SCC seeks to protect Virginia consumers from surprise medical bills

The SCC is proposing a protection for Virginia consumers enrolled in managed care health insurance plans to guard against a practice known as balance billing in which they receive surprise bills from medical providers for amounts not covered by their plan.

When a patient enters a hospital or other medical facility that is in the patient’s health-plan network, the patient assumes that costs other than co-pays, coinsurance and deductibles will be covered by the patient’s insurance plan. In-network providers, through a negotiated contract with the health plan, agree to accept health plan payments that are typically discounted.

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Credit: Peshkova

When using a facility that is part of the plan’s network of providers however, certain medical procedures may be administered by an out-of-network provider. Balance billing occurs when out-of-network providers directly bill the patient for the provider’s full charges beyond the amount covered by the insurance plan. It is not unusual for a patient to receive surprise bills for hundreds or thousands of dollars.

The SCC’s Bureau of Insurance is proposing a regulation requiring managed care health insurance plans that the SCC regulates under Virginia insurance law to require an advance notice provision in every contract with in-network facilities. As proposed, the regulation will require any hospital or medical facility in the health plan’s network to give notice prior to admission or registration informing the patient when he or she may be treated and billed by an out-of-network provider.

The notice must be sufficiently timely to allow patients to either decline the receipt of services from an out-of-network provider at the facility or contact the health plan to seek and change to another available in-network facility. The option only applies to non-emergency services.

Under the proposed regulation, medical facilities that fail to provide this notice – not the patient – would be financially responsible for any costs from out-of-network providers that exceed the cost to the patient of in-network services.

The Commission is seeking written comments on the proposal until August 9, 2019. Comments and requests for a hearing may be sent to the Clerk of the State Corporation Commission, Document Control Center, P.O. Box 2118, Richmond, Virginia 23219-2118. Please refer to case number INS-2019-00081 when commenting.

Comments may be submitted online via the SCC website at www.scc.virginia.gov/case/PublicComments.aspx. Find case number INS-2019-00081, and click on the “Submit Comments” button for this case.

The proposed effective date of the regulation is October 1, 2019. Health plans would be required to seek to amend their contracts with hospitals and other facilities within 90 days of the effective date.

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