The Department of Health and Human Services this week finalized regulations on a key element of health reform, the essential health benefits package.
Background. Under the Affordable Care Act, certain types of health insurance plans must cover a minimum standard of benefits beginning in 2014: health plans sold in the state-based Exchanges, individual plans, small-group plans, and Medicaid benchmark plans for the expansion population. The ACA specified that these minimum benefits include ten categories of services, including mental health and addiction treatment services. Moreover, the ACA applied the standards of the 2008 parity law to these plans, meaning that they must provide behavioral health services on par with their medical/surgical coverage. The ACA left it up to the Department of Health and Human Services to further define essential benefits through the rulemaking process.
Initial Guidance and Proposed Rule. In late 2011, HHS released a bulletin indicating that it intended to give states broad flexibility in defining their own essential benefits packages. Later informal guidance established the types of existing health plans that states could look to as the model for their essential benefits. Finally, in November 2012, HHS issued its first formal regulatory guidance outlining in more detail precisely how it expects states to define their essential benefits for the purposes of plans sold in the Exchanges. The National Council published a summary of that rule and submitted comments urging HHS to strengthen certain aspects related to the coverage mental health, addiction treatment, and habilitative benefits. Another proposed rule issued in January 2013 applied similar guidance to the establishment of essential benefits in Medicaid benchmark plans.
Final Rule Issued This Week. Yesterday, HHS issued its final rule on essential benefits, including its responses to the nearly 6,000 comments that were submitted. The final rule includes few major changes to the earlier version. Continue reading for our summary of the final guidance.
Inclusion of Behavioral Health Services at Parity. All plans that are required to cover essential benefits must include mental health and addiction treatment services at parity with medical/surgical. Plans that do not already include mental health and addiction benefits – or include these benefits but not at parity with medical/surgical benefits – must supplement their plans to come into compliance with parity. HHS did not offer specific guidance in the final rule on the process by which plans should augment behavioral health benefits. However, the final rule did specify that states would not be responsible for any costs associated with additional benefits needed to bring their essential benefits into compliance with parity.
Supplementing Essential Benefits: Many healthcare advocates have expressed concern that the benchmark plans states have selected to use as the basis for essential benefits (known as the “base-benchmark plan”) do not include adequate coverage of certain types of services. Most commonly, these base-benchmark plans do not cover pediatric dental and vision; however, two states’ selected plans do not cover mental health or substance use disorder benefits and 19 states’ plans do not cover habilitative services. The final rule outlines a process by which states must supplement the base-benchmark plan if it fails to include a required category of essential benefits. For most benefits, this process is to draw that entire category of benefits from one of the other benchmark plan options. Many commenters, including the National Council, asked HHS to establish a minimum standard of benefits within each category so as to guard against inadequate coverage of certain types of benefits. HHS did not accede to this request in the final regulation, preferring to preserve “state flexibility” in determining the benefits that will best meet their residents’ needs.
Benefit Substitutions: Consumer advocates have been wary of plans’ ability to substitute different benefits for those found in the base-benchmark plan. The final rule clarifies that plans are permitted to implement substitutions within – but not across – benefit categories. Any substitutions must be actuarially equivalent to the original benefits, and substitutions cannot result in a plan design that discriminates against particular groups of people. Plans are also permitted to substitute coverage limitations (for example, restrictions on the amount, duration, or scope of services) but these must be “substantially equal” to the original benchmark plan limitations and cannot discriminate against particular groups of people. The final rule also gives states authority for regulating and monitoring substitution of benefits so as to ensure that they are actuarially equivalent and non-discriminatory.
Non-Discrimination in Plan Design. The proposed rule included language to assure non-discrimination in plan design, a major issue for people with chronic conditions. The rule prohibits cost-sharing structures, utilization management techniques, and benefit designs that discriminate against beneficiaries based on race, age, disability status, health status, quality of life, having high health care needs, or other characteristics. States must monitor and identify discriminatory benefit designs. The National Council and other commenters requested HHS to identify a non-discrimination standard that would provide a framework to ensure compliance. Noting that it has tried to ensure state flexibility at every turn, HHS opted not to provide additional clarifying language in the final rule. This means that responsibility for ensuring non-discrimination will rest squarely with the states.
Habilitative and Rehabilitative Services. Here, HHS outlined a “transitional policy” designed to give states flexibility over their benefit packages. If the base-benchmark plan does not already include habilitative benefits, the state may create its own definition of required habilitative services. Should the state fail to do this, insurance plans may define and adopt their own set of habilitative services. The final rule clarified that habilitative services must be offered at parity with rehabilitative services.
Drug Coverage. The final rule states that plans must cover the greater of: one drug in every category and class of the U.S. Pharmacopoeia; or the same number of drugs in every category and class that were covered in the base-benchmark plan. In practice, this means that few plans will have to modify their current formularies. However, the National Council had strongly encouraged HHS to adopt the Medicare Part D pharmacy coverage rules, which include even stronger protections for psychiatric medications. The final rule rejected this approach; however, it did specify that states must establish a process by which individuals may request access to non-formulary drugs.
Application of Essential Benefits to Medicaid. The public comment period closed today on a behemoth proposed rule spanning nearly 500 pages that outlined the application of essential benefits to Medicaid, among other topics. The proposed approach closely mirrors that taken for essential benefits in the Exchange; it also includes a number of other changes related to current Medicaid policy. Most concerning are a series of proposed “updates” to cost-sharing policies that could result in Medicaid beneficiaries being charged more for the services they receive. The proposed rule also makes an important change to current policies defining which individuals are exempt from mandatory enrollment in Medicaid benchmark plans (vs. traditional Medicaid): for the first time, it specifically includes individuals with serious mental illness and children with serious emotional disturbances under the definition of “medically frail.” The National Council has submitted comments on these changes opposing the increases in cost sharing and urging HHS to expand the definition of medically frail to also include individuals with serious substance use disorders.