New Utilization Review Process for Health Plans

Orlando—Before the Patient Protection and Affordable Care Act (ACA) was signed into law in March 2010, utilization reviews varied depending on the health insurer since they had different timelines and rules and inconsistent claims and appeals processes.

As part of the ACA, everything must now be standardized, with the hope of setting common practices and reducing confusion. The National Association of Insurance Commissioners (NAIC) established the standards, which include health plans informing consumers of their right to internal and external appeals in plan materials as well as when a claim is denied.

“The basic point is consumer protection,” said Barak Mevorak, MD, vice president of quality and compliance at Advanced Medical Reviews, Inc.

At the Spring Managed Care Forum, Dr. Mevorak discussed the changes during a session titled Patient Protection and Affordable Care Act: Impact on Utilization Review and the Health Insurance Market. The rules apply to group health plans regardless of whether they are covered by the Employee Retirement Income Security Act. The new process requires an external review process, imposes new disclosure and notice requirements, and expands internal reviews for claims and appeals. However, some grandfathered plans are exempt, according to Dr. Mevorak.

The NAIC called for an external review of decisions to deny coverage based on medical necessity, appropriateness, healthcare setting, level of care, or effectiveness of a benefit. In emergency situations or if plans did not follow internal claim rules, the rules ask for expedited access to external reviews.

States assign an independent review board to review any appeals and ensure that the members meet certain standards, do not have conflicts of interest, and keep written records. Decisions are binding, according to Dr. Mevorak, who added that health plans must pay the consumer for a denied benefit.

When disputing coverage denials, members are required to first follow an internal appeal process. If an external appeal is necessary, health plans pay for the costs while members pay a nominal fee. The NAIC recommends that states adopt external appeals standards, however, the federal government will provide an appeals process for states that choose not to offer this process.

A state-appointed independent review organization handles the external appeals process, and plans are required to explain the decisions in detail and notify consumers about their right to appeal and to have the appeal expedited if they need urgent care.

Dr. Mevorak said the new rules put an administrative burden on health insurers. On average, there are 1.3 external reviews per year per 10,000 lives covered. It was estimated that there would be 3600 new appeals in 2012 and 7000 in 2013. However, as of April, Dr. Mevorak said there had already been 3000 new appeals.

Although their awareness is growing, most plan members are not well informed about the appeals process, according to Dr. Mevorak. Meanwhile, plans are struggling to find ways to handle the increasing number of reviews and understanding the stricter rules. “This is really only the beginning,” Dr. Mevorak said. “A lot of health plans have not caught up to the system.”—Tim Casey