{"id":128437,"date":"2025-08-08T07:08:15","date_gmt":"2025-08-08T07:08:15","guid":{"rendered":"https:\/\/www.europesays.com\/us\/128437\/"},"modified":"2025-08-08T07:08:15","modified_gmt":"2025-08-08T07:08:15","slug":"virginia-bureau-of-insurance-issues-guidance-clarifying-material-change-and-required-notifications-for-managed-care-health-insurance-plans-healthcare","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/128437\/","title":{"rendered":"Virginia Bureau Of Insurance Issues Guidance Clarifying Material Change And Required Notifications For Managed Care Health Insurance Plans – Healthcare"},"content":{"rendered":"

On July 22, the Virginia Bureau of Insurance
\n(BOI<\/strong>) issued Administrative Letter 2025-02 (the
\nLetter<\/strong>) to all licensed insurers writing Managed
\nCare Health Insurance Plans (MCHIPs<\/strong>) in Virginia.
\nThe Letter clarifies what constitutes a “material change”
\nand thereby also clarifies when an attendant filing is required to
\nbe submitted to the BOI.[2]<\/a> Specifically, the Letter provides
\ncommentary on Virginia Code Section 38.2-5802(D), which states as
\nshown directly below (emphasis added) and which governs the
\nmaterial change scenario.<\/p>\n

D. No MCHIP shall be operated in a manner that is materially
\nat variance with the information submitted pursuant to this
\nsection. Any change in such information which would result
\nin operational changes that are materially at variance with the
\ninformation currently on file with the Commission<\/strong> shall be
\nsubject to the Commission’s prior approval. If the Commission
\nfails to act on a notice of material change within thirty days of
\nits filing, the proposed changes shall be deemed approved.
\nA material change in the MCHIP’s health care delivery
\nsystem shall be deemed to result in operational changes that are
\nmaterially at variance with the information on file<\/strong> with
\nthe Commission. The Commission may determine that other
\nchanges are material<\/strong> and may require disclosure to secure
\nfull and accurate knowledge of the affairs and condition of the
\nhealth carrier.<\/p>\n

The Letter provides an overview of the terms of the above-quoted
\nsection, and then the BOI states: “Changes in service area may
\nconstitute a material change if the financial operations of a MCHIP
\nare affected as detailed in this letter,” and “Other
\npotential material changes include a change in the network or
\ntiered networks impacting financial operations.” The BOI then
\nprovides Filing Instructions and a Material Change Checklist. In
\nthe Filing Instructions, the BOI re-enunciates its standard for
\nfiling a material change in Items 1 and 2 (emphasis added):<\/p>\n

1. As provided by statute, a health carrier shall file a
\nrequest for approval prior to effecting a change which is
\nmaterially at variance with information currently on file with the
\nCommission. Health carriers must consider the significance of
\nanticipated changes and seek prior approval of any change which can
\nbe reasonably identified as having a material impact at any
\ntime in the foreseeable future<\/strong> on an MCHIP’s health
\ncare delivery system. The health carrier’s decision not
\nto seek prior approval must be supported by reasonable and
\ndocumented consideration<\/strong> of materiality. Failure to file
\nnotice of a material change shall be deemed a violation of \u00a7
\n38.2-5802 D of the Code subject to penalty pursuant to
\n\u00a7 38.2- 218 of the Code<\/strong>.<\/p>\n

2. As a general guideline, changes requiring prior approval
\npursuant to \u00a7 38.2-5802 D of the Code include
\nany change that is likely to increase or decrease the
\nhealth carrier’s revenues, expenses, or net worth (capital and
\nsurplus) in an amount that exceeds 5% of the health carrier’s
\ncurrent net worth<\/strong>. Anticipated changes shall
\ninclude the impact on the<\/strong> remaining current year
\ntotal expense, revenues and net worth, and projected impact on the
\nnext two calendar years<\/strong>. If a change of 5% is noted in any
\nof the three time periods, prior approval is required. For purposes
\nof this calculation, “current net worth” means the health
\ncarrier’s net worth as detailed by the most recently filed
\nannual or quarterly financial statement.<\/p>\n

These reflections of the statutory standard appear framed to
\nclarify the BOI’s broad interpretation of the material change
\ntrigger in the statute while also providing some useful guidelines.
\nFirst, the BOI makes clear that it expects for there to be both
\nreasonable and documented consideration of why certain changes are
\nnot “material changes” requiring prior approval.
\nCompliance personnel should make note of this expectation as it
\nimplies that documented compliance procedures should be created for
\nevents that arguably approach, but do not cross, the materiality
\nline for prior approval.<\/p>\n

Second, the BOI provides a financial threshold against which
\ncarriers can mark the reasonableness of their analysis, for changes
\n“likely to increase or decrease the health carrier’s
\nrevenues, expenses, or net worth (capital and surplus) in an amount
\nthat exceeds 5% of the health carrier’s current net
\nworth.” Presumably, if a change is unlikely to increase or
\ndecrease those financial metrics in excess of 5% of net worth, that
\nfact could be used as a component of compliance personnels’
\ndocumented consideration of a non-materiality.<\/p>\n

