Joe Touschner

March 15, 2012
Joe Touschner

Affordable Care Act : / / /

Despite that title, our blog is not converting to the abbreviated language of texts and Twitter–I promise to type out the words in full when they’re needed.  We’re also definitely not moving with Twitter speed in bringing you the news, but on February 17, the Centers for Medicare and Medicaid Services released a frequently asked questions (FAQ) document on the essential health benefits (EHB).  It clarifies some of the points in the agency’s EHB bulletin from December.   The FAQ covers a range of issues that fall into the categories of benchmark options, state mandated benefits, and EHBs in Medicaid.  We wanted to bring you a number of key points in case you’re behind in your reading list of sub-regulatory guidance from federal agencies:

Benchmark options

* States may not choose separate benchmark plans for the individual and small group markets–there must be one benchmark for private-market plans.  States may, however, choose a separate benchmark plan for Medicaid benefits that are required to include the EHBs–see below.

* The benchmark plan benefits selected this year will apply in 2014 and 2015, even if the underlying plan’s benefits change in the future.  As stated in the original bulletin, CMS will review its overall essential health benefit approach for 2016.

* As suggested in the bulletin, insurers will have the ability to substitute benefits within the 10 required EHB categories as long as the substitutions are actuarially equivalent.  In the FAQ, though, there is no mention of substituting benefits across categories.

* States, on the other hand, may not create a benefit package separate from one of the benchmark choices and have it approved by the Secretary (as in Medicaid or CHIP), even if it is actuarially equivalent to one of the benchmark choices.

* The preventive services required to be covered by the ACA and mental health parity required by other federal law will apply to EHB benefits.

State mandates

* States will be required to defray the cost of any mandated benefits that are not included in the state’s essential health benefits.  While most of the benchmark options will include state mandates, there are situations in which a mandate may not be included.  For instance, a certain mandate might apply only in the individual market, not in the small group market.  If a state chose a small group market benchmark and did not otherwise include the mandate in its EHB package, it would need to defray the cost of this individual market mandate.  The FAQ does not provide further info on how these costs would be computed or paid by states.

* State benefit mandates enacted after December 31, 2011 would not be part of the state’s EHB package in 2014 and 2015, unless they were already included in the benchmark plan.

EHBs in Medicaid

* For Medicaid, benefits for newly-eligible enrollees must be consistent with existing Medicaid law (Sec. 1937), which allows for three benchmark plan options–the largest non-Medicaid HMO, any state employee health plan, or a certain federal employee plan–as well as Secretary-approved coverage.  States will ALSO choose, through a state plan amendment, an EHB benchmark for Medicaid from any of the ten allowable choices, which while overlapping are not the same as the Sec. 1937 options.

* Once this benchmark choice is made, the state will need to make sure that its Medicaid EHBs, like those for the private market, include all of the ten categories of services required by the ACA.  Medicaid benefits for the newly-eligible will be those benefits that are included in the Sec. 1937 benchmark, supplemented if necessary to include the Medicaid EHBs.  We’re still awaiting more in-depth guidance on this interaction of benchmarks in Medicaid, so stay tuned.

We continue to be troubled by the allowance for insurer flexibility in the EHBs, especially when states are not being given flexibility to set a higher benefits standard.  In addition, the FAQ mentions that while the ACA bars annual and lifetime dollar limits on benefits, plans will be able to set limits that aren’t based on the amount of dollars expended, like limits on the number of visits or days of treatment.  But in noting that these non-dollar limits should be actuarially equivalent to the dollar limits they’re replacing, it seems that enrollees will be no better off.  We hope CMS will further clarify that this won’t be a loophole that allows plans to reestablish dollar limits by another name.

The February FAQ gives us a few more answers on the essential health benefits, but a lot of questions remain.  Nonetheless, states will need to move forward quickly to study their benchmark options and make a choice by the third quarter of 2012.  Check back for more updates on this process–we’ll share what’s happening both from the federal government and the states.