Title 14 VAC — Insurance

Agency 5 State Corporation Commission, Bureau of Insurance

Chapter 20 Variable Contract Regulations

Article I Definitions

14VAC5-20-10 Definitions

The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise:

"Agent", when used in this chapter (14VAC5-20-10 et seq.) means any individual, partnership or corporation which under the laws of this State is licensed as a life insurance agent, or nonresident life insurance broker.

"Commission", when used in this chapter (14VAC5-20-10 et seq.) means the State Corporation Commission.

"Contract on a variable basis" or "variable contract", when used in this chapter (14VAC5-20-10 et seq.) means any policy or contract which provides for insurance or annuity benefits which may vary according to the investment experience of any separate account or accounts maintained by the insurer as to such policy or contract, as provided for in § 38.2-3113 of the Code of Virginia.

"Satisfactory alternative examination" to Part I of the written examination called for by subsection C of 14VAC5-20-80 shall include any securities examination which is declared by the Commission to be an equivalent examination on the basis of content and administration. The following examinations are deemed to be a satisfactory alternative examination:

A state securities sales examination acceptable to the Securities and Exchange Commission;
The National Association of Securities Dealers, Inc. Examination for Principals, or Examination for Qualification as a Registered Representative;
The various securities examinations required by the New York Stock Exchange, the American Stock Exchange, Pacific Stock Exchange, or any other registered national securities exchange;
The Securities and Exchange Commission test given pursuant to Section 15(b) (8) of the Securities Exchange Act of 1934 (15 USC § 78a et seq.);
The examination recommended for the testing of variable contract agents by the National Association of Insurance Commissioners, when adopted by the Insurance Department of any State or Territory of the United States and approved for use by such Department by the Securities and Exchange Commission.

"Variable contract agent", when used in this chapter (14VAC5-20-10 et seq.) means an agent who shall sell or offer to sell any contract on a variable basis.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623, § 2, eff. March 1, 1969.

Article II Qualification of Insurance Companies to Issue "Variable Contracts"

14VAC5-20-20 Delivery of variable contracts

A. No company shall deliver or issue for delivery variable contracts within this Commonwealth unless (i) it is licensed to do a life insurance or annuity business in this Commonwealth; and (ii) the Commission is satisfied that its condition or method of operation in connection with the issuance of such contracts will not render its operation hazardous to the public or its policyholders in this Commonwealth. In this connection, the Commission shall consider among other things:

The history and financial condition of the company;
The character, responsibility and fitness of the officers and directors of the company; and
The law and regulation under which the company is authorized in the state of domicile to issue variable contracts.

B. If the company is a subsidiary of an admitted life insurance company or affiliated with such company by common management or ownership, it may be deemed by the Commission to have satisfied the provisions of subdivision (ii) of subsection A hereof if either it or such admitted life company satisfies the aforementioned provisions; provided, further, that companies licensed and having a satisfactory record of doing business in this Commonwealth for a period of at least three years may be deemed to have satisfied the Commission with respect to subdivision (ii) of subsection A.

C. Before any company shall deliver or issue for delivery variable contracts within this Commonwealth, it shall submit to the Commission (i) a general description of the kinds of variable contracts it intends to issue; (ii) if requested by the Commission, a copy of the statutes and regulations of its state of domicile under which it is authorized to issue variable contracts and (iii) if requested by the Commission, biographical data with respect to officers and directors of the company on the NAIC uniform biographical data form.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623, § 3, eff. March 1, 1969.

Article III Separate Account or Separate Accounts

14VAC5-20-30 Separate accounts; provisions

Article III Separate Account or Separate Accounts

A domestic company issuing variable contracts shall establish one or more separate accounts pursuant to § 38.2-3113 of the Code of Virginia of the insurance laws of this Commonwealth, subject to the following provisions of this article:

Unless otherwise approved by the Commission assets allocated to a separate account shall be valued at their market value on the date of valuation, or if there is no readily available market, then as provided under the terms of the contract or the rules or other written agreement applicable to such separate account.
No sale, exchange or other transfer of assets may be made by a company between any of its separate accounts or between any other investment account and one or more of its separate accounts unless, in case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the contracts with respect to the separate account to which the transfer is made, and unless such transfer, whether into or from a separate account is made (i) by a transfer of cash, or (ii) by a transfer of securities having a valuation which could be readily determined in the marketplace, provided that such transfer of securities is approved by the Commission. The Commission may authorize other transfers among such accounts if, in its opinion, such transfers would not be inequitable.
The company shall maintain in each such separate account assets with a value at least equal to the reserves and other contract liabilities with respect to such account, except as may otherwise be approved by the Commission.
Rules under any provision of the insurance laws of this Commonwealth or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to members of any separate account's committee, board or other similar body. No officer or director of such company nor any member of the committee, board or body of a separate account shall receive directly or indirectly any commission or any other compensation with respect to the purchase or sale of assets of such separate account.
A company may with respect to any separate account registered with the Securities and Exchange Commission as a unit investment trust exercise voting rights in connection with any securities of a regulated investment company registered under the Investment Company Act of 1940 (15 USC § 80a-1 et seq.) and held in such separate accounts in accordance with instructions from persons having interests in such accounts ratably as determined by the company.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623, § 4, eff. March 1, 1969.

Article IV Filing of Contracts

14VAC5-20-40 Filing of contracts

Article IV Filing of Contracts

The filing requirements applicable to variable contracts shall be those filing requirements otherwise applicable under existing statutes and regulations of this Commonwealth with respect to individual and group life insurance and annuity form filings, to the extent appropriate.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623, § 5, eff. March 1, 1969.

Article V Contracts Providing for Variable Benefits

14VAC5-20-50 Procedures

Article V Contracts Providing for Variable Benefits

A. Any variable contract providing benefits payable in variable amounts delivered or issued for delivery in this Commonwealth shall contain a statement of the essential features of the procedures to be followed by the insurance company in determining the dollar amount of such variable benefits. Any such contract, including a group contract and any certificate issued thereunder, shall state that such dollar amount will vary to reflect investment experience and shall contain on its first page a clear statement to the effect that the benefits thereunder are on a variable basis.

B. Illustrations of benefits payable under any contract providing benefits payable in variable amounts shall not include projections of past investment experience into the future or attempted predictions of future investment experience; provided that nothing contained herein is intended to prohibit use of hypothetical assumed rates of return to illustrate possible levels of annuity payments.

C. Any individual variable annuity contract delivered or issued for delivery in this Commonwealth shall stipulate the expense, mortality, and investment increment factors to be used in computing the dollar amount of variable benefits or other contractual payments or values thereunder, and may guarantee that expense and/or mortality results shall not adversely affect such dollar amounts.

In computing the dollar amount of variable benefits or other contractual payments or values under an individual variable annuity contract:

The annual net investment increment assumption shall not exceed 5.0%, except with the approval of the Commission;
To the extent that the level of benefits may be affected by mortality results, the mortality factor shall be determined from the Annuity Mortality Table for 1949, Ultimate, or any modification of that table not having a higher mortality rate at any age, or, if approved by the Commission, from another table.

"Expense", as used in this subdivision, may exclude some or all taxes, as stipulated in the contract.

D. The reserve liability for variable annuities shall be established pursuant to the requirements of the standard valuation law in accordance with actuarial procedures that recognize the variable nature of the benefits provided.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623, § 6, eff. March 1, 1969.

Article VI Required Reports

14VAC5-20-60 Required reports

Article VI Required Reports

A. Any company issuing individual variable contracts providing benefits in variable amounts shall mail to the contractholder at least once in each contract year after the first at his last address known to the company, a statement or statements reporting the investments held in the separate account and, in the case of contracts under which payments have not yet commenced, a statement reporting as of a date not more than four months previous to the date of mailing, (i) the number of accumulation units credited to such contracts and the dollar value of a unit, or (ii) the value of the contractholder's account.

B. The company shall submit annually to the Commission a statement of the business of its separate account or accounts in such form as may be prescribed by the National Association of Insurance Commissioners.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623; December 19, 1968, eff. March 1, 1969.

Article VII Foreign Companies

14VAC5-20-70 Foreign companies

Article VII Foreign Companies

If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially equal to that provided by this chapter, the Commission, to the extent deemed appropriate by it in its discretion, may consider compliance with such law or regulation as compliance with this chapter.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623; December 19, 1968, eff. March 1, 1969.

Article VIII Qualification and Examination of Agents

14VAC5-20-80 Agents

Article VIII Qualification and Examination of Agents

A.1. No agent shall be eligible to sell or offer for sale a contract on a variable basis unless prior to making solicitation or sale of such a contract, he also be licensed as a variable contract agent.

Any agent who participates only in the sale or offering for sale of variable contracts that are not registered under the federal Securities Act of 1933 (15 USC § 77a et seq.) need not be licensed as a variable contract agent.

B. Any agent applying for a license as a variable contract agent shall do so by filing with the Commission the required application.

C. The licensing as a variable contract agent of any agent complying with subsection B shall not become effective until such agent shall have satisfactorily passed a written examination upon securities and variable contracts. Such examination shall be divided into two parts. Part I shall be on securities generally. Part II shall deal with variable contracts, and shall be composed of at least 15 questions, but not more than 50 questions, concerning the history, purpose, regulation, and sale of contracts on a variable basis.

D. The examination will be given in such places and at such times as the Commission shall from time to time designate. Upon application for license as a variable contract agent, the applicant shall be notified of the date of the next examination.

E. The examination recommended for the testing of variable contract agents by the National Association of Insurance Commissioners (NAIC) is hereby adopted for use in this State in its present form, or as it may be amended, and it shall be used in all tests given pursuant to this regulation.

F. Any applicant for license as a variable contract agent shall not be required to take Part I of the NAIC examination if, at the time of application, evidence is presented that the applicant (i) has previously passed a satisfactory alternative examination as that term is defined in 14VAC5-20-10, or (ii) is currently registered with the federal Securities and Exchange Commission as a broker-dealer, or is currently associated with a broker-dealer and has met qualification requirements with respect to such association.

G. Every applicant applying for license as a variable contract agent shall satisfactorily complete Part II of the examination required by subsection C with a grade of at least 70%, or shall present evidence of successful completion of either a variable contract examination given under the supervision of an insurance department of any State or Territory of the United States which has adopted Part II of the examination recommended for the testing of variable contract agents by the National Association of Insurance Commissioners or has been examined and licensed by any such department prior to its adoption of the National Association of Insurance Commissioners Model Regulation.

H.1. Any applicant who fails to pass Part I of the examination required by this subsection may not take Part I of the examination again until 30 days after initially taking it. After a second such failure, such applicant may not take the examination again until 60 days after taking the second examination. After a third and any subsequent such failure, such applicant may not take the examination again until 90 days after the third and any subsequent examinations.

Any applicant failing to pass Part II of the examination may take Part II again 30 days after the first and any subsequent examinations.

I. Every application for a license as a variable contract agent shall be accompanied by an examination fee of $5.00. A fee of $5.00 will be charged for each re-examination administered to an applicant.

J. Report of the results of any examination given pursuant to this regulation shall be made by the Bureau of Insurance on "Commissioner's Report of Examination".

K. Except as modified by this chapter, the regulations of the Bureau of Insurance governing the licensing of life insurance agents including examinations therefor shall apply hereto.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623; December 19, 1968, eff. March 1, 1969.

14VAC5-20-90 Examination of other persons

Part I of the written examination provided for in subsection C of 14VAC5-20-80 shall also be administered to other persons who are not required to be licensed to sell life insurance in this Commonwealth upon their submission of the required application and payment of the examination fee.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623; December 19, 1968, eff. March 1, 1969.

14VAC5-20-100 Records of examination

A. Results of the examination administered pursuant to subsection C of 14VAC5-20-80 will be reported by the Bureau of Insurance to the applicant's company. In addition, examination results will be reported by the Bureau of Insurance to any other State Insurance Department requesting confirmation of the examination grade, either upon request of such Department or upon request of the applicant or his company.

B. Records of the examination grade of each applicant upon an examination administered by the Bureau of Insurance, or upon an examination deemed to be a satisfactory alternative examination and administered by another agency or authority and reported to the Bureau of Insurance will be retained in the file pertaining to said applicant.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623; December 19, 1968, eff. March 1, 1969.

14VAC5-20-110 General

A. Any person licensed in this Commonwealth as a variable contract agent shall immediately report to the Commission (i) any suspension or revocation of his variable contract agent's license or life insurance agent's license in any other state or territory of the United States, (ii) the imposition of any disciplinary sanction (including suspension or expulsion from membership, suspension or revocation of or denial of registration) imposed upon him by any national securities exchange, or national securities association, or any federal, or state or territorial agency with jurisdiction over securities or contracts on a variable basis; (iii) any judgment or injunction entered against him on the basis of conduct deemed to have involved fraud, deceit, misrepresentation, or violation of any insurance or securities law or regulation.

B. The Commission may reject any application or suspend or revoke or refuse to renew any variable contract agent's license upon any ground that would bar such applicant or such agent from being licensed to sell life insurance contracts in this Commonwealth. The rules governing any proceeding relating to the suspension or revocation of a life insurance agent's license shall also govern any proceeding for suspension or revocation of a variable contract agent's license.

C. Renewal of a variable contract agent's license shall follow the same procedure established for renewal of an agent's license to sell life insurance contracts in this Commonwealth.

History

Statutory Authority: § 38.2-3113 of the Code of Virginia.
Historical Notes: Derived from Regulation 3, Case No. 18623; December 19, 1968, eff. March 1, 1969.

Chapter 80 Rules Governing Variable Life Insurance

Article I Scope

14VAC5-80-10 Scope

Article I Scope

All life insurance, as defined in § 38.2-102 of the Code of Virginia, payable in variable dollar amounts shall be subject to the provisions of this chapter. In the event of conflict between the provisions of this regulation and the provisions of any other regulation issued by the Commission, the provisions of this chapter shall be controlling as to variable life insurance.

Nothing contained in this chapter (14VAC5-80-10 et seq.), shall be construed to relieve an insurer of complying with the statutory requirements set forth in Title 38.2 of the Code of Virginia to the extent such statutory requirements may be deemed by the Commission to be applicable to variable life insurance.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article II, § 1, eff. June 15, 1992.

Article II Definitions

14VAC5-80-20 Definitions

Article II Definitions

As used in this chapter (14VAC5-80-10 et seq.):

"Affiliate" of an insurer means any person, directly or indirectly, controlling, controlled by, or under common control with such insurer; any person who regularly furnishes investment advice to such insurer with respect to its separate accounts for which a specific fee or commission is charged; or any director, officer, partner or employee of any such insurer, controlling or controlled person, or person providing investment advice or any member of the immediate family of such person.

"Agent" means any person, corporation, partnership, or other legal entity which is licensed by this Commonwealth as a life and health insurance agent.

"Assumed investment rate" means the rate of investment return which would be required to be credited to a variable life insurance policy, after deduction of charges for taxes, investment expenses, and mortality and expense guarantees to maintain the variable death benefit equal at all times to the amount of death benefit, other than incidental insurance benefits, which would be payable under the plan of insurance if the death benefit did not vary according to the investment experience of the separate account.

"Benefit base" means the amount to which the net investment return is applied.

"Commission" means the State Corporation Commission.

"Control" (including the terms "controlling", "controlled by" and "under common control with") means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing more than 10% of the voting securities of any other person. This presumption may be rebutted by a showing made to the satisfaction of the Commission that control does not exist in fact. The Commission may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect.

"Flexible premium policy" means any variable life insurance policy other than a scheduled premium policy as specified in the definition of that item in this section.

"General Account" means all assets of the insurer other than assets in separate accounts established pursuant to § 38.2-3113 of the Code of Virginia or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer, whether or not for variable life insurance.

"Incidental insurance benefit" means all insurance benefits in a variable life insurance policy, other than the variable death benefit and the minimum death benefit, including but not limited to accidental death and dismemberment benefits, disability benefits, guaranteed insurability options, family income, or term riders.

"Minimum death benefit" means the amount of the guaranteed death benefit, other than incidental insurance benefits, payable under a variable life insurance policy regardless of the investment performance of the separate account.

"Net investment return" means the rate of investment return in a separate account to be applied to the benefit base.

"Person" means any association, aggregate of individuals, business, company, corporation, individual, joint stock company, organization, partnership, receiver, reciprocal, or interinsurance exchange, trustee or society.

"Policy processing day" means the day on which charges authorized in the policy are deducted from the policy's cash value.

"Scheduled premium policy" means any variable life insurance policy under which both the amount and timing of premium payments are fixed by the insurer.

"Separate account" means a separate account established pursuant to § 38.2-3113 of the Code of Virginia or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

"Variable death benefit" means the amount of the death benefit, other than incidental insurance benefits, payable under a variable life insurance policy dependent on the investment performance of the separate account, which the insurer would have to pay in the absence of any minimum death benefit.