Third, the BOI describes a temporal scope for the 5% threshold
\nanalysis that includes impacts in the current and subsequent two
\ncalendar years. This likewise leads to a potential presumption that
\nif a change is unlikely to increase or decrease net worth in the
\nnext three years, then compliance personnel could document that
\nfact as part of their consideration as to why a change is not
\nmaterial.<\/p>\n

Last, the BOI calls out the potential penalties for violation of
\nthe requirement to file a material change, citing to Virginia Code
\nSection 38.2-218. That Section provides for a US$5,000 penalty per
\nknowing or willful violation, a US$1,000 penalty for violation
\nwithout knowledge or intent (aggregate of US$10,000), and provision
\nfor restitution if\/as applicable.[3]<\/a><\/p>\n

[1]<\/a> Virginia Code Section 38.2-5800 defines
\nMCHIP as shown below:<\/p>\n

“Managed care health insurance plan” or
\n“MCHIP” means an arrangement for the delivery of health
\ncare in which a health carrier undertakes to provide, arrange for,
\npay for, or reimburse any of the costs of health care services for
\na covered person on a prepaid or insured basis which (i) contains
\none or more incentive arrangements, including any credentialing
\nrequirements intended to influence the cost or level of health care
\nservices between the health carrier and one or more providers with
\nrespect to the delivery of health care services and (ii) requires
\nor creates benefit payment differential incentives for covered
\npersons to use providers that are directly or indirectly managed,
\nowned, under contract with or employed by the health carrier. Any
\nhealth maintenance organization as defined in \u00a7 38.2-4300 or
\nhealth carrier that offers preferred provider contracts or policies
\nas defined in \u00a7 38.2-3407 or preferred provider subscription
\ncontracts as defined in \u00a7 38.2-4209 shall be deemed to be
\noffering one or more MCHIPs. For the purposes of this definition,
\nthe prohibition of balance billing by a provider shall not be
\ndeemed a benefit payment differential incentive for covered persons
\nto use providers who are directly or indirectly managed, owned,
\nunder contract with or employed by the health carrier. A single
\nmanaged care health insurance plan may encompass multiple products
\nand multiple types of benefit payment differentials; however, a
\nsingle managed care health insurance plan shall encompass only one
\nprovider network or set of provider networks.<\/p>\n

[2]<\/a> The Letter is available at https:\/\/pxl-sccvirginiagov.terminalfour.net\/prod01\/channel_3\/media\/sccvirginiagov-home\/regulated-industries\/insurance\/insurance-companies\/administration-of-insurance-regulation-in-virginia\/administrative-letters\/AL-2025-02.pdf<\/a><\/p>\n

[3]<\/a> Virginia Code Section 38.2-218 provides as
\nshown below in its entirety:<\/p>\n

A. Any person who knowingly or willfully violates any
\nprovision of this title or any regulation issued pursuant to this
\ntitle shall be punished for each violation by a penalty of not more
\nthan $5,000.<\/p>\n

B. Any person who violates without knowledge or intent any
\nprovision of this title or any rule, regulation, or order issued
\npursuant to this title may be punished for each violation by a
\npenalty of not more than $1,000. For the purpose of this
\nsubsection, a series of similar violations resulting from the same
\nact shall be limited to a penalty in the aggregate of not more than
\n$10,000.<\/p>\n

C. Any violation resulting solely from a malfunction of
\nmechanical or electronic equipment shall not be subject to a
\npenalty.<\/p>\n

D.<\/p>\n

1. The Commission may require a
\nperson to make restitution in the amount of the direct actual
\nfinancial loss:<\/p>\n

a. For charging a rate in excess
\nof that provided by statute or by the rates filed with the
\nCommission by the insurer;<\/p>\n

b. For charging a premium that
\nis determined by the Commission to be unfairly discriminatory, such
\nrestitution being limited to a period of one year from the date of
\ndetermination;<\/p>\n

c. For failing to pay amounts
\nexplicitly required by the terms of the insurance contract where no
\naspect of the claim is disputed by the insurer; and<\/p>\n

d. For improperly withholding,
\nmisappropriating, or converting any money or property received in
\nthe course of doing business.<\/p>\n

2. The Commission shall have no
\njurisdiction to adjudicate controversies growing out of this
\nsubsection regarding restitution among insurers, insureds, agents,
\nclaimants and beneficiaries.<\/p>\n

E. The provisions provided under this section may be imposed
\nin addition to or without imposing any other penalties or actions
\nprovided by law.<\/p>\n

The content of this article is intended to provide a general
\nguide to the subject matter. Specialist advice should be sought
\nabout your specific circumstances.<\/p>\n","protected":false},"excerpt":{"rendered":"On July 22, the Virginia Bureau of Insurance (BOI) issued Administrative Letter 2025-02 (the Letter) to all licensed…\n","protected":false},"author":3,"featured_media":128438,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[210,1141,1142,67,132,68],"class_list":{"0":"post-128437","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-health-care","8":"tag-health","9":"tag-health-care","10":"tag-healthcare","11":"tag-united-states","12":"tag-unitedstates","13":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114991890639865185","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/128437","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=128437"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/128437\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/128438"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=128437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=128437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=128437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}