[Federal Register Volume 65, Number 225 (Tuesday, November 21, 2000)]
[Rules and Regulations]
[Pages 70246-70271]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-29766]
[[Page 70245]]
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Part VIII
Department of Labor
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Pension and Welfare Benefits Administration
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29 CFR Part 2560
Employee Retirement Income Security Act of 1974; Rules and Regulations
for Administration and Enforcement; Claims Procedure; Final Rule
Federal Register / Vol. 65, No. 225 / Tuesday, November 21, 2000 /
Rules and Regulations
[[Page 70246]]
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DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
29 CFR Part 2560
RIN 1210-AA61
Employee Retirement Income Security Act of 1974; Rules and
Regulations for Administration and Enforcement; Claims Procedure
AGENCY: Pension and Welfare Benefits Administration, Labor.
ACTION: Final regulation.
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SUMMARY: This document contains a final regulation revising the minimum
requirements for benefit claims procedures of employee benefit plans
covered by Title I of the Employee Retirement Income Security Act of
1974 (ERISA or the Act). The regulation establishes new standards for
the processing of claims under group health plans and plans providing
disability benefits and further clarifies existing standards for all
other employee benefit plans. The new standards are intended to ensure
more timely benefit determinations, to improve access to information on
which a benefit determination is made, and to assure that participants
and beneficiaries will be afforded a full and fair review of denied
claims. When effective, the regulation will affect participants and
beneficiaries of employee benefit plans, employers who sponsor employee
benefit plans, plan fiduciaries, and others who assist in the provision
of plan benefits, such as third-party benefits administrators and
health service providers or health maintenance organizations that
provide benefits to participants and beneficiaries of employee benefit
plans.
DATES: Effective Date: January 20, 2001.
Applicability Date: This regulation applies to all claims filed on
or after January 1, 2002.
FOR FURTHER INFORMATION CONTACT: Susan M. Halliday or Susan G. Lahne,
Office of Regulations and Interpretations, Pension and Welfare Benefits
Administration, Department of Labor, 200 Constitution Avenue NW.,
Washington, DC 20210, telephone (202) 219-7461. This is not a toll-free
number.
SUPPLEMENTARY INFORMATION:
A. Background
On September 9, 1998, the Department of Labor (the Department)
published a notice in the Federal Register (63 FR 48390) containing a
proposed regulation, designated as proposed Sec. 2560.503-1 of Title 29
(the proposal), intended to substantially revise the minimum
requirements for benefit claims procedures of all employee benefit
plans covered under Title I of ERISA. The reforms contained in the
proposal, as explained in the preamble that accompanied it, were based
in part on comments the Department had previously received in response
to a Request for Information (the RFI) published in the Federal
Register (62 FR 47262) on September 8, 1997. In addition, the proposal
was developed to respond to a memorandum from the President, dated
February 20, 1998, directing the Secretary of Labor to ``propose
regulations to strengthen the internal appeals process for all Employee
Retirement Income Security Act (ERISA) health plans to ensure that
decisions regarding urgent care are resolved within not more than 72
hours and generally resolved within 15 days for non-urgent care'' and
``to ensure the information [group health plans] provide to plan
participants is consistent with the Patients' Bill of Rights.'' \1\
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\1\ The President's memorandum specifically endorsed the reports
of the President's Advisory Commission on Consumer Protection and
Quality in the Health Care Industry (the Commission), which set out
specific rights of health care consumers that should be protected,
including the right ``to a fair and efficient process for resolving
differences with their health plans, health care providers, and the
institutions that service them, including a rigorous system of
internal review and an independent system of external review.''
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In response to the RFI comments, the President's directives, and
the recommendations of the Commission, the Department developed a
proposal to substantially reform the standards for the resolution of
benefit claims under all employee benefit plans covered by the Act. The
revised standards derive from section 503 of ERISA, which requires
every employee benefit plan, in accordance with regulations of the
Department, to ``provide adequate notice in writing to every
participant or beneficiary whose claim for benefits under the plan has
been denied, setting forth the specific reasons for such denial,
written in a manner calculated to be understood by the participant''
and to ``afford a reasonable opportunity to any participant whose claim
for benefits has been denied for a full and fair review by the
appropriate named fiduciary of the decision denying the claim.'' While
focusing primarily on group health plans and plans providing disability
benefits, the proposal contained provisions altering the benefit claims
procedures for all employee benefit plans. Among other reforms, the
proposal imposed new notice requirements with respect to incomplete or
incorrectly filed claims, altered the standards for appeals of denied
claims, and increased or made more specific the disclosure obligations
of plans generally with respect to procedural rights and denials of
claims. With respect to group health plans and plans providing
disability benefits specifically, the proposal shortened the time
periods for making initial benefit claims decisions and decisions on
appeal of denied claims and imposed additional obligations with respect
to group health claims that involved urgent care.
The Department received more than 700 letters of comment in
response to the proposal. A public hearing on the proposal was held in
Washington, DC., on February 17, 18, and 19, 1999. More than 60
speakers, representing a fair cross-section of the interested public,
including benefit plan sponsors, service providers, health care
professionals, benefit claimants, health care organizations, and
insurance companies, presented testimony and were questioned by a panel
of Departmental officials.
After due consideration of the issues raised by the written
comments and oral testimony, the Department has modified the scope of
the proposal, refined its requirements as to minimum procedural
standards for the resolution of benefit claims disputes, and is now
publishing in this notice, in final form, regulation Sec. 2560.503-1,
establishing new minimum procedural requirements for benefit claims
under employee benefit plans. In the course of developing this final
regulation, the Department took serious notice of the issues raised by
commenters on behalf of the employers that sponsor employee benefit
plans and the institutions that aid in their administration or provide
the promised benefits. In making changes in the regulation that respond
to those issues, the Department has attempted to reconcile the need for
procedural protections with the purely voluntary nature of the system
through which these vital benefits are delivered. The Department
believes, however, that the procedural reforms contained in this
regulation are necessary to guarantee important procedural rights to
benefit claimants.
While the Department has made a number of significant changes to
the proposal, in particular by limiting the scope of its reforms
principally to group health plans and plans providing disability
benefits and by moderating the severity of the decisionmaking time
frames applicable to such plans, the regulation preserves the core
reforms of the proposal. In publishing this
[[Page 70247]]
regulation, the Department believes it has responded to the needs of
employers and employees and has successfully implemented, to the extent
of its regulatory authority under the Act, the protections recommended
by the President's Commission. This action, the Department believes,
will ensure that benefit claimants, at least in ERISA-covered plans,
are provided faster, fuller, and fairer decisions on their benefit
claims.
The following summarizes the most important modifications that the
Department adopted in developing this regulation. It further describes
generally the comments that gave rise to those changes and explains the
Department's reasons for those modifications.
Scope
The proposal contained a number of provisions that would have
established new, substantially uniform procedural requirements for all
employee benefit plans, including improved notice and disclosure
protections and strengthened standards of conduct on review. A
substantial number of commenters expressed concern about the scope of
the proposal, pointing out that the Department's expressed reasons for
procedural reform, as set forth in the preamble to the proposal,
focused almost exclusively on perceived problems arising specifically
under group health plans and plans providing disability benefits. These
commenters claimed that the Department's record does not demonstrate a
clear need to change the procedural rules in effect for plans other
than group health plans and plans providing disability benefits.
The Department believes, in light of the comments received on this
issue, that it is premature to conclude that the proposed reforms are
equally appropriate for all plans. In particular, the Department is
concerned that it may not have an adequate record regarding the need
for reform of procedural standards for pension plans. Accordingly, the
Department has determined to limit more narrowly to group health plans
and plans providing disability benefits the reforms presently adopted
in the regulation and to reserve for further consideration the question
of the appropriateness of extending these reforms to pension plans and
welfare plans other than group health plans and plans providing
disability benefits. The regulation, thus, contains standards
respecting benefit claims procedures for pension and other welfare
plans that are substantially similar to those currently in effect under
the regulation promulgated by the Department in 1977 (the 1977
regulation).\2\ As a result, under the regulation, pension plans and
welfare plans other than group health plans and plans providing
disability benefits will not generally be required to revise their
procedures.
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\2\ It should be noted that the regulation as it applies to such
plans is not identical to the 1977 regulation. In some respects, the
language of the regulation has been updated to reflect current
practices and to incorporate the Department's longstanding
interpretations of the 1977 regulation. In addition, as noted
specifically below, some provisions of the 1977 regulation have been
clarified in this regulation, and such clarifications apply
uniformly to all employee benefit plans covered under the Act.
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In revising the proposal in this manner, however, the Department
notes its continuing interest in assessing the appropriateness of the
1977 regulation's standards for pension and other welfare plans. In
this regard, the Department is soliciting public comment on this issue
to facilitate development of an adequate record upon which to consider
additional reforms.
One commenter requested clarification as to the application of the
proposed regulation to ``long-term care benefits.'' This commenter
described long-term care benefits as clearly distinguishable from group
health or disability benefits. Long-term care benefits, it was
suggested, have been designed uniquely to provide assistance in tasks
of daily living to individuals with disabilities or chronic conditions.
Eligibility for long-term care benefits is based, according to the
commenter, solely on whether an individual is ``unable to perform a
requisite number of the activities of daily living due to the loss of
functional capacity or requires substantial supervision due to severe
cognitive impairment.'' The commenter reported that ``long term-care
benefits'' generally include a wide range of services, including
respite care, coverage for home modifications for the disabled,
nursing-home care, and payment for family care givers, all directed
towards meeting the routine needs of daily life, but do not include
``medical care'' within the meaning of section 733(a)(2) of the Act or
replacement income as is usual under disability plans. It is the view
of the Department that the provision of the type of benefits described
by the commenter would not, in and of itself, cause a plan to be
treated as a group health plan or a plan providing disability benefits
for purposes of this regulation.
Time Frames for Decisionmaking
The proposal contained new time frames for claims decisions by
group health plans and plans providing disability benefits at both the
initial claims decision stage and on review. In its treatment of group
health claims, the proposal distinguished between claims involving
urgent care and all other group health claims, setting different
maximum time periods for the two categories of group health claims,\3\
and, with respect to disability claims,\4\ the proposal provided a
separate set of maximum time periods somewhat longer than for group
health plans. In proposing these relatively short time frames, the
Department emphasized that they reflected specific ``best practices''
discussed in the RFI comments and the Department's belief that speedy
decisionmaking is a crucial protection for claimants who need either
medical care or the replacement income that disability benefits
provide.\5\ The Department specifically solicited further public
comment on the adequacy of the proposal's definition of claims
involving urgent care, explaining that speedy decisionmaking has
increased significance when a claim must be approved prior to a
claimant's receiving medical care.
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\3\ The proposal required urgent care claims decisions to be
made during a stringent maximum 72-hour period at both the initial
and review stages. All other group health claims were required under
the proposal to be resolved within not more than 15 days, with
respect to both initial and review decisions. The proposal did not
provide for any extensions of these periods by plans in any
circumstances, although it did not prohibit consensual agreements
between claimants and plans on the timing of decisions.
\4\ Where a single plan provides more than one type of benefit,
it is the Department's intention that the nature of the benefit
should determine which procedural standards apply to a specific
claim, rather than the manner in which the plan itself is
characterized.
\5\ The proposal also eliminated, for group health plans and
plans providing disability benefits, the time extension on review
available, under the 1977 regulation, to plans administered by
boards of directors or committees that meet at least quarterly.
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There was relatively little objection among the commenters
regarding the proposed decisionmaking time frames for urgent care group
health claims. The majority of those commenting either actively
supported or accepted the necessity for this reform, indicating that at
the present time urgent care decisions are generally being made within
the proposed time frames.\6\ In discussing
[[Page 70248]]
the time frames proposed for other group health and disability
decisionmaking, however, a large number of commenters objected to the
shortness of the time frames.
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\6\ The rules contained in subparagraph (f)(2)(i) regarding
treatment of claims involving urgent care are, therefore, largely
unchanged from those contained in the proposal. A few commenters
suggested that the definition of ``claims involving urgent care'' be
expanded to include the concept of ``maintaining'' maximum function,
as well as regaining maximum function. The Department has not made
this change, but it is the view of the Department that the
definition as proposed, and as adopted in this regulation, addresses
the concern for protecting ``maximum function'' by providing that if
delaying deciding a claim could seriously jeopardize the claimant's
``life'' or ``health,'' the claim involves urgent care. Any effect
on a claimant's ``maximum function'' that is less than serious
jeopardy to life or health should not be considered a ``claim
involving urgent care.''
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With respect to the proposed time frames for non-urgent group
health claims, many commenters acknowledged the legitimacy of the
Department's concern for affording claimants speedy access to medical
care, but asserted that the Department's concerns regarding access to
care did not justify treating all non-urgent claims the same. These
commenters asserted that it would be extremely difficult and expensive,
if not impossible, to satisfy the proposal's requirement that all non-
urgent group health claims be decided within not more than 15 days.
They urged the Department to consider distinguishing between ``pre-
service'' claims, that is, those claims that must be decided before a
claimant will be afforded access to health care, and claims that
involve only the payment or reimbursement of the cost for medical care
that has already been provided (``post-service'' claims). \7\ The pre-
service claims, the commenters argued, should be subject to a shorter
decisionmaking time frame. Other non-urgent group health claims, these
commenters argued, do not raise the same degree of concern since they
do not represent cases in which claimants may actually be denied
medical care. In many instances, the commenters asserted, a longer
decisionmaking period for these post-service claims may be appropriate,
even necessary, since a longer period of deliberation may in some
proportion of cases result in the grant of benefits that might
otherwise be denied.
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\7\ The record indicates also that representatives of claimants
do not generally oppose making this distinction.
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The Department has seriously considered the arguments and testimony
put forth on this issue, and it has concluded that there is substantial
justification for treating non-urgent health care claims along the
lines suggested in the comments. Accordingly, the regulation makes a
distinction, in setting the maximum time periods for deciding non-
urgent group health claims, between group health claims that involve
access to medical care (pre-service claims) and group health claims
that involve purely the payment or reimbursement of costs for medical
care that has already been provided (post-service claims).
Subparagraph (m)(2) defines a ``pre-service claim'' as any request
for approval of a benefit with respect to which the terms of the plan
condition receipt of the benefit, in whole or in part, on approval of
the benefit in advance of obtaining medical care. In this regard, it is
the Department's view that any review or approval that a plan requires
as part of the process of receiving a benefit, even if such review or
approval does not guarantee that the plan will ultimately grant the
benefit, involves a ``claim'' and must be treated as such for purposes
of this regulation. For example, a request for pre-approval under a
utilization review program or for a prior authorization of health care
items or service would be a ``pre-service claim'' under this
definition, as would any request for a preauthorization that a plan
requires a claimant to obtain as a precondition to the claimant's
receiving a larger benefit (e.g., payment of 80% of the cost of the
preauthorized service, rather than 50%). ``Post-service claims'' are
defined in subparagraph (m)(3) as all claims under a group health plan
that are not pre-service claims.
Subparagraph (f)(2)(iii)(A) requires that pre-service claims be
decided within a maximum \8\ of 15 days at the initial level, and
subparagraph (i)(2)(ii) permits a maximum of 30 days on review of an
adverse benefit determination.\9\ Post-service claims are subject to a
maximum time period of 30 days for the initial decision under
subparagraph (f)(2)(iii)(B) and a maximum of 60 days on review under
subparagraph (i)(2)(iii)(A). With respect to both pre- and post-service
claims, the regulation further provides for limited extensions of
time.\10\ In the Department's view, establishing separate time frames
for these two groups of claims, and providing more generous time frames
for each group, will balance the needs of claimants and the business
considerations raised by the commenters representing plans, employers,
and administrators. These time frames accommodate both the need for
additional time in some cases and the need for speedy decisionmaking
when access to medical care is at stake.
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\8\ As in the 1977 regulation and the proposal, the times
established for decisionmaking are maximum times only. Decisions are
required to be made, generally, within a reasonable period of time
appropriate to the circumstances. Accordingly, in some cases,
delaying a decision until the end of the applicable maximum period
may be unreasonable under the circumstances and thus a violation of
the procedural standards.
\9\ Various commenters requested clarification as to whether the
term ``days'' as used in the proposal was intended to refer to
calendar days or to some other more limited construct, such as
``business'' days. It was the Department's intention in the
proposal, and it continues to be the Department's position with
respect to this regulation, that the term ``days'' means calendar
days. In light of the need for speedy decisionmaking in many of the
time frames involved, the Department has determined not to restrict
the counting of days as used in the regulation to less than every
calendar day, but rather to provide reasonable periods of time
determined by reference to calendar days.
\10\ The regulation's provisions for extension of time for group
health plans and plans providing disability benefits are discussed
generally below. In addition, the regulation leaves in place a
restricted form of the ``quarterly meeting'' rule contained in the
1977 regulation, permitting extension of the decisionmaking time on
review, under subparagraph (i)(2)(iii)(B) for post-service claims
and under subparagraph (i)(3)(ii) for claims for disability
benefits. The extension of time for plans administered by boards of
trustees or committees that meet at least quarterly is available,
under the regulation, only for multiemployer plans. It is the
Department's view that such plans, in which employee representation
is guaranteed, will delay decisionmaking by exercising this
privilege only when it is necessary and not harmful to claimants.
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Concurrent Care Decisions
The proposal contained a provision that would accelerate
decisionmaking in the case of an urgent care claim arising out of a
termination or reduction of previously granted benefits being provided
over a period of time. Under the proposal, any such termination or
reduction would be treated as an adverse benefit determination, and
plans would be required to provide notice in such circumstances of the
termination or reduction of benefits at a time sufficiently in advance
of the termination or reduction so as to allow the claimant to appeal
the denial before the termination or reduction takes effect. This
proposal was intended to address RFI comments that expressed concern
over the harm that patients suffer from interruptions in treatment that
should have been provided on a continuous basis. The Department
believed that the dangers of this harm could be minimized if patients
are provided an opportunity to argue in favor of uninterrupted
continuing care before treatment is cut short or reduced. No serious
objections to this provision were raised in the comment record.
In finalizing the regulation, the Department has concluded that
there is no strong basis for providing this protection only for
terminations or reductions involving urgent care. \11\ Any
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decision to terminate or reduce benefits that have already been granted
will cause disruption and potential harm to patients receiving the
ongoing care. In our view, claimants faced with such a disruption
should be afforded an adequate opportunity to contest the termination
or reduction of already granted benefits before it takes effect.
Accordingly, subparagraph (f)(2)(ii)(A) retains the basic protection
provided in the proposal as to the termination or reduction of
previously granted benefits, but expands its scope to encompass any
termination or reduction of already granted benefits.
