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Thanks for bulk billing! Now here’s some forms

5 minute read

assignment of benefit voucher

The rules for patient consent to be bulk billed are good news for the doctors who love paperwork, bad news for the other 99.99%.

Doctors who want to bulk bill patients for a telehealth appointment have a compulsory new form to fill out documenting a patient’s verbal consent, courtesy of Services Australia.

The only other alternatives are getting written consent via email, privately billing the patient or running the risk of repaying all those benefits in the event of an audit.

To be clear, collecting a patient’s written consent to bulk bill has been a longstanding – if somewhat obscure – requirement under subsection 20B paragraph 3c of the Health Insurance Act 1973.

When telehealth was introduced over the pandemic, Services Australia made a temporary exception and allowed practitioners to get verbal consent from patients and simply make a note of it in the consult notes.

That exception was flagged as ending in December last year, but was extended at the last minute so the Department of Health and Aged Care could develop what the AMA said would be a “solution that is more suitable for permanent telehealth services”.

At the time, the medical association said it hoped the department would take the opportunity to “streamline arrangements” and reduce paperwork.

This particular wish does not appear to have been granted.

Under the new arrangements, doctors can still collect verbal consent to bulk bill – but they will have to follow it up by completing an online form which then has to be sent to the patient via email or text.

There are two approved forms to choose from: bulk bill voucher electronically transmitted claims form DB4E and assignment of benefit Medicare bulk bill webclaim form DB020 , the latter of which can only be used in conjunction with HPOS Medicare bulk bill webclaim.

Services Australia instructs doctors to type “patient verbally agreed” in the patient signature field of these forms, but only after discussing this with the patient .

Alternatively, GPs can email a patient to ask for written consent to bulk bill if they’ve done a telehealth appointment.

This is also a multi-step process.

First, the doctor needs to tell the patient during the consult that they plan to bulk bill.

Then, the doctor has to send an email to the patient’s nominated email address with the details of the service – including item numbers, benefit amounts and the date/time of service – the customer statement and a privacy notice.

Including the patient’s Medicare card number or the doctor’s provider number in this email is apparently a no-no, presumably for privacy reasons.

The patient then replies to that email, explicitly writing that they agree to the assignment of the Medicare benefit directly to the health professional.

Only once that is done can the doctor complete general, specialist and diagnostic assignment of benefit voucher form DB4 and submit the claim, writing “email agreement” in the signature block.

A copy of the form also must be sent to the patient.

The Albanese gov’t tripled GP incentives for bulk billing, woohoo! Now they introduce the requirement for a signed patient consent form in order to bulk bill a telehealth consultation! ??How is that meant to work? ? ?? #BulkBilling #TELEhealth #Medicare — Dr Rob Mathews (@robmathews) October 2, 2023

The third and final way to get bulk billing consent from a patient for a telehealth appointment is to obtain a physical signature via snail mail.

The new arrangements first appeared in a DOHAC fact sheet dated September 18 and took effect immediately.

In the fact sheet, DOHAC credited the new requirements to prove verbal consent to an Australian National Audit Office report on Medicare telehealth services released in January.

That ANAO report found that verbal consent for bulk billing created a fraud risk.

To spell it out: if there’s no patient acknowledgement that the consult being billed by the doctor actually happened, Services Australia could potentially be defrauded by GPs $38 at a time.

The ANAO also found that DOHAC officials had not only failed to properly assess the legal implications of verbal consent before putting it in place, but also outright ignored concerns from staff members about the potential for fraud as early as March 2020.

The report is about as snippy as official wording allows and takes the department to task for not clarifying to doctors that the verbal consent policy might not meet the legal requirement to provide patients with a copy of what they’re getting bulk billed for.

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“The legal consequences of failing to observe such requirements can be severe [for practitioners],” the ANAO wrote.

“Where a provider does not provide a copy of the signed agreement in approved form to the patient, there is no legal basis for Services Australia to pay the benefit to the provider.

“Additionally, providers can be criminally liable for failing to complete the agreement form properly.”

It led to a recommendation that DOHAC develop better procedures for structured and documented risk assessments whenever there’s a change to the MBS, which the department accepted.

Failure to have a signature from the patient acknowledging their consent to being bulk billed makes an entire claim non-compliant, meaning Medicare can theoretically demand repayment.

If it considers the non-compliant claims to be fraudulent in nature, there’s every chance that Medicare will also refer that doctor to the Commonwealth Director of Public Prosecutions.

DoHAC has reportedly assured the RACGP that no retrospective compliance will be carried out on this front.

Generally, however, doctors are advised to keep a copy of all correspondence, claims and forms for at least two years for auditing purposes.

College president Dr Nicole Higgins said she would raise the issue with DoHAC and Health Minister Mark Butler on behalf of members.

