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Assignment of Benefits: What You Need to Know

August 17, 2022
Steven Schwartzapfel

Insurance can be useful, but dealing with the back-and-forth between insurance companies and contractors, medical specialists, and others can be a time-consuming and ultimately unpleasant experience. You want your medical bills to be paid without having to act as a middleman between your healthcare provider and your insurer.

However, there’s a way you can streamline this process. With an assignment of benefits, you can designate your healthcare provider or any other insurance payout recipient as the go-to party for insurance claims. While this can be convenient, there are certain risks to keep in mind as well.

Below, we’ll explore what an assignment of insurance benefits is (as well as other forms of remediation), how it works, and when you should employ it. For more information, or to learn whether you may have a claim against an insurer, contact Schwartzapfel Lawyers now at 1-516-342-2200 .

What Is an Assignment of Benefits?

An assignment of benefits (AOB) is a legal process through which an insured individual or party signs paperwork that designates another party like a contractor, company, or healthcare provider as their insurance claimant .

Suppose you’re injured in a car accident and need to file a claim with your health insurance company for medical bills and related costs. However, you also need plenty of time to recover. The thought of constantly negotiating between your insurance company, your healthcare provider, and anyone else seems draining and unwelcome.

With an assignment of benefits, you can designate your healthcare provider as your insurance claimant. Then, your healthcare provider can request insurance payouts from your healthcare insurance provider directly.

Through this system, the health insurance provider directly pays your physician or hospital rather than paying you. This means you don’t have to pay your healthcare provider. It’s a streamlined, straightforward way to make sure insurance money gets where it needs to go. It also saves you time and prevents you from having to think about insurance payments unless absolutely necessary.

What Does an Assignment of Benefits Mean?

An AOB means that you designate another party as your insurance claimant. In the above example, that’s your healthcare provider, which could be a physician, hospital, or other organization.

With the assignment of insurance coverage, that healthcare provider can then make a claim for insurance payments directly to your insurance company. The insurance company then pays your healthcare provider directly, and you’re removed as the middleman.

As a bonus, this system sometimes cuts down on your overall costs by eliminating certain service fees. Since there’s only one transaction — the transaction between your healthcare provider and your health insurer — there’s only one set of service fees to contend with. You don’t have to deal with two sets of service fees from first receiving money from your insurance provider, then sending that money to your healthcare provider.

Ultimately, the point of an assignment of benefits is to make things easier for you, your insurer, and anyone else involved in the process.

What Types of Insurance Qualify for an Assignment of Benefits?

Most types of commonly held insurance can work with an assignment of benefits. These insurance types include car insurance, healthcare insurance, homeowners insurance, property insurance, and more.

Note that not all insurance companies allow you to use an assignment of benefits. For an assignment of benefits to work, the potential insurance claimant and the insurance company in question must each sign the paperwork and agree to the arrangement. This prevents fraud (to some extent) and ensures that every party goes into the arrangement with clear expectations.

If your insurance company does not accept assignments of benefits, you’ll have to take care of insurance payments the traditional way. There are many reasons why an insurance company may not accept an assignment of benefits.

To speak with a Schwartzapfel Lawyers expert about this directly, call 1-516-342-2200 for a free consultation today. It will be our privilege to assist you with all your legal questions, needs, and recovery efforts.

Who Uses Assignments of Benefits?

Many providers, services, and contractors use assignments of benefits. It’s often in their interests to accept an assignment of benefits since they can get paid for their work more quickly and make critical decisions without having to consult the insurance policyholder first.

Imagine a circumstance in which a homeowner wants a contractor to add a new room to their property. The contractor knows that the scale of the project could increase or shrink depending on the specifics of the job, the weather, and other factors.

If the homeowner uses an assignment of benefits to give the contractor rights to make insurance claims for the project, that contractor can then:

Bill the insurer directly for their work. This is beneficial since it ensures that the contractor’s employees get paid promptly and they can purchase the supplies they need.
Make important decisions to ensure that the project completes on time. For example, a contract can authorize another insurance claim for extra supplies without consulting with the homeowner beforehand, saving time and potentially money in the process.

Practically any company or organization that receives payments from insurance companies may choose to take advantage of an assignment of benefits with you. Example companies and providers include:

Ambulance services
Drug and biological companies
Lab diagnostic services
Hospitals and medical centers like clinics
Certified medical professionals such as nurse anesthetists, nurse midwives, clinical psychologists, and others
Ambulatory surgical center services
Permanent repair and improvement contractors like carpenters, plumbers, roofers, restoration companies, and others
Auto repair shops and mechanic organizations

Advantages of Using an Assignment of Benefits

An assignment of benefits can be an advantageous contract to employ, especially if you believe that you’ll need to pay a contractor, healthcare provider, and/or other organization via insurance payouts regularly for the near future.

These benefits include but are not limited to:

Save time for yourself. Again, imagine a circumstance in which you are hospitalized and have to pay your healthcare provider through your health insurance payouts. If you use an assignment of benefits, you don’t have to make the payments personally or oversee the insurance payouts. Instead, you can focus on resting and recovering.
Possibly save yourself money in the long run. As noted above, an assignment of benefits can help you circumvent some service fees by limiting the number of transactions or money transfers required to ensure everyone is paid on time.
Increased peace of mind. Many people don’t like having to constantly think about insurance payouts, contacting their insurance company, or negotiating between insurers and contractors/providers. With an assignment of benefits, you can let your insurance company and a contractor or provider work things out between them, though this can lead to applications later down the road.

Because of these benefits, many recovering individuals, car accident victims, homeowners, and others utilize AOB agreements from time to time.

Risks of Using an Assignment of Benefits

Worth mentioning, too, is that an assignment of benefits does carry certain risks you should be aware of before presenting this contract to your insurance company or a contractor or provider. Remember, an assignment of benefits is a legally binding contract unless it is otherwise dissolved (which is technically possible).

The risks of using an assignment of benefits include:

You give billing control to your healthcare provider, contractor, or another party. This allows them to bill your insurance company for charges that you might not find necessary. For example, a home improvement contractor might bill a homeowner’s insurance company for an unnecessary material or improvement. The homeowner only finds out after the fact and after all the money has been paid, resulting in a higher premium for their insurance policy or more fees than they expected.
You allow a contractor or service provider to sue your insurance company if the insurer does not want to pay for a certain service or bill. This can happen if the insurance company and contractor or service provider disagree on one or another billable item. Then, you may be dragged into litigation or arbitration you did not agree to in the first place.
You may lose track of what your insurance company pays for various services . As such, you could be surprised if your health insurance or other insurance premiums and deductibles increase suddenly.

Given these disadvantages, it’s still wise to keep track of insurance payments even if you choose to use an assignment of benefits. For example, you might request that your insurance company keep you up to date on all billable items a contractor or service provider charges for the duration of your treatment or project.

For more on this and related topic, call Schwartzapfel Lawyers now at 1-516-342-2200 .

How To Make Sure an Assignment of Benefits Is Safe

Even though AOBs do carry potential disadvantages, there are ways to make sure that your chosen contract is safe and legally airtight. First, it’s generally a wise idea to contact knowledgeable legal representatives so they can look over your paperwork and ensure that any given assignment of benefits doesn’t contain any loopholes that could be exploited by a service provider or contractor.

The right lawyer can also make sure that an assignment of benefits is legally binding for your insurance provider. To make sure an assignment of benefits is safe, you should perform the following steps:

Always check for reviews and references before hiring a contractor or service provider, especially if you plan to use an AOB ahead of time. For example, you should stay away if a contractor has a reputation for abusing insurance claims.
Always get several estimates for work, repairs, or bills. Then, you can compare the estimated bills and see whether one contractor or service provider is likely to be honest about their charges.
Get all estimates, payment schedules, and project schedules in writing so you can refer back to them later on.
Don’t let a service provider or contractor pressure you into hiring them for any reason . If they seem overly excited about getting started, they could be trying to rush things along or get you to sign an AOB so that they can start issuing charges to your insurance company.
Read your assignment of benefits contract fully. Make sure that there aren’t any legal loopholes that a contractor or service provider can take advantage of. An experienced lawyer can help you draft and sign a beneficial AOB contract.

Can You Sue a Party for Abusing an Assignment of Benefits?

Sometimes. If you believe your assignment of benefits is being abused by a contractor or service provider, you may be able to sue them for breaching your contract or even AOB fraud. However, successfully suing for insurance fraud of any kind is often difficult.

Also, you should remember that a contractor or service provider can sue your insurance company if the insurance carrier decides not to pay them. For example, if your insurer decides that a service provider is engaging in billing scams and no longer wishes to make payouts, this could put you in legal hot water.

If you’re not sure whether you have grounds for a lawsuit, contact Schwartzapfel Lawyers today at 1-516-342-2200 . At no charge, we’ll examine the details of your case and provide you with a consultation. Don’t wait. Call now!

Assignment of Benefits FAQs

Which states allow assignments of benefits.

Every state allows you to offer an assignment of benefits to a contractor and/or insurance company. That means, whether you live in New York, Florida, Arizona, California, or some other state, you can rest assured that AOBs are viable tools to streamline the insurance payout process.

Can You Revoke an Assignment of Benefits?

Yes. There may come a time when you need to revoke an assignment of benefits. This may be because you no longer want the provider or contractor to have control over your insurance claims, or because you want to switch providers/contractors.

To revoke an assignment of benefits agreement, you must notify the assignee (i.e., the new insurance claimant). A legally solid assignment of benefits contract should also include terms and rules for this decision. Once more, it’s usually a wise idea to have an experienced lawyer look over an assignment of benefits contract to make sure you don’t miss these by accident.

Contact Schwartzapfel Lawyers Today

An assignment of benefits is an invaluable tool when you need to streamline the insurance claims process. For example, you can designate your healthcare provider as your primary claimant with an assignment of benefits, allowing them to charge your insurance company directly for healthcare costs.

However, there are also risks associated with an assignment of benefits. If you believe a contractor or healthcare provider is charging your insurance company unfairly, you may need legal representatives. Schwartzapfel Lawyers can help.

As knowledgeable New York attorneys who are well-versed in New York insurance law, we’re ready to assist with any and all litigation needs. For a free case evaluation and consultation, contact Schwartzapfel Lawyers today at 1-516-342-2200 !

Schwartzapfel Lawyers, P.C. | Fighting For You™™

What Is an Insurance Claim? | Experian

What is assignment of benefits, and how does it impact insurers? | Insurance Business Mag

Florida Insurance Ruling Sets Precedent for Assignment of Benefits | Law.com

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Assignment of Benefits: What It Is, and How It Can Affect your Property Insurance Claim

Table of Contents

What is an Assignment of Benefits?

In the context of insured property claims, an assignment of benefits (AOB) is an agreement between you and a contractor in which you give the contractor your right to insurance payments for a specific scope of work . In exchange, the contractor agrees that it will not seek payment from you for that scope of work, except for the amount of any applicable deductible. In other words, you give part of your insurance claim to your contractor, and your contractor agrees not to collect from you for part of its work.

The most important thing to know about an assignment of benefits is that it puts your contractor in control your claim , at least for their scope of work. Losing that control can significantly affect the direction and outcome of your claim, so you should fully understand the implications of an AOB (sometimes called an assignment of claims or AOC) before signing one.

How Does an Assignment of Benefits Work in Practice?

Let’s say you’re an insured homeowner, and Hurricane Ian significantly damaged your roof. Let’s also assume your homeowner’s policy covers that damage. A roofer, after inspecting your roof and reviewing your insurance policy, might conclude that your insurer is probably going to pay for a roof replacement under your insurance policy. The only problem is that it’s early in the recovery process, and your insurer hasn’t yet stated whether it will pay for the roof replacement proposed by your contractor. So if you want your roof replaced now, you would ordinarily agree to pay your roofer for the replacement, and wait in hopes that your insurer reimburses you for the work. This means that if your insurance company refuses to pay or drags out payment, you’re on the hook to your roofer for the cost of the replacement.

As an alternative to agreeing to pay your roofer for the full cost of the work, you could sign an assignment of benefits for the roof replacement. In this scenario, your roofer owns the part of your insurance claim that pertains to the roof replacement. You might have to pay your roofer for the amount of your deductible, but you probably don’t have to pay them for the rest of the cost of the work. And if your insurance company refuses to pay or drags out payment for the roof replacement, it’s your roofer, and not you, who would be on the hook for that shortfall.

So should you sign an AOB? Not necessarily. Read below to understand the pros and cons of an assignment of benefits.

Are There any Downsides to Signing an Assignment of Benefits?

Yes.

You lose control of your claim . This is the most important factor to understand when considering whether to sign an AOB. An AOB is a formal assignment of your legal rights to payment under your insurance contract. Unless you’re able to cancel the AOB, your contractor will have full control over your claim as it relates to their work.

To explain why that control could matter, let’s go back to the roof replacement example. When you signed the AOB, the scope of work you agreed on was to replace the roof. But you’re not a roofing expert, so you don’t know whether the costs charged or the materials used by the roofer in its statement of work are industry appropriate or not. In most cases, they probably are appropriate, and there’s no problem. But if they’re not – if, for instance, the roofer’s prices are unreasonably high – then the insurer may not approve coverage for the replacement. At that point, the roofer could lower its prices so the insurer approves the work, but it doesn’t have to, because it controls the claim . Instead it could hold up work and threaten to sue your insurer unless it approves the work at the originally proposed price. Now the entire project is insnared in litigation, leaving you in a tough spot with your insurer for your other claims and, most importantly, with an old leaky roof.

Misunderstanding the Scope of Work. Another issue that can arise is that you don’t understand the scope of the assignment of benefits. Contractor estimates and scopes of work are often highly technical documents that can be long on detail but short on clarity. Contractors are experts at reading and writing them. You are not. That difference matters because the extent of your assignment of benefits is based on that technical, difficult-to-understand scope of work. This can lead to situations where your understanding of what you’re authorizing the contractor to do is very different from what you’ve actually authorized in the AOB agreement.

In many cases, it’s not necessary . Many contractors will work with you and your insurer to provide a detailed estimate of their work, and will not begin that work until your insurer has approved coverage for it. This arrangement significantly reduces the risk of you being on the hook for uninsured repairs, without creating any of the potential problems that can occur when you give away your rights to your claim.

Do I have to sign an Assignment of Benefits?

No. You are absolutely not required to sign an AOB if you do not want to.

Are There any Benefits to Signing an Assignment of Benefits?

Potentially, but only if you’ve fully vetted your contractor and your claim involves complicated and technical construction issues that you don’t want to deal with.

First, you must do your homework to fully vet your contractor! Do not just take their word for it or be duped by slick ads. Read reviews, understand their certificate of insurance, know where they’re located, and, if possible, ask for and talk to references. If you’ve determined that the contractor is highly competent at the work they do, is fully insured, and has a good reputation with customers, then that reduces the risk that they’ll abuse their rights to your claim.

Second, if your claim involves complicated reconstruction issues, a reputable contractor may be well equipped to handle the claim and move it forward. If you don’t want to deal with the hassle of handling a complicated claim like this, and you know you have a good contractor, one way to get rid of that hassle is an AOB.

Another way to get rid of the hassle is to try Claimly, the all-in-one claims handling tool that get you results but keeps you in control of your claim.

Can my insurance policy restrict the use of AOBs?

