CMS-10338 - Supporting_Statement_2022_Final

Supporting Statement Part A

Affordable Care Act Internal Claims and Appeals and External Review Procedures for Nongrandfathered and Grandfathered Group Health Plans and Issuers and Individual Market
Issuers for Paperwork Reduction Act Submission
(CMS-10338/OMB Control Number 0938-1099)
Background
The Patient Protection and Affordable Care Act, Public Law 111-148, (the Affordable
Care Act) was enacted by President Obama on March 23, 2010. As part of the Act,
Congress added PHS Act section 2719, which provides rules relating to internal claims and
appeals and external review processes. On July 23, 2010 an interim final rule (2010 IFR)
was published implementing section 2719 of the PHS Act. On June 24, 2011, the 2010 IFR
was amended specifying rules governing the internal claims and appeals and external
review processes. The Departments of Health and Human Services, Labor, and the Treasury
(the Departments) finalized the 2010 IFR on November 18, 2015 (2015 final rule). The
2015 final rule clarifies consumer rights and aligns the appeals process across all types of
plans, starting in 2018.
The Consolidated Appropriations Act (CAA) of 2021, 1 which includes Section 110 of
the No Surprises Act, adds new sections 2799A-1 and 2799A-2 to the PHS Act, which
protect participants, beneficiaries, and enrollees in group health plans and group and
individual health insurance coverage from receiving surprise medical bills when they
receive emergency services, non-emergency services from non-participating providers at
participating facilities, and air ambulance services, under certain circumstances. The CAA
also amends section 2719 of the PHS Act to require the external review process to apply
with respect to any adverse determination by a plan or issuer involving items and services
subject to the surprise billing and cost-sharing protections under section 2799A-1 or
2799A-2 of the PHS Act. Interim final rules titled “Requirements Related to Surprise
Billing; Part II” (September 2021 IFR) were published, implementing certain provisions of
the CAA, including the provision regarding the requirement that the external review
process apply to items and services subject to determinations involving 2799A-1 or
2799A-2 of the PHS Act. The CAA extends these protections to grandfathered plans and
so the Departments implemented section 110 of the CAA to make external review
available to individuals enrolled in grandfathered health plans or coverage. The September
2021 IFR will be herein after referred to as the “Appeals regulation.”

1

Pub. L. 116-260.

1

B. Justification
1. Need and Legal Basis
With respect to internal claims and appeals processes for group health coverage, PHS Act
section 2719 and paragraph (b)(2)(i) of the Appeals regulation provide that group health
plans and health insurance issuers offering group health insurance coverage must comply
with the internal claims and appeals processes set forth in 29 CFR 2560.503-1 of the
Department of Labor (DOL) claims procedure regulation, and update such processes in
accordance with standards established by the Secretary of Labor in paragraph (b)(2)(ii) of the
regulation. Paragraph (b)(3)(i) requires issuers offering coverage in the individual health
insurance market to also comply with the DOL claims procedure regulation as updated by the
Secretary of Health and Human Services (HHS) in paragraph (b)(3)(ii) of the Appeals
regulation for their internal claims and appeals processes.
The DOL claims procedure regulation requires plans to provide participants and
beneficiaries (claimants) who are denied a claim with a written or electronic notice that
contains the specific reasons for the denial, a reference to the relevant plan provisions on
which the denial is based, a description of any additional information necessary to perfect the
claim, and a description of steps to be taken if the participant or beneficiary wishes to appeal
the denial. The DOL claims procedure regulation also requires that any adverse benefit
determination made upon review of a claim be in writing (including electronic means) and
include specific reasons for the decision, as well as references to relevant plan provisions.
Paragraph (b)(3)(ii)(C) of the Appeals regulation adds an additional requirementthat nongrandfathered ERISA-covered group health plans provide to the claimant, free of charge, any
new or additional evidence considered or relied upon, or generated by the plan or issuer in
connection with the claim. 2
PHS Act section 2719 further requires that non-grandfathered group health plans and
health insurance issuers offering non-grandfathered group or individual coverage comply
with either a state external review process in the state in which the issuer operates or a
federal external review process. The Appeals regulation provides a basis for determining
when plans and issuers must comply with an applicable state external review process and
when they must comply with a federal external review process.

Such evidence must be provided as soon as possible and sufficiently in advance of the date on which the notice of
adverse benefit determination on review is required to be provided to give the claimant a reasonable opportunity to
respond prior to that date. Additionally, before the plan or issuer can issue an adverse benefit determination on review
based on a new or additional rationale the claimant must be provided, free of charge, with the rationale. The rationale
must be provided as soon as possible and sufficiently in advance of the date on which the notice ofadverse benefit
determination on review is provided.

