Chapter 405. Rules Governing Balance Billing for Out-of-Network Health Care Services
14VAC5-405-10. Purpose and scope.
The purpose of this chapter is to set forth rules and procedures that address balance billing and the use of arbitration between health carriers and out-of-network providers pursuant to the provisions of §§ 38.2-3445 through 38.2-3445.07 of Chapter 34 (§ 38.2-3400 et seq.) of Title 38.2 of the Code of Virginia. This chapter shall apply to all health benefit and managed care plans issued and delivered in this Commonwealth except as provided for in § 38.2-3445.06 of the Code of Virginia.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
14VAC5-405-20. Definitions.
The following words and terms when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise:
"Allowed amount" means the maximum portion of a billed charge a health carrier will pay, including any applicable cost-sharing requirements, for a covered service or item rendered by a participating provider or by a nonparticipating provider.
"Arbitrator" means an individual included on a list of arbitrators approved by the commission pursuant to 14VAC5-405-50.
"Balance bill" means a bill sent to an enrollee by an out-of-network provider for health care services provided to the enrollee after the provider's billed amount is not fully reimbursed by the carrier, exclusive of applicable cost-sharing requirements.
"Child" means a son, daughter, stepchild, adopted child, including a child placed for adoption, foster child, or any other child eligible for coverage under the health benefit plan.
"Clean claim" means a claim (i) that has no material defect or impropriety, including any lack of any reasonably required substantiation documentation, that substantially prevents timely payment from being made on the claim; and (ii) that includes required Internal Revenue Service documentation for the carrier to process payment. A carrier shall notify the person submitting the claim of any defect or impropriety.
"Commercially reasonable payment" or "commercially reasonable amount" means payments or amounts a carrier is required to reimburse a health care provider for out-of-network services pursuant to §§ 38.2-3445.01 and 38.2-3445.02 of the Code of Virginia.
"Commission" means the State Corporation Commission.
"Cost-sharing requirement" means an enrollee's deductible, copayment amount, or coinsurance rate.
"Covered benefits" or "benefits" means those health care services to which an individual is entitled under the terms of a health benefit plan.
"Dependent" means the spouse or child of an eligible employee, subject to the applicable terms of the policy, contract, or plan covering the eligible employee.
"Elective group health plan" means (i) a self-funded group health plan providing or administering an employee welfare benefit plan as defined in § 3(1) of ERISA, 29 USC § 1002(1), that is self-insured or self-funded with respect to such plan and that establishes for its enrollees a network of participating providers, or a self-funded group health plan for local government employees, local officers, teachers, and retirees, and the dependents of such employees, officers, teachers, and retirees; and (ii) elects to participate in the requirements of §§ 38.2-3445 through 38.2-3445.07 of the Code of Virginia by notifying the commission in accordance with 14VAC5-405-80.
"Emergency medical condition" means, regardless of the final diagnosis rendered to an enrollee, a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, so that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment to bodily functions, (iii) serious dysfunction of any bodily organ or part, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus.
"Emergency services" means with respect to an emergency medical condition (i) a medical screening examination as required under § 1867 of the Social Security Act (42 USC § 1395dd) that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition and (ii) such further medical examination and treatment, to the extent they are within the capabilities of the staff and facilities available at the hospital, as are required under § 1867 of the Social Security Act (42 USC § 1395dd (e)(3)) to stabilize the patient.
"Enrollee" means a policyholder, subscriber, covered person, participant, or other individual covered by a health benefit plan.
"ERISA" means the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et seq.).
"Facility" means an institution providing health care related services or a health care setting, including hospitals and other licensed inpatient centers; ambulatory surgical or treatment centers; skilled nursing centers; residential treatment centers; diagnostic, laboratory, and imaging centers; and rehabilitation and other therapeutic health settings.
"Health benefit plan" means a policy, contract, certificate, or agreement offered by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services. "Health benefit plan" includes short-term and catastrophic health insurance policies, and a policy that pays on a cost-incurred basis, except as otherwise specifically exempted in this definition. "Health benefit plan" also includes an elective group health plan. "Health benefit plan" does not include the "excepted benefits" as defined in § 38.2-3431 of the Code of Virginia.
"Health care professional" means a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with state law.
"Health care provider" or "provider" means a health care professional or facility.
"Health care services" means services for the diagnosis, prevention, treatment, cure, or relief of a health condition, illness, injury, or disease.