Yes, it’s possible that your Florida insurance policy restricts the use of AOBs, but only if all of the following criteria are met:

When you selected your coverage, your insurer offered you a different policy with the same coverage, only it did not restrict the right to sign an AOB.
Your insurer made the restricted policy available at a lower cost than the unrestricted policy.
If the policy completely prohibits AOBs, then it was made available at a lower cost than any policy partially prohibiting AOBs.
The policy includes on its face the following notice in 18-point uppercase and boldfaced type:

THIS POLICY DOES NOT ALLOW THE UNRESTRICTED ASSIGNMENT OF POST-LOSS INSURANCE BENEFITS. BY SELECTING THIS POLICY, YOU WAIVE YOUR RIGHT TO FREELY ASSIGN OR TRANSFER THE POST-LOSS PROPERTY INSURANCE BENEFITS AVAILABLE UNDER THIS POLICY TO A THIRD PARTY OR TO OTHERWISE FREELY ENTER INTO AN ASSIGNMENT AGREEMENT AS THE TERM IS DEFINED IN SECTION 627.7153 OF THE FLORIDA STATUTES.

627.7153.

Pro Tip : If you have an electronic copy of your complete insurance policy (not just the declaration page), then search for “policy does not allow the unrestricted assignment” or another phrase from the required language above to see if your policy restricts an AOB. If your policy doesn’t contain this required language, it probably doesn’t restrict AOBs.

Do I have any rights or protections concerning Assignments of Benefits?

Yes, you do. Florida recently enacted laws that protect consumers when dealing with an AOB.

Protections in the AOB Contract

To be enforceable, a Assignments of Benefits must meet all of the following requirements:

Be in writing and executed by and between you and the contractor.
Contain a provision that allows you to cancel the assignment agreement without a penalty or fee by submitting a written notice of cancellation signed by the you to the assignee:
at least 30 days after the date work on the property is scheduled to commence if the assignee has not substantially performed, or
at least 30 days after the execution of the agreement if the agreement does not contain a commencement date and the assignee has not begun substantial work on the property.
Contain a provision requiring the assignee to provide a copy of the executed assignment agreement to the insurer within 3 business days after the date on which the assignment agreement is executed or the date on which work begins, whichever is earlier.
Contain a written, itemized, per-unit cost estimate of the services to be performed by the assignee .
Relate only to work to be performed by the assignee for services to protect, repair, restore, or replace a dwelling or structure or to mitigate against further damage to such property.
Contain the following notice in 18-point uppercase and boldfaced type:

YOU ARE AGREEING TO GIVE UP CERTAIN RIGHTS YOU HAVE UNDER YOUR INSURANCE POLICY TO A THIRD PARTY, WHICH MAY RESULT IN LITIGATION AGAINST YOUR INSURER. PLEASE READ AND UNDERSTAND THIS DOCUMENT BEFORE SIGNING IT. YOU HAVE THE RIGHT TO CANCEL THIS AGREEMENT WITHOUT PENALTY WITHIN 14 DAYS AFTER THE DATE THIS AGREEMENT IS EXECUTED, AT LEAST 30 DAYS AFTER THE DATE WORK ON THE PROPERTY IS SCHEDULED TO COMMENCE IF THE ASSIGNEE HAS NOT SUBSTANTIALLY PERFORMED, OR AT LEAST 30 DAYS AFTER THE EXECUTION OF THE AGREEMENT IF THE AGREEMENT DOES NOT CONTAIN A COMMENCEMENT DATE AND THE ASSIGNEE HAS NOT BEGUN SUBSTANTIAL WORK ON THE PROPERTY. HOWEVER, YOU ARE OBLIGATED FOR PAYMENT OF ANY CONTRACTED WORK PERFORMED BEFORE THE AGREEMENT IS RESCINDED. THIS AGREEMENT DOES NOT CHANGE YOUR OBLIGATION TO PERFORM THE DUTIES REQUIRED UNDER YOUR PROPERTY INSURANCE POLICY.

Contain a provision requiring the assignee to indemnify and hold harmless the assignor from all liabilities, damages, losses, and costs, including, but not limited to, attorney fees.

Contractor Duties

Under Florida law, a contractor (or anyone else) receiving rights to a claim under an AOB:

Must provide you with accurate and up-to-date revised estimates of the scope of work to be performed as supplemental or additional repairs are required.
Must perform the work in accordance with accepted industry standards.
May not seek payment from you exceeding the applicable deductible under the policy unless asked the contractor to perform additional work at the your own expense.
Must, as a condition precedent to filing suit under the policy, and, if required by the insurer, submit to examinations under oath and recorded statements conducted by the insurer or the insurer’s representative that are reasonably necessary, based on the scope of the work and the complexity of the claim, which examinations and recorded statements must be limited to matters related to the services provided, the cost of the services, and the assignment agreement.
Must, as a condition precedent to filing suit under the policy, and, if required by the insurer, participate in appraisal or other alternative dispute resolution methods in accordance with the terms of the policy.
If the contractor is making emergency repairs, the assignment of benefits cannot exceed the greater of $3,000 or 1% of your Coverage A limit.

What is an assignment of benefits?

Jim Probasco is an expert in the areas of personal income, saving and investing, banking, home buying, insurance, and more. A Dayton, Ohio-based writer, Jim has written for radio and television, and authored books for parents in arts education opportunities for their children.

The last time you sought medical care, you likely made an appointment with your provider, got the treatment you needed, paid your copay or deductible, and that was it. No paperwork, no waiting to be reimbursed; your doctor received payment from your insurance company and you both went on with your lives.

This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .

What is an assignment of benefits?

An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another medical professional providing care. With a homeowners, renters, or auto insurance claim, the third party could be a contractor, auto repair shop, or other facility.

Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right. For example, the contract may not violate the law or contain unfair terms.

Not all doctors or contractors utilize AOBs. Therefore, it’s a good idea to make sure the doctor or service provider and you are on the same page when it comes to AOBs before treatment or work begins.

How an AOB works

The function of an AOB agreement varies depending on the type of insurance policy involved, the healthcare provider, contractor, or service provider, and increasingly, state law. Although an AOB is normal in health insurance, other applications of assignment of benefits have now included the auto and homeowners insurance industry.

Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says “assignment of benefits” across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?

According to Dr. David Berg of Redirect Health , the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”

With homeowners or auto insurance, the same rules apply. Once you sign the AOB, you are effectively out of the picture. The contractor who reroofs your house or the mechanic who rebuilds your engine works with your insurance company by filing a claim on your behalf and receiving their money without your help or involvement.

“Each state has its own rules, regulations, and permissions regarding AOBs,” says Gregg Barrett, founder and CEO of WaterStreet , a cloud-based P&C insurance administration platform. “Some states require a strict written breakdown of work to be done, while others allow assignment of only parts of claims.”

Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:

You and your contractor draw up an AOB clause as part of the contract.
The contract stipulates the exact work that will be completed and all necessary details.
The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.
The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.

After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.

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Example of an assignment of benefits

If you’re dealing with insurance, how would an AOB factor in? Let’s take an example. “Say you have a water leak in the house,” says Angel Conlin, chief insurance officer at Kin Insurance . “You call a home restoration company to stop the water flow, clean up the mess, and restore your home to its former glory. The restoration company may ask for an assignment of benefits so it can deal directly with the insurance company without your input.”

In this case, by eliminating the homeowner, whose interests are already represented by an experienced insurance adjustor, the AOB reduces redundancy, saves time and money, and allows the restoration process to proceed with much greater efficiency.

When would you need to use an assignment of benefits?

An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.

An AOB also frees you from paying the entire bill upfront and seeking reimbursement from your insurance company after work has been completed or services rendered. Since you are not required to sign an assignment of benefits, failure to sign will result in you paying the entire medical bill and filing for reimbursement. The three most common uses of AOBs are with health insurance, car insurance, and homeowners insurance.

Assignment of benefits for health insurance

As discussed, AOBs in health insurance are commonplace. If you have health insurance, you’ve probably signed AOBs for years. Each provider (doctor) or practice requires a separate AOB. From your point of view, the big advantages of an AOB are that you receive medical care, your doctor and insurance company work out the details and, in the event of a disagreement, those two entities deal with each other.

Assignment of benefits for car owners

If your car is damaged in an accident and needs extensive repair, the benefits of an AOB can quickly add up. Not only will you have your automobile repaired with minimal upfront costs to you, inconvenience will be almost nonexistent. You drop your car off (or have it towed), wait to be called, told the repair is finished, and pick it up. Similar to a health care AOB, disagreements are worked out between the provider and insurer. You are usually not involved.

Assignment of benefits for homeowners

When your home or belongings are damaged or destroyed, your primary concern is to “return to normal.” You want to do this with the least amount of hassle. An AOB allows you to transfer your rights to a third party, usually a contractor, freeing you to deal with the crisis at hand.

When you sign an AOB, your contractor can begin immediately working on damage repair, shoring up against additional deterioration, and coordinating with various subcontractors without waiting for clearance or communication with you.

The fraud factor

No legal agreement, including an AOB, is free from the possibility of abuse or fraud. Built-in safeguards are essential to ensure the benefits you assign to a third party are as protected as possible.

In terms of what can and does go wrong, the answer is: plenty. According to the National Association of Mutual Insurance Companies (NAMICs), examples of AOB fraud include inflated invoices or charges for work that hasn’t been done. Another common tactic is to sue the insurance company, without the policyholder’s knowledge or consent, something that can ultimately result in the policyholder being stuck with the bill and higher insurance premiums due to losses experienced by the insurer.

State legislatures have tried to protect consumers from AOB fraud and some progress has been made. Florida, for example, passed legislation in 2019 that gives consumers the right to rescind a fraudulent contract and requires that AOB contracts include an itemized description of the work to be done. Other states, including North Dakota, Kansas, and Iowa have all signed NAMIC-backed legislation into law to protect consumers from AOB fraud.

The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:

File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.
Don’t pay in full upfront. Legitimate contractors do not require it.
Get three estimates before selecting a contractor.
Get a full written contract and read it carefully before signing.
Don’t be pressured into signing an AOB. You are not required to sign an AOB.

Pros and cons of an assignment of benefits

The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.

An AOB frees you from paying for services and waiting for reimbursement from your insurer
Some people appreciate not needing to negotiate with their insurer
You are not required to sign an AOB.
Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay
An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south
Any AOB you do sign is legally binding

The takeaway

An AOB, as the health insurance example shows, can simplify complicated and costly insurance transactions and help consumers avoid time-consuming negotiations. And it can save upfront costs while letting experts work out the details.

It can also introduce a nightmare scenario laced with fraud requiring years of costly litigation. Universal state-level legislation with safeguards is required to avoid the latter. Until that is in place, your best bet is to work closely with your insurer when signing an AOB. Look for suspicious or inflated charges when negotiating with contractors, providers, and other servicers.

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Consumer Insight

Sept. 13, 2023

Assignment of Benefits: Consumer Beware

You've just survived a severe storm, or a tornado and you've experienced some extensive damage to your home that requires repairs, including the roof. Your contractor is now asking for your permission to speak with your insurance company using an Assignment of Benefits. Before you sign, read the fine print. Otherwise, you may inadvertently sign over your benefits and any extra money you’re owed as part of your claim settlement.

The National Association of Insurance Commissioners (NAIC) offers information to help you better understand insurance, your risk and what to do in the event you need repairs after significant storm damage.

Be cautious about signing an Assignment of Benefits. An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company. An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal directly with your insurance company when negotiating repairs and issuing payment directly to the repair company. However, an AOB is a legal contract, so you need to understand what rights you are signing away and you need to be sure the repair company is trustworthy.

With an Assignment of Benefits, the third party, like a roofing company or plumber, files your claim, makes the repair decision and collects insurance payments without your involvement.
Once you have signed an AOB, the insurer only communicates with the third party and the other party can sue your insurer and you can lose your right to mediation.
It's possible the third party may demand a higher claim payment than the insurer offers and then sue the insurer when it denies your claim.
You are not required to sign an AOB to have repairs completed. You can file a claim directly with your insurance company, which allows you to maintain control of the rights and benefits provided by your policy in resolving the claim.

Be on alert for fraud. Home repair fraud is common after a natural disaster. Contractors often come into disaster-struck regions looking to make quick money by taking advantage of victims.

It is a good idea to do business with local or trusted companies. Ask friends and family for references.
Your insurer may also have recommendations or a list of preferred contractors.
Always get more than one bid on work projects. Your adjuster may want to review estimates before you make repairs.

Immediately after the disaster, have an accurate account of the damage for your insurance company when you file a claim.

Before removing any debris or belongings, document all losses.
Take photos or video and make a list of the damages and lost items.
Save damaged items if possible so your insurer can inspect them, some insurance companies may have this as a requirement in their policy.

Most insurance companies have a time requirement for reporting a claim, so contact your agent or company as soon as possible. Your state insurance department can help you find contact information for your insurance company, if you cannot find it.

Insurance company officials can help you determine what damages are covered, start your claim and even issue a check to start the recovery process.
When reporting losses, you will need insurance information, current contact information and a home inventory or list of damaged and lost property . If you do not have a list, the adjuster will give you some time to make one. Ask the adjuster how much time you have to submit this inventory list. The NAIC Post Disaster Claims Guide has details on what you can do if you do not have a home inventory list.

After you report damage to your insurance company, they will send a claims adjuster to assess the damage at no cost to you . An adjuster from your insurance company will walk through and around your home to inspect damaged items and temporary repairs you may have made.

A public adjuster is different from an adjuster from your insurance company and has no ties to the insurance company.
They estimate the damage to your home and property, review your insurance coverage, and negotiate a settlement of the insurance claim for you.
Many states require public adjusters to be licensed. Some states prohibit public adjusters from negotiating insurance claims for you. In those states, only a licensed attorney can represent you.
You have to pay a public adjuster.
The NAIC Post Disaster Claims Guide has information on the different types of adjusters.

Once the adjuster has completed an assessment, they will provide documentation of the loss to your insurer to determine your claims settlement. When it comes to getting paid, you may receive more than one check. If the damage is severe or you are displaced from your home, the first check may be an emergency advance. Other payments may be for the contents of your home, other personal property, and structural damages. Please note that if there is a mortgage on your home, the payment for structural damage may be payable to you and your mortgage lender. Lenders may put that money into an escrow account and pay for repairs as the work is completed.

More information. States have rules governing how insurance companies handle claims. If you think that your insurer is not responding in a timely manner or completing a reasonable investigation of your claim, contact your state insurance department .

About the National Association of Insurance Commissioners

As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.

Assignment of benefits

Assignment of benefits is a legal agreement where a patient authorizes their healthcare provider to receive direct payment from the insurance company for services rendered.

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What is Assignment of Benefits?

Assignment of benefits (AOB) is a crucial concept in the healthcare revenue cycle management (RCM) process. It refers to the legal transfer of the patient's rights to receive insurance benefits directly to the healthcare provider. In simpler terms, it allows healthcare providers to receive payment directly from the insurance company, rather than the patient being responsible for paying the provider and then seeking reimbursement from their insurance company.

Understanding Assignment of Benefits

When a patient seeks medical services, they typically have health insurance coverage that helps them pay for the cost of their healthcare. In most cases, the patient is responsible for paying a portion of the bill, known as the copayment or deductible, while the insurance company covers the remaining amount. However, in situations where the patient has assigned their benefits to the healthcare provider, the provider can directly bill the insurance company for the services rendered.

The assignment of benefits is a legal agreement between the patient and the healthcare provider. By signing this agreement, the patient authorizes the healthcare provider to receive payment directly from the insurance company on their behalf. This ensures that the provider receives timely payment for the services provided, reducing the financial burden on the patient.

Difference between Assignment of Benefits and Power of Attorney

While the assignment of benefits may seem similar to a power of attorney (POA) in some respects, they are distinct legal concepts. A power of attorney grants someone the authority to make decisions and act on behalf of another person, including financial matters. On the other hand, an assignment of benefits only transfers the right to receive insurance benefits directly to the healthcare provider.