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\11\ The regulation calls this type of decisionmaking
``concurrent care decisions'' because the decision to reduce the
treatment is made concurrently with the treatment itself. The
regulation clarifies that the provision applies to ongoing treatment
covering either a period of time or a number of treatments. If a
plan approves a course of treatment that has no finite termination
date, such as treatments to be provided ``as long as medically
necessary,'' a reduction or termination of that course of treatment
is considered a concurrent care decision under the regulation.
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Some commenters urged the Department to consider extending the
protection of this special timing rule to requests for additional care
discovered to be necessary during the course of the initially
prescribed treatment. In response to these suggestions and to minimize
the possibility of harm from interruptions in treatment, the regulation
further provides that any urgent care claim requesting to extend a
course of treatment beyond the initially prescribed period of time or
number of treatments must be decided within not more than 24 hours,
provided that the claim is made at least 24 hours prior to the
expiration of the initially prescribed period. If such a claim is
denied, it would be appealable as an urgent care claim. \12\
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\12\ Of course, any request to extend a course of treatment that
does not involve urgent care is a claim under the regulation and is
governed by the standards generally applicable to such claims.
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Time Frames for Plans Providing Disability Benefits
The proposal established time frames for resolution of disability
claims that were shorter than those in the 1977 regulation.\13\
Commenters representing disability insurers voiced concern over this
aspect of the proposal. These commenters argued that disability claims
are often difficult to resolve inasmuch as they present complex issues
requiring consideration of not only a claimant's medical condition, but
also the claimant's continuing vocational capabilities. These
commenters asserted that the proposed time frames were far too short to
accommodate the individualized decisionmaking process involved in
resolving most disability claims. Commenters representing claimants,
especially long-term disability claimants, took an opposite position,
arguing that disability providers frequently delay resolving these
claims unnecessarily in order to avoid beginning to make payments. They
emphasized the economic hardships disabled claimants experience as a
result of any unnecessary delays in receiving the replacement income
that disability benefits are intended to provide.
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\13\ Under the proposal, disability claims were subject to a 30-
day maximum initial decisionmaking period, with the possibility of a
15-day unilateral extension; review of adverse benefit
determinations of such claims were made subject to a 45-day maximum
period, with a possible 45-day unilateral extension.
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After consideration of the comments and testimony on this issue,
the Department has resolved to provide a limited opportunity for
extension of time to resolve disability claims. Subparagraph (f)(3), in
consequence, provides that disability claims must be resolved, at the
initial level, within 45 days of receipt; a plan may, however, extend
that decisionmaking period for an additional 30 days for reasons beyond
the control of the plan. If, after extending the time period for a
first period of 30 days, the plan administrator determines that it will
still be unable, for reasons beyond the control of the plan, to make
the decision within the extension period, the plan may extend
decisionmaking for a second 30-day period. The regulation requires that
the plan provide a disability claimant with an extension notice that
details the reasons for the delay. Thus, a plan may take, under limited
and justifiable circumstances, up to 105 days to resolve a disability
claim at the initial claims stage, provided that appropriate notice is
provided to the claimant before the end of the first 45 days and again
before the end of each succeeding 30-day period. In the Department's
view, this framework will enable a plan to take sufficient time to make
an informed decision on what may be a complex matter, but the plan will
be required to keep the claimant well informed as to the issues that
are retarding decisionmaking and any additional information the
claimant should provide. By limiting the reasons for which decisions
may be delayed, the regulation also requires prompt decisonmaking when
appropriate.
With respect to the review of adverse benefit determinations
involving disability claims, subparagraph (i)(3)(i) adopts the basic
approach of the proposal, permitting a maximum of 45 days to complete a
review,\14\ but it further permits plans providing disability benefits
to extend the decisionmaking time on review for an additional 45-day
period under the rules applicable to pension and other welfare plans,
and under subparagraph (i)(3)(ii) allows multiemployer plans providing
disability benefits that are administered by boards of trustees or
committees meeting at least quarterly to take advantage of the
``quarterly meeting'' extended time period on review.\15\
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\14\ Under the regulation, a plan cannot impose more than two
levels of mandatory review with respect to denial of a disability
claim.
\15\ See below for explanation of the ``quarterly meeting''
rule.
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Incomplete Claims and Extensions of Time
The proposal specifically required all plans to make an early
determination as to whether a filed claim is ``incomplete.'' Under the
proposal, notification that a claim is incomplete, including a
description of the information necessary to complete the claim, would
be required to be provided to a claimant within 5 days of filing the
claim. This provision, which responded directly to complaints expressed
in the RFI comments, was intended to eliminate unnecessary causes of
delay in the processing of claims and to speed communications between
plan and claimant regarding essential information.
The Department received many comments on the proposal asserting
that it is often not possible to determine whether a claim is
incomplete without deciding the claim in its entirety.\16\ The
requirement to provide notice of incompleteness within 5 days, these
commenters urged, would essentially force plans to make complete
benefit determinations within that time. These commenters further
suggested that providing an opportunity for extending the time for
deciding ``incomplete'' group health and disability claims would better
serve the purposes intended to be achieved by the notice of
incompleteness.\17\
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\16\ Representatives of claimants supported the proposed rule
regarding incomplete claims, asserting that plans frequently and
unnecessarily delay in informing claimants of obvious deficiencies
in claims, thereby causing claims decisions to be made later than
would otherwise be the case.
\17\ The 1977 regulation permitted an extension of time of up to
90 days for processing claims under ``special circumstances.'' The
proposal would have eliminated this provision and prohibited plans
from taking extensions of time without the claimant's consent.
Commenters representing plans, employers, and plan administrators
objected to the prohibition on extensions of time as inappropriately
inflexible.
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In light of these objections and arguments, the Department has
reconsidered the structure of its proposed rule regarding incomplete
claims and extensions of time. The regulation generally omits the
provisions for incomplete claims except
[[Page 70250]]
with respect to urgent care claims.\18\ Instead, the Department has
modified the 1977 regulation's provisions for extensions of time to
permit group health plans and plans providing disability benefits a
limited opportunity to extend the period for decisionmaking at the
initial level.\19\ Under subparagraphs (f)(2)(iii)(A) and (B) group
health plans may extend decisionmaking on both pre- and post-service
claims for one additional period of 15 days after expiration of the
relevant initial period, if the plan administrator determines that such
an extension is necessary for reasons beyond the control of the plan.
Under subparagraph (f)(3), plans providing disability benefits may
avail themselves of a similar provision permitting a maximum of two
extensions of time, each of 30 days, when necessary for reasons beyond
the control of the plan.\20\
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\18\ As was proposed, the regulation requires plans to provide
notice of incompleteness, in the case of a claim involving urgent
care, within 24 hours of receipt of the claim and does not permit a
plan to unilaterally extend the time period for deciding an urgent
care claim.
\19\ With respect to pension and other welfare plans, this
regulation fully continues the provisions of the 1977 regulation
regarding extensions of time.
\20\ The rules for disability claims are also described above.
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In each case, if the reason for taking the extension is the failure
of a claimant to provide necessary information, the time period for
making the determination is tolled from the date on which notice of the
necessary information is sent to the claimant until the date on which
the claimant responds to the notice.\21\ In connection with providing
an opportunity for extension, subparagraph (f)(4) further specifies
that the time periods for making a decision are considered to commence
to run when a claim is filed in accordance with the reasonable filing
procedures of the plan, without regard to whether all of the
information necessary to decide the claim accompanies the filing.
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\21\ This tolling period ends on the date on which the plan
receives the claimant's response to the notice, without regard to
whether the claimant's response supplies all of the information
necessary to decide the claim. Once the claimant responds, the plan
will have the benefit of the extension of time (15 days for group
health claims; 30 days for disability claims) within which to decide
the claim. The plan may take only the extensions described in the
regulation (e.g., one extension for group health claims) and may not
further extend the time for making its decision unless the claimant
agrees to a further extension.
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In providing a limited extension opportunity for deciding group
health and disability claims, it is the Department's intention to
provide plans with the flexibility necessary to handle all claims
appropriately, whether such claims are easy or difficult, complete when
filed or needing more information. The Department emphasizes that the
time periods for decisionmaking are generally maximum periods, not
automatic entitlements. If a specific claim presents no difficulty
whatsoever, it may be unreasonable to delay in deciding that claim
until the end of the maximum period; similarly, an extension may be
imposed only for reasons beyond the control of the plan. For example,
the Department would not view delays caused by cyclical or seasonal
fluctuations in claims volume to be matters beyond the control of the
plan that would justify an extension. The Department further notes that
there is no provision for extensions of time in the case of claims
involving urgent care.
Notice and Disclosure Requirements
The proposal contained several amplified notice and disclosure
requirements, some of which were made applicable to all plans, and some
of which applied specifically only to group health plans. Among such
general new notice requirements was a provision requiring all plans to
provide a specific notice, within 5 days (24 hours in the case of a
claim involving urgent care), in any instance in which a participant or
beneficiary made a request for a benefit, but failed to follow the
plan's procedures for filing a claim.\22\ The mandated notice for
incorrectly filed claims would explain that the request for a benefit
did not constitute a claim under the terms of the plan and would
further describe the plan's procedures for filing a claim. The
Department's intention in proposing this new notice requirement was to
ensure that plans did not ignore, either deliberately or inadvertently,
any reasonable, albeit unsuccessful, attempt by claimants or their
representatives to make a claim.
---------------------------------------------------------------------------
\22\ The proposal listed a number of individuals and parties
related to the plan and the employer, communication with whom would
trigger the notice requirement.
---------------------------------------------------------------------------
Many commenters representing employers, plans, and plan
administrators objected to this provision, asserting that plans would
have difficulty determining whether a communication with the plan was a
``request for a benefit'' or a simple inquiry about the plan's
provisions, unrelated to any specific benefit claim. These commenters
argued that the notice requirement would be unduly expensive to
implement because of the large number of plan-related individuals
contact with whom could trigger the requirement. Commenters further
argued that this notice requirement was superfluous since a plan's
summary plan description (SPD) should clearly describe the requirements
for filing a claim for benefits, and it can be assumed that claimants
read and understand their plan's SPD.
After reconsidering this proposal in light of the comments, the
Department has determined to clarify this notice requirement to
eliminate uncertainty as to its meaning and to narrow its application
to better target the perceived problem. Under subparagraph (c)(1)(i),
the requirement to provide a notice informing claimants that they have
failed to properly file a claim will arise only if a request is made
that involves a pre-service claim. Further, under subparagraph
(c)(1)(ii), the notice requirement will be triggered only by a
communication from a claimant or a health care professional
representing the claimant that specifies the identity of the claimant,
a specific medical condition or symptom, and a specific treatment,
service, or product for which approval is requested, and the
communication is received by a person or organizational unit
customarily responsible for handling benefit matters. In order to
reduce the asserted costs of compliance, the regulation provides that
the notice may be provided orally to the claimant or health care
professional (as appropriate), unless the claimant or representative
requests a written notice. Restricting the scope of this notice
requirement in this manner will reduce the compliance difficulties
posited by the commenters, while still requiring notice of a defective
filing to be given in those instances most critical to claimants.
The proposal clarified the requirement under the 1977 regulation
that a plan's claims procedures must be described in the SPD of the
plan. The proposal specified that the description in the SPD must
include all procedures for filing claim forms, providing notification
of benefit determinations, and reviewing denied claims. With respect to
group health plans, the proposal would require the SPD description to
include any procedures for obtaining preauthorizations, approvals, or
utilization review decisions.
As a concomitant to this basic disclosure, the proposal further
clarified that a notice of adverse benefit determination (at both the
initial level and on review) \23\ must identify
[[Page 70251]]
specifically any internal rules, guidelines, protocols, etc. that
served as a basis for the adverse benefit determination.\24\ If such
rules had served as a basis for the decision either at the initial
level or on review, the proposal further required that a copy of the
protocol be provided to the claimant upon request.
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\23\ The proposal required written or electronic notice to be
provided with respect to grants of benefits as well as denials. In
view of the negative comments that the Department received regarding
this requirement, the regulation requires written or electronic
notice of benefit grants to be provided only in the case of claims
involving urgent care and pre-service claims.
\24\ It is the Department's view that such internal rules,
guidelines, protocols, etc. are ``instruments under which the plan
is established or operated'' within the meaning of section 104(b) of
the Act and as such must be furnished to participants and
beneficiaries upon written request. See Advisory Opinion 96-14A
(July 31, 1996).
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While there was little comment on the proposal's provision for
disclosure in the SPD of the plan's claims procedures, some commenters
representing plan administrators and health insurance or services
provider organizations objected to the requirements regarding
identification and furnishing of a utilized internal rule or protocol.
In the view of these commenters, these requirements would impose
excessive burdens on administration of group health plans and provide
little in the way of useful information to claimants. While the
testimony and comments on this issue were in some conflict,\25\ a large
number of commenters asserted that it would be expensive and difficult
to specify in the notice of adverse benefit determination the
individual protocol on which the decision was based because of the
computerized nature of the determination processes. In addition, these
commenters argued that specification of the protocol would not provide
the claimant with useful information about why their benefit claim had
been denied. These commenters also worried that the language of the
proposal could be read to require plans routinely to furnish a copy of
the specific protocol itself as part of the notice of adverse benefit
determination. Because protocols can be of some length and complexity,
providing these documents routinely with any adverse benefit
determination could impose a large burden on the administration of
group health plans.
---------------------------------------------------------------------------
\25\ Many commenters representing claimants affirmed the
importance of having access to internal rules or protocols used in
decisionmaking. Other testimony, in particular from insurers,
indicated that specifically utilized protocols are currently
available and furnished to claimants upon request. Other testimony
indicated that such protocols can be obtained routinely only through
discovery processes in litigation.
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The Department continues to believe that claimants have a need to
know the specific basis for an adverse benefit determination. Where a
plan utilizes a specific internal rule or protocol, understanding the
terms of the specific protocol may be crucial to a claimant's ability
to successfully contest the denial on review. Therefore, subparagraph
(g)(1)(v) generally retains the requirements that a plan inform a
claimant that a protocol has been relied upon and furnish the protocol
upon request. To reduce the potential burden of complying with these
requirements, the regulation makes clear that the notice of adverse
benefit determination may either set forth the protocol on which it was
based or a statement that a protocol was relied upon and that a copy of
such protocol will be made available to the claimant free of charge
upon request.
Several commenters requested that the Department amplify the
disclosure requirements for adverse benefit determinations to require
plans to provide an adequate explanation of the reason for an adverse
benefit determination based on medical judgment especially when
invoking plan exclusions based on ``medical necessity'' or similar
broad terms. Commenters asserted that the reasons given in these
circumstances were frequently ``cursory'' and ``vague and open ended.''
One commenter stated that when claimants receive such conclusory
denials unsupported by scientific or clinical evidence, ``they are in
the untenable position of having to refute arguments they are not
allowed to understand.''
The Department agrees that claimants would benefit from receiving
fuller explanations when a claim is denied because the care is not
medically necessary, is experimental in nature, or some similar plan
exclusion or limit is applied. Consequently, the Department is adding
new subparagraphs (g)(1)(v)(B) and (j)(5)(ii) to require that the
notification of an adverse benefit determination (at both the initial
level and on review) based on medical necessity, experimental
treatment, or other similar exclusion or limit either explain the
scientific or clinical judgment of the plan in applying the terms of
the plan to the claimant's medical circumstances, or include a
statement that such an explanation will be provided free of charge to
the claimant upon request. In response to comments, the Department is
also adding subparagraph (j)(5)(iii) to require inclusion of a
statement notifying claimants that they can seek additional information
about potential alternative dispute resolution methods.
The preamble to the proposal discussed the Department's interest in
providing claimants sufficient access to information that could aid
them in determining whether a plan and its agents had acted fairly and
consistently in denying their claims. In particular, the Department was
concerned about claimants' difficulties in obtaining sufficient
information to determine whether a particular claims decision comported
with prior decisions on similar issues and whether a claimant would be
justified in challenging a decision as defective under the Act on that
basis. In this regard, the Department stated in the preamble that it
was considering requiring plans to disclose, after an adverse benefit
determination on review, documents and records relating to previous
claims involving the same diagnosis and treatment decided by the plan
within the five years prior to the adverse benefit determination (up to
a maximum of 50 such claims). The disclosure obligation would have been
limited to cases in which a claimant commences litigation over the
benefit determination and would have been further limited, with respect
to insured benefits, to claims involving the same plan or insurance
contract language.
This proposal was opposed by many commenters representing
employers, plans, plan administrators, and insurers. They asserted that
such a requirement would be prohibitively expensive to implement and
would provide claimants with little information of any benefit. They
also asserted that requiring this disclosure would be beyond the
Department's regulatory authority under section 503 of the Act.
The Department has seriously considered the objections raised to
this suggestion in the preamble of the proposal and has altered its
approach to the problem in order to reduce the potential burden on
plans and avoid any suggestion of possible interference with the civil
discovery processes in litigation. Subparagraph (b)(5) provides, as a
general requirement for reasonable claims procedures for all plans,
that a plan's claims procedures must include administrative safeguards
and processes designed to ensure and to verify that benefit claims
determinations are made in accordance with governing plan documents and
that, where appropriate, the plan provisions have been applied
consistently with respect to similarly situated claimants. Courts have
long recognized that such consistency is required even under the most
deferential judicial standard of review. \26\ It is the view of the
[[Page 70252]]
Department that this provision does no more than to require a plan to
formalize, as a part of its claims procedures, the administrative
processes that it must already have established and be using in
operating the plan in order to satisfy basic fiduciary standards of
conduct under the Act. The Department has not articulated specific
requirements as to how such processes should be designed, believing
that plans should have flexibility and are capable of monitoring their
internal decisionmaking effectively and efficiently.
---------------------------------------------------------------------------
\26\ See, e.g., Lutheran Medical Center v. Contractors,
Laborers, Teamsters and Engineers Health and Welfare Plan, 25 F.3d
616, 620-22 (8th Cir. 1994); De Nobel v. Vitro Corp., 885 F.2d 1180,
1188 (4th Cir. 1989).
---------------------------------------------------------------------------
As a concomitant to this general requirement, subparagraph
(m)(8)(iii) further provides that, among the information that a plan
must provide a claimant upon request after receiving an adverse benefit
determination, is any information that the plan has generated or
obtained in the process of ensuring and verifying that, in making the
particular determination, the plan complied with its own administrative
processes and safeguards that ensure and verify appropriately
consistent decisionmaking in accordance with the plan's terms. It is
not the Department's intention in this regard to require plans to
artificially create new systems for the sole purpose of generating
documents that can be handed to a claimant whose claim is denied in
order to satisfy this disclosure requirement. The Department
anticipates that plans generally will have systems for ensuring and
verifying consistent decisionmaking that may or may not result in there
being disclosable documents or information pertaining to an individual
claims decision.
