[Federal Register Volume 61, Number 67 (Friday, April 5, 1996)]
[Rules and Regulations]
[Pages 15196-15199]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8372]
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OFFICE OF PERSONNEL MANAGEMENT
48 CFR Parts 1604 and 1652
RIN 3206-AG30
Federal Employees Health Benefits Acquisition Regulation; Filing
Health Benefit Claims; Addition of Contract Clause
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing final
regulations to add a new contract clause in part 1652 of the Federal
Employees Health Benefits Acquisition Regulation (FEHBAR). The clause
clarifies for both FEHB carriers and covered individuals the
circumstances under which OPM may render a decision regarding a covered
individual who asks OPM to review a health benefits plan's denial of a
claim if the plan has either affirmed its denial when the covered
individual requested reconsideration, or failed to respond to the
covered individual's request for reconsideration as provided by OPM's
regulations. The clause further clarifies the circumstances under which
claimants may seek court review of benefit denials under the FEHB
Program. The purpose of these final regulations is to specify that
covered individuals who wish to bring legal action regarding a denial
of an FEHB benefit must pursue such claim against OPM. Further, the
regulations clarify the administrative review process that must precede
legal action in the courts.
EFFECTIVE DATE: May 6, 1996.
FOR FURTHER INFORMATION CONTACT: Margaret Sears, (202) 606-0004.
SUPPLEMENTARY INFORMATION: On March 29, 1995, OPM published interim
regulations in the Federal Register (60 FR 16056) that require
individuals who want to bring suit concerning the denial of their
health benefits claims to bring
[[Page 15197]]
such suits against OPM instead of the health benefits carrier, as had
been the case previously. The interim regulations also clarified the
administrative review procedures that must precede legal action in the
courts, the circumstances under which suits may be brought against OPM,
and that the court's review is limited to the record that was before
OPM when it made its decision.
OPM received 11 comments on the interim regulations. Three
commenters suggested that we amend the regulations to clarify that the
regulations apply to providers to whom the covered individual has
assigned the right to pursue the claim. We have not accepted this
suggestion because the right of access to the disputed claim process
belongs to the covered individual. We have amended the interim
regulations to clarify that another person or entity, whether or not a
provider, can gain access to the disputed claims process only when
acting on behalf of the covered individual and with the covered
individual's specific written consent.
Two commenters thought that the one-year period for initiating the
disputed claims process was too long. They suggested a 90-day period
instead. The one-year period has been OPM's policy since the disputed
claims process was created in 1975. However, we believe that the period
can now be reduced to 6 months if there are sufficient safeguards to
protect the interests of individuals who, because of medical problems
or for other reasons are unable to request reconsideration within the 6
months time limit. Therefore, we are modifying the regulations to
require that covered individuals who want to ask the plan to reconsider
its denial must do so within 6 months after the denial unless the
covered individual shows that he or she was prevented by a cause beyond
his or her control from making the request within that time period. In
addition, we are adding a provision to allow OPM to reopen a decision
it made concerning a disputed claim if it receives evidence that was
unavailable at the time OPM made its decision.
Two commenters said that the amount of time carriers have to
respond to requests for reconsideration--30 days--is too short,
especially when the issue is medical necessity. They suggested that the
carriers be allowed 45 days, with the option to extend the period for
an additional 30 days, if necessary. They further suggested that the
carriers be given 45 days rather than 30 to review additional
information received from the covered individual or provider. In both
cases, the 30-day period has been in place for a number of years and
has been working well enough that we believe that extending the time
period to 45 days would unnecessarily lengthen the time required to
complete the disputed claims process. Therefore, we have not accepted
these suggestions.
Two commenters said that the time period for seeking judicial
review should be tied to the date the covered individual receives OPM's
decision rather than the date the care or service was provided. One
commenter supported the provision basing the time limit on the date the
care or service was provided and asked us not to change it. The interim
regulations provide that legal action on a disputed claim may not be
brought later than December 31 of the 3rd year after the year in which
the care or service was provided. After considering these three
comments we have decided not to modify our regulations at this time.
This timeframe reflects our brochure language over the past several
years. It is our experience that this timeframe works well; however, we
will continue to monitor all timeframes in these regulations and make
changes as warranted.
