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No Sign of Essential Benefits Proposal, but Some Say States Can Progress Anyway

By John Reichard, CQ HealthBeat Editor

September 19, 2012 -- Despite indications that it might be out by now, a proposed rule setting minimum standards for the benefits that insurers must provide under the health care law has yet to emerge—and the Obama administration may be skittish about releasing it before the approaching election.

Insurers, states, and health care law supporters all say that with enrollment in insurance exchanges set to begin in a little more than a year, having a proposed rule is key. Insurers have to be able to craft the benefit packages they will offer in the exchanges, among many other tasks they must accomplish to prepare for the exchanges, which will begin to operate in 2014.

Some state officials and lawmakers say not having a proposal makes it difficult to comply with the health care law (PL 111-148, PL 111-152) because states have no assurances that the essential benefit packages they adopt will meet the demands of regulators at the Centers for Medicare and Medicaid Services (CMS).

CMS has issued a "bulletin" to guide states on putting together an essential benefits standard. But that's not the same as a proposed regulation.

Even those who ardently support the health care law and are sympathetic to the administration are anxious about the lack of a proposal. "I hope to see it before the election," said Timothy Jost, a professor at Washington and Lee University Law School. "The states need it, and so do the plans. October 2013, when plan enrollment begins, is coming up awfully fast."

Michael Hash, then the acting head of the CMS Center for Consumer Information and Insurance Oversight, told a Capitol Hill forum in July that he expected the proposal to be out "shortly." Close observers of CMS predicted it would be issued by the end of the summer. 

But the White House Office of Management and Budget, which normally notifies the public of such things, has issued no notice on its website that the proposed rule is under review. It often takes OMB weeks, if not months, to sign off on such proposals.

Whether or not the proposal comes out before the election may hinge on whether it breaks new ground.

"The bureaucratic survival rule for an election year is, above all, do no harm to the incumbent," said a managed care industry consultant. "So if the rule just repeats previous guidance that the states identify the most prevalent benefits currently offered, then the White House will issue it, as it will not generate employer or payer opposition.

"However, if the rule includes specific benefit mandates beyond the general categories previously specified, then the Republicans and the carriers will claim that the benefits are not affordable—an accusation the administration probably does not want to debate shortly before Election Day," the consultant continued.

Some state officials—such as Joshua Sharfstein, Maryland's secretary of health and mental hygiene,—have been preparing despite the absence of the proposal. Sharfstein said in a recent interview that state officials have held internal meetings to identify the benefits that Maryland will adopt and have conducted public meetings to get stakeholder reaction.

Michigan has tentatively adopted a minimum benefits package and has put it up for public comment. A consumer group in that state has objected to a proposal, saying it lacks sufficient provisions for mental health care.

"In the absence of more formal rules, states are beginning to select their EHB plans," Heather Howard, an official with the Robert Wood Johnson Foundation, testified before the House Ways and Means Health Subcommittee on Sept. 12. "For example, the Oregon Exchange Board issued a preliminary recommendation to select the third-largest small-group plan as its EHB benchmark."

Howard said that in Colorado, the governor's office released a draft benchmark plan for public comment after giving stakeholders a chance to weigh in. "While highly specific guidance could have made the choice easy for states, the deliberate and open process of selecting an EHB in several leading states has helped to ensure broad acceptance from the stakeholder community and a clear understanding of why and how the EHB was chosen," she said.

Howard added that it's "absolutely" the case that more formal rules on essential benefits are needed. But it's not the case that implementation efforts need to come to a halt in their absence, she added.

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