Understanding Your State's Essential Health Benefits: A Systematic Approach. I. Essential, But Often Unclear: An Overview of the EHB Rules

Transcription

1 Understanding Your State's Essential Health Benefits: A Systematic Approach By David E. Kopans, Esq. and Michael T. Frye, Esq. I. Essential, But Often Unclear: An Overview of the EHB Rules A. The EHB Package Requirement As amended by Section 1201 the Patient Protection and Affordable Care Act (PPACA), Section 2707 of the Public Health Service Act requires certain health insurance issuers to offer comprehensive health insurance coverage by offering an essential health benefits (EHBs) package. The EHB package requirement is only one of many private health insurance market reforms under PPACA, with other reforms including guaranteed issue and renewability of coverage, nondiscrimination rules, rating restrictions, and various consumer protections. Within the EHB package requirement are three major sets of rules that govern: The provision of EHBs; Cost-sharing requirements; and Actuarial value calculations for determining levels of coverage. 1 In other words, PPACA separately addresses the covered benefits that are the EHBs and the plan s cost-sharing features (e.g., deductibles, copayments, and coinsurance). 2 The cost-sharing features determine the level of actuarial value of a plan, which PPACA categorizes as different metal levels (i.e., bronze, silver, gold and platinum). 3 Only the first set of rules governing the provision of EHBs is addressed in this paper. B. The EHB Health Insurance Markets 1. Individual and Small Group Markets Within the private health insurance market for any policy or plan year starting on or after January 1, 2014, health insurance issuers must offer the EHB package in the individual and markets. 4 The individual market generally means the market for health 1 Sec. 1302(a)(1)-(3), PPACA. 2 CCIIO, EHB Bulletin (Dec. 16, 2011) 3 CCIIO, EHB Bulletin (Dec. 16, 2011) 4 Section 2707, PPACA

2 insurance coverage offered to individuals. 5 The market means the health insurance market under which individuals obtain health insurance coverage on behalf of themselves, and their dependents, through a group health plan maintained by a small employer. 6 A small employer is an employer who employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. 7 Whereas a group health plan offered by an employer who fails to meet the minimum requirements of a small employer will by default be regulated within the individual market, a state may opt to have the plan regulated as a plan Exchange and Off-Exchange Markets The EHB rules do not differentiate between the exchange and off-exchange individual and markets. So, issuers must offer EHBs regardless of whether a plan is a qualified health plan (QHP) offered through an exchange or outside the exchange. 3. Grandfathered Plans, Large Group and Self-Insured Markets Health plans that are grandfathered or offered in the large group and self-insured markets are not directly subject to the EHB rules in that they are not obligated to cover EHBs. 9 However, because PPACA s prohibition on annual and lifetime limits on the dollar value of benefits applies to these plans only with respect to any EHBs that they offer, they must determine which benefits covered under the plan are EHBs if the plan imposes any annual or lifetime limits Group/Blanket Student Health Insurance Plans Student health plans are traditionally regulated by state insurance departments as a form of non-employer group or blanket health insurance. 11 At first glance, they should be able to avoid the obligation to cover EHBs. However, because federal regulations implementing PPACA defined student health insurance as a type of individual health insurance coverage, 12 federal law has made student health insurance plans subject to the EHB rules. Even so, in Federal Register preamble commentary, the Centers for Medicare 5 45 C.F.R C.F.R C.F.R C.F.R See, e.g., 78 Fed. Reg , (Feb. 25, 2013) (stating, Self-insured group health plans, health insurance coverage offered in the large group market, and grandfathered health plans are not required to cover the essential health benefits. ) 10 [2711, PHSA; Sec. 1001, PPACA] 11 See, e.g., 77 Fed. Reg , (Mar. 21, 2012) C.F.R (a)

3 and Medicaid Services (CMS) concluded, States may continue to regulate student health insurance coverage as a form of group or blanket health insurance, provided these standards do not prevent the application of the relevant individual market provisions of the PHS Act. 13 For those states that regulate student health insurance plans as nonemployer group or blanket health insurance, they may continue to do so as long as the plans are able to comply with the federal individual market rules. In such case, even nonemployer group and blanket student health insurance plans must cover EHBs. C. The EHB Categories For a health plan to satisfy the EHB rules, it must offer coverage for at least the following ten (10) categories of benefits: 14 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; and Pediatric services, including oral and vision care. While PPACA established these EHB categories, it did not define any of them. Rather, it delegated the responsibility to the Secretary of the U.S. Department of Health and Human Services (HHS). 15 PPACA provided broad guiding principles for the Secretary to consider in defining the scope of each category. First, the scope must be equal to the scope of benefits provided under a typical employer plan. 16 Second, any definition of EHBS must comply with the following elements: Reflect an appropriate balance among the EHB categories so that benefits are not unduly weighted toward any category; Fed. Reg. at Sec. 1302(b)(1), PPACA. 15 Sec. 1302(b)(2), PPACA. 16 Sec. 1302(b)(2)(A), PPACA. 17 Sec. 1302(b)(4)(A), PPACA

