Thursday, February 21, 2013
HHS Releases Final Rule on Essential Health Benefits and Related Provisions
The Department of Health and Human Services (HHS) on Feb. 20 issued a final rule that establishes standards and requirements implementing the Patient Protection and Affordable Care Act’s (ACA) essential health benefits (EHB) provision, and includes calculation of the actuarial value of health plans, and health plan accreditation.
The EHB sets the parameters for the types of benefits that must be offered by insurers starting in 2014. The definition of EHB is critical to determining whether the health coverage purchased includes the required range of services to ensure a meaningful benefit for the consumer.
Disappointingly, few changes were made in response to public comments, including those by the AHA and other provider organizations. In many cases, HHS indicated it would monitor state and health plan performance, with a view toward making needed modifications to the definition of EHB for 2016. Overall, the AHA remains concerned that HHS’s approach in the final rule may have granted states and health plans too much flexibility – undermining the ACA’s goal of extending meaningful and affordable coverage to the millions of people who are currently uninsured or underinsured. Also, the degree to which health plans can deviate from their state’s EHB benchmark may continue to allow so many benefit variations from plan to plan that comparison shopping by consumers will continue to be difficult.
Highlights of the rule follow.
Essential Health Benefits: The ACA requires that non-grandfathered health plans in the individual and small group markets, both inside and outside the health insurance exchanges, include a core set of EHB. According to the ACA, the EHB are required to include products and services in 10 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.
The final rule keeps in place the proposed benchmark approach for determining a plan’s compliance with the EHB. The benchmark plan the state selects is intended to reflect the scope of services offered by a “typical employer plan” in that state. States can choose from four benchmark approaches:
1. One of the three largest small group plans in the state by enrollment;
2. One of the three largest state employee health plans by enrollment;
3. One of the three largest federal employee health plan options by enrollment; or
4. The largest HMO plan offered in the state’s commercial market by enrollment.
EHB State and Health Plan Flexibility: The final rule grants considerable flexibility to state governments and health plans in three areas:
1. States can choose from among the benchmark plan options;
2. States can modify the benchmark to conform to ACA EHB requirements through a supplementation process; and
3. Issuers can offer health plans that deviate from the state benchmark in a variety of ways, including substitution of services within any of the 10 EHB categories.
The final rule prohibits health plans from creating benefit designs that would discriminate against current and future enrollees. But the rule gives health plans wide latitude to substitute services within any benefit category, as long as the substitution is actuarially equivalent. As the AHA stated in comments on the proposed rule, the effect of this provision is that plans are allowed to deviate from their state’s EHB definition, and the only real standard for the benefit is cost. Furthermore, those substitutions may not be readily apparent in the general benefit summaries that will be made available, resulting in a lack of transparency for consumers about what is covered.
If the chosen benchmark plan lacks any of the required ACA categories, states must supplement the benchmark plan with the lacking benefit or service. Supplementation of services is expected for habilitative services – those designed to assist individuals in acquiring, retaining, and improving self-help, socialization and adaptive skills – which are not typically covered by individual and small group plans. The final rule gives states wide latitude to define habilitative services. While the rule suggests that a state provide parity between the habilitative benefit and the rehabilitative benefit, the rule allows health plan issuers to design their own approach to habilitative services, as long as they report it to HHS. While HHS states it will monitor the habilitative services issue, no oversight plan is outlined in the final rule. The AHA, in comments to the proposed rule, stated that a clearly defined habilitative service is critically important for lifelong developmental and health care needs, particularly for children. The lack of a clear definition in this final rule remains a concern.
Also, state-mandated benefits enacted before Dec. 31, 2011, can be included in a state’s EHB package even though they may not yet be implemented and reflected in their benchmark option, so that the state does not need to pay the cost of those benefits, as would otherwise be required by the ACA. The appendix of the rule lists state EHB-benchmark plans, as well as the federally determined default benchmark plan for a state if it fails to select a benchmark plan.
Actuarial Value (AV): The AV is calculated as the percentage of total average costs for benefits that a plan will cover, with the remainder of the plan’s cost the responsibility of the enrollee. The final rule closely follows the proposed rule, retaining some flexibility in determining the AV of the plans that can be offered and sold in the individual and small group market, with the EHB as its base.
The ACA requires four levels of plans – “metal levels” from bronze to platinum –that vary based on the percentage of the AV paid by the plan. The final rule gives health plans a 2 percentage point leeway on both sides of a metal plan level; for example, silver plans, which must have a 70 percent AV, are acceptable if they have a score ranging between 68 percent and 72 percent. To streamline and standardize the calculation of AV for health plan issuers, initially all will use HHS’s publicly available AV calculator, using a national standard population. Beginning in 2015, HHS will accept state-specific data sets for the standard population if states choose to submit alternate data.
Health Plan Accreditation: HHS has included in the rule the process for recognizing additional accrediting bodies for qualified health plan certification beyond the two announced in November 2012: the National Committee for Quality Assurance and URAC (formerly known as the Utilization Review Accreditation Commission). As proposed, the rule will allow health plans not yet accredited to participate while seeking accreditation as long as they meet other requirements.