"Health carrier" means an entity subject to the insurance laws and regulations of the Commonwealth and subject to the jurisdiction of the commission that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an insurer licensed to sell accident and sickness insurance, a health maintenance organization, a health services plan, or any other entity providing a plan of health insurance, health benefits, or health care services.
"Initiating party" means the health carrier or out-of-network provider that requests arbitration pursuant to § 38.2-3445.02 of the Code of Virginia and 14VAC5-405-40.
"In-network" or "participating" means a provider that has contracted with a carrier or a carrier's contractor or subcontractor to provide health care services to enrollees and be reimbursed by the carrier at a contracted rate as payment in full for the health care services, including applicable cost-sharing requirements.
"Managed care plan" means a health benefit plan that either requires an enrollee to use, or creates incentives, including financial incentives, for an enrollee to use health care providers managed, owned, under contract with, or employed by the health carrier.
"Network" means the group of participating providers providing services to a managed care plan.
"Offer to pay" or "payment notification" means a claim that has been adjudicated and paid by a carrier or determined by a carrier to be payable by an enrollee to an out-of-network provider for services described in subsection A of § 38.2-3445.01 of the Code of Virginia.
"Out-of-network" or "nonparticipating" means a provider that has not contracted with a carrier or a carrier's contractor or subcontractor to provide health care services to enrollees.
"Out-of-pocket maximum" or "maximum out-of-pocket" means the maximum amount an enrollee is required to pay in the form of cost-sharing requirements for covered benefits in a plan year, after which the carrier covers the entirety of the allowed amount of covered benefits under the contract of coverage.
"Provider group" means a group of multispecialty or single specialty health care professionals who contract with a facility to exclusively provide multispecialty or single specialty health care services at the facility.
"Receipt" means five calendar days after mailing or the date of electronic transmittal.
"Surgical or ancillary services" means any professional services, including surgery, anesthesiology, pathology, radiology, or hospitalist services and laboratory services.
"Written" or "in writing" means a written communication that is electronically transmitted. Paper communication is discouraged.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
14VAC5-405-30. Balance billing for out-of-network services.
A. Pursuant to § 38.2-3445.01 of the Code of Virginia, no out-of-network provider shall balance bill or attempt to collect payment amounts from an enrollee other than those described in subsection B of this section for:
1. Emergency services provided to an enrollee by an out-of-network provider; or
2. Nonemergency services provided to an enrollee at an in-network facility if the nonemergency services involve otherwise covered surgical or ancillary services provided by an out-of-network provider.
B. An enrollee who receives services described in subsection A of this section is obligated to pay the in-network cost-sharing requirement specified in the enrollee's or applicable group health plan contract, which shall be determined using the carrier's median in-network contracted rate for the same or similar service in the same or similar geographic area. When there is no median in-network contracted rate for the specific services provided, the enrollee's cost-sharing requirement shall be determined as provided in § 38.2-3407.3 of the Code of Virginia. An enrollee who is enrolled in a high deductible health plan associated with a Health Savings Account or other health plan for which the carrier is prohibited from providing first-dollar coverage prior to the enrollee meeting the deductible requirement under 26 USC § 223(c)(2) or any other applicable federal or state law may be responsible for any additional amounts necessary to meet deductible requirements beyond those described in this subsection, including additional amounts pursuant to subsection E of this section and owed to the out-of-network provider in 14VAC5-405-40, but only to the extent that the deductible has not yet been met and not to exceed the deductible amount.
C. When a clean claim is received pursuant to the provisions of subsection A of this section, the health carrier shall be responsible for:
1. Providing an explanation of benefits to the enrollee and the out-of-network provider that reflects the cost-sharing requirement determined under this subsection;
2. Applying the in-network cost-sharing requirement under subsection B of this section and any cost-sharing requirement paid by the enrollee for such services toward the in-network maximum out-of-pocket payment obligation;
3. Making commercially reasonable payments for services other than cost-sharing requirements directly to the out-of-network provider without requiring the completion of any assignment of benefits or other documentation by the provider or enrollee;
4. Paying any additional amounts owed to the out-of-network provider through good faith negotiation or arbitration directly to the out-of-network provider; and
5. Making available to a provider through electronic or other method of communication generally used by a provider to verify enrollee eligibility and benefits information regarding whether an enrollee's health benefit plan is subject to the requirements of this section.
D. If the enrollee pays the out-of-network provider an amount that exceeds the amount determined under subsection B of this section, the out-of-network provider shall be responsible for:
1. Refunding to the enrollee the excess amount that the enrollee paid to the provider within 30 business days of receipt of the later of payment or notice that the enrollee's managed care plan is subject to the requirements of this section; and
2. Paying the enrollee interest computed daily at the legal rate of interest stated in § 6.2-301 of the Code of Virginia beginning on the first calendar day after the 30 business days for any unrefunded payments.