"Variable life insurance policy" means any policy or contract that provides for a form of life insurance as defined in § 38.2-102 of the Code of Virginia, the amount or duration of which varies according to the investment experience of any separate account or accounts established and maintained by the insurer as to such policy, pursuant to §§ 38.2-3114 and 38.2-3113 of the Code of Virginia or pursuant to the corresponding section of the insurance laws of the state of domicile of a foreign or alien insurer.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article III, §§ 1-17, eff. June 15, 1992.

Article III Qualification of Insurer to Issue Variable Life Insurance

14VAC5-80-30 Licensing and approval to do business in the Commonwealth

Article III Qualification of Insurer to Issue Variable Life Insurance

The following requirements are applicable to all insurers either seeking authority to issue variable life insurance in this Commonwealth or having authority to issue variable life insurance in this Commonwealth.

An insurer shall not deliver or issue for delivery any variable life insurance policy in this Commonwealth unless:

The insurer is licensed to transact a life insurance business in this Commonwealth;
The insurer has obtained the necessary written approvals of the Commission for the conduct of a variable life insurance business in this Commonwealth. The Commission shall grant such written approval only after it has found that:

a. The plan of operation for the issuance of variable life insurance policies is not unsound;

b. The general character, reputation, and experience of the management and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer are such as to reasonably assure competent operation of the variable life insurance business of the insurer in this Commonwealth; and

c. The present and foreseeable future financial condition of the insurer and its method of operation in connection with the issuance of such policies is not likely to render its operation hazardous to the public or its policyholders in this Commonwealth. The Commission shall consider, among other things:

(1) The history of operation and financial condition of the insurer.

(2) The qualifications, fitness, character, responsibility, reputation, and experience of the officers and directors and other management of the insurer and those persons or firms proposed to supply consulting, investment, administrative, or custodial services to the insurer;

(3) The applicable law and regulations under which the insurer is authorized in its state of domicile to issue variable life insurance policies. The state of entry of an alien insurer shall be deemed its state of domicile for this purpose; and

(4) If the insurer is a subsidiary of, or is affiliated by common management or ownership with another company, its relationship to such other company and the degree to which the requesting insurer, as well as the other company, meet these standards.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 1, eff. June 15, 1992.

14VAC5-80-40 Filing for approval to do business in the Commonwealth

The Commission may, at its discretion, require that an insurer, before it delivers or issues for delivery any variable life insurance policy in this Commonwealth, file the following information for the consideration of the Commission in making the determination required by subdivision 2 of 14VAC5-80-30 of this article:

Copies of and a general description of the variable life insurance policies it intends to issue; however, approval of the insurer pursuant to this Article shall not be construed as approval of the forms pursuant to Article IV of this chapter;
A general description of the methods of operation of the variable life insurance business of the insurer; including methods of distribution of policies and the names of those persons or firms proposed to supply consulting, investment, administrative, custodial or distribution services to the insurer;
With respect to any separate account maintained by an insurer for any variable life insurance policy, a statement of the investment policy the issuer intends to follow for the investment of the assets held in such separate account, and a statement of procedures for changing such investment policy. The statement of investment policy shall include a description of the investment objectives intended for the separate account;
A description of any investment advisory services contemplated as required by 14VAC5-80-290 of Article VI.
A copy of the statutes and regulations of the state of domicile of the insurer under which it is authorized to issue variable life insurance policies; and
Biographical data with respect to officers and directors of the insurer on the National Association of Insurance Commissioners Uniform Biographical Data Form; and
A statement of the insurer's actuary describing the mortality and expense risks which the insurer will bear under the policy.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 2, eff. June 15, 1992.

14VAC5-80-50 Standards of suitability

Every insurer seeking approval to enter into the variable life insurance business in this Commonwealth shall establish and maintain a written statement specifying the Standards of Suitability to be used by the insurer. Such Standards of Suitability shall specify that no recommendations shall be made to an applicant to purchase a variable life insurance policy and that no variable life insurance policy or certificate shall be issued in the absence of reasonable grounds to believe that the purchase of such policy or certificate is not unsuitable for such applicant on the basis of information furnished after reasonable inquiry of such applicant concerning the applicant's insurance and investment objectives, financial situation and needs, and any other information known to the insurer or to the agent making the recommendation.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 3, eff. June 15, 1992.

14VAC5-80-60 Use of sales materials

An insurer authorized to transact variable life insurance business in this Commonwealth shall not use any sales material, advertising material, or descriptive literature or other materials of any kind in connection with its variable life insurance business in this Commonwealth which is false, misleading, deceptive, or inaccurate.

Variable life insurance marketing communications shall be subject to the additional requirements of Rules Governing Advertisement of Life Insurance and Annuities (14VAC5-41-10).

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 4, eff. June 15, 1992; amended, Virginia Register Volume 37, Issue 4, eff. October 12, 2020.

14VAC5-80-70 Requirements applicable to contractual services

Any material contract between an insurer and suppliers of consulting, investment, administrative, sales, marketing, custodial, or other services with respect to variable life insurance operations shall be in writing and provide that the supplier of such services shall furnish the Commission with any information or reports in connection with such services which the Commission may request in order to ascertain whether the variable life insurance operations of the insurer are being conducted in a manner consistent with this chapter and any other applicable law or regulations.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 5, eff. June 15, 1992.

14VAC5-80-80 Reports to the Commission

Any insurer authorized to transact the business of variable life insurance in this Commonwealth shall submit to the Commission, in addition to any other materials which may be required by this chapter or any other applicable laws or regulations;

a. an annual statement of the business of its separate account or accounts in such form as may be prescribed by the Commission; and

b. prior to its use in this Commonwealth any information furnished to applicants as provided for in Article VII (14VAC5-80-300) and

c. prior to its use in this Commonwealth the form of any of the Reports to Policyholders as provided for in Article IX (14VAC5-80-320); and

d. such additional information concerning its variable life insurance operations or its separate accounts as the Commission shall deem necessary.

Any material submitted to the Commission under this section shall be disapproved if it is found to be false, misleading, deceptive, or inaccurate in any material respect and, if previously distributed, the Commission may require the distribution of amended material.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 6, eff. June 15, 1992.

14VAC5-80-90 Authority of Commission to disapprove

Any material required to be filed with and approved by the Commission shall be subject to disapproval or withdrawal of approval if at any time such material is found by the Commission not to comply with the standards established by this chapter, or any other applicable statute or regulation.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IV, § 7, eff. June 15, 1992.

Article IV Variable Life Insurance Form

14VAC5-80-100 Variable life insurance form approval; in general

Article IV Variable Life Insurance Form

The Commission shall not approve any variable life insurance form filed pursuant to this regulation unless it conforms to the requirements of this Article and all other statutory and regulatory requirements deemed applicable by the Commission. No policy or certificate approved prior to June 15, 1992 shall be delivered or issued for delivery in this Commonwealth until it has been approved by the Commission under the requirements established by this section.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article V, eff. June 15, 1992.

14VAC5-80-110 Filing of variable life insurance policies

All variable life insurance policies or certificates, and all riders, endorsements, applications and other documents which are to be attached to and made a part of the policy or certificate and which relate to the variable nature of the policy, shall be filed with and approved by the Commission prior to such forms being put in force, issued for delivery, or delivered in this Commonwealth.

The procedures and requirements for such filing and approval shall be, to the extent appropriate and not inconsistent with this regulation, the same as those otherwise applicable to other life insurance forms.
The Commission may approve variable life insurance policies and related forms with provisions the Commission deems to be not less favorable to the policyholder and the beneficiary than those required by this regulation.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article V, § 1, eff. June 15, 1992.

14VAC5-80-120 Mandatory policy benefit and design requirements

Variable life insurance policies delivered or issued for delivery in this Commonwealth shall comply with the following minimum requirements.

Mortality and expense risks shall be borne by the insurer. The mortality and expense charges shall be subject to the maximums stated in the contract.
For scheduled premium policies, a minimum death benefit shall be provided in an amount at least equal to the initial face amount of the policy less any indebtedness so long as premiums are duly paid.
The policy shall reflect the investment experience of one or more separate accounts established and maintained by the insurer which shall be set forth in the policy. The insurer must demonstrate that the reflection of the investment experience in variable life insurance policy is actuarially sound.
Each variable life insurance policy shall be credited with the full amount of the net investment return applied to the benefit base.
Any changes in variable death benefits of each variable life insurance policy shall be determined at least annually.
The cash value of each variable life insurance policy shall be determined at least monthly. The method of computation of cash values and other nonforfeiture benefits, as described either in the policy or in a statement filed with the insurance supervisory official of the state in which the policy is delivered, or issued for delivery, shall be in accordance with actuarial procedures that recognize the variable nature of the policy. The method of computation must be such that, if the net investment return credited to the policy at all times from the date of issue should be equal to the assumed investment rate with premiums and benefits determined accordingly under the terms of the policy, then the resulting cash values and other nonforfeiture benefits must be at least equal to the minimum values required by § 38.2-3200 through § 38.2-3229 (Standard Nonforfeiture Law) of the Code of Virginia for a general account policy with such premiums and benefits. The assumed investment rate shall not exceed the maximum interest rate permitted under the standard nonforfeiture law of this Commonwealth. If the policy does not contain an assumed investment rate this demonstration shall be based on the maximum interest rate permitted under the standard nonforfeiture law. The method of computation may disregard incidental minimum guarantees as to the dollar amounts payable. Incidental minimum guarantees include, for example, but are not to be limited to, a guarantee that the amount payable at death or maturity shall be at least equal to the amount that otherwise would have been payable if the net investment return credited to the policy at all times from the date of issue had been equal to the assumed investment rate.
The computation of values required for each variable life insurance policy may be based upon such reasonable and necessary approximations as are acceptable to the Commission.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article V, § 2, eff. June 15, 1992.

14VAC5-80-130 Mandatory policy provisions

Each variable life insurance policy filed for approval in this Commonwealth shall in addition to other applicable statutory requirements, contain the following:

The first page of each policy shall contain:

a. A prominent statement in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, that the amount or duration of death benefits may be variable or fixed under specified conditions;

b. A prominent statement in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, that cash values may increase or decrease in accordance with the experience of the separate account subject to any specified minimum guarantees;

c. A prominent statement in contrasting color and in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, describing any minimum death benefit required pursuant to subdivision 2 of 14VAC5-80-120;

d. A statement describing the method, or a reference to the policy provision which describes the method, for determining the amount of insurance payable at death;

e. When appropriate a prominent statement in boldface type at least two points larger than the type used for policy provisions, printed in all capital letters, that the policy loan value is less than 100% of the policy's cash value surrender value;

2.a. For scheduled premium policies, a provision for a grace period of not less than 31 days from the premium due date which shall provide that where the premium is paid within the grace period, policy values will be the same, except for the deduction of any overdue premium, as if the premium were paid on or before the due date.

b. For flexible premium policies, a provision for a grace period beginning on the policy processing day when the total charges authorized by the policy that are necessary to keep the policy in force until the next policy processing day exceed the amounts available under the policy to pay such charges in accordance with the terms of the policy. Such grace period shall end on a date not less than 61 days after the mailing date of the report to policyholders required by subdivision 3 of Article IX (14VAC5-80-320).

The death benefit payable during the grace period will equal the death benefit less any outstanding indebtedness and less any overdue charges at the time of the last valuation of the policy preceding the beginning of the grace period.

3.a. For scheduled premium policies, a provision that the policy will be reinstated at any time within three years from the date of default upon the written application of the insured, and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:

(1) All overdue premiums with interest at a rate not exceeding 6.0% per year compounded annually and any indebtedness in effect at the end of the grace period following the date of default with interest at a rate as provided in § 38.2-3308 of the Code of Virginia; or

(2) 110% of the increase in cash value resulting from reinstatement plus all overdue premiums for incidental insurance benefits with interest at a rate not exceeding 6.0% per annum compounded annually.

b. For flexible premium policies a provision that the policy will be reinstated at any time within three years from the date of default upon the written application of the insured and evidence of insurability, including good health, satisfactory to the insurer, unless the cash surrender value has been paid or the period of extended insurance has expired, upon the payment of any outstanding indebtedness arising subsequent to the end of the grace period following the date of default together with accrued interest thereon to the date of reinstatement and payment of an amount not exceeding the greater of:

(1) A charge not to exceed three months cost of insurance; or

A full description of the benefit base and of the method of calculation and application of any factors used to adjust variable benefits under the policy;
A provision designating the separate account to be used and stating that:

a. The assets of such separate account shall be available to cover the liabilities of the general account of the insurer only to the extent that the assets of the separate account exceed the liabilities of the separate account arising under the variable life insurance policies supported by the separate account;

b. The assets of such separate account shall be valued at least as often as any policy benefits vary but at least monthly.

A designation of the officers who are empowered to make an agreement or representation on behalf of the insurer;
A provision setting forth conditions or requirements as to the designation, or change of designation, of a beneficiary and a provision for disbursement of benefits in the absence of a beneficiary designation;
A statement of any conditions or requirements concerning the assignment of the policy;
A description of any adjustments in policy values to be made in the event of misstatement of age or sex of the insured;
A provision stating that the investment policy of the separate account shall not be changed without the approval of the insurance supervisory official of the state of domicile of the insurer, and that the approval process is on file with the Commission;
A provision that payments of variable death benefits in excess of any minimum death benefits, cash values, policy loans, or partial withdrawals (except when used to pay premiums) or partial surrenders may be deferred;

a. For up to six months from the date of request, if such payments are based on policy values which do not depend on the investment performance of the separate account, or

b. Otherwise, for any period during which the New York Stock Exchange is closed for trading (except for normal holiday closing) or when the Securities and Exchange Commission has determined that a state of emergency exists which may make such payment impractical;

If settlement options are provided, at least one such option shall be provided on a fixed basis only;
A description of the basis for computing the cash value and the surrender value under the policy shall be included;
Premiums or charges for incidental insurance benefits shall be stated separately; and
The insurer may establish a reasonable minimum cash value below which any nonforfeiture insurance options will not be available. Upon termination of any policy if there is any cash value, the cash value shall be returned to the owner of the policy.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article V, § 3, eff. June 15, 1992.

14VAC5-80-140 Policy loan provisions

Every variable life insurance policy, other than term insurance policies and pure endowment policies, delivered or issued for delivery in this Commonwealth shall contain, in addition to other applicable statutory requirements, provisions which are not less favorable to the policyholder than the following:

A provision for policy loans after the policy has been in force for two full years which provides the following:

For scheduled premium policies, whenever the indebtedness exceeds the cash surrender value, the insurer shall give notice of any intent to cancel the policy if the excess indebtedness is not repaid within 31 days after the date of mailing of such notice.
The policy may provide that if, at any time, so long as premiums are duly paid, the variable death benefit is less than it would have been if no loan or withdrawal had ever been made, the policyowner may increase such variable death benefit up to what it would have been if there had been no loan or withdrawal by paying an amount not exceeding 110% of the corresponding increase in cash value and by furnishing such evidence of insurability as the insurer may request.
The policy may specify a reasonable minimum amount which may be borrowed at any time but such minimum shall not apply to any automatic premium loan provision.
The policy loan provisions shall be constructed so that variable life insurance policyholders who have not exercised such provisions are not disadvantaged by the exercise thereof.
Any amount paid to the policyholders upon the exercise of any policy loan provision shall be withdrawn from the separate account and shall be returned to the separate account upon repayment except that a stock insurer may provide the amount for policy loans from the general account.
At least 90% of the policy's cash surrender value may be borrowed.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article V, § 4, eff. June 15, 1992.

14VAC5-80-150 Other policy provisions

The following provisions may in substance be included in a variable life insurance policy or related form delivered or issued for delivery in this Commonwealth:

For any increase in death benefits which results from an application of the owner subsequent to the policy issue date, the policy may provide an exclusion for suicide within two years of such increase as to the increased amount of death benefits. Any refund due under a suicide exclusion may be adjusted to reflect the investment activity of the variable account;
Incidental insurance benefits may be offered on a fixed or variable basis;
A provision allowing the policyholder to elect in writing in the application for the policy or thereafter an automatic premium loan on a basis not less favorable than that required of policy loans under 14VAC5-80-140, except that a restriction that no more than two consecutive premiums can be paid under this provision may be imposed;
A provision allowing the policyholder to make partial withdrawals;
Any other policy provision approved by the Commission.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article V, § 5, eff. June 15, 1992.

Article V Reserve Liabilities for Variable Life Insurance [Repealed]

14VAC5-80-160 (Repealed.)

Article V Reserve Liabilities for Variable Life Insurance [Repealed]

Historical Notes

Derived from Regulation 26, Case No. INS920077, Article VI, §§ 1 to 4, eff. June 15, 1992; repealed, Virginia Register Volume 18, Issue 14, eff. March 31, 2002.

Article VI Separate Accounts

14VAC5-80-200 Establishment and administration of separate accounts

Article VI Separate Accounts

The following requirements apply to the establishment and administration of variable life insurance separate accounts by any domestic insurer.

Any domestic insurer issuing variable life insurance shall establish one or more separate accounts pursuant to § 38.2-3113 of the Code of Virginia.

