Hope or Hype?: Why the Affordable Care Act's New External Review Rules for Denied ERISA Healthcare Claims Need More Reform

Abstract

The Affordable Care Act requires that now, after an insurance company has denied a healthcare claim, the company must provide an opportunity for external review of the denial. Both the Department of Labor and the press have heralded this change as a boon to consumers that will ease the healthcare claims appeal process. But will the average consumer benefit from this new level of review? As a practical matter, is a further level of review — usually available only after two internal levels of review — the kind of reform that will make a difference to most consumers? Or is this new level of review just one more barrier, set up to thwart the consumer’s efforts to be reimbursed for healthcare?

This article posits that the new external review rules are an imperfect substitute for more extensive ERISA claims reform. The external review rules should be revised so that payors rather than consumers suffer the negative effects of incorrect claims decisions. That is, the rules should internalize the real costs of incorrect denials by imposing a penalty on payors when claims are reversed on external appeal. In addition, to be useful to the average consumer, external review should also be more available, understandable, and independent.

Keywords: Healthcare, ERISA, Affordable Care Act, Healthcare Reform