2006 Code of Virginia § 38.2-3407.15 - Ethics and fairness in carrier business practices

38.2-3407.15. Ethics and fairness in carrier business practices.

A. As used in this section:

"Carrier," "enrollee" and "provider" shall have the meanings set forthin 38.2-3407.10; however, a "carrier" shall also include any personrequired to be licensed under this title which offers or operates a managedcare health insurance plan subject to Chapter 58 ( 38.2-5800 et seq.) ofthis title or which provides or arranges for the provision of health careservices, health plans, networks or provider panels which are subject toregulation as the business of insurance under this title.

"Claim" means any bill, claim, or proof of loss made by or on behalf of anenrollee or a provider to a carrier (or its intermediary, administrator orrepresentative) with which the provider has a provider contract for paymentfor health care services under any health plan; however, a "claim" shallnot include a request for payment of a capitation or a withhold.

"Clean claim" means a claim (i) that has no material defect or impropriety(including any lack of any reasonably required substantiation documentation)which substantially prevents timely payment from being made on the claim or(ii) with respect to which a carrier has failed timely to notify the personsubmitting the claim of any such defect or impropriety in accordance withthis section.

"Health care services" means items or services furnished to any individualfor the purpose of preventing, alleviating, curing, or healing human illness,injury or physical disability.

"Health plan" means any individual or group health care plan, subscriptioncontract, evidence of coverage, certificate, health services plan, medical orhospital services plan, accident and sickness insurance policy orcertificate, managed care health insurance plan, or other similarcertificate, policy, contract or arrangement, and any endorsement or riderthereto, to cover all or a portion of the cost of persons receiving coveredhealth care services, which is subject to state regulation and which isrequired to be offered, arranged or issued in the Commonwealth by a carrierlicensed under this title. Health plan does not mean (i) coverages issuedpursuant to Title XVIII of the Social Security Act, 42 U.S.C. 1395 et seq.(Medicare), Title XIX of the Social Security Act, 42 U.S.C. 1396 et seq. orTitle XX of the Social Security Act, 42 U.S.C. 1397 et seq. (Medicaid), 5U.S.C. 8901 et seq. (federal employees), or 10 U.S.C. 1071 et seq.(CHAMPUS); or (ii) accident only, credit or disability insurance, long-termcare insurance, CHAMPUS supplement, Medicare supplement, or workers'compensation coverages.

"Provider contract" means any contract between a provider and a carrier (ora carrier's network, provider panel, intermediary or representative) relatingto the provision of health care services.

"Retroactive denial of a previously paid claim" or "retroactive denial ofpayment" means any attempt by a carrier retroactively to collect paymentsalready made to a provider with respect to a claim by reducing other paymentscurrently owed to the provider, by withholding or setting off against futurepayments, or in any other manner reducing or affecting the future claimpayments to the provider.

B. Subject to subsection H, every provider contract entered into by a carriershall contain specific provisions which shall require the carrier to adhereto and comply with the following minimum fair business standards in theprocessing and payment of claims for health care services:

1. A carrier shall pay any claim within 40 days of receipt of the claimexcept where the obligation of the carrier to pay a claim is not reasonablyclear due to the existence of a reasonable basis supported by specificinformation available for review by the person submitting the claim that:

a. The claim is determined by the carrier not to be a clean claim due to agood faith determination or dispute regarding (i) the manner in which theclaim form was completed or submitted, (ii) the eligibility of a person forcoverage, (iii) the responsibility of another carrier for all or part of theclaim, (iv) the amount of the claim or the amount currently due under theclaim, (v) the benefits covered, or (vi) the manner in which services wereaccessed or provided; or

b. The claim was submitted fraudulently.

Each carrier shall maintain a written or electronic record of the date ofreceipt of a claim. The person submitting the claim shall be entitled toinspect such record on request and to rely on that record or on any otheradmissible evidence as proof of the fact of receipt of the claim, includingwithout limitation electronic or facsimile confirmation of receipt of a claim.