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assignment of benefit voucher

  • Construction Accidents

Practice Areas

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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Social Security

Program operations manual system (poms).

TN 35 (04-14)

GN 02410.001 Assignment of Benefits

A.  protection from assignment of benefits.

Sections 207 and 1631(d)(1) of the Social Security Act (the Act) prohibit “transfer” or “assignment” of a beneficiary or recipient’s right to future payment under title II and title XVI respectively. These sections of the Act prohibit the transfer of control over money to someone other than the beneficiary, recipient, or the representative payee. These sections also protect the beneficiary or recipient's right to receive payments directly, and to choose how to use the payments.

Our responsibility for protecting payments against legal process and assignment ends when we pay the beneficiary or recipient. However, once paid, Sections 207 and 1631(d)(1) of the Act continue to protect payments as long as we can identify them as:

Retirement, Survivors and Disability Insurance (RSDI) benefits; or

Supplemental Security Income (SSI) payments.

For example, this would include a situation in which RSDI or SSI payments are the only direct deposit payments in the account.

A beneficiary or recipient can use Sec. 207 or 1631(d)(1) of the Act as a personal defense if ordered to pay his or her payments to someone else, or if his or her payments are ordered to be taken by legal process.

B.  Exceptions to protection from assignment of benefits

Laws may create exceptions to the protections provided under Sec. 207 and 1631 of the Act, but only if they explicitly identify the applicable section, either Sec. 207 or 1631 (also found in the United States Code as 42 USC 407 or 42 USC 1383), and provide that the law applies despite that section. So far, Congress has authorized the following exceptions to Sec. 207 and 1631 of the Act.

1.  Garnishment of benefit payments for child support or alimony

Garnishment is the legal process of withholding an amount from money owed to a person in order to pay off the person’s debt to another. Under Sec.459 of the Act (42 USC 659), garnishment of benefit payments for the purpose of collecting amounts owed for child support or alimony is permitted. For policy on garnishment of title II benefits, see GN 02410.200 through GN 02410.225 .

2.  Garnishment of benefit payments for victim restitution

Garnishment of benefit payments to recover court-ordered victim restitution is permitted under 18 USC 3613(a), 3663, 3663A, and 3664. For policy on garnishment for court-ordered victim restitution, see GN 02410.223 .

3.  Levy for unpaid federal taxes

Levy is the legal seizure of property, such as Social Security benefit payments, to recover a debt. The IRS places a levy on benefit payments to recover unpaid federal taxes under 26 USC 6331 and 6334. For policy on IRS levy, see GN 02410.100 .

C.  Fees and automatic withdrawals

State or Federal government guidelines do not regulate financial institution (FI) fees. These fees are a matter of contract between banks and their customers. Customary fees outlined in account contracts with FIs, and the automatic withdrawal of these fees, do not constitute an assignment of benefits. For a definition of an acceptable FI, see GN 02402.030 .

1.  Financial institution

The following banking options meet Treasury’s definition of an acceptable FI:

Savings and loan associations,

Credit unions, or

Thrift institutions.

For policy on acceptable financial institutions, see GN 02402.030 .

NOTE : A master sub-account is an account at an FI established to receive deposits on behalf of a group of individuals. Sub-accounts are then set up at the same FI, another FI, or on the individual ledgers maintained by the master account holder. An acceptable master sub-account relationship is not an assignment of benefits. For policy on acceptable master sub-account relationships, see GN 02402.050 .

2.  Account fees

We do not prohibit automatic withholding of account fees from accounts holding SSA payments when those fees are customary to accounts with the FI.

A fee is “customary” if it is consistent with fees associated with similar accounts at the FI and the same fees apply to both federal and non-federal deposits.

NOTE : We should question fees that apply only to federal payments. If the FI applies different fees to federal and similar non-federal deposits, send the issue in question to the Regional Office (RO).

3.  Pre-authorized withdrawals

A beneficiary recipient, or his or her representative payee, may pre-authorize an FI, or other entity, to withdraw funds from his or her account for a wide variety of purposes (e.g., utility bills, mortgage payments, loan repayments, investments, nursing home fees, etc.). Once the beneficiary recipient, or his or her representative payee, establishes control by receipt and deposit of the payment, these arrangements are allowed, provided they can be terminated at any time. Terminating the arrangement does not mean terminating or canceling the debt. It means that the beneficiary recipient, or his or her representative payee, may terminate the pre-authorized withdrawal arrangement as a method for paying the debt. The right to receive and to choose how to use those payments exists if the beneficiary recipient, or his or her representative payee, can freely terminate this arrangement. If a beneficiary recipient, or his or her representative payee, cannot freely revoke the pre-authorized withdrawal, send the issue in question to the RO.

D.  Prohibited arrangements versus acceptable relationships

The beneficiary recipient’s, or his or her representative payee’s, control of the receipt and use of payments will determine if a payment arrangement is prohibited or acceptable.