The proposal attempted to clarify the 1977 regulation's requirement
that claimants be afforded access, after a benefit denial, to
``pertinent documents.'' Based on its conclusion from RFI comments that
there was substantial public confusion concerning the meaning of the
term ``pertinent,'' the Department proposed to replace that term with
the term ``relevant.'' The proposal further stated that a document
would be considered ``relevant'' to a claim whether or not such
document was in fact relied upon by the plan in making the adverse
benefit determination. As stated in the preamble to the proposal, the
Department believed that these changes would make clear that claimants
must be provided access to all of the information present in the claims
record, whether or not that information was relied upon by the plan in
denying the claim and whether or not that information was favorable to
the claimant. Such full disclosure, which is what the 1977 regulation
contemplated, is necessary to enable claimants to understand the record
on which the decision was made and to assess whether a further appeal
would be justified.
Commenters representing plans, employers, insurers, and plan
administrators expressed dissatisfaction with this attempted
clarification.\27\ The main source of their objection was that the
proposal failed to define adequately the scope of the intended
disclosure. In their view, the use of the term ``relevant,''
particularly when coupled with the modifier that information need not
have been relied upon to be relevant, would impose an unlimited burden
on plans to search their records for any information relevant in the
broadest sense to the claim, whether it was in any way related to the
actual claims process. These commenters feared that plans would face
added costs of keeping track of, and disclosing, a large amount of
information generally accessible to the decisionmaker, without regard
to whether such information was in any way utilized in the
decisionmaking process.
---------------------------------------------------------------------------
\27\ Representatives of claimants, however, strongly supported
this clarification, complaining that plan officials occasionally
seek to withhold information that would tend to support granting the
claim.
---------------------------------------------------------------------------
The regulation responds to this concern. While retaining the term
``relevant'' in subparagraph (j)(3) to describe the documents and other
information that must be made available to a claimant free of charge
upon request after receiving an adverse benefit determination, the
regulation provides a specific definition of that term. Subparagraph
(m)(8) states that a document, record, or other information is
considered ``relevant'' if it was relied upon in making the
determination, or was submitted to the plan, considered by the plan, or
generated in the course of making the benefit determination, without
regard to whether such document, record, or other information was
relied upon in making the determination. Subparagraph (m)(8) further
provides that the claimant should receive any information demonstrating
that, in making the adverse benefit determination, the plan complied
with its own processes for ensuring appropriate decisionmaking and
consistency. Additionally with respect to group health and disability
claims under subparagraph (m)(8), a document, record, or other
information is considered ``relevant'' if it constitutes a statement of
policy or guidance with respect to the plan concerning the denied
treatment option or benefit for that claimant's diagnosis, without
regard to whether such advice or statement was relied upon in making
the determination. The Department believes that this specification of
the scope of the required disclosure of ``relevant'' documents will
serve the interests of both claimants and plans by providing clarity as
to plans' disclosure obligations, while providing claimants with
adequate access to the information necessary to determine whether to
pursue further appeal.
Standards of Review
The proposal adopted new standards for a full and fair appeal of an
adverse benefit determination. The proposal required that the review be
conducted by an appropriate named fiduciary who is neither the party
who made the initial adverse determination, nor the subordinate of such
party; that the review not afford deference to the initial adverse
benefit determination; and that the review take into account all
comments, documents, records, and other information submitted by the
claimant, without regard to whether such information was previously
submitted or relied upon in the initial determination. In addition,
with respect to group health claims, the proposal required fiduciaries
reviewing any determination based on a medical judgment to consult with
a health care professional with appropriate training and experience in
the field of medicine involved in the medical judgment. Such health
care professional was required to be ``independent'' of any health care
professional consulted in making the initial adverse benefit
determination.
Most commenters considering this aspect of the proposal strongly
supported these reforms, agreeing that there is a need to ensure that
claims decisions are reviewed by a party with sufficient independence
to provide a full and fair review. A significant number of commenters
urged the Department to extend the requirement of consultation with an
appropriate health care professional to the review of decisions on
disability claims. Some commenters, however, voiced concern regarding
the additional cost that would be imposed by the requirement of a
separate decisionmaker and consultation with health care professionals.
In particular, it was argued that small employers, whose plans, it was
asserted, generally are administered solely by a single individual who
is either the owner of the business or the general manager of the
business, would be caused
[[Page 70253]]
substantial additional expense to obtain the independent review. Some
commenters further urged the Department to clarify the type of
``independence'' that would satisfy the Department's requirement for
the health care professional who must be consulted on review.
Subparagraphs (h)(3) and (4) generally retain the proposed
standards for the conduct of reviews of adverse benefit determinations
with respect to group health plans and plans providing disability
benefits. By limiting the scope of this reform to group health plans
and plans providing disability benefits, the regulation greatly
reduces, the Department believes, the cost implications for small
employers. In addition, the regulation requires consultation with an
appropriately qualified health care professional on review of denied
disability claims involving medical judgments. Subparagraph (h)(3)(v)
further clarifies that the standards for ``independence'' of a health
care professional who is consulted in connection with a review are the
same as those that apply to the appropriate named fiduciary under
subparagraph (h)(3)(ii), that is, the individual who is consulted must
be an individual different from, and not subordinate to, any individual
who was consulted in connection with the initial decision. The
Department believes that these changes will accommodate the interests
of benefit claimants in having a full opportunity for an adequate
review and the needs of employers and plans to limit the costs of
providing such a review.
Permitted Levels of Review
The proposal provided that a plan may require only one appeal of a
denied claim. This limitation was intended to assure that claimants
whose claims are denied have the ability to take their claims to court
without undue delay, as the Department believes was intended by section
503 of the Act. Nothing in the proposal, however, was intended to
preclude a plan from offering, or a claimant from agreeing to utilize,
additional voluntary administrative appeals processes. The proposal
further banned plans from requiring that denied claims be submitted to
arbitration or that any costs be imposed on a claimant as a condition
for filing or appealing a claim.
These aspects of the proposal were opposed by many commenters
representing employers, plans, plan administrators, benefit providers,
and insurers. These commenters asserted that it is common practice
among a large number of plans to provide more than one level of appeal
for a denied claim and that such a practice generally benefits
claimants by providing a less costly alternative to taking a denied
claim to court. Such a practice is particularly common, it appears,
with respect to insured benefits, where initial decisions and one or
more appeals are handled within the insurer, and appeals at additional
levels are to the plan or employer. Commenters representing claimants,
on the other hand, supported the limitation on the number of mandatory
appeals, arguing that multiple levels of administrative appeal often
hamper and frustrate claimants, causing them to abandon claims. Such
multiple levels often serve no actual purpose, these commenters assert,
and provide no independent review.
The Department continues to believe that allowing plans to impose
an unlimited number of levels of administrative appeals of denied
claims does not serve the best interests of claimants. However, it has
concluded that the strict limitation of appeals to a single level may
be unnecessarily limiting. In the interests of providing plans some
flexibility in creating claims processes, and to accommodate what
appears to be a common practice, subparagraph (c)(2) permits two levels
of mandatory appeal of an adverse benefit determination. \28\ In order
to promote speedy resolution of group health claims, however,
subparagraph (i)(2) limits the overall time period within which plans
must decide appeals of denied claims. \29\
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\28\ As with other aspects of the regulation's procedural
reforms, this limit is imposed only with respect to group health
plans and plans providing disability benefits. The Department
solicits comments on whether this reform should be extended to other
employee benefit plans.
\29\ If a group health plan provides only one level of appeal,
it may take up to 30 days to resolve an appeal of a pre-service
claim denial; if it provides two levels of appeal, both levels must
be concluded within that 30 days. For appeals of post-service claims
denials, a plan with a single level of appeal may take up to 60 days
to conclude that appeal; plans with two levels of appeal must
complete both appeals within the same 60 days.
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With respect to the proposal's ban on arbitration, a significant
number of commenters representing unions, \30\ multiemployer plans, and
employers objected that this reform was contrary to the general
approach of the Federal government, as expressed in the Federal
Arbitration Act, to encourage the appropriate use of alternative
dispute resolution. In addition, these commenters suggested that
arbitration generally provides a useful and less costly means of
resolving benefit disputes than litigation. An equal number of
commenters representing claimants, however, supported the proposed ban
on mandatory arbitration, asserting that, as applied to claims
disputes, arbitration is inherently unfair because of the difference in
status between the typical benefit claimant and the typical plan or
employer. Commenters also suggested that the practice of requiring plan
participants to agree to arbitrate all benefits disputes as a condition
of participation in the plan is inherently unfair due to the inequality
in bargaining power between employers and employees. Further, they
argued that the traditional methods of cost-sharing involved in
commercial arbitration, in which each party pays half of the costs of
the arbitration, may be prohibitively expensive for most claimants.
---------------------------------------------------------------------------
\30\ The issue of the 1977 regulation's special treatment of
grievance procedures, including arbitration, adopted by collectively
bargained, single employer plans through the collective bargaining
agreement, is discussed separately below.
---------------------------------------------------------------------------
After careful deliberation on the issues raised by the commenters
regarding the use of alternative dispute resolution for benefit claims
disputes, the Department has revised its approach to permit plans,
pursuant to subparagraph (c)(4), to require some limited forms of
mandatory arbitration. In addition, in subparagraph (c)(3), the
Department addresses more generally the subject of plans' offering
additional, voluntary processes, including voluntary binding
arbitration, after conclusion of the required claims review process. By
retaining the complete prohibition on imposing costs on claimants in
connection with filing or appealing a claim, however, subparagraph
(b)(3) makes clear that any process used by a plan to resolve a claim
dispute, including arbitration, must be conducted without imposing fees
on the claimant. These restrictions apply, under the regulation, only
to group health plans and plans providing disability benefits.
With respect to mandatory arbitration used as part of the claims
process, subparagraph (c)(4) provides that a plan may require
arbitration as one (or both) of the permitted levels of review of a
denied claim, provided, first, that the arbitration is conducted in
accordance with the requirements of the regulation applicable to such
appeals and, second, that the claimant is not thereby precluded from
challenging the arbitrator's decision, including pursuing the claim in
court pursuant to section 502(a) of the Act. With respect to voluntary
additional levels of appeal offered by a plan, including voluntary
binding arbitration or other methods of dispute resolution,
subparagraph (c)(3)(iii) provides that a plan may offer
[[Page 70254]]
such voluntary additional levels of appeal to a claimant as a method of
resolving a benefit dispute only after the dispute has arisen.
Subparagraph (c)(3)(iv) further requires the plan to provide the
claimant with sufficient information about the voluntary process to
permit the claimant to make an informed judgment about whether to
submit the dispute to the voluntary process; this requirement includes
information about the applicable rules, the process for selecting the
decisionmaker, and the circumstances, if any, that may affect the
impartiality of the decisionmaker, such as any financial or personal
interests in the result or any past or present relationship with any
party to the review process. The plan must also make clear to the
claimant that the decision as to whether or not to submit a benefit
dispute to the voluntary level of appeal will have no effect on the
claimant's rights to any other benefits under the plan.\31\ In
addition, subparagraph (c)(3) includes two protections intended to make
sure that additional appeal levels offered by a plan remain truly
voluntary. First, subparagraph (c)(3)(i) requires any plan offering a
voluntary appeal to agree not to later assert a defense of failure to
exhaust available administrative remedies against a claimant who
chooses not to make use of the voluntary appeal process. Second,
subparagraph (c)(3)(ii) requires such plans to agree that any statute
of limitations or other defense based on timeliness is tolled while the
dispute is under submission to the voluntary process. The Department
considers these protections to be essential to procedural fairness for
a claimant who is offered or pursues voluntary administrative processes
as an alternative to pursuing a claim in court.
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\31\ In this regard, the regulation requires that any plan
intending to offer an additional voluntary level of appeal must
include, in the notice of adverse benefit determination on review, a
statement describing the voluntary appeal procedure and the
claimant's right to obtain the information about the process
described in subparagraph (c)(3)(iv) free of charge before deciding
to submit the claim to the voluntary level of appeal.
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Preemption of State Law
Section 514(a) of the Act provides that the provisions of the Act
generally supersede State laws ``insofar as they may now or hereafter
relate to any employee benefit plan [covered under the Act].'' Section
514(b)(2)(A), however, saves from the general preemption of section
514(a) State laws that regulate insurance, banking, or securities. The
scope and meaning of the general preemption provision of section 514(a)
and the savings clause contained in section 514(b)(2)(A) have been the
subject of controversy since enactment of the Act.\32\ The proposal did
not address section 514 of the Act or in any way propose to regulate
the relationship between the proposed minimum standards for benefit
claims procedures of employee benefit plans and State law that might
affect or relate to such standards.
---------------------------------------------------------------------------
\32\ See, e.g., Pegram v. Herdrich, 120 S. Ct. 2143 (2000); Unum
Life Ins. Co. v. Ward, 526 U.S. 358, (1999); Boggs v. Boggs, 520
U.S. 833 (1997); N.Y. State Conf. of Blue Cross & Blue Shield Plans
v. Travelers Ins. Co., 514 U.S. 645 (1995); John Hancock Mut. Life
Ins. Co. v. Harris Trust & Savings Bank, 510 U.S. 86 (1993).
---------------------------------------------------------------------------
Many commenters, including several State insurance commissioners,
urged the Department to consider addressing the question of the
preemptive effect of a final regulation on State law. Such commenters
suggested that a failure to do so would exacerbate existing confusion
about the possible preemption of State law efforts seeking to improve
the quality of health care, especially those that seek to protect
patients' rights by providing State-mandated systems for the review of
disputes between patients and health care providers or insurers. Such
State law, the commenters argued, may be considered to be preempted to
the extent that the State-law requirements differ from or conflict with
the requirements of this regulation. Some commenters urged the
Department to provide in this regulation for the complete preemption of
State law that provides procedures for the resolution of benefit claims
disputes. Others urged the Department to model the extent of the
regulation's preemptive effect on section 731(a) of the Act, which
provides special, more limited preemption with respect to the
provisions of the Part 7 of the Act, concerning portability,
renewability, nondiscrimination, and other rights relating to group
health plans. Overall, a large number of commenters agreed that there
would be benefit to the public in general in the Department's
clarifying its views as to the preemptive effect of the regulatory
standards.
In response to these comments, the Department has added to the
regulation a new paragraph (k) providing interpretive guidance on the
question of the relationship of the substantive regulatory standards to
State law. Subparagraph (k)(1) states that the regulatory standards
should not be read to supersede State law regulating insurance (even
when such State law prescribes standards for claims processes and
internal review of claims) unless such State law prevents the
application of a requirement of the regulation. For example, a State
may have a law requiring insurers to allow oral appeals of all claims
or to decide claims within shorter periods of time. These laws would
not prevent the application of the regulation because plans could
comply with both the regulation and the State laws.
Subparagraph (k)(2)(i) explains that a State law regulating
insurance should not be considered to prevent the application of a
requirement of the regulation merely because the State law establishes
a review procedure to evaluate and resolve disputes involving adverse
benefit determinations under group health plans, so long as the review
procedure is conducted by parties other than the insurer, the plan, the
plan's fiduciaries, the employer, or any employee or agent of any of
the foregoing. Subparagraph (k)(2)(ii) further explains that, in the
Department's view, the types of procedures described in subparagraph
(k)(2)(i) are not part of the claims procedures contemplated by section
503 of the Act, but are ``external reviews'' that are beyond the scope
of the regulation. As a result, while such procedures as established by
State law are not preempted by the regulation, under subparagraph
(k)(2)(ii), claimants cannot be required to submit their claims to such
procedures in order to be entitled to file suit under section 502(a) of
the Act.\33\ There is nothing in the regulation, however, that would
preclude a claimant from voluntarily submitting a claim for review
pursuant to a State-provided external review process.
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\33\ It is the view of the Department that claimants would be
entitled to have a claim dispute adjudicated in court pursuant to
section 502(a) of the Act after exhausting the plan's claims
procedures, but without regard to State law procedures described in
subparagraph (k)(2), regardless of whether such State law procedures
are mandatory pursuant to State law.
---------------------------------------------------------------------------
By providing that only State insurance law that does not prevent
the application of the regulatory standards will be saved from
preemption, subparagraph (k)(1) preserves the procedural protections
required by the regulation, which the Department finds essential to the
full and fair review mandated by section 503 of the Act,\34\ but
recognizes that States may impose non-conflicting standards for
internal processes. Subparagraph (k)(2) of the
[[Page 70255]]
regulation clarifies the extent to which State law reform efforts
regarding patients' rights may be affected by the preemption provided
for in paragraph (k)(1). Subparagraph (k)(2) articulates the
Department's view that procedural remedies established by State law
that are ``external'' to the plan will not be preempted by the
regulation. In this regard, subparagraph (k)(2)(i) defines the
processes that will be considered ``external'' to the plan by reference
to the party who is responsible for conducting the procedures. It is
the Department's view that procedures that are conducted by parties
other than the insurer providing benefits under the plan, the plan
itself, the plan's fiduciaries, or the employer sponsoring the plan (or
by any employee or agent of any of these parties) \35\ are procedures
sufficiently independent of the plan to be considered outside the scope
of the process required by section 503 of the Act.
---------------------------------------------------------------------------
\34\ Nothing in this regulation should be construed to limit a
claimant's ability to pursue any state law remedy that may be
available as a result of a medical decision, even where such
decision implicates eligibility for benefits under a plan. See
Pegram v. Herdrich, 120 S. Ct. 2143 (2000).
\35\ Whether a party conducting a review procedure should be
considered to act as the ``agent'' of a party related to the plan
will depend on the independent authority with which the party is
vested. That an insurer is required, under State law, to provide
funds to pay for a review will not, in and of itself, cause the
party who conducts the review to be considered an ``agent'' of the
insurer.
---------------------------------------------------------------------------
Other Issues
The regulation makes a number of additional changes to the proposal
in response to comments. Other aspects of the proposal have been
retained unchanged, despite comments, in light of the Department's
conclusions as to their importance. The following briefly summarizes
these other issues.
