ERISA - Overview for Healthcare Providers: Part I
Date Posted: Wednesday,
August 02, 2023
In the United States, approximately 88% of the employees who are enrolled in employer-sponsored health insurance benefits have plans that are subject to ERISA regulations.
ERISA is the acronym for the Employee Retirement Income Security Act, which is a federal law that was enacted in 1974 to protect employees who participate in employer-sponsored benefit plans. Among the employer-sponsored plans that are covered under ERISA are health insurance plans, retirement plans, disability plans, and life insurance plans. It is important to note that not all employers that offer employee benefits are subject to ERISA. Employer sponsored plans that are offered by religious organizations, government entities, and small employers with fewer with 100 participants are not subject to ERISA. The employer-sponsored health benefit plans subject to ERISA's provisions include those that are intended to provide "medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death...."
RISA protects employees in several ways. ERISA imposes fiduciary duties on plan administrators and trustees who are responsible for managing and overseeing employee benefit plans. Regarding retirement plans, ERISA establishes minimum vesting standards, which determine when employees have a non-forfeitable right to their accrued benefits. This ensures that employees who have contributed to a retirement plan or earned benefits over time are entitled to receive those benefits, even if they leave their job before retirement. With respect to ERISA-covered health insurance plans, these fiduciary duties require plan administrators to act in the best interest of plan participants and beneficiaries. Whether it is an ERISA-covered retirement plan or a health insurance plan, employers are required to provide plan participants with important information about their benefit plans. ERISA-covered employers that offer health insurance benefits to their employees must furnish them with a summary plan description (SPD). The SPD describes the health insurance benefits provided and how the plan works. Specifically, the SPD is a "written instrument which describes the terms of the plan, identifies the plan under which it is established, provides information as to the sources of contributions to the plan, advises the participants and beneficiaries of their rights and obligations under the plan, explains the procedures to be followed in presenting a claim for benefits under the plan, and sets forth the provisions for review of denied claims." ERISA also provides a legal framework for plan participants and beneficiaries to bring lawsuits to enforce their legal rights.
ERISA plan participants are generally entitled to the benefits that are provided by their employee benefit plans, under the terms and conditions outlined in the plan documents. But, benefits can be denied under ERISA if the plan administrator determines that the benefits sought do not meet the eligibility requirements, are not covered under the plan, or do not meet the plan's criteria or standards. ERISA uses the term, "adverse benefit determination" for denied benefits. The term "adverse benefit determination" means a "denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for, a benefit resulting from the application of any utilization review, as well as a failure to cover an item or service for which benefits are otherwise provided because it is determined to be experimental or investigational or not medically necessary or appropriate." When a claim for benefits is denied, ERISA requires the employer's health benefit plan to provide the plan participant or beneficiary with written notice which identifies the specific reasons for the denial. The written notice must be "in a manner calculated to be understood by the participant." In addition to identifying the specific reason(s) for the adverse benefit determination, the notification must make a reference to the specific plan provision(s) upon which the adverse determination is based, describe the additional information that is necessary for the beneficiary to perfect the claim for benefits, and provide an explanation of why such information is necessary.
ERISA permits the medical provider to act as the beneficiary's authorized representative when appealing adverse benefit determinations. ERISA requires the health insurance benefit plan to provide a framework to appeal adverse benefit determinations. The appeal process must offer a full and fair review of the health insurance claim and the adverse benefit determination. The appeal must be initiated within 180 days of the beneficiary's notification of the adverse benefit determination. The insurance company or plan administrator generally has 60 days to respond to the appeal. The entire appeal process typically involves several levels of review, including an initial review, an appeal, and a final review by an independent reviewer or arbitration.
In appealing the insurance claim denial, medical providers can take the following steps:
- Obtain a copy of the patient's insurance policy and the plan documents (SPD) to gain an understanding of the terms and conditions of the policy and the reason for the denial.
- Ensure that the services or treatments sought are covered under the plan and determine if any specific exclusions or limitations apply.
- Review the denial letter provided by the insurance carrier or plan administrator; this should provide a written explanation for the claim denial. Note that an explanation of benefits (EOB) alone likely will not satisfy ERISA's notification requirements.
- Scrutinize the rationale provided in the denial notice and assess whether the plan administrator or health insurer has adequately explained their decision and provided sufficient evidence or documentation to support their determination. Identify potential errors in their reasoning.