4 Not make coverage decisions, determine reimbursement rates, establish incentive programs, or design benefits in ways that discriminate against individuals because of their age, disability, or expected length of life; 18 Take into account the health care needs of diverse segments of the population, including women, children, persons with disabilities, and other groups; 19 Ensure that EHBs are not subject to denial to individuals against their wishes on the basis of the individuals age or expected length of life or of the individuals present or predicted disability, degree of medical dependency, or quality of life; 20 Require QHPs to cover emergency department services (1) without imposing any requirement under the plan for prior authorization of services or any limitation on coverage where the provider of services does not have a contractual relationship with the plan for the providing of services that is more restrictive than the requirements or limitations that apply to emergency department services received from providers with contractual relationships with the plan; and (2) with a costsharing requirement that is the same for in-network and out-of-network services; and 21 Permit a plan to be considered a QHP even if it does not offer pediatric dental benefits if a stand-alone dental benefits plan is offered through the same exchange. 22 None of these EHB rules prohibit a plan from providing benefits in excess of the EHBs defined by the Secretary. 23 While PPACA permits states to require benefits in addition to EHBs, a state is required to assume the cost of those additional benefits when offered by a QHP by making payments to an individual enrolled in the QHP or directly to the QHP in which the individual is enrolled Sec. 1302(b)(4)(B), PPACA. 19 Sec. 1302(b)(4)(C), PPACA. 20 Sec. 1302(b)(4)(D), PPACA. 21 Sec. 1302(b)(4)(E), PPACA. 22 Sec. 1302(b)(4)(F), PPACA. 23 Sec. 1302(b)(5), PPACA. 24 Sec. 1311(d)(3)(B), PPACA

5 D. The Origin of the Benchmark Plan 1. The Reference Plan Approach On December 16, 2011, in a bulletin, aptly titled Essential Health Benefits Bulletin, the CMS Center for Consumer Information and Insurance Oversight (CCIIO) informally proposed its approach to defining EHBs. As explained by CCIIO, The intended regulatory approach utilizes a reference plan based on employer-sponsored coverage in the marketplace today, supplemented as necessary to ensure that plans cover each of the 10 statutory categories of EHB. In developing this intended approach, HHS sought to balance comprehensiveness, affordability, and State flexibility and to reflect public input received to date The CCIIO Survey of Employer Sponsored Plan Benefits and State Benefit Mandates In selecting the reference plan approach, CCIIO reviewed surveys and other information, including the PPACA-required survey conducted by the Secretary of U.S. Department of Labor (DOL) on employer-sponsored coverage, 26 regarding plans in the large group plans, small employer plans and public employer plans. 27 CCIIO concluded that these plans do not differ significantly in the range of services they cover. 28 Rather, they primarily differed in their cost-sharing provisions. 29 CCIIO found that plans virtually covered all 10 EHB categories. 30 services included, for example: Commonly covered physician and specialist office visits, inpatient and outpatient surgery, hospitalization, organ transplants, emergency services, maternity care, inpatient and outpatient mental health and substance use disorder services, generic and brand prescription drugs, physical, occupational and speech therapy, 25 CCIIO, EHB Bulletin, at 1 (Dec. 16, 2011). 26 Sec. 1302(b)(2)(A), PPACA. 27 CCIIO, EHB Bulletin, at 4 (Dec. 16, 2011). 28 CCIIO, EHB Bulletin, at 4 (Dec. 16, 2011). 29 CCIIO, EHB Bulletin, at 4 (Dec. 16, 2011). 30 CCIIO, EHB Bulletin, at 4 (Dec. 16, 2011)

6 durable medical equipment, prosthetics and orthotics, laboratory and imaging services, preventive care and nutritional counseling services for patients with diabetes, and well child and pediatric services such as immunizations. 31 The greatest variation in coverage of benefits was identified for the following: preventive and basic dental care, acupuncture, bariatric surgery, hearing aids, smoking cessation programs and medications, in-vitro fertilization, applied behavior analysis for children with autism, mental health and substance use disorder services, pediatric oral and vision services, and habilitative services The Benchmark Plan Proposal Having reviewed the benefits currently being offered in various markets, CCIIO concluded that each state should select a benchmark plan. 33 The benchmark plan would serve the reference plan for both the scope of services and any limits offered by the PPACA-phrased, typical employer plan. 34 In support of this approach, CCIIO noted its major advantage being that it recognizes that issuers make a holistic decision in constructing a package of benefits and adopt packages they believe balance consumers needs for comprehensiveness and affordability. 35 E. The EHB Final Rule 1. State Selection of the Benchmark Plan On February 25, 2013, HHS published a final rule on the Standards Related to Essential Health Benefits, Actuarial Value, and Accreditation. 36 Consistent with the Bulletin, the 31 CCIIO, EHB Bulletin, at 4-5 (Dec. 16, 2011). 32 CCIIO, EHB Bulletin, at 5 (Dec. 16, 2011). 33 CCIIO, EHB Bulletin, at 8 (Dec. 16, 2011). 34 CCIIO, EHB Bulletin, at 8 (Dec. 16, 2011). 35 CCIIO, EHB Bulletin, at 8 (Dec. 16, 2011) Fed. Reg. at