Four commenters suggested that the regulations should explicitly
state that court actions are not to be brought against a carrier or a
carrier's subcontractors. One commenter suggested that we amend the
regulations to state that the carrier is an indispensable party to the
lawsuit. After considering these five comments, we have modified the
regulations to specify that court action is not to be brought against
the carrier or the carrier's subcontractors. Since it is OPM's
decision, not the carrier's, that is being contested, it is appropriate
that OPM, rather than the carriers, be the focus of lawsuits related to
denial of benefits.
Two commenters said that the interim regulations should be set
aside because they adversely affect the covered individual's right (1)
of access to State courts, (2) to seek monetary compensation for
damages, (3) under State law to require insurer to prove that notice
was given concerning changes in benefits and that contract language is
clear, (4) to have the option to go to court without seeking OPM
review, (5) to present evidence that OPM did not have when it made its
determination, and (6) to seek an expedited ruling by the court when
life or health is at issue. OPM's regulations have never offered such
``rights.'' The interim regulations simply clarified that these
opportunities are not available to covered individuals under the FEHB
program. The FEHB law includes a provision specifically stating that
the FEHB contract provisions that relate to the extent of coverage or
benefits supersede and preempt any State law that relates to health
insurance or plans to the extent that such law is inconsistent with
FEHB contractual provisions. Therefore, we believe the interim
regulations accurately reflect the intent of the FEHB law. Further, it
has been OPM's policy, and will continue to be OPM's policy, to
expedite the dispute resolution process when there are issues of life
and health at stake. Premature involvement of the courts at such time
is unnecessary. The only real change made by the interim regulations
was which party to the FEHB contracts should be named in a suit.
Two commenters said that the interim regulations should be set
aside because they violated the Administrative Procedure Act in that
they became effective before completing a comment period. The interim
regulations were promulgated to provide immediate guidance and
information to alleviate any burden on the FEHB enrollees in cases of
possible litigation. It was OPM's view that immediate implementation of
regulations that clarify and more fully explain the proper judicial
review of an OPM decision sustaining a health benefit plan's denial of
coverage would minimize unnecessary litigation and uncertainty. Thus,
the interim regulations were intended to more clearly specify a review
procedure that sometimes appeared to be unclear and was not always
applied consistently.
One commenter inquired whether the interim regulations removed a
restriction so that there was good cause for issuing them in this form.
It was OPM's view that the interim regulations remove the restriction
requiring that enrollees sue a health benefits carrier when contesting
an OPM decision that affirmed the carrier's determination that the
benefit is not covered under the carrier's plan. Previously, enrollees
could not bring suit against OPM directly even though they ultimately
were contesting OPM's decision.
One commenter asserted that the regulations should specify that
they have no impact on an individual's rights under the Federal Sector
Equal Employment Opportunity rule set forth in 29 CFR Part 1614. That
is, individuals who believe they have been discriminated against in
regard to insurance benefits because of disability or another protected
basis are not required to pursue or exhaust the administrative remedy
provided by these regulations before pursuing their rights under 29 CFR
Part 1614. Since OPM has no authority concerning the provisions of
title 29 of the Code of
[[Page 15198]]
Federal Regulations, it would not be appropriate to address an
individual's rights under title 29 in this contract clause. Instead,
the circumstances under which one may access remedies related to title
29 should be included in title 29.
One commenter felt that the interim regulations do not expressly
prescribe time limits when the carrier fails to make its decision
within 60 days after requesting, but not receiving, information from
the covered individual. We have modified the regulations to clarify
that this circumstance is included in the administrative process.
One commenter objected to the requirement that the claimants must
express their reasons in terms of the brochure provisions because
enrollees sometimes do not have brochures. Since a dispute about a
claim must be based on whether or not the claim was payable under the
FEHB contract and the brochure sets forth the contract provisions,
individuals need a brochure in order to know whether they have a
dispute. They also need a brochure to obtain information on the
procedures for disputing carriers' denials of claims. Further,
brochures are easily obtainable from the plan. We find that this
requirement is important in encouraging the individual to express his
or her reasons in a manner that will facilitate a successful result
when there is a valid dispute.
Two commenters suggested that the regulations be revised to require
that OPM's decision contain a notice of the covered individual's right
to bring suit. We are not adopting that suggestion because we are
adding that information to the brochures. The brochures will give
complete information about the disputed claims process from the initial
request to the carrier for reconsideration through the requirements for
bringing suit when OPM concurs with the carrier's reconsideration
decision to deny the claim.
