IOM takes first step in defining essential health benefits

Washington -- Preliminary work has begun on one of the most significant decisions in implementing the national health reform law: choosing the minimum benefits that health plans must offer to be sold in the reform law's 2014 health insurance coverage requirement.

The Institute of Medicine, an independent advisory group, announced in early November that it began a study to recommend how to determine and update these "essential benefits," as they are known in the health reform law. The essential benefits package also will determine which types of health care and services, if any, will be in higher demand.

The Dept. of Health and Human Services requested the IOM study before its rulemaking process begins. The study is expected to be delivered by September 2011.

HHS will develop separate standards for the minimum amount of health insurance individuals must have to meet the health reform law's individual health insurance mandate.

The current minimum

The health reform law already specified many benefits to be included. At a minimum, qualifying health plans must cover:

• Inpatient, outpatient, emergency and maternity care.
• Mental health and substance abuse treatment.
• Oral and vision care.
• Prescription drugs, lab tests.
• Preventive and rehabilitative care.

IOM researchers will not suggest specific benefits or services to be included as essential benefits. Instead, they will review how insurers determine coverage and medical necessity and provide guidance and principles for the HHS secretary to consider when deciding what other criteria to add to the list. For example, the study will look at the health care needs of diverse population segments and nondiscrimination based on age, disability and life expectancy. IOM researchers will offer advice on how the government can periodically review and update the benefits package.

Massachusetts and Utah are the only states with health insurance exchanges. Both require health plans to offer a minimum level of benefits to qualify for inclusion in their exchanges.

The national health reform law has resolved two of the most contentious issues Massachusetts faced: deductibles and mandated prescription drug coverage, said Nancy Turnbull, a board member of the Commonwealth Connector, the independent state agency that set essential benefits for Massachusetts.

Essential benefits questions

But many other questions remain about the national essential benefits, she said. Although other states don't mandate health insurance, many require health plans to cover some services. Those state benefit mandates vary widely, as do the benefits covered by employers.

For example, only Massachusetts and 14 other states require health plans to cover in vitro fertilization, according to the Council for Affordable Health Insurance, a research and advocacy association of insurance carriers in the individual, small group, HSA and senior markets.

In a separate study expected to be completed in the spring of 2011, the Dept. of Labor will look at the benefits employee health plans typically offer. The new federal law specifies that the essential benefits package represent those typically covered by employers.

The more benefits HHS names as essential, the higher the premiums for the coverage and the more that small businesses, consumer advocates and health insurers will worry about the cost of premiums.

"We do think the affordability issue should be a part of this discussion," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans.

IOM is accepting public comments on its study through Dec. 6. The IOM committee managing the study will meet in January, said IOM spokeswoman Ashley McWilliams.