7 final rule requires each state to identify a single EHB benchmark plan. 37 However, this EHB benchmark plan is not the same as the reference plan or, as described in the final rule, the base-benchmark plan. 38 The base-benchmark plan is the plan selected by a state from one of the following categories: Small group market health plan. The largest health plan by enrollment in any of the three largest insurance products by enrollment in the State's small group market; State employee health benefit plan. Any of the largest three employee health benefit plan options by enrollment offered and generally available to State employees in the State involved; FEHBP plan. Any of the largest three national Federal Employees Health Benefits Program (FEHBP) plan options by aggregate enrollment that is offered to all health-benefits-eligible federal employees under 5 U.S.C. 8903; or HMO. The coverage plan with the largest insured commercial non-medicaid enrollment offered by a health maintenance organization operating in the State. 39 If a state fails to select a base-benchmark plan, the default plan will be the first option above. 40 Multi-state plans are subject to different benchmark standards. 41 As noted above, the final rule distinguishes between the selected base-benchmark plan and the EHB benchmark plan. Whereas the base-benchmark plan is an existing plan predating the EHB requirements, the EHB benchmark plan is the standardized set of essential health benefits that must be met by a QHP or certain other health insurance issuers. 42 To develop the base-benchmark plan into the EHB-benchmark plan, the following standards must be met: EHB coverage. 43 Provide coverage for at least each of the 10 EHB categories C.F.R C.F.R (a) C.F.R (a)(1)-(4) C.F.R (c) C.F.R C.F.R C.F.R (a)

8 Coverage in each benefit category. 44 Supplement, as necessary, the basebenchmark plan to cover any EHB categories not covered, including with respect to pediatric oral and vision services. Non-discrimination. 45 Exclude discriminatory benefit designs that contravene the non-discrimination standards under 45 C.F.R that prohibit discrimination based on an individual s age, expected length of life, present or predicted disability, degree of medical dependency, quality of life, or other health conditions. This rule also adopts the non-discrimination provision applicable to QHP issuers that prohibition discrimination generally (and not specifically with respect to benefit designs) on the basis of race, color, national origin, disability, age, sex, gender identity, or sexual orientation. 46 Balance. 47 Ensure an appropriate balance among the EHB categories to ensure that benefits are not unduly weighted toward any category. Determination of habilitative services. 48 Where a base-benchmark does not cover habilitative services, determine which services are included in that category. The foregoing process was completed over the course of 2012 and A list of each state s base-benchmark plans, supplementary plans for pediatric oral and vision benefits, and the status of the habilitative services is included in Exhibit A. 2. Important Notes About the EHB Final Rule Preamble commentary included with the final EHB rule provided additional useful guidance clarifying the EHB rule but not necessarily expressly stated in the EHB rule. Transitional Policy for 2014 and 2015 Benefit Years. As confirmed by HHS in the preamble commentary, the EHB benchmark plan approach is a transition policy that would apply for at least the 2014 and 2015 benefit years. 49 For the 2016 benefit year and beyond, HHS only noted, We are currently reviewing all C.F.R (b) C.F.R (d). 46 See 45 C.F.R (e) C.F.R (e) C.F.R (f) Fed. Reg. at

9 options for updating EHB in 2016 and anticipate releasing additional guidance in the future on enforcement of EHB requirements and updating EHB. 50 EHB Details Left to the States. HHS noted the numerous commenters to the proposed EHB rule asking that the 10 EHB categories be defined in more detail. 51 HHS rejected this request, noting its intent to minimize market disruption by allowing the state to select the specific details of their EHB coverage by reference to one of a range of popularly selected plans offered in the state or as part of the FEHBP. 52 States Payments to Defray Costs of Non-EHBs Unlikely. As noted above, PPACA requires states to defray the cost of state-required benefits imposed on QHPs that are in addition to EHBs. Under the final EHB rule, CMS permitted any state-required benefit enacted on or before December 31, 2011 (even if not effective until a later date) to be considered an EHB. This rule, therefore, would obviate the requirement for the state to defray costs for these state-required benefits. 53 In such case, HHS stated, we expect that [state payments to defray such costs] would rarely occur, if at all, in 2014 and Further, HHS clarified that state-required benefits only include the care, treatment, and services that an issuer must provide to its enrollees. 55 They do not include [o]ther state laws that do not related to specific benefits, including those relating to providers and benefit delivery method. 56 Enforcement of EHB Compliance Left to the States. In response to commenters asking for a greater role for HHS in monitoring and enforcing the EHB rules, HHS responded that the EHB rule is consistent with federal law that looks first to states for enforcement, then to the Secretary [of HHS] where a state has failed to substantially enforce Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at

