RICHMOND – Virginia lawmakers this year took bold action to reform the health care system by passing a new law that protects patients and families from receiving unexpected medical bills after they have already paid their fair share of health insurance costs.
Bipartisan legislation carried by Senator Barbara Favola of Arlington County (SB 172) and House of Delegates’ Appropriations Committee Chairman Luke Torian of Prince William County (HB 1251) prohibits balance billing for out-of-network emergency services and certain non-emergency services (such as anesthesiology, radiology, surgery, pathology, hospitalist, and laboratory care) at in-network facilities. Those bills, which passed the General Assembly with unanimous support, also cap patient cost responsibility for medical services, meaning any remaining amount is the financial responsibility of a patient’s insurance company. Virginia Governor Ralph Northam presided over a virtual bill signing ceremony for the legislation last week.
Balance billing, or surprise medical bills, typically occur in situations when an insured patient receives care from a health care provider who is not in-network with their insurance company.
When this happens, insurers often refuse to pay providers for health care services rendered, leaving patients facing an unexpected, and sometimes costly, bill. Research published in JAMA Internal Medicine, a monthly peer-reviewed medical journal from the American Medical Association, found that more than one-third of inpatient admissions and emergency department visits from 2010-2016 resulted in surprise billing situations.
“This new law is transformational. It ensures that Virginians will no longer have to worry about facing unexpected medical bills when they receive health care,” said Favola. “Achieving this victory for Virginia patients and families took many long hours of negotiations with a diverse group of stakeholders who share a common belief that patients should not be burdened with the task of negotiating an outstanding medical bill with their insurance company. Patients recovering from medical care should focus on healing, not the emotional and financial anxieties of resolving unexpected, expensive medical bills that can explode household budgets and place families at risk of bankruptcy. Under this law, patients will no longer be responsible for unexpected medical expenses once they have met their deductible and co-payment obligation. I am proud to have worked on this successful effort that balances the interests of patients, providers, and insurers and that enshrines in the law important financial protections for Virginians when they seek health care.”
“Surprise medical bills can cause financial instability and unfairly put patients in the middle of provider-insurer disputes,” added Torian. “I am proud we were able to come together in Virginia to pass a solution that takes patients out of the middle, ensures health care providers are reimbursed for the care they provide, and protects Virginia families. Now, insured Virginians will be able to access health care with confidence, knowing there won’t be a surprise bill coming if a treatment or provider wasn’t covered under their insurance plan.”
The new law sets up a good faith arbitration process for resolving billing disputes between insurers and health care providers if they are unable to agree on a commercially reasonable payment amount. Patients are completely removed from that process and any additional financial obligation related to it. Under a baseball-style arbitration process, an independent arbitrator selected by the involved parties from a list approved by the Virginia State Corporation Commission’s (SCC) Bureau of Insurance (BOI) is tasked with considering a broad set of factors (including the median in-network and out-of-network allowed amounts and the median billed charges for the corresponding geographic area in determining whether the “commercially reasonable amount” has been paid. The process also permits multiple contested claims to be bundled during arbitration. Parties in arbitration retain the ability to reach a settlement agreement during that process. The law also establishes an arbitration fee the parties must split and enforcement authority to prevent abuse of the process. And it includes insurance company transparency requirements which apply to commercial plans as well as the state health insurance plan (self-insured plans that register with the BOI may also opt-in).
Recently, draft regulations related to implementation of the new balance billing law have been made public by the SCC. A public comment period on the draft regulations is open through Sept. 1, 2020, and the proposed effective date for the regulations is Jan. 1, 2021.