TITLE 14. INSURANCE

STATE CORPORATION COMMISSION

Final Regulation

Title of Regulation: 14VAC5-405. Rules Governing Balance Billing for Out-of-Network Health Care Services (amending 14VAC5-405-20, 14VAC5-405-30, 14VAC5-405-40).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Effective Date: March 3, 2026.

Agency Contact: Jackie Myers, Chief Insurance Market Examiner, Bureau of Insurance, State Corporation Commission, P.O. Box 1157, Richmond, VA 23218, telephone (804) 371-9630, or email jackie.myers@scc.virginia.gov.

Summary:

The amendments (i) add definitions of "general business practice" and "good faith negotiation period"; (ii) require a health carrier to provide instructions regarding the claim payment dispute process and to develop and implement processes to analyze the outcome of arbitration decisions involving the same provider, CPT code, and geographic area in determining a commercially reasonable payment amount; (iii) clarify requirements related to the good faith negotiation period and the ability for the health carrier and the out-of-network provider to continue to negotiate after the good faith negotiation period; (iv) prohibit health carriers or providers from initiating arbitration with such frequency as to indicate a general business practice; and (v) clarify that any payment due from the health carrier to the provider is subject to the applicable interest provisions stipulated in the Code of Virginia.

Changes to the proposed regulation include removing the requirement for a health carrier to develop and implement processes to analyze the outcome of arbitration decisions involving the same provider, CPT code, and geographic area in determining a commercially reasonable payment amount.

AT RICHMOND, MARCH 2, 2026

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. INS-2025-00072

Ex Parte: In the matter of amending

Rules Governing Balance Billing for

Out-of-Network Health Care Services

ORDER ADOPTING AMENDMENTS

On August 25, 2025, the State Corporation Commission (Commission) entered an Order Establishing Proceeding regarding a proposal by the Bureau of Insurance (Bureau) to amend rules set forth in Chapter 405 of Title 14 of the Virginia Administrative Code, 14VAC5-405-10 et seq., entitled Rules Governing Balance Billing for Out-of-Network Health Care Services (Amended Rules).

The Bureau recommended the Amended Rules to provide clarity and consistency in the interpretation and administration of processes related to payment disputes and arbitration, including certain technical amendments to align the rules with current federal and state law.

The Order Establishing Proceeding and the Amended Rules were sent to all carriers licensed in Virginia to write accident and sickness insurance and other interested parties on

August 29, 2025; were sent to the Office of the Virginia Attorney General's Division of Consumer Counsel (Consumer Counsel); and were published in the Virginia Register of Regulations on September 22, 2025. Licensees, Consumer Counsel, and other interested parties were afforded the opportunity to file written comments and/or request a hearing on or before October 31, 2025 (Comment Period).

Prior to expiration of the Comment Period, the Bureau discovered that the link on the Commission's website for the submission of comments in this case was not active. To ensure that the public had the full opportunity to participate in this proceeding, the Commission entered an Amending Order on November 6, 2025, giving interested persons additional time to comment on, propose modifications or supplements to, or request a hearing on the proposed Amended Rules, and to extend the Bureau's attendant timeframe to submit its response to comments.

The Amending Order was sent to all carriers licensed in Virginia to write accident and sickness insurance and other interested parties on November 12, 2025; sent to Consumer Counsel; and published in the Virginia Register of Regulations on December 1, 2025. Licensees, Consumer Counsel, and other interested parties were afforded the opportunity to file written comments or request a hearing on or before December 31, 2025.

Comments to the Amended Rules were filed by Dominion Plastic Surgery, the Virginia Association of Health Plans, the Virginia Hospital & Healthcare Association, and the ERISA Industry Committee. No requests for a hearing were filed with the Clerk of the Commission.

The Bureau considered the comments filed and responded to them in its Response to Comments (Response), which the Bureau filed with the Clerk on January 30, 2026. In its Response, the Bureau proposed certain changes to the Amended Rules and identified why the Bureau believes certain proposed revisions cannot or should not be made. The Bureau also proposed additional revisions as clarifications to the Amended Rules.