E. The amount paid to an out-of-network provider for health care services described in subsection A of this section shall be a commercially reasonable amount, based on payments for the same or similar services provided in a similar geographic area. Within 30 calendar days of receipt of a clean claim from an out-of-network provider, the carrier shall offer to pay the provider a commercially reasonable amount. Disputes between the out-of-network provider and the carrier regarding the commercially reasonable amount shall be handled as follows:
1. If the out-of-network provider disputes the carrier's payment, the provider shall notify the carrier in writing and negotiate in good faith no later than 30 calendar days after the earlier of receipt of payment or payment notification from the carrier; and
2. If the carrier and provider do not agree to a commercially reasonable payment amount within the good faith negotiation period and either party acts within the required timeframes to pursue further action to resolve the dispute, the dispute shall be resolved through arbitration as provided in § 38.2-3445.02 of the Code of Virginia and 14VAC5-405-40. A carrier may not require a provider to reject or return claim payment as a condition of pursuing further arbitration.
F. A health carrier shall not be prohibited from (i) informing enrollees in a nonemergency situation of the availability of in-network facilities that employ or contract with only in-network providers that render surgical and ancillary services ; or (ii) offering plan designs that encourage enrollees to utilize specific in-network health care providers.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
14VAC5-405-40. Arbitration process.
A. If a good faith negotiation does not result in resolution of the dispute, the health carrier or provider may initiate arbitration by providing the notice of intent to arbitrate form to the commission and the non-initiating party within 10 calendar days following completion of the good faith negotiation period. The notice shall state the initiating party's final payment offer. Failure to timely submit the notice of intent to arbitrate form shall negate the party's opportunity to seek arbitration for the claim that was the subject of the untimely notice.
B. Agreement between the parties may be reached at any time in the process. The arbitration will then be terminated. The claim shall then be paid within 10 calendar days and the matter closed upon agreement .
C. The commission shall maintain a list of qualified arbitrators and each arbitrator's fixed fee on its website.
1. Within five calendar days of the notice of intent to arbitrate, the initiating party shall notify the commission of either agreement on an arbitrator from the list or that the parties cannot agree on an arbitrator.
2. If the parties cannot agree on an arbitrator, within five calendar days the commission shall provide the parties with the names of five arbitrators from the list. Within five calendar days, each party is responsible for reviewing the list of five arbitrators and notifying the commission if there is an apparent conflict of interest with any of the arbitrators on the list. Each party may veto up to two of the named arbitrators. If one name remains, that arbitrator shall be chosen. If more than one name remains, the commission shall choose the arbitrator from the remaining names.
3. Once the arbitrator is chosen, the commission shall notify the parties and the arbitrator within five calendar days.
4. The arbitrator's fee is payable within 10 calendar days of the assignment of the arbitrator with the health carrier and the provider to divide the fee equally.
D. Both parties shall agree to and execute a nondisclosure agreement within 10 business days following receipt of the notice of intent to arbitrate.
E. Within 30 calendar days following receipt of the notice of intent to arbitrate, each party shall provide written submissions in support of its position as well as the final payment offers directly to the arbitrator. At this time, the non-initiating party also shall provide its final offer to the initiating party. Each party shall include in its written submission the evidence and methodology for asserting that the amount proposed to be paid is or is not commercially reasonable. Any party that fails to make a written submission required by this subsection without good cause shown will be in default. The arbitrator shall require the defaulting party to pay or accept the final payment offer of the non-defaulting party and may require the defaulting party to pay the entirety of the arbitrator's fee.
F. The arbitrator shall consider the following factors in reviewing the submissions of the parties and making a decision requiring payment of the final offer amount of either the initiating or non-initiating party:
1. The evidence and methodology submitted by the parties to assert that their final offer amount is reasonable;
2. Patient characteristics and the circumstances and complexity of the case, including time and place of service and type of facility, that are not already reflected in the provider's billing code for the service;
3. The arbitrator may also consider other information that a party believes is relevant as part of their original written submission, including data sets developed pursuant to § 38.2-3445.03 of the Code of Virginia. The arbitrator shall not require extrinsic evidence of authenticity for admitting such data sets.