The proposal eliminated a provision in the 1977 regulation that
seemed to imply that representatives of a claimant must be ``duly
authorized'' to act on behalf of the claimant. This change reflected
the perception of the Department that no single Federal standard
governs the authorization of a representative and that claimants should
be able to freely name representatives to act on their behalf. Many
commenters representing employers and plans responded that elimination
of the concept of an ``authorized'' representative could be read to
require plans to accept anyone who claimed to be a representative of a
claimant, without permitting plans to establish reasonable procedures
to verify that status. This could prevent plans from protecting the
privacy or other rights of claimants. The regulation responds to this
concern by reinstituting a concept of authorization with respect to
claimants' representatives.\36\ Specifically, subparagraph (b)(4)
provides that a plan's claims procedures may not preclude an authorized
representative (including a health care provider) from acting on behalf
of a claimant and further provides that a plan may establish reasonable
procedures for verifying that an individual has been authorized to act
on behalf of a claimant. However, subparagraph (b)(4) requires a group
health plan to recognize a health care professional with knowledge of a
claimant's medical condition as the claimant's representative in
connection with an urgent care claim.
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\36\ This provision, which is a clarification of current law,
applies to all employee benefit plans covered under the Act.
---------------------------------------------------------------------------
The proposal provided that a ``claim'' is any request for a plan
benefit or benefits, made by a claimant or by a representative of a
claimant, that complies with a plan's reasonable procedure for making
benefit claims.\37\ It further specified that, in the case of a group
health plan, a request for a benefit includes a request for a coverage
determination, for preauthorization or approval of a plan benefit, or
for a utilization review determination in accordance with the terms of
the plan. One commenter argued that the reference to ``coverage
determination'' in this provision could be read to include
determinations of eligibility under a group health plan, and that such
determinations should not be treated as claims. The Department agrees
that all requests for determinations of eligibility under a group
health plan should not be required to be treated as claims for benefits
for purposes of ERISA's claims procedure under section 503.\38\ On the
other hand, the Department also believes that where a claim for
benefits is made in accordance with reasonable procedures and the claim
is denied because the claimant is not eligible for benefits under the
terms of the plan, the claimant should be afforded the right to appeal
that determination in accordance with the claims procedures of the plan
and this regulation.\39\ In this regard, the reference to ``coverage
determination'' has been eliminated from the description of a claim for
benefits in paragraph (e). In an effort to clarify the application of
the regulation to benefit claim denials based on eligibility, the
Department has amended the definition of ``adverse benefit
determination'' in subparagraph (m)(4) to include denials of benefits
based on a determination of a claimant's eligibility to participate in
the plan. The Department, nonetheless, is interested in receiving
public comments concerning whether, and to what extent, questions to a
plan regarding eligibility should be governed by a prescribed process,
with timing and notice standards.
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\37\ In this regard, the Department notes that all such claims
for benefits are covered by this regulation, regardless of the
reason or reasons a plan may have for denying the claim. For
example, a claim for a health care service, even a health care
service that is specifically excluded by the plan's governing
documents, would be covered by the regulation.
\38\ The Department notes that persons who need to establish
their status as participants or beneficiaries under a plan have a
number of ways to do so without implicating the claims procedures.
Eligibility information is generally provided through the plan
administrator, the summary plan description, and plan documents. If
a person is unable to determine his or her status under the plan or
if there is disagreement about a person's status under the plan,
section 502(a)(1)(B) of the Act provides that participants and
beneficiaries may bring a civil action to clarify their rights to
future benefits under the terms of the plan.
\39\ Sections 206(d)(3) and 609(a)(5) of the Act mandate certain
specific plan procedures for determining the qualified status of
domestic relations orders and medical child support orders,
respectively, and for administering qualified domestic relations
orders (QDROs) and qualified medical child support orders (QMCSOs).
It is the view of the Department that issues pertaining to such
orders must be resolved pursuant to the procedures described in
section 206(d)(3) or 609(a)(5) of the Act, as appropriate, and not
the claims procedures governed by section 503 of the Act and the
current regulation.
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The proposal contained a provision setting forth the Department's
view of the consequences that ensue when a plan fails to provide
procedures that meet the requirements of section 503 as set forth in
regulations. The proposal stated that if a plan fails to provide
processes that meet the regulatory minimum standards, the claimant is
deemed to have exhausted the available administrative remedies and is
free to pursue the remedies available under section 502(a) of the Act
on the basis that the plan has failed to provide a reasonable claims
procedure that would yield a decision on the merits of the claim. The
Department's intentions in including this provision in the proposal
were to clarify that the procedural minimums of the regulation are
essential to procedural fairness and that a decision made in the
absence of the mandated procedural protections should not be entitled
to any judicial deference.
Many commenters representing employers and plans argued that this
provision would impose unnecessarily harsh consequences on plans that
substantially fulfill the requirements of the regulation, but fall
short in minor respects. These commenters suggested that the Department
adopt instead a standard of good faith compliance as the
[[Page 70256]]
measure for requiring administrative exhaustion. Alternatively, they
suggested that the Department recognize the judicial doctrine under
which exhaustion is required unless the administrative processes impose
actual harm on the claimant.
Upon consideration, the Department has determined to retain this
provision in paragraph (l). Inasmuch as the regulation makes
substantial revisions in the severity of the standards imposed on
plans, we believe that plans should be held to the articulated
standards as representing the minimum procedural regularity that
warrants imposing an exhaustion requirement on claimants. In the view
of the Department, the standards in the regulation represent essential
aspects of the process to which a claimant should be entitled under
section 503 of the Act. A plan's failure to provide procedures
consistent with these standards would effectively deny a claimant
access to the administrative review process mandated by the Act.
Claimants should not be required to continue to pursue claims through
an administrative process that does not comply with the law. At a
minimum, claimants denied access to the statutory administrative review
process should be entitled to take that claim to a court under section
502(a) of the Act for a full and fair hearing on the merits of the
claim. Further, the Department believes that it is unlikely that this
provision, in and of itself, will result in an increase in benefit
claims litigation. Given the limited remedies available in a suit under
section 502(a) of the Act, claimants will have little incentive to
invoke this provision unless they believe they will be unable to
receive a fair consideration from the plan.
The proposal eliminated several special provisions contained in the
1977 regulations, including the special treatment provided for
grievance procedures of collectively bargained, single-employer plans
\40\ and for benefits provided through Federally qualified health
maintenance organizations (``HMOs'').\41\ With respect to each of these
special provisions, the Department requested comment on whether, in the
interests of uniform treatment of benefit claims, these special
treatments could be eliminated.
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\40\ The 1977 regulation provides that such collectively
bargained plans may substitute, for the provisions of the
regulation, a collectively bargained procedure that either provides
for filing, initial disposition of claims, and grievance and
arbitration of benefit claims, or provides only for grievance and
arbitration of such claims.
\41\ The 1977 regulation provides that plans that provide
benefits through membership in a qualified HMO, as defined in
section 1310(d) of the Public Service Act, 42 U.S.C. 300e-9(d), are
deemed to satisfy the regulation with respect to such benefits if
the HMO satisfies the requirements of section 1310 of the Public
Service Act.
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Comments on these subjects were relatively sparse. With respect to
the special HMO exception, the Department has determined to retain the
proposal's elimination of the special treatment. With respect to
treatment of collectively bargained, single-employer plans, the
Department received a few comments from interested parties, arguing
that elimination of the special treatment would interfere unduly with
the collective bargaining process and citing the Department's policy,
articulated in the preamble to the 1977 regulation,\42\ not to
interfere with the operation of such agreements merely because they
involve employee benefit plans. On review of the record, the Department
has concluded that there is no reason to alter its policy position with
regard to collective bargaining agreements that establish grievance
procedures for single-employer collectively bargained plans and,
accordingly, has determined to reinstate in subparagraph (b)(6) the
special treatment provided in the 1977 regulation for such single-
employer, collectively bargained plans.
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\42\ See 42 FR 27426 (May 27, 1977).
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The proposal stated that the regulation, when finalized, would be
applicable to plans on the later of the effective date of the final
regulation or the first day of the plan year beginning on or after the
effective date, with a delayed compliance date for collectively
bargained plans. Commenters argued that these applicability dates would
be too soon, delineating the significant changes that would be required
to achieve compliance with the proposal's requirements, such as review
of third party administrator relationships, revisions to vendor
contracts, systems redesign, amendment of documents, and preparation of
appropriate disclosures for participants and beneficiaries. Several of
these commenters requested a period of twelve months between
publication of the final regulation and its applicability to plans.
Recognizing these concerns, the Department has determined to provide a
more substantial period of time for orderly and deliberate compliance
efforts. Therefore, the regulation provides that its provisions will
apply to claims filed under a plan on or after January 1, 2002.
B. Economic Analysis Under Executive Order 12866
Overview
In developing the regulation, the Department considered the
potential economic effects of available alternative approaches. The
regulation is crafted to maximize economic benefits net of costs. The
Department believes that the regulation's benefits will substantially
outweigh its costs.
The regulation will have two major, direct effects: it will change
the timing and outcomes of some health and disability claims decisions,
and it will require affected plans to modify claims decision-making
processes.
The regulation will cause plans to promptly approve some valid
claims that otherwise would have been denied. In economic terms, these
changes in claims outcomes can be characterized as financial transfers
that produce societal benefits. The cost to the plan of the services
provided is offset by a benefit of equal financial value to the
claimant, so the net cost to society is zero. The amount of the
transfer cannot be estimated because there are no data on the number of
valid claims that are denied today.
At least two societal benefits will derive from the prompt approval
of valid benefit claims. The first benefit will be improved health
outcomes and financial security. Claimants will be assured access to
needed health care when ill or injured and financial support when
disabled. The second will be more efficient labor and insurance
markets, which should facilitate more and better health and disability
benefit coverage. Employers will be more able and inclined to provide
these benefits if employees are confident that valid claims will be
approved. These benefits generally cannot be quantified, but they are
expected to be large.
In estimating plans' cost to comply with the regulation, the
Department considered the degree to which current claims handling
practices conform to the regulation's requirements. Many claims are
already handled in satisfaction of all or some applicable requirements,
but assuring that all claims meet all the requirements will require at
least some modifications to all plans' claims procedures. These
modifications will entail one-time, ``start-up'' costs to establish the
new processes, and ongoing costs to operate them.
The Department anticipates that all health and disability benefit
plans will incur some start-up cost. Start-up costs are estimated at
$119 million in 2001. Most of that cost, $103 million, is attributable
to health plans, while the remaining $16 million is attributable to
disability plans. Health plan start-up costs amount to an estimated $37
per plan and $0.75 per enrollee on average, while disability plan
start-up costs are
[[Page 70257]]
estimated to average $9 per plan and $0.24 per enrollee. Since most
claims administrators serve many plans so costs generally will be
spread widely across plans.
Ongoing costs will be incurred in connection with the subset of
health and disability benefit claims that must be handled differently
to satisfy the regulation's requirements. That subset will be small in
connection with many of these requirements. Many claims are already
handled in satisfaction of some requirements, such as the regulation's
time frames for claims decisions, and many requirements apply only to a
small subset of claims, such as urgent care claims or health benefit
claims that are denied. Ongoing costs attributable to the regulation
are estimated to be $399 million in 2002. Costs will fall over time
with increased automation. Most of the ongoing cost, $379 million, is
attributable to health benefit claims, while the remaining $21 million
is attributable to disability benefit claims. Annual health plan costs
amount to an average of $135 per plan. This is equivalent to $2.77 per
enrollee on average, or approximately one-tenth of one percent of total
plan premium. Disability plan ongoing costs average $12 per plan and
$0.31 per enrollee. The cost to carry out any particular claims
transaction in satisfaction of the regulation is likely to be low, but
claims volume is high (1.4 billion health benefit claims per year), so
aggregate costs are substantial.
The single largest ongoing cost is attributable to the regulation's
time frames for health claims decisions. The Department believes that
under plans' current practices up to 1 percent of claims decisions are
not made within the regulation's maximum time periods. Accelerating
these 14 million decisions to comply with the regulation is estimated
to cost $222 million in 2002.
The economic costs of the regulation will be very small relative to
the overall cost of providing and administering health and disability
benefits. Health plans' ongoing cost of complying with the regulation
will amount to just 0.1 percent of total plan expenditures. Costs of
this relative magnitude are not expected to adversely affect employers'
propensity to offer health and disability benefits.
The regulation does not substantially change the standards
applicable to pension benefit claims or welfare benefit claims other
than health and disability benefit claims. Its economic effects are
therefore are limited to those associated with health and disability
benefit claims.
The ongoing cost estimates for the regulation, presented here, are
higher than the Department's ongoing cost estimates for the proposed
regulation, previously presented in that proposed regulation's
preamble. This should not be interpreted as an indication that the
regulation will carry greater cost than would the proposed regulation.
On the contrary, the regulation relaxes certain provisions of the
proposed regulation, such as time frames for certain health benefit
claims, in ways that will reduce economic costs without sacrificing
economic benefits. The Department's estimation of the cost of the
regulation incorporates new information, not available for estimating
the cost of the proposed regulation, including the extensive public
comments received in response to the proposed regulation. Based on this
new information, the Department revised its estimations of the cost of
certain provisions.
Required Analyses of Economic Impact
1. Executive Order 12866
Under Executive Order 12866, the Department must determine whether
the regulatory action is ``significant'' and therefore subject to the
requirements of the Executive Order and subject to review by the Office
of Management and Budget (OMB). Under section 3(f), the order defines a
``significant regulatory action'' as an action that is likely to result
in a rule: (1) having an annual effect on the economy of $100 million
or more, or adversely and materially affecting a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local or tribal governments or communities (also
referred to as ``economically significant''); (2) creating serious
inconsistency or otherwise interfering with an action taken or planned
by another agency; (3) materially altering the budgetary impacts of
entitlement grants, user fees, or loan programs, or the rights and
obligations of recipients thereof; or (4) raising novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in the Executive Order.
Pursuant to the terms of the Executive Order, it has been
determined that this action is consistent with the President's
priorities as articulated in the President's February 20, 1998,
directive to the Secretary of Labor to propose regulations that, among
other things, implement the recommendations of the President's Advisory
Commission on Consumer Protection and Quality in the Health Care
Industry. In addition, the Department estimates that this regulatory
action will have an economic impact exceeding $100 million in the year
2002, the year in which this regulation will be applicable to benefit
claims. The total cost of this regulation is expected to be $399
million in 2002, and to decrease thereafter. This amount is
approximately $2.77 per group health plan enrollee and $.31 per
disability plan enrollee. Therefore, this notice is ``significant'' and
subject to OMB review under Sections 3(f)(1) and 3(f)(4) of the
Executive Order. Accordingly, the Department has undertaken to assess
the costs and benefits of this regulatory action. The benefits of the
regulation, although not quantifiable, are expected to exceed its cost.
The Department's assessment of the regulation's costs and benefits is
summarized above and detailed later in this preamble.
2. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) (RFA) imposes
certain requirements with respect to Federal rules that are subject to
the notice and comment requirements of section 553(b) of the
Administrative Procedure Act (5 U.S.C. 551 et seq.) and that are likely
to have a significant economic impact on a substantial number of small
entities. Unless an agency certifies that a final rule will not have a
significant economic impact on a substantial number of small entities,
section 604 of the RFA requires the agency to present a final
regulatory flexibility analysis describing the impact of the rule on
small entities at the time of publication of the notice of final
rulemaking. Small entities include small businesses, organizations, and
governmental jurisdictions.
For purposes of analysis under the RFA, PWBA continues to consider
a small entity to be an employee benefit plan with fewer than 100
participants. The basis of this definition is found in section
104(a)(2) of ERISA, which permits the Secretary of Labor to prescribe
simplified annual reports for pension plans that cover fewer than 100
participants. Under section 104(a)(3), the Secretary may also provide
for simplified annual reporting and disclosure if the statutory
requirements of part 1 of Title I of ERISA would otherwise be
inappropriate for welfare benefit plans.
PWBA believes that assessing the impact of this rule on small plans
is an appropriate substitute for evaluating the effect on small
entities. Because this definition differs from the definition of small
business based on size standards, which is promulgated by the Small
Business Administration (SBA) (13 CFR 121.201) pursuant to the Small
Business
[[Page 70258]]
Act (5 U.S.C. 631 et seq.), PWBA solicited comments on its use of its
standard for evaluating the effects of the proposal on small entities.
A few comments concerning the size standard were received from
Congressional and administrative representatives. One commenter was
concerned that prior to adopting the proposed size standard, the
Department first consult with the Office of Advocacy of the Small
Business Administration (SBA) and provide an opportunity for public
comment. The Department consulted with the SBA regarding its proposed
size standard prior to publication of the proposed regulation in the
Federal Register. The SBA agreed with the proposed alternate size
standard, indicating that Department provided a reasonable
justification for its definition. No other comments were received with
respect to this size standard.
A summary of the final regulatory flexibility analysis based on the
100 participant size standard is presented below.
This regulation applies to all small employee benefit plans covered
by ERISA. Employee benefit plans with fewer than 100 participants
include 631,000 pension plans, 2.8 million health plans, 1.7 million
disability plans, and 1.7 million other welfare plans. The regulation
makes substantial changes to the 1977 regulation, which it replaces,
only in its provisions applicable to health and disability plans.
The final rule amends the Department's existing benefits claims
regulation, which implements ERISA's claims and appeals requirements.
Both ERISA and the existing regulation require plans to maintain
procedures to determine claims and to review disputed claims
determinations. The compliance requirements assumed for purposes of
this regulation consist of new standards for claims and appeals
procedures.
The objective of this revised regulation is to improve the accuracy
and timeliness of health and disability benefit claims and appeals
determinations. Certain provisions pertaining to group health plans are
being implemented in response to the President's February 20, 1998,
directive to the Secretary of Labor to propose regulations that among
other things implements the recommendations of the President's Advisory
Commission on Consumer Protection and Quality in the Health Care
Industry. An extensive list of authorities may be found in the
Statutory Authority section, below.
The Department believes that modifying and operating claims and
appeals procedures in compliance with the regulation will require a
combination of professional and clerical skills.
The Department estimates that the added cost to small plans of
complying with the regulation will amount to $94 million over the years
2001 to 2002. This figure includes $24 million in one-time, start-up
costs incurred in 2001 to revise health and disability benefit claims
procedures and related systems, and $71 million in annual, ongoing
added costs beginning in 2002 to handle health and disability benefit
claims in compliance with the regulation's new standards. The annual
ongoing cost in later years will change with claims volume and mix, and
is expected to decrease with increasing automation in claims
processing. The $71 million annual cost in 2002 averages $25 for each
small health plan and $2.77 for each small health plan enrollee, and $1
for each small disability plan and $0.15 for each small disability plan
enrollee. By contrast, the ongoing cost to large plans in 2002 is
estimated at $329 million, or $6,183 for each large health plan and
$2.77 for each large health plan enrollee, and $481 for each large
disability plan and $0.35 for each large disability plan enrollee.
