Update: Essential Health Benefits FAQs
Posted on May 9, 2012 | No Comments
On December 16, 2011, CMS released a Bulletin describing its intended approach in formal rulemaking to define the essential health benefit (EHB) provisions of the Affordable Care Act (ACA). The ACA requires that all plans sold in the individual and small group markets (both inside and outside state health benefit Exchanges) cover essential health benefits and further defines the “small group” market for purposes of essential health benefits as firms employing 100 or fewer employees (Section 2707 of the Public Health Service Act, added by PPACA §1201).
In February 2012, CMS issued a supplemental document entitled Frequently Asked Questions on Essential Health Benefits Bulletin. This supplement to the December 16th Bulletin provides answers to 22 questions arising from the December 16th Bulletin itself. Highlights are as follows:
- A single benchmark: States will be expected to select one benchmark plan as their EHB benchmark across both the individual and small group markets and both inside and outside their Exchanges. According to HHS, use of a single benchmark will reduce “administrative complexity” and will “result in a more consistent and consumer-oriented set of options.”
- Duration of a state’s initial EHB benchmark: HHS envisions an evolving benchmark, with states’ initial benchmark selected in 2012 to apply to plan years 2014 and 2015. The agency intends to “revisit this approach” for plan years starting in 2016.
- State benefit mandates; additional costs: States would need to defray the cost of state mandates that are in addition to the benefits included in state-selected benchmark plans. The largest small group plan operates as a state’s default benchmark plan which, CMS notes, typically complies with state mandates. CMS also indicates that it will revisit the question of state benefit mandates policy. Under the ACA, states must pay the full added premium cost of state mandates that are included in qualified health plans sold in state Exchanges and that exceed the scope of benefits classified as EHBs.
- State laws broadening benefit mandates applicable to the EHB benchmark: States cannot pass new legislation broadening their state benefit mandates as a means of expanding the scope of EHBs. HHS notes that state benefit mandates enacted after December 31, 2011 cannot be part of a state’s EHB benchmark in 2014 and 2015.
- State supplements to EHB benchmarks that are missing one or more of the federal EHB statutory categories of benefits: HHS indicates that it will propose rules that require states to supplement EHB benchmarks missing one or more statutory benefits. Under the proposed policy, a state would look first to the “second largest small group market benchmark plan”. If neither benchmark offers benefits in the missing categories, the state would be expected to look to the “FEHBP benchmark plan with the highest enrollment.” HHS indicates that three categories of statutory benefits – pediatric oral health, pediatric vision services, and habilitation services – typically are omitted from many health insurance plans.
- In the case of habilitation services, HHS is considering two options. Under the first, states would be expected to offer the same services covered under plans’ rehabilitation service category, and at parity. Under the second, the plan would decide which services to cover and would report this to HHS.
- In the case of oral care, HHS is considering that the state create a supplement for the EHB plan from either the Federal Employee Dental and Vision Insurance Program (FEDVIPP) with the largest national enrollment or the state’s separate Children’s Health Insurance Program plan. In the case of vision care, the frame of reference would be the FEDVIP.
- Distinguishing between plans and products: HHS notes that a “product” is the benefit package reported by an issuer in its insurance filing. By contrast, the “plan” is the benefits covered by the product, excluding all applicable riders. Where certain statutory benefits are available only as riders to a state’s EHB plan, the state would be expected to supplement the plan with its second most popular plan or the FEHBP.
- Actuarial equivalence: HHS indicates that in determining whether a plan’s coverage level is consistent with the EHB benchmark, a plan “could substitute coverage of services within each of the ten statutory categories,” so long as substitution were actuarially equivalent, as defined under CHIP regulation 42 C.F.R. §457.431. Thus, a plan could offer 10 PT services and 20 speech therapy services rather than vice versa, assuming actuarial equivalence.
- Substantial equivalence: HHS permits substantial equivalence, so that plans whose scope of benefits and coverage limitations were “substantially equivalent” to the benchmark would be permissible. Scope and duration limits would need to be consistent with federal law on matters such as annual and lifetime dollar cap prohibitions. Benchmarks including dollar limits would be incorporated into the EHB package without such limits. At the same time, plans could apply actuarial equivalence principles to create non-dollar-based limits in order to achieve “actuarially equivalent substitutions within statutory categories.”
- Self insured plans, large group plans, and grandfathered plans: CMS clarifies that these plans are not subject to the EHB requirements. HHS also notes that annual and lifetime dollar limits can apply under these plans, as long as they apply to benefits that do not fall within the statutory definition of EHBs. Thus, in large plans exempt from the EHB requirements, annual and lifetime dollar limits that apply to non-EHB categories of benefits will be permissible.
- Small group products offered to companies whose employees live in more than one state: CMS notes that the EHB benchmark would be determined by where the employer’s primary place of business is located.
- Preventive services: CMS clarifies that the federal preventive services benefit defined under the ACA (Public Health Service Act §2713) will be included as a federal EHB requirement, since the EHB benefit package includes preventive services.
- Mental health parity: CMS clarifies that mental health parity, as defined under the 2008 amendments to the parity act (known as MHPAEA), applies to the EHB benchmark.
- State-defined EHBs: CMS clarifies that states will be expected to select an EHB benchmark from the pre-existing benchmark choices outlined in the December 2011 bulletin, and will not be able to structure an EHB benchmark in a manner comparable to their ability to structure a CHIP benchmark with Secretarial approval.
- Sharing information: CMS indicates that it will provide states with information on the top three FEHBP plans, as well as the top three small group market products in each state and the largest small group plan (the default plan) based on data collected in the first quarter of 2012. States will be expected to select their benchmark in the third quarter of 2012, well ahead of the first year of plan enrollment beginning January 2014. HHS will issue guidance designed to standardize the collection of information from states regarding their EHB benchmarks. States may select their benchmark in accordance with the process that is appropriate in a given state (e.g., legislative, administrative, or a combination of the two depending on the state).
- Relationship between the Medicaid benchmark and the EHB benchmark: CMS notes that since 2006 states have had the option to offer benchmark or benchmark-equivalent coverage to certain categories of beneficiaries; in the case of Medicaid, the 2006 legislation allows states to choose among existing commercial insurance benchmarks. Alternatively, as in CHIP, states structure a benchmark equivalent requiring Secretarial approval. Under the Affordable Care Act, however, CMS interprets the amendments to the 2006 law made by the Act as requiring a state to select among possible reference plans, rather than creating its own benchmark equivalent package. If the selected EHB benchmark misses one or more of the statutory coverage categories applicable to EHBs, then CMS indicates that the state Medicaid agency would be expected to adjust the benchmark to reach all coverage categories, just as adjustments would be required in the Exchange or non-Exchange individual and small group markets. A state could, however, select a different benchmark for Medicaid from one selected for its individual and small group markets. In addition, the state could select its regular Medicaid benefit plan as its benchmark, so long as all ten statutory EHB categories are represented.
- changes in available insurance options;
- how the plan member's current plan deviates from the market reforms instituted by the ACA (i.e. no coverage of individuals with pre-existing conditions, no guaranteed issuance, etc.);
- the right and ability of a plan member to enroll in a plan through the ACA's health insurance marketplaces;
- how a plan member may enroll in a new plan through the ACA marketplaces; and
- the ability of the plan member to enroll in another plan outside of the marketplaces that adheres to ACA market reforms.