U.S. Sets New Rules for Health Care Plan Appeals

The Clinton administration, despairing of getting a lame-duck Congress to enact a patients’ bill of rights, issued regulations Monday that create a formal and rapid appeals process for 130 million private sector workers.

The process for employees to appeal claims rejected by their health insurance plans until now has varied. The new rules will apply to virtually all companies offering health insurance, with the exception of some small firms. Also exempted are workers in government agencies and church-related groups.

As of Jan. 1, 2002, health plans would have to abide by strict deadlines on notifying patients about coverage. They would have 72 hours to tell patients whether treatments in potentially life-threatening situations would be covered, and 15 days for advance clearance of routine operations. Patients could appeal those decisions to the health plan, which would have to respond within an expedited timetable.

The managed care industry, which often has balked at federal regulation, indicated it would not seek to have the rules overturned by Congress or the next president.

The regulations differ significantly from the proposed patients’ bill of rights. That legislation would have created an independent appeal mechanism outside the industry, and would have significantly expanded patients’ ability to sue health plans for punitive damages. Currently, lawsuits are restricted to the recovery of medical costs.

For 90% of Americans in managed health care programs, “someone other than your doctor decides if treatments will be covered,” said Edward Montgomery, deputy assistant secretary of the Labor Department, which issued the rules. “Too many people wait too long for decisions [and] . . . are frustrated by complicated appeals procedures.”

The goal of the regulations is to provide a speedier and more efficient system for handling the contacts between the patients and health plans.

The rules are in three basic categories: medical procedures approved in advance; payment for services and treatments already delivered; and “urgent care” procedures.

For advance certification, such as a gallbladder surgery recommended by a physician, the health plan would have to tell the patient within 15 days whether it will pay for the procedure. If the plan says no, and the patient challenges that rejection, the appeal must be handled within 30 days.

After a consumer has received some services, the health plan might decide it does not want to pay some or all of the bill. The plan must tell the patient within 30 days if it is refusing to cover the charges. A patient can appeal the rejection and must receive an answer within 60 days.

For urgent care, the plan must respond in 72 hours. For example, a dermatologist might find a melanoma and decide it should be removed right away. The health plan must tell the patient in 72 hours if it is going to pay the bill.

Health plans will have to furnish consumers with detailed reasons for turning down claims.

The regulation issued on Monday “cannot substitute for a patients’ bill of rights, but it can put in place fundamental safeguards,” said Leslie Kramerich, acting assistant secretary for the government’s Pension and Welfare Benefits Administration.

California consumers, through state legislation, already have the right to an independent appeals system if they belong to one the of health maintenance organizations or preferred provider organizations regulated by the state’s Department of Managed Health Care.

In a separate action, an unusual coalition involving the insurance industry, hospitals and a consumer group called for a major effort to expand health coverage for low-income workers. It is aimed at the 23 million people in families with incomes below 200% of the federal poverty standard, or $28,300 for a family of three.

The plan calls for expanding eligibility for Medicaid, the federal health program for the poor, increasing spending under a special program to insure children from low-income families and granting new tax breaks to firms offering health insurance to their workers.

There was no formal estimate of the potential cost to the taxpayers, but a general standard is that it costs about $1 billion a year to provide insurance for an additional 1 million people.