Some questions that came to me today while reading the latest HHS standards clarification:
What is an Essential Health Benefit?
There are two categories of EHB, though they have the same weight. The federal government, through the ACA, stipulates ten EHBs which
must be included in all non-gradfathered plans, both on- and off-exchange:
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
10) Pediatric services, including oral and vision care
In addition to these items there are additional items set at the state level. The state must elect a "benchmark" plan; whatever services are offered by that benchmark become state-specific EHBs.
The selection of state-specific EHBs is important on two counts:
1) An EHB cannot have a lifetime dollar limit attached to it; and
2) A state-specific EHB is not considered as a cost when an individual subsidy is calculated.
#2 is critical as subsidies are calculated in part on the cost of the second least expensive Silver plan offered. If that plan has state-specific EHBs resulting from the benchmark plan choice then the cost of those EHBs must be actuarily removed from the plan premium, which will drive
down the subsidy.
EXAMPLE: A state currently mandates that all plans in the state include autism spectrum and temperomandibular joint syndrome treatment. Presumably then (unless the state law changes) the state's benchmark plan will include autism and TMJ. If the benchmark has autism and TMJ then they become state-specific EHBs. If they are state-specific EHBs then they will have to be offered by all plans, including the second least expensive Silver plan. The second least expensive Silver plan may cost $6000/year, but if autism and TMJ cost $500/year then the subsidies will be calculated on $5,500.
What is a "benchmark" plan?
States are required to designate one plan as a benchmark. The benchmark sets the state-specific Essential Health Benefits. States have five options for selecting their benchmark plan:
1) One of the three largest small group plans in the state
2) One of the three largest state employee health plans
3) One of the three largest federal employee health plan options
4) The largest HMO plan in the state's commercial market; or
5) No selection. If the state makes no selection then the default is the state's largest small group plan based on enrollment.
The selection of the benchmark plan is significant. The Department of Health and Human Services ("HHS") distributed a final rule on July 18, 2012 on 45 CFR indicating that the definition of "benchmark plan" is to include the term "portal plan" as used in §159.110. The use of "portal plan" is significant because a portal plan includes coverages which might normally be considered optional riders.
EXAMPLE: A state currently mandates that all plans in the state include autism spectrum and temperomandibular joint syndrome treatment. If the plan selected as benchmark in the state offered autism and TMJ coverage
and the plurality of plan customers also purchased an optional rider that gave a free gym membership, then:
Under the rule as originally written only autism and TMJ would be considered state-specific EHBs; but
Under the rule as reinterpreted to include "portal plans", autism, TMJ,
and gym memberships would now be considered state-specific EHBs.