In healthcare, a power of attorney is typically used in situations where a patient is unable to make decisions about their medical care. It allows a designated individual, known as the healthcare proxy, to make decisions on behalf of the patient. In contrast, an assignment of benefits is used to streamline the payment process between the healthcare provider and the insurance company.

Examples of Assignment of Benefits

To better understand how assignment of benefits works, let's consider a few examples:

Sarah visits her primary care physician for a routine check-up. She has health insurance coverage through her employer. Before the appointment, Sarah signs an assignment of benefits form, authorizing her physician to receive payment directly from her insurance company. After the visit, the physician submits the claim to the insurance company, and they reimburse the physician directly for the covered services.

John undergoes a surgical procedure at a hospital. He has health insurance coverage through a private insurer. Prior to the surgery, John signs an assignment of benefits form, allowing the hospital to receive payment directly from his insurance company. The hospital submits the claim to the insurance company, and they reimburse the hospital for the covered services. John is responsible for paying any copayments or deductibles directly to the hospital.

Mary visits a specialist for a specific medical condition. She has health insurance coverage through a government program. Mary signs an assignment of benefits form, granting the specialist the right to receive payment directly from the government program. The specialist submits the claim to the program, and they reimburse the specialist for the covered services. Mary is responsible for any applicable copayments or deductibles.

In each of these examples, the assignment of benefits allows the healthcare provider to receive payment directly from the insurance company, simplifying the billing and reimbursement process for both the provider and the patient.

Assignment of benefits is a fundamental concept in healthcare revenue cycle management. It enables healthcare providers to receive payment directly from the insurance company, reducing the financial burden on patients and streamlining the billing process. By understanding the assignment of benefits, patients can make informed decisions about their healthcare and ensure that their providers receive timely payment for the services rendered.

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Related terms, vulnerability.

Vulnerability is the state of being exposed to potential risks or threats, making an entity susceptible to exploitation or harm.

Cash accounting

Cash accounting is a financial method that records revenue and expenses when actual cash is received or paid out, providing real-time cash flow visibility.

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What is an Assignment of Benefits?

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This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .

What is an assignment of benefits?

How an AOB works

According to Dr. David Berg of Redirect Health, the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”

Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:

You and your contractor draw up an AOB clause as part of the contract.
The contract stipulates the exact work that will be completed and all necessary details.
The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.
The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.

After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.

Example of an assignment of benefits

When would you need to use an assignment of benefits?

An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.

Assignment of benefits for health insurance

Assignment of benefits for car owners

Assignment of benefits for homeowners

The fraud factor

The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:

File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.
Don’t pay in full upfront. Legitimate contractors do not require it.
Get three estimates before selecting a contractor.
Get a full written contract and read it carefully before signing.
Don’t be pressured into signing an AOB. You are not required to sign an AOB.

Pros and cons of an assignment of benefits

The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.

Pros of assignment of benefits

With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.

An AOB frees you from paying for services and waiting for reimbursement from your insurer.
Some people appreciate not needing to negotiate with their insurer.
You are not required to sign an AOB.

Cons of assignment of benefits

As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.

Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay.
An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south.
Any AOB you do sign is legally binding.

The takeaway

By: Jim Probasco

From: Fortune Recommends

Assignment of benefits: A growing concern

By Kevin Poll

Evaluating claims properly and determining the appropriate amount of a loss are crucial for insurance companies, especially when trying to offer competitive premiums to customers and maintain profitable financial results.

Factors that affect profitability

In the business of insurance, many factors—some that can’t be controlled—affect financial profitability. Predictive analytics and more refined modeling are helping insurers reduce uncertainty, but even the best of models have their limitations.

Further, many variables can’t be predicted but could have significant financial impact on the bottom line. One of those variables—the potential for the benefits of an insurance policy being assigned post-loss to predatory adjusters—has been a hot topic, particularly in those states where laws and regulations currently prevent insurance companies from being able to mitigate the problem.

What is assignment of benefits?

Typically, an insurance policy has a loss payment provision that advises the policyholder that any payment for a first-party loss will be paid directly to the insured unless another party is legally entitled to collect payment. However, a common practice by consumers after a loss is to have the contractor that will be making the repairs to the damaged property work directly with the insurance company for payment.

Some insurance providers have simplified this process by developing a network of trusted contractors that are allowed to inspect claims on their behalf. This creates a consumer-friendly environment where the insured, for the most part, is removed from the claims settlement process. However, consumers generally are free to make other choices, so if they decide on a contractor not in that network, the insurer most likely will work with the entity selected by the insured.

When a contractor, who is not in an insurance provider’s network, is chosen, the insured has two options: either receive payment from the insurance company and then work directly with the contractor or allow the contractor to work directly with the insurance company regarding repairs and payment. Insurance companies would likely prefer the first option because they can then more closely monitor the claims process. While the second option may be less desirable to the insurance company, certain states, like Florida, have laws in place that actually prevent the carrier from disallowing it.

What are the concerns with assignment of benefits?

Transferring the benefits of a policy to a third party, such as a contractor, does create a better customer experience; however, insurers generally lose a bit of control managing the claims process when working directly with the third party.

Several states (especially Florida as discussed below) have seen an influx in predatory public adjusters and contractors that seek out consumers who may potentially have a loss covered by their homeowners policy. These adjusters (that may also serve as the contractor making the repairs to the home) will have the consumer sign a transfer of benefits to them almost immediately after suffering the loss, and then they will work directly with the insurance company to complete the claims process.

One issue that arises (and often the consumer is unaware of this) is that the adjuster/contractor could be inflating the actual cost of the claim by reporting damage that may not actually have occurred. Additionally, the claim may not be reported to the insurance company until the repairs have already been completed so the insurance company has not had an opportunity to inspect the damage. Such tactics can result in additional profits for the adjuster/contractor, which translates to inflated severity and rising premiums for the consumer.

This issue may be particularly problematic in Florida, where insurance carriers may not be aware of potential losses until they’re served with a lawsuit for expenses incurred by the contractor that completed the repairs. In fact, the Florida Office of Insurance Regulation (FLOIR) released results from a study it conducted showing that the number of lawsuits attributed to assignment of benefits (AOB) increased from 408 in 2000 to more than 28,000 in 2016. Further, the average severity for claims where there is an AOB is about 85 percent more than those claims without an AOB.

How has this issue escalated?

Several factors have contributed to the growing problem of assignment of benefits in Florida; however, a combination of case law and legislation, which has made it difficult for insurance companies to mitigate claim costs and potential fraud, may be the most impactful.

In the 1917 landmark case of West Florida Grocery Co. v. Teutonia Fire Ins. Co., 77 So. 209, 210-, the state Supreme Court rendered a decision holding that the insured was able to assign the benefits of the policy following a loss directly to a third party without the written consent of the insurance provider. The precedent established by this 100-year-old case continues to make it very difficult for an insurance company to prohibit the assignment of benefits in Florida.

In addition to this case, Florida Statute §627.428 governing payment of attorneys’ fees related to insurance practices requires that insurance companies pay legal fees to third parties successfully suing to obtain payment for their services even if the ruling from the court places the amount of the claim only $1 above the insurance company’s offer in settlement. As a result, this statute incentivizes contractors to sue insurance companies for reimbursement, because the likelihood that they’ll have to pay their own legal fees for the case is very slim.

As reported by The Sun Sentinel earlier this year, consumers in southern Florida could expect to see rate increases averaging 5-15% as a result of claims abuse. Additionally, if it can be assumed that a significant number of the lawsuits complied in the FLOIR study referenced above were initiated by public adjusters and contractors seeking to be unjustly compensated, it could be suggested that this predatory behavior is factoring into these rate increases.

Despite this potential correlation, the legislature has yet to make changes to existing laws. While some members of Florida’s legislature favor the existing legislation, others are advocating for consumers and supporting legislation that would eliminate the abuse. Although remedial legislation did fail in 2017, some members have said they’re hopeful to get legislation passed in 2018.

How is ISO responding?

ISO has been reviewing policy language to determine the best course of action for responding to the growing crisis, especially in Florida. While prohibiting assignment of benefits post-loss altogether is not allowed by state law, several policy provisions can be modified to introduce parameters on how the benefits of the policy can be assigned to a third party. ISO is finalizing these changes and hopes to file in the first quarter of 2018 so that member companies can address this concern with or without any future changes to Florida law.

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What Is Assignment Of Benefits In Medical Billing – AOB Complete Guide

The healthcare industry operates with a diverse network of payers and various reimbursement means. From government to private insurance companies, a healthcare practice is simultaneously engaged with multiple payer parties, each linked to a different patient with unique regulations and requirements. This reimbursement workflow and many other factors alone make this already hectic environment business a bit more chaotic if not dealt with properly. With the development and execution of several policies, every healthcare service strives to bring more efficiency and seamlessness to its operations, and the reimbursement system is not an exception in this regard. This is where the assignment of benefits in medical billing comes into play.

What is Assignment of Benefits in Medical Billing?

An assignment of benefits in medical billing is a type of agreement between the healthcare provider, insurance company, and the patient through which a patient authorizes the medical service to collect healthcare policy coverage benefits on their behalf from their insurer for the service they have received from the facility. Once the patient signs this agreement, a direct payment link is made between the facility and the insurance company without communicating every time with the patient, which brings seamlessness and efficiency to the reimbursement process.

Read More: Medical Billing vs Revenue Cycle Management – Key Differences Explained

Medical Services That Use the Assignment of Benefits

Various healthcare providers across different specialties and settings may use Assignment of Benefits (AOB) as part of their billing practices. Some examples of healthcare providers that commonly use AOB include:

Physicians and Medical Practices
Hospitals and Medical Centers
Dentists and Dental Clinics
Physical Therapy and Rehabilitation Centers
Ambulatory Surgery Centers
Imaging Centers

So how does this assignment of benefits in medical billing work? Let’s explore:

What is the Procedure for the Assignment of Benefits in Medical Billing ? – the Methodology

Patient visit.

In the first step, the patient receives medical service from a healthcare facility like a hospital, clinic, etc.

AOB Agreement

Once the services are rendered, the healthcare facility presents an AOB agreement to the patient to transfer their healthcare insurance coverage benefits to the facility directly. The patient is advised to thoroughly review the form before signing for consent as they are establishing a direct form of communication and payment action by authorizing the medical service to collect monetary benefits on their behalf.

Claim Submission

In this stage, the healthcare service document and code all the service encounters with the patient into medical bills and claim, comprising all the details and treatment procedures that are associated with curing the patient. These claims are then sent to the insurance company.

Claim Reviewing

After claim submission, the insurance company meticulously evaluates it on the criteria of its unique requirements, standard policies, and regulations. They also analyze the accuracy of the claim and assess the coverage limit against the payment listed in the claim. If the claim is found to be inaccurate or ineligible for coverage by the insurance company, it reverts back to the facility for denial management.

In the case the claim is approved, the insurance company makes payment directly to the medical service given the AOB policy. This reimbursed amount may cover the full or half of the patient’s medical bills, based on the coverage plan.

Patient Responsibility

Once the insurer pays the billed amount to the medical service, any remaining payment responsibilities come on the shoulder of the patient, like deductibles, co-pays, or services not covered by insurance. The patient may receive an explanation of benefits (EOB) from the insurance company, outlining the details of the claim and any patient responsibility.

Read More: Why Outsourcing Ophthalmology Medical Billing is the Smart

What are the Complications in the Assignment of Benefits in Medical Billing? – the Hindrances

Assignment of benefits does not work well necessarily for all patient encounters. There are some instances where it fails to be applicable or may get denied. So what are those cases? Let’s explore:

Out-of-Network Providers

An insurance policy can deny the assignment of benefits claim if the service acquired by the patient is out of its network of carriers. In this case, the healthcare facility can’t establish any type of reimbursement connection with the insurance policy and must obtain the payments directly from the patient. The patient can then cover their expenditure from their insurance policy.

Non-Covered Services

It is not necessary that a health insurance policy cover all types of patient medical encounters. Every policy has its own limitations and offers reimbursements for medical services according to its regulations. So if a patient seeks a medical facility that is not covered by their healthcare policy, no AOB agreement will be applicable here. In this scenario, a patient is required to pay all the charges from their own pocket.

Preauthorization Requirements

Insurance policies require preauthorization for certain medical treatments, procedures, or medications, and if a patient fails to obtain this preauthorization, the insurance company rejects the assignment of benefits claim, leaving the patient to pay the bills out of their pocket.

Claims Rejection

Even with an AOB in place, insurance companies may reject or deny claims for various reasons, such as incomplete documentation, coding errors, or policy exclusions. In such cases, the provider and the patient may need to work together to resolve the issue and resubmit the claim.

If an AOB gets accepted, it will only cover the services eligible for insurance coverage. Patients are still responsible for any deductibles, co-pays, or non-covered services as per their insurance policy. If the patient fails to pay their portion, it can lead to complications in the billing process.

Billing Disputes

Moreover, billing disputes between healthcare providers and insurance companies are another reason for AOB complications. Occasionally, disputes may arise between the healthcare provider and the insurance company regarding reimbursement rates or claim processing. These disputes can delay or hinder the AOB process, requiring additional efforts to resolve the billing issues. Read More: What Is Down Coding In Medical Billing? – The Complete Guide

Assignment of benefits is an excellent way to increase the efficiency of the reimbursement process in the medical industry. However, for a patient, it is important to thoroughly and meticulously review all the terms and complications associated with the agreement of AOB as it transfers their monetary rights directly to the healthcare service.

Concerning healthcare services, they must ensure a well-communicated, clear, and detailed preparation of this agreement to help patients better understand all the things related to their financial obligations and insurance benefits transfer. Further, the medical facilities should also bring more accuracy and compliance with standards to their billing and overall financial landscape to make the whole process conducive to the acceptance of AOB, effectively navigating the complex web of reimbursements.

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Benefit Claims Procedure Regulation FAQs

A-1: does the regulation apply to benefit claims filed by enrollees in federal programs, such as medicare and medicaid, or to federal employees and their families covered under the federal employees health benefits program (fehbp).

No. The regulation establishes requirements only for employee benefit plans that are covered under ERISA. See ERISA sections 3(1) and 3(2). Such plans are typically benefit programs provided by private-sector employers for their employees (or by unions, acting either independently or jointly with employers, for their members). Government programs, whether federal, state, or local, that are not related to employment, such as Medicaid and Medicare, are not covered by these claims procedure rules; neither are government-sponsored benefit programs for governmental employees, such as the FEHBP or benefit plans provided by state or local governments to their own employees. Such plans have their own specific rules for claims procedures, which may derive from other federal law (for federal programs) or from state or local law.

A-2: Does the regulation apply to benefit claims filed by persons who are both enrollees in Medicare + Choice programs and participants in an ERISA plan?

The regulation applies only to benefits provided under an ERISA plan that are outside the scope of what is regulated by the Medicare program. Benefits provided under ERISA plans vary from plan to plan based on plan design. When a benefit is provided under an ERISA plan pursuant to a separate group arrangement between the Medicare + Choice organization and the employer (or employee organization), even though the benefit is only available to enrollees in a Medicare + Choice program, we have been advised by HHS that the benefit would be outside the scope of what is regulated by the Medicare program. Claims for such benefits would be subject to the provisions of the regulation. The primary source of information about these ERISA benefits is the summary plan description for the plan, which is available on request from the plan administrator. On the other hand, benefits that are covered under a Medicare + Choice contract (whether they are Medicare benefits, additional benefits paid for by Medicare, or supplemental benefits paid for through a premium charged to all enrollees) are subject to the Medicare + Choice rules for organization determinations, appeals, and grievances under 42 CFR 422 and not the provisions of the regulation. See question A-1. A person who is covered by a Medicare + Choice program and wants more information on how these Medicare + Choice rules apply to his or her coverage should call 1.800.Medicare. He or she may also want to consult their Medicare Regional Office and 1.800.Medicare can assist them in contacting the appropriate office.