The Bureau has recommended to the Commission that the Amended Rules be adopted as proposed in its Response.

NOW THE COMMISSION, having considered this matter, concludes that the attached Amended Rules should be adopted effective March 3, 2026. The Commission declines to adopt any recommendation to further limit what constitutes a "general business practice" beyond the definition as set forth in the Amended Rules. In so doing, we clarify that we make no finding as to our authority to implement a two-tiered process for determining what constitutes a general business practice pursuant to § 38.2-3445.05 D of the Code of Virginia (Code). We further agree with the Bureau and decline to impose limitations on the good faith negotiation process. Yet, we do so without making any finding as to whether governing law affords the Commission authority to impose such limitations.

The Commission expresses appreciation to all those who filed written comments. The comments in this case were beneficial to determining how the Commission's rules can best reach the goals set at the outset of this proceeding: (1) the definitions of general business practice and good faith negotiation period; (2) the applicability of interest provisions in §§ 38.2-3407.1 and 38.2-4306.1 of the Code to any payment due from the health carrier to the provider; and, (3) the requirement for health carriers to develop and implement processes to analyze the outcome of arbitration decisions involving the same provider, Current Procedural Technology Code and geographic area in determining a commercially reasonable payment amount. Ultimately, the Amended Rules are improved.

Accordingly, IT IS ORDERED THAT:

(1) The amendments to Rules Governing Balance Billing for Out-of-Network Health Care Services at Chapter 405 of Title 14 of the Virginia Administrative Code, which are attached hereto and made part hereof, are ADOPTED effective March 3, 2026.

(2) The Bureau shall provide notice of this Order Adopting Amendments and the adopted Amended Rules to all insurers licensed in Virginia to write accident and sickness insurance and to any other interested persons as the Bureau may designate.

(3) The Commission's Office of General Counsel shall provide a copy of this Order Adopting Amendments, and the adopted Amended Rules, to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

(4) Interested persons may download unofficial copies of this Order Adopting Amendments and the adopted Amended Rules from the Commission's website: scc.virginia.gov/case-information.

(5) This case is dismissed.

A COPY hereof shall be sent by the Clerk of the Commission to: John E. Farmer, Jr., Senior Assistant Attorney General, at jfarmer@oag.state.va.us, Office of the Attorney General, Division of Consumer Counsel, 202 North 9th Street, 8th Floor, Richmond, Virginia 23219-3424; and the Commission's Office of General Counsel and the Bureau of Insurance in care of Deputy Commissioner Julie Blauvelt.

14VAC5-405-20. Definitions.

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

"Allowed amount" means the maximum portion of a billed charge a health carrier will pay, including any applicable cost-sharing requirements, for a covered service or item rendered by a participating provider or by a nonparticipating provider.

"Arbitrator" means an individual included on a list of arbitrators approved by the commission pursuant to 14VAC5-405-50.

"Balance bill" means a bill sent to an enrollee by an out-of-network provider for health care services provided to the enrollee after the provider's billed amount is not fully reimbursed by the carrier, exclusive of applicable cost-sharing requirements.

"Child" means a son, daughter, stepchild, adopted child, including a child placed for adoption, foster child, or any other child eligible for coverage under the health benefit plan.

"Clean claim" means a claim (i) that has no material defect or impropriety, including any lack of any reasonably required substantiation documentation, that substantially prevents timely payment from being made on the claim; and (ii) that includes required Internal Revenue Service documentation for the carrier to process payment. A carrier shall notify the person submitting the claim of any defect or impropriety.

"Commercially reasonable payment" or "commercially reasonable amount" means payments or amounts a carrier is required to reimburse a health care provider for out-of-network services pursuant to §§ 38.2-3445.01 and 38.2-3445.02 of the Code of Virginia.

"Commission" means the State Corporation Commission.

"Cost-sharing requirement" means an enrollee's deductible, copayment amount, or coinsurance rate.

