By Robert A. Holden, Esq., Senior Vice President
On January 25, the Department of Health and Human Services (HHS), through its Center for Consumer Information and Insurance Oversight (CCIIO), released information identifying the three largest health plans in each state, as well as the three largest national Federal Employee Health Benefit Program (FEHBP) plans to aid states as they consider how to implement health reform.
From the perspective of the states, the implementation of the Affordable Care Act (ACA) has long been a waiting game. After its enactment in 2010, it became clear quickly that states would be doing much of the heavy lifting when it came to implementing the insurance reforms required under the act, primarily because until then health insurance regulation was almost exclusive to the states. Nevertheless, states were dependent on federal guidance and rulemaking before they could make progress towards many of the private insurance reforms and the 2014 implementation date for health benefit exchanges.
Throughout 2011, states had anticipated that federal HHS rules would then define the specific benefits that would be covered in each of these categories so that they could address this issue in the 2012 legislative sessions. However, after recommendations from the Institute of Medicine, HHS did not propose rules addressing specific benefits. Instead, the agency released a December 16, 2011, bulletin advising the states to develop a “bench mark” based on employer plans in their states, which could be the basis for benefits in their respective exchanges, and which HHS would review in 2016. This removed a potentially charged issue from discussion at the federal level until well after the 2012 election.
Now, even with information identifying their largest health plans, states must contend with a lack of federal guidance addressing one of health care reform’s most politically charged issues: what benefits will be covered under the new system?
Essential Health Benefits, the benefits that must be covered by health insurance plans offered through state health benefit exchanges, are defined broadly in the ACA to include the following categories: (1) ambulatory patient services, (2) emergency services (3) hospitalization, (4) maternity and newborn care, (5) mental health and substance use disorder services, including behavioral health treatment, (6) prescription drugs, (7) rehabilitative and habilitative services and devices, (8) laboratory services, (9) preventive and wellness services and chronic disease management, and (10) pediatric services, including oral and vision care.
While many of these categories are already covered by health plans, states have long had their own individual concepts of what constitutes an “essential” benefit. Each session, states introduce scores of bills mandating health insurers provide coverage for specific health benefits. These have been generally opposed by the insurance industry as increasing costs, but frequently address popular concerns, such as continued coverage of routine mammograms or coverage for the treatment of autism spectrum disorders. The ACA acknowledged the potential for increased costs created by coverage mandates. Because federal subsidies would keep premiums affordable for individuals utilizing the state exchanges, the act requires states to pay costs attributable for benefits required beyond the essential health benefits provided for under the ACA.
Unsurprisingly, the details of the essential health benefits had been greatly anticipated by state legislators who now, in light of the HHS bulletin, may have substantial leeway in preserving their current mandates. At a minimum, states will be able to use health plans (subject to their state’s mandates) to create a benchmark for the new state health benefit exchange. While there is still uncertainty as to how the state benchmarks will be judged by HHS in 2016, states have already started to determine processes to review their state mandates and how they fit into the ACA’s essential benefits.
Prior to the release of the HHS bulletin, Massachusetts and Minnesota introduced a number of bills placing a moratorium on new mandates, as well as legislation to require a comprehensive regulatory review of mandated benefits in their states. While Massachusetts legislation proposes to authorize the Division of Health Care Finance to review the mandated benefits, and Minnesota legislation authorizing their Commissioner of Commerce to do the same, South Carolina, Rhode Island and West Virginia would look to their respective insurance commissioners.
Regardless of the review process, states will be revisiting their mandated insurance benefits this legislative session, and the issue will undoubtedly receive attention at the state insurance commissioners’ (NAIC) meeting in March. Stakeholders, including disease treatment advocates, pharmaceutical and equipment manufacturers, as well as health care provider groups will be pressing the case that their services and products are essential to health care consumers.