HHS Issues Bulletin on Essential Benefits

On December 16, 2011, HHS released a “bulletin” describing the approach that it intends to take to establishing the “essential health benefits” under the Affordable Care Act. A bulletin is a form of guidance that lacks the legal stature of a rule. HHS believed, however, that the states, insurers, consumer advocates, and the public needed some indication as to the direction HHS was intending to take in defining the EHB, and the Bulletin was intended to serve this purpose until an actual rule is issued.

It is likely that the intent of those who drafted the ACA was to establish a uniform national EHB standard. This is not what the Bulletin proposes, however, at least for 2014 and 2015. Rather the Bulletin proposes that each state define its own EHB within federal guidelines. States will do this by choosing among federally-defined “benchmark” plans. This is the approach that the Children’s Health Insurance Program (CHIP) has used since 1997 and that states may use for some Medicaid populations. The Bulletin signals that HHS intends to extend this approach to those groups guaranteed the EHB under the ACA.

For 2014 and 2015, states may pick a benchmark plan from one of the following four categories:

(1) the largest plan by enrollment in any of the three largest small group insurance products in the State’s small group market (a product being a package of services and riders offered by an insurer and a plan being a specific selection of benefits and cost-sharing) ;

(2) any of the largest three State employee health benefit plans by enrollment;

(3) any of the largest three national Federal Employee Health Benefit Plan plan options by enrollment; or

(4) the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the State.

If a state fails to pick a benchmark plan, the largest plan in any of the three largest small group products will be the default. Under the Bulletin, exchange plans and plans offered in the individual and small group market must cover the services included in the benchmark plan.

Personally I am disappointed that a national standard benefit plan was not created. Stay tuned for more comments on this in future posts.