Written by Gary Bacher and Stephanie Willis
On Friday, December 16th, the Department of Health and Human Services (“HHS”)released its Essential Health Benefits Bulletin (the “Bulletin”) that outlines the HHS’s intended regulatory approach to defining the essential health benefits (“EHBs”) required by section 1302 of the Affordable Care Act (the “Act”). As the HHS press release states, the Bulletin will “give consumers, states, employers and issuers timely information as they work toward establishing Exchanges and making decisions for 2014.” HHS will be accepting comments on the Bulletin until January 31, 2012 via email.
Under the Act, EHBs encompass ten categories of services and items:
- 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/wellness services and chronic disease management; and
- pediatric services, including oral and vision care.
As of January 1, 2014, all ten categories of services and items must be covered by non-grandfathered plans offered in the individual and small group markets (both inside and outside of the Health Insurance Exchanges (“HIEs”)), Medicaid benchmark and benchmark-equivalent, and Basic Health Programs.
HHS’s Basic Approach
HHS’s Bulletin proposes that each State select a single “benchmark” plan from one of the following plan types and supplement it if necessary to include benefits in all ten EHB categories:
- one of the three largest small group plans in the state;
- one of the three largest state employee health plans;
- one of the three largest federal employee health plan options;
- the largest HMO plan offered in the state’s commercial market.
On the topic of State-mandated benefits, HHS indicated that it intends to provide a transitional period in 2014 and 2015 to allow States to coordinate their benefit mandates with EHB requirements while “minimizing the likelihood” that a State would be required to defray the cost of such mandates in excess of EHB. HHS then plans to evaluate the benchmark approach for the calendar year 2016 and develop an approach that may exclude some State benefit mandates from inclusion in a State’s EHB package. These provisions have potential fiscal implications for States and may also impact the level of health plan premium assistance available in a State based HIE.
HHS emphasized the concept of “benefit design flexibility.” Consistent with that concept, HHS proposed to employ a similar approach as that used in the Children’s Health Insurance Program (“CHIP”). For instance, HHS would require a health plan 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 ten coverage categories. However, health plans would be allowed to “adjust” or “substitute” benefits with respect to specific services covered and any quantitative limits, provided the health plan continues to offer coverage in all ten statutory categories. HHS indicated that it was also considering whether to allow substitution across benefit categories. For prescription drug coverage, HHS is considering allowing the same flexibility as permitted in the Medicare Part D program – health plans would be required to cover the categories and classes set forth in the benchmark, but would be permitted to choose the specific drugs to include within those categories and classes.
Initial public reaction to the Bulletin has been varied, with analysts pointing out (both positively and negatively) that the intended approach outlined by HHS suggests there may be substantial variation in benefits across the country. Whatever one’s views on the approach outlined in the Bulletin, a range of questions remain. These include “big picture” questions on topics not addressed in the Bulletin, such as the calculation of “actuarial value” – essentially the proportion of covered claims paid out in benefits –as well as implementation of EHBs in the Medicaid program. More generally, as our colleague Alden Bianchi in the Employment, Benefits, & Labor Section discussed in a recent Advisory, because the planned EHB provisions do not on their face apply to employer-sponsored coverage, the ultimate relationship, if any, between the final EHB provisions and employer-sponsored coverage through concepts such as “minimum value” will be important to watch.
The EHB Bulletin also raises a number of detail-level questions reflecting both policy and operational considerations. These include consideration of how the “substantially equal” test would be applied and administered, and the interaction of this standard with other EHB provisions such as those requiring “appropriate balance among benefit categories,” and non-discrimination based on age, disability, or expected length of life.
With these and other questions, many eyes will continue to be focused on the release of additional EHB and related guidance, and ultimately the applicable regulatory provisions themselves.