G. Within 15 calendar days after receipt of the parties' written submissions, the arbitrator shall issue a written decision requiring payment of the final offer amount of either of the parties. The arbitrator shall notify the parties and the commission of this decision. The decision shall include an explanation by the arbitrator of the basis for the decision and factors relied upon in making the decision and copies of all written submissions by each party. The decision shall also include information required to be reported to the commission, including the name of the health carrier, the name of the provider, the provider's employer or business entity in which the provider has an ownership interest, the name of the facility where services were provided, and the type of health care service at issue. The claim shall be paid within 10 calendar days after the arbitration decision.
H. Within 30 calendar days of receipt of the arbitrator's decision, either party may appeal to the commission in accordance with the provisions of 5VAC5-20-100 B based only on one of the following grounds: (i) the decision was substantially influenced by corruption, fraud, or other undue means; (ii) there was evident partiality, corruption, or misconduct prejudicing the rights of any party; (iii) the arbitrator exceeded his powers; or (iv) the arbitrator conducted the proceeding contrary to the provisions of § 38.2-3445.02 of the Code of Virginia and commission rules, in such a way as to materially prejudice the rights of the party.
I. A single provider is permitted to bundle claims for arbitration. Multiple claims may be addressed in a single arbitration proceeding if the claims at issue (i) involve identical health carrier or administrator and provider parties; (ii) involve claims with the same or related Current Procedural Technology (CPT) codes, Healthcare Common Procedure Coding System (HCPCS) codes, or in the case of facility services, Diagnosis Related Group (DRG) codes, Revenue Codes, or other procedural codes relevant to a particular procedure, and (iii) occur within a period of two months of one another. Provider groups are not permitted to bundle claims for arbitration if the health care professional providing the service is not the same.
J. All written submissions and notifications required under this section shall be submitted electronically. Individual information related to any arbitration is confidential and not subject to disclosure.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021; Errata, 37:17 VA.R. 2634 April 12, 2021.
14VAC5-405-50. Arbitrator qualifications and application.
A. Any person meeting the minimum qualifications of an arbitrator may submit an application on a form prescribed by the commission. An application fee of up to $500 may be required. The commission shall review the application within 30 days of receipt and notify the arbitrator of its decision.
B. An arbitrator approved by the commission shall meet the following minimum qualifications:
1. Any professional license the arbitrator has is in good standing;
2. Training in the principles of arbitration or dispute resolution by an organization recognized by the commission;
3. Experience in matters related to medical or health care services;
4. Completion of any training made available to the applicants by the commission;
5. Experience in arbitration or dispute resolution; and
6. Any other information deemed relevant by the commission.
C. The applicant shall supply the following information to the commission as part of the application process:
1. Number of years of experience in arbitrations or dispute resolutions;
2. Number of years of experience engaging in the practice of medicine, law, or administration responsible for one or more of the following issues: health care billing disputes, carrier and provider or facility contract negotiations, health services coverage disputes, or other applicable experience;
3. The names of the health carriers for which the arbitrator has conducted arbitrations or dispute resolutions;
4. Membership in an association related to health care, arbitration or dispute resolutions and any association training related to health care or arbitration or dispute resolution;
5. A list of specific areas of expertise in which the applicant conducts arbitrations;
6. Fee to be charged for arbitration that shall reflect the total amount that will be charged by the proposed arbitrator, inclusive of indirect costs, administrative fees, and incidental expenses; and
7. Any other information deemed relevant by the commission.
D. Before accepting any appointment, an arbitrator shall disclose to the parties any potential conflict of interest that would adversely impact the arbitrator's independence and impartiality in rendering a decision in the arbitration. A conflict of interest may include (i) current or recent ownership or employment with any health carrier; (ii) current or recent ownership or employment with a physician, health care provider, or a health care facility; or (iii) having a material professional, familial, or financial conflict of interest with a party to the arbitration to which the arbitrator is assigned.
E. An arbitrator shall ensure that arbitrations are conducted within the specified timeframes and that required notices are provided in a timely manner.
F. The arbitrator shall maintain records and provide reports to the commission as requested in accordance with the requirements set out in § 38.2-3445.02 of the Code of Virginia and 14VAC5-405-40.
G. The commission shall immediately terminate the approval of an arbitrator who no longer meets the qualifications or requirements to serve as an arbitrator. Failure to disclose any known facts that a reasonable person would consider likely to affect the impartiality of the arbitrator in the arbitration proceeding shall serve as potential grounds for termination.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
14VAC5-405-60. Data sets.