1.  Prohibited arrangements

A.  payment to the wrong person.

Do not make payment to any person or entity other than the beneficiary recipient, or his or her representative payee, except as outlined in GN 02410.001B and GN 02410.001C in this section. This prohibition applies regardless of the person or entity who makes the request.

For example, the prohibition applies when:

a beneficiary or recipient requests that we pay his or her payments to someone other than the beneficiary or the beneficiary’s representative payee.

a court orders SSA to make payment to a party other than the beneficiary or recipient, unless one of the specific exceptions in GN 02410.001B in this section exists. For policy on when SSA should not comply with a bankruptcy court’s order to pay benefits to a bankruptcy trustee, see GN 02410.005 .

When you are unable to determine whether there is a prohibited arrangement, send the issue in question to the RO.

b.  Other prohibited arrangements

Even if the payment goes directly to the beneficiary or recipient (or the representative payee), the arrangement may is prohibited if the beneficiary or recipient surrenders control of the payments. Avoid any arrangement where the beneficiary or recipient surrenders or shares control of payments with a person or entity that has an interest in charging or collecting money from the beneficiary or recipient.

Avoid the following situations:

Do not approve sending a payment, either by check or electronically, to a loan company where the beneficiary or recipient has a loan, or to a party holding the beneficiary or recipient's power of attorney. For information on power of attorney, see GN 02410.010 .

Do not approve a bank account when the attorney or non-attorney representative has the power to withdraw funds so that representative’s fees can be collected directly from that beneficiary or recipient’s account. See the note in GN 03920.025A . For policy on unacceptable requests for direct deposit, see GN 02402.085 .

In both scenarios given, the arrangement is prohibited because the beneficiary or recipient surrenders control over the payment.

When you are unsure of a prohibited arrangement, send the issue in question to the RO.

2.  Acceptable relationships

A.  third-party repayment.

Third parties may employ representatives to ensure that beneficiaries or recipients repay debts owed to the third parties immediately after the beneficiary or recipient starts to receive payment. This arrangement is acceptable if:

The third-party representative has no financial interest in the beneficiary or recipient’s direct deposit account (i.e., he is not named on the account and has no authority to direct the money in the account);

The third party representative is not charging the beneficiary or recipient a fee;

The beneficiary or recipient pre-authorizes, (according to the financial institution’s policy), a withdrawal of funds from his account to repay a debt to a third party;

The third-party representative did not obtain the pre-authorization from the beneficiary or recipient through deceit, coercion, or intimidation; and

The third-party representative gets oral or written confirmation from the beneficiary or recipient of the pre-authorization to withdraw the money from the account after we deposit funds into the beneficiary or recipient’s account and before a transfer of funds to pay the third party debt.

NOTE : Confirmation is necessary because a beneficiary or recipient may have signed the pre-authorization before learning whether he or she will receive benefits and the amount of past-due benefits he or she will receive. In this situation, confirmation prevents the third party from taking funds before the beneficiary or recipient exercises control over the funds.

b.  Financial institution-electronic funds distributor (FI-EFD) accounts

Some FI have established Electronic Funds Distributor (EFD) relationships with various check cashing establishments to receive and distribute monthly direct deposit payments to assist SSA beneficiaries or recipients who do not have traditional bank accounts.

The FI receives the monthly payment by direct deposit titled under the beneficiary or recipient’s name. Then, the FI electronically transfers payment to the contracted EFD. The EFD, acting as an agent of the FI, will then release the monthly payment to the account holder in the form of a cashier’s check.

These FI-EFD accounts are acceptable and not prohibited if they meet the following requirements:

The FI must be acceptable under United States Treasury guidelines. (For policy on acceptable types of financial institutions, see GN 02402.030A .)

The EFD must have a contract with and act as an agent of the FI.

The FI account must be acceptable as outlined in GN 02402.030 B.1 .

A secondary contract relationship that attaches the FI-EFD transaction account as collateral for loan fees associated with the EFD cannot exist as a requirement for participation between the EFD and the beneficiary or recipient.

No person or entity can have control over the receipt, or use of, SSA benefit payments other than the beneficiary or his or her representative payee. (For Assignment of Benefits, see GN 02410.001 and Sec.1631 (d)(1).)

The beneficiary, recipient, or representative payee may cancel his or her FI-EFD direct deposit arrangement at any time.

Fees associated with the account must be customary to fees for similar accounts at the FI and those fees are outlined in the FI-customer contract.

When you are unable to clearly determine whether an FI-EFD account is acceptable, send the issue in question to the RO.

E.  Examples of acceptable and prohibited relationships

1.  acceptable relationship.

