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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 54
[TD 9532]
RIN 1545–BK30

DEPARTMENT OF LABOR
Employee Benefits Security
Administration
29 CFR Part 2590
RIN 1210–AB45

DEPARTMENT OF HEALTH AND
HUMAN SERVICES
[CMS–9993–IFC2]

45 CFR Part 147
RIN 0938–AQ66

Group Health Plans and Health
Insurance Issuers: Rules Relating to
Internal Claims and Appeals and
External Review Processes
Internal Revenue Service,
Department of the Treasury; Employee
Benefits Security Administration,
Department of Labor; Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services.
ACTION: Amendment to interim final
rules with request for comments.
AGENCIES:

This document contains
amendments to interim final regulations
implementing the requirements
regarding internal claims and appeals
and external review processes for group
health plans and health insurance
coverage in the group and individual
markets under provisions of the
Affordable Care Act. These rules are
intended to respond to feedback from a
wide range of stakeholders on the
interim final regulations and to assist
plans and issuers in coming into full
compliance with the law through an
orderly and expeditious implementation
process.
DATES: Effective date. This amendment
to the interim final regulations is
effective on July 22, 2011.
Comment date. Comments are due on
or before July 25, 2011.
ADDRESSES: Written comments may be
submitted to any of the addresses
specified below. Any comment that is
submitted to any Department will be
shared with the other Departments.
Please do not submit duplicates.
All comments will be made available
to the public. Warning: Do not include

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any personally identifiable information
(such as name, address, or other contact
information) or confidential business
information that you do not want
publicly disclosed. All comments may
be posted on the Internet and can be
retrieved by most Internet search
engines. Comments may be submitted
anonymously.
Department of Labor. Comments to
the Department of Labor, identified by
RIN 1210–AB45, by one of the following
methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• E-mail: [email protected].
• Mail or Hand Delivery: Office of
Health Plan Standards and Compliance
Assistance, Employee Benefits Security
Administration, Room N–5653, U.S.
Department of Labor, 200 Constitution
Avenue, NW., Washington, DC 20210,
Attention: RIN 1210–AB45.
Comments received by the
Department of Labor will be posted
without change to http://
www.regulations.gov and http://
www.dol.gov/ebsa, and available for
public inspection at the Public
Disclosure Room, N–1513, Employee
Benefits Security Administration, 200
Constitution Avenue, NW., Washington,
DC 20210.
Department of Health and Human
Services. In commenting, please refer to
file code CMS–9993–IFC2. Because of
staff and resource limitations, we cannot
accept comments by facsimile (FAX)
transmission.
You may submit comments in one of
four ways (please choose only one of the
ways listed):
1. Electronically. You may submit
electronic comments on this regulation
to http://www.regulations.gov. Follow
the instructions under the ‘‘More Search
Options’’ tab.
2. By regular mail. You may mail
written comments to the following
address ONLY: Centers for Medicare &
Medicaid Services, Department of
Health and Human Services, Attention:
CMS–9993–IFC2, P.O. Box 8010,
Baltimore, MD 21244–8010.
Please allow sufficient time for mailed
comments to be received before the
close of the comment period.
3. By express or overnight mail. You
may send written comments to the
following address ONLY: Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, Attention: CMS–9993–IFC2,
Mail Stop C4–26–05, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
4. By hand or courier. If you prefer,
you may deliver (by hand or courier)

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your written comments before the close
of the comment period to either of the
following addresses:
a. For delivery in Washington, DC—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, Room 445–G, Hubert
H. Humphrey Building, 200
Independence Avenue, SW.,
Washington, DC 20201.
(Because access to the interior of the
Hubert H. Humphrey Building is not
readily available to persons without
Federal government identification,
commenters are encouraged to leave
their comments in the CMS drop slots
located in the main lobby of the
building. A stamp-in clock is available
for persons wishing to retain a proof of
filing by stamping in and retaining an
extra copy of the comments being filed.)
b. For delivery in Baltimore, MD—
Centers for Medicare & Medicaid
Services, Department of Health and
Human Services, 7500 Security
Boulevard, Baltimore, MD 21244–1850.
If you intend to deliver your
comments to the Baltimore address,
please call telephone number (410) 786–
9994 in advance to schedule your
arrival with one of our staff members.
Comments mailed to the addresses
indicated as appropriate for hand or
courier delivery may be delayed and
received after the comment period.
Internal Revenue Service. Comments
to the IRS, identified by REG–125592–
10, by one of the following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Mail: CC:PA:LPD:PR (REG–125592–
10), Room 5205, Internal Revenue
Service, P.O. Box 7604, Ben Franklin
Station, Washington, DC 20044.
• Hand or courier delivery: Monday
through Friday between the hours of
8 a.m. and 4 p.m. to: CC:PA:LPD:PR
(REG–125592–10), Courier’s Desk,
Internal Revenue Service, 1111
Constitution Avenue, NW., Washington,
DC 20224.
All submissions to the IRS will be
open to public inspection and copying
in Room 1621, 1111 Constitution
Avenue, NW., Washington, DC from
9 a.m. to 4 p.m.
FOR FURTHER INFORMATION CONTACT:
Amy Turner or Beth Baum, Employee
Benefits Security Administration,
Department of Labor, at (202) 693–8335;
Karen Levin, Internal Revenue Service,
Department of the Treasury, at (202)
622–6080; Ellen Kuhn, Centers for
Medicare & Medicaid Services,
Department of Health and Human
Services, at (301) 492–4100.
Customer Service Information:
Individuals interested in obtaining

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information from the Department of
Labor concerning employment-based
health coverage laws may call the EBSA
Toll-Free Hotline at 1–866–444–EBSA
(3272) or visit the Department of Labor’s
Web site (http://www.dol.gov/ebsa). In
addition, information from HHS on
private health insurance for consumers
can be found on the Centers for
Medicare & Medicaid Services (CMS)
Web site (http://www.cms.hhs.gov/
HealthInsReformforConsume/
01_Overview.asp). Information on
health reform can be found at http://
www.healthcare.gov.
SUPPLEMENTARY INFORMATION:
I. Background
The Patient Protection and Affordable
Care Act, Public Law 111–148, was
enacted on March 23, 2010; the Health
Care and Education Reconciliation Act,
Public Law 111–152, was enacted on
March 30, 2010 (collectively known as
the ‘‘Affordable Care Act’’). The
Affordable Care Act reorganizes,
amends, and adds to the provisions in
part A of title XXVII of the Public
Health Service Act (PHS Act) relating to
group health plans and health insurance
issuers in the group and individual
markets. The term ‘‘group health plan’’
includes both insured and self-insured
group health plans.1 The Affordable
Care Act adds section 715(a)(1) to the
Employee Retirement Income Security
Act (ERISA) and section 9815(a)(1) to
the Internal Revenue Code (the Code) to
incorporate the provisions of part A of
title XXVII of the PHS Act into ERISA
and the Code, and make them
applicable to group health plans, and
health insurance issuers providing
health insurance coverage in connection
with group health plans. The PHS Act
sections incorporated by this reference
are sections 2701 through 2728. PHS
Act sections 2701 through 2719A are
substantially new, though they
incorporate some provisions of prior
law. PHS Act sections 2722 through
2728 are sections of prior law
renumbered, with some, mostly minor,
changes.
On July 23, 2010, the Departments of
Health and Human Services (HHS),
Labor, and the Treasury (the
Departments) issued interim final
regulations implementing PHS Act
section 2719 at 75 FR 43330 (July 2010
regulations), regarding internal claims
and appeals and external review
1 The term ‘‘group health plan’’ is used in title
XXVII of the PHS Act, part 7 of ERISA, and chapter
100 of the Code, and is distinct from the term
‘‘health plan’’, as used in other provisions of title
I of the Affordable Care Act. The term ‘‘health
plan’’, as used in those provisions, does not include
self-insured group health plans.

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processes for group health plans and
health insurance issuers offering
coverage in the group and individual
markets. The requirements of PHS Act
section 2719 and the July 2010
regulations do not apply to
grandfathered health plans under
section 1251 of the Affordable Care
Act.2
A. Internal Claims and Appeals
With respect to internal claims and
appeals processes for group health plans
and health insurance issuers offering
group health insurance coverage, PHS
Act section 2719 provides that plans
and issuers must initially incorporate
the internal claims and appeals
processes set forth in regulations
promulgated by the Department of Labor
(DOL) at 29 CFR 2560.503–1 (the DOL
claims procedure regulation) and update
such processes in accordance with
standards established by the Secretary
of Labor. Similarly, with respect to
internal claims and appeals processes
for individual health insurance
coverage, issuers must initially
incorporate the internal claims and
appeals processes set forth in applicable
State law and update such processes in
accordance with standards established
by the Secretary of HHS.
The July 2010 regulations provided
such updated standards for compliance
and invited comment on the updated
standards. In particular, the July 2010
regulations provided the following
additional standards 3 for internal
claims and appeals processes:
1. The scope of adverse benefit
determinations eligible for internal
claims and appeals includes a rescission
of coverage (whether or not the
rescission has an adverse effect on any
particular benefit at the time).4
2 The Departments published interim final
regulations implementing section 1251 of the
Affordable Care Act on June 17, 2010, at 75 FR
34538, as amended on November 17, 2010 at 75 FR
70114.
3 To address certain relevant differences in the
group and individual markets, the July 2010
regulations provided that health insurance issuers
offering individual health insurance coverage must
comply with three additional requirements for
internal claims and appeals processes. First, the
July 2010 regulations include initial eligibility
determinations in the individual market within the
scope of claims eligible for internal appeals.
Second, health insurance issuers offering individual
health insurance coverage are permitted only one
level of internal appeal. Third, health insurance
issuers offering individual health insurance
coverage must maintain all records of claims and
notices associated with internal claims and appeals
for six years and must make these records available
for examination by the claimant, State or Federal
oversight agency. 75 FR 43330, 43334 (July 23,
2010).
4 This definition is broader than the definition in
the DOL claims procedure regulation, which
provides that a denial, reduction, or termination of,

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2. Notwithstanding the rule in the
DOL claims procedure regulation that
provides for notification in the case of
urgent care claims 5 not later than 72
hours after the receipt of the claim, a
plan or issuer must notify a claimant of
a benefit determination (whether
adverse or not) with respect to a claim
involving urgent care as soon as
possible, taking into account the
medical exigencies, but not later than 24
hours after the receipt of the claim by
the plan or issuer.6
3. Clarifications with respect to full
and fair review, such that plans and
issuers are clearly required to provide
the claimant (free of charge) with new
or additional evidence considered,
relied upon, or generated by (or at the
direction of) the plan or issuer in
connection with the claim, as well as
any new or additional rationale for a
denial at the internal appeals stage, and
a reasonable opportunity for the
claimant to respond to such new
evidence or rationale.
4. Clarifications regarding conflicts of
interest, such that decisions regarding
hiring, compensation, termination,
promotion, or other similar matters with
respect to an individual, such as a
claims adjudicator or medical expert,
must not be based upon the likelihood
that the individual will support the
denial of benefits.
5. Notices must be provided in a
culturally and linguistically appropriate
manner, as required by the statute, and
as set forth in paragraph (e) of the July
2010 regulations.
6. Notices to claimants must provide
additional content. Specifically:
a. Any notice of adverse benefit
determination or final internal adverse
benefit determination must include
information sufficient to identify the
claim involved, including the date of
the service, the health care provider, the
claim amount (if applicable), the
diagnosis code and its corresponding
meaning, and the treatment code and its
corresponding meaning.
or a failure to provide payment (in whole or in part)
for a benefit is an adverse benefit determination
eligible for internal claims and appeals processes.
5 A claim involving urgent care is generally a
claim for medical care or treatment with respect to
which the application of the time periods for
making non-urgent care determinations could
seriously jeopardize the life or health of the
claimant or the ability of the claimant to regain
maximum function; or, in the opinion of the
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.
6 Under the July 2010 regulations, there is a
special exception if the claimant fails to provide
sufficient information to determine whether, or to
what extent, benefits are covered or payable under
the plan.

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b. The plan or issuer must ensure that
the reason or reasons for an adverse
benefit determination or final internal
adverse benefit determination includes
the denial code and its corresponding
meaning, as well as a description of the
plan’s or issuer’s standard, if any, that
was used in denying the claim. In the
case of a final internal adverse benefit
determination, this description must
also include a discussion of the
decision.
c. The plan or issuer must provide a
description of available internal appeals
and external review processes,
including information regarding how to
initiate an appeal.
d. The plan or issuer must disclose
the availability of, and contact
information for, an applicable office of
health insurance consumer assistance or
ombudsman established under PHS Act
section 2793.
7. If a plan or issuer fails to strictly
adhere to all the requirements of the
July 2010 regulations, the claimant is
deemed to have exhausted the plan’s or
issuer’s internal claims and appeals
process, regardless of whether the plan
or issuer asserts that it has substantially
complied, and the claimant may initiate
any available external review process or
remedies available under ERISA or
under State law.
On September 20, 2010, based on a
preliminary review of comments from
stakeholders which indicated that they
believed more time was needed to come
into compliance with PHS Act section
2719 and the additional internal claims
and appeal standards in the July 2010
regulations, the Department of Labor
issued Technical Release 2010–02 (T.R.
2010–02), which set forth an
enforcement grace period until July 1,
2011 for compliance with certain new
provisions with respect to internal
claims and appeals.7
Specifically, T.R. 2010–02 set forth an
enforcement grace period until July 1,
2011 with respect to standard #2 above
(regarding the timeframe for making
urgent care claims decisions), standard
#5 above (regarding providing notices in
a culturally and linguistically
appropriate manner), standard #6 above
(requiring broader content and
specificity in notices), and standard #7
above (regarding exhaustion). T.R.
2010–02 also stated that, during that
period, the Department of Labor and the
Internal Revenue Service (IRS) would
7 Technical Release 2010–02 is available at
http://www.dol.gov/ebsa/pdf/ACATechnicalRelease
2010-02.pdf. HHS published a corresponding
guidance document, available at: http://
cciio.cms.gov/resources/files/
interim_procedures_for_internal_claims_and
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not take any enforcement action against
a group health plan, and HHS would not
take any enforcement action against a
self-funded nonfederal governmental
health plan that is working in good faith
to implement such additional standards
but does not yet have them in place.8
Based on further review of the
comments received on the July 2010
regulations and T.R. 2010–02, and other
feedback from interested stakeholders,
on March 18, 2011, the Department of
Labor issued Technical Release 2011–
01 9 (T.R. 2011–01), which modified and
extended the enforcement grace period
set forth in T.R. 2010–02. Specifically,
T.R. 2011–01 extended the enforcement
grace period until plan years beginning
on or after January 1, 2012 with respect
to standard #2 above (regarding the
timeframe for making urgent care claims
decisions), standard #5 above (regarding
providing notices in a culturally and
linguistically appropriate manner), and
standard #7 above (regarding
exhaustion). Moreover, whereas T.R.
2010–02 required plans to be working in
good faith to implement such standards
for the enforcement grace period to
apply, T.R. 2011–01 stated that no such
requirement would apply for either the
extended or the original enforcement
grace period.
With respect to standard #6 above
(requiring broader content and
specificity in notices), T.R. 2011–01
extended the enforcement grace period
only in part. Specifically, with respect
to the requirement to disclose diagnosis
codes and treatment codes (and their
corresponding meanings), T.R. 2011–01
extended the enforcement grace period
until plan years beginning on or after
January 1, 2012.10 With respect to the
other disclosure requirements of
standard #6, the enforcement grace
period was extended from July 1, 2011
until the first day of the first plan year
beginning on or after July 1, 2011
(which is January 1, 2012 for calendar
year plans), affecting: (a) The disclosure

of information sufficient to identify a
claim (other than the diagnosis and
treatment information), (b) the reasons
for an adverse benefit determination, (c)
the description of available internal
appeals and external review processes,
and (d) for plans and issuers in States
in which an office of health consumer
assistance program or ombudsman is
operational, the disclosure of the
availability of, and contact information
for, such program.11
T.R. 2011–01 also stated the
Departments’ intent to issue an
amendment to the July 2010 regulations
that would take into account comments
and other feedback received from
stakeholders and make modifications to
certain provisions of the July 2010
regulations. T.R. 2011–01 went on to
state that the relief was intended to act
as a bridge until an amendment to the
July 2010 regulations was issued.
This amendment to the July 2010
regulations makes changes with respect
to the provisions subject to the
enforcement grace period under T.R.
2011–01. At the expiration of the
enforcement grace period, the
Departments will begin enforcing the
relevant requirements of the July 2010
regulations, as amended by this
rulemaking.

8 T.R. 2010–02 also stated that HHS was
encouraging States to provide similar grace periods
with respect to issuers and HHS would not cite a
State for failing to substantially enforce the
provisions of part A of title XXVII of the PHS Act
in these situations.
9 T.R. 2011–01 is available at http://www.dol.gov/
ebsa/pdf/tr11-01.pdf.
10 Information related to diagnosis and treatment
codes (and/or their meanings) is, however,
generally required to be provided to claimants upon
request under existing DOL claims procedures. See
29 CFR 2560.503–1(h)(2)(iii), which is also
applicable to plans (whether or not they are ERISA
plans) and issuers that are not grandfathered health
plans pursuant to paragraph (b)(2)(i) of the July
2010 regulations. Nevertheless, a request for such
information, in itself, should not be considered to
be a request for (and therefore trigger the start of)
an internal appeal or external review.

11 Any enforcement grace period with respect to
disclosure requirements that has been provided
under T.R. 2010–02 or T.R. 2011–01 does not affect
disclosure requirements still in effect for ERISA
plans under the DOL claims procedure regulation
and/or Part 1 of ERISA.
12 See DOL Technical Release 2010–01, available
at http://www.dol.gov/ebsa/pdf/
ACATechnicalRelease2010-01.pdf; HHS Technical
Guidance issued August 26, 2010, available at
http://cciio.cms.gov/resources/files/interim_appeals
_guidance.pdf; and HHS Technical Guidance issued
September 23, 2010, available at http://
cciio.cms.gov/resources/files/technical_guidance
_for_self_funded_non_fed_plans.pdf. Additional
clarifications were provided in the form of
frequently-asked questions (FAQs), available at
http://www.dol.gov/ebsa/faqs/faq-aca.html and
http://cciio.cms.gov/resources/factsheets/
aca_implementation_faqs.html#claims.

