Are Insurance Carriers Processing Claims in Compliance with ERISA Rules & Regulations Are Insurance Carriers Processing Claims in Compliance with ERISA Rules & Regulations

Are Insurance Carriers Processing Claims in Compliance with ERISA Rules & Regulations

Maxine Collins, MBA, CPA, CPMC, CMOM, CMIS
Director of Compliance, Audits and Education at CoreMD Partners, LLC

This auditing and compliance “Tip of the Week” was originally published by the
National Alliance for Medical Auditing Specialists (NAMAS), a division of DoctorsManagement.

Per the Henry J. Kaiser Family Foundation: “Sixty percent of covered workers are in a self-funded health plan! Self-funding is common among larger firms because they can spread the risk of costly claims over a large number of workers and dependents.”

These plans are governed by ERISA, the Employee Retirement Income Security Act, a Federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to protect individuals in these plans.

The Affordable Care Act (ACA) expanded parts of ERISA to apply to some non-ERISA claims under government-sponsored healthcare plans. A section has been added in the ACA that mandates health plan claims processes under the U.S. Department of Labor’s (DoL) Claims Regulations be included as part of every individual or group health insurance plan in the U.S. This means that the DoL rules will now apply to all plans where a governmental entity (i.e. Federal government, state or city) is the employer and or sponsor of the health plan.

ERISA requires plan sponsors to provide participants with information about plan features, funding and payment of claims.

  • Requires plans to establish a grievance and appeals process, and
  • Gives participants the right to sue for benefits and breaches of fiduciary duty.

If a Physician/Provider has a comprehensive, legal Assignment of Benefits (AOB) signed and dated by the patient, they can “stand in the shoes” of the beneficiary and request access to all Summary Plan Documents (SPDs), internal memos, emails, coverage determinations and any other items used in denying, underpaying, or requesting a refund from the Provider/patient.

Therefore, the physician/provider’s office must make sure the appropriate information is gathered for successful claim reimbursement/appeals such as:

  • Beneficiary Status- Demographics/Employer (Plan Sponsor)/Fully insured plan or Self-insured Plan, Verification, need for Preauthorization and/or referral from PCP, dates of coverage, etc.
  • Knowledge of specific Summary Plan Benefits
  • Legal Assignment of Benefits (signed/dated by Patient)
  • Form signed and dated by patient that gives provider rights to act on behalf of patient (giving rights as their ERISA representative)
  • Beware of when the Insurance Carrier asks you to accept their form. It could have limitations.
  • Check your forms to make sure they give you this right. You may want your legal counsel to review them.

ERISA sets specific periods of time for health plans to:

  • Evaluate claim and inform you of a decision
  • Time limits are counted in calendar days, so weekends and holidays are included
  • SPD governs what benefits must be paid. Plans are required to pay benefits within reasonable time after claim is approved.

For Post-Service Claims:

  • Must be decided within reasonable time, but not later than 30 days after Plan has received the claim.
  • If more time is needed due to reasons beyond the Plan’s control, the Plan can extend this timeframe by up to 15 days. The Plan Administrator has to let you know before the end of the first 30-day period, along with an explanation for the delay, requesting any information needed and advising you when a final decision is expected.
  • If more information is requested, you have 45 days to supply and the claim must then be decided no later than 15 days after Plan receives information, or the period of time given by Plan to do so ends, whichever comes first.
  • Plan would need consent if it wants more time after first extension.
  • Plan must give notice in whole or in part (paying less than 100% of claim) before the end of the time allotted for the decision.

There are also specific time frames for processing urgent care claims and Pre-Service (Preauthorizations/Precertifications) that each office must be aware of in order to ensure timely claims processing.

The AOB- And an example/result of not having a good one:

  • “DB Healthcare LLC v. Blue Cross Blue Shield of Ariz., Inc., 2017 WL 1075050 (9th Cir. 2017)”
    • 9th Circuit dismissed two consolidated cases by health care providers – “seeking payment for medical services pursuant to assignments from patients who were ERISA plan participants.”
    • Providers received reimbursement for services provided. However, the insurers later determined they had been overpaid. Sound familiar?
    • “One insurer threatened to suspend provider credentialing and terminate the provider’s network agreements. The other insurer withheld reimbursements to the provider for unrelated claims.”
    • Providers sued to stop the insurers’ actions and force them to comply with ERISA claims procedures.
    • Court ruled providers lacked “authority to sue under ERISA” because of a legally ineffective AOB – which shows the importance of a well-crafted assignment document.

TIP: Appropriately processed AOBs are vital in collecting ERISA claims!

  • Must ensure that a provider obtains a right to pursue payment from health insurance payor, including an ERISA plan, but must also specifically assign the provider the right to take all necessary action, including available administrative appeals or filing suit.
  • Must specify if it covers services to patient or their dependent(s).
  • Should be in perpetuity (no termination date)
  • Must have specific names of patient/dependent(s) and legal name of practice/entity.
  • Must be signed and dated and cover language of the law.

What to do next…

  1. Contact us to discuss your audit needs by calling (800) 635-4040 or email
  2. Read more: What can you expect from a coding and compliance review?
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