Start-up costs for small plans will be modest because a large
majority of such plans purchase claims administration services from a
relatively small number of insurers, HMOs, and other service providers.
Service providers typically use a single claims processing system to
service a large number of customers. Thus, the cost of revising and
implementing a relatively small number of claims and appeals procedures
is spread thinly over a far larger number of small plans. The
regulation therefore is not expected to adversely affect small plans.
Small and large plans and their respective enrollees will benefit
equally from improved accuracy and timeliness in claims and appeals
determinations.
The Department's assessment of the regulation's costs and benefits
is detailed later in this preamble.
3. Paperwork Reduction Act
On September 9, 1998, the Pension and Welfare Benefits
Administration published in the Federal Register (63 FR 48390), a
Notice of Proposed Rulemaking concerning the Employee Retirement Income
Security Act of 1974, Rules and Regulations for Administration and
Enforcement; Claims Procedure, which included a request for comments on
its information collection provisions. That proposal, if adopted as
proposed, would have revised the information collection request (ICR)
included in the existing regulation relating to the minimum
requirements for benefits claims procedures for all employee benefit
plans covered under Title I of ERISA. Also on September 9, 1998, the
Department submitted the revised ICR to OMB for review and clearance
under the Paperwork Reduction Act of 1995 (PRA 95), and solicited
public comments concerning the revision of the information collection
request (ICR) included in the proposal.
OMB has approved the ICR included in the Final Regulation
concerning the Employee Retirement Income Security Act of 1974, Rules
and Regulations for Administration and Enforcement; Claims Procedure. A
copy of the ICR, with applicable supporting documentation, may be
obtained by contacting the Department of Labor, Departmental Clearance
Officer, Ira Mills, at (202) 693-4122. (Not a toll-free number.)
The burden estimates are summarized below. A more detailed
description of the assumptions and methodology underlying these
estimates will be found below in the analysis of costs.
Agency: Pension and Welfare Benefits Administration.
Title: Final Regulation, Employee Retirement Income Security Act of
1974; Rules and Regulations for Administration and Enforcement; Claims
Procedure (Final Revisions to Benefit Claims Procedure Regulation
Pursuant to 29 CFR 2560.503-1).
OMB Number: 1210-0053.
Affected Public: Individuals or households; Business or other for-
profit; Not-for-profit institutions.
Frequency of Response: On occasion.
Total Respondents: 6.7 million (2001); 6.7 million (2002); 6.7
million (2003).
Total Responses: 118 million (2001); 118 million (2002); 118
million (2003).
Estimated Burden Hours: 316,000 (annual average 2001-2003).
Estimated Annual Costs (Operating and Maintenance): $96 million
(annual average 2001-2003).
Persons are not required to respond to the revised information
collection unless it displays a currently valid OMB control number.
4. Unfunded Mandates Reform Act
For purposes of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4) (UMRA), as well as Executive Order 12875, this rule does not
include any Federal mandate that may result in expenditures by State,
local, or tribal governments, but does include mandates that may impose
an annual
[[Page 70259]]
expenditure of $100 million or more on the private sector. The basis
for this statement is described in the analysis of costs for purposes
of Executive Order 12866 and the Regulatory Flexibility Act. Elsewhere
in this preamble we have identified the authorizing legislation,
presented cost-benefit analyses, described regulatory alternatives, and
explained how we selected the least costly alternative as required by
UMRA.
5. Small Business Regulatory Enforcement Fairness Act
This final rule is subject to the provisions of the Small Business
Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.)
(SBREFA), and is a major rule under SBREFA. Accordingly, this final
rule has been transmitted to Congress and the Comptroller General for
review.
C. Detailed Assessment of Economic Benefits and Costs of the
Regulation
Economic Benefits of the Regulation
The regulation will ensure the prompt approval of some health and
disability claims that otherwise would have been wrongly denied. The
approval of such claims can be characterized as financial transfers
that will produce societal benefits. Quicker and more accurate health
benefit claims determinations will serve to encourage the delivery of
more beneficial health care. This in turn will improve health benefit
claimants' health outcomes, productivity, and quality of life, and
possibly avert the need for some later health care and associated
expense. With respect to disability claims, timelier determinations
will assure prompt replacement of lost income for successful claimants,
thereby averting some financial hardships. Improved standards for
handling health and disability claims will also increase enrollee
confidence in their health and disability plans and thereby promote
efficiency in group insurance and labor markets and employer
sponsorship of health and disability plans.
These benefits of the regulation generally are impossible to
quantify because of limitations in available data and the absence of
reliable measures for their assessment. The Department's analysis is
therefore restricted to identifying the categories of these benefits
and describing their origins and anticipated magnitude.
1. Group Health Claims
The regulation updates ERISA's requirements for benefit claims
processing in group health plans to address recent, dramatic changes in
the delivery and financing of health care services. This will improve
health care quality by averting harmful, inappropriate delays and
denials of health benefits, thereby yielding substantial social
benefits. It will also increase confidence in the employment-based
health benefits system, increase transparency and enrollee access to
information related to their benefit claims, and help streamline and
make more uniform and predictable claims and appeals procedures. In so
doing, it can help increase the efficiency of health benefit plans and
of health insurance, health care markets, and labor markets at large.
The Department expects that the economic benefits of the regulation
will be large. Benefits are expected to be large in part because
serious weaknesses in current claims determination processes, which the
regulation will help correct, are widespread. Elements of health claims
and appeals processes that are widely considered to be essential are
often lacking, the U.S. General Accounting Office has reported. Just 41
percent of HMOs and 50 percent of indemnity insurers studied by GAO
provided for appeals decisions to be made by individuals not involved
in the original denial. Written denial notices explaining appeal rights
were provided by 97 percent of HMOs, but just 67 percent of indemnity
insurers. Expedited reviews were provided by 94 percent of HMOs, but
just 67 percent of indemnity insurers.\43\
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\43\ GAO, HMO Complaints and Appeals: Most Key Procedures in
Place, but Others Valued by Consumers Largely Absent, GAO/HEHS, 98-
119, May 1998; and GAO, Indemnity Health Plans: Key Features of
Consumer Complaint and Appeals Systems, GAO/HEHS 98-189, June 1998.
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Improving Health Outcomes
There is broad agreement that more accurate and timely claims
determinations can yield large economic benefits in the form of
improved health outcomes. In one survey, 59 percent of physicians said
their decisions regarding hospital length of stay were subject to
review. Forty-five percent were subject to review in connection with
site-of-care decisions, as were 39 percent in connection with treatment
appropriateness. On average for various types of treatment, plans
initially denied between 1.8 percent and 5.8 percent of physician-
recommended actions.\44\ In another survey, 87% of physicians reported
that managed care health plans denied one or more patients' claims for
medical services during a two-year period, often adversely affecting
patients' health.\45\ In yet another survey, 17 percent of insured
adults under age 65 reported problems with delayed or denied coverage,
and 12 percent reported billing or payment problems. Of adults
reporting problems, 21 percent said the problem resulted in them losing
time from school or work, 21 percent reported worsened health, and 6
percent reported suffering a permanent or long-lasting disability.\46\
These figures demonstrate the potential importance of prompt and
accurate claims determinations to health outcomes.
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\44\ Dahlia K. Remler et. al., ``What Do Managed Care Plans Do
To Affect Care? Results from a Survey of Physicians,'' Inquiry 34:
196-204 (Fall 1997).
\45\ Kaiser Family Foundation Press Release, ``New Survey Shows
that Providers and Health Plans Clash Often over Patient Care''
(July 28, 1999).
\46\ Kaiser Family Foundation, ``National Survey on Consumer
Experiences with Health Care Plans'' (June 2000).
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The President's Advisory Commission on Consumer Protection and
Quality in the Health Care Industry (the Commission) placed ``highest
priority'' on ``creating systems that minimize errors and correct them
in a timely fashion,'' adding that improvements to appeals processes
could avert injuries.\47\
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\47\ The President's Advisory Commission on Consumer Protection
and Quality in the Health Care Industry, Quality First: Better
Health Care for All Americans, Final Report to the President of the
United States. The report points out that some patients suffer harm
when ``inappropriate benefit coverage decisions . . . impinge on or
limit the delivery of necessary care.'' A wrongful denial of
coverage ``can lead to a delay in care or to a decision to forgo
care entirely.'' The report adds that ``even a small number of
mistakes . . . can have serious, costly, or fatal consequences,''
such as ``additional health expenses, increased disability, lost
wages, and lost productivity.''
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Lacking data on the number of claims and appeals that are wrongly
denied and the incidence and severity of resultant injuries, the
Department was unable to quantify the economic benefits of improved
health outcomes under the regulation. There is evidence, however, that
additional spending on appropriate health care increases social
welfare.\48\ The Department believes that the economic benefits of
improved health outcomes under the regulation will be large.
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\48\ See, e.g., David M. Cutler and Elizabeth Richardson, ``Your
Money and Your Life: The Value of Health and What Affects It,'' in
Frontiers in Health Policy Research (Alan M. Garber, ed., Cambridge:
MIT Press, 1999, at 99-132).
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Improving Market Efficiency
By improving claims and appeals processes, the regulation will
increase efficiency in the operation of employee benefit systems and
health care, health insurance, and labor markets.
The regulation will increase efficiency by reducing complexity.
Idiosyncratic
[[Page 70260]]
requirements, time-frames, and procedures for claims processing impose
substantial burdens on participants, their representatives, and service
providers. By establishing a more complete, uniform set of minimum
requirements the regulation will reduce the complexity of claims
processing requirements, thereby increasing efficiency.
The regulation will improve the efficiency of private employee
benefits systems by enhancing its transparency and fostering
participants' confidence in its fairness. In various surveys, consumers
have expressed concern that plans sometimes withhold care or
benefits.\49\ The ability to get a promised benefit, particularly when
sick or disabled, is at the heart of these consumer concerns. The
regulation will also increase efficiency by better informing claimants.
When information about the terms and conditions under which benefits
will be provided is unavailable to enrollees, they will discount the
value of benefits to compensate for the perceived risk.
---------------------------------------------------------------------------
\49\ For example, a 1997 Kaiser Family Foundation / Harvard
University survey found that a majority of Americans say managed
care plans have made it harder for people who are sick to see
medical specialists and have decreased the quality of health care
for the sick. A majority of those in managed care plans are very or
somewhat worried that their health plan would be more concerned
about saving money than about what is the best treatment for them if
they were sick (Kaiser Family Foundation, ``Is There a Managed Care
`Backlash'?'' Press Release, National Toplines, and Chart Pack,
November 7, 1997).
---------------------------------------------------------------------------
The voluntary nature of the employment-based health benefit system
in conjunction with the open and dynamic character of labor markets
make explicit as well as implicit negotiations on compensation a key
determinant of the prevalence of employee benefits coverage. It is
likely that 80% to 100% of the cost of employee benefits is borne by
workers through reduced wages.\50\ The prevalence of benefits is
therefore largely dependent on the efficacy of this exchange. If
workers perceive that there is the potential for inappropriate denial
of benefits, they will discount the value of such benefits to adjust
for this risk. This discount drives a wedge in the compensation
negotiation, limiting its efficiency. With workers unwilling to bear
the full cost of the benefit, fewer benefits will be provided. To the
extent that workers perceive that a federal regulation, supported by
enforcement authority, reduces the risk of inappropriate denials of
benefits, the differential between the employers' costs and workers'
willingness to accept wage offsets is minimized.
---------------------------------------------------------------------------
\50\ See, e.g., Jonathan Gruber and Alan B. Krueger, ``The
Incidence of Mandated Employer-Provided Insurance: Lessons from
Workers Compensation Insurance,'' Tax Policy and Economy (1991);
Jonathan Gruber, ``The Incidence of Mandated Maternity Benefits,''
American Economic Review, Vol. 84 (June 1994), at 622-641; Lawrence
H. Summers, ``Some Simple Economics of Mandated Benefits,'' American
Economic Review, Vol. 79, No. 2 (May 1989); Louise Sheiner, ``Health
Care Costs, Wages, and Aging,'' Federal Reserve Board of Governors
working paper, April 1999; and Edward Montgomery, Kathryn Shaw, and
Mary Ellen Benedict, ``Pensions and Wages: An Hedonic Price Theory
Approach,'' International Economic Review, Vol. 33 No. 1 (Feb.
1992).
---------------------------------------------------------------------------
Effective claims procedures can also improve health care, health
plan quality, and market efficiency by serving as a communication
channel, providing feedback from participants, beneficiaries, and
providers to plans about quality issues. Aggrieved claimants are
especially likely to disenroll if they do not understand their appeal
rights, or if they believe that their plans' claims and appeals
procedures will not effectively resolve their difficulties. Unlike
appeals, however, disenrollments fail to alert plans to the
difficulties that prompted them. More effective appeals procedures can
give participants and beneficiaries an alternative way to respond to
difficulties with their plans. Plans in turn can use the information
gleaned from the appeals process to improve services.
By providing aggrieved claimants with an alternative to
disenrollment, improved claims and appeals procedures will reduce
disenrollment rates. Lower disenrollment rates in turn will increase
plans' incentive to keep enrollees healthy over the long term,
prompting managed care organizations (MCOs) to step up efforts to
promote preventive care and healthy lifestyles. (In contrast, the high
disenrollment rates associated with ineffective claims and appeals
procedures discourage MCOs from investing in such efforts.) Such
efforts by MCOs may yield long term improvements in population health
and reductions in national health care costs.
The disenrollments that will be discouraged by the regulation would
have been economically inefficient. Such disenrollments can be
characterized as instances where aggrieved claimant, lacking access to
or knowledge of a full and fair appeals process, drop their otherwise
preferred health coverage option in favor of an inferior option. By
discouraging such disenrollments, the regulation will increase social
welfare.
Reducing economically inefficient turnover across health coverage
options will also trim administrative costs. Plans incur costs directly
to process enrollments and disenrollments. Turnover also imposes
indirect transactions costs on enrollees and providers, including
(sometimes) costs that arise when enrollees must change doctors or
hospitals and when enrollees and doctors must become familiar with new
plan provisions, including new claims procedures.
The Department also expects that the regulation's higher standard
for claims adjudication will enhance some insurers' and group health
plans' abilities to effectively control costs by limiting access to
inappropriate care. Providing a more formally sanctioned framework for
internal review and consultation on difficult claims facilitates the
adoption of cost containment programs by employers who, in the absence
of a regulation providing some guidance, may have opted to pay
questionable claims rather than risk alienating participants or being
deemed to have violated ERISA's fiduciary provisions.
Finally, it is worth noting that economic theory allows for
regulation of managed care practices to be welfare-enhancing. For
example, Korobkin contends that ``managed care organizations (MCOs)
have an incentive to provide an inefficiently low quality of certain
types of benefits because it is difficult for consumers to evaluate
their quality prior to contracting, and because consumers who are able
to evaluate quality after contracting are the customers that MCOs do
not wish to retain.'' \51\
---------------------------------------------------------------------------
\51\ Russell Korobkin, ``The Efficiency of Managed Care `Patient
Protection' Laws: Incomplete Contracts, Bounded Rationality, and
Market Failure,'' 85 Cornell Law Review 1 (1999).
---------------------------------------------------------------------------
In summary, the regulation's new, higher standards for handling
health benefit claims will reduce the incidence of excessive delays and
inappropriate denials, averting serious, avoidable lapses in health
care quality and resultant injuries and losses to enrollees. It will
raise enrollees' level of confidence in and satisfaction with their
health care benefits. It will improve plans' awareness of participant,
beneficiary, and provider concerns, prompting plan responses that
improve health care quality. Finally, by helping assure prompt and
precise adherence to contract terms and by improving the flow of
information between plans and enrollees, the proposed regulation will
bolster the efficiency of labor, health care, and insurance markets.
The Department therefore concludes that the economic benefits of the
regulation will outweigh its costs.
[[Page 70261]]
2. Disability Benefit Claims
With respect to disability claims, timelier determinations will
assure prompt replacement of lost income for successful claimants,
thereby averting some financial hardships. Improving standards for
handling disability claims will also increase enrollee confidence in
disability plans and promote efficiency in disability insurance and
labor markets.
Averting Financial Hardship
As with health benefit claims, the regulation is intended and
expected to improve the timeliness and accuracy of disability benefit
claims determinations. This will avert financial hardship for claimants
whose claims or appeals would otherwise have been inappropriately
delayed or denied.
No data are available on how much financial hardship might be
attributable to such delays or denials, or how much hardship the
regulation might avert, but the potential magnitudes are large.
Severe disabilities are not uncommon among the working age
population. In 1994, 6 million Americans age 22 to 44 (or 6 percent of
all those in the age group) were severely disabled, as were 3 million
of those age 45 to 54 (12 percent) and 5 million of those 55 to 64 (22
percent). Altogether more than one-half of severely disabled Americans
were age 22 to 64, and nearly one-half of these were age 44 or younger.
Severe disability often greatly impedes work and erodes income. The
employment rate for people 21 to 64 years of age was 82 percent among
those with no disability, but 26 percent among those with severe
disabilities. The proportion of this age group with low income (less
than one-half of the median) was 13 percent among those with no
disability, but 42 percent among those with severe disabilities. \52\
---------------------------------------------------------------------------
\52\ John M. McNeil, ``Americans with Disabilities: 1994-95,''
U.S. Bureau of the Census, Current Population Reports, P 70-61
(August 1997).
---------------------------------------------------------------------------
More than 4 million disabled individuals under age 65 currently
rely on Supplemental Security Income (SSI), a federal means-tested cash
assistance program for disabled individuals with very low incomes and
assets. More than one-half million disabled Americans join the SSI
rolls each year.\53\
---------------------------------------------------------------------------
\53\ U.S. Social Security Administration, Social Security
Bulletin, Annual Statistical Supplement, 1998.
---------------------------------------------------------------------------
Private, employment-based disability insurance can help replace
income people lose when disability forces them to terminate or curtail
work. The Department estimates that in 2002 36 million U.S. private-
sector employees (or 32 percent of all such employees) will be insured
against short-term disability, and 26 million (or 23 percent) will be
insured against long term disability. Insured workers may nonetheless
suffer financial hardship, however, if their claims for disability
benefits are wrongly denied or unduly delayed. Public comments on the
proposed regulation provide examples of such hardships.
Improving Market Efficiency
The regulation's disability claims provisions will promote market
efficiency in many of the same ways as its health claims provisions.