A-3: Does the regulation apply to a request for a determination whether an individual is eligible for coverage under a plan?

The regulation applies to coverage determinations only if they are part of a claim for benefits. The regulation, at § 2560.503-1(e), defines a claim for benefits, in part, as a request for a plan benefit or benefits made by a claimant in accordance with a plan's reasonable procedure for filing benefit claims. A claim for group health benefits includes pre-service claims (§ 2560.503-1(m)(2)) and post-service claims (§ 2560.503-1(m)(3)). If an individual asks a question concerning eligibility for coverage under a plan without making a claim for benefits, the eligibility determination is not governed by the claims procedure rules. If, on the other hand, the individual files a claim for benefits in accordance with the plan's reasonable procedures, and that claim is denied because the individual is not eligible for coverage under the plan, the coverage determination is part of a claim and must be handled in accordance with the claims procedures of the plan and the requirements of the regulation. See 65 FR at 70255.

A-4: Does the regulation apply to a request for prior approval of a benefit or service when such prior approval is not required under the terms of the plan?

No. If the plan does not require prior approval for the benefit or service with respect to which the approval is being requested, the request is not a claim for benefits (§ 2560.503-1(e)) governed by the regulation. The regulation defines pre-service claim by reference to the plan's requirements, not the claimant's decision to seek the medical care, nor the doctor's decision to provide care. Thus, in the absence of any plan requirement for prior approval, mere requests for advance information on the plan's possible coverage of items or services or advance approval of covered items or services do not constitute pre-service claims under the regulation. See § 2560.503-1(m)(2).

A-5: Is a plan required to treat all questions regarding benefits as claims for benefits under the plan?

No. The regulation does not govern casual inquiries about benefits or the circumstances under which benefits might be paid under the terms of a plan. On the other hand, a group health plan that requires the submission of pre-service claims, such as requests for preauthorization, is not entirely free to ignore pre-service inquiries where there is a basis for concluding that the inquirer is attempting to file or further a claim for benefits, although not acting in compliance with the plan's claim filing procedures. In such a case, the regulation requires the plan to inform the individual of his or her failure to file a claim and the proper procedures to be followed. Specifically, this type of notification is required where there is a communication by a claimant or authorized representative (e.g., attending physician) that is received by a person or organizational unit customarily responsible for handling benefit matters (e.g., personnel office) and that communication names the specific claimant, specific medical condition or symptom and a specific treatment, service, or product for which approval is requested. Under the regulation, notice must be furnished as soon as possible, but not later than 24 hours in the case of urgent care claims or 5 days in the case of non-urgent claims. Notice may be oral, unless a written notification is requested. See § 2560.503-1(c)(1).

A-6: Do the requirements applicable to group health plans apply to dental benefits offered as a stand-alone plan or as part of a group health plan?

Yes, in both cases. The regulation defines group health plan as an employee welfare benefit plan within the meaning of ERISA section 3(1) to the extent that such plan provides medical care within the meaning of section 733(a) of ERISA. See § 2560.503-1(m)(6). Section 733(a)(2) defines medical care, in part, to mean the diagnosis, cure, mitigation, treatment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body. Accordingly, for purposes of the claims procedure rules, the provision of dental benefits, either as part of a larger welfare plan, or as a stand-alone plan, would be subject to the requirements of the regulation applicable to group health plans.

A-7: Do the requirements applicable to group health plans apply to prescription drug benefit programs offered as a stand-alone plan or as part of a group health plan?

Yes, in both cases. Prescription drug benefits would, like dental benefits, constitute medical care within the meaning of Section 733(a)(2). See question A-6. Accordingly, the provision of prescription drug benefits, either as a stand-alone plan, or as part of a group health plan, would be subject to the requirements of the regulation applicable to group health plans. Whether, and under what circumstances, specific practices permitted under the plan, such as the submission of a prescription to a pharmacy or pharmacist, will constitute a claim for benefits governed by the claims procedure rules will depend on the terms of the plan.

A-8: Do the requirements applicable to group health plans apply to contractual disputes between health care providers (e.g., physicians, hospitals) and insurers or managed care organizations (e.g., HMOs)?

No, provided that the contractual dispute will have no effect on a claimant's right to benefits under a plan. The regulation applies only to claims for benefits. See questions A-3, A-4, A-5. The regulation does not apply to requests by health care providers for payments due them -- rather than due the claimant -- in accordance with contractual arrangements between the provider and an insurer or managed care organization, where the provider has no recourse against the claimant for amounts, in whole or in part, not paid by the insurer or managed care organization.

The following example illustrates this principle. Under the terms of a group health plan, participants are required to pay only a $10 co-payment for each office visit to a preferred provider doctor listed by a managed care organization that contracts with such doctors. Under the preferred provider agreement between the doctors and the managed care organization, the doctor has no recourse against a claimant for amounts in excess of the co-payment. Any request by the doctor to the managed care organization for payment or reimbursement for services rendered to a participant is a request made under the contract with the managed care organization, not the group health plan; accordingly, the doctor's request is not a claim for benefits governed by the regulation.

On the other hand, where a claimant may request payments for medical services from a plan, but the medical provider will continue to have recourse against the claimant for amounts unpaid by the plan, the request, whether made by the claimant or by the medical provider (e.g., in the case of an assignment of benefits by the claimant) would constitute a claim for benefits by the claimant. For information on authorized representatives of claimants. See questions B-1, B-2, B-3.

A-9: What benefits are disability benefits subject to the special rules applicable under the regulation for disability claims?

A benefit is a disability benefit under the regulation, subject to the special rules for disability claims, if the plan conditions its availability to the claimant upon a showing of disability. It does not matter how the benefit is characterized by the plan or whether the plan as a whole is a pension plan or a welfare plan. If the claims adjudicator must make a determination of disability in order to decide a claim, the claim must be treated as a disability claim for purposes of the regulation. As the department stated in the preamble to the regulation, 65 FR at 70247, n.4, where a single plan provides more than one type of benefit, it is the department's intention that the nature of the benefit should determine which procedural standards apply to a specific claim, rather than the manner in which the plan itself is characterized. Accordingly, plans, including pension plans, that provide benefits conditioned upon a determination of disability must maintain procedures for claims involving such benefits that comply with the requirements of the regulation applicable to disability claims, including the requirements for de novo review, the consultation requirement for medical judgments, the limit on appeal levels, the time limits for deciding disability claims, and the disclosure requirements in connection with extensions of time.

However, if a plan provides a benefit the availability of which is conditioned on a finding of disability, and that finding is made by a party other than the plan for purposes other than making a benefit determination under the plan, then the special rules for disability claims need not be applied to a claim for such benefits. For example, if a pension plan provides that pension benefits shall be paid to a person who has been determined to be disabled by the Social Security Administration or under the employer's long term disability plan, a claim for pension benefits based on the prior determination that the claimant is disabled would be subject to the regulation's procedural rules for pension claims, not disability claims.

A-10: Do the time frames in these rules govern the time within which claims must be paid?

No. While the regulation establishes time frames within which claims must be decided, the regulation does not address the periods within which payments that have been granted must be actually paid or services that have been approved must be actually rendered. Failure to provide services or benefit payments within reasonable periods of time following plan approval, however, may present fiduciary responsibility issues under Part 4 of title I of ERISA.

A-11: When a group health plan participant presents a prescription to a pharmacy to be filled at a cost to the participant determined by reference to a formula or schedule established in accordance with the terms of such plan and with respect to which the pharmacy exercises no discretion on behalf of the plan, does the regulation require that the presentation of the prescription be treated as a claim for benefits?

No. As indicated in question A-7, whether, and under what circumstances, specific practices permitted under a plan, such as the presentation of a prescription to a pharmacy, will constitute a claim for benefits governed by the claims procedure rules will depend on the terms of the plan. In this regard, a claim for benefits is defined in § 2560.503-1(e) to mean a request for a plan benefit or benefits made by a claimant in accordance with a plan's reasonable procedure for filing benefit claims. Accordingly, whether, and to what extent, the presentation of a prescription to a pharmacy which exercises no discretion on behalf of the plan will constitute a request for a plan benefit will be determined by reference to the plan's procedures for filing benefit claims.

It is not uncommon for group health plans to have arrangements with preferred or network providers (e.g., doctors, physical therapists, pharmacies, optometrists) to provide medical care-related services or products at a predetermined cost to covered plan participants and with respect to which the providers exercise no discretion on behalf of the plan. It is the view of the department that neither the statute nor the claims procedure regulation requires that a plan treat interactions between participants and preferred or network providers under such circumstances as a claim for benefits governed by the regulation. Moreover, if the pharmacy refuses to fill the prescription absent payment of the entire cost by the participant, the regulation does not require that this refusal be treated as an adverse benefit determination under the regulation. It should be noted, however, that where a plan provides such benefits the plan must maintain a reasonable procedure, in accordance with the regulation, for processing claims of participants relating to such benefits.

A-12: Does the regulation apply to benefit claims filed by participants in top hat plans, e.g., plans that are unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees?

Yes. The regulation establishes requirements for all employee benefit plans that are covered under Part 5 of ERISA, which would include top hat plans. Certain top hat plans are specifically excluded from parts of ERISA (see, e.g., sections 201(2); 301(a)(3); 401(a)(1)), but that exclusion does not apply to section 503, under which the regulation was promulgated. In this regard, paragraph (b)(2) of the regulation requires that a description of the plan's claims procedures must be included as part of the plan's summary plan description meeting the requirements of 29 CFR § 2520.102-3. Where a top hat plan is not required to furnish summary plan descriptions, pursuant to 29 CFR §§ 2520.104-23 or 2520.104-24, such plan may satisfy the requirements of paragraph (b)(2) of the regulation by taking steps reasonably designed to ensure that participants in such plans are made aware of the existence of the plan's claims procedures in conjunction with enrollment in the plan and how to obtain such procedures upon request.

A-13: Would a determination of disability for purposes of receiving a premium waiver under a contributory life insurance plan be governed by the special rules applicable to disability benefits under the claims procedure regulation?

Yes. A benefit is a disability benefit under the regulation, subject to the special rules for disability claims, if the plan conditions availability of the benefit on a showing of disability. As noted in question A-9, however, if a plan provides a benefit the availability of which is conditioned on a finding of disability, and that finding is made by a party other than the plan for purposes other than making a benefit determination under the plan, then the special rules for disability claims need not be applied to a claim for such benefits. The department notes that the inclusion of a premium waiver in a plan that is not otherwise covered by ERISA would not, in and of itself, cause the plan to become subject to the regulation.

B-1: May a plan require that a claimant complete and file a form identifying any person authorized to act on his or her behalf with respect to a claim?

Yes, with one exception. The regulation provides that a reasonable claims procedure may not preclude an authorized representative of a claimant from acting on behalf of a claimant with respect to a benefit claim or appeal of an adverse benefit determination. The regulation also provides, however, that a plan may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of the claimant. Completion of a form by the claimant identifying the authorized representative would be one method for making such a determination.

The one exception is where a claim involves urgent care. In such instances, a plan must, without regard to the plan's procedures for identifying authorized representatives, permit a health care professional with knowledge of the claimant's medical condition (e.g., a treating physician) to act as the authorized representative of the claimant. This exception is intended to enable a health care professional to pursue a claim on behalf of a claimant under circumstances where, for example, the claimant is unable to act on his or her own behalf. See § 2560.503-1(b)(4).

B-2: Does an assignment of benefits by a claimant to a health care provider constitute the designation of an authorized representative?

No. An assignment of benefits by a claimant is generally limited to assignment of the claimant's right to receive a benefit payment under the terms of the plan. Typically, assignments are not a grant of authority to act on a claimant's behalf in pursuing and appealing a benefit determination under a plan. In addition, the validity of a designation of an authorized representative will depend on whether the designation has been made in accordance with the procedures established by the plan, if any.

B-3: When a claimant has properly authorized a representative to act on his or her behalf, is the plan required to provide benefit determinations and other notifications to the authorized representative, the claimant, or both?

Nothing in the regulation precludes a plan from communicating with both the claimant and the claimant's authorized representative. However, it is the view of the department that, for purposes of the claims procedure rules, when a claimant clearly designates an authorized representative to act and receive notices on his or her behalf with respect to a claim, the plan should, in the absence of a contrary direction from the claimant, direct all information and notifications to which the claimant is otherwise entitled to the representative authorized to act on the claimant's behalf with respect to that aspect of the claim (e.g., initial determination, request for documents, appeal, etc.). In this regard, it is important that both claimants and plans understand and make clear the extent to which an authorized representative will be acting on behalf of the claimant.

B-4: What kind of administrative processes and safeguards must a plan have in place to ensure and verify appropriately consistent decision making?

The department did not intend to prescribe any particular process or safeguard to ensure and verify consistent decision making by plans. To the contrary, the department intended to preserve the greatest flexibility possible for designing and operating claims processing systems consistent with the prudent administration of a plan. The department believes that prudent plan administration requires ensuring that similarly situated claims are, under similar circumstances, decided in a consistent manner. Consistency in the benefit claims determinations might be ensured by applying protocols, guidelines, criteria, rate tables, fee schedules, etc. Consistent decision making might be ensured and verified by periodic examinations, reviews, or audits of benefit claims to determine whether the appropriate protocols, guidelines, criteria, rate tables, fee schedules, etc. were applied in the claims determination process. See § 2560.503-1(b)(5).

B-5: For purposes of furnishing relevant documents to a claimant, what kind of disclosure is required to demonstrate compliance with the administrative processes and safeguards required to ensure and verify appropriately consistent decision making in making the benefit determination?

What documents will be required to be disclosed will depend on the particular processes and safeguards that a plan has established and maintains to ensure and verify appropriately consistent decision making. See 65 FR at 70252. The department does not anticipate new documents being developed solely to comply with this disclosure requirement. Rather, the department anticipates that claimants who request this disclosure will be provided with what the plan actually used, in the case of the specific claim denial, to satisfy this requirement. The plan could, for example, provide the specific plan rules or guidelines governing the application of specific protocols, criteria, rate tables, fee schedules, etc. to claims like the claim at issue, or the specific checklist or cross-checking document that served to affirm that the plan rules or guidelines were appropriately applied to the claimant's claim. Plans are not required to disclose other claimants' individual records or information specific to the resolution of other claims in order to comply with this requirement. See § 2560.503-1(m)(8)(iii). See question D-12.

B-6: Do the regulation's limits on the use of pre-dispute arbitration extend to other actions that a participant or beneficiary might pursue with regard to a health care provider or other person or entity?

No. The regulation is intended to regulate pre-dispute arbitration only with respect to group health and disability benefits provided under ERISA-covered plans. The regulation is not intended to affect the enforceability of a pre-dispute arbitration agreement with respect to any other claims or disputes. Accordingly, the regulation should not be read to affect the obligation of a participant or beneficiary to arbitrate such other claims and disputes within the scope of the arbitration agreement. See 29 CFR § 2560.503-1(c)(3)(iii).

C-1: When does the time period for making an initial decision on a claim begin to run?

The time for making an initial claims decision begins to run when the claim is filed in accordance with a plan's reasonable filing procedures, regardless of whether the plan has all of the information necessary to decide the claim at the time of the filing.