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B. External Review
1. Applicability of Federal and State
External Review Processes
PHS Act section 2719, the July 2010
regulations, and technical guidance
issued by the Departments 12 provide a
system with respect to applicability of
either a State external review process or
a Federal external review process for
non-grandfathered plans and issuers.
How this impacts plans and issuers
varies, depending on the type of
coverage:
a. Self-insured plans subject to ERISA
and/or the Code.
In the case of self-insured plans
subject to ERISA and/or the Code, a

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Federal external review process
supervised by DOL and Treasury
applies (the ‘‘private accredited IRO
process’’ 13). On August 23, 2010, the
Department of Labor issued Technical
Release 2010–01 (T.R. 2010–01), which
set forth an interim enforcement safe
harbor for self-insured plans not subject
to a State external review process or to
the HHS-supervised process (the ‘‘HHSadministered process’’).14 This interim
enforcement safe harbor essentially
permits a private contract process under
which plans contract with accredited
independent review organizations
(IROs) to perform reviews. Separate
guidance being issued contemporaneous
with the publication of this amendment
makes adjustments to, and provides
clarifications regarding, the operation of
the private accredited IRO process.
b. Insured coverage.
In the case of health insurance issuers
in the group and individual market, the
July 2010 regulations set forth 16
minimum consumer protections based
on the Uniform External Review Model
Act promulgated by the National
Association of Insurance Commissioners
(NAIC) that, if provided by a State
external review process, will result in
the State’s process applying in lieu of a
Federal external review process.
Moreover, for insured group health
plans, as provided under paragraph
(c)(1) of the July 2010 regulations, if a
State external review process applies to
and is binding on the plan’s health
insurance issuer under paragraph (c) of
the July 2010 regulations (regarding
State standards for external review),
then the insured group health plan is
not required to comply with either the
State external review process or the
Federal external review process. The
July 2010 regulations provided a
transition period for plan years (in the
individual market, policy years)
beginning before July 1, 2011, during
which any existing State external review
process will be considered sufficient
(and will apply to health insurance
13 For simplicity, the Federal external review
process for self-insured plans subject to ERISA and/
or the Code supervised by DOL and Treasury is
referred to as the ‘‘private accredited IRO process’’
throughout this preamble. However, the interim
procedures for Federal external review issued as
DOL Technical Release 2010–01 also recognizes
that States may choose to expand access to their
State external review process to plans not subject
to applicable State laws (such as self-insured ERISA
plans) and allows those plans to meet their
responsibilities to provide external review under
PHS Act section 2719(b) by voluntarily complying
with the provisions of that State external review
process.
14 HHS Technical Guidance issued August 26,
2010 provided that, for insured coverage, the
Federal external review process would be fulfilled
through the HHS-administered process.

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issuers in that State). During the
transition period, in States and
territories without an existing State
external review process (Alabama,
Mississippi, Nebraska, Guam, American
Samoa, U.S. Virgin Islands and the
Northern Mariana Islands), HHS
guidance generally provided that health
insurance issuers will participate in the
HHS-administered process. As
explained later in this preamble, this
amendment to the July 2010 regulations
modifies the transition period originally
issued as part of the July 2010
regulations so that the last day of the
transition period for all health insurance
issuers offering group and individual
health insurance coverage is December
31, 2011.
In addition, the July 2010 regulations
provided that, following the conclusion
of the transition period, health
insurance issuers in a State that does
not meet the minimum consumer
protection standards set forth in
paragraph (c) of the July 2010
regulations will participate in an
external review process under Federal
standards similar to the process under
the NAIC Uniform Model Act, such as
the HHS-administered process. Separate
guidance being issued contemporaneous
with the publication of this amendment
announces standards under which, until
January 1, 2014, a State may also
operate such an external review process
under Federal standards similar to the
process under the NAIC Uniform Model
Act (an ‘‘NAIC-similar process’’).
Accordingly, if HHS determines that a
State has neither implemented the
minimum consumer protections
required under paragraph (c) of the July
2010 regulations, nor an NAIC-similar
process, issuers in the State will have
the choice of participating in either the
HHS-administered process or the
private accredited IRO process. HHS is
adopting this approach to permit States
to operate their external review
processes under standards established
by the Secretary until January 1, 2014,
avoiding unnecessary disruption, while
States work to adopt an ‘‘NAIC-parallel
process,’’ consistent with the consumer
protections set forth in paragraph (c) of
the July 2010 regulations.
c. Self-insured, nonfederal
governmental plans.
For self-insured, nonfederal
governmental plans (which are subject
to the PHS Act, but not ERISA or the
Code), previous HHS guidance generally
provided that they follow the private
accredited IRO process.15 (In States and
territories that did not have an existing
15 See HHS Technical Guidance issued September
23, 2010.

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external review process (Alabama,
Mississippi, Nebraska, Guam, American
Samoa, U.S. Virgin Islands and the
Northern Mariana Islands), previous
HHS guidance generally provided that
such plans may choose to follow the
HHS-administered process or follow the
private accredited IRO process.)
Separate guidance being issued
contemporaneous with the publication
of this amendment generally treats selfinsured nonfederal governmental plans
the same as health insurance issuers.
That is, a State may temporarily operate
such an external review process
applicable to a self-insured nonfederal
governmental plan under Federal
standards similar to the process under
the NAIC Uniform Model Act. If no such
State-operated process exists, selfinsured nonfederal governmental plans
have the choice of participating in either
the HHS-administered process or the
private accredited IRO process.
2. Scope of Claims Eligible for External
Review
While the process varies depending
on the type of coverage, so does the
scope of claims eligible for external
review. That is, for insurance coverage
and self-insured nonfederal
governmental plans subject to a State
external review process (either an NAICparallel process or an NAIC-similar
process), the State determines the scope
of claims eligible for external review.16
For coverage subject to either the HHSadministered process or the private
accredited IRO process, the July 2010
regulations provided that any adverse
benefit determination (or final internal
adverse benefit determination) could be
reviewed unless it is related to a
participant’s or beneficiary’s failure to
meet the requirements for eligibility
under the terms of a group health plan.
As explained later in this preamble, this
amendment to the July 2010 regulations
modifies the scope of claims eligible for
16 Under paragraphs (c)(2)(i) and (c)(2)(xvi) of the
July 2010 regulations, State processes must provide
external review for adverse benefit determinations
(including final internal adverse benefit
determinations) that are based on issuer’s (or plan’s)
requirements for medical necessity,
appropriateness, health care setting, level of care, or
effectiveness of a covered benefit; or that involve
experimental or investigational treatment. (A State
external review process may also provide for
external review of a broader scope of adverse
benefit determinations.) At the same time,
paragraph (c)(3) of the July 2010 regulations
provides a transition period during which a State
external review process will be considered binding
on an issuer (or a plan), in lieu of the requirements
of any Federal external review process, even if the
State process does not meet all the requirements of
paragraph (c)(2) of the July 2010 regulations. That
transition period is being modified by this
amendment, as described below.

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external review under the Federal
external review process.
II. Overview of Amendments to the
Interim Final Regulations
A. Internal Claims and Appeals

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1. Expedited Notification of Benefit
Determinations Involving Urgent Care
(Paragraph (b)(2)(ii)(B) of the July 2010
Regulations)
The July 2010 regulations provided
that a plan or issuer must notify a
claimant of a benefit determination
(whether adverse or not) with respect to
a claim involving urgent care (as
defined in the DOL claims procedure
regulation) 17 as soon as possible, taking
into account the medical exigencies, but
not later than 24 hours after the receipt
of the claim by the plan or issuer, unless
the claimant fails to provide sufficient
information to determine whether, or to
what extent, benefits are covered or
payable under the plan or health
insurance coverage. This was a change
from the DOL claims procedure
regulation, which generally requires a
determination not later than 72 hours
after receipt of the claim by a group
health plan for urgent care claims. The
preamble to the July 2010 regulations
stated that the Departments expected
electronic communication would enable
faster decision-making than in the year
2000, when the DOL claims procedure
regulation was issued.18
While some commenters supported
the 24-hour rule (particularly consumer
advocates and medical associations,
including mental health providers who
noted the 24-hour standard was
especially important for people in
psychiatric crisis), concerns were raised
by many plans and issuers regarding the
burden of a 24-hour turnaround. Some
commenters argued that some of the
claims constituting ‘‘urgent care’’ and
thus qualifying for the expedited
timeframe really do not need to be made
within 24 hours. Moreover, a number of
commenters highlighted that the
72-hour provision was intended only to
serve as a ‘‘backstop’’; as the general
rule under both the July 2010
regulations and the DOL claims
procedure regulation requires a decision
17 Under the DOL claims procedure regulation, a
‘‘claim involving urgent care’’ is a claim for medical
care or treatment with respect to which the
application of the time periods for making nonurgent care determinations could seriously
jeopardize the life or health of the claimant or the
ability of the claimant to regain maximum function;
or, 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.
18 75 FR 43330, 43333 (July 23, 2010).

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as soon as possible consistent with the
medical exigencies involved, making
the change to a 24-hour timeframe
unnecessary for the most serious
medical cases. Some commenters cited
the Emergency Medical Treatment and
Labor Act (EMTALA),19 which generally
requires hospitals to provide emergency
care to individuals with or without
insurance or preauthorization and,
therefore, mitigates the need for
expedited pre-service emergency claims
determinations in many situations.
Finally, some commenters stated that a
firm 24-hour turnaround for urgent care
claims will adversely affect claimants,
as plans and issuers will not have
sufficient time to properly review a
claim, adversely affecting the quality of
the review process in cases where the
provider cannot be consulted in time,
and leading to unnecessary denials of
claims.
After considering the comments, and
the costs and benefits of an absolute 24hour decision-making deadline for preservice urgent care claims, this
amendment permits plans and issuers to
follow the original rule in the DOL
claims procedure regulation (requiring
decision-making in the context of preservice urgent care claims as soon as
possible consistent with the medical
exigencies involved but in no event later
than 72 hours), provided that the plan
or issuer defers to the attending
provider with respect to the decision as
to whether a claim constitutes ‘‘urgent
care.’’ At the same time, the
Departments underscore that the 72hour timeframe remains only an outside
limit and that, in cases where a decision
must be made more quickly based on
the medical exigencies involved, the
requirement remains that the decision
should be made sooner than 72 hours
after receipt of the claim.
2. Additional Notice Requirements for
Internal Claims and Appeals (Paragraph
(b)(2)(ii)(E) of the July 2010 Regulations)
The July 2010 regulations also
provided additional content
requirements for any notice of adverse
benefit determination or final internal
adverse benefit determination. The July
2010 regulations required a plan or
issuer to:
(a) Ensure that any notice of adverse
benefit determination or final internal
adverse benefit determination includes
information sufficient to identify the
claim involved. Under the July 2010
regulations, this information included
the date of service, the health care
provider, and the claim amount (if
19 42

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applicable),20 as well as the diagnosis
code (such as an ICD–9 code, ICD–10
code, or DSM–IV code),21 the treatment
code (such as a CPT code),22 and the
corresponding meanings of these codes.
(b) Ensure that the description of the
reason or reasons for the adverse benefit
determination or final internal adverse
benefit determination includes the
denial code (such as a CARC and
RARC) 23 and its corresponding
meaning. It must also include a
description of the plan’s or issuer’s
standard, if any, that was used in
denying the claim (for example, if a plan
applies a medical necessity standard in
denying a claim, the notice must
include a description of the medical
necessity standard). In the case of a
notice of final internal adverse benefit
determination, this description must
include a discussion of the decision.
(c) Provide a description of available
internal appeals and external review
processes, including information
regarding how to initiate an appeal.
(d) Disclose the availability of, and
contact information for, any applicable
office of health insurance consumer
assistance or ombudsman established
under PHS Act section 2793 to assist
enrollees with the internal claims and
appeals and external review
processes.24
Many comments received on the July
2010 regulations raised concerns about
the additional content required to be
included in the notices. Comments by a
range of stakeholders, including plans,
issuers, and consumer advocacy
organizations focused heavily on the
automatic provision of the diagnosis
20 The amount of the claim may not be knowable
or available at the time, such as in a case of
preauthorization, or there may be no specific claim,
such as in a case of rescission that is not connected
to a claim.
21 ICD–9 and ICD–10 codes refer to the
International Classification of Diseases, 9th revision
and 10th revision, respectively. The DSM–IV codes
refer to the Diagnostic and Statistical Manual of
Mental Disorders, Fourth Edition.
22 CPT refers to Current Procedural Terminology.
23 CARC refers to Claim Adjustment Reason Code
and RARC refers to Remittance Advice Remark
Code.
24 To assist plans and issuers in making these
disclosures, the Departments provided a current list
of relevant consumer assistance programs and
ombudsmen in the Appendix to T.R. 2011–01.
Plans and issuers with July 1 plan years may rely
upon the list in that Appendix when developing
their notices of adverse benefit determination and
final internal adverse benefit determination for plan
years beginning on July 1, 2011. The Departments
are committed to reviewing and updating this list.
The first update is being made available
contemporaneous with publication of this
amendment. The first update is available (and any
future updates will be made available) at http://
www.dol.gov/ebsa/healthreform and http://
cciio.cms.gov/programs/consumer/capgrants/
index.html.

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and treatment codes (and their
meanings). Concerns were raised about
privacy (because explanations of
benefits (EOBs) often are sent to an
individual who is not the patient, such
as an employee who is the patient’s
spouse or parent), interference with the
doctor-patient relationship,25 and high
costs.26 More specifically, commenters
highlighted that sensitive issues such as
mental health treatments would be
identified by specific treatment or
diagnosis codes and that privacy
concerns are magnified for adult
dependents under age 26 who may be
covered by their parent’s health plan.
Others pointed out that there are over
20,000 treatment and diagnosis codes in
use today, presenting a costly
administrative and operational
challenge for plans and issuers.
Comments also questioned the efficacy
of providing the codes, which some
argued are often very difficult for the
average patient to understand.27
Other comments were received in
support of the coding provisions.
Consumer advocates commented
positively on the requirement that
denial notices include information for
consumers about their right to appeal
denials and the availability of state
consumer assistance programs (CAPs)
that will help consumers file appeals.
There were also positive comments on
the requirement to provide a rationale
for the denial (including a description of
the plan’s or issuer’s standard (such as
‘‘medical necessity’’), if any, that was
used denying the claim). With respect to
the provision of coding information,
some commented that this would be
helpful to consumers because coding
errors and missing coding information
often are the basis for denying claims.
After considering all of the comments,
and the costs and benefits of the
25 Several commenters raised concerns that
providers’ initial or suspected diagnosis may not
match the ultimate diagnosis or patients’ perception
of their diagnosis. One commenter gave the
example of a patient who has a biopsy procedure.
In that case, the patient would receive an EOB with
an initial diagnosis code of cancer, however the
results of the biopsy may rule out cancer. In that
situation, the EOB can result in confusion and
unnecessary mental anguish.
26 In particular, comment letters cited concerns
with respect to programming aspects of providing
diagnosis codes at a time when plans and issuers
are changing over from ICD–9 diagnosis codes to
more extensive and technical ICD–10 codes.
27 Several commenters noted that technical ICD–
9 and/or ICD–10 codes can be confusing and/or
cause worry. One commenter gave the example of
a patient presenting with a white coating on his
tongue, who is told not to worry and to brush the
tongue with a toothbrush. The diagnosis code is
529.3, hypertrophy of tongue papillae, a term not
used by the patient’s doctor during the office visit
and, therefore, prone to cause confusion and/or
concern.

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additional disclosure, this amendment
eliminates the requirement to
automatically provide the diagnosis and
treatment codes as part of a notice of
adverse benefit determination (or final
internal adverse benefit determination)
and instead substitutes a requirement
that the plan or issuer must provide
notification of the opportunity to
request the diagnosis and treatment
codes (and their meanings) in all notices
of adverse benefit determination (and
notices of final internal adverse benefit
determination), and a requirement to
provide this information upon
request.28 This amendment also clarifies
that, in any case, a plan or issuer must
not consider a request for such
diagnosis and treatment information, in
itself, to be a request for (and therefore
trigger the start of) an internal appeal or
external review.
3. Deemed Exhaustion of Internal
Claims and Appeals Processes
(Paragraph (b)(2)(ii)(F) of the July 2010
Regulations)
The courts generally require claimants
to exhaust administrative proceedings
before going to court or seeking external
review. When plans and issuers offer
full and fair internal procedures for
resolving claims, it is reasonable to
insist that claimants first turn to those
procedures before seeking judicial or
external review of benefit denials. There
is less justification, however, for
insisting that a claimant exhaust
administrative procedures that do not
comply with the law. Accordingly, the
July 2010 regulations permitted
claimants to immediately seek review if
a plan or issuer failed to ‘‘strictly
adhere’’ to all of the July 2010
regulations’ requirements for internal
claims and appeals processes, regardless
of whether the plan or issuer asserted
that it ‘‘substantially complied’’ with
the July 2010 regulations. The July 2010
regulations also clarified that, in such
circumstances, the reviewing tribunal
should not give special deference to the
plan’s or issuer’s decision, but rather
should resolve the dispute de novo.
Consumer groups generally supported
this ‘‘strict adherence’’ approach, but
the approach received a number of
negative comments from some issuers
and plan sponsors, who advocate a
‘‘substantial compliance’’ approach.
28 As discussed earlier, in footnote 9, information
related to diagnosis and treatment codes (and/or
their meanings) is, however, generally required to
be provided to claimants upon request under
existing DOL claims procedures, which is also
incorporated in the July 2010 regulations. See 29
CFR 2560.503–1(h)(2)(iii) and paragraph (b)(2)(i) of
the July 2010 regulations.

