The U.S. Department of Health and Human Services (HHS) released an Essential Health Benefits Bulletin and related fact sheet on Dec. 16, 2011, outlining proposed policies intended to give states greater flexibility to implement the federal Patient Protection and Affordable Care Act.
The Affordable Care Act mandates that health insurance plans offered in the individual and small group markets provide a comprehensive package of items and services, known as “essential health benefits,” as determined by HHS. The new HHS bulletin describes an approach that would allow individual states to choose one of the following health insurance plans to set the “benchmark” for items and services included in the essential health benefits package:
• 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 health maintenance organization (HMO) plan offered in the state’s commercial market.
The benefits and services included in the health insurance plan selected by the state would be the essential health benefits package for that state. Plans could modify coverage within a benefit category so long as they did not reduce the value of coverage. If a state chooses not to select a benchmark, HHS intends to propose that the default benchmark will be the small group plan with the largest enrollment in the state.
Mandated Items and Services
Consistent with the reform law, states must ensure the essential health benefits package covers items and services in at least 10 categories of care:
• 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.
• Pediatric services, including oral and vision care.
If a state selects a plan that does not cover all 10 categories of care, the state will have the option to examine other benchmark insurance plans to determine the type of benefits that must be added to its essential health benefits package.
“More than 30 million Americans who newly have insurance coverage in 2014 will have a comprehensive benefit package,” said Sherry Glied, HHS assistant secretary for planning and evaluation, in a statement. “In addition to assuring comprehensive coverage for the newly insured, many millions of Americans buying their own insurance today will gain valuable new coverage, including more than 8 million Americans who currently do not have maternity coverage, and more than 1 million who will gain prescription drug coverage.”
Just to Clarify...
Small Group Plans and Essential Health Benefits
The Affordable Care Act defines a small employer as having at least one but no more than 100 employees. However, it provides states the option of defining small employers as having at least one but not more than 50 employees in plan years beginning before Jan. 1, 2016.
Generally, if you have fewer than 100 employees (using the definition for full-time equivalents) you will be purchasing coverage in the small group market.
Starting Jan. 1, 2014, nongrandfathered, fully insured plans in the individual and small group markets and those in the exchanges were required to provide coverage of benefits or services in the 10 categories listed above, which reflect the scope of benefits covered by a typical employer plan.
Self-insured small group plans, large group plans, and grandfathered plans are not required to offer essential health benefits.
Employers Express Concerns
Some business advocates expressed concerns that the approach could allow states to mandate a rich benefit package, particularly because the federal employees' health benefits plan is among the country's most generous packages.
"While the essential health benefits bulletin issued by HHS allows for flexibility, the devil will be in the details," said Neil Trautwein, chairman of the Essential Health Benefits Coalition, an employers group, in a released statement.
"The bulletin leaves unanswered the question of affordability in the states," he added. "Employers, health plans and state governments should have as much flexibility as possible in order to design and choose plans that are affordable and meet the needs of American families. HHS should continue to work to develop a rule that balances state-selected and reasonably comprehensive benefits with affordability for employers and individuals. A final rule that does otherwise will make health coverage more expensive for employers and individuals to purchase and make jobs more difficult for employers to create."
The HHS bulletin addresses only the services and items to be covered by health plans and not Affordable Care Act limits on cost-sharing such as deductibles, co-payments, and co-insurance. The cost-sharing features will be addressed in future bulletins and rules addressing formulas for determining the actuarial value of the plan.
Release of ‘Bulletin’ Sidesteps Important Disclosure Requirements, Republicans Charge
The Department of Health and Human Services (HHS) sidestepped several important disclosure requirements with the new health care law and is preventing Congress and the American public from being able to assess the true costs associated with the health care reform law's “essential health benefits” mandate, according to a Jan. 13, 2012, letter sent to HHS Secretary Kathleen Sebelius from several House chairmen and Senate ranking members.
The letter was signed by Energy and Commerce Chairman Fred Upton (R-Mich.), Ways and Means Chairman Dave Camp (R-Mich.), and Education and the Workforce Chairman John Kline (R-Minn.) and their counterparts in the Senate, Senator Mike Enzi (R-Wyo.), Ranking Member on the Senate Health, Education, Labor and Pensions (HELP) Committee, and Senator Orrin Hatch (R-Utah), Ranking Member on the Senate Finance Committee.
“By issuing a ‘bulletin’ rather than a proposed rule, the administration has sidestepped the requirement to publish a cost benefit analysis estimating the impact these mandates will have on health insurance premiums and the increased costs to the federal government,” the chairmen and ranking members wrote. “Additionally, the administration has avoided publishing a list of unfunded mandates on states and the private sector by issuing a ‘bulletin’ rather than a proposed rule, and has also avoided publishing a list of regulatory alternatives. Finally, the administration is not required to respond to comments received regarding this ‘bulletin.’ Publishing a ‘bulletin' rather than a proposed rule is the antithesis of an ‘open and transparent’ process.”
The letter requested HHS provide the following information by Jan. 27, 2012:
1. The legal basis and rationale for pursuing a “bulletin” rather than a proposed rule.
2. Information documenting the instances over the last 20 years when an agency pursued this type of action prior to publishing a proposed or final rule pertaining to the subject of the “bulletin.”
3. A cost benefit analysis of the “bulletin,” including an accounting statement showing the Department’s assessment of the benefits, costs, and transfers associated with this regulatory action, as well as the economic impact analysis associated with this “bulletin.”
4. All documents, emails, and data pertaining to the cost benefit analysis and the economic impact analysis of implementing the essential health benefits “bulletin,” including any unfunded mandates on the states and the private sector and any regulatory alternatives considered by the Administration.
5. A commitment that the administration staff will in the future brief Congress before briefing lobbyists and special interest groups on important issues relating to implementation of the health care law.
"The information requested by the Republican chairmen and ranking members will help ensure the public is fully informed of the consequences of the recent health care law," according to a statement issued by the Republican congressional leadership.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
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