Last week, the Department of Health and Human Services (HHS) issued a bulletin (pre-regulation guidance) on the Essential Health Benefits (EHB) package in an effort to give states the information needed to begin constructing the Exchanges as well as the requirements for qualified health plans sold through the Exchanges. The EHB package, which must be offered by insurers in most policies sold to individuals and small businesses both in and out of the Exchange, is arguably one of the most important aspects of the federal health reform law.
States to determine benchmark EHB plan
Under HHS’ intended approach, states would have the flexibility to select an existing health plan to set the “benchmark” for the items and services included in the EHB package. This gives states the option to select a plan that would be equal in scope to the services covered by a typical employer plan in their state, with additional flexibility to adjust with the market as innovative plan designs are developed and advancements in care become available. States will base their package on the benefits offered by: one of the three largest state employee health plans (by enrollment); one of the three largest federal employee health plans; the largest HMO plan offered in the state; or one of the three largest small-group plans in the state. The benefits and services included in the selected health plan would then be considered the EHB package for the state.
Consistent with the Affordable Care Act (ACA), 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. The bulletin addresses only the services and items covered by a health plan, not the cost sharing—such as deductibles, copayments, and coinsurance—that will be required by a qualified health plan. The cost-sharing features and rules will be addressed in future bulletins.
State mandates
The Institute of Medicine (IOM) issued guidance a few months ago that stressed the importance of affordability in an EHB package, along with stressing that only state mandates that are evidence-based should be included in the EHB package. The HHS bulletin has somewhat deviated from the IOM’s guidance, in that it does not specifically address cost and offers a different solution for state mandates. To prevent federal dollars paying for state benefit mandates, the ACA requires states to pay the cost of state mandated benefits (in excess of the EHB package) for individuals enrolled in any plan offered through an Exchange. However, the bulletin provides that as a transition in 2014 and 2015, state mandates included in the benchmark plans would be included in the EHB package for that state, without requiring the state to pay for the cost.
What we are hearing
Patient advocates previously called for a broad national EHB standard that would cover a wide range of treatments, while business groups have said affordability must be a top consideration, even if it means a more limited package. Both segments appear to have concern with the bulletin. It does not address cost as a consideration for the establishment of the EHB package to satisfy the business groups, nor does it address consumer advocate concerns by creating a national standard that will “beef up” plans in states with minimal state mandated coverage. Furthermore, the bulletin continues the uncertainty faced by insurers, consumers and employers over exactly what will be covered in the EHB package.
To add confusion, the issuance of a bulletin by HHS was an unexpected twist, as the issuance of a Proposed Rule and/or Request for Information is the normal protocol for regulations of this kind. It has been speculated that the administration specifically chose to issue a bulletin as it does not have to provide definitive economic estimates of the proposal or determine regulatory impact on small business. Additionally, allowing states to make the decision on the EHB package that works the best for them saves the administration the potential political backlash from not including specific benefits in the package.
Next steps
All eyes are on Washington state as to which option it will choose as its benchmark plan. As a mandate-heavy state, it will be particularly interesting to see how Washington will impose restrictions on the EHB package in an effort to keep coverage affordable in the post-2014 market. Will there be a continued push for additional mandates at the state level, or will the legislature begin to review the current mandates on the books? Either way, HHS has given the state some time to transition current mandates and develop an EHB package that will offer Washingtonians access to affordable adequate coverage.
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