"Covered benefits," or "benefits," or "covered services" means those health care services to which an individual is entitled under the terms of a health benefit plan.

"Dependent" means the spouse or child of an eligible employee, subject to the applicable terms of the policy, contract, or plan covering the eligible employee.

"Elective group health plan" means (i) a self-funded group health plan providing or administering an employee welfare benefit plan as defined in § 3(1) of ERISA, 29 USC § 1002(1), that is self-insured or self-funded with respect to such plan and that establishes for its enrollees a network of participating providers, or a self-funded group health plan for local government employees, local officers, teachers, and retirees, and the dependents of such employees, officers, teachers, and retirees; and (ii) elects to participate in the requirements of §§ 38.2-3445 through 38.2-3445.07 of the Code of Virginia by notifying the commission in accordance with 14VAC5-405-80.

"Emergency medical condition" means, regardless of the final diagnosis rendered to an enrollee, a medical condition manifesting itself by acute symptoms of sufficient severity, including severe pain, so that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in (i) serious jeopardy to the mental or physical health of the individual, (ii) danger of serious impairment to bodily functions, (iii) serious dysfunction of any bodily organ or part, or (iv) in the case of a pregnant woman, serious jeopardy to the health of the fetus.

"Emergency services" means [ , ] with respect to an emergency medical condition [ , ] (i) (a) a medical screening examination as required under § 1867 of the Social Security Act (42 USC § 1395dd) that is within the capability of the emergency department of a hospital, including ancillary services routinely available to the emergency department to evaluate such emergency medical condition and (ii) (b) such further medical examination and treatment, to the extent they are within the capabilities of the staff and facilities available at the hospital, as are required under § 1867 of the Social Security Act (42 USC § 1395dd (e)(3)) to stabilize the patient; and (ii) as it relates to any mental health services or substance abuse services, as those terms are defined in § 38.2-3412.1 of the Code of Virginia, rendered at a behavioral health crisis service provider as defined in § 38.2-3438 of the Code of Virginia, (a) a behavioral health assessment that is within the capability of a behavioral health crisis service provider, including ancillary services routinely available to evaluate such emergency medical condition and (b) such further examination and treatment, to the extent that they are within the capabilities of the staff and facilities available at the behavioral health crisis service provider, as are required so that the patient's condition does not deteriorate.

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

"ERISA" means the Employee Retirement Income Security Act of 1974 (29 USC § 1001 et seq.).

"Facility" means an institution providing health care related services or a health care setting, including hospitals and other licensed inpatient centers; ambulatory surgical or treatment centers; skilled nursing centers; residential treatment centers; diagnostic, laboratory, and imaging centers; and rehabilitation and other therapeutic health settings.

"General business practice" means the submission of a request for arbitration more frequently than five requests per 30-day period by [ either ] a health carrier [ , facility, ] or provider group (or sole health care professional not part of a provider group).

"Good faith negotiation period" means the 30 calendar days after the earlier of the provider's receipt of payment or payment notification from the health carrier.

"Health benefit plan" means a policy, contract, certificate, or agreement offered by a health carrier to provide, deliver, arrange for, pay for, or reimburse any of the costs of health care services. "Health benefit plan" includes short-term and catastrophic health insurance policies, and a policy that pays on a cost-incurred basis, except as otherwise specifically exempted in this definition. "Health benefit plan" also includes an elective group health plan. "Health benefit plan" does not include the "excepted benefits" as defined in § 38.2-3431 of the Code of Virginia.

"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 provider" or "provider" means a health care professional or facility.

"Health care services" means services for the diagnosis, prevention, treatment, cure, or relief of a health condition, illness, injury, or disease.

"Health carrier" or "carrier" means an entity subject to the insurance laws and regulations of the Commonwealth and 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 insurer licensed to sell accident and sickness insurance, a health maintenance organization, a health services plan, or any other entity providing a plan of health insurance, health benefits, or health care services.

