Department of Labor Issues Proposed Regulations on Claims Procedures and Summary Plan Descriptions; Interim Rule on Newborns' and Mothers' Health Protection Act
The Department of Labor has issued proposed regulations on claims procedures for employee benefit plans subject to Title I of ERISA. These regulations reflect the DOL's conclusion that the current regulations are no longer adequate to protect participants and beneficiaries, particularly in the health benefit context. Accordingly, while the proposed regulations apply to all types of Title I plans, they contain special provisions for group health benefit claims.
The major features of the proposed regulations are as follows:
Time limits for benefit determinations
- Group health urgent care benefits: initial decisions must be made within 72 hours after the claim is made, appeals must be decided within 72 hours.
- Group health benefits, non-urgent care: initial decisions within 15 days, appeals within 30 days.
- Disability benefits: initial determinations within 30 days, appeals within 45 days.
- Retirement and other benefits: no change (initial decisions within 90 days, appeals within 60 days).
- Special time limits for benefit determinations by boards of trustees that meet only quarterly would be eliminated, holding them to the same standards as fiduciaries of other plans.
- Time limits for participants to appeal adverse benefit determinations for group health and disability claims would be expanded.
New disclosure requirements
- Written notifications of an adverse benefit determination must provide more detailed information, including notice of the participant's right to bring a civil action under ERISA following the denial on review.
- Participants/beneficiaries must be allowed access to all information relevant to their claim for benefits, regardless of whether it was used in making a decision.
New notice requirements
- In general, participants/beneficiaries must be notified within 45 days after submission of their claims of any missing or incomplete information. This time limit is reduced to 15 days for disability benefits, to 5 days for non-urgent group health benefits and to 24 hours for urgent care benefits.
- The definition of claims denial (now called an "adverse benefit determination") would be expanded to include, among other things, denials of pre-certification for hospitalization and other health care services and reduction or termination of benefits being provided over a period of time.
New standards of review on appeal
- Review must be performed by a named fiduciary that is neither the party that made the initial adverse benefit determination nor a subordinate of that party.
- The claim is reviewed de novo, with no deference to the initial decision and on the basis of all relevant documentation, whether or not used in the initial decision.
- For a health benefit claim based on medical judgment, the review must be made by an appropriately trained health care professional.
- Requiring mandatory arbitration of benefit claims denials is unreasonable.
- Special treatment for collectively bargained plans and HMO-type arrangements would be repealed. Both these types of plans would be fully subject to the new claims procedures.
Summary Plan Descriptions
The DOL has also issued proposed regulations on the required content of summary plan descriptions (SPDs) for employee benefit plans. If finalized, the regulations would clarify that, among other things, the following information must be contained in the SPD:
Information specific to group health plan SPDs
- Cost-sharing information, including co-payments, deductibles, premiums, coinsurance.
- Annual or lifetime caps or other limitations on benefits.
- The extent to which preventative services are covered.
- Whether and under what circumstances existing and new drugs are covered.
- Coverage of medical devices, tests and procedures.
- Conditions on selection of physicians, both primary care and specialists.
- Whether, and for what services, pre-authorization is required.
The regulations repeal the limited exemption from the requirement to provide SPDs that applied to plans which provide health benefits through a qualified HMO.
Information specific to retirement plan SPDs
- The definition of normal retirement age.
- Conditions for eligibility.
- Information relating to vesting and accrual upon plan termination.
- If applicable, a statement that benefits are insured by the PBGC. If applicable, a statement that a defined contribution plan is intended to constitute a plan under ERISA § 404(c), which limits fiduciary liability for participant-directed investment decisions.
General information in all SPDs
- Plan sponsor's ability to amend/terminate the plan, or modify/eliminate benefits.
- How assets will be allocated upon plan termination.
- Description of benefits.
- The procedures governing qualified domestic relations orders (QDROs) and qualified medical child support orders (QMCSOs).
- Circumstances that may result in disqualification, ineligibility, loss, denial or suspension of benefits.
- Claims procedures.
Revised Interim Rule on Newborns' and Mothers' Health Protection Act of 1996
The DOL has also issued a revision to its interim regulations regarding the information an SPD must disclose about participants' rights under the Newborns' and Mothers' Health Protection Act of 1996 (NMHPA). The NMHPA prohibited group health plans and insurance carriers from limiting the hospital stay for mothers and newborn children to less than 48 hours following a normal vaginal delivery, or 96 hours following a cesarean section. The new interim rule clarifies that these minimum stay provisions do not apply where the attending provider, in consultation with the mother, decides to discharge the mother and/or newborn earlier than the minimum stay period. The interim rule provides specific language plans may use in their SPDs to address this issue.
Plan administrators must comply with the new NMHPA interim rule no later than the date occurring after November 9, 1998 on which the first summary of material modifications or updated SPD must be provided to participants.