On Friday, December 16, 2011, the US Department of Health & Human Services (HHS) releasedlong-anticipated regulatory guidance – in the form of a pre-rule bulletin – related to the reform law’s essential health benefits package. Under the law, health plans offered in the individual and small group markets, both inside and outside of state health benefit exchanges, offer a comprehensive package of items and services, known as “essential health benefits.” Essential health benefits must include items and services within at least 10 categories set out in the statute.
Since the reform bill passed in March 2010, observers have hotly debated the impacts that the minimum essential health benefits package would have on coverage costs and comprehensiveness for plans sold in the individual and small group markets. One pressing issue is that States are required to subsidize the costs of any mandated benefits that go above and beyond the federal floor for individuals receiving premium subsidy support in exchanges. An advisory report published by the Institute of Medicine in the fall of 2011 recommends that the ultimate minimum essential benefits package rightly balance costs and comprehensiveness of coverage.
Instead of setting a national essential health benefits standard, as was expected by many observers, this pre-rule bulletin proposes giving “states the flexibility to select a plan that would be equal in scope to the services covered by a typical employer plan in their state.” This approach would allow states to select an existing plan to serve as the “benchmark” for items and services to include in the essential health benefits package.
For 2014 and 2015, States would choose one of the following health insurance plans as their benchmark:
-One of the three largest small group plans in the state;
-One of the three largest state employee health plans;
-One of the three largest federal employee health plan options;
-The largest HMO plan offered in the state’s commercial market.
HHS notes in their press release, “the benefits and services included in the health insurance plan selected by the state would be the essential health benefits package. Plans could modify coverage within a benefit category so long as they do not reduce the value of coverage.”
In the instance that a State does not make a benchmark choice, HHS proposes that the default benchmark will be the small group plan with the largest enrollment in the State. This option would include state-mandated coverage in that plan.
The HHS press release can be found here.