Written by Jennifer Jaff, at Advocacy for Patients with Chronic Illness, Inc, and Cross-posted on Stand Up for Health Care a Project of Families USA.
As someone who has been filing insurance appeals on behalf of consumers for fifteen years, I am nothing short of thrilled by the new rules governing consumers’ rights to appeal adverse decisions by insurance companies.
When I started working in this area, I would file an appeal and then maybe a second level appeal, and that was that. If I could not convince the insurance company to change its mind, there was nothing more I could do. Since then, most states have enacted what are called “external appeal” laws, which allow consumers to seek an independent review of health insurance denials of coverage, usually through a State Insurance Department. The independent reviewers are organizations that have doctors on staff or on contract who review the insurer’s decision and decide whether the insurance company was right in denying coverage. When an independent review organization overturns an insurer’s denial of coverage, in most (but not all) states, that’s the final word – the consumer wins. External appeals have been the most important consumer protection to come along in as long as I have been doing this work, at least until now.
However, there still were many holes in the system. First and foremost, self-funded plans – typically, health plans created to benefit employees of very large employers – are not governed by state law. While some of them voluntarily created independent reviews, most did not. In addition, a handful of states have not enacted external review laws.
And even beyond external appeals, there always has been a huge variety among the State laws governing the regular, internal appeal process, and not all States vigorously enforce all of the consumer protections that exist. All that changes as a result of health insurance reform.
Starting on September 23, 2010 (or the beginning of the next plan year after that date), federal law will greatly strengthen consumers’ appeal rights. Insurance company decisions denying, reducing, terminating, or failing to make a payment for a benefit can be appealed, as can an insurance company decision to rescind or retroactively cancel an insurance policy due to the health of the consumer. Consumers must be provided a copy of the rationale for any denial of coverage. Claims must be evaluated independently and impartially. The notice that is sent to the consumer must be written in plain terms, and must include sufficient information to allow consumers to understand the reason for the decision. If insurance companies break the rules, they may have to cover the benefit. It’s about time!
Even more exciting, there now will be external appeals in all states and for all plans, including the large self-funded plans that were not subject to independent reviews in the past. This is a tremendous advance for consumers; now (with one exception explained below), all coverage decisions will be subject to review by an independent review organization that has the authority to overturn the denial of coverage. In States that do not have external appeal systems in place, there will be a Federal external review process. The new rules provide nationwide standards for external appeals, too, to ensure that they are fair and impartial.
Of course, as is the case with most laws, there are a couple of technical points that should be noted. First, these changes do not take effect for all plans on September 23. Instead, they take effect at the beginning of the next plan year after September 23. For example, if your plan’s open enrollment period starts on January 1, you plan year starts on January 1, so these new rules would take effect on January 1, 2011 – the first day of the plan year beginning after September 23, 2010.
Second, the new rules do not apply to “grandfathered” plans. Remember President Obama saying you could keep your current plan if you are happy with it? Well, if you were in a plan on March 23, 2010 that does not change in any very significant way – if there are no large increases in copays, coinsurance, deductibles, no large decrease in annual limits on benefits or in the employer’s contribution towards the premium payments, and no elimination of coverage of substantially all treatments for a particular disease – your plan is considered “grandfathered,” and you or your employer can keep it just as it is. Many of the provisions of the new law will not apply to grandfathered plans, including the new rules governing appeals.
Still, for most of us, the news appeal rules grant far greater consumer protections than what we have been used to in the past. And I simply cannot overstate the importance of the expansion of external appeals to all States and non-grandfathered self-funded plans. We win our hardest cases through external appeals. Now, consumers in Mississippi and Alabama – every State – will have access to independent reviews, and consumers who work for large employers will have a right to appeal to an impartial decision-maker.
The new appeal rules level the playing field, putting consumers on equal footing with their insurer or plan administrator. As such, they are one of the critically important early changes to come about as a result of health insurance reform.
This post was written by Jennifer Jaff, at Advocacy for Patients with Chronic Illness, Inc, which serves as a resource where patients can get free information, advice and advocacy services in multiple issue areas.