A company pays long-term disability (LTD) benefits to a customer and requires them to file for Social Security title II benefits. When the Social Security claim is allowed, the amount of Social Security benefits received offsets the LTD benefit amount. As an incentive to induce the LTD insurer to refer claimants, the claimant’s LTD representative offers to assist the insurer with recovering the overpayment the insurer made to the claimant. The LTD representative does not charge the claimant a fee for this service. The LTD representative also makes it clear to the claimant that he or she may pay the LTD directly and does not have to pay the LTD through the representative.

At the LTD representative’s request, the claimant gives the representative pre-authorization to withdraw funds from the claimant’s bank account if SSA approves the claim and issues the claimant past-due benefits.

After we approve the claim and deposit the past-due benefits into the claimant’s account, the LTD representative gets oral authorization (in addition to the pre-authorization) to transfer those funds to the LTD insurer to satisfy the LTD overpayment. The LTD representative also documents the oral authorization. We will accept this arrangement. The beneficiary is exercising control over the past-due benefits deposited into his or her account before the pre-authorized transfer of funds, and the beneficiary understands that he or she could have elected to pay the LTD directly. The LTD provider does not receive a fee from the beneficiary and obtains a pre-authorization to transfer funds from the beneficiary’s account in order to repay the third party (i.e., the overpayment of payments from the insurer). The LTD representative also gets authorization after deposit of the SSA benefit payment into the beneficiary’s account. For policy on acceptable third-party repayment arrangements, see GN 02410.001D.2.a. , in this section.

b.  Master sub-account

Comfort Nursing Home maintains a master sub-account titled “Comfort Nursing Home Patients' Accounts” at New State Bank for the convenience of its residents. The nursing home sets up a separate sub-account for each resident. Residents sign agreements for the nursing home to withdraw monthly amounts for care costs. Residents can withdraw any amount, up to the balance in their accounts for personal expenses and they have the right to terminate the account at any time. The nursing home keeps track of all deposits and withdrawals. This is an acceptable master sub-account. For policy on acceptable master sub-accounts with FI, see GN 02402.050 .

c.  FI-EFD

Big Bucks Bank Inc. (BBB) is an accepted FI. BBB offers the “We-Pay-U” program for customers without traditional bank accounts. We-Pay-U program customers sign a contract and establish a non-interest bearing account with BBB for the sole purpose of electronic transfer of federal or non-federal monthly payments to that account. Beneficiaries or recipients can then receive their SSA payments in the form of a cashier's check from Brown Bear Check Cashing. Brown Bear Check Cashing acts as an agent of BBB and must adhere to the rules and regulations of BBB in relation to the We-Pay-U account. The We-Pay-U customer agrees to a monthly processing fee associated with the We-Pay-U account, which BBB withdraws from their payment automatically. This is an acceptable relationship. The beneficiary or recipient has established control of their payment and the fees associated with the We-Pay-U program. Because the account fees in the contract apply to both federal and non-federal monthly payments, we consider them customary to the BBB account. For policy on acceptable FI-EFD arrangements, see GN 02410.001D.2.b. in this section.

2.  Prohibited arrangement

A beneficiary or recipient has appointed an attorney representative to help him in proceedings before SSA. SSA is not paying an attorney fee directly to the representative. The beneficiary or recipient establishes a checking account in his or her own name that requires the signature of both the beneficiary or recipient and the attorney on checks written to withdraw funds from the account. The beneficiary or recipient requests direct deposit of his or her payments to that account. This is a prohibited arrangement because the beneficiary or recipient has given control of access to payments to the attorney representative. See the following references for additional information:

For policy on Who is a Representative, see GN 03910.020 .

For policy on representative’s fees in trust or escrow accounts, see GN 03920.025 .

For policy on acceptable types of financial institutions and accounts, see GN 02402.030 .

For policy on payment to the wrong person, see GN 02410.001D.1. , in this section.

F.  References

GN 02402.030 Acceptable Types of Financial Institutions and Accounts

GN 02402.050 Account Titles

GN 02402.085 Unacceptable Requests for Direct Deposit

GN 03910.020 Who Is a Representative

GN 03920.017 Payment of Representative's Fee

GN 03920.025 Representative's Fee - Trust or Escrow Accounts

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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, conversion factor (cf).

Conversion factor (CF) is a numerical value used to convert relative value units (RVUs) into payment rates for healthcare services in the revenue cycle management (RCM) process.

Copayment is a fixed amount that a patient pays out-of-pocket for a specific healthcare service at the time of receiving care.

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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).

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

assignment of benefit voucher

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.

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What is Assignment of Benefits in Medical Billing?

doctor sitting at his desk on his laptop

An assignment of benefits is the act of signing documentation authorizing a health insurance company to pay a physician directly. In other words, the insurance company can pay claims without the direct involvement of the patient in the process. There are other situations where AOBs can be helpful, but we’ll focus on their use in relation to medical benefits.

