SCC Told It Lacks Authority to Limit Balance Billing

by Steve Haner

The arguments which have paralyzed Virginia General Assembly efforts to end surprise bills from medical providers are surfacing again in comments to the State Corporation Commission.  It is considering an internally generated regulation that requires advance consent from patients to be treated by someone outside their approved health plan.

As proposed in June and reported by the Richmond Times-Dispatch, the regulation addresses only elective medical procedures, not emergencies.  It is tied to legislation which passed in 2019 that requires written notice to patients of the possibility some provider on their care team might be “out of network” and thus send them a separate bill outside their insurance contract.

Does the proposed regulation (at the end of this document) implement that action by the General Assembly, or does it go beyond what the legislature approved?  If the latter, is the SCC allowed to take this regulatory step?  The hospitals, doctors and other providers lining up in opposition say the SCC would be exceeding its authority.

The growing written record (here) will be supplemented by a hearing on September 12.  The regulation was proposed for an October 1 effective date, but even supporters in their comments are picking at the details and suggesting amendments.  The outcome may be another of those well-intentioned stakeholder groups that have bogged down previous attempts to restrict this practice. 

As is noted in the comments filed by attorney Bill Hurd for the Virginia Hospital and Healthcare Association, nine bills were introduced at the 2019 General Assembly on this session and one passed. Hurd goes on to complain that the SCC is seeking to re-write the General Assembly outcome in three ways:

“First, the Proposed Rules would substantially change the notice requirements contained in the Statute. Second, unlike the Statute, the Proposed Rules would require facilities to keep track of network-related information about individual patients. Third, unlike the Statute, the Proposed Rules would require facilities to pay for out-of-network services in certain situations.”

Hurd’s third point refers to the enforcement mechanism in the proposed SCC regulation.  If the facility (usually a hospital or out-patient center) fails to get the required approvals, it might have to pay the bill for an out-of-network provider.

Other comments from opponents, perhaps unwittingly, point out how the new law is rather feckless on its own.  Writes Sara Heisler of OrthoVirginia, Inc.:

“The new Code Section 38.2-3445.1 requires a facility providing elective services to post a required notice or inform a covered person of the required notice. That’s it. It does not require provider contracts to contain certain language, it does not require the facility to obtain written consent from the covered person, it does not require the covered person to choose between in-network providers and out-of-network providers, and it does not require a facility to be financially responsible for out-of-network services. If the General Assembly had wanted these requirements to be applied to facilities and health carriers, it would have included these requirements in the statute.”

“The statutory “required notice” can be accomplished through “posting” a sign, a flyer, or other preprinted, standard language,” writes John B. Mumford on behalf of the Medical Society of Virginia.  He said it is then up to the patient to check with the health insurer to see which providers are in or out of network. The health plans are off the hook in the new regulation, he asserts:

“The Proposed Rules place the entire information burden on facilities. Health plans, the regulated entities under Title 38.2, have no incentive under the Proposed Rules to provide facilities with correct or complete information, and suffer no consequence if they fail to provide information necessary for a facility to make the individualized determinations required…”

In their comments, most of them merely email messages rather than lawyer letters, the health plans are generally supportive of the Bureau of Insurance proposal.  Again, they add many suggestions that will prevent quick adoption of anything.  Doug Gray of the Virginia Association of Health Plans wants more controls imposed on the facilities.  He writes:

“….we are concerned the notification language as written will not provide consumers a choice. Facilities will try to steer patients to using a non-network provider and accepting these inflated charges, or facilities will claim there are no in-network providers and refer patients to another facility. We suggest the regulation be amended to ensure facilities give consumers a choice between using only in-network providers or the potential of having a non-network provider.”

Support for the proposal – and for the SCC’s authority over this matter — was also provided in comments from the Virginia Poverty Law Center (with its own four proposed amendments) and Senior Assistant Attorney General Meade Browder, head of the section charged with consumer advocacy.

One major provider, nationwide lab services company Quest Diagnostics, jumped in to ask the SCC to clarify that the proposed regulation would not apply to it at all.  It usually never sees any patient, only the tissue or fluid sample sent by the hospital or doctors for evaluation.

“Although we feel strongly that the rule and statute clearly do not require out of network laboratories to provide notice and obtain consent, to ensure complete clarity, we recommend that Section A be amended to include language confirming that the notice and consent requirement applies to scenarios in which an in-network facility refers a patient to an out-of-network provider.”

A patient’s blood is not the patient?  The firm may get some clarification it doesn’t desire.

The advice at the General Assembly is: Don’t try to write a bill on the floor.  The same may be true of efforts to write regulations in a court room. But this issue infuriates people when they get caught up by it, all the parties demonstrate greed and pass the blame, the General Assembly has failed to settle on meaningful reforms, and the SCC’s Bureau of Insurance is trying to fill a vacuum.  When Medicare for All comes, consumer fury over issues like these will be the reason.

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11 responses to “SCC Told It Lacks Authority to Limit Balance Billing

  1. My understanding of regulation in general – is that a law if passed and then the agencies that implement – write the regulations.

    More often than not – more than one agency might be involved as the law is more encompassing.

    Regulatory agencies then ask for public comment before they promulgate the formal rule. Those comments can come from both legislative, other agencies, entities affected by the regulation, interest groups and the public.

