Essential Health Benefits, Part 1

Helen is postmenopausal, and her doctor has written an order for a bone mass density test. Should her health insurance cover the test as a preventive health service?

David has an 8-year-old son diagnosed with autism. What part of his son’s care is a medical service as distinct from a nonmedical service?

Teshia is a 30-year-old mother of 2. She and her husband have decided not to have another child at this time. Should her health insurance be mandated to include contraceptives?

While the answers may seem easy at first glance, defining EHBs is one of the most important and difficult responsibilities of the federal government in implementing the Patient Protection and Affordable Care Act (PPACA). The goal is to ensure that people have access to high quality healthcare without onerous out-of-pocket costs. Where do you draw the line?

PPACA, which was signed into law in March 2010, mandates the creation of an EHB package that all qualified health plans must cover by 2014.¹ It is designed so that individuals have adequate coverage for a range of specific services when they purchase insurance.

“Essential” is widely understood as a concept, but the term has eluded definition, primarily because patients, providers, payers, and policy makers differ in their assessment of what is essential in the context of a healthcare service. As Jeffrey Kang, MD, MPH, chief medical officer for CIGNA Corporation, said, “Individuals will look at this and define ‘essential’ by their needs. Essential is in the eye of the beholder.”²

To ensure adequacy in insurance coverage, PPACA requires the Secretary of the Department of Health and Human Services to establish an EHB package equal to the scope of benefits provided under a typical employer plan.

The package will set a new federal standard that will serve as a minimum requirement for determining health benefits at all qualified health plans participating in state exchanges. Non-grandfathered small and individual insurance plans also must cover these benefits. However, the coverage requirements will impact the broad private insurance market as well.

Under PPACA, the benefits must include, at a minimum, the following 10 categories of services:

• Ambulatory patient services.

• Emergency services.

• Hospitalizations.

• Maternity and newborn care.

• Mental health and substance use disorder services, including behavioral health.

• Prescription drugs.

• Rehabilitative services and devices.

• Laboratory services.

• Preventive and wellness services and chronic disease management.

• Pediatric services, including vision and oral care.

In defining the benefits, the Secretary also must

• Ensure that they reflect an appropriate balance among the categories listed above.

• Not make coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, present or predicted disability, expected length of life, degree of medical dependency, or quality of life.

• Take into account the healthcare needs of diverse segments of the population, including women, children, persons with disabilities, and other groups.

In addition, coverage of emergency services cannot be subject to prior authorization requirements or be limited because the provider of services does not have a contractual relationship with the plan.

Most mandated benefits today are established by state legislatures, since private insurance regulation has historically been the responsibility of the states. The number and types of mandates placed on health plans vary greatly. According to a tracking survey conducted by the Council for Affordable Health Insurance, there are more than 2100 state-mandated benefit laws. Idaho has the fewest benefit mandates with 13, while Rhode Island has the most with 69.³

So how does the Secretary decide which items and services will or will not be included in the package? Existing federal health programs, such as the Federal Employee Health Benefits Plan and Medicare, may be instructive in determining the potential approaches the Secretary may take.

For example, one approach would be to define benefits narrowly, as done under Medicare Part B. Or, the Secretary could define benefit categories more broadly and establish process-oriented requirements as a “check” on plans, similar to Medicare Part D. Another possible approach would be to create a process similar to the Federal Employees Health Benefits Plan and grant plans the flexibility to develop their own coverage policies within each of the 10 categories stipulated in PPACA.

At the request of the Secretary, the Institute of Medicine (IOM) brought together a diverse group of stakeholders in mid-January to begin developing recommendations on the criteria and methods for determining and updating the EHB package.⁴ The IOM has been charged with recommending a process for creating the EHB package, not defining specific services. It is expected to issue its report by the fall of 2011.

The options are many. The consequences are profound. Mandated benefits provide important protections for insured populations, but they might also hinder the ability of health insurers to offer affordable coverage options.

That was one of several opinions voiced at the IOM hearing.⁵ Where is the common ground for people with comorbidities? Where is the balance between covering what people with chronic conditions need in order to live healthier lives and providing an affordable benefits package?

The patient advocacy community was intimately involved in the creation of PPACA. The primary purpose of the law is to help patients get the care they so desperately need. It will not be easy to create an EHB package that balances the needs of all the stakeholders. The best efforts of many minds will be required to get it right.