Essential Health Benefit
See below for advocacy updates as well.
The Affordable Care Act establishes a package of essential health benefits (EHB) - a minimum level of benefits that will be required to be included in most health plans. [1] This package will apply to all new policies sold in the individual and small group markets beginning in 2014 as well to Medicaid benchmark or benchmark equivalent coverage (which will be available to many newly eligible individuals in 2014). States will have an opportunity to mandate additional benefits not included in the EHB; however, states will be required to pay for any increased private insurance premium costs stemming from the additional state mandates, even for unsubsidized plans.
Section 1302 of the Patient Protection and Affordable Care Act (Affordable Care Act) states that the EHB package must cover services in at least 10 specific 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,
- Pediatric services, including oral and vision care.
It must be equal in scope to benefits provided under a “typical employer plan” and reflect a balance among the 10 categories so that they are not unduly weighted toward any category. It also must not discriminate against individuals based on age, disability or expected length of life; and must take into account the health care needs of diverse populations like women, children, and people with disabilities.
States have an opportunity to mandate additional benefits not included in the EHB; however, states will be required to pay for any increased private insurance premium costs stemming from the additional state mandates, even for unsubsidized plans.
In New Hampshire, HB 627 (pending / re-referred 2011 legislation), as passed by the House, would prohibit the state from mandating coverage for any benefits not included in the EHB package to avoid such a state cost.
EHB Bulletin
On December 16th, 2011, the Department of Health and Human Services (HHS) issued a pre-regulatory bulletin on the Essential Health Benefits (EHB) package. Specifically, it states that “the EHB be defined by a benchmark plan selected by each State. The Selected benchmark plan would serve as a reference plan, reflecting the scope of services and any limits . . .” HHS solicited comments on the bulletin until January 31, 2012. Below is a list of questions and answers regarding the EHB Bulletin, or you can click here for a downloadable summary. Past template comments can be found below as well.
How is HHS planning to define the EHB package?
HHS proposes to define the EHB package as closely as possible to the four types of benchmark plans listed below (benchmark plans missing any of the 10 required categories of services must be supplemented). As proposed, a state would have the flexibility to choose one benchmark plan from among the total 10 possible choices. The benefit and benefit limits encompassed in this chosen plan serves as the state’s defined EHB package. If a state doesn’t select a benchmark, the default will be the largest small group plan in the state. HHS has stated that it will assess and evaluate the benchmark approach in 2016. As it is proposed in the bulletin, the benchmark plan choices are:
- The largest* plan in any of the three largest small group insurance products in the State’s small group market
- Any of the three largest State employee health benefit plans
- Any of the largest 3 national Federal Employee Health Benefit Program (FEHBP) plan options
- The largest commercial non-Medicaid HMO plan
*Largest means based on number of enrollees.
How will benchmark plans be determined and when must a state pick a benchmark plan?
The bulletin proposes that benchmark plans be determined using “enrollment data from the first quarter two years prior to the coverage year and that States will select a benchmark in the third quarter two years prior to the coverage year.” Under this guidance, benchmark plans for 2014 would be based on plan enrollment data from the first quarter of 2012 and a state would have to decide on their benchmark plan by the end of the 2012 year.
How will a state choose its EHB benchmark plan?
The bulletin does not specify how or what state entity will choose the EHB benchmark plan. Depending on state law, a state’s legislature or the executive branch might have that authority. Therefore, the process for choosing a benchmark plan may vary state by state.
The Senate Commerce Committee has amended HB 627 to direct the Joint Health Care Reform Oversight Committee to select NH’s EHB benchmark plan.
How does this EHB bulletin fit into the regulatory process?
The EHB bulletin is pre-regulatory guidance. HHS has indicated that it will issue formal proposed rules at a later date. The EHB benchmark plan approach as laid out in the released bulletin will be used for 2014 and 2015. After these two years, HHS plans on assessing the benchmark process based on feedback and evaluation.
How will the EHB bulletin affect state health insurance mandates?
