As many of us just finished scurrying to fulfill our children’s increasingly unrealistic holiday wish lists (my six year-old wanted a laptop and a phone hah!), it’s a fitting time to step back and think about what is essential.
Section 2707 of the Affordable Care Act (ACA) requires all non-grandfathered health insurance coverage offered in the individual or small group markets beginning in 2014 to include essential health benefits (EHB). Section 1302 then largely leaves the task of defining this term to the Secretary of HHS, as long as EHB include these ten statutorily itemized general categories:
(A) Ambulatory patient services.
(B) Emergency services.
(D) Maternity and newborn care.
(E) Mental health and substance use disorder services, including behavioral health treatment.
(F) Prescription drugs.
(G) Rehabilitative and habilitative services and devices.
(H) Laboratory services.
(I) Preventive and wellness services and chronic disease management.
(J) Pediatric services, including oral and vision care.
The statute also directed that the scope of EHB must be “equal to the scope of benefits provided under a typical employer plan.” (For more background on EHB, see Timothy Jos t’s recent blog post on Health Affairs.)
Given the complexity of establishing a national floor for coverage, it is not surprising that the statute was short on specifics, and stakeholders have been waiting for HHS to provide detailed guidance as 2014 gets closer and closer.
On December 16, 2011, the Center for Consumer Information and Insurance Oversight in HHS released a bulletin outlining HHS’s intended regulatory approach to defining EHB. After balancing “comprehensiveness, affordability, and State flexibility” along with input from various camps, HHS’s “intended regulatory approach utilizes a reference plan based on employer-sponsored coverage in the marketplace today, supplemented as necessary to ensure that plans cover each of the 10 statutory categories of EHB.” Specifically, HHS
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 . . . .
The bulletin identifies four benchmark plan types for 2014 and 2015 (HHS will assess the benchmark process for later years based on experience and feedback): (1) “the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market; (2) any of the largest three State employee health benefit plans by enrollment; (3) any of the largest three national FEHBP plan options by enrollment; or (4) the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State.” It also indicated HHS’ intent to propose a default benchmark plan if a State does not exercise its discretion to select its benchmark.
Under HHS’s intended regulatory framework, insurance providers could adopt the balance achieved by the State benchmark, but it must supplement the benchmark it if it does not include all ten ACA-required categories. HHS solicited comments regarding “options for supplementing missing categories.” HHS also intends to require plans to offer “benefits that are ’substantially equal’ to the benefits of the benchmark plan selected by the State and modified as necessary to reflect the 10 coverage categories.” It wants to provide flexibility to adjust benefits as long as there is coverage in all ten categories, and the flexibility will be “subject to a baseline set of relevant benefits.”
This bulletin raises more questions than it answers. HHS itself seeks comment on a variety of issues, including the definition of habilitative services, what to require when a benchmark plan does not cover one of the ten statutory categories, or whether to permit substitutions between (and not only within) categories, subject to “a higher level of scrutiny.” What do terms like “substantially equal” or “higher level of scrutiny” mean in practice?
On a more macro level, the bulletin raises the classic tension between centralized, prescriptive programs and those that permit states flexibility. On the one hand, permitting state flexibility may ease states’ objections to federal interference with insurance regulation, and permit experimentation to reflect local circumstances. As the bulletin recognizes, all states have their own benefit mandates, so the less prescriptive the federal EHB definition, the lower the risk it will conflict with state-specific mandate requirements.
Yet with devolution comes the possibility that state decisions will frustrate the achievement of the ACA’s policy goals. It remains to be seen how HHS effectively will police the various state and local decision makers who will exercise this discretion to protect consumers from discriminatory behavior. How powerful will HHS’s oversight be? For example, HHS’s review of the scope of existing coverage of mental health and substance use disorder services revealed great variations in coverage. How much variation is acceptable? What is the substance of the “baseline set of relevant benefits” that is supposed to limit state discretion? What role will politics have in this state-by-state process?
These questions just scratch the surface and remind us how critical it is to engage in this debate. Jason Millman , writing for Politico, noted that consumer groups have not yet taken “the sky-is-falling position” in protest of HHS’s intended regulatory approach even though they have advocated for specific, federal requirements. The sky may not be falling, but there are important policy issues in play that will benefit from careful and deliberate airing. Comments on the bulletin must be submitted by January 31, 2012 to EssentialHealthBenefits@cms.hhs.gov.
Here’s to a new year in which more of us realize the essentials we all shouldn’t have to live without. Happy and safe holidays!