Ensuring Coverage Affordability Must be Central Objective in Implementing Essential Health Benefits (EHB) Package

The Essential Health Benefits Coalition (EHBC) appreciates that the Department of Health and Human Services (HHS) recognized the crucial need for state flexibility in its transitional strategy to implement the essential health benefits (EHB) package.  Providing flexibility in selecting a benchmark plan will help assure that states can tailor benefits to meet their populations’ health needs.  Of equal importance is the need to ensure availability of high-quality, affordable coverage options.  Simply stated, making certain that EHB packages do not put the cost of coverage beyond the reach of small businesses, their employees and individuals must be a central objective.  As HHS continues its work in developing EHB policies, the Coalition offers the following for consideration:

• Adopt Institute of Medicine (IOM) Premium Target Recommendation. In its report to HHS, the IOM recommended setting a premium target that reflects the current average cost of a small business health insurance plan as the benchmark for determining the inclusion of specific benefits in the EHB package. The Coalition strongly agrees with the IOM that currently available small group coverage should guide the EHB package.

• Avoid including benefits not typically offered under small group plans.  Benefits included in the benchmark should include only those typically offered under small group plans.  Any additional supplementation of these benefits beyond the absolute minimum necessary to comply with the law should be avoided to help ensure coverage affordability.

• Allow Private Sector Strategies to Achieve Greater Benefit Value and Affordability; avoid applying Medicare requirements. Private sector benefit design, medical management and care delivery approaches have helped achieve greater benefit value and affordability. The Coalition strongly urges HHS to ensure that health plans can continue to use these strategies employed in the commercial market and not to apply Medicare requirements, which would limit plans’ ability to craft and implement innovative strategies to improve quality, outcomes and value.

• Apply cost and medical effectiveness considerations to all benefits, including state mandates.  Development of the EHB package should incorporate evaluations of benefits, including state benefit mandates, from both a cost and medical effectiveness perspective.  The Coalition recommends that in order to ensure affordability, HHS encourage states to undertake a review of their most costly benefit mandates, using the method described by the IOM in its recommendations to HHS on defining EHBs, and states should exclude state-mandated benefits that lack a strong evidence-base after the transition period (2014-2015).

• Ensure affordability by allowing health plans to make a “good faith” determination of whether or not a benefit included in the benchmark is essential for purposes of applying annual limits.  The February “Frequently Asked Questions (FAQ)” document indicates that HHS will prohibit annual dollar limits on any benefit, including state-mandated benefits, in the benchmark, although the FAQs indicate that health plans would be permitted to impose non-dollar limits that are at least actuarially equivalent to the annual dollar limits.  To ensure that coverage remains affordable, the Coalition urges HHS to permit health plans to make a good faith determination of whether the benefits offered in the state benchmark, including state-mandated benefits, are essential (i.e., fall within the 10 statutorily-required essential health benefit categories).  If a health plan determines in good faith that a benefit is not essential (does not fall into one of the 10 categories), the health plan may apply annual dollar limits on that benefit.  If a health plan determines that a benefit is essential, the health plan may not apply annual dollar limits on that benefit.

• Permit flexibility in determining actuarially equivalent benefits. The Essential Health Benefits Bulletin provides that health plans will be required to offer benefits that are “substantially equal” to the benefits in the benchmark plan. To ensure that coverage remains affordable, the Coalition urges HHS to adopt rules that allow the maximum amount of flexibility in determining reasonable substitutions that have an actuarially equivalent value to the benefits in the benchmark plan.