For purposes of calculating the time period within which a claim must be decided, a plan cannot extend the time period by treating as filed only those claims with respect to which all the information necessary to make a decision has been submitted (often referred to as clean claims). See § 2560.503-1(f)(4).

C-2: May a plan's claims procedures require claimants to submit relevant medical information or information relating to coordination of benefits prior to the plan's making a decision on a claim?

Plans have considerable flexibility in defining the procedures to be followed for the initiation, processing, and appeal of benefit claims. However, while plans may require the submission of specific information necessary to a benefit determination under the terms of the plan, including medical and coordination of benefit information, the plan may nonetheless have to make a decision on the claim before receiving such information. As noted in question C-1, the time periods applicable to deciding claims begin to run on the date a claim is filed in accordance with reasonable procedures of the plan, without regard to whether all the information necessary to make a benefit determination accompanies the filing. See § 2560.503-1(f)(4).

C-3: If the period within which a group health claim must be decided is ending and the claimant has yet to furnish all the information necessary to decide the claim, may the plan extend the time period for deciding the claim and, if so, for how long?

In general, a group health plan may unilaterally extend the decision making on both pre-service and post-service claims for 15 days after the expiration of the initial period, if the administrator determines that such an extension is necessary for reasons beyond the control of the plan. There is no provision for extensions in the case of claims involving urgent care.

If the reason for taking the extension is the failure of the claimant to provide information necessary to decide the claim, and the claimant is so notified of this fact, the time period for making the decision is suspended (tolled) from the date of the notification to the claimant to the earlier of:

The date on which a response from the claimant is received by the plan
The date established by the plan for the furnishing of the requested information (at least 45 days)

The extension period (15 days) – within which a decision must be made by the plan – will begin to run from the date on which the claimant's response is received by the plan (without regard to whether all of the requested information is provided) or, if earlier, the due date established by the plan for furnishing the requested information (at least 45 days). See §§ 2560.503-1(f)(2)(iii) (A) and (B); 2560.503-1(f)(4); 2560.503-1(i)(4). Also see 65 FR at 70250, n.21.

C-4: Many plans, including group health and disability plans, require claimants to submit to examination by an expert or experts of the plan's choosing in connection with the plan's consideration of the claimant's claim. How do the regulation's time limits apply to the completion of such examinations?

The regulation's time limits begin to run when a claim is filed in accordance with the reasonable procedures of the plan for filing claims. See question C-1. A plan that requires a physical or other examination of the claimant to evaluate a claim must design a process that provides for decision making within the time frames of the regulation.

If necessary, however, in the circumstances of a specific claim, a plan may take an extension of time to enable the claimant to submit requested information (including the report of a required examination). The regulation's provisions on extensions of time and tolling, discussed in question C-3, would apply to these situations to determine when an extension is permitted and when an extension would begin and end. Under those rules, when a plan takes an extension of time because additional information must be obtained from a claimant, the claimant must be provided at least 45 days within which to provide the information or submit to the requested examination. Plans may, of course, provide claimants longer periods of time for this purpose.

C-5: May a claimant agree to an extension or further extension of the time period within which a plan must decide a claim?

Yes. The only limits on extensions of time established by the regulation are imposed on plans. Claimants may voluntarily agree to provide a plan additional time within which to make a decision on a claim, even under circumstances where the plan could not unilaterally extend the decision making period, such as in the case of a claim involving urgent care or a claim on appeal.

See §§ 2560.503-1(f)(2)(i); 2560.503-1(i). Also see 65 FR at 70250, n.21.

C-6: What responsibility does the plan have for determining whether any specific claim involves urgent care and must therefore be decided on an expedited basis?

A plan has a duty to make this determination on the basis of the information provided by, or on behalf of, the claimant. A claim involving urgent care is any claim for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations could seriously jeopardize the life or health of the claimant or the claimant's ability to regain maximum function, or -- in the opinion of a physician with knowledge of the claimant's medical condition -- would subject the claimant to severe pain that cannot be adequately managed without the care or treatment that is the subject of the claim.

In determining whether a claim involves urgent care, the plan must apply the judgment of a prudent layperson who possesses an average knowledge of health and medicine. However, if a physician with knowledge of the claimant's medical condition determines that a claim involves urgent care, the claim must be treated as an urgent care claim. See § 2560.503-1(m)(1).

C-7: Under the regulation, urgent care claims must be decided as soon as possible, taking into account the medical exigencies, but not later than 72 hours after receipt, and pre-service claims must be decided within a reasonable period of time appropriate to the medical circumstances, but not later than 15 days after receipt. Can a plan's claims procedures require claimants to explain or describe whether, and what, medical exigencies or medical circumstances exist?

Yes. While the department has indicated that the time periods for decision making are generally maximum periods and not automatic entitlements, the department recognizes that assessments of the appropriate timeframe for making benefit determinations will, in large part, be dependent on the information provided by the claimant. Requesting specific information from the claimant regarding whether and what medical circumstances exist that may give rise to a need for expedited processing of the claim would appear to facilitate claims processing and, therefore, would not, in the view of the department, be an unreasonable plan request. If, on the other hand, the plan believes based on its own review of the claim that expedited processing is required, it is the view of the department that the claim must be processed on an expedited basis without regard to the claimant's failure to provide information relating to whether expedited processing is necessary.

C-8: If a claimant requests a plan to extend a previously approved course of treatment, by either increasing the number of treatments or the period of time for treatments, and that request is determined by the claimant's treating physician to be a claim involving urgent care, within what period must the plan approve or deny the claimant's request?

Under the concurrent care provisions of the rule, any request that involves both urgent care and the extension of a course of treatment beyond the period of time or number of treatments previously approved by the plan must be decided as soon as possible, taking into account the medical exigencies, and notification must be provided to the claimant within 24 hours after receipt of the claim, when the request is made at least 24 hours prior to the expiration of the prescribed period of time or number of treatments. If such a request is not made at least 24 hours prior to the expiration of the prescribed period of time or number of treatments, the request must be treated as a claim involving urgent care and decided in accordance with the urgent care claim timeframes, i.e., as soon as possible, taking into account the medical exigencies, but not later than 72 hours after receipt. See § 2560.503-1(f)(2)(i) and (ii) (B).

If a request to extend a course of treatment beyond the period of time or number of treatments previously approved by the plan does not involve urgent care, the request may be treated as a new benefit claim and decided within the timeframe appropriate to the type of claim, i.e., as a pre-service claim or a post-service claim. § 2560.503-1(f)(2)(iii).

C-9: In the case of a group health plan's decision to reduce or terminate a previously approved course of treatment, must claimants be afforded at least 180 days to appeal the plan's revised determination before the benefit can be reduced or terminated?

No. Under the concurrent care provisions of the rule, any reduction or termination of a course of treatment (other than by plan amendment) before the end of the previously approved period or number of treatments is treated as an adverse benefit determination. In such cases the rule requires that the plan administrator provide the claimant sufficient advance notice of the reduction or termination to allow the claimant to appeal and obtain a determination before the benefit is reduced or terminated. Generally, claimants must be afforded at least 180 days following an adverse benefit determination to appeal that determination. If the 180 day rule applied to appeals under concurrent care provisions of the regulations, notifications of reductions or terminations would, in every instance, have to be given at least six months in advance of the termination or reduction. This was not the intention of the department. Accordingly, while the department is of the view that plans must afford claimants a reasonable period of time within which to develop their appeal of a proposed reduction or termination, plans are not required to assume that claimants will need the full 180 days to file such an appeal before the benefit can be reduced or terminated under the special rules governing concurrent care claims. See § 2560.503-1(f)(2)(ii) (A).

C-10: In what circumstances, if any, would a post-service claim be a claim involving urgent care?

Post-service claims are those claims with respect to which plan approval is not a prerequisite to obtaining medical services and payment is being requested for medical care already rendered to the claimant. Accordingly, a post-service claim would never constitute a claim involving urgent care within the meaning of the regulation.

A post-service claim is defined in the regulation as any claim for a benefit under a group health plan that is not a pre-service claim. Pre-service claims are those claims with respect to which the terms of the plan condition receipt of the benefit, in whole or in part, on approval of the benefit in advance of obtaining medical care. See question C-6, § 2560.503-1(m)(1), (2), and (3).

C-11: If a claim is determined to involve urgent care when it is initially filed, must it automatically continue to be treated as urgent if it is denied and the claimant files an appeal, regardless of whether, at that time, medical services have actually been provided and the only question to be resolved is who will pay for such services?

No. The nature of a claim or a request for review of an adverse benefit determination should be judged as of the time the claim or review is being processed. If requested services have already been provided between the time the claim was denied and a request for review is filed, the claim no longer involves urgent care because use of the post-service time frames for deciding the appeal could not jeopardize the claimant's life, health, or ability to regain maximum function, or subject the claimant to severe pain. See § 2560.503-1(m)(1).

C-12: If a claimant submits medical bills to a plan for reimbursement or payment, and the plan, applying the plan's limits on co-payment, deductibles, etc., pays less than 100% of the medical bills, must the plan treat its decision as an adverse benefit determination?

Under the regulation, an adverse benefit determination generally includes any denial, reduction, or termination of, or a failure to provide or make payment (in whole or in part) for, a benefit. In any instance where the plan pays less than the total amount of expenses submitted with regard to a claim, while the plan is paying out the benefits to which the claimant is entitled under its terms, the claimant is nonetheless receiving less than full reimbursement of the submitted expenses. Therefore, in order to permit the claimant to challenge the plan's calculation of how much it is required to pay, the decision is treated as an adverse benefit determination under the regulation. Providing the claimant with the required notification of adverse benefit determination will give the claimant the information necessary to understand why the plan has not paid the unpaid portion of the expenses and to decide whether to challenge the denial, e.g., the failure to pay in full. This approach permits claimants to challenge whether, for example, the plan applied the wrong co-payment requirement or deductible amount. The fact that the plan believes that a claimant's appeal will prove to be without merit does not mean that the claimant is not entitled to the procedural protections of the rule. This approach to informing claimants of their benefit entitlements with respect to specific claims, further, is consistent with current practice, in which Explanation of Benefits forms routinely describe both payable and non-payable portions of claim-related expenses. See § 2560.503-1(m)(4).

C-13: Under what circumstances is a plan required to notify a claimant of a benefit determination that is not an adverse benefit determination, i.e., a complete grant of a claim?

In the case of urgent care claims and pre-service claims, the regulation requires that claimants be apprised of the plan's benefit determination, whether the determination is adverse or a complete grant. The rules require that this notification be furnished in accordance with the timeframes generally applicable to urgent care and pre-service claims. There is no specific notification requirement applicable to post-service claims that are fully granted. See § 2560.503-1(f)(2)(i) and (iii).

C-14: What information is a plan required to provide when giving notice of a claim determination that is not adverse (that has been completely granted), in the case of an urgent care or pre-service claim?

The regulation does not specify the information that must be provided in notices of benefit determinations that are not adverse. However, in accordance with the regulation's general requirement of reasonableness, the department anticipates that such notices will contain sufficient information to fully apprise the claimant of the plan's decision to approve the requested benefits. See § 2560.503-1(f)(2)(i) and (iii) (A).

C-15: When a plan has approved a benefit that will be provided over a period of time, such as a series of chemotherapy treatments, must the plan notify the claimant when the benefits end?

No. Provided that the plan complied with the regulation in adequately notifying the claimant regarding the scope of the benefit that was originally approved (e.g., for how long, how many treatments, etc.) and further provided that the plan has not decided to reduce or terminate early the course of treatment that was previously approved, the regulation does not require the plan to provide a formal notification that the course of treatment is coming to an end. See § 2560.503-1(f)(2)(ii).

C-16: May a notice of an adverse benefit determination generally state that a rule, guideline or protocol may have been relied upon in making the benefit determination and satisfy the requirements of the regulation?

No. The regulation provides that if an internal rule, guideline, protocol, or similar criterion was relied upon in making an adverse benefit determination, the notification of the adverse benefit determination must either set forth the rule, guideline, protocol, or criterion or indicate that such was relied upon and will be provided free of charge to the claimant upon request. It would be sufficient, in the view of the department, in such a case, to indicate that an internal rule, etc., had been relied upon without specifying the identity of the specific rule and that the specific rule, etc. would be furnished to the claimant upon request. A notice that merely indicates, however, that a rule, guideline, protocol, or similar criterion may have been relied upon does not provide the claimant any specific information about the basis on which his or her claim was decided. Inasmuch as plans will know in every instance what rules, protocols, guidelines, etc. were relied upon in making a determination, providing an indication whether such was relied upon should not be difficult. Moreover, the department is concerned that the routine inclusion of such a statement in all adverse benefit determination notifications may undermine the significance of the required disclosure. See § 2560.503-1(g)(1)(v) (A). For similar reasons, a general statement in an adverse benefit determination notice would not be considered as satisfying the requirements of § 2560.503-1(g)(1)(v) (B). Also see § 2560.503-1(j)(5)(i) and (ii).

C-17: Is a plan required to provide a copy of an internal rule, guideline, protocol, or similar criterion when the applicable rule, guideline, protocol, or criterion was developed by a third party which, for proprietary reasons, limits the disclosure of that information?

Yes. It is the view of the department that where a rule, guideline, protocol, or similar criterion serves as a basis for making a benefit determination, either at the initial level or upon review, the rule, guideline, protocol, or criterion must be set forth in the notice of adverse benefit determination or, following disclosure of reliance and availability, provided to the claimant upon request. However, the underlying data or information used to develop any such rule, guideline, protocol, or similar criterion would not be required to be provided in order to satisfy this requirement. The department also has taken the position that internal rules, guidelines, protocols, or similar criteria would constitute instruments under which a plan is established or operated within the meaning of section 104(b)(4) of ERISA and, as such, must be disclosed to participants and beneficiaries. See §§ 2560.503-1(g)(v) (A) and (j)(5)(i); 65 FR at 70251. Also see §§ 2560.503-1(h)(2)(iii) and 2560.503-1(m)(8)(i); Advisory Opinion 96-14A (July 31, 1996).

C-18: If a plan conditions continuation of disability benefit payments on a periodic confirmation of the claimant's disability and, in conjunction with such a confirmation, determines that the claimant is no longer disabled and, accordingly, terminates payment of benefits, must the plan treat the termination as an adverse benefit determination under the regulation?

Yes. Under the regulation, an adverse benefit determination includes any denial, reduction, or termination of a benefit. Accordingly, where a plan terminates the payment of disability benefits under such circumstances, the plan is required to provide the claimant a notification of adverse benefit determination and the right to appeal that determination consistent with the regulation. See 29 CFR § 2560.503-1(m)(4), (g) and (h). If, on the other hand, a plan provides for the payment of disability benefits for a pre-determined, fixed period (e.g., a specified number of weeks or months or until a specified date), the termination of benefits at the end of the specified period would not constitute an adverse benefit determination under the regulation. Any request by a claimant for payment of disability benefits beyond the specified period, therefore, would constitute a new claim. See 29 CFR § 2560.503-1(f)(3). Also see 29 CFR § 2560.503-1(f)(2)(ii).

C-19: Does the regulation limit a plan's ability to establish a maximum period for the filing of initial claims for benefits?

No. The regulation does not contain any specific rules governing the period of time that must be given to claimants to file their claims. However, a plan's claim procedure nonetheless must be reasonable and not contain any provision, or be administered in any way, that unduly inhibits or hampers the initiation or processing of claims for benefits. Adoption of a period of time for filing claims that serves to unduly limit claimants' reasonable, good faith efforts to make claims for and obtain benefits under the plan would violate this requirement. See 29 CFR § 2560.503-1(b)(3).