2

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Starting in 2018, all plans and issuers are required to comply with the federal consumer
protection standards for the appeals process. To the extent the state in which the issuer
operates does not meet the minimum federal external review standards, or the plan or issuer
is not subject to a state external review process, the plan or issuer may choose to either
contract with an Independent Review Organization (IRO) (also referred to as a Private,
Accredited IRO), as described in section 45 CFR 147.136(d)(2) of the Appeals regulation, or
participate in the HHS-administered federal external review process, as described in section
45 CFR 147.136(d)(4) of the Appeals regulation.
If claimants belong to plans that elect to participate in the HHS-administered federal
external review process, those claimants may submit a request via a web-based portal, mail,
email, or fax directly to HHS. 3 The web-based portal may be used to request an external
review of a plan’s or issuer’s determination and to check on the status of a submitted
request. Claimants who request a review online are required to attach pertinent and relevant
documentation which provides support for their request for an external review. The DOL
claims procedure regulation imposes information collection requirements as part of the
reasonable procedures that an employee benefit plan must establish regarding the handling
of a benefit claim. These requirements include third-party notice and disclosure requirements
that the plan must satisfy by providing information to participants and beneficiaries of the
plan. The Appeals regulation includes additional requirements for employee benefit plans
that must be met or exceeded, as described in DOL Technical Guidance 2011-02. 4
The CAA of 2021 amended section 2719 of the PHS Act to require the external review
process to apply with respect to any adverse determination by a plan or issuer involving items
and services subject to the surprise billing and cost-sharing protections under section 2799A-1
or 2799A-2 of the PHS Act. In order to implement this expansion, the Appeals regulations at
45 CFR 147.136 were amended by the September 2021 IFR. In particular, the September
2021 IFR amends the 2015 final rules to broaden the scope of external review requirements
and explicitly require, to the extent not already covered, that any adverse determination that
involves consideration of whether a plan or issuer is complying with PHS Act section 2799A1 or 2799A-2 is eligible for external review. Additionally, the September 2021 IFR extends
the external review requirement to grandfathered health plans and coverage for adverse
benefit determinations involving items and services covered by requirements of PHS Act
section 2799A-1 or 2799A-2.
The disclosure requirements of the federal external review process include: (1) preliminary
review by plans of requests for external reviews; (2) Independent Review Organizations (IROs)
to notify claimants of eligibility and acceptance for external review; (3)the plan or issuer to
provide IROs with documentation and other information considered in making adverse benefit
determination; (4) the IRO to forward to the plan or issuer any information submitted by the
claimant; (5) plans to notify the claimant and IRO if it reverses its decision; (6) the IRO to notify
3

Standards for Self-Insured Non-Federal Governmental Health Plans and Health Insurance Issuers Offering
Groupand Individual Health Coverage Using the HHS Administered Federal External Review Process;
https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/FERP-Guidance-8-29-2018.pdf.
4
Guidance on External Review for Group Health Plans and Health Insurance Issuers Offering Group and
IndividualHealth Coverage, and Guidance for States on State External Review Processes;
https://www.dol.gov/agencies/ebsa/employers-and-advisers/guidance/technical-releases/11-02.

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the claimant and plan of the result of the final external review; and (7) the IRO to maintain
records for six years.
2. Information Users
The information collection requirements included in the DOL claims procedure
regulation and the Appeals regulation ensure that claimants receive adequate information
regarding the plan’s claims procedures and the plan’s handling of specific benefit claims.
Claimants need to understand plan procedures and plan decisions in order to appropriately
request benefits and/or appeal benefit denials. The information collected in connection with
the HHS-administered federal external review process is collected by HHS, and is used to
provide claimants with an independent external review.
3. Use of Information Technology
The DOL claims regulation and the Appeals regulation do not restrict plans’ use of
electronic technology to process and pay claims, to maintain information on the basis for
claim determination, and to generate correspondence related to claims processing decisions.
The Appeals regulation provides consumers a secure, online portal, which may be used
as an additional tool to request and process HHS-administered federal external review
requests.
4. Duplication of Efforts
There is no duplication of efforts for these information collection requirements. In some
circumstances, states may require substantially similar information to be provided to insured
persons and any such information disclosure may be used to satisfy any potential duplicative
or overlapping requirements.
5. Small Businesses
The regulation applies to all employee benefit plans and therefore is likely to affect small
entities that provide health care benefits. For the purposes of the 2015 final rule, small entities
that fall under HHS’ regulatory authority includes small health insurance insurers and small
self-insured nonfederal governmental health plans.
We believe that few, if any, insurance companies underwriting comprehensive health
insurance policies are small entities. Using data from the 2009 Current Population Survey, HHS
estimates that the Appeals regulation will affect an estimated 5.73 percent of nonfederal
governmental health plans that qualify as small plans. HHS considered the potential burden on
small entities in structuring the regulation by permitting plan sponsors the maximum possible

