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Essential Health Benefits Proposal Prompts Questions, Worries

By Jane Norman, CQ HealthBeat Associate Editor

January 12, 2012 -- Uncertainty, apprehension, and questions continue to swirl around a surprising Health and Human Services (HHS) proposal to allow state officials to choose an essential health benefit template for their exchanges from among certain existing insurance plans in their states.

While the bulletin on the approach HHS intends to follow was billed as advantageous for states because it offers them "flexibility and freedom," patient advocates who expected a clearer national standard for benefit design were taken aback by the Dec. 16 announcement. And they remain wary.

Some are even raising questions about whether the agency is following the intent of the health care law (PL 111-148, PL 111-152). Many of their concerns center on whether, because the benchmark plans could be different in every state, benefits will vary widely across the country for people in the individual and small-group markets who, under the law, will be required to have insurance.

Meanwhile, in the states that are working on proposed exchanges, officials are scrambling to get the enrollment data on health insurance plans that will figure into decisions on which plans will serve as benchmarks. In some cases, such information is not immediately available or accessible. Many state legislators are already in session and are expected to continue working on the framework for their exchanges, which must be up and running by 2014. Getting enrollment data is key to the process.

It remains unclear when the HHS-issued guidance will be followed by rulemaking and whether the public comments will be made public. Rather than posting comments on a website, as is the case under traditional rulemaking, they are to be sent to an email address at HHS.

Department spokesmen did not respond to repeated questions about whether the public comments due by Jan. 31 on the essential health benefits bulletin will be made available.

In taking this approach to the essential benefit package, HHS was trying to avert a fight with states. So it proposed to let officials choose from among four different benchmark plans already offered in their states' commercial markets. States could pick one of the three largest small-group plans by enrollment; one of the three largest state employee health plans by enrollment; one of the three largest federal employee health plan options by enrollment; and the largest HMO plan by enrollment.

If states do not choose a benchmark, the default would be the small-group plan with the largest enrollment in the state. This approach will be used in the early years of implementation, 2014 and 2015, and then HHS will evaluate the method.

HHS Secretary Kathleen Sebelius wrote in a Jan. 4 column published in USA Today that "the coverage that works in Florida might not work in Nebraska," and under the HHS approach "states will have the option to pick their own standard from among the most typical, popular and proven employer plans in each state."

Pediatricians Question Plan

But that approach is coming in for criticism from medical groups such as the American Academy of Pediatrics, whose president said in an interview that pediatricians are worried that children will lose out on services they need if plans vary from state to state.

"I think it's another example of our willingness to settle, for other reasons, for less-than-optimal care of children," said Robert W. Block, president of the influential, 60,000-member group, which submitted detailed comments to HHS prior to its guidance announcement. The HHS bulletin "may be suggesting things that are not comporting with the statute," he said.

The overhaul requires coverage of services and items in 10 categories. HHS officials said that based on their research, the benchmarks will cover most of the essential health benefits. If a state selects a plan that doesn't hit all 10 marks, then it has to look at other plans to fill the gaps.

But Block said pediatricians are concerned that issues particular to children won't be addressed in those plans. Care for children is different from that of adults and should be modeled on the set of services provided by the Early and Periodic Screening Diagnosis and Treatment regimen that is in Medicaid plans, pediatricians say.

It is also going to be difficult administratively, Block said, wasting time that doctors could spend on medical services. "We as pediatricians would have to learn how to deal with 50 different plans," he said, adding that it would be particularly problematic in regions bordering two or more states.

The sheer number of possible choices for benchmark plans in the states—as many as 500—and what they may or may not cover has overwhelmed some advocates, said Marc Boutin, executive vice president and chief operating officer of the National Health Council, which acts as a voice for people with chronic diseases and disabilities. The HHS bulletin did not address how oversight would be conducted.

"I think it's sort of created a lot of anxiety," said Boutin, whose group would like to see HHS set a national definition for "medical necessity" applicable to the benefits plans.

But he expressed cautious optimism, saying that at their core, each of the benchmarks is consistent with a framework proposed earlier by the council and predicated on a broad set of services with exclusions.

"It's also clear from what HHS has said and done that there's a number of next steps to come," Boutin said.

Advocates Want More Time

Reflecting the current atmosphere of uncertainty, dozens of patient advocacy groups recently said they want the Jan. 31 deadline for public comments on the proposal delayed while they figure out what it means. The proposal was announced Dec. 16, just before a long holiday break.

Among the groups was the AIDS Institute, which has concerns about language dealing with prescription drug benefits and with preventive services. "I feel that HHS is not following the law, and they did not define the essential benefits," said Carl Schmid of the AIDS Institute. "We were anticipating the 10 services, the broad categories, with some descriptions in it. We didn't get that." Nonetheless, said Schmid, he also has been told that more information is coming soon and AIDS advocates are meeting next week with HHS officials.

"I think we can work within the apparatus," Schmid said. Patient protections at the national level also were anticipated but are absent, he noted.

In the states, the work now on essential health benefits is at the staff level, said Joy Johnson Wilson, health policy director at the National Conference of State Legislatures.

The HHS bulletin was important because it gave states the first clue as to how the federal government might proceed on the package, she said. "Now it's stage two. What does that really mean? We don't know the answer to that yet," she said. The states and the federal government also have to agree on definitions of what was said in the bulletin, she said.

Information has to be gathered on enrollment in the benchmark plans, and state officials are trying to pull that together to present to legislative committees so that it is available for hearings, she said. The challenge is that this is a short year for legislative action because it's an election year, and some sessions will end as early as March.

Wilson said "it would not be a good thing" for HHS to agree to the request for an extension of the deadline for public comment. "We are trying to make this as fast-track as possible so it allows legislatures time to do what they need to do to get these exchanges pulled together," she said.

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