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States, Not Feds, to Determine Essential Benefits

Cheryl Clark, for HealthLeaders Media, December 19, 2011

In a surprise decision, Obama Administration officials on Friday announced they do not intend to prescribe specific features for essential health benefits beyond 10 general categories, but instead will let each state decide what's appropriate for exchanges that start in 2014.

"The proposal we're putting forward today reflects our commitment to giving states the flexibility they need to set up their state-based exchanges," Health and Human Services Secretary Kathleen Sebelius said in a news briefing. "We've acknowledged many times that coverage that works in Florida may not work in Nebraska."

Steven Larsen, Centers for Medicare & Medicaid Services deputy administrator, added that "the point is that states, through say, creation of their small group benefit... have made decisions about what benefits are appropriate in that particular state. So you do end up with differences, and that's based on judgments that typically the state legislatures have made..."

The Patient Protection and Affordable Care Act directed Sebelius' office to "define essential health benefits" saying that it should include "at least the following general categories and the items and services within the 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.
  10. Pediatric services, including oral and vision care.

Many Americans now do not have coverage for many services within these categories, such as maternity or drug coverage, said Sherry Glied, HHS , assistant secretary for planning and evaluation.

Patient advocates criticized the announcement, saying the result could be a patchwork of coverage that varies in comprehensiveness from state to state for 30 million newly covered residents.