If there isn’t an assignment of benefits agreement in place, the patient would be responsible for paying the other party directly from their own pocket, then filing a claim with their insurance provider to receive reimbursement. This could be time-consuming and costly, especially if the patient has no idea how to file a claim.

The document is typically signed by patients when they undergo medical procedures. The purpose of this form is to assign the responsibility of payment for any future medical bills that may arise after the procedure. It’s important to note that not all procedures require an AOB.

An assignment of benefits agreement might be utilized to pay a medical practitioner the patient didn’t choose, like an anesthesiologist. The patient may have picked a surgeon, but an anesthesiologist assigned on the day of the procedure might issue a separate bill. They’re, in essence, signing that anyone involved in their treatment can receive direct payment from the insurance carrier. It doesn’t have to go through the patient.

This document can also eliminate service fees surrounding processing. As a result, the patient can focus on medical treatment and recovery without being bogged down with the complexities of paying medical bills. The overall intent of an assignment of benefits agreement is to make the process more manageable for the patient, as they don’t need to haggle directly with their insurer.

List of Providers and Services

When the patient signs an AOB agreement, they give a third party right to obtain payment for services the provider performed, and medical billing services are a prime example of where they may sign an AOB agreement.

  • Ambulance services
  • Medical insurance claims
  • Drugs and pharmaceuticals
  • Diagnostic and clinical lab services
  • Emergency surgical center services
  • Dialysis supplies and equipment used in the home
  • Physician services for Medicare and Medicaid patients

Services of professionals other than a primary care physician, which includes:

  • Physician assistants
  • Clinical nurse specialists
  • Clinical social workers
  • Clinical psychologists
  • Certified registered nurse anesthetists

doctor at desk filling out forms on clipboard

Information Commonly Requested on Assignment of Benefits Form:

  • Signature of patient or person legally responsible
  • Signature of parent or legal guardian

How AOBs Affect the Medical Practitioner

A medical provider or their administrative staff may feel overwhelmed by the sheer number of forms patients must fill out prior to treatment. Demanding more paperwork from patients may be seen as an added burden on the managerial staff, as well as the patient. However, getting a signed AOB is vital in preserving the interests of everyone involved.

In addition to receiving direct payment from the insurance company without needing to go through the patient, a signed assignment of benefits form will help medical providers appeal denied and underpaid claims. They can ask that payments be made directly to them rather than through the patient. This makes the process more manageable for both the doctors and the patient.

Things to Bear in Mind

The patient gives their rights and benefits to third parties under their current health plan. Depending on the wording in the AOB, their insurer may not be allowed to contact them directly about their claims. In addition, the patient may be unable to negotiate settlements or approve payments on their behalf and enable third parties to endorse checks on behalf of the patient. Finally, when the patient signs an AOB, the insurer may sue the third parties involved in the dispute.

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Does the patient have to sign the bulk bill voucher?

Date of Answer: 12:06 pm  I  August 1, 2020

BB 2020/061

It is commonly believed that patients do not have to sign the bulk bill voucher. This is incorrect. The law is clear that the patient’s signature evidencing consent to bulk bill is always required.

This answer explains the law around the requirement for patients to sign the Bulk Bill voucher, commonly known as the DB4 form.

Relevant legislative provisions

Health Insurance Act 1973 , Section 20A

Health Insurance Act 1973 , Section 20B(3)

Health Insurance Act 1973 , Section 127

Health Insurance Regulations 2018, Reg 63(2)(b)

Electronic Transactions Act 1999

Other relevant materials

1. Short bulk bill explainer article published in Australian Doctor:

The Law Trumps Medicare Advice on Bulk Bill Vouchers: https://www.ausdoc.com.au/workwise/youre-likely-guilty-so-beware-law-trumps-medicare-advice-bulk-bill-vouchers

2. Peer reviewed academic journal article published in the Journal of Law and Medicine, with detailed analysis of bulk billing arrangements:

Medicare Billing Law and Practice: Complex, Incomprehensible and Beginning to Unravel. https://www.ncbi.nlm.nih.gov/pubmed/31682343

Wong v Commonwealth of Australia;  Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee No 309 [2009] HCA 3 (2 February 2009) 

Departmental interpretation

https://www.servicesaustralia.gov.au/organisations/health-professionals/services/medicare/medicare-online-health-professionals (accessed 6 June 2020)

“Assignment of benefit documents

Assignment of benefit forms no longer need to be stored at the practice if you are using Medicare Online. ..

The legislative requirements for the assignment of benefit are:

  • an agreement must be made between the patient (assignor) and you for the assignment of benefit
  • the agreement is evidenced through the use of the assignment of benefit form
  • the patient is required to sign the form
  • a copy of the agreement must be provided to the patient.”

