Part I. General
1VAC55-20-20. Definitions.
The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:
"Accident or health plan" means a plan described in the Internal Revenue Code § 105.
"Administrative services arrangement" means an arrangement whereby a third party administrator agrees to administer all or part of the health benefits program.
"Adoption agreement" means an agreement executed between a local employer and the department specifying the terms and conditions of the local employer's participation in the health benefits program.
"Adverse experience adjustment" means the adjustment determined by the department, consistent with its actuarial practices, to premiums for the year in which a local employer withdraws from the plan.
"Alternative health benefits plans" means optional medical benefits plans, inclusive of but not limited to HMOs and PPOs, which are offered pursuant to the health benefits program in addition to the basic statewide plan.
"Basic statewide plan" means the statewide health benefits plan for state employees offered at a uniform rate to all state employees pursuant to § 2.2-2818 of the Code of Virginia.
"Benefits administrator" or "group benefits administrator" means the person or office designated in the application and adoption agreement to be responsible for the day-to-day administration of the health benefits program at the local level. The benefits administrator is an employee of the agency or local employer that employs the benefits administrator. The benefits administrator is not an agent of the health insurance plan or the Department of Human Resource Management.
"Coordinated service" means a health care service or supply covered under both the program and another health plan. The coordinated service will be provided under the program only to the extent it is not excluded or limited under the program.
"Coordination of benefits" means the establishment of a priority between two or more underwriters that provide health benefits protection covering the same claims incident.
"Department" means the Department of Human Resource Management.
"Dependent" means any person who is determined to be an eligible family member of an employee pursuant to subsection E of 1VAC55-20-320.
"Director" means the Director of the Department of Human Resource Management.
"Dual membership" means the coverage in the health benefits program of the employee and either the spouse or one dependent. This definition does not include coverage of retirees or employees or their spouses who are otherwise covered by Medicare.
"Effective date of coverage" means the date on which a participant is enrolled for benefits under a plan or plans elected under the health benefits program.
"Employee" means a person employed by an employer participating in the health benefits program or, where demanded by the context of this chapter, a retired employee of such an employer. The term "employee" shall include state employees and employees of local employers.
"Employee health insurance fund" or "health insurance funds" means accounts established by the state treasury and maintained by the department within which contributions to the plan shall be deposited.
"Employer" means the entity with whom a person maintains a common law employee-employer relationship. The term "employer" is inclusive of each state agency and of a local employer.
"Employer application" or "application" means the form, to be provided by the department, to be used by the local employer for applying to participate in the health benefits program.
"Enrollment action" means providing the information, which would otherwise be contained on an enrollment form, through an alternative means such as the Internet or an interactive voice response system, for the purpose of securing or changing membership or coverage in the employee health benefits program. Submitting a properly completed enrollment form and taking an enrollment action through an employee self-service system are used interchangeably to indicate equivalent actions.
"Enrollment form" means the form, to be provided by the department, to be used by participants to enroll in a plan or to indicate a change in coverage.
"Family membership" means the coverage in the health benefits program of the employee and two or more eligible dependents.
"Health benefits program" or "program" means, individually or collectively, the plan or plans the department may establish pursuant to §§ 2.2-1204 and 2.2-2818 of the Code of Virginia.
"Health Maintenance Organization" or "HMO" means an entity created under federal law, "The Health Maintenance Organization Act of 1973" (Title XIII of the Public Health Service Act), as amended, or one defined under state law.
"Health plan" means:
1. A plan or program offering benefits for, or as a result of, any type of health care service when it is:
a. Group or blanket insurance (including school insurance programs); or
b. Blue Cross, Blue Shield, group practice (including HMOs and PPOs), individual practice (including IPAs), or any other prepayment arrangement (including this program) when:
(1) An employer contributes any portion of the premium;
(2) An employer contracts for the group coverage on behalf of employees; or
(3) It is any labor-management trustee plan, union welfare plan, employer organization plan, or employee benefit organization plan.
