This is the twelfth in a series of articles about health care reform.
One year after the enactment of the health care reform legislation on March 23, 2010, changes are still being made on both the federal and state levels. This article addresses one recent federal policy and one state law change from the State of Minnesota.
Further Delay of Federal Enforcement of Claims Procedures
The U.S. Department of Labor issued Technical Release 2011-01 on March 18, 2011. In it, the Department of Labor, Department of the Treasury and Department of Health and Human Services (the Departments) indicated that they will not take action against nongrandfathered health plans for failure to comply with certain elements of the benefit claims review process discussed below. Under the health care reform law, nongrandfathered plans were to be subject to revised claims review procedures for plan years beginning on or after September 23, 2010. Technical Release 2011-01, issued September 20, 2010, stated that no action would be taken for failure to comply with certain elements of the revised claims review procedures until July 1, 2011. Technical Release 2011-01 further delays some of these requirements.
The Departments will not take any actions against a nongrandfathered plan for noncompliance with elements of the claims process noted below before the listed dates:
1. Urgent care claims must be decided within 24 hours of receipt (formerly 72) in most cases. Enforcement is delayed until plan years beginning on or after January 1, 2012.
2. Notices must be given in a "culturally and linguistically appropriate manner." If a significant portion of employees are not able to read in English, substitute notifications in a non-English language must be provided. Enforcement is delayed until plan years beginning on or after January 1, 2012.
3. A plan's failure to strictly adhere to all of the internal claims process will result in "deemed exhaustion" by a claimant of internal claims procedures. Claimants can then pursue external review or judicial review without further exhaustion of the claims procedure and any decision by the plan or insurer will be reviewed de novo rather than under a more plan friendly abuse of discretion standard. Enforcement is delayed until plan years beginning on or after January 1, 2012.
4. Notices to claimants must provide additional content. Specifically:
- a) Any notice of adverse benefit determination or final internal adverse benefit determination must include information sufficient to identify the claim involved, including the date of the service, the health care provider, the claim amount (if applicable), the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning.
- b) The plan or issuer must ensure that the reason or reasons for an adverse benefit determination or final internal adverse benefit determination includes the denial code and its corresponding meaning, as well as a description of the plan's or issuer's standard, if any, that was used in denying the claim. In the case of a final internal adverse benefit determination, this description must also include a discussion of the decision.
- c) The plan or issuer must provide a description of available internal appeals and external review processes, including information regarding how to initiate an appeal.
- d) The plan or issuer must disclose the availability of, and contact information for, an applicable office of health insurance consumer assistance or ombudsman established under PHS Act section 2793.
Enforcement of this fourth provision is delayed until plan years beginning on or after July 1, 2011. However, no enforcement of the requirement to include the treatment and diagnosis codes and their corresponding meanings will be taken until plan years beginning on or after January 1, 2012.
In addition to the delayed enforcement of the above mentioned claims provisions, the Technical Release stated that the delay is not predicated on the plan's use of good faith efforts to comply with the listed provisions. However, the Technical Release makes it clear that it does not address the rights of private parties in private litigation or enforcement by the states, but only the enforcement delay on the part of the Departments. Therefore, it may be prudent for plans to put forth a good faith effort to comply with all of the claims review elements promptly.
Finally, the Departments indicate that they intend to amend the final interim regulations published on July 23, 2010, "in the near future." The amendment will take into account comments provided in response to the previously issued final interim regulations.
Change in State Income Taxation of Health Benefits in Minnesota
On March 21, 2011, Minnesota Gov. Mark Dayton signed into law H.F. 79. This legislation addresses the treatment of employer provided health benefits for adult children for purposes of Minnesota state income taxation. While the federal tax law was previously amended to permit coverage of children under the age of 27 through an employer sponsored health plan on a pre-tax basis from March 30, 2010, forward, Minnesota's state tax law was not similarly amended. This discrepancy would have resulted in the fair market value of the nondependent child's health coverage (including reimbursements through medical flexible spending accounts) constituting wages for the employee. However, the new legislation eliminates this discrepancy for 2010. It does so by incorporating the federal Internal Revenue Code as amended through December 31, 2010, for purposes of determining Minnesota taxable wages earned during 2010. Minnesota has yet to address the state tax treatment of such health coverage for tax years after 2010. Employers who distributed 2010 W-2 forms that included the amount of health coverage provided to adult children under the age of 27 as income are not required to distribute corrected W-2s.