New proposed regulations from HHS have outlined a framework for identifying the package of "essential health benefits" (EHB) that must be offered by certain health plans beginning in 2014.
Affected Plans. The plans directly affected by the rules include "qualified health plans" (or "QHPs") that will be offered through an exchange, and any other non-grandfathered individual and small-group insurance policies, whether or not offered through an exchange.
Defining Essential Health Benefits. Rather than defining a package of essential health benefits that must be covered by all affected plans, the regulations propose that essential health benefits be determined on a state-by-state basis by reference to an "EHB-benchmark plan" identified by each state (or identified by default, if the state does not make an affirmative designation). The benchmark plan may be selected from one of the following:
- The largest plan by enrollment in any of the 3 largest small-group insurance products in the state.
- Any of the largest 3 state employee health benefit plans by enrollment.
- Any of the largest 3 national health plan options available to Federal employees under the Federal Employees Health Benefit Program.
- The largest insured commercial HMO operating in the state.
An Appendix to the proposed regulations lists, for each state, the plan that the state has already designated as its benchmark plan or that will be the default plan, if the state does not make an affirmative designation.
List of Largest State Small-Group Products. Earlier this year, HHS published a list of the largest 3 small-group insurance products for each state, based on enrollment statistics as of March 31, 2012. In Kansas, the 3 plans are: (1) Blue Cross and Blue Shield of Kansas Comprehensive Major Medical - Blue Choice (PPO); (2) Blue Cross and Blue Shield of Kansas AffordaBlue - Blue Choice (PPO); and (3) UnitedHealthcare Insurance Company Choice Plus (POS). The default benchmark plan for Kansas will be the Blue Cross Comprehensive Blue Choice PPO plan.
What About Self-Insured and Large-Group Plans? The requirement to cover EHB does not apply to self-insured plans, large-group plans, and grandfathered health plans. However, it is likely that most robust large plans already cover substantially the same categories of benefits that are required to be covered under an EHB package. And, in any case, there is likely to be some degree of market-based pressure to conform large-plan coverage to the type of coverage required to be offered on the exchanges and in the individual and small-group markets.
Compare "Minimum Essential Coverage." A separate concept under Health Care Reform is the requirement to offer or maintain "minimum essential coverage" (MEC). The individual mandate requires all individuals to maintain MEC (or pay a penalty), and the employer mandate requires applicable large employers to offer full-time employees MEC (or pay a penalty). In some cases, MEC will include coverage of essential health benefits, but not always. Minimum essential coverage is defined to include coverage under a grandfathered plan and coverage under a plan offered in the large-group market within a state, neither of which are required to cover EHB.
Why Do Employers Care? Although the EHB requirements directly affect the design of insurance policies offered by insurance carriers, they are relevant to employers because they will drive cost (particularly for employers purchasing coverage in the small-group market) and will, to some degree, set the standards by which employees will measure the value of health coverage being offered by an employer.