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The Departments continue to believe
that claimants should not have to follow
an internal claims and appeals
procedure that is less than full, fair, and
timely, as set forth in the July 2010
regulations. In response to comments,
the Departments are retaining the
general approach to this requirement,
but this amendment also adds a new
paragraph (b)(2)(ii)(F)(2) to the July 2010
regulations to provide an exception to
the strict compliance standard for errors
that are minor and meet certain other
specified conditions. The new
paragraph will also protect claimants
whose attempts to pursue other
remedies under paragraph (b)(2)(ii)(F)(1)
of the interim final regulations are
rejected by a reviewing tribunal. Under
the amended approach, any violation of
the procedural rules of the July 2010
regulations pertaining to internal claims
and appeals would permit a claimant to
seek immediate external review or court
action, as applicable, unless the
violation was:
(1) De minimis;
(2) Non-prejudicial;
(3) Attributable to good cause or
matters beyond the plan’s or issuer’s
control;
(4) In the context of an ongoing goodfaith exchange of information; and
(5) Not reflective of a pattern or
practice of non-compliance.
In addition, the claimant would be
entitled, upon written request, to an
explanation of the plan’s or issuer’s
basis for asserting that it meets this
standard, so that the claimant could
make an informed judgment about
whether to seek immediate review.
Finally, if the external reviewer or the
court rejects the claimant’s request for
immediate review on the basis that the
plan met this standard, this amendment
would give the claimant the right to
resubmit and pursue the internal appeal
of the claim.
4. Form and Manner of Notice
(Paragraph (e) of the July 2010
Regulations)
PHS Act section 2719 requires group
health plans and health insurance
issuers to provide relevant notices in a
culturally and linguistically appropriate
manner. The July 2010 regulations set
forth a requirement to provide notices in
a non-English language based on
separate thresholds of the number of
people who are literate in the same nonEnglish language. In the group market,
the threshold set forth in the July 2010
regulations differs depending on the
number of participants in the plan:
• For a plan that covers fewer than
100 participants at the beginning of a
plan year, the threshold is 25 percent of

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all plan participants being literate only
in the same non-English language.
• For a plan that covers 100 or more
participants at the beginning of a plan
year, the threshold is the lesser of 500
participants, or 10 percent of all plan
participants, being literate only in the
same non-English language.
These thresholds were adapted from
the DOL regulations regarding style and
format for a summary plan description,
at 29 CFR 2520.102–2(c) for participants
who are not literate in English. For the
individual market, the threshold is 10
percent of the population residing in the
county being literate only in the same
non-English language. The individual
market threshold was generally adapted
from the approach used under the
Medicare Advantage program, which
required translation of materials in
languages spoken by more than 10
percent of the general population in a
service area at the time the threshold
was established.
Under the July 2010 regulations, if an
applicable threshold is met with respect
to a non-English language, the plan or
issuer must provide the notice upon
request in the non-English language.
Additionally, the plan or issuer must
include a statement in the English
versions of all notices, prominently
displayed in the non-English language,
offering the provision of such notices in
the non-English language. Finally, to the
extent the plan or issuer maintains a
customer assistance process (such as a
telephone hotline) that answers
questions or provides assistance with
filing claims and appeals, the plan or
issuer must provide such assistance in
the non-English language.
Comments received in response to the
July 2010 regulations raised several
concerns about this requirement. One
group of commenters stated that the
thresholds for the group market were
difficult to comply with, especially for
small plans (where an individual or a
small number of individuals could
cause a plan to change status with
respect to the threshold) and insured
plans (where the issuer may be in a very
difficult position to determine the
English literacy of an employer’s
workforce). Some commenters stated
that the threshold requirements for the
group and individual markets should be
consistent.
Other commenters were concerned
with the high costs of compliance with
this rule, particularly the ‘‘tagging and
tracking requirement’’ to the extent that
individuals who request a document in
a non-English language would need to
be ‘‘tagged’’ and ‘‘tracked’’ so that any
future notices would be provided
automatically in the non-English

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language. Some of these commenters
cited the high costs associated with
implementing translation requirements
pursuant to California State law and the
low take-up rates of translated materials
in California. Some commenters also
cited the importance of having written
translation of documents available (at a
minimum, upon request), as well as
having oral language services for
customer assistance.
Following review of the comments
submitted on this issue and further
review and consideration of the
provisions of PHS Act section 2719, the
Departments have determined it is
appropriate to amend the provisions of
the July 2010 regulations related to the
provision of notices in a culturally and
linguistically appropriate manner. This
amendment establishes a single
threshold with respect to the percentage
of people who are literate only in the
same non-English language for both the
group and individual markets. With
respect to group health plans and health
insurance issuers offering group or
individual health insurance coverage,
the threshold percentage of people who
are literate only in the same non-English
language will be set at 10 percent or
more of the population residing in the
claimant’s county, as determined based
on American Community Survey data
published by the United States Census
Bureau.29 The Departments will update
this guidance annually on their Web site
if there are changes to the list of the
counties determined to meet this 10
percent threshold for the county’s
population being literate only in the
same non-English language.30
This amendment to the July 2010
regulations requires that each notice
sent by a plan or issuer to an address in
a county that meets this threshold
include a one-sentence statement in the
relevant non-English language about the
availability of language services. The
Departments have provided guidance
with sample sentences in the relevant
languages in separate guidance being
issued contemporaneous with the
publication of this amendment. For ease
of administration, some plans and
issuers may choose to use a onesentence statement for all notices within
29 At the time of publication of this amendment,
255 U.S. counties (78 of which are in Puerto Rico)
meet this threshold. The overwhelming majority of
these are Spanish; however, Chinese, Tagalog, and
Navajo are present in a few counties, affecting five
states (specifically, Alaska, Arizona, California,
New Mexico, and Utah). A full list of the affected
U.S. counties in 2011 is included in Table 2 later
in this preamble, under the heading, ‘‘IV. Economic
Impact and Paperwork Burden.’’
30 This information will be made available at
http://www.dol.gov/ebsa/healthreform and http://
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an entire State (or for a particular
service area) that reflects the threshold
language or languages in any county
within the State or service area. For
example, statewide notices in California
could include the relevant one-sentence
statement in Spanish and Chinese
because, using the data from Table 2,
Spanish meets the 10 percent threshold
in Los Angeles County and 22 other
counties and Chinese meets the 10
percent threshold in San Francisco
County. This would be a permissible
approach to meeting the rule under this
amendment.
In addition to including a statement
in all notices in the relevant nonEnglish language, this amendment
requires a plan or issuer to provide a
customer assistance process (such as a
telephone hotline) with oral language
services in the non-English language
and provide written notices in the nonEnglish language upon request. For this
purpose, plans and issuers are permitted
to direct claimants to the same customer
service telephone number where
representatives can first attempt to
address the consumer’s questions with
an oral discussion, but also provide a
written translation upon request in the
threshold non-English language. Finally,
this amendment removes any ‘‘tagging
and tracking’’ requirement that would
have otherwise applied under the July
2010 regulations.
This amendment to the July 2010
regulations provides standards for
providing culturally and linguistically
appropriate notices that balance the
objective of protecting consumers by
providing understandable notices to
individuals who speak primary
languages other than English with the
goal of simplifying information
collection burdens on plans and issuers.
(Note, nothing in these regulations
should be construed as limiting an
individual’s rights under Federal or
State civil rights statutes, such as Title
VI of the Civil Rights Act of 1964 (Title
VI) which prohibits recipients of
Federal financial assistance, including
issuers participating in Medicare
Advantage, from discriminating on the
basis of race, color, or national origin.
To ensure non-discrimination on the
basis of national origin, recipients are
required to take reasonable steps to
ensure meaningful access to their
programs and activities by limited
English proficient persons. For more
information, see, ‘‘Guidance to Federal
Financial Assistance Recipients
Regarding Title VI Prohibition Against
National Origin Discrimination
Affecting Limited English Proficient
Persons,’’ available at http://
www.hhs.gov/ocr/civilrights/resources/

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specialtopics/lep/
policyguidancedocument.html.)
The Departments welcome comments
on this amendment, including whether
it would be appropriate to include a
provision in the final rules requiring
health insurance issuers providing
group health insurance coverage to
provide language services in languages
that do not meet the requisite threshold
for an applicable non-English language,
if requested by the administrator or
sponsor of the group health plan to
which the coverage relates. For
example, if Chinese does not meet the
10 percent threshold in New York
County, but an employer with a large
Chinese-speaking population asks the
health insurance issuer providing its
group health insurance coverage to
provide language services in Chinese (as
described in the amendment), the
Departments invite comment on what
obligations should be imposed on the
issuer, if any, to provide language
services in Chinese.

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B. External Review
1. Duration of Transition Period for
State External Review Processes
In general, if State laws do not meet
the minimum consumer protections of
the NAIC Uniform Model Act,31 as set
forth in paragraph (c)(2) of the July 2010
regulations, insurance coverage (as well
as self-insured nonfederal governmental
plan and church plan coverage) is
subject to the requirements of an
external review process under Federal
standards similar to the process under
the NAIC Uniform Model Act, such as
the HHS-administered process.
Paragraph (c)(3) of the July 2010
regulations provided a transition period
for plan years (in the individual market,
policy years) beginning before July 1,
2011 in order to allow States time to
amend their laws to meet or go beyond
the minimum consumer protections of
the NAIC Uniform Model Act set forth
in paragraph (c)(2) of the July 2010
regulations. HHS has been working
closely with States regarding enactment
of laws to conform to paragraph (c)(2)
and much progress has been made.
However, enacting State legislation and
regulations can often be a complex and
time-consuming process. Accordingly,
the Departments are modifying the
transition period under paragraph (c)(3)
of the July 2010 regulations so that the
last day of the transition period is
31 The NAIC Uniform Model Act in place on July
23, 2010 provides external review for claims
involving medical necessity, appropriateness,
health care setting, level of care, effectiveness (of a
covered benefit), whether a treatment is
experimental, and whether a treatment is
investigational.

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December 31, 2011 to give States, which
are making substantial progress in
implementing State external review
processes that conform to paragraph
(c)(2), the requisite time to complete
that process. Because the July 2010
regulations would have ended the
transition period for plan years (in the
individual market, policy years)
beginning on or after July 1, 2011, the
Departments note that ending the
transition period on December 31, 2011
will reduce the length of the transition
period for plans and policies with plan
years (in the individual market, policy
years) beginning after January 1 but
before July 1. When the July 2010
regulations were published, the
Departments anticipated that issuers in
every State that had not enacted laws to
conform to paragraph (c)(2) of the July
2010 regulations would need to
participate in the HHS-administered
process. Now, the Departments have
decided that issuers may continue to
participate in a State external review
process under Federal standards similar
to the process under the NAIC Uniform
Model Act (an NAIC-similar process),
which the Departments anticipate will
reduce market disruption when the
transition period ends. Therefore, based
on the Departments’ concerns for
making the consumer protections of the
Affordable Care Act available without
undue delay and for ensuring as much
uniformity as possible in the availability
of those protections regardless of the
form of a consumer’s health coverage,
the Departments have decided to end
the transition period on December 31,
2011. Therefore, this amendment to the
July 2010 regulations provides that,
before January 1, 2012, an applicable
State external process will apply in lieu
of the requirements of the Federal
external review process. PHS Act
section 2719(c) authorizes the
Departments to deem an external review
process ‘‘in operation as of the date of
enactment’’ of the Affordable Care Act
as compliant with the external review
requirements of PHS Act section
2719(b). Through December 31, 2011,
any currently effective State external
review process satisfies the
requirements of either PHS Act section
2719(c) or section 2719(b)(2). If there is
no applicable State external review
process, separate guidance being issued
contemporaneous with the publication
of this amendment generally provides a
choice between the HHS-administered
process or the private accredited IRO
process.

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2. Scope of the Federal External Review
Process
Paragraph (d)(1) of the July 2010
regulations sets forth the scope of claims
eligible for external review under the
Federal external review process.
Specifically, any adverse benefit
determination (including a final internal
adverse benefit determination) could be
reviewed unless it related to a
participant’s or beneficiary’s failure to
meet the requirements for eligibility
under the terms of a group health plan
(i.e., worker classification and similar
issues were not within the scope of the
Federal external review process).
Comments received in response to the
July 2010 regulations were mixed on the
scope of claims eligible for external
review. Some commenters argued that
PHS Act section 2719 requires the
Federal external review process to be
‘‘similar to’’ the NAIC Uniform Model
Act and that the broader scope of claims
eligible for the Federal external review
process is a major departure from the
NAIC Uniform Model Act. In addition,
some comments from plans and issuers
stated that the IROs that are used in the
private accredited IRO process
traditionally have expertise in
adjudicating medical claims, and
questioned IROs’ experience and
expertise with legal and contractual
claims. Other comments from IROs and
the IRO industry stated that these
organizations do currently conduct
reviews that involve both medical
judgment issues and legal and
contractual issues, and that there is
sufficient capacity for conducting
reviews of such disputes.
Some plan and issuer comments
highlighted that, with a limited number
of accredited IROs and increased
demand for their services, the cost of
external review for self-insured group
health plans will likely increase. By
contrast, an IRO association group
commented that member organizations
are not at capacity with regard to the
volume of work they can perform, and
that they are confident that the number
of accredited IROs can adequately
handle the volume of reviews
anticipated for the Federal external
review process.
Some plans and issuers stated that
handing plan document interpretation
and legal interpretation issues over to an
IRO may raise issues of consistency of
interpretations within a plan,
unwarranted consistency across plans
that have unique standards, ERISA
fiduciary responsibility concerns, and
possible conflicts. At the same time,
other comments generally supported the
broad scope of claims eligible for the

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Federal external review process as set
forth in the July 2010 regulations. These
commenters argued very strongly that it
is nearly impossible to adjudicate
contractual claims through traditional
ERISA enforcement (which generally
relies on Federal court adjudication),
leaving plan participants and
beneficiaries with no effective means of
enforcing their rights to benefits under
a plan. Consumer organizations further
commented that external review finally
provides the free, independent means of
enforcement to level the playing field of
claims adjudication and, therefore, the
scope of claims eligible for the Federal
external review process should be as
broad as possible.
After considering all the comments,
with respect to claims for which
external review has not been initiated
before September 20, 2011, the
amendment suspends the original rule
in the July 2010 regulations regarding
the scope of claims eligible for external
review for plans using a Federal
external review process (regardless of
which type of Federal process),
temporarily replacing it with a different
scope. Specifically, this amendment
suspends the broad scope of claims
eligible for the Federal external review
process and narrows the scope to claims
that involve (1) medical judgment
(excluding those that involve only
contractual or legal interpretation
without any use of medical judgment),
as determined by the external reviewer;
or (2) a rescission of coverage. The more
narrow scope under this amendment is
more similar to the scope of claims
eligible for external review under the
NAIC Uniform Model Act. This
amendment provides an example
describing a plan that generally only
provides 30 physical therapy visits but
will provide more with an approved
treatment plan. The plan’s rejection of a
treatment plan submitted by a provider
for the 31st visit based on a failure to
meet the plan’s standard for medical
necessity involves medical judgment
and, therefore, the claim is eligible for
external review. Similarly, another
example describes a plan that generally
does not provide coverage for services
provided on an out-of-network basis,
but will provide coverage if the service
cannot effectively be provided in
network. In this example, again, the
plan’s rejection of a claim for out-ofnetwork services involves medical
judgment. Additional examples of
situations in which a claim is
considered to involve medical judgment
include adverse benefit determinations
based on:
• The appropriate health care setting
for providing medical care to an

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individual (such as outpatient versus
inpatient care or home care versus
rehabilitation facility);
• Whether treatment by a specialist is
medically necessary or appropriate
(pursuant to the plan’s standard for
medical necessity or appropriateness);
• Whether treatment involved
‘‘emergency care’’ or ‘‘urgent care’’,
affecting coverage or the level of
coinsurance;
• A determination that a medical
condition is a preexisting condition;
• A plan’s general exclusion of an
item or service (such as speech therapy),
if the plan covers the item or service in
certain circumstances based on a
medical condition (such as, to aid in the
restoration of speech loss or impairment
of speech resulting from a medical
condition);
• Whether a participant or beneficiary
is entitled to a reasonable alternative
standard for a reward under the plan’s
wellness program; 32
• The frequency, method, treatment,
or setting for a recommended preventive
service, to the extent not specified, in
the recommendation or guideline of the
U.S. Preventive Services Task Force, the
Advisory Committee on Immunization
Practices of the Centers for Disease
Control and Prevention, or the Health
Resources and Services Administration
(as described in PHS Act section 2713
and its implementing regulations); 33
and
• Whether a plan is complying with
the nonquantitative treatment limitation
provisions of the Mental Health Parity
and Addiction Equity Act and its
implementing regulations, which
generally require, among other things,
parity in the application of medical
management techniques.34
The suspension is intended to give
the marketplace time to adjust to
providing external review. It will also
32 See 26 CFR 54.9802–1(f)(2)(iv)(A), 29 CFR
2590.702(f)(2)(iv)(A), and 45 CFR
146.121(f)(2)(iv)(A), requiring that wellness
programs that require individuals to satisfy a
standard related to a health factor in order to obtain
a reward allow a reasonable alternative standard (or
waiver of the otherwise applicable standard) for
obtaining the reward for any individual for whom,
for that period, it is either unreasonably difficult
due to a medical condition to satisfy the otherwise
applicable standard, or medically inadvisable to
attempt to satisfy the otherwise applicable standard.
33 See 26 CFR 54.9815–2713T, 29 CFR 2590.715–
2713, and 45 CFR 147.130; see also FAQ 8, FAQs
About the Affordable Care Act Implementation Part
II, regarding the scope, setting, or frequency of the
items or services to be covered under the preventive
health services recommendations and guidelines
(available at http://www.dol.gov/ebsa/faqs/faqaca2.html and http://cciio.cms.gov/resources/
factsheets/aca_implementation_faqs2.html).
34 See Code section 9812 and 26 CFR 54.9812–1T,
ERISA section 712 and 29 CFR 2590.712, and PHS
Act section 2726 and 45 CFR 146.136.

