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California Could Determine Its Own Essential Health Benefits

On Friday, the Department of Health and Human Services (HHS) posted a bulletin regarding the Essential Health Benefits (EHBs). EHBs are the minimum set of services that all plans in the individual market must offer in 2014, according to ACA. The benefits must cover 10 categories and be similar to those in a “typical employer plan.”

HHS first asked the Institute of Medicine (IOM) to come up with criteria to follow when determining these benefits, which were released on October 7, 2011. You can read IOM’s recommendations here. IOM determined that a “typical small employer plan” was difficult to identify and that some of the services mandated through ACA are not, in fact, offered in typical small employer plans.

We originally expected the EHBs to be defined in a Notice of Proposed Rulemaking, which was anticipated to be released in late fall. It seems, however, that HHS would like to solicit feedback on its bulletin before releasing a formal notice of rule making.

HHS’s Friday bulletin proposed that EHBs should be defined on a state-by-state basis using a benchmark approach. In 2014 and 2015, states may select a benchmark plan whose services would become the EHBs for the state. States have the option to select either one of the three largest state employee health plans, one of the three largest federal employee health plans, one of the three largest small group plans, or the largest HMO plan offered by the state’s commercial market.

At today’s Exchange Board Meeting, Katie Marcellus (the Exchange’s new senior employee on eligibility and enrollment issues) identified who these plans would be in California. The three largest state employee plans are Kaiser, Blue Shield Access+, and PERS Choice. The three largest federal employee health plan options are Blue Cross Blue Shield (BCBS) Basic, BCBS Standard and Government Employees Health Association Standard. The three largest small group plans and the largest HMO in California are still to be determined.

If the benchmark plan that the state selects does not cover all 10 categories mandated by ACA, the state must supplement the missing categories with benefits from another benchmark option. For example, if the state selects BCBS Basic and BCBS Basic does not offer children’s dental care but BCBS Standard does, they must use that defined benefit from the BCBS Standard. Plans may adjust the benefits between categories, as long as they still cover all 10 required categories and the coverage has the same actuarial value.

The Exchange, partner state agencies and stakeholders will submit comments to HHS by the January 31, 2012 deadline. See the presentation to the Exchange Board here.