2. The term "health plan" refers to each plan or program separately. It also refers to any portion of a plan or program that reserves the right to take into account benefits of other health plans when determining its own benefits. If a health plan has a coordination of benefits provision that applies to only part of its services, the terms of this section will be applied separately to that part and to any other part.
3. A prepaid health care services contract or accident or health plan meeting all the following conditions is not a health plan:
a. One that is individually underwritten;
b. One that is individually issued;
c. One that provides only for accident and sickness benefits; and
d. One that is paid for entirely by the subscriber.
A contract or policy of the type described in subdivision 3 of this definition is not subject to coordination of benefits.
"Independent hearing officer" means an individual requested by the director of the department from a list maintained by the Executive Secretary of the Supreme Court of Virginia to arbitrate disputes that may arise in conjunction with these regulations or the health benefits program.
"Independent review organization" means an organization that, upon written request from the Department of Human Resource Management, examines the adverse health benefits claim decision made by the Commonwealth's Third Party Administrator (TPA). The independent review organization should determine whether the TPA's decision is objective, clinically valid, compatible with established principles of health care, and appropriate under the terms of the contractual obligations to the covered person.
"Insured arrangement" means an accident or health plan underwritten by an insurance company wherein the department's only obligation as it may relate to claims is the payment of insurance company premiums.
"Local employees" or "employees of local governments" means all officers and employees of the governing body of any county, city, or town, and the directing or governing body of any political entity, subdivision, branch, or unit of the Commonwealth or of any commission or public authority or body corporate created by or under an act of the General Assembly specifying the power or powers, privileges or authority capable of exercise by the commission or public authority or body corporate, as distinguished from § 15.2-1300 or 15.2-1303 of the Code of Virginia, or similar statutes, provided that the officers and employees of a social services department, welfare board, community services board, or behavioral health authority, or library board of a county, city, or town shall be deemed to be the employees of local government.
"Local employer" means any county, city, or town, school board, and the directing or governing body of any political entity, subdivision, branch or unit of the Commonwealth or of any commission or public authority or body corporate created by or under an act of the General Assembly specifying the power or powers, privileges or authority capable of exercise by the commission or public authority or body corporate, as distinguished from § 15.2-1300 or 15.2-1303 of the Code of Virginia, or similar statutes.
"Local officer" means the treasurer, registrar, commissioner of revenue, attorney for the Commonwealth, clerk of a circuit court, sheriff, or constable of any county or city or deputies or employees of any of the preceding local officers.
"Local retiree" means a former local employee who has met the terms and conditions for early, normal, or late retirement from a local employer.
"Open enrollment" means the period during which an employee may elect to commence, waive, or change membership or plans offered pursuant to the health benefits program.
"Part-time employee," as defined by each local employer, means an employee working less than full time but more than 20 hours per week whom a local employer has determined to be eligible to participate in the program. The conditions of participation for these employees shall be decided by the local employer in a nondiscriminatory manner.
"Participants" means individuals covered by the plan due to their relationship with the employer. They are not covered as dependents under the plan.
"Plan administrator" means the department.
"Preexisting condition" means a condition that, in the opinion of the plan's medical advisors, displayed signs or symptoms before the participant's effective date of coverage. These signs or symptoms must be ones of which the participant was aware or should reasonably have been aware. The condition is considered preexisting whether or not the participant was seen or treated for the condition. It is also considered preexisting whether or not the signs and symptoms of the condition were correctly diagnosed.
"Preferred provider organization" or "PPO" means an entity through which a group of health care providers, such as doctors, hospitals, and others, agree to provide specific medical and hospital care and some related services at a negotiated price.
"Primary coverage" means the health plan that will provide benefits first. It does not matter whether or not a claim has been filed for benefits with the primary health plan.
"Retiree" means any person who meets the definition of either a state retiree or a local retiree.
"Secondary coverage" means the health plan under which the benefits may be reduced to prevent duplicate or overlapping coverage.
