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OptumHealth’s New Stop Loss Endorsement Already Approved By Twenty States

OptumHealth has amended its stop loss contract to provide protection to self-insured plan sponsors who may face additional exposure resulting from changes in the claims appeal process under the Patient Protection and Affordable Care Act (PPACA).

The amendment, called an “extended liability endorsement,” is included in all new and renewal OptumHealth® stop loss contracts that take effect on or after January 1, 2012, subject to state approval. OptumHealth has received approval in twenty states to date, with more state approvals expected to follow.

Beginning in 2012, PPACA allows individuals whose claim is denied by a health plan through its internal claims review process to appeal to an independent review organization (IRO). A claim that is initially denied may eventually have to be paid by the health plan if the IRO overturns the denial.

Typically with most stop loss contracts, claims paid outside the time frame set out in the contract are not eligible for reimbursement. Under this new appeal process, however, payment on an overturned denial may be made months later, even beyond the benefit period in the stop loss contract. In such cases, OptumHealth will extend the paid date in the contract by up to 12 months.

“Many of our third party administrator clients have expressed concern about employers’ potential liability as a result of the new claims appeal process, said Scott Avery, stop loss product director of OptumHealth. “With our new policy endorsement, OptumHealth is helping self-insured employers to maintain their high quality stop loss protection while minimizing potential gaps in coverage.”

There are an estimated 1.3 external appeals for every 10,000 plan participants, and there will be approximately 2,600 external appeals in 2011, according to the US Departments of Health and Human Services, Labor, and the Treasury.

On average, about 40 percent of denials are reversed on external appeal, with the amount per reversed claim averaging $12,400. According to the government, $13.4 million in additional claims will be reversed by the external review process in 2011, increasing to $33.1 million in 2013.


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