Insurers Call for Essential Health Benefits To Be Affordable and Based on Evidence

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By Sara Hansard  

Ensuring that health plans are affordable should be the primary factor considered by the Department of Health and Human Services in specifying benefits that must be covered in 2014 by individual and small group plans, the two associations that represent health insurers said in comments filed Jan. 31.

“Affordability should be the cornerstone of your consideration,” America's Health Insurance Plans (AHIP) said in its comment letter on the bulletin issued Dec. 16 on essential health benefits (EHBs). The Patient Protection and Affordable Care Act requires all “non-grandfathered” individual and small group plans—those that were not in effect before PPACA was enacted in 2010—to cover EHBs inside and outside of state-based health insurance exchange markets. The EHBs must cover 10 benefit categories listed in the law, and the benefits package is to equal the scope of typical employer plans.

Unless the benefits are affordable, many individuals, families, and small employers will not be able to purchase coverage or continue to offer coverage to employees, AHIP said in its letter, signed by Daniel Durham, executive vice president of policy and regulatory affairs, and Gregory Gierer, vice president of policy and regulatory affairs. AHIP represents about 1,300 insurers covering about 200 million people.

Scientific evidence should also be a key consideration in determining which services should be included to ensure consumers receive safe and effective care at the right time and in the right setting, the insurers said. State-mandated benefits that are not found to be safe and effective based on evidence should be excluded from EHB requirements after a transition period ends in 2016, they said.

Many State Mandates Without Evidence

In its letter, the Blue Cross and Blue Shield Association (BCBSA) cited a report from the Institute of Medicine on EHBs that found many state mandates have been passed into law because of pressure from advocacy groups “without sufficient scientific review of the evidence.”

States should be “given the latitude” to review current benefit mandates and eliminate any that are not evidence-based or are problematic due to the benchmark process, BCBSA said in its letter, signed by Justine Handelman, vice president of legislative and regulatory policy. Both insurer groups said state-mandated benefits that are not based on scientific evidence should be excluded from EHBs in 2016 and afterward.

In the December bulletin, HHS outlined the approach it said it intends to pursue in a later rulemaking on EHBs. It said it would allow states to choose one of four types of benchmark plans on which to base EHBs that would be required in each state, including the option of choosing one of the three largest small group insurance products operating in the state (see previous article).

Over the next two years, HHS should examine the potential cost of the benchmark approach for small businesses and families buying coverage on their own, AHIP said. It cited a 2009 Congressional Budget Office analysis finding that average premiums in the individual market would be 27 percent to 30 percent higher because of increased coverage requirements of PPACA.

Comments on the bulletin were due Jan. 31, but an HHS official told Bloomberg BNA that comments will be accepted later, without a specific deadline. The agency is developing a list of frequently asked questions to be posted in the coming weeks that will include the public comments, said the official, who asked not to be identified.

The insurance associations also supported the bulletin's flexibility for states to choose benchmark plans on which to base the EHBs. “This approach recognizes the variation that exists today across states and will ensure some people will not have to upgrade their benefits from what they have today,” said BCBSA, which represents 38 independent, local Blue Cross and Blue Shield companies that cover about 99 million people.

The insurance groups' comments were in contrast with comments made by patient advocacy and consumer groups, which argued that a federal standard should be set in order to ensure comprehensive coverage under PPACA (see related item in this issue).

Seven House Democrats also weighed in on the issue Feb. 6 (see related item in this issue).

Call for Behavioral Health Coverage

In its comment letter, the Association for Behavioral Health and Wellness (ABHW) asked that “when a state chooses a benchmark plan, mental health and substance use disorders are appropriately covered.” ABHW represents companies that provide mental health, substance use disorder, and other health and wellness programs to more than 115 million people.

ABHW said it is especially concerned if benchmark plans do not include mental health and substance use disorder benefits and states need to supplement the benefits. The process for selecting benchmark plans and supplemental benefits should be transparent and allow for participation by stakeholders, the group said in its letter, signed by President and Chief Executive Officer Pamela Greenberg.

Bulletin Versus Rulemaking

BCBSA also expressed concern that HHS issued the guidance in the form of a bulletin, rather than as a proposed regulation. It is “critically important” to finalize all regulations following a proposed rulemaking process, in the first quarter of 2012, so states and payers can make changes to be ready for open enrollment in the exchanges by Oct. 1, 2013, it said.

The American Benefits Council (ABC), which represents Fortune 500 companies that sponsor employee health and retirement plans covering about 100 million people, said in its letter that the bulletin could cause confusion for some plan sponsors and issuers because it does not expressly “reaffirm” that large group health plans and self-insured group health plans may continue to use a good faith effort to comply with the EHB requirement.

Large Group, Self-Insured Plan Impacts

Although large group health plans and self-insured plans are not required under PPACA to cover EHBs, plans that voluntarily cover EHBs are subject to the law's prohibition on lifetime and annual dollar limits, ABC said in its letter, signed by Paul Dennett, senior vice president, health care reform, and Kathryn Wilber, senior counsel, health policy.

HHS should make it clear that EHB rules apply only to health plans that are “qualified” to be offered in the exchanges and not to large group and self-insured plans, it said. “Allowing each state to develop its own definition of essential health benefits would provide an unworkable standard for large group health plans and self-insured plans,” it said.

ABC also warned that HHS not impose specific “minimum value” requirements for employer-sponsored plans. Under PPACA, large employers that do not offer “minimum essential coverage” that meets qualifications for being affordable for employees could be subject to a penalty if any full-time employee receives premium tax credits or cost-sharing reductions through the exchanges, ABC said.

PPACA does not permit “using the essential health benefit requirement to essentially bootstrap” a requirement for a minimum value test for employer-sponsored plans, ABC said. “Such an approach would not only increase the cost and complexity for employers of providing coverage to employees, but also lead to some employers exiting the system altogether,” it said.

For More Information

AHIP's comment letter is available at The BCBSA's letter is available at The American Benefits Council's letter is available at The ABHW's letter is available at


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