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What is an Essential Benefit?

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The new health reform law, beginning in 2014, requires all insurance plans to cover a specific set of essential benefits. The health law includes 10 broad categories that must be included — things like “ambulatory care” and “prevention” – but left the task of fleshing out a specific list to Health and Human Services who in turn gave the states the discretion to decide the issue.

Health and Human Services then turned the job over to the states: In a December rule, the department announced that states had four options for deciding what their health plans would need to cover. Of course states will cover emergency care, outpatient surgery etc... but what about accupuncturte or autism treatment? States could tell insurance companies to cover whatever one of their larger, small group insurance plans in the state covers. Or, they could benchmark their plan to cover the benefits that state employees get.

Essential Benefits 101

Beginning in 2014, individual and small group health insurance plans, inside and outside of the health benefits exchange, will need to offer a set of essential health benefits that cover services within these ten categories:

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

The scope of the essential health benefits will need to represent the coverage offered by a typical employer plan. The essential health benefits will reflect a balance among the ten categories. The definition of the essential health benefits cannot include cost-sharing provisions or make coverage decisions.

The National Council of State Legislatures notes that all 50 states already have a total of more than 1,800 separate laws that mandate specific insurance coverage and payment. However, more than half the states also have special requirements known as mandate review or mandate evaluation laws and boards, that already can and do evaluate costs of adding new benefit coverage within their state. The IOM also recommended that the HHS secretary grant state requests for a variant of the essential health-benefits package for those states administering their own exchanges. These will be granted where states produce a package that is “actuarially equivalent” to the national package. The IOM encouraged the HHS secretary to conduct a “public deliberative process” that it described in the report.

California

The states are fervently working to make these decisions. California is one of those with some interesting decisions inlcuding on coverage for accupuncture. There is now legislation on Gov. Jerry Brown’s (D) desk that would benchmark the state’s essential benefits to a small business plan offered by Kaiser Permanente. Emily Bazar tracked down a copy of what that plan covers. It includes the things you’d expect, like preventive care visits and hospital stays.

It also has a few benefits you might not have seen coming. Acupuncture, “typically provided only for the treatment of nausea or as part of a comprehensive pain management program for the treatment of chronic pain,” is included with a $30 copay per visit.

Because the decision comes down to "essential benefits" the plans will not cover everything. In every state there will be a laundry list of benefits that did not make the cut. Infertility treatment, massage therapy and hair growth treatment are excluded from this benchmark plan. In many states these are mandated benefits, however, that still does not mean they will become essential benefits.

For California — like any state — it’s a bit of a balancing act. The goal is to provide comprehensive coverage. At the same time, legislators have to be mindful of the budget: A package with too many benefits could end up unaffordable and inaccessible to the people Obamacare is supposed to cover.

Florida

States have until Oct. 1 to name their Essential Health Benefits or surrender the decision to the federal government. If that happens in Florida, a plan offered by Florida Blue (formerly Blue Cross Blue Shield) would be the minimum benchmark, per the federal rules.

A group of 15 medical and health advocacy organizations wrote to Scott, the state insurance commissioner and other leaders, asking them to hold public hearings and seek input on what benefits will best serve Floridians. However, the state Office of Insurance Regulation said the decision rests with Scott and the Florida Legislature.

Conclusion

The above review of state issues regarding coverage mandates is exactly why there will be in-state skirmishes over these benefit decisions, like acupuncture and massage therapy, as states decide what health care counts as essential and what doesn’t. In addition, each one of these has its own interest or lobbying group fighting for their inclusion. Just think of autism treatment, alternative medicine beyond acupuncture is another big area.

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