Essential Health Benefits: What State Advocates Need to Know

Essential Health Benefits: What State Advocates Need to Know Health Reform in Your Backyard JoAnn Volk Georgetown University Health Policy Institute March 15, 2012

Webinar Producers • Georgetown University Health Policy Institute • American Plasma Users Coalition (A-PLUS) • Alpha-1 Association • Alpha-1 Foundation • GBS/CIDP Foundation International • Committee of Ten Thousand • Hemophilia Federation of America • Immune Deficiency Foundation • Jeffrey Modell Foundation • National Hemophilia Foundation • Platelet Disorder Support Association • Patient Services Incorporated

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Objectives of this Series • To help advocates understand how the Affordable Care Act (ACA) will affect their care • To help advocates understand what the ACA will mean for health care in their state • To arm advocates with the tools they need to make sure ACA implementation in their state meets the needs of patients

Objectives of this Webinar • Begin developing the skills and expertise for state advocates • Provide an overview of Essential Health Benefits (EHB) as set forth in the ACA • Discuss requirements for health benefit plan design • Provide an overview of the federal Department of Health and Human Services (HHS) guidance to states • Outline patient concerns with the approach set forth in the bulletin

Goals of the ACA • Improve health coverage for those who have insurance, including • Expand coverage to dependents up to age 26 • Prohibit annual and lifetime limits • Put limits on how insurers can set premiums • Improve health care quality • Expand coverage to those without insurance • Reduce the number of uninsured by 32 million

Overview of Essential Health Benefits in Health Reform • ACA to expand coverage to those without and to improve coverage for those who have it • EHB part of both those goals: • Set standard for coverage that is adequate • Allow consumers to compare plans and understand benefits • Protect against insurers using benefit design to avoid higher cost patients

Requirements for Health Coverage • Law lists 10 broad categories: • Ambulatory patient services (i.e., doctor visits); • Emergency services; • Hospitalization; • Maternity and newborn care; • Mental health and substance abuse disorder services, including behavioral health treatment; • Prescription drugs; • Rehabilitative and habilitative services and devices; • Laboratory services; • Preventive and wellness and chronic disease management services; • Pediatric services, including oral and vision care.

Other Requirements under the Law • EHB should be similar to “typical employer plan” • All new plans in individual and small group market must offer EHB (not large group plans, self insured or “grandfathered” plans) • The law’s limits on out-of-pocket costs and prohibition against annual and lifetime limits apply only to the EHB • EHB only includes the services and benefits to be covered. It does not address what patients will pay out of pocket for those benefits and services.

Other Requirements Under the Law • When defining EHB, federal and state officials must consider: • Whether there is an appropriate balance among categories (ie, sicker patients should not get less) • Whether the benefit design would discriminate against individuals because of their age, disability, or expected length of life • The health care needs of diverse segments of the population • When essential benefits are defined, if services provided can be denied based on age, expected length of life, disability, degree of medical dependency or quality of life

Requirements for HHS Under the Law • Health and Human Services must periodically review the EHB and report to Congress: • If patients are having difficulty accessing needed services for reasons of cost or coverage • If the EHB should be updated to take into account new treatment or medical advancements, and how • And whether adding benefits to the EHB would increase costs or affect the “actuarial value” of the benefit (ie, how much of the services are covered by the plan rather than the patient)

A Note About Cost-Sharing • One term used throughout the ACA is “actuarial value,” which is a measure of how much a plan will pay for services vs. how much a patient will pay (on average) • The 4 tiers of coverage in the ACA are based on this measure: bronze, silver, gold, platinum • A bronze plan (60% actuarial value) will require patients to pay more out of pocket than a platinum plan (90% actuarial value)

Process to Date • Dept. of Labor study of “typical employer plan” wasn’t all that useful • Institute of Medicine report on process would have presented other problems for patients: • Dismissive of state mandates • Suggested premium be the starting point, not the benefits people need • HHS listening sessions with consumers, providers, employers and plans

HHS Proposal: Why the State-Based Approach? • HHS study of benefits currently offered to small businesses, state employees and federal employees plans found similar benefits with a few exceptions: • Services covered because of state law: IVF, certain treatments for autism • Services covered in plans that don’t have to comply with state insurance law: mental health/substance abuse services, pediatric vision and oral services, habilitative services • Differences in plans were typically in how much patients pay out of pocket

What did HHS Propose? • Each state will choose one EHB from among 10 plans that are currently in the state: • Largest plan by enrollment in any of the top 3 small group market products • Any of the largest 3 state employee plans • Any of the largest 3 federal employee plans • Largest insured commercial non-Medicaid HMO • These existing plans – known as benchmark plans - include not just services/treatments covered but any limits that may apply (ie, visit limits)

HHS Proposal, cont’d • If a benchmark doesn’t cover all 10 categories required under the ACA, benefits must be added • If a benchmark doesn’t include coverage required by state law (state mandates), a state can add it to their EHB at state cost for those in “qualified health plans” (whether subsidized or not) • If state does not choose an EHB, the default plan will be largest plan by enrollment in largest product in small group market

HHS Proposal, cont’d • Insurers may have flexibility to offer benefits that are similar to but not exactly the same as the EHB • They may do substitutions of coverage within a category, changing the actual services covered and any visit limits • They may do substitutions across all 10 categories • The only limit on substitutions is that they must be roughly the same in value as the EHB • Insurers have flexibility to offer prescription benefit lower than the EHB: one or more per class rather than 2 or more

Where Proposal Falls Short on the Process for Picking an EHB • Getting the information on benchmark plans • Hard to know what the top 3 plans in each market are; HHS released top 3 plans in small group market based on 2011 data – but this is first step only • Really need to know what plans cover – and for that you need detailed plan documents • EHB can change as benchmarks change • Unclear where decision will be made in state • Enforcement becomes big concern: how do you know states and insurers are meeting the requirements of the ACA

Where the Proposal Falls Short on What the EHB Will Be • Weakens key goals of EHB • To set minimum standard for coverage • To provide greater transparency in insurance and make it easier to compare plans • Insurer flexibility may create problems for people with serious and chronic diseases • Opens door to insurers using benefit design to avoid the sick – especially with other 2014 reforms in place • Creates more confusion and uncertainty for consumers • Prescription benefit requirement is not as strong as Medicare and not as strong as currently exists in private market

What Can State Advocates Do? • Requests to state: • State must use transparent process to choose EHB • Make clear the factors state will use in making a choice • Allow for public input • Make publicly available plan documents for each benchmark option – to know in detail what is covered and what is not • Ensure enforcement of patient protections and other ACA requirements

What Can State Advocates Do? • Review plan documents to ensure services, treatments and therapies are covered • Do categories of service line up with ACA list of 10 benefit categories? • What limits are in plans? • Other considerations: • Stability of coverage: year to year changes? • Implications of adding benefits: What is effect on other benefits? What gets squeezed down or out?

What Can State Advocates Do? • Engage allies if key decision-makers aren’t responsive to your needs and requests • Other patient groups can help with top line requests (plan data, open process) • Allies in legislative or executive branches can help flush out where and when decisions made • Provide feedback to national chapters and organizations to help identify best practices and successful approaches

Essential Health Benefits: What State Advocates Need to Know