§ 9418. Payment for health care services

(a) Except as otherwise specified, as used in this subchapter:

(1) “Claim” means any claim, bill, or request for payment for all or any portion of provided health care services that is submitted by:

(A) a health care provider or a health care facility pursuant to a contract or agreement with the health plan; or

(B) a health care provider, a health care facility, or a patient covered by the health plan.

(2) “Contested claim” means a claim submitted to a payer, health plan, or contracting entity that does not include:

(A) sufficient information needed to determine payer liability; or

(B) reasonable access to information needed to determine the liability or basis for payment of the claim.

(3) “Contracting entity” means any entity that contracts directly or indirectly with a health care provider for either the delivery of health care services or the selling, leasing, renting, assigning, or granting of access to a contract or terms of a contract. For purposes of this subchapter, the Department of Vermont Health Access, health care providers, physician hospital organizations, health care facilities, and stand-alone dental plans are not contracting entities.

(4) “Covered entity” means an organization that enters into a contract with a contracting entity to gain access to a provider network contract. For purposes of this subchapter, the Department of Vermont Health Access is not a covered entity.

(5) “Denied” or “denial” means the circumstance in which the plan asserts that it has no liability to pay a claim, based on eligibility status of the patient, coverage of a service under the health plan, medical necessity of a service, liability of another payer, or other grounds.

(6) “Edit” or “editing” means a practice or procedure pursuant to which one or more adjustments are made to Current Procedural Terminology (CPT) codes, American Society of Anesthesiologists’ (ASA) current procedural terminology, the American Dental Association’s (ADA) current dental terminology, or Healthcare Common Procedure Coding System (HCPCS) Level II codes included in a claim that result in:

(A) payment being made based on some, but not all, of the codes originally billed by a participating health care provider;

(B) payment being made based on different codes from those originally billed by a participating health care provider;

(C) payment for one or more of the codes included in the claim originally billed by a participating health care provider being reduced by application of payer’s editing software, such as multiple procedure logic software;

(D) payment for one or more of the codes being denied;

(E) a reduced payment as a result of services provided to an insured that are claimed under more than one procedure code on the same service date; or

(F) any combination of the subdivisions in this subdivision (6).

(7) “Health care contract” or “contract” means a contract entered into, amended, or renewed between a contracting entity or health plan and a health care provider specifying the rights and responsibilities of the contracting entity and provider for the delivery of health care services to insureds, including primary care health services, preventive health services, chronic care services, and specialty health care services.

(8) “Health plan” means a health insurer, disability insurer, health maintenance organization, medical or hospital service corporation, and, to the extent permitted under federal law, any administrator of an insured or self-insured plan. “Health plan” also includes a health plan that requires its medical groups, independent practice associations, or other independent contractors to pay claims for the provision of health care services.

(9) “Health care provider” or “provider” means a person, partnership, or corporation licensed, certified, or otherwise authorized by law to provide professional health care services in this State and shall include a health care provider group, network, independent practice association, or physician hospital organization that is acting exclusively as an administrator on behalf of a health care provider to facilitate the provider’s participation in health care contracts. The term includes a hospital but does not include a pharmacist, pharmacy, nursing home, or a health care provider organization or physician hospital organization that leases its network to a covered entity or contracts directly with employers or self-insured plans.

(10) “Insured” means any person eligible for health care benefits under a health benefit plan, and includes all of the following terms: enrollee, subscriber, member, insured, dependent, covered individual, and beneficiary.

(11) “Most favored nation clause” means a provision in a health care contract that:

(A) prohibits, or grants a contracting entity an option to prohibit, a participating provider who contracts with another contracting entity from accepting lower payment for the provision of health care services than the payment specified in the first contracting entity’s contract;

(B) requires, or grants a contracting entity an option to require, the participating provider to accept a lower payment in the event the participating provider agrees to provide health care services for any other contracting entity at a lower price;

(C) requires, or grants a contracting entity an option to require, termination or renegotiation of the existing health care contract in the event the participating provider agrees to provide health care services for any other contracting entity at a lower price;

(D) requires the participating provider to disclose the participating provider’s contractual reimbursement rates with other contracting entities.

(12) “National Correct Coding Initiative,” or “NCCI” means the Centers for Medicare and Medicaid Services’ (CMS) published list of edits and adjustments that are made to health care providers’ claims submitted for services or supplies provided to patients insured under the federal Medicare program and other federal insurance programs.

