Doctors zero in on benefit gaps allowed under health reform

Physician organizations say some health plan benchmarks that states might choose would provide inadequate benefits. Others worry the proposal would not control costs.

By — Posted Feb. 13, 2012

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Physician organizations are expressing concerns that minimum health coverage standards proposed by federal health officials to start in 2014 might not cover children adequately or provide sufficient drug coverage, among other issues.

The national health system reform law requires the Dept. of Health and Human Services to designate a minimum health package -- known as essential health benefits -- that must be offered by health plans through insurance exchanges and many similar health plans outside the exchanges.

On Dec. 16, 2011, HHS proposed letting each state choose an existing health plan operating in the state to serve as a benchmark for the mandatory minimum coverage. States would have significant latitude in choosing benchmark plans from among four types of popular health insurance products. Setting this benefits standard -- designed to bolster small-group and individual market coverage -- is one of the most crucial decisions the federal government and states will make in implementing the health reform law.

However, many of the potential benchmark plans that states could choose do not cover some medically necessary care for children, including rehabilitative and habilitative treatment, according to letters submitted to HHS in late January by the American Medical Association and the American Academy of Pediatrics.

"The pediatric [essential health benefits] standard should include all preventive, diagnostic and treatment services that are medically necessary for children," wrote AMA Executive Vice President and CEO James L. Madara, MD. "We do not believe that the benchmark options outlined in the [HHS proposal] will meet this standard." The AAP agreed that the HHS proposal lacked sufficient pediatric benefits.

Instead, HHS should require that a benchmark plan include the standard Medicaid package of child health benefits, known as Early and Periodic Screening Diagnosis and Treatment, Dr. Madara said. This would ensure that children receive comprehensive care, including immunizations, mental health care, vision and hearing screenings, and dental care.

The health reform law requires most individual and small-group health plans to provide 10 broad categories of benefits. But some plans that might serve as benchmarks include nonclinical restrictions on pediatric services, such as limits on visits, the AAP wrote in a joint letter with the Children's Hospital Assn. and March of Dimes.

Dr. Madara also wrote that HHS' proposed prescription drug coverage minimum is insufficient. The proposal would require health plans to cover only one prescription medication per drug class, but Medicare requires at least two drugs per class, or more if one of the drugs has therapeutic advantages over the others in the same class, Dr. Madara said.

Call for a national standard

The American Academy of Pediatrics said the health reform law's language clearly directed the HHS secretary to establish one national standard for essential benefits, not leave that job up to individual states. The secretary is required to review and update the benefits standard, but this task will be harder if states can select their own standards, the academy wrote.

"We question how the secretary can viably fulfill these obligations," the AAP comment letter stated.

The American Academy of Family Physicians said state-specific benchmarks might be effective in some form, but the HHS proposal would not guarantee relatively equal health benefits to all patients. The AMA and American College of Physicians generally supported the HHS plan allowing states to select their own minimum coverage packages, although the AMA expressed concern that monitoring many different state benchmarks will be difficult.

HHS Secretary Kathleen Sebelius has said her department sought to give states flexibility on essential health benefits because one state's minimum coverage might not be appropriate for another.

But political pressures also might have influenced the HHS essential benefits proposal. Conservative critics of federal mandates in the health reform law may have prompted the decision to give states more power in an effort to blunt the criticism, suggested John Ball, MD. He's a retired health care executive who chaired an Institute of Medicine committee that advised HHS on essential benefits.

Still, the major disappointment for IOM committee members was that HHS did not follow their advice to explicitly link minimum health benefits to cost controls, said John Santa, MD, MPH. He's an IOM panel member and director of the Consumer Reports Health Ratings Center. Such a system might have set a cost ceiling based on existing health plans, and selected benefits based in part on their costs and medical effectiveness, he said.

"HHS, probably for very good political reasons, couldn't do that," Dr. Santa said.

The HHS proposal is the first official federal step toward implementing essential benefits. The department issued the proposal in bulletin form -- a more preliminary issuance than a proposed regulation, which is expected to be the next step.

Will consumers be confused?

Physician, patient and hospital organizations also expressed concern about other provisions in the HHS proposal that they say could undermine the transparency the reform law seeks to bring to health insurance markets.

First, the HHS proposal would allow benefit substitutions at the health plan level as long as the coverage is "substantially equivalent" and maintains the same actuarial value. But substituting benefits within or across the 10 required categories would at best "result in needless confusion for consumers and at worst could lead to discriminatory plan design," the Federation of American Hospitals wrote.

In addition, every health insurance plan has its own definition of medical necessity, said Marc Boutin, president and COO of the National Health Council, which represents about 50 patient advocacy organizations. The HHS proposal would allow this patchwork of standards to remain.

America's Health Insurance Plans said in its letter that the HHS proposal would allow benefit mandates that are too costly. First, it wouldn't automatically exclude state-specific benefit mandates from benchmark coverage; nor would it subject these benefits to rigorous, evidence-based review. The HHS proposal also would let states set benchmark coverage based on plans that are more extensive than a typical small-group plan, which could increase costs beyond the reach of individuals and small businesses, AHIP said.

Christopher Koller, an IOM committee member and the health insurance commissioner for Rhode Island, said he was of two minds about the HHS essential benefits proposal. He would have liked HHS to have included premium targets or standards for evidence-based coverage in its requirements.

"But as a state person ... this is much easier to implement than the IOM recommendation," he said.

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How states will help set health benefit minimums

Federal health officials in December 2011 proposed giving states significant latitude to set minimum health insurance benefits as required by the national health system reform law. The minimum benefits package must be offered by small-group and individual health plans in health insurance exchanges, and by many health plans outside the exchanges. The federal proposal would:

  • Allow states to choose a benchmark health plan from one of the three largest health plans under four plan types: small-group, state employee, federal employee, or commercial HMO.
  • Require health plans to cover 10 categories of benefits specified by the reform law or a substantially equivalent list of benefits. The categories include prescription drugs, mental health and substance abuse services, emergency care, and pediatric services with oral and vision care.
  • Set the largest small-group plan in a state as the default benchmark if the state declines to choose one.
  • Allow states to choose a plan that covers existing state-mandated benefits outside of the 10 required benefit categories until at least 2016. An exception would apply if a state selects a benchmark plan that does not include the state-mandated benefits, such as a federal employee plan.

Source: Essential Health Benefits Bulletin, Centers for Medicare & Medicaid Services' Center for Consumer Information and Insurance Oversight, Dec. 16, 2011 (link)

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External links

"Essential Health Benefits: Illustrative List of the Largest Three Small-Group Products by State," Centers for Medicare & Medicaid Services' Center for Consumer Information and Insurance Oversight, January (link)

Essential Health Benefits Bulletin, Centers for Medicare & Medicaid Services' Center for Consumer Information and Insurance Oversight, Dec. 16, 2011 (link)

Centers for Medicare & Medicaid Services' Center for Consumer Information and Insurance Oversight (link)

"Essential Health Benefits: Balancing Coverage and Cost," Institute of Medicine, Oct. 6, 2011 (link)

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