14VAC5-215 Rules Governing Independent External Review of Final Adverse Utilization Review Decisions

REGULATIONS

Vol. 28 Iss. 8 - December 19, 2011

TITLE 14. INSURANCE

STATE CORPORATION COMMISSION

Chapter 215

Final Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.

Titles of Regulations: 14VAC5-215. Rules Governing Independent External Review of Final Adverse Utilization Review Decisions (repealing 14VAC5-215-10 through 14VAC5-215-130).

14VAC5-216. Rules Governing Internal Appeal and External Review (amending 14VAC5-216-20, 14VAC5-216-40, 14VAC5-216-70; adding 14VAC5-216-45).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Effective Date: January 1, 2012, for 14VAC5-216 and May 16, 2012, for repeal of 14VAC5-215.

Agency Contact: Julie Blauvelt, Senior Insurance Market Examiner, State Corporation Commission, Bureau of Insurance, P.O. Box 1157, Richmond, VA 23218, telephone [phone], FAX [phone], or email [e-mail].

Summary:

This action repeals 14VAC5-215, which is necessary because pertinent provisions § 38.2-5900 of the Code of Virginia and §§ 38.2-5901 through 38.2-5905 of the Code of Virginia were repealed by the General Assembly in 2011 and the external review process was replaced with a new process found in Chapter 35.1 (§§ 38.2-3556 through 38.2-3571) of Title 38.2 of the Code of Virginia. External review under 14VAC5-215 will not be available after May 15, 2012. Amendments and an added section to 14VAC5-216 are necessary because on June 22, 2011, the federal government issued amendments to its "Rules Relating to Internal Claims and Appeals and External Review Process" (amending 26 CFR Part 54, 29 CFR Part 2590, and 45 CFR Part 147) addressing exhaustion and notice issues. The amendments also added a section to 14VAC5-216 to conform to these federal requirements. The amendments to 4CAC5-216 are required to be effective by January 1, 2012.

AT RICHMOND, DECEMBER 1, 2011

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. INS-2011-00200

Ex Parte: In the matter of Repealing the
Rules Governing Independent External Review
of Final Adverse Utilization Review Decisions
and Amending the Rules Governing
Internal Appeal and External Review

ORDER REPEALING AND ADOPTING RULES

By Order entered herein September 27, 2011 ("Order to Take Notice"), all interested persons were ordered to take notice that subsequent to November 21, 2011, the State Corporation Commission ("Commission") would consider the entry of an order to repeal the "Rules Governing Independent External Review of Final Adverse Utilization Review Decisions" at Chapter 215 of Title 14 of the Virginia Adminstrative Code (14 VAC 5-215-10 through 14 VAC 5-215-130 and Forms) to be effective on May 16, 2012, and amend certain sections in Chapter 216 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Internal Appeal and External Review," specifically set forth at 14 VAC 5-216-20, 14 VAC 5-216-40, and 14 VAC 5-216-70, as well as add a new section at 14 VAC 5-216-45. These amendments were proposed by the Bureau of Insurance ("Bureau"). The Order to Take Notice required that on or before November 21, 2011, any person objecting to the repeal of Chapter 215 or the amendments to Chapter 216 shall have filed a request for hearing with the Clerk of the Commission ("Clerk").

The Order to Take Notice also required all interested persons to file their comments in support of or in opposition to the repeal of Chapter 215 and the amendments to Chapter 216 on or before November 21, 2011.

No comments were filed with the Clerk. No request for a hearing was filed with the Clerk.

The Bureau recommends the repeal of Chapter 215 and the adoption of the amendments to Chapter 216 as proposed.

The repeal of Chapter 215 is necessary because pertinent provisions of § 38.2-5900 and §§ 38.2-5901 through 38.2-5905 of the Code of Virginia ("Code") were repealed by the General Assembly in 2011, and the external review process was replaced with a new process found in Chapter 35.1 (§§ 38.2-3556 through 38.2-3571) of the Code. External review under Chapter 215 will not be available after May 15, 2012. Amendments, including a new section in Chapter 216, are necessary because the federal government has issued amendments to its regulations relating to internal appeal and external review, addressing exhaustion and notice issues. The amendments and new section in Chapter 216 conform to the federal requirements. These amendments are required to be effective by January 1, 2012.

NOW THE COMMISSION, having considered the Bureau's recommendation to repeal Chapter 215 effective on May 16, 2012, and amend as well as add a new section to Chapter 216, is of the opinion that Chapter 215 should be repealed effective May 16, 2012, and the amendments to 14 VAC 5-216-20, 14 VAC 5-216-40, and 14 VAC 5-216-70, as well as a new section at 14 VAC 5-216-45, should be adopted effective January 1, 2012.