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allow the Departments time to evaluate
IROs’ capacity for handling external
reviews; to consider whether current
accreditation standards are sufficient to
ensure that IROs are capable of making
accurate and consistent decisions (both
across different plans and across
different IROs) regarding legal and
contractual issues that do not involve
medical judgment or rescissions; and to
assess the mechanics of the Federal
external review process (and any
potential adjustments). The
Departments solicit comments on these
issues, including on whether limiting
the scope of claims during the
suspension period will impose
administrative costs in determining
whether a claim is eligible for external
review. The Departments also welcome
any data on external review claims
actually performed to date under private
contracts pursuant to the private
accredited IRO process for
implementing PHS Act § 2719(b),
including number of claims reviewed,
type of review (such as whether it
involved any medical judgment or not),
and costs associated with the review.
The Departments expect that the
suspension will be lifted by January 1,
2014, when other consumer protections
under the Affordable Care Act take
effect. Moreover, if, after taking into
account all the relevant information,
including public comments, the
Departments decide to return to the
original rule providing for a broad scope
of claims or permanently modify the
scope of claims through rulemaking, the
Departments will give sufficient
advance notice to enable plans, their
service providers, IROs, and other
affected parties sufficient time to
comply with a new rule.
Separate guidance being issued
contemporaneous with the publication
of this amendment announces standards
under which, until January 1, 2014, a
State may operate an external review
process under Federal standards similar
to the process under the NAIC Uniform
Model Act (an NAIC-similar process).
The Departments are adopting this
approach to permit States to operate
their external review processes under
standards established by the
Departments until January 1, 2014,
avoiding unnecessary disruption, while
States work to adopt the consumer
protections set forth in paragraph (c) of
the July 2010 regulations. Paragraph
(d)(1) of the July 2010 regulations, as
amended, will govern the scope of a
State external review process under
Federal standards similar to the process
under the NAIC Uniform Model Act.
Because the amended paragraph (d)(1)

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creates a broader scope of external
review than is required under the NAIC
Uniform Model Act, and because it
would be illogical to require States to
make changes to their process to
encompass the broader scope of
paragraph (d)(1) in their external review
process while they work to adopt the
consumer protections of the NAIC
Uniform Model Act (which has a
narrower scope), the Departments are
also amending paragraph (d)(1) to
permit the Secretaries to modify the
scope of the Federal external review
process in future guidance to permit
State external review processes (both
NAIC-similar processes and NAICparallel processes) to the scope that
applies under the NAIC Uniform Model
Act.
3. Clarification Regarding Requirement
That External Review Decision Be
Binding
The Departments have received a
number of comments on the
requirement that an IRO decision be
binding on parties. Specifically, the July
2010 regulations provided that an
external review decision by an IRO is
binding on the plan or issuer, as well as
the claimant, except to the extent that
other remedies are available under State
or Federal law.35 This binding
requirement is also one of the minimum
consumer protections set forth in
paragraph (c) of the July 2010
regulations.36
Some comments received in response
to the July 2010 regulations highlighted
the importance of this consumer
protection and expressed approval that
this requirement would minimize
delays that could further hurt claimants,
as the plan or issuer must provide
coverage or payment for the claim
immediately upon receipt of a notice of
a final external review decision. Other
commenters questioned whether the
requirement that external review is
binding eliminates the plan’s or issuer’s
option to choose to pay a claim at any
time during or after the external review
process.
Nothing in PHS Act section 2719(b),
the July 2010 regulations, or related
guidance precludes a plan or issuer
from choosing to provide coverage or
payment for a benefit. Instead, the
Departments read the requirement of the
NAIC Uniform Model Act, which is
incorporated into the July 2010
regulations, to require plans and issuers
35 See 26 CFR 54.9815–2719T(d)(2)(iv), 29 CFR
2590.715–2719(d)(2)(iv), and 45 CFR
147.136(d)(2)(iv).
36 See 26 CFR 54.9815–2719T(c)(2)(xi), 29 CFR
2590.715–2719(c)(2)(xi), and 45 CFR
147.136(c)(2)(xi).

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to provide a benefit if that is the
decision of the IRO. A plan or issuer
may not delay payment because the
plan disagrees and intends to seek
judicial review. Instead, while the plan
may be entitled to seek judicial review,
it must act in accordance with the IRO’s
decision (including by making payment
on the claim) unless or until there is a
judicial decision otherwise. However,
the requirement that the IRO’s decision
be binding does not preclude the plan
or issuer from making payment on the
claim or otherwise providing benefits at
any time, including following a final
external review decision that denies the
claim or otherwise fails to require such
payment or benefits.
After considering all the comments on
the requirement that an IRO decision be
binding on the plan and issuer, as well
as the claimant, this amendment
clarifies the language in paragraphs
(c)(2)(xi) (regarding the minimum
standards for State external review
processes) and (d)(2)(iv) (regarding
Federal external review process
standards). Specifically, these two
provisions are amended to add language
stating that, for purposes of the binding
provision, the plan or issuer must
provide benefits (including by making
payment on the claim) pursuant to the
final external review decision without
delay, regardless of whether the plan or
issuer intends to seek judicial review of
the external review decision and unless
or until there is a judicial decision
otherwise. The Departments welcome
comments as to whether any additional
clarifications about the binding
provision would be helpful.
C. Separate, Contemporaneous
Technical Guidance
Separate technical guidance is being
issued by the Departments
contemporaneous with the publication
of this amendment. This technical
guidance addresses both State- and
Federally-administered external review
processes. An appendix to this technical
guidance contains revised versions of
the three model notices issued by the
Departments in connection with the July
2010 regulations. The updated versions
of the model notice of adverse benefit
determination, model notice of final
internal adverse benefit determination,
and model notice of final external
review decision reflect the requirements
contained in the provisions of this
amendment and the guidance. This
technical guidance will be available at
http://www.dol.gov/ebsa/healthreform
and http://cciio.cms.gov.
HHS is issuing also two additional
technical guidance documents. The first
provides instructions for self-insured

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nonfederal governmental plans and
health insurance issuers with respect to
election of a Federal external review
process. The second provides, for
transparency purposes, updated
information on how the county-level
estimates pertaining to the 10 percent
threshold were calculated for the rules
related to culturally and linguistically
appropriate notices. Both of these
documents will be available at http://
cciio.cms.gov.
III. Interim Final Rules
Section 9833 of the Code, section 734
of ERISA, and section 2792 of the PHS
Act authorize the Secretaries of the
Treasury, Labor, and HHS (collectively,
the Secretaries) to promulgate any
interim final rules that they determine
are appropriate to carry out the
provisions of chapter 100 of the Code,
part 7 of subtitle B of title I of ERISA,
and part A of title XXVII of the PHS Act,
which include PHS Act sections 2701
through 2728 and the incorporation of
those sections into ERISA section 715
and Code section 9815. The
amendments promulgated in this
rulemaking carry out the provisions of
these statutes. Therefore, the foregoing
interim final rule authority applies to
these amendments.
Under the Administrative Procedure
Act (APA) (5 U.S.C. 551 et seq.), while
a general notice of proposed rulemaking
and an opportunity for public comment
is generally required before
promulgation of regulations, this is not
required when an agency, for good
cause, finds that notice and public
comment thereon are impracticable,
unnecessary, or contrary to the public
interest. The provisions of the APA that
ordinarily require a notice of proposed
rulemaking do not apply here because of
the specific authority to issue interim
final rules granted by section 9833 of
the Code, section 734 of ERISA, and
section 2792 of the PHS Act. Moreover,
even if the APA requirements for notice
and comment were applicable to this
regulation, they have been satisfied.
This is because the matters that are the
subject of these amendments have
already been subjected to public notice
and comment, as they were addressed in
the July 2010 regulations, and are a
logical outgrowth of that document. The
amendments made in this interim final
rule are being made in response to
public comments received on the July
2010 regulations. While the
Departments have determined that, even
if the APA were applicable, an
additional opportunity for public
comment is unnecessary in the case of
these amendments, the Departments are
issuing these amendments as an interim

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final rule so as to provide the public
with an opportunity for public comment
on these modifications.
IV. Economic Impact and Paperwork
Burden
A. Summary and Need for Regulatory
Action—Department of Labor and
Department of Health and Human
Services
As stated earlier in this preamble, the
Departments previously issued the July
2010 regulations implementing PHS Act
section 2719, which were published in
the Federal Register on July 23, 2010
(75 FR 43330). The July 2010
regulations set forth rules with respect
to internal claims and appeals and
external appeals processes for group
health plans and health insurance
issuers that are not grandfathered health
plans.
As described in detail in Section II of
this preamble, after the July 2010
regulations were issued, the
Departments received public comments
expressing concerns about the burdens
associated with several of the
regulations’ provisions. In response to
such comments, the Departments are
hereby amending the following
provisions of the July 2010 regulations:
• Expedited notification of benefit
determinations involving urgent care
(paragraph (b)(2)((ii)(B) of the July 2010
regulations);

• Additional notice requirements
with respect to notice of adverse benefit
determinations or final internal adverse
benefit determination (paragraph
(b)(2)(ii)(E) of the July 2010
regulations);37
• Deemed exhaustion of internal
claims and appeals processes (paragraph
(b)(2)(ii)(F) of the July 2010 regulations);
• Providing notices in a culturally
and linguistically appropriate manner
(paragraph (e) of the July 2010
regulations);
• The duration of the transition
period for State external review
processes (paragraph (c)(3) of the July
2010 regulations); and
• The scope of claims eligible for
external review under the Federal
external appeals process (paragraph
(d)(1) of the July 2010 regulations).
The Departments crafted these
amendments to the July 2010
regulations to secure the protections
intended by Congress. In accordance
with OMB Circular A–4, the
Departments have quantified the costs
of these amendments where feasible and
provided a qualitative discussion of
some of the benefits and costs that may
stem from them.
The Departments believe that (i) the
costs associated with the amended rules
are less than the costs associated with
the July 2010 regulations, (ii) the
amended rules adequately protect the

rights of participants, beneficiaries, and
policyholders, and (iii) the benefits of
the amended rules justify their costs
relative to the pre-Affordable Care Act
baseline and the July 2010 regulations.
B. Executive Orders 12866 and 13563—
Department of Labor and Department of
Health and Human Services
Executive Orders 13563 and 12866
direct agencies to assess all costs and
benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). Executive Order 13563
emphasizes the importance of
quantifying both costs and benefits, of
reducing costs, of harmonizing rules,
and of promoting flexibility. This rule
has been designated a ‘‘significant
regulatory action’’ although not
economically significant, under section
3(f) of Executive Order 12866.
Accordingly, the rule has been reviewed
by the Office of Management and
Budget.
The Departments provide an
assessment of the potential costs and
benefits associated with each amended
regulatory provision below, as
summarized in Table 1.

TABLE 1—ACCOUNTING TABLE
Benefits
Qualitative: Amendments to the interim final regulations ensure urgent care benefit determinations are made in a timely manner, increase patient privacy, ensure non-English speakers understand their rights, and provide that claimants will be deemed to have exhausted their administrative proceedings and can proceed to court or external review if a plan or issuer fails to strictly adhere to the regulatory requirements with
the exception of the requirements that are described in the amendment. These amendments are expected to reduce compliance costs while
still ensuring patient protections.
Cost

Estimate

Annualized Monetized ($millions/year) ............................................................

Year dollar
1.7
1.7

2011
2011

Discount
rate
7 percent
3 percent

Period
covered
2012–2014
2012–2014

Qualitative: Monetized costs are for providing notices upon request in a culturally and linguistically appropriate manner. Non-monetized costs include costs for plans and issuers to respond to requests for diagnostic and treatment codes, and costs incurred by claimants to resolve
whether a plan or insurer’s failure to strictly adhere to the regulatory requirements is sufficient for a claimant to proceed directly to an external
or court review.

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1. Estimated Number of Affected
Entities
For purposes of estimating the entities
affected by these amendments to the
July 2010 regulations, the Departments
have defined a large group health plan
37 Under the July 2010 regulations, this included
the date of service, the health care provider, and the
claim amount (if applicable), as well as the
diagnosis code (such as an ICD–9 code, ICD–10
code, or DSM–IV code), the treatment code (such

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as an employer plan with 100 or more
workers and a small group plan as an
employer plan with fewer than 100
workers. The Departments make the
following estimates about plans and
issuers affected by these amendments:

(1) There are approximately 72,000 large
and 2.8 million small ERISA-covered
group health plans with an estimated
97.0 million participants in large group
plans and 40.9 million participants in
small group plans;38 (2) there are

as a CPT code), and the corresponding meanings of
these codes.
38 All participant counts and the estimates of
individual policies are from the U.S. Department of

Labor, EBSA calculations using the March 2009
Current Population Survey Annual Social and
Economic Supplement and the 2008 Medical
Expenditure Panel Survey.

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126,000 governmental plans with 36.1
million participants in large plans and
2.3 million participants in small
plans;39 and (3) there are 16.7 million
individuals under age 65 covered by
individual health insurance policies.40
The actual number of affected
individuals depends on several factors,
including whether (i) a health plan
retains its grandfather status, (ii) the
plan is subject to ERISA, (iii) benefits
provided under the plan are self-funded
or financed by the purchase of an
insurance policy, (iii) the applicable
State has enacted an internal claims and
appeals law, and (iv) the applicable
State has enacted an external review
law, and if so the scope of such law, and
(v) the number of new plans and
enrollees in such plans.
2. Benefits and Costs
The benefits and costs of the
amendments to the July 2010
regulations are discussed together under
this section, because the primary effect
of the amendments is to reduce the cost
of compliance.
a. Expedited notification of benefit
determination involving urgent care. As
discussed in detail above, the July 2010
regulations generally provide that a plan
or issuer must notify a claimant of a
benefit determination with respect to an
urgent care claim as soon as possible
taking into account the medical
exigencies, but no later than 24 hours
after the receipt of the claim by the plan
or issuer. This was a change from the
DOL claims procedure regulation,
which requires an urgent care
determination to be made not later than
72 hours after receipt of the claim by a
group health plan. The Departments
received several comments regarding
the burdens associated with meeting the
24-hour turnaround. Some commenters
argued that some of the claims
constituting ‘‘urgent care’’ and thus
qualifying for the expedited timeframe
really do not need to be decided within
24 hours. Moreover, a number of
commenters highlighted that the 72hour provision was never anything more
than a ‘‘backstop’’; the general rule
under both the July 2010 regulations
and the DOL claims procedure
regulation is for a decision as soon as
possible consistent with the medical
exigencies involved, making the change
to a 24-hour timeframe unnecessary for
the most serious medical cases. Finally,
some commenters cited the Emergency
Medical Treatment and Labor Act
39 Estimate is from the 2007 Census of
Government.
40 US Census Bureau, Current Population Survey,
March 2009.

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(EMTALA)41, which generally requires
emergency room care to be treated with
or without insurance or
preauthorization and, therefore,
mitigates much of the need for
expedited pre-service emergency claims
determinations in many situations.
After considering the comments, and
the costs and benefits of an absolute 24hour decision-making deadline, the
amendment permits plans and issuers to
follow the original rule in the DOL
claims procedure regulation (requiring
decision-making in the context of preservice urgent care claims as soon as
possible consistent with the medical
exigencies involved but in no event no
later than 72 hours), provided the plan
or issuer defers to the attending
provider with respect to the decision as
to whether a claim constitutes ‘‘urgent
care.’’
The Departments expect that this
amendment will ensure urgent care
benefit determinations are made in a
timely manner while reducing burden
on plans and issuers for several reasons.
ERISA-covered plans were already
subject to this requirement; therefore,
there is no additional burden imposed
on such plans from the pre-Affordable
Care Act baseline. For self-insured
nonfederal governmental plans and
issuers in the individual market, the 72hour requirement would increase
burden from a pre-Affordable Care Act
baseline to the extent that such plans
and issuers are not already meeting this
standard. The Departments do not have
sufficient data to estimate the fraction of
plans and issuers that were not already
in compliance with this standard. Many
claims filed with self-insured
nonfederal governmental plans and
individual market issuers already could
have been meeting this requirement for
urgent care claims, because ERISA
claims constitute a large portion of
health claims, and the Departments
understand that, in general, issuers and
service providers apply the same claims
and appeals standards to ERISA-covered
and non-ERISA-covered plans.
Plans and issuers that previously were
not subject to the DOL claims procedure
regulation and that are not already
meeting the claims and appeals
standard under the DOL claims
procedure regulation, could incur
additional costs to become compliant
with the 72-hour standard, but the
Departments expect these costs to be
less than those associated with a 24hour standard. Speeding up the
notification process for these
determinations to meet the 72-hour
standard could necessitate incurring
41 42

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additional cost to add more employees
or find other ways to shorten the
timeframe, but again such costs are
expected to be less than the costs
associated with meeting the 24-hour
standard provided in the July 2010
regulations. Additional costs for
claimants may be associated with this
requirement if meeting the 72-hour
timeframe results in more claims being
denied than would have been denied
under a longer notification period, but
again such costs are expected to be less
than the costs associated with meeting
the 24-hour standard provided in the
July 2010 regulations. The Departments
do not have sufficient data to estimate
such costs.
b. Additional notice requirements for
internal claims and appeals. As
discussed above, the July 2010
regulations had additional content
requirements for the required notices.
The Departments received comments
addressing the requirements to include
the diagnosis code (such as an ICD–9
code, ICD–10 code, or DSM–IV code),
the treatment code (such as a CPT code),
and the corresponding meanings of
these codes. Concerns were raised about
patient privacy, interference with the
doctor-patient relationship, and high
costs. Commenters also pointed out that
there are currently over 20,000
treatment and diagnosis codes in use
today, presenting a costly administrative
and operational challenge for plans and
issuers. Comments also questioned the
efficacy of providing codes which some
argued are often very difficult for the
average patient to understand.
After considering all the comments,
and the costs and benefits of the
additional disclosure, the amendment to
the July 2010 regulations eliminates the
requirement to automatically provide
the diagnosis and treatment codes as
part of a notice of adverse benefit
determination (or final internal adverse
benefit determination) and instead
requires plans and issuers to provide
notification of the opportunity to
request the diagnosis and treatment
codes (and their meanings) in all notices
of adverse benefit determination (and
notices of final internal adverse benefit
determination) and to provide this
information upon request.
Making the codes only available upon
request protects patients’ privacy while
reducing the burden for plans and
issuers to redesign notices. However,
plans and issuers will still incur costs
to establish procedures to receive,
process, and mail the requests. The
Departments do not have a basis to
estimate the net cost associated with
this amendment, because they do not
have sufficient data available to estimate

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the savings that will result from plans
and issuers not needing to redesign
notices or calculate the number of future
requests.
c. Deemed exhaustion of internal
claims and appeals process. The July
2010 regulations provide that claimants
can immediately seek judicial or
external review if a plan or issuer failed
to ‘‘strictly adhere’’ to all of the July
2010 regulations’ requirements for
internal claims and appeals processes,
regardless of whether the plan or issuer
asserted that it ‘‘substantially complied’’
with the July 2010 regulations. This
approach received a number of negative
comments from some issuers and plan
sponsors, who prefer a ‘‘substantial
compliance’’ approach, especially in
cases where deviations from the
regulatory standards were minor.
In response to these comments, the
Departments are retaining the approach
to this requirement, but this amendment
also adds a new paragraph
(b)(2)(ii)(F)(2) to the July 2010
regulations to provide an exception to
the strict compliance standard for errors
that are minor and meet certain other
specified conditions. The new
paragraph will also protect claimants
whose attempts to pursue other
remedies under paragraph (b)(2)(ii)(F)(1)
of the interim final regulations are
rejected by a reviewing tribunal. Under
the amended approach, any violation of
the procedural rules of July 2010
regulations pertaining to internal claims
and appeals would permit a claimant to
seek immediate external review or court
action, as applicable, unless the
violation was:
(1) De minimis;
(2) Non-prejudicial;
(3) Attributable to good cause or
matters beyond the plan’s or issuer’s
control;
(4) In the context of an ongoing goodfaith exchange of information; and
(5) Not reflective of a pattern or
practice of non-compliance.42

The Departments expect that this
amendment will protect patients’ right
to proceed to external review while
lowering costs based on the assumption
that internal appeals are less expensive
than external reviews or litigation.
However, the amendment may add
some costs, because participants and
policyholders now may face uncertainty
regarding whether a particular violation
is minor. Many claimants may incur a
cost to seek professional advice, because
they will not be able to make this
judgment on their own behalf.
Alternatively, some claimants might
seek immediate external review or
judicial review and be denied it. The
Departments do not have a sufficient
basis to estimate these costs.
d. Culturally and Linguistically
Appropriate Notices. PHS Act section
2719 requires group health plans and
health insurance issuers to provide
relevant notices in a culturally and
linguistically appropriate manner. The
July 2010 regulations set forth a
requirement to provide notices in a nonEnglish language based on separate
thresholds of the number of people who
are literate in the same non-English
language. In the group market, the
threshold set forth in the July 2010
regulations differs depending on the
number of participants in the plan as
follows:
• For a plan that covers fewer than
100 participants at the beginning of a
plan year, the threshold is 25 percent of
all plan participants being literate only
in the same non-English language.
• For a plan that covers 100 or more
participants at the beginning of a plan
year, the threshold is the lesser of 500
participants, or 10 percent of all plan
participants, being literate only in the
same non-English language.43
For the individual market, the threshold
is 10 percent of the population residing
in the county being literate only in the
same non-English language.44

42 In addition, the claimant would be entitled,
upon written request, to an explanation of the
plan’s or issuer’s basis for asserting that it meets
this standard, so that the claimant could make an
informed judgment about whether to seek
immediate review. Finally, if the external reviewer
or the court rejects the claimant’s request for
immediate review on the basis that the plan met
this standard, this amendment would give the
claimant the right to resubmit and pursue the
internal appeal of the claim.