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flexibility in designing their plans, including the possibility of hiring third-party service
providers to carry out these administration responsibilities in order to make use of the lowest
cost method of compliance available. A large majority of small plans purchase claims
administration services from insurers, HMOs, and other service providers, and HHS has taken
this fact into account in deriving its burden estimates. These service providers typically develop
a single claims processing system to service a large number of customers, including small
entities. The cost of revising and implementing the procedures is therefore spread widely over a
large number of small plans, minimizing burden on those plans. Moreover, small plans and
their respective enrollees benefit equally from the service provider’s expertise and ability to
provide improved accuracy and timeliness in claims and appeals determinations.
6. Less Frequent Collection
The information collection requirements arise in connection with the occurrence of
individual claims for benefits, and consist of third-party notices and disclosures. No
information is reported to the federal government other than that which is necessary for HHS to
facilitate an external review. The information collection provisions of the regulation ensure that
sufficient information is provided to claimants so that they may fully exercise their rights under
their coverage. The information collection is necessary to ensure that claimants in plans or
policies in states whose external review processes do not meet the requirements of 2719(b)(1)
and 2719(b)(2), as well as plans not subject to their state’s external review process can access
their rights as described in PHS Act Section 2719.
7. Timing of Notification
The DOL claims procedure regulation, the Appeals regulation and federal external
review process guidelines together impose special timing requirements for the handling of
claims in the fully insured and small group markets, self-funded nonfederal governmental
health plans, and plans not subject to a state external review process in cases where the state
does not have an external review process that meets federal requirements. 45 CFR
147.136(b)(2) of the Appeals regulation also provides a basis for special timing requirements
set forth by the DOL claims procedure regulation.
First, for health care claims involving “urgent care”, 45 CFR 147.136(b)(2)(ii)(B) of
the Appeals regulation provides processes set forth by the DOL claims procedure
regulation, which requires, in general, that claimants be notified of health benefit
determinations “as soon as possible, taking into account the medical exigencies, but not
later than 72 hours after receipt of the claim.” In cases involving urgent care where the
health claim is a request to extend the time period or number of treatments of ongoing
medical care, this period is 24 hours.
Second, for “pre-service” health care claims, 45 CFR 147.136(b)(2) of the Appeals
regulation, incorporates the requirement from the DOL claims procedure regulation that
claimants be notified of health benefit determinations “within a reasonable period of time
appropriate to the medical circumstances, but not later than 15 days after receipt of the
claim by the plan.” Pre-service claims involve requirements that a claimant obtain
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approval from the plan prior to receiving health care services or products in order to
maintain eligibility for benefits.
Third, for “post-service” health care benefit claims, 45 CFR 147.136(b)(2) of the
Appeals regulation incorporates the requirement from the DOL claims procedure regulation
that notification of an adverse benefit determination be given “within a reasonable period
of time, but not later than 30 days after receipt of the claim.” Even though 30 days is the
maximum response time for these claims, a plan must provide a determination sooner if it
is reasonable to do so. Disability benefit claims are subject to a similar construct, except
that the maximum response time is 45 days.
To facilitate external review for claimants in plans or coverage not subject to a state
external review process, the plans or issuers are required to electronically notify HHS as
to whether they are subject to a federal external review process under PHS Act 2719 and
to specify the insurance plan(s) to which it applies. If the plan or issuer is subject to a
federal external review process under PHS Act Section 2719, the plan or issuer is
required to notify HHS which federal external review process they are using and provide
contact information for designated personnel in their appeals department, including
names, mailing address, telephone numbers, facsimile numbers and e-mail addresses.
Issuers and self-funded nonfederal governmental health plans that elect to use the HHSadministered federal external review process will also be required to provide the
claimants’ relevant files to the HHS external review contractor in fewer than five days,
upon request.
These timing requirements are related to policy objectives in an area of important
public concern. For example, the shortest time frame for “urgent care” claims apply only
under circumstances in which delay could seriously jeopardize the life or health of the
claimant, the ability of the claimant to regain maximum function, or where delay would
subject the claimant to severe pain. The next shortest time frame applies under pre-service
claims in which medical care, while not urgent, has not been provided to a claimant who
needs treatment for a medical problem, and where the plan or coverage requires preapproval of the medical care before providing such products or services. Post-service health
claims and disability claims also involve important concerns relating to the sick and
disabled, but under these circumstances, plans may take up to 45 days to respond if it is
reasonably necessary to do so. The time frames also ensure that claimants are given a
response to their appeal and can escalate to another level of appeal, if needed, within a
reasonable amount of time.
Another reason why these time frames are important is that these notices relate to the
payment of money by a plan to claimants to whom fiduciary responsibilities are owed.
Without enforcement of reasonable deadlines, payers could be given a financial incentive
to delay the payments, and this would likely be inconsistent with appropriate fiduciary
standards.

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8. Federal Register/Outside Consultation
A 60-day Notice was published in the Federal Register on March 9, 2022 (87 FR
8016). A summary and response to the one comment received is included in Appendix A.
A 30-day notice published May 5, 2022 (87 FR 26760). No outside consultation was
sought.
9. Payments/Gifts to Respondents
No payments or gifts are associated with these data collections.
10. Confidentiality
To the extent of applicable law and HHS policies, HHS will maintain consumer
privacywith respect to the information disclosed.
11. Sensitive Questions
These data collections involve no sensitive questions.
12. Burden Estimates (Hours & Wages)
12.1 Internal Claims and Internal Appeals Process (45 CF 147.136)
HHS estimates that this information collection will affect an average 109,653 respondents
per year, over the next three years. HHS expects the number of respondents will increase over
time as more plans relinquish grandfathered status and must comply with the regulations. The
frequency of response will be on occasion, mirroring the frequency of benefit claims that
require responses, resulting in an estimated average hourly burden of 1,195,529 hours and
with an associated average cost of $184 million per year over the next three years. It is
expected that there will be an increase in the hour burden and associated cost as grandfathered
plans continue to lose that status in future years. Although grandfathered plans are not subject
to the current regulations, the September 2021 IFR extends the balance billing protections
related to external reviews to grandfathered plans.
Under PHS Act section 2719, all sponsors of non-grandfathered group health plans and
health insurance issuers offering group or individual health insurance coverage must comply
with all requirements of the DOL claims regulation as well as the new standards that are
established by the Secretary of Labor and the Secretary of Health and Human Services in
paragraphs (b)(2) and (b)(3) of the 2015 FR. These estimates include only ongoing costs of
compliance with the statute, the DOL claims regulation, and the Appeals regulation. Average
labor costs are calculated using data from the Bureau of Labor Statistics. 5

May 2020 Occupational Employment Statistics found at https://www.bls.gov/oes/2020/may/oes_stru.htm#43-0000.
Adjusted hourly wages are calculated as follows: (2020 BLS mean wage rate)/(ECEC ratio)*(Overhead load
factor)*(inflation rate)^2(inflated 2 years from base year).
5

7

TABLE 1: Adjusted Hourly Wages Used in Burden Estimates

Occupation Title
Secretaries and Administrative
Assistants, Except Legal,
Medical,and Executive
Physician (all other)
Lawyer
Human Resources Manager
Medical Secretaries

Occupational
Code

Mean
Hourly
Wage
($/hour)

Adjusted
Hourly
Wage
($/hour)

