Patient Protection and Mandatory External Review: Amending ERISA's Claims Procedure
Released: 2001-01-19T00:00:00

Summary:
This report discusses the existing claims procedure required by the Employee Retirement Income Security Act of 1974(ERISA), and legislative efforts in the 106th Congress to amend ERISA to provide for the mandatoryexternal review of denied benefits. Although most of thepatient protection bills introduced in the 106th Congress included provisions for external review andmore rigorous standards for the internal review of deniedbenefits, this report focuses on the Patients' Bill of Rights Plus Act of 1999, S. 1344, passed by the Senateon July 15, 1999, and the BipartisanConsensus Managed Care Improvement Act of 1999, H.R. 2990, passed by the House of Representatives onOctober 7, 1999.

paragraphs: RS20258 -- Patient Protection and Mandatory External Review: Amending ERISA's Claims Procedure
Updated January 19, 2001
subsections: section_title: Patients' Bill of Rights Plus Act of 1999, S.1344
paragraphs: The Patients' Bill of Rights Plus Act of 1999, S. 1344 , was introduced by Senator Trent Lott (R-MS) on July 8, 1999, and passed by the Senate onJuly 15, 1999. S. 1344 sought to amend ERISA to provide additional requirements for group health plansand health insurance issuers offeringcoverage in connection with group health plans.
If enacted, S. 1344 would have required group health plans and health insurance issuers to develop written procedures for addressing grievances. Agrievance was defined by the bill as any complaint made by a participant or beneficiary that does not involve acoverage determination. Once a grievance wasaddressed, a resulting determination would not have been appealable.
S. 1344 would have allowed participants and beneficiaries to appeal any adverse coverage determination to an internal review process. An adversecoverage determination was defined as any determination under the plan which results in a denial of coverage orreimbursement. A participant or beneficiaryseeking internal review would have been allowed at least 180 days after the date of the adverse coveragedetermination to make an appeal. Review would havebeen conducted by an individual with appropriate expertise who was not involved in the initial determination. Appeals involving issues of medical necessity orexperimental treatment would have been conducted by physicians with appropriate expertise.
Internal review would have been completed within 30 working days of receiving the request for review. Where delay could jeopardize the life or health of theclaimant, S. 1344 would have required that review was completed no later than 72 hours after receiving therequest for review. A request forexpedited review would have to include documentation of a medical exigency by the treating health careprofessional. For routine determinations, notice of thedecision would have to be issued no later than 2 working days after the completion of review. For expediteddeterminations, notice would have to be issuedwithin the 72-hour review period. Failure to issue a timely decision would been treated as an adverse coveragedetermination for purposes of obtaining externalreview.
If enacted, S. 1344 would have required all plans and issuers to have written procedures to permit access to an independent external review process. External review would have been available to selected adverse coverage determinations. Those determinationsincluded coverage decisions that (1) are based onmedical necessity and exceed a significant financial threshold; (2) are based on medical necessity and involve asignificant risk of placing the life or health of theparticipant in jeopardy; or (3) involve an experimental or investigational treatment. To obtain external review, aclaimant would have to complete the internalreview process and file a written request for review within 30 working days of receiving the internal reviewdecision.
Within 5 working days after receiving the request for external review, the plan or issuer would have selected an external appeals entity. (13) This external appealsentity would have designated an external reviewer who would conduct the review. The external reviewer wouldhave to (1) be appropriately credentialed orlicensed to deliver health care; (2) not have any material, professional, familial, or financial affiliation with the caseunder review; (3) have expertise in thediagnosis or treatment under review and be a physician of the same specialty, when reasonably available; (4) receiveonly reasonable and customary compensationfrom the plan or issuer; and (5) not be held liable for decisions regarding medical determinations. The externalreviewer would have been required to consider allvalid, relevant, scientific, and clinical evidence to determine the medical necessity, appropriateness, or experimentalnature of the proposed treatment.