Accordingly, IT IS ORDERED THAT:

(1) Chapter 215 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Independent External Review of Final Adverse Utilization Review Decisions" at 14 VAC 5-215-10 through 14 VAC 5-215-130 and Forms used in the administration of the Chapter, which are attached hereto and made a part hereof, should be, and they are hereby, REPEALED effective on May 16, 2012;

(2) The amendments to certain sections in Chapter 216 of Title 14 of the Virginia Administrative Code entitled "Rules Governing Internal Appeal and External Review" specifically set forth at 14 VAC 5-216-20, 14 VAC 5-216-40, and 14 VAC 5-216-70, as well as a new section at 14 VAC 5-216-45, which are attached hereto and made a part hereof, should be, and they are hereby, ADOPTED effective on January 1, 2012;

(3) AN ATTESTED COPY hereof, together with a copy of the repealed Chapter 215 and adopted amendments to Chapter 216 shall be sent by the Clerk of the Commission to Althelia Battle, Deputy Commissioner, Bureau of Insurance, State Corporation Commission, who forthwith shall give further notice of the repeal of Chapter 215 and the adopted amendments to Chapter 216 by mailing a copy of this Order, including a clean copy of the repeal of Chapter 215 and the amendments to Chapter 216, to all companies, health maintenance organizations and health service plans licensed by the Commission to write accident and sickness insurance in the Commonwealth of Virginia, as well as all interested parties;

(4) The Commission's Division of Information Resources shall cause a copy of this Order, together with the repealed Chapter 215 and adopted amendments to Chapter 216, to be forwarded to the Virginia Registrar of the Regulations for appropriate publication in the Virginia Register of Regulations;

(5) The Commission's Division of Information Resources shall make available this Order and the attached repealed Chapter 215 and adopted amendments to Chapter 216 on the Commission's website: http://www.scc.virginia.gov/case; and

(6) The Bureau of Insurance shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements of paragraph (3) above.

14VAC5-216-20. Definitions.

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Adverse benefit determination" in the context of the internal appeals process means (i) a determination by a health carrier or its designee utilization review entity that, based on the information provided, a request for, a benefit under the health carrier's health benefit plan upon application of any utilization review technique does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness or is determined to be experimental or investigational and the requested benefit is therefore denied, reduced, or terminated or payment is not provided or made, in whole or in part, for the requested benefit; (ii) the denial, reduction, or termination of, or failure to provide or make payment in whole or in part for, a benefit based on a determination by a health carrier or its designee utilization review entity of a covered person's eligibility to participate in the health carrier's health benefit plan; (iii) any review determination that denies, reduces, or terminates or fails to provide or make payment, in whole or in part, for a benefit; (iv) a rescission of coverage determination as defined in § 38.2-3438 of the Code of Virginia; or (v) any decision to deny individual coverage in an initial eligibility determination.

"Adverse determination" in the context of external review means a determination by a health carrier or its designee utilization review entity that an admission, availability of care, continued stay, or other health care service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness or is determined to be experimental or investigational and the requested service or payment for the service is therefore denied, reduced, or terminated.

"Authorized representative" means (i) a person to whom a covered person has given express written consent to represent the covered person; (ii) a person authorized by law to provide substituted consent for a covered person; (iii) a family member of a covered person or the covered person's treating health care professional when the covered person is unable to provide consent; (iv) a health care professional when the covered person's health benefit plan requires that a request for a benefit under the plan be initiated by the health care professional; or (v) in the case of an urgent care internal appeal, a health care professional with knowledge of the covered person's medical condition.

"Clinical peer reviewer" means a practicing health care professional who holds a nonrestricted license in a state, district, or territory of the United States and in the same or similar specialty as typically manages the medical condition, procedure, or treatment under appeal.

"Commission" means the State Corporation Commission.

"Concurrent review" means utilization review conducted during a patient's stay or course of treatment in a facility, the office of a health care professional, or other inpatient or outpatient health care setting.

"Covered person" means a policyholder, subscriber, enrollee, or other individual participating in a health benefit plan. For purposes of this chapter with respect to the administration of appeals, references to a covered person include a covered person's authorized representative, if any.

"Emergency services" means those health care services that are rendered after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment of the individual's bodily functions, (iii) serious dysfunction of any of the individual's bodily organs, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus.

"Final adverse determination" means an adverse determination involving a covered benefit that has been upheld by a health carrier, or its designee utilization review entity, at the completion of the health carrier's internal appeal process.

"Group health plan" means an employee welfare benefit plan (as defined in the Employee Retirement Income Security Act of 1974 (29 USC § 1002(1)), to the extent that the plan provides medical care and including items and services paid for as medical care to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise.

