Essential health benefits: an approach to updating (part 3)

In our final post focusing on recent recommendations by the Institutes of Medicine (IOM) regarding the process HHS should use to define the essential health benefits (EHB) package, we’ll examine the approach to updating the package recommended in “Essential Health Benefits: Balancing Coverage and Cost” (go here  to access a prepublication copy of the full report). Annual updates to the EHB are expected to commence in 2016.

Cost remains key. IOM urges HHS to continue to factor the cost of the EHB package into its updating decisions. Thus, any changes to the EHB package should not result in a package that exceeds the actuarially estimated cost of the current package in the next year.

Evolution of the benefit package. While IOM acknowledges that Congress expected the EHB package to be similar in structure to existing employer benefit packages, it urges HHS to use the updating process to “improve the content and structure” of the EHB in at least three ways.



First, the scope of benefits eligible for coverage should be guided by scientific evidence documenting the medical interventions that deliver desired results. Coverage should be provided for interventions that are effective, but not for those shown to be ineffective.

Tied to the goal of utilizing evidence-based science, the second goal in updating the EHB should be to make the definitions and descriptions of what benefits are included and excluded much more specific. For example, if a drug used to control hypertension is found to be effective only in patients over age 50, then the EHB should offer not offer coverage for that use of the drug in younger patients.

Finally, the financial structure of benefit packages should reinforce the use of “high-value, necessary care.” For example, while cost-sharing, commonly used in benefit design today, reduces utilization, less utilization in the short run may not bring the best result in the long run. “Value-based insurance design” would reduce or eliminate cost-sharing for certain interventions, including maintenance drugs. (Here’s a rough example of this concept: if cost-sharing for a daily blood pressure medication is eliminated, the risk of the need for a high-cost intervention to treat a heart attack or stroke is reduced.)

Benefits advisory committee. HHS should establish a benefits advisory committee to help it with the updating process. According to the report, such a committee could offer advice to HHS on several aspects of the updating process, including benefit design issues, changes to the premium target, and appropriate mechanism for evaluating new interventions.

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