by James C. Sherlock
There are a couple of new issues between Virginia’s Bureau of Insurance (BOI) and the federal Centers for Medicare/Medicaid Services (CMS).
The problems were briefed today by a Board of Insurance representative to the Health Insurance Reform Committee.
CMS has told the BOI that the 2020 General Assembly passed a law (possibly without knowing the implications) that violated a federal statute. The Virginia law attempted to protect the state from having to spend money to fund a new health insurance mandate for Qualified Health Plan (QHP) holders. QHPs are small group and individual policies sold on the ACA exchange.
The feds are not amused. Virginia law apparently will need to be changed.
Julia Blauvelt of the BOI, a component of the State Corporation Commission, presented the background on those challenges today to the General Assembly’s Health Insurance Reform Commission (HIRC).
- Benefits originally included in the state’s benchmark plan are essential health benefits (EHB), whether or not mandated.
- State can require benefits “in addition to EHB” but if so, must make payments to defray the cost.
- Any benefit required by state action taking place on or after January 1, 2012, other than for purposes of compliance with federal requirements, is considered in addition to EHB.
- New federal rules require states to report all state-mandated benefits by July 1, 2022 and annually thereafter.
There is a little more to the background than that. The General Assembly passed two laws in 2020.
- The first was well intentioned. Code of Virginia § 38.2-3418.18. Coverage for formula and enteral nutrition products as medicine. That is judged by CMS to be an addition to EHB.
- The second law, Code of Virginia 38.2-6506 Certification of health benefit plans as qualified health plans apparently violated twin federal requirements:
- that newly-mandated benefits be uniformly applied across all insurance plans regulated by the state; and
- that the state pay any costs of the new benefit to Qualified Health Plan holders.
Indeed, CMS has told BOI that 38.2-6506 A 1 violates federal standards that prevent discrimination in coverage mandates among plans.
The formula and enteral nutrition bill is the only benefit mandate that the BOI has determined requires defrayal — state payment of all expenses — under its new understanding of the law. It estimates that the cost to the state will be between $300,000 and $700,000 annually.
The bigger impact is that any other new health insurance mandates that the General Assembly may pass in the future may also have to be 100% funded by the state for policies bought on the ACA exchange.
Code of Virginia 38.2-6506 A 1 and any other laws that require a different set of benefits for different plans in a market will have to be changed or risk federal pre-emption. Under pre-emption, federal penalties of up to 1% of payments otherwise due to Virginia could be assessed annually until corrective actions are taken.
The BOI notified the committee it will prohibit QHPs from including formula and nutrition benefits in 2023 plans unless Virginia law is changed.
I am not sure what the GA will do. But it appears to me that it got bad advice in 2020, and will have to clean it up.
Lessons: Healthcare is maddeningly complicating. Legislating in that space is hard.
I am surprised there are not more issues like this.