"Self-funded arrangement" means a facility through which the plan sponsor agrees to assume the risk associated with the type of benefit provided without using an insurance company.
"Single membership" means coverage of the employee only under the health benefits program.
"State" means the Commonwealth of Virginia.
"State agency" means a court, department, institution, office, board, council, or other unit of state government located in the legislative, judicial, or executive departments or group of independent agencies, as shown in the Appropriation Act, and which is designated in the Appropriation Act by title and a three-digit agency code.
"State employee" means any person who is regularly employed full time on a salaried basis, whose tenure is not restricted as to temporary or provisional appointment, in the service of, and whose compensation is payable, no more often than biweekly, in whole or in part, by the Commonwealth or any department, institution, or agency thereof. "State employee" shall include the Governor, Lieutenant Governor, Attorney General, and members of the General Assembly. It includes "judge" as defined in § 51.1-301 of the Code of Virginia and judges, clerks, and deputy clerks of regional juvenile and domestic relations, county juvenile and domestic relations, and district courts of the Commonwealth.
"State retiree" means a former state employee who has met the terms and conditions for early, normal or late retirement from the Commonwealth.
"Teacher" means any employee of a county, city, or other local public school board.
Statutory Authority
§ 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.2, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004; Volume 26, Issue 25, eff. September 16, 2010; Volume 30, Issue 14, eff. April 24, 2014.
1VAC55-20-30. Designee and delegations of authority.
Pursuant to § 2.2-2818 of the Code of Virginia, the Department of Human Resource Management shall establish a health benefits program (the "program"), subject to the approval of the Governor, for providing accident or health benefit protection, including but not limited to chiropractic treatment, hospitalization, medical, surgical and major medical coverage for state employees and the employees of participating local employers.
The Director of the Department of Human Resource Management hereby delegates to the Director of the Office of Health Benefits the authority to:
1. Propose, design, and administer one or more accident or health plans, or both. All such approved plans will, in the aggregate, constitute the health benefits program. Any plan or plans proposed by the Office of Health Benefits shall be subject to the approval of the Director of the Department of Human Resource Management.
2. Propose regulations at any time for the purpose of the implementation, communication, funding, and administration of the health benefits program.
3. Enter into one or more contracts for the purpose of implementing, communicating, funding or administering the health benefits program. To this end, but not exclusively, such contract or contracts may be for the underwriting, the funding, and administration, including claims processing and claims adjudication, of the program. Such contracts may be for the legal, accounting and actuarial services as well as communication, statistical analysis and any other item that may be needed to effectively review and maintain the health benefits program.
4. Evaluate the effectiveness of the health benefits program or any plan which may constitute a component part, as it might relate to the objectives of such program or such component plan and make recommendations regarding the effectiveness of such program or plan in meeting such stated objectives.
Statutory Authority
§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.3, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.
1VAC55-20-40. (Repealed.)
Historical Notes
Derived from VR525-01-02 § 1.4, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004; repealed, Virginia Register Volume 30, Issue 14, eff. April 24, 2014.
1VAC55-20-50. (Repealed.)
Historical Notes
Derived from VR525-01-02 § 1.5, eff. November 21, 1990; repealed, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.
1VAC55-20-60. Types of plans.
A. The administration and underwriting of the plans shall be at the discretion of the department and may include but not be limited to self-funded arrangements, insured arrangements, administrative services arrangements, health maintenance organizations, and preferred provider organizations. The department is authorized to exercise judgment and discretion in the establishment, procurement and implementation of all underwriting and other services necessary for the establishment, maintenance, and administration of such plans and will be deemed to do so in good faith.
B. The department, as it deems necessary or prudent, may contract for outside services, including but not limited to actuarial, consulting, and legal counsel. The department may contract such services on an individual basis or in conjunction with other services.
Statutory Authority
§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.6, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.
1VAC55-20-70. Procurement.
