What We ll Cover Today

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1 Health Care Reform: New Guidance on Preventive Services, Claims Appeals Procedures and Over-the- Counter Medicine September 14, 2010 Presented by: Sue O. Conway (616) April A. Goff (616) Norbert F. Kugele (616) Copyright 2010 by Warner Norcross & Judd LLP All Rights Reserved (Materials included in the following outline are not intended to provide legal advice and are for seminar use only.) What We ll Cover Today Preventive Services Claims Appeals Procedures Internal Appeal External Review Over-the-Counter Drugs 1

2 Preventive Services Under the Patient Protection and Affordable Care Act Preventive Services Regulations Interim final regulations issued July 19, 2010 Effective for plan years beginning on or after September 23, 2010 Do not apply to grandfather plans 2

3 New Preventive Services Requirements Group health plans (and group and individual market health insurance issuers) must Provide benefits for certain recommended preventive services Not impose cost sharing requirements deductible, co-payment or co-insurance for such recommended preventive services Recommended Preventive Services Four lists of recommended services: 1. Items or services with rating of A or B in current recommendations of the U.S. Preventive Services Task Force with respect to the individual involved Examples of covered items: Screenings for breast cancer, colon cancer, cervical cancer, diabetes, high blood pressure, high cholesterol 3

4 Recommended Preventive Services Covered items that may surprise you: Screening and counseling to reduce alcohol misuse Counsel use of aspirin for cardiac risk (men age 45-79, women age 55-79) Interventions to promote and support breastfeeding Dietary counseling (for at-risk adults) Obesity screening and counseling Behavioral counseling to prevent STI (sexually active adolescents and at-risk adults) Counseling for tobacco use; tobacco cessation interventions Recommended Preventive Services 2. Immunizations for routine use recommended by the Advisory Committee and Immunization Practice (adopted by Centers for Disease Control and Prevention) Schedules show recommended age, number of doses, interval between doses and recommendation for particular health conditions 4

5 Recommended Preventive Services 3. Guidelines supported by the Health Resources and Services Administration (HRSA) for infants, children and adolescents Measurements Sensory screening (vision, hearing) Developmental/behavioral assessment Physical exam 4. HRSA guidelines for women (currently under development, issued by 8/1/2011) Recommended Preventive Services Complete list of recommendations and guidelines at: vention.html For updated or new recommendation and guidelines, plans have one year to cover. 5

6 Out-of-Network Not Required Plan or insurer is not required to cover recommended preventive services by out-ofnetwork provider. If plan covers out-of-network preventive, can impose cost sharing. Coverage Limitations To extent recommendation or guideline does not specify frequency, method, treatment or setting for a preventive service, plan or insurer can use reasonable medical management techniques. Plan or insurer can impose cost sharing for treatment that is not a recommended preventive service even if treatment results from a recommended preventive service. 6

7 Cost Sharing for Office Visit If primary purpose of office visit is delivery of preventive service and preventive service is not billed separately from office visit: No cost sharing for office visit. If primary purpose of office visit is not preventive service and preventive service is not billed separately: Cost sharing for office visit is OK. Regardless of purpose of office visit, if preventive service is billed separately from office visit: Cost sharing for office visit is OK (but not for preventive service). Cost? Federal agencies estimate that preventive service regulations will increase premiums for non-grandfathered plans by approximately 1.5% 7

8 Internal Claims Review Requirements Internal Claims Review Requirements Internal Claims requirements must satisfy ERISA Preamble: this applies to non-grandfathered plans not subject to ERISA, such as governmental plans and church plans. Adverse Benefit Determination Eligible for Internal Review includes Plan s denial, reduction, or termination of, or a failure to provide or make a payment (in whole or in part) for a benefit that is based on: determination of eligibility to participate; determination that a benefit is not covered; imposition of a preexisting condition exclusion, source-of-injury exclusion, network exclusion, or other limitation on otherwise covered benefits; or determination that a benefit is experimental, investigational, or not medically necessary or appropriate 8

9 Internal Appeals Procedure Apply for all non-grandfathered plans, regardless of ERISA status. Must satisfy the following requirements: Expanded Definition of Adverse Benefit Determination. OId rule: a denial, reduction, or termination of, or a failure to provide or make payment for, a benefit. New rule: includes a rescission of coverage as defined under the new law. Reduced Timeframe for Urgent Care Determinations. Old rule: As soon as possible but no more than 72 hours after receiving the claim. New rule: no more than 24 hours after receiving claim. Additional Information to Claimant. If plan considers, relies on or generates any new evidence during the appeal process, or bases its determination on appeal on a new rationale, it must furnish the new evidence or rationale to the claimant as soon as possible and free of charge. Must be provided sufficiently in advance of the final determination to allow the claimant an opportunity to respond before the final determination is made. Avoid Conflicts of Interest No Conflicts of Interest. Claims and appeals must be decided by individuals who are independent and impartial. Decisions regarding hiring, compensation, termination, promotion, or other similar matters with respect to a claims adjudicator or medical expert cannot be based upon the likelihood that individual will deny a claim. 9

