RD471 - The Financial Impact of Mandated Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2018 and 2019 Reporting Period

Executive Summary:

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 reporting process. In doing so, the reporting period was changed to every other year, with each year in the period reported separately. 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 report 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 2018/2019 reporting period. Previous reports are listed in Appendix A.

Pursuant to the streamlined reporting thresholds, 16 of the 745 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 2018 and 2019., 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, 2018/2019 and not displayed separately.

Information presented in this report reflects data provided by 8 HMOs. 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).

The Bureau of Insurance again provided an ICD-9 to ICD-10 crosswalk for the purposes of the 2018/2019 reporting period. As noted in the 2018 report, RD408 – The Financial Impact of Mandate Health Insurance Benefits and Providers Pursuant to Section 38.2-3419.1 of the Code of Virginia: 2016/2017 Reporting Period, changes in ICD coding continue to impact the ability of insurers to identify for the purposes of this report those claims falling under the mandated benefits and provider reporting requirements. The Bureau continues to monitor insurers’ compliance with the reporting instructions. However, identification of potential ICD coding issues remains difficult due to changing coding services and the systems utilized by providers to submit claims. The Bureau will continue to review any identified coding issues in order to amend the instructions 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: $1,347.30
Average Percent of Total Claims: 17.43%

Average Claim Cost Per Certificate: $1,138.63
Average Percent of Total Claims: 18.13%

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 $1,347 was paid for claims attributable to mandated benefits, offers and providers during the 2018/2019 biennium. This represents approximately 17% of all claim payments made under this type of individual contract. Likewise, during the 2018/2019 biennium, approximately $1,139 was paid in claims payments under a group certificate providing applicable contracts or certificates in Virginia, representing approximately 18% of all claim payments made under this type of group contract.

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.