In 2020, the Virginia General Assembly passed House Bill 1251/Senate Bill 172 (Chapters 1080 and 1081 of the 2020 Virginia Acts of Assembly). The legislation was codified as §§ 38.2-3445-38.2-3445.2 of Chapter 34 of Title 38.2 of the Code of Virginia ("Code") (collectively, "Law"). Effective January 1, 2021, the Law prohibits the balance billing of enrollees by out-of-network health care providers for emergency services, or by out-of-network surgical or ancillary service providers at an innetwork facility, for any amount other than the enrollee’s applicable cost-sharing requirements.

Under the Law, if a health care provider disputes the amount to be paid by the health carrier for services rendered to an enrollee, the provider and the health carrier shall make a good faith effort to reach a resolution on the amount of the reimbursement. If the health carrier and the provider do not agree on a commercially reasonable payment, either party may seek to resolve the dispute by arbitration.

The Law, among other things, directed the Commission to establish a framework for arbitration of such disputes to include: (i) a timeline for the proceedings; (ii) a method for choosing an arbitrator; (iii) a fixed fee schedule for the costs of arbitration ; (iv) required and optional factors for the arbitrator to consider; (v) non-disclosure agreements; (vi) reporting requirements; and (vii) a process for appeals based on specified criteria, including abuse of arbitration proceedings. The Commission was authorized to adopt rules and regulations governing the arbitration process.

In 2020, the Commission promulgated its Rules Governing Balance Billing for Out- ofNetwork Health Care Services (14 VAC 5-405-10 et seq.) ("Rules"). The Rules, effective January 1, 2021, apply to all health benefit and managed care plans issued and delivered in the Commonwealth except as provided for in § 38.2- 3445.06 of the Code.

The Commission prepares an annual report summarizing the dispute resolution information provided by arbitrators. The report is posted on the Bureau’s website and submitted to the Chairs of the House Committees on Labor and Commerce and Appropriations, and the Senate Committees on Commerce and Labor and Finance and Appropriations annually by July 1.

The Law also directs the Commission to submit an annual report by December 1 of each year. This annual report (i) presents information reported by health carriers to the Bureau as required by § 38.2-3445.2 of the Code on the number of out-of-network claims paid; (ii) studies changes in provider participation in health carrier networks and variances in payment levels if providers are reinstated following termination; (iii) assesses the potential impact of these changes in participation or payment levels for emergency services on premiums; and (iv) presents an update on the number and type of claims resolved by arbitration, including variations between the initial payment and final settled amounts.

For this first annual report, the Commission gathered the following data for calendar years 2017 – 2020, and from January 1, 2021 through June 30, 2021 in accordance with § 38.2-3445.2 of the Code.

For the comparison period January 1 through June 30, 2021, the Commission reports:

• An increase in the amount of out-of-state emergency claims paid;

• The rate of claims paid for non-emergency surgical and ancillary services at an in-network facility are two to three times higher than the rate of claims paid for emergency services;

• At least 40% of provider contract terminations are noted as voluntary;

• Nearly all providers who were reinstated in the same year in which their contract terminated were reinstated at the same payment level as their previous contract; and

• Given the minimal number of claims that represent out-of-network emergency claims, premiums should not be impacted materially by changes to network participation and payment levels.

For arbitrations decided from January 1, 2021 to October 31, 2021:

• The first request eligible for balance billing arbitration was accepted on March 10, 2021.

• The Commission received a total of 727 arbitration requests through October 31, 2021, of which 660 requests were accepted as eligible.

• Of the 546 arbitration decisions rendered by arbitrators during this period, 356 arbitrations (65.2%) were decided in favor of the health carrier, and 190 arbitrations (34.8%) were decided in favor of the provider.