How Has the Affordable Care Act Affected IROs?
A crucial consumer protection in the Affordable Care Act — the right to appeal to an outside entity when an insurance company denies payment – received relatively little public attention -but it’s creating noteworthy opportunities and challenges for independent review organizations (IROs). The Affordable Care Act (ACA) carves out a role for IROs, which may step in to provide an external review when consumers disagree with the outcome of their insurers’ internal review process. However, because of financial pressure on the health insurance industry from other ACA rules, insurers are increasingly asking IROs to handle additional tasks, as well. Another impact of the ACA relates to the ongoing evolution of regulations pertaining to IROs. Leaders of these organizations must be able to continue providing expert judgment on medical review issues against a shifting regulatory landscape.
The ACA supported a considerable need for IROs
Health insurers regularly deny claims, setting the stage for customer appeals. A 2011 paper from the US Government Accountability Office found that rates of coverage denials ranged from 11 to 24 percent across several states. Within one state, claim denial rates differed sharply among large insurers, ranging from 6 to 40 percent. Data from a handful of states found that appeals frequently led to the reversal of denials: at least 39 percent of internal appeals, and at least 23 percent in external reviews. Before the ACA, as the Health Affairs Blog notes, “there was no right to an external appeal with respect to ERISA plans, and a number of states lacked or offered inadequate protection for appeal rights. The only recourse for denied claims was often a costly lawsuit, which was seldom a realistic alternative.”
In 2010, three federal departments (Health and Human Services, Labor and Treasury) issued an interim final rule that specified consumers’ rights to:
- Obtain an explanation about why their claim was denied
- An internal appeals process
- An external review from an independent third party
IROs see opportunities for a larger role in reviews
Another aspect of the ACA could help IROs gain a more prominent role in settling differences between consumers and their health insurers. The ACA’s medical loss ratio provision, which requires health insurers to spend at least 80 percent of customers’ premiums on medical care, “is intended to cap the total amount of dollars from premiums that insurance companies spend on administrative costs, executive salaries, marketing, overhead and profits,” according to the National Association of Independent Review Organizations (NAIRO). As a result, health plans are examining ways to cut their expenses, which can include outsourcing time-consuming or costly tasks. As NAIRO notes, IROs are well-positioned to handle new projects such as physician preauthorization reviews and internal appeals. This frees up more resources for health plans’ medical directors to devote toward “higher value-added tasks like quality improvement, reviewing clinical trials and updating policy language,” NAIRO says.
Shifting rules create need for IRO vigilance
According to the Health Affairs Blog, the initial ACA rules governing internal and external reviews were particularly favorable for consumers. Later, the departments of Health and Human Services, Labor and Treasury released a number of amendments that accommodate the needs of employers and insurers, the blog noted. In 2013, these departments gave states additional time to “bring their external review procedures into compliance with the National Association of Insurance Commissioner’s External Review Model Act,” the blog added, extending the deadline to Jan. 1, 2016. As with many other aspects of the Affordable Care Act, the rules affecting IROs have evolved. Advanced Medical Reviews was founded in 2004, at the cusp of extraordinary change in the healthcare system. So we’ve embraced flexibility from our beginning. We keep pace with changing regulations, and we carefully track the latest research and policy to assure that our doctors make the most informed and unbiased reviews possible. The passage of the ACA was a landmark event that reverberated throughout the healthcare community. More than five years later, Advanced Medical Reviews continues to play an important role in meeting the needs of both consumers and health insurers who are affected by the ACA.