2. A carrier shall, within 30 days after receipt of a claim, requestelectronically or in writing from the person submitting the claim theinformation and documentation that the carrier reasonably believes will berequired to process and pay the claim or to determine if the claim is a cleanclaim. Upon receipt of the additional information requested under thissubsection necessary to make the original claim a clean claim, a carriershall make the payment of the claim in compliance with this section. Nocarrier may refuse to pay a claim for health care services rendered pursuantto a provider contract which are covered benefits if the carrier fails timelyto notify or attempt to notify the person submitting the claim of the mattersidentified above unless such failure was caused in material part by theperson submitting the claims; however, nothing herein shall preclude such acarrier from imposing a retroactive denial of payment of such a claim ifpermitted by the provider contract unless such retroactive denial of paymentof the claim would violate subdivision 6 of this subsection. Nothing in thissubsection shall require a carrier to pay a claim which is not a clean claim.

3. Any interest owing or accruing on a claim under 38.2-3407.1 or38.2-4306.1 of this title, under any provider contract or under any otherapplicable law, shall, if not sooner paid or required to be paid, be paid,without necessity of demand, at the time the claim is paid or within 60 daysthereafter.

4. a. Every carrier shall establish and implement reasonable policies topermit any provider with which there is a provider contract (i) to confirm inadvance during normal business hours by free telephone or electronic means ifavailable whether the health care services to be provided are medicallynecessary and a covered benefit and (ii) to determine the carrier'srequirements applicable to the provider (or to the type of health careservices which the provider has contracted to deliver under the providercontract) for (a) pre-certification or authorization of coverage decisions,(b) retroactive reconsideration of a certification or authorization ofcoverage decision or retroactive denial of a previously paid claim, (c)provider-specific payment and reimbursement methodology, coding levels andmethodology, downcoding, and bundling of claims, and (d) otherprovider-specific, applicable claims processing and payment matters necessaryto meet the terms and conditions of the provider contract, includingdetermining whether a claim is a clean claim. If a carrier routinely, as amatter of policy, bundles or downcodes claims submitted by a provider, thecarrier shall clearly disclose that practice in each provider contract.Further, such carrier shall either (i) disclose in its provider contracts oron its website the specific bundling and downcoding policies that the carrierreasonably expects to be applied to the provider or provider's services on aroutine basis as a matter of policy or (ii) disclose in each providercontract a telephone or facsimile number or e-mail address that a providercan use to request the specific bundling and downcoding policies that thecarrier reasonably expects to be applied to that provider or provider'sservices on a routine basis as a matter of policy. If such request is made byor on behalf of a provider, a carrier shall provide the requesting providerwith such policies within 10 business days following the date the request isreceived.

b. Every carrier shall make available to such providers within 10 businessdays of receipt of a request, copies of or reasonable electronic access toall such policies which are applicable to the particular provider or toparticular health care services identified by the provider. In the event theprovision of the entire policy would violate any applicable copyright law,the carrier may instead comply with this subsection by timely delivering tothe provider a clear explanation of the policy as it applies to the providerand to any health care services identified by the provider.

5. Every carrier shall pay a claim if the carrier has previously authorizedthe health care service or has advised the provider or enrollee in advance ofthe provision of health care services that the health care services aremedically necessary and a covered benefit, unless:

a. The documentation for the claim provided by the person submitting theclaim clearly fails to support the claim as originally authorized; or

b. The carrier's refusal is because (i) another payor is responsible for thepayment, (ii) the provider has already been paid for the health care servicesidentified on the claim, (iii) the claim was submitted fraudulently or theauthorization was based in whole or material part on erroneous informationprovided to the carrier by the provider, enrollee, or other person notrelated to the carrier, or (iv) the person receiving the health care serviceswas not eligible to receive them on the date of service and the carrier didnot know, and with the exercise of reasonable care could not have known, ofthe person's eligibility status.

6. No carrier may impose any retroactive denial of a previously paid claimunless the carrier has provided the reason for the retroactive denial and (i)the original claim was submitted fraudulently, (ii) the original claimpayment was incorrect because the provider was already paid for the healthcare services identified on the claim or the health care services identifiedon the claim were not delivered by the provider, or (iii) the time which haselapsed since the date of the payment of the original challenged claim doesnot exceed the lesser of (a) 12 months or (b) the number of days within whichthe carrier requires under its provider contract that a claim be submitted bythe provider following the date on which a health care service is provided.Effective July 1, 2000, a carrier shall notify a provider at least 30 days inadvance of any retroactive denial of a claim.