10 Covered Benefit and Limits. The final EHB rule generally requires issuers to offer EHBs that are substantially equal to the EHB-benchmark plan. 58 In such case, issuers benefits must match the benchmark plan s covered benefits; limitations on coverage including coverage of benefit amount, duration, and scope; and prescription drug benefits that meet certain requirements specified in the rule. 59 In s Benefit Substitutions. The rule also permits issuers to substitute benefits that are actuarially equivalent, unless prohibited by applicable state requirements. 60 While the EHB rule permits these actuarially equivalent substitutions, a number of states have prohibited them, opting instead to have benefits, including visit, scope, and duration limits, duplicated exactly as they appear in the basebenchmark plans or supplementary plans. 61 Reasonable Medical Management Permitted. Given the concern that the benchmark plan approach would undermine issuer s use of traditional medical management techniques, HHS clarified that the EHB rule does not prohibit issuers from applying reasonable medical management techniques. 62 As an example of inappropriate medical management, HHS suggested a prior authorization policy that discriminates on the basis of membership in a particular group based on factors such as age, disability or expected length of life that are not based on nationally recognized, clinically appropriate standards of medical practice evidence or not medically indicated and evidence-based. 63 An appropriate technique would be to require preauthorization for coverage of zoster (shingles) vaccine in persons under 60 years of age, consistent with the recommendation of the Advisory Committee on Immunization Practices C.F.R (a)(1) C.F.R (a)(1) C.F.R (b). 61 See, e.g., Michigan Department of Insurance and Financial Services, Essential Health Benefits and Plan Management FAQs, available at (last accessed on Mar. 3, 2014) (stating, In Michigan, actuarially equivalent substitutions are not allowed across or within benefit categories. ); see also Maryland Insurance Administration, Bulletin (Jan. 7, 2013) (stating, substitution of EHBs will not be permitted in the individual and markets for This approach will be reassessed for ) Fed. Reg. at Fed. Reg. at Fed. Reg. at

11 F. The Rejected Alternative EHB Approaches 1. A National Definition of EHBs The EHB benchmark approach means that EHBs will vary from state to state based on the specific coverage under a state s benchmark plan. As noted by HHS in the preamble commentary to the final EHB rule, it received comments recommending a single, uniform federal EHB package. 65 The concern express with the state-by-state benchmark approach was that the base-benchmark plans have a large degree of variation in covered benefits that may lead to inconsistent EHB packages from state to state. 66 HHS rejected this recommendation because it would not allow for state flexibility and issuer innovation in benefit design, would require a burdensome overhaul for issuers, and would disrupt the market No Definition of EHBs HHS also admitted that it considered codifying the 10 EHB categories without additional definition to allow issuers to adjust their benefit packages accordingly. 68 In the end, however, HHS also rejected this approach because it would have allowed extremely wide variation across plans in the benefits offered, would not have assured consumers that they would have coverage for basic benefits, and would not have improved the ability of consumers to make comparisons among plans Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at

12 II. What s In and What s Out? A Closer Look at Actual EHBs A. The Three Levels of EHBs Even though not spelled out in any statute or regulation, in a sense, there are three levels to any EHB. The first level is the statutory EHB category and the second level is the benefits that fall within that category. The third level is the detailed description of each benefit. 1. Examples of First and Second Level Benefits The following table shows a sample of these first and second levels of EHBs. Ambulatory Patient Services Primary care visit to treat an injury or illness Emergency Services Urgent care centers or facilities Laboratory Services Diagnostic test (x-ray and lab work) Specialist visit Home health care services Imaging (CT/PET Scans, MRIs) Other practitioner office visit (nurse, physician assistant) Outpatient facility fee (e.g., ambulatory surgery center) Emergency room services Emergency transportation/ambulance Outpatient surgery physician/surgical services Home health care services Skilled nursing facility Hospice services

13 2. Examples of Third Level Benefits The third level is where the actual EHBs are found. Take, for example, the EHB category, rehabilitative and habilitative services and devices, which would include the second level benefit, durable medical equipment (DME). In the case of the Ohio benchmark plan, the DME benefit is described as follows: Durable medical equipment - The rental (or, at Our option, the purchase) of durable medical equipment prescribed by a Physician or other Provider. Durable medical equipment is equipment which can withstand repeated use; i.e., could normally be rented, and used by successive patients; is primarily and customarily used to serve a medical purpose; is not useful to a person in the absence of illness or injury; and is appropriate for use in a patient s home. Examples include but are not limited to wheelchairs, crutches, hospital beds, and oxygen equipment. Rental costs must not be more than the purchase price. The Plan will not pay for rental for a longer period of time than it would cost to purchase equipment. The cost for delivering and installing the equipment are Covered Services. Payment for related supplies is a Covered Service only when the equipment is a rental, and medically fitting supplies are included in the rental; or the equipment is owned by the Member; medically fitting supplies may be paid separately. Equipment should be purchased when it costs more to rent it than to buy it. Repair of medical equipment is covered. Covered Services may include, but are not limited to: 1. Hemodialysis equipment 2. Crutches and replacement of pads and tips 3. Pressure machines 4. Infusion pump for IV fluids and medicine 5. Glucometer 6. Tracheotomy tube 7. Cardiac, neonatal and sleep apnea monitors 8. Augmentive communication devices are covered when We approve based on the Member s condition. Based on this description of the DME benefit, every EHB-compliant plan must cover wheelchairs, crutches, hospital beds, oxygen equipment, and any of the items on the nonexhaustive list of DME. If a plan includes any of these third level benefits in its exclusions, it would not be EHB-compliant

