This blog is part of a series that will highlight how changes in the 2019 Notice of Benefit and Payment Parameters (NBPP) final rule will affect the comprehensive coverage that the essential health benefits (EHBs) package offer to consumers.
On April 10, the Centers for Medicare & Medicaid Services (CMS) released the 2019 Notice of Benefit and Payment Parameters (NBPP) final rule. This annual rule contains the major changes that CMS intends to implement for the next plan year for the individual and small group markets. While these rules cover a number of topics, ranging from network adequacy standards to medical-loss ratio requirements, this year’s changes to the essential health benefits (EHB) package could have significant consequences for consumers. First up, let’s put the new EHB rules into perspective by getting back to the EHB basics.
What Are Essential Health Benefits?
Prior to the Affordable Care Act (ACA), federal law did not require minimum benefit standards, resulting in gaps in coverage for critical health services such as preventive care, prescriptions drugs or hospitalization. For example, before the ACA, 62 percent of the people who purchased their own health insurance did not have maternity services, while 34 percent did not have coverage for substance use disorder treatments. These gaps in coverage forced consumers to decide between forgoing important health care services and paying for often-cripplingly expensive medical bills.
The ACA made a number of reforms to the individual and small group markets, but chief among them was the establishment of a package of benefits that set a floor for what services health plans sold in these markets must cover. Federal law outlines the required 10 essential health benefit categories, which range from emergency services to maternity care, but states have discretion to choose from a set of plans to serve as the benchmark plan in their state. The benefits within this benchmark plan then set the standard for the required benefits for other plans in that state. Consequently, there is significant variation in EHB benchmarks in states across the country.
The History of EHB Benchmarks
After a series of listening sessions and a report from the Institute of Medicine proposing a set of criteria for use in determining which benefits are most important for coverage, the Department of Health and Human Services (HHS) created a process for setting EHB benchmarks. Contrary to the recommendations of many consumer advocates, who advocated that HHS set a national EHB benchmark, HHS guidance granted each state the flexibility to determine its own essential health benefits package through the benchmark-setting process. Using this process, states could select their benchmark plan based on a range of options, including one of the largest state employee plans or small-group plans based on enrollment. If a state did not select a plan, the benchmark plan defaulted to the plan with the largest enrollment numbers in that state’s small-group market.
Once selected, that benchmark plan would determine the required benefit packages for both the individual and small-group plans in that state. While the ACA does not require insurers to replicate each benefit within the state’s benchmark plan, the benefits offered must be actuarially equivalent to those in the benchmark plan. This process also stipulates that if a benchmark plan does not include one or more of the 10 EHB categories, the state is required to supplement the plan with the relevant categories of benefits using another benchmark plan. To date, states have had one opportunity – in 2015 – to modify their initial EHB benchmark selections for the 2017 and 2018 plan years.
New Rules for EHB Benchmarks
The final NBPP rule released this month makes significant changes to the EHB benchmark setting process outlined above. For a detailed overview of these changes, visit the National Health Law Program’s new issue brief. Most notably, for the 2020 plan year, states have the opportunity to redefine their EHB package by selecting a new EHB benchmark in one of the following three new ways:
- Select a benchmark plan from another state;
- Replace the benefits from one or more categories in their current benchmark with the benefits in the same category from another state; or
- Create an entirely new benchmark standard.
Combined with a new “generosity test,” which prohibits a state from using the new process to select a more generous benchmark to make coverage more affordable, these changes threaten a race to the bottom to create less comprehensive coverage. In other words, because the ACA bars states from making their EHB benchmark more robust, they can only slim it down. This places individuals and families with ongoing health needs at greater financial risk if the services they need are no longer covered.
States planning to utilize this new EHB benchmark process are required to submit certain documentation to CMS by July 2, 2018. The final rule also requires states to provide public notice and the opportunity to comment on the changes to the state’s EHB benchmark, presenting a window for advocates to influence their states’ EHB selection. The entity that determines the EHB benchmark plan varies by state (ranging from the governor, legislators or departments of insurance), and the final rule doesn’t specify any parameters for a robust public process. However, as states are considering whether to embark on this new process, now is the time for consumer advocates to demand transparency and ample stakeholder engagement to ensure that the results truly reflect the needs of consumers in the state.