Essential Health Benefits Bulletin Draws Fire

In December 2011 the Department of Health and Human Services surprised just about everyone when it announced via a bulletin that instead of establishing essential health benefits (EHB) at a federal level for the state health insurance exchanges, it was considering passing that job onto the states.

The immediate reaction was generally negative with consumer groups and some industry stakeholders expressing concern that the state approach would result patchwork interpretations of EHB. Political observers were more pragmatic, suggesting that HHS punted on the EHB decision in an attempt to blunt potential Supreme Court case arguments that the federal government was taking over the country's healthcare system.

The public was invited to formally comment on the bulletin but in an unusual step, the bulletin comments were not collected through the typical regulations.org site. Instead stakeholders and interest groups were directed to an e-mail address. There was no response to a HealthLeaders Media request that HHS identify the central location where all the comments are now stored.

But the comments have been leaking out via e-mail and press releases. Here is a sampling:

Several House committees, including Energy and Commerce and Ways and Means, along with Sen. Mike Enzi (R-WY) and Sen. Orrin Hatch (R-Utah) asks HHS to justify its decision to issue a bulletin rather than a proposed rule on EHB. HHS "is sidestepping several important disclosure requirements with the new healthcare law and is preventing Congress and the American public from being able to assess the true costs associated with the so-called essential health benefits."

The letter notes that Obama administration "is not required to respond to comments received regarding this bulletin. Publishing a bulletin rather a proposed rule is the antithesis of an open and transparent process."

National Women's Law Center notes that although the Affordable Care Act states that "the scope of the essential health benefits …is equal to the scope of benefits provided under a typical employer plan," other ACA requirements could mean that EHBs are intended to be different from the typical employer plan. "The statute requires categories of coverage, including behavioral health treatment, habilitative services and devices, and pediatric oral and vision (services), that are likely not in the typical employer plan."

The NWLC notes that the ACA requires HHS to take into account "the healthcare needs of diverse segments of the population, including women" and "prohibits discrimination based on the basis of race, color, national origin, sex, age and disability. It may be necessary to expand the scope of benefits in order to adjust for discriminatory practices in the current insurance market. It will not be possible for the EHB to meet these requirements and remain in the scope of the typical employer plan."

The American Hospital Association says the approach to defining EHB fails to reflect "the individual's need for a range of services grounded in evidence-based guidelines. The work of the Institute of Medicine on this subject and the recent issuance of the EHB bulletin suggest that in the struggle to balance affordability with comprehensiveness of health benefits, the recommendations consistently tilt in favor of affordability."

AHA recommends that HHS establish "a universal baseline of benefits, and prevent insurers from picking and choosing the benefits that are covered," adding that affordability of the EHBs "could be governed by the cost sharing amounts among the four levels of qualified health plans." AHA also asks HHS "to clarify that its benchmark plan approach to benefits is "limited to covered services and does not include the plan's underlying decisions regarding actuarial value and cost-sharing."

America's Health Insurance Plans says "affordability should be the cornerstone" of consideration in establishing EHB. It supports providing states with a two-year transition period to create an affordable EHB package. AHIP suggests that "HHS should examine the cost and medical evidence of mandates and develop a framework for excluding some state mandates from inclusion in the EHB package."

It recommends that "HHS establish a deadline—no later than June 30, 2012—for states to select an EHB benchmark. If states do not select the benchmark plan by the deadline, HHS should specify the fallback plan as the largest small-group plan in the state by the deadline."

Michigan Consumers for Healthcare, which represents more than 110 community and health advocacy organizations in the state, says the bulletin provides too much flexibility to the states by allowing them to benchmark to a reference plan. "This approach relies too heavily on a palette of inadequate options that insurance companies already provide, and would allow states to create EHB packages that fall short of the robust, comprehensive coverage contemplated by the Affordable Care Act."

The American Medical Association, while generally supportive of the HHS bulletin, raises several operational issues in its comments. "If each state is going to choose from among the four benchmarks suggested by HHS, what is the process that each state will use in choosing the standard and what will the criteria be? How will HHS review and provide the necessary oversight of potentially hundreds of state- and plan-defined benchmark standards?"

It notes that "consumers, physicians, and other providers, and other stakeholders will need to have access to all of the plans under consideration. This will be quite a daunting challenge and require substantial oversight resources by HHS and the states, which may be difficult given continuing budget constraints at both the federal and state levels.

It will also be essential for an appeals process to be established in every state, through the state department of insurance or other appropriate agency, regarding the coverage of EHBs to ensure fair and non-discriminatory practices."

The comment letter from the American Academy of Pediatrics and 13 other organizations involved in children's health expresses concern that the EHB bulletin doesn't address children's health issues as intended by the ACA. "Nine of the 10 potential benchmark plans are defined by their availability to employees, and the tenth, the largest HMO option, is also likely to be mostly employer-based.

Because these plans are built around working adult, they may lack important benefits for children." The letter notes that the ACA also requires that child-only plans be available in state exchanges but "the bulletin does not mention these plans."

The Essential Health Benefits Coalition, which consists of groups representing large and small employers such as the U.S. Chamber of Commerce and the National Federation of Independent Business, stresses cost and medical effectiveness in its comments. It also asks HHS to grant employers the same flexibility as states to "design and choose health coverage in a competitive marketplace that is most affordable for them and their employees."

EHBC recommends that only benefits in effect as of March 1, 2012 should be allowed to be considered for the benchmark EHB package and that new state benefit mandates not be added retroactively. 

The Pharmaceutical Care Management Association says it is happy with the EHB bulletin. "PCMA is encouraged that the HHS bulletin notes that EHB plans will have some design flexibility on pharmacy benefits and other issues. PCMA hopes that as HHS moves forward with regulations, it recognizes that relying on a market-based approach used successfully in the commercial market allows for greater flexibility and innovation."