43 These thresholds were adapted from the DOL
regulations regarding style and format for a
summary plan description, at 29 CFR 2520.102–2(c)
for participants who are not literate in English.
44 The individual market threshold was generally
adapted from the approach used under the
Medicare Advantage program, which required
translation of materials in languages spoken by
more than 10 percent of the general population in
a service area at the time the threshold was
established.

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Under the July 2010 regulations, if an
applicable threshold is met with respect
to a non-English language, the plan or
issuer must provide the notice upon
request in the non-English language.
Additionally, the plan or issuer must
include a statement in the English
versions of all notices, prominently
displayed in the non-English language,
offering the provision of such notices in
the non-English language. Finally, to the
extent the plan or issuer maintains a
customer assistance process (such as a
telephone hotline) that answers
questions or provides assistance with
filing claims and appeals, the plan or
issuer must provide such assistance in
the non-English language.
As discussed earlier in this preamble,
the Departments received comments
that raised concerns regarding the
burdens imposed by this provision. In
response to these comments, the
Departments have decided to amend the
July 2010 regulations’ provisions related
to the provision of notices in a
culturally and linguistically appropriate
manner to establish a single threshold
with respect to the number of people
who are literate only in the same nonEnglish language for both the group and
individual markets. Under the amended
provision, for group health plans and
health insurance issuers offering group
or individual health insurance coverage,
the threshold percentage of people who
are literate only in the same non-English
language will be set at 10 percent or
more of the population residing in the
claimant’s county, as determined based
on American Community Survey (ACS)
data published by the United States
Census Bureau. Table 2, below provides
a chart listing those 255 U.S. counties
(78/255 are in Puerto Rico) in which at
least 10 percent of the population speak
a particular non-English language and
speak English less than ‘‘very well.’’
These data are applicable for 2011 and
are calculated using 2005–2009 ACS
data. The Departments will update this
guidance annually on their Web site if
there are changes to the list of the
counties determined to meet this 10
percent threshold for the county’s
population being literate only in the
same non-English language.

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37221

TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK
ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45

emcdonald on DSK2BSOYB1PROD with RULES3

Non-English language
State

County

Spanish
%

Chinese
%

Tagalog
%

Navajo
%

AK ..................
AK ..................
AR .................
AZ ..................
AZ ..................
AZ ..................
AZ ..................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CA .................
CO .................
CO .................
CO .................
CO .................
CO .................
CO .................
CO .................
CO .................
CO .................
CO .................
FL ..................
FL ..................
FL ..................
FL ..................
FL ..................
FL ..................
FL ..................
FL ..................
GA .................
GA .................
GA .................
GA .................
GA .................
IA ...................
ID ...................
ID ...................
ID ...................
ID ...................
IL ...................
KS ..................
KS ..................
KS ..................
KS ..................
KS ..................
KS ..................
KS ..................
KS ..................

Aleutians West Census Area ...............................................................
Aleutians East Borough .......................................................................
Sevier County ......................................................................................
Apache County ....................................................................................
Maricopa County ..................................................................................
Yuma County .......................................................................................
Santa Cruz County ..............................................................................
Colusa County .....................................................................................
Fresno County .....................................................................................
Glenn County .......................................................................................
Imperial County ....................................................................................
Kern County .........................................................................................
Kings County ........................................................................................
Los Angeles County .............................................................................
Madera County ....................................................................................
Merced County .....................................................................................
Monterey County ..................................................................................
Napa County ........................................................................................
Orange County .....................................................................................
Riverside County ..................................................................................
San Benito County ...............................................................................
San Bernardino County .......................................................................
San Diego County ................................................................................
San Francisco County .........................................................................
San Joaquin County ............................................................................
Santa Barbara County .........................................................................
Santa Cruz County ..............................................................................
Stanislaus County ................................................................................
Sutter County .......................................................................................
Tulare County ......................................................................................
Ventura County ....................................................................................
Adams County .....................................................................................
Costilla County .....................................................................................
Denver County .....................................................................................
Eagle County .......................................................................................
Garfield County ....................................................................................
Lake County .........................................................................................
Phillips County .....................................................................................
Prowers County ...................................................................................
Saguache County ................................................................................
Yuma County .......................................................................................
Collier County ......................................................................................
DeSoto County .....................................................................................
Glades County .....................................................................................
Hardee County .....................................................................................
Hendry County .....................................................................................
Miami-Dade County .............................................................................
Okeechobee County ............................................................................
Osceola County ...................................................................................
Atkinson County ...................................................................................
Echols County ......................................................................................
Hall County ..........................................................................................
Telfair County .......................................................................................
Whitfield County ...................................................................................
Buena Vista County .............................................................................
Clark County ........................................................................................
Minidoka County ..................................................................................
Owyhee County ...................................................................................
Power County ......................................................................................
Kane County ........................................................................................
Finney County ......................................................................................
Ford County .........................................................................................
Grant County ........................................................................................
Hamilton County ..................................................................................
Seward County ....................................................................................
Stanton County ....................................................................................
Stevens County ....................................................................................
Wichita County .....................................................................................

13
....................
17
....................
11
22
39
27
15
14
32
16
18
19
18
20
25
14
14
15
21
15
11
....................
12
15
12
13
12
21
14
12
11
12
16
12
11
12
12
15
10
13
21
10
22
26
31
12
16
12
20
16
10
18
12
22
11
12
13
15
16
23
16
11
26
19
11
12

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12
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16
35
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12
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TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK
ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45—Continued

emcdonald on DSK2BSOYB1PROD with RULES3

Non-English language
State

County

Spanish
%

Chinese
%

Tagalog
%

Navajo
%

KS ..................
NC .................
NC .................
NE .................
NE .................
NE .................
NJ ..................
NJ ..................
NJ ..................
NM .................
NM .................
NM .................
NM .................
NM .................
NM .................
NM .................
NM .................
NM .................
NV .................
NY .................
NY .................
NY .................
OK .................
OR .................
OR .................
OR .................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................

Wyandotte County ...............................................................................
Alleghany County .................................................................................
Duplin County ......................................................................................
Colfax County ......................................................................................
Dakota County .....................................................................................
Dawson County ....................................................................................
Hudson County ....................................................................................
Passaic County ....................................................................................
Union County .......................................................................................
Chaves County ....................................................................................
Dona Ana County ................................................................................
Hidalgo County ....................................................................................
Lea County ...........................................................................................
Luna County .........................................................................................
McKinley County ..................................................................................
Mora County ........................................................................................
Santa Fe County ..................................................................................
Chaves County ....................................................................................
Clark County, .......................................................................................
Bronx County .......................................................................................
New York County .................................................................................
Queens County ....................................................................................
Texas County .......................................................................................
Hood River County ..............................................................................
Marion County ......................................................................................
Morrow County .....................................................................................
Andrews County ...................................................................................
Atascosa County ..................................................................................
Bailey County .......................................................................................
Bexar County .......................................................................................
Brooks County .....................................................................................
Calhoun County ...................................................................................
Cameron County ..................................................................................
Camp County .......................................................................................
Castro County ......................................................................................
Cochran County ...................................................................................
Concho County ....................................................................................
Crane County .......................................................................................
Crockett County ...................................................................................
Crosby County .....................................................................................
Culberson County ................................................................................
Dallam County .....................................................................................
Dallas County .......................................................................................
Dawson County ....................................................................................
Deaf Smith County ...............................................................................
Dimmit County .....................................................................................
Duval County .......................................................................................
Ector County ........................................................................................
Edwards County ...................................................................................
El Paso County ....................................................................................
Frio County ..........................................................................................
Garza County .......................................................................................
Gonzales County .................................................................................
Hale County .........................................................................................
Hall County ..........................................................................................
Hansford County ..................................................................................
Harris County .......................................................................................
Hidalgo County ....................................................................................
Howard County ....................................................................................
Hudspeth County .................................................................................
Jim Hogg County .................................................................................
Jim Wells County .................................................................................
Karnes County .....................................................................................
Kenedy County ....................................................................................
Kinney County ......................................................................................
Kleberg County ....................................................................................
La Salle County ...................................................................................
Lamb County ........................................................................................

10
14
14
23
14
15
18
16
13
11
18
12
11
18
....................
11
12
11
11
20
10
12
18
15
11
14
11
11
18
12
18
12
30
11
20
18
29
10
20
11
15
12
18
12
20
33
26
12
10
29
16
35
14
12
14
16
18
35
16
31
26
13
17
14
15
11
22
15

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37223

TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK
ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45—Continued

emcdonald on DSK2BSOYB1PROD with RULES3

Non-English language
State

County

Spanish
%

Chinese
%

Tagalog
%

Navajo
%

TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
TX ..................
UT ..................
VA ..................
VA ..................
WA .................
WA .................
WA .................
WA .................
WA .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................
PR .................

Lipscomb County .................................................................................
Lynn County .........................................................................................
Maverick County ..................................................................................
Midland County ....................................................................................
Moore County ......................................................................................
Nueces County ....................................................................................
Ochiltree County ..................................................................................
Parmer County .....................................................................................
Pecos County .......................................................................................
Presidio County ....................................................................................
Reagan County ....................................................................................
Reeves County ....................................................................................
San Patricio County .............................................................................
Schleicher County ................................................................................
Sherman County ..................................................................................
Starr County .........................................................................................
Sterling County ....................................................................................
Sutton County ......................................................................................
Tarrant County .....................................................................................
Terrell County ......................................................................................
Terry County ........................................................................................
Titus County .........................................................................................
Travis County .......................................................................................
Upton County .......................................................................................
Uvalde County .....................................................................................
Val Verde County .................................................................................
Ward County ........................................................................................
Webb County .......................................................................................
Willacy County .....................................................................................
Winkler County .....................................................................................
Yoakum County ...................................................................................
Zapata County .....................................................................................
Zavala County ......................................................................................
San Juan County .................................................................................
Manassas city ......................................................................................
Manassas Park city ..............................................................................
Adams County .....................................................................................
Douglas County ...................................................................................
Franklin County ....................................................................................
Grant County ........................................................................................
Yakima County .....................................................................................
Anasco Municipio .................................................................................
Adjuntas Municipio ...............................................................................
Aguada Municipio ................................................................................
Aguadilla Municipio ..............................................................................
Aguas Buenas Municipio .....................................................................
Aibonito Municipio ................................................................................
Arecibo Municipio .................................................................................
Arroyo Municipio ..................................................................................
Barceloneta Municipio ..........................................................................
Barranquitas Municipio ........................................................................
Bayamon Municipio ..............................................................................
Cabo Rojo Municipio ............................................................................
Caguas Municipio ................................................................................
Camuy Municipio .................................................................................
Canovanas Municipio ...........................................................................
Carolina Municipio ...............................................................................
Catano Municipio .................................................................................
Cayey Municipio ...................................................................................
Ceiba Municipio ...................................................................................
Ciales Municipio ...................................................................................
Cidra Municipio ....................................................................................
Coamo Municipio .................................................................................
Comero Municipio ................................................................................
Corozal Municipio ................................................................................
Culebra Municipio ................................................................................
Dorado Municipio .................................................................................
Fajardo Municipio .................................................................................

14
12
48
11
19
12
17
22
18
36
21
27
12
12
14
43
11
18
10
12
11
20
12
11
15
29
12
49
20
13
23
36
33
....................
17
18
23
11
27
16
17
85
86
81
78
90
82
83
84
78
87
78
82
80
88
83
77
82
86
73
88
86
84
93
88
76
77
78

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TABLE 2—PERCENT OF THE COUNTY POPULATION THAT SPEAK A PARTICULAR NON-ENGLISH LANGUAGE AND SPEAK
ENGLISH LESS THAN ‘‘VERY WELL’’, BY U.S. COUNTY 45—Continued
Non-English language
State

emcdonald on DSK2BSOYB1PROD with RULES3

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PR
PR
PR
PR
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PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR
PR

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County

Florida Municipio ..................................................................................
Guayama Municipio .............................................................................
Guayanilla Municipio ............................................................................
Guaynabo Municipio ............................................................................
Gurabo Municipio .................................................................................
Gu+nica Municipio ...............................................................................
Hatillo Municipio ...................................................................................
Hormigueros Municipio ........................................................................
Humacao Municipio .............................................................................
Isabela Municipio .................................................................................
Jayuya Municipio .................................................................................
Juana Diaz Municipio ...........................................................................
Juncos Municipio .................................................................................
Lajas Municipio ....................................................................................
Lares Municipio ....................................................................................
Las Marias Municipio ...........................................................................
Las Piedras Municipio ..........................................................................
Loiza Municipio ....................................................................................
Luquillo Municipio ................................................................................
Manati Municipio ..................................................................................
Maricao Municipio ................................................................................
Maunabo Municipio ..............................................................................
Mayaguez Municipio ............................................................................
Moca Municipio ....................................................................................
Morovis Municipio ................................................................................
Naguabo Municipio ..............................................................................
Naranjito Municipio ..............................................................................
Orocovis Municipio ...............................................................................
Patillas Municipio .................................................................................
Penuelas Municipio ..............................................................................
Ponce Municipio ...................................................................................
Quebradillas Municipio .........................................................................
Rincon Municipio ..................................................................................
Rio Grande Municipio ..........................................................................
Sabana Grande Municipio ...................................................................
Salinas Municipio .................................................................................
San German Municipio ........................................................................
San Juan Municipio .............................................................................
San Lorenzo Municipio ........................................................................
San Sebastian Municipio .....................................................................
Santa Isabel Municipio .........................................................................
Toa Alta Municipio ...............................................................................
Toa Baja Municipio ..............................................................................
Trujillo Alto Municipio ...........................................................................
Utuado Municipio .................................................................................
Vega Alta Municipio .............................................................................
Vega Baja Municipio ............................................................................
Vieques Municipio ................................................................................
Villalba Municipio .................................................................................
Yabucoa Municipio ...............................................................................
Yauco Municipio ...................................................................................

These amendments also require each
notice sent by a plan or issuer to an
address in a county that meets this
threshold to include a one-sentence
statement in the relevant non-English
language about the availability of
language services to be provided by the
45 Data are from the 2005–2009 ACS available at
http://www.census.gov/acs. Only those counties
where at least 10% of the county speak a particular
non-English language and speak English less than
‘‘very well’’ are listed.

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%

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Departments. The Departments have
provided guidance with sample
sentences in the relevant languages in
separate guidance being issued
contemporaneous with the publication
of this amendment.
In addition to including a statement
in all notices in the relevant nonEnglish language, a plan or issuer would
be required to provide a customer
assistance process (such as a telephone
hotline) with oral language services in

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85
69
81
83
86
74
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85
91
86
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91
85
89
79
84
95
88
77
86
87
83
91
91
84
86
80
83
73
85
83
86
85
73
83
84
86
80
80
79
83
83
76
83
88
86
85

Chinese
%

Tagalog
%

Navajo
%

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the non-English language and provide
written notices in the non-English
language upon request.
The Departments expect that the
largest cost associated with the
amended rules for culturally and
linguistically appropriate notices will be
for plans and issuers to provide notices
in the applicable non-English language
upon request. Based on the ACS data,
the Departments estimate that there are
about 12 million individuals living in

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covered counties that are literate in a
non-English Language. The ACS did not
start collecting insurance coverage
information until 2008. Therefore, to
estimate the percentage of the 12
million affected individuals that were
insured, the Departments used the
percentage of the population in the State
that reported being insured by private or
public employer insurance or in the
individual market from the 2009
Current Population Survey (CPS).46 This
results in an estimate of approximately
seven million individuals who are
eligible to request translation services.
In discussions with the regulated
community, the Departments found that
experience in California, which has a
State law requirement for providing
translation services, indicates that
requests for translations of written
documents averages 0.098 requests per
1,000 members. While the California
law is not identical to the amendment
to the July 2010 regulations, and the
demographics for California do not
match other counties, for purposes of
this analysis, the Departments used this
percentage to estimate of the number of
translation service requests that plan
and issuers can expect to receive.
Industry experts also told the
Departments that while the cost of
translation services varies, $500 per
document is a reasonable approximation
of translation cost.
Using the ACS and the CPS, the
Departments estimate 34 million
insured lives in the affected counties.
Based on the foregoing, the Departments
estimate that the cost to provide
translation services will be
approximately $1.7 million annually
(34,087,000 lives * 0.098/1000 * $500).
e. Duration of the transition period for
State external review processes. These
amendments to the July 2010
regulations modify the transition period
under paragraph (c)(3) so that the last
day of the transition period is December
31, 2011. Modifying the transition
period gives states additional time to
implement State external review
processes that conform to paragraph
(c)(2). This modification produces
benefits and costs to participants and
beneficiaries depending upon which
state they live in and the timing of the
beginning of the plan year. HHS is
working closely with states to help them
have external review processes that
meet the requirements of paragraph
(c)(2). The July 2010 regulations would
have participants living in states with
46 Please note that using state estimates of
insurance coverage could lead to an over estimate
if those reporting in the ACS survey that they speak
English less than ‘‘very well’’ are less likely to be
insured than the state average.