If no law or other regulation provides for the custody of separate account assets and if such insurer is not the custodian of such separate account assets, all contracts for custody of such assets shall be in writing and the Commission shall have authority to review and approve or disapprove of both the terms of any such contract and the proposed custodian prior to the transfer of custody.
Such insurer shall not without the prior written approval of the Commission employ in any material capacity in connection with the handling of separate account assets any person who:

a. Within the last 10 years has been convicted of any felony or a misdemeanor arising out of such person's conduct involving embezzlement, fraudulent conversion, or misappropriation of funds or securities or involving violation of Sections 1341, 1342, or 1343 of Title 18, United States Code; or

b. Within the last 10 years has been found by any state regulatory authority to have violated or has acknowledged violation of any provision of any state insurance law involving fraud, deceit, or knowing misrepresentation; or

c. Within the last 10 years has been found by federal or state regulatory authorities to have violated or has acknowledged violation of any provision of federal or state securities laws involving fraud, deceit, or knowing misrepresentation.

All persons with access to the cash, securities, or other assets of the separate account shall be under bond in the amount of not less than a value indexed to the National Association of Insurance Commissioners fidelity bonding recommendations regarding personnel handling general account assets or as determined by the Commission.
The assets of such separate accounts shall be valued at least as often as variable benefits are determined but in any event at least monthly.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VII, § 1, eff. June 15, 1992.

14VAC5-80-210 Amounts in the separate account

The insurer shall maintain in each separate account assets with a value at least equal to the greater of the valuation reserves for the variable portion of the variable life insurance policies or the benefit base for such policies.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VII, § 2, eff. June 15, 1992.

14VAC5-80-220 Investment by the separate account

A. No sale, exchange, or other transfer of assets may be made by an insurer or any of its affiliates between any of its separate accounts or between any other investment account and one or more of its separate accounts unless:

In case of a transfer into a separate account, such transfer is made solely to establish the account or to support the operation of the policies with respect to the separate account to which the transfer is made; and
Such transfer, whether into or from a separate account, is made by a transfer of cash; but other assets may be transferred if approved by the Commission in advance.

B. The separate account shall have sufficient net investment income and readily marketable assets to meet anticipated withdrawals under policies funded by the account.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VII, § 3, eff. June 15, 1992.

14VAC5-80-230 Limitations on ownership

A. A separate account shall not purchase or otherwise acquire the securities of any issuer, other than securities issued or guaranteed as to principal and interest by the United States government, if immediately after such purchase or acquisition the value of such investment, together with prior investments of such account in such security valued as required by this chapter, would exceed 10% of the value of the assets of the separate account. The Commission may waive this limitation in writing if it believes such waiver will not render the operation of the separate account hazardous to the public or the policyholders in this Commonwealth.

B. No separate account shall purchase or otherwise acquire the voting securities of any issuer if as a result of such acquisition the insurer and its separate accounts in the aggregate will own more than 10% of the total issued and outstanding voting securities of such issuer. The Commission may waive this limitation in writing if it believes such waiver will not render the operation of the separate account hazardous to the public or the policyholders in this Commonwealth or jeopardize the independent operation of the issuer of such securities.

C. The percentage limitation specified in subsection A of this section shall not be construed to preclude the investment of the assets of separate accounts in shares of investment companies registered pursuant to the Investment Company Act of 1940 (15 USC § 80a-1 et seq.) or other pools of investment assets if the investments and investment policies of such investment companies or asset pools comply substantially with the provisions of 14VAC5-80-220 of this chapter and other applicable portions of this chapter.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VII, § 4, eff. June 15, 1992.

14VAC5-80-240 Valuation of separate account assets

Investments of the separate account shall be valued at their market value on the date of valuation, or at amortized cost if it approximates market value.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VII, § 5, eff. June 15, 1992.

14VAC5-80-250 Separate account investment policy

The investment policy of a separate account operated by a domestic insurer filed under subdivision 3 of 14VAC5-80-40 of Article III shall not be changed without first filing such change with the Commission.

Any change filed pursuant to this section shall be effective 60 days after the date it was filed with the Commission, unless the Commission notifies the insurer before the end of such 60 day period of its disapproval of the proposed change. At any time the Commission may, after notice and opportunity to be heard, disapprove any change that has become effective pursuant to this section.
The Commission may disapprove the change if it determines that the change would be detrimental to the interests of the policyholders participating in such separate account.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VII, § 6, eff. June 15, 1992.

14VAC5-80-260 Charges against separate account

The insurer must disclose to the policyholder and/or certificateholder in writing, prior to or at the time of delivery of the policy or certificate, all charges that may be made against the separate account, including, but not limited to, the following:

Taxes or reserves for taxes attributable to investment gains and income of the separate account;
Actual cost of reasonable brokerage fees and similar direct acquisition and sale costs incurred in the purchase of sale of separate account assets;
Actuarially determined costs of insurance (tabular costs) and the release of separate account liabilities;
Charges for administrative expenses and investment management expenses, including internal costs attributable to the investment management of assets of the separate account;
A charge, at a rate specified in the policy, for mortality and expense guarantees;
Any amounts in excess of those required to be held in the separate accounts; and
Charges for incidental insurance benefits.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VI, § 7, eff. June 15, 1992.

14VAC5-80-270 Standards of conduct

Every insurer seeking approval to enter into the variable life insurance business in this Commonwealth shall adopt by formal action of its board of directors a written statement specifying the standards of conduct of the insurer, its officers, directors, employees, and affiliates with respect to the purchase or sale of investments of separate accounts. Such standards of conduct shall be binding on the insurer and those to whom it refers. A code or codes of ethics meeting the requirements of Section 17j under the Investment Company Act of 1940 (15 USC § 80a-1 et seq.) and applicable rules and regulations thereunder shall satisfy the provisions of this section.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VI, § 8, eff. June 15, 1992.

14VAC5-80-280 Conflicts of interest

Rules under any provision of the insurance laws of this Commonwealth or any regulation applicable to the officers and directors of insurance companies with respect to conflicts of interest shall also apply to members of any separate accounts committee or other similar body.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VI, § 9, eff. June 15, 1992.

14VAC5-80-290 Investment advisory services to a separate account

An insurer shall not enter into a contract under which any person undertakes, for a fee, to regularly furnish investment advice to such insurer with respect to its separate accounts maintained for variable life insurance policies unless:

The person providing such advice is registered as an investment advisor under the Investment Advisers Act of 1940 (15 USC § 80a-1 et seq.); or
The person providing such advice is an investment manager under the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et seq.) with respect to the assets of each employee benefit plan allocated to the separate account; or
The insurer has filed with the Commission and continues to file annually the following information and statements concerning the proposed advisor;

a. The name and form of organization, state of organization, and its principal place of business;

b. The names and addresses of its partners, officers, directors, and persons performing similar functions, or if such an investment advisor be an individual, of such individual;

c. A written Standard of Conduct complying in substance with the requirements of 14VAC5-80-270 of this Article which has been adopted by the investment advisor and is applicable to the investment advisor, its officers, directors, and affiliates;

d. A statement provided by the proposed advisor as to whether the advisor or any person associated therewith;

(1) Has been convicted within 10 years of any felony or misdemeanor arising out of such person's conduct as an employee, salesman, officer or director or an insurance company, a banker, an insurance agent, a securities broker, or an investment advisor involving embezzlement, fraudulent conversion, or misappropriation of funds or securities, or involving the violation of Sections 1341, 1342, or 1343 of Title 18 of United States Code;

(2) Has been permanently or temporarily enjoined by order, judgment, or decree of any court of competent jurisdiction from acting as an investment advisor, underwriter, broker, or dealer, or as an affiliated person or as an employee of any investment company, bank, or insurance company, or from engaging in or continuing any conduct or practice in connection with any such activity;

(3) has been found by federal or state regulatory authorities to have willfully violated or have acknowledged willful violation of any provision of federal or state securities laws or state insurance laws or of any rule or regulation under any such laws; or

(4) has been censured, denied an investment advisor registration, had a registration as an investment advisor revoked or suspended, or has been barred or suspended from being associated with an investment advisor by order of federal or state regulatory authorities; and

e. Such investment advisory contract shall be in writing and provide that it may be terminated by the insurer without penalty to the insurer or the separate account upon no more than 60 days' written notice to the investment advisor.

The Commission may, after notice and opportunity for hearing, by order require such investment advisory contract to be terminated if it deems continued operation thereunder to be hazardous to the public or the insurer's policyholders.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VI, § 10, eff. June 15, 1992.

Article VII Information Furnished to Applicants

14VAC5-80-300 Information furnished to applicants

Article VII Information Furnished to Applicants

An insurer delivering or issuing for delivery in this Commonwealth variable life insurance policies shall deliver to the applicant for the policy or certificate, and obtain a written acknowledgement of receipt from such applicant coincident with or prior to the execution of the application, the following information. The requirements of this Article shall be deemed to have been satisfied to the extent that a disclosure containing information required by this Article is delivered, either in the form of (i) a prospectus included in the requirements of the Securities Act of 1933 (15 USC § 77a et seq.) and which was declared effective by the Securities and Exchange Commission; or (ii) all information and reports required by the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et seq.) if the policies are exempted from the registration requirements of the Securities Act of 1933 pursuant to Section 3(a)(2) thereof.

A summary explanation, in non-technical terms, of the principal features of the policy, including a description of the manner in which the variable benefits will reflect the investment experience of the separate account and the factors which affect such variation. Such explanation must include notices of the provisions required by § 38.2-3301 and § 38.2-3304 of the Code of Virginia regarding the 10 day free look and entire contract provisions of the policy or certificate.
A statement of the investment policy of the separate account, including:

a. A description of the investment objectives intended for the separate account and the principal types of investments intended to be made; and

b. any restriction or limitations on the manner in which the operations of the separate account are intended to be conducted.

A statement of the net investment return of the separate account for each of the last 10 years or such lesser period as the separate account has been in existence.
A statement of the charges levied against the separate account during the previous year.
A summary of the method to be used in valuing assets held by the separate account.
A summary of the federal income tax aspects of the policy applicable to the insured, the policyholder and the beneficiary.
Illustrations of benefits payable under the variable life insurance contract. Such illustrations shall be prepared by the insurer and shall not include projections of past investment experience into the future or attempted predictions of future investment experience, provided that nothing contained herein prohibits use of hypothetical assumed rates of return to illustrate possible level of benefits if it is made clear that such assumed rates are hypothetical only.
If there are any guaranteed elements to the accumulation of cash values, an illustration or proposal must separately display:

a. The guaranteed cash values and

b. The guaranteed loan values if the loan values are less than 100% of the cash values.

If the loan value is less than 100% of the cash surrender value such fact must be shown as a percentage of cash surrender value and such fact must be prominently displayed on any proposal or in any illustration.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article VIII, § 1, eff. June 15, 1992.

Article VIII Applications

14VAC5-80-310 Applications

Article VIII Applications

The application for a variable life insurance policy shall contain:

A prominent statement in boldface capital letters that the death benefit may be variable or fixed under specified conditions;
A prominent statement in boldface capital letters that cash values may increase or decrease in accordance with the experience of the separate account (subject to any specified minimum guarantees);
Questions based on the insurer's standards of suitability so that in view of the applicant's other insurance, investment objectives, age, earnings, marital status, number and age of dependents, current life insurance program, the value of savings and other assets, net worth, and any other pertinent information, the insurer may determine that variable life insurance is suitable for the applicant.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article IX, § 1, eff. June 15, 1992.

Article IX Reports to Policyholders

14VAC5-80-320 Reports to policyholders

Article IX Reports to Policyholders

Any insurer delivering or issuing for delivery in this Commonwealth any variable life insurance policies or certificates shall mail to each variable life insurance policyholder and certificateholder at his or her last known address the following reports:

Within 30 days after each anniversary of the policy, a statement or statements with serialized pages of the cash surrender value, loan value if less than 100% of the cash surrender value, death benefit, any partial withdrawal or policy loan, any interest charge, and any optional payments allowed pursuant to 15VAC5-80-140 of Article IV under the policy computed as of the policy anniversary date. Provided, however, that such statement may be furnished within 30 days after a specified date in each policy year so long as the information contained therein is computed as of a date not more than 60 days prior to the mailing of such notice. This statement shall state that, in accordance with the investment experience of the separate account, the cash values and the variable death benefit may increase or decrease, and shall prominently identify any value described therein which may be recomputed prior to the next statement required by this section. If the policy guarantees that the variable death benefit on the next policy anniversary date will not be less than the variable death benefit specified in such statement, the statement shall be modified to so indicate. For flexible premium policies, the report must contain a reconciliation of the change since the previous report in cash value and cash surrender value, if different, because of payments made (less deductions for expense charges), withdrawals, investment experience, insurance charges and any other charges made against the cash value. The report must show the loan value separately if the loan value is less than 100% of the policy's cash surrender value. In addition, the report must show the projected cash value, and cash surrender value if different from the projected cash value, and projected loan value if less than 100% of the policy's projected cash surrender value, as of one year from the end of the period covered by the report assuming that: (i) planned periodic premiums, if any, are paid as scheduled; (ii) guaranteed costs of insurance are deducted; and (iii) the net investment return is equal to the guaranteed rate or, in the absence of a guaranteed rate, is not greater than zero. If the projected value is less than zero, a warning message must be included that states that the policy may be in danger of terminating without value in the next 12 months unless additional premium is paid.
Annually, a statement or statements including:

a. A summary of the financial statement of the separate account based on the annual statement last filed with the Commission;

b. The net investment return of the separate account for the last year and, for each year after the first, a comparison of the investment rate of the separate account during the last year with the investment rate during prior years, up to a total of not less than five years when available;

c. A list of investments held by the separate account as of a date not earlier than the end of the last year for which an annual statement was filed with the Commission;

d. Any charges levied against the separate account during the previous year;

e. A statement of any change, since the last report, in the investment objective and orientation of the separate account, in any investment restriction or material quantitative or qualitative investment requirement applicable to the separate account or in the investment advisor of the separate account.

For flexible premium policies, a report must be sent to the policyholder if the amounts available under the policy on any policy processing day to pay the charges authorized by the policy are less than the amount necessary to keep the policy in force until the next following policy processing day. The report must indicate the minimum payment required under the terms of the policy to keep it in force and the length of the grace period for the payment of such amount.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article X, § 1, eff. June 15, 1992.

Article X Foreign Companies

14VAC5-80-330 Foreign companies

Article X Foreign Companies

If the law or regulation in the place of domicile of a foreign company provides a degree of protection to the policyholders and the public which is substantially similar to that provided by this chapter, the Commission to the extent deemed appropriate by it in its discretion, may consider compliance with such law or regulation as compliance with these regulations.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article XI, § 1, eff. June 15, 1992.

Article XI Qualifications of Agents for the Sale of Variable Life Insurance

14VAC5-80-340 Qualification to sell variable life insurance

Article XI Qualifications of Agents for the Sale of Variable Life Insurance

A. No person may sell or offer for sale in this Commonwealth any variable life insurance policy unless such person is currently licensed by the Commission as a life and health insurance agent, is authorized to represent the insurer through which the policy is offered and evidence has been filed with the Commission, in a form satisfactory to the Commission, that such person also holds any license or authorization which may be required by this Commonwealth or the federal government for the solicitation or sale of variable life insurance.

B. Any examination administered by the Commission for the purpose of determining the eligibility of any person for licensing as an agent shall, after June 15, 1992, include such questions concerning the history, purpose, regulation, and sale of variable life insurance as the Commission deems appropriate.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article XII, § 1, eff. June 15, 1992.

14VAC5-80-350 Reports of disciplinary actions

Any person qualified in this Commonwealth under this article to sell or offer to sell variable life insurance shall immediately report to the Commission:

Any suspension or revocation of his agent's license in any other state or territory of the United States;
The imposition of any disciplinary sanction, including suspension or expulsion from membership, suspension, or revocation of or denial of registration, imposed upon him by any national securities exchange, or national securities association, or any federal, state, or territorial agency with jurisdiction over securities or variable life insurance; and
Any judgment or injunction entered against him on the basis of conduct deemed to have involved fraud, deceit, misrepresentation, or violation of any insurance or securities law or regulation.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article XII, § 2, eff. June 15, 1992.

14VAC5-80-360 Refusal to qualify agent to sell variable life insurance: suspension, revocation, or nonrenewal of qualification

The Commission may reject any application or suspend or revoke or refuse to renew any agent's qualification under this article to sell or offer to sell variable life insurance upon any ground that would bar such applicant or such agent from being licensed to sell other life insurance contracts in this Commonwealth. The rules governing any proceeding relating to the suspension or revocation of any agent's license shall also govern any preceeding for suspension or revocation of an agent's qualification to sell or to offer to sell variable life insurance.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article XII, § 3, eff. June 15, 1992.

Article XII Severability

14VAC5-80-370 Severability

Article XII Severability

If any provision of this chapter or the application thereof to any person or circumstance is for any reason held to be invalid, the remainder of the chapter and the application of such provision to other persons or circumstances shall be not affected thereby.

