RD408 - The Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2016/2017 Reporting Period

Executive Summary:

The Financial Impact of Section 38.2-3419.1 of the Code of Virginia requires every insurer, health services plan, and health maintenance organization (HMO) from which a report is deemed necessary under regulations adopted by the State Corporation Commission (Commission) to report to the Commission, no less often than biennially, cost and utilization information for each of the mandated benefits and mandated providers contained in §§ 38.2-3408 through 38.2-3419, and § 38.2-4221 of the Code of Virginia. The Commission’s Rules Governing the Reporting of Cost and Utilization Data Relating to Mandated Benefits and Mandated Providers (the Rules) at 14VAC5-190-10 et seq. specify the detail and form of the information that must be reported by companies.

The Rules establish requirements applicable to the reporting of claim and premium data specific to each benefit and provider category contained in §§ 38.2-3408 through 38.2-3419, and § 38.2-4221 of the Code of Virginia. Data regarding self-funded plans and policies issued in other states which provide coverage to residents of Virginia is not represented in this report because such plans and policies are generally not subject to the mandated benefit and mandated provider requirements of Virginia.

In Case No. INS-2016-00223, the Commission amended the Rules to streamline the data reporting process. In doing so, the reporting period was changed to every other year, with each year in the period reported separately. The first data reports were due May 1, 2018, covering calendar years 2016 and 2017. In addition, the basis for reporting was changed from annual written premiums to covered lives to further streamline reporting. Pursuant to this change, any health insurance issuer reporting greater than 5,000 covered lives in Virginia to the National Association of Insurance Commissioners for certain lines of comprehensive health coverage must file the cost and utilization data reports on mandated benefits and providers for each year exceeding the threshold. The subject lines are individual comprehensive health coverage, small group employer comprehensive coverage, and large group employer comprehensive coverage. The Commission is required to submit its report to the Governor and the General Assembly by October 31 of each year in which reports are due. This report provides information relating to the 2016/2017 reporting period. Previous reports are listed in Appendix A.

Pursuant to the streamlined reporting thresholds, 17 of the 763 companies licensed to issue accident and sickness or subscription contracts in Virginia or licensed as HMOs in Virginia during the reporting period met the reporting threshold for 2016, while 16 met the reporting threshold for 2017. All required companies submitted completed reports for the required periods. For the purposes of streamlined reporting, the data from each reporting year was aggregated into one combined reporting period, 2016/2017, and not displayed separately. Information presented in this report reflects data provided by 8 insurers for 2016 and 2017 and data provided by 9 HMOs for 2016 and 8 HMOs for 2017. HMOs and health services plans are not subject to all of the mandated benefit requirements of Title 38.2 of the Code of Virginia; however, the data provided by HMOs and health services plans has been included in the data provided by insurers for the purposes of reporting claims costs and utilization as well as premium impact summaries.

The Rules require companies to use certain procedure and diagnosis codes when developing claim information for each benefit category. Benefits have been defined in this manner in order to ensure a reasonable level of consistency among data collection methodologies employed by the various companies. The codes utilized in the preparation of this report are part of two widely accepted coding systems used by most hospitals, health care providers, and companies. These systems are outlined in the "Physicians’ Current Procedural Terminology, 2014 Office Edition" (CPT-Plus procedure codes) and the "International Classification of Diseases - 10th Revision" - (ICD-10-CM diagnosis codes).

As discussed in the 2015 report, RD337 - The Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2014 Reporting Period, the International Classification of Disease (ICD) Codes, for which cost and utilization data is reported, underwent a major update in 2015. Effective September 30, 2015, the ICD-9 codes were replaced by ICD-10 codes. As a result, insurers were requested to report mandated benefits and utilization for the 9-month period of January 1, 2015, through September 30, 2015, for benefits coded utilizing the ICD-9.

The Bureau of Insurance provided an ICD-9 to ICD-10 crosswalk for the purposes of the 2016/2017 reporting period. Because of the significant differences between the two coding systems, the data reported in this report will not be compared to any data from prior reports. For example, ICD-9 code V70.5 was used to identify Health Examination of Defined Subpopulations, Children. The equivalent ICD-10 code changed to Z021 - Encounter for Pre-Employment Examination, Z023 – Encounter for Examination for Recruitment to Armed Forces, or Z0289 – Encounter for Other Administrative Examinations. Only Z0289 would be considered the reporting code for Child Health Supervision Services. Furthermore, it is apparent from analysis of the changes in ICD coding that insurers are less able to identify for the purposes of this report those claims falling under the mandated benefits and provider reporting requirements. The Bureau is monitoring insurers’ compliance with the reporting instructions and will identify potential ICD coding issues in order to amend the instructions to address identified issues for future reports.

This report includes summaries of each of the mandated benefit and provider requirements in Virginia, together with information relating to the impact of these requirements on cost and utilization. The following chart represents, on an aggregate basis, the average claim cost per individual contract or group certificate and the average percentage of total claims that this cost represents for all mandated benefits, offers and providers taken collectively.

Average Claim Cost Per Contract: $747.00
Average Percent of Total Claims: 14.03%

Average Claim Cost Per Certificate: $1,237.95
Average Percent of Total Claims: 17.04%

This chart illustrates that, on average for an individual health insurance contract or subscription contract providing the type of coverage under which mandated benefits, offers and providers are applicable, approximately $747 was paid for claims attributable to mandated benefits, offers and providers during the 2016/2017 biennium. This represents approximately 14% of all claim payments made under this type of individual contract. Likewise, during the 2016/2017 biennium, approximately $1,238 was paid in claims payments under a group certificate providing applicable contracts or certificates in Virginia.

It is important to note that while the statutory requirements relative to the mandated benefits, mandated offers, and mandated providers identified in this report remain in effect and applicable to health plans issued in Virginia, the requirements associated with each mandate, in many cases, also apply insofar as the benefit and coverage requirements associated with the mandates are included in the essential health benefit requirements for individual market and small group market health benefit plans pursuant to § 38.2-3451 of the Code of Virginia.