Market News
HHS Identifies Its Approach for Defining Essential Health Benefits
December 23, 2011
On December 16, 2011, HHS issued a bulletin outlining the methodology it intends to follow while defining the “essential health benefits package”. As a result of Health Reform, beginning in 2014, non-grandfathered health plans in the individual and small group markets, both inside and outside the Exchanges, must ensure that benefit coverage includes the “essential health benefits” (EHB). For years 2014 and 2015, the law defines the term “small employer” as an employer who employs an average of not more than 100 employees during the year. Beginning January 1, 2016, states may define small groups as 50 employees or fewer. Grandfathered individual and small group health plans, self-insured group health plans, along with health insurance coverage offered in the large group market are not required to cover the essential health benefits. Essential health benefits will need to cover items and services in at least ten specified benefit classes. The following benefit classes are identified as essential benefits:
- Ambulatory patient services
- Emergency services
- Hospitalization
- Maternity and newborn care
- Mental health and substance use disorder services, behavioral health
- 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
HHS intends to propose that these new EHB be defined by a benchmark plan selected in each state. The intent is that this selected benchmark plan would serve as a reference, reflecting the services and limits offered by the “typical employer plan” in that state. The HHS bulletin goes on to identify four options for each state’s benchmark plan for two years, 2014 and 2015:
- any of the three largest small group plans in the state by enrollment;
- any of the three largest state employee health plans by enrollment;
- any of the three largest federal employee health plan options by enrollment; or
- the largest insured commercial HMO operating in the state by enrollment.
If a state neglects to select a benchmark health plan, the default benchmark plan would be the small group plan with the largest enrollment in the state. HHS has communicated that depending on the option selected, the benchmark plan may include state mandates. Health Reform requires that states defray the cost of state mandated benefits for individuals enrolled in the plan when the mandated benefits exceed the essential benefits requirement.
Not every benchmark plan will include coverage for all ten EHB categories. While most plans currently offer coverage for most of the EHB requirements, many plans will be absent benefits for habilitative services, pediatric oral and vision care. Because HHS intends to require that a health plan offer benefits that are “substantially equal” to the benchmark plan, it appears insurers will have some flexibility to adjust covered services and quantitative limits, provided they continue to offer coverage for ALL ten EHB categories.
Source: Essential Health Benefits Bulletin (Dec. 16, 2011)
Factsheet: Essential Health Benefits: HHS Informational Bulletin (Dec. 16, 2011)
Website: http://www.healthcare.gov/news/factsheets/2011/12/essential-health-benefits12162011a.html