43-6014
29-1228
23-1011
13-1070
43-6013

$28.96
$154.74
$105.28
49.09
$18.13

$55.23
$169.40
$140.96
$91.83
$46.07

Ongoing burdens are a function of claims volume, as well as the denial and appeal
rates of all plans. Each covered individual was estimated to generate 10.2 claims on
average per year 6, 82 percent of which were filed electronically. The Departments then
assumed that 15 percent of these claims were denied. 7 The Departments assumes that three
percent of these claims were pre-service with the remaining being post-service claims. The
number of post-service claims extended was based on the share of ‘‘clean’’ claims that
took more than 30 days to complete processing. The share of denials expected to be
appealed, 0.2 percent, was based on a RAND study. 8 The Departments expect half of these
appeals to be reversed, and those not reversed were divided between ‘‘medical claims’’
(28.9 percent) and ‘‘administrative claims’’ (71.1 percent).
The transaction burden will vary widely with the type and complexity of the claim in
question, but the mix of claims and associated burdens generally are expected to be similar
across plans of the same type. The average time required for the information collection
associated with any particular type of health benefit claim transaction will range from one
minute for certain routine automatic notices to four and a half hours for certain disclosures on
requests related to adverse benefit determinations. The Departments attributed costs to
notifying individuals of denied claims and processing appeals. Initial denials were assumed
to only take a few minutes for a clerical worker to draft and send an adverse benefit
determination notice based on the model notice issued by the Departments that does not
require any information to be included that cannot be auto-populated.
Appealed denials deemed “medical” in nature will require a physician 4.5 hours (at a rate
of $169.40) to review relevant appeals materials, make a determination, and draft a one

6
Used previous estimates of 10.2 claims per enrollee to find number of claims and 3% as the share pre-service. Electronic
vs. Paper based on AHIP's May 2006 study.
7
Share of denials based on HIAA (now AHIP) March 2003 report on Claims Payment Processes (and EBSA
assumptions on appeals).
8
Share of denials appealed based on RAND 2004 study entitled "Inside the Black Box of Managed Care Decisions".

8

page response, resulting in an estimated cost of $762.30 per “medical” denial.
Appealed denials deemed “administrative” in nature will require a legal professional
(at a rate of $140.96) approximately 2 hours to review the relevant materials and make
a decision related to a reversal or approval of a denial and draft a two-page response,
resulting in an estimated cost of $281.92. Each notice of adverse benefit determination
and notice of the decision of an internal appeal will incur a mailing cost estimated at
$0.65 per notice including, printing ($0.05 per page), and postage costs ($0.55 postage).
The Departments estimate that approximately 93 percent of large group health
and all small group health plans administer claims using a third-party provider.
Approximately 5 percent of individuals covered by group health insurance, as well
as all people covered in the individual market insurance claims, are administered inhouse. In-house administration burdens are accounted for as hours, while purchased
services are accounted for as dollar costs. The hourly burden as well as mailing costs
for plans processing claims in-house is described below:
TABLE 2: Hour and Cost Burden (in thousands)
InHouse
Burden
Mailing
Costs

OutHouse
Burden
Mailing
Cost

OutHouse
Burden
Labor
Costs

In and Out
House
Cost
Burden
Total Cost
Burden

Claims
Government
Sector ESI

Claims
Individual
Market

InHouse
Burden
Hours

In-House
Burden
Hours
Equivalent
Costs

9,635

3,530

58.8

$3,065

$413.0

$1,066

$7,906

$4,895.9

1,700

623

20.8

$1,082

$72.9

$188

$2,791

$1,537.3

Post-Service
Claim
Denied

54,977

20,144

671.5

$34,976

$2,356.8

$6,080

$90,226

$49,707.5

Post-Service
Claim
Extended

13,634

6,422

107.0

$5,575

$751.4

$1,508

$11,188

$7,013.9

77.8

36.6

186.8

$21,870

$23.8

$80

$43,887

$51,714.0

Pre-Service
Claim
Approved
Pre-Service
Claim
Denied

Denial
Appeal
Total
Appeal
Upheld

51.9

24.4

47.9

$7,776.2

$17.7

$31.9

$13,978

$14,0276

Appeal
Denied

77.8

36.6

160.6

$24,414.9

$26.6

$41.8

$43,887

$43,955.4

Medical SubTotal

37.5

17.6

149.7

$24,352.0

$12.8

--

$43,774

$43,786.8

9

InHouse
Burden
Mailing
Costs

OutHouse
Burden
Mailing
Cost

OutHouse
Burden
Labor
Costs

In and Out
House
Cost
Burden
Total Cost
Burden

Claims
Government
Sector ESI

Claims
Individual
Market

InHouse
Burden
Hours

In-House
Burden
Hours
Equivalent
Costs

Claim
Upheld

15.0

7.1

47.3

$7,690.1

$5.1

--

$13,823

$13,828.1

Claim
Denied

22.5

10.6

102.5

$16,661.9

$7.7

--

$29,951

$29,958.7

Admin Sub
Total

92.2

43.4

58.8

$7,839.2

$31.5

--

$14,091

$14,122.5

Claim
Upheld

36.9

17.4

0.6

$86.1

$12.6

--

$155

$167.6

Claim
Denied

55.3

26.1

58.2

$7,753.0

$18.9

--

$13,936

$13,954.9

Fair and Full
Review

90.8

42.8

4.0

$207.2

$16.6

$29.9

$304.2

$323.7

Notice of
Decision
External
Review

2.2

0.2

0.1

$15.9

$0.2

$1.4

$103.0

$104.6

80,415

30,939

1,671

$163,157

$3,751

$8,997

$329,696

$415,023

Total
•

Assumed that 7 percent of large plan process these claims in-house in the Group Market.
Large plans account for 69.5 percent of policy-holders and therefore 4.9 percent of claims are
processed in-house.