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laws that do not meet the minimum
consumer protections in paragraph
(c)(2) entering the Federal external
review process that would provide more
consumer protections. However, this
requirement to enter the Federal
external review process would take
effect upon the start of a new plan year
beginning on or after July 1, 2011.
This modification delays coverage of
external review for participants whose
plan year would have started between
July 1, 2011 and December 31, 2011, but
provides coverage sooner for
participants in plans with plan years
beginning after January 1, 2012, and has
no change for participants in plans with
plan years beginning on January 1, 2012.
The annual reporting form for certain
ERISA covered health plans, the Form
5500, has information on health plan
year end dates and also the number of
participants in health plans. While most
health plans with less than 100
participants are not required to file the
Form 5500, the Departments are able to
observe the plan year end dates and
hence the plan year start dates for large
plans. The Departments looked at the
dispersion of plan year start dates for
plans that filed the Form 5500 and
found that nearly 76 percent of
participants are in plans with a plan
year start date of January 1, 2012 and
hence will not be effected by the change
in the rule; nearly 13 percent of
participants are in plans that could
possibly see a delay in receiving the
protections of external review, while
just over 10 percent of participants will
be able to access the protections sooner.
These estimates did not take into
account the state in which the plan was
located. The Departments do not have
data on the start date of policies in the
individual market. While on net about
2.4 percent of participants in affected
plans could see a delay in receiving the
protections, these costs are offset by
giving states, and issuers additional
time, and hence lower costs, to prepare
for complying with the rule.
f. Scope of Federal External Review.
Paragraph (d)(1) of the July 2010
regulations provides that any adverse
benefit determination (including a final
internal adverse benefit determination)
could be brought to the Federal external
review process unless it related to a
participant’s or beneficiary’s failure to
meet the requirements for eligibility
under the terms of a group health plan
(i.e., worker classification and similar
issues were not within the scope of the
Federal external review process). As
discussed earlier in this preamble,
comments received in response to the
July 2010 regulations indicate that the

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37225

scope of external review claims was too
broad.
After considering all the comments,
with respect to plans subject to the
Federal external review process, for
claims for which external review has
not been initiated before September 20,
2011, the amendment suspends the
original rule in the July 2010 regulations
regarding the scope of claims eligible for
external review for plans using the
Federal process, temporarily replacing it
with a different scope. Specifically, this
amendment suspends the broad scope of
claims eligible for external review and
narrows the scope to those that involve
(1) medical judgment (excluding those
that involve only contractual or legal
interpretation without any use of
medical judgment), as determined by
the external reviewer; or (2) a rescission
of coverage. The suspension is intended
to give the marketplace time to adjust to
providing external review. The
Departments believe that, once the
market has so adjusted, it will become
clear that the benefits of the July 2010
regulations’ broader scope would be
likely to justify its costs.
C. Regulatory Flexibility Act—
Department of Labor and Department of
Health and Human Services
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 APA (5 U.S.C. 551
et seq.) and that are likely to have a
significant economic impact on a
substantial number of small entities.
Under Section 553(b) of the APA, a
general notice of proposed rulemaking
is not required when an agency, for
good cause, finds that notice and public
comment thereon are impracticable,
unnecessary, or contrary to the public
interest. The interim final regulations
were exempt from the APA, because the
Departments made a good cause finding
that a general notice of proposed
rulemaking is not necessary earlier in
this preamble. Therefore, the RFA did
not apply and the Departments were not
required to either certify that the
regulations or this amendment would
not have a significant economic impact
on a substantial number of small entities
or conduct a regulatory flexibility
analysis.
Nevertheless, the Departments
carefully considered the likely impact of
the rule on small entities in connection
with their assessment under Executive
Order 12866. Consistent with the policy
of the RFA, the Departments encourage
the public to submit comments that
suggest alternative rules that accomplish

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the stated purpose of the Affordable
Care Act and minimize the impact on
small entities.
D. Special Analyses—Department of the
Treasury
Notwithstanding the determinations
of the Department of Labor and
Department of Health and Human
Services, for purposes of the Department
of the Treasury, it has been determined
that this Treasury decision is not a
significant regulatory action for
purposes of Executive Order 12866.
Therefore, a regulatory assessment is not
required. It has also been determined
that section 553(b) of the APA (5 U.S.C.
chapter 5) does not apply to these
temporary regulations. For the
applicability of the RFA, refer to the
Special Analyses section in the
preamble to the cross-referencing notice
of proposed rulemaking published
elsewhere in this issue of the Federal
Register. Pursuant to section 7805(f) of
the Code, these temporary regulations
have been submitted to the Chief
Counsel for Advocacy of the Small
Business Administration for comment
on their impact on small businesses.
E. Paperwork Reduction Act

emcdonald on DSK2BSOYB1PROD with RULES3

1. Department of Labor and Department
of the Treasury
Currently, the Departments are
soliciting 60 days of public comments
concerning these disclosures. The
Departments have submitted a copy of
these interim final regulations to OMB
in accordance with 44 U.S.C. 3507(d) for
review of the information collections.
The Departments and OMB are
particularly interested in comments
that:
• Evaluate whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information will have practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
collection of information, including the
validity of the methodology and
assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology,
for example, by permitting electronic
submission of responses.
Comments should be sent to the
Office of Information and Regulatory

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Affairs, Attention: Desk Officer for the
Employee Benefits Security
Administration either by fax to (202)
395–7285 or by e-mail to
[email protected]. A copy
of the ICR may be obtained by
contacting the PRA addressee: G.
Christopher Cosby, Office of Policy and
Research, U.S. Department of Labor,
Employee Benefits Security
Administration, 200 Constitution
Avenue, NW., Room N–5718,
Washington, DC 20210. Telephone:
(202) 693–8410; Fax: (202) 219–4745.
These are not toll-free numbers. E-mail:
[email protected]. ICRs submitted to
OMB also are available at reginfo.gov
(http://www.reginfo.gov/public/do/
PRAMain).
a. Department of Labor and Department
of the Treasury: Affordable Care Act
Internal Claims and Appeals and
External Review Disclosures for NonGrandfathered Plans
These amendments make two changes
to the interim final regulations that
affect the paperwork burden. The first is
an amendment no longer requiring that
diagnosis and treatment codes be
included on notices of adverse benefit
determination and final internal adverse
benefit determination. Instead, they
must notify claimants of the opportunity
to receive the codes on request and
plans and issuers must provide the
codes upon request. The Departments
expect that this change will lower costs,
because plans and issuers no longer will
have to provide the codes on the
notices. Plans and issuers will incur a
cost to establish procedures for receive,
process, and mail the codes upon
request; however, the Departments are
unable to estimate such cost due to a
lack of a basis for an estimate of the
number of requests that will be made for
the codes.
The amendments also change the
method for determining who is eligible
to receive a notice in a culturally and
linguistically appropriate manner, and
the information that must be provided
to such persons. The previous rule was
based on the number of employees at a
firm. The new rule is based on whether
a participant or beneficiary resides in a
county where ten percent or more of the
population residing in the county is
literate only in the same non-English
language.
Participants and beneficiaries residing
in an affected county and speaking an
applicable non-English language will
now receive a one-sentence statement in
all notices written in the applicable
non-English language about the
availability of language services. In
addition to including the statement,

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plan and issuers are required to provide
a customer assistance process (such as
a telephone hotline) with oral language
services in the non-English language
and provide written notices in the nonEnglish language upon requests.
The Departments understand that oral
translation services are already provided
for nearly all covered participants and
beneficiaries. Therefore, no additional
burden is associated with this
requirement of the amendment. The
Departments estimate that plans will
incur an annual cost burden of $1.2
million to translate written notices into
the relevant non-English language.47
Based on the foregoing, the
Departments have adjusted the total
estimated cost burden for this
information collection. The cost burden
is $243,000 in 2011, $1.7 million in
2012, and $1.8 million in 2013.
Type of Review: Revised collection.
Agencies: Employee Benefits Security
Administration, Department of Labor;
Internal Revenue Service, U.S.
Department of the Treasury,
Title: Affordable Care Act Internal
Claims and Appeals and External
Review Disclosures for NonGrandfathered Plans.
OMB Number: 1210–0144; 1545–
2182.
Affected Public: Business or other forprofit; not-for-profit institutions.
Total Respondents: 1,020,000 (threeyear average).
Total Responses: 111,000(three-year
average).
Frequency of Response: Occasionally.
Estimated Total Annual Burden
Hours: 233 hours (Employee Benefits
Security Administration); 233 hours
(Internal Revenue Service) (three-year
average).
Estimated Total Annual Burden Cost:
$628,900 (Employee Benefits Security
Administration); $628,900 (Internal
Revenue Service) (three-year average).
2. Department of Health and Human
Services
a. ICR Regarding Affordable Care Act
Internal Claims and Appeals and
External Review Disclosures for Nongrandfathered Plans
As discussed above in the Department
of Labor and Department of the Treasury
PRA section, these amendments make
two changes to the interim final
regulations that affect the paperwork
burden. The first is an amendment no
longer requiring that diagnosis and
treatment codes be included on notices
of adverse benefit determination and
final internal adverse benefit
47 The Department’s methodology for this
estimate is explained in IV, B, 2, d, above.

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determination. Instead these codes are
available upon request. The
Departments expect that this change
will lower costs compared to the July
2010 regulations because plans and
issuers no longer will have to provide
the codes on the notices. Plans and
issuers will incur a cost to establish
procedures for receiving, processing,
and mailing the codes upon request;
however, the Departments are unable to
estimate such cost due to lack of a basis
for an estimate of the number of
requests that will be made for the codes.
Second, the amendments also changes
who is eligible to receive a notice in a
culturally or linguistically appropriate
manner.
The Departments estimated the new
cost burden of providing the translation
of requested notices into the applicable
non-English language. The annual cost
burden is estimated to be $430,000
annually starting in 2012. The
derivation of this estimate was
discussed above in the Economic Impact
section.
Due to the amendments, the
Department has adjusted the total
estimated costs of this information
collection. The Department estimates
that State and local governmental plans
and issuers offering coverage in the
individual market will incur a total hour
burden of 570,804 hours in 2011,
998,807 hours in 2012, and 1.22 million
hours in 2013 to comply with
equivalent costs of $28.2 million in
2011, $57.4 million in 2012, and $70.5
million in 2013. The total cost burden
for those plans that use service
providers, including the cost of mailing
all responses is estimated to be $20.7
million in 2011, $37.9 million in 2012,
and $51.7 million in 2013.
The hour and cost burden is
summarized below:
Type of Review: Revised collection.
Agency: Department of Health and
Human Services.
Title: Affordable Care Act Internal
Claims and Appeals and External
Review Disclosures
OMB Number: 0938–1099.
Affected Public: Business; State,
Local, or Tribal Governments.
Respondents: 46,773 (three-year
average).
Responses: 218,650,000 (three-year
average).
Frequency of Response: Occasionally.
Estimated Total Annual Burden
Hours: 929,870 hours (three-year
average).
Estimated Total Annual Burden Cost:
$36,600,000 (three-year average).
We have requested emergency OMB
review and approval of the
aforementioned information collection

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requirements by July 1, 2011. To obtain
copies of the supporting statement and
any related forms for the proposed
paperwork collections referenced above,
access CMS’ Web site at http://
www.cms.gov/
PaperworkReductionActof1995/PRAL/
list.asp#TopOfPage or e-mail your
request, including your address, phone
number, OMB number, and CMS
document identifier, to
[email protected], or call the
Reports Clearance Office at 410–786–
1326.
If you comment on any of these
information collection requirements,
please do either of the following:
1. Submit your comments
electronically as specified in the
ADDRESSES section of this proposed rule;
or
2. Submit your comments to the
Office of Information and Regulatory
Affairs, Office of Management and
Budget,
Attention: CMS Desk Officer, CMS–
9993–IFC2
Fax: (202) 395–6974; or
E-mail:
[email protected]
F. Congressional Review Act
These amendments to the interim
final regulations are subject to the
Congressional Review Act provisions of
the Small Business Regulatory
Enforcement Fairness Act of 1996 (5
U.S.C. 801 et seq.) and have been
transmitted to Congress and the
Comptroller General for review.
G. Unfunded Mandates Reform Act
The Unfunded Mandates Reform Act
of 1995 (Pub. L. 104–4) requires
agencies to prepare several analytic
statements before proposing any rules
that may result in annual expenditures
of $100 million (as adjusted for
inflation) by State, local and tribal
governments or the private sector. These
amendments to the interim final
regulations are not subject to the
Unfunded Mandates Reform Act
because they are being issued as interim
final regulations. However, consistent
with the policy embodied in the
Unfunded Mandates Reform Act, the
regulation has been designed to be the
least burdensome alternative for State,
local and tribal governments, and the
private sector, while achieving the
objectives of the Affordable Care Act.
H. Federalism Statement—Department
of Labor and Department of Health and
Human Services
Executive Order 13132 outlines
fundamental principles of federalism,
and requires the adherence to specific

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37227

criteria by Federal agencies in the
process of their formulation and
implementation of policies that have
‘‘substantial direct effects’’ on the
States, the relationship between the
national government and States, or on
the distribution of power and
responsibilities among the various
levels of government. Federal agencies
promulgating regulations that have
federalism implications must consult
with State and local officials, and
describe the extent of their consultation
and the nature of the concerns of State
and local officials in the preamble to the
regulation.
In the Departments’ view, these
amendments to the interim final
regulations have federalism
implications, because they have direct
effects on the States, the relationship
between the national government and
States, or on the distribution of power
and responsibilities among various
levels of government. However, in the
Departments’ view, the federalism
implications of these interim final
regulations are substantially mitigated
because, with respect to health
insurance issuers, the Departments
expect that the majority of States will
enact laws or take other appropriate
action to implement an internal and
external appeals process that will meet
or exceed federal standards.
In general, through section 514,
ERISA supersedes State laws to the
extent that they relate to any covered
employee benefit plan, and preserves
State laws that regulate insurance,
banking, or securities. While ERISA
prohibits States from regulating a plan
as an insurance or investment company
or bank, the preemption provisions of
section 731 of ERISA and section 2724
of the PHS Act (implemented in 29 CFR
2590.731(a) and 45 CFR 146.143(a))
apply so that the HIPAA requirements
(including those of the Affordable Care
Act) are not to be ‘‘construed to
supersede any provision of State law
which establishes, implements, or
continues in effect any standard or
requirement solely relating to health
insurance issuers in connection with
group health insurance coverage except
to the extent that such standard or
requirement prevents the application of
a requirement’’ of a Federal standard.
The conference report accompanying
HIPAA indicates that this is intended to
be the ‘‘narrowest’’ preemption of State
laws. (See House Conf. Rep. No. 104–
736, at 205, reprinted in 1996 U.S. Code
Cong. & Admin. News 2018.) States may
continue to apply State law
requirements except to the extent that
such requirements prevent the
application of the Affordable Care Act

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requirements that are the subject of this
rulemaking. State insurance laws that
are more stringent than the Federal
requirements are unlikely to ‘‘prevent
the application of’’ the Affordable Care
Act, and be preempted. Accordingly,
States have significant latitude to
impose requirements on health
insurance issuers that are more
restrictive than the Federal law.
Furthermore, the Departments have
opined that, in the instance of a group
health plan providing coverage through
group health insurance, the issuer will
be required to follow the external
review procedures established in State
law (assuming the State external review
procedure meets the minimum
standards set out in these interim final
rules).
In compliance with the requirement
of Executive Order 13132 that agencies
examine closely any policies that may
have federalism implications or limit
the policy making discretion of the
States, the Departments have engaged in
efforts to consult with and work
cooperatively with affected State and
local officials, including attending
conferences of the National Association
of Insurance Commissioners (NAIC),
meeting with NAIC staff counsel on
issues arising from the interim final
regulations and consulting with State
insurance officials on an individual
basis. It is expected that the
Departments will act in a similar
fashion in enforcing the Affordable Care
Act requirements, including the
provisions of section 2719 of the PHS
Act. Throughout the process of
developing these amendments to the
interim final regulations, to the extent
feasible within the specific preemption
provisions of HIPAA as it applies to the
Affordable Care Act, the Departments
have attempted to balance the States’
interests in regulating health insurance
issuers, and Congress’ intent to provide
uniform minimum protections to
consumers in every State. By doing so,
it is the Departments’ view that they
have complied with the requirements of
Executive Order 13132.
Pursuant to the requirements set forth
in section 8(a) of Executive Order
13132, and by the signatures affixed to
these regulations, the Departments
certify that the Employee Benefits
Security Administration and the Centers
for Medicare and Medicaid Services
have complied with the requirements of
Executive Order 13132 for the attached
amendment to the interim final
regulations in a meaningful and timely
manner.

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V. Statutory Authority
The Department of the Treasury
temporary regulations are adopted
pursuant to the authority contained in
sections 7805 and 9833 of the Code.
The Department of Labor interim final
regulations are adopted pursuant to the
authority contained in 29 U.S.C. 1027,
1059, 1135, 1161–1168, 1169, 1181–
1183, 1181 note, 1185, 1185a, 1185b,
1191, 1191a, 1191b, and 1191c; sec.
101(g), Pub. L. 104–191, 110 Stat. 1936;
sec. 401(b), Pub. L. 105–200, 112 Stat.
645 (42 U.S.C. 651 note); sec. 512(d),
Pub. L. 110–343, 122 Stat. 3881; sec.
1001, 1201, and 1562(e), Pub. L. 111–
148, 124 Stat. 119, as amended by Pub.
L. 111–152, 124 Stat. 1029; Secretary of
Labor’s Order 6–2009, 74 FR 21524
(May 7, 2009).
The Department of Health and Human
Services interim final regulations are
adopted pursuant to the authority
contained in sections 2701 through
2763, 2791, and 2792 of the PHS Act (42
U.S.C. 300gg through 300gg–63, 300gg–
91, and 300gg–92), as amended.
List of Subjects
26 CFR Part 54
Excise taxes, Health care, Health
insurance, Pensions, Reporting and
recordkeeping requirements.
29 CFR Part 2590
Continuation coverage, Disclosure,
Employee benefit plans, Group health
plans, Health care, Health insurance,
Medical child support, Reporting and
recordkeeping requirements.
45 CFR Part 147
Health care, Health insurance,
Reporting and recordkeeping
requirements, and State regulation of
health insurance.
Steven T. Miller,
Deputy Commissioner for Services and
Enforcement, Internal Revenue Service.
Approved: June 21, 2011.
Emily S. McMahon,
Acting Assistant Secretary of the Treasury
(Tax Policy).
Signed this 20th day of June 2011.
Phyllis C. Borzi,
Assistant Secretary, Employee Benefits
Security Administration, Department of
Labor.
CMS–9993–IFC2

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Approved: June 16, 2011.
Donald Berwick,
Administrator, Centers for Medicare &
Medicaid Services.
Approved: June 17, 2011.
Kathleen Sebelius,
Secretary, Department of Health and Human
Services.