History

Statutory Authority: §§ 12.1-13 and 38.2-3313 of the Code of Virginia.
Historical Notes: Derived from Regulation 26, Case No. INS920077, Article XIII, § 1, eff. June 15, 1992.

Chapter 211 Rules Governing Health Maintenance Organizations

Part I Applicability and Definitions

14VAC5-211-10 Applicability and scope

A. This chapter sets forth rules to carry out the provisions of Chapter 43 (§ 38.2-4300 et seq.) of Title 38.2 of the Code of Virginia, and applies to all health maintenance organizations and to all health maintenance organization contracts and evidences of coverage delivered or issued for delivery by a health maintenance organization established or operating in this Commonwealth.

B. In the event of conflict between the provisions of this chapter and the provisions of any other rules issued by the commission, the provisions of this chapter shall be controlling as to health maintenance organizations.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011.

14VAC5-211-20 Definitions

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"ACA" means the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152) and any federal regulations issued pursuant thereto.

"Allowable charge" means the amount from which the health maintenance organization's payment to a provider for any covered item or service is determined before taking into account the enrollee's cost sharing.

"Basic health care services" means in-area and out-of-area emergency services, inpatient hospital and physician care, outpatient medical services, laboratory and radiologic services, preventive health services and mental health and substance use disorder services, or all essential health benefits required under § 38.2-3451 of the Code of Virginia. In the case of a health maintenance organization that has contracted with this Commonwealth to furnish basic health care services to recipients of medical assistance under Title XIX of the Social Security Act (42 USC § 1396 et seq.) pursuant to § 38.2-4320 of the Code of Virginia, the basic health care services to be provided by the health maintenance organization to program recipients may differ from the basic health care services required by this chapter to the extent necessary to meet the benefit standards prescribed by the state plan for medical assistance services authorized pursuant to § 32.1-325 of the Code of Virginia.

"Coinsurance" means a copayment, expressed as a percentage of the allowable charge for a specific health care service.

"Commission" means the State Corporation Commission.

"Copayment" means an amount an enrollee is required to pay in order to receive a specific health care service.

"Cost sharing" means any coinsurance, copayment, or deductible.

"Deductible" means a dollar amount an enrollee is required to pay out of pocket before the health care plan pays the costs associated with certain health care services.

"Dependent" means the spouse, child, or other class of persons of a subscriber or eligible employee, subject to the applicable terms of the policy, contract, or plan.

"Emergency services" shall have the same meaning as § 38.2-3438 of the Code of Virginia and means those health care services that are rendered by affiliated or nonaffiliated providers after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment of the individual's bodily functions, (iii) serious dysfunction of any of the individual's bodily organs, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus.

"Enrollee" means a policyholder, subscriber, participant, member, or other individual covered by a health benefit plan.

"Essential health benefits" includes the following general categories and items and services covered within the categories in accordance with regulations issued pursuant to the ACA: (i) ambulatory patient services; (ii) emergency services; (iii) hospitalization; (iv) laboratory services; (v) maternity and newborn care; (vi) mental health and substance use disorder services; (vii) pediatric services, including oral and vision care; (viii) prescription drugs; (ix) preventive and wellness services and chronic disease management; and (x) rehabilitative and habilitative services and devices.

"Evidence of coverage" means a certificate, individual or group agreement or contract, or identification card issued in conjunction with the certificate, agreement or contract, issued to a subscriber setting out the coverage and other rights to which an enrollee is entitled.

"Excess insurance" or "stop loss insurance" means insurance issued to a health maintenance organization by an insurer licensed in this Commonwealth, on a form approved by the commission, or a risk assumption transaction acceptable to the commission, providing indemnity or reimbursement against the cost of health care services provided by the health maintenance organization.

"Exchange certified stand-alone dental plan" means a limited dental care services plan that has been approved to meet the criteria for certification pursuant to the ACA.

"Grandfathered plan" means coverage provided by a health carrier to (i) a small employer on March 23, 2010; (ii) an individual who was enrolled on March 23, 2010, including any extension of coverage to an individual who becomes a dependent of a grandfathered enrollee after March 23, 2010; or (iii) an employee who enrolls in the employer's grandfathered plan after March 23, 2010, for as long as such plan maintains that status in accordance with the ACA.

"Group contract" means a contract for health care services issued by a health maintenance organization, which by its terms limits the eligibility of subscribers and enrollees to a specified group.

"Group health plan" means an employee welfare benefit plan as defined in § 3(1) of the Employee Retirement Income Security Act of 1974 (ERISA) (29 USC § 1002(1)) to the extent that the plan provides medical care within the meaning of § 733(a) of ERISA (29 USC § 1191b(a)) to employees, including both current and former employees, or their dependents as defined under the terms of the plan directly or through insurance, reimbursement, or otherwise.

"Health benefit plan" or "health care plan" means an arrangement in which a person undertakes to provide, arrange for, pay for, or reimburse a part of the cost of health care services. A significant part of the arrangement shall consist of arranging for or providing health care services, including emergency services and services rendered by nonparticipating referral providers, as distinguished from mere indemnification against the cost of the services, on a prepaid basis. For purposes of this chapter, a significant part shall mean at least 90% of total costs of health care services.

"Health care professional" means a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with state law.

"Health care services" means the furnishing of services to an individual for the purpose of preventing, alleviating, curing, or healing human illness, injury or physical disability.

"Health insurance exchange" means a health benefit exchange established or operated in the Commonwealth pursuant to § 1311(b) of the ACA, including the Federally Facilitated Marketplace established pursuant to § 1321 of the ACA.

"Health maintenance organization" means a person who undertakes to provide or arrange for one or more health care plans. A health maintenance organization is deemed to be offering one or more managed care health insurance plans and is subject to Chapter 58 (§ 38.2-5800 et seq.) of Title 38.2 of the Code of Virginia.

"Individual health insurance coverage" means health insurance coverage offered to individuals in the individual market, but does not include excepted benefits as defined in § 38.2-3431 of the Code of Virginia. Individual health insurance coverage does not include short-term limited duration coverage.

"Individual market" means the market for health insurance coverage offered to individuals other than in connection with a group health plan.

"Large employer" means, in connection with a group health plan or health insurance coverage with respect to a calendar year and a plan year, an employer who employed an average of at least 51 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. Effective January 1, 2016, "large employer" means, in connection with a group health plan or health insurance coverage with respect to a calendar year and a plan year, an employer who employed an average of at least 101 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.

"Large group market" means the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by a large employer.

"Limited health care services" means dental care services or vision care services.

"Medical necessity" or "medically necessary" means appropriate and necessary health care services that are rendered for a condition which, according to generally accepted principles of good medical practice, requires the diagnosis or direct care and treatment of an illness, injury, or pregnancy-related condition, and are not provided only as a convenience.

"Net worth" or "capital and surplus" means the excess of total admitted assets over the total liabilities of the health maintenance organization, provided that surplus notes shall be reported and accounted for in accordance with § 38.2-4300 of the Code of Virginia.

"Nonparticipating referral provider" means a provider who is not a participating provider but with whom a health maintenance organization has arranged, through referral by its participating providers, to provide health care services to enrollees. Payment or reimbursement by a health maintenance organization for health care services provided by nonparticipating referral providers may exceed 5.0% of total costs of health care services, only to the extent that any excess payment or reimbursement over 5.0% shall be combined with the costs for services that represent mere indemnification, with the combined amount subject to the combination of limitations set forth in this definition and in this section's definition of health care plan.

"Out-of-area services" means the health care services that the health maintenance organization may cover when its enrollees are outside the geographical limits of the health maintenance organization's service area.

"Out-of-pocket maximum" means the maximum dollar amount that an enrollee is required to pay during a plan or policy year before the health benefit plan pays 100% of the allowable charges for covered basic health care services for the balance of the plan or policy year. This amount shall include deductibles, coinsurance or copayments, and any other expenditure required of an enrollee for any covered medical expense. This limit may or may not include premiums, balance billed amounts for out-of-network services, or payments for services that are not basic health care services.

"Participating provider" or "affiliated provider" means a provider who has agreed to provide health care services to enrollees and to hold those enrollees harmless from payment with an expectation of receiving payment, other than copayments or deductibles, directly or indirectly from the health maintenance organization.

"Point-of-service benefit" means a health maintenance organization's delivery system or covered benefits, or the delivery system or covered benefits of another carrier under contract or arrangement with the health maintenance organization, that permit an enrollee to receive covered items and services outside of the provider panel of the health maintenance organization under the terms and conditions of the group contract holder's group health benefit plan with the health maintenance organization or with another carrier arranged by or under contract with the health maintenance organization and that otherwise complies with § 38.2-3407.12 of the Code of Virginia.

"Preexisting condition exclusion" means a limitation or exclusion of benefits, including a denial of coverage, based on the fact that the condition was present before the effective date of coverage, or if the coverage is denied, the date of denial, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before the effective date of coverage. "Preexisting condition exclusion" also includes a condition identified as a result of a pre-enrollment questionnaire or physical examination given to an individual, or review of medical records relating to the pre-enrollment period.

"Premium" means all moneys paid by an employer, eligible employee, or covered person as a condition of coverage from a health carrier, including fees and other contributions associated with the health benefit plan.

"Primary care health care professional" means a health care professional who provides initial and primary care to enrollees; who supervises, coordinates, and maintains continuity of patient care; and who may initiate referrals for specialist care, if referrals are a requirement of the enrollee's health care coverage.

"Provider" or "health care provider" means a physician, hospital, or other person that is licensed or otherwise authorized to furnish health care services.

"Rescission" means a cancellation or discontinuance of coverage under a health care plan that has a retroactive effect. "Rescission" does not include: (i) a cancellation or discontinuance of coverage under a health care plan if the cancellation or discontinuance of coverage has only a prospective effect, or the cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage; or (ii) a cancellation or discontinuance of coverage when the health care plan covers active employees and, if applicable, dependents and those covered under continuation coverage provisions, if the employee pays no premiums for coverage after termination of employment and the cancellation or discontinuance of coverage is effective retroactively back to the date of termination of employment due to a delay in administrative recordkeeping.

"Service area" means a clearly defined geographic area in which the health maintenance organization has directly or indirectly arranged for the provision of health care services to be generally available and readily accessible to enrollees.

"Small employer" means in connection with a group health plan or health insurance coverage with respect to a calendar year and a plan year, an employer who employed an average of at least one but not more than 50 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year. Effective January 1, 2016, "small employer" means in connection with a group health plan or health insurance coverage with respect to a calendar year and a plan year, an employer who employed an average of at least one but not more than 100 employees on business days during the preceding calendar year and who employs at least one employee on the first day of the plan year.

"Small group market" means the health insurance market under which individuals obtain health insurance coverage (directly or through any arrangement) on behalf of themselves (and their dependents) through a group health plan maintained by a small employer.

"Specialist" means a licensed health care provider to whom an enrollee may be referred by his primary care health care professional and who is certified or eligible for certification by the appropriate specialty board, where applicable, to provide health care services in a specialized area of health care.

"Subscriber" means a contract holder or enrollee who is responsible for payment to the health maintenance organization or on whose behalf the payment is made.

"Supplemental health care services" means health care services that may be offered by a health maintenance organization in addition to the required basic health care services.

"Surplus notes" means those instruments that meet the requirements of 14VAC5-211-40.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

Part II Financial Condition Requirements

14VAC5-211-30 Covered and uncovered expenses

A. Health maintenance organizations licensed in this Commonwealth shall report to the commission on a form prescribed by the commission all uncovered expenses for the three-month periods ending on December 31, March 31, June 30, and September 30 on or before March 1, May 15, August 15, and November 15, respectively, of each year. This statement of covered and uncovered expenses shall be filed with each annual and quarterly financial statement pursuant to § 38.2-4307.1 C of the Code of Virginia.

B. Each expense of a health maintenance organization that is owed or paid to a health care provider under contract with a health maintenance organization shall be considered a covered health care expense by that health maintenance organization if (i) the contract between the health maintenance organization and the health care provider contains the hold harmless clause required by § 38.2-5805 C 9 of the Code of Virginia and (ii) the expense falls within the scope of the hold harmless clause.

C. If there is an intermediary organization between the health maintenance organization and the health care providers, the hold harmless clause shall be amended to include nonpayment by either the health maintenance organization or the intermediary organization. The hold harmless clause shall be included in any contract between the intermediary organization and health care providers and in any contract between the health maintenance organization and the intermediary organization before health care expenses owed or paid to the intermediary organization shall be considered covered expenses.

D. A health maintenance organization may request permission from the commission to treat other types of expenses as covered expenses. The request shall be in writing and state the health maintenance organization's justification for the requested treatment. In no case shall a health maintenance organization treat an expense, other than those set forth in subsections B and C of this section, as a covered expense without the prior approval of the commission.

E. Each expense that is not a covered expense under this section shall be considered an uncovered expense.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005.

14VAC5-211-40 Surplus notes

For the purpose of recognizing surplus notes, no debt shall be considered subordinated unless (i) it qualifies for recognition as a surplus note and can be reported as surplus (equity) in accordance with § 38.2-4300 of the Code of Virginia, and (ii) the subordination clause set forth below is executed by the health maintenance organization and the lender.

Subordination Clause

The rights of lender to the principal sum and/or accrued interest thereon are and shall remain subject to and subordinate to all other liabilities of health maintenance organization, and, upon the dissolution or liquidation of health maintenance organization, no payment upon this instrument shall be made until all other liabilities of the plan shall have been paid. It is further agreed to by and between the parties hereto that written approval from the State Corporation Commission must be obtained prior to any repayment of principal or payment of interest.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005.

14VAC5-211-50 Financial projections

The commission may require a health maintenance organization licensed in Virginia to submit to it periodic updates of the projection of operating results required by § 38.2-4301 B 11 of the Code of Virginia. Each update shall also include a complete explanation of any significant variance between actual operating results and the operating results that were forecasted under the projection last submitted to the commission and documentation of all critical assumptions. Critical assumptions include, but are not limited to, enrollment levels, premium rates, provider reimbursements, utilization rates, risk-sharing arrangements with providers, general and administrative expenses, excess and other insurance expenses and recoveries, coordination of benefits, costs of long-term financing, and inflation. The commission may revise or request a revision of any financial projection that it deems to be unreasonable relative to the health maintenance organization's historic performance.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 24, Issue 22, eff. July 1, 2008.

14VAC5-211-60 (Repealed.)

History

Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; repealed, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

Part III Contract Requirements

14VAC5-211-70 Continuation of coverage

A. An enrollee whose eligibility for coverage terminates under the group contract shall have the opportunity to continue coverage under the existing group contract for a period of at least 12 months immediately following the date of termination of the enrollee's eligibility for coverage under the group contract. Continuation coverage shall not be applicable if the group contract holder is required by federal law to provide for continuation of coverage under its group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act (COBRA) (P.L. 99-272). Coverage shall be provided without additional evidence of insurability subject to the following requirements:

The application and payment for the continued coverage is made to the group contract holder within 31 days after issuance of the written notice required in subsection C of this section, but in no event beyond the 60-day period following the date of the termination of the person's eligibility;
Each premium for the continued coverage is timely paid to the group contract holder on a monthly basis during the 12-month period; and
The premium for continuing the group coverage shall be at the health care plan's current rate applicable to similarly situated individuals under the group contract plus any applicable administrative fee not to exceed 2.0% of the current rate.

B. A continuation of coverage shall not be required to be made available when:

The enrollee is covered by or is eligible for benefits under Title XVIII of the Social Security Act (42 USC § 1395 et seq.) known as Medicare;
The enrollee is covered by substantially the same level of benefits under any policy, contract, or plan for individuals in a group;
The enrollee has not been continuously covered during the three-month period immediately preceding the enrollee's termination of coverage;
The enrollee was terminated by the health care plan for any of the reasons stated in 14VAC5-211-230 A 1 or 2, or coverage was rescinded; or
The enrollee was terminated from a plan administered by the Department of Medical Assistance Services that provided benefits pursuant to Title XIX or XXI of the Social Security Act (42 USC § 1396 et seq. or § 1397aa et seq.).

C. The group contract holder shall provide each enrollee or other person covered under the group contract written notice of the procedures and timeframes for obtaining continuation of coverage under the group contract. The notice shall be provided within 14 days of the group contract holder's knowledge of the enrollee's or other covered person's loss of eligibility under the group contract.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 2, eff. January 1, 2011; Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-80 Coordination of benefits

A. A health care plan may include in its group or individual contract a provision that the value of any benefit or service provided by the health maintenance organization may be coordinated with other health insurance or health care benefits or services that are provided by other individual or group policies, contracts, or health care plans, including coverage provided under governmental programs, so that no more than 100% of the eligible incurred expenses is paid.