Fuller information and fuller and fairer claims appeals processes will
promote enrollee confidence and discourage workers from inappropriately
discounting the value of their disability benefits, thereby fostering
efficiency in disability insurance and labor markets. Fairer and faster
determinations will also spare claimants and their representatives,
including their health care providers, the incidental (but potentially
large) costs associated with excessively cumbersome and lengthy claims
and appeals processes. Finally, by averting some financial hardships,
faster and more accurate claims determinations will relieve claimants
and their creditors of some of the costs associated with borrower
delinquency and bankruptcy.
Economic Costs of the Regulation
1. Cost Estimates
The Department performed a comprehensive, unified analysis to
estimate the economic cost attributable to the final regulation for
purposes of compliance with Executive Order 12866, the Regulatory
Flexibility Act, and the Paperwork Reduction Act. The analysis takes
into account a wide range of information, including public comments on
the Department's proposed regulation.
Table 1 summarizes the Department's cost estimates, disaggregated
by type of claim and plan size.\54\ ``Small'' plans have fewer than 100
participants. Health claims, which at 1.4 billion annually are far more
numerous than disability claims, account for the majority of costs.
Ongoing costs will change over time with claims volume and mix, and
will fall over time as health claims processing becomes more automated.
---------------------------------------------------------------------------
\54\ In the tables that follow, due to rounding, individual
reported estimates may not always add to reported totals.
---------------------------------------------------------------------------
The Department does not anticipate any increase in the cost of
processing pension claims or welfare plan claims other than health and
disability claims. As noted earlier in this preamble, the regulation's
standards applicable to pension claims and welfare claims other than
health and disability claims are substantially similar to those
currently in effect under the 1977 regulation.
Table 1.--Summary of Administrative Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Start-up costs 2001 Annual costs 2002 Total costs 2001-2002
Plan size -----------------------------------------------------------------------------------------
Small Large Total Small Large Total Small Large Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions:
Health...................................................... $20 $82 $103 $68 $310 $379 $88 $393 $481
Disability.................................................. 4 13 16 2 18 21 6 31 37
-----------------------------------------------------------------------------------------
Total................................................... 24 95 119 71 329 399 94 424 518
Dollars per enrollee:
Health...................................................... 0.81 0.73 0.75 2.77 2.77 2.77 3.58 3.50 3.51
Disability.................................................. 0.24 0.24 0.24 0.15 0.35 0.31 0.40 0.59 0.55
Dollars per plan:
Health...................................................... 7 1,642 37 25 6,183 135 32 7,825 172
Disability.................................................. 2 332 9 1 481 12 3 814 22
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 70262]]
The regulation applies different standards to disability claims and
to different kinds of health benefit claims. The start-up cost of
meeting these standards reflects the number of claims processes that
must be modified and the degree of changes to those processes that are
necessary. The ongoing cost of adhering to the standards reflects the
volume of claims transactions to which they apply and the necessary
degree of change to bring all transactions into compliance. Based on
public comments and other information, it is clear that many health and
disability plans already comply or nearly comply with many of the
regulations' standards in connection with a large number of claims, but
that all or most will need to make at least some changes in their
handling of at least some claims.
Table 2 connects the Department's cost estimates with the
regulation's major provisions and the Department's estimates of
affected claims processes and claims transactions. The single largest
ongoing cost is attributable to the regulation's time frames for health
claims decisions. The Department believes that under plans' current
practices up to 1 percent of claims decisions would violate this
provision. Accelerating these 14 million decisions is estimated to cost
$222 million in 2002.
In estimating the start-up cost, the Department considered the
major actions that plans (or their service providers) would undertake,
including revising processes, modifying forms, modifying systems, and
hiring or contracting where necessary. The Department estimated these
combined costs at $119 million in 2001, or a little more than $12,000
on average for each entity that processes health or disability claims.
Table 2.--Start-Up Costs, and Ongoing Costs by Major Provision
----------------------------------------------------------------------------------------------------------------
Health benefit claims Disability benefit
-------------------------- claims
Type of claim -------------------------
Affected Estimated Affected Estimated
procedures cost ($MM) procedures cost ($MM)
----------------------------------------------------------------------------------------------------------------
Start up, 2001.............................................. 308,000 $103 24,000 $16
----------------------------------------------------------------------------------------------------------------
Affected
transactions Estimated Affected Estimated
(MM) cost ($MM) transactions cost ($MM)
Ongoing, 2002............................................. ............ $379 ............ $21
Notices................................................. 114.6 27 179,000 6
Time frames............................................. 1,397.6 222 1,421,000 6
Fuller reviews.......................................... 0.4 32 32,000 3
Disclosure on request................................... 2.9 68 57,000 3
Expert consultations...................................... 0.2 30 32,000 3
----------------------------------------------------------------------------------------------------------------
2. Basis for Estimates
The Department's analysis relies on various government and private
surveys and studies and the testimony, written comments, and other
materials received by the Department in response to its proposed
regulation and earlier request for information. The Department
developed additional assumptions as necessary where no data were
available.
Comments on the Department's proposed regulation were helpful to
the Department's effort to estimate the cost impact of its regulation.
Many commenters described how the proposed regulation's major
requirements compared with, and would affect, their current business
practices, and how the requirements would interact with state laws,
accreditation standards, and other strictures on those practices. In
estimating the cost of the regulation, the Department relied on these
comments to gauge the differences between plans' current business
practices and the regulation's requirements and to develop reasonable
assumptions regarding the cost of compliance.
The Department separately estimated the one-time, start-up cost of
coming into compliance with the regulation and the ongoing, annual cost
of complying.
3. Start-Up Costs
In estimating start-up costs, the Department considered the number
of claims processes that will be affected by the regulation. The
overwhelming majority of health and disability benefit plans rely on
service providers to administer their claims processes. Only a small
fraction perform these administrative functions in-house. Those that do
tend to be very large, self-insured plans. Service providers, which are
less numerous than plans, tend to use a single claims process to
service a large number of plans. They may also provide customized
claims processes for some plans, especially for self-insured plans,
which generally are not subject to state laws regarding benefit
coverage. The Department expects that the start-up cost of revising
claims processes, which for a given claims process may be large, in
most cases will be spread thinly across plans and participants. Table 3
presents the Department's estimates of the number of affected health
and disability claims processes.
Table 3.--Affected Plans and Claims Processes
------------------------------------------------------------------------
Health benefit Disability
plans benefit plans
------------------------------------------------------------------------
Number of plans......................... 2,802,000 1,716,000
Number of claims processes.............. 308,000 35,000
Maintained by plans that self-administer 4,000 3,000
Maintained by service providers......... 305,000 32,000
------------------------------------------------------------------------
[[Page 70263]]
The Department considered the following major actions that plans
(or their service providers) would undertake to come into compliance
with the regulation: revising processes, revising forms, modifying
systems, and hiring or contracting where necessary. The Department
assumed that all health and disability plans would have to revise
processes and forms and modify systems to at least some degree and that
some would hire personnel or contract for additional or different
services in order to achieve compliance. \55\
---------------------------------------------------------------------------
\55\ This estimate is not intended to include the cost of
developing new explanations of claims processes for inclusion in
plan descriptions. The Department separately accounts for that cost
as part of the estimated cost of its regulation governing the
content of summary plan descriptions.
---------------------------------------------------------------------------
4. Ongoing Costs
In estimating the ongoing cost of various provisions, the
Department considered the number of claims transactions to which they
apply, the degree to which plans already comply in the course of normal
business or in response to a state law or other mandate other than
ERISA, and, to the degree that they do not, the likely cost of coming
into compliance.
Claims volume was estimated by applying estimated claiming rates
for various types of claims to projected estimates of plan enrollment
in 2002. To estimate the application of the regulation's various
requirements to different types of benefit claims, it was necessary to
separately estimate health, disability, pension, and other benefit
claims volumes. With respect to health benefit claims, it was necessary
to separately estimate urgent, pre-service, and post-service claims
volume, and the number of denials that are based on clinical or medical
judgments. With respect to disability claims, it was necessary to
estimate short-term and long-term disability claims separately. The
Department also accounted separately for costs associated with approved
and denied claims and appeals. Table 4 summarizes estimated 2002 claims
volume.
Table 4.--Summary of Claims Volume, 2002
----------------------------------------------------------------------------------------------------------------
Health Disability Pension Other
(MMs) (000s) (000s) (000s)
----------------------------------------------------------------------------------------------------------------
Claims...................................................... 1,369.7 1,389.7 2,122.1 244.5
Approved.................................................. 1,328.6 1,304.9 2,104.0 236.4
Denied.................................................... 41.0 84.8 18.0 8.1
Appeals..................................................... 0.4 31.6 1.8 0.8
Approved.................................................. 0.3 6.5 0.9 0.4
Denied.................................................... 0.1 25.1 0.9 0.4
Health claims (MMs)......................................... 1,369.7 ........... ........... ...........
Urgent pre-service........................................ 1.2 ........... ........... ...........
Routine pre-service....................................... 40.0 ........... ........... ...........
Post-service.............................................. 1,328.5 ........... ........... ...........
Denied health claims (MMs).................................. 41.0 ........... ........... ...........
Clinical/scientific basis................................. 14.5 ........... ........... ...........
Other basis............................................... 26.5 ........... ........... ...........
Disability claims (000s).................................... 1,389.7 ........... ........... ...........
Short-term................................................ 1,162.7 ........... ........... ...........
Long-term................................................. 227.1 ........... ........... ...........
----------------------------------------------------------------------------------------------------------------
The Department applied estimates of health and disability benefit
claiming rates and claims mix to its estimates of enrollment in health
and disability plans to produce its estimates of total claims volume.
The Department estimated claims volume and mix in light of comments
received in response to its proposed regulation and other data that
provide reasonable proxies for private-sector employment-based health
and disability benefit plans' claim patterns. For example, comments on
the proposed regulation indicated health benefit claiming rates ranging
from about 5 to 18 claims per individual per year. The average rate
across all comments reporting rates was 9 claims per year, and surveys
available to the Department reported rates of 6 \56\ and 11 \57\ claims
per year. Many of these reported figures may omit some health benefit
claims, such as dental claims, made by the same individuals under
separate plans. The Department assumed that the health benefit claiming
rates average 10 per covered individual, believing that this is
consistent with comments received and other available information.
---------------------------------------------------------------------------
\56\ A published 1995 survey of 53 health insurers' claims
systems by the Health Insurance Association of America.
\57\ A survey of 7 managed care organizations conducted and
provided to the Department in response to its proposed regulation.
---------------------------------------------------------------------------
The Department similarly relied on comments received and other
available data to assess health benefit claims denial and appeal rates
and the mix of urgent, pre- and post-service claims. The Department
assessed disability claiming rates and claims mix based on comments
received (including information from the life insurance industry) and
available data on the incidence of temporary and permanent disability
in the working age population. \58\
---------------------------------------------------------------------------
\58\ Primarily, data from the National Center for Health
Statistics and the Social Security Administration.
---------------------------------------------------------------------------
The Department separately considered the effect of each of the
regulation's major provisions on each type of claim to which it
applies. Based on its analysis, the Department attributed cost to the
application of the regulation's notice, timeliness, disclosure,
standard of review, and expert consultation requirements to health and
disability claims and appeals. \59\ Many plans' current, normal
[[Page 70264]]
business practices meet or nearly meet one or more of these
requirements. Nonetheless, the Department believes that many health and
disability benefit plans will have to modify their claims processes to
some degree in order to meet all of these requirements in connection
with all claims. \60\
---------------------------------------------------------------------------
\59\ The Department did not attribute cost to certain other
major provisions of the regulation, including the regulation's
prohibition against unduly inhibiting or hampering the initiation or
processing of claims for benefits, the requirement that plans have
procedures to ensure and verify appropriately consistent decisions,
and the provisions applicable to pension plans and welfare plans
other than health and disability benefit plans. These provisions
merely clarify current law and do not impose new standards. Other
provisions, including the requirement that certain health care
professionals be treated as claimants' representatives in connection
with urgent health benefit claims, the prohibition against requiring
more than two mandatory levels of administrative appeal, the
restrictions on arbitration, and the requirement of at least 180
days for filing appeals, are expected to have minimal impact on plan
costs.
\60\ For example, not all health plans currently include in
denied claim notices statements of claimants' rights to request
copies of any guidelines or protocols or explanations of any
clinical or scientific judgments that were applied. Not all health
and disability claims are decided within the time frames specified
in the final regulation. Not all health and disability plans
routinely disclose relevant information, such as statements of
policy or guidance regarding denied treatments for claimants'
conditions. Not all provide for decisionmakers on review who are
different from and not subordinate to initial decisionmakers, or
disclose the identity of medical experts consulted in connection
with reviews.
---------------------------------------------------------------------------
As reported in table 2 (above), the Department attributed the
single largest ongoing cost, $222 million, to the application of the
regulation's timeliness requirements to health benefit claims. The
magnitude of this estimated cost is a function of the large volume of
total health benefit claims (estimated at 1.4 billion in 2002) and the
proportion of these that will be affected by the time frames of the
regulation. In light of comments received in response to its proposed
regulation and other available information, \61\ the Department assumed
that 1 percent of claims and appeals determinations will have to be
accelerated in order to comply with the regulation. On the same basis,
it assumed that the unit cost of accelerating determinations will range
from $10 for initial determinations that do not involve medical
judgments to $50 for determinations on appeal that do involve such
judgments. The low end of this range represents the use of
administrative staff to accelerate precessing times, the higher end a
substantially greater cost due to the need for consultation by a
medical professional in some circumstances. On average the affected
claims are expected to be close to the low end of the range because the
majority of claims transactions are initial determinations that will
not hinge on medical judgments.
---------------------------------------------------------------------------
\61\ Including the 1995 survey of insurers cited above and a
Mercer/Foster Higgins Survey of employment-based health plans.
---------------------------------------------------------------------------
The costs attributed to disclosure following adverse
determinations, fuller reviews on appeal, and expert consultations in
appeals involving medical judgments reflect the progressively smaller
incidence (relative to total claims volume) of adverse determinations,
appeals, and appeals involving medical judgments. Estimated unit costs
associated with these provisions reflect comments received and other
available information on the cost of these elements of health benefit
claims processes and the degree to which plans' normal business
practices currently conform to the provisions. For example, in light of
such information, the Department believes that expert medical
consultations for a typical appeal cost between $350 and $500. However,
most plans' normal business practices already provide for some type of
expert consultation in appeals involving medical judgments. The
Department therefore assumed that the cost of such consultations will
rise by $100 on average, reflecting the understanding that plans'
normal business practices may not always provide consultations as
required by the regulation's provisions.
5. Required Estimates
The Department developed estimates as appropriate for purposes of
compliance with Executive Order 12866, the Regulatory Flexibility Act,
and the Paperwork Reduction Act. Because the regulation establishes new
standards for, and will have a substantial economic impact on, health
and disability claims, the Department estimated the cost of the
regulation in connection with these claims for purposes of Executive
Order 12866 and the Regulatory Flexibility Act, as well as for purposes
of the Paperwork Reduction Act. Because it established no substantial
new standards for pension claims and other welfare benefit claims, the
Department estimated its cost in connection with these claims only for
purposes of the Paperwork Reduction Act.
6. Changes in Claims and Appeals Volume and Disposition
The cost estimates reported above reflect administrative costs
associated with processing claims and appeals, based on the assumption
that the volume, mix, and disposition of claims and appeals remain
constant. The regulation, however, is expected to change the overall
volume and nature of appeals and to improve the accuracy of claims and
appeals decisions. The Department was unable to quantify these changes,
but undertook a qualitative assessment of their likely nature,
magnitude, and social welfare effects. The Department believes that
changes in the nature of appeals and in claims and appeals decisions
may be large in number, but will be small as a fraction of total claims
and appeals volume and will result in a substantial overall increase in
social welfare.
The regulation may increase or decrease the actual number of
appeals. It is expected to decrease the number of non-meritorious
appeals and to encourage and help ensure the approval of meritorious
claims. Improved accuracy of initial claims decisions under the
regulation will serve to reduce the volume of appeals. The volume may
increase, however, if the existence of fuller review processes and
information disclosure under the regulation increases claimants'
propensity to appeal denied claims. Fuller disclosure of information to
claimants will also tend to encourage appeals that are meritorious and
discourage those that are not. Improved accuracy of initial decisions
provides social benefits without the administrative expense of appeals.
Any new appeals arising as a result of the regulation are likely to be
both meritorious and successful; such appeals are likely to deliver
social benefits that are larger than the associated administrative
cost. The regulation is also expected to reduce non-meritorious,
unsuccessful appeals, which generally deliver no social benefits to
justify their administrative cost.
Changes in claims and appeals decisions under the regulation are
also expected to increase social welfare. The Department expects that
the regulation will improve the timeliness and accuracy of decisions.
In particular, the Department expects that some claims and appeals that
otherwise would have been denied, but in fact should have been approved
under plans' terms, will now be paid. Therefore, it is highly likely
that the number and dollar amount of claims approved will increase. For
example, encouraging meritorious over non-meritorious appeals should
increase the number of favorable determinations on appeal. As noted
earlier in this preamble, the approval of meritorious claims that
otherwise would have been denied can be characterized as a financial
transfer from plans to claimants that will have societal benefits.
Economic theory suggests that, all else being equal, improving
adherence to private voluntary agreements, such as plans' terms, tends
to increase economic efficiency. In addition, as noted earlier in this
preamble, there is evidence that additional spending on appropriate
health care increases social welfare.
[[Page 70265]]
D. Federalism Summary Impact Statement
Although the Department has identified this regulation as possibly
having federalism implications, those implications are limited.
Therefore, in compliance with Executive Order 13132, 64 FR 43255
(August 10, 1999), the Department has taken a number of steps to
consult with affected entities.
First, the Department has, throughout the process of developing the
proposed regulation and the final regulation, provided State and local
officials with significant opportunities for meaningful and timely
input. After issuance of the proposed regulation, the Department
invited public comment from all affected parties, including States and
local governments, and held the public comment period open for an
extended period. The Department further held a three-day public hearing
and consulted separately with the major organizations that represent
state and local government prior to finalizing the regulation.
The insurance commissioners of various states, acting collectively
through the National Association of Insurance Commissioners (NAIC),
provided substantial public comment on the proposed regulation and
participated in the public hearing by submitting written testimony,
testifying personally, and engaging in public discussion with the
Department's panel of officials. The Department also invited all of the
``Big 7'' organizations \62\ that represent state and local government
to meet separately with the Department to discuss this regulation.