Detailed reasoning

Section 20A(1) of the Health Insurance Act (the Act) describes the bulk billing process as follows (my underlining):

“Assignment of Medicare benefit

(1)  Where a medicare benefit is payable to an eligible person in respect of a professional service rendered to the eligible person or to another eligible person, the first‑mentioned eligible person and the person by whom, or on whose behalf, the professional service is rendered (in this subsection referred to as the practitioner) may enter into an agreement, in accordance with the approved form, under which:

(a)  the first‑mentioned eligible person assigns his or her right to the payment of the medicare benefit to the practitioner; and

(b)  the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first‑mentioned eligible person.”

There are two parties described in Section 20A. The first is the ‘eligible person’ which is the patient, and the second is the ‘practitioner’ which may be a doctor or any health provider able to claim using the medicare scheme.

Section 20A states that the patient holds the legal right to the medicare benefit, not the practitioner. A simple two step process (known as bulk billing) is set out, whereby the patient assigns their right to a medicare benefit to the practitioner, and the practitioner accepts it in full payment for the service provided.

Implicit in this arrangement is the concept of consent.

In deliberations around the operation of Section 20A, Kirby J, in the High Court case of Wong v Commonwealth of Australia said:

“Even “bulk billing” is only possible by consent of both parties to that relationship.”

The method of consent is described in Section 20B(3) of the Act. This is where the patient’s signature comes into play. The Act states that the patient has to sign the assignment of benefit form to evidence their consent to being bulk billed.

Here is section 20B(3) with the word ‘signed’ underlined.

“(3)  A claim referred to in subsection (2) shall not be paid unless the claimant satisfies the Chief Executive Medicare that:

(c)  in the case of an agreement under subsection 20A(1) that was signed by each party in the presence of the other—the assignor retained in his or her possession after the agreement was so signed a copy of the agreement;”

The content on the Department’s website (above, under the heading Departmental Interpretation) is likely the cause of widespread non-compliance with the signature requirement, because it is confusing.

However, it is important to understand that the department saying you do not have to keep the signed form, does not mean the patient does not have to sign it.

The law is clear – the patient has to sign the assignment of benefit form to evidence consent, and the fact that the department permits putting your copy of the signed form in the bin, in no way negates the provisions of the Act.

From the government perspective, continuance of the signature requirement is good policy, designed to protect the integrity of public money, in two ways:

  • It is the only active involvement the patient has in a bulk billing transaction, and it therefore provides the only opportunity for the patient to review and query the services being claimed against her/his Medicare number, and
  • It is a critically important safeguard against fraudulent billing (such as billing for fictitious services) because it is the only evidence of both the practitioner and patient being in the same place at the same time.

From the practitioner perspective, retaining copies of signed bulk bill vouchers is a good idea, because it evidences practitioner presence and patient consent. Entries in clinical records cannot do this to the same extent. For example, an unethical practitioner could easily make an entry in a clinical record for an existing patient, without having provided a service, and the patient would likely never know that a claim had been bulk billed under their Medicare card.

The department’s position is unfortunate, however, it is there in black and white on their website. So, if you are bulk billing electronically, the department has made clear, the decision to retain or bin signed bulk bill vouchers is a matter for you.

Section 20A and 20B are two of the key machinery provisions of the Act, underpinning the operation of the Medicare scheme. Think of them like pulmonary veins that deliver oxygenated blood to the heart. These sections deliver approved payments of taxpayer’s money to your pocket. Removing them from the scheme would obliterate patient consent and render the scheme more vulnerable to abuse.

Examples and other relevant information

Other important legal provisions relating to bulk billing that you should be aware of.

  • Asking patients to sign blank bulk bill forms or forms with missing details is illegal per Section 127 of the Act .
  • Not giving patients a copy of their signed bulk bill form is an offence, but penalties can be waived if you have a ‘reasonable excuse’ as to why you didn’t give it to the patient. This is also in Section 127.
  • Using a Medicare Easyclaim terminal has a special legal provision, so having the patient (not you) press ‘yes or ‘OK’ on the terminal is a legally valid signature, per regulation 63(2)(b).
  • If the patient is unable to sign, you can indicate ‘unable to sign’ and notate why. This has always been an available option on the prescribed form (the DB4).
  • Medicare is a fee-for-service scheme meaning you must obtain the patient’s consent for each separate service. It is not permissible to obtain a blanket ongoing consent to bulk bill, such as for a course of chemotherapy.
  • The Department is bound by the provisions of the Electronic Transactions Act 1999 and so SMS/email signatures are permitted, providing certain criteria are met. This will help you to understand how to manage the bulk bill signature requirement in situations where the patient is not physically in the same place as the practitioner when the service is provided, such as case conferences and telehealth. See answer BB2020/062 .

Who this applies to

Everyone when bulk billing.

