Healthcare Reform, ERISA Claims, and Government Health Plans

January 17, 2014

Thanks to the Affordable Care Act, all claims filed under government plans are now on equal footing with ERISA-governed health plan claims.

The medical provider community is becoming more aware of the health plan claims procedures contained in the Employee Retirement Income Security Act (ERISA). The federal ERISA claims regulations provide many advantages to physicians when they pursue payment on their patient's claims covered under private; i.e., non-government, group-sponsored plans. These advantages include the right to prompt claim decisions, the right to full and complete explanations on all EOBs, and the right to obtain e-mails, data, and documents from group health insurers or administrators when claim determinations are "adverse" (a complete or partial claim denial).

According to a little-known provision in the Affordable Care Act, these ERISA processes - designed to promote speed, fairness, and transparency - are now also required to be incorporated into every government employee group health plan. Beginning in about 2011, the healthcare reform law required that these ERISA procedures be added to government-sponsored plans, such as those covering the employees of cities, school districts, states, and even the federal government.

This article outlines the main benefits of these regulations and explains how physicians can use them to address the vague and frustrating claim denials often seen in EOBs. With some education and perseverance, using these tools can improve a physician's bottom line.

First, we should be clear that these regulations apply to all group health plans. Many physicians have been under the impression that the rules only apply to self-insured plans and not to plans that are funded by a group insurance policy. Let's debunk that myth here: ERISA applies to all group plans, whether insured or not; and now, through the Affordable Care Act, ERISA's regulations apply to all government employer-sponsored plans as well.

Second, as a threshold matter, physicians must recognize that not only do the patients have legal rights here, but so does the physician. As ERISA beneficiaries, the physicians can pursue the same pathways as their patients can, under the patient's health plan. Simple language - often already contained in a physician's intake paperwork - and certain wording in the patient's health plan can create beneficiary rights in the physician.

While the insurance industry and most claim administrators have vigorously fought this concept, there is solid legal authority supporting a physician's rights here. Thus, once the physician is legally deemed a beneficiary, he or she can hold the insurer or claim administrator's feet to the fire when it comes to pursuing payment on claims.

The ERISA health plan claims regulations have, for example, the following advantages:

• Insurers and claims administrators must respond to all health plan claims within 30 days;

• The burden is on insurers and claim administrators to justify a claim denial based upon an alleged lack of medical necessity or if it is allegedly experimental of investigational, with scientific or clinical evidence; and

• If a claim is denied, the insurer or administrator must provide internal documents to a requesting physician, such as their internal emails and memos.

The first important concept is the timing rule: An insurer or administrator must respond to a filed claim within 30 days. And if the response is a request for medical records, there is only a one-time request allowed per claim, and only a 15-day extension of the requirement to render a timely claim decision. If these deadlines are blown, the physician should demand payment in full, regardless of the type of services rendered. Legal counsel can pursue payment in full, using other methods, if a written demand by the physician is unsuccessful.

The next significant rule is that an insurer or claim administrator must explain the scientific or clinical basis for any decision that alleges a lack of medical necessity or that a service rendered was experimental or investigational. Insurance companies try to shift the burden to the physician, but the law places the burden in reverse: If a claim is denied on these grounds, the insurer or administrator needs to step up to the plate - with proof. And the insurer or administrator cannot transmit numerous and untimely requests for records as to medical necessity, after the 30-day deadline.

And finally, when a claim decision is adverse, the physician should demand all of the insurer's internal medical documentation, e-mails, or other documents that allegedly support the insurance company or claim administrator's decision. The regulations have contained these rights for 12 years, but physicians have not become aware of them, nor pressed for these materials on denied claims. Using this tool can often result in the receipt of a check, on a disputed claim, representing payment in full.

Be assured that these rules are a tool kit that will serve physicians well in their quest for payment and fair treatment on all claims filed under both public and private group health plans.

Richard Quadrinois a New York insurance lawyer who has represented physicians throughout the U.S., for many years. His practice focuses on health insurance and ERISA claims and litigation. E-mail him at here.