HHS May Let States Decide Essential Health Benefits

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By Sara Hansard

The Trump administration may give states more flexibility in stipulating health insurance benefits as part of its move toward deregulation.

Changes in regulations governing the Affordable Care Act’s essential health benefits are an area where the Department of Health and Human Services has legal latitude, and it may use it whether or not the ACA is changed substantially by Congress, according to people who follow health-care policy.

“The essential health benefits are one of the areas where there’s more room because a lot of the current requirements are in regulation rather than in statute,” Manatt Health managing partner Joel Ario, a health-care advisory board member for Bloomberg BNA, told Bloomberg BNA. Ario was head of the first exchange office in 2010-2011 under the Obama administration.

President Donald Trump is pushing for Congress to enact legislation that would substantially change the Affordable Care Act, and the House passed the American Health Care Act ( H.R. 1628) in a 217-213 vote May 4. But the Senate is struggling to find enough support among Republicans to pass a bill, and the administration has emphasized deregulation and returning power to states.

The ACA requires exchange plans to cover 10 general categories of essential health benefits (EHBs), including maternity, mental health, and prescription drugs—expensive coverage that often wasn’t included in individual health insurance plans prior to enactment of the law in 2010. Under an HHS regulation issued in 2013, states can designate benchmark plans on which the EHBs are based, and most states designed the largest small group plans in their states.

Changing Benefit Benchmarks

The HHS could change the rules governing which plans could be used as benchmarks, Ario said. “They may want to change what the reference points are,” which could relax the requirements, he said.

“The statute is fairly permissive” regarding the EHBs, Tom Miller, a resident fellow at the American Enterprise Institute, told Bloomberg BNA. The AEI is a free-market-oriented think tank, and Miller has been critical of the ACA.

The HHS’s Centers for Medicare & Medicaid Services could work with states to “change the landscape for small group plans,” he said. “That’s how they could water it down, change the boundary lines.”

HHS spokeswoman Alleigh Marre told Bloomberg BNA the agency couldn’t comment on future regulatory action, and she referred to the agency’s web posting about its efforts on regulatory relief.

`Super Waivers’

The HHS is likely to look toward “super waivers that combine Medicaid and private insurance in the individual market,” Miller said.

That could be accomplished by providing waivers for changes to the Medicaid program under Section 1115 of the Social Security Act and for changes to the private insurance market under Section 1332 of the ACA, he said.

The Section 1332 state innovation waivers allow states to innovate to provide access to health care that is at least as comprehensive and affordable as would be provided absent the waiver, provides coverage to a comparable number of residents of the state, and doesn’t increase the federal deficit.

The Treasury Department and the HHS in December 2015 issued regulatory guidance on the 1332 waivers, which is easier to change than a regulation, Miller said. The guidance interpreted the provision narrowly, prohibiting states from combining savings under Section 1115 Medicaid waivers with 1332 waivers, he said.

Private Insurance for Low Income

The Trump administration is “already trying to encourage senators who feel like Medicaid cuts are too steep for them,” Miller said.

“They could cover more of these lower-income people through private insurance coverage by doing a mega waiver moving Medicaid money into a pot of funds that could subsidize individual insurance coverage,” he said.

“That has the most potential of anything to change the terrain in a nonlegislative way,” Miller said.

In May the HHS’s Center for Consumer Information and Insurance Oversight issued guidance that will make it easier for health insurance carriers and brokers to enroll people in qualified health plans (QHPs) who are eligible for the ACA’s subsidies, John Desser, senior vice president for public policy and government affairs of the online private health insurance exchange eHealth Inc., told Bloomberg BNA.

Previously enrollees were directed to multiple websites to enroll and qualify for subsidies, Desser said. That “essentially made it unworkable for many web brokers to enroll people in QHPs and get their premium tax credit.” The new guidance allows for direct enrollment by carriers and brokers starting in the fall, he said.

Accessing Eligibility Data

The next step that Desser believes the HHS will take will be to enable carriers and brokers to directly connect to websites that will determine potential enrollees’ eligibility based on their citizenship or residency status, as well as their eligibility for subsidies.

The federal government’s creation of the data hub to determine that eligibility is “a uniquely appropriate function of the federal government,” Desser said. That task has now been completed through the HealthCare.gov system, he said.

However, Desser argued the federal government is not well equipped for marketing and outreach to push enrollment in ACA plans, and those expenses should be left for companies and brokers.

“Now they need to spend just a little more money and develop services that the private sector can interact with on behalf of a customer to get them quickly and efficiently enrolled,” Desser said.

Both the Obama administration and the Trump administration have talked about setting up such a stand-alone eligibility service, Desser said. “Perhaps a more serious and determined effort is under way” in the Trump administration, he said. “That’s the sense I’m getting.”

More Network Flexibility

The HHS is also likely to provide states more flexibility in determining network adequacy requirements that health plans must meet for including health-care providers, Katie Allen, executive director of the Council for Affordable Health Coverage (CAHC), told Bloomberg BNA. Members of the CAHC include employers, pharmaceutical manufacturers, health insurers, health-care providers, and patients.

In the market stabilization rule the HHS published April 18, the threshold that carriers had to meet for including essential community providers in their networks was lowered from 30 percent to 20 percent, Allen said. Essential community providers are health-care organizations that generally provide service to low-income people in underserved areas, and carriers are required to include them in their networks.

The HHS “could go even further” in changing essential health benefit rules by deferring to states to set network adequacy requirements, Allen said.

To contact the reporter on this story: Sara Hansard in Washington at shansard@bna.com

To contact the editor responsible for this story: Kendra Casey Plank at kcasey@bna.com

For More Information

The Office of Management and Budget's Current Unified Agenda or Regulatory and Deregulatory Actions is at https://www.reginfo.gov/public/do/eAgendaMain.

Information on the American Health Care Act (H.R. 1628) is at https://www.congress.gov/bill/115th-congress/house-bill/1628.

The HHS final rule on essential health benefits is at https://www.gpo.gov/fdsys/pkg/FR-2013-02-25/pdf/2013-04084.pdf.

The HHS's web posting, Providing Relief Right Now for Patients, is at https://www.hhs.gov/healthcare/empowering-patients/providing-relief-right-now-for-patients/index.html.

The Treasury-HHS regulatory guidance on Section 1332 waivers is at https://www.federalregister.gov/documents/2015/12/16/2015-31563/waivers-for-state-innovation.

The Center for Consumer Information and Insurance Oversight's May exchange guidance is at https://www.cms.gov/CCIIO/Resources/Regulations-and-Guidance/Downloads/Guidance-for-the-Proxy-Direct-Enrollment-Pathway-for-2018-Individual-Market-Open-Enrollment-Period.pdf.

The HHS market stabilization rule is at https://www.federalregister.gov/documents/2017/04/18/2017-07712/patient-protection-and-affordable-care-act-market-stabilization.

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