A critical problem faced by feedback-merger mechanisms is the lack of information that is discarded due to the hidden nodes in multicast trees. A node is said to be hidden from another if it is located in a sub tree that is a result from a fork in any upstream node. We propose in this paper the virtual layering scheme to avoid the problem caused by hidden-nodes in multi-layered multicast video environments. The virtual layering scheme induces intermediate nodes to keep extra states of the multicast session, which reduces the video degradation for the whole set of receivers. Furthermore, this scheme is coupled with the Direct Algorithm in order to improve the degree of satisfaction at heterogeneous receivers. The algorithm relies on a mechanism that dynamically controls the rates of the video layers and addresses scalability issues by implementing a merging procedure at intermediate nodes in order to avoid packet implosion at the source. The Virtual Layering scheme combined with the Direct Algorithm is optimized to achieve high global video quality and reduced bandwidth requirements. The results show that the proposed scheme leads to improved global video quality at heterogeneous receivers with no cost of extra bandwidth.