•

Share requesting external review and the reversal statistics taken from the
January 2006 AHIP report on State External Review Programs.

•

Share of claims requiring extension based on the number of claims requiring
more than 30 day to process, taken from AHIP January 2010 study "A
Survey of Health Care Claims Receipt and Processing Times, 2009."
12.2 Non-English Language Assistance (45 CFR 147.136)
As a result of the Appeals final regulation, plans and issuers must provide
claimants who reside in a county where ten percent or more of the population
residing in the county is literate only in the same non- English language with a onesentence 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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plans 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 non-English language upon request.
HHS expects that the largest cost associated with the 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 American
Community Survey (ACS), the HHS estimates that there are about 9.3 million
individuals living in covered counties that are literate only in a non-English
Language. The ACS does not have insurance coverage information. Therefore, to
estimate the percentage of the 8.7 million affected individuals who were insured,
HHS used the percent of the population in the state that reported being insured by
nonfederal government employer insurance from the 2014 CPS. This results in an
estimate of approximately 2.1 million individuals who are eligible to request
translation services.
In discussions with the regulated community, HHS found that experience in
California, which has a state law requirement for providing translation services,
indicates that requests for translations of written documents average 0.098 requests
per 1,000 members. While the California law is not identical to the federal
regulations, and the demographics for California do not match other counties
nationally, for purposes of this analysis, HHS used this percentage to estimate the
number of translation service requests that plans and issuers can expect to receive.
Industry experts also told HHS that while the cost of translation services varies,
$500 per document is a reasonable approximation of translation cost.
Using the ACS and the CPS, HHS estimates that there are 11.6 million
individuals insured through nonfederal governmental employer sponsored insurance
or through the individual insurance market living in the affected counties. Based on
the foregoing, HHS estimates that the cost to provide translation services will be
approximately $567,251 annually (11,576,541 lives * 0.098/1000 * $500).
12.3 Existing External Review Requirements for Non-Grandfathered Plans (45 CFR 147.136)
This ICR also accounts for the existing burden of the disclosure requirements of the
federal external review process for health insurance issuers in states where state external
review processes do not meet the (b)(1) or (b)(2) standard of PHS Act 2719 [see “Guidance on
External Review for Group Health Plans and Health Insurance Issuers Offering Group and
Individual Health Coverage and Guidance for States on State External Review Processes” on
the CCIIO website at http://cciio.cms.gov], and self-funded nonfederal governmental plans
not subject to a compliant state or territory external review process [see “Instructions for Self
Insured Non- Federal Governmental Health Plans and Health Insurance Issuers Offering
Group and Individual Health Coverage on How to Elect a federal external review process” on
the CCIIO website at http://cciio.cms.gov]. Note that both health insurance issuers and selffunded nonfederal governmental health plans have an option of contracting with Independent

11

Review Organizations (IROs) as described in the HHS Technical Release 2017-02. 9
Both health insurance issuers in states that are non-compliant with federal external review
process standards, and plans not subject to a state external review process must disclose
electronicallyto HHS whether they will use the HHS-administered federal external review
process or are following the process outlined in HHS Technical Release 2011-02. This
burden is accounted for in this ICR.
Health insurance issuers in states that do not have a compliant external review process
and plans not subject to a state external review process that have opted to use the HHSadministered federal external review process or the Department of Labor’s federal external
review process (“applicable plans and issuers”) will be required to notify HHS as to which
federal external review process they will be using via the Health Insurance Oversight System
(HIOS). If they are using the HHS- administered federal external review process, they will
also be required to electronically submit to HHS all notices pertaining to external review
rights including the notice of adverse benefit determinations and the notice of final internal
adverse benefit determinations. If these notices are updated at any time, updated copies of
these notices will need to be submitted to HHS.
The HHS-administered federal external review process also requires that; 1) the CMS
appointed examiner (“the examiner”) must conduct a preliminary review of a claimant’s
eligibility for external review; 2) applicable plans and issuers must provide the examiner with
documentation and other information considered in making adverse benefit determinations or
final adverse benefit determinations; 3) the examiner must notify the claimants who are
ineligible for external review that they are ineligible; 4) the examiner must forward to the
applicable plan or issuer any information submitted by the claimant;5) that if the applicable
plan or issuer reverses its decision, it must notify the claimant and the examiner; 6) the
examiner must notify claimant and the applicable plan or issuer of result of final external
review (burden previously accounted for); and 7) the examiner must maintain records for six
years.
Health insurance issuers and self-funded nonfederal governmental plans in states where
the state external review processes do not meet the (b)(1) or (b)(2) standard of PHS Act 2719
that decide to follow the external review process will be subject to the following different set
of requirements as described in section 45 CFR 147.136(d)(2) of the Appeals regulation,: 1)
Issuers must conduct a preliminary review of claimant requests for external review in order to
determine eligibility; 2) following the preliminary review, issuers must notify the claimant
whether or not they are eligible for external review; 3) if the claimant is eligible, the issuer
must forward to the IRO all documentation and other information considered when making its
adverse benefit determination; 4) the IRO must forward all information submitted by the
claimant back to the issuer; 5) next, the IRO must notify claimant and the applicable plan or
issuer of the result of the final external review; and finally, the IRO must retain its records for
six years.
9

Guidance on Standards for Self-Insured Non-Federal Governmental Health Plans and Health Insurance Issuers
Offering Group and Individual Health Coverage Using the HHS-Administered Federal External Review, available
at: https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/FERP-Guidance_Final4_01-1117-MM-508.pdf.

