For any disability claim, medical record review is an important requirement because it helps to determine the validity of the claim. A person who is unable to work following a disabling injury or medical condition may be eligible to obtain benefits under an individual disability income insurance (IDI) policy or a group long-term disability (LTD) insurance policy. Insurance companies employ doctors to review the claim forms and the entire medical chart. The claimant’s medical records are thus important medical evidence that will be considered. As such, claimants will have to ensure that their medical file is complete and carries details of all relevant symptoms and clinical findings. Most group LTD policies are governed by the federal law ERISA (Employee Retirement Income Security Act) and are usually referred to as ERISA disability policies.
New ERISA Regulations Effective from April 1, 2018
New regulations from the U.S. Department of Labor governing ERISA disability benefit claims became effective from April 1, 2018. Administrators of employee benefit plans governed by ERISA must ensure that the claims procedures contained in their affected benefit plans comply with the new regulations applicable to disability benefits. The new rules are intended to ensure the independence and impartiality of plan decision makers when determining disability benefit claims.
Insurance plans that provide health and welfare benefits (medical, health, vision, dental, life, accident, disability) as well as retirement plans (defined benefit, cash balance, 401 (k), profit sharing) fall under ERISA plans. The new regulations also cover non-qualified deferred compensation plans that are subject to ERISA’s claims regulations provisions. Section 503 of ERISA requires every employee benefit plan to:
- Provide notice in writing in understandable language explaining the exact reasons for claim denial
- Provide an individual with an opportunity for a full and fair review of denial.
So, what are the new requirements?
- Claims adjudicators, medical professionals providing disability opinions, and others able to influence the outcome must be independent and impartial. For instance, employment or decisions regarding compensation, promotion, or similar matters cannot be made based on the likelihood that an individual will support the denial of disability benefits.
- Benefit denial notices must specify:
- A comprehensive discussion of why the claim was denied and the standards applied in reaching the decision.
- The reasons for disagreeing with the views of healthcare or vocational professionals whose opinions were provided by the claimant or obtained at the request of the plan, irrespective of whether the claim determination was made based on those opinions.
- If applicable, state the basis for disagreeing with a finding of disability by the social security administration.
- The guidelines, protocols, standards, internal rules or other criteria the plan relied upon in denying the claim; or a statement that such guidelines do not exist.
- In case the denial is based on a medical necessity, investigative treatment or a similar exclusion, an explanation of the scientific or clinical judgement for the determination must be provided, or a statement that such will be provided free of charge upon request.
- Claimants must be given timely notice of their right to access the entire claim file, and all related documents. They must be provided the right to present evidence supporting their claim during the review process. This requires that the first adverse benefit determination must contain a statement that the claimant is entitled to receive upon request, and free of charge, all documents relevant to the claim. At present, this statement is required only in notices of adverse benefit determinations on appeal.
- If a plan doesn’t comply with ERISA claims procedure requirements, the claimant can request court review on the basis that the plan failed to provide a reasonable claims procedure that would yield a decision on the merits of the claim. The plan cannot in this case assert the claimant’s failure to exhaust administrative remedies. As per the new regulations, an exception is given only when the violation is small/minor/insignificant (de minimus) and certain other criteria apply that include no harm to the claimant and the plan was acting in good faith.
- The insurance plan is required to provide the claimant information regarding any new evidence or rationale it is using to support its denial on appeal. This should be given at the earliest, and sufficiently in advance of the date on which the notice of adverse benefit determination is due. The notice regarding new evidence, the claimant’s opportunity to respond, and the plan’s determination must all be completed within the existing time frame for an appeal determination, i.e. 45 days from the filing of the appeal, with a possible 45-day extension.
- The new ERISA regulations has expanded the term “adverse benefit determination” to include any denial, reduction or termination of, or a failure to make full or partial payment for a benefit. All rescissions of coverage (other than for the claimant’s non-payment of insurance premiums) including retroactive terminations because of errors in the application for coverage that would come under “alleged misrepresentation of fact”, must be treated as adverse benefit determinations.
- It should be ensured that all notices and denials are written in a “culturally and linguistically appropriate” manner. For example, in areas where there are 10% or more of people literate only in a non-English language, the benefit denial notices must carry a prominent statement in the particular non-English language that language services are available. These services should include help with filing claims and appeals in the non-English language. If requested for, the plan must provide written notices in the non-English language.
Steps Insurance Plans Can Take to Ensure Compliance
In view of the new regulations, insurance plan administrators must review the benefits provided by their ERISA plans and determine whether those are affected. If a plan requires disability determination for benefit eligibility, it is subject to the new regulations. Administrators must review whether their plans:
- Provide a benefit upon the occurrence of a disability
- Accelerated vesting upon the occurrence of a disability
- Waiver of allocation of accrual requirements for receiving employer contributions upon the occurrence of a disability
- Acceleration of a plan benefit upon the occurrence of a disability to determine if the plan needs to meet the new regulations requirements.
Certain plans may not require to be amended to comply with the new regulations. For example, if a benefit’s availability is dependent on the finding of a disability made by a party other than the plan, a claim for such a benefit may not be subject to the new regulations. Examples of situations where the eligibility determination is made by an entity outside of the plan include when the finding of disability is tied to a disability determination made by the social security administration (SSA) or by the employer’s long-term disability insurance.
As providers of medical record review for attorneys handling insurance claim disputes, we understand how important legal counsel is for insurance plans to ensure compliance with the new ERISA regulations. This is because if plans are found to be non-compliant, then claimants bringing claims for disability benefits after April 1, 2018 will be deemed to have exhausted the plan’s administrative remedies and are eligible to pursue any remedies available to them under Section 502 (a) ERISA, including bringing a suit in federal court.
A quick review of the steps various insurers are taking in this regard shows that the following actions can help to stay compliant.
- Updating or refining their standard disability plans to accommodate changes required by the new regulations.
- Reviewing their present claims handling procedures.
- Reviewing plan documents to determine which plans are subject to the new rules.
- Refining their written internal claims handling guidelines to remain compliant and ready for inclusion in claim denial notices.
- Revamping their denial letter formats to include all the new required disclosures.
- Providing comprehensive training to their claims examiners and appeals staff.
- Hiring language service providers to translate notices into the required non-English languages, and handle calls from non-English speaking claimants.
- Co-ordinating with third-party administrators and other claims administrators to ensure that their administrative procedures and disability-related correspondence are compliant with the new regulations.
Claims administrators, insurance attorneys and medical record review companies serving them, and other stakeholders must stay updated with the changes introduced in the rules and regulations governing insurance plans. This is important to stay compliant as well as ensure that beneficiaries receive optimum services.