When this applies

Always. This has been the law since Medibank (later Medicare) began.

Relevant AIMAC courses

Bulk Billing, Medicare’s Heart Beat

Date of Answer: 1:37 pm  I  September 21, 2020

  • Bulk billing is only permissible AFTER a service has been provided and fees have been incurred in respect of a professional service. Therefore, do not ever ask a patient to sign a bulk bill voucher (even if all data elements have been completed) before a service has been provided. Patients cannot be asked to sign for a service they have not received.

Date of Answer: 5:54 pm  I  January 16, 2023

Date of Answer: 1:52 pm  I  February 23, 2023

Health Insurance Act 1973 , Section 20B(3)

Health Insurance Act 1973 , Section 127

2. Academic journal article published in the Journal of Law and Medicine, with detailed analysis of bulk billing arrangements:

Wong v Commonwealth of Australia;  Selim v Lele, Tan and Rivett constituting the Professional Services Review Committee No 309 [2009] HCA 3 (2 February 2009) 

(1)  Where a medicare benefit is payable to an eligible person in respect of a professional service rendered to the eligible person or to another eligible person, the first‑mentioned eligible person and the person by whom, or on whose behalf, the professional service is rendered (in this subsection referred to as the practitioner) may enter into an agreement, in accordance with the approved form, under which:

(a)  the first‑mentioned eligible person assigns his or her right to the payment of the medicare benefit to the practitioner; and

(b)  the practitioner accepts the assignment in full payment of the medical expenses incurred in respect of the professional service by the first‑mentioned eligible person.”

“(3)  A claim referred to in subsection (2) shall not be paid unless the claimant satisfies the Chief Executive Medicare that:

(c)  in the case of an agreement under subsection 20A(1) that was signed by each party in the presence of the other—the assignor retained in his or her possession after the agreement was so signed a copy of the agreement;”

Date of Answer: 3:51 pm  I  March 1, 2023

Date of Answer: 2:27 pm  I  May 15, 2023

Date of Answer: 3:14 pm  I  June 5, 2023

Whether patients need to sign something when being bulk billed causes a great deal of confusion industry wide. The confusion is understandable given Medicare itself advises that you do not need to retain signed bulk bill vouchers. But what does that actually mean and what does the law say?

Date of Answer: 3:15 pm  I  June 5, 2023

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Assignment of Benefit

GPs and their practice staff are reminded that when processing bulk bill claims though Medicare Easyclaim that the patient must physically assign their benefit as full payment for the service. The Department of Human Services in its latest News for Health Professionals advises that for the assignment of benefit you need to:

  • use the assignment of benefit form to show evidence of your agreement with the patient
  • get the patient to sign the form
  • provide the patient with a copy of the agreement
  • press OK on the EFTPOS terminal
  • or to sign an approved DB4 form if the EFTPOS terminal system is unavailable

assignment of benefit voucher

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Bulk bill claim definitions

Bulk bill claim definitions for Medicare Easyclaim.

on this page

Bulk bill claims, accept or decline indicator, assignment of benefit, benefit assigned amount, claims per transaction, real time concession entitlement verification (cev), retention of records, transmission of bulk bill claims.

A bulk bill claim is where a patient who is eligible for a Medicare benefit assigns their right to the benefit to the servicing provider as full payment for that service and the health professional lodges the claim with us.

It is at the health professional’s discretion whether or not to bulk bill a patient.

Where a Medicare eligibility or concession entitlement is returned by us, the medical practice or patient may choose to accept or decline the claim.

When a patient assigns their right to the benefit to the servicing provider as full payment for those services.

For Medicare Easyclaim, the benefit returned in a bulk bill claim refers to an estimate of the benefit that the health professional will be paid.

This amount may be adjusted in accordance with the rules set out in the MBS.

Only 1 bulk bill claim can be submitted per transmission. This claim may contain more than one service item.

When the bulk bill claim is lodged, we will validate the patient’s concession entitlement only if the patient’s Medicare card is valid.

We recommend practices keep all records associated with benefits paid for at least 2 years. These records can include electronic billing information, notes in practice software, appointment records and assignment of benefit forms. In the event of an audit, this information will help health professionals to validate to us that claims have been correctly paid.

Bulk bill claims are transmitted to us in real time but are not assessed immediately.

Basic patient or provider eligibility checks occur before the patient and provider accept or decline the assignment of benefit. The patient must be present to press OK to assign their benefit.

The receipt that is printed is an Assignment of Benefit Advice only and indicates that the claim has been successfully transmitted to us.

The practice must give the patient a copy of the receipt.

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This information was printed 21 February 2024 from https://www.servicesaustralia.gov.au/bulk-bill-claim-definitions . It may not include all of the relevant information on this topic. Please consider any relevant site notices at https://www.servicesaustralia.gov.au/site-notices when using this material.

