HHS Releases Essential Health Benefits Final Rule for Individual, Small Group Plans

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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 2010.

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 Policy.

Accreditation Standards for QHPs

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.”

EHBs Likely to Make Plans More Expensive

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 warn.

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 design.

“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 said.

“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 benefits.

Mental Health Coverage

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 said.

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, told BNA.

“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.

'Exception Process' for Pharmaceuticals

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.”

Stand-Alone Dental Plan Treatment Clarified

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.

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