"Health benefit plan" means a policy, contract, certificate, or agreement offered or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services. "Health benefit plan" does not include accident only, credit, or disability insurance; coverage of Medicare services or federal employee health plans pursuant to contracts with the United States government; Medicare supplement or long-term care insurance; Medicaid coverage; dental only or vision only insurance; specified disease insurance; hospital indemnity coverage; limited benefit health coverage; coverage issued as a supplement to liability insurance; insurance arising out of a workers' compensation or similar law; automobile medical payment insurance; medical expense and loss of income benefits; or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

"Health care professional" means a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with the laws of the Commonwealth.

"Health carrier" means an entity, subject to the insurance laws and regulations of the Commonwealth or subject to the jurisdiction of the commission, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an accident and sickness insurance company, a health maintenance organization, a nonprofit hospital and health service corporation, or a nonstock corporation offering or administering a health services plan, a hospital services plan, or a medical or surgical services plan, or any other entity providing a plan of health insurance, health benefits, or health care services except as excluded under § 38.2-3557 of the Code of Virginia.

"Independent review organization" means an entity that conducts independent external reviews of adverse determinations and final adverse determinations, as well as alleged violations of 14VAC5-216-30 through 14VAC5-216-70 pertaining to internal appeal.

"PPACA" means the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152).

"Pre-service claim" means a claim for a benefit under a health benefit plan that requires approval of the benefit in whole or in part, in advance of obtaining the service or treatment.

"Post-service claim" means a claim for a benefit under a health benefit plan that is not a pre-service claim, or the service or treatment has been provided to the covered person.

"Self-insured plan" means an "employee welfare benefit plan" that has the meaning set forth in the Employee Retirement Income Security Act of 1974, 29 USC § 1002(1).

"Urgent care appeal" means an appeal for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations (i) could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or (ii) in the opinion of the treating health care professional with knowledge of the covered person's medical condition, would subject the covered person to severe pain that cannot be adequately managed without the care or treatment that is the subject of the appeal. An urgent care appeal shall not be available for any post-service claim or retrospective adverse benefit determination.

"Utilization review" means a set of formal techniques designed to monitor the use of or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of health care services, procedures or settings. Techniques may include ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review.

14VAC5-216-40. Minimum appeal requirements.

A. Each covered person shall be entitled to a full and fair review of an adverse benefit determination. Within 180 days after the date of receipt of a notice of an adverse benefit determination, a covered person may file an appeal with the health carrier. A health carrier may designate a utilization review entity to coordinate the review. For purposes of this chapter, "health carrier" may also mean its designated utilization review entity.

B. The health carrier shall conduct the appeal in a manner to ensure the independence and impartiality of the individuals involved in reviewing the appeal. In ensuring the independence and impartiality of such individuals, the health carrier shall not make decisions regarding hiring, compensation, termination, promotion, or other similar matters based upon the likelihood that an individual will support the denial of benefits.

C. 1. In deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other service is experimental, investigational, or not medically necessary or appropriate, the health carrier shall designate a clinical peer reviewer to review the appeal. The clinical peer reviewer shall not have been involved in any previous adverse benefit determination with respect to the claim.

2. A reviewer of any other type of adverse benefit determination shall be an appropriate person designated by the health carrier. The reviewer of the appeal shall not be the individual who made any previous adverse benefit determination of the subject appeal nor the subordinate of such individual and shall not defer to any prior adverse benefit determination.

D. A full and fair review shall also provide for:

1. The covered person to have an opportunity to submit written comments, documents, records, and other information relating to the appeal for the reviewer or reviewers to consider when reviewing the appeal;.

2. Upon request to the health carrier, the covered person to have reasonable access to and free of charge copies of all documents, records, and other information relevant to the covered person's request for benefits (note that any request for diagnosis and treatment codes, in itself, should not be considered to be a request for an internal appeal);. This information shall be provided to the covered person as soon as practicable.

3. An appeal process that takes into account all comments, documents, records, and other information submitted by the covered person relating to the appeal, without regard to whether such information was submitted or considered in the initial benefit determination.

4. The identification of medical or vocational experts whose advice was obtained on behalf of the health benefit plan in connection with a covered person's adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination.

5. An urgent care appeal process.

6. Prior to issuing a final adverse benefit determination, the health carrier to provide free of charge to the covered person any new or additional evidence relied upon or generated by the health carrier or at the direction of the health carrier, in connection with the internal appeal sufficiently in advance of the date the determination is required to be provided to permit the covered person a reasonable opportunity to respond prior to that date.

E. A health carrier shall notify the covered person of the final benefit determination within a reasonable period of time appropriate to the medical circumstances, but not later than the timeframes established in subdivisions 1 and 2 of this subsection.

