by James C. Sherlock

On the other hand, 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 brought up today by a representative from the Insurance Committee on the Health Insurance Reform Committee.

CMS has notified the BOI that the 2020 General Assembly passed a law that violates federal law, whether it knows the implications or not. Virginia law sought 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 that are sold on the ACA exchange.

The Feds are not amused. Virginia law apparently needs to be changed.

Julia Blauvelt from BOI, a component of the State Corporation Commission, presented the background to these challenges to the General Assembly today to the Health Insurance Reform Commission (HIRC).

  • Benefits originally included in the government benchmark plan are Essential Health Benefits (EHB), whether or not mandatory.
  • The state can demand services “in addition to the EMS”, but in this case must make payments to cover the costs.
  • All services that are required by government measures on or after January 1, 2012, except for the purpose of fulfilling federal regulations, will be taken into account in addition to the EMS.
  • New federal regulations require states to report all state-mandated benefits by July 1, 2022, and annually thereafter.

There’s a little more to it than that. The General Assembly passed two laws in 2020.

  1. The first was well meant. Code of Virginia § 38.2-3418.18. Coverage for formulas and products for enteral nutrition as pharmaceuticals. CMS sees this as a supplement to EMS.
  2. Second Act, Code of Virginia 38.2-6506 Certification of health insurance plans as qualified health insurance companies appeared to violate two state requirements:
    • that newly prescribed benefits are applied consistently to all state-regulated insurance plans; and
    • that the state bears all costs of the new service to the holders of the qualified health insurance.

In fact, CMS has advised BOI that 38.2-6506 A1 violates federal standards that prevent discrimination in cover missions between plans.

The bill for the formula and enteral nutrition is the only performance mandate that the BOI has stipulated that, according to their new legal understanding, state payment of all expenses is required. It estimates the cost to the state will be between $ 300,000 and $ 700,000 annually.

The bigger impact is that all other new health insurance mandates that the General Assembly might pass in the future will also have to be 100% financed by the state for policies bought on the ACA exchange.

Code of Virginia 38.2-6506 A1 and all other laws that prescribe different benefits for different plans in a market must be changed or risk a state right of first refusal. As a preventive measure, federal penalties of up to 1% of the payments otherwise due to Virginia could be imposed annually until corrective action is taken.

The BOI told the committee that it will ban QHPs from including formula and nutritional benefits in plans for 2023 unless Virginia law is changed.

I’m not sure what the GA will do. But it seems to me that it got bad advice in 2020 and it needs to clean up.

Lessons: Healthcare is insanely complicated. Legislation in this area is difficult.

I am surprised that there are no more problems like this.