The Department of Health and Human Services Feb. 20 issued a final rule establishing
benefits that must be covered beginning in 2014 by individual and small group
plans that took effect since passage of the Affordable Care Act in March
The 149-page final rule, scheduled for publication in the Feb. 25 Federal
Register, implements a requirement in the ACA that the plans cover essential
health benefits (EHBs) for 10 categories of care, including basic services such
as hospitalization and emergency care, as well as mental health and maternity
care. In addition, the plans must cover a minimum of 60 percent of the actuarial
value of covered medical services. The rule applies to plans sold within the
online health insurance exchange markets that will be created under the ACA, as
well as to plans sold outside of the exchanges.
HHS Feb. 20 also released a report, Affordable Care Act
Will Expand Mental Health and Substance Use Disorder Benefits and Parity
Protections for 62 Million Americans, that details how EHBs will expand
mental health and substance use disorder benefits and federal laws requiring
that mental health benefits be equal to, or have “parity” with, other health
benefits in the individual and small group markets.
The rule (CMS-9980-F) finalizes an HHS proposed rule allowing states to
designate health plans operating in their states to be benchmarks for EHBs,
which are to match typical employer plans. HHS will designate the largest small
group plan operating in states that do not designate benchmark plans. In 2016,
HHS will reassess the process.
Twenty-seven states and the District of Columbia have picked benchmark plans,
and 23 states have not, according to the National Academy for State Health
The final rule also sets out standards under which qualified health plans
(QHPs) that will be offered in the exchanges must be accredited. The exchanges
open for enrollment Oct. 1 for plans that take effect in 2014.
The rule “will help consumers compare and select health plans in the
individual and small group markets based on what is important to them and their
families,” HHS said in a statement. “People can make these choices knowing these
health plans will cover a core set of critical benefits and can more easily
compare the level of coverage based on a uniform standard. Further, these
provisions help expand choices and competition on the Marketplaces,” it said,
referring to the exchanges.
Little appears to have been changed in the final rule from the proposed rule
(30 HRR 1265, 11/26/12), according to Timothy Jost, a law professor at
Washington and Lee University in Lexington, Va., who is also a consumer
representative to the National Association of Insurance Commissioners.
One change in the final rule gives “states authority to regulate substitution
of benefits where plans substitute actuarial equivalent benefits for the base
benchmark plan benefits,” he told BNA. That could give states power “to regulate
if not prohibit substitution of benefits.”
Business groups and insurers have cautioned that the comprehensive set of
EHBs goes beyond what most individual market consumers purchase today. EHBs,
along with other ACA requirements, are likely to result in sharp premium
increases, especially for young, healthy individual plan consumers, they
America's Health Insurance Plans President and Chief Executive Officer Karen
Ignagni issued a statement applauding the final rule for “giving states more
control over their benchmark plans and preserving flexibility in benefit
“At the same time, the minimum essential health benefits standard will still
require many individuals and small businesses to purchase coverage that is more
comprehensive and more expensive than they choose to purchase today,” Ignagni
“Today's rule on essential health benefits goes beyond just the cost of
providing health care coverage,” Neil Trautwein, vice president and employee
benefits policy counsel for the National Retail Federation, said in a statement.
“It goes to the fundamental future--the stability or not--of employer-based
health coverage under the Affordable Care Act.” The retail industry employs many
low-wage employees, often without offering employer-sponsored health
In releasing the final rule, HHS explained that in the past, nearly 20
percent of individual plans did not provide mental health services, and nearly a
third had no coverage for substance use disorder services. The final rule
includes those services as EHBs and applies federal parity protections to those
benefits. Those provisions will protect some 62 million more Americans, it
The final rule clarified that if states choose benchmark plans that are not
compliant with the parity provisions, those states “would need to make changes
to the benefit to become parity compliant,” Pamela Greenberg, president and
chief executive officer of the Association for Behavioral Health and Wellness,
“The final rule states that a state would not have to pay for the additions
that they need to make to become parity compliant because parity compliant is
part of the essential health benefit, and therefore states are not responsible
for that additional cost” under the ACA, Greenberg said.
The final rule makes it clear that plans must have an “exceptions process”
for prescription drugs, Jost said. “If you need a drug not on the formulary
there will be an exceptions process for you to get access to a drug,” he said.
“That's very important to people who need drugs not on the formulary.”
Carl Schmid, deputy executive director of the AIDS Institute, which had
lobbied with other patient groups to require plans to cover more prescription
drugs, told BNA that HHS “addressed our concerns in the final rule.”
However, Schmid added, “[w]e still are concerned that patients, depending on
what state they live in, will have a wide difference in the number of drugs they
can access.” HHS is relying on ACA prohibitions against discrimination to
protect patients, he said. “That still does not address the wide variation from
state to state. One state can have 500 drugs on a plan while another will have
to have over 1,000. While acknowledging that plans can cover new drugs, they
still have not proposed a process for them to be covered, thus potentially
denying patients … new life saving therapies.”
The final rule also clarifies how stand-alone dental plans can be used to
supplement benchmark plans, William Schiffbauer, of the Schiffbauer Law Office
in Washington, D.C., told BNA.
“The rule clarifies in a positive sense the treatment of stand-alone dental
plans to offer the pediatric dental benefit in the individual and small group
market outside the exchanges,” Schiffbauer said. “The agency clarified that in
the market outside the exchange the EHB requirement is satisfied when an
individual has a medical plan combined with a stand-alone dental plan.”
The final rule also clarifies that pediatric vision plans can also be used to
supplement benchmark plans, Schiffbauer said.
The Office of Management and Budget reviewed the rule as “economically
significant,” meaning it has “economically significant effects” of $100 million
or more in one year.
By Sara Hansard
Text of the final rule on essential health benefits is available at http://op.bna.com/hl.nsf/r?Open=bbrk-954m76
and the report at http://op.bna.com/dlrcases.nsf/r?Open=kpin-955u7c.