B. A health care plan shall not be relieved of its duty to provide a covered health care service to an enrollee because the enrollee is entitled to coverage under other policies, contracts, or health care plans. In the event that benefits are provided by a health care plan and another policy, contract, or health care plan, the determination of the order of benefits shall in no way restrict or impede the rendering of services required to be provided by the health care plan. The health maintenance organization shall be required to provide or arrange for the service first and then, at its option, seek coordination of benefits with any other health insurance or health care benefits or services that are provided by other policies, contracts, or plans. Until a coordination of benefits determination is made, the enrollee shall not be held liable for the cost of covered services provided.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-90 Cost sharing

A. Except for preventive services required by § 38.2-3442 of the Code of Virginia, a health maintenance organization may require a copayment of enrollees as a condition for the receipt of a specific health care service. A copayment shall be shown in the evidence of coverage as either a specified dollar amount or as coinsurance.

B. If the health maintenance organization has an established out-of-pocket maximum for cost sharing, it shall keep accurate records of each enrollee's cost sharing and notify the enrollee when his out-of-pocket maximum is reached. The notification shall be given no later than 30 days after the health maintenance organization has processed sufficient claims to determine that the out-of-pocket maximum is reached. The health maintenance organization shall not charge additional cost sharing for the remainder of the contract or calendar year, as appropriate. The health maintenance organization shall also promptly refund to the enrollee all cost sharing payments charged after the out-of-pocket maximum is reached. Any maximum out-of-pocket amount shall be shown in the evidence of coverage as a specified dollar amount, and the evidence of coverage shall clearly state the health maintenance organization's procedure for meeting the requirements of this subsection.

C. A grandfathered plan that excludes a deductible from the out-of-pocket maximum may continue to do so as long as the plan remains grandfathered.

D. The provisions of this subsection shall not apply to any Family Access to Medical Insurance Security (FAMIS) Plan (i) authorized by the United States Centers for Medicare and Medicaid Services pursuant to Title XXI of the Social Security Act (42 USC § 1397aa et seq.) and the state plan established pursuant to Chapter 13 (§ 32.1-351 et seq.) of Title 32.1 of the Code of Virginia and (ii) underwritten by a health maintenance organization.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 24, Issue 22, eff. July 1, 2008; Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-100 (Repealed.)

History

Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 24, Issue 22, eff. July 1, 2008; Volume 27, Issue 25, eff. September 1, 2011; repealed, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-110 (Repealed.)

History

Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; repealed, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-120 (Repealed.)

History

Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; repealed, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-130 Extension of benefits for total disability

A. A group contract issued by a health maintenance organization in the large group market shall contain a reasonable extension of benefits upon discontinuance of the group contract with respect to enrollees who become totally disabled while enrolled under the contract and who continue to be totally disabled at the date of discontinuance of the contract.

B. Upon payment of premium, coverage shall remain in full force and effect for a reasonable period of time not less than 180 days, or until the enrollee is no longer totally disabled, or a succeeding carrier elects to provide replacement coverage to that enrollee without limitation as to the disabling condition.

C. The provisions of this section shall not apply to contracts entered into by any health maintenance organization that has contracted with the Virginia Department of Medical Assistance Services to provide health care services to recipients of medical assistance services pursuant to Title XIX of the Social Security Act, as amended, or to individuals covered by the Family Access to Medical Insurance Security Insurance (FAMIS) plan developed pursuant to Title XXI of the Social Security Act, as amended.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-140 Freedom of choice

A. At the time of enrollment an enrollee shall have the right to select a primary care health care professional from among the health maintenance organization's affiliated primary care health care professionals, subject to availability and in accordance with § 38.2-3443 of the Code of Virginia.

B. An enrollee who is dissatisfied with his primary care health care professional shall have the right to select another primary care health care professional from among the health maintenance organization's affiliated primary care health care professionals, subject to availability. The health maintenance organization may impose a reasonable waiting period for this transfer.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011.

14VAC5-211-150 Complaint and appeals procedure

A. A health maintenance organization shall establish and maintain a complaint system to provide reasonable procedures for the prompt and effective resolution of written complaints in accordance with Chapter 5 (§ 32.1-137.1 et seq.) of Title 32.1 and Chapter 58 (§ 38.2-5800 et seq.) of Title 38.2 of the Code of Virginia. In addition, a health maintenance organization shall establish and maintain an internal appeals procedure in accordance with Chapter 5 (§ 32.1-137.1 et seq.) of Title 32.1 and Chapter 35.1 (§ 38.2-3556 et seq.) of Title 38.2 of the Code of Virginia and applicable regulations. A record of all written complaints shall be maintained for the period specified in § 38.2-511 of the Code of Virginia. A record of all requests for internal appeal shall be maintained in accordance with the provisions of § 32.1-137.16 of the Code of Virginia.

B. Pending the resolution of a written complaint filed by a subscriber or enrollee, coverage may not be terminated for the subscriber or enrollee for any reason that is the subject of the written complaint, except where coverage is being terminated or rescinded in accordance with 14VAC5-211-230.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011.

Part IV Services

14VAC5-211-160 Basic health care services

A. A health maintenance organization that offers coverage in the large group market shall provide, or arrange for the provision of, as a minimum, basic health care services. These services shall include the following:

Inpatient hospital and physician services. Medically necessary hospital and physician services affording inpatient treatment to enrollees in a licensed hospital for a minimum of 90 days per contract or calendar year. Hospital services include room and board; general nursing care; special diets when medically necessary; use of operating room and related facilities; use of intensive care unit and services; x-ray, laboratory, and other diagnostic tests; drugs, medications, biologicals, anesthesia, and oxygen services; special duty nursing when medically necessary; short-term physical therapy, radiation therapy, and inhalation therapy; administration of whole blood and blood plasma; and short-term rehabilitation services. Physician services include medically necessary health care services performed, prescribed, or supervised by physicians within a hospital for registered bed patients.
Outpatient medical services. Medically necessary health care services performed, prescribed or supervised by physicians for enrollees, which may be provided in a nonhospital based health care facility, at a hospital, in a physician's office, or in the enrollee's home, and shall include consultation and referral services. Outpatient medical services shall also include diagnostic services, treatment services, short-term physical therapy and rehabilitation services the provision of which the health maintenance organization determines can be expected to result in the significant improvement of an enrollee's condition within a period of 90 days, laboratory services, x-ray services, and outpatient surgery.
Diagnostic laboratory and diagnostic and therapeutic radiologic services.
Preventive health services shall be provided in accordance with the provisions of § 38.2-3442 of the Code of Virginia.
In-area and out-of-area emergency services, including medically necessary ambulance services, available on an inpatient or an outpatient basis 24 hours per day, seven days per week.
Mental health and substance use disorder services shall be provided on parity with the medical and surgical benefits contained in the plan in accordance with the Mental Health Parity and Addiction Equity Act of 2008 (P.L. 110-343).
Medically necessary dental services as a result of accidental injury, regardless of the date of such injury. Contracts may require that treatment be sought within 60 days of the accident for injuries occurring on or after the effective date of coverage.

B. A health maintenance organization that offers coverage in the individual or small group market shall provide, or arrange for the provision of, as a minimum, the essential health benefits required under § 38.2-3451 of the Code of Virginia.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 2, eff. January 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-165 Point-of-service benefits

A. A health maintenance organization shall offer point-of-service benefits to its enrollees in the large group market in accordance with the provisions of § 38.2-3407.12 of the Code of Virginia.

B. If point-of-service benefits are chosen, a description of the procedure for obtaining point-of-service benefits and notification requirements before obtaining these benefits shall be included in the evidence of coverage as well as a description of the restrictions or limitations on such benefits.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-170 Supplemental health care services

In addition to the basic health care services required to be provided in 14VAC5-211-160, a health maintenance organization may offer to its enrollees any supplemental health care services it chooses to provide, as allowed by applicable law. These services may or may not be subject to cost sharing limitations or out-of-pocket or deductible maximums that are applicable to basic health care services.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-180 Out-of-area services

In addition to out-of-area emergency services required to be provided as basic health care services, a health maintenance organization may offer indemnity benefits covering out-of-area services to its enrollees. A description of the procedure for obtaining out-of-area services and notification requirements before obtaining these services shall be included in the evidence of coverage as well as a description of restrictions or limitations on out-of-area services. Except for out-of-area emergency services, a health care plan that requires the enrollee to contact the health maintenance organization before obtaining out-of-area services shall provide for telephone consultation on a 24-hour per day, seven-day per week basis.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-190 Limited health care services

A. A health maintenance organization may offer limited health care services in either dental care or vision care services.

B. A health maintenance organization shall be reasonably assured that the enrollee has obtained pediatric oral essential health benefits from an exchange-certified stand-alone dental plan for coverage purchased in the individual or small group markets outside the health insurance exchange. A health maintenance organization shall be deemed to have obtained reasonable assurance that such pediatric oral health benefits are provided to the enrollee if:

At least one qualified dental plan, as defined in § 38.2-3455 of the Code of Virginia, (i) offers the minimum essential pediatric oral health benefits that are required under the ACA and (ii) is available for purchase by a subscriber or enrollee; and
The health maintenance organization prominently discloses, in a form approved by the commission, at the time that it offers the health benefit plan that the plan does not provide ACA-required minimum essential pediatric oral health benefits.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-200 (Repealed.)

History

Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; repealed, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

Part V Disclosure and Prohibitions

14VAC5-211-210 Evidence of coverage requirements

A. An enrollee shall receive an evidence of coverage under a health care plan provided by a health maintenance organization established or operating in this Commonwealth, including any amendments to it. The evidence of coverage shall be delivered or issued for delivery within a reasonable period of time after enrollment, but not more than 60 days from the later of the effective date of coverage or the date on which the health maintenance organization is notified of enrollment. An identification card shall be delivered or issued for delivery within 15 days from the later of the effective date of coverage or the date on which the health maintenance organization is notified of enrollment.

B. An evidence of coverage delivered or issued for delivery shall contain the following:

The name, address, and telephone number of the health maintenance organization;
The health care services and other benefits to which the enrollee is entitled under the health care plan;
Exclusions or limitations on the services, kind of services, benefits, or kind of benefits to be provided, including any cost sharing features;
Where and in what manner information is available as to how services may be obtained;
The effective date and the term of coverage;
The total amount of payment for health care services and any indemnity or service benefits that the enrollee is obligated to pay with respect to individual contracts, or an indication whether the plan is contributory or noncontributory for group certificates;
A description of the health maintenance organization's method of resolving enrollee complaints, including a description of any arbitration procedure if complaints may be resolved through a specified arbitration agreement;
A list of providers and a description of the service area that shall be provided with the evidence of coverage if the information is not given at the time of enrollment;
The right of an enrollee to continue group coverage, including the terms and conditions under which coverage may be continued;
The terms and conditions under which coverage may be terminated or rescinded;
Coordination of benefits provisions, if applicable;
Assignment of benefits restrictions in the contract;
The health maintenance organization's procedure for filing claims, including any requirements for notifying the health maintenance organization of a claim and requirements for filing proof of loss;
The health maintenance organization's enrollment and eligibility requirements, including the conditions under which dependents may be added and any limiting age for dependents covered under an individual or group contract;
A provision that the contract or evidence of coverage and any amendments to it constitutes the entire contractual agreement between the parties involved and that no portion of the charter, bylaws, or other document of the health maintenance organization shall constitute part of the contract unless it is set forth in full in the contract;
Except for an evidence of coverage that does not provide for the periodic payment of premium or for the payment of any premium, a provision that the contract holder is entitled to a grace period of not less than 31 days for the payment of any premium due except the first premium. The provision shall also state that during the grace period the coverage shall continue in force unless the contract holder has given the health maintenance organization written notice of discontinuance in accordance with the terms of the contract and in advance of the date of discontinuance. The contract may provide that the contract holder shall be liable to the health maintenance organization for the payment of a pro rata premium for the time the contract was in force during the grace period; and
Terms and conditions related to the designation of a primary care health care professional.

C. A copy of the evidence of coverage shall be delivered to each enrollee and may be delivered electronically in accordance with the Uniform Electronic Transactions Act (§ 59.1-479 et seq. of the Code of Virginia).

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-220 Preexisting conditions and waiting periods

A. In accordance with § 38.2-3444 of the Code of Virginia, a health maintenance organization shall not limit or exclude coverage for an enrollee by imposing a preexisting condition exclusion. This section shall apply to any health maintenance organization providing a health benefit plan in the individual or group markets, including a grandfathered group health plan, but not including a grandfathered plan for individual health insurance coverage.

B. A waiting period not to exceed 90 days may be allowed for a group health plan or excepted benefits policies or contracts that do not provide for essential health benefits. Any waiting period is deemed to commence on the enrollment date for group coverage or the effective date of the policy, as applicable.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-230 Reasons for termination or rescission

A. A health maintenance organization shall not terminate an enrollee's coverage for services provided under a health maintenance organization contract except for one or more of the following reasons:

Failure to pay the premium required by the contract as shown in the contract or evidence of coverage;
The policyholder or contract holder has performed an act or practice that constitutes fraud or made an intentional misrepresentation of material fact in connection with the coverage;
The group contract holder has failed to comply with a material plan provision relating to employer contribution or group participation rules; or
Discontinuance of the group contract under which the enrollee was covered.

B. A health maintenance organization shall not terminate coverage for services provided under a policy or contract without giving the subscriber written notice of termination, effective at least 31 days from the date of mailing or, if not mailed, from the date of delivery, except that:

For termination due to nonpayment of premium, the grace period as required in 14VAC5-211-210 B 16 shall apply;
For termination due to nonpayment of premium by an employer, the notice provisions required in § 38.2-3542 C of the Code of Virginia shall apply; or
For termination due to change of eligibility status, immediate notice of termination may be given.

C. A health maintenance organization shall not rescind coverage for services provided under a contract unless the enrollee or a person seeking coverage on behalf of an enrollee performs an act, practice, or omission that constitutes fraud, or the person makes an intentional misrepresentation of material fact, as prohibited by the terms of the plan. Notice of any rescission shall comply with the requirements of § 38.2-3441 of the Code of Virginia. Upon rescission, a health maintenance organization shall promptly refund all premiums less any claims paid.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 27, Issue 25, eff. September 1, 2011; Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-240 Unfair discrimination

A health maintenance organization shall not unfairly discriminate against an enrollee on the basis of the age, sex, health status, race, color, creed, national origin, ancestry, religion, marital status, or lawful occupation of the enrollee, or because of the frequency of utilization of services by the enrollee.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; amended, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

Part VI General Provisions

14VAC5-211-250 Conformity with state law

A contract or evidence of coverage that contains a provision that conflicts with the requirements of this chapter or the provisions of Chapter 43 (§ 38.2-4300 et seq.) or Chapter 58 (§ 38.2-5800 et seq.) of Title 38.2 of the Code of Virginia shall not be rendered invalid but shall be construed and applied as if it were in full compliance with the requirements of this chapter and Chapters 43 and 58 of Title 38.2 of the Code of Virginia.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005.

14VAC5-211-260 (Repealed.)

History

Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005; repealed, Virginia Register Volume 31, Issue 3, eff. January 1, 2015.

14VAC5-211-270 Controversies involving contracts

The commission shall have no jurisdiction to adjudicate controversies between a health maintenance organization and its enrollees. A breach of contract shall not be deemed a violation of this chapter.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005.

14VAC5-211-280 Severability

If any provision of this chapter or its application to any person or circumstance is for any reason held to be invalid, the remainder of the chapter and the application of the provisions to other persons or circumstances shall not be affected.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 21, Issue 23, eff. July 1, 2005.

Chapter 216 Rules Governing Internal Appeal and External Review

Part I General

14VAC5-216-10 Scope and purpose

A. This chapter shall apply to all health carriers, except that the provisions of this chapter shall not apply to a policy or certificate that provides coverage only for a specified disease, specified accident or accident-only coverage; credit; disability income; hospital indemnity; long-term care; dental, vision care, or any other limited supplemental benefit or to a Medicare supplement policy of insurance; coverage under a plan through Medicare, Medicaid, or the federal employees health benefits program; self-insured plans except that a self-insured employee welfare benefit plan may elect to use the state external review process; any coverage issued under Chapter 55 of Title 10 of the U.S. Code (TRICARE), and any coverage issued as supplemental to that coverage; any coverage issued as supplemental to liability insurance, workers' compensation or similar insurance; and automobile medical payment insurance or any insurance under which benefits are payable with or without regard to fault, whether written on a group or individual basis.

B. The purpose of this chapter is to set forth rules to carry out the provisions of Chapter 35.1 (§ 38.2-3556 et seq.) of Title 38.2 of the Code of Virginia as well as federal law to provide a health carrier with guidelines to assist with establishing a procedure for an internal appeals process under which there will be a full and fair review of any adverse benefit determination. This chapter also sets forth requirements for the external review process.

C. This chapter shall apply to any adverse benefit determination made on or after July 1, 2011, by any health carrier for a grandfathered or non-grandfathered health benefit plan, as defined by the PPACA.

D. This chapter also sets forth requirements for an exception request for plan years beginning on or after January 1, 2016.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011; amended, Virginia Register Volume 32, Issue 12, eff. February 1, 2016.

