No one likes going to the hospital, or paying bills, but paying bills from the hospital can be confusing for even the most astute patients. Deciphering an explanation of benefits (EOB) from a health insurance company and trying to determine what you owe and to whom can cause some serious headaches. (Which hopefully don’t lead to another doctor’s visit!) In recent years, frustration with the complexities of healthcare billing has given rise to a cottage industry of patient advocates who say that their expertise at wading through paperwork, including EOBs, can save patients money. The question is, can a health insurance plan refuse to deal with a patient advocate? The U.S. Department of Labor (DOL) recently weighed in, and its answer is no.
Filing Claims or Appeals on Behalf of Participants
If you sponsor a group health plan (and you arent a church-affiliated organization or a governmental entity), your plan is probably subject to the Employee Retirement Income Security Act of 1974). ERISA imposes several requirements on employee benefit plans, one of which is that they must establish and maintain reasonable claims procedure over the last 40 years the DOL has issued—ERISA regulations that set minimum standards for claims procedures.
For decades, ERISA regulations have provided that plans’ claims procedures must permit an “authorized representative of a claimant” to take action on the claimant’s behalf. Most commonly, that takes the form of a parent (who is the employee) filing a claim for a child’s benefits. If the child is a minor and the employee is the child’s parent or legal guardian, you may be able to establish pretty easily that the employee can act on the child’s behalf. In other circumstances, it can be a lot less clear whether a plan participant actually intends to permit someone else to act on her behalf—especially if someone other than a family member is pursuing the claim.
Can plan limit who’s an authorized representative?
According to an “Information Letter” issued by the DOL on February 27, 2019, a commercial entity that acts as a patient advocate and healthcare claim recovery expert asked the agency to “clarify its ability to act as an authorized representative for claimants” under the ERISA regulations. The commercial entity indicated it was seeking to be named the authorized representative to file initial claims for benefits on behalf of plan participants as well as appeal claims that are denied, and it wanted to deal directly with the plan rather than relying on the participant to act as a go-between.
The DOL didn’t express any discomfort with a commercial entity acting as an authorized representative. Instead, it stated that the ERISA regulations expressly protect participants’ right to name an authorized representative. In fact, the DOL focused more on emphasizing that notifications that would typically go to participants should be provided to the authorized representative unless the participant directs otherwise.
What’s required to name an authorized representative?
You don’t have to take a so-called authorized representative’s word on the authority it has been granted. Instead, you can amend your claims procedure to include a process that plan participants must follow when they name someone to be their authorized representative, including another individual or a commercial entity. For example, you may require participants to complete a particular form in order to name an authorized representative.
You should confirm that your plan’s summary plan description (SPD) states that participants can name an authorized representative to act on their behalf or let them know that a separate document, which they can request free of charge, sets out the claim procedures. But participants may need to complete more than just a form naming their authorized representative. For instance, a participant may be required to complete an authorization form that complies with the Health Insurance Portability and Accountability Act (HIPAA) before your plan can share her protected health information with her authorized representative.
Also, keep in mind that naming someone to act as an authorized representative for the claims and appeals process isn’t the same as assigning a claim to a third party. Courts across the country have upheld provisions in ERISA plans that prohibit the assignment of claims.
What’s on the horizon?
More and more participants may be willing to hire a commercial entity to act as their authorized representative in the hope that they will save money on their out-of-pocket medical costs by finding supposed errors in the way their health insurance claims are billed. The DOL has indicated it sees no problem with that practice from an ERISA perspective.
The DOL’s position highlights the importance of ensuring that your plan complies with ERISA and all other applicable laws, and that the plan is being administered in accordance with its documents, including the SPD. A good place to begin is with your plan’s claims procedures. If they don’t comply with ERISA, an employee may be able to file a lawsuit without exhausting the plan’s administrative procedures, which may mean more litigation for you (and therefore higher attorneys’ fees).
There’s never been a better time to have your plan’s claims procedures reviewed to ensure they comply with ERISA’s requirements—and to provide for a process by which participants can name an authorized representative.