States will set rules within wide categories
By David Wetzler, Senior Benefit Consultant
In a major surprise on the politically charged new health care law, the Obama administration said that it would not define a single uniform set of “essential health benefits’’ that must be provided by insurers for tens of millions of Americans.Instead, starting in January 2014, each state will have the power to determine what health benefits must be covered by health insurance policies offered within its borders.
Essential health benefits may vary within 10 broad categories which include preventive care, emergency services, maternity care, hospital and doctors’ services, and prescription drugs.
The move could lead to significant state-by-state variations in what would be covered under the health care program, much like the current differences in state Medicaid programs and the Children’s Health Insurance Program.
On December 16, 2011, the Department of Health and Human Services (HHS) issued a bulletin outlining proposed policies and the approach it intends to pursue in rulemaking for defining Essential Health Benefits (EHB). Per the Patient Protection and Affordable Care Act (PPACA), beginning on January 1, 2014, non-grandfathered Individual and Small Group plans offered inside and outside the Exchanges must cover the EHB. In addition, PPACA prohibits the use of lifetime and annual limits on the dollar amount of EHB.
In developing the regulation, HHS stated that its aim is to balance comprehensiveness, affordability, and State flexibility. It is, therefore, proposing to allow each State to select an existing health plan as a “benchmark” to establish the services and items included in the Essential Health Benefits package for 2014 and 2015.
States will choose from one of four health insurance plan options as a benchmark:
- the largest plan based on enrollment in any of the three largest small group products in the State
- any one of the three largest State employee health plans
- any one of the three largest Federal employee health plan options
- the largest HMO plan offered in the State’s commercial market
The bulletin did not address cost sharing, e.g., deductibles, copayments, and coinsurance, which will be covered in future guidance. Cost-sharing rules will determine the actuarial value of the plan. It also does not address how this state-by-state approach is to be applied to the ban on lifetime and annual limits for plans that cover people in multiple States.
However, the bulletin did reaffirm that Essential Health Benefits must include items and services within the following 10 benefit categories:
- ambulatory patient services;
- emergency services;
- hospitalization;
- 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
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