14 Even more illustrative of the importance of review EHBs at their third level is a breakdown of the human organ transplant benefits under the Ohio and District of Columbia (D.C.) benchmark plans. Ohio Covers cornea, kidney transplants, human organ and stem cell/bone marrow transplants, and related services 70 Covers acquisition procedures, harvest and storage, and preparatory myeloablative therapy Covers transportation and lodging to and from the facility, if the facility is more than 75 miles from residence, for one companion (two companions if recipient is a minor) Ground transportation expressly covered Silent Covers unrelated donor searches for bone marrow/stem cell transplants for covered transplant procedures Silent Immunosuppressant drugs covered under prescription drug benefit District of Columbia Covers bone marrow, solid organ transplant, and other non-solid organ transplant procedures (with separate high dose chemotherapy/bone marrow or stem cell transplant benefit) Organ procurement charges including harvesting, recovery, preservation, and transportation of the donated organ Covers hotel lodging and air transportation for recipient and one companion (two companions if recipient is a minor) Covers registration at transplant facilities Expressly excludes benefits for donor search services Expressly excludes benefits where Member is an organ donor and recipient is not a Member Covers immunosuppressant maintenance drugs Based on these third level benefits, coverage for the actual transplant procedures are fairly similar. However, from there, the differences are noticeable. In Ohio, a member s unrelated donor searches are covered but not in D.C. In D.C., expenses for transportation and lodging would appear to be covered even if the member is within 75 miles of his or her residence. D.C. covers air transportation but maybe not ground transportation. Ohio covers ground transportation and the benefit may be broad enough to imply coverage for air transportation. Registration fees only appear to be covered in D.C. Coverage for donor members where the recipient is not a member is excluded in D.C. but might be covered in Ohio. Lastly, immunosuppressant maintenance drugs are covered under the transplant benefit in D.C. and the prescription drug benefit in Ohio. Under the benchmark plan regulatory framework, what may seem essential in one state could likely be a non-covered benefit in a neighboring state. As illustrative above, the 70 The Ohio Department of Insurance has subsequently clarified that this benefit includes human tissue transplants as well

15 determination of a state s actual EHBs is a fact-intensive analysis that can only be answer by reviewing the third level benefits described in a state s benchmark plan or in the supplementary plans or guidance that may be available. B. When the EHB Categories Matter PPACA envisioned EHBs as those benefits that fall within the 10 categories identified above. However, with the adoption of the benchmark plan approach, these categories are generally irrelevant as one must look to a state s benchmark plan as the primary source of the specific benefits that must be covered. That being said, there are certain benefits that benchmark plans did not commonly cover, if at all, and for which the EHB categories (and the definition of those categories) play a major role in determining EHBs. 1. Preventive and Wellness Services and Chronic Disease Management An EHB package must include preventive health services that include all of the following items and services: 71 Evidence-based items or services that have in effect a rating of A or B in the current recommendations of the United States Preventive Services Task Force with respect to the individual involved; Immunizations for routine use in children, adolescents, and adults that have in effect a recommendation from the Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention with respect to the individual involved; With respect to infants, children, and adolescents, evidence-informed preventive care and screenings provided for in comprehensive guidelines supported by the Health Resources and Services Administration; and With respect to women, evidence-informed preventive care and screenings provided for in binding comprehensive health plan coverage guidelines supported by the Health Resources and Services Administration. A list of the required preventive health services for adults, women and children is available on the HealthCare.gov website. 72 While issuers must offer these preventive health services with no cost sharing (e.g., deductible, coinsurance or copayment), 73 they must be aware of state-required benefits C.F.R (a)(4); 45 C.F.R (a)(1)(i)-(iv). 72 See What are my preventive care benefits? available at

16 that may require coverage that overlaps with and exceeds this EHB category and for which cost sharing is permissible Mental Health and Substance Use Disorder Services With respect to the mental health and substance use disorder services, including behavioral health treatment services, benefits must comply with the requirements of 45 C.F.R The final EHB rule defines these services as follows: Mental health benefits means benefits with respect to services for mental health conditions, as defined under the terms of the plan and in accordance with applicable Federal and State law. Any condition defined by the plan as being or as not being a mental health condition must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the Diagnostic and Statistical Manual of Mental Disorders (DSM), the most current version of the ICD, or State guidelines). 75 Substance use disorder benefits means benefits with respect to services for substance use disorders, as defined under the terms of the plan and in accordance with applicable Federal and State law. Any disorder defined by the plan as being or as not being a substance use disorder must be defined to be consistent with generally recognized independent standards of current medical practice (for example, the most current version of the DSM, the most current version of the ICD, or State guidelines). 76 In requiring compliance with Section , HHS incorporated the regulatory requirements promulgated under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). 77 The MHPAEA expressly exempts plans, i.e., group health plans (or health insurance issuer offering coverage in connection with group health plans) of a small employer. 78 In such case, although the MHPAEA technically does not require plans to comply with its requirements, the final EHB rule incorporates the requirements of the MHPAEA into the EHB categories, thereby obligating any issuer required to offer EHBs to comply with the MHPAEA regulations C.F.R (a)(1). 74 See, e.g., D.C. Code , et seq.; see also O.R.C C.F.R (a) C.F.R (a) Fed. Reg. at C.F.R (f)

