HHS Punts on Essential Health Benefits Decision

Margaret Dick Tocknell, for HealthLeaders Media , December 28, 2011

The group's final report stressed medical effectiveness, safety, and costs. It provided recommendations in five areas:

  1. Develop a premium target. HHS should determine what the national average premium of typical small employer plans would be in 2014 and match the benefits to that premium cost.
  2. Define priorities. Hold a series of small group meeting around the country to discuss the benefits and costs of different plan designs, including coverage-specific services and cost-sharing.
  3. Ensure appropriate care. Only medically necessary services should be covered and the definition of "medically necessary" should depend on individual circumstances.
  4. Promote state-based innovations. HHS should grant states' requests to adopt alternatives to the EHB package only if the alternatives are consistent with PPACA requirements and do not vary significantly from the federal package.
  5. Update the EHB. HHS should update the EHB package annually, beginning in 2016. Advances in medical science and cost should define the updates. A National Benefits Advisory Council should be appointed to offer external advice.


Reaction to the IOM report was generally favorable although there was grumbling from consumer groups that wanted the IOM to endorse robust benefits and to not worry so much about costs.

HHS faces a tight timeline for establishing EHB. Health insurance exchanges have already been a tough sell in many states where the political powers that be view healthcare reform as yet another federal mandate that will be costly for states to implement.

HHS took IOM's advice and conducted three listening sessions in Washington, DC for provider groups and consumer advocates, as well as one session for health plans and employers. The department also held a conference call with state government representatives to hear their thoughts on the EHB policy. HHS also held 10 sessions across the country that drew more than 1,000 participants.

HHS identified these key themes:

  • Consumer groups are concerned about the IOM's emphasis of cost over the comprehensiveness of benefits while employers supported the IOM conclusion that the benefits be based on small employer plans.
  • Consumer groups want specific benefits to be identified while employers said they preferred more general guidance and flexibility.
  • Consumer groups are worried that about discrimination against individuals with particular conditions. Employers stressed concern about resources and asked for a moderate benefit package.
  • Consumers favor a uniform benefits package that included state mandates. Employers and others focused on the need for flexibility to reflect local preferences and practices.

For now it seems that employers, health plans and government officials have won the latest battle of the benefits. HHS has announced that each state will have the flexibility to select an existing health plan to set the benchmark for the items and services included in an essential health benefits package.

States will still have to make sure that their health insurance plans cover the 10 categories of care mandated in the PPACA, but this decision provides states with flexibility in how the categories will be covered.

But remember, this was all released as a bulletin. That means HHS is testing the waters and probably expects the give and take to continue. Comments are welcome at EssentialHealthBenefits@cms.hhs.gov until Jan. 31, 2012. The final rule is expected in May.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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