States React to Essential Health Benefits Bulletin

Late last year, HHS surprised many in the health reform community by issuing a bulletin on essential health benefits (EHBs) that proposed that EHBs be defined by a benchmark plan selected by each state. Although the HHS bulletin created an outline for states to move forward on EHB, it didn’t settle the matter. Instead, it began a robust conversation, with states and stakeholder groups developing comments, submitting questions, and considering potential implications of the EHB options.
What the Bulletin Says:
The bulletin proposes that states establish their EHB packages by selecting from four types of benchmark plans, including:

1. the largest plan by enrollment in any of the three largest small-group insurance products in the state’s small group market;
2. any of the largest three state employee health benefit plans by enrollment;
3. any of the largest three national federal employee health benefit plan options by enrollment;
4. or the largest insured commercial non-Medicaid Health Maintenance Organization (HMO) operating in the state.

(For more on the bulletin, read Timothy Jost’s post on the Health Affairs blog. For a view on why the HHS bulletin embraces strengths of American federalism, read Alan Weil’s perspective in the New England Journal of Medicine.)
Some Reactions from the States
Many states and stakeholder groups, including business and consumer advocacy organizations, submitted comments and questions to HHS for further clarification. In developing these comments and questions, some states sought stakeholder input on the potential implications of pursuing various EHB options. At State Refor(u)m, we examined the comments that several states submitted to HHS in response to the EHB bulletin. Below are a few highlights of the issues and questions raised by states:
Benchmark Plan Definition
Although the bulletin laid out several options for benchmark plans, some states asked for more clarification on how certain elements of the benchmark plans are defined. For instance, Colorado, New York, and California’s Health Benefits Review Program, asked for clearer definitions of (and demarcations among) “products,” “plans,” “cost-sharing options,” and “riders” in the benchmark plan. These comments also reflect the need for further clarification on whether different cost-sharing and rider configurations would be defined as separate “products” or “plans.”
State Benefit Mandates
Since the ACA requires states to “defray” the cost of state benefit mandates that exceed the EHB, Colorado asked HHS how existing state benefit mandates that do not apply equally across insurance markets would be factored into the benchmark plan once it is selected. West Virginia also asked if state benefit mandate costs, particularly those that might be implemented after the selection of the EHB benchmark, would be paid by the state or federal government, and asked who would be responsible for determining the cost associated with the mandate.
Affordability
While many comments to HHS mention affordability as a concern when examining potential benchmark plans, affordability rests at the center of Utah’s comments. The state suggests that the available benchmark plans the state may choose from are unsuitable to serve as a “floor” in the market because, Utah contends, the state’s employer-based plans are generous. Therefore, the state tells HHS, selecting a benchmark plan based on employer plans would create unduly expensive premiums for consumers.
Benchmark Plan Modification
Another issue of concern is whether or not states will be able to modify their benchmark plans once they are selected. In Colorado’s comments, the state expressed the desire for flexibility in modifying their benchmark plan after selection, for the purpose of accommodating evidence-based standards as they evolve. Similar to Colorado, New York also urged HHS to provide further guidance on their process for updating the EHB package in 2016, so that they can coordinate budget and legislative planning.
Resources for Moving Forward
The bulletin also instructs states to select a benchmark plan by the third quarter of 2012. In order to meet this deadline, states will need to quickly assess current state benefit mandates and their insurance markets. Last year, the California Health Benefit Review Program published anoverview of state processes for evaluating health insurance benefit mandates. You can also find other documents to assist your state in planning for EHB here. In the coming weeks, HHS plans to issue a Q&A based on the comments and questions the agency received from states and other stakeholders.
As noted on the CCF blog, although the January 31 deadline for EHB comments has officially passed, HHS is still able to consider comments submitted after the deadline because it issued a bulletin, rather than a more formal proposed rulemaking. Did your state submit comments to HHS? Share them here on State Refor(u)m.