by Sara E. Hauptfuehrer
The Patient Protection and Affordable Care Act ("PPACA")
requires health insurance issuers and certain employer-sponsored group health
plans to comply with "the applicable State external review process for such
plans and issuers." States' external review processes must provide for
external review of denials of insurance claims (and claims for group health
plan benefits) for medical care based on medical necessity, appropriateness,
health care setting, level of care, or effectiveness of a covered
benefit. PPACA's external review requirements were to become effective to
policies issued after September 23, 2010, and then, via interim regulations,
after a transition period ending on July 1, 2011.
On June 22, 2011, the Department of Labor issued
additional guidance on the external review standards in Technical Release
2011-02. This guidance includes a transition period until January 1,
2012, for state external review process implementation, as well as a set of
temporary standards for NAIC-similar processes that will apply until January
1, 2014, in the absence of an approved state-administered external review
This is how the regulators expect things to play
out: By July 31, 2011, HHS was to have determined whether each state's
external review process met the applicable minimum standards. A state
whose process was rejected had the opportunity to challenge HHS's
determination. Final determinations are to be in place by October 1,
2011. If the state's external review process has not received a
favorable determination by that time, beginning on January 1, 2012,
plans and insurance companies will be subject to the temporary standards
spelled out in the Technical Release.
If all else fails - that is, if a state's external review
process has not been approved - as of January 1, 2014, a
federally-administered external review process becomes applicable.
Insurers can choose to participate in an external review process administered
by HHS or engage in the private independent review organization ("IRO") process
for ERISA plans.
As of August 1, 2011, West Virginia did not have an HHS
approved external review process. According to the Centers for Medicare
& Medicaid Services' website, West Virginia insurers and plans will be
subject to the federally-administered external review process. It is not
clear from the website whether the state still intends to develop its own
external review process or will remain subject to the federal program.
The same is true of Ohio and Pennsylvania. On the other hand, Kentucky
has an approved external review process that meets the strict standards
promulgated by the regulators in July 2010.
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