We have also modified paragraph (g)(3) of the clause to clarify
that recovery in the FEHB Program is accomplished through a directive
from OPM to the carrier to make payment according to the court's order.
Regulatory Flexibility Act
I certify that this regulation will not have a significant economic
impact on a substantial number of small entities because the regulation
merely incorporates administrative procedures and regulatory
requirements into FEHB contracts.
List of Subjects in 48 CFR Parts 1604 and 1652
Government employees, Government procurement, Health insurance.
Office of Personnel Management.
James B. King,
Director.
Accordingly, OPM is amending 48 CFR chapter 16 as follows:
PART 1604--ADMINISTRATIVE MATTERS
1. The authority citation for parts 1604 and 1652 continue to read
as follows:
Authority: 5 U.S.C. 8913; 40 U.S.C. 486(c); 48 CFR 1.301.
2. In part 1604; subpart 1604.71 is adopted as final and
republished to read as follows:
Subpart 1604.71--Disputed Health Benefit Claims
Sec. 1604.7101 Filing Health Benefit Claims/Court Review of Disputed
Claims.
Guidelines for a Federal Employees Health Benefit (FEHB) Program
covered individual to file a claim for payment or service and for legal
actions on disputed health benefit claims are found at 5 CFR 890.105
and 890.107, respectively. The contract clause at 1652.204-72 of this
chapter, reflecting this guidance, must be inserted in all FEHB Program
contracts.
PART 1652--CONTRACT CLAUSES
3. In subpart 1652.2, section 1652.204-72 is revised and adopted as
final to read as follows:
Subpart 1652.2--Texts of FEHBP Clauses
Sec. 1652.204-72 Filing Health Benefit Claims/Court Review of Disputed
Claims.
As prescribed in 1604.7101 of this chapter, the following clause
must be inserted in all FEHB Program contracts.
Filing Health Benefit Claims/Court Review of Disputed Claims
(a) General. (1) The Carrier resolves claims filed under the
Plan. All health benefit claims must be submitted initially to the
Carrier. If the Carrier denies a claim (or a portion of a claim),
the covered individual may ask the Carrier to reconsider its denial.
If the Carrier affirms its denial or fails to respond as required by
paragraph (b) of this clause, the covered individual may ask OPM to
review the claim. A covered individual must exhaust both the Carrier
and OPM review processes specified in this clause before seeking
judicial review of the denied claim.
(2) This clause applies to covered individuals and to other
individuals or entities who are acting on the behalf of a covered
individual and who have the covered individual's specific written
consent to pursue payment of the disputed claim.
(b) Time limits for reconsidering a claim. (1) The covered
individual has 6 months from the date of the notice to the covered
individual that a claim (or a portion of a claim) was denied by the
Carrier in which to submit a written request for reconsideration to
the Carrier. The time limit for requesting reconsideration may be
extended when the covered individual shows that he or she was
prevented by circumstances beyond his or her control from making the
request within the time limit.
(2) The Carrier has 30 days after the date of receipt of a
timely-filed request for reconsideration to:
(i) Affirm the denial in writing to the covered individual;
(ii) Pay the bill or provide the service; or
(iii) Request from the covered individual or provider additional
information needed to make a decision on the claim. The Carrier must
simultaneously notify the covered individual of the information
requested if it requests additional information from a provider. The
Carrier has 30 days after the date the information is received to
affirm the denial in writing to the covered individual or pay the
bill or provide the service. The Carrier must make its decision
based on the evidence it has if the covered individual or provider
does not respond within 60 days after the date of the Carrier's
notice requesting additional information. The Carrier must then send
written notice to the covered individual of its decision on the
claim. The covered individual may request OPM review as provided in
paragraph (b)(3) of this clause if the Carrier fails to act within
the time limit set forth in this paragraph.
(3) The covered individual may write to OPM and request that OPM
review the Carrier's decision if the Carrier either affirms its
denial of a claim or fails to respond to a covered individual's
written request for reconsideration within the time limit set forth
in paragraph (b)(2) of this clause. The covered individual must
submit the request for OPM review within the time limit specified in
paragraph (e)(1) of this clause.