17 The MHPAEA regulations do not require plans to offer mental health or substance use disorder benefits. Rather, when a plan offers both medical/surgical benefits and mental health or substance use disorder benefits, it requires the plan to comply with certain parity requirements. 79 These parity requirements apply with respect to (1) aggregate lifetime and annual dollar limits, and (2) financial requirements and treatment limitations. 80 When designing an EHB-compliant mental health and substance use disorder benefit, plans must ensure that they comply with the MHPAEA s very technical parity requirements. 3. Habilitative Services and Devices An EHB benchmark plan must include a habilitative services benefit. 81 If the basebenchmark plan does not include coverage for habilitative services, a state may determine which services are included. 82 Where an EHB benchmark plan does not include coverage for habilitative services, habilitative services must either (1) provide parity by covering habilitative services benefits that are similar in scope, amount, and duration to benefits covered for rehabilitative services; or (2) be determined by the issuer and reported to HHS. 83 At the time the final EHB rule was published, HHS reported that 22 state benchmark plans did not include a habilitative services benefit. 84 A number of states have taken steps to define habilitative services. For example, West Virginia issued a bulletin defining it as follows: Medically necessary services that help a person gain, keep, or improve skills for daily living. Some examples include physical and occupational therapy, speech-language pathology, and other needed services C.F.R (b)-(c) C.F.R (b)-(c) C.F.R (a)(5) C.F.R (f) C.F.R (a)(5) Fed. Reg. at West Virginia, Offices of the Insurance Commissioner, No. 184, Re: Habilitative Benefit Category of Essential Health Benefits (March 2013)

18 In Arkansas, habilitative services were also defined through a bulletin as follows: Definition of Habilitative Services Habilitative Services are services provided in order for a person to attain and maintain a skill or function that was never learned or acquired and is due to a disabling condition. Coverage of Habilitative Services Subject to permissible terms, conditions, exclusions and limitations, health benefit plans, when required to provide essential health benefits, shall provide coverage for physical, occupational and speech therapies, developmental services and durable medical equipment for developmental delay, developmental disability, developmental speech or language disorder, developmental coordination disorder and mixed developmental disorder. 86 Instead of issuing an insurance bulletin, Ohio defined this benefit through a letter issued by the Ohio Governor. 87 The letter avoids requiring a specific, overall definition for habilitative services but provides specific benefits related to habilitative services to children with a medical diagnosis of Autism Spectrum disorder, providing: Habilitative services benefits shall be determined by the individual plans and must include, but shall not be limited to, Habilitative Services to children (0 to 21) with a medical diagnosis of Autism Spectrum disorder which at a minimum shall include: (1) Out-Patient Physical Rehabilitation Services including (a) Speech and Language therapy and/or Occupational therapy, performed by a licensed therapists, 20 visits per year of each service; and (b) Clinical Therapeutic Intervention defined as therapies supported by empirical evidence, which include but are not limited to Applied Behavioral Analysis, provided by or under the supervision of a professional who is licensed, certified, or registered by an appropriate agency of this 86 Arkansas Insurance Department, Directive No , Declaration of Pediatric Vision and Habilitative Service Benefits in Arksansas s [sic] Essential Health Benefits Benchmark Plan (Feb. 6, 2013). 87 Letter to Director Gary Cohen, CMS CCIIO, from John R. Kasich, Governor, State of Ohio (Dec. 26, 2012)

19 state to perform the services in accordance with a treatment plan, 20 hours per week; (2) Mental/Behavioral Health Outpatient Services performed by a licensed Psychologist, Psychiatrist, or Physician to provide consultation, assessment, development and oversight of treatment plans, 30 visits per year total. While the foregoing are illustrative of the variation in the specific definitions of and approaches to defining habilitative services, California provided its definition through statute and offers an example of exclusions that are applied to this benefit. Under California law, Examples of health care services that are not habilitative services include, but are not limited to, respite care, day care, recreational care, residential treatment, social services, custodial care, or education services of any kind, including, but not limited to, vocational training. 88 Not all states chose to define the habilitative services benefit, such as the Commonwealth of Pennsylvania. 89 In those states, as noted above, plans must provide parity by covering habilitative services benefits that are similar in scope, amount, and duration to benefits covered for rehabilitative services; or define the benefit themselves and report to HHS. 4. Pediatric Services, Including Oral and Vision Care Supplementary Benchmark Plans. Defining pediatric services, particularly pediatric oral and vision services, is a problem under the benchmark plan approach. As observed by HHS, Our review of research on employer-sponsored plan benefits, including small employer products, found that pediatric oral and vision services were not covered under the benefit packages of a number of potential benchmarks, but, rather, were often covered under stand-alone policies. 90 To address this issue, HHS identified supplementary plan options, as discussed above. Most states selected or defaulted to the MetLife Federal Dental plan for pediatric dental and to the Blue Cross Blue Shield FEP BlueVision plan. 91 Some states selected other 88 Cal. Ins. Code (q)(1). 89 See CCIIOO, Additional Information on Proposed State Essential Health Benefits Benchmark Plans, available at Fed. Reg. at Fed. Reg. at

