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Essential Health Benefits Policy Update. Katie Marcellus California Health Benefit Exchange Board December 20, 2011. Essential Health Benefits in the Affordable Care Act.

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Essential Health Benefits Policy Update

Katie Marcellus

California Health Benefit Exchange Board

December 20, 2011

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Essential Health Benefits in the Affordable Care Act

  • Effective January 2014, all individual and small group plans, both those offered in the Exchange and outside of the Exchange, must cover essential health benefits

  • Plans may not impose lifetime limits on essential health benefits. Annual limits on essential health benefits are restricted until 2014, after which they are prohibited

  • Secretary of the federal Department of Health and Human Services develops the essential health benefits

  • Scope of essential health benefits must be equal to the scope of benefits offered under a “typical employer plan”

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Essential Health Benefits: Required Categories

  • Ambulatory patient services

  • Emergency services

  • Hospitalization

  • Maternity and newborn care

  • Mental health and substance abuse disorder services

  • Prescription drugs

  • Rehabilitative and habilitative services and devices

  • Laboratory services

  • Preventive and wellness services and chronic disease management

  • Pediatric services, including oral and vision care

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Essential Health Benefits: Factors Required for HHS Consideration

  • Ensure appropriate balance among the ten categories

  • No discrimination based on age, disability, or life expectancy

  • Consider healthcare needs of diverse segments of the population

  • Essential health benefits must be periodically updated

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Institute of Medicine Report on Essential Health Benefits Consideration

  • Requested by the Secretary of Health and Human Services

  • Purpose of the report:

    • To develop policy foundations, criteria, and methods for defining and updating essential health benefits

    • Not to develop a list of categories and services for inclusion

  • Report released October 7, 2011

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Institute of Medicine’s Identified Challenges Consideration

  • “Typical employer package” very difficult to identify

  • Many mandated benefits in the Affordable Care Act are not generally included in employer-based coverage

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Institute of Medicine Report Recommendations Consideration

  • Establish an initial essential health benefits package guided by a national average premium target

  • Identify data and establish a research infrastructure to support updating the essential health benefits

  • Permit states to define essential health benefits for themselves if they meet certain criteria

  • Update the essential health benefits based on evidence, increasing specificity, and value promotion

  • Create an Advisory Council to advise on the data and research plan and make annual recommendations about essential health benefits updates

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Essential Health Benefits: HHS Bulletin Announcing Potential Standards

  • Department of Health and Human Services proposed to define essential health benefits using a benchmark approach

  • For 2014 and 2015, states may select a benchmark plan that reflects the scope of services offered by a “typical employer plan”

  • The benefits and services in the selected benchmark plan would be the essential health benefits package for the state

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State Options for Benchmark Plan Standards

  • One of the three largest state employee health plans by enrollment

  • One of the three largest federal employee health plan options by enrollment

  • One of the three largest small group plans in the state by enrollment

  • The largest HMO plan offered in the state’s commercial market by enrollment

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Benchmark Options in California Standards

  • Three largest state employee plans

    • Kaiser

    • Blue Shield Access+

    • PERS Choice


  • Three largest federal employee health plan options

    • Blue Cross Blue Shield (BCBS) Basic

    • BCBS Standard

    • Government Employees Health Association Standard


  • Three largest small group plans and largest HMO: TBD

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HHS Benchmark Proposal: Coverage Issues Standards

  • If the selected benchmark plan does not cover all 10 categories of care from the Affordable Care Act, the state must supplement the missing categories using the benefits from any other benchmark option

  • In 2014 and 2015, if the state chooses a benchmark plan subject to state mandates, those state mandates would be included within the state’s essential health benefits package.

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HHS Benchmark Proposal: StandardsPlan Flexibility

  • Plans must offer benefits that are substantially equal to the selected benchmark plan

  • Plans may adjust benefits, including both covered services and limits, as long as they offer coverage for all 10 categories and the coverage has the same value

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Next Steps and Outstanding Issues Standards

  • Analysis of the benchmark plans in California

  • Decision of the Exchange, partner state agencies, and stakeholders to comment on the proposed process (comments due January 31, 2012)

  • Once federal guidance is final, selection of the benchmark plan

  • For the Exchange, determine additional plan/benefit design criteria, if any

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References Standards

  • News Release About Federal Informational Bulletin:

  • Federal Informational Bulletin on Essential Health Benefits:

  • ASPE Research Brief—Essential Health Benefits, Comparing Benefits of Small Group Products and State and Federal Employee Plans:

  • ASPE Research Brief—Essential Health Benefits, Individual Market Coverage:

  • Department of Labor Report on Selected Medical Benefits:

  • Institute of Medicine Report: