Rules expand ability to appeal health insurance rejections

WASHINGTON -- For many Americans, few experiences with the health care system are more frustrating than confronting a rejected claim from an insurance plan. Rejection notices are often unclear, as are the procedures for challenging them.

Today, the Obama administration issued new rules designed to simplify the process and expand consumers' rights, as required by the recently enacted health care law.

Here are some questions and answers about how the new protections will work.

QUESTION: Do Americans already have the right to appeal if a health insurer denies coverage for a claim?

ANSWER: Many do, but the rules differ depending on whether you get insurance from an employer or whether you buy it on your own. Consumer protections also vary dramatically from state to state.

Existing federal rules require most employer-provided plans to have a process for appealing a rejected claim through an internal process. But if you are rejected, there is no guarantee that you can take your appeal to an independent third-party reviewer.

You currently have no right to an external review of your denied claim if you work for a company that self-insures, as many large employers do.

And if you buy insurance on your own, you may not get an external review either.

Thirteen states guarantee an external review for only some kinds of health plans. Six states do not require any independent review process.

Q: So, what will happen now?

A: The new rules essentially standardize the appeals process for both internal and external appeals. Next year, if you qualify for the new protections, you will be guaranteed an internal review if your claim is denied, whether you get insurance from a private employer, from a government employer or directly from a commercial carrier.

These internal reviews will also have to conform to several new standards that will require health plans to explain denials more clearly, to speed decisions in urgent cases and to prevent conflicts of interest by arbiters reviewing denied claims.

In addition, qualifying Americans will also be guaranteed an external review of their denied claim by someone not employed by their health plan.

States have until July 1, 2011, to put these new external review regulations in place, or the federal government will step in and do it.

Q: Is everyone eligible for these new protections?

A: No. The rules apply only to health plans whose plan years begin after Sept. 23 and to existing health plans that make substantial changes, such as large increases in co-pays or employee contributions.

Existing health plans that do not make significant changes -- which are called "grandfathered" plans -- will not be subject to the new regulations.

Administration officials estimate that next year 41 million Americans will be in plans that will have to offer additional protections.

Q: How do I find out if I can get the new protections?

A: Consumers can check with their state insurance commissioner or with the Employee Benefits Security Administration at the U.S. Department of Labor. Benefits specialists can be reached by calling 866-444-3272.

The administration also is making $30 million in grants available to states and U.S. territories to establish new consumer assistance offices or to bolster existing ones.

Q: Will these rules make a difference?

A: It's difficult to say. The Obama administration did not attempt to quantify the benefits of the new rules. But many consumer advocates -- including Consumers Union, Families USA, the National Partnership for Women and Families and the AARP -- believe they provide important new protections.

"Under these new rules, if your health insurance claim is denied, you've got a fairer shot at appealing the decision," Consumers Union health reform campaign director DeAnn Friedholm said in a statement. "It's another important step in building a health care system that truly works for consumers."