HHS issues essential health benefits bulletin

The Department of Health and Human Services (HHS) has issued a bulletin outlining the approach it intends to pursue in rulemaking to define essential health benefits. The Patient Protection and Affordable Care Act (ACA) requires health insurance plans offered in the individual and small group markets, both inside and outside of the Affordable Insurance Exchanges (Exchanges), to offer a comprehensive package of items and services, known as essential health benefits (EHB).

The bulletin addresses only the services and items covered by a health plan, not the cost sharing, such as deductibles, copayments, and coinsurance. The cost-sharing features will be addressed in future bulletins, and cost-sharing rules will determine the actuarial value of the plan.

HHS indicates that it is releasing this intended approach to give consumers, states, employers and issuers timely information as they work toward establishing Exchanges and making decisions for 2014. According to HHS, this approach was developed with significant input from the public, as well as reports from the Department of Labor, the Institute of Medicine, and research conducted by HHS.

Intended regulatory approach. The HHS bulletin indicates that its goal is to pursue an approach that will:

• encompass the 10 categories of services identified in the statute;

• reflect typical employer health benefit plans;

• reflect balance among the categories;

• account for diverse health needs across many populations;

• ensure there are no incentives for coverage decisions, cost sharing or reimbursement rates to discriminate impermissibly against individuals because of their age, disability, or expected length of life;

• ensure compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA);

• provide states a role in defining EHB; and

• balance comprehensiveness and affordability for those purchasing coverage.

Benchmark plan types. HHS indicates it intends to propose that EHB be defined by a benchmark plan selected by each state. The selected benchmark plan would serve as a reference plan, reflecting both the scope of services and any limits offered by a “typical employer plan” in that state as required by ACA Sec. 1302(b)(2)(A). This approach is based on the approach established by Congress for the Children’s Health Insurance Program (CHIP) and for certain Medicaid populations.

States are permitted to select a single benchmark to serve as the standard for qualified health plans inside the Exchange operating in their state and plans offered in the individual and small group markets in their state.

States would choose one of the following health insurance plans as a benchmark:

1) the three largest small group plans in the state;

2) the three largest state employee health plans;

3) the three largest federal employee health plan options; or

4) the largest HMO plan offered in the state’s commercial market.

The benefits and services included in the health insurance plan selected by the state would be the EHB package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.

Consistent with the law, states must ensure the EHB package covers items and services in at least ten categories of care, including preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs. If a state selects a plan that does not cover all ten categories of care, the state will have the option to examine other benchmark insurance plans, including the Federal Employee Health Benefits Plan (FEHBP), to determine the type of benefits that will be included in the EHB package.

Defraying the cost of additional benefits. ACA Sec. 1311(d)(3)(B) requires states to defray the costs of state-mandated benefits in excess of EHB for individuals enrolled in any qualified health plan either in the individual market or in the small group market. Similar to other Exchange decisions, the state may select the benchmark plan.

According to HHS, the approach for 2014 and 2015 would provide a transition period for states to coordinate their benefit mandates while minimizing the likelihood the state would be required to defray the costs of these mandates in excess of EHB. In the transitional years of 2014 and 2015, if a state chooses a benchmark subject to state mandates – such as a small group market plan – that benchmark would include those mandates in the state EHB package.

Alternatively, a state also could select a benchmark such as an FEHBP plan that may not include some or all of the state’s benefit mandates, and, therefore, under ACA Sec. 1311(d)(3)(B), the state would be required to cover the cost of those mandates outside the state EHB package.

Updating EHB. ACA Secs. 302(b)(4)(G) and (H) direct the Secretary to periodically review and update EHB. As required by the ACA, HHS will assess whether enrollees have difficulties with access for reasons of coverage or cost, changes in medical evidence or scientific advancement, market changes not reflected in the benchmarks and the affordability of coverage as it relates to EHB. HHS invites comments on approaches to gathering information and making this assessment and also encourages public input on the entire proposed approach outlined in the bulletin. Comments are due by January 31, 2012 and can be sent to EssentialHealthBenefits@cms.hhs.gov.

SOURCE: Essential Health Benefits Bulletin, Center for Consumer Information and Insurance Oversight, December 16, 2011.