HHS: States to Determine Minimum Health Benefits Under Health Reform

There are 50 states and a few territories, and now there could be that many versions of essential benefit plans under federal health reform. That’s because the U.S. Department of Health and Human Services (HHS) is shunning a centralized approach to dictating “how much health coverage is enough;” that is, what needs to be covered under health reform’s essential health benefits (EHB) package.

The regulatory approach now suggested by HHS would let states pick a reference plan based on employer-sponsored coverage prevalent in their territory. According to this proposed bulletin on EHB implementation, states would peruse existing health plans to set the “benchmark” for the items and services included in the EHB package in their states. HHS says states may choose one of the following health insurance plans as the benchmark:

• 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; or
• the largest HMO plan offered in the state’s commercial market.

The bulletin noted that most major services are covered by most plans whether sponsored by government or private companies, small or large. The agency did note that small-employer plans tend not to cover a set of services that are covered by most federal employee health plans. On the other hand, it noted that some small employers do cover services bypassed by federal employee health plans. Flexibility must not be such a bad thing after all.

The government’s goal, HHS said, when setting up the essential benefits package is to preserve the following eight goals:

• encompass the 10 categories of services identified in the statute;
• reflect typical employer health benefit plans;
• reflect balance among the categories;
• account for diverse health needs across many populations;
• ensure there are no incentives for coverage decisions, cost sharing or reimbursement rates to discriminate impermissibly against individuals because of their age, disability, or expected length of life;
• ensure compliance with the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA);
• provide states a role in defining EHB; and
• balance comprehensiveness and affordability for those purchasing coverage.

The bulletin as it stands relates only to covered services. Cost sharing and actuarial value are not addressed.

If a state’s minimum EHB does not satisfy the feds, they can step in and require some supplemental coverage, to ensure that plans cover each of the 10 statutory categories of EHB, HHS said.

HHS is asking for input on this approach by Jan. 31, 2012.

Beginning in 2014, insurance coverage sold on exchanges and offered by employers (to satisfy health reform) will have to include the following categories of health care: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.

For more information, see these materials from HHS:

Fact sheet on the essential health benefits bulletin.

Summary of individual market coverage as it relates to essential health benefits.

Information comparing benefits in small group products and state and Federal employee plans