14VAC5-216-20 Definitions

The following words and terms when used in this chapter shall have the following meanings unless the context clearly indicates otherwise:

"Adverse benefit determination" in the context of the internal appeals process means (i) a determination by a health carrier or its designee utilization review entity that, based on the information provided, a request for, a benefit under the health carrier's health benefit plan upon application of any utilization review technique does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness or is determined to be experimental or investigational and the requested benefit is therefore denied, reduced, or terminated or payment is not provided or made, in whole or in part, for the requested benefit; (ii) the denial, reduction, or termination of, or failure to provide or make payment in whole or in part for, a benefit based on a determination by a health carrier or its designee utilization review entity of a covered person's eligibility to participate in the health carrier's health benefit plan; (iii) any review determination that denies, reduces, or terminates or fails to provide or make payment, in whole or in part, for a benefit; (iv) a rescission of coverage determination as defined in § 38.2-3438 of the Code of Virginia; or (v) any decision to deny individual coverage in an initial eligibility determination.

"Adverse determination" in the context of external review means a determination by a health carrier or its designee utilization review entity that an admission, availability of care, continued stay, or other health care service that is a covered benefit has been reviewed and, based upon the information provided, does not meet the health carrier's requirements for medical necessity, appropriateness, health care setting, level of care, or effectiveness or is determined to be experimental or investigational and the requested service or payment for the service is therefore denied, reduced, or terminated.

"Authorized representative" means (i) a person to whom a covered person has given express written consent to represent the covered person; (ii) a person authorized by law to provide substituted consent for a covered person; (iii) a family member of a covered person or the covered person's treating health care professional when the covered person is unable to provide consent; (iv) a health care professional when the covered person's health benefit plan requires that a request for a benefit under the plan be initiated by the health care professional; or (v) in the case of an urgent care internal appeal, a health care professional with knowledge of the covered person's medical condition.

"Clinical peer reviewer" means a practicing health care professional who holds a nonrestricted license in a state, district, or territory of the United States and in the same or similar specialty as typically manages the medical condition, procedure, or treatment under appeal.

"Commission" means the State Corporation Commission.

"Concurrent review" means utilization review conducted during a patient's stay or course of treatment in a facility, the office of a health care professional, or other inpatient or outpatient health care setting.

"Covered person" means a policyholder, subscriber, enrollee, or other individual participating in a health benefit plan. For purposes of this chapter with respect to the administration of appeals, references to a covered person include a covered person's authorized representative, if any.

"Emergency services" means those health care services that are rendered after the sudden onset of a medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson who possesses an average knowledge of health and medicine to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment of the individual's bodily functions, (iii) serious dysfunction of any of the individual's bodily organs, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus.

"Exception request" means a process that allows a covered person, authorized representative, or prescribing physician (or other prescriber, as appropriate) to request and gain access to clinically appropriate drugs not otherwise covered by a health benefit plan in the individual and small group market because of formulary restrictions.

"Final adverse determination" means an adverse determination involving a covered benefit that has been upheld by a health carrier, or its designee utilization review entity, at the completion of the health carrier's internal appeal process.

"Group health plan" means an employee welfare benefit plan (as defined in the Employee Retirement Income Security Act of 1974 (29 USC § 1002(1)), to the extent that the plan provides medical care and including items and services paid for as medical care to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise.

"Health benefit plan" means a policy, contract, certificate, or agreement offered or issued by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services. "Health benefit plan" does not include accident only, credit, or disability insurance; coverage of Medicare services or federal employee health plans pursuant to contracts with the United States government; Medicare supplement or long-term care insurance; Medicaid coverage; dental only or vision only insurance; specified disease insurance; hospital indemnity coverage; limited benefit health coverage; coverage issued as a supplement to liability insurance; insurance arising out of a workers' compensation or similar law; automobile medical payment insurance; medical expense and loss of income benefits; or insurance under which benefits are payable with or without regard to fault and that is statutorily required to be contained in any liability insurance policy or equivalent self-insurance.

"Health care professional" means a physician or other health care practitioner licensed, accredited, or certified to perform specified health care services consistent with the laws of the Commonwealth.

"Health carrier" means an entity, subject to the insurance laws and regulations of the Commonwealth or subject to the jurisdiction of the commission, that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services, including an accident and sickness insurance company, a health maintenance organization, a nonprofit hospital and health service corporation, or a nonstock corporation offering or administering a health services plan, a hospital services plan, or a medical or surgical services plan, or any other entity providing a plan of health insurance, health benefits, or health care services except as excluded under § 38.2-3557 of the Code of Virginia.

"Independent review organization" means an entity that conducts independent external reviews of adverse determinations and final adverse determinations, as well as alleged violations of 14VAC5-216-30 through 14VAC5-216-70 pertaining to internal appeal.

"PPACA" means the Patient Protection and Affordable Care Act (P.L. 111-148), as amended by the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152).

"Pre-service claim" means a claim for a benefit under a health benefit plan that requires approval of the benefit in whole or in part, in advance of obtaining the service or treatment.

"Post-service claim" means a claim for a benefit under a health benefit plan that is not a pre-service claim, or the service or treatment has been provided to the covered person.

"Self-insured plan" means an "employee welfare benefit plan" that has the meaning set forth in the Employee Retirement Income Security Act of 1974, 29 USC § 1002(1).

"Urgent care appeal" means an appeal for medical care or treatment with respect to which the application of the time periods for making non-urgent care determinations (i) could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or (ii) in the opinion of the treating health care professional with knowledge of the covered person's medical condition, would subject the covered person to severe pain that cannot be adequately managed without the care or treatment that is the subject of the appeal. An urgent care appeal shall not be available for any post-service claim or retrospective adverse benefit determination.

"Utilization review" means a set of formal techniques designed to monitor the use of or evaluate the clinical necessity, appropriateness, efficacy, or efficiency of health care services, procedures or settings. Techniques may include ambulatory review, prospective review, second opinion, certification, concurrent review, case management, discharge planning, or retrospective review.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011; amended, Virginia Register Volume 28, Issue 8, eff. January 1, 2012; Volume 32, Issue 12, eff. February 1, 2016.

Part II Internal Appeal

14VAC5-216-30 General requirements

A. Each health carrier offering a health benefit plan shall establish and maintain an internal appeals procedure in accordance with this chapter, 29 USC § 2560.503-1, and 45 CFR 147.136 to provide a full and fair review of any adverse benefit determination.

B. As part of each health carrier's health benefit plan and any adverse benefit determination, each health carrier shall provide notice of its available internal appeals procedures (including urgent care appeals), including timeframes for submission of an appeal, the health carrier's review and response. Such notice shall also include the name, address, and telephone number of the person or organizational unit designated to coordinate the review of the appeal for the health carrier, and contact information for the Bureau of Insurance. If the plan is a managed care health insurance plan (MCHIP), the mailing address, telephone number, and email address for the Office of the Managed Care Ombudsman shall also be included.

C. The internal appeals procedure shall not contain any provision, or be administered in a way that unduly inhibits or hampers the initiation or processing of claims for benefits.

D. The internal appeals procedure shall provide for an authorized representative of a covered person to act on behalf of the covered person in pursuing a benefit claim or appeal of an adverse benefit determination. A health carrier may establish reasonable procedures for determining whether an individual has been authorized to act on behalf of a covered person. In the case of an urgent care appeal, a health care professional shall be permitted to act as the authorized representative of the covered person, in accordance with this chapter.

E. The internal appeals procedure shall contain administrative processes and safeguards designed to ensure and to verify that benefit determinations are made in accordance with the provisions of the health benefit plan and, where appropriate, the health benefit plan provisions have been applied consistently with respect to similarly situated covered persons.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-40 Minimum appeal requirements

A. Each covered person shall be entitled to a full and fair review of an adverse benefit determination. Within 180 days after the date of receipt of a notice of an adverse benefit determination, a covered person may file an appeal with the health carrier. A health carrier may designate a utilization review entity to coordinate the review. For purposes of this chapter, "health carrier" may also mean its designated utilization review entity.

B. The health carrier shall conduct the appeal in a manner to ensure the independence and impartiality of the individuals involved in reviewing the appeal. In ensuring the independence and impartiality of such individuals, the health carrier shall not make decisions regarding hiring, compensation, termination, promotion, or other similar matters based upon the likelihood that an individual will support the denial of benefits.

C. 1. In deciding an appeal of any adverse benefit determination that is based in whole or in part on a medical judgment, including determinations with regard to whether a particular treatment, drug, or other service is experimental, investigational, or not medically necessary or appropriate, the health carrier shall designate a clinical peer reviewer to review the appeal. The clinical peer reviewer shall not have been involved in any previous adverse benefit determination with respect to the claim.

A reviewer of any other type of adverse benefit determination shall be an appropriate person designated by the health carrier. The reviewer of the appeal shall not be the individual who made any previous adverse benefit determination of the subject appeal nor the subordinate of such individual and shall not defer to any prior adverse benefit determination.

D. A full and fair review shall also provide for:

The covered person to have an opportunity to submit written comments, documents, records, and other information relating to the appeal for the reviewer or reviewers to consider when reviewing the appeal.
Upon request to the health carrier, the covered person to have reasonable access to and free of charge copies of all documents, records, and other information relevant to the covered person's request for benefits. This information shall be provided to the covered person as soon as practicable.
An appeal process that takes into account all comments, documents, records, and other information submitted by the covered person relating to the appeal, without regard to whether such information was submitted or considered in the initial benefit determination.
The identification of medical or vocational experts whose advice was obtained on behalf of the health carrier in connection with a covered person's adverse benefit determination, without regard to whether the advice was relied upon in making the benefit determination.
An urgent care appeal process.
Prior to issuing a final adverse benefit determination, the health carrier to provide free of charge to the covered person any new or additional evidence relied upon or generated by the health carrier or at the direction of the health carrier, in connection with the internal appeal sufficiently in advance of the date the determination is required to be provided to permit the covered person a reasonable opportunity to respond prior to that date.

E. A health carrier shall notify the covered person of the final benefit determination within a reasonable period of time appropriate to the medical circumstances, but not later than the timeframes established in subdivisions 1 and 2 of this subsection.

If an internal appeal involves a pre-service claim review request, the health carrier shall notify the covered person of its decision within 30 days after receipt of the appeal. A health carrier may provide a second level of internal appeal for group health plans only, provided that a maximum of 15 days is allowed for a benefit determination and notification from each level of the appeal.
If an internal appeal involves a post-service claim review request, the health carrier shall notify the covered person of its decision within 60 days after receipt of the appeal. A health carrier may provide a second level of internal appeal for group health plans only, provided that a maximum of 30 days is allowed for a benefit determination and notification from each level of the appeal.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011; amended, Virginia Register Volume 28, Issue 8, eff. January 1, 2012; Volume 32, Issue 12, eff. February 1, 2016.

14VAC5-216-45 Exhaustion

A. In addition to the provisions of § 38.2-3560 of the Code of Virginia, the internal appeal process may be deemed exhausted based on a violation of any of the provisions of 14VAC5-216-30 through 14VAC5-216-70. The internal appeal process shall not be deemed exhausted based on a de minimis violation that does not cause, and is not likely to cause, prejudice or harm to the covered person so long as the health carrier demonstrates that the violation was for good cause or due to matters beyond the control of the health carrier and that the violation occurred in the context of an ongoing, good faith exchange of information between the health carrier and the covered person. If the violation is part of a pattern or practice of violations by the health carrier, the violation shall not be considered de minimis.

B. The covered person may request a written explanation of the violation from the health carrier, and the health carrier shall provide the written explanation within 10 days, including a specific description of its basis, if any, for asserting that the violation should not cause the internal appeal process to be deemed exhausted, along with a notification of the right to review this matter by an independent review organization. A review by an independent review organization may be requested by the covered person to the commission to determine if the health carrier has met the standard under this section. The covered person must include, as part of the request for review, the written explanation of the violation by the health carrier. The independent review organization shall have a maximum of 10 days to conduct this review and provide a written response to the covered person, the health carrier, and the commission. If rejected, within five days the health carrier shall provide the covered person with a notice of the opportunity to resubmit and pursue an internal appeal of the claim.

C. The health carrier shall pay the independent review organization costs incurred for this review.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 28, Issue 8, eff. January 1, 2012.

14VAC5-216-50 Urgent care appeals

A. The health carrier shall notify the covered person of its initial benefit determination as soon as possible taking into account medical exigencies, but not later than 72 hours after receipt of the request, unless the covered person fails to provide sufficient information to determine whether, or to what extent, benefits are covered or payable under the health benefit plan. In the case of such failure, the health carrier shall notify the covered person as soon as possible, but not later than 24 hours after receipt of the request, of the specific information necessary to complete the claim. The covered person shall be afforded a reasonable amount of time, taking into account the circumstances, but not less than 48 hours to provide the specified information. The health carrier shall notify the covered person of its benefit determination not later than 48 hours after the earlier of (i) its receipt of the specified information or (ii) the end of the period afforded to the covered person to provide the specified additional information.

B. The notification of an urgent care adverse benefit determination that is based on a medical necessity, appropriateness, health care setting, level of care, effectiveness, experimental or investigational service or treatment, or similar exclusion or limit, shall include a description of the health carrier's urgent care appeal process including any time limits applicable to those procedures and the availability of and procedures for an expedited external review.

C. Upon receipt of an adverse benefit determination, a covered person may submit a request for an urgent care appeal either orally or in writing to the health carrier. Any appeal request made under this section by a treating health care professional shall be handled as an urgent care appeal. If such request is made by the covered person and not the treating health care professional, an individual acting on behalf of the health carrier shall apply the judgment of a prudent layperson who possesses an average knowledge of health and medicine to determine whether the appeal meets urgent care requirements.

D. All necessary information, including the benefit determination on appeal, shall be transmitted between the health carrier and the covered person by telephone, facsimile, or the most expeditious method available.

E. The health carrier shall notify the covered person and the treating health care professional of its benefit determination as soon as possible, taking into account the medical exigencies, but not later than 72 hours after receipt of an urgent care appeal.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011; amended, Virginia Register Volume 32, Issue 12, eff. February 1, 2016.

14VAC5-216-60 Concurrent review decisions

A. A health carrier shall provide continued coverage pending the outcome of an internal appeal of a concurrent review decision.

B. Any reduction or termination by a health carrier of an approved course of treatment (other than by health benefit plan amendment or termination) to be provided over a period of time or number of treatments shall constitute an adverse benefit determination. The health carrier shall notify the covered person of the adverse benefit determination at a time sufficiently in advance of the reduction or termination to allow the covered person to file an internal appeal and obtain a determination before the benefit is reduced or terminated.

C. Any request by a covered person to extend the course of treatment beyond the period of time or number of treatments that is an urgent care appeal shall be decided as soon as possible, taking into account the medical exigencies. The covered person and the treating health care professional shall be notified of the benefit determination within 72 hours after receipt of the internal appeal.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-65 Exception request for prescription drugs

A. For plan years beginning on or after January 1, 2016, notwithstanding any other provision of this chapter, a health carrier shall have a process in place that allows for a covered person or his prescribing physician (or other prescriber) to request and gain access to clinically appropriate drugs not otherwise covered by the health benefit plan, known as an exception request, in accordance with the requirements of 45 CFR §156.122(c).

A standard exception request shall be reviewed and acted upon within one business day of receipt of the request, and a coverage determination shall be provided to the covered person and prescribing physician no later than 72 hours following receipt of the request.
An expedited exception request may be made when exigent circumstances exist. Exigent circumstances exist when the covered person is suffering from a health condition that may seriously jeopardize the covered person's life, health, or ability to regain maximum function or when the covered person is undergoing a current course of treatment using a nonformulary drug. An expedited exception request shall be reviewed and a coverage determination provided to the covered person and prescribing physician no later than 24 hours following receipt of the request.
If a health carrier denies coverage as a result of a standard exception request or an expedited exception request, the covered person or prescribing physician may submit an external exception request to the health carrier, requiring that the original exception request and subsequent denial be reviewed by an independent review organization. Such request shall be reviewed and a coverage determination provided to the covered person and prescribing physician no later than 72 hours following receipt of the request if the original request was a standard exception request, or 24 hours following receipt of the request if the original request was an expedited exception request.

B. The health carrier shall provide the nonformulary drug or drugs for the duration of the prescription (including refills) if coverage is granted under a standard exception request, or for the duration of the exigency if coverage is granted under an expedited exception request, including those granted through an external exception request. Coverage for each drug approved by an exception request shall be applied as if the drug was part of the prescription formulary.

C. A health carrier shall contract with at least one accredited independent review organization to conduct reviews in accordance with the requirements of subdivision A 3 of this section.

History

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 32, Issue 12, eff. February 1, 2016.