1. If an internal appeal involves a pre-service claim review request, the health carrier shall notify the covered person of its decision within 30 days after receipt of the appeal. A health carrier may provide a second level of internal appeal for group health plans only, provided that a maximum of 15 days is allowed for a benefit determination and notification from each level of the appeal.

2. If an internal appeal involves a post-service claim review request, the health carrier shall notify the covered person of its decision within 60 days after receipt of the appeal. A health carrier may provide a second level of internal appeal for group health plans only, provided that a maximum of 30 days is allowed for a benefit determination and notification from each level of the appeal.

14VAC5-216-45. Exhaustion.

A. In addition to the provisions of § 38.2-3560 of the Code of Virginia, the internal appeal process may be deemed exhausted based on a violation of any of the provisions of 14VAC5-216-30 through 14VAC5-216-70. The internal appeal process shall not be deemed exhausted based on a de minimis violation that does not cause, and is not likely to cause, prejudice or harm to the covered person so long as the health carrier demonstrates that the violation was for good cause or due to matters beyond the control of the health carrier and that the violation occurred in the context of an ongoing, good faith exchange of information between the health carrier and the covered person. If the violation is part of a pattern or practice of violations by the health carrier, the violation shall not be considered de minimis.

B. The covered person may request a written explanation of the violation from the health carrier, and the health carrier shall provide the written explanation within 10 days, including a specific description of its basis, if any, for asserting that the violation should not cause the internal appeal process to be deemed exhausted, along with a notification of the right to review this matter by an independent review organization. A review by an independent review organization may be requested by the covered person to the commission to determine if the health carrier has met the standard under this section. The covered person must include, as part of the request for review, the written explanation of the violation by the health carrier. The independent review organization shall have a maximum of 10 days to conduct this review and provide a written response to the covered person, the health carrier, and the commission. If rejected, within five days the health carrier shall provide the covered person with a notice of the opportunity to resubmit and pursue an internal appeal of the claim.

C. The health carrier shall pay the independent review organization costs incurred for this review.

14VAC5-216-70. Notification requirements.

A. A health carrier shall provide a covered person with written or electronic notification of its benefit determination on appeal. The notification of an adverse benefit determination shall be written in easily understandable language and shall set forth the following:

1. Information sufficient to identify the claim involved with respect to the appeal, including the date of service, the health care provider, and the claim amount, and a statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning. The health carrier may not consider a request for diagnosis or treatment information, in itself, to be a request for internal appeal;

2. The specific reason or reasons for the adverse benefit determination;

3. Reference to the specific plan provisions on which the adverse benefit determination is made;

4. A statement that the covered person is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the covered person's claim for benefits;

5. A statement indicating whether any additional internal appeals are available or whether the covered person has received a final adverse determination. If internal appeals are available, contact information on where to submit the appeal;

6. A statement describing the external review procedures offered by the health carrier and the covered person's right to obtain information about such procedures and the covered person's right to bring a civil action under § 502(a) of ERISA (29 USC § 1001 et seq.), if applicable; and

7. A statement indicating that the covered person has the right to request an external review if the covered person has not received a final benefit determination within the timeframes provided in 14VAC5-216-40 E, unless the covered person requests or agrees to a delay.

B. In the case of a group health plan, the required notification shall also set forth the following:

1. If an internal rule, guideline, protocol, or other similar criterion (collectively "rule") was relied upon in making the adverse benefit determination, either the specific rule or a statement that such rule was relied upon in making the adverse benefit determination and that a copy of the rule will be provided free of charge to the covered person upon request;

2. If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the covered person's medical circumstances, or a statement that such explanation will be provided free of charge upon request; and

3. Include a statement indicating that the covered person may have other voluntary alternative dispute resolution options, such as mediation. The covered person should be referred to the appropriate federal or state agency, his plan administrator, or the health carrier, as appropriate.

C. All notices shall be provided in a culturally and linguistically appropriate manner. The health carrier shall:

1. Provide oral language services, such as a telephone customer hotline, that include answering questions and providing assistance with filing claims, benefit requests, internal appeals, and external review in any applicable non-English language;

2. Provide, upon request, any notice in any applicable non-English language; and

3. Include in the English versions of all notices, a statement prominently displayed in any applicable non-English language clearly indicating how to access the language services provided by the health carrier.

With respect to any address in this Commonwealth to which a notice is sent, a non-English language is an applicable non-English language if 10% or more of the population residing in the city or county is literate only in the same non-English language, as determined by the American Community Survey data published by the United States Census Bureau.

C. D. Electronic notification shall be in accordance with the provisions of the Uniform Electronic Transactions Act (§ 59.1-479 et seq. of the Code of Virginia).

VA.R. Doc. No. R12-2990; Filed December 5, 2011, 3:58 p.m.