20 options, such as the coverage provided under the state s Children s Health Insurance Program (). 92 Upper Age Limit. Although never defined in statute or regulation, HHS has informally provided guidance on the minimum age for which the pediatric services are available. HHS selected the age of 19 as the upper limit for the definition of pediatric services. 93 It observed that this limit was consistent with PPACA s prohibition on preexisting conditions for children, the age limit for eligibility to enroll in, and certain coverage obligations under federal Medicaid law. 94 Nevertheless, HHS permits states to increase this maximum age in defining pediatric services. 95 Embedding Pediatric Dental Services. As noted by HHS, PPACA provides that, if an Exchange offers a stand-alone dental plan offering a pediatric dental EHB benefit, medical plans are not required to offer a pediatric dental plan benefit on that Exchange. 96 When asked by commenters to extend the ability not to embed pediatric dental EHB in the case of off-exchange plans, HHS pointed out that PPACA did not provide for such an exclusion. 97 While HHS emphasized that off-exchange plans (unlike exchange plans in certain cases) are required to offer the full ten EHB categories, including the pediatric dental benefit. 98 However, HHS concluded that, at the option of an issuer, when the issuer is reasonably assured that an individual has obtained coverage through an Exchange-certified stand-alone dental plan offered outside an Exchange, the issuer would not be found non-compliant with the EHB requirements. 99 This guidance is subject to important caveats worth emphasizing. First, while the dental plan can be purchased outside an exchange, it must be Exchange-certified. 100 Second, this option is only available for the pediatric dental EHB and not for any other EHB category Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at Fed. Reg. at

21 III. What am I Missing? Other Federal and State Laws Impacting EHBs After reviewing a state s base-benchmark plan and any supplementary benchmark plans, the answer to the question What am I missing? could be nothing or a lot. The reason for this uncertainty is the numerous federal and state laws mandating certain benefits that either went into effect after the benchmark plan was offered in the market or never applied to that benchmark plan. The potentially most problematic (in the sense of trying to identify a required benefits) are the ones that are covered by the benchmark plan but are not expressly identified therein. The following reviews a few of these benefits. A. Abortion A benchmark plan may cover therapeutic and/or non-therapeutic abortions. However, this coverage does not mean that abortion is either a required benefit or a permitted benefit. PPACA permits states to opt out of abortion coverage, 102 as some states have done in whole or in part. 103 Even where a state has not opted out of coverage, PPACA and its implementing regulations permit each issuer to choose whether to cover this benefit. 104 When an issuer chooses to offer coverage, it must ensure that it complies with the regulatory framework set out in the final EHB rule. B. Approved Clinical Trials As added by PPACA, Section 2709 to the Public Health Service Act requires group health plans and health insurance issuers offering group or individual health insurance coverage to cover the costs of routine patient costs for items and services furnished in connection with an approved clinical trial. 105 Routine patient costs include all items and services consistent with the coverage provided in the plan (or coverage) that is typically covered for an individual who is not enrolled in a clinical trial. 106 These costs do not include (1) the investigational item, device, or service, itself; (2) items and services that are provided solely to satisfy data collection and analysis needs and that are not used in the direct clinic management of the patient; or (3) a service that is clearly inconsistent with widely accepted and established standards of care for a particular diagnosis U.S. Code 18023(a). 103 See, e.g., O.R.C (prohibiting qualified health plans from offering coverage for nontherapeutic abortions). 104 Sec. 1303(b)(1)(A), PPACA; 45 C.F.R (c) U.S.C. 300gg-8(a)(1)(B) U.S.C. 300gg-8(a)(2)(A) U.S.C. 300gg-8(a)(2)(B)