14VAC5-216-70 Notification requirements

A. A health carrier shall provide a covered person with written or electronic notification of its benefit determination on appeal. The notification of an adverse benefit determination shall be written in easily understandable language and shall set forth the following:

Information sufficient to identify the claim involved with respect to the appeal, including the date of service, the health care provider, the claim amount, and a statement describing the availability, upon request, of the diagnosis code and its corresponding meaning, and the treatment code and its corresponding meaning. The health carrier may not consider a request for diagnosis or treatment information, in itself, to be a request for internal appeal;
The specific reason or reasons for the adverse benefit determination;
Reference to the specific plan provisions on which the adverse benefit determination is made;
A statement that the covered person is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the covered person's claim for benefits;
A statement indicating whether any additional internal appeals are available or whether the covered person has received a final adverse determination. If internal appeals are available, contact information on where to submit the appeal;
A statement describing the external review procedures offered by the health carrier and the covered person's right to obtain information about such procedures and the covered person's right to bring a civil action under § 502(a) of ERISA (29 USC § 1001 et seq.), if applicable; and
A statement indicating that the covered person has the right to request an external review if the covered person has not received a final benefit determination within the timeframes provided in 14VAC5-216-40 E, unless the covered person requests or agrees to a delay.

B. In the case of a group health plan, the required notification shall also set forth the following:

If an internal rule, guideline, protocol, or other similar criterion (collectively "rule") was relied upon in making the adverse benefit determination, either the specific rule or a statement that such rule was relied upon in making the adverse benefit determination and that a copy of the rule will be provided free of charge to the covered person upon request;
If the adverse benefit determination is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the covered person's medical circumstances, or a statement that such explanation will be provided free of charge upon request; and
Include a statement indicating that the covered person may have other voluntary alternative dispute resolution options, such as mediation. The covered person should be referred to the appropriate federal or state agency, his plan administrator, or the health carrier, as appropriate.

C. All notices shall be provided in a culturally and linguistically appropriate manner. The health carrier shall:

Provide oral language services, such as a telephone customer hotline, that include answering questions and providing assistance with filing claims, benefit requests, internal appeals, and external review in any applicable non-English language;
Provide, upon request, any notice in any applicable non-English language; and
Include in the English versions of all notices, a statement prominently displayed in any applicable non-English language clearly indicating how to access the language services provided by the health carrier.

With respect to any address in this Commonwealth to which a notice is sent, a non-English language is an applicable non-English language if 10% or more of the population residing in the city or county is literate only in the same non-English language, as determined by the American Community Survey data published by the United States Census Bureau.

D. Electronic notification shall be in accordance with the provisions of the Uniform Electronic Transactions Act (§ 59.1-479 et seq. of the Code of Virginia).

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011; amended, Virginia Register Volume 28, Issue 8, eff. January 1, 2012.

Part III External Review

14VAC5-216-80 Incomplete or ineligible determinations

A. After the covered person has requested an external review, and if he is notified by the health carrier that the request is incomplete in accordance with § 38.2-3561 B 4 or 38.2-3563 D 6 of the Code of Virginia, the covered person shall have five business days from receipt of such notice to return the requested materials necessary to complete the request to the health carrier. The health carrier shall then have five business days to conduct the preliminary review for eligibility. Notification shall be in accordance with the provisions of § 38.2-3561 C or 38.2-3563 E of the Code of Virginia.

B. If the health carrier determines that a covered person's request for external review is complete but ineligible, the covered person may request that the commission review the ineligibility determination.

Within five business days from the date the covered person receives notification from the health carrier, the covered person may request in writing that the commission review the ineligibility determination by the health carrier.
Within one business day after receipt of a notification from the covered person, the commission shall notify the health carrier of such request.
Within three business days of receipt of the commission's notice to the health carrier, the health carrier shall forward all information and materials used to make the ineligibility determination to the commission.
Within five business days of receipt of all materials necessary to make an eligibility determination, the commission shall review the file and make such decision.
Within one business day of such decision, the commission shall notify the covered person and the health carrier, and the assigned independent review organization if eligible.

C. If the covered person has requested an expedited external review or an expedited external review of experimental or investigational treatment, and is notified by the health carrier that the request for such expedited external review is incomplete, the covered person shall promptly return the requested materials necessary to complete the request to the health carrier. The health carrier shall then promptly conduct the preliminary review for eligibility.

D. If the health carrier determines that a covered person's request for expedited external review is complete but ineligible, the covered person may promptly request, orally or in writing, that the commission review the ineligibility determination.

Upon receipt of an eligibility request from a covered person, the commission shall promptly notify the health carrier of such request.
The health carrier shall promptly forward all information and materials used to make the ineligibility determination to the commission.
Upon receipt of all information and materials from the health carrier, the commission shall promptly review the file and make an eligibility determination.
The commission shall promptly notify the covered person and the health carrier, and the assigned independent review organization if eligible.

E. If the request for a standard external review does not contain sufficient information to allow the commission to send the request to the health carrier, the commission shall have one business day from the date the sufficient information is received to provide notice to the health carrier.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-90 Expedited external review

A. If a covered person files a request with the commission for an expedited external review in accordance with § 38.2-3560 C of the Code of Virginia, the health carrier shall promptly conduct an eligibility determination in accordance with 14VAC5-216-80 prior to review by an independent review organization.

B. When an independent review organization is requested by the commission in accordance with § 38.2-3562 of the Code of Virginia to conduct an expedited external review of an adverse determination under § 38.2-3560 C of the Code of Virginia, the independent review organization shall determine whether the timeframes for sequential completion of the expedited internal appeal and expedited external review (i) could seriously jeopardize the life or health of the covered person or the ability of the covered person to regain maximum function; or (ii) would subject the covered person to severe pain that cannot be adequately managed without the care or treatment that is the subject of the appeal, as compared to the timeframes for simultaneous completion of the expedited appeal and review. The independent review organization shall promptly make such determination and shall promptly notify the covered person, the health carrier, and the commission.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-100 Qualifications for independent review organizations

A. An independent review organization that desires to conduct external reviews for the Commonwealth shall submit an application using Form 216-E to the commission for review and approval. An application fee of up to $500 may be required.

B. An independent review organization shall meet all the qualification requirements in § 38.2-3565 of the Code of Virginia.

C. An independent review organization that does not maintain required accreditation status shall provide notice to the commission within 30 days of any change in such status.

History

Statutory Authority: § 12.1-13 and § 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-110 External review reporting requirements

In accordance with § 38.2-3568 of the Code of Virginia, each health carrier and each independent review organization shall file with the commission a report by April 1 of each calendar year using Form 216-F or 216-G as appropriate.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-120 Funding of external review

Failure of a health carrier to timely pay any independent review organization for a completed external review shall be a violation of this section and shall subject the health carrier to penalties imposed under Title 38.2 of the Code of Virginia.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

14VAC5-216-130 Self-insured plans

A. Any self-insured plan whose plan sponsor's headquarters is located in Virginia may choose to utilize the external review processes outlined in Chapter 35.1 (§ 38.2-3556 et seq.) of Title 38.2 of the Code of Virginia. For purposes of Part III of this chapter, "health carrier" shall mean a self-insured plan or its third-party administrator if any, that opts in to the state external review process.

B. A self-insured plan utilizing such external review processes shall notify the commission that it will opt-in to the state external review process by completing Form 216-H. A new form shall be completed for each plan year.

C. A self-insured plan that opts in to the state external review process shall comply with all statutes and regulations pertaining to such process. Plan materials and appropriate denial notices shall contain required information regarding the state external review processes.

D. A self-insured plan that opts into the state external review process but fails to comply with the requirements outlined in this chapter and applicable state statutes pertaining to the external review process may be terminated from use of such process by the commission.

History

Statutory Authority: § 12.1-13 and 38.2-223 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 27, Issue 22, eff. July 1, 2011.

Agency 10 Virginia Birth-Related Neurological Injury Compensation Program

Chapter 10 Virginia Birth-Related Neurological Injury Compensation Program Regulations

Part I General Procedural Requirements

14VAC10-10-10 Payer of last resort

The Virginia Birth-Related Neurological Injury Compensation Program (Program) is a payer of last resort. Each admitted claimant's primary insurance and other sources of coverage should be billed for covered services before the Program is asked to pay for a service. An admitted claimant may not receive reimbursement or compensation from the Program for expenses for items or services, or for reimbursements, that he has received or is entitled to receive by contract, state law, or federal law, or from another source, except to the extent that it is prohibited by federal law.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-20 Primary insurance

A. Medical services that are required to be precertified, preauthorized, or authorized by the admitted claimant's primary insurance provider may not be payable by the Virginia Birth-Related Neurological Injury Compensation Program (Program) if the primary insurance carrier's certification or authorization process has not been satisfied.

B. Admitted claimants must utilize the primary insurer's in-network providers and facilities unless otherwise authorized by the Program. Utilizing non-network or nonparticipating providers or facilities may result in reduced payment or nonpayment of incurred expenses.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-30 Medical review

The Virginia Birth-Related Neurological Injury Compensation Program reserves the right to submit requests for services or equipment for independent medical review to determine medical necessity or appropriateness of care prior to authorizing payment.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

Part II Benefits

14VAC10-10-40 Counseling

The Virginia Birth-Related Neurological Injury Compensation Program will pay for counseling for family members related to the needs of an admitted claimant. After primary insurance, a maximum of $1,500 per calendar year will be paid for this service. Services must be provided by a licensed clinical social worker, counselor, psychologist, or psychiatrist.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-50 Personal nursing and assistive care

A. The Virginia Birth-Related Neurological Injury Compensation Program (Program) will pay for appropriate medically necessary and reasonable nursing care or assistive care as recommended in writing by the admitted claimant's primary care physician.

B. The Program will review or consult periodically with medical professionals concerning the continued appropriateness of the nursing hours.

C. The Program utilizes nursing agencies when available. All nursing agencies utilized by the Program must provide to the Program copies of their employment policies regarding the criminal history records checks and sex offender searches conducted on their employees. All nursing agencies utilized by the Program must provide a certification to the Program for each employee the agencies places for care of admitted claimants that verifies that the named employee has not been convicted of any offense listed as a barrier crime pursuant to § 37.2-314, 37.2-416, or 37.2-506 of the Code of Virginia. No nursing agency shall be reimbursed for any hours worked by an agency employee for which such certification has not been provided to the Program. Signed and dated time sheets and monthly care summaries must be submitted with each request for reimbursement. If an agency is unable to provide care, the Executive Director of the Program is authorized to approve other arrangements.

D. If a nursing agency is not available, or the admitted claimant's parent or legal guardian chooses to employ a relative or legal guardian of the admitted claimant to provide prescribed nursing or attendant care authorized by the admitted claimant's primary care physician or appropriate treating specialist physician, the Program may reimburse the admitted claimant's parent or legal guardian for care providers who are employed by the admitted claimant's family as independent contractors or household employees, as the case may be, upon approval of the Executive Director of the Program. The Program will reimburse admitted claimant families for employment-related taxes such as FICA or unemployment tax, related to the hiring of an independent contractor upon receipt of proper documentation of payment of these taxes. The parent or legal guardian of the admitted claimant must provide a certification to the Program for each independent contractor or household employee who the parent or legal guardian hires for an admitted claimant's care that verifies that the named independent contractor or household employee has not been convicted of any offense listed as a barrier crime pursuant to § 37.2-314, 37.2-416, or 37.2-506 of the Code of Virginia. No parent or legal guardian shall be reimbursed for any hours worked by an independent contractor for which such certification has not been provided to the Program. The parent or legal guardian of the admitted claimant will pay any application fees associated with requesting these background checks of the Virginia State Police. Upon receipt of the certification and a receipt from the Virginia State Police or an authenticated copy of the canceled check, the Program will reimburse those application fees associated with the application of the independent contractor or household employee actually hired. Signed and dated time sheets, signed and dated receipts of payment, and monthly care summaries must be submitted with each request for reimbursement.

E. The Program will not reimburse a care provider for more than a 16-hour shift within a 24-hour period unless there is an emergency and no other care provider is available to care for the admitted claimant. Overtime is not paid unless preauthorized by the Program. The Program will not reimburse for work by a full-time caregiver for more than 40 hours per week unless preauthorized by the Program.

F. The Program will not provide a private duty nurse while an admitted claimant is hospitalized unless the attending physician considers it medically necessary and a written order for private duty nursing is provided to the Program. The Program will pay for a sitter who is not a family member and may not have medical experience while the child is hospitalized, if requested, and with prior approval from the Program and a letter of medical necessity from the attending physician.

G. The Program will provide nurses or caregivers to accompany admitted claimants during school hours provided such care is deemed medically necessary and is not otherwise available. This care counts toward the total approved nursing hours.

H. The Program will reimburse medically necessary care provider expenses if they have not been previously filed with the tax authorities as deductions or credits. If they have been filed with the tax authorities as deductions or credits, then an amended tax report must be filed with the tax authorities and a copy of the amended tax report provided to the Program before the family will be reimbursed for these expenses.

I. The Program may reimburse for medically necessary and reasonable nursing and attendant care that is provided by a relative or legal guardian of an admitted claimant so long as that care is beyond the scope of childcare duties and services normally and gratuitously provided by family members to uninjured children and so long as such care and reimbursement requests are in accordance with other applicable provisions and the following:

The relative or legal guardian providing the care must be at least 18 years of age.
The parent or legal guardian of the admitted claimant must submit a letter of medical necessity from the admitted claimant's primary care physician or appropriate treating specialist physician that sets forth the number of nursing or attendant care hours needed per day; the physician's assessment regarding the level of care required; and certification that the intended caregiver is appropriately trained, qualified, and physically capable of performing the required home medical and attendant care duties. Medically necessary care to be provided by a relative or legal guardian of an admitted claimant shall be performed only at the direction and control of the admitted claimant's primary care physician or appropriate treating specialist physician.
The parent or legal guardian of the admitted claimant must provide a certification to the Program for each caregiver the parent or legal guardian hires for an admitted claimant's care that verifies that the named caregiver has not been convicted of any offense listed as a barrier crime pursuant to §§ 37.2-314, 37.2-416, or 37.2-506 of the Code of Virginia. No parent or legal guardian shall be reimbursed for any hours worked by a caregiver for whom such certification has not been provided to the Program. The parent or legal guardian of the admitted claimant will pay any application fees associated with requesting these background checks of the Virginia State Police. Upon receipt of the certification and a receipt from the Virginia State Police or an authenticated copy of the canceled check, the Program will reimburse those application fees associated with the application of the caregiver actually hired.
Any relative or legal guardian of an admitted claimant providing caregiver services must provide a signed release of liability form to the Program regarding any potential injury sustained during the course of providing services to the admitted claimant.
Any parent or legal guardian of an admitted claimant choosing to utilize nursing or attendant care that is provided by a relative or legal guardian in lieu of nursing or other professional caregiver services must provide a signed release of liability form to the Program regarding any potential injury sustained by the admitted claimant during the course of receiving care.
Signed and dated time sheets, signed and dated receipts of payment, and monthly care summaries must be submitted with each request for reimbursement.
The Program will not reimburse for care provided by a nurse or other professional caregiver and by a relative or legal guardian for the same hours. Hours of care provided by a relative or legal guardian of an admitted claimant cannot be used to supplement hours of care provided by professional caregivers or nursing agencies to the extent that those hours would exceed the total hours deemed medically necessary and authorized by the Program.
No more than 12 hours within a 24-hour period may be reimbursed for care provided by any single relative or legal guardian of an admitted claimant.
The rate of reimbursement for nursing and attendant care that is provided by a relative or legal guardian of an admitted claimant shall be the average hourly rate for a home health aide (combined all industries) as reported by the Commonwealth of Virginia's Labor Market Data report for the applicable metropolitan statistical area in the most recently published data available. The Program will reimburse an admitted claimant's parent or legal guardian for employment-related taxes, such as FICA or unemployment tax, resulting from that parent or legal guardian's employment of a relative or legal guardian as the admitted claimant's caregiver as set forth in this chapter, upon receipt of proper documentation of payment of these taxes.
The Program's Executive Director and staff reserve the right to have reviewed each nursing or attendant care plan or physician order for medical necessity.

J. The Program generally follows Medicaid payment rates depending on the locality or state where the care is delivered.

K. Travel expenses associated with nursing care are reimbursable only if the travel is medically necessary. No travel expenses will be paid for nurses or caregivers accompanying families on vacation or other nonmedically necessary travel. Travel expenses for medically necessary nursing or attendant care during medically necessary travel will only be paid for one person in addition to the admitted claimant. All such payments or reimbursements are made to the parent or guardian of the admitted claimant not to the caregiver.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-60 Dental care

The Virginia Birth-Related Neurological Injury Compensation Program will pay for the admitted claimant's dental care costs if they are medically necessary not cosmetic and are not covered by other sources.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-70 Therapy

A. The Virginia Birth-Related Neurological Injury Compensation Program (Program) will pay for therapy that is determined to be medically necessary and reasonable and for which there is a letter of medical necessity provided by the admitted claimant's primary care physician or appropriate treating specialist physician.

B. The Program may consult periodically with appropriate medical professionals regarding the necessity for continuing various therapies including behavioral, physical, horseback, and speech therapy.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-80 Transportation; vans

A. The Virginia Birth-Related Neurological Injury Compensation Program (Program) will fund the purchase of a van when it becomes medically necessary for wheelchair transportation. Van options for admitted claimants are available from the Program. The Program will have the primary lien on the van's certificate of title, although the van itself will be titled in the name of the admitted claimant's parents or legal guardians. The Program will pay the personal property taxes on and sales taxes resulting from the initial purchase of the medically necessary van and also will pay an amount equal to the uninsured motorist fee, or the insurance premium for the van, whichever is less. Other operating costs, such as city or county decals and tags, maintenance, repairs, and tires will be the responsibility of the parents or guardians. Mileage and other transportation costs will be reimbursed as set out under 14VAC10-10-150. The Program will reimburse the admitted claimant's family for the cost of insuring the lift and tie downs if an additional cost is incurred for this and a receipt is provided.

