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States Race Toward Monday Deadline to Pick Their Benchmark Plans

By Jane Norman, CQ HealthBeat Associate Editor

September 28, 2012 -- It's crunch time for states that are working to select their benchmark plans for essential health benefits, with a Monday deadline looming for a decision to be submitted to federal officials.

According to a roundup by Avalere Health, 16 states have identified their proposed benchmark plans that will be the models for individual and small-group insurance coverage in each state's health insurance exchange. Another 17 have identified their potential benchmarks plans so the final tally of states that submit proposed benchmarks to the Department of Health and Human Services (HHS) could still rise.

The states identified by Avalere as having picked benchmark plans are California, Oregon, Washington, Utah, Colorado, Arkansas, Mississippi, Michigan, Virginia, Delaware, Maryland, Connecticut, Rhode Island, New Hampshire, Vermont, and the District of Columbia.

However, HHS officials also have told states that the deadline to pick a plan by the end of the third quarter of the year is a "soft" one since it was not set out as a formal regulation, according to a letter sent earlier this week by Kansas Insurance Commissioner Sandy Praeger to Gov. Sam Brownback. Praeger also said in the letter that HHS officials told states during a Sept. 14 conference call that shortly after the deadline, HHS will begin reaching out to states that haven't submitted benchmarks to discuss a default plan. Under guidance HHS issued earlier this year, the default would be the largest plan by enrollment in a state's small-employer group market.

During the last few days, exchange boards in several states have finished up the details of what will be included in their essential health benefits. Under the health care law (PL 111-148, PL 111-152), beginning in 2014, all non-grandfathered insurance plans in the individual and small-group markets have to cover a list of essential health benefits. The plans will be available in the exchanges, which are to be up and running by January 2014.

Plans are required to cover 10 categories of benefits: ambulatory patient services; emergency services; pediatric services, including vision and dental; maternity and newborn care; prescription drugs; rehabilitative, habilitative services and devices; lab services; hospitalization; preventive and wellness services and chronic disease management; and mental health and substance-use disorder treatment.

States are to choose among four benchmark plans currently operating within their borders. 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.

HHS officials said earlier this year that this approach of using benchmark plans will be followed in the early implementation years of 2014 and 2015 and reevaluated later. The approach of letting states decide on their benchmark plans has worried advocacy groups concerned that benefits will vary widely from state to state, but state officials generally have praised HHS for giving them the flexibility to set their own standards.

The benchmark requirement has produced a standoff in Kansas. In her letter, Praeger also submitted to Brownback her analysis for the Kansas essential health benefits benchmark plan, suggesting it resemble a Blue Cross Blue Shield of Kansas plan, the largest small-group plan in the state, along with children's vision and dental care added. Brownback, however, according to news reports, is declining to make any decisions until after the November election.

In New Hampshire, the Union Leader reports that the Joint Healthcare Reform Oversight Committee, a body made up of lawmakers, voted to approve a local health plan, Matthew Thornton Blue, as the benchmark. It is projected to cost $498.79 a person a month, the newspaper said.

A chart put together by State Reform, an online group organized by the National Academy for State Health Policy for state officials working to implement the health care law, says that questions remain about what happens next, such as what a state does if HHS determines its plan is discriminatory and whether final HHS approval of the benchmark proposals will come by the end of the year.

Meanwhile, Sen. Charles E. Grassley of Iowa and Rep. Fred Upton of Michigan, both Republicans, sent a letter to HHS Secretary Kathleen Sebelius asking for an explanation of "what appears to be inadequate or non-existent oversight" of $1 billion in grants awarded to states for constructing their health insurance exchanges. They said they are concerned by reports of "questionable expenses," such as a contract by the state of California with a public relations agency to try to get prime time TV shows to promote the health care law. HHS hasn't given states enough guidance on how the exchange grant money is to be used, they said.

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