(4) The Carrier may extend the time limit for a covered
individual's submission of additional information to the Carrier
when the covered individual shows he or she was not notified of the
time limit or was prevented by circumstances beyond his or her
control from submitting the additional information.
(c) Information required to process requests for
reconsideration. (1) The covered individual must put the request to
the Carrier to reconsider a claim in writing and give the reasons,
in terms of applicable brochure provisions, that the denied claim
should have been approved.
(2) If the Carrier needs additional information from the covered
individual to make a decision, it must:
(i) Specifically identify the information needed;
(ii) State the reason the information is required to make a
decision on the claim;
[[Page 15199]]
(iii) Specify the time limit (60 days after the date of the
Carrier's request) for submitting the information; and
(iv) State the consequences of failure to respond within the
time limit specified, as set out in paragraph (b)(2) of this
section.
(d) Carrier determinations. The Carrier must provide written
notice to the covered individual of its determination. If the
Carrier affirms the initial denial, the notice must inform the
covered individual of:
(1) The specific and detailed reasons for the denial;
(2) The covered individual's right to request a review by OPM;
and
(3) The requirement that requests for OPM review must be
received within 90 days after the date of the Carrier's denial
notice and include a copy of the denial notice as well as documents
to support the covered individual's position.
(e) OPM review. (1) If the covered individual seeks further
review of the denied claim, the covered individual must make a
request to OPM to review the Carrier's decision. Such a request to
OPM must be made:
(i) Within 90 days after the date of the Carrier's notice to the
covered individual that the denial was affirmed; or
(ii) If the Carrier fails to respond to the covered individual
as provided in paragraph (b)(2) of this clause, within 120 days
after the date of the covered individual's timely request for
reconsideration by the Carrier; or
(iii) Within 120 days after the date the Carrier requests
additional information from the covered individual, or the date the
covered individual is notified that the Carrier is requesting
additional information from a provider. OPM may extend the time
limit for a covered individual's request for OPM review when the
covered individual shows he or she was not notified of the time
limit or was prevented by circumstances beyond his or her control
from submitting the request for OPM review within the time limit.
(2) In reviewing a claim denied by the Carrier, OPM may:
(i) Request that the covered individual submit additional
information;
(ii) Obtain an advisory opinion from an independent physician;
(iii) Obtain any other information as may in its judgment be
required to make a determination; or
(iv) Make its decision based solely on the information the
covered individual provided with his or her request for review.
(3) When OPM requests information from the Carrier, the Carrier
must release the information within 30 days after the date of OPM's
written request unless a different time limit is specified by OPM in
its request.
(4) Within 90 days after receipt of the request for review, OPM
will either:
(i) Give a written notice of its decision to the covered
individual and the Carrier; or
(ii) Notify the individual of the status of the review. If OPM
does not receive requested evidence within 15 days after expiration
of the applicable time limit in paragraph (e)(3) of this clause, OPM
may make its decision based solely on information available to it at
that time and give a written notice of its decision to the covered
individual and to the Carrier.
(f) OPM, upon its own motion, may reopen its review if it
receives evidence that was unavailable at the time of its original
decision.
(g) Court review. (1) A suit to compel enrollment under
Sec. 890.102 of Title 5, Code of Federal Regulations, must be
brought against the employing office that made the enrollment
decision.
(2) A suit to review the legality of OPM's regulations under
this part must be brought against the Office of Personnel
Management.
(3) Federal Employees Health Benefits (FEHB) carriers resolve
FEHB claims under authority of Federal statute (chapter 89, title 5,
United States Code). A covered individual may seek judicial review
of OPM's final action on the denial of a health benefits claim. A
legal action to review final action by OPM involving such denial of
health benefits must be brought against OPM and not against the
Carrier or the Carrier's subcontractors. The recovery in such a suit
shall be limited to a court order directing OPM to require the
Carrier to pay the amount of benefits in dispute.
(4) An action under paragraph (3) of this clause to recover on a
claim for health benefits:
(i) May not be brought prior to exhaustion of the administrative
remedies provided in paragraphs (a) through (f) of this clause;
(ii) May not be brought later than December 31 of the 3rd year
after the year in which the care or service was provided; and
(iii) Will be limited to the record that was before OPM when it
rendered its decision affirming the Carrier's denial of benefits.
(End of Clause)
[FR Doc. 96-8372 Filed 4-4-96; 8:45 am]
BILLING CODE 6325-01-P