---------------------------------------------------------------------------
\62\ The organizations invited were the National Governors
Association, the National League of Cities, the National Conference
of State Legislatures, the National Association of Counties, the
U.S. Conference of Mayors, and the Council of State Governments. The
meeting was attended by representatives of the National Governors
Association, the National Conference of State Legislatures, and the
National Association of Counties.
---------------------------------------------------------------------------
The NAIC and the Big 7 attendees have generally praised the
Department for taking this regulatory action regarding ERISA covered
plans because the Department's approach has generally paralleled the
approach taken by many States in regulating the conduct of insurance
companies doing business in their States. However, both the NAIC and
the Big 7 attendees asked the Department to limit the application of
the regulation to ``self-funded'' plans, which do not provide benefits
through insurance directly regulated by the States. The NAIC and Big 7
attendees argued that many States have already provided protections to
participants in insured plans that are greater than that contained in
the proposed regulation. The Department has not followed this
suggestion, although the Department has sought to address the concerns
raised by the NAIC and Big 7 attendees in other ways. (See, for
example, the discussion below and elsewhere in this preamble regarding
preemption.) It is the view of the Department that the importance of
establishing uniform minimum procedural rights for all participants and
beneficiaries in ERISA-covered group health plans outweighs the
concerns of the State and local governments.
With respect specifically to preemption, Executive Order 13132
requires agencies taking such action to act in strict accordance with
governing law and to restrict preemption to the minimum level necessary
to achieve the objectives of the statute pursuant to which any
regulations are promulgated. The Department has satisfied these
requirements in this regulation.
The proposed regulation was silent on preemption. The Department
intended that the scope of preemption that would result under the
proposed regulation would be limited to the minimum level required by
section 514 of the Act and the Supremacy Clause of the Constitution.
The Department's intent remains the same with respect to this final
regulation. The NAIC and other commenters argued that the proposal's
silence on the subject of preemption was potentially confusing and
asked the Department to make clear its views as to the preemptive
effect of the final regulation. The Department has responded to these
comments by adding paragraph (k) to the final regulation. Paragraph (k)
provides interpretive guidance on preemption.
The Department's view of the preemptive effect of the regulation is
consistent with the Department's intent that the regulation's
preemptive effect be limited to the minimum required by section 514 and
the Supremacy Clause. As explained elsewhere in this preamble,
paragraph (k) specifically sets forth the Department view that State
insurance laws are not preempted unless they ``prevent the
application'' of a requirement of the regulation. In other words, State
insurance laws are preempted by the final regulation only to the extent
that those laws are in conflict with the regulation such that the State
laws could not be read in harmony with the regulation.
In response to the specific concern most commonly expressed by
state insurance commissioners, the Department stated further in
paragraph (k)(2) its view that State-mandated external review
procedures, which operate outside the scope of plans' internal review
procedures, are not preempted by promulgation of the regulation.
Thus, the Department has made every effort to limit the effect that
the regulation will have on State law to the minimum imposed by
operation of the statute and the Constitution.
Finally, Executive Order 13132 limits the extent to which agencies
may impose mandates on State and local governments. This regulation
does not create a mandate on State or local governments. The regulation
does not impose any enforceable duties on these entities. This
regulation will be implemented at the Federal level and imposes
compliance obligations only on private industry. The regulation
therefore does not require imposition on States of substantial direct
compliance costs, mandates, duties, or similar obligations.
List of Subjects in 29 CFR Part 2560
Employee benefit plans, Employee Retirement Income Security Act,
Benefit Claims Procedures.
For the reasons set out in the preamble, 29 CFR part 2560 is
amended as follows:
PART 2560--RULES AND REGULATIONS FOR ADMINISTRATION AND ENFORCEMENT
1. The authority citation for part 2560 continues to read as
follows:
Authority: Secs. 502, 505 of ERISA, 29 U.S.C. 1132, 1135, and
Secretary's Order 1-87, 52 FR 13139 (April 21, 1987).
Section 2560-502-1 also issued under sec. 502(b)(1), 29 U.S.C.
1132(b)(1).
Section 2560-502i-1 also issued under sec. 502(i), 29 U.S.C.
1132(i).
Section 2560-503-1 also issued under sec. 503, 29 U.S.C. 1133.
2. Section 2560.503-1 is revised to read as follows:
Sec. 2560.503-1 Claims procedure.
(a) Scope and purpose. In accordance with the authority of sections
503 and 505 of the Employee Retirement Income Security Act of 1974
(ERISA or the Act), 29 U.S.C. 1133, 1135, this section sets forth
minimum requirements for employee benefit plan procedures pertaining to
claims for benefits by participants and beneficiaries (hereinafter
referred to as claimants). Except as otherwise specifically provided in
this section, these requirements apply to every employee benefit plan
described in section 4(a) and not exempted under section 4(b) of the
Act.
(b) Obligation to establish and maintain reasonable claims
procedures.
[[Page 70266]]
Every employee benefit plan shall establish and maintain reasonable
procedures governing the filing of benefit claims, notification of
benefit determinations, and appeal of adverse benefit determinations
(hereinafter collectively referred to as claims procedures). The claims
procedures for a plan will be deemed to be reasonable only if--
(1) The claims procedures comply with the requirements of
paragraphs (c), (d), (e), (f), (g), (h), (i), and (j) of this section,
as appropriate, except to the extent that the claims procedures are
deemed to comply with some or all of such provisions pursuant to
paragraph (b)(6) of this section;
(2) A description of all claims procedures (including, in the case
of a group health plan within the meaning of paragraph (m)(6) of this
section, any procedures for obtaining prior approval as a prerequisite
for obtaining a benefit, such as preauthorization procedures or
utilization review procedures) and the applicable time frames is
included as part of a summary plan description meeting the requirements
of 29 CFR 2520.102-3;
(3) The claims procedures do not contain any provision, and are not
administered in a way, that unduly inhibits or hampers the initiation
or processing of claims for benefits. For example, a provision or
practice that requires payment of a fee or costs as a condition to
making a claim or to appealing an adverse benefit determination would
be considered to unduly inhibit the initiation and processing of claims
for benefits. Also, the denial of a claim for failure to obtain a prior
approval under circumstances that would make obtaining such prior
approval impossible or where application of the prior approval process
could seriously jeopardize the life or health of the claimant (e.g., in
the case of a group health plan, the claimant is unconscious and in
need of immediate care at the time medical treatment is required) would
constitute a practice that unduly inhibits the initiation and
processing of a claim;
(4) The claims procedures do not preclude an authorized
representative of a claimant from acting on behalf of such claimant in
pursuing a benefit claim or appeal of an adverse benefit determination.
Nevertheless, a plan may establish reasonable procedures for
determining whether an individual has been authorized to act on behalf
of a claimant, provided that, in the case of a claim involving urgent
care, within the meaning of paragraph (m)(1) of this section, a health
care professional, within the meaning of paragraph (m)(7) of this
section, with knowledge of a claimant's medical condition shall be
permitted to act as the authorized representative of the claimant; and
(5) The claims procedures contain administrative processes and
safeguards designed to ensure and to verify that benefit claim
determinations are made in accordance with governing plan documents and
that, where appropriate, the plan provisions have been applied
consistently with respect to similarly situated claimants.
(6) In the case of a plan established and maintained pursuant to a
collective bargaining agreement (other than a plan subject to the
provisions of section 302(c)(5) of the Labor Management Relations Act,
1947 concerning joint representation on the board of trustees)--
(i) Such plan will be deemed to comply with the provisions of
paragraphs (c) through (j) of this section if the collective bargaining
agreement pursuant to which the plan is established or maintained sets
forth or incorporates by specific reference--
(A) Provisions concerning the filing of benefit claims and the
initial disposition of benefit claims, and
(B) A grievance and arbitration procedure to which adverse benefit
determinations are subject.
(ii) Such plan will be deemed to comply with the provisions of
paragraphs (h), (i), and (j) of this section (but will not be deemed to
comply with paragraphs (c) through (g) of this section) if the
collective bargaining agreement pursuant to which the plan is
established or maintained sets forth or incorporates by specific
reference a grievance and arbitration procedure to which adverse
benefit determinations are subject (but not provisions concerning the
filing and initial disposition of benefit claims).
(c) Group health plans. The claims procedures of a group health
plan will be deemed to be reasonable only if, in addition to complying
with the requirements of paragraph (b) of this section--
(1)(i) The claims procedures provide that, in the case of a failure
by a claimant or an authorized representative of a claimant to follow
the plan's procedures for filing a pre-service claim, within the
meaning of paragraph (m)(2) of this section, the claimant or
representative shall be notified of the failure and the proper
procedures to be followed in filing a claim for benefits. This
notification shall be provided to the claimant or authorized
representative, as appropriate, as soon as possible, but not later than
5 days (24 hours in the case of a failure to file a claim involving
urgent care) following the failure. Notification may be oral, unless
written notification is requested by the claimant or authorized
representative.
(ii) Paragraph (c)(1)(i) of this section shall apply only in the
case of a failure that--
(A) Is a communication by a claimant or an authorized
representative of a claimant that is received by a person or
organizational unit customarily responsible for handling benefit
matters; and
(B) Is a communication that names a specific claimant; a specific
medical condition or symptom; and a specific treatment, service, or
product for which approval is requested.
(2) The claims procedures do not contain any provision, and are not
administered in a way, that requires a claimant to file more than two
appeals of an adverse benefit determination prior to bringing a civil
action under section 502(a) of the Act;
(3) To the extent that a plan offers voluntary levels of appeal
(except to the extent that the plan is required to do so by State law),
including voluntary arbitration or any other form of dispute
resolution, in addition to those permitted by paragraph (c)(2) of this
section, the claims procedures provide that:
(i) The plan waives any right to assert that a claimant has failed
to exhaust administrative remedies because the claimant did not elect
to submit a benefit dispute to any such voluntary level of appeal
provided by the plan;
(ii) The plan agrees that any statute of limitations or other
defense based on timeliness is tolled during the time that any such
voluntary appeal is pending;
(iii) The claims procedures provide that a claimant may elect to
submit a benefit dispute to such voluntary level of appeal only after
exhaustion of the appeals permitted by paragraph (c)(2) of this
section;
(iv) The plan provides to any claimant, upon request, sufficient
information relating to the voluntary level of appeal to enable the
claimant to make an informed judgment about whether to submit a benefit
dispute to the voluntary level of appeal, including a statement that
the decision of a claimant as to whether or not to submit a benefit
dispute to the voluntary level of appeal will have no effect on the
claimant's rights to any other benefits under the plan and information
about the applicable rules, the claimant's right to representation, the
process for selecting the decisionmaker, and the circumstances, if any,
that may affect the impartiality of the decisionmaker,
[[Page 70267]]
such as any financial or personal interests in the result or any past
or present relationship with any party to the review process; and
(v) No fees or costs are imposed on the claimant as part of the
voluntary level of appeal.
(4) The claims procedures do not contain any provision for the
mandatory arbitration of adverse benefit determinations, except to the
extent that the plan or procedures provide that:
(i) The arbitration is conducted as one of the two appeals
described in paragraph (c)(2) of this section and in accordance with
the requirements applicable to such appeals; and
(ii) The claimant is not precluded from challenging the decision
under section 502(a) of the Act or other applicable law.
(d) Plans providing disability benefits. The claims procedures of a
plan that provides disability benefits will be deemed to be reasonable
only if the claims procedures comply, with respect to claims for
disability benefits, with the requirements of paragraphs (b), (c)(2),
(c)(3), and (c)(4) of this section.
(e) Claim for benefits. For purposes of this section, a claim for
benefits is a request for a plan benefit or benefits made by a claimant
in accordance with a plan's reasonable procedure for filing benefit
claims. In the case of a group health plan, a claim for benefits
includes any pre-service claims within the meaning of paragraph (m)(2)
of this section and any post-service claims within the meaning of
paragraph (m)(3) of this section.
(f) Timing of notification of benefit determination. (1) In
general. Except as provided in paragraphs (f)(2) and (f)(3) of this
section, if a claim is wholly or partially denied, the plan
administrator shall notify the claimant, in accordance with paragraph
(g) of this section, of the plan's adverse benefit determination within
a reasonable period of time, but not later than 90 days after receipt
of the claim by the plan, unless the plan administrator determines that
special circumstances require an extension of time for processing the
claim. If the plan administrator determines that an extension of time
for processing is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 90-
day period. In no event shall such extension exceed a period of 90 days
from the end of such initial period. The extension notice shall
indicate the special circumstances requiring an extension of time and
the date by which the plan expects to render the benefit determination.
(2) Group health plans. In the case of a group health plan, the
plan administrator shall notify a claimant of the plan's benefit
determination in accordance with paragraph (f)(2)(i), (f)(2)(ii), or
(f)(2)(iii) of this section, as appropriate.
(i) Urgent care claims. In the case of a claim involving urgent
care, the plan administrator shall notify the claimant of the plan's
benefit determination (whether adverse or not) as soon as possible,
taking into account the medical exigencies, but not later than 72 hours
after receipt of the claim by the plan, unless the claimant fails to
provide sufficient information to determine whether, or to what extent,
benefits are covered or payable under the plan. In the case of such a
failure, the plan administrator shall notify the claimant as soon as
possible, but not later than 24 hours after receipt of the claim by the
plan, of the specific information necessary to complete the claim. The
claimant shall be afforded a reasonable amount of time, taking into
account the circumstances, but not less than 48 hours, to provide the
specified information. Notification of any adverse benefit
determination pursuant to this paragraph (f)(2)(i) shall be made in
accordance with paragraph (g) of this section. The plan administrator
shall notify the claimant of the plan's benefit determination as soon
as possible, but in no case later than 48 hours after the earlier of--
(A) The plan's receipt of the specified information, or
(B) The end of the period afforded the claimant to provide the
specified additional information.
(ii) Concurrent care decisions. If a group health plan has approved
an ongoing course of treatment to be provided over a period of time or
number of treatments--
(A) Any reduction or termination by the plan of such course of
treatment (other than by plan amendment or termination) before the end
of such period of time or number of treatments shall constitute an
adverse benefit determination. The plan administrator shall notify the
claimant, in accordance with paragraph (g) of this section, of the
adverse benefit determination at a time sufficiently in advance of the
reduction or termination to allow the claimant to appeal and obtain a
determination on review of that adverse benefit determination before
the benefit is reduced or terminated.
(B) Any request by a claimant to extend the course of treatment
beyond the period of time or number of treatments that is a claim
involving urgent care shall be decided as soon as possible, taking into
account the medical exigencies, and the plan administrator shall notify
the claimant of the benefit determination, whether adverse or not,
within 24 hours after receipt of the claim by the plan, provided that
any such claim is made to the plan at least 24 hours prior to the
expiration of the prescribed period of time or number of treatments.
Notification of any adverse benefit determination concerning a request
to extend the course of treatment, whether involving urgent care or
not, shall be made in accordance with paragraph (g) of this section,
and appeal shall be governed by paragraph (i)(2)(i), (i)(2)(ii), or
(i)(2)(iii), as appropriate.
(iii) Other claims. In the case of a claim not described in
paragraphs (f)(2)(i) or (f)(2)(ii) of this section, the plan
administrator shall notify the claimant of the plan's benefit
determination in accordance with either paragraph (f)(2)(iii)(A) or
(f)(2)(iii)(B) of this section, as appropriate.
(A) Pre-service claims. In the case of a pre-service claim, the
plan administrator shall notify the claimant of the plan's benefit
determination (whether adverse or not) within a reasonable period of
time appropriate to the medical circumstances, but not later than 15
days after receipt of the claim by the plan. This period may be
extended one time by the plan for up to 15 days, provided that the plan
administrator both determines that such an extension is necessary due
to matters beyond the control of the plan and notifies the claimant,
prior to the expiration of the initial 15-day period, of the
circumstances requiring the extension of time and the date by which the
plan expects to render a decision. If such an extension is necessary
due to a failure of the claimant to submit the information necessary to
decide the claim, the notice of extension shall specifically describe
the required information, and the claimant shall be afforded at least
45 days from receipt of the notice within which to provide the
specified information. Notification of any adverse benefit
determination pursuant to this paragraph (f)(2)(iii)(A) shall be made
in accordance with paragraph (g) of this section.
(B) Post-service claims. In the case of a post-service claim, the
plan administrator shall notify the claimant, in accordance with
paragraph (g) of this section, of the plan's adverse benefit
determination within a reasonable period of time, but not later than 30
days after receipt of the claim. This period may be extended one time
by the plan for up to 15 days, provided that the plan administrator
both determines that
[[Page 70268]]
such an extension is necessary due to matters beyond the control of the
plan and notifies the claimant, prior to the expiration of the initial
30-day period, of the circumstances requiring the extension of time and
the date by which the plan expects to render a decision. If such an
extension is necessary due to a failure of the claimant to submit the
information necessary to decide the claim, the notice of extension
shall specifically describe the required information, and the claimant
shall be afforded at least 45 days from receipt of the notice within
which to provide the specified information.
(3) Disability claims. In the case of a claim for disability
benefits, the plan administrator shall notify the claimant, in
accordance with paragraph (g) of this section, of the plan's adverse
benefit determination within a reasonable period of time, but not later
than 45 days after receipt of the claim by the plan. This period may be
extended by the plan for up to 30 days, provided that the plan
administrator both determines that such an extension is necessary due
to matters beyond the control of the plan and notifies the claimant,
prior to the expiration of the initial 45-day period, of the
circumstances requiring the extension of time and the date by which the
plan expects to render a decision. If, prior to the end of the first
30-day extension period, the administrator determines that, due to
matters beyond the control of the plan, a decision cannot be rendered
within that extension period, the period for making the determination
may be extended for up to an additional 30 days, provided that the plan
administrator notifies the claimant, prior to the expiration of the
first 30-day extension period, of the circumstances requiring the
extension and the date as of which the plan expects to render a
decision. In the case of any extension under this paragraph (f)(3), the
notice of extension shall specifically explain the standards on which
entitlement to a benefit is based, the unresolved issues that prevent a
decision on the claim, and the additional information needed to resolve
those issues, and the claimant shall be afforded at least 45 days
within which to provide the specified information.
(4) Calculating time periods. For purposes of paragraph (f) of this
section, the period of time within which a benefit determination is
required to be made shall begin at the time a claim is filed in
accordance with the reasonable procedures of a plan, without regard to
whether all the information necessary to make a benefit determination
accompanies the filing. In the event that a period of time is extended
as permitted pursuant to paragraph (f)(2)(iii) or (f)(3) of this
section due to a claimant's failure to submit information necessary to
decide a claim, the period for making the benefit determination shall
be tolled from the date on which the notification of the extension is
sent to the claimant until the date on which the claimant responds to
the request for additional information.