Department of the Treasury
Internal Revenue Service
26 CFR Chapter I
Accordingly, 26 CFR part 54 is
amended as follows:
PART 54—PENSION EXCISE TAXES
Paragraph 1. The general authority
citation for part 54 continues to read as
follows:

■

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 54.9815–2719T is
amended by:
■ 1. Revising paragraphs (b)(2)(ii)(B),
(b)(2)(ii)(E)(1), (b)(2)(ii)(F), (c)(2)(xi),
(c)(3), (d)(1), (d)(2)(iv) and (e).
■ 2. Redesignating (b)(2)(ii)(E)(2),
(b)(2)(ii)(E)(3), and (b)(2)(ii)(E)(4) as
(b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and
(b)(2)(ii)(E)(5), respectively.
■ 3. Adding new paragraph
(b)(2)(ii)(E)(2).
The revisions and addition read as
follows:
■

§ 54.9815–2719T Internal claims and
appeals and external review processes
(temporary).

*

*
*
*
*
(b) * * *
(2) * * *
(ii) * * *
(B) Expedited notification of benefit
determinations involving urgent care.
The requirements of 29 CFR 2560.503–
1(f)(2)(i) (which generally provide,
among other things, in the case of urgent
care claims for notification 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) continue to apply to the plan and
issuer. For purposes of this paragraph
(b)(2)(ii)(B), a claim involving urgent
care has the meaning given in 29 CFR
2560.503–1(m)(1), as determined by the
attending provider, and the plan or
issuer shall defer to such determination
of the attending provider.
*
*
*
*
*
(E) * * *
(1) The plan and issuer must ensure
that any notice of adverse benefit
determination or final internal adverse
benefit determination includes
information sufficient to identify the

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claim involved (including the date of
service, the health care provider, the
claim amount (if applicable), and a
statement describing the availability,
upon request, of the diagnosis code and
its corresponding meaning, and the
treatment code and its corresponding
meaning).
(2) The plan and issuer must provide
to participants and beneficiaries, as
soon as practicable, upon request, the
diagnosis code and its corresponding
meaning, and the treatment code and its
corresponding meaning, associated with
any adverse benefit determination or
final internal adverse benefit
determination. The plan or issuer must
not consider a request for such
diagnosis and treatment information, in
itself, to be a request for an internal
appeal under this paragraph (b) or an
external review under paragraphs (c)
and (d) of this section.
*
*
*
*
*
(F) Deemed exhaustion of internal
claims and appeals processes—(1) In
the case of a plan or issuer that fails to
adhere to all the requirements of this
paragraph (b)(2) with respect to a claim,
the claimant is deemed to have
exhausted the internal claims and
appeals process of this paragraph (b),
except as provided in paragraph
(b)(2)(ii)(F)(2) of this section.
Accordingly, the claimant may initiate
an external review under paragraph (c)
or (d) of this section, as applicable. The
claimant is also entitled to pursue any
available remedies under section 502(a)
of ERISA or under State law, as
applicable, on the basis that the plan or
issuer has failed to provide a reasonable
internal claims and appeals process that
would yield a decision on the merits of
the claim. If a claimant chooses to
pursue remedies under section 502(a) of
ERISA under such circumstances, the
claim or appeal is deemed denied on
review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph
(b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of
this paragraph (b) will not be deemed
exhausted based on de minimis
violations that do not cause, and are not
likely to cause, prejudice or harm to the
claimant so long as the plan or issuer
demonstrates that the violation was for
good cause or due to matters beyond the
control of the plan or issuer and that the
violation occurred in the context of an
ongoing, good faith exchange of
information between the plan and the
claimant. This exception is not available
if the violation is part of a pattern or
practice of violations by the plan or
issuer. The claimant may request a

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written explanation of the violation
from the plan or issuer, and the plan or
issuer must provide such explanation
within 10 days, including a specific
description of its bases, if any, for
asserting that the violation should not
cause the internal claims and appeals
process of this paragraph (b) to be
deemed exhausted. If an external
reviewer or a court rejects the claimant’s
request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section
on the basis that the plan met the
standards for the exception under this
paragraph (b)(2)(ii)(F)(2), the claimant
has the right to resubmit and pursue the
internal appeal of the claim. In such a
case, within a reasonable time after the
external reviewer or court rejects the
claim for immediate review (not to
exceed 10 days), the plan shall provide
the claimant with notice of the
opportunity to resubmit and pursue the
internal appeal of the claim. Time
periods for re-filing the claim shall
begin to run upon claimant’s receipt of
such notice.
*
*
*
*
*
(c) * * *
(2) * * *
(xi) The State process must provide
that the decision is binding on the plan
or issuer, as well as the claimant, except
to the extent other remedies are
available under State or Federal law,
and except that the requirement that the
decision be binding shall not preclude
the plan or issuer from making payment
on the claim or otherwise providing
benefits at any time, including after a
final external review decision that
denies the claim or otherwise fails to
require such payment or benefits. For
this purpose, the plan or issuer must
provide benefits (including by making
payment on the claim) pursuant to the
final external review decision without
delay, regardless of whether the plan or
issuer intends to seek judicial review of
the external review decision and unless
or until there is a judicial decision
otherwise.
*
*
*
*
*
(3) Transition period for external
review processes. (i) Through December
31, 2011, an applicable State external
review process applicable to a health
insurance issuer or group health plan is
considered to meet the requirements of
PHS Act section 2719(b). Accordingly,
through December 31, 2011, an
applicable State external review process
will be considered binding on the issuer
or plan (in lieu of the requirements of
the Federal external review process). If
there is no applicable State external
review process, the issuer or plan is
required to comply with the

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37229

requirements of the Federal external
review process in paragraph (d) of this
section.
(ii) For final internal adverse benefit
determinations (or, in the case of
simultaneous internal appeal and
external review, adverse benefit
determinations) provided on or after
January 1, 2012, the Federal external
review process will apply unless the
Department of Health and Human
Services determines that a State law
meets all the minimum standards of
paragraph (c)(2) of this section.
(d) * * *
(1) Scope—(i) In general. Subject to
the suspension provision in paragraph
(d)(1)(ii) of this section and except to
the extent provided otherwise by the
Secretary in guidance, the Federal
external review process established
pursuant to this paragraph (d) applies to
any adverse benefit determination or
final internal adverse benefit
determination (as defined in paragraphs
(a)(2)(i) and (a)(2)(v) of this section),
except that a denial, reduction,
termination, or a failure to provide
payment for a benefit based on a
determination that a participant or
beneficiary fails to meet the
requirements for eligibility under the
terms of a group health plan is not
eligible for the Federal external review
process under this paragraph (d).
(ii) Suspension of general rule. Unless
or until this suspension is revoked in
guidance by the Secretary, with respect
to claims for which external review has
not been initiated before September 20,
2011, the Federal external review
process established pursuant to this
paragraph (d) applies only to:
(A) An adverse benefit determination
(including a final internal adverse
benefit determination) by a plan or
issuer that involves medical judgment
(including, but not limited to, those
based on the plan’s or issuer’s
requirements for medical necessity,
appropriateness, health care setting,
level of care, or effectiveness of a
covered benefit; or its determination
that a treatment is experimental or
investigational), as determined by the
external reviewer; and
(B) A rescission of coverage (whether
or not the rescission has any effect on
any particular benefit at that time).
(iii) Examples. The rules of paragraph
(d)(1)(ii) of this section are illustrated by
the following examples:
Example 1. (i) Facts. A group health plan
provides coverage for 30 physical therapy
visits generally. After the 30th visit, coverage
is provided only if the service is
preauthorized pursuant to an approved
treatment plan that takes into account
medical necessity using the plan’s definition

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of the term. Individual A seeks coverage for
a 31st physical therapy visit. A’s health care
provider submits a treatment plan for
approval, but it is not approved by the plan,
so coverage for the 31st visit is not
preauthorized. With respect to the 31st visit,
A receives a notice of final internal adverse
benefit determination stating that the
maximum visit limit is exceeded.
(ii) Conclusion. In this Example 1, the
plan’s denial of benefits is based on medical
necessity and involves medical judgment.
Accordingly, the claim is eligible for external
review during the suspension period under
paragraph (d)(1)(ii) of this section. Moreover,
the plan’s notification of final internal
adverse benefit determination is inadequate
under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3)
of this section because it fails to make clear
that the plan will pay for more than 30 visits
if the service is preauthorized pursuant to an
approved treatment plan that takes into
account medical necessity using the plan’s
definition of the term. Accordingly, the
notice of final internal adverse benefit
determination should refer to the plan
provision governing the 31st visit and should
describe the plan’s standard for medical
necessity, as well as how the treatment fails
to meet the plan’s standard.
Example 2. (i) Facts. A group health plan
does not provide coverage for services
provided out of network, unless the service
cannot effectively be provided in network.
Individual B seeks coverage for a specialized
medical procedure from an out-of-network
provider because B believes that the
procedure cannot be effectively provided in
network. B receives a notice of final internal
adverse benefit determination stating that the
claim is denied because the provider is outof-network.
(ii) Conclusion. In this Example 2, the
plan’s denial of benefits is based on whether
a service can effectively be provided in
network and, therefore, involves medical
judgment. Accordingly, the claim is eligible
for external review during the suspension
period under paragraph (d)(1)(ii) of this
section. Moreover, the plan’s notice of final
internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and
(b)(2)(ii)(E)(3) of this section because the plan
does provide benefits for services on an outof-network basis if the services cannot
effectively be provided in network.
Accordingly, the notice of final internal
adverse benefit determination is required to
refer to the exception to the out-of-network
exclusion and should describe the plan’s
standards for determining effectiveness of
services, as well as how services available to
the claimant within the plan’s network meet
the plan’s standard for effectiveness of
services.

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*

*
*
*
*
(2) * * *
(iv) These standards will provide that
an external review decision is binding
on the plan or issuer, as well as the
claimant, except to the extent other
remedies are available under State or
Federal law, and except that the
requirement that the decision be
binding shall not preclude the plan or

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issuer from making payment on the
claim or otherwise providing benefits at
any time, including after a final external
review decision that denies the claim or
otherwise fails to require such payment
or benefits. For this purpose, the plan or
issuer must provide any benefits
(including by making payment on the
claim) pursuant to the final external
review decision without delay,
regardless of whether the plan or issuer
intends to seek judicial review of the
external review decision and unless or
until there is a judicial decision
otherwise.
*
*
*
*
*
(e) Form and manner of notice—(1) In
general. For purposes of this section, a
group health plan and a health
insurance issuer offering group health
insurance coverage are considered to
provide relevant notices in a culturally
and linguistically appropriate manner if
the plan or issuer meets all the
requirements of paragraph (e)(2) of this
section with respect to the applicable
non-English languages described in
paragraph (e)(3) of this section.
(2) Requirements—(i) The plan or
issuer must provide oral language
services (such as a telephone customer
assistance hotline) that include
answering questions in any applicable
non-English language and providing
assistance with filing claims and
appeals (including external review) in
any applicable non-English language;
(ii) The plan or issuer must provide,
upon request, a notice in any applicable
non-English language; and
(iii) The plan or issuer must include
in the English versions of all notices, a
statement prominently displayed in any
applicable non-English language clearly
indicating how to access the language
services provided by the plan or issuer.
(3) Applicable non-English language.
With respect to an address in any
United States county to which a notice
is sent, a non-English language is an
applicable non-English language if ten
percent or more of the population
residing in the county is literate only in
the same non-English language, as
determined in guidance published by
the Secretary.
*
*
*
*
*
Department of Labor
Employee Benefits Security
Administration
29 CFR Chapter XXV
29 CFR part 2590 is amended as
follows:

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PART 2590—RULES AND
REGULATIONS FOR GROUP HEALTH
PLANS
1. The authority citation for part 2590
continues to read as follows:

■

Authority: 29 U.S.C. 1027, 1059, 1135,
1161–1168, 1169, 1181–1183, 1181 note,
1185, 1185a, 1185b, 1191, 1191a, 1191b, and
1191c; sec. 101(g), Pub. L. 104–191, 110 Stat.
1936; sec. 401(b), Pub. L. 105–200, 112 Stat.
645 (42 U.S.C. 651 note); sec. 512(d), Pub. L.
110–343, 122 Stat. 3881; sec. 1001, 1201, and
1562(e), Pub. L. 111–148, 124 Stat. 119, as
amended by Pub. L. 111–152, 124 Stat. 1029;
Secretary of Labor’s Order 6–2009, 74 FR
21524 (May 7, 2009).

2. Section 2590.715–2719 is amended
by:
■ 1. Revising paragraphs (b)(2)(ii)(B),
(b)(2)(ii)(E)(1), (b)(2)(ii)(F), (c)(2)(xi),
(c)(3), (d)(1), (d)(2)(iv), and (e).
■ 2. Redesignating (b)(2)(ii)(E)(2),
(b)(2)(ii)(E)(3), and (b)(2)(ii)(E)(4) as
(b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and
(b)(2)(ii)(E)(5), respectively.
■ 3. Adding new paragraph
(b)(2)(ii)(E)(2).
The revisions and addition read as
follows:
■

§ 2590.715–2719 Internal claims and
appeals and external review processes.

*

*
*
*
*
(b) * * *
(2) * * *
(ii) * * *
(B) Expedited notification of benefit
determinations involving urgent care.
The requirements of 29 CFR 2560.503–
1(f)(2)(i) (which generally provide,
among other things, in the case of urgent
care claims for notification 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) continue to apply to the plan and
issuer. For purposes of this paragraph
(b)(2)(ii)(B), a claim involving urgent
care has the meaning given in 29 CFR
2560.503–1(m)(1), as determined by the
attending provider, and the plan or
issuer shall defer to such determination
of the attending provider.
*
*
*
*
*
(E) * * *
(1) The plan and issuer must ensure
that any notice of adverse benefit
determination or final internal adverse
benefit determination includes
information sufficient to identify the
claim involved (including the date of
service, the health care provider, the
claim amount (if applicable), and a
statement describing the availability,
upon request, of the diagnosis code and
its corresponding meaning, and the
treatment code and its corresponding
meaning).

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(2) The plan and issuer must provide
to participants and beneficiaries, as
soon as practicable, upon request, the
diagnosis code and its corresponding
meaning, and the treatment code and its
corresponding meaning, associated with
any adverse benefit determination or
final internal adverse benefit
determination. The plan or issuer must
not consider a request for such
diagnosis and treatment information, in
itself, to be a request for an internal
appeal under this paragraph (b) or an
external review under paragraphs (c)
and (d) of this section.
*
*
*
*
*
(F) Deemed exhaustion of internal
claims and appeals processes—(1) In
the case of a plan or issuer that fails to
adhere to all the requirements of this
paragraph (b)(2) with respect to a claim,
the claimant is deemed to have
exhausted the internal claims and
appeals process of this paragraph (b),
except as provided in paragraph
(b)(2)(ii)(F)(2) of this section.
Accordingly, the claimant may initiate
an external review under paragraph (c)
or (d) of this section, as applicable. The
claimant is also entitled to pursue any
available remedies under section 502(a)
of ERISA or under State law, as
applicable, on the basis that the plan or
issuer has failed to provide a reasonable
internal claims and appeals process that
would yield a decision on the merits of
the claim. If a claimant chooses to
pursue remedies under section 502(a) of
ERISA under such circumstances, the
claim or appeal is deemed denied on
review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph
(b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of
this paragraph (b) will not be deemed
exhausted based on de minimis
violations that do not cause, and are not
likely to cause, prejudice or harm to the
claimant so long as the plan or issuer
demonstrates that the violation was for
good cause or due to matters beyond the
control of the plan or issuer and that the
violation occurred in the context of an
ongoing, good faith exchange of
information between the plan and the
claimant. This exception is not available
if the violation is part of a pattern or
practice of violations by the plan or
issuer. The claimant may request a
written explanation of the violation
from the plan or issuer, and the plan or
issuer must provide such explanation
within 10 days, including a specific
description of its bases, if any, for
asserting that the violation should not
cause the internal claims and appeals
process of this paragraph (b) to be

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deemed exhausted. If an external
reviewer or a court rejects the claimant’s
request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section
on the basis that the plan met the
standards for the exception under this
paragraph (b)(2)(ii)(F)(2), the claimant
has the right to resubmit and pursue the
internal appeal of the claim. In such a
case, within a reasonable time after the
external reviewer or court rejects the
claim for immediate review (not to
exceed 10 days), the plan shall provide
the claimant with notice of the
opportunity to resubmit and pursue the
internal appeal of the claim. Time
periods for re-filing the claim shall
begin to run upon claimant’s receipt of
such notice.
*
*
*
*
*
(c) * * *
(2) * * *
(xi) The State process must provide
that the decision is binding on the plan
or issuer, as well as the claimant, except
to the extent other remedies are
available under State or Federal law,
and except that the requirement that the
decision be binding shall not preclude
the plan or issuer from making payment
on the claim or otherwise providing
benefits at any time, including after a
final external review decision that
denies the claim or otherwise fails to
require such payment or benefits. For
this purpose, the plan or issuer must
provide benefits (including by making
payment on the claim) pursuant to the
final external review decision without
delay, regardless of whether the plan or
issuer intends to seek judicial review of
the external review decision and unless
or until there is a judicial decision
otherwise.
*
*
*
*
*
(3) Transition period for external
review processes. (i) Through December
31, 2011, an applicable State external
review process applicable to a health
insurance issuer or group health plan is
considered to meet the requirements of
PHS Act section 2719(b). Accordingly,
through December 31, 2011, an
applicable State external review process
will be considered binding on the issuer
or plan (in lieu of the requirements of
the Federal external review process). If
there is no applicable State external
review process, the issuer or plan is
required to comply with the
requirements of the Federal external
review process in paragraph (d) of this
section.
(ii) For final internal adverse benefit
determinations (or, in the case of
simultaneous internal appeal and
external review, adverse benefit
determinations) provided on or after

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37231

January 1, 2012, the Federal external
review process will apply unless the
Department of Health and Human
Services determines that a State law
meets all the minimum standards of
paragraph (c)(2) of this section.
(d) * * *
(1) Scope—(i) In general. Subject to
the suspension provision in paragraph
(d)(1)(ii) of this section and except to
the extent provided otherwise by the
Secretary in guidance, the Federal
external review process established
pursuant to this paragraph (d) applies to
any adverse benefit determination or
final internal adverse benefit
determination (as defined in paragraphs
(a)(2)(i) and (a)(2)(v) of this section),
except that a denial, reduction,
termination, or a failure to provide
payment for a benefit based on a
determination that a participant or
beneficiary fails to meet the
requirements for eligibility under the
terms of a group health plan is not
eligible for the Federal external review
process under this paragraph (d).
(ii) Suspension of general rule. Unless
or until this suspension is revoked in
guidance by the Secretary, with respect
to claims for which external review has
not been initiated before the effective
date of this paragraph (d)(1) (September
20, 2011), the Federal external review
process established pursuant to this
paragraph (d) applies only to:
(A) An adverse benefit determination
(including a final internal adverse
benefit determination) by a plan or
issuer that involves medical judgment
(including, but not limited to, those
based on the plan’s or issuer’s
requirements for medical necessity,
appropriateness, health care setting,
level of care, or effectiveness of a
covered benefit; or its determination
that a treatment is experimental or
investigational), as determined by the
external reviewer; and
(B) A rescission of coverage (whether
or not the rescission has any effect on
any particular benefit at that time).
(iii) Examples. This rules of paragraph
(d)(1)(ii) of this section are illustrated by
the following examples:
Example 1. (i) Facts. A group health plan
provides coverage for 30 physical therapy
visits generally. After the 30th visit, coverage
is provided only if the service is
preauthorized pursuant to an approved
treatment plan that takes into account
medical necessity using the plan’s definition
of the term. Individual A seeks coverage for
a 31st physical therapy visit. A’s health care
provider submits a treatment plan for
approval, but it is not approved by the plan,
so coverage for the 31st visit is not
preauthorized. With respect to the 31st visit,
A receives a notice of final internal adverse
benefit determination stating that the
maximum visit limit is exceeded.