Section 1311 of the Affordable Care Act requires states to defray the cost of any state-mandated benefit that exceeds what is covered under the EHB package for the enrollees of a Qualified Health Plan (QHP). Under the bulletin, states can keep their mandates until 2016 without having to defray the cost if they choose a benchmark plan that includes the state’s mandates like the small group plans. Vice-versa, if a state chooses a benchmark like the FEHBP plans, which are not subject to state mandates, they would have to defray the cost of any mandate that exceeds the covered benefits in the FEHBP plan. In 2016, HHS is re-evaluating the benchmark approach and may exclude some state mandates from the EHB package.
As a result of the ability for states to avoid any cost for mandated benefits in the short term, the Senate Commerce Committee has recommended amending SB 627 to remove any reference to changes to state mandates in light of the EHBs.
What if one of the 10 categories of services is not covered in the chosen EHB benchmark plan?
If a state chooses a benchmark that lacks coverage for any of the 10 required categories of services, they must supplement the missing category of services with benefits from another benchmark option that does cover the missing category of services. If the state has the default benchmark, they must supplement the benchmark with benefits from the next largest small group plan that has the missing benefits.
Specifically for mental health and substance use disorder services, HHS has proposed that these services must be covered at parity to medical and surgical benefits. Habiliative services must be covered at parity to rehabilitative services, but HHS is also proposing to give insurers the discretion to decide what habiliative services to cover and then report back to HHS on what they cover. Lastly, while the statutory language in Section 1302 lists the category of service as pediatric services, including oral and vision care, the bulletin proposes to require benchmark plans to only offer pediatric and vision benefits, which can be based on benefits from the Federal Employees Dental and Vision Insurance, vision benefits from a state’s CHIP program, or vision and dental benefits proposed by an insurer.
What kind of flexibility will insurers have under the EHB benchmark plan approach?
HHS is proposing to give insurers the flexibility to design health insurance plans that reference a state’s benchmark plan, so long as the benefits are substantially equal. Insurers would have the ability to substitute specific services and their quantitative limits for other services and limits within a category of services. An example given by HHS was that under rehabilitative services if a benchmark plan covers 20 occupational therapy sessions and 15 physical therapy sessions, an insurer could design a plan that instead covers 15 sessions of occupation therapy and 20 physical therapy sessions. Disconcertingly, HHS is also considering allowing insurers to swap out benefits across categories of services. That essentially means specific services under a category like maternity and newborn care could be substituted out for services under a different category of services like preventative and wellness services.
HHS is also proposing to give insurers flexibility with pharmacy benefits, similar to that of Medicare Part D. As stated in the bulletin, “if a benchmark plan offers a drug in a certain category or class, all plans [referencing the benchmark] must offer at least one drug in that same category or class, even though the specific drugs on the formulary may vary.”
What about cost-sharing and actuarial value?
The EHB bulletin does not address the cost-sharing and actuarial value provisions within the Affordable Care Act. HHS is proposing to release future and separate guidance on how it will calculate actuarial value.
Does the bulletin address how the EHB package will affect Medicaid?
Section 2001 of the Affordable Care Act states that starting in 2014 any Medicaid benchmark benefit package or benchmark equivalent coverage must provide at least the EHB package. HHS stated in the bulletin that they will issue future guidance on how the EHB package will be implemented in the Medicaid program.
Action Steps for State Advocates
- Identify what state entity will have the authority to choose the benchmark plan in their state and try to work with them
- Work with and request information from the Department of Insurance on plan descriptions and enrollment data
- Submit comments to HHS on EHB bulletins as they are announced
For copies of the most recent bulletins:
For resources shared around these bulletins:
"Essential Health Benefits: Illustrative List of the Largest Three Small Group Products by State".
Advocates can use a template comment drafted by Community Catalyst. Click here to download the template.
Quick Update: HHS released a list of FAQs to provide additional guidance on the intended approach to defining essential health benefits (EHB). The FAQs cover a variety of topics including information about the process of selecting and updating the benchmark plans, States’ responsibility with respect to State-mandated benefits, and the application of benchmarks to plans that have enrollees in multiple states. Click here for the EHB FAQ.
[1] The Essential Health Benefit package does not apply to grandfathered, large group, and self-insured plans.