(g) Manner and content of notification of benefit determination.
(1) Except as provided in paragraph (g)(2) of this section, the plan
administrator shall provide a claimant with written or electronic
notification of any adverse benefit determination. Any electronic
notification shall comply with the standards imposed by 29 CFR
2520.104b-1(c)(1)(i), (iii), and (iv). The notification shall set
forth, in a manner calculated to be understood by the claimant --
(i) The specific reason or reasons for the adverse determination;
(ii) Reference to the specific plan provisions on which the
determination is based;
(iii) A description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of
why such material or information is necessary;
(iv) A description of the plan's review procedures and the time
limits applicable to such procedures, including a statement of the
claimant's right to bring a civil action under section 502(a) of the
Act following an adverse benefit determination on review;
(v) In the case of an adverse benefit determination by a group
health plan or a plan providing disability benefits,
(A) If an internal rule, guideline, protocol, or other similar
criterion was relied upon in making the adverse determination, either
the specific rule, guideline, protocol, or other similar criterion; or
a statement that such a rule, guideline, protocol, or other similar
criterion was relied upon in making the adverse determination and that
a copy of such rule, guideline, protocol, or other criterion will be
provided free of charge to the claimant upon request; or
(B) 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 claimant's medical
circumstances, or a statement that such explanation will be provided
free of charge upon request.
(vi) In the case of an adverse benefit determination by a group
health plan concerning a claim involving urgent care, a description of
the expedited review process applicable to such claims.
(2) In the case of an adverse benefit determination by a group
health plan concerning a claim involving urgent care, the information
described in paragraph (g)(1) of this section may be provided to the
claimant orally within the time frame prescribed in paragraph (f)(2)(i)
of this section, provided that a written or electronic notification in
accordance with paragraph (g)(1) of this section is furnished to the
claimant not later than 3 days after the oral notification.
(h) Appeal of adverse benefit determinations. (1) In general. Every
employee benefit plan shall establish and maintain a procedure by which
a claimant shall have a reasonable opportunity to appeal an adverse
benefit determination to an appropriate named fiduciary of the plan,
and under which there will be a full and fair review of the claim and
the adverse benefit determination.
(2) Full and fair review. Except as provided in paragraphs (h)(3)
and (h)(4) of this section, the claims procedures of a plan will not be
deemed to provide a claimant with a reasonable opportunity for a full
and fair review of a claim and adverse benefit determination unless the
claims procedures--
(i) Provide claimants at least 60 days following receipt of a
notification of an adverse benefit determination within which to appeal
the determination;
(ii) Provide claimants the opportunity to submit written comments,
documents, records, and other information relating to the claim for
benefits;
(iii) Provide that a claimant shall be provided, upon request and
free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant's claim for
benefits. Whether a document, record, or other information is relevant
to a claim for benefits shall be determined by reference to paragraph
(m)(8) of this section;
(iv) Provide for a review that takes into account all comments,
documents, records, and other information submitted by the claimant
relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.
(3) Group health plans. The claims procedures of a group health
plan will not be deemed to provide a claimant with a reasonable
opportunity for a full
[[Page 70269]]
and fair review of a claim and adverse benefit determination unless, in
addition to complying with the requirements of paragraphs (h)(2)(ii)
through (iv) of this section, the claims procedures--
(i) Provide claimants at least 180 days following receipt of a
notification of an adverse benefit determination within which to appeal
the determination;
(ii) Provide for a review that does not afford deference to the
initial adverse benefit determination and that is conducted by an
appropriate named fiduciary of the plan who is neither the individual
who made the adverse benefit determination that is the subject of the
appeal, nor the subordinate of such individual;
(iii) Provide that, 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 item is experimental, investigational, or not medically
necessary or appropriate, the appropriate named fiduciary shall consult
with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical judgment;
(iv) Provide for the identification of medical or vocational
experts whose advice was obtained on behalf of the plan in connection
with a claimant's adverse benefit determination, without regard to
whether the advice was relied upon in making the benefit determination;
(v) Provide that the health care professional engaged for purposes
of a consultation under paragraph (h)(3)(iii) of this section shall be
an individual who is neither an individual who was consulted in
connection with the adverse benefit determination that is the subject
of the appeal, nor the subordinate of any such individual; and
(vi) Provide, in the case of a claim involving urgent care, for an
expedited review process pursuant to which--
(A) A request for an expedited appeal of an adverse benefit
determination may be submitted orally or in writing by the claimant;
and
(B) All necessary information, including the plan's benefit
determination on review, shall be transmitted between the plan and the
claimant by telephone, facsimile, or other available similarly
expeditious method.
(4) Plans providing disability benefits. The claims procedures of a
plan providing disability benefits will not, with respect to claims for
such benefits, be deemed to provide a claimant with a reasonable
opportunity for a full and fair review of a claim and adverse benefit
determination unless the claims procedures comply with the requirements
of paragraphs (h)(2)(ii) through (iv) and (h)(3)(i) through (v) of this
section.
(i) Timing of notification of benefit determination on review. (1)
In general. (i) Except as provided in paragraphs (i)(1)(ii), (i)(2),
and (i)(3) of this section, the plan administrator shall notify a
claimant in accordance with paragraph (j) of this section of the plan's
benefit determination on review within a reasonable period of time, but
not later than 60 days after receipt of the claimant's request for
review by the plan, unless the plan administrator determines that
special circumstances (such as the need to hold a hearing, if the
plan's procedures provide for a hearing) require an extension of time
for processing the claim. If the plan administrator determines that an
extension of time for processing is required, written notice of the
extension shall be furnished to the claimant prior to the termination
of the initial 60-day period. In no event shall such extension exceed a
period of 60 days from the end of the initial period. The extension
notice shall indicate the special circumstances requiring an extension
of time and the date by which the plan expects to render the
determination on review.
(ii) In the case of a plan with a committee or board of trustees
designated as the appropriate named fiduciary that holds regularly
scheduled meetings at least quarterly, paragraph (i)(1)(i) of this
section shall not apply, and, except as provided in paragraphs (i)(2)
and (i)(3) of this section, the appropriate named fiduciary shall
instead make a benefit determination no later than the date of the
meeting of the committee or board that immediately follows the plan's
receipt of a request for review, unless the request for review is filed
within 30 days preceding the date of such meeting. In such case, a
benefit determination may be made by no later than the date of the
second meeting following the plan's receipt of the request for review.
If special circumstances (such as the need to hold a hearing, if the
plan's procedures provide for a hearing) require a further extension of
time for processing, a benefit determination shall be rendered not
later than the third meeting of the committee or board following the
plan's receipt of the request for review. If such an extension of time
for review is required because of special circumstances, the plan
administrator shall provide the claimant with written notice of the
extension, describing the special circumstances and the date as of
which the benefit determination will be made, prior to the commencement
of the extension. The plan administrator shall notify the claimant, in
accordance with paragraph (j) of this section, of the benefit
determination as soon as possible, but not later than 5 days after the
benefit determination is made.
(2) Group health plans. In the case of a group health plan, the
plan administrator shall notify a claimant of the plan's benefit
determination on review in accordance with paragraphs (i)(2)(i) through
(iii), as appropriate.
(i) Urgent care claims. In the case of a claim involving urgent
care, the plan administrator shall notify the claimant, in accordance
with paragraph (j) of this section, of the plan's benefit determination
on review as soon as possible, taking into account the medical
exigencies, but not later than 72 hours after receipt of the claimant's
request for review of an adverse benefit determination by the plan.
(ii) Pre-service claims. In the case of a pre-service claim, the
plan administrator shall notify the claimant, in accordance with
paragraph (j) of this section, of the plan's benefit determination on
review within a reasonable period of time appropriate to the medical
circumstances. In the case of a group health plan that provides for one
appeal of an adverse benefit determination, such notification shall be
provided not later than 30 days after receipt by the plan of the
claimant's request for review of an adverse benefit determination. In
the case of a group health plan that provides for two appeals of an
adverse determination, such notification shall be provided, with
respect to any one of such two appeals, not later than 15 days after
receipt by the plan of the claimant's request for review of the adverse
determination.
(iii) Post-service claims. (A) In the case of a post-service claim,
except as provided in paragraph (i)(2)(iii)(B) of this section, the
plan administrator shall notify the claimant, in accordance with
paragraph (j) of this section, of the plan's benefit determination on
review within a reasonable period of time. In the case of a group
health plan that provides for one appeal of an adverse benefit
determination, such notification shall be provided not later than 60
days after receipt by the plan of the claimant's request for review of
an adverse benefit determination. In the case of a group health plan
that provides for two appeals of an adverse determination, such
notification shall be provided, with respect to any one of
[[Page 70270]]
such two appeals, not later than 30 days after receipt by the plan of
the claimant's request for review of the adverse determination.
(B) In the case of a multiemployer plan with a committee or board
of trustees designated as the appropriate named fiduciary that holds
regularly scheduled meetings at least quarterly, paragraph
(i)(2)(iii)(A) of this section shall not apply, and the appropriate
named fiduciary shall instead make a benefit determination no later
than the date of the meeting of the committee or board that immediately
follows the plan's receipt of a request for review, unless the request
for review is filed within 30 days preceding the date of such meeting.
In such case, a benefit determination may be made by no later than the
date of the second meeting following the plan's receipt of the request
for review. If special circumstances (such as the need to hold a
hearing, if the plan's procedures provide for a hearing) require a
further extension of time for processing, a benefit determination shall
be rendered not later than the third meeting of the committee or board
following the plan's receipt of the request for review. If such an
extension of time for review is required because of special
circumstances, the plan administrator shall notify the claimant in
writing of the extension, describing the special circumstances and the
date as of which the benefit determination will be made, prior to the
commencement of the extension. The plan administrator shall notify the
claimant, in accordance with paragraph (j) of this section, of the
benefit determination as soon as possible, but not later than 5 days
after the benefit determination is made.
(3) Disability claims. (i) Except as provided in paragraph
(i)(3)(ii) of this section, claims involving disability benefits
(whether the plan provides for one or two appeals) shall be governed by
paragraph (i)(1) of this section, except that a period of 45 days shall
apply instead of 60 days for purposes of that paragraph.
(ii) In the case of a multiemployer plan with a committee or board
of trustees designated as the appropriate named fiduciary that holds
regularly scheduled meetings at least quarterly, paragraph (i)(3)(i) of
this section shall not apply, and the appropriate named fiduciary shall
instead make a benefit determination no later than the date of the
meeting of the committee or board that immediately follows the plan's
receipt of a request for review, unless the request for review is filed
within 30 days preceding the date of such meeting. In such case, a
benefit determination may be made by no later than the date of the
second meeting following the plan's receipt of the request for review.
If special circumstances (such as the need to hold a hearing, if the
plan's procedures provide for a hearing) require a further extension of
time for processing, a benefit determination shall be rendered not
later than the third meeting of the committee or board following the
plan's receipt of the request for review. If such an extension of time
for review is required because of special circumstances, the plan
administrator shall notify the claimant in writing of the extension,
describing the special circumstances and the date as of which the
benefit determination will be made, prior to the commencement of the
extension. The plan administrator shall notify the claimant, in
accordance with paragraph (j) of this section, of the benefit
determination as soon as possible, but not later than 5 days after the
benefit determination is made.
(4) Calculating time periods. For purposes of paragraph (i) of this
section, the period of time within which a benefit determination on
review is required to be made shall begin at the time an appeal is
filed in accordance with the reasonable procedures of a plan, without
regard to whether all the information necessary to make a benefit
determination on review accompanies the filing. In the event that a
period of time is extended as permitted pursuant to paragraph (i)(1),
(i)(2)(iii)(B), or (i)(3) of this section due to a claimant's failure
to submit information necessary to decide a claim, the period for
making the benefit determination on review shall be tolled from the
date on which the notification of the extension is sent to the claimant
until the date on which the claimant responds to the request for
additional information.
(5) Furnishing documents. In the case of an adverse benefit
determination on review, the plan administrator shall provide such
access to, and copies of, documents, records, and other information
described in paragraphs (j)(3), (j)(4), and (j)(5) of this section as
is appropriate.
(j) Manner and content of notification of benefit determination on
review. The plan administrator shall provide a claimant with written or
electronic notification of a plan's benefit determination on review.
Any electronic notification shall comply with the standards imposed by
29 CFR 2520.104b-1(c)(1)(i), (iii), and (iv). In the case of an adverse
benefit determination, the notification shall set forth, in a manner
calculated to be understood by the claimant--
(1) The specific reason or reasons for the adverse determination;
(2) Reference to the specific plan provisions on which the benefit
determination is based;
(3) A statement that the claimant 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 claimant's
claim for benefits. Whether a document, record, or other information is
relevant to a claim for benefits shall be determined by reference to
paragraph (m)(8) of this section;
(4) A statement describing any voluntary appeal procedures offered
by the plan and the claimant's right to obtain the information about
such procedures described in paragraph (c)(3)(iv) of this section, and
a statement of the claimant's right to bring an action under section
502(a) of the Act; and
(5) In the case of a group health plan or a plan providing
disability benefits--
(i) If an internal rule, guideline, protocol, or other similar
criterion was relied upon in making the adverse determination, either
the specific rule, guideline, protocol, or other similar criterion; or
a statement that such rule, guideline, protocol, or other similar
criterion was relied upon in making the adverse determination and that
a copy of the rule, guideline, protocol, or other similar criterion
will be provided free of charge to the claimant upon request;
(ii) 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 claimant's medical
circumstances, or a statement that such explanation will be provided
free of charge upon request; and
(iii) The following statement: ``You and your plan may have other
voluntary alternative dispute resolution options, such as mediation.
One way to find out what may be available is to contact your local U.S.
Department of Labor Office and your State insurance regulatory
agency.''
(k) Preemption of State law. (1) Nothing in this section shall be
construed to supersede any provision of State law that regulates
insurance, except to the extent that such law prevents the application
of a requirement of this section.
(2) (i) For purposes of paragraph (k)(1) of this section, a State
law regulating insurance shall not be considered to prevent the
application of a requirement of this section merely because such State
law establishes a review procedure
[[Page 70271]]
to evaluate and resolve disputes involving adverse benefit
determinations under group health plans so long as the review procedure
is conducted by a person or entity other than the insurer, the plan,
plan fiduciaries, the employer, or any employee or agent of any of the
foregoing.
(ii) The State law procedures described in paragraph (k)(2)(i) of
this section are not part of the full and fair review required by
section 503 of the Act. Claimants therefore need not exhaust such State
law procedures prior to bringing suit under section 502(a) of the Act.
(l) Failure to establish and follow reasonable claims procedures.
In the case of the failure of a plan to establish or follow claims
procedures consistent with the requirements of this section, a claimant
shall be deemed to have exhausted the administrative remedies available
under the plan and shall be entitled to pursue any available remedies
under section 502(a) of the Act on the basis that the plan has failed
to provide a reasonable claims procedure that would yield a decision on
the merits of the claim.
(m) Definitions. The following terms shall have the meaning
ascribed to such terms in this paragraph (m) whenever such term is used
in this section:
(1)(i) A ``claim involving urgent care'' is any claim for medical
care or treatment with respect to which the application of the time
periods for making non-urgent care determinations--
(A) Could seriously jeopardize the life or health of the claimant
or the ability of the claimant to regain maximum function, or,
(B) In the opinion of a physician with knowledge of the claimant's
medical condition, would subject the claimant to severe pain that
cannot be adequately managed without the care or treatment that is the
subject of the claim.
(ii) Except as provided in paragraph (m)(1)(iii) of this section,
whether a claim is a ``claim involving urgent care'' within the meaning
of paragraph (m)(1)(i)(A) of this section is to be determined by an
individual acting on behalf of the plan applying the judgment of a
prudent layperson who possesses an average knowledge of health and
medicine.
(iii) Any claim that a physician with knowledge of the claimant's
medical condition determines is a ``claim involving urgent care''
within the meaning of paragraph (m)(1)(i) of this section shall be
treated as a ``claim involving urgent care'' for purposes of this
section.
(2) The term ``pre-service claim'' means any claim for a benefit
under a group health plan with respect to which the terms of the plan
condition receipt of the benefit, in whole or in part, on approval of
the benefit in advance of obtaining medical care.
(3) The term ``post-service claim'' means any claim for a benefit
under a group health plan that is not a pre-service claim within the
meaning of paragraph (m)(2) of this section.
(4) The term ``adverse benefit determination'' means any of the
following: a denial, reduction, or termination of, or a failure to
provide or make payment (in whole or in part) for, a benefit, including
any such denial, reduction, termination, or failure to provide or make
payment that is based on a determination of a participant's or
beneficiary's eligibility to participate in a plan, and including, with
respect to group health plans, 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.
(5) The term ``notice'' or ``notification'' means the delivery or
furnishing of information to an individual in a manner that satisfies
the standards of 29 CFR 2520.104b-1(b) as appropriate with respect to
material required to be furnished or made available to an individual.
(6) The term ``group health plan'' means an employee welfare
benefit plan within the meaning of section 3(1) of the Act to the
extent that such plan provides ``medical care'' within the meaning of
section 733(a) of the Act.
(7) The term ``health care professional'' means a physician or
other health care professional licensed, accredited, or certified to
perform specified health services consistent with State law.
(8) A document, record, or other information shall be considered
``relevant'' to a claimant's claim if such document, record, or other
information
(i) Was relied upon in making the benefit determination;
(ii) Was submitted, considered, or generated in the course of
making the benefit determination, without regard to whether such
document, record, or other information was relied upon in making the
benefit determination;
(iii) Demonstrates compliance with the administrative processes and
safeguards required pursuant to paragraph (b)(5) of this section in
making the benefit determination; or
(iv) In the case of a group health plan or a plan providing
disability benefits, constitutes a statement of policy or guidance with
respect to the plan concerning the denied treatment option or benefit
for the claimant's diagnosis, without regard to whether such advice or
statement was relied upon in making the benefit determination.
(n) Apprenticeship plans. This section does not apply to employee
benefit plans that solely provide apprenticeship training benefits.
(o) Applicability dates. This section shall apply to claims filed
under a plan on or after January 1, 2002.
Signed at Washington, DC, this 15th day of November, 2000.
Leslie Kramerich,
Acting Assistant Secretary, Pension and Welfare Benefits
Administration, U.S. Department of Labor.
[FR Doc. 00-29766 Filed 11-20-00; 8:45 am]
BILLING CODE 4510-29-P