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(ii) Conclusion. In this Example 1, the
plan’s denial of benefits is based on medical
necessity and involves medical judgment.
Accordingly, the claim is eligible for external
review during the suspension period under
paragraph (d)(1)(ii) of this section. Moreover,
the plan’s notification of final internal
adverse benefit determination is inadequate
under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3)
of this section because it fails to make clear
that the plan will pay for more than 30 visits
if the service is preauthorized pursuant to an
approved treatment plan that takes into
account medical necessity using the plan’s
definition of the term. Accordingly, the
notice of final internal adverse benefit
determination should refer to the plan
provision governing the 31st visit and should
describe the plan’s standard for medical
necessity, as well as how the treatment fails
to meet the plan’s standard.
Example 2. (i) Facts. A group health plan
does not provide coverage for services
provided out of network, unless the service
cannot effectively be provided in network.
Individual B seeks coverage for a specialized
medical procedure from an out-of-network
provider because B believes that the
procedure cannot be effectively provided in
network. B receives a notice of final internal
adverse benefit determination stating that the
claim is denied because the provider is outof-network.
(ii) Conclusion. In this Example 2, the
plan’s denial of benefits is based on whether
a service can effectively be provided in
network and, therefore, involves medical
judgment. Accordingly, the claim is eligible
for external review during the suspension
period under paragraph (d)(1)(ii) of this
section. Moreover, the plan’s notice of final
internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and
(b)(2)(ii)(E)(3) of this section because the plan
does provide benefits for services on an outof-network basis if the services cannot
effectively be provided in network.
Accordingly, the notice of final internal
adverse benefit determination is required to
refer to the exception to the out-of-network
exclusion and should describe the plan’s
standards for determining effectiveness of
services, as well as how services available to
the claimant within the plan’s network meet
the plan’s standard for effectiveness of
services.

emcdonald on DSK2BSOYB1PROD with RULES3

*

*
*
*
*
(2) * * *
(iv) These standards will provide that
an external review decision is binding
on the plan or issuer, as well as the
claimant, except to the extent other
remedies are available under State or
Federal law, and except that the
requirement that the decision be
binding shall not preclude the plan or
issuer from making payment on the
claim or otherwise providing benefits at
any time, including after a final external
review decision that denies the claim or
otherwise fails to require such payment
or benefits. For this purpose, the plan or
issuer must provide any benefits
(including by making payment on the

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claim) pursuant to the final external
review decision without delay,
regardless of whether the plan or issuer
intends to seek judicial review of the
external review decision and unless or
until there is a judicial decision
otherwise.
*
*
*
*
*
(e) Form and manner of notice—(1) In
general. For purposes of this section, a
group health plan and a health
insurance issuer offering group health
insurance coverage are considered to
provide relevant notices in a culturally
and linguistically appropriate manner if
the plan or issuer meets all the
requirements of paragraph (e)(2) of this
section with respect to the applicable
non-English languages described in
paragraph (e)(3) of this section.
(2) Requirements—(i) The plan or
issuer must provide oral language
services (such as a telephone customer
assistance hotline) that include
answering questions in any applicable
non-English language and providing
assistance with filing claims and
appeals (including external review) in
any applicable non-English language;
(ii) The plan or issuer must provide,
upon request, a notice in any applicable
non-English language; and
(iii) The plan or issuer must include
in the English versions of all notices, a
statement prominently displayed in any
applicable non-English language clearly
indicating how to access the language
services provided by the plan or issuer.
(3) Applicable non-English language.
With respect to an address in any
United States county to which a notice
is sent, a non-English language is an
applicable non-English language if ten
percent or more of the population
residing in the county is literate only in
the same non-English language, as
determined in guidance published by
the Secretary.
*
*
*
*
*
Department of Health and Human
Services
45 CFR Subtitle A
For the reasons stated in the
preamble, the Department of Health and
Human Services amends 45 CFR part
147 as follows:
PART 147—HEALTH INSURANCE
REFORM REQUIREMENTS FOR THE
GROUP AND INDIVIDUAL HEALTH
INSURANCE MARKETS
1. The authority citation for part 147
continues to read as follows:

■

Authority: Sections 2701 through 2763,
2791, and 2792 of the Public Health Service
Act (42 U.S.C. 300gg through 300gg–63,
300gg–91, and 300gg–92), as amended.

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2. Section 147.136 is amended by:
1. Revising paragraphs (b)(2)(ii)(B),
(b)(2)(ii)(E)(1), (b)(2)(ii)(F), (c)(2)(xi),
(c)(3), (d)(1), (d)(2)(iv), and (e).
■ 2. Redesignating (b)(2)(ii)(E)(2),
(b)(2)(ii)(E)(3), and (b)(2)(ii)(E)(4) as
(b)(2)(ii)(E)(3), (b)(2)(ii)(E)(4), and
(b)(2)(ii)(E)(5), respectively.
■ 3. Adding new paragraph
(b)(2)(ii)(E)(2).
The revisions and addition read as
follows:
■
■

§ 147.136 Internal claims and appeals and
external review processes.

*

*
*
*
*
(b) * * *
(2) * * *
(ii) * * *
(B) Expedited notification of benefit
determinations involving urgent care.
The requirements of 29 CFR 2560.503–
1(f)(2)(i) (which generally provide,
among other things, in the case of urgent
care claims for notification 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) continue to apply to the plan and
issuer. For purposes of this paragraph
(b)(2)(ii)(B), a claim involving urgent
care has the meaning given in 29 CFR
2560.503–1(m)(1), as determined by the
attending provider, and the plan or
issuer shall defer to such determination
of the attending provider.
*
*
*
*
*
(E) * * *
(1) The plan and issuer must ensure
that any notice of adverse benefit
determination or final internal adverse
benefit determination includes
information sufficient to identify the
claim involved (including the date of
service, the health care provider, the
claim amount (if applicable), and a
statement describing the availability,
upon request, of the diagnosis code and
its corresponding meaning, and the
treatment code and its corresponding
meaning).
(2) The plan and issuer must provide
to participants and beneficiaries, as
soon as practicable, upon request, the
diagnosis code and its corresponding
meaning, and the treatment code and its
corresponding meaning, associated with
any adverse benefit determination or
final internal adverse benefit
determination. The plan or issuer must
not consider a request for such
diagnosis and treatment information, in
itself, to be a request for an internal
appeal under this paragraph (b) or an
external review under paragraphs (c)
and (d) of this section.
*
*
*
*
*

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Federal Register / Vol. 76, No. 122 / Friday, June 24, 2011 / Rules and Regulations
(F) Deemed exhaustion of internal
claims and appeals processes—(1) In
the case of a plan or issuer that fails to
adhere to all the requirements of this
paragraph (b)(2) with respect to a claim,
the claimant is deemed to have
exhausted the internal claims and
appeals process of this paragraph (b),
except as provided in paragraph
(b)(2)(ii)(F)(2) of this section.
Accordingly, the claimant may initiate
an external review under paragraph (c)
or (d) of this section, as applicable. The
claimant is also entitled to pursue any
available remedies under section 502(a)
of ERISA or under State law, as
applicable, on the basis that the plan or
issuer has failed to provide a reasonable
internal claims and appeals process that
would yield a decision on the merits of
the claim. If a claimant chooses to
pursue remedies under section 502(a) of
ERISA under such circumstances, the
claim or appeal is deemed denied on
review without the exercise of
discretion by an appropriate fiduciary.
(2) Notwithstanding paragraph
(b)(2)(ii)(F)(1) of this section, the
internal claims and appeals process of
this paragraph (b) will not be deemed
exhausted based on de minimis
violations that do not cause, and are not
likely to cause, prejudice or harm to the
claimant so long as the plan or issuer
demonstrates that the violation was for
good cause or due to matters beyond the
control of the plan or issuer and that the
violation occurred in the context of an
ongoing, good faith exchange of
information between the plan and the
claimant. This exception is not available
if the violation is part of a pattern or
practice of violations by the plan or
issuer. The claimant may request a
written explanation of the violation
from the plan or issuer, and the plan or
issuer must provide such explanation
within 10 days, including a specific
description of its bases, if any, for
asserting that the violation should not
cause the internal claims and appeals
process of this paragraph (b) to be
deemed exhausted. If an external
reviewer or a court rejects the claimant’s
request for immediate review under
paragraph (b)(2)(ii)(F)(1) of this section
on the basis that the plan met the
standards for the exception under this
paragraph (b)(2)(ii)(F)(2), the claimant
has the right to resubmit and pursue the
internal appeal of the claim. In such a
case, within a reasonable time after the
external reviewer or court rejects the
claim for immediate review (not to
exceed 10 days), the plan shall provide
the claimant with notice of the
opportunity to resubmit and pursue the
internal appeal of the claim. Time

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periods for re-filing the claim shall
begin to run upon claimant’s receipt of
such notice.
*
*
*
*
*
(c) * * *
(2) * * *
(xi) The State process must provide
that the decision is binding on the plan
or issuer, as well as the claimant, except
to the extent other remedies are
available under State or Federal law,
and except that the requirement that the
decision be binding shall not preclude
the plan or issuer from making payment
on the claim or otherwise providing
benefits at any time, including after a
final external review decision that
denies the claim or otherwise fails to
require such payment or benefits. For
this purpose, the plan or issuer must
provide benefits (including by making
payment on the claim) pursuant to the
final external review decision without
delay, regardless of whether the plan or
issuer intends to seek judicial review of
the external review decision and unless
or until there is a judicial decision
otherwise.
*
*
*
*
*
(3) Transition period for external
review processes. (i) Through December
31, 2011, an applicable State external
review process applicable to a health
insurance issuer or group health plan is
considered to meet the requirements of
PHS Act section 2719(b). Accordingly,
through December 31, 2011, an
applicable State external review process
will be considered binding on the issuer
or plan (in lieu of the requirements of
the Federal external review process). If
there is no applicable State external
review process, the issuer or plan is
required to comply with the
requirements of the Federal external
review process in paragraph (d) of this
section.
(ii) For final internal adverse benefit
determinations (or, in the case of
simultaneous internal appeal and
external review, adverse benefit
determinations) provided on or after
January 1, 2012, the Federal external
review process will apply unless the
Department of Health and Human
Services determines that a State law
meets all the minimum standards of
paragraph (c)(2) of this section.
(d) * * *
(1) Scope—(i) In general. Subject to
the suspension provision in paragraph
(d)(1)(ii) of this section and except to
the extent provided otherwise by the
Secretary in guidance, the Federal
external review process established
pursuant to this paragraph (d) applies to
any adverse benefit determination or
final internal adverse benefit

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37233

determination (as defined in paragraphs
(a)(2)(i) and (a)(2)(v) of this section),
except that a denial, reduction,
termination, or a failure to provide
payment for a benefit based on a
determination that a participant or
beneficiary fails to meet the
requirements for eligibility under the
terms of a group health plan is not
eligible for the Federal external review
process under this paragraph (d).
(ii) Suspension of general rule. Unless
or until this suspension is revoked in
guidance by the Secretary, with respect
to claims for which external review has
not been initiated before September 20,
2011, the Federal external review
process established pursuant to this
paragraph (d) applies only to:
(A) An adverse benefit determination
(including a final internal adverse
benefit determination) by a plan or
issuer that involves medical judgment
(including, but not limited to, those
based on the plan’s or issuer’s
requirements for medical necessity,
appropriateness, health care setting,
level of care, or effectiveness of a
covered benefit; or its determination
that a treatment is experimental or
investigational), as determined by the
external reviewer; and
(B) A rescission of coverage (whether
or not the rescission has any effect on
any particular benefit at that time).
(iii) Examples. This rules of paragraph
(d)(1)(ii) of this section are illustrated by
the following examples:
Example 1. (i) Facts. A group health plan
provides coverage for 30 physical therapy
visits generally. After the 30th visit, coverage
is provided only if the service is
preauthorized pursuant to an approved
treatment plan that takes into account
medical necessity using the plan’s definition
of the term. Individual A seeks coverage for
a 31st physical therapy visit. A’s health care
provider submits a treatment plan for
approval, but it is not approved by the plan,
so coverage for the 31st visit is not
preauthorized. With respect to the 31st visit,
A receives a notice of final internal adverse
benefit determination stating that the
maximum visit limit is exceeded.
(ii) Conclusion. In this Example 1, the
plan’s denial of benefits is based on medical
necessity and involves medical judgment.
Accordingly, the claim is eligible for external
review during the suspension period under
paragraph (d)(1)(ii) of this section. Moreover,
the plan’s notification of final internal
adverse benefit determination is inadequate
under paragraphs (b)(2)(i) and (b)(2)(ii)(E)(3)
of this section because it fails to make clear
that the plan will pay for more than 30 visits
if the service is preauthorized pursuant to an
approved treatment plan that takes into
account medical necessity using the plan’s
definition of the term. Accordingly, the
notice of final internal adverse benefit
determination should refer to the plan
provision governing the 31st visit and should

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describe the plan’s standard for medical
necessity, as well as how the treatment fails
to meet the plan’s standard.
Example 2. (i) Facts. A group health plan
does not provide coverage for services
provided out of network, unless the service
cannot effectively be provided in network.
Individual B seeks coverage for a specialized
medical procedure from an out-of-network
provider because B believes that the
procedure cannot be effectively provided in
network. B receives a notice of final internal
adverse benefit determination stating that the
claim is denied because the provider is outof-network.
(ii) Conclusion. In this Example 2, the
plan’s denial of benefits is based on whether
a service can effectively be provided in
network and, therefore, involves medical
judgment. Accordingly, the claim is eligible
for external review during the suspension
period under paragraph (d)(1)(ii) of this
section. Moreover, the plan’s notice of final
internal adverse benefit determination is
inadequate under paragraphs (b)(2)(i) and
(b)(2)(ii)(E)(3) of this section because the plan
does provide benefits for services on an outof-network basis if the services cannot
effectively be provided in network.
Accordingly, the notice of final internal
adverse benefit determination is required to
refer to the exception to the out-of-network
exclusion and should describe the plan’s
standards for determining effectiveness of
services, as well as how services available to
the claimant within the plan’s network meet
the plan’s standard for effectiveness of
services.

emcdonald on DSK2BSOYB1PROD with RULES3

*

*

*

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*

*

19:19 Jun 23, 2011

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(2) * * *
(iv) These standards will provide that
an external review decision is binding
on the plan or issuer, as well as the
claimant, except to the extent other
remedies are available under State or
Federal law, and except that the
requirement that the decision be
binding shall not preclude the plan or
issuer from making payment on the
claim or otherwise providing benefits at
any time, including after a final external
review decision that denies the claim or
otherwise fails to require such payment
or benefits. For this purpose, the plan or
issuer must provide any benefits
(including by making payment on the
claim) pursuant to the final external
review decision without delay,
regardless of whether the plan or issuer
intends to seek judicial review of the
external review decision and unless or
until there is a judicial decision
otherwise.
*
*
*
*
*
(e) Form and manner of notice—(1) In
general. For purposes of this section, a
group health plan and a health
insurance issuer offering group or
individual health insurance coverage
are considered to provide relevant
notices in a culturally and linguistically
appropriate manner if the plan or issuer
meets all the requirements of paragraph
(e)(2) of this section with respect to the

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Sfmt 9990

applicable non-English languages
described in paragraph (e)(3) of this
section.
(2) Requirements—(i) The plan or
issuer must provide oral language
services (such as a telephone customer
assistance hotline) that include
answering questions in any applicable
non-English language and providing
assistance with filing claims and
appeals (including external review) in
any applicable non-English language;
(ii) The plan or issuer must provide,
upon request, a notice in any applicable
non-English language; and
(iii) The plan or issuer must include
in the English versions of all notices, a
statement prominently displayed in any
applicable non-English language clearly
indicating how to access the language
services provided by the plan or issuer.
(3) Applicable non-English language.
With respect to an address in any
United States county to which a notice
is sent, a non-English language is an
applicable non-English language if ten
percent or more of the population
residing in the county is literate only in
the same non-English language, as
determined in guidance published by
the Secretary.
*
*
*
*
*
[FR Doc. 2011–15890 Filed 6–22–11; 4:15 pm]
BILLING CODE 4830–01–P

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