- If the denial notice is unclear or lacks specific information, contact the plan administrator or insurer for clarification. Request additional documentation to obtain clarity to the explanation offered as the reason behind the adverse benefit determination.
- Gather relevant medical records and documentation that support the medical necessity of the services that were provided.
- File a written appeal within the timeframe specified in the denial letter. The written appeal should be comprehensive and well-documented. It should outline the reasons why the adverse benefit determination should be overturned. Clearly identify errors or omissions in the initial decision and provide robust evidence in support of your position.
- The appeal should include a detailed explanation of why the claim should be approved. Include the supporting documentation and a copy of the denial letter.
- Calendar the date for which the insurance company or plan administrator is obligated to provide a response to the appeal.
To the extent possible, the healthcare provider should take all necessary steps to avoid denials in the first place by controlling what they can on their end.
Healthcare providers who provide care to patients with health insurance plans falling under ERISA should ensure that their billing department takes the following steps:
- Verify the patient's coverage and understand the terms and provisions of the specific plan to determine the benefits available, coverage limitations, and requirements for obtaining those benefits.
- Obtain a valid assignment of benefits for the right to seek payment directly from the health insurance plan on behalf of the patient. A valid and enforceable assignment of benefits must be in place to pursue claims on behalf of the patient.
- Comply with the plan's claims submission requirements and deadlines to ensure timely reimbursement.
- Establish communication channels with the plan administrator or the designated claims administrator for the plan to clarify coverage, understand the claim submission processes, and to address questions or concerns regarding reimbursement.
- Be aware of the process for appealing denied claims and the timeframes for which an appeal process must be initiated.
- Request a copy of the SPD or other relevant plan documents from patients to better understand the plan's provisions.
When a medical provider requests the SPD from an employer, the employer must respond within 30 days of the request. If the employer fails to respond or provides incomplete or inaccurate information, the medical provider may file a complaint with the Department of Labor's Employee Benefits Security Administration (EBSA). The EBSA is responsible for enforcing ERISA regulations and can provide assistance in obtaining plan documents. If an employer fails to comply with a request for the SPD within the required timeframe, it may be subject to penalties and enforcement action by the EBSA. Penalties for failing to provide the SPD can include fines of up to $110.00 per day per participant or beneficiary who is denied a copy of the SPD. In addition, the EBSA may seek an order requiring the employer to provide the SPD and may take other enforcement action as necessary.
If a healthcare provider exhausts all of the administrative appeals processes, legal action can be a consideration. Healthcare providers can file suit against the health insurer if there is a valid assignment of benefits from the plan beneficiary. ERISA provides a private right of action to file suit against the health insurer to recover the value of the benefits that are provided under the plan. Healthcare providers do not have direct statutory authority under ERISA to sue for benefits. The healthcare provider's ability to file suit against the health insurance plan is derived from an assignment of the plan beneficiary's rights. However, before any suit can be initiated, the beneficiary must first exhaust the plan's internal appeals process. In addition to seeking damages for the wrongfully denied benefits, ERISA permits the prevailing party to recover reasonable attorney's fees and litigation costs. Of course, filing suit is a last resort.
As stated earlier, not all health insurance plans are ERISA plans. While approximately 88% of the employees who receive employer-sponsored health insurance benefits have ERISA-covered plans, 12% of employees with employer-sponsored health insurance have plans that are governed under state law, not ERISA. With respect to state laws that govern health insurance benefits, those laws are preempted when the plan falls under ERISA, if those laws "relate to any employee benefit plan." A state law pertaining to insurance is "preempted" and therefore unenforceable when it is inconsistent with ERISA's regulatory scheme. Stay tuned for Part II.
Franklin J. Rooks Jr., PT, MBA, Esq. In addition to being an attorney, Franklin J. Rooks Jr. is also a licensed physical therapist. Mr. Rooks concentrates his legal practice on employment matters, representing employees. His physical therapy background provides him with a unique perspective in his representation of individuals who have been discriminated against on the basis of a disability. A portion of Mr. Rooks' practice is devoted to false claims actions, representing whistleblowers primarily in the area of healthcare fraud. Much of Mr. Rooks' expertise in healthcare fraud has been derived from his considerable experience in medical billing.
www.morganrooks.com