"Initiating party" means the health carrier or out-of-network provider that requests arbitration pursuant to § 38.2-3445.02 of the Code of Virginia and 14VAC5-405-40.

"In-network" or "participating" means a provider that has contracted with a carrier or a carrier's contractor or subcontractor to provide health care services to enrollees and be reimbursed by the carrier at a contracted rate as payment in full for the health care services, including applicable cost-sharing requirements.

"Managed care plan" means a health benefit plan that either requires an enrollee to use, or creates incentives, including financial incentives, for an enrollee to use health care providers managed, owned, under contract with, or employed by the health carrier.

"Network" means the group of participating providers providing services to a managed care plan.

"Offer to pay" or "payment notification" means a claim that has been adjudicated and paid by a carrier or determined by a carrier to be payable by an enrollee to an out-of-network provider for services described in subsection A of § 38.2-3445.01 of the Code of Virginia.

"Out-of-network" or "nonparticipating" means a provider that has not contracted with a carrier or a carrier's contractor or subcontractor to provide health care services to enrollees.

"Out-of-pocket maximum" or "maximum out-of-pocket" means the maximum amount an enrollee is required to pay in the form of cost-sharing requirements for covered benefits in a plan year, after which the carrier covers the entirety of the allowed amount of covered benefits under the contract of coverage.

"Provider group" means a group of multispecialty or single specialty health care professionals who contract with a facility to exclusively provide multispecialty or single specialty health care services at the facility.

"Receipt" means five calendar days after mailing or the date of electronic transmittal.

"Surgical or ancillary services" means any professional services, including surgery, anesthesiology, pathology, radiology, or hospitalist services and laboratory services.

"Written" or "in writing" means a written communication that is electronically transmitted. Paper communication is discouraged.

14VAC5-405-30. Balance billing for out-of-network services.

A. Pursuant to § 38.2-3445.01 of the Code of Virginia, no out-of-network provider shall balance bill or attempt to collect payment amounts from an enrollee other than those described in subsection B of this section for:

1. Emergency services provided to an enrollee by an out-of-network provider; or

2. Nonemergency services provided to an enrollee at an in-network facility if the nonemergency services involve otherwise covered surgical or ancillary services provided by an out-of-network provider.

B. An enrollee who receives services described in subsection A of this section is obligated to pay the in-network cost-sharing requirement specified in the enrollee's or applicable group health plan contract, which shall be determined using the carrier's median in-network contracted rate for the same or similar service in the same or similar geographic area. When there is no median in-network contracted rate for the specific services provided, the enrollee's cost-sharing requirement shall be determined as provided in § 38.2-3407.3 of the Code of Virginia. An enrollee who is enrolled in a high deductible health plan associated with a Health Savings Account or other health plan for which the carrier is prohibited from providing first-dollar coverage prior to the enrollee meeting the deductible requirement under 26 USC § 223(c)(2) or any other applicable federal or state law may be responsible for any additional amounts necessary to meet deductible requirements beyond those described in this subsection, including additional amounts pursuant to subsection E of this section and owed to the out-of-network provider in 14VAC5-405-40, but only to the extent that the deductible has not yet been met and not to exceed the deductible amount.

C. When a clean claim is received pursuant to the provisions of subsection A of this section, the health carrier shall be responsible for:

1. Providing an explanation of benefits to the enrollee and the out-of-network provider that [ : (i) ] reflects the cost-sharing requirement determined under this subsection; [ and (ii) provides the out-of-network provider instructions to dispute the carrier's payment pursuant to subsection E of this section.

2. Providing the out-of-network provider instructions to dispute the carrier's payment pursuant to subsection E of this section; ]

[ 2. 3. ] Applying the in-network cost-sharing requirement under subsection B of this section and any cost-sharing requirement paid by the enrollee for such services toward the in-network maximum out-of-pocket payment obligation;

[ 3. 4. ] Making commercially reasonable payments for services other than cost-sharing requirements directly to the out-of-network provider without requiring the completion of any assignment of benefits or other documentation by the provider or enrollee;

[ 4. 5. ] Paying Negotiating with the out-of-network provider in good faith and paying any additional amounts owed to the out-of-network provider through good faith negotiation or arbitration directly to the out-of-network provider; and

[ 5. 6. ] Making available to a provider through electronic or other method of communication generally used by a provider to verify enrollee eligibility and benefits information regarding whether an enrollee's health benefit plan is subject to the requirements of this section.