12

It is estimated that there will be 4,049 external reviews conducted in a year for the
affected population. 10 The total hour burden associated with the federal external review
process for affected self-funded nonfederal governmental health plans and health insurance
issuers is 1,788 with an equivalent cost of $128,876. HHS made reasonable estimates for the
amount of time it would take for each of the steps outlined above, assuming that a clerical
worker could prepare most of the documents that would need to be sent forward. HHS used
salary data provided by the Department of Labor National Occupational Employment
Survey.
There is no record retention burden placed on self-funded nonfederal governmental plans
and health insurance issuers that elect the HHS process because CMS’s contractor retains all
records.
Summary
Total burden hours are estimated at 1,195,626 hours annually for 2021, 2022 and
2023. Equivalent costs are estimated at $83,629,389 million annually for 2021,
2022 and 2023.
TABLE 3: HHS’ Summary of Existing Burden
Estimated
Number of
Responses

Total Annual
Burden (Hours)

Total Estimated
Labor Cost

Total Estimated
Cost Burden

2022

516,626,544

1,195,626

$83,629,389

$184,134,300

2023

516,626,544

1,195,626

$83,629,389

$184,134,300

2024

516,626,544

1,195,626

$83,629,389

$184,134,300

Year

12.4 External Review Requirements for Non- Grandfathered Plans and Grandfathered plans
(45 CFR 147.136)
The No Surprise Act extends the protections related to external reviews to grandfathered
plans. Grandfathered plans must comply either with a state external review process or a
federal review process. The disclosure requirements of the federal external review process
require (1) a preliminary review by plans of requests for external review; (2) IROs to notify
claimants of eligibility and acceptance for external review; (3) the plan or issuer to provide

10

Rate of external reviews is 0.013%. AHIP Center for Policy Research, “An Update on State External
Review Programs,2006,” July 2008. North Carolina Department of Insurance “Healthcare Review Program:
Annual Report,” 2013.

13

IROs with documentation and other information considered in making adverse benefit
determination; (4) the IRO to forward to the plan or issuer any information submitted by the
claimant; (5) plans to notify the claimant and IRO if it reverses its decision; (6) the IRO to
notify the claimant and plan of the result of the final external appeal; (7) the IRO to
maintain records for six years.
HHS already has an existing information collection on the claims, appeals, and external
review requirements for non-grandfathered plans (0938-1099). Due to the September2021
interim final rule, HHS has added the burden associated with the external review
requirements for grandfathered plans and non-grandfathered plans in the information
collection.
HHS estimates that there are approximately 84.4 million participants in self-insured
ERISA-covered plans, grandfathered non-federal governmental plans and in grandfathered
individual market coverage. Prior to the interim final rules, HHS estimates that there are
approximately 8.1 million participants in plans in the states which have no external review
laws or whose laws do not meet the federal minimum requirements. 11 These estimates lead to
a total of 92.5 million participants. Among the 92.5 million participants, 80.5 million
participants in non-grandfathered plans and 12 million participants in grandfathered plans will
be required to be covered by the external review requirement.
HHS estimates that there are an estimated 1.3 external reviews for every 10,000
participants 12 and that there will be approximately 12,275 external reviews annually.
Experience from North Carolina indicates that about 75% of requests for external reviews are
actually eligible to proceed to an external review, 13 therefore it is expected that there will be
about 16,261 (12,275/0.7549) requests for external review. In addition, a 2% increase in the
number of out-of-networks claims was incorporated in the estimate to capture the increase in
burden on non-grandfathered plans resulting from the surprise billing and cost sharing
protections of the external review.
As shown in Table 4, the hour burden related to the preliminary review by grandfathered
and non-grandfathered plans of the request for external review is estimated to be 4,065 hours
(16,261 *0.25 hours) with an equivalent cost of $383,060 (4,065 hours * $91.83). HHS
assumes that plans have a human resources specialist with a labor rate of $91.83. The human
resource specialist will spend an average of 15 minutes for each of the requests, for a plan to
make an eligibility determination. Plans will already have conducted internal reviews for
eligible claimants; therefore, the required information for plans to make this determination
should be readily available. Additionally, plans will incur material costs of $0.05 for paper
and printing and $0.55 for postage for each request for external review, resulting in a cost of
$9,756 (16,261 * $0.60).

11

These states are Alabama, Florida, Georgia, Pennsylvania, Texas, and Wisconsin. See Affordable Care Act:
Working with States to Protect Consumers, available at
https://www.cms.gov/CCIIO/Resources/Files/external_appeals.html
12
AHIP Center for Policy and Research, "An Update on State External Review Programs, 2006," July 2008.
13
North Carolina Department of Insurance. “Health Insurance Smart NC: Annual Report on External ReviewActivity
2013.” https://digital.ncdcr.gov/digital/collection/p249901coll22/id/730531.

14

TABLE 4: Annual Burden and Cost for Plans to Conduct a Preliminary Review of the
Request for the External Review Starting in 2022
Year
2022

Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total Estimated
Cost

16,261

4,065

$373,303

$9,756

$383,060

Once an eligibility determination is made, plans must provide the IRO with all
documentation and other information considered in making an adverse benefit determination.
HHS assumes that plans have clerical staff with a labor rate of $55.23. The clerical staff will
spend an average of 5 minutes for each of the requests, for a plan to send documentation to the
IRO. As shown in Table 5, for the 12,275 verified requests for external review the hour
burden for grandfathered and non-grandfathered plans is estimated as 1,023 hours (12,275 * 5
minutes), with an equivalent cost of $56,494 (1,023 * $55.23). Additionally, plans will incur
material costs of $0.05 for each sheet of paper. HHS assumes that each set of documentation
will be 20 pages. Plans will also incur a cost of $0.55 for postage for each set of
documentation, resulting in a cost burden of $19,026 (12,275 x $0.05 x 20 + 12,275 * $0.55).
HHS estimates that this will cost, on average, $1.55 per claimant.
TABLE 5: Annual Burden and Cost for Plans to Provide the IRO with Documentation
Starting in 2022
Year
2022

Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total
Estimated Cost

12,275

1,023

$56,494

$19,026

$75,519

IROs must also send each eligible claimant a notice of eligibility and acceptance. HHS
assumes that the IRO has clerical staff with a labor rate of $55.23 that will spend, on average
5 minutes per claimant preparing the notice, and that IROs incur an average cost of $0.60 to
print and mail the notice. As shown in Table 6, for the 12,275 verified requests for external
review, the cost burden for the clerical worker to send the notice of eligibility and acceptance
is estimated to be $56,494 (12,275 x 5 minutes x $55.23). Additionally, IROs will incur
material costs of $0.05 for each sheet of paper. HHS assumes that each notice of eligibility
and acceptance will be 1 page. Plans will also incur a cost of $0.55 for postage for each set of
documentation, resulting in a cost of $7,365 (12,275 x $0.05 + 12,275 * $0.55). Thus, the
total cost burden relating to the notice of eligibility and acceptance is $63,858.

15

TABLE 6: Annual Burden and Cost for IROs to Send Notice of Eligibility and
Acceptance Starting in 2022
Year
2022

Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total
Estimated Cost

12,275

1,023

$0

$7,365

$63,858

IROs are required to send to plans all documents that claimants submit. HHS does not
know what fraction of claimants will submit additional documentation, but for purposes of
this burden analysis assume that half of claimants (6,137) do. HHS assumes that the IRO has
clerical staff with a labor rate of $55.23 that will spend, on average 5 minutes per claimant
preparing and forwarding the required documents, and that IROs incur an average cost of
$1.05 to print and mail the documents. As shown in Table 7, for the 6,137 verified requests
for external review, the cost burden for the clerical worker to send the claimants’
documentation to the plans is estimated to be $28,247 (6,137 x 5 minutes x $55.23).
Additionally, IROs will incur material costs of $0.05 for each sheet of paper. HHS assumes
that such documentation will be 10 pages. Plans will also incur a cost of $0.55 for postage for
each set of documentation, resulting in a cost of $6,444 (6,137 x $0.05 x 10 + 12,275 * $0.55).
Thus, the total cost burden relating to preparing and forwarding the required documents is
$34,691.
TABLE 7: Annual Burden and Cost for IROs to Send Plans all Documents that
Claimants Submit Starting in 2022
Year

Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total
Estimated Cost

2022

6,137

511

$28,247

$6,444

$34,691

IROs are required to notify the claimant and plan of the result of the final external
appeal. HHS estimates that preparing and sending the notices for each of the 12,275 external
reviews will take IRO clerical staff, with a labor rate of $55.23, on average 5 minutes per
claimant and that IROs incur an average cost of $1.05 to mail the documents. As shown in
Table 8, for the 12,275 verified requests for external review, the cost burden for the clerical
worker to send the notice is estimated to be $56,494 (12,275 x 5 minutes x $55.23).
Additionally, IROs will incur material costs of $0.05 for each sheet of paper. HHS assumes
that such documentation will be 10 pages. Plans will also incur a cost of $0.55 for postage for
each set of documentation, resulting in a cost of $12,888 (12,275 x $0.05 x 10 + 12,275 *
$0.55). Thus, the total cost burden relating to notifying the claimant and plan of the final
external appeal result is $69,382.

16

TABLE 8: Annual Burden and Cost for IROS to Notify the Claimant and Plan of the
Result of the Final External Appeal Starting in 2022
Year
2022

Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total
Estimated Cost

12,275

1,023

$56,494

$12,888

$69,382

IROs also are required to maintain records of all claims and notices associated with the
external review process for six years. HHS is of the view that these documents would be
retained as a customary part of business, but estimate that clerical staff will spend on average
an additional 5 minutes per claimant ensuring all files are complete. As shown in Table 9, for
the 12,275 verified requests for external review, the cost burden for the clerical worker to
maintain records is estimated to be $56,494 (12,275 x 5 minutes x $55.23).
TABLE 9: Annual Burden and Cost for IROS to Maintain Record of All Claims and
Notices Starting in 2022
Year
2022

Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total
Estimated Cost

12,275

1,023

$0

$56,494

$56,494

HHS estimates that the federal external review process will result in an hour
burden of 5,088 hours with an equivalent cost of $429,797 related to external reviews. The
cost burden of approximately $253,207 annually. The cost burden results from the cost
associated with preparing and mailing required notices and documents. HHS is not able to
estimate the number of reversals and the associated notices to claimants and IROs that plans
would send due to reversing prior decisions, but HHS is of the view that the number would be
small.
HHS estimates that there are approximately 13.5 million individual market enrollees and
19.3 million non-federal governmental plans enrollees. 14 These estimates lead to a total of
32.8 million total enrollees in individual market and non-federal government plans. Among
the 32.8 million participants, 2.6 million are in grandfathered plans and 30.1 million are in
non-grandfathered plans. HHS also added a two percent increase in the number of out-ofnetworks claims to capture the increase in burden on non-grandfathered plans resulting from

14

Individual market based on data from MLR annual report for the 2019 MLR reporting year, available at
https://www.cms.gov/CCIIO/Resources/Data-Resources/mlr. Non-federal government plans data from Agency for
Healthcare Research and Quality, Center for Financing, Access and Cost Trends. 2019 Medical Expenditure Panel
Survey-Insurance Component.