(13) “Participating provider” means a health care provider that has a health care contract with a contracting entity and is entitled to reimbursement for health care services rendered to an insured under the health care contract. The term includes a hospital, but does not include a pharmacist, pharmacy, or nursing home, or a health care practitioner organization or physician-hospital organization that leases the health care practitioner organization’s or physician-hospital organization’s network to a covered entity or contracts directly with employers or self-insured plans.

(14) “Payer” means any person or entity that assumes the financial risk for the payment of claims under a health care contract or the reimbursement for health care services rendered to an insured by a participating provider under the health care contract. The term “payer” does not include:

(A) the Department of Vermont Health Access; or

(B) reinsurers that neither pay claims directly nor act as contracting entities.

(15) “Prior authorization” means the process used by a health plan to determine the medical necessity, medical appropriateness, or both, of otherwise covered drugs, medical procedures, medical tests, and health care services. The term “prior authorization” includes preadmission review, pretreatment review, and utilization review.

(16) “Procedure codes” means a set of descriptive codes indicating the procedure performed by a health care provider and includes the American Medical Association’s Current Procedural Terminology codes (CPT), the Healthcare Common Procedure Coding System Level II Codes (HCPCS), the American Society of Anesthesiologists’ (ASA) current procedural terminology, and the American Dental Association’s current dental terminology.

(17) “Product” means, to the extent permitted by State and federal law, one of the following types of categories of coverage for which a participating provider may be obligated to provide health care services pursuant to a health care contract:

(A) health maintenance organization;

(B) preferred provider organization;

(C) fee-for-service or indemnity plan;

(D) Medicare Advantage HMO plan;

(E) Medicare Advantage private fee-for-service plan;

(F) Medicare Advantage special needs plan;

(G) Medicare Advantage PPO;

(H) Medicare supplement plan;

(I) workers’ compensation plan; or

(J) any other commercial health coverage plan or product.

(b) Not later than 30 days following receipt of a claim, a health plan, contracting entity, or payer shall do one of the following:

(1) Pay or reimburse the claim.

(2) Notify the claimant in writing that the claim is contested or denied. The notice shall include specific reasons supporting the contest or denial and a description of any additional information required for the health plan, contracting entity, or payer to determine liability for the claim.

(3) Pend a claim for services rendered to an enrollee during the second and third months of the consecutive three-month grace period required for recipients of advance payments of premium tax credits pursuant to 26 U.S.C. § 36B. In the event the enrollee pays all outstanding premiums prior to the exhaustion of the grace period, the health plan, contracting entity, or payer shall have 30 days following receipt of the outstanding premiums to proceed as provided in subdivision (1) or (2) of this subsection, as applicable.

(c) If a claim is contested because the health plan, contracting entity, or payer was not provided with sufficient information to determine payer liability and for which written notice has been provided as required by subdivision (b)(2) of this section, then the health plan, contracting entity, or payer shall have 30 days after receipt of the additional information to complete consideration of the claim.

(d) A health plan, contracting entity, or payer shall acknowledge receipt of an electronic claim to the submitting party within 24 hours after the beginning of the next business day following receipt of the claim. For purposes of this subsection, the term “submitting party” means:

(1) a health care provider submitting a claim to a contracting entity, health plan, or payer; or

(2) a clearinghouse submitting a claim on behalf of a health care provider to a contracting entity, health plan, or payer.

(e) Interest shall accrue on a claim at the rate of 12 percent per annum calculated as follows:

(1) for a claim that is uncontested, from the first calendar day following the 30-day period following the date the claim is received by the health plan, contracting entity, or payer;

(2) for a nonelectronic contested claim for which notice was provided as required by subdivision (b)(2) of this section, or for an electronic contested claim for which notice and acknowledgment were provided as required in subdivision (b)(2) and subsection (c) of this section, from the first calendar day after the 30-day period following the date that sufficient additional information is received;

(3) for a nonelectronic contested claim for which notice was not provided as required by subdivision (b)(2) of this section or for which notice was provided later than the 30 days required by subdivision (b)(2) of this section, from the first calendar day after the 30-day period following the date the original claim was received by the health plan, contracting entity, or payer;

(4) for a contested electronic claim, for which notice and acknowledgment were not provided as required by subdivision (b)(2) and subsection (c) of this section, or for which notice or acknowledgment were provided later than the time required by subdivision (b)(2) and subsection (c) of this section, from the first calendar day after the 30-day period following the date the original claim was received by the health plan, contracting entity, or payer;

(5) for a claim that was denied or for which notice of denial was provided as required by subdivision (b)(2) of this section, from the first calendar day after the 30-day period following the date of a final arbitration award, judgment, or administrative order that found a plan, contracting entity, or payer to be liable for payment of the claim; and

(6) for a claim that was denied, for which notice of denial was not provided as required by subdivision (b)(2) of this section, or for which notice was provided later than the 30 days required by subdivision (b)(2) of this section, from the first calendar day after the 30-day period following the date the original claim was received by the health plan, contracting entity, or payer.