C-20: What timeframes apply when an extension of time is required by a plan in connection with an initial disability benefit determination?

The regulation addresses two situations in which a plan may have an extension of time for making a disability benefit determination. The first situation is when a decision cannot be rendered due to any matter beyond the control of the administrator other than the need for additional information from the claimant. In this situation, the extension period is added to the period within which the determination is required to be made. For example, if prior to the end of the initial 45-day period, the administrator determines that, for reasons beyond its control, a decision cannot be rendered, the plan may take up to an additional 30 days (i.e., 30 days in addition to the initial 45-day period). Similarly, if a decision cannot, for similar reasons, be rendered within the initial extension period, the plan may take up to an additional 30 days (i.e., 30 days in addition to the initial 30-day extension period) or up to a total of 105 days to decide the pending claim. See 29 CFR § 2560.503-1(f)(3). The second situation is when the plan requires additional information from the claimant to make a benefit determination. This situation is governed by the principles in question C-3.

C-21: If a plan determines that a claim does not provide sufficient information, must the plan take an extension of time and request additional information from the claimant?

No. The provisions governing extensions of time are permissive and not mandatory. As such, plans may provide for taking extensions of time or not, and plan administrators may be given the discretion to decide whether to take an extension of time in connection with any individual claim. Consequently, as a general matter, a plan may deny claims at any point in the administrative process on the basis that it does not have sufficient information; such a decision would allow the claimant to advance to the next stage of the claims process.

C-22: If a group health plan determines that an extension of time is necessary in order to obtain additional information from a claimant, may the administrator as part of the notice to the claimant of the need for the extension of time also include a notice of adverse benefit determination applicable if the claimant fails to provide any information within the period prescribed by the plan (i.e., at least 45 days)?

Yes. If the notice clearly states that the claim will be denied if the claimant fails to submit any information in response to the plan's request, it is the view of the department that the furnishing of a combined notice would not be contrary to the regulation, provided that the combined notice satisfied the content requirements applicable to both the extension notice and the notice of adverse benefit determination. In this regard, the notice of adverse benefit determination should make clear that the period for appealing the denied claim begins to run at the end of the period prescribed in the notice for submitting the requested information (or such later date as may be provided under the terms of the plan). See 29 CFR § 2560.503-1(f)(2) and (3).

D-1: May a plan require that requests for review of adverse benefit determinations be made in writing?

Yes, with one exception. The regulation provides that a plan's claims procedure must provide a claimant with a reasonable opportunity for a full and fair review of a denied claim. A claims procedure that requires requests for reviews of adverse benefit determinations to be made in writing would not be unreasonable in that regard, except with respect to claims involving urgent care. In the case of urgent care claims, the regulation requires that a plan's procedures permit requests for expedited appeals to be submitted orally or in writing by the claimant. See § 2560.503-1(h)(2) and (3)(vi).

D-2: May the direct supervisor of the person(s) who makes initial claim determinations serve as the appropriate named fiduciary for purposes of reviewing those claims on appeal?

Yes. The only limitation that the rule imposes on who can serve as the named fiduciary for purposes of reviewing adverse benefit determinations is that the named fiduciary cannot be either the individual who made the initial benefit determination that is the subject of the appeal or a subordinate of that individual. The rule further requires that the reviewer, whoever that individual is, may not afford deference to the initial determination. That is, the reviewer must consider the full record of the claim and make an independent decision on whether it should be granted. See § 2560.503-1(h)(3)(ii).

D-3: If a group health plan provides for two levels of review, rather than one, following an adverse benefit determination, what standards, if any, govern the second level of review?

Where a plan provides for two levels of review on appeal, it is the view of the department that the second level of review is subject to the same standards that apply to the first level of review. For example, the second-level reviewer may not afford deference to the decision at the first level of review, and the reviewer must not be the same person who made the first level review decision on the claim or a subordinate of that person. See §§ 2560.503-1(c)(2) and 2560.503-1(h)(3)(ii).

D-4: If a group health plan provides for two levels of review following an adverse benefit determination, within what period must a determination be made at each level?

In the case of pre-service claims, a maximum of 15 days is provided for a benefit determination at each level. In the case of post-service claims, a maximum of 30 days is provided for a determination at each level. See § 2560.503-1(i)(2)(ii) and (iii).

For example, if a claimant appeals a pre-service adverse benefit determination, and the plan provides for two levels of review at the appeal level, the plan must make a determination within a reasonable period of time, taking into account the medical circumstances, but no later than 15 days after receipt of the appeal. If that claim is again denied at the first level of appeal and the claimant appeals that denial to the second level review stage, the plan must again make a determination within a reasonable period of time, taking into account the medical circumstances, but not later than 15 days after the plan's receipt of the claimant's second level appeal request.

In the case of urgent care claims, the regulation does not prescribe any specific period within which a determination must be made at each level of a two-level review process for such claims. Given the principles underlying the provisions governing pre- and post-service claims, however, it is the view of the department that each level of review of an urgent care claim would have to be completed in sufficient time to ensure that the total period for completing the reviews would not exceed the maximum period otherwise applicable to a process with only one level of review – as soon as possible, taking into account the medical exigencies, but not longer than 72 hours. See § 2560.503-1(i)(2)(i).

D-5: If a group health plan provides for two levels of review following an adverse benefit determination, how much time must a claimant be afforded to appeal the first level review determination to the second level review?

Under the regulation, claimants must be afforded at least 180 days following receipt of an adverse benefit determination to appeal that determination. In the case of a plan with a two-level review process, the 180-day rule applies to the period to be afforded claimants to appeal to the first review level. While the regulation does not specifically address the period of time to be afforded claimants to pursue the second level of review, the regulation requires that a plan's procedures must nonetheless be reasonable and, therefore, it is the view of the department that plans must afford claimants a reasonable opportunity to pursue a full and fair review at the second review level. See § 2560.503-1(h)(1) and (3)(i).

D-6: If a group health plan provides for two levels of review following an adverse benefit determination, may the plan use non-binding arbitration as a means for deciding the appealed claim?

Yes. A plan's procedures may provide for arbitration of benefit disputes at one of the two levels of appeal, provided two conditions are met. First, the arbitration must be conducted in a manner that will ensure that the timeframes and notice requirements otherwise applicable to appeals will be satisfied. Second, the arbitration must be non-binding – that is, the arbitration may not limit the claimant's ability to challenge the benefit determination in court. See § 2560.503-1(c)(4). The regulation also permits a plan to offer binding arbitration to a claimant after completion of the plan's appeal process. See questions E-1and E-2

D-7: May the board of trustees or committee of a multi-employer group health plan or multi-employer disability benefit plan that generally reviews appealed benefit claims at their quarterly meetings provide for two levels of appeal consistent with the regulation?

Yes, under limited circumstances. In general, the regulation permits plans to maintain two levels of review for adverse benefit determinations and establishes special timing rules for making benefit decisions at each level of the review process. See §§ 2560.503-1(c)(2), 2560.503-1(i)(2)(ii) and (iii), 2560.503-1(i)(3). The regulation also provides special timing rules applicable to boards of trustees or committees of multi-employer group health plans and multi-employer disability benefit plans, pursuant to which such plans are excepted from the otherwise applicable timing requirements. Under these rules, such boards or committees generally are permitted to defer the decisions on adverse benefit determination appeals until the next regularly scheduled meeting of the plan's board or committee. See §§ 2560.503-1(i)(2)(iii) (B), 2560.503-1(i)(3)(ii). It is the view of the department that a multi-employer group health plan or a disability benefit plan could not, in a manner consistent with the regulation, rely on both the special rules governing the maintenance of two appeal levels and the special rules for regularly scheduled boards of trustees or committee meetings. On the other hand, the department does not believe a multi-employer plan is foreclosed by the regulation from electing to make appeal determinations in accordance with the special rules governing two levels of appeal, rather than in accordance with the quarterly meeting provisions of the regulation. In addition, there is nothing in the regulation that would foreclose a multi-employer plan from making benefit review determinations in accordance with the quarterly meeting provisions and, following such determinations, providing claimants with an opportunity to voluntarily pursue an additional (second) review of their claim. See § 2560.503-1(c)(3).

D-8: Does the regulation's requirement of consultation with appropriate health care professionals limit the discretion of a plan fiduciary reviewing an adverse benefit determination with respect to the advice the fiduciary may seek in resolving the issues raised by the review?

The regulation requires, for group health and disability claims, that the fiduciary deciding an appeal of an adverse benefit determination based in whole or in part on a medical judgment consult with an appropriate health care professional. This requirement of consultation is intended to ensure that the fiduciary deciding a claim involving medical issues is adequately informed as to those issues. The consultation requirement, however, is not intended to constrain the fiduciary from consulting any other experts the fiduciary considers appropriate under the circumstances. For example, in connection with the appeal of a denied disability claim, a fiduciary may consider it appropriate to consult with vocational or occupational experts. In all cases, a fiduciary must take appropriate steps to resolve the appeal in a prudent manner, including acquiring necessary information and advice, weighing the advice and information so obtained, and making an independent decision on the appeal. The regulation's provision for consultation with a health care professional is not intended to alter the fiduciary standards that apply to claims adjudication.

D-9: Under what circumstances must a group health plan (or disability benefit plan) disclose the identity of experts consulted in the course of deciding a benefit claim?

The regulation provides that, in order to allow claimants a reasonable opportunity for a full and fair review of their claim, a plan's claims procedures must provide for the identification of medical (or vocational) experts whose advice was obtained on behalf of the plan in connection with an adverse benefit determination, without regard to whether the advice was relied upon in making the determination. Under the rules, plans are not required to automatically provide, as part of a notice of an adverse benefit determination or otherwise, the identity of experts consulted during the claim determination process. Nor are plans required to disclose the name of experts in the absence of an adverse benefit determination. On the other hand, consistent with the procedural requirements of the regulation, the plan must provide the identity of any such experts when requested by a claimant in connection with an adverse benefit determination. See § 2560.503-1(h)(3)(iv) and (4).

D-10: Upon receipt of a request from a claimant for the identity of experts consulted by the plan in connection with an adverse benefit determination, may a plan satisfy the requirements of the regulation by providing only the name of the company employing the expert or the qualifications of the expert, rather than the name of the expert?

No. The regulation expressly requires that plans provide for the identification of the medical or vocational expert or experts whose advice was obtained on behalf of the plan in connection with the claimant's claim. Consequently, merely providing the name of the company employing the expert or the qualifications of the expert would not, in the department's view, satisfy this requirement of the regulation. See § 2560.503-1(h)(3)(iv) and (4). See question D-7.

D-11: Does the regulation require that a group health plan provide a claimant with copies of the claimant's medical records relating to his or her benefit claim?

Yes. The regulation requires a plan to provide claimants, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to a claimant's claim for benefits. Under the regulation, relevant documents include, among other things, documents or records relied upon in making a benefit determination and documents and records submitted in the course of making the benefit determination. Inasmuch as a claimant's medical records relating to the benefit claim would be relevant documents, access to, and copies of, the claimant's medical records would have to be provided upon the claimant's request. The department notes, however, that if a plan has reason to believe that a claimant's medical records contain information that should be explained or disclosed by the physician (or other health professional) who developed the information, it would not be inconsistent with the regulation to refer the claimant to the physician (or other health professional) for such information prior to providing the requested documents directly to the claimant. However, if the physician to whom the claimant was referred failed to provide the requested information to the claimant in a reasonable period of time and without charge, the plan itself would be required to honor the claimant's request.

D-12: Does the regulation require that a plan provide claimants with access to or copies of files of other claimants?

No. The regulation requires that a claimant, have access to, and copies of, documents, records and other information relevant to the claimant's claim. For this purpose, the regulation defines as relevant any document, record, or other information that:

Was relied upon in making the benefit determination
Was submitted, considered, or generated in the course of making the benefit determination, without regard to whether it was relied upon
Demonstrates compliance with the plan's administrative processes and safeguards for ensuring consistent decision making
Constitutes a statement of policy or guidance with respect to the group health plan concerning the denied treatment option or benefit for the claimant's diagnosis, without regard to whether it was relied upon in making the benefit determination. See §§ 2560.503-1(h)(2)(iii) and 2560.503-1(m)(8)

While information and data from various claimants' files may have been compiled for purposes of developing a plan's criteria, standards, guidelines, or policies to be used in ensuring and demonstrating compliance with administrative processes and safeguards relating to consistent decision making, (see question B-5); or evaluating or assessing treatment options for benefit determinations, only the criteria, standards, guidelines, or policies themselves would have to be disclosed as information relevant to an individual claimant's claim, not the various claimants' files on which such criteria, standards, guidelines, or policies were based.

D-13: Must a plan include, in every notice of adverse benefit determination on review, a statement apprising claimants that -- You or your plan may have other voluntary dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. department of Labor Office and your state insurance regulatory agency?

The regulation, at § 2560.503-1(j)(5)(iii), provides for the inclusion of the statement described above in all notices of adverse benefit determination on review involving group health and disability claims. However, the department recognizes that information on the specific voluntary appeal procedures offered by the plan will be provided, consistent with § 2560.503-1(j)(4), in the notice of adverse benefit determination, along with a statement of the claimant's right to bring a civil action under section 502(a) of ERISA. Pending further review, therefore, the department will not seek to enforce compliance with the requirements of § 2560.503-1(j)(5)(iii).

E-1: Under what circumstances may a plan afford claimants the ability to appeal their benefit claim beyond the review level required by the regulation?

While the regulation limits a plan's claims procedure to a maximum of two mandatory appeal levels, the regulation does permit plans to offer voluntary additional levels of appeal, including arbitration or any other form of alternative dispute resolution, provided that certain conditions are met. The conditions of the regulation focus on ensuring that the claimant elects the additional appeal voluntarily. Specifically, the regulation provides that, in the case of such voluntary levels of appeal, the plan's claims procedure must provide:

The plan will not assert a failure to exhaust administrative remedies where a claimant elects to pursue a claim in court rather than through the voluntary level of appeal
The plan agrees that any statute of limitations applicable to pursuing the claimant's claim in court will be tolled during the period of the voluntary appeal process
The voluntary level of appeal is available only after the claimant has pursued the appeal(s) required by the regulation
The plan provides the claimant with sufficient information to make an informed judgment about whether to submit a claim through the voluntary appeal process, including the specific information delineated in the regulation
No fees or costs are imposed on the claimant as part of the voluntary appeal process. See § 2560.503-1(c)(3)

E-2: Can a plan's voluntary level of appeal include binding arbitration as a form of benefit dispute resolution?

Yes. Provided that a plan's claims procedure otherwise complies with the conditions of the regulation applicable to voluntary levels of appeal, there is nothing in the regulation that would preclude a plan from using binding arbitration or any other method of dispute resolution. See § 2560.503-1(c)(3). Also see 65 FR at 70253.

E-3: Do the regulation's special rules on voluntary additional levels of appeal, including arbitration, apply to pension plans or welfare plans other than group health plans or plans providing disability benefits?

No. The special rules on post-appeal level reviews apply, under the regulation, only to group health plans and plans that provide disability benefits. All other ERISA-covered plans are not required by the regulation to comply with these rules. However, if such other plans elect to establish voluntary additional levels of review, those levels would have to comport with the general requirements for a reasonable procedure described in § 2560.503-1(b).

F-1: What are the effective date and applicability dates of the new claims procedure rules?

The regulation became effective as of January 20, 2001. The effective date is the date the regulations became legally effective as part of the Code of Federal Regulations.

