External Review Process Options for Self-Funded Health Insurance Plans

Abstract

Many provisions of the Patient Protection and Affordable Care Act (the “PPACA” or “the Act”), signed into law on March 23, 2010, are highly controversial. Particularly contentious are issues pertaining to the rationing of health care, as illustrated by the recent, highly visible discourse about “death panels.” The issue became so heated that President Obama urged five governors with whom he met to avoid using the word “rationing” in discussing health care reform “for fear of evoking the hostile response that sank the Clintons’ attempt to achieve reform.” Although none of the legislative proposals contained any provisions that would lead to the creation of death panels or any similar body, the Act does have sections that affect decisions about who will receive health care and who will not.

One of these sections is the provision of the PPACA governing external review of denial-of-care decisions by insurance companies. This section generally mandates either that insurers comply with external review processes found in state law, or, if they are not subject to state regulation, that they establish an external review process. Insurers in the latter category must implement “effective external review process[es]” that meet “minimum standards established by the Secretary [of Health and Human Services]” and that are “similar” to state-regulated processes. While the framework provided in the Act offers some guidance as to what these processes should look like, it does not dictate a specific review process.