External review for self-funded employer plans

If your employer pays your health claims itself, which is called self-funded, you will not use your state’s external review process in most cases. Your plan must offer the federal process, run through private accredited review organizations. The steps are much like any other external review: four months to ask, a decision in 45 days or 72 hours, no cost to you, and a binding result. What differs is who runs it and who you can turn to if something goes wrong.

What this means

In a self-funded plan the employer, or the plan itself, pays the claims. An insurance company often acts only as the claims administrator. In a fully insured plan the employer buys an insurance policy and the insurer bears the cost. Federal external review rules use exactly this split: a plan that provides benefits other than through health insurance coverage is self-insured. See self-funded or fully insured for how to tell.

The federal law that governs private employer benefit plans, the Employee Retirement Income Security Act (ERISA), overrides state laws that relate to employee benefit plans, but it saves state laws that regulate insurance. A self-funded plan is not treated as an insurer. So state insurance laws, including state appeal and external review laws, generally cannot be applied to it. A self-funded plan is not required to use a state’s external review process. It may choose to do so only where the state has opened its process to such plans.

A fully insured employer plan is different. The insurer follows the state process where the state’s process meets the federal standards. If you do not know which you have, read how to find out what kind of plan you have.

How the federal route works for a self-funded plan

• The plan picks from a rotation. The plan must contract with at least three accredited independent review organizations and rotate cases among them, or use another unbiased method. A reviewer may not have financial incentives tied to upholding denials.
• The plan checks eligibility first. It has 5 business days for a preliminary check and 1 more business day to tell you. If the request is not eligible, the notice must give the contact details of the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA). If it is incomplete, you may fix it within the four-month period or 48 hours, whichever is later.
• You can add information. You have at least 10 business days after the reviewer’s notice.
• The review is fresh. The reviewer decides the claim anew and is not bound by the plan’s earlier decisions. It considers your medical records, your treating professional’s recommendation, the plan’s terms and evidence-based practice guidelines.
• The plan pays the reviewer. You pay nothing.
• Deadlines. Four months to ask. A standard decision within 45 days after the reviewer receives the request. An expedited decision as fast as the medical situation requires, and no later than 72 hours.
• The decision binds. It binds the plan and you, except to the extent other remedies are available under state or federal law. If the denial is reversed, the plan must provide coverage or payment immediately, even if it intends to seek court review.

What to do

1. Confirm your plan type. Check the summary plan description (the booklet explaining your plan) and your denial letter. Ask the human resources department or the plan administrator in writing if unsure. The summary plan description must say whether and to what extent benefits are guaranteed by an insurance policy.
2. Read the final denial letter for the process and the date. It should say how to begin external review. Check the date on your notice, which controls.
3. File within four months. Follow how to request external review. Use the external review request letter.
4. Ask for an expedited review if your health is at risk. See how to get an expedited appeal.
5. Keep copies and a record. Note the date you filed and when the 45 days or 72 hours end.
6. Contact EBSA if the plan does not follow the process. See how to get help from the Department of Labor.

What the plan may say, and what to say back

“Our plan is self-funded, so state law does not apply and you have no outside review.” State law generally does not apply, but federal law requires external review for plans that are not grandfathered. Ask for the written steps for the federal process and the date by which you must ask.

“Your state’s review is not available to you.” Ask which process the plan uses and in writing. Ask for the name of the accredited organization if one is assigned.

The rule

A self-funded ERISA plan uses the federal external review process, run through private accredited independent review organizations. It is not required to use a state’s external review process and may do so only where the state has opened its process to such plans. See title 29 of the Code of Federal Regulations (CFR), section 2590.715-2719(c)(1) and (d)(4).

Watch for

• State insurance department. It generally cannot take a complaint about a self-funded plan, because state insurance law cannot be applied to it. Complaints go to EBSA for private employers.
• Grandfathered plans. They do not have the general federal external review. They must offer it for surprise-billing disputes.
• Government employers. A self-funded plan run by a state or local government is outside ERISA but follows the Public Health Service Act, and the Centers for Medicare & Medicaid Services (CMS) oversees it. It chooses between private accredited reviewers and the process the Department of Health and Human Services runs. See government and church employer plans.
• Church plans. The tax code and a Treasury regulation apply the federal appeal and external review rules to them, but we have not confirmed how they are enforced against a particular plan. Ask the plan for its written process.
• Your employer. Some employers can approve exceptions. That is not a legal right. See asking your employer to overrule a denial.

What next

• How to request external review: the steps, evidence and timing.
• What to expect from an external review decision: what the decision means and what comes after.
• How to get help from the Department of Labor: the federal agency for private employer plans.