(f) The Commissioner may suspend the accrual of interest under subsection (e) of this section if the Commissioner determines that the health plan’s failure to pay a claim within the applicable time limit is the result of a major disaster, act-of-God, or unanticipated major computer system failure or that the action is necessary to protect the solvency of the health plan.

(g) All payments shall be made within the time periods provided by this section unless otherwise specified in the contract between the health plan and the health care provider or the health care facility. The health plan shall provide notice as required by subsection (b) of this section and pay interest on uncontested and contested claims as required in subsection (e) of this section from the day following the contract payment period, unless otherwise specified in the contract.

(h) A health plan in this State shall not impose on any provider any retrospective denial of a previously paid claim or any part of that previously paid claim, unless:

(1) The health plan has provided at least 30 days’ notice of any retrospective denial or overpayment recovery or both in writing to the provider. The notice must include:

(A) the patient’s name;

(B) the service date;

(C) the payment amount;

(D) the proposed adjustment; and

(E) a reasonably specific explanation of the proposed adjustment.

(2) The time that has elapsed since the date of payment of the previously paid claim does not exceed 12 months.

(i) The retrospective denial of a previously paid claim shall be permitted beyond 12 months from the date of payment for any of the following reasons:

(1) the plan has a reasonable belief that fraud or other intentional misconduct has occurred;

(2) the claim payment was incorrect because the health care provider was already paid for the health services identified in the claim;

(3) the health care services identified in the claim were not delivered by the provider;

(4) the claim payment is the subject of adjustment with another health plan; or

(5) the claim is the subject of legal action.

(j)(1) For purposes of subsections (h) and (i) of this section, for routine recoveries as described in subdivisions (A) through (J) of this subdivision (1), retrospective denial or overpayment recovery of any or all of a previously paid claim shall not require 30 days’ notice before recovery may be made. A recovery shall be considered routine only if one of the following situations applies:

(A) duplicate payment to a health care provider for the same professional service;

(B) payment with respect to an individual who was not a plan member as of the date the service was provided;

(C) payment for a noncovered service, not to include services denied as not medically necessary, experimental, or investigational in nature, or services denied through a utilization review mechanism;

(D) erroneous payment for services due to plan administrative error;

(E) erroneous payment for services where the claim was processed in a manner inconsistent with the data submitted by the provider;

(F) payment where the health care provider provides the plan with new or additional information demonstrating an overpayment;

(G) payment to a health care provider at an incorrect rate or using an incorrect fee schedule;

(H) payment of claims for the same plan member that are received by the health plan out of the chronological order in which the services were performed;

(I) payment where the health care provider has received payment for the same services from another payer whose obligation is primary; or

(J) payments made in coordination with a payment by a government payer that require adjustment based on an adjustment in the government-paid portion of the claim.

(2) Notwithstanding the provisions of subdivision (1) of this subsection, recoveries that, in the reasonable business judgment of the payer, would be likely to affect a significant volume of claims or accumulate to a significant dollar amount shall not be deemed routine, regardless of whether one or more of the situations in subdivisions (1)(A) through (1)(J) of this subsection apply.

(3) Nothing in this subsection shall be construed to affect the time frames established in subdivision (h)(2) or subsection (i) of this section.

(k) Notwithstanding this section, a health plan may not retroactively deny or recoup a pharmacy point-of-sale payment except in the circumstances of fraud, intentional misconduct, a member not receiving the prescription, or error in the processing of the claim.

(l) Nothing in this section shall be construed to prohibit a health plan from applying payment policies that are consistent with applicable federal or State laws and regulations, or to relieve a health plan from complying with payment standards established by federal or State laws and regulations.

(m) The provisions of this section shall not apply to stand-alone dental plans licensed to do business in Vermont. (Added 1997, No. 159 (Adj. Sess.), § 14a; amended 2005, No. 103 (Adj. Sess.), § 3, eff. April 5, 2006; 2007, No. 203 (Adj. Sess.), § 27, eff. June 10, 2008; 2009, No. 61, § 29; 2009, No. 156 (Adj. Sess.), § I.28; 2011, No. 171 (Adj. Sess.), § 11g; 2013, No. 79, § 5, eff. Jan. 1, 2014; 2015, No. 54, § 37; 2023, No. 6, § 231, eff. July 1, 2023.)