17

the surprise billing and cost sharing protections of the external review resulting in an adjusted
total of 30.7 million for non-grandfathered plans and an adjusted total of 33.3 million for all
individual market and non-federal government plans.
HHS also estimates there are an estimated 1.3 external reviews for every 10,000
participants and that there will be approximately 4,337 total external reviews annually for
individual market and non-federal government plans. This amount includes 3,994 reviews for
non-grandfathered plans and 343 for grandfathered plans. Experience from North Carolina
indicates that about 75% of requests for external reviews are actually eligible to proceed to an
external review, therefore it is expected that there will be about 5,783 requests for external
review. This amount includes 5,326 requests for non-grandfathered plans and 457 requests
for grandfathered plans.
As shown in Table 10, HHS estimates that the disclosure requirements will require 3,066
burden hours that result in $222,224 in estimated labor costs and $19,625 in other costs for
printing and mailing. The total estimated updated burden for federal external review to
individual market and non-federal government plans is $241,850. This amount includes
$222,729 in costs for non-grandfathered plans and $19,121 for grandfathered plans.
TABLE 10: HHS’ Summary Table of New Collection Burden for Federal External Review
Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

Total
Estimated Cost

2022

5,783

3,066

$222,224

$19,625

$241,850

2023

5,783

3,066

$222,224

$19,625

$241,850

2024

5,783

3,066

$222,224

$19,625

$241,850

3 Year
Average

5,783

3,066

$222,224

$19,625

$241,850

Year

The existing information collection had an estimated hour burden of 1,394 hours with
anequivalent cost of $97,616 and an estimated cost burden by $3,002,150.
In summary, the total burden associated with the information collection, including the
existing collection, is approximately 6,307 hours at an equivalent cost burden of
approximately $3,497,208 annually. Because the burden is shared equally between the DOL
and the Department of the Treasury, the DOL’s share is 3,241 hours at an equivalent cost of
263,706 annually. The DOL’s share of the cost burden is $1,627,679 annually. As HHS,
DOL and the Department of the Treasury share jurisdiction, HHS will account for 50 percent
of the burden, or 3,066 hours with an equivalent cost of $241,850. The summary of burden
for HHS, DOL and the Department of the Treasury’s information collection has also been
provided below.

18

TABLE 11: DOL and Department of the Treasury’s Summary Table
Estimated
Number of
Responses

Total Annual
Burden
(Hours)

Total
Estimated
Labor Cost

Other Costs

2022

381,826

3,241

$263,706

$1,627,679

$1,891,385

2023

381,826

3,241

$263,706

$1,627,679

$1,891,385

2024

381,826

3,241

$263,706

$1,627,679

$1,891,385

3 Year
Average

381,826

3,241

$263,706

$1,627,679

$1,891,385

Year

Total
Estimated Cost

13. Capital Costs
13.1 ICRs Regarding Disclosure for Self-Insured Plans Opting-in to State Law (45 CFR
149.30)
As indicated in question 12, the bulk of Group Market claims will be processed
by third-party service providers. Total cost is estimated by multiplying the number of
responses by the amount of time required to prepare the documents and then
multiplying this by the appropriate hourly cost of either clerical workers ($55.23) 15,
doctors ($169.40) 16 or lawyers ($140.96) 17, and then adding the cost of copying and
mailing responses ($0.65) 18 each for those not sent electronically) . These costs are
described in Table 1. The total estimated cost burden for those plans that use service
providers, including the cost of mailing all responses (including mailing costs for
those prepared in-house listed in Table 2), is $184.13 million annually.

15

Secretaries, Except Legal, Medical, and Executive (43-6014): $28.96(2020 BLS Wage rate)/0.675(ECEC
ratio)*1.2(Overhead Load Factor) *1.023(Inflation rate) ^2(Inflated 2 years from base year) =
$55.23.
16
Family and General Practitioner (29-1062): $154.74 (2020 BLS Wage rate) /0.69(ECEC ratio)
*1.35(Overhead Load Factor) *1.023(Inflation rate) ^2(Inflated 2 years from base year) = $169.40.
17
The Department's estimated 2020 hourly labor rates include wages, other benefits, and overhead are calculated as
follows: mean wage from 2020 National Occupational Employment Survey (April 2014, Bureau ofLabor Statistics.
https://www.bls.gov/oes/current/oes_nat.htm); wages as a percent of total compensation from the Employer Cost for
Employee Compensation (2020, Bureau of Labor Statistics http://www.bls.gov/news.release/ecec.t02.htm);overhead as a
multiple of compensation is assumed to be 25 percent of total compensation for paraprofessionals, 20 percent of
compensation for clerical, and 35 percent of compensation for professional; annual inflation assumed to be 2.3 percent
annual growth of total labor cost since 2019 (Employment Costs Index data for private industry
http://www.bls.gov/news.release/eci.nr0.htm).
18
Cost of copying and mailing responses (0.54 each for those not sent electronically). $0.55 for USPS First Class
Postage and $0.05 per page of materials costs for two pages of paper.

19

Federal External Review Process
It is estimated that there will be an annual administrative cost burden of
$59,826 on average over the next three years associated with the federal external
review process. This administrative cost burden is a result of sending the files and
notices required by the proposal to the independent examiner for health insurance
issuers and self-funded nonfederal governmental health plans using the federal
external review process.
14. Cost to Federal Government
Government program staffing costs, to provide technical assistance to
respondents, are based on one14 Grade/Step 1 in the Washington D.C. area.
GS-14: hourly rate $64 at 1.3 hours a week:

Annual cost: $ 79,022

15. Changes to Burden
There are no changes to burden or cost.
16. Publication/Tabulation Dates
There are no plans to publish the outcome of the information collection.
17. Expiration Date
The expiration date will be displayed on the first page of each instrument (top, right-hand
corner).

20