    After that – there are two paths to change – the courts – and back to the legislature to tweak the law to further guide the regulators.

    It’s totally impractical for the legislature to implement and maintain the regulations….. SOMEONE has to interprete the intent of the law relative to the current regulations… etc… it’s just not a job for the legislature unless they are going to hire their own staff to generate regulations from the law.

    The thing about the out-of-network – there are all kinds of things like this in society that people do not understand – nor agree with. Take HOAs for example… or the VDOT rules for eminent domain takings, or the COE rule for wetlands… etc, etc.

    the typical path is interact with the regulatory agencies and if they feel they are doing what the law requires then go back to the legislature and start the process of public involvement on the change – all over again.

    But there is a LOT that the general public just does not understand They AGREE to all manner of things in contracts, and purchases and online services that they don’t read and don’t know what they signed then get outraged later on when they find out what they really agreed to!

    Life is complicated and we are all ignorant – in various areas even as we are well-informed in others – we are all ignorant on many things that we simply do not know about.

    yes.. I know… Steve will be hard to resist pointing out this commenter as an example!

  2. I’m not sure that “balance billing” is really comparable to an HOA agreement, unless when you went to your last real estate closing your child or spouse or parent or friend was deathly ill and the selling agent told you to sign some forms so that doctors in the E.R. would deign to look at him or her. I just did a closing and I can’t remember anything quite like that.

  3. Larry, one point of this post is to build on our earlier discussion of the interplay between the GA and the SCC. The arguments are transferring over from the energy field, although in truth this is just the traditional separation of powers and check and balances at play. Anonymous, I’m glad you felt so fully informed at your closing, but as a former lobbyist for the Realtors, who then did battle with them over the ability of non-lawyers to do closings, I can tell you most people have no idea what they are signing and who is getting money under the table. And they can be under some pressure (not like an ER visit, admittedly.)

  4. No, it’s nothing like an ER visit. They’re not comparable. I’m not suggesting that most people are very fully informed at a real estate closing. I am pointing out that in only one situation is the immediate threat of death for a close family member on the table.

    • The modern day residential real estate closing is a metaphor for the corrupt modern day liberal state and society. It’s an elaborate system of useless busywork designed to fleece the customer buying the home, while it unfairly enriches everyone else at the table, whether those corrupt interests are sitting there or not, namely the state, local and federal government, the local Bar, the lender, and the title insurance and settlement industry (who typically takes no risk worthy of insurance and provides next to no real service worthy of its cost). Meanwhile the seller of the home also loses by reason of the wasted costs added to his sales price that brings no value to either buyer or seller. The system is thoroughly corrupt.

      • Other sometime invisible pirates sitting at the table feeding off the buyer and seller include home brokerage and sales industry, and their growing array of allied industries who facilitate the corrupt game. These include such fixers and poseurs as all sorts of appraisers, decorators, stage artists, home inspectors, re-modelers, and home repair, function, safety and title experts, not to mention at the special interests who have forces unnecessary and costly clauses and requirements into the closing documents for private and often hidden advantage, rendering those documents unreadable nonsense.

        • One can also add to this List the Deplorables feeding off home buyers in America, the residential mortgage brokers, originators, aggregators, packagers, raters and securitizers, as well as the army of lobbyist, lawyers, and fixers practicing before federal, state, and local legislative and administrative bodies, an industry from which one of our number here on Bacon’s Rebellion is now in recovery from and doing penitence for, at our great benefit.

          • Reed Fawell 3rd

            The bottom line here is that today’s real estate sale and settlement industry is in crying need of a vast overhaul and reform from top to bottom, so as to bring the industry into the modern age. New technology, information, and communications systems have already, or easily can, remove most of the risks earlier insured against and also render obsolete many of the skills demanded before, and can also perform most of those services in a faction of the time and cost earlier required. Thus, today’s system rips off the home selling and buying public four ways to Sunday.

          • Reed Fawell 3rd

            Indeed, most parts of America’s home sales and settlement industry remind me of most parts of America’s system of higher education: The customer whether buyer or seller, student or parent, pay ever higher costs for ever less service and benefits, while the providers of those services get ever richer while gaining ever more personal benefit at the expense of those they falsely claim to serve, protect, and look after.

  5. I never imagined that the balance billing issue should get so complicated. Conceptually, it seems so simple — gain the patient’s consent before he/she is treated outside his/her health plan. From Steve’s description, however, every special interest in the health care sector has a dog in this fight, and wants to tilt the playing field in its favor. I have never been a fan of a single-payer health system, but the current system seems so dysfunctional, you have to wonder if single-payer could possibly be worse.

    Meanwhile… no one is doing anything about the looming physician shortage, which even a single-payer system would do nothing to solve.

  6. Steve, your last sentence is right on point. When folks get their backs up and press for a popular solution to an entrenched problem they tend to over-react in a sweeping manner to make the problem go away once and for all. Special interests in health care need to think long term about what they are doing to themselves by not accommodating reasonable dissatisfaction with the health system’s “gotcha” attitude towards its own ultimate consumers, the patients. The government-run solution will put them entirely out of business — at an enormous cost in efficiency and practicality, yes, hurting the very folks demanding change; but it certainly will put them out of business.

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