7. Notwithstanding subdivision 6 of this subsection, with respect to providercontracts entered into, amended, extended, or renewed on or after July 1,2004, no carrier shall impose any retroactive denial of payment or in anyother way seek recovery or refund of a previously paid claim unless thecarrier specifies in writing the specific claim or claims for which theretroactive denial is to be imposed or the recovery or refund is sought. Thewritten communication shall also contain an explanation of why the claim isbeing retroactively adjusted.

8. No provider contract may fail to include or attach at the time it ispresented to the provider for execution (i) the fee schedule, reimbursementpolicy or statement as to the manner in which claims will be calculated andpaid which is applicable to the provider or to the range of health careservices reasonably expected to be delivered by that type of provider on aroutine basis and (ii) all material addenda, schedules and exhibits theretoand any policies (including those referred to in subdivision 4 of thissubsection) applicable to the provider or to the range of health careservices reasonably expected to be delivered by that type of provider underthe provider contract.

9. No amendment to any provider contract or to any addenda, schedule, exhibitor policy thereto (or new addenda, schedule, exhibit, or policy) applicableto the provider (or to the range of health care services reasonably expectedto be delivered by that type of provider) shall be effective as to theprovider, unless the provider has been provided with the applicable portionof the proposed amendment (or of the proposed new addenda, schedule, exhibit,or policy) at least 60 calendar days before the effective date and theprovider has failed to notify the carrier within 30 calendar days of receiptof the documentation of the provider's intention to terminate the providercontract at the earliest date thereafter permitted under the providercontract.

10. In the event that the carrier's provision of a policy required to beprovided under subdivision 8 or 9 of this subsection would violate anyapplicable copyright law, the carrier may instead comply with this section byproviding a clear, written explanation of the policy as it applies to theprovider.

11. All carriers shall establish, in writing, their claims payment disputemechanism and shall make this information available to providers.

C. Without limiting the foregoing, in the processing of any payment of claimsfor health care services rendered by providers under provider contracts andin performing under its provider contracts, every carrier subject toregulation by this title shall adhere to and comply with the minimum fairbusiness standards required under subsection B, and the Commission shall havethe jurisdiction to determine if a carrier has violated the standards setforth in subsection B by failing to include the requisite provisions in itsprovider contracts and shall have jurisdiction to determine if the carrierhas failed to implement the minimum fair business standards set out insubdivisions B 1 and B 2 in the performance of its provider contracts.

D. No carrier shall be in violation of this section if its failure to complywith this section is caused in material part by the person submitting theclaim or if the carrier's compliance is rendered impossible due to mattersbeyond the carrier's reasonable control (such as an act of God, insurrection,strike, fire, or power outages) which are not caused in material part by thecarrier.

E. Any provider who suffers loss as the result of a carrier's violation ofthis section or a carrier's breach of any provider contract provisionrequired by this section shall be entitled to initiate an action to recoveractual damages. If the trier of fact finds that the violation or breachresulted from a carrier's gross negligence and willful conduct, it mayincrease damages to an amount not exceeding three times the actual damagessustained. Notwithstanding any other provision of law to the contrary, inaddition to any damages awarded, such provider also may be awarded reasonableattorney's fees and court costs. Each claim for payment which is paid orprocessed in violation of this section or with respect to which a violationof this section exists shall constitute a separate violation. The Commissionshall not be deemed to be a "trier of fact" for purposes of this subsection.

F. No carrier (or its network, provider panel or intermediary) shallterminate or fail to renew the employment or other contractual relationshipwith a provider, or any provider contract, or otherwise penalize anyprovider, for invoking any of the provider's rights under this section orunder the provider contract.

G. This section shall apply only to carriers subject to regulation under thistitle.

H. This section shall apply with respect to provider contracts entered into,amended, extended or renewed on or after July 1, 1999.

I. Pursuant to the authority granted by 38.2-223, the Commission maypromulgate such rules and regulations as it may deem necessary to implementthis section.

J. If any provision of this section, or the application thereof to any personor circumstance, is held invalid or unenforceable, such determination shallnot affect the provisions or applications of this section which can be giveneffect without the invalid or unenforceable provision or application, and tothat end the provisions of this section are severable.

K. The Commission shall have no jurisdiction to adjudicate individualcontroversies arising out of this section.

(1999, cc. 709, 739; 2004, c. 425; 2005, c. 349.)