D. If the enrollee pays the out-of-network provider an amount that exceeds the amount determined under subsection B of this section, the out-of-network provider shall be responsible for:

1. Refunding to the enrollee the excess amount that the enrollee paid to the provider within 30 business days of receipt of the later of payment or notice that the enrollee's managed care plan is subject to the requirements of this section; and

2. Paying the enrollee interest computed daily at the legal rate of interest stated in § 6.2-301 of the Code of Virginia beginning on the first calendar day after the 30 business days for any unrefunded payments.

E. The amount paid to an out-of-network provider for health care services described in subsection A of this section shall be a commercially reasonable amount, based on payments for the same or similar services provided in a similar geographic area. Within 30 calendar days of receipt of a clean claim from an out-of-network provider, the carrier shall offer to pay the provider a commercially reasonable amount. Disputes between the out-of-network provider and the carrier regarding the commercially reasonable amount shall be handled as follows:

1. If the out-of-network provider disputes the carrier's payment, no later than 30 calendar days after the earlier of receipt of payment or payment notification from the carrier, the provider shall notify the carrier in writing and both parties shall negotiate in good faith no later than 30 calendar days after the earlier of receipt of payment or payment notification from the carrier; and;

2. If the carrier and provider agree to a commercially reasonable payment amount within the good faith negotiation period, the carrier shall pay to the provider any additional amounts agreed upon within 30 calendar days of the agreement; and

3. If the carrier and provider do not agree to a commercially reasonable payment amount within the good faith negotiation period and either party acts within the required timeframes to pursue further action to resolve the dispute, the dispute shall be resolved through arbitration as provided in § 38.2-3445.02 of the Code of Virginia and 14VAC5-405-40. A carrier may not require a provider to reject or return claim payment as a condition of pursuing further arbitration.

F. A health carrier shall not be prohibited from (i) informing enrollees in a nonemergency situation of the availability of in-network facilities that employ or contract with only in-network providers that render surgical and ancillary services; or (ii) offering plan designs that encourage enrollees to utilize specific in-network health care providers.

[ G. A health carrier shall develop and implement processes to analyze the outcome of arbitration decisions involving the same provider, CPT code, and geographic area in determining a commercially reasonable payment amount. ]

14VAC5-405-40. Arbitration process.

A. If a good faith negotiation does not result in resolution of the dispute, the health carrier or provider may initiate arbitration by providing the notice of intent to arbitrate form to the commission and the non-initiating party within 10 calendar days following completion of the good faith negotiation period. The notice shall state the initiating party's final payment offer. Failure to timely submit the notice of intent to arbitrate form shall negate the party's opportunity to seek arbitration for the claim that was the subject of the untimely notice.

B. Nothing shall prevent both parties from continuing to negotiate after the good faith negotiation period. Agreement between the parties may be reached at any time in the process. The arbitration will then be terminated. The claim shall then be paid within 10 calendar days and the matter closed upon agreement.

C. The commission shall maintain a list of qualified arbitrators and each arbitrator's fixed fee on its website.

1. Within five calendar days of the notice of intent to arbitrate, the initiating party shall notify the commission of either agreement on an arbitrator from the list or that the parties cannot agree on an arbitrator.

2. If the parties cannot agree on an arbitrator, within five calendar days the commission shall provide the parties with the names of five arbitrators from the list. Within five calendar days, each party is responsible for reviewing the list of five arbitrators and notifying the commission if there is an apparent conflict of interest with any of the arbitrators on the list. Each party may veto up to two of the named arbitrators. If one name remains, that arbitrator shall be chosen. If more than one name remains, the commission shall choose the arbitrator from the remaining names.