A. The commission shall contract with Virginia Health Information or its successor to establish a data set and business process to provide health carriers, health care providers, and arbitrators with data to assist in determining commercially reasonable payments and resolving payment disputes for out-of-network medical services rendered by health care providers. This contractor will develop the data sets and business process in collaboration with health carriers and health care providers. The data set shall be reviewed by the advisory committee established pursuant to § 32.1-276.7:1 of the Code of Virginia.
B. The 2020 data set shall be based upon the most recently available full calendar year of claims data drawn from commercial health plan claims and shall not include claims paid under Medicare or Medicaid or other claims paid on other than a fee-for-service basis. The 2020 data set shall be adjusted annually for inflation by applying the Consumer Price Index-Medical Component as published by the Bureau of Labor Statistics of the U.S. Department of Labor to the previous year's data set.
C. The commission may implement other adjustments to the data sets in accordance with § 38.2-3445.03 of the Code of Virginia.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
14VAC5-405-70. Notification to consumers.
A. The notice of consumer rights shall be in a standard format provided by the commission and available on the commission's website.
B. A health carrier shall provide an enrollee with:
1. A clear description of the managed care plan's out-of-network health benefits outlined in the plan documents that also explains the circumstances under which the enrollee may have payment responsibility in excess of cost-sharing amounts for services provided out-of-network;
2. The notice of consumer rights delivered with the plan documents; and
3. An explanation of benefits that clearly indicates whether the enrollee may or may not be subject to balance billing if it contains claims from out-of-network providers.
C. A health carrier shall update its website and provider directory no later than 30 days after the addition or termination of a participating provider.
D. A health care facility shall provide the notice of consumer rights to an enrollee at the time any nonemergency service is scheduled and also along with the bill. A health care facility shall provide the notice of consumer rights to an enrollee with any bill for an emergency service. The notice may be provided electronically. However, a posted notice on a website will not satisfy this requirement.
E. A health care provider shall provide a notice of consumer rights upon request and post the notice on its website, along with a list of carrier provider networks with which it contracts. If no website is available, a health care provider shall provide to each consumer a list of carrier provider networks with which it contracts and the notice of consumer rights. This list shall be updated on a regular basis.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
14VAC5-405-80. Elective group health plans may opt-in.
A. An elective group health plan shall provide notice to the commission and to its third-party administrator of its opt-in decision on a form prescribed by the commission. The completed form must include an attestation that the elective group health plan has elected to participate in and be bound by §§ 38.2-3445 through 38.2-3445.07 of the Code of Virginia and this chapter, except as described in subsection E of this section. The form will be posted on the commission's public website for use by elective group health plans.
B. An elective group health plan shall reflect in its coverage documents its participation pursuant to subsection A of this section. The elective group health plan or plan administrator shall submit the required form electronically to the commission at least 30 days prior to the effective date. No other documents are required to be filed with the commission.
C. An elective group health plan may elect to initiate its participation on January 1 of any year or in any year on the first day of the elective group health plan's plan year.
D. An elective group health plan's election occurs on an annual basis. An elective group health plan may choose to automatically renew its election to opt in to §§ 38.2-3445 through 38.2-3445.07 of the Code of Virginia on an annual basis or it may choose to renew on an annual basis until the commission receives advance notice from the plan that it is terminating its election as of either December 31 of a calendar year or the last day of its plan year. Notices under this subsection must be submitted to the commission at least 30 days in advance of the effective date of the election to initiate participation and the effective date of the termination of participation.
E. Elective group health plan sponsors and their third-party administrators may develop their own internal processes related to member notification, member appeals, and other functions associated with any fiduciary duty to enrollees under ERISA, if applicable.
F. A list of all elective group health plans shall be posted on the commission's public website, to be updated at least each quarter. Posted information shall include relevant plan information.
G. A carrier that administers an elective group health plan shall, at the time of coverage verification through electronic and other methods of communication generally used by a provider to verify enrollee eligibility and benefits information, make information available to a provider of the elective group health plan's participation in the provisions of this chapter.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021; Errata 37:10, 37:10 VA.R. January 4, 2021.
14VAC5-405-90. Severability.
If any provision of this chapter or its application to any person or circumstance is for any reason held to be invalid by a court, the remainder of this chapter and the application of the provisions to other persons or circumstances shall not be affected.
Statutory Authority
§§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes
Derived from Virginia Register Volume 37, Issue 7, eff. January 1, 2021.
Forms (14VAC5-405)
Notice of Consumer Rights, Form 405-A (rev. 9/2022)
Elective Group Health Plan Opt-In, Form 405-B (rev. 3/2021)
Elective Group Health Plan Change/Termination, Form 405-C (rev. 3/2021)