The applicability dates are the dates on which plans must begin to comply with the regulation. The applicability date for claims other than group health claims is January 1, 2002. This means that such plans must comply with the regulation beginning with new claims filed on or after January 1, 2002.

As amended on July 9, 2001, the regulation contains separate applicability dates for group health claims and all other claims. Under the regulation as amended on July 9, 2001, the applicability date for group health claims was the first day of the first plan year that begins on or after July 1, 2002, but not later than January 1, 2003. This means that group health plans were required to comply with the regulation beginning with new claims filed on or after the first day of the first plan year beginning on or after July 1, 2002, but not later than January 1, 2003. For all calendar year group health plans, the applicability date was January 1, 2003.

Claims that were filed under a plan before the relevant applicability date, and that were not yet resolved as of the applicability date, may be handled in accordance with the plan's old benefit claims procedures, or, if the plan so chooses, in accordance with the new procedures.

F-2: What principles are likely to be applied when a claimant elects to abandon the plan's administrative claims process in favor of pursuing his or her benefit claim in court?

Section 503 of ERISA requires plans to set up procedures to provide a full and fair review of denied benefit claims. With limited exceptions, claimants must exhaust those internal procedures before filing a civil action for benefits under section 502(a)(1)(B). This requirement reflects a legal presumption favoring exhaustion of internal procedures.

Paragraph (l) of § 2560.503-1 provides that where a plan fails to establish or follow claims procedures consistent with the requirements of the regulation, a claimant shall be deemed to have exhausted the administrative remedies available under the plan. The claimant shall be entitled to pursue any available remedies under section 502(a) on the basis that the plan has failed to provide a reasonable claims procedure that would yield a decision on the merits.

However, the regulation does not undermine the principle that claimants bear the burden of proving to the satisfaction of the court that the plan failed to establish or follow claims procedures consistent with the requirements of the regulation. In addition, many of the requirements in the regulation give a plan significant discretion in establishing and following reasonable procedures. For example, paragraph (b)(3) of the regulation prohibits a plan from establishing or administering its procedures so as to unduly inhibit or hamper the initiation or processing of claims for benefits. Accordingly, a plan will be accorded significant deference in evaluating whether it failed to follow a procedure consistent with those aspects of the regulation.

Moreover, not every deviation by a plan from the requirements of the regulation justifies proceeding directly to court. A plan that establishes procedures in full conformity with the regulation might, in processing a particular claim, inadvertently deviate from its procedures. If the plan's procedures provide an opportunity to effectively remedy the inadvertent deviation without prejudice to the claimant, through the internal appeal process or otherwise, then there ordinarily will not have been a failure to establish or follow reasonable procedures as contemplated by § 2560.503-1(l). Thus, for example, a plan that issues a notice of adverse benefit determination fully advising the claimant of the right to review and to request additional information from the plan may be able to correct an inadvertent failure to include in the notice the specific plan provision on which the denial was based. Ordinarily in that circumstance the plan will have provided access to a reasonable claims procedure consistent with the regulations. On the other hand, systematic deviations from the plan procedures, or deviations not susceptible to meaningful correction through plan procedures, such as the failure to include a description of the plan's review procedures in a notice of an adverse benefit determination, would justify a court determination that the plan failed to provide a reasonable procedure.

In addition, filing a lawsuit without exhausting plan procedures could limit claimants' appeal rights and cause claimants to lose benefits to which they otherwise might be entitled. This could be the case when, during the time it takes for a court to dismiss the claimant's suit, the plan's deadline for filing an appeal expires. In this regard, there is nothing in the regulation that would serve to toll internal plan deadlines for filing or appealing claims when suit is brought under section 502(a)(1)(B).

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Assignment of Benefits
Find a Doctor
Accepting Supplement Plans
Accepting Medicare Advantage
Medicare Assignment Codes

What Does It Mean for a Doctor to Accept Medicare Assignment?

Key Takeaways

Doctors who accept Medicare assignment are paid agreed-upon rates for services.
It’s important to verify that your doctor accepts assignment before receiving services to avoid high out-of-pocket costs.
A doctor or clinician may be “non-participating” but can still agree to accept Medicare assignment for some services.
If you visit a doctor or clinician who has opted out (doesn’t accept Medicare), you may have to pay for your entire visit cost unless it’s a medical emergency.
Medigap Supplemental insurance (Medigap) plans won’t pay for service costs from doctors who don’t accept assignment.

One of the things that Original Medicare beneficiaries often enjoy about their coverage is that they can use it anywhere in the country. Unlike plans with provider networks, they can visit doctors either at home or on the road; both are covered the same. But do all doctors accept Medicare patients? Truth is, this wide-ranging coverage area only applies to doctors who accept Medicare assignment. Fortunately, most do. If you’re eligible for Medicare, it’s important to visit doctors and clinicians who accept Medicare assignment. This will help keep your out-of-pocket costs within your control. Doctors who agree to accept Medicare assignment sign an agreement that they’re willing to accept payment from Medicare for their services. If you’re a current beneficiary or nearing enrollment, you may have other questions. Do all doctors accept Medicare Advantage plans? What about Medicare Supplement insurance (Medigap)? Read on to learn how to find doctors that accept Medicare assignment and how this keeps your healthcare costs down.

Find the Medicare Plan that works for you.

What is medicare assignment of benefits.

When you’re eligible for Medicare, you have the option to visit doctors and clinicians who accept assignment. This means they are Medicare-approved providers who agree to receive Medicare reimbursement rates for covered services. This helps save you money. If you have Original Medicare (Part A and B), your doctor visits are covered by your Part B plan. Inpatient services such as hospital stays and some skilled nursing care are covered by Part A . In order for a participating doctor (or facility) to bill Medicare and be reimbursed, you must authorize Medicare to reimburse your doctor directly for your covered services. This is called the Medicare assignment of benefits. You transfer your right to receive Medicare payment for a covered service to your doctor or other provider. Note: If you have a Medicare Supplement insurance ( Medigap ) plan to pay for out-of-pocket costs, you may also need to sign a separate assignment of benefits form for Medigap reimbursement. More on Medigap below.

How Can I Find Doctors Near Me That Accept Medicare?

The easiest way to find a doctor who accepts Medicare assignment is to contact their office and ask them directly.
If you’re looking for a new doctor, you can use the Medicare search tool to find clinicians and doctors that accept Medicare assignment.
You can also ask a state health insurance assistance program (SHIP) representative for help in locating a doctor that accepts Medicare assignment.
Don’t assume that having a longstanding relationship with your doctor means nothing will ever change. Check in with them to make sure they still accept Medicare assignment and whether they’re planning to opt out.

Do Doctors Who Accept Medicare Have to Accept Supplement Plans?

If your doctor accepts Medicare assignment and you have Original Medicare (Medicare Part A and Part B) with a Medicare Supplement (Medigap) plan, they will accept the supplemental insurance. Depending on your Medigap plan coverage , it may pay all or part of your out-of-pocket costs such as deductibles, copayments and coinsurance. However, if you have a Medicare Advantage plan (Part C), you may have a network of covered doctors under the plan. If you visit an out-of-network doctor, you may need to pay all or part of the cost for your services. Keep in mind that you can’t have a Medigap supplemental plan if you have a Medicare Advantage plan. If you have questions or want to learn more about different Medicare plans like Original Medicare with Medigap versus Medicare Advantage, GoHealth has licensed insurance agents ready to help. They can shop your different options and offer impartial guidance where you need it.

Do Most Doctors Accept Medicare Advantage Plans?

Health Maintenance Organization (HMO): These plans have a network of covered providers, as well as a primary care physician to manage your care. If you visit a doctor outside your plan network, you may have to pay the full cost of your visit.
Preferred Provider Organization (PPO): You’ll probably still have a primary care physician, but these are more flexible plans that allow you to go out of network in some cases. But you may have to pay more.
Private Fee for Service (PFFS): You may be able to visit any doctor or provider with these plans, but your costs may be higher.
Special Needs Plan (SNP): This type of plan is only for certain qualified individuals who either have a specific health condition ( C-SNP ) or who qualify for both Medicaid and Medicare insurance ( D-SNP ).

What Are Medicare Assignment Codes?

Medicare assignment codes help Medicare pay for covered services. If your doctor or other provider accepts assignment and is a participating provider, they will file for reimbursement for services with a CMS-1500 form and the code will be “assigned.” But non-participating providers can select “not assigned.” This means they are not accepting Medicare-assigned rates for a given service. They can charge up to 15% over the full Medicare rate for the service. If you go to a doctor or provider who accepts assignment, you don’t need to file your own claim. Your doctor’s office will directly file with Medicare. Always check to make sure your doctor accepts assignment to avoid excess charges from your visit.

Looking for a plan with prescription drug coverage?

Health Insurance Claim Form . CMS.gov.
Lower costs with assignment . Medicare.gov.
How Many Physicians Have Opted-Out of the Medicare Program? KFF.org.
Joining a plan . Medicare.gov.

This website is operated by GoHealth, LLC., a licensed health insurance company. The website and its contents are for informational and educational purposes; helping people understand Medicare in a simple way. The purpose of this website is the solicitation of insurance. Contact will be made by a licensed insurance agent/producer or insurance company. Medicare Supplement insurance plans are not connected with or endorsed by the U.S. government or the federal Medicare program. Our mission is to help every American get better health insurance and save money.

Any information we provide is limited to those plans we do offer in your area. Please contact Medicare.gov or 1-800-MEDICARE to get information on all of your options.

[email protected]

(888) 444-6041

What is Assignment of Benefits in Medical Billing

The health care industry has a wide network of health care insurance payers that make payments on behalf of patients having insurance plans. Without insurance plans, many patients would not be able to seek medical services. Whenever a patient visits a doctor for the treatment he/she needs to ensure that the insurance payer makes the payment for all the medical benefits he/she may have received. This is where the assignment of benefits comes in.

Definition of Assignment of Benefits

The term assignment of benefits (AOB) may be referred to as an agreement that transfers the health insurance claims benefits of the policy from the patient to the health care provider. This agreement is signed by the patient as a request to pay the designated amount to the health care provider for the health benefits he/she may have received. On the patient’s request the insurance payer makes the payment to the hospital/doctor.

Understanding of Assignment of Benefits

The assignment of benefits is generally transferred by designing a legal document— for which, the format may vary across medical offices. This document is called the ‘Assignment of Benefits’ form. While signing the form, the patient also authorizes the insurance company to release any and all written information that is required by the hospital for reimbursement purposes. This also means that any medical billing and collection company hired by the hospital is free to use the released information for billing purposes. In addition to this, the patient agrees to appoint anyone from the hospital as a representative on his/her behalf to seek payment from the insurance payer. In other words, once the document has been signed, the patient is no longer required to deal directly with the insurance company or its representative, unless asked to do so.

It is important to note that the assignment of benefits occurs only when a claim has been successfully processed with the insurance company/payer. However, the insurance company may not always honor and accept the request for AOB. The acceptance or rejection of AOB depends on the patient’s or member’s health benefits contract and/or the State Law. Therefore all three parties— patient, health care provider, and the insurance company must stay updated with the State Law and also, review the patient’s health benefit plan thoroughly. This will help in saving time and unnecessary paperwork if the chances of the insurance company rejecting the AOB seem to be high.

Following are some providers or medical services that use AOB:

Ambulance services.
Ambulatory surgical center services.
Clinical diagnostic laboratory services.
Biological(s) and drugs.
Home dialysis equipment and supplies.
Physician services for patients having Medicare and Medicaid plans.
Services of medical professionals other than a primary physician, including certified registered nurse anesthetists, clinical nurse specialists, clinical psychologists, clinical social workers, nurse midwives, nurse practitioners, and physician assistants.
Simplified billing roster for vaccines, such as— influenza virus and pneumococcal.

AOB plays an important role in medical billing by establishing direct contact with the patient’s health care insurance payer. The purpose is to increase the chances of reimbursement and accelerate the process without contacting the patient additionally..

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What is an assignment of benefits?

This is how most people receive health care in the U.S. This system, known as assignment of benefits or AOB, is now being used with other types of insurance, including auto and homeowners coverage .

How an AOB works

Because AOBs are common in health care, you probably don’t think twice about signing a piece of paper that says "assignment of benefits" across the top. But once you sign it, you’re likely turning over your right to deal with your insurance company regarding service from that provider. Why would you do this?

According to Dr. David Berg of Redirect Health, the reason is simple: “Without an AOB in place, the patient themselves would be responsible for paying the cost of their service and would then file a claim with their insurance company for reimbursement.”

Within the guidelines of the specific insurance rules for AOBs in your state, the general steps include:

You and your contractor draw up an AOB clause as part of the contract.

The contract stipulates the exact work that will be completed and all necessary details.

The contractor sends the completed AOB to the insurance company where an adjuster reviews, asks questions, and resolves any discrepancies.

The contractor’s name (or that of an agreed-upon party) is listed to go on the settlement check.

After work is complete and signed off, the insurer will issue the check and the claim will be considered settled.

Example of an assignment of benefits

When would you need to use an assignment of benefits?

An AOB can simplify complicated and costly insurance transactions and allow you to turn these transactions over to trusted experts, thereby avoiding time-consuming negotiations.

Assignment of benefits for health insurance

Assignment of benefits for car owners

Assignment of benefits for homeowners

The fraud factor

The National Association of Insurance Commissioners (NAIC), offers advice for consumers to help avoid AOB fraud and abuse:

File a claim with your insurer before you hire a contractor. This ensures you know what repairs need to be made.

Don’t pay in full upfront. Legitimate contractors do not require it.

Get three estimates before selecting a contractor.

Get a full written contract and read it carefully before signing.

Don’t be pressured into signing an AOB. You are not required to sign an AOB.

Pros and cons of an assignment of benefits

The advantages and disadvantages of an AOB agreement depend largely on the amount and type of protection your state’s insurance laws provide.

Pros of assignment of benefits

With proper safeguards in place to reduce opportunities for fraud, AOBs have the ability to streamline and simplify the insurance claims process.

An AOB frees you from paying for services and waiting for reimbursement from your insurer.

Some people appreciate not needing to negotiate with their insurer.

You are not required to sign an AOB.

Cons of assignment of benefits

As with most contracts, AOBs are a double-edged sword. Be aware of potential traps and ask questions if you are unsure.

Signing an AOB could make you the victim of a scam without knowing it until your insurer refuses to pay.

An AOB doesn’t free you from the ultimate responsibility to pay for services rendered, which could drag you into expensive litigation if things go south.

Any AOB you do sign is legally binding.

The takeaway

This story was originally featured on Fortune.com

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An assignment of benefits, or AOB, is a legal tool that allows an insurer to directly pay a third party for services performed rather than reimbursing a claimant afterwards. In recent years, insurers have experienced an increase in fraud and abuse of assignment of benefit provisions, resulting in higher costs.

Assignment of rights to collect under an insurance policy after a loss are common. In many cases, homeowners will assign the right to collect to contractors or other service providers following a loss. Vendors soliciting AOBs from policyholders are typically associated with property insurance, auto repair, and personal insurance claims. While such assignment may allow policyholders to make emergency repairs more quickly, the practice has resulted in many homeowners becoming the victims of scam artists and other unscrupulous service providers. Contractors have sought to unilaterally establish the value of the claim and demand payment for inflated invoices. Many contractors also work with attorneys that then sue the insurance company over the claim.

