Supporting Statement

SUPPORTING STATEMENT
1. CIRCUMSTANCES NECESSITATING COLLECTION OF INFORMATION
Section 9812 of the Code requires group health plans maintained by an employer with more than 50 employees to
disclose upon request to participants and beneficiaries of the plan the medical necessity criteria used in making
decisions regarding claims for benefits under the plan.

2. USE OF DATA
This is a third party disclosure requirement. Participants or beneficiaries requesting medical necessity criteria from a
group health plan will be in a better position to evaluate whetehr the plan followed its criteria in deciding a particular
claim by the participant or beneficiary for benefits udner the plan.

3. USE OF IMPROVED INFORMATION TECHNOLOGY TO REDUCE BURDEN
Participants and beneficiaries are permitted to make electronic requests for medical necessity criteria, and plans may
reply by electronic means if they comply with electronic disclosure requirements.

4. EFFORTS TO IDENTIFY DUPLICATION
Group health plans are currently required under the Employee Retirement Income Security Act (ERISA) to provide
individuals seeking a benefit under the plan an explantion of claims denials. Section 9812 of the Code also imposes
this obligation with respect to denials of mental health or substance sue disorder benefits. To avoid duplication, the
termporary regulations provide that a plan subject to ERISA complies with that requirement by complying with the
ERISA cliams procedure requirements. There is no comparable existing requirement to disclose medical necessity
criteria used in determining claims for benefits.

5. METHODS TO MINIMIZE BURDEN ON SMALL BUSINESSES OR OTHER SMALL ENTITIES
Employers with not more than 50 employees are not subject to the ICR.

6. CONSEQUENCES OF LESS FREQUENT COLLECTION ON FEDERAL PROGRAMS OR
POLICY ACTIVITIES
Not applicable -- collection is occasional, upon request of a third party.

Form 14029 (Rev. 4-2009) Catalog Number 51944B Page 4

Department of the Treasury–Internal Revenue Service

7. SPECIAL CIRCUMSTANCES REQUIRING DATA COLLECTION TO BE INCONSISTENT
WITH GUIDELINES IN 5 CFR 1320.5(d)(2)
Not applicable.

8. CONSULTATION WITH INDIVIDUALS OUTSIDE OF THE AGENCY ON AVAILABILITY
OF DATA, FREQUENCY OF COLLECTION, CLARITY OF INSTRUCTIONS AND FORMS,
AND DATA ELEMENTS
Comments are requested in the temporary and cross-referencing proposed regulations.

9. EXPLANATION OF DECISION TO PROVIDE ANY PAYMENT OR GIFT TO RESPONDENTS
Not applicable.

10. ASSURANCE OF CONFIDENTIALITY OF RESPONSES
Not applicable.

11. JUSTIFICATION OF SENSITIVE QUESTIONS
Not applicable.

12. ESTIMATED BURDEN OF INFORMATION COLLECTION
The Departments are unable to estimate with certainty the number of requests for medical necessity criteria
disclosures that will be received by plan administrators; however, the Departments have assumed that, on average,
each plan affected by the rule will receive one request. For PRA purposes, plans using third-party administrators will
report the costs as a cost burden, while plans administering claims in-house will report the burden as an hour burden.
The Departments assume that it will take a medically trained clerical staff member five minutes to respond to each
request at a wage rate of $27 per hour. This results in an annual hour burden of nearly 1,900 hours.

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service

13. ESTIMATED TOTAL ANNUAL COST BURDEN TO RESPONDENTS
The associated cost of the 1,900 hours estimated to be spent complying with the ICR in-house is nearly $51,000 for the
approximately 23,000 requests done in-house. The remaining 424,000 medical necessity criteria disclosures will be
provided through third-party administrators resulting in a cost burden of approximately $950,000.
Both these estimates and the cost estimates of #12 are totals. However, for purposes of burdens requested for OMB
clearance, DOL and IRS have split them in half, so the requested burdens reflect 50% of these totals.

14. ESTIMATED ANNUALIZED COST TO THE FEDERAL GOVERNMENT
Not applicable -- third party disclosure.

15. REASONS FOR CHANGE IN BURDEN
New ICR.

16. PLANS FOR TABULATION, STATISTICAL ANALYSIS AND PUBLICATION
Not applicable.

17. REASONS WHY DISPLAYING THE OMB EXPIRATION DATE IS INAPPROPRIATE
Not applicable.

18. EXCEPTIONS TO THE CERTIFICATION STATEMENT ON OMB PRA SUBMISSION FORM
Not applicable.

19. REASON FOR EMERGENCY SUBMISSION

Form 14029 (Rev. 4-2009) Catalog Number 51944B

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Department of the Treasury–Internal Revenue Service