Review would have been conducted in accordance with the medical exigencies of the case, but would have to be completed within 30 days of the date on whichthe reviewer was designated or all necessary information was received, whichever was later. For cases where delaycould jeopardize the life or health of theparticipant, review would have to be conducted within 72 hours of the date on which the reviewer was designatedor all necessary information was received,whichever was later. The determination of the external reviewer would have been binding upon the plan or issuer.
section_title: Bipartisan Consensus Managed Care Improvement Act of 1999, H.R.2990
paragraphs: The Bipartisan Consensus Managed Care Improvement Act of 1999, H.R. 2990 , combined two bills: the Quality Care for the Uninsured Act of 1999,originally H.R. 2990 , was introduced by Representatives James M. Talent (R-MO) and John B. Shadegg(R-AZ) on September 30, 1999, and theBipartisan Consensus Managed Care Improvement Act of 1999, originally H.R. 2723 , was introduced byRepresentatives Charlie Norwood (R-GA)and John D. Dingell (D-MI) on August 5, 1999. (14) The combined bill was passed by the House of Representatives on October 7, 1999. H.R. 2990 would not only have required group health plans and health insurance issuers to provide an external review processfor denied claims, but would have alsoestablished new deadlines for the internal review process and mandated the creation of a formal grievance system.
Under H.R. 2990 , group health plans and health insurance issuers would have been required to maintain a system that addressed oral and writtengrievances. These grievances would have included any aspect of the plan's or issuer's services, but would notinclude a claim for benefits. Once resolved,grievances would not have been subject to appeal.
If enacted, H.R. 2990 would have permitted a participant, beneficiary, or enrollee to request and obtain an internal review of his claim within 180days following a denial of a claim for benefits. Review would have been conducted by a named fiduciary if thedispute involved a claim for benefits under theplan. For disputes involving denied coverage, review would have been conducted by a named appropriate individual. If the case involved medical judgment,review would have been conducted by a physician.
Internal review would have been completed in accordance with the medical exigencies of the case, but not later than 14 days after receiving the request for review. If additional information was needed, this deadline could be extended to 28 days. Where delay could seriouslyjeopardize the life or health of the claimant, reviewwould have to be completed within 72 hours after receiving a request for expedited review. This request could besubmitted orally or in writing by the claimant orprovider.
H.R. 2990 would have required all plans and issuers to create an external review process. External review would have been available for benefitdenials that were either based on medical necessity or involved investigational or experimental treatment. Externalreview would have also been available when adecision as to whether a benefit is covered involved a medical judgment. H.R. 2990 would have allowed theSecretary of Labor to establishadditional standards for external review, including a filing deadline. The plan or issuer would have been permittedto condition external review on the exhaustionof the internal review process. In addition, the plan or issuer would have been able to charge a filing fee for externalreview. However, this fee could not exceed$25.
External review would have been conducted by a certified external appeal entity. For group health plans, the entity would have to be certified either by theSecretary of Labor, under a process recognized or approved by the Secretary of Labor, or by a qualified privatestandard-setting organization. For state healthinsurance issuers, the entity would have to be certified by the applicable state authority or under a processrecognized or approved by such authority. If the statehad not established a certification process, the entity would have to be certified either by the Secretary of Health andHuman Services, under a process recognizedor approved by such Secretary, or by a qualified private standard-setting organization. The external appeal entitywould have to conduct its activities through apanel of not fewer than three clinical peers, and have sufficient medical, legal, and other expertise and sufficientstaffing to conduct its activities in a timelymanner.
The determination of the external appeal entity would have been made in accordance with the medical exigencies of the case, but not later than 21 days afterreceiving the request for external review. Where delay could seriously jeopardize the life or health of the claimant,a determination would have to be made within72 hours after receiving the request for external review. The decision of the external appeal entity would have beenbinding on the plan and issuer involved in thedetermination.
Please see the following CRS Issue Briefs and Reports for additional information. 
section_title: Issue Briefs
paragraphs: CRS Issue Brief IB98002, Medical Records Confidentiality . 
CRS Issue Brief IB98017, Patient Protection and Managed Care: Legislation in the 106thCongress .
CRS Issue Brief IB98037, Tax Benefits for Health Insurance .
section_title: Reports
paragraphs: CRS Report 97-643, Medical Savings Accounts . 
CRS Report 98-286 , ERISA's Impact on Medical Malpractice and Negligence Claims .
CRS Report RL30077(pdf) , Managed Care: Recent Proposals for New Grievance and AppealsProcedures .
CRS Report RL30144, Side by Side Comparison of Selected Patient Protection Bills in the106th Congress .
section_title: CRS Series on Managed Health Care
paragraphs: CRS Report 97-482, The Use of Financial Incentives . 
CRS Report 97-913, A Primer .
CRS Report 97-938, Federal and State Regulation .