B. Vans will be replaced at approximately 100,000 miles. Documentation of the vehicle's service history and condition will be considered in determining the timing of van replacement.

C. In the event a van provided by the Program is no longer necessary for transportation of the admitted claimant, the van must be returned, and the title must be transferred to the Program within three months. The family may purchase the van if an agreeable purchase price is agreed upon with the Executive Director of the Program.

D. All vans returned to the Program should be in good working order and be able to pass a Virginia state inspection. If the van is not in good working order or cannot pass a Virginia state inspection, the admitted claimant's parent or legal guardian must have the defects repaired at his own cost if the expense is not covered by insurance prior to returning the vehicle to the Program.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-90 Equipment

A. Equipment documented as medically necessary by the admitted claimant's physician will be provided by the Virginia Birth-Related Neurological Injury Compensation Program (Program). Because there is a gamut of equipment that may be provided, no attempt is made to list all such equipment in this section. Equipment provided to date, however, includes oxygen concentrators, bipap machines, feeding pumps, gait trainers, wheelchairs, Wizard strollers, suction machines, apnea monitors, IV poles, pulse oximeters, therapy balls, therapy mats, Gorilla car seats, wheelchair lifts, and wheelchair tie-downs.

B. All medically necessary equipment (except vans) purchased entirely by the Program remains the property of the Program. Depending upon the type of equipment and its condition, it is expected that equipment will be returned to the Program when no longer required by the admitted claimant. The family may purchase the equipment if a purchase price is agreed upon with the Executive Director of the Program. If the equipment is not purchased entirely by the Program it does not have to be returned to the Program.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-100 Augmentative communication technology

A. The Virginia Birth-Related Neurological Injury Compensation Program (Program) will pay for devices, equipment, and computer software for the purpose of aiding in communication of an admitted claimant who otherwise is unable to communicate verbally. The Program may require an evaluation be completed by a Program assigned augmentative communication consultant to ensure the appropriate equipment is recommended or purchased.

B. For all equipment supplied by the Program, it is expected that the admitted claimant and those involved in the care of the admitted claimant will utilize the equipment as intended and invest the time and effort required for the equipment to be utilized successfully.

C. In accordance with the Program's general policy on purchasing medically necessary equipment, all augmentative communication technology equipment remains the property of the Program. If for any reason the equipment no longer is necessary or not utilized by the admitted claimant, it should be returned to the Program. Because the Program is a payer of last resort, all measures for obtaining coverage through primary insurance or other sources must be exhausted before the Program will cover augmentative technology services.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-110 Privately owned housing assistance

A. The Virginia Birth-Related Neurological Injury Compensation Program (Program) Board of Directors statutory authority concerns awards for the medical needs of the admitted claimants it serves. However, if an admitted claimant has medically necessary housing needs that can be addressed in the nonrental home currently owned and occupied by the admitted claimant's family or guardian, the board will provide one-time funding for medically necessary modification to, or construction of, an accessible bedroom and bathroom if such modification or construction is feasible and reasonable. This modification or construction must be within the Program's allowable standards for cost, space, and other factors before funding for an accessible bedroom and bathroom will be authorized. The Program's construction manager or other qualified professional will determine the feasibility of these modifications or construction and whether the admitted claimant's needs will be met in the contemplated project.

B. The maximum lifetime housing benefit per admitted claimant for any one or combination of housing benefits (rental or construction) is up to $175,000.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-120 Rental housing assistance

A. If the admitted claimant resides in a non-handicapped-accessible rental unit and moves to a handicapped accessible rental unit, the Virginia Birth-Related Neurological Injury Compensation Program (Program) will reimburse the difference between the former monthly rental payment and the cost for the appropriate handicapped accessible rental unit of similar size and quality based on cost per square foot. Any substantial increases in the square footage of the handicapped accessible unit to be reimbursed must be attributable to medically necessary requirements and not exceed the overall guidelines utilized when the Program constructs additional space for an admitted claimant.

B. The handicapped accessible rental unit should meet all applicable regulations of the Americans with Disabilities Act (ADA (42 USC § 1201 et seq.)). Exceptions to meeting the ADA regulations must be approved by the Virginia Birth-Related Neurological Injury Compensation Program's Board of Directors. Prior to providing reimbursement the Program may require certification of the rental unit's suitability for the admitted claimant or compliance with this policy.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-130 Funeral expenses

The Virginia Birth-Related Neurological Injury Compensation Program will pay a maximum of $5,000 for the funeral and burial expenses of an admitted claimant.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-140 Attorney fees

Virginia law authorizes payment of reasonable attorney fees incurred in the initial filing of a claim to enter the Virginia Birth-Related Neurological Injury Compensation Program, subject to the approval and award of the Virginia Workers' Compensation Commission.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-150 Miscellaneous expenses

A. Transportation. Upon submission of receipts, the Virginia Birth-Related Neurological Injury Compensation Program (Program) will reimburse parking fees associated with medically necessary travel. The Program will reimburse documented mileage for medically necessary travel at the following rates:

Mileage will be reimbursed at 50% of the U.S. Internal Revenue Service's mileage rate for vans provided by the Program. Mileage reimbursement typically covers gasoline and other costs of operation. Because the Program provides the van in this instance, the Program's mileage reimbursement is intended only to cover the cost of gasoline associated with medically necessary transportation. Mileage is based on the distance from the home to the appointment location. Verification may be required by the Program.
For use of personal vehicles, reimbursement will be at the U.S. Internal Revenue Service's mileage rate. In the event a van provided by the Program is unavailable, the mileage reimbursement allowance provided would be that allowed for vans purchased by the Program. Upon submission of receipts, the Program will reimburse other medically necessary transportation expenses not otherwise reimbursed.

B. Postage. The Program will pay postage for reimbursement requests submitted to the Program and for information requested by the Program.

C. Cell phones. If the Program receives a prescription from the admitted claimant's primary care physician or appropriate treating specialist physician that a cellular telephone is medically necessary, the Program will pay for basic monthly emergency service. If basic emergency service is unavailable, the Program will pay for basic monthly service only. If installation of the cellular telephone is required, the phone must be installed in the vehicle in which the admitted claimant is transported. An admitted claimant's parent or guardian must contact the Program for the current allowable amounts.

D. Diapers. Beginning at age three years, the Program will pay for diapers for an admitted claimant when deemed medically necessary pursuant to the Program's purchasing guidelines. If the parent or guardian of an admitted claimant does not have receipts for the period of time between the child's third birthday and the child's admission into the Program, the parent or guardian may submit the reimbursement request with the prescription and receive reimbursement based upon the Medicaid reimbursement rate.

E. Therapeutic toys. The Program will provide therapeutic toys with documentation of the therapeutic benefit of the toys. These toys are not to exceed $300 per calendar year. Once the admitted claimant has no need for these toys and if the toys are in good condition, the Program will accept their return to be used to stock a lending program. The toys will be sanitized prior to use by other families.

F. Other expenses. The Program may pay other medically necessary expenses of the admitted claimant as determined by the Program's Board of Directors in its discretion. Requests for medically necessary services, etc., that are not addressed in this chapter should be sent to the Executive Director of the Program who will refer these requests to the board for action.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

Part III Other Procedures

14VAC10-10-160 Insurance

A. Because the Virginia Birth-Related Neurological Injury Compensation Program (Program) generally is a payer of last resort, each admitted claimant's parent or legal guardian must purchase private health insurance to provide coverage for the actual medically necessary and reasonable expenses as described in § 38.2-5009 A 1 of the Code of Virginia that were, or are, incurred as a result of the admitted claimant's birth-related neurological injury and for the admitted claimant's benefit. The admitted claimant's parent or legal guardian may request the assistance of the Program facilitator in obtaining a suitable health insurance policy for the admitted claimant if he has no preexisting coverage for the admitted claimant upon the admitted claimant's admission into the Program. The Program will reimburse, upon receipt of proof of payment, solely the portion of the premiums that is attributable to the admitted claimant's post-admission coverage and paid for by the admitted claimant's parent or legal guardian. The Program must be provided with a copy of the applicable health insurance policy before benefits are paid by the Program. It is the responsibility of the parents or guardians to seek benefits for which an admitted claimant is eligible by submitting requests to the Program third-party administrator or other appropriate staff person, as indicated on the Program's website. In addition, the parents or guardians of the admitted claimant must identify a primary care physician.

B. Claimants must utilize the primary insurer's in-network providers and facilities unless otherwise authorized by the Program. Utilizing non-network or nonparticipating providers or facilities may result in reduced payment, nonpayment, or nonreimbursement of incurred expenses.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017; amended, Virginia Register Volume 34, Issue 15, eff. March 9, 2018.

14VAC10-10-170 Reimbursement

Although an admitted claimant has been determined eligible for benefits from the Virginia Birth-Related Injury Compensation Program (Program), parents or caregivers must contact the Program before committing to the purchase of equipment or incurring other expenses for which they may seek reimbursement. Failure to do so may jeopardize reimbursement from the Program. In the case of emergency care rendered or sought during nonbusiness hours, the admitted claimant's family is responsible for contacting the Program the next business day for authorization of services for which the Program is expected to pay.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-180 Claims for reimbursement

Requests for reimbursement of expenses from medical providers, pharmacies, equipment providers, medically necessary mileage, or other expenses will not be honored if submitted after one year from the date they are incurred. All reimbursement requests must be accompanied by documentation of medical necessity and receipts from providers. This time limit does not apply to expenses incurred prior to acceptance into the Virginia Birth-Related Neurological Injury Compensation Program (Program). All requests for reimbursement for expenses prior to entry into the Program must be submitted within two years of entry into the Program.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-190 Requests for authorization; services outside insurance plan covered area or network

A. In the event it is medically necessary to take an admitted claimant outside the admitted claimant's applicable insurance plan's covered service area or the primary insurance's provider network for evaluation, surgery, etc., it must be ascertained if the primary insurance plan will pay for benefits and if so, what amount it will pay. After this is determined, the Virginia Birth-Related Neurological Injury Compensation Program (Program) must be contacted for authorization prior to seeking services or the Program may determine not to pay any balance remaining on the bill for these services.

B. If an in-network provider is available for a service and an out-of-network provider is utilized, the Program will reimburse or pay only an amount equal to what the Program would have paid if an in-network provider had been utilized.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-200 Medically necessary travel greater than 100 miles from primary residence

In the event it is medically necessary to take an admitted claimant outside the local service area (more than 100 miles from the admitted claimant's primary residence) for evaluation, surgery, or other medically necessary care, it must be ascertained prior to the travel if the travel-related expenses will be reimbursed by the Virginia Birth-Related Neurological Injury Compensation Program (Program). If preauthorization is not obtained, the Program may not pay for these travel-related expenses.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-210 Request for benefits not specifically addressed

This chapter authorizes the Executive Director of the Virginia Birth-Related Neurological Injury Compensation Program (Program) to provide the benefits described without referral to the Board of Directors of the Program except in exceptional circumstances, and in the executive director's discretion. The board, however, realizes that there may be programs, equipment, or other items, which may be of value to an admitted claimant that this chapter does not address. If the parents or guardians feel a benefit not described in this chapter would be of value to the admitted claimant (the executive director is not authorized to provide those benefits without board approval), the parents or guardians should write the board via the executive director, who will bring these requests to the board at its next meeting.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-220 Experimental treatment and therapy

A. Experimental treatments or therapy not typically covered by health insurance, including conductive education, may be covered up to a maximum of $6,000 per year, combined, with written prior authorization from the Executive Director of the Virginia Birth-Related Neurological Injury Compensation Program (Program). The Board of Directors of the Program recognizes that such therapies or treatments may be useful for some admitted claimants and, therefore, grants this discretionary benefit on a case-by-case basis. Because this benefit is not provided expressly by the Virginia Birth-Related Neurological Injury Compensation Act (§ 38.2-5000 et seq. of the Code of Virginia), however, there is no guarantee of coverage for experimental therapy or treatment. This completely discretionary benefit may be rescinded at any time; especially if such rescission is warranted by the Board of Directors fiduciary obligations set forth in § 38.2-5016 F of the Code of Virginia. Upon such rescission, benefits under this policy will terminate immediately and no admitted claimant will have any further recourse or any basis for a claim for further benefits under this policy.

B. A written request for authorization of experimental treatment or therapy must be submitted to the Program in accordance with the following process:

A letter of medical necessity from the admitted claimant's physiatrist, neurologist, or other appropriate treating specialist physician, who also regularly treats other patients with cerebral palsy, must be received by the Program. A letter of medical necessity from a physical therapist is not acceptable.
The letter of medical necessity must be received in the Program's offices at least 60 days prior to the desired start of treatment.
Evidence as to whether the primary insurers or other payers will cover any portion of the cost must be submitted with the request.
At the Program's discretion, all requests for experimental treatments or therapies may be reviewed for medical necessity by an objective qualified physician.

C. All other Program regulations regarding therapies, including the travel policy, are applicable to authorized experimental treatments or therapies. These include:

Payment for travel, lodging, and meals on a per diem basis based on current Commonwealth of Virginia rates.
For travel other than by car or van, prior authorization must be obtained.

D. Written authorization from the Program must be obtained by the admitted claimant prior to any payments or reimbursements being made by the Program.

E. Total combined costs for experimental treatments or therapies, related equipment, and travel expenses during any single calendar year may not exceed $6,000.

F. Following any experimental therapy treatment, a complete and thorough progress report prepared by the treating facility must be submitted to the Program within 60 days of completion of the therapy.

G. No further sessions or treatments will be authorized prior to the Program's receiving such progress reports. The receipt of the reports does not guarantee that further treatments will be authorized.

H. The Program may request an independent progress evaluation by a qualified physician prior to any reauthorization for subsequent treatments. If the admitted claimant's insurance will not cover this evaluation, the Program will pay for the evaluation at usual and customary rates. If the Program pays for the evaluation, that cost will not be considered to be part of the cost of the treatment.

I. A local qualified provider of the experimental therapy or treatment requested should be utilized unless the Program grants an exception for a specific treatment provider.

J. For any therapy or treatment proposed, no more than 100 hours will be authorized upon initial request. Additional authorization may be provided only after the procedures in subsection F of this section have been followed.

K. Nursing, certified nurse aide, or other personal assistance will not be provided for extended experimental therapy sessions of more than two hours per day unless a letter of medical necessity is received by the Program from an appropriate treating specialist physician. The letter must state specifically that a nurse must be present due to specified health risks to the admitted claimant.

L. In determining whether authorization will be granted for experimental therapy or treatment, the Program will consider, including the following:

The overall cost associated with the experimental treatment or therapy. The cost for one person to accompany the admitted claimant, if stated to be medically necessary by the treating physician; the duration of the Program; the expected benefits to the admitted claimant; and the availability of the experimental program in Virginia.
The report from the admitted claimant's treating physician regarding the medical necessity for the admitted claimant to participate in the experimental program.
Whether there is medically recognized proof of results that the experimental therapy or treatment has benefitted other patients in similar circumstances.
The expected frequency and duration of the experimental treatment or therapy requested.
The Program may require third party medical reviews to evaluate the potential success, safety, or results of the experimental treatment or therapy.

M. The Program encourages families to seek out clinical trials being conducted by accredited medical facilities, medical schools, or other highly regarded and medically accepted facilities or organizations to help establish the medical efficacy of experimental treatments or therapies.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.

14VAC10-10-230 Disagreements

A. Disagreements concerning whether a service or item of equipment should be paid for or reimbursed by the Virginia Birth-Related Neurological Injury Compensation Program (Program) may arise. If Program staff and the Program's Executive Director cannot make a determination regarding a request, or cannot resolve a disagreement, then the executive director has been authorized by the Program's Board of Directors to place the admitted claimant's request on the agenda for the board's consideration and determination at its next regular meeting.

B. The parents or guardians, within 30 days of receiving the Program staff's or executive director's written denial of a claim, may submit a written explanation of the dispute, provide documentation supporting the request and demonstrating that procedures for the submission of claims pursuant to this chapter have been followed, and request that the board make a determination regarding the claim at its next regular meeting.

C. The parents or guardians of the admitted claimant may attend a meeting of the board to make a presentation and to provide documentation in support of the request in addition to submitting written materials to the Program.

D. If a dispute is not resolved by the board, a petition of appeal may be filed with the Clerk of the Virginia Workers' Compensation Commission at 1000 DMV Drive, Richmond, Virginia 23220, within 30 days of receipt of written notification of the board's decision.

History

Statutory Authority: § 38.2-5002.1 of the Code of Virginia.
Historical Notes: Derived from Virginia Register Volume 33, Issue 23, eff. July 10, 2017.