Essential Benefits Standards Issued

Our cover story in November 2011 asked “Will ‘Essential Benefits’ Break the Bank?”, and last month the government, some argue, answered “It sure as heck might.”

Our story predicted that the health insurance industry would lobby hard to prevent the size of the essential benefits package mandated under the Affordable Care Act from hindering plans’ ability to operate in health care exchanges.

Apparently to no avail, because the Obama administration last month issued standards that are a lot more burdensome to insurers than what had been proposed last November.

For instance, Neil Trautwein, vice president of the National Retail Federation, tells the Wall Street Journal that the “language regarding the scope of mental health service that insurance plans must cover appears stronger than previously proposed.

The standards are meant to close coverage gaps: Almost 20 percent of those who buy insurance cannot get mental health care and nearly a third of insured have no access to substance abuse coverage.

These, of course, are the hot topic items that the consumer press highlighted. (Headline in the New York Times: “New Federal Rule Requires Insurers To Offer Mental Health Coverage.”)

But the essential benefit standards go further than that. They require health plans to cover benefits in 10 categories of services. Those categories are:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

The ruling leaves to the states to decide on specifics concerning what will be covered and what will not. One thing we know, health plans will struggle.

As we noted in our November 2011 cover story: “A rich essential benefits package will probably prevent plans from competing on the scope of additional benefits. ‘The essential benefits package will effectively have a price put on it, and the challenge is going to be for payers to design a plan that will fit within that price and deliver all those benefits,’ says Jordan Battani, a principal in CSC’s Global Institute for Emerging Healthcare Practices. Because the ACA sets a minimum medical loss ratio of 85 percent for health plans in the exchanges, plans will have to get their administrative costs under control just to be able to keep premiums competitive.”

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