Trish Neely, CFCI
What are essential health benefits? With publication of a bulletin by HHS in December, we are getting closer to knowing. This is important news given that by 2014, all Insurance policies must cover these benefits in order to be certified and offered in the states’ Exchanges, and all Medicaid state plans must cover these services.
On December 16, 2011, the Department of Health and Human Services (HHS) issued a bulletin outlining the approach that HHS intends to pursue in rulemaking to define essential health benefits. In the bulletin, HHS characterizes its approach as comprehensive and flexible to the states.
Under the Patient Protection and Affordable Care Act (PPACA), Essential Health Benefits (EHBs) are defined as “a set of health care service categories that must be covered by certain plans, beginning in 2014” and “include items and services within at least the following 10 categories:
- ambulatory patient services;
- emergency services;
- maternity and newborn care;
- mental health and substance use disorder services, including behavioral health treatment;
- prescription drugs;
- rehabilitative and habilitative services and devices;
- laboratory services;
- preventive and wellness services and chronic disease management; and
- pediatric services, including oral and vision care.”
EHBs within the 10 categories will be defined using a benchmark approach. Each state will be given the flexibility to select a benchmark plan that reflects the scope of services offered by a “typical employer plan” to best meet the needs of its citizens. The benefits and services included in the benchmark health insurance plan selected by the state would constitute the essential health benefits package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.
State Exchanges. States will be able to choose one of the following benchmark health insurance plans:
- One of the three largest small group plans in the state by enrollment;
- One of the three largest state employee health plans by enrollment;
- One of the three largest federal employee health plan options by enrollment;
- The largest HMO plan offered in the state’s commercial market by enrollment.
If states choose not to select a benchmark, then under the HHS proposal, the default benchmark will be the small group plan with the largest enrollment in the state.
To prevent federal dollars going to state benefit mandates, PPACA requires states to defray the cost of benefits required by state law in excess of EHBs for individuals enrolled in any plan offered through an Exchange. However, as a transition in 2014 and 2015, some of the benchmark options will include health plans in the state’s small group market and state employee health benefit plans.
Group and Individual Health Plans. To meet the EHB coverage standard, health plans may offer benefits that are “substantially equal” to the benchmark plan selected by the state and modified as necessary to reflect the 10 coverage categories. Health plans also would have flexibility to adjust benefits, including both the specific services covered and any quantitative limits, provided they continue to offer coverage for all 10 statutory EHB categories and the coverage has the same value. According to the HHS bulletin, “permitting flexibility will provide greater choice to consumers, promoting plan innovation through coverage and design options, while ensuring that plans providing EHBs offer a certain level of benefits.”
If you are thinking that this is not such a big deal because your plan already provides comprehensive coverage you may be right. A recent survey conducted by the National Association of Health Underwriters (NAHU) of more than 1,100 NAHU members who provide health insurance coverage to employers of all sizes shows employees already receive comprehensive health insurance coverage.
To view NAHU’s complete survey results by small or large employer use the following links:
Important Note to our readers:
The HHS Bulletin as reported above represents the intended regulatory approach. HHS will continue to take public comments through January 31, 2012 and may modify its final approach. The Institute of Medicine (IOM) has submitted comments that encourage regulators to make sure that coverage is comprehensive and affordable. We could not agree more.
To comment: EssentialHealthBenefits@cms.hhs.gov.