The department shall comply with the Virginia Public Procurement Act, Chapter 43 (§ 2.2-4300 et seq.) of Title 2.2 of the Code of Virginia, as it may relate to any services to which such Act shall apply.
In an effort to stabilize the administration and maintenance of the health benefits program, the department may contract for services applicable to such program for a period of time not exceeding 10 years, with the department reserving the right, in its sole discretion, to cancel such contracts annually upon 90 days written notice to the contractor.
Statutory Authority
§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.7, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.
1VAC55-20-80. Plan assets.
A. The assets of the health benefits program, together with all appropriations, contributions and other payments, shall be deposited in the employee health insurance fund(s) (the "health insurance fund(s)") from which payments for claims, premiums or other contributions, cost containment and administrative expenses shall be withdrawn from time to time.
B. The health insurance fund for state employees shall be maintained separate and apart from the health insurance fund for retirees of the state eligible for Medicare and from the health insurance fund for local employees. All such funds shall be maintained for the exclusive benefit of the employees participating currently in the respective health insurance plans.
C. The department may designate with the approval of the Department of the Treasury one or more insurance companies, banks or any such similar institution as a direct recipient of premiums or other contributions for part or all coverage under the health benefits program from local and state employers.
D. The assets of the fund shall be held for the sole benefit of the employee health insurance fund and to that end, employees participating in the health benefits program.
Any interest on unused balances in the fund shall revert back to the credit of the fund. The State Treasurer shall charge reasonable fees to recover the actual costs of investing the assets held in the fund.
Statutory Authority
§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.8, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.
1VAC55-20-90. Appeals.
A. The director of the department shall be the final arbiter of any disputes arising under this chapter. The director may not redelegate this authority other than to an independent hearing officer except as provided under subsection C of this section.
All disputes arising under this chapter shall be submitted to the department, which shall have the responsibility for interpreting and administering this chapter. All disputes shall be made in writing in such manner as may be reasonably required by the department and shall set forth the facts that the applicant believes to be sufficient to entitlement to relief hereunder. The department may adopt forms for such submissions in which case all appeals shall be filed on such forms.
B. Appeals not filed within the time frames established herein shall be denied.
Requests for review of procurements under the provisions of the Virginia Public Procurement Act (§ 2.2-4300 et seq. of the Code of Virginia) shall be filed within 10 days of the department's notice of intent to award a contract.
Requests for relief from local employers or state agencies with respect to any action of the department other than a procurement shall be filed within 30 days of the action grieving the applicant. Requests for relief from state or local employees with respect to any action of the department other than a procurement shall be filed within 60 days of the action grieving the employee.
C. Upon receipt by the department for a request for review under this section, it shall determine all facts that are necessary to establish the right of an applicant for relief. The department shall approve, deny, or investigate any and all disputes arising hereunder. Upon request, the department will afford the applicant the right of a hearing with respect to any finding of fact or determination related to any claim under this section. In the event of an adverse decision by the department, the applicant shall be notified of such decision as provided in this section. Reviews for treatment authorizations or medical claims that have been denied will be sent to an independent review organization. The independent review organization shall examine the final denial of claims or treatment authorizations to determine whether the decision is objective, clinically valid, and compatible with established principles of health care. The decision of the independent review organization shall (i) be in writing, (ii) contain findings of fact as to the material issues in the case and the basis for those findings, and (iii) be final and binding if consistent with law and policy.
D. The applicant shall be notified in writing of any adverse decision with respect to his claim within 90 days after its submission. The notice shall be written in a manner calculated to be understood by the applicant and shall include:
1. The specific reason or reasons for the denial;
2. Specific references to law, this chapter, contracts awarded pursuant to this chapter, or the Health Insurance Manual/Local Administrative Manual and related instructions on which the denial is based;
3. A description of any additional material or information necessary to the applicant to perfect the claim and an explanation why such material or information is necessary; and
4. An explanation of the review process.
If special circumstances require an extension of time for processing an initial application, the department shall furnish written notice of the extension and the reason therefore to the applicant before the end of the initial 90-day period. In no event shall such extension exceed 90 days.