State legislatures have sought to protect insurance consumers from AOB abuse by imposing common sense limitations, and 2019 finally saw some progress. For example, for the past several years, the Florida legislature has sought to put some parameters around the use of assignment of benefits to curtail the explosion of lawsuits filed by contractors and attorneys allegedly on behalf of consumers who knew nothing about the lawsuits. The only beneficiary of such fraud were the unscrupulous lawyers and contractors. In 2019, AOB reform legislation finally passed the Florida legislature, and was signed into law by the governor. Among other things, the new law gives policyholders the right to rescind the contract, and mandates that the assignment include an itemized description of the work to be done. Similarly, governors in North Dakota, Kansas, and Iowa all signed into law NAMIC-backed legislation to protect consumers from abusive assignment of benefit practices.

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INSIGHT: An Ounce of Prevention—The Importance of Early Review of Assignment of Benefits and Powers of Attorney

By Anthony P. La Rocco, George P. Barbatsuly, Stacey A. Hyman, and Alyssa F. Conn

Introduction

One of the most frequently litigated issues in reimbursement cases brought by in- and out-of-network healthcare providers against insurers is provider standing, or a provider’s right to file a lawsuit to recover for services it provided to its patients. This is because the health insurance industry bases the rights and responsibilities that one party owes to another on contract law. While network contracts often dictate that insurers pay in-network providers directly for services, providers who do not participate in the networks have no independent legal right to payment from the insurer as such providers do not share a contractual relationship with the plan.

Accordingly, these providers must ensure that patients assign their rights to benefits under the health insurance plan to the non-participating provider via an assignment of benefits (“AOB”). Under a valid AOB, the provider “steps into the shoes” of the patient with respect to the contract between the patient and the insurer and may pursue the same benefits that the patient would have been able to pursue him or herself. Without a valid AOB, courts have been clear that the provider has no legal standing to sue the health insurer for payment.

Additionally, participating providers should also obtain and maintain irrevocable AOBs from their patients, despite network contractual language directing payment. Possessing a valid AOB is often a legal prerequisite to submitting a claim, even under the participation agreement, and participation status may change. Moreover, providers may not be participating with all insurers and assignments provide an alternative basis for recovery.

However, the road to recovery on claims is not as simple as merely executing an AOB: insurers frequently challenge the scope of AOBs, requiring courts to analyze them and determine whether the language sufficiently confers standing on the provider to assert a claim. The case law on assignments is, therefore, constantly evolving. The following article explores some of the common issues surrounding crafting and obtaining valid AOBs from patients as well as alternative avenues to survive a standing challenge where plans contain anti-assignment clauses.

What Kind of Language Should the Assignment of Benefits Contain?

An AOB should be “broadly specific”: It should be broad enough to cover all conceivable rights and claims the provider could bring under the plan, but specific enough in that it enumerates the rights in order to survive challenges of overbreadth. These enumerated rights should include, but are not limited to: the right to appeal, the right to request plan documents, the right to pursue claims for benefits, and the right to pursue claims for equitable relief/breaches of fiduciary duties.

The below examples provide AOB language ranked in order from least likely to confer standing to most likely.

Least Likely to Confer Standing : “I authorize insurance payments to be made to [PROVIDER] for services provided at [PROVIDER’S FACILITY].”

This AOB simply authorizes payments to be made, but does not give the provider any right to pursue payment or other remedies. Therefore, this language would likely be insufficient to confer legal standing.

Improved language : “I authorize [PROVIDER] to appeal to my insurance company on my behalf . . . . I hereby assign to [PROVIDER] all payments for medical services rendered to myself or my dependents.”

This language would, at least, give the provider the right to sue for payment under ERISA Section 502(a). However, the language is still lacking as it does not give the provider the right to pursue claims for equitable relief or for breaches of fiduciary duties.

An example of even better, (albeit not perfect) language : “I voluntarily consent to the collection and testing of my specimen, and all future testing, performed by [the Laboratories] or [their] affiliated laboratories unless I give written notice that I have revoked my consent. I authorize my insurance company to pay and mail directly to [the Laboratories] or [their] affiliated laboratories all medical benefits for payment of services rendered. I also authorize [the Laboratories] or [their] affiliated laboratories to endorse any checks received on my behalf for payment of services provided. I hereby irrevocably assign to [the Laboratories] or [their] affiliated laboratories all benefits under any policy of insurance, indemnity agreement, or any collateral source as defined by statute for services provided. This assignment includes all rights to collect benefits directly from my insurance company and all rights to proceed against my insurance company in any action, including legal suit, if for any reason my insurance company fails to make payment of benefits due. This assignment also includes all rights to recover attorney’s fees and costs for such action brought by the provider as my assignee.

The language here is “broadly specific” in that it enumerates with specificity a myriad of rights the provider seeks to have the patient assign. One federal appeals court found that similar assignment language clearly applied to claims against fully-insured health insurance plans, and at least arguably applied to self-funded plans. The court sent the case back to the trial court for further discovery on whether this language applied to self-funded plans. Health care providers can remove this uncertainty up front by having their assignment of benefit forms specifically refer to self-funded plans.

When Should the Provider Require the Assignment to Be Executed?

The best time to have a patient execute an assignment of benefits is at or before the time that services are provided. This is because it is often difficult to track down patients later when a provider must submit a large volume of claims that have gone unpaid. Ideally, these forms are executed together with other intake forms, such as consent for treatment and privacy policies/releases.

If the AOB is not obtained prior to the services, courts will still generally permit assignments that are executed after treatment, at least absent a showing of prejudice to the insurer. Furthermore, although logistical challenges may sometimes ensue where a patient is incapacitated or deceased, courts have upheld the validity of AOBs executed by spouses of such patients.

Navigating Anti-Assignment Provisions in Plans

Some patient plans contain anti-assignment language that prohibits the patient from assigning his or her benefits. This language is a challenge to a provider’s ability to establish standing. Courts are however, split on the issue. Some courts hold that an unambiguous anti-assignment clause is enforceable and can invalidate a patient’s assignment. In these cases, the courts have focused on the freedom of contracting parties.

Other courts hold that an anti-assignment clause is not, in and of itself, dispositive of whether a provider has standing. Anti-assignment clauses are subject to traditional contract defenses, such as fraud, misrepresentation, and unconscionability. For example, if a clause is buried in illegible “fine print” or if it was plainly neither intended nor likely to be read by the other party, those circumstances might support an inference of fraud. Other considerations include: ambiguity in the clause, the scope of the clause, course of dealing, and waiver or estoppel arguments.

An example of anti-assignment language that is completely prohibitory would be: “The benefits of the Contract or Certificate are personal to the Subscriber and are not assignable by the Subscriber in whole or in part to a Non-Member hospital or provider, or to any other person or entity.”

Another example of language that permits assignment only with consent would be: “You may not assign your Benefits under the Plan to a non-Network provider without our consent.”

Providers may, however, still recover in circumstances where the plans contain valid anti-assignment provisions. Recently, for example, the Third Circuit, in American Orthopedic & Sports Med. v. Indep. Blue Cross Blue Shield , 2018 BL 173478 (3d Cir., No. 17-1663, 5/16/18), recognized an alternative basis under which health care providers may obtain standing to sue in federal court. Where a patient grants a valid power of attorney to a health care provider, the Third Circuit has now recognized that a health care provider may pursue a claim for reimbursement on the patient’s behalf, even if the ERISA plan contains a valid and enforceable anti-assignment clause. The court explained that, whereas a plan can limit a beneficiary’s ability to assign claims as a matter of contract law, an anti-assignment clause does not prevent the beneficiary from assigning the health care provider to act as the beneficiary’s agent, any more than it would strip the beneficiary of his or her own interest in the claim.

In sum, while there is no “one size fits all” approach, a simple direction of payment often does not survive scrutiny and will likely be challenged by insurers. Thus, prudent providers will want to work with experienced healthcare counsel to craft assignment language to encompass all of the patient’s rights under the plan and, if applicable, take advantage of the Third Circuit alternative basis for standing by including language that creates a valid power of attorney.

Anthony P. La Rocco is the Managing Partner of K&L Gates’ Newark office. He leads a national health care team involved in significant reimbursement litigation matters on behalf of health care providers against various insurance companies’ health benefits plans and their third party administrators related to under-payment and non-payment of claims for a variety of covered medical testing procedures conducted across the United States. Tony can be reached at [email protected] .

George P. Barbatsuly is a Partner in K&L Gates’ Newark office. His health care and ERISA disputes experience includes representing health care providers in disputes with payer insurance companies, health benefits plans, and third party administrators. George can be reached at [email protected] .

Stacey A. Hyman is an Associate in K&L Gates’ Newark office. She focuses her practice on commercial disputes and insurance coverage, specifically insurance reimbursement recovery. Stacey can be reached at [email protected] .

Alyssa F. Conn is an Associate in K&L Gates’ Newark office. She focuses her practice on a range of complex commercial litigation and insurance coverage disputes in federal and state courts, including healthcare and ERISA disputes. Alyssa can be reached at [email protected] .

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COMMENTS

Assignment of Benefits: What You Need to Know
There are many reasons why an insurance company may not accept an assignment of benefits. To speak with a Schwartzapfel Lawyers expert about this directly, call 1-516-342-2200 for a free consultation today. It will be our privilege to assist you with all your legal questions, needs, and recovery efforts.
Assignment of Benefits: What It Is, and How It Can Affect your ...
What is an Assignment of Benefits? In the context of insured property claims, an assignment of benefits (AOB) is an agreement between you and a contractor in which you give the contractor your right to insurance payments for a specific scope of work.In exchange, the contractor agrees that it will not seek payment from you for that scope of work, except for the amount of any applicable deductible.
What is an assignment of benefits (AOB)?
An AOB is a legal agreement that allows your insurance company to directly pay a third party for services performed on your behalf. In the case of health care, it could be your doctor or another ...
Assignment of Benefits: Consumer Beware
An Assignment of Benefits, or an AOB, is an agreement signed by a policyholder that allows a third party—such as a water extraction company, a roofer or a plumber—to act on behalf of the insured and seek direct payment from the insurance company. An AOB can be a useful tool for getting repairs done, as it allows the repair company to deal ...
Assignment of Benefits (AOB)
What is an assignment of benefits? An AOB is an agreement that transfers the insurance claims rights or benefits of the policy to a third party. An AOB gives the third party authority to file a claim, make repair decisions, and collect insurance payments without the involvement of the homeowner. AOBs have been used with life and health ...
PDF Assignment of Benefits Guide
Assignment of Benefits. A procedure whereby a beneficiary/patient authorizes the administrator of the program to forward payment for a covered procedure directly to the treating dentist. This is done using box #37 on the ADA claim form. The below image shows the specific instructions for how to complete box #37 for use with assignment of benefits.
Assignment of benefits
Assignment of benefits. Assignment of benefits is a legal agreement where a patient authorizes their healthcare provider to receive direct payment from the insurance company for services rendered. Boost patient experience and your bottom line by automating patient cost estimates, payer underpayment detection, and contract optimization in one place.
What is assignment of benefits, and how does it impact insurers?
Mar 06, 2020 Share. Assignment of benefits, widely referred to as AOB, is a contractual agreement signed by a policyholder, which enables a third party to file an insurance claim, make repair ...
All You Need to Know About Assignment of Benefits
When you visit an in-network doctor in a contract with your insurance company, the assignment of benefits (AOB) happens automatically. That hospital receives payment right from the insurance company, and the provider handles everything related to billing. But if your doctor is out-of-network, you might have to sign an AOB agreement that's ...
What is an Assignment of Benefits?
Assignment of benefits is legal, thanks to a concept known as freedom of contract, which says two parties may make a private agreement, including the forfeiture of certain rights, and the government may not interfere. There are exceptions, making freedom of contract something less than an absolute right.
PDF ADA Dental Insurance Reform Assignment of Benefits
As used in this section, "assignment of benefits" means the transfer of dental care coverage reimbursement benefits or other rights under an insurance policy, subscription contract, or dental services plan by an insured, subscriber, or enrollee to a dentist or oral surgeon. 627.638.
Assignment and Nonassignment of Benefits
The second reimbursement method a physician/supplier has is choosing to not accept assignment of benefits. Under this method, a non-participating provider is the only provider that can file a claim as non-assigned. When the provider does not accept assignment, the Medicare payment will be made directly to the beneficiary.
Assignment of benefits: A growing concern
The precedent established by this 100-year-old case continues to make it very difficult for an insurance company to prohibit the assignment of benefits in Florida. In addition to this case, Florida Statute §627.428 governing payment of attorneys' fees related to insurance practices requires that insurance companies pay legal fees to third ...
Medicare Assignment
Medicare assignment is a fee schedule agreement between the federal government's Medicare program and a doctor or facility. When Medicare assignment is accepted, it means your doctor agrees to the payment terms of Medicare. Doctors that accept Medicare assignment fall under one of three designations: a participating doctor, a non ...
What is Assignment of Benefits in Medical Billing
An assignment of benefits in medical billing is a type of agreement between the healthcare provider, insurance company, and the patient through which a patient authorizes the medical service to collect healthcare policy coverage benefits on their behalf from their insurer for the service they have received from the facility.
Assignment and Non-assignment of Benefits
Non-assignment of Benefits. Non-assigned is the method of reimbursement a physician/supplier has when choosing to not accept assignment of benefits. Under this method, a non-participating provider is the only provider that can file a claim as non-assigned. When the provider does not accept assignment, the Medicare payment will be made directly ...
Benefit Claims Procedure Regulation FAQs
The regulation, at § 2560.503-1 (e), defines a claim for benefits, in part, as a request for a plan benefit or benefits made by a claimant in accordance with a plan's reasonable procedure for filing benefit claims. A claim for group health benefits includes pre-service claims (§ 2560.503-1 (m) (2)) and post-service claims (§ 2560.503-1 (m) (3)).
Best Practices in Administering Benefit Claims #3
Second, many health plans will have "direct payment" provisions whereby the plan will pay out-of-network benefits directly to a provider as a convenience to the participant. A properly drafted anti-assignment clause will distinguish between a permissible direct payment arrangement from a prohibited assignment of benefits.
Do All Doctors Accept Medicare? Medicare Assignment Explained
Medicare assignment codes help Medicare pay for covered services. If your doctor or other provider accepts assignment and is a participating provider, they will file for reimbursement for services with a CMS-1500 form and the code will be "assigned.". But non-participating providers can select "not assigned.".
What is Assignment of Benefits in Medical Billing
Without insurance plans, many patients would not be able to seek medical services. Whenever a patient visits a doctor for the treatment he/she needs to ensure that the insurance payer makes the payment for all the medical benefits he/she may have received. This is where the assignment of benefits comes in. Definition of Assignment of Benefits
What is an assignment of benefits?
An assignment of benefits (AOB) is a legal agreement you sign that lets a third party negotiate, bill, and receive payment from your insurance provider.
Our Positions
An assignment of benefits, or AOB, is a legal tool that allows an insurer to directly pay a third party for services performed rather than reimbursing a claimant afterwards. In recent years, insurers have experienced an increase in fraud and abuse of assignment of benefit provisions, resulting in higher costs. Assignment of rights to collect ...
INSIGHT: An Ounce of Prevention—The Importance of Early Review of
The best time to have a patient execute an assignment of benefits is at or before the time that services are provided. ... reimbursement litigation matters on behalf of health care providers against various insurance companies' health benefits plans and their third party administrators related to under-payment and non-payment of claims for a ...
Prior Authorization Coordinator, in Salt Lake City
Prior Authorization Coordinator, in Salt Lake City Prior Authorization Coordinator Job Summary Job Summary The Division of Pediatric Clinical Enterprise at the University of Utah School of Medicine has an immediate opening for a Scheduling and Prior Authorization Coordinator. This position works with a team of professionals responsible for obtaining prior authorization before services are ...

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