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COMMENTS

  1. Assignment of benefit

    complete a General, Specialist and Diagnostic (assignment of benefit) Voucher form (DB4). For manually submitted claims, write in the signature block 'Written email agreement provided.' For electronic claims, you don't need to note the email signature but you must keep the patient's email consent on file. You must then:

  2. Assignment of Benefits

    Assignment of benefits is not authorization to submit claims. It is important to note that the beneficiary signature requirements for submission of claims are separate and distinct from assignment of benefits requirements except where the beneficiary died before signing the request for payment for a service furnished by a supplier and the supplier accepts assignment for that service.

  3. Thanks for bulk billing! Now here's some forms

    The patient then replies to that email, explicitly writing that they agree to the assignment of the Medicare benefit directly to the health professional. Only once that is done can the doctor complete general, specialist and diagnostic assignment of benefit voucher form DB4 and submit the claim, writing "email agreement" in the signature block.

  4. 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.

  5. SSA

    A. Protection from assignment of benefits. Sections 207 and 1631 (d) (1) of the Social Security Act (the Act) prohibit "transfer" or "assignment" of a beneficiary or recipient's right to future payment under title II and title XVI respectively. These sections of the Act prohibit the transfer of control over money to someone other than ...

  6. What is assignment of benefits, and how does it impact insurers?

    Mar 06, 2020. 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 decisions ...

  7. 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 ...

  8. 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 ...

  9. 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)).

  10. 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.

  11. Bulk bill payments to health professionals

    Adjusting a bulk bill claim. Bulk billing is when you bill Medicare directly for your patient's medical or allied health service. In a bulk billing arrangement both of the following apply: you accept the Medicare benefit as full payment for the service. your patient assigns their right to a Medicare benefit to you, so we pay the benefit to you.

  12. What is Assignment of Benefits in Medical Billing?

    An assignment of benefits is the act of signing documentation authorizing a health insurance company to pay a physician directly. In other words, the insurance company can pay claims without the direct involvement of the patient in the process. There are other situations where AOBs can be helpful, but we'll focus on their use in relation to ...

  13. Assignment of Benefits (AOB)

    Assignment of Benefits (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 are commonly used in homeowners' insurance claims by ...

  14. Does the patient have to sign the bulk bill voucher?

    The Act states that the patient has to sign the assignment of benefit form to evidence their consent to being bulk billed. Here is section 20B (3) with the word 'signed' underlined. " (3) A claim referred to in subsection (2) shall not be paid unless the claimant satisfies the Chief Executive Medicare that:

  15. eCFR :: 42 CFR 435.610 -- Assignment of rights to benefits

    § 435.610 Assignment of rights to benefits. (a) Consistent with §§ 433.145 through 433.148 of this chapter, as a condition of eligibility, the agency must require legally able applicants and beneficiaries to: (1) Assign rights to the Medicaid agency to medical support and to payment for medical care from any third party;

  16. 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.

  17. Submitting Medicare Bulk Bill Webclaims

    You can also fill out a Bulk bill voucher - electronically transmitted claims form. Completing a manual Assignment of benefit form. Steps to complete a manual assignment of benefit form: Only one patient is allowed per form. Check date of service is before Medicare card expiry date - indicate with an X in the Expiry Date Checked box.

  18. 42 CFR Part 433 Subpart D

    Assignment of rights to benefits—State plan requirements. § 433.146. Rights assigned; assignment method. § 433.147. Cooperation in establishing the identity of a child's parents and in obtaining medical support and payments and in identifying and providing information to assist in pursuing third parties who may be liable to pay. § 433.148.

  19. Assignment of Benefit

    use the assignment of benefit form to show evidence of your agreement with the patient. get the patient to sign the form. provide the patient with a copy of the agreement. let the patient know that to assign their benefit for bulk bill claims to you, it is a legal requirement for the patient to: press OK on the EFTPOS terminal.

  20. Medical coding and billing Flashcards

    Study with Quizlet and memorize flashcards containing terms like The document together with the payment voucher that is sent to a physician who has accepted assignment of benefits is referred to as an, All of the following are responsibilities of the insurance payment poster EXCEPT, If the insurance billing specialist posts a payment and there is a remaining balance, they should always and more.

  21. Bulk bill voucher

    Use this form to claim assigned benefits for electronically transmitted claims. Download and complete the Bulk bill voucher - electronically transmitted claims form. These services can be claimed through HPOS Bulk Bill Webclaim capability. This form is interactive. It has 2 copies, one for the health professional and one for the patient.

  22. Bulk bill claim definitions

    Assignment of benefit. When a patient assigns their right to the benefit to the servicing provider as full payment for those services. Benefit assigned amount. For Medicare Easyclaim, the benefit returned in a bulk bill claim refers to an estimate of the benefit that the health professional will be paid.