After nearly two years and endless negotiation amongst stakeholders, the Virginia House and Senate unanimously passed legislation to eliminate surprise hospital billing for Virginians covered under state-regulated health care plans. State-regulated health care plans are those that are fully insured or provided to government employees. ERISA plans and coverage provided by a single employer must opt into the law for it to apply. This could still leave millions of Virginians vulnerable to surprise billing practices.
Surprise or “balance” billing is most often associated with emergency services provided to an insured patient at a hospital that is out-of-network, or when an out-of-network physician provides services to a patient at a hospital or facility that is otherwise in-network. This practice results in patients receiving unexpected bills for out-of-network services, often amounting to thousands of dollars. While only a few number of patients get these large bills, the instances of surprise billing are dramatic enough to draw the attention of the Virginia legislature.
The Virginia bill is modeled after a Washington state prohibition on balance billing which requires insurers to offer out-of-network providers the accepted commercial rate for services, which is generally the same or close to the in-network rate paid to providers in the geographic area. Patients receiving out-of-network emergency care may only be charged the in-network rate—to include usual deductibles and copays. Providers and institutions who are unsatisfied with the payment rate may contest in-network rate with the patient’s insurance company. If the provider and insurance company cannot reach an agreement within 30 days, the provider may submit the claim to arbitration.
Virginia legislators took a number of steps in hopes of making the arbitration process simple and efficient. First, the 30-day period is designed to encourage negotiation between the parties and discourage arbitration. Second, the arbitrator for these disputes in Virginia does not have to be an attorney. This is a change from Washington’s law, and the expectation is that allowing non-attorneys to act as arbitrators will simplify the process and lower its costs. Finally, the bill requires each party put their best offer on the table from the start so that negotiations are stream-lined.
A compromise between hospitals, doctors, and insurers, the surprise billing legislation attempts to strike a balance between each party’s concerns. That said, stakeholders still have apprehensions moving forward. Insurers are concerned that the bill will encourage hospitals not to join their network and instead rely on the arbitration process to obtain higher payments. Hospital systems and physicians fear that the new law will not guarantee a fair market reimbursement rate based on the cost of services in their geographic area.
However, both sides agree that the new law has benefits. One such positive development is that the new law takes billings disputes out of the hands of the patient so that they will no longer have the be the middle-man in a fight between their insurance company and the hospital. Patients will not be required to participate in the arbitration process. Furthermore, the bill achieves the goal of preventing unsuspecting patients from receiving exorbitant bills for emergency room visits which they believed to be covered, albeit only for patients in state-regulated plans.
Upon signature of the governor, the bill is set to go into effect on January 1, 2021. If you have questions about Virginia’s new surprise billing legislation, please contact Jerry Canaan or Roxanne Millan.