ERISA Advisory Council Reports on Group Health Plan Claims and Appeals

March 11, 2025

The DOL's Advisory Council on Employee Welfare and Pension Benefit Plans (the Council) recently issued a report examining the group health plan benefit claims and appeals process. In particular, the report studies the reasons behind low participant appeal rates and makes recommendations to address this concern.

Under ERISA, group health plan fiduciaries must establish and maintain reasonable claims procedures that allow participants to apply for and receive promised benefits. Plans (including insured and self-funded plans) must meet the minimum standards for benefit claims determinations set by rules issued by the DOL. Among other items, the DOL rules require that if a claim is denied, the claimant is entitled to receive notice written in “a manner calculated to be understood by the claimant.” The denial must set forth the specific reason(s) for the denial, the specific plan provisions on which the determination was based, a description and explanation of any additional material or information that is necessary for the claimant to perfect the claim, and a description of appeal procedures.

Despite these requirements, a 2023 Kaiser Family Foundation (KFF) survey cited in the report noted the low appeal rate and lack of understanding by participants on how to challenge claim denials. (The KFF survey found that although 18% of adults had experienced a denied claim, only approximately 15% filed a formal appeal, and more than half of the participants were unsure whether they had a right to appeal claim denials.) Surveys such as this one prompted the Council to examine the current claim and appeal environment, the causes behind the low appeal rates, and the extent to which participants may lack knowledge of claim and appeal procedures. The Council also reviewed whether and to what extent claim denial notices and explanation of benefits (EOBs) inform participants, in an understandable manner, of the specific reasons for claim denials and otherwise satisfy regulatory requirements.

In conducting the examination, the Council reviewed published information on health benefit claims. Additionally, the Council sought testimony from various industry stakeholders, including the American Medical Association (AMA), patient/participant advocacy organizations, and TPAs. The AMA noted that negative experiences in appealing denied benefit claims often resulted in reluctance to engage with the appeal process prospectively, as well as participants delaying or forgoing treatment. The AMA also stressed that medical determinations by plans should be evidence-based and use nationally recognized standards. An industry attorney expressed that insurers and TPAs often assert they are not acting as fiduciaries when making claim determinations involving discretionary clinical judgments but need to be held accountable for their decisions as claims fiduciaries.

Another industry stakeholder noted the limited information available about group health plan claims and appeals and suggested that the DOL could collect more useful data, including the frequency of appeals, via Form 5500. Patient and participant advocacy groups testified that EOBs often do not communicate the level of information currently required by existing regulations and called for improvements to make claim denial notices and EOBs more reader-friendly and meaningful. Several stakeholders advocated for greater transparency regarding the use of artificial intelligence in the claims review process.

The Council considered whether changes to DOL guidance, education, and enforcement policies might improve the health benefits claims and appeals process, particularly for participants. Based on the testimonials received and information reviewed, the Council developed recommendations for the DOL to consider, which include the following:

• The DOL should develop and implement an educational campaign to better inform participants about their appeal rights and how to obtain assistance from governmental agencies and consumer assistance organizations when needed.
• The DOL should attempt to develop model language and model forms, including a model EOB form, for use in the claims and appeals process, inclusive of model language explaining appeal rights.
• The DOL should mandate that clinical determinations be made in accordance with generally accepted evidence-based standards of care and treatment.
• The DOL should issue guidance clarifying when actions taken by TPAs are fiduciary rather than ministerial acts.
• The DOL should examine how it might be able to collect useful data on health benefit claims and appeals, such as by adding additional reporting on Form 5500.
• The DOL should develop standards for the use of artificial intelligence in claims and appeals determinations.

Employer Takeaway

Group health plan sponsors should be aware of this report, review it for additional details, and monitor further developments. However, it’s important to note that the Council’s recommendations are only advisory; the DOL has the discretion to determine whether to adopt any of these measures. Additionally, it’s unclear how the Trump administration’s policies may impact the DOL’s priorities and enforcement capabilities or the Council’s activities.

Nonetheless, group health plan sponsors should ensure their claims administrators are exercising their discretionary authority carefully when adjudicating plan claims and appeals and communicating their determinations to participants in a comprehensive manner. Benefit denial notices and EOBs should be written in a way the average participant understands and should clearly specify all information required by existing regulations.

2024 ERISA Advisory Council Report: Group Health Plan Claims and Appeals