3. Once the arbitrator is chosen, the commission shall notify the parties and the arbitrator within five calendar days.

4. The arbitrator's fee is payable within 10 calendar days of the assignment of the arbitrator with the health carrier and the provider to divide the fee equally.

D. Both parties shall agree to and execute a nondisclosure agreement within 10 business days following receipt of the notice of intent to arbitrate.

E. Within 30 calendar days following receipt of the notice of intent to arbitrate, each party shall provide written submissions in support of its position as well as the final payment offers directly to the arbitrator. At this time, the non-initiating party also shall provide its final offer to the initiating party. Each party shall include in its written submission the evidence and methodology for asserting that the amount proposed to be paid is or is not commercially reasonable. Any party that fails to make a written submission required by this subsection without good cause shown will be in default. The arbitrator shall require the defaulting party to pay or accept the final payment offer of the non-defaulting party and may require the defaulting party to pay the entirety of the arbitrator's fee.

F. The arbitrator shall consider the following factors in reviewing the submissions of the parties and making a decision requiring payment of the final offer amount of either the initiating or non-initiating party:

1. The evidence and methodology submitted by the parties to assert that their final offer amount is reasonable;

2. Patient characteristics and the circumstances and complexity of the case, including time and place of service and type of facility, that are not already reflected in the provider's billing code for the service;

3. The arbitrator may also consider other information that a party believes is relevant as part of their original written submission, including data sets developed pursuant to § 38.2-3445.03 of the Code of Virginia. The arbitrator shall not require extrinsic evidence of authenticity for admitting such data sets.

G. Within 15 calendar days after receipt of the parties' written submissions, the arbitrator shall issue a written decision requiring payment of the final offer amount of either of the parties. The arbitrator shall notify the parties and the commission of this decision. The decision shall include an explanation by the arbitrator of the basis for the decision and factors relied upon in making the decision and copies of all written submissions by each party. The decision shall also include information required to be reported to the commission, including the name of the health carrier, the name of the provider, the provider's employer or business entity in which the provider has an ownership interest, the name of the facility where services were provided, and the type of health care service at issue. The claim shall be paid within 10 calendar days after the arbitration decision.

H. Within 30 calendar days of receipt of the arbitrator's decision, either party may appeal to the commission in accordance with the provisions of 5VAC5-20-100 B based only on one of the following grounds: (i) the decision was substantially influenced by corruption, fraud, or other undue means; (ii) there was evident partiality, corruption, or misconduct prejudicing the rights of any party; (iii) the arbitrator exceeded his powers; or (iv) the arbitrator conducted the proceeding contrary to the provisions of § 38.2-3445.02 of the Code of Virginia and commission rules, in such a way as to materially prejudice the rights of the party.

I. A single provider is permitted to bundle claims for arbitration. Multiple claims may be addressed in a single arbitration proceeding if the claims at issue (i) involve identical health carrier or administrator and provider parties; (ii) involve claims with the same or related Current Procedural Technology (CPT) codes, Healthcare Common Procedure Coding System (HCPCS) codes, or in the case of facility services, Diagnosis Related Group (DRG) codes, Revenue Codes, or other procedural codes relevant to a particular procedure, and (iii) occur within a period of two months of one another. Provider groups are not permitted to bundle claims for arbitration if the health care professional providing the service is not the same.

J. All written submissions and notifications required under this section shall be submitted electronically. Individual information related to any arbitration is confidential and not subject to disclosure.

K. Pursuant to § 38.2-3445.05 of the Code of Virginia, no health carrier or provider shall initiate arbitration with such frequency as to indicate a general business practice.

L. Any payments due from the health carrier to the provider shall be subject to the interest provisions in § 38.2-3407.1 or 38.2-4306.1 of the Code of Virginia, as applicable. [ The date of the negotiated agreement or arbitration decision should be considered the date of "receipt of proof of loss" for the purpose of the computation of interest. ]