10 Notices Must be Culturally and Linguistically Appropriate Must provide notices to claimants in a non-english language upon request. For plans with fewer than 100 participants, non-english notices must be provided upon request if at least 25 percent of all plan participants are literate only in the same non-english language. For plans with 100 or more participants, non-english notices must be provided upon request if the lesser of 500 participants or 10 percent of all plan participants are literate only in the same non-english language. English versions must contain a prominent statement in the non- English language offering the notice in the non-english language A claimant who requests a non-english notice must receive all subsequent notices in that language. Any hotline or other claimant assistance process must also be provided in the non-english language. Notice: Content Requirement In addition to existing ERISA claims regulations, a notice of an adverse benefit determination must include the following: date of service, provider, and claim amount (if applicable) diagnosis code (ICD-9, ICD-10 or DSM-IV codes), treatment code (such as CPT code) and denial code (such as a CARC and RARC code) and their meanings a description of any standard (e.g., medical necessity) used in denying the claim, and in the case of a final internal adverse determination, this description must include a discussion of the decision a description of available internal appeals and external review processes (including how to initiate an appeal) a statement regarding the availability of, and contact information for, any applicable office of health insurance consumer assistance or ombudsman to assist with claims, appeals and external reviews. 10

11 Continued Coverage Pending Appeal Applies Only to Continued Coverage Claims Example: plan has previously approved an ongoing course of treatment for a specified period of time or number of treatments. Plan cannot reduce the period or number without first providing the claimant with advance notice and an opportunity to appeal. Intended to be consistent with current ERISA regulations regarding concurrent care. No Substantial Compliance If a non-grandfathered plan does not strictly comply: Claimant will be deemed to have exhausted the internal claims and appeals process, and may immediately initiate an external review OR seek relief in court. If claimant goes to court, determination deemed a denial and will not be given deference by the court. No De Minimis errors. Substantial Compliance irrelevant. 11

12 External Claims Review Requirements State Standards for External Review Applies to insured plans and potentially to selfinsured plans not subject to ERISA Plans sponsored by state and local governments or churches Must contain consumer protection standards set forth under the NAIC Uniform Model Act HHS will evaluate whether state s external review process complies Current state standards acceptable for plan years beginning before July 1,

13 Federal Standards for External Review Applies to self-insured group health plans not subject to state process Most adverse benefit determination will be eligible for review Decisions based on worker classification and eligibility will not be eligible for review Safe Harbor Process for Self- Insured Group Health Plans Non-grandfathered self-insured health plans can do one of the following: Comply with Technical Release Voluntarily comply with State external review processes. Not clear yet whether Michigan will open up process to self-insured plans. 13

14 Technical Release Must have contracts with at least 3 Independent Review Organizations (IROs) IROs must be accredited URAC (Utilization Review Accreditation Commission) Other similar nationally-recognized accrediting organization Specific contractual requirements Must rotate claims between IROs Technical Release Must allow claimant four months to request external review. Preliminary review requirement Complete within 5 days of receiving request Determine whether claimant covered by plan at time of contested service Payment denied because of eligibility issue. Claimant exhausted internal review process Claimant has provided all required information and forms Notice of preliminary review Must provide within 1 day! Must allow time for claimant to submit any missing or incomplete information. 14

15 Technical Release If claim is eligible for external review: Plan must submit all documents to IRO within 5 business days. IRO must make decision within 45 days Notify claimant of acceptance and right to submit data Must consider any additional information submitted by claimant within 10 days and forward to Plan. Must make independent determination and send detailed notification to claimant and plan. Plan may reconsider its own decision and withdraw review prior to IRO s decision If IRO reverses Plan s decision, Plan must immediately provide coverage or payment. Technical Release Expedited external review available Grounds for expedited external review: Upon receiving initial adverse benefit determination, if urgent care situation and using internal claims procedure would take too long. Upon receiving internal review decision and normal external review process would take too long. Immediate preliminary review, assignment to IRO and transmission of relevant information by fax, phone or other expeditious method. IRO must decide matter as expeditiously as possible but in no event more than 72 hours. 15

16 Things To Do Non-grandfathered plans must implement before start of new plan year. Talk to TPA to see if it will contract with IROs. If not, contact IROs. Amend plan documents and SPDs to describe new process. Over-the-Counter Drugs and Medicare 16

17 Over-The-Counter Drugs Limitation (IRS Notice ) Revised definition of medical expenses for health plan, HSAs and MSAs New rule for health plans, FSAs and HRAs Cost of medicines or drugs may be paid or reimbursed by an employer-provided health plan, including a FSA and HRA only if the medicine or drug: Requires a prescription; Is an O-T-C medicine or drug and the individual obtains a prescription; or Is insulin. Effective for purchases on or after January 1, Over-The-Counter Drugs Limitation (IRS Notice ) New rule for HSAs and MSAs Distribution from HSA or Archer MSA for medicines or drugs is tax free only if medicine or drug: Requires a prescription Is an O-T-C medicine or drug and the individual obtains a prescription; or Is insulin. Otherwise, amount is included in gross income plus 20% additional tax. New rule does not affect distributions before 2011 or distributions on or after January 1, 2011 for medicines or drugs purchased before

18 What s a Prescription? A written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and is issued by an individual legally authorized to issue a prescription in that state. Only Applicable to Medicines or Drugs New rules do not apply to medical care items that are not medicines or drugs, such as: Bandages Crutches Diagnostic devices (e.g., blood sugar test kits) Items merely beneficial to general health (vacation, gym membership) are not medical care expenses. 18

19 Health FSA and HRA Debit Cards Current debit card systems are incapable of knowing whether medicines and drugs are prescribed. For expenses on and after January 1, 2011, FSA and HRA debit cards may not be used to purchase O-T-C drugs or medicines. Transition non-enforcement period from January 1 January 15. Beginning January 16, must substantiate prescription O-T-C drug purchase before reimbursement e.g., pharmacy receipt identifying name of purchaser (or person for whom prescription applies), date and amount of purchase and Rx number or copy of prescription. Transition Rule for Cafeteria Plan Amendments Notwithstanding rule against retroactive amendments, amendment to conform 125 cafeteria plan to O-T-C requirements, may be retroactively effective if adopted no later than June 30,

20 Questions??? 20