E. Standards, credentials, and qualifications of the independent review organization.
1. In order to qualify to perform either standard or expedited external reviews pursuant to this chapter or the Code of Virginia, an independent review organization shall have and maintain written policies and procedures that govern all aspects of the standard and expedited external review processes that include, at a minimum, a quality assurance mechanism in place that ensures that:
a. External reviews are conducted within the specified time frames and required notices are provided in a timely manner;
b. Qualified and impartial clinical peer reviewers are selected to conduct external reviews on behalf of the impartial health entity and reviewers are suitably matched to specific cases; and
c. The confidentiality of medical records is maintained in accordance with the confidentiality and disclosure laws of the Commonwealth or the Health Insurance Portability and Accountability Act.
2. All clinical peer reviewers assigned by an independent review organization to conduct external reviews shall be physicians or other appropriate health care providers who meet the following minimum qualifications:
a. Are expert in the treatment of the covered person's medical condition that is the subject of the external review;
b. Are knowledgeable about the recommended health care service or treatment through recent or current actual clinical experience treating patients with the same or similar medical conditions as the covered person's;
c. Hold a nonrestricted license in a state of the United States and, for physicians, a current certification by a recognized American medical specialty board in the area or areas appropriate to the subject of the external review; and
d. Have no history of disciplinary actions or sanctions, including loss of staff privileges or participation restrictions, that have been taken or are pending by any hospital, governmental agency or unit, or regulatory body that raise a substantial question as to the clinical peer reviewer's physical, mental, or professional competence or moral character.
3. An independent review organization shall not be affiliated with or a subsidiary of nor be owned or controlled by a health plan, a trade association of health plans, or a professional association of health care providers.
4. In determining whether an independent review organization or a clinical peer reviewer of the independent review organization has a material, professional, familial, or financial conflict of interest, the director may take into consideration situations where the characteristics of that relationship or connection are such that they are not materially sufficient to disqualify the independent review organization or the clinical peer reviewer from conducting the external review.
Statutory Authority
§ 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.9, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004; Volume 30, Issue 14, eff. April 24, 2014.
1VAC55-20-100. No presumption of right.
These regulations and the health benefits program herein established shall not be deemed to constitute a contract of employment between any participating employer and any participant. No participant in the program shall acquire any right to be retained in the employer's employ by virtue of the program, nor, upon the participant's dismissal or voluntary termination of employment, shall the participant have any interest in any assets of the program other than as may be specifically provided herein.
Furthermore, these regulations and the health benefits program herein established shall in no event confer upon any participant any rights, duties or responsibilities other than those granted herein. The Commonwealth of Virginia specifically reserves the right to amend, modify or terminate, inclusive of eligibility, coverage and contributions provisions, the health benefits program or any plan or plans comprising all or part of the program, as they may relate to any active or retired participant.
Statutory Authority
§§ 2.1-20.1 and 2.1-20.1:02 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.10, eff. November 21, 1990.
1VAC55-20-110. Authority to withhold revenues.
In the event of default by any employer participating in the health insurance program authorized by § 2.2-1204 of the Code of Virginia in the remittance of premiums or other fees and costs of the program, the State Comptroller is hereby authorized to pay such premiums and costs and to recover such payments from any funds appropriated and payable by the Commonwealth to the employer for any purpose. The State Comptroller shall make such payments, and recover an equivalent amount if possible, from an employer's appropriated funds upon receipt of notice from the director of the department that such payments are due and unpaid from the employer.
Statutory Authority
§§ 2.2-1204 and 2.2-2818 of the Code of Virginia.
Historical Notes
Derived from VR525-01-02 § 1.11, eff. November 21, 1990; amended, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.
1VAC55-20-120. (Repealed.)
Historical Notes
Derived from VR525-01-02 § 1.12, eff. November 21, 1990; repealed, Virginia Register Volume 20, Issue 20, eff. July 16, 2004.