On December 16, 2011, the Department of Health and Human Services issued an information bulletin outlining its first proposed guidance on how states and health plans are to implement the Essential Health Benefits provisions of the Affordable Care Act (ACA). Below is an explanation of the new guidance and its implications for behavioral health.
What are essential health benefits?
The essential health benefits package (or EHB) is the minimum coverage standard that health plans must meet beginning in 2014. This requirement is intended to ensure that consumers have access to adequate coverage and can make easy comparisons between insurance plans when purchasing coverage. The ACA requires that at least the following 10 categories of benefits be included in EHB:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management, and
- Pediatric services, including oral and vision care
These new requirements are a significant change from today’s health insurance market. Currently, many plans offer only bare-bones coverage and do not provide critical benefits like mental health and addictions treatment or maternity services. However, the ACA did not specify exactly which services must be covered within each of the 10 categories, instead, leaving the decision to HHS through the rulemaking process.
How does the new HHS guidance further define EHB?
Rather than designing one standard benefit package for all health plans in the nation to follow, HHS has opted to leave states with broad discretion in defining essential benefits in their state. The recent information bulletin proposes to allow states four options for selecting a “benchmark” plan whose covered benefits would be the basis of the EHB package in that state. The four options are:
- Any of the three largest small-group plans in the state;
- Any of the three largest state employee health plans;
- Any of the three largest federal employee health benefits program (FEHBP) options; or
- The largest insured commercial non-Medicaid HMO plan operating in the state.
If the plan that a state selects as its benchmark plan does not include all of the 10 required categories of benefits, then the plan must be modified to include the missing categories.
To what plans do the EHB requirements apply?
The following types of health plans must offer at least the essential health benefits package:
- Insurance plans sold through the state health insurance exchanges
- Small group and non-group plans that do not participate in the exchanges and do not have “grandfathered” status
- Medicaid benchmark and benchmark-equivalent plans for individuals who are newly eligible for Medicaid (note that existing Medicaid benchmark plans, which were originally created and authorized as part of the 2006 Deficit Reduction Act, are different from and may not be used as the benchmark plan for the purposes of crafting the essential health benefits package)
Is behavioral health included in the EHB package?
As noted above, the ACA expressly identifies mental health and addictions treatment services are as essential benefits, along with rehabilitative and habilitative services. However, the extent to which specific behavioral health services are covered will depend in large part on which existing insurance plan each state selects as its “benchmark” plan – that is, the plan on which the EHB package in that state will be based. If the state selects a plan with slim coverage of behavioral health services or a strict interpretation of what is considered “rehabilitative” services, it could affect individuals’ ability to access these services.
Does parity apply to EHB?
The HHS guidance confirms that the 2008 Mental Health Parity and Addictions Equity Act applies to individual plans as well as small group plans – a provision that was inserted into the law as an amendment by Senator Debbie Stabenow (D-MI) during the health reform debate. If the plan that a state selects as the benchmark plan does not currently comply with the parity law, modifications must be made to the benefits package to bring it into compliance with parity.
Will states be able to include state-mandated benefits in their EHB packages?
Some states have passed insurance mandates requiring health plans to cover certain types of services or treatment for certain disorders such as autism. The ACA does not prohibit states from applying these mandates to insurance products after 2014, but states are responsible for the costs of any mandates that fall outside the 10 benefit categories. The new HHS bulletin proposes to give states a two-year transition period (2014-2015) during which they will not have to pay the cost of additional mandated benefits.
Will health plans be required to match the exact benefits package of the benchmark plan?
HHS proposes that health plans must offer benefits that are “substantially equal” to the benefits covered in the selected benchmark plan. The information bulletin did not include clear instructions as to what extent plans may make substitutions within or across categories. Additional guidance on this topic will be forthcoming.
What implications does this decision have for behavioral health coverage, broadly speaking?
The HHS guidance is an indication that the Obama Administration plans to allow states a fair amount of flexibility in carrying out the new insurance requirements of the ACA. How behavioral health will fare during this process may vary on a state-by-state basis and will depend in large part on how each state decides to approach the issue. The recent guidance also reaffirms the importance of the parity law in ensuring consumers’ access to behavioral health treatment: because plans that are not in compliance with parity must adapt their benefits accordingly, a strong effort at identifying and challenging noncompliant plans may be crucial to ensuring broad coverage of behavioral health benefits.
What are the next steps for essential health benefits?
HHS must next issue actual regulatory guidance around essential health benefits. The information bulletin released December 16 represents its intended approach to crafting these regulations. HHS is accepting public comments through January 31, 2012. Comments can be sent to: EssentialHealthBenefits@cms.hhs.gov. Stay tuned to the National Council’s policy communications to learn about the latest news and updates on essential health benefits.