22 An approved clinical trial that implicates this coverage requirement means a phase I, phase II, phase III, or phase IV clinical trial that is conducted in relation to the prevention, detection, or treatment of cancer or other life-threatening disease or condition and is any of the following: Federally funded trials. The study or investigation is approved or funded (which may include funding through in-kind contributions) by one or more of the following: (i) The National Institutes of Health; (ii) The Centers for Disease Control and Prevention; (iii) The Agency for Health Care Research and Quality; (iv) The Centers for Medicare & Medicaid Services; (v) cooperative 1 group or center of any of the entities described in clauses (i) through (iv) or the Department of Defense or the Department of Veterans Affairs; (vi) A qualified nongovernmental research entity identified in the guidelines issued by the National Institutes of Health for center support grants; (vii) Any of the following if certain conditions are met: (I) The Department of Veterans Affairs; (II) The Department of Defense; or (III) The Department of Energy; The study or investigation is conducted under an investigational new drug application reviewed by the Food and Drug Administration; or The study or investigation is a drug trial that is exempt from having such an investigational new drug application. 108 When designing the benefits for this coverage, issuers must also be cognizant of state laws that impose similar but not identical coverage requirements. 109 C. Infertility In some cases, infertility coverage is an EHB because it appears in the state benchmark plan. 110 In other cases, infertility may not appear in the benchmark plan because the applicable state-mandated benefit did not apply to the product type in which the benchmark plan falls, such as where a mandate applies to a health maintenance organization but the benchmark plan is a preferred provider organization 111 As noted above, under current HHS policy, states do not need to defray the costs of these state-required benefits if enacted before the regulatory deadline U.S.C. 300gg-8(d). 109 See, e.g., D.C. Code , et seq. 110 See, e.g., CCIIOO, Additional Information on Proposed State Essential Health Benefits Benchmark Plans, available at See, e.g., O.R.C (A)(1)(h) (imposing coverage requirements for infertility and voluntary family planning services for HMO plans only)

23 D. Benefits Arising from Non-Benefit Laws This final category offers the greatest potential problems for issuers in determining a state s EHBs. The reason is that the benchmark plan and other existing plans being offered in the market might not expressly identify certain benefits that are mandatory but originate from a non-benefits law. An example of this category is the recent clarifying bulletin issued by the D.C. Department of Insurance, Securities and Banking (DISB) regarding the Prohibition of Discrimination in Health Insurance Based on Gender Identity or Expression. 112 The bulletin clarified that D.C. mandates the coverage of medically necessary treatments for gender dysphoria, including gender reassignment surgeries. 113 The legal basis for this benefit is not a traditional state-mandated benefit but rather the state s anti-discrimination law that includes discrimination on the basis of gender identity or expression. 114 Without being aware of such regulatory guidance, given that the D.C. benchmark plan is silent on its coverage of these mandatory services, issuers entering into the D.C. market could run afoul of this obligation through, for example, impermissible exclusions or benefit designs. 112 DISB, Bulletin 13-IB-01-30/15 Revised (Feb. 27, 2014). 113 DISB, Bulletin 13-IB-01-30/15 Revised, at 3 (Feb. 27, 2014). 114 DISB, Bulletin 13-IB-01-30/15 Revised, at 1-2 (Feb. 27, 2014)

24 IV. How Do I Figure Out the EHBs for My State? Keys to a Systematic EHB Analysis A. A Systematic Analysis of EHBs is Possible There is no one size-fits-all approach to determining a state s EHBs. Too much variation exists with respect to benefits, the use of supplementary benchmark plans, state law and state insurance department guidance. Nevertheless, it is possible to approach a state s EHBs using a systematic analysis that allows one to collect all of the information necessary to determine the state s EHBs as summarized below with a checklist included in Exhibit B. B. Key Steps to Analyzing a State s EHBs 1. Find the benchmark plan. The benchmark plan should be the starting template for determining a state s EHBs. It contains the vast majority of third level benefits that could trip up any filing that contains benefits or exclusions that are inconsistent with these third level benefits. 2. Determine if there are any supplementary benchmark plans. As with the benchmark plan, these supplementary benchmark plans are vital for determining the state s EHBs. They generally provide the pediatric oral and vision benefits for the state. Sometimes they provide other important benefits, such as the mental health and substance use disorder benefits. 3. Research state insurance department guidance and bulletins. As illustrated by the recent DISB bulletin on gender dysphoria, state insurance departments have generally compiled numerous bulletins, checklists and other guidance to assist with developing EHB-compliant benefit packages. Failing to identify these resources can lead to significant delays in obtaining product approval and greatly increase the effort required to identify the state s EHBs. 4. Review applicable federal and state laws and regulations. Despite the availability of benchmark plans and state insurance department resources, federal and state laws and regulations continue to play an important role in determining specific EHBs. This area of research must not be overlooked. 5. With the 2014 plan year well under way, find approved, EHBcompliant samples. Lastly, whereas issuers had only the foregoing sources to piece together the EHBs for a state, this is no longer the case. With the 2014 plan year well under way, many EHBcompliant filings have been approved in every state. Still, even approved filings contain

25 mistakes that can trip up subsequent filers. Therefore, these should be viewed as resources but not definitive statements of a state s EHBs. C. Prepare for the 2016 Plan Year Perhaps the most exasperating part of the EHB regulatory framework is that it only applies for the 2014 and 2015 plan years. While it is certainly possible that HHS may largely adopt this same framework for 2016 and beyond, it is equally possible that it may impose drastic changes. However, with the filings for the 2015 plan year only now getting underway, HHS is likely not going to be making public its plans for 2016 and beyond any time soon