurance issuer offering group or 

individual health insurance coverage 

are considered to provide relevant 

notices in a culturally and linguistically 

appropriate manner if the plan or issuer 

meets all the requirements of paragraph 

(e)(2) of this section with respect to the 

applicable non-English languages 

described in paragraph (e)(3) of this 

section. 

(2) Requirements—(i) The plan or 

issuer must provide oral language 

services (such as a telephone customer 

assistance hotline) that include 

answering questions in any applicable 

non-English language and providing 

assistance with filing claims and 

appeals (including external review) in 

any applicable non-English language; 

(ii) The plan or issuer must provide, 

upon request, a notice in any applicable 

non-English language; and 

(iii) The plan or issuer must include 

in the English versions of all notices, a 

statement prominently displayed in any 

applicable non-English language clearly 

indicating how to access the language 

services provided by the plan or issuer. 

(3) Applicable non-English language. 

With respect to an address in any 

United States county to which a notice 

is sent, a non-English language is an 

applicable non-English language if ten 

percent or more of the population 

residing in the county is literate only in 

the same non-English language, as 

determined in guidance published by 

the Secretary. 

* * * * * 

[FR Doc. 2011–15